ANNUAL REPORT 2019YEAR ENDED MAY 31, 2019

Head Office 11-20, Minami-Semba 3-Chome, Chuo-ku, Osaka 542-8504, Japan
Phone: +81-6-6251-6801
Fax: +81-6-6251-0862
URL: https://suminoe.co.jp/

Company Purpose

Suminoe Textile supplied carpet to various major architectural structures

We contribute to the improvement of society through production, sales of good products andprosperity of business.

during the Meiji era.
We have thus advanced together with Japan from its start as a modern nation.

Company Motto
We pride ourselves as a pioneer in the interior design and furnishing industry and persist in
the spirit of cooperation, sincerity and resolution.

1883

1891

1896

Meiji Era

1913

1930

Taisho Era

Showa Era

1949

1958

1980

1994

1998

2003

2005

2010

2011

2012

2013

2015

2018

Heisei Era

2019

Contents

Reiwa Era

Financial
Highlights
P3

1883

At the age of 35 founder Denshichi
Murata purchased 3 looms in 1883
and began manufacturing carpets.

1913

Suminoe Textile Joint-Stock Company is established.

1980

Nara Factory began production of Japan's firstcarpet tiles.

1891

In 1891, Suminoe Textile supplied carpet for theestablishment of Japan's Imperial Diet Building in
Hibiya. We have been serving as its supplier for 120
years since then.

2003

Suminoe Textile of America Corporation is establishedin the U.S.
Current subsidiary, Suzhou Suminoe Textiles Co., Ltd.
is established in China.
Current subsidiary, Suzhou Suminoe Koide
Automotive Accessories Co., Ltd. is jointly establishedin China.
Current subsidiary, PT. Sinar Suminoe Indonesia is
jointly established in Indonesia.

2005

1930

Subsidiary, SPM Automotive Textile Co., Ltd. is
jointly established in China.

2013

Consolidate Suminoe Koka Co., Ltd. and Suminoe
Nara Co., Ltd., Suminoe Techno Co., Ltd. isestablished.
Suminoe Textile de Mexico, S.A. de C.V. is establishedin Mexico.
PT. Suminoe Surya Techno is established in Indonesia.

100th Anniversary

Business
Results
P4

Topics

We celebrated the130th anniversary of
our founding and the100th anniversary of
our incorporation.

P6

Suminoe Textile Co., Ltd. is established.

1949

Shares listed on the Tokyo, Osaka, and Kyoto stock
exchanges.

1896

Successful production of hand-woven moquette in
1896, adopted by Japan National Railways for seatcovering in 1899.

1958

Starting with our supply of nylon seat covering to
TOYOTA MOTOR CORPORATION in 1958, ourproducts have been used by various Japanese
automobile manufacturers one after another.

1994

Current subsidiary, T.C.H. Suminoe Co., Ltd. is
jointly established in Thailand.

1998

TRIPLE FRESH®
deodorant treatment
technology developed.

2010

Subsidiary, Suminoe Teijin Techno Krishna India Pvt.
Ltd. is jointly established in India.
Suminoe Textile Shanghai Co., Ltd. is established in
China.

2011

ECOS® Recycled Carpet
Tiles New Release.

2012

2015

Suminoe ata Glance

Acquired Bondtex, Inc.
and made it a consolidated subsidiary.

P9

2018

Suminoe Koide (Thailand) Co., Ltd. starts up
operations.

Financial
Section2019

P16

Suminoe Textile Vietnam Co., Ltd. is established in
Vietnam.

ECOS® became the first product to obtain Eco Markcertification under the new certification criteria.

Corporate
Data

We are aiming for the creation of a globally optimized supply system.
1

Suminoe Textile Co., Ltd. Annual Report 2019

P39

Suminoe Textile Co., Ltd. Annual Report 20192

Financial Highlights

Business Results
Thousands of
U.S.Dollars

Millions of Yen

Financial Highlights

At Year-End:Total Assets
Total Equity
Per Share (Yen and U.S. dollars):

Net Income Attributable to Owners of the Parent
Shareholder's Equity
Cash dividends applicable to the year

Financial Ratios (%):

2019

2018

2017

2016

2015

2019

¥98,6173,118
467¥97,873
2,248
1,084

¥96,038
1,298
26¥97,530
2,554
245¥91,183
3,102
1,816

$904,743
28,606
4,284¥87,976
35,271¥92,183
38,542¥90,255
37,399¥86,878
37,178¥90,126
39,205$807,119323,587¥65.36
4,469.04
70.00¥143.66
4,515.26
70.00

¥3.50
4,412.34
70.00¥32.52
4,416.08
70.00¥240.67
4,661.45
60.00

$0.60
41.00
0.64

Equity Ratio
ROE (Net Income Attributable to Owners of the Parent Base)ROA (Ordinary Income Base)

34.8%
1.4
3.4

36.9%
0.1
1.5

36.9%
3.2
2.6

39.0%
5.5
4.2

38.3%
0.7
3.3

Business Results

For the Year:Net Sales
Operating Income
Net Income Attributable to Owners of the Parent

Chairman and President
Ichizo Yoshikawa

Note 1: U.S. dollar amounts are converted from Japanese yen amounts at the rate of U.S.$1 to ¥109, the approximate rate on May 31, 2019.
2: Net income attributable to owners of the parent per share of common stock is computed based on the weighted average number of shares outstanding.
3: Suminoe Textile implemented a 1-for-10 reverse split of common shares, which took effect on December 1, 2017. We are calculating our net income
attributable to owners of the parent per share, shareholder’s equity per share and cash dividends applicable to the year per share based on the numberof shares outstanding after the reverse stock split.

Net Sales (Millions of Yen)
100,000

97,53091,183

97,87396,038

Consolidated financial result

98,61780,00060,00040,00020,000
0

2015

2016

2017
(Millions of Yen)

2,000

4,000
3,102

3,118

2,554

2,248

2,000

0

2015

2016

2017

90,12680,00086,87820182019

90,25592,183

87,976

0

245
2015

2016

467
2017

40,00039,20537,17820182019

37,39938,54235,271

2016

Suminoe Textile Co., Ltd. Annual Report 2019

2017

2018

2019

0

U.S. subsidiary, and a loss on the sale of investment

environment maintained a modest trajectory toward

securities. Under these circumstances, ourrecovery and corporate earnings also trended

consolidated net sales for the fiscal year under review

solid and steadily. However, there was enhanced

were ¥98,617 million (U.S.$904,743 thousand, up

wariness over the future economic outlook primarily

0.8% year-on-year), with operating income of ¥3,118

attributable to concerns of prolonged U.S.-China

million (U.S.$28,606 thousand, up 38.8%), ordinary

trade friction.

income of ¥2,956 million (U.S.$27,124 thousand, up

In accordance with the basic policy of its 5th three-

25.3%), and net income attributable to owners of theyear medium-term management plan, “2020,” theparent of ¥467 million (U.S.$4,284 thousand, down

Suminoe Textile Group deployed various measures

56.9%).

Net sales increased year-on-year reflecting strong
Facilities Segment owing to an expansion in sales at
Japanese automakers in China. Operating income
and ordinary income also grew in comparison witha year earlier. However, net income attributable to10,00020152019 under review, the employment and income

2015

2016

Consolidated Financial Results & Targets

performance in the Automotive Textiles and Traffic

20,00020,000loss at Suminoe Textile of America Corporation,to achieve the goals in its second year of the plan.

26

30,00040,0003

1,084

Total Equity (Millions of Yen)

60,000

0

1,500

500

Total Assets (Millions of Yen)
100,000

1,816

1,000

1,298

1,000

2019

Net Income Attributable to Owners of the Parent

Operating Income (Millions of Yen)

3,000

2018

During the consolidated fiscal year ended May 31,

2017

2018

2019

Net Sales
Operating Income

2019(Result)

2018(Result)¥96,000¥ 98,617¥ 97,873$904,743$897,917¥ 2,600

owners of the parent declined due to the posting of

Net Income Attributable to
Owners of the Parent

an extraordinary loss, reflecting both an impairment

Exchange Rate (Yen)¥ : Millions of Yen

2020(Target)¥ 1,300-¥   3,118¥   2,248$ 28,606$ 20,624¥    467¥   1,084$   4,284$   9,945

U.S.$1=¥109

U.S.$1=¥109$ : Thousands of U.S. Dollars

Suminoe Textile Co., Ltd. Annual Report 20194

Business Results

Topic 1Dividend policy

Progress of 5th Three-Year Medium-Term Management Plan “2020”

The Company has positioned shareholder return as a key management issue and distributes profits

In June 2017, we embarked on our 5th three-year medium-term management plan “2020,” and this fiscal year

appropriately by taking into account stable dividend payments and business results. Based on this basic

was the second year. Business growth and the restructuring of our corporate governance system are the leading

dividend policy, for this fiscal year, we have paid an annual dividend of ¥70 (U.S.$0.64) per share (¥35

priorities in this management plan given the improper accounting treatments uncovered at Suminoe Textile of(U.S.$0.32) per share for both year-end

America Corporation.

and interim dividends).
In addition, it plans to pay an annual

Annual Cash Dividends Per Sharedividend of ¥70 per share (an interim¥70

dividend of ¥35 and year-end dividend of

¥70

¥70

▶ Restructuring of corporate governance¥70¥70 TOTAL（Forecast）¥60¥35) for the fiscal year ending May 2020.

Topic

Business Results

END ¥35

It is our belief that the first step to preventing a recurrence of this issue is to delve into the background of

the issue and bring everything to light. Therefore our initial move to preventing human error is to rebuild our
global core system to grasp earnings and inventory trends in a timely manner for use in decision-making

by management. In addition, each department is required to report on a weekly and monthly basis using astandard companywide format so that management executives and employees can share information andthereby promote mutual communication. Furthermore, we are implementing “management patrols.” ThisMID ¥35

consists of executives going out and visiting the frontlines and business sites. Through these measures, weare building a globally-shared platform to foster a corporate culture with consistent information recognition

FY2015FY2016FY2017FY2018FY2019FY2020Note : The figures shown were calculated based on standards after the reverse stock split.

and open communication.
▶ Growth of businessWe aim to flexibly address customer needs in a timely manner to grow our businesses. To this end, weare confidently tackling three themes: expansion of product lineups, strengthening of globalization, anddevelopment and sales of high value-added products. In particular, in the strengthening of globalization, weOutlook for the next term
The fiscal year ending May 31, 2020 is the lastyear of “2020,” our 5th three-year medium-

term management plan. The economy in Japan
continues to gradually trend toward recovery

but the economic outlook remains unclear due
to various risks, including the consumption tax
hike, which is expected to be implemented in

October 2019, and overseas concerns including a
slowdown in the global economy and U.S.-China
trade friction.

Based on the themes of restructuring corporate
governance and growth of business in themedium-term management plan, the Suminoe
Textile Group is strengthening its business

are rebuilding our growth platform from a long-term perspective.
infrastructure by reconstructing its core system
while capturing inbound demand in the Interior

Consolidated Numerical Targets

Fittings Segment and by expanding its lineup

5th Three - Year Medium - Term Management Plan “2020”of new fabric mixtures and enhancing its QCD

FY2018(quality, price, supply) overseas in the Automotive

Net Sales

Textiles and Traffic Facilities Segment.

net sales of ¥96,000 million, operating income of

1,297¥2,600 million, ordinary income of ¥2,800 million,
parent of ¥1,300 million for the fiscal year ending
May 31, 2020.

97,50097,872

2,800

2,247

FY2020100,000

98,617102,000

3,100

3,118

3,450

96,000Operating Income

Considering these circumstances, we plan to post

and net income attributable to owners of the

96,038FY2019FY2017
Result

FY2018
Original Forecast

Result

FY2019Original Forecast

Result2,600

FY2020
Original Forecast
Revised Forecast

96,03897,50097,872100,000

98,617102,000

96,000Operating Income

1,297

2,800

2,247

3,100

3,118

3,450

2,600

Ordinary Income

1,364

2,950

2,358

3,350

2,956

3,750

2,800

26

1,500

1,083

1,900

467

2,200

1,300

0.1%

4.5%

3.2%

5.5%

1.4%

6.0%

4.5%

Net Sales% change from the previous year

Ratio of the operating income
to net sales

Net Income Attributableto Owners of the Parent

ROE

98.5%
1.4%

101.5%

2.9%

101.9%

2.3%

102.6%

3.1%

100.8%

3.2%

102.0%

3.4%

97.3%

2.7%

Note: The figures in the results are based on Japanese GAAP.

