FINANCIAL REPORT(Report under Article 24, paragraph 1 of the Financial Instruments and Exchange Act)
Business Year from April 1, 2019 to March 31, 2020
(The 72nd Term)(TRANSLATION)

ARISAWA MFG. CO., LTD.
E01152TABLE OF CONTENTS
Page Number
Cover Page
PART I. INFORMATION ON THE BUSINESS ................................................................... 1
I. General Conditions of Business .............................................................................................. 1
1. Changes in Principal Management Indicators, etc. ........................................................ 1
2. History ............................................................................................................................ 3
3. Description of Business .................................................................................................. 4
4. Status of Subsidiaries and Affiliated Companies ........................................................... 6
5. Status of Employees ....................................................................................................... 8
II. Status of Business .................................................................................................................. 9
1. Management Policy, Management Environment and Tasks to be Addressed ................ 9
2. Business Risks, etc. ...................................................................................................... 10
3. Analyses of Consolidated Financial Position, Business Resultsand Cash Flows by the Corporate Managers .......................................................... 11
4. Agreements with Managerial Implications, etc. ........................................................... 18
5. Research and Development Activities .......................................................................... 18
III. Status of Facilities .............................................................................................................. 20
1. Outline of Capital Investment ...................................................................................... 20
2. Status of Major Facilities.............................................................................................. 20
3. Plans for Installation and Retirement, etc. of Facilities ................................................ 22
IV. Status of the Submitting Company .................................................................................... 23
1. Status of Shares, etc...................................................................................................... 23(1) Total Number of Shares, etc. ............................................................................... 23(2) Status of Stock Acquisition Rights, etc. ................................................................ 24(3) Status of Exercise of Moving Strike Convertible Bonds, etc. ............................... 26(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc. .... 26(5) Status of Shareholder Categories ........................................................................... 27(6) Status of Major Shareholders ................................................................................ 28(7) Status of Voting Rights ......................................................................................... 30
2. Status of Acquisition of Treasury Stock, etc. ............................................................... 31
3. Dividend Policy ............................................................................................................ 32
4. Status of Corporate Governance, etc. ........................................................................... 33(1) Outline of Corporate Governance.......................................................................... 33(2) Status of Directors and Officers ............................................................................ 38(3) Status of Audit ....................................................................................................... 42(4) Remuneration, etc. of Directors and Corporate Auditors ...................................... 44(5) Status of Shareholding ........................................................................................... 46
V. Status of Accounting ........................................................................................................... 52
1. Consolidated Financial Statements, etc. ....................................................................... 53(1) Consolidated Financial Statements ........................................................................ 53(2) Other .................................................................................................................... 101
2. Financial Statements, etc. ........................................................................................... 102(1) Financial Statements ............................................................................................ 102(2) Details of Major Assets and Liabilities ............................................................... 116(3) Other .................................................................................................................... 117
VI. Outline of Share Handling of the Submitting Company .................................................. 117
VII. Reference Information on the Submitting Company ...................................................... 118
1. Information on Parent Company, etc. of Submitting Company ............................ 118
2. Other Reference Information ................................................................................ 118
PART II. INFORMATION ON GUARANTY COMPANIES, ETC.
OF THE SUBMITTING COMPANY ................................................................ 120[Independent Auditors’ Report]

Cover Page
Document to be filed:

Financial Report

Statutory basis:

Article 24, paragraph 1 of the Financial Instruments and Exchange Act

Filing to:

Director-General of the Kanto Local Finance Bureau

Date of filing:

June 26, 2020

Business year:

The 72nd Term (From April 1, 2019 to March 31, 2020)

Company name (Japanese):

Kabushiki-Kaisha Arisawa Seisakusho

Company name (English):Arisawa Mfg. Co., Ltd.

Name and title of representative:

Yuta Arisawa, President and Representative Director

Location of head office:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, General Manager, Accounting Department

Place of contact:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, General Manager, Accounting Department

Places where copies of this Financial Report

Arisawa Mfg. Co., Ltd., Tokyo Branch Office

are made available for public inspection:(12-5, Yanagibashi 2-chome, Taito-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)

PART I.

INFORMATION ON THE BUSINESS

I. General Conditions of Business1. Changes in Principal Management Indicators, etc.
(1) Consolidated Management Indicators, etc.
Term

68th term

69th term

70th term

71st term

72nd term

Closing month

March 2016

March 2017

March 2018

March 2019

March 2020

37,22834,45140,90944,72845,970

3,510

2,690

4,044

4,297

2,783

2,702

2,037

3,453

2,861

212

1,067

1,821

4,498

2,200

△117

47,602

48,55152,49353,46249,01860,98363,80872,38273,096

71,7091,263.29

1,290.93

1,378.16

1,397.78

1,387.76

76.02

57.20

96.35

79.15

6.14

75.58

57.06

95.51

78.70

6.12

Net sales (Millions of yen)
Ordinary income or loss ()(Millions of yen)
Profit or loss () attributableto owners of the parent(Millions of yen)Comprehensive income(Millions of yen)
Net assets (Millions of yen)
Total assets(Millions of yen)
Net assets per share (Yen)
Net income or loss ()per share(Yen)

Fully diluted net income per
share

(Yen)

Equity ratio

(%)

73.8

72.2

68.6

69.3

64.3

Return on equity

(%)

6.0

4.5

7.2

5.7

0.4

Price earnings ratio (Times)

7.6

13.7

10.2

10.0

130.7

4,548

3,419

2,181

2,893

4,837

△1,771△1,671△471△3,304

6,580△3,540

419

△59

△576

△4,431

4,901

7,026

8,829

7,718

14,725

1,426

1,432

1,454

(295)

(313)

(294)

Cash flows from operating
activities (Millions of yen)
Cash flows from investing
activities (Millions of yen)
Cash flows from financing
activities (Millions of yen)
Cash and cash equivalents at
the end of period(Millions of yen)

Number of employees(Parenthesized figures
1,285
1,305
indicate the average number
(189)
(139)
of temporary employees notincluded in the total)
Note: Consumption tax, etc. are not included in the amount of net sales.

-1-(2) Management Indicators, etc. of the Submitting Company
Term

68th term

69th term

70th term

71st term

72nd term

Closing month

March 2016

March 2017

March 2018

March 2019

March 2020

25,793

23,41028,50329,26931,635

2,542

1,898

2,451

2,602

2,365

2,219

1,516

2,503

1,947

6,792

7,294

7,317

7,458

7,541

7,594

35,61135,67936,02436,22636,381

Net sales(Millions of yen)

Ordinary income or loss ()(Millions of yen)
Net income or loss ()(Millions of yen)
Capital stock (Millions of yen)
Number of shares issued andoutstanding(Thousands of shares)
Net assets(Millions of yen)

32,75933,852

36,13836,571

38,931

Total assets(Millions of yen)

40,10242,643

46,19545,68851,535916.79944.94999.83

1,005.76

1,166.03

23.00
(－)

20.00
(－)

34.00
(－)

30.00
(－)

30.00
(－)

62.43

42.59

69.83

53.87

195.86

62.06

42.48

69.22

53.56

195.28

Net assets per share(Yen)

Dividend per share(Yen)(Parenthesized figures indicate
the amount of interim dividend
per share included in the total)
Net income or loss ()per share(Yen)

Fully diluted net income per
share

(Yen)

Equity ratio

(%)

81.4

79.0

78.0

79.7

75.2

Return on equity

(%)

6.7

4.6

7.2

5.4

18.1

(Times)

9.2

18.4

14.1

14.7

4.1

(%)

36.8

47.0

48.7

55.7

15.3

583
(101)

589
(69)

592
(99)

602
(119)

614
(134)

Price earnings ratio
Dividend payout ratio

Number of employees(Parenthesized figures indicate
the average number of temporary
employees not included in the
total)
Shareholders' gross yield(%)（Comparative Indicator：

58.1

80.1

103.2

87.4

91.2

dividend-included TOPIX(89.2)(102.3)(118.5)(112.5)(101.8)

1,095

827

1,349

1,350

1,148

（Tokyo Stock Price Index））
Highest share price(Yen)

Lowest share price
(Yen)
511
482
695
655
Note: 1. Consumption tax, etc. are not included in the amount of net sales.
2. "Highest share price" and "Lowest share price" are recorded in Tokyo Stock Exchange (First section).

-2-

680

2. History
July 1949▪ Incorporation of Arisawa Mfg. Co., Ltd. (hereinafter referred to as either the “Company” or the“Submitting Company”, as the case may be), succeeding the businesses of “Arisawa Manufacturing”,
which was founded in 1909 and manufactured Battenburg lace, narrow woven fabrics, electricalinsulating tapes and glass fiber fabrics, etc.

April 1954

▪ Established a resin processing division.

June 1954▪ Relocated the Head Office from Ohmachi, Takada-shi (currently Joetsu-shi), Niigata to Minamihoncho, Takada-shi.

May 1959▪ Opened Tokyo Sales Office and Osaka Sales Office.

September 1960

▪ OTC trading of the Company’s stock started at Tokyo Securities Dealers Association.

October 1961

▪ The Company’s stock was listed on the Second Section of Tokyo Stock Exchange.

December 1966

▪ Incorporated Arisawa Jushi Kogyo Co., Ltd. (currently a consolidated subsidiary), which conducts
molding and processing of resin products related to industrial application structural materials.

June 1968▪ Opened a factory in Oaza-Nakadahara, Takada-shi (currently Joetsu-shi), Niigata, establishing new
resin processing facilities.

August 1973

▪ Incorporated Eagle Co., Ltd., which operates a driving range.

March 1974

▪ Incorporated Myoko Shinko Co., Ltd., which conducts processing of resin products related to electricalinsulating materials.

June 1974▪ Absorbed Arisawa Shoji Co., Ltd. and reorganized the sales division into Tokyo Branch Office andOsaka Branch Office (Osaka Branch Office was closed down in September 2015).

April 1976

▪ Incorporated Yuai Sangyo, Ltd., which manufactures glass fiber fabrics and special fiber fabrics related
to electrical insulating materials.

May 1987▪ Incorporated Arisawa Logistics, Ltd., which conducts warehouse management and logistics operations.

July 1991▪ Incorporated Polatechno Co., Ltd. (which manufactures polarizing plates for use in liquid crystal
displays) through joint capital investment with Nippon Kayaku Co., Ltd.

December 1994

▪ Opened Technological Development Center on the premises of Nakadahara Factory.

October 1996

▪ Acquired Arisawa Polywork Co., Ltd. (which conducts molding and processing of resin products
related to industrial application structural materials) with capital contribution of Arisawa Logistics, Ltd.

July 1999▪ Opened a factory in Oaza-Nakadahara (on the west side of the current Nakadahara Factory), Joetsu-shi,
Niigata, establishing new resin processing facilities.

July 2000▪ Incorporated Arisawa Fiber Glass Co., Ltd. (currently a consolidated subsidiary), spinning off the glass
cloth manufacturing division of the Submitting Company (related to electronic materials and electricalinsulating materials) and consigning manufacture of glass cloth to Arisawa Fiber Glass Co., Ltd.

September 2002

▪ The Company’s stock was listed on the First Section of Tokyo Stock Exchange.

April 2003

▪ Myoko Shinko Co., Ltd. absorbed Arisawa Polywork Co., Ltd., Yuai Sangyo, Ltd. and Arisawa
Logistics, Ltd. and changed its corporate name to Arisawa Sogyo Co., Ltd. (currently a consolidated
subsidiary).

March 2006

▪ Stock of Polatechno Co., Ltd. was listed on the JASDAQ Securities Exchange.

October 2009

▪ Acquired shares of ThinFlex Corporation (currently a consolidated subsidiary).

December 2010

▪ Howa Sangyo Ltd., a subsidiary, changed its corporate name to Protec International Holdings Co., Ltd.
(currently a consolidated subsidiary) and acquired shares of Protec Arisawa Europe, S.A. and Protec
Arisawa America, Inc. (both currently consolidated subsidiaries)

July 2011▪ Arisawa Sogyo Co., Ltd. absorbed Eagle Co., Ltd.

October 2015

▪ Opened Kansai Sales Office in Kyoto-shi, Kyoto. (Relocated to Osaka-shi, Osaka in March 2018)

November 2017

▪ Acquired all shares of Satosen Co., Ltd., which conducts manufacturing and sales of electronicmaterials (currently a consolidated subsidiary).

October 2019

▪ Sold all shares of Polatechno Co., Ltd. excluding it from the affiliate companies accounted for underequity method.
-3-3. Description of BusinessOur corporate group (hereinafter referred to as either “our Group” or the “Group”, as the case may be) is
comprised of the Company, fifteen (15) subsidiaries and four (4) affiliated companies and is engaged in
manufacturing and sales of electronic materials, industrial application structural materials, electrical insulating
materials and display materials. It also develops business activities such as sales of goods related to each businesssegment as well as logistics and other services.
Description of business of our Group and the capacities of the Company and its associated companies with respect
to each business segment are as follows.
The business segments shown below are categorized in the same manner as those shown in V. Status of Accounting– 1. Consolidated Financial Statements, etc. – (1) Consolidated Financial Statements – [Notes].
(1) Electronic Materials
The Company manufactures and sells materials for flexible and rigid printed circuit boards, etc. that are used
as electronic materials, while Arisawa Fiber Glass Co., Ltd., a subsidiary, manufactures glass cloth for printed
circuit boards. ThinFlex Corporation, a subsidiary, also manufactures and sells materials for flexible printed
circuit boards, etc., while Satosen Co., Ltd., a subsidiary, manufactures and sells rigid printed circuit boards.
(2) Industrial Application Structural Materials
The Company, Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc. manufacture and sell filament
winding molded products for use as industrial application structural materials. The Company manufactures andsells honeycomb panels and prepregs, etc. for aircraft. Arisawa Sogyo Co., Ltd., a subsidiary, manufactures andsells pultrusion molded products and FRP ski sheets, etc.
Protec International Holdings Co., Ltd. conducts business management of the aforesaid Protec Arisawa
companies as the holding company of these subsidiaries engaged in the water treatment business with theirfilament winding molded products.
(3) Electrical Insulating Materials
Arisawa Fiber Glass Co., Ltd., a subsidiary, manufactures glass cloth and glass tapes for use as electricalinsulating materials, and the Company sells such glass cloth and glass tapes. The Company manufactures andsells prepregs, etc. for electrical insulation, while Arisawa Sogyo Co., Ltd., a subsidiary, and Arisawa Jushi
Kogyo Co., Ltd., another subsidiary, manufacture these products.
(4) Display Materials
The Company manufactures and sells 3D display filters, etc. for use as display materials. ColorLink Japan,
Ltd., a subsidiary, manufactures and sells special optical films, with Arisawa Manufacturing (Dalian) Co., Ltd.
also conducting the post-process operations for such special optical films. Innovision FlexTech Corporation
manufactures and sells screens, etc.
(5) Other Businesses
The Company conducts sales of the related goods mentioned above in (2) and (3). In addition, Arisawa Sogyo
Co., Ltd., a subsidiary, conducts logistics operations and also operates a driving range.
The above matters are abstracted in the following Business Activities Diagram.

-4-

ColorLink Japan, Ltd.

TopFlex

Corporation

Arisawa Manufacturing (Dalian) Co., Ltd.

SatosenCo.,

Arisawa Jushi Kogyo Co., Ltd.

Protec International Holdings Co., Ltd.

Protec Arisawa Europe, S.A.

Protec Arisawa America, Inc.
Ar i sa wa S o g yo Co . , Lt d .

Transactions of products, etc.

Other transactions(Note)

Consolidated subsidiary

Industrial application structural materials

Electrical insulating materials

Innovision FlexTech Corporation

Ltd.

Arisawa Fiber Glass Co., Ltd.

Display materials

ThinFlex Corporation

Arisawa Mfg. Co., Ltd. (Manufacture and sales)

Electronic materials(Business Activities Diagram)

Affiliated company accounted for underthe equity method

Non-consolidated subsidiary

Arisawa Sogyo Co., Ltd. is engaged in other businesses in addition to the manufacture of electrical insulating
materials and the manufacture and sales of industrial application structural materials.

-5-4. Status of Subsidiaries and Affiliated Companies

Name

Location

Capital stock(Thousands of Description of core
yen except asbusinessotherwise noted)

Votinginterest
held by theCompany

Relevant descriptions(%)(Consolidated
subsidiaries)
ThinFlex
Corporation(See Note 2)
ThinFlex
Technology
Corporation(B.V.I.)(See Note 2)
TopFlex
Corporation(See Note 2
and Note 5)
Satosen Co.,Ltd.

1,006,377(Thousands of
Taiwan dollar)

Electronic materials

52.3

British Virgin
Islands

15,710(Thousands of
US dollar)

Electronic materials

100.0(100.0)---

Kunshan City,
P.R. China

17,000(Thousands of
US dollar)

Electronic materials

100.0(100.0)

Sales of electronic material
products

99,540Electronic materials

100.0

Leasing of land
Concurrent directorship

100.0

Consignment manufacture of glass
fiber fabrics related to electronicmaterials and electrical insulating
materials,
Leasing of buildings andmanufacturing equipment,
Financial support,
Concurrent directorship

100.0

Financial support,
Concurrent directorship

Osaka-shi,
Osaka

Arisawa Fiber
Glass Co., Ltd.
(See Note 2)

Joetsu-shi,
Niigata

100,000

Electronicmaterials,
Electrical insulating
materials

ProtecInternational
Holdings Co.,
Ltd.

Joetsu-shi,
Niigata

101,830

Industrial
application
structural materials

Protec Arisawa
Europe, S.A.

Munguia, Spain

1,670(Thousands of
euro)

Industrial
application
structural materials

Protec Arisawa
America, Inc.

Vista, CA,
U.S.A.

3,200(Thousands of
US dollar)

Industrial
application
structural materials

30,950Electrical insulating
materials,
Industrial
application
structural materials,
Other businesses

Arisawa Sogyo
Co., Ltd.

Supply of raw materials as well as
sales of products related toelectronic materials,
Concurrent directorship

Kaohsiung
County, Taiwan

Joetsu-shi,
Niigata

Arisawa Jushi
Kogyo Co.,
Ltd.

Joetsu-shi,
Niigata

ColorLink
Japan, Ltd.

Joetsu-shi,
Niigata

10,000198,201

Electrical insulating
materials

Display materials

-6-

100.0
(100.0)Financial support,
Concurrent directorship

100.0(100.0)Financial support,
Concurrent directorship

100.0

Consignment manufacture as wellas consignment of warehousing
and logistics operations of resin
products related to electricalinsulating materials and industrial
application structural materials,
Leasing of buildings, machineryand equipment

100.0

Consignment manufacture of resin
products related to electricalinsulating materials,
Leasing of land and buildings,
Concurrent directorship97.2

Leasing of buildings, machineryand equipment,
Supply of raw materials,
Concurrent directorship

Name

Location

Capital stock(Thousands of Description of core
yen except asbusinessotherwise noted)

Votinginterest
held by theCompany(%)

Relevant descriptions(Affiliatedcompanies
accounted forunder theequity method)
Innovision263,516
Sales and purchase of products
Kaohsiung
FlexTech(Thousands of Display materials
35.4 related to display materials,
City, Taiwan
Corporation
Taiwan dollar)
Concurrent directorship
Note: 1. Segment names are stated in the column “Description of core business”.
2. The company falls under the category of specified subsidiary.
3. Parenthesized figures in the column “Voting interest held by the Company” indicate the ratio of indirect ownership to thepertinent total.
4. The company submits its own financial report.
5.
Net sales (excluding inter-company sales between the consolidated companies) of TopFlex Corporation account for morethan ten hundredths (10/100) of the Group’s consolidated net sales.
Key income and loss indices, etc. of TopFlex Corporation(Thousands of yen)
(1) Net sales(2) Ordinary income

6,788,175
151,140(3) Net income(4) Net assets

133,546
1,737,346(5) Total assets

6,999,366-7-

5. Status of Employees(1) Status of Consolidated Group(As of March 31, 2020)
Segment name

Number of employees

Electronic materials

838

（141）

Industrial application structural materials

290

（79）

Electrical insulating materials

128

（18）

Display materials

125

（24）

1,381

（262）

Other

35

（21）

Unallocated (Common)

38

（11）

1,454

（294）

Total of reportable segments

Total
Note: 1.

2.

The column “Number of employees” indicates the number of full-time employees (excluding persons on loan to companies
outside our Group from those within our Group and including persons on loan to companies within our Group from thoseoutside our Group), while the annual average number of temporary employees (including part-timers, employees
dispatched from staffing agencies and seasonal workers) is stated in the parentheses.
The number of employees stated as that of “Unallocated (Common)” is the number of those who belong to theadministrative departments of the Company.

(2) Status of Submitting Company
Number of employees

Average age (Years old)

Average length of service (Years)

43.0

19.3

614（134）
Segment name(As of March 31, 2020)
Average annual salary(Thousands of yen)
5,827

Number of employees

Electronic materials

333

（65）

Industrial application structural materials

122

（44）

Electrical insulating materials

70

（11）

Display materials

51

（3）

576

（123）

Unallocated (Common)

38

（11）

Total

614

（134）

Total of reportable segments

Note: 1.

2.
3.

The column “Number of employees” indicates the number of full-time employees (excluding persons on loan to othercompanies from the Company and including persons on loan to the Company from other companies), while the annual
average number of temporary employees (including part-timers, employees dispatched from staffing agencies and seasonal
workers) is stated in the parentheses.
“Average annual salary” includes bonuses and extra wages.
The number of employees stated as that of “Unallocated (Common)” is the number of those who belong to theadministrative departments of the Company.

(3) Status of Labor Union
The labor union of the Submitting Company belongs to the local division of the Japanese Federation of Textile,
Chemical, Food, Commercial, Service and General Workers’ Unions and has made sound development since its
formation in 1946. The labor-management relations are harmonious, and efforts are made to develop theCompany’s business through mutual cooperation. The union membership as of March 31, 2020 stands at 479
members.

-8-

II. Status of Business
1. Management Policy, Management Environment and Tasks to be Addressed
The Company and our corporate Group, ever since its initiation, have been working on technologicalinnovations and product development to build up unique technologies that integrate the “weaving, coating
and molding” elements of its expertise while consistently fulfilling users’ needs, thereby increasing its
corporate value. Along with the globalization of markets and the rapid diversification of needs, we will
strive to further differentiate technologies as well as improve quality and productivity, thereby creating
corporate value.
As the change in needs is expected in some parts of business due to the impact of spread of the new corona
virus, we will promote the development of new products and business development.
Note that matters stated concerning the future in the text are based on judgments made by our Group as ofthe end of the current consolidated fiscal year.
(1) Basic Policies of Corporate Management
Grounded in the motto “Creation, Innovation and Challenge”, our Group makes it its management policy to:(i) create new values and enhance customer satisfaction;(ii) anticipate customer needs and create a new business with creative technology;(iii) improve quality and productivity, and strengthen business quality.
Under such management policy, we aim to create corporate value and, along with the improvement of capitalefficiency, enhance shareholder value of the Company by means of enhancing customer satisfaction, accelerating
new product development and improving profitability through thorough cost reduction.

(2) Mid- to Long-Term Management Strategies
Our corporate group aims to work on technological innovation and product development while consistently
fulfilling users’ needs and realize its sound survival and sustainable growth, thereby increasing its mid- to longterm corporate value. Specifically, to maintain and expand the revenue base of existing business, we implement
strategic investments in new business that maximizes the synergy effect with existing business and has a highprofitability of capital besides improving and expanding productivity and investing in the development of new
products that anticipate user’s needs.
- In the electronic materials segment, we proceed with the development of new products, centering on mobile
devices, in-vehicle devices and semiconductors. We also continue our exhaustive cost-cutting efforts andclosely collaborate with the consolidated subsidiaries in pursuit of enhanced competitiveness and expanded
market shares.
- In the industrial application structural materials segment and electrical insulating materials segment, we
promote new product development and sales expansion focusing on transportation infrastructure, water
treatment and electrical insulating, with a view to maintaining sound profitability and expanding market shares.
- In the display materials segment, we work to further expand sales of new products utilizing our unique opticaltechnology primarily in the fields of medical applications and large sized displays.
- We deepens collaboration with the overseas consolidated subsidiaries and work to further expand sales bystrengthening the technical service to customers.

(3) Business and Financial Tasks to be Preferentially Addressed
Our Group promotes the following as the tasks to be addressed in order to ensure accelerated and thoroughimplementation of the aforesaid management strategies.
- Exhaustive review of manufacturing technologies and materials selection in order to realize more competitive
cost structure- Thorough cost reduction by means of improving management techniques (centering on the Arisawa
Production System) and proprietary technologies as well as enhancing professional competence of individual
employees- Promotion of enhanced cooperation among the manufacturing, sales and technical divisions in pursuit of more
efficient business operations- We implement strategic investments in new business that maximizes the synergy effect with existing businessand has a high profitability of capital.
-9-It should be noted that our corporate group has an adequate liquid fund and there is no hindrance to thecontinuation of business activities while the impact of the new corona virus infection continues. Although a fall insome demand is expected in segments such as industrial application structural materials segment that deals withthe materials for aircraft in the future, we expect that our corporate group as a whole will stay solid including themainstay electronic materials segment. If it takes time to settle the situation, the impact may be greater than we
expect, but we will implement the above measures promptly while paying close attention to market conditions andensure our sound survival and sustainable growth.

(4) Objective Indicators, etc. for Judgement on the Status of Achievement of Managerial Goals
The target management indicators are a ratio of new product sales of 50% or more, an operating income marginof 8% or more and an ROA (return on assets) of 5% or more.
Note that we are in the process of formulating a medium-term management plan. We will disclose the plan assoon as it is formulated, but the objective indicators, etc. for judgement on the status of achievement of managerial
goals are subject to change.

2. Business Risks, etc.
Among the matters related to the status of business and the status of accounting, etc., which are stated in the
Financial Report, the major risks that the corporate managers recognize may have a significant impact on the
consolidated financial position, business results and cash flows of the consolidated companies are as follows.
The matters stated concerning the future in the text are based on judgments made by our Group as of the end of
the current consolidated fiscal year.

(1) Fluctuations in Demand for Products
Major users of the products manufactured and sold by our Group are information equipment manufacturers,
electronic component manufacturers, industrial electronic device manufacturers, etc., and fluctuations in demand
for these electronic devices affect the results of operations of our Group.

(2) Dependence on Particular Products
Net sales of our Group depend largely on the electronic materials segment. A sales decline in this segment may
affect the results of operations of our Group.

(3) Development of New Businesses
Our Group is making efforts to launch several new businesses, and the status of progress in such efforts may
affect the results of operations of our Group.

(4) Procurement of Raw Materials
If purchase prices of the raw materials purchased by our Group rise sharply due to escalating price of crude oiland copper, such rise may affect the results of operations of our Group.

(5) Impact of Disasters
The vast majority of our Group’s production bases are located in Joetsu-shi, Niigata, Japan. In the event of anearthquake or other disaster, the resultant disruption or interruption of production activities, etc. may affect theresults of operations of our Group.

(6) Environmental Regulations
Businesses of our Group are subject to various legal regulations, including, but not limited to, those applicable
to environmental protection. If any significant liability or obligation accrues to our Group in connection withcompliance with any such environmental or other kind of regulation, such liability or obligation may affect theresults of operations of our Group.

- 10 -

(7) The Impact of the Spread of the New Corona Virus Infection
The new corona virus infection is being contained, but the disruption of supply chain and production activities
and the negative impact on the domestic economy and markets, etc. may affect the results of operation of ourGroup if the infection is prolonged or spreads again.
Note that the impact of the infection on our Group business is not significant in production and limited in sales.
We expect that the effect on the results of operation will vary depending on the timing of the containment of theinfection in the future, and the forecast of business results for the fiscal year ending on March 31, 2021 is set
range. The case of the virus contained early (until the end of September 2020) is set as the upper limit of the range,
and the case of it not contained (until the end of March 2021) is set as the lower limit of the range. We will
announce the forecast of business results as soon as its outlook is available.
Our Group gives first priority to the safety and health of all the stakeholders and implements not only theinfection prevention measures thoroughly in accordance with the administrative guidelines to prevent the further
spread of the infection but also the measures such as prohibition of business trips and visitors in principle with aneffective utilization of teleconference system, implementation of telework (working from home), an opening of asatellite office, etc.

3. Analyses of Consolidated Financial Position, Business Results and Cash Flows by the Corporate
Managers(1) Overview of Operating Results, etc.
Analysis of financial conditions, results of operations and status of cash flows of the current consolidated fiscal
year is as follows.
i) Financial Position and Operating Results
The Japanese economy in the current consolidated fiscal year remained uncertain due to the spread of the newcorona virus infection after January in addition to the impact of the trade friction caused by the US trade policy
and the slowdown of the Chinese economy, etc.
Under such circumstances, our corporate group (the Company, its consolidated subsidiaries and the affiliatedcompanies accounted for under the equity method; hereinafter referred to as either “our Group” or the “Group”,
as the case may be) saw a year-on-year decline, as compared with the previous fiscal year, in the sales in theelectronic materials segment (for use primarily in multifunctional mobile terminals) and the industrial application
structural materials segment.
As a result, the business results of our Group for the current consolidated fiscal year showed net sales of 45,970
million yen (representing a 2.8% increase as compared with the previous consolidated fiscal year), an operating
income of 2,762 million yen (representing a 11.5% decrease as compared with the previous consolidated fiscal
year), an ordinary income of 2,783 million yen (representing a 35.2% decrease as compared with the previous
consolidated fiscal year) and a profit attributable to owners of the parent of 212 million yen (representing a 92.6%
decrease as compared with the previous consolidated fiscal year).
Business results with respect to each segment are as follows.
Electronic materials
In the electronic materials segment, net sales were 29,765 million yen, representing a 3.5% increase ascompared with the previous consolidated fiscal year due to a steady increase in the sales of our mainstay product,i.e. materials for flexible printed circuit boards for multi-functional cellular phones (the amount of orders
received increased by 10.1% to 18,728 million yen, and the production output increased by 9.4%, as comparedwith the previous consolidated fiscal year on a non-consolidated basis of the Submitting Company), while thesegment income or loss recorded an income of 2,331 million yen (representing a 11.0% decrease as comparedwith the previous consolidated fiscal year).
Industrial application structural materials
In the industrial application structural materials segment, due to an increase in sales of aircraft interiormaterials, net sales were 8,395 million yen, representing a 16.3% increase as compared with the previous
consolidated fiscal year, while the segment income or loss recorded an income of 1,393 million yen (representing
a 25.5% increase as compared with the previous consolidated fiscal year).
Electrical insulating materials
In the electrical insulating materials segment, due to a decrease in infrastructure-related sales, net sales were2,984 million yen, representing a 4.6% decrease as compared with the previous consolidated fiscal year, while
the segment income or loss recorded an income of 366 million yen (representing a 14.9% decrease as compared- 11 -

with the previous consolidated fiscal year).
Display materials
In the display materials segment, due to a steady increase in sales of 3D imaging-related materials and adecrease in sales of polarization control optical components of ColorLink Japan Ltd., net sales were 3,427
million yen, representing a 7.4% decrease as compared with the previous consolidated fiscal year, while thesegment income or loss recorded an income of 235 million yen (representing a 104.8% increase as comparedwith the previous consolidated fiscal year).
Other (other businesses)
In other businesses, net sales were 818 million yen, representing a 11.3% increase as compared with theprevious consolidated fiscal year, while the segment income or loss recorded an income of 222 million yen(representing a 15.2% increase as compared with the previous consolidated fiscal year).
The amounts of net sales, orders received, etc. stated in this section do not include consumption tax, etc.
ii) Cash Flows
Cash and cash equivalents (hereinafter referred to as the “Funds”) as of the end of the current consolidated
fiscal year were 14,725 million yen, representing a year-on-year increase of 7,007 million yen, or 90.8%.
The following is the status of each cash flow category during the current consolidated fiscal year and the key
factors of such status.
(Cash flows from operating activities)
Funds earned from operating activities were 4,837 million yen, representing a 67.2% increase as comparedwith the previous consolidated fiscal year. This was due largely to an increase in the Funds comprising 3,122
million yen in income before income taxes and 1,982 million yen in depreciation, etc. as well as a decrease in
the Funds comprising 1,561 million yen in Increase in notes and accounts receivable, etc.
(Cash flows from investing activities)
Funds disbursed for investing activities were 6,580 million yen (3,304 million yen disbursed for the previous
consolidated fiscal year). This was due largely to an increase of 8,981 million yen from sales of shares ofsubsidiaries and associates, etc.
(Cash flows from financing activities)
Funds disbursed from financing activities were 4,431 million yen, representing a 668.3% increase ascompared with the previous consolidated fiscal year. This was due largely to a decrease of 3,200 million yen
for purchase of treasury shares, etc.
iii) Status of Production, Receipt of Orders and Sales
1) Production Results and Status of Receipt of Orders
Our Group (the Company and its consolidated subsidiaries; the same shall apply hereinafter) manufacturesand sells such an extensive and varied range of products that even the products of the same type are notnecessarily uniform in capacity, construction, form or other respects. Also, quite a few of our products are not
manufactured on a made-to-order basis. Such being the case, we do not indicate any segmentalized production
volume and order volume in monetary amounts or quantities.
For this reason, we indicate the status of production, receipt of orders and sales in a correlation with thebusiness results with respect to each of the segments shown in “(1) Overview of Operating Results, etc. - i)
Financial Position and Operating Results”- 12 -

2) Sales Results
Net sales for the current consolidated fiscal year with respect to each reportable segment are as follows.

