People who create value
Annual Report

2014

Year Ended March 31, 2014

Management Philosophy
We will realize “a pleasant society” by further advancing “every technology”
the Group has and creating a wide range of products to help fulfill the dreams
for the whole world with our innovative products.

Sales by Segment (includinginter-segment sales and transactions)(Millions of Yen)
60,00050,00040,00010,6008,399

11,72330,000

ProfileThe TAIYO HOLDINGS GROUP is the chemical manufacturer that commands a global
market share of more than 60% for solder resist, which is essential for the printed wiring boards (PWBs) used in a variety of electronics products, from such IT devices ascellular phones, PCs, and other digital equipment to ­digital household appliances andin-vehicle electronics equipment.
Established in 1953 as Taiyo Ink Manufacturing Co., Ltd., with the manufacture andsale of printing ink and related material products as its business objective, the TAIYOHOLDINGS GROUP undertook a major transformation of its business domains in
1976, to a business in which solder resist was made its ­mainstay product.
To target further growth this year, which marks the 60th anniversary of its establishment, the TAIYO HOLDINGS GROUP is enhancing “every technology” of all its com­panies based on the technological capabilities that have been accumulated in thedevelopment and manufacture of solder resist. The TAIYO HOLDINGS GROUP willcontinue to supply across the world innovative products that go beyond solder resist.
In addition to maintaining its unwavering No. 1 position in the solder resist field, inthe years to come, the TAIYO HOLDINGS GROUP will be focusing on research anddevelopment and on the cultivation of businesses that will become pillars of new
growth.

20,0003,936
10,835

10,00013,0650Japan

17,791

14,005

2013/3
China

2014/3
Taiwan

Korea

Operating Income by Segment(Millions of Yen)

8,000
7,000

1,074

6,000

1,428

5,000
4,000
3,000

2,617

591
498
1,585

2,000
1,000
0

Japan

1,906

1,686

2013/3
China

2014/3
Taiwan

Korea

Contents
01
02
04
06
08
11

Basic Management Policies
At a Glance
Product Innovation
Research and Development Activities
Interview with the President
Special Feature
12 Japan
13 China
14 Taiwan
15 Korea
16 Supply Chains

18 Review of Operations
22 CSR

24 Corporate Governance
26 Board of Directors and Corporate Auditors
27 Financial Section
28
30
34
36
37
38
40
41
64

Six-Year Summary
Management’s Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report

65 Domestic and Global Network
66 Corporate Information

Basic Management Policies
TAIYO HOLDINGS CO., LTD. (“we” or “our”) has identified its objectives asa corporate group in the Management Philosophy and Basic Management
Policy on the previous page and below. We will develop by continuing the­spirit of our Management Philosophy without changes and reviewing our BasicManagement Policies to match ­changes in the environment and strategy on along-term basis.

Basic Management Policies
1. We will generate profit and increase corporate value, thereby contributing
to the well-being and prosperity of customers, communities, shareholders,and employees.

2. We will discharge our corporate social responsibility with regard to theachievement of our Management Philosophy, including complying with thelaw, protecting the environment, ensuring thorough quality management,
and contributing to society.

3. We will leverage our global system to always provide superior products
and services.

4. We will constantly create opportunities for employees to challenge anddevelop themselves, aiming to have a corporate group composed of people
who are highly motivated to be successful and to achieve goals set bythemselves.

5. We will increase our comprehensive corporate strengths by maximizing
cooperation between the Group companies and strengthen the teamworkof all employees with emphasis on “speed and communication.”

6. We aim to have a group of global companies able to contribute to ther­ealization of a pleasant society by constantly working for technologicalinnovation and creating new products and businesses.

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

TAIYO HOLDINGS CO., LTD. Annual Report 201401

At a Glance

Classification of ProductsGroup

Category

Percentage of Net Sales

Rigid

PWBs

FPDs

PKG & FPC

18.0%

Build-up

2.3%

PDPs/Touch Panels

10.3%

3.3%

OthersHistory

66.1%—

Growth fundamentals built up over 60 years
We are targeting further growth, based as ever on the technological capabilities accumulated in the development
and manufacture of solder resist.

1963 Sept. Taiyo Ink Mfg. Co., Ltd. established.
1970 Aug. Commenced printed wiring board (PWB) marketing.
1973 May	Developed and commenced marketing of epoxy resin thermallycurable single-component solder resist.
1982 Mar.	Ranzan Plant (current Ranzan Facility) established.
1984 June	Exhibited liquid developable solder resistat the JPCA Show.
1988 Sept.	Established TAIYO INK MFG. CO.,
(KOREA) LTD. Commenced locally based
production overseas.
1990 Mar.	Completed construction of Technology
Development Center at the Ranzan
Facility.
1990 Sept.	Launched initial public offering on the over-the-counter market.

02 TAIYO HOLDINGS CO., LTD. Annual Report 20141990 Dec.	Established marketing subsidiary TAIYO AMERICA, INC. in Nevada,
U.S.A.
1992 Feb.	Commenced research and development into plasma display panel
materials.
1993 Jan.	Developed and commenced marketing of package board solder
resist, especially ball grid array (BGA) solder resist.
1993 Nov.	Registered basic patent for alkaline developable solder resist inJapan.
1994 Dec.	Acquired ISO 9001 certification for Head Office and the Ranzan
Facility.
1995 Feb.	Transformed U.S. marketing subsidiary TAIYO AMERICA, INC. intoa manufacturing and marketing company, and commenced local
production.

Sales (Millions of Yen)
Unit Sales of Mobile Phones
Rigid Board
Board Materials
Materials
Rigid
29,23529,23522,993
21,250 22,993
21,25020,289 20,262
20,262
20,289(Million Units)
2,500

2,100

2,000
1,500

1,455

1,440

980

760

1,610

1,710

400

630

520

1,700

980

1,190

2013

2014
Forecast

1,000

2014/3
2010/3
2010/3 2011/3
2011/3 2012/3
2012/3 2013/3
2013/3 2014/3

500

5,600
5,600

5,685
5,685

5,416
5,416

6,763
6,763

7,965

2010/3 2011/3 2012/3 2013/3
2013/3 2014/3

1,111
1,111

1,022
1,022

2011

2012

Non-smartphones
Smartphones

2018
Forecast
Source: Prismark Partners LLC

The Media Tablet Explosion(Million Units)
400

Build-up Board
Board Materials
Materials
Build-up
1,259
1,259

475

0

PKG
PKG Board
Board andand Flexible
Flexible Printed
Printed Circuit
Circuit
Board Materials
Materials
Board
7,965

680

972
972

1,025
1,025

300

300

330

390

360

260
210

200

130

2011/3 2012/3
2012/3 2013/3
2014/3
2010/3 2011/3
2013/3 2014/3
2010/3FPD Materials

0

64

2011

12,307

9,455

2012

2013

2014

(Estimate)

2015

2016

2017

2018

Forecast
Source: Prismark Partners LLC

7,316

6,099
6,099

4,554
4,554

2010/3
2010/3 2011/3
2011/3 2012/3
2012/3 2013/3
2013/3 2014/3
2014/3
OthersOthers
994
994

100

1,443
1,443
972
972

760
760

869
869

Terminology
TermDefinitionPWB Materials

Chemical products for printed wiring boards

FPD Materials

Chemical products for flat panel displays

PDP Materials

Chemical products for plasma display panels

SR“Solder resist ink” or “solder mask”

PKG Materials

Chemical products for semiconductor packages

2010/3
2010/3 2011/3
2011/3 2012/3
2012/3 2013/3
2013/3 2014/3

1996 Sept.	Established local production subsidiary TAIWAN TAIYO INK CO.,LTD. in Taiwan.
1999 Jan.	Established marketing subsidiaries TAIYO INK INTERNATIONAL(SINGAPORE) PTE LTD. in Singapore and TAIYO INKINTERNATIONAL (HK) LTD. in Hong Kong.
2001 Jan.	Listed on the First Section of the Tokyo Stock Exchange.
2001 Apr.	Opened the Ranzan-Kitayama Facility, the Company’s main domestic production base.
2001 July	Established technical support subsid­
iary TAIYO INK (THAILAND) CO., LTD.
in Thailand.
2001 Dec.	Established local production subsidiary
TAIYO INK (SUZHOU) CO., LTD. in
China.

2003 Jan.	Acquired ISO 14001 certification for Head Office and RanzanKitayama Facility.
2010 June	Approval given for resolution concerning transfer to holding company system through corporate divestiture at 64th General Meeting of
Shareholders.
2010 Oct.	Company split implemented and corporate name changed to
TAIYO HOLDINGS CO., LTD.
2013 May	Acquired Taiwanese company ONSTATIC TECHNOLOGY CO.,LTD.’s shares and made it a subsidiary company.

TAIYO HOLDINGS CO., LTD. Annual Report 201403

Product Innovation

Sound technological skills enabling next-generation
product breakthroughs
The World’s Leading Manufacturerof Solder Resist
Printed wiring boards (PWBs) are used in a variety of electronics products, from mobile phones, PCs, and other IT equipment to digital household appliances and in vehicle electronics equipment. Solder resist is an
essential element in these PWBs.

The Market Leader in the Solder Resist Field:
60% Market Share for Solder Resist
The ink, typically green, that is applied to the surfaces of PWBs is, in fact,solder resist (known in the U.S. and elsewhere as solder mask), themainstay product of the TAIYO HOLDINGS GROUP. Solder resist is an
essential material in the production of PWBs used in electronics equipment, from mobile phones and PCs to digital appliances and automotive
electronic devices. The TAIYO HOLDINGS GROUP commands a global
market share for solder resist of more than 60%, making it the No. 1­specialty chemical manufacturer in this field.

785: Number of Patents
Our business philosophy is to develop and supply products of the highest value based on superior technical expertise. Guided by this philosophy, we see our mission as the world’s leading manufacturer as being totirelessly research and develop high-quality products for supply to theworld. Our technical expertise serves as the backbone of our operations,and we are proud to be a company with the manufacturing excellence toserve the world’s needs. We aim to create products imbuing the highest
value, leveraging the various technologies we have amassed as a pioneer
in solder resist.

Electronics Market Forecasts

2013-2018
Compounded Average
Annual Growth Rate
3.8%

(Billions of $)
2,500

2,020
2,000

1,500

1,458

1,602

1,616

1,678

1,731

7.4%
3.8%

1,269

6.0%
1,000

3.1%

Smartphones and Tablets
Servers/Storage/Communications Infrastructure
Automotive Electronics
Other Electronics

500

0

2009

2010

2011

04 TAIYO HOLDINGS CO., LTD. Annual Report 2014

2012

2013

2014
Estimate2018

Note: Includes value of PV modules in total electronics
Source: Prismark Partners LLC

MarketNext-Generation Products
White Color Solder Resist & Paste
Solder Resist for PWBs
Features • Higher reflectance• Excellent discoloration resistance against UV rays and heat• No change in color (red) after gold plating and reflow

Market Trend
Miniaturization and greater
component density

Crack after the reflow process
Conventional typeLEW series

No crack
X25
Resist thickness: 40µm

Photoimageable Solder Resist for Package Substrates
Liquid-Type Solder Resist AUS AZ1 for FC-xGA
Features • Excellent TCT*1 resistance• Excellent reliability with thin coating• Excellent HAST*2 resistance• Other excellent properties

Photoimageable Black Solder Resist for Package Substrates
Features • Excellent opacity • High photosensitivity and fast photo speed• Available in liquid type and dry film type

Required Functions
High sensitivity
High productivity
High resolution
High resistanceHigh insulation reliability
High modulus
High strength

Excellent resolution

Mask Size: 80µm

Line Width: 50µm

SR Thickness: 20µm

Cross Section

High Sensitivity PSR/High Heat Resistance PSR
Solder Resist for PWBs
Features • High sensitivity & High productivity • High resolution

Color variation

Green

Blue

Black

Solder Resist for Inkjet Printers
Solder Resist for PWBs
Features • Simplified process• Dual cure type with good adhesion to substrates

Ink-jet printing*1: Temperature Cycling Test
*2: Highly Accelerated Temperatureand Humidity Stress Test

Printing

Before solder resist coating

Post-cureFree exposure development

Finished goods

TAIYO HOLDINGS CO., LTD. Annual Report 201405

Research and Development Activities

Responding to Needs for Further Miniaturization
and Greater Component Density
One of our key management strategies is to allocate thenecessary and appropriate levels of corporate resources to
R&D, in order to develop products that will be new sourcesof earnings along with solder resist (SR), which is our mainstay product, and to consolidate our position as a leading
company. In fiscal year 2013, ended March 31, 2014, theGroup’s R&D expenditures were approximately ¥1,600 million (an increase of almost ¥400 million over the previous fiscal year). Taiyo is also focusing on securing highly capable
R&D personnel and technicians in Japan and ­overseas.
The issue common to a diverse range of materials that go
into printed wiring boards (PWBs), including SR, is the miniaturization of PWBs, as final electronics products become
more compact and require greater component density, toaccommodate ever higher ultra-miniaturized wiring and insulation patterns. Among these various materials, requirements
are becoming especially more sophisticated in the area of
flexible circuit boards that can be bent and folded.
Amid these developments, in fiscal year 2013, the TAIYOHOLDINGS GROUP launched new products mainly in thefields of conductive silver paste (for use in touch panels andother applications), interlayer insulation materials (for package (PKG) substrates, etc.), and materials with excellent
bending properties (for use in flexible circuits and other applications). The potential market for these products is expected
to be about ¥10,000 million ­annually.
In addition to the developments previously mentioned, theGroup reported progress in R&D that will lead to many
results in the years ahead.

TAIYO HD GROUP Main Proprietary Fundamental Technology

Photosensitivity

ThermalResistance

Insulation

Adhesion

Conduction

R&D Expenditures(Millions of Yen)
1,800

1,594
1,500

1,199

1,200

1,016

996

963

2010/3

2011/3

2012/3

900
600
300
0

2013/3

2014/3

Voice of the Employee
Gao JingJie, R&D Division, TAIYO HOLDINGS CO., LTD.
Current position: Planner in R&D Department I, R&D Division
Job description: Responsible for development of new analyticalmethods for products
What I want to contribute to the Company in the future: I will try todevelop detection and analysis techniques that are more rapid,
sensitive, and efficient to provide strong support for product­quality improvement and for new material research.

06 TAIYO HOLDINGS CO., LTD. Annual Report 2014TAIYO HOLDINGS CO., LTD.
Ranzan Facility

Solder Resist (SR)The TAIYO HOLDINGS GROUP began to supply SR adapted for the
direct exposure method for wiring miniaturization at an early date.
The Group supplies not only the previously existing liquid-type SR
for cutting-edge package (PKG) boards but also dry film-type SR,
which is advantageous for circuit miniaturization. The Group products have been adopted for use in PKG substrates that find­application in ­smartphones.
The Group is placing special emphasis on the development of
SR for PWBs used in automotive devices. Among these, an area ofparticular interest is PWBs used in electric vehicles. This is an area
where it is necessary to overcome difficult operating conditions,since these devices must withstand high temperatures and vibration
as well as sudden high voltage surges. In addition, flexible circuitboards are coming into wider use, and the Group is working todevelop SR for PWB use that meets a wide range of conditions andexpands the market.

SR for PWBs

Conductive Materials
Among electrode materials for use in touch panels installed insmartphones and tablet PCs, the TAIYO HOLDINGS GROUP has
developed silver paste for screen printing, and this material has
been adopted by manufacturers. The Group, in collaboration with its
customers, is also developing a photoimageable material that makes
possible pattern formation to an even-higher definition. In addition,
research is also under way into conductive pastes that do not
require the use of precision m­ etals.

Conductive silver paste

Interlayer Insulation Materials
In line with customer requests, the TAIYO HOLDINGS GROUP isdeveloping dry film-type interlayer insulation materials for use in
PKG substrates. Plans call for responding to needs for interlayer
insulation materials other than dry-film types in the years ahead.

Photoimageable Cover Lay Film
Along with the development of lighter and thinner information terminal devices, the space within PWBs has become smaller, and this isleading to the wider use of flexible substrates that can be folded andstored. To meet the needs generated by these trends, the TAIYOHOLDINGS GROUP has developed photoimageable cover lay filmthat excels in miniature processability, heat resistance, and bendability. The Group is collaborating with its customers to further­commercialize these materials and put them into wider use.

Dry film

Conductive Adhesives
Information terminal devices, as typified by smartphones, make use ofboth hard, rigid substrates and flexible substrates, and, thus far, thesehave been joined with general-purpose plastic connectors. However, torespond to the need for narrow-pitch connections accompanying greater
component density, manufacturers want lighter materials and want tolower connector costs. To meet these needs, the TAIYO HOLDINGSGROUP has developed an anisotropic conductive adhesive with dimensional stability that hardens quickly even at relatively low temperatures.
Photosensitive cover lays

TAIYO HOLDINGS CO., LTD. Annual Report 201407

Interview with the President

The TAIYO HOLDINGS GROUP reported major increases in sales and income in fiscal year 2013,
ended March 31, 2014, as a result of the positive impact of the correction of the high values of the
yen and the implementation of M&A deals. At fiscal year-end, the dividend on equity (DOE) ratio
was 7.9%, and our dividend payout ratio stood at 61.9%. Looking ahead, we will continue our
R&D activities with an emphasis on marketing and have set healthy targets for the longer termof annual net sales of ¥150,000 million and a 20% ratio of operating income to net sales.

