Kikkoman Group

Corporate Report
2019

Financial Section

Management’s Discussion and Analysis 01

Consolidated Balance Sheets 07
Consolidated Statements of Income 09
Consolidated Statements of Comprehensive Income 10
Consolidated Statements of Changes in Net Assets 11
Consolidated Statements of Cash Flows 14
Notes to Consolidated Financial Statements 15
Independent Auditor’s Report 33

Note: Fiscal years in this report are April to March.

Example: FY2019 = April 2018–March 2019
 Management’s Discussion and Analysis

OPERATING RESULTS

In FY2019, ended March 31, 2019, the Kikkoman Oceania and a strong performance by the Foods—
Group’s domestic sales rose year on year thanks Wholesale segment.
to strong sales of beverages and higher sales of As a result, on a consolidated basis, net sales
food products, despite declines in sales of soy increased 5.3% year on year to ¥453,565 million,
sauce and liquor and wine. Overseas sales also operating profit rose 5.2% to ¥38,417 million, and
increased year on year, supported by growth in soy profit attributable to owners of parent increased
sauce sales in North America, Europe, and Asia/ 9.0% to ¥25,992 million.

Net Sales Millions of yen

2019 2018 Change
Domestic Foods—Manufacturing and Sales ¥174,654 ¥172,437 ¥ 2,217 1.3%
Domestic Others 21,427 21,149 277 1.3%
Overseas Foods—Manufacturing and Sales 93,510 89,453 4,056 4.5%
Overseas Foods—Wholesale 192,109 174,457 17,651 10.1%
Adjustments (28,136) (26,895) (1,240) —
Consolidated ¥453,565 ¥430,602 ¥22,962 5.3%

Operating Profit Millions of yen

2019 2018 Change
Domestic Foods—Manufacturing and Sales ¥10,597 ¥10,385 ¥ 211 2.0%
Domestic Others 1,773 1,465 308 21.0%
Overseas Foods—Manufacturing and Sales 18,745 17,791 953 5.4%
Overseas Foods—Wholesale 8,597 8,166 431 5.3%
Adjustments (1,296) (1,307) 11 —
Consolidated ¥38,417 ¥36,502 ¥1,915 5.2%

Net Sales Operating Profit Profit Attributable to

Owners of Parent
(Millions of yen) (Millions of yen) (Millions of yen)

453,565 38,417 25,992

430,602 36,502 23,810 23,846
408,372 402,174
32,598 32,842
19,964

2016 2017 2018 2019 (FY) 2016 2017 2018 2019 (FY) 2016 2017 2018 2019 (FY)

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

01 Financial Section
SEGMENT INFORMATION

DOMESTIC
strong, and sales of newly launched Cho Shogayaki
Foods—Manufacturing and Sales no Tare and products for industrial-use and food
Sales in this segment rose 1.3% to ¥174,654 million service-use also increased. As a result, overall tare
and operating profit increased 2.0% to ¥10,597 sales rose from a year earlier.
million, with sales and profits both rising year on year. Sales of the Uchi no Gohan series (handy
Japanese-style seasoning mixes) declined from a
Soy Sauce Division year earlier. Sales of Del Monte seasonings rose
In soy sauce for the home-use sector, sales of the from a year ago due to strong sales of high value-
Itsudemo Shinsen series of fresh raw soy sauce added products such as the Lycopene-Rich series.
continued to rise steadily, reflecting growing Total sales in the Food Products Division rose from
recognition in the market of the product’s added the previous fiscal year.
value, such as the flavor of raw soy sauce and the
easy-to-use bottles that keep the contents fresh. Beverages Division
Thorough marketing efforts such as TV advertising In soy milk beverages, amid rising interest in healthy
contributed to sales growth. Meanwhile, sales of lifestyles, sales of foods for specified health uses
products in conventional plastic bottles such as (FOSHU products), flavored soy milk such as mint
Koikuchi Soy Sauce fell year on year. In the industrial- chocolate and plain soy milk increased. A growing
use and food service-use sectors, sales fell year on number of consumers are using soy milk as a
year. As a result, sales in the Soy Sauce Division cooking ingredient, as well as a beverage, supporting
declined compared with the previous fiscal year. higher sales of soy milk beverages year on year.
In Del Monte beverages, sales increased year on
Food Products Division year due to strong sales of unsalted tomato juice,
Among tsuyu (soy sauce soup base) products in the unsalted vegetable juice, and Lycopene-Rich tomato
home-use sector, the Gumen series, a straight type beverages. As a result, sales in the Beverages Division
that does not need to be diluted, sold well. Sales of increased compared with the previous fiscal year.
condensed tsuyu products rose year on year, with
sales of Koidashi Hon Tsuyu growing strongly. In tare Liquor and Wine Division
(dipping and marinade sauces), sales of the Sales of Hon Mirin declined year on year. In the
mainstay Wagaya wa Yakinikuyasan series were home-use sector, although Noko Jukusei Hon Mirin

Domestic Overseas
Foods—Manufacturing and Sales Foods—Manufacturing and Sales
This business segment manufactures and sells the This business segment manufactures and sells the
products listed below in the domestic market. products listed below in overseas markets.
Division Main Products Division Main Products Main Region
Soy Sauce Division • Soy sauce North America,
Soy sauce
• Tsuyu (soy sauce soup base) Soy Sauce Division • Europe,
• Teriyaki sauce
Food Products • Tare (dipping and marinade sauces) Asia/Oceania
Division • Handy seasoning mixes • Canned fruits Asia/Oceania
• Del Monte seasonings Del Monte Division • Canned corn (Excluding the
Soy milk beverages • Tomato ketchup Philippines)
Beverages Division •
• Del Monte beverages Other Foods
• Health foods North America
Liquor and Wine • Mirin (sweet sake for cooking) Division
Division • Wines
Foods—Wholesale
Others This business segment purchases and sells
This business segment covers the production and oriental food products in Japan and overseas.
sale of clinical diagnostic reagents, hygiene
inspection agents, processing enzymes and chemical
products such as hyaluronic acid, as well as real
estate rental, logistics and back-office support for
the Kikkoman Group, and other businesses.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 02
was launched and sales of high value-added increased from the previous fiscal year.
products such as Komekoji Kodawari-jikomi Hon Mirin In the European market, sales increased year on
(premium sweet sake for cooking) were strong, sales year, reflecting a strong performance in key markets
of Houjun Hon Mirin were weak. In the industrial-use such as the UK and France.
sector, products in large containers decreased. Sales In Asia/Oceania, sales rose in China. Sales in
of wines declined year on year as Kikkoman Food Thailand and the Philippines also increased, which
Products Co. ended selling imported wines. As a led to year-on-year sales growth overall. As a result,
result, sales in the Liquor and Wine Division declined sales in the overseas Soy Sauce Division increased
compared with the previous fiscal year. compared with the previous fiscal year.

Others Del Monte Division

Sales in this segment rose 1.3% to ¥21,427 million and The Del Monte Division manufactures and sells
operating profit increased 21.0% to ¥1,773 million, products such as canned fruits/corn items and
with sales and profits both increasing year on year. tomato ketchup in Asia/Oceania.
Sales of clinical diagnostic reagents, hygiene Sales in this division rose year on year in China,
inspection agents, and hyaluronic acid were strong. including Hong Kong. As a result, sales in the Del
Sales in the logistics business rose year on year, Monte Division increased compared with the
supporting growth in segment sales overall. previous fiscal year.

Other Foods Division

OVERSEAS
This division manufactures and sells health foods
Foods—Manufacturing and Sales mainly in North America. Despite firm sales through
Sales in this segment rose 4.5% to ¥93,510 million and medical clinics, sales declined overall due to weak
operating profit increased 5.4% to ¥18,745 million, sales through general stores.
with sales and profits both increasing year on year.
Foods—Wholesale
Soy Sauce Division Sales in this segment rose 10.1% to ¥192,109 million
In the North American market, the division worked and operating profit increased 5.3% to ¥8,597 million,
to expand its business by leveraging the power of with sales and profits both rising year on year.
the Kikkoman brand by continuing efforts to Sales in North America increased, supported by
enhance the lineup of mainstay soy sauce products efforts to build a stronger presence in the wider local
and soy sauce-based seasonings and other market, in addition to the Asian American market.
products for the home-use sector. In the industrial- Also, the Japanese food market continued to grow in
and food service-use sectors, the division worked to Europe and Asia/Oceania, contributing to steady
accurately address customer needs to expand its sales in each region. As a result, sales in this segment
business. As a result, sales in North America increased compared with the previous fiscal year.

Net Sales Composition (FY2019) Operating Profit Composition (FY2019)

(%) (%)

22
27
42 38
Total Total
¥453,565 ¥38,417
million  omestic Foods
D million 4  omestic Foods
D
—Manufacturing and Sales —Manufacturing and Sales
Domestic Others Domestic Others

2  verseas Foods
O  verseas Foods
O
—Manufacturing and Sales 47 —Manufacturing and Sales
18
 verseas Foods
O  verseas Foods
O
—Wholesale —Wholesale

* The figures are after elimination of inter-segment transactions.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

03 Financial Section
FINANCIAL POSITION

ASSETS and the equity ratio rose 1.2 percentage points to

Current assets as of March 31, 2019 increased 73.3%. Net assets per share increased ¥90.42 to
¥12,670 million from the end of the previous fiscal ¥1,382.60.
year, mainly reflecting increases in cash and Effective from the beginning of FY2019, “Partial
deposits, and merchandise and finished goods. Amendments to Accounting Standard for Tax
Property, plant and equipment, at cost and Effect Accounting” (ASBJ Statement No. 28,
investments and other assets increased ¥5,519 February 16, 2018), etc. are applied and
million from the end of the previous fiscal year, comparisons are made with figures as of March
mainly due to rises in construction in progress and 31, 2018 that were retroactively recalculated.
machinery, equipment and vehicles, despite a drop
in investment securities. As a result, total assets CASH FLOWS
were ¥362,119 million, an increase of ¥18,190 Cash and cash equivalents were ¥27,509 million
million from the end of the previous fiscal year. as of March 31, 2019, an increase of ¥4,723
million compared with the end of the previous
LIABILITIES fiscal year.
Current liabilities as of March 31, 2019 decreased Details of cash flow positions in each type of
¥1,241 million from the end of the previous fiscal activity and the major contributing factors during
year. This was mainly attributable to a decrease in the fiscal year under review are described below.
other current liabilities, despite an increase in other
accounts payable. Non-current liabilities increased Cash Flows from Operating Activities
¥2,270 million from the end of the previous fiscal Net cash provided by operating activities was
year, mainly attributable to increases in net defined ¥37,023 million, a decline of ¥622 million from the
benefit liability, deferred tax liabilities, and long- previous fiscal year, mainly due to an increase in
term debt. As a result, total liabilities were ¥91,667 cash used for income taxes paid.
million, an increase of ¥1,028 million from the end Cash Flows from Investing Activities
of the previous fiscal year. Net cash used in investing activities was ¥25,698
million, mainly reflecting cash used for the
NET ASSETS acquisition of property, plant and equipment.
Although both retained earnings and treasury
stock, at cost decreased mainly due to the Cash Flows from Financing Activities
retirement of treasury stock, total net assets as of Net cash used in financing activities was ¥7,041
March 31, 2019 increased mainly due to the million, mainly reflecting cash used for cash
booking of profit attributable to owners of parent. dividends paid.
As a result, net assets totaled ¥270,451 million

