2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
Phone: 81-3-5999-1511

http://www.taiyo-hd.co.jp/English

TAIYO HOLDINGS CO., LTD. Annual Report 2011TAIYO HOLDINGS CO., LTD.

Our Confidence
in Growth
Annual Report 2011
Year Ended March 31, 2011

Printed in Japan

Corporate Information(As of March 31, 2011)

Company Overview

Accessing Our Investor
Information Online

Name: TAIYO HOLDINGS CO., LTD.
Head office: 2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan

ProfilePhone: 81-3-5999-1511

The TAIYO GROUP is committed to providing

Established: September 29, 1953

our shareholders and investors with up-to-date

Capital: ¥6,134 million

information on a regular basis. To this end, we

Shares authorized: 50,000,000

have devoted a section of our corporate website

in fact solder resist (known in the U.S. and elsewhere as solder mask), the mainstay

Total number of issued shares: 27,464,000(see link below) to a wide range of information

product of the TAIYO HOLDINGS GROUP. Solder resist is an essential material in

Stock listings: Tokyo

A global leader in solder resist
The green and white ink applied to the surfaces of printed wiring boards (PWBs) are

the production of PWBs used in electronics equipment, from mobile phones andaimed at investors and other stakeholders suchas messages from the President, financial data,

Number of shareholders: 7,671

as well as an overview of management strategy

Major shareholders:PCs to digital appliances and automotive electronic devices.

Shares(thousands)

Shareholdings as apercentage of total
shares issued (%)

Kowa Co., Ltd.

5,247

19.10

Japan Trustee Services Bank, Ltd.

3,424

12.46

Company’s Treasury Stock

2,025

7.37

Mitsuo Kawahara

1,306

4.75

based on superior technical expertise. We aim to enhance corporate value by creating

State Street Bank and Trust Company 505223(Standing proxy: Mizuho Corporate Bank, Ltd.)

945

3.44

superior value through manufacturing excellence.

The Master Trust Bank of Japan, Ltd.

870

3.16

SHIKOKU CHEMICALS CORPORATION

631

2.29

Toshin Yushi Co., Ltd.

538

1.96

Takato Kawahara

486

1.77

NORTHERN TRUST COMPANY (AVFC) SUB A/C
AMERICAN CLIENTS (Standing proxy: The Hongkong
and Shanghai Banking Corporation Limited Tokyo Branch)

451

1.64

15,92857.99

TAIYO HOLDINGS is a specialty chemical manufacturer. We command a share ofaround 50% of the global market for solder resist.
Our business philosophy is to develop and supply products of the highest value

Name

Total

and policies.
http://www.taiyo-hd.co.jp/English/Ir/index/(Notes)1. The number of shares indicated as held by Japan Trustee Services Bank, Ltd. includes 3,412 thousand shares held as part of trust banking services. This includes 1,116
thousand shares entrusted to the Sumitomo Mitsui Banking Corporation Retirement Benefit Trust Account.
2. The number of shares indicated as held by The Master Trust Bank of Japan, Ltd. includes 674 thousand shares held as part of trust banking services.
3. We received a change report for the large shareholding report submitted by Harris Associates L.P. dated November 30, 2010 (date of the change: November 24, 2010) in which
said company claims a shareholding of 1,780 thousand shares of TAIYO stock as of the date of submission. As the Company was unable to verify the effective s­ hareholdings
listed in this change report regarding its shares as of the end of the fiscal year, Harris Associates L.P. has not been included in the above list of major shareholders.
The change report for the large shareholding report submitted by Harris Associates L.P. contained the following information:
Shareholder: Harris Associates L.P.
Address: Two North LaSalle Street, Suite 500, Chicago, IL 60602, USA
Shares: 1,780,700
Shareholdings as a percentage of total shares issued: 6.48

Contents

1 Financial Highlights
2	History
4 Message to Shareholders and Investors
10 Corporate Governance
12 Review of Operations
16 Research and Development

17
20
21
47

CSR
Domestic and Global Network
Financial Section
Corporate Information

Stock Price and Trading Volume(Thousands of shares)(Yen)
18,0006,000

15,0005,000

12,000

4,000

9,000

3,000

6,000

2,000

3,000

1,000

Matters Regarding Forward-looking Statements
This annual report contains forward-looking statements regarding TAIYO HOLDINGS’ current management plans, strategies and other matters. Readers are
cautioned that these forward-looking statements hold inherent risks and uncertainties, and may differ materially from actual results or business performance.

0

2006

n

Stock Price ( left scale)

2007

n

2008

Nikkei Stock Average ( left scale)

2009

2010

2011

0

n Trading Volume (right scale)

TAIYO HOLDINGS CO., LTD. Annual Report 201147

Financial Highlights
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
March 31, 2011, 2010 and 2009

Thousands of
U.S. dollars*Millions of Yen
2011

2010

2011

2009

For the year:
Net sales¥ 40,366¥ 35,056¥ 32,614$486,337

5,381

4,843

3,332

64,831

Operating income
Operating income ratio (%)

13.3

13.8

10.2

Net income

3,403

3,011

1,958

41,000Net cash provided by operating activities

4,576

3,127

4,581

55,133

Net cash provided by investing activities

758

(70)

(1,470)9,132

Net cash used in financing activities(3,697)(2,367)(4,428)(44,542)

Research and development expenses

996

1,016

979

12,000

Number of employees

840

807

793

¥ 42,851¥ 43,705¥ 40,869

At year-end:
Total assets$516,277

Return on equity (%)

9.9

8.7

5.4

Equity ratio (%)

78.2

80.1

83.3

34,18735,686

34,584

411,892¥ 131.78¥ 116.08

74.25

$

115.00

90.00

90.00

1.39

1,316.53

1,349.61

1,313.20

15.86

Total equity
Per share data (Yen and U.S. Dollars):
Net income
Cash dividends
Net assets

¥

1.59

* The U.S. dollar amounts stated above and elsewhere in this report have been translated from yen, for convenience only, at the rate of ¥83 = US$1, which was the approximate
rate on the Tokyo Foreign Exchange Market on March 31, 2011.

Net Income andReturn on Equity

Net Sales andOperating Income Ratio(Millions of Yen)

(%)

50,000(Millions of Yen)

(%)(Millions of Yen)

(%)

10

75,000100

860,000645,0002,000

430,000

40

1,000

2

15,000

20

15

5,000

12

4,000

30,0009

3,000

20,000

6

10,000

3

13.8

13.3

Total Assets andEquity Ratio
9.9

8.7

83.3

40,36640,0000

10.2

35,05632,614

2009

2010

3,403
3,011

2011

0

0

5.4
1,958

2009

2010

2011

0

0

40,8692009

80.1

43,705

2010(Years ended March 31)(Years ended March 31)(Years ended March 31)

n Net sales (left scale)Operating income ratio (right scale)n Net income (left scale)
Return on equity (right scale)n Total assets (left scale)
Equity ratio (right scale)

n

n

78.2

42,851

80

60

2011

0

n

TAIYO HOLDINGS CO., LTD. Annual Report 201101

History

Outstanding technology
and creative flexibility
have driven our growth.

50

40

30

1970
-	Aug. Commenced printed wiring board(PWB) marketing.

1973- May. Developed and commenced
marketing of epoxy resin, thermallycurable single-component solder resist.

1976- Radical change in business policy

20

1982
- Mar. Ranzan Plant (current Ranzan
Facility) established.

1984- Jun. Exhibited liquid developable solder
resist at the JPCA Show.

1988- Sep. Established TAIYO INK MFG. CO.,
(KOREA) LTD. (now TAIYO INK CO.,
(KOREA) LTD.) as a joint venture in the10

Republic of Korea.

1953- Sep. Taiyo Ink Mfg. Co., Ltd. established.

0
Net Sales(Billions of Yen)

02

1960

TAIYO HOLDINGS CO., LTD. Annual Report 2011

1970

1980

2000

Compound Annual
Growth Rate

- Jan. Acquired QS 9000 certification for
Head Office and the Ranzan Facility.

6.4%

	Acquired ISO 14001 certification for the
Ranzan Facility.

2001- Jan. Listed on the First Section of theTokyo Stock Exchange.

1990- Mar. Completed construction ofTechnology Development Center at
the Ranzan Facility.
- Sep. Launched initial public offering on
the over-the-counter market.
-	Dec. Established marketing subsidiary-	Apr. Opened the Ranzan-Kitayama
Facility, the company’s main domestic
production base.

TAIYO AMERICA, INC. in Nevada, USA.

1992
-	Feb. Commenced research and development into plasma display panel materials.
- Mar. Transferred Head Office to newly
constructed building in Nerima-ku, Tokyo.

1993- Jul. Established technical support subsid-- Jan. Developed and commenced marketing of package board solder resist, especially BGA solder resist.
-	Nov. Registered basic patent for alkalinedevelopable solder resist in Japan.

iary TAIYO INK (THAILAND) CO., LTD. in
Thailand.
-	Dec. Established local production

2010-	Apr. TAIYO JAPAN COMPANY created as
operations division in charge of Japan.
- Jun. Approval given for resolution

subsidiary TAIYO INK (SUZHOU) CO.,concerning transfer to holding company

LTD. in China.

system through corporate divestiture at
64th General Meeting of Shareholders.

1994-	Dec. Acquired ISO 9001 certification for-	Oct. Company Split implemented andHead Office and the Ranzan Facility.

corporate name changed to Taiyo­Holdings Co., Ltd.

1995
-	Feb. Transformed USA marketing
subsidiary TAIYO AMERICA, INC. into a
manufacturing and marketing company,

2003

and commenced local production.

- Jan. Acquired ISO 14001 certification for

1996

Head Office and Ranzan-Kitayama Facility.

- Sep. Established local production- Sep. TAIYO INK’s fiftieth anniversary.

subsidiary TAIWAN TAIYO INK CO., LTD.

2005

in Taiwan.

- Expanded sales of plasma display panel

1999

materials.

- Jan. Established marketing subsidiaries
TAIYO INK INTERNATIONAL (­SINGAPORE)

2008- Jun. Established a second local

PTE LTD. in Singapore and TAIYO INK

production subsidiary in China, TAIYO INKINTERNATIONAL (HK) LIMITED in(ZHONGSHAN) CO., LTD.

Hong Kong.

1990

2000

2010

TAIYO HOLDINGS CO., LTD. Annual Report 201103

Message to Shareholders and Investors

Our vision is clear.
Our sales and profits recovered substantially in year-on-year terms during
the year ended March 2011. We plan to pursue sustainable growth in theyear ending March 2012 as we move forward with our new medium-termbusiness plan.

On my Appointment to the Top Job— Overcoming harsh operating conditions through“speed and communication”
I would like to thank everyone for all the support that I havereceived since succeeding my predecessor, Mr. Yuichi­Kamayachi, as President and CEO on April 1, 2011.
My first few months have been marked by exceptionallychallenging circumstances in the aftermath of the Great East
Japan Earthquake in March. Nevertheless, I will do all I can toensure the continued growth of the TAIYO HOLDINGS GROUP.
To summarize my career to date, I joined an audit firm in1995 and later established my own accounting and consulting
practices. I gained substantial experience in management
consulting, particularly in the areas of corporate reconstruction, mergers and acquisitions, business administration andfinancial accounting.
I became involved with the TAIYO HOLDINGS GROUP frommy time at the audit firm. I was appointed to the board of TAIYOINK MFG. (now TAIYO HOLDINGS) as an outside director in June2008 and promoted to Executive Vice President in April 2010.
The operating environment surrounding the TAIYO­HOLDINGS GROUP has changed at an astonishing pace inrecent years. We are seeing a rapid growth in economic strengthin China and other emerging economies. On the technical side,
there is demand for products that deliver higher performanceand greater resolution. Our challenge is to meet two increasingly

Eiji Sato President and CEO
04

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Long-term vision
A corporate Group that continues as a global leader in solder
resist, while also sustaining Group growth based on the development of new business pillars

Group Business Plan 2010 (from FY2010 to FY2012)- Prompt management response to changing business conditions- Forge long-term business strategy- Focus on sectors with growth potential over the medium-to-long term horizon

divergent markets, namely for low-priced, mass-produced items,
and for high-value-added products.
My formula for success under such conditions is “speed andcommunication.”
What I mean by this is that we must be faster than our rivals

We posted a record year in terms of our sales volume. Net
sales rose 15.1% year on year to ¥40,366 million, exceeding our
initial forecast. In the printed wiring board (PWB) materials
sector, we expanded sales in every market, notably in the­Chinese market, and generated solid growth in high-­performancein developing products and responding to customer needs andproducts. In flat panel display (FPD) materials, the high price ofdemands. If we are to weather this harsh business climate, wesilver, a key raw material, pushed up sales prices for many prod-

must also excel at sharing information quickly within the Groupucts, which resulted in top-line revenue growth.

about what our customers are demanding. I am confident that

Operating income increased 11.1% year on year to ¥5,381

the qualities and strengths the TAIYO HOLDINGS GROUP pos-million, mainly due to the positive impact of higher sales volume.

sesses will allow us to achieve both of these goals.

This occurred despite a number of negative factors, including

At 42 years old, I may be relatively young for such a position,

yen appreciation, the impact of the Great East Japan Earth-but I believe that my youth and experience provide an advan-

quake, and costs associated with the shift to a holding company

tage. I ask for your continued support in helping the TAIYO

structure on October 1, 2010, as well as higher fixed costs. Net

HOLDINGS GROUP to prosper going forward.

income rose 13.0% to ¥3,403 million. Profits at all levels posted
a significant recovery on a year-on-year basis.

Results for Year Ended March 2011

The rolling power blackouts in the wake of the March 2011

— Sales set a new record in terms of sales volume anddisaster temporarily reduced the production capacity of our

topped ¥40 billion, the highest figure since the year

factories in Japan, but we have since restored normal opera-

ended March 2008

tions. We do not anticipate any major impact on production
going forward.

In the electronic components industry where we are engaging inand developing the Group’s business, the year ended March2011 saw growth in the level of global demand for smartphones
and tablet PCs. Furthermore, due to higher demand in the Chinese market and other factors, there was favorable growththroughout the year. All of these factors helped offset some signsof softer demand from the second half of the year onward incertain sectors such as PCs and flat-screen televisions.

(Millions of Yen)

(Years ended March 31)

2009

2010

2011

Net sales

32,61435,05640,366

Operating income

3,332

4,843

5,381

Operating income ratio (%)

10.2

13.8

13.3

Net income

1,958

3,011

3,403

TAIYO HOLDINGS CO., LTD. Annual Report 201105

Overview of Medium-term Business Plan

China, where competition becomes more intense every year.

