may 8, 2020 consolidated financial results for the fiscal ... · each market of ehii (energy,...

May 8, 2020

Consolidated Financial Results for the Fiscal Year Ended March 31, 2020 [Under Japanese GAAP]

Company name: ALPS ALPINE CO., LTD.

Listing: First Section of the Tokyo Stock Exchange

Code number: 6770

URL: https://www.alpsalpine.com/e/ir/index.html

Representative: Toshihiro Kuriyama

President & CEO

Inquiries to: Toshinori Kobayashi

Vice President

Officer in charge of Corporate Planning, Accounting & Finance (TEL.:+81-3-5499-8026)

Scheduled date to file Annual Securities Report: June 24, 2020

Scheduled date to commence dividend payments: June 25, 2020

Preparation of supplementary materials on annual earnings: Yes

Holding of annual earnings performance review: Yes (for analysts)

(Amounts are rounded down to the nearest million yen, unless otherwise noted)

1. Consolidated performance for the fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020)

(1) Consolidated operating results (Percentages indicate changes from the previous fiscal year)

Net sales Operating income Ordinary income

Net income attributable

to owners of parent

Millions of yen % Millions of yen % Millions of yen % Millions of yen % Fiscal year ended

March 31, 2020 810,570 (4.8) 26,795 (46.0) 18,646 (57.2) (4,009) ― March 31, 2019 851,332 (0.8) 49,641 (31.0) 43,605 (34.6) 22,114 (53.3)

(Note) Comprehensive income

For the Fiscal year ended March 31, 2020: ¥(9,686) million [―%]

For the Fiscal year ended March 31, 2019: ¥21,465 million (65.8)%

Basic earnings

per share

Diluted earnings

per share Return on equity

Ordinary income

to Total Assets

Operating income

margin

Yen Yen % % % Fiscal year ended

March 31, 2020 (19.53) ― (1.2) 2.9 3.3

March 31, 2019 110.19 110.14 6.6 6.5 5.8

(Reference) Share of loss of entities accounted for using equity method

For the Fiscal year ended March 31, 2020: ¥(3,166) million

For the Fiscal year ended March 31, 2019: ¥(1,584) million

(2) Consolidated financial position Total assets Net assets Equity ratio Net assets per share

Millions of yen Millions of yen % Yen As of

March 31, 2020 625,542 355,615 51.9 1,587.06

March 31, 2019 675,717 395,360 54.1 1,731.36

(Reference) Equity

As of March 31, 2020: ¥324,464 million


(3) Consolidated cash flows Cash flows from

operating activities

Cash flows from

investing activities

Cash flows from

financing activities

Cash and cash equivalents

at the end of the year

Millions of yen Millions of yen Millions of yen Millions of yen Fiscal year ended

March 31, 2020 87,210 (42,419) (31,601) 128,217

March 31, 2019 72,671 (67,405) (6,910) 118,318

https://www.alps.com/e/ir/index.html

2. Cash dividends Annual dividends

Total amount

of dividend

Dividend

payout ratio

(Consolidated)

Ratio of

dividends to

net assets

(Consolidated)

June

30

September

30

December

31

March

31 Total

Yen Yen Yen Yen Yen Millions of yen % % Fiscal year ended March 31, 2019

― 25.00 ― 25.00 50.00 10,173 45.4 3.1

Fiscal year ended March 31, 2020

― 20.00 ― 10.00 30.00 6,137 ― 1.8

Fiscal year ending March 31, 2021 (Forecast)

― ― ― ― ― ―

(Note)The dividend forecast for the fiscal year ending March 2021 has not yet been determined at the present moment

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2021 (from April 1, 2020 to March 31, 2021)

Regarding the Company's Consolidated earnings forecasts for the fiscal year ending March 31, 2021, it has not yet been

determined, because it would be difficult to measure the impact of the novel coronavirus (COVID-19). Hence, the Company

intends to promptly disclose the impact on the full-year earnings as soon as such disclosure becomes possible.

“(4) Forecast” under “1. Overview of Financial Results” on page 5 of the attached materials for more details regarding

the use of the forecasts.

* Notes

(1) Changes in significant subsidiaries during the year (changes in specific subsidiaries resulting in the change in scope of

consolidation): Applicable

Included: None Excluded: ALPS ELECTRIC (UK)LIMITED

(2) Changes in accounting policies, changes in accounting estimates and restatement:

a. Changes in accounting policies due to revisions to accounting standards: None

b. Changes in accounting policies due to other reasons: None

c. Changes in accounting estimates: None

d. Restatements: None

(3) Number of issued shares (common stock)

a. Total number of issued shares at the end of the period (including treasury stock)

Fiscal year ended March 31, 2020 219,281,450 shares


b. Number of shares of treasury stock at the end of the period



c. Average number of shares during the period

Fiscal year ended March 31, 2020 205,306,192shares

Fiscal year ended March 31, 2019 200,694,007shares

(Reference) Standalone performance

Standalone performance for the fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020)

(1) Standalone operating results

(Percentages indicate year-on-year changes)

Net sales Operating income Ordinary income Net income

Millions of

yen

% Millions of

yen

% Millions of

yen

% Millions of

yen

%


357,168 (9.5) (7,524) ― (1,788) ― (14,760) ―


394,661 (14.6) 6,602 (77.8) 17,726 (46.3) 15,974 (51.7)

Basic earnings

per share

Diluted earnings

per share

Yen Yen Fiscal year ended March 31, 2020 (71.90) ― Fiscal year ended March 31, 2019 79.60 79.56

(2) Standalone financial position

Total assets Net assets Equity ratio Net assets per share

Millions of yen Millions of yen % Yen As of

March 31, 2020 328,745 173,046 52.6 845.32

March 31, 2019 373,633 211,438 56.5 1,000.60

(Reference) Equity



* Earnings reports are not subject to audit by external auditors.

* Explanation and other special notes concerning the appropriate use of earnings forecast

(Notes on forward-looking statements)

The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently

available to ALPS ALPINE CO., LTD. (the “Company”) and certain assumptions deemed to be reasonable, and are not

intended to guarantee the achievement of these forecasts. Actual results may differ materially from the forecasts due to various

factors. Please refer to “(4) Forecast” under “1. Overview of Financial Results” on page 5 of the attached materials for the

assumptions used in the forecasts and notes regarding the use of the forecasts.

(Access to supplementary material on annual earnings)

Supplementary material on annual earnings is available on the Company’s website on Friday, May 8, 2020.

－ 1 －

○ Supplementary Materials – Contents

1．Overview of Financial Results ............................................................................................................................................................ 2

(1) Overview of financial results for the fiscal year ended March 31, 2020 ................................................................................... 2

(2) Overview of financial position for the fiscal year ended March 31, 2020 ................................................................................. 4

(3) Overview of cash flows for the fiscal Year ended March 31, 2020 ........................................................................................... 4

(4) Forecast ..................................................................................................................................................................................... 5

(5) Basic policy for distribution of earnings and dividends for the fiscal year ended March 31, 2020 and for the fiscal year

ending March 31, 2021 ................................................................................................................................................................... 5

(6) Business Risk ............................................................................................................................................................................ 6

2．Information Regarding the Company.................................................................................................................................................. 6

3．Management Policy, Business Environment and Challenges Facing .................................................................................................. 6

(1) The Company’s basic management policy ................................................................................................................................ 6

(2) The Company’s mid- and long-term business strategy and target management indicators ....................................................... 7

(3) The Company’s business environment and challenges facing ................................................................................................... 7

4．Basic Policy for Accounting Policy Selection .................................................................................................................................... 8

5. Consolidated Financial Statements and Significant Notes Thereto ...................................................................................................... 9

(1) Consolidated balance sheet ....................................................................................................................................................... 9

(2) Consolidated statement of income and comprehensive income .............................................................................................. 11

(3) Consolidated statement of changes in net assets ..................................................................................................................... 13

(4) Consolidated statement of cash flows ..................................................................................................................................... 15

(5) Notes to consolidated financial statements .............................................................................................................................. 16

(Notes on going concern assumptions) ................................................................................................................................... 16

(Changes in the fiscal year of consolidated subsidiaries) ........................................................................................................ 16

(Important matters underlying the preparation of consolidated financial statements) ............................................................. 16

(Omission of disclosures)........................................................................................................................................................ 17

(Segment information) ............................................................................................................................................................ 17

(Per share information) ........................................................................................................................................................... 20

(Subsequent events) ................................................................................................................................................................ 21

6. Non-consolidated Financial Statements ............................................................................................................................................. 22

