Toyo Denki Seizo Report
Tokyo Tatemono Yaesu Building, 1-4-16, Yaesu, Chuo-ku, Tokyo 103-0028 Tel: +81-3-5202-8121 (General Affairs Division)

https://www.toyodenki.co.jp/

2020

Our Heart and Technology for the Future

Our Long-Term Vision

Toyo Denki Seizo K.K. Contributes to the Development of Social Infrastructure Systems
Based on a firm management foundation, we help build social infrastructure systems that are considerate of the global environment through theglobal provision of high-quality products that integrate our exceptional motor drive technologies since establishment with our breakthroughadvanced technologies.

Information
Equipment
Systems
Segment

Business Principles
Industrial
Systems
Segment

Prioritize ethics and contribute to the prosperity of customers and society as a whole
Encourage creativity and enterprising spirit to meet the challenges of the future

Industrial Systems Segment
The Company is extensively contributing to customers at home and abroad through general industrial
machinery and equipment, testing equipment for automobile development and social infrastructure
equipment that is indispensable to the daily lives of people. In addition, we address manufacturing that
contributes to the prevention of global warming, while providing products manufactured through highsystem-building technologies that make full use of energy-saving motors, inverters, FA controllers andnetworks.

Build trust by focusing on quality first

Automobile testing systems

Code of Conduct
1. Respond to customers in a timely and speedy manner
2. Tackle all challenges with forethought and creativity
3. Continuous efforts toward self-development and skill improvement
4. Keep a broad perspective and influence each other toward growth

Transportation
Systems
Segment

5. Act with awareness and pride of a good member of society and businessman

Manufacturing

Power generation andsocial infrastructure system
Production and processing
equipment systems

Information Equipment Systems Segment

Transportation Systems Segment
Electrical equipment for rail vehicles manufactured by theCompany using its technological capability developed over 100
years covers a wide range of fields, including propulsion systems (drive systems), auxiliary power supply and door-closing
units of trains, and we contribute to the maintenance and development of railway infrastructure overseas, not to mention in
Japan, by pursuing safety and comfort of trains.

In the Information Equipment Systems segment, we operate in the two fields of railway station operating equipment and remote monitoring systems, by merging advanced telecommunication technologies
and mechatronics.
With regard to railway station operating equipment systems, we develop and manufacture commuter
pass issuing machines that quickly became IC card compliant and portable terminal devices for conductors, and provide systems for smooth toll collection and income management system to railway operators.
Our remote monitoring systems greatly contribute to labor saving and maintenance saving of customers through realization of various equipment monitoring and position monitoring, by leveraging
cloud computing.

Current collectors(pantographs)

Door operating equipment

Facilities management solutions

Driving gear units
Railway station operating
equipment systems
Main motors

Passenger information
display system

Twin disk couplings
Auxiliary power supply (SIV)
Master controllers
Total train communication
system1

Propulsion inverters (VVVF inverter)

For the development process of its auxiliary power supply, theCompany has acquired a certification of the IRIS (International
Railway Industry Standard), an international quality management system standard for the railway industry.

CONTENTS
Contents/Editorial Policy/Long-Term Vision…… 1
Over 100-Year History of Toyo Denki Seizo K.K.…… 3
Consolidated Financial Highlights…………… 4
Message from Chairman and President……… 5
Special Report 1 Initiatives for ESG and SDGs…… 7
Special Report 2 Plant Opening Ceremony of
Chalco-Toyo Permanent Magnet Motor Co., Ltd.…… 8
Business Report
Transportation Systems Segment………… 9
Industrial Systems Segment……………… 10
Information Equipment Systems Segment…… 11
Business Development…………………… 12
Research and Development/Intellectual Property…… 13
ESG/CSR Report
Environment
		 Initiatives to Protect the Environment…… 14
Social		 With Our Customers…………………… 16
		 With Our Shareholders and Investors…… 17
		 With Our Local Communities…………… 18
		 With Our Suppliers……………………… 19
		 With Our Employees…………………… 19
Governance		Corporate Governance………………… 21
		Executive Profiles……………………… 23
		 Messages from Outside Directors……… 23
		 Internal Control and Compliance………… 25
		Risk Management……………………… 25
		Risk Factors…………………………… 25
		Information Security…………………… 26
Financial Report
Financial Review………………………… 27
Reference Data for Management Indices…… 28
Consolidated Balance Sheets……………… 29
Consolidated Statements of Income and	Consolidated Statements of Comprehensive Income…… 31
Consolidated Statements of Changes in Net Assets…… 32
	Consolidated Statements of Cash Flows…… 33
Stock Related Information…………………… 34
Company Profile…………………………… 35
Organization Chart…………………………… 36
Editorial Policy
We have been publishing this report since 2013
with the goal of allowing a wide range of stakeholders to have a better understanding of theCompany. This report combines our management
policy with reports on our businesses, ESG/CSR
and finances. We are committed to describing our
initiatives during the year and our future direction
in a manner that is easy to understand.
Period Covered by This Report
This report focuses on our activities in fiscal 2019(from June 2019 to May 2020), but also contains
some information from outside this period.
Organizations Covered by This Report
This report covers the Toyo Denki Group, including
Toyo Denki Seizo K.K. and its consolidated subsidiaries.
Reference Guidelines
The GRI Sustainability Reporting Standards(GRI Standards)
Toyo Denki Seizo Report 20202

Over 100-Year History of Toyo Denki Seizo K.K.
Our company was founded in 1918 with the intention of “domestic production of electrical machinery for railway vehicles”.
A spectacular feeling that we want to export products to domestic as well as to many Orient countries and contribute to thedevelopment of the country has come from the name of “TOYO DENKI SEIZO K.K.”. And this feeling has been handed
down to successive employees, and now our products are contributing to the development of social infrastructure systems
around the world.

1918~1949

1972

From foundation to postwar
1918 Technical cooperation with Brit1919

ish Dick Kerr and establishmentof the company with the capitalof 3 million yen
Operation started at Yokohama
Factory evelopment of brushless motor generator (BLMG), first in the worldDDevelopment of 150kVA 440Hz static CVCF, first in Japan

1973 Completion of commutation ticket issuing system

1977 Completion of large high-speed automatic drafting machine

1978 Developed our proprietary AFE chopper Panama Canal Agency Electric
device1983

 ompletion of in-train ticket issuingCsystemLocomotive for Dredgers

1985 T he current Yokohama Planmt was completed
1985 Delivery of world-first superimposed field excitation control for 205
series electric train of Japanese National Railways

Group photo of our employees withtechnical advisors from the partner
British Dick Kerr company.

1988 Completion of world-first heat-pipe type 8-unit motor batch control VVVF inverter and delivery of it to Tokyu Electric Railway Co

Yokohama factory at the start of operations(Hodogaya-ku, Yokohama)

1920 C ontrol equipments and traction motors delivered directly to Keihan Electric Railway Co.

 evelopment of electric equipment for1932 D

first in our country, and delivered to
Sagami Railway

1949

AS motor

1958

1965 Development of thyristor static Leonard
equipment series, first in Japan3

Net sales(million yen)

39,746

40,66842,527

41,172

39,071Gross profit (million yen)

9,119

9,221

8,072

7,839

8,242

Operating income(million yen)

1,638

1,571

366

557

1,068

Net income attributableto owners of the parent (million yen)

889

1,174

692

690

1,081

Comprehensive income  (million yen)

(925)

1,513

2,009

(251)

(351)

Capital investment(million yen)

902

4,606

4,772

1,090

545

Research and development costs (million yen)

868

927

840

731

792

Fiscal Year-End

1990~2019

58,001

55,165

Net assets(yen)

2,457.05

2,605.09

2,788.01

2,773.87

2,704.61

Per Share Information

Net income(yen)

1991 Development of light-weight VVVF inverter using 1,500V mass-pro-

92.33

123.87

73.33

75.27

120.98duction type reverse conductive GTO thyristor, first in our Japan

Dividend

(yen)

6

30

50*2

30

30

1997

 ompletion of in-train ticket issuing machine corresponding to auC
tomatic ticket checker

Major Management IndicesDevelopment of intelligent door system, first in Japan

1998 Delivery of electric equipment for Bei-

Shareholders’ equity ratio

(%)

47.1

44.8

41.6

42.8

43.8

2000 Completion of permanent-magnet mo-

Return on equity (ROE)

(%)

3.7

4.9

2.7

2.7

4.4

Operating income ratio

(%)

4.1

3.9

0.9

1.4

2.7

Overseas net sales ratio 

(%)

31.8

31.1

25.3

22.9

20.7

Dividend payout ratio

(%)

32.5

24.2

68.2

39.9

24.8

Number of officers  (non-consolidated)

12

13

12

11

10

Number of employees on a consolidated basis

1,245

1,262

1,267

1,226

1,227

Number of employees at Group
companies in Japan and overseas

421

430

391

395

386

3,924

3,895

4,097

4,905

4,185

648.8

647.2

680.3

839.2

743.9

tor (ED motor)

the world’s first micro gas turbine hybrid
vehicleJoint development of the first full-flat,super-low floor light rail vehicle (LRV)
produced in Japan
Succeeded in development and runningof in-wheel motor for car

goes into service (delivery of automatic commuter ticket vending
machine with support for smart card passes and smart card chargemachines to station facilities)
Start of commercial service of the new N700 series trains on the Tokaido and Sanyo Shinkansen lines (delivery of traction motors, gear units,
pantographs, TD couplings, static conversion equipment, etc.)
Start of sales of the VF66 Series general purpose inverter

2008 S tart of sales of the VF66 inverter
2009 Delivered electric machinery for Tohoku
Shinkansen E5 series

2018

1969 Completion of automotive brake test equipment

Fiscal Year

63,291*1

for JR WestJapan National Railway Series 0
Shinkansen

Financial Data

54,9272012 Order receipt of handsets for conductor

to Japanese National Railways

Fiscal 201950,233

Cardan shaft driving device

 elivery of pantograph for Shinkansen
1963 D

Fiscal 2018

(million yen)2007 The new public transport smart card Pasmo In-wheel motor

Japan National Railway 151 series
limited express train “Kodama”

Fiscal 2017

Total assets

1959 C ompletion of automatic train stop
1960 C ompletion of traction motor anddrive for Shinkansen testing car
Order received for electric towing locomotive for the Panama CanalDevelopment of constant-speed operation controller for vehicle, first in Japan
Development of hydraulic winch forship, first in Japan

Fiscal 2016

24,183

Commutator motor (patented)

 ompletion of traction motor and conC
troller for the Japan National Railways“Kodama”limited express

Fiscal 2015

24,804

 evelopment of ST type three-phase AC
1950 Ddevice, first in Japan

159th fiscal term

26,327

From postwar reconstruction to high economic growth1952 Development of Cardan shaft driving

158th fiscal term

24,603

2004 Development of electrical equipment for Beijing subway east-west line train

1950~1989

157th fiscal term

23,676jing subway east-west line train

 ur stocks was listed on Tokyo Stock ExchangeO

156th fiscal term

(million yen)

Early domestic pantograph1935 Development of diesel electric railcar,

155th fiscal term

Net assets evelopment of stroke switching type door closing machine, first in Japan
1990 D

trolleybus, first in Japan ompletion of controller with regenerC
ation brake using compound motor,
first in Japan

Highlights of Toyo Denki Seizo K.K. and Consolidated Subsidiaries for the Consolidated Fiscal Year ended May 31 or as of May 31

thyristor, first in Japan

Global expansion and to the next 100 years

 evelopment of pantograph, first in Japan
1921 D
1926 Start of manufacturing of three-phasecommutator motor (AS motor)

1989 Development of small VVVF inverter using reverse conductive GTO

Consolidated Financial Highlights ay, Shiga Ryuo Plant completed
M
Angeles County Metropolitan
June, Toyo Denki Seizo K.K. 100th anni- Los
Transportation Bureau P3010 LRV
versaryOrder received for consigned research and development of superconducting flywheel power storage system for railways

2019 Establishment of SIAM TOYO DENKI Co., Ltd. in Thailand stablishment of Chalco-Toyo Permanent Magnet Motor Co., Ltd.
E
in China

Non-financial Data

CO2 emissions on
a non-consolidated basis(t)*3Electricity consumption on a
non-consolidated basis (10,000 kWh)*3

Note: Effective as of December 1, 2016, the Company implemented a share consolidation (five shares consolidated into one share). Net assets and net income are calculated on
the assumption that the share consolidation was implemented at the beginning of the 155th fiscal term.
Dividends are presented in the actual amounts paid.
*1 The Company has adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 2 8, February 1 6, 2 0 1 8) from the beginning of the158th fiscal term. Accordingly, total assets as of the end of the 157th fiscal term have been calculated by retroactively applying the accounting standard.
*2 The dividend for the 157th fiscal term includes a commemorative dividend of 20 yen for the 100th anniversary.
*3 Aggregate amount of production bases per fiscal year beginning in April and ending in March of the following year
Figures for the Shiga Ryuo Plant since fiscal 2018 include those for TD Drive Co., Ltd.
Toyo Denki Seizo Report 20204

Message from the President

While following the basic policy of the medium-term management
plan “Revitalize 2020,” we will add and carry out new measures to
respond to changes in the business environment.

Kenzo Terashima

Akira Watanabe

ChairmanPresident

that the Company has been pursuing in recent years, the fully
fledged operation of Chalco-Toyo Permanent Magnet Motor Co.,
Ltd., a joint venture responsible for manufacturing industrial permanent-magnet synchronous motors in China, as well as the expansion of the subway train maintenance business in Beijing, will
be major pillars of that policy.
Based on the decisions of the 159th Ordinary General Meetingof Shareholders and a subsequent meeting of the Board of Directors, Mr. Kenzo Terashima was appointed Chairman, and Mr. Akira
Watanabe was appointed President. Additionally, Mr. Koji Mizumoto assumed the new position of Outside Director with the objective of further strengthening governance.
We hope that our stakeholders will look forward to further development of the Company facilitated by the new management
team and would like to ask for their continued support.

In the Information Equipment Systems segment, orders received were lower than the previous fiscal year without any major
projects in the second half of the year. Both net sales and segment profit increased, boosted by software improvement projects
and other factors associated with the consumption tax hike andrevisions in train timetables in the spring.
Our dividend forecast for the fiscal year ending May 2021 isstill pending. When it becomes possible to disclose our earnings
forecast, we will promptly announce a dividend forecast as well.

Profile of New President
Name
Akira WatanabeHometown
Tokyo

Results for the fiscal year ended May 2020

We would like to express our sincere gratitude to all of our stakeholders for their continued support.
First of all, we offer heartfelt condolences to those who losttheir lives to COVID-19 and deepest sympathies to their families
and the people affected by the loss. We also pray for the quickest
recovery of coronavirus patients.
COVID-19 has caused a major impact on the entire Japaneseindustry, including our customers who are transportation operators and companies in the automobile industry and the equipment
industry. We pray that the COVID-19 epidemic will be contained
as quickly as possible and that economic activity will be revived
again. The Company will continue its efforts to help to prevent the
spread of infections, while prioritizing the safety and health of
employees through measures such as working from home andstaggered commuting and minimizing hindrance to production.
During the fiscal year ended May 2020, the spread of
COVID-19 resulted in restrictions on sales activities in Japan due
to voluntary refraining from going out and on traveling abroadfrom the latter half of the year. However, the Company did not suffer from any major hindrance to its production activities andachieved a higher profit that exceeded the initial target for the

5fiscal year. This was attributable to the integration of production
bases of the Industrial Systems segment to the Shiga Ryuo Plant,
which was carried out on the occasion of the 100th anniversaryof the Company’s founding, productivity improvement in theTransportation Systems segment, as well as new product development in the Information Equipment Systems segment.
Nevertheless, the global economic downturn caused by
COVID-19 has made many customers cautious on capital investment during the fiscal year ending May 2021. Amid this environment, in terms of the Company’s earnings forecast for the fiscal
year ending May 2021, it’s possible to make forecast to a certain
extent for the Transportation Systems segment, which had a relatively large order backlog at the end of the previous fiscal year,
but we think that it will take some time to assess coming developments for the Industrial Systems segment. We will promptly inform you once our earnings forecast can be produced.
Meanwhile, our business policy is to add and implement newmeasures in response to changes in the business environmentthat are becoming apparent these days, while reviewing the medium-term management plan and following the basic policy of theongoing “Revitalize 2020.” In particular, regarding globalization

In the fiscal year ended May 2020, orders received were 38.5 billion yen due to a negative rebound from the previous fiscal year,
when we received large-scale orders in the Industrial Systems
segment, and the stagnation of sales activities caused by the
spread of COVID-19. Net sales were 39.0 billion yen, reflecting a
YoY decrease in orders received in the Transportation Systems
segment. Operating income reached 1.06 billion yen owing to improved profitability, exceeding one billion yen for the first time inthree years. Ordinary income was 1.2 billion yen due to higher
operating income. Net income attributable to owners of the parent
was 1.08 billion yen as a result of efforts to reduce certain crossholdings. Overseas sales accounted for 20.7% of net sales, mainly due to lower net sales at overseas subsidiaries.
By segment, the Transportation Systems segment saw a YoY
decrease in orders received, dragged down by lower orders in Japan and overseas excluding China. Net sales decreased due to afall in sales in Japan. Segment profit was unchanged from theprevious fiscal year as a result of efforts to step up cost control
and reduce expenses.
In the Industrial Systems segment, orders received were lower
than the previous fiscal year due to a negative rebound from theprevious fiscal year, when we received large-scale orders, and thestagnation of sales activities caused by the spread of COVID-19.
Net sales increased, helped by higher sales for testing equipment
and power supply. Segment profit rose as a result of enhanced
cost control and process control.