— We have clarified our vision and are working to accel-

We aim to maintain the Group’s competitive edge in the Chi-erate growth through a range of important measuresnese market by developing low-priced products with a quality
advantage in addition to our usual customer-focused approach,

The operating conditions that the Group faces are in constantin which we seek to add value in specific ways. By setting up

flux. We see four main trends: ongoing market expansion in

new production and sales bases closer to our customers, we

China; more intense price competition; increasing separation

are also working to respond to customer needs more promptly.

between high-value-added and low-priced products; and the

In January 2011, we began operations along the southernemergence of local manufacturers. In October 2010, we unveiled

coast of China at TAIYO INK TRADING (­SHENZHEN) CO., LTD.

“Group Business Plan 2010” (GBP) as our medium-term busi-

We created the Office of China Strategy in April 2011. We areness plan for the period from FY2010 to FY2012, responding toon track to begin operations at our second production com-these evolving operating conditions. Under this new plan, wepany in China, TAIYO INK (ZHONGSHAN) CO., LTD., in Octo-

have stated our long-term vision of where we want the Group to

ber 2012. We are making steady progress toward our goal of

be in FY2020. Our goal is to remain the global leader in solder

raising our market share in China.

resist (SR), while also seeking to sustain growth based on theAlongside this, we are energetically pursuing a new productdevelopment strategy aimed at establishing the Group in new

development of new business pillars.
A key strategic aim in the realization of this vision is to raise

fields besides PWB and FPD materials and expanding into new

our market share in China, which is by far the dominant market

business domains. We generated sales of about ¥2.0 billion fromin terms of scale compared with Japan, Taiwan, Korea andthese new products in the year ended March 2011. We aim toother countries. In particular, we aim to increase our global

double this figure to ¥4.0 billion in the year ending March 2013

market share in solder resist, our mainstay product, to at leastby developing new products such as white SR, black SR and

50% within the next few years. Achieving this goal requires thatsilver paste for touch-screen panels. The annual sales of white

we develop a strategy for the low-priced product sector in

SR have exceeded ¥0.5 billion already. We plan to focus on

Market Strategy for China
Critical for success in the high-growth
Chinese market

(Ton)

1,000

China
Japan

800

ASEAN

600

– Low-priced strategy:
Develop and sell products
offering quality advantage
at low prices

Taiwan400
200
0– Reinforce sales andOther markets

production setup:
Establish new sales bases

2007

2008

2009

(Years ended March 31)

06

South Korea

TAIYO HOLDINGS CO., LTD. Annual Report 2011

2010

2011

and production facilities

Based on continued progress with these various initiatives,

growing sales volume for these new products, while seeking tocreate new products by exploring niche markets, and to develop

we have established consolidated performance targets for thea wide-ranging product lineup based on market research andyear ending March 2013 of ¥48.0 billion in net sales and ¥7.7

information gathered from our customers.

billion in operating income.

The Group is developing a strategy based on manufacturing
and selling products locally. Under this approach, we are aiming
not only to be more customer-responsive, but also to source a

New Products

higher proportion of raw materials from local suppliers while
producing more input materials internally.
Under our “Global Talent Management Strategy,” we are
seeking to develop the personnel needed to manage and leadthis new era of global competition and rapid change, specificallyfocusing on strong workforce communications and enhanced
cross-cultural understanding of overseas subsidiaries. We areBlack SR

cultivating senior management candidates and training employees to acquire the skills and knowledge needed for global business, including communication abilities, people skills andin-depth analytical capabilities. We are also evaluating the skillsof employees in overseas subsidiaries to determine where we asa company can maximize their value to the organization. We arebuilding our HR development systems to foster the growth of
Inkjet marking

those employees with potential.

Market Prospect

South Korea

China

Japan

TAIYO HD share
Market in FY2010
Market in FY2012 (forecast)

67%

67%

36%

75%
75%

47%

Taiwan
ASEAN

70%

75%

60%

67%

TAIYO HOLDINGS CO., LTD. Annual Report 2011

07

TAIYO HOLDINGS GROUP’s Strengths

Group’s real strengths, and will continue to be an important— The Group characteristics that support our growth­element as we grow in the future.

Our Management Philosophy is based on our technologicalpany structure to help us become more adaptable in today’s

capabilities. We will develop and provide products with maxi-

increasingly rapid business cycle. The new structure involves

mum value, generate income and increase our corporate value,

greater delegation of management authority and will help pro-thereby contributing to the well-being and prosperity of ourmote faster operational decision-making and business execu-

customers, local communities, shareholders and employees.

tion. For instance, across all of our Group subsidiaries we are

In October 2010, we made the transition to a holding com-

The TAIYO HOLDINGS GROUP is a technology-driven group,

seeing costs increase due to the need for multi-functional prod-

and we seek to increase our share of the global market by creat-uct development so that the subsidiaries themselves can con-ing competitive products based on our technical expertise. We

clude their business activities. They regard these costs as

believe our technical strengths will remain a source of competitive

comprising up-front investments to ensure that we have theadvantage, just as they have been in the past. Our skills relatecapacity to meet orders for increased product volume and to

more to the development of technical solutions to solve specificmaintain and / or increase our market share. The holding com-

customer needs than to creating entirely new products. Expansion

pany structure will become another strength for the Group,in China, which is a critical part of our medium-term businesssupporting our future growth strategy.

plan, is about adding value to products by creating customertailored solutions, and then selling these products to build a com-

Outlook for Year Ending March 2012

petitive position. Establishing new production and sales bases to— Targeting continued growth in sales and profits to

help us identify the needs of local customers is part of that equa-achieve plan goals

tion, but the Group has grown historically by making a variety of
products based on the precise requirements of our customers.

We forecast further growth of the electronics market, led by China

The on-site technical service that we can provide is another of theand other developing countries. We expect the competition fromTargets for Net Sales and Operating Income

Sales from New Products(Billions of Yen)
5

FY2010 result:(Billions of Yen)

approx. ¥ 2.0 billion

50

41.9

FY2012 target:
4¥4.0 billion

48.0

45.3

44.5
40.3

40

32.6

GBP 2010

3

30

2

20

1

10

7.9

0

2007

0

2010

2011

2012

(Performance target)(Years ended March 31)

2013(Plan)TAIYO HOLDINGS CO., LTD. Annual Report 2011

8.8

2008

3.3

4.8

5.3

2009

2010

2011

(Years ended March 31)

Net sales

08

35.0

Operating income

5.6

2012

(Performancetarget)7.7

2013(Plan)

low-priced products to intensify within the Chinese market. In

Shareholder Returns Policy

addition, the first half of the year could be affected by post-­—Stable and consistently high returns to shareholders

disaster factors such as power restrictions in Japan.
There are also concerns that the disaster will cause custom-

We believe it is important to return profits to shareholders in theers to step up efforts to diversify supply chains. Since we com-form of cash dividends. Our policy is to make stable and consis-

mand a share of over 70% in the markets where we operatetently high shareholder returns over time. We have set a(other than in China), such moves could serve to erode themedium-term target of delivering cash dividends equivalent to at

Group’s overall market share. Our local production and sales

least 5% of net assets. For the year ended March 2011, we paid

strategy in the medium-term business plan aims to address thisan annual dividend of ¥115 per share, consisting of an ordinary

issue. By taking advantage of our production capabilities in

dividend of ¥90 plus a special ¥25 dividend to commemorate

Japan, Korea, Taiwan and China, we aim to provide customers

the tenth anniversary of listing on the First Section of the Tokyo

with the security of multiple procurement sources for the Group’s

Stock Exchange. In line with our policy on shareholder returns,

products. In this way, we will preserve our market share while

we plan to pay a dividend of ¥90 per share for the year ending

also generating new opportunities to serve the business needs ofMarch 2012.

our customers.
Under such operating conditions, and taking into accountthe anticipated growth in sales volume and movements in foreign

We hope that our shareholders and investors will continue toprovide the TAIYO HOLDINGS GROUP with their support andunderstanding.

exchange rates, we forecast consolidated net sales of ¥44,500
million for the year ending March 2012, up 10.2% in year-on-year
terms. We expect operating income to increase 4.1% to ¥5,600
million, along with 11.7% growth in net income to ¥3,800 million.
We aim to make further steady progress toward achieving the
medium-term business plan targets.

Returns to Shareholders(Yen)

(%)

150

10

8.1
115

8.6
115

120

90

60

55

3.9
55
25

30

2007

6.8

90

90

45

45

8

25

6
45

4
30

15
15

0

6.5

30

2008

45

45

45

2009

2010

2011

2

0

(Years ended March 31)

Interim ordinary dividend (left scale)Special commemorative dividend (left scale)Year-end ordinary dividend (left scale)
Ratio of dividend to net assets (right scale)

TAIYO HOLDINGS CO., LTD. Annual Report 201109

Corporate GovernanceSound management structures to promoterealization of our business vision

Construction of Sound Management Structures

The Board of Directors is composed of six Directors and four

We moved to a holding company structure on October 1, 2010.

Corporate Auditors. Meetings of the Board of Directors are held

Having group management and strategic functions, the holding

regularly each month, but the Board can also hold extraordinary

company aims to develop and improve our strategies while opti-

meetings if necessary. The Board discusses and resolves impor-mizing the allocation of resources. The operating subsidiaries

tant matters, and also oversees the execution of duties by theunder the holding company can act promptly and autonomously.

Representative Director. Corporate Auditors, including outside

This system enables us to respond better to customers across

Auditors, attend most meetings of the Board and Executive Com-various markets while also speeding up decision-making andmittee, which convene on a number of occasions each year, toboosting operational efficiency. Its aim is to increase profits andengage in discussions and to monitor proceedings in detail. Two ofhelp us build corporate value.

the Corporate Auditors are full-time auditors with the power tosubmit questions to the Group employees. The system enables

Basic Thinking on Corporate Governance

the Corporate Auditors to conduct adequate monitoring of the

In line with our Management Philosophy and Basic Management

execution of duties by Directors. Furthermore, under the current

Policy, we aim to prosper together with our customers, sharehold-system, although we do not appoint outside directors, we arrange

ers, business partners and other stakeholders. We also believe it isthat all four of our Corporate Auditors are outside Auditors in ordernecessary for us to embrace social responsibilities as well as seek-

to ensure that we have in place an independent and impartial

ing to generate profits. To this end, we seek to promote manage-

auditing function.

ment transparency and to fulfill our disclosure obligations to

The Internal Audit Dept., which has a staff of three employ-support the Company’s continued prosperity.

ees, is fully independent of other Group operations. It undertakes
an audit of all departments of the holding company and operat-

Corporate Governance Structures

ing subsidiaries based on the annual audit plan approved by the

Our corporate governance system is centered on the Board of

Board of Directors. Results of these audits are reported to the

Directors and the Board of Corporate Auditors, whose members

Board of Directors and Board of Corporate Auditors for related

are both approved by resolutions at the Shareholders’ Meeting.

discussions. The Internal Audit Dept. also holds regular meetings

We have also adopted a system of Executive Officers to separate

with the accounting auditors to exchange information.

management oversight from operational execution. The Executive
Officers appointed to serve on the Executive Committee are Gen-Internal Controls

eral Managers of divisions of TAIYO HOLDINGS and representa-

We regard the construction of a system of internal controls as atives of overseas subsidiaries. This set-up aims to promote fastercritical part of corporate governance. These controls include theoperational execution as well as right strategic decision-making.

five components described below.

Shareholders’ Meeting
Reports to

Appoints and dismisses

Board of Directors
Reports to

Appoints anddismisses

President and CEO
Executive Officers
Reports toReports to
AuditsInstructs

Reports to

Appoints and dismisses

Board of Corporate Auditors
Cooperation

Audits

Office of Internal Audits
Internal audits

Instructs

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Accounting Auditors
AuditsReports to

Departments and Subsidiaries

10

Appoints and dismisses
Cooperation

Cooperation

(1) The Ethical and Legal Compliance System, based on ourCSR (Corporate Social Responsibility) Philosophy and the Codeof Conduct.

systems designed to confirm the safety and location of employees
or gather data on the status of Group facilities.
In other initiatives, we have studied and put in place information(2) The appointment of one Director as Chief Compliance Officer tosecurity management measures through the regular activities of thechair the Ethics Committee and lead a team promoting internal

Information Security Committee. We conduct internal training pro-business ethics.

grams to raise employee awareness of information security issues.

(3) An internal hotline to enable employees to report complianceviolations or any related concerns to an external lawyer.

A Director with specific responsibility for risk management
oversees the Group’s risk management program.

(4) R egular reports by the Chief Compliance Officer to theBoard of Directors concerning the ethics and compli-

Executive Compensation

ance framework status.

The Group policy on executive compensation is to set in an objec-(5) Establishment of an independent Internal Audit Dept. thattive and transparent way executive compensation levels that pro-reports audit findings to the Board of Directors and the Board

vide incentives to executives to increase corporate value andof Corporate Auditors, and where necessary to the accounting

shareholder value, while also being properly justifiable. Executive

auditors as well.

compensation is deliberated by the Compensation Committee, abody composed of an outside Auditor and three independent

To maintain the reliability of our financial reporting, we have also

experts. The Directors’ compensation is decided by the Board ofdeveloped a system of internal controls to ensure that effective andDirectors and the corporate auditors’ compensation is decided byappropriate internal control reports are produced, based on thethe Board of Corporate Auditors, after the aforementioned delib-

provisions of the Financial Instruments and Exchange Law.

eration by the Compensation Committee.

Risk Management

performance-based components linked to the Group earnings and

The Group has studied and instituted ways of mitigating, or of

the share price. The Corporate Auditors only receive a base salary.

Directors’ compensation is made up of a base salary plus

taking appropriate steps in response to, a variety of risks associated with business activities.

Executive compensation for the year ended March 2011 isshown below.