A Review of Fiscal Year 2013,
Ended March 31, 2014
Q: Could you please give us your analysisof the business environment and yourcorporate performance in fiscal year
2013?
During fiscal year 2013, a key development for the­electronics parts industry was the expansion in the car
electronics market. Also, demand for products from theinformation terminal industry, including smartphones andtablets, remains firm.
Within this operating environment, the Group’s net
sales rose 22.2%, to ¥44,225 million, and operating
income expanded 72.6%, to ¥7,569 million. Similarly,
net income increased 46.4%, to ¥4,931 million.
Our business policies leading to this growth included
the positioning of ONSTATIC TECHNOLOGY CO., LTD.
(OTC) as a subsidiary and consolidation of OTC’s resultsfrom the second quarter of the fiscal year. Another factor
leading to growth in sales and income was our successin expanding sales of high-function products, including
dry film-type SR. In addition, positioning OTC, which had
been a competitor, as a subsidiary helped us to attainour initial objective of stabilizing product prices. Anothermajor factor contributing to performance, resulting fromthe implementation of government policies, was thedownward correction in the value of the yen against
other major currencies.

Eiji Sato
President and CEO

08 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Preparing for Further Growth
Q: What strategies are you implementing
to conduct marketing activities andstructure supply chains that will
increase Taiyo’s ability to cope withchanges in the operating environment?

Q: Please explain how you are going
to expand market share and create
new products through R&D that will
become major new sources of­earnings.

The TAIYO HOLDINGS GROUP has the top market

We make a clear distinction between divisions that areshare in the global SR industry. Also, since our overseas

responsible for “research” and those engaging in “devel-

sales are a high proportion of our consolidated net sales,

opment.” Research is aimed at generating results over a

we are strongly influenced by trends in the markets for

medium- to long-term time span of three to five years.

final products in the electronics industry. We are also sig-

On the other hand, development refers to our activities

nificantly influenced by the sudden rise of new entrants

to further develop and apply existing technologies overin the semiconductor and other electronics components

the short term. Another point is that we are expanding

industries, because these changes essentially redraw the

our R&D functions even overseas, outside Japan.

industry map. In addition, our business portfolio is easily

When we reach the point in the development process

impacted by fluctuations in foreign currency rates.

where a product can be commercialized between one

For these reasons, we place particular emphasis on

and up to two years from now, we expand the develop-

gathering information immediately, mainly through ourment team to include not only technical personnel but

marketing divisions in Japan, regarding development inalso marketing and production people. Thereby, theour businesses and markets around the world as well asteam becomes a new product team focused especiallythe latest news on new market entrants. To avert foreign

on marketing issues and objectives. Previously, market-

currency risk, we are expanding our initiatives to create a

ing and production members of these new productproduction framework where income and expenditures

teams also had responsibilities in their principal businessare denominated in the same currencies. This means

activities. Now, however, they are engaging full time in

implementing the policy that “products that are sold in

new product development, and their goals are to finish

local areas (markets) are made from materials procured

development and launch products that accurately meetin the local area and manufactured there.”customer needs.

Financial Results(Millions of Yen)

FY3/2013

FY3/2014

Year-on-year change

Rate of change

Net Sales

36,18444,2258,041

22%

Operating Income

4,386

7,569

3,183

73%

Net Income

3,368

4,931

1,563

46%

TAIYO HOLDINGS CO., LTD. Annual Report 201409

Interview with the President

Q: What are your ideas about developing
human resources?
I do not believe that human resources should be developed, at least by the Company alone. Human resources
should proactively develop themselves. What we areemphasizing most in the development of humanresources is providing the environment for people tolearn and try things on their own. In more-specific terms,
we instigate many projects and create opportunities forconfronting the challenges of new business development. Beginning a few years ago, we started sending

personnel to study in universities. The reason is that we
think that getting away from the workplace for a while isnecessary. To begin with, rather than reporting for workon time every day, I believe it is meaningful for people tothink of new ideas outside the workplace and then use
these ideas in their work. I am aiming to have this senseof values take root in our corporate culture.
Also, as one way to increase employee motivation,
we made the decision to introduce an employee shareownership plan at our meeting of the Board of Directors
in May.

Future Objectives and Returning Profits to Shareholders
Q: What is your outlook for performance in fiscal year 2014, ending
March 31, 2015, and what is yourlong-term vision?
In fiscal year 2014, we are looking for increases inboth sales and income. Our outlook is for net sales of¥45,500 million, operating income of ¥7,700 million, andwe paid a regular annual dividend of ¥90 per share forfiscal year 2013 and declared a commemorative dividend of an additional ¥30, for a total of ¥120 per sharefor the full year. This represented a dividend on equity
ratio of 7.9% and a dividend payout ratio of 61.9%.
For fiscal year 2014, we are planning on paying anannual dividend of ¥90 per share.
We operate in an industry where product life cycles

net income of ¥5,000 million. This will imply a ratio of

can be quite short. The TAIYO HOLDINGS GROUP aims

operating income to net sales of 17%, but we want toto stay at the head of its industry by continually introduc-

return to a 20% ratio as soon as possible, and ouring new products and achieving sustained increases inacquisition of OTC should help us along toward thiscorporate performance. In addition, Taiyo strives toobjective. In the long term, we are aiming for net sales ofachieve healthy and sound growth from a multiplicity of¥150,000 million and a 20% ratio of operating income toperspectives and to contribute to the happiness andnet sales. Since we cannot rule out the possibility thatprosperity of its shareholders and other stakeholders. I

the yen may begin to strengthen again, we have towould like to take this opportunity to express my heart-

speed up our i­nitiatives to build a corporate structure

felt thanks to all our shareholders and other investors forthat can cope with a stronger yen.

their continuing interest and understanding of the TAIYOHOLDINGS GROUP.

Q: What will be your approach toreturning profits to shareholders?
We have positioned returning profits through the payment of cash dividends as an important policy, and weare returning a continuous, steady, and high level of profits to shareholders. Our basic policy is “to maintain a dividend on equity ratio of 5% or higher on a consolidated
basis in the medium-to-long term.” Based on this policy,
10 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Special FeatureSelf-Starter Personnel Contribute to Group Company Development
For the TAIYO HOLDINGS GROUP toexpand its global share of the SR
market, to remain on a growth pathdriven by the continued developmentof new products and business, and toachieve sustainable growth, importantconditions will be for each and every
employee to be a self-starter.
To cite one example of what thismeans: Self-starter personnel will set
their own specific goals for expanding
market share and developing new
products. They will be able to draw
up their own road maps from R&D
through manufacturing and sales.
They will be able to experience the joyof realizing these plans and roadmaps. As the word “self-starter”
implies, personnel with these qualities
are not trained. Without fail, they see

and seize opportunities, and train
themselves.
The TAIYO HOLDINGS GROUP
provides opportunities for self-development. These include sending
employees to study at universities,emphasizing on-the-job training, andthe active rotation of employees
among Group companies. In addition,
Taiyo is actively engaged in hiring adiverse range of staff members fromJapan and overseas regardless of
their nationality, recruiting staff graduating from foreign universities andcollege graduates in Japan.
The TAIYO HOLDINGS GROUP
allows its personnel to experience­difficulties and successes in a broad
range of countries and regions as wellas in a diversity of job positions as

they aim to become self-starters. As
a result of their contributions, Taiyo
experiences growth in many countries
and regions, achieves improvement in
performance, and in fiscal 2013 realized major increases in net sales andincome.
Looking ahead, across the Group,
Taiyo will provide opportunities for
top-quality personnel to become
leaders, and, in an environment
where they can gain actual experience as managers, they will aim toseize opportunities to achieve further
growth as self-starters, and ultimately
develop themselves and become the
new management responsible for the
next generation.

TAIYO HOLDINGS CO., LTD. Annual Report 201411

JapanSales

Operating Income(Millions of Yen)

(Millions of Yen)

16,00014,005

1,686

12,000

1,500

8,000

1,000

4,000

500

0

1,906

2,000

13,065

2013/3 2014/3

02013/3 2014/3

Core of Marketing Activities
One of the consolidated companies
located in Japan is TAIYO INK MFG.
CO., LTD., a manufacturing and­marketing subsidiary.
In fiscal year 2013, sales of rigid
substrate materials were approximately level with the previous fiscal
year. Sales of PKG substrate materials were favorable, accompanying
expansion in the market for smartphones. As a result, sales in Japan in
fiscal year 2013 were ¥14,005 million(an increase of 7.2% year on year),and operating income was ¥1,906
million (a gain of 13.1% over the­previous fiscal year).
One of the principal roles of theGroup holding company is to be inoverall charge of strategies for Asianmarkets and promote their implementation. In more-specific terms, theholding company must keep a­watchful eye on the Asian markets as
a whole at all times, identify needs
before they emerge, and create new
products that match these needs
through R&D, based on marketing.
For example, in China, newentrants into the smartphone market
are emerging as companies spin out
or, otherwise, break away from large
companies in the field. Grasping information on their presence is difficult for
locally based companies acting alone.
Therefore, the TAIYO HOLDINGSGROUP’s base in Japan draws on its
marketing capabilities and makes
direct approaches to promising manufacturers. If it is discovered thatthese companies have needs thathave not been encountered thus far,the Group turns its attention to theconsideration of developing new
products answering these needs.
The TAIYO HOLDINGS GROUP
has earned a high ­reputation for both
quality and price in the PWB materials
market in China, and it has won amarket share of about 60%.
Regarding future issues, the Group
conducts thorough­going market
research and sales development
activities, especially with the aim of
not overlooking potential for new customers for PKG substrate materials
and works to substantially raise its
market share through the implementation of various strategies, includingemphasis on customer s­ ervice.
In this way, Japan plays the roleof the core for marketing in Asia andpromotes improvement in performance in the countries of the region.

Voice of the Employee
Eiji Kawai, Sales and Marketing Division, TAIYO INK MFG. CO.,
LTD.

Dummy

Current position: Section I, Sales Department, Sales and Marketing
DivisionJob description: Sales and after-sales s­ ervice to domestic customers
What I want to contribute to the Company in the future: I want toalways grasp customers’ latent needs and reflect this in new product development. I also want our products to be used throughout
the world and for them to bring smiles to people’s faces.

12 TAIYO HOLDINGS CO., LTD. Annual Report 2014TAIYO INK MFG. CO., LTD.

Special Feature

Japan

China

China
Taiwan

Korea

Sales

Operating Income(Millions of Yen)

(Millions of Yen)

20,00017,791(including Hong Kong)
15,000

2,800

2,100

1,585

10,835
10,000

1,400

5,000

700

0

2,617

2013/3 2014/3

02013/3 2014/3

Expanding Market Share through Three Strategies
The consolidated companies locatedin China are TAIYO INK (SUZHOU)
CO., LTD., a manufacturing and marketing subsidiary that was establishedin 2001, and ONSTATIC INK(SHENZHEN) CO., LTD., which isa subsidiary of ONSTATICTECHNOLOGY CO., LTD., which
was acquired in 2013. In ­addition,
the TAIYO HOLDINGS GROUP
has other ­subsidiaries, TAIYO INKINTERNATIONAL (HK) LTD. and
TAIYO INK TRADING (SHENZHEN)
CO., LTD., which are marketing­subsidiaries operating mainly inthe southern China region.
In fiscal year 2013, sales of rigid
substrate materials were strong owing
to expansion of the servers and telecommunications equipment markets.
In addition, the consolidation of

ONSTATIC INK (SHENZHEN) CO.,LTD. contributed significantly to performance. As a result, sales in China
in fiscal year 2013 amounted to¥17,791 million (up 64.2% year onyear), and operating income was¥2,617 million (an increase of 65.2%
over the previous fiscal year) (Thesefigures include transactions among
Group companies.).
The TAIYO HOLDINGS GROUP has
a market share of about 60% in the
Chinese market, but is implementing
three strategies to further increase its
share. First, in the standard productfield, the Group is procuring materials
in the local market to reduce costs.
Second, in the automotive market, theGroup is marketing to automobile
manufacturers that have selected andare using its PWB materials.

The Group’s third strategy is toestablish a deeper market position in
the smartphone sector. The numberof information terminals sold byChinese manufacturers is forecast to
rise to the top level in the world inview of China’s population. New parts
manufacturers based in China areentering the market, and, in somecases, these have developed to
become top-notch companies in theterminal and parts markets. The
Group is searching for new parts
manufacturers, examining their technological capabilities and the customers they supply, and, in the years
ahead, will tap into the vast needs ofthese companies.

Voice of the Employee
Niu ZhouJun, Customer Operations Department, TAIYO INK(SUZHOU) CO., LTD.
Current position: Deputy Manager of Customer Operations
Department
Job description: Inventory management, orders management, andlogistics management
What I want to contribute to the Company in the future: I aim to be a
key person to promote good communications, not only within mydepartment but throughout the company and externally as well.

TAIYO INK (SUZHOU) CO., LTD.
Description of Business: Manufacture
and marketing of PWB materials

TAIYO HOLDINGS CO., LTD. Annual Report 201413

Taiwan

Sales

Operating Income(Millions of Yen)

(Millions of Yen)

10,000

1,600

1,428

8,399
7,500

5,000

1,200

800

3,936

498
400

2,500

0

2013/3 2014/3

02013/3 2014/3

Substantial Rise in Sales and Income due to Consolidation of OTC
The consolidated company locatedin Taiwan is TAIWAN TAIYO INK CO.,LTD., a manufacturing and marketing
subsidiary, which was established as
the TAIYO HOLDINGS GROUP’s firstcompany in Taiwan in 1996. At present, other Group companies in
Taiwan are ONSTATIC TECHNOLOGYCO., LTD. (OTC) and three other­subsidiaries, which are also actively
engaged in manufacturing and­marketing.
In fiscal year 2013, sales of rigid­substrate materials were favorable
accompanying the expansion in themarkets for servers and car electronics. In addition, the consolidation of
OTC into the TAIYO HOLDINGSGROUP made a major contribution tofinancial results. As a consequence,sales in Taiwan amounted to ¥8,399
million (an increase of 113.4% year
on year), and operating income
amounted to ¥1,428 million (a gainof 186.7% over the previous fiscal
year) (These figures include transactions among Group companies.).
The economy of Taiwan is heavily
dependent on exports, and, among
export products, the largest contributor is electronics devices. However,as seen in the industrialized countries,
Taiwanese manufacturers are shifting
their production facilities to theemerging countries. PWB producers,
in particular, have moved most of
their production to China and othercountries. However, R&D divisions
remain in Taiwan, and, in general,decision making regarding thes­ election and adoption of new materials to be used in new products takes
place in Taiwan. In addition, for semiconductors and the other high-value-­
added components in core products,
the processes from R&D through­production continue to be locatedin Taiwan. Accordingly, the TAIYOHOLDINGS GROUP is working to
expand its sales in Taiwan and ismaking aggressive product proposals
to the R&D divisions of PWB manufacturers and other electronics-­
related and other companies,
including semiconductor ­companies.

Voice of the Employee
Chieh Chun Chieh, R&D Department, ONSTATIC TECHNOLOGYCO., LTD.
Current position: Assistant and Team Leader of R&D Department
Job description: Technical operation of R&D laboratory
What I want to contribute to the Company in the future: I have been
involved in the establishment of the technical foundation since the
R&D Department was started. My experience includes manufacturing, color tuning, and lab scale experimental testing. I wantto contribute to upgrading product performance through new
product R&D.

14 TAIYO HOLDINGS CO., LTD. Annual Report 2014

ONSTATIC TECHNOLOGY CO., LTD.

Special Feature

Korea

Sales

Operating Income(Millions of Yen)

(Millions of Yen)

14,000

1,200

1,074

11,723
10,50010,600

900

7,000

600

3,500

300

0

0

2013/3 2014/3

591

2013/3 2014/3

Concentrating on Countermeasures for “Hollowing Out”
The TAIYO HOLDINGS GROUP’s
consolidated company in Korea is
TAIYO INK MFG. CO., (KOREA) LTD.,a manufacturing and marketing subsidiary established in 1988.
In fiscal year 2013, sales of dry film
for PKG substrates, which have ahigh margin, were favorable owing to
the expansion of the smartphonemarket. On the other hand, the unit
sales ­volume of flat panel display(FPD) materials, which are lower-margin products, declined substantially.
Also, sales prices of these materials,
which use silver as a raw material,
declined along with the drop in themarket price of silver. As a result,sales and operating income
decreased. As a consequence, sales
in Korea amounted to ¥10,600 million(a decline of 9.6% year on year), while
operating income stood at ¥1,074
million (an increase of 81.6% over theprevious fiscal year) (These figures
include transactions among Group
companies.).
Even among other Asian countries,
the stagnation in Korea has been particularly prolonged, and one of thefactors that can be cited for this is the“hollowing out” of the manufacturingsector due to rising wages and otherfactors. Especially over about the last
two years, the rate of hollowing out
has been quite pronounced. Thishas had an impact on the TAIYOHOLDINGS GROUP, and sales ofmaterials for FPDs have fallen to
about one-third of the peak level. As
a result, the ratio of the Group’s sales

accounted for by sales in Korea has
decreased. However, the Group has
maintained its share of approximately
60% in PWB materials, including dry
film for use in PKG substrates. Taking
account of the possibility that substantial further hollowing out may takeplace in Korea going forward, theGroup will focus on further structuring
its business strategy for that market.

Voice of the Employee
Seungchan Lee, Sales Team, TAIYO INK MFG. CO., (KOREA) LTD.
Current position: Manager of Sales TeamJob description: Sales and client management for Korean customers of products made in Korea and at overseas locations
What I want to contribute to the Company in the future: I will meet andmanage customers’ needs speedily to earn trust and strengthen
relationships with customers and end users to prevent competitorsfrom gaining market share. I will also expand sales of new products and raise profits. These two points are the contribution to the
Taiyo Group that I want to make.

