for the Year Ended March 31, 2019 and Independent Auditor's Report

EIZO Corporation and Subsidiaries

EIZO Corporation and Subsidiaries
Consolidated Balance Sheet
March 31, 2019

Millions of Yen
2019
2018

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Short-term investments (Notes 4 and 13)
Notes and accounts receivable (Note 13):
Trade notes
Trade accounts
Other
Allowance for doubtful receivables
Inventories (Note 5)
Prepaid expenses and other current assets

Thousands of
U.S. Dollars(Note 1)
2019

¥ 16,099
1,117¥ 20,395
590$ 146,355
10,155216
17,030805(77 )28,377601

207
22,331
198(131 )
24,777670

1,964
154,8187,318(700 )
257,973
5,462

64,16869,037583,345CURRENT LIABILITIES:
Short-term bank loans (Notes 6 and 13)
Current portion of long-term debt (Notes 6 and 13)
Accounts payable (Note 13):
Trade accounts
Other
Income taxes payable
Accrued expenses
Other current liabilities
Total current liabilities

Total current assets
PROPERTY, PLANT, AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment
Furniture and fixtures
Construction in progress
Total
Accumulated depreciation
Net property, plant, and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 13)
Goodwill
Deferred tax assets (Note 9)
Other assets
Total investments and other assets

3,574
15,711
5,147
7,285
1,793
33,510(19,189 )

3,250
15,102
4,930
6,936
392
30,610(18,439 )32,491
142,827
46,791
66,227
16,300304,636(174,445 )

14,321

12,171130,191

38,677
2,317
512
1,429

33,071
2,831
585
1,802

351,609
21,064
4,655
12,99142,93538,289390,319

LONG-TERM LIABILITIES:Long-term debt (Notes 6 and 13)
Liability for retirement benefits (Note 7)
Deferred tax liabilities (Note 9)
Other long-term liabilities
Total long-term liabilities¥ 121,424¥ 119,497

¥

1,868

¥

1,958
26

$

16,982

6,696
1,387
565
4,023
1,134

7,620
1,309
1,896
4,514
1,336

60,873
12,6095,136
36,573
10,30915,67318,659142,482

1,246
2,829
5,593
1,159

29
3,224
4,891
1,172

11,32725,71850,845
10,538

10,827

9,316

98,4284,426
4,314
70,563

4,426
4,314
68,28040,236
39,218641,482(2,663 )(2,662 )(24,209 )18,471(510 )
323

17,507(227 )(116 )

167,918(4,636 )2,936

94,924

91,522862,945¥ 121,424¥ 119,497$ 1,103,855

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 12 and 14)
EQUITY (Notes 8 and 16):
Common stock—authorized, 65,000,000 shares;
issued, 22,731,160 shares in 2019 and 2018
Capital surplus
Retained earnings
Treasury stock—at cost, 1,410,709 shares in 2019 and
1,410,536 shares in 2018
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total equity

TOTAL

Millions of Yen
2019
2018

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars(Note 1)2019

$ 1,103,855

TOTAL

See notes to consolidated financial statements.

-2-

EIZO Corporation and Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2019

Millions of Yen
2019
2018
NET SALES

Thousands of
U.S. Dollars(Note 1)
2019

¥ 72,944¥ 84,058$ 663,127

49,18957,973447,173

23,75526,085215,954

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 10 and 11)

18,385

17,531

167,136

Operating income

5,370

8,554

48,818639(3 )(481 )
185

547
(3 )
269
138

5,809
(27 )
(4,373 )
1,682

340

951

3,091

INCOME BEFORE INCOME TAXES

5,710

9,505

51,909INCOME TAXES (Note 9):
Current
Deferred

1,248
153

2,680
(314 )

11,345
1,391

1,401

2,366

12,736

4,309

7,139

39,173¥ 4,309¥ 7,139$ 39,173

COST OF SALES
Gross profit

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange (loss) gain—net
Other—net
Other income—net

Total income taxes
NET INCOME
NET INCOME ATTRIBUTABLE TO OWNERS OF
THE PARENTYen
PER SHARE OF COMMON STOCK (Note 2.q):
Basic net income
Cash dividends applicable to the year

¥ 202.09
95.00

See notes to consolidated financial statements.

-3-

U.S. Dollars¥ 334.82
85.00$ 1.84
0.86

EIZO Corporation and Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2019

Millions of Yen
2019
2018
NET INCOME

Thousands of
U.S. Dollars(Note 1)
2019

¥ 4,309¥ 7,139$ 39,173964(283 )
439

468
278
169

8,763
(2,573 )
3,991

1,120

915

10,181COMPREHENSIVE INCOME¥ 5,429¥ 8,054$ 49,354

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO—
Owners of the parent¥ 5,429¥ 8,054$ 49,354

OTHER COMPREHENSIVE INCOME (LOSS) (Note 15):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total other comprehensive income

See notes to consolidated financial statements.

