QUARTERLY REPORT(The Third Quarter of the 72nd Term)
From October 1, 2019 to December 31, 2019

(TRANSLATION)

ARISAWA MFG. CO., LTD.

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. Description of Business..................................................................................................................... 1
II. Status of Business ................................................................................................................................ 2
1. Business Risks, etc. ........................................................................................................................... 2
2. Analyses of Consolidated Financial Position, Business Results and Cash Flowsby the Corporate Managers ........................................................................................................... 2
3. Agreements with Managerial Implications, etc................................................................................. 4
III. Status of the Submitting Company ..................................................................................................... 5
1. Status of Shares, etc. ......................................................................................................................... 5(1) Total Number of Shares, etc. ........................................................................................................... 5(2) Status of Stock Acquisition Rights, etc. .......................................................................................... 5(3) Status of Exercise of Moving Strike Convertible Bonds, etc. ......................................................... 5(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc. ............................. 5(5) Status of Major Shareholders .......................................................................................................... 5(6) Status of Voting Rights ................................................................................................................... 6
2. Status of Directors and Officers ........................................................................................................ 6
IV. Status of Accounting .......................................................................................................................... 7
1. Quarterly Consolidated Financial Statements ................................................................................... 8(1) Quarterly Consolidated Balance Sheets .......................................................................................... 8(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated
Statements of Comprehensive Income ........................................................................................ 10[Quarterly Consolidated Statements of Income] ......................................................................... 10[Quarterly Consolidated Statements of Comprehensive Income] ............................................... 11
2. Other................................................................................................................................................ 16
PART II. INFORMATION ON GUARANTY COMPANIES, ETC. OF THE
SUBMITTING COMPANY ................................................................................................ 17[Independent Auditors’ Quarterly Review Report]

Cover Page
Document to be filed:

Quarterly Report

Statutory basis:

Article 24-4-7, paragraph 1 of the Financial Instruments and Exchange Act

Filing to:

Director-General of the Kanto Local Finance Bureau

Date of filing:

February 14, 2020

Quarterly accounting period:

The Third Quarter of the 72nd Term (From October 1, 2019 to December 31,
2019)

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, General Manager, Accounting Department

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

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, General Manager, Accounting Department

Places where copies of this Quarterly Report are

Arisawa Mfg. Co., Ltd., Tokyo Branch Officemade available for public inspection:(12-5, Yanagibashi 2-chome, Taito-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1, Nihombashi Kabutocho, Chuo-ku, Tokyo)

PART I. INFORMATION ON THE BUSINESS
I. General Conditions of Business1. Changes in Principal Management Indicators, etc.
Term
Accounting period
Net sales

71st term
consolidated cumulative
third quarter
From April 1, 2018
to December 31, 2018

72nd term
consolidated cumulative
third quarter
From April 1, 2019
to December 31, 2019

From April 1, 2018
to March 31, 201934,69634,32744,728

3,644

2,221

4,297

2,411

△118

2,861

1,530

△22

2,200

52,75649,09153,462

72,037

71,53773,096

66.73

△3.38

79.15

66.29

－

78.70

69.3

64.7

69.3

71st term
consolidated
third quarter
From October 1, 2018
to December 31, 2018

72nd term
consolidated
third quarter
From October 1, 2019
to December 31, 2019

(Millions of yen)

Ordinary income(Millions of yen)
Profit (or loss (△))
attributable toowners of theparent(Millions of yen)Comprehensive income(Millions of yen)
Net assets (Millions of yen)
Total assets(Millions of yen)
Net income (or loss (△)) per
share
(Yen)
Fully diluted net income per
share
(Yen)
Equity ratio
(%)

Term
Accounting period

71st term

Net income per share (Yen)
17.58
23.20
Note: 1. As Arisawa Mfg. Co., Ltd. (hereinafter referred to as either the “Company” or the “Submitting Company”, as the casemay be) prepares the quarterly consolidated financial statements, the changes in principal management indicators, etc.
of the Submitting Company are not stated above.
2. Consumption tax, etc. are not included in the amount of net sales.
3. Diluted net income per share in the 72nd term consolidated cumulative third quarter is not stated above due to net loss
per share, though potential share exists.

