Consolidated Financial Results for the Three Months Ended June 30, 2017
(Japanese Accounting Standards)
August 8, 2017
Tokyo Stock Exchange
http://www.mmc.co.jp/

Name of Listed Company: Mitsubishi Materials Corporation
Listing:
Stock Code:
5711
URL:
Representative: Akira Takeuchi, President
Contact:
Nobuyuki Suzuki, General Manager, Corporate Communications Dept., General Affiars Dept.,
General Administration Div.
Tel: +81-3-5252-5206
Scheduled filing date of Quarterly Report:
August 8, 2017
Scheduled date of start of dividend payment:–
Supplementary materials for the quarterly financial results: Yes
Investor conference for the quarterly financial results:
Yes (For Institutional Investors)(Amounts of less than million yen are omitted.)

1. Results of the first three months ended June 30, 2017 (From April 1, 2017 to June 30, 2017)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Net salesFirst three months ended June 30, 2017
First three months ended June 30, 2016
(Note) Comprehensive income:Operating profit

Net income
attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

333,316
298,828

11.5
-17.2

17,307
13,19031.2-19.5

21,64012,066

79.4-29.4

11,63010,7668.0-63.6

The first three months ended June 30, 2017: 13,808 million yen (－%)
The first three months ended June 30, 2016: -13,538 million yen (－%)

Net income
per share

Diluted net income
per share
YenFirst three months ended June 30, 2017
First three months ended June 30, 2016

88.80
82.18

Yen

–
–

* The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date of October 1, 2016. Accordingly, net income per share is calculated on
the assumption that the consolidation of its shares was conducted at the beginning of the previous consolidated fiscal year.

(2) Consolidated Financial Position
Total assets
As of June 30, 2017
As of March 31, 2017
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Net assets

Million yen

Million yen%

1,929,080
1,896,939

711,518
710,195

32.3
32.8

As of June 30, 2017: 623,683 million yen

As of March 31, 2017: 621,281 million yen

2. Dividend Payments
Dividends per share(Record date)

First quarter
Yen

Year ended March 31, 2017–

Year ending March 31, 2018–Year ending March 31, 2018 (Forecast)Second quarter

Third quarter

Yen

Yen

Year-end

Annual
Yen

2.00

–

40.00

30.00

–

50.00

Yen

–
80.00

(Note) Revision of dividend forecast published most recently: No* The Company consolidated its shares at a 10:1 ratio of its common stock, with an effective date of October 1, 2016. For the amount of dividends at the end of the second
quarter of the fiscal year ended March 31, 2017, the amount prior to the consolidation of shares is stated because the dividends were paid based on the number of shares
before the consolidation of shares.
For the year-end dividend per share in the fiscal year ended March 31, 2017, the amount after the consolidation of shares is stated and a hyphen is written for the annual
dividend because it cannot be simply combined.

3. Consolidated earnings forecast (From April 1, 2017 to March 31, 2018)(Figures in percentages denote the year-on-year change.)

Net sales

Six months ending
September 30, 2017
Year ending March 31, 2018

Operating profit

Ordinary income

Net income
attributable toowners of parent

Net income
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

720,000

19.4

33,00020.8

36,00038.3

18,000-39.1

137.45

1,540,000

18.1

70,00017.1

75,00017.3

31,0009.3

236.72(Note) Revision to forecast published most recently: Yes
For the revisions to the consolidated earnings forecasts, please see the “Notice of Revisions to the Performance Forecast” published today (August 8,2017).

* Notes(1) Significant changes of subsidiaries during the term under review (changes in specific subsidiaries accompanied bya change in the scope of consolidation):
None(2) Application of specific accounting treatment:

Yes(Note) For details, please see “(3) Notes to consolidated quarterly financial statements (Application of special accounting
treatment in the preparation of the quarterly consolidated financial statements)” under “2. Consolidated Financial
Statements and Keynotes” on page 12.