-4-

EIZO Corporation and Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2019

BALANCE, APRIL 1, 2017

Thousands
Number of
Shares ofCommonStock
Outstanding

CommonStockCapitalSurplus21,321¥ 4,426¥ 4,314

Net income
Cash dividends, ¥85 per share
Purchase of treasury stock
Net increase in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, MARCH 31, 2018
Net income
Cash dividends, ¥95 per share
Purchase of treasury stock
Net increase in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, MARCH 31, 2019

BALANCE, MARCH 31, 2018

Total
Equity¥ 62,954¥ (2,662 )¥ 85,281¥ 17,039¥ (505 )¥ (285 )

7,139(1,813 )

7,139(1,813 )
468
169

468
278
169

(116 )

91,522439

4,309(2,026 )(1 )964(283 )
439¥ 323¥ 94,924

278
21,321

4,426

4,314

68,280(2,662 )17,507(227 )

4,309(2,026 )
(1 )

(1 )
964
(283 )

21,320¥ 4,426¥ 4,314¥ 70,563

CommonStockCapitalSurplusRetained
Earnings$ 40,236$ 39,218$ 620,727

Net income
Cash dividends, $0.86 per share
Purchase of treasury stock
Net increase in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, MARCH 31, 2019

Retained
Earnings

Millions of Yen
Accumulated Other Comprehensive Income
Unrealized
ForeignDefinedGain onCurrency
Retirement
Treasury
Available-forTranslation
Benefit
Stock
Sale Securities
Adjustments
Plans¥ (2,663 )¥ 18,471¥ (510 )Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Unrealized
ForeignDefinedGain onCurrency
Retirement
Treasury
Available-forTranslation
Benefit
Stock
Sale Securities
Adjustments
Plans$ (24,200 )$ 159,155$ (2,063 )$ (1,055 )$ 832,018

3,991

39,173(18,418 )
(9 )
8,763
(2,573 )3,991$ 2,936$ 862,945

39,173(18,418 )
(9 )
8,763
(2,573 )$ 40,236$ 39,218

See notes to consolidated financial statements.

-5-$ 641,482$ (24,209 )$ 167,918$ (4,636 )Total
EquityEIZO Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2019
Thousands of
U.S. Dollars(Note 1)
2019

Millions of Yen
2019
2018
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Provision of allowance for doubtful receivables
Foreign exchange loss (gain)—net
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories
Decrease in accounts payable(Decrease) increase in accrued expenses
Increase in liability for retirement benefits
Other—net
Total adjustments¥ 5,710¥ 9,505$ 51,909(2,545 )
2,238
513
(53 )
88

(1,946 )
2,353
252
(10 )
(137 )(23,136 )
20,3454,664(482 )
800

5,105(4,015 )(1,331 )(461 )
209(110 )(362 )(4,279 )542(584 )
64
203(1,133 )(4,675 )46,409(36,500 )(12,100 )(4,191 )
1,900(1,000 )(3,291 )

5,348

4,830

48,618(3,841 )(192 )(2,787 )(156 )(34,918 )(1,745 )

302

4

2,745

(4,655 )(42,318 )(327 )(1,079 )(2,567 )17(8,713 )(6,568 )(79,209 )

1,284
(55 )
(2,025 )(1 )(959 )(1,813 )11,673(500 )(18,409 )(9 )Net cash used in financing activities(797 )(2,772 )(7,245 )FOREIGN CURRENCY TRANSLATION ADJUSTMENT ON
CASH AND CASH EQUIVALENTS(134 )

111(1,218 )¥ (4,296 )¥ (4,399 )$ (39,054 )Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment
Purchases of software and other long-lived assets
Proceeds from sales of short-term investments andinvestment securities
Purchases of short-term investments and investment
securities
Payment for acquisition of business(Increase) decrease in other assets
Net cash used in investing activities
FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Repurchases of treasury stock

NET DECREASE IN CASH AND CASH EQUIVALENTS—(Forward)-6-(2,973 )(Continued)

EIZO Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2019

Millions of Yen
2019
2018

Thousands of
U.S. Dollars(Note 1)
2019

NET DECREASE IN CASH AND CASH EQUIVALENTS—(Forward)¥ (4,296 )¥ (4,399 )$ (39,054 )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

20,395

24,794

185,409¥ 16,099¥ 20,395$ 146,355

CASH AND CASH EQUIVALENTS, END OF YEARINVESTING ACTIVITIES:Payment for purchase of Carina System Co., Ltd. net ofcash acquired¥2,567

ADDITIONAL INFORMATION:
Assets acquired
Liabilities assumed
Cash paid for the capital
Goodwill

1,933
1,924
2,660
2,651

See notes to consolidated financial statements.

-7-(Concluded)

EIZO Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2019

1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with theprovisions 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 ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements havebeen made to the consolidated financial statements issued domestically in order to present them in aform that is more familiar to readers outside Japan. In addition, certain reclassifications have been madein the 2018 consolidated financial statements to conform to the classifications used in 2019.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which
EIZO Corporation (the "Company") is incorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan andhave been made at the rate of ¥110 to $1, the approximate rate of exchange at March 31, 2019. Suchtranslations 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 ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of March 31, 2019, include the accountsof the Company and its 16 (17 in 2018) subsidiaries (together, the "Group").
Under the control concept, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated.
All significant intercompany balances and transactions have been eliminated in consolidation. All
material unrealized profit included in assets resulting from transactions within the Group is 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 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 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 witheither International Financial Reporting Standards or 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
that should be adjusted in the consolidation process so that net income is accounted for inaccordance 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 in equity
through other comprehensive income; (c) expensing capitalized development costs of research anddevelopment ("R&D"); and (d) cancellation of the fair value model of accounting for property, plant,
and equipment and investment properties and incorporation of the cost model of accounting.

-8-

c.