(1) Balance sheet ........................................................................................................................................................................... 22

(2) Statement of income ................................................................................................................................................................ 24

(3) Statement of changes in net assets ........................................................................................................................................... 25

7. Other .................................................................................................................................................................................................. 27

(1) Sales results of the Electronic Components Segment .............................................................................................................. 27

(2) Change of Directors and Officers (expected effective date is June 24, 2020) ......................................................................... 27

－ 2 －

1．Overview of Financial Results

(1) Overview of financial results for the fiscal year ended March 31, 2020

Regarding the global economy during the fiscal year ended March 31, 2020, the outlook for the global economy

remains bleak due to the outbreak of the novel coronavirus (COVID-19). Regarding the nine months ended

December31, 2019, the US economy remained strong supported by steady consumer spending due to the Federal

Reserve Board's easy monetary policy and labor market improvement while in the manufacturing industry showed

signs of a slowdown. On the other hand, in Europe, the recovery of exports was delayed due to the impact of the

global economic slowdown, and a continued turmoil over the U.K.’s withdrawal from the EU also had a negative

impact on the economy. In China, although the first phase of trade talks was agreed upon with the U.S., the

economy has been sluggish due to a decrease in exports to the U.S. and a decrease in consumer spending in the

prolonged trade friction. In Japanese economy, while in the manufacturing industry showed signs of a slowdown,

strong labor market trend continued, and the overall economy remained firm accordingly. During the fourth quarter,

the impact of the coronavirus, which spreads worldwide, began in China in February 2020, and subsequently spread

to Europe, the United States, and Asia simultaneously. From March onwards, due to the infection control measures

of the governments of each country, it was announced that the manufacturing industry in each country suspended

their plant operation, which had a great impact on the global economy during the current consolidated fiscal year.

Operating results for the fiscal year ended March 31, 2020 are summarized below. Net sales shown below

represent net sales to external parties, after elimination of inter-segment sales (e.g., sales made by the Electronic

Components Segment to the Automotive Infotainment Segment (supply of products) or sales made by the Logistics

Segment to the Electronic Components Segment and the Automotive Infotainment Segment (provision of logistics

services)).

(Results of each operating segment)

(i) Electronic Components Segment

In the electronics industry, while new product development for CASE (Connected, Autonomous, Shared &

Services, Electric) has continued to accelerate in the automotive market, the current market conditions are

sluggish due to a year on year decline in the volume of global new car sales. The smartphone market as a whole

has experienced negative growth due to the impact of the coronavirus was the significant impact, despite strong

sales of some new products. Each market of EHII (Energy, Healthcare, industry, IoT), specific initiatives are

accelerating, including proposals for new businesses that combine IoT (Internet of Things) and AI.

Under these circumstances surrounding the Electronic Components Segment, in the automotive market, sales

of modules and high-frequency products for communication products decreased overall due to the softening of

the automotive market. In the consumer market, although efforts were made to cultivate new customers and

expand sales of various products for smartphones, the trend was weak. In addition to these factors, sales and

operating income decreased compared to the previous fiscal year due to the spread of the coronavirus.

[Automotive market]

In the automotive market within the Electronic Components Segment, for the era of autonomous driving, we

continued to develop the variety of next generation products including high-grade input devices (Premium-HMI) in

vehicle interiors. As part of the initiatives for CASE development, we further promoted proposal activities for the

next generation products, such as touch input modules. However, the impact on production and sales has widened

due to supply chain disruption and our response to measures to control the spread of the coronavirus at our plants in

China since February. Subsequently, each of our plants in China progressively restarted operations, however the

pandemic spread simultaneously across Europe, America and Asia. Since March, due to governments’ measures to

control the spread of infection, our customers in Europe, America, Asia and Japan have announced that their plants

would be closed from the start of March. Consequently, the global automotive market became sluggish.

Net Sales in this market for the fiscal year ended March 31, 2020 amounted to ¥242.0 billion, a decrease of

12.9% compared to the previous fiscal year.

[Consumer market]

In the consumer market, even after the Chinese New Year, the suspension of operations at our plant in China,

which produce camera actuators for smartphones, had a continuing huge effect on the business activities.

－ 3 －

Although we continued to acquire new customers and to expand sales of camera actuators and touch panels for

smartphones, overall sales were weak due to the impact of the coronavirus. In EHII, specific activities were

carried out, such as a Logistics Asset Tracker using IOT, which was adopted by AGC Inc. using it for product

transport pallets for the first time in Japan's domestic market.

Net sales in this market for the fiscal year ended March 31, 2020 amounted to ¥182.6 billion, a decrease of

4.2% compared to the previous fiscal year.

As a result, net sales in the Electronic Components Segment for the fiscal year ended March 31, 2020 amounted

to ¥424.7 billion, a decrease of 9.4%, and operating income amounted to ¥16.1 billion, a decrease of 45.5 %

compared to the previous fiscal year.

(ii) Automotive Infotainment Segment

In the automotive industry, sales of new cars declined in China, the world's largest market, due to the economic

slowdown, and sales volume also decreased in the U.S. and Europe compared with the previous fiscal year. In

addition, the business environment surrounding our automotive industry has greatly changed, leading to an

intensified competition among companies that cross the frameworks of the business area or industry, including IT

and communications in order to utilize the mobile communication standard 5G for next generation for connected

cars and autonomous driving.

Under these circumstances, in the Automotive Infotainment Segment, we are aiming the early realization of

synergies through the business integration by focusing on the development of a new products that link display

products with the Electronic Components Segment’s sensors and the commercialization of a drone system that uses

a GPS (Global Positioning System) in navigations and technologies that combine image processing technology and

sensors. We commenced the development of a vehicle warning system that alerts pedestrians to the approach of a

vehicle by applying our technology cultivated through the development of audio speakers.

In order to develop digital keys for car sharing using block chain technology and to manage vehicle information

for connected cars, we acquired a certain number of shares of FreeBit, Co., Ltd., an IT company and strengthened

MaaS (Mobility as a Service) business through business partnership.

As the same as the automotive market in the electronic components segment, the result for the fiscal year ended

March 31, 2020, were affected by the rapid slowdown in sales genuine products after March, such as movement

restriction and suspension of operations at customer plant due to the spread of the coronavirus in Europe and the

U.S.. Sales increased due to favorable performance of some products compared with the previous fiscal year, but

operating income declined due to R&D expenses and other factors resulting from getting the orders in the future.

As a result, net sales in the Automotive Infotainment Segment for the fiscal year ended March 31, 2020 amounted

to ¥306.2 billion, an increase of 0.9%, and operating income amounted to ¥5.6 billion, a decrease of 59.4% compared

to the previous fiscal year.

(iii) Logistics Segment

In the electronic component industry, which is a major source of customers of the Logistics Segment, the

movement of freight was slow due to decreasing demand for various electronic equipment, automobiles and

industrial equipment. In addition, the spread of the coronavirus led to the suspension of operations at our customers'

plants and the strengthening of various regulations in each country. As a result, the volume of cargo handled were

affected to some extent from February 2020 in China and from March mainly in North America and ASEAN. In

contrast, we expect that increases in demand for semiconductors and electronic components are anticipated as 5G

(the mobile communication standard for next generation), IoT, and computerization of automobiles develop.

In the Logistics Segment (Alps Logistics Co., Ltd., listed on the Second Section of the Tokyo Stock Exchange),

with such a demand trend, we made an effort to increase the volume of cargo handled by establishing hubs and

enhancing network in particular regions, where an increase in demand for electronic components was anticipated in

the future. Regarding ASEAN countries and South Asia region, the construction of a large warehouse in Thailand

was completed and operations were launched in July 2019. In Europe, we established an office in Hungary as our

first step to expand our business in Eastern Europe. Moreover, we made our efforts to enhance productivity through

stable operations and efficiency improvement in expanded bases. In addition, as one of the measures to strengthen

－ 4 －

automotive related logistics, we established a joint venture with Logicom Co., Ltd. as the first step of the measures

for global business development, we established a subsidiary in India, in order to expand our automotive related

businesses.

During the fiscal year ended March 31, 2020, despite efforts to acquire new customers in Japan and overseas, net

sales decreased due to a decrease in overall movement of electronic freight, resulting from US-China trade friction

and the impact of the coronavirus expanded.

As a result, net sales in the Logistics Segment for the fiscal year ended March 31, 2020 amounted to ¥66.8 billion,

a decrease of 0.0%, and operating income amounted to ¥4.1 billion, a decrease of 12.8% compared to the previous

fiscal year.

