東洋水産（2875） – Consolidated Financial Results for the Nine Months Ended December 31, 2021

Translation Consolidated Financial Results for the Nine Months Ended December 31, 2021 January 31, 2022 https://www.maruchan.co.jp/ First Section of the Tokyo Stock Exchange Company name: Toyo Suisan Kaisha, Ltd. Listing: Securities code: 2875 URL: Representative: Masanari Imamura, Representative Director and President Contact: Scheduled date of filing of quarterly securities report: Scheduled date of start of dividend payment: Preparation of quarterly results presentation materials: Holding of quarterly results briefing meeting: Takayoshi Hirano, General Manager of Accounting Department TEL: +81-3-3458-5246 (from overseas) February 10, 2022 – Yes None (Amounts less than one million yen have been omitted.) 1. Consolidated Operating Results for the First Nine Months of FY2022 (from April 1, 2021 to December 31, 2021) (1) Consolidated Operating Results Net sales Operating profit Ordinary profit Nine months ended Dec. 31, 2021 Dec. 31, 2020 % Millions of yen 26,386 30,701 Note: Comprehensive income Nine months ended December 31, 2021: 22,834 million yen Nine months ended December 31, 2020: 18,785 million yen % Millions of yen 24,822 29,059 Millions of yen 268,097 256,345 (14.6) 32.8 4.6 – (14.1) 26.3 [21.6%] [22.9%] (Percentages indicate year-on-year changes.)Profit attributable to owners of parent % Millions of yen 18,353 22,699 % (19.1) 31.6 Nine months ended Dec. 31, 2021 Dec. 31, 2020 Basic earnings per share Diluted earnings per share Yen 179.71 222.26 Yen – – The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the first quarter of the fiscal year ending March 31, 2022. In addition, in accordance with principle-based treatment, the new accounting policy has been retrospectively applied to all prior periods. Accordingly, the year-on-year change for net sales for the nine months ended December 31, 2020 is not shown due to the retrospective adjustment in accordance with the change in the accounting policy. (2) Consolidated Financial Position Equity ratio Total assets Millions of yen 444,374 428,651 Net assets Millions of yen 356,815 343,319 % 77.6 77.3 As of Dec. 31, 2021 As of Mar. 31, 2021 Reference: Equity As of December 31, 2021: 344,623 million yen 331,459 million yen As of March 31, 2021: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the first quarter of the fiscal year ending March 31, 2022. In addition, in accordance with principle-based treatment, the new accounting policy has been retrospectively applied to all prior periods. Accordingly, the consolidated financial position for the fiscal year ended March 31, 2021 was retrospectively adjusted. 2. Dividends FY2021 FY2022 FY2022 (Forecast) Full Year Dividends 1st quarter-end 2nd quarter-end 3rd quarter-end Yen – – Yen 40.00 40.00 Yen – – Year-end For the year Yen 90.00 90.00 Yen 50.00 50.00 Note: Revisions to the dividends forecasts most recently announced: None 3. Consolidated Results Forecasts for FY2022 (from April 1, 2021 to March 31, 2022) Net sales Operating profit Ordinary profit Millions of yen 360,000 Note: Revisions to the results forecasts most recently announced: None Millions of yen 32,000 (12.2) Full year 5.6 % % Millions of yen (Percentages indicate year-on-year changes.)Basic earnings per share Profit attributable to owners of parent Millions of yen % Yen % 33,500 (13.4) 25,000 (14.0) 244.79 * Notes (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None (2) Application of specific accounting procedures for preparation of the quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement a. Changes in accounting policies due to amendments to accounting standards and other regulations: Yes b. Changes in accounting policies due to other reasons: None c. Changes in accounting estimates: None d. Restatement: None (4) Number of shares issued (common stock) a. Number of shares issued at end of period (including treasury shares) As of December 31, 2021 As of March 31, 2021 b. Number of treasury shares at end of period As of December 31, 2021 As of March 31, 2021 year) Nine months ended December 31, 2021 Nine months ended December 31, 2020 110,881,044 shares 110,881,044 shares 8,753,241 shares 8,753,164 shares 102,127,840 shares 102,128,124 shares c. