Consolidated Financial Results for the Three Months Ended June 30, 2019
(Japanese Accounting Standards)
August 7, 2019
Tokyo Stock Exchange
http://www.mmc.co.jp/

Name of Listed Company: Mitsubishi Materials Corporation
Listing:
Stock Code:
5711
URL:
Representative: Naoki Ono, Chief Executive Officer
Contact:
Nobuyuki Suzuki, General Manager, Corporate Communications Dept., General Affiars Dept.,
Human Resources & General Affairs Div.
Tel: +81-3-5252-5206
Scheduled filing date of Quarterly Report:
August 7, 2019
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, 2019 (From April 1, 2019 to June 30, 2019)(1) Consolidated Results of Operations (cumulative)(Figures in percentages denote the year-on-year change.)
Net salesFirst three months ended June 30, 2019
First three months ended June 30, 2018
(Note) Comprehensive income:Operating profit

Net income
attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

366,256
420,049

-12.8
26.0

8,992
16,887-46.8-2.4

19,191
18,078

6.2
-16.5

2,411
9,883

-75.6
-15.0

The first three months ended June 30, 2019: -14,800 million yen (–%)
The first three months ended June 30, 2018: 5,521 million yen (-60.0%)

Net income
per share

Diluted net income
per share
YenFirst three months ended June 30, 2019
First three months ended June 30, 2018

Yen

–
–

18.41
75.47

(2) Consolidated Financial Position
Total assets
As of June 30, 2019
As of March 31, 2019
(Reference) Shareholders’ Equity:

Shareholders’equity ratio

Net assets

Million yen

Million yen%

1,958,546
1,938,270

695,620
723,337

31.3
32.7

As of June 30, 2019: 613,754 million yen

As of March 31, 2019: 633,582 million yen

2. Dividend Payments
Dividends per share(Record date)

First quarter

Second quarter

Yen

Year ended March 31, 2019–Year ending March 31, 2020–

Third quarter

Yen

Year ending March 31, 2020 (Forecast)Year-end

Yen

Annual
Yen

Yen

40.00

–

40.00

80.00

40.00

–

40.00

80.00

(Note) Revision of dividend forecast published most recently: No

3. Consolidated Earnings Forecast (From April 1, 2019 to March 31, 2020)(Figures in percentages denote the year-on-year change.)

Net sales
Six months ending
September 30, 2019Year ending March 31,
2020

Operating profit

Net income
attributable toowners of parent

Ordinary income

Net income
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

830,000-3.0

23,000-16.7

24,000

-27.4

5,000

-66.3

38.18

1,700,000

2.2

51,00038.4

62,00022.3

30,000–229.10(Note) Revision to forecast published most recently: Yes

* 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 Key Notes” on page 10.

(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:

Yes
None
None
None

(4) Numbers of issued shares (common stock)(i)
Numbers of issued shares at end of terms (including treasury shares):Three months ended June 30, 2019:
131,489,535 sharesYear ended March 31, 2019:
131,489,535 shares(ii)
Numbers of treasury shares at end of terms:
Three months ended June 30, 2019:
540,902 sharesYear ended March 31, 2019:538,493 shares(iii) Average number of shares issued during terms (quarterly cumulative period):
Three months ended June 30, 2019:
130,949,845 shares
Three months ended June 30, 2018:
130,961,338 shares* This quarterly financial summaries is not subject to a quarterly review by certified public accountants or audit firms.
* 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, 2019” on page 4 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 Wednesday,
August 7, 2019. 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, 2019 .................. 2(1) Details of operating results .................................................................................................................... 2(2) Details of financial position ................................................................................................................... 4(3) Information on the consolidated earnings forecasts and other future forecasts ..................................... 4