TAIYO INK MFG. CO., (KOREA) LTD.
Description of Business: Manufacture
and marketing of PWB and FPD materials

TAIYO HOLDINGS CO., LTD. Annual Report 201415

Supply Chains
Network Covering the Global Market
In fiscal year 2013, about 86% of TAIYOHOLDINGS GROUP sales were accounted for by PWB materials. The principal
centers for production of PWBs haveshifted from the United States and Europe
to Japan and then to emerging countries,
and, in recent years, production in China
has risen rapidly.
While responding to these globalchanges in the business environment,
the Group has conducted transactions
with PWB manufacturers around theworld. The Group has been aware that its

most-important mission is to provide
superior products and services at all times
and has worked to expand this network tocover global markets. Today, the TAIYOHOLDINGS GROUP has manufacturingand marketing bases in Japan, China,
Taiwan, Korea, and the United States aswell as marketing and technical service
centers in Shenzhen and Hong Kong in
China, Singapore, and Thailand.
The quality of the TAIYO HOLDINGSGROUP products and services together
with the agility of its global network hasenabled the Group to secure the leading
share in SR in global markets, and overseas sales have climbed to account for
about 80% of its net sales. Further growthis expected in the medium-to-long term indemand for PWB materials for use in electronics components around the world.
The Group will step up its activities todevelop its businesses globally and will
endeavor to respond to burgeoning
demand.

Quality Management in the Overall Supply ChainTo provide superior products and services
at all times to customers throughout theworld, activities to improve quality throughthe Company’s supply chain are indispensable. First, to enable customers to
select the optimal products for theirneeds from the diverse lineup of items the
TAIYO HOLDINGS GROUP offers, marketing personnel in charge endeavor tomatch product specifications with client
requirements through close communication. When client requirements exceed
the specifications of existing products,
this is communicated to product­development divisions, designs are drawn

up, and, after production process plans
are prepared by the manufacturing divisions, the Group works to provide customers with products that match their
specifications.
To enhance quality and provide forsmooth deliveries to customers, anotherimportant process is materials procurement. To ensure the stable procurementof both volumes and quantities, the
TAIYO HOLDINGS GROUP conducts
audits of supplier factories and makes
periodic assessments of their operations,while also setting standards for theacceptance of raw materials and ensuringthat deliveries of raw materials that are
not up to standard are prevented.
Moreover, the Group has structured aquality management system based on
ISO 9001 at each of the Group’s production bases.
Finally, the Group is aiming to win ahigh level of customer satisfaction by creating a detailed management system that
extends from packing and shipment
through to deliveries. The Group is also
providing follow-up after deliveries and isasking for assessments as well as feedback from customers regarding eachstage of the supply chain.

Offering Advantages to Customers through “Local Production
and Local Procurement”
The TAIYO HOLDINGS GROUP does
business with customers in virtually every
country. In many cases, product sales
prices are quoted in foreign currencies,
and one management issue is that fluctuations in exchange rates have an impact
on the Group’s performance. To deal with
this, the TAIYO HOLDINGS GROUP is
promoting the implementation of “local
production and local procurement” or, inother words, “products that are sold in
local areas (markets) are made from
16 TAIYO HOLDINGS CO., LTD. Annual Report 2014

materials procured in the local area andmanufactured there.” By increasing thepercentage of raw materials that are procured locally, the Group is working to
respond by having income and expenditures denominated in the same currency.
“Local production and local procurement” leads to strengthening the Group’s
capabilities for responding to client
requests and needs. For example,
through this approach, the Group candevelop products that meet customers’

needs in the local markets quickly, andlead time for filling orders can be shortened. This approach is also effective forfacilitating business continuity plans(BCPs) because it means that prices ofraw materials can be lowered and thatmultiple supply chains can be structured.
Especially regarding lead time, the Groupis rapidly making preparations for shortening required delivery times to meet clients’requests and put into place systems thatwill enable the next-day delivery of orders.

Special Feature

Global Network
TAIYO INK (SUZHOU) CO., LTD.
TAIYO INK TRADING(SHENZHEN) CO., LTD.

TAIYO INK MFG. CO., (KOREA) LTD.

ONSTATIC INK (SHENZHEN)
CO., LTD.
TAIYO HOLDINGS CO., LTD.
TAIYO INK
(THAILAND) CO., LTD.

TAIYO AMERICA, INC.
TAIYO INK MFG.
CO., LTD.

TAIYO INK INTERNATIONAL(SINGAPORE) PTE LTD.

TAIWAN TAIYO INK CO., LTD.
TAIYO INK
INTERNATIONAL (HK) LTD.

ONSTATIC TECHNOLOGY CO., LTD.

Production and Marketing Subsidiaries
Marketing or Technical Support Subsidiaries

Voice of the Employee
You Te Chen, Manufacturing Department,
TAIWAN TAIYO INK CO., LTD.

Sayato Sumiyoshi, Administration
Division, TAIYO INK MFG. CO., LTD.

Current position: Manager of Finishing
Section, Manufacturing Department,
TAIWAN TAIYO INK CO., LTD.

Current position: Chief of Operation
Section, Administration Department,
Administration Division

Job description: Management and process
improvement of finishing work in manufacturing

Job description: Domestic and overseas
order processing, domestic and overseas
shipping management, inventory management

What I want to contribute to the Company in the future:1) Simplify production flow and improve productivity2) Eliminate waste and lower costs
3) Make the workplace friendly and fun

What I want to contribute to the Company in the future: I want tobuild a system to respond to customer requests flexibly, as weare a customer-interfacing department, and provide even better
service.

TAIYO HOLDINGS CO., LTD. Annual Report 201417

Review of Operations

Geographical Segment Review
Breakdown of Net Sales

Net Sales (Millions of Yen)(including inter-segment sales and transactions)Japan

18,491

11,788

25.8%
2011

2012

13,0652013

14,005

2014(Years ended March 31)

China(including Hong Kong)

17,791

11,91632.8%
2011

10,637

10,835

2012

2013

2014

(Years ended March 31)

Taiwan

8,399

15.5%

4,414

2011

3,706

3,936

2012

2013

2014

(Years ended March 31)

Korea

16,66813,743
11,723

10,600

19.5%
2011

2012

2013

2014

(Years ended March 31)

Other
Regions

3,525
3,061
2,619

6.5%
2011

2012

(Years ended March 31)

18 TAIYO HOLDINGS CO., LTD. Annual Report 2014

2,854

2013

2014

Segment Profit (Millions of Yen)

1,906
1,686

1,014

990

2011

2012

2013

Performance Overview

Consolidated Group
Subsidiaries

The consolidated company located in Japan is TAIYO INK MFG. CO.,LTD., a manufacturing and marketing subsidiary.
Sales of rigid board materials remained unchanged, with no major fluctuations. Sales of PKG board materials were strong due to the expansionof the smartphone market.
As a result, net sales amounted to ¥14,005 million (up 7.2% year onyear) with segment profit at ¥1,906 million (up 13.1% year on year).

TAIYO INK MFG. CO.,LTD.

The consolidated companies located in China are TAIYO INK (SUZHOU)
CO., LTD. and ONSTATIC INK (SHENZHEN) CO., LTD., manufacturing andmarketing subsidiaries, and TAIYO INK INTERNATIONAL (HK) LTD. and
TAIYO INK TRADING (SHENZHEN) CO., LTD., marketing subsidiaries
operating mainly in the southern China region. ONSTATIC INK(SHENZHEN) CO., LTD. is a subsidiary of ONSTATIC TECHNOLOGY CO.,LTD., which was acquired during the current fiscal year.
Lower-priced rigid board materials performed favorably due to the
expansion of the market of products for servers and telecommunications
equipment.
As a result, net sales amounted to ¥17,791 million (up 64.2% year onyear) with segment profit at ¥2,617 million (up 65.2% year on year).

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

The consolidated companies located in Taiwan are TAIWAN TAIYO INK CO.,LTD., and ONSTATIC TECHNOLOGY CO., LTD. (and another three subsidiaries), both manufacturing and marketing subsidiaries.
Performance was strong for rigid board materials owing to the expansionof the market of products for servers and car electronics.
As a result, net sales amounted to ¥8,399 million (up 113.4% year on year)with segment profit at ¥1,428 million (up 186.7% year on year).

ONSTATIC TECHNOLOGYCO., LTD. (OTC)TAIWAN TAIYO INK CO.,LTD.

The consolidated company located in Korea is TAIYO INK MFG. CO.,
(KOREA) LTD., a manufacturing and marketing subsidiary.
Sales volumes of FPD materials, which have a low profit margin, declined
substantially, while sales amounts were also down considerably comparedwith the previous fiscal year due to a fall in the price of silver, which has aconnection with sale unit prices of FPD materials. On the other hand, dry film
for PKG boards, which have a high-profit margin, performed favorably
because of the expansion of the market for smartphone-related products,
and profit increased year on year.
As a result, net sales amounted to ¥10,600 million (down 9.6% year onyear) with segment profit at ¥1,074 million (up 81.7% year on year).

TAIYO INK MFG. CO.,
(KOREA) LTD.

The other consolidated companies are TAIYO AMERICA, INC. and TAIYOINK INTERNATIONAL (SINGAPORE) PTE LTD.
At TAIYO AMERICA, sales were roughly at the same level with the same
period of the previous fiscal year.
TAIYO INK INTERNATIONAL (SINGAPORE) performed steadily due to the
expansion of the market of products for car electronics in Thailand.
As a result, net sales amounted to ¥3,525 million (up 23.5% year on year)with segment profit at ¥453 million (up 39.8% year on year).

TAIYO AMERICA, INC.
TAIYO INK
INTERNATIONAL(SINGAPORE) PTE LTD.

2014

(Years ended March 31)

2,814

2,617

1,751

2011

2012

1,585

2013

2014

(Years ended March 31)

1,428

511

470

498

2011

2012

2013

2014

(Years ended March 31)

1,074

979

650

2011

2012

591

2013

2014

(Years ended March 31)

453
324
238

2011

273

2012

2013

2014

(Years ended March 31)

TAIYO HOLDINGS CO., LTD. Annual Report 201419

Analysis of Operating Results
In the global economy during the fiscal year ended March 31,

Operating under these conditions, net sales for the current

2014, the U.S. economy remained on a moderate recovery

fiscal year amounted to ¥44,225 million (up 22.2% year on

track due to the expansion of exports and an increase in con-year).

sumer spending, and the European economy showed signs ofIn the PWB (printed wiring board) materials market, botha recovery although unemployment rates are still high. On thethe sales volume and the sales amount increased year onother hand, uncertainty over China’s economy was not wiped

year, partly due to contributions of the inclusion of ONSTATIC

out, as seen by the continued slowdown of economic growth

TECHNOLOGY CO., LTD. in the scope of consolidation andin that country. The Japanese economy started recovering

the weak yen, in addition to robust sales of rigid board materi-moderately, as seen by the recovery of exports and increases

als. As a result, net sales of PWB materials were ¥38,226 mil-in consumer spending as the correction of the strong yenlion (up 36.5% year on year).

advanced following proactive monetary and financial policies.

Net sales of FPD materials, mainly consisting of PDP materi-

In the electronics components industry, in which the Groupals, dropped to ¥4,554 million (down 37.7% year on year),

operates, the market of products for car electronics expanded,owing to lower sales volume and a fall in the unit price driven

and demand for products for smartphones and tablet devices

by a significant drop in the market price of silver, which consti-

was firm.

tutes one of the products’ raw materials.

Sales Results by Product Group Category(Millions of Yen)

50,00040,00030,00020,000

Rigid board materials
PKG board and flexible printed circuit board materials
Build-up board materials
FPD materials
Others

10,000

2014

0

2011

2012

2013

2014

Product Description
The Group’s products divide principally into the two categories of printed wiring board (PWB) materials and flat panel dis-

TAIYO HOLDINGS GROUP Product Segments

play (FPD) materials. The Group is also utilizing the elemental
technologies cultivated in these existing segments to develop
new fields and products targeting the electronic components

Printed Wiring Board(PWB) Materials
Package Board
Materials

industry.
PWB materials are grouped into the three categories of (1)rigid board materials, (2) package and flexible printed circuitboard materials, and (3) build-up board materials. The key
contributor is solder resist (SR), the Group’s mainstay product(see chart).

20 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Rigid Board
Materials

Flexible Printed
Circuit Board
Materials
Build-up Board
Materials

Flat Panel Display(FPD) Materials
Plasma Display
Panel(PDP) Materials

Development of
New Product Lines

Review of Operations
PWB Materials
PWB materials are chemicals used in PWB manufacturingnames, numbers, positions, or other information that relates

processes. They have been the traditional mainstay of theto mounted electronic components, and (3) interlayer insula-Group’s business. PWB materials are further classified into

tion materials, which are used in build-up substrates to sepa-

SR and non-SR products.

rate the various layers of mounted components.

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

SR generates a large proportion of Group sales. The GroupIt forms an insulating layer to protect the underlying board

was the pioneering inventor of alkaline developable SR, a major­circuit pattern. SR can be divided into “photoimageable”

variant of photo­and other types. Other important SR categories are LPI

imageable SR (the­(liquid photoimageable) and DFR (dry film).

current mainstream

Non-SR products include (1) hole plugging ink, used totype), and com-

­provide an insulating in-fill for the through-holes that connectmands the leading

electronic circuits in various PWB layers, (2) legend (orshare of the global­marking) ink, which is used on PWB surfaces to indicate

SR market.

FPD Materials
Within FPD materials, plasma display panel (PDP) materials

pattern pastes to create the black patterns for generating

for use in flat-screen TV panels account for the majority ofimage contrast. FPD materials now constitute the Group’s

sales. The Group manufactures and sells conductive pastes,

second-largest product segment behind PWB materials.

which function as the electrodes in plasma TV sets, and black

New Fields and Products
TAIYO HOLDINGS is undertaking R&D initiatives to expand

displays with clearer pictures and ever-smaller electronic com-

our product groups into the electronics and optical compo-

ponents with improved thermal management measures. At

nents fields at the same time as we develop our adhesive andthe same time, the industry is moving away from glass materi-­thermal management technologies and other element

als towards polymers. TAIYO HOLDINGS proposes new prod-­technologies.

ucts that anticipate these technological trends as well as is

In order to exchange more data more quickly, with lighter,developing innovative products in its existing product fields.

more-compact products, the electronics industry is demanding

1.

Meeting Optical
Demands2.

Meeting Needs for
Miniaturization

Example of application: Solder resist shown ingreen areas

3.

Meeting Needs for ThermalManagement Measures

4.

Meeting Needs for
Polymer Materials

White color solder resist

TAIYO HOLDINGS CO., LTD. Annual Report 2014

21

CSR
Since its establishment in September 1953, TAIYOIn order to fulfill these responsibilities, the TAIYOHOLDINGS has continued to grow thanks to the trust placed

HOLDINGS GROUP has established a corporate CSR

in it by the stakeholders, including its shareholders, custom-

Philosophy and a Code of Conduct, and is involved in a vari-ers, and business partners. In order to continue to respond to

ety of CSR activities through its CSR organization comprisingthat trust and grow together, all directors and employees ofvarious management systems and committees.

the TAIYO HOLDINGS GROUP will fulfill its corporate social

The directors and employees of the TAIYO HOLDINGS

responsibilities by taking a consistently forward-looking

GROUP will strive to create a company that is trusted byapproach to business activities and observing ethics and laws.

­society and is actively involved in CSR activities.

CSR Philosophy
We will promote our corporate social responsibilities, 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 e will observe laws and other social norms, and, understanding the spirit thereof, will act
W
openly and fairly.

2. Workplace Environment

We will respect employees’ human rights, and create a workplace that is fair and free of­discrimination.

3. Fair Business Dealings

We will deal with all our business partners in an honest manner and conduct business withthem based on 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 ofthird 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.

Management Philosophy

CSR Philosophy

Requirements/expectations
Share price, environmental protection,
high-functionality products

Code of Conduct
Provision
Social contribution, dividends, fairbusiness dealings, tax payment

Management
Internal controls

Information disclosure
Website, CSR report, business report

Green procurement
Environmentallyfriendly products

Environment
Evaluation
Rating, awards, degree of customer
satisfaction

22 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Environment management
substance reduction
Prevention of
global warming

Risk management
Information
securityCompliance

Social contribution

Society
Employment,
human rights,
occupational safety

Sustained development/stabilizationof management

Stakeholders(Shareholders, customers, business partners,
regional communities, employees)

Communication
with stakeholders

Relationship with Shareholders

Environmental Protection Activities

Performing IR Activities

Use of Electric Cars and Installation

TAIYO HOLDINGS maintains a basic policy of ensuring accu-

of Recharging Facilities

racy, fairness, and promptness in the performance of IR activi-

The TAIYO HOLDINGS GROUP introduced electric vehicles

ties. On the basis of this policy, we deliver to shareholders

for corporate use in fiscal 2011 as part of its activities toand investors information effective for making investment

reduce CO2 emissions. In fiscal 2013, the Group added two

decisions.

more electric vehicles with the aim of even more effectively

In terms of specific IR activities, we publish an annual

lowering CO2 emissions. With the addition of the new electricreport, offer IR information on our website, hold financial

cars, more employees are using these vehicles, and weresults briefings for analysts and institutional investors, andexpect that this will contribute to raising the awareness ofmeet individually with institutional investors, among othercontributing to the environment.
In addition, along with the increase in electric power used

activities.

by these vehicles, the Group has installed battery-recharging

Relationship with Suppliers

units in various locations in Japan. This will provide a

Carry Out Supplier Assessments and On-Site Audits

more-convenient usage environment, and employees will be

In order to conduct business transactions with suppliers inable to drive from one Group location to another and use thea relationship of trust, the TAIYO HOLDINGS GROUP carries

vehicles for other purposes. Going forward, the Group willout supplier assessments, clarifies anything necessary, andcontinue to actively

proceeds with the cooperation of the supplier.

support environ-

We carry out on-site audits of our suppliers of raw materials

mental preservation.

and products, with the understanding and approval of our
suppliers, as a way to maintain and improve the quality,­environmental friendliness, and delivery of procured goods.