2. Description of Business
There was no material change in information regarding the business lines of our corporate group (the Company
and its associated companies; hereinafter referred to as either the “Group” or “our Group”, as the case may be) in
the current consolidated cumulative third quarter.
The changes, with respect to each Reportable segment, of principal associated companies in the current
consolidated cumulative third quarter are as follows;(Display materials)
All shares the Company held of Polatechno Co., Ltd., which was the company accounted for under the equity
method, were transferred, and so it has been excluded from the scope of the application of equity method fromthe current consolidated third quarter.

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II. Status of Business
1. Business Risks, etc.
The current consolidated cumulative third quarter saw neither any new business risks, etc. emerging nor any
significant change in the business risks, etc. stated in the Financial Report for the previous business year.

2. Analyses of Consolidated Financial Position, Business Results and Cash Flows by the Corporate
Managers
Matters stated concerning the future in the text are based on judgments made as of the end of the current
consolidated third quarter.

(1) Financial Position and Operating Results1) Operating Results
The Japanese economy in the current consolidated cumulative third quarter remained uncertain due to theconcern about the trade friction caused by the US trade policy and its financial policy, the slowdown of theChinese economy, etc.
Under such circumstances, the results of operations of our group (the Company, its consolidated
subsidiaries and the companies accounted for under the equity method) for the current consolidated
cumulative third quarter showed net sales of 34,327 million yen (representing a 1.1% decrease as comparedwith the year-earlier quarter), an operating income of 2,077 million yen (representing an 21.6% decrease ascompared with the year-earlier quarter), an ordinary income of 2,221 million yen (representing a 39.0%
decrease as compared with the year-earlier quarter) and a loss attributable to owners of the parent of 118
million yen (profit attributable to owners of the parent of 2,411 million yen in the year-earlier quarter).
The reason for the net loss attributable to owners of the parent is the impairment loss of 624 million yen
shown as extraordinary loss in the electronic materials segment and the display materials segment in addition
to the tax expenses shown regarding the sale of all shares of Polatechno Co., Ltd., which was the affiliatecompany accounted for under equity method, in the third quarter.
In the electronic materials segment, the Company devalued the carrying amount of non-current assets to
its recoverable amount as a result of our examining the future earnings prospect based on the latest businessplan, because there is a downturn in profitability with the change of market and business environment in therigid printed circuit boards business where Satosen Co., Ltd., which is a consolidated subsidiary of theCompany, deals with their manufacture and sales. The impairment of goodwill is also shown.
In the display materials segment, the Company devalued the carrying amount of non-current assets to its
recoverable amount as a result of our examining the future earnings prospect based on the latest businessplan, because there is a downturn in profitability due to the projected market formation of a new businessdelayed more than expected in the field of polarization control optical components of ColorLink Japan Ltd.,
which is a consolidated subsidiary of the Company.
Business results with respect to each segment are as follows.
a. Electronic materials segment
In the electronic materials segment, net sales were 22,477 million yen (a 0.7% decrease as compared withthe year-earlier quarter) due to a steady increase in sales of our mainstay product, i.e. materials for flexible
printed circuit boards (the amount of orders received increased by 3.8%, and the production output increased
by 4.7%, as compared with the year-earlier quarter on a non-consolidated basis of the Submitting Company),a decrease in sales of rigid printed circuit boards by Satosen Co., Ltd., etc., while the segment income was
1,935 million yen (a 13.6% decrease as compared with the year-earlier quarter) due to a decrease in sales ofrigid printed circuit boards.
b. Industrial application structural materials segment
In the industrial application structural materials segment, net sales were 6,457 million yen (a 2.7% increase
as compared with the year-earlier quarter) due to a steady increase in sales of materials for aircraft, a decreasein sales of water treatment pressure vessels, etc., while the segment income was 962 million yen (a 7.5%
decrease as compared with the year-earlier quarter) due to a decrease in sales of water treatment pressure
vessels.

