February 7, 2020 Company name: JAMCO Corporation Stock exchange listing: Tokyo Stock Exchange Stock Exchange Code: 7408 URL: https://www.jamco.co.jp/ Representative: Harutoshi Okita, President & CEO Contact: Kentaro Goto, Director & Managing Executive Officer Phone: +81-42-503-9145 The date of filing quarterly securities report: February 10, 2020 The start date of payout of dividend: – Availability of supplementary briefing material on quarterly financial results: None Schedule of quarterly financial results briefing session: None (Amounts are rounded down to the nearest million yen.) 1. Consolidated Operating Results for the Third Quarter of the Fiscal Year 2019 (from April 1, 2019 to December 31, 2019)
(Note) Comprehensive income: The third quarter of fiscal year 2019: ¥230 million [(87.1)%] The third quarter of fiscal year 2018: ¥1,796 million [4.5%]
3. Consolidated Financial Results Forecast for the Fiscal Year 2019 (from April 1, 2019 to March 31, 2020)
* Notes: (1) Changes in significant subsidiaries during this quarter of the fiscal year 2019: None (2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates and retrospective restatement 1) Changes in accounting policies due to the revision of accounting standards: Yes 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting estimates: None 4) Retrospective restatement: None (4) Number of common shares issued 1) Number of common shares outstanding (including the number of treasury stock): As of December 31, 2019: 26,863,974 shares As of March 31, 2019: 26,863,974 shares 2) Number of treasury stock: As of December 31, 2019: 38,932 shares As of March 31, 2019: 38,832 shares 3) Average number of common shares outstanding: 3 rd quarter of FY 2019: 26,825,082 shares 3 rd quarter of FY 2018: 26,825,193 shares
*Notes:
*1. This document is an English translation of a statement written initially in Japanese. The Japanese original document should be considered as the primary version. *2. These quarterly financial results are outside the scope of quarterly review by certified public accountants or audit firms. *3. Explanation of the proper use of financial results forecast and other notes The earnings forecasts and other statements herein are based on information currently available to the Company and certain premises that the Company deems to be reasonable. Actual results may differ significantly from these forecasts due to a wide range of factors.
Table of Contents

(1) Explanation of Operating Results During the third quarter of FY 2019, there were growing signs of a slowdown in the global economy due mainly to concerns on the trade issue between the U.S. and China as well as confusion stemming from Brexit, despite continued moderate growth in the U.S. economy. The dollar-yen exchange rate moved within the range of the lower ¥112 to the lower ¥105 per US$1. In the air transportation industry, while fierce competition continues due to aggressive efforts of low-cost carriers (LCCs), major airlines are launching various strategies such as securing new flight routes, enhancing passenger cabin services, and entering into LCC business as a result of growing global demand for air transportation. Although the impact of the Boeing 737 MAX aircraft grounding and the reduction of production of the Boeing 787 aircraft are matters of temporary concern, both Boeing and Airbus have continued to maintain a high level of order backlog, backed by rising passenger demand over the medium to long term. With plans to increase production of some models, along with progress in the development of new models aiming at improved fuel efficiency, the aircraft market is expected to remain robust. Under such circumstances, in the aircraft interiors business and the aircraft seat business, we worked to identify the cause and verify safety in response to the inappropriate quality issues announced on March 26, 2019, and implemented corrective/preventive measures, while proceeding with efforts to raise awareness of both compliance and quality to a higher level. In the aircraft components business, we took initiatives to improve productivity, while proceeding with in- house production of interiors and seat parts by applying the metal processing technologies we have accumulated over the years. In the aircraft maintenance business, we continued with initiatives to ensure flight safety and enhance quality, while endeavoring to expand aircraft maintenance for airlines. As a result, on a consolidated basis, during the third quarter of FY 2019, the Company posted net sales of ¥65,337 million (up ¥3,386 million compared to the same period of the previous fiscal year), operating income of ¥1,174 million (down ¥1,587 million compared to the same period of the previous fiscal year), ordinary income of ¥786 million (down ¥1,883 million compared to the same period of the