Change in assumptions for estimating business performance in light of the COVID-19 impact

「Deferred tax assets are recognized based on estimates of the timing and amount of taxable income generated under future business plans. These estimates may be affected by changes in uncertain future economic conditions and other factors.」

「The Company expects economic activity to normalize as countries' measures against COVID-19 are eased or discontinued. It estimates the recoverability of deferred tax assets based on the assumption that demand for its core products will continue to recover from the following consolidated fiscal year onward.」

「The Company expects the global economy to recover moderately through economic stimulus and fiscal policies in various countries and regions, although the resolution of COVID-19 will take time and its impact on the economy will be prolonged. It estimates the recoverability of deferred tax assets based on the assumption that demand for its core products will recover moderately from the following consolidated fiscal year onward.」

「There have been no material changes since the second-quarter report, which changed the description of significant accounting estimates and the assumptions used in those estimates in the section entitled “Management's Discussion and Analysis of Financial Condition, Results of Operations and Cash Flows” in the annual securities report for the previous fiscal year.」

「The Company has changed the description of significant accounting estimates and the assumptions used in those estimates in the section entitled “Management's Discussion and Analysis of Financial Condition, Results of Operations and Cash Flows” in the annual securities report for the previous fiscal year. In preparing the financial statements, the Company had made estimates and forecasts based on the assumption that, although the impact of a certain decline in revenue caused by the spread of COVID-19 would continue through the first quarter of the fiscal year, demand would gradually recover from the second quarter onward. However, demand for carrier did not recover in the second quarter because the operating rates of copiers, commercial printing presses and other equipment in offices remained sluggish and inventory adjustments continued. From the third quarter onward, although the timing of the end of COVID-19 remained unforeseeable, economic activity was gradually resuming, and the Company expected the economy to recover moderately, supported by the effects of economic stimulus and fiscal policies in various countries and regions. The Company therefore revised its estimates and forecasts on the assumption that carrier demand in the second half would gradually recover from the third quarter after the inventory adjustment phase through the second quarter, but would not return to near previous demand levels until the following fiscal year or later. However, it is difficult to reasonably estimate and forecast all impacts at this point, and they may vary depending on the timing of the end of the pandemic and other factors.」