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal * Quarterly financial results reports are exempt from quarterly reviews conducted by certified public accountants or an audit corporation. * Explanation related to the appropriate use of the results forecasts and other items warranting special mention (Caution regarding forward-looking statements) Forward-looking statements in this document, including the results forecasts, etc., are based on the information available as of the date of the release of this document and the preconditions that the Company deemed to be reasonable; they are not meant to be a commitment by the Company, and a variety of factors in the future may cause actual results to differ materially from these forecasts. Please refer to Section: “(3) Explanation of forward-looking information, including consolidated results forecasts” of “1. Qualitative Information on Quarterly Consolidated Financial Results for the Nine Months Ended December 31, 2021” on page 3 of the attachments for the preconditions for the results forecasts and items to exercise caution in the use of these results forecasts. Index of Attachments 1. Qualitative Information on Quarterly Consolidated Financial Results for the Nine Months Ended December 31, 2021 ………………………………………………………………………………………………………………………. 2 (1) Explanation of the consolidated operating results ………………………………………………………………………… 2 (2) Explanation of the consolidated financial position ………………………………………………………………………. 3 (3) Explanation of forward-looking information, including consolidated results forecasts …………………….. 3 2. Quarterly Consolidated Financial Statements and Significant Notes Thereto ………………………………… 4 (1) Quarterly consolidated balance sheets ……………………………………………………………………………………….. 4 (2) Quarterly consolidated statements of income and comprehensive income ………………………………………. 6 Quarterly consolidated statements of income (Cumulative) ………………………………………………………….. 6 Quarterly consolidated statements of comprehensive income (Cumulative) ……………………………………. 7 (3) Notes to quarterly consolidated financial statements ……………………………………………………………………. 8 (Notes on going concern assumptions) ………………………………………………………………………………………. 8 (Notes in the event of substantial changes in shareholders’ equity) ………………………………………………… 8 (Changes in accounting policies) ………………………………………………………………………………………………. 8 (Segment information) …………………………………………………………………………………………………………… 10 1 1. Qualitative Information on Quarterly Consolidated Financial Results for the Nine Months Ended December 31, 2021 (1) Explanation of the consolidated operating results During the nine months ended December 31, 2021, signs of recovery were seen in the Japanese economy as the challenging conditions due to the impact of the novel coronavirus disease (COVID-19) gradually relaxed. Looking ahead, although recovery is expected to continue on the back of results from various economic measures and the improvement of overseas economies amid the restoration of socioeconomic activities toward normalcy, it is necessary to closely monitor the risk of a downturn in Japanese and overseas economies caused by a resurgence of the spread of infection, affecting socioeconomic activities, the impact of fluctuations in financial and capital markets, etc. Under these circumstances, the Toyo Suisan Group (hereafter, the “Group”) has remained committed to its mission “to contribute to society through foods” and “to provide safe and secure foods and services to customers” under the corporate slogan of “Smiles for All.” The Group continued to implement further cost reductions and promoted aggressive sales activities in its efforts to face an increasingly competitive sales environment. As a result, net sales were ¥268,097 million (up 4.6% year on year), operating profit was ¥24,822 million (down 14.6% year on year), ordinary profit was ¥26,386 million (down 14.1% year on year), and profit attributable to owners of parent was ¥18,353 million (down 19.1% year on year) for the period under review. The foreign exchange rate used for the period was ¥115.01 to the U.S. dollar (¥103.50 to the U.S. dollar for the corresponding period of the previous fiscal year). The operating results by segment are as follows. In the Seafood Segment, due to the impact of requests for the public to stay at home and other measures to prevent the spread of COVID-19, although the sales for prepared food departments of some supermarkets and food delivery businesses increased, sales decreased mainly due to lower sales volume of products for convenience stores and other factors. As a result, segment sales were ¥18,924 million (down 2.7% year on year) and segment profit was ¥294 million (up 42.9% year on year) mainly due to an improvement in the cost of sales ratio of fish eggs and an increase in shipments, despite the surge in the price of tuna as a raw material and rising procurement costs of salmon and trout. In the Overseas Instant Noodles Segment, sales increased amid the continuing high