QUARTERLY REPORT · 2019. 9. 9. · Quarterly Accounting Period: Second Quarter of the 65th Term (From July 1,2012 to September 30, 2012) Name of Company: Kabushiki Kaisha Arisawa

QUARTERLY REPORT

(Second Quarter of the 65th Term)

From July 1, 2012 to September 30, 2012

(TRANSLATION)

ARISAWA MFG. CO., LTD.

TABLE OF CONTENTS

Page Number

Cover Page

PART I. INFORMATION ABOUT THE BUSINESS ........................................................................1

I. General Conditions of Business ............................................................................................................1 1. Changes in Principal Business Indicators, etc...................................................................................1 2. Description of Business.....................................................................................................................1

II. Status of Business ................................................................................................................................2 1. Business Risks, etc. ...........................................................................................................................2 2. Important Agreements for Operation, etc. ........................................................................................2 3. Analysis of Financial Conditions, Business Results and Status of Cash Flows................................2

III. Status of the Submitting Company.....................................................................................................6 1. Status of Shares, etc. .........................................................................................................................6 (1) Total Number of Shares, etc. .........................................................................................................6 (2) Status of Stock Acquisition Rights, etc. ........................................................................................7 (3) Status of Exercise of Bonds with Stock Acquisition Rights, Exercise Price Adjustment

Clause attached .............................................................................................................................8 (4) Details of Rights Plan ....................................................................................................................8 (5) Changes in the Number of Shares Issued and Outstanding, Capital stock, etc. ............................8 (6) Status of Major Shareholders.........................................................................................................9 (7) Status of Voting Rights................................................................................................................10

2. Status of Directors and Officers ......................................................................................................10

IV. Status of Accounting ........................................................................................................................11 1. Quarterly Consolidated Financial Statements .................................................................................12 (1) Quarterly Consolidated Balance Sheet ........................................................................................12 (2) Quarterly Consolidated Profit and Loss Statement and Quarterly Consolidated Statement

of Comprehensive Income ..........................................................................................................14 [Quarterly Consolidated Profit and Loss Statement] ..................................................................14 [Quarterly Consolidated Statements of Comprehensive Income]...............................................15

(3) Quarterly Consolidated Cash Flow Statement.............................................................................16 2. Other................................................................................................................................................22

PART II. INFORMATION ON GUARANTY COMPANIES OF THE SUBMITTING COMPANY, ETC. ...............................................................................................................23

[Quarterly Review Report]

Cover Page

Type of Submitted Document: Quarterly Report

Authoritative Text: Financial Instruments and Exchange Law, Article 24-4-7, paragraph 1

Submitted to: Chief of Kanto Financial Affairs Bureau

Date of Submission: November 14, 2012

Quarterly Accounting Period: Second Quarter of the 65th Term (From July 1,2012 to September 30, 2012)

Name of Company: Kabushiki Kaisha Arisawa Seisakusho

English Translation of Company Name: Arisawa Mfg. Co., Ltd.

Name and Title of Representative: Sanji Arisawa, President and Chief Executive Officer

Location of Principal Office: 5-5, Minami Honcho 1-chome, Joetsu City, Niigata Prefecture

Telephone Number: (025) 524-5124

Contact Person: Hiroshi Hayatsu, General Affairs Department Manager

Nearest Liaison Office: 5-5, Minami Honcho 1-chome, Joetsu City, Niigata Prefecture

Telephone Number: (025) 524-5124

Contact Person: Hiroshi Hayatsu, General Affairs Department Manager

Places where Copies of Quarterly Report Are Available for Public Inspection:

Arisawa Mfg. Co., Ltd., Tokyo Branch Office (12-5, Yanagibashi 2-chome, Taito-ku, Tokyo) Arisawa Mfg. Co., Ltd., Osaka Branch Office (Konishi Nissei Building 11th Floor, 12-12, Minami Senba 4-chome, Chuo-ku, Osaka) Tokyo Stock Exchange (2-1, Nihonbashi Kabuto-cho, Chuo-ku, Tokyo)

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PART I. INFORMATION ABOUT THE BUSINESS

I. General Conditions of Business

1. Changes in Principal Business Indicators, etc.

Term

64th Term Consolidated Cumulative

Second Quarter

65th Term Consolidated Cumulative

Second Quarter

64th Term

Accounting Period From April 1, 2011 to September 30,

2011

From April 1, 2012 to September 30,

2012

From April 1, 2011 to March 31, 2012

Net sales (Millions of yen) 16,109 14,021 27,825 Ordinary income or loss () (Millions of yen) 6 259 447

Net income(Millions of yen) 1,475 229 586

Comprehensive income (Millions of yen)

618 319 642

Net assets (Millions of yen) 36,385 35,114 35,041 Total assets(Millions of yen) 49,838 46,447 46,666 Net income per share (Yen) 42.16 6.57 16.75 Fully diluted net income per share (Yen) 42.12 6.56 16.74

Net worth ratio (%) 70.1 72.3 71.9 Cash flows from operating activities (Millions of yen) 682 255 829

Cash flows from investing activities (Millions of yen) 2,361 806 1,917

Cash flows from financing activities (Millions of yen) 109 558 835

Cash and cash equivalents at end of period (Millions of yen)

6,979 4,382 6,038

Term 64th Term

Consolidated Second Quarter

65th Term Consolidated

Second Quarter

Accounting Period From July 1, 2011 to September 30, 2011From July 1, 2012

to September 30, 2012

Net income or loss () per share (Yen) 6.00 6.22

Note: 1. As the Company prepares quarterly consolidated financial statements, the changes in principal business indicators, etc., of the Submitting Company are not described.

2. Consumption tax not included in net sales amounts.

2. Description of Business

There has been no material change in information regarding business lines of our Group (the Company and its affiliated companies) during the current consolidated cumulative second quarter. No change of organization has been made to any of the key affiliated companies.

In this regard, categories of reportable segments have been changed starting from the first quarter of the current consolidated fiscal year. For details of such change, see IV. Status of Accounting - 1. Quarterly Consolidated Financial Statements – [Notes] – (Segment Information, etc.).

