Note: This is an excerpt translation of the “Yukashoken-Houkokusho” for the convenience of overseas
stakeholders. In cases where any differences occur between the English version and the original Japaneseversion, the Japanese version shall prevail. F-TECH INC. assumes no responsibility for this translation or for
direct, indirect or any other forms of damages arising from the translation.

Consolidated Financial Statements
March 31, 2019

F-TECH INC.
19, Showanuma, Shobu-cho, Kuki City, Saitama, JAPANConsolidated financial statements, etc.
(1) Consolidated financial statementsi)Consolidated balance sheets(Millions of yen)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
Dies and tools, net
Land
Leased assets, net
Construction in progress
Other, net
Total property, plant and equipment
Intangible assets
SoftwareRight of using facilities
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

As of March 31, 2018

As of March 31, 2019

5,871
39,209
5,406
4,740
9,321
4,139
68,6897,191
33,667
4,450
3,999
9,277
2,866
61,45318,01039,333
2,428
5,928
544
5,094
1,658
72,99816,096
36,115
2,110
5,892
640
3,520
2,014
66,392

*1

*1

359
38
397
*2

-1-

6,240
220
36
1,026
832
(13)
8,341
81,737150,426

304
38
342
*2

6,255
218
135
1,434
790
(12)
8,822
75,556
137,010(Millions of yen)
As of March 31, 2018
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Income taxes payable
Accounts payable - otherNotes payable - facilities
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors’ retirement benefits
Net defined benefit liability
Long-term accounts payable - other
Negative goodwill
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

*3

-2-

22,32019,391
13,454
495
791
3,693
105
98
4,898
65,250

As of March 31, 2019*3

22,83812,64912,660
648
390
2,715
137
64
4,895
57,002

25,348
223
2,058
99
990
324
61
17
29,123
94,374

19,728
153
2,080
106
920
112
56
18
23,17680,1796,790
7,222
25,662(18)
39,656

6,790
7,222
28,133(18)
42,127

792

467

168
(445)
515
15,87956,051
150,426

(418)
(331)
(281)
14,98556,830137,010ii)

Consolidated statements of income and comprehensive income(Millions of yen)
Fiscal year ended
March 31, 2018

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable toProfit attributable to owners of parent
Profit (loss) attributable to non-controlling interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests*1*2, *3226,060
201,835
24,225
17,3686,856*1*2, *3

235,361
212,007
23,353
16,772
6,580

66
43

88
53

456

398

208
774

322
863

1,136
417
152
1,706
5,924

1,207
180
86
1,475
5,968

*4

45
45

*4

15
15

*5

2
59
–
62
5,908
1,609
(1,007)
601
5,307

*5

19
63
1,958
2,041
3,943
1,775
(552)
1,223
2,720

*6

*8

-3-

Fiscal year ended
March 31, 2019

*6
*7

4,709
597

2,844
(124)

85
(152)
83

(216)
(817)
111

(13)

(106)

2
5,309

*8

(1,029)
1,691

4,747

2,047

562

(356)

iii) Consolidated statements of changes in net assets
Fiscal year ended March 31, 2018
(Millions of yen)
Shareholders’ equity

Balance at beginning of current
periodCapital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity

5,615

6,155

21,425(18)

33,177

1,175

1,175

Changes of items during period
Conversion of convertiblebond-type bonds with shareacquisition rights

2,350

Dividends of surplus

(471)

(471)

Profit attributable to ownersof parent

4,709

4,709

Purchase of treasury shares(0)Change in the parent
company’s ownershipinterest of subsidiaries due
to transactions with noncontrolling shareholders

(0)

(107)

(107)

Net changes of items otherthan shareholders’ equity–

Total changes of items during
period

1,175

1,067

4,237

(0)

6,479

Balance at end of current period

6,790

7,222

25,662(18)

39,656

Accumulated other comprehensive income

Balance at beginning of current
periodValuationdifference
on availablefor-salesecurities

Foreigncurrencytranslation
adjustment

740

270

Total
Non-controlling
Remeasurements accumulated
interestsof definedotherbenefit planscomprehensive
income(533)

477

16,077

Total net assets

49,732

Changes of items during period
Conversion of convertiblebond-type bonds with shareacquisition rights

2,350

Dividends of surplus(471)

Profit attributable to ownersof parent

4,709

Purchase of treasury shares(0)Change in the parent
company’s ownershipinterest of subsidiaries due
to transactions with noncontrolling shareholders(107)

Net changes of items otherthan shareholders’ equity

52

(102)

87

37

(197)

(160)

Total changes of items during
period

52

(102)

87

37

(197)

6,319

Balance at end of current period

792

168

(445)

515

15,87956,051-4-

Fiscal year ended March 31, 2019
(Millions of yen)
Shareholders’ equity

Balance at beginning of current
periodCapital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity

6,790

7,222

25,662(18)

39,656––

Changes of items during period
Conversion of convertiblebond-type bonds with shareacquisition rights–

Dividends of surplus

(374)

(374)

Profit attributable to ownersof parent

2,844

2,844

Purchase of treasury shares(0)Change in the parent
company’s ownershipinterest of subsidiaries due
to transactions with noncontrolling shareholders––

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current period

(0)

–
–

–

2,470

(0)

2,470

6,790

7,222

28,133(18)

42,127

Accumulated other comprehensive income

Balance at beginning of current
periodValuationdifference
on availablefor-salesecurities

Foreigncurrencytranslation
adjustment

792

168

Total
Non-controlling
Remeasurements accumulated
interestsof definedotherbenefit planscomprehensive
income(445)

515

15,879Total net assets

56,051

Changes of items during period
Conversion of convertiblebond-type bonds with shareacquisition rights–

Dividends of surplus(374)

Profit attributable to ownersof parent

2,844

Purchase of treasury shares(0)Change in the parent
company’s ownershipinterest of subsidiaries due
to transactions with noncontrolling shareholders–

Net changes of items otherthan shareholders’ equity

(325)

(586)

114

(797)

(894)

(1,691)

Total changes of items during
period

(325)

(586)

114

(797)

(894)

779

Balance at end of current period

467

(418)

(331)

(281)

14,98556,830-5-

iv)

Consolidated statements of cash flows(Millions of yen)
Fiscal year ended
March 31, 2018

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in assets and liabilities related toretirement benefits
Increase (decrease) in provision for directors’
retirement benefits
Increase (decrease) in provision for directors’
bonusesInterest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using
equity method
Loss (gain) on sales of property, plant and equipment
Loss on retirement of property, plant and equipment
Decrease (increase) in notes and accounts receivable- tradeDecrease (increase) in inventories
Increase (decrease) in notes and accounts payable trade
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Other, net
Net cash provided by (used in) investing activities-6-

Fiscal year ended
March 31, 2019

5,908
11,666–(5)

3,943
11,719
1,958
(5)

79

(40)

(180)

6

(35)

(34)

(109)
1,136
184

(142)
1,207
164

(456)

(398)

(43)
59

3
63

(6,149)

5,017

96

1,719

1,177

838

(293)
13,036146(1,141)(1,424)
10,616(769)
25,252179(1,219)(1,071)
23,141(12,641)
92
(95)
(34)
(4)
(12,683)(6,757)
100
(94)
(38)
(30)
(6,820)(Millions of yen)
Fiscal year ended
March 31, 2018
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Purchase of treasury shares
Repayments of installment payables
Cash dividends paid
Dividends paid to non-controlling interests
Repayments of finance lease obligations
Proceeds from sale and leaseback transactions
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 period
Cash and cash equivalents at end of period

*1

-7-

Fiscal year ended
March 31, 2019

(622)
16,977(11,683)
(0)
(444)
(471)
(868)
(891)
413
2,409

(6,966)
7,171(13,861)
(0)
(306)
(377)
(537)
(840)
867
(14,850)

(190)

(150)

152
5,719
5,871

1,319
5,871
7,191

*1

Notes to consolidated financial statements
Basis of presentation and significant accounting policies for preparation of consolidated financial
statements
1. Basis of presentation of consolidated financial statements
The accompanying consolidated financial statements have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations, andin accordance with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards (“IFRS”).
As permitted by the Japanese Financial Instruments and Exchange Act, amounts less than one million yen
have been omitted. As a result, the totals shown in accompanying financial statements do not necessarily
agree with the sum of the individual amounts.
2.