-2-

c. Electrical insulating materials segment
In the electrical insulating materials segment, net sales were 2,269 million yen (a 5.7% decrease ascompared with the year-earlier quarter) due to a decrease in sales of materials for infrastructure-related use,
while the segment income was 248 million yen (a 27.9% decrease as compared with the year-earlier quarter)
due to a decrease in sales.
d. Display materials segment
In the display materials segment, net sales were 2,573 million yen (a 7.6% decrease as compared withthe year-earlier quarter) due to a steady increase in sales of 3D imaging-related materials and a decrease insales of polarization control optical components by ColorLink Japan Ltd., while the segment income was
150 million yen (a 61.8% increase as compared with the year-earlier quarter) as a result of the profit of 3D
imaging-related materials compensating for a decrease in the profit of polarization control opticalcomponents.
e. Other (other businesses)
In other businesses, net sales were 549 million yen, representing a 5.3% decrease as compared with theyear-earlier quarter, while the segment income or loss recorded a segment income of 146 million yen (a 3.3%
decrease as compared with the year-earlier quarter).
It should also be noted that the amounts of net sales, orders received, etc. stated in this section do notinclude consumption tax, etc.
2) Financial Position
Total assets as of the end of the current consolidated cumulative third quarter were 71,537 million yen, adecrease of 1,559 million yen compared with the end of the previous year. This was largely due to the sharetransfer of Polatechno Co., Ltd., which was an affiliate company, and the acquisition of treasury stock withan increase of 5,897 million yen in cash and deposits and a decrease of 8,047 million yen in investment
securities.
Total liabilities as of the end of the current consolidated cumulative third quarter were 22,445 million
yen, an increase of 2,811 million yen compared with the end of the previous year. This was due largely to
an increase of 3,016 million yen in income taxes payable.
Total net assets as of the end of the current consolidated cumulative third quarter were 49,091 million yen,a decrease of 4,370 million yen compared with the end of the previous year. This was due largely to anincrease of 3,200 million yen in treasury shares and a decrease of 1,205 million yen in retained earnings.

(2) Management Policy, Management Strategy, etc.
There was no significant change, during the current consolidated cumulative third quarter, in the
management policy, management strategy, etc. set by our Group.

(3) Business and Financial Tasks to be Addressed
There was no significant change in the tasks to be addressed by our Group in the current consolidated
cumulative third quarter.
In this regard, the Company has a basic policy in place as to how the persons controlling the Company’s
financial and business policymaking shall act, and the contents, etc. of such basic policy (the matters set forthin Article 118, item 3 of the Ordinance for Enforcement of the Companies Act) are as follows.
1) Contents of the basic policy and the efforts toward the realization of the basic policy (including, but
not limited to, effective utilization of the assets of the Company and formation of an appropriate
corporate group)
The Company, ever since its initiation in 1909, has been working on technological innovations andproduct 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 under favorable labor-management climate. The Company’s Board of Directors believes that theCompany is obligated to adhere to such time-honored principle of nurturing technologicalaccumulation and also to understand, foster and enhance the said corporate value in the long run.
In light of the above, our Group stands on a management policy centering on the motto “Creation,
Innovation and Challenge” as we aim to create corporate value and enhance shareholder value of theCompany by means of enhancing customer satisfaction, accelerating new product development and-3-

improving profitability through thorough cost reduction.
2) Efforts to prevent inappropriate persons from controlling the Company’s financial and business
policymaking
The Company decided not to continue the protective measures (Takeover defensive measures) asof the end of the 71st Ordinary General Meeting of Shareholders held on June 27, 2019. However, if
any acquisition of large block shares of the Company is made, we will strive to gather necessary andsufficient information which may enable the shareholders to make an appropriate judgement on thepros and cons of such acquisition of large block shares, and seek to secure time and information
required for the shareholders' considering by disclosing opinions of the Board of Directors, etc.

(4) Research and Development Activities
The Group’s total expenses for research and development activities incurred in the current consolidated
cumulative third quarter amounted to 1,577 million yen.
In this regard, there was no significant change in the status of research and development activities of ourGroup in the current consolidated cumulative third quarter.

3. Agreements with Managerial Implications, etc.
In the current consolidated third quarter, there was no decision made on, or execution of, agreements withmanagerial implications, etc.