(3) Changes in accounting policies, changes of accounting estimates and restatement(i)
Changes in accounting policies due to amendments to accounting standards:(ii) Other changes in accounting policies:(iii) Changes in accounting estimates:(iv) Restatements:

None
Yes
None
None

(Note) For details, please see “(3) Notes to consolidated quarterly financial statements (Changes in accounting policies)” under“2. Consolidated Financial Statements and Keynotes” on page 12.

(4) Numbers of issued shares (common stock)(i)
Numbers of issued shares at end of terms (including treasury shares):Three months ended June 30, 2017:
131,489,535 sharesYear ended March 31, 2017:
131,489,535 shares(ii)
Numbers of treasury shares at end of terms:
Three months ended June 30, 2017:
511,609 sharesYear ended March 31, 2017:
507,863 shares(iii) Average number of shares issued during terms (quarterly cumulative period):
Three months ended June 30, 2017:
130,979,953 shares
Three months ended June 30, 2016:
130,999,672 shares* The Company consolidated its shares at a rate of one share for every 10 shares of its common stock, with October 1, 2016 as
the effective date. Subsequently, the numbers of issued shares at end of terms, the numbers of treasury shares at end of terms,
and the average number of shares issued during terms are calculated based on the assumption that the consolidation of shares
was conducted at the beginning of the previous consolidated fiscal year

* This quarterly financial summaries is not subject to a quarterly review.
* Explanation about the proper use of financial forecasts and other special notes(Notes concerning forward-looking statements, etc.)
The operating results forecasts and other forward-looking statements contained in this report are based on information
currently available to the Company, as well as certain assumptions that the Company has judged to be reasonable. As
such, they do not constitute an assurance that the Company promises to achieve these projected results. Therefore,
readers are advised to note that the actual results may vary materially from the forecasts due to a variety of factors.
Please see “(3) Information on the consolidated earnings forecasts and other future forecasts” of “1. Qualitative
Information on Financial Results for the First Quarter Ended June 30, 2017” on page 5 for the assumptions about
consolidated earnings forecasts.
(Procedure for obtaining supplementary information on quarterly financial results and quarterly financial briefing)
Mitsubishi Materials Corporation plans to hold a quarterly financial briefing for institutional investors on Tuesday,
August 8, 2017. The materials used at this briefing are disclosed on the TDnet and the Company’s web page at the timethat the quarterly financial results are announced.

Contents
1. Qualitative Information on Financial Results for the First Quarter Ended June 30, 2017 .................................. 2(1) Details of operating results .............................................................................................................................2(2) Details of financial position ...........................................................................................................................5(3) Information on the consolidated earnings forecasts and other future forecasts ..............................................5
2. Consolidated Financial Statements and Keynotes............................................................................................... 6(1) Consolidated balance sheet ............................................................................................................................6(2) Consolidated statement of income and consolidated statements of comprehensive income ..........................8
Consolidated statement of income................................................................................................................ 8
Consolidated statements of comprehensive income ..................................................................................... 9(3) Notes to consolidated quarterly financial statements ................................................................................... 10
Notes on assumptions for a going concern ................................................................................................. 10
Segment information .................................................................................................................................. 10
Notes on significant changes in the amount of shareholders’ equity, if any .............................................. 12
Application of special accounting treatment in the preparation of the quarterly consolidated financial
statements ..................................................................................................................................................... 12
Changes in accounting policies .................................................................................................................. 12
Additional information ............................................................................................................................... 12
Contingent liabilities .................................................................................................................................. 12–1–

1. Qualitative Information on Financial Results for the First Quarter Ended June 30, 2017
(1) Details of operating results1) Overview of operating results
During the first quarter of the consolidated fiscal year under review, signs of recovery were seen in the Asian
economies of China, Thailand and Indonesia. In the United States, the economy remained on a moderate
recovery track.
In Japan, corporate earnings and employment and income conditions were on the road to recovery, andconsumer spending and capital expenditure showed signs of improvement.
Regarding the business environment for the Mitsubishi Materials Group, demand for cement, particularly
demand from the public sector remained firm, and the foreign exchange markets were characterized by
year-on-year yen depreciation.
Under these circumstances, consolidated net sales for the first quarter under review totaled ¥333,316 million,
up 11.5% year on year. Operating profit increased 31.2% year on year, to ¥17,307 million, and ordinary
income rose 79.4%, to ¥21,640 million. Net income attributable to owners of parent was ¥11,630 million, up
8.0% year on year.
2) Overview by segments(Cement)