Disclosure of scope of consolidation(1) Number of consolidated subsidiaries: Sixteen
F&P Mfg., Inc.
F&P America Mfg., Inc.
F.tech Philippines Mfg., Inc.
F.E.G. DE QUERETARO, S.A. DE C.V.
F.tech Zhongshan Inc.
F.tech R&D North America Inc.
F.tech Wuhan Inc.
Fukuda Engineering Co., Ltd.
Kyushu F.tech Inc.
F.tech Mfg. (Thailand) Ltd.
Reterra Co., Ltd.
F.tech R&D Philippines Inc.
F.tech R&D (Guangzhou) Inc.
F&P MFG.DE MEXICO S.A. DE C.V.
Yantai Fuyan Mould Co., Ltd.
PT. F.tech INDONESIA(2) Number of non-consolidated subsidiaries: Two
Laguna Greenland Corp.
F.tech Automotive Components Private Limited
Reason for exclusion from scope of consolidation
The non-consolidated subsidiaries are small in scale and the amounts of their total assets, net
sales, profit (loss) (for the Company’s equity interest), retained earnings (for the Company’s
equity interest) and other financial statement items do not have a significant impact on the
Company’s consolidated financial statements.

3.

Disclosure about application of equity method(1) Non-consolidated subsidiaries accounted for using the equity method
Not applicable.

-8-(2) Number of associates accounted for using the equity method: FourJohnan Manufacturing Inc.
JOHNAN AMERICA, Inc.
JOHNAN F.TECH (THAILAND) LTD.
JOHNAN DE MEXICO, S.A. DE C.V.
(3) Number of non-consolidated subsidiaries not accounted for using the equity method: Two
Laguna Greenland Corp.
F.tech Automotive Components Private Limited
Number of associates not accounted for using the equity method: Six
Progressive Tools & Components Pvt Ltd.
JOHNAN UK LTD.
PT. JFD INDONESIA
JOHNAN WUHAN INC.
Johnan Kyushu Manufacturing Inc.
Johnan Foshan Inc.
Reason for exclusion from scope of equity method
The non-consolidated subsidiaries and associates that are not accounted for using the equity
method are excluded from the application of the equity method since such exclusion has no
significant impact on the Company’s consolidated financial statements in terms of profit (loss)(for the Company’s equity interest), retained earnings (for the Company’s equity interest) andother financial statement items, and overall they are of minor significance.
(4) The fiscal year ends of certain companies accounted for using the equity method are different fromthe consolidated fiscal year end. In preparing the consolidated financial statements, the Company
uses the financial statements of these companies as of their fiscal year end.
4.

Disclosure about fiscal years, etc. of consolidated subsidiaries
Among the consolidated subsidiaries, the fiscal year end of F.tech Philippines Mfg., Inc. and F.tech R&D
Philippines Inc. is January 31 and the fiscal year end of F.E.G. DE QUERETARO, S.A. DE C.V., F.tech
Zhongshan Inc., F.tech Wuhan Inc., Yantai Fuyan Mould Co., Ltd., F.tech R&D (Guangzhou) Inc., F&P
MFG.DE MEXICO S.A. DE C.V. and PT. F.tech INDONESIA is December 31.
In the preparation of the consolidated financial statements, the financial statements as of these dates areused. However, for major transactions that occurred between these fiscal year ends and the consolidated
fiscal year end, necessary adjustments are made in the consolidated financial statements.

5.

Disclosure of accounting policies(1) Accounting policy for measuring significant assetsi)Securities
Available-for-sale securities (other securities)
Securities with a fair value
Stated at fair value based on market prices on the closing date of the accounting period.
(Valuation difference is stated as a component of net assets in the consolidated balance sheets,the cost of securities sold is calculated applying the moving-average method.)
Securities without a fair value
Stated at cost determined by the moving-average method.
-9-

ii)

Derivatives
Stated at fair value.
iii) Inventories
Inventories of the Company and its domestic consolidated subsidiaries are stated at cost determinedby the average cost method (balance sheet amounts are determined based on the method of writing
down book value in accordance with decreased profitability). Inventories of foreign consolidated
subsidiaries are stated at the lower of cost or market, determined by the first-in, first-out method.
(2) Accounting policy for depreciation of significant assetsi)
Property, plant and equipment (excluding leased assets)
Depreciated by the straight-line method.
ii) Intangible assets (excluding leased assets)
Amortized by the straight-line method.
Software (for internal use) is amortized by the straight-line method over the usable period in the
Company (5 years).
iii) Leased assets
Leased assets relating to finance lease transactions that do not transfer ownership are depreciated by
the straight-line method assuming the lease periods as useful lives without residual value.
(3) Accounting policy for significant provisionsi)
Allowance for doubtful accounts
To prepare for losses from bad debts, an estimated uncollectible amount is provided either bymaking an estimation using the historical rate of credit loss in the case of general receivables, orbased on individual consideration of collectibility in the case of specific receivables such as highly
doubtful receivables.
ii) Provision for directors’ retirement benefits
At the Company and some subsidiaries, to prepare for the payment of directors’ retirement benefits,
the amount to be paid at the fiscal year end, based on the internal rules for directors’ retirement
benefits, is provided.
iii) Provision for directors’ bonuses
To prepare for the payment of directors’ bonuses, the amount expected to be paid at the current fiscal
year end is provided.
(4) Accounting method of retirement benefitsi)Methods of attributing estimated retirement benefits to accounting periods
When calculating retirement benefit obligations, the benefit formula method is used to attribute
estimated benefit amounts to periods of service until the fiscal year end.
ii) Amortization of actuarial gains and losses
Actuarial gains and losses are amortized beginning in the following fiscal years by the straight-line
method over a period which is equal to or less than the average remaining service period of
employees (mainly 5 years) at the time of occurrence.
iii) Application of simplified method for small businesses
In calculating net defined benefit liability, certain consolidated subsidiaries apply the simplified
method in which the net defined benefit liability and retirement benefit costs are deemed to be theamount of retirement benefits to be paid in cases where all eligible employees retired on a voluntarybasis at the fiscal year-end date.
(5) Translation basis of significant assets and liabilities denominated in foreign currencies
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the spot
exchange rates prevailing at the consolidated fiscal year end, and the translation adjustment is- 10 -

recognized in the consolidated statements of income. Assets and liabilities of foreign consolidated
subsidiaries are translated into Japanese yen at the spot exchange rates as of the fiscal year end, andrevenues and expenses of foreign consolidated subsidiaries are translated into Japanese yen at the
average exchange rates. Translation adjustments are included in foreign currency translation adjustment
and non-controlling interests in net assets in the consolidated balance sheets.
(6) Accounting policy for goodwill
All goodwill and the portion of negative goodwill that was recognized on or before March 31, 2010
have been amortized by the straight-line method over periods not exceeding 20 years based on theestimated period during which their effect will be recognized for each investment.
(7) Scope of cash and cash equivalents in consolidated statements of cash flows
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments thatare readily convertible to known amounts of cash and subject to insignificant risk of change in value
and due within three months from the date of acquisition.
(8) Other significant matters for preparing consolidated financial statements
Accounting policy for consumption taxes
Tax exclusive method is adopted.
New accounting standards to be applied
1. The Company and its domestic consolidated subsidiaries
 “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, issued by the AccountingStandards Board of Japan on March 30, 2018)
 “Implementation guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
issued by the Accounting Standards Board of Japan on March 30, 2018)(1) Overview
The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board(FASB) jointly developed comprehensive revenue recognition standards and issued “Revenue fromContracts with Customers” in May 2014 (IASB’s IFRS 15 and FASB’s Topic 606). Considering thatIFRS 15 shall apply to fiscal years beginning on or after January 1, 2018, and Topic 606 shall apply tofiscal years beginning after December 15, 2017, the ASBJ developed a comprehensive accounting
standard on revenue recognition and thus issued the accounting standard together with theimplementation guidance.
The ASBJ established the accounting standard on revenue recognition by following the basic policies indeveloping it. The basic policies were: firstly, incorporating the core principle of IFRS 15 as thestarting point from the perspective of facilitating comparability among financial statements, which isone of the benefits of ensuring consistency with IFRS 15; secondly, adding alternative treatments, but
to the extent not impairing comparability, where consideration should be given to the practice having
been used in Japan.
(2) Scheduled date of application
These ASBJ statement and guidance will be applied at the start of the fiscal year beginning on April 1,
2021.
(3) Effects of application of the accounting standard, etc.
The impact of the application of the Accounting Standard for Revenue Recognition on the consolidated
financial statements is currently under evaluation.

- 11 -

2.

Foreign consolidated subsidiaries“Leases” (US GAAP ASU 2016-02)(1) Overview
This accounting standard requires a lessee to recognize assets and liabilities for all leases in principle,
and so forth.
(2) Scheduled date of application
The accounting standard will be applied from the fiscal year ending March 31, 2021.
(3) Effects of application of the accounting standard, etc.
The impact on the consolidated financial statements is currently under evaluation.
“Leases” (IFRS 16)(1) Overview
This accounting standard requires a lessee to recognize assets and liabilities for all leases in principle,
and so forth.
(2) Scheduled date of application
The accounting standard will be applied from the fiscal year ending March 31, 2020.
(3) Effects of application of the accounting standard, etc.
The impact on the consolidated financial statements is currently under evaluation.