5

Suminoe Textile Co., Ltd. Annual Report 2019

Suminoe Textile Co., Ltd. Annual Report 20196

Global Business Operations of the Suminoe Textile GroupAcquired JIS Q 9100 certiﬁcation, an international quality
management system standard in the aerospace ﬁeld in Japan

Topic

Topic 3
Topic

Topic 2

Suminoe Textile Shanghai Co., Ltd.
Shanghai

Suminoe Textile ofAmerica Corporation
C.A. Design
Suminoe Textile
California
of America
Corporation

Suzhou Suminoe Textiles Co., Ltd.
SuzhouSuzhou Suminoe Koide
Automotive Accessories Co., Ltd.
SuzhouSuminoe Teijin Techno
Krishna India Pvt. Ltd.
Haryana

Suminoe Textile Co., Ltd.
SPM Automotive Textile Co., Ltd.

Guangzhou

Suminoe Textile Vietnam Co., Ltd.

T.C.H. Suminoe Co., Ltd.

Bondtex, Inc.
South Carolina

Suminoe Textile deMexico, S.A. de C.V.

Ha NamAyudhayaSouth Carolina

Guanajuato

Suminoe Koide (Thailand) Co., Ltd.
Chiang Mai

Suminoe Textile Co., Ltd. acquired JIS Q 9100 certiﬁcation for its aircraft carpet
business.
The Company is intensifying its quality improvement efforts, so as to satisfy theneeds of customers not only in Japan but also in overseas countries, by offering
more reliable products.

Applied Standard

Certiﬁed Organization	Osaka First Sales Department, Functional Materials Business Division andQuality Assurance Department, Suminoe Textile Co., Ltd.

PT. Suminoe Surya Techno
Bandung

PT. Sinar Suminoe Indonesia

Bandung

JIS Q 9100:2016

Controlling Address	11-20, Minami-Semba 3-Chome, Chuo-ku, Osaka 542-8504 Japan, Head
Offce of Suminoe Textile Co., Ltd.

Scope of Certiﬁcation	Design, development, contract manufacturing, and sales of carpets for aircraftinteriors

The Suminoe Textile Group has accelerated its overseas expansion, mainly into Asia and North and Central
America, since 1994 when it established an overseas subsidiary in Thailand.
In August 2019, Suminoe Textile Co., Ltd. established a new company in Vietnam, which produces and sells
electric carpets and blankets, and other textiles-based heating products. Electric carpets, which are among theSuminoe Textile Group’s key products in its functional materials business, have been produced in the existing
manufacturing site in Suzhou, China. We have commenced operations of the new company in Vietnam, tostrengthen the production and supply system of these products.
The Suminoe Textile Group is now operating its business in 14 sales and production sites, including the newcompany, in seven countries. Each site has been active in recruiting local employees, thereby striving to help
create jobs in the region. In the future, we will continue to expand operations overseas, aiming at creating a
globally optimized supply system.
Summary of new company in Vietnam

7

Name

Suminoe Textile Vietnam Co., Ltd.

OfficeDong Van III Industrial Zone, Hoang Dong Commune, Duy Tien District, Ha Nam
Province, Vietnam

Established

August 2019

Capital$1,900,000-

Investment Ratio

Suminoe Textile Co., Ltd. 100%

Business Description

Producing and selling electric carpets and blankets, and other textiles-basedheating products

Suminoe Textile Co., Ltd. Annual Report 2019

Merits of obtaining the certiﬁcation●Raising the level of quality
To be certiﬁed, organizations work to raise the level of quality by formulating operation processes in line with
the international quality management system standard and conducting continuous improvement activities.
●Earning customer trust
Organizations strive to improve customer satisfaction though high-quality and stable manufacturing. Also, thecertiﬁcation can help lighten the workload of these organizations’ clients in conducting supplier audits.
●Expansion from Japan to overseas
Information on the registered certiﬁcation is shared through an international database. This increases theappeal of certiﬁed organizations to overseas customer bases, thereby expanding opportunities for receipt oforders.

What is JIS Q 9100?
JIS Q 9100 is an international quality management system standard, which includes the requirements for ISO 9001 plus additional
requirements speciﬁc to the aerospace industry. JIS Q 9100 is technically equivalent to the AS 9100 standard used in the United States andthe EN 9100 standard in Europe, allowing mutual certiﬁcation with these American and European standards. With increasing demand forhigher quality in the aerospace industry, parts suppliers are becoming required to obtain JIS Q 9100 certiﬁcation.

Suminoe Textile Co., Ltd. Annual Report 20198

Suminoe at a Glance
Net Sales

Operating Income(Millions of Yen)
40,000I nterior
F ittings(Millions of Yen)
300
34,33034.8%

200Roll Carpets

Carpet Tiles

Rugs and Mats

Curtains

Wallpaper

Plush Hand-woven
Curtains

Hand-woven Carpet
and Hooked Rugs

Nishijin Brocade
Fabric20,000100

10,00033

P 11

A utomotive
Textiles andTraffic
Facilities

263

34,28230,000Suminoe at a Glance

Suminoe at a GlanceContribution to Total Net Sales

0

Contribution to Total Net Sales

2018

2019

Net Sales

0

2018

2019

Operating Income

Automotive Textiles

Traffic Facilities

Door trim

60,00059,75860,3043,331

30,0002018

2019

Net Sales

3.9%

Bus

0

Wheel
house
2018

2019

Ship

AircraftEngine cover
Car mat(Millions of Yen)
300

5,000
4,000

Train

Operating Income(Millions of Yen)

Functional
M aterials

Sun visor

Floor carpet

1,000

10,000Contribution to Total Net Sales

Luggagecompartment

2,000

20,000

P 13

Seat covering
Seat back

3,000

40,000

0

4,018

4,000

50,00061.2%

Ceiling material(Millions of Yen)
5,000

(Millions of Yen)
70,000

3,647

3,887
200

3,000
2,000

177

186

Electric Carpets

Tispa Deodorization
Related Brand

Air-filter Products

100

1,000

P 15

9

Suminoe Textile Co., Ltd. Annual Report 2019

0

2018

2019

0

SUMITRON®

2018

2019

Continuous Fiber
Made from Recycled
PET bottles

OH TILE Olefin
Flooring Material

Floor Material
for Bathrooms

Kakidanomi

Persimmon Polyphenol
Supplements

Suminoe Textile Co., Ltd. Annual Report 201910

Interior Fittings

Roll Carpets

RUNON CO., LTD.

Carpet Tiles

Suminoe Textile Co., Ltd.

Kyoto Traditional Art and Craft Factory

Wallpaper

Suminoe at a Glance

Suminoe at a Glance

SUMINOE Co., Ltd.

Nishijin Brocade FabricTango Textile Co., Ltd.

Rugs and Mats

Curtains

Plush Hand-woven Curtains

Hand-woven Carpet
and Hooked Rugs

At the Vanguard of Lifestyle Creation
Ever since 1891, when its carpets were

production of eco-friendly products, under the

supplied to the Imperial Diet Building on thetheme of KKR+A, or Kenko (Health), Kankyo

occasion of its opening, the Suminoe Textile(Environment), Recycle and Amenity.

Group has created comfortable and safe living
spaces as a pioneer in the Japanese interiors
Environmentally Friendly Product at theand our wallpaper and paper for sliding doors

World’s Highest Level

by RUNON CO., LTD. The Suminoe Textile

ECOS® is a series of recycled carpet tiles produced

design and functionality, and serving diverse
customers by offering a wide variety of interior
products for public facilities, hotels, schools,
hospitals, and office buildings, as well as forgeneral households.
In recent years, we have worked on the11

Suminoe Textile Co., Ltd. Annual Report 2019launched in July 2018, outperformed sales ofroll carpets trended briskly attributable to newsales underperformed the previous year owing tooutperformed a year earlier. Sales of hook andcommercial and other facilities, owing to inboundare primarily marketed by SUMINOE Co., Ltd.

friendly products that feature both excellent

In the commercial-use carpets business, sales

construction and renewal projects for hotels,industry. Currently, our curtains and carpets

Group is committed to providing environmentally

Business Overview for the Fiscal Year ended May 31, 2019using horizontal recycling
technology. ECOS® hasachieved a post-consumption
recycled material usage rateof 84%.
Through our proprietary
recycling system, recycledmaterials are created fromold carpet tiles.

tourist demand. While exports of ECOS®,

eco-friendly carpet tiles under the horizontal

recycling system, faltered, its sales in Japan

were flat year-on-year owing in part to large-

scale projects. Sales of carpets, rugs and matsfor general households undershot performancein the previous year reflecting a sluggish market
environment. In the curtain business, sales ofFace, contract curtains for medical, welfare, andeducational institutions, trended briskly thanks toorders for large-scale projects. Sales of U Life®

Vol. 9, curtains for general households which was

the same series a year earlier. However, curtain
sluggish demand for mode S® Vol. 8 and otherproducts. Sales of wall coverings and materials
were on a par with the previous year reflecting

mixed performance. Although sales faltered formass-produced wall coverings, Runon Mark II

Vol. 23, which were rolled out in February 2019,

sales were brisk for wall coverings used in home

improvements, Runon Home and fusuma (sliding
doors) paper, Runon Rin.

Consequently, the Interior Fittings Segment
posted operating income of ¥263 million(U.S.$2,413 thousand, up 691.6% year-on-year)
on net sales of ¥34,282 million (U.S.$314,514
thousand, down 0.1%).

Suminoe Textile Co., Ltd. Annual Report 201912

Automotive Textiles and Traffic Facilities
Suminoe at a Glance

Suminoe at a Glance

Confidence Based on Our Experience as a Pioneer
In 1896, we succeeded in producing hand-woven moquette as a seat covering for the first time in Japan.
This domestic moquette was adopted by Japan National Railways (now JR) for its seat coverings in 1899.
Since then, we have supplied our products to JR, private railways and publicly operated transportation
services, maintaining the top market share for more than a century. Currently, Suminoe Textile offers total
proposals for seat coverings, curtains, wall materials, flooring materials and other interior materials for
public transportation systems, such as Shinkansen bullet
trains and other trains, buses, ships, and aircraft. We
also deliver environmentally friendly products, including
SUMICUBE® seat cushion material, which excels interms of both safety andenvironmental performance.

Our Expertise in Proposing Optimal Solutions as a Total SupplierIn 1931, Suminoe Textile supplied carpets

six countries (the United States, Mexico, China,

and seat covering materials for automobiles

Thailand, Indonesia, and India), aiming at theassembled and manufactured in Japan for

creation of a globally optimized supply system.

Ford Motor Company and General Motors.
After World War II, the production of domestic

another.
At present, Suminoe Textile supplies its products
to all Japanese automobile manufacturers.

Seat covering
Seat backLuggagecompartment

Sun visor

Suminoe Textile Co., Ltd. Annual Report 2019

year-on-year owing to brisk orders for new fabricmixtures in Mexico. Accordingly, overseas, sales
and operating income increased versus a year

down in the benefits from orders the Company
received for interior fittings for new car models

covering materials, car mats, and floor carpets.

13

orders from Japan Railways (JR) Group andunderperformed the previous year due to a windfrom floors to ceilings, including headliners, seatsetting up 12 manufacturing and sales sites in

the previous year. Overseas, sales in China

both sales and operating income grew fromearlier. In Japan, sales and operating income

can supply a total line of automotive textiles,

has now expanded its overseas presence byincome dropped. In the railway vehicle-related

as well. Operating income in the Americas rose

Ceiling material

The greatest feature of our Company is that we

Outside Japan, the Suminoe Textile GroupIn the automotive textiles business as a whole,automakers in China and were solid in Thailand

Door trim

Wheel
house

Floor carpet

and negative impact from a substantial increase

Engine coverIn the traffic facilities business as a whole,

Car matCentral Japan Railway Company, West Japan Railway
Company : Sinkansen N700 series

Business Overview for the Fiscal Year ended May 31, 2019benefited from an expansion in sales at Japanese

automobiles increased, with our products
adopted in these Japanese-made cars one after

SUMICUBE®
Seat Cusion Material
East Japan Railway Company: E235 series

in raw material and distribution costs.

although sales increased year-on-year, operating

business, sales remained strong reflecting

private railway companies for new vehicle andremodeling products. In addition, it also reflects
brisk sales of non-textile products. Bus-related
sales decreased from the previous year. Thisis due to a continued delay in recovery of thedemand for large buses since the previous fiscal
year, and weak demand for new bus production
and remodeling. Meanwhile, airplane-related
sales remained flat from the previous year.

Consequently, the Automotive Textiles and Traffic
Facilities Segment posted operating income of¥4,018 million (U.S.$36,862 thousand, up 20.6%
year-on-year) on net sales of ¥60,304 million(U.S.$553,248 thousand, up 0.9%).

Suminoe Textile Co., Ltd. Annual Report 201914

Functional Materials
Suminoe at a Glance

In Pursuit of Endless Business Possibilities
Transcending the boundaries of our traditional business segments, such as interior fittings and automotive
textiles and traffic facilities, we have embarked on business targeting other fields and industries. Suminoe

Textile has offered products that incorporate the unique technologies we have accumulated, such as TRIPLE

FRESH® deodorizing filters and olefin bathroom flooring. In addition, the Company offers new value in the fieldof functional materials (SUMINOE BIOTECH®) based on biotechnology, in keeping with the theme of KKR+A, or
Kenko (Health), Kankyo (Environment), Recycle and Amenity.
Tispa Deodorization Related Brand
The Tispa Series, Real
Odor Deodorization without
Disguising with a Scent, isstationary deodorizers forhome use, making use of adeodorant filter.