Net sales
Operating profit
Ordinary income

FY 2017 Q1
40.1
2.8
2.5

FY 2018 Q1
47.5
5.2
5.3

(Billion yen)
Increase / Decrease (%)
7.4(18.5%)
2.4(88.1%)
2.7(107.0%)

Sales volumes rose in Japan due to the firm performance of construction work of facilities related to theTokyo Olympic and Paralympic Games in the Tokyo metropolitan area, as well as disaster restoration workand road-related work in Kyushu, which also remained solid. However, rising thermal energy costs resulted
in a decline in operating profit, even as net sales increased.
In the United States, sales volumes of ready-mixed concrete increased, thanks to firm demand related tohousing and commercial facilities in Southern California. Sales volumes of cement also increased year on
year, due to the rise in the sales volume of ready-mixed concrete. Following a price review, the selling priceof cement rose year on year. As a result, both net sales and operating profit increased.
In the overall Cement business, cement production amounted to 2.5 million tons, down 0.1 million tons fromthe first quarter of the previous fiscal year.
As a result, net sales and operating profit increased year on year for the entire Cement business. Ordinary
income also rose with the increase in operating profit.
The Company has excluded Yantai Mitsubishi Cement Co., Ltd. from the scope of consolidation in the firstquarter of the consolidated fiscal year under review, because the Company transferred all of the equity
interests in Yantai Mitsubishi Cement Co., Ltd., which engaged in the manufacturing and sales business of
cement in China.

–2–

(Metals)

Net sales
Operating profit
Ordinary income

FY 2017 Q1
139.5
4.5
4.3

FY 2018 Q1
158.5
3.7
7.8

(Billion yen)
Increase / Decrease (%)
19.0(13.6%)-0.7(-16.0%)3.4(79.8%)In the copper business, net sales increased but operating profit declined, reflecting periodic furnace repairs
conducted at Noshima Smelter & Refinery, despite an increase in production linked to a rise in the amountcontracted by Onahama Smelting and Refining Co., Ltd. Copper cathode production for the entire Metals
business amounted to 144 thousand tons, up 6.9 thousand tons year on year.
In the gold and other valuable metals business, net sales and operating profit increased mainly due to a rise inpalladium prices.
In the copper and copper alloy products business, net sales and operating profit were up chiefly due to anincrease in sales of products for automobiles and other use.
As a result, the entire Metals business posted a year-on-year increase in net sales, but operating profit
declined primarily due to the impact of periodic furnace repairs at Noshima Smelter & Refinery. Ordinary
income increased year on year due to a rise in dividend income.
(Advanced Materials & Tools)

Net sales
Operating profit
Ordinary income

FY 2017 Q1
36.4
3.6
2.9

FY 2018 Q1
39.0
4.2
3.9

(Billion yen)
Increase / Decrease (%)
2.5(7.1%)
0.5(16.4%)
1.0(37.1%)In the cemented carbide products business, net sales and operating profits increased as a result of aggressive
efforts for sales promotion, in addition to higher demand in overseas market particularly in Europe, UnitedStates and Southeast Asia.
In the high-performance alloy products business, sales of our mainstay sintering parts increased in Japan,
Europe and the United States following the launch of new products, but operating profit declined due to a risein selling and administrative expenses, although net sales increased.
As a result, the overall Advanced Materials & Tools business recorded year-on-year increases in net sales
and operating profit. Ordinary income also rose due to an increase in foreign exchange gains, in addition tohigher operating profit.
(Electronic Materials & Components)

Net sales
Operating profit
Ordinary income

FY 2017 Q1
15.0
0.2
0.2

FY 2018 Q1
17.4
1.4
1.4

(Billion yen)
Increase / Decrease (%)
2.4(16.1%)
1.2(464.4%)1.2(434.0%)In the advanced materials and chemical products business, net sales and operating profit increased, reflecting
a rise in sales of products related to semiconductor manufacturing equipment and other products.

