Toyo Tire : Financial Data 2024

Consolidated Financial Statements 1

Notes to Consolidated Financial Statements 7

Independent Auditor's Report 41

Updated on June 18, 2025

Consolidated Financial Statements

Consolidated Balance Sheets

Toyo Tire Corporation and Consolidated Subsidiaries December 31, 2024 and 2023

Thousands of

U.S. dollars

See the accompanying notes to the consolidated financial statements.

Thousands of

U.S. dollars

Millions of yen (Note 1)

Net assets (Note 17):

Shareholders' equity Common stock

Consolidated Statements of Income

Toyo Tire Corporation and Consolidated Subsidiaries For the years ended December 31, 2024 and 2023

Thousands of

U.S. dollars

Millions of yen (Note 1)

2024 2023 2024

Net sales (Notes 20 and 21) 565,358 552,826 $ 3,574,143

Cost of sales 334,595 336,314 2,115,280

Gross profit 230,763 216,512 1,458,863

Selling, general and administrative expenses 136,782 139,613 864,723

Operating income (Note 21) 93,981 76,899 594,140

U.S. dollars

Yen (Note 1)

2024 2023 2024

Net income per share 485.86 469.42 $ 3.07

Diluted net income per share - - -Dividends per share 120.00 100.00 $ 0.76

See the accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income

Toyo Tire Corporation and Consolidated Subsidiaries For the years ended December 31, 2024 and 2023

Thousands of

U.S. dollars

Millions of yen (Note 1)

See the accompanying notes to the consolidated financial statements.

Consolidated Statements of Changes in Net Assets

Toyo Tire Corporation and Consolidated Subsidiaries For the years ended December 31, 2024 and 2023

Millions of yen

Foreign

Valuation difference Deferred gains currency Remeasurements

Common Capital Retained Treasury on available-for-sale or losses translation of defined Non-controlling Total

Consolidated Statements of Cash Flows

Toyo Tire Corporation and Consolidated Subsidiaries For the years ended December 31, 2024 and 2023

Thousands of

U.S. dollars

Millions of yen (Note 1)

2024 2023 2024

Toyo Tire Corporation and Consolidated Subsidiaries

1. Basis of Presenting Consolidated Financial Statements

   The accompanying consolidated financial statements of Toyo Tire Corporation (the "Company"） and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law

   and its related accounting regulations and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards ("IFRS").

   The financial statements of the Company's consolidated overseas subsidiaries for consolidation purposes have been prepared in conformity with IFRS or generally accepted accounting principles in the United States of America ("US GAAP") and partially reflect the adjustments which are necessary to conform with Japanese GAAP. The accompanying consolidated financial statements have been reformatted and translated into English with some expanded descriptions from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.

   The translations of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at December 31, 2024, which was ¥158.18 to U.S. $1.00. The translations should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies

   Consolidation and investments in affiliates

   The accompanying consolidated financial statements include the accounts of Toyo Tire Corporation (the "Company") and significant subsidiaries (together, the "Companies") over which the Company has power of control through majority voting rights or the existence of certain other conditions evidencing control. Investments in affiliates over which the Company has the ability to exercise significant influence over operating and financial policies are accounted for by the equity method.

   The consolidated financial statements include the accounts of the Company and its 34 significant majority owned subsidiaries (37 in 2023). The factors effecting an increase or decrease in the number of consolidated subsidiaries were respectively due to the establishment of new companies, the sales of all equity interest to others and the liquidation of the subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. Investments in 3 affiliates (3 in 2023) were accounted for by the equity method.

   Cash and cash equivalents

   In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid investments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.

   Allowance for doubtful receivables

   Allowance for doubtful receivables is provided to cover possible losses on collection. With respect to normal trade accounts receivable, it is stated at an amount based upon the actual rate of historical bad debts. For certain doubtful receivables, the uncollectable amount has been individually estimated.

   Inventories

   Inventories are stated principally at the lower of weighted average cost or net realizable value.

   Property, plant and equipment (except lease assets and right-of-use assets)

   Property, plant and equipment are stated at cost and depreciated principally by the straight-line method over the estimated useful life of the asset. Expenditures for maintenance and repairs, including minor replacements and betterments, are charged

   to income as incurred.

   Software costs (except lease assets)

   Software costs are included in intangible assets and depreciated by the straight-line method over the estimated useful life of mainly 5 years.

   Lease assets

   Property, plant and equipment capitalized under finance lease arrangements are depreciated by the straight-line method over the lease term.

   Right-of-use assets

   Property, plant and equipment capitalized under lease arrangements are depreciated by the straight-line method over the lease term.

   Securities

   Securities classified as available-for-sale securities are stated at fair market value with unrealized gains and losses, net of applicable taxes, recorded as a component of net assets. Securities with no fair market value are stated at cost. If securities decline in value significantly and the decline is not considered recoverable, the value of the securities is reduced to net realizable value and the reduction in the value of the securities charged to income. The cost of securities sold is determined based on the average cost of all the shares of securities held at the time of sale.

