ANNUALREPORT2009

A MESSAGE TO OUR SHAREHOLDERS
Greetings
Since its founding in Japan’s ancient capital, Kyoto, in April 1979, TOWA Corporation has
consistently developed proprietary technologies and created numerous de facto standards. Our
primary operations are composed of development, manufacturing and sales of resin
encapsulation systems for semiconductors, singulation systems and precision molds for
manufacturing semiconductors, as well as the manufacture and sales of fine plastic molded
products. We maintain a leading share of the global market for our mainstay semiconductor
resin encapsulation systems, which enjoy an excellent reputation with users.

Economic Overview
The Japanese economy has been crippled by a recession up to the current consecutive
fiscal year. The world financial turmoil triggered by a corporate credibility crisis, cast a large
shadow over the business world. Exports, the driving force of the national economy plunged
and the country rapidly entered into a recession.
Above all, semiconductor businesses have been suffering from rapid changes in the world
market caused by drastic inventory adjustment and falling prices. Also, this has forced
businesses to reorganize its industrial structure.

PerformanceWe, the TOWA group of companies introduced “Challenge 30”, a mid-term management
plan which had been drawn up in April 2006, and smoothly implemented the following
measures: carrying out belt-tightening and work restructuring projects, and installing acompany-wide integrated computer system (SAP). As a result, we managed to perform far better
than originally estimated in the first as well as the second years since 2006.
However, in the third quarter of the fiscal year 2009, which was the final year of thecompletion of the plan, we faced the world financial crisis and experienced unprecedented rapidand drastic market reduction. A large number of orders were either cancelled or delayed by ourclients, and our sales dropped to 11,577 million yen (in comparison to 14,175 million yen
recorded for the same period in the previous year, a 55.0％ decline).
Furthermore, concerning the profit and loss, regardless of cost cutting measures
implemented, due to the rapid drop in sales, we posted an operating loss of 3,337 million yen (incomparison to the record of 2,381 million yen operating profit for the same period in theprevious year) and a net loss for the period of 4,163 million yen (in comparison to the record of

2,118 million yen net profit for the same period in the previous year).

Looking Ahead
It is estimated that the global economy will continue to be unstable for a while. In thesemiconductor industry, the timing of a fully-fledged recovery of the market after inventory
liquidation remains uncertain.
In April 2009, as the Towa group marked its 30 year anniversary of its establishment, we
also formulated a new mid-term management plan, “Revitalize TOWA" that will not only
provide a framework for confronting the new business challenges brought to light from theexperiences and introspection we have experienced during these difficult times but will also
lead the way to extensive growth by further refining our young seedlings of "New technology"
and "New business".
Its fundamental principle is that“ Founded on the basics of craftsmanship andmanufacturing, we shall ensure constant and stable business income by establishing a “flexible
cost structure” and a“ responsive production system to market change”, and also byimplementing timely and appropriate global business strategies to accommodate client’s needs.
The following will show the framework for the new mid-term management plan, “Revitalize“TOWA”” and a summary of the status quo.
１． Maintain a surplus by controlling expenses based on the order received status
Towa’s business portfolio indicates that the semiconductor business constitutes a majorityof the company’s operation, and we dominate the market in the production of semiconductor
molding devices. Therefore, it is expected that once the semiconductor market recovers, it
should not take long before we observe an increase in orders.
Yet, at this point of time, the timing of the recovery still remains uncertain, and therefore,
we are required to endure these severe market conditions.
We have already started cutting back on fixed costs by means of employment cost
reduction as well as temporary lay-offs, and we are prepared to adjust the fixed cost according
to the changing needs in the market.
We will continue to take this business approach until the market revives. This way, we
should be able to continue to make profits and keep losses under control even if the current
economic condition is prolonged.
２． Revising the business portfolio
The semiconductor market has been experiencing huge ups-and-downs and this has greatly
influenced our company’s performance as well. TOWA will be expanding our molding-related

and sealing technology, cultivated under our semiconductor operations, to applications in fields
other than semiconductors so that, as a result, the ratio of our portfolio consisting ofsemiconductor business will be reduced, thereby reducing the range of fluctuation of our
financial performance.
In particular, as our “strategic project”, we are going to continue working on our “LED
Project” which has already been launched and is successful. Also, having entered the time ofeco businesses, TOWA will focus on solutions that utilize our own unique technologies, such as
those for in-vehicle units, power devices and solar batteries, product areas that are expected to
expand and grow to levels far beyond the previous, and we strive to market such products as
rapidly as possible.
３． Winning an overwhelming share in the semiconductor molding device market
In traditional semiconductor production processes, most of the differentiation occurred in
the front-end. However, these days, with the advent of WLP (Wafer Level Package) with use ofbigger chip boards, smaller chips and multiple layers, technological demands for the back-end
have reached a much higher level, and the differentiation including cost management has also
been achieved in the back-end.
Using our sealing and mold-related technology, which is our core competence, we intend toacquire more than 50 % of the share of the market and dominate the semiconductor molding
devise market.
We look forward to your continuing support and assistance in the future.
We would like to express our heartfelt appreciation for your support.
September 2009

Yoichi Kawahara
President & COO

Consolidated Balance Sheets
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2008 and 2009

2008

2009

Thousands of
U.S. dollars(Note 1)
2009

￥

￥

＄

Millions of yen

ASSETS
Current assets:
Cash on hand and at banks ……………………………………

3,351

4,399

44,783Inventories ……………………………………………………
Deferred tax assets (Note 8) …………………………………
Other current assets …………………………………………..

9,871
(102)
9,769
4,053
48
429

3,313
(18)
3,295
4,872
19
219

33,727(183)
33,544
49,598193
2,229

Total current assets ………………………………………..