Relationship with Local Communities and Society

The battery-recharging unit

Contributing to Regional Revitalization
Taiyo’s Ranzan Facility and Ranzan-machi, Saitama
Prefecture, where TAIYO INK MFG. CO., LTD., is located, arethe birthplace of Yoshinaka Kiso, a well-known figure in
Japanese history. Each year, TAIYO HOLDINGS sponsors a

Protection of Great Purple Emperor,
Japan’s National Butterfly

booth at the Ranzan Festival, which continues the history and

Designated Japan’s national butterfly, the great purple

traditions of the area.

emperor (Sasakia charonda) is found in nettle trees (Celtis

As in the previous year, in 2013, our booth was designed

sinensis), on which it feeds during the larval stage and on

to promote interchange with the people of the region, withwhich adults deposit eggs. The butterfly inhabits the densely

children’s toys and other playthings for sale and an area towooded areas in the town of Ranzan in Saitama Prefecture,acquaint visitors with our activities. All of the sales on the day

including on two species of oak tree, Quercus serrata andof the festival were

Quercus acutissima, which produce the sap on which theadult butterflies feed.

donated to the local

TAIYO INK undertakes protection activities in conjunctionsocial welfare coun-with the town, for instance by creating an environment within

cil and used for

our Ranzan Facility site in which the butterflies can easily­welfare purposes.

pass the winter.
Employees also take anactive part in the volunTaiyo Group’s boothteer activity of creating
secondary forest.

TAIYO HOLDINGS CO., LTD. Annual Report 201423

Corporate GovernanceConstruction of Sound Management Structures

The Board of Directors is composed of seven Directors, one

We have a holding company structure. Having Group man-of whom is an outside director. The Board of Corporate

agement and strategic functions, the holding company aims

Auditors is composed of four Corporate Auditors, two of

to develop and improve our strategies while optimizing thewhom are outside auditors. Meetings of the Board of

allocation of resources. The operating subsidiaries under the

Directors are held regularly each month, but the Board canholding company can act promptly and autonomously. This

also hold extraordinary meetings if necessary. The Board

system enables us to respond better to customers acrossdiscusses and resolves important matters, and also over-various markets while also speeding up decision making andsees the execution of duties by the Representative Director.

boosting operational efficiency. Its aim is to increase profits

Corporate Auditors, including outside auditors, attend mostand help us build corporate value.

meetings of the Board and Executive Committee, whichconvene on a number of occasions each year, to engage in

Basic Thinking on Corporate Governancediscussions and to monitor proceedings in detail. Two of the

In line with our Management Philosophy and Basic

Corporate Auditors are full-time auditors with the power toManagement Policy, we aim to prosper together with our cus-

submit questions to the Group employees. The system

tomers, regional communities, shareholders, employees, busi-

enables the Corporate Auditors to conduct adequate moni-

ness partners, and other stakeholders. We also believe it istoring of the execution of duties by Directors.

necessary for us to embrace social responsibilities as well as

The Internal Audit Department, which has a staff of two

seek to generate profits. To this end, we seek to promote

employees, is fully independent of other Group operations. It

management transparency and to fulfill our disclosure obliga-

undertakes an audit of all departments of the holding com-

tions to support the Company’s continued prosperity.

pany and operating subsidiaries based on the annual audit
plan approved by the Board of Directors. Results of these

Corporate Governance Structuresaudits are reported to the Board of Directors and Board of

Our corporate governance system is centered on the

Corporate Auditors.

Board of Directors and the Board of Corporate Auditors,
whose members are both approved by resolutions at theInternal Controls

Shareholders’ Meeting. We have also adopted a system of

We regard the construction of a system of internal controls as

Executive Officers to separate management oversight froma critical part of corporate governance. These controls include

operational execution. The Executive Officers appointed to

the five components described below.

serve on the Executive Committee are General Managers of(1) Keep all Directors and employees informed about our CSR

divisions of TAIYO HOLDINGS and representatives of over-(Corporate Social Responsibility) Philosophy and the Code ofseas subsidiaries. This setup aims to promote faster opera-

Conduct.

tional execution as well as right strategic decision making.

Shareholders’ Meeting
Reports to

Appoints and dismisses

Board of Directors

Reports to
AuditsInstructs

Reports to

Appoints
and dismisses

President and CEO
Executive Officers
Reports toReports to

Appoints and dismisses

Board of Corporate Auditors
Cooperation

Cooperation

Audits

Office of Internal Audits
Internal audits

Departments and Subsidiaries

Accounting Auditors
AuditsReports to

Instructs

24 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Appoints and dismisses

Cooperation

(2) The appointment of one Director as Chief Complianceresult, the Group confirmed that it could respond rapidly in

Officer to chair the Ethics Committee and lead a team pro-the event of an earthquake. We also verified that we had

moting internal business ethics.

secured a method of communication to use immediately after(3) An internal hotline to enable employees to report compli-

an earthquake, and that time is needed to confirm the safety

ance violations or any related concerns to an external lawyer.

status of those employees who are on leave when an earth-(4) Regular reports by the Chief Compliance Officer to thequake occurs.

Board of Directors concerning the ethics and complianceIn this context, the Risk Management Committee used thisframework status.

post-earthquake information as a basis to review a manual(5) Establishment of an independent Internal Audit

describing the emergency situation caused by a fire or earth-

Department that reports audit findings to the Board of

quake, and how to respond afterwards. This manual forms

Directors and the Board of Corporate Auditors, and wherepart of the Risk Management Manual, and is meant to benecessary to the accounting auditors as well.

used in such an emergency. We ensured that the manual is

To maintain the reliability of our financial reporting, we have

simply written and clearly lists what must be done. We also

also developed a system of internal controls to ensure thatcombined the antidisaster drills that had been conducted at

effective and appropriate internal control reports are pro-each base hitherto, and performed a joint drill at three

duced, based on the provisions of the Financial Instruments­domestic bases.

and Exchange Law.

Executive Compensation
Risk Management

The Group policy on executive compensation is to set in an

The Group has studied and instituted ways of mitigating, orobjective and transparent way for executive compensationof taking appropriate steps in response to, a variety of risks

levels that provide incentives to executives to increase cor-

associated with business activities.

porate value and shareholder value, while also being proper-

One Director is appointed as “the Director in charge of risk

ly justifiable. Executive compensation is deliberated by the

management.” Moreover, the department in charge of risks

Compensation Committee, a body that includes an outside

occurring in the course of natural work operations evaluates

auditor. The Directors’ compensation is decided by theand responds to these risks. Furthermore, the Risk

Board of Directors and the Corporate Auditors’ compensa-

Management Committee conducts risk management in ation is decided in collaboration with the Board of Corporatecross-departmental manner over the entire Group. As

Auditors, after the aforementioned deliberation by theregards the detailed activities conducted during the fiscal year

Compensation Committee.

ended March 2012, the Group completely reviewed the Risk

Directors’ compensation is made up of a base salary plus

Management Manual, and also focused activities on issues

performance-based components linked to the Group earn-

related to the aftermath of the Great East Japan Earthquake

ings and the share price. The Corporate Auditors onlythat occurred in March 2011. As part of our responses in thereceive a base salary.

period after the earthquake, we established an earthquake

Executive compensation for the year ended March 2014

countermeasure conference framework, and arranged foris shown below.

domestic bases to hold frequent television ­conferences. As a

Executive Compensation

Executive category

Aggregate
remuneration(Millions of yen)

Aggregate remuneration by component (Millions of yen)
Base salary

Earnings-based
performance

Retirement
benefits

Total number of
executives

Director

146

89

57

—

6

Corporate Auditor

11

11

—

—

3

Outside Corporate Auditor

37

37

—

—

3

TAIYO HOLDINGS CO., LTD. Annual Report 201425

Board of Directors and Corporate Auditors (As of June 20, 2014)

Front row (left to right)
Takayuki Morita

Seiki Kashima

Eiji Sato

Masahisa Kakinuma

Eiji Takehara

Director

Managing Director

President and CEO

Director

Director

Back row (left to right)
Haruomi Yoshimoto

Akihito Sakai

Takato Kawahara

Masayuki Hizume

Si Bum Yoo

Kiyoshi Endo

Corporate Auditor

Outside Corporate Auditor

Director

Outside Director

Corporate Auditor

Outside Corporate Auditor

Directors

Corporate Auditors

Eiji Sato   President and CEO

Akihito Sakai   Outside Corporate Auditor

Seiki Kashima   Managing Director

Kiyoshi Endo   Outside Corporate Auditor

Masahisa Kakinuma   Director

Si Bum Yoo   Corporate Auditor

Takayuki Morita   Director

Haruomi Yoshimoto   Corporate Auditor

Eiji Takehara   Director
Takato Kawahara   Director
Masayuki Hizume   Outside Director

26 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Financial Section

28 Six-Year Summary
30 Management’s Discussion and Analysis
34 Consolidated Balance Sheets
36 Consolidated Statements of Income
37 Consolidated Statements of Comprehensive Income
38 Consolidated Statements of Changes in Equity
40 Consolidated Statements of Cash Flows
41 Notes to Consolidated Financial Statements
64 Independent Auditor’s Report

TAIYO HOLDINGS CO., LTD. Annual Report 201427

Six-Year Summary
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
The years ended March 31

2009(TAIYO INK MFG. CO., LTD.)For the Year:Net sales
Cost of sales
Selling, general and administrative expenses
Operating income
Net income
Depreciation and amortization
Net cash provided by operating activities
Net cash used in (provided by) investing activities
Net cash provided by (used in) financing activities
At year-end:
Total assets
Property, plant and equipment, net
Total liabilities
Minority interests
Total equity¥32,614
22,635
6,647
3,332
1,958
1,396
4,581
(1,470)(4,428)40,86914,664
6,285
522
34,584Per share data:
Basic net income
Cash dividends applicable to the year
Net assets¥   74.25
90.00
1,313.20

Ratios:Ratio of operating income to net sales
Return on equity
Equity ratio

10.2%
5.4
83.3

Common stock:
Number of shares issued

28,464,000

See notes to consolidated financial statements.

Net Sales

Operating Income
and Operating Income Ratio(Millions of Yen)

(Millions of Yen)

50,0008,000

40,00044,22540,366
39,79736,18435,0566,000

30,000
4,000

(%)

7,569

4,843
13.8
13.3

4,386
4,040
10.2

20,000

12.1

2,000

10,000

0

17.1

5,381

2010 2011 2012 2013 2014

(Years ended March 31)

0

18

12

6

2010 2011 2012 2013 2014

(Years ended March 31)

Operating income (left scale)Operating income ratio (right scale)

28 TAIYO HOLDINGS CO., LTD. Annual Report 2014

24

0Millions of Yen

2010

2011

2012

2013

2014

¥35,056
24,123
6,089
4,843
3,010
1,261
3,126
(70)
(2,366)¥40,366
28,428
6,557
5,381
3,403
1,127
4,575
758
(3,696)¥39,797
29,823
5,934
4,040
2,503
1,046
2,793
(1,343)(2,979)¥36,184
25,319
6,479
4,386
3,368
1,004
6,109
(2,478)(2,314)¥44,225
28,349
8,307
7,569
4,931
1,181
7,020
(3,839)2,350

43,704
13,954
8,018
679
35,68542,851
13,0508,664
696
34,18640,703
12,546
7,227
478
33,47644,023
12,664
7,213
605
36,81058,36914,376
15,713
2,046
42,656¥   98.38
90.00
1,297.18¥  132.38
90.00
1,423.26¥  193.83
120.001,596.45

Yen¥  116.08
90.00
1,349.61¥  131.78
115.001,316.53
%

13.8%
8.7
80.1

13.3%
9.9
78.2

10.2%
7.5
81.1

12.1%
9.7
82.2

17.1%
12.8
69.6

Thousands of Shares

27,464,000

27,464,000

27,464,000

Net Income and Net Income Per Share

Return on Equity(Millions of Yen)

(Yen)

(%)

6,000

300

14.0

4,931

5,000

3,403
3,000
2,000

3,368

3,010
116.08193.83250

132.38
98.38

1,000
0

9.7

9.9
8.7

200

7.5
150

2,503
131.7827,464,000

12.8

10.5
4,000

27,464,000

7.0

100
3.5
50

2010 2011 2012 2013 2014

(Years ended March 31)002010 2011 2012 2013 2014

(Years ended March 31)

Net income (left scale)
Net income per share (right scale)
TAIYO HOLDINGS CO., LTD. Annual Report 201429

Management’s Discussion and Analysis
Analysis of operating results
In the global economy during the fiscal year ended March 31,

Operating under these conditions, net sales for the current

2014, the U.S. economy remained on a moderate recovery­fiscal year amounted to ¥44,225 million (up 22.2% year on year).

track due to the expansion of exports and an increase in con-

In the PWB (printed wiring board) materials market, both thesumer spending, and the European economy showed signs ofsales volume and the sales amount increased year on year, partly

a recovery although unemployment rates are still high. On thedue to contributions of the inclusion of ONSTATIC TECHNOLOGY

other hand, uncertainty over China’s economy was not wipedCO., LTD. in the scope of consolidation and the weak yen, in addi-

out, as seen by the continued slowdown of economic growth intion to robust sales of rigid board materials. As a result, net sales

that country. The Japanese economy started recovering moder-of PWB materials were ¥38,226 million (up 36.5% year on year).

ately, as seen by the recovery of exports and increases in con-

Net sales of FPD materials, mainly consisting of PDP materials,

sumer spending as the correction of the strong yen advanced

dropped to ¥4,554 million (down 37.7% year on year), owing tofollowing proactive monetary and financial policies.

lower sales volume and a fall in the unit price driven by a signifi-

In the electronics components industry, in which the Group
operates, the market of products for car electronics expanded,and demand for products for smartphones and tablet devices

cant drop in the market price of silver, which constitutes one ofthe products’ raw materials.
As a result, operating income amounted to ¥7,569 million (up72.6% year on year), with net income at ¥4,931 million (up 46.4%

was firm.

year on year).

Sales results by product group category
The following are sales results by product group category for the fiscal year ended March 31, 2014.
(Millions of yen)Compared to the p­ revious fiscal year
Name of product group category

Previous fiscal year results

Current fiscal year results

ChangeRigid board materials

20,262

29,235

8,973

44.3

PKG board and flexible printed circuit board materials

6,763

7,965

1,202

17.8

Build-up board materials

Rate of change (%)

972

1,025

53

5.5

7,316

4,554

(2,761)(37.7)

Others

869

1,443

573

66.0

Total

36,18444,224

8,040

22.2

FPD materials

Results by segment are as follows.

ONSTATIC TECHNOLOGY CO., LTD., which was acquiredJapanduring the current fiscal year.

The consolidated company comprising the Japan segment is
TAIYO INK MFG. CO., LTD., a manufacturing and marketing
subsidiary.
Sales of rigid board materials remained unchanged, with nomajor fluctuations. Sales of PKG board materials were strong
due to the expansion of the smartphone market.
As a result, net sales amounted to ¥14,005 million (up 7.2%

Lower-priced rigid board materials performed favorably due
to the expansion of the market of products for servers and telecommunications equipment.
As a result, net sales amounted to ¥17,791 million (up 64.2%
year on year) with segment profit at ¥2,617 million (up 65.2%
year on year).
Taiwanyear on year) with segment profit at ¥1,906 million (up 13.1%

The consolidated companies comprising the Taiwan segment

year on year).

are manufacturing and marketing subsidiaries TAIWAN TAIYO

China (including Hong Kong)

INK CO., LTD., and ONSTATIC TECHNOLOGY CO., LTD. (andThe consolidated companies comprising the China segment are
TAIYO INK (SUZHOU) CO., LTD. and ONSTATIC INK(SHENZHEN) CO., LTD., manufacturing and marketing subsidiaries, and TAIYO INK INTERNATIONAL (HK) LIMITED and
TAIYO INK TRADING (SHENZHEN) CO., LTD., marketing subsidiaries operating mainly in the southern China region.
ONSTATIC INK (SHENZHEN) CO., LTD. is a subsidiary of

30 TAIYO HOLDINGS CO., LTD. Annual Report 2014

another three subsidiaries). Performance was strong for rigid
board materials owing to the expansion of the market of products for servers and car electronics.
As a result, net sales amounted to ¥8,399 million (up 113.4%
year on year) with segment profit at ¥1,428 million (up 186.7%
year on year).