–3–

In the electronic components business, both net sales and operating profit also increased thanks to a higher
volume of sales of products for home appliances and optical communication related equipment.
The polycrystalline silicon business recorded an increase in net sales and operating profit, chiefly due to thepositive effect of changes in the schedule of periodic repairs, in addition to higher sales.
As a result, the entire Electronics Materials & Components business registered year-on-year increases in net
sales and operating profit. Ordinary income rose as a result of higher operating profit.
(Aluminum)

Net sales
Operating profit
Ordinary income

FY 2017 Q1
40.2
2.3
2.2

FY 2018 Q1
39.5
2.3
2.2

(Billion yen)
Increase / Decrease (%)-0.7(-1.8%)-0.0(-0.2%)-0.0(-0.2%)In the aluminum can business, net sales and operating profit declined due to a fall in sales of both regularcans and bottle cans and rising energy costs.
In the rolled aluminum and processed aluminum products business, net sales and operating profit increased
thanks to higher sales of can materials and products for automobiles, despite the rise in energy costs.
As a result, the entire Aluminum business posted a decrease in net sales, but operating profit and ordinary
income remained unchanged from the level a year ago.
(Others)

Net sales
Operating profit
Ordinary income

FY 2017 Q1
45.4
1.0
0.9

FY 2018 Q1
50.7
1.6
1.9

(Billion yen)
Increase / Decrease (%)
5.3(11.9%)
0.6(61.9%)
1.0(110.2%)In the energy-related business, net sales and operating profit increased due to a rise in sales prices of coal.
In the “E-waste” (used electronics and electrical products) recycling business, both net sales and operating
profit increased with a rise in the recycling unit cost of valuables, in addition to continued firmness inrecycling volumes.
Total net sales and operating profit in the overall Others business excluding the energy-related business andthe “E-waste” (used electronics and electrical products) recycling business increased.
In the overall Others business, net sales and operating profit increased from a year earlier. Ordinary income
rose due to the rise in operating profit, in addition to an increase in dividend income.
Orders received for nuclear energy and engineering-related services amounted to ¥16.4 billion, down ¥4.2
billion year on year. The order backlog at the end of the period was ¥48.6 billion, up ¥18.4 billion from ayear earlier.

–4–(2) Details of financial position
Total assets at the end of the first quarter of the consolidated fiscal year under review stood at ¥1,929.0 billion,up ¥32.1 billion from the end of the previous consolidated fiscal year. This result was mainly due to an increase
in inventories during the first quarter under review.
Total liabilities were ¥1,217.5 billion, an increase of ¥30.8 billion from the end of the previous consolidated
fiscal year. This increase was chiefly attributable to a rise in long-term loans payable during the first quarter
under review.

(3) Information on the consolidated earnings forecasts and other future forecasts
In our consolidated earnings forecasts for the six months and the full year of the fiscal year ending March 31,
2018, we have revised the previous forecasts (announced on May 11, 2017) for net sales, operating profit,
ordinary income and net income attributable to owners of parent as follows. Due to the demand for cement
particularly for housing and commercial facilities remained firm in Southern California, the United States andthat some of the dividends from copper mines, which we expected to be paid in the second half, have been paidin the first quarter under review.
Revisions to Consolidated Earnings Forecasts for the First Six Months of the Fiscal Year Ending March 31, 2018(from April 1, 2017 to September 30, 2017)(Billion yen)Previous forecast
Current forecast
Increase / Decrease (%)
Net sales
750.0
720.0
-4.0%
Operating profit
28.0
33.0
17.9%
Ordinary income
25.0
36.0
44.0%
Net income attributable to
13.0
18.0
38.5%
owners of parent
Revisions to Consolidated Earnings Forecasts for the Fiscal Year Ending March 31, 2018(from April 1, 2017 to March 31, 2018)