Segment nameCurrent consolidated fiscal year
(From April 1, 2019 to March 31,
2020)(Millions of yen)Comparison with the previous
consolidated fiscal year (%)

Electronic materials

29,765

3.5

Industrial application structural
materials

8,974

6.9

Electrical insulating materials

2,984

△4.6

Display materials

3,427

△7.4

45,151

2.6

Other

818

11.3

Total

45,9702.8

Total of reportable segments

Note: 1. Inter-segment transactions are eliminated by setoff.
2. Sales results with respect to each major customer and their respective ratios to the total sales amount for the last two
consolidated fiscal years are as follows.

Customer name

Previous consolidated fiscal year
(From April 1, 2018 to March 31, 2019)

Current consolidated fiscal year
(From April 1, 2019 to March 31, 2020)

Amount(Millions of yen)Amount(Millions of yen)

Ratio (%)

Sumitomo Shoji Chemicals
5,664
12.7
Co., Ltd.
3. The amounts stated above do not include consumption tax, etc.

- 13 -

5,381

Ratio (%)
11.7

(2) Details of analysis and study regarding the conditions of operating results etc. from the viewpoint ofcorporate managers.
Details of perception, analysis and study regarding the conditions of operating results etc. of our Group from theviewpoint of corporate managers are as followings.
The matters regarding future in the following sentences were judged as of end of the current consolidated fiscal
year.
i) Details of Perception, Analysis and Study regarding Financial Position and Conditions of Operating Results
In the current consolidated fiscal year, we worked for the continuous growth of existing business by making
the capital expenditures for improvement and expansion of production capacity mainly related to our mainstay
electronic materials. At the same time, we continued an aggressive effort for the market expansion and thegrowth of our Group by developing new products that anticipated changes in markets in each segment.
Electronic materials, as the core products of our Group, increased in orders (including our subsidiary, "ThinFlex
Corporation") for multifunctional mobile devices and supported the whole Group. Regarding industrial
application structural materials, electrical insulating materials, and display materials, we look forward to further
growth and we will continue to develop new products and to increase profitability.
Meanwhile, in the course of the current consolidated fiscal year, the new corona virus infection spread andhas not been entirely contained as of this moment. Its impact is described in “II. Status of Business Factors 1.
Management Policy, Management Environment and Tasks to be Addressed.” Also, factors that may givematerial impact to operating results of our Group are described in "II. Status of Business 2. Business Risks, etc.",
so please refer to it.
Analysis of financial position and operating results in the current consolidated fiscal year of our Group is asfollows.
1) Analysis of Financial Conditions(Assets)
Total assets as of the end of the current consolidated fiscal year were 71,709 million yen (73,096 million yen
as of the end of the previous consolidated fiscal year), representing a year-on-year decrease of 1,386 million
yen, or 1.9%.
Balance of total current assets as of the end of the current consolidated fiscal year was 42,722 million yen(35,577 million yen as of the end of the previous consolidated fiscal year), representing a year-on-year increaseof 7,145 million yen, or 20.1%. This was due largely to an increase of 6520 million yen in cash and deposits by
the share transfer, etc. of Polatechno Co., Ltd., which was an affiliate company.
Balance of total non-current assets as of the end of the current consolidated fiscal year was 28,986 million
yen (37,518 million yen as of the end of the previous consolidated fiscal year), representing a year-on-year
decrease of 8,531 million yen, or 22.7%. This was due largely to a decrease of 8935 million yen in investment
securities by the share transfer of Polatechno Co., Ltd., which was an affiliate company.
(Liabilities)
Total liabilities as of the end of the current consolidated fiscal year were 22,691 million yen (19,633 million
yen as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 3,057 million
yen, or 15.6%.
Balance of total current liabilities as of the end of the current consolidated fiscal year was 18,425 million yen(16,172 million yen as of the end of the previous consolidated fiscal year), representing a year-on-year increaseof 2,252 million yen, or 13.9%. This was due largely to an increase of 3127 million yet in income taxes payable,
etc. by the profit from sales of shares of Polatechno Co., Ltd.
Balance of total non-current liabilities as of the end of the current consolidated fiscal year was 4,265 million
yen (3,461 million yen as of the end of the previous consolidated fiscal year), representing a year-on-year
decrease of 804 million yen, or 23.2%. This was due largely to an increase of 1,302 million yen in long-termloans payable.
(Net assets)
Total net assets as of the end of the current consolidated fiscal year were 49,018 million yen (53,462 million
yen as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 4,443 million
yen, or 8.3%. This was due largely to an increase of 3200 million yen by the acquisition of treasury stock.

- 14 -

2) Analysis of Results of Operations(Net sales)
Net sales for the current consolidated fiscal year were 45,970 million yen (44,728 million yen for the previous
consolidated fiscal year), representing a year-on-year increase of 1,241 million yen, or 2.8%. Cost of sales was
38,224 million yen (36,607 million yen for the previous consolidated fiscal year), representing a year-on-yearincrease of 1,616 million yen and signifying a 1.3 percentage point deterioration in the ratio of cost of sales to
83.1% our thoroughgoing efforts to cut costs.
As a result, gross profit was 7,745 million yen (8,121 million yen for the previous consolidated fiscal year),representing a year-on-year decrease of 375 million yen and signifying a 1.3 percentage point decrease in theratio of gross profit to 16.9%.
(Operating income or loss)
Total selling, general and administrative expenses for the current consolidated fiscal year were 4,983 million
yen (5,001 million yen for the previous consolidated fiscal year), representing a year-on-year decrease of 17
million yen and signifying a 0.4 percentage point decrease in the ratio of selling, general and administrative
expenses to 10.8% in our thoroughgoing efforts to cut costs.
As a result, operating income was 2,762 million yen (3,119 million yen for the previous consolidated fiscal
year), representing a year-on-year decrease of 357 million yen and signifying a 1.0 percentage point decreasein the ratio of operating profit to 6.0%.
(Ordinary income or loss)
Total non-operating income for the current consolidated fiscal year was 745 million yen (1,508 million yen
for the previous consolidated fiscal year), representing a year-on-year decrease of 762 million yen. This wasdue largely to the posting of 327 million yen in interest income. Total non-operating expenses were 724 million
yen (330 million yen for the previous consolidated fiscal year), representing a year-on-year increase of 393
million yen. This was due largely to the posting of 138 million yen in loss on redemption of investment
securities and 134 million yen in foreign exchange losses.
As a result, ordinary income was 2,783 million yen (4,297 million yen for the previous consolidated fiscal
year), representing a year-on-year decrease of 1,514 million yen and signifying a 3.5 percentage point decreasein the ratio of ordinary profit to 6.1%.
(Income or loss before income taxes)
Total extraordinary income for the current consolidated fiscal year was 1,310 million yen (113 million yen
for the previous consolidated fiscal year), representing a year-on-year increase of 1,197 million yen. This wasdue largely to the posting of 1,294 million yen in gain on sales of investment securities. Total extraordinary
losses were 971 million yen (194 million yen for the previous consolidated fiscal year), representing a year-onyear increase of 776 million yen. This was due largely to an increase of 379 million yen in impairment loss and248 million yen in loss on valuation of investment securities.
As a result, income before income taxes was 3,122 million yen (4,215 million yen for the previous
consolidated fiscal year), representing a year-on-year decrease of 1,093 million yen and signifying a 2.6
percentage point decrease in the ratio of profit before income taxes to 6.8%.
(Profit or loss attributable to owners of the parent)
Total income taxes for the current consolidated fiscal year were 2,678 million yen (1,066 million yen for theprevious consolidated fiscal year), representing a year-on-year increase of 1,612 million yen. As the bottom
line, profit attributable to owners of the parent for the current consolidated fiscal year was 212 million yen(2,861 million yen for the previous consolidated fiscal year), representing a year-on-year decrease of 2,648
million yen and signifying a 5.9 percentage point decrease in the ratio of profit attributable to owners of theparent to 0.5%.

- 15 -

ii) Details of Analyses and Study Regarding Cash Flows and Information on Financial Resources for Capital and
Liquidity of Funds
Status of each cash flow category during the current consolidated fiscal year and the factors behind such status
are stated in II. Status of Business - 3. Analyses of Consolidated Financial Position, Business Results and Cash
Flows by the Corporate Managers - (1) Overview of Operating Results, etc. - ii) Cash Flows.
(Cash flow indicators)
Previous consolidated fiscal year
(As of March 31, 2019)

Current consolidated fiscal year
(As of March 31, 2020)

Equity ratio (%)

69.3

64.3

Equity ratio on a mark-to-market basis (%)

39.3

37.2

Ratio of interest-bearing liabilities to cash flows(Years)2.7

1.7

Interest coverage ratio (Times)

34.2

76.5

Note: Equity ratio: Total shareholders’ equity / Total assets
Equity ratio on a mark-to-market basis: Total market capitalization / Total assets
Ratio of interest-bearing liabilities to cash flows: Interest-bearing liabilities / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest paid
1. All indicators above are calculated on the basis of the consolidated financial results.
2. Total market capitalization is calculated by multiplying the number of shares issued and outstanding at the end of theperiod (excluding treasury stock) by the closing price per share at the end of the period.
3. Interest-bearing liabilities represent all those liabilities (stated in the consolidated balance sheets) on which interest ispaid.
4. For operating cash flows, the amount of “Net cash provided by (used in) operating activities” stated in the consolidated
statements of cash flows is used. For the interest paid, the amount of “Interest expenses paid” stated in the consolidated
statements of cash flows is used.
1) Financial resources for capital and liquidity of funds

Our Group makes it our basic policy to stably secure the liquidity of funds and the resources of capital requiredfor business operations. Though we basically use our own capital for short-term working capital, we hold acontract for overdraft with main financing banks so as to procure temporary working capital efficiently in time ofinsufficiency. Regarding the capital relating to capital formation such as business investments, we basicallyprocure our own capital and long-term borrowings from financial institutions in view of financing cost and risk
diversification. Additionally, for the purpose of efficient fund management, reducing of financial risk and savingof interest expenses, our Group started "Group Finance".
2) Objective Indicators etc. for Judgement on the Status of Achievement of Management Policy, Management
Strategies and Managerial goals
Our Group aims to enhance shareholder value of the companies by strengthening of profit structure andimproving of asset efficiency, and also makes "Operating Income Margin" and "Return on Assets (ROA)" ascritical indicators. In the current consolidated fiscal year, the Operating Income Margin is 6.0% (representing a 1.0
point deterioration as compared with the previous year) and the Return on Assets is 0.3% (representing a 3.6%
point deterioration as compared with the previous year). We intend to continue further improvement of such
indicators.
iii) Significant Accounting Estimates and Assumptions Used in Making Such Estimates
The consolidated financial statements of our Group are made based upon the corporate accounting standards
which are generally accepted in Japan. In preparing this consolidated financial statements, the management are
required to estimate for accounting. With respect to such estimates, the management comprehensively considers
and reasonably judges past results, present circumstances, etc.; nevertheless, actual results may become different
from the said estimates due to uncertainty peculiar to estimating.
The critical accounting policies adopted for the preparation of financial statements are described in"Important Matters Underlying Preparation of Consolidated Financial Statements" of "V. Status of Accounting:
1. Consolidated Financial Statements, etc. (1) Consolidated Financial Statements Notes ", among which thefollowing critical accounting policies are considered to have a profound effect on the important judging andestimating in course of preparing consolidated
financial statements.
- 16 -

1) Allowance for doubtful accounts
In our Group, as a reserve for potential loan losses, an estimated uncollectible amount is recorded based on
the historical loan-loss ratio in the case of general accounts receivable, and in light of the collectability in each
instance in the case of some specific accounts receivable, e.g. doubtful receivables. When a financial conditionof customers gets worse and their solvency declines, an additional allowance may need recording.
2) Assessment of recoverability of deferred tax assets
When applying tax effect accounting, our Group reasonably estimates recoverability of deferred tax assets
and records such assets after deduction of valuation allowance. Recoverability of deferred tax assets depends on
the possibility of future untaxable depreciation of taxable items and on the future taxable income estimated on
the basis of future profitability; therefore, if such estimated amount vary, a profit may fluctuate due to reversal
or additional recording of the deferred tax assets.
3) Impairment of securities and investment securities
Our Group holds securities and investment securities; we use, as valuation methods, the market method on
securities with market value and use the cost method on securities without market value. We conduct treatments
for impairment on our owned securities according to reasonable standards, because we bear the risk of pricefluctuation in the stock market (if such securities have market value) and investees' business results etc. mayworsen (if such securities have no market value).
Our Group has conducted necessary treatments for impairment on securities and investment securities.
Additionally, if any loss which is not reflected on the current book value occurs or any book value becomes
uncollectible due to deteriorating market conditions, worsening business results of investees, etc. in the future,
further treatments for impairment may be required according to the said standards.
4) Impairment of non-current assets
Our Group applies Accounting Standard for Impairment of Fixed Assets, and is grouping non-current assets on the basisof business unit which generates cash flow independently. When the recoverable amount of an asset group falls below
book amount, such different amount is perceived as an impairment loss. When the recoverable amount of an asset groupfurther goes down in the future, further recording of an impairment loss may be required.
This application shows an impairment loss of 475 million yen as extraordinary losses in manufacturing facilities(including land, buildings, etc.) of the consolidated subsidiaries in the current consolidated fiscal year.

5) Impairment of goodwill
Our Group uses amortization for goodwill by the straight-line method over a five (5)-year period. Its asset
value is reviewed based on results of operations and business plans of the subsidiaries, etc. If the original income
estimate, etc. is no longer viable and necessity of impairment is recognized in the future, goodwill in the relevant
consolidated fiscal year could be written down due to impairment.
This study shows an impairment loss of goodwill of 175 million yen, and there is no balance of goodwill asof the end of the current consolidated fiscal year.
Note that the impact of the new corona virus infection is described in “ Additional Information” of “V. Status of
Accounting 1. Consolidated Financial Statements, etc. (1) Consolidated Financial Statements Notes.”- 17 -

4. Agreements with Managerial Implications, etc.
No applicable matter.

5. Research and Development Activities
Major research and development activities of our Group are conducted by the Submitting Company as well as
ThinFlex Corporation, Satosen Co., Ltd. Protec Arisawa Europe, S.A., Protec Arisawa America, Inc. and ColorLink
Japan, Ltd., consolidated subsidiaries of the Submitting Company, and these companies are also disseminating
technologies to other consolidated subsidiaries.
As a technology-oriented corporate group, we adopt a flexible organization as a basis for our research anddevelopment activities in order to match the increasingly diversified and sophisticated needs of the users. Centering on
our core business fields, i.e. the electronic materials field, the industrial structural materials field, the electricalinsulating material field and the display materials field, we vigorously pursue research and development of newtechnologies and new products, aiming at launching new products to the market, nurturing of next generation products,
forward-looking promotion of technologies and expansion of fundamental technologies.
Examples of electronic materials include glass cloth for printed circuit boards, prepregs for special printed circuitboards and materials for FPCs (flexible printed circuit boards), etc. Examples of industrial structural materials include
materials for use in water treatment equipment, materials for use in superconductivity applications, materials foraircraft interiors. Examples of electrical insulating materials include prepregs for use in electrical insulating andvarious molded products, etc. Examples of display materials include 3D-filters, optical molded products, etc.
As of the end of the current consolidated fiscal year, we had 179 employees involved in research and development
activities, and our total research and development expenses incurred in the current consolidated fiscal year amounted
to 2,074 million yen.
Research and development achievements and the amount of research and development expenses incurred withrespect to each field during the current consolidated fiscal year were as follows.
(1) Electronic Materials Field- Materials for flexible printed circuit boards
Further sophistication of electronic devices typified by smartphones is under way as density of electronic circuits are
increasing due to miniaturization. Along with this miniaturization, insulation reliability under environment harsher
than before is required for coverlays and adhesive sheets to protect circuits. In order to deal with this challenge, bymeans of our original technology for resin composition, we developed the products excellent in insulation reliability
with the highest standard in the industry. Now the evaluation of them for certification is being conducted by ourcustomers.
- In-car electronic materials
Further adoption of materials for flexible printed circuit boards is under consideration for the purpose of weight
reduction and downsizing of electronic materials in automobiles that are being electrified. Flexible copper-clad boards
laminated with thick copper foil are necessary in circuit boards to support high current. Those could not be produced in
the conventional manufacturing facilities, but now can be produced with stable quality by improving the facilities with
our original idea. Now the evaluation of them for certification is being conducted by our customers.
As IC (integrated circuit) power modules to be installed become more miniaturized and energy saving, high heatdissipating adhesive sheets are necessary to dissipate the heat generated by IC effectively. We have a wide variety ofadhesive sheets excellent in insulation reliability and heat dissipation property, and their adoption is expanding. Now
we are working on the further improvement of heat dissipation property.
Research and development expenses incurred with respect to electronic materials amounted to 1,367 million yen.
(2) Industrial Application Structural Materials Field and Electrical Insulating Materials Field- Materials for aircrafts
In recent years, weight of aircrafts has been reduced with light and strong carbon-fiber components for the purposeof improving fuel efficiency. Woven fabrics used with carbon fiber are adopted for main structural members foraircrafts such as fuselages, wings, etc., wall materials of airframe's interior combined with the flame-retardant featureby means of our unique technology for resin compounding, and carbon-fiber honeycomb components for partitionmaterials and main structural members.
Demand for aircrafts is expected twice as much as
today at around 2040, and the Company is promoting the- 18 -

development of technology for further weight reduction while suppressing costs by way of our original weaving
technology and fire retardation technology.
- Disaster prevention related structural members
As natural disasters such as floods, earthquakes, and typhoons occur more frequently, buildings and structuralmembers are being reinforced and disaster-prevention measures are being taken. CFRP cured using carbon-fiber as
reinforcement fiber and impregnated with special resin is authorized for reinforcement of structural members anddisaster prevention, and demand for it is increasing.
The Company satisfies demand of our customers and delivers our products by utilizing our integrated manufacturing
technique from weaving to coating to make full use of special resin. In order to save lives and minimize damage
caused by disasters, we will also concentrate on this field and continue with development of materials to contribute tosociety.
- Water treatment FRP pressure vessels
Our FRP pressure vessels have been used widely for water treatment such as seawater desalination. Especiallydemand for non-draining is increasing for environmental loading reduction in recent years. The Company successfully
developed high pressure vessels of high reliability used for its system with our consolidated subsidiaries, Protec
Arisawa Europe, S.A. and Protec Arisawa America, Inc. We will work on developing products to contribute to water
resources and environmental loading reduction.
Research and development expenses incurred with respect to composite materials amounted to 335 million yen.
(3) Display Materials Field- 3D display materials
The 3D display systems incorporating the Company’s “Xpol®” patterned retardation layer have been used for a large
variety of purposes mainly in the healthcare sector, among others, due largely to their high quality reliability andexcellent stereoscopic imaging properties.
Until now, they are increasingly adopted for the use of ophthalmology and brain surgery in addition to endoscopic
surgery. We will start to develop new products considering expansion to remote medical care and remote construction
with the development of 5G high-speed communication technology in the future. Research and development expenses
incurred with respect to display materials amounted to 343 million yen.

- 19 -

III. Status of Facilities
1. Outline of Capital Investment
Our Group concentrates its capital investment in the expansive and growing fields in order to keep pace with therapid technological innovation and the tough sales competition and made capital expenditures totalling 2,168 million
yen in the current consolidated fiscal year.
The principal component of our capital investment in the current consolidated fiscal year was 1,474 million yen
for production equipment related to electronic materials centering on materials for flexible printed circuit boards.
In this regard, no retirement or sale, etc. of facilities or equipment that may significantly affect our Group’s
production capacity was conducted in the current consolidated fiscal year.

2. Status of Major Facilities(1) Submitting Company
As of March 31, 2020
Book value
Name ofbusiness place(Location)

Segment nameNature of facilities

Electronic materials
manufacturing facilities,
Electronic materials,
Industrial application
Minami-honcho Industrial application
structural materials
Factory
structural materials,
manufacturing facilities,(Joetsu-shi,
Electrical insulating
Electrical insulating
Niigata)materials,
materials manufacturing
facilities,

Buildings Machinery,
Land
Lease
Number ofandequipment
Other
Total
(Thousands assets
structures and vehicles(Thousands (Thousands employeesof yen) (Thousands(Thousands (Thousandsof yen)of yen)(Area m2)of yen)of yen)of yen)411,334

101,174

Nakadahara
Factory(Joetsu-shi,
Niigata)Electronic materials
manufacturing facilities,
Electronic materials, Industrial application
Industrial application structural materials
structural materials,
manufacturing facilities,
Electrical insulating Electrical insulating
materials,
materials manufacturing
Display materials
facilities,
Display materials
manufacturing facilities

2,257,624

1,144,324

NakadaharaNishi Factory(Joetsu-shi,
Niigata)

Industrial application
Industrial application
structural materials,
structural materials,
Display materials
Display materials
manufacturing facilities

192,892

1,003,931

Head Office(Joetsu-shi,
Niigata)

Head office(Common)

Other facilities

641,179

6,213

Tokyo Branch
Office(Taito-ku,
Tokyo)

Electronic materials,
Industrial application
structural materials,
Electrical insulating
materials,
Other facilities
Display materials,
Other,
Head office(Common)140,920

3,307- 20 -

55,202（18,240）

292,057（114,611）

362,485（34,515）

103,504（29,209）298,820（577）

38,76225,281

631,755

56
(13)

－

175,9113,869,918

427
(107)

－

17,607

1,576,916

56
(3)

－

47,533

798,431

32
(11)

4,177

23,656

470,88140(－)

(2) Domestic Subsidiaries
As of March 31, 2020
Book value
Company
nameName ofbusiness
place(Location)

Segment nameNature of facilities

SatosenCo., Ltd.

--(Osaka-shi,
Osaka)

Electronicmaterials,

Electronicmaterials
manufacturing--(Joetsu-shi,
Niigata)Electronicmaterials,
Electricalinsulating
materials

Arisawa
Sogyo Co.,
Ltd.

--(Joetsu-shi,
Niigata)

Industrial
application
structural
materials,
Electricalinsulating
materials,
Other

Arisawa
Jushi
Kogyo
Co., Ltd.

--(Kawaguchi-shi,
Saitama)Electricalinsulating
materials

ColorLink
Japan, Ltd.

--(Joetsu-shi,
Niigata)

Arisawa
Fiber
Glass Co.,Ltd.

Displaymaterials

Electronicmaterials
manufacturing
facilities,
Electricalinsulating
materials
manufacturing
facilities
Industrial
application
structural
materials
manufacturing
facilities,
Electricalinsulating
materials
manufacturing
facilities
Electricalinsulating
materials
manufacturing
facilities
Display materials
manufacturing
facilities

Machinery,
Buildings
equipment
Land
Number ofandLease assets
Other
Total
and
(Thousands
structures(Thousands (Thousands (Thousands employees
vehiclesof yen)(Thousandsof yen)of yen)of yen)(Thousands (Area m2)of yen)of yen)148,886

0291,900（4,373）－391

441,17886(54)263,501

206,851

117,197（34,706）

64,801

5,304

657,65681(22)

235,398

43,550252,604（42,229）－

15,085546,639106(34)

54,15464,896

31,561（2,407）－

11,708

162,32119(2)

88,637043,158（4,109）－269

132,06474(21)(3) Overseas Subsidiaries
As of March 31, 2020
Book value
Company
nameName ofbusiness
place(Location)

Segment nameThinFlex
Corporation--(KaohsiungCounty,Taiwan)Electronicmaterials

Electronicmaterials
manufacturing
facilities

1,111,112

1,075,894

TopFlex
Corporation--(Kunshan
City,
P.R. China)

Electronicmaterials

Electronicmaterials
manufacturing
facilities

235,360

115,926

ProtecArisawa
Europe,S.A.

--(Munguia,
Spain)

Industrial
application
structural
materials

83,489144,986

29,163（8,891）

ProtecArisawa
America,
Inc.

--(Vista, CA,
U.S.A.)

Industrial
application
structural
materials

8,044

50,922

-

Note:

1.

Buildings Machinery,Land
Number ofandequipment
Lease assets
Other
Total
Nature of facilities(Thousands
structures and vehicles(Thousands (Thousands (Thousands employeesof yen)(Thousands (Thousandsof yen)of yen)of yen)2(Area m )of yen)of yen)Industrial
application
structural
materials
manufacturing
facilities
Industrial
application
structural
materials
manufacturing
facilities

442,616(See Note
4)

247,747

2,877,371

228(－)

40,644- (See Note
4)13,820405,753

139
(－)

-

8,450

266,089

73
(26)

-

29,193

88,16037(1)-Among the columns under “Book value”, “Other” indicates the total of tools, furniture and fixtures and construction in progress. The
amounts stated above do not include consumption tax,- 21 -etc.

2.

Major facilities leased out by the Submitting Company to its domestic subsidiaries are included in the facilities of the pertinentsubsidiaries respectively.
Facilities and employees in Kansai office are included in Satosen Co., Ltd.
The land-use rights, 331,424 thousand yen (39,265㎡) and 40,644 thousand yen (30,136㎡), are included in the lease assets of ThinFlex
Corporation and TopFlex Corporation.
The parenthesized figures in the column “Number of employees” indicate the number of temporary employees not included in thepertinent total.

3.
4.
5.

3. Plans for Installation and Retirement, etc. of Facilities(1) Installation, etc. of Material Facilities
Name ofbusiness placeorcompany

Location

Segment
nameNature of facilities

Investment amount
Total amountAmountto behitherto
invested
disbursed(Thousands (Thousands ofof yen)yen)

Source offunds

Scheduled start andcompletion months

Start

Capacity
increase
uponcompletion

Completion

Electronicmaterials
194,000－ Own funds
April2020 October2020－
manufacturing
facilities
Note: 1. The amounts stated above do not include consumption tax, etc.
2. No amount or value is shown in the column “Capacity increase upon completion” as it is difficult to reasonably determine any pertinent
amount or value.
Arisawa Mfg.
Co., Ltd.

Myoko-shi,
NiigataElectronicmaterials(2) Retirement, etc. of Material Facilities
There is no plan for retirement, etc. of material facilities.

- 22 -

IV. Status of the Submitting Company
1. Status of Shares, etc.
(1) Total Number of Shares, etc.
1) Total number of shares
Class

Total number of shares authorized to be issued

Common stock

130,000,000

Total

130,000,000

2) Shares issued and outstandingClass

Number of shares issued andoutstanding as of the end of
the business year
(As of March 31, 2020)

Number of shares issued andoutstanding as of the filingdate of the Financial Report(As of June 26, 2020)

Name of financial instruments
exchange where the shares arelisted or authorized financial
instruments firms association
where the shares are registered

Remarks

Common stock

36,381,524

36,383,024

Tokyo Stock Exchange(First Section)

Number ofsharesconstituting
one full unit:
100

Total

36,381,524

36,383,024

---

---

Note:

The number of shares issued through the exercise of stock acquisition rights in the period from June 1, 2020 to the filing dateof this Financial Report is not included in the column “Number of shares issued and outstanding as of the filing date of the
Financial Report”.

- 23 -

(2) Status of Stock Acquisition Rights, etc.
1) Details of Stock Option Scheme
Stock acquisition rights issued under the Companies Act were as follows.
Date of resolution

June 26, 2015

5 directors of the Company,
5 directors of the Company,
176 employees of the Company, 187 employees of the Company,
and 21 directors and employees and 14 directors and employeesof subsidiaries of the Companyof subsidiaries of the Company

Category and number of persons to whom stockacquisition rights shall be granted
Number of stock acquisition rights (Units)※

Class, contents and number of shares subject to stockacquisition rights

1,538〔1,525〕

1,558〔1,533〕

Common stock 153,800〔152,500〕

Common stock 155,800〔153,300〕

Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) ※Exercise period for stock acquisition rights

867

536 (See Note 1)(See Note 1)

July 1, 2017 throughJune 30, 2020※

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) ※Issuance price※2(See Note 2)

Conditions for the exercise of stock acquisition rights

June 24, 2016

July 1, 2018 throughJune 30, 2021

1,035 Issuance price634

Amount credited to equity capital Amount credited to equity capital

518

317

Matters concerning the transfer of stock acquisition rights

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization(See Note 3)

Date of resolution

June 28, 2017

5 directors of the Company,
5 directors of the Company,
194 employees of the Company, 211 employees of the Company,
and 10 directors and employees and 11 directors and employeesof subsidiaries of the Company of subsidiaries of the Company

Category and number of persons to whom stockacquisition rights shall be granted
Number of stock acquisition rights (Units)※

Class, contents and number of shares subject to stockacquisition rights

3,086〔3,061〕

3,284〔3,254〕

Common stock 308,600〔306,100〕

Common stock 328,400〔325,400〕

Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) ※Exercise period for stock acquisition rights

1,004

1,104

(See Note 1)

July 1, 2019 throughJune 30, 2022※

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) ※Issuance price※2(See Note 2)

Conditions for the exercise of stock acquisition rights

June 28, 2018

(See Note 1)

July 1, 2020 throughJune 30, 2023

1,035 Issuance price

1,272

Amount credited to equity capital Amount credited to equity capital

518

636

Matters concerning the transfer of stock acquisition rights

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization(See Note 3)- 24 -

Date of resolution

June 27, 20194 directors of the Company,
4 directors of the Company,
208 employees of the Company, 147 employees of the Company,
and 14 directors and employees and 13 directors and employeesof subsidiaries of the Company of subsidiaries of the Company

Category and number of persons to whom stockacquisition rights shall be granted
Number of stock acquisition rights (Units)※

3,260〔3,230〕

Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) ※922

Common stock

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) ※Issuance price※2(See Note 2)

326,800

Undecided (See Note 1 and 4)(See Note 1)

July 1, 2021 throughJune 30, 2024※

Conditions for the exercise of stock acquisition rights

3,268

Common stock 326,000〔323,000〕Class, contents and number of shares subject to stockacquisition rights

Exercise period for stock acquisition rights

June 25, 2020

July 1, 2022 throughJune 30, 2025

1,090
Undecided

Amount credited to equity capital

545

Matters concerning the transfer of stock acquisition rights

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization(See Note 3)※ The contents are described as of the end of the current business year (March 31, 2020). With respect to the items whichchanged during the period from the end of the current business year to the end of the month previous to the filing (May 31,2020), the contents thereof are described in [ ] as of the end of the month previous to the filing. No other contents changed
from the end of the current business year.
Note 1. If the Company conducts a stock split or a reverse stock split after the issuance of stock acquisition rights, the paid-in amountshall be adjusted in accordance with the following calculation formula, and any fraction less than 1 yen arising from suchadjustment shall be rounded up to the nearest integer value.
Paid-in amount after adjustment= Paid-in amount before adjustment ×

1
Ratio of stock split and reverse stock split

If the Company issues new shares (except in the case of the issuance of new shares through the exercise of stock options) or
disposes of shares of treasury stock at a price less than the current market price of the Company’s common stock, the paid-in
amount shall be adjusted in accordance with the following calculation formula, and any fraction less than 1 yen arising fromsuch adjustment shall be rounded up to the nearest integer value.
Number of shares issued &Paid-in amount after adjustment = Paid-in amount before adjustment ×

outstanding+

Number of new shares being issued × Paid-in
amount per share
Current market price per share

Number of shares issued & outstanding + Number of new shares being issued

If the Company disposes of shares of treasury stock, the “Number of new shares being issued” shall instead be read as the“Number of shares of treasury stock being disposed of”.
2.Being a director, an advisor or an employee of the Company or a director, an advisor or an employee of a subsidiary of theCompany at the time of exercising the rights. But as for the resolution of June 25, 2020, being a director or an employee of
the Company or a director or an employee of a subsidiary of the Company
3. In the event that a merger agreement in which the Company becomes a defunct company has been approved, or that a
proposal for approval of a stock swap agreement (or for a transfer of shares) in which the Company becomes a wholly
owned subsidiary has been approved at a general meeting of shareholders, except where the surviving company or theCompany’s wholly owning parent company succeeds to the obligation to grant stock acquisition rights, the Company shallbe able to acquire the stock acquisition rights without consideration.
4.Amount to be paid at the time of exercising each unit of stock acquisition right shall be the amount obtained by multiplying
the paid-in amount per share determined on the date of allotment by the number of shares subject to one unit of stockacquisition right. The said paid-in amount per share shall be the amount obtained by multiplying the simple mean value ofthe closing price of shares of common stock of the Company in regular trading at the Tokyo Stock Exchange on the date ofallotment and the closing prices for the nearest six (6)days where a closing price exists preceding the date of allotment- 25 -(or the nearest seven (7) days where a closing price exists preceding the date of allotment, if there is no closing price on thedate of allotment) by 1.05. Any fraction less than 1 yen arising from this calculation shall be rounded up to the nearest
integer value. However, if the resulting amount is less than the closing price on the date of allotment (or the closing price on
the nearest preceding day, if there is no closing price on the date of allotment), the closing price on the date of allotment (orthe closing price on the nearest preceding day, if there is no closing price on the date of allotment) shall be used instead.