Total Assets Net Assets/Equity Ratio Cash and Cash Equivalents

(Millions of yen) (Millions of yen) (Millions of yen)

365,671 361,248 362,119 270,451 44,205

343,929
244,437 253,289
225,675
35,150

72.1% 73.3% 27,509

66.4% 22,785
61.2%

2016 2017 2018 2019 (FY) 2016 2017 2018 2019 (FY) 2016 2017 2018 2019 (FY)

Net assets   Equity ratio

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 04
RISK FACTORS

Listed below are the major risks faced by the required personnel, such events could reduce the
Kikkoman Group in its business activities that could Group’s manufacturing and sales capabilities, and
have a significant impact on the decisions of investors. could thus lower sales and earnings. In addition, cost
increases including expenses incurred to restore
CHANGES IN THE MARKET ENVIRONMENT facilities and the procurement cost of raw materials,
The Kikkoman Group is developing business in energy and other resources, could adversely affect
various countries and regions worldwide, including the Group’s business results and financial position.
Japan, North America, Europe and Asia, and aims for
sustained business development. A decline in EXCHANGE RATE FLUCTUATIONS
demand for the products and services that the Group Kikkoman converts the financial statements of its
provides, due to worsening economic conditions in overseas subsidiaries and other foreign domiciled
particular countries where the Kikkoman Group is entities into Japanese yen for preparing its
doing business, a change in consumers’ tastes or consolidated financial statements. The line items in
values held in regard to products, the emergence of the financial statements of these subsidiaries and
new business competitors, or other factors, could other entities are thus subject to foreign currency
result in lower sales and earnings and thus adversely exchange rate fluctuations when converted into
affect the Kikkoman Group’s business results and Japanese yen. In particular, where there is an
financial position. appreciation of the yen against other currencies, the
converted amount in yen will be lower.
CHANGES IN THE SOCIAL ENVIRONMENT Furthermore, exchange rate fluctuations could
Should any disruption in business activity arise in the affect the provision price of products and services
countries where the Group does business, due to denominated in foreign currencies and the
unexpected events such as war, terrorism or changes procurement cost of raw materials and products
in politics or society, it could adversely affect the purchased by the Kikkoman Group. The Kikkoman
Group’s business results and financial position. Group uses various techniques to mitigate and avoid
foreign currency exchange risk, but changes in
NATURAL DISASTERS, EPIDEMICS currency markets could adversely affect its business
AND ACCIDENTS results and financial position.
Should any emergency situation beyond expectation
arise, such as an earthquake or other natural disaster, FLUCTUATIONS IN RAW MATERIAL PRICES
a disaster caused by climate change, the wide-scale Some raw materials used by the Kikkoman Group
spread of an epidemic, or a major accident, resulting are subject to the effects of commodities market
in damage to manufacturing, logistics, or other conditions. The soybeans, soybean meal and wheat
facilities; difficulties in the procurement of raw used in the mainstay soy sauce products are subject
materials or energy; or complications in securing the to the effects of conditions in international

Cash Flows

(Millions of yen)

37,661 37,645 37,023

26,136
13,235

(7,041)
(15,855) (17,801) (14,640)
(25,698)
(30,359)

(43,968)

2016 2017 2018 2019 (FY)

Operating cash flow   Investing cash flow   Financing cash flow

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

05 Financial Section
commodities markets. Fluctuations in crude oil and trademarks, as necessary with respect to the
prices could also affect manufacturing and delivery technology it develops. These intellectual property
costs for PET bottles used to package Kikkoman’s rights have many advantages from an operational
products and other products. A rapid increase in perspective and are thus regarded as an important
market prices for these materials could lead to management resource. However, if another company
higher manufacturing and delivery expenses and develops similar rights or technology that is superior
thus adversely affect the Kikkoman Group’s business to the Kikkoman Group’s, or if the Kikkoman Group
results and financial position. becomes involved in a dispute with another company
over intellectual property rights, the Group could lose
ACCOUNTING FOR IMPAIRMENT OF ASSETS its competitive advantage, which could adversely
The Kikkoman Group owns a variety of assets, affect its business results and financial position.
including real estate used in the course of business
operations. Should recovery of the Group’s ALLIANCES AND CORPORATE ACQUISITIONS
investment in such assets become unlikely due to a The Kikkoman Group has formed alliances with other
decline in market value or a decrease in profitability, companies in specific fields of business. Going
the assets will become liable for asset impairment forward, to utilize resources as necessary from
accounting. This could adversely affect the Kikkoman outside the Group, the Group may form strategic
Group’s business results and financial position. alliances, including equity-based alliances and
corporate acquisitions. However, the inability of the
FLUCTUATIONS IN THE MARKET VALUE Kikkoman Group to carry out its business plan as
OF SECURITIES expected after forming an alliance or conducting an
The Kikkoman Group holds marketable securities acquisition could adversely affect the Group’s
with fair market values. Should there be a significant business results and financial position.
decline in the market value of these securities, this
could adversely affect the Kikkoman Group’s LAWS AND REGULATIONS
business results and financial position. In Japan, the Kikkoman Group is subject to laws and
regulations such as the Food Sanitation Law and the
WEATHER Product Liability Act. In addition, the Group is subject
The Kikkoman Group’s business portfolio includes to the laws and regulations of each country in which it
products that are vulnerable to consumption develops business. Changes to these and other laws
patterns caused by the effects of the weather. In and regulations in the future could restrict the
particular, a cool summer or warm winter could Kikkoman Group’s activities, and thus adversely affect
result in lower sales of these products, and thus its business results and financial position.
adversely affect the Kikkoman Group’s business
results and financial position. INFORMATION AND IT SYSTEM MANAGEMENT
The Kikkoman Group operates IT systems related to
ISSUES RELATED TO FOOD SAFETY operations such as product development,
The Kikkoman Group works to strengthen its quality manufacturing, distribution and sales, and holds
assurance and quality control systems based on the important information related to Group management
fundamental mission of providing high-quality and many corporations and individuals. The Group
products in a safe and stable manner. Nevertheless, takes every possible step to ensure the maintenance
in the event that an accident occurs in connection and security of these systems in order to mitigate IT
with one of its products, including as the result of a system problems and other such events, while at the
chance occurrence, or in the event that a situation same time operating a strict information management
beyond the scope of the Group’s initiatives arises, system. However, the Kikkoman Group’s business
this could adversely affect the Group’s business results and financial position could be adversely
results and financial position. affected by system failures or the leak or falsification
of data due to events such as power failures, natural
INTELLECTUAL PROPERTY disasters, software and equipment failures, computer
The Kikkoman Group is acquiring industrial property viruses, and unauthorized system access that have an
rights, including patent rights, utility model rights, impact which is greater than anticipated by the Group.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 06
 Consolidated Balance Sheets
KIKKOMAN CORPORATION and Consolidated Subsidiaries
March 31, 2019 and 2018

Thousands of
U.S. dollars
Millions of yen (Note 3)
2019 2018 2019
Assets
Current assets:
Cash and deposits (Notes 4 and 17) ¥ 30,162 ¥ 22,196 $ 271,754
Trade notes and accounts receivable (Notes 5, 8 and 17) 60,719 58,452 547,067
Allowance for doubtful receivables (717) (499) (6,460)
60,001 57,953 540,598
Short-term investment securities (Notes 4 and 6) — 2,892 —
Merchandise and finished goods 42,513 37,760 383,034
Work in process 10,997 10,894 99,080
Raw materials and supplies 5,330 4,991 48,022
Other 7,512 7,159 67,681
Total current assets 156,518 143,847 1,410,199

Property, plant and equipment, at cost (Note 19):

Land 20,936 20,779 188,629
Buildings and structures (Note 9) 107,019 103,007 964,222
Machinery, equipment and vehicles (Note 9) 207,845 197,744 1,872,646
Leased assets 357 325 3,216
Other 22,420 21,234 202,000
Construction in progress 14,080 7,264 126,858
372,660 350,354 3,357,599
Accumulated depreciation (249,270) (240,232) (2,245,878)
Property, plant and equipment, net 123,390 110,121 1,111,721

Investments and other assets:

Investment securities (Notes 6 and 17) 53,835 59,112 485,043
Investments in and advances to unconsolidated subsidiaries
and affiliates 6,840 6,798 61,627
Goodwill (Note 9) 4,969 5,081 44,769
Other intangible assets 5,339 5,440 48,103
Deferred tax assets (Note 11) 3,053 2,863 27,506
Net defined benefit asset (Note 10) 5,936 7,371 53,482
Other 2,235 3,289 20,136
Total investments and other assets 82,211 89,959 740,706
Total assets ¥ 362,119 ¥ 343,929 $ 3,262,627

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

07 Financial Section
 Thousands of
U.S. dollars
Millions of yen (Note 3)
2019 2018 2019
Liabilities
Current liabilities:
Short-term bank loans (Notes 8 and 17) ¥  3,487 ¥  3,392 $   31,417
Current portion of long-term debt (Notes 7 and 17) — 300 —
Lease obligations (Notes 7 and 14) 50 33 450
Trade notes and accounts payable (Note 17) 22,383 21,535 201,666
Other accounts payable (Notes 17 and 21) 18,872 17,737 170,033
Accrued income taxes 3,230 3,433 29,101
Provision for employees’ bonuses 2,592 2,497 23,353
Provision for directors’ bonuses 125 115 1,126
Other 5,497 8,436 49,526
Total current liabilities 56,240 57,481 506,712

Non-current liabilities:
Long-term debt (Notes 7 and 17) 13,602 13,000 122,551
Lease obligations (Notes 7 and 14) 90 40 810
Net defined benefit liability (Note 10) 5,511 4,783 49,653
Accrued directors’ severance benefits 711 712 6,405
Provision for environmental remediation 31 124 279
Deferred tax liabilities (Note 11) 7,934 7,309 71,483
Other 7,546 7,187 67,988
Total non-current liabilities 35,427 33,157 319,190
Total liabilities 91,667 90,639 825,903