2. Consolidated Financial Statements and Key Notes ............................................................................. 5(1) Consolidated balance sheet .................................................................................................................... 5(2) Consolidated statement of income and consolidated statements of comprehensive income ................. 7
Consolidated statement of income .......................................................................................................... 7
Consolidated statements of comprehensive income ............................................................................... 8(3) Notes to consolidated quarterly financial statements ............................................................................ 9
Notes on assumptions for a going concern ............................................................................................. 9
Segment information............................................................................................................................... 9
Notes on significant changes in the amount of shareholders’ equity, if any ......................................... 10
Application of special accounting treatment in the preparation of the quarterly consolidated financial
statements.............................................................................................................................................. 10
Changes in accounting policies ............................................................................................................. 10
Additional information.......................................................................................................................... 10
Contingent liabilities ............................................................................................................................. 10
Important subsequent events ................................................................................................................. 13–1–

1. Qualitative Information on Financial Results for the First Quarter Ended June 30, 2019(1) Details of operating results1) Overview of operating results
During the first quarter of the consolidated fiscal year under review, in the Asia region, economic slowdown
continued in China and a tendency toward economic deceleration was also seen in Thailand. However,
economy showed signs of a modest recovery in Indonesia. In the United States, the economy continued to
improve steadily.
In Japan, employment and income conditions were on the road to recovery. However, exports showed adownward trend and growth in industrial production also appeared to slow down.
Regarding the business environment for the Mitsubishi Materials Group, declining demand in automobile
and semiconductor-related sectors and falling copper prices and weaker domestic demand for cement had anegative impact.
Under these circumstances, consolidated net sales for the first quarter under review totaled ¥366,256 million,
down 12.8% year on year. Operating profit decreased 46.8% year on year, to ¥8,992 million, and ordinary
income rose 6.2%, to ¥19,191 million. Meanwhile, Universal Can Corporation, which is a consolidated
subsidiary of the Company, recorded an extraordinary loss of ¥10,423 million as a provision for loss on the
Antimonopoly Act. As a result, net income attributable to owners of parent fell 75.6%, to ¥2,411 million.
2) Overview by segments
From the first quarter of the fiscal year, the reporting segments have been changed. The details are set forthin “2. (3) Notes to consolidated quarterly financial statements (segment information).” In this regard, incomparison with the data of the same quarter of the previous year below, the numerical data obtained upon
the reclassification for the same quarter of the previous year under the changed segments is used .
(Advanced Products)

Net sales
Operating profit
Ordinary income

FY 2019 Q1
148.4
4.5
4.3

FY 2020 Q1
133.2
1.0
1.3

(Billion yen)
Increase / Decrease (%)-15.1(-10.2%)-3.4(-75.7%)-2.9(-68.3%)In the copper and copper alloy products business, both net sales and operating profit decreased as a result of afall in sales of automotive and semiconductor-related products.
In the electronics materials & components business, both net sales and operating profit decreased, reflecting
decline in sales of products such as advanced materials and electronic components and mainly an increase in
the production costs of polycrystalline silicon products.
In the aluminum products business, both net sales and operating profit fell due to a decrease in sales ofregular cans and bottle cans for beverages and rolled and extruded products such as extruded products forautomobiles and heat exchange sheet materials.
Consequently, both net sales and operating profit for the entire Advanced Products decreased year on year.
Ordinary income declined due to decrease in operating profit.

–2–

(Metalworking Solutions Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1
44.8
5.9
5.4

FY 2020 Q1
40.4
3.6
3.3

(Billion yen)
Increase / Decrease (%)-4.4(-9.9%)-2.2(-38.4%)-2.1(-39.5%)In the cemented carbide products business, both net sales and operating profit decreased as a result of decline
in sales in the Asia region, especially China.
In the sintering parts, etc. business, net sales fell and operating loss expanded due to decline in sales ofmainstay sintering parts mainly in China.
Consequently, both net sales and operating profit for the entire Metalworking Solutions business fell year on
year. Ordinary income declined due to decrease in operating profit.
(Metals Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1
192.6
3.5
3.5

FY 2020 Q1
151.9
1.4
9.9

(Billion yen)
Increase / Decrease (%)-40.6(-21.1%)-2.0(-59.4%)
6.3(177.9%)In the copper business, both net sales and operating profit fell, mainly due to decrease production volume
following operational troubles at Onahama Smelting and Refining Co., Ltd. in addition to falling copper
prices.
In the gold and other valuable metals business, both net sales and operating profit declined due to decreased
production volume of gold and other valuable metals as a result of a fall in the amount contained in raw
materials.
As a result, overall the Metal business posted year-on-year declines in both net sales and operating profit.
Despite the decrease in operating profit, ordinary income increased due to higher dividend income.
(Cement Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1
57.1
4.3
5.1