SUMITRON®

Electric Carpet

Continuous fiber
made from recycled
PET bottles

The main unit is produced
by Suzhou Suminoe Textiles
Co., Ltd.

Air-filter
Products
TRIPLE FRESH® Bio is a concept of deodorizing filter where abiomimetic enzyme is invested in to a corrugate carrier. It continuously
decomposes and deodorizes unpleasant odor components byoxidation-reduction reaction. This technology is incorporated into
deodorizing filters used in air purifiers and other household appliances.

Floor Material for
Bathrooms
We have developed bath flooringmade of eco-friendly olefinmaterials.

SUMINOE BIOTECH®

Financial Section

2019

Functional materials based on biotechnology,
and foods,
processed foods,
cosmetics, etc.,
making effective
use of thesematerials.

Year ended May 31, 2019

Business Overview for the Fiscal Year ended May 31, 2019
In the deodorization and filter-related business,of floor materials for bathrooms was down, andon-year owing to the acquisition of new orders

to weak demand for mats for school children,

both sales and operating income grew year-

and brisk sales of deodorizing filters for heating

equipment. In the electric carpet business, sales

and operating income grew from the previous year
thanks to an increase in the number of orders.

Sales and operating income of building and civilengineering materials and KEAT® (Suminoe

Tapered Filament) also expanded versus a year

earlier thanks to steady sales. Meanwhile, sales

sales and operating income was down due

Sumitron®, polyester filament for dust mats, andaircraft carpets.

Consequently, the Functional Materials Segment
posted operating income of ¥186 million(U.S.$1,706 thousand, up 5.5% year-on-year) on

net sales of ¥3,887 million (U.S.$35,661 thousand,up 6.6%).

Contents
P17 Consolidated Balance Sheet
P19 Consolidated Statement of Income
P20 Consolidated Statement of Comprehensive Income
P21 Consolidated Statement of Changes in Equity
P22 Consolidated Statement of Cash FlowsP23 Notes to Consolidated Financial Statements
P38 INDEPENDENT AUDITOR'S REPORTP39 Corporate Data

15

Suminoe Textile Co., Ltd. Annual Report 2019

Consolidated Balance Sheet

Suminoe Textile Co., Ltd. and its Subsidiaries
May 31, 2019

Thousands of U.S.
Dollars（Note 1）

ASSETS20192018¥ 7,754¥ 9,411

LIABILITIES AND EQUITY

2019

CURRENT ASSETS:
Cash and cash equivalents（Note 13）$ 71,138

Short-term bank loans（Notes 5 and 13）

9

8

83

126

120

1,156

Trade notes（Note 13）

3,637

3,776

Electronically recorded monetary claims（Note 13）

5,674

5,607

14,544

13,674133,431

166

125

1,523

Other

1,309

1,454

12,009Accrued expenses

Allowance for doubtful receivables

（30）

（17）

（275）

Provision for loss on litigation

Income taxes receivable

Inventories（Note 4）
Other
Total current assets

Current portion of long-term debt（Notes 5 and 13）

4,425

40,596

11,664

11,391

107,00915,666

16,634

143,725

1,784

1,978

16,36650,63952,770464,578

Construction and other
Income taxes payable

Bonds payable（Notes 5 and 13）

1,500

500

13,761Long-term debt（Notes 5 and 13）

7,954

6,017

72,972

Liability for retirement benefits（Note 6）

4,303

4,066

39,477

95

382

872

Deferred tax liabilities（Note 9）

175,633

2,699

23,431

Deferred tax liabilities related to land revaluation excess

Lease assets

1,883

2,174

17,275

Other

122

181

1,120

58,906

61,724

540,422（32,545）（34,585）（298,578）

26,361

27,139241,844

4,413

Deferred tax assets（Note 9）

1,588

1,137

14,569Intangibles

1,422

1,085

13,046

Other

1,184

1,216

10,862

（150）

（149）

（1,367）

10,976

12,274

100,697

Total long-term liabilities¥92,183$807,11917

Suminoe Textile Co., Ltd. Annual Report 2019

549

5,083

3,761

34,505

758

494

6,954

18,925

15,769173,624

9,554

9,554

87,651EQUITY（Notes 5, 8 and 17）:
Common stock – authorized, 30,000,000 shares; issued, 7,682,162
shares in 2019 and 2018*
Capital surplus

2,652

2,652

24,330Retained earnings

10,778

10,82398,881

Treasury stock – at cost; 837,557 shares and 139,368 shares in2019 and 2018, respectively*（2,424）（365）（22,239）

1,914

3,155

17,560

Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Deferred（loss）gain on derivatives under hedge accounting
Land revaluation excess
Foreign currency translation adjustments
Defined retirement benefit plan

（6）
7,797

12
7,797

（55）
71,532

602

601

5,523

（278）

（171）

（2,550）30,58934,058

280,633

Noncontrolling interests

4,682

4,484

42,954

Total equity

35,271

38,542

323,587¥87,976¥92,183$807,119* Shares have been restated, as appropriate, to reflect a ten-to-one share consolidation effected on December 1, 2017.
See notes to consolidated financial statements.

554
3,761

COMMITMENTS AND CONTINGENT LIABILITIES（Notes 10, 14 and 16）

Total¥87,976

21,266473

LONG-TERM LIABILITIES:

21,464

611

2,372

3,175

2,554

481

2,318

309,908

19,144

59,183

4,211

195

Furniture and fixtures

8,374

7,220

550

37,872

Machinery and equipment

6,451

810

346

Total current liabilities

161,385

INVESTMENTS AND OTHER ASSETS:

787
459

33,780

Other（Note 9）

17,605TOTAL

32,376

Trade accounts（Note 13）

17,591

Total investments and other assets

17,90852,055

Buildings and structures

Allowance for doubtful accounts

1,873

33,367Retirement allowances for retirement benefits for directors and Audit &Supervisory Board members

Investments in associated companies（Note 13）

1,952

3,181

161,578

Investment securities（Notes 3, 5 and 13）$ 76,147

4,784

17,601

Net property, plant and equipment¥12,243

3,529

17,612

Total¥ 8,300

Payables:Land

Accumulated depreciation

2019

Trade notes（Note 13）

PROPERTY, PLANT AND EQUIPMENT（Note 5）:Construction in progress

2018

Electronically recorded obligations（Note 13）

Receivables:

Trade accounts（Note 13）

2019

CURRENT LIABILITIES:Marketable securities（Notes 3 and 13）
Short-term investments（Note 13）

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

Financial Section 2019

Financial Section 2019

Millions of Yen

TOTALSuminoe Textile Co., Ltd. Annual Report 201918

Consolidated Statement of Income

Suminoe Textile Co., Ltd. and its Subsidiaries
Year Ended May 31, 2019

Thousands of U.S.
Dollars（Note 1）

2019

2018

2019

NET SALES¥98,617¥97,873$904,743

COST OF SALES

78,347

78,634

718,780

Gross profit

20,27019,239185,963

17,152

16,991

157,357

3,118

2,248

28,606

Operating income

Interest and dividend income

197

186

1,807

Rental income

252

233

2,312

Equity in（losses）earnings of associated companies

（31）

37

（284）

（Loss）gain on sales of investment securities

（151）

668

（1,385）Interest expense

（316）

（275）

（2,899）

Sales discounts

（51）

（51）

（467）

Rental expense

（32）

（32）

（294）

Environmental expenses

（57）

（11）

（523）

Loss on sales and disposals of property, plant and equipment

（21）

（5）

（193）

Write-down of investment securities

（44）
（527）

（21）

（4,835）

（39）

（493）

（358）

Other - net

（86）

23

（789）

（906）

259

（8,312）

2,212

2,507

20,294Current

983

1,058

9,019

Deferred

（50）

（441）

（459）

933

617

8,560

1,279

1,890

11,734

812

806

7,450

¥   467¥ 1,084$   4,284

Other income（expenses）– net
Income before income taxes

NET INCOME

2019

2018

¥1,279¥1,8902019$11,734

OTHER COMPREHENSIVE INCOME（LOSS）（Note 15）:
Unrealized（loss）gain on available-for-sale securities（1,241）

Deferred（loss）on derivatives under hedge accounting

（3）

（3）

（28）

Foreign currency translation adjustments

（3）

98

（28）

Remeasurements of defined benefit plans

（107）

28

（982）

（15）

24

（137）

（1,369）266（12,560）¥  （90）¥2,156$  （826）

Owners of the parent¥ （898）¥1,303$（8,239）

Noncontrolling interests

808

Total other comprehensive (loss) income

COMPREHENSIVE（LOSS）INCOME

119（11,385）

TOTAL COMPREHENSIVE INCOME（LOSS）ATTRIBUTABLE TO:
853

7,413

See notes to consolidated financial statements.

（404）

Increase in provision for loss on litigation

Impairment loss for long-lived assets（Note 12）

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

Share of other comprehensive（loss）gain in associates

OTHER INCOME（EXPENSES）:

Suminoe Textile Co., Ltd. and its Subsidiaries
Year Ended May 31, 2019

Financial Section 2019

Financial Section 2019

Millions of Yen

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES（Note 11）

Consolidated Statement of Comprehensive Income

INCOME TAXES（Note 9）:

Total income taxes

NET INCOME
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

Yen

U.S. Dollars

PER SHARE OF COMMON STOCK（Note 2.r）:Basic net income*Cash dividends applicable to the year**¥65.36¥143.66

$0.60

70.00

38.50

0.64

* Basic net income has been restated, as appropriate, to reflect a ten-to-one share consolidation effected on December 1, 2017.
** Cash dividends applicable to the year have not been restated as a result of the ten-to-one share consolidation effected on December 1, 2017.
See notes to consolidated financial statements.

19

Suminoe Textile Co., Ltd. Annual Report 2019

Suminoe Textile Co., Ltd. Annual Report 201920

Consolidated Statement of Changes in Equity
Financial Section 2019

Common Stock

Capital Surplus

Retained Earnings

Treasury Stock

75,437,010¥9,554¥2,652¥10,267
1,084
（528）

¥  
（362）

Cash dividends, ¥38.50 per share*
Consolidation of shares（3,485）（67,890,731）（3）

Net change in the year

BALANCE, MAY 31, 2018

7,542,794

9,554

2,652

10,823467（512）

Net income attributable to owners of the parent
Cash dividends, ¥70.00 per share*
Purchase of treasury stock（698,189）（365）（2,059）Net change in the year

BALANCE, May 31, 2019

6,844,605¥9,554¥2,652¥10,778¥（2,424）

Millions of Yen
Accumulated Other Comprehensive Income
Unrealized Gain（Loss）on Deferred Gain（Loss）on Derivatives Land Revaluation
Available-for-Sale Securities
under Hedge Accounting
ExcessBALANCE, JUNE 1, 2017

Foreign Currency
Translation Adjustments

Total

Defined Retirement
Benefit Plan

Noncontrolling
Interests

Total Equity¥3,036¥（10）¥7,797¥550¥（199）¥33,285
1,084
（528）
（3）

¥4,114¥37,399
1,084
（528）
（3）

119
3,155

22
12

7,797

51
601

28
（171）

370
4,484

（1,241）¥1,914（18）¥ （6）¥7,7971¥  602（107）¥（278）

220
34,058467（512）（2,059）（1,365）¥30,589590
38,542467（512）（2,059）（1,167）¥35,271

Net income attributable to owners of the parent
Cash dividends, ¥38.50 per share*
Purchase of treasury stock
Consolidation of shares
Net change in the year

BALANCE, MAY 31, 2018
Net income attributable to owners of the parent
Cash dividends, ¥70.00 per share*
Purchase of treasury stock
Net change in the year

BALANCE, May 31, 2019

198
¥4,682

Common Stock

Capital Surplus

Retained Earnings$87,651$24,330$99,294
4,284（4,697）

Net income attributable to owners of the parent
Cash dividends, $0.64 per share*

Treasury Stock$ （3,349）（18,890）

Purchase of treasury stock
Net change in the year

BALANCE, May 31, 2019$87,651$24,330$98,881$（22,239）

OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes – paid
Income taxes – refunded
Depreciation and amortization
Impairment loss for long-lived assets
Provision for doubtful receivables and accounts
Increase in provision for loss on litigation
Loss on sales and disposals of property, plant and equipment
Gain on sales of investment securities
Equity in losses（earnings）of associated companies
Payment for loss on litigation
Changes in assets and liabilities:
Increase in notes and accounts receivable – trade
Decrease（increase）in inventories
Increase in notes and accounts payable – trade（Decrease）increase in liability for retirement benefits（Increase）decrease in consumption tax receivable（Decrease）increase in consumption tax payable
Decrease in other current assets
Increase（decrease）in other current liabilities
Other - net
Total adjustments
Net cash provided by operating activities
Proceeds from sales of property, plant and equipment
Purchases of property, plant and equipment
Purchase of intangible assets
Proceeds from sales and redemption of securities
Purchases of marketable and investment securities
Proceeds from acquisition of subsidiaries
Other - net
Net cash used in investing activities

FINANCING ACTIVITIES:
Thousands of U.S. Dollars（Note 1）
Accumulated Other Comprehensive Income
Unrealized Gain（Loss）on Deferred Gain（Loss）on Derivatives Land Revaluation
Available-for-Sale Securities
under Hedge Accounting
ExcessBALANCE, MAY 31, 2018$28,945$  110$71,532

Foreign Currency
Translation Adjustments

Defined Retirement
Benefit Plan

$5,514

Net income attributable to owners of the parent
Cash dividends, $0.64 per share*
Purchase of treasury stock
Net change in the year

BALANCE, May 31, 2019（11,385）$17,560（165）$ （55）$71,532

9$5,523* Per share figures have not been restated as a result of the ten-to-one share consolidation effected on December 1, 2017.
See notes to consolidated financial statements.