Business Combinations—Business combinations are accounted for using the purchase method.
Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses
in the periods in which the costs are incurred. If the initial accounting for a business combination isincomplete by the end of the reporting period in which the business combination occurs, an acquirer
shall report in its financial statements provisional amounts for the items for which 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 toreflect new information obtained about facts and circumstances that existed as of the acquisition
date and that would have affected the measurement of the amounts recognized as of that date.
Such adjustments shall be recognized as if the accounting for the business combination had been
completed at the acquisition date. The acquirer recognizes any bargain purchase gain in profit orloss immediately on the acquisition date after reassessing and confirming that all of the assets
acquired and all of the liabilities assumed have been identified after a review of the procedures usedin the purchase price allocation. A parent's ownership interest in a subsidiary might change if theparent purchases or sells ownership interests in its subsidiary. The carrying amount of
noncontrolling interest is adjusted to reflect the change in the parent'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 and the amount by which the noncontrollinginterest is adjusted is accounted for as capital surplus as long as the parent retains control over its
subsidiary.
During the year ended March 31, 2019, the Company merged with EIZO Medical Solutions Inc. For
further information, please refer to Note 3.

d.

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, certificates of deposit, and commercial paper, all of whichmature or become due within three months of the date of acquisition.

e.

Inventories—Inventories are stated at the lower of cost, determined by the average method forfinished products and work in process and by the moving-average method for raw materials, or net
selling value.

f.

Short-Term Investments and Investment Securities—Short-term investments andinvestment securities are classified and accounted for, depending on management's intent, as
follows: (1) trading securities, which are held for the purpose of earning capital gains in the nearterm, are reported at fair value, and the related unrealized gains and losses are included in earnings;
and (2) available-for-sale securities, which are not classified as either trading securities or held tomaturity debt securities, are reported at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-averagemethod.
For other-than-temporary declines in fair value, investment securities are reduced to net realizablevalue by a charge to income.

g.

Property, Plant, and Equipment—Property, plant, and equipment are stated at cost. Depreciationof property, plant, and equipment of the Company and its domestic subsidiaries is computed
substantially by the declining balance method at rates based on the estimated useful lives of theassets, while the straight-line method is applied to buildings of the Company and its domestic
subsidiaries acquired after April 1, 1998, buildings improvements and structures acquired on or after
April 1, 2016, and all property, plant, and equipment of foreign subsidiaries. The range of useful lives
is principally from 15 to 50 years for buildings and structures, from 7 to 10 years for machinery andequipment, and from 2 to 6 years for furniture and fixtures.

-9-

h.

Goodwill—Goodwill is amortized over 10 years or less by the straight-line method. Immaterial
goodwill may be charged entirely to income at acquisition. Amortization of goodwill is ¥513 million($4,664 thousand) and ¥252 million for the years ended March 31, 2019 and 2018, respectively.

i.

Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events orchanges in circumstances indicate the carrying amount of an asset or asset group may not berecoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued use
and eventual disposition of the asset or asset group. The impairment loss would be measured as theamount by which the carrying amount of the asset exceeds its recoverable amount, which is thehigher of the discounted cash flows from the continued use and eventual disposition of the asset or
the net selling price at disposition.

j.

Retirement and Pension Plans—The Company and certain of its domestic subsidiaries have adefined contribution pension plan and unfunded retirement benefit plans. Other domestic
subsidiaries have a defined benefit pension plan and unfunded retirement benefit plans. Certain
foreign subsidiaries have either a defined contribution plan or defined benefit plan. Additionally, theCompany or its subsidiaries may add premium severance pay.
The Company accounts for the liability for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date. The projected benefit obligations are
attributed to periods on a straight-line basis. Actuarial gains and losses and prior service costs thatare yet to be recognized in profit or loss are recognized within equity (accumulated othercomprehensive income), after adjusting for tax effects and are recognized in profit or loss over five
years, no longer than the expected average remaining service period of the employees. The
discount rate is determined using a single weighted-average discount rate reflecting the estimatedtiming and amount of benefit payment.
Retirement benefits to directors and Audit & Supervisory Board members are recorded at theamount that would be required if the directors and Audit & Supervisory Board members retired at theconsolidated balance sheet date. In June 2004, the retirement benefit system was abolished and theamount required to be paid at the time of the abolishment will be paid to directors and Audit &Supervisory Board members upon their retirement.

k.

R&D Costs—R&D costs are charged to income as incurred.

l.

Software Development Contracts—Revenue from sales of customized software and costs ofdevelopment of the customized software should be recognized by the percentage-of-completion
method if the outcome of a development contract can be estimated reliably. When total revenue,
total costs, and the stage of completion of the contract at the consolidated balance sheet date canbe reliably measured, the outcome of a development contract can be estimated reliably. If theoutcome of a development contract cannot be reliably estimated, the completed contract methodshould be applied. When it is probable that the total costs will exceed total revenue, an estimatedloss on the contract should be immediately recognized by providing for a loss on development
contracts.

m. Income Taxes—The provision for income taxes is computed based on the pretax income includedin 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 of assets and liabilities. Deferred taxes aremeasured by applying currently enacted tax laws to the temporary differences.

- 10 -

On February 16, 2018, the ASBJ issued ASBJ Statement No. 28, "Partial Amendments to
Accounting Standard for Tax Effect Accounting," 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 previously classified as current liabilities and long-term liabilities
under the previous accounting standard. The revised accounting standard is effective for annual
periods beginning on or after April 1, 2018. The Company retrospectively applied the revised
accounting standard effective April 1, 2018, and deferred tax assets of ¥2,264 million and deferred
tax liabilities of ¥44 million which were previously classified as current assets and current liabilities,
respectively, as of March 31, 2018, have been reclassified as investments and other assets andlong-term liabilities, respectively, in the accompanying consolidated balance sheet.
The Group files a tax return under the consolidated corporate tax system in Japan, which allows
companies to base tax payments on the combined profits or losses of the parent company and its
wholly owned domestic subsidiaries.
n.

