for the Year Ended March 31, 2023 and Independent Auditor's Report

EIZO Corporation and SubsidiariesEIZO Corporation and Subsidiaries
Consolidated Balance Sheet
March 31, 2023

Millions of Yen
2023
2022

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 15)
Short-term investments (Notes 6 and 15)
Notes, accounts receivable and contract assets (Note 15):
Trade notes
Trade accounts
Contract assets
Electronically recorded monetary claims
Other
Allowance for doubtful receivables
Inventories (Notes 3 and 7)
Prepaid expenses and other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment
Furniture and fixtures
Right-of-use assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 15)
Deferred tax assets (Note 11)
Other assets
Total investments and other assets¥

Thousands of
U.S. Dollars(Note 1)
2023

9,557

¥ 22,388300$

47
16,587
2,347
1,680
709
(100)
48,0211,056

32
20,079
2,925
1,779
247
(103)
31,7491,115

353
124,714
17,647
12,6325,331(752)
361,060
7,940

79,90480,511

600,782

4,410
24,082
7,198
9,113
2,139
4
46,946(24,957)

4,326
22,366
6,649
8,620
1,706
91
43,758(23,584)

33,158181,068
54,12068,51916,08329352,977(187,646)

21,98920,174

165,331

52,191634
1,218

52,825659
1,290

392,414
4,767
9,157

54,04354,774406,338¥ 155,936¥ 155,459$ 1,172,451

CURRENT LIABILITIES:
Short-term bank loans (Notes 8 and 15)
Current portion of long-term debt (Notes 8 and 15)
Accounts payable (Note 15):
Trade accounts
Other
Income taxes payable
Accrued expenses
Other current liabilities

71,857

Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Notes 8 and 15)
Liability for retirement benefits (Note 9)
Deferred tax liabilities (Note 11)
Other long-term liabilities
Total long-term liabilities

¥

1,575
450

¥

2,051
336

$

11,842
3,383

6,898
2,743
1,075
5,269
1,707

7,522
1,965
2,399
4,847
1,606

51,865
20,624
8,083
39,617
12,834

19,717

20,726148,248

2,308
2,670
9,667
994

2,172
3,086
9,810
1,083

17,35320,07572,684
7,474

15,63916,151

117,586

4,426
4,314
83,8964,426
4,314
82,04033,27832,436
630,797(3,998)(2,665)(30,060)

28,8512,600
491

28,801
1,439
227

216,925
19,5493,692

120,580

118,582

906,617¥ 155,936¥ 155,459$ 1,172,451

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 14 and 16)
EQUITY (Notes 10 and 18):
Common stock—authorized, 65,000,000 shares; issued,
21,981,160 shares in 2023 and 22,731,160 shares in 2022
Capital surplus
Retained earnings
Treasury stock—at cost, 1,408,606 shares in 2023 and1,411,088 shares in 2022
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
2023
2022

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars(Note 1)
2023

TOTAL
See notes to consolidated financial statements.

-5-

EIZO Corporation and Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)2023

NET SALES¥ 80,850¥ 86,789$ 607,895

COST OF SALES

55,60655,929418,090

25,24430,860189,805

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 12 and 13)

20,242

19,561

152,196

Operating income

5,002

11,29937,609

1,099
(41)
(104)
1,943
(5)

933
(22)
(203)
420

8,263
(308)
(782)
14,609(38)

Gross profit

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange loss—net
Gain on sale of investment securities (Note 6)
Loss on sale of investment securities
Loss on impairment of long-lived assets
Other—net

170(1,243)
103

1,279

3,062

(12)

23,023

INCOME BEFORE INCOME TAXES

8,064

11,28760,632

INCOME TAXES (Note 11):
Current
Deferred

2,332
(130)

3,722
(230)

17,534
(977)

2,202

3,492

16,557

5,862

7,795

44,075¥ 5,862¥ 7,795$ 44,075

Other income (expenses) —net

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

¥ 280.97
120.00See notes to consolidated financial statements.

-6-

U.S. Dollars¥ 365.61
120.00$ 2.11
0.90

EIZO Corporation and Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)2023

NET INCOME¥ 5,862¥ 7,795$ 44,075

OTHER COMPREHENSIVE INCOME (LOSS) (Note 17):
Unrealized gain (loss) on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans

50
1,161
264

(2,608)
1,396
105

376
8,729
1,985

1,475

(1,107)

11,090COMPREHENSIVE INCOME¥ 7,337¥ 6,688$ 55,165

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO—
Owners of the parent¥ 7,337¥ 6,688$ 55,165

Total other comprehensive income (loss)

See notes to consolidated financial statements.

-7-

EIZO Corporation and Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2023

BALANCE, APRIL 1, 2021

Thousands
Number of
Shares ofCommonStock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

Millions of Yen
Accumulated Other Comprehensive Income
Unrealized
ForeignDefinedGain onCurrency
Retirement
Available-forTranslation
Benefit
Treasury
Stock
Sale Securities
Adjustments
Plans

21,320¥ 4,426¥ 4,314¥ 76,803¥ (2,664)

Net income
Cash dividends, ¥120 per share
Purchase of treasury stock
Net decrease in unrealized gain on available-for-sale securities
Net change in foreign currency translation adjustments
Net change in defined retirement benefit plans
BALANCE, APRIL 1, 2022
Net income
Cash dividends, ¥120 per share
Purchase of treasury stock
Cancellation of treasury stock
Disposal of treasury stock
Transfer from retained earnings to common 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, 2023