Contingent Liabilities (Note 15)

Net assets
Shareholders’ equity:
Common stock, without par value:
Authorized: 600,000,000 shares at March 31, 2019 and 2018
Issued: 193,883,202 shares at March 31, 2019 and 2018 11,599 11,599 104,504
Capital surplus (Note 12) 13,695 13,915 123,389
Retained earnings (Note 12) 225,835 238,660 2,034,732
Treasury stock, at cost:
1,905,508 shares at March 31, 2019 and
18,403,085 shares at March 31, 2018 (3,631) (35,616) (32,714)
Total shareholders’ equity 247,498 228,558 2,229,912

Accumulated other comprehensive income (loss):

Unrealized holding gain (loss) on securities, net of taxes 17,521 20,956 157,861
Deferred hedge gain (loss), net of taxes (Note 18) (4) (38) (36)
Foreign currency translation adjustments 1,081 (2,050) 9,739
Remeasurements of defined benefit plans, net of taxes (Note 10) (667) 647 (6,009)
Total accumulated other comprehensive income (loss) 17,930 19,514 161,546
Non-controlling interests 5,022 5,216 45,247
Total net assets 270,451 253,289 2,436,715
Total liabilities and net assets ¥362,119 ¥343,929 $3,262,627

See accompanying notes to consolidated financial statements.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 08
 Consolidated Statements of Income
KIKKOMAN CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

Thousands of
U.S. dollars
Millions of yen (Note 3)
2019 2018 2019
Net sales ¥453,565 ¥430,602 $4,086,539
Cost of sales (Notes 10 and 13) 277,805 260,426 2,502,973
Gross profit 175,759 170,176 1,583,557

Selling, general and administrative expenses (Notes 10 and 13) 137,341 133,673 1,237,417
Operating income 38,417 36,502 346,130

Other income (expenses):

Interest and dividend income 1,364 1,245 12,289
Equity in earnings of affiliates 126 172 1,135
Foreign exchange gains 120 2,701 1,081
Rental income (Note 19) 691 701 6,225
Gain on valuation of derivatives (Note 18) 3,650 5 32,885
Gain on investments in partnership 886 639 7,982
Interest expenses (131) (304) (1,180)
Foreign exchange losses (2,315) (203) (20,857)
Loss on valuation of derivatives (Note 18) (34) (2,169) (306)
Provision of allowance for doubtful accounts (863) (292) (7,775)
Gain on sales of property, plant and equipment (Note 19) 688 — 6,198
Gain on sales of investment securities (Note 6) 1,484 3,981 13,370
Compensation for transfer 540 — 4,865
Loss on impairment of fixed assets (2,378) (141) (21,425)
Loss on disposal of property, plant and equipment (235) (305) (2,117)
Loss on revaluation of investment securities (Note 6) — (1,076) —
Loss on revaluation of golf club memberships (7) (2) (63)
Loss on valuation of shares of subsidiaries and affiliates (210) (381) (1,892)
Loss on redemption of bonds — (1,668) —
Environmental expenses (213) — (1,919)
100th anniversary project cost — (392) —
Other, net (3,988) (3,014) (35,931)
Income before income taxes 37,595 35,999 338,724

Income taxes (Note 11):

Current 9,008 10,390 81,160
Deferred 2,182 1,450 19,659
11,191 11,841 100,828
Net income 26,403 24,157 237,886

Net income attributable to:

Non-controlling interests (411) (311) (3,703)
Owners of parent (Note 16) ¥ 25,992 ¥ 23,846 $  234,183

See accompanying notes to consolidated financial statements.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

09 Financial Section
 Consolidated Statements of Comprehensive Income
KIKKOMAN CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

Thousands of
U.S. dollars
Millions of yen (Note 3)
2019 2018 2019
Net income ¥26,403 ¥24,157 $237,886
Other comprehensive income (loss):
Unrealized holding gain (loss) on securities, net of taxes (3,266) 653 (29,426)
Deferred hedge gain (loss), net of taxes 33 (35) 297
Foreign currency translation adjustments 3,578 (4,530) 32,237
Remeasurements of defined benefit plans, net of taxes (1,294) 1,128 (11,658)
Share of other comprehensive income of affiliates accounted
for using the equity method (216) (86) (1,946)
Total other comprehensive income (loss) ¥ (1,165) ¥ (2,870) $ (10,496)
Comprehensive income ¥25,238 ¥21,287 $227,389

Total comprehensive income attributable to:

Owners of parent ¥25,081 ¥20,833 $225,975
Non-controlling interests 156 454 1,405
See accompanying notes to consolidated financial statements.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 10
 Consolidated Statements of Changes in Net Assets
KIKKOMAN CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

Year ended March 31, 2019 Millions of yen

Shareholders’ equity
Common stock Total
(193,883,202 Capital surplus Retained earnings shareholders’
shares) (Note 12) (Note 12) Treasury stock equity
Balance at beginning of the period ¥11,599 ¥13,915 ¥238,660 ¥(35,616) ¥228,558
Changes of items during the period
Cash dividends (7,105) (7,105)
Net income attributable to
owners of parent 25,992 25,992
Change in accounting period of
consolidated subsidiaries 140 140
Change in scope of consolidation (72) (72)
Purchase of treasury stock (15) (15)
Retirement of treasury stock (220) (31,779) 31,999 —
Disposal of treasury stock 0 0 1
Net changes of items other
than shareholders’ equity
Total changes of items during
the period — (219) (12,825) 31,985 18,939
Balance at end of the period ¥11,599 ¥13,695 ¥225,835 ¥ (3,631) ¥247,498

Millions of yen
Accumulated other comprehensive income (loss)
Unrealized Deferred Remeasurements Total
holding gain hedge gain Foreign of defined accumulated
(loss) on (loss), net currency benefit plans, other Non-
securities, of taxes translation net of taxes comprehensive controlling Total
net of taxes (Note 18) adjustments (Note 10) income (loss) interests net assets
Balance at beginning of the period ¥20,956 ¥(38) ¥(2,050) ¥ 647 ¥19,514 ¥5,216 ¥253,289
Changes of items during the period
Cash dividends (7,105)
Net income attributable to
owners of parent 25,992
Change in accounting period of
consolidated subsidiaries 140
Change in scope of consolidation (72)
Purchase of treasury stock (15)
Retirement of treasury stock —
Disposal of treasury stock 1
Net changes of items other
than shareholders’ equity (3,434) 33 3,131 (1,315) (1,584) (194) (1,778)
Total changes of items during
the period (3,434) 33 3,131 (1,315) (1,584) (194) 17,161
Balance at end of the period ¥17,521 ¥ (4) ¥ 1,081 ¥ (667) ¥17,930 ¥5,022 ¥270,451

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

11 Financial Section
Year ended March 31, 2019 Thousands of U.S. dollars (Note 3)
Shareholders’ equity
Common stock Total
(193,883,202 Capital surplus Retained earnings shareholders’
shares) (Note 12) (Note 12) Treasury stock equity
Balance at beginning of the period $104,504 $125,371 $2,150,283 $(320,893) $2,059,266
Changes of items during the period
Cash dividends (64,014) (64,014)
Net income attributable to
owners of parent 234,183 234,183
Change in accounting period of
consolidated subsidiaries 1,261 1,261
Change in scope of consolidation (648) (648)
Purchase of treasury stock (135) (135)
Retirement of treasury stock (1,982) (286,323) 288,305 —
Disposal of treasury stock 0 0 9
Net changes of items other
than shareholders’ equity
Total changes of items during
the period — (1,973) (115,550) 288,179 170,636
Balance at end of the period $104,504 $123,389 $2,034,732 $ (32,714) $2,229,912

Thousands of U.S. dollars (Note 3)

Accumulated other comprehensive income (loss)
Unrealized Deferred Remeasurements Total
holding gain hedge gain Foreign of defined accumulated
(loss) on (loss), net currency benefit plans, other Non-
securities, of taxes translation net of taxes comprehensive controlling Total
net of taxes (Note 18) adjustments (Note 10) income (loss) interests net assets
Balance at beginning of the period $188,809 $(342) $(18,470) $ 5,829 $175,817 $46,995 $2,282,088
Changes of items during the period
Cash dividends (64,014)
Net income attributable to
owners of parent 234,183
Change in accounting period of
consolidated subsidiaries 1,261
Change in scope of consolidation (648)
Purchase of treasury stock (135)
Retirement of treasury stock —
Disposal of treasury stock 9
Net changes of items other
than shareholders’ equity (30,939) 297 28,209 (11,847) (14,271) (1,747) (16,019)
Total changes of items during
the period (30,939) 297 28,209 (11,847) (14,271) (1,747) 154,617
Balance at end of the period $157,861 $ (36) $ 9,739 $ (6,009) $161,546 $45,247 $2,436,715

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 12
Year ended March 31, 2018 Millions of yen
Shareholders’ equity
Common stock Total
(210,383,202 Capital surplus Retained earnings shareholders’
shares) (Note 12) (Note 12) Treasury stock equity
Balance at beginning of the period ¥11,599 ¥13,914 ¥222,614 ¥(30,600) ¥217,528
Changes of items during the period
Cash dividends (7,727) (7,727)
Net income attributable to
owners of parent 23,846 23,846
Change in scope of consolidation (72) (72)
Purchase of treasury stock (5,016) (5,016)
Disposal of treasury stock 0 0 1
Net changes of items other
than shareholders’ equity
Total changes of items during
the period — 0 16,045 (5,016) 11,030
Balance at end of the period ¥11,599 ¥13,915 ¥238,660 ¥(35,616) ¥228,558

Millions of yen
Accumulated other comprehensive income (loss)
Unrealized Deferred Remeasurements Total
holding gain hedge gain Foreign of defined accumulated
(loss) on (loss), net currency benefit plans, other Non-
securities, of taxes translation net of taxes comprehensive controlling Total
net of taxes (Note 18) adjustments (Note 10) income (loss) interests net assets
Balance at beginning of the period ¥20,306 ¥ (3) ¥ 2,652 ¥ (473) ¥22,481 ¥4,427 ¥244,437
Changes of items during the period
Cash dividends (7,727)
Net income attributable to
owners of parent 23,846
Change in scope of consolidation (72)
Purchase of treasury stock (5,016)
Disposal of treasury stock 1
Net changes of items other
than shareholders’ equity 649 (35) (4,703) 1,121 (2,967) 789 (2,177)
Total changes of items during
the period 649 (35) (4,703) 1,121 (2,967) 789 8,852
Balance at end of the period ¥20,956 ¥(38) ¥(2,050) ¥  647 ¥19,514 ¥5,216 ¥253,289