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II. Status of Business

1. Business Risks, etc.

The current consolidated cumulative second quarter has seen neither new business risks, etc. accruing nor any significant change in the business risks, etc. stated in the financial report of the previous business year.

2. Important Agreements for Operation, etc.

In the current consolidated second quarter, no decision on or execution of important agreements for operation, etc., was made.

3. Analysis of Financial Conditions, Business Results and Status of Cash Flows

Matters concerning the future in the text are according to the judgment of our Group (the Company and its consolidated subsidiaries) as of the end of the current consolidated quarter. (1) Status of Business Results

Although some parts of the Japanese economy in the current consolidated cumulative second quarter has shown signs of picking up, the outlook remains dim under the influence of the prolonged tendency toward strong yen, the jitters about the borrowing binge in some European countries and the decelerating growth in China and other emerging economies.

Under such circumstances, our Group (the Company, its consolidated subsidiaries and the companies accounted for under the equity method) has seen a year-on-year sales decline due mainly to the sluggish demand for digital consumer electronics worldwide (in terms of the electronic materials segment, which is our core business field), although our results of operating activities and ordinary operations have somewhat improved over their year-earlier levels as a result of our cost-cutting efforts.

As a result, for the business results for the current consolidated cumulative second quarter, net sales were

14,021 million yen (a 13.0% drop as compared to the year-earlier quarter), operating loss was 76 million yen (operating loss of 211 million yen for the year-earlier quarter), ordinary income was 259 million yen (ordinary income of 6 million yen for the year-earlier quarter), and net income was 229 million yen (a 84.4% drop as compared to the year-earlier quarter).

Business results by segment are as follows. In this regard, categories of reportable segments have been changed starting from the first quarter of the

current consolidated fiscal year, and the following comparisons with the year-earlier quarter have been made with figures for the year-earlier quarter reclassified into the segmentation after such change.

1) Electronic materials segment

In the electronic materials segment, net sales were 6,335 million yen, a 24.2% drop as compared to the year-earlier quarter due largely to weak sales of our core product, i.e. flexible printed circuit board materials (The amount of orders received dropped 17.8%, and the production output dropped 21.7%, as compared to the year-earlier quarter on a non-consolidated basis of the Company), while the segment income or loss recorded an income of 64 million yen. 2) Display materials segment

In the display materials segment, net sales were 2,165 million yen, a 13.5% drop as compared to the year-earlier quarter due to a downturn in sales of 3D-related materials, while the segment income or loss recorded a loss of 24 million yen. 3) Electric insulation materials segment

In the electric insulation materials segment, net sales were 1,541 million yen, a 3.7% drop as compared to the year-earlier quarter due to a downturn in sales of prepregs for electric insulation and glass cloth, while the segment income or loss recorded an income of 203 million yen.

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4) Industrial application structural materials segment In the industrial application structural materials segment, net sales were 3,308 million yen, a 24.0%

increase as compared to the year-earlier quarter due largely to the business growth in the FW molded products as well as honeycomb panels and prepregs for aircrafts, while the segment income or loss recorded an income of 95 million yen. 5) Related goods sales segment

In the related goods sales segment, net sales were 548 million yen, a 36.0% drop as compared to the year-earlier quarter, while the segment income or loss recorded an income of 47 million yen. 6) Logistics-related segment

In the logistics-related segment, net sales were 78 million yen, a 3.9% increase as compared to the year-earlier quarter, while the segment income or loss recorded an income of 44 million yen. 7) Other (other business segments)

In other business segments, the aggregate net sales were 43 million yen, a 7.5% drop as compared to the year-earlier quarter, while the segment income or loss recorded an income of 9 million yen.

It should also be noted that the amounts of sales, orders received and the like stated in this section do not include the amount of consumption tax, etc.

(2) Status of Cash Flows

Cash and cash equivalents (hereinafter referred to as the “Funds”) at the end of the current consolidated second quarter amounted to 4,382 million yen, falling 2,596 million yen as compared to the end of the previous consolidated second quarter (a 37.2% drop as compared to the year-earlier quarter).

The following is the status of each cash flow category and the key factors behind such status in the current consolidated cumulative second quarter.

(Cash Flows from Operating Activities) Funds disbursed for operating activities were 255 million yen (earning of 682 million yen in the year-

earlier quarter). This was mainly due to an increase in Funds comprising the decrease of 90 million yen in depreciation expenses and the decrease of 489 million yen in inventories, etc. as well as a decrease in Funds comprising the increase of 1,545 million yen in notes and accounts receivable and the decrease of 81 million yen in equity in earnings of affiliates, etc.

(Cash Flows from Investing Activities) Funds disbursed for investing activities were 806 million yen (earning of 2361 million yen in the year-

earlier quarter). This was mainly due to earning of Funds comprising the proceeds of 1,200 million yen from sale of short-term investment securities and the proceeds of 250 million yen from withdrawal of time deposits as well as an outflow of Funds comprising the expenditure of 999 million yen for purchase of short-term investment securities and the expenditure of 795 million yen for purchase of property, plant and equipment, etc.

(Cash Flows from Financing Activities) Funds disbursed for financing activities were 558 million yen (a 408.4% leap as compared to the year-

earlier quarter). This was mainly due to an outflow of Funds because of the expenditure of 751 million yen for repayment of long-term loans payable as well as earning of Funds from the proceeds of 377 million yen from long-term loans payable.

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(3) Business and Financial Tasks to be Tackled There was no significant change in the tasks to be tackled by our Group in the current consolidated

cumulative second quarter. In this regard, the Company has a basic policy in place as to how the persons controlling the Company’s

financial and business policies should be, and the contents of such basic policy (the matters set forth in Article 118, Item 3 of the Enforcement Rules of the Companies Act) are as follows.

1) Contents of the basic policy as well as the efforts toward the realization of the basic policy (including, but not limited to, effective utilization of the assets of the Company and formation of an appropriate corporate group)

The Company, since its initiation in 1909, has made efforts at technological innovation and product development while consistently responding to user needs as well as addressing improvements in corporate value by developing unique technologies integrating weaving, coating and molding under an environment of favorable labor relations. The Company’s Board of Directors believes that the company is always obligated to continue to develop along its historical path of accumulating technologies as well as understanding such corporate value and fostering improvement of this corporate value over the long run.

