Printed in Japan
OSG Corporation
OSG REPORT 2019
OSG Report 2019
Fiscal year ended November 2019
Editorial Policy
The OSG Report is published primarily for investors. As an integrated report, it
encompasses management strategies for medium- to long-term growth, and
information about the environmental, social, and governance (ESG) systems
on which our growth is based, together with results and financial information
for the fiscal year ended November 2019.
Various information about OSG is also available on our corporate website. We
hope that this report and the information on the website will help readers to
achieve a fuller understanding of our activities. We will continue our efforts to
provide editorial content that meets readers’ expectations
Disclaimer Regarding Forward-Looking Statements
Apart from information based on historical facts, all references in this report
to plans, strategies, forecasts, or management initiatives pertaining to the
future business performance of OSG are forward-looking statements and as
such represent assumptions and judgments based on information currently
available. Actual results may differ from the results predicted in this report
due to various factors, including trends in the economic environment in which
OSG operates, product demand and price trends, the development of new
products, sales, raw material prices, and exchange rate fluctuations.
Always moving forward toward new
achievements based on reliable technology
enabled by creativity and innovation
OSG products are vital for the processing of parts used in manufacturing by industry
such as automotive and aerospace. Because human safety can depend on a single
screw connection, advanced technology is essential to ensure reliability and depend-
ability. OSG tools have a reputation for advanced engineering capabilities and are
preferred by manufacturers worldwide. Even in this time of rapid change, we will
continue to monitor trends carefully and meet ambitious new challenges as we make
progress in each link of our supply chain.
CONTENTS
01
Our Value Creation Story
08
Financial and Non-Financial Highlights
10
President’s Message
16
Special Feature: Sustainable Improvement of Corporate Value
20
Corporate Governance
24
Corporate Ocers
26
Environmental Initiatives
28
Social Initiatives
30
Financial Section
39
Corporate Information
Our Value Creation Story
VISION
Global Presence
As a comprehensive cutting tool manufacturer, we make
products that at a fundamental level contribute to
enhancing people’s quality of life. Through continuous
growth, we have established a production, sales, and
technical support network spanning 33 countries. Our
corporate aim is to continue to expand our operations
globally and strengthen our contribution to the
manufacturing industries in the world.
shaping your dreams
We want to give shape to the aspirations of every customer.
That goal motivates us to continue taking up new challenges as
we work to support manufacturing industries worldwide.
Tool Communication
OSG’s products are created through communication with our
customers. Communication is indispensable to our ability to
supply products and services that truly meet customers’ needs,
and to our continuing efforts to develop better products.
01
1997
OSG Europe S.A., the holding
company for Europe (Belgium) was
established.
2000
Nine business sites in Japan were
certified under ISO 14001.
2001
OSG (Shanghai) Co., Ltd. (China)
was established.
1938
Hideo Osawa established OSG
Grinding Co., Ltd. in Tokyo and
began manufacturing and selling
taps and dies.
1963
The company began to manufac-
ture rolling flat dies.
1968
OSG Tap and Die (USA) (now OSG
USA, Inc.) was established.
1969
Taiho Tool Mfg. Co., Ltd. (Taiwan)
was established.
1970
The company began to manufac-
ture HSS end mills.
1974
OSG Ferramentas de Precisão Ltda.
(Brazil) (now OSG Sulamericana de
Ferramentas Ltda.) was established.
1981
OSG was listed on the First Section
of the Tokyo and Nagoya stock
exchanges.
1984
OSG began to manufacture drills.
1985
OSG Korea Corporation was
established.
1992
OSG Manufacturing Company and
OSG Corporation merged to form
OSG Corporation.
1994
OSG Royco, S.A. de C.V. (Mexico)
was established.
1996
OSG Thai Co., Ltd. (Thailand) was
established.
Since its establishment in Tokyo in 1938, OSG has grown in the global cutting tool market by developing a variety
of original technologies, including technology for tap grinding with grindstones, and by building overseas sales
channels. The driving force that has enabled us to create advanced technology and build a global network spanning
33 countries is the unique OSG spirit of meeting and overcoming every difficulty and challenge. We will continue to
take up new challenges on our path to even greater success and growth on a global scale.
Our Value Creation Story
HISTORY
Global growth through the development of
original technologies and sales channels
02
2003
OSG GmbH (Germany) was
established.
2003
OSG Italia S.R.L. was established.
2004
The Design Center was established.
2005
OSG (India) Pvt, Ltd. was
established.
2015
Desgranges Outils Coupants S.A.
(France) was acquired.
2016
Amamco Tool & Supply Co., Inc.
(USA) was acquired.
2017
The D-Lab was established.
2006
The Global Technology Center was
established.
2007
All OSG products were certified
under ISO 9001.
2007
PT. OSG Indonesia was established.
2008
OSG Vietnam Co., Ltd. was
established.
2008
OSG Philippines Corporation was
established.
2010
OSG Phoenix indexable tools went
on sale.
2012
OSG Turkey Kesici Takımlar Sanayi
ve Ticaret A.Ş. was established.
0
30
60
90
120
150
(Billions of yen)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
¥126.9
Net sales
billion
03
A comprehensive cutting tool manufacturer
with the global top market share for taps
OSG is a comprehensive tool maker. In addition to having the highest market share in the world for taps, we
manufacture and sell drills, end mills, rolling dies, and various other products. Known for our high standards of
precision and efficiency, OSG offers a total range of 100,000 items, including many products that are the first,
best, and fastest of their types in the world. These tools are used worldwide by manufacturers in industries
ranging from automotive and aerospace to precision parts to molds and dies. We will continue to enhance our
capacity for innovation, which is key to our ability to respond effectively to user needs by creating and supply-
ing high-added-value products that combine world-class quality with competitive products.
Our Value Creation Story
PRODUCTS
TAPS
Taps are used to cut “female” screw threads
on the inside surfaces of holes. They are
vital for the processing of precision screws,
such as those used in automobile engines,
and have been flagship products for OSG
ever since its establishment.
DRILLS
Drills are hole-cutting tools used in the
production of automotive parts and other
products that require advanced processing
techniques. OSG is focusing on the expan-
sion of sales of carbide drills for high
efficiency processing and the drilling of
difficult-to-cut materials.
04
END MILLS
End mills are used to create shapes by
cutting away metal. They are able to cut
and contour molds for plastic parts,
primarily for home appliances, die-casting
dies for automotive parts, stamping molds,
and the processing of aircraft parts.
ROLLING
DIES
Rolling dies are used to form threads on round
bars and are also applied to the production of
automotive parts. OSG is working to expand its
sales of counter-flow rolling dies.
INDEXABLE
TOOLS
Indexable tools, which are cutting tools
with exchangeable blades, are used to cut
metal to produce dies and mechanical
parts. While end mills are used for finishing,
indexable tools are intended for roughing.
GAUGES
Gauges are used to measure the accuracy
of threads, holes, and other parts. Accuracy
inspection has become an extremely
important process because of the trend
toward increasing product precision and
compliance with international standards.
Net sales
by Region
Japan
The Americas
Europe and Africa
Asia
[ Fiscal year ended
November 2019]
22.9%
16.3%
18.1%
42.7%
Net sales
by Industry
Automotive
industry
Aerospace
industry
General industry
( Precision parts,
Mold, etc.)
[ Fiscal year ended
November 2019]
*Estimate
30%
over
50
%
over
10
%
over
8%
32%
28%
11%
21%
Net sales
by Product
Category
Taps
End mills
Drills
Rolling dies
Other
[ Fiscal year ended
November 2019]
05
Maximizing OSG’s social and economic value through original value creation processes
Our Value Creation Story
VALUE CREATION
Our Capitals Value Creation Process
*Fiscal year ended November 2019
The power of OSG lies in our assured innovative techno-
logical know-how for producing high-quality and high-
performance products; our exceptional services to re-
spond to situations diligently; and our out-of-the-box
thinking to provide total solutions that anticipate our
customers’ needs.
We are committed to contribute to the advancement of
the manufacturing industries by shaping our customers’
dreams into reality.
Business model driving value creation
Corporate Governance
P. 20–23
Key strengths maximizing value creation
Integrated Production
Structures
Excellent Corporate Culture
Supply chain collaboration: Leveraging our strengths
Design/
Development
Orders Procurement
Financial capital
Social capital
R&D capital
Manufactured capital
Sales capital
Brand
Human capital
Consolidated work force: 7,236
Over 30% of the world market share
for taps
Manufacturing plants in 17 countries
Sales bases in 33 countries
Technical centers in 7 countries
88 affiliated Group companies
Net sales ¥126.9 billion
Overseas sales ratio 57.3%
Interest-bearing debt ¥26.7 billion
EBITDA ¥29. billion
*As of November 30, 2019
*Based on our estimate
Foundation for Value Creation
06
Maximizing OSG’s social and economic value through original value creation processes
In line with the philosophy em-
bodied in the Sustainable Devel-
opment Goals (SDGs), the OSG
Group aims to contribute to
sustainable social development
through its business activities.
Value Creation Process
We want to give shape to the
aspirations of every customer.
That goal motivates us to con-
tinue taking up new challenges
as we work to support manu-
facturing industries worldwide.
Social/Environmental Initiatives
P. 26–29
We aim to be the world’s leading
manufacturer of hole-making
cutting tools.