See accompanying notes to consolidated financial statements.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

13 Financial Section
 Consolidated Statements of Cash Flows
KIKKOMAN CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

Thousands of
U.S. dollars
Millions of yen (Note 3)
2019 2018 2019
Cash flows from operating activities
Income before income taxes ¥ 37,595 ¥ 35,999 $ 338,724
Depreciation and amortization 13,258 13,160 119,452
Loss on impairment of fixed assets 2,378 141 21,425
Increase (decrease) in accrued directors’ severance benefits (0) (74) (0)
Increase (decrease) in net defined benefit liability 410 1,157 3,694
Interest and dividend income (1,364) (1,245) (12,289)
Interest expenses 131 304 1,180
Equity in earnings of affiliates (126) (172) (1,135)
Gain on sales of property, plant and equipment (700) (231) (6,306)
(Gain) Loss on sales of investment securities (Note 6) (1,490) (3,981) (13,424)
Loss on disposal of property, plant and equipment 1,028 813 9,262
Loss on revaluation of investment securities — 1,077 —
(Increase) decrease in trade notes and accounts receivable (1,462) (4,010) (13,172)
(Increase) decrease in inventories (4,649) (4,479) (41,886)
Increase (decrease) in trade notes and accounts payable 643 596 5,793
Other (727) 1,722 (6,550)
Subtotal 44,923 40,779 404,748
Interest and dividends received 1,414 1,234 12,739
Interest paid (139) (431) (1,252)
Income taxes paid (9,175) (3,936) (82,665)
Net cash provided by operating activities 37,023 37,645 333,570

Cash flows from investing activities

Acquisition of property, plant and equipment (26,585) (16,390) (239,526)
Proceeds from sales of property, plant and equipment 830 1,576 7,478
Acquisition of intangible assets (967) (768) (8,712)
Acquisition of investment securities (2,612) (3,542) (23,533)
Proceeds from sales of investment securities 3,164 4,609 28,507
Addition to loans receivable (1,501) (622) (13,523)
Collection of loans receivable 554 413 4,991
Other 1,420 84 12,793
Net cash used in investing activities (25,698) (14,640) (231,534)

Cash flows from financing activities

Increase (decrease) in short-term bank loans 79 536 711
Proceeds from long-term debt 602 — 5,423
Repayment of long-term debt (300) — (2,702)
Redemption of bonds — (31,668) —
Acquisition of treasury stock (19) (5,035) (171)
Cash dividends paid (7,105) (7,727) (64,014)
Cash dividends paid to non-controlling shareholders (248) (24) (2,234)
Other (50) (48) (450)
Net cash used in financing activities (7,041) (43,968) (63,438)
Effect of exchange rate changes on cash and cash equivalents 246 (703) 2,216
Net increase (decrease) in cash and cash equivalents 4,529 (21,666) 40,805
Cash and cash equivalents at beginning of the year 22,785 44,205 205,288
Decrease in cash and cash equivalents due to change in
accounting period of consolidated subsidiaries (6) — (54)
Increase in cash and cash equivalents from newly
consolidated subsidiary 200 335 1,801
Decrease in cash and cash equivalents resulting from exclusion of
subsidiaries from consolidation — (88) —
Cash and cash equivalents at end of the year (Note 4) ¥ 27,509 ¥ 22,785 $ 247,851
See accompanying notes to consolidated financial statements.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 14
 Notes to Consolidated Financial Statements
KIKKOMAN CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

1 Basis of Preparation

KIKKOMAN CORPORATION (the “Company”) and its domestic subsidiaries maintain their accounting records and prepare their financial
statements in accordance with accounting principles generally accepted in Japan, and its foreign subsidiaries maintain their books of
account in conformity with those of their countries of domicile. The accompanying consolidated financial statements have been
compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange
Act of Japan and have been prepared in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards (“IFRS”).
Practical Issues Task Force No. 18, “Revised Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries,
etc., for Consolidated Financial Statements,” issued by the Accounting Standards Board of Japan (“ASBJ”) as revised September 14, 2018
(“PITF No. 18”), requires that accounting policies applied by a parent company and its subsidiaries to similar transactions and events
under similar circumstances should, in principle, be unified for preparing the consolidated financial statements. PITF No. 18, however,
as a tentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial
statements prepared in accordance with either IFRS or U.S. generally accepted accounting principles. In this case, adjustments for the
following four items are required in the consolidation process so that their impacts on net income attributable to owners of parent are
accounted for in accordance with Japanese GAAP.

(a) Goodwill not subject to amortization

(b) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss
(c) Capitalized expenditures for research and development activities
(d) Fair value measurement of investment properties, and revaluation of property, plant and equipment and intangible assets
(e) Changes in fair value of an equity instrument in other comprehensive income

As permitted by the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted.
Consequently, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily
agree with the sum of the individual amounts.
The consolidated financial statements for the previous year have been reclassified to conform to the current year’s presentation.

2 Summary of Significant Accounting Policies

(a) Basis of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include the accounts of the Company and all significant companies controlled
directly or indirectly by the Company. In addition, companies over which the Company exercises significant influence in terms of their
operating and financial policies have been included in the consolidated financial statements on an equity basis.
All significant inter-company balances and transactions have been eliminated in consolidation.
Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are stated at cost.
Differences between the acquisition costs and the underlying net equities in investments in consolidated subsidiaries are recorded as
goodwill in the consolidated balance sheets and amortized using the straight-line method over their estimated useful lives or a period of
five years. Any immaterial amounts are charged or credited to income in the year of acquisition.

(b) Foreign currency translation

Income and expenses in foreign currencies are translated at the rates prevailing at the time of the transaction. Except as noted in (n)
Derivatives below, all monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the year-end
rates. Resulting exchange gains or losses are charged or credited to income for the year.
Revenue and expense accounts of foreign consolidated subsidiaries are translated at the average exchange rates in effect during the
year. Except for shareholders’ equity, the balance sheet accounts of foreign consolidated subsidiaries are translated into yen at the rates
of exchange in effect at the balance sheet date. The components of shareholders’ equity are translated at their historical exchange rates.
Differences arising on translation are presented as foreign currency translation adjustments or non-controlling interests as a separate
component of net assets.

(c) Cash equivalents

For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.

(d) Securities
Marketable securities classified as other securities are carried at fair value with any unrealized gains and losses reported as a separate
component of accumulated other comprehensive income, net of taxes. Non-marketable securities classified as other securities are
carried at cost. Cost of securities sold is mainly determined by the moving average method.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

15 Financial Section
(e) Inventories
Inventories are mainly stated at cost determined by the periodic average method.
In cases where the profitability has declined, the book value is written down accordingly.

(f) Depreciation and amortization

Property, plant and equipment (excluding leased assets) are depreciated mainly by the straight-line method over their estimated useful lives.
Intangible assets (excluding leased assets) are amortized by the straight-line method over their estimated useful lives. Software for
internal use is amortized over its estimated useful life. The range of useful lives is five to 10 years.
The straight-line method is adopted for depreciation of leased assets, with the lease period set as the useful life and the residual
value as zero.

(g) Allowance for doubtful receivables

The allowance for doubtful receivables is calculated based on the prior loss experience and the estimated amount of probable individual
bad debts at the balance sheet date.

(h) Provision for employees’ and directors’ bonuses

Provision for employees’ and directors’ bonuses is provided based on the estimated amounts to be paid.

(i) Employee retirement benefits

(1) Attribution of expected retirement benefits to periods of service
In the calculation of retirement benefit obligations, the benefit formula basis is used for attributing expected retirement benefits to
periods of service.

(2) Amortization of actuarial gains/losses and prior service costs

Prior service cost is amortized by the straight-line method over a period of 10 years, which is shorter than the average remaining years of
service of the active participants in the plans.
The adjustment made during the year arising from revisions to actuarial assumptions (the “actuarial gain or loss”) is amortized by the
straight-line method beginning the following year over a period of 10 years, which is shorter than the average remaining years of service
of the active participants in the plans.

(j) Accrued directors’ severance benefits

Certain directors, corporate auditors and corporate officers of the Company and certain domestic consolidated subsidiaries are entitled
to lump-sum payments under their respective unfunded retirement allowance plans. Provision for retirement allowances for these officers
has been made at the estimated amount that would be paid if all directors, corporate auditors and corporate officers resigned as of the
balance sheet date.

(k) Provision for environmental remediation

In preparation for payments relating to the disposal of polychlorinated biphenyl (PCB) and other wastes under the “Law Concerning
Special Measures Against PCB Waste,” a provision for environmental remediation has been made for the estimated costs to be incurred.

(l) Income taxes

Deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of the
assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are
expected to reverse.
The Company and certain domestic consolidated subsidiaries apply the Japanese consolidated taxation system.

(m) Research and development costs

Research and development costs are charged to income as incurred.

(n) Derivatives
The Company and its consolidated subsidiaries utilize derivative financial instruments for the purpose of hedging their exposure to
adverse fluctuations in foreign currency exchange rates but not for speculative purposes. Derivatives are stated at fair value with any
changes in unrealized gain or loss charged or credited to income, except for those that meet the criteria for deferral hedge accounting
under which unrealized gain or loss is deferred as a separate component of accumulated other comprehensive income, net of taxes.
Payables hedged by qualified forward foreign exchange contracts are translated at the corresponding contract rates.

(o) Appropriation of retained earnings

Under the Companies Act of Japan, the appropriation of retained earnings with respect to a given financial period is made by resolution
of the shareholders at a general meeting held subsequent to the close of such financial period. The financial statements for that period
do not, therefore, reflect such appropriations.

(p) Changes in presentation

Changes in the consolidated statements of income
The following changes in presentation have been made due to change in materiality of the account:
1) “ Gain on valuation of derivatives,” “Gain on investments in partnership,” “Foreign exchange losses” and “Provision of allowance for
doubtful accounts” included in “Other, net” in “Other income (expenses)” for the year ended March 31, 2018 are presented as a
separate account for the year ended March 31, 2019 due to an increase in materiality.
2) “ Sales discounts” in “Other income (expenses)” was presented as a separate account for the year ended March 31, 2018 but is
included in “Other, net” in “Other income (expenses)” for the year ended March 31, 2019 due to a decrease in materiality.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 16
 The consolidated financial statements for the year ended March 31, 2018 have been reclassified to conform to the presentation used
for the year ended March 31, 2019.
As a result, “Gain on valuation of derivatives” of ¥5 million, “Gain on investments in partnership” of ¥639 million, “Foreign exchange
losses” of ¥203 million and “Provision of allowance for doubtful accounts” of ¥292 million presented in “Other, net” for the year ended
March 31, 2018 are presented as a separate account in “Other income (expenses)” for the year ended March 31, 2019. Also “Sales
discounts” of ¥747 million for the year ended March 31, 2018 is reclassified to “Other, net” in “Other income (expenses)” for the year
ended March 31, 2019.