Based on the above, our Group aims at enhancing profitability by creating new businesses and markets, prioritizing safety and quality as our objectives under the corporate policies based on the philosophy of “Creation, Innovation and Challenge.”

2) Efforts for preventing control by inappropriate persons of decisions on financing and corporate policies of the Company

We have witnessed such takeover methods across stock markets recently, through forceful acquisition of large block share buyouts without sufficient explanation or consultation with shareholders of a targeted company or its top management. Not a few of these buyouts can be regarded as leading to loss of corporate value, forced sale of large block shares or violation of shareholder interests.

We have determined that it is necessary to secure the disclosure of necessary and sufficient information and a period for examination and consideration of a takeover bid by presenting rules and procedures to be complied with by a bidder or proposer who seeks a takeover (hereinafter collectively referred to as a “Takeover Bidder”) through Company developed countermeasures for acquisition of large block shares of the Company (hereinafter referred to as the “Rules”), and obtained approval for the Rules at the 63rd ordinary general meeting of shareholders held on June 29, 2011.

Under the Rules, in the event that implementation of countermeasures has been approved at the general meeting of shareholders, etc., to confirm the will of shareholders, and that a Takeover Bidder does not comply with the Rules or that it is clear a large block acquisition of shares of the Company and similar acts or proposals (hereinafter collectively referred to as a “Takeover”) will destroy corporate value, countermeasures shall be implemented in accordance with the Rules.

(For the details of the Rules, please refer to the website of the Company at http:www.arisawa.co.jp/)

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3) That the said efforts in accordance with the basic policy do not encroach on the corporate value of the Company and the common interest of shareholders and that they do not aim at maintaining the status of officers.

The Board of Directors of the Company believes that while the Company’s shares have been listed on the stock exchange and investors can freely trade shares of the Company, a large block acquisition of shares of the Company against the will of the Board of Directors of the Company or a takeover bid accompanying the transfer of control of the Company should not be denied if such actions contribute to the interest of all shareholders through an improvement in corporate value, and a final judgment should be made by all shareholders of the Company.

If such Takeover is made, in order for shareholders to make an appropriate judgment, we think it is best to have the Takeover Bidder provide detailed information and disclose sufficient information to shareholders as well as having the Board of Directors of the Company express its opinions which will in turn allow the shareholders to directly express their opinions at the general meeting of shareholders, etc., on which proposal is best suited to securing and improving corporate value and the common interest of the shareholders, and the Rules provide for as follows.

a. Judgment by direct resolution of shareholders The Rules are to confirm directly the will of shareholders on approval or disapproval of a

takeover bid by a Takeover Bidder except for noncompliance of the Rules by the Takeover Bidder, etc. In confirmation of the will of shareholders, it is almost impossible for the Directors to make individual solicitation for the protection of their own interests and there is no room for arbitrary intention of the Directors.

b. Restrictions on implementation of countermeasures by the judgment of the board of directors It is restricted to the cases where the violation of the Rules or destruction of corporate value and

the common interest of shareholders are clear that a countermeasure can be implemented by the Board of Directors of the Company without confirming the will of shareholders, and so-called “Sunset-clause,” which limits the term of the Rules to two (2) years, is also attached.

Therefore, the Board of Directors of the Company believes that the “Basic Policy for Control of the Company” is the efforts for securing the corporate value of the Company and the common interest of shareholders and that it shall not impair the common interest of shareholders.

(4) Research and Development Activities

Amount of expenses for research and development activities of the entire Group in the current consolidated cumulative second quarter was 785 million yen.

In this regard, there was no significant change in the status of research and development activities of our Group in the current consolidated cumulative second quarter.

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III. Status of the Submitting Company

1. Status of Shares, etc.

(1) Total Number of Shares, etc. 1) Total number of shares

Class Total number of shares authorized to be issued

Common Stock 130,000,000

Total 130,000,000

2) Shares issued and outstanding

Class

Number of shares issued and outstanding as of the end of the second quarter

(September 30, 2012)

Number of shares issued and outstanding as of the

filing date of the Quarterly Report

(November 14, 2012)

Name of financial instruments exchange

where the shares are listed or authorized financial

instruments firms association where the shares are registered

Remarks

Common Stock 34,997,824 34,997,824 Tokyo Stock Exchange (First Section Market)

Number of shares constituting one

full unit: 100

Total 34,997,824 34,997,824 --- ---

Note: The number of shares issued upon the exercise of stock acquisition rights during the period from November 1, 2012 through the date of submission of this quarterly report is not included in the column “Number of shares issued and outstanding as of the filing date of the Quarterly Report”.

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(2) Status of Stock Acquisition Rights, etc. Stock acquisition rights issued in the current second quarter were as follows.

1) Resolution at the Board of Directors’ Meeting

Date of Resolution June 28, 2012

Number of stock acquisition rights(Units) 540

Number of treasury stock acquisition rights out of the total number of stock acquisition rights (Units) ---

Class of shares subject to stock acquisition rights Common Stock

Number of shares subject to stock acquisition rights 54,000

Amount to be paid per share upon the exercise of each stock acquisition right (Yen) 223

Exercise period for stock acquisition rights July 1, 2014 through

June 30, 2017

Issuance price and amount credited to equity capital in the event of share issuance upon the exercise of stock acquisition rights (Yen)

Issuance Price 287

Amount Credited to Equity Capital 144

Conditions for the exercise of stock acquisition rights Being a director of the Company or an advisor or a counselor provided for in Article 28 of the Articles of Incorporation of the Company at the time of exercising the stock acquisition rights.

Matters concerning the transfer of stock acquisition rights Transfer of stock acquisition rights shall be subject to the approval of the Board of Directors.