17,65012,804130,347

Land ……………………………………………………………
Buildings and structures ………………………………………
Machinery and equipment ……………………………………
Construction in progress ………………………………………
Less: Accumulated depreciation ……………………………

4,529
12,3989,653
36(14,684)

4,361
12,413
9,924
49(15,375)

44,396
126,367
101,028
499(156,521)

Total property, plant and equipment ……………………….

11,932

11,372

115,769

Other assets:
Investment securities (Note 3) ………………………………..
Deferred income taxes (Note 8) ……………………………..
Other ………………………………………………………….

3,046
36
1,696

1,822
9
1,943

18,54892
19,780Total other assets ………………………………………….

4,778

3,774

38,420Total assets ………………………………………………………

34,36027,950284,536

Notes and accounts receivable :Trade ……………………………………………………….
Less: Allowance for doubtful accounts ……………………

Property, plant and equipment, at cost :The accompanying notes are an integral part of these financial statements.

Consolidated Balance Sheets
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2008 and 2009

2008

2009

Thousands of
U.S. dollars(Note 1)
2009

￥

￥

＄

Millions of yen

LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent liabilities:
Short-term borrowings (Note 4) ………………………………….
Current portion of long-term debt (Note 4) ………………………
Notes and accounts payable ………………………………………
Accrued expenses(Note 2(10)) ……………………………………
Accrued income taxes ……………………………………………
Other current liabilities(Note 2(9))…………………………………
Total current liabilities ………………………………………..

Long-term liabilities:
Long-term debt (Note 4) …………………………………………
Accrued severance indemnities for employees(Notes2(11)and (5)Accrued severance indemnities for directors
and corporate auditors………………..
Deferred tax liabilities (Note 8) ………………………………..
Other long-term liabilities …………………………………………

5,274
2,524
2,931
463
83
1,569

8,653
2,143
549
234
41
928

88,08921,816
5,589
2,382
418
9,447

12,844

12,548

127,741

4,127
739

3,464
764

35,264
7,778

-

-

-

255
1

83
1

845
10

Total long-term liabilities …………………………………….

5,122

4,312

43,897

Total liabilities ……………………………………………….

17,966

16,860171,638

Shareholders' equity (Note 6)
Common stock
Authorized: 80,000,000 shares
Issued :25,021,832 shares at 31st March, 2009……………
Additional paid-in capital …………………………………………
Retained earnings ………………………………………………..
Unrealized gain (loss) on other securities …………………………
Translation adjustments …………………………………………
Less: Treasury stock at cost ……………………………………

8,933
3,115
3,921
333
99
(7)

8,933
3,115
(469)
82
(564)
(7)

90,94031,711(4,775)835(5,742)(71)

Total shareholders' equity ……………………………………

16,394

11,090112,898

Total liabilities and shareholders' equity ……………………..

34,36027,950284,536

Contingent liabilities (Note 10)

The accompanying notes are an integral part of these financial statements.

Consolidated Statements of Income
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESTwo years ended March 31, 2009

Thousands of
U.S. dollars(Note 1 )2009

Millions of yen
2008

2009

￥

￥

Net sales……………………………………………………………………
Cost of sales…………………………………………………………………
Gross profit…………………………………………………………

25,754
18,221
7,533

11,578
10,680898＄
117,866
108,724
9,142

Selling, general and administrative expenses (Notes2(10)and 7)…

5,152

4,235

43,113Operating Income…………………………………………………..

2,381(3,337)(33,971)

Other income (expenses)
Interest and dividend income……………………………………………
Interest expenses…………………………………………………………
Foreign exchange gains（losses) …………………………………………
Gain on sale of investment securities……………………………………
Valuation loss of investment securities…………………………………
Equity in earnings of affiliates……………………………………………
Loss on impairment of fixed assets………………………………………
Gain(Loss) on sale of investment in stocks of affiliated company………
Gain on sale of assets for discontinuing operation ………………………
Other, net…………………………………………………………………
Total other income (expenses) ………………………………………

43
(337)
(426)
31
332
(17)
49
108
(217)

43
(300)
(33)
(226)
(64)
(165)
22
(723)

438
(3,054)(336)(2,301)(652)(1,680)225(7,360)

Income before income taxes and minority interests …………………

2,164(4,060)(41,331)

Income taxes (Note 8)
Current ……………………………………………………………….
Deferred ……………………………………………………………..

60
(15)

27
77

275
784

Income before minority interests ………………………………………

2,119(4,164)(42,390)

Minority Interests …………………………………………………………

-

-

-

Net Income……………………………………………………………

2,119(4,164)(42,390)￥(166.45)(166.45)
0.00

U.S. dollars(Note 1 )＄(1.70)(1.70)
0.00

Amount per share of common stock (Note 2 (16) ):Net Income……………………………………………………………
Diluted net income ……………………………………………………
Cash dividends ………………………………………………………

The accompanying notes are an integral part of these financial statements.

￥
84.70
10.00

Consolidated Statements of Shareholders' Equity
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESTwo years ended March 31, 2009

Millions of yen
Number of

Unrealized

Additional

Total

shares ofCommonpaid-in

Retained

gain on otherTranslation

Treasuryshareholders'common stock

stock

capitalearnings

securities

adjustmentsstockequity

￥

￥

￥

￥

8,933

3,115

Balance at March 31, 2007 …………………………………… 25,021,832

￥

1,927

621

￥
351

￥
(6)

14,941Net Income ………………………………………………….

-

-

-

2,119

-

-

-

2,119

Bonus to corporate directors …………………………………

-

-

-

(125)

-

-

-

(125)

Net increase of treasury stock …………………………………

-

-

-

-

-

-

(1)

(1)

Net increase of unrealized gain on other securities ……………

-

-

-

-

(288)

-

-

(288)

Net increase of translation adjustments ……………………

-

-

(252)

-

(252)

99

(7)

16,394

Balance at March 31, 2008 …………………………………… 25,021,832

8,933

3,115

3,921

333

Effect of change to IFRS ………………………………………

-

-

-

24

-

-

-

24

Net Income ………………………………………………….