We formulated and put in place a business continuity plan
(BCP) during the year ended March 2009 with the aim of fulfilling

Executive compensation

our obligations as a supplier in the event of an emergency. The
plan features a three-step process to transfer production to alternative facilities offshore if our production sites in Japan are affectedby a disaster. In the year ended March 2011, we completed thesecond step of the BCP process by putting in place a system tosupplement production if necessary. We did not need to implement the BCP after the Great East Japan Earthquake struck

Executive category

Aggregate
remuneration(Millions of yen)

Aggregate remuneration by component(Millions of yen)BasesalaryEarnings-based
performance

Retirement
benefits

Total
number of
executives

Directors

205

140

46

17

9

Corporate Auditor

18

18

–

0

1

Outside Corporate
Auditors

14

14

–

0

3

because none of the Group’s employees or factories were damaged. However, the advanced contingency planning did enable us
to respond rapidly to assist customers by continuing to organize
prompt shipments of products.
We have also created manuals of response measures during
and after natural disasters and other emergencies. We regularly
conduct emergency safety training drills and test the operation ofBoard of Directors(As of July 1, 2011)

President and CEO

Eiji Sato
ChairmanThree-step production continuity system

Yuichi Kamayachi

Products that can be made using existing raw
materials and facilities at alternative sites

Done

Directors

Corporate Auditors

Step 2

Products requiring the supply of some raw materials
to alternative sites (as part of overseas development)

Done

Step 3

Products requiring the supply of some raw materials
to alternative sites (domestic)

Morio Suzuki
Masuhiro Omori
Si Bum Yoo
Takato Kawahara

Toshio Nemoto
Akihito Sakai
Masayuki Hizume
Toshiaki Taue

Step 1TAIYO HOLDINGS CO., LTD. Annual Report 201111

Review of Operations

Geographical Segment Review
Breakdown of Net SalesJapan

Net Sales (Millions of yen)

2010

35.8%

2011

20,37918,491(Years ended March 31)

China(including Hong Kong)

2010

23.1%

2011

10,362

11,916(Years ended March 31)

Taiwan

2010

8.6%

2011

4,083

4,414

(Years ended March 31)

South Korea

2010

26.6%

2011

10,241

13,743(Years ended March 31)

Other Regions

5.9%

2010

2,972

2011

3,061

(Years ended March 31)

12

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Operating Income (Millions of yen)

2010

600

2011

1,014

(Years ended March 31)

2010

2011

Sales volume recovered across all printed wiring board(PWB) materials. Reflecting firm demand from both domestic and export sources, sales totaled ¥22,993 million for
rigid board materials and ¥1,259 million for build-up board
materials.
Overall, net sales in Japan declined 9.3% compared withthe previous year to ¥18,491 million. Operating income
increased 68.8% to ¥1,014 million.

TAIYO INK MFG. CO., LTD.

A correction in production output for PCs and flat-screen
televisions began to affect the business during the second

TAIYO INK (SUZHOU) CO., LTD.
TAIYO INK INTERNATIONAL(HK) LIMITEDTAIYO INK TRADING (SHENZHEN)
CO., LTD

2,814

TAIWAN TAIYO INK CO., LTD.

645

Although demand for high-performance rigid board materials was firm, the impact of yen appreciation against the U.S.
dollar squeezed operating margins.
Overall, net sales in Taiwan increased 8.1% in year-onyear terms to ¥4,414 million, but operating income fell
20.8% to ¥511 million.

Sales volume for rigid board materials and materials used insemiconductor package and flexible substrates rose to a newrecord high, boosted by the emergence of South Korean
electronics manufacturers. Sales amounts also posted a newrecord supported by strong sales of flat-panel display materials
from the start of the fiscal year and higher unit prices for products due to sharp rises in the price of silver, a key raw material.
Overall, net sales in Korea grew 34.2% in year-on-year
terms to ¥13,743 million, but operating income fell 1.0% to¥979 million.

TAIYO INK CO., (KOREA) LTD.

Sales volume in the ASEAN region posted a record high,reflecting a strong performance in the first half of the year.
Sales of build-up board materials and other products
increased solidly in the European and U.S. markets.
Overall, net sales in other regions amounted to ¥3,061
million, an increase of 3.0% in year-on-year terms. Operating income rose 84.9% to ¥238 million.

TAIYO AMERICA, INC.
TAIYO INK INTERNATIONAL­(SINGAPORE) PTE LTD(Years ended March 31)

2010

Consolidated Group Subsidiaries

half, but full-year results were supported by strong demandin the Chinese market. Sales volume increased to a newrecord high.
Overall, regional net sales increased 15.0% in year-onyear terms to ¥11,916 million. Operating income rose
14.2% to ¥2,814 million.

2,463

2011

Business Overview

511(Years ended March 31)

2010

989

2011

979

(Years ended March 31)

2010

2011

129

238

(Years ended March 31)

TAIYO HOLDINGS CO., LTD. Annual Report 201113

Review of Operations

Product Description and Performance Overview
The Group’s products are divided into the two categories of printed wiring board (PWB) materials and flat panel display (FPD) materials.
The Group is also utilizing the technologies cultivated in these existing segments to develop new fields and products targeting the electronic components industry.
PWB materials are grouped into the three categories of (1) rigid board materials, (2) package and flexible board materials, and(3) build-up board materials. The key contributor is solder resist (SR), the Group’s mainstay product (see chart below).
TAIYO HOLDINGS GROUP Product Segments
Printed Wiring Board(PWB) Materials

Flat Panel Display(FPD) Materials

Package Board
Materials

Rigid Board Materials

Flexible Board
Materials
Build-up Board
Materials

Plasma Display Panel(PDP) Materials

Development of
New Product Lines

PWB Materials
Liquid Photoimageable (LPI)
Photoimageable (PI)
Solder Resist

Printed Wiring
Board Materials

Dry Film (DFR)
Others(Thermally- and UV–curable)

Others(Hole Plugging Ink, Innerlayer Dielectrics, Etching Resist, etc.)

PWB materials are chemicals used in PWB manufacturing pro-

Solder resist generates a large proportion of Group sales. The

cesses. They have been the traditional mainstay of the Group’sGroup was the pioneering inventor of alkaline developable SR, abusiness. PWB materials are further classified into SR andmajor variant of photoimageable SR (the current mainstream type),

non-SR products.

and commands the leading share of the global SR market.

SR is masking ink applied over the surface of a PWB. It

Supported by higher demand in China, sales volume of rigid

forms an insulating layer to protect the underlying board circuitboard materials increased significantly in the year ended Marchpattern. SR can be divided into “photoimageable” and other2011 despite an overall slowdown in the second half of the year.

types. Other important SR categories are LPI (liquid photoimage-

Sales volume growth in the Chinese market was 18% year onable) and DFR (dry film).

year. Total sales of PWB materials rose 7.1% compared with the

Non-SR products include (1) hole plugging ink, used toprevious year to ¥29,938 million.

provide an insulating in-fill for the through holes that connect
electronic circuits in various PWB layers, (2) legend (or marking)

For more detailed information about solder resist, please refer toink, which is used on PWB surfaces to indicate names, num-

our web site.

bers, positions or other information that relate to mounted elec-

http://www.taiyoink.co.jp/english/Profile/soldarregest01.html

tronic components, and (3) interlayer insulation materials, which
are used in build-up substrates to separate the various layers ofmounted components.

14

TAIYO HOLDINGS CO., LTD. Annual Report 2011

FPD Materials
Front Glass Panel

Display Electrode ( Transparent Electrode)Black PatternDielectric
Layer

Within FPD materials, plasma display panel (PDP) materials foruse in flat-screen TV panels account for the majority of sales.
The Group manufactures and sells conductive pastes, whichfunction as the electrodes in plasma TV sets, and black pattern
pastes to create the black patterns for generating image con-Protective
Coating

trast. FPD materials now constitute the Group’s second-largest
product segment behind PWB materials. The sector is expanding rapidly due to the growth of the plasma TV market.
Segment performance advanced significantly in the year
ended March 2011 due to greater sales volume and higher unit
prices linked to sharp rises in the price of silver, a key raw material. Another key factor was substantial sales growth in China,
Display Electrode(Bus Electrode)

Fluorescent
Material

Rear Glass
Panel

Address
Electrode

Barrier Rib

which had not made a major contribution to segment sales or
profits previously. Total sales of FPD materials grew 55.0% year
on year to ¥9,455 million.

TAIYO HD GROUP Products

New Fields and Products
The Group is actively engaged in developing and investigatinghigh light reflectance. The Group gained a related patent in

new market opportunities.

2009. Product sales topped ¥0.5 billion in the year ended March

Sales from new fields and products totaled approximately¥2.0 billion in the year ended March 2011. The Group aims todouble sales from this segment by March 2013.
The following section outlines some of these new productsthat the Group has developed.
The first is white solder resist. Demand for such an SR vari-2011, and are forecast to grow further in the future.
The second is black solder resist, which offers another alternative to the standard green or blue SR colors. In recent years,
more products have started to feature black PWBs that use ablack solder resist. The Group has applied its expertise in photolithography to develop this new product range. The higher com-

ant has grown in recent years due to the emergence of light-

ponent density and increased circuit resolution in the chips fitted

emitting diode (LED) lights and LED-backlit LCD TV sets, whichto smartphones and other mobile devices have made conven-have energy-saving and eco-friendly features. White solder resist

tional photo-irradiation methods obsolete due to the need forhelps boost the luminance of LEDs or LED backlighting due tomore resolution. New SR variants are required for novel direct
etching methods that do not utilize a negative film. We havedeveloped black SR that copes with the contradictory requirements of being sufficiently light absorbent but also allowing
enough light to penetrate to enable hardening of the high-­
resolution circuit patterns. This product is suitable for laser direct
imaging and can also be used within a developable photo-pastethat contains high concentrations of light-blocking silver particles, which are applied using photolithographic printing techniques. The resulting product combines a deep black hue withthe required sensitivity and precision for high-resolution etching.

White SRTAIYO HOLDINGS CO., LTD. Annual Report 201115

Research and Development

We are engaged in continual R&D activities to develop new

silver paste for use in through holes that has lower silver content

products for new markets.

(making it cheaper), but offers equivalent conductivity.

In the field of PWB materials, our R&D is mainly focused on

Conductive pastes are materials that are used in plasma

adhesives, heat dissipation, eco-regulatory compliance anddisplay panel (PDP) electrodes and flat-panel displays such as

electrical conductors. We are also actively applying the experi-

touch screens. We are developing conductive pastes for use inence and technical expertise that we have built up over many

new applications such as connections to solar cells or electro-

years to materials besides solder resist.

magnetic shielding. We are also researching the use of metals

In interlayer insulation materials, we are focusing our R&D

other than silver or nano-metals in such materials.

efforts toward pattern etching process technology which can be

In terms of technical trends, growing demand to conserveused in combination with new interlayer insulation materials toresources and energy is focusing attention on printed (printable)facilitate higher resolution patterns and better reliability. We areelectronics as the pattern-etching solution of choice. Our in-housealso developing adhesives for use with metallic substrates thatR&D programs are focused on the production of next-generation

can offer superior heat-dissipation characteristics and materials

lighting or flexible electrodes based on inkjet printing or gravure

with pre-embedded components.

offset printing (which is excellent for high resolution and mass

Inkjet marking requires a production process capable ofthroughput). We are also participating in research collaborations

applying ink-based patterns to specified parts of substrates whilewith other firms and academic institutions to develop technologies

using minimal amounts of ink. This requires low-viscosity ink thatfor the next generation of printed electronics, and looking todries instantly. Conventional ink can suffer from poor adhesion

develop technologies for flexible device applications.

characteristics. We have developed ink that delivers superior

In terms of our approach to R&D, we try to make the mostadhesion by adding a thermosetting ingredient. The product isefficient use of our resources by entering technical research

now in commercial development following patent acquisition.

partnerships and participating in joint development with universi-

Conductive materials for PWB applications fall into the twoties and public research institutions. Internally, we focus our R&D

varieties of carbon paste and silver paste for through holes.

on a limited number of projects and use joint development proj-

Carbon paste has garnered attention in recent years as an alter10,000
10,000 costs
nativeto metal electroplating
because it helps reduce
9,111

8,963

8,703

ects between the Group companies. This approach helps us to
10
9,111

8,703

compared with using high-priced precious8,116
metals. We have 8,226
7,619

8,000

8,000

resistancevariability that leaves less phenol-formaldehyde
resi6,000
6,000

6due, an issue withproducts. We are developinga3,183conventional
3,183
3,002
3,339

2,909

3,315

3,072
2,228

2,000
ResearchandDevelopment Expenses

04/3

0

05/3

2,448

4,000 3,211

8,226
mercialization8,116
of superior products.

emphasizing the quality of patent submissions
rather than the
6number of applications filed.

4

2,559

2,909

3,315
2,228

1,949

(Millions of yen)patents)00
04/3 09/3
05/3
07/3 (only registered
08/3

06/3

(Cases)

1,200

500

979

1,016

428

996
400

900

300

342
274

600
200
300

0

100

2009

2010

2011

(Years ended March 31)

0

2009

2010

2011

(Years ended March 31)* The above number indicates the number of patents
registered by the TAIYO GROUP for each fiscal year, forwhich the patent rights continue to be valid as of the fiscal
year under review.

16

TAIYO HOLDINGS CO., LTD. Annual Report 2011

2,448

3,072

2,000
Numberof Patents2 Ownedby the TAIYO GROUP

06/3

8

In intellectual property, we are seeking to boost efficiency by

3,002

3,339

1,954

7,619

8

created a material with good printing characteristics and low

4,000 3,211

10develop
8,963 innovative technologies promptly to enable rapid com-

4

2,559
1,954

1,949
2

07/3

08/3

09/3

0

CSR

The Group has prospered by earning the trust of shareholders,

In addition, various management structures and committees

customers, business partners and other stakeholders. To remain

provide the infrastructure needed to support appropriate promo-

worthy of such trust and support the Group’s continued devel-tion of the CSR-related activities that we undertake.

opment, we have formulated our CSR Philosophy and a Code of
Conduct based on our Management Philosophy and BasicManagement Policy to guide all of our business activities. In
conducting business, we are committed to fulfilling our corporatesocial responsibilities as an enterprise.

CSR Philosophy
We will promote our corporate social responsibility, including complying with the law, protecting the environment,
ensuring thorough quality management, and contributing to society.