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III. 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
and outstanding as of theend of the third quarter(As of December 31, 2019

Class

Number of shares issued
and outstanding as of thefiling date of this Quarterly
Report(As of February 14, 2020)

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

Remarks

Common stock

36,367,924

36,367,924

Tokyo Stock Exchange(First Section)

Number of sharesconstituting one
full unit: 100

Total

36,367,924

36,367,924

---

---

Note: The number of shares issued through the exercise of stock acquisition rights in the period from February 1, 2020 tothe filing date of this Quarterly Report is not included in the column “Number of shares issued and outstanding as of
the filing date of this Quarterly Report”.

(2) Status of Stock Acquisition Rights, etc.
1) Details of Stock Option Scheme
No applicable matter.
2) Status of Other stock acquisition right
No applicable matter.

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

(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc.
PeriodCapital stock(Thousands of yen)

Number of shares issued andoutstanding
ChangeBalance

ChangeFrom October 1, 2019 to
December 31, 2019
41,40036,367,924
17,394(See Note)
Note: The increases are due to the exercise of stock acquisition rights.

Legal capital surplus(Thousands of yen)

Balance

ChangeBalance

7,588,111

17,3946,700,102(5) Status of Major Shareholders
As the current quarterly accounting period is the third quarter, there is no matter to be stated.

-5-(6) Status of Voting Rights
Since the “Status of Voting Rights” as of the end of the current third quarter cannot be stated herein as therelevant entries in the shareholder registry have yet to be confirmed, it is stated based on the shareholder
registry as of the most recent record date (September 30, 2019).
1) Shares issued and outstanding
As of December 31, 2019
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)

---

---

---

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

Common stock 1,967,700

---

---

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

Common stock 34,280,600

Shares constituting less than one full unit

Common stock

Category

Number of shares issued and outstanding

342,806---

78,224------36,326,524

---

---

Total number of voting rights held by--342,806--shareholders
Note: 500 shares held in the name of Japan Securities Depository Center, Inc. are included in the row “Shares with fullvoting 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) Treasury Stock, etc.
As of December 31, 2019
Name and address of shareholder
Full name or corporate
nameAddress

Arisawa Mfg. Co., Ltd.

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

Number of shares held
Under own
name1,967,700

Under thenames ofothers---Total

1,967,700

Ratio of the number ofshares held to thenumber of sharesissued and outstanding
(%)
5.41

Total
--1,967,700--1,967,700
5.41
Note: The Company bought back 3,128,300 shares upon a resolution by the Board of Directors held on August 27th, 2019.
As a result, the number of treasury stock as of the end of the current consolidated cumulative third quarter is 3,135,820
shares including shares constituting less than one full unit.

2. Status of Directors and Officers
No applicable matter.

-6-

IV. Status of Accounting
1.

Method of Preparation of Quarterly Consolidated Financial Statements
The quarterly consolidated financial statements of the Company are prepared in compliance with the“Regulations for Terminology, Forms and Preparation Methods of Quarterly Consolidated Financial Statements”(Cabinet Office Ordinance No. 64 of 2007).

2.

Certification of Audit
The Company received a quarterly review of its quarterly consolidated financial statements for the current
consolidated third quarter (From October 1, 2019 to December 31, 2019) and the current consolidated cumulative
third quarter (From April 1, 2019 to December 31, 2019) conducted by Ernst & Young ShinNihon LLC under theprovisions of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act.

-7-

1. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous consolidated
fiscal year
(As of March 31, 2019)

Current consolidated
third quarter(As of December 31, 2019)

AssetsCurrent assets
8,193,697

Cash and deposits
Notes and accounts receivable-trade*16,127,374

14,091,061*

17,429,954

Securities

1,401,188

1,487,631

Merchandise and finished goods

4,012,943

3,167,019

Work in process

1,941,748

2,103,815

Raw materials and supplies

3,378,698

3,284,280

Other

1,190,214

1,173,460

Allowance for doubtful accounts△668,052△623,707

Total current assets

35,577,813

42,113,516

11,998,454

12,940,964

Goodwill

219,309－

Other

175,923

204,538

Total intangible assets

395,233

204,538

Investment securities

23,142,852

15,095,000

Other

2,125,569

1,198,456

Allowance for doubtful accounts△143,823△15,446

Total investments and other assets

25,124,598

16,278,010

Total non-current assets

37,518,286

29,423,512

Total assets

73,096,100

71,537,028

Non-current assets
Property, plant and equipment
Intangible assets

Investments and other assets-8-

(Thousands of yen)
Current consolidated
third quarter(As of December 31, 2019)