Our Goals
Integrated Production
Structures
Platform Sharing Global Network
Supply chain collaboration: Leveraging our strengths
P. 17
P. 16
Procurement Logistics/Sales
After-sales
service
Manufacturing/
Quality
Out-of-the-box
Thinking
Innovation
Total
Solutions
Services
Customer
Communication
Social value
Economic value
Foundation for Value Creation
07
’15 ’16 ’17 ’18 ’19
19,554
0
4,000
8,000
16,000
24,000
20,000
12,000
0
5
10
20
30
25
15
15.415.4
Operating income (left)
Operating margin (right)
126,964
’15 ’16 ’17 ’18 ’19
0
30,000
90,000
120,000
150,000
60,000
Net sales (millions of yen) Operating income (millions of yen)
Operating income margin (%)
-1,053
-3,000
0
3,000
9,000
12,000
15,000
6,000
-20
0
20
60
80
100
40
67.867.8
Free cash ow (left)
Equity ratio (right)
’15 ’16 ’17 ’18 ’19
140.06
0
40
80
160
120
’15 ’16 ’17 ’18 ’19
Free cash flow (millions of yen)
Equity ratio (%)
Earnings per share (EPS) (yen)
0
300,000
900,000
1,200,000
600,000
1,061,271
18.418.4
0
10
20
40
30
Electricity Fuel oil (power generation) LPG (left)
Per unit of production (right)
’15 ’16 ’17 ’18 ’19
Energy consumption (GJ)
Energy consumption per unit of production (GJ/million yen)
49,768
0
20,000
30,000
50,000
60,000
40,000
0
1.0
10,000 0.5
1.5
2.5
3.0
2.0
0.860.86
Total emissions (left)
Per unit of production (right)
’15 ’16 ’17 ’18 ’19
CO
2
emissions (t)
CO
2
emissions per unit of production (t/million yen)
Financial and Non-Financial Highlights
Financial Highlights
Non-Financial Highlights
08
190,414
0
50,000
100,000
200,000
150,000
129,078
Total assets
Total equity
’15 ’16 ’17 ’18 ’19
Total assets (millions of yen)
Total equity (millions of yen)
’15 ’16 ’17 ’18 ’19
47.0
0
10
20
40
50
30
0
20
60
100
80
40
33.633.6
Dividend per share (left)
Dividend payout ratio (right)
Dividend per share (yen)
Dividend payout ratio (%)
29,076
0
7,000
14,000
28,000
35,000
21,000
0
10
20
40
50
30
EBITDA (left)
EBITDA margin (right)
’15 ’16 ’17 ’18 ’19
22.922.9
EBITDA (millions of yen)
EBITDA margin (%)
13,686
0
3,000
6,000
12,000
15,000
9,000
0
5
10
20
25
15
Net income attributable to owners of the parent (left)
Return on equity (ROE) (right)
’15 ’16 ’17 ’18 ’19
10.810.8
Net income attributable to owners of the parent (millions of yen)
Return on equity (ROE) (%)
2,064
0
500
1,000
2,000
2,500
1,500
0
20
40
80
100
60
Waste emissions (left)
Valuable resource ratio (right)
’15 ’16 ’17 ’18 ’19
45.545.5
Waste emissions (t)
Valuable resource ratio (%)
’15 ’16 ’17 ’18 ’19
7,236
0
2,000
8,000
6,000
4,000
1,845
Number of employees (consolidated)
Number of employees (non-consolidated)
Number of employees (consolidated) (persons)
Number of employees (non-consolidated) (persons)
09
President’s Message
Creating New Value
We will adapt to a changing business environment and work to achieve further growth
through growth strategies targeting both the expansion of existing business activities
and the development of new fields of business.
Norio Ishikawa
President and CEO
Further Growth and Success
“Three Firsts” Our Keys to Success in a
Rapidly Changing World
Our business environment continues to change, and the
pace of change is likely to accelerate going forward. We
need to adapt to a spectrum of major changes, including
advances in digital technology, such as the Internet of
Things and AI, the trend toward electric vehicles, and the
diversication of needs. In this changing environment, we
aim to build an unshakeable position for OSG as the world’s
leading manufacturer of hole-making cutting tools. The
entire OSG Group is working together to achieve this goal
by strengthening our global competitiveness, by enhancing
the added value of our products, and by creating new
business models based on our services and solutions.
These eorts are focused toward a concept that we call
the “three rsts.” First, we are determined to achieve “global
rst” status by constantly maintaining a global perspective
as we enter a new growth phase centered on overseas
markets. Second, we will maintain an “order rst” strategy in
10
both sales and manufacturing, based on our awareness that
the quickest way to attract orders from customers is to give
rst priority to the solution of customers’ problems. Third,
we will adopt a “front rst” strategy focusing on frontline
activities based on direct contacts with overseas customers,
rather than the frontline operations managed by the parent
company. With every individual employee aware of the
“three rsts” and committed to our spirit of challenge, we
will move forward with our continuing eorts to compete in
the global market and capture new demand all over the
world. I am condent that this is the best path to the further
growth and success for OSG.
“The Next Stage 17” Medium-term Management Plan
Major End-users Strategy and
Catalogue Item Sales Strategy
The scal year ended November 2019 was the third year of
“The Next Stage 17,” the medium-term management plan
that will culminate in the scal year ending November 2020.
We continued to make progress toward our targets under
this plan through multifaceted initiatives based on our
major end-users strategy and catalogue item sales strategy.
Under the major end-users strategy, we propose tools
and processing methods optimized for specic customer
needs. We have won more orders than expected through this
strategy, which focuses both on the automotive industry,
which is our core market, and our second core area, the
aerospace industry. In the aerospace industry, OSG is build-
ing a reputation for highly competitive products backed by
advanced technology. Our growing presence in this market
is apparent from the fact that we are recognized as a core
Tier 1 member of the Advanced Manufacturing Research
Centre (AMRC) of the United Kingdom, having joined in
2013. We are also starting to harvest signicant benets from
our business policies in this area, including sustained sales
eorts and M&A activities. For example, in the scal year
ended November 2019 we commenced research and devel-
opment activities with partner companies.
Our focus under the catalogue item sales strategy is to
help our customers to achieve productivity improvements
by supplying tools that provide superior cost performance.
In addition to increased sales of the A Brand series of
high-performance tools, this strategy has also been very
successful in expanding the “A-Club” distribution organiza-
tion worldwide. The network has spread to many countries,
resulting in sustained progress toward the establishment of
an integrated global brand.
These two basic strategies have been accompanied by
the continual evolution of our frontline operations. In the
Americas, we have strengthened production operations at
each location, allowing us to reap the benets of local
production for local consumption. Many of the rolling dies
that we produce in the United States are heavy products.
Because of the high transportation costs involved, signi-
cant cost reductions can be achieved through local produc-
tion for local use. Rolling dies are used in the manufacture of
automotive parts, such as drive shafts and constant velocity
joints, which are also used in electric vehicles. We plan
further increases in local production of these items. Our
manufacturing operations in Canada are now operating
protably thanks to a shift to local production of carbide
end mills, which were previously imported from the United
States. Economic conditions in China are dicult, but our
customer base there is increasing thanks to the expansion of
sales channels and the use of the Technical Center. I believe
that we can look forward to growth in the future. In Taiwan,
our Group company, Taiho Tool Mfg. Co., Ltd., celebrated the
50th anniversary of its founding and achieved its goal of
becoming a wholly owned subsidiary. Taiho Tool Mfg. mainly
produces taps, gauges, and rolling dies. They are expected
to achieve growth in the expanding Taiwanese market by
using Japanese and Taiwanese technologies in a wide range
of activities, including its own drill regrinding and coating
processes, as well as the manufacture of new carbide tools.
In Southeast Asia, orders are expanding in Vietnam, Indone-
sia, Thailand, and Malaysia, and all of our plants in the region
are now operating protably. We are also expanding the
scope of our business operations in India, including the
introduction of coating services at two plants. In Europe, we
11
The Next Stage 17
n Global leader in market share
(taps, end mills, drills, and rolling dies)
n 20% operating income margin
n Net sales ¥150 billion
nOperating income ¥30 billion
Long-term
vision
Medium-term vision
Basic strategies
Major end-users
Catalogue item sales
Toward the operating income
margin 20%
n Eect of mass production
• “The A brand” marketing on each
geographic segment
• Introduce new system of product
management
n High value-added
• Employ most advanced coating items
• Oer total solutions to customers’ needs
n Strengthen synergy in the OSG Group
• Evolution of core technologies at global
eld rapidly
• Global sales and production network
between Group companies
President’s Message
Leading global manufacturer
of hole-making cutting tools
FY2020
have acquired numerous companies through M&A, and our
focus going forward will be post-merger integration (PMI).
Europe has the potential to yield greater sales growth than
North America.
Demand for regrinding and recoating services has
expanded dramatically in recent years. We have made this a
priority area, and projects to expand our capacity are
progressing ahead of schedule. Our eorts to enhance
after-sales services are also producing excellent results.
Economic conditions remained buoyant in the rst half
of 2019, but the situation was reversed in the second half as
trade friction between the United States and China trig-
gered a rapid slowdown in markets for production goods.
The rst-half results for the OSG Group included new
records for both sales and prots. However, the slowdown
in the second half had a major impact throughout East Asia,
including Japan, and economic performance was also
aected by exchange rate uctuations. This situation
caused a downswing in our business performance. I would
characterize 2019 as a year in which these developments
gave us a new awareness of the importance of implement-
12
Basic Strategies
n “Best delivery time” and “Cost competitiveness”
n Expand technical centers globally
n M&A (maximize synergy effect)
Face more customers, and suggest total
solutions to meet their demands
• Focus on the automotive industry
• Position the aircraft as a key industry as the automotive
• Develop new end-users in future fields
n Expand carbide items range
n Establish strong “A-Club” distribution networks in each region
n Strengthen inventory policy and supply chain
Contributing to customers’ productivity
by providing cost-performance tools in a
timely manner
• For more customers in the industry of
general engineering and mold & die all over the world
How? How?
Major end-users Catalogue item sales
ing measures that are appropriate for the conditions and
creating structures that allow us to maintain steady forward
momentum.
Because of the challenging conditions, the goals set
down in our medium-term management plan are unlikely to
be achieved until the scal year ending November 2021 or
later. However, our basic strategies for sales, technology,
manufacturing, and management are based on global
perspectives, and we will continue to focus all of our resourc-
es toward the capture of new demand in world markets.
Improving Productivity
Digitalization Initiatives Centering
on the NEO Shinshiro Factory
In the scal year ended November 2019, work began in
earnest on a project that will revolutionize our production
structures. The NEO Shinshiro Factory, which is currently
being built in the grounds of the Shinshiro Factory, will
become operational in May 2020. We plan to transfer
production lines for carbide drills from the Oike Factory and
carbide taps from the Yana Factory.
At the same time, we are working to improve productiv-
ity through the company-wide OSG 4.0 Project. The aim of
this digitalization project is to enhance our ability to win
orders and maximize our prots through productivity and
output improvements achieved by making all of our sales,
manufacturing, design, and customer management systems
available for use through our own unique database, the OSG
Product Data Management (OPDM) System.
The NEO Shinshiro Factory will be the starting point for
a chain reaction that will result in the digitalization of all
processes from production planning, operations monitor-
ing, and inventory management to after-sales services, in all
of our plants. By digitally linking all of these processes, We
will accelerate the introduction of automation and labor-
saving systems, leading to the development of “smart line”
systems capable of operating for 72 hours without human
intervention. We will also plan to integrate production
management, budgeting, and scheduling at key factories in
Japan and overseas under the “One Factory” concept.