On the consolidated basis, the Group, consisting of three operating segments noted above and other, recorded net

sales of ¥810.5 billion, operating income of ¥26.7 billion, ordinary income of ¥18.6 billion, which were decreases

of 4.8%, 46.0%, 57.2% respectively, compared to the previous fiscal year. Further, net loss attributable to owners of

parent of ¥4.0 billion for the fiscal year ended March 31, 2020, while net income attributable to owners of parent

was ¥22.1 billion for the previous fiscal year.

(2) Overview of financial position for the fiscal year ended March 31, 2020

Assets, Liabilities and Net Assets

Total assets as of March 31, 2020 were ¥625.5 billion, a decrease of ¥50.1 billion from the end of the previous

fiscal year. Equity decreased ¥40.8 billion due to factors such as decreases in retained earnings and increase in

treasury stock to ¥324.4 billion, and equity ratio was 51.9%.

Current assets as of March 31, 2020 were ¥369.1 billion, a decrease of ¥33.7 billion from the end of the previous

fiscal year due to factors such as a decrease in trade notes and accounts receivable, as well as an increase in cash

and deposits.

Non-current assets as of March 31, 2020 were ¥256.3 billion, a decrease of ¥16.4 billion from the end of the

previous fiscal year, due to factors such as decreases in machinery, equipment and vehicles, deferred tax assets, as

well as increases in intangible assets.

Current liabilities as of March 31, 2020 were ¥198.0 billion, an increase of ¥10.0 billion from the end of the

previous fiscal year, due to factors such as increases in short-term borrowings, as well as decreases in trade notes

and accounts payable.

Non-current liabilities as of March 31, 2020 were ¥71.8 billion, a decrease of ¥20.4 billion from the end of the

previous fiscal year, due to factors such as a decrease in long-term borrowings, as well as an increase in liability for

retirement benefits.

(3) Overview of cash flows for the fiscal Year ended March 31, 2020

The balance of cash and cash equivalents (the “cash”) as of March 31, 2020 was ¥128.2 billion, an increase of ¥9.8

billion from the end of the previous fiscal year.

(Cash flows from operating activities)

The increase in cash from operating activities for the fiscal year ended March 31, 2020 was ¥87.2 billion,

compared to an increase of ¥72.6 billion for the previous fiscal year.

The increase was mainly related to an increase in cash due to ¥46.0 billion of depreciation and amortization, a

decrease of ¥31.1 billion in trade and other receivables, ¥15.5 billion of income before income taxes, as well as a

decrease in cash due to ¥9.6 billion of income taxes paid, ¥4.0 billion of increase in inventories.

(Cash flows from investing activities)

The decrease in cash from investing activities for the fiscal year ended March 31, 2020 was ¥42.4 billion,

compared to a decrease of ¥67.4 billion for previous fiscal year. The decrease was mainly related to a decrease in

cash due to ¥40.6 billion used for acquisition of property, plant and equipment and intangible assets, ¥3.5 billion of

purchase of ownership interests of subsidiaries in change in scope of consolidation, ¥3.0 billion of increase in time

deposits as well as increase in cash due to ¥5.2 billion of proceeds from withdrawal of time deposits.

(Cash flows from financing activities)

The decrease in cash from financing activities for the fiscal year ended March 31, 2020 was ¥31.6 billion,

compared to a decrease of ¥6.9 billion for the previous fiscal year. The decrease was mainly related to a decrease in

－ 5 －

cash due to ¥12.3 billion used for purchase of treasury stock, ¥9.3 billion used for cash dividends paid, ¥8.8 billion

of repayment of long-term loans payable.

Movement of the Company’s management indicators related to financial position are as follows

Fiscal year

ended

March 31, 2016

Fiscal year

ended

March 31, 2017

Fiscal year

ended

March 31, 2018

Fiscal year

ended

March 31, 2019

Fiscal year

ended

March 31, 2020

Equity ratio (%) 40.6 42.2 45.0 54.1 51.9

Equity ratio based on market value (%) 68.3 102.5 76.3 72.1 34.3

Debt redemption period (years) 1.1 1.6 1.1 1.5 1.2

Interest coverage ratio 50.4 81.6 91.2 58.7 66.4

Equity ratio: Equity / Total assets

Equity ratio based on market

value: Market capitalization / Total assets

Debt redemption period: Interest-bearing liabilities / Operating cash

flows

Interest coverage ratio: Operating cash flows / Interest expenses paid

* Each indicator is calculated using financial figures on a consolidated basis.

* Market capitalization is calculated by multiplying closing price of the stock at the end of the fiscal year by number

of shares issued and outstanding at the end of the year.

* Operating cash flows are derived from cash flows from operating activities on the consolidated statement of cash

flows. Interest-bearing liabilities are aggregate of corporate bonds, convertible bonds, bonds with subscription rights

to shares, and borrowings on the consolidated balance sheet. Interest expenses paid is derived from interest paid on the

consolidated statement of cash flows.

(4) Forecast

With continuing trade friction between the U.S. and China, and the U.K.'s withdrawal from the EU, and the

spread of the coronavirus, the global economy is becoming increasingly uncertain. In the electronics industry, the

business environment surrounding our automotive industry has greatly changed along with the development of

CASE, with the advanced functionality trend of smartphone-related products, with the development variety of new

services within IOT in the EHII markets. However, the market condition remains severe in our industry due to the

impact of the coronavirus.

In this economic environment, the 1st year of the 1st Medium-Term Management Plan has passed, in order to

become “Innovative T-Shaped Company (ITC101)”, we are accelerating our projects to develop synergy from the

business integration. The spread of the coronavirus is affecting the Company’s consolidated results through a

decrease in the utilization rate of oversea plants in the Group, and a fall in sales in each segment. Therefore, in

order to mitigate this effect, we will continue to take necessary measures in response to rapidly changing situations.

Further, we aim to expand our logistics business through expansion of global network and further promote group-

wide business operations to enhance our corporate value.

Regarding the Company's Consolidated earnings forecasts for the fiscal year ending March 31, 2021, it has not yet

been determined, because it would be difficult to measure the impact of the coronavirus at this stage. Hence, the

Company intends to promptly disclose the impact on the full-year earnings as soon as such disclosure becomes

possible.

(5) Basic policy for distribution of earnings and dividends for the fiscal year ended March 31, 2020 and for the fiscal

year ending March 31, 2021

Our basic policy is to actively adopt shareholder return measures such as share buybacks according to surplus

capital and financial capacity, in addition to making profit distribution decision based on the consolidated profit of

Electronic Components Segment and Automotive Infotainment Segment, considering the balance of (i) return profits

to shareholders, (ii) allocate funds to R&D and capital investment for future business development and enhanced

－ 6 －

competitiveness, and (iii) retain profit internally.

We determine profit allocation in consideration of a balance of all three elements with respect to internal reserves

as described above. In accordance with this policy, we will make a proposal at the 87th Ordinary General Meeting of

Shareholders to pay a year-end dividend of ¥10 per share for the fiscal year ended March 31, 2020, taking into overall

consideration of our financial performance, financial position, and shareholder expectations for dividends.

Further, the dividend distributions in the fiscal year ending March 31, 2021 has not been determined at the present

moment.

(6) Business Risk

In addition to the contents described in the securities report submitted on June 21, 2019, the spread of the coronavirus

infection caused a decrease in sales in each business and utilization rate of oversea plants. It may affect our operating

results and financial condition.

(Note)

Forward looking statements, forecasts, plans, policies, strategies in these materials that are not finalized facts, are

derived from the Company’s forecast based on the information that was available as of the report release date and

certain assumptions deemed to be reasonable. Actual results may differ from the forecasts due to various risk factors

and uncertainties.

2．Information Regarding the Company

(Changes in important subsidiaries during the accounting period)

From the 4th quarter consolidated accounting period, ALPS ELECTRIC (UK) LIMITED, which was our

consolidated subsidiary and also a specified subsidiary, was excluded from the scope of consolidation as it was

liquidated.

In addition, during the first quarter consolidated accounting period, due to the additional acquisition of shares,

FAITAL S.p.A., which was an affiliated company, and two of its subsidiaries are newly included in the scope of

consolidation although they were not specified subsidiaries.

The items other than the above are omited because there is no material change from disclosures in “Overview of

business” and “Affiliated companies” in the Annual Securities Report filed on June 21, 2019.

3．Management Policy, Business Environment and Challenges Facing

(1) The Company’s basic management policy

The Group has three pillars: Electronic Components Segment, Automotive Infotainment Segment and Logistics

Segment, each of which develops synergy from close collaboration with each other and operates its business globally.

