Roland : Quarterly Securities Report For the Third Quarter of the 51th Fiscal Year

Quarterly Securities Report

For the Third Quarter of the 51st Fiscal Year (July 1, 2022 through September 30, 2022)

Roland Corporation

1. This is an English translation of the Quarterly Securities Report (Shihanki Hokokusho), which was produced based on Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan and was filed via the Electronic Disclosure for Investors' NETwork (EDINET) system as set forth in Article 27-30-2 of the same act. The translation includes a table of contents and pagination that are not included in the electronic filing.
2. Appended to the back of this document are English translations of the independent auditors' Quarterly Review Report attached to the Quarterly Securities Report when it was filed using the aforementioned method, and the Confirmation Note that was filed at the same time as the Quarterly Securities Report.
3. This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

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	Table of Contents
		Page
Quarterly Securities Report for the Third Quarter of the 51st Fiscal Year
Cover ........................................................................................................................................................................................................	3
Section 1 Company Information ............................................................................................................................................................	4
Item 1. Overview of Company ...........................................................................................................................................................	4
1.	Key Financial Data .................................................................................................................................................................	4
2.	Description of Business ..........................................................................................................................................................	4
Item 2. Overview of Business .............................................................................................................................................................	6
1.	Business Risks ........................................................................................................................................................................	6
2.	Management's Discussion and Analysis of Financial Position, Operating Results and Cash Flows ......................................	6
3.	Material Contracts, etc. ...........................................................................................................................................................	8
Item 3. Information about Reporting Company ..............................................................................................................................	9
1.	Company's Shares, etc............................................................................................................................................................	9
2.	Directors and Other Officers.................................................................................................................................................	10
Item 4. Financial Information .........................................................................................................................................................	11
1.	Quarterly Consolidated Financial Statements, etc.................................................................................................................	12
2.	Other information .................................................................................................................................................................	20
Section 2 Information about Reporting Company's Guarantor, etc. ..............................................................................................	21
Independent Auditor's Quarterly Review Report
Confirmation Note

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Cover

Document title	Quarterly Securities Report
Clause of stipulation	Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act
Place of filing	Director, Kanto Local Finance Bureau
Filing date	November 10, 2022
Quarterly accounting period	The third quarter of the 51st fiscal year (July 1, 2022 through September 30, 2022)
Company name	Roland Kabushiki Kaisha
Company name in English	Roland Corporation
Title and name of representative	Gordon Raison, CEO and Representative Director
Address of registered headquarters	2036-1 Nakagawa, Hosoe-cho,Kita-ku,Hamamatsu-shi, Shizuoka
Telephone number	[phone]
Name of contact person	Shunsuke Sugiura, CFO and Director
Nearest place of contact	2036-1 Nakagawa, Hosoe-cho,Kita-ku,Hamamatsu-shi, Shizuoka
Telephone number	[phone]
Name of contact person	Shunsuke Sugiura, CFO and Director
Place for public inspection	Tokyo Stock Exchange, Inc.
	(2-1 Nihonbashi Kabutocho, Chuo-ku, Tokyo)

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Section 1 Company Information

Item 1. Overview of Company

1. Key Financial Data

Fiscal year		50th	51st	50th
	Nine-month Period	Nine-month Period
Accounting period		(January 1, 2021 through	(January 1, 2022 through	(January 1, 2021 through
	September 30, 2021)	September 30, 2022)	December 31, 2021)
Net sales	(million yen)	60,668	64,622	80,032
Ordinary profit	(million yen)	8,936	5,872	10,102
Profit attributable to owners of parent	(million yen)	7,741	5,075	8,586
Comprehensive income	(million yen)	9,256	9,716	11,361
Net assets	(million yen)	26,542	32,387	28,656
Total assets	(million yen)	51,028	68,594	52,807
Basic earnings per share	(yen)	282.25	185.43	312.73
Diluted earnings per share	(yen)	276.15	182.54	306.26
Equity-to-asset ratio	(%)	51.5	46.8	53.7
Net cash provided by (used in)	(million yen)	4,207	(3,934)	4,929
operating activities
Net cash provided by (used in)	(million yen)	(545)	(791)	(803)
investing activities
Net cash provided by (used in)	(million yen)	(5,535)	4,953	(6,071)
financing activities
Cash and cash equivalents	(million yen)	8,787	8,201	8,781
at end of period
Fiscal year		50th	51st
	Third quarter	Third quarter
Accounting period		(July 1, 2021 through	(July 1, 2022 through
	September 30, 2021)	September 30, 2022)
Basic earnings per share	(yen)	56.74	42.18

Notes: 1. Non-consolidated financial data are not presented as the Company prepares quarterly consolidated financial statements.