Code of Conduct
We will observe the following code to put the Group’s CSR Philosophy into practice.
1. Ethical and Legal Compliance
We will observe laws and other social norms, and understanding the spirit thereof, will act openly and fairly.
2. Workplace Environment
We will respect employees’ human rights, and create a workplace that is fair and free of discrimination.
3. Fair Business Dealings
We will deal with all our business partners in an honest manner and conduct business with them basedon impartial and fair business conditions.
4. Respect for Stakeholders
We will always conduct business activities with respect for the viewpoints of all our stakeholders,and disclose information in a timely and appropriate manner.
5. Ensuring Confidentiality
We will work to ensure the protection of confidential information related to our business partners,
the company itself, and any individual.
6. Ensuring Quality (Quality Policy)
We will ensure that we always provide safe, quality products that satisfy our customers.
7. Protecting the Environment (Basic Environmental Philosophy)
We will endeavor to protect the environment as part of the performance of our social responsibility,
and will engage in business activities that are in harmony with the environment.
8. Social Contribution
As members of society, we will engage in activities that contribute to society.
9. Respect for Intellectual Property
We will take appropriate precautions to protect our intellectual property rights, and those of third parties.
10. Exclusion of Anti-social Forces
We will take a resolute stance towards anti-social forces and will not respond in any way toillegal or improper demands.

TAIYO HOLDINGS CO., LTD. Annual Report 201117

Relationship with Shareholders

Relationship with Customers

Performing IR Activities

Maintaining Quality Management and Utilizing

TAIYO HOLDINGS maintains a basic policy of ensuring accuracy,

Complaints

fairness, and promptness in the performance of IR activities. On

The TAIYO HOLDINGS GROUP carries out initiatives to ensure

the basis of this policy, we deliver to shareholders and investors

high levels of quality and safety which satisfy our customers. In

information effective for making investment decisions.

the year under review, we focused on ensuring that our quality

In terms of specific IR activities, we offer IR information on

management system was compatible with our new organiza-

our website, hold financial results briefings for analysts and insti-

tional structure. Specifically, we mapped out our outsourcing

tutional investors, and meet with institutional investors, amongprocesses and clarified for each process the roles and responsi-

other activities. We are also proactive in providing information tobilities of the companies and organizational bodies involved. In

overseas institutional investors. In the year under review, foraddition, TAIYO INK instituted reforms to maintain its quality

example, we held IR meetings in Hong Kong.

management system under its new organizational structure, andthe reforms were certified as compatible with ISO 9001:2008

Shareholders’ Meeting

after a review by the registration body. Going forward, we will

At our General Meeting of Shareholders, we deliver our annual

strive to raise the effectiveness of our quality managementbusiness report using narrated videos on large-screen displays tosystem even as we streamline the system for efficiency.

facilitate a better understanding of our management strategy andWe consider customer complaints as opportunities tooperations. On-demand video of the meeting is made available toimprove quality. After receiving a complaint, we identify the roots

provide wide access to the proceedings, including to shareholdersof the problem and take effective response measures that will

who could not attend as well as to the media. Following the meet-lead to the manufacturing and provision of products with moreing, we hold a reception for shareholders at which we introduce

stable quality.

printed wiring boards and various electronics that use our prod-

Quality improvement based on customer complaints

ucts. The reception also allows investors to speak directly to our
executives and product developers, which enhances communica-

Actiontion between our company and shareholders.

Plan
ActionCheck
Sharing information
with customers

Do

Check
Do

Plan

Relationship with Suppliers
Carrying Out On-site Audits
The TAIYO HOLDINGS GROUP carries out on-site audits of its
Executives greet shareholders at the reception after the General
Meeting of Shareholders.

suppliers of raw materials and products, with the understanding
and approval of its suppliers, as a way to maintain and improve
the quality and delivery of procured goods.

1

2
Select suppliers toaudit based on a reviewof the quality overthe past year
(done annually in June)

18

Provide a checklist andaudit plan to selectedsuppliers beforehand.
Suppliers conduct theirown internal evaluation
and return the documents to us prior to theaudit.

TAIYO HOLDINGS CO., LTD. Annual Report 20113
 udit team membersA
selected from quality
assurance, manufacturing technology,
and procurement
divisions agree on
key audit points.

4

5
Audit conducted.

 fter audit, teamA
members discuss theresults and hold a final
review which includes
the supplier. An audit
report explaining areas
requiring improvement
is prepared and sent tothe supplier.

6
 eceipt of report fromR
supplier on improvements. Related departments discuss the
response and confirm
the efficacy of the
improvement initiatives.

Relationship with Local Communities
and Society

Environmental Protection Activities

Social Contribution

beautification programs as part of its environmental protection

As part of its social contribution activities, the TAIYO HOLDINGS

activities. At our Ranzan Facility, about 10 management-level

GROUP makes monetary donations to support relief efforts in

employees are split into two teams which take turns picking up

the event of major disasters causing significant damage. In the

garbage from roads around the site on a monthly basis. In addi-

case of the Great East Japan Earthquake, we quickly responded

tion, TAIYO INK is registered with a road beautification program inwith financial support to the Japanese Red Cross Society.

Saitama Prefecture, and employees contribute their time once a

The TAIYO HOLDINGS GROUP conducts various community

month to clean up the roads, focusing on national road No. 254.
Company

Disaster

We also participate in programs to protect the Great purple

Typhoon No. 9 in Okayama
and Hyogo prefectures (2009)

emperor, designated as Japan’s national butterfly.

Sumatra Earthquake (2009)

Relationships with Employees

Samoa Earthquake (2009)

Global Human Resource Development

Haiti Earthquake (2010)

Recognizing the cultural diversity among employees at sites

Chile Earthquake (2010)

outside Japan, the TAIYO HOLDINGS GROUP is striving toGreat East Japan Earthquake(2011)

maintain strong communication with all employees and foster

TAIWAN TAIYO INK CO., LTD.

Taiwan Floods (2009)

duties. We evaluate employees at Group companies outside

TAIYO INK (SUZHOU) CO., LTD.

Sichuan Province Earthquake(2008)

Japan to confirm if they have the right skills and communication

Great East Japan Earthquake(2011)and the ability to think through issues. The evaluations also give

TAIYO HOLDINGS CO., LTD.
and TAIYO INK MFG. CO., LTD.

global human resources which can smoothly perform work

abilities to perform global business, strong interpersonal skills,
us an opportunity to determine how we can better support thegrowth of our overseas employees.

Community Contribution Activities
The TAIYO HOLDINGS GROUP carries out community vitaliza-

Support Systems for Employees with Families

tion initiatives as part of its local community contribution activi-

In Japan, the shortage of daycare centers for young children has

ties. In the year under review, we took part in the annual Ranzan

become a serious social problem. We are supporting ourFestival held in Ranzan Town, Saitama Prefecture. We set up aemployees with family responsibilities through various support

booth at the festival to sell toys and games to children and pro-

programs, including child-rearing and family nursing support

vide PR space for the company. The festival afforded an oppor-

systems.

tunity for our employees to enhance communication withmembers of the local community, improve citizens’ understanding of our company, and support the vitalization of the town. Allproceeds from our booth were donated to a local social welfareorganization to support their community programs.

TAIYO employees making a variety of characters out of balloons

TAIYO HOLDINGS CO., LTD. Annual Report 201119

Domestic and Global Network

TAIYO HOLDINGS CO., LTD.
Head Office2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
PHONE: 81-3-5999-1511 FAX: 81-3-5999-1501

TAIYO HOLDINGS CO., LTD.
Ranzan Facility
388 Ohkura, Ranzan-machi, Hiki-gun,
Saitama 355-0222, Japan
PHONE: 81-493-62-7777 FAX: 81-493-62-2330

TAIYO INK MFG. CO., LTD.

Production and Marketing Subsidiaries
Marketing or Technical Support Subsidiaries

900 Hirasawa, Ranzan-machi,
Hiki-gun, Saitama 355-0215, Japan
PHONE: 81-493-61-2711 FAX: 81-493-61-2701

Company

TAIWAN TAIYO INK CO., LTD.
TAIYO INK CO., (KOREA) LTD.
TAIYO INK (SUZHOU) CO., LTD.
TAIYO INK (ZHONGSHAN) CO., LTD.
TAIYO AMERICA, INC.
TAIYO INK INTERNATIONAL (SINGAPORE) PTE LTDTAIYO INK (THAILAND) CO., LTD.
TAIYO INK INTERNATIONAL (HK) LIMITEDTAIYO INK TRADING (SHENZHEN) CO., LTD

Voting Shares Held

96.8%
86.1%
100.0%
100.0%
100.0%
100.0%
49.0%
100.0%
100.0%

Business Description

Manufacture and marketing of PWB materials
Manufacture and marketing of PWB and FPD materials
Manufacture and marketing of PWB materials
Manufacture and marketing of PWB materials (Under construction)
Manufacture and marketing of PWB materials
Marketing of PWB materials
Technical support for PWB materials
Marketing of PWB materials
Marketing of PWB materials

Production and Marketing
Subsidiaries

Marketing or Technical Support
Subsidiaries

TaiwanTAIWAN TAIYO INK CO., LTD.

Singapore
TAIYO INK INTERNATIONAL(SINGAPORE) PTE LTD

No.7 Ta Tung 2nd Road. Kuan-Yin Industry Park,
Taoyuan, Taiwan, R.O.C.
PHONE: 886-3-483-3230 FAX: 886-3-483-3240
http://www.taiyoink.com.tw

Korea
TAIYO INK CO., (KOREA) LTD.
1058-8, Singil-dong, Danwon-gu, Ansan City,
Gyeonggi-do, Korea
PHONE: 82-31-491-9250 FAX: 82-31-491-7671
http://www.taiyoink.co.kr

China - Suzhou
TAIYO INK (SUZHOU) CO., LTD.
No. 26 Taishan Road, Suzhou New District,Suzhou City, Jiangsu, P.R. China
PHONE: 86-512-6665-5550
FAX: 86-512-6665-5011
http://www.taiyoink.com.cn

China - Zhongshan
TAIYO INK (ZHONGSHAN) CO., LTD.
National Torch High-tech Industrial Development
Zone, Zhongshan City,
Guangdong, P.R. China.

171 Chin Swee Road #11-07/08 San Centre
Singapore 169877
PHONE: 65-6372-1141 FAX: 65-6372-1151

ThailandTAIYO INK (THAILAND) CO., LTD.
408/122 Phaholyothin Place, 28/F Phaholyothin
Road, Samsen-Nai, Phayathai, Bangkok 10400,
Thailand
PHONE: 66-2-619-0506 FAX: 66-2-619-0799

Head OfficeHong Kong
TAIYO INK INTERNATIONAL (HK) LIMITED
Room 703, 7/F, Silvercord, Tower 2, 30 CantonRoad, Tsim Sha Tsui, Kowloon, Hong Kong
PHONE: 852-2735-0636 FAX: 852-2375-7332

China - Shenzhen
TAIYO INK TRADING (SHENZHEN) CO., LTD

TAIWAN TAIYO INK CO., LTD.

Rm 1506, Office Tower, Shun Hing Square Di Wang
Comm. Centre, 5002 Shun Nan Dong Road,
Shenzhen City, Guangdong, PRC
PHONE: 755-2583-4787 FAX: 755-8207-0989

USA - Nevada
TAIYO AMERICA, INC.
2675 Antler Drive, Carson City, NV 89701, U.S.A.
PHONE: 1-775-885-9959 FAX: 1-775-885-9972
http://www.taiyo-america.com

20

TAIYO HOLDINGS CO., LTD. Annual Report 2011TAIYO INK (SUZHOU) CO., LTD.

Financial Section

22
26
28
29
30
31
32
46

Management Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statement of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report

TAIYO HOLDINGS CO., LTD. Annual Report 201121

Management Discussion and Analysis

Overview of the Consolidated Results

Sales of FPD materials, which are comprised mainly of PDP

During the fiscal year ended March 31, 2011, the recovery in thematerials, advanced significantly in the year ended March 2011global economy slowed slightly in the second half of the year

due to greater sales volume and higher unit prices linked todue to factors such as the reemergence of fiscal problems in

sharp rises in the price of silver, a key raw material. Total sales ofdeveloped countries and growing political instability in the Middle

FPD materials grew 55.0% year on year to ¥9,455 million.

East. However, over the full year, the global economy was strong

As a result, net sales for the current fiscal year amounted toon the whole, driven by macroeconomic factors such as contin-¥40,366 million (up 15.1% year on year).

ued high growth rates in China and other emerging countries.
However, the Great East Japan Earthquake that occurred on

Gross profit and operating income

March 11, 2011 and its aftermath resulted in a stagnation in

Gross profit rose 9.2% year on year to ¥11,938 million despite

production due to the constraints of obtaining supplies such as

the fact that cost of sales increased 17.8% to ¥28,428 million.

needed products, parts and materials, and this in turn signifi-

Selling, general and administrative expenses were ¥6,557 million

cantly affected the Japanese economy and other economies in(up 7.7% year on year) due mainly to increases in distribution

the world. Going forward, the overall result is that the economic

expenses, sales commission and experiment and research

outlook remains uncertain.

expenses. As a result, the operating income increased by 11.1%

In the electronics components industry, signs of a lull inyear on year to ¥5,381 million.

demand for PCs, flat-screen TVs and other applications

The operating income ratio was decreased by 0.5 of a per-emerged from the second half of the year, but the industry wascentage point, from 13.8% in the previous fiscal year to 13.3%.

strong over the full fiscal year on growing shipments worldwide
of products such as smartphones and tablet PCs, and firm

Net income

demand in the Chinese market.

Income before income taxes and minority interests and net

Operating under these conditions, the Group’s sales on a

income both increased year on year to ¥5,209 million (up 8.3%)

volume basis reached a record high, and sales and profits bothand ¥3,403 million (up 13.0%), respectively. These increases

sharply exceeded the levels in the previous fiscal year.

were mainly due to a decrease in foreign exchange loss and anincrease in gain on sales of noncurrent assets, despite

Net sales

decreases in interest and dividend income and an increase inSales of PWB (printed wiring board) materials were ¥29,938

loss on sales and retirement of noncurrent assets.

million (up 7.1% year on year). By product group, sales of “rigid

Net income per share increased by 13.5% year on year fromboard materials” increased significantly due to a strong rise in¥116.08 to ¥131.78.

demand in the Chinese market.

Net Sales

Operating Income
and Operating Income Ratio(Millions of yen)

(Millions of yen)

50,00040,36640,00032,614

(%)

13.8

6,000

Net Income and
Net Income Per Share

4,843

13.3
5,381

(Millions of Yen)

4,000

30,0003,011
131.7810

3,332

20,000
2,000

1,958

116.08
100

74.25

5

50

1,000

10,000

2009

2010

2011

(Years ended March 31)

0

TAIYO HOLDINGS CO., LTD. Annual Report 2011

2009

2010

2011

0

0

2009

2010

2011

(Years ended March 31)(Years ended March 31)

n Operating income (left scale)Operating income ratio (right scale)n Net income (left scale)
Net income per share (right scale)

n

22

150

3,000

2,000

0

200

3,403

10.2

35,056

(Yen)

4,000

15

n

0

Results by Segments

South Korea

Japan

In the South Korea market, the sales volume for “rigid board

In the Japan market, the sales volume of all the of product items

materials” and “package board and flexible board materials”

of PWB materials recovered. In particular, sales of “rigid board

reached a record high, supported by continued strong perfor-

materials” and “build-up board materials” were strong both inmances at emerging South Korean electronics manufacturers.