Net sales
Operating profit
Ordinary income
Net income attributableto owners of parent

Previous forecast
1,570.0
65.0
68.0

Current forecast
1,540.0
70.0
75.0

28.0

31.0

–5–

(Billion yen)
Increase / Decrease (%)
-1.9%
7.7%
10.3%
10.7%

2. Consolidated Financial Statements and Keynotes(1) Consolidated balance sheet
As of March 31, 2017
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Machinery and equipment, net
Land, net
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets–6–(Million yen)
As of June 30, 2017

141,264
213,343
85,878
101,643
100,757
227,119(2,537)82,752
226,147
94,888138,020
117,781
221,446(2,657)

867,469

878,379

199,758
260,805
205,661

200,652
259,042
210,523

666,226

670,218

43,43615,13855,062
14,84658,57469,908252,067
58,151(5,549)252,600
63,551(5,578)

304,669

310,573

1,029,470

1,050,700

1,896,939

1,929,080

As of March 31, 2017
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of bonds payable
Commercial papers
Income taxes payable
Provision
Gold payable
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Provision for environmental measures
Other provision
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity(Million yen)
As of June 30, 2017

114,502203,819
15,000–16,154
13,518241,406
102,262

134,671
214,574
15,00010,0007,323
6,831
242,897
100,558

706,665

731,857

55,000254,41132,5685,502
56,03776,56040,000276,564
32,326
2,373
57,94076,499480,079

485,704

1,186,744

1,217,561

119,457
92,422
333,526(2,017)

119,457
92,422
340,206(2,029)543,390550,058

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans

55,226888
34,930(1,418)(11,735)

55,102(593)
34,943(4,888)(10,938)

Total accumulated other comprehensive income

77,891

73,62588,91387,834Non-controlling interests
Total net assets
Total liabilities and net assets–7–710,195

711,518

1,896,939

1,929,080

(2) Consolidated statement of income and consolidated statements of comprehensive income
Consolidated statement of income
Consolidated first three quarters

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Interest income
Dividend income
Equity in earnings of affiliates
Rent income on non-current assets
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of non-current assets
Other
Total extraordinary income
Extraordinary losses
Settlement related expenses
Loss on valuation of investment securities
Other
Total extraordinary losses
Income before income taxes
Income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent(Million yen)Three Months Ended
June 30, 2016
(Apr. 1, 2016–Jun. 30, 2016)
298,828
249,788
49,04035,84913,190–8–

Three Months Ended
June 30, 2017
(Apr. 1, 2017–Jun. 30, 2017)
333,316
279,944
53,372
36,06417,307

117
1,182
714
1,227
531
3,773

187
5,937
600
1,156
1,274
9,155

1,335
3,562
4,898
12,066

1,247
3,575
4,822
21,640

600
3,209
2
3,812

126
17
0
143

–
132
17
150
15,728
4,033
11,695929
10,76615–
14
30
21,754
7,122
14,632
3,001
11,630Consolidated statements of comprehensive income
Consolidated first three quarters(Million yen)Three Months Ended
June 30, 2016
(Apr. 1, 2016–Jun. 30, 2016)

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Equity in earnings of affiliates
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests–9–

Three Months Ended
June 30, 2017
(Apr. 1, 2017–Jun. 30, 2017)

11,695

14,632(5,380)1,479(21,404)
1,290(1,218)(179)(1,432)
(103)
815
76

(25,233)(823)(13,538)

13,808(9,633)

10,729(3,905)

3,078

(3) Notes to consolidated quarterly financial statements
Notes on assumptions for a going concern
N/A

Segment information[Segment Information]
I. For the three months ended June 30, 2016 (from April 1, 2016 to June 30, 2016)
Sales and income of reporting segments(Million yen)

AdvancedElectronic
Materials & Materials & Aluminum
Tools
Components

CementMetals(1) Outside customers

39,492

137,794

32,34913,785(2) Withinconsolidated group

681

1,776

4,084

1,282

Total

40,174

139,570

36,433

2,566

4,369

2,900

Amountindicated intheAdjustment
consolidated
amountquarterlystatements
of income

OthersTotal

39,73735,668298,828–

298,828

532

9,736

18,093(18,093)–

15,06740,27045,405

316,922(18,093)