Date of birth
November 22, 1959
Education
March 1982: Graduated from Department of Electrical Engineering, Schoolof Engineering, Tohoku University
CareerApril 1982	Joined Toyo Denki Seizo K.K.
August 2013	General Manager, Business Development Division
August 2015	Executive Officer, General Manager, Management Planning
Division
August 2016	Director, Division Director, Transportation Business Unit
June 2018	Executive Director and Executive Officer;
Division Director, Transportation Business Unit; General
Manager, International Sales Division, Transportation
Business Unit
August 2018	Executive Director and Executive Officer;
Division Director, Transportation Business Unit
August 2019	Senior Executive Director and Executive Officer;
Division Director, Transportation Business Unit; Plant
Manager, Yokohama Plant
August 2020	Appointed as President, Representative Director
Memorable assignments• Involved in the development and design of propulsion unit of magnetic
levitation train (high speed surface transport or HSST) systems (late1980s)• Involved in the development and mass production launch of electriccomponents for hybrid construction machinery (early 2010s)
Motto
Be both cautious and optimistic
Hobbies
Listening to and playing music, motorcycle
Toyo Denki Seizo Report 20206

1Special Report

Initiatives for ESG and SDGs

Plant Opening Ceremony of Chalco-Toyo Permanent
Magnet Motor Co., Ltd.

Connect to the Future– What we can do for people, the environment and society“Transportation Systems” to support the safety of railway infrastructure with electrical equipment such as pantographs and driving gear units.
“Industrial Systems” to help people’s lives and energy saving with automotive development, processing equipment, and electrical products for
power generation infrastructure.
“Information Equipment Systems” to watch the work comfortably in the network such as terminals for stations and conductors, monitoring
control of remote facilities, etc.
In our three businesses, we are manufacturing things that help the environment and society (ESG).
We will contribute to the realization of a sustainable society by further leveraging our accumulated technology and experience.

Environment

Page 14

Environmental stewardship activities(Environmental Philosophy and Action Guidelines)
Implementation of environmental management	SocialPage 16

Initiatives for stakeholders
Creating a pleasant workplace

2

Special Report

Governance

Page 21

Corporate governanceThe business activities of Toyo Denki Seizo are closely related to the environment and social infrastructure. By offering products and systems combining“environmental technology” and “IT technology,” we contribute to infrastructuredevelopment and sustainable development of a safe and secure society. We areendeavoring to proliferate energy-saving products toward the following specificgoals of SDGs:
7 Affordable and Clean Energy
13 Climate Action

In June 2019, the Company established Chalco-Toyo Permanent Magnet Motor Co., Ltd., a joint venture company that primarily engages in the manufacture and sales of industrial permanent-magnet synchronous motors inChangshu, Jiangsu Province in the People’s Republic of China (hereinafter
China). Preparations for the plant’s operation had been underway and werecompleted recently, with an opening ceremony held on September 10, 2020.
The opening ceremony was a grand affair and attended by the joint venture
partner companies, senior officials of the Changshu government, business
partners, local media, and many other guests.
We will continue to capitalize on our outstanding motor drive technology
and globally expand our business in order to contribute to the realization ofsocial infrastructure systems that are friendly to the global environment.

Plant opening ceremony

Internal view of the plant

Examples of initiatives

Internal awareness-raising activities

Energy saving of railways

We conduct awareness raising activities
such as in-house newsletters to raiseawareness and knowledge of SDGs andto encourage employees to think themselves about efforts to achieve SDGs
through business.

We have been supplying various electrical equipment for vehicles to railways around theworld to support their development. Examples of our products accepted by customers inrecent years include the supply of VVVF inverters using SiC elements and high-efficiency
totally-enclosed motors for Keisei Electric Railway’s new 3100
series rolling stock. Energy consumption was reduced by about
18% compared to the conventional system, achieving energy
savings.

Energy saving with eco-drive (ED) motors and intelligent inverters
The Company’s permanent-magnet synchronous
motors, “eco-drive (ED) motors,” and intelligent
inverters are widely used for production andprocessing facility systems in Japan and overseas,
facilitating energy-saving.

7

Background to the establishment of Chalco-Toyo Permanent Magnet Motor Co., Ltd.
Chalco-Toyo Permanent Magnet Motor Co., Ltd. was established as a joint investment between Chinalco Rare Earth & Metals Co., Ltd., asupplier of rare earth metal resources affiliated with Aluminum Corporation of China (CHINALCO), a trading company Beijing Ling Yang
Trading Co., Ltd., and the Company. The purpose of the joint venture is to manufacture highly efficient permanent-magnet synchronous
motors for production and processing facilities as the Company’s first overseas manufacturing base for the Industrial Systems segment,
and to capture energy-saving needs in the Chinese and ASEAN markets.

Jingche Shuangyang
Toyo Denki (Beijing)

Overview of the plant
Beijing

North Korea
Japan
South Korea

People’s Republic of China

Chalco-Toyo (Changshu)
ChengduYonggui Toyo

Changzhou Ruiyang
Yangdian Zhanyun
Changsha

Xiangyang Electric

Block G, Jiadi (Changshu) International Industrial Park,
No.1150 Southeast Avenue, Changshu Hi-tech Industrial
Development Zone, Changshu City, Jiangsu Province

Site area

approx. 20,000 m2

Tokyo
Osaka

NagoyaChangzhou
Shanghai

Location

Subsidiaries and affiliates for Transportation Systems
Subsidiaries and affiliates for Industrial Systems
Subsidiaries and affiliates for all segments

Employees 42 people
Products

Industrial permanent-magnet synchronous
motorsApplications

Factory lines, processing equipment, printing
machines, compressors, pumps, etc.

Production
Target production of 5,000 units in fiscal 2021
capacity

Toyo Denki Seizo Report 20208

Transportation Systems Segment

BUSINESS

Support railway transportation that connects people andcities with safety and trust, through manufacturing thatmerges electronics technologies and mechanicaltechnologies in a highly advanced manner

Results for fiscal 2019
Net Sales (Unit: Million yen)Segment Income (Unit: Million yen)Orders Received

Orders Received (Unit: Million yen)

Net Sales (Unit: Million yen)

2019

2020

2018

2019

2020

2018

2019

2020

1,008 million yen (Up 55.1% year on year)

650

1,008

13,023

12,33913,023 million yen (Up 5.5% year on year)
Segment Income

2018

Segment Income (Unit: Million yen)276

Segment Income

Net Sales

11,769

2,474

2,578

2,427

24,269 million yen (Down 10.9% year on year)
2,474 million yen (Up 1.9% year on year)

33.3%

11,198 million yen (Down 12.7% year on year)
24,26927,23525,712

25,86625,712 million yen (Down 1.4% year on year)

26,080Orders Received (Unit: Million yen)

Net Sales

Percentage of
total net sales

Results for fiscal 201927,949Orders Received

BUSINESS

Deliver technologies and gratitude to customers withhighly precise, highly responding and highly efficient
power electronics, for realization of an environmentfriendly society

11,19862.1%

Industrial Systems Segment

12,833

Percentage of
total net sales

Business Report

11,309Business Report

2018

2019

2020

2018

2019

2020

2018

2019

2020

Orders received decreased 1.4% compared with the previous fiscal year to 25,712 million yen, due to a decrease in orders from private

Orders received decreased 12.7% compared with the previous fiscal year to 11,198 million yen, due to a negative rebound from the pre-railways and overseas customers excluding those in China. Net sales totaled 24,269 million yen, a 10.9% decrease from the previous fis-vious year, when we received large-scale orders for a new business (related to power supply), as well as the stagnation of sales activities

cal year, due to a decrease in sales for JR Group and private railways. Segment income was almost unchanged from the previous fiscal

caused by the spread of COVID-19. Net sales increased 5.5% compared with the previous fiscal year to 13,023 million yen on higher

year at 2,474 million yen, as a result of efforts to step up cost control and reduce expenses.

sales for testing equipment and power supply. Segment income totaled 1,008 million yen, a 55.1% increase compared with the previous
fiscal year, due to efforts to step up cost control and process control, as well as to reduce expenses.

VOICE

We will introduce new environmentally friendly products to the market and expand theoverseas maintenance business.

The Transportation Systems segment will naturally continue pursuing safety and reliability of electrical equipment for
railway vehicles, which have to meet strict usage conditions, and at the same time pour our efforts on reducing environmental impact in the form of energy saving, maintenance saving, and noise reduction to provide new environmentallyfriendly products and services.
In the domestic business, there has been a growing number of customers who have chosen our new products, including driving inverters and auxiliary power supply units that realized smaller size and lighter weight as well as
noise-reduced motor and driving gear units. Going forward, we anticipate more customers will choose our new products, together with pantographs and other highly reliable electrical equipment.
As for the overseas business, the maintenance business of electrical equipment for subway trains has alreadybeen launched in China, and we will strive to develop a structure and provide stable services to meet demand thatwill sharply increase. Particularly in North America, we are reorganizing our local subsidiaries in response to changes
in the business environment and preparing to build a new maintenance business with a plan to start operationssoon.
We will also work towards improving profitability of the production line at the Yokohama Plant, one of our production bases, by enhancing production capacity and efficiency.

9

Naoki Okuyama
General Manager ofTransportation Business Unit

VOICE

We will strengthen the domestic business foundation and push for overseas expansion,
while enhancing the Shiga Ryuo Plant.

In two years after the launch of the Shiga Ryuo Plant, the Industrial Systems segment has achieved a significant improvement in profitability while absorbing the increase in depreciation associated with the construction of the new plant.
This is because factory productivity has increased, and we have significantly boosted the profitability of manufacturing
through tighter cost control and process control, in addition to thorough cost management.
In our sales efforts, we expanded the user base with the introduction of super-high-speed rotating dynamo that can
support the development of electric vehicles (EV) in the field of testing equipment for automobile development, and alsooffered system development and detailed services to thoroughly satisfy customer needs in the processing equipment
field. With these efforts, we sought to expand sales to domestic and overseas machine manufacturers and users.
Meanwhile, 2020 has been hit by the coronavirus crisis, and we are now facing headwinds owing to customers pulling back from capital investments and restrictions on our sales activities and on-site actions. Despite the setbacks, weare steadily proceeding with steps to enhance the Shiga Ryuo Plant toward the future.
In addition to further improving product quality, we will expand the applications of in-wheel-well dynamo for testing
equipment and implement actions for their full-scale production, while accelerating the development of large-capacity
motor and inverter for overseas markets. Also, we will capitalize on SIAM TOYO DENKI, a Thai subsidiary established in
2019, and Chalco-Toyo Permanent Magnet Motor Co., Ltd., a Chinese motor production subsidiary that started operation this year, in order to strengthen the domestic business foundation and push for overseas expansion.

Yoshifumi Otsubo
General Manager of Industry
Business Unit

Toyo Denki Seizo Report 202010

Business Report

Information Equipment Systems Segment

BUSINESS

Provision of products that make the execution of operations
on station premises and trains smooth and convenient andM2M solutions based on mobile phone networks and cloudservers using remote monitoring system

Percentage of
total net sales

4.5%

Results for fiscal 2019
Orders Received (Unit: Million yen)

2019

2020

2018

2019

2020

2018

290

314

460

1,772

1,611

1,756
2018

BUSINESS

Order received for consigned research and development ofsuperconducting flywheel power storage system for railways
The Company received an order from East Japan Railway Company to conduct operations related to equipment manufacturing and the
preparation of test reports for verification tests of a superconducting flywheel power storage system for railways.
Based on the “Basic Agreement on Technology Development of Superconducting Flywheel Power Storage System for Railways” concluded on March 29, 2018 between Yamanashi Prefecture, the Railway Technical Research Institute, and East Japan Railway Company,
this system is being developed for the world’s first practical use in the railway field. The Company will conduct the design and manufacturing of the power conversion equipment, and will be responsible for the overall coordination of this power storage system’s construction, in
cooperation with MIRAPRO Co., Ltd. (Hokuto, Yamanashi Prefecture; President & CEO: Hiroyuki Tsugane).
Through this business, the Company will work on the construction of a new power storage system that contributes to the improvementof energy efficiency, the stable usage of renewable energy and technology development in the railway field.

Segment Income

460 million yen (Up 58.6% year on year)

Expansion of New Businesses

2019

2020

Orders received decreased 8.2% compared with the previous fiscal year to 1,611 million yen without any major projects in the second
half of the fiscal year, despite the boost from software improvement projects associated with the consumption tax hike and revisions in
train timetables in the spring as well as higher orders of composite ticket vending machine in the first half. Net sales increased 11.9%

compared with the previous fiscal year to 460 million yen for the same reason as net sales.

The flywheel power storage system is a systemthat, by rotating a large disk (flywheel) within thedevice, stores regenerative electric power as kinetic energy (charging), and converts kinetic energy
back to electric power (discharging) as necessary.
The bearing portion of the superconducting flywheel power storage system adopts the superconductivity technology designed by the Railway
Technical Research Institute, and establishedthrough verification tests conducted in Komekurayama, Yamanashi Prefecture. The technology allows the flywheel to float, reducing rotational loss
as there is no contact, and realizes a reduction in

When discharging
Power is supplied to the train, andflywheel decelerates

Charging

Discharging

Time

Superconducting Flywheel Power Storage System
Generator motor

FlywheelSuperconducting
magnetic bearing

Power conversion
equipment

Discharging

sions in train timetables in the spring as well as higher sales of composite ticket vending machine. Segment income increased 58.6%

Storage System for Railways

When charging
Regenerative electric power of the train
is absorbed, and flywheel accelerates

Charging

year on year to 1,772 million yen, helped by software improvement projects associated with the consumption tax hike and the revi-Superconducting Flywheel Power

Rotational speedof flywheel

1,772 million yen (Up 11.9% year on year)

2,416

Net Sales

Segment Income (Unit: Million yen)

2,801

1,611 million yen (Down 8.2% year on year)

Net Sales (Unit: Million yen)

1,583

Orders Received

Business Report

Strong magnetic repulsive force realized by thesuperconducting magnetic bearing allows the flywheel to float

maintenance efforts.

Overhead wires

VOICE

We will work towards expanding the Information Equipment Systems segment through product development
and solutions that meet customer needs, with a focus on railway station operating equipment.

To be prepared for the consumption tax hike scheduled for October 2019, the Information Equipment Systems segment updated all equipment already in use during the previous fiscal year. As part of the process, there were many
functional refurbishments, creating a lot of work for us, but everything was completed without any major problems.
In addition, we delivered renewal orders for commuter pass issuing machine to several customers. These machines
are currently working smoothly. Commuter pass issuing machines that one of those companies ordered are exclusively for IC cards and no longer compatible with magnetic tickets. This is the first product of its kind that the Company supplied. Additionally, we received an order for and delivered software for IC card charging machines, which isa new product. We will continue to provide products that satisfy our customers by leveraging our strengths in products related to fare calculation and IC card processing.
We face extremely difficult conditions in the current fiscal year as business operators have postponed or cut backon their plans for renewal and new projects as well as functional refurbishments in light of the spread of COVID-19.
We will press on with new product development with the keywords of non-contact, cashless, thin client, and competitive price in anticipation of coronavirus containment, while giving due consideration to the prevention of infection
spread.

11

When braking

When accelerating

When the train decelerates:
Regenerative electric power is generated

When the train accelerates:
Train consumes electric power

IORemoter II: New IoT terminal for Toyo IoT/M2M solutions/remote monitoring and control systems

Toshihiko Akihiro
General Manager of IT Business
Unit

The Company has been developing IORemoter II, which is a further evolution of “IORemoterLTE,” an IoT terminal for remote monitoring and control systems, for IoT/
M2M solutions. Shipment of the first lot will start in November 2020.
IORemoter II is a high-speed IoT terminal with a built-in 4G/LTE module. IoT remote monitoring and control ofvarious facilities, controllers, devices, and mobile entities can be conducted faster and at a larger capacity.
Furthermore, with multi-carrier and dual SIM operation enabled, we can now propose communication lines thatare more suitable for each customer’s applications.
The Company is considering collaboration with cloud service platforms in the future. We hope to contribute to operational efficiency by realizing the provision of faster, easier, lower-priced, and more secure IoT/M2M solutions forour customers.
Toyo Denki Seizo Report 202012

Business Report

Research and Development/Intellectual Property

BUSINESS

ESG/CSR Report

Environment

Initiatives to Protect the Environment

R&D to support the development of social infrastructureand supporting frameworks

With a view to realizing an environment-friendly society, the Company will further strive to promote the reduction ofenvironmental burden, while providing more efficient products that contribute to energy conservation.

Research and Development
The Group’s R&D activities are based on seeking to create products that fully satisfy our customers and challenging the creation andexpansion of these products, and we actively promote development of technologies of our existing businesses and basic technology
developments that support this development as well as development of new products that expand our businesses.

Environmental
Philosophy
Action Guidelines

The Toyo Denki Group sets initiatives to protect the global environment as its priority task
and contributes to the development of a sustainable society.
We will continue to provide products and services that are considerate of the burden on the global
environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”1.

We will comply with all environmental requirements including those under the relevant laws and regulations.

Description2.

Development ofhigh-frequency insulated
Transportation auxiliary power supply (SIV)

Applying SiC elements to high-frequency insulated auxiliary power supply and taking advantage of low switchinglosses enabled higher frequency of the voltage applied to the transformer and the suppression of the increase in element losses, making the whole auxiliary power supply smaller and lighter.

We will strive to minimize environmental burden through a reduction of energy consumption and other measuresat all stages of product lifecycle, namely planning, development, design, production, sales, use and disposal.

3.

We will establish and execute a system to continuously promote activities to protect the global environment.

4.

We will raise environmental awareness among individuals through enlightenment activities within the Group

Development of VVVF inverters
for vehicles with wheel slip
stabilizing control

We introduced wheel slip stabilizing control using the slip acceleration feedforward control method. The method isaimed at keeping stable slipping and enabling self-re-adhesion without drastically reducing torque to restore adhesion during wheel spins.

Development of
in-wheel-well dynamo

The name “in-wheel-well dynamo” was adopted for “flat-type dynamo” that can fit inside the automobile’s wheel well and be analternative to the conventional roller type chassis dynamo. We installed the product on real vehicles and conducted evaluation tests
based on driving modes specified by the Ministry of Land, Infrastructure, Transport and Tourism and other organizations.