-

-

-

(4,164)---(4,164)

Cash dividends …………………………………………………

-

-

-

(250)

-

-

-

(250)

Net increase of treasury stock ……………………………..

-

-

-

-

-

-

0

Net increase of unrealized gain on other securities ………..

-

-

-

-

(251)

-

Net increase of translation adjustments ……………………

-Balance at March 31, 2009 …………………………………… 25,021,832

8,933

-

-

3,115

-

(469)

82

0
-

(251)

(663)

-

(663)

(564)

(7)

11,090Thousands of U.S.dollars (Note 1 )Number of

Unrealized

Additional

Total

shares ofCommonpaid-in

Retained

gain on otherTranslation

Treasuryshareholders'common stock

stock

capitalearnings

securities

adjustmentsstockequity＄＄＄＄90,94031,711

39,917

Balance at March 31, 2008 …………………………………… 25,021,832

＄

3,390

＄

1,008

＄
(71)

166,895

Effect of change to IFRS ………………………………………

-

-

-

244

-

-

-

244

Net Income ………………………………………………….

-

-

-

(42,390)---(42,390)

Cash dividends …………………………………………………

-

-

-

(2,546)---(2,546)

Net increase of treasury stock ……………………………..

-

-

-

-

-

-

0

Net increase of unrealized gain on other securities ………..

-

-

-

-

(2,555)-

Net increase of translation adjustments ……………………

-Balance at March 31, 2009 …………………………………… 25,021,832

The accompanying notes are an integral part of these financial statements.

90,94031,711(4,775)835

0-(2,555)(6,750)-(6,750)(5,742)(71)

112,898

Thousands of
U.S. dollars(Note 1 )Millions of yen

2008
￥
2,164

2009
￥
(4,060)2009＄(41,331)

1,228
(332)
(43)
337
(224)
(1,578)
1,097
(127)
494

1,315
165
64
(43)
300
175
226
6,482
(922)
175
(2,258)13,387
1,680
652
(438)
3,054
1,782
2,301
65,988(9,387)
1,782(22,988)

(77)
54
2,993
45
(362)
(89)
2,587

(439)
(264)
916
51
(314)
(46)
607

(4,469)(2,688)9,325
519(3,197)
(468)
6,179

Cash Flows from Investing Activities:
Purchase of investment securities …………………………………………………………
Sale of investment securities……………………………………………………………..
Purchase of property, plant and equipment ………………………………………………
Sale of property, plant and equipment ……………………………………………………
Other, net …………………………………………………………………………………
Net cash provided by (used in) investing activities ………………………………………

(27)
246
(1,369)163(97)(1,084)(7)(1,438)7(53)(1,491)(71)(14,639)71(540)(15,179)

Cash Flows from Financing Activities:
Increase（decrease) in short-term borrowings ……………………………………………
Proceeds from issuance of long-term debt ………………………………………………
Repayments of long-term debt ……………………………………………………………
Redemption of bonds…………………………………………………………………….
Purchase of treasury stock ……………………………………………………………….
Cash dividends ……………………………………………………………………………
Net cash provided by (used in ) financing activities ……………………………………

283
800(2,332)
(572)
(1)
(125)
(1,947)

3,246
1,500
(1,952)
(572)
(250)
1,972

33,046
15,270(19,872)(5,823)(2,546)
20,075

Effect of exchange rate changes on Cash and Cash Equivalents …………………………
Net increase(decrease) in Cash and Cash Equivalents ………………………………………
Cash and Cash Equivalents at Beginning of Period …………………………………………

253
(191)
3,542

(40)
1,048
3,351

(407)
10,66834,114

Cash and Cash Equivalents at End of Period (Note2(3)) ……………………………………

3,351

4,399

44,782

Cash Flows from Operating Activities:
Net Income before income taxes and minority interests …………………………………
Adjustments for:
Depreciation ………………………………………………………………………….
Loss on impairment of fixed assets ………………………………………………..
Equity in earnings of affiliates ……………………………………………………….
Interest and dividends income ……………………………………………………….
Interest expenses ……………………………………………………………………
Foreign exchange losses (gains) ……………………………………………………
Valuation loss (gains) of investment securities……………………………………
(Increase) decrease in trade notes and accounts receivable ………………………………
(Increase) decrease in inventories …………………………………………………………
(Increase) decrease in other current assets ……………………………………………….
Increase (decrease) in notes and accounts payable ………………………………………
Increase(decrease) in accrued andother current liabilities …………………………………………………
Other, net …………………………………………………………………………………
Sub-total …………………………………………………………………………………
Interest and dividends received ……………………………………………………………
Interest paid ………………………………………………………………………………
Income taxes paid …………………………………………………………………………
Net cash provided by (used in) operating activities …………………………………….

The accompanying notes are an integral part of these financial statements.

Notes to the Consolidated Financial Statements
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIES

1.