previous fiscal year) and net income attributable to shareholders of parent company of ¥339 million (down ¥1,271 million compared to the same period of the previous fiscal year). Provision for loss on construction contracts of ¥4,068 million for construction to be completed in or after the quarterly fourth quarter of FY 2019 was recognized as of December 31, 2019. The impact of this provision for loss on construction contracts on income (loss) for the quarterly third quarter of FY 2019 was an increase of ¥354 million in cost of sales (provision for loss on construction contracts as of September 30, 2019 was ¥3,713 million) and, for the cumulative third quarter of FY 2019, an increase of ¥287 million in cost of sales (provision for loss on construction contracts at the end of the previous fiscal year was ¥3,781 million). Selling, general and administrative expenses, non-operating income (expenses), and extraordinary income (loss) are as follows: Selling, general and administrative expenses were ¥6,162 million (a decrease of ¥584 million compared to the same period of the previous fiscal year), due mainly to decreases in warranty expenses and sales commissions. In terms of non-operating income (expenses), an expense of ¥388 million was reported due mainly to a deterioration in foreign exchange gains (losses) resulting from the appreciation of the yen in the foreign exchange market from the end of the previous fiscal year (an expense of ¥91 million in the same period of the previous fiscal year). As for extraordinary income (loss), although insurance income related to quality issues of ¥60 million was recognized due to liability insurance, a loss of ¥215 million was reported due mainly to loss related to quality (a loss of ¥127 million in the same period of the previous fiscal year).
[Aircraft Interiors Business]
In the aircraft interiors business, net sales increased from the same period of the previous fiscal year due to progress in the shipment of products during the quarterly third quarter of FY 2019, despite a temporary delay in the shipment of products owing to the response to inappropriate quality issues. Meanwhile, ordinary income decreased from the same period of the previous fiscal year, mainly reflecting a decline in the number of shipments of profitable programs compared with the favorable number in the same period of the previous fiscal year, in addition to increases in personnel expenses and transportation costs for improving shipment delays. As a result, the aircraft interiors business posted net sales of ¥43,735 million (up ¥1,381 million compared to the same period of the previous fiscal year) and ordinary income of ¥2,219 million (down ¥2,181 million compared to the same period of the previous fiscal year).
[Aircraft Seat Business]
In the aircraft seat business, net sales increased from the same period of the previous fiscal year due to the shipment of the business class seat "Venture." Meanwhile, an ordinary loss was reported due mainly to additional expenses incurred as a result of shifting orders to other production bases following the temporary suspension of production owing to responses to inappropriate quality issues at Miyazaki JAMCO Corporation. As a result, the aircraft seat business posted net sales of ¥11,614 million (up ¥2,057 million compared to the same period of the previous fiscal year) and ordinary loss of ¥1,748 million (ordinary loss of ¥1,796 million in the same period of the previous fiscal year).
[Aircraft Components Business]
In the aircraft components business, despite an increase in shipments of heat exchangers and other equipment, net sales decreased from the same period of the previous fiscal year due to the postponement of shipments of some aircraft engine parts to the quarterly fourth quarter and thereafter. In addition, an ordinary loss was reported due mainly to a decrease in net sales. As a result, the aircraft components business posted net sales of ¥4,125 million (down ¥372 million compared to the same period of the previous fiscal year) and ordinary loss of ¥182 million (ordinary loss of ¥61 million in the same period of the previous fiscal year).
[Aircraft Maintenance Business]
In the aircraft maintenance business, net sales increased from the same period of the previous fiscal year due to a solid increase in performance of aircraft maintenance and equipment maintenance for airlines. In addition, ordinary income increased from the same period of the previous fiscal year due mainly to the impact of an increase in net sales and initiatives to improve profitability. As a result, the aircraft maintenance business posted net sales of ¥5,861 million (up ¥320 million compared to the same period of the previous fiscal year) and ordinary income of ¥501 million (up ¥371 million compared to the same period of the previous fiscal year).