Development of slender-typehigh-speed motor for EV/HEV
system tests

We developed a slender-type high-speed motor with a maximum speed of 20,000 rpm for testing the drive systemsof electric and hybrid vehicles.

Results and topics from fiscal 2019
Segment

Systems

Industrial
Systems

Information
Equipment
Systems

Project

Development of standardized
data and programs for railway
station operating equipment

A sustainable society as envisaged by the Company is the combination of a “low-carbon society,” a “recycling-based society” anda “nature-symbiotic society.”
The environment technologies of the Company have produced
numerous products that contribute to energy conservation, including
high efficiency motors and inverters that capitalize on the amalgamation of our outstanding motor drive technology and other state-of-theart technologies. In the meantime, the Company has been striving toconserve resources through not only the efficient use of energy but
also the reduction of the size and weight of its products.
In addition, the Company is working on the development of
products with lower levels of noise involved in their use to makethem friendlier to the surrounding environment.
The Company will make further contribution to make society
more sustainable, fully utilizing on its environmental technologies
on a global scale, while carrying out various environmental
actions at each of its bases.

We developed standardized fare software (data/programs) used for station operating equipment. This is expected toreduce renewal costs associated with fare revision and to improve the quality of the fare calculation processing.
We developed and commercialized IORemoter II by evolving the remote monitoring terminal (IORemoter) currently onsale to expand and enhance functions. Its main enhanced function is support for SIM-free and dual SIM operation,
making it possible to employ multiple communication carriers including overseas ones to build a monitoring system.

Function expansion of
Expansion of remote monitoring units
New
Businesses Development of automotive
step up/down converter

We developed a step up/down converter consisting of automotive electronic components. Adopting the interleaving
method for power conversion circuit and controlling phase difference of switching achieved lower input and output
ripple current, reducing the capacity of reactor and capacitor.

Reduction of motor
manufacturing cost withsquare wire and laser welding

With the aim of reducing man-hours for the winding process by adopting square wires for ED motor coils and automating laser welding, we finished evaluation for the optimization of the number of motor poles and conductor size formedium- to large-size models.

Improved sealability of
lubrication for vehicle
driving gear units

We worked on the analysis of lubrication pumping in the gearbox and the fluid analysis of the labyrinth structure, as
well as the discovery of the mechanism of lubrication mist generation.

Research
Laboratory

Aiming for Realization of a Sustainable SocietyIntellectual Property

13

Energy conservation throughthe Company’s technologies
and products
Energy conservation in
production activities
Use of sustainable energy

Recycling-based society
Promotion of 3Rs(reduce, reuse, recycle)

Improvement of logistics
efficiency
Proper treatment of wastes
Reduction of amount of final
disposal of wastes

Nature-symbiotic society

Proper management ofchemical substances

Conservation of biodiversity

Cleanup around offices

Our Website

Environmental Management System
Our intellectual property is placed as a key corporate resource. Our intellectual property department is responsible
for the management of intellectual property and our researchlaboratory and the development divisions in each business
unit actively apply for patents and utility models.
In the overseas markets which we expect to further expand our businesses, we have started to actively engage inactivities concerning our intellectual property in order to protect our technologies and brand.

Low-carbon society
Implementation of measuresagainst global warming

Patent applications granted
Patent applications:
Granted cases:(Applications)

80
60

5

62

1
0

40

57
20
0

16 0
16
2015

4
65 27
14
14

2016

0

Overseas
Overseas

66

45

45

Japan
Japan

51
33

1

47

26

24

2017

2018

5

42

36

31

9

9
37

2

36

27

29 34

2019

2020

2

In order to tackle environmental issues on an independent andcontinuous basis, the Company has developed and operates anenvironmental management system and thereby obtained ISO
14001 certification. This certification has been acquired for all
offices and the production bases Yokohama Plant and Shiga
Ryuo Plant.
Years of ISO 14001 certification

Yokohama Plant
2004

Shiga Ryuo Plant*
2001

Extended to all offices
2010

Information on the
Company’s environmental initiatives canbe found at our website.

https://www.toyodenki.co.jp/
esg_csr/*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.
Toyo Denki Seizo Report 202014

Environment

ESG/CSR Report

ESG/CSR Report

Initiatives to Prevent Global Warming

Initiatives for Control over Chemical Substances

Initiatives to reduce greenhouse gas (CO2) emissions

Volatile organic compounds (VOCs) emitted as a result of our businessactivities are adequately controlled and the amount of emission ismonitored under the Pollutant Release and Transfer Register (PRTR).
We will further engage in the reduction of waste through suchmeasures including using non-VOC materials and implementing
recovery and reuse of solvents. PCB waste is also subject to adequate control, storage and disposal in accordance with Japan’s
Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.

The Company is promoting energy conservation at each of its
production bases and offices to reduce its CO2 emissions. At the
production bases in particular, we are promoting power-savingand streamlining at production facilities. In addition, the Yokohama
Plant uses solar power generation for peak shaving of power demands.

Notification volume for Pollutant Release and Transfer Register (PRTR) substances

Targeted reduction of CO2 emissions and progress status
Aiming to reduce CO2 emissions per unit of production output by
1% year on year, the Company’s main production base, the Yokohama Plant, reduced emissions by 5.1% in fiscal 2019.

Total amount of air emissions(kg)

Total amount of shift

10,0008,000 7,900

7,700

6,120

6,000

5,260

5,750
6,490 7,200
7,000
6,800
6,150 6,600
5,800

4,000

Total energy input (electricity)

2,000
Yokohama Plant(Unit: 10,000 kWh)

Shiga Ryuo Plant (formerly Shiga Factory)

0

1,000

839.2

800

684.3
680.3
176.5
32.5 648.831.0 647.231.6
36.0

600
400

651.8

200

617.8

615.6

662.7

644.3

2014

743.9
178.3

565.6

2015

2016

2017

2018

2019

(year*)

Total energy input (gas)(Unit: 1,000 m )Yokohama Plant

3

Shiga Ryuo Plant (formerly Shiga Factory)

500
400

284.7

286.0

294.1

443.4
74.3

350.0

369.1

100

2019

(year*)

2014

2015

2016

Output of general and valuable waste

2017

328.0

450

2018

2019

(year*)

408.5

300

434.3

274.1

424.5

Shiga Ryuo Plant (formerly Shiga Factory)

4,265
4,097
3,895
170 3,924
183
165
161

109.6
2014

4,185
806

2015

2016

2017

1,000

3,759

3,734

3,914

12

3,972

0
2015

2016

2017

2018

2019

490.6
55.1

2018

2019

Yokohama Plant

Shiga Ryuo Plant(year*)

10.4

3,379
9

2014

450.7
48.8

Shiga Ryuo Plant
Shiga Ryuo Plant

Volume of landfill waste
(t)

4,095

Yokohama Plant
Yokohama Plant

435.5
401.9
134.8
123.6
107.6
16.6
19.8
115.0
107.0

0

4,905
933

441.9

246.2

150
Yokohama Plant

5,000

General waste output
Valuable waste output

600

Total CO2 emissions(t)

The Company has been thoroughly implementing waste processing rules, sorting metal waste and recycling paper resources. As aresult, its landfill waste rate was 1.2% in fiscal 2019.

408.2
80.2

0

2,000

2018

(year*)

9.0
4.1

6

5.0

3

5.0

7.2
3.2

6.3

2.3

15

The Company makes it one of our business principles to “build trust by focusing on quality first.” As such, we strive
to enhance customer satisfaction through our commitment to thorough-going quality control as we believe delivering safe and secure products and services to customers is the Company’s most important mission.

Quality Control – Providing Safe and High-Quality Products
Basic policy on quality control
The Company’s electrical equipment for rail vehicles is installed inmany rail vehicles. These extremely important products play a
direct role in ensuring the safety of human life and property
during rail transportation. In the Industrial Systems and Information Equipment Systems segments as well, the Company’s products and services are used in customers’ production facilities,
development sites and in the field of social infrastructure, andthey form the foundation supporting the sustainable developmentof a society that is safe and comfortable to live in.
In order to ensure the high quality of our products and services,
the Company has established a quality policy, which is deployed at all
production bases as we strive to maintain and improve our humanresources education, compliance with rules, and our facilities.

2015

2016

2017

*The fiscal year is from April to March of the following year *Figures for the Shiga Ryuo Plant include those of TD Drive Co., Ltd. from fiscal 2018.
*Prior to fiscal 2017, total energy input (gas) data is available only for the Yokohama Plant due to zero input of the Shiga Plant.
*Prior to fiscal 2017, data on output of general and valuable waste and volume of landfill waste is presented only for the Yokohama Plant.

2018

2019

Quality assurance to satisfy our customers.
Challenge to achieve “zero” complaints.

(year*)

Year ISO 9001 certification obtained

Yokohama Plant
1997

Shiga Ryuo Plant*
2000

Extended to all offices
2005*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Responding to the Global Market
Proper export controls
The Export Control Department at Human Resources and General
Affairs Division is responsible for export management as the export management control department. We have created a system
for the proper management of exports in order to ensure compliance with the laws and regulations concerning export management in the countries and regions where we engage in businessactivities as well as to avoid involvement in transactions that could
hinder the maintenance of international peace and safety.
The Export Control Department handles cargo and technology
parameters used in determining whether or not export permits
are required, as well as investigation of transactions. In addition,
the Department carries out employee education and guidanceand support for Group companies.

Promotion framework

Acquisition of International Standards

With regard to quality control, each fiscal year the Company develops policies and the promotion framework aimed at further maintaining and improving quality in each business unit, along withspecific policies pertaining to the reduction of flaws and other issues. The Company’s Corporate Quality Control Division works together with the quality control department or the quality assurance
department in each business unit to put together a report on thestatus of quality control and results in each unit. The report is delivered to top management at the monthly Operating Officer Liaison
Meeting where measures are debated and decided. Furthermore, inthe event that a flaw is discovered after a product has been
shipped, the necessary steps are swiftly taken, mainly by the quality
assurance department in each business unit, while at the sametime the causes that led to the flaw and its mechanism are investigated, and this information is put into a database so that the information can be shared in-house in an effort to prevent recurrence.

High level of safety is essential for rail vehicles. UNIFE, the Association of European Rail Industry, established the International
Railway Industry Standard (IRIS) in
2007 to ensure the quality of rail vehicles.
In 2013, we became the first company in Japan to obtain an IRIS certification for auxiliary power supply (SIV).
In 2014, we were also accredited to the China Railway Certification Center’s (CRCC) certification for driving gear units.
CRCC, a state-owned enterprise set up in April 2003 after obtaining approval of the Certification and Accreditation Administration of the People’s Republic of China, is an organization thatmainly manages the quality of railway products. It is necessary
to obtain this certification to sell high-speed rail products in
China.
We will continue to acquire international standards and further
expand our business globally.

Quality Management System

4.0

0
2014

With Our Customers

Quality Policy

(t)

200

3,000

2017

Main actions
2014

4,000

2016

Initiatives for Reducing Disposed Waste as
Well as Recycling

0

300

2015

SocialThe Company has created and operates a quality management
system at its production bases, the Yokohama Plant and theShiga Ryuo Plant, and has obtained ISO 9001 certification.
Toyo Denki Seizo Report 2020

16

ESG/CSR ReportSocialWith Our Shareholders and Investors

Contributions to Local Communities

We strive to ensure transparency of management through the timely and proper disclosure of information and various modes of communication in order to receive an appropriate evaluation of the Company from our shareholders
and investors.

We are committed to various social contribution activities, to contribute to society through our business while facilitating our own co-existence with communities and to foster young people who will represent the next generation.

Towards Enhancement of Corporate ValueTo Convey the Mission and Appeal of
Electrical Industry as Well as of Toyo Denki

Basic philosophy
Through timely and appropriate disclosure of information to ourshareholders and investors, the Company accurately conveys ourmanagement policy and business conditions while making use of
IR tools such as our website to promote a full range of IR activities
that contribute to the improvement of our corporate value.

Dividends
Based on a comprehensive consideration of factors such as
maintaining a stable and continuous return of profits, andstrengthening the corporate structure, the Company paid a yearend dividend of 30 yen per share for the current fiscal year. Our
dividend forecast for the fiscal year ending May 2021 is still
pending at this time.
Dividend per share

Development of IR activities
IR activities for institutional investors and securities analysts
The Toyo Denki management team holds a financial results briefing each quarterly period to provide opportunities for institutional
investors and securities analysts to understand the summary of
our financial results. The management team gives a report including the state of progress of the medium-term management plan
and an overview and forecast for each segment as well as neworders received and other topics.
In addition, we strive to deepen understanding of the Company
through individual visits to institutional investors or holding factory
tours to provide opportunities for them to actually see our manufacturing sites, as well as participating in small meetings organized by securities companies, and taking other measures.
IR activities for individual shareholders and individual investors
The Company website includes a “For Individual Investors” page
which offers a clear introduction to our business activities and our
results, as well as making available a variety of IR materials.

Common dividend

(Yen)

40

（30）

30

30

Participation in university endowment courses and hands-on
courses

30

30

20
10

We are committed to activities that raise awareness and appreciation of our manufacturing expertise by accepting interns from local technical high schools and providing them with hands-on
experience at manufacturing sites. This internship system serves
as an effective means of recruiting outstanding technical staff on
a consistent basis as some students from these schools apply for
positions at the Company.

We are conducting “factory tours” to provide opportunities formembers of local communities to actually see our manufacturing
facilities and products in order to develop deeper understanding
about the business operations of the Company. During these tours,
we inform the participants of our products as well as our actions
for environmental protection and factory facilities, in an effort tobuild up relationships built on trust with local communities.

50
20

50

30

Commemorative dividend

Receiving interns

Factory tours

To bedetermined

60
FY 2015

2016

2017

2018

2019

2020

(Forecast)*Effective as of December 1, 2016, the Company implemented a stock consolidation of its commonshares at the ratio of five shares to one share. For the status of dividends before fiscal 2016, theactual dividend amounts before the said stock consolidation are stated. The figures in parentheses
are the amounts calculated based on the standard after the stock consolidation.

We participated in endowment courses sponsored by the Yokohama Green Purchasing Network so that participants can deepen
their knowledge on history of railway and the environment throughour business activities.
We conduct lectures leveraging the know-how fostered throughoperations and our business activities in on-site training courses
held by educational institutions including universities.

Record of 159th Ordinary General Meeting of Shareholders
Date held: Wednesday, August 26, 2020

The Company issues Business Reports for shareholders once every six months. They are also available on the website.

URL “For Individual Investors”
https://www.toyodenki.co.jp/ir/individual.php

A factory tour

Received the 2019 Yokohama Global WarmingCountermeasures Award from Yokohama CityThe Yokohama Global Warming Countermeasures Award is presented to businesses that have made outstanding efforts such as drastic reduction of greenhouse gas emissions under the Yokohama City
Global Warming Action Plan Program implemented by the Environmental Planning Bureau of Yokohama City.
We installed a solar power generation system (500 kW) on theroof of the Yokohama Plant in 2012. In recent years, the system has
generated 600,000 to 650,000 kWh of electricity annually, all ofwhich is consumed internally. This contributes to reducing greenhouse gas emissions (equivalent to approximately 300 tons of CO2
per year) and curbing global warming. The Company was awarded
by Yokohama City in recognition of this accomplishment.

Endowment course at a university

Cooperation with Yokohama Kyodo no Mori FundInterim Business Report for Fiscal 2019

Business Report for Fiscal 2019

The Company cooperates in small woodlands conservation activities led mainly by the city of Yokohama by donating part of theproceeds from vending machines installed at the Engineering
Center of the Yokohama Plant to the fund.

Plant tour for shareholders
Solar power generation system at the Yokohama Plant

17

Toyo Denki Seizo Report 2020

18

ESG/CSR ReportSocialWith Our SuppliersWith Our Employees

The Company responds to the needs of our customers
through the strong network we have built with suppliersin line with our unique characteristics as a businessbased on an individual build-to-order/multi-productsmall lot manufacturing model.

The Company seeks to cultivate a dynamic corporate
culture and to create a pleasant and safe workplace
where each and every employee can unleash his or her
diverse capabilities.

Towards Just and Fair Procurement

Towards the Development of Human
Resources with Competitive Strengths

Communication with suppliers
The Company’s products possess various distinctive characteristics such as being individually built-to-order, manufactured in
multi-product small lots, and demanding high reliability. Therefore,
the Company can be affected by the performance of our suppliers
as a result of issues such as delays in supply due to fluctuationsin production quantity or delays in processing due to the quality of
products received.
In order to reduce these risks as much as possible, the Company carries out instruction and support related to quality, technology, and skills for our suppliers, as well as guidance for
improvement of manufacturing sites, in order to ensure stableprocurement of even better quality products. In addition, we
actively promote information sharing through the “Toyo Denki
Cooperation Association” to which our leading suppliers belong.

Formulation of “Procurement Action Guidelines”(formulated in February 2016)
Procurement Action Guidelines
These guidelines indicate the codes of conduct that the Toyo
Denki Group’s executives and employees should observe in the
procurement of purchased parts and outsourced parts as required for the manufacturing of products ordered by customers(“procurement transactions”).
1. Procurement transactions shall be carried out in observanceof the laws of the relevant countries.
2. Information concerning suppliers in procurement transactions
shall only be obtained within the scope necessary for conducting procurement activities in accordance with contracts. Furthermore, efforts shall be made to carefully manage andobserve the confidentiality of information gained through procurement transactions.
3. Personal interests with suppliers shall be prohibited in procurement transactions, including the lending and borrowing of money.
4. Receiving of support beyond the socially accepted practices or
receiving of money or inappropriate gifts or any other forms of
personal rewards from suppliers shall be prohibited in personaltransactions. In addition, forceful requests for any of the abovefrom suppliers shall be prohibited in procurement transactions.
* Inquiries from outside are accepted via the following phone number
and e-mail address:

Legal Compliance Department, Human Resources and General Affairs Division +81-3-5202-8121
email address for inquiries to Toyo Denki Seizo K.K.: contact@toyodenki.co.jp

19

Human resources development policy
The Company has set the following policy on human resources
development and carries out education and training under the education and training system diagram as shown below.
(1)	To develop human resources who understand and practice our business principles and code of conduct and who
are of value both as company employees and as members of society.
(2)	To develop human resources who are professionals, eachpossessing a high degree of specialized expertise, by enhancing the knowledge, techniques, and skills they needto carry out their duties.
(3)	To provide a variety of educational opportunities in orderto promote personal development, with emphasis on aself-directed approach to study and growth.