Our goal is to become an “Innovative T-shaped Company (ITC101)”. By integrating “vertical I-Shaped” strength

being the developing of core devices to create competitive products and “horizontal I-Shaped” strength being the

developing of systems utilizing a wide range of devices and technologies, and by providing new values, the Company

is determined to become an “Innovative T-Shaped Company” with the aim of ¥1 trillion net sales and 10% operating

income margin by the fiscal year ending March 31, 2025. Toward this goal, the Alps Company will promote the

“evolution from component supplier to functional device partner”, and the Alpine Company will “evolve into

mobility life creator with in-house core devices”.

Guided by a philosophy of “creating new value that satisfies stakeholders and is friendly to the Earth”, the

Electronic Components Segment aims to realize comfortable communication between people and media. The

Company’s approach to “monozukuri” is summed up in the phrase, “perfecting the art of electronics,” meaning we

create products that are “Right (optimal)”, “Unique (distinctive)”, and “Green (environment-friendly)”. In other

words, it is a product that has not only sophisticated appearances but also high-quality functions with environmental

considerations such as energy and resource savings. To realize this goal, we are constantly pursuing advanced

monozukuri based on various unique technologies such as microfabrication, mold processing, software/IC design,

and material processing. In addition to component products such as switches and sensors, and module products, we

are also working on new product development and business domains such as green devices.

In the Automotive Infotainment Segment, by integrating the Electronic Components Segment’s in-car

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device/module products and the Automotive Infotainment Segment’s products for automakers, and with the synergy

effect of the technologies cultivated by both segments and their respective fields of expertise, going forward, we will

work on creative and innovative product development to provide services that offer safe, comfortable and impressive

driver and passenger experiences and to realize high-quality transportation spaces.

In the Logistics Segment, Alps Logistics Co., Ltd. handles electronic components as its main cargo, under a

corporate philosophy of “pursuing the best form of logistics that supports monozukuri and contributing to enriching

the society”, and its business domain is defined as an “integrated logistics service specializing in electronic

components”.

Each group company will collaborate with each other under the corporate philosophy, promotes medium- and

short-term management plans, and aims to expand business and maximize corporate value.

(2) The Company’s mid- and long-term business strategy and target management indicators

The 1st Mid-Term Business Plan for the three-year period from April 2019 to the end of March 2022 has started.

Our goal is to become an “Innovative T-shaped Company (ITC101)”. We aim to achieve net sales of ¥1 trillion and

operating income margin of 10% by the fiscal year ending March 31, 2025, by evolving from component supplier to

functional device partner and by evolving into mobility life creator with in-house core devices.

In the Electronic Components Segment, we aim to integrate our three core technologies including HMI, sensors

and connectivity, and evolve them into functional devices that incorporate software.

In the Automotive Infotainment Segment, amid changes in the usage style of automobiles, we aim to develop

proposal-based system products that consider the entire car lifestyle, and expand further to develop high-value-added

products that combine these products with core devices cultivated through the Electronic Components Segment.

In the Logistics Segment, the 4th Mid-Term Business Plan for the three-year period from the fiscal year ended

March 31, 2020 has started. Our Mid-Term Business Plan is to “provide the best form of logistics that keeps evolving

to more customers.” We will take initiatives to “achieve consolidated net sales of ¥120 billion” and to “improve

corporate quality”.

(3) The Company’s business environment and challenges facing

While environment surrounding the Group is extremely difficult to forecast amid growing uncertainty, demand for

electronics products and vehicles is expected to grow, driven by the increased demand for high-performance and

multi-functional products in developed countries, and the increasing demand in emerging countries is expected to

lead the growth in medium- and long-term.

In the Electronic Components Segment, the automotive market, in which electronics is becoming increasingly

important, and the smartphone market, which is experiencing high demand for high-performance components despite

slowing growth, and the VR market, which is emerging, are expected to continue to expand. We will continue to

create highly competitive products from the three technological domains of HMI, Sensors and Connectivity to meet

those needs. In order to accelerate development and improve productivity and quality, we will further strengthen our

efforts on our technology, sales, and manufacturing divisions to create Number 1 products.

In addition, as our customers are expanding globally and demand for specific products fluctuates dramatically

over a short period of time, we need to implement and establish a more robust and flexible production system. In

addition to promoting the establishment of production bases in Japan and overseas, we will also increase profitability

by improving productivity, including that of our back-office divisions. Furthermore, in EHII market which has a wide

range of business models, we will work to establish a business foundation through the development of proprietary

products and collaborations and alliances with other companies.

In the Automotive Infotainment Segment, today’s automotive industry has entered a phase of tremendous

transformation that is said to occur only once every 100 years. In particular, the four domains which are referred to

as CASE are seeing, major changes that are unparalleled by other industries, such as the constant connection to the

internet, autonomous driving, automobile sharing services, and a shift toward vehicle electrification such as with

hybrid cars and electric vehicles. In addition, the trend of mergers and acquisitions that transcend the framework of

the automobile industry is accelerating even faster than in the past, as exemplified by the expansion of IT companies

into the automotive industry. Focusing management resources on CASE domains will continue to be a trend in the

automobile industry as a whole, and suppliers such as HMI are expected not only to develop module products, but

also to propose total system solutions for the entire automotive industry.

－ 8 －

In light of these rapidly changing market conditions for automotive infotainment equipment, to develop new

products that combine the strengths of the Electronic Components Segment and the business, and to shorten the lead

time for commercialization are urgent issues. By creating synergies through the business integration, we will respond

swiftly to these issues and meet the expectations of customers.

In the Logistics Segment, the electronic components industry, which is our main customer, is expected to continue

growing due to the advancement of computerization of various equipment and automobiles as well as the expansion

of demand in emerging countries. On the other hand, customers’ need for logistics reforms is becoming sophisticated

and diverse due to progress in optimizing production and rationalizing production and sales in response to changes

in products and markets. Under these circumstances, by pursuing “the best form of logistics” for each customer and

providing it to more customers, we aim to grow further globally.

We will also contribute to the revenue of other businesses by strengthening sales activities outside the Group.

4．Basic Policy for Accounting Policy Selection

Considering the comparability of consolidated financial statements between periods and companies, for the time

being, the Company and the Group intends to prepare consolidated financial statements based on Japanese generally

accepted accounting principles.

With regard to the application of IFRS, our policy is to take appropriate actions considering domestic and foreign

trends while improving the system environment.

－ 9 －

5. Consolidated Financial Statements and Significant Notes Thereto

(1) Consolidated balance sheet

(Millions of yen)

As of March 31, 2019 As of March 31, 2020

Assets

Current assets

Cash and deposits 122,079 129,598

Trade notes and accounts receivable 156,875 119,604

Merchandise and finished goods 58,314 63,061

Work in process 10,574 11,344

Raw material and supplies 26,946 26,067

Others 28,434 19,763

Allowance for doubtful accounts (320) (252)

Total current assets 402,905 369,187

Non-current assets

Property, plant and equipment

Buildings and structures 146,174 152,279

Accumulated depreciation and impairment loss (96,552) (100,575)

Buildings and structures, net 49,621 51,704

Machinery, equipment and vehicles 248,709 249,808


Machinery, equipment and vehicles, net 71,134 58,364

Tools, furniture and fixtures and molds 140,058 142,118


Tools, furniture and fixtures and molds, net 22,040 22,022

Land 30,899 30,404

Construction in progress 13,949 15,368

Total property, plant and equipment, net 187,646 177,865

Intangible assets, net 23,248 28,259

Investments and other assets

Investment securities 27,220 30,985

Deferred tax assets 16,600 6,960

Retirement benefit assets 61 12

Others 18,877 12,798


Total investments and other assets 61,917 50,230

Total non-current assets 272,811 256,354

Total assets 675,717 625,542

－ 10 －

(Millions of yen)


Liabilities

Current liabilities

Trade notes and accounts payable 69,596 61,781

Short-term borrowings 38,245 56,198

Accrued expenses 17,863 16,190

Accrued income taxes 4,689 4,096

Provision for bonuses 10,574 10,120

Provision for directors’ bonuses 125 79

Provision for product warranties 8,791 9,798

Other provisions 370 460

Others 37,773 39,314

Total current liabilities 188,029 198,038

Non-current liabilities

Long-term borrowings 70,570 43,672

Deferred tax liabilities 1,038 2,333

Defined benefit liabilities 14,739 18,828

Provision for directors’ retirement benefits 206 168

Provision for environmental measures 590 590

Others 5,181 6,293

Total non-current liabilities 92,326 71,887

Total liabilities 280,356 269,926

Net assets

Shareholders’ equity

Common stock 38,730 38,730

Capital surplus 126,561 126,544

Retained earnings 227,078 206,491

Treasury stock (18,283) (32,233)