KoreaOther

The consolidated company comprising the Korea segment is

The consolidated companies comprising the operations in

TAIYO INK MFG. CO., (KOREA) LTD., a manufacturing and mar-areas other than the previously mentioned are TAIYO AMERICA,

keting subsidiary. Sales volumes of FPD materials, which have a

INC. and TAIYO INK INTERNATIONAL (SINGAPORE) PTE LTD.

low profit margin, declined substantially, while sales amounts

At TAIYO AMERICA, sales were roughly at the same level

were also down considerably compared with the previous fiscal

with the same period of the previous fiscal year. TAIYO INK

year due to a fall in the price of silver, which is connected with

INTERNATIONAL (SINGAPORE) performed steadily due to thesales unit prices of FPD materials. On the other hand, dry film

expansion of the market of products for car electronics infor PKG boards, which have a high-profit margin, performed

Thailand.
As a result, net sales amounted to ¥3,525 million (up 23.5%

favorably because of the expansion of the market for smart-

year on year), with segment profit at ¥453 million (up 39.8%

phone-related products, and profit increased year on year.

year on year).

As a result, net sales amounted to ¥10,600 million (down
9.6% year on year) with segment profit at ¥1,074 million (up81.6% year on year).

Consolidated forecasts for the next fiscal year
Under these circumstances, the Group will continue to

Although the operating environment in the next fiscal year ending March 31, 2015 is expected to remain uncertain, demandstrengthen its marketing capability, expand the proportion of raw

for small-sized information terminals, such as smartphones andmaterials that it procures from overseas markets, and improvetablet devices, and car electronics-related products continues

productivity. At the same time, it will actively promote the devel-

to be strong in the electronics components industry in which theopment and marketing of new products with the ultimate goal ofGroup operates, while we also expect that the sales volume ofincreasing its market share and expanding earnings.

FPD materials will continue to decline.
(Millions of yen)

Net sales(Millions of yen)

Operating income(Millions of yen)

Net income(Millions of yen)

Net income per share(yen)

For the fiscal year ending March 31, 2015 (Forecast)

45,500

7,700

5,000

196.56

For the fiscal year ended March 31, 2014 (Actual results)

44,225

7,569

4,931

193.83

2.9

1.7

1.4

1.4

Rate of change (%)

Analysis of financial position
a. Positions of assets, liabilities, and net assets
The following shows the positions of assets, liabilities, and net assets as of March 31, 2014.
As of March 31, 2013
(Millions of yen)

As of March 31, 2014
(Millions of yen)

Change(Millions of yen)

Current assets

26,97937,798

10,819Cash and deposits increased approx. ¥6,400 million andnotes and accounts receivable–trade increased approx.
¥3,600 million.

Non-current assets

17,043

20,5703,526

Goodwill increased approx. ¥4,700 million, shares of subsidiaries and associates decreased approx. ¥2,600 million, andbuildings and structures increased approx. ¥700 million.

Total assets

44,02358,36914,346

Total liabilities

7,213

15,7138,500

Long-term loans payable increased approx. ¥5,600 million,
notes and accounts payable–trade increased approx. ¥900
million, and accounts payable–other increased approx.
¥700 million.

Total net assets

36,80942,655

5,845

Net income was approx. ¥4,900 million, cash dividends paid
increased approx. ¥3,000 million, foreign currency translation
adjustments increased approx. ¥2,500 million, and minority
interests increased approx. ¥1,400 million.

Total liabilities andnet assets

44,02358,36914,346Main factors(comparison with the end of the previous fiscal year)

TAIYO HOLDINGS CO., LTD. Annual Report 201431

b. Cash flow position
The following is the position of cash flows for the fiscal year ended March 31, 2014.


Fiscal year ended March 31, 2014
(Millions of yen)

Main factors

Net cash provided by (used in)operating activities

7,020

Income before income taxes and minority interests provided approx.
¥7,500 million, depreciation provided approx. ¥1,100 million, andincome taxes paid used approx. ¥1,900 million.

Net cash provided by (used in)investing activities(3,839)Purchase of property, plant and equipment used approx. ¥1,700 million, purchase of shares of subsidiaries used approx. ¥2,700 million,
and liquidation of investments in capital of subsidiaries and associates
provided approx. ¥500 million.

Net cash provided by (used in)financing activities

2,350

Proceeds from long-term loans payable provided approx. ¥5,600 million,
and cash dividends paid used approx. ¥3,000 million.

Net increase (decrease) in cash
and cash equivalents

6,571

Cash and cash equivalents at
end of period

20,338c. Trend of indicators
The following is the transition of cash flow indicators.


Fiscal year ended
March 31, 2010

Fiscal year ended
March 31, 2011

Fiscal year ended
March 31, 2012

Fiscal year ended
March 31, 2013

Fiscal year ended
March 31, 2014

Equity ratio (%)

80.1

78.2

81.1

82.2

69.6

Equity ratio on mark-to-market basis (%)

148.7

152.0

138.7

156.0

133.1

—

—

—

—

0.9

2,734.6

1,350.2

992.5

3,850.3

331.3Interest-bearing debt to cash flow ratio(year)
Interest coverage ratio (times)

Equity ratio:(Net assets- Minority interests)/Total assets
Equity ratio on mark-to-market basis: Total market capitalization/Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt/Cash flow
Interest coverage ratio:
Operating cash flow/Interest paid
(1) The above indicators are calculated based on consolidated financial figures.
(2) Total market capitalization is calculated based on the total number of issued shares at the fiscal year-end (excluding treasury shares) × stock market price at the­fiscal year-end.
(3) Net cash provided by (used in) operating activities stated in the consolidated statement of cash flows is used for “Cash flows.” “Interest paid” is the amount statedunder interest expenses paid in the consolidated statement of cash flows.

Basic policy on profit distribution and dividends for the current fiscal year and next fiscal year
The Company regards profit distribution to shareholders in cash

As already announced, we also plan to pay a year-end dividend

as an important policy and will effectuate a continuous, stableof ¥45, and this will be placed on the agenda of the next Generalprofit distribution at high levels. We use the ratio of dividends to

Meeting of Shareholders. This will result in an annual dividend of

net assets as our target index, keeping this figure at least at 5%¥120 per share for the current fiscal year.

of consolidated financial results for the mid-to-long term.
In accordance with this policy, the Company paid an interim
dividend of ¥75 per share: ¥45 of ordinary dividend and ¥30 ofConcerning dividends of the next fiscal year, we plan to pay
an interim dividend of ¥45 and a year-end dividend of ¥45, andthis will result in an annual dividend of ¥90 per share.

commemorative dividend.

Risk factors
The following are the main risks that may influence the businessincome. If radical technological developments, such as elec-

development of the Company.

tronic parts that do not use PWBs or PWBs that do not use

a. Technological innovation risks

SR, were to be widely adopted, this would result in a signifi- 1) Risks related to PWBs
 Our Group is reliant on the manufacture and sale of PWB
materials, and SR in particular, as a major source of our
32 TAIYO HOLDINGS CO., LTD. Annual Report 2014

cant decrease in demand for our products.
   From the viewpoint of product characteristics, operability,and economic viability, there is little possibility that such technological innovations will be widely adopted in the near future.

However, the Company considers it an important issue inf. Risk of exchange rate fluctuations

the field of research and development to find possible

Our ratio of overseas sales to net sales is comparatively high,new methods for PWBs.

and there are many instances when we calculate product prices 2) Risks related to PDP materials

in foreign currencies. Accordingly, our business performance is Our PDP material customers are restricted to a few panel

affected by fluctuations in exchange rates, with a highly appreci-

manufacturers. As we rely heavily on certain customers, theated yen normally leading to reduced income and profits.

performance of these customers could significantly impact

g. Risk of price fluctuations in key products

our own sales.
   As PDPs compete with LCDs and other technologies in the
FPD market, the future demand of PDPs involves uncertainty.

PWB manufacturing is shifting to other Asian countries,­especially China, and we are engaged in continuing price wars
with rival companies, including local companies as well as otherb. Risks associated with patents

Japanese firms regarding SR. There is also pressure to lower

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

SR prices, which has resulted from price competition in thetion, efforts are being made to protect the products and tech-

PWB market. Because of this, there is a possibility that the pricenology we develop through patents and intellectual property.

of our main product, SR, may drop, thus affecting the perfor-

However, in the event a patent application, etc. does not result

mance of our Group.

in the granting of rights or a third party requests invalidation,

h. Risks related to fluctuations in product demandinsufficient protection of our rights as a Group may result.
Moreover, infringing on the intellectual property rights owned bya third party could impact the performance of our Group as aresult of the payment of royalties or large amounts of damages.
c. Risk of major production facilities being affectedby a disaster
Our Group has manufacturing bases in Japan, Taiwan, Korea,
China, and the United States. In the event that any of our manufacturing bases is damaged by a natural disaster and manufacturing functions are obstructed, manufacturing and supply
functions would be switched to another manufacturing baseas an emergency measure. However, this would require some
preparation and adjustment, and our business would be­affected in the interim.
d. Risk related to procurement of raw materials
The Group procures many of its raw materials from external
raw material manufacturers.
Problems at these raw material manufacturers or a lack ofsupplies that hinder the Group’s production activities may affectthe performance of the Group.
e. Country-specific risks related to business deployment
overseas
Our Group conducts manufacturing activities in Japan, Taiwan,
Korea, China, and the United States. Sales of our Group’s products particularly in China, Taiwan, Korea, ASEAN countries, andother Asian markets are expanding. Accordingly, terrorist activities, destabilization of the political situation, economic fluctuations, the outbreak of earthquakes and contagion, unforeseenchanges to legal, regulatory, or tax systems, and other coun-

Demand for our Group’s main products is influenced by­electronic components market trends, which may affect­the ­performance of our Group.
i. Credit risks related to receivables
The Group has many customers, and, although we do not concentrate an excessive amount of receivables on specific customers, the deterioration of the financial position of customers
and the resulting bad debt may affect the performance of ourGroup.
j. Risks related to the soaring cost of raw materials
Due to the state of the oil market, the prices of certain raw
materials have risen, which may affect the performance of ourGroup. The profitability of PDP materials, in particular, may beaffected due to the rising cost of silver, one of the key raw­materials used in PDP production.
k. Risk of recoverability of deferred tax assets
With respect to deductible temporary differences and tax-loss
carryforwards, the Group determines recoverability after reasonably estimating future taxable income when recording deferred
tax assets. However, in the event deferred tax assets are
deemed unrecoverable in whole or in part as actual taxable
income may differ from estimates due to changes in the business environment and other factors, or should changes in tax
rates or revisions in tax systems occur in various countries, arecalculation of deferred tax assets would become necessary.
If, as a result of the above, a reversal of deferred tax assets isnecessary, it could impact on our operating results and financial
position.

try-specific risks could impact our business strategies and­performance of our Group.

TAIYO HOLDINGS CO., LTD. Annual Report 201433

Consolidated Balance Sheets
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
March 31, 2014 and 2013

Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2014

2013

2014

¥20,338¥13,767$197,648

811

886

7,881

11,891

8,200

115,559

CURRENT ASSETS:
Cash and cash equivalents (Note 13)
Time deposits (Note 13)
Notes and accounts receivable—trade (Notes 4 and 13)
Marketable securities

1

10

4,388

3,686

42,643

Consumption taxes receivable

151

123

1,468

Deferred tax assets (Note 11)

91

93

884

Other current assets

400

330

3,888

Allowance for doubtful accounts (Note 13)

(273)

(106)

(2,653)37,79826,979367,328

Land

4,237

4,179

41,176

Buildings and structures—net

7,626

6,872

74,110Machinery, equipment, and vehicles—net

1,608

1,218

15,627

Tools, furniture, and fixtures—net

657

394

6,385

Construction in progress

248

1

2,410

14,376

12,664

139,708

Investment securities (Notes 3 and 13)

749

587

7,279

Investments in unconsolidated subsidiaries and affiliates (Note 13)

19

3,201

185

Goodwill

4,745

30

46,113

Software

236

156

2,293

Deferred tax assets (Note 11)

16

73

155

Other assets

431

741

4,189

(1)

(408)

(10)

6,195

4,380

60,204¥58,369¥44,023$567,240

Inventories (Note 5)    Total current assets

PROPERTY, PLANT, AND EQUIPMENT (Note 6):     Total property, plant, and equipment

INVESTMENTS AND OTHER ASSETS:

Allowance for doubtful accounts     Total investments and other assets
TOTAL
See notes to consolidated financial statements.

34 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND EQUITY

2014

2013

2014

Short-term bank loans (Note 8)¥  534    $  5,190

Notes and accounts payable—trade (Note 13)

5,433¥ 4,487

52,799Accounts payable—other (Note 13)

1,394

684

13,547

Income taxes payable (Note 13)

563

509

5,471

Accrued expenses

654

593

6,356

Deferred tax liabilities (Note 11)

287

254

2,789

Other current liabilities

71

198

690

8,936

6,725

86,842CURRENT LIABILITIES:    Total current liabilities

LONG-TERM LIABILITIES:Long-term debt (Note 8)

5,658

54,985

Liability for retirement benefits (Note 9)

327

227

3,178

Asset retirement obligations

55

54

535

Deferred tax liabilities (Note 11)

702

174

6,822

Other long-term liabilities

35

33

340

6,777

488

65,860  Common stock—authorized, 50,000,000 shares;
issued, 27,464,000 shares in 2014 and 2013

6,135

6,135

59,621  Capital surplus

7,102

7,102

69,019  Retained earnings

32,25730,379313,479   Treasury stock—at cost, 2,026,110 shares in 2014 and2,025,826 shares in 2013

(5,373)(5,372)(52,216)    Total shareholders’ equity

40,121

38,244

389,903   Valuation difference on available-for-sale securities

235

135

2,284

   Foreign currency translation adjustments

329(2,174)

3,197   Defined retirement benefit plans(75)     Total accumulated other comprehensive income (loss)

489(2,039)4,752  Minority interests

2,046

605

19,883    Total equity

42,65636,810414,538

TOTAL¥58,369¥44,023$567,240    Total long-term liabilities
COMMITMENTS AND CONTINGENT LIABILITIES (Note 15)
EQUITY (Notes 10 and 20):
Shareholders’ equity:

Accumulated other comprehensive income (loss):(729)

TAIYO HOLDINGS CO., LTD. Annual Report 201435

Consolidated Statements of Income
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2014 and 2013

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2014

2013

2014

NET SALES¥44,225¥36,184$429,786

COST OF SALES

28,34925,319275,500    Gross profit

15,876

10,865

154,286SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES (Note 12)

8,307

6,479

80,729    Operating income

7,569

4,386

73,557

Interest and dividend income

150

150

1,458

Interest expense

(33)

(2)

(321)

Foreign exchange gain—net

24

149

233

OTHER INCOME (EXPENSES): Loss on valuation of investments in unconsolidated subsidiaries
and affiliates(67)

Loss on insurance cancellation

(14)
13

126

Loss on impairment of long-lived assets (Note 7)(279)(2,711)

Loss on step acquisitions (Note 19)

(73)

(709)

Gain on liquidation of subsidiaries and affiliates

59

573

Other—net

164

97

1,594

25

313

243

7,594

4,699

73,800Current

1,909

1,431

18,552

Deferred

485

(167)

4,714

    Total income taxes

2,394

1,264

23,266NET INCOME BEFORE MINORITY INTERESTS

5,200

3,435

50,534

269

67

2,614

¥ 4,931¥ 3,368$ 47,920

Equity in earnings of subsidiaries and associated companies    Other income—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTSINCOME TAXES (Note 11):MINORITY INTERESTS IN NET INCOME
NET INCOME

Yen

U.S. Dollars

PER SHARE OF COMMON STOCK (Notes 2.s and 18):
Basic net income¥193.83¥132.38$1.88

Cash dividends applicable to the year

120.00

90.00

1.17

See notes to consolidated financial statements.

36 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Consolidated Statements of Comprehensive Income
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2014 and 2013

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2014

2013

2014

¥5,200¥3,435$50,534

100

57

972

Foreign currency translation adjustments

2,790

2,156

27,114    Total other comprehensive income

2,890

2,213

28,086COMPREHENSIVE INCOME (Note 17)¥8,090¥5,648$78,620¥7,560¥5,497$73,469

530

151

5,151

NET INCOME BEFORE MINORITY INTERESTSOTHER COMPREHENSIVE INCOME (Note 17):
Valuation difference on available-for-sale securities

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

TAIYO HOLDINGS CO., LTD. Annual Report 201437

Consolidated Statements of Changes in Equity
Years Ended March 31, 2014 and 2013

Millions of Yen
Shareholders’ Equity
Number of
Shares ofCommonStock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

BALANCE, APRIL 1, 2012
Net income
Dividends from surplus
Purchase of treasury stock
Changes of items during the year

25,438,334¥6,135¥7,102BALANCE, MARCH 31, 2013
Net income
Dividends from surplus
Purchase of treasury stock
Changes of items during the year
BALANCE, MARCH 31, 2014

25,438,174

6,135

7,102

Treasury
Stock—At
Cost

Total
Shareholders’Equity¥29,301
3,368(2,290)¥(5,372)¥37,166
3,368(2,290)30,3794,931(3,053)(5,372)(1)

38,244
4,931(3,053)(1)¥(5,373)¥40,121

(160)

(284)
25,437,890¥6,135¥7,102¥32,257

Millions of Yen
Accumulated Other Comprehensive Income
Valuation
Total
Difference
Foreign
Accumulatedon AvailableCurrency
Defined
Other
for-SaleTranslation
Retirement Comprehensive
Securities
Adjustments Benefit Plans Income (Loss)

Minority
Interests

Total
Equity¥  478¥33,476
3,368(2,290)

BALANCE, APRIL 1, 2012
Net income
Dividends from surplus
Purchase of treasury stock
Changes of items during the year

¥ 78

57

2,072

2,129

127

2,256

BALANCE, MARCH 31, 2013
Net income
Dividends from surplus
Purchase of treasury stock
Changes of items during the year
BALANCE, MARCH 31, 2014135

(2,174)(2,039)

605

100
¥235

2,503
¥   3292,528¥   489

1,441¥2,04636,810
4,931(3,053)(1)
3,969¥42,656

See notes to consolidated financial statements.