Education and training system
The Company’s education and training system is divided into level-specific trainings conducted at each occasion, individual trainings according to job types and roles, a support program aimed at
helping employees to obtain academic degrees and official qualifications, and division education conducted independently by eachdivision.
Training contents are reviewed based on actions expected of
employees.
New employees who join the Company as technical staff receive lectures and practical training at the Technical Training Center in the Yokohama Plant for one year. The Technical Training
Center dates back to 1937 and has an over 80-year history. Employees with exceptional manufacturing skills or expertise arerecognized as “Technical My Star” internally and assigned to instruct and train younger employees. With these initiatives, three
employees have accepted Contemporary Master Craftsman
awards from the Minister of Health, Labour and Welfare and two
have been awarded to theMedal with Yellow Ribbon by
the Japanese government.
We continue to endeavor
to pass on superior technologies and skills to maintainthe high quality of our prod- Employee recognized as “Technical My Star” gets a
ucts.
special mark on his helmet

Creating a Pleasant Workplace

Initiatives for employment of the disabled

Response to the Act on Promotion of Women’s Participation
and Advancement in the Workplace
In accordance with The Act on Promotion of Women’s Participation and Advancement in the Workplace (Women’s Advancement
Promotion Act) that was enacted on April 1, 2016, the Company
is formulating an action plan to create an environment where
women can continue working with a sense of security as they advance their careers.
Acquisition of the “Kurumin” certification logo (June 2014)
In recognition of our efforts as a “company that
supports child-rearing,” which includes a substantial childcare system, educational activities concerning a work-life balance, the creation of an environment inwhich it is easy to obtain childcare leave, and the acquisition record of childcare leave by male employees, we received the “Kurumin”
certification logo from the Tokyo Labor Bureau in June 2014.
Initiatives for diverse work-styles
The Company has implemented a flexible work-style including a
flextime system for sales staff and those involved in development.
Furthermore, in order to support employees’ work-life balance,
we have put in place the “System for Rehiring Employees” foremployees who have resigned due to life events that occur in thecourse of their career (childbirth, childcare, family care, spouse’stransfer, etc.), so that they can be rehired when they reach thestage when it is possible to return to work.
As for employees who wish to be rehired after they reach themandatory retirement age (60), in principle, we continue to employ them until the age of 65.

The Company makes improvements to the workplace environmentand carries out workplace training with the aim of creating aworkplace where the disabled and those in normal health canwork together energetically. We also hold on-site job experience
sessions in collaboration with local governing agencies and special-needs schools regarding employment of the disabled.
Mental health measures
In an effort to prevent and detect mental health problems at an
early stage, we annually carry out stress checks and analyze theresults for each department at all offices (including overseasones). In addition to conducting “Line care training” for managers
and supervisors, we have partnered with an external medical institution to set up a telephone and e-mail consultation service toprovide support for prevention, treatment, and return to work.
Safety and hygiene initiatives
Under the “Company-Wide Safety and Hygiene Management Policy,” formulated every fiscal year, the Company holds the Safety
and Hygiene Committee monthly at each office, where annual
plans are drawn up and ongoing discussions are held in order tobuild a safe working environment, to reduce workplace injuries tozero and to find solutions to issues, including mental health. In
addition, the Company holds the “Company-Wide Safety and Hygiene Committee” every quarter to promote sharing of information
between offices as well as between Group companies.

Data concerning personnel and labor (at Toyo Denki Seizo K.K.)
Item
Number of employees

Unit
Total
Men
Women

Ratio of female employees
Number of administrative professionals

%
Total
Men
Women

Ratio of female administrative professionals
Average age

Average years of employment
Average annual salary
Turnover rate (within 3 years of joining the Company)
Number of employees taking childcare leave
Number of employees taking family care leave
Number of temporary staff (including part-timers)
Notes

Persons

Persons%

OverallMen
Women
Overall
Men
Women

Age

Years
Yen
%
Persons
Persons
Persons

Fiscal 2015
824
761
63
7.6
155
151
4
2.6
40.4
40.4
39.5
15.4
15.5
14.1
6,024,175
3.4
7
0
160

Fiscal 2016
832
768
64
7.7
150
146
4
2.7
40.4
40.4
40.1
15.2
15.2
14.8
5,990,250
2.0
9
0
152

Fiscal 2017
843
771
72
8.5
140
136
4
2.9
40.2
40.3
39.5
14.9
15.1
12.7
6,049,512
2.7
4
0
130

Fiscal 2018
831
762
69
8.3
143
139
4
2.8
40.8
40.8
40.9
15.4
15.5
14.1
5,756,046
6.5
6
0
119

Fiscal 2019
841
773
68
8.1
136
133
3
2.2
41.0
40.9
41.7
15.4
15.5
14.1
5,634,571
4.7
2
0
106

*Number of regular employees including Operating Officers, and number of special employees, temporary employees, contract employees and staff
on loan from other companies, etc.

Toyo Denki Seizo Report 2020

20

ESG/CSR Report

GovernanceIn an effort to continuously enhance its corporate value, the Company is striving to ensure transparency ofmanagement and compliance, along with the maintenance and operation of an adequate governance framework while reinforcing its risk management framework.

Corporate GovernanceOur philosophy of corporate governance
The Group’s business activities are based on the business principles that “prioritize ethics and contribute to the prosperity of customers and society as a whole.” We therefore strive to attainsound corporate management through strengthening and reinforcing corporate governance, fully appreciating the significanceof compliance based on corporate ethics. At the same time, we
review as appropriate our management monitoring system to ensure its conformity to the changes in the business environment
including social environment and relevant legislation.
Corporate governance

21Internal audit and Statutory Auditor’s audit
Internal audit
Internal audits of the Company are carried out by the Audit Division based on internal audit plans decided by the Board of Directors. The Audit Division has staff with qualifications such as theCertified Internal Auditor (CIA) and the Certified Information Systems Auditor (CISA). It reports its action plans and internal audit
results to the Board of Directors and the Board of Statutory Auditors.
Statutory Auditors’ audit
Statutory Auditors work with the Audit Division and Accounting
Auditors and exchange information on audit plans and contents ofaccounting audits to perform appropriate auditing tasks. Statutory
Auditors receive the results of quarterly reviews from Accounting

Outside Directors and External Statutory Auditors
The Company’s Outside Executives currently include three Outside
Directors and three External Statutory Auditors as shown below.
Each Outside Executive has excellent insight in each expertiseand satisfies the independence guidelines for Outside Executives
defined by the Company.
Mr. Hirokazu Chinone, Director (Outside Executive)
Mr. Hirokazu Chinone is qualified as a lawyer and provides usefuladvice regarding management in general, drawing on his specialized knowledge regarding corporate law and his wealth of experience developed throughout his career.
Mr. Takashi Yamagishi, Director (Outside Executive, memberof the Nomination and Compensation Advisory Committee)
Mr. Takashi Yamagishi provides useful advice regarding management in general, drawing on his wealth of corporate management
experience at Teijin Limited and his superior expertise.
Mr. Koji Mizumoto, Director (Outside Executive)
Mr. Koji Mizumoto was newly appointed as Director at the 159th
Annual General Meeting of Shareholders on August 26, 2020. He
is expected to provide useful advice, drawing on his wealth ofcorporate management experience at a predecessor firm to NIPPON STEEL CORPORATION and his knowledge of financial accounting as CFO.
Mr. Toshiaki Akechi, Statutory Auditor
Mr. Toshiaki Akechi is engaged in auditing activities, drawing on
his wealth of corporate management experience at a predecessor
firm to JR East Foods Co., Ltd. and other places.

Mr. Yoshinori Kawamura, Statutory Auditor (Outside Executive)
Mr. Yoshinori Kawamura serves as Professor of Faculty of Commerce, Waseda University, and is engaged in auditing activities,
drawing on his expertise regarding corporate finance and accounting
developed thus far. He also has experiences as Secretary and Special Member of the Business Accounting Council of the Financial
Services Agency, and an examiner of the Certified Public Accountant
Examination, etc.
Mr. Yasushi Miki, Statutory Auditor
Mr. Yasushi Miki is engaged in auditing activities, drawing on his
wealth of experience developed at a predecessor bank to MUFG
Bank, Ltd. and other places and his global perspective.
Executive Remuneration
Directors
Remuneration for the Company’s Directors consists of basic remuneration and bonuses, and the total remuneration amount isdetermined within the maximum remuneration, which was decided at the Ordinary General Meeting of Shareholders held in
August 2006. To ensure the independence of Outside Directors,
the Company provides no bonuses to them. Decisions on remuneration for Directors are made at the Nomination and Compensation Advisory Committee set up under the Board of Directors,
with the participation of Outside Directors, in order to enhance
objectivity and transparency of the decision process for executive remuneration.
Statutory Auditors
Remuneration for the Company’s Statutory Auditors is determinedthrough discussion among Statutory Auditors within the maximum
total remuneration, which was fixed at the Ordinary General Meeting of Shareholders held in August 2006. It takes form of fixed remuneration for each standing and part-time position. There are nobonuses for Statutory Auditors.

Corporate governance framework
General meeting of shareholders
Appointments/dismissals

Accounting Auditors

Reporting

ReportingAppointments/dismissals

Legal audit

Board of Statutory Auditors

ReportingDirectors

Statutory Auditors
Reporting

Reporting/decisions
Instruction/reporting

Internal Control Committee
Internal audit(Secretariat)

Legal counsel(Contact for whistle-blowers)

Reporting

Reporting

Human Resources andGeneral Affairs Division(Contact for whistle-blowers)(Contact for legal consulting)

Reporting on
business execution

Appointments/dismissals

Business audit

Accounting audit

Audit Division

Appointments/dismissals

Board of Directors

Appointments/
reporting/recommendations
Whistle-blowings
Oversight
Whistle-blowings

President
Management Strategy Meeting
Operating Officer Report Meeting
National and Global Group Company Meetings
Instruction/reporting

Appointments/dismissals

We have corporate bodies established in accordance with laws
and regulations as well as the Articles of Incorporation, including
the General Meeting of Shareholders, Directors and the Board of
Directors, Statutory Auditors and the Board of Statutory Auditors,
and Accounting Auditors. To strengthen corporate governance, thesupervision and execution functions of the Board of Directors are
separated, through the adoption of a structure where the Board of
Directors is mainly in charge of governance, and Operating Officers are primarily in charge of business execution.
The Company strives to ensure that both the supervision function of the Board of Directors and the audit function of (the Boardof) Statutory Auditors work effectively and believes that the current system is sufficiently running.
Specifically, each of the following bodies and meeting bodies isin place to function effectively.
Directors and the Board of Directors
At its regular monthly meetings as well as extraordinary meetings held when appropriate, the Board of Directors, which iscomposed of seven Directors including three Outside Directors,
discusses and decides on important management matterssuch as reports on Operating Officers’ business execution andmatters to be decided solely at the discretion of the Board of
Directors, while supervising the execution of duties by Operating Officers.
 Management Strategy Meeting and Operating Officer Report
Meeting, etc.
The Company has meeting bodies including the Management
Strategy Meeting and Operating Officer Report Meeting. Throughthese bodies, specific matters related to their execution of duties
and critical management matters including those subject to thedeliberation of the Board of Directors are reported to the President by Operating Officers and the general managers of business execution departments, deliberated and discussed

preliminarily. As for the matters discussed at meetings, matterssubject to the deliberation of the Board of Directors are decided
by the Board of Directors and other matters are decided by employees with business execution authority through means suchas circulars based on the Management Authority Rules.
Statutory Auditors and the Board of Statutory Auditors
The Board of Statutory Auditors is made up of four members
including three External Statutory Auditors. Statutory Auditors
oversee management by attending the Board of Directors’
meetings, etc. and expressing appropriate opinions in the process of deliberating business execution reports from Operating
Officers and matters to be decided solely at the discretion of
the Board of Directors. In addition, Statutory Auditors audit thebusiness activities and assets of the Company and Group companies in accordance with audit policies and division of duties
set by the Board of Statutory Auditors.
Voluntary committees
a. Nomination and Compensation Advisory Committee
Under the Board of Directors, the Company has in place theNomination and Compensation Advisory Committee, whose
members include Outside Directors. Its purpose is to list
candidates for Directors and Statutory Auditors and nominate Operating Officers, and to ensure transparency andobjectivity regarding decisions on compensation for Directors and Operating Officers.
b. Internal Control Committee
The Internal Control Committee is in place under the Boardof Directors to develop a system stipulated in the basic policy of internal control systems, check the operation status,and conduct constant reviews. The Committee meets quarterly, and the contents of deliberation are reported to theBoard of Directors each time.

Auditors both verbally and in writing, and confirm their actionplans to be taken at a fiscal year-end audit. Statutory Auditors
also receive the results of fiscal year-end audits from Accounting
Auditors in statutory documents along with verbal reviews. Furthermore, Statutory Auditors are in principle required to be present at inventory taking or on-site inspection at subsidiaries by
Accounting Auditors.

Operating Officers
Instruction/reporting

Each business department
Instruction/reporting

Instruction/
reporting

Each Group company

Toyo Denki Seizo Report 2020

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ESG/CSR Report

GovernanceTakashi Yamagishi

Executive Profiles (as of August 26, 2020)

Chairman,
Representative
Director

President,
Representative
Director

Director

Akihiko Ishii

Director

Director (Outside)

Director (Outside)

Director (Outside)

Yoshifumi Otsubo Hirokazu Chinone Takashi Yamagishi Koji Mizumoto

Kenzo Terashima Akira Watanabe
Senior Executive Officers

Hiroshi Shimotakahara Akihiko Ishii

Yoshifumi Otsubo

Executive Officers

Shuji Horie
Standing Statutory Standing Statutory Statutory Auditor
Statutory Auditor
Auditor
AuditorYoshinori Kawamura Yasushi Miki

Toshiaki Akechi

Kenji Ueda

Kenji Tanimoto Kenji Fujiwara

Points of discussion and advice at the Board of Directors

The functions of outside directors at a board of directors are
said to be “supervision” and “advice.” The former is to properly
get across the opinions of stakeholders to the board of directors, and the latter is to maximize corporate value through strategy formulation and decision-making. While the presence ofoutside directors creates a tension at the board of directors anddeepens discussions, strictly requiring independence of outside
directors makes it difficult for them to contribute to strategy formulation. The Company has several Outside Directors. I view myrole is participating in discussion for important decision-making
from an early stage with an outsider’s perspective, enhancing
the transparency of decision-making at the Board of Directors
by providing my expertise on occasion, and contributing to improving sustainable corporate value and the supervisory function.

My position at the Board of Directors is to provide support forachieving the Company’s long-term vision of “providing
high-quality products that combine motor drive technologies
and advanced breakthrough technologies worldwide and contributing to the realization of environmentally friendly social infrastructure.” It is not just approving what has been decided by
the Management Strategy Meeting, but also asking essential
questions from an outsider’s perspective and making correct
management decisions through active discussion. Issues forwhich final decisions have been postponed will be discussed
again by the Directors’ Strategy Meeting in which I participate
as Outside Director. The Nomination and Compensation Advisory
Committee and talks at research presentations provide good
opportunities to learn about management and human capital. I
believe that it is important for the Company to be always monitored by outsiders for maintaining high-level of management
discipline.

Operating Officers

Naoki Okuyama Toshihito Nakanishi Shini Furutsuki
Takuya Hatakeyama Toshiharu Takagi Chiaki Nakano
Yuji Nagano

Hiroyuki Imaizumi

Messages from Outside Directors

Hirokazu Chinone

23

Role of Outside Director

Role of Outside Director

Points of discussion and advice at the Board of Directors

The Companies Act stipulates that the authority of a board of directors is to make decisions on important business execution
matters and oversee the execution of duties, and this also applies to directors who make up the board of directors.
Furthermore, the main role of outside directors is to oversee
the execution of duties in particular. The reason for this is that itis thought to be beneficial to have independent outside directors
who have no ties of obligation to internal directors and few
stakes, in order to prevent illegal and unfair decisions with compliance issues.
I am a lawyer by profession. I don’t have any experience inrunning a company, making it difficult to give useful and appropriate advice to improve the Company’s business performance,
but I believe monitoring business execution is my area of expertise to prevent the Company’s scandals and various risks.

Since my appointment as Director, fortunately no agenda itemor proposal that would become a compliance issue has beenpresented to the Board of Directors.
However, it is generally understood that even when a compliance issue emerges, that information rarely reaches the Boardof Directors, and in many cases, it is too late when the problem
is discovered. In order to avoid this, it is necessary to havemechanisms in place that allow negative information to beraised to executives. Such mechanisms include an internal audit
department that is independent of business divisions and whistleblowing systems. I believe that it is important to ensure thatsuch bodies function successfully and dot not end up just being
a formality.

Koji MizumotoRole of Outside Director

Points of discussion and advice at the Board of Directors

The Ministry of Economy, Trade and Industry published practicalguidelines on outside directors to strengthen corporate governance, raising expectation that the independent officer system
will play more serious role.
I worked for a material manufacturer for more than 40 years,
during which I experienced many good and bad things that happened in varying degrees to corporations. I recognize that it is
my main mission entrusted by shareholders to supervise management effectively and positively with the eyes of an outsider
while making the best use of my experience.
Specifically, I hope to give advice to the current executive
team and management for the Company’s future development
based on my experience including past reflections and newstudies. In particular, I would like to fulfill my role in the Company’s efforts to survive and become highly profitable and future-oriented with everyone’s participation through mechanisms(systems).