Total

Noncontrolling
Interests

Total Equity$（1,568） $312,459 $41,137 $353,596
4,284
4,284
（4,697）（4,697）（18,890）（18,890）（982） （12,523）
1,817 （10,706）$（2,550） $280,633 $42,954 $323,587

Thousands of U.S.
Dollars（Note 1）

Millions of Yen

INVESTING ACTIVITIES:

Thousands of U.S. Dollars（Note 1）

BALANCE, MAY 31, 2018

Suminoe Textile Co., Ltd. and its Subsidiaries
Year Ended May 31, 2019

Millions of Yen

Number of Shares ofCommon Stock Outstanding

Net income attributable to owners of the parent
Purchase of treasury stock

Consolidated Statement of Cash FlowsNet change in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Purchase of treasury stock
Proceeds from issuance of bonds payable
Dividends paid
Dividends paid to noncontrolling interests
Other - net
Net cash provided by and used in financing activities

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
NET（DECREASE）INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR

2019

2018

2019

¥  2,212¥  2,507$ 20,594（1,284）
97
1,769
527
14
39
21
151
31
（533）

（1,074）
428
1,726
21
（2）
493
5
（668）
（37）

（11,780）890
16,229
4,835
128
358
193
1,385
284
（4,890）

（769）
1,077
253
（205）
（5）
（57）
343
623
457
2,549
4,761

（458）
（225）
80
104
264
222
104
（344）
374
1,013
3,520

（7,055）9,881
2,321（1,881）
（46）
（523）
3,147
5,716
4,193
23,38543,67929（1,105）
（512）
543
（397）

9
（951）
（221）
4,437
（3,534）
17
（2）
（245）

266
（10,138）（4,697）
4,982（3,642）1,302
700（1,815）（3）（38,486）
33,945（20,587）（18,890）
8,844（4,697）（5,688）（7）（1,449）（4,195）3,700（2,244）（2,059）
964
（512）
（620）
（4,966）

（528）
（555）
55
（844）

Financial Section 2019

BALANCE, JUNE 1, 2017

Suminoe Textile Co., Ltd. and its Subsidiaries
Year Ended May 31, 2019（64）
（13,293）（45,559）

（3）

50

（28）

（1,657）9,411¥  7,754

2,481
6,930
¥  9,411（15,201）
86,339$ 71,138

See notes to consolidated financial statements.

21

Suminoe Textile Co., Ltd. Annual Report 2019

Suminoe Textile Co., Ltd. Annual Report 201922

Notes to Consolidated Financial Statements
Financial Section 2019

The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its
related accounting regulations and in 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.
In preparing the consolidated financial statements, certain
reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order topresent them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in
the 2018 consolidated financial statements to conform to theclassifications used in 2019.
The consolidated financial statements are stated in Japaneseyen, the currency of the country in which Suminoe Textile Co., Ltd.
(the "Company") is incorporated and operates. The translationsof Japanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and havebeen made at the rate of ¥109 to $1, the approximate rate ofexchange at May 31, 2019. Such translations should not be
construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
a.Consolidation - The accompanying consolidated financial
statements as of May 31, 2019 include the accounts of theCompany and all subsidiaries (collectively, the "Group").
Under the control and influence concepts, those companies inwhich the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated.
Investments in two associated companies (three associatedcompanies in 2018) are accounted for using the equity method.
The excess of the cost of acquisition over the fair value of the
net assets of an acquired subsidiary at the date of acquisition isamortized over a period not exceeding 20 years.
All significant intercompany balances and transactions havebeen eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Groupis also eliminated.
b.Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements- Under Accounting Standards Board of Japan ("ASBJ")
Practical Issues Task Force ("PITF") No. 18, "Practical Solution
on Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements,"
the accounting policies and procedures applied to a parent

23

Suminoe Textile Co., Ltd. Annual Report 2019

company and its subsidiaries for similar transactions and events
under similar circumstances should in principle be unified
for the preparation of the consolidated financial statements.
However, financial statements prepared by foreign subsidiaries
in accordance with either International Financial ReportingStandards or the generally accepted accounting principles in
the United States of America (Financial Accounting Standards
Board Accounting Standards Codification) tentatively may be
used for the consolidation process, except for the following
items which should be adjusted in the consolidation process sothat net income is accounted for in accordance with Japanese
GAAP, unless they are not material:(a) amortization of goodwill; (b) scheduled amortization of
actuarial gain or loss of pensions that has been directly
recorded in equity through other comprehensive income; (c)expensing capitalized development costs of research anddevelopment (R&D); and (d) cancellation of the fair value modelof accounting for property, plant and equipment and investment
properties and incorporation of cost model of accounting.
c.Unification of Accounting Policies Applied to Foreign
Associated Companies for the Equity Method - ASBJ
Statement No. 16, "Accounting Standard for Equity Methodof Accounting for Investments," requires adjustments to bemade to conform the associates' accounting policies for similartransactions and events under similar circumstances to those of
the parent company when the associate's financial statements
are used in applying the equity method, unless it is impracticable
to determine such adjustments. In addition, financial statements
prepared by foreign associated companies in accordance witheither International Financial Reporting Standards or the GAAPin the United States of America tentatively may be used inapplying the equity method if the following items are adjusted sothat net income is accounted for in accordance with Japanese
GAAP, unless they are not material:(a) amortization of goodwill; (b) scheduled amortization of
actuarial gain or loss of pensions that has been recorded inequity through other comprehensive income; (c) expensing
capitalized development costs of R&D; and (d) cancellationof the fair value model of accounting for property, plant andequipment and investment properties and incorporation of thecost model of accounting.
d.Business Combinations - Business combinations areaccounted for using the purchase method. Acquisitionrelated costs, such as advisory fees or professional fees, areaccounted for as expenses in the periods in which the costs
are incurred. If the initial accounting for a business combination
is incomplete by the end of the reporting period in which thebusiness combination occurs, an acquirer shall report in its
financial statements provisional amounts for the items forwhich the accounting is incomplete. During the measurement
period, which shall not exceed one year from the acquisition,
the acquirer shall retrospectively adjust the provisional amounts

recognized at the acquisition date to reflect new information
obtained about facts and circumstances that existed as of theacquisition date and that would have affected the measurementof the amounts recognized as of that date. Such adjustments
shall be recognized as if the accounting for the businesscombination had been completed at the acquisition date. The
acquirer recognizes any bargain purchase gain in profit orloss immediately on the acquisition date after reassessing andconfirming that all of the assets acquired and all of the liabilities
assumed have been identified after a review of the procedures
used in the purchase price allocation. A parent's ownershipinterest in a subsidiary might change if the parent purchases orsells ownership interests in its subsidiary. The carrying amountof noncontrolling interest is adjusted to reflect the change in theparent's ownership interest in its subsidiary while the parent
retains its controlling interest in its subsidiary. Any difference
between the fair value of the consideration received or paid andthe amount by which the noncontrolling interest is adjusted isaccounted for as capital surplus as long as the parent retains
control over its subsidiary.
e.Cash Equivalents - Cash equivalents are short-term
investments that are readily convertible into cash and exposed
to insignificant risk of changes in value. Cash equivalents
include time deposits which mature within three months of thedate of acquisition.
f.Inventories - Inventories are stated at the lower of cost,
determined by the average cost method for finished products,
purchased merchandise and work in process, and by themoving-average method for raw materials and supplies, or net
selling value.
g.Marketable and Investment Securities - Marketable
and investment securities are classified and accounted
for, depending on management's intent, as available-forsale securities, which are not classified as either of theaforementioned securities, and are reported at fair value, withunrealized gains and losses, net of applicable taxes, reported
as a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost
determined by the moving-average method. For other-thantemporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
h.Property, Plant and Equipment - Property, plant andequipment, except land, are stated at cost. Depreciation iscomputed over the estimated useful lives of the assets by the
declining-balance method, while the straight-line method isapplied to buildings acquired after April 1, 1998, and building
improvements and structures acquired on or after April 1, 2016.
The range of estimated useful lives is principally from 3 to 50
years for buildings and structures and from 4 to 17 years formachinery and equipment. The useful lives for lease assets are

the terms of the respective leases.
Under the "Law of Land Revaluation," promulgated and revisedon March 31, 1998 and 1999, respectively, the Company
elected a one-time revaluation of its own-use land to avalue based on real estate appraisal information as of May
31, 2000. The resulting land revaluation excess represents
unrealized appreciation of land and is stated, net of income
taxes, as a component of equity. There was no effect on
the consolidated statement of income from this revaluation.
Continuous readjustment is not permitted, unless the land value
subsequently declines significantly such that the amount of thedecline in value should be removed from the land revaluation
excess account and related deferred tax liabilities.
As of May 31, 2019, the carrying amount of the land after theabove one-time revaluation exceeded the market value by¥2,558 million ($23,468 thousand).

Financial Section 2019

1. BASIS OF PRESENTATION OF CONSOLIDATEDFINANCIAL STATEMENTS

Suminoe Textile Co., Ltd. and its Subsidiaries
Year Ended May 31, 2019i.Long-Lived Assets - The Group reviews its long-lived assets
for impairment whenever events or changes in circumstancesindicate the carrying amount of an asset or asset group may not
be recoverable.
An impairment loss would be recognized if the carrying amountof an asset or asset group exceeds the sum of the undiscounted
future cash flows expected to result from the continued use andeventual disposition of the asset or asset group. The impairment
loss would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued use
and eventual disposition of the asset or the net selling price at
disposition.
j.Retirement Benefits - The Company and certain subsidiaries
have both lump-sum severance payments and defined
contribution pension plans for employees' retirement benefits.
The Company accounts for the liability for retirement benefits
based on the projected benefit obligations at the balance sheet
date. The projected benefit obligations are attributed to periods
on a straight-line basis. Actuarial gains and losses and past
service costs that are yet to be recognized in profit or loss arerecognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and are recognizedin profit or loss over 10 years, no longer than the expected
average remaining service period of the employees.
The Company provides for the liability for directors and Audit
and Supervisory Board members' retirement benefits at theamounts that would be required to be paid if all directors
and Audit and Supervisory Board members retired at theconsolidated balance sheet date. Amounts payable to directors
and Audit and Supervisory Board members upon retirement areleft to the approval of the Board of Directors.
k.R&D Costs - R&D costs are charged to income as incurred.

Suminoe Textile Co., Ltd. Annual Report 201924

Financial Section 2019

m.Construction Contracts - Construction revenue andconstruction costs are recognized by the percentage-ofcompletion method if the outcome of a construction contract
can be estimated reliably. When total construction revenue, total
construction costs and the stage of completion of the contract at
the consolidated balance sheet date can be reliably measured,
the outcome of the construction contract is deemed to be
estimated reliably. If the outcome of a construction contract
cannot be reliably estimated, the completed-contract methodshould be applied. When it is probable that the total construction
costs will exceed total construction revenue, an estimated loss
on the contract should be immediately recognized by providing
for a loss on such construction contracts.
n.Income Taxes - The provision for current income taxes
is computed based on the pretax income included in the
consolidated statement of income. The asset and liability
approach is used to recognize deferred tax assets and liabilities
for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred taxes are measured by applying
currently enacted income tax rates to the temporary differences.
On February 16, 2018, ASBJ issued ASBJ Statement No. 28,"Partial Amendments to Accounting Standard for Tax EffectAccounting," which requires deferred tax assets and deferred
tax liabilities to be classified as investments and other assets
and long-term liabilities, respectively. Deferred tax assets
were previously classified as current assets and investments
and other assets, and deferred tax liabilities were previouslyclassified as current liabilities and long-term liabilities under
the previous accounting standard. The revised accounting
standard is effective for annual periods beginning on or afterJune 1, 2018. The Company retrospectively applied the revised
accounting standard effective April 1, 2018, and deferred
tax assets of ¥622 million and deferred tax liabilities of ¥0
million which were previously classified as current assets
and current liabilities, respectively, as of May 31, 2018, havebeen reclassified as investments and other assets and longterm liabilities, respectively, in the accompanying consolidatedbalance sheet.
Also, by adopting the ASBJ Statement No. 28, the method
to treat taxable temporary difference pertaining to stock ofsubsidiaries is changed to a method where deferred tax
liabilities are not recognized because the Company has
not made a decision on or has no plan for selling stock ofsubsidiaries within the foreseeable future. The effect of thischange is immaterial, therefore, the amount due to the effect isrecognized under "Deferred income taxes" in the consolidated
fiscal year ended May 31, 2019.