BALANCE, APRIL 1, 2022

¥

43

¥ 122

¥ 114,453

105

7,795
(2,558)(1)(2,608)
1,396
105

227

118,582

7,795(2,558)(1)(2,608)
1,396
21,320

4,426

4,314

82,040(2,665)28,801

1,439

5,862
(2,527)(750)
3(1,482)
3
1,479

5,862
(2,527)(2,822)(2,822)
1,482
7

10

(1,479)
50
264

50
1,161
264

¥ 491

¥ 120,580

1,161
20,573¥ 4,426¥ 4,314¥ 83,896

CommonStockCapitalSurplusRetained
Earnings$ 33,278$ 32,436$ 616,842

Net income
Cash dividends, $0.90 per share
Purchase of treasury stock
Cancellation of treasury stock
Disposal of treasury stock
Transfer from retained earnings to common 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, 2023

¥ 31,409¥ (3,998)¥ 28,851¥ 2,600

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Unrealized
ForeignDefinedGain onCurrency
Retirement
Treasury
Available-forTranslation
Benefit
Stock
Sale Securities
Adjustments
Plans$ (20,038)$ 216,549$ 10,820$ 1,707

44,075(19,000)(11,143)
23
11,120(21,218)
11,14353

See notes to consolidated financial statements.

-8-$ 891,594

76(11,120)
1,985

376
8,729
1,985

$ 3,692$ 906,617

8,729$ 32,436

Total
Equity44,075(19,000)(21,218)376$ 33,278

Total
Equity$ 630,797$ (30,060)$ 216,925$ 19,549

EIZO Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2023

Millions of Yen
2023
2022
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Provision of allowance for doubtful receivables
Foreign exchange gain—net
Gain on sale of investment securities
Loss on sale of investment securities
Loss on impairment of long-lived assets
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories(Decrease) increase in accounts payable
Increase in accrued expenses
Decrease in liability for retirement benefits
Other—net
Total adjustments

Thousands of
U.S. Dollars(Note 1)2023

¥ 8,064¥11,287$ 60,632(3,589)2,317(3,242)
2,234
379
27
(156)
(420)

(26,985)
17,421(7)(198)(1,943)5(53)(1,489)(14,609)
38

1,243
4,563
(15,243)(1,733)
370
(188)
(10)
(15,656)(4,863)
342
1,179
302
(96)
214
(2,857)34,308(114,609)(13,030)
2,782(1,414)(75)(117,715)(7,592)8,430(57,083)(1,962)(183)(2,769)(504)(14,752)(1,376)

2,954
(2)
47

1,666
(902)
115

22,211
(15)
353

854

(2,394)

6,421

(629)
(141)
(2,526)(234)(2,822)(131)(2,558)(209)(1)(4,729)(1,060)(18,993)(1,759)(21,218)

Net cash used in financing activities(6,352)(2,899)(47,759)

FOREIGN CURRENCY TRANSLATION ADJUSTMENT ON
CASH AND CASH EQUIVALENTS

259

368

1,947

¥(12,831)¥ 3,505$(96,474)

Net cash (used in) 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 investment securities
Decrease in other assets
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES:
Decrease in short-term bank loans-net
Repayments of long-term debt
Dividends paid
Repayments of lease obligations
Repurchases of treasury stock

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS — (Forward)-9-(Continued)

EIZO Corporation and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2023

Millions of Yen
2023
2022
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS — (Forward)

Thousands of
U.S. Dollars(Note 1)
2023¥(12,831)¥ 3,505$ (96,474)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

22,38818,883

168,331

CASH AND CASH EQUIVALENTS, END OF YEAR

¥ 9,557¥ 22,388$ 71,857

See notes to consolidated financial statements.

- 10 -(Concluded)

EIZO Corporation and Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2023

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 of International Financial Reporting Standards ("IFRS").
In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form that is more familiar to readers outside Japan. In addition, certain reclassifications
have been made in the 2022 consolidated financial statements to conform to the classifications usedin 2023.
The consolidated financial statements are stated in Japanese yen, the currency of the country inwhich EIZO Corporation (the "Company") is incorporated and operates. The translations of Japanese
yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside
Japan and have been made at the rate of ¥133 to $1, the approximate rate of exchange at March 31,
2023. Such translations should not be construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of March 31, 2023, include theaccounts of the Company and its 16 (16 in 2022) subsidiaries (together, the "Group") listed
below.

Consolidated Subsidiaries

Location

EIZO MS Corporation
Irem Software Engineering Inc.
EIZO Support Network Corporation
Carina System Corporation
EIZO Agency Corporation
EIZO Engineering Corporation
EIZO GmbHEIZO Technologies GmbH

Ishikawa, JapanTokyo, Japan
Ishikawa, Japan
Hyogo, Japan
Ishikawa, Japan
Ishikawa, Japan
Rülzheim, Germany
Geretsried, Germany

EIZO Rugged Solutions Inc.

Orlando, FL, U.S.A.

EIZO Display Technologies (Suzhou)Co., Ltd.
EIZO Inc.
EIZO Nordic AB
EIZO AGEIZO Limited
EIZO Europe GmbHEIZO Austria GmbH

Suzhou, China
Cypress, CA, U.S.A.
Väsby, Sweden
Wädenswil, Switzerland
Ascot, U.K.
Mönchengladbach, Germany
Vienna, Austria

Equity Ownership
Percentage (%)*1
100
100
100
100
100
100
100
100
(100 )*2100(100 )*2
100
100
100
100
100
100
100
(100 )*2*1 As of March 31, 2023
*2 The percentages in "Equity Ownership Percentage" indicate indirect ownership ratio includedin the total.
- 11 -

Under the control concept, those companies in which the Company, directly or indirectly, is able
to exercise 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.
In addition, the Company established EIZO Private Limited, a 100% subsidiary in India. As of theend of the current consolidated fiscal year, EIZO Private Limited is not included in the scope of
consolidation because it had not yet completed the payment of capital.
(1) Purpose of establishment
The market is expected economic growth in the mid to long term, and the local market andapplications for which EIZO products are sought are expanding and diversifying. Therefore,
the Company will directly conduct sales and marketing activities in order to expand sales inIndia and neighboring countries by implementing flexible sales measures and developing
new markets in response to market changes.
(2) Name, business activities, size, and location of the company to be established
Name:

EIZO Private Limited

Business activities:

Sales of imaging products and related productsSize:

30 million Indian rupee (100% owner by the Group)

Location:

Mumbai, Maharashtra, India(3) Date of establishment
March 2023b.