I think what is often lacking in the resolutions made by boards of directors is the viewpoints of outsiders and perspectives in terms ofwhether they meet the mandates given by various stakeholders.
Below is a checklist that should be reviewed by members of boardsof directors in my opinion. I will participate in discussions and give
advice based on these points.
Clarity of top management’s instructions and responsibility forbusiness earnings
Level of targets, achievements, and internal dissemination of
medium- and long-term management plansM easures to increase our stock price, awareness and actions for SDGs
Information-gathering function and concrete actions for takeover defense
Product pricing power, sales capabilities, material procurement
capabilities, financial positionH ealth and safety track records and measures at plants
B CP and risk managementH uman resource development measures (development of staff andnext management team) and management of personnel systemsF uture orientation of the company, new products and R&D status
General management issues such as the operation status ofcomputer systems
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ESG/CSR Report

GovernanceInternal Control and ComplianceInternal Control
The Company views the development and operation of an internal
control system to be an important management issue, and it hasdeveloped an efficient, legal and appropriate business execution
system pursuant to Article 362 of the Companies Act and Article
100 of the Ordinance for Enforcement of the Companies Act. The
Internal Control Committee established under the Board of Directors reviews the operational status of the internal control system
and will revise it as necessary.
Principles of compliance
The Company has set “1. adherence to rules,” “2. observance ofconfidentiality,” “3. distinction between private and public matters,” “4. strictness with money,” “5. prohibition of side jobs,” and“6. prohibition of discriminatory and sexually suggestive statements or behavior” as principles of compliance.
Compliance promotion framework
To focus on business principles and fulfill its social responsibility,
the Company has provided all officers and employees with a copyof the Compliance Manual (Toyo Denki Seizo Ethical Standards)
that stipulates its code of conduct. The move is part of an effort tohave the code and the basic rules of work fully known.
The Company has also introduced a whistle-blowing systemthat allows employees to provide information directly to the management. The system is aimed at ensuring that any illegal orinappropriate conduct within the Company is detected at theearliest possible stage and that adequate measures are taken
promptly and as needed so that such conduct is rectified.
Compliance education
The Company is organizing scheduled and systematic training
sessions based on a compliance training master plan to enhanceknowledge on compliance while promoting a conscious respect
for corporate ethics.

Risk Management
Basic policy
The Company is engaged in developing rules and a framework forrisk management according to the Basic Rules for Risk Management established in August 2006.

25

Promotion framework
The Company has established the Internal Control Committee under the Board of Directors, chaired by the President. It analyzes
and assesses all the risks that exist in the Group and develops aneffective risk management framework capable of dealing precisely with the risks of the types and degrees that the Group is exposed to. The committee specifically reviews risk verifications andcountermeasures, and periodically reports details of its deliberations to the Board of Directors.
Furthermore, the committee is committed to enhancing theGroup-wide risk management framework in accordance with the
Basic Rules for Risk Management.

Risk Factors
From the perspective of proactive information disclosure, theGroup intends to disclose a wide range of recognizable risks. Major risks that may affect its earnings and financial position are set
out below. The Group aims for thorough understanding of theserisks in order to establish a necessary risk management framework designed to prevent the risks from materializing or minimize
the impact of risks if they do materialize.
Forward-looking statements below are based on the judgmentof the Group as of the end of the fiscal year ended May 2020.
(1) Changes in domestic and international economic trends
The Group’s sales heavily rely on the Transportation Systems
and Industrial Systems segments. Its customers conduct business operations at home and overseas. As such, business climates and individual spending conditions in different countries
may affect the Group’s business performance.
(2) Large-scale disasters and outbreak of infectious diseases
The great majority of the Group’s production bases for theTransportation Systems segment are located in the Kanto area
and those for the Industrial Systems segment are in the Kansai area. Production capacity may be severely affected bylarge-scale disasters and the outbreak of infectious diseases
in either of these areas. Furthermore, large-scale disasters
and the outbreak of infectious diseases may hinder the entire
supply chain and impact order trends, thus affecting the Company’s production and earnings.
Since January 2020, COVID-19 has been spreading in Japan and overseas. The Group is taking actions to help preventthe spread of infections, while prioritizing the safety and healthof employees through measures such as staggered commuting and working from home and minimizing hindrance to production. The impact on our business operations has been
limited so far. However, orders that the Company has received

are showing some effect, and since it is difficult to reasonably
calculate the impact on earnings for the fiscal year ending
May 2021, the Company has not released its earnings forecast
yet. We will promptly announce it when it becomes possible toreasonably make earnings forecast.
(3) Intensifying competition
The Japanese market for the Transportation Systems segment
has matured and thus faces intensifying competition. The Industrial Systems segment is also under pressure from intensifying competition for product development. The Group’sbusiness performance may be affected by such intensifying
competition.
(4) Occurrence of large-scale damages
If large-scale damages are incurred due to product defects
and other causes and cannot be covered by insurance, it may
affect the Group’s business performance.
(5) Delays in product development
With a view to providing attractive products to customers, theGroup applies itself to gathering information about customer
needs and leverages it in the development of new products to
support its future growth. However, delays in the developmentof new products to respond to rapid technological or environmental changes may affect the Group’s performance.
(6) Delays and other problems in the supply of materials
Owing to the fact that the Group’s business has various distinctive characteristics, some of the materials it procures are
not easily available due to factors such as a limited number ofsuppliers. Delays in supply or discontinuation in production ofsuch materials may affect the Group’s production. Moreover,the Group’s business performance may be affected by thefluctuation in prices of raw materials, notably steel products
and copper.
(7) Changes in overseas situations
The Group proactively pursues the expansion of overseas operations including the Chinese market. Its business performance may be affected by major changes in situations
overseas.
(8) Litigations and other legal proceedings
If the Group becomes the subject of any litigation or other legal proceeding, its business operations and performance may
be affected. Although the Group particularly attends to theprotection of intellectual property rights, amid drastically advancing technical innovations and accelerating globalization ofbusiness, the Group is inevitably exposed to potential disputes
with third parties over intellectual property rights.
(9) Relationships with business alliance partners
With the aim of business expansion and enhancing competitiveness, the Group proactively pursues various alliances withthird parties. However, if these alliances do not deliver

expected results due to a failure in forging favorable relationships with partners, the Group may face an impact on its performance.
(10) Exchange rate fluctuations
As the Group is aggressively expanding into overseas markets, an increase in foreign currency denominated transactions will heighten the impact of exchange rate fluctuations
on the Group’s performance.
(11) Fluctuations in the value of holding assets
Fluctuations in the fair value of assets held by the Group may
affect its performance.
(12) Changes in financial conditions
The Group’s financing programs may be affected by unexpected changes in financial conditions.
(13) Breach of confidential information
The Group retains customer information related to its business executions. Also, it possesses various types of confidential information concerning the Group’s proprietary
technologies and operations. If these information assets leakoutside the Group for unforeseeable reasons, it may impact
its business operations and performance.
(14) Domestic and foreign laws and regulations
The Group proactively pursues expansion in overseas operations, particularly the Chinese market, and as such, its operations are subject to not only Japanese laws but also the laws
and regulations of each country. Although the Group has established and operates a robust compliance system, its business operations and performance are still at risk from theeffects of unforeseeable events.

Information Security
Basic policy
The Company holds a vast amount of information assets including
information presented by customers related to its businessexecution and confidential information concerning the Group’s
proprietary technologies and its trade. Each Group company istaking various measures in this respect based on an awarenessof shared security under the Group’s Information Security Guidelines, which have been established to adequately manage anduse these information assets.
Information security training
The Company is conducting educational activities to develop
information security awareness among all employees including
various training sessions, some involving the use of educationalDVDs.
Toyo Denki Seizo Report 2020

26

2019

Cash flows from operating activities (Unit: Million yen)

FY 2015

Cash flow fromoperating activities
Net cash provided by operating activities amounted to 2,148 million yen (net cash of 3,720 million yen provided
Net cash provided by in the previous fiscal year), principally due to a decrease in inventories.
operating activities
2,148 million yen
Cash flow frominvesting activities
Net cash provided byinvesting activities
41 million yen

Net cash provided by investing activities totaled 41 million yen (net cash of 1,019 million yen used in the previous
fiscal year), principally due to 1,132 million yen of proceeds from sales of investment securities, offset by 647
million yen of purchases of property, plant and equipment.

Cash flow fromfinancing activities
Net cash used infinancing activities
1,126 million yen

Net cash used in financing activities was 1,126 million yen (net cash of 2,012 million yen used in the previous
fiscal year), primarily owing to repayment of debt.

792

840
731

2019

FY 2015

2018

2019

2018

Japan

China

FY 2015

Others

2016

2019

2017

2018

2019

FY 2015-2,012
2016

2017

2018

2019

(Unit: Million yen)Overseas net sales ratio

2017-1,126-3,087
2016-4,691

FY 20152017

Cash flows from financing activities (Unit: Million yen)

41

2017

2016

Net sales by region

Cash Flows

27

2016

-937

Net assets as of May 31, 2020 stood at 24,183 million yen, a decrease of 620 million yen compared with theend of the previous fiscal year. This decrease was largely attributable to a 1,448 million yen decrease in unrealized holding gain on available-for-sale securities.

2018

2,148

Net Assets
Total net assets
24,183 million yen-1,572

Total liabilities as of May 31, 2020 stood at 30,981 million yen, a decrease of 2,215 million yen compared withthe end of the previous fiscal year. This decrease was largely attributable to a decrease of 871 million yen in debt
and a decrease of 623 million yen in deferred tax liabilities.

1,505

Liabilities
Total liabilities
30,981 million yen

1,135

Total assets as of May 31, 2020 stood at 55,165 million yen, a decrease of 2,836 million yen compared with theend of the previous fiscal year. The decrease in total assets was largely attributable to a decrease of 758 million
yen in property, plant and equipment and a decrease of 2,421 million yen in investment securities, offset by anincrease of 1,053 million yen in cash on hand and in banks.

2017

3,720

Financial Position

2016

Cash flows from investing activities (Unit: Million yen)
FY 2015

AssetsTotal Assets
55,165 million yen

927

1,774
2018

4,140

2017

2,868

2016

545

1,090

902
FY 2015-1,341

From a profit perspective, operating income increased 91.5% compared with the previous fiscal year to 1,068
million yen. Ordinary income increased 143.5% compared with the previous fiscal year to 1,207 million yen. Net
income attributable to owners of the parent increased 56.7% to 1,081 million yen, as a result of efforts to cut
some cross-shareholdings.

1,487

Profit/Loss
Net Income
attributable toowners of the parent
YoY +56.7%-1,019Net sales decreased 5.1% compared with the previous fiscal year to 39,071 million yen due to a decrease in theTransportation Systems segment.

Research and development costs(Unit: Million yen)

1,237

Net sales
YoY -5.1%

Depreciation and amortization (Unit: Million yen)

850

Orders received decreased 5.3% compared with the previous fiscal year to 38,527 million yen due to a decreasein orders received in the Transportation Systems segment, the Industrial Systems segment, and the Information
Equipment Systems segment.

(Unit: Million yen)

868

Capital investment 

Results of Operation
Orders received
YoY -5.3%

Reference Data for Management Indices801

Consolidated Operating Results, Consolidated Financial Position, and Consolidated Cash Flow for Fiscal
2019 (from June 1, 2019 to May 31, 2020) are as follows:

Financial Report

4,772

Financial Review

4,606

Financial Report

2018

2016

2017

2018

2019

2020

Japan

27,09428,00632,124

31,74530,997

China

8,374

5,882

4,085

3,663

4,282

Others

4,277

6,778

6,317

5,763

3,791

Total

39,746

40,66842,527

41,172

39,071

Overseas net sales ratio

31.8%

31.1%

25.3%

22.9%

20.7%

2019

Toyo Denki Seizo Report 2020

28

TOYO DENKI SEIZO K.K.
Consolidated Balance Sheets

As of

May 31,
2020

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)(Note 1)

AssetsCurrent assets:
Cash on hand and in banks (Notes 16 and 18)¥3,293¥2,240$30,632

Trade notes and accounts receivable (Notes 2 and 16)

14,135

14,192

131,453

Electronically recorded receivables (Note 16)

1,538

1,443

14,307

Inventories (Note 3)

7,178

7,571

66,755

Other current assets

139

573

1,294

Allowance for doubtful accounts

(0)

(1)

(0)

26,28426,019244,443

Total current assets

Property, plant and equipment (Note 4):
Buildings and structures

6,753

7,090

62,809Machinery and vehicles

1,059

1,441

9,855

Land

1,301

1,301

12,101

Construction in progress

86

31

799

Other

724

818

6,739

9,925

10,68392,305

15,434

17,856

143,540

Deferred tax assets (Note 11)

170

164

1,583

Intangible assets

490

692

4,566

2,865

2,598

26,647

Allowance for doubtful accounts

(6)

(12)

(63)

Total investments and other assets

18,954

21,299176,273

Total assets (Note 20)¥55,165¥58,001$513,022

Total property, plant and equipment

Investments and other assets (Note 5):
Investment securities (Notes 5, 16 and 17)

Other

29

As of

May 31,
2020

May 31,
2019(Millions of yen)

LIABILITIES AND NET ASSETS
Current liabilities:
Trade notes and accounts payable (Notes 2 and 16)
Electronically recorded payables (Note 16)
Short-term borrowings and current portion of long-term debt
(Notes 6 and 16)
Income taxes payable (Note 11)
Accrued expenses
Accrued directors' bonuses
Accrued employees' bonuses
Reserve for losses on order acknowledgements (Note 3)
Other
Total current liabilities

May 31,
2020(Thousands of
U.S. dollars)(Note 1)

¥2,2245,877¥2,670
5,944$20,683
54,659

2,207

2,462

20,528

334
606
36
876
732
773
13,669

320
678
38
819
570
1,258
14,763

3,106
5,640
340
8,155
6,814
7,191
127,118

12,344
930
4,010
25
3
17,312

12,961
1,554
3,893
20
4
18,433

114,799
8,650
37,292232
28
161,003

Net assets (Notes 8 and 15):
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity¥4,998
3,177
11,610(1,280)18,505¥4,998
3,177
10,797(1,280)17,693$46,483
29,549107,978(11,911)
172,100

Accumulated other comprehensive income:Unrealized holding gain on securities
Translation adjustments
Retirement benefits liability adjustments (Note 7)
Total accumulated other comprehensive income
Total net assets

5,727
79
(129)
5,677
24,183

7,176
126
(192)
7,110
24,80453,266739(1,206)
52,799224,900

Total liabilities and net assets¥55,165¥58,001$513,022

Long-term liabilities:
Long-term debt (Notes 6, 16 and 19)
Deferred tax liabilities (Note 11)
Liability for retirement benefits (Note 7)Long-term payables
Other
Total long-term liabilities
Commitments and contingencies (Note 14)

See notes to consolidated financial statements.

Toyo Denki Seizo Report 2020

30

TOYO DENKI SEIZO K.K.
Consolidated Statements of Income

For the Years Ended

Net sales (Note 20)
Cost of sales (Note 3)
Gross profit
Selling, general and administrative expenses (Note 9)
Operating income (Note 20)
Non-operating income (expenses):
Interest and dividend income
Interest expense
Equity in (losses) earnings of unconsolidated subsidiaries and affiliates
Foreign exchange loss
Insurance claim income related to disaster
Subsidy income
Disaster recover expenses
Other income (expenses), net
Ordinary income
Special gains, net (Note 10)
Income before income taxes
Income taxes (Note 11):
Current
Deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent

TOYO DENKI SEIZO K.K.
Consolidated Statements of Changes in Net Assets
May 31,
2020

May 31,
2019(Millions of yen)

May 31,
2020(Millions of yen)
Shareholders’ equity(Thousands of
U.S. dollars)(Note 1)

¥39,071
30,828
8,242¥41,172
33,3337,839$363,355
286,700
76,654

7,174
1,068

7,281
557

66,719
9,935

235
(83)
(39)
(56)
104
40
(79)
19
139
1,207
445
1,653

244
(143)
10
(82)
—
—
—
(89)
(61)
495
750
1,246

2,188
(780)
(362)
(528)
969
371
(742)
182
1,297
11,232
4,146
15,378

577
(5)
571
1,081
—
¥1,081

448
107
556
690
—
¥690

5,368
(49)
5,318
10,060—$10,060

Commonstock

Capitalsurplus31

Total net
assets¥3,177¥10,579¥(480)¥18,274¥8,111¥188¥(247)¥8,052¥26,327

—

—

(472)

—

(472)

—

—

—

—

(472)

—
—

—
—

690
—

—
(800)

690
(800)

—
—

—
—

—
—

—
—

(800)

Balance as of May 31, 2019——
¥4,998——¥3,177—
218¥10,797—(800)¥(1,280)—(581)¥17,693

(934)
(934)
¥7,176

(61)
(61)
¥126

54
54
¥(192)(941)(941)¥7,110(941)(1,523)¥24,804

Balance as of June 1, 2019

¥4,998¥3,177¥10,797¥(1,280)¥17,693¥7,176¥126¥(192)¥7,110¥24,804

—

—

(268)

—

(268)

—

—

—

—

(268)

—
—

—
—

1,081
—

—
(0)

1,081
(0)

—
—

—
—

—
—

—
—

1,081
(0)

—
—
¥4,998——¥3,177—813¥11,610—(0)¥(1,280)—812¥18,505(1,448)(1,448)¥5,727

(47)
(47)
¥ 79

62
62
¥(129)(1,433)(1,433)¥5,677(1,433)(620)¥24,183

Cash dividends paid
Net income attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders' equity
Total changes during the year

690

Changes during the year
Cash dividends paid
Net income attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders' equity
Total changes during the year
Balance as of May 31, 2020

(Thousands of U.S. dollars) (Note 1)

Balance as of June 1, 2019

Accumulated other comprehensive income
Total
Retirement
accumulated
benefitsotherliability
comprehensive
adjustments
incomeTotal
shareholders’equityUnrealized
holding
gain onsecurities

Translation
adjustments$66,741$1,178$(1,789)$66,129$230,670

Commonstock

CapitalsurplusRetainedearnings

Treasurystock$46,483$29,549$100,413$(11,905) $164,541——(2,494)—(2,494)

—

—

—

—

(2,494)————

10,060——(6)

10,060
(6)

—
—

—
—

—
—

—
—

10,060(6)——$46,483——$29,549—
7,565$107,978

—
—
(6)
7,559
$(11,911) $172,100(13,474)(13,474)$53,266

(439)
(439)
$739

583
583
$(1,206)

Total net
assetsChanges during the year
Cash dividends paid
Net income attributable toowners of the parent

May 31,
2020

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)(Note 1)

¥1,081¥690$10,060(1,448)
(12)
62

(934)
19
54

(13,474)
(113)
583

(34)
(1,433)

(81)
(941)

(325)
(13,330)

Comprehensive loss¥(351)¥(251)$(3,270)

Comprehensive loss attributable to:
Owners of the parent
Non-controlling interests¥(351)—¥(251)—$(3,270)—

See notes to consolidated financial statements.