13
President’s Message
Our Path to Global Growth
Maximizing M&A Synergies,
Taking Up the Challenge of New Fields,
Businesses, and Products
Our M&A strategy for the OSG Group has the dual goals of
expanding sales channels and increasing the scope of our
activities. The consolidated group has grown to more than 80
companies with over 7,000 employees. The companies that
we add to the Group through M&A are involved in product
areas that are slightly dierent from OSG’s product genres.
This allows us to increase our market shares in existing
business areas while further expanding our product lineup.
We see this as the path to sustainable growth in a changing
business environment.
After acquiring companies, our next priority is post-
merger integration (PMI). To maximize the synergy benets
of mergers, we have designated the scal year ending
November 2020 as a milestone year for our M&A strategy and
the start of a new phase in which we will focus on the inte-
gration of the companies that we have acquired on all levels,
including management, operations, and attitudes.
As a part of our research and development strategy, we
plan to build a research facility in the grounds of the Oregon
Manufacturing Innovation Center (OMIC), a Boeing-led
research organization in Oregon, U.S.A., which we joined in
2017. Anticipated roles for this facility, which we aim to
complete by the end of 2020, include the development of
cutting tools suitable for processing materials used in
next-generation aerospace parts, and the provision of
after-sales services, such as tool coating.
We also established a new internal organization, the
Application Sales Team, and launched a new initiative to
promote the use of OSG products on machine tools. The new
team will work with machinery trading companies and
manufacturers, major users, and distributors to propose total
solutions for customer needs. The aim of this approach is to
dierentiate OSG from its competitors, leading in the me-
dium- to long-term future to the improvement of our corpo-
rate value and the expansion of our market share.
Human Resource Development
Educational Structure to
Meet Current Needs
We see people as valuable assets. We are working to enhance
frontline skills by training people with the ability to succeed
and contribute in a global arena. Our Personnel Team, which
was previously attached to the General Aairs Department,
has been restructured into the Human Resources and Gen-
eral Aairs Department, which is now leading our eorts to
train skilled employees. Going forward, our priority will be to
create an educational structure that will not only provide
training in areas relating to skills and performance, but will
also help every employee to assimilate the OSG manage-
ment philosophy and the “three rsts” concept that I referred
to at the start of this message.
As in the world of sport, competition among top players
is vital to the training of talented people. Competition
inevitably leads to the improvement of each individual’s
skills. We want to maximize the potential and performance of
every front oce and back oce team. We also aim to create
working environments characterized by open communica-
tion and mutual respect, as arenas for friendly competition.
Financial and Capital Strategy
Combining Proactive Growth
Investment with Returns to Investors
With an equity ratio of 67.8%, I believe that OSG has a sound
nancial structure. While aiming for a return on equity (ROE)
above 10%, we also strive to achieve a good balance in our
prot distribution, between strategic growth investment and
the maintenance of nancial soundness, and investor re-
turns. Our priority for prot distribution is growth investment
targeting improvement in our medium- to long-term corpo-
rate value.
In scal 2019, we commenced a major investment
program that will update our production structures. The
main focus of this approximately ¥17 billion program will be
the expansion of our production capacity in Japan and
14
overseas. We have actively invested in future growth
through various projects, including the construction of the
NEO Shinshiro Factory, and the introduction of “smart line”
systems at our main production facilities. We have also
expanded existing core business operations, implemented
initiatives to capture new demand, and expanded our
research and development capabilities.
We plan several M&A initiatives in 2020. Because these
require large amounts of cash, we will base our capital
policy on exible nancing. Also, since we include goodwill
in our accounts each year, we believe that one of the keys to
securing and improving prots is the early achievement of
synergy benets through productivity improvement initia-
tives, such as PMI and the OSG 4.0 Project.
We recognize the distribution of prot to shareholders
as a vital management priority. Our basic policy on prot
distribution is to maintain a consolidated payout ratio of
30% or higher, while taking cash ow, our nancial position,
and other factors into consideration. We have set the
dividend for the scal year ended November 2019 at ¥47 per
share, consisting of an interim dividend of ¥23 and a nal
dividend of ¥24.
To Our Stakeholders
ESG as a
Growth Driver
Today, companies face a wide range of social expectations and
responsibilities, and the roles that businesses play have be-
come increasingly important. Environmental, Social, and
Governance (ESG) initiatives are vital to OSG’s goal of achieving
sustainable growth as an admired and truly global company.
Our environmental initiatives are guided by our commit-
ment to the development of eco-friendly products. The
entire OSG Group is working toward the creation of a
sustainable society through activities that include the
development and proposal of environmentally sound
products and technologies, resource and energy conserva-
tion across all processes, waste reduction, and the recycling
of carbide materials.
OSG is also working to fulll its social responsibilities.
We have implemented various measures to maximize the
potential of our employees, who are our single greatest
management resource. In addition to the introduction of
extime and childcare leave systems, we are also continually
improving our oce environments to provide comfortable
working conditions. Furthermore, we engage in a wide
range of social contribution activities in line with our
commitment to co-creation with local communities.
Our approach to corporate governance is based on the
principles contained in the Corporate Governance Code. We
are continually developing and improving our highly
eective corporate governance systems, and we have
enhanced the transparency, independence, and manage-
ment oversight capabilities of our governance structure by
maintaining a clear demarcation between management
supervisory bodies and the executive organization.
The spirit of challenge has been part of OSG’s DNA since
its founding. Our ongoing challenge is to contribute to
sustainable social development while achieving further
growth in our corporate value on a global scale through the
provision of high-quality, high-added-value cutting tools.
We look forward to the continuing support and understand-
ing of all stakeholders.
We aim to improve our corporate value
by actively investing in growth.
15
Special Feature: Sustainable Improvement of Corporate Value
We will work toward further improvement in our corporate value
by leveraging our value creation capabilities in conjunction with the reach of our supply chain.
Global Network Excellent Corporate Culture
Platform SharingIntegrated Production Structures
The OSG Group procures
carbide materials used to
create our high-added-
value products in-house,
and we also develop our
own coatings to enhance
the durability of our
tools. By fabricating our
own equipment, we have
been able to create
flexible production
structures and achieve
high productivity.
Since establishing its first
overseas subsidiary in
the United States in
1968, OSG has built a
network of sales offices
in 33 countries. This
network allows us to
identify trends in the
global cutting tool
market while also
monitoring customer
needs through our local
sales activities.
OSG has tangible and
intangible assets that
can be used throughout
the entire Group. OSG
Group companies
around the world can
share our unique plat-
forms, including our
coating technologies,
test cutting experience,
and accumulated
know-how for improving
our customers’ produc-
tivity.
Management insights
have enabled OSG to
cultivate an excellent
corporate culture. By
maintaining and improv-
ing this corporate
culture, we can facilitate
post-merger integration
(PMI) and create a lot of
synergy with new Group
companies.
Materials
Coatings
Manufacturing
equipment
STRENGTH
Strengths that help to maximize value creation
16
We will work toward further improvement in our corporate value
by leveraging our value creation capabilities in conjunction with the reach of our supply chain.
Design/
Development
Orders
Procurement
Manufacturing/
Quality
Logistics/Sales
After-sales
services
In-house fabrication of our own manufacturing equipment
Development of new products to meet a wide variety of needs
Addressing customers’ problems through face-to-face sales
Monitoring customer needs through locally focused sales
Global procurement structures in Japan and overseas
Partial procurement of carbide materials within the OSG Group
Preferential purchasing from environment-friendly suppliers
Global network of manufacturing facilities in 17 countries
Establishment of an in-house quality certification system to
ensure consistent quality worldwide
Local factories with close local links, hub factories providing regional
coordination, and mother factories providing technical support
Finely tuned sales and logistics systems to meet customer needs
Optimized global inventory management with frontline stocks at
key locations around the world
Sales network spanning 33 countries
Regrinding and recoating technologies to improve tool cutting
performance and extend tool life
Maximum utilization of our unique know-how as a cutting tool
manufacturer
SUPPLY CHAIN
Supply chain collaboration that leverages strengths
17
Special Feature: Sustainable Improvement of Corporate Value
Takehiro Sasahara
Technical Application Support
Group, Design Center
Collaboration across process boundaries allows us to maximize performance and customer satisfaction.
OSG will continue to achieve growth through the creation of unique added value in this way.
01
CASE STUDY
Creating added value through
cross-process collaboration
Notable Viewpoints of Key Players
Tsuyoshi Fukaseko
Application Sales Team
Manufacturing, engineering, and sales personnel
work together as one team.
We use processing technology to provide solutions
to customers’ problems.
18
OSG’s manufacturing, engineering, and sales
personnel have worked together as a single
team to expand our market share in Japan and
globally. Our business environment is now
evolving rapidly, and we will be unable to keep
pace with this change using the methods of
the past. We need to modify our approach to a
changing environment.
In addition to our traditional proposal
sales method based on collaboration with
customers, the Application Sales Team also
actively offers solutions that help to enhance
customers’ new developments and processing
methods through closer engagement with the
machinery and peripheral equipment indus-
tries, as well as support for tool layouts when
new equipment is installed. Thanks to our
solutions-based sales approach, we expect to
be able to capture many new projects and
build new customer relationships even in a
challenging business environment.
To continue responding effectively to our
customers’ expectations, we need to maintain
cooperation between our Technical Applica-
tion Support Group and Engineering Depart-
ment, with manufacturing, engineering, and
sales staff working together as one team. We
will take up the challenge of further expanding
our market in Japan and overseas, by enhanc-
ing our ability to meet the needs of our
customers in Japan and worldwide, and by
further accelerating our global growth.
The task of the Technical Application Support
Group is to find solutions for processing
problems in response to customer requests
received through OSG sales staff. We offer
processing solutions. We also help customers
to introduce new processing technologies
with confidence by not only selecting tools
and calculating cutting conditions according
to the processing environment, but also by
testing the proposed solutions using machine
tools in the Technical Support Center.
Recently we have been collaborating
more frequently with the Application Sales
Team, which handles the mounting business*.
If a customer is considering entry into an
industry, we can utilize the knowledge and
expertise that we have accumulated through
our work with a wide range of industries,
including the automotive, aerospace,
construction equipment, and medical fields, to
select the right tools and provide a wide range
of technical support covering everything from
machine tools to peripheral equipment.