38 TAIYO HOLDINGS CO., LTD. Annual Report 2014¥(4,246)¥(4,168)

¥(75)
¥(75)

Thousands of U.S. Dollars (Note 1)
Shareholders’ Equity

BALANCE, MARCH 31, 2013
Net income
Dividends from surplus
Purchase of treasury stock
Changes of items during the year
BALANCE, MARCH 31, 2014

Treasury
Stock—At
Cost

Total
Shareholders’EquityCommonStockCapitalSurplusRetained
Earnings$59,621$69,019$295,229
47,920(29,670)$(52,206) $371,663
47,920(29,670)(10)(10)$59,621$69,019$313,479$(52,216) $389,903

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Valuation
Total
Difference
Foreign
Accumulatedon AvailableCurrency
Defined
Other
for-SaleTranslation
Retirement Comprehensive
Securities
Adjustments Benefit Plans Income (Loss)

BALANCE, MARCH 31, 2013
Net income
Dividends from surplus
Purchase of treasury stock
Changes of items during the year
BALANCE, MARCH 31, 2014

$1,312$(21,128)

972$2,28424,325$   3,197$(19,816)$(729)$(729)

24,568$  4,752

Minority
Interests

Total
Equity$ 5,879 $357,726
47,920(29,670)(10)
14,004
38,572$19,883 $414,538

See notes to consolidated financial statements.

TAIYO HOLDINGS CO., LTD. Annual Report 201439

Consolidated Statements of Cash Flows
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Years Ended March 31, 2014 and 2013

Thousands of
U.S. Dollars(Note 1)Millions of Yen

2014

2013

2014

¥ 7,594¥ 4,699$ 73,800  Income taxes—paid(1,956)(1,072)(19,009)   Depreciation and amortization

1,181

1,004

11,477OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:  Loss on valuation of investments in unconsolidated subsidiaries
and affiliates

67  Impairment loss279   (Increase) decrease in notes and accounts receivable—trade

(228)

1,199

(2,216)   Decrease in inventories

722

963

7,017

   Decrease in notes and accounts payable—trade

(200)

(962)

(1,943)   (Decrease) increase in other current liabilities

(334)

43

(3,246)

35

214

340

(73)

(46)

(709)

    Total adjustments

(574)

1,410

(5,578)     Net cash provided by operating activities

7,020

6,109

68,222

Payments into time deposits(3,284)(2,164)(31,914)

Proceeds from withdrawal of time deposits

3,449

2,808

33,518Purchases of property, plant, and equipment(1,728)(552)(16,793)

Purchase of OTC, net of cash acquired(1,928)(2,669)(18,737)   Increase in accrued expenses
Other—net

2,711

INVESTING ACTIVITIES: Purchase of investments in subsidiaries resulting in change
in scope of consolidation(862)(8,377)Purchase of software

(143)

(54)

(1,390)

Other—net

656

153

6,375

(3,839)(2,478)(37,308)     Net cash used in investing activities
FINANCING ACTIVITIES:
Increase in long-term debt

5,619

54,607

Repayments of short-term loans payable

700

Proceeds from short-term loans payable(700)

Purchase of treasury stock

(1)

(10)

(3,053)(2,290)(29,670)

(215)

(24)

(2,089)     Net cash provided by (used in) financing activities

2,350(2,314)

22,838FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS

1,040

886

10,106NET INCREASE IN CASH AND CASH EQUIVALENTS

6,571

2,203

63,858

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

13,767

11,564

133,790

CASH AND CASH EQUIVALENTS, END OF YEAR

¥20,338¥13,767$197,648

Cash dividends paid
Cash dividends paid to minority shareholders

See notes to consolidated financial statements.

40 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Notes to Consolidated Financial Statements
TAIYO HOLDINGS CO., LTD. and Consolidated Subsidiaries
Year Ended March 31, 2014

1. Basis of Presenting 	The accompanying consolidated financial statements have been prepared in a­ ccordance withthe provisions set forth in the Japanese Financial Instruments and Exchange Act and its related
Consolidated
Financial Statements accounting regulations, and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
	  In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order topresent them in a form that is more familiar to readers outside Japan. In addition, certain
reclassifications have been made in the 2013 consolidated financial statements to conform tothe classifications used in 2014.
	  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 convenienceof readers outside Japan and has been made at the rate of ¥102.9 to $1, the approximate rateof exchange at March 31, 2014. 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.
	a. Consolidation
2. Summary of	 
The consolidated financial statements as of March 31, 2014, include the accounts of the
Significant
Company and its 14 significant (8 as of March 31, 2013) subsidiaries (collectively, the
Accounting Policies“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 forusing 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 LTD.
TAIYO INK INTERNATIONAL (HK) LTD.
TAIYO INK TRADING (SHENZHEN) CO., LTD.
ONSTATIC TECHNOLOGY CO., LTD. (“OTC”)	   Since the Company acquired the additional outstanding shares of OTC, which was previously accounted for by the equity method, OTC is consolidated from the first quarter of theyear ended March 31, 2014. As OTC owns 5 associated companies, the total number ofconsolidated subsidiaries becomes 14.
	   Investments in the remaining one (three as of March 31, 2013) unconsolidated subsidiary
are stated at cost. If the equity method of accounting had been applied to the investments inthese companies, the effect on the accompanying consolidated financial statements would
not be material.
The excess of the cost of an acquisition over the fair value of the net assets of theacquired subsidiary at the date of acquisition is being amortized on a straight-line basis overa period of 5 or 20 years.  There are no investments in associated companies accounted for using the equity method in2014 (one in 2013).

TAIYO HOLDINGS CO., LTD. Annual Report 201441

	Since the Company acquired the additional outstanding shares of OTC, investment in this associated company is no longer accounted for using the equity method from the year ended March
31, 2014. With regard to the five associated companies owned by OTC, the Company does notcount them in the number of associated companies accounted for using the equity method in
consideration of the fact that OTC establishes one commercial distribution channel with the fivecompanies, and they are considered one company as a whole.
	  All significant intercompany balances and transactions have been eliminated in consolidation.
All material unrealized profit included in assets resulting from transactions within the Group iseliminated.
The fiscal years of three (two as of March 31, 2013) consolidated subsidiaries closed theiraccounts on December 31. To prepare the Company’s consolidated financial statements,
TAIYO INK (SUZHOU) CO., LTD., and TAIYO INK TRADING (SHENZHEN) CO., LTD., prepareda set of accounts with a closing date of March 31 and these were used for consolidation purposes. The Company used the financial statements of OTC whose fiscal year ends on
December 31 for consolidation since the difference of fiscal year ends between the Company
and OTC is no more than three months. The necessary adjustments for significant transactions,
if any, during the intervening period are made on consolidation. As April 1, 2013, was deemedas the acquisition date for the business combination, financial results of OTC until March 31,
2013, were recorded as equity in earnings of affiliates on the consolidated financial statements
for the year ended March 31, 2014.
b. U
 nification of Accounting Policies Applied to Foreign Subsidiaries
for the Consolidated Financial Statements	 In May 2006, the Accounting Standards Board of Japan (“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 similar transactions 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
Reporting Standards or the accounting principles generally accepted in the United States ofAmerica 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 research and development(“R&D”); (d) cancellation of the fair value model accounting for property, plant and equipment
and investment properties, and incorporation of the cost model accounting; and (e) exclusionof 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,” and in December 2005, the ASBJ issued ASBJ
Statement No. 7, “Accounting Standard for Business Divestitures” and ASBJ Guidance No.
10, “Guidance for Accounting Standard for Business Combinations and Business
Divestitures.” The accounting standard for business combinations allowed companies toapply 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 businesscombination was considered to be an acquisition and the purchase method 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
42 TAIYO HOLDINGS CO., LTD. Annual Report 2014

standard requires accounting for business combinations only by the purchase method. As aresult, the pooling of interests method of accounting is no longer allowed. (2) The previous
accounting standard accounts for R&D costs to be charged to income as incurred. Underthe revised standard, in-process R&D acquired in a business combination is capitalized as anintangible 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 the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss
on the acquisition date immediately after reassessing and confirming that all of the assets
acquired and all of the liabilities assumed have been identified after a review of the procedures
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 thatare exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificates of deposit, commercial paper, andbond 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-­averagemethod, or net selling value.
f. M arketable and Investment Securities	 The Company classifies all marketable and investment securities as available-for-sale securities, which are reported at fair value, with unrealized gains and losses, net of applicabletaxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined using 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 estimatedcredit losses based on the individual financial review of doubtful or troubled accounts and ageneral reserve for other accounts based on the Company’s historical credit loss experienceof a certain past period.
h. Property, Plant, and Equipment	 Property, plant, and equipment are stated at cost.
Buildings are depreciated principally using the straight-line method, while property, plant,
and equipment other than buildings are depreciated principally using the declining-balancemethod over the estimated useful lives of the assets.
The ranges of useful lives for major categories are as follows:   Buildings and structures:   Machinery, equipment, and vehicles:   Tools, furniture, and fixtures:

From 7 to 60 years
From 4 to 10 years
From 3 to 8 yearsi. L ong-Lived Assets	 The Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable.
An impairment loss would be recognized if the carrying amount of an asset or asset groupexceeds 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 bemeasured 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 and­eventual disposition of the asset or the net selling price at disposition.
TAIYO HOLDINGS CO., LTD. Annual Report 201443

j. Software	 Software for internal use is amortized using the straight-line method over the estimated useful life of mainly five years.
k. R
 &D Costs
	  R&D costs are charged to income as incurred.
l. A
 ccrued 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. R etirement and Pension Plans
	  The straight-line method is used to attribute expected benefits to periods of services in­calculating projected benefit obligations.
	    Prior-service costs are amortized using the straight-line method over five years.
	    Actuarial gains (losses) are amortized using the straight-line method over five years fromthe following year after incurrence.
	    In May 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for
Retirement Benefits” and ASBJ Guidance No. 25, “Guidance on Accounting Standard for
Retirement Benefits,” which replaced the accounting standard for retirement benefits that
had been issued by the Business Accounting Council in 1998 with an effective date of April
1, 2000, and the other related practical guidance and were followed by partial amendmentsfrom time to time through 2009.
	   (a) U nder the revised accounting standard, actuarial gains and losses and past-service
costs that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (liability for retirement benefits) or asset (asset for
retirement benefits).
	   (b) T he revised accounting standard does not change how to recognize actuarial gains andlosses and past-service costs in profit or loss. Those amounts are recognized in profit orloss over a certain period no longer than the expected average remaining service periodof the employees. However, actuarial gains and losses and past-service costs that arosein the current period and have not yet been recognized in profit or loss are included inother comprehensive income and actuarial gains and losses and past-service costs thatwere recognized in other comprehensive income in prior periods and then recognized in
profit or loss in the current period shall be treated as reclassification adjustments.
	   (c) T he revised accounting standard also made certain amendments relating to the methodof attributing expected benefit to periods and relating to the discount rate and expected
future salary increases.
	    This accounting standard and the guidance for (a) and (b) above are effective for the endof annual periods beginning on or after April 1, 2013, and for (c) above are effective for the
beginning of annual periods beginning on or after April 1, 2014, or for the beginning ofannual periods beginning on or after April 1, 2015, subject to certain disclosure in March
2015, both with earlier application being permitted from the beginning of annual periods
beginning on or after April 1, 2013. However, no retrospective application of this accounting
standard to consolidated financial statements in prior periods is required.
	    The Company applied the revised accounting standard and guidance for retirement­benefits for (a) and (b) above, effective March 31, 2014. As a result, liability for retirement
benefits of ¥317 million ($3,081 thousand) was recorded as of March 31, 2014, and accumulated other comprehensive income (defined retirement benefit plans) for the year ended
March 31, 2014, decreased by ¥75 million ($729 thousand). Net assets per sharedecreased by ¥2.92 ($0.03) as of March 31, 2014.
	    Liability for directors and corporate auditors is recorded to account for the payments of
their retirement benefits based on the internal rules.

44 TAIYO HOLDINGS CO., LTD. Annual Report 2014	    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 lumpsum payments resulting from said abolishment was approved at the 64th general meetingof shareholders held on June 29, 2010. These payments will be effected as retirement benefits paid at the time of retirement according to the period of service up to the abolishmentof the system.
n. A
 sset 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 these accounting standards, 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 theretirement of such tangible fixed asset. The asset retirement obligation is recognized as thesum of the discounted cash flows required for the future asset retirement and is recorded in
the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset
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 by increasing 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 theasset. Over time, the liability is accreted to its 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 the­capitalized amount of the related asset retirement cost.
o. Income Taxes	 The provision for income taxes is computed based on the pretax income included in the consolidated statement 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 aremeasured by applying currently enacted income tax rates to the temporary differences.
The Group files a tax return under the consolidated corporate tax system, which allows
companies to base tax payments on the combined profit or losses of the parent company
and its wholly owned domestic subsidiaries.
p. F oreign 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 consolidated balance
sheet date. The foreign exchange gains and losses from translation are recognized in the
consolidated statement of income.
q. F oreign 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 consolidated balance sheet date,
except for equity, which is translated at the historical exchange rates. Differences arising fromsuch translation are 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 Japanese yen at the average exchange rates.

TAIYO HOLDINGS CO., LTD. Annual Report 2014

45

r. D
 erivative Financial Instruments	 The Group uses derivative financial instruments to manage its exposures to fluctuations inforeign 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 andgains or losses on derivative transactions are recognized in the c­ onsolidated statement ofincome.
s. P
 er Share Information
	 Basic net income per share (“EPS”) is computed by dividing net income available to c
­ ommonshareholders by the weighted-average number of common shares o­ utstanding for the period.
Diluted net EPS is not disclosed because it is antidilutive.
Cash dividends per share presented in the accompanying consolidated s­ tatement ofincome are dividends applicable to the respective years, including d­ ividends to be paid at theend of the year.
t. A
 ccounting 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 consolidated financial statements is changed,
prior-period consolidated financial statements are reclassified in accordance with the newpresentation. (3) Changes in Accounting Estimates—A change in an accounting estimate isaccounted for in the period of the change if the change affects that period only and isaccounted 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 consolidated
financial statements is discovered, those consolidated 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 fi­ scal year beginning on orafter April 1, 2011.
u. Accounting Standard Issued but Not Yet Adopted
	 Accounting Standard for Retirement Benefits—In May 2012, the ASBJ issued ASBJ
Statement No. 26 and ASBJ Guidance No. 25, which replaced the accounting standard for
retirement benefits that had been issued by the Business Accounting Council in 1998 with aneffective date of April 1, 2000, and the other related practical guidance, being followed bypartial amendments from time to time through 2009.
	   The revised accounting standard made certain amendments relating to the method of
attributing expected benefit to periods and relating to the discount rate and expected futuresalary increases.
	   This accounting standard and the guidance are effective for the beginning of annual periods beginning on April 1, 2014. However, no retrospective application of this accounting
standard to consolidated financial statements in prior periods is required.
	   As a result of applying the revised accounting standard and the guidance, operating
income and income before income taxes and minority interests for the year ending March 31,
2015, are expected to decrease by ¥25 million ($243 thousand). Retained earnings at the
beginning of the fiscal year ending March, 31, 2015, is expected to increase by ¥562 million($5,462 thousand).

46 TAIYO HOLDINGS CO., LTD. Annual Report 2014	
Practical Solution on Transactions of Delivering the Company’s Own Stock to
Employees, etc., through Trusts—On December 25, 2013, the ASBJ issued PITF No. 30,“Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc.
through Trusts.” PITF No. 30 is effective for the beginning of annual periods beginning on orafter April 1, 2014, with earlier application permitted from the beginning of annual periods first
ending after the date of issuance of PITF No. 30 and applied retrospectively.
	  In accordance with PITF No. 30, upon transfer of treasury stock to the employee stockownership trust (the “Trust”) by the entity, any difference between the book value and fair value ofthe treasury stock shall be recorded in capital surplus. At year-end, the entity shall record (1)the entity stock held by the Trust as treasury stock in equity, (2) all other assets and liabilities of
the Trust on a line-by-line basis, and (3) a liability/asset for the net of (i) any gain or loss ondelivery of the stock by the Trust to the employee shareholding association, (ii) dividends
received from the entity for the stock held by the Trust, and (iii) any expenses relating to theTrust.
	  The Company expects to apply PITF No. 30 from the beginning of the annual period beginning on April 1, 2014, and is in the process of measuring the effects of applying PITF No. 30 in
future applicable periods.
	Marketable and investment securities at March 31, 2014 and 2013, consisted of the following:
3. Marketable andInvestment Securities
Thousands ofMillions of Yen

U.S. Dollars

2014

2013

2014

¥731
1

¥574
1

$7,104
10

¥732

¥575

$7,114

Noncurrent:
Marketable equity securities
Government and corporate bonds
Total	  The costs and aggregate fair values of marketable and investment securities at March 31,
2014 and 2013, were as follows:
Millions of Yen
March 31, 2014

Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value

¥365

¥374

¥8

¥731

¥366

¥374

¥8

¥732

Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value

¥365

¥216

¥7

¥574

¥216

¥7

¥575

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

1

1

Millions of Yen
March 31, 2013

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

1
¥366

1

TAIYO HOLDINGS CO., LTD. Annual Report 201447

Thousands of U.S. Dollars
Cost

Unrealized
Gains

Unrealized
LossesFair
Value

Equity securities$3,547$3,635$78$7,104

Debt securities

10

March 31, 2014

Securities classified as available-for-sale:

Total

10

$3,557$3,635$78$7,114

	  Available-for-sale securities whose fair values are not readily determined at March 31, 2014
and 2013, were as follows:
Millions of Yen

Available-for-sale—equity securities

Thousands of
U.S. Dollars

2014

2013

2014

¥18

¥12

$175

	  The Group had not sold available-for-sale securities during the years ended March 31, 2014
and 2013.