demand compared to before the COVID-19 pandemic, as sales increased for the Ramen series, one of our signature products in bag-type noodles, while sales were also favorable for cup-type noodles such as the Yakisoba series and Bowl series, in addition to Instant Lunch series which is one of our signature products. In Mexico, sales increased due to favorable sales of both cup-type noodles, our signature products, and bag-type noodles. As a result, segment sales were ¥79,587 million (up 20.8% year on year). Segment profit was ¥7,823 million (down 33.1% year on year) mainly due to an increase in raw material costs resulting from higher prices of the main raw materials and an increase in distribution costs resulting from a higher unit price of freight, despite the effect of sales increase. In the Domestic Instant Noodles Segment, although sales struggled for the Japanese-style series including Akai Kitsune Udon and Midori no Tanuki Ten Soba, sales increased as sales of the MARUCHAN QTTA series for cup-type noodles continued to be favorable amid the continuing high demand compared to before the COVID-19 pandemic. Sales in bag-type noodles decreased despite efforts to expand sales mainly of the Maruchan Seimen series, which celebrated its 10th anniversary in October 2021 with the launch of a commemorative product. As a result, segment sales were ¥72,980 million (down 1.2% year on year) and segment profit was ¥9,380 million (down 15.1% year on year) due to increases mainly in motive utility costs and sales promotion costs, despite factors such as decreases in personnel expenses and transportation and storage costs. In the Frozen and Refrigerated Foods Segment, due to the impact of requests for the public to stay at home and other measures to prevent the spread of COVID-19, sales of products for restaurants, workplace cafeterias, etc. continued on a downward trend. Sales in fresh noodles decreased despite efforts to expand sales mainly of the Maruchan Yakisoba (Three-Meal Package) series, which is one of our signature products, and the Maruchan Fresh Ramen Noodle (Three-Meal Package) series, amid continuing demand for home cooking. As a result, segment sales were ¥38,854 million (down 4.0% year on year) and segment profit was ¥5,057 million (down 4.6% year on year) mainly due to a decrease in sales and an increase in motive utility costs. In the Processed Foods Segment, amid the continuing high demand compared to before the COVID-19 pandemic, sales of packaged cooked rice increased due to carrying out the plan to increase the portions of our retort packaged cooked rice products in addition to the launch of new products. Sales continued to be favorable and increased for freeze-dried products due to the expansion of customers, mainly for the Sozai no Chikara series, a freeze-dried soup product with five packs in one bag, and the increase of opportunities for eating at home. As a result, segment 2 sales were ¥14,401 million (up 2.3% year on year), and the segment reported a segment profit of ¥86 million (compared with a segment loss of ¥445 million in the corresponding period of the previous fiscal year) mainly due to an increase in sales and a decrease in personnel expenses, despite an increase in motive utility costs. Although conditions in the Cold-Storage Segment were challenging due to stored inventory falling year on year because of the impact of the spread of COVID-19 and global logistics disruption, handling of household frozen foods increased and handling of home deliveries was steady due to stay-at-home demand as the public stays at home. As a result, segment sales were ¥16,955 million (up 4.0% year on year) and segment profit was ¥1,960 million (up 77.0% year on year) due to factors such as a decrease in personnel expenses in addition to not having temporary expenses from the operation of new cold storage facilities in the previous fiscal year, despite an increase in motive utility costs. The Other Business Segment consists of mainly the packed lunch/deli food business. Segment sales were ¥26,392 million (up 0.1% year on year) while segment profit was ¥951 million (up 25.8% year on year). (2) Explanation of the consolidated financial position At the end of the third quarter of the fiscal year ending March 31, 2022, total assets increased by ¥15,723 million from the previous fiscal year-end to ¥444,374 million, and net assets increased by ¥13,496 million to ¥356,815 million. The main factors contributing to these results are as follows: The main contributing factors for assets were increases in notes and accounts receivable – trade, and contract assets and