FY 2020 Q1
58.5
4.2
5.1

(Billion yen)
Increase / Decrease (%)
1.3(2.4%)-0.1(-3.0%)-0.0(-0.3%)In Japan, both net sales and operating profit decreased, reflecting lower sales volumes mainly due to decline
in demand both for construction work of facilities related to the Tokyo Olympic and Paralympic Games in
the Tokyo metropolitan area as well as the road construction work related to Shin-Meishin Expressway in the
Tokai area.
Overseas, both net sales and operating profit increased due to rising sales prices for ready-mixed concrete in
the United States as well as higher sales volumes.
Consequently, net sales for the entire Cement business increased year on year, but operating profit decreased.
Ordinary income declined mainly due to decrease in operating profit.

–3–

(Others Business)

Net sales
Operating profit
Ordinary income

FY 2019 Q1
39.6
0.7
0.9

FY 2020 Q1
38.2
0.5
0.9

(Billion yen)
Increase / Decrease (%)-1.3(-3.5%)-0.2(-27.8%)0.0(1.5%)In the energy-related business, net sales increased but operating profit decreased, reflecting late progress incertain contracted work despite higher sales in nuclear energy-related business.
In the environment recycling business, net sales increased but operating profit decreased, reflecting higher
operational costs in addition to decline in the unit sales price of valuables, which offset increased sales due tohigher volumes of "E-waste" (used electronics and electrical products) and incineration ash processing.
In the Others business excluding the energy-related business and the environmental recycling business, net
sales decreased but operating profit increased.
In the Others business overall, both net sales and operating profit decreased year on year. Ordinary incomerose, reflecting an increase in equity in earnings of affiliates.

(2) Details of financial position
Total assets at the end of the first quarter of the consolidated fiscal year under review stood at ¥1,958.5 billion,up ¥20.2 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 ¥1,262.9 billion, an increase of ¥47.9 billion from the end of the previous consolidated
fiscal year. This was mainly due to increases in commercial papers and short-term loans payable in the
consolidated first quarter under review.

(3) Information on the consolidated earnings forecasts and other future forecasts
For the first six months of the fiscal year ending March 31, 2020, the Company revised the previous
consolidated earnings forecast that announced on May 13, 2019. Net income attributable to owners ofparent is expected to decline from the previous forecast, given that the provision for loss on the
Antimonopoly Act was posted as an extraordinary loss and so on in the first three months of the current
fiscal year under review.
While, the full-year consolidated earnings forecasts for the fiscal year ending March 31, 2020 remainunchanged from the previous forecasts.
Revisions to Consolidated Earnings Forecasts for the Six months of the fiscal year ending March 31, 2020
(from April 1, 2019 to September 30, 2019)(Billion yen)Previous forecast
Current forecast
Increase / Decrease (%)
Net sales

830.0

830.0

－

Operating profit

23.0

23.0

－

Ordinary income

24.0

24.0

－

Net income attributableto owners of parent

12.0

5.0

-58.3

(Note) The above forecast has been prepared on assumed economic conditions, market trends, and other factors foreseeable as of the date ofthis announcement, and the results may differ from the forecasts due to various factors arising in the future.