   Derivatives and hedge accounting

   The Companies state derivative financial instruments at fair value and recognize changes in the fair value as gain or loss, unless the derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss resulting from changes in the fair value of the derivative financial instrument until the related loss or gain on the hedged item is recognized. However, when forward foreign exchange contracts are used as hedges and meet certain hedging criteria, the foreign currency receivables or payables are translated at the contracted rate. Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the asset or liability for which the swap contract was executed.

   Provision for directors' bonuses

   The provision for directors' bonuses is estimated and recorded to provide for directors'

   bonuses based on the estimated amount of payment.

   Provision for environmental remediation

   The provision for environmental remediation is estimated and recorded to provide for potential future costs, such as costs related to the removal and disposal of PCB waste.

   Provision for product compensation

   The provision for product compensation is estimated and recorded to provide for potential future costs of repair work and other measures of the products sold.

   Provision for loss on liquidation of subsidiaries and affiliates

   The provision for liquidation of subsidiaries and affiliates is estimated and recorded to provide for losses associated with the liquidation of subsidiaries and affiliates.

   Provision for loss on litigation

   The provision for loss on litigation is estimated and recorded to provide for losses related to pending litigation, such as the costs of participating in the litigation itself and any expected amount of losses that will occur in the future.

   Basis for recognition of significant revenues and expenses

   The Companies principally manufactures and sells products in the tire business and the automotive parts business segments. Revenue from sales is recognized mainly at the time of receipt of inspection because the customer's control over the product will be acquired and the obligation to perform will be satisfied at the time of receiving the product inspection. Revenue from export sales is calculated when the risk is transferred to the customer, in accordance with the trade terms set out in the Incoterms because the customer mainly gains control over the product and the performance obligation is satisfied at that time. However, if the period from shipment to delivery in domestic sales is the normal period, the Companies will adopt alternative treatment and recognize revenue at the time of shipment of the product.

   In both the tire business and the automotive parts business, the transaction price of products in a transaction is determined at the start of the transactions with each customer, and the related revenues are measured by deducting future returning products, discounts, rebates, etc., from the consideration promised in the contract. The returning

   products amount is calculated by estimating the expected return rate based on past data. For discounts and rebates, future payments are estimated and calculated based on contracts, etc., until the actual results are finalized. Since payment is received within one year after delivery to the customer, the promised consideration does not include significant financial factors.

   Some of the Group's transactions include rebates and sales commissions based on the transaction volume for a certain period from several months to one year. Amounts of such variable consideration are recorded as refund liabilities by adjusting the estimated transaction price based on the contract.

   In the tire business, winter tire products sold mainly in Japan can be returned from winter to spring. The Companies estimate the portion that is expected to be returned in the future, reduce revenues, and record returned assets as the right to collect returned products.

   Severance and retirement benefits

   1. Employees

      In determining retirement benefit obligations, the estimated amount of retirement benefits is attributed to periods on the benefit formula basis. Past service costs are amortized in expenses using the straight-line method over the average of the estimated remaining service years of employees at the time of occurrence (mainly 15 years).

      Actuarial gains and losses are recognized in income and expenses using the straight-line method over the average of the estimated remaining service years of employees at the time of occurrence (mainly 15 years) commencing with the following period.

   2. Directors and statutory auditors

   In accordance with their internal rules, certain consolidated subsidiaries have included at their fiscal year-end amounts that will be necessary for the payment of retirement

   benefits to directors and statutory auditors. The amounts included in the liability for severance and retirement benefits at December 31, 2024 and 2023 were ￥7 million ($44 thousand) and￥6 million, respectively.

   Research and development expenses

   Research and development expenses are charged to income as incurred. Such expenses for the years ended December 31, 2024 and 2023 were ￥ 13,588 million ($85,902 thousand) and ￥12,729 million, respectively.

   Income taxes

   The asset-liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

   Net income per share

   Computations of basic net income per share of common stock are based on the weighted average number of shares outstanding during each financial period. Diluted net income per share was not disclosed because there were no dilutive common stock equivalents.

   Dividends per share

   Declarations of dividends and appropriations of unappropriated retained earnings are

   approved at the annual shareholders' meeting held after the end of the fiscal year. Therefore, cash dividends per share shown in the consolidated statements of operations reflect the final dividends approved after the end of the relevant fiscal year.

   Translation of foreign currencies

   Receivables and payables denominated in foreign currencies are translated into Japanese yen at year-end rates.

   Balance sheet accounts of consolidated overseas subsidiaries and affiliates are translated into Japanese yen at year-end rates, except for net assets accounts, which are translated at historical rates. Revenue and expense accounts of consolidated overseas subsidiaries and affiliates are translated at average exchange rates for the year, except for transactions with the Company, which are translated at the rates used by the Company.

   Reclassifications

   Certain prior year amounts have been reclassified to conform to the current year presentation. These changes had no impact on previously reported results of operations or net assets.