Changes in presentation
Upon application of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018 (hereinafter, “Statement No. 28”)) from the beginning of the current
fiscal year, the Company and its domestic subsidiaries changed the presentation and related notes of deferred
tax assets and deferred tax liabilities, such that deferred tax assets and deferred tax liabilities are classified aspart of ‘investments and other assets’ and ‘non-current liabilities,’ respectively.
As a result, in the consolidated balance sheets as of March 31, 2018, “Deferred tax assets” classified as“Current assets” decreased by 610 million yen, and “Deferred tax assets” classified as “Investments andother assets” increased by 610 million yen.
Deferred tax assets and deferred tax liabilities of the same taxable entity are offset in presentation, and total
assets decreased by 98 million yen compared with the amount before the change.
The notes related to tax effect accounting additionally included those described in notes 8 (excluding total
amount of valuation allowance) and 9 of “Accounting Standard for Tax Effect Accounting,” which arerequired in paragraphs 3 to 5 of Statement No. 28. However, this additional information corresponding to theprevious fiscal year is not disclosed, in accordance with the transitional treatments prescribed in paragraph 7of Statement No. 28.

- 12 -

Notes to consolidated balance sheets*1. Accumulated depreciation of property, plant and equipment is as follows:(Millions of yen)
As of March 31, 2018

As of March 31, 2019

104,053

111,922*2. Investment securities relating to non-consolidated subsidiaries and associates are as follows:(Millions of yen)
As of March 31, 2018

As of March 31, 2019

4,379

4,664

Investment securities (stocks)*3. The Group has entered into overdraft agreements and loan commitment agreements with 14 banks toefficiently raise working capital. Balance of unexecuted borrowings at end of period under these
agreements is shown below:(Millions of yen)
As of March 31, 2018

As of March 31, 2019

Total amount of overdraft facility limit and loan
commitment

45,41147,698

Balance of borrowings outstanding

19,196

12,64926,21535,048Unexecuted balance- 13 -

Notes to consolidated statements of income and comprehensive income*1. The ending balance of inventories represents the amount after write-down of the book value inaccordance with the decline in profitability and the following loss (reversal) on valuation of inventories
is included in cost of sales.
(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

136

(25)

*2. The major items of selling, general and administrative expenses are as follows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Haulage expenses

3,074

2,890

Salaries, allowance and bonuses

4,691

4,439

Retirement benefit costs

192

194

Provision for directors’ bonuses

96

61

Provision for directors’ retirement benefits

20

20

Depreciation

561

497

2,971

2,985

Research and development expenses*3. Research and development expenses included in general and administrative expenses(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

2,971

2,985

*4. The breakdown of gain on sales of non-current assets is as follows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Buildings and structures–

7

Machinery, equipment and vehicles

17

6

Land

27

–

Other

0

1

45

15

Total

*5. The breakdown of loss on sales of non-current assets is as follows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Machinery, equipment and vehicles

2

9

Other

0

9

2

19

Total

- 14 -

*6. The breakdown of loss on retirement of non-current assets is as follows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Buildings and structures1

10

Machinery, equipment and vehicles

54

48

Dies and tools

0

1

Other

2

2

59

63

Total

*7. Impairment loss
For the fiscal year ended March 31, 2018, the Group did not record impairment loss.
For the fiscal year ended March 31, 2019, the Group recorded impairment loss on the following asset
group:
Location
Ohio, U.S.A

Use

Type

Auto parts
Production-related facilities

Buildings and structures,
machinery, equipment andvehiclesAmount1,958 million yen

In principle, the Group’s business assets are grouped by the categories for management accounting.
With regard to business assets of F&P America Mfg., Inc., a consolidated subsidiary of the Company inNorth America, there was an indication of impairment in conjunction with a decline in profitability due toa change in the production system of a major customer in the United States. As a result of consideration of
the future recoverability, the carrying amounts were reduced to the recoverable amounts, and the reduced
amounts were recorded as impairment loss in extraordinary losses. The breakdown is buildings andstructures of 1,558 million yen, and machinery, equipment and vehicles of 399 million yen.
The recoverable amount was measured at the net selling price that was assessed by appraisal value.

- 15 -

*8. Notes regarding reclassification adjustments and tax effects relating to other comprehensive income(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Valuation difference on available-for-sale securities
Increase (decrease) during the period

122

(309)

Pre-adjustment of tax effect

122

(309)

Tax effect amount

(36)

92

Valuation difference on available-for-sale securities

85

(216)

(152)

(817)

(152)

(817)

Increase (decrease) during the period

13

106

Reclassification adjustments

549Pre-adjustment of tax effect

68

116

Tax effect amount

14

(4)

Remeasurements of defined benefit plans, net of tax

83

111

(13)

(106)

(13)

(106)

2

(1,029)Foreign currency translation adjustment
Increase (decrease) during the period
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax

Share of other comprehensive income of entities
accounted for using equity method
Increase (decrease) during the period
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income- 16 -

Notes to consolidated statements of changes in net assets
Fiscal year ended March 31, 2018
1. Class and total number of issued shares and class and number of treasury shares(Thousands of shares)
Number of shares asof beginning ofcurrent fiscal year

Number of shares
increased in current
fiscal year

Number of shares
decreased in current
fiscal year

Number of shares asof end of current
fiscal year

Common shares (Note 1)

16,7601,951–

18,712

Total

16,7601,951–

18,712

Common shares (Note 2)

33

0

–

33

Total

33

0

–

33

Issued shares

Treasury shares(Notes) The breakdown of the increase in number of common shares is as follows:
1. Increase from the exercise of share acquisition rights in convertible bond-type bonds with share acquisition rights:
1,951,819 shares
2. Increase from the purchase of treasury shares less than one unit: 35 shares

2.

Dividends(1) Cash dividends paid

Resolution

Class of shares

Total cash
dividend(Millions of yen)

Source ofdividends

Dividend pershare (Yen)Record date

Effective date

Annual General
Meeting of
Shareholders heldon June 23, 2017

Common shares

284

Retained earnings

17

March 31, 2017

June 26, 2017

Board of Directors’
meeting held on
November 7, 2017

Common shares

187

Retained earnings

10

September 30,
2017

December 1, 2017

(Note)

A 70th anniversary commemorative dividend of 7 yen is included in the dividend per share resolved at the Annual
General Meeting of Shareholders held on June 23, 2017.

(2) Dividends whose record dates are in the current fiscal year but whose effective dates fall in thenext fiscal year
Resolution

Class of shares

Total cash
dividend(Millions of yen)

Annual General
Meeting of
Shareholders heldon June 21, 2018

Common shares

187

Source ofdividends

Retained earnings- 17 -

Dividend pershare (Yen)10

Record date

Effective date

March 31, 2018

June 22, 2018

Fiscal year ended March 31, 2019
1. Class and total number of issued shares and class and number of treasury shares(Thousands of shares)
Number of shares asof beginning ofcurrent fiscal year

Number of shares
increased in current
fiscal year

Number of shares
decreased in current
fiscal year

Number of shares asof end of current
fiscal year

Common shares

18,712––

18,712

Total

18,712––

18,712

33

0

–

33

33

0

–

33

Issued shares

Treasury shares
Common shares (Note)
Total(Note)

2.

The breakdown of the increase in number of common shares is as follows:
Increase from the purchase of treasury shares less than one unit: 32 shares

Dividends(1) Cash dividends paid

Resolution

Class of shares

Total cash
dividend(Millions of yen)

Source ofdividends

Dividend pershare (Yen)Record date

Effective date

Annual General
Meeting of
Shareholders heldon June 21, 2018

Common shares

187

Retained earnings

10

March 31, 2018

June 22, 2018

Board of Directors’
meeting held on
November 7, 2018

Common shares

187

Retained earnings

10

September 30,
2018

December 4, 2018

(2) Dividends whose record dates are in the current fiscal year but whose effective dates fall in thenext fiscal year
Resolution

Class of shares

Total cash
dividend(Millions of yen)

Annual General
Meeting of
Shareholders heldon June 26, 2019

Common shares

187

Source ofdividends

Retained earnings- 18 -

Dividend pershare (Yen)10

Record date

Effective date

March 31, 2019

June 27, 2019

Notes to consolidated statements of cash flows*1. Reconciliation of ending balance of cash and cash equivalents with account balances per balance sheet(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Cash and deposits

5,871

7,191

Cash and cash equivalents

5,871

7,191

2.