2) Details of Rights Plan
No applicable matter.
3) Status of Other stock acquisition right
No applicable matter.

(3) Status of Exercise of Moving Strike Convertible Bonds, etc.
No applicable matter.

(4) Changes in the Number of Shares Issued and Outstanding, Capital Stock, etc.
PeriodNumber of shares issued andoutstanding
ChangeBalance

Capital stock(Thousands of yen)
ChangeBalance

Legal capital surplus(Thousands of yen)
ChangeBalance

From April 1, 2015
to March 31, 2016
(See Note)

125,300

35,611,124

31,857

7,294,347

31,853

6,406,366

From April 1, 2016
to March 31, 2017
(See Note)

68,50035,679,624

22,672

7,317,019

22,672

6,429,038

From April 1, 2017
to March 31, 2018
(See Note)

344,500

36,024,124

141,222

7,458,242

141,170

6,570,209

From April 1, 2018
to March 31, 2019
(See Note)

202,100

36,226,224

83,4507,541,693

83,406

6,653,615

From April 1, 2019
to March 31, 2020
(See Note)

155,300

36,381,524

52,3337,594,026

52,402

6,706,017

Note 1.
2.

The increases are due to the exercise of stock acquisition rights.
In the period from April 1, 2020 to May 31, 2020, the number of shares issued and outstanding increased by 1,500 shares,
and the amount of capital stock and that of legal capital surplus increased by 475 thousand yen respectively, all through theexercise of stock acquisition rights.

- 26 -

(5) Status of Shareholder Categories
Status of Shares (Number of shares constituting one full unit: 100)
Category

Number ofshareholders

Governments
Financialand local
institutions
governments－

29

Financial
Foreign corporations, etc.
instruments
Otherbusiness corporations Other than
Individuals
operators
individuals

28

90

84

8

Individuals
and others

8,381

As of March 31, 2020
Status ofsharesconstituting
less thanTotal
one full
unit
8,620

－

Number ofshares held
(Units－122,452
9,018
35,46761,484
92
134,547 363,060
75,524
except asotherwise
noted)
Ratio of thenumber of
－
－
33.73
2.48
9.77
16.93
0.03
37.06
100.00shares held
(%)
Note:
1. Out of 3,135,830 shares of treasury stock, 31,358 units are included in the column “Individuals and others”, and 30 sharesare included in the column “Status of shares constituting less than one full unit”.
2. In the columns “Other corporations” and “Status of shares constituting less than one full unit”, shares held in the name ofJapan Securities Depository Center, Inc. are included by 5 units and 19 shares, respectively.

- 27 -

(6) Status of Major Shareholders

Full name or
corporate name

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

Address

11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo

Number ofshares held

As of March 31, 2020
Ratio of the numberof shares held to thenumber of sharesissued andoutstanding(excluding treasury
stock) (%)

3,816,700

11.48

Mitsubishi Gas Chemical Company, 5-2, Marunouchi 2-chome,Inc. (See Note 3)
Chiyoda-ku, Tokyo

1,472,166

4.42

Japan Trustee Services Bank, Ltd.
(Trust account)

1,435,800

4.31

1,245,300

3.74

8-11, Harumi 1-chome,
Chuo-ku, Tokyo

INTERTRUST
TRUSTEES(CAYMAN)LIMITED 190 ELGIN AVENUE, GERGE TOWN,SOLELY IN ITS CAPACITY AS
GRAND CAYMAN KY1-9005, CAYMAN
TRUSTEE OF JAPAN-UP
ISLANDS(Standing Proxy: Mizuho Bank, Ltd. 15-1, Konan 2-chome,
Settlement & Clearing Services
Minato-ku, Tokyo
Department)
The Hachijuni Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)

178-8, Nakagosho Okada,
Nagano-shi, Nagano(11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo)

1,000,930

3.01

Arisawa Kenko Ltd.

11-44, Nishishiro-cho 3-chome,
Joetsu-shi, Niigata

834,338

2.5

JAPAN SECURITIES FINANCE
CO., LTD.

2-10, Kayaba-cho 1-chome,
Chuo-ku , Tokyo

750,000

2.25

DFA INTL SMALL CAP VALUE
PORTFOLIO(Standing Proxy: Citibank, N.A.,
Tokyo Branch)

Palisades West 6300, Bee Cave Road, Building
One, Austin, TX 78746, U.S.A.
(27-30, Shinjuku 6-chome, Shinjuku-ku, Tokyo)

719,982

2.16

Japan Trustee Services Bank, Ltd.
(Trust account 5)

8-11, Harumi 1-chome,
Chuo-ku, Tokyo

640,100

1.92

The Daishi Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)1071-1, Higashiborimae-dori 7-bancho,
Chuo-ku, Niigata-shi, Niigata(11-3, Hamamatsu-cho 2-chome,
Minato-ku, Tokyo)

628,903

1.89

12,544,219

37.73

Total

---

Note: 1. The ratio of the number of shares held to the total number of shares issued (except for treasury stock) is displayed with thenumbers truncating the numbers beyond the third decimal point.
2. Apart from the above, there is the treasury stock of 3,135,830 shares that the Company holds.
3. The number of shares held by Mitsubishi Gas Chemical Company, Inc. includes 966,306 shares that have been contributed by
Mitsubishi Gas Chemical Company, Inc. as the trust property of retirement benefit trust. The pertinent name in the Company’s
register of shareholders is “The Master Trust Bank of Japan, Ltd. (Retirement benefit trust account and Mitsubishi Gas
Chemical Company, Inc. account).”
4. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of September 6,2018 that Sumitomo Mitsui Trust Bank, Limited and a joint holder thereof hold the shares described below as of August 31,
2018, the Company has confirmed no beneficial ownerships of the number of shares as of March 31, 2020. Therefore, such
number of shares is not included in above-mentioned Status of Major Shareholders. Details of the Change Report of theReport on Bulk Holding are as follows:- 28 -

Bulk Holders
Address: Sumitomo Mitsui Trust Bank, Limited and two joint holder thereof: 1-4-1, Marunouchi, Chiyoda-ku, Tokyo

Number of shareholdings etc.
: 1,488,200
Holding ratio of share certificates etc. : 4.12
5. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of December
20, 2018 that BlackRock Japan Company, Limited and a joint holder thereof hold the shares described below as of December
14, 2018, the Company has confirmed no beneficial ownerships of the number of shares as of March 31, 2020. Therefore,such number of shares is not included in above-mentioned Status of Major Shareholders. Details of the Change Report of theReport on Bulk Holding are as follows:
Bulk Holders
Address
Number of shareholdings etc.

: BlackRock Japan Company, Limited and one joint holder thereof: 1-8-3, Marunouchi, Chiyoda-ku, Tokyo: 1,259,700

Holding ratio of share certificates etc. : 3.48
6. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of December 21,
2018 that Sumitomo Mitsui Asset Management Company, Limited hold the shares described below as of December 14, 2018,
the Company has confirmed no beneficial ownerships of the number of shares as of March 31, 2020. Therefore, such numberof shares is not included in above-mentioned Status of Major Shareholders. Details of the Change Report of the Report on
Bulk Holding are as follows:
Bulk Holders
thereof
Address
Number of shareholdings etc.

: Sumitomo Mitsui Asset Management Company, Limited and one joint holder: 2-5-1 Atago, Minato-ku, Tokyo: 1,090,300

Holding ratio of share certificates etc. : 3.01
7. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of August 15,
2019 that Strategic Capital, Inc. hold the shares described below as of August 7, 2019, the Company has confirmed nobeneficial ownerships of the number of shares as of March 31, 2020. Therefore, such number of shares is not included inabove-mentioned Status of Major Shareholders. Details of the Change Report of the Report on Bulk Holding are as follows:
Bulk Holders: Strategic Capital, Inc.
Address
Number of shareholdings etc.

: 3-14-15, Higashi, Shibuya-ku, Tokyo: 2,279,500

Holding ratio of share certificates etc. : 6.29
8. Though it is described in the Report on Bulk Holding available for public inspection as of December 3, 2019 that Nippon
Value Investors KK hold the shares described below as of November 29, 2019, the Company has confirmed no beneficial
ownerships of the number of shares as of March 31, 2020. Therefore, such number of shares is not included in abovementioned Status of Major Shareholders. Details of the Change Report of the Report on Bulk Holding are as follows:
Bulk Holders: Nippon Value Investors KK
Address
Number of shareholdings etc.

: 1-8-1 Marunouchi, Chiyoda-ku, Tokyo: 1,822,500

Holding ratio of share certificates etc. : 5.02

- 29 -

(7) Status of Voting Rights
1) Shares issued and outstanding
As of March 31, 2020
Number of shares

Number of voting rights(Units)Remarks

Shares without voting rights

---

---

---

Shares with restricted voting rights(Treasury stock, etc.)

---

---

---

Shares with restricted voting rights(Other)

---

---

---

Shares with full voting rights (Treasury
stock, etc.)

Common stock 3,135,800

---

---

Shares with full voting rights (Other)(See Note 1)

Common stock 33,170,200

331,702---

Shares constituting less than one full unit
(See Note 2)

Common stock

75,524------36,381,524

---

---

331,702---

Category

Number of shares issued and outstanding
Total number of voting rights held byshareholders---

Note: 1. 500 shares held in the name of Japan Securities Depository Center, Inc. are included in the row “Shares with full voting rights(Other)”. 5 units of voting rights pertaining to shares with full voting rights held in the name of Japan Securities Depository
Center, Inc. are included in the column “Number of voting rights”.
2. 30 shares of treasury stock are included in the row "Shares constituting less than one full unit".

2) Treasury Stock, etc.
As of March 31, 2020
Name and address of shareholder

Number of shares held
Under thenames ofothersRatio of the number ofshares held to thenumber of sharesissued and outstanding(%)

Full name or
corporate name

Address

Arisawa Mfg. Co., Ltd.

5-5, Minami-honcho 1chome, Joetsu-shi,
Niigata

3,135,800---

3,135,800

8.61

---

3,135,800---

3,135,800

8.61

Total

Under own
name- 30 -Total

2. Status of Acquisition of Treasury Stock, etc.
[Classes of Stock, etc.]
Acquisition of common stock under the provisions of Article 155, item 3 of the Companies Act and Article 155, item
7 of the Companies Act.

(1) Status of Acquisition by Resolution of a General Meeting of Shareholders
No applicable matter.

(2) Status of Acquisition by Resolution of the Board of Directors
Acquisition of common stock under the provisions of Article 155, item 3 of the Companies Act
Category

Number of shares

Total amount (Yen)

3,600,000

3,200,000,000－－

Treasury stock acquired during the current business year

3,128,300

3,199,887,301

Total remaining shares with voting rights and total value

471,700

112,69913.1

0.0

Treasury stock acquired during the current period－－

Ratio of unexercised shares as of the filing date (%)

13.1

0.0

Resolution of the Board of Directors (August 27, 2019)(Acquisition period: August 28, 2019 to March 24, 2019)
Acquisition of treasury stock prior to the current business year

Ratio of unexercised shares as of the end of the current
business year (%)(3) Details of Acquisition not Authorized by Resolution of a General Meeting of Shareholders or
Resolution of the Board of Directors
Acquisition under the provisions of Article 155, item 7 of the Companies Act
Category

Number of shares

Total amount (Yen)Treasury stock acquired during the current business year

152

145,774

Treasury stock acquired during the current period－－

Note: The row “Treasury stock acquired during the current period” does not include the shares acquired through the purchase ofshares constituting less than one full unit in the period from June 1, 2020 to the filing date of this Financial Report.

(4) Status of Disposal and Holding of Acquired Treasury Stock
Current Business Year
Category

Current Period

Numberof shares

Total disposal
amount (Yen)

Numberof shares

Total disposal
amount (Yen)

Acquired treasury stock offered for subscription

---

---

---

---

Acquired treasury stock disposed of through retirement

---

---

---

---

Acquired treasury stock transferred in relation to merger,
share exchange and company split

---

---

---

---

Other

---

---

---

---

3,135,830---

3,135,830---

Number of shares of treasury stock held

Note: The “Number of shares of treasury stock held” in the “Current Period” does not include the shares acquired through thepurchase of shares constituting less than one full unit in the period from June 1, 2020 to the filing date of this Financial Report.

- 31 -

3. Dividend Policy
The Company positions the distribution of profits to its shareholders as a priority management objective. We will
invest for the maintenance and expansion of profitability base of existing business as well as for a strategic
investment in new business, and also implement a stable and positive distribution, specifically a two-story of 20 yen
of fixed dividend per share and performance-linked dividend. As for an acquisition of treasury stock, we will respondflexibly in total consideration of business environment, financial conditions, etc. and aim at a total return ratio of
60% or more.
With respect to the frequency of dividend payments, the Company specifies in its articles of incorporation that
the Company can effect interim dividend payments. Currently, however, in view of the tendency for the net sales,
etc. for the first half of fiscal year to be higher than those for the second half in the ratio to the annual result, theCompany pays a year-end dividend once a year in order to ensure equitable distribution of dividends in light ofbusiness results.
Decisions with respect to dividends from surplus are made at a general meeting of shareholders for the year-end
dividend and by the Board of Directors for the interim dividend.
As for the annual dividend for the current business year, the Company decided to pay 30 yen per share based on
the said policy. As a result, the dividend payout ratio for the current consolidated fiscal year was 488.6%.
A resolution was passed at the Board of Directors’ Meeting of August 27, 2019 to set 3,600,000 shares as an
upper limit of the total acquisition share and 3,200 million yen as an upper limit of the total acquisition cost, and we
acquired treasury stocks of 3,128,300 shares and total 3,199 million yen by October 30, 2019.
The Company plans to appropriate its internal reserves to research and development activities and capital
investment for business expansion, etc., aiming at enhancement of the shareholder value in future years.
The distribution of dividends from surplus for the current business year is as follows.

Date of resolution

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)997,370

30.00

Resolution at the Ordinary General Meeting of
Shareholders of June 25, 2020

- 32 -

4. Status of Corporate Governance, etc.
(1) Outline of Corporate Governance1) Basic Concept of Corporate Governance
The Company has a corporate governance system in place to increase corporate value through sustainablegrowth and to maintain social credibility and is also making efforts to secure efficient and equitable
management and to enhance management transparency through proactive disclosure.
In terms of management efficiency, to ensure collection of highly accurate information and expeditious
decision making and executions, we aim at management by a selected few and restrict the number of Directors
to the requisite minimum. In this context, we employ the Operating Officer system to ensure speedy executionof operations under the decisions of the Board of Directors, where the Outside Directors and Outside
Corporate Auditors also attend.
In terms of equitable management, in line with the basic policy concerning improvement of the internal
control system, we improve organizations and systems for the purpose of ensuring legal compliance. In orderto enhance transparency, we promote communication with our shareholders and general investors through IR
activities, etc. and conduct disclosure practices in as active and timely a manner as possible.
2) Outline of Corporate Governance System

As for execution of operations, to ensure speedy execution and control of the management policy andmanagement plans determined at the regular or extraordinary meetings of the Board of Directors, an eleven(11)-member Board of Operating Officers (comprising one (1) Chief Executive Officer and ten (10)Operating Officers) is in place in pursuit of management efficiency and speed.
Each Operating Officer plans and promotes operations under his or her supervision upon approval at theregular or extraordinary meetings of the Board of Directors as well as the regular meeting of the Board of
Operating Officers and strives for efficient and speedy execution of duties pursuant to the Regulations for the
Segregation of Duties, etc.
3) Reasons for Adopting Corporate Governance System

As a company employing the Board of Corporate Auditors system, we hold the meeting of the Board of
Corporate Auditors regular pursuant to the Regulations for the Board of Corporate Auditors. The Corporate
Auditors attend meetings of the Board of Directors, and the Full-time Corporate Auditor attends meetings ofthe Board of Operating Officers, etc. The Corporate Auditors also offer appropriate proposals and advice as
to execution of Directors’ duties and the status of improvement and operation of the internal control system,
etc., thereby exercising strict oversight over the management.
We also appoint, in order to exercise external oversight, two (2) Outside Corporate Auditors and three (3)Outside Directors, each of whom bears a part in management oversight in terms of laws and regulations,finance, accounting and corporate governance respectively from a neutral and objective viewpoint,
contributing to what we believe is a fully functioning corporate governance system.
4) Status of Improvement of Internal Control System and Risk Management System

The Company adopted, by resolution of the Board of Directors, the “Systems to Ensure Proper Operations”
as shown below.
a. System to ensure that execution by Directors and employees of the Company and its subsidiaries of theirrespective duties complies with the applicable laws and regulations and the Articles of Incorporation
The Company and its subsidiaries shall lay down the “Arisawa Group Corporate Action Guidelines”
applicable throughout the Group, set specific internal regulations in line with the said guidelines, and thenobserve the said internal regulations, thereby establishing a system which ensures that execution by
Directors and employees of their respective duties complies with the applicable laws and regulations andthe Articles of Incorporation.
b. System concerning storage and management of information on execution of duties of Directors of theCompany
As for the storage and management of information on execution of duties of Directors, internal
regulations for document management shall be set in line with the provisions of the applicable laws andregulations and the Articles of Incorporation to construct a system which ensures proper storage andmanagement of the relevant information.
- 33 -

c. System concerning reporting to the Company of the matters relating to execution of duties of Directors,
etc. of subsidiaries of the Company
Supervision over execution of duties of Directors, etc. of subsidiaries of the Company shall be exercisedthrough having Directors of the Company concurrently serve as Directors of subsidiaries of the Company.
Also, internal regulations for management of associated companies shall be set, establishing a system
which makes it mandatory for subsidiaries of the Company to submit their respective board minutes to
the Company and also to report the relevant material facts to the Company, both along the lines of theprovisions of the said regulations.
d. Regulations and other systems concerning management of risk of loss for the Company and its
subsidiaries
In order to comprehend and manage various risks surrounding the Group and its operations, internal
regulations managing and coping with each risk category shall be set. Observing the said regulations
establishes a system that helps reduce and mitigate business risks.
e. System to ensure efficient execution of duties of Directors of the Company and its subsidiaries
The Group shall improve internal regulations governing the segregation of duties and the scope of job
authorities to definitize each department’s duty assignment and job authorities and shall also introduce acommon accounting management system for the entire Group, etc., thereby establishing a system which
ensures efficient execution of duties of Directors of the Company and its subsidiaries.
f. Matters concerning employees assigned, upon request of Corporate Auditors of the Company, to assist
with duties of Corporate Auditors of the Company, the matters concerning independence of such
employees from Directors of the Company and the system to ensure effectiveness of instructions from
Corporate Auditors of the Company to such employees
Employees to assist with duties of a Corporate Auditor shall be appointed upon request of the Corporate
Auditor and in view of the expertise and experience, etc. required for the audit work. The employees so
appointed as assistant shall execute the relevant duties under the direction of the Corporate Auditor andalso be free from the dictates of any Director of the Company so as to ensure the independence of such
employees from Directors and the effectiveness of instructions from the Corporate Auditor to such
employees.
g. System to mandate reporting to Corporate Auditors of the Company by Directors and employees, etc. of
the Company as well as Directors, Corporate Auditors and employees, etc. of subsidiaries of the Company
and the system to ensure prevention of unfavorable treatment of those who have made such reporting on
account of the pertinent report having been madeInternal regulations stipulating the matters to be reported by Directors and employees, etc. of theCompany to Corporate Auditors shall be set so as to establish a system which mandates immediate
reporting to Corporate Auditors of all material facts with implications on the Group’s management andbusiness results. Also, the internal hotline system prohibiting unfavorable treatment of the whistle-blower
shall be maintained so that Corporate Auditors can directly receive the relevant reports from employees,
etc.
h. Matters concerning policies on the processing of costs incurred from execution of duties of Corporate
Auditors of the Company
Promptly upon receipt of a request, made by a Corporate Auditor under the provisions of Article 388of the Companies Act, for an advance payment, etc. of expenses to be incurred from execution of his or
her duties, the Company shall settle the pertinent expenses or liabilities. Also, if a Corporate Auditor
deems consultations, etc. with lawyers, chartered accountants and other specialists to be necessary forexecution of his or her duties, the Company shall allow the amount disbursed for enlisting suchconsultations, etc. as part of the necessary audit-related expenses.
i. Other systems to ensure execution of effective audits by Corporate Auditors of the Company
Corporate Auditors of the Company shall collect periodic reports from Directors of subsidiaries of theCompany, collect reports from Corporate Auditors of subsidiaries of the Company and also engage inother coordinated actions, as needed, so
as to execute proper audits of the Group.
- 34 -

j. System to ensure credibility of financial reporting
To ensure credibility of financial reporting, the Group shall make continuous evaluation of the statusof improvement and operation of the internal control system for financial reporting and also remedy any
defect or flaw found in such system, thereby maintaining a system which allows the Group’s internal
control to function effectively and properly.
k. System to exclude anti-social forces
The Company and its subsidiaries shall expressly state in the “Arisawa Group Corporate Action
Guidelines” a policy to prevent and preclude any relationship with anti-social forces that pose a threat tothe order and safety of civil society. The Group shall also adopt and maintain a resolute attitude towardanti-social forces in cooperation with law enforcement and other external specialized agencies.
The Company’s corporate governance system is abstracted in the following diagram.

General Meeting of Shareholders

Return7 Directors(incl. 3 Outside Directors)

Audit

Appointment, Dismissal,
Directions & Supervision
Board of
Operating
Officers
Report11 Operating Officers
Directions(CEO and other Operating
Officers)*

Accounting
Audit

Directions &Supervision
Each department, subsidiary, etc.
Internal Audit

Accounting Auditors (Ernst & Young ShinNihon LLC)

Board ofDirectors

Assignment
・Remuneration
Advisory Committee

Appointment& Dismissal

Appointment& Dismissal

Internal Audit Department

Board of Corporate Auditors

3 Corporate Auditors (incl. 2 Outside Corporate Auditors)

Appointment& Dismissal(Collaboration)*Note:The Board of Operating Officers consists of a total of eleven (11) Operating
Officers (including, but not limited to, the Chief Executive Officer), four (4) ofwhich are concurrently assumed by the relevant Directors.

5) Maximum Number of Directors
The Company’s Articles of Incorporation stipulate that the number of Directors of the Company shall not be
more than fifteen (15).
6) Requirements for Appointment of Directors
The Company’s Articles of Incorporation stipulate that a resolution on appointing Directors shall be adopted
by a majority vote of the voting rights of the shareholders who are present and also hold at least one-third (1/3)
of all voting rights of the shareholders entitled to exercise voting rights.
It is also stipulated in the said Articles of Incorporation that no cumulative voting shall be allowed for a
resolution on appointing Directors.
7) Summary of the Terms of Contracts for Limitation of Liability- 35 -

The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
427, paragraph 1 of the Companies Act, enter into contracts for limitation of liability with its Outside Directors
and Outside Corporate Auditors so that the Company can recruit competent persons as Outside Directors andOutside Corporate Auditors and also that the recruited Outside Directors and Outside Corporate Auditors cansoundly fulfill their expected roles. The main purport of such contracts for limitation of liability (entered into
between the Company and the Outside Directors as well as Outside Corporate Auditors under the said
stipulation) is as follows.
The Outside Directors and Outside Corporate Auditors shall, with respect to the liability for damages under
Article 423, paragraph 1 of the Companies Act, assume such liability for damages to the extent of the statutory
minimum liability amount as long as they perform their respective duties in good faith without being grossly
negligent.
8) Matters Typically Requiring a Resolution of a General Meeting of Shareholders which may be Resolved by
the Board of Directors
The Company’s Articles of Incorporation stipulate that the Company may resolve on the following mattersby voting at a meeting of the Board of Directors instead of voting at a general meeting of shareholders.
a. Organ to determine acquisition of treasury stock
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
165, paragraph 2 of the Companies Act, acquire shares of treasury stock through market transactions, etc.
upon a resolution of the Board of Directors instead of that of a general meeting of shareholders. This
stipulation aims to enable an agile capital policy by authorizing the Board of Directors to resolve on theacquisition of the Company’s treasury stock.
b. Organ to determine distribution of interim dividends from surplus
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
454, paragraph 5 of the Companies Act, distribute interim dividends with the record date of September 30 ofevery year upon a resolution of the Board of Directors instead of that of a general meeting of shareholders.
This stipulation aims to expeditiously return profits to the Company’s shareholders by authorizing the Boardof Directors to resolve on the distribution of interim dividends from surplus.
9) Requirements for Special Resolutions of a General Meeting of Shareholders
The Company’s Articles of Incorporation stipulate that, with respect to the requirements for special
resolutions of a general meeting of shareholders provided for in Article 309, paragraph 2 of the Companies Act,a special resolution shall be adopted by a two-thirds (2/3) majority vote of the voting rights of the shareholders
who are present and also hold at least one-third (1/3) of all voting rights of the shareholders entitled to exercise
voting rights. This stipulation aims to ensure smooth operation of general meetings of shareholders by relaxing
the quorum requirement for special resolutions of a general meeting of shareholders.
10) Basic Policy for the Control of Kabushiki-Kaisha
a. Contents of the basic policy and the efforts toward the realization of the basic policy (including, but notlimited to, effective utilization of the assets of the Company and formation of an appropriate corporategroup)The Company, ever since its initiation in 1909, has been working on technological innovations and productdevelopment to build up unique technologies that integrate the “weaving, coating and molding” elements of
its expertise while consistently fulfilling users’ needs, thereby increasing its corporate value under favorable
labor-management climate. The Company’s Board of Directors believes that the Company is obligated toadhere to such time-honored principle of nurturing technological accumulation and also to understand, fosterand enhance the said corporate value in the long run.
In light of the above, our Group stands on a management policy centering on the motto “Creation,
Innovation and Challenge,” as we aim to enhance profitability through creation of new business bases andnew markets with the utmost emphasis on the pursuit of safety and quality.
b. Efforts to prevent inappropriate persons from controlling the Company’s financial and business
policymaking
The Company resolved at the Board of Directors’ Meeting of May 30, 2019 not to continue the protective
measures to address largescale acquisitionsof the Company’s shares (Takeover defensive measures)- 36 -

that would expire as of the end of the 71st Ordinary General Meeting of Shareholders held on June 27, 2019.
Since then, we carefully considered measures to increase the corporate value and the common interests ofthe shareholders including new ways against inappropriate acquisition, etc. that would impair the corporate
value. From now on, as we make an effort to maximize the corporate value more than ever, we intend to
oppose to purchases that would impair the corporate value by increasing the transparency of management
decision process with the making of a medium-term management plan that sets forth the improvement of
profitability capital efficiency.
c. Amendment to the provisions of Articles of Incorporation with regard to the protective measures to address
large-scale acquisitions of the Company’s shares (Takeover defensive measures)
The Company resolved at the 72nd Ordinary General Meeting of Shareholders held on June 25, 2020 todelete the Articles of Incorporation Chapter 7 Takeover Defense Measures (the Introduction of Takeover
Defense Measures) Article 41 regarding takeover defense measures. Note that we will work on an adequate
collection of information and its disclosure in a timely and appropriately manner to secure the Company’s
corporate value and the common interests of the shareholders when a large-scale purchase of the Company‘sshares is made.

- 37 -

(2) Status of Directors and Officers
1) Directors and Officers(Number of female directors and officers: 0)(Percentage of female directors and officers: Nil)
Title

Name

Date of birth

Career summary
April 1992
February 2002
August 2003
April 2007
April 2009
June 2010

Joined Mitsubishi Electric Corporation
Joined JPMorgan Securities Japan Co., Ltd.
Joined the Company
Assistant General Manager, Manufacturing Dept.
Operating Officer of the Company
President
andDirector and Senior Operating Officer of theRepresentative
Yuta
July 25,Company
Director
Arisawa
1969
June 2011
Director and Senior Managing Operating Officerof the Company
CEO
June 2014
President, Representative Director of the Company
June 2015
Chief Operating Officer (COO) of the Company
June 2017
Chief Executive Officer (CEO) of the Company(Current)
March 1981
Joined the Company
July 1996
General Manager, Tokyo Branch OfficeDirector
June 2008
President and Representative Director of Arisawa
Jushi Kogyo Co., Ltd. (Current)
Division Chief,
June 2008
Operating Officer of the Company
Electrical
Yoshihiko January 24,
June 2014
Director and Senior Operating Officer of theInsulating
and
Toda
1958
Company
Composite
May 2017
President and Representative Director of Arisawa
Materials
Fiber Glass Co., Ltd. (Current)
Business Div.
June 2017
Director and Senior Managing Operating Officerof the Company (Current)
April 1989
Joined Mitsui & Co., Ltd.
Director
May 2011
Department Manager, Solar Business Div.,
Functional Chemicals Business Unit of Mitsui &Senior OperatingCo., Ltd.
Officer
April 2013
Department Manager, Advanced Materials Div.,
supervising
Functional Chemicals Business Unit of Mitsui &Electronic
Osamu
June 5, 1965
Co., Ltd.
Materials Sales Nakajima
July 2014
Department Manager, Business Development Div.,
Dept.;
Basic Chemicals Business Unit of Mitsui & Co.,
Division Chief,
Ltd.
Electronic
October 2015
Joined the Company as Operating Officer
Materials
June 2016
Director and Senior Operating Officer of theBusiness Div.
Company (Current)
April 1983
Joined Toshiba Corporation
April 2000
Vice President of Toshiba America Business
Solutions, Inc.
April 2003
General Manager, MFP Business Division,
Document Processing & Telecommunication
System Company of TOSHIBA TEC
Director
CORPORATION
April 2011
General Manager, Emerging Countries Division,
Senior Operating
Global Solutions Business Group of TOSHIBA
Officer
TEC CORPORATION
supervising
June 2012
Vice President, Chief Marketing Executive, Global
Manufacturing
Solutions Business Group of TOSHIBA TEC
Dept.
and
Hidetaka
May 30,CORPORATION
Administration
Nonami
1958
April 2015
Vice President, Deputy Managing Director,
Dept.;
Printing Solutions Business Group of TOSHIBADivision Chief,
TEC CORPORATION
Manufacturing
July 2016
Audit & Supervisory Board Member of TOSHIBAEngineering Div.,TEC CORPORATION
General Affairs
September 2016 Joined the Company as Assistant Division Chief,andAnalysis
Administration Division
Center
September 2016 Operating Officer, Deputy Division Chief,
Administration Division; in charge of General
Affairs Dept., Manufacturing Engineering Dept.
and Quality Assurance Dept. of the Company
June 2017
Director and Senior Operating Officer of theCompany (Current)- 38 -

Term

Number ofshares of theCompany held

See
Note 490,730See
Note 450,967

See
Note 415,090See
Note 42,119

TitleName

Date of birth

Career summary

Number ofshares of theCompany held

See
Note 42,000

See
Note 5---See
Note 5---See
Note 6

1,921

See
Note 61,000

See
Note 6---

April 1968

Director

YutakaTsukahara

December21, 1945

Director

Koji
Nakamura

August 15,
1948

Director

Kazuo
Abiko

January 22,
1947

Full-time
Corporate
AuditorKoji Ohta

February 9,
1955

Joined Fuji Heavy Industries Ltd. (currently
Subaru Corporation)
June 1999
Vice President and Senior General Manager, Japan
Sales & Marketing Div. of Fuji Heavy Industries
Ltd.
June 2001
Senior Vice President and Chief General Manager,
Japan Region, Subaru Sales & Marketing Div. of
Fuji Heavy Industries Ltd.
June 2003
Senior Vice President and Chief General Manager,
Subaru Product & Portfolio Planning Div. of Fuji
Heavy Industries Ltd.
May 2005
President and Representative Director of Tokyo
Subaru Inc.
June 2017
Director of the Company (Current)
April 1973
Joined Mitsui & Co., Ltd.
April 2004
Managing Officer; Chief Operating Officer ofSynthetic Resins and Inorganic Chemicals
Business Unit
April 2006
Executive Managing Officer; Chief Operating
Officer of Chemicals Business Unit II
April 2009
Senior Executive Managing Officer; Chief
Operating Officer of EMEA (Europe, the Middle
East and Africa) Business Unit
March 2011Retired as Senior Executive Managing Officer
August 2011
Audit & Supervisory Board Member, SANKO
Co., Ltd. (current)
August 2016
Outside Director, Sanko Gosei Ltd. (current)
June 2020
Director of the Company (Current)
November 1978 Joined Associated Press
May 1985
Deputy General Manager of Tokyo Studio
July 2001
President, Foreign Correspondents' Club of Japan
April 2004
General Manager of Tokyo Bureau, Associated
Press
July 2007
General Manager for Northeast Asia
February 2010 Advisor
July 2018
Auditor, Foreign Correspondents’ Club of Japan(current)
June 2020
Director of the Company (Current)
March 1973
Joined the Company
July 2002
Group Leader, Accounting Group, General Affairs
Dept.
July 2004
General Manager, General Affairs Dept.
June 2012
Full-time Corporate Auditor of the Company(Current)

Term

October 1987

Corporate
AuditorKoichiro
TanakaJuly 6,
1965

Corporate
AuditorKoichiYokotaMarch 3,1970

Joined Tohmatsu Aoki & Sanwa (presently
Deloitte Touche Tohmatsu LLC)
March 1991
Registered as Certified Public Accountant
August 1998
Resident Representative of Dalian Office, U.S.
Deloitte Touche Tohmatsu (Office Head)
September 2002 Managing Director of the Japanese Operations
Department in South China of Shenzhen Office in
China, Deloitte Touche Tohmatsu Limited
December 2003 Director and Executive Officer; Partner
supervising China Business and in charge of
Public Communication, Corporate Finance
Department of Deloitte Touche Tohmatsu(presently Deloitte Tohmatsu Financial Advisory
LLC)
June 2014
Retired from Deloitte Touche Tohmatsu LLC
July 2014
Established Tanaka Sogo Accountant Office,Representative Director (current)
March 2017
Outside Corporate Auditor, ODAWARAENGINEERING CO., LTD. (current)
June 2018
Auditor, Japan Automobile Research Institute(current)
June 2020
Corporate Auditor of the Company (Current)
November 1996 Registered as Certified Public Tax Accountant
April 2003
Director, Takada Branch of Kanto-Shinetsu
Certified Public Tax Accountant’s Association
January 2004
Head, Yokota Accountant Office (current)
April 2019
General Manager, Takada Branch of KantoShinetsu Certified Public Tax Accountant’s
Association (current)
June 2020
Corporate Auditor of the Company (Current)

Total:
163,827

Note:

1.