3. Significant Accounting Estimates

   Loss on impairment of fixed assets

   1. Carrying amounts in the current year's consolidated financial statements

      	Millions of yen		Thousands of U.S. dollars
      	2024	2023	2024
      Loss on impairment of fixed assets ¥	7,675 ¥	2,051 $	48,521

   2. Other information that contributes to the understanding of users of the consolidated financial statements regarding the content of accounting estimates

   For fixed assets, if there are indications of impairment, whether to recognize an impairment loss is determined by comparing the carrying amount with the total undiscounted future cash flows from the asset or asset group. If an impairment loss is determined necessary, the carrying amount is reduced to the recoverable amount (the higher of net selling value or value in use), and the reduction in the carrying amount is recognized as an impairment loss. Business assets are grouped by business segment based on internal management. Leased assets, assets designated for disposal, such as for sale, and idle assets that are not expected to be used in the future are grouped by the individual property.

   With respect to the automotive parts business, the Company and domestic subsidiaries continued to incur a loss from its operating activities for two consecutive years and there were indications of impairment. Therefore, whether to recognize an impairment loss was determined. As a result of the review, it was also determined that the total undiscounted future cash flows for the business were less than the carrying amount of the fixed assets of the business, and the carrying amount was reduced to the recoverable amount (the higher of net selling value or value in use) and recorded as an impairment loss.

   The estimates of future cash flows of the automotive components business used to determine whether impairment loss should be recognized are based on the business plan and factored in using assumptions, such as sales volume forecasts, that take into account market trends. Future forecasts, including these assumptions, are subject to uncertainty and, if changes in the business plan or changes in market conditions occur, they may have a material impact on the consolidated financial statements in the following fiscal year and beyond.

4. Unadopted Standards and Guidances

   • "Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules" (Practical Solution No. 46, March 22, 2024, Accounting Standards Board of Japan)

     1. Overview

        In October 2021, members of the Inclusive Framework on Base Erosion and Profit Shifting of the Organisation for Economic Co-operation and Development (OECD) / Group of Twenty (G20) agreed on the global minimum tax.

        Following this agreement, the treatment in Japan related to the Income Inclusion Rule (IIR), one of the internationally agreed global minimum tax rules, has been stipulated in the "Act on Partial Revision of the Income Tax Act, etc." (Act No. 3 of 2023) enacted on March 28, 2023, and shall be applied from the fiscal year beginning on or after April 1, 2024.

        The global minimum tax aims to ensure that mulitinational enterprises, etc. that meet certain requirements pay income tax of at least 15% on income arising in each jurisdiction in which they operate, and is a new tax regime in which the company that generates net income (profit), i.e. the source for withholding tax, and the company that bears the tax liability are different.

        The Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules stipulates how to account for and disclose national and local income taxes related to the global minimum tax system.

     2. Effective date

        Effective from the beginning of the fiscal year ending December 31, 2025.

     3. Effect of application of standard

        The Company is currently evaluating the effect of the adoption of the "Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules" on its consolidated financial statements.

        • "Accounting Standard for lease" (ASBJ Statement No.34, issued on September 13,2024)

        • "Guidance on Accounting Standard for lease accounting" (ASBJ Guidance No.33, issued on September 13, 2024)

     1. Overview

        The ASBJ considered the development of lease accounting that a lessee recognizes all leased assets and the corresponding liabilities on balance sheet in light of IFRS 16, as part of the convergence efforts to align the J-GAAP with the IFRS.

        As a fundamental policy, ASBJ decided to absorb the primary provisions of IFRS 16, with a single lessee accounting model, rather than taking all the provisions of IFRS 16 into account.

        As a result of absorbing the primary provisions, ASBJ published the lease accounting principles

        that aim to apply the provisions of IFRS 16 to separate financial statements with simplicity and convenience and without the need for revision basically.

        Accounting standards for lease applies a single lessee accounting model that recognizes depreciation expenses on right-of-use assets and interest expenses on the lease liabilities with respect to expense distribution of lessees regardless of finance lease or operating lease, as with IFRS 16.

     2. Effective date

        Effective from the beginning of the fiscal year ending December 31, 2028.

     3. Effect of application of standards

     The Company is currently evaluating the effect of the adoption of the "Accounting Standard for lease," etc. on its consolidated financial statements.

5. Additional Information Audit remuneration

   1. Remuneration of the Accounting Auditor

      Millions of yen Thousands of U.S. dollars

      Category	Fiscal	year	ended	December	31, 2024	Fiscal	year	ended	December	31, 2023
      	Remuneration for audit and attestation services				Remuneration for non-audit services	Remuneration for audit and attestation services				Remuneration for non-audit services
      The Company	￥	116			￥	-	￥	110		￥	56
      Consolidated subsidiaries	14				-	13				-
      Total	￥	130			￥	-	￥	123		￥	56

      Fiscal year ended December 31, 2024
      Remuneration for audit and attestation services	Remuneration for non-audit services
      $ 733	$ ―
      89	-
      $ 822	$ ―

      (Note) The non-audit services for the Company consisted of advisory services for accounting and taxation, etc., as services other than those stipulated in Article 2, Paragraph 1 of the Certified Public Accountants Act.