Japan and overseas.

Moreover, sales of FPD materials remained firm from the start of
the fiscal year, with higher average sales unit prices due to a

Nevertheless, net sales in Japan declined 9.3% comparedwith the previous year to ¥18,491 million. Operating income

sharp increase in the price of silver, which is a key raw material,

increased 68.8% to ¥1,014 million.

leading to record high sales on a monetary basis.

China (including Hong Kong)

year terms to ¥13,743 million, but operating income fell 1.0% toA correction in production output for PCs and flat-screen televi-¥979 million.

As a result, net sales in South Korea grew 34.2% in year-on-

sions began to negatively impact on the business during thesecond half of the fiscal year, but full-year results were supported

Other markets

by strong demand in the Chinese market. As a result, sales

As regards to other markets, in the ASEAN region, althoughvolume increased to a new record high.

there were signs of a slowdown in the second half of the fiscal

Consequently, net sales in the China market increased

year, a strong performance in the first half resulted in a record

15.0% in year-on-year terms to ¥11,916 million. Operating

sales volume over the full year. In the European and Americanincome rose 14.2% to ¥2,814 million.

markets, sales were strong, particularly for “build-up board
materials.”
As a result, net sales in other markets amounted to ¥3,061

TaiwanAlthough demand for high-performance “rigid board materials” inmillion, an increase of 3.0% in year-on-year terms. Operating

the Taiwan market was firm, the impact of yen appreciation

income soared 84.9% to ¥238 million.

against the U.S. dollar adversely squeezed operating margins.
10,0009,111
As
a result, net sales
in Taiwan
increased 8.1% in year-on8,963

10

8,703

year terms to ¥4,414 million, but operating8,116
income fell
20.8% 8,226
to
7,619

Assets

8,000

8

6,000

6

¥511 million.

3,183
4,000 3,211

3,002
3,339

2,909

3,315

2,448

3,072
2,228

1,954

04/3

increase was mainly attributable to increases in inventories of¥275 million (up 7.2% year on year) and in deferred tax assets of¥180 million (up 174.8% year on year).

2¥13,050 million. This decrease was mainly due to a decrease of

Total property, plant and equipment decreased 6.5% to

1,949

Return on Equity
0

Current assets increased by 0.6% to ¥27,675 million. This

4

2,559

2,000

Analysis of Financial Position¥591 million (down 7.6% year on year) in buildings and struc-

05/3

06/3

07/3

08/3

09/3

0

tures, net, and of ¥197 million (down 12.7% year on year) inmachinery, equipment and vehicles, net. On the other hand,

(%)
12

9.9
8.7

investments and other assets decreased by 4.8% to ¥2,126
million. This came despite a ¥50 million (up 128.2% year on year)
increase in deferred tax assets, and a ¥188 million (down 109.0%

8

year on year) decrease in allowance for doubtful accounts.
As a result, total assets stood at ¥42,851 million at March
5.4

31, 2011, 2.0% lower than the previous fiscal year end.

4

0

2009

2010

2011

(Years ended March 31)

TAIYO HOLDINGS CO., LTD. Annual Report 201123

Liabilities

Research and Development Expenses

Current liabilities increased by 7.1% to ¥7,681 million. ThisThe TAIYO HOLDINGS GROUP conducts research and develop-

increase was mainly due to a ¥447 million (up 85.0%) increase inment activities centered on the fields of insulation materials,

accounts payable-other and a ¥209 million (up 52.3%) increase

conductive materials and adhesive materials for the electronics

in income taxes payable.

industry which is responding to the needs of our sophisticatedLong-term liabilities increased by 16.2% year on year to­information-based society.

¥983 million. This was mainly due to an increase in deferred tax

Research and development expenses for the year ended

liabilities of ¥51 million (up 9.3%) and in asset retirement obliga-

March 31, 2011 totaled ¥996 million, ¥20 million lower than thetions of ¥52 million.

previous fiscal year.

Total equity

Risk Factors

Total equity, after adding minority interests, was ¥34,187 million

The following are the main risks that may influence the businessas of March 31, 2011, a 4.2% decrease from the previous fiscal

development of the Company.

year-end. This was mainly due to an increase in foreign currencytranslation adjustments of ¥1,239 million.
As a result, the equity ratio was decreased by 1.9 percent-(1) Technological innovation risks
1. Risks related to PWBs

age points from the previous fiscal year-end, from 80.1% to

Our Group is reliant on the manufacturing and selling of PWB

78.2%, and ROE was 9.9%.

materials, and SR in particular, as a major source of our income.
If radical technological developments, such as electronic parts

Analysis of Cash Flows

that do not use PWBs or PWBs that do not use SR, were to be

Cash flows from operating activities

widely adopted, this would result in a significant decrease in

Net cash provided by operating activities increased by 46.3%

demand for our products.

year on year to ¥4,576 million. The main cash inflows were

From the viewpoint of product characteristics, operability,

income before income taxes and minority interests of ¥5,209

and economic viability, there is little possibility that such techno-

million and depreciation and amortization of ¥1,128 million. The

logical innovations will be widely adopted in the near future.

main cash outflows were increases in accounts receivable-trade

However, the Company considers it to be an important issue inand inventories of ¥901 million, an increase in accounts payable-

the field of research and development to investigate possible

trade and other current liabilities of ¥743 million, and income

new manufacturing methods in relation to PWBs.

taxes-paid amounting to ¥1,678 million.
2. Risks related to PDP materials

Cash flows from investing activities

Our PDP materials customers are restricted to a few panel manu-

Net cash provided by investing activities amounted to ¥758

facturers. As we rely heavily on certain customers, the performancemillion, an improvement from net cash of ¥70 million used inof these customers could significantly impact our own sales.

investing activities in the previous year. This was mainly due to

As PDPs compete with LCDs and other technologies in the¥1,297 million in proceeds from the net of withdrawal from and

FPD market, the future demand for PDPs necessarily involves

payment into time deposits, and a decrease to ¥488 million for

uncertainty.

the purchase of property, plant and equipment.

(2) Risks associated with patents
Cash flows from financing activities

In order for our Group to maintain a superior competitive posi-

Net cash used in financing activities decreased by 56.2% totion, efforts are being made to protect the products and technol-¥3,697 million. The main usage of cash was in dividends paid

ogy we develop through patents and intellectual property.

of ¥2,335 million and in the purchase of treasury stock of

However, in the event a patent application, etc., does not result¥1,312 million.

in the granting of rights, or a third party successfully requests an

As a result, cash and cash equivalents as of March 31, 2011

invalidation, insufficient protection of our rights as a Group may

stood at ¥13,153 million, ¥1,239 million higher than the previous

result. Moreover, infringing on the intellectual property rights

fiscal year-end.

owned by a third party could impact the performance of ourGroup as a result of the subsequent payment of royalties or large
amounts of damages.

24

TAIYO HOLDINGS CO., LTD. Annual Report 2011

(3) Risk of major production facilities being affectedby a disaster(8) Risk of price fluctuations in key products

Our Group has manufacturing bases in Japan, Taiwan, South

cially China, and we are engaged in continuing price wars over

Korea, China and the United States. In the event that any of our

SR with local companies as well as other Japanese firms. There

manufacturing bases are damaged by a natural disaster andis also pressure to lower SR prices which has resulted from pricetheir manufacturing functions are obstructed, manufacturing andcompetition in the PWB market. Because of this, there is a pos-

supply functions would then be switched to another manufactur-

sibility that the price of our main product, SR, may drop, thus

ing base as an emergency measure. However, this would require

affecting the performance of our Group.

PWB manufacturing is shifting to other Asian countries, espe-

some preparation and adjustment and our business would be
negatively affected in the interim.

(9) Risks related to fluctuations in product demand
Demand for our Group’s main products is influenced by elec-(4) Risk related to procurement of raw materials

tronic components market trends, which may affect the perfor-

The Group procures many of its raw materials from external raw

mance of our Group.

material manufacturers. The occurrence of problems at these
raw material manufacturers or a lack of supplies that hinders the(10) Credit risks related to receivables

Group’s production activities may negatively affect the business

The Group has many customers and, although we do not con-performance of the Group.

centrate an excessive amount of receivables on specific customers, the deterioration of the financial position of customers and(5) Risk related to higher prices of raw materials

the resulting bad debt may affect the performance of our Group.

The occurrence of rises in the prices of some of the raw materials
that the Group procures due to the impact of conditions in the(11) Risk of recoverability of deferred tax assets

petroleum market, or suchlike, may negatively affect the businessWith respect to deductible temporary differences and tax-loss

performance of the Group. In the case of PDP materials in particu-

carryforward, the Group determines recoverability after rea-lar, fluctuations in the price of silver, one of the key raw materials,

sonably estimating future taxable income when recording

may negatively impact on the earnings of the Group.

deferred tax assets. However, in the event that deferred tax
assets are deemed unrecoverable in whole or in part as actual(6) Country-specific risks related to businessdeployment overseas

taxable income may differ from estimates due to changes in

Our Group conducts manufacturing activities in Japan, Taiwan,changes in tax rates or revisions in tax systems occur in vari-South Korea, China, and the United States. Sales of ourous countries, a recalculation of deferred tax assets wouldGroup’s products particularly in China, Taiwan, South Korea,

become necessary. If, as a result of the above, a reversal of

ASEAN countries, and other Asian markets are expanding.

deferred tax assets is necessary, it could impact on our oper-

Accordingly, terrorist activities, destabilization of the politicalating results and financial position.

the business environment and other factors, or should

situation, economic fluctuations, the outbreak of earthquakes
and contagion, unforeseen changes to legal, regulatory or tax
systems, labor-related industrial disputes and other countryspecific risks could impact on the business strategies andperformance of our Group.

(7) Risk of exchange rate fluctuations
Our ratio of overseas sales to net sales is approximately 80%,and in the majority of cases we calculate our overseas net sales
figures in foreign currencies. Accordingly, our business performance is affected by fluctuations in exchange rates, with a highly
appreciated yen normally leading to reduced income and profits.

TAIYO HOLDINGS CO., LTD. Annual Report 201125

Consolidated Balance Sheets
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
March 31, 2011 and 2010

Thousands of
U.S. Dollars(Note 1)
2011

Millions of Yen
2011

2010

¥13,153¥11,914

820

2,261

9,879

Notes and accounts receivable—trade (Note 11)

8,793

9,174

105,940

Inventories (Note 4)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents (Note 11)
Time deposits (Note 11)$158,470

4,121

3,846

49,651

Consumption taxes receivable

322

233

3,880

Deferred tax assets (Note 9)

283

103

3,410

Other current assets

300

307

3,614

Allowance for doubtful accounts (Note 11)

(117)

(321)

(1,410)27,67527,517

333,434

Land

4,097

4,135

49,361

Buildings and structures—net

7,164

7,755

86,313

Machinery, equipment and vehicles—net

1,352

1,549

16,289Tools, furniture and fixtures—net

406

515

4,892

Construction in progress

31
13,05013,954

157,229

Investment securities (Notes 3 and 11)

530

572

6,386

Investments in unconsolidated subsidiaries (Note 11)

980

990

11,807

Total current assets

PROPERTY, PLANT AND EQUIPMENT (Note 5):

Net property, plant and equipment

374

INVESTMENTS AND OTHER ASSETS:

Goodwill

21

47

253

Software (Note 6)

178

227

2,145
1,072

Deferred tax assets (Note 9)

89

39

Other assets

687

530

8,276

Allowance for doubtful accounts

(359)

(171)

(4,325)

Total investments and other assets
TOTAL
See notes to consolidated financial statements.

26

TAIYO HOLDINGS CO., LTD. Annual Report 2011

2,126

2,234

25,614¥42,851¥43,705$516,277

Thousands of
U.S. Dollars(Note 1)
2011

Millions of Yen
LIABILITIES AND EQUITY

2011

2010

CURRENT LIABILITIES:
Notes and accounts payable—trade (Note 11)¥ 5,326¥ 5,483$ 64,169

Accounts payable—other (Note 11)

973

526

11,723

Income taxes payable (Note 11)

609

400

7,337

Accrued expenses

483

491

5,819

Deferred tax liabilities (Note 9)

190

222

2,289

Other current liabilities

100

51

1,205

7,681

7,173

92,542

Deferred tax liabilities (Note 9)

598

547

7,205

Liability for retirement benefits (Note 7)

318

288

3,831

Asset retirement obligations

52

Total current liabilities
LONG-TERM LIABILITIES:Other long-term liabilities
Total long-term liabilities

627

15

11

180

983

846

11,84373,916

COMMITMENTS AND CONTINGENT LIABILITIES (Note 12)
EQUITY (Notes 8 and 15):
Shareholders’ equity:
Common stock­—authorized, 50,000,000 shares;
6,135

6,135

Capital surplus

issued, 27,464,000 shares in 2011 and 2010

7,102

7,102

85,566

Retained earnings

29,724

28,662

358,120

Treasury stock—at cost, 2,025,546 shares in 2011 and
1,525,526 shares in 2010
Total shareholders’ equity(5,372)(4,060)(64,722)

37,58937,839452,880

Accumulated other comprehensive income (loss):
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Total accumulated other comprehensive loss
Minority interests
Total equity
TOTAL

90

117

1,084

(4,188)(2,949)(50,458)(4,098)(2,832)(49,374)

696

679

8,386

34,18735,686

411,892¥42,851¥43,705$516,277

TAIYO HOLDINGS CO., LTD. Annual Report 201127

Consolidated Statements of Income
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010

Thousands of
U.S. Dollars(Note 1)
2011

Millions of Yen
2011

2010

NET SALES¥40,366¥35,056

COST OF SALES

28,42824,123

342,506

Gross profit

11,938

10,933

143,831

6,557

6,090

79,000

5,381

4,843

64,831

72

179

867

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 10)
Operating income$486,337

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Foreign exchange loss—net
Other—net
Other expenses—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

(3)

(1)

(36)

(177)

(277)

(2,132)

(64)

67

(771)

(172)

(32)

(2,072)

5,209

4,811

62,759

1,898

1,257

22,868

INCOME TAXES (Note 9):
Current
Deferred
Total income taxes
NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET INCOME
NET INCOME

(203)

438

(2,446)

1,695

1,695

20,422

3,514

3,116

42,337

111

105

1,337

¥ 3,403¥ 3,011$ 41,000

Yen

U.S. Dollars

PER SHARE OF COMMON STOCK (Notes 2.s and 14):
Basic net income¥131.78¥116.08$1.59

Cash dividends applicable to the year

115.00

90.00

1.39

See notes to consolidated financial statements.

