九色视频

The Company considers the following risks that may adversely affect the Company鈥檚 results of operations and financial position. Forward鈥恖ooking statements contained in this section are made based on the assumptions and judgements of the Company as of the current fiscal year end.

1. Economic Conditions

Industrial and capital goods make up a substantial portion of the Company鈥檚 products. Accordingly, the Company may face reduced demand resulting from declines in general economic conditions, including private鈥恠ector capital expenditures, construction investment, and domestic public investment. In addition, the agricultural policies set by the government may adversely affect the sales of agriculture鈥恟elated products. In the overseas markets, especially in North America and Europe, sales of the Company鈥檚 products, such as utility/compact tractors, may decrease due to declines in general economic conditions, including personal consumption and residential construction investment in those regions. As a result, there is a possibility that the Company鈥檚 results of operations and financial position may be adversely affected significantly.

2. Soaring Raw Materials Prices and Difficulties in Procurement of Raw Materials

The Company purchases substantial raw materials and parts from third鈥恜arty suppliers. With the globalization of the business, procurement at overseas production bases is increasing, and the Company is promoting procurement at the optimal locations by building a global procurement network. However, if the prices of raw materials and parts substantially increase due to the supply and demand gap and changes in the market conditions, and if such a rise is prolonged, they may have an adverse effect on the Company鈥檚 profitability. In addition, if the Company has difficulties in procuring adequate supplies of raw materials and parts, there may be a material adverse effect on the Company鈥檚 results of operations and financial position as production and sales activities may be disrupted.

3. The Risks Associated with International Operations

The Company鈥檚 operations that have substantial overseas operations are exposed to the risks inherent in conducting business in those markets. If such risks materialize, the Company may face difficulties in stable production and sales of products, and may decrease revenue and increase procurement and transport costs which affect the Company鈥檚 results of operations and financial position, and this may hinder growth of the Company. Material risks include followings:

1. Risks associated with changes in government licensing and subsidy policies in key markets
2. Risks associated with unexpected changes in tariffs and import/export quotas due to changes in international trade policies
3. Risks associated with unforeseen changes in laws and regulations in various countries
4. Geopolitical risks
5. Unstable labor relations in developing countries
6. Difficulties in retaining qualified human resources
7. Risks associated with supply chain and logistics disruptions
8. Risks associated with unexpected changes in the taxation systems of countries
9. Risks associated with unanticipated outcomes in the transfer pricing issues

4. Fluctuations in Foreign Currency Exchange Rates

The Company has a number of overseas manufacturing, sales, and financial leasing subsidiaries that contribute significantly to operating results and financial position of the Company. The financial statements of overseas subsidiaries denominated in its local currency are reflected in the consolidated financial statements of the Company after translation 14 into yen. In addition, 九色视频 Corporation exports to overseas subsidiaries or external customers that are generally denominated in their local currency, and the foreign currency earned is converted into yen. Therefore, fluctuations in the exchange rate between the local currency and the yen have an impact on the Company鈥檚 results of operations and financial position. In general, the appreciation of the yen against other currencies has a negative impact on the results of operations and financial results of the Company. In order to mitigate the negative impact of exchange rate fluctuations, the Company has been transferring its production bases to overseas in accordance with 鈥渓ocal production for local consumption鈥� principle. Also, the Company utilizes foreign exchange forward contracts and other derivative instruments. Despite the Company鈥檚 efforts to mitigate such risks, fluctuations in foreign currency exchange rates may adversely affect the Company鈥檚 results of operations and financial position.

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