25

Suminoe Textile Co., Ltd. Annual Report 2019o.Foreign Currency Transactions - All short-term and long-termmonetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange
rates at the consolidated balance sheet date. The foreignexchange gains and losses from translation are recognized in
the consolidated statement of income to the extent that they are
not hedged by forward exchange contracts.
p.Foreign Currency Financial Statements - The balance sheet
accounts of foreign subsidiaries and associated companies aretranslated into Japanese yen at the current exchange rates asof the balance sheet date, except for equity, which is translated
at historical rates. Revenue and expense accounts of theforeign subsidiaries and associated companies are translated
into Japanese yen at the average exchange rates for the fiscal
year.
Differences arising from such translation are shown as "Foreign
currency translation adjustments" under accumulated othercomprehensive income in a separate component of equity.
q.Derivatives and Hedging Activities - The Group uses foreignexchange forward contracts and interest rate swaps to manage
its exposures to fluctuations in foreign exchange and interest
rates. The Group does not enter into derivatives for trading or
speculative purposes.
Derivative financial instruments are classified and accounted
for as follows: (1) all derivatives are recognized as either assets
or liabilities and measured at fair value, and the resulting gains
or losses are recognized in the consolidated statement ofincome, and (2) for derivatives used for hedging purposes, if
such derivatives qualify for hedge accounting because of highcorrelation and effectiveness between the hedging instruments
and the hedged items, gains or losses on those derivatives aredeferred until maturity of the hedged transactions, the "deferredhedge accounting method."
Foreign currency forward exchange contracts are utilized tohedge foreign currency exposures on overseas transactions.
Trade payables and receivables denominated in foreign
currencies are translated at the contracted rates, the "assigning
method," if the forward contracts qualify for hedge accounting.
Interest rate swaps that qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value,
but the differential paid or received under the swap agreements
is recognized and included in interest expense or income, the"exceptional method."Interest rate and currency swaps used to hedge long-term debts
denominated in foreign currencies with variable interest rates,
which qualify for hedge accounting and meet specific matching
criteria, are not measured at market value. Rather, the long-term
debts are recorded at yen amounts under the swap agreements
and interest expense is calculated and recorded using fixedinterest rates.

r.Per Share Information - Basic net income per share iscomputed by dividing net income attributable to commonshareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted forstock splits.
On December 1, 2017, the Company effected a ten-to-one
share consolidation based on the resolution of the shareholders'meeting held on August 30, 2017. All prior-year share and pershare figures, except cash dividends per share, have been
restated to reflect the impact of the share consolidation and toprovide data on a basis comparable to the year ended May 31,
2019. Such restatements include calculations regarding theCompany's weighted-average number of common shares andbasic net income per share.
The computations of net income per share of common stock arebased on the weighted-average number of shares outstandingof 7,147,131 shares and 7,543,303 shares for the years ended
May 31, 2019 and 2018, respectively.
Diluted net income per share is not disclosed because theCompany has not issued potentially dilutive securities.
Cash dividends per share presented in the accompanying
consolidated statements of income are dividends applicable to
the respective years, including dividends to be paid after theend of the year.
Cash dividends per share applicable to the period for the fiscal
year ended May 31, 2018 comprise interim dividends of ¥3.50(before the consolidation) and year-end dividends of ¥35.00(after the consolidation). If the consolidation had been taken into
consideration, cash dividends per share applicable to the period
for the fiscal year ended May 31, 2018 would be ¥70.00.
s.Accounting Changes and Error Corrections - Under ASBJ
Statement No. 24, "Accounting Standard for Accounting
Changes and Error Corrections," and ASBJ Guidance No. 24,"Guidance on Accounting Standard for Accounting Changes
and Error Corrections," accounting treatments are required
as follows: (1) Changes in Accounting Policies—When a new
accounting policy is applied following revision of an accounting
standard, the new policy is applied retrospectively unless therevised accounting standard includes specific transitional
provisions, in which case the entity shall comply with thespecific transitional provisions. (2) Changes in Presentation—
When the presentation of financial statements is changed, priorperiod financial statements are reclassified in accordance with
the new presentation. (3) Changes in Accounting Estimates—Achange in an accounting estimate is accounted for in the periodof the change if the change affects that period only, and isaccounted for prospectively if the change affects both the periodof the change and future periods. (4) Corrections of Prior-Period
Errors—When an error in prior-period financial statements is
discovered, those statements are restated.

Recognition," and ASBJ Guidance No. 30, "Implementation
Guidance on Accounting Standard for Revenue Recognition."
The core principle of the standard and guidance is that an entity
should recognize revenue to depict the transfer of promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitledin exchange for those goods or services. An entity should
recognize revenue in accordance with that core principle byapplying the following steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performanceobligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a
performance obligation
The accounting standard and guidance are effective for annual
periods beginning on or after April 1, 2021. Earlier application ispermitted for annual periods beginning on or after April 1, 2018.
The Company expects to apply the accounting standard andguidance for annual periods beginning on or after June 1, 2021,
and is in the process of measuring the effects of applying theaccounting standard and guidance in future applicable periods.

Financial Section 2019l.Leases - Finance lease transactions are capitalized byrecognizing lease assets and lease obligations in the balance
sheet.

u.Changes in Presentation - "Decrease in other current assets"and "Increase (decrease) in other current liabilities," which had
been included in "Other – net" under "Cash flows from operating
activities" in the previous fiscal year, have been presented
separately from the year ended May 31, 2019 due to theirincreased quantitative significance.
v.Abolishment of Directors' Retirement Benefit System - At the129th Annual General Meeting of Shareholders held on August30, 2018, the Company resolved to pay final retirement benefits
following the abolishment of the directors' retirement benefit
system (payment to be made at the time of each director's
resignation) as part of the Company's review of its directors'
compensation system. Accordingly, the Company reversed thetotal amount provided for "Retirement allowances for retirement
benefits for directors and Audit & Supervisory Board members"
and presented the unpaid amount of ¥247 million ($2,266
thousand) for payment of final retirement benefits as "Other"under non-current liabilities. Meanwhile, some of the Company's
subsidiaries in Japan have provided directors' retirement
benefits at an amount required to be paid at the end of thecurrent consolidated fiscal year under review, based on theirinternal regulations, in preparation for payment of retirement
benefits for directors (including executive officers).

t.New Accounting Pronouncements
Revenue Recognition - On March 30, 2018, the ASBJ issued
ASBJ Statement No. 29, "Accounting Standard for Revenue

Suminoe Textile Co., Ltd. Annual Report 201926

3. MARKETABLE AND INVESTMENT SECURITIESThousands of U.S. Dollars

Financial Section 2019

Millions of Yen
2018

2019

Marketable securities￥    9￥    8$    83

Total￥    9￥    8$    83￥6,308￥8,227$57,871

143

147

1,312

￥6,451￥8,374$59,183

Current:

Non-current:
Unlisted equity securities
Total

Realized
Gains

Realized
LossesAvailable-for-sale:
Equity securities$4,844$165$（1,505）

Total$4,844$165$（1,505）

Thousands of
U.S. Dollars

2019

Marketable equity securities

Proceeds

The cost and aggregate fair values of marketable and investment
securities as of May 31, 2019 and 2018 were as follows:

4. INVENTORIESInventories as of May 31, 2019 and 2018 consisted of thefollowing:

2019

2018

2019

¥ 9,367¥11,077$ 85,936

Work in process

2,011

1,789

18,450Raw materials and supplies

4,288

3,768

39,339Total¥15,666¥16,634$143,725

Millions of Yen

Years Ending May 31

2021
2022
2023
2024
2025 and thereafter
Total

Unrealized
Gains

Fair Value

Securities classified as:

5. SHORT-TERM BANK LOANS AND LONG-TERM DEBT

Available-for-sale:Marketable equity securities¥3,479Marketable securities¥3,189¥360¥6,308¥3,189¥360¥6,317

9

Total

9

¥3,488Millions of Yen

Short-term bank loans are principally composed of bankoverdrafts. The weighted-average annual interest rates for shortterm bank loans and notes discounted at May 31, 2019 and 2018
were 2.23% and 1.92%, respectively.

2018
Unrealized
Gains

Cost

Unrealized
LossesFair Value

Securities classified as:Long-term debt as of May 31, 2019 and 2018 consisted of thefollowing:¥  500$ 4,587

1,000¥1,5009,174$13,761

Thousands of
U.S. Dollars

2019

2018

2019

¥3,929¥3,929$36,046

Buildings and structures, less accumulated depreciation

503

543

4,615

Machinery and equipment, less accumulated depreciation

415

404

3,807

Land

Investment securities
Total

Unrealized
LossesThousands of U.S. Dollars

Millions of Yen

2019
Cost

Millions of Yen

The assets pledged as collateral for short-term bank loans andlong-term debt as of May 31, 2019 and 2018 were as follows:

Thousands of
U.S. Dollars

Millions of Yen

Finished products and purchased merchandise

Annual maturities of bonds, less current portion, as of May 31,
2019 were as follows:

2,938

3,655

26,954¥7,785¥8,531$71,422Of the above property, plant and equipment, that provided ascollateral for a factory foundation mortgage as of May 31, 2019and 2018 was as follows:
Thousands of
U.S. Dollars

Millions of Yen

Land

2019

2018

2019

¥3,929¥3,929$36,046

Buildings and structures, less accumulated depreciation

503

543

4,615

Machinery and equipment, less accumulated depreciation

415

404

3,807

¥4,847¥4,876$44,468

Total

Available-for-sale:Marketable equity securities¥3,810Marketable securities¥4,495¥78¥8,227

8

Total¥3,818¥4,495¥78¥8,2352019
Cost

Unrealized
Losses2019

Fair Value¥1,309¥1,078$12,009

Unsecured

7,440

5,575

68,256

1,157

1,237

10,615

9,906

7,890

90,880Obligations under finance leases
Total

Available-for-sale:$31,917 $29,257

Marketable securities
Total$3,303$57,871$3,303$57,954

83

The information for available-for-sale securities which were soldduring the years ended May 31, 2019 and 2018 is as follows:

1,952

1,873

17,908Long-term debt, less current portion¥7,954¥6,017$72,972

Realized
Gains

Bonds as of May 31, 2019 and 2018 consisted of the following:

Realized
LossesAvailable-for-sale:
Equity securities

¥528

¥18

¥（164）

Total

¥528

¥18

¥
（164）

0.24%, due September 2021
Total

Available-for-sale:
Equity securities¥  937

Others

3,500
Total

27

Suminoe Textile Co., Ltd. Annual Report 2019

¥4,437

¥676
¥676

2019

2018

2019

¥  500¥500$4,587¥500$13,761

1,000¥1,5009,174

Annual maturities of long-term debt, less current portion, as of
May 31, 2019 were as follows:
Years Ending May 31

May 31, 2018

Thousands of
U.S. Dollars

Millions of Yen

0.30%, due January 2026

Millions of Yen
Proceeds

Less current portion
83$32,000 $29,257

May 31, 20192019

Collateralized

Securities classified as:
Marketable equity securities

2018

Loans from banks and other financial institutions:

2018: 0.42% – 10.50% (due: years ending May 31, 2019 – 2033)
2019: 0.41% – 10.70% (due: years ending May 31, 2020 – 2026)

Thousands of U.S. Dollars
Unrealized
Gains

Thousands of
U.S. Dollars

Millions of Yen

8

2021
2022
2023
2024
2025 and thereafter
Total

Millions of Yen¥1,370
2,966
1,414
162
2,042
¥7,954

Thousands of U.S. Dollars$12,596
27,211
12,972
1,486
18,734$72,972

The Company concluded a syndicated loan agreement (balances
at May 31, 2019 and 2018 were ¥4,474 million ($41,046 thousand)and ¥2,474 million, respectively), with Mizuho Bank, Ltd. as theCompany's agent. This agreement is subject to the following
financial covenants:(1) Equity as of the year-end and the second quarter-end of eachfiscal year shall be more than ¥30,100 million ($276,147
thousand) and more than 75% of the balance of thecorresponding period of the previous year, on a consolidated
basis.
(2) Equity as of the year-end and the second quarter-endof each fiscal year shall be more than ¥22,800 million($209,174 thousand) and more than 75% of the balanceof the corresponding period of the previous year, on anonconsolidated basis.
(3) Ordinary income as presented in accordance with Japanese
GAAP shall not be a loss for two consecutive financial years
from the fiscal year ended May 31, 2016, on a consolidated
basis.
(4) Ordinary income as presented in accordance with Japanese
GAAP shall not be a loss for two consecutive financial years
from the fiscal year ended May 31, 2016, on a nonconsolidated
basis.