Description of significant transactions not requiring use of cash or cash equivalents(1) Assets and liabilities associated with finance lease transactions(Millions of yen)
Fiscal year ended
March 31, 2018

Assets and liabilities associated with finance leasetransactions

417

Fiscal year ended
March 31, 2019
870

(2) Exercise of share acquisition rights in convertible bond-type bonds with share acquisition rights:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Increase in amount of capital stock from exercise of shareacquisition rights

1,175

–

Increase in amount of capital surplus from exercise ofshare acquisition rights

1,175

–

Decrease in amount of bonds payable from exercise ofshare acquisition rights

2,350

–

- 19 -

Notes on leases
As lessee
1. Finance lease transactions
Finance lease transactions that do not transfer ownershipi) Leased assets
Property, plant and equipment
Production facilities:
Machinery and equipmentii) Depreciation of leased assets
Depreciation of leased assets is as stated in “5. Disclosure of accounting policies, (2) Accounting
policy for depreciation of significant assets” under “Basis of presentation and significant accounting
policies for preparation of consolidated financial statements.”
2.

Operating lease transactions
Future lease payments under non-cancellable leases of operating lease transactions(Millions of yen)
As of March 31, 2018

As of March 31, 2019

Due within one year

199

202

Due over one year

146

200

Total

346

403

- 20 -

Notes on financial instruments
1. Overview of financial instruments(1) Policy on treatment of financial instruments
The Group raises necessary funds (mainly loans from banks and issuance of corporate bonds)
according to the capital expenditure plan to conduct the auto parts related business consisting of the
manufacture and sale of auto parts and dies, equipment, tools, etc. for these parts. The Group utilizes
derivatives to hedge its exposure to risks described below and adheres to a policy of not conducting
derivative transactions for speculative purposes.
(2) Financial instruments and related risks
Notes and accounts receivable - trade that are operating receivables are exposed to the credit risk ofcustomers. Although operating receivables denominated in foreign currencies, which arise fromintercompany transactions due to the globally developed businesses, are exposed to the risk offluctuations in exchange rates, forward exchange contracts are used to hedge this risk. Investment
securities are principally stocks related to business activities or capital alliances with business partners
and exposed to the risk of fluctuations in market prices. Long-term loans receivable are intercompany
loans and exposed to the credit risk of the borrowers.
Notes and accounts payable - trade that are operating payable and accounts payable - other are due
within one year. Some of these payables are denominated in foreign currencies due to import ofmaterials, etc. and exposed to the risk of fluctuations in exchange rates, however they are within therange of the balance of accounts receivable - trade denominated in the same foreign currency on apermanent basis. Loans payable, long-term accounts payable - other and lease obligations on financeleases are principally for procuring funds needed for capital expenditure and due for repayment within
up to five years after the fiscal year end.
Derivative transaction is forward exchange contracts to hedge the foreign currency risk on operatingreceivables arising from intercompany transactions.
(3) Risk management system for financial instrumentsi)Management of credit risk (customers’ default risk)
For operating receivables, the Company conducts maturity management and balance management by
counterparty through periodical monitoring of major business partners’ status in the operation
division and the management division of each department in accordance with the internal rules onsales management, and endeavors to quickly determine and mitigate any concern on the collection ofreceivables due to deteriorated financial conditions. Consolidated subsidiaries also manage operatingreceivables in the same manner in accordance with the Company’s internal rules on sales
management. For long-term loans receivable, the Company periodically monitors the status ofborrowers to quickly determine and mitigate any concern on the collection of loans due to theirdeteriorated financial condition and other factors.
ii) Management of market risk (fluctuation risk of foreign currency exchange and interest rates, etc.)
The Company and some consolidated subsidiaries utilize forward exchange contracts in principle tohedge the foreign currency exchange rate fluctuation risk by currency on a monthly basis for
operating receivables arising from intercompany transactions. Depending on the status of foreignexchange rates, forward exchange contracts are entered into for a maximum of 12 months in relation
to operating receivables denominated in foreign currencies that are certainly expected to arise fromforecast royalty transactions.
For investment securities, the Company periodically assesses market value and financial conditionsof issuers (business partners).
For derivative transactions, the Company assesses the positions to conduct hedge transactions on amonthly basis under the hedge policy of the funds and foreign exchange conference, in accordancewith the internal rules on foreign exchange risks which stipulate transaction authority, limit amounts
and other matters. Based on this assessment, the accounting department conducts transactions, andrecords information on the transaction and checks balances with counterparties.
- 21 -

iii) Management of liquidity risk associated with fund raising (risk of inability to pay on due date)
The Company’s accounting department prepares and updates financial plans annually and monthly
based on reports from each department.
(4) Supplementary explanation concerning fair values of financial instruments
Fair values of financial instruments comprise of values based on market prices and reasonably
measured values where market prices are unavailable. As several variable factors are incorporated in
calculating the relevant fair value, the resulting amount may vary depending on the different
preconditions employed.
(5) Concentration of credit risks
As of March 31, 2019, 62.3% of operating receivables were associated with the major customers.

- 22 -

2.

Fair values of financial instruments
Carrying amounts on the consolidated balance sheets, fair values and differences therebetween of thefinancial instruments are shown below. However, financial instruments whose fair values are deemed to
be extremely difficult to determine are not included therein (Please refer to Note 2 below).
As of March 31, 2018
(Millions of yen)
Carrying amount on
the consolidatedbalance sheet

Fair value

Difference(1) Cash and deposits

5,871

5,871

–

(2) Notes and accounts receivable - trade39,20939,209

–

1,508

1,508

–

220

221

1

(5) Notes and accounts payable - trade22,32022,320–(6) Accounts payable - other

3,423

3,423

–

(7) Short-term loans payable

19,391

19,391–(8) Long-term loans payable (*1)

38,80338,646(156)(9) Lease obligations (*2)

718

732

13

(10) Long-term accounts payable - other (installment) (*3)

594

566

(28)

(11) Derivatives (*4)

(4)

(4)

–

(3) Investment securities
Available-for-sale securities (other securities)(4) Long-term loans receivable(*1) Current portion of long-term loans payable in current liabilities is included.
(*2) The total amount of lease obligations in current liabilities and lease obligations in non-current liabilities is presented.
(*3) Current portion of long-term accounts payable - other (installment) included in accounts payable - other in current
liabilities is included.
(*4) Claims and obligations arising from derivative transactions are presented on a net basis.

As of March 31, 2019
(Millions of yen)
Carrying amount on
the consolidatedbalance sheet

Fair value

Difference(1) Cash and deposits

7,191

7,191

–

(2) Notes and accounts receivable - trade33,66733,667

–

1,237

1,237

–

218

219

1

(5) Notes and accounts payable - trade

22,83822,838–(6) Accounts payable - other

2,715

2,715

–

(7) Short-term loans payable

12,64912,649–(8) Long-term loans payable (*1)

32,38832,374(14)(9) Lease obligations (*2)

802

776

(26)

(10) Long-term accounts payable - other (installment) (*3)

378

388

9

(11) Derivatives (*4)

(1)

(1)

–

(3) Investment securities
Available-for-sale securities (other securities)(4) Long-term loans receivable(*1) Current portion of long-term loans payable in current liabilities is included.
(*2) The total amount of lease obligations in current liabilities and lease obligations in non-current liabilities is presented.
(*3) Current portion of long-term accounts payable - other (installment) included in accounts payable - other in current- 23 -

liabilities is included.
(*4) Claims and obligations arising from derivative transactions are presented on a net basis.
(Notes) 1. Measurement method of fair values of financial instruments and matters concerning securities and derivatives(1) Cash and deposits and (2) Notes and accounts receivable - trade
The fair value of these assets is based on the book value, given that the fair value is almost the same as thebook value, as they are settled in a short period.
(3) Investment securities
The fair value of stocks with fair value is based on the quoted market price.
(4) Long-term loans receivable
The fair value of long-term loans receivable is calculated based on the present value of future cash flows(principal and interest) discounted using the assumed interest rate of similar new borrowings.
(5) Notes and accounts payable - trade, (6) Accounts payable - other and (7) Short-term loans payable
The fair value of these liabilities is based on the book value, given that the fair value is almost the same as thebook value, as they are settled in a short period.
(8) Long-term loans payable, (9) Lease obligations and (10) Long-term accounts payable - other (installment)
The fair values of long-term loans payable with fixed interest rates, lease obligations and long-term accounts
payable - other (installment) are calculated by discounting the total amount of principal and interest at theassumed interest rate of similar new borrowings, lease contracts and installment payment contracts. Since longterm loans payable with floating interest rates reflect market interest rates within a short period, the fair value isapproximately the same as the book value and thus presented at the book value.
(11) Derivatives
The fair value of derivatives is based on the prices presented by the financial institution with which the contract
has been made. These derivatives are forward exchange contracts to hedge the exchange rate fluctuation risk on
operating receivables denominated in foreign currencies.
2. Financial instruments whose fair values are deemed to be extremely difficult to determine(Millions of yen)Classification

As of March 31, 2018

As of March 31, 2019

4,379

4,664

352

352

4,732

5,017

Non-listed shares
Shares of subsidiaries and associates
Other
Total
(Note)

The above are not included in “(3) Investment securities” above because their market prices are notavailable and the future cash flows cannot be estimated reliably, and thus their fair values are deemed
extremely difficult to determine.

