Note: This is an excerpt translation of the “Kessan Tanshin” for the convenience of overseas stakeholders.
In cases where any differences occur between the English version and the original Japanese version, theJapanese 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 Results
for the Nine Months Ended December 31, 2019
<under Japanese GAAP>

F-TECH INC.
19, Showanuma, Shobu-cho, Kuki City, Saitama, JAPAN1. Qualitative information regarding financial results for the period under review(1) Information regarding operating results
The global economy in the nine months ended December 31, 2019 remained in a recovery trend as awhole, but concerns over the economic slowdown have increased mainly due to the prolonged trade
friction between the United States and China. The Japanese economy made a moderate recovery despite
weaknesses seen in exports and production. Overseas, the economy in the United States continued steady
growth, supported by robust personal consumption. In China, the economy continued to slow down
mainly due to the impact of trade friction between the United States and China. The economies of otherregions in Asia as a whole slowed down moderately.
In the automotive industry, in Japan, sales volumes fell below the previous fiscal year due to theconsumption tax increase and natural disasters. In North America, sales of passenger cars were sluggish,
while sales of light trucks remained strong. In Asia, sales volumes continued in a slump.
Under these circumstances, the Group has been working to provide its customers with new value inaccordance with the basic policies of “Back to Basics” and “Challenge for New” outlined in the 13thMid-term plan. This led the Group to win new large-scale business contracts in North America, Japanand Asia.
The operating results for the Group during the nine months under review are as follows. Although there
was mass production start-up effects of products for newly awarded products in the North American
market, net sales decreased by 6.2% year on year to 164,685 million yen due mainly to reduced
production volumes in the Chinese and Asian markets and the impact of foreign exchange. Operating
profit decreased by 37.4% year on year to 2,894 million yen, ordinary profit decreased by 60.1% year onyear to 1,739 million yen, and loss attributable to owners of parent was 725 million yen (a profit
attributable to owners of parent of 2,284 million yen in the same period of the previous year) partly due
to the lower sales plus the impact of the impairment loss recorded at JOHNAN AMERICA, Inc., anaffiliate accounted for using the equity method.
Operating results by segment are as follows.
(Japan)Net sales decreased by 19.4% year on year to 19,740 million yen and operating loss was 753 million yen(an operating profit of 824 million yen in the same period of the previous year) due to a decline in thenumber of orders stemming from reduced production by major customers.
(North America)
Net sales fell by 0.7% year on year to 101,091 million yen due to a decline in production volumes
required by major customers in the United States and strong yen impact, despite an increase in theproduction volumes of ordered products in Mexico and Canada. The segment recorded an operating
profit of 314 million yen (an operating loss of 492 million yen in the same period of the previous year),as a result of not only mass production start-up effects of ordered products, but the improvement ofproduction efficiency and measures for cost reduction.
(Asia)As production volumes required by major customers remained weak, net sales decreased by 11.2% year
on year to 43,853 million yen and operating profit decreased by 21.6% year on year to 3,120 million yen.
(2) Information regarding financial position
As of December 31, 2019, total assets decreased by 1,464 million yen compared with the end of theprevious fiscal year to 135,545 million yen, mainly reflecting decreases in notes and accounts receivable- trade, and machinery, equipment and vehicles.
Liabilities increased by 1,244 million yen from the end of the previous fiscal year to 81,424 million yen,mainly reflecting increases in short-term loans payable and long-term loans payable.
Net assets decreased by 2,709 million yen from the end of the previous fiscal year to 54,121 million yen
mainly reflecting a decrease in retained earnings.

-1-(3) Information regarding consolidated earnings forecasts and other forward-looking statements
Although the spread of novel coronavirus has been affecting our operations, we can hardly estimate theeffect, at this point in time. Therefore, the earnings forecasts for the fiscal year ending March 31, 2020
announced on November 7, 2019 have not been changed. We will promptly disclose the revised earnings
forecasts based on the subsequent trends of business results when needed.

-2-2. Quarterly consolidated financial statements and significant notes thereto(1) Consolidated balance sheets(Millions of yen)
As of March 31, 2019

As of December 31, 2019

7,191
33,667
4,450
3,999
9,277
2,866
61,453

9,486
28,219
6,662
4,291
8,659
2,815
60,13516,096
36,115
3,520
10,65866,392342

16,21232,543
7,549
11,031
67,337
283

6,255
2,579
(12)
8,822
75,556
137,010

6,067
1,742
(20)
7,789
75,410135,545

22,83812,64912,660390
64
8,398
57,002

18,58917,108
10,864499
91
7,762
54,915

19,728
106
920
56
2,365
23,17680,17921,772
120
889
51
3,673
26,50881,424Assets
Current 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
Construction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Provision for directors’ retirement benefits
Net defined benefit liability
Negative goodwill
Other
Total non-current liabilities
Total liabilities-3-(Millions of yen)
As of March 31, 2019