6. RETIREMENT BENEFITSThe Company and certain consolidated subsidiaries mainly have
unfunded defined benefit plans and defined contribution plans for
employees. Under most circumstances, employees terminating
their employment are entitled to retirement benefits determinedbased on the rate of pay at the time of termination, years ofservice and certain other factors. Some consolidated subsidiariesof the Company adopt the simplified method for computing liability
for retirement benefits and periodic benefit costs.

Financial Section 2019Marketable and investment securities as of May 31, 2019 and2018 consisted of the following:

May 31, 2019

Defined Benefits(1) The changes in defined benefit obligation for the years ended
May 31, 2019 and 2018 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2019

2018

2019

¥2,987¥3,048$27,404

Current service cost

117

115

1,073

Interest cost

21

21

193

Actuarial losses

202

7

1,853

Balance at beginning of year

Benefits paid
Balance at end of year

（213）

（204）

（1,954）¥3,114¥2,987$28,569(2) The changes in the net defined benefit liability accounted for by
the simplified method were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year

2019

2018

2019

¥1,079¥1,000$9,899Periodic benefit cost

200

155

1,835

Benefits paid

（91）

（78）

（835）

OthersBalance at end of year

1

2

9

¥1,189¥1,079$10,908(3) A reconciliation between the liability recorded in the
consolidated balance sheet and the balances of defined
benefit obligation and plan assets as of the years ended May
31, 2019 and 2018 was as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2018

2019

Unfunded defined benefit obligation¥4,303¥4,066$39,477

Net liability arising from defined
benefit obligation¥4,303¥4,066

Millions of Yen$39,477
Thousands of
U.S. Dollars

2019

2018

2019

Liability for retirement benefits¥4,303¥4,066$39,477

Net liability arising from defined
benefit obligation¥4,303¥4,066$39,477

Suminoe Textile Co., Ltd. Annual Report 201928

Thousands of
U.S. Dollars

Millions of Yen
2019

2018

2019

Service cost

¥117

¥115

$1,073

Interest cost

21

21

193

Recognized actuarial losses

48

47

440

Periodic benefit cost calculated by
the simplified method

200

155

1,835

Net periodic benefit costs

¥386

¥338

$3,541(5) Amounts recognized in other comprehensive income (before
income tax effect) in respect of defined retirement benefit
plans as of May 31, 2019 and 2018 were as follows:
Millions of Yen

Actuarial losses
Total

Thousands of
U.S. Dollars

2019

2018

2019

¥154

¥40

$1,413¥154¥40$1,413(6) Amounts recognized in accumulated other comprehensive
income (before income tax effect) in respect of defined
retirement benefit plans as of May 31, 2019 and 2018 were as
follows:
Millions of Yen

Unrecognized actuarial losses
Total

Thousands of
U.S. Dollars

2019

2018

2019

¥400

¥246

$3,670¥400¥246$3,670(7) Assumptions used for the years ended May 31, 2019 and 2018
were as follows:
Discount rate

2019

2018

0.0%

0.8%

The expected compensation increase rates are based on the agespecific compensation increase index as of May 31, 2019 and2018.
Defined Contribution
The amounts of required contributions to the defined contributionplans of the Company and consolidated subsidiaries for theyears ended May 31, 2019 and 2018 were ¥162 million ($1,486
thousand) and ¥157 million, respectively.

7. LEASE
As a lessor, the minimum rental commitments under noncancelable
operating leases at May 31, 2019, were as follows:
Millions of Yen

Thousands of
U.S. Dollars

Due within one year¥  124$ 1,138

Due after one year

4,756

43,633¥4,880$44,771

Total

29

Suminoe Textile Co., Ltd. Annual Report 2019

8. EQUITY
Japanese companies are subject to the Companies Act of Japan(the "Companies Act"). The significant provisions in the Companies
Act that affect financial and accounting matters are summarized
below:(a) Dividends
Under the Companies Act, companies can pay dividends at any
time during the fiscal year in addition to the year-end dividend
upon resolution at the shareholders' meeting. Additionally, forcompanies that meet certain criteria including (1) having a
Board of Directors, (2) having independent auditors, (3) having
an Audit and Supervisory Board and (4) the term of serviceof the directors being prescribed as one year rather than thenormal two-year term by its articles of incorporation, the Boardof Directors may declare dividends (except for dividends-inkind) at any time during the fiscal year if the company hasprescribed so in its articles of incorporation. However, theCompany does not meet all the above criteria.
The Companies Act permits companies to distribute dividendsin-kind (non-cash assets) to shareholders subject to certain
limitations and additional requirements.
Semiannual interim dividends may also be paid once a year
upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies
Act provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation
is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends
must be maintained at no less than ¥3 million.
(b) Increases/decreases and transfer of common stock, reserveand surplus
The Companies Act requires that an amount equal to 10%
of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in capital(a component of capital surplus) depending on the equity
account charged upon the payment of such dividends until
the total aggregate amount of the legal reserve and additional
paid-in capital equals 25% of the common stock. Under theCompanies Act, the total amount of additional paid-in capitaland the legal reserve may be reversed without limitation. The
Companies Act also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts within equity
under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchasetreasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock
purchased cannot exceed the amount available for distribution
to the shareholders, which is determined by a specificformula. Under the Companies Act, stock acquisition rights arepresented as a separate component of equity. The Companies
Act also provides that companies can purchase both treasury
stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component ofequity or deducted directly from stock acquisition rights.
On December 1, 2017, the Company effected a ten-toone share consolidation based on the resolution of theshareholders' meeting held on August 30, 2017.

Millions of Yen
May 31, 2019

One
Year orLess

After One
After Two
After Three
After Four
Five
Year through Years through Years through Years through AfterYears
Two Years Three Years Four Years
Five Years

Total

¥1

¥ 18

¥2,531（1）（18） （17）（1,713）（1,749）

Financial Section 2019

Financial Section 2019(4) The components of net periodic benefit costs for the years
ended May 31, 2019 and 2018 were as follows:

Deferred tax assets
relating to tax loss
carryforwards¥ 17¥2,495Less valuation
allowances for tax
loss carryforwards
Net deferred tax
assets relating to
tax loss

9. INCOME TAXES

782

carryforwards

The Company and its domestic subsidiaries are subject toJapanese national and local income taxes which, in the aggregate,
resulted in a normal effective statutory tax rate of approximately
30.6% and 30.8% for the years ended May 31, 2019 and 2018,
respectively.
The tax effects of significant temporary differences and tax loss
carryforwards which resulted in deferred tax assets and liabilities
as of May 31, 2019 and 2018 are as follows:
Thousands of
U.S. Dollars

Millions of Yen
2019

2018

2019

Allowance for doubtful receivables
and accounts¥    53¥    50$    486

Liabilities for retirement benefits

1,336

1,350

12,257Tax loss carryforwards

2,531

2,511

23,220Investment securities

85

85

780

Inventories

394

387

3,615

782

Thousands of U.S. Dollars
May 31, 2019

One
Year orLess

After One
After Two
After Three
After Four
Five
Year through Years through Years through Years through AfterYears
Two Years Three Years Four Years
Five Years

Total

Deferred tax assets
relating to tax loss
carryforwards

$9

$ 165

$ 156 $22,890 $23,220（9）（165） （156）（15,716）（16,046）

Less valuation
allowances for tax
loss carryforwards
Net deferred tax
assets relating to
tax loss
7,174

carryforwards

7,174

Deferred tax assets:

Other

689

592

6,321

Total of tax loss carryforwards andtemporary differences

5,088

4,975

46,679Less valuation allowance for tax
loss carryforwards（1,749）（16,046）

Less valuation allowance fortemporary differences（883）（8,101）

Total valuation allowance（2,632）（2,388）¥ 2,456¥ 2,587

Total deferred tax assets

A reconciliation between the normal effective statutory tax rates
and the actual effective tax rates reflected in the accompanying
consolidated statements of income for the years ended May 31,
2019, with the corresponding figures for 2018, is as follows:
2019

2018

Normal effective statutory tax rate

30.6%

30.8%

Change in valuation allowance

9.4（19.4）

Expenses not deductible for income tax purposes

3.6

2.1

Per capita levy

2.0

1.8

（24,147）

Foreign tax credit

2.4

1.8

$ 22,532

Difference of tax rates for foreign subsidiaries

（2.4）

3.6

Equity in earnings of associated companies

1.4

0.3

Tax exemption of investments in affiliated companies（5.5）

Deferred tax liabilities:
Unrealized gain on available-forsale securities¥903¥1,249$   8,284

Retained earnings of affiliated companies

0.4

0.5

Land

393

393

3,606

Tax reconciliation

0.5

2.0

Other

126

357

1.156

Other - net¥ 1,422¥ 1,999$ 13.046

Net deferred tax assets¥ 1,588¥ 1,137$ 14.569

Net deferred tax liabilities¥   554¥   549$   5,083

Total deferred tax liabilities

The expiration of tax loss carryforwards, the related valuation
allowances and the resulting net deferred tax assets as of May 31,
2019, were as follows:

Actual effective tax rates

（0.2）

1.1

42.2%

24.6%

10. RELATED PARTY DISCLOSURES
Transactions of the Company with associated companies for theyears ended May 31, 2019 and 2018 were as follows:
Millions of Yen

Guarantees and similar items ofloans payable to associates

Thousands of
U.S. Dollars

2019

2018

2019

¥2,359¥2,339$21,642

Suminoe Textile Co., Ltd. Annual Report 201930

11. R&D COSTS
Financial Section 2019

12. IMPAIRMENT LOSSESFor the year ended May 31, 2019, the Group recognized ¥527
million ($4,835 thousand) of impairment losses as other expenses
for a part of their operational assets ("Buildings and structures"¥52 million ($477 thousand), "Machinery and equipment" ¥409
million ($3,752 thousand), "Lease assets" ¥20 million ($183
thousand), other accounts ¥46 million ($423 thousand)) because
it was considered difficult to recover the investment amounts ofthese investments due to a decline in profitability, etc.
The recoverable value of operational assets was measured basedon the net selling price, which was valued for the expected selling
price based on the appraisal value.
For the year ended May 31, 2018, the Group recognized ¥21
million of impairment losses as other expenses for a part of theiroperational assets because it was considered difficult to recover
the investment amounts of these investments due to a decline inprofitability, etc.
The recoverable value of operational assets was measured basedon the net selling price, but it was difficult to find an alternative useor sell to third parties, so it was valued based on the memorandum
value.