securities, despite a decrease in cash and deposits. The main contributing factors for liabilities were increases in notes and accounts payable – trade and accrued expenses, despite a decrease in income taxes payable. The main contributing factors for net assets were increases in retained earnings and foreign currency translation adjustment. As a result of these factors, the equity ratio was 77.6%. (3) Explanation of forward-looking information, including consolidated results forecasts The Company has not changed its consolidated results forecasts for the full term of the fiscal year ending March 31, 2022, as announced on October 29, 2021, because it is unclear when the COVID-19 pandemic will be brought under control and it is difficult to rationally calculate the impact on the consolidated results forecasts at this time. If any revisions are necessary in the future, the relevant information will be duly disclosed. 3 2. Quarterly Consolidated Financial Statements and Significant Notes Thereto (1) Quarterly consolidated balance sheets As of end FY2021 (March 31, 2021) As of end 3Q FY2022 (December 31, 2021) (Millions of yen)Assets Current assets Cash and deposits Notes and accounts receivable – trade Notes and accounts receivable – trade, and contract assets Securities Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Land Leased assets, net Construction in progress Other, net Total property, plant and equipment Intangible assets Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Retirement benefit asset Other Total investments and other assets Total non-current assets Total assets 117,544 51,567 – 42,000 14,467 433 9,440 3,124 (599) 237,978 74,710 36,779 34,661 2,172 8,310 1,303 157,938 1,267 1,267 29,169 1,358 37 900 31,465 190,672 428,651 103,605 – 66,528 56,000 16,252 401 10,997 2,785 (601) 255,969 74,809 39,526 34,775 1,935 4,359 1,163 156,571 1,293 1,293 28,410 1,141 33 954 30,540 188,404 444,374 4 As of end FY2021 (March 31, 2021) As of end 3Q FY2022 (December 31, 2021) (Millions of yen)Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Lease obligations Accrued expenses Income taxes payable Provision for bonuses for directors (and other officers) Provision for removal cost of property, plant and equipment Asset retirement obligations Other Total current liabilities Non-current liabilities Lease obligations Deferred tax liabilities Provision for retirement benefits for directors (and other officers) Retirement benefit liability Provision for loss on business of subsidiaries and associates Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 24,825 350 296 22,988 4,306 231 24 10 4,817 57,850 3,519 1,983 320 20,221 35 213 1,188 27,481 85,331 18,969 22,942 289,000 (8,233) 322,678 9,006 16 1,743 (1,985) 8,780 11,860 343,319 428,651 28,743 404 285 24,180 851 70 95 – 5,214 59,845 3,349 2,444 316 20,047 – 216 1,338 27,713 87,558 18,969 22,942 298,162 (8,233) 331,840 8,452 25 6,025 (1,720) 12,782 12,192 356,815 444,374 5 (2) Quarterly consolidated statements of income and comprehensive income Quarterly consolidated statements of income (Cumulative) 3Q FY2021 (from April 1, 2020 to December 31, 2020) 3Q FY2022 (from April 1, 2021 to December 31, 2021) (Millions of yen)Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Miscellaneous income Total non-operating income Non-operating expenses Interest expenses Share of loss of entities accounted for using equity method Miscellaneous losses Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Subsidy income Other Total extraordinary income Extraordinary losses Loss on sale and retirement of non-current assets Impairment losses Loss on valuation of shares of subsidiaries and associates Provision for removal cost of property, plant and equipment Other Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 256,345 185,651 70,693 41,634 29,059 794 470 – 749 2,014 180 2 189 372 30,701 1 1,837 18 1,857 115 14 886 26 2 1,046 31,511 8,211 143 8,355 23,155 456 22,699 268,097 198,919 69,178 44,355 24,822 282 487 119 952 1,843 174 – 104 279 26,386 1 138 60 200 130 24 – 95 37 286 26,300 6,651 822 7,473 18,826 473 18,353 6 Quarterly consolidated statements of comprehensive income (Cumulative) 3Q FY2021 (from April 1, 2020 to December 31, 2020) 3Q FY2022 (from April 1, 2021 to December 31, 2021) (Millions of yen)Profit Other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 23,155 359 (22) (5,032) 330 (5) (4,370) 18,785 18,229 555 18,826 (565) 9 4,281 278 3 4,007 22,834 22,355 479 7 (3) Notes to quarterly consolidated financial statements (Notes on going concern assumptions) Not applicable (Notes in the event of substantial changes in shareholders’ equity) Not applicable (Changes in accounting policies) (Application of Accounting Standard for Revenue Recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the first quarter of the fiscal year ending March 31, 2022, and it has recognized revenue at the time the control of promised goods or services is transferred to the customer at the amount expected to be received upon exchange of said goods or services. The changes due to this application are as follows. 