Basis of presenting Consolidated Financial Statements
TOWA CORPORATION (the ”Company”) and its domestic subsidiaries maintain their accounts andrecords in accordance with the provisions set forth in the Corporate Law of Japan and the Securities andExchange Law and in conformity with accounting principles and practices generally accepted in Japan(“JPGAAP”), which are different, in certain respects from the application and disclosures and disclosure
requirements of International Financial Reporting Standards (“IFRS”).
The Company’s overseas subsidiaries maintain their accounts and records in conformity withgenerally accepted accounting principles and practices prevailing in their respective countries of domicile.
The accompanying consolidated financial statements of the Company are prepared on the basis ofaccounting principles generally accepted in Japan, as required by the Securities and Exchange Law ofJapan.
In preparing the accompanying consolidated financial statements, certain reclassifications andrearrangements have been made to the consolidated financial statements issued domestically in order topresent them in a form which is more familiar readers outside Japan.
The consolidated financial statements are not intended to present the consolidated financial position,
results of operations and cash flows in accordance with the accounting principles and practices generally
accepted in countries and jurisdictions other than Japan.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience ofthe reader, using the approximate exchange rate at March 31, 2009, which was ¥98.23 to US$1.00. These
convenience translations should not be construed as representations that the Japanese yen amounts havebeen, could have been, or could in the future be, converted into U.S. dollars at this or any other rate ofexchange.
For the purpose of enhancement of group management, the company decided to unify the financial
period for all its subsidiaries. As a result of a change in the fiscal year-end from December 31 to March
31(including assumed settling day for 3 subsidiaries), the accounting term for TOWAM Sdn. Bhd.,
TOWA Singapore Mfg Pte.Ltd, TOWA-Intercon Technology,Inc., TOWA (Shanghai) Co.,Ltd., TOWA
(Suzhou) Co.,Ltd., and TOWA TAIWAN Co., Ltd was 15 months for the year ended March 31, 2008.As
a result, sales and operating income for the year ended March 31, 2008 increased by 2,266 million
yen($22,617thousand) and 268 million yen($2,675thousand), respectively.

2. Summary of Significant Accounting Policies(1) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
subsidiaries and affiliates. All significant inter-company transactions, account balances and unrealized
profits have been eliminated in consolidation. At March 31, 2009, the year-end of the consolidated
subsidiaries matches that of the consolidated financial statements(see note 1).
Shown below are the significant subsidiaries and affiliates of the Company.

Subsidiaries(All subsidiaries have been consolidated)
Name
BANDICK Corporation
TOWATEC Co., Ltd.
TOWA Service Co., Ltd.
TOWAM Sdn. Bhd.
TOWA (Suzhou) Co., Ltd.
TOWA America Corporation ※１
TOWA Asia-Pacific Pte. Ltd.
TOWA (Shanghai) Co., Ltd.
TOWA TAIWAN Co., Ltd
TOWA Semiconductor Equipment
Philippines Corporation
TOWA Europe GmbHTOWA Singapore Mfg Pte. Ltd. ※２

Ownership
100%
100
100
100
100
100
100
100
100
100

Country of Incorporation
Japan
Japan
Japan
Malaysia
China
The United States of America
Singapore
China
TaiwanPhilippines

100
100

Germany
Singapore

Ownership
35 %
23
40
20

Country of Incorporation
Korea
Korea
TaiwanJapan

Affiliates(All affiliates are accounted for by the equity method)Name
TONGIJIN Corporation
SECRON Co., Ltd.
TOWA Jipal Technologies Co., Ltd.
Scientific and Semiconductor
Manufacturing Equipment RecyclingCo., Ltd※１．The Board directors of TOWA-Intercon Technology, Inc decided to change its company name as
TOWA America Corporation effecive July 1, 2008.
※２．TOWA Singapore Mfg.Pte.Ltd is in process of liquidation.
(2) Translation of Foreign Currency Items
In accordance with the Japanese accounting standard, every monetary assets and liabilities
denominated in foreign currencies are principally translated into Japanese yen at the exchange rate ineffect at the balance sheet date. The foreign exchange gains and losses from translation are recognized in
the statements of income.
With respect to financial statements of overseas subsidiaries, the balance sheet accounts aretranslated into Japanese yen at the exchange rates in effect at the balance sheet date except forshareholders’ equity, which are translated at the historical rates. And revenue and expenses are translated
at the exchange rate in effect at the balance sheet date. The differences resulting from translation in thismanner are included in “Translation adjustments” which is listed in Shareholders’ Equity in theaccompanying consolidated balance sheets.
(3) Cash and Cash Equivalents
For the purposes of cash flow statements, cash and cash equivalents comprise cash in hand, deposits
held at call with banks, net of overdrafts and all highly liquid investments with maturities of three months
or less.

Components of cash and cash equivalents as of March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars(Note 1)
2009

Millions of Yen
2008
2009
Cash on hand and at banks
Less: Time deposits with deposit termof over three months
Cash and cash equivalentat end of year

¥3,351¥4,399$44,783---¥3,351¥4,399$44,783(4) Securities
Securities are classified into four categories.
Categorization and valuation for investments in securities are as follows:1. Trading Securities
・ Such securities held for the purpose of generating profits from short-term price movements.
・ Unrealized gain/loss at the end of period resulting from the valuation by applying the fairvalue at such date is directly debited/credited to income;・ Such securities are treated in current assets in the balance sheet.
2. Held-to-maturity Debt Securities
・ Debt securities whose maturity dates are predetermined and are to be redeemed at par,acquired with intention to hold to their maturity dates;
・ The difference between the acquisition cost and the amount expected to gain at maturity isamortized or appreciated over the remaining period to maturity date. The amount amortized orappreciated is charged/credited to income for the respective period as interest expense orinterest income, as the case may be.
・ Unrealized loss will be required to be charged to income as impairment unless unrealized loss
is expected to recover within a reasonable period.
3. Shares in equity of Subsidiaries and Affiliates
・ Those securities are carried at cost unless such investment is regarded impaired.
4. Other Securities:
・ Such securities other than those categorized in 1 to 3 above;・ Other Securities with market quotation are valued at such market price at the end of period,
and those without market quotation are valued at cost.
・ Unrealized gain/loss at the end of period resulting from such valuation is charged toshareholders’ equity as “Unrealized gain/(loss) on Other Securities” after netting off thedeferred income taxes thereto.
・ Unrealized loss which it incurred as the fair value is less than 50% of its acquisition cost will
be required to be charged to income.
・ Unrealized loss which it incurred as the fair value is 30% ~50% of its acquisition cost will be
required to be charged to income unless the unrealized loss is expected to recover within areasonable period.
The moving average method is applied for calculation of the costs of securities.