3. Redemption schedule for monetary receivables after the fiscal year end
As of March 31, 2018
(Millions of yen)
Due within one
year

Due after one
Due after five
year through five years through ten
years
years

Due over ten
years

Cash and deposits

5,871

–

–

–

Notes and accounts receivable - trade39,209

–

–

–

–

–

220

–

45,081–

220–

Long-term loans receivable
Total- 24 -

As of March 31, 2019
(Millions of yen)
Due within one
year

Due after one
Due after five
year through five years through ten
years
years

Due over ten
years

Cash and deposits

7,191

–

–

–

Notes and accounts receivable - trade33,667

–

–

–

–

–

218

–

40,85855

162–

Long-term loans receivable
Total

4. Repayment schedule for bonds payable, long-term loans payable, lease obligations and other interest-bearing debts
As of March 31, 2018
(Millions of yen)
Due within one
year

Due after one
Due after five
year through five years through ten
years
years

Due over ten
years

Short-term loans payable

19,391–––Long-term loans payable

13,454

24,641706–

Lease obligations

495

223

–

–

Long-term accounts payable - other(installment)

270

324

–

–

Total

33,612

25,189706–

As of March 31, 2019
(Millions of yen)
Due within one
year

Due after one
Due after five
year through five years through ten
years
years

Due over ten
years

Short-term loans payable

12,649–––Long-term loans payable

12,66019,375352–

Lease obligations

648

153

–

–

Long-term accounts payable - other(installment)

266

112

–

–

Total

26,225

19,641352–- 25 -

Notes on securities
1. Available-for-sale securities (other securities)
As of March 31, 2018
(Millions of yen)Type

Items whose carrying
amount on the consolidatedbalance sheet exceeds
original purchase price
Items whose carrying
amount on the consolidatedbalance sheet does notexceed original purchase
price

Carrying amount on
the consolidatedbalance sheet

Difference(1) Shares

1,494

662

831

(2) Bonds–––(3) Other

–

–

–

1,494

662

831

(1) Shares

13

13

(0)

(2) Bonds–––(3) Other

–

–

–

13

13

(0)

1,508

676

831

Subtotal

Subtotal

Total(Note)

Original purchasepriceNon-listed shares (carrying amount on the consolidated balance sheet: 352 million yen) are not included in“Available-for-sale securities (other securities)” above because their market prices are not available and their fairvalues are deemed extremely difficult to determine.

As of March 31, 2019
(Millions of yen)Type

Items whose carrying
amount on the consolidatedbalance sheet exceeds
original purchase price
Items whose carrying
amount on the consolidatedbalance sheet does notexceed original purchase
price

Carrying amount on
the consolidatedbalance sheet

2.

Difference(1) Shares

1,222

696

525

(2) Bonds–––(3) Other

–

–

–

1,222

696

525

(1) Shares

15

18

(3)

(2) Bonds–––(3) Other

–

–

–

15

18

(3)

1,237

715

522

Subtotal

Subtotal

Total(Note)

Original purchasepriceNon-listed shares (carrying amount on the consolidated balance sheet: 352 million yen) are not included in“Available-for-sale securities (other securities)” above because their market prices are not available and their fairvalues are deemed extremely difficult to determine.

Available-for-sale securities (other securities) soldFiscal year ended March 31, 2018
Not applicable.
Fiscal year ended March 31, 2019
Not applicable.

- 26 -

Notes on derivatives
1. Derivative transactions to which hedge accounting is not applied(1) Foreign currency
As of March 31, 2018
(Millions of yen)
As of March 31, 2018
Classification

Transactions otherthan market
transactions

Type of transaction

Portion ofcontract/notionalamount over one
year

Fair value

Valuation gain
(loss)

Forward exchange
contracts
Sell
U.S. dollar

898

–

(4)

(4)

Thai Baht

71

–

0

0

970

–

(4)

(4)

Total
(Note)

Contract/notionalamountMeasurement method for fair values
Fair values are calculated based on price presented by counterparty financial institutions, etc.

As of March 31, 2019
(Millions of yen)
As of March 31, 2019
Classification

Transactions otherthan market
transactions

Type of transaction

Portion ofcontract/notionalamount over one
year

Fair value

Valuation gain
(loss)

Forward exchange
contracts
Sell
U.S. dollar

813

–

(1)

(1)

Thai Baht

65

–

(0)

(0)

879

–

(1)

(1)

Total
(Note)

Contract/notionalamountMeasurement method for fair values
Fair values are calculated based on price presented by counterparty financial institutions, etc.

(2) Interest rate
As of March 31, 2018
Not applicable.
As of March 31, 2019
Not applicable.

- 27 -

2.

Derivative transactions to which hedge accounting is applied(1) Foreign currency
As of March 31, 2018
Not applicable.
As of March 31, 2019
Not applicable.
(2) Interest rate
As of March 31, 2018
Not applicable.
As of March 31, 2019
Not applicable.

- 28 -

Notes on retirement benefits
1. Summary of retirement benefit plans adopted
The Company has established a constitution-based defined benefit corporate pension plan. Somedomestic consolidated subsidiaries have established constitution-based defined benefit corporate
pension plans and lump-sum retirement benefit plans. Some foreign consolidated subsidiaries haveestablished defined benefit plans or the defined contribution plans.
Because the Company has participated in JMSA Welfare Pension Fund (multi-employer contributory
pension plan) and cannot reasonably calculate the amount of plan assets in terms of its contributions forthe plan, retirement benefit obligations for the plan are accounted for in the same manner as a defined
contribution plan.
2.

Defined benefit plans(1) Reconciliation between the balance at beginning of period and the balance at end of period ofretirement benefit obligations (excluding plans to which the simplified method was applied)(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

6,419

6,697

Service cost

486

453

Interest cost

20

27

Actuarial loss (gain)

0

(59)

Benefits paid

(215)

(287)

Other

(13)

(4)

6,697

6,828

Balance at beginning of period

Balance at end of period(2) Reconciliation between the balance at beginning of period and the balance at end of period of plan
assets (excluding plans to which the simplified method was applied)(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

5,560

5,836

Expected return on plan assets

115

121

Actuarial loss (gain)

14

58

Contributions paid by the employer

363

366

Benefits paid

(206)

(248)

Other

(10)

(2)

5,836

6,132

Balance at beginning of period

Balance at end of period- 29 -

(3) Reconciliation between the balance at beginning of period and the balance at end of period of net
defined benefit liability for plans to which the simplified method was applied(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 201992

92

Benefit costs

23

24

Benefits paid

(13)

(15)

Contributions paid by the employer

(10)

(12)

92

89

Balance at beginning of period

Balance at end of period(4) Reconciliation between the balances at end of period of retirement benefit obligations and plan
assets, and net defined benefit liability and net defined benefit asset recorded in the consolidatedbalance sheet(Millions of yen)
As of March 31, 2018

As of March 31, 2019

Funded retirement benefit obligations

6,605

6,741

Plan assets(5,954)(6,263)

650

478

Unfunded retirement benefit obligations

303

306

Total net liability (asset) for retirement benefits

953

784

Net defined benefit liability

990

920

Net defined benefit asset

(36)

(135)

Total net liability (asset) for retirement benefits

953

784

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Service cost

486

453

Interest cost

20

27

Expected return on plan assets

(115)

(121)

Net actuarial loss amortization

54

9

Retirement benefit costs calculated using simplified
methods

23

24

469

393

(Note)

Includes plans to which simplified methods were applied.

(5) Retirement benefit costs(Millions of yen)

Total

- 30 -

(6) Remeasurements of defined benefit plans, net of tax
The breakdown of the items recorded in remeasurements of defined benefit plans, net of tax (before
deducting tax effect) in the consolidated statement of income and comprehensive income is asfollows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

68

116

68

116

Actuarial gains and losses
Total(7) Remeasurements of defined benefit plans
The breakdown of the items recorded in remeasurements of defined benefit plans (before deducting
tax effect) in accumulated other comprehensive income in the consolidated balance sheet is asfollows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

(450)

(324)

(450)

(324)

As of March 31, 2018

As of March 31, 2019

Actuarial gains and losses that are yet to be recognized
Total(8) Plan assetsi)
Breakdown of major categories of plan assets
The ratio of major categories to total plan assets is as follows:
Bonds

18.2%

18.0%

Equity securities

13.0

16.4

Cash and deposits

57.1

56.0

Other

11.7

9.6

100.0

100.0

Total

ii)

Method to determine rate of expected long-term return
The rate of expected long-term return is determined in consideration of the present and expectedasset mix and the present and expected long-term return rate on the various assets that comprisethe plan assets.