Matters concerning substitute payment ---

Matters concerning the grant of stock acquisition rights in connection with acts of reorganization

In the event that a merger agreement in which the Company becomes a defunct company has been approved, or that a proposal for approval of a stock swap agreement (or for a transfer of shares) in which the Company becomes a wholly owned subsidiary has been approved at a general meeting of shareholders, except where the surviving company or the wholly owning parent company succeeds to the obligation to grant stock acquisition rights, the Company may acquire the stock acquisition rights without consideration.

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2) Resolution at the Ordinary General Meeting of Shareholders

Date of Resolution June 28, 2012

Number of stock acquisition rights(Units) 1,945

Number of treasury stock acquisition rights out of the total number of stock acquisition rights (Units) ---

Class of shares subject to stock acquisition rights Common Stock

Number of shares subject to stock acquisition rights 194,500

Amount to be paid per share upon the exercise of each stock acquisition right (Yen) 223

Exercise period for stock acquisition rights July 1, 2014 through

June 30, 2017

Issuance price and amount credited to equity capital in the event of share issuance upon the exercise of stock acquisition rights (Yen)

Issuance Price 287 Amount Credited to Equity Capital

144

Conditions for the exercise of stock acquisition rights Being a director, an advisor or an employee of the Company or a director, an advisor or an employee of a subsidiary of the Company at the time of exercising the stock acquisition rights.

Matters concerning the transfer of stock acquisition rights Transfer of stock acquisition rights shall be subject to the approval of the Board of Directors.

Matters concerning substitute payment ---

Matters concerning the grant of stock acquisition rights in connection with acts of reorganization

In the event that a merger agreement in which the Company becomes a defunct company has been approved, or that a proposal for approval of a stock swap agreement (or for a transfer of shares) in which the Company becomes a wholly owned subsidiary has been approved at a general meeting of shareholders, except where the surviving company or the wholly owning parent company succeeds to the obligation to grant stock acquisition rights, the Company may acquire the stock acquisition rights without consideration.

(3) Status of Exercise of Bonds with Stock Acquisition Rights, Exercise Price Adjustment Clause attached

No applicable matter.

(4) Details of Rights Plan No applicable matter.

(5) Changes in the Number of Shares Issued and Outstanding, Capital stock, etc. Number of shares issued and

outstanding Capital stock

(Thousands of yen) Capital reserves

(Thousands of yen) Period Change Balance Change Balance Change Balance

July 1, 2012 through September 30, 2012 --- 34,997,824 --- 7,117,259 --- 6,229,282

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(6) Status of Major Shareholders As of September 30, 2012

Full name or corporate name

Address Number of shares held

Ratio of shares held to total number of shares issued and outstanding (%)

Mitsubishi Gas Chemical Co., Ltd. 5-2 Marunouchi 2-chome, Chiyoda-ku, Tokyo 1,472,166 4.20

Japan Trustee Services Bank, Ltd. (Trust account)

8-11 Harumi 1-chome, Chuo-ku, Tokyo 1,293,300 3.69

Hachijuni Bank, Ltd. (Standing Proxy: The Master Trust Bank of Japan, Ltd.)

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

1,000,930 2.85

Arisawa Kenko Ltd. 11-44 Nishishiro-cho 3-chome, Joetsu City, Niigata Prefecture 834,338 2.38

CBNY DFA INTL SMALL CAP VALUE PORTFOLIO (Standing Proxy: Citibank Japan Ltd.)

388 GREENWICH STREET, NY, NY 10013, USA (3-14 Higashi-Shinagawa 2-chome, Shinagawa-ku, Tokyo)

774,882 2.21

Eiichi Arisawa Joetsu City, Niigata Prefecture 691,046 1.97

The Daishi Bank, Ltd. (Standing Proxy: The Master Trust Bank of Japan, Ltd.)

1071-1, Higashiborimaedori 7-bancho, Chuo-ku, Niigata City, Niigata Prefecture (11-3 Hamamatsu-cho 2-chome, Minato-ku, Tokyo)

628,903 1.79

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

11-3 Hamamatsu-cho 2-chome, Minato-ku, Tokyo 607,400 1.73

The Master Trust Bank of Japan, Ltd. (Retirement benefit trust account and Mitsubishi Electric Corporation account)

11-3 Hamamatsu-cho 2-chome, Minato-ku, Tokyo 530,536 1.51

Nippon Life Insurance Company 6-6 Marunouchi 1-chome Chiyoda-ku, Tokyo 485,922 1.38

Total --- 8,319,423 23.77

Note: Number of shares held by Mitsubishi Gas Chemical Co., Ltd. includes 966,306 shares that have been contributed by Mitsubishi Gas Chemical Co., Ltd. as the trust property of retirement benefit trust. Name in the Company’s register of shareholders is “The Master Trust Bank of Japan, Ltd. (Retirement benefit trust account and Mitsubishi Gas Chemical Co., Ltd. account).”

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(7) Status of Voting Rights 1) Shares issued and outstanding

As of September 30, 2012

Category Number of Shares Number of Voting Rights (Units) Remarks

Shares without voting rights --- --- ---

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

Shares with restricted voting rights (Other) --- --- ---

Shares with full voting rights (Treasury stock, etc.) Common Stock 3,300 --- ---

Shares with full voting rights (Other) Common Stock 34,869,100 348,691 ---

Shares constituting less than one full unit Common Stock 125,424 --- ---

Total number of shares issued and outstanding 34,997,824 --- ---

Total number of voting rights held by shareholders --- 348,691 ---

Note: 500 shares held in the name of Japan Securities Depository Center, Inc. are included in the row “Shares with full voting rights (Other)”. 5 units of voting rights held in the name of Japan Securities Depository Center, Inc. in regard to shares with full voting rights are included in the column “Number of Voting Rights”.

2) Treasury Stocks, etc.