Figures stated in the column “Number of shares of the Company held” represent the number of shares beneficially owned
by each of the persons listed above, including their respective ownership interests under the Company’s stock ownership- 39 -

2.

3.

4.
5.
6.
7.

8.

plan for its directors and officers. Since the number of shares acquired in June 2020 through the said stock ownership planis yet to be confirmed as of the filing date of this Financial Report (June 26, 2020), the number of shares beneficiallyowned by each of the persons listed above as of May 31, 2020 is stated.
Among the Directors, Yutaka Tsukahara, Koji Nakamura and Kazuo Abiko are Outside Directors (set forth in Article 2,
item 15 of the Companies Act) falling under the outside officers (set forth in Article 2, paragraph 3, item 5 of the Ordinancefor Enforcement of the Companies Act).
Among the Corporate Auditors, Koichiro Tanaka and Koichi Yokota are Outside Corporate Auditors (set forth in Article
2, item 16 of the Companies Act) falling under the outside officers (set forth in Article 2, paragraph 3, item 5 of theOrdinance for Enforcement of the Companies Act).
From the closing of the Ordinary General Meeting of Shareholders held on June 27, 2019 until the closing of the Ordinary
General Meeting of Shareholders for the fiscal year ending on March 31, 2021.
From the closing of the Ordinary General Meeting of Shareholders held on June 25, 2020 until the closing of the Ordinary
General Meeting of Shareholders for the fiscal year ending on March 31, 2021.
From the closing of the Ordinary General Meeting of Shareholders held on June 25, 2020 until the closing of theOrdinary General Meeting of Shareholders for the fiscal year ending on March 31, 2024.
The Company employs the Operating Officer system to ensure expeditious execution of the operations determined by the
Board of Directors and formulation of highly transparent management strategies. The Company has a total of eleven (11)Operating Officers consisting of one (1) Chief Executive Officer, one (1) Senior Managing Operating Officer, two (2)Senior Operating Officers and the following seven (7) Operating Officers.
Yasunori Kihara
Operating Officer supervising Procurement Dept. and Quality Assurance Dept.; Deputy
Division Chief, Administration Div.
Takeshi Masuda
Operating Officer supervising Corporate Planning Dept. and Accounting Dept.; Deputy
Division Chief, Administration Div.
Makoto Tai
Operating Officer supervising Electrical Insulating & Composite Materials Engineering
Dept., Optical Materials Engineering Dept. and Electronic Materials Engineering
Dept.(sub-) ; Deputy Division Chief, Electrical Insulating & Composite Materials Business
Dept.
Takeshi Aizawa
Operating Officer supervising Manufacturing Dept.; Deputy Division Chief, Manufacturing
Div.
Eiichi Matsuya
Operating Officer supervising General Affairs Dept. and Human Capital Dept.; Deputy
Division Chief, Administration Div.
Yoshifumi Ara
Operating Officer supervising Electrical Insulating & Composite Materials Sales Dept.;
Deputy Division Chief, Electrical Insulating & Composite Materials Business Dept.
Syuichi Fujita
Operating Officer supervising Electronic Materials Technical Administration Dept.
(principal) and Electronic Materials Manufacturing Engineering Dept.; Deputy Division
Chief, Electronic Materials Business Div.
The Company appointed the substitute corporate auditors under the provisions of Article 329, paragraph 3 of the Companies
Act as a precaution against shortage in the number of corporate auditors required by the applicable laws and regulations
as follows: Hiroshi Hayatsu as a substitute for Koji Ohta, Full-time Corporate Auditor, and Hideyuki Baba as a substitutefor the Outside Corporate Auditors, i.e. Koichiro Tanaka and Koichi Yokota. The career summary of each of the said
substitute corporate auditors is shown below.
Name

Date of birth

Hiroshi Hayatsu

March 13, 1957

Hideyuki Baba

March 29, 1964

Career summary

April 1975 Joined the Company
April 2001 Leader of Information System GroupMay 2010 General Manager of Human Capital Dept.
April 2012 General Manager of General Affairs Dept.
March 2017 Resigned from the Company
April 1998
Registered at Niigata Bar Association
April 2003
Representative, Hideyuki Baba Law Office(Current)- 40 -

Term

Numberof sharesof theCompanyheld

1 year

1,767

1 year---2) Status of Outside Directors and Officers
a. Summary of personal, capital and business relationships and other interests between Outside Directors andOutside Corporate Auditors and the Submitting Company- While Yutaka Tsukahara, an Outside Director, is a former director of Subaru Corporation and Tokyo Subaru
Inc., the said company is not our major business partner, and the said person is no longer involved in executionof the said company’s business. As described in "1) Directors and Officers ", the number of the Company's
shares owned by Yutaka Tsukahara, an Outside Director, is minimal. In view of these facts, we believe there
is no possibility of conflict of interest between the said person as an Outside Director and the generalshareholders of the Company.
- While Koji Nakamura, an Outside Director, is a former senior executive managing officer of Mitsui & Co.,
Ltd., the said person is no longer involved in execution of the said company’s business. Moreover, we believe
there is no possibility of conflict of interest between the said person as an Outside Director and the generalshareholders of the Company- There is no capital relationship, business relationship or any other interests existing between Kazuo Abiko, an
Outside Director, and the Company, and we believe there is no possibility of conflict of interest between thesaid person as an Outside Director and the general shareholders of the Company.
- As described in "1) Directors and Officers", the number of the Company's shares owned by Koichiro Tanaka,
an Outside Corporate Auditor, is minimal. Therefore, there is no capital relationship, business relationship or
any other interests existing between Koichiro Tanaka, an Outside Corporate Auditor, and the Company, andwe believe there is no possibility of conflict of interest between the said person as an Outside Corporate
Auditor and the general shareholders of the Company.
- Koichi Yokota, an Outside Corporate Auditor, is a head of Yokota Accountant Office, and there is no capital
relationship, business relationship or any other interests existing between the said office or person and theCompany, and we believe there is no possibility of conflict of interest between the said person as an Outside
Corporate Auditor and the general shareholders of the Company.
b. Status of appointment of Outside Directors and Outside Corporate Auditors and functions and roles served by
Outside Directors and Outside Corporate Auditors in corporate governance
The Company appoints, in order to exercise external oversight, two (2) Outside Directors and three (3)Outside Corporate Auditors, each of whom bears a part in management oversight in terms of laws andregulations, finance, accounting and corporate governance respectively from a neutral and objective viewpoint,
contributing to what the Company considers as fully functioning oversight of management. In this regard, thenames of the Outside Directors Yutaka Tsukahara, Koji Nakamura and Kazuo Abiko, as well as the Outside
Corporate Auditor Koichiro Tanaka and Koichi Yokota are filed with Tokyo Stock Exchange as theindependent officers of the Company.
c. Details of the standards or policy in terms of independence from the Submitting Company for appointment of
Outside Directors or Outside Corporate Auditors and the Submitting Company’s standpoint concerning thestatus of the relevant appointments
Although the Company has no specific standards or policy in force as to independence from the Submitting
Company applicable to appointment of Outside Directors or Outside Corporate Auditors, we judge, in making
any such appointment, the independence of each candidate in terms of his or her personal, capital and business
relationships and any other interests with the Company and also comprehensively judge each candidate’s
experience and knowledge of corporate governance, internal control and financial reporting, etc.
3) Mutual Collaboration between supervision or auditing by Outside Directors or Outside Corporate Auditors
and internal audit, accounting audit and auditing by Corporate Auditors, as well as Relationship between
supervision or auditing by Outside Directors or Outside Corporate Auditors and Internal Control Division.
The Outside Corporate Auditors, tapping into their wealth of experience and insight, audit the legality ofbusiness operations by the Board of Directors and the effectiveness of corporate governance, etc. throughattendance at meetings of the Board of Directors and of the Board of Corporate Auditors and also review ofvarious reports on the status of internal audit and accounting audit, etc. obtained directly or via the Full-time
Corporate Auditor.
The Outside Directors receive, at the Board of Directors’ meetings, etc., reports, etc. on the internal audits
conducted upon request of the Board of Corporate Auditors and the audits by the Corporate Auditors or theaccounting auditors and maintain mutual collaboration including, but not limited to, opinion exchanges asappropriate.
- 41 -

(3) Status of Audit
1) Status of Auditing by Corporate Auditors
The Board of Corporate Auditors of the Company is composed of three (3) members (one [1] full-time
Corporate Auditor and two [2] Outside Corporate Auditors). The Corporate Auditors conduct periodic audits,
attend the meeting of the Board of Corporate Auditors (held regular in principle pursuant to the Regulations
for the Board of Corporate Auditors) and also raise issues, where appropriate, as to execution of Directors’
duties and the status of improvement and operation of the internal control system, etc.
Koji Ohta, a full-time Corporate Auditor, has substantial practical experience of financial and accounting
affairs in Accounting Department of the Company.
The meetings of the Board of Corporate Auditors were held eight times for the current business year, andthe attendance records of each auditor is as follows.
Name

The Number of Meetings

The Number of Attendances

Koji Ohta

Eight (8) times

Eight (8) times

Koichi Sakai

Eight (8) times

Eight (8) times

Shinjiro Kawai

Eight (8) times

Eight (8) times

The main issues for consideration by the Board of Corporate Auditors are an audit plan, an audit approachand assignment, important matters regarding the audit during the period, other matters regarding an executionof the Auditors, etc.
Note that activities of the Full-time Corporate Auditor are to understand and report to the Board of Corporate
Auditors the status of the Company and the content of audit by attending at the meetings of the Board of
Directors and other important meetings and exchanging information with the internal audit division, theaccounting auditors, etc.
2) Status of Internal Audit
As the internal audit division, three (3) full-time employees are assigned to the Internal Audit Dept., whichis independent of other organizations of the Company and conducts scheduled audits and unscheduled audits
as appropriate. As for scheduled audits, an audit plan is made for each term pursuant to the relevant internal
regulations, and audits are conducted after the final decision by the Chief Executive Officer. Audit results arenotified to the relevant departments along with specific advice and recommendations, while reporting to, andopinion exchanges with, the Corporate Auditors are also made.
Results of auditing by the Internal Audit Dept. are reported to the Board of Corporate Auditors, and the
Corporate Auditors share in the recognition of such results in the course of their auditing to enhance theircollective audit function.

- 42 -

3)

Status of Accounting Audit
a. Name of Audit Corporation
Ernst & Young ShinNihon LLC
b. Continuous Audit Period
From 1985 on
This is as far as the Company could find with its investigation, and it might be before the above.
c. CPA who executed the audit work
Akira Igarashi
Eishi Daikoku
d. Composition of assistants involved in the audit work.
The composition of assistants involved in the accounting audit work of the Company is determined inaccordance with the criteria for selection of audit corporations and includes Six (6) certified public accountantsand eleven (11) others.
e. Policy and reason for the selection of Audit Corporation
The Board of Corporate Auditors examines whether Accounting Auditors maintain an independent
standpoint and conduct an appropriate audit and decides on the suitability of reappointment to ensure
appropriateness and credibility of financial reporting based on the evaluation in accordance with the following“Policy on Decisions on Dismissal or Non-reappointment of the Accounting Auditors” and the evaluative
standard established by the Board of Corporate Auditors. As a result of that, it decided that it was unnecessary
not to reappoint the above Audit Corporation.
(Policy on Decisions on Dismissal or Non-reappointment of the Accounting Auditor)
If the accounting auditors is found to fall under each item of Article 340, paragraph 1 of the Companies Act,
our Board of Corporate Auditors dismisses the accounting auditors based on the unanimous approval from theBoard of Corporate Auditors.
Besides that, if it deems it necessary because there is difficulty to conduct an appropriate audit due to an
occurrence of causes, etc. to impair an independence and appropriateness of Audit Corporation, the Board of
Corporate Auditors decides on and suggests at the General Meeting of Shareholders details of a resolution
regarding dismissal or non-reappointment of the accounting auditors.
f. Evaluation of Audit Corporation by Corporate Auditors and Board of Corporate Auditors
Corporate Auditors and Board of Corporate Auditors of the Company evaluate the audit corporations inaccordance with "Practical Guidelines for Corporate Auditors, etc. regarding Evaluation of Accounting
Auditors and Setting of Selection Standards" (Japan Audit & Supervisory Board Members Association,
November 10, 2015). Board of Corporate Auditors checks on Audit Corporation with respect to the problemof quality control system, independence and expertise of the audit team, validity and efficiency of auditing,etc. by means of regular exchanging of opinions with the audit corporation, hearing of matters to be checked,
and report on the implementation of audit, etc., so we believe there is no problem.

- 43 -

4) Details, etc. of Remuneration of Accounting Auditors
a. Remuneration of Auditing Certified Public Accountants, etc.

(Thousands of yen)Previous consolidated fiscal year
Category

Submitting Company
Consolidated subsidiaries
Total

Remuneration foraudit andattestation services

Current consolidated fiscal year

Remuneration for
non-audit services

Remuneration foraudit andattestation services

Remuneration for
non-audit services

35,100－36,350

－

－

－

－

－

35,100－36,350－b. Remuneration of the same network (Ernst & Young) as Auditing Certified Public Accountants (except for a.)
Previous consolidated fiscal year
Category

Submitting Company
Consolidated subsidiaries
Total

Remuneration foraudit andattestation services

Current consolidated fiscal year

Remuneration for
non-audit services

Remuneration foraudit andattestation services

Remuneration for
non-audit services

35,100－36,350

－

－

－

－

－

35,100－36,350－c. Details of other significant remuneration for audit and attestation services
No applicable matterd. Policy for Determination of Remuneration of Accounting Auditors
Remuneration of Auditing Certified Public Accountants, etc. of the Company is determined by considerationof scale and characteristics of the Company as well as the number of auditing days, etc., by consultation withthe audit corporation and by getting consent of Board of Corporate Auditors.
e. Reason for the consent of Board of Corporate Auditors to remuneration of accounting auditors
Board of Corporate Auditors decided to provide consent to the amount of remuneration of accounting auditors,
etc., after carefully examining the adequacy of performance of accounting auditors and such decision-making,
etc.

(4)

Remuneration, etc. of Directors and Corporate Auditors
1) Matters relating to Policy of Determination on Amount of Remuneration, etc. of Directors and Corporate
Auditors or Calculation Method thereof
Our fundamental policy is to establish a corporate governance system for the improvement of corporate value
through sustainable development and acquiring social credibility as well as to make efforts for securing efficientand fair management and improvement of transparency by positive information disclosure. We will further
reinforce our efforts to strengthen such corporate governance.
In implementing the following remuneration programs, the Company deliberates and decides the remuneration,etc. of directors and corporate auditors through development of remuneration governance.
a. Basic Guidelines for Remuneration System for Directors and Corporate Auditors
The Company established basic guidelines for the remuneration system for directors and corporate auditors as
below.
・ The system should encourage the management to improve their performance through associating theperformance with remuneration and to exercise their solid entrepreneurship for sustainable development of
the Company.
・The system should reflect not only financial performance but also appreciation for proactive initiative basedon the management philosophy of "CIC Better today than yesterday, better tomorrow than today" with theventure spirit of “Creation, Innovation and Challenge”.
・The system should attract excellent human resources for management who can contribute to sustainable
development and enhancement of corporate value of the Company.
- 44 -

b. Structure of Remuneration System for Directors and Corporate Auditors
The remuneration for Directors except Outside Directors of the Company is monthly remuneration which isconstituted of basic fixed remuneration, performance-based remuneration and stock option remuneration. We
calculate annual remuneration, according to their positions concerning the basic fixed portion and based on
consolidated business results of the previous fiscal year concerning the performance-based portion. And such
remuneration is divided equally and paid during the period of execution of duties thereof.
Key Performance Indicators (KPI) of performance-based remuneration is consolidated operating income in asingle year, and the performance targets as a basis has been set at 3.5 billion yen. The reasons for the selectionof consolidated operating income as Key Performance Indicators (KPI) are that it is a financial indicator that
represents the result of primary business activities and is used for the system of employee bonus, and that it isimportant to keep consistency between the both systems. Performance-based remuneration for inside directors
except President reflects the results of individual performance evaluation by President based on performance ofeach division.
The percentage of a single-year basic amount (refer to Note) of performance-based remuneration to basic fixed
remuneration is 60% across all titles, and a rate of pay which is multiplied by a single-year basic amount will
range from 0% to 200% according to results of performance evaluation.
Regarding the stock option remuneration, a given number of stock acquisition rights are granted according totitles every fiscal year.
When determining a remuneration level of the Company and a rate of performance-based portion, we checkthe validity thereof through objective and multilateral benchmark analysis of remuneration which is based on"Management Remuneration Database" run by an outside remuneration consultant.
Regarding the remuneration of outside directors and corporate auditors, however, only fixed portion of monthly
remuneration is paid in consideration of their roles.
(Note) 'A single-year basic amount' refers to the amount of performance-based remuneration in the case that individual
performance evaluation of certain title is equal to standard evaluation when consolidated operating income is 3.5 billion
yen.

c. Date of Resolution of a General Meeting of Shareholders regarding Remuneration of Directors and Corporate
Auditors
It was resolved at the 56th Ordinary General Meeting of Shareholders held on June 29, 2004 that total amountof remuneration for Directors should be no more than 30 million yen per month and total amount of remuneration
for Corporate Auditors should be no more than 3 million yen per month.
It was resolved at the 62nd Ordinary General Meeting of Shareholders held on June 29, 2010 that stock option
remuneration for directors should be no more than 50 million yen (100,000 shares) per year.
The number of Directors and Corporate Auditors covered (as of the filing date: June 26, 2020) consists of 6
directors (4 inside directors and 2 outside directors) regarding monthly remuneration and 4 directors (only insidedirectors) regarding stock option remuneration. Regarding the remuneration of outside directors and corporate
auditors, only fixed portion of monthly remuneration is paid in consideration of their roles.
d. Remuneration Governance
The Company deliberates and determines, at the Board of Directors, Basic Guidelines for Remuneration
System for Directors and Corporate Auditors and Structure of Remuneration System for Directors and Corporate
Auditors, as well as total amount thereof, while individual payments are determined by President. In order toensure a high degree of independence, objectivity and transparency in the process of determining and managing
of Remuneration System for Directors and Corporate Auditors of the Company, the Assignment andRemuneration Advisory Committee is set up as an advisory body to the Board of Directors.
A chairman of the Assignment and Remuneration Advisory Committee shall be selected from among
independent outside directors by resolution of the Board of Directors and majority of committee members shallconsist of independent outside directors.
The Board of Directors will deliberate and determine, in accordance with the contents of return from theAssignment and Remuneration Advisory Committee, Basic Guidelines for Remuneration System for Directors
and Corporate Auditors and Structure of Remuneration System for Directors and Corporate Auditors, as well as
individual amount of remuneration, etc. Note that an individual amount of remuneration is an amount of
remuneration with performance-based remuneration for the inside directors except President added.

- 45 -

2) The aggregate amount of remuneration, etc. of each category of Directors and Corporate Auditors, the breakdownof such aggregate amount by the type of remuneration, etc. and the number of Directors and Corporate Auditors
coveredCategory of Directors andCorporate Auditors
Directors(excluding Outside Directors)
Corporate Auditors(excluding Outside Corporate
Auditors)
Outside Directors and Outside
Corporate Auditors

Aggregate amountof remuneration,
etc.
(Thousands ofyen)

Breakdown by the type of
remuneration, etc.
(Thousands of yen)Monthly
Stock option
remuneration

Number of
Directors or
Corporate
Auditors
covered177,926

167,468

10,4585

13,032

13,032－

1

13,152

13,152－

4(Note) Performance-based portion included in monthly remuneration of the above is annual remuneration which
was calculated based on consolidated business results of the fiscal year of 2018. And the amounts whichwere paid evenly during the fiscal year of 2019 are stated above.

(5) Status of Shareholding
1) Criterion and attitude for segmentation of investment stock
Regarding segmentation of investment stock held for purposes of pure investment and held for purposes other thanpure investment, we separate purposes of making a profit through value change of stock or dividends on stock as"purposes of pure investment " from the other purposes as "purposes other than pure investment".
2) Investment stock held for purposes other than pure investment
a. Policy on holding, Method of verifying the reasonableness of holding, and Verified matters by the Board of
Directors, etc., regarding appropriateness of holding individual stock names(1) Policy on holding
Regarding investment stock held by the Company for purposes other than pure investment (hereinafter referred
to as “Cross-shareholdings”), shares, etc. of business partners, etc. may be acquired and held if it is judged thatsuch acquisition will contribute to the enhancement of corporate value of the Company over the mid-and-long-termin terms of facilitation and reinforcement, etc. of building stable and long-term business relations, businesscollaboration or cooperative business activities with the said business partners. We will verify effectiveness ofholding, etc. in terms of mid-and-long-term economic rationality as well as maintenance and strengthening ofcomprehensive relationship. And such validation will be reported to the Board of Directors. If any stock names are
judged, through the verification, to have no reasonableness of holding, we will sell off such stocks and reduce theshareholdings.
(2) Method of verifying the reasonableness of shareholding
Regarding all Cross-shareholdings held, the Board of Directors yearly gives comprehensive consideration toquantitative analysis of transaction performances and returns, etc. through shareholdings, qualitative analysis ofstatus of business relations based on the policy on shareholding, strategic background of acquisition, etc. , as wellas risk of shareholding, etc., and then verifies and evaluates the propriety of such shareholding.
Following items are verified through the quantitative analysis:
1) whether dividend earning rate is worth capital cost or not2) annual amount of transaction, amount of profits
3) profit or loss from valuation of stock- 46 -

(3) Verified matters by the Board of Directors, etc. regarding the propriety of holding individual stock names
At the Board of Directors held in March of 2020, the Company verified status of shareholding, risk returns,
importance of business and comprehensive meaning of shareholding, with respect to all shares (23 stock names)
held as Cross-shareholdings, and decided to sell the shares of total three (3) stock names, which are one (1) stockname that was judged to have no meaning of shareholding and two (2) stock names that were decided to be soldduring the current period.
b. Number of stock names and amount shown on balance sheets
Number ofstock names（Stocknames）

Aggregate amount of theamount shown on balance
sheets(Thousands of yen)

Unlisted stock

11

52,217

Stock other than unlisted
stock

12

1,838,032（Stock names whose number of shares increased in the current business year)

Unlisted stock
Stock other than unlisted
stock

Number ofstock names（Stocknames）

Aggregate amount ofacquisition price associatedwith increase in number ofshares (Thousands of yen)

－

－

－

－

－

－

Reason for increase in number of shares（Stock names whose number of shares decreased in the current business year)
Number ofstock names（Stocknames）

Aggregate amount ofacquisition price associatedwith decrease in number ofshares (Thousands of yen)

Unlisted stock－－

Stock other than unlisted
stock

5

70,520- 47 -

c. Information regarding the number of shares for each stock name of Specified Investment Stock and Deemed
Shareholding, as well as the amount shown on balance sheets, etc.
Specified Investment Stock

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

333,000

333,000

Mitsubishi Gas Chemical
Company, Inc.
391,608

525,807275,000

275,000

Mitsubishi Electric Corporation
367,125

391,187

823,500

823,500

Fujikura Ltd.
257,755

581,113343,399

581,113

The Hachijuni Bank, Ltd.
227,215- 48 -

266,730

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：(Note)2

Holding
shares oftheCompany

Yes

Yes

Yes

Yes

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

278,400

297,400

ViSCO Technologies
Corporation

204,624551,379

132,700

132,700

NOK Corporation
158,311

228,642

49,962

49,962

Daishi Hokuetsu Financial
Group, Inc.
118,060

30,000156,131

30,000

Kaneka Corporation
77,700- 49 -

124,350

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: It is forthe maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts by establishingbusiness relations with theintroduction of the said
company’s inspection technology,
etc.
Quantitative effect ofshareholding： As a result of
verifying the reasonableness ofholding, we intend to sell theshares because of its poor
effectiveness. Note that we soldpart of them in the current
business year.
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：(Note)2

Holding
shares oftheCompany

No

Yes

No
(Note)3Yes

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

62,42062,420Mitsubishi UFJ Financial Group,Inc.
25,15534,331

6,655

6,655

Sumitomo Corporation
8,245

10,188

1,800

1,800

Broadcasting System of Niigata
Inc.

2,061

1,944

515

515

Kobe Steel, Ltd.

172

427

－

10,255－36,148－18,283

Toshiba Corporation

Mizuho Financial Group, Inc.
－

- 50 -

3,131

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: As thesaid group is a main customer ofelectronic materials products anda vender of raw materials, it is forthe maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding：(Note)2
Purpose of shareholding: It is forthe maintenance andstrengthening of relations withlocal businesses and theimprovement of future corporate
value through informationcollection and mutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, we intend to sell theshares at a proper time because of
its poor effectiveness.
Purpose of shareholding: As thesaid company’s group is a venderof main raw materials, it is for the
maintenance and strengthening of
stable business relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding：As a result of
verifying the reasonableness ofholding, we intend to sell theshares at a proper time because of
its poor effectiveness.
As a result of verifying thereasonableness of holding, wesold all the shares in the current
business year.
As a result of verifying thereasonableness of holding, wesold all the shares in the current
business year.

Holding
shares oftheCompany

No(Note)4

No(Note)5

No

No

No

No

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)－

17,600

－

2,305

－

104

－

146

Nishishiba Electric Co., Ltd.

Tohoku Electric Power Co., Inc.

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Holding
shares oftheCompany

As a result of verifying thereasonableness of holding, wesold all the shares in the current
business year.
As a result of verifying thereasonableness of holding, wesold all the shares in the current
business year.

No

No（Note）1. "－" shows that there is no shareholding of the stock name
2. Because of the difficulty in stating quantitative effect of shareholding, method of verifying the reasonablenessof shareholding is stated. The method of verifying is as stated above in "(2) Method of verifying thereasonableness of shareholding" of "a. Policy on holding, Method of verifying the reasonableness of holding,and Verified matters by the Board of Directors, etc., regarding appropriateness of holding individual stock
names".
3. Daishi Hokuetsu Financial Group, Inc. holds no shares of the Company, while The Daishi Bank, Ltd. and The
Hokuetsu Bank, Ltd., group companies of the said Group, hold shares of the Company.
4. Mitsubishi UFJ Financial Group, Inc. holds no shares of the Company, while MUFG Bank, Ltd., a groupcompany of the said Group, holds shares of the Company.
5. Sumitomo Corporation holds no shares of the Company, while Sumitomo Shoji Chemicals Co., Ltd., a groupcompany of the said Corporation, holds shares of the Company.

Deemed Shareholding
No applicable matter.
3) Investment stock held for purposes of pure investment
Current business year
Category

Unlisted stock
Stock other than unlisted
stock

Previous business year

Aggregate amount of theAggregate amount of the
Number of stock names amount shown on balance Number of stock names amount shown on balance(Stock name)sheets(Stock name)sheets(Thousands of yen)(Thousands of yen)
－

－

－

－

－

－

－

－

Current business year
Category

Unlisted stock
Stock other than unlisted
stock

Aggregate amount of
Dividends income(Thousands of yen)

Aggregate amount of loss Aggregate amount of loss
on saleson valuation(Thousands of yen)(Thousands of yen)

－

－

－

－

－

－

- 51 -

V. Status of Accounting
1.

Method of Preparation of Consolidated Financial Statements and Financial Statements(1) The consolidated financial statements of the Company are prepared in compliance with the “Regulations
for Terminology, Forms and Preparation Methods of Consolidated Financial Statements” (Ministerial
Ordinance No. 28 of the Ministry of Finance, 1976).

(2) The financial statements of the Company are prepared in compliance with the “Regulations for
Terminology, Forms and Preparation Methods of Financial Statements, etc.” (Ministerial Ordinance No.
59 of the Ministry of Finance, 1963; hereinafter referred to as the “Regulations for Financial Statements”).
The Company falls under the Special Financial Statement-Submitting Companies and prepares its financial
statements pursuant to the provisions of Article 127 of the Regulations for Financial Statements.

2.

Certification of Audit
The Company received a review of its consolidated financial statements for the current consolidated fiscal year
(From April 1, 2019 to March 31, 2020) and its financial statements for the current business year (From April 1,
2019 to March 31, 2020) conducted by Ernst & Young ShinNihon LLC under the provisions of Article 193-2,
paragraph 1 of the Financial Instruments and Exchange Act.

3.

Special Efforts to Secure Appropriateness of Consolidated Financial Statements, etc.
The Company makes special efforts to secure appropriateness of its consolidated financial statements, etc.
Specifically, we make efforts to improve our systems by subscription to professional journals aiming to gain
correct understanding of the changes, etc. in the accounting standards and also affiliation with the Financial
Accounting Standards Foundation aiming to ensure precise understanding of and appropriate responses to thecontents of the accounting standards, etc.