(9) Actuarial assumptions
Major bases for actuarial calculations at end of period
As of March 31, 2018

As of March 31, 2019

Discount rate

0.1%

0.1%

Long-term expected rate of return

2.0%

2.0%

Expected rate of salary increase

3.0%

3.0%

- 31 -

3.

Defined contribution plan
The required contribution amount to defined contribution plans (including employees’ pension fundplan in multi-employer contributory pension plans which is accounted for in the same manner) was 388
million yen in the previous fiscal year and 453 million yen in the current fiscal year.

4.

Multi-employer contributory pension plans
The required contribution amount to the multi-employer contributory pension plan-type defined benefit
plans, which is accounted for in the same manner as a defined contribution plan, was 22 million yen in
the previous fiscal year and 49 million yen in the current fiscal year.
(1) Latest funding position of the multi-employer contributory pension plans
JMSA Welfare Pension Fund(Millions of yen)Previous fiscal year
Current fiscal year
(As of March 31, 2018) (As of March 31, 2019)
Amount of plan assets

1,014

1,242

Amount of reserve for the purpose of pension financing
calculation

622

1,018

Difference

392

223

(2) Ratio of the Group’s members to the entire plan
JMSA Welfare Pension FundPrevious fiscal year
16.4% (As of March 31, 2018)
Current fiscal year
17.6% (As of March 31, 2019)(3) Supplementary explanation
The main reason for the difference in (1) above, is 452 million yen of past service liabilities for the
purpose of pension financing calculation.
Under the JMSA Welfare Pension Fund, past service liabilities are amortized over four years andeight months using the equal repayment method.
The ratio in (2) above is different from the ratio of the Group’s actual contributions.

Notes on share options, etc.
Not applicable.

- 32 -

Notes on tax effect accounting
1. Breakdown of deferred tax assets and deferred tax liabilities by major component(Millions of yen)
As of March 31, 2019

As of March 31, 2018
Deferred tax assets
Tax loss carry forwards (Note 2)

2,562

2,419

Excess depreciation

828

1,008

Elimination of unrealized gains on non-current assets

747

627

Impairment loss

495

453

Accrued bonuses

369

435

Net defined benefit liability

148

175

Loss on valuation of inventories

135

101

Other

491

418

5,777

5,639

Valuation allowance for tax loss carry forwards (Note 2)–(1,775)

Valuation allowance for the total of deductible temporary
difference, etc.

–

(1,375)

Valuation allowance subtotal (Note 1)(3,377)(3,151)

Total deferred tax assets

2,400

2,488

Depreciation (foreign consolidated subsidiaries)(3,004)(2,837)

Valuation difference on available-for-sale securities

(250)

(158)

Net defined benefit asset

(11)

(16)

Other

(167)

(122)

Total deferred tax liabilities(3,433)(3,133)Net deferred tax assets (liabilities)(1,032)(645)

Deferred tax assets subtotal

Deferred tax liabilities(Notes) 1. Valuation allowance decreased by 225 million yen. This decrease is mainly due to a decrease in valuation
allowance for deductible temporary difference as a result of the recording of taxable income at the Company
and some consolidated subsidiaries.
2. Amounts of tax loss carry forwards and related deferred tax assets by expiration of carry forwards
As of March 31, 2019

(Millions of yen)
Within one
year

Over one
Over twoOver threeyear andyears andyears andwithin two within three within four
years
years
years

Over four
years andwithin five
years

Over five
years

Total

Tax loss carry forwards
(a)

–

132

427

676

277

904

2,419

Valuation allowance

–

(61)

(427)

(651)

(275)

(360)

(1,775)

Deferred tax assets

–

71

–

25

1

544

(b) 643(a)(b)

Tax loss carry forwards represent the amount multiplied by the statutory income tax rate.
For tax loss carry forwards of 2,419 million yen (amount multiplied by the statutory income tax rate), deferred tax
assets of 643 million yen were recorded. The deferred tax assets of 643 million yen were recognized principally in
relation to the balance of tax loss carry forwards for F&P America Mfg., Inc. of 571 million yen (amount after
multiplying the statutory income tax rate). Tax loss carry forwards for which these deferred tax assets were recorded
arose due to the recording of loss before income taxes in the fiscal year ended March 31, 2018 and the fiscal year
ended March 31, 2019. The Company has determined, based on expected future taxable income, etc., that thedeferred tax assets related to the tax loss carry forwards are determined to be recoverable.

- 33 -

2.

Reconciliation of significant difference between statutory income tax rate and effective income tax rate
after application of tax effect accounting
As of March 31, 2018

As of March 31, 2019

30.3%

30.1%

7.2

10.0

Change in valuation allowance(14.3)(9.2)

Share of profit (loss) of entities accounted for using equity
method

(2.3)

(3.0)

Tax rate differences in foreign consolidated subsidiaries

(1.7)

2.3

Expenses not deductible permanently such as entertainment
expenses

2.9

1.9

Inhabitant per capita tax

0.3

0.4

(13.0)

–

Other

0.8

(1.5)

Effective income tax rate after application of tax effectaccounting

10.2

31.0

Statutory income tax rate
(Adjustments)
Foreign tax credit

Effect of the U.S. tax reform- 34 -

Notes on asset retirement obligations
Not applicable.
Notes on real estate for lease, etc.
The Company and a consolidated subsidiary own rental properties and idle properties in Saitama
Prefecture and other areas.
In the current fiscal year, net rental revenue from the rental properties amounted to 23 million yen (rental
revenue was recorded in non-operating income). Carrying amount on the consolidated balance sheet,increase (decrease) in the current fiscal year and fair value of these real estate properties for lease, etc. are
as follows:(Millions of yen)
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Carrying amount on the consolidatedbalance sheet
Balance at beginning of period

1,257

1,219

Increase (decrease) during period

(38)

(522)

1,219

696

1,409

928

Balance at end of period
Fair value at end of period(Notes) 1. Carrying amount on the consolidated balance sheet is calculated by subtracting accumulated depreciation andimpairment loss from acquisition cost.
2. The increase (decrease) during the fiscal year ended March 31, 2019 includes an increase due to foreign
currency translation difference of 8 million yen and a decrease due to a change in use to business assets, etc. of(530) million yen.
3. Fair values at end of period are based on certain appraisal value and indicators that are considered toappropriately reflect market prices.

- 35 -

Segment information, etc.
Segment information
1. Description of reportable segments
The reportable segments of the Company are components for which discrete financial information isavailable and whose operating results are regularly reviewed by the Board of Directors to makedecisions about resource allocation and assess their performance.
The Company is engaged in the manufacture and sale of auto parts. As of the end of the current fiscal
year, four companies including the Company in Japan as well as five local corporations in North
America and eight local corporations in Asia each conduct the business operations. These local
corporations, which are independent management units, formulate comprehensive strategies anddevelop business activities in each area.
For this reason, the Company consists of regional segments based on the manufacturing and sales
systems and has three reportable segments, namely Japan, North America and Asia.
2.

Explanation of measurements of net sales, profit (loss), assets, liabilities, and other items for eachreportable segment
The accounting procedures for reportable segments are consistent with those stated in “Basis ofpresentation and significant accounting policies for preparation of consolidated financial statements.”
Profit of reportable segments is based on operating profit (before amortization of goodwill).
Transactions with other segments are based on prevailing market prices.

3.

Disclosure of net sales, profit (loss), assets, liabilities, and other items for each reportable segment
Fiscal year ended March 31, 2018
(Millions of yen)
Reportable segments
Japan

North America

Total

Asia

Net sales
Net sales to external customers

28,795

129,904

67,360226,060

Transactions with other segments

16,779

1,489

3,177

21,446

Total

45,574

131,393

70,538247,506

Segment profit (loss)

1,744(1,878)

6,684

6,549

Segment assets

56,04975,95045,240177,241

Depreciation

2,805

5,401

3,893

12,101

Investments in entities accounted forusing equity method

3,963

279

–

4,243

Increase in property, plant andequipment and intangible assets

2,069

7,902

2,918

12,890

Other items- 36 -

Fiscal year ended March 31, 2019
(Millions of yen)
Reportable segments
Japan

North America

Total

Asia

Net sales
Net sales to external customers

33,001

136,450

65,909235,361

Transactions with other segments

11,645

1,778

3,410

16,833

Total

44,647138,228

69,319252,195

921

(54)

5,275

6,142

57,19363,24841,605

162,047

Depreciation

2,798

5,625

3,683

12,107

Investments in entities accounted forusing equity method

4,529

–

–

4,529

Increase in property, plant andequipment and intangible assets

2,415

2,497

3,236

8,149

Segment profit (loss)
Segment assets
Other items

4.