Changes due to adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting”
Upon application of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018
(hereinafter, “Statement No. 28”)) from the beginning of the current fiscal year, the Company and its domestic subsidiaries changed the
presentation and related notes of deferred tax assets and deferred tax liabilities, such that deferred tax assets and deferred tax liabilities
are classified as part of “investments and other assets” and “non-current liabilities,” respectively.
As a result, “Deferred tax assets” classified as “current assets” decreased by ¥4,492 million, “Deferred tax assets” classified as “investments
and other assets” increased by ¥1,500 million, “Other” classified as “current liabilities” decreased by ¥50 million and “Deferred tax
liabilities” classified as “non-current liabilities” decreased by ¥2,941 million in the balance sheet as of the end of the previous fiscal year.
Since deferred tax liabilities and deferred tax assets of the same entity are offset, total assets decreased by ¥2,992 million due to
these changes.
The notes related to tax effect accounting additionally included those described in notes 8 (excluding total amount of valuation
reserves) and 9 of “Accounting Standard for Tax Effect Accounting,” which are required in paragraphs 3 to 5 of Statement No. 28. However,
this additional information corresponding to the previous fiscal year is not disclosed, in accordance with the transitional treatments
prescribed in paragraph 7 of Statement No. 28.

(q) Standards and guidance not yet adopted

The following standard and guidance were issued but not yet adopted.
—“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 30, 2018)
—“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 30, 2018)

(1) Overview
The International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) have jointly developed
comprehensive accounting standards related to revenue recognition, which were issued in May 2014 as “Revenue from Contracts with
Customers” (by the IASB as IFRS 15, and by the FASB as Topic 606). Given the state of application of IFRS 15 from periods beginning on or
after January 1, 2018, and of Topic 606 from periods beginning on or after December 15, 2017, the ASBJ has developed a comprehensive
accounting standard on revenue recognition and issued corresponding implementation guidance.
When developing its Accounting Standard for Revenue Recognition, the ASBJ’s basic policy was to use the basic principles of IFRS 15
as a starting point from the perspective of improving the international comparability of financial statements. In addition, taking into
account actual practice in Japan to date, the standard includes additional alternative treatments to the extent that international
comparability would not be lost.

(2) Effective date

Effective from the year ending March 31, 2022.

(3) Effects of the application of the standard and guidance

The Company and its consolidated subsidiaries are currently in the process of determining the effects of these new standards on the
consolidated financial statements.

3 U.S. Dollar Amounts

The translation of yen amounts into U.S. dollar amounts is included solely for convenience, as a matter of arithmetic computation, at the
rate of ¥110.99 = U.S.$1.00, the approximate rate of exchange in effect on March 31, 2019. The translation should not be construed as a
representation that yen amounts have been, could have been or could in the future be converted into U.S. dollars at the above or any
other rate.

4 Cash and Cash Equivalents

The components of cash and cash equivalents in the consolidated statements of cash flows as of March 31, 2019 and 2018 were as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Cash and deposits ¥30,162 ¥22,196 $271,754
Short-term investment securities — 2,892 —
Time deposits with maturities of more than three months (2,653) (798) (23,903)
Short-term investments with period from the acquisition date to
the redemption date of more than three months — (1,504) —
Cash and cash equivalents ¥27,509 ¥22,785 $247,851

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

17 Financial Section
 5 Notes Maturing at the End of the Year

Notes maturing at the end of the year are settled as of the clearing day. When days at the end of the year when notes are due to be
cleared are holidays of financial institutions, notes maturing at the end of the year are included in the balance at the end of the year
as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Trade notes receivable ¥37 ¥5 $333
Trade notes payable 5 — 45

6 Fair Value of Securities

As of March 31, 2019 and 2018, the Company and its consolidated subsidiaries did not possess any securities classified as trading
securities and held-to-maturity securities. Securities classified as other securities are included in “Short-term investment securities” and
“Investment securities” in the accompanying consolidated balance sheets.
The components of unrealized gain or loss on marketable securities classified as other securities as of March 31, 2019 and 2018 are
summarized as follows:

March 31, 2019 Millions of yen Thousands of U.S. dollars

Acquisition Carrying Acquisition Carrying
costs value Difference costs value Difference
Unrealized gain:
Stocks ¥16,501 ¥42,382 ¥25,881 $148,671 $381,854 $233,183
Unrealized loss:
Stocks 5,264 5,033 (230) 47,427 45,346 (2,072)
Total ¥21,766 ¥47,416 ¥25,650 $196,107 $427,209 $231,101

March 31, 2018 Millions of yen

Acquisition Carrying
costs value Difference
Unrealized gain:
Stocks ¥19,511 ¥50,131 ¥30,619
Unrealized loss:
Stocks 2,891 2,638 (252)
Other 2,892 2,892 —
5,783 5,530 (252)
Total ¥25,295 ¥55,661 ¥30,366

Proceeds from sales of securities classified as other securities amounted to ¥3,149 million ($28,371 thousand) and ¥4,577 million
with an aggregate gain on sales of ¥1,495 million ($13,469 thousand) and ¥3,981 million for the years ended March 31, 2019 and
2018, respectively.

7 Long-Term Debt and Credit Facilities

Long-term debt and lease obligations as of March 31, 2019 and 2018 consisted of the following:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Loans from banks ¥13,602 ¥13,300 $122,551
Lease obligations 140 74 1,261
13,743 13,374 123,821
Less: Current portion 50 333 450
¥13,693 ¥13,040 $123,371

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 18
The annual maturities of long-term debt and lease obligations subsequent to March 31, 2019 are summarized as follows:

Thousands of
Years ending March 31, Millions of yen U.S. dollars
2020 ¥    50 $    450
2021 33 297
2022 232 2,090
2023 419 3,775
2024 and thereafter 13,007 117,190
¥13,743 $123,821

The Company and its consolidated subsidiaries have lines of credit from banks that provided for up to ¥65,693 million ($591,882
thousand) and ¥65,434 million in borrowings as of March 31, 2019 and 2018, respectively. There were ¥2,784 million ($25,083 thousand)
and ¥2,728 million of short-term bank loans outstanding under these credit facilities as of March 31, 2019 and 2018, respectively.

8 Pledged Assets

The assets pledged as collateral for short-term bank loans as of March 31, 2019 and 2018 were as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Trade notes and accounts receivable ¥554 ¥531 $4,991

The short-term bank loans corresponding to the above assets as of March 31, 2019 and 2018 were as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Short-term bank loans ¥554 ¥531 $4,991

9 Impairment Loss

The Company classifies its operating assets mainly by management accounting unit and classifies assets based on the minimum unit that
generates cash flows independently from the cash flows of other assets and groups of assets. Idle assets are considered individually. The
Company writes down the book value of impaired assets and groups of assets to the recoverable amount and recognizes an impairment
loss as an extraordinary loss in the consolidated statement of income.
Impairment loss was recognized for the assets and groups of assets below.

Thousands of
Year ended March 31, 2019 Millions of yen U.S. dollars
Location Application Type Amount Amount
Yamanashi Prefecture and Nagano Prefecture Business assets Buildings, machinery and equipment ¥2,378 $21,425
Total ¥2,378 $21,425

The Company wrote down the book value of the business assets in Yamanashi Prefecture and Nagano Prefecture to their recoverable
value, which was measured by the net realizable value based on the appraisal value determined by the real estate appraiser, since the
recoverable value is less than the book value due to a deterioration in the business environment of material price increases and poor sales.

Year ended March 31, 2018 Millions of yen

Location Application Type Amount
Chiba Prefecture Business assets Buildings, machinery and equipment ¥ 50
United States — Goodwill 56
United States — Goodwill 33
Total ¥141

The business assets in Chiba Prefecture are related to the Domestic Others segment. The Company wrote down the book value of the
business assets to their recoverable value, which was assessed based on the estimated value in use according to a memorandum value
since future cash flows were expected to be negative.
An impairment loss was recognized for the unamortized balances of goodwill in the United States of ¥56 million and ¥33 million since
it was considered unlikely that profits would be earned as initially expected.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

19 Financial Section
10 Employee Retirement Benefits

The Company and certain consolidated subsidiaries have funded and unfunded defined benefit plans and defined contribution plans for
benefit payments to their employees.
With defined benefit corporate pension plans (all funded plans), a lump-sum payment or pension will be provided on a points’ basis
by the Company and main domestic subsidiaries, and according to basic rates of pay and length of service by other subsidiaries.
In retirement lump-sum plans (which include unfunded plans and funded plans as a result of employee pension plans being set up),
lump-sum payments are provided as retirement benefits on a points’ basis by the Company and main domestic subsidiaries, and
according to basic rates of pay and service length by other subsidiaries.
For defined benefit corporate pension plans and retirement lump-sum plans offered by certain consolidated subsidiaries, net defined
benefit liability and retirement benefit costs are calculated according to a simplified method.
The disclosures for defined benefit plans in the tables below include plans to which a simplified method has been applied.