There is strong overseas demand for this
type of technical support. With our center in
Japan acting as the mother facility, we have
established technical support centers in six
bases—the United States, Mexico, Germany,
Taiwan, China, and South Korea. We will
continue to expand our global network so that
we can help our customers to give shape to
their dreams by using OSG’s original process-
ing technologies to solve their metal process-
ing problems.
* Mounting business: Through this service, we match
machinery with tools to provide customers with the
processing technologies that they need.
Notable Viewpoints of Key Players
Mitsuyoshi Hikosaka
Representative Director
OSG Coating Service Co., Ltd.
Regrinding and coating technologies not only improve customer productivity and reduce costs,
but also reduce environmental loads by enhancing tool performance and life span.
We are determined to capture this expanding global demand for regrinding and coating services
by oering greater value in this area.
02
CASE STUDY
Providing value that exceeds customer
expectations through after-sales service
We will continue to take on global challenges
in the spirit of “Never Say Never.”
19
Coating is a processing industry. OSG Coating
Service Co., Ltd. (OCS), which was spun off
from OSG Corporation in 2001, was estab-
lished to handle coating for OSG’s in-house
business operations and also to expand
external sales as a coating contractor.
Today the contract coating market has
expanded to include various fields, including
not only cutting tools but also molds and dies,
machine parts, medical equipment, and
decorations. OCS started its business from
scratch, but our origin as the coating division
of a cutting tool manufacturer gave us a major
advantage over our competitors because of
our extensive knowledge of cutting tools.
This advantage allowed us to outperform
our competitors on various levels, including
product quality, development capabilities, and
our ability to offer solutions to problems. We
have used that knowledge and expertise to
expand our business in Japan by focusing
primarily on developing the previously
untapped market for the recoating of cutting
tools after regrinding. We are now moving
ahead with initiatives to expand our Japanese
business model globally.
The motto of OCS is “Never Say Never.”
We will continue to expand our business by
taking up challenges in every field of business,
especially aftermarket services.
Regrinding sites 21 countries and regions
Coating sites
14 countries and regions
After-sales service bases
General Meeting of Shareholders
Appointment, dismissal
Advice, reports
Appointment, dismissal
Appointment,
dismissal
Advice, consultation
Audits,
etc.
Independent
audits
Audit
Reporting
Reporting
Appointment, dismissal
Collaboration
Information
gathering
Collaboration
Appointment,
dismissal
Directives, supervision
Directives, supervision
Reporting
Directives
Nomination and
Compensation Committee
Audit & Supervisory Committee
(directors who are members of the
Audit & Supervisory Committee)
Board of Directors
(including members of the
Audit & Supervisory Committee)
Risk and Compliance Management Committee
Representative director
Management Committee
Executive ocers
Operational executive divisions
(including subsidiaries)
Legal and tax advisors
Management Audit Section
Accounting auditors
Audit & Supervisory
Committee Section
Corporate Governance Structure
Under our corporate philosophy of achieving a global presence,
we regard compliance with laws, regulations, and social norms
as a fundamental part of our management policies, together
with fairness and transparency in our business activities. We also
believe that these qualities contribute to sustainable corporate
development and the improvement of corporate value. Mea-
sures to enhance corporate governance, including the establish-
ment of efficient and transparent management organizations,
and the creation of systems to ensure timely and fair disclosure
of accurate information, are among our most important man-
agement priorities.
One of the ways in which we enhance our corporate gover-
nance is by raising compliance awareness among directors,
executive officers and employees of OSG and its Group compa-
nies through the dissemination of the OSG Philosophy and the
OSG Corporate Code of Ethics, which provide specific guidelines
designed to raise ethical standards within the company.
Basic Philosophy
Corporate Governance
We will continue to develop a highly practical
corporate governance structure and enhance
our systems.
20
As a company with an audit and supervisory committee, OSG’s
corporate governance structure consists of the Board of Direc-
tors, the Audit & Supervisory Committee, and the accounting
auditors. The role of the Board of Directors is clearly defined
under this structure. Operational executive functions are
performed by executive officers, while the Board of Directors is
responsible for decision-making and the supervision of opera-
tional executive actions.
To strengthen decision-making functions, the eight-member
Board of Directors includes two members who are also involved
in business operations as executive officers. The remaining six
directors, of whom five are outside directors, are also members
of the Audit & Supervisory Committee. The outside directors
also make up the majority of the Board of Directors. By creating
this structure, we have enhanced the transparency and
independence of the Board of Directors and the effectiveness of
its management supervisory role, while bringing in outside
perspectives.
In addition, OSG has introduced an executive officer system
to ensure effective responses to changes in the business envi-
ronment, as well as to clarify the roles and responsibilities of the
executive organization. The executive officers are solely respon-
sible for the performance of business operations in a timely
manner and in accordance with policies decided by the Board of
Directors, while continually improving flexibility and efficiency.
By adopting our present corporate governance structure, we
have enhanced the ability of the Board of Directors to oversee
and supervise management decision-making and the perfor-
mance of business operations, thereby improving management
efficiency and ensuring that management decisions can be
made appropriately and strategically. The activities of the Audit
& Supervisory Committee, of which five of the six members are
outside directors, include the auditing of the company’s finan-
cial position and operations, and the performance of duties by
the representative director and executive officers. OSG’s five
outside directors are independent officers as stipulated in the
listing rules. With the six members of the Audit & Supervisory
Committee, including these highly independent outside direc-
tors, as members of the Board of Directors, we believe that we
have created a corporate governance structure by providing an
environment for effective management supervisory functions
and by ensuring that the company is managed transparently
and appropriately.
In addition to these measures to improve management trans-
parency and fairness and ensure timely information disclosure,
we have also established Risk Management Rules as a frame-
work for the creation of risk management structures to maintain
management soundness and corporate ethics in the OSG Group.
We have also established the Risk and Compliance Management
Committee to ensure the effective and efficient implementation
of the Risk Management Rules. Its role is to formulate basic risk
management policies and consider and implement timely
countermeasures after assessing the significance and urgency
of risks.
5
Outside directors
3
Internal directors
Audit & Supervisory
Committee members
Executive officers
Board of Directors
Total of 8 directors (5 outside directors)
Overview of Corporate Governance Structure
Reasons for Adopting this Corporate Governance Structure
Risk and Compliance Management Committee
Corporate Governance
21
Outside
director
Audit &
Supervisory
Committee
member
Reasons for appointment Positions held concurrently
Takeo
Nakagawa
In addition to an academic career spanning many years, Dr. Nakagawa has extensive
experience in and knowledge of corporate management. He was judged to be a
person who would participate in board meetings from an independent perspective
and contribute to management auditing and supervision. Since Dr. Nakagawa is not
associated with any OSG aliated company or major supplier or customer, he was
deemed to present no risk of conicts of interest with general shareholders, and it was
therefore decided to appoint him as an outside director.
Representative Director and Chairman,
Fine Tech Corporation
Outside Director, TSUGAMI CORPORATION
Director,
Osawa Scientic Studies Grants Foundation
Kyoshiro
Ono
Mr. Ono has extensive experience and wide-ranging knowledge gained through his
work as an executive ocer in another company. He was judged to be a person who
would participate in board meetings from an independent perspective and contrib-
ute to management auditing and supervision. OSG has a business relationship with
ONOCOM Co., LTD., of which Mr. Ono was a director until January 2016, pertaining to
the purchase of equipment. This is a normal business relationship between the two
corporations. Since Mr. Ono has no direct personal interest in the transactions, there is
no risk of a conict of interest between him and general shareholders. The company
judges that there are no issues whatsoever concerning Mr. Ono’s independence.
Yoshiyuki
Sakaki
Professor Sakaki has wide-ranging knowledge and experience gained through his
long academic career. He was judged to be a person who would participate in board
meetings from an independent perspective and contribute to management audit-
ing and supervision. Since Professor Sakaki is not associated with any OSG aliated
company or major supplier or customer, he was deemed to present no risk of conicts
of interest with general shareholders, and it was therefore decided to appoint him as
an outside director.
President, Shizuoka Futaba Gakuen
Councilor,
Osawa Scientic Studies Grants Foundation
Akito
Takahashi
Mr. Takahashi has extensive experience and advanced knowledge and specialist skills
gained through his career as an attorney. As a legal expert, he was judged to be a
person who would participate in board meetings from an independent perspective
and contribute to management auditing and supervision. Since Mr. Takahashi is not
associated with any OSG aliated company or major supplier or customer, he was
deemed to present no risk of conicts of interest with general shareholders, and it was
therefore decided to appoint him as an outside director.
Outside Director,
Nippon Carbon Co., Ltd.
Outside Director,
Oriental Consultants Holdings Co., Ltd.
Kunihiko
Hara
In addition to an academic career spanning many years, Mr. Hara has extensive experi-
ence in and knowledge of corporate management. He was judged to be a person who
would participate in board meetings from an independent perspective and contrib-
ute to management auditing and supervision. Since Mr. Hara is not associated with
any OSG aliated company or major supplier or customer, he was deemed to present
no risk of conicts of interest with general shareholders, and it was therefore decided
to appoint him as an outside director.
Designated Professor, Nagoya University
(Innovation Strategy Oce)
Name of committee Total members Internal directors Outside directors Outside experts Chairperson
Nomination and Compensation Committee
6 1 5 0
Internal directors
OSG has established a Nomination and Compensation Commit-
tee as an advisory body for the Board of Directors. Its purpose is
to strengthen the independence, objectivity, and accountability
of board functions through the appropriate involvement of
independent outside directors and the provision of advice in
relation to the appointment of directors and executive officers,
etc., and compensation. The Nomination and Compensation
Committee consists of directors who are also members of the
Audit & Supervisor Committee, and five of the six members are
independent outside directors.
Persons who are deemed suitable to be directors of OSG, on
the basis of their extensive experience, advanced knowledge,
and high-level specialist capabilities, are selected and nomi-
nated as candidates for membership of the Board of Directors.
The Board of Directors then makes decisions on appointments
after seeking advice and receiving a response from the Nomina-
tion and Compensation Committee.
Please refer to the section headed “Compensation for
Company Officers” on the following page for details of OSG’s
process for determining compensation.