   2. Remuneration of the network firms to which the Accounting Auditor belongs (KPMG LLP), excluding Remuneration of the Accounting Auditor

      Millions of yen Thousands of U.S. dollars

      Category	Fiscal	year	ended	December	31, 2024	Fiscal	year	ended	December	31, 2023
      	Remuneration for audit and attestation services				Remuneration for non-audit services	Remuneration for audit and attestation services				Remuneration for non-audit services
      The Company	￥	-			￥	59	￥	-		￥	23
      Consolidated subsidiaries	528				43	477				69
      Total	￥	528			￥	102	￥	477		￥	92

      Fiscal year ended December 31, 2024
      Remuneration for audit and attestation services	Remuneration for non-audit services
      $ ―	$ 373
      3,338	272
      $ 3,338	$ 645

      (Note) The non-audit services for the Company and consolidated subsidiaries consisted of advisory services for taxation and overseas projects, etc.

   3. Remuneration based on other significant audit and attestation services Nothing to be noted

6. Comprehensive Income

   For the years ended December 31, 2024 and 2023.

   Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in the current or previous periods and the tax effects for each component of other comprehensive income were as follows:

   		Millions 2024	of yen	2023			Thousands of U.S. dollars 2024
   Valuation difference on available-for-sale securities Increase (decrease) during the year		(460)			6,637		$ (2,908)
   Reclassification adjustments		(6,583)			(15,102)		(41,617)
   Subtotal, before tax		(7,043)			(8,465)		(44,525)
   Tax (expense) or benefit		2,156			2,534		13,630
   Subtotal, net of tax		(4,887)			(5,931)		(30,895)
   Deferred gains and losses on hedges Increase (decrease) during the year		(317)			65		(2,004)
   Subtotal, before tax		(317)			65		(2,004)
   Tax (expense) or benefit		96			(20)		607
   Subtotal, net of tax		(221)			45		(1,397)
   Foreign currency translation adjustments Increase (decrease) during the year		24,534			12,208		155,102
   Reclassification adjustments		56			-		354
   Subtotal, before tax		24,590			12,208		155,456
   Tax (expense) or benefit		(690)			499		(4,362)
   Subtotal, net of tax		23,900			12,707		151,094
   Remeasurements of defined benefit plans Increase (decrease) during the year		6,681			9,484		42,237
   Reclassification adjustments		(1,328)			(514)		(8,396)
   Subtotal, before tax		5,353			8,970		33,841
   Tax (expense) or benefit		(1,626)			(2,743)		(10,279)
   Subtotal, net of tax		3,727			6,227		23,562
   Share of other comprehensive income of affiliates accounted for using equity Increase (decrease) during the year	method	163			119		1,030
   Reclassification adjustments		-			-		-
   Subtotal, before tax		163			119		1,030
   Tax (expense) or benefit Subtotal, net of tax		- 163			- 119		- 1,030
   Total other comprehensive income		22,682			13,167		$ 143,394

7. Statements of Cash Flows

   1. Cash and cash equivalents in the consolidated statements of cash flows and cash and time deposits in the consolidated balance sheets at December 31, 2024 and 2023 were reconciled as follows:

      Thousands of

      Millions of yen U.S. dollars

      		2024			2023	2024
      Cash and time deposits			86,637		52,880	$ 547,711
      Less time deposits with maturities exceeding three months			(304)		(82)	(1,921)
      Cash and cash equivalents			86,333		52,798	$ 545,790

   2. Significant non-monetary transactions For the year ended December 31, 2024 Nothing to be noted.

   For the year ended December 31, 2023

   The relevant transactions were the acquisition of right-of-use assets in the form of the lease of the distribution base in United States for ¥13,010 million.

8. Inventories

   Inventories at December 31, 2024 and 2023 consisted of the following:

   Thousands of

   Millions of yen U.S. dollars

   		2024		2023	2024
   Finished goods		86,701		77,466	$ 548,116
   Work-in-process		5,011		5,061	31,679
   Raw materials and supplies		31,133		24,537	196,820
   		122,845		107,064	$ 776,615

9. Financial Instruments
   1. Status of financial instruments

      1. Policies for using financial instruments

         The Companies procure the capital required under plans of investment in plant and equipment primarily from bank loans and bond issues. The Companies manage surplus capital using financial instruments that carry little or no risk and procure short-term working capital from bank loans and commercial paper. The Companies use derivatives to mitigate the risks that are described below and, as a matter of policy, do not use derivatives for speculative transactions.

      2. Financial instruments and exposures to risk

         Notes and accounts receivable expose the Companies to customer credit risk. In addition, receivables denominated in foreign currencies, which arise as the result of doing business globally, expose the Companies to the risk of exchange rate fluctuations. In principle, the Companies hedge the risks with forward foreign exchange contracts to the net position of deducted notes and accounts payable denominated in foreign currencies. Investments in securities consist primarily of investments in companies with whom the Companies do business or have capital alliances and expose the Companies to the risk of changes in market prices.

         Almost all notes and accounts payable are due within one year. The Companies procure the capital required for its investments in plant and equipment generally through bank loans, bond issues and lease transactions.

         The Companies use derivatives transactions, including forward foreign exchange contracts, to hedge the risk of exchange rate fluctuations associated with receivables denominated in foreign currencies.