(a) Defined benefit plans

(1) Reconciliation of the balance of retirement benefit obligations at beginning and end of the period

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Balance of retirement benefit obligations at beginning of the period ¥36,297 ¥36,958 $327,029
Service cost 1,259 1,334 11,343
Interest cost 368 400 3,315
Actuarial (gain) loss 816 588 7,352
Retirement benefits paid (2,396) (2,929) (21,587)
Other 497 (54) 4,477
Balance of retirement benefit obligations at end of the period ¥36,842 ¥36,297 $331,939

(2) Reconciliation of the balance of plan assets at beginning and end of the period

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Balance of plan assets at beginning of the period ¥38,885 ¥38,960 $350,346
Expected return on plan assets 898 955 8,090
Actuarial gain (loss) (1,222) 1,213 (11,010)
Employer contributions 855 894 7,703
Retirement benefits paid (2,314) (2,729) (20,848)
Other 165 (409) 1,486
Balances of plan assets at end of the period ¥37,267 ¥38,885 $335,768

(3) R
 econciliation of the balances of retirement benefit obligations and plan assets to net amount recorded on the consolidated
balance sheets

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Retirement benefit obligations of funded pension plans ¥ 35,074 ¥ 34,740 $ 316,010
Plan assets (37,267) (38,885) (335,768)
(2,193) (4,144) (19,758)
Retirement benefit obligations of unfunded pension plans 1,768 1,556 15,929
Net amount recorded on the consolidated balance sheet (425) (2,588) (3,829)

Amounts recorded on the consolidated balance sheet:

Net defined benefit liability 5,511 4,783 49,653
Net defined benefit asset (5,936) (7,371) (53,482)
Net amount recorded on the consolidated balance sheet ¥ (425) ¥ (2,588) $ (3,829)

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 20
(4) Retirement benefit cost

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Service cost ¥1,259 ¥1,334 $11,343
Interest cost 368 400 3,315
Expected return on plan assets (898) (955) (8,090)
Amortization of net actuarial loss 281 1,081 2,531
Amortization of prior service cost (15) (13) (135)
Other 276 257 2,486
Retirement benefit costs relating to defined benefit plans ¥1,271 ¥2,105 $11,451

(5) Remeasurements of defined benefit plans

The breakdown of remeasurements of defined benefit plans (before deducting tax effect) is as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Prior service cost ¥   (15) ¥ (24) $   (135)
Actuarial gain (loss) (1,830) 1,798 (16,487)
Total ¥(1,845) ¥1,773 $(16,623)

(6) Accumulated remeasurements of defined benefit plans

The breakdown of accumulated remeasurements of defined benefit plans (before deducting tax effect) is as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Unrecognized prior service cost ¥ 90 ¥106 $ 810
Unrecognized actuarial gain (loss) (1,145) 684 (10,316)
Total ¥(1,054) ¥791 $ (9,496)

(7) Plan assets

Breakdown of major plan assets
The ratio of each main category to the total plan assets is as follows:

March 31, 2019 2018

Stock 32% 33%
Debt securities 28% 28%
General life insurance accounts 17% 17%
Other 23% 22%
Total 100% 100%
Note: 2
 7% and 28% as of March 31, 2019 and 2018, respectively, of the total plan assets are assets contributed to a retirement benefit trust for retirement
lump-sum plans.

Method for determining expected long-term rate of return

In determining the expected long-term rate of return on plan assets, the Company considers the current and projected plan asset
allocations, as well as the current and expected long-term rates of return on the various assets constituting the plan assets.

(8) Actuarial assumptions

The main actuarial assumptions as of the end of the year (presented as a weighted average) are as follows:

March 31, 2019 2018

Discount rate Mainly 0.2% Mainly 0.4%
Long-term expected return on assets Mainly 2.0–2.5% Mainly 2.0–2.5%

(b) Defined contribution plans

The Company and certain consolidated subsidiaries’ contributions for defined contribution plans were ¥761 million ($6,856 thousand)
and ¥668 million for the years ended March 31, 2019 and 2018, respectively.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

21 Financial Section
11 Income Taxes

Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise corporation tax, inhabitants tax and
enterprise tax that, in the aggregate, resulted in a statutory tax rate of approximately 30.5% and 30.7% for the years ended March 31,
2019 and 2018, respectively.
Income taxes of foreign consolidated subsidiaries are generally based on the tax rates applicable in their countries of incorporation.

(a) Significant components of deferred tax assets and liabilities as of March 31, 2019 and 2018

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Deferred tax assets:
Inventories ¥ 341 ¥ 184 $ 3,072
Other accounts payable 1,718 1,649 15,478
Allowance for doubtful receivables 649 384 5,847
Provision for employees’ bonuses 776 747 6,991
Accrued pension and severance costs 2,542 2,059 22,902
Unrealized profit 601 619 5,414
Loss on impairment of fixed assets 3,943 3,442 35,525
Tax loss carried forward 1,820 3,215 16,397
Other 3,240 2,292 29,191

Gross deferred tax assets: 15,632 14,595 140,841

Valuation allowance for tax loss carryforwards (1,141) — (10,280)
Valuation allowance for deductible temporary differences (1,976) — (17,803)
Valuation allowance (3,117) (2,951) (28,083)
Total deferred tax assets 12,515 11,643 112,757

Deferred tax liabilities:

Depreciation (4,900) (3,860) (44,148)
Deferred capital gain (1,367) (1,370) (12,316)
Gain on establishment of pension trust fund (989) (989) (8,910)
Unrealized holding gains on securities (7,679) (9,248) (69,186)
Other (2,459) (621) (22,155)
Total deferred tax liabilities (17,396) (16,089) (156,734)
Deferred tax assets (liabilities), net ¥ (4,881) ¥ (4,445) $ (43,976)

Note
Tax loss carryforwards and its deferred tax assets by expiration periods

As of March 31, 2019 Millions of yen

2025 and
2020 2021 2022 2023 2024 beyond Total
Tax loss carryforwards (*1)
¥ 35 ¥ 56 ¥ 26 ¥ 14 — ¥ 1,687 ¥ 1,820
Valuation allowance (35) (56) (26) (12) — (1,010) (1,141)
Net deferred tax assets — — — ¥ 2 — ¥ 676 ¥ 678 (*2)

As of March 31, 2019 Thousands of U.S. dollars

2025 and
2020 2021 2022 2023 2024 beyond Total
Tax loss carryforwards (*1)
$ 315 $ 504 $ 234 $ 126 — $15,199 $ 16,397
Valuation allowance (315) (504) (234) (108) — (9,099) (10,280)
Net deferred tax assets — — — $ 18 — $ 6,090 $ 6,108 (*2)

(*1) Tax loss carryforwards shown in the above table is after multiplying the statutory tax rate.
(*2) Deferred tax assets of ¥678 million was recognized for tax loss carryforwards of ¥1,820 million (amount multiplied by the statutory tax rate). No valuation
allowance is recognized for the tax loss carryforwards since the amount was determined to be recoverable based on expected future taxable income.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 22
(b) Reconciliation of the difference between the statutory tax rate and the effective tax rate for the years ended March 31, 2019 and 2018

Years ended March 31, 2019 2018

Statutory tax rate — 30.7%
Adjustments:
Entertainment and other permanently non-deductible expenses — 1.0
Dividends and other permanently non-taxable income — (0.2)
Per capita inhabitants tax — 0.2
Special deductions for corporate taxes paid — (1.2)
Tax rate differences for consolidated subsidiaries — 1.2
Amortization of goodwill — 0.6
Net change in valuation allowance — 0.9
Other — (0.3)
Effective tax rate — 32.9%

Reconciliation of the difference between the statutory tax rate and the effective tax rate for the year ended March 31, 2019 is not
disclosed because the difference between the two tax rates was less than 5% of the statutory tax rate.

12 Capital Surplus and Retained Earnings

The Companies Act of Japan provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus
(other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal
reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of common stock. Such distributions can be
made at any time by resolution of the shareholders or by the Board of Directors if certain conditions are met, but neither the capital
reserve nor the legal reserve is available for distribution.

13 Research and Development Costs

Research and development costs included in cost of sales and selling, general and administrative expenses for the years ended March 31,
2019 and 2018 were ¥3,816 million ($34,381 thousand) and ¥3,772 million, respectively.

14 Leases

(a) Finance leases

Finance leases, except for leases under which the ownership of the leased assets is considered to be transferred to the lessee, whose
inception dates were on or before March 31, 2008, are accounted for in the same manner as operating leases. The details are omitted
due to immateriality.

(b) Operating leases

Future minimum lease payments as lessee subsequent to March 31, 2019 and 2018 for non-cancelable operating leases are summarized
as follows:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
Within 1 year ¥ 3,420 ¥ 3,490 $ 30,813
Over 1 year 13,262 14,300 119,488
¥16,683 ¥17,791 $150,310

15 Contingent Liabilities

The Company and its consolidated subsidiaries had the following contingent liabilities as of March 31, 2019 and 2018:

Thousands of
Millions of yen U.S. dollars
March 31, 2019 2018 2019
As guarantor of indebtedness of:
Others ¥    56 ¥    81 $    504
Contingent liabilities related to the redemption of corporate bonds by
debt assumption ¥30,000 ¥30,000 $270,294

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

23 Financial Section
16 Amounts Per Share

The computation of basic net income per share is based on the weighted average number of shares of common stock outstanding during
each period. Diluted net income per share has been omitted for the years ended March 31, 2019 and 2018 because no potentially
dilutive instruments were outstanding during the years.
Net assets per share are based on the number of shares outstanding at the respective balance sheet dates.
Cash dividends per share represent the cash dividends declared as applicable to the respective years.

Yen U.S. dollars

As of and for the years ended March 31, 2019 2018 2019
Net income:
Basic ¥  135.39 ¥  123.71 $ 1.21
Net assets 1,382.60 1,292.18 12.45
Cash dividends applicable to the year 41.00 39.00 0.36

17 Financial Instruments

(a) Policy for financial instruments

In light of plans for capital investment, the Company and its subsidiaries mainly raise the funds required through bank loans and bond
issuance. The Company and its subsidiaries manage temporary fund surpluses through financial assets that have a high level of liquidity.
Further, the Company and its subsidiaries raise short-term working capital through bank loans. Derivative transactions are used in order
to mitigate risk as described below, such that speculative transactions are not undertaken, based on the Company’s policy.
Trade receivables (trade notes and accounts receivable) are exposed to credit risk in relation to customers. Each operating
department and the accounting department of the Company and its subsidiaries perform periodic monitoring of the financial condition of
major customers, manage due dates and balances, obtain a prompt understanding and attempt to mitigate the risk of uncollectable
receivables in the event of deterioration in customers’ financial condition.
Investment securities are exposed to variable risks associated with market prices. The Company and its subsidiaries perform
periodic monitoring of the financial condition of the issuers for marketable investment securities. A continuing review of the holding of
securities, other than held-to-maturity securities, is performed by taking into consideration the market as well as the relationship with the
trading counterparties.
Accounts payable have payment due dates mostly within two months. Loans payable and bonds primarily are raised for capital
investment and have payment due dates within six years at the longest.
Derivative transactions consist of foreign exchange forward contracts entered into in order to hedge currency-associated variable risks
that arise from foreign currency-denominated operating receivables and payables. Enforcement and management of derivative
transactions are performed by obtaining the appropriate personnel approval under the administrative procedures for trading authority and
budget limits. Derivative transactions are not subject to significant credit risk since the trading counterparties are limited to financial
institutions with high credit ratings. In addition, subsidiaries regularly report the actual results of the derivative transactions to the finance
department of the Company.

(b) Fair value of financial instruments

The carrying value on the consolidated balance sheets, fair value and differences between carrying value and fair value for financial
instruments as of March 31, 2019 and 2018 are set out below. The following tables do not include financial instruments for which fair
values are difficult to determine.