Foreign Currency Transactions—All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at theconsolidated balance sheet date. The foreign exchange gains and losses from translation arerecognized in the consolidated statement of income to the extent that they are not hedged byforward exchange contracts.

o.

Foreign Currency Financial Statements—The balance sheet accounts of the foreign subsidiaries
are translated into Japanese yen at the current exchange rate as of the balance sheet date, except
for equity, which is translated at the historical rate.
Differences arising from such translation were shown as "Foreign currency translation adjustments"
under accumulated other comprehensive income as a separate component of equity.
Revenue and expense accounts of foreign subsidiaries are translated into Japanese yen at the
average exchange rate.

p.

Derivatives—The Group uses derivative financial instruments to manage its exposures tofluctuations in foreign currency exchange rates. Foreign exchange forward contracts are utilized by
the Group to reduce foreign currency exchange rate risks. The Group does not enter into derivatives
for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows: all derivatives arerecognized as either assets or liabilities and measured at fair value with gains or losses on derivativetransactions recognized in the consolidated statement of income.

q.

Per Share Information—Basic net income per share is computed by dividing net income
attributable to common shareholders by the weighted-average number of common shares
outstanding for the period.
Cash dividends per share shown in the consolidated statement of income are presented on an
accrual basis, and include interim dividends paid and year-end dividends to be approved after the
consolidated balance sheet date.
Diluted net income per share of common stock is not disclosed herein because the Company has
not issued any securities that are potentially dilutive for the years ended March 31, 2019 and 2018.

- 11 -r.

New Accounting Pronouncements—On March 30, 2018, the ASBJ issued ASBJ Statement
No. 29, "Accounting Standard for Revenue Recognition," and ASBJ Guidance No. 30,"Implementation Guidance on Accounting Standard for Revenue Recognition." The core principle ofthe standard and guidance is that an entity should recognize revenue to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration to which theentity expects to be entitled in exchange for those goods or services. An entity should recognize
revenue in accordance with that core principle by applying 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 performance obligations 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 is permitted for annual periods beginning on or after April 1, 2018.
The Company expects to apply the accounting standard and guidance for annual periods beginningon or after April 1, 2021 and is in the process of measuring the effects of applying the accounting
standard and guidance in future applicable periods.

3.

BUSINESS COMBINATION
Year Ended March 31, 2019
(Business Combinations of Entities under Common Control)a.

Outline of the business combination(1) Names and businesses of companies involved in merger
Joint company (surviving company of absorption-type merger)
Name of the joint company:
Business outline:

EIZO Corporation
Development, design, manufacture and sales of visualdisplay systems, amusement monitors and related services

Combined company (merged company of absorption-type merger)
Name of the combined company: EIZO Medical Solutions Inc.
Business outline:
System integration business solutions for the healthcare
market with our products(2) Date of business combination
October 1, 2018(3) Legal form of business combination
A consolidation-type merger, with EIZO Medical Solutions Inc. as the merged company and
EIZO Corporation as the surviving company(4) Content of allocation related to merger
Due to the merger with a wholly owned subsidiary, there is no allocation of stock and so on
money for this merger.

- 12 -

(5) Overview and purpose of the transaction
The Company executed this transaction to reorganize their healthcare business and to enhancetheir offering capabilities and provide more flexibility to the healthcare market.
b.

Overview of accounting method used
This merger was accounted for a jointly controlled transaction, based on ASBJ Statement No. 21,"Accounting Standard for Business Combinations" and ASBJ Statement No. 28, "Guidance on
Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures."(Completion of Purchase Price Allocation)
In the previous year, the process for distinguishing identifiable assets and liabilities on the date of thebusiness combination for the acquisition of Carina System Co., Ltd. which occurred on March 30, 2018,
was still under examination and the allocation of purchase price had not yet been completed as of March
31, 2018. As such, the amount of goodwill was accounted for on a provisional basis.
This process was completed during the current year and the adjustments due to the finalization of thepurchase price allocation has been reflected in the comparative information for the previous year. Suchadjustments are as follows:
Goodwill of ¥2,983 million which was accounted for on a provisional basis in the previous year
decreased by ¥333 million to ¥2,650 million subsequent to the allocation of ¥502 million to otherintangible assets and ¥169 million to the deferred tax liabilities.
There was no impact on the consolidated statement of income for the prior period.
4.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIESShort-term investments and investment securities as of March 31, 2019 and 2018, consisted of thefollowing:
Millions of Yen
2019
2018
Short-term investments:
Trust fund investments
Debt securities
Others

¥

317

¥

290
300

800

Thousands of
U.S. Dollars
2019
$

2,882
7,273

Total

¥ 1,117¥590$ 10,155

Investment securities:
Marketable equity securities
Nonmarketable equity securities
Debt securities¥ 36,870
150
1,657¥ 32,921
150$ 335,182
1,364
15,063Total¥ 38,677¥ 33,071$ 351,609- 13 -

The cost and aggregate fair value of short-term investments and investment securities at March 31, 2019and 2018, were as follows:

March 31, 2019

Cost

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value

Securities classified as:
Trading¥

317

Available for sale:
Equity securities
Others¥ 10,323
800¥ 27,128¥ 581¥ 36,870
800

Total

¥ 11,123¥ 27,128¥ 581¥ 37,670

March 31, 2018
Securities classified as:
Trading¥

Available for sale—
Equity securities¥ 7,823¥ 25,216¥ 118¥ 32,921

Total¥ 7,823¥ 25,216¥ 118¥ 32,921

March 31, 2019

Cost

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
LossesSecurities classified as:
Trading

5.