4. Notes Maturing on
March 31, 2014 and2013	Notes that were to mature at the consolidated balance sheet date were accounted for at thedate of actual settlement. The year-end of March 31, 2014, of certain subsidiaries and the yearend of March 31, 2013, coincided with a bank h­ oliday and the following notes maturing on
March 31, 2014 and 2013, were included in the consolidated balance sheets at March 31,
2014 and 2013:
Millions of Yen
2014

Notes receivable—trade

5. Inventories

2013

Thousands of
U.S. Dollars
2014

¥125

Inventories at March 31, 2014 and 2013, consisted of the following:
Millions of Yen

Thousands of
U.S. Dollars

2014

2013

2014

Merchandise and finished products
Work in process
Raw materials and supplies¥2,227320
1,841¥1,816
196
1,674$21,642
3,110
17,891

Total¥4,388¥3,686$42,643

6. Property, Plant, and 	Accumulated depreciation at March 31, 2014 and 2013, was ¥21,024 million ($204,315 thousand) and ¥18,894 million, respectively.
Equipment

48 TAIYO HOLDINGS CO., LTD. Annual Report 2014

7. Long-Lived Assets

	The Group reviewed its long-lived assets for impairment for the year ended March 31, 2014.
As a result, the Group recognized impairment losses for the year ended March 31, 2014, as
follows:
Location

TAIYO INK CO., (KOREA) LTD.

Usage

Business use

Classification

Millions of Yen

Thousands of
U.S. Dollars

Buildings
Machinery andequipment¥125$1,215154

1,497

 	   In principle, business use assets are grouped based on the department of the Group.
	   Business use assets of TAIYO INK CO., (KOREA) LTD., a consolidated subsidiary of theCompany, were written down to recoverable amounts because their profitability and fair­values declined drastically compared to their book values.
	   The recoverable amount is measured at its value in use and the recoverable amount isdeemed as zero since no future cash flow is expected.
	   No impairment losses were recognized for the year ended March 31, 2013.
	The weighted-average interest rate applicable to the short-term borrowings at March 31, 2014,
8. Short-Term Bank
was 0.66%.
Loans and Long	 There were no short-term bank loans at March 31, 2013.
Term Debt
Long-term debt as of March 31, 2014, consisted of the following:
Millions of Yen

Thousands of
U.S. Dollars

Long-term debt, 2018 with weighted-average interest of 0.15%
as of March 31, 2014

¥5,658$54,985

Total¥5,658$54,985 	  There was no long-term debt at March 31, 2013.
	  Annual maturities of long-term debt for the next five years and thereafter as of March 31,
2014, were as follows:Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars¥5,658$54,985¥5,658$54,985

2015
2016
2017
2018
2019
2020 and thereafter
Total

TAIYO HOLDINGS CO., LTD. Annual Report 201449

9. Retirement andPension Plans

	The Company has non-contributory-funded defined benefit plans based on the point systemand defined contribution plans. Certain overseas consolidated subsidiaries have defined contribution plans and other types of plans.
The liability for retirement benefits at March 31, 2014 and 2013, for directors and corporate
auditors is ¥10 million ($97 thousand) and ¥10 million, respectively. The retirement benefits for
directors and corporate auditors are paid subject to the approval of the shareholders.
Year Ended March 31, 2014

Defined Benefit Plans
	  The changes in projected benefit obligations for the year ended March 31, 2014, were as­follows:

Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
Foreign exchange difference
Balance at end of year

Millions of Yen

Thousands of
U.S. Dollars¥2,541$24,694

169
42
76
(122)
66

1,642
408
739
(1,186)642¥2,772$26,939

	  The changes in plan assets for the year ended March 31, 2014, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial losses
Employer contribution
Benefits paid
Foreign exchange difference
Balance at end of year

Millions of Yen

Thousands of
U.S. Dollars¥2,271$22,070

34
12
206
(121)
53

330
117
2,002
(1,176)515¥2,455$23,858

	  A reconciliation between the liabilities recorded in the consolidated balance sheet and thebalances of projected benefit obligations and plan assets as of March 31, 2014, is as follows:

Funded projected benefit obligations

Millions of Yen

Thousands of
U.S. Dollars¥2,772$26,939

Plan assets(2,455)(23,858)

Net liability for defined obligations¥  317$ 3,081

Liability for retirement benefits¥  317$ 3,081

Net liability for defined benefit obligations¥  317$ 3,081	  The components of net periodic benefit costs for the year ended March 31, 2014, were as
follows:

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Amortization of prior‑service cost
Net periodic benefit costs
50 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Millions of Yen

Thousands of
U.S. Dollars¥169$1,642

42
(34)
(8)
10

408
(330)
(78)
97

¥179

$1,739	  Accumulated other comprehensive income on defined retirement benefit plans before
income tax effect as of March 31, 2014, is as follows:
Millions of Yen

Thousands of
U.S. Dollars

Unrecognized actuarial losses¥(115)$(1,118)

Total¥(115)$(1,118)

	  Plan assets as of March 31, 2014, consisted of the following:
General account

100%

Total

100%

	  The expected long-term rate of return on plan assets is determined considering current andexpected distribution of plan assets and current and expected long-term rate of return derived
from various components of plan assets.
	  Assumptions used for the year ended March 31, 2014, were set forth as follows:
Discount rate

1.2%

Expected long-term rate of return on plan assets

1.0%

Defined Contribution Plans
	The required contribution amount to the defined contribution plans by the Company and its
certain consolidated subsidiaries is ¥30 million ($292 thousand) at March 31, 2014.
Year Ended March 31, 2013
	  The liability for retirement benefits for employees at March 31, 2013, consisted of the following:
Millions of Yen

Projected benefit obligations
Fair value of plan assets
Unfunded retirement benefit obligations
Unrecognized actuarial losses
Unrecognized prior service costs
Liability for retirement benefits¥(2,541)
2,271
(270)
43
10
¥  (217) 	 The components of net periodic benefit costs for the year ended March 31, 2013, are as follows:
Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses
Amortization of prior-service costs

¥158
42
(29)
17
10

Net periodic benefit costs¥198	  In addition to the costs shown in the preceding table, other expenses for the defined con­tribution plans of the Company and certain overseas consolidated subsidiaries amounted to¥27 million for the year ended March 31, 2013.

TAIYO HOLDINGS CO., LTD. Annual Report 201451

	  Assumptions used for the year ended March 31, 2013, are as follows:
Discount rate
Expected rate of return on plan assets
Amortization period of actuarial (gains) losses
Amortization period of prior-service costs

10. Equity

1.2%
1.0%
Mainly 5 years
Mainly 5 years	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, including (1) having a board of directors, (2) having independent
auditors, (3) having a 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 Company
meets all the above criteria.
The Companies Act permits companies to distribute dividends in kind (noncash assets) toshareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the boardof 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 oftreasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after d­ ividends 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 appropriatedas a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account that was charged upon the paymentof such dividends until the total of aggregate amount of legal reserve and additional paid-in
capital equals 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, and retained 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 d­ ispose ofsuch treasury stock by resolution of the board of directors. The amount of treasury stock
purchased cannot exceed the amount available for distribution to the shareholders, which isdetermined by specific formula.
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 stockacquisition rights and treasury stock. Such treasury stock acquisition rights are presented
as a separate component of equity or deducted directly from stock acquisition rights.

52 TAIYO HOLDINGS CO., LTD. Annual Report 2014

11. 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
38% for the years ended March 31, 2014 and 2013.
	  The tax effects of significant temporary differences, which resulted in deferred tax assets andliabilities as of March 31, 2014 and 2013, are as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

2013

2014

¥  176¥ 114$ 1,710

Unrealized profit

96

107

933

Deduction of foreign corporation tax carried forward

72

67

700

Allowance for doubtful accounts

1

61

10

Accrued expenses

Deferred tax assets:
Retirement benefits

96

106

933

 Loss on valuation of investments in unconsolidated
subsidiaries and affiliates
Other

114

182
260

1,107

    Total deferred tax assets
Less valuation allowance

555
(171)

897
(185)

5,393
(1,662)   Total deferred tax assets, net of valuation allowance

384

712

3,731

(1,083)
(57)
(130)

(719)
(82)
(74)

(10,525)(554)(1,263)

Deferred tax liabilities:
Undistributed earnings of associated companies
Reserve for technique and development
Valuation difference on available-for-sale securities

4

(99)

39

    Total deferred tax liabilities(1,266)(974)(12,303)

Net deferred tax assets¥  (882)¥(262)$ (8,572)

Other	  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, 2014, with the corresponding figures for 2013, is as follows:
2014

2013

Normal effective statutory tax rate
Tax rates difference relating to overseas subsidiaries
Elimination of dividend income
Deduction of foreign corporation tax carried forward

37.87%(14.75)0.95(0.12)

37.87%(13.46)1.50(1.02)

Undistributed earnings of associated companies
Nondeductible withholding income tax of dividends
Tax exemption for experiments and research expenses and other
Valuation allowance
Other

2.86
5.53
(1.82)(0.92)
1.92(1.79)
6.44(2.33)(1.36)
1.05

Actual effective tax rate

31.52%

26.90%

	“Act on Partial Revision of the Income Tax Act” (Act No. 10 of 2014), “Act on Partial Revision of
the Local Tax Act” (Act No. 4 of 2014) and “Act on Partial Revision of the Corporation Local
Inhabitants Tax Act” (Act No. 11 of 2014) were promulgated on March 31, 2014. Accordingly,
the normal effective statutory tax rates used to calculate deferred tax assets and deferred tax
liabilities changed to 35.52% for temporary differences which are expected to reverse in the fiscal year beginning on April 1, 2014, and 35.53% for those in the fiscal year beginning on April
1, 2015.
	  The effects of this change are immaterial.
TAIYO HOLDINGS CO., LTD. Annual Report 201453

12. R&D Costs	R&D costs charged to income for the years ended March 31, 2014 and 2013, were ¥1,594
million ($15,491 thousand) and ¥1,199 million, respectively.

(1) Summary of Financial Instruments Status
13. Financiala. G
 roup policy for financial instruments
Instruments and	 TheGroup’s policy is to fund operations internally wherever possible. With large-scale capital
Related Disclosuresprojects, the Group borrows funds from banks or arranges other types of funding, dependingon market conditions.
Short-term surplus funds are managed conservatively using only financial instruments thatprovide high security.
The Group employs derivatives to mitigate known future risks, but does not use such
instruments for speculative purposes as a 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 theshares 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-denominated­liabilities of this kind that are exposed to exchange rate fluctuation risk.
Foreign exchange forward contracts and others are used to hedge the exchange rate
­fluctuation risk associated with foreign currency-denominated operating assets and others.
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 assets­regularly in line with internal regulations governing the management of credit limits and tradereceivables. Besides managing due dates and outstanding balances by counterparty, theCompany also aims to identify as early as possible and alleviate any concerns about non­payment caused by deterioration 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 tobe 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 and long-term debt, the Company and certain consolidated Groupsubsidiaries 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 andthe relationships with relevant business partners.
With respect to the management of derivatives, the internal party responsible for the­transaction must gain the approval of the authorized settlement managers to exercise any
derivatives contract, in line with internal management regulations specifying the transactional
authority and related limits for contractual exposures. The results of derivatives transactions
are reported to the board of directors p­ eriodically.
54 TAIYO HOLDINGS CO., LTD. Annual Report 2014	 Management of Liquidity Risks Associated with Fund Procurement (Relating to Risk ofNonpayment 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. F
 air value of financial instruments and related matters	 The 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 theassumptions employed for the various factor variables used in such calculations.
(2) Fair Value of Financial Instruments	 Carrying amount, fair value, and unrealized gain (loss) at March 31, 2014 and 2013, were as
follows:
Financial instruments whose fair values are difficult to measure are excluded from the tablebelow.
Millions of Yen
March 31, 2014

Carrying
AmountFair
Value(1) Cash and cash equivalents¥20,338¥20,338811

811(2) Time deposits(3) Notes and accounts receivable—trade

11,891Less allowance for doubtful receivables(273)
11,618

11,618731

731(5) Notes and accounts payable—trade

5,433

5,433

(6) Accounts payable—other

1,394

1,394

(7) Income taxes payable

563

563

(8) Short-term bank loans

534

534

(9) Long-term debt

5,658

5,658

(10) Derivatives—net

16

16¥13,767¥13,767886886(4) Investment securities

Unrealized
Gain (Loss)

March 31, 2013

(1) Cash and cash equivalents(2) Time deposits(3) Notes and accounts receivable—trade

8,200

Less allowance for doubtful receivables

(106)
8,094

(4) Investment securities

8,094

575

575

4,487

4,487

(6) Accounts payable—other

684

684

(7) Income taxes payable

509

509

(8) Derivatives—net

8383(5) Notes and accounts payable—trade

TAIYO HOLDINGS CO., LTD. Annual Report 201455

Thousands of U.S. Dollars
March 31, 2014

(1) Cash and cash equivalents(2) Time deposits

Carrying
AmountFair
Value

Unrealized
Gain (Loss)$197,648$197,648

     

7,881

7,881

(3) Notes and accounts receivable—trade115,559

Less allowance for doubtful receivables(2,653)112,906

112,906(4) Investment securities

7,104

7,104

(5) Notes and accounts payable—trade

52,79952,799(6) Accounts payable—other

13,547

13,547(7) Income taxes payable

5,471

5,471

(8) Short-term bank loans

5,190

5,190

(9) Long-term debt

54,98554,985(10) Derivatives—net

155

155

	  The amount of allowance for doubtful receivables is deducted from receivables.
Notes: 1. Measurement of fair value of financial instruments			 (1) C ash and cash equivalents, (2) Time deposits and (3) Notes and accounts receivable—tradeThe fair value of cash and deposit and receivables approximate carrying values due to the short maturity ofthese instruments.
			 (4) Investment securities
The fair values of investment securities are measured at the quoted market price of the stock exchange for theequity instruments and at the quoted price obtained from the financial institution for certain debt instruments.
Fair value information of the fair value for the investment securities by classification is included in Note 4.
			 (5) N otes and accounts payable—trade, (6) Accounts payable—other, (7) Income taxes payable, and (8) Shortterm bank loans
The fair value of the above approximates carrying values due to the short maturity of these instruments.
			 (9) L ong-term debt
The fair value approximates carrying value due to the variable interest rate which reflects the market rate in ashort period of time and the fact that the credit status of the Company has not changed drastically since theexecution of borrowings.
					(10) Derivatives
Please see Note 14.
2. Carrying amounts of financial instruments whose fair values cannot be reliably determined
Thousands of
U.S. Dollars

Millions of Yen

Investment securities—unlisted securities

2014

2013

2014

¥18

¥   12

$175

19

2,702

185

Investments in unconsolidated subsidiaries:
Unlisted securities
Investment in partnership		499

3. Maturity analysis for financial assets and securities with contractual maturities

Millions of Yen

March 31, 2014

Due inOne Yearor Less

Cash and cash equivalents¥20,338

Time deposits
Notes and accounts receivable—trade
Government and corporate bonds

56 TAIYO HOLDINGS CO., LTD. Annual Report 2014

811
11,8911

Due after One
Year throughFive YearsThousands of
U.S. Dollars

March 31, 2014

Due inOne Yearor Less

Cash and cash equivalents$197,648

Time deposits

7,881
115,559
10

Notes and accounts receivable—trade
Government and corporate bonds

Due after One
Year throughFive Years

	  Please see Note 8 for annual maturities of long-term debt.

14. Derivative Financial 	Derivative transactions to which hedge accounting is not applied as of March 31, 2014 and2013, were as follows:
Instruments
Millions of Yen

March 31, 2014

Contract
AmountContract
Amount Dueafter One Year

Fair
Value

Unrealized(Loss) Gain

¥3,340

¥(10)

¥(10)

397

(6)

(6)

¥3,113

¥(86)

¥(86)

282

3

3

Foreign exchange forward contracts:
Selling U.S. dollar
Buying yen
March 31, 2013

Foreign exchange forward contracts:
Selling U.S. dollar
Buying yen

Thousands of U.S. Dollars

March 31, 2014

Contract
AmountContract
Amount Dueafter One Year

Fair
Value

Unrealized
Loss$32,459

$(97)

$(97)

3,858

(58)

(58)

Foreign exchange forward contracts:
Selling U.S. dollar
Buying yen

	  The fair value of derivative transactions is measured at the quoted price obtained from thefinancial institution.