28

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Consolidated Statement of Comprehensive Income
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2011

NET INCOME BEFORE MINORITY INTERESTS

Millions of Yen
2011

Thousands of
U.S. Dollars(Note 1)2011

¥ 3,514$ 42,337

OTHER COMPREHENSIVE LOSS (Note 13):
Valuation difference on available-for-sale securities
Foreign currency translation adjustments

(26)

(313)

(1,284)(15,470)

Total other comprehensive loss

(1,310)(15,783)

COMPREHENSIVE INCOME (Note 13)¥ 2,204$ 26,554¥ 2,136$ 25,735

68

819

COMPREHENSIVE INCOME ATTRIBUTABLE TO (Note 13):
Owners of the parent
Minority interests
See notes to consolidated financial statements.

TAIYO HOLDINGS CO., LTD. Annual Report 201129

Consolidated Statements of Changes in Equity
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010

Thousands of
U.S. Dollars(Note 1)
2011

Millions of Yen

Shareholders’ equity:
Common stock:
Balance at the end of previous year—shares issued,
2011—27,464,000 shares,
2010—27,464,000 shares
Balance at the end of current year—shares issued,
2011—27,464,000 shares,
2010—27,464,000 shares
Capital surplus:
Balance at the end of previous year
Disposal of treasury stock
Balance at the end of current year
Retained earnings:
Balance at the end of previous year
Net income
Dividends from surplus
Decrease by newly consolidated subsidiaries
Balance at the end of current year
Treasury stock—at cost:
Balance at the end of previous year
2011—1,525,526 shares,
2010—1,525,382 shares
Purchase of treasury stock
2011—500,080 shares,
2010—144 shares
Disposal of treasury stock
2011—60 shares,
2010—0 shares
Balance at the end of current year
2011—2,025,546 shares,
2010—1,525,526 shares
TOTAL SHAREHOLDERS’ EQUITY
Accumulated other comprehensive income (Loss):
Valuation difference on available-for-sale securities:
Balance at the end of previous year
Change of items during the year
Balance at the end of current year
Foreign currency translation adjustments:
Balance at the end of previous year
Change of items during the year
Balance at the end of current year
TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS
Minority interests:
Balance at the end of previous year
Change of items during the year
Balance at the end of current year
Total equity:
Balance at the end of previous year
Net income
Dividends from surplus
Purchase of treasury stock
Disposal of treasury stock
Decrease by newly consolidated subsidiaries
Net changes of items other than shareholders’ equity
Balance at the end of current year
See notes to consolidated financial statements.

30

TAIYO HOLDINGS CO., LTD. Annual Report 2011

2011

2010

¥ 6,135¥ 6,135$ 73,916¥ 6,135¥ 6,135$ 73,916¥ 7,102¥ 7,102$ 85,566¥ 7,102¥ 7,102$ 85,566¥28,662
3,403(2,334)(7)¥29,724¥27,985
3,011(2,334)¥28,662$345,325
41,000(28,120)(85)$358,120¥(4,060)¥(4,059)$(48,915)(1,312)(1)(15,807)¥(5,372)¥37,589¥(4,060)¥37,839$(64,722)$452,880

¥

¥

55
62
117

$ 1,410(326)$ 1,084¥(2,949)(1,239)¥(4,188)¥(4,098)¥(3,155)
206¥(2,949)¥(2,832)$(35,531)(14,927)$(50,458)$(49,374)

¥

¥

522
157
679

$ 8,181205$ 8,386¥35,686
3,403(2,334)(1,312)¥34,585
3,011(2,334)(1)$429,952
41,000(28,120)(15,807)(7)(1,249)¥34,187425¥35,686(85)(15,048)$411,892

¥

¥

117
(27)
90

679
17
696

¥

¥

Consolidated Statements of Cash Flows
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010

Thousands of
U.S. Dollars(Note 1)
2011

Millions of Yen
2011

2010

¥ 5,209¥ 4,811$ 62,759

Income taxes—paid(1,678)(1,075)(20,217)

Depreciation and amortization

1,128

1,262

13,590

Increase in notes and accounts receivable—trade(421)(2,644)(5,072)

Increase in inventories

(480)

(754)

(5,783)

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:

Changes in assets and liabilities, net of effects:

Increase in notes and accounts payable—trade

146

2,614

1,759

Increase (decrease) in other current liabilities

597

(983)

7,193

Decrease in accrued expenses

(118)

(114)

(1,422)

193

10

2,326

Total adjustments(633)(1,684)(7,626)

Net cash provided by operating activities

4,576

3,127

55,133

Other—net

INVESTING ACTIVITIES:Payments into time deposits(3,842)(2,395)(46,289)

Proceeds from withdrawal of time deposits

5,139

2,671

61,916

Purchase of short-term investment securities(256)

Proceeds from sales of short-term investment securities

257

Purchases of property, plant and equipment(488)(3,084)
3,096
(513)

Proceeds from sales of investment securities
Other—net
Net cash provided by (used in) investing activities(5,880)

222
(52)

(55)

(627)

758

(70)

9,132

FINANCING ACTIVITIES:
Increase in short-term loans payable

1,200

14,458Decrease in short-term bank loans payable(1,200)(14,458)

Purchase of treasury stock(1,312)

Cash dividends paid

(2,335)(2,335)(28,133)

(50)

(32)

(602)

(3,697)(2,367)(44,542)

Cash dividends paid to minority shareholders
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND
CASH EQUIVALENTS(15,807)(68)(4,843)NET INCREASE IN CASH AND CASH EQUIVALENTS¥ 1,235¥

622$ 14,880

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

11,914

11,292

143,542

INCREASE IN CASH AND CASH EQUIVALENTS FROMNEWLY CONSOLIDATED SUBSIDIARYCASH AND CASH EQUIVALENTS, END OF YEAR

(402)

4
¥13,153

48¥11,914$158,470

See notes to consolidated financial statements.

TAIYO HOLDINGS CO., LTD. Annual Report 201131

Notes to Consolidated Financial Statements
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2011 and 2010

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the­Japanese Financial Instruments and Exchange Act and its related accounting regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
Under Japanese GAAP, a consolidated statement of comprehensive income is required from the fiscal year ended March 31,
2011 and has been presented herein. Accordingly, accumulated other comprehensive income is presented in the consolidatedbalance sheet and the consolidated statement of changes in equity. Information with respect to other comprehensive income forthe year ended March 31, 2010 is disclosed in Note 13. In addition, “net income before minority interests” is disclosed in the
consolidated statement of income from the year ended March 31, 2011.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the 2010 financial statements to conform to the classifications usedin 2011.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which TAIYO HOLDINGS
Co., Ltd. (the “Company”) is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts is
included solely for the convenience of readers outside Japan and has been made at the rate of ¥83 to $1, the approximate rateof exchange at March 31, 2011. Such translation should not be construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.

2. Summary of Significant Accounting Policies
a. Consolidation—
The consolidated financial statements as of March 31, 2011 include the accounts of the Company and its eight significant (six asof March 31, 2010) subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method.
(Names of consolidated subsidiaries)
TAIYO INK MFG. CO., LTD.
TAIWAN TAIYO INK CO., LTD.
TAIYO INK CO., (KOREA) LTD.
TAIYO INK (SUZHOU) CO., LTD.
TAIYO AMERICA, INC.
TAIYO INK INTERNATIONAL (SINGAPORE) PTE LTDTAIYO INK INTERNATIONAL (HK) LIMITEDTAIYO INK TRADING (SHENZHEN) CO., LTD
Investments in the remaining three (four as of March 31, 2010) unconsolidated subsidiaries and associated companies arestated at cost. If the equity method of accounting had been applied to the investments in these companies, the effect on theaccompanying consolidated financial statements would not be material.
Two subsidiaries, TAIYO INK MFG. CO., LTD. and TAIYO INK TRADING (SHENZHEN) CO., LTD, were not consolidated in2010 because the former was immaterial to the consolidated financial statements and the latter was only established in this financial year.
The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date of acquisition
is being amortized on a straight-line basis over a period of five years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Group is eliminated.
The fiscal years of two (one as of March 31, 2010) consolidated subsidiaries ended on December 31. In preparing the consolidated financial statements, the Company used the financial statements of these subsidiaries, which were prepared additionally at
March 31 closing to correspond to the Group’s reporting period for consolidation purpose.

32

TAIYO HOLDINGS CO., LTD. Annual Report 2011

b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—
In May 2006, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task Force (“PITF”) No. 18,“Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.”
PITF No. 18 prescribes (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar­transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial
statements, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting­Standards or the generally accepted accounting principles in the United States of America tentatively may be used for the consolidation process, (3) however, the following items should be adjusted in the consolidation process so that net income is accounted for inaccordance with Japanese GAAP unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial
gain or loss of pensions that has been directly recorded in the equity; (c) expensing capitalized development costs of R&D; (d) cancellation of the fair value model accounting for property, plant and equipment and investment properties and incorporation of the costmodel accounting; (e) recording the prior years’ effects of changes in accounting policies in the income statement where retrospective
adjustments to financial statements have been incorporated; and (f) exclusion of minority interests from net income, if included.

c. Business Combination—
In October 2003, the Business Accounting Council issued a Statement of Opinion, “Accounting for Business Combinations,” andin December 2005, the ASBJ issued ASBJ Statement No. 7, “Accounting Standard for Business Divestitures” and ASBJ GuidanceNo. 10, “Guidance for Accounting Standard for Business Combinations and Business Divestitures.” The accounting standard forbusiness combinations allowed companies to apply the pooling of interests method of accounting only when certain specific criteria were met such that the business combination was essentially regarded as a uniting-of-interests. For business combinations
that did not meet the uniting-of-interests criteria, the business combination was considered to be an acquisition and the purchasemethod of accounting was required. This standard also prescribed the accounting for combinations of entities under common
control and for joint ventures.
In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No. 21,“Accounting Standard for Business Combinations.” Major accounting changes under the revised accounting standard are as follows: (1) The revised standard requires accounting for business combinations only by the purchase method. As a result, the pooling of interests method of accounting is no longer allowed. (2) The current accounting standard accounts for research anddevelopment costs to be charged to income as incurred. Under the revised standard, in-process research and development(IPR&D) acquired in a business combination is capitalized as an intangible asset. (3) The previous accounting standard provided
for a bargain purchase gain (negative goodwill) to be systematically amortized over a period not exceeding 20 years. Under therevised standard, the acquirer recognizes the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of theprocedures used in the purchase allocation. This standard was applicable to business combinations undertaken on or after April
1, 2010. The Company adopted this standard on April 1, 2010.

d. Cash Equivalents—
Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk ofchanges in value.
Cash equivalents include time deposits, certificate of deposits, commercial paper and bond funds, all of which mature or
become due within three months of the date of acquisition.

e. Inventories—
Inventories are principally stated at the lower of cost, determined by the moving-average method, or net selling value.

f. Marketable and Investment Securities—
The Company classified all marketable and investment securities as available-for-sale securities, which are reported at fair value,with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other than
temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.

g. Allowance for Doubtful Accounts—
The allowance for doubtful accounts is provided for at the aggregate amounts of estimated credit losses based on the individual
financial review of doubtful or troubled accounts and a general reserve for other accounts based on the company’s historical credit
loss experience of a certain past period.
TAIYO HOLDINGS CO., LTD. Annual Report 201133

h. Property, Plant and Equipment—
Property, plant and equipment are stated at cost.
Buildings are depreciated principally using the straight-line method, and property, plant and equipment other than buildings
are depreciated principally using the declining-balance method over the estimated useful lives of the assets.
The ranges of useful lives for major categories are as follows:
Buildings and structures:		

From 7 to 60 years

Machinery, equipment and vehicles:

From 5 to 10 years

Tools, furniture and fixtures:		

From 3 to 8 years

i. Long-Lived Assets—
The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amountof an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of
the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.

j. Software—
Software for internal use is amortized by the straight-line method over the estimated useful life of mainly five years.

k. Research and Development Costs—
Research and development costs are charged to income as incurred.

l. Accrued Bonuses—
The Company and certain consolidated subsidiaries provide accrued bonuses for employees, directors and corporate auditors
based on future projections for the current fiscal year.

m. Retirement and Pension Plans—
Liabilities for retirement benefits are recorded for employees’ pension and severance payments based on the projected benefit
obligations and fair value of plan assets at the balance sheet date.
Prior service costs are amortized on the straight-line method over five years.
Actuarial gains (losses) are amortized on the straight-line method over five years from the following year after incurrence.
Liability for directors and corporate auditors are recorded to state for the payments of their retirement benefits based on theinternal rules.
The Company, at the meeting of the Board of Directors held on April 22, 2010, resolved to abolish the directors’ retirement
benefits system and the agenda item regarding lump-sum payments resulting from said abolishment was approved at the 64th
General Meeting of Shareholders held on June 29, 2010. These payments will be effected as retirement benefits paid at the timeof retirement according to the period of service up to the abolishment of the system.

n. Asset Retirement Obligations—
In March 2008, the ASBJ published the accounting standard for asset retirement obligations, ASBJ Statement No. 18, “Accounting Standard for Asset Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard for Asset Retirement Obligations.” Under this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either
by law or contract that results from the acquisition, construction, development and the normal operation of a tangible fixed asset
and is associated with the retirement of such tangible fixed asset. The asset retirement obligation is recognized as the sum of the
discounted cash flows required for the future asset retirement and is recorded in the period in which the obligation is incurred if areasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period theasset retirement obligation is incurred, the liability should be recognized when a reasonable estimate of asset retirement obligation
can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized byincreasing the carrying amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its

34

TAIYO HOLDINGS CO., LTD. Annual Report 2011

present value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash
flows are reflected as an increase or a decrease in the carrying amount of the liability and the capitalized amount of the related
asset retirement cost. This standard was effective for fiscal years beginning on or after April 1, 2010.
The Company applied this accounting standard effective April 1, 2010. The effect of this change was to decrease operating
income by ¥2 million ($24 thousand) and income before income taxes and minority interests by ¥33 million ($398 thousand).

o. Income Taxes—
The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The
asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

p. Foreign Currency Transactions—
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese
yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in
the consolidated statements of income.

q. Foreign Currency Financial Statements—
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange
rates as of the balance sheet date except for equity, which is translated at the historical exchange rates. Differences arising fromsuch translation were shown as “Foreign currency translation adjustments” under accumulated other comprehensive income in a
separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the
average exchange rates.

r. Derivative Financial Instruments—
The Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange. Foreign exchange
forward contracts are utilized by the Group to reduce foreign currency exchange risks.
The Group does not enter into derivatives for trading or speculative purposes.
All derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statements of income.

s. Per Share Information—
Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average
number of common shares outstanding for the period.
Diluted net income per share is not disclosed because it is anti-dilutive.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to therespective years including dividends to be paid after the end of the year.

t. New Accounting Pronouncements
Accounting Changes and Error Corrections—
In December 2009, the ASBJ issued ASBJ Statement No. 24, “Accounting Standard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting Changes and Error Corrections.” Accounting treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies—When a new accounting
policy is applied with revision of accounting standards, the new policy is applied retrospectively unless the revised accounting
standards include specific transitional provisions. When the revised accounting standards include specific transitional provisions,an entity shall comply with the specific transitional provisions. (2) Changes in Presentations—When the presentation of financial
statements is changed, prior period financial statements are reclassified in accordance with the new presentation. (3) Changes in
Accounting Estimates—A change in an accounting estimate is accounted for in the period of the change if the change affects that
period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior Period Errors—When an error in prior period financial statements is discovered, those statements are restated. Thisaccounting standard and the guidance are applicable to accounting changes and corrections of prior period errors which are
made from the beginning of the fiscal year that begins on or after April 1, 2011.