298,828

278

2,235

921

13,272(1,206)

12,066

Net sales

Segment income

Notes: 1. “Others” includes nuclear energy-related services, environmental and recycling-related business, real estatebusiness, and engineering-related services.
2. “Adjustment amount” of segment income of -¥1,206 million includes the elimination of intersegment transactionsof -¥37 million and corporate expenses of -¥1,168 million which are not distributed to the reporting segments.
Corporate expenses consist mainly of general and administrative expenses that do not belong to the reporting
segments, basic experiment and research expenses, and financial revenue and expenses.
3. Segment income has been adjusted together with ordinary income on the consolidated quarterly statements ofincome.

II. For the three months ended June 30, 2017 (from April 1, 2017 to June 30, 2017)
1. Sales and income of reporting segments(Million yen)

AdvancedElectronic
Materials & Materials & Aluminum
Tools
Components

CementMetals(1) Outside customers

46,798156,377

36,157

15,291(2) Withinconsolidated group

799

2,209

2,874

Total

47,598

158,587

5,314

7,858

Amountindicated intheAdjustment
consolidated
amountquarterlystatements
of income

OthersTotal

39,29339,398333,316–

333,316

2,202

241

11,396

19,723(19,723)–

39,032

17,49339,53550,794353,040(19,723)

333,316

3,976

1,489

2,231

1,936

22,806(1,165)

21,640Net sales

Segment income

Notes: 1. “Others” includes nuclear energy-related services, environmental and recycling-related business, real estatebusiness, and engineering-related services.
2. “Adjustment amount” of segment income of -¥1,165 million includes the elimination of intersegment transactionsof -¥54 million and corporate expenses of -¥1,111 million which are not distributed to the reporting segments.
Corporate expenses consist mainly of general and administrative expenses that do not belong to the reporting
segments, basic experiment and research expenses, and financial revenue and expenses.
3. Segment income has been adjusted together with ordinary income on the consolidated quarterly statements ofincome.

– 10 –

2. Matters relating to the change in the reporting segments, etc.
(Changes in the depreciation method of property, plant and equipment)
As stated in “Changes in accounting policies”, as the deprecation method applied to production facilities forelectronic materials and components of the Company and its consolidated subsidiaries in Japan, thedeclining-balance method was mainly used, but the method has been changed to the straight-line method fromthe first quarter of the current consolidated fiscal year.
As a result of changing the depreciation method, segment income has increased ¥61 million in the first quarter ofthe current consolidated fiscal year, compared with the case in which the past method is used.

– 11 –

Notes on significant changes in the amount of shareholders’ equity, if any
N/AApplication of special accounting treatment in the preparation of the quarterly consolidated
financial statements
The Company calculates tax expenses by rationally assuming an effective tax rate after applying tax effectaccounting to income before income taxes for the consolidated fiscal year, including the first quarter underreview, and multiplying income before income taxes for the first quarter by the estimated effective tax rate.

Changes in accounting policies(Changes in the depreciation method of property, plant and equipment)
As the deprecation method applied to production facilities for electronic materials and components of theCompany and its consolidated subsidiaries in Japan, the declining-balance method was mainly used, but themethod has been changed to the straight-line method from the first quarter of the current consolidated fiscal year.
This change has been made based on our judgment that the straight-line method is more reasonable, given that
production facilities are expected to operate stably over a long period of time and that the investment effect is
expected to emerge evenly, as a result of examining the depreciation method in the wake of the formulation of
the Medium-Term Management Strategy (FY2018 to FY2020).
As a result of changing the depreciation method, operating profit, ordinary income and income before income
taxes have increased ¥61 million, respectively, in the first quarter of the current consolidated fiscal year,
compared with the case in which the past method is used.