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 IFRS 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 in accordance with Japanese GAAP,
unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial
gain or loss of pensions that has been recorded in equity through other comprehensive income;(c) expensing capitalized development costs of research and development ("R&D");(d) cancellation of the fair value model of accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting; and (e) recording a gainor loss through profit or loss on the sale of an investment in an equity instrument for thedifference between the acquisition cost and selling price, and recording impairment loss throughprofit or loss for other-than-temporary declines in the fair value of an investment in an equity
instrument, where a foreign subsidiary elects to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument.

- 12 -

c.

Business Combinations—Business combinations are accounted for using the purchasemethod. Acquisition-related costs, such as advisory fees or professional fees, are accounted foras expenses in the periods in which the costs are incurred. If the initial accounting for a businesscombination is incomplete 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 forwhich the accounting is incomplete. During the measurement period, which shall not exceed one
year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts
recognized at the acquisition date to reflect new information obtained about facts andcircumstances that existed as of the acquisition date and that would have affected themeasurement 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 or loss immediately on theacquisition date after reassessing and confirming that all of the assets acquired and all of theliabilities assumed have been identified after a review of the procedures used in the purchaseprice allocation. A parent's ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrollinginterest 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 ofthe consideration received or paid and the amount by which the noncontrolling interest is
adjusted is accounted for as capital surplus as long as the parent retains control over its
subsidiary.

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 ofwhich mature 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 inearnings; and (2) available-for-sale securities, which are not classified as either trading securities
or held to maturity 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
realizable value by a charge to income.

g.

Property, Plant and Equipment—Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment of the Company and its domestic subsidiaries iscomputed substantially by the declining balance method at rates based on the estimated useful
lives of the assets, while the straight-line method is applied to buildings of the Company and its
domestic subsidiaries acquired after April 1, 1998, buildings improvements and structuresacquired 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 and equipment, and from 2 to 6 years for furniture and fixtures.

h.

Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever eventsor changes 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
the amount by which the carrying amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued use and eventual disposition of theasset or the net selling price at disposition.
- 13 -

i.

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,
the Company 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
that are 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 theestimated timing and amount of benefit payment.
Retirement benefits to directors and the Audit and Supervisory Committee members arerecorded at the amount that would be required if the directors and the Audit and Supervisory
Committee members retired at the consolidated balance sheet date. In June 2004, the retirement
benefit system was abolished and the amount required to be paid at the time of the abolishment
will be paid to directors and the Audit and Supervisory Committee members upon theirretirement.

j.

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

k.

Revenue Recognition— The Group's principal business is the development, manufacture, andsale of visual displays and related products.
For product sales, the Company determines that the performance obligations to customers are
satisfied when the products are delivered to the customers, and obtain control of the products.
Therefore, the Company recognizes the revenue at a point in time of delivery of the products. For
sales of entrusted development of amusement software, the Company determines that
performance obligations to customers for an entrusted development are satisfied over a certain
period of time from the start of development based on the customer's request to the provision of
the software deliverables to the customers and the completion of the inspection. Therefore, theCompany recognizes the revenue over a period from the start of development to the completionof the inspection. 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.
The transaction price is measured by the amount promised in contracts with customers, which isthe amount deducting the amount of discount and rebate. The amount of consideration does notinclude any significant financial component.

l.

Income Taxes—The provision for income taxes is computed based on the pretax income
included in the consolidated statement of income. The asset and liability approach is used torecognize 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 are measured by applying currently enacted tax laws to the temporary
differences.
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 andits wholly owned domestic subsidiaries.

- 14 -

With regard to the transition to the Group Tax Sharing System established based on "Act for
Partial Amendment of the Income Tax Act, etc." (Act No. 8, 2020) and to the items reconsideredon the Non-consolidated Tax Return Filing System in accordance with this transition to the GroupTax Sharing System, the Company and certain subsidiaries calculate the amounts of deferred
tax assets and deferred tax liabilities based on the provisions of the Income Tax Act before theamendment, without applying the provisions of Paragraph 44 of the "Implementation Guidanceon Tax Effect Accounting" (ASBJ Guidance No. 28, February 16, 2018) pursuant to Paragraph 3of the "Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Tax Return Filing System to the Group Tax Sharing System" (Practical Issues Task
Force No. 39, March 31, 2020).
m. Foreign Currency Transactions—All short-term and long-term monetary receivables andpayables denominated in foreign currencies are translated into Japanese yen at the exchange
rates at the consolidated balance sheet date. The foreign exchange gains and losses fromtranslation are recognized in the consolidated statement of income to the extent that they are nothedged by forward exchange contracts.
n.

Foreign Currency Financial Statements—The balance sheet accounts of the foreignsubsidiaries 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 ofequity.
Revenue and expense accounts of foreign subsidiaries are translated into Japanese yen at the
average exchange rate.

o.

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 onderivative transactions recognized in the consolidated statement of income.

p.

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, 2023 and2022.

- 15 -

3.