(5) Inventories
Inventories are mainly stated at the lower of cost or net selling value, the cost being determined bymainly specific identification method for finished products and work-in-process, by mainly
moving-average method for raw materials and by the last purchase cost method for supplies.
Effective the year ended March 31, 2009, the Company and its domestic subsidiaries adopted“Accounting Standard for Measurement of Inventories” (Accounting Standards Board of Japan (ASBJ)
Statement No.9 issued on July 5, 2006).As a result of the adoption of this accounting standard, operating
income and income before income taxes for the year ended March 31, 2009 decreased by 133 million yen($1,354 thousand).
(6) Allowance for Doubtful Accounts
The Company and its domestic subsidiaries have provided the allowance based on the past
uncollectible receivable experience for a certain reference period. Furthermore, for receivables which arefrom the debtors with financial difficulty, the allowance is provided for estimated unrecoverable amounts
individually. Overseas subsidiaries have provided an allowance for doubtful accounts in the estimatedamounts of possible bad debts.
(7) Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation for property, plant and equipment of the Company and its domestic subsidiaries iscalculated by applying declining-balance method, except for buildings acquired on and after April 1, 1998
which are applied the straight-line method, over the estimated useful lives.
The principal estimated useful lives are as follows:
Buildings and structures
2 ～ 50 years
Machinery and equipment
2 ～ 10 years
Depreciation for those of overseas subsidiaries is computed by the straight-line method in accordancewith the regulations of respective domicile countries.
Pursuant to revision of the Corporation Tax Law, the Company and its domestic subsidiaries havechanged their method of depreciating assets acquired on or after April 1, 2007, to confirm to revised law.
As a result, operating income and income before income taxes for the year ended March 31, 2008
decreased by 21 million yen($210 thousand), respectively.
The Company and its domestic consolidated subsidiaries also depreciate the difference between 5% of
the acquisition cost of asset acquired on or before March 31, 2007 and the memorandum value uniformly
over a five-year period, starting the year following the fiscal year in which the depreciated value of said
assets reaches 5% of the acquisition cost of assets using the pre-amendment depreciation method. As aresult, operating income and income before income taxes for the year ended March 31, 2008 decreased by
38 million yen($379 thousand), respectively.
(8) Leased Assets
Leased assets are depreciated to a residual value of zero by the straight-line method using the contract
term as the useful life.
Up to the year ended March 31, 2008, finance lease transactions which do not transfer ownership tolessee were accounted for as operating leases.
Effective the year ended March 31, 2009, as the “Accounting Standard for Lease Transactions” (ASBJ
Statement No.13 originally issued by the First Committee of the Business Accounting Council on June 17,1993 and revised by the ASBJ on March 30, 2007) and the “Guidance on Accounting Standard for Lease
Transactions” (ASBJ Guidance No.16 originally issued by the Accounting System Committee of theJapanese Institute of Certified Public Accountants on January 18, 1994 and revised by the ASBJ on
March 30, 2007) have been applied, lease transactions of the Company and its domestic subsidiaries areaccounted for as finance leases if substantially all of the benefits and risks of ownership have beentransferred to the lessee.
Effective April 1, 2008, since the Company and its domestic subsidiaries applied the accounting
standard for lease transactions outlined above, finance lease transactions, which do not transfer ownershipto lessee, started before April 1, 2008 were accounted for as operating leases.

(9) Derivatives
The Company has entered into foreign exchange agreements and interest rate agreements to hedge thefluctuation of foreign currency and interest rate exposures, and not for speculative purposes. The
instruments include foreign currency forward contracts and interest rate swap agreements.
These instruments were accounted by the deferral hedge accounting. The Company has accounted forforeign currency forward contracts by the designation accounting, and accounted for interest rate swap
agreements by the exception accounting.
(10) Product Warranties
The Company has accounted for the estimate amounts of maintenance expenses as the productwarranties, which corresponded to the sales based on the prior track record for the outcome ofmaintenance expenses of the sold products during the period of warranty.
As of March 31, 2009, the liability for expected warranty costs was 29 million yen ($295thousand) .
(11) Accrued Bonus for Directors
The Company and its subsidiaries provide for accrued bonuses to directors for the expected payment
of directors’ bonuses for the current fiscal year to those directors serving at the end of the fiscal year.
(12) Accrued Severance Indemnities
Employees who terminate their service with the Company and its domestic subsidiaries are under mostcircumstances, entitled to lump-sum severance indemnities determined by reference to current basis rates
of pay, length of service and conditions under which the terminations occur.
Accrued severance indemnities are provided based on the amount of projected benefit obligation lesspension plan assets at fair value at the end of the annual period.
(13) Research and Development Costs
Research and development expenditure is charged to income when incurred.
(14) Income Taxes
Income taxes of the Company and its domestic subsidiaries consist of corporate income taxes, local
taxes and enterprise taxes. Enterprise taxes are deductible when paid for the computation of other taxes.
Deferred income taxes are recognized using the asset and liability approach, whereby deferred tax
assets and liabilities were recognized in respect of temporary differences between the tax basis of assets
and liabilities and those as reported in the financial statements.
(15) Appropriation of Retained Earnings
Under the Japanese Corporate Law and the Articles of Incorporation of the Company, theappropriation of retained earnings or disposition of accumulated deficit could be adopted by the Board of
Directors. The appropriations of retained earnings reflected in the accompanying consolidated financial
statements include the results of such appropriations applicable to the immediately preceding financial
year as approved by the Board of Directors, and effected, during the relevant year. Dividends are paid toshareholders on the shareholders' register as at the end of each financial year.
(16) Per Share Information
Net income per share and diluted net income per share are computed based on the weighted-average
number of shares of common stock outstanding during each year and stock splits are reflected in thecalculation of the weighted-average number of shares of common stock.
Cash dividend per share is the total of the per-share amounts of interim cash distribution and the yearend cash dividends for the income of the respective financial periods.