As of December 31, 2019

6,790
7,222
28,133(18)
42,1276,790
7,222
26,858(18)
40,852

467

485

(418)
(331)
(281)14,985
56,830137,010(1,128)(215)(858)
14,127
54,121
135,545

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-4-(2) Consolidated statements of income and comprehensive income(Millions of yen)
Nine months endedDecember 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
methodForeign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodForeign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss)
Profit attributable toProfit (loss) attributable to owners of parent
Profit 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-5-

Nine months ended
December 31, 2019

175,622
158,463
17,15812,538
4,619

164,685
149,798
14,887
11,993
2,894

60
43

55
41

280

–

126
186
698

–
131
229

908

824

–

232

–
46
955
4,362

249
77
1,383
1,739

13
0
13

8
1
9

5
41
47
4,329
1,491
60
1,552
2,777

3
33
37
1,711
1,616
614
2,231
(519)

2,284
492(725)
205

(243)
(620)
9942(1,052)
112(106)

(17)

(871)
1,906(916)(1,435)

1,606(1,302)

300

(133)

(3) Notes to quarterly consolidated financial statements
Uncertainties of entity’s ability to continue as going concern
Not applicable.
Substantial changes in the amount of shareholders’ equity
Not applicable.
Application of special accounting for preparing quarterly consolidated financial statements(Calculation of tax expenses)
Tax expenses in the quarterly consolidated financial statements for a portion of consolidated subsidiaries
are calculated first by reasonably estimating the effective tax rate after applying tax effect accounting
against profit before income taxes for the fiscal year including the third quarter ended December 31, 2019,and next by multiplying the quarterly profit (loss) before income taxes by such estimated effective tax rate.
Changes in accounting policies
Application of IFRS 16 Leases
Starting from the first quarter ended June 30, 2019, IFRS 16 Leases has been applied to the Group
companies except for the following companies: the Company itself and its subsidiaries in Japan that haveadopted Japanese GAAP, and its subsidiaries in the United States that have adopted the generally accepted
accounting principles in the United States (US GAAP). IFRS 16 requires a lessee to recognize, inprinciple, all lease transactions as assets and liabilities in the balance sheet. There are no material changes
in accounting for leases as a lessor.
The Group reflects the cumulative effect of applying this accounting standard as an adjustment to thebalances of retained earnings as well as related non-current assets and liabilities as of the beginning of thefirst quarter ended June 30, 2019 in accordance with the transition under IFRS 16.
As a result, compared with the amounts under the previous accounting standard, “Other” of property, plantand equipment increased by 1,451 million yen, “Other” of current liabilities increased by 241 million yen,and “Other” of non-current liabilities increased by 1,112 million yen as of December 31, 2019. The
impacts on the beginning balance of retained earnings and profit or loss for the nine months ended
December 31, 2019 were immaterial.
Application of Accounting Standards Codification (ASC) 606 Revenue from Contracts with Customers
Starting from the first quarter ended June 30, 2019, ASC 606 Revenue from Contracts with Customers has
been applied to the overseas subsidiaries that have adopted the US GAAP. ASC 606 requires such
subsidiaries to recognize revenue when promised goods or services are transferred to customers in an
amount reflecting consideration to which they expect to be entitled in exchange for those goods orservices.
The Group applies this accounting standard in accordance with the transition procedure under ASC 606.
As a result, compared with the amounts under the previous accounting standard, net sales and cost of salesfor the nine months ended December 31, 2019 increased by 839 million yen, respectively. There is no
impact on the beginning balance of retained earnings.

-6-Segment information, etc.
Segment information
I.
Nine months ended December 31, 2018
1. Disclosure of net sales and profit for each reportable segment(Millions of yen)
Reportable segments
JapanNet sales
Net sales to external customers
Transactions with other segments
Total

Total

101,760
1,231

49,378
2,563

175,622
13,082

33,771

102,992

51,941

188,705824(492)

3,981

4,313

Differences between total amounts of profit (loss) for reportable segments and amounts in theconsolidated statements of income and comprehensive income and main details of these differences(matters relating to difference adjustments)(Millions of yen)AmountProfit3.

Asia

24,483
9,288

Segment profit (loss)

2.

North America

Reportable segments total
Elimination of intersegment transactions

4,313
306

Operating profit in the consolidated statements ofincome and comprehensive income

4,619Disclosure of impairment loss on non-current assets and goodwill, etc. for each reportable segment
Not applicable.

II. Nine months ended December 31, 2019
1. Disclosure of net sales and profit for each reportable segment(Millions of yen)
Reportable segments
JapanNet sales
Net sales to external customers
Transactions with other segments
TotalSegment profit (loss)

2.

Asia

Total

19,7408,411

101,091
1,152

43,853
2,055

164,685
11,62028,152102,244

45,909176,306

(753)

314

3,120

2,681

Differences between total amounts of profit (loss) for reportable segments and amounts in the
consolidated statements of income and comprehensive income and main details of these differences(matters relating to difference adjustments)(Millions of yen)AmountProfit

3.

North America

Reportable segments total
Elimination of intersegment transactions

2,681
212

Operating profit in the consolidated statements ofincome and comprehensive income

2,894Disclosure of impairment loss on non-current assets and goodwill, etc. for each reportable segment
Not applicable.

-7-

Significant events after the reporting period
Not applicable.

-8-