SIGNIFICANT ACCOUNTING ESTIMATE
Valuation of Inventories(1) Amounts recognized in the consolidated financial statements for the years ended March 31, 2023
and 2022, were as follows:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Finished products
Work in process
Raw materials and supplies¥ 17,539
2,192
28,290¥ 10,038
1,730
19,981$ 131,872
16,481
212,707

Total¥ 48,021¥ 31,749$ 361,060(2) Information on the significant accounting estimate
The necessary write-downs are recorded by estimating future cash flows that inventories will
generate from estimated future sales based on market demand and net sales value. If actual
market demand or net selling prices fall beyond our estimates, additional write-downs may berequired.
It is difficult to objectively predict the impact of inventory valuation on the consolidated financial
statements for the following fiscal year at this time. According to the past results, the Groupestimates the maximum increase or decrease will be about 3% of total inventories. Estimates are
based on information available at the end of the current fiscal year. In determining accounting
estimates, the Group assumes that the impact of COVID-19 will be insignificant. However, if
future sales are expected to be lower than initially estimated, the book value of the subject
inventory assets may be devalued.

4.

NEW ACCOUNTING PRONOUNCEMENTS—"Accounting Standard for Current Income Taxes"(ASBJ Statement No. 27, October 28, 2022,
Accounting Board of Japan)—"Accounting Standard or Presentation of Comprehensive Income"(ASBJ Statement No. 25,
October 28, 2022, Accounting Board of Japan)—"Implementation Guidance on Tax Effect Accounting"(ASBJ Guidance No. 28, October 28, 2022,
Accounting Board of Japan)
In February 2018, the ASBJ has issued ASBJ Statement No. 28, "Partial Amendments to AccountingStandard for Tax Effect Accounting, etc." ("ASBJ Statement No. 28"). In the course of deliberations
on the transfer of the practical guidelines on tax effect accounting by the Japanese Institute ofCertified Public Accountants to the ASBJ, the results of the deliberations on the following two issues
were decided to be reviewed after the publication of ASBJ Statement No. 28.
—Classification of current income taxes (taxation for comprehensive income)—Tax effect on the sale of shares of subsidiaries and affiliates that applied Group Taxation Regime
The new accounting standards are effective for annual periods beginning on or after April 1, 2024.
The Company is in the process of measuring the effects of applying the new accounting standards infuture applicable periods.

- 16 -

5.

ADDITIONAL INFORMATION
There were no significant changes in the assumptions used to estimate the future performance of theGroup related to COVID-19 during the current fiscal year. Accounting estimates for the impairment oflong-lived assets and the recoverability of deferred tax assets were made based on information
available at the end of the current fiscal year. In determining accounting estimates, the Groupassumes that the impact of COVID-19 will be insignificant.

6.

SHORT-TERM INVESTMENTS AND INVESTMENT SECURITIESShort-term investments and investment securities as of March 31, 2023 and 2022, consisted of thefollowing:

Millions of Yen
2023
2022
Short-term investments:
Debt securities
Others

¥

300

Total

¥

300

Thousands of
U.S. Dollars
2023

Investment securities:
Marketable equity securities
Nonmarketable equity securities
Others¥ 52,026
17
148¥ 52,560
17248$ 391,173
128
1,113

Total

¥ 52,191¥ 52,825$ 392,414

The cost and aggregate fair value of short-term investments and investment securities at March 31,
2023 and 2022, were as follows:

March 31, 2023
Securities classified as:
Available for sale:
Equity securities
Debt securities
OthersTotal

Cost¥ 10,670

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value¥ 41,786¥ 52,026

¥ 430

148

148

¥ 10,818¥ 41,786¥ 430¥ 52,174¥ 11,284300
248¥ 42,092¥ 816¥ 52,560
300
248¥ 11,832¥ 42,092¥ 816¥ 53,108

March 31, 2022
Securities classified as:
Available for sale:
Equity securities
Debt securities
OthersTotal- 17 -

March 31, 2023
Securities classified as:
Available for sale:
Equity securities
Debt securities
Others
Total

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
LossesCost$ 80,226$ 314,180$ 3,233$ 391,173

1,113$ 81,339

Fair
Value

1,113
$ 314,180$ 3,233$ 392,286

The proceeds, realized gains and realized losses of the available-for-sale securities which were soldduring the years ended March 31, 2023 and 2022, were as follows:

March 31, 2023

Proceeds

Millions of Yen
Realized
Gains

Available-for-sale－Equity securities¥ 2,554¥ 1,943

¥

5

Total

¥ 2,554¥ 1,943¥

5

Available-for-sale－Equity securities

¥

614

¥

420

Total

¥

614

¥

420

March 31, 2023

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesAvailable-for-sale－Equity securities$ 19,203$ 14,609

$

38

Total

$ 19,203$ 14,609$

38

Realized
LossesMarch 31, 2022

7.

INVENTORIESInventories at March 31, 2023 and 2022, consisted of the following:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Finished products
Work in process
Raw materials and supplies¥17,539
2,192
28,290¥ 10,038
1,730
19,981$131,872
16,481
212,707

Total¥ 48,021¥ 31,749$361,060- 18 -

Provision for write-down of the book values of inventories to reflect the decline in profitability for theyears ended March 31, 2023 and 2022, were as follows:

Millions of Yen
2023
2022
Provision for write-down of
the book values of inventories
8.

¥

(21)

¥ 379

Thousands of
U.S. Dollars2023$ (158)SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2023 and 2022, consisted of notes to banks. The
weighted-average annual interest rates applicable to the short-term bank loans at March 31, 2023
and 2022, were 0.26% and 0.07%, respectively.
Long-term debt at March 31, 2023 and 2022, consisted of the following:

Millions of Yen
2023
2022
Loans from banks, due 2030, with interest rates of 3.17%
at March 31, 2023 and 0.15% at March 31,2022¥ 1,093
Obligations under finance leases
1,665
Total
2,758
Current portion of long-term debt
Long-term debt, less current portion

Thousands of
U.S. Dollars
2023¥ 1,162
1,346
2,508

$ 8,218
12,51820,736

(450)

(336)

(3,383)¥ 2,308¥ 2,172$17,353

Annual maturities of long-term debt, as of March 31, 2023, for the next five years and thereafter wereas follows:Year Ending
March 31

9.