Differences between total amounts for reportable segments and amounts in the consolidated financial
statements and main details of these differences (matters relating to difference adjustments)(Millions of yen)
Fiscal year ended
March 31, 2018

Net sales

Fiscal year ended
March 31, 2019

Reportable segments total

247,506

252,195

Elimination of intersegment transactions(21,446)(16,833)

Net sales in the consolidated financial statements

226,060

235,361(Millions of yen)

Fiscal year ended
March 31, 2018

ProfitReportable segments total
Elimination of intersegment transactions
Operating profit in the consolidated financial statements

Fiscal year ended
March 31, 2019

6,549

6,142

306

438

6,856

6,580
(Millions of yen)

Fiscal year ended
March 31, 2018

AssetsFiscal year ended
March 31, 2019

Reportable segments total

177,241

162,047

Elimination of intersegment transactions(26,804)(25,027)

(10)

(10)

150,426

137,010

Other adjustments
Total assets in the consolidated financial statements- 37 -

(Millions of yen)
Reportable segments total
Other items

Amount recorded in the
consolidated balance sheet

Adjustments

Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
ended March ended March ended March ended March ended March ended March
31, 2018
31, 2019
31, 2018
31, 2019
31, 2018
31, 2019

Depreciation

12,101

12,107

(435)

(387)

11,666

11,719Investments in entities
accounted for using equity
method

4,243

4,529

–

–

4,243

4,529

Increase in property, plantand equipment andintangible assets

12,890

8,149

(454)

(93)

12,435

8,055(Note)

Adjustments of increase in property, plant and equipment and intangible assets are the effect of intersegment
consolidation adjustments.

- 38 -

Information associated with reportable segments
Fiscal year ended March 31, 2018
1. Information by product or service
This information has been omitted as net sales to external customers in a single product or service
category account for more than 90% of net sales recorded in the consolidated statements of income.
2.

Information by geographical region(1) Net salesJapan
27,766(Note)U.S.A.

(Millions of yen)Canada79,276

China

40,988

Other

50,707

Total

27,322

Net sales are segmented by country or region based on customer locations.

(2) Property, plant and equipment
Japan
15,9933.

226,060

U.S.A.

(Millions of yen)Canada15,666

China

15,703Mexico12,742

Other

7,193

Total

5,698

Information for major customers

72,998(Millions of yen)Counterparty

Revenues

Relevant segment

Honda Motor Co., Ltd. and its group companies

170,089

All reportable segments

General Motors Company and its group companies

25,781

All reportable segments

Fiscal year ended March 31, 2019
1. Information by product or service
This information has been omitted as net sales to external customers in a single product or service
category account for more than 90% of net sales recorded in the consolidated statements of income.
2.

Information by geographical region(1) Net salesJapan32,242(Note)U.S.A.

(Millions of yen)Canada82,593

China

40,079Other49,258

Total

31,186

Net sales are segmented by country or region based on customer locations.

(2) Property, plant and equipment
Japan13,353

3.

235,361

U.S.A.
13,760(Millions of yen)CanadaChina

15,277

Mexico12,101

6,931

Information for major customers

Other

Total

4,966

66,392(Millions of yen)Counterparty

Revenues

Relevant segment

Honda Motor Co., Ltd. and its group companies

169,512

All reportable segments

General Motors Company and its group companies

30,257

All reportable segments- 39 -

Disclosure of impairment loss on non-current assets for each reportable segment
Fiscal year ended March 31, 2018
Not applicable.
Fiscal year ended March 31, 2019
(Millions of yen)Japan

North America

Impairment loss–

Unallocatedamounts andelimination

Asia

2,446

–

Total

(487)

1,958

Amortization and unamortized balance of goodwill for each reportable segment
Fiscal year ended March 31, 2018
(Millions of yen)Japan

North America

Unallocatedamounts andelimination

Asia

Total

Amortization during
period

–

0

–

–

0

Balance at end of
period

–

10

–

–

10

Amortization and unamortized balance of negative goodwill in accordance with businesscombinations that took effect before April 1, 2010 are as follows:(Millions of yen)Japan

North America

Unallocatedamounts andelimination

Asia

Total

Amortization during
period

1

1

3

–

6

Balance at end of
period

17

18

36

–

72

Fiscal year ended March 31, 2019
(Millions of yen)Japan

North America

Unallocatedamounts andelimination

Asia

Total

Amortization during
period

–

0

–

–

0

Balance at end of
period

–

10

–

–

10

- 40 -

Amortization and unamortized balance of negative goodwill in accordance with businesscombinations that took effect before April 1, 2010 are as follows:(Millions of yen)Japan

North America

Unallocatedamounts andelimination

Asia

Total

Amortization during
period

1

1

3

–

6

Balance at end of
period

16

16

33

–

66

Information about gain on bargain purchase for each reportable segment
Fiscal year ended March 31, 2018
Not applicable.
Fiscal year ended March 31, 2019
Not applicable.

- 41 -

Related parties
Fiscal year ended March 31, 2018
1. Related-party transactions(1) Transactions between the company filing the consolidated financial statements and relatedpartiesi)
The parent company and major shareholders (limited to companies) of the company filingthe consolidated financial statements
Type

Name

Honda
Major
Motor Co.,
shareholder
Ltd.

Location

Minato-ku,
Tokyo

Capital stock
or stakeTransaction
Nature of Voting rights Relationship Description
amountholdingratiobusiness orwith theof(Millions of occupation(Millionsofrelated party transactions
(%)
yen)
yen)
Purchaser of
Manufacture
products ofand sale ofSale of(Owned)the Group
motor
finished
86,067
vehicles and Direct 13.64 and seller of
goods
passengers
parts and raw
car bodies
materials

20,579Line item

Accounts
receivable tradeEndingbalance(Millions of
yen)

2,893

(Notes) 1. Terms and conditions of transactions and policy on determination thereof(1) Due to the completion of conversion of all the yen-denominated convertible bond-type bonds with shareacquisition rights due 2020, which was issued by the Company, into shares on September 12, 2017, the voting
rights holding ratio of Honda Motor Co., Ltd. changed to 13.64%, and thus the type of the related party
changed from other associate to major shareholder. The above transaction amount includes the transactions
that occurred in the period when the type of the related party was other associate.
(2) Selling prices are determined by making an estimate based on economic rationality in view of market prices
and the Company’s manufacturing technologies, submitting the estimate to the customer and then negotiatingon price.
2. In the above amounts, transaction amounts do not include consumption taxes while ending balances do.

ii)

Type

Name

Officer andhis or her
Akihideclose family Fukuda
member(Note)

Officers and major individual shareholders (limited to individuals) of the company filing theconsolidated financial statements
Location–

Capital stock
or stakeTransaction
Nature of Voting rights Relationship Description
amountbusiness or holding ratio with theof(Millions of occupation(Millions ofrelatedpartytransactions
(%)
yen)
yen)

–

Executive(Owned)SeniorAdvisor of Direct 4.76
the Company

Advisory
contract

Advisoryfees

22Line item–

Endingbalance(Millions ofyen)–

Advisory fees are determined based on the contract entered into through consultation between the both parties after
comprehensively taking into account past experience and others.

- 42 -

(2) Transactions between consolidated subsidiaries of the company filing the consolidated
financial statements and related partiesi)Companies which have the same parent company as the company filing the consolidated
financial statements and subsidiaries of other associates of the company filing theconsolidated financial statements
Type

Name

Subsidiary Honda ofof major
Americashareholder Mfg., Inc.

Location

Ohio, U.S.A.

Transaction
Nature of Voting rights Relationship Description
amountCapital stockbusiness or holding ratio with theofor stake(Millions ofoccupation
relatedpartytransactions(%)
yen)
Manufactureand sale of
USD
motor
561,568
vehicles andthousandpassengers
car bodies

Alabama,
U.S.A.

Manufactureand sale of
USD
motor
400,000
vehicles andthousandpassengers
car bodies

Subsidiary
Honda
Ontario,of major
Canada, Inc. Canada
shareholder

Manufactureand sale of
CAD
motor
226,090vehicles andthousandpassengers
car bodies

Honda
Subsidiary Automobile Ayutthaya,of majorshareholder (Thailand) Thailand
Co., Ltd.