[Others]
The Others segment includes the businesses of the consolidated subsidiary Orange JAMCO Corporation, and we were able to make steady progress mainly in inter-segment transactions, including assistance work in the aircraft interiors business. As a result, the Others segment posted net sales of ¥0 million (up ¥0 million compared to the same period of the previous fiscal year) and ordinary loss of ¥2 million (ordinary loss of ¥1 million in the same period of the previous fiscal year). (2) Explanation of Financial Position [Assets, liabilities and net assets] Total assets as of December 31, 2019 amounted to ¥114,420 million, up ¥11,439 million from the end of the previous fiscal year. Of such, total current assets increased by ¥11,836 million from the end of the previous fiscal year, due mainly to an increase in notes and accounts receivable – trade (up ¥5,277 million compared to the end of the previous fiscal year) and an increase in raw materials and supplies (up ¥4,501 million compared to the end of the previous fiscal year), despite a decrease in cash and deposits (down ¥142 million compared to the end of the previous fiscal year). Total non-current assets decreased by ¥397 million from the end of the previous fiscal year due mainly to decreases in property, plant and equipment (down ¥243 million compared to the end of the previous fiscal year) and investments and other assets (down ¥176 million compared to the end of the previous fiscal year) as a result of relatively limited investment for the third quarter of FY 2019. Total liabilities amounted to ¥84,035 million, up ¥11,769 million from the end of the previous fiscal year. This was attributable primarily to an increase in short-term loans payable (up ¥13,587 million compared to the end of the previous fiscal year) and an increase in notes and accounts payable – trade (up ¥1,566 million compared to the end of the previous fiscal year), which offset the decrease in income taxes payable (down ¥1,377 million compared to the end of the previous fiscal year). Total net assets amounted to ¥30,384 million, down ¥330 million from the end of the previous fiscal year. This was due primarily to a decrease in retained earnings (down ¥196 million compared to the end of the previous fiscal year) as a result of cash dividend payment and other factors. As a result, the equity ratio stood at 26.1%. (3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information As for net sales, despite a temporary delay in shipments of products as a result of responses to inappropriate quality issues related to the aircraft interiors business and the aircraft seat business, products were shipped out from the quarterly third quarter of FY 2019. Meanwhile, the forecast for income remains unchanged from the consolidated financial results forecast for the fiscal year ending March 31, 2020 announced on November 8, 2019 due to progress in the shipment of products and the weaker-than-expected yen exchange rate, despite the lingering impact of additional expenses including personnel expenses and transportation costs for improving shipment delays. In light of the present circumstances, the exchange rate for the quarterly fourth quarter of FY 2019 assumed for the consolidated financial results forecast has been changed from ¥105 to ¥108 per US$1.
(3) Notes to Quarterly Consolidated Financial Statements (Notes on going concern assumption) There is no relevant information. (Notes in the case of significant changes in shareholders' equity) There is no relevant information.
(Segment information, etc.) [Segment information] I. For the third quarter of FY 2018 1. Information on net sales and income (loss) by reportable segment
Corporation is a special-purpose subsidiary, dedicated to promoting the employment of people with disabilities and provides assistance work in the Company's factories, which is one of the corporate social responsibilities. 2. Differences between the total amount of income (loss) of reportable segments and the amounts in the Quarterly Consolidated Statement of Income and the major details of such differences (Matters relating to adjustment of differences)
3. Information on impairment loss on non-current assets and goodwill by reportable segment There is no relevant information.
1. Information on net sales and income (loss) by reportable segment (Note) The Others segment includes the businesses of affiliate Orange JAMCO Corporation. Orange JAMCO Corporation is a special-purpose subsidiary, dedicated to promoting the employment of people with disabilities and provides assistance work in the Company's factories, which is one of the corporate social responsibilities. 2. Differences between the total amount of income (loss) of reportable segments and the amounts in the Quarterly Consolidated Statement of Income and the major details of such differences (Matters relating to adjustment of differences)
3. Information on impairment loss on non-current assets and goodwill by reportable segment There is no relevant information.