- 52 -

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
1) Consolidated Balance Sheets(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivabletrade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment andvehiclesAccumulated depreciation
Machinery, equipment andvehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant andequipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and otherassetsTotal non-current assets
Total assets

Current consolidated fiscal year
(As of March 31, 2020)*2

8,193,697*4

16,127,374

17,697,085

1,401,188
4,012,943
1,941,748
3,378,698
1,190,214△668,052
35,577,813

1,558,445
3,083,432
2,017,729
3,177,428
1,059,764△585,049
42,722,906

19,427,835△13,845,280
5,582,555

20,082,654△14,210,115
5,872,538

*2

*2

*2

14,714,069

29,125,791

29,537,558△25,210,271△25,575,578*2

3,915,519*2

3,961,980*2

1,949,718
121,693
2,400,451△1,971,483
428,967*2

1,877,655
291,586
3,022,196△2,100,819
921,376*2*1

11,998,454

12,925,137

219,309
175,923395,233－
225,017225,017

23,142,852
218,024
15,289535,679
1,356,575△143,823*2- 53 -*2*1*2

14,207,192
214,352
16,579861,196674,765△137,662

25,124,598

15,836,423

37,518,286
73,096,100

28,986,578
71,709,484

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2019)
Liabilities
Current liabilities
Notes and accounts payable-trade
Current portion of bonds
Short-term loans payable
Current portion of long-term loans
payableLease obligations
Income taxes payable
Provision for bonuses
Provision for directors’ bonuses
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets*4

6,105,195
36,8005,394,122
779,820*2, *3*2

Current consolidated fiscal year
(As of March 31, 2020)*2, *3

6,916,079
36,8004,866,202*2

187,669

17,535
300,788
510,407
3,957
3,024,295
16,172,921*4

128,000
1,265,465
13,201
1,074,271
626,885
92,502
260,723
3,461,049
19,633,971*2

7,541,693
6,653,615
35,130,363△4,76449,320,907

745,120443
707,571△147,916
1,305,219
144,419
2,691,582
53,462,129
73,096,100- 54 -

60,1383,428,200
570,517
4,793
2,355,419
18,425,820*2

91,2002,567,816
391,672
236,866
738,606
92,310147,024
4,265,495
22,691,316

7,594,026
6,706,017
34,256,590△3,204,797
45,351,837

448,970△1,311
478,798△141,260
785,197
166,148
2,714,984
49,018,167
71,709,484

2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income[Consolidated Statements of Income](Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freightage and packing expenses
Salaries and allowances
Provision for bonuses
Provision for directors’ bonuses
Provision for retirement benefits
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative
expenses
Operating income
Non-operating income
Interest income
Dividends income
Share of profit of entities accounted for using
equity method
Foreign exchange gains
Rent income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on redemption of investment securities
Foreign exchange losses
Rent expenses
Provision of allowance for doubtful accounts
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Impairment loss
Impairment loss of goodwill
Loss on valuation of investment securities
Other
Total extraordinary losses
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of the parent

Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
44,728,243*1, *236,607,194
8,121,049

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
45,970,001*1, *2
38,224,015
7,745,986

713,508
1,407,937
104,273
3,957
69,002
61,3112,641,496

718,576
1,524,596
128,247
4,793
76,213
5,888
2,525,606*1

5,001,486*1

4,983,921

3,119,562

2,762,064

336,000
101,318

327,172
104,317558,090－160,081
141,079
212,414
1,508,984－
115,153
199,348745,991

81,88062,541－
63,473
48,68774,307
330,890
4,297,655

97,422
138,830
134,442
93,113
97,760163,233
724,804
2,783,251*3

33,71965,01014,374
113,104*3*4

265
1,294,172
16,422
1,310,859*5

96,725－45,00053,231
194,956
4,215,803
862,516
204,008
1,066,525
3,149,278
287,899
2,861,378*5*5475,811
175,447
293,587
26,828
971,674
3,122,437
3,698,729△1,020,085
2,678,644
443,792
231,000
212,792- 55 -

[Consolidated Statements of Comprehensive Income](Thousands of yen)

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to ownersof the parent
Comprehensive income attributable to noncontrolling interests

Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019
3,149,278

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
443,792△469,322△296,163

443△384,361△1,755△134,015

22,493△27,799△117,745△101,311*- 56 -△948,493
2,200,785*△561,044△117,251

2,047,009△307,229

153,776

189,977

3) Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodChanges of items during theperiodCapital surplus

7,458,242

6,570,209

83,45083,406

Issuance of new shares
Dividends from surplus
Profit attributable to ownersof the parent

Retained earnings

Treasury stock

33,493,564

Total shareholders’equity△4,46747,517,548

166,857△1,224,579△1,224,579

2,861,378

2,861,378

Purchase of treasury stock

△296

△296

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period83,45083,406

1,636,799△296

1,803,359

7,541,693

6,653,615

35,130,363△4,76449,320,907

Accumulated other comprehensive income
Valuation Deferred gains
Total
Share
differenceor losses on
Foreignaccumulated
Remeasuremeacquisitionon
hedgescurrencyother
nts of definedrightsavailabletranslation
comprehensive
benefit plansfor-saleadjustment
incomesecurities
Balance at beginning of current
periodChanges of items during theperiod1,214,473－

1,081,810△176,694

2,119,588

127,640

Noncontrollinginterests

Total net
assets2,728,960

52,493,738

Issuance of new shares

166,857

Dividends from surplus△1,224,579

Profit attributable to ownersof the parent

2,861,378△296

Purchase of treasury stock
Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period△469,352

443△374,238

28,778△814,369

16,778△37,378△834,968△469,352

443△374,238

28,778△814,369

16,778△37,378

968,390745,120443

707,571△147,916

1,305,219

144,419

2,691,582

53,462,129- 57 -

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)(Thousands of yen)
Shareholders’ equity
Capital stock
Balance at beginning of current
periodChanges of items during theperiodCapital surplus

7,541,693

6,653,615

52,33352,402Issuance of new shares
Dividends from surplus

Retained earnings

Treasury stock

35,130,363

Total shareholders’equity△4,76449,320,907

104,735△1,086,565△1,086,565

212,792

212,792

Profit attributable to ownersof the parent
Purchase of treasury stock△3,200,033△3,200,033

Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at end of current
period52,33352,402△873,773△3,200,033△3,969,070

7,594,026

6,706,017

34,256,590△3,204,797

45,351,837

Valuationdifferenceonavailablefor-salesecurities
Balance at beginning of current
periodChanges of items during theperiod745,120

Accumulated other comprehensive income
Total
Share
DeferredForeignaccumulated
Remeasuremeacquisition
gains orcurrencyother
nts of definedrightslosses ontranslation
comprehensive
benefit planshedgesadjustment
income443

707,571△147,916

1,305,219

144,419

Noncontrollinginterests

Total net
assets2,691,582

53,462,129

Issuance of new shares

104,735

Dividends from surplus△1,086,565

Profit attributable to ownersof the parent

212,792△3,200,033

Purchase of treasury stock
Net changes of items otherthan shareholders' equity△296,149△1,755△228,773

6,656△520,021

21,72923,401

Total changes of items during
the period
Balance at end of current
period△296,149△1,755△228,773

6,656△520,021

21,72923,401 △4,443,961

448,970△1,311

478,798△141,260

785,197

166,148- 58 -

2,714,984△474,890

49,018,167

4) Consolidated Statements of Cash Flows(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss
Impairment loss of goodwill
Amortization of goodwill
Share-based compensation expenses
Increase (decrease) in provision for productwarranties
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors'
bonuses
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in net defined benefit
liability
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)Share of (profit) loss of entities accounted forusing equity method
Loss (gain) on sales of investment securities
Loss on compensation for damage
Loss (gain) on valuation of investment
securities
Loss (gain) on redemption of investment
securities
Loss (gain) on sales of non-current assets
Loss on retirement of property, plant andequipment
Gain on reversal of share acquisition rights
Loss (gain) on change in equity
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in accrued consumption
taxes
Decrease (increase) in other assets
Other, net
Increase (decrease) in other liabilities
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes (paid) refund
Proceeds from insurance income
Compensation for damage paid
Net cash provided by (used in) operating
activities- 59 -

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

4,215,803
1,901,582
96,725－58,482
53,6383,122,437
1,982,964
475,811
175,447
43,861
55,402△82

79△87,853

60,109△1,999836

109,999

103,649

55,69371,720△437,318
81,880△21,172△431,489
97,422
10,569△558,090

52,281△64,9873,876△1,291,341－

45,000293,587△12,096

82,394△33,719△265

20,107

6,637△7,341△7,033△16,422－△517,924△1,561,941△682,445

1,034,154△588,527

799,562

36,330201,531

135,546－
44,9883,839,063
603,579△84,622△1,460,756
87,807△91,683△332,592△5,185△114,813
4,916,408
619,083△63,256△634,236－－

2,893,387

4,837,999

(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time
deposits
Purchase of securities
Purchase of property, plant andequipment
Proceeds from sales of property, plantand equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment
securities
Proceeds from sales of shares ofsubsidiaries and associates
Payments of loans receivableCollection of loans receivable
Decrease (increase) in otherinvestments
Net cash provided by (used in)investing activities
Cash flows from financing activities
Net increase (decrease) in short-termloans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Payments for long-term accounts
payable - other
Redemption of bonds
Proceeds from issuance of commonsharesPurchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controllinginterests
Net cash provided by (used in) financing
activities
Effect of exchange rate change on cash
and cash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of
period*1△100,000△200,000

3,000

210,000－△200,000△2,758,365△2,771,975

38,574397△43,057△1,929,842△105,378△1,032,333

1,476,584

1,421,883－

9,215,040△55,049
33,500△22,000
19,87730,46344,677△3,304,192

6,580,188

1,295,491△548,879

917,500△1,341,230△20,968

1,908,898△1,223,318△52,153△115,173△115,173△36,800△36,800

137,338

87,484△296△1,221,488△3,200,033△1,085,016△191,154△166,575△576,781△4,431,566△123,536

20,680△1,111,123

7,007,302

8,829,805

7,718,682

7,718,682- 60 -

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)*1

14,725,985

[Notes](Important Matters Underlying Preparation of Consolidated Financial Statements)
1. Matters concerning scope of consolidation(1) Number of consolidated subsidiaries: eleven (11)Names of major consolidated subsidiaries:
ThinFlex Corporation, ThinFlex Technology Corporation (B.V.I.), TopFlex Corporation, Satosen Co., Ltd.,
Arisawa Fiber Glass Co., Ltd., Protec International Holdings Co., Ltd., Protec Arisawa Europe, S.A., Protec
Arisawa America, Inc., Arisawa Sogyo Co., Ltd., Arisawa Jushi Kogyo Co., Ltd., ColorLink Japan, Ltd.,(2) Names, etc. of major non-consolidated subsidiaries
Major non-consolidated subsidiaries:
Arisawa Manufacturing (Dalian) Co., Ltd., Kashiwa Seiki Co., Ltd.
(Reasons for excluding the above-mentioned non-consolidated subsidiaries from the scope of consolidation)
The non-consolidated subsidiaries are small in size, and their aggregate total assets, net sales, net income orloss (Amount corresponding to the Company’s equity interest) and retained earnings (Amount corresponding to
the Company’s equity interest), etc. do not materially affect the consolidated financial statements.
2. Matters concerning application of equity method(1) Number of affiliated companies accounted for under the equity method: one ()Names of major affiliated companies:
Innovision FlexTech Corporation
All shares of Polatechno Co., Ltd. were sold in the third quarter consolidated fiscal period, and so it has
been excluded from the scope of application of equity method.
(2) As the non-consolidated subsidiaries (Arisawa Manufacturing (Dalian) Co., Ltd. and three (3) other companies)
and the affiliated companies (Ryoyu Industrial Corporation and two (2) other company) to which the equity
method is not applied have only slight effects on the consolidated financial statements in terms of net income
or loss (Amount corresponding to the Company’s equity interest) and retained earnings (Amount corresponding
to the Company’s equity interest), etc. (even if they are excluded from the scope of application of the equity
method) and also bear no significance as a whole, these companies have been excluded from the scope of
application of the equity method.
(3) With respect to those companies accounted for under the equity method whose closing dates differ from theconsolidated closing date, the financial statements for the relevant business year of each such company havebeen used.
3. Matters concerning business year, etc. of consolidated subsidiaries
The closing date of ThinFlex Corporation, TopFlex Corporation, ThinFlex Technology Corporation (B.V.I.),
Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc., all of which are consolidated subsidiaries, is
December 31 of each year.
In preparation of consolidated financial statements, financial statements as of the said closing date are used;provided, however, that for the important transactions conducted in the period from January 1 to March 31 (i.e. theconsolidated closing date), the adjustments necessary for consolidation purposes have been made.

- 61 -

4. Matters concerning accounting policies(1) Valuation standards and valuation methods for important assets
1) Securities
Available-for-sale securities
Securities with available fair market values:
Stated at fair market value based on the market price as of the closing date, etc. (Valuation differences
are reported as a component of net assets, and the cost of securities sold is calculated using the average cost
method.)Securities with no available fair market value:
Stated at average cost.
2) Derivative financial instruments
Stated at fair value method
3) Inventories
Merchandise, finished goods, semi-finished goods and work in process:
The Company and its domestic consolidated subsidiaries primarily adopt the cost method on a first-in,
first-out basis (The amount shown on the balance sheets is calculated by writing inventories down due to a
decline in profitability.), and the overseas subsidiaries primarily adopt the lower-of-cost-or-market method
based on the moving average method.
Raw materials and supplies:
The Company and its domestic consolidated subsidiaries primarily adopt the cost method based on the
periodic average method (The amount shown on the balance sheets is calculated by writing inventories
down due to a decline in profitability.), and the overseas subsidiaries primarily adopt the lower-of-cost-ormarket method based on the moving average method.
(2) Methods of depreciation and amortization of important depreciable assets
1) Property, plant and equipment (excluding lease assets)
The Company and its domestic consolidated subsidiaries adopt the declining-balance method, except for thebuildings (excluding accompanying facilities) acquired on or after April 1, 1998, and accompanying facilities
and structures acquired on or after April 1, 2016, which are depreciated using the straight-line method. The
overseas consolidated subsidiaries adopt the straight-line method.
The useful life mostly falls within the ranges shown below:
Buildings and structures: ten (10) years to thirty-one (31) years
Machinery, equipment and vehicles: four (4) years to nine (9) years
2) Intangible assets (excluding lease assets)
The straight-line method is adopted. Software used by the Company is amortized over an estimated in-houseusable period. (Currently five (5) years)
In addition, technology-related assets are amortized over the economic useful life (8 years).
3) Lease assets
Lease assets related to finance lease transactions that entail transfer of title
Depreciation and amortization is based on the same method as applied to self-owned non-current assets.
Lease assets related to finance lease transactions that do not entail transfer of title
Depreciation and amortization is based on the straight-line method that takes the lease period as theuseful life and sets the residual value at zero (0).
(3) Standards for recording important allowances and provisions
1) Allowance for doubtful accounts
As a reserve for potential loan losses, an estimated uncollectible amount is allocated based on the historicalloan-loss ratio in the case of general accounts receivable, and in light of the collectibility in each instance in thecase of some specific accounts receivable, e.g. doubtful receivables.
2) Provision for bonuses
The Company and some of its consolidated subsidiaries, in preparation for the payment of bonuses to theirrespective employees, allocate such portion of the expected aggregate bonus amount that is recognizable in thecurrent consolidated fiscal year.
3) Provision for directors’ bonuses
Some of the Company’s consolidated subsidiaries, in preparation for the payment of bonuses to theirrespective directors and officers, make a relevant allocation based on the expected aggregate amount of suchbonus payment for the current consolidated fiscal year.
4) Provision for product warranties- 62 -

As a reserve for warranty expenses potentially incurred with respect to the products delivered to customers,
an amount reasonably expected to accrue in such expenses is estimated and appropriated.
(4) Accounting methods concerning retirement benefits
1) Method of inter-period attribution of expected retirement benefits
In calculating retirement benefit obligations, the benefit formula is employed as the method of attributing theestimated amount of each employee’s retirement benefits to his or her service period up to the end of the current
consolidated fiscal year.
2) Method of recognizing actuarial differences as expenses
Actuarial differences are recognized as expenses, effective from the consolidated fiscal year immediately
following the year of occurrence of each such difference, in an amount prorated using the straight-line method
over a certain number of years (Currently five (5) years) within the average remaining service period of theemployees at the time of occurrence of the said difference in each consolidated fiscal year.
3) Adoption of simplified method by small-scale businesses, etc.
Some of the Company’s consolidated subsidiaries employ, in calculating their respective net defined benefit
liabilities and retirement benefit expenses, a simplified method which deems the size of retirement benefit
obligations to be equal to the aggregate amount of retirement benefits payable assuming the voluntary
retirement of all employees at the end of the current period.
(5) Standards for translating important foreign currency assets and liabilities into Japanese currency
Foreign currency monetary assets and liabilities are translated into Japanese yen at the spot exchange rate asof the consolidated closing date, and the resulting translation differences are entered as income or loss, as thecase may be. Assets and liabilities of overseas subsidiaries, etc. are translated into Japanese yen at the spot
exchange rate as of the consolidated closing date, and their respective incomes and expenses are translated into
Japanese yen at the average exchange rate during the period, with the resulting translation differences being
recorded as part of “Foreign currency translation adjustment” and “Non-controlling interests” in the “Netassets” section.
(6) Accounting method of significant hedge transactions
1) Method of hedge accounting
The Company adopts the deferred hedge accounting. With respect to the forward exchange contracts thatmeet the requirements of hedge accounting, we adopt the designated hedge accounting.
2) Hedging instruments and hedged items
Hedging instruments: Forward exchange contracts
Hedged items: Monetary claims denominated in foreign currencies, Anticipated transactions in foreign
currencies
3) Hedging policy
Forward foreign exchange transactions are conducted within the scope of actual demand for the purpose ofdeterring risks involved in transactions denominated in foreign currencies from the fluctuations in the foreignexchange market. These transactions will never be entered for speculative purpose.
4) Method of assessing hedge effectiveness
The Company assesses the effectiveness of hedging based on the ratio of changes that is calculated bycomparing the cumulative total of the market fluctuations of hedged items with that of hedging instruments.
However, when the forward foreign exchange transactions are by designated hedge accounting, suchassessment of effectiveness is omitted.
(7) Method and period of amortization of goodwill
Goodwill is amortized using the straight-line method over a five (5)-year period.
(8) Scope of funds in the consolidated statements of cash flows
The funds consist of cash on hand, demand deposits that are immediately withdrawable and short-term
investments with a maturity of three (3) months or less from the date of acquisition which are readily
convertible to cash and carry only a negligible risk of value fluctuations.
(9) Other important matters concerning preparation of consolidated financial statements
Accounting methods concerning consumption tax, etc.
The consumption tax, etc. are accounted for using the tax exclusion method.
Accounting methods concerning deferred assets
Stock delivery expenses are fully charged to expenses when they are paid.

- 63 -

(Changes in Accounting Policies)<Application of IFRS 16 (Lease)>
IFRS 16 "Lease" (Published in January, 2016) (hereinafter "IFRS 16") has been applied to the IFRS-applied
subsidiaries of our Group since the current consolidated fiscal year. In applying IFRS 16, we adopted the method
allowed as provisional measures where cumulative influence of application of this Standards is recognized on thecommencement date of such application.
Regarding the lease on the side of lessee which was classified into operating lease by applying IAS 17 in the past,
right-of-use assets and lease liability were recognized on the commencement date of such application.
A part of assets included in "Other” in “Investments and other assets” is transferred to right-of-use assets.
Along with the application of this Standards, Consolidated Balance Sheets show that “Other” in “Property, plantand equipment,” “Lease obligations” in “Current liabilities” and “Lease obligations” in “Non-current liabilities”
increased respectively by 372,069 thousand yen, 31,077 thousand yen and 302,416 thousand yen, while “Other” in“Investments and other assets” decreased by 40,644 thousand yen.
The influence on gain and loss in the consolidated financial statements due to these changes was slight.
(Accounting Standards etc. not yet applied)
1. Accounting standard, etc. for revenue recognition- "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan Statement No.29, March
30, 2020)- "Implementation Guidance on Accounting Standard for Revenue Recognition" (Accounting Standards Board ofJapan Guidance No.30, March 30, 2020)(1) Overview
The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board (FASB)
jointly developed comprehensive revenue recognition accounting standards and issued “Revenue from Contracts
with Customers” in May 2014 (IASB: IFRS 15, FASB: Topic 606). Considering that IFRS 15 will apply to fiscal
years beginning on or after January 1, 2018, and Topic 606 will apply to fiscal years beginning after December 15,
2017, the ASBJ developed a comprehensive accounting standard on revenue recognition and thus issued theaccounting standard together with the implementation guidance.
The ASBJ established the accounting standard on revenue recognition by adhering a basic policy in developing
it. This basic policy was to first, incorporate the core principles of IFRS 15 as the starting point from theperspective of facilitating comparability among financial statements, which is one of the benefits of ensuringconsistency with IFRS 15; and second, add alternative treatments, to the extent that they do not impair
comparability, where consideration should be given to conventional practices etc. in Japan.
(2) Scheduled date of application
The Accounting Standard and the Implementation Guidance mentioned above will be applied at the start of the
fiscal year beginning on April 1, 2021.
(3) Effect of application of the accounting standard, etc.
The effect of the application of the "Accounting Standard for Revenue Recognition", etc. on the consolidated
financial statements is currently under evaluation.
2. Accounting standard, etc. for calculating fair value
・“Accounting Standard for Calculating Fair Value” (Accounting Standards Board of Japan Statement No.30, July4, 2019)
・“Accounting Standard for Inventories” (Accounting Standards Board of Japan Statement No.9, July 4, 2019)
・“Accounting Standard for Financial Instruments”(Accounting Standards Board of Japan Statement No.10, July 4,
2019)
・“Implementation Guidance on Accounting Standard for Calculating Fair Value” (Accounting Standards Board ofJapan Guidance No.31, July 4, 2019)
・“Implementation Guidance on Disclosure of Fair Value, etc. of Financial Instruments” (Accounting Standards
Board of Japan Guidance No.19, March 30, 2020)）- 64 -

(1) Overview
Considering that the International Accounting Standards Board (IASB) and US Financial Accounting Standards
Board (FASB) established almost the same content of the detailed guidance (IFRS 13 “Fair Value Measurement”
in International Financial Reporting Standards (IFRS) and Topic 820 “Fair Value Measurement” in AccountingStandards Codification in Generally Accepted Accounting Principles (US-GAAP)), Accounting Standards Boardof Japan took measures to ensure consistency between the Japanese standards and international accounting
standards and issued “Accounting Standard for Calculating Fair Value,” etc.
A basic policy for establishing the accounting standard for calculating fair value by Accounting Standards
Board of Japan is said to basically incorporate all of the provisions of IFRS 13 from the perspective of facilitatingcomparability among financial statements of domestic and foreign companies by using a unified calculation
method and to set forth other handling of each items with consideration for the practices that have been carried out
in Japan up to now to the extent that they do not impair comparability.
(2) Scheduled date of application
The Accounting Standard and the Implementation Guidance mentioned above will be applied at the start of the
fiscal year beginning on April 1, 2021.
(3) Effect of application of the accounting standard, etc.
The effect of the application of the “Accounting Standard for Calculating Fair Value,” etc. on the consolidated
financial statements is currently under evaluation.
3. “Accounting Standard for Disclosure of Accounting Estimates”(Accounting Standards Board of Japan Statement
No.31, March 30, 2020)(1) Overview
Accounting standard for disclosure of accounting estimates (hereinafter referred to as “this accounting
standard”) was developed and issued by Accounting Standards Board of Japan because a request has been made toconsider requiring disclosure of information that is highly useful to users of financial statements as explanatory
notes information under Japanese standards regarding “Major Sources of Estimation Uncertainty” which is
required to be disclosed under International Accounting Standards (IAS) 1 “Presentation of Financial Statements”(hereinafter referred to as IAS 1), 125 issued by the International Accounting Standards Board (IASB) in 2003.
A basic policy on the development of this accounting standard by Accounting Standards Board of Japan is not
to expand individual explanatory notes but for a company to decide a specific disclosure content in terms of adisclosure purpose after showing principles (a purpose of disclosure) and to use the provision of IAS 1, 125 as areference for its development.
(2) Scheduled date of application
The Accounting Standard and the Implementation Guidance mentioned above will be applied at the start of the
fiscal year beginning on April 1, 2020.
4. “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections”(Accounting Standards Board of Japan Statement No.24, March 30, 2020)(1) Overview
In response to the recommendation to consider the enhancement of the explanatory notes information regarding“Accounting Principles and Procedures Adopted in the Case Where the Provisions of Related AccountingStandards are Unclear,” the Accounting Standards Board of Japan released the revised standards as the
Accounting Standard for Disclosure of Accounting Policies, Accounting Changes and Error Corrections after
making the necessary amendments.
Note that, in order to enhance the explanatory information regarding “Accounting Principles and Procedures
Adopted in the Case Where the Provisions of Related Accounting Standards are Unclear,” the provision in theCommentary on Business Accounting Principles (Note 1-2) is to be succeeded so as not to affect the practice thathas been done in the case where the related accounting standards are clearly defined.
- 65 -

(2) Scheduled date of application
The Accounting Standard and the Implementation Guidance mentioned above will be applied at the start of the
fiscal year beginning on April 1, 2020.
(Changes in Presentation)<Consolidated Statements of Income>1. “Rent income”, which was presented as part of “Other” in “Non-operating income” in the previous consolidated
fiscal year, is separately stated effective from the current consolidated fiscal year due to a rise in percentage ofthe pertinent amount to more than ten hundredths (10/100) of the aggregate amount of Non-operating income.
In order to reflect such change in presentation, a reclassification has been made in the consolidated financial
statements for the previous consolidated fiscal year.
As a result, 335,942 thousand yen of “Other”, listed within “Non-operating income” in the consolidated
statements of income for the previous consolidated fiscal year, has been reclassified into the combination of
141,079 thousand yen of “Rent income” and 212,414 thousand yen of “Other”.
2. “Loss on retirement of non-current assets”, which was separately stated within “Extraordinary losses” in theprevious consolidated fiscal year, is presented as part of “Other” effective from the current consolidated fiscal
year due to a fall in quantitative materiality. In order to reflect such change in presentation, a reclassification has
been made in the consolidated financial statements for the previous consolidated fiscal year.
As a result, 53,231 thousand yen of “Loss on retirement of non-current assets”, listed within “Extraordinary
losses” in the consolidated statements of income for the previous consolidated fiscal year, has been reclassified
as part of “Other”.
(Additional information)(Accounting estimates)
Taking into account the fact that the scale and extent of the impact of the new coronavirus infection on the Group'sbusiness will vary from business to business, we have established a range for the fiscal year ending March 31, 2021,
assuming the upper limit of the range in the case of an early containment (by the end of September 2020) and thelower limit of the range in the case of no containment (by the end of March 2021). Based on the anticipated impacts
and assumptions, we have reviewed our accounting estimates such as the recoverability of our deferred tax assets
and impairment of non-current assets, and have determined that none of these have a material impact at this time.
However, depending on future convergence and the impact on the economy, the financial statements after the next
consolidated fiscal year could be materially affected.

- 66 -

(Notes Related to Consolidated Balance Sheets)*1 Items related to non-consolidated subsidiaries and affiliated companies are as follows.
(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2019)

Current consolidated fiscal year
(As of March 31, 2020)

8,541,034

362,552

Investment securities (Stock)*2 Assets subject to a security interest and secured liabilities
Assets subject to a security interest are as follows.

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2019)
Cash and deposits

Current consolidated fiscal year
(As of March 31, 2020)

14,440(--- )53,373(--- )Buildings and structures
Machinery, equipment and vehicles

4,030,250
1,151,387((

2,919,738)
823,701)

3,908,335
1,390,535((

2,979,833)
1,176,164)

Property, plant and equipment (Other)Land

34,726500,217((34,726)
199,190)

138,129
558,408((

97,484)
199,190)

Investments and other assets (Other)

43,090(--- )14,560(--- )( 3,977,357 )

6,063,341(

4,452,673)

Total

5,774,111

Secured liabilities are as follows.

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2019)

Short-term loans payable
Current portion of long-term loans payable
Long-term loans payable
Total

Current consolidated fiscal year
(As of March 31, 2020)

1,112,202(

200,000)

870,349(－)

779,820((714,848)－

187,669((

133,332)
813,890)(

914,848)

1,969,916(

947,222)

154,665
2,046,687

911,898

The parenthesized figures represent factory foundation mortgages and the liabilities secured by such mortgages.

*3 The Submitting Company has an overdraft agreement in effect with each of its six (6) partner banks toensure efficient procurement of operating funds. The following is the balance of unexecuted loans under suchoverdraft agreements as of the end of the current and previous consolidated fiscal years.
(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2019)
Aggregate overdraft limit
Drawdowns
Balance of unexecuted loans- 67 -

Current consolidated fiscal year
(As of March 31, 2020)

6,300,000

6,300,000

465,000－

5,835,000

6,300,000

*4 Notes, etc. maturing at the end of the consolidated fiscal year
For accounting treatment of notes, electronically recorded monetary claims and electronically recorded
obligations maturing at the end of the consolidated fiscal year, settlement is made as of the clearing date of eachnote or as of the settlement date of each electronically recorded monetary claim and electronically recorded
obligation, as the case may be. As the end of the previous consolidated fiscal year falls on a bank holiday, thefollowing notes, electronically recorded monetary claims and electronically recorded obligations maturing at theend of the consolidated fiscal year are included in their respective balances as of the end of the consolidated
fiscal year.
Previous consolidated fiscal year
(As of March 31, 2019)(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2020)

Notes and accounts receivable-trade66,950－Notes and accounts payable-trade
Current liabilities and others (Notes payable-facilities,

130,679
51,206－－

Electronically recorded obligations-non-operating)(Notes Related to Consolidated Statements of Income)*1 Total amount of research and development expenses included in manufacturing costs for the current period andgeneral and administrative expenses(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
2,001,9782,074,050*2 Closing inventories are stated in the amount after writing inventories down due to a decline in profitability,
and the following loss on valuation of inventories or gain on reversal of loss on valuation of inventories ()are included in the cost of sales.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
71,661

195,328*3 Details of gain on sales of non-current assets are as follows.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

Buildings and structures

1,591

－

Machinery, equipment and vehicles

32,127265*4 The gain on sale of investment securities is due mainly to the sale of all shares of Polatechno Co., Ltd., which
was the affiliate company.

- 68 -

*5 Impairment loss
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)
Our Group recorded an impairment loss with respect to the following asset group(s) in the previous
consolidated fiscal year.
Impairment loss
Location
Usage
Type(Thousands of yen)

Joetsu-shi, Niigata

Display materials manufacturing facilities

Buildings
andstructures; machinery,equipment
andvehicles; land; etc.

96,725

Our Group conducts asset grouping grounded in its business segments and based primarily on productlines (each line representing a family of products), while each asset becomes the subject of asset grouping in
the cases of assets for rent and idle assets, etc.
Of the Group’s business assets, those asset groups whose profitability significantly declined due largely
to a fall in the market price of the relevant products, etc. have been written down to the recoverable amount,and the aggregate amount of such write-downs, 96,725 thousand yen, was recorded as an impairment loss in
extraordinary losses. The said aggregate amount consists of 52,349 thousand yen of buildings and structures,
30,979 thousand yen of machinery, equipment and vehicles, 10,653 thousand yen of land and 2,742 thousand
yen of others.
The recoverable amount of each relevant asset group is measured according to the net selling price, whilethe value of each real-estate property is fixed at the value assessed by a licensed real-estate appraiser.
Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)
Our Group recorded an impairment loss with respect to the following asset group(s) in the current
consolidated fiscal year.
Impairment loss
Location
Usage
Type(Thousands of yen)

Satosen Co., Ltd.
(Osaka-shi, Osaka)

Electronic materials manufacturing facilities

ColorLink Japan, Ltd.
(Joetsu-shi, Niigata)

Display materials manufacturing facilities

Buildings
andstructures; machinery,equipment and vehicles;
land; Construction inprogress;
etc.;
Goodwill.
Buildings
andstructures; machinery,equipment and vehicles;
Construction
inprogress; etc.

544,569

106,689

Our Group conducts asset grouping grounded in its business segments and based primarily on productlines (each line representing a family of products), while each asset becomes the subject of asset grouping in
the cases of assets for rent and idle assets, etc.
As for the electronic materials manufacturing facilities assets, due to the goodwill and business assets ofSatosen Co., Ltd., which is a consolidated subsidiary of the Company, having been below the planestablished at the time of the acquisition of the shares, the Company devalued the full amount of theunamortized balance of the goodwill and the carrying amount of the business assets to their recoverable
amount because excess earning power cannot be expected as a result of our reviewing the future businessplan, and 544,569 thousand yen, was recorded as an impairment loss in extraordinary losses. The said
aggregate amount consists of 42,991 thousand yen of buildings and structures, 189,543 thousand yen ofmachinery, equipment and vehicles, 97,100 thousand yen of land, 12,659 thousand yen of construction inprogress, 26,826 thousand yen of others and 175,447 thousand yen of goodwill.
The recoverable amount is measured according to the net selling price, while the value of each real-estate
property is fixed at the value assessed by a licensed real-estate appraiser.
As for the display materials manufacturing facilities assets, due to the profit arising from operating
activities continuing negative and having little potential for a future earnings recovery at Satosen Co., Ltd.,
which is a consolidated subsidiary of the Company, the Company devalued their carrying amount to its
recoverable amount and 106,689 thousand yen was recorded as an impairment loss in extraordinary losses.
The said aggregate amount consists of 2,996 thousand yen of buildings and structures, 79,616 thousand
yen of machinery, equipment and vehicles, 4,909 thousand yen of construction in progress and 19,167
thousand yen of others.