Previous consolidated
fiscal year
(As of March 31, 2019)
Liabilities
Current liabilities
Notes and accounts payable-trade*

6,105,195*

6,409,212

5,394,122

5,501,509

Current portion of long-term loans payable

779,820

189,814

Current portion of bonds

36,80036,800

Income taxes payable

300,7883,316,797

Provision for bonuses

510,407272,688

3,957

4,093

Short-term loans payable

Provision for directors' bonuses
Other

*

Total current liabilities

3,041,830*

3,055,110

16,172,921

18,786,025

128,000

91,200Long-term loans payable

1,265,465

1,962,785

Net defined benefit liability

626,885

644,434

Asset retirement obligations

Non-current liabilities
Bonds payable

92,50291,858

Other

1,348,196

869,355

Total non-current liabilities

3,461,049

3,659,633

19,633,971

22,445,659

Capital stock

7,541,693

7,588,111

Capital surplus

6,653,615

6,700,102

Retained earnings

35,130,363

33,925,105△4,764△3,204,787

49,320,907

45,008,532

745,120

981,306

443－

Total liabilities
Net assets
Shareholders’ equity

Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment

707,571396,277

Remeasurements of defined benefit plans△147,916△87,770

Total accumulated other comprehensive income

1,305,219

1,289,813

Subscription rights to shares

144,419

156,001

Non-controlling interests

2,691,582

2,637,021

Total net assets

53,462,129

49,091,369

73,096,100

71,537,028

Total liabilities and net assets-9-(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income[Quarterly Consolidated Statements of Income][Consolidated cumulative third quarter](Thousands of yen)
Current consolidated
cumulative third quarter(From April 1, 2019
to December 31, 2019)

Previous consolidated
cumulative third quarter(From April 1, 2018
to December 31, 2018)
Net sales

34,696,479

34,327,306

Cost of sales

28,307,028

28,415,924

Gross profit

6,389,450

5,911,381

Selling, general and administrative expenses

3,740,685

3,833,508

Operating income

2,648,765

2,077,873

Interest income

247,878

239,325

Dividends income
Share of profit of entities accounted for using equity
methodOther

97,087

100,368

538,963－399,547

222,510

1,283,475

562,204

62,692

71,129Non-operating income

Total non-operating income
Non-operating expenses
Interest expenses－

93,450

Provision of allowance for doubtful accounts

85,712－

Other139,597

253,589

Foreign exchange losses

Total non-operating expenses

288,001

418,168

3,644,240

2,221,909

Gain on sales of non-current assets

34,125262

Gain on sales of securities

65,010Ordinary income
Extraordinary income*

1,271,030

Other

13,546

14,244

Total extraordinary income

112,681

1,285,537

Impairment loss－

448,357

Impairment loss of goodwill

Extraordinary losses－

175,447

Compensation for damage

91,683－

Other

48,75931,753

Total extraordinary losses

140,443

655,558

Income before income taxes

3,616,478

2,851,888

982,186

2,796,074

2,634,291

55,813

Income taxes
ProfitProfit attributable to non-controlling interests
Profit (or loss(△)) attributable to owners of the parent- 10 -

223,144

174,506

2,411,146△118,692

[Quarterly Consolidated Statements of Comprehensive Income][Consolidated cumulative third quarter]
Previous consolidated
cumulative third quarter(From April 1, 2018
to December 31, 2018)
Profit(Thousands of yen)
Current consolidated
cumulative third quarter(From April 1, 2019
to December 31, 2019)

2,634,291

55,813△913,898

236,177

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

1,707

△443

△188,103△227,935

20,28925,690△24,089△111,385△1,104,094△77,897

Comprehensive income

1,530,197△22,083(Breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to non-controllinginterests