3.

Securities(1) The following is a summary of investments in affiliates and other securities at March 31, 2008:
Millions of yen
2008

Other securities:
Market value available:
Equity securities……….
Market value notavailable:
Equity securities……….
Other securities total…..

Book Value(Estimated fairvalue)

Unrealized
gains

Unrealized
losses¥1,042¥1,042

¥634
¥634

¥52
¥52

¥1,624¥1,6247¥1,049

¥634

¥52

7
¥1,631

Cost

Investments in affiliates:

Millions of yen
2008
Book Value

Market value not available:
Equity securities……...

¥1,415¥1,415¥3,046Total(2) The following is a summary of investments in affiliates and other securities at March 31, 2009
Millions of yen
2009

Other securities:
Market value available:
Equity securities
Market value notavailable:
Equity securities
Other securities total

Book Value(Estimated fairvalue)

Unrealized
gains

Unrealized
losses

¥824
¥824

¥196
¥196

¥36
¥36

¥984
¥984

3
¥827

¥196

¥36

3
¥987

Cost

Millions of yen
Investments in affiliates:
2009
Book Value
Market value not available:
Equity securities……...
Total

¥835
¥835
¥1,822

Thousands of U.S. dollars (Note 1)
2009

Other securities:
Market value available:
Equity securities
Market value notavailable:
Equity securities
Other securities total

Book Value(Estimated fairvalue)

Unrealized
gains

Unrealized
losses$8,388$8,388$1,995$1,995$366$366$10,017$10,017$31$8,419$1,995$366$
31$10,048

Cost

Thousands of
U.S. dollars(Note 1)
2009
Book Value

Investments in affiliates:

Market value not available:
Equity securities$8,500$8,500$18,548Total
4． Short-term Borrowings and Long-term Debt

Short-term borrowings represent loans from banks and an insurance company. The annual averageinterest rates applicable to short-term borrowings at March 31, 2008 are 2.5% and 2009 are 2.0%,
respectively.
Long-term debt as of March 31, 2008 and 2009 consisted of the following:

Borrowings from financial institutions
1.0% Yen Bonds due 2010
1.1% Yen Bonds due 2011
1.0% Yen Bonds due 2011
1.6% Yen Bonds due 2011
Long-term installment payment for
Purchase of machinery and equipment
Capital lease payable
Less: Portion due within one year

Millions of Ｙen
2008
2009
¥4,977¥4,508
500
300
300
200
600
400
252
180
83
(2,585)¥4,12716(2,140)¥3,464

Thousands of
U.S. dollars(Note 1)
2009
$45,892
3,054
2,036
4,072
1,832
163
(21,785)$35,264

The aggregate annual maturity of long-term debt after March 31, 2009 is summarized as follows:
Thousands of
U.S. dollars
Millions of Ｙen
Years ending March 31,(Note 1)2010
¥2,158$21,969
2011
2,167
22,061
2012
734
7,472
2013 and thereafter
563
5,731
¥5,622$57,233
The Company's assets pledged as collateral for short-term borrowings and long-term debt were as
follows:
Thousands of
U.S. dollars(Note 1)
2009

Millions of Yen
2008
2009
Principal of debt:
Short-term borrowings
Portion due within one year
Long-term borrowings¥¥
Assets pledged as collateral:
Land
Buildings
Regardingloan

payables,thesyndicate

70
425
18
513

¥

contract$1,120183
0$1,303¥2,375
2,572¥4,947$24,178
26,183$50,361¥¥2,3752,747¥5,122
loan

110
18
0
128

with

limit

of

¥4,000

millionyen($40,721thousand) and commitment line contracts with limits of ¥ 2,500 million yen ($ 25,450
thousand), respectively include financial covenant terms. The contractor triggers acceleration and isenforced to repay the full principal and interest if the contractor breaches either of the following terms.
(Financial covenant terms included in the syndicated loan contract)(1) The amount of shareholder’s equity on the consolidated and non-consolidated balance sheets at theend of each fiscal year and each semiannual period must be maintained at 60 % or more of the same
respective period in the previous year, and 60 % or more of the shareholder’ equity on the consolidated
and non-consolidated balance sheet of the fiscal year ended March 31, 2004.
(2) The ordinary losses in both consolidated and non-consolidated statements of income for each fiscal
year must not be existed in two successive periods after the fiscal year ended March 31, 2005.
(Financial covenant terms included in commitment line contract)(1) The amount of shareholder’s equity on the consolidated and non-consolidated balance sheets at theend of each fiscal year and each semiannual period must be maintained at 60 % or more of the same
respective period in the previous year, and 60 % or more of the shareholder’ equity on the consolidated
and non-consolidated balance sheet of the fiscal year ended March 31, 2007.
(2) The ordinary losses in both consolidated and non-consolidated statements of income for each fiscal
year must not be existed in two successive periods after the fiscal year ended March 31, 2008.

5.

Accrued Severance Indemnities for employees
The following tables set forth the changes in benefit obligation, plan assets and funded status of theCompany and its subsidiaries at March 31, 2008 and 2009.

Projected benefit obligation at end of year
Fair value of plan assets at end of year
Funded status:
Benefit obligation in excess of plan assets
Unrecognized actuarial loss
Accrued pension liability recognized in theConsolidation balance sheets

Millions of Yen
2008
2009
¥1,556¥1,500748
628

Thousands of
U.S. dollars(Note 1)
2009
$15,270
6,393

808
69

872
108

8,877
1,099

¥739

¥764

$7,778

Note: Some subsidiaries adopted the alternative method of accounting for retirement benefit
allowable for small business entity under the new accounting standards.
Severance and pension costs of the Company and its subsidiaries included the following components
for the year ended March 31, 2008 and 2009.