Manufacture
THB and sale ofmotor
5,460,000
vehicles andthousand passengers
car bodies

Honda
Subsidiary Manufacof major
turing ofshareholder Alabama,
LLC

Endingbalance(Millions ofyen)

34,184

Accounts
receivable trade

3,022

31,767

Accounts
payable trade

2,936

–

Purchaser of
products ofSale ofthe Groupfinished
and seller ofgoods
parts and raw
materials

25,663

Accounts
receivable trade

2,165

–

Purchaser of
products ofSale ofthe Groupfinished
and seller ofgoods
parts and raw
materials

29,981

Accounts
receivable trade

2,904

–

Purchaser of
products ofSale ofthe Groupfinished
and seller ofgoods
parts and raw
materials

9,679

Accounts
receivable trade

1,741

–

Purchaser of Sale ofproducts of finishedgoods
the Groupand seller of Purchase ofparts and raw raw
materials
materials

Line item(Notes) 1. Terms and conditions of transactions and policy on determination thereof(1) Selling prices are determined by making an estimate based on economic rationality in view of market prices
and the Company’s manufacturing technologies, submitting the estimate to the customer and then negotiatingon price.
(2) In purchases of raw materials, prices are determined through negotiations on price by reference to market prices.
2. In the above amounts, transaction amounts do not include consumption taxes while ending balances do.

2.

Notes on the parent company or major associates
Not applicable.

- 43 -

Fiscal year ended March 31, 2019
1. Related-party transactions(1) Transactions between the company filing the consolidated financial statements and relatedpartiesi)
The parent company and major shareholders (limited to companies) of the company filingthe consolidated financial statements
Type

Name

Honda
Major
Motor Co.,
shareholder
Ltd.

Location

Minato-ku,
Tokyo

Capital stock
or stakeTransaction
Nature of Voting rights Relationship Description
amountholdingratiobusiness orwith theof(Millions of occupation(Millionsofrelated party transactions
(%)
yen)
yen)
Manufacture
Purchaser of Sale ofand sale ofproducts of finished
goods(Owned)motor
the Group
86,067
vehicles and Direct 13.64 and seller of Purchase ofparts and raw raw
passengers
materials
car bodies
materials

Line item

Endingbalance(Millions ofyen)

24,871

Accounts
receivable trade

2,936

13,395

Accounts
payable trade

1,538(Notes) 1. Terms and conditions of transactions and policy on determination thereof
Selling prices are determined by making an estimate based on economic rationality in view of market prices andthe Company’s manufacturing technologies, submitting the estimate to the customer and then negotiating on price.
2. In the above amounts, transaction amounts do not include consumption taxes while ending balances do.

ii)

Type

Name

Officer andhis or her
Akihideclose family Fukuda
member(Note)

Officers and major individual shareholders (limited to individuals) of the company filing theconsolidated financial statements
Location–

Capital stock
or stakeTransaction
Nature of Voting rights Relationship Description
amountholdingratiobusiness orwith theof(Millions of occupation(Millionsofrelated party transactions
(%)
yen)
yen)

–

Executive(Owned)SeniorAdvisor of Direct 4.76
the Company

Advisory
contract

Advisoryfees30Line item–

Endingbalance(Millions ofyen)–

Advisory fees are determined based on the contract entered into through consultation between the both parties after
comprehensively taking into account past experience and others.

- 44 -

(2) Transactions between consolidated subsidiaries of the company filing the consolidated
financial statements and related partiesi)Companies which have the same parent company as the company filing the consolidated
financial statements and subsidiaries of other associates of the company filing theconsolidated financial statements
Type

Name

Subsidiary Honda ofof major
Americashareholder Mfg., Inc.

Location

Ohio, U.S.A.

Transaction
Nature of Voting rights Relationship Description
amountCapital stockbusiness or holding ratio with theofor stake(Millions ofoccupation
relatedpartytransactions(%)
yen)
Manufactureand sale of
USD
motor
561,568
vehicles andthousandpassengers
car bodies

Alabama,
U.S.A.

Manufactureand sale of
USD
motor
400,000
vehicles andthousandpassengers
car bodies

Subsidiary
Honda
Ontario,of major
Canada, Inc. Canada
shareholder

Manufactureand sale of
CAD
motor
226,090vehicles andthousandpassengers
car bodies

Honda
Subsidiary Automobile Ayutthaya,of majorshareholder (Thailand) Thailand
Co., Ltd.

Manufacture
THB and sale ofmotor
5,460,000
vehicles andthousand passengers
car bodies

Honda
Subsidiary Manufacof major
turing ofshareholder Alabama,
LLC

Endingbalance(Millions ofyen)

32,148

Accounts
receivable trade

2,864

31,347

Accounts
payable trade

2,661

–

Purchaser of
products ofSale ofthe Groupfinished
and seller ofgoods
parts and raw
materials

23,535

Accounts
receivable trade

2,157

–

Purchaser of
products ofSale ofthe Groupfinished
and seller ofgoods
parts and raw
materials

30,543

Accounts
receivable trade

3,144

–

Purchaser of
products ofSale ofthe Groupfinished
and seller ofgoods
parts and raw
materials

8,940

Accounts
receivable trade

1,604

–

Purchaser of Sale ofproducts of finishedgoods
the Groupand seller of Purchase ofparts and raw raw
materials
materials

Line item(Notes) 1. Terms and conditions of transactions and policy on determination thereof(1) Selling prices are determined by making an estimate based on economic rationality in view of market prices
and the Company’s manufacturing technologies, submitting the estimate to the customer and then negotiatingon price.
(2) In purchases of raw materials, prices are determined through negotiations on price by reference to market prices.
2. In the above amounts, transaction amounts do not include consumption taxes while ending balances do.

2.

Notes on the parent company or major associates
Not applicable.

Notes on special purpose entities subject to disclosure
Not applicable.

- 45 -

Per share information(Yen)
Fiscal year ended
March 31, 2018
Net assets per share

Fiscal year ended
March 31, 2019

2,150.74

2,240.33

Basic earnings per share

262.98152.30

Diluted earnings per share

252.13–(Notes) 1. Diluted earnings per share for the fiscal year ended March 31, 2019 is not presented since no potential shares
exist.
2. Basis for calculating basic earnings per share and diluted earnings per share is as follows:
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Basic earnings per share
Profit attributable to owners of parent (Millions of yen)

4,709

2,844

–

–

Profit attributable to owners of parent related tocommon shares (Millions of yen)

4,709

2,844

Average number of shares (Thousands of shares)

17,90818,678––

Increase in number of common shares(Thousands of shares)

770–[Of the above, convertible bond-type bonds with shareacquisition rights (Thousands of shares)]

(770)

(–)

Outline of potential shares that were not used in
calculating diluted earnings per share because they haveno dilutive effects––

Amounts not attributable to common shareholders(Millions of yen)

Diluted earnings per share
Adjustment on profit attributable to owners of parent(Millions of yen)

Significant subsequent event
Not applicable.
v)

Annexed consolidated detailed schedules
Annexed detailed schedule of corporate bonds
Not applicable.

- 46 -

Annexed detailed schedule of borrowings
Balance atBalance at end Average interest
beginning ofof current periodratecurrent period(Millions of yen)(%)
(Millions of yen)Classification

Payment due

Short-term loans payable

19,391

12,649

2.58–

Current portion of long-term loans payable

13,454

12,6602.05–

Current portion of lease obligations

495

648

0.98

–

Current portion of long-term accounts payable other (installment)

270

266

2.63

–

25,34819,728

2.13

2020–2025

Lease obligations (excluding current portion)

223

153

0.86

2020–2023

Long-term accounts payable - other (excluding
current portion)

324

112

3.08

2020–2021

59,50846,219––Long-term loans payable (excluding current portion)

Total(Notes) 1. The average interest rate is calculated using the interest rate and balance at end of period.
2. Repayment of long-term loans payable, lease obligations and long-term accounts payable - other (installment)(excluding current portion) above scheduled within five years after the closing date of the accounting period are as
follows:(Millions of yen)
Due after one year
through two years

Due after two years
through three years

8,978

6,267

3,152

976

Lease obligations

126

15

11

–

Long-term accounts payable other (installment)

110

2

–

–

Long-term loans payable

Due after three years
through four years

Due after four years
through five years

Annexed detailed schedule of asset retirement obligations
Not applicable.
(2) Other information
Quarterly information for the fiscal year ended March 31, 2019
(Cumulative period)

Three months
ended June 30,
2018

Six months ended
September 30,
2018

Nine months
ended December
31, 2018

Fiscal year ended
March 31, 2019

Net sales (Millions of yen)

58,110115,393

175,622235,361

Profit before income taxes (Millions of yen)

1,588

2,553

4,329

3,943

780

1,398

2,284

2,844

41.76

74.89

122.31152.30First quarter

Second quarter

Third quarter

Fourth quarter

41.76

33.13

47.42

29.99

Profit attributable to owners of parent(Millions of yen)
Basic earnings per share (Yen)(Three-month period)
Basic earnings per share (Yen)- 47 -