1,374,383△134,097

155,813112,014- 11 -

[Notes](Change in the scope of consolidation or application of equity method)<Material change in the scope of application of equity method>
All shares of Polatechno Co., Ltd. were sold in the current consolidated third quarter, and so it has been
excluded from the scope of application of equity method.
(Changes in Accounting Policies)<Application of IFRS 16 (Lease)>
IFRS 16 "Lease" (Published in January, 2016) (hereinafter, "IFRS 16") has been applied to the IFRS-applied
subsidiaries of our Group since the current consolidated first quarter. In applying IFRS 16, we adopted themethod allowed as Provisional measures where cumulative influence of application of this Standards isrecognized on the commencement date of such application.
Regarding the lease on the side of lessee which was classified into operating lease by applying IAS 17 in thepast, right-of-use assets and lease liability were recognized on the commencement date of such application.
A part of assets included in "Other” in “Investments and other assets” is transferred to right-of-use assets.
Along with the application of this Standard, Quarterly Consolidated Balance Sheets show that “Property,
plant and equipment”, “Other” in “Current liabilities” and “Other” in “Non-current liabilities” increased
respectively by 363,384 thousand yen, 32,919 thousand yen and 292,273 thousand yen, while “Other” in“Investments and other assets” decreased by 39,675 thousand yen.
The influence on gain and loss in the current cumulative consolidated third quarter due to these changes was
slight.
(Particular accounting treatments applied in preparation of quarterly consolidated financial statements)<Calculation of tax expenses>
Tax expenses are calculated by multiplying the quarterly income before income taxes by an estimatedeffective tax rate. Such effective tax rate is reasonably estimated after applying tax effect accounting to theincome before income taxes for the consolidated fiscal year including the current consolidated third quarter.
(Notes Related to Quarterly Consolidated Balance Sheets)* Notes, etc. maturing at the end of the consolidated third quarter
For accounting treatment of notes, electronically recorded monetary claims and electronically recorded
obligations maturing at the end of the consolidated third quarter, settlement is made as of the clearing date ofeach note or as of the settlement date of each electronically recorded monetary claim and electronically recorded
obligation, as the case may be. As the end of the current consolidated third quarter falls on a bank holiday, thefollowing notes, electronically recorded monetary claims and electronically recorded obligations maturing at
the end of the consolidated third quarter are included in their respective balances as of the end of theconsolidated third quarter.
Previous consolidated fiscal year
(As of March 31, 2019)
Notes and accounts receivable-trade
Notes and accounts payable-trade
Current liabilities and others (Notes payable - nonoperating, Electronically recorded obligations-nonoperating)(Thousands of yen)
Current consolidated third quarter(As of December 31, 2019)

66,950130,679

56,725134,061

51,206445,993(Notes Related to Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements ofComprehensive Income)* The principal component of the gain on sale of investment securities shown in the current consolidated
cumulative third quarter is 1,261,698 thousand yen, which is the gain on sale from the transfer of all shares ofPolatechno Co., Ltd., which was the affiliate company accounted for under equity method.

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(Notes Related to Quarterly Consolidated Statements of Cash Flows)
Quarterly consolidated statements of cash flows for the current consolidated cumulative third quarter were notprepared. In this regard, the amounts of depreciation (including amortization of intangible assets except for
goodwill) and amortization of goodwill for the previous and current consolidated cumulative third quarters are as
follows.
Previous consolidated
cumulative third quarter(From April 1, 2018
to December 31, 2018)
Depreciation
Amortization of goodwill(Thousands of yen)
Current consolidated
cumulative third quarter(From April 1, 2019
to December 31, 2019)

1,387,281
43,861

1,457,908
43,861(Notes Related to Shareholders’ Equity, etc.)
I Previous consolidated cumulative third quarter (From April 1, 2018 to December 31, 2018)
1. Dividends paid
(Resolution)

Class ofsharesOrdinary General
Meeting of
Shareholders ofJune 28, 2018

Common stock

Total amount ofdividends(Thousands ofyen)

Dividend
per share(Yen)

1,224,579

34.00

Record date

Effective
date

Source ofdividends

March 31, 2018

June 29, 2018

Retained earnings

2. Significant changes in the amount of shareholders’ equity
No applicable matter.
II Current consolidated cumulative third quarter (From April 1, 2019 to December 31, 2019)
1. Dividends paid
(Resolution)

Class ofsharesOrdinary General
Meeting of
Shareholders ofJune 27, 2019

Common stock

Total amount ofdividends(Thousands ofyen)

Dividend
per share(Yen)

1,086,565

30.00

Record date

Effective
date

Source ofdividends

March 31, 2019

June 28, 2019

Retained earnings

2. Significant changes in the amount of shareholders’ equity
The Company bought back 3,128,300 shares upon a resolution by the Board of Directors held on August 27th,
2019. As a result, the treasury stock increased 3,199,887 thousand yen in the current consolidated cumulative third
quarter and amounted to 3,204,787 thousand yen as of the end of the current consolidated third quarter.