- 69 -

Note that a carrying amount is measured according to value in use, but it is assessed according tomemorandum value because future cash flow is negative.
(Notes Related to Consolidated Statements of Comprehensive Income)*Reclassification adjustment and tax effects relating to other comprehensive income(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
Valuation difference on available-for-sale securities:
Amount arising in the current fiscal year

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)△600,380△74,903△762,472△675,284△426,134

205,961

129,971△469,322△296,163

Amount arising in the current fiscal year668

△1,975

Reclassification adjustment

－

△668

668
△224

△2,643443△1,755

Reclassification adjustment
Before tax effects
Tax effects
Valuation difference on available-for-sale securities

336,337

Deferred gains or losses on hedges:

Before tax effects
Tax effects
Deferred gains or losses on hedges

887

Foreign currency translation adjustment:△384,361△134,015

Remeasurements of defined benefit plans, net of tax:
Amount arising in the current fiscal year

△6,561△89,285

Reclassification adjustment

38,92549,28532,364△9,871△39,999

22,493△27,799△117,745△101,311△948,493△561,044

Amount arising in the current fiscal year

Before tax effects
Tax effects
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method:Amount arising in the current fiscal year
Total other comprehensive income- 70 -

12,199(Notes Related to Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets)
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)
1. Matters concerning class and number of shares issued and outstanding and of shares of treasury stock
Number of shares at the
beginning of theconsolidated fiscal year

Increase in the numberof shares during theconsolidated fiscal year

Decrease in the numberof shares during theconsolidated fiscal year

Number of shares at theend of the consolidated
fiscal year

Common stock (See Note 1)

36,024,124

202,100－

36,226,224

Total

36,024,124

202,100－

36,226,224

7,084

294

－

7,378

Shares issued and outstanding

Treasury stock
Common stock (See Note 2)
Total
Note: 1.
2.

－
7,084
294
7,378
The increase of 202,100 shares in the number of shares issued and outstanding (common stock) is due to an issuanceof new shares through the exercise of stock acquisition rights.
The increase of 294 shares in the number of shares of treasury stock (common stock) is due to a purchase of sharesconstituting less than one full unit.

2. Matters concerning stock acquisition rights and treasury stock acquisition rights

Details of stockacquisition rights

Stock acquisition rights
issued as stock options

---

---

---

---

---

144,419

---

---

---

---

---

144,419

Category

Submitting
Company(Parent
company)
Total

Number of shares subject to stock acquisition
Balance at therightsend of the
At theIncrease
DecreaseAt the end of consolidated
beginning offiscal year
during theduring thethethe
consolidated consolidated consolidated (Thousands ofconsolidatedyen)fiscal year
fiscal year
fiscal year
fiscal year

Class ofshares subject
to stockacquisitionrights3. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)

Ordinary General
Meeting ofCommon stock
1,224,579
34.00
Shareholders ofJune 28, 2018
Note:
The dividend per share of 35 yen includes a special dividend of 11 yen.

Record date

Effective date

March 31, 2018

June 29, 2018

(2) Dividends whose record date belongs to the current consolidated fiscal year but whose effective date belongs
to the next consolidated fiscal year
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Source ofdividends

Ordinary General
Meeting of
Shareholders ofJune 27, 2019

Common stock

1,086,565

Retainedearnings- 71 -

Dividend pershare (Yen)Record date

30.00 March 31, 2019

Effective dateJune 28, 2019

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)
1. Matters concerning class and number of shares issued and outstanding and of shares of treasury stock
Number of shares at the
beginning of theconsolidated fiscal year

Increase in the numberof shares during theconsolidated fiscal year

Decrease in the numberof shares during theconsolidated fiscal year

Number of shares at theend of the consolidated
fiscal year

Common stock (See Note 1)

36,226,224

155,300－

36,381,524

Total

36,226,224

155,300－

36,381,524

7,378

3,128,452－

3,135,830

Shares issued and outstanding

Treasury stock
Common stock (See Note 2)
Total
Note: 1.
2.

－
7,378
3,128,452
3,135,830
The increase of 155,300 shares in the number of shares issued and outstanding (common stock) is due to an issuanceof new shares through the exercise of stock acquisition rights.
The increase of 3,128,452 shares in the number of shares of treasury stock (common stock) is due to an increase of

3,128,300 shares resulting from the acquisition of treasury stocks by a resolution of the Board of Directors
and an increase of 152 shares resulting from the purchase of shares constituting less than one full unit.
2. Matters concerning stock acquisition rights and treasury stock acquisition rights

Details of stockacquisition rights

Stock acquisition rights
issued as stock options

---

---

---

---

---

166,148

---

---

---

---

---

166,148

Category

Submitting
Company(Parent
company)
Total

Number of shares subject to stock acquisition
Balance at therightsend of the
At theIncrease
DecreaseAt the end of consolidated
beginning offiscal year
during theduring thethethe
consolidated consolidated consolidated (Thousands ofconsolidatedyen)fiscal year
fiscal year
fiscal year
fiscal year

Class ofshares subject
to stockacquisitionrights3. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)

Ordinary General
Meeting of
Shareholders of June27, 2019

Common stock

1,086,565

30.00

Record date

Effective date

March 31, 2019

June 28, 2019(2) Dividends whose record date belongs to the current consolidated fiscal year but whose effective date belongs
to the next consolidated fiscal year
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Source ofdividends

Ordinary General
Meeting of
Shareholders ofJune 25, 2020

Common stock

997,370

Retainedearnings- 72 -

Dividend pershare (Yen)Record date

30.00 March 31, 2020

Effective dateJune 26, 2020

(Notes Related to Consolidated Statements of Cash Flows)*1 The correlation between the balance of cash and cash equivalents at the end of the current and previous
consolidated fiscal years and the amounts shown for the corresponding items on the relevant consolidated balance
sheets(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
Cash and deposits
Time deposits with a deposit term of more than three months

8,193,697

Securities (Money management fund)△635,000
159,984

Cash and cash equivalents

7,718,682

2

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
14,714,069△625,000
636,915
14,725,985

The details of material non-cash transactions
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)
There are no material non-cash transactions.
Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)
IFRS 16 has been applied to the overseas subsidiaries of our Group from the current consolidated fiscal year, and theamount shown as the assets and liabilities related to finance lease transactions at the beginning of the current consolidated
fiscal year was 360,097 thousand yen.

(Notes Related to Lease Transactions)(As lessee)
Finance lease transactions
1. Finance lease transactions that entail transfer of title
1) Details of lease assets
Property, plant and equipment
Boiler-related facilities mainly. (falling under “Machinery, equipment and vehicles” respectively)
2) Methods of depreciation and amortization of lease assets
As is stated in (Important Matters Underlying Preparation of Consolidated Financial Statements) - 4. Mattersconcerning accounting policies - (2) Methods of depreciation and amortization of important depreciable assets.
2. Finance lease transactions that do not entail transfer of title and the right-of-use assets at the IFRS 16-applied
subsidiaries of our Group1) Details of lease assets
Property, plant and equipment
Land and photovoltaic facility, mainly. (falling under “Machinery, equipment and vehicles” respectively)
2) Methods of depreciation and amortization of lease assets
As is stated in (Important Matters Underlying Preparation of Consolidated Financial Statements) - 4. Mattersconcerning accounting policies - (2) Methods of depreciation and amortization of important depreciable assets.
(Notes Related to Financial Instruments)
1. Matters concerning the status of financial instruments(1) Policies for financial instruments
Our Group obtains funds required in light of its financing plan and business plan (mainly through bankloans), and invest any temporary surplus funds in highly liquid financial instruments, and also obtains shortterm operating funds through bank loans. Our Group makes use of derivative transactions in order to avoid
the risks mentioned below and maintains a policy of eschewing speculative transactions.
(2) Description of financial instruments and risks associated with such financial instruments
Notes and accounts receivable, a type of operating receivables, are exposed to customer credit risk, andforeign currency operating receivables are also exposed to exchange rate fluctuation risk.
Securities and investment securities consist of those held primarily as pure investments and equity sharesin the Company’s business partners and are exposed to market price fluctuation risk.

- 73 -

Notes and accounts payable, a type of operating payables, are mostly due in approximately four (4) months.
The notes and accounts payable denominated in foreign currencies are exposed to exchange rate fluctuation
risk.
Loans payable are primarily aimed at obtaining funds required for capital investment. They are fixed rateloans and liabilities and therefore are not exposed to interest rate fluctuation risk.
Derivative transactions conducted by our Group are restricted to forward exchange contracts with the
purpose to hedge exchange fluctuation risk in respect of operating receivables denominated in foreign
currency. To learn about hedging instruments and hedged items with respect to hedge accounting, hedging
policy and method of assessing hedge effectiveness, etc., refer to "4. Matters concerning accounting
policies (6) Accounting method of significant hedge transactions" in [Notes] (Important Matters Underlying
Preparation of Consolidated Financial Statements) described above.

(3) Risk management system for financial instruments
1) Management of credit risk (Risks associated with default of contract by business partners, etc.)
As for notes and accounts receivable, the sales departments set a credit limit for each of the Company’s
regular customers, monitoring such customers’ respective payment schedules, remaining credit lines andoverall business conditions in an attempt to promptly recognize and reduce doubtful accounts.
As for securities and investment securities held for the purpose of fund management, higher-rated bonds
are selected to minimize credit risk.
2) Management of market risk (Risks associated with fluctuations in foreign exchange rates and interest
rates, etc.)
As for some foreign currency operating receivables and payables, forward exchange contracts may be
employed to avoid exchange rate fluctuation risk.
As for securities and investment securities, the Company continually reviews the holding status in lightof the relevant market conditions and business relations.
The execution and management of derivative transactions are conducted, pursuant to the management
rules that specify transaction authority and transaction amount limits, by the department in charge withthe approval of the person in charge of settlement.
3) Management of liquidity risk (Risk that payment cannot be made as and when due under contract) infinancing activities
The Company has entered into an overdraft agreement with its partner banks to ensure expeditious
financing and to minimize liquidity risk.
In financing activities, the Company prepares and updates a financial plan under its business plan andcapital investment plan and maintains liquidity on hand, etc. in an attempt to minimize liquidity risk.
(4) Supplementary explanations on matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is based on either the quoted market price, if available, or areasonably estimated price where no market price is available. As variable factors are incorporated in thedetermination of the said reasonably estimated price, such price may vary depending on the choice among
different assumptions, etc.

- 74 -

2.

Matters concerning fair value, etc. of financial instruments
The amount shown on the consolidated balance sheets, the fair value and the difference between the former
and the latter are as follows. Financial instruments whose fair value is deemed extremely difficult to reasonably
determine are not included (See Note 2).
Previous consolidated fiscal year (As of March 31, 2019)(Thousands of yen)Amount shown on
consolidated balance sheets

Fair value

Difference(1) Cash and deposits

8,193,697

8,193,697－(2) Notes and accounts receivable–
trade

16,127,374

16,127,374－(3) Securities and investment securities

23,937,888

20,929,013△3,008,874

48,258,961

45,250,086△3,008,874(1) Notes and accounts payable–trade

6,105,195

6,105,195－(2) Short-term loans payable

5,394,122

5,394,122－

300,788

300,788

－2,045,285

2,044,710△574

13,845,391

13,844,816△574

Total assets(3) Income taxes payable(4) Long-term loans payable (*1)
Total liabilities(*1) The current portion of long-term loans payable is included.
Current consolidated fiscal year (As of March 31, 2020)
Amount shown on
consolidated balance sheets(Thousands of yen)
Fair value

Difference(1) Cash and deposits

14,714,069

14,714,069－(2) Notes and accounts receivable–trade

17,697,085

17,697,085－(3) Securities and investment securities

14,997,974

14,997,974－

47,409,129

47,409,129－(1) Notes and accounts payable–trade

6,916,079

6,916,079－(2) Short-term loans payable

4,866,202

4,866,202－(3) Income taxes payable

3,428,200

3,428,200－(4) Long-term loans payable (*1)

2,755,485

2,755,723

238

17,965,967

17,966,206

238

Total assets

Total liabilities(*1) The current portion of long-term loans payable is included.
Note: 1. Methods of calculating fair value of financial instruments and matters concerning securities
Assets(1) Cash and deposits and (2) Notes and accounts receivable–trade
As the fair value of these items approximates their respective book values due to their short maturities,
they are recorded at the pertinent book value.
(3) Securities and investment securities
The fair value of stock, etc. is based on the quoted price in an active market (e.g. a stock exchange),
and the fair value of bonds is based on the said quoted price or the price presented by the relevant financial
institutions, etc. For matters concerning securities with respect to each purpose of holding, refer to (Notes
Related to Securities).
Liabilities(1) Notes and accounts payable-trade, (2) Short-term loans payable and (3) Income taxes payable
As the fair value of these items approximates their respective book values due to their short maturities,
they are recorded at the pertinent book value.
(4) Long-term loans payable
The fair value of these loans is calculated based on the present value obtained by discounting the sumof the principal and the interest accruing thereon at the rate that should apply if a similar borrowing is
newly made.

- 75 -

2. Financial instruments whose fair value is deemed extremely difficult to reasonably determine
Category

Previous consolidated fiscal year
(As of March 31, 2019)(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2020)

606,152

767,663

Unlisted stock, etc.

As these instruments have no quoted market price, and it is deemed extremely difficult to reasonably
determine their respective fair values, they are not included in “(3) Securities and investment securities”.
3. Scheduled amount of redemption after the consolidated closing date of monetary receivables and securities
with a maturity datePrevious consolidated fiscal year (As of March 31, 2019)(Thousands of yen)year

Due after one year
and within five years

8,188,402－－－

16,127,374

－

－

－

－

110,990－－

1,227,014

3,923,792

3,947,170

1,326,149

13,873367,654379,890345,696

25,556,665

4,402,436

4,327,060

1,671,845

Due within one
Deposits
Notes and accounts
receivable–trade
Securities andinvestment securities
Available-for-salesecurities with amaturity date(1) Government
bonds, local
government
bonds, etc.
(2) Corporatebonds(3) Other
Total

Due after five years
and within ten years

Current consolidated fiscal year (As of March 31, 2020)

Deposits
Notes andaccounts
receivable–trade
Securities andinvestment
securities
Available-forsale securities
with a maturity
date(1) Government
bonds, local
government
bonds, etc.
(2) Corporatebonds(3) Other
Total

Due after ten
years(Thousands of yen)

Due within one year

Due after one year
and within fiveyears

14,706,430

－

－

－

17,697,085

－

－

－

108,830－－－

691,143

4,736,027

3,330,979

1,163,033

13,603501,725

217,660

442,281

33,217,092

5,237,752

3,548,639

1,605,315- 76 -

Due after five years
and within ten
years

Due after ten years

4. Scheduled amount of repayment after the consolidated closing date of corporate bonds, long-term loans
payable, lease obligations and other interest-bearing liabilities
Previous consolidated fiscal year (As of March 31, 2019)(Thousands of yen)
Due after one
Due after two Due after three Due after four
Due within one
Due after five
year and within years and within years and within years and within
year
years
two years
three years
four years
five years
Short-term loans payable

5,394,122

－

－

－

－

－

Long-term loans payable

779,820

417,657

49,392

792,1126,304－

6,173,942

417,657

49,392

792,112

6,304

－

Total

Current consolidated fiscal year (As of March 31, 2020)(Thousands of yen)

Due after one
Due after two Due after three Due after four
Due within one
Due after five
year and within years and within years and within years and within
year
years
two years
three years
four years
five years
Short-term loans payable

4,866,202

－

－

－

－

－

Long-term loans payable

187,669

182,724

1,566,226

307,422

237,836

273,606

5,053,871

182,724

1,566,226

307,422

237,836

273,606

Total(Notes Related to Securities)
1. Available-for-sale securities
Previous consolidated fiscal year (As of March 31, 2019)(Thousands of yen)Type

Amount shown on
consolidated balance
sheetsAcquisition cost

(1) Equity Shares

2,298,522

813,727

1,484,794－－－

5,727,589

5,255,153

472,436

473,047

452,208

20,839(3) Other574,181551,790

22,391

Subtotal

9,073,340

7,072,879

2,000,461

377,730

575,829△198,098

110,367

124,416△14,048

5,168,251

5,790,808△622,557

347,163401,895△54,731(3) Other

720,319756,216△35,896

Subtotal

6,723,832

7,649,165△925,332

Difference(2) Bonds
Those whose amountshown on consolidatedbalance sheets exceeds theacquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other(1) Equity Shares(2) Bonds
Those whose amountshown on consolidatedbalance sheets does notexceed the acquisition cost

Total
Note:

1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other

15,797,173

14,722,045
1,075,128
As shares of unlisted stock, etc. (shown in the amount of 205,832 thousand yen on the consolidated balance sheets) haveno quoted market price, and it is deemed extremely difficult to reasonably determine their respective fair values, they
are not included in the table above.

- 77 -

Current consolidated fiscal year (As of March 31, 2020)(Thousands of yen)Type

Amount shown on
consolidated balance
sheetsAcquisition cost

(1) Equity Shares

1,318,938

491,590827,348－－－

6,067,484

5,641,373

426,110464,759

439,434

25,325(3) Other－－－

Subtotal

7,851,182

6,572,398

1,278,784

519,093

576,624△57,530

109,004

124,237△15,233

4,487,652

4,922,242△434,589

354,524

401,895△47,370(3) Other

1,676,516

1,750,861△74,345

Subtotal

7,146,791

7,775,861△629,069

14,997,974

14,348,259

649,715

Difference(2) Bonds
Those whose amountshown on consolidatedbalance sheets exceeds theacquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other(1) Equity Shares(2) Bonds
Those whose amountshown on consolidatedbalance sheets does notexceed the acquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other

Total
Note:

As shares of unlisted stock, etc. (shown in the amount of 405,111 thousand yen on the consolidated balance sheets) haveno quoted market price, and it is deemed extremely difficult to reasonably determine their respective fair values, they are
not included in the table above.

2. Available-for-sale securities sold
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)
Type

Amount sold(1) Equity Shares(Thousands of yen)

Total gain on sale

Total loss on sale

69,69765,0100－－－

1,388,342

71,877

63,823

14,635

1,861

－

1,728

－

22

1,474,403

138,748

63,845(2) Bonds
1) Government bonds,
local government
bonds, etc.
2) Corporate bonds3) Other(3) Other
Total

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)
Type(1) Equity Shares

Amount sold(Thousands of yen)

Total gain on sale

Total loss on sale

70,22932,474－－－－1,228,836

54,574

117,474

14,635

1,861－

108,182

63

24,2491,421,883

88,973

141,724(2) Bonds
1) Government bonds,
local government
bonds, etc.
2) Corporate bonds3) Other(3) Other
Total- 78 -

3. Securities subject to impairment
An impairment of available-for-sale securities totalling 45,000 thousand yen was made in the previous
consolidated fiscal year.
An impairment of available-for-sale securities totalling 283,586 thousand yen and shares of subsidiaries
10,000 thousand yen was made in the current consolidated fiscal year.
In this regard, an impairment of securities is made in full if the fair value at the end of the consolidated
fiscal year is 50% or less of the acquisition cost, and in such amount as deemed necessary in view of theprospects for a price rebound, etc. if the fair value at the end of the consolidated fiscal year falls within therange of 30% to 50% of the acquisition cost.
(Notes Related to Derivative Transactions)
1. Derivative transaction not subject to hedge accounting
Previous consolidated fiscal year (As of March 31, 2019)
Statement is omitted as it is not material.
Current consolidated fiscal year (As of March 31, 2020)
Statement is omitted as it is not material.
2. Derivatives transactions subject to hedge accounting
Currency-related transactions
Previous consolidated fiscal year (As of March 31, 2019)
Hedge accounting
methodType of transactions

Major hedged items

Contract amount(Thousands ofyen)Contract
amount due
after 1 yearperiod(Thousands ofyen)

Anticipatedtransactions in foreign
currencies

352,295－

668

Accounts receivable

230,877－(See Note 2)

583,172－

668

Fair value(Thousands ofyen)

Forward foreign exchangetransactions
Deferral hedge
accounting

Short open position
U.S. dollar

Designated hedge
accounting forforward foreignexchange, etc.

Forward foreign exchangetransactions
Short open position
U.S. dollar
Total

Note: 1. The method of calculating the fair market value is based on the price presented by the counterparty financial institution.
2. Because it is calculated together with the accounts receivable considered as hedged item, the amount of fair value by
designated hedge accounting for forward foreign exchange contracts, etc. is included in the fair value of such accounts
receivable.

- 79 -

Current consolidated fiscal year (As of March 31, 2020)
Hedge accounting
methodType of transactions

Major hedged items

Contract amount(Thousands ofyen)Contract
amount due
after 1 yearperiod(Thousands ofyen)

Fair value(Thousands ofyen)

Anticipatedtransactions in foreign
currencies

407,631－△1,975

Accounts receivable

42,186－(See Note 2)

449,817－△1,975

Forward foreign exchangetransactions
Deferral hedge
accounting

Short open position
U.S. dollar

Designated hedge
accounting forforward foreignexchange, etc.

Forward foreign exchangetransactions
Short open position
U.S. dollar
Total

Note: 1. The method of calculating the fair market value is based on the price presented by the counterparty financial institution.
2. Because it is calculated together with the accounts receivable considered as hedged item, the amount of fair value by
designated hedge accounting for forward foreign exchange contracts, etc. is included in the fair value of such accounts
receivable.

(Notes Related to Retirement Benefits)
1. Outline of retirement benefit plans adopted by the GroupThe Company and some of its consolidated subsidiaries adopt, as a defined benefit scheme, the defined benefit
corporate pension plan and the retirement lump-sum distribution plan. The Submitting Company shifted to thedefined benefit corporate pension plan from the qualifying retirement pension plan as of April 1, 2007. Someof the Company’s domestic consolidated subsidiaries participate in the Smaller Enterprise Retirement
Allowance Mutual Aid System as a defined contribution scheme. Some of the Company’s overseas consolidated
subsidiaries adopt the defined contribution retirement allowance plan.
2.

Defined benefit scheme (including plans employing the simplified method)(1) Reconciliation between the beginning and ending balances of retirement benefit obligations
Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
Balance of retirement benefit obligations
at the beginning of year
Service cost
Interest cost
Actuarial differences generated
Retirement benefits paid
Increase resulting from acquisition of a(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

4,391,542

4,493,421

278,091

279,087

13,04934,675△223,937

13,374△2,985△198,848－－

4,493,421

4,584,049

consolidated subsidiary
Balance of retirement benefit obligations
at the end of year

- 80 -

(2) Reconciliation between the beginning and ending balances of plan assets

Balance of plan assets at the beginning of year
Expected return on plan assets

Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
3,787,985
37,879Retirement benefits paid

28,114
226,635△214,079

Balance of plan assets at the end of year

3,866,535

Actuarial differences generated
Employer contributions(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
3,866,535
38,665△92,271
227,257△194,744
3,845,442(3) Reconciliation between the ending balance of retirement benefit obligations and plan assets combined
and the net defined benefit liability and net defined benefit asset shown on consolidated balance sheets
Previous consolidated fiscal year
(As of March 31, 2019)
4,458,088
Retirement benefit obligations under the funded plans△3,866,535
Plan assets(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2020)
4,547,412△3,845,442

591,552

701,969

Retirement benefit obligations under the unfundedplans

35,33336,637

Net amount of liability and asset shown on
consolidated balance sheets

626,885738,606

Net defined benefit liability

626,885738,606

626,885738,606

Net amount of liability and asset shown on
consolidated balance sheets(4) Amount of retirement benefit expenses and components thereofService cost

Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
278,091

Interest cost
Expected return on plan assets
Recognized actuarial loss
Retirement benefit expenses incurred under(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
279,087

13,04913,374△37,879
38,925△38,665
49,285292,186

303,082

defined benefit scheme(5) Remeasurements of defined benefit plans, net of tax
Remeasurements of defined benefit plans, net of tax (before tax effects) consist of the following.

Actuarial differences

Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)△32,364- 81 -(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)
39,999(6) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans (before tax effects) consist of the following.

Unrecognized actuarial differences
Note:

Previous consolidated fiscal year
(As of March 31, 2019)△163,252(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2020)△203,252

The figures stated above only cover the Company and its consolidated subsidiaries, while the amount shown asremeasurements of defined benefit plans for the previous consolidated fiscal year includes not only the figures
stated above but also the unrecognized items attributable to the companies accounted for under the equity method(Amount corresponding to the Company’s equity interest).

(7) Matters concerning plan assets
1) Rough breakdown of plan assets
The categorical distribution of the total plan assets held is as follows.
Previous consolidated fiscal year Current consolidated fiscal year
(As of March 31, 2019)(As of March 31, 2020)
Life insurance company general accounts
50%
52%
Trust bank special accounts
25%
24%Life insurance company special accounts
25%
24%
Total
100%
100%
Note: Each account comprises a diverse range of investment asset classes centering on domestic bonds, in areflection of the basic policy of securing stable returns.

2) Method of determining the expected long-term rate of return on plan assets
The current and expected future allocations of the plan assets as well as the current and anticipatedlong-term rates of return on the diverse range of asset classes comprising the plan assets are taken into
account in determining the expected long-term rate of return on plan assets.
(8) Matters concerning actuarial assumptions
Major actuarial assumptions
Previous consolidated fiscal year Current consolidated fiscal year
(As of March 31, 2019)(As of March 31, 2020)
Discount rate
0.3%
0.3%
Expected long-term rate of return on plan assets
1.0%
1.0%
1.0～2.8%
1.0～2.8%
Expected rates of salary increase3.

Defined contribution scheme
The total amount required for contributions to the defined contribution plans of some of the Company’s
domestic consolidated subsidiaries and overseas consolidated subsidiaries was 72,407 thousand yen for theprevious consolidated fiscal year (From April 1, 2018 to March 31, 2019) and 77,281 thousand yen for thecurrent consolidated fiscal year (From April 1, 2019 to March 31, 2020).

(Notes Related to Stock Options, etc.)
1. Amount recorded as expenses and item of expenses associated with stock options(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

53,63855,402Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

7,341

16,422

Share-based compensation expenses in cost of sales
and selling, general and administrative expenses

2. Amount recorded as income due to forfeiture by non-exercise of rights(Thousands of yen)

Gain on reversal of share acquisition rights- 82 -

3. Outline and scale of stock options and changes(1) Outline of stock options
Directors’ remuneration
stock option in 2014

Directors’ retirement bonuses
stock option in 2005

Employees, etc.
stock option in 2014

Category and number ofgrantees

6 directors of the Company

16 directors of the Company

163 employees and advisors of theCompany, and 10 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

39,700 shares of common stock

93,000 shares of common stock

216,500 shares of common stock

Grant dateAugust 1, 2005

August 18, 2014

August 18, 2014

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

Conditions for vesting

No condition for vesting is set, but
the conditions for exercising therights are as follows:(1) Eligible person may exercise thestock acquisition rights only on theoccasion of his or her retirement fromthe post of director of the Company;
provided, however, that the eligible
person shall exercise the stockacquisition rights in the period
between the date immediately
following the date of his or her
retirement (hereinafter referred to as
the “Date of Commencing Exerciseof Right”) and the date elapsing ten(10) days from the Date ofCommencing Exercise of Right (bothdates inclusive).
(2) In the event of the eligible
person’s death, among his or her
heirs, only the spouse, children andlineal ascendants (first degree) of theeligible person may exercise thestock acquisition rights; provided,
however, that such heirs shall
exercise the stock acquisition rights
in the period between the date
immediately following the date ofretirement of the eligible person bydeath and the date elapsing three (3)months from such date (both dates
inclusive).

1 year and 11 months(August 18, 2014 through June30, 2016)

1 year and 11 months(August 18, 2014 through June30, 2016)

July 1, 2016 through June 30, 2019

July 1, 2016 through June 30, 2019

Requisite service period

Exercise period

N.A.
August 1, 2005 through July 31,
2025- 83 -

Directors’ remuneration
stock option in 2015

Employees, etc.
stock option in 2015

Directors’ remuneration
stock option in 2016

5 directors of the Company

176 employees and advisors of theCompany, and 20 directors andemployees of subsidiaries of theCompany

5 directors of the Company

Number of stock options(See Note)

78,000 shares of common stock

241,400 shares of common stock

73,000 shares of common stock

Grant dateAugust 17, 2015

August 17, 2015

August 16, 2016

Conditions for vesting

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

Requisite service period

1 year and 11 months(August 17, 2015 through June30, 2017)

1 year and 11 months(August 17, 2015 through June30, 2017)

1 year and 11 months(August 16, 2016 through June30, 2018)

Exercise period

July 1, 2017 through June 30, 2020

July 1, 2017 through June 30, 2020

July 1, 2018 through June 30, 2021

Category and number ofgrantees

Directors’ remuneration
stock option in 2017

Employees, etc.
stock option in 2016

Employees, etc.
stock option in 2017

Category and number ofgrantees

187 employees and advisors of theCompany, and 14 directors andemployees of subsidiaries of theCompany

5 directors of the Company

194 employees and advisors of theCompany, and 10 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

234,000 shares of common stock

75,000235,300 shares of common stock

Grant dateAugust 16, 2016

August 16, 2017

August 16, 2017

Conditions for vesting

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising the rights
is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

Requisite service period

1 year and 11 months(August 16, 2016 through June30, 2018)

1 year and 11 months(August 16 2017 through June30, 2019)

1 year and 11 months(August 16, 2017 through June30, 2019)

Exercise period

July 1, 2018 through June 30, 2021

July 1, 2019 through June 30, 2022

July 1, 2019 through June 30, 2022

- 84 -

shares of common stockDirectors’ remuneration
stock option in 2018

Employees, etc.
stock option in 2018

Directors’ remuneration
stock option in 20194 directors of the Company

Category and number ofgrantees

5 directors of the Company

211 employees and advisors of theCompany, and 11 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

75,000 shares of common stock

257,300 shares of common stock

55,000shares of common stock

Grant dateAugust 16, 2018

August 16, 2018

August 16, 2019

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including anadvisor and a counselor) or adirector or an employee of a
subsidiary of the Company(including an advisor) at the timeof exercising the rights.

Requisite service period

1 year and 11 months(August 16, 2018 through June30, 2020)

1 year and 11 months(August 16, 2018 through June30, 2020)

1 year and 11 months(August 16, 2019 through June 30,
2021)

Exercise period

July 1, 2020 through June 30, 2023

July 1, 2020 through June 30, 2023

July 1, 2021 through June 30, 2024

Conditions for vesting

Employees, etc.
stock option in 2019
Category and number ofgrantees

208 employees and advisors of theCompany, and 14 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

271,000 shares of common stock

Grant dateAugust 16, 2019

Conditions for vesting

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

Requisite service period

1 year and 11 months(August 16, 2019 through June 30,
2021)

Exercise period

July 1, 2021 through June 30, 2024

Note:

Stated in terms of shares of stock.

- 85 -

(2) Scale of stock options granted and changes
Stock options that existed during the current consolidated fiscal year (fiscal year ended March 31, 2020) arecovered, with the number of stock options stated in terms of shares of stock.
(a) Number of stock options
Directors’ retirement
bonuses
stock option in 2005

Directors’ remuneration
stock option in 2014

Employees, etc. stock
option in 2014

At the end of the previous
consolidated fiscal year

－

－

－

Granted－－－Forfeited－－－

Vested－－－Outstanding

－

－

－

27,10020,80073,300－－－Exercised

27,100－17,800Forfeited－

20,80055,500Exercisable

－

－

－

Directors’ remuneration
stock option in 2015

Employees, etc. stock
option in 2015

Directors’ remuneration
stock option in 2016

At the end of the previous
consolidated fiscal year

－

－

－

Granted－－－Forfeited－－－

Vested－－－Outstanding

－

－

－

61,000146,400

45,200－－－Exercised

21,80023,8007,200

Forfeited

－

8,000

－

39,200114,600

38,000

Before vested

After vested(Shares)(Shares)At the end of the previous
consolidated fiscal year
VestedBefore vested

After vested
At the end of the previous
consolidated fiscal year

(Shares)(Shares)

VestedExercisable- 86 -

Employees, etc. stock
option in 2016

Directors’ remuneration
stock option in 2017

Employees, etc. stock
option in 2017

At the end of the previous
consolidated fiscal year－

75,000235,200

Granted－－－Forfeited

－

－

100

Vested－75,000235,100

Outstanding

－

－

－

183,400－－－

75,000235,100

Exercised57,600－－Forfeited

8,000

－

1,500

Exercisable

117,800

75,000233,600

Before vested

After vested(Shares)(Shares)At the end of the previous
consolidated fiscal year
VestedDirectors’ remuneration
stock option in 2018

Employees, etc. stock
option in 2018

Directors’ remuneration
stock option in 201975,000255,900－

Granted－－55,000Forfeited

－

2,500

－

Vested－－－75,000253,400

55,000At the end of the previous
consolidated fiscal year

－

－

－

Vested－－－Exercised－－－

Forfeited－－－

Exercisable

－

－

－

Before vested(Shares)At the end of the previous
consolidated fiscal year

Outstanding
After vested(Shares)- 87 -

Employees, etc. stock
option in 2019
Before vested(Shares)At the end of the previous
consolidated fiscal year－

Granted

271,000

Forfeited－

Vested－Outstanding
After vested

271,000(Shares)At the end of the previous
consolidated fiscal year－

Vested－Exercised－

Forfeited－

Exercisable－- 88 -

(b) Unit price information
Directors’ retirement
bonuses
stock option in 2005

Directors’ remuneration
stock option in 2014

Employees, etc. stock
option in 2014

Exercise price

(Yen)

1

741

741

Average stock price at the timeof exercise

(Yen)

905

－

834

Fair value at the grant date

(Yen)

－

182

182

Directors’ remuneration
stock option in 2015

Employees, etc. stock
option in 2015

Directors’ remuneration
stock option in 2016

Exercise price

(Yen)

867

867

536

Average stock price at the timeof exercise

(Yen)

1,019

998

855

Fair value at the grant date

(Yen)

168

168

98

Employees, etc. stock
option in 2016

Directors’ remuneration
stock option in 2017

Employees, etc. stock
option in 2017

Exercise price

(Yen)

536

1,004

1,004

Average stock price at the timeof exercise

(Yen)

981

－

－

Fair value at the grant date

(Yen)

98

188

188

Directors’ remuneration
stock option in 2018

Employees, etc.
stock option in 2018

Directors’ remuneration
stock option in 2019

Exercise price

(Yen)

1,104

1,104

922

Average stock price at the timeof exercise

(Yen)

－

－

－

Fair value at the grant date

(Yen)

168

168

168

Employees, etc.
stock option in 2019
Exercise price

(Yen)

922

Average stock price at the timeof exercise

(Yen)

－

Fair value at the grant date

(Yen)

168

- 89 -

4. Method of estimating fair value of stock options
Method of estimating fair value of directors’ remuneration stock option in 2019 and employees, etc. stock option
in 2019 granted in the current consolidated fiscal year is as follows.
1) Valuation technique used
Black-Scholes model
2) Principal parameters and method of estimation
Directors’ remuneration
stock option in 2019

Employees, etc.
stock option in 2019

Stock price volatility(See Note 1)

36.85％

36.85％

Expected life

(See Note 2)

3 years and 6 months

3 years and 6 months

Expected dividends(See Note 3)

30.00 yen per share

30.00 yen per share

Risk-free interest rate

(See Note 4)

0.00％

0.00％

Note:

1.
2.
3.
4.