As of September 30, 2012

Name and address of shareholder Number of shares held

Full name or corporate name Address

Under own name

Under the names of

others Total

Ratio of shares held to total number of sharesissued and outstanding

(%)

Arisawa Mfg. Co., Ltd. 5-5 Minami Honcho 1-chome, Joetsu City, Niigata Prefecture

3,300 --- 3,300 0.01

Total --- 3,300 --- 3,300 0.01

2. Status of Directors and Officers


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IV. Status of Accounting

1. Method of Preparation of Quarterly Consolidated Financial Statements

The quarterly consolidated financial statements of the Company are prepared in compliance with the “Regulations Concerning Terms, Forms and Preparation Method of Quarterly Consolidated Financial Statements” (Cabinet Office Ordinance No. 64, 2007).

2. Certification of Audit

The Company received a quarterly review of quarterly consolidated financial statements for the current consolidated second quarter (From July 1, 2012 to September 30, 2012) and the current consolidated cumulative second quarter (From April 1, 2012 to September 30, 2012) by Ernst & Young ShinNihon LLC under the provision of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Law.

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1. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheet (Thousands of yen)

Previous Consolidated

Fiscal Year (As of March 31, 2012)

Current Consolidated Second Quarter

(As of September 30, 2012)

Assets

Current assets

Cash and deposits 7,412,220 5,588,575

Notes and accounts receivable-trade *2 8,532,084 *2 10,106,828

Short-term investment securities 701,639 499,919

Merchandise and finished goods 2,760,965 2,275,835

Work in process 1,297,582 1,173,508

Raw materials and supplies 1,781,127 1,912,993

Other 733,702 665,472

Allowance for doubtful accounts 174,357 165,365

Total current assets 23,044,965 22,057,768

Noncurrent assets

Property, plant and equipment

Buildings and structures, net 6,255,207 6,084,628

Machinery, equipment and vehicles, net 2,986,473 3,020,793

Other, net 1,922,955 2,042,027

Total property, plant and equipment 11,164,637 11,147,449

Intangible assets Goodwill 52,655 38,940

Other 144,622 144,014

Total intangible assets 197,277 182,954

Investments and other assets Investment securities 11,581,343 12,358,782

Other 1,057,607 1,068,668

Allowance for doubtful accounts 379,070 367,637

Total investments and other assets 12,259,880 13,059,812

Total noncurrent assets 23,621,795 24,390,216

Total assets 46,666,761 46,447,984

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(Thousands of yen)

Previous Consolidated

Fiscal Year (As of March 31, 2012)

Current Consolidated Second Quarter


Liabilities

Current liabilities

Notes and accounts payable-trade *2 3,990,176 *2 4,358,479Short-term loans payable 1,133,165 1,149,283Current portion of long-term loans payable 1,015,912 1,075,805Income taxes payable 61,708 84,996Provision for bonuses 446,252 400,968Provision for directors' bonuses 2,480 885Provision for product warranties 126,319 71,947Other *2 2,005,798 *2 1,892,195

Total current liabilities 8,781,814 9,034,562

Noncurrent liabilities Long-term loans payable 2,068,007 1,662,947Provision for retirement benefits 34,212 34,279Asset retirement obligations 63,607 64,468Other 677,524 537,419

Total noncurrent liabilities 2,843,350 2,299,113

Total liabilities 11,625,165 11,333,676

Net assets Shareholders’ equity

Capital stock 7,117,259 7,117,259Capital surplus 6,229,282 6,229,282Retained earnings 20,848,841 20,903,600Treasury stock 1,655 1,708

Total shareholders’ equity 34,193,727 34,248,434

Accumulated other comprehensive income Valuation difference on available-for-sale securities 371,836 170,057Foreign currency translation adjustment 1,000,912 813,975

Total accumulated other comprehensive income 629,076 643,917

Subscription rights to shares 230,542 159,172Minority interests 1,246,402 1,350,620

Total net assets 35,041,595 35,114,308

Total liabilities and net assets 46,666,761 46,447,984

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(2) Quarterly Consolidated Profit and Loss Statement and Quarterly Consolidated Statements of Comprehensive Income

[Quarterly Consolidated Profit and Loss Statement] [Consolidated cumulative second quarter]

(Thousands of yen)

Previous Consolidated Cumulative Second Quarter

(From April 1, 2011 to September30, 2011)

Current Consolidated Cumulative Second Quarter

(From April 1, 2012 to September 30, 2012)

Net sales 16,109,836 14,021,520Cost of sales 14,183,033 12,455,534Gross profit 1,926,803 1,565,986Selling, general and administrative expenses * 2,138,338 * 1,642,584Operating loss () 211,535 76,598Non-operating income

Interest income 24,981 31,836Dividends income 22,789 26,990Equity in earnings of affiliates 467,355 386,984Amortization of negative goodwill 18,457 18,457Other 198,182 178,863Total non-operating income 731,765 643,133

Non-operating expenses Interest expenses 52,232 42,756Foreign exchange losses 346,242 165,081Other 115,724 99,653Total non-operating expenses 514,200 307,491

Ordinary income 6,030 259,043Extraordinary income

Gain on sales of noncurrent assets 60,382 27,072Gain on reversal of subscription rights to shares 64,823 88,112Other 1,497,952 8,383Total extraordinary income 1,623,158 123,569

Extraordinary loss Loss on sales of investment securities － 18,222Loss on valuation of stocks of subsidiaries and affiliates － 20,345Other 14,068 16,118Total extraordinary loss 14,068 54,686

Income before income taxes 1,615,119 327,926Income taxes 88,599 46,976Income before minority interests 1,526,520 280,949Minority interests in income 51,224 51,093Net income 1,475,296 229,856

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[Quarterly Consolidated Statements of Comprehensive Income] [Consolidated cumulative second quarter]

(Thousands of yen)





Income before minority interests 1,526,520 280,949Other comprehensive income

Valuation difference on available-for-sale securities 1,013,374 201,818Foreign currency translation adjustment 78,956 161,280Share of other comprehensive income of associates accounted for using equity method 25,976 78,821

Total other comprehensive income 908,441 38,283Comprehensive income 618,079 319,233(Breakdown)

Comprehensive income attributable to owners of the parent 566,679 215,014

Comprehensive income attributable to minority interests 51,399 104,218

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(3) Quarterly Consolidated Cash Flow Statement (Thousands of yen)