      3. Policies and processes for managing risk

         1. Credit risk management (counterparty risk)

            The Company monitors the financial status of counterparties and manages amounts and settlement dates under internal procedures for receivables. The Company works to quickly identify and mitigate payment risks that may result from situations such as the deterioration of the financial condition of a counterparty. Consolidated subsidiaries are subject to the same risk management rules.

            In derivative transactions, the Company mitigates counterparty risk by conducting transactions with highly creditworthy financial institutions. The maximum credit risk as of December 31, 2024 is presented on the balance sheet as the carrying value of the financial assets exposed to credit risk.

         2. Managing market risk (risk of exchange rate and interest rate fluctuations)

            For receivables denominated in foreign currencies, the Company uses principally forward foreign

            exchange contracts to hedge the risk of exchange rate fluctuations on a currency-by-currency basis evaluated monthly.

            For investments in securities, the Companies periodically examine the fair value of the securities and the financial condition of the issuing entity.

            The Financial Department handles derivative transactions, books them and makes reconciliations in accordance with the basic policies approved by the Board of Directors pursuant to established internal control procedures for financial risk. In addition, the Financial Department reports the monthly amounts to finance officers and the Board of Directors.

         3. Management of liquidity risk associated with capital procurement (payment default risk)

            The Company manages liquidity risk by creating and updating a capital deployment plan based on reports from each division.

      4. Supplemental information on fair values

         The contractual amounts of the derivative transactions discussed in Note 11, "Derivative Financial Instruments and Hedging Transactions," do not reflect the market risk associated with the derivatives transactions themselves.

   2. Fair values of financial instruments

      The fair value of financial instruments, amounts presented in the consolidated balance sheets and any differences as of December 31, 2024 and 2023 are set forth in the tables below.

      Equity securities without market price are not included in "Investment in securities." (See (2) below)

      1. Marketable securities, derivatives transactions and methods for estimating the fair value of financial instruments Assets

         Investment in securities

         The fair value of shares, etc., is based on prices established on exchanges. In addition, Note 10, "Securities," provides information on marketable securities by the intent for which they are held.

         Millions of yen

         Thousands of

         U.S. dollars

         2024		2023				2024
         Amounts presented in the consolidated balance sheets		5,077		16,118		$ 32,096
         Fair value		5,077		16,118		32,096
         Differences		-		-		$ -

         Liabilities

         Bonds payable (including the current portion)

         The fair value of bonds payable is based on the price provided by counterparty financial institutions.

         Millions of yen

         Thousands of

         U.S. dollars

         2024		2023				2024
         Amounts presented in the consolidated balance sheets		25,000		25,000		$ 158,048
         Fair value		24,409		24,843		154,312
         Differences		(591)		(157)		$ (3,736)

         Long-term bank loans (including the current portion)

         The fair value of long-term bank loans is estimated as the discounted present value of the total principal and interest using the assumed interest rates for equivalent new loans.

         Millions of yen

         Thousands of

         U.S. dollars

         2024		2023				2024
         Amounts presented in the consolidated balance sheets		46,306		52,043		$ 292,742
         Fair value		46,021		51,453		290,941
         Differences		(285)		(590)		$ (1,801)

         Long-term lease liabilities (including the current portion)

         The fair value of long-term lease liabilities is estimated as the discounted present value of the total principal and interest using the assumed interest rates for equivalent new lease transactions.

         Millions of yen

         Thousands of

         U.S. dollars

         2024		2023				2024
         Amounts presented in the consolidated balance sheets		21,863		20,069		$ 138,216
         Fair value		21,867		20,282		138,241
         Differences		4		213		$ 25

         Derivatives transactions*1

         The fair value of derivatives transactions is stated at the price presented by the counterparty financial institution.

         Millions of yen

         Thousands of

         U.S. dollars

         2024		2023				2024
         Amounts presented in the consolidated balance sheets		(168)		149		$ (1,062)
         Fair value		(168)		149		(1,062)
         Differences		-		-		$ -

         *1

         The fair value of these derivatives transactions is included in the applicable items and stated accordingly. The net asset or liability which results from derivatives transactions except for these show the net amount. If the account balance is a debt, it is indicated by parenthesis ( ).

         *2

         Notes to "Cash and time deposits", "Notes and accounts receivable - trade", "Notes and accounts payable - trade", "commercial paper" and "Short-term bank loans" have been omitted since their carrying values approximate fair values because of their short maturities.

      2. Amounts presented in the consolidated balance sheets of equity securities without market price

         Millions of yen

         Thousands of

         U.S. dollars

         2024 2023 2024

         Nonlisted equity securities 1,634 1,632 $ 10,330

      3. The redemption schedule for receivables after the close of the fiscal year

         Millions of yen

         Thousands of

         U.S. dollars

         (Cash and time deposits)		2024		2023		2024
         Within 1 year From 1 year to 5 years From 5 years to 10 years Over 10 years		86,637 - - -		52,880 - - -		$ 547,711 - - -
         		Milli	ons of	yen		Thousands of U.S. dollars
         (Notes and accounts receivable - trade)		2024		2023		2024
         Within 1 year From 1 year to 5 years From 5 years to 10 years Over 10 years		130,370 - - -		107,794 - - -		$ 824,188 - - -