Service cost
Interest cost
Expected return on plan assets
Actuarial losses
Net periodic benefit cost

Millions of Yen
2008
2009
¥122
¥94
26
27
(6)
0
(3)
10
¥139
¥131

Thousands of
U.S. dollars(Note 1)
2009
$957
275
0
102
$1,334

Assumption used in the accounting for the defined benefit plans for the year ended March 31, 2008
and 2009 are as follows:
Method of attributing benefit
to periods of service
Discount rateLong-term rate of return on fund assets
Amortization unrecognized projected
Benefit obligation at the date of transition
Amortization period for actuarial losses

2008
Straight –line basis
2.0%
0.7%
15years(decliningbalance basis)

2009
Straight –line basis
2.0%
0.0%
15years(decliningbalance basis)

6. Shareholders’ Equity
Under the Japanese Corporate Law the appropriation of retained earnings or disposition of
accumulated deficit could be adopted by the Board of Directors.
The Japanese Company Law requires that amounts equal to 10% of interim cash dividend and 10% ormore of cash dividends and other appropriations of retained earnings paid out with respect to eachfinancial period be set aside in the legal reserve until an aggregate amount of additional paid-in capitaland the legal reserve equals 25% of the amount of stated capital. The amount of total additional paid-in
capital and legal reserve which exceeding 25% of stated capital can be transferred to retained earnings by
a resolution of the shareholders, which may be available for dividends.
Under the Japanese Corporate Law, although the entire amount of the issue price of new shares isrequired to be accounted for as common stock a company may, by resolutions of its Board of Directors,
account for an amount not exceeding one-half of the issue price of such new shares as additional paid-in
capital.
7.

Research and Development Costs
Research and development costs charged to income for the years ended March 31, 2008 and 2009were ¥747million and ¥266million ($2,708 thousand), respectively.

8.

Loss on impairment of fixed assets
The Company has recognized impairment loss of 165 million yen ($1,680 thousand), for the following
group of assets as of March 31, 2009.
Location

Use

Category

Kyoto East Plant(Kyoto, Japan)

Equipment for development
Manufacturing plant for
precision mold.

Land

Impairment loss
(millions of yen)

165

The company and its subsidiaries assessed impairment of each group of assets, which are grouped on
the basis of segment by products for domestic companies and by location for foreign subsidiaries.
Therefore, due to the decline in real estate value and poor performance of assets, operating profitability
has worsened substantially, the company has decided to mark the assets down to the recoverable value,
and accrued impairment loss as ¥165million ($1,680thousand).
9.

Income Taxes
The company is subject to a number of different income taxes, which in the aggregate, result in astatutory tax rate in Japan of approximately 39.8% for the years ended of March 31, 2008 and 2009.
The deferred tax assets and deferred tax liabilities at March 31, 2008 and 2009 are as follows:
Thousands of
U.S. dollars(Note 1)Millions of Ｙen
2008
2009
2009
Deferred tax assets:
Inventory write down
¥243
¥303
$3,085
Impairment loss of fixed assets
691
707
7,197
Retirement and severance benefits
249
261
2,657
Net operating loss carried forward
2,269
3,429
34,908Other, net
932
1,086
11,056
Valuation Allowance(4,300)(5,758)(58,618)
84
28
285
Deferred tax liabilities:
Special tax purpose provision
Other, net
(255)
(83)
(845)
(255)
(83)
(845)
Net deferred tax assets/(liabilities)¥(171)¥(55)$(560)

10.

LeasesThe Company and its consolidated subsidiaries and equity method affiliates have been utilizing
finance lease arrangements other than those deemed to transfer the ownership of the leased property to thelessee to employ certain machinery and equipment.
The finance lease transactions, which do not transfer ownership to lessee, started before April 1, 2008
were accounted for as operating leases.
Total lease payments for such lease arrangements for the year ended March 31, 2008 and 2009 are¥12million and ¥7 million ($71 thousand), respectively.
Summarized below are the pro forma information on acquisition costs, accumulated depreciation andfuture minimum lease payments for the property held under such lease as mentioned above:
As of March 31, 2008
Millions of yen

Acquisition costs
Accumulated
Depreciation
Net leased property

MachineryAnd
Equipment
¥ 7
1

Other
¥34
26

Total
¥41
27

¥ 6

¥ 8

¥14

MachineryAnd
Equipment
¥ 7
3

Other
¥12
9

Total
¥19
12

¥ 4

¥ 3

¥7

As of March 31, 2009
Millions of yen

Acquisition costs
Accumulated
Depreciation
Net leased property

Thousands of U.S. dollars (Note 1)

Acquisition costs
Accumulated
Depreciation
Net leased property

MachineryAnd
Equipment
$71
31

Other
$122
91

Total
$193
122

$40

$ 31

$71

Future minimum lease payments as of March 31, 2008 and 2009:

Due within one year
Due after one year
Total

Millions of yen
2008
¥7
7
¥14

Thousands ofMillions of yen
U.S. dollars (Note 1)
2009
2009
¥4
$41
3
30
¥7
$71

Depreciation is calculated by the straight-line method on the assumption that the term of the lease isuseful life of the relevant leased asset and residual value is zero.
Depreciation expense, which is not reflected in the accompanying consolidated statements of income,would have been ¥12 million and ¥7 million ($71 thousand) for the year ended March 31, 2008and 2009,
respectively.

11.

Contingent Liabilities
The Companies have no significant contingent liabilities.

12.