Translation
adjustments

Total
Retirement
accumulated
benefitsotherliability
comprehensive
adjustments
incomeChanges during the year

Purchases of treasury stock

Other comprehensive loss (Note 12):
Unrealized holding loss on securities
Translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive loss of affiliates accounted forby the equity method
Total other comprehensive loss

Unrealized
holding
gain onsecurities

Shareholders’ equity

TOYO DENKI SEIZO K.K.
Consolidated Statements of Comprehensive Income

Net income

Treasury
stock

Total
shareholders’equity¥4,998

Balance as of June 1, 2018

See notes to consolidated financial statements.

For the Years Ended

Retainedearnings

Accumulated other comprehensive income

Net changes in items
other than those inshareholders' equity
Total changes during the year
Balance as of May 31, 2020

(13,330)(13,330)(13,330)(5,770)$52,799 $224,900

See notes to consolidated financial statements.

Toyo Denki Seizo Report 2020

32

TOYO DENKI SEIZO K.K.
Consolidated Statements of Cash Flows

For the Years Ended

TOYO DENKI SEIZO K.K.
Notes to Consolidated Financial Statements
May 31,
2020

May 31,
2019(Millions of yen)

Operating activities
Income before income taxes
Depreciation and amortization
Reversal of allowance for doubtful accounts
Provision for accrued employees' bonuses
Increase in liability for retirement benefits
Interest and dividend income
Interest expense
Insurance claim income related to disaster
Subsidy income
Disaster recover expenses
Gain on sales of investment securities
Changes in operating assets and liabilities:
Trade notes and accounts receivable
Inventories
Trade notes and accounts payable
Reserve for losses on order acknowledgements
Advances received
Accrued expenses
Other, net
SubtotalInterest and dividend income received
Interest expense paid
Proceeds from insurance income related to disaster
Subsidies received
Payments for disaster recover expenses
Income taxes paid
Net cash provided by operating activities

33

May 31,
2020(Thousands of
U.S. dollars)(Note 1)

¥1,653
1,487
(7)
57
138
(235)
83
(104)
(40)
79
(447)

¥1,246
1,774
(0)
5
37
(244)
143
—
—
—
(804)

$15,378
13,836
(66)
531
1,291
(2,188)
780
(969)
(371)
742
(4,163)

(64)
372
(481)
166
(13)
(64)
(164)
2,418
235
(91)
104
40
(79)
(477)
2,148

2,527
290
(1,790)
(134)
(129)
(170)
1,076
3,828
259
(146)
—
—
—
(221)
3,720

(599)
3,466
(4,479)
1,551
(124)
(602)
(1,526)22,488
2,188
(851)
969
371
(742)
(4,441)
19,983

Investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Payments of loans receivableCollection of loans receivable
Payments for investments in capital of subsidiaries and affiliates
Other, net
Net cash provided by (used in) investing activities

(647)
(33)
(14)
1,132
(26)
—
(338)
(31)
41

(2,277)
(49)
(260)
1,441
—
35
—
92
(1,019)(6,018)(310)(133)
10,532(247)—(3,149)(291)
381

Financing activities
Decrease in short-term loans payable
Increase in long-term debt
Repayment of long-term debt
Purchases of treasury stock
Cash dividends paid
Other, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 18)

(287)
—
(568)
(0)
(268)
(1)
(1,126)
(10)
1,053
2,240
¥3,293(1,990)4,600(3,355)
(800)
(471)
4
(2,012)
(4)
685
1,555
¥2,240(2,672)—(5,286)(6)(2,495)(10)(10,471)(95)
9,798
20,834$30,632

1. Summary of Significant Accounting Policies(a) Basis of presentation
The accompanying consolidated financial statements of TOYO DENKI SEIZO K.K. (the “Company”) and consolidated subsidiaries(collectively the “Group”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards (IFRS), and are compiled
from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act ofJapan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.
Amounts of less than one million yen and one thousand U.S. dollars have been rounded down to the nearest million yen andthousand U.S. dollars, respectively, in the presentation of the accompanying consolidated financial statements. As a result, the totals
in yen and U.S. dollars do not necessarily agree with the sum of the individual amounts.
(b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements included the accounts of the Company and any significant companies controlled
directly or indirectly by the Company.
Companies over which the Company exercises significant influence in terms of their operating and financial policies have beenaccounted for by the equity method. The Company applies the “Practical Solution of Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Financial Statements” (Accounting Standards Board of Japan (ASBJ) Practical Issues Task
Force (PITF) No. 18) and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for using Equity
Method” (PITF No. 24). In accordance with these PITF, the accompanying consolidated financial statements have been preparedby using the accounts of foreign consolidated subsidiaries and affiliates prepared in accordance with either IFRS or accounting
principles generally accepted in the United States as adjusted for certain items including goodwill, actuarial differences and capitalized
development costs.
As of May 31, 2020, the numbers of consolidated subsidiaries and affiliates accounted for by the equity method were 6 and 3 (6and 3 in 2019). A subsidiary, TOYO DENKI USA, INC., for which fiscal year end is December 31, is consolidated by using their pro
forma financial statements as of March 31 which are prepared solely for consolidation purposes and necessary adjustments are madeto their financial statements to reflect any significant transactions from April 1 to May 31. All significant intercompany balances andtransactions have been eliminated in consolidation.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted for by the equity method are carried at costor less. Where there has been a permanent decline in the value of such investments, the Company has written down the investments.
(c) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statements of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets excluding non-controlling interests which are translated at their historicalexchange rates. Revenue and expense accounts are translated at the average rate of exchange in effect during the year. Differences
arising from the translation are presented as translation adjustments in the consolidated financial statements.
(d) Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can be withdrawn at any time and short-term investmentswith a maturity of three months or less from the date of purchase, which can easily be converted to cash and are subject to little riskof change in value.
(e) Inventories
Inventories are stated principally at the lower of cost or net realizable value, cost being determined principally by the specificidentification method for finished products and work in process and by the moving average cost method for raw material andsupplies.

See notes to consolidated financial statements.
Toyo Denki Seizo Report 202034

(f) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into three categories: trading, held-tomaturity or other securities (available-for-sale securities). Trading securities are carried at fair value and held-to-maturity securities
are carried at amortized cost. Available-for-sale securities with market quotation are carried at fair value with changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly in net assets. Available-for-sale securities without market
quotation are carried at cost. Cost of securities sold is determined by the moving average method.
(g) Property, plant and equipment (except for leased assets) and depreciation
Depreciation of property, plant and equipment of the Company and its consolidated subsidiaries is calculated principally by the
declining-balance method based on the estimated useful lives and the residual value, while buildings except for facilities attached tobuildings acquired on or after April 1, 1998 and facilities attached to buildings and structures acquired on or after June 1, 2016 aredepreciated by the straight-line method. The estimated useful lives of these assets are as follows:
Buildings and structures:		
8 to 60 years
Machinery and vehicles:		
3 to 12 years
Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income.
(h) Intangible assets (except for leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized over the internal available period(5 years) using the straight-line method.
(i) Leases
Leased assets capitalized under the finance lease arrangements which do not transfer ownership to the lessee are depreciated overthe lease period without any residual value using the straight-line method.
All other lease transactions are accounted for as operating leases and related payments are charged to income as incurred.
(j) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal receivables and on an estimate of the collectabilityof receivables from companies in financial difficulty.
(k) Accrued directors’ bonuses
Accrued directors’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future for the
performance incentive bonuses.
(l) Accrued employees’ bonuses
Accrued employees’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future.
(m) Reserve for losses on order acknowledgements
Reserve for losses on order acknowledgements is provided based on the amounts expected to be incurred during the current fiscal
year and which are able to estimate the losses reasonably to cover the future losses on order acknowledgements. Provision of reserve
for losses on order acknowledgements in the amounts of ¥166 million ($(1,551) thousand) and ¥(134) million is included in cost of
sales for the years ended May 31, 2020 and 2019, respectively.
(n) Retirement benefits
Retirement benefit obligation is attributed to each period by the benefit formula method over the estimated years of service of theeligible employees.
Prior service cost is amortized as incurred by the straight-line method over a fixed period (10 years) within the average remaining
years of service of the employees.
Actuarial differences are amortized by the straight-line method over a fixed period (10 years) within the average remaining years ofservice of the employees from the following year when incurred.

35(o) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect to the temporary
differences between the financial reporting and tax bases of the assets and liabilities, and were measured using the enacted tax rates
and laws which will be in effect when the differences are expected to reverse.
(p) Construction revenue and costs
Construction revenue and construction costs are recognized by the percentage-of-completion method, if the outcome of aconstruction contract can be estimated reliably. The percentage of completion is measured based on the percentage of the costs
incurred to the estimated total costs. For other construction contracts, the completed-contract method is applied.
(q) Research and development expenses
Research and development expenses are charged to income when incurred.
(r) Consumption taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes.
(s) Derivative financial instruments
The Company and certain consolidated subsidiaries enter into various derivative transactions in order to manage certain risks arisingfrom adverse fluctuations in interest rates. Derivative financial instruments are carried at fair value with changes in unrealized gain orloss charged or credited to operations, except for these which meet the criteria for deferred hedge accounting under which unrealized
gain or loss is deferred as a component of net assets.
Deferred hedge accounting is adopted for derivatives which qualify as hedges, under which unrealized gain or loss is deferred.
Hedging instruments are derivative transactions and hedged items are primarily interest on debts. Hedge effectiveness is notassessed if the substantial terms and conditions of the hedging instruments and the hedged items are the same.
(t) Accounting standards issued but not yet effective
On March 30, 2018, the ASBJ issued “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29) and “Implementation
Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30).
(1) Overview
The International Accounting Standards Board (“IASB”) and the Financial Accounting Standards Board (“FASB”) of the U.S. havejointly developed a comprehensive accounting standard for revenue recognition. In May 2014, the IASB and the FASB each issued“Revenue from Contracts with Customers” (IASB: IFRS 15 and FASB: Topic 606). Considering that IFRS 15 has been applied fromfiscal years beginning on or after January 1, 2018 and Topic 606 has been applied from fiscal years beginning after December 15,
2017, the ASBJ has developed a comprehensive accounting standard for revenue recognition, which was issued together with its
implementation guidance.
As a basic policy in developing the accounting standard for revenue recognition, the ASBJ has incorporated the basic principles of
IFRS 15 from the viewpoint of comparability between financial statements, a factor essential for facilitating consistency with IFRS 15.
In addition, if there are any business practices in Japan for which consideration is required, alternative accounting treatments shall be
added to the accounting standard to the extent that they do not impair comparability.
(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
May 31, 2022.
(3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standard and implementation guidance on its
consolidated financial statements.

Toyo Denki Seizo Report 202036

2. Other Explanatory Information
Note 1. U.S. Dollar Amounts
The accompanying consolidated financial statements are expressed in yen, and solely for the convenience of the reader, havebeen translated into U.S. dollars at the rate of ¥107.53=U.S.$1, the approximate rate of exchange prevailing at May 31, 2020. Thistranslation should not be construed as a representation that all amounts shown could be converted into U.S. dollars at such rate.
Note 2. Notes Receivable and Payable
As May 31, 2020 fell on a bank holiday, the following notes receivable and payable are deemed to have been settled on the maturity
date:

As of

May 31,
2020

May 31,
2019(Millions of yen)¥64
6Notes receivable
Notes payableMay 31,
2020(Thousands of
U.S. dollars)

¥—
—

$602
64

Goods and finished products
Work in process
Raw materials and supplies

May 31,
2020

May 31,
2019(Millions of yen)

¥ 756
3,424
2,996
¥7,178

May 31,
2020(Thousands of
U.S. dollars)

¥ 991
3,504
3,074
¥7,571$ 7,035
31,85027,869$66,755

Inventories were stated at the lower of cost or net realizable value and the Company recognized losses on write-down of
inventories held for the ordinary sales purpose due to a decline in profitability in the amount of ¥212 million ($1,976 thousand) and¥92 million for the years ended May 31, 2020 and 2019, respectively. These amounts were included in “Cost of sales.”Inventories related to construction contracts which are estimated to make losses were stated after deducting the corresponding
reserve for losses on order acknowledgements in the following amounts:

As of

May 31,
2020

May 31,
2019(Millions of yen)

¥  2
135
¥138

Goods and finished products
Work in process

May 31,
2020(Thousands of
U.S. dollars)

¥84
13
¥97

$ 26
1,262
$1,288Note 4. Property, Plant and Equipment
The following table sets forth the acquisition costs and related accumulated depreciation:

As of
Buildings and structures
Machinery and vehicles
Other
Accumulated depreciation

37

For the Years Ended

May 31,
2020

May 31,
2019(Millions of yen)

¥ 12,269
8,179
4,654
25,103(16,565)¥ 8,538¥ 12,210
8,174
4,410
24,795(15,444)¥ 9,351

May 31,
2020(Thousands of
U.S. dollars)$ 114,100
76,071
43,287
233,459(154,054)$ 79,405

May 31,
2020

May 31,
2019(Millions of yen)

¥1,487

May 31,
2020(Thousands of
U.S. dollars)¥1,774$13,836

Accumulated depreciation of property, plant and equipment amounted to ¥16,565 million ($154,054 thousand) and ¥15,444
million as of May 31, 2020 and 2019, respectively.
Note 5. Investments and Other Assets
Investments in unconsolidated subsidiaries and affiliates included in “Investment securities” as of May 31, 2020 and 2019 were as
follows:

As ofInvestments in capital

Note 3. Inventories
Inventories as of May 31, 2020 and 2019 were as follows:

As ofDepreciation of property, plant and equipment for the years ended May 31, 2020 and 2019 were as follows:

May 31,
2020

May 31,
2019(Millions of yen)

¥2,158

May 31,
2020(Thousands of
U.S. dollars)¥1,893$20,073

Note 6. Short-Term Borrowings and Long-Term Debt
As of May 31, 2020 and 2019, short-term borrowings and the current portion of long-term debt consisted of the following:

As ofLoans, principally from banks
Current portion of long-term debt

May 31,
2020

May 31,
2019(Millions of yen)

¥1,590617¥2,207

May 31,
2020(Thousands of
U.S. dollars)¥1,893568¥2,462$14,787
5,740$20,528

The annual weighted average interest rates applicable to short-term borrowings and current-portion of long-term debt as of May
31, 2020 were 0.584% and 0.647%, respectively.
As of May 31, 2020 and 2019, long-term debts were as follows:

As of

May 31,
2020

May 31,
2019(Millions of yen)

Long-term debt, excluding current portion, serially due from 2021 through 2032

¥12,344

May 31,
2020(Thousands of
U.S. dollars)¥12,961$114,799

The annual weighted average interest rate applicable to long-term debt as of May 31, 2020 was 0.419%.
The maturities of long-term debt are summarized as follows:

Years ended May 31(Millions of yen)(Thousands of
U.S. dollars)

2021
2022
2023
2024
2025 and thereafter¥   617585
585
885
10,288¥12,961$  5,740
5,443
5,443
8,232
95,680$120,540

Toyo Denki Seizo Report 2020

38

The assets pledged as collateral for short-term borrowings of ¥2,147 million ($19,970 thousand) and long-term debt of ¥3,864
million ($35,938 thousand) as of May 31, 2020 were as follows:

As of May 31
Buildings and structures
Machinery and vehicles
Other property, plant and equipment
Land(Millions of yen)(Thousands of
U.S. dollars)¥5,768
588
436
1,232
¥8,025$53,6445,469
4,057
11,461$74,632

Buildings and structures
Machinery and vehicles
Other property, plant and equipment(Millions of yen)

Retirement benefit obligation as of June 1
Service cost
Interest cost
Actuarial loss
Retirement benefits paid
Retirement benefit obligation as of May 31

May 31,
2020

May 31,
2019(Millions of yen)

¥3,893
290
14
(21)
(166)
¥4,010

May 31,
2020(Thousands of
U.S. dollars)¥3,862
293
14
(7)
(270)
¥3,893$36,204
2,699
136
(204)
(1,544)$37,292

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of
May 31, 2020 and 2019 for the Company’s and the consolidated subsidiaries’ defined benefit plans:

As of

May 31,
2020

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)

Unfunded retirement benefit obligation
Net liability (asset) for retirement benefits on the consolidated balance sheets¥4,0104,010¥3,893
3,893$37,292
37,292

Liability for retirement benefits
Net liability (asset) for retirement benefits on the consolidated balance sheets¥4,0104,010¥3,893
3,893$37,292
37,292$2,699136
637$3,473

May 31,
2019

May 31,
2020(Millions of yen)

¥90
¥90

(Thousands of
U.S. dollars)

¥78
¥78

$841
$841

Retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) as of May 31,2020 and 2019 were as follows:

May 31,
2020

As of

May 31,
2019

May 31,
2020(Millions of yen)

¥186
¥186

Unrecognized actuarial gain
Total

(Thousands of
U.S. dollars)

¥277
¥277

$1,738$1,738Major actuarial assumptions (weighted average) used in accounting for the above plans as of May 31, 2020 and 2019 were as
follows:

May 31,2020
0.4%

For the Years Ended
Discount rate

May 31,2019
0.4%

Note: The Company does not use the expected rate of salary increase in computing retirement benefit obligation since the Company adopts the point system.