      4. The redemption schedule for bonds payable, long-term bank loans and Long-term lease liabilities after the close of the fiscal year

      Millions of yen

      Thousands of

      U.S. dollars

      		2024			2023			2024
      Within 1 year Bonds payable			-			-		$ -
      Long-term bank loans			5,166			6,051		32,659
      Long-term lease liabilities			6,396			4,841		40,435
      			11,562			10,892		$ 73,094
      From 1 year to 2 years Bonds payable			5,000			-		$ 31,610
      Long-term bank loans			9,805			5,037		61,986
      Long-term lease liabilities			5,473			4,282		34,600
      			20,278			9,319		$ 128,196
      From 2 years to 3 years Bonds payable			-			5,000		$ -
      Long-term bank loans			20,367			9,687		128,758
      Long-term lease liabilities			5,412			3,779		34,214
      			25,779			18,466		$ 162,972
      From 3 years to 4 years Bonds payable			10,000			-		$ 63,219
      Long-term bank loans			4,567			20,301		28,872
      Long-term lease liabilities			3,603			3,711		22,778
      			18,170			24,012		$ 114,869
      From 4 years to 5 years Bonds payable			-			10,000		$ -
      Long-term bank loans			6,400			4,567		40,460
      Long-term lease liabilities			579			2,723		3,660
      			6,979			17,290		$ 44,120
      Over 5 years Bonds payable			10,000			10,000		$ 63,219
      Long-term bank loans			-			6,400		-
      Long-term lease liabilities			400			733		2,529
      			10,400			17,133		$ 65,748

   3. Fair value information of financial instruments by level of inputs

   Based on the observability and the singnificance of the inputs used to determine fair values, fair value information of financial instruments is presented by categorizing measurements into the following three levels:

   Level 1 fair value: fair value measured by quoted prices of identical assets or liabilities in active markets. Level 2 fair value: fair value measured using observable inputs other than Level 1.

   Level 3 fair value: fair value measured using unobservable inputs.

   When multiple inputs of different categories are used in measuring fair value, the Company and its subsidiaries classify the fair values into the category from which the lowest inputs were used.

   1. Financial instruments measured at fair values in the consolidated balance sheet For the year ended December 31, 2024

      Caregory

      Fair value

      Millions of yen

      Level 1 Level 2 Level 3 Total

      Investment in securities Other securities
      Securities	5,077	-	-	5,077
      Derivative transactions
      Currency-related	-	(168)	-	(168)
      Total assets	5,077	(168)	-	4,909

      Thousands of U.S. Dollars

      Caregory Fair value

      Level 1 Level 2 Level 3 Total

      Investment in securities Other securities
      Securities	32,096	-	-	32,096
      Derivative transactions
      Currency-related	-	(1,062)	-	(1,062)
      Total assets	32,096	(1,062)	-	31,034

      For the year ended December 31, 2023

      Caregory Fair value

      Millions of yen

      Level 1 Level 2 Level 3 Total

      Investment in securities Other securities
      Securities	16,118	-	-	16,118
      Derivative transactions
      Currency-related	-	149	-	149
      Total assets	16,118	149	-	16,267

   2. Financial instruments other than those measured at fair values in the consolidated balance sheet For the year ended December 31, 2024

   Caregory Fair value

   Millions of yen

   Level 1 Level 2 Level 3 Total

   Bonds	-	24,409	-	24,409
   Long-term bank loans	-	46,021	-	46,021
   Long-term lease liabilities	-	21,867	-	21,867
   Total liabilities	-	92,297	-	92,297

   Thousands of U.S. Dollars

   Caregory Fair value

   Level 1 Level 2 Level 3 Total

   Bonds		-	154,312	- 154,312
   Long-term bank loans		-	290,941	- 290,941
   Long-term lease liabilities		-	138,241	- 138,241
   Total liabilities		-	583,494	- 583,494
   For the year ended December 31, 2023
   				Millions of yen
   Caregory			Fair value
   Level 1 Level 2 Level 3 Total
   Bonds	-	24,843	-	24,843
   Long-term bank loans	-	51,454	-	51,454
   Long-term lease liabilities	-	20,282	-	20,282
   Total liabilities	-	96,579	-	96,579

   Note:

   Explanation of valuation methods and inputs used to calculate fair value

   Investment in securities

   The fair value listed equity securities is measured using quoted prices. Because these prices involve transactions on an active market, the fair value is classified as Level 1 fair value.

   Bonds

   The fair value of the bonds is measured using quoted market prices. Since the bonds have market prices but are not traded in an active market, the fair value is classified as Level 2 fair value.

   Long-term bank loans

   The fair value of long-term bank loans is determined by discounting the amount of the total principal and interest at the interest rate that would apply to a similar new loan. The fair value is classfied as Level 2 fair value.

   Long-term lease liabilities

   The fair value of long-term lease liabilities is determined by discounting the amount of the total principal and interest at the interest rate that would apply to a similar new lease transactions. The fair value is classfied as Level 2 fair value.

   Derivative transactions

   The fair value of forward exchange contracts is measured using the present discounted value method based on observable inputs, such as exchange rates.The fair value is classified as Level 2 fair value.

