Business Risks

Listed below are representative items that could have a substantial effect on the decisions of investors. The Company Group(the Company and its consolidated subsidiaries)’s business and other related risks are not limited to these items.
The statements of prospective matters contained herein are based upon assessments made by the Company Group as of March 31, 2017.

(1)Drastic Changes to Demand and Market Structure

The Electronics and Information Technology segment is a core business area of the Company Group, and drastic changes could occur in regards to devices, components, and materials due to technological innovation in this area. The Company Group endeavors to meet new and emerging needs with its extensive and advanced specialty glass technology. Nevertheless, due to change to new devices, the demand for existing products could decline, which could negatively impact the business results, and/or financial results of the Company Group.
In addition, significant fluctuations in product price or supply volume as a result of disruption of the balance between supply and demand and intense market competition, may impact the Company Group’s business operations, business results, and/or financial situations.

(2)Capital Expenditure Risks

The Company Group produces various types of specialty glass products. Substantial funds and time are necessary when creating new facilities for the production thereof. Existing facilities also require continuous improvements in production efficiency.
The Company Group strives to put in place new production facilities in a timely and optimal manner and implement continuous improvements in the existing facilities. However, in case demand forecasts change substantially, in case predicted production efficiency or production capacity is not achieved, or in case the prices for major parts for the construction of such facilities rapidly change due to their market conditions, business operations, business results, and/or financial situations of the Company Group could face impacts.

(3)Risks related to Certain Products

There are certain products that the Company Group produces for the supply to specific customers. In regard to such products, the investment plans, sales plans, or procurement policies of such customers could have impacts on the Company Group’s business operations, business results, and/or financial situations.

(4)Risks related to Procurement of Materials and Other Items

In connection with the Company Group’s production, the dependence on procuring raw materials and fuels from overseas is quite high. Some types of materials used in production can only be purchased from a limited number of suppliers. In the case of a supply shortage or delay, or in the case of a sudden increase in material prices, the Company Group’s business operations, business results, and/or financial situations could be impacted.

(5)Risks related to Legal Restrictions

The Company Group is subject to various laws and regulations in the countries and areas in which it operates. Such laws and restrictions are relating various areas such as approval of investments, import and export restrictions, business transactions, antitrust, product liability, environment, labor, patents, taxes, and currency exchange. Although the Company Group strives to comply with these laws and regulations and conduct fair corporate activities, should the results of lawsuits or legal procedures against the Company Group for violation of laws and regulations or restrictions be unfavorable to the Company Group, the Company Group’s business operations, business results, and/or financial situations could be impacted.

(6)Risks related to Intellectual Property Rights

The Company Group endeavors to acquire intellectual property rights that are and will be useful in current and future business activities. We also examine such rights owned by other companies to prevent any legal dispute. In case the Company Group is subjected to legal actions regarding intellectual property rights, the Company Group’s business operations, business results, and/or financial situations could be impacted.

(7)Environmental Risks

The Company Group is mainly engaged in glass business which consumes a lot of resources and energy and imposes considerable burdens on environment. The Company Group strives to develop environmentally conscious products and conduct improvements in facilities and management systems that will help reduce environmental burdens. We also improve production efficiency by implementing indexes to ensure that energy and natural resources are being used effectively and optimally. We will promote “3R” activities (reduce, reuse, and recycle) to reduce environmental burdens. However, if environmental restrictions or the social expectations towards environmental issues become stricter, the Company Group’s business operations, business results, and/or financial situations could be impacted.

(8)Risks related to Fluctuations in Exchange and Interest Rates and Others

The Company Group is conducting its business all over the world. Therefore, the Company Group tries to reduce currency risks stemming from exchange rate fluctuations by taking measures such as holding exchange contracts. The Company Group’s business operations, business results, and/or financial situations could be impacted by the changes in the exchange rates.
Also, interest rate trends and fluctuations in securities markets could impact the Company Group’s business operations, business results, and/or financial situations.

(9)Risks related to Overseas Business Operations

The Company Group is conducting its business all over the world. Overseas operations have potential risks such as

  • Unexpected changes to laws and regulations
  • Risks stemming from international taxation systems such as transfer price taxation
  • Business practices that are unique to a particular country or area
  • Changes to political or social situations
  • Social confusion due to terrorism, war, infectious diseases, or other causes

(10)Securing Human Resources

The Company Group places its human resources strategy as one of the key factors in its business operations. We acknowledge the need to secure and educate employees appropriately for future business development. In the event that it becomes difficult to secure appropriate human resources, the Company Group’s business operations could become limited and opportunities could be lost, resulting in an impact on the Company Group’s business operations, business results, and/or financial situations.

(11)Impairment Accounting for Fixed Assets

The Company applies impairment accounting for fixed assets. Depending on market trends and the Company Group’s profitability, impairment loss could be incurred on equipment and facilities, which could have impacts on the Company Group’s business operations, business results, and/or financial situations. The Company Group implements as needed disposal, sales and conversion of a part of unused property, plant, and equipment. However, depending on the trend of future economic situations and real estate prices, impairment loss could be incurred.

(12)Risks related to Information Management

The Company Group may acquire confidential information regarding clients, other associations, and/or individuals (including employees) during the course of its business activities. The Company Group endeavors to treat such information with extreme care and to implement measures such as effectively using security systems to prevent any leakage of information by constituting the Information Management Committee, but it is impossible to completely deny the possibility of leakage. In case such information is leaked to an outside party, an impacted party could seek compensation for damages, and/or the corporate image of the Company Group could become damaged. In addition, a leak of confidential information regarding new technology could have an impact on the Company Group’s business operations, business results, and/or financial situations.

(13)Risks related to Natural Disasters and Accidents

Natural disasters such as earthquakes and typhoons or accidents such as fires could cause seriously damages to the Company Group’s facilities and equipment as well as difficulties in the supply of electricity, gas or water. This could result in the halting of all or part of the Company Group’s production, which could in turn lead to delays in production and distribution. Large expenditures could also become necessary to repair damaged equipment in such a case. As a result, the Company Group’s business operations, business results, and/or financial situations could be impacted.