Corporate Governance
Nomination and Compensation Committee
Reasons for Appointment of Outside Directors, Positions Held Concurrently
*As of February 22, 2020
22
Compensation Based on Allocations of Restricted Stock
• Eligibility: Directors (excluding members of the Audit & Supervisory
Committee)
• The amount of compensation is determined within the upper limit
defined by a resolution of the 106th Ordinary Shareholders’ Meeting
held on February 16, 2019. The maximum total value of shares
allocated to eligible directors is set at ¥200 million a year, and the
maximum total number of the company’s ordinary shares that can be
issued or disposed of is 100,000 per year. The purpose of this system
is to provide an incentive to achieve continual improvement in the
company’s performance and corporate value and increase the value
shared with shareholders.
n Process for Determining Compensation
Fixed Compensation, Compensation Based on Allocations of
Restricted Stock
In order to determine the amount of compensation for directors
(excluding members of the Audit & Supervisory Committee), the Board
of Directors delegates the Representative Director to prepare proposed
compensation amounts according to standards set by the company.
The proposed amounts are then referred to the Nomination and
Compensation Committee. Based on the response from the Nomination
and Compensation Committee, the amounts are then nalized by a
resolution of the Board of Directors. The amount of compensation for
directors who are also members of the Audit & Supervisory Committee
is determined through consultation among those directors.
Variable Compensation
Variable compensation is linked to the company’s business perfor-
mance. The Representative Director is delegated by the Board of
Directors to calculate the proposed amounts for prot-linked bonuses
and personal assessment bonuses using the methods outlined above.
These proposed amounts are then submitted to the Nomination and
Compensation Committee. Based on the report from the Nomination
and Compensation Committee, the Board of Directors determines the
nal amounts to be paid, subject to approval of the total amount
through a resolution of an ordinary shareholders’ meeting.
The company discontinued the payment of retirement bonuses for
corporate ocers at the conclusion of the 92nd Ordinary Shareholders’
Meeting held on February 19, 2005.
n Compensation Structure
Compensation for directors (excluding directors who are members
of the Audit & Supervisory Committee) consists of fixed basic
compensation, variable compensation linked to business perfor-
mance, and allocations of restricted stock. Since directors who are
members of the Audit & Supervisory Committee are independent
from the other directors and are not involved in the execution of
business operations, their compensation consists solely of fixed
compensation.
Fixed Compensation
The total amount of xed compensation is determined within the upper
limit dened by a resolution of the 103rd Ordinary Shareholders’
Meeting held on February 20, 2016. Compensation is set at ¥396 million
per year for directors (excluding directors who are members of the
Audit & Supervisory Committee), and ¥84 million per year for directors
who are also members of the Audit & Supervisory Committee.
Variable Compensation
Starting in the fiscal year ended November 2019, the company
provides variable compensation in the form of profit-linked bonuses
in line with the definition of profit-linked salaries provided in Article
34, Paragraph 1 Item 3 of the Corporation Tax Act, as well as personal
assessment bonuses.
Profit-linked Bonuses
• Eligibility: Eligible directors who are serving as executive officers and
managing officers
• Calculation method: Profit-linked bonus = Consolidated operating
income before provision for the cost of performance-linked bonuses
x Rank-based bonus ratio (see table below)
The maximum amount for profit-linked bonuses is ¥700 million.
Personal Assessment Bonuses
• Eligibility: Executive officers (excluding the Representative Director
and CEO) and managing officers
• Calculation method: Personal assessment bonuses are paid according
to qualitative assessments of each person’s contribution to business
performance. The maximum amount for personal assessment
bonuses is ¥50 million.
Under the leadership of the Representative Director and Presi-
dent, the Management Planning Department coordinates the
activities of units involved in IR activities and maintains collabo-
ration among these units on a day-to-day basis. The Manage-
ment Planning Department actively responds to requests for IR
information, including telephone inquiries from investors and
small meetings. OSG holds quarterly meetings to present its
financial results, as well as half-yearly financial presentations by
top management. If necessary, any opinions and concerns
gathered through shareholder dialogue are fed back to the
Board of Directors and senior management by the executive
officer in charge of the unit that carried out the IR activities
concerned. When engaging in dialogue with investors, OSG
takes care over the management of insider information by
ensuring that such dialogue, whether at financial presentations
or small meetings, centers on strategies for the achievement of
sustainable growth and the improvement of OSG’s corporate
value from a medium- to long-term perspective.
Rank Percentage
President, Representative Director, and CEO 0.405%
Senior Managing Officer, Director 0.183%
Managing Officer 0.162%
Rank-based bonus ratio
Compensation for Company Officers
Basic Policy on Constructive Dialogue with Shareholders
23
Corporate Officers
President, Representative Director,
and CEO
Norio Ishikawa
Senior Managing Officer, Director
Nobuaki Osawa
Director
(Audit & Supervisory Committee Member)
Gohei Osawa
Director
(Audit & Supervisory Committee Member)
Takeo Nakagawa*
Director
(Audit & Supervisory Committee Member)
Kyoshiro Ono*
Director
(Audit & Supervisory Committee Member)
Yoshiyuki Sakaki*
Director
(Audit & Supervisory Committee Member)
Akito Takahashi*
Director
(Audit & Supervisory Committee Member)
Kunihiko Hara*
*Outside Director
Substitute Director
(Audit & Supervisory Committee Member)
Kayoko Yamashita**
**Substitute Outside Director
Managing Officer
Jiro Osawa
Managing Officer
Hideaki Osawa
Managing Officer
Koji Takeo
Senior Executive Officer
Mitsuyoshi Hikosaka
Senior Executive Officer
Yasutaka Yoneda
Executive Officer
Jeffrey Tennant
Executive Officer
Toshihiro Hisadome
Executive Officer
Yasushi Suzuki
Executive Officer
Hideyuki Ohashi
Executive Officer
Kenya Sugihara
Executive Officer
Seungjin Chung
Executive Officer
Yukinori Chikada
Executive Officer
Osamu Ishida
24
25
No.
Environmental target FY2019
FY2020 Target
Item Content Target Result
1
Energy
Conservation
Total Energy Use Reduction
( Energy sources: Electric power,
Fuel oil and LPG)
Total use of energy BM: 85,018 GJ/month
1.0% reduction
957 GJ/month
reduction
2.0% reduction
1,911 GJ/month
reduction
1.0% reduction
957 GJ/month
reduction
Basic unit of production
BM: 20 GJ/million yen
1.0% reduction
0.20 GJ/million
yen reduction
9.8% reduction
1.91 GJ/million
yen reduction
1.0% reduction
0.20 GJ/million yen
reduction
2 Eco-Products Eco-Friendly Product Development 31 points 27 points 33 points*
3 Eco-Factory Eco-Friendly Production 34 points 48 points 37 points*
The OSG Group recognizes protection of the global environment as a vital priority for humanity. Under our Environmental Basic Policy,
we are actively committed to efficient resource use and environmentally responsible manufacturing. We strive to supply our customers
with environment-friendly products and services as part of efforts to reduce environmental loads and contribute to the development of
a society based on resource recycling.
Under the slogans, “An
Eco-friendly Company” and
“A Culture that Cares for the
Environment,” we work to
protect the global environ-
ment and achieve harmoni-
ous coexistence between our
activities and the natural
environment.
OSG has been promoting zero emission
activities to reduce waste. We have also
developed a system to recycle reusable and
recyclable resources and established a
structure to ensure the proper disposal of
waste from our operations. Therefore, our
recycling rate has been over 99% since 2005.
Environmental Performance in Fiscal 2019 and Targets for Fiscal 2020
*Numerical scores out of 60 under OSG’s standards for the improvement of environmental activities
Metal scrap
634.6 tons
Cardboard boxes
(sold for reuse)
76.4 tons
Waste oil
(sold for reuse, recycled)
420.2 tons
Oil sludge
(sold for reuse, recycled)
174.5 tons
Diatomaceous soil
(sold for reuse, recycled)
489.5 tons
Waste grinding wheels
(recycled)
49.6 tons
Waste plastic
(recycled)
65.3 tons
Wood chips
(recycled)
82.1 tons
Others
(recycled)
68.6 tons
Total
2,060.7 tons
E
C
O
-
F
R
I
E
N
D
L
Y
Recycling Rate
99%
Basic Philosophy
Environmental Basic Policy
Promotion of Resources Recycling
Environmental Initiatives
As a supplier of cutting tools to meet the needs of a
wide range of industries, OSG is continually working
to minimize environmental loads through its product
development and manufacturing activities.
*Results for fiscal 2019
26
OSG is working to manufacture environment-friendly products and supply them to customers. We are actively reducing environmental
impacts by enhancing after-sales services, by developing highly efficient tools that allow rapid cutting, and by creating products with
extended life spans that help to reduce the amounts of resources used.
n Regrinding and Recoating Services
With repeated use, the cutting performance of taps, end mills, drills, and other cutting
tools will eventually deteriorate due to wear. These tools can be restored to the same
standard as new products through regrinding and recoating. OSG provides regrinding,
recoating, and other after-sales services globally to meet the needs of its customers.
Initiatives to Reduce Environmental Impacts
Environmental Initiatives
After regrindingBefore regrinding
l R Gash
Reliable processing of steel materials was difficult with conventional 3-flute drills.
The unique R gash geometry of the ADO-TRS drills provides significant improve-
ments in terms of chip breaking and chip form consistency. In addition, this new
geometry can reduce cutting resistance by as much as 30%, to below the level
possible with 2-flute drills, resulting in stable performance in high-feed process-
ing of steel materials.
l Long Life, Stable Processing
This combination of specifications allows the ADO-TRS series to achieve a long
tool life with reliable drilling of a wide range of materials, including high-strength
steels. ADO-TRS drills reduce processing time and power consumption thanks to
their high efficiency, while their long service life contributes to the effective
long-term use of carbide materials.
Environment-friendly Products
TOPICS
3-Flute Drills—the New Standard
The ADO-TRS-3D and 5D “Triple Revolution” 3-Flute Carbide Drill Series
OSG is committed to the development of environment-friendly products. On November 1, 2018, we announced the ADO-TRS
series of drills at the Japan International Machine Tool Fair (JIMTOF 2018). Dubbed the “Triple Revolution” drills after a naming
competition, the ADO-TRS drills represent a new era in carbide drills, a category in which 2-flute drills were previously the
norm. With low cutting resistance comparable to the performance of 2-flute drills, our 3-flute drills provide superior chip
evacuation and are rated highly by users.