The amounts of the required contribution to the defined contribution plans of the Company and its consolidated subsidiaries were¥118 million ($1,097 thousand) and ¥117 million for the years ended May 31, 2020 and 2019, respectively.
Note 8. Net Assets
Information regarding changes in net assets for the years ended May 31, 2020 and 2019 was as follows:a. Shares issued and outstanding/ Treasury stock
For the year ended May 31, 2020

Number ofshares as ofJune 1, 2019

Increase

Decrease

Number ofshares as of
May 31, 2020

(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock
Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit

39

(Thousands of
U.S. dollars)

¥293
14
71
¥379

May 31,2020

Type of shares

Note: The plan adopting the simplified method is included.

May 31,
2020

Retirement benefits liability adjustments included in other comprehensive income (before tax effect) as of May 31, 2020 and 2019were as follows:

Actuarial gain
Total

Note 7. Retirement Benefit Plans
The Company and its consolidated subsidiaries have retirement benefit plans combined by defined contribution plans and lumpsum payment plans.
The Company and its consolidated subsidiaries introduced the point system in the lump-sum payment plans, under which
retirement benefit amounts are computed based on the accumulated points granted according to the job ranking and performances.
Under the lump-sum payment plans held by certain consolidated subsidiaries, the liability for retirement benefits and retirement
benefit expenses are calculated using a simplified method.
The changes in the retirement benefit obligation during the years ended May 31, 2020 and 2019 were as follows:

For the Years Ended

¥290
14
68
¥373

As of

$14,3455,469
4,057$23,871

May 31,
2019(Millions of yen)

Service cost
Interest cost
Amortization of actuarial loss
Retirement benefit expenses(Thousands of
U.S. dollars)¥1,542588
436¥2,566

May 31,2020

For the Years Ended

The following assets included in the above are set by factory foundation fixed collateral security for short-term borrowings of¥1,622 million ($15,085 thousand) as of May 31, 2020:

As of May 31

The components of retirement benefit expenses for the years ended May 31, 2020 and 2019 were as follows:

9,735,000——

9,735,000

792,966

437—

793,403437 shares

Toyo Denki Seizo Report 202040

For the year ended May 31, 2019

Number ofshares as ofJune 1, 2018

Type of shares

Increase

Decrease

Number ofshares as of
May 31, 2019

(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock

9,735,000——

9,735,000

291,907

501,059—

792,966

Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit
Increase due to purchase of treasury stock based on the resolution of the Board of Directors’ meeting

1,059 shares
500,000 sharesb. Dividends
1) Dividends paid
For the year ended May 31, 2020
Resolution
Annual general meetingof the shareholders on
August 28, 2019

Type of shares

Total dividends Total dividends
Dividends per(Millions of (Thousands of Dividends per share (U.S.
yen)
U.S. dollars)
share (Yen)dollars)¥268

Common stock$2,495¥30.00$0.27

Cut-off date

Effective date

May 31, 2019 August 29, 2019

For the year ended May 31, 2019
Resolution
Annual general meetingof the shareholders on
August 28, 2018

Type of shares

Total dividends(Millions of Dividends per
yen)share (Yen)Common stock¥472

Cut-off date

Effective date

¥50.00 May 31, 2018 August 29, 2018

2) Dividends with the cut-off date in the year ended May 31, 2020 and the effective date in the year ending May 31, 2021
Total
dividends Total dividends
Dividends per(Millions of (Thousands of Source of Dividends per share (U.S.
Type of shares
yen)
U.S. dollars) dividends
share (Yen)dollars)Cut-off date Effective date
Resolution
Annual general meetingof the shareholders on
CommonRetained
May 31,
August 27,
August 26, 2020
stock
2020
¥268
$2,495 earnings¥30.00$0.27 2020

Note 10. Special Gains (Losses), Net
The components of “Special gains (losses), net” for the years ended May 31, 2020 and 2019 were as follows:

For the Years Ended
Special gains:
Gain on sales of investment securities
Special losses:
Commemorative project cost for the 100th anniversary of foundation
Loss on valuation of investment securities
Total

May 31,
2020

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)

¥447

¥804

$4,163

—
1
¥445

(53)
—
¥750

—
17
$4,146Note 11. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries consist of corporation tax, inhabitants’taxes and enterprise tax, which, in the aggregate, resulted in a statutory rate of approximately 30.6% for the years ended May 31,2020 and 2019. Income taxes of a foreign consolidated subsidiary are based generally on the tax rates applicable in the country ofincorporation.
The reconciliation between the effective tax rates reflected in the consolidated statements of income and the effective statutory tax
rate for the years ended May 31, 2020 and 2019 was as follows:

For the Years Ended
Effective statutory tax rate
Effect of:
Non-deductible expenses for income tax purpose
Non-taxable income such as dividends income, etc.
Per capita inhabitant tax
Valuation allowance
Income from affiliates accounted for by the equity method
Difference arising from the rates used by subsidiaries
Retained profit of affiliates
Research and development tax credit
Investment incentive tax credit
Other
Effective tax rate

May 31,
2020
30.6%

May 31,
2019
30.6%

1.2
(0.9)
1.7
4.8
0.7
1.5
(0.2)
(1.2)
(2.5)
(1.1)
34.6%

2.1
(1.1)
2.3
7.2
(0.2)
2.1
3.2
(1.3)
—
(0.3)
44.6%

Note 9. Selling, General and Administrative Expenses
The main components of “Selling, general and administrative expenses” for the years ended May 31, 2020 and 2019 were as follows:

For the Years Ended
Salaries and allowances
Provision for accrued directors’ bonuses
Provision for accrued employees’ bonuses
Retirement benefit expenses
Provision for allowance for doubtful accounts
Research and development expenses

41

May 31,
2020

May 31,
2019(Millions of yen)

¥1,931
36
348
216
(1)
792

May 31,
2020(Thousands of
U.S. dollars)¥1,979
38
326
216
(0)
731

$17,961
340
3,241
2,013
(14)
7,373

Toyo Denki Seizo Report 2020

42

The significant components of deferred tax assets and liabilities as of May 31, 2020 and 2019 were as follows:

May 31,
2020

As of

May 31,
2019(Millions of yen)

Deferred tax assets:
Write-down of inventories
Liability for retirement benefits
Accrued employees’ bonuses
Reserve for losses on order acknowledgements
Net operating loss carryforwards (Note 1)
Other
Total gross deferred tax assets
Valuation allowance for net operating loss carryforwards (Note 1)
Valuation allowance for deductible temporary differences
Total valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities(Thousands of
U.S. dollars)

¥235
1,234
274
104
472
333
2,655
(466)
(359)
(825)
1,830

¥210
1,198
256
123
553
258
2,600
(382)
(363)
(745)
1,855

$2,192
11,478
2,553
971
4,394
3,102
24,693(4,335)(3,338)(7,674)17,018(2,541)(48)(2,589)¥(759)(3,193)(50)(3,244)¥(1,389)(23,638)(447)(24,085)$(7,067)(Note 1) The breakdown of net operating loss carryforwards and valuation allowance by expiry date is as follows:Year ended May 31, 2020
Due after
Due after
Due after
Due after
One Year
Two Years
Three YearsFour Years(Millions of yen)Due inthroughthroughthroughthroughDue after
One Year or Less
Two Years
Three YearsFour Years
Five Years
Five Years
Net operating loss carry
¥427
¥—
¥—
¥5
¥—
¥39
forwards (a)Valuation allowance
—
(427)
—
(5)
—
(33)
Deferred tax assets
—
—
—
—
6
—

(Thousands of U.S. dollars)
Net operating loss carryforwards (a)Valuation allowance
Deferred tax assets

Year ended May 31, 2019

May 31,
2020

Total
¥472
(466)
6(b)

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years

Total

$—

$—

$46

$—

$370

$ 3,977$ 4,394

—
—

—
—

(46)
—

—
—

(311)
59

(3,977)(4,335)59(b)Due inOne Year or Less—(a) The amount is determined by multiplying the corresponding net operating loss carryforwards by the effective statutory tax rate.
(b) Deferred tax assets of ¥6 million ($59 thousand) is recognized on net operating loss carryforwards of ¥472 million ($4,394
thousand) (amount multiplied by the effective statutory tax rate). The said deferred tax assets of ¥6 million ($59 thousand) is
recognized on the net operating loss carryforwards of ¥6 million ($59 thousand) (amount multiplied by the effective statutory tax
rate) of Toyo Koki Co., Ltd., which is a consolidated subsidiary of the Company.

(Millions of yen)Due inOne Year or Less

Net operating loss carryforwards (a)Valuation allowance
Deferred tax assets

Due after
One Yearthrough Two
Years

Due after
Due after
Two Years
Three Years
through Three through Four
Years
Years

Due after
Four Years
through FiveYears

Due after
Five Years

Total

¥—

¥—

¥8

¥5

¥—

¥540

¥553

—
—

—
—

—
8

(5)
—

—
—

(377)

(382)
171(b)

163(a) The amount is determined by multiplying the corresponding net operating loss carryforwards by the effective statutory tax rate.
(b) Deferred tax assets of ¥171 million is recognized on net operating loss carryforwards of ¥553 million (amount multiplied by theeffective statutory tax rate). The said deferred tax assets of ¥171 million is recognized on the net operating loss carryforwardsof ¥154 million (amount multiplied by the effective statutory tax rate) of the Company and that of ¥16 million (amount multipliedby the effective statutory tax rate) of Toyo Koki Co., Ltd., which is a consolidated subsidiary of the Company. The net operating
loss carryforwards which resulted in deferred tax assets for the Company were generated from the devaluation loss on sharesof subsidiaries of ¥551 million which became tax deductible for the year ended May 31, 2018, and the valuation allowance is notrecognized because the management considered it to be recoverable considering the prospects of future taxable income and its
plans of selling shares held for strategic purpose.
Note 12. Other Comprehensive Loss
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive loss forthe years ended May 31, 2020 and 2019:

For the Years Ended

May 31,2020

Unrealized holding loss on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding loss on securities¥(1,653)(447)(2,100)652(1,448)¥ (533)(804)(1,337)403(934)$(15,375)(4,163)(19,538)
6,063(13,474)

Translation adjustments
Amount arising during the year
Amount before tax effectTranslation adjustments

(12)
(12)
(12)

19
19
19

(113)
(113)
(113)

Retirement benefits liability adjustments
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effect
Retirement benefits liability adjustments

21
68
90
(27)
62

7
71
78
(24)
54

204
637
841
(257)
583

(34)

(81)

(325)

(34)
¥(1,433)(81)¥ (941)(325)$(13,330)

Share of other comprehensive loss of affiliates accounted forby the equity method
Amount arising during the year
Share of other comprehensive loss of affiliates accounted forby the equity method
Total other comprehensive loss

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)Note 13. Lease Transactions
The information about finance leases that do not transfer ownership of the leased property to the lessee is omitted since there is nomateriality in terms of value.

43

Toyo Denki Seizo Report 202044

Note 14. Contingent Liabilities
As of May 31, 2020 and 2019, the Company was committed to provide guarantees on bank borrowings of the following affiliates:

As of

May 31,
2020

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)

¥334
181

¥327
78

$3,111
1,684

For the Years Ended

May 31,
2020

May 31,
2019

May 31,
2020

Net income:Basic¥120.98¥75.27

$1.12

As of

May 31,
2020

May 31,
2019

May 31,
2020

Net assets¥2,704.61

Changzhou Ruiyang Transmission Technology Co., Ltd.
Beijing Jingche Shuangyang Traction System Co., Ltd.
Note 15. Amounts Per Share(Yen)(U.S. dollars)(Yen)(U.S. dollars)¥2,773.87$25.15

Note: Diluted net income per share is omitted since there is no dilution of equity.

The bases for calculation are as follows:
Basic net income per share

For the Years Ended

May 31,
2020

May 31,
2019(Millions of yen)

Net income attributable to owners of the parent
Net income not attributable to common shareholders
Net income attributable to owners of the parent related to common stock¥1,081—
1,081

Average number of shares of common stock during the year

8,941

May 31,
2020(Thousands of
U.S. dollars)

¥690
—
690

$10,060—
10,060(Thousand shares)

9,173

Note 16. Financial Instruments
Overview(1) Policy for financial instruments
The Group raises its necessary funds for capital investments to reinforce and renew production facilities and working capital
principally through bank borrowings. The Group manages temporary cash surpluses through low risk financial assets. The Group
uses derivatives in order to avoid the following risks and does not enter into derivatives for speculative or trading purposes.
(2) Types of financial instruments and related risk
Trade receivables—trade notes and accounts receivable and electronically recorded receivables—are exposed to credit risk inrelation to customers. Trade receivables denominated in foreign currencies arising from international business are exposed to foreignexchange fluctuation risk, but the Group utilizes forward foreign exchange contracts to reduce such risk as a hedging instrument.
Investment securities are composed of mainly the shares of common stock of other companies with which the Group has business
relationships and exposed to market risk.
Certain long-term debt raised for the purpose of making capital investments with variable interest rates is exposed to interest rate
fluctuation risk. However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Grouputilizes interest rate swap transactions as a hedging instrument.
Regarding hedging instruments and hedged items in hedge accounting, hedging policy, and assessment of the effectiveness ofhedging activities, etc., please see “1. Summary of Significant Accounting Policies (s) Derivative financial instruments.”

45(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies of the Group for managing credit risk arising from receivables, each related division monitors
credit worthiness of their main customers periodically, and monitors due dates and outstanding balances by individual customer. In
addition, the Group is making efforts to identify and mitigate risks of bad debts from customers who are having financial difficulties.
Investment securities are composed of mainly the shares of common stock of highly rated companies with which the Group hasbusiness relationships. Accordingly, the Group believes that the credit risk deriving from such investment securities is insignificant.
The Group also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions only with financial
institutions which have a sound credit profile.
(b) Monitoring of market risks (the risk arising from fluctuations in foreign exchange rates, interest rates and others)
The Group utilizes interest rate swap transactions to reduce interest rate fluctuation risk on long-term debt.
For investment securities, the Group periodically reviews the fair values of such financial instruments and the financial position of
the issuers.
In conducting derivative transactions, the division in charge of each derivative transaction follows the internal policies, which set
forth delegation of authority and maximum upper limit on positions. Monthly reports including actual transactions data are submitted
to the Board of Directors for their review.
(c) Monitoring of liquidation risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis to manage liquidationrisk.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 19, Derivative
Transactions are not necessarily indicative of the actual market risk involved in derivative transactions.
Estimated Fair value of Financial Instruments
Carrying value of financial instruments on the consolidated balance sheets as of May 31, 2020 and 2019 and estimated fair value areshown in the following table. The following table does not include financial instruments for which it is extremely difficult to determine
the fair value (Please refer to Note 2 below):

As of May 31, 2020

Carrying value

Fair value

Difference(Millions of yen)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Electronically recorded receivables
4) Investment securities
Total assets
Liabilities
5) Trade notes and accounts payable6) Electronically recorded payables
7) Short-term borrowings
8) Long-term debt
Total liabilities
9) Derivative transactions*¥3,293
14,135
1,538
14,369¥33,337¥3,293
14,135
1,538
14,369¥33,337

¥—
—
—
—
¥—

¥2,224
5,877
1,590
12,961¥22,653¥—¥2,224
5,877
1,590
13,005¥22,696
¥—

¥—
—
—
43
¥43
¥—

Toyo Denki Seizo Report 202046

As of May 31, 2020

Carrying value

Fair value

Difference(Thousands of U.S. dollars)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Electronically recorded receivables
4) Investment securities
Total assets
Liabilities
5) Trade notes and accounts payable6) Electronically recorded payables
7) Short-term borrowings
8) Long-term debt
Total liabilities
9) Derivative transactions*2.Financial instruments for which it is extremely difficult to determine the fair value$30,632
131,453
14,307
133,634$310,028$30,632
131,453
14,307
133,634$310,028

$—
—
—
—
$—

$20,683
54,65914,787
120,540$210,670$—$20,683
54,65914,787
120,944$211,075
$—

$—
—
—
404
$404
$—

As of May 31, 2020

Fair value

Difference

As of May 31, 2020

Carrying value(Millions of yen)

Assets1) Cash on hand and in banks2) Trade notes and accounts receivable3) Electronically recorded receivables
4) Investment securities
Total assets
Liabilities
5) Trade notes and accounts payable6) Electronically recorded payables
7) Short-term borrowings
8) Long-term debt
Total liabilities
9) Derivative transactions*¥1,065

May 31,
2020(Thousands of
U.S. dollars)¥1,065$9,905

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the above table.
3. Redemption schedule for receivables and securities with maturities on May 31, 2020 and 2019 were as follows:

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables¥3,291
13,9401,538¥18,770
Due in One Yearor Less

¥—
194
—
¥194

¥—
—
—
¥—

¥—
—
—
¥—

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Thousands of U.S. dollars)¥2,240
14,192
1,443
16,790¥34,667¥2,240
14,192
1,443
16,790¥34,667

¥—
—
—
—
¥—

¥2,670
5,944
1,893
13,530¥24,039¥—¥2,670
5,944
1,893
13,594¥24,103
¥—

¥—
—
—
63
¥63
¥—

*Derivative transactions are presented in a net amount of receivables and payables and net payables are shown in parenthesis.
Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets:Cash on hand and in banks, trade notes and accounts receivable and electronically recorded receivables
Since these items are settled in a short period of time, their carrying value approximates fair value.
However, if they are settled in a long period of time, the fair value of receivables is based on the present value of the receivables classified by definite periods discounted
using interest rates on the corresponding period until settlement.
Investment securities
The fair value of stocks is based on quoted market prices. Investment securities held by the Group are classified as available-for-sale securities and please see Note 17“Securities.”
Liabilities:
Trade notes and accounts payable, electronically recorded payables and short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings
were entered into. The fair value of long-term debt with variable interest rates, which is hedged by the interest rate swaps and to which hedge accounting is applied (referto the following paragraph), is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings wereentered into.
Derivative transactions
The fair value of interest rate swaps accounted for by the hedge accounting is included in the fair value of the related long-term debt, since such interest rate swaps areaccounted for together with long-term debt as hedged items.
The fair value of interest rate swaps accounted for by the normal method is determined based on the price, etc. provided by the financial institutions.