–4–

2. Consolidated Financial Statements and Key Notes(1) Consolidated balance sheet
As of March 31, 2019
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–5–(Million yen)
As of June 30, 2019108,648248,220
92,452
108,293
134,825
220,108(2,900)87,919248,065
100,739
121,818
137,692
249,981(2,855)

909,647

943,362

229,123
235,664
222,627

232,264
234,226
228,895

687,415

695,387

40,816
17,92438,814
17,271

58,74056,086

236,572
49,983(4,088)

218,458
49,451(4,198)282,467

263,711

1,028,622

1,015,184

1,938,270

1,958,546

As of March 31, 2019
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Commercial papers
Income taxes payable
Provision for loss on the Antimonopoly Act
Other provisions
Gold payable
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Provision for environmental measures
Other provisions
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, 2019

147,566
180,100
5,000
7,869
–
14,931
253,918
118,623

137,790
192,284
35,0005,488
10,423
7,915
268,072
118,502728,011775,477

50,000259,667
40,4273,468
50,003
83,35350,000258,718
37,9793,365
50,32987,056

486,921487,448

1,214,933

1,262,925

119,457
92,393352,932(2,123)

119,457
92,393
350,268(2,130)562,659

559,988

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

51,220124
33,023(5,828)(7,617)38,266
1,205
33,013(10,723)(7,996)

Total accumulated other comprehensive income

70,92253,76589,754

81,866

Non-controlling interests
Total net assets
Total liabilities and net assets–6–723,337

695,620

1,938,270

1,958,546

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

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating profit
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodRent income on non-current assets
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Settlement expenses of remaining business in mines
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on liquidation of subsidiaries and associates
Other
Total extraordinary income
Extraordinary losses
Provision for loss on the Antimonopoly Act
Impairment loss
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, 2018
(Apr. 1, 2018 - Jun. 30, 2018)
420,049364,529
55,52038,633
16,887–7–

Three Months Ended
June 30, 2019
(Apr. 1, 2019 - Jun. 30, 2019)366,256
319,134
47,122
38,130
8,992

245
3,314

346
11,074

354

765

1,243
510
5,668

1,268
1,205
14,660

1,217
677
1,131
1,450
4,476
18,078

1,263
948
578
1,671
4,461
19,191

170
506
85
762

1,070
–
53
1,123

–
686
334
0
1,020
17,8206,223
11,596
1,713
9,883

10,423478–
27
10,928
9,386
5,655
3,730
1,319
2,411

Consolidated statements of comprehensive income
Consolidated first three months(Million yen)Three Months Ended
June 30, 2018
(Apr. 1, 2018 - Jun. 30, 2018)

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
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests–8–

Three Months Ended
June 30, 2019
(Apr. 1, 2019 - Jun. 30, 2019)11,596

3,730(9,908)(1,603)5,834
350(12,970)
1,881(6,808)
(393)

(748)

(240)

(6,075)(18,531)5,521(14,800)

1,663(14,325)

3,858

(474)

(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, 2018 (from April 1, 2018 to June 30, 2018)
Sales and income of reporting segments(Million yen)

Advanced
Products

Metalworking
Solutions
Business

MetalsBusiness

CementBusiness

OthersBusiness

Total

Amountindicated intheAdjustment
consolidated
amountquarterlystatements ofincomeNet sales
144,938

41,971

145,399

56,52331,216420,049–(2) Within consolidated group

3,515

2,913

47,222664

8,470

62,786(62,786)–

Total

148,453

44,884

192,62257,18839,687

482,836(62,786)

420,049

4,307

5,498

3,592

5,132

931

19,463(1,384)

18,078(1) Outside customers

Segment income

420,049

Notes: 1. “Others business” includes nuclear energy-related services, environmental and recycling-related business, realestate business, and engineering-related services.
2. “Adjustment amount” of segment income of -¥1,384 million includes the elimination of intersegment transactionsof ¥82 million and corporate expenses of -¥1,467 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, 2019 (from April 1, 2019 to June 30, 2019)
1. Sales and income of reporting segments(Million yen)

Advanced
Products

Metalworking
Solutions
Business

MetalsBusiness

CementBusiness

OthersBusiness

Total

Amountindicated intheAdjustment
consolidated
amountquarterlystatements ofincomeNet sales
130,61037,455

110,877

57,83429,479366,256–(2) Within consolidated group

2,644

2,993

41,049712

8,812

56,212(56,212)–

Total

133,254

40,449151,926

58,54638,292422,469(56,212)366,256

1,366

3,329

9,983

5,116

945

20,741(1,550)19,191(1) Outside customers

Segment income

366,256

Notes: 1. “Others business” includes nuclear energy-related services, environmental and recycling-related business, andengineering-related services.
2. “Adjustment amount” of segment income of -¥1,550 million includes the elimination of intersegment transactionsof -¥23 million and corporate expenses of -¥1,527 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.