290

Fair
Value
$

2,882

Available for sale:
Equity securities
Others$ 93,845
7,273$ 246,618$ 5,281$ 335,182
7,273

Total

$ 101,118$ 246,618$ 5,281$ 342,455

INVENTORIESInventories at March 31, 2019 and 2018, consisted of the following:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Finished products
Work in process
Raw materials and supplies¥ 12,238
4,576
11,563¥ 10,280
1,985
12,512$ 111,255
41,600105,118

Total¥ 28,377¥ 24,777$ 257,973- 14 -

6.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2019 and 2018, consisted of notes to banks. The weighted-averageannual interest rate applicable to the short-term bank loans was 0.07% at March 31, 2019 and 2018.
Annual maturities of long-term debt, as of March 31, 2019, for the next five years and thereafter were as
follows:
Year Ending
March 31

7.

Millions of Yen

Thousands of
U.S. Dollars

2025 and thereafter¥ 1,246$ 11,327

Total¥ 1,246$ 11,327

RETIREMENT AND PENSION PLANS
The Company and certain of its subsidiaries have severance payment plans for employees, directors,
and Audit & Supervisory Board members.
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service, and certain otherfactors. Such retirement benefits are given in the form of a lump-sum severance payment from theCompany or from certain subsidiaries and annuity payments from the Company, certain subsidiaries, ora trustee. Employees of the Company or certain subsidiaries are entitled to larger payments if thetermination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary
retirement at certain specific ages prior to the mandatory retirement age.
(1) The changes in defined benefit obligation for the years ended March 31, 2019 and 2018, were as
follows:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Balance at beginning of year
Current service cost
Interest cost
Actuarial gains
Benefits paid
Prior service cost
Others¥ 4,147257
21(541 )(102 )(4 )(66 )¥ 3,994235
19(128 )(97 )124$ 37,700
2,336
191(4,918 )(927 )(36 )(601 )

Balance at end of year

¥ 3,712¥ 4,147$ 33,745- 15 -

(2) The changes in plan assets for the years ended March 31, 2019 and 2018, were as follows:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
Others¥ 1,025
22
(24 )
23
(20 )
(41 )

¥ 924
24
(9 )
21
(10 )
75

$ 9,318200(218 )
209(182 )(372 )

Balance at end of year

¥ 985

¥ 1,025$ 8,955(3) A reconciliation between the liability recorded in the consolidated balance sheet and the balances ofdefined benefit obligation and plan assets as of March 31, 2019 and 2018, was as follows:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation¥ 1,727(985 )
742
1,985¥ 1,770(1,025 )745
2,377$ 15,700(8,955 )
6,745
18,045Net liability for defined benefit obligation¥ 2,727¥ 3,122$ 24,790

Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Liability for retirement benefits¥ 2,727¥ 3,122$ 24,790

Net liability for defined benefit obligation¥ 2,727¥ 3,122$ 24,790(4) The components of net periodic benefit costs for the years ended March 31, 2019 and 2018, wereas follows:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Amortization of prior service cost
Others

¥ 257
21
(22 )
73
(4 )
88

¥ 235
19
(24 )
131
71

$ 2,336191(200 )
664
(36 )
800

Net periodic benefit costs

¥ 413

¥ 432

$ 3,755- 16 -

(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined
retirement benefit plans for the years ended March 31, 2019 and 2018, were as follows:
Thousands of
U.S. Dollars
2019

Millions of Yen
2019
2018
Actuarial gains
Prior service cost

¥ (563 )(16 )¥ (191 )$ (5,118 )(145 )Total¥ (579 )¥ (191 )$ (5,263 )(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March 31, 2019 and 2018, were as follows:
Thousands of
U.S. Dollars
2019

Millions of Yen
2019
2018
Unrecognized actuarial (gains) losses
Unrecognized prior service cost

¥ (427 )
(16 )

¥ 136

$ (3,882 )(145 )Total¥ (443 )¥ 136$ (4,027 )(7) Plan assetsa.

Components of plan assets
Plan assets as of March 31, 2019 and 2018, consisted of the following:

b.

2019

2018

Debt investments
Equity investments
Cash and cash equivalents
Others

53 %
15
5
27

54 %
15
4
27

Total

100 %

100 %

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates ofreturn which are expected currently and in the future from the various components of the plan
assets.

(8) Assumptions used for the years ended March 31, 2019 and 2018, are set forth as follows:

Discount rate
Expected rate of return on plan assets

2019

2018

0.2%–1.8%
4.3%

0.1%–1.6%
5.0%

The expected raise rate is based on the index of the raise calculated by age as of March 31, 2013.

- 17 -

(9) Defined contribution plan
The required contribution amounts of the Group for the years ended March 31, 2019 and 2018, were¥239 million ($2,173 thousand) and ¥223 million, respectively.
The liability for retirement benefits at March 31, 2019 and 2018, for directors and Audit & Supervisory
Board members was ¥102 million ($927 thousand).
8.