Rare metals
Tungsten ore
Scarce resources
Refiner
Resources Recovery Products
Nihon Hard Metal Co., Ltd.
Carbide alloy manufacturer
Product recycler
Customers
Carbide tool users
OSG
Carbide tool
manufacturer
n Carbide Tool Recycling
Carbide tool recycling is a priority for
the entire OSG Group. We ensure
effective resource utilization by collect-
ing used tools from customers and
recycling the rare metals in them for
reuse as raw materials. We also help our
customers to improve the effectiveness
of their CSR activities and achieve zero
emission status.
27
Social Initiatives
We will fulfill our social responsibilities to all of our
stakeholders, including our customers, suppliers,
employees, and communities.
Promoting Diversity
Active Commitment to the Expansion of Employment Opportunities for People with Disabilities
OSG actively employs people with disabilities. We are also expanding our efforts in this area into off-site and contract work in collabora-
tion with community-based social welfare organizations. OSG is broadening the scope of its contributions to local communities and
society by providing opportunities for people who cannot work within companies to participate in the workforce. We will continue to
work alongside all concerned to help people to experience the joy of productive work.
n Exceeding the Statutory Percentage of
Employees with Disabilities
Statutory ratio 2.20%
OSG employment ratio 2.27%
*As of fiscal 2019
n Recruitment and Stabilization
We work closely with support organizations to monitor the
progress of individuals with disabilities from recruitment to
stable employment. At the pre-employment stage, we provide
factory tours, work experience opportunities, and other
activities matched to each person’s level of disability, so that
individuals will have a better understanding of the workplace
and feel condent to work on a continuous basis. We are also
aware of the possibility that some employees with disabilities
may have diculty carrying out their work due to the sudden
onset of debilitating symptoms. OSG will continue its eorts
to create working environments in which everyone can work
with peace of mind, while also heeding input from all of our
employees, including those with disabilities.
The OSG Group is working toward the development of a more sustainable society by maintaining and developing healthy relationships with
all stakeholders, including shareholders, customers, business partners, employees, and local communities. As members of society, we will
strive to exist in harmony with society through social contribution activities and the promotion of mutual understanding with stakeholders.
Basic Philosophy
n Contributing to Communities
OSG factory tours for
support organizations and
companies
Year ended
November 2019
Individuals: 41
Groups: 5
Seminar for companies, supporters,
and users
“Examples of Employment Initiatives
for People with Disabilities”
Year ended
November 2019
External: 12
n Staff Member Opinion:
Key elements of our approach at
the recruitment stage
• We value people.
• People with disabilities are
valuable workers.
• A person’s individuality includes
their disabilities.
• People need the happiness that
comes from performing useful
work.
Masahisa Miyagawa
Human Resources and
General Affairs Department
28
n Introduction of a Flextime System
In addition to our existing system of reduced working hours for
employees with childcare and nursing care needs, we have intro-
duced a flextime system at most of our worksites. Under this system,
all employees are able to adjust their working hours flexibly accord-
ing to their individual lifestyles.
n Satellite Work System Trial
We are currently trialing a new satellite work system developed to
assist employees who find it difficult to attend their original work
locations because of the location in which they live, childcare needs,
or other factors. By allowing people to work at sites closer to their
homes, this system reduces commuting times and also supports
employees with childcare duties.
Maintaining and Improving Quality, Communicating with Our Customers
We are implementing a range of initiatives to strengthen the OSG brand. Our key priorities are the maintenance and improve-
ment of quality, and communication with customers. In line with our motto of “shaping your dreams,” we will continue to
work toward further improvements in customer satisfaction by supplying dependable products and services.
l Working toward Consistent Global Quality under the
OSG Quality Certification System
OSG established the OSG quality certification system to ensure
consistent quality in its products and services throughout the
world. Quality assurance departments in our production facilities
and Group companies around the world work together to maintain
and enhance their quality performance. In fiscal 2019, three of our
Group companies achieved Quality Level 5, the highest rating under
the OSG quality certification system.
Group Companies and Products that Achieved
Quality Level 5 for the First Time in Fiscal 2019
Organizational
level
Company (country) Products
Level 5
OSG Thai Co., Ltd.
(Thailand)
• Rolling dies (TR/DP/RF)
• Carbide drills
OSG (Shanghai) Precision
Tools Co., Ltd. (China)
• Carbide end mills
• Carbide drills
Aoyama Seisakusho
Co., Ltd. (Japan)
• Regrinding of
carbide drills
l Participation in Exhibitions
As a comprehensive cutting tool manufacturer, OSG actively
participates in various exhibitions. We also build tool-based
communication with customers through hands-on seminars at
which participants can try out tools for themselves.
Social Initiatives
Creating Good Working Environments
MECT2019 INTERMOLD2019
Creating a Virtuous Cycle
by Providing Good Working Environments
Improving the
working environment
Enhancing the
work-life balance
Raising work
eciency and
productivity
Achieving corporate
growth and retaining
excellent human
resources
OSG’s Approach to Work-style Innovation
OSG is implementing work-style innovations with the aim of improving both worker satisfaction and productivity. We will create
healthy working environments in which everyone can work with confidence and improved motivation and efficiency.
Sustainable Growth of the OSG Brand
TOPICS
29
2010/11 2011/11 2012/11 2013/11 2014/11 2015/11 2016/11 2017/11 2018/11 2019/11 2019/11
For the year
Net sales 69,513 80,959 84,083
88,378 101,031 111,917 105,561 120,198 131,368 126,964 1,158,854
Cost of sales 44,605 48,439 49,381 52,777 58,061 61,865 59,179 69,711 74,833 73,281 668,872
Selling, general and administrative expenses 17,383 20,214 20,747 22,774 25,554 28,454 28,135 31,349 34,015 34,128 311,503
Operating income (loss) 7,524 12,305 13,954 12,827 17,415 21,597 18,246 19,137 22,520 19,554 178,478
Ordinary income (loss) 6,699 11,374 13,695 13,910 17,568 21,510 17,813 19,144 22,567 19,710 179,906
Net income (loss) attributable to OSG Corporation 3,772 5,904 7,138 8,619 9,989 12,518 10,134 13,993 14,710 13,686 124,920
Cash flows from operating activities 14,095 11,344 12,286 16,171 19,688 19,588 16,333 20,820 20,125 19,261 175,811
Cash flows from investing activities (5,522) (8,195) (19,746) (2,972) (3,119) (16,976) (16,843) (7,566) (13,351) (20,314) (185,421)
Cash flows from financing activities (15,562) (5,855) 8,643 (9,423) (12,813) (6,216) (778) (11,137) (4,723) 3,465 31,631
Depreciation and amortization 5,307 5,657 5,688 6,716 6,830 7,705 7,885 8,612 9,100 9,522 86,918
EBITDA 12,832 17,962 19,642 19,544 24,246 29,302 26,132 27,749 31,621 29,076 265,396
Capital expenditure 3,568 8,225 10,284 5,876 7,327 12,487 13,394 9,494 11,464 17,139 156,435
Number of employees 4,843 5,078 5,117 5,118 5,233 5,569 5,866 6,611 7,020 7,236 7,236
End of fiscal year
Total assets 105,635 104,373 121,689
134,503 142,302 155,129 156,081 166,712 178,020 190,414 1,737,991
Net assets 63,162 65,347 71,471 87,621 100,943 113,637 103,059 128,394 138,354 140,658 1,283,853
Interest-bearing debt 27,318 23,011 34,284
29,063 20,009 20,195 33,506 16,325 15,612 26,782 244,453
Total equity 57,117 59,367 64,482
80,024 91,458 102,566 92,216 115,810 125,332 129,078 1,178,153
Per share
Net income (loss) (yen) 39.34 62.18 75.16
90.76 105.20 131.78 110.59 153.70 150.47 140.06 1.28 (US dollars)
Net assets (yen) 601.44 625.14 679.01 842.71 963.15 1,079.12 1,024.34 1,191.65 1,279.29 1,328.08 12.12 (US dollars)
Dividends (yen) 12.00 18.00 23.00 30.00 34.00 46.00 50.00 46.00 47.00 47.00 0.43 (US dollars)
Management indicators
Overseas sales ratio (%) 48.6 49.7 48.0
53.5 54.6 57.8 55.3 57.6 58.4 57.3 —
Operating income margin (%) 10.8 15.2 16.6 14.5 17.2 19.3 17.3 15.9 17.1 15.4 —
Return on equity (ROE) (%) 6.7 10.1 11.5 11.9 11.7 12.9 10.4 13.5 12.2 10.8 —
Return on assets (ROA) (%) 3.4 5.6 6.3 6.7 7.2 8.4 6.5 8.7 8.5 7.4 —
Equity ratio (%) 54.1 56.9 53.0 59.5 64.3 66.1 59.1 69.5 70.4 67.8 —
EBITDA margin (%) 18.5 22.2 23.4 22.1 24.0 26.2 24.8 23.1 24.1 22.9 —
Dividend payout ratio (%) 30.5 28.9 30.6 33.1 32.3 34.9 45.2 29.9 31.2 33.6 —
Data by product category
Taps 23,158 28,906 29,379
28,924 34,655 38,239 33,948 38,175 41,729 39,895 364,139
Drills 16,265 18,284 19,839 20,724 23,600 25,743 26,709 31,662 36,811 36,147 329,934