Total shareholders’ equity 374,086 339,533

Accumulated other comprehensive income (loss)

Unrealized gains on securities 3,194 13,435

Deferred gains on hedges 12 －

Revaluation reserve for land (496) (496)

Foreign currency translation adjustments (7,628) (18,214)

Remeasurements of defined benefit plans (3,822) (9,792)

Total accumulated other comprehensive loss (8,740) (15,068)

Subscription rights to shares 361 278

Non-controlling interests 29,652 30,872

Total net assets 395,360 355,615

Total liabilities and net assets 675,717 625,542

－ 11 －

(2) Consolidated statement of income and comprehensive income

(Millions of yen)

Fiscal year ended

March 31, 2019

Fiscal year ended

March 31, 2020

Net sales 851,332 810,570

Cost of sales 689,337 670,700

Gross profit 161,995 139,870

Selling, general and administrative expenses 112,353 113,074

Operating income 49,641 26,795

Non-operating income

Interest income 705 798

Dividend income 481 509

Subsidy income 471 1,380

Miscellaneous income 1,060 872

Total non-operating income 2,718 3,561

Non-operating expenses

Interest expense 1,297 1,298

Foreign exchange losses 2,082 3,655

Share of loss of entities accounted for using

equity method 1,584 3,166

Commission fee 2,586 1,625

Miscellaneous expenses 1,202 1,964

Total non-operating expense 8,754 11,709

Ordinary income 43,605 18,646

Extraordinary income

Gain on sale of non-current assets 544 1,946

Insurance income for loss on disaster － 2,772

Others 648 803

Total extraordinary income 1,193 5,522

Extraordinary loss

Impairment loss 1,839 2,688

Loss on valuation of investment securities 251 1,149

Loss on valuation of investments in capital of

subsidiaries and affiliates － 933

Business structure improvement expenses 860 －

Loss on realization of foreign currency

translation adjustments － 1,282

Loss on disaster － 1,989

Others 658 556

Total extraordinary loss 3,609 8,601

Income before income taxes 41,189 15,568

Current income taxes 10,890 10,375

Deferred income taxes 1,124 7,591

Total income taxes 12,014 17,966

Net income (loss) 29,174 (2,398)

Net income attributable to:

Owners of parent 22,114 (4,009)

Non-controlling interests 7,059 1,610

Other comprehensive income (loss)

Unrealized gains (losses) on securities (2,689) 9,367

Deferred gains on hedges 1 0

Foreign currency translation adjustments (3,162) (9,665)

Remeasurements of defined benefit plans (628) (5,982)

Share of other comprehensive loss of investments

accounted for using the equity method (1,230) (1,008)

Total other comprehensive loss (7,708) (7,288)

Comprehensive income 21,465 (9,686)

－ 12 －

Comprehensive income attributable to:

Owners of parent 18,123 (10,671)

Non-controlling interests 3,341 985

－ 13 －

(3) Consolidated statement of changes in net assets

For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019) (Millions of yen)


Common stock Capital surplus Retained earnings Treasury stock Total shareholders’

equity Balance at the beginning of the

year 38,730 56,065 213,790 (3,497) 305,088

Changes during the year

Dividends (8,815) (8,815)

Net income (loss) attributable

to owners of parent 22,114 22,114

Purchase of treasury stock (17,704) (17,704)

Disposal of treasury stock 17 33 51

Reversal of revaluation reserve for land (11) (11)

Share exchange 70,515 2,884 73,400

Changes in the fiscal year of

consolidated subsidiaries －

Change in scope of equity

method －

Change in shares of parent

arising from transactions with

non-controlling shareholders (36) (36)

Changes in items other than

shareholders' equity, net

Total changes during the year － (70,496) 13,288 (14,786) 68,997

Balance at the end of the year 38,730 126,561 227,078 (18,283) 374,086

Accumulated other comprehensive income

Subscription

rights to

shares

Non-

controlling

interests

Total net

assets Unrealized

gains on

securities

Deferred

losses on

hedges

Revaluation

reserve for

land

Foreign

currency

translation

adjustments

Remeasurements

of defined

benefit plans

Total

accumulated

other

comprehensive

income (loss)

Balance at the beginning of the

year 4,734 (0) (505) (5,339) (2,800) (3,912) 333 114,362 415,872


Dividends (8,815)


to owners of parent 22,114

Purchase of treasury stock (17,704)

Disposal of treasury stock 51

Reversal of revaluation reserve

for land (11)

Share exchange 73,400


consolidated subsidiaries －


method －



non-controlling shareholders (36)


shareholders' equity, net (1,540) 13 9 (2,289) (1,021) (4,828) 28 (84,709) (89,509)

Total changes during the year (1,540) 13 9 (2,289) (1,021) (4,828) 28 (84,709) (20,511)

Balance at the end of the year 3,194 12 (496) (7,628) (3,822) (8,740) 361 29,652 395,360

－ 14 －



Common stock Capital surplus Retained earnings Treasury stock Total shareholders’

equity Balance at the beginning of the

year 38,730 126,561 227,078 (18,283) 374,086


Dividends (9,368) (9,368)


to owners of parent (4,009) (4,009)


Disposal of treasury shares (11) 157 145

Reversal of revaluation reserve for land －

Share exchange －


consolidated subsidiaries 13 13


method (7,222) (7,222)



non-controlling shareholders

(6) (6)



Total changes during the year － (17) (20,586) (13,949) (34,553)

Balance at the end of the year 38,730 126,544 206,491 (32,233) 339,533

Accumulated other comprehensive income

Subscription

rights to

shares

Non-

controlling

interests

Total net

assets

Unrealized

gains

(losses) on

securities

Deferred

gains

(losses) on

hedges

Revaluation

reserve for

land

Foreign

currency

translation

adjustments

Remeasurements

of defined

benefit plans

Total

accumulated

other

comprehensive

loss

Balance at the beginning of the

year 3,194 12 (496) (7,628) (3,822) (8,740) 361 29,652 395,360


Dividends (9,368)


to owners of parent (4,009)


Disposal of treasury shares 145

Reversal of revaluation reserve

for land －

Share exchange －


consolidated subsidiaries 13


method (7,222)


arising from transactions with non-controlling shareholders

(6)


shareholders' equity, net 10,240 (12) (10,585) (5,970) (6,328) (82) 1,219 (5,191)

Total changes during the year 10,240 (12) － (10,585) (5,970) (6,328) (82) 1,219 (39,745)

Balance at the end of the year 13,435 － (496) (18,214) (9,792) (15,068) 278 30,872 355,615

－ 15 －

(4) Consolidated statement of cash flows

(Millions of yen)

Fiscal year ended

March 31, 2019

Fiscal year ended

March 31, 2020

Cash flows from operating activities

Income before income taxes 41,189 15,568

Depreciation and amortization 44,188 46,057

Impairment loss 1,839 2,688

Increase in provision for product warranties 1,901 1,256

Interest and dividend income (1,186) (1,307)

Interest expense 1,297 1,298

Share of loss of entities accounted for using

equity method 1,584 3,166

Gain on sales of non-current assets (544) (1,946)

Insurance income for loss on disaster － (2,772)

Loss on valuation of investment securities 251 1,149

Loss on realization of foreign currency

translation adjustments － 1,282

Loss on disaster － 1,989

Decrease in trade and other receivables 1,457 31,102

Increase in inventories (912) (4,087)

Increase (decrease) in trade and other payables 4,739 (2,881)

Increase (decrease) in accrued expenses 123 (1,249)

Others (7,596) 2,903

Subtotal 88,332 94,216

Interest and dividend received 1,386 1,190

Interest paid (1,237) (1,313)

Insurance proceeds on disaster － 2,772

Income taxes paid (15,810) (9,655)

Net cash provided by operating activities 72,671 87,210

Cash flows from investing activities

Increase in time deposits (4,700) (3,031)

Proceeds from withdrawal of time deposits 1,690 5,202

Acquisition of property, plant and equipment (52,348) (32,653)

Proceeds from sales of property, plant and

equipment 1,153 2,565

Acquisition of intangible assets (8,546) (7,997)

Purchase of investment securities (61) (2,786)

Purchase of shares of affiliated companies (1,296) －

Purchase of ownership interests of subsidiaries in

change in scope of consolidation (439) (3,561)

Others (2,855) (156)

Net cash used in investing activities (67,405) (42,419)

Cash flows from financing activities

Net increase (decrease) in short-term loans

payable (4,200) 231

Proceeds from long-term loans payable 46,052 1,000

Repayment of long-term loans payable (3,155) (8,865)

Cash dividends paid (8,815) (9,368)

Cash dividends paid to non-controlling interests (6,035) (793)


Contribution to money held in trust for purchase

of treasury stock (1,989) －

Repayments of lease obligations (646) (1,267)

Others (10,598) (175)

Net cash used in financing activities (6,910) (31,601)

Effect of exchange rate changes on cash and cash (815) (4,070)

－ 16 －

equivalents

Net increase (decrease) in cash and cash equivalents (2,460) 9,119

Cash and cash equivalents at the beginning of the

year 120,778 118,318

Net increase in cash and equivalent resulting from

changes in closing date of consolidated subsidiaries － 778

Cash and cash equivalents at the ending of the year 118,318 128,217

(5) Notes to consolidated financial statements

(Notes on going concern assumptions)

No items to report.