–9–2. Matters regarding the change of the reporting segments, among other changes
At the meeting of the Board of Directors held on February 12, 2019, the Company resolved to partially change
the organization of business divisions. This change was made on April 1, 2019.
The coal-related business in the “Others business” has changed to the “Cement Business,” in which coal isused as thermal energy, to achieve more efficient business management.
In this regard, the segment information for the three months of the previous consolidated fiscal year that is
disclosed herein is made according to the changed method of segmentation.

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(Application of IFRS 16 “Leases”)
Foreign subsidiaries that apply IFRS started applying IFRS 16 “Leases” from the first quarter of the consolidated
fiscal year under review. The impact of application of this accounting standard on the consolidated financial
statements for the first quarter of the consolidated fiscal year under review was insignificant.

Additional information(On-site inspection by the Japan Fair Trade Commission)
Universal Can Corporation (hereinafter, “Universal Can”), a consolidated subsidiary of the Company, wason-site inspected by the Japan Fair Trade Commission (hereinafter, “JFTC”) on February 6, 2018, due tosuspected of violating the Antimonopoly Act concerning the transaction of empty cans for beverages. On July 2,
2019, Universal Can received from the JFTC a notice of hearing of opinions pertaining to a cease and desist
order (draft) and a surcharge payment order (draft) in accordance with the Antimonopoly Act. Accordingly, inthe first quarter of the consolidated fiscal year under review, the Company recorded a provision for loss on the
Antimonopoly Act of ¥10,423 million based on the surcharge payment order (draft).

Contingent liabilities(Matters concerning taxation in Indonesia)
Previous consolidated fiscal year (As of March 31, 2019)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“PTS”) received a notice of reassessment in an amount of US$47 million (¥5,312 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 PTS for the year ended December 31, 2009. On January 28, 2015, the PTS
made a provisional deposit of US$14 million (¥1,553 million) as a part of the additional collection.
However, the PTS 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 the PTS based on a comparisonof the profit margin ratio with other companies selected by the Indonesian National Tax Authority, was highly
unreasonable and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax– 10 –

Authority on March 16, 2016. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on June 6,2016 to present the fairness of the view of the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,533
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥698 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2018,
because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on February 27, 2018 was dismissed by the Indonesian National Tax
Authority on February 25, 2019. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on May 17,
2019 to present the fairness of the view of the Company and the PTS.
On December 5, 2018, the PTS also received a notice of reassessment in an amount of US$15 million (¥1,688
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥651 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2019,because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The total amount for additional collection being disputed by the PTS, including amounts for the fiscal years
described above as well as amounts for the fiscal year ended December 31, 2010, the fiscal year ended
December 31 2011, the fiscal year ended December 31, 2013 and the fiscal year ended December 31, 2015 is
US$101 million (¥11,309 million).
First quarter of the consolidated fiscal year under review (As of June 30, 2019)
On December 30, 2014, PT. Smelting in Indonesia, a consolidated subsidiary of the Company (hereinafter the“PTS”) received a notice of reassessment in an amount of US$47 million (¥5,159 million based on the exchange
rate at the end of the first quarter of the consolidated fiscal year under review) from the Indonesian National Tax
Authority, regarding the sales transaction pricing of the PTS for the year ended December 31, 2009. On January
28, 2015, the PTS made a provisional deposit of US$14 million (¥1,509 million) as a part of the additional
collection.
However, the PTS 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 the PTS based on a comparisonof the profit margin ratio with other companies selected by the Indonesian National Tax Authority, was highly
unreasonable and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on March 25, 2015 was dismissed by the Indonesian National Tax
Authority on March 16, 2016. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on June 6,2016 to present the fairness of the view of the Company and the PTS.
On November 29, 2017, the PTS also received a notice of reassessment in an amount of US$22 million (¥2,460
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2012. On December 27, 2017, the PTS made a provisional
deposit of US$6 million (¥678 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2018,
because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The written objection submitted by the PTS on February 27, 2018 was dismissed by the Indonesian National Tax– 11 –