Calculated based on the actual stock prices during the three (3) years and six (6) months from February 2016 toAugust 2019.
As reasonable estimates are difficult to make due to a lack of sufficient accumulation of data, the expected life
is estimated on the presumption that the rights are exercised at the midpoint of the exercise period.
Based on the actual amount of dividends for the consolidated fiscal year ended March 31, 2019.
Japanese government bond yield for the period corresponding to the expected life.

5. Method of estimating the number of stock options vested
Only the actual number of forfeited stock options is reflected because it is basically difficult to reasonably estimate
the number of stock options that will be forfeited in the future.
(Notes Related to Tax Effect Accounting)
1. Breakdown by major occurrence factor of deferred tax assets and deferred tax liabilities(Thousands of yen)Previous consolidated
fiscal year
(As of March 31, 2019)

Current consolidated
fiscal year
(As of March 31, 2020)

Deferred tax assets
Impairment loss
Tax loss carry-forward(See Note)

Loss on valuation of investment securities
Allowance for doubtful accounts
Loss on valuation of inventories
Provision for bonuses
Other
Deferred tax assets subtotal
Valuation allowance related to Tax loss carry-forward(See Note)
Valuation allowance related to the total of deductible
temporary differences etc.
Valuation allowance subtotal

491,994357,974

323,623
248,824

297,674
224,413

148,971
157,705

201,938
176,244618,106

701,708

2,111,626

2,451,948△228,827△357,974△939,734△937,718△1,168,562△1,295,692

943,064

1,156,256△969,860△328,569△213,045△207,105△86,357△96,869△55,631△56,143△1,481,656△531,926△538,591

624,329

Deferred tax assets total
Deferred tax liabilities
Retained earnings of subsidiaries and associates
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets
Other
Deferred tax liabilities total

360,984
253,410

Net amount of deferred tax assets (liabilities)- 90 -

Note: Amount of Tax loss carry-forward and deferred tax assets thereof by maturity date of carryforward
Previous consolidated fiscal year (As of March 31, 2019)(Thousands of yen)
Due after
Due after
Due after
Due after
Due within
one year
Due after five
two years
three year
four year
Total
one year
and within
years
and within
and within
and within
two years
three years
four years
five years
Tax loss carryforward (※)
Valuation
allowance－－－

17,338－236,072

253,410－－－△17,338－△211,489△228,827

Deferred tax
－
－
－
－
－
24,582
assets(※) "Tax loss carry-forward" indicates the amount multiplied by Normal effective statutory tax rate.
Current consolidated fiscal year (As of March 31, 2020)
Due after
Due after
Due within
one year
two years
one year
and within
and within
two years
three years
Tax loss carryforward (※)
Valuation
allowance

24,582(Thousands of yen)
Due after
three year
and withinfour years

Due after
four year
and within
five years

Due after five
years

Total

－

－

17,338－57,096

283,538

357,974－－△17,338－△57,096△283,538△357,974

Deferred tax
－
－
－
－
－
－
assets(※) "Tax loss carry-forward" indicates the amount multiplied by Normal effective statutory tax rate.

－

2. Breakdown by item of major causes of any significant difference between the normal effective statutory tax rate andthe effective income tax rate after tax effect accounting
Previous consolidated
fiscal year
(As of March 31, 2019)
Normal effective statutory tax rate
(Adjustments)
Items permanently excluded from taxable income
Difference in tax rates with overseas subsidiaries
Special tax deductions
Amendment for consolidation of loss (gain) on salesof shares of subsidiaries and associates
Valuation allowance
Dividends income eliminated in consolidation
Impairment loss of goodwill
Retained earnings of subsidiaries and associates
Other
Effective income tax rate after tax effect accounting- 91 -

Current consolidated
fiscal year
(As of March 31, 2020)

30.5%

30.5%

△2.4%
△2.0%
△1.3%
－

△3.1%
△2.8%
△2.7%

△1.4%
3.0%
－
1.6%
△2.7%
25.3%

4.4%
3.7%
1.7%
1.2%
2.8%
85.8%

50.1%

(Notes Related to Asset Retirement Obligations)
Asset retirement obligations that are recorded in the consolidated balance sheets(1) Outline of asset retirement obligations
These are restoration obligations, etc. in connection with real estate rental agreements for certain factories andoffices.
(2) Method of calculating the amount of asset retirement obligations
An estimated useful life of thirty-one (31) years and a discount rate at 1.9% are used in calculating the amountof asset retirement obligations.
(3) Changes in the aggregate amount of asset retirement obligations(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)
Balance at the beginning of year
Adjustment due to lapse of time
Increase resulting from acquisition of aconsolidated subsidiary
Other increase or decrease (: decrease)
Balance at the end of year

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

92,837164

92,502
168

－

－

△500

△360

92,502

92,310(Notes Related to Real Properties for Rent, etc.)
Statement is omitted as the aggregate value of the real properties for rent, etc. is not material.
(Segment Information, etc.)[Segment Information]
1. Outline of reportable segments
Reportable segments of the Company are those constituent units of the Company who make available separate
financial information and also are subject to periodic review by the board of directors aimed at determining the
distribution of management resources and evaluating business results.
The Company has manufacturing and sales systems in place for each category of product and service at its head
office, etc. and conducts business activities based on the comprehensive strategies that the Company develops forthe domestic and overseas markets as to its products and services.
The Company’s business, therefore, consists of several segments that represent each category of product andservice and are based on the said manufacturing and sales systems. Such segments are the four (4) reportablesegments of the Company, i.e. “Electronic materials business”, “Industrial application structural materials business”,“Electrical insulating materials business” and “Display materials business”.
“Electronic materials business” produces materials for flexible and rigid printed circuit boards, etc. “Industrial
application structural materials business” produces filament winding molded products, honeycomb panels andprepregs for aircraft, pultrusion molded products and FRP ski sheets, etc. “Electrical insulating materials business”
produces glass cloth, glass tapes and prepregs for electrical insulation, etc. “Display materials business” produces
3D display filters and special optical films, etc.
2.

Method of calculating the amount of net sales, income or loss, assets, liabilities and other items with respect to eachreportable segment
The accounting methods applied to the reported business segments are basically the same as those stated in the(Important Matters Underlying Preparation of Consolidated Financial Statements).
The amount of income or loss recorded for each reportable segment is based on the operating income or loss
(before amortization of goodwill).
Inter-segment revenues and transfers are based on the prevailing market price.

- 92 -

3.

Information on the amount of net sales, income or loss, assets, liabilities and other items with respect to eachreportable segment
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)(Thousands of yen)
Reportable segment
Industrial
application
structural
materials

Electronicmaterials
Net sales
Net sales to externalcustomers
Inter-segment sales
or transfers
Total

Electricalinsulating
materials

Displaymaterials

Subtotal

Other(See Note)

Total

28,770,006

8,395,152

3,127,617

3,699,894

43,992,670

735,573

44,728,243

－

－

－

－

－

774,757

774,757

28,770,006

8,395,152

3,127,617

3,699,894

43,992,670

1,510,331

45,503,001

Segment income

2,620,863

1,393,245

430,901

114,841

4,559,852

192,791

4,752,643

Segment assets

28,191,582

8,187,279

3,224,618

11,269,843

50,873,325

1,229,002

52,102,328

1,397,503

170,987

83,532130,836

1,782,860

21,9991,804,859－－－

8,021,428

8,021,428－

8,021,428

1,958,890

168,807

81,738144,156

2,353,593

6,703

2,360,296

Other
Depreciation
Investment incompanies
accounted for underthe equity method
Increase inproperty, plant andequipment andintangible assets

Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes therelated goods sales, the logistics-related operations and other businesses, etc.

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)(Thousands of yen)
Reportable segment
Other(See Note)

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

29,765,050

8,974,588

2,984,156

3,427,412

45,151,206

818,794

45,970,001

－

－

－

－

－

796,455

796,455

29,765,050

8,974,588

2,984,156

3,427,412

45,151,206

1,615,250

46,766,457

Segment income

2,331,392

1,475,260

366,888

235,241

4,408,782

222,173

4,630,955

Segment assets

28,747,464

9,329,352

3,185,554

3,062,923

44,325,294

1,309,738

45,635,032

1,449,803

180,468

84,873

142,537

1,857,683

21,168

1,878,851－－－

217,982

217,982－

217,982

1,548,869

193,481

142,372

219,016

2,103,740

2,636

2,106,376

Net sales
Net sales to externalcustomers
Inter-segment sales
or transfers
Total

Total

Other
Depreciation
Investment incompanies
accounted for underthe equity method
Increase in property,
plant and equipment
and intangible assets

Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes the related
goods sales, the logistics-related operations and other businesses, etc.

- 93 -

4.

Difference between the total amount of reportable segments and the pertinent amount shown on the consolidated
financial statements as well as the key components of such difference (Matters concerning difference adjustment)(Thousands of yen)
Net sales

Previous consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

43,992,670

45,151,206

Net sales in the category “Other”

1,510,331

1,615,250

Elimination of inter-segment transactions△774,757△796,455

Net sales shown on the consolidated financial
statements

44,728,243

45,970,001(Thousands of yen)

IncomePrevious consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

4,559,852

4,408,782

Income in the category “Other”

192,791

222,173

Elimination of inter-segment transactions△105,450△92,405

Amortization of goodwill△58,482△43,861△1,443,860△1,707,227△25,287△25,396

Unallocated corporate expenses (See Note)
Adjustment of inventories

Operating income shown on the consolidated financial
3,119,562
2,762,064
statements
Note: “Unallocated corporate expenses” are mostly general and administrative expenses that are not attributable to any of the reportablesegments.
(Thousands of yen)
AssetsPrevious consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

50,873,325

44,325,294

Assets in the category “Other”
Elimination of claims to administrative departments of
the head office
Unallocated corporate assets (See Note)

1,229,002

1,309,738△453,463△673,953

21,472,523

26,773,801△25,287△25,396

Adjustment of inventories

Total assets shown on the consolidated financial
73,096,100
71,709,484
statements
Note: “Unallocated corporate assets” are mostly investment securities, etc. that are not attributable to any of the reportable segments.
(Thousands of yen)Amount shown on the
Total of reportable
Other
Adjustment
consolidated financial
segments
statements
Other item

Depreciation

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

1,782,860

1,857,683

21,99921,16896,722

104,112

1,901,582

1,982,964

Increase in property, plantand equipment and2,353,593 2,103,740
6,703
2,636
183,553
167,555 2,543,849 2,273,932
intangible assets
Note: The adjustment to “Increase in property, plant and equipment and intangible assets” represents capital investment in the assets
used for the common corporate purpose.

- 94 -

[Related Information]
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)
1. Information by product and service(Thousands of yen)

Net sales to externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other28,770,006

8,395,152

3,127,617

3,699,894

735,573

Total

44,728,243

2. Information by region(1) Net sales(Thousands of yen)Japan

P.R. China

20,775,148

13,236,723

Other country or
regionTotal

10,716,371

44,728,243

Note: Net sales are categorized by country or region on the basis of customer locations.

(2) Property, plant and equipment(Thousands of yen)Japan

Taiwan9,495,215

1,759,191

Other country or
regionTotal

744,046

11,998,454

3. Information by major customer(Thousands of yen)
Customer name

Net sales

Sumitomo Shoji Chemicals Co., Ltd.

Relevant segment
5,664,735

Electronic materials businessCurrent consolidated fiscal year (From April 1, 2019 to March 31, 2020)
1. Information by product and service(Thousands of yen)

Net sales to externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other29,765,050

8,974,588

2,984,156

3,427,412

818,794

2. Information by region(1) Net sales(Thousands of yen)Japan
19,588,099

P.R. China
13,572,138

Other country or
regionTotal

12,809,763

45,970,001

Note: Net sales are categorized by country or region on the basis of customer locations.

(2) Property, plant and equipment(Thousands of yen)Japan
9,289,124

Taiwan2,916,654

Other country or
regionTotal

719,358- 95 -

12,925,137

Total

45,970,001

3. Information by major customer(Thousands of yen)
Customer name

Net sales

Sumitomo Shoji Chemicals Co., Ltd.

Relevant segment
5,381,162

Electronic materials business[Information on impairment loss on non-current assets with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)(Thousands of yen)
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Unallocated/
Eliminated

Other

Total

Impairment loss

－

－

－

96,725－－96,725

Impairment lossof goodwill

－

－

－

－

－

－

－

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)(Thousands of yen)
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Unallocated/
Eliminated

Other

Total

Impairment loss

369,122－－

106,689－－475,811

Impairment lossof goodwill

175,447

－

－

－

－

－

175,447[Information on amortization of goodwill and unamortized balance with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)(Thousands of yen)
Industrial
application
structural
materials

Electricalinsulating
materials

58,482

－

－

－

－

－

58,482

219,309

－

－

－

－

－

219,309

Electronicmaterials
Amortization in
the year
Balance at theend of year

Displaymaterials

Unallocated/
Eliminated

Other

Total

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)(Thousands of yen)
Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other

Unallocated/
Eliminated

Total

Amortization in
－
－
－
－
－
43,861
43,861the year
Balance at the end
－
－
－
－
－
－
－
of year
Note: An impairment loss of goodwill of 175,447 thousand yen is shown as extraordinary losses in electronic materials.

[Information on gain on bargain purchase with respect to each reportable segment]
No applicable matter.

- 96 -

(Information on Related Parties)
1. Transactions with related parties
Transactions between the company submitting the consolidated financial statements and related parties
Directors and major shareholders (individuals only), etc. of the company submitting the consolidated financial
statements
Previous consolidated fiscal year (From April 1, 2018 to March 31, 2019)
Capital stock
Full name orType

corporate nameor investment
Locationin capital(Thousands ofRatio ofBusiness outline voting rightor occupation

Chairman,

Sanji Arisawaof the

－

－

Note:

Representative
Director of theCompany

Relationship

Description

transactionof transaction (Thousands of(held), etc.

yen)
Directorholding

Balance at

Amount of

the end of
Item

yen)

0.87%
directly
heldyear(Thousandsof yen)Exercise of－

the right of

11,930－－stock option

Company

Terms of transactions and the policy for determining the terms of transactions, etc.
The table above covers the exercises in the previous consolidated fiscal year of the rights of stock option granted under aresolution at the Board of Directors’ Meeting of the Company of June 26, 2014.
The column “Amount of transaction” indicates the amount obtained by multiplying the number of shares of stock granted
through the exercise in the previous consolidated fiscal year of the pertinent right of stock option by the paid-in amount per
share.

Current consolidated fiscal year (From April 1, 2019 to March 31, 2020)
Capital stock
Full name orType

corporate nameor investment
Locationin capital(Thousands ofRatio ofBusiness outline voting rightor occupation

holding

Relationship

Description

transactionof transaction (Thousands of(held), etc.

yen)

Balance at

Amount of

the end of
Item

year
(Thousands

yen)of yen)Representative
Director

Director andYuta Arisawaof the－Company－ Chief Executive

0.24%
directly
held

Exercise of－

Officer of thethe right of

11,964－stock option

Company

Note:

Terms of transactions and the policy for determining the terms of transactions, etc.
The table above covers the exercises in the current consolidated fiscal year of the rights of stock option granted under aresolution at the Board of Directors’ Meeting of the Company of June 26, 2015.
The column “Amount of transaction” indicates the amount obtained by multiplying the number of shares of stock granted
through the exercise in the previous consolidated fiscal year of the pertinent right of stock option by the paid-in amount per
share.

2.

Notes with respect to parent or important affiliated companies(1) Information on parent
No applicable matter.
(2) Condensed financial information on important affiliated companies
No applicable matter.

- 97 -－

(Per Share Information)
Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

Net assets per share

1,397.78 yen

1,387.76 yen

Net income per share

79.15 yen

6.14 yen

Fully diluted net income per share
78.70 yen
Note: The bases of calculation of net income per share and fully diluted net income per share are as follows.
Previous consolidated fiscal year
(From April 1, 2018
to March 31, 2019)6.12 yen

Current consolidated fiscal year
(From April 1, 2019
to March 31, 2020)

Net income per share
Profit attributable to owners of the parent(Thousands of yen)Amount not attributable to common
stockholders (Thousands of yen)
Profit attributable to owners of the parent
pertaining to common stock (Thousands ofyen)
Average number of shares of common stockduring the year

2,861,378

212,792------

2,861,378

212,792

36,150,184

34,682,121

---

---

208,623

103,772(208,623)(103,772)

Fully diluted net income per share
Adjustment of profit attributable to ownersof the parent (Thousands of yen)
Increase in the number of shares of common
stock(Number of shares subject to stockacquisition rights included in the figure
above)
Outline of dilutive shares that were notincluded in the calculation of fully diluted net
income per share due to a lack of dilutive effectSix (6) types of stock acquisitionrights:Resolution at the Board of Directors’Meeting of June 26, 2015 (61,000
shares);Resolution at the Ordinary General
Meeting of Shareholders of June 26,2015 (146,400 shares);
Resolution at the Board of Directors’Meeting of June 28, 2017 (75,000
shares);Resolution at the Ordinary General
Meeting of Shareholders of June 28,2017 (235,200 shares) ;Resolution at the Board of Directors’Meeting of June 28, 2018 (75,000
shares); andResolution at the Ordinary General
Meeting of Shareholders of June 28,2018 (255,900 shares).For details, see
IV. Status of the Submitting Company- 1. Status of Shares, etc. - (2) Statusof Stock Acquisition Rights, etc.

(Significant Subsequent Events)
No applicable matter.
- 98 -

Eight (8) types of stock acquisitionrights:Resolution at the Board of Directors’Meeting of June 26, 2015 (39,200
shares);Resolution at the Ordinary General
Meeting of Shareholders of June 26,2015 (114,600 shares);
Resolution at the Board of Directors’Meeting of June 28, 2017 (75,000
shares);Resolution at the Ordinary General
Meeting of Shareholders of June 28,2017 (233,600 shares) ;Resolution at the Board of Directors’Meeting of June 28, 2018 (75,000
shares);Resolution at the Ordinary General
Meeting of Shareholders of June 28,2018 (253,400shares) ; Resolution at
the Board of Directors’ Meeting ofJune 27, 2019 (55,000 shares); andResolution at the Ordinary General
Meeting of Shareholders of June 27,
2019 (271,000 shares).
For details, see IV. Status of theSubmitting Company - 1. Status of
Shares, etc. - (2) Status of Stock
Acquisition Rights, etc.

(Consolidated Supplementary Schedules)[Schedule of corporate bonds]
Company

Satosen Co.,Ltd.

Satosen Co.,
Ltd.

Total

Issue

First series
unsecuredbond (Private
placement
bond)
Second series
unsecuredbond (Private
placementbond)－Issue date

Balance atBalance at end
beginning ofof current
current period
period(Thousands of (Thousands of
yen)
yen)

Interest rate(%)

Collateral

Maturity date

March 31,2017

70,000(20,000)

50,000(20,000)

0.21

None

April 15,
2022

April 28,2017

94,800(16,800)

78,000(16,800)

0.25

None

May 24, 2024－

164,800(36,800)

128,000(36,800)－－－

Note: 1. The parenthesized figures represent the outstanding balance of redemptions due within 1 year.
2. Redemption amounts within five years of the consolidated closing date are shown below.
Within one year
(Thousands of yen)

1-2years(Thousands of yen)

36,8002-3years(Thousands of yen)

36,8003-4years(Thousands of yen)

26,8004-5years(Thousands of yen)

16,80010,800[Schedule of loans payable, etc.]
Category

Balance at theBalance at the end
Average
beginning of currentof current period interest rate Repayment period
period(Thousands of yen)(%)(Thousands of yen)
5,394,122

4,866,202

1.05

---

Current portion of long-term loans payable

779,820

187,669

0.37---

Current portion of lease obligations

17,53560,1384.01---

1,265,465

2,567,816

0.92021 to 2025

13,201

391,6723.10

2021 to 2038

115,173

99,1701.64---

155,155

55,985

1.612021 to 2022

Total

7,740,472

8,228,653

－

Note:

1. The column “Average interest rate” indicates the weighted average interest rate to the balance of loans payable, etc. at theend of the current period.

Short-term loans payable

Long-term loans payable (excluding the current portion)
Lease obligations (excluding the current portion)
Other interest-bearing liabilities
Current portion of long-term accounts payable - other
Other interest-bearing liabilities
Long-term accounts payable - other(excluding the current portion)- 99 ----

2. The scheduled amount of repayment of long-term loans payable (excluding the current portion) , lease obligations(excluding the current portion) and long-term accounts payable - other (excluding the current portion) over the five (5) years
after the consolidated closing date is as follows.
(Thousands of yen)
Due after four years
Due after one year andDue after two years
Due after three years
and within five
within two years
and within three years
and within four years
years
Long-term loans payable

182,724

1,566,226

307,422

237,836

Lease obligations

48,87051,35951,68548,661Long-term
accounts
payable - other

50,805

5,179

－

－

[Schedule of asset retirement obligations]
As the amount of asset retirement obligations as of the beginning of the current consolidated fiscal year and as of theend of the current consolidated fiscal year is not more than one hundredth (1/100) of the aggregate amount of liabilities
and net assets as of the beginning of the current consolidated fiscal year and as of the end of the current consolidated
fiscal year respectively, statement has been omitted under the provisions of Article 92-2 of the Regulations for
Terminology, Forms and Preparation Methods of Consolidated Financial Statements.

- 100 -

(2) Other
Quarterly Information, etc. in the Current Consolidated Fiscal Year
(Cumulative period)
Net sales(Thousands of yen)
Income before income
taxes(Thousands of yen)
Profit attributable toowners of the parent(Thousands of yen)
Net income per share(Yen)(Accounting period)
Net income per share(Yen)First quarter

Second quarter

Third quarter

Current consolidated
fiscal year

10,547,117

22,599,910

34,327,306

45,970,001

593,277

1,437,402

2,851,888

3,122,437

250,373△894,114△118,692

212,792

6.91△24.81

△3.38

6.14

First quarter
6.91

Second quarter△31.93- 101 -

Third quarter
23.20

Fourth quarter
9.97

2. Financial Statements, etc.
(1) Financial Statements
1) Balance Sheets(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

AssetsCurrent assets
Cash and deposits
Notes receivable-trade

3,806,291*2, *5*2

Accounts receivable-trade
Electronically recorded monetary claimsoperating
Securities

9,554,448

443,288*2352,251

8,662,769*2

9,754,950

76,272

197,9231,300,765

1,457,995

Merchandise and finished goods

2,439,805

2,051,510

Work in process

1,079,682

1,176,573

Raw materials and supplies

1,323,743

1,335,720

46,11667,823

Prepaid expenses*2

Accrued income
Short-term loans receivable from subsidiaries
and associates
Other

151,078*2

1,476,197*2

547,91298,727
1,352,654*2

591,535

Allowance for doubtful accounts△518,819△509,459

Total current assets

20,835,103

27,482,656

Non-current assets
Property, plant and equipment
Buildings*1

3,799,000*1

3,698,498

Structures*1

312,873*1

322,974

Machinery and equipment*12,202,800*12,409,985

Vehicles

18,025

21,335Tools, furniture and fixtures*1

170,988*1

214,155Land*1

1,376,078*1

1,376,078

Lease assets

2,202

107,740

Construction in progress

85,112

83,285

7,967,081

8,234,053

Total property, plant and equipment- 102 -

(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Intangible assets
Software

31,63473,202

Other

9,895

9,755

Total intangible assets

41,53082,958Investment securities

13,648,094

12,928,949

Shares of subsidiaries and associates

2,866,952

2,072,296

132,706

6,764

Long-term prepaid expenses

19,157

175,605

Deferred tax assets

237,010523,583

Investments and other assets

Long-term loans receivable

Other

80,83342,298

Allowance for doubtful accounts△139,603△13,166

Total investments and other assets

16,845,150

15,736,331

24,853,762

24,053,343

45,688,866

51,535,999

Total non-current assets
Total assets
Liabilities
Current liabilities
Notes payable-trade*2, *5

223,893*2

160,725*2

3,161,070*2

4,101,207

Electronically recorded obligations-operating*2, *5

1,507,061*2

1,219,342

Short-term loans payable*1, *4

965,000*1, *4500,000

Current portion of long-term loans payable*1

714,848*1

133,332

Accounts payable-other*2629,354*2

679,359

Accounts payable-trade

Accrued expenses

89,864

94,241

Income taxes payable

118,157

3,135,959

Unearned revenue

1,596

1,584

Lease obligations

603

19,637

Deposits received

27,03427,740345,792

365,997

781,332

197,5818,565,608

10,636,709

Provision for bonuses
Other

*5

Total current liabilities- 103 -

(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Non-current liabilities－

Long-term loans payable
Provision for retirement benefits*1813,890428,299

498,716－

451,058

Lease obligations

1,527

89,256

Asset retirement obligations

28,652

28,820Other

92,96186,059Total non-current liabilities

551,441

1,967,801

9,117,050

12,604,511

7,541,693

7,594,026

Legal capital surplus

6,653,615

6,706,017

Total capital surplus

6,653,615

6,706,017

Legal retained earnings

748,262748,262

Other retained earnings
Reserve for advanced depreciation of noncurrent assets
General reserve

18,324

17,06618,020,000

19,020,000

2,705,677

7,413,243

21,492,264

27,198,572△4,764△3,204,797

35,682,808

38,293,819

744,588471,520

Total valuation and translation adjustments

744,588471,520

Share acquisition rights

144,419

166,148

36,571,816

38,931,487

45,688,866

51,535,999

Provision for loss on guarantees

Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus

Retained earnings

Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities

Total net assets
Total liabilities and net assets- 104 -

2) Statements of Income(Thousands of yen)Previous business year
(From April 1, 2018
to March 31, 2019)

Current business year
(From April 1, 2019
to March 31, 2020)

Net sales*129,269,122*1

31,635,474

Cost of sales*1

25,092,404*1

27,168,243

Gross profit
Selling, general and administrative expenses

4,176,717*1,*2

Operating income

2,643,712

4,467,230*1,*2

1,533,005

2,839,985
1,627,245

Non-operating income
Interest and dividends income*1

Foreign exchange gains

825,078*1

782,379－

142,935

Rent income*1

250,132*1

239,284

Other*1

164,081*1

174,889

Total non-operating income

1,382,227

1,196,552

Non-operating expenses
Interest expenses

4,349

*1

7,917

Commission for purchase of treasury shares－

63,997

Loss on redemption of investment securities

62,541

138,830

Rent expenses

168,684

204,959

Provision of allowance for doubtful accounts

59,410－Other

17,274

42,130Total non-operating expenses
Ordinary income

312,259

457,8362,602,974

2,365,961

Extraordinary income
Gain on sales of non-current assets

800

Gain on sales of investment securities

65,010

3,917

Other

15,10916,422

Total extraordinary income

80,9209,033,948*3

9,013,608

Extraordinary losses－

Loss on valuation of investment securities
Impairment loss

*1,*4

933,586－

96,725

Provision for loss on guarantees

－

*1,*5

451,058

Provision of allowance for doubtful accounts

－

*1,*6

60,000Other

55,88626,300Total extraordinary losses

152,6111,470,946

Income before income taxes

2,531,282

9,928,964

Income taxes-current

559,485

3,302,828

Income taxes-deferred

24,377△166,737

583,862

3,136,090

1,947,419

6,792,873

Total income taxes
Net income- 105 -

3) Statements of Changes in Shareholders’ Equity and Other Net Assets
Previous business year (From April 1, 2018 to March 31, 2019)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capital stock

Balance at beginning of current period

Legal capital Total capital Legal retained
surplussurplusearnings

7,458,242

6,570,209

6,570,209

83,45083,406

83,406

Reserve foradvanceddepreciationof non-current
assets748,262

19,633Total
retainedearnings

Generalreserve

Retainedearnings
brought
forward

17,020,000

2,981,528

20,769,424

1,308

－

Changes of items during the period
Issuance of new shares
Reversal of reserve for advanced
depreciation of non-current assets△1,308△1,224,579 △1,224,579

Dividends from surplus
Net income (loss)
Provision of general reserve

1,947,419

1,947,419

1,000,000 △1,000,000－

Purchase of treasury stock
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at end of current period

83,45083,406

83,406－△1,3081,000,000△275,851

722,840

7,541,693

6,653,615

6,653,615

748,262

18,32418,020,000

2,705,677

21,492,264

Shareholders’ equity
Treasurystock
Balance at beginning of current period△4,467

Valuation
Total
difference onshareholders’available-forequity
sale securities
34,793,408

1,217,584

Valuation and translation
adjustments
DeferredTotal
gains orvaluation andlosses ontranslation
hedgesadjustments－

1,217,584

ShareacquisitionrightsTotal net
assets127,640

36,138,633

Changes of items during the period
Issuance of new shares
Reversal of reserve for advanced
depreciation of non-current assets
Dividends from surplus
Net income (loss)
Provision of general reserve
Purchase of treasury stock
Net changes of items other thanshareholders' equity
Total changes of items during theperiodBalance at end of current period△296

166,857

166,857－－△1,224,579△1,224,579

1,947,419

1,947,419

－

－

△296

△296
△472,996－△472,996

16,778△456,218△296

889,400△472,996－△472,996

16,778433,182△4,76435,682,808

744,588－744,588

144,419

36,571,816- 106 -

Current business year (From April 1, 2019 to March 31, 2020)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capital stock

Balance at beginning of current
periodReserve forLegal capital Total capital Legal retainedadvancedsurplussurplusearnings
depreciationof non-current
assets7,541,693

6,653,615

6,653,615

52,33352,402

52,402

748,262

18,324

Total
retainedearnings

Generalreserve

Retainedearnings
brought
forward

18,020,000

2,705,677

21,492,264

1,258

－

Changes of items during the period
Issuance of new shares
Reversal of reserve for advanced
depreciation of non-current assets△1,258△1,086,565 △1,086,565

Dividends from surplus
Net income (loss)
Provision of general reserve

6,792,873

6,792,873

1,000,000 △1,000,000－

Purchase of treasury stock
Net changes of items other thanshareholders' equity
Total changes of items during theperiod52,33352,402

52,402－△1,2581,000,000

4,707,566

5,706,308

Balance at end of current period

7,594,026

6,706,017

6,706,017

748,262

17,066

19,020,000

7,413,243

27,198,572

ShareacquisitionrightsTotal net
assets144,419

36,571,816

Shareholders’ equity

Valuation and translation adjustments
Total

Treasurystock

Valuation
Total
Deferred gains valuationdifference onor losses on
andshareholder
available-forhedges
translations’ equity sale securities

adjustments

Balance at beginning of current
period△4,76435,682,808

744,588－744,588

Changes of items during the period
Issuance of new shares

104,735

104,735－－△1,086,565△1,086,565

6,792,873

6,792,873－－△3,200,033 △3,200,033△3,200,033

Reversal of reserve for advanced
depreciation of non-current assets
Dividends from surplus
Net income (loss)
Provision of general reserve
Purchase of treasury stock
Net changes of items other thanshareholders' equity△273,067－△273,067