Millions of Yen

Thousands of
U.S. Dollars

2023
2024
2025
2026
2027
2028 and thereafter

¥ 450
423
334
302
260
989

$ 3,383
3,180
2,511
2,271
1,955
7,436

Total

¥ 2,758$20,736

RETIREMENT AND PENSION PLANS
The Company and certain of its subsidiaries have severance payment plans for employees, directors,
and the Audit and Supervisory Committee members.

- 19 -

Retirement and Pension Plans for Employees
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,
or a 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, 2023 and 2022, were as
follows:
Thousands ofMillions of Yen
U.S. Dollars
2023
2022
2023
Balance at beginning of year
Current service cost
Interest cost
Actuarial (gains) losses
Benefits paid
Past service cost
Others¥ 4,197
200
20
(437)
(243)

$ 31,556
1,504
150(3,286)(1,827)57¥ 4,245
219
16
198
(269)
(4)
(208)

Balance at end of year

¥ 3,794¥ 4,197$ 28,526

429(2) The changes in plan assets for the years ended March 31, 2023 and 2022, were as follows:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Balance at beginning of year
Expected return on plan assets
Actuarial (losses) gains
Contributions from the employer
Benefits paid
Others¥ 1,183
28
(29)
29
(62)
46

¥ 1,075
15
62
27
(27)
31

$ 8,895
211
(218)
218
(466)
345

Balance at end of year

¥ 1,195¥ 1,183$ 8,985- 20 -

(3) A reconciliation between the liability recorded in the consolidated balance sheet and thebalances of defined benefit obligation and plan assets as of March 31, 2023 and 2022, was asfollows:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation¥1,648(1,195)453
2,145¥ 1,933(1,183)750
2,265$ 12,391(8,985)
3,406
16,128Net liability for defined benefit obligation¥ 2,598¥ 3,015$ 19,534

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Liability for retirement benefits¥ 2,598¥ 3,015$ 19,534

Net liability for defined benefit obligation¥ 2,598¥ 3,015$ 19,534(4) The components of net periodic benefit costs for the years ended March 31, 2023 and 2022,
were as follows:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

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

¥ 200
20
(28)
(113)
(4)
52

¥ 219
16
(15)
(61)
(4)
3

$ 1,504
150
(211)
(850)
(30)
392

Net periodic benefit costs

¥ 127

¥ 158

$ 955

(5) Amounts recognized in other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans for the years ended March 31, 2023 and 2022, were as follows:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Actuarial gains
Prior service cost¥(258)
4¥ (89)
4$(1,940)
30

Total¥(254)¥ (85)$(1,910)- 21 -

(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March 31, 2023 and 2022, were as follows:
Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022
Unrecognized actuarial gains
Unrecognized prior service cost

¥ (505)¥ (247)(4)$ (3,797)

Total¥ (505)¥ (251)$ (3,797)(7) Plan assetsa.

Components of plan assets
Plan assets as of March 31, 2023 and 2022, consisted of the following:

b.

2023

2022

Debt investments
Equity investments
Cash and cash equivalents
Others

54%
15
5
26

52 %
16
5
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 theplan assets.

(8) Assumptions used for the years ended March 31, 2023 and 2022, are set forth as follows:

Discount rate
Expected rate of return on plan assets

2023

2022

0.9%–3.9%
4.5%

0.3%–1.7%
2.5%

The expected raise rate is based on the index of the raise calculated by age as of March 31,
2018.
(9) Defined contribution plan
The required contribution amounts of the Group for the years ended March 31, 2023 and 2022,
were ¥335 million ($2,519 thousand) and ¥301 million, respectively.
Provision for Retirement Benefits for Directors and the Audit and Supervisory Committee
Members
The liability for retirement benefits at March 31, 2023 and 2022, for directors and the Audit andSupervisory Committee members was ¥72 million ($541 thousand) and ¥72 million, respectively.

- 22 -

10.

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 to the third condition above, the board of directors of companies with an audit andsupervisory committee (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 the Companies Act. The Company is organized as a company with an audit andsupervisory committee, effective June 23, 2016. The Company meets all the above criteria, andaccordingly, 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 amountof 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 asa legal reserve (a component of retained earnings) or as additional paid-in capital (a componentof 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 the accounts within equity under certain conditions upon
resolution of the shareholders.

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to 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. Under the Companies Act, stock acquisition rights are presented as a separate
component of equity. The Companies Act also provides that companies can purchase bothtreasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights arepresented as a separate component of equity or deducted directly from stock acquisition rights.

- 23 -

11.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes
that, in the aggregate, resulted in normal effective statutory tax rates of approximately 30.5% and30.4% for the years ended March 31, 2023 and 2022, respectively.
The tax effects of significant temporary differences and tax loss carryforwards that resulted indeferred tax assets and liabilities at March 31, 2023 and 2022, are as follows:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Deferred tax assets:
Inventories
Liability for retirement benefits
Tax loss carryforwards
Accrued expenses
Other
Less valuation allowance¥ 1,233
834
1,435
942
1,117
(2,033)

Total

3,528

3,381

26,526(12,505)(56)(12,475)(56)(94,023)(420)(12,561)(12,531)(94,443)¥ (9,033)¥ (9,150)$ (67,917)

Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Other
Total
Net deferred tax liabilities

¥

930
860
1,114
991
1,233
(1,747)

$

9,271
6,271
10,7897,083
8,398(15,286)

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, 2023,
with the corresponding figures for 2022, is as follows:
2023
Normal effective statutory tax rate
Tax credit for research expenses
Effect of reduction of income tax rates on deferred tax assets
Subsidiaries earnings taxed at different rates
Other—net

30.5 %
(4.7)
3.6
(0.5)
(1.6)

Actual effective tax rate

27.3 %

2022

Notes are omitted because the difference between the statutory tax rate and the effective tax rate
was less than or equal to 5% of the statutory tax rate for the year ended March 31, 2022.