- 13 -

(Segment Information, etc.)[Segment Information]
I Previous consolidated cumulative third quarter (From April 1, 2018 to December 31, 2018)
1. Information on the amount of net sales and income or loss with respect to each reportable segment(Thousands of yen)
Reportable segment
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

Other(See Note)

Total

Net sales
Net sales toexternal
22,632,723
6,291,123
2,406,831
2,786,181
34,116,860
579,619
34,696,479
customers
Inter-segment
sales or594,710594,710－－－－－transfers
Total
22,632,723
6,291,123
2,406,831
2,786,181
34,116,860
1,174,330
35,291,190
Segment income
2,240,316
1,040,188344,258
93,0683,717,831
151,577
3,869,408
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.

2. Difference between the aggregate amount of income or loss of reportable segments and the pertinent
amount shown on the quarterly consolidated statements of income as well as the key components of suchdifference (Matters concerning difference adjustment)(Thousands of yen)
IncomeAmountTotal of reportable segments

3,717,831

Income in the category “Other”

151,577

Elimination of inter-segment transactions△81,160

Amortization of goodwill△43,861

Unallocated corporate expenses (See Note)△1,071,575

Adjustment of inventories△24,045
Operating income shown on the quarterly
2,648,765
consolidated statements of income
Note: Unallocated corporate expenses are mostly general and administrative
expenses that are not attributable to any of the reportable segments.

3. Information on impairment loss on non-current assets or goodwill, etc. with respect to each reportablesegment
No applicable matter.

- 14 -

II Current consolidated cumulative third quarter (From April 1, 2019 to December 31, 2019)
1. Information on the amount of net sales and income or loss with respect to each reportable segment(Thousands of yen)
Reportable segment
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

Other(See Note)

Total

Net sales
Net sales toexternal
22,477,949
6,457,995
2,269,187
2,573,141
33,778,273
549,032
34,327,306
customers
Inter-segment
sales or594,321594,321－－－－－transfers
Total
22,477,949
6,457,995
2,269,187
2,573,141
33,778,273
1,143,353
34,921,627
Segment income
1,935,317
962,654248,190
150,617
3,296,780
146,501
3,443,281
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.

2. Difference between the aggregate amount of income or loss of reportable segments and the pertinent
amount shown on the quarterly consolidated statements of income as well as the key components of suchdifference (Matters concerning difference adjustment)(Thousands of yen)
IncomeAmountTotal of reportable segments

3,296,780

Income in the category “Other”

146,501

Elimination of inter-segment transactions△65,556

Amortization of goodwill△43,861

Unallocated corporate expenses (See Note)△1,227,826

Adjustment of inventories△28,163
Operating income shown on the quarterly
2,077,873
consolidated statements of income
Note: Unallocated corporate expenses are mostly general and administrative
expenses that are not attributable to any of the reportable segments.

3. Information on impairment loss on non-current assets or goodwill, etc. with respect to each reportablesegment(Significant impairment losses on non-current assets)
In the electronic materials segment, with respect to the assets (including goodwill) in which investments
could not be expected to recover due to a downturn in profitability, the Company devalued their carrying amountto its recoverable amount and showed the relevant amount of its loss to extraordinary losses as impairment
losses.
In the display materials segment, with respect to the assets in which profit arising from operating activities
continues negative, the Company devalued their carrying amount to its memorandum value and showed therelevant amount of its loss to extraordinary losses as impairment losses.
In this regard, the amount of the relevant impairment losses shown in the current consolidated cumulative
third quarter is 539,702 thousand yen in the electronic materials segment and 84,101 thousand yen in the display
materials segment.
(Material change of the amount of goodwill)In the electronic materials segment, the impairment loss of goodwill is shown, so the amount of goodwill
decreased. In this regard, the decreased amount of goodwill by the said event was 175,447 thousand yen in thecurrent consolidated cumulative third quarter.