Net cash provided by (used in) operating activities

Income before income taxes 1,615,119 327,926Depreciation 779,683 689,158Amortization of goodwill 15,333 15,123Share-based compensation expenses 30,769 16,742Gain on reversal of subscription rights to shares 64,823 88,112Increase ( decrease) in allowance for doubtful accounts 88,723 19,720

Increase ( decrease) in provision for bonuses 39,159 45,284Increase ( decrease) in provision for product warranties 141,256 54,371

Increase ( decrease) in provision for directors' bonuses 1,186 1,595Increase ( decrease) in provision for retirement benefits 12,988 264

Loss ( gain) on redemption of investment securities － 13,002Interest and dividends income 47,770 58,827Interest expenses 52,232 42,756

Foreign exchange losses ( gains) 303,661 106,898

Equity in ( earnings) losses of affiliates 467,355 386,984

Loss ( gain) on change in equity 9,438 2,482Loss ( gain) on sales of short-term and long term investment securities 1,492,836 18,222

Loss ( gain) on valuation of investment securities 17,394 285

Loss ( gain) on sales of noncurrent assets 60,382 27,072Loss on retirement of property, plant and equipment 2,234 3,555Loss ( gain) on sales of stocks of subsidiaries and affiliates － 5,901

Loss on valuation of stocks of subsidiaries and affiliates － 20,345Decrease ( increase) in notes and accounts receivable-trade 284,574 1,545,594

Decrease ( increase) in inventories 312,008 489,923Increase ( decrease) in notes and accounts payable-trade 414,501 369,744

Amortization of negative goodwill 18,457 18,457

Increase ( decrease) in accrued consumption taxes 137,802 12,976

Decrease ( increase) in other assets 65,064 81,241

Increase ( decrease) in other liabilities 163,146 113,696Other 8 305

Subtotal 816,162 186,204

Interest and dividends income received 351,264 346,446Interest expenses paid 52,380 42,598Payments for extra retirement payments － 310,745Other payments － 34,072Income taxes paid 432,947 28,507

Net cash provided by (used in) operating activities 682,098 255,682

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(Thousands of yen)





Net cash provided by (used in) investing activities

Payments into time deposits 358,650 72,865Proceeds from withdrawal of time deposits 1,550,000 250,714Purchase of short-term investment securities 999,333 999,402Proceeds from sales of short-term investment securities 1,050,000 1,200,000Purchase of property, plant and equipment 766,434 795,983Proceeds from sales of property, plant and equipment 437,598 57,544Purchase of intangible assets 8,932 17,968Purchase of investment securities 1,374,188 609,514Proceeds from sales of investment securities 2,829,965 170,323Payments of loans receivable 1,000 －

Collection of loans receivable 2,950 10,452

Net cash provided by (used in) investing activities 2,361,975 806,699

Net cash provided by (used in) financing activities Net increase ( decrease) in short-term loans payable 460,045 3,399Proceeds from long-term loans payable 324,743 377,833Repayment of long-term loans payable 483,406 751,706Redemption of bonds 49,765 －

Repayments of lease obligations 149,387 13,555Purchase of treasury stock 45 53Cash dividends paid 208,521 173,837Cash dividends paid to minority shareholders 3,419 123

Net cash provided by (used in) financing activities 109,756 558,043Effect of exchange rate change on cash and cash equivalents 68,131 35,445

Net increase ( decrease) in cash and cash equivalents 2,866,186 1,655,870

Cash and cash equivalents at beginning of period 4,112,839 6,038,695

Cash and cash equivalents at end of period * 6,979,025 * 4,382,824

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[Changes in the Scope of Consolidation or Scope of Application of the Equity Method] (Material changes in the scope of application of the equity method)

No applicable matter. In this regard, Toppan Arisawa Optical Technology Co., Ltd. was dissolved as of September 14, 2012 and is

currently under liquidation proceedings.

[Changes in Accounting Policy] (Changes in accounting policy not easily distinguishable from changes in accounting estimate)

With the enforcement of the latest revision of the Corporation Tax Act, the Company and its domestic consolidated subsidiaries have changed, starting from the first quarter of the current consolidated fiscal year, their respective depreciation methods with regard to the property, plant and equipment acquired on or after April 1, 2012 to the method complying with the revised Corporation Tax Act.

The effect of the said change is minimal.

[Particular accounting treatment applied in preparation of quarterly consolidated financial statements] (Calculation of tax expenses)

Tax expenses are calculated by multiplying the quarterly net income before taxes by an estimated effective tax rate. Such effective tax rate is reasonably estimated after applying tax effect accounting to the net income before taxes in the consolidated fiscal year including the current consolidated second quarter. [Notes] (Notes Related to Quarterly Consolidated Balance Sheet)

1 Contingent liabilities Important legal case

Current Consolidated Second Quarter (ended September 30, 2012) An action for damages (claiming 1,720 million yen) was brought as of February 9, 2012 against Arisawa

Kenpan Co., Ltd. (hereinafter referred to as “Arisawa Kenpan”), the Company’s consolidated subsidiary, by Okayama Daiken Corporation (hereinafter referred to as “Okayama Daiken”) over detachment of kitchen panels (delivered by Arisawa Kenpan) occurring after construction.

Arisawa Kenpan determines it is not liable for damages in this legal case as the said detachment was caused by the material designated by Okayama Daiken and is responding to the action through consultations with attorneys.

*2 Notes maturing at the end of the consolidated second quarter

For accounting treatment of notes maturing at the end of the consolidated second quarter, settlement is made on the clearing date of each such note. As the end of the current consolidated second quarter falls on a bank holiday, the following notes maturing at the end of the consolidated second quarter are included in their respective balances as of the end of the consolidated second quarter, as shown below.

(Thousands of yen)

Previous Consolidated Fiscal Year (As of March 31, 2012) Current Consolidated Second Quarter


Notes and accounts receivable-trade 93,409 87,667 Notes and accounts payable-trade 136,076 136,694 Current liabilities and others (Equipment notes payable-trade)

74,346 2,252

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(Notes Related to Quarterly Consolidated Profit and Loss Statement) * Major items under selling, general and administrative expenses and their respective amounts are as follows.