End mills 16,198 17,837 18,472 20,857 22,886 26,554 24,837 27,090 27,917 26,690 243,617
Rolling dies 6,663 7,067 7,280 7,681 9,165 9,921 9,443 10,218 10,645 9,973 91,031
Gauges 1,085 1,137 1,176 1,232 1,419 1,538 1,478 1,625 1,757 1,946 17,767
Other 6,140 7,725 7,935 8,958 9,304 9,919 9,143 11,424 12,508 12,310 112,363
Sales to external customers
Japan 36,196 41,266 44,212
41,922 46,659 48,150 48,257 51,639 55,287 54,725 499,500
The Americas 11,295 12,699 13,605 16,093 18,236 21,758 19,478 21,413 22,680 23,152 211,319
Europe/Africa 5,536 6,548 6,491 7,827 9,879 11,382 12,268 18,177 22,134 20,893 190,702
Asia 16,484 20,444 19,774 22,534 26,256 30,626 25,556 28,968 31,266 28,193 257,331
Key Financial Data for the Past 10 Years
Financial Section
30
2010/11 2011/11 2012/11 2013/11 2014/11 2015/11 2016/11 2017/11 2018/11 2019/11 2019/11
For the year
Net sales 69,513 80,959 84,083
88,378 101,031 111,917 105,561 120,198 131,368 126,964 1,158,854
Cost of sales 44,605 48,439 49,381 52,777 58,061 61,865 59,179 69,711 74,833 73,281 668,872
Selling, general and administrative expenses 17,383 20,214 20,747 22,774 25,554 28,454 28,135 31,349 34,015 34,128 311,503
Operating income (loss) 7,524 12,305 13,954 12,827 17,415 21,597 18,246 19,137 22,520 19,554 178,478
Ordinary income (loss) 6,699 11,374 13,695 13,910 17,568 21,510 17,813 19,144 22,567 19,710 179,906
Net income (loss) attributable to OSG Corporation 3,772 5,904 7,138 8,619 9,989 12,518 10,134 13,993 14,710 13,686 124,920
Cash flows from operating activities 14,095 11,344 12,286 16,171 19,688 19,588 16,333 20,820 20,125 19,261 175,811
Cash flows from investing activities (5,522) (8,195) (19,746) (2,972) (3,119) (16,976) (16,843) (7,566) (13,351) (20,314) (185,421)
Cash flows from financing activities (15,562) (5,855) 8,643 (9,423) (12,813) (6,216) (778) (11,137) (4,723) 3,465 31,631
Depreciation and amortization 5,307 5,657 5,688 6,716 6,830 7,705 7,885 8,612 9,100 9,522 86,918
EBITDA 12,832 17,962 19,642 19,544 24,246 29,302 26,132 27,749 31,621 29,076 265,396
Capital expenditure 3,568 8,225 10,284 5,876 7,327 12,487 13,394 9,494 11,464 17,139 156,435
Number of employees 4,843 5,078 5,117 5,118 5,233 5,569 5,866 6,611 7,020 7,236 7,236
End of fiscal year
Total assets 105,635 104,373 121,689
134,503 142,302 155,129 156,081 166,712 178,020 190,414 1,737,991
Net assets 63,162 65,347 71,471 87,621 100,943 113,637 103,059 128,394 138,354 140,658 1,283,853
Interest-bearing debt 27,318 23,011 34,284
29,063 20,009 20,195 33,506 16,325 15,612 26,782 244,453
Total equity 57,117 59,367 64,482
80,024 91,458 102,566 92,216 115,810 125,332 129,078 1,178,153
Per share
Net income (loss) (yen) 39.34 62.18 75.16
90.76 105.20 131.78 110.59 153.70 150.47 140.06 1.28 (US dollars)
Net assets (yen) 601.44 625.14 679.01 842.71 963.15 1,079.12 1,024.34 1,191.65 1,279.29 1,328.08 12.12 (US dollars)
Dividends (yen) 12.00 18.00 23.00 30.00 34.00 46.00 50.00 46.00 47.00 47.00 0.43 (US dollars)
Management indicators
Overseas sales ratio (%) 48.6 49.7 48.0
53.5 54.6 57.8 55.3 57.6 58.4 57.3 —
Operating income margin (%) 10.8 15.2 16.6 14.5 17.2 19.3 17.3 15.9 17.1 15.4 —
Return on equity (ROE) (%) 6.7 10.1 11.5 11.9 11.7 12.9 10.4 13.5 12.2 10.8 —
Return on assets (ROA) (%) 3.4 5.6 6.3 6.7 7.2 8.4 6.5 8.7 8.5 7.4 —
Equity ratio (%) 54.1 56.9 53.0 59.5 64.3 66.1 59.1 69.5 70.4 67.8 —
EBITDA margin (%) 18.5 22.2 23.4 22.1 24.0 26.2 24.8 23.1 24.1 22.9 —
Dividend payout ratio (%) 30.5 28.9 30.6 33.1 32.3 34.9 45.2 29.9 31.2 33.6 —
Data by product category
Taps 23,158 28,906 29,379
28,924 34,655 38,239 33,948 38,175 41,729 39,895 364,139
Drills 16,265 18,284 19,839 20,724 23,600 25,743 26,709 31,662 36,811 36,147 329,934
End mills 16,198 17,837 18,472 20,857 22,886 26,554 24,837 27,090 27,917 26,690 243,617
Rolling dies 6,663 7,067 7,280 7,681 9,165 9,921 9,443 10,218 10,645 9,973 91,031
Gauges 1,085 1,137 1,176 1,232 1,419 1,538 1,478 1,625 1,757 1,946 17,767
Other 6,140 7,725 7,935 8,958 9,304 9,919 9,143 11,424 12,508 12,310 112,363
Sales to external customers
Japan 36,196 41,266 44,212
41,922 46,659 48,150 48,257 51,639 55,287 54,725 499,500
The Americas 11,295 12,699 13,605 16,093 18,236 21,758 19,478 21,413 22,680 23,152 211,319
Europe/Africa 5,536 6,548 6,491 7,827 9,879 11,382 12,268 18,177 22,134 20,893 190,702
Asia 16,484 20,444 19,774 22,534 26,256 30,626 25,556 28,968 31,266 28,193 257,331
(Thousands of
U.S. dollars)(Millions of yen)
31
FY2018
As of Nov. 30, 2018
FY2019
As of No v. 30, 2019
Assets
Current Assets
Cash and time deposits 24,406 26,950
Notes and accounts receivable 25,128 22,400
Marketable securities 0 11
Merchandise and finished goods 24,237 29,844
Work in process 7,443 6,376
Raw materials and supplies 7,121 7,658
Other 2,781 3,061
Allowance for doubtful accounts (198) (198)
Total current assets 90,920 96,104
Fixed Assets
Tangible assets
Building and structures 19,871 18,663
Machinery and equipment 32,269 35,217
Tools, furniture, and fixtures 2,159 2,179
Land 15,172 14,864
Construction in progress 2,748 7,199
Other 4 12
Total tangible assets 72,226 78,137
Intangible assets
Goodwill 3,367 3,613
Other 633 1,412
Total intangible assets 4,000 5,026
Investments and other assets
Investment securities 4,610 3,882
Investment in capital 1,859 1,203
Long-term loans 412 1,774
Deferred tax assets 2,358 2,951
Net defined benefit asset 75 87
Other 1,937 1,611
Allowance for doubtful accounts (381) (364)
Total investments and other assets 10,873 11,146
Total fixed assets 87,100 94,309
Total 178,020 190,414
(Millions of yen)
Consolidated Summary Balance Sheet
Financial Section
32
FY2018
As of Nov. 30, 2018
FY2019
As of Nov. 30, 2019
Liabilities and Net Assets
Current Liabilities
Notes and accounts payable 6,067 6,039
Short-term loans payable 2,282 2,742
Current portion of long-term loans payable 1,175 546
Accrued expenses 7,878 7,822
Income taxes payable 2,732 2,699
Reserve for directors’ bonuses 390 253
Other 3,675 3,474
Total current liabilities 24,202 23,578
Long-term Liabilities
Bonds — 5,000
Convertible bonds 1,860 1,670
Long-term borrowings 10,294 16,822
Deferred tax liabilities 953 1,079
Retirement allowance for directors and corporate auditors 27 —
Liabilities for employees’ retirement benefits 511 504
Other 1,815 1,099
Total long-term liabilities 15,463 26,177
Total liabilities 39,666 49,755
Shareholders’ Equity
Common stock 12,124 12,194
Capital surplus 13,662 13,731
Retained earnings 100,260 109,428
Treasury stock (161) (1,894)
Total shareholders’ equity 125,886 133,460
Accumulated Other Comprehensive Income
Unrealized gain on available-for-sale securities 1,608 1,281
Foreign currency translation adjustments (2,161) (5,663)
Total accumulated other comprehensive income (553) (4,381)
Subscription rights to shares 13 13
Noncontrolling interests 13,008 11,567
Total net assets 138,354 140,658
Total Liabilities and Net Assets 178,020 190,414
(Millions of yen)
33
FY2018
Dec. 1, 2017 to Nov. 30, 2018
FY2019
Dec. 1, 2018 to Nov. 30, 2019
Net Sales 131,368 126,964
Cost of Sales 74,833 73,281
Gross profit 56,535 53,682
Selling, General and Administrative Expenses 34,015 34,128
Operating income 22,520 19,554
Other Income
Interest income 217 245
Dividend income 105 97
Purchase discounts 45 52
Equity in earnings of affiliates — 10
Reversal of provision for loss on litigation — 380
Subsidy income 254 252
Other 840 869
Total other income 1,463 1,908
Other Expenses
Interest expense 164 205
Sales discounts 817 787
Equity in losses of affiliates 15 —
Foreign exchange loss 119 260
Other 297 497
Total other expenses 1,415 1,752
Ordinary Income 22,567 19,710
Extraordinary Income
Gain on sales of investment securities — 474
Total extraordinary income — 474
Extraordinary Loss
Loss on valuation of investment securities — 339
Total extraordinary loss — 339
Income Before Income Taxes 22,567 19,845
Income Taxes
Current 7,111 5,963
Deferred (184) (409)
Total income taxes 6,926 5,554
Net Income 15,641 14,291
Net Income Attributable to Noncontrolling Interests 930 604
Net Income Attributable to OSG Corporation 14,710 13,686
Consolidated Summary Statement of Income
Financial Section
(Millions of yen)
34
FY2018
Dec. 1, 2017 to Nov. 30, 2018
FY2019
Dec. 1, 2018 to Nov. 30, 2019
Net Income 15,641 14,291
Other Comprehensive Income
Unrealized gain (loss) on available-for-sale securities (414) (332)
Deferred gain (loss) on derivatives under hedge accounting 0 —
Foreign currency translation adjustments (1,672) (4,534)
Share of other comprehensive income in associates (0) 1
Total other comprehensive income (2,086) (4,865)
Comprehensive Income 13,554 9,425
(Breakdown)
Comprehensive income attributable to OSG Corporation 12,877 9,755
Comprehensive income attributable to noncontrolling interests 677 (329)
Consolidated Statement of Comprehensive Income
Financial Section
(Millions of yen)
35
Shareholders’ equity Accumulated other comprehensive income
Stock acquisition
rights
Noncontrolling
interests
Total equity
Common stock Capital surplus Retained earnings Treasury stock Total
Unrealized gain on
available-for-sale
securities
Deferred (loss) gain
on derivatives under
hedge accounting
Foreign currency
translation
adjustments
Total
