TDK : Internet Disclosure Items for Notice of Convocation of the 126th Ordinary General Meeting (Consolidated Statement of Equity and List of Notes to the Consolidated Financial Statements)

June 6, 2022

To Shareholders

INTERNET DISCLOSURE ITEMS FOR NOTICE OF CONVOCATION

OF THE 126TH ORDINARY GENERAL

MEETING OF SHAREHOLDERS

1. CONSOLIDATED STATEMENT OF EQUITY
2. LIST OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

[126th Fiscal Year (From April 1, 2021 to March 31, 2022)]

TDK Corporation

Tokyo, Japan

Disclosure documents audited by the Accounting Auditors and Audit & Supervisory Board Members are provided to shareholders on website of TDK Corporation (https://www.tdk.com/ja/index.html) pursuant to relevant laws and regulations and Article 16 of the Articles of Incorporation of TDK Corporation.

Notes: 1. This is a translation from Japanese of a notice distributed to shareholders in Japan. The translation is prepared solely for the convenience of foreign shareholders. In the case of any discrepancy between the translation and the Japanese original, the latter shall prevail.

2. There are no English translations: Non-Consolidated Statement of Changes in Net Assets and List of Notes to the Non-Consolidated Financial Statements.

CONSOLIDATED STATEMENT OF EQUITY
(prepared in accordance with U.S. GAAP)
From:	April l, 2021
To: March 31, 2022
(¥ in millions)
					Accumulated
	Common	Additional	Legal	Retained	other
	stock	paid-in capital	reserve	earnings	comprehensive
					income (loss)
Balance as of beginning of period	32,641	-	46,403	1,024,019	(82,733)
Equity transaction of consolidated subsidiaries and other		(131)
Cash dividends				(24,002)
Transferred to legal reserve			10,037	(10,037)
Transferred from retained earnings to additional paid-in capital		129		(129)
Comprehensive income
Net income				183,632
Foreign currency translation adjustments					169,958
Pension liability adjustments					13,426
Net unrealized gains (losses) on securities					166
Total comprehensive income (loss)
Acquisition of treasury stock
Compensation expenses related to stock options		101
Exercise of stock option		(99)
Balance as of end of period	32,641	－	56,440	1,173,483	100,817
	Treasury	Total TDK	Non
	Stockholders'	controlling	Total equity
	stock
	equity	interests
Balance as of beginning of period	(16,792)	1,003,538	2,759	1,006,297
Equity transaction of consolidated subsidiaries and other		(131)	181	50
Cash dividends		(24,002)	(277)	(24,279)
Transferred to legal reserve		－		－
Transferred from retained earnings to additional paid-in capital		－		－
Comprehensive income
Net income		183,632	505	184,137
Foreign currency translation adjustments		169,958	271	170,229
Pension liability adjustments		13,426	8	13,434
Net unrealized gains (losses) on securities		166		166
Total comprehensive income (loss)		367,182	784	367,966
Acquisition of treasury stock	(5)	(5)		(5)
Compensation expenses related to stock options		101		101
Exercise of stock option	99	0		0
Balance as of end of period	(16,698)	1,346,683	3,447	1,350,130

Note: Amounts less than ¥1 million have been rounded to the nearest unit.

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In principle, equity securities excluding investments in consolidated subsidiaries and affiliates are measured at fair value and the changes in its fair value are recognized in the consolidated statements of income. The cost of securities sold is primarily calculated by the moving-averagemethod.

Debt securities are classified as available-for-salesecurities and measured at fair value. Net unrealized gains (losses) are charged or credited directly to other comprehensive income (loss). The cost of securities sold is primarily calculated by the moving-averagemethod.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[Important Matters for Preparation of Consolidated Financial Statements] 1. Matters Concerning Scope of Consolidation

Number of consolidated subsidiaries:	137
Name of major consolidated subsidiaries:	TDK-Lambda Corporation
	TDK Akita Corporation
	SAE Magnetics (Hong Kong) Limited
	TDK U.S.A. Corporation
	TDK Europe S.A.
	TDK Electronics AG
	Amperex Technology Limited
	InvenSense, Inc.
2. Matters Concerning Equity-Method
Number of Equity-method affiliates:	5

Name of a principal Equity-method affiliate: TODA KOGYO Co.

Semiconductor Energy Laboratory Co., Ltd.

3. Significant Accounting Policies

(1) Standards for preparation of consolidated financial statements:

TDK Corporation (the "Company")'s consolidated financial statements are prepared based on accounting standards generally accepted in the United States ("US GAAP"), pursuant to the provisions of Article 120-3, Paragraph 1 of the Ordinance of Companies Accounting of Japan. However, some accounting description and notes required by US GAAP have been omitted herein in conformity with the second sentence of Article 120, Paragraph 1 of the same Ordinance, which is applied mutatis mutandis pursuant to Article 120-3, Paragraph 3 of the same Ordinance.