13. FINANCIAL INSTRUMENTS(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long-term debt,
including bank loans, corporate bonds and lease obligations,based on its capital financing plan. Cash surpluses, if any, areinvested in low-risk financial assets. Short-term bank loans areused to fund the Group's ongoing operations. Derivatives are
not used for speculative purposes, but to manage exposure tofinancial risks as described in Note 14.
(2) N ature and Extent of Risks Arising from Financial
Instruments
Receivables, such as trade notes, trade accounts andelectronically recorded monetary claims, are exposed tocustomer credit risk. Receivables in foreign currencies are
exposed to the risk of fluctuation in foreign currency exchange
rates.
Marketable and investment securities, mainly the stocks offinancial institutions, customers and suppliers of the Company,
are exposed to the risk of market price fluctuations.
Payment terms of payables, such as trade notes, tradeaccounts and electronically recorded obligations, are less than
one year. Payables in foreign currencies are exposed to the31

Suminoe Textile Co., Ltd. Annual Report 2019(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from acounterparty's failure to repay or service debt according to thecontractual terms. The Company manages and mitigates its
credit risk from receivables on the basis of internal guidelines,
which include monitoring of payment terms and balancesof major customers by each business sales department to
identify the default risk of customers at an early stage. Also,
subsidiaries of the Company manage credit risk based on thesame guidelines.
The Company believes it has limited credit risk on derivative
agreement transactions because it transacts with highly rated
financial institutions.
Market risk management (foreign exchange risk andinterest rate risk)
Foreign currency trade receivables and payables are exposed
to market risk resulting from fluctuations in foreign currency
exchange rates. Such foreign exchange risk with forecasted
transactions is hedged principally by forward foreign currency
contracts. Interest rate swaps and interest rate and currency
swaps are used to manage exposure to market risks fromchanges in interest rates of loans and bonds payable.
Marketable and investment securities are managed bymonitoring the market values and financial position of issuers
on a regular basis.
Derivatives have been utilized in accordance with internal
guidelines that regulate the authorization and credit limit.
Liquidity risk management
The Company manages liquidity risk through adequate
financial planning by the Finance Department of the Company.
Complementary information for fair value of financial
instruments
Fair values of financial instruments are based on quoted prices
in active markets. If quoted prices are not available, otherrational valuation techniques are used instead. The techniques
include changing some factors, and the fair values may bechanged by adopting different assumptions. In addition, thecontract amounts of derivatives in Note 14 do not directly
indicate their market risk.
(4) Fair Values of Financial Instruments(a) Fair value of financial instruments
Millions of Yen
May 31, 2019

Carrying
AmountFair Value

Cash and cash equivalents¥ 7,754¥ 7,754

Short-term investments

126

126

Notes receivable – trade

3,637

3,637

Electronically recorded monetary claims

5,674

5,674

Accounts receivable – trade

14,544

14,544Marketable securities and investment securities
Total
Notes payable – trade

6,317

6,317

¥38,052¥38,052¥ 3,529¥ 3,529

Net Unrealized
Gains/Losses

Electronically recorded obligations

4,425

4,425

Accounts payable – trade

11,664

11,664

Short-term bank loans

8,300

8,300

Current portion of long-term debt

1,952

1,952

Bonds payable

1,500

1,497

Long-term debt

7,954

7,884

70

Total

¥39,324¥39,251¥73

Derivatives¥      9¥      9May 31, 2018

Carrying
AmountFair Value

Cash and cash equivalents¥ 9,411¥ 9,411¥ 3

Millions of Yen

Short-term investments

120

120

Notes receivable – trade

3,776

3,776

Electronically recorded monetary claims

5,607

5,607

Accounts receivable – trade

13,674

13,674Marketable securities and investment securities

8,235

8,235

¥40,823¥40,823¥ 3,181¥ 3,181

Total
Notes payable – trade
Electronically recorded obligations

4,784

4,784

Accounts payable – trade

11,391

11,391

Short-term bank loans

12,243

12,243Current portion of long-term debt

1,873

1,873

Net Unrealized
Gains/Losses

500

496

Long-term debt

6,017

5,920

97

Total

¥39,989¥39,888¥101¥     （6）¥     （6）¥   4Thousands of U.S. Dollars
May 31, 2019

Carrying
AmountFair Value

Cash and cash equivalents$ 71,138$ 71,138

Short-term investments

1,156

1,156

Notes receivable – trade33,36733,367

Electronically recorded monetary claims

52,05552,055

Accounts receivable – trade133,431

133,431

Marketable securities and investment securities

57,95557,955$349,102$349,102$ 32,376$ 32,376

Total
Notes payable – trade
Electronically recorded obligations

40,596

40,596

Accounts payable – trade107,009

107,009

Short-term bank loans

76,147

76,147

Current portion of long-term debt

17,90817,908

Bonds payable

13,761

13,734

Net Unrealized
Gains/Losses

Liabilities
Notes and accounts payable – trade, electronicallyrecorded obligations, short-term bank loans and current
portion of long-term debt
The fair values of notes and accounts payable – trade,electronically recorded obligations, short-term bank loans andcurrent portion of long-term debt approximate their carrying
amounts, as these amounts are settled in a short period oftime.

Long-term debt
The fair values of long-term loans and lease obligations atfixed interest rates are determined by discounting the cash
flows related to the loans at the Company's assumed corporate
borrowing rates. For the portion of loans that are subjected
to interest rate swaps, that qualify for hedge accounting, andthat meet specific matching criteria, fair value is determined bydiscounting the cash flows related to the loans with the interest
rate swaps at the Company's assumed corporate borrowing
rates.
Derivatives
Information on the fair value of derivatives is included in Note14.
(b) Carrying amounts of financial instruments whose fair values
cannot be reliably determined are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019

2018

2019

$ 27

Investments in associated companies

¥481

¥611

$4,413

Unlisted equity securities

143

147

1,312

Long-term debt

72,972

72,330642

Total$360,769$360,100$669$      83$      83

Derivatives

Marketable and investment securities
The fair values of marketable and investment securities aremeasured at the quoted market price on the stock exchange
for equity instruments and at the quoted price obtained fromfinancial institutions for certain debt instruments. Informationon the fair values of marketable and investment securities byclassification is included in Note 3.

Bonds payable
The fair values of bonds payable are determined by discounting
the cash flows related to the bonds at the rates determinedbased on the remaining term of the bonds and credit risk.

Bonds payable

Derivatives

AssetsCash and cash equivalents, notes and accounts receivable– trade and electronically recorded monetary claims
The fair values of cash and cash equivalents, notes andaccounts receivable – trade and electronically recordedmonetary claims approximate their carrying amounts, as theseamounts are settled in a short period of time.

Financial Section 2019

R&D costs charged to income were ¥254 million ($2,330
thousand) and ¥268 million for the years ended May 31, 2019 and2018, respectively.

risk of fluctuation in foreign currency exchange rates. Shortterm bank loans are used in trade transactions. Long-term debt
and obligations of finance leases are used in raise funds forcapital investments.
A part of such payables is exposed to market risks fromchanges in variable interest rates, and trade liabilities andloans are exposed to liquidity risk.
Derivatives mainly include foreign currency forward contracts,
interest rate swaps and interest rate and currency swaps,
which are used to manage exposure to market risks fromchanges in foreign currency exchange rates of receivables andpayables and from changes in interest rates. Please see Note
14 for more details about derivatives.

Suminoe Textile Co., Ltd. Annual Report 201932

Millions of Yen
May 31, 2019

Cash and cash equivalents

Due in One
Year or Less

Due after One
Year throughFive Years¥ 7,754

Millions of Yen
At May 31, 2019

Selling U.S. dollars
Buying U.S. dollars

126

Selling euros

Notes receivable – trade

3,637

Buying euros

Electronically recorded monetary claims

5,674

Buying Thai baht

Accounts receivable – trade

14,544

Buying Mexican pesos

Total¥31,735

Cash and cash equivalents
Marketable securities

Due after One
Year throughFive Years¥ 9,4118

Short-term investments

120

Notes receivable – trade

3,776Electronically recorded monetary claims

5,607

Accounts receivable – trade

13,674

Total¥32,596

Due in One
Year or Less

Cash and cash equivalents$ 71,138

Short-term investments

1,156

Notes receivable – trade33,367

Buying U.S. dollars
Buying euros

At May 31, 2018

*1

30

*1

60

*1

16

*1

318

*1

Accounts
payable – trade
Accounts
payable – trade¥  643¥（9）

Unrealized gain on available-for-salesecurities:

21

（1）

Gains arising during the year

Due after One
Year throughFive Years

Selling U.S. dollars
Buying U.S. dollars
Buying euros

Long-termloans¥3,034¥2,994*2

52,055

Buying U.S. dollars

133,431

Buying euros

Total$291,147

Contract
Amount Dueafter One Year

Fair
Value

*1

276

*1

61

*1

Long-term
loans

HedgedItem

Buying U.S. dollars
Selling euros
Buying euros
Buying Thai baht
Buying Mexican pesos

Buying euros¥ 852$（16,303）

190

（676）

1,743

Amount before income tax effect（1,587）

176（14,560）

346

（57）

3,175

（1,241）

119（11,385）

Deferred gain (loss) on derivatives
under hedge accounting:Total deferred loss on derivatives
under hedge accounting

（4）

（4）

1

1

（37）
9

（3）

（3）

（28）

（3）

98

（28）

Foreign currency translation
adjustments:¥1,284

¥（4）

37

（1）

Losses arising during the year

（202）

（7）

Reclassification adjustments toprofit

48

47

440

Amount before income tax effect

（154）

40

（1,413）¥1,074¥1,034*2

Contract
AmountContract
Amount Dueafter One Year

Income tax effect

Fair
Value

47

（12）

431

28

（982）

（15）

24

（137）

¥（1,369）¥ 266$（12,560）

Share of other comprehensive income
in associates:(Losses) gains arising during theyear

Accounts
receivable – trade
Accounts
payable – trade
Accounts
receivable – trade
Accounts
payable – trade
Accounts
payable – trade
Accounts
payable – trade$ 1,229

*1

972

*1

275

*1

550

*1

147

*1

2,917

*1

Accounts
payable – trade
Accounts
payable – trade$5,900

$（83）

192

（9）

Long-term
loans$27,835（1,853）（107）

Total remeasurements of defined
benefit plans

Total other comprehensive
income16. CONTINGENT LIABILITIESAt May 31, 2019, the Group had the following contingent liabilities:

Interest rate swaps using
exceptional method:(fixed-rate payment, floatingrate receipt)¥（1,777）

Income tax effect$27,468*2*1.F oreign currency forward contracts are accounted for as part of accounts
receivable and accounts payable. Therefore, the fair values of the contracts areincluded in the fair value of underlying accounts receivable and accounts payable.
*2.The portions of interest rate swaps that qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value, but the differential
paid or received under the swap agreements is recognized and included ininterest expense or income. In addition, the fair value of such interest rate swaps
in Note 13 is included with that of the hedged items (i.e., long-term debt).

Guarantees and similar items of loans payable to associates

Millions of Yen

Thousands of
U.S. Dollars¥240$2,2022019

Remeasurements of defined benefit
plans:

Foreign currency forward contracts using
deferred hedge accounting method:
Buying U.S. dollars

2018

Reclassification adjustments toprofit or loss

Adjustments arising during the year
Accounts
payable – trade
Accounts
payable – trade

Appropriation of Retained Earnings
The following appropriation of retained earnings as of May 31,
2019 was approved at the Company's shareholders' meeting heldon August 29, 2019:Year-end cash dividends, ¥35 ($0.32) per share

Income tax effect¥  127

17. SUBSEQUENT EVENT

Thousands of
U.S. Dollars

Millions of Yen

Losses arising during the year
Accounts
receivable – trade
Accounts
payable – trade
Accounts
payable – trade

Foreign currency forward contracts
using assigning method:
Selling U.S. dollars

The Group enters into derivative financial instrument contracts,in the normal course of business, to reduce its exposure tofluctuations in interest rates and foreign exchange rates. The
Group utilizes interest rate swaps and interest rate currency
swaps to hedge interest exposure on long-term debt. The Groupalso enters into foreign exchange forward contracts to hedge
market risk from changes in foreign exchange rates associatedwith assets and liabilities denominated in foreign currencies. The
Group does not hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited tomajor financial institutions, the Group does not anticipate any
losses arising from credit risk.
Derivatives have been utilized in accordance with internal
guidelines that regulate the authorization and the credit limit.
Derivative transactions to which hedge accounting is applied as of
May 31, 2019 and 2018 are as follows:

Contract
AmountThousands of U.S. Dollars
At May 31, 201914. DERIVATIVE FINANCIAL INSTRUMENTS

HedgedItem

Interest rate swaps using
exceptional method:(fixed-rate payment, floatingrate receipt)

The components of other comprehensive income for the years
ended May 31, 2019 and 2018 were as follows:

Total unrealized gain on
available-for-sale securities

Foreign currency forward contracts using
deferred hedge accounting method:

Accounts receivable – trade

15. OTHER COMPREHENSIVE INCOME

2019

Foreign currency forward contracts
using assigning method:

Electronically recorded monetary claims

Suminoe Textile Co., Ltd. Annual Report 2019

*1

106

Millions of Yen

Please see Note 5 for annual maturities of long-term debt,
obligations under finance leases and bonds.

33¥  134

Interest rate swaps using
exceptional method:(fixed-rate payment, floatingrate receipt)

Thousands of U.S. Dollars
May 31, 2019

Accounts
receivable – trade
Accounts
payable – trade
Accounts
receivable – trade
Accounts
payable – trade
Accounts
payable – trade
Accounts
payable – trade

Foreign currency forward contracts using
deferred hedge accounting method:

Millions of Yen
Due in One
Year or Less

Fair
Value

The fair value of foreign currency forward contracts is measured
using quoted prices obtained from financial institutions.