Balance, November 30, 2017 11,954 13,492 90,308 (1,229) 114,526 2,019 (0) (735) 1,283 13 12,570 128,394
Changes of items during period
Issuance of new shares 170 170 340
340
Cash dividends (4,583) (4,583) (4,583)
Net income attributable to
owners of the parent
14,710 14,710
14,710
Purchase of treasury stock (9) (9) (9)
Disposal of treasury stock (127) 1,077 950 950
Adjustment of retained earnings for
newly consolidated subsidiaries
(47) (47)
(47)
Purchase of shares of
consolidated subsidiaries
—
—
Transfer to capital surplus from
retained earnings
—
—
Net change in the year
(410) 0 (1,426) (1,837) — 437 (1,399)
Total changes of items during period 170 170 9,952 1,067 11,359
(410) 0 (1,426) (1,837) — 437 9,960
Balance, November 30, 2018 12,124 13,662 100,260 (161) 125,886 1,608 — (2,161) (553) 13 13,008 138,354
Shareholders’ equity Accumulated other comprehensive income
Stock acquisition
rights
Noncontrolling
interests
Total equity
Common stock Capital surplus Retained earnings Treasury stock Total
Unrealized gain on
available-for-sale
securities
Deferred (loss) gain
on derivatives under
hedge accounting
Foreign currency
translation
adjustments
Total
Balance, November 30, 2018 12,124 13,662 100,260 (161) 125,886 1,608 — (2,161) (553) 13 13,008 138,354
Changes of items during period
Issuance of new shares 70 70 140
140
Cash dividends (4,704) (4,704) (4,704)
Net income attributable to
owners of the parent
13,686 13,686
13,686
Purchase of treasury stock (1,904) (1,904) (1,904)
Disposal of treasury stock 4 171 175 175
Adjustment of retained earnings for
newly consolidated subsidiaries
271 271
271
Purchase of shares of
consolidated subsidiaries
(90) (90)
(90)
Transfer to capital surplus from
retained earnings
84 (84) —
—
Net change in the year (326) — (3,501) (3,828) — (1,441) (5,269)
Total changes of items during period 70 68 9,168 (1,732) 7,574 (326) — (3,501) (3,828) — (1,441) 2,304
Balance, November 30, 2019 12,194 13,731 109,428 (1,894) 133,460 1,281 — (5,663) (4,381) 13 11,567 140,658
FY2018 (Dec. 1, 2017 to Nov. 30, 2018)
FY2019 (Dec. 1, 2018 to Nov. 30, 2019)
Consolidated Statement of Changes In Equity
Financial Section
36
Shareholders’ equity Accumulated other comprehensive income
Stock acquisition
rights
Noncontrolling
interests
Total equity
Common stock Capital surplus Retained earnings Treasury stock Total
Unrealized gain on
available-for-sale
securities
Deferred (loss) gain
on derivatives under
hedge accounting
Foreign currency
translation
adjustments
Total
Balance, November 30, 2017 11,954 13,492 90,308 (1,229) 114,526 2,019 (0) (735) 1,283 13 12,570 128,394
Changes of items during period
Issuance of new shares 170 170 340
340
Cash dividends (4,583) (4,583) (4,583)
Net income attributable to
owners of the parent
14,710 14,710
14,710
Purchase of treasury stock (9) (9) (9)
Disposal of treasury stock (127) 1,077 950 950
Adjustment of retained earnings for
newly consolidated subsidiaries
(47) (47)
(47)
Purchase of shares of
consolidated subsidiaries
—
—
Transfer to capital surplus from
retained earnings
—
—
Net change in the year
(410) 0 (1,426) (1,837) — 437 (1,399)
Total changes of items during period 170 170 9,952 1,067 11,359
(410) 0 (1,426) (1,837) — 437 9,960
Balance, November 30, 2018 12,124 13,662 100,260 (161) 125,886 1,608 — (2,161) (553) 13 13,008 138,354
Shareholders’ equity Accumulated other comprehensive income
Stock acquisition
rights
Noncontrolling
interests
Total equity
Common stock Capital surplus Retained earnings Treasury stock Total
Unrealized gain on
available-for-sale
securities
Deferred (loss) gain
on derivatives under
hedge accounting
Foreign currency
translation
adjustments
Total
Balance, November 30, 2018 12,124 13,662 100,260 (161) 125,886 1,608 — (2,161) (553) 13 13,008 138,354
Changes of items during period
Issuance of new shares 70 70 140
140
Cash dividends (4,704) (4,704) (4,704)
Net income attributable to
owners of the parent
13,686 13,686
13,686
Purchase of treasury stock (1,904) (1,904) (1,904)
Disposal of treasury stock 4 171 175 175
Adjustment of retained earnings for
newly consolidated subsidiaries
271 271
271
Purchase of shares of
consolidated subsidiaries
(90) (90)
(90)
Transfer to capital surplus from
retained earnings
84 (84) —
—
Net change in the year (326) — (3,501) (3,828) — (1,441) (5,269)
Total changes of items during period 70 68 9,168 (1,732) 7,574 (326) — (3,501) (3,828) — (1,441) 2,304
Balance, November 30, 2019 12,194 13,731 109,428 (1,894) 133,460 1,281 — (5,663) (4,381) 13 11,567 140,658
(Millions of yen)
(Millions of yen)
37
FY2018
Dec. 1, 2017 to Nov. 30, 2018
FY2019
Dec. 1, 2018 to Nov. 30, 2019
Operating Activities:
Income before income taxes 22,567 19,845
Depreciation and amortization 9,100 9,522
Amortization of goodwill 477 535
Change in allowance for doubtful receivables (16) 7
Change in liability for directors’ bonuses (1) (137)
Change in liability for employees’ retirement benefits 69 51
Change in retirement allowance for directors and corporate auditors (42) (24)
Interest and dividend income (322) (343)
Interest expense 164 205
Equity in loss (earnings) of an associated company 15 (10)
Gain on sales of investment securities — (474)
Loss on valuation of investment securities — 339
Change in notes and accounts receivable (1,494) 1,902
Change in inventories (3,854) (6,319)
Change in notes and accounts payable 768 453
Change in accrued expenses 593 115
Other—net (725) (19)
Sub-total 27,300 25,651
Interest and dividend income received 310 345
Interest expense paid (125) (232)
Income taxes—paid (7,359) (6,503)
Net cash provided by operating activities 20,125 19,261
Investing Activities:
Payments for time deposits (2,788) (3,504)
Proceeds from refund of time deposits 1,480 2,971
Proceeds from redemption of marketable securities 0 0
Purchases of investment securities (243) (429)
Proceeds from sales of investment securities 78 583
Acquisitions of property, plant and equipment (11,464) (17,139)
Proceeds from sales of property, plant and equipment 406 211
Acquisitions of intangible assets (105) (418)
Payment for purchase of subsidiaries’ stock (620) (1,158)
Other—net (94) (1,432)
Net cash used in investing activities (13,351) (20,314)
Financing Activities:
Change in short-term borrowings—net 424 482
Proceeds from long-term borrowings 420 7,036
Repayments of long-term borrowings (539) (1,259)
Proceeds from issuance of bonds — 5,000
Purchase of investments in subsidiaries resulting in
no change in scope of consolidation
(26) (682)
Purchase of treasury stock (4) (1,899)
Proceeds from sales of treasury stock — 54
Dividends paid (4,581) (4,709)
Dividends paid to noncontrolling interests (416) (525)
Other—net — (30)
Net cash used in financing activities (4,723) 3,465
Effect of exchange rate change on cash and cash equivalents (333) (690)
Net increase in cash and cash equivalents 1,716 1,721
Cash and cash equivalents at beginning of year 19,598 21,545
Cash and cash equivalents from newly consolidated subsidiaries 229 437
Cash and cash equivalents at end of year 21,545 23,704
Consolidated Summary Statement of Cash Flows
Financial Section
(Millions of yen)
38
Company Profile (As of November 30, 2019)
Status of Shares (As of November 30, 2019)
Major shareholders
Ownership breakdown
Number of
shares held
(Thousands)
Percent
ownership
(%)
The Master Trust Bank of Japan, Co., Ltd.
(Trust Account)
6,713 6.84
SSBTC CLIENT OMNIBUS ACCOUNT 5,451 5.55
Japan Trustee Services Bank, Ltd.
(Trust Account)
4,566 4.65
NORTHERN TRUST CO.
(AVFC) RE FIDELITY FUNDS
3,796 3.87
OSG Agent Association 3,066 3.12
OSG Stock Holding Association 2,543 2.59
Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)
2,348 2.39
Osawa Scientific Studies Grants Foundation 2,340 2.38
Sumitomo Mitsui Banking Corporation 2,100 2.14
THE BANK OF NEW YORK MELLON 140051 2,095 2.14
(Notes)
1. The number of shares held is rounded down to the nearest thousand.
2. The shareholding ratio is calculated after deducting treasury shares.
Treasury stock
2 thousand shares
0.00%
Individuals and others
26,537 thousand shares
27.04%
Financial institutions
32,513 thousand shares
33.13%
Securities
1,132 thousand shares
1.15%
Overseas institutions
26,765 thousand shares
27.27%
Domestic institutions
11,195 thousand shares
11.41%
To Our Stakeholders
OSG’s website provides a variety of timely information such
as corporate information, product information,
industry solutions, news releases and IR information.
https://www.osg.co.jp/en/
Corporate Information
Company name OSG Corporation
Headquarters 3-22, Honnogahara, Toyokawa,
Aichi Prefecture 442-8543, Japan
Date established March 26, 1938
Capital ¥12,194 million
Number of
employees
7,236 (consolidated)/
1,845 (non-consolidated)
Business activities Manufacture and sale of cutting tools,
rolling dies, gauges, machine tools
and machine parts, importation and
sale of tools
Number of shares issuable 200,000,000 shares
Number of shares outstanding 98,147,239 shares
Number of shareholders 7,324
Minimum share purchasing unit 100 shares
Stock listings Tokyo Stock Exchange,
Nagoya Stock Exchange
Securities code 6136
39
Printed in Japan
OSG Corporation
OSG REPORT 2019
3-22, Honnogahara, Toyokawa, Aichi Prefecture 442-8543, Japan
URL: https://www.osg.co.jp/en/