Authority on February 25, 2019. Therefore, the PTS filed a complaint to the Tax Court in Indonesia on May 17,
2019 to present the fairness of the view of the Company and the PTS.
On December 5, 2018, the PTS also received a notice of reassessment in an amount of US$15 million (¥1,639
million) from the Indonesian National Tax Authority, primarily regarding its posting of gains and losses on
hedging for the fiscal year ended December 31, 2014. On December 27, 2018, the PTS made a provisional
deposit of US$5 million (¥632 million) as part of the additional collection.
However, the PTS submitted a written objection to the Indonesian National Tax Authority on February 27, 2019,because this assessment was a view that unilaterally negated the basis for recording gains and losses on hedging,etc. of the PTS and found to be unacceptable by the Company and the PTS.
The total amount for additional collection being disputed by the PTS, including amounts for the fiscal years
described above as well as amounts for the fiscal year ended December 31, 2010, the fiscal year ended
December 31 2011, the fiscal year ended December 31, 2013 and the fiscal year ended December 31, 2015 is
US$101 million (¥10,983 million).
(Matters concerning Non-Conforming Products)
Previous consolidated fiscal year (As of March 31, 2019)
Mitsubishi Materials Corporation discovered that the Company’s consolidated subsidiaries had delivered
products, etc. that deviated from customer standards or internal company specifications due to misconduct,
including the rewriting of inspection records data and the insufficient testing, concerning some of the products
manufactured and sold in the past.
Based on the above fact, some of the aforementioned subsidiaries received notification of revocation of their JIS
certification and ISO certifications from the accrediting agencies.
Depending on the progress of the above mentioned issues, the Company’s consolidated business results may beaffected, due to compensate customers and other losses. However, such amounts which are currently difficult toestimate are not reflected in the consolidated financial statements.
First quarter of the consolidated fiscal year under review (As of June 30, 2019)
Mitsubishi Materials Corporation discovered that the Company’s consolidated subsidiaries had delivered
products, etc. that deviated from customer standards or internal company specifications due to misconduct,
including the rewriting of inspection records data and the insufficient testing, concerning some of the products
manufactured and sold in the past.
Based on the above fact, some of the aforementioned subsidiaries received notification of revocation of their JIS
certification and ISO certifications from the accrediting agencies.
Depending on the progress of the above mentioned issues, the Company’s consolidated business results may beaffected, due to compensate customers and other losses. However, such amounts which are currently difficult toestimate are not reflected in the quarterly consolidated financial statements.

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Important subsequent events(Absorption-type merger of the consolidated subsidiary)
The Company resolved at a meeting of its Board of Directors held on July 31, 2019 to conduct anabsorption-type merger of Mitsubishi Shindoh Co., Ltd., a consolidated subsidiary of the Company with April 1,2020 as the effective date and concluded a merger agreement on July 31, 2019.
1. Overview of transaction(1) Name and business of acquired enterprise
Name of acquired enterprise:
Mitsubishi Shindoh Co., Ltd.
Business of acquired enterprise: Rolling, extruding and casting of copper and copper alloys and theprocessing and sales thereof(2) Date of business combination
April 1, 2020 (Plan)(3) Legal form of business combination
Absorption-type merger in which the Company shall be the surviving company and Mitsubishi Shindoh Co.,
Ltd. shall be dissolved.
(4) Name of the companies after the business combination
Mitsubishi Materials Corporation(5) Purpose of business combination
The purpose of the merger is to cooperatively operate the Group’s management resources in the Copper &Copper Alloy business in order to invest more actively and flexibly and to develop products promptly thatmeet market needs and to improve and enhance the production and sales systems in Japan as well as
overseas.
2. Overview of accounting procedures to implement
The Company plans to account processing for the merger as a transaction under common control in accordancewith the Accounting Standard for Business Combinations (ASBJ Statement No. 21, January 16, 2019) and
Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business
Divestitures (ASBJ Guidance No. 10, January 16, 2019).

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