TAIYO HOLDINGS CO., LTD. Annual Report 201135

3. Marketable and Investment Securities
Marketable and investment securities as of March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2010

2011

2011

Non-current:
Marketable equity securities

¥509

¥552

2

1

24

¥511

¥553

$6,157

Government and corporate bonds
Total$6,133The costs and aggregate fair values of marketable and investment securities at March 31, 2011 and 2010 were as follows:
Millions of Yen
March 31, 2011

Cost

Unrealized Gains

Unrealized Losses

Fair Value

Securities classified as available-for-sale:
Equity securities¥358

Debt securities

2

¥157

¥6

¥509

¥360

¥157

¥6

¥511

Equity securities

¥356

¥200

¥4

¥552

Debt securities

1
¥200

¥4

¥553

Total

2

March 31, 2010

Securities classified as available-for-sale:

Total

¥357

1

Thousands of U.S. Dollars
March 31, 2011

Cost

Unrealized Gains

Unrealized Losses

Fair Value

Securities classified as available-for-sale:
Equity securities$4,313

Debt securities

24

Total

$4,337$1,892$72$6,13324$1,892$72$6,157Available-for-sale securities whose fair values are not readily determined at March 31, 2011 and 2010 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2010

2011

Available-for-sale—Equity securities

2011

¥19

¥19

$229

The information for available-for-sale securities which were sold during the year ended March 31, 2010 was as follows:
Millions of Yen
March 31, 2010

Proceeds

Gains on Sales

Losses on Sales

¥30

¥2

Securities classified as available-for-sale:
Equity securities
Others
Total

¥178
44

3

¥222

¥33

The Group had not sold available-for-sale securities during the year ended March 31, 2011.

36

TAIYO HOLDINGS CO., LTD. Annual Report 2011¥2

4. Inventories
Inventories at March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2011

2010

2011

¥1,860¥1,945$22,410

185

255

2,229

Raw materials and supplies

2,076

1,646

25,012

Total¥4,121¥3,846$49,651

Merchandise and finished products
Work in process

5. Property, Plant and Equipment
Accumulated depreciation at March 31, 2011 and 2010 were ¥16,767 million ($202,012 thousand) and ¥16,163 million,
respectively.

6. Long-Lived Assets
In the fiscal year ended March 31, 2011, the Group recognized an impairment loss with regard to the following assets group:

Use

Idle assets

Location

Category

Nerima Ward, Tokyo

SoftwareMillions of Yen

Thousands of
U.S. Dollars

2011

2011

¥24

$289

These idle assets were written down to their recoverable amounts because there was no prospect of use in the future.
No impairment loss was recognized in 2010.

7. Retirement and Pension Plans
The Company has non-contributory funded defined benefit plans based on the point system and defined contribution plans whichwere established at October 1, 2009. Certain overseas consolidated subsidiaries have defined contribution plans and otherbesides defined benefit plans.
The liability for retirement benefits at March 31, 2011 and 2010 for directors and corporate auditors is ¥112 million ($1,349
thousand) and ¥105 million, respectively. The retirement benefits for directors and corporate auditors are paid subject to theapproval of the shareholders.
The liability for retirement benefits for employees at March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2011

2010

2011

¥(2,178)¥(2,074)$(26,241)

Fair value of plan assets

2,004

1,887

24,145

Unfunded retirement benefit obligations

(174)

(187)

(2,096)

Unrecognized actuarial gains

(63)

(36)

(759)

Unrecognized prior service costs

31

40

373

¥ (206)¥ (183)$ (2,482)

Projected benefit obligations

Liability for retirement benefits

TAIYO HOLDINGS CO., LTD. Annual Report 201137

The components of net periodic benefit costs for the years ended March 31, 2011 and 2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen
2010

2011

2011

Service cost

¥145

¥141

Interest cost

50

45

602

Expected return on plan assets

(26)

(23)

(313)

Amortization of actuarial gains

(26)

(26)

(313)

Amortization of prior service costs

10

10

120

¥153

¥147

$1,843

Net periodic benefit costs$1,747

In addition to the costs shown in the preceding table, other expenses for the defined contribution plans of the Company andcertain overseas consolidated subsidiaries amounted to ¥26 million ($313 thousand) and ¥18 million for the years ended March
31, 2011 and 2010, respectively.
Assumptions used for the years ended March 31, 2011 and 2010 are as follows:
Discount rate
Expected rate of return on plan assets

2011

2010

2.0%

2.0%

1.0%

1.0%

Amortization period of actuarial (gains) losses

Mainly 5 years

Mainly 5 years

Amortization period of prior service costs

Mainly 5 years

Mainly 5 years

8. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon
resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having
independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one
year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for
dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to a certain
limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or
the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but theamount of net assets after dividends must be maintained at no less than ¥3 million.

(b) Increases / Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account that was
charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock.
Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation.
The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders.

(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of
the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the­shareholders which is determined by specific formula.

38

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock.
Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

9. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate,
resulted in a normal effective statutory tax rate of approximately 41% for the years ended March 31, 2011 and 2010.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities at March 31, 2011 and2010 are as follows:
Thousands of
U.S. Dollars

Millions of Yen
2011

2010

¥ 135¥ 137

101

54

1,217

1,283

1,297

15,458

97

108

1,169

2011

Deferred tax assets:
Retirement benefits
Unrealized profit
Deduction of foreign corporation tax carried forward
Allowance for doubtful accounts$ 1,627

Accrued expenses

194

98

2,337

Other

173

110

2,084

Total deferred tax assets

1,983

1,804

23,892(1,349)(1,220)(16,253)

634

584

7,639

Undistributed earnings of associated companies(821)(1,017)(9,892)

Reserve for technique and development

(85)

(66)

(1,024)

Unrealized gains on available-for-sale securities

(61)

(79)

(735)

Other

(83)

(49)

(1,000)Less valuation allowance
Total deferred tax assets, net of valuation allowance
Deferred tax liabilities:

Total deferred tax liabilities
Net deferred tax assets(1,050)(1,211)(12,651)¥ (416)¥ (627)$ (5,012)

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements of income for the years ended March 31, 2011 and 2010 is as follows:
2011

2010

Normal effective statutory tax rate

40.54%

40.44%Tax rates difference relating to overseas subsidiaries(15.76)(14.25)

Elimination of dividends income

1.64

9.21

Deduction of foreign corporation tax carried forward(1.25)

Undistributed earnings of associated companies(2.96)

Non-deductible withholding income tax of dividends

7.30

Indirect foreign tax credit

2.71(7.45)

Valuation allowance

3.10

5.46

Other

(0.08)(0.88)

Actual effective tax rate

32.53%

35.24%TAIYO HOLDINGS CO., LTD. Annual Report 201139

10. Research and Development Costs
Research and development costs charged to income for the years ended March 31, 2011 and 2010 were ¥996 million ($12,000
thousand) and ¥1,016 million, respectively.

11. Financial Instruments and Related Disclosures
In March 2008, the ASBJ revised ASBJ Statement No. 10, “Accounting Standard for Financial Instruments” and issued ASBJ
Guidance No. 19, “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance were applicable to financial instruments and related disclosures at the end of the fiscal years ending on orafter March 31, 2010. The Group applied the revised accounting standard and the guidance effective March 31, 2010.

(1) Summary of Financial Instruments Statusa. Group policy for financial instruments
The Group’s policy is to fund operations internally wherever possible. With large-scale capital projects, the Group borrows funds
from banks or arranges other types of funding, depending on market conditions.
Short-term surplus funds are managed conservatively using only financial instruments that provide high security.
The Group employs derivatives to mitigate known future risks, but does not use such instruments for speculative purposes asa matter of policy.
b. Nature and extent of risks arising from financial instruments
Operating receivables such as trade notes and trade accounts are exposed to credit risks relating to the Group’s customers.
Operating receivables denominated in foreign currencies that arise in the course of conducting overseas business are exposed
additionally to exchange rate fluctuation risk.
Marketable and investment securities mainly comprise bonds and investments in the shares of affiliated business partners.
These investments are exposed to the risk of fluctuations in market prices.
Operating liabilities such as notes and accounts payable—trade typically have payment due dates within four months. The
Group also has some foreign currency-denominated liabilities of this kind that are exposed to exchange rate fluctuation risk.
Foreign exchange forward contracts are used to hedge the exchange rate fluctuation risk associated with foreign currencydenominated operating assets.
c. Risk management system for risks associated with financial instruments
Management of Credit Risk (Relating to Contractual Defaults by Business Partners)
The Company monitors the status of business partners with respect to operating assets regularly, in line with internal regulations
governing the management of credit limits and trade receivables. Besides managing due dates and outstanding balances bycounterparty, the Company also aims to identify as early as possible and alleviate any concerns about non-payment caused bydeterioration in financial condition or other factors.
Consolidated Group subsidiaries also follow the Company’s policy on credit risk management.
Bond investments are limited to high-rated bonds. The associated credit risk is judged to be minimal.
The Group only enters into derivative contracts with highly rated financial institutions as counterparties. The associated credit
risk is regarded as negligible.
Management of Market Risk (Relating to Fluctuations in Exchange Rates, Interest Rates, Etc.)
To manage the currency fluctuation risk associated with foreign currency-denominated operating assets and liabilities, the Company and certain consolidated Group subsidiaries assess related exposures for each currency on a monthly basis.
The market values and financial condition of issuers (most of which are the Group’s business partners) are assessed regularly
for all marketable and investment securities. The ownership of any shares is reviewed on an ongoing basis, depending on market
conditions and the relationships with relevant business partners.
With respect to the management of derivatives, the internal party responsible for the transaction must gain the approval of theauthorized settlement managers to exercise any derivatives contract, in line with internal management regulations specifying thetransactional authority and related limits for contractual exposures. The results of derivatives transactions are reported to theBoard of Directors periodically.

40

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Management of Liquidity Risks Associated with Fund Procurement (Relating to Risk of Non-payment by Due Date)
Appropriate operational funding plans are created and approved for all Group firms. The Group manages any related liquidity risks
and ensures that cash-on-hand is maintained at adequate levels.
d. Fair value of financial instruments and related matters
Fair value of financial instruments is based on market prices where available and rational estimates in the case of unquoted
instruments. Estimated values can vary depending on the assumptions employed for the various factor variables used insuch calculations.

(2) Fair Value of Financial Instruments
The carrying amount, fair value and unrealized gain (loss) at March 31, 2011 and 2010 were as follows:
Financial instruments whose fair values are difficult to measure are excluded from the table below.
Millions of Yen
March 31, 2011

(1) Cash and cash equivalents(2) Time deposits(3) Notes and accounts receivable—trade
Less: allowance for doubtful receivables(4) Investment securities(5) Notes and accounts payable—trade

Carrying Amount

Fair Value¥13,153¥13,153820

820

Unrealized
Gain (Loss)

8,793
(117)
8,676

8,676

511

511

5,326

5,326

(6) Accounts payable—other

973

973

(7) Income taxes payable

609

609

(8) Derivatives—net

22

22¥11,914¥11,914(2) Time deposits

2,261

2,261

(3) Notes and accounts receivable—trade

9,174

March 31, 2010

(1) Cash and cash equivalents

Less: allowance for doubtful receivables(4) Investment securities(5) Notes and accounts payable—trade

(321)
8,853

8,853

553

553

5,483

5,483

(6) Accounts payable—other

526

526

(7) Income taxes payable

400

400

(8) Derivatives—net

25

25
Thousands of U.S. Dollars

March 31, 2011

(1) Cash and cash equivalents(2) Time deposits(3) Notes and accounts receivable—trade
Less: allowance for doubtful receivables

Carrying Amount

Fair Value$158,470$158,470

9,879

9,879

105,940(1,410)104,530

104,530(4) Investment securities

6,157

6,157

(5) Notes and accounts payable—trade64,16964,169(6) Accounts payable—other

11,723

11,723(7) Income taxes payable

7,337

7,337

265

265

(8) Derivatives—net

Unrealized
Gain (Loss)

The amount of allowance for doubtful receivables is deducted from receivables.