10. Securities

    A The following tables summarize acquisition costs and book values (fair values) of securities with available fair values as of December 31, 2024 and 2023.

    Available-for-sale securities with available fair values exceeding acquisition costs Thousands of

    Millions of yen U.S. dollars

    2024 2023 2024

    Acquisition cost:

    Equity securities 2,303 6,303 $ 14,559 Bonds - - -

    Other - - -

    2,303 6,303 $ 14,559

    Book value:

    Equity securities 5,077 16,118 $ 32,096 Bonds - - -

    Other - - -

    5,077 16,118 $ 32,096

    Difference:

    Equity securities 2,774 9,815 $ 17,537 Bonds - - -

    Other - - -

    2,774 9,815 $ 17,537

    Available-for-sale securities with available fair values not exceeding acquisition costs Thousands of

    Millions of yen U.S. dollars

    		2024		2023		2024
    Acquisition cost:
    Equity securities			-		- $		-
    Bonds			-		-		-
    Other			-		-		-
    			-		- $		-
    Book value:
    Equity securities			-		- $		-
    Bonds			-		-		-
    Other			-		-		-
    			-		- $		-
    Difference:
    Equity securities			-		- $		-
    Bonds			-		-		-
    Other			-		-		-
    			-		- $		-

    B Total sales of available-for-sale securities for the years ended December 31, 2024 and 2023 were as follows:

    Millions of yen

    Thousands of

    U.S. dollars

    		2024		2023 2024
    Amount of sales
    Equity securities		10,798		15,999 $ 68,264
    Bonds		-		- -
    Other		-		- -
    		10,798		15,999 $ 68,264
    Total gain on sales
    Equity securities		6,731		15,106 $ 42,553
    Bonds		-		- -
    Other		-		- -
    		6,731		15,106 $ 42,553
    Total loss on sales
    Equity securities		-		- $ -
    Bonds		-		- -
    Other		-		- -
    		-		- $ -

11. Derivative Financial Instruments and Hedging Transactions

    Year ended December 31, 2024

    1. Derivative transactions for which hedge accounting does not apply Currency related

       None

    2. Derivative transactions for which hedge accounting applies

    Currency related Millions of yen Thousands of U.S. dollars

    Hedge accounting method	Type of transaction	Hedged items	Contract amount	Portion over 1 year	Fair value
    	Forward foreign exchange
    	contracts
    Deferred hedges	Selling: USD Selling: EUR	Accounts receivable - trade	¥5,645 113	- -	¥(163) (1)
    	Selling: CAD		662	-	(4)
    	Selling: AUD		361	-	(1)
    	Forward foreign exchange
    Hedged receivables translated using forward contract rates	contracts Selling: USD Selling: EUR	Accounts receivable - trade	¥2,159 681	- -	(Note) (Note)
    	Selling: CAD		990	-	(Note)
    	Selling: AUD		494	-	(Note)

    Contract amount	Portion over 1 year	Fair value
    $35,687	-	$(1,030)
    714	-	(6)
    4,185	-	(25)
    2,282	-	(6)
    $13,649	-	(Note)
    4,305	-	(Note)
    6,259	-	(Note)
    3,123	-	(Note)

    Note: The fair value of gain or loss resulting from foreign exchange contracts embedded in receivables subject to hedging is included in the fair value of the corresponding receivables.

    Year ended December 31, 2023

    1. Derivative transactions for which hedge accounting does not apply

       Currency related None

    2. Derivative transactions for which hedge accounting applies

    Currency related Millions of yen

    Hedge accounting method	Type of transaction	Hedged items	Contract amount	Portion over 1 year	Fair value
    	Forward foreign exchange
    	contracts
    Deferred hedges	Selling: USD Selling: EUR	Accounts receivable - trade	¥3,675 396	- -	¥138 8
    	Selling: CAD		311	-	3
    	Selling: AUD		289	-	0
    	Forward foreign exchange
    Hedged receivables translated using forward contract rates	contracts Selling: USD Selling: EUR Selling: CAD	Accounts receivable - trade	¥3,039 546 1,087	- - -	(Note) (Note) (Note)
    	Selling: AUD		448	-	(Note)

    Note: The fair value of gain or loss resulting from foreign exchange contracts embedded in receivables subject to hedging is included in the fair value of the corresponding receivables.

12. Pledged Assets

    	Millions of yen			Thousands of U.S. dollars
    	2024	2023		2024
    Property, plant and equipment - net of accumulated depreciation	17,945	18,132		$ 113,447
    	17,945	18,132		$ 113,447
    There is no obligation corresponding to the assets above.

13. Short-term debt, Long-term debt and Long-term lease liabilities

Short-term debt at December 31, 2024 and 2023 consisted of the following:

Thousands of

Millions of yen U.S. dollars 2024 2023 2024

Short-term bank loans at December 31, 2024 and 2023 bore interest at the weighted average rate of 5.46% and 5.25%, respectively.

Thousands of

Millions of yen U.S. dollars 2024 2023 2024

Loans principally from banks and insurance companies at December 31, 2024 and 2023 bore interest at the weighted average rate of 0.60% and 0.67%, respectively.