EQUITYJapanese 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 & Supervisory Board, and (4) the term of service of thedirectors being prescribed as one year rather than the normal two-year term by its articles ofincorporation, the board of directors may declare dividends (except for dividends-in-kind) at any time
during the fiscal year if the company has prescribed so in its articles of incorporation. With respect tothe third condition above, the board of directors of companies with an audit and supervisorycommittee (as implemented under the Companies Act effective May 1, 2015) may also declare
dividends at any time because such companies, by their nature, meet the criteria under theCompanies Act. The Company is organized as a company with an audit and supervisory committee,
effective June 23, 2016. The Company meets all the above criteria, and accordingly, the board of
directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) toshareholders 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 of incorporation of the company so stipulate. The Companies Act provides
certain limitations on the amounts available for dividends or the purchase of treasury stock. The
limitation is defined as the amount available for distribution to the shareholders, 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, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as alegal reserve (a component 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 aggregate amount of the legal reserve and additional paid-in capital equals 25% of the common
stock. Under the Companies Act, the total amount of additional paid-in capital and 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 theaccounts 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 purchase treasury stock and dispose of suchtreasury stock by resolution of the board of directors. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders, which is determined by aspecific formula.

- 18 -

Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition rights.
9.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes
that, in the aggregate, resulted in a normal effective statutory tax rate of approximately 30.5% and 30.7%
for the years ended March 31, 2019 and 2018, respectively.
The tax effects of significant temporary differences and tax loss carryforwards that resulted in deferred
tax assets and liabilities at March 31, 2019 and 2018, are as follows:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Deferred tax assets:
Inventories
Liability for retirement benefits
Tax loss carryforwards
Accrued expenses
Other
Less valuation allowance¥ 1,047
808
781
755
1,428
(1,664 )¥ 1,052
788
983
830
1,746
(1,861 )

Total

3,155

3,538

28,682(8,076 )(160 )(7,592 )(252 )(73,418 )(1,454 )(8,236 )(7,844 )(74,872 )¥ (5,081 )¥ (4,306 )$ (46,190 )Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
Total
Net deferred tax liabilities

$

9,518
7,345
7,100
6,864
12,982(15,127 )Note: During the current year, we finalized the provisional accounting treatment related to thebusiness combination during the prior period.
The impact of finalizing such accounting treatment has been reflected in the consolidated
financial statements for the fiscal year ended March 31, 2018.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates
reflected in the accompanying consolidated statement of income for the year ended March 31, 2019, withthe corresponding figures for 2018, is as follows:
2019

2018

Normal effective statutory tax rate
Tax credit for research expenses
Decrease in valuation
Amortization of goodwill
Other—net

30.5 %
(3.1)
(4.9)
2.9
(0.9)

30.7 %(4.8)(1.2)

Actual effective tax rate

24.5 %

24.9 %- 19 -

0.2

At March 31, 2019, certain subsidiaries have tax loss carryforwards aggregating approximately¥3,027 million ($27,518 thousand) that are available to be offset against taxable income of such
subsidiaries in future years. These tax loss carryforwards, if not utilized, will expire as follows:Year Ending
March 31

10.

Millions of Yen

Thousands of
U.S. Dollars

2022 and thereafter¥ 3,027$ 27,518

Total¥ 3,027$ 27,518

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the years ended March 31, 2019 and 2018, principallyconsisted of the following:
Millions of Yen
2019
2018
Salaries for employees
Provision for bonuses
Retirement benefit expenses
Provision for product warranty liabilities
R&D expenses
Provision for loss on recycling of monitors
Provision of allowance for doubtful accounts

11.

¥ 5,885
354
314
191
5,395
(86 )
(50 )

¥ 5,418
392
341
432
5,481
(76 )
(9 )

Thousands of
U.S. Dollars
2019$ 53,500
3,218
2,855
1,736
49,045(782 )(455 )

R&D COSTS
R&D costs charged to income were ¥5,932 million ($53,927 thousand) and ¥5,908 million for the years
ended March 31, 2019 and 2018, respectively.

12.

LEASES
The minimum rental commitments under noncancelable operating leases at March 31, 2019 and 2018,
were as follows:
Millions of Yen
2019
2018

Thousands of
U.S. Dollars
2019

Due within one year
Due after one year

¥ 245
1,449

¥ 266
396

$ 2,227
13,173

Total¥ 1,694¥ 662$ 15,400- 20 -

13.

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments based on its capital expenditure plan. Cash surpluses, if any,
are invested in low-risk financial assets. Derivatives are not used, for speculative purposes, but tomanage exposure to financial risks as described in (2) below.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although
receivables in foreign currencies are exposed to the risk of fluctuation in foreign currency exchange
rates, the position, net of payables in foreign currencies, is hedged by using forward foreign currency
contracts. Short-term investment and investment securities, mainly equity instruments of customers
and suppliers of the Group, debt securities and funds in trust are exposed to credit risk and the riskof fluctuation in market price and interest rate.
All payment terms of payables, such as trade accounts, are within one year. Although payables inforeign currencies are exposed to the risk of fluctuation in foreign currency exchange rates, thoserisks are netted against the balance of receivables denominated in the same foreign currency, as
noted above.
Short-term bank loans are used to hedge the exchange risk for nontrade receivables denominated inforeign currency. The payment term is within three months after the consolidated balance sheet
date. The long-term bank loan is used to finance for construction of new buildings at EIZO GmbH
which is a consolidated subsidiary. All the loans are traded in foreign currency and have variableinterest rates. Thus, they are exposed to the market risk of fluctuation in exchange rates and interest
rates.
Derivatives mainly include forward foreign currency contracts that are used to manage exposure torisk of changes in foreign currency exchange rates of receivables and payables. Please see Note 14
for more details about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service debt
according to the contractual terms. The Group manages its credit risk from receivables on the basisof internal guidelines, which include monitoring of payment terms and balances of major customers
by each business administration department to identify the default risk of customers at an earlystage. With respect to debt securities, the Group manages its exposure to credit risk by limiting its
funding to high credit rating bonds in accordance with in its internal guidelines. Please see Note 14
for information about derivatives.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March
31, 2019.