1. A portion of the sales promotion expenses, etc. that had previously been recorded as selling, general and administrative expenses is deducted from net sales. 2. For buy-sell transactions, raw materials, etc. supplied for value were previously derecognized. However, because the Company has an obligation to repurchase the supplied raw materials, etc. in the transactions, the supplied raw materials, etc. will not be derecognized. In addition, revenue related to the transfer of the supplied materials in the transactions is not recognized. 3. For some transactions, the total amount of consideration received from customers was recognized as revenue previously. However, for transactions in which the role of the Group is to serve as an agent or trustee in providing good or services to customers, revenue is recognized as the net amount calculated by deducting the amount paid to suppliers from the amount of consideration received from customers. The change in the accounting policy has been applied retrospectively, in principle. Therefore, the new accounting policy was reflected in the consolidated financial statements for the same period of the previous fiscal year and for the previous fiscal year; provided, however, that in the retrospective application, the methods set forth in paragraph 85 of the Accounting Standard for Revenue Recognition were applied. (1) Comparative information is not retrospectively restated for contracts where nearly all the revenue amounts have been recognized prior to the beginning of the previous fiscal year subject to the previous treatment (2) Comparative information is retrospectively restated for the amount of variable consideration included in contracts where nearly all the revenue amounts have been recognized prior to the beginning of the current fiscal year subject to the previous treatment, using the amount when the uncertainty associated with the variable consideration is subsequently resolved For the previous fiscal year, as a result of this change, and compared with the figures before the retrospective application, merchandise and finished goods increased by ¥99 million, raw materials and supplies increased by ¥2,480 million and other under current liabilities increased by ¥2,579 million. In addition, for the first nine months of the previous fiscal year, net sales decreased by ¥58,545 million, cost of sales decreased by ¥3,397 million and selling, general and administrative expenses decreased by ¥55,148 million, but operating profit, ordinary profit and profit before income taxes did not change. Due to the application of the Accounting Standard for Revenue Recognition, etc., “Notes and accounts receivable – trade” under current assets of the consolidated balance sheet as of the end of the previous fiscal year has been included in “Notes and accounts receivable – trade, and contract assets” under current assets from the quarterly consolidated balance sheet as of the end of the first quarter of the fiscal year ending March 31, 2022. In accordance with the transitional treatment provided for in paragraph 89-2 of the Accounting Standard for Revenue Recognition, figures for the previous fiscal year have not been restated in accordance with the new approach to presentation. Furthermore, the information on disaggregation of revenue from contracts with customers during the first nine months of the previous fiscal year has not been disclosed as allowed by the transitional treatment provided for in paragraph 28-15 of the Accounting Standard for “Quarterly Financial Reporting” (ASBJ Statement No. 12, March 31, 2020). (Application of Accounting Standard for Fair Value Measurement, etc.) Application of the new accounting policy set forth in Accounting Standard for Fair Value Measurement, etc. is in line with the transitional measures provided for in paragraph 19 of the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019), etc. and paragraph 44-2 of the “Accounting 8 Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). The Company has applied the said standards proactively as of the beginning of the first quarter of the fiscal year ending March 31, 2022. There are no impacts on the quarterly consolidated financial statements. 