(Thousands of yen)





Salaries, allowances and bonuses 511,060 430,435 Provision for bonuses 112,883 76,200 Provision for directors' bonuses 1,906 885 Provision for retirement benefits 32,590 28,139 Provision of allowance for doubtful

accounts 111,783 6,095

(Notes Related to Quarterly Consolidated Cash Flow Statement)

* The correlation between the balance of cash and cash equivalents (at the end of the current consolidated second quarter) and the amount shown for the corresponding item on the quarterly consolidated balance sheet is as follows. (Thousands of yen)





Cash and deposits 8,465,283 5,588,575 Time deposits with deposit terms of

more than three months 1,486,258 1,205,750

Cash and cash equivalents 6,979,025 4,382,824

(Notes Related to Shareholders’ Equity, etc.) I Previous Consolidated Cumulative Second Quarter (From April 1, 2011 to September 30, 2011)

Dividend Amount

(Resolution)

Type of stock

Total amount of dividends

(Thousands of yen)

Dividend per share

(Yen) Record date Effective date

Underlying assets of dividends

Ordinary general meeting of

shareholders held on June 29, 2011

Common stock 209,970 6.00 March 31, 2011 June 30, 2011 Retained earnings

II Current Consolidated Cumulative Second Quarter (From April 1, 2012 to September 30, 2012)

Dividend Amount

(Resolution)

Type of stock

Total amount of dividends

(Thousands of yen)

Dividend per share

(Yen) Record date Effective date

Underlying assets of dividends

Ordinary general meeting of

shareholders held on June 28, 2012

Common stock 174,973 5.00 March 31, 2012 June 29, 2012 Retained earnings

- 20 -

(Segment Information, etc.) [Segment Information] I Previous Consolidated Cumulative Second Quarter (From April 1, 2011 to September 30, 2011) 1. Information about the amount of net sales and income or loss by reportable segment

(Thousands of yen) Reportable segment

Electronic materials

Display materials

Electric insulation materials

Industrial application structural materials

Related goods sales

Sales Sales to external customers 8,358,371 2,503,260 1,600,463 2,667,704 857,205Intersegment sales or transfers --- --- --- --- ---

Total 8,358,371 2,503,260 1,600,463 2,667,704 857,205Segment income or loss () 404,620 139,295 207,237 19,665 39,518

Reportable segment

Logistics-related Total

Other (See Note) Total

Sales Sales to external customers 76,023 16,063,030 46,806 16,109,836 Intersegment sales or transfers 286,785 286,785 70,796 357,581

Total 362,809 16,349,815 117,602 16,467,418 Segment income or loss () 53,729 546,145 6,375 552,521

Note: The column “Other” includes business segments that do not fall under any of the reportable segments mentioned above.

2. Difference between the total amount of income or loss of reportable segments and the corresponding amount reported in the quarterly consolidated profit and loss statement as well as the key components of such difference (Matters concerning difference adjustment)

(Thousands of yen)

Income Amount

Total of reportable segments 546,145

Income in the category “Other” 6,375

Elimination of intersegment transactions 34,451

Amortization of goodwill 15,333

Unallocated corporate expenses (See Note) 698,711

Adjustment of inventories 15,560 Operating loss () in quarterly consolidated profit and loss statement 211,535

Note: Unallocated corporate expenses are mostly general and administrative expenses not attributable to any particular reportable segment.

3. Information about impairment loss for noncurrent assets or goodwill, etc., by reportable segment


- 21 -

II Current Consolidated Cumulative Second Quarter (From April 1, 2012 to September 30, 2012) 1. Information about the amount of net sales and income or loss by reportable segment

(Thousands of yen) Reportable segment

Electronic materials

Display materials

Electric insulation materials

Industrial application structural materials

Related goods sales

Sales Sales to external customers 6,335,263 2,165,581 1,541,242 3,308,295 548,896Intersegment sales or transfers --- --- --- --- ---

Total 6,335,263 2,165,581 1,541,242 3,308,295 548,896Segment income or loss () 64,194 24,784 203,816 95,949 47,321

Reportable segment

Logistics-related Total

Other (See Note) Total

Sales Sales to external customers 78,966 13,978,246 43,274 14,021,520 Intersegment sales or transfers 203,896 203,896 55,483 259,380

Total 282,863 14,182,143 98,757 14,280,901 Segment income or loss () 44,914 431,411 9,299 440,711

Note: The column “Other” includes business segments that do not fall under any of the reportable segments mentioned above.

2. Difference between the total amount of income or loss of reportable segments and the corresponding amount reported in the quarterly consolidated profit and loss statement as well as the key components of such difference (Matters concerning difference adjustment)

(Thousands of yen)

Income Amount

Total of reportable segments 431,411

Income in the category “Other” 9,299

Elimination of intersegment transactions 21,667

Amortization of goodwill 15,123

Unallocated corporate expenses (See Note) 465,331

Adjustment of inventories 15,186 Operating loss () in quarterly consolidated profit and loss statement 76,598

Note: Unallocated corporate expenses are mostly general and administrative expenses not attributable to any particular reportable segment.

3. Matters concerning Changes in Reportable Segments, etc. As stated in (Changes in accounting policy not easily distinguishable from changes in accounting

estimates), with the enforcement of the latest revision of the Corporation Tax Act, the Company and its domestic consolidated subsidiaries have changed, starting from the first quarter of the current consolidated fiscal year, their respective depreciation methods with regard to the property, plant and equipment acquired on or after April 1, 2012 to the method complying with the revised Corporation Tax Act. Accordingly, the depreciation method for each reportable segment has also been changed to the method complying with the revised Corporation Tax Act.

The effect of the said change on each segment income or loss is minimal. Also, starting from the first quarter of the current consolidated fiscal year, the logistics-related

business has newly been introduced to the lineup of reportable segments from among the “Other” business segments in view of the increasing quantitative importance of such business. In this regard, the segment information herein disclosed for the previous consolidated cumulative second quarter has been prepared on the basis of the categories of reportable segments for the current consolidated cumulative second quarter.