21,729△251,338

Total changes of items during theperiod△3,200,033

2,611,010△273,067－△273,067

21,7292,359,671

Balance at end of current period△3,204,797

38,293,819

471,520－

471,520

166,148

38,931,487- 107 -

[Notes](Important Accounting Policies)
1. Valuation standards and valuation methods for assets(1) Valuation standards and valuation methods for securities
1) Equity stakes in subsidiaries and affiliated companies
Stated at average cost.
2) Available-for-sale securities
Securities with available fair market values:
Stated at fair market value based on the market price as of the closing date, etc. (Valuation differences arereported as a component of net assets, and the cost of securities sold is calculated using the average cost method.)
Securities with no available fair market value:
Stated at average cost.
(2) Derivative financial instruments
Stated fair value method(3) Valuation standards and valuation methods for inventories
1) Merchandise, finished goods, semi-finished goods and work in process
The cost method on a first-in, first-out basis is adopted. (The amount shown on the balance sheets is calculated
by writing inventories down due to a decline in profitability.)
2) Raw materials and supplies
The cost method based on the periodic average method is adopted. (The amount shown on the balance sheetsis calculated by writing inventories down due to a decline in profitability.)
2. Methods of depreciation and amortization of non-current assets(1) Property, plant and equipment (excluding lease assets)
The declining-balance method is adopted, except for the buildings (excluding accompanying facilities)
acquired on or after April 1, 1998 and accompanying facilities and structures acquired on or after April 1, 2016,
which are depreciated using the straight-line method.
The useful life mostly falls within the ranges shown below:
Buildings: fifteen (15) years to thirty-one (31) years
Machinery and equipment: eight (8) years to nine (9) years(2) Intangible assets (excluding lease assets)
The straight-line method is adopted. Software used by the Company is amortized over an estimated in-houseusable period. (Currently five (5) years)(3) Lease assets
Lease assets related to finance lease transactions that entail transfer of title
Depreciation and amortization is based on the same method as applied to self-owned non-current assets.
Lease assets related to finance lease transactions that do not entail transfer of title
Depreciation and amortization is based on the straight-line method that takes the lease period as the useful lifeand sets the residual value at zero (0).
3. Standards for translating foreign currency assets and liabilities into Japanese currency
Foreign currency monetary assets and liabilities are translated into Japanese yen at the spot exchange rate as of
the closing date, and the resulting translation differences are entered as income or loss, as the case may be.
4. Standards for recording allowances and provisions(1) Allowance for doubtful accounts
As a reserve for potential loan losses, an estimated uncollectible amount is allocated based on the historicalloan-loss ratio in the case of general accounts receivable, and in light of the collectability in each instance inthe case of some specific accounts receivable, e.g. doubtful receivables.
(2) Provision for bonuses
In preparation for the payment of bonuses to its employees, the Company allocates an expected aggregate
amount of such payment.
(3) Provision for retirement benefits- 108 -

As a reserve for the payment of retirement benefits to employees, an amount is appropriated on the basis of
the estimated amounts of retirement benefit obligations and plan assets as of the end of the current businessyear.
1) Method of inter-period attribution of expected retirement benefits
In calculating retirement benefit obligations, the benefit formula is employed as the method of attributing
the estimated amount of each employee’s retirement benefits to his or her service period up to the end of
the current business year.
2) Method of recognizing actuarial differences as expenses
Actuarial differences are recognized as expenses, effective from the business year immediately following
the year of occurrence of each such difference, in an amount prorated using the straight-line method over acertain number of years (Currently five (5) years) within the average remaining service period of theemployees at the time of occurrence of the said difference in each business year.
(4) Provision for loss on guarantees
In order to prepare for loss on guarantees, etc., the estimated amount of losses is shown, taking into accountthe financial conditions, etc. of guaranteed parties.
5. Accounting method of significant hedge transactions(1) Method of hedge accounting
The Company adopts the deferred hedge accounting. With respect to the forward exchange contracts thatmeet the requirements of hedge accounting, we adopt the designated hedge accounting.
(2) Hedging instruments and hedged items
Hedging instruments : Forward exchange contracts
Hedged items: Monetary claims denominated in foreign currencies, Anticipated transactions inforeign currencies(3) Hedging policy
Forward foreign exchange transactions are conducted within the scope of actual demand for the purpose ofdeterring risks involved in transactions denominated in foreign currencies from the fluctuations in the foreignexchange market. These transactions will never be entered for speculative purpose.
(4) Method of assessing hedge effectiveness
The Company assesses the effectiveness of hedging based on the ratio of changes that is calculated bycomparing the cumulative total of the market fluctuations of hedged items with that of hedging instruments.
However, when the forward foreign exchange transactions are by designated hedge accounting, suchassessment of effectiveness is omitted.
6. Other important matters underlying preparation of financial statements(1) Accounting methods concerning retirement benefits
The method of accounting for an unappropriated portion of unrecognized actuarial differences concerning
retirement benefits is different from the method of accounting applied to the same in the case of theconsolidated financial statements.
(2) Accounting methods concerning consumption tax, etc.
The consumption tax, etc. are accounted for using the tax exclusion method.
(3)Accounting methods concerning deferred assets
Stock delivery expenses are fully charged to expenses when they are paid.

- 109 -

(Changes in Presentation)<Balance Sheets>“Lease obligations”, which was presented as part of “Other” in “Current liabilities” in the previous business year, isseparately stated effective from the current business year due to a rise in quantitative materiality. In order to reflect
such change in presentation, a reclassification has been made in the financial statements for the previous businessyear. As a result, 781,936 thousand yen of “Other”, listed within “Current liabilities” in the balance sheets for theprevious business year, has been reclassified into the combination of 603 thousand yen of “Lease obligations” and781,332 thousand yen of “Other”.
<Statements of Income>1. “Gain on sales of non-current assets”, which was presented as part of “Other” in “Extraordinary income” in theprevious business year, is separately stated effective from the current business year due to a rise in quantitative
materiality. In order to reflect such change in presentation, a reclassification has been made in the financial
statements for the previous business year. As a result, 15,910thousand yen of “Other”, listed within “Extraordinary
income” in the statements of income for the previous business year, has been reclassified into the combination of
800 thousand yen of “Gain on sales of non-current assets” and 15,109 thousand yen of “Other”.
2. “Loss on retirement of non-current assets”, which was separately stated within “Extraordinary losses” in theprevious business year, is presented as part of “Other” in “Extraordinary losses” effective from the current businessyear due to a fall in quantitative materiality. In order to reflect such change in presentation, a reclassification has
been made in the financial statements for the previous business year. As a result, 55,886 thousand yen of “Loss onretirement of non-current assets”, listed within “Extraordinary losses” in the statements of income for the previous
business year, has been reclassified as part of “Other”.
(Additional Information)(Accounting Estimates)
Taking into account the fact that the scale and extent of the impact of the new coronavirus infection on the
Company's business will vary from business to business, we have established a range for the fiscal year ending
March 31, 2021, assuming the upper limit of the range in the case of an early containment (by the end of September2020) and the lower limit of the range in the case of no containment (by the end of March 2021). Based on the
anticipated impact and assumptions, we have reviewed our accounting estimates such as the recoverability of ourdeferred tax assets and impairment of non-current assets and determined that none of these have a material impact at
this time. However, depending on future convergence and the impact on the economy, the financial statements after
the next business year could be materially affected.

- 110 -

(Notes Related to Balance Sheets)*1 Assets subject to a security interest and secured liabilities corresponding thereto
Assets subject to a security interest(Thousands of yen)Previous business year
(As of March 31, 2019)
Buildings

Current business year
(As of March 31, 2020)

2,772,572(2,772,572)

2,741,807(2,741,807)

Structures
Machinery and equipment

147,166
823,701(147,166)(823,701)

238,025
1,176,164(238,025)(1,176,164)

Tools, furniture and fixtures
Land

34,726
266,508(34,726)(199,190)

97,484
266,508(97,484)(199,190)

4,044,674(3,977,357)

4,519,990(4,452,673)

Total

Secured liabilities(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Short-term loans payable

200,000(200,000)－(－)

Current portion of long-termloans payable

714,848(714,848)

133,332(133,332)－(－)

813,890(813,890)

914,848(914,848)

947,222(947,222)

Long-term loans payable
Total

The parenthesized figures represent factory foundation mortgages and the liabilities secured by such mortgages.

- 111 -

*2

Monetary receivables and payables outstanding with associated companies (excluding those separately stated)(Thousands of yen)Previous business year
(As of March 31, 2019)

Short-term monetary receivables
Short-term monetary payables*3

Current business year
(As of March 31, 2020)

543,681
1,033,372

Guarantee liabilities
Accounts borrowed from financial institutions of associated companies and Guarantee liabilities for performance
guarantee(Thousands of yen)
Current business year
(As of March 31, 2020)

Previous business year
(As of March 31, 2019)
Satosen Co., Ltd.
(Loan guarantee)
Protec Arisawa Europe, S.A.
(Product warranty)
Protec Arisawa America, Inc.
(Product warranty)*4749,940
1,159,101

870,000

648,941

62,438

14,16235,97735,277The Company has an overdraft agreement in effect with each of its six (6) partner banks to ensure efficient
procurement of operating funds. The following is the balance of unexecuted loans under such overdraft agreements
as of the end of the current and previous business years.
(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Aggregate overdraft limit
Drawdowns

6,300,000
465,000

6,300,000－

Balance of unexecuted loans

5,835,000

6,300,000*5 Notes, etc. maturing at the end of the business year
For accounting treatment of notes, electronically recorded monetary claims and electronically recorded
obligations maturing at the end of the business year, settlement is made as of the clearing date of each note or as ofthe settlement date of each electronically recorded monetary claim and electronically recorded obligation, as thecase may be. As the end of the previous business year falls on a bank holiday, the following notes, electronicallyrecorded monetary claims and electronically recorded obligations maturing at the end of the business year are
included in their respective balances as of the end of the business year.
Previous business year
(As of March 31, 2019)(Thousands of yen)
Current business year
(As of March 31, 2020)

Notes receivable - trade
Notes payable - trade

38,712
13,681－－

Electronically recorded obligations - operating
Current liabilities and others (Notes payable-facilities,

163,301－

50,789－

Electronically recorded obligations-non-operating)- 112 -

(Notes Related to Statements of Income)*1 Volume of transactions with associated companies
Previous business year
(From April 1, 2018
to March 31, 2019)(Thousands of yen)
Current business year
(From April 1, 2019
March 31, 2020)

2,414,854
3,974,801

2,554,293
4,174,155

590,656

1,719,259

toGross operating transaction volume
Net sales
Value of goods laid in
Gross non-operating transaction volume*2 Approximately 47% of the amount of selling, general and administrative expenses recorded for the previous
business year falls under selling expenses, while the remaining 46% falls under general and administrative
expenses. Approximately 53% of the amount of selling, general and administrative expenses recorded for thecurrent business year falls under selling expenses, while the remaining 54% falls under general and administrative
expenses. The major items of selling, general and administrative expenses and their respective amounts are as
follows.
Previous business year
(From April 1, 2018
to March 31, 2019)(Thousands of yen)
Current business year
(From April 1, 2019
to March 31, 2020)

Salaries and allowances
Provision for bonuses

565,347
71,336645,359
82,642Retirement benefit expenses
Freightage and packing expenses

56,159722,648

63,358745,435

73,3681,154,850

70,9691,232,219

Depreciation
Other*3 Gain on sales of investment securities
Gain on sales of investment securities shown in the current business year is due mainly to the sale of all shares ofPolatechno Co., Ltd., which was the affiliate company.
*4 Loss on valuation of investment securities
Loss on valuation of 649,999 thousand yen on shares of Satosen Co., Ltd., which is a consolidated subsidiary of theCompany, is included.
*5 Provision for loss on guarantees
The estimated amount of losses is shown as provision for loss on guarantees, taking into account the financial
conditions, etc. of a guaranteed party, Satosen Co., Ltd., which is a consolidated subsidiary of the Company.
*6 Provision of allowance for doubtful accounts
An estimated uncollectible amount of receivables to Satosen Co., Ltd., which is a consolidated subsidiary of theCompany, is shown as allowance for doubtful accounts.

- 113 -

(Notes Related to Securities)
Equity stakes in subsidiaries and affiliated companies
Previous business year (As of March 31, 2019)
Category(Thousands of yen)Amount shown onbalance sheets

Equity stakes in subsidiaries
Equity stakes in affiliated companies
Total

Fair value

1,116,334

5,324,372

4,208,038

233,905

5,131,840

4,897,934

1,350,239

10,456,212

9,105,973

Current business year (As of March 31, 2020)
Category
Equity stakes in subsidiaries
Note:

Difference(Thousands of yen)Amount shown onbalance sheets

Fair value

1,116,334

3,884,328

Difference
2,767,994

Amount shown on the balance sheets for the equity stakes in subsidiaries and affiliated companies whose fair value isdeemed extremely difficult to reasonably determine(Thousands of yen)
Category

Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Equity stakes in subsidiaries

1,295,582

735,582

Equity stakes in affiliatedcompanies

221,130

220,380

As these equity stakes have no quoted market price, and it is deemed extremely difficult to reasonably
determine their respective fair values, they are not included in the tables entitled “Equity stakes in subsidiaries
and affiliated companies” shown before.

- 114 -

(Notes Related to Tax Effect Accounting)
1. Breakdown by major occurrence factor of deferred tax assets and deferred tax liabilities(Thousands of yen)Previous business year
(As of March 31, 2019)

Current business year
(As of March 31, 2020)

Deferred tax assets
Loss on valuation of investment securities
Impairment loss

224,046
359,926

422,296
329,930

Allowance for doubtful accounts
Accrued enterprise tax

200,832
22,440160,989
159,238

Provision for retirement benefits
Provision for loss on guarantees

130,631－

152,108
137,572

Provision for bonuses
Other

105,466
267,277

111,629
248,423

Deferred tax assets subtotal
Valuation allowance

1,310,621△737,702

1,722,189△982,532

Deferred tax assets total

572,919739,656△326,761△8,041△206,926

Deferred tax liabilities
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets
Asset retirement obligations
Deferred tax liabilities total
Net amount of deferred tax liabilities

2.

△1,105△8,041△1,105△335,909△216,073

237,010523,583

Breakdown by item of major causes of any difference between the normal effective statutory tax rate and theeffective income tax rate after tax effect accounting
Previous business year
(As of March 31, 2019)30.5％

Normal effective statutory tax rate
(Adjustments)
Items permanently excluded from taxable income△4.1％

Valuation allowance△3.7％

Special tax deductions

△1.8％
1.9％

Items permanently excluded from tax-deductible
expenses

0.3％

Other

23.1％

Effective income tax rate after tax effect accounting(Significant Subsequent Events)
No applicable matter.

- 115 -

Current business year
(As of March 31, 2020)

Notes are omitted as thedifference between thenormal effective statutory
tax rate and the effective
income tax rate after tax
effect accounting is lessthan five hundredths(5/100) of the normal
effective statutory tax rate.

(Supplementary Schedules)[Schedule of property, plant and equipment, etc.](Thousands of yen)

Category

Property,plant andequipment

Type of assets

Balance at the
beginning ofcurrent period

Amount ofdecrease incurrent
periodBalance at theend of current
periodAccumulated
depreciationoraccumulated
amortization

Buildings

3,799,000

170,784

1,498

269,787

3,698,498

10,828,416

Structures

312,873

49,287357

38,827

322,974

1,177,753

Machineryandequipment

2,202,800

922,089

17,328

697,575

2,409,985

20,773,922

Vehicles

18,025

15,552

0

12,242

21,335

190,722

Tools,
furnitureand fixtures

170,988

133,918

16

90,734

214,155

1,472,062

1,376,078－－－

1,376,078－

Lease assets

2,202

114,283－

8,745

107,740

11,584

Constructionin progress

85,112

1,647,777

1,649,605－

83,285－

Total property,
plant andequipment

7,967,081

3,053,693

1,668,807

1,117,913

8,234,053

34,454,462

Software

31,63455,401－

13,83373,202

－

Other

9,895

－

－

140

9,755

－

82,958－Land

Intangible
assetsAmount ofincrease incurrent period

Amount ofdepreciationor
amortizationin current
periodTotal
intangible－
41,53055,401
13,974assetsNote: 1. Key components of the increase in the current period are as follows.
Machinery andElectronic materials manufacturing facilities
equipment
Display materials manufacturing facilities
Electrical insulating materials manufacturing facilities
Construction in progress
Electronic materials manufacturing facilities
Unallocated corporate assets
Display materials manufacturing facilities(Thousands of yen)
736,990
150,345
21,522
1,103,924
233,104
182,265

2. Key components of the decrease in the current period are as follows.
Construction in progressTransfer to the main account(Thousands of yen)
1,402,342[Schedule of allowances and provisions](Thousands of yen)
Balance at the
beginning of current
periodAmount of increasein current period

Allowance for doubtful accounts

658,422

520,975

656,772

522,625

Provision for bonuses

345,792

365,997345,792

365,997－451,058－

451,058

Item

Provision for loss on guarantees

Amount of decrease Balance at the end of
in current period
current period(2) Details of Major Assets and Liabilities
Statement is omitted as the relevant information is stated in the consolidated financial statements.

- 116 -

(3) Other
No applicable matter.

VI. Outline of Share Handling of the Submitting Company

Business year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

To be held in June

Record date

March 31

Record dates of distribution ofdividends from surplus

September 30 and March 31

Number of shares per unit

100 shares

Purchase of shares constituting
less than one full unit
(Special account)
Stock Transfer Agency Dept.,
Handling place

Mitsubishi UFJ Trust and Banking Corporation
1-1 Nikko-cho, Fuchu-shi, Tokyo
Sumitomo Mitsui Trust Bank, Limited

Transfer agent

1-4-1, Marunouchi, Chiyoda-ku, Tokyo

Forwarding office

Purchase fees

Method of giving public notice

Privileges of shareholders
Note:--The amount obtained by prorating the consignment fee per unit (prescribed by
Tokyo Stock Exchange) according to the number of shares constituting lessthan one full unit purchased
Public notices of the Company shall be given by electronic means; provided,
however, that if an electronic public notice cannot be provided due to an
accident or any other unavoidable reason, the Company shall publish its public
notice in the Nikkei newspaper.
Electronic public notices URL:
http://www.arisawa.co.jp/japanese/koukoku.html
None

Pursuant to the provisions of the Articles of Incorporation of the Company, the shareholders of the Company’s sharesconstituting less than one full unit may not exercise any rights other than: (i) the rights set forth in each item of Article 189,
paragraph 2 of the Companies Act; (ii) the right to make requests under the provisions of Article 166, paragraph 1 of theCompanies Act; and (iii) the right to receive allotment of the shares offered and allotment of the stock acquisition rights
offered in proportion to the number of shares held by each such shareholder.

- 117 -

VII. Reference Information on the Submitting Company
1. Information on Parent Company, etc. of Submitting Company
The Company has no parent company, etc. provided for in Article 24-7, paragraph 1 of the Financial
Instruments and Exchange Act.

2. Other Reference Information
The Company submitted the following documents between the commencement date of the current businessyear and the date of submission of the Financial Report.
(1) Financial Report, documents attached thereto and Confirmation Letter
Business year from April 1, 2018 to March 31, 2019 (The 71st Term)
Submitted to the Director-General of the Kanto Local Finance Bureau on June 28, 2019.
(2) Internal Control Report and documents attached thereto
Submitted to the Director-General of the Kanto Local Finance Bureau on June 28, 2019.
(3) Quarterly Report and Confirmation Letter(The First Quarter of the 72nd Term) (From April 1, 2019 to June 30, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on August 9, 2019.
(The Second Quarter of the 72nd Term) (From July 1, 2019 to September 30, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on November 14, 2019.
(The Third Quarter of the 72nd Term) (From October 1, 2019 to December 31, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on February 14, 2020.
(4) Extraordinary Report
Submitted to the Director-General of the Kanto Local Finance Bureau on July 1, 2019.
This is an Extraordinary Report under the provisions of Article 19, paragraph 2, item 9-2 of the Cabinet
Office Ordinance on Disclosure of Corporate Affairs, etc. (Results of exercise of voting rights at thegeneral meeting of shareholders) .
Submitted to the Director-General of the Kanto Local Finance Bureau on August 27, 2019.
This is an Extraordinary Report under the provisions of Article 19, paragraph 2, items 12 and 19 of the
Cabinet Office Ordinance on Disclosure of Corporate Affairs, etc. (Events that have a marked impact on
the analyses of consolidated financial position, business results and cash flows).
(5) Amendment Report of Extraordinary Report
Submitted to the Director-General of the Kanto Local Finance Bureau on August 19, 2019.
This is an Amendment Report of Extraordinary Report related to the Extraordinary Report submitted onJune 27, 2019 (Issuance of stock acquisition rights as employees, etc. stock options).

- 118 -

(6) Share Buyback Report
Reporting Period (From August 1, 2019 to August 31, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on September 13, 2019
Reporting Period (From September 1, 2019 to September 30, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on October 15, 2019
Reporting Period (From October 1, 2019 to October 31, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on November 15, 2019
Reporting Period (From November 1, 2019 to November 30, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on December 13, 2019
Reporting Period (From December 1, 2019 to December 31, 2019)
Submitted to the Director-General of the Kanto Local Finance Bureau on January 10, 2020
Reporting Period (From January 1, 2020 to January 31, 2020)
Submitted to the Director-General of the Kanto Local Finance Bureau on February 7, 2020
Reporting Period (From February 1, 2020 to February 29, 2020)
Submitted to the Director-General of the Kanto Local Finance Bureau on March 9, 2020
Reporting Period (From March 1, 2020 to March 31, 2020)
Submitted to the Director-General of the Kanto Local Finance Bureau on April 14, 2020

- 119 -

PART II. INFORMATION ON GUARANTY COMPANIES, ETC. OF THE
SUBMITTING COMPANY
No applicable matter.

- 120 -

Independent Auditors’ Reportconcerning consolidated financial statements and internal control report
June 25, 2020
To the Board of Directors of Arisawa Mfg. Co., Ltd.
Ernst & Young ShinNihon LLC
Niigata office
Akira Igarashi[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Eishi Daikoku[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant<Audit of Financial Statements>
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 1 of the Financial Instruments
and Exchange Act, we have audited the consolidated financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of
Accounting” for the consolidated fiscal year from April 1, 2019 to March 31, 2020, consisting of the consolidated balance sheets,
consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of changes inshareholders’ equity and other net assets, consolidated statements of cash flows, important matters underlying preparation of
consolidated financial statements, other notes and consolidated supplementary schedules.
In our opinion, the above consolidated financial statements fairly present, in all material respects, the financial conditions ofArisawa Mfg. Co., Ltd. and its consolidated subsidiaries as of March 31, 2020 as well as the results of their operations and theirstatus of cash flows for the consolidated fiscal year ended March 31, 2020 in accordance with the corporate accounting standards
generally accepted in Japan.
Basis for the Audit Opinion
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Our responsibility in the auditing
standards is stated in “The Responsibility of Auditors in the Consolidated Financial Statements Audit.” We are independent of theCompany and its consolidated subsidiaries and fulfill other ethical responsibilities as an auditor.in accordance with the code ofprofessional ethics in Japan. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withthe corporate accounting standards generally accepted in Japan. This includes improvement and operation of such internal control
as the management deems necessary for the preparation and fair presentation of consolidated financial statements free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare
the consolidated financial statements based on the going concern assumption and disclosing the items regarding the going concern
assumption in accordance with the corporate accounting standards generally accepted in Japan if such items are required to bedisclosed.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor the execution of Directors’ duties in the
improvement and operation of the financial reporting process.
Responsibility of Auditors in the Consolidated Financial Statements Audit
Responsibility of auditors is to express an opinion on the consolidated financial statements from an independent standpoint in
the auditors’ report based on our audit by obtaining reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement due to fraud or error. Material misstatement is judged to be material if it is likely tooccur due to fraud or error and, individually or in aggregation, is reasonably expected to have an impact on decisions made byusers of the consolidated financial statements.
Auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards generally accepted in Japan.
・We identify and assess a risk of material misstatement due to fraud or error. We also design and conduct the audit proceduresthat address the risk of material misstatement. The selection and application of the audit procedures depend on the auditor's
judgment. In addition, we obtain sufficient and appropriate audit evidence to provide a basis for our audit opinion.
・In making such risk assessments, the auditors review internal controls relevant to the audits in order to design audit proceduresthat are appropriate under the circumstances, while it is not the objective of an audit of the consolidated financial statements
to express an opinion on the effectiveness of the entity’s internal control.
・We evaluate the accounting policies adopted by the management and appropriateness of their methods of application as well
as reasonableness of the accounting estimates made by the management and validity of related notes.
・We conclude whether it is appropriate for the management to prepare the consolidated financial statements with the going
concern assumption and, based on the obtained audit evidence, whether a material uncertainty regarding events or conditions
that may cast significant doubt on the going concern assumption exists. If a material uncertainty regarding the going concern
assumption exists, it is required to promote awareness to the notes in the consolidated financial statements in the auditors’
report, or if the notes regarding a material uncertainty in the consolidated financial statements are inappropriate, it is required
to express an opinion with exceptive items to the consolidated financial statements. Conclusion by the auditors is based on
the audit evidence obtained by the day of the audit report, but a company may not be able to exist as the going concern
depending on future events or conditions.
・We evaluate not only whether the presentation and notes of the consolidated financial statements are in accordance withgenerally accepted accounting principles but also whether the presentation, structure, and contents of the consolidated financial
statements including related notes as well as the consolidated financial statements properly present underlying transactions
and accounting events.
・We obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated
subsidiaries to express an opinion about the consolidated financial statements. The auditors are responsible for instruction,
supervision, and execution of audits regarding the consolidated financial statements. The auditors assume responsibility for
an audit opinion all by themselves.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned audit and its timingof conduct, material audit findings including material weaknesses of internal control identified in the audit process, and othermatters required by the auditing standards.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on that they complied with the code ofprofessional ethics on independence in Japan, matters that are reasonably believed to have an impact on the auditors’ independence,and the details of safeguards if those are implemented to remove or mitigate inhibitors.
<Audit of Internal Control>
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 2 of the Financial Instruments
and Exchange Act, we have audited the internal control report as of March 31, 2020 of Arisawa Mfg. Co., Ltd.
In our opinion, the above internal control report, in which Arisawa Mfg. Co., Ltd. represents that its internal control overfinancial reporting is effective as of March 31, 2020, fairly presents, in all material respects, the evaluation results of its internal
control over financial reporting in accordance with the evaluation standards for internal control over financial reporting generally
accepted in Japan.
Basis for the Audit Opinion
We conducted an internal control audit in accordance with the auditing standards for internal control over financial reporting
generally accepted in Japan. Our responsibility in the auditing standards for internal control over financial reporting is stated in“Responsibility of the Auditors in Internal Control.” We are independent of the Company and its consolidated subsidiaries andfulfill other ethical responsibilities as an auditor in accordance with the code of professional ethics in Japan. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Internal Control ReportManagement is responsible for the improvement and operation of internal control over financial reporting as well as the
preparation and fair presentation of the internal control report in accordance with the evaluation standards for internal control overfinancial reporting generally accepted in Japan.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor and verify the status of improvement andoperation of the internal control system for financial reporting.
In this regard, there is a possibility that internal control over financial reporting cannot completely prevent or detect false
statements in financial reporting.
Responsibility of Auditors in Internal Control Audit
Our responsibility is to express an opinion on the internal control report from an independent standpoint by obtaining reasonableassurance about material misstatement in the internal control report based on our internal control audit.
The auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards for internal control over financial reporting generally accepted in Japan.
・We conduct audit procedures to obtain audit evidence about the results of evaluating internal control over financial reportingstated in the internal control report. Audit procedures for an internal control audit are selected and applied at our own judgment,
based on the gravity of the impact on the credibility of financial reporting.
・ We evaluate the overall presentation of the internal control report, including a review of the statements made by the
management with respect to the scope, procedures, and results of the assessment of internal control over financial reporting.
・We obtain sufficient and appropriate audit evidence about the results of evaluating internal control over financial reportingstated in the internal control report. The auditors are responsible for instruction, supervision, and execution of audits regarding
the internal control report. The auditors assume responsibility for an audit opinion all by themselves.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned internal control
audit and its timing of conduct, the results of exercising the internal control audit, material weaknesses identified in internal control
to be disclosed, the results of their correction, and other matters required by the auditing standards of internal control.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on that they complied with the code ofprofessional ethics on independence in Japan, matters that are reasonably believed to have an impact on the auditors’ independence,and the details of safeguards if those are implemented to remove or mitigate inhibitors.
Interest
There exists no special interest between the Company and its consolidated subsidiaries and this audit corporation or its
engagement partners which is required to be stated pursuant to the provisions of the Certified Public Accountants Act.
Note:

1. All the matters stated above have been electronically copied from the matters stated in the original Audit Report. The original
Audit Report is separately archived by the Company.
2. XBRL data are not included in the subject of the audit.

Independent Auditors’ Report
June 25, 2020
To the Board of Directors of Arisawa Mfg. Co., Ltd.
Ernst & Young ShinNihon LLC
Niigata office
Akira Igarashi[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Eishi Daikoku[Seal]

Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 1 of the Financial Instruments
and Exchange Act, we have audited the financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of Accounting” forthe 72nd business year from April 1, 2019 to March 31, 2020, consisting of the balance sheets, statements of income, statements ofchanges in shareholders’ equity and other net assets, important accounting policies, other notes and supplementary schedules.
In our opinion, the above financial statements fairly present, in all material respects, the financial conditions of Arisawa Mfg.
Co., Ltd. as of March 31, 2020 and the results of its operations for the business year ended March 31, 2020 in accordance with thecorporate accounting standards generally accepted in Japan.
Basis for the Audit Opinion
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Our responsibility in the auditing
standards is stated in “Responsibility of the Auditors in Financial Statements Audit.” We are independent of the Company and its
consolidated subsidiaries and fulfill other ethical responsibilities as an auditor in accordance with the code of professional ethics
in Japan. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the corporate
accounting standards generally accepted in Japan. This includes improvement and operation of such internal control as the
management deems necessary for the preparation and fair presentation of financial statements free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate to prepare the financial
statements based on the going concern assumption and disclosing the items regarding the going concern assumption in accordancewith the corporate accounting standards generally accepted in Japan if such items are required to be disclosed.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor the execution of Directors’ duties in the
improvement and operation of the financial reporting process.
Responsibility of Auditors in Financial Statements Audit
Responsibility of auditors is to express an opinion on the financial statements from an independent standpoint in the auditors’
report based on our audit by obtaining reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement due to fraud or error. Material misstatement is judged to be material if it is likely to occur due to fraud or
error and, individually or in aggregation, is reasonably expected to have an impact on decisions made by users of theconsolidated financial statements.
The auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards generally accepted in Japan.
・We identify and assess a risk of material misstatement due to fraud or error. We also design and conduct the audit proceduresthat address the risk of material misstatement. The selection and application of the audit procedures depend on the auditor's
judgment. In addition, we obtain sufficient and appropriate audit evidence to provide a basis for our audit opinion.
・In making such risk assessments, the auditors review internal controls relevant to the audits in order to design audit proceduresthat are appropriate under the circumstances, while it is not the objective of an audit of the financial statements to express anopinion on the effectiveness of the entity’s internal control.
・We evaluate the accounting policies adopted by the management and appropriateness of their methods of application as well as
reasonableness of the accounting estimates made by the management and validity of related notes.
・We conclude whether it is appropriate for the management to prepare the financial statements with the going concern assumption
and whether a material uncertainty regarding events or conditions that may cast significant doubt on the going concern
assumption exists based on the obtained audit evidence. If a material uncertainty regarding the going concern assumption exists,
it is required to promote awareness to the notes in the financial statements in the auditors’ report, or if the notes regarding amaterial uncertainty in the financial statements are inappropriate, it is required to express an opinion with exceptive items to thefinancial statements. Conclusion by the auditors is based on the audit evidence obtained by the day of the audit report, but acompany may not be able to exist as a going concern depending on future events or conditions.
・We evaluate not only whether the presentation and notes of the financial statements are in accordance with generally accepted
accounting principles in Japan but also whether the presentation, structure, and contents of the financial statements including
related notes as well as the financial statements properly present underlying transactions and accounting events.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned audit and its
timing of conduct, material audit findings including material weaknesses of internal control identified in the audit process, andother matters required by the auditing standards.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on that they complied with the code ofprofessional ethics on independence in Japan, matters that are reasonably believed to have an impact on the auditors’
independence, and the details of safeguards if those are implemented to remove or mitigate inhibitors.
Interest
There exists no special interest between the Company and this audit corporation or its engagement partners which is required to
be stated pursuant to the provisions of the Certified Public Accountants Act.
Note:

1. All the matters stated above have been electronically copied from the matters stated in the original Audit Report. The original
Audit Report is separately archived by the Company.
2. XBRL data are not included in the subject of the audit.