9 (Segment information) I. Nine months ended December 31, 2020 (from April 1, 2020 to December 31, 2020) 1. Information relating to net sales, profit and loss by each reportable segment (Millions of yen) Reportable segment Seafood Segment Overseas Instant Noodles Segment Domestic Instant Noodles Segment Frozen and Refrigerated Foods Segment Processed Foods Segment Cold-Storage Segment Total Other (Note 1) Total Adjust-ments (Note 2) Amount reported on quarterly consoli-dated financial statements (Note 3) 19,452 65,865 73,834 40,459 14,073 16,299 229,984 26,360 256,345 – 256,345 Net sales Net sales to outside customers Intersegment sales or transfers 705 – 42 7 – 800 1,555 18 1,574 (1,574) – Total 20,157 65,865 73,877 40,466 14,073 17,099 231,540 26,379 257,919 (1,574) 256,345 Segment profit (loss) Notes: 1. The Other Business Segment is one which is not among the reportable segments and refers to a business which is 29,665 28,909 11,049 11,690 5,301 1,107 (606) (445) 205 756 29,059 mainly involved in the packed lunch/deli food business. 2. The negative ¥606 million in segment profit or loss adjustments includes companywide expenses of negative ¥995 million which have not been allocated to each reportable segment, a negative ¥51 million adjustment to inventories, and other adjustments of ¥440 million. Companywide expenses refer mainly to general and administrative expenses which do not belong to any reportable segment. Other adjustments are mainly for the offset elimination of knowhow fees from overseas subsidiaries. 3. Segment profit or loss is adjusted at the operating profit level on the quarterly consolidated financial statements. 2. Information relating to impairment losses on non-current assets or goodwill for each reportable segment Not applicable 10 II. Nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021) 1. Information relating to net sales, profit and loss, and information on disaggregation of revenue by each reportable segment (Millions of yen) Reportable segment Seafood Segment Overseas Instant Noodles Segment Domestic Instant Noodles Segment Frozen and Refrigerated Foods Segment Processed Foods Segment Cold-Storage Segment Total Other (Note 1) Total Adjust-ments (Note 2) Net sales Japan 18,554 – 72,980 38,854 14,401 16,955 161,747 26,190 187,937 – 187,937 The Americas 25 79,587 79,612 – 79,612 79,612 Other regions 344 – 344 202 547 547 – – – – – – – – 18,924 79,587 72,980 38,854 14,401 16,955 241,705 26,392 268,097 – 268,097 Amount reported on quarterly consoli-dated financial statements (Note 3) – – 18,924 79,587 72,980 38,854 14,401 16,955 241,705 26,392 268,097 – 268,097 613 – 39 9 – 713 1,376 16 1,393 (1,393) – Total 19,538 79,587 73,020 38,863 14,401 17,669 243,081 26,409 269,491 (1,393) 268,097 Segment profit 294 7,823 9,380 5,057 86 1,960 24,603 951 25,555 (732) 24,822 Notes: 1. The Other Business Segment is one which is not among the reportable segments and refers to a business which is mainly involved in the packed lunch/deli food business. 2. The negative ¥732 million in segment profit adjustments includes companywide expenses of negative ¥954 million which have not been allocated to each reportable segment, a negative ¥65 million adjustment to inventories, and other adjustments of ¥286 million. Companywide expenses refer mainly to general and administrative expenses which do not belong to any reportable segment. Other adjustments are mainly for the offset elimination of knowhow fees from overseas subsidiaries. 3. Segment profit is adjusted at the operating profit level on the quarterly consolidated financial statements. 4. Net sales are revenue mainly recognized from contracts with customers, and the amount of revenue recognized from Net sales (Note 4) Net sales to outside customers Intersegment sales or transfers other sources is not significant. Not applicable 2. Information relating to impairment losses on non-current assets or goodwill for each reportable segment 3. Information relating to changes in reportable segments As described in “(Changes in accounting policies),” the Company has applied the Accounting Standard for Revenue Recognition, etc. from the beginning of the first quarter of the fiscal year ending March 31, 2022, and changed the accounting treatment for revenue recognition. Accordingly, the Company has changed the method of measuring profit or loss of reportable segments. Please note that the segment information for the first nine months of the previous fiscal year were prepared based on the new method of measuring segment profit or loss. 11