1. Basic earnings per share and diluted earnings per share are computed using the average number of shares of common stock during the period, which is calculated by subtracting the number of treasury shares from these shares. These treasury shares include the treasury shares remaining in Board Benefit Trust, Employee Stock Ownership Plan Trust and Employee Shareholding Association-type ESOP Trust.
2. The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) from the beginning of the fiscal year ending December 31, 2022. Accordingly, the key financial data for the fiscal year ending December 31, 2022 are those after applying the said accounting standard.

2. Description of Business

There were no significant changes in the business in which the Company and its subsidiaries and affiliates (collectively, the "Group") operate during the nine months ended September 30, 2022.

Meanwhile, at the Board of Directors meeting held on September 12, 2022, the Company resolved that Roland Drum Corporation ("RDC"), which was newly established as a wholly owned subsidiary of the Company, will make Drum Workshop, Inc. a subsidiary through the acquisition of all its outstanding shares. The acquisition procedure was completed as of October 3, 2022.

For the details, please refer to "Item 4. Financial Information, 1. Quarterly Consolidated Financial Statements, etc., Notes to Quarterly Consolidated Financial Statements, (Subsequent events)."

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Item 2. Overview of Business

1. Business Risks

During the nine months ended September 30, 2022 (hereinafter the "period under review"), among the matters related to Overview of Business and Financial Information stated in this Quarterly Securities Report, no major risks that might have a material impact on the financial position, operating results and cash flows of the Group have been recognized by the management. There were no significant changes in the matters related to "Business and other risks" stated in the Annual Security Report for the previous fiscal year.

2. Management's Discussion and Analysis of Financial Position, Operating Results and Cash Flows

This document contains forward-looking statements, which are based on the Group's estimates and assumptions made as of the end of the period under review.

The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 of March 31, 2020; hereinafter, referred as the "Accounting Standard for Revenue Recognition") since the beginning of the fiscal year ending December 2022 .

Under the Accounting Standard for Revenue Recognition, sales discounts, which were previously recognized in non-operating expenses, have been reclassified as deductions from net sales. With this change in our accounting standard, net sales and operating profit decline, whereas ordinary profit, profit attributable to owners of parent, and cash flows remain unaffected.

Figures for the period under review as referred to in "Business performance" below represent the results after the application of the Accounting Standard for Revenue Recognition. Therefore, direct year-on-year comparisons of these figures are not presented. Instead, for better understanding of the operating performance for the period under review, year-on-year after adjustment are presented, which are percentages calculated based on the assumption that the results for the period under review had been measured by the same accounting standard as used in the fiscal year ended December 31, 2021.

1. Business performance
   During the period under review, while new COVID-19 cases were contained to some extent and social and economic activities got back on a recovery track, the Group forced to face some downside risks, such as the prolonged Russia-Ukraine conflict, global inflation and drastic changes in exchange rate and interest rates. Signs of economic downturn were noticeable especially in the third quarter and later of the current fiscal year. Market conditions remained highly uncertain particularly in China, as the recovery from the lockdown in Shanghai was relatively tepid.
   In the electronic musical instruments business hemisphere, compared to the pre-pandemic era, sales standards went on to become a further solid position endorsed by the entrenched new lifestyle brought by the COVID-19 pandemic as a whole. On the procurement and supply sides, by implementing various measures, the circumstances have been moving out of the worst phase of COVID-19 and order backlog was progressed successfully. Meanwhile, on the cost side, although ocean transportation and raw material prices were remained higher than expected, the Group has focused on to optimize its product prices with the careful eyes on the market conditions and competitive situations of each region.
   Moreover, with a view to further growth of the drums business, the Company published an announcement that Roland Drum Corporation, one of the Group's consolidated subsidiaries would acquire all the outstanding shares of U.S. based Drum Workshop, Inc. and make it a wholly owned subsidiary as of September 12, and acquisition procedure was completed as of October 3. Through this partnership between the major brands of electronic and acoustic drums, the Group will develop a new drum market. While Roland Drum Corporation is subjected to be consolidated commencing from the fourth quarter of the current fiscal year, this transaction will have no significant impact and the consolidated forecast has not been revised. However, in the rise of any matters to be disclosed, announcements shall be published in a swift manner.
   As a result of the above, during the period under review, the Group recorded net sales of ¥64,622 million (up 7.6% year on year after adjustment). In terms of profit, the Group recorded operating profit of ¥6,288 million (down 28.2% year on year after adjustment), ordinary profit of ¥5,872 million (down 34.3% year on year) and profit attributable to owners of parent of ¥5,075 million (down 34.4% year on year).
   Sales performance by mainstay category is as shown below:
   (Keyboards) Net sales: ¥20,820 million (up 13.1% year on year after adjustment)
   Among the mainstay categories, electronic pianos remained in stronger demand compared to the pre-COVID-19 pandemic era,

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