(2) Valuation standards and methods for inventories:

Products and works in process are valued at the lower of cost or market mainly using a periodic average method, and raw materials and supplies are valued at the lower of cost or market mainly using a moving-average cost method.

(3) Valuation standards and methods for securities:

The Accounting Standards Codification ("ASC") 320, "Investments-Debt Securities" and ASC 321 "Investments-Equity Securities" issued by the U.S. Financial Accounting Standards Board ("FASB") are applied.

Equity securities:

Debt securities

(4) Method for depreciating net property, plant and equipment:

Depreciations of property, plants and equipment are computed by the straight-line method.

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(5) Goodwill and other intangible assets:

TDK group ("TDK") does not amortize Goodwill, but instead is tested for impairment at least annually, except for a case in which indicators show or change in situation arise that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. The test is conducted more frequently if certain indicators arise. In a case the carrying amount of a reporting unit is more than its fair value, an impairment loss is recognized. The main method used for fair value measurement is discounted cash flow method.

TDK amortize intangible assets with finite useful lives over their respective estimated useful lives. Intangible assets with indefinite useful lives are not amortized unless the useful like is determined to no longer be indefinite, and instead are tested for impairment annually except for a case in which indicators show or change in situation arise that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. In a case the carrying amount is more than its fair value, an impairment loss is recognized.

(6) Derivative financial instruments:

TDK applies ASC 815 ("Derivatives and Hedging"), and all derivatives held by TDK are recognized on the consolidated balance sheets at fair value. The accounting treatment of subsequent changes in the fair value depends on their use, and whether they qualify as effective "hedges" for accounting purposes. Derivatives that are not designated as hedges must be adjusted to fair value through the consolidated statement of income. If a derivative is designated as a hedge, then depending on its nature, changes in its fair value will be recorded in other comprehensive income (loss).

If a derivative is used as a hedge of a net investment in a foreign operation, the entire change in its fair value is recorded in the foreign currency translation adjustments account within other comprehensive income (loss).

(7) Accounting basis of principal allowances:

Allowance for doubtful receivables:

TDK recognizes an allowance for doubtful receivable that is based on an uncollectible amount estimated in consideration of the historical bad debt ratio of receivable in general and in consideration of individual possibility of collection with respect to specific doubtful receivables.

Retirement and severance benefits:

For the future payment of retirement and severance benefits to employees, TDK recognizes an amount based on projected benefit obligations and the fair value of plan assets as of March 31, 2021, in accordance with ASC 715, "Compensation-Retirement Benefits."

Prior service costs of employees are amortized using the straight-line method over the average remaining service period of employees.

With respect to actuarial net losses, the part exceeding the amount equivalent to 10% of projected benefit obligations or the fair value of plan assets as of the beginning of the fiscal year concerned, whichever is larger, is amortized using the straight-line method over the average remaining service period of employees.

1. Accounting method of consumption tax, etc.: Consumption taxes are accounted using tax exclusion method.
2. Taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.

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The financial statement impact of tax positions is recognized when it is more likely than not that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement with the taxing authorities.

(10) Lease:

Right-of-use assets of operating lease and operating lease obligation is recognized on the consolidated balance sheet based on present value of lease expense throughout the lease term. Lease expense is recognized throughout the lease term by straight-line method.

(11) Revenue Recognition

TDK applies ASC606 "Revenue from Contracts with Customers", and recognizes revenue based on the following 5 steps.

Step 1 : Identify the contracts with a customer

Step 2 : Identify the performance obligations in the contract

Step 3 : Determine the transaction price

Step 4 : Allocate the transaction price to the performance obligations in the contract

Step 5 : Recognize revenue when (or as) the entity satisfies a performance obligation Further detail is presented in Note 24 of Notes to Consolidated Financial Statements.

TDK sells passive components, sensor application products, magnetic application products and energy application products to global ICT related companies, manufacturers of automobile and automotive components, manufacturers of home electrical appliances and industrial equipment. For those product sales, TDK recognizes revenue when products are transferred to the customers as the customers gain control over the products and performance obligation is satisfied accordingly.

Transaction price that TDK receives in exchange for products transferred may include variable consideration such as sales discounts, customer privileges, and rebates based on sales volume. Variable consideration is included in the transaction price when uncertainty over the variable consideration is resolved to the extent that a significant reversal in the amount of revenue is not expected. Variable consideration is estimated based on past trend or other elements which are already known as of the transaction date and is updated on a regular basis.

4. Reclassifications:

From the year ending March 31, 2022, the amount recognized in "Loss (gain) on securities, net", which was disclosed as "Other-net" in "Other income (deductions)" for the year ending March 31, 2021, is becoming material, so it is disclosed in a separate account.

In the "Other income (deductions)" for the year ending March 2021, "Gain (loss) on sale of investments in affiliates" was disclosed separately; however, as the amount became immaterial for the year ending March 2022, it is included in "Other-net" in "Other income (deductions)".

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