47

May 31,
2019(Millions of yen)

Unlisted equity securities*Derivative transactions are presented in a net amount of receivables and payables and net payables are shown in parenthesis.

As of May 31, 2019

May 31,
2020

As of

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables

As of May 31, 2019$30,608
129,641
14,307$174,557

$—
1,811
—
$1,811

$—
—
—
$—

$—
—
—
$—

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables¥2,237
13,881
1,443¥17,562

¥—
311
—
¥311

¥—
—
—
¥—

¥—
—
—
¥—

4.The redemption schedule for long-term debt is disclosed in Note 6.

Note 17. Securities
Information regarding securities classified as available-for-sale securities
Available-for-sale securities

As of May 31, 2020

Carrying value Acquisition cost

Unrealized
gain (loss)(Millions of yen)

Securities for which carrying value exceeds acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds carrying value:
Stock
Subtotal
Total¥14,218¥14,218¥5,868¥5,868¥8,349¥8,349¥151¥151¥14,369

¥229
¥229
¥6,098¥(78)¥(78)¥8,271

Toyo Denki Seizo Report 202048

As of May 31, 2020

Carrying value Acquisition cost

Unrealized
gain (loss)

Hedging policies(Thousands of U.S. dollars)

Securities for which carrying value exceeds acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds carrying value:
Stock
Subtotal
Total$132,226$132,226$54,579$54,579$77,646$77,646$1,407$1,407$133,634$2,135$2,135$56,715$(727)$(727)$76,919

Notes: 1.	Unlisted stocks were not included in the above table because there were no quoted market prices available and they were extremely difficult to determine the fairvalue.
2. Acquisition cost in the above table represents carrying value reflecting impairment losses.
If the market value of the securities declines by 50% or more from the acquisition cost as of the end of the fiscal year, the Group recognizes the difference between
the market value and the acquisition cost as an impairment loss. If the decline ranges between about 30% and 50%, the Group recognizes an impairment loss forthe necessary amount considering its recoverability.

As of May 31, 2019

Carrying value Acquisition cost

Unrealized
gain (loss)(Millions of yen)

Securities for which carrying value exceeds their acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds their carrying value:
Stock
Subtotal
Total¥16,594¥16,594¥6,188¥6,188¥10,405¥10,405

¥196
¥196
¥16,790

¥231
¥231
¥6,420¥(35)¥(35)¥10,370

Information regarding available-for-sale securities sold

Stock:
Sales proceeds
Gain on sales
Loss on sales

Cash on hand and in banks
Cash and cash equivalents

49

Types and purpose of derivative transactions
The Company primarily uses forward foreign exchange contracts to hedge against the fluctuations in foreign currency exchange rates
on trade receivables denominated in foreign currencies and interest rate swaps to hedge against the adverse impact of fluctuations ininterest rates on interest-bearing debt.
Derivative transactions to which hedge accounting is not applied:
As of May 31, 2020 and 2019, there were no currency-related derivatives.
Derivative transactions to which hedge accounting is applied:

As of May 31, 2020

Notional amount
Major hedged
Maturing after
item
Contract amount
one year

Fair value(Millions of yen)Interest rate swaps accounted for by the exceptional method:
Receive/floating and pay/fixedLong-term debt

As of May 31, 2020

Notional amount
Major hedged
Maturing after
item
Contract amount
one year

¥32

¥—

Note

Fair value(Thousands of U.S. dollars)

May 31,
2020

May 31,
2019(Millions of yen)

¥780
447
—

May 31,
2020(Thousands of
U.S. dollars)¥1,556804—$7,256
4,163—

Note 18. Supplementary Cash Flow Information
Cash and cash equivalents in the consolidated statements of cash flows for the years ended May 31, 2020 and 2019 were reconciled
to cash on hand and in banks in the consolidated balance sheets as follows:

As of

The Company utilizes forward foreign exchange contracts and interest rate swaps for the purpose of hedging its exposure tofluctuations in foreign exchange rates and interest rates, respectively. However, based on internal management rules on financial
market risk approved by the Company’s Board of Directors, Group companies do not enter into transactions involving derivatives for
speculative or trading purposes.

Interest-related derivatives:

Notes: 1.	Unlisted stocks were not included in the above table because there were no quoted market prices available and they were extremely difficult to determine the fairvalue.
2. Acquisition cost in the above table represents carrying value reflecting impairment losses.
If the market value of the securities declines by 50% or more from the acquisition cost as of the end of the fiscal year, the Group recognizes the difference between
the market value and the acquisition cost as an impairment loss. If the decline ranges between about 30% and 50%, the Group recognizes an impairment loss forthe necessary amount considering its recoverability.

For the Years Ended

Note 19. Derivative Transactions

May 31,
2020

May 31,
2019(Millions of yen)

¥3,293¥3,293

May 31,
2020

Interest rate swaps accounted for by the exceptional method:
Receive/floating and pay/fixedLong-term debt

$297

$—

Note

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received
under the swap agreement is recognized and included in interest expenses. Accordingly, the fair value of interest rate swaps is included in the fair value of long-term
debt. The notional amount of long-term debt includes current portion of long-term debt.

As of May 31, 2019

Notional amount
Major hedged
Maturing after
item
Contract amount
one year

Fair value(Millions of yen)Interest rate swaps accounted for by the exceptional method:
Receive/floating and pay/fixedLong-term debt

¥104

¥32

Note

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received
under the swap agreement is recognized and included in interest expenses. Accordingly, the fair value of interest rate swaps is included in the fair value of long-term
debt. The notional amount of long-term debt includes current portion of long-term debt.

(Thousands of
U.S. dollars)¥2,240¥2,240$30,632$30,632

Toyo Denki Seizo Report 202050

Note 20. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and operating results are
regularly reviewed by the Board of Directors to make decisions about resource allocation and to assess performance.
The Group establishes business units by product and each business unit designs domestic and overseas comprehensive strategies
for its products and is developing business activities. Accordingly, the Group consists of the three reportable segments by productbased on the business units, which are Transportation Systems, Industrial Systems and Information Equipment Systems.
The accounting policies of the segments are substantially the same as those described in the significant accounting policies in “1.
Summary of Significant Accounting Policies.” Segment profit is evaluated based on operating income.
Inter-segment sales are recorded at the same prices used in transactions with third parties.
For the year ended May 31, 2020
Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated

For the year ended May 31, 2019
Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Millions of yen)

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers¥27,235¥12,339¥1,583¥13¥41,172¥—¥41,172

Segment profit
Segment assets

50
27,285¥2,427¥20,216

012,340¥650¥14,310

—
1,583
¥290
¥1,199

591
605
¥34
¥572

642
41,814¥3,401¥36,300

(642)
(642)
¥(2,843)¥21,701—
41,172¥557¥58,001

Other items:
Depreciation
Capital expenditures

¥718
¥595

¥691
¥366

¥92
¥109

¥1
¥13

¥1,503¥1,085¥270¥5¥1,774¥1,090(Millions of yen)

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers
Segment profit
Segment assets
Other items:
Depreciation
Capital expenditures¥24,269¥13,023¥1,772¥5¥39,071¥—¥39,071

Note: “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

1224,282¥2,474¥20,3641
13,024¥1,008¥13,679

—
1,772
¥460
¥1,062

510
516
¥5
¥536

524
39,595¥3,948¥35,642

(524)
(524)
¥(2,880)¥19,522—39,071¥1,068¥55,165

Geographical information

¥592
¥356

¥608
¥111

¥27
¥24

¥4
¥5

¥1,232
¥497

¥255
¥47

¥1,487¥545

For the year ended May 31, 2020
Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

May 31,
2020

Japan
China
Other
Consolidated¥30,997
4,282
3,791¥39,071

May 31,
2019(Millions of yen)

May 31,
2020(Thousands of
U.S. dollars)¥31,745
3,663
5,763¥41,172$288,272
39,82335,258$363,355

Consolidated

Major customer information
Major customer information for the years ended May 31, 2020 and 2019 was omitted since there was no customer to whom sales
exceeds 10% of net sales recorded in the accompanying consolidated statements of income.

$225,700$121,115$16,486$53$363,355$—$363,355

Segment profit
Segment assets

118
225,818$23,008$189,385

10
121,125$9,378$127,214—
16,486$4,278$9,880

4,746
4,799
$53
$4,986

4,874
368,230$36,719$331,467(4,874)(4,874)$(26,783)$181,555—
363,355$9,935$513,022

Other items:
Depreciation
Capital expenditures$5,510$3,315$5,661$1,036

$252
$226

$41
$51

$11,464$4,629$2,371$443$13,836$5,072

Note 21. Significant Subsequent Events
There were no significant subsequent events to be noted.

Note 22. Additional Information

Note: “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

51

For the Years Ended

Note: Net sales information above is based on customers’ location.

(Thousands of U.S. dollars)

Sales, profits orlosses and asset byreportable segments
Net sales:
Sales to third parties
Inter-segment sales
and transfers

Net sales to third parties by countries or areas grouped according to geographical classification for the years ended May 31, 2020
and 2019 were summarized as follows:In making accounting estimates such as impairment of property, plant and equipment, and recoverability of deferred tax assets, theGroup has computed the amounts based on information available at the time of preparation of its consolidated financial statements.
In computing those amounts, stable future cash flows obtained from continuous transactions with certain customers are used as
significant assumptions in making such accounting estimates. The Group considers that the impacts from the spread of the newcoronavirus infectious disease on the Group will continue for a certain period of time during the fiscal year ending May 31, 2021.

Toyo Denki Seizo Report 2020

52

Report of Independent Auditors

53

Toyo Denki Seizo Report 2020

54

Stock Related Information
Number of shares (As of May 31, 2020)
Number of shares authorized

36,000,000

Number of shares issued

9,735,000

Number of shareholders

5,614

Distribution of shares by type of shareholder
Treasury stock
8.15%

Financial instruments
business operators
0.88%

Major shareholders
Number of shares held
% of
Shareholders(Thousands)
total shares held
The Master Trust Bank of Japan, Ltd. (Trust account)487
5.45
East Japan Railway Company
480
5.36
Employees Stock Ownership Plan
416
4.65
NIPPON LIFE INSURANCE COMPANY
337
3.77
MUFG Bank, Ltd.
270
3.02
Sanshin Co., Ltd.
270
3.01
Toyo Denki Subcontractor Factories
257
2.87
Shareholding Association
Japan Trustee Services Bank, Ltd. (Trust account)235
2.63
BNP PARIBAS SECURITIES SERVICES
216
2.42
LUXEMBOURG/JASDEC/JANUS HENDERSONHORIZON FUND
Masayoshi Yamauchi
213
2.38

Foreigncorporations, etc.
6.83%
Other
corporations
19.15%

Individuals
and others
40.25%

Financial
institutions
24.74%(Note) The percentages of total shares held are calculated excluding 793,403 treasury stocks.

Transition of share price
Share price
(Yen)

(Yen)

3,000

3,000

(Yen)

(Yen)

3,000

3,000

2,000

2,000

2,000

2,000

1,000

1,000

1,000

1,000

0

0

(Thousands) 2017.6

Trading volume

2018.1

2019.12020.1(Thousands)(Thousands) 2017.6

2018.1

2019.12020.1(Thousands)

3,000
0

3,0000

3,000

2,000

3,000

2,000

2,000

2,000

1,000

1,000

1,000

1,000

0

0

0

0

Disclaimer on the forward-looking statements
Information in this corporate report contains forward-looking statements. Such statements were developed based on the information available at the time
when this report was prepared. These forward-looking statements may be largely revised in the future, and the actual outcome could significantly varyfrom the stated or implied contents of such statements subject to various factors. This report is not intended to solicit investment. Investors are kindly
asked to make your investment decision at your own judgment and responsibility. Numbers presented in 100 million yen or million yen are rounded down
to the nearest respective unit.

55

Toyo Denki Seizo Report 2020

56

Company Profile

Organization Chart(as of May 31, 2020)(Revised on Oct 1, 2020)

Company Profile

Education and Development Department
Export Management Department

Head office building

Subsidiaries and Affiliates (as of September 1, 2020)
Affiliates accounted for by the equity method

Yokohama plantNon-consolidated subsidiaries

Transportation Systems
TOYOKOUKI Co., Ltd.
Taihei Electric Co., Ltd.

Overseas

Toyo Denki (Beijing) Co., Ltd. (China)

Industrial Systems

Information Equipment Systems

Toyosangyo K.K.
TD Drive Co., Ltd.

	Changzhou Yangdian Zhanyun Transport Equipment Co., Ltd.
(China)TOYO DENKI USA, INC. (U.S)
Hunan Xiangyang Electric Co., Ltd. (China)
	Changzhou Ruiyang Transmission Technology Co., Ltd. (China)	Beijing Jingche Shuangyang Traction System Co,. Ltd.
(China)	Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd.
(China)OthersToyo Shoji
Co., Ltd.

	SIAM TOYO DENKI Co., Ltd.
(Thailand)	Chalco-Toyo Permanent Magnet
Motor Co., Ltd. (China)

Planning and Research Department

Corporate Production Planning Division

Production Planning Department

Purchasing Division

Planning and Research Department

Business Development Division

Transportation Business Unit

Audit Division

Overseas Project DivisionInternational Engineering Division
Engineering Division
Overseas Engineering Division
Development Division
Transportation Systems Works
Production Management Division
Design Division
Quality Assurance Division
Manufacturing Division
Procurement Division
Industrial Systems Planning Division
Industry Business Unit

Design Division
Quality Assurance Division

TOYOKOUKI Co., Ltd.
Toyosangyo K.K.
TD Drive Co., Ltd.

Changzhou Ruiyang
Yonggui Toyo
TOYO DENKI SEIZO K.K. DELHI
LIAISON OFFICE

Yangdian Zhanyun
Chalco-Toyo
Xiangyang Electric
SIAM TOYO

Manufacturing Division
Procurement Division

Taihei Electric Co., Ltd.

Toyo Denki (Beijing)
TOYO USAIT Business Unit

Toyo Shoji Co., Ltd.
TOYO DENKI USA,INC.
Toyo Denki (Beijing) Co., Ltd.

Research Laboratory

Changzhou Yangdian Zhanyun Transport Equipment Co., Ltd.
SIAM TOYO DENKI Co., Ltd.
Hunan Xiangyang Electric Co., Ltd.
Changzhou Ruiyang Transmission Technology Co., Ltd.
Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd.
Beijing Jingche Shuangyang Traction System Co., Ltd.

* See the table above for the full names of subsidiaries and affiliates.

57

Chalco-Toyo Permanent Magnet Motor Co., Ltd.

Sales Division 1
Sales Division 2
Sales Division 3
Sales Division 4
Engineering Division
Industrial Systems Works
Production Management Division
Development Division

Subsidiaries and Affiliates

Jingche Shuangyang

Development Promotion Department
EV Systems Department
IoT Solutions Department
Transportation Business Planning Division
Japan Sales Division
JR Group Sales Division
Commuter Rail and Subway Sales Division
Osaka Sales Division
Nagoya Sales Division
China Sales DivisionInternal Control Committee

Board ofAuditorsJapan

Affiliates not accounted for by the equity method

Management Strategy
Meeting

Hiroshima Branch
Kyushu Branch

Corporate Quality Management Division

Quality Management Department 2

Yokohama
BranchNagoyaOsaka Branch
BranchFinance Department
Accounting Department
Quality Management Department 1

National and Global Group
Company Meetings

Niigata Branch

Okinawa
BranchConsolidated subsidiaries

Nomination andCompensation Advisory
Committee

Sendai Branch

Operating Officer Liaison
Meeting

Shiga Ryuo
Plant

Financial Affairs Division

Audit
Officer

Code Number
Number of Shares Authorized
Number of Shares Issued
Number of Shareholders

Legal Compliance Department

President

Stock Exchange Listing

General Affairs Department
Human Resources Department

Auditors

Head Office

Human Resources and General Affairs Division

Board of Directors

Established
Capital
Number of Employees

TOYO DENKI SEIZO K.K.
(TOYO ELECTRIC MFG. CO., LTD.)
June 20, 1918
4,998,390,000 yen
1,227 (Consolidated)
841 (TOYO DENKI SEIZO K.K.)
Tokyo Tatemono Yaesu Building,
1-4-16, Yaesu, Chuo-ku, Tokyo,
103-0028, Japan
TEL +81-3-5202-8121 (General
Affairs Division)
https://www.toyodenki.co.jp/
The Tokyo Stock Exchange, First
Section6505
36,000,000 shares
9,735,000 shares
5,614

PR, IR, and CSR Department
Information Systems Department

Group Administration Office

Hokkaido Branch

General Meeting of Shareholders

Company NameManagement Planning Department
Management Planning Division

Yokohama Plant
Shiga Ryuo Plant
Osaka Branch
Nagoya BranchInformation Systems Planning Division
Information Systems Sales Division
Information Systems Works
Design Division
Quality Assurance Division
Production Engineering Division
Engineering Strategy Division
Engineering Research Division
Engineering Management Division
Administration Division
Administration Division

Kyushu Branch
Hokkaido Branch

Toyo Denki Seizo Report 202058