- 24 -

12.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the years ended March 31, 2023 and 2022,
principally consisted of the following:

Millions of Yen
2023
2022
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
13.

¥ 7,033
461
250
420
5,654
(44)
(2)

¥ 6,417
446
243
635
5,514
(22)
44

Thousands of
U.S. Dollars
2023$ 52,880
3,466
1,880
3,158
42,511(331)(15)

R&D COSTS
R&D costs charged to income were ¥6,142 million ($46,180 thousand) and ¥5,835 million for theyears ended March 31, 2023 and 2022, respectively.

14.

LEASES
The minimum rental commitments under noncancelable operating leases at March 31, 2023 and2022, were as follows:

Millions of Yen
2023
2022

15.

Thousands of
U.S. Dollars
2023

Due within one year
Due after one year

¥ 1

¥ 58
2

$

8

Total

¥ 1

¥ 60

$

8

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments based on its capital expenditure plan. Cash surpluses, ifany, are invested in low-risk financial assets. Derivatives are not used for speculative purposes,
but to manage 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 risk of fluctuation in market price and interest rate.
All payment terms of payables, such as trade accounts, are within one year. Although payables
in foreign currencies are exposed to the risk of fluctuation in foreign currency exchange rates,
those risks are netted against the balance of receivables denominated in the same foreign
currency, as noted above.

- 25 -

Short-term bank loans are used to hedge the exchange risk for nontrade receivables
denominated in foreign currency. The payment term is within three months after the consolidatedbalance 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 variable interest 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
to risk of changes in foreign currency exchange rates of receivables and payables. Please see
Note 16 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 basis of internal guidelines, which include monitoring of payment terms and balances ofmajor customers by each business administration department to identify the default risk ofcustomers at an early stage. With respect to debt securities, the Group manages its exposure tocredit risk by limiting its funding to high credit rating bonds in accordance with its internal
guidelines. Please see Note 16 for information about derivatives.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as ofMarch 31, 2023.
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 andfinancial position of issuers on a regular basis.
The basic policies regarding derivative transactions have been approved by the director in
charge of accounting based on internal guidelines that prescribe the authority and the limit foreach transaction by the corporate treasury department. Reconciliation of the transactions andbalances with customers is made and the transaction data is reported to the director in charge ofaccounting on a monthly 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, 2023, 10.5% 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. The fair values of cash
and cash equivalents, notes and account receivable, account payable and short-term bank loan
are not disclosed because their maturities are short and the carrying values approximate fairvalue.

- 26 -

(a) Fair value of financial instruments
Millions of Yen
March 31, 2023

Carrying
AmountFair Value

Short-term investments andinvestment securities¥ 52,174¥ 52,174

Total¥ 52,174¥ 52,174

Long-term bank loan

¥ 1,093¥ 1,093

Total¥ 1,093¥ 1,093

Derivatives

¥

¥

(57)

Unrealized
Gain/Loss(57)

March 31, 2022
Short-term investments andinvestment securities¥ 53,108¥ 53,108

Total¥ 53,108¥ 53,108

Long-term bank loan

¥ 1,162¥ 1,162

Total¥ 1,162¥ 1,162

Derivatives¥¥

March 31, 2023

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

Short-term investments andinvestment securities$ 392,286$ 392,286

Total$ 392,286$ 392,286

Long-term bank loan

$

8,218

$

8,218

Total

$

8,218

$

8,218

Derivatives

$

(429)

$

(429)

(134)

(134)

(b) Carrying amount of financial instruments that do not have a quoted market price in an active
marketMillions of Yen
2023
2022
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- 27 -¥17¥ 17

Thousands of
U.S. Dollars
2023

$128

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

Due in1 Yearor Less

March 31, 2023

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

Cash and cash equivalents
Receivables
Investment securities:
Others¥ 9,555
16,587
79

¥ 70

Total

¥ 26,221¥ 70

Due after
10 Years

March 31, 2022
Cash and cash equivalents
Receivables
Investment securities:
Debt securities
Others¥ 22,386
20,079
300
88

¥ 160

Total

¥ 42,853¥ 160

March 31, 2023

Due in1 Yearor Less

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:
Others$ 71,842
124,714
594

$ 526

Total

$ 197,150$ 526

Due after
10 Years(7) Financial Instruments Categorized by Fair Value Hierarchy
The fair value of financial instruments is categorized into the following three levels, depending on
the observability and significance of the inputs used in making fair value measurements:
Level 1: Fair values measured by using quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Fair values measured by using inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly or indirectly.
Level 3: Fair values measured by using unobservable inputs for the assets or liabilities.
If multiple inputs are used that have a significant impact on the measurement of fair value, fairvalue is categorized at the lowest level in the fair value measurement among the levels to which
each of these inputs belongs.