(Changes in the fiscal year of consolidated subsidiaries)

Previously, among consolidated subsidiaries of the Company, ALPS LOGISTICS HONG KONG LTD., ALPS

LOGISTICS (S) PTE. LTD., ALPS NAIGAI LOGISTICS (MALAYSIA) SDN. BHD., TIANJIN ALPS TEDA

LOGISTICS CO., LTD., ALPS LOGISTICS (SHANGHAI) CO., LTD., ALPS LOGISTICS (GUANGDONG)

CO., LTD., ALPS LOGISTICS (USA), INC., DALIAN ALPS TEDA LOGISTICS CO., LTD., SHANGHAI ALPS

LOGISTICS CO., LTD., ALPS LOGISTICS MEXICO, S. A. DE C. V., ALPS LOGISTICS (THAILAND) CO.,

LTD., ALPS LOGISTICS TAIWAN CO., LTD., ALPS LOGISTICS KOREA CO., LTD., ALPS LOGISTICS

(CHONGQING) CO., LTD., ALPS LOGISTICS EUROPE GmbH, ALPS LOGISTICS VIETNAM CO., LTD.,

ALPS LOGISTICS MEXICO EXPRESS, S. A. DE C. V., and TEDA ALPS LOGISTICS SHANGHAI CO., LTD.,

whose closing date was December 31, used the financial statements as of that date and made necessary adjustments

for significant transactions that occurred between December 31 and March 31, the consolidated closing date. In

order to better understand management information and disclose annual consolidated financial statements, the

method has been changed from the ended March 31, 2020, and these consolidated companies carry out the annual

provisional settlement of accounts as at the annual consolidated closing date.

The profit and loss of the consolidated subsidiaries for the period from January 1, 2019 to March 31, 2019 is

adjusted as the change in retained earnings.

(Important matters underlying the preparation of consolidated financial statements)

1. Matters concerning scope of consolidation

The Company has 88 consolidated subsidiaries.

ALPS LOGICOM INDIA PRIVATE LIMITED, which was newly established, ZHAOPU

ELECTRONICS(SHANGHAI) INC. whose equity was acquired by the company, have been included in the scope of

consolidation from the fiscal year ended March 31, 2020.

FAITAL S.p.A., FAITAL U.S.A., INC., and Magyarországi Hangszórógyártó Kft., which were affiliates not

accounted for by the equity method, have been included in the scope of consolidation from the current fiscal year due

to the acquisition of additional shares.

Two Companies including ALPS ELECTRIC (UK) LIMITED, were excluded from the scope of consolidation

because they were liquidated.

The Company has three non-consolidated subsidiaries, including ALPINE DO BRASIL LTDA. All of those non-

consolidated companies are immaterial in terms of total assets, net sales, net income (equity equivalent) and retained

earnings (equity equivalent) and have not had a significant impact on the consolidated financial statements as a whole

and therefore, they were excluded from the scope of consolidation.

2. Matters concerning the application of the equity method

Investments in the following two affiliates are accounted for by the equity method:

Device & System Platform Development Center, NEUSOFT REACH AUTOMOTIVE TECHNOLOGY

（SHANGHAI）CO. LTD..

The Company has three non-consolidated subsidiaries including ALPINE DO BRASIL LTDA. and four affiliates

not accounted for by the equity method. All of those companies are immaterial in terms of net income (equity

equivalent) and retained earnings (equity equivalent) and have not had a significant impact on the consolidated

financial statements as a whole. As such, the equity method has not been applied to those companies.

－ 17 －

NEUSOFT XIKANG ALPS (SHENYANG) TECHNOLOGY CO., LTD., was excluded from the application of

the equity method because it was liquidated. Two companies, NEUSOFT CORPORATION, DALIAN NEUSOFT

HOLDINGS CO., LTD., were excluded from the application of the equity method due to a decline in influence.

If the closing date of a company accounted for by the equity method is different from the consolidated closing

date, the financial statements for each affiliate’s fiscal year are used for consolidation, but the consolidated financial

statements are adjusted to include significant transactions that occurred during the period between each affiliate’s

closing date and the consolidated closing date.

(Omission of disclosures)

Disclosures of notes regarding changes in presentation, consolidated balance sheet, consolidated statement of

income and comprehensive income, consolidated statement of changes in net assets, consolidated statement of cash

flows, lease transactions, financial instruments, securities, derivative transactions, retirement benefits, stock options,

tax effect accounting, asset retirement obligations, real estate for lease, and related party information are omitted

because we believe those information is not significant enough to be disclosed in this report.

(Segment information)

a. Segment information

1. Overview of reportable segment

The Company's operating segments are components of its business for which separate financial information is

available and which are subject to periodic review by the Board of Directors in order to decide how resources should

be allocated and to evaluate financial results.

The Company has group companies for each product and service, and the Company and each group company

formulate comprehensive strategies for the products and services we deliver and conduct our business activities.

The Company consists of segments which are classified based on types of products and services and similarities

of sales market and it has three reportable segments: Electronic Components Segment, Automotive Infotainment

Segment and Logistics Segment.

The Electronic Components Segment develops, manufactures and sells various electronic components. The

Automotive Infotainment Segment develops, manufactures and sells in-car audio equipment and information and

communication equipment. The Logistics Segment provides transportation, storage, forwarding and other services.

2. Calculation method for net sales, profit/loss, assets, liabilities and other items by reportable segment

Income of reportable segments is based on operating income. Intersegment sales and transfers are based on

actual transactions.

3. Information concerning net sales, profit/loss, assets, liabilities and other items by reportable segment

For the fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)

(Millions of yen)

Reportable segment

Other

(Note 1) Total

Adjustments

(Note 2)

Amount on

consolidated

financial

statements

(Note 3)

Electronic

Components

Segment

Automotive

Infotainment

Segment

Logistics

Segment Sub-total

Net sales

External 468,605 303,593 66,888 839,087 12,244 851,332 － 851,332

Inter-segment sales and

transfers 15,663 7,576 38,031 61,271 14,993 76,265 (76,265) －

Total 484,269 311,170 104,919 900,359 27,238 927,597 (76,265) 851,332

Segment profit 29,607 13,921 4,722 48,250 1,430 49,681 (39) 49,641

Segment assets 473,866 218,143 75,603 767,614 44,057 811,672 (135,955) 675,717

－ 18 －

Segment liabilities 198,580 79,632 25,082 303,295 37,818 341,114 (60,758) 280,356

Other items

Depreciation and

amortization 33,995 7,412 2,287 43,695 455 44,150 37 44,188

Increase in property, plant

and equipment and

intangible assets

33,210 13,597 5,533 52,341 562 52,903 24 52,928

(Note)

1. “Other” represents business segments not included in the reportable segments, and includes the development of systems, office

services, financing and leasing businesses.

2. The adjustments are as follows:

(1) The adjustment of ¥(39) million to segment profit represents reclassification adjustments upon consolidation and eliminations

of inter-segment transactions.

(2) The adjustment of ¥(135,955) million to segment assets represents eliminations of inter-segment transactions.

(3) The adjustment of ¥(60,758) million to segment liabilities represents eliminations of inter-segment transactions.

