Refinement of the period allocation of warranty costs following a change in the method of recognizing provisions for product warranties

「Previously, the Company recorded after-sales service expenses during the product warranty period when incurred. However, as the proportion of the Fine Mechatronics business, in which these expenses primarily arise, in the Company's total sales increased, the Company developed and accumulated methods for collecting the data necessary to identify these expenses. As a result, from the third quarter of the current consolidated fiscal year, it became possible to reasonably estimate the amount expected to be required in the future. Accordingly, to refine the measurement of income and expenses by period, the Company has changed its method to record as a product warranty provision an estimated amount calculated based on past performance and other factors. As a result, compared with the previous method, operating profit, ordinary profit and quarterly profit before income taxes decreased by ¥120 million each.」