Contract
AmountForeign currency forward contracts
using assigning method:

Short-term investments

May 31, 2018

Contract
Amount Dueafter One Year

HedgedItem

Financial Section 2019

Financial Section 2019(5) Maturity Analysis for Financial Assets and Securities with
Contractual Maturities

Millions of Yen

Thousands of
U.S. Dollars¥2,359$21,642

18. SEGMENT INFORMATIONIn March 2008, the ASBJ revised ASBJ Statement No. 17,"Accounting Standard for Segment Information Disclosures," andissued ASBJ Guidance No. 20, "Guidance on Accounting Standard
for Segment Information Disclosures." Under the standard andguidance, an entity is required to report financial and descriptive
information about its reportable segments. Reportable segments
are operating segments or aggregations of operating segmentsthat meet specified criteria. Operating segments are components
of an entity about which separate financial information is available
and for which such information is evaluated regularly by the chief
operating decision-maker in deciding how to allocate resources
and in assessing performance. Generally, segment information isrequired to be reported on the same basis as is used internally forevaluating operating segment performance and deciding how toallocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are components for which
separate financial information is available and whose operating
results are reviewed regularly by the Board of Directors inorder to determine allocation of resources and assess segment
performance. The Group is organized by business operating
units and subsidiaries, which are separated based on the
products and services they provide. Each of these units andsubsidiaries plan comprehensive strategies for businessand perform business activities. Therefore, based on thesebusiness operating units and also taking account of the typesof products and the similarities in markets, the reportablesegments of the Group are divided into three segments: theinterior fittings segment, the automotive textiles and traffic
facilities segment and the functional materials segment. Theinterior fittings segment includes manufacturing and salesof carpets, curtains, wallpaper and other flooring materials.
The automotive textiles and traffic facilities segment includes
manufacturing and sales of interior materials for automobiles,
trains, buses, ships, aircraft and other conveyances. The
functional materials segment includes manufacturing and salesof electric carpets and related products, such as deodorizers
and processing of silicon wafers for solar cells.

Suminoe Textile Co., Ltd. Annual Report 201934

Financial Section 2019(3) Information about Sales, Profit, Assets and Other Items by Reportable Segment
Millions of Yen

Financial Section 2019(2) Methods of Measurement for the Amounts of Sales, Profit,
Assets and Other Items for Each Reportable Segment
The accounting policies of the segments are substantially thesame as those described in significant accounting policies
in Note 2. The profits of reportable segments correspondto operating income. The internal sales or transfers among
segments are based on actual market prices.

2019
Reportable Segments
Interior
Fittings

Automotive
Textiles andTraffic Facilities

Functional
Materials

Total

Others

Total

Reconciliations

Consolidated

Sales:
Sales to customers¥34,282¥60,304¥3,887¥98,473¥144¥98,617

Intersegment sales

724

7

2

733

172

905

¥  
（905）

¥98,617

Total¥35,006¥60,311¥3,889¥99,206¥316¥99,522¥  （905）¥98,617

Segment profit¥   263¥ 4,018¥  186¥  4,467¥ 79¥ 4,546¥（1,428）¥ 3,118

Segment assets

25,111

38,2702,203

65,584423

66,007

21,96987,976

320

1,193

77

1,590

25

1,615

154

1,769

Other:
Depreciation and amortization
Investments in associated companies accounted
for by the equity method
Increase in property, plant and equipment andintangible assets

481
185

481

1,482

34

481

1,701

24

1,725

481
（42）

1,683

Millions of Yen
2018
Reportable Segments
Interior
Fittings

Automotive
Textiles andTraffic Facilities

Functional
Materials

Total

Others

Total

Reconciliations

Consolidated

Sales:
Sales to customers¥34,330¥59,758¥3,647¥97,735¥138¥97,873

Intersegment sales

672

8

8

688

182

870

¥  
（870）

¥97,873

Total¥35,002¥59,766¥3,655¥98,423¥320¥98,743¥  （870）¥97,873

Segment profit¥    33¥ 3,331¥  177¥ 3,541¥ 68¥ 3,609¥（1,361）¥ 2,248

Segment assets

27,47937,166

2,222

66,867445

67,312

24,871

92,183

343

1,140

90

1,573

20

1,593

133

1,726

Other:
Depreciation and amortization
Investments in associated companies accounted
for by the equity method
Increase in property, plant and equipment andintangible assets

611
186

611

764

27

611

977

32

1,009

611
263

1,272

Reconciliations

Consolidated

Thousands of U.S. Dollars
2019
Reportable Segments
Interior
Fittings

Automotive
Textiles andTraffic Facilities

Sales to customers$314,514$553,248$35,661$903,423$1,320$904,743

Intersegment sales

6,642

64

18

6,724

1,579

8,303

$  （8,303）

Functional
Materials

Total

Others

Total

Sales:$904,743

Total$321,156$553,312$35,679$910,147$2,899$913,046$  （8,303）$904,743

Segment profit$   2,413$ 36,862$ 1,706$ 40,981$  726$ 41,707$ （13,101）$ 28,606

Segment assets

230,376

351,101

20,211

601,6883,881

605,569

201,550

807,119

2,936

10,945706

14,587229

14,816

1,413

16,229Other:
Depreciation and amortization
Investments in associated companies accounted
for by the equity method
Increase in property, plant and equipment andintangible assets

4,413
1,697

13,5934,413
312

15,6054,413
220

15,825

4,413
（385）

15,440Note 1.Reconciliations of segment profit of ¥1,428 million ($13,101 thousand) consist of elimination of intersegment transactions of ¥24 million ($220 thousand) and corporate
expenses unallocated to the respective reportable segments of ¥1,452 million ($13,321 thousand). Corporate expenses unallocated to the respective reportable segments
include the costs of the Administrative Department and the Development Department of the Company.
2.Reconciliations of segment assets of ¥21,969 million ($201,550 thousand) consist of elimination of intersegment transactions of ¥265 million ($2,431 thousand) andcorporate assets unallocated to the respective reportable segments of ¥22,234 million ($203,981 thousand). Corporate assets unallocated to the respective reportablesegments mainly consist of surplus funds (cash, deposits and securities), long-term investments (investment securities) and assets of the Administrative Department of theCompany.

35

Suminoe Textile Co., Ltd. Annual Report 2019

Suminoe Textile Co., Ltd. Annual Report 201936

(4) Information about Geographical Areas

Financial Section 2019

Financial Section 2019

Millions of Yen
2019
For the year ended May 31, 2019

Sales to customers

Japan

North and Central America(U.S.A.)

Asia

OthersTotal¥14,869¥17,901¥258¥98,617¥65,589（11,859）
Property, plant and equipment

22,5382,897

926

26,361Millions of Yen
2018
For the year ended May 31, 2018

Sales to customers

Japan

North and Central America(U.S.A.)

Asia

OthersTotal¥15,121¥16,674¥346¥97,873¥65,732（12,799）
Property, plant and equipment

22,615

3,456

1,068

27,139Thousands of U.S. Dollars
2019
For the year ended May 31, 2019

Sales to customers

Japan

North and Central America(U.S.A.)

Asia

OthersTotal$136,413$164,229$2,367$904,743$601,734（108,798）
Property, plant and equipment

206,771

26,5788,495

241,844(5) Information about Impairment Losses of Fixed Assets by Reportable Segment
Millions of Yen
2019
Reportable Segments
For the year ended May 31, 2019

Interior Fittings

Automotive Textiles andTraffic Facilities

Functional
Materials

¥527

Total

OthersEliminations/
Corporate

¥527

Total

¥527

Millions of Yen
2018
Reportable Segments
For the year ended May 31, 2018

Interior Fittings

Automotive Textiles andTraffic Facilities

Functional
Materials

¥21

Total

OthersEliminations/
Corporate

¥21

Total

¥21

Thousands of U.S. Dollars
2019
Reportable Segments
For the year ended May 31, 2019

Interior Fittings

Automotive Textiles andTraffic Facilities$4,835Functional
Materials

Total

Others$4,835

Eliminations/
Corporate

Total$4,835(6) Information about Goodwill by Reportable Segment
Disclosure is omitted since the aggregate values for the years ended May 31, 2019 and 2018 are immaterial.
(7) Information about Negative Goodwill by Reportable Segment
Not applicable.

37

Suminoe Textile Co., Ltd. Annual Report 2019

Suminoe Textile Co., Ltd. Annual Report 201938

Corporate Data
Corporate Data(as of August 31, 2019)

OfficesHead Office, Osaka Branch &Osaka Showroom
11-20, Minami-Semba 3-Chome,
Chuo-ku, Osaka 542-8504
Phone: +81-6-6251-6801
Fax: +81-6-6251-0862(as of August 29, 2019)

R&D Center

Subsidiaries

Chairman and President

Directors

Corporate Auditors

11-20, Minami-Semba 3-Chome,
Chuo-ku, Osaka 542-8504
Phone: +81-6-6251-6839
Fax: +81-6-6251-6868

USA

Ichizo Yoshikawa (Representative Director)

Katsuyuki Sawai
Teppei Nagata
Haruo Shimizu
Takashi Yokota
Kohei Nomura

Kunihiko Kotaki
Masashi Hashimoto
Atsuhiro Sonoda

Suminoe Textile of America Corporation
Bondtex, Inc.

MexicoSuminoe Textile de Mexico, S.A. de C.V.

Technical CenterTokyo Branch & Tokyo Showroom
BR Gotanda-Building, 30-4,
Nishi-Gotanda 2-Chome,
Shinagawa-ku, Tokyo 141-0031
Phone: +81-3-5434-2860
Fax: +81-3-5434-6542

Board of Directors and Corporate Auditors

China

SPM Automotive Textile Co., Ltd.
Suzhou Suminoe Koide Automotive
Accessories Co., Ltd.
Suminoe Textile Shanghai Co., Ltd.
Suzhou Suminoe Textiles Co., Ltd.

Kubota, Ando-cho, Ikoma-gun,Nara 639-1064
Phone: +81-743-57-5441
Fax: +81-743-57-6410

ThailandSubsidiaries

T.C.H. Suminoe Co., Ltd.
Suminoe Koide (Thailand) Co., Ltd.

Japan

Sales Offices

SUMINOE Co., Ltd.
RUNON CO., LTD.
SUMINOE LOGISTICS Co., Ltd.
Suminoe Works Co., Ltd.
Sewing Hyogo Co., Ltd.
Suminoe Teijin Techno Co., Ltd.
Marunaka Souei Co., Ltd.
Suminoe Techno Co., Ltd.
Tango Textile Co., Ltd.
Teijin Tecloth Ltd.
Owari Seisen Co., Ltd.
Kansai Laboratory Co., Ltd.

Sapporo, Sendai, Saitama, Chiba,
Yokohama, Shizuoka, Kanazawa,
Nagoya, Kyoto, Kobe, Okayama,
Hiroshima, Fukuoka

Factories
Nara, Shiga, Kyoto, Aichi, Ishikawa

Indonesia

PT. Suminoe Surya Techno
PT. Sinar Suminoe Indonesia

India

Suminoe Teijin Techno Krishna India Pvt. Ltd.

VietnamSuminoe Textile Vietnam Co., Ltd.

Associated Companies

Senior Managing Directors
Yoshiaki Tanihara (Representative Director)
Hitoshi Iida (Representative Director)

Investor Information
Founded:Incorporated:

1883
December 25, 1913
(Suminoe Textile Joint-Stock Company)

Change of Organization: December 26, 1930
(Suminoe Textile Co., Ltd.)

Capital:Authorized Shares:
Issued Shares:
Shareholders:
Employees:¥9,554,173,950
30,000,000
7,682,162
4,082

Corporate Data

Company Network(as of May 31, 2019)

Composition of Shareholders :Securities Firms

0.22%
Foreign
Shareholders

3.33%

Financial
Institutions

Other
Corporations

36.08%

29.49%

260 (Parent Company)
2,899 (Consolidated Basis)

Japan

Sumisho Airbag Systems Co., Ltd.
KST Co., Ltd.

Individuals and Others

30.88%

Suminoe Textile Shanghai Co., Ltd.
Shanghai

Suminoe Textile ofAmerica Corporation
C.A. Design
Suminoe Textile
California
of America
Corporation

Suzhou Suminoe Textiles Co., Ltd.
SuzhouSuzhou Suminoe Koide
Automotive Accessories Co., Ltd.
SuzhouSuminoe Teijin Techno
Krishna India Pvt. Ltd.
Haryana

T.C.H. Suminoe Co., Ltd.
Ayudhaya

SPM Automotive Textile Co., Ltd.
Guangzhou

Suminoe Textile Vietnam Co., Ltd.
Ha NamSuminoe Koide (Thailand) Co., Ltd.
Chiang Mai

PT. Suminoe Surya Techno
Bandung

PT. Sinar Suminoe Indonesia
Bandung

39

Suminoe Textile Co., Ltd. Annual Report 2019

South Carolina

Suminoe Textile Co., Ltd.

Bondtex, Inc.
South Carolina

Suminoe Textile deMexico, S.A. de C.V.
Guanajuato

Major Shareholders:(as of May 31, 2019)

Number of Shares(Thousands)

Percentage of Total
Shares Outstanding

Takashimaya Company, Limited

924

13.51

Nippon Life Insurance Company

501

7.33

HAYASHI TELEMPU HOLDINGS CORPORATION

466

6.81

Marubeni Corporation

366

5.36

Mizuho Bank, Ltd.

234

3.43

TOYOTA MOTOR CORPORATION

224

3.27

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

189

2.76

The Master Trust Bank of Japan, Ltd. (as trustee for Retirement Benefit Trust of UNITIKA LTD.)

178

2.61

MUFG Bank, Ltd.

174

2.55

Suminoe Textile Kyoeikai

150

2.20

Name

Suminoe Textile Co., Ltd. Annual Report 201940