3. Segment profit is reconciled to operating income of the consolidated financial statements


(Millions of yen)

Reportable segment

Other

(Note 1) Total

Adjustments

(Note 2)

Amount on

consolidated

financial

statements

(Note 3)

Electronic

Components

Segment

Automotive

Infotainment

Segment

Logistics

Segment Sub-total

Net sales

External 424,709 306,299 66,872 797,881 12,688 810,570 － 810,570

Inter-segment sales and

transfers 13,633 7,389 33,869 54,892 12,800 67,692 (67,692) －

Total 438,343 313,689 100,741 852,773 25,488 878,262 (67,692) 810,570

Segment profit 16,124 5,655 4,118 25,897 1,202 27,100 (304) 26,795

Segment assets 427,164 216,531 78,451 722,148 46,455 768,604 (143,062) 625,542

Segment liabilities 185,367 85,075 26,887 297,330 40,159 337,489 (67,563) 269,926

Other items

Depreciation and

amortization 33,402 8,801 3,363 45,566 488 46,055 2 46,057

Increase in property, plant

and equipment and

intangible assets

25,729 11,587 4,555 41,872 828 42,701 (338) 42,362

(Note)

1. “Other” represents business segments not included in the reportable segments, and includes the development of systems, office

services, financing and leasing businesses.

2. The adjustments are as follows:

(1) The adjustment of ¥(304) million to segment profit represents reclassification adjustments upon consolidation and eliminations

of inter-segment transactions.

(2) The adjustment of ¥(143,062) million to segment assets represents eliminations of inter-segment transactions.

(3) The adjustment of ¥(67,563) million to segment liabilities represents eliminations of inter-segment transactions.

3. Segment profit is reconciled to operating income of the consolidated financial statements.

b. Relevant information


1. Information by product and service

This information is omitted because such information is disclosed in “Segment information”.

－ 19 －

2. Geographic information

(1) Net sales

(Millions of yen)

China Japan United States Germany Others Total

167,809 158,237 136,435 80,659 308,190 851,332

(Note) Net sales are attributed by country or region based on the customers’ locations.

(2) Property, plant and equipment

(Millions of yen)

Japan China Others Total

112,858 38,404 36,382 187,646

3. Information on major customers

This information is omitted because there are no customers that account for 10% or more of net sales in the

consolidated statements of income and comprehensive income


1. Information by product and service

This information is omitted because such information is disclosed in “Segment information”.

2. Geographic information

(1) Net sales

(Millions of yen)

China Japan United States Germany Others Total

155,522 154,466 133,676 86,637 280,267 810,570

(Note) Net sales are attributed by country or region based on the customers’ locations.

(2) Property, plant and equipment

(Millions of yen)

Japan China Others Total

109,882 30,591 37,391 177,865

3. Information on major customers

This information is omitted because there are no customers that account for 10% or more of net sales in the

consolidated statements of income and comprehensive income.

c. Information concerning impairment loss on non-current assets by reportable segment


(Millions of yen)

Electronic

Components Segment

Automotive

Infotainment Segment

Logistics Segment Other All/Elimination Total

Impairment loss 1,583 － 255 －－ 1,839


(Millions of yen)

Electronic

Components

Segment

Automotive

Infotainment

Segment

Logistics Segment Other All/Elimination Total

Impairment loss 2,527 － 160 －－ 2,688

－ 20 －

d. Information concerning amortization of goodwill unamortized balance by reportable segment

This information is omitted because the amount is insignificant.

e. Information concerning gain on negative goodwill by reportable segment

(from April 1, 2018 to March 31, 2019) No items to report.

(from April 1, 2019 to March 31, 2020) As the monetary importance is low, the description is omitted.

(Per share information)

For the fiscal year ended March 31,

2019

(from April 1, 2018 to March 31,

2019)

For the fiscal year ended March 31,

2020


2020)

Net assets per share 1,731.36 yen 1,587.06 yen

Earnings (loss) per share 110.19 yen (19.53) yen

Diluted earnings per share 110.14 yen －yen

Further, regarding diluted earnings per share for this fiscal year, although there are diluted earnings, not stated as it is a

loss per share.

(Note 1) The basis for calculating book-value per share is as follows:


Total net assets (millions of yen) 395,360 355,615

Amount deducted from total net assets (millions of yen) 30,014 31,151

(Subscription rights to shares (millions of yen)) (361) (278)

(Non-controlling interests (millions of yen)) (29,652) (30,872)

Total net assets related to common stock at the end of the

year (millions of yen) 365,346 324,464

Number of common stock used in calculating net assets per

share at the end of the year (thousand) 211,016 204,443

(Note 2) The basis for calculating earnings(loss) per share and diluted earnings per share is as follows:

For the fiscal year ended March

31, 2019 (from April 1, 2018 to

March 31, 2019)

For the fiscal year ended March

31, 2020 (from April 1, 2019 to

March 31, 2020)

Earnings (loss) per share

Net income (loss) attributable to owners of parent (millions

of yen) 22,114 (4,009)

Amount not attributable to common shareholders (millions

of yen) －－

Net income (loss) attributable to owners of parent related to

common stock (millions of yen) 22,114 (4,009)

Average number of shares during the year (thousand) 200,694 205,306

Diluted earnings per share

Adjustment to net income attributable to owners of parent

(millions of yen) －－

Increase in number of common stock (thousand) 94 －

(Subscription rights to shares) (94) (－)

Summary of dilutive shares that were not included in the

calculation of diluted earnings per share because they have

no dilutive effect

－－

－ 21 －

(Subsequent events)

(Transactions under common control)

The Company resolved at its board of directors meeting held on October 30, 2019 to succeed the entire

business of Alpine Electronics, Inc. (“Alpine” and, together with the Company, the “Companies”), a wholly

owned subsidiary of the Company, through an absorption-type company split (the “Company Split”), except for

ownership and management of trademark rights related to commercial products sold under “Alpine” brand and

shares of subsidiaries. Based on the resolution, the Companies executed an absorption-type company split

agreement as of the same date. Based on this agreement the Company is the succeeding company and the Alpine

is the splitting company on April 1, 2020.

1.Outline of the transaction

(1) Name and details of the business subject to the transaction

Name of the business: Automotive Infotainment Business

Details of the business: Businesses related to audio equipment and information and communication

equipment

(2) Date of business combination: April 1, 2020

(3) Legal form of business combination

A simplified absorption-type company split under which Alpine is to be split and the Company becomes

the successor. (4) Name of the company after the business combination

ALPS ALPINE CO., LTD (5) Other matters concerning the overview of the transaction

i. Purpose of the transaction

In order to realize our vision of becoming an “Innovative T-Shaped Company (ITC101)” as raised

in the Mid-Term Business Plan announced on April 26, 2019, the Company has been working on the

reform of the business structure aimed at promoting One ALPSALPINE. As part of the structural

reform, the Company has decided to transfer Alpine’s entire business to the Company in order to

facilitate more efficient and agile management. Through this transfer, we will accelerate the evolution

into a “T-shaped Company” that is capable of undertaking a diverse range of businesses to meet

customer needs, from devices to system services, and pursue early creation of integration synergies.

ii. Details of allotment in the company split

The company split will not entail allotment of shares or other monetary consideration.

ⅲ. Operating Results of the Division to be Succeeded (for the fiscal year ended March 31, 2020)

Net Sales ¥164,854 million

Operating income ¥(10,859) million

Ordinary income ¥(5,543) million

ⅳ. Asset and Liability Items and Amounts to be Assumed (as of March 31, 2020)

(Millions of yen)

Assets Liabilities

Item Book value Item Book value

Current assets 46,146 Current liabilities 40,193

Non-current assets 35,519 Non-current liabilities 1,745

Total 81,665 Total 41,938

2. Overview of accounting treatment

It will be accounted for as a transaction under common control in accordance with “Accounting Standard

for Business Combinations” (Accounting Standards Board of Japan Statement No. 21, January 16, 2019) and

“Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for

Business Divestitures” (Accounting Standards Board of Japan Guidance No. 10, January 16, 2019).

