Review of expense classifications and segment performance management following the introduction of a new accounting system

「From the second quarter of the consolidated fiscal year, R&D expenses for new business areas, which had previously been allocated to each reporting segment, were reclassified as part of expenses relating to the head office functions included in the adjustment to segment profit, following a review of management accounting methods to enable more appropriate evaluation of segment performance.」

「The company and certain consolidated subsidiaries have changed their accounting method from the current fiscal year, recording filling costs and other expenses previously included in selling, general and administrative expenses under cost of sales.」

「The Company also reviewed its performance management classifications and reclassified Air Water Materials Inc. and 8 other companies, which had previously been included in the industrial gas-related business, under the other businesses. In addition, financial income and expenses, including financing costs previously included in each segment, are now recorded collectively under adjustments.」

「Beginning in the first quarter of the current consolidated fiscal year, the company and certain consolidated subsidiaries changed the method of accounting for filling costs and other expenses previously recorded as selling, general and administrative expenses, recording them instead as cost of sales. This change was made after the new accounting system went into operation, to clarify the correspondence between net sales and cost of sales and align it more closely with the evaluation of the group's performance. In addition, to manage the performance of each segment more accurately, the company abolished the internal interest rate system and records financing costs and other financial income and expenses previously included in each segment collectively under Adjustments.」