Long-term lease liabilities at December 31, 2024 and 2023 consisted of the following:

Thousands of

Millions of yen U.S. dollars 2024 2023 2024

Lease liabilities at December 31, 2024 and 2023 bore interest at the weighted average rate of 4.03% and 3.63%, respectively.

Long-term lease liabilities 21,863 20,069 $ 138,216

14. Severance and Retirement Benefits

1. Summary of adopted retirement benefit plans

   The Companies have funded or unfunded defined benefit pension plans and funded or unfunded defined contribution pension plans to provide retirement and severance benefits to substantially all employees. Under the defined benefit pension plans (all funded type), employees are entitled to lump-sum payments or pension payments based on their earnings and the length of service at retirement or termination of employment. Under lump-sum pension plans (some of these plans are funded by pension trusts), employees are entitled to lump-sum payments based on their earnings and the length of service at retirement or termination of employment. In addition, certain subsidiaries use the simplified method to determine pension benefit obligations.

2. Defined benefit plans, including plans applying the simplified method

   1. Movement in retirement benefit obligations

      Millions of yen Thousands of U.S. dollars
      		2024			2023		2024
      Balance at January 1			20,231			21,469	$	127,899
      Service cost			1,144			1,256		7,232
      Interest cost			315			220		1,991
      Actuarial loss (gain)			(406)			(1,109)		(2,567)
      Benefits paid			(1,525)			(1,613)		(9,641)
      Other			(4)			8		(25)
      Balance at December 31			19,755			20,231	$	124,889
      (2) Movement in plan assets
      Millions of yen Thousands of U.S. dollars
      		2024			2023		2024
      Balance at January 1			27,645			19,940	$	174,769
      Expected return on plan assets			27			2		171
      Actuarial gain (loss)			6,275			8,375		39,670
      Contributions paid by the employer			16			17		101
      Benefits paid			(722)			(690)		(4,564)
      Decrease due to the deconsolidation			-			-		-
      Balance at December 31			33,241			27,644	$	210,147

      (3) Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits

      2024			2023			2024
      Funded retirement benefit obligation			16,290		16,680		$		102,984
      Plan assets			(33,241)		(27,644)				(210,147)
      			(16,951)		(10,964)				(107,163)
      Unfunded retirement benefit obligations			3,465		3,551				21,905
      Total net liability (asset) for retirement benefits			(13,486)		(7,413)				(85,258)
      Net defined benefit liability			3,465		3,524				21,905
      Net defined benefit asset			(16,951)		(10,937)				(107,163)
      Total net liability (asset) for retirement benefits			(13,486)		(7,413)		$		(85,258)
      (4) Retirement benefit cost			Millions of yen				Thousands of		U.S. dollars
      		2024			2023		2024
      Service cost			1,144			1,256	$		7,232
      Interest cost			315			219			1,991
      Expected return on plan assets			(27)			(2)			(171)
      Amortization of actuarial gains and losses			(1,329)			(514)			(8,401)
      Past service costs amortization			(0)			(0)			(0)
      Total retirement benefit costs			103			959	$		651
      (5) Remeasurements of defined benefit plans
      Millions of yen Thousands of U.S. dollars
      		2024			2023		2024
      Past service costs			(0)			(1)	$		(0)
      Actuarial gains and losses			5,353			8,970			33,841
      Total balance			5,353			8,969	$		33,841
      (6) Accumulated adjustments for retirement benefits
      Millions of yen Thousands of U.S. dollars
      		2024			2023			2024
      Past service costs that are yet to be recognized			1			1		$	6
      Actuarial gains and losses that are yet to be recognized			22,305			16,951			141,010
      Total balance			22,306			16,952		$	141,016
      (7) Plan assets
      1. Plan assets comprise:
      		2024			2023
      Equity securities			97	％		96	％
      Life insurance accounts			0	％		0	％
      Bonds			2	％		2	％
      Other			1	％		1	％
      Total			100	％		100	％

      Millions of yen

      Thousands of U.S. dollars

      (Note 1) The pension trust set up for lump-sum plans held 95％ of total plan assets and 95％ of total plan assets at December 31, 2024 and 2023, respectively. (Note 2) Life insurance accounts consist of investments in life insurance general accounts and special accounts.

      General accounts are guaranteed for the amount of principal and interest, while special accounts are not guaranteed for their investment return.

      2. Long-term expected rate of return

      Current and target asset allocations and historical and expected returns on various categories of plan assets are considered in determining long-term expected rates of return.

      (8) Actuarial assumptions

      The Principal actuarial assumptions

      2024 2023

      Discount rate Mainly 1.7 ％ 1.0 ％

      Long-term expected rate of return Mainly 0.0 ％ 0.0 ％

      (Note) The company and its consolidated subsidiaries do not use expected salary increase rates when calculating retirement benefit obligations, because they have adopted a point system.

3. Defined contribution plan

Contributions to the plan for the consolidated subsidiaries were ￥2,458 million ($15,539 thousand) and ￥2,040 million at December 31, 2024 and 2023, respectively.