- 21 -

Market risk management (foreign exchange rate risk and interest rate risk)
Foreign currency trade receivables, payables, short-term bank loans, and long-term debt are
exposed to fluctuations in foreign currency exchange rates. Such foreign exchange rate risk ishedged occasionally by forward foreign currency contracts.
Marketable and investment securities are managed by monitoring the market values and financial
position of issuers on a regular basis.
The basic policies regarding derivative transactions have been approved by the director in charge ofaccounting based on internal guidelines that prescribe the authority and the limit for each transaction
by the corporate treasury department. Reconciliation of the transactions and balances withcustomers is made and the transaction data is reported to the director in charge of accounting on amonthly basis.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on
maturity dates. The Group manages its liquidity risk by holding an adequate volume of liquid assets
along with adequate financial planning by the corporate treasury department.
(4) Concentration of Credit Risk
As of March 31, 2019, 7.7% of total receivables are from specific major customers of the Group.
(5) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices
are not available, other rational valuation techniques are used instead.
(a) Fair value of financial instruments
Millions of Yen
Carrying
AmountMarch 31, 2019

Fair Value

Cash and cash equivalents
Notes and accounts receivable
Allowance for doubtful receivables
Notes and accounts receivable (net)
Short-term investments andinvestment securities¥ 16,099
18,051(77 )
17,974¥ 16,099

37,98737,987

Total¥ 72,060¥ 72,060

Accounts payable
Short-term bank loans
Long-term bank loan

¥ 8,083
1,868
1,246

¥ 8,083
1,868
1,246

Total

¥ 11,197¥ 11,197- 22 -

17,974

Unrealized
Gain/LossMillions of Yen
Carrying
AmountMarch 31, 2018

Fair Value

Unrealized
Gain/Loss

Cash and cash equivalents
Notes and accounts receivable
Allowance for doubtful receivables
Notes and accounts receivable (net)
Short-term investments andinvestment securities¥ 20,395
22,736(131 )
22,605¥ 20,395

33,211

33,211

Total¥ 76,211¥ 76,211

Accounts payable
Short-term bank loans
Long-term debt

¥ 8,929
1,958
55¥ 8,929
1,958
56

¥1

Total

¥ 10,942¥ 10,943¥1

Derivatives

¥

¥

35

22,60535

Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain/Loss

March 31, 2019
Cash and cash equivalents
Notes and accounts receivable
Allowance for doubtful receivables
Notes and accounts receivable (net)
Short-term investments andinvestment securities$ 146,355
164,100(700 )
163,400$ 146,355

345,336

345,336

Total$ 655,091$ 655,091

Accounts payable
Short-term bank loans
Long-term bank loan

$ 73,482
16,982
11,327$ 73,482
16,982
11,327

Total$ 101,791$ 101,791

163,400

Derivatives
Cash and Cash Equivalents
The carrying values of cash and cash equivalents approximate fair value because of their shortmaturities.
Notes and Accounts Receivable
The carrying values of notes and accounts receivable approximate fair value because of theirshort-term settlement periods. The allowance for doubtful receivables is deducted from notes
and accounts receivable.

- 23 -

Short-Term Investments and Investment Securities
The fair values of short-term investments and investment securities are measured at the quoted
market price of the stock exchange for equity instruments and at the quoted price obtained fromfinancial institutions for certain debt instruments. Fair value information for the short-term
investments and investment securities by classification is included in Note 4.
Accounts Payable and Short-Term Bank Loans
The carrying values of accounts payable and short-term bank loans approximate fair value
because of their short-term settlement periods.
Long-Term Bank Loan
As those with variable interest rates reflect market interest rates within a short period of time
and the EIZO Corporation's credit capability is not different markedly from the execution, the fairvalue is approximately the same as the book value and thus is stated at that carrying value.
Derivatives
Fair value information for derivatives is included in Note 14.
(b) Carrying amount of financial instruments whose fair value cannot be reliably determined
Millions of Yen
2019
2018
Investments in equity instruments that do nothave a quoted market price in an active market
Debt securities that do not have a quoted market
price in an active market

Thousands of
U.S. Dollars
2019

¥ 150

¥ 150

$ 1,364

1,657

300

15,063(6) Maturity Analysis for Financial Assets and Securities with Contractual Maturities

Due in1 Yearor Less

March 31, 2019

Millions of Yen
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Cash and cash equivalents
Receivables
Investment securities:
Debt securities
Others¥ 16,097
18,051800¥ 1,200
457

Total¥ 34,948¥ 1,657

March 31, 2018
Cash and cash equivalents
Receivables
Debt securities¥ 20,391
22,736300

Total¥ 43,427- 24 -

Due after
10 YearsDue in
1 Yearor Less

March 31, 201914.