As of March 31, 2019 Millions of yen

Carrying amount Fair value Difference
(1) Cash and deposits ¥ 30,162 ¥ 30,162 ¥—
(2) Trade notes and accounts receivable 60,719 60,719 —
(3) Investment securities 47,416 47,416 —
Total assets 138,298 138,298 —
(1) Trade notes and accounts payable 22,383 22,383 —
(2) Other accounts payable 18,872 18,872 —
(3) Short-term bank loans (*1)
3,487 3,487 —
(4) Long-term bank loans (*1)
13,602 13,654 51
Total liabilities 58,345 58,397 51
Derivatives (*2)
¥  1,256 ¥  1,256 ¥—

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 24
As of March 31, 2019 Thousands of U.S. dollars
Carrying amount Fair value Difference
(1) Cash and deposits $  271,754 $  271,754 $ —
(2) Trade notes and accounts receivable 547,067 547,067 —
(3) Investment securities 427,209 427,209 —
Total assets 1,246,040 1,246,040 —
(1) Trade notes and accounts payable 201,666 201,666 —
(2) Other accounts payable 170,033 170,033 —
(3) Short-term bank loans (*1)
31,417 31,417 —
(4) Long-term bank loans (*1)
122,551 123,020 459
Total liabilities 525,677 526,146 459
Derivatives (*2)
$   11,316 $   11,316 $ —

As of March 31, 2018 Millions of yen

Carrying amount Fair value Difference
(1) Cash and deposits ¥ 22,196 ¥ 22,196 ¥ —
(2) Trade notes and accounts receivable 58,452 58,452 —
(3) Investment securities 55,661 55,661 —
Total assets 136,310 136,310 —
(1) Trade notes and accounts payable 21,535 21,535 —
(2) Other accounts payable 17,737 17,737 —
(3) Short-term bank loans (*1)
3,392 3,392 —
(4) Long-term bank loans (*1)
13,300 13,283 (16)
Total liabilities 55,965 55,948 (16)
Derivatives (*2)
¥ (3,366) ¥ (3,366) ¥ —

(*1) Long-term bank loans include the current portion of long-term debt.
(*2) The carrying amount and fair value of derivative transactions are stated on a net basis. Figures in parentheses represent net liabilities.

Methods for calculating fair values of financial instruments

• Assets
(1) Cash and deposits, (2) Trade notes and accounts receivable
Since these assets are short term in nature, their carrying value approximates fair value.
(3) Investment securities
Since securities such as negotiable certificates of deposit are short term in nature, their carrying value approximates fair value.
The fair value of investment securities is based on the quoted market prices for listed shares.
 Unlisted stocks and others with a carrying amount of ¥11,791 million ($106,234 thousand) and ¥12,382 million as of March 31,
2019 and 2018, respectively, are excluded from investment securities in the above table, since they have no market values and their
fair values are difficult to determine.
 Information on investment securities categorized by holding purpose is set out in Note 6. Fair Value of Securities.

• Liabilities
(1) Trade notes and accounts payable, (2) Other accounts payable, (3) Short-term bank loans
Since these liabilities are short term in nature, their carrying value approximates fair value.
(4) Bonds
Fair value of corporate bonds is determined based on present values calculated by discounting the total principal and interest using
interest rates corresponding to the credit risk and remaining period of the bond.
(5) Long-term debt
Fair value of long-term debt is calculated by discounting the total principal and interest using the incremental borrowing rate.

• Derivatives
Information on derivatives is set out in Note 18. Derivatives.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

25 Financial Section
18 Derivatives

Summarized below are the notional amounts and the estimated fair value of the open derivative positions as of March 31, 2019 and 2018:

(a) Hedge accounting not applied

Currency-related transactions

March 31, 2019 Millions of yen

Notional Valuation gain
Classification Type of transaction amount Over 1 year Fair value (loss)
Non-market transactions Forward foreign exchange contracts:
Sell:
USD ¥ 3,563 ¥ — ¥ (23) ¥ (23)
AUD 63 — (0) (0)
JPY 23 — 0 0
HKD 14 — (0) (0)
Buy:
USD 49,001 35,384 1,439 1,439
EUR 4,563 2,822 (146) (146)
GBP 0 — 0 0
SGD 5,934 4,403 (3) (3)
JPY 436 — (3) (3)
Total ¥63,600 ¥42,610 ¥1,261 ¥1,261

March 31, 2019 Thousands of U.S. dollars

Notional Valuation gain
Classification Type of transaction amount Over 1 year Fair value (loss)
Non-market transactions Forward foreign exchange contracts:
Sell:
USD $ 32,101 $ — $ (207) $ (207)
AUD 567 — (0) (0)
JPY 207 — 0 0
HKD 126 — (0) (0)
Buy:
USD 441,490 318,803 12,965 12,965
EUR 41,111 25,425 (1,315) (1,315)
GBP 0 — 0 0
SGD 53,464 39,670 (27) (27)
JPY 3,928 — (27) (27)
Total $573,024 $383,908 $11,361 $11,361

March 31, 2018 Millions of yen

Notional Valuation gain
Classification Type of transaction amount Over 1 year Fair value (loss)
Non-market transactions Forward foreign exchange contracts:
Sell:
USD ¥ 4,267 ¥ — ¥ 1 ¥ 1
EUR 315 — (0) (0)
AUD 49 — 0 0
SGD 304 — (0) (0)
JPY 19 — (1) (1)
HKD 10 — 0 0
Buy:
USD 51,000 31,253 (3,219) (3,219)
EUR 3,856 3,807 59 59
GBP 179 — (0) (0)
SGD 5,957 5,151 (159) (159)
JPY 135 — (0) (0)
Total ¥66,096 ¥40,212 ¥(3,319) ¥(3,319)

Notes
1. Fair value is calculated based on the prices provided by financial institutions.
2. The amounts in the table above include the profit or loss due to eliminating inter-company balances in consolidation.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 26
(b) Hedge accounting applied
Currency-related transactions

March 31, 2019 Millions of yen

Notional
Hedge accounting method Type of transaction Hedged item amount Over 1 year Fair value
Currency forward contracts Forward foreign exchange contracts:
Sell:
USD Accounts receivable ¥   29 ¥ — (Note 2)
EUR 12 — (Note 2)
Buy:
USD Accounts payable 331 — (Note 2)
USD Long-term debt 202 202 (Note 2)
EUR Accounts payable 80 — (Note 2)
JPY 12 — (Note 2)
Deferral hedge accounting Sell:
USD Accounts receivable 18 — (0)
Buy:
USD Accounts payable 2,774 — (3)
EUR ¥  120 ¥ — ¥(1)

March 31, 2019 Thousands of U.S. dollars

Notional
Hedge accounting method Type of transaction Hedged item amount Over 1 year Fair value
Currency forward contracts Forward foreign exchange contracts:
Sell:
USD Accounts receivable $   261 $ — (Note 2)
EUR 108 — (Note 2)
Buy:
USD Accounts payable 2,982 — (Note 2)
USD Long-term debt 1,819 1,819 (Note 2)
EUR Accounts payable 720 — (Note 2)
JPY 108 — (Note 2)
Deferral hedge accounting Sell:
USD Accounts receivable 162 — (0)
Buy:
USD Accounts payable 24,993 — (27)
EUR $ 1,081 $ — $ (9)

March 31, 2018 Millions of yen

Notional
Hedge accounting method Type of transaction Hedged item amount Over 1 year Fair value
Currency forward contracts Forward foreign exchange contracts:
Sell:
USD Accounts receivable ¥   99 ¥— (Note 2)
Buy:
USD Accounts payable 646 — (Note 2)
EUR 49 — (Note 2)
SGD 5 — (Note 2)
JPY 144 — (Note 2)
Deferral hedge accounting Sell:
USD Accounts receivable 13 — (0)
Buy:
USD Accounts payable 1,794 — (46)
EUR ¥    2 ¥— ¥ (0)

Notes
1. Fair value is calculated based on the prices provided by financial institutions.
2. For certain accounts receivable and accounts payable denominated in foreign currencies for which foreign exchange forward contracts are used to hedge the
foreign currency fluctuations, the fair value of derivative financial instruments is included in the fair value of the hedged accounts receivable and accounts payable.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

27 Financial Section
19 Rental Properties

The Company and certain consolidated subsidiaries own a number of commercial facilities including land for rent in Chiba Prefecture and
other locations. Net rental income from such rental properties for the years ended March 31, 2019 and 2018 was ¥750 million ($6,757
thousand) and ¥737 million, respectively. The Company recorded ¥294 million ($2,648 thousand) and ¥194 million of gain on sales of
rental properties as other income for the years ended March 31, 2019 and 2018, respectively.
The carrying amount and the fair value of such rental properties as of March 31, 2019 and 2018 were as follows:

March 31, 2019 Millions of yen

Carrying amount
Beginning of year Net change during year End of year Fair value as of March 31, 2019
¥8,594 ¥(50) ¥8,543 ¥24,157

March 31, 2019 Thousands of U.S. dollars

Carrying amount
Beginning of year Net change during year End of year Fair value as of March 31, 2019
$77,430 $(450) $76,970 $217,650

March 31, 2018 Millions of yen

Carrying amount
Beginning of year Net change during year End of year Fair value as of March 31, 2018
¥10,099 ¥(1,505) ¥8,594 ¥20,114

Note
The fair value of significant properties is calculated based on the appraisal standard used by real estate appraisers, and the fair value of immaterial properties is
calculated based on the value for property tax assessment.

20 Segment Information

(a) Segment information

(1) Overview of reportable segments
Reportable segments are a component or aggregated component for which segment specific financial information is available. The
Company’s Board of Directors uses this financial information periodically to make decisions on the allocation of management resources
and to evaluate business performance.
The Company, as a holding company, mainly plans Group strategy, and manages and controls its subsidiaries. The Company divides
its domestic business into manufacturing and sales of foods, and other business. The Company divides its overseas business into
manufacturing and sales of foods, and the sales of oriental food products. As a result, the Company identified four reportable segments,
which are “Domestic Foods—Manufacturing and Sales,” “Domestic Others,” “Overseas Foods—Manufacturing and Sales” and “Overseas
Foods—Wholesale.”
“Domestic Foods—Manufacturing and Sales” includes manufacturing and sales of foods in the domestic market, including soy sauce,
beverages and alcoholic beverages.
“Domestic Others” includes manufacturing and sales of pharmaceuticals and chemical products, real estate rental, logistics and
back-office operations in the domestic market.
“Overseas Foods—Manufacturing and Sales” includes manufacturing and sales of soy sauce, Del Monte products and health foods in
overseas markets, and sales of domestically manufactured products to overseas markets.
“Overseas Foods—Wholesale” includes the purchase of overseas oriental products for sale in domestic and overseas markets and
sales of oriental products in domestic and overseas markets.