TAIYO HOLDINGS CO., LTD. Annual Report 201141

Notes: 1. Measurement of fair value of financial instruments		 (1) Cash and cash equivalents, (2) Time deposits and (3) Notes and accounts receivable—trade		The fair values of the above approximate carrying values due to the short maturity of these instruments.
		 (4) Investment securities		The fair values of investment securities are measured at the quoted market price of the stock exchange for the equity
instruments, and at the quoted price obtained from the financial institution for certain debt instruments. The informationof the fair value for the investment securities by classification is included in Note 3.
		 (5) Notes and accounts payable—trade, (6) Accounts payable—other and (7) Income taxes payable		The fair values of the above approximate carrying values due to the short maturity of these instruments.
		 (8) Derivatives
		Please see Note 12.
2. Carrying amounts of financial instruments whose fair values cannot be reliably determined
Thousands of
U.S. Dollars

Millions of Yen
2010

2011

Investment securities—Unlisted securities

2011

¥ 19

¥ 19

Unlisted securities

115

125

1,385

Investments in partnership

865

865

10,422$229

Investments in unconsolidated subsidiaries:

3. Maturity analysis for financial assets and securities with contractual maturities
Millions of Yen
March 31, 2011

Cash and cash equivalents
Notes and accounts receivable—trade

Due in 1 Yearor Less

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years¥13,973
8,793
Thousands of U.S. Dollars

March 31, 2011

Due in 1 Yearor Less

Cash and cash equivalents$168,349

Notes and accounts receivable—trade105,940

Due after 1 Yearthrough 5 Years

Due after 5 Years
through 10 Years

Due after
10 Years

12. Derivative Financial Instruments
Derivative transactions to which hedge accounting is not applied at March 31, 2011 and 2010 were as follows:
Millions of Yen
March 31, 2011

Foreign exchange forward contracts—selling U.S.$

Fair Value

Unrealized
Gain (Loss)¥1,936

¥(22)

¥(22)

¥849

¥(25)

¥(25)

Fair Value

Unrealized
Gain (Loss)$(265)$(265)

Contract AmountContract AmountDue after One Year

March 31, 2010

Foreign exchange forward contracts—selling U.S.$

Thousands of U.S. Dollars
March 31, 2011

Foreign exchange forward contracts—selling U.S.$

Contract Amount$23,313

Contract AmountDue after One YearThe fair value of derivative transactions is measured at the quoted price obtained from the financial institution.

42

TAIYO HOLDINGS CO., LTD. Annual Report 2011

13. Comprehensive Income
For the year ended March 31, 2010
Comprehensive income for the year ended March 31, 2010 consisted of the following:
March 31, 2010

Millions of Yen

Comprehensive income attributable to:
Owners of the parent¥3,279Minority interests

189

Total comprehensive income¥3,468Other comprehensive income for the year ended March 31, 2010 consisted of the following:
March 31, 2010

Millions of Yen

Other comprehensive income:
Valuation difference on available-for-sale securities¥ 62

Foreign currency translation adjustments

290

Total other comprehensive income¥352

14. Net Income Per Share
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2011 and2010 is as follows:Year Ended March 31, 2011

Basic EPS—Net income available to common shareholders

Millions of Yen

SharesNet Income

Weighted-Average
SharesYen¥3,40325,821,866¥131.78¥3,01125,938,543¥116.08

U.S. Dollars
EPS

$1.59

Year Ended March 31, 2010

Basic EPS—Net income available to common shareholders

Diluted net income per share is not disclosed because there are no dilutive securities.

15. Subsequent Events
The following appropriation of retained earnings at March 31, 2011 was approved at the Company’s shareholders meeting heldon June 28, 2011:

Year-end cash dividends, ¥70 ($0.84) per share

Millions of Yen

Thousands of
U.S. Dollars¥1,781$21,458

16. Segment Information
For the Year Ended March 31, 2011 and 2010
In March 2008, the ASBJ revised ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” andissued ASBJ Guidance No. 20, “Guidance on Accounting Standard for Segment Information Disclosures.”
Under the standard and guidance, an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluatedregularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally,
segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. This accounting standard and the guidance are applicable
to segment information disclosures for the fiscal year beginning on or after April 1, 2010.
The segment information for the year ended March 31, 2010 under the revised accounting standard is also disclosed hereunder as required.
TAIYO HOLDINGS CO., LTD. Annual Report 201143

(1) Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by theCompany’s management is being performed in order to decide how resources are allocated among the Group.
The Group made the transition to the holding company system on October 1, 2010. The business of the Group consists mainly of
one activity, the manufacture and distribution of solder resist for PWBs, among others. Each Group company formulates comprehensive
strategies and deploys business activities, operating under a holding company system whereby the Company is the holding company.
The Group is composed of four reportable segments divided by geographic area, namely “Japan,” “China,” “Taiwan,” and“Korea,” based on our manufacturing and marketing system.
(2) Method of measurement for information for the amounts of sales, profit (loss), assets, liabilities and other items byreportable segments
The accounting policies of each reportable segment are consistent with those disclosures in Note 2, “Summary of Significant
Accounting Policies.”(3) Information about sales, profit (loss), assets, liabilities and other items by reportable segments
Millions of Yen
Reportable Segments
Year Ended March 31, 2011

Japan

Sales:¥ 9,418
Sales to external customers
Intersegment sales or transfers
9,073
Total sales¥18,491
Segment profit¥ 1,014Segment assets
9,303
Other items:
525
Depreciation
Increase in property, plant andequipment and intangible assets
152

China

Taiwan

Korea

Total

Other

Total

Reconciliations

Consolidated¥11,912
4¥11,916¥ 2,814
8,789¥3,219
1,195¥4,414¥  511
4,418¥12,785958¥13,743¥   979
5,816¥37,334
11,230¥48,564¥ 5,318
28,326¥3,03229¥3,061¥  238
1,837¥40,366
11,259¥51,625¥ 5,556
30,163¥(11,259)¥(11,259)¥ (175)
12,688¥40,366¥ 5,381
42,851

168

128

90

911

17

928

200

1,128

108

128

61

449

16

465

62

527

Reconciliations

Consolidated¥40,366

Millions of Yen
Reportable Segments
Year Ended March 31, 2010

Japan

Sales:¥ 9,031
Sales to external customers
Intersegment sales or transfers 11,348
Total sales¥20,379
Segment profit¥ 600
Segment assets
31,931Other items:
848
Depreciation
Increase in property, plant andequipment and intangible assets
170

China

Taiwan

Korea

Total

Other

Total

¥10,349
13¥10,362¥ 2,4639,202¥3,007
1,076¥4,083¥  645
5,214¥ 9,710531¥10,241¥ 9895,133¥32,097
12,968¥45,065¥ 4,697
51,480¥2,95913¥2,972¥  1292,793¥35,056
12,981¥48,037¥ 4,826
54,273

181

122

87

1,238

24

1,262

1,262

16

67

189

442

4

446

446

¥35,056¥(12,981)¥(12,981)¥
17(10,568)¥35,056¥ 4,843
43,705

Thousands of U.S. Dollars
Reportable Segments
Year Ended March 31, 2011

Japan

Sales:
Sales to external customers $113,470Intersegment sales or transfers 109,313
Total sales$222,783
Segment profit$ 12,217
Segment assets
112,084
Other items:
6,325
Depreciation
Increase in property, plant andequipment and intangible assets
1,831

44

TAIYO HOLDINGS CO., LTD. Annual Report 2011

China

Taiwan

Korea

Total

Other

Total

Reconciliations

Consolidated$143,518
48$143,566$ 33,903
105,892$38,783
14,398$53,181$ 6,157
53,229$154,036
11,542$165,578$ 11,795
70,072$449,807
135,301$585,108$ 64,072
341,277$36,530350$36,880$ 2,868
22,133$486,337
135,651$621,988$ 66,940
363,410

2,024

1,542

1,085

10,976205

11,181

2,409

13,590

1,301

1,542

735

5,409

193

5,602

747

6,349

$486,337$(135,651)$(135,651) $486,337$ (2,109) $ 64,831
152,867
516,277

Notes:(a) The “China” segment covers local subsidiaries in China and Hong Kong.
(b) The “Other” segment is not included in reportable segments and covers the business activities of local subsidiaries in the United States of America
and other Asian countries.
(c) Depreciation does not include goodwill amortization.
(d) Segment profit of “Reconciliations” includes unallocated segment loss of ¥151 million ($1,819 thousand), which is mainly composed of the loss
concerning the holding company in 2011.
(e) Segment assets of “Reconciliations” include unallocated segment assets of ¥14,806 million ($178,386 thousand), which are mainly composed of
the assets concerning the holding company in 2011.

For the year ended March 31, 2010
Information about industry segments, geographical segments and sales to foreign customers of the Group for the year ended
March 31, 2010 is as follows:(1) Industry segments
The Group is primarily engaged in manufacture and distribution of solder resist for PWBs, among others. Accordingly, information
by business segment is not disclosed because the Group has one business segment.
(2) Geographical segments
The geographical segments of the Group for the year ended March 31, 2010 are summarized as follows:
Millions of Yen
2010

Japan

Asia

North
America

Total

Eliminations/
Corporate Consolidated

Sales:
Sales to customers¥ 9,031¥24,977¥1,048¥35,056

Inter-area transfer

11,34815

46

11,409¥(11,409)¥35,056

Total sales

20,37924,992

1,094

46,465(11,409)

Operating expenses

19,77920,948947

41,674(11,461)

35,05630,213Operating income

¥

600

¥ 4,044¥  147¥ 4,791¥

52¥ 4,843

Segment assets¥31,931¥20,196¥1,327¥53,454¥ (9,749)¥43,705

Notes:(a) Countries and territories are classified based on geographical proximity.
(b) Major countries or areas other than Japan are as follows:
Asia:
Korea, Taiwan, China, Hong Kong, Singapore
North America: the United States of America(3) Sales to foreign customers
Millions of Yen
2010

North
America

Asia

Europeand Other

Total

Sales to foreign customers¥936¥27,527¥132¥28,595

Notes:(a) Countries and territories are classified based on geographical proximity.
(b) Major countries or areas are as follows:
North America:
the United States of America
Asia:
Korea, Taiwan, China, Hong Kong, Thailand
Europe and other: Germany(c) Sales to foreign customers represent sales of the Group to countries and regions outside of Japan.

TAIYO HOLDINGS CO., LTD. Annual Report 201145

Independent Auditors’ Report46

TAIYO HOLDINGS CO., LTD. Annual Report 2011

Corporate Information(As of March 31, 2011)

Company Overview

Accessing Our Investor
Information Online

Name: TAIYO HOLDINGS CO., LTD.
Head office: 2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan

ProfilePhone: 81-3-5999-1511

The TAIYO GROUP is committed to providing

Established: September 29, 1953

our shareholders and investors with up-to-date

Capital: ¥6,134 million

information on a regular basis. To this end, we

Shares authorized: 50,000,000

have devoted a section of our corporate website

in fact solder resist (known in the U.S. and elsewhere as solder mask), the mainstay

Total number of issued shares: 27,464,000(see link below) to a wide range of information

product of the TAIYO HOLDINGS GROUP. Solder resist is an essential material in

Stock listings: Tokyo

A global leader in solder resist
The green and white ink applied to the surfaces of printed wiring boards (PWBs) are

the production of PWBs used in electronics equipment, from mobile phones andaimed at investors and other stakeholders suchas messages from the President, financial data,

Number of shareholders: 7,671

as well as an overview of management strategy

Major shareholders:PCs to digital appliances and automotive electronic devices.

Shares(thousands)

Shareholdings as apercentage of total
shares issued (%)

Kowa Co., Ltd.

5,247

19.10

Japan Trustee Services Bank, Ltd.

3,424

12.46

Company’s Treasury Stock

2,025

7.37

Mitsuo Kawahara

1,306

4.75

based on superior technical expertise. We aim to enhance corporate value by creating

State Street Bank and Trust Company 505223(Standing proxy: Mizuho Corporate Bank, Ltd.)

945

3.44

superior value through manufacturing excellence.

The Master Trust Bank of Japan, Ltd.

870

3.16

SHIKOKU CHEMICALS CORPORATION

631

2.29

Toshin Yushi Co., Ltd.

538

1.96

Takato Kawahara

486

1.77

NORTHERN TRUST COMPANY (AVFC) SUB A/C
AMERICAN CLIENTS (Standing proxy: The Hongkong
and Shanghai Banking Corporation Limited Tokyo Branch)

451

1.64

15,92857.99

TAIYO HOLDINGS is a specialty chemical manufacturer. We command a share ofaround 50% of the global market for solder resist.
Our business philosophy is to develop and supply products of the highest value

Name

Total

and policies.
http://www.taiyo-hd.co.jp/English/Ir/index/(Notes)1. The number of shares indicated as held by Japan Trustee Services Bank, Ltd. includes 3,412 thousand shares held as part of trust banking services. This includes 1,116
thousand shares entrusted to the Sumitomo Mitsui Banking Corporation Retirement Benefit Trust Account.
2. The number of shares indicated as held by The Master Trust Bank of Japan, Ltd. includes 674 thousand shares held as part of trust banking services.
3. We received a change report for the large shareholding report submitted by Harris Associates L.P. dated November 30, 2010 (date of the change: November 24, 2010) in which
said company claims a shareholding of 1,780 thousand shares of TAIYO stock as of the date of submission. As the Company was unable to verify the effective s­ hareholdings
listed in this change report regarding its shares as of the end of the fiscal year, Harris Associates L.P. has not been included in the above list of major shareholders.
The change report for the large shareholding report submitted by Harris Associates L.P. contained the following information:
Shareholder: Harris Associates L.P.
Address: Two North LaSalle Street, Suite 500, Chicago, IL 60602, USA
Shares: 1,780,700
Shareholdings as a percentage of total shares issued: 6.48

Contents

1 Financial Highlights
2	History
4 Message to Shareholders and Investors
10 Corporate Governance
12 Review of Operations
16 Research and Development

17
20
21
47

CSR
Domestic and Global Network
Financial Section
Corporate Information

Stock Price and Trading Volume(Thousands of shares)(Yen)
18,0006,000

15,0005,000

12,000

4,000

9,000

3,000

6,000

2,000

3,000

1,000

Matters Regarding Forward-looking Statements
This annual report contains forward-looking statements regarding TAIYO HOLDINGS’ current management plans, strategies and other matters. Readers are
cautioned that these forward-looking statements hold inherent risks and uncertainties, and may differ materially from actual results or business performance.

0

2006

n

Stock Price ( left scale)

2007

n

2008

Nikkei Stock Average ( left scale)

2009

2010

2011

0

n Trading Volume (right scale)

TAIYO HOLDINGS CO., LTD. Annual Report 201147

2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
Phone: 81-3-5999-1511

http://www.taiyo-hd.co.jp/English

TAIYO HOLDINGS CO., LTD. Annual Report 2011TAIYO HOLDINGS CO., LTD.

Our Confidence
in Growth
Annual Report 2011
Year Ended March 31, 2011

Printed in Japan