Thousands of U.S. Dollars
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Cash and cash equivalents
Receivables
Investment securities:
Debt securities
Others$ 146,336
164,100
7,273$ 10,909
4,155

Total

$ 317,709$ 15,064

Due after
10 Years

DERIVATIVESThe Group enters into derivative contracts, including foreign currency forward contracts, to hedge foreignexchange rate risk associated with certain assets and liabilities denominated in foreign currencies.
All derivative transactions are entered into to hedge foreign currency exposures incorporated within theGroup's business. Accordingly, market risk in these derivatives is basically offset by opposite movementsin the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, theGroup does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies
that regulate the authorization and credit limit amount.
Derivative Transactions to Which Hedge Accounting Is Not Applied
Derivative transactions to which hedge accounting is not applied at March 31, 2019 and 2018, were as
follows:
As of March 31, 2019, there is no such matter.

March 31, 2018

Contract
AmountForeign currency forward contracts—
Selling Euro

¥ 949

Millions of Yen
Contract
AmountDue after
Fair
1 YearValue

Unrealized
Gain/Loss¥ 35

The fair value of derivative transactions is measured at the quoted price obtained from financial
institutions.

- 25 -¥ 35

15.

OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income and loss for the years ended March 31, 2019 and2018, were as follows:
Millions of Yen
2019
2018
Unrealized gain on available-for-sale securities:
Gains arising during the year
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Amount before income tax effect
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income

16.

Thousands of
U.S. Dollars
2019¥ 1,449
1,449(485 )¥ 736
736(268 )$ 13,173
13,173(4,410 )

¥ 964

¥ 468

$ 8,763¥ (283 )(283 )¥ 278
278$ (2,573 )(2,573 )¥ (283 )¥ 278$ (2,573 )

¥ 508
71
579
(140 )

¥ 60
132
192
(23 )

$ 4,618646
5,264(1,273 )

¥ 439

¥ 169

$ 3,991¥ 1,120¥ 915$ 10,181

SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2019, was approved at the board of
directors' meeting held on May 16, 2019:Year-end cash dividends, ¥50 ($0.5) per share
17.

Millions of Yen

Thousands of
U.S. Dollars¥ 1,066$ 9,691

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures," and ASBJ
Guidance No. 20, "Guidance on Accounting Standard for Segment Information Disclosures," an entity isrequired to report financial and descriptive information about its reportable segments. Reportablesegments are operating segments or aggregations of operating segments that meet specified criteria.
Operating segments are components of an entity about which separate financial information is available,
and such information is evaluated regularly by the chief operating decision-maker in deciding how toallocate resources and in assessing performance. Generally, segment information is required to bereported on the same basis as is used internally for evaluating operating segment performance anddeciding how to allocate resources to operating segments.

- 26 -

(1) Description of Reportable Segments
The Group is primarily engaged in the manufacture, development, and sale of visual products and related products. The Group consists of this single industry, andtherefore, it is not required to disclose separate financial information by segment.
(2) Information about Products and Services

Sales to external customers

Sales to external customers

Sales to external customers

Millions of Yen
2019
Vertical&SpecificBusiness&
Plus

Healthcare

CreativeWork¥ 17,788¥ 30,409¥ 5,972¥ 7,420

Business&
Plus

Healthcare

Creative
Work

Millions of Yen
2018
Vertical&Specific¥ 18,111¥ 29,780¥ 5,749¥ 7,885

Amusement

Other

Total

¥ 8,584¥ 2,771¥ 72,944

Amusement

Other

Total

¥ 15,234¥ 7,299¥ 84,058

Other

Total

$ 25,191$ 663,127

Business&
Plus

Healthcare

Thousands of U.S. Dollars
2019
VerticalCreative&
Work
Specific
Amusement$ 161,709$ 276,445$ 54,291$ 67,455$ 78,036(3) Information about Geographical Areas(a) Sales

Japan

EuropeMillions of Yen
2019
North
America¥ 32,484¥ 30,283¥ 6,132¥ 4,045¥ 72,944

Japan

EuropeMillions of Yen
2018
North
America

Other

Total

¥ 44,405¥ 30,057¥ 5,810¥ 3,786¥ 84,058- 27 -

Other

Total

JapanEuropeThousands of U.S. Dollars
2019
North
America$ 295,309$ 275,300$ 55,745

Other

Total

$ 36,773$ 663,127

Note: Sales are classified by country or region based on the location of customers.
(b) Property, plant, and equipment

Japan

Europe¥ 11,139¥ 3,115

Japan

Europe$ 101,264$ 28,318

Millions of Yen
2019
North
America¥ 27
Thousands of U.S. Dollars
2019
North
America
$ 245

Other

Total

¥ 40

¥ 14,321

Other

Total

$ 364

$ 130,191

As of March 31, 2018, the amount of property, plant, and equipment located in Japan exceeds
90% of the amount of property, plant, and equipment in the consolidated balance sheet, andthus, there is no requirement to disclose such geographic information.
(4) Information about Major Customers

Name of Customers

Millions of Yen
2019
Sales

JT Japan Technicals¥ 9,760

Name of Customers

Millions of Yen
2018
Sales

JT Japan Technicals¥ 21,019

Name of Customers

Thousands of
U.S. Dollars
2019
Sales

JT Japan Technicals$ 88,727******- 28 -