- 15 -

(Per Share Information)
The amounts of net income (or loss) per share and fully diluted net income per share with their respective basesof calculation are as follows.
Previous consolidated
cumulative third quarter(From April 1, 2018
to December 31, 2018)(1) Net income (or loss) per share (△)

Current consolidated
cumulative third quarter(From April 1, 2019
to December 31, 2019)66.73 yen

△3.38 yen

2,411,146△118,692－－

2,411,146△118,692

36,134,606

35,159,633

66.29 yen

---

---

---

236,993---(Basis of calculation)
Profit (or loss) attributable to owners of theparent (△) (Thousands of yen)Amount not attributable to common
stockholders (Thousands of yen)
Profit (or loss) attributable to owners of theparent pertaining to common stock (△)(Thousands of yen)
Average number of shares of common stockduring the period(2) Fully diluted net income per share(Basis of calculation)
Adjustment of profit attributable to ownersof the parent (Thousands of yen)
Increase in the number of shares of common
stockOutline of dilutive shares that were not includedin the calculation of fully diluted net income pershare due to a lack of dilutive effect and also
underwent a significant change after the end of
the previous consolidated fiscal year
Note:

---

---

Diluted net income per share in the current term consolidated cumulative third quarter is not stated above due to net loss
per share, though potential share exists.

(Significant Subsequent Events)
No applicable matter.

2. Other
No applicable matter.

- 16 -

PART II. INFORMATION ON GUARANTY COMPANIES, ETC. OF THE
SUBMITTING COMPANY
No applicable matter.

- 17 -

Independent Auditors’ Quarterly Review ReportFebruary 14, 2020
To the Board of Directors of Arisawa Mfg. Co., Ltd.

Ernst & Young ShinNihon LLC
Akira Igarashi[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Eishi Daikoku[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
We have conducted, under the provisions of Article 193-2, paragraph 1 of the Financial Instruments and ExchangeAct, a quarterly review of the quarterly consolidated financial statements of Arisawa Mfg. Co., Ltd. listed in the “Statusof Accounting” for the consolidated third quarter (From October 1, 2019 to December 31, 2019) and the consolidated
cumulative third quarter (From April 1, 2019 to December 31, 2019) of the consolidated fiscal year from April 1, 2019
to March 31, 2020, consisting of the quarterly consolidated balance sheets, quarterly consolidated statements of income,quarterly consolidated statements of comprehensive income and notes.
Responsibility of Management for the Quarterly Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the quarterly consolidated financial
statements in accordance with the standards for preparation of quarterly consolidated financial statements 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 quarterly consolidated financial statements free from material
misstatement, whether due to fraud or error.
Responsibility of Auditors
Our responsibility is to express a conclusion on the quarterly consolidated financial statements from an independent
standpoint based on our quarterly review. We conducted our quarterly review in accordance with the quarterly review
standards generally accepted in Japan.
A quarterly review consists principally of making inquiries to the management and the persons responsible forfinancial and accounting matters, etc., applying analytical procedures and conducting other quarterly review procedures.
The quarterly review procedures are less exhaustive than the procedures for annual financial statement audits
conducted in accordance with the audit standards generally accepted in Japan.
We believe that the evidence we have obtained provides a basis for our conclusion.
Conclusion of Auditors
In our quarterly review, no matter has come to our attention that causes us to believe that the above quarterly
consolidated financial statements do not fairly present, in any material respect, the financial conditions of Arisawa
Mfg. Co., Ltd. and its consolidated subsidiaries as of December 31, 2019 and the results of their operations in the
consolidated cumulative third quarter ended December 31, 2019 in accordance with the standards for preparation ofquarterly consolidated financial statements generally accepted in Japan.
Interest
There exists no special interest between the Company and this audit corporation or its engagement partners whichis required to be stated pursuant to the provisions of the Certified Public Accountants Act.
Note:

1. All the matters stated above have been electronically copied from the matters stated in the original quarterly review report. The
original 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 quarterly review.