- 28 -

(a) The financial assets and liabilities measured at the fair values in the consolidated balance
sheet

March 31, 2023

Level 1Marketable and investment securities:
Available-for-sale securities:
Equity securities
Corporate bonds
Other¥ 52,026

Total assets¥ 52,026

Millions of Yen
Level 2
Level 3Total

¥ 52,026
¥ 148

148

¥ 148

¥ 52,174

Derivative transactions:
Foreign currency forward contracts

¥ 57

¥

57

Total liabilities

¥ 57

¥

57

March 31, 2022

Level 1Marketable and investment securities:
Available-for-sale securities:
Equity securities
Corporate bonds
Other¥ 52,560

Total assets¥ 52,560

Millions of Yen
Level 2
Level 3

Total

¥ 300
248

¥ 52,560
300
248

¥ 548

¥ 53,108

Derivative transactions:
Foreign currency forward contracts

¥ 134

¥

134

Total liabilities

¥ 134

¥

134

Thousands of U.S. Dollars
Level 1
Level 2 Level 3
Total

March 31, 2023
Marketable and investment securities:
Available-for-sale securities:
Equity securities
Corporate bonds
Other$ 391,173

Total assets$ 391,173$ 391,173$ 1,113

1,113$ 1,113$ 392,286

Derivative transactions:
Foreign currency forward contracts

$ 429

$

429

Total liabilities

$ 429

$

429

- 29 -

(b) The financial assets and liabilities not measured at the fair values in the consolidatedbalance sheet
Millions of Yen
Level 2
Level 3Total

Long-term bank loan

¥ 1,093¥ 1,093

Total liabilities¥ 1,093
Millions of Yen
Level 2
Level 3

¥ 1,093Long-term bank loan

¥ 1,025¥ 1,025

Total liabilities¥ 1,025¥ 1,025

March 31, 2023

Level 1March 31, 2022

Level 1March 31, 2023

Level 1Thousands of U.S. Dollars
Level 2
Level 3

Total

Total

Long-term bank loan

$ 8,218$ 8,218

Total liabilities$ 8,218$ 8,218

The following is a description of valuation methodologies and inputs used for measurementof the fair value of assets and liabilities:
Marketable and Investment Securities
The fair values of listed equity securities, corporate bonds and others are measured at thequoted market prices. Since listed equity securities are traded in active markets, the fairvalues of listed equity securities are categorized as Level 1. Whereas the quoted market
prices of corporate bonds and others are not considered to be in active markets due to lowmarket transactions, the fair values of corporate bonds and others are categorized as
Level 2.
Derivatives
The fair values of foreign currency forward contracts are measured at the quoted market
prices considering observable inputs such as foreign currency exchange rate, and are
categorized as Level 2.
Long-Term Bank Loan
The fair values of long-term bank loan are measured by using discounted present value
techniques considering assumptions including expected future cash flows and discount rates
taking into account maturity and credit risk, and are categorized as Level 2.

- 30 -

16.

DERIVATIVESThe Group enters into derivative contracts, including foreign currency forward contracts, to hedge
foreign exchange 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
the Group's business. Accordingly, market risk in these derivatives is basically offset by opposite
movements in the value of hedged assets or liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions,
the Group 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, 2023 and 2022, wereas follows:

March 31, 2023

Contract
AmountMillions of Yen
Contract
AmountDue after
Fair
1 YearValue

Foreign currency forward contracts—
Selling Euro¥ 2,285¥ (57)¥ (57)¥ 3,150¥ (134)¥ (134)

March 31, 2023

Contract
AmountThousands of U.S. Dollars
Contract
AmountDue after
Fair
Unrealized
1 YearValue
Gain/Loss

Foreign currency forward contracts—
Selling Euro$ 17,180$ (429)Unrealized
Gain/Loss

March 31, 2022
Foreign currency forward contracts—
Selling Euro$ (429)The fair value of derivative transactions is measured at the quoted price obtained from financial
institutions.

- 31 -

17.

OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) for the years ended March 31, 2023 and2022, were as follows:

Millions of Yen
2023
2022
Unrealized gain (loss) on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
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 (loss)

18.

Thousands of
U.S. Dollars
2023¥ 2,017(1,937)80(30)¥ (3,290)(389)(3,679)1,071$ 15,165(14,563)
602
(226)

¥

50

¥ (2,608)$

376¥ 1,161
1,161¥ 1,396
1,396

$

8,729
8,729

¥ 1,161¥ 1,396

$

8,729

¥

371
(112)
259
5

¥

147
(62)
85
20

$

2,789
(842)
1,947
38

¥

264

¥

105

$

1,985

¥ 1,475¥ (1,107)$ 11,090

SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2023, was approved at the board of
directors' meeting held on May 18, 2023:

Year-end cash dividends, ¥65 ($0.5) per share- 32 -

Millions of Yen

Thousands of
U.S. Dollars¥ 1,337$ 10,053

19.

REVENUE(1) Information Regarding Disaggregated Revenue from Contracts with Customers
Millions of Yen
2023
Geographical Areas
Overseas
Japan
Reportable Segment:
Business & Plus
Healthcare
Creative Work
Vertical & Specific
Amusement
Other¥ 13,212
22,881
5,644
5,515

Total

908

¥ 5,371
11,833
1,102
3,754
6,498
4,132

¥ 18,583
34,714
6,746
9,269
6,498
5,040

¥ 48,160¥ 32,690¥ 80,850

Millions of Yen
2022
Geographical Areas
Overseas
Japan
Reportable Segment:
Business & Plus
Healthcare
Creative Work
Vertical & Specific
Amusement
Other¥ 12,123
19,445
5,231
4,373

Total

Total

Total

654

¥ 5,421
12,4601,048
3,965
18,142
3,927¥ 17,544
31,905
6,279
8,338
18,142
4,581¥ 41,826¥ 44,963¥ 86,789

Thousands of U.S. Dollars
2023
Geographical Areas
Overseas
Japan
Total
Reportable Segment:
Business & Plus
Healthcare
Creative Work
Vertical & Specific
Amusement
Other$ 99,338
172,038
42,436
41,466

Total

6,827

$ 40,383
88,9708,286
28,22648,85731,068$ 139,721
261,008
50,722
69,692
48,85737,895$ 362,105$ 245,790$ 607,895(2) Basic Information to Understand Revenues from Contracts with Customers
Although the Group is effectively a single segment consisting mainly of visual products andrelated products, revenue is divided into sales of products and entrusted development of
amusement software due to differences in the timing of fulfillment of performance obligations.
Product sales are included in Business & Plus, Healthcare, Creative Work, Vertical & Specificand Amusement, and entrusted development of amusement software is included in others.