Segment Information(1) Segment by products
Millions of Ｙen

Year ended March 31, 2008

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income
Ⅱ.Assets
Total assets
Depreciation and amortization
Capital expenditure

Semiconductor
equipment

Fine plastic
moldElimination/
Unallocated
AssetsConsolidated¥ 24,440
24,440¥1,314
1,314¥-¥25,754
25,754

1,118
196

¥-

23,373¥ 2,381¥ 1,108
¥ 94
¥ 84

-

¥ 34,360¥ 1,228¥ 1,508¥

22,2552,185¥ 33,252¥ 1,134¥ 1,424

Millions of Ｙen

Year ended March 31, 2009

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income
Ⅱ.Assets
Total assets
Depreciation and amortization
Capital expenditure¥

Semiconductor
equipment

Fine plastic
moldElimination/
Unallocated
AssetsConsolidated¥ 10,361
10,361¥1,217
1,217¥-¥11,578
11,57813,826¥ (3,465)

1,089
¥ 128

¥-

14,915¥ (3,337)¥ 26,895¥ 1,205¥ 1,192¥ 1,055
¥ 110
¥ 105

-

¥ 27,950¥ 1,315¥ 1,297

Year ended March 31, 2009

Thousands of U.S. dollars (Note 1)

Semiconductor
equipment

Fine plastic
moldElimination/
Unallocated
Assets$105,477
105,477$12,389
12,389$-$117,866
117,866

140,751$(35,274)

11,086$1,303$-$151,837$(33,971)$273,796$ 12,267$ 12,135$10,740$ 1,120$ 1,069-$284,536$ 13,387$ 13,204

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income
Ⅱ.Assets
Total assets
Depreciation and amortization
Capital expenditure

Consolidated(2) Segmented by geographical location of activities
Millions of Ｙen

Year ended March 31, 2008

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income(loss)
Ⅱ.AssetsAsia¥23,818287
24,105¥1,682
6,865
8,547

¥226
839
1,065

¥28
74
102

¥
(8,065)(8,065)¥25,754¥25,754

22,382¥ 1,723

7,863
¥ 684

1,160
¥(95)

91
¥11

(8,123)¥58

23,373¥ 2,381¥33,265¥6,253¥1,432¥90¥(6,680)¥34,360

Millions of Ｙen

Japan

Cost of sales andOperating expenses
Operating income (loss)
Ⅱ.Assets

OthersElimination/
Unallocated
AssetsConsolidated

Japan

Year ended March 31, 2009

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales

North
America

Asia

North
America

OthersElimination/
Unallocated
AssetsConsolidated¥11,423207
11,630

¥145
3,715
3,860

¥5
364
369

¥5
60
65

¥
(4,346)(4,346)¥11,578¥11,578

15,026¥(3,396)

3,761
¥ 99

384
¥(15)

80
¥(15)

(4,336)¥(10)

14,915¥(3,337)¥27,068¥3,815¥1,273¥56¥(4,262)¥27,950

Year ended March 31, 2009

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income (loss)

Ⅱ.AssetsJapan

Thousands of U.S. dollars (Note 1)
Elimination/
North
UnallocatedAsia
America
OthersAssetsConsolidated$116,288
2,107
118,395$1,47637,81939,295

$51
3,706
3,757

$51
611
662

$(44,243)(44,243)$117,866$117,866

152,968$(34,573)

38,288$ 1,0073,909$(152)

814$(152)(44,142)$(101)

151,837$(33,971)$275,557$38,837$12,959$570$(43,387)$284,536(3) Sales by region

Year ended March 31
Japan
Overseas
Asia
North America
Other
Overseas total
Consolidated sales

Millions of Ｙen
2008
2009
¥ 6,925¥ 3,303
18,020654
15518,829¥25,754

7,588
410
277
8,275
¥11,578

Thousands of
U.S. dollars(Note 1)
2009
$33,625
77,247
4,174
2,820
84,241$117,866

Corporate Information
as of June 26, 2009
Corporate Data
Corporate Name:
Headquarters/Factory:

TOWA CORPORATION
5 Kamichoshi-cho, Kamitoba,

Board of Directors
Chairman & CEO
Kazuhiko Bandoh

Minami-ku, Kyoto 601-8105, Japan
Eatablished:

April 17, 1979

Operations:

Develop, design, manufacture, and sell
precision molds, manufacturing systems forelectronic components, inspection systems forelectronic components, precision-molded andassembly products, medical-use equipment, andelectronic-communications equipment.
Other related business.

President & COO
Yoichi Kawahara

Directors
Hisao Nishimura
Hirokazu Okada
Makoto Fukutomi
Kiyoshi Osaki

Paid-in Capital:¥8,932,627,777

Common StockStanding Corporate Auditor

Authorized:

80,000,000

Issued Number of Shares:

25,021,832

Unit for Trading:
Stock Listings:

Transfer Agents:
Fiscal Year:
Number of Employees:
URL:
Subsidiaries andAffiliated Companies:

100

Tsutomu Shirayama

Coporate Auditors

First Section of the Tokyo Stock Exchange

Masanori Sugiyama

First Section of the Osaka Securities Exchange

Katsuhiro Umeyama

Mizuho Trust & Banking Co., Ltd
From April 1 to March 31490
http://www.towajapan.co.jp
BANDICK Corporation
TOWATEC Co., Ltd.
TOWA Service Co., Ltd.
TOWAM Sdn. Bhd.
TOWA Asia-Pacific Pte. Ltd.
TOWA Semiconducter Equipment Philippines Corporation
TOWA America Corporation
TOWA Europe GmbHTOWA (Shanghai) Co., Ltd.
TOWA (Suzhou) Co., Ltd.
TOWA TAIWAN Co., Ltd.
TONGJIN Corporation
SECRON Co., Ltd.
TOWA-Jipal Technologies Co., Ltd.
Scientific and Semiconductor Manufacturing Equipment Recycling Co., Ltd.

5 Kamichoshi-cho, Kamitoba, Minami-ku,
Kyoto 601-8105, JapanTEL (075) 692-0250 FAX (075) 692-0270