15. Contingent
Liabilities

The Group’s contingent liabilities as of March 31, 2014 and 2013, were as follows:
Millions of Yen

Export bill discountThousands of
U.S. Dollars

2014

2013

2014

¥26

¥26

$253

TAIYO HOLDINGS CO., LTD. Annual Report 201457

16. Business
Combinations

	(Business Combination through Acquisition)a. Overview of Business Combination(1) Name of acquired company and description of business
Name of acquired company:
ONSTATIC TECHNOLOGY CO., LTD.
Description of the business:	Manufacturing and distribution of specialty ink for precisionequipment(2) Purpose of the business combination
	The Group manufactures and distributes specialty ink for precision equipment, expanding­business activities mainly in Japan, China, Taiwan, Korea, and ASEAN. Meanwhile, OTC, theacquired company, manufactures and distributes specialty ink for precision equipment mainly
focusing on China and Taiwan.
  The Company acquired the shares of OTC in Taiwan and made it its subsidiary, whereby theGroup expects to share and use the respective management resources effectively, providing
intensive services to meet customers’ needs.
(3) Date of the business combination
May 16, 2013(4) Legal form of the business combination
Acquisition of shares for cash consideration(5) Name of the company after the business combination
Not changed(6) Acquired voting rights
Immediately before the date of the business combination
Additions at the date of the business combination
After the acquisition

25.5%
25.5%
51.0%

(7) Grounds for determination of the acquiring company
	The Company acquired 51.0% of the voting rights of OTC through the acquisition of shares forcash consideration.
b. P eriod for Which the Results of Operation of the Acquired Company is Included in
the Consolidated Financial Statements
	The Company used the financial statements of OTC whose fiscal year ends on December 31
for consolidation since the difference of fiscal year ends between the Company and OTC is no
more than three months. As April 1, 2013, was deemed as the acquisition date under the business combination, financial results of OTC until March 31, 2013, were recorded as equity inearnings of affiliates in the consolidated financial statements for the year ended March 31,
2014.
c. Acquisition Cost and Breakdown

58 TAIYO HOLDINGS CO., LTD. Annual Report 2014

Millions of Yen

Thousands of
U.S. Dollars

Consideration for acquisition: Acquisition cost of OTC held by the Company immediately
before the acquisition
Cash paid at the date of business combination
Transaction costs—advisory fees, etc.

¥2,6692,568
61$25,938
24,956593

Total acquisition costs¥5,298$51,487

d. A
 mount of Goodwill Recognized and Reason Thereof and the Method and Period
for Amortization of Goodwill

Amount of goodwill recognizedMillions of Yen

Thousands of
U.S. Dollars¥3,330$32,362	  Goodwill is recognized for the difference of acquisition cost and net amount of assets
acquired and liabilities assumed.
	  Goodwill is amortized on a straight-line basis over 20 years.
e. Assets Acquired and Liabilities Assumed at the Date of the Business Combination
Millions of Yen

Thousands of
U.S. Dollars

Current assets
Noncurrent assets¥4,998414$48,572
4,023

Total assets¥5,412$52,595

Current liabilities
Noncurrent liabilities¥1,359118$13,207
1,147

Total liabilities¥1,477$14,354(Transactions under Common Control)a. Overview of the Transaction(1) Name of combined company and description of the business
Name of combined company:
ONSTATIC TECHNOLOGY CO., LTD.
Description of the business:	Manufacturing and distribution of specialty ink for precisionequipment(2) Date of the business combination
August 12, 2013(3) Legal form of the business combination
Acquisition of shares for cash consideration(4) Name of the company after the business combination
Not changed(5) Overview and purpose of the transaction
	Shares owned by minority shareholders were acquired to share and use the respective business resources effectively.
b. Overview of Accounting Methods Applied	This business combination is accounted for as a transaction with minority shareholders amongtransactions under common control in accordance with ASBJ Statement No. 21 and ASBJ
Guidance No. 10.
c. Acquisition Cost and Breakdown
Millions of Yen

Thousands of
U.S. Dollars

Consideration for acquisition—cash and deposits
Transaction costs—advisory fees, etc.

¥1,90819$18,542185

Total acquisition costs¥1,927$18,727TAIYO HOLDINGS CO., LTD. Annual Report 2014

59

d. A
 mount of Goodwill Recognized and Reason Thereof and the Method and Period
for Amortization of Goodwill
Millions of Yen

Thousands of
U.S. Dollars¥1,146$11,137

Amount of goodwill recognized	  Goodwill is recognized for the difference of acquisition cost and net amount of assets
acquired and liabilities assumed.
	  Goodwill is amortized on a straight-line basis over 20 years.

17. Comprehensive
Income	Components of other comprehensive income for the years ended March 31, 2014 and 2013,
were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

2013

2014

¥  156¥   89$ 1,516

(56)

(32)

(544)

100

57

972

Gain arising during the year

2,790

2,156

27,114

Total other comprehensive income¥2,890¥2,213$28,086

Valuation differences on available-for-sale securities:
Gain arising during the year
Income tax effectForeign currency translation adjustments:

18. Net Income
Per Share	A reconciliation of the differences between basic and diluted net EPS for the years ended
March 31, 2014 and 2013, was as follows:
Millionsof YenThousandsof Shares

Year Ended March 31, 2014

Net
IncomeWeighted-Average
SharesBasic EPS—Net income available
to common shareholders¥4,931

25,438¥193.83¥3,36825,438¥132.38

Yen

EPS

Year Ended March 31, 2013

Basic EPS—Net income available
to common shareholders

Diluted net EPS is not disclosed because there are no dilutive securities.

60 TAIYO HOLDINGS CO., LTD. Annual Report 2014

U.S. Dollars$1.88

19. Supplemental Cash 	The Company acquired and newly consolidated OTC and six companies during the year ended
March 31, 2014.
Flow Information
	  In the third quarter of the year ended March 31, 2014, one subsidiary of OTC was liquidated.
	  The details of assets and liabilities of these companies at the date of consolidation and reconciliation between acquisition costs of the shares and net payment for the acquisition are as follows:

Current assets
Noncurrent assets

Millions of Yen

Thousands of
U.S. Dollars¥4,998$48,571

414

4,023

Goodwill

3,330

32,362Current liabilities(1,359)(13,207)

Noncurrent liabilities
Minority interests in consolidated subsidiaries(118)(1,147)(1,943)(18,882)

(24)

(233)

5,298

51,487

Valuation difference
Subtotal(2,669)(25,938)

Valuation by equity method before consolidation

(73)

(709)

Loss on step acquisition

73

709

Acquisition costs before consolidation

2,629

25,549Cash and cash equivalents held by acquired companies(1,767)(17,172)

Purchase of investments in subsidiaries resulting in change inscope of consolidation¥  862$ 8,377

Total acquisition costs

20. Subsequent Event	The appropriation of retained earnings as of March 31, 2014, approved at the Company’s
shareholders’ meeting held on June 20, 2014, is as follows:

Year-end cash dividends, ¥45 ($0.44) per share

Millions of Yen

Thousands of
U.S. Dollars¥1,145$11,127

21. Segment Information	(1) Description of Reportable Segments
	The Group’s reportable segments are those for which separate financial information is available, and regular evaluation by the Company’s management is being performed in order todecide how resources are allocated among the Group.
The Group made the transition to a holding company system on October 1, 2010. The
business of the Group consists mainly of one activity, the manufacture and distribution ofsolder resist for printed wiring boards, 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.
From the first quarter of the year ended March 31, 2014, the Company acquired OTC,
including OTC’s six subsidiaries, and OTC is consolidated. In the third quarter of the year
ended March 31, 2014, one subsidiary of OTC was liquidated.
(2) Method of Measurement for Information for the Amounts of Sales, Profit (Loss),
Assets, Liabilities, and Other Items by Reportable Segments
	The accounting policies of each reportable segment are consistent with those d­ isclosuresin Note 2, “Summary of Significant Accounting Policies.”

TAIYO HOLDINGS CO., LTD. Annual Report 201461

(3) Information about Sales, Profit (Loss), Assets, Liabilities, and Other Items by Reportable Segments
Millions of Yen
Reportable Segments
Year Ended March 31, 2014

Japan

Sales: Sales to external customers¥ 8,698 ¥16,203 ¥ 5,575 ¥10,312 ¥40,788 ¥3,437 ¥44,225

Taiwan

1,588

Korea

2,824

288

Total

Other

10,00788

Total

Reconciliations

Consolidated¥44,225

10,095¥(10,095)¥14,005 ¥17,791 ¥ 8,399 ¥10,600 ¥50,795 ¥3,525 ¥54,320¥(10,095)¥44,225

Segment profit¥ 1,906 ¥ 2,617 ¥ 1,428 ¥ 1,074 ¥ 7,025 ¥  453 ¥ 7,478
Segment assets
7,897 12,369 13,000
7,625 40,891 2,053 42,944
Other items:
238
206
193
157
794
14
808
Depreciation Increase in property, plant, andequipment and intangible assets
1,267
275
171
444
2,157
10
2,167

¥     91
15,425¥ 7,569
58,369

309

1,117

389

2,556

Intersegment sales or transfers
Total sales

5,307

China

Millions of Yen
Reportable Segments
Year Ended March 31, 2013

Japan

Sales: Sales to external customers¥ 8,822 ¥10,683 ¥2,897 ¥10,986 ¥33,388 ¥2,796 ¥36,184

Intersegment sales or transfers

China

4,243

152

Taiwan

Korea

1,039

737

Total

6,171

Other

58

Total

Reconciliations

Consolidated¥36,184

6,229¥(6,229)

Total sales¥13,065 ¥10,835 ¥3,936 ¥11,723 ¥39,559 ¥2,854 ¥42,413¥(6,229)¥36,184

Segment profit
Segment assets
Other items:
Depreciation Increase in property, plant, andequipment and intangible assets¥ 1,686 ¥ 1,585 ¥  498 ¥   591 ¥ 4,360 ¥  324 ¥ 4,684
7,430
8,079
4,646
7,046 27,201
1,728 28,929¥  (298)
15,094¥ 4,386
44,023

193

187

150

103

633

13

646

358

1,004

165

98

91

155

509

10

519

87

606

Thousands of U.S. Dollars
Reportable Segments
Year Ended March 31, 2014

Japan

China

Taiwan

Korea

Total

Other

Total

Reconciliations

Consolidated

Sales: Sales to external customers
Intersegment sales or transfers$ 84,528 $157,464 $ 54,179 $100,214 $396,385 $33,401 $429,786
51,575

15,43227,444

2,799

97,250855

98,105$429,786$(98,105)$136,103 $172,896 $ 81,623 $103,013 $493,635 $34,256 $527,891$(98,105)$429,786

Segment profit$ 18,523 $ 25,432 $ 13,878 $ 10,437 $ 68,270 $ 4,402 $ 72,672
Segment assets
76,745 120,204 126,336
74,101 397,386 19,951 417,337
Other items:
2,313
2,002
1,875
1,526
7,716
136
7,852
Depreciation Increase in property, plant, andequipment and intangible assets
12,313
2,672
1,662
4,315
20,962
97
21,059$    885
149,903$ 73,557
567,240

3,003

10,855

3,781

24,840Total sales

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 U.S. and other Asian countries.
(c) Depreciation does not include goodwill amortization.
(d) From the second quarter of the year ended on March 31, 2014, the “Taiwan” and “China” segments include sales and operating income of OTC (including
OTC’s four subsidiaries). As one of its subsidiaries is not engaged in any business activities, the subsidiary is not included in the segments above.
(e) Segment profit of “Reconciliations” includes unallocated segment income of ¥133 million ($1,293 thousand) and unallocated segment loss of ¥266 million,
which is mainly composed of the income or loss concerning the holding company in 2014 and 2013, respectively.
(f) Segment assets of “Reconciliations” include unallocated segment assets of ¥19,084 million ($185,462 thousand) and ¥16,765 million, which are mainlycomposed of the assets concerning the holding company in 2014 and 2013, respectively.

62 TAIYO HOLDINGS CO., LTD. Annual Report 201422. Related-Party
Disclosures

	There were no transactions of the Company with related parties for the fiscal year ended March
31, 2014.
	  Transactions of the Company with related parties for the fiscal year ended March 31, 2013
were as follows:
Nature of related party:	Unconsolidated subsidiaryName:
TAIYO LOGISTICS CO., LTD.
Location:
Saitama, Japan
Capital amount:¥12 million
Business:
Logistic subcontracting services to the Company
Ownership of voting rights:
100%
Description of transaction:
Receipt of dividend
Transaction amount:¥78 million

TAIYO HOLDINGS CO., LTD. Annual Report 201463

Independent Auditor’s Report

64 TAIYO HOLDINGS CO., LTD. Annual Report 2014

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

Head Office

The Ranzan-Kitayama Facility

Global Network
Company

Voting Shares HeldBusiness Description

TAIWAN TAIYO INK CO., LTD.

99.8%

Manufacture and marketing of PWB materials

TAIYO INK MFG. CO., (KOREA) LTD.

89.8%

Manufacture and marketing of PWB and FPD materials

TAIYO INK (SUZHOU) CO., LTD.

100.0%

Manufacture and marketing of PWB materials

TAIYO AMERICA, INC.

100.0%

Manufacture and marketing of PWB materials

ONSTATIC TECHNOLOGY CO., LTD.

69.2%

Manufacture and marketing of PWB materials

ONSTATIC INK (SHENZHEN) CO., LTD.

*1

Manufacture and marketing of PWB materials

TAIYO INK INTERNATIONAL (SINGAPORE) PTE LTD.

100.0%

Marketing of PWB materials

TAIYO INK INTERNATIONAL (HK) LTD.

100.0%

Marketing of PWB materials

TAIYO INK TRADING (SHENZHEN) CO., LTD.

100.0%

Marketing of PWB materials

TAIYO INK (THAILAND) CO., LTD.

100.0%

Technical support for PWB materials*1 ONSTATIC INK (SHENZHEN) CO., LTD. is a wholly owned subsidiary of ONSTATIC TECHNOLOGY CO., LTD.

Production and Marketing Subsidiaries
TaiwanTAIWAN TAIYO INK CO., 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 MFG. 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

ONSTATIC TECHNOLOGY CO.,LTD.
7F., No. 1, Ren’ ai Rd., Yingge
Dist., New Taipei City 239,
Taiwan, R.O.C.
PHONE: 886-2-26777481
FAX: 886-2-26777484
http://www.otcink.com.tw/

China
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

USA
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

ONSTATIC INK (SHENZHEN)
CO., LTD.
Building No. 38, WesternIndustrial Zone, Sha-Yi Village,
Sha-Jing Town,
Shenzhen, Guangdong, China
PHONE: 86-755-8173-7288
FAX: 86-755-8173-7282

Marketing or Technical Support Subsidiaries
Singapore
TAIYO INK INTERNATIONAL(SINGAPORE) PTE LTD.
133 New Bridge Road #09-08
Chinatown Point, Singapore
059413
PHONE: 65-6372-1141
FAX: 65-6372-1151

Hong Kong
TAIYO INK INTERNATIONAL(HK) LTD.
Room 703, 7/F, Silvercord,
Tower 2, 30 Canton Road,
Tsim Sha Tsui, Kowloon,
Hong Kong
PHONE: 852-2735-0636
FAX: 852-2375-7332

China
TAIYO INK TRADING(SHENZHEN) CO., LTD.
Rm. 1509, Office Tower,
Shun Hing Square Di Wang
Comm. Centre, 5002 Shen Nan
Dong Road, Shenzhen,
Guangdong, PRC
PHONE: 86-755-2583-4787
FAX: 86-755-8207-0989

ThailandTAIYO INK (THAILAND) CO., LTD.
1199 Piyavan Tower, 14F/Room
14C Phaholyothin Rd,
Samsen-Nai, Phayathai,Bangkok 10400, Thailand
PHONE: 66-2-619-5670
FAX: 66-2-619-7527

TAIYO HOLDINGS CO., LTD. Annual Report 201465

Corporate Information
Company Overview

Accessing Our Investor Information Site:
An Introduction to TAIYO HOLDINGS’s Website

Name: TAIYO HOLDINGS CO., LTD.
Phone: 81-3-5999-1511

TAIYO HOLDINGS is committed to providing a fullrange of information to all stakeholders including shareholders, investors, customers, and business partners.

Established: September 29, 1953

http://www.taiyo-hd.co.jp/English/Group/index.html

Head office: 2
 -7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan

Capital: ¥6,135 million
Shares authorized: 50,000,000

TAIYO HOLDINGS CO., LTD.

Total number of issued shares: 27,464,000
Stock listing: Tokyo
Number of shareholders: 7,000
Major shareholders:Shares(thousands)

Shareholding as apercentage of total
shares issued (%)

Kowa Co., Ltd.

6,554

23.86

Company’s Treasury Stock

2,026

7.37

Japan Trustee Services Bank, Ltd. (Trust Account)

1,528

5.56

The Master Trust Bank of Japan, Ltd.
(Trust Account)

1,236

4.50

Japan Trustee Services Bank, Ltd. (shares retrusted to Sumitomo Mitsui Trust Bank, Limited, andshares entrusted to Sumitomo Mitsui Banking
Corporation retirement benefit trust account)

1,116

4.06

SHIKOKU CHEMICALS CORPORATION

631

2.29

Toshin Yushi Co., Ltd.

538

1.96

Mitsuo Kawahara

500

1.82

Takato Kawahara

486

1.77

RBC ISB A/C DUB NON RESIDENT - TREATY
RATE

460

1.67

Name

Investor Information

Stock Price and Trading Volume(Yen)

(Thousands of shares)

18,0006,000

15,0005,000

12,000

4,000

9,000

3,000

6,000

2,000

3,000

1,000

0

2010

Nikkei Stock Average (left scale)

66 TAIYO HOLDINGS CO., LTD. Annual Report 20142011
Stock Price (left scale)2012
Trading Volume (right scale)

2013

2014

0

2-7-1 Hazawa, Nerima-ku, Tokyo 176-8508, Japan
PHONE: 81-3-5999-1511
http://http://www.taiyo-hd.co.jp/English

Printed in Japan