- 33 -

The sales of products
The Company determines that the performance obligations to customers for the sales of the
products is satisfied when the products are delivered to the customers and the customers obtains
control of the products. Therefore, the Company recognizes the revenue at a point in time ofdelivery of the products.
The transaction price is measured by the amount promised in contracts with customers, which isthe amount deducting the amount of discount and rebate. The amount of consideration does notinclude any significant financial component.
Entrusted development of amusement software
The Company determines that performance obligations to customers for an entrusted
development will be satisfied over a certain period of time from the start of development basedon the customer's request to the provision of the software deliverables to the customers and thecompletion of the inspection. Therefore, the Company recognizes the revenue over the period
from the start of development to the completion of acceptance. Revenue recognition is based on
cost recovery method when it is not possible to reasonably estimate the degree of progress
regarding satisfied performance obligations, but it is expected to recover the costs. The
transaction price is based on the amount of consideration promised in contracts with customers
and does not include any significant financial component.
(3) Information to Understand the Amount of Revenue for the Current Consolidated Fiscal
Year and the Next Consolidated Fiscal Year(a) The balances of contract assets, contract liabilities and receivables from contracts withcustomers

Millions of Yen
2023
2022
Receivables from contracts with customers
Contract assets
Contract liabilities¥ 18,314
2,347
581¥ 21,890
2,925
895

Thousands of
U.S. Dollars
2023$ 137,699
17,647
4,368

Contract assets relate to the Company's rights to consideration for the development
deliverables of the entrusted development of amusement software with customers. The
contract assets will be transferred to the receivables from contracts with customers when the
Company's right to consideration becomes unconditional. The consideration for theentrusted development is invoiced at the time of delivery of the deliverable to the customer
and the completion of acceptance in accordance with the contractual terms and is generally
received in the second month following the billing month.
Contract liabilities are related to advance payments for which the maintenance period has
not elapsed out of the maintenance price received after concluding the maintenancecontracts with customers. Contract liabilities are reversed when revenue is recognized.
(b) Transaction price allocated to remaining performance obligations
The total transaction price allocated to the remaining performance obligations related to theentrusted development of amusement software by the Company is ¥950 million. Revenue
will be recognized over the next 12 months as its development is completed.

- 34 -

20.

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 is required to report financial and descriptive information about its reportable segments. Reportable segments 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 to allocate resources and in assessing
performance. Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance anddeciding how to allocate resources to operating segments.
(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

Business&
Plus

Healthcare

Creative
Work

Millions of Yen
2023
Vertical&Specific¥ 18,583¥ 34,714¥ 6,746¥ 9,269¥ 6,498¥ 5,040¥ 80,850

Amusement

Other

Total

¥ 18,142¥ 4,581¥ 86,789

Other

Total

$ 37,895$ 607,895

Business&
Plus

Healthcare

Creative
Work

Millions of Yen
2022
Vertical&Specific¥ 17,544¥ 31,905¥ 6,279¥ 8,338

Amusement

Other

Total

Business&
Plus

Healthcare

Thousands of U.S. Dollars
2023
VerticalCreative&
Work
Specific
Amusement$ 139,721$ 261,008$ 50,722$ 69,692$ 48,857(3) Information about Geographical Areas(a) Sales

Japan

EuropeMillions of Yen
2023
North
America¥ 32,690¥ 33,620¥ 8,062¥ 6,478¥ 80,850

Japan

EuropeMillions of Yen
2022
North
America

Other

Total

¥ 44,963¥ 30,502¥ 5,979¥ 5,345¥ 86,789- 35 -

Other

Total

JapanEuropeThousands of U.S. Dollars
2023
North
America$ 245,789$ 252,782$ 60,617

Other

Total

$ 48,707$ 607,895

Notes : 1. Sales are classified by country or region based on the location of customers.
2. Within Europe, sales in Germany for the years ended March 31, 2023 and 2022,
were ¥18,291 million ($137,526 thousand) and ¥15,853 million, respectively.
(b) Property, plant and equipment

Japan

Europe¥ 12,793¥ 7,001

Millions of Yen
2023
North
America¥ 2,126

Japan

EuropeMillions of Yen
2022
North
America¥ 11,744¥ 6,820¥1,519Japan

EuropeThousands of U.S. Dollars
2023
North
America$ 96,188$ 52,639$ 15,985

Other

Total

¥ 69

¥ 21,989

Other

Total

¥ 91

¥ 20,174

Other

Total

$ 519

$ 165,331

Note: Within Europe, property, plant and equipment in Germany for the years ended
March 31, 2023 and 2022, were ¥5,955 million ($44,774 thousand) and ¥5,821 million,
respectively.
(4) Information about Major Customers

Name of Customers

Millions of Yen
2023
Sales

JT Japan Technicals¥ 10,077

Name of Customers

Millions of Yen
2022
Sales

JT Japan Technicals¥ 21,408

Name of Customers

Thousands of
U.S. Dollars
2023
Sales

JT Japan Technicals$ 75,767******- 36 -