(2) Methods of calculating amounts for net sales, income or loss, assets, liabilities and other items by reportable segment
Segment income in the following tables is operating income. Intra-group sales and transfers were made based on market prices.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 28
(3) Information on sales, income or loss, assets and other items by reportable segment

As of and for the year ended March 31, 2019 Millions of yen
Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale T otal Adjustments Consolidated
Sales and operating income:
Net sales to third parties ¥172,899 ¥ 7,661 ¥ 81,325 ¥191,679 ¥453,565 ¥ — ¥453,565
Intra-group sales and transfers 1,755 13,766 12,184 430 28,136 (28,136) —
Total net sales 174,654 21,427 93,510 192,109 481,701 (28,136) 453,565
Segment income 10,597 1,773 18,745 8,597 39,714 (1,296) 38,417
Segment assets 119,643 22,786 153,594 75,633 371,657 (9,538) 362,119

Other items:
Depreciation and amortization 6,734 1,284 3,464 1,059 12,542 605 13,148
Amortization of goodwill 543 — 105 32 680 — 680
Increase in property, plant and
equipment and intangible assets ¥ 10,601 ¥ 1,289 ¥  7,719 ¥  4,515 ¥ 24,125 ¥ 4,220 ¥ 28,346

As of and for the year ended March 31, 2019 Thousands of U.S. dollars
Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Sales and operating income:
Net sales to third parties $1,557,788 $ 69,024 $  732,723 $1,726,993 $4,086,539 $ — $4,086,539
Intra-group sales and transfers 15,812 124,029 109,775 3,874 253,500 (253,500) —
Total net sales 1,573,601 193,053 842,508 1,730,867 4,340,039 (253,500) 4,086,539
Segment income 95,477 15,974 168,889 77,457 357,816 (11,676) 346,130
Segment assets 1,077,961 205,297 1,383,854 681,439 3,348,562 (85,935) 3,262,627

Other items:
Depreciation and amortization 60,672 11,568 31,210 9,541 113,001 5,450 118,461
Amortization of goodwill 4,892 — 946 288 6,126 — 6,126
Increase in property, plant and
equipment and intangible assets $   95,513 $ 11,613 $   69,546 $   40,679 $  217,361 $ 38,021 $  255,392

Notes
Adjustments are as follows:
(1) Adjustments of ¥(1,296) million ($(11,676) thousand) in segment income mainly represent expenses relating to the corporate division of the Company, which
totaled ¥(1,142) million ($(10,289) thousand).
(2) Adjustments of ¥(9,538) million ($(85,935) thousand) in segment assets represent the elimination of intersegment assets and assets relating to the corporate
division of the Company, which totaled ¥121,335 million ($1,093,206 thousand). Assets relating to the corporate division of the Company consist mainly of
cash and deposits and investment securities.
(3) Adjustments of ¥605 million ($5,450 thousand) in depreciation and amortization consist of depreciation of assets relating to the corporate division of the Company.
(4) Adjustments of ¥4,220 million ($38,021 thousand) in increase in property, plant and equipment and intangible assets consist of asset acquisitions of the
corporate division of the Company.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

29 Financial Section
As of and for the year ended March 31, 2018 Millions of yen
Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Sales and operating income:
Net sales to third parties ¥170,907 ¥ 7,579 ¥ 78,043 ¥174,072 ¥430,602 ¥ — ¥430,602
Intra-group sales and transfers 1,529 13,570 11,410 384 26,895 (26,895) —
Total net sales 172,437 21,149 89,453 174,457 457,498 (26,895) 430,602
Segment income 10,385 1,465 17,791 8,166 37,809 (1,307) 36,502
Segment assets 117,882 22,417 141,862 67,995 350,158 (6,229) 343,929

Other items:
Depreciation and amortization 6,275 1,235 3,664 1,062 12,237 785 13,023
Amortization of goodwill 543 — 108 — 651 — 651
Increase in property, plant and
equipment and intangible assets ¥  7,563 ¥ 1,464 ¥  5,124 ¥  3,470 ¥ 17,622 ¥ 558 ¥ 18,180

Notes
1. Adjustments are as follows:
(1) Adjustments of ¥(1,307) million in segment income mainly represent expenses relating to the corporate division of the Company, which totaled
¥(1,163) million.
(2) Adjustments of ¥(6,229) million in segment assets represent the elimination of intersegment assets and assets relating to the corporate division of
the Company, which totaled ¥117,850 million. Assets relating to the corporate division of the Company consist mainly of cash and deposits and
investment securities.
(3) A djustments of ¥785 million in depreciation and amortization consist of depreciation of assets relating to the corporate division of the Company.
(4) Adjustments of ¥558 million in increase in property, plant and equipment and intangible assets consist of asset acquisitions of the corporate division of
the Company.
2. “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) has been applied from the start of
the first quarter of fiscal 2019 (the year ending March 31, 2019). Figures as of the end of the previous consolidated fiscal year have been retroactively
adjusted for comparison.

(b) Related information

Information by geographical area

For the year ended March 31, 2019 Millions of yen

Sales Japan North America Other Total
Amount ¥185,101 ¥194,323 ¥74,140 ¥453,565

For the year ended March 31, 2019 Thousands of U.S. dollars
Sales Japan North America Other Total
Amount $1,667,726 $1,750,815 $667,988 $4,086,539

For the year ended March 31, 2018 Millions of yen

Sales Japan North America Other Total
Amount ¥180,091 ¥182,257 ¥68,254 ¥430,602

Note: Sales are based on the location of customers and are classified by country or region.
Note: “North America” is managed as one region. As it is difficult to classify sales to third parties by individual country, the sales amount for each country is
not disclosed.

As of March 31, 2019 Millions of yen

Property, plant and equipment Japan United States Other Total
Net book value ¥75,876 ¥33,363 ¥14,149 ¥123,390

As of March 31, 2019 Thousands of U.S. dollars

Property, plant and equipment Japan United States Other Total
Net book value $683,629 $300,594 $127,479 $1,111,721

As of March 31, 2018 Millions of yen

Property, plant and equipment Japan United States Other Total
Net book value ¥70,825 ¥25,224 ¥14,071 ¥110,121

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 30
Information regarding loss on impairment of fixed assets by reportable segment

For the year ended March 31, 2019 Millions of yen

Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Impairment loss ¥2,378 ¥— ¥— ¥— ¥2,378 ¥— ¥2,378

For the year ended March 31, 2019 Thousands of U.S. dollars
Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Impairment loss $21,425 $— $— $— $21,425 $— $21,425

For the year ended March 31, 2018 Millions of yen

Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Impairment loss ¥— ¥50 ¥90 ¥— ¥141 ¥— ¥141

Information regarding the balance of goodwill by reportable segment

As of March 31, 2019 Millions of yen

Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Goodwill ending balance ¥3,320 ¥— ¥1,069 ¥579 ¥4,969 ¥— ¥4,969

As of March 31, 2019 Thousands of U.S. dollars

Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Goodwill ending balance $29,912 $— $9,631 $5,216 $44,769 $— $44,769

As of March 31, 2018 Millions of yen

Domestic Overseas
Foods— Foods— Overseas
Manufacturing Domestic Manufacturing Foods—
and Sales Others and Sales Wholesale Total Adjustments Consolidated
Goodwill ending balance ¥3,863 ¥— ¥1,218 ¥— ¥5,081 ¥— ¥5,081

Information regarding amortization of goodwill is omitted, since this information was disclosed in (a) (3). Information on sales, income
or loss, assets and other items by reportable segment.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

31 Financial Section
21 Related Party Transactions

Transactions with related parties

(1) Transactions between the Company and related parties
There are no applicable matters to be reported.

(2) Transactions between the Company’s subsidiaries and related parties

Officers and major shareholders of the Company, etc.

As of and for the year ended March 31, 2019

Millions of yen % Millions of yen
Share of
voting rights Relationship
Paid-in capital Business/ (shares with related Nature of Transaction Year-end
Category Name Location or investment Position owned) parties transactions value Item balance
Officer Noriaki — — President 0.4 Land rent Land rent ¥11 Other ¥2
Horikiri & CEO accounts
payable

As of and for the year ended March 31, 2019

Thousands of U.S. dollars % Thousands of U.S. dollars
Share of
voting rights Relationship
Paid-in capital Business/ (shares with related Nature of Transaction Year-end
Category Name Location or investment Position owned) parties transactions value Item balance
Officer Noriaki — — President 0.4 Land rent Land rent $99 Other $18
Horikiri & CEO accounts
payable

Notes:
1. Consumption tax is not included in “Transaction value” but is included in “Year-end balance.”
2. The Company decides the land rent based on the market rents in the area.

As of and for the year ended March 31, 2018

Millions of yen % Millions of yen
Share of
voting rights Relationship
Paid-in capital Business/ (shares with related Nature of Transaction Year-end
Category Name Location or investment Position owned) parties transactions value Item balance
Officer Noriaki — — President 0.4 Land rent Land rent ¥10 Other ¥2
Horikiri & CEO accounts
payable

Notes:
1. Consumption tax is not included in “Transaction value” but is included in “Year-end balance.”
2. The Company decides the land rent based on the market rents in the area.

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

Financial Section 32
 Independent Auditor’s Report

The Board of Directors

KIKKOMAN CORPORATION

We have audited the accompanying consolidated financial statements of KIKKOMAN CORPORATION and
its consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2019, and
the consolidated statements of income, comprehensive income, changes in net assets, and cash flows for
the year then ended and a summary of significant accounting policies and other explanatory information,
all expressed in Japanese yen.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for designing and
operating such internal control as management determines is necessary to enable the preparation and fair
presentation of the consolidated financial statements that are free from material misstatement, whether
due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not to
express an opinion on the effectiveness of the entity’s internal control, but in making these risk
assessments the auditor considers internal controls relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.

Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of KIKKOMAN CORPORATION and its consolidated
subsidiaries at March 31, 2019, and their consolidated financial performance and cash flows for the year
then ended in conformity with accounting principles generally accepted in Japan.

Convenience Translation
We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for
the convenience of readers, and, in our opinion, the accompanying consolidated financial statements have
been properly translated on the basis described in Note 3.

June 25, 2019

Tokyo, Japan

KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9

33 Financial Section
KIKKOMAN GROUP CORPORATE REPORT 2 0 1 9
Financial Section 34
Kikkoman Corporation

Noda Head Office

250 Noda, Noda-shi, Chiba 278-8601, Japan
Tokyo Head Office
2-1-1 Nishi-Shimbashi, Minato-ku, Tokyo 105-0003, Japan

https://www.kikkoman.com/en/