- 22 -

4. Information about impairment loss for noncurrent assets or goodwill, etc., by reportable segment No applicable matter.

(Per Share Information) The amounts of net income per share and the fully diluted net income per share with their respective bases of calculation are as follows.





(1) Net income per share 42 yen 16 sen 6 yen 57 sen

(Basis of calculation)

Net income (Thousands of yen) 1,475,296 229,856 Amounts that are not attributable to common stockholders (Thousands of yen) --- ---

Net income for common stocks (Thousands of yen) 1,475,296 229,856

Average number of shares of common stock during the period 34,995,041 34,994,578

(2) Fully diluted net income per share 42 yen 12 sen 6 yen 56 sen

(Basis of calculation) Adjustment of net income (Thousands of yen) --- ---

Increase in number of common stocks (shares) 31,324 31,263

The outline of potential shares which were not included in the calculation of the amount of fully-diluted net income per share due to the absence of dilutive effects and also underwent a significant change following the end of the previous consolidated fiscal year.

--- ---

(Important Events after Closing the Accounts)


2. Other

Litigation An action for damages (claiming 1,720 million yen) was brought as of February 9, 2012 against Arisawa

Kenpan Co., Ltd. (hereinafter referred to as “Arisawa Kenpan”), the Company’s consolidated subsidiary, by Okayama Daiken Corporation (hereinafter referred to as “Okayama Daiken”) over detachment of kitchen panels (delivered by Arisawa Kenpan) occurring after construction.

Arisawa Kenpan determines it is not liable for damages in this legal case as the said detachment was caused by the material designated by Okayama Daiken and is responding to the action through consultations with attorneys.

- 23 -

PART II. INFORMATION ON GUARANTY COMPANIES OF THE SUBMITTING COMPANY, ETC.


Quarterly Review Report of Independent Auditor

November 13, 2012

To: Board of Directors Arisawa Mfg. Co., Ltd. Ernst & Young ShinNihon LLC Issei Tsukada [Seal] Designated Limited Partner and Operating Partner, Certified Public Accountant Shinichi Oshima [Seal] Designated Limited Partner and Operating Partner, Certified Public Accountant

We conducted, under the provision of Article 193-2, paragraph 1 of the Financial Instruments and Exchange Law, a quarterly review of the quarterly consolidated financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of Accounting” for the consolidated second quarter (From July 1, 2012 to September 30, 2012) and the consolidated cumulative second quarter (From April 1, 2012 to September 30, 2012) of the consolidated fiscal year from April 1, 2012 to March 31, 2013, consisting of a quarterly consolidated balance sheet, quarterly consolidated profit and loss statement, quarterly consolidated statements of comprehensive income, quarterly consolidated cash flow statement and notes.

Responsibility of Management for Quarterly Consolidated Financial Statements

It is the responsibility of management to prepare and properly present quarterly consolidated financial statements in accordance with the standards for preparation of quarterly consolidated financial statements generally accepted in Japan. This includes improvement and operation of the internal control which was determined by management to be necessary for preparing and properly presenting quarterly consolidated financial statements free of material misstatement by fraud or error.

Responsibility of Auditor

It is our responsibility to express our conclusions on the quarterly consolidated financial statements from an independent position based on the quarterly review conducted by us. We conducted a quarterly review in accordance with the standards for quarterly review generally accepted in Japan.

In the quarterly review, interviews with the management and the persons responsible for the matters concerning finance and accounting, etc., analytical procedures and other quarterly review procedures are mainly carried out. Quarterly review procedures are less exhaustive than the procedures for audit of annual financial statements conducted in accordance with the audit standards generally accepted in Japan.

We believe we have obtained evidence constituting a foundation for expressing our conclusions.

Conclusions of Auditor In the quarterly review conducted by us, no matters were discovered in every material respect which led us to believe that the

above quarterly consolidated financial statements did not properly present the financial conditions of Arisawa Mfg. Co., Ltd. and its consolidated subsidiaries as of September 30, 2012 as well as their business results and status of cash flow in the consolidated cumulative second quarter ended as of the same day in accordance with the standards for preparing quarterly consolidated financial statements generally accepted in Japan.

Interest

There exists no special interest between the Company and this audit corporation or the operating partners to be stated under the provisions of the Certified Public Accountants Law.

Note: 1. All matters in the above are copied electronically from the matters stated in the original quarterly review report. The original quarterly review report is kept separately by the Company (submitting company of the quarterly report).

2. XBRL data is not included in the scope of quarterly consolidated financial statements.

QUARTERLY REPORTTABLE OF CONTENTSCover PagePART I. INFORMATION ABOUT THE BUSINESSI. General Conditions of Business1. Changes in Principal Business Indicators, etc.2. Description of Business

II. Status of Business1. Business Risks, etc.2. Important Agreements for Operation, etc.3. Analysis of Financial Conditions, Business Results and Status of Cash Flows

III. Status of the Submitting Company1. Status of Shares, etc.(1) Total Number of Shares, etc.(2) Status of Stock Acquisition Rights, etc.(3) Status of Exercise of Bonds with Stock Acquisition Rights, Exercise Price Adjustment Clauseattached(4) Details of Rights Plan(5) Changes in the Number of Shares Issued and Outstanding, Capital stock, etc.(6) Status of Major Shareholders(7) Status of Voting Rights

2. Status of Directors and Officers

IV. Status of Accounting1. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(2) Quarterly Consolidated Profit and Loss Statement and Quarterly Consolidated Statements ofComprehensive Income[Quarterly Consolidated Profit and Loss Statement][Quarterly Consolidated Statements of Comprehensive Income]

(3) Quarterly Consolidated Cash Flow Statement

2. Other

PART II. INFORMATION ON GUARANTY COMPANIES OF THE SUBMITTINGCOMPANY, ETC.Quarterly Review Report of Independent Auditor

Documents

QUARTERLY REPORT · 2019. 9. 9. · Quarterly Accounting Period: Second Quarter of the 65th Term (From July 1,2012 to September 30, 2012) Name of Company: Kabushiki Kaisha Arisawa