Additional information(Provision for environmental measures)
In regards to expenses for specific countermeasure work to prevent mining-induced pollution and expenses forcountermeasure work to stabilize collection sites in abandoned mines managed by the Group, we have recorded a
provision for expenses whose estimated amount has been fixed because the details of the construction work havebeen determined. However, there are some forms of countermeasure work for which the amount cannot becalculated reasonably because the details of construction work are undecided due to the fact that the mostappropriate construction method for the landscape and existing equipment have yet to be selected, even thoughspecific countermeasure work is necessary.

Contingent liabilities
Previous consolidated fiscal year (As of March 31, 2017)
On December 30, 2014, PT Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“Consolidated Subsidiary”) received a notice of reassessment in an amount of US$47 million (¥5,370 million
based on the exchange rate at the end of the previous consolidated fiscal year) from the Indonesian National Tax
Authority regarding the sales transaction pricing of the Consolidated Subsidiary for the year ended December
2009. On January 28, 2015, the Consolidated Subsidiary made a provisional deposit of US$14 million (¥1,570
million) as a part of the additional collection.
However, the Consolidated Subsidiary submitted a written objection to the Indonesian National Tax Authority
on March 25, 2015, because this assessment, which claimed there was a sales shortage on the part of theConsolidated Subsidiary based on a comparison of the profit margin ratio with other companies selected by theIndonesian National Tax Authority, was highly unreasonable and found to be unacceptable by the Company andthe Consolidated Subsidiary.
The written objection submitted by the Consolidated Subsidiary on March 25, 2015 was dismissed by the– 12 –

Indonesian National Tax Authority on March 16, 2016. Therefore, the Consolidated Subsidiary filed a complaint
to the Tax Court in Indonesia on June 6, 2016 to present the fairness of the view of the Company and theConsolidated Subsidiary.
On December 22, 2016, the Consolidated Subsidiary received a notice of reassessment in an amount of US$34
million (¥3,841 million) from the Indonesian National Tax Authority, regarding its posting of raw material costs
for the fiscal year ended December 31, 2011.
However, the Consolidated Subsidiary submitted a written objection to the Indonesian National Tax Authority
on March 20, 2017, because this assessment was a view that unilaterally negated the basis for recording raw
materials costs, etc. of the Consolidated Subsidiary and found to be unacceptable by the Company and theConsolidated Subsidiary.
First quarter of the consolidated fiscal year under review (As of June 30, 2017)
On December 30, 2014, PT Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“Consolidated Subsidiary”) received a notice of reassessment in an amount of US$47 million (¥5,361 million
based on the exchange rate at the end of the first quarter of the consolidated fiscal year under review) from theIndonesian National Tax Authority, regarding the sales transaction pricing of the Consolidated Subsidiary for theyear ended December 2009. On January 28, 2015, the Consolidated Subsidiary made a provisional deposit of
US$14 million (¥1,568 million) as a part of the additional collection.
However, the Consolidated Subsidiary submitted a written objection to the Indonesian National Tax Authority
on March 25, 2015, because this assessment, which claimed there was a sales shortage on the part of theConsolidated Subsidiary based on a comparison of the profit margin ratio with other companies selected by theIndonesian National Tax Authority, was highly unreasonable and found to be unacceptable by the Company andthe Consolidated Subsidiary.
The written objection submitted by the Consolidated Subsidiary on March 25, 2015 was dismissed by theIndonesian National Tax Authority on March 16, 2016. Therefore, the Consolidated Subsidiary filed a complaint
to the Tax Court in Indonesia on June 6, 2016 to present the fairness of the view of the Company and theConsolidated Subsidiary.
On December 22, 2016, the Consolidated Subsidiary received a notice of reassessment in an amount of US$34
million (¥3,834 million) from the Indonesian National Tax Authority, regarding its posting of raw material costs
for the fiscal year ended December 31, 2011.
However, the Consolidated Subsidiary submitted a written objection to the Indonesian National Tax Authority
on March 20, 2017, because this assessment was a view that unilaterally negated the basis for recording raw
materials costs, etc. of the Consolidated Subsidiary and found to be unacceptable by the Company and theConsolidated Subsidiary.

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