－ 22 －

6. Non-consolidated Financial Statements

(1) Balance sheet

(Millions of yen)

As of

March 31, 2019

As of

March 31, 2020

Assets

Current assets

Cash and deposits 29,264 16,025

Notes receivable 791 729

Accounts receivable - trade 78,262 67,545

Merchandise and finished goods 13,829 9,805

Work in process 4,495 5,940

Raw material and supplies 5,472 4,646

Advance payments 183 15

Prepaid expenses 1,414 1,334

Accounts receivable - other 11,392 10,438

Income taxes receivable 1,458 1,112

Short-term loans receivable from subsidiaries and

affiliated companies 22,442 22,205

Others 2,047 50


Total current assets 170,993 139,849

Non-current assets Property, plant and equipment

Buildings 19,273 18,448

Structures 1,159 1,114

Machinery and equipment 29,118 22,889

Vehicles 77 82

Tools, furniture and fixtures 3,313 2,385

Molds 3,143 1,781

Land 17,252 17,272

Construction in progress 5,672 5,727

Total property, plant and equipment, net 79,009 69,702

Intangible assets Patent right 77 61

Leasehold right 236 236

Trademark right 26 23

Software 10,972 10,360

Telephone subscription right 42 40

Right of using facilities 1 1

Total intangible assets, net 11,355 10,723

Investments and other assets Investment securities 1,377 2,643

Shares of subsidiaries and affiliated companies 89,725 89,607

Investments in capital 11 337

Investments in capital of subsidiaries and affiliated

companies 11,154 11,154

Long-term loans receivable from employees 93 64

Claims provable in rehabilitation 803 488

Long-term prepaid expenses 419 226

Prepaid pension cost 115 116

Guarantee deposits 66 59

Deferred tax assets 9,281 4,231

Others 57 57


Total investments and other assets 112,274 108,470

Total non-current assets 202,639 188,896

Total assets 373,633 328,745

－ 23 －

(Millions of yen)

As of

March 31, 2019

As of

March 31, 2020

Liabilities

Current liabilities

Accounts payable - trade 44,569 40,050

Short-term borrowings 21,594 21,300

Current portion of long-term borrowings 1,000 23,000

Lease obligations 39 15

Accounts payable - other 15,126 14,619

Accrued expenses 3,241 3,174

Accrued income taxes 177 317

Advance received 247 67

Deposits received 217 219

Provision for bonuses 4,742 4,311

Provision for directors’ bonuses 31 27

Provision for product warranties 1,954 1,850

Provision for loss on inventory 429 556

Others 159 117

Total current liabilities 93,531 109,629

Non-current liabilities

Long-term borrowings 64,000 42,000

Lease obligations 38 23

Long-term accounts payable - other 133 133

Provision for retirement benefits 3,398 2,807

Provision for environmental measures 590 590

Asset retirement obligations 414 427

Others 88 87

Total non-current liabilities 68,663 46,070

Total liabilities 162,194 155,699

Net assets


Common stock 38,730 38,730

Capital surplus

Legal capital surplus 99,993 99,993

Other capital surplus 3,532 3,520

Total capital surplus 103,525 103,514

Retained earnings

Other retained earnings

Retained earnings brought forward 86,896 62,766

Total retained earnings 86,896 62,766

Treasury stock (18,341) (32,290)

Total shareholders’ equity 210,811 172,720

Valuation and translation adjustments

Unrealized gains on securities 331 100

Total valuation and translation adjustments 331 100

Subscription rights to shares 295 225

Total net assets 211,438 173,046

Total liabilities and net assets 373,633 328,745

－ 24 －

(2) Statement of income

(Millions of yen)

Fiscal year ended

March 31, 2019 Fiscal year ended

March 31, 2020

Net sales 394,661 357,168 Cost of sales 336,666 312,965

Gross profit 57,995 44,203

Selling, general and administrative expenses 51,393 51,727

Operating income (loss) 6,602 (7,524)

Non-operating income Dividend income 12,632 8,581 Miscellaneous income 898 1,444

Total non-operating income 13,531 10,026

Non-operating expenses Interest expense 507 576 Foreign exchange losses － 1,443 Commission fee 1,398 1,325 Miscellaneous expenses 500 944

Total non-operating expense 2,406 4,290

Ordinary income (loss) 17,726 (1,788)

Extraordinary income

Gain on insurance income for loss on disaster － 2,222 Others 927 93

Total extraordinary income 927 2,316

Extraordinary loss Impairment loss 1,583 7,459 Loss on valuation of investment securities 359 1,054 Loss on disaster － 1,507 Others 185 178

Total extraordinary loss 2,128 10,200

Income before income taxes (loss) 16,525 (9,672)

Current income taxes 393 (61) Deferred income taxes 157 5,150

Total income taxes 551 5,088

Net income (loss) 15,974 (14,760)

－ 25 －

(3) Statement of changes in net assets



Common stock

Capital surplus Retained earnings

Treasury stock

Total

shareholders’ equity

Legal capital surplus

Other capital surplus

Total capital surplus

Other retained

earnings Total

retained earnings

Retained

earnings brought

forward

Balance at the beginning of the year 38,730 53,830 3,514 57,344 79,737 79,737 (3,497) 172,314


Dividends (8,815) (8,815) (8,815)

Net income (loss) 15,974 15,974 15,974


Disposal of treasury stock 17 17 33 51

Share exchange 46,163 46,163 2,884 49,048



Total changes during the year － 46,163 17 46,181 7,158 7,158 (14,843) 38,496

Balance at the end of the year 38,730 99,993 3,532 103,525 86,896 86,896 (18,341) 210,811

Valuation and translation

adjustments Subscription

rights to shares Total net assets

Unrealized

gains on

securities

Total valuation

and translation

adjustments

Balance at the beginning of the year 819 819 180 173,315


Dividends (8,815)

Net income (loss) 15,974



Share exchange 49,048


shareholders' equity, net (487) (487) 115 (372)

Total changes during the year (487) (487) 115 38,123

Balance at the end of the year 331 331 295 211,438

－ 26 －



Common

stock

Capital surplus Retained earnings

Treasury

stock

Total

shareholders’

equity

Legal capital

surplus

Other capital

surplus

Total capital

surplus

Other retained

earnings Total

retained

earnings

Retained

earnings

brought forward

Balance at the beginning of the year 38,730 99,993 3,532 103,525 89,896 86,896 (18,341) 210,811


Dividends (9,368) (9,368) (9,368)

Net income (loss) (14,760) (14,760) (14,760)


Disposal of treasury stock (11) (11) 157 145

Share exchange －



Total changes during the year －－ (11) (11) (24,129) (24,129) (13,949) (38,090)

Balance at the end of the year 38,730 99,993 3,520 103,514 62,766 62,766 (32,290) 172,720

Valuation and translation adjustments

Subscription

rights to shares Total net assets

Unrealized

gains (losses)

on securities

Total valuation

and translation

adjustments

Balance at the beginning of the year 331 331 295 211,438


Dividends (9,368)

Net income (loss) (14,760)



Share exchange －


shareholders' equity, net (231) (231) (70) (301)

Total changes during the year (231) (231) (70) (38,391)

Balance at the end of the year 100 100 225 173,046

－ 27 －

7. Other

(1) Sales results of the Electronic Components Segment

Sales results of Electronic Components Segment for the fiscal year ended March 31, 2020 are as follows:

For the fiscal year ended

March 31, 2019


2019)

For the fiscal year ended

March 31, 2020


2020)

Changes in net sales

Net sales

(Millions of yen)

Percentage

(%)

Net sales

(Millions of yen)

Percentage

(%)

Amount

(Millions of yen)

Percentage

(%)

Electronic Components Segment 468,605 55.0 424,709 52.4 (43,895) (9.4)

Automotive market 277.883 32.6 242,084 29.9 (35,798) (12.9)

Consumer market 190,722 22.4 182,625 22.5 (8,097) (4.2)

(Note) Percentage represents ratio to the consolidated net sales.

(2) Change of Directors and Officers (expected effective date is June 24, 2020)

(i) Candidate for Director to be newly appointed who are not Members of Audit and Supervisory Committee

Director Tetsuhiro Saeki Senior Vice President, CMO, Information Systems

Director Naofumi Fujie Aisin Seiki Co., Ltd.

Senior Executive Advisor

Director Noriko Oki Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

Investment Banking Business Unit

Senior Advisor

* Naofumi Fujie and Noriko Oki are candidates for outside director.

(ii) Candidate for Director to be newly appointed who are Members of Audit and Supervisory Committee

Director Toshinori Kobayashi Vice President, Corporate Planning, Accounting & Finance

(iii) Retiring Directors

Satoshi Kinoshita Director (Outside)

Shinji Maeda Director, Audit and Supervisory Committee Members

(iv) Officers to be appointed

Officer Wilfried Baumann President, ALPS ALPINE EUROPE GmbH

Officer Hiroaki Kiba Senior Manager, Sales Planning Office

Officer Junji Kobayashi General Manager, Corporate Planning Operations & Senior

Manager, Corporate Planning Office

(v) Retiring Officers

Yoichiro Kega Vice President, HR & General Affairs, Legal, Export & Import

Administration

Toshinori Kobayashi Vice President, Corporate Planning, Accounting & Finance

Shinji Inoue Vice President, Automotive Sales & Marketing

* Toshinori Kobayashi is a candidate for members of audit and supervisory committee.

may 8, 2020 consolidated financial results for the fiscal ... · each market of ehii (energy,...

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