ANNUALREPORT2

1

0

5

A MESSAGE TO OUR SHAREHOLDERS

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

Economic Overview
Despite the uncertainty in the future with a temporary negative growth by thereactionary decline due to the last-minute demand according to the consumption tax
increase and prolonged weakness of consumer confidence, etc., Japan's economy in thisconsolidated fiscal year has made a gradual recovery, presenting an improvement of
employment situation by the various economic policies of the government, continual
announcement of good results of the companies that can enjoy the weaker yen benefits
by an additional monetary easing by the Bank of Japan.

Performance
In the semiconductor industry, capital investment of each semiconductor
manufacturer and OSAT company has favorably progressed since the semiconductor
demand for portable terminals has increased in China, the largest smartphone market
in the world, where the telecommunications standard has advanced to high-speed data
communication, and, in addition, sales of smartphones of new models has been steady.
As for the demand for semiconductors, technologies to connect various apparatuses tothe network to collect information have been spreading in addition to the continuous
favorable change in demand for smartphones. Accordingly, the demand for servers ofdata centers to process huge information has been expanded. Moreover, the expansionof demand is expected more and more with the automobile-related semiconductors as
seen in the system development to assist in the prevention of automobile collision andsafe driving.
－1－Under such a circumstance, our group could obtain orders and sales exceeding theplanning at the beginning in this period, by linking the positive capital investment ofeach OSAT company in Taiwan and China to orders. Orders for the molding equipmentin the compression type using our own technique which does not cause any resin flow
have increased due to the increase of large-sized substrates and refining anddensifying semiconductor packages that cannot be created by the conventional molding
method. Market supremacy of our products has surely penetrated and the sales ratio of
the compression type equipment, a highly valued product, has increased. As the result,earnings in this period have exceeded the value planned at the beginning of this period.
Moreover, by using the labs established at the European and U.S. bases, we havesucceeded in establishing a strong and close relationship with companies without
fabrication facilities, by approaching such companies through the evaluation and trial
production from the development stage and gaining orders through each OSAT
company.
According to the results above, the sales in this consolidated fiscal year has reached
21 billion 204 million yen (increased by 23.5%, 4 billion 38 million yen from theprevious consolidated fiscal year), the operating profit is 1 billion 671 million yen(increased by 3.7 times, 1 billion 213 million yen from the previous consolidated fiscal
year), the recurring profit is 2 billion 316 million yen (increased by 3.5 times, 1 billion
649 million yen from the previous consolidated fiscal year), and the net income in thisperiod is 2 billion 95 million yen (increased by 3.7 times, 1 billion 527 million yen fromthe previous consolidated fiscal year).

Looking Ahead
Regarding the capital investment of each semiconductor manufacturer in the fiscal
year 2015, it is expected that positive investment will continue with announcement ofstructuring a production line for the latest semiconductor package of 16 nm generationand investing for the development of the next generation in the investment planning
exceeding the schedule at the beginning of the period by a major semiconductor
manufacturer. It is also expected that the investment for enhancing the production
capacity would increase due to the increase of electrical equipment in automobiles andthe increase in shipping of wearable terminals.
Under such a circumstance, our group will aim at development in new fields such as
modularization of electronic parts, etc. as well as expanding the sales of the molding
equipment of semiconductors, holding the compression technology as a weapon. Also,
we will positively promote the manufacture and sales of CBN end mills and glass
cutting equipment and develop products, utilizing a high mold release coating
technology "Bancera", to create new markets other than the semiconductor market. In
the fine plastic molding business, we suppose that a steady circumstance will continue－2－because of the expansion of medical markets by advanced medical care and aging
society.
Our group put up long-term management vision, "TOWA Decade Vision" in March
2014, aiming at Portfolio revolution by extension of existing business, development toapply core technology, and creation of "new markets", etc., and then compiled various
measures and strategies, etc. that will be the milestones for realization in a mid-term(3-year) corporate planning (from March 2015 to March 2017). Now, we are working tosteadily execute various measures listed in the plan. Immediate major challenges inour group are as follows.

Semiconductor Manufacturing Equipment Business(1) Sales expansion of molding equipment with compression technology anddevelopment to other fields

Although transfer molding methods have been the mainstay for use in semiconductor
molding, factors such as the increases in the sizes of substrates and density of semiconductor
packages have resulted in an increase in the amount of products that cannot be produced by atransfer method. To produce these semiconductor packages, molding equipment in thecompression type using our own technology, which does not cause any resin flow, isrequired. Therefore, we will aim at the sales expansion of the molding equipment,
capturing the latest package trend and customers’ needs. Also, we will develop inother fields such as the fields of electronic parts, vehicle parts, etc. as well as the LED
manufacturing equipment using the compression technology.
(2) Improvement of market share in singularization apparatus

Singulation equipment is semiconductor manufacturing equipment for the dicing process(dividing of large substrates) that is a downstream process from molding. In other words, acustomer with singulation equipment is the same as a customer with molding equipment for
which TOWA has a high market share. By utilizing the high reliability and market share of
our molding equipment, TOWA aims to also capture the top share globally for singulationequipment.
(3) Challenge to the "new market" creation and commercialization
Since the scale of existing semiconductor molding market is limited, we have put
up “the practice of manufacture which [Create a Market]" as the core theme in themedium-term (3-year) corporate planning, aiming at further development. Along sucha planning, we will continue to develop the service commercialization andconsumables business to create a market by innovation, apply and develop coretechnology, and improve the customers’ productivity. In addition, we will work on withconsidering converting the business structure, including the trust fabrication.
(4) Restructuring of business activity networks and activity forms
We will strengthen our business operation and improve our earning capability byreviewing the tasks and roles among the headquarters, sales business companies,
and agencies to restructure a business model so that individual sales businesscompany can secure earning. At the bases in Europe and the United States, we will－3－

positively excavate new needs by enhancing the lab function to perform forming
experiments and evaluations.
(5)Pursuit of high productivity manufacturing system
We will continue to promote the construction of the proper site production systemand the direct shipping system at overseas production bases with our partnercompanies. We will also work on cost reduction by improving the in-house production
ratio against purchase goods and finished goods as well as performing development
and production, incorporating regional needs at overseas production bases. On theother hand, we will organize a system to procure parts in an optimum condition by
constructing suppliers' database.
(6) Development of global leaders
The majority of our sales target is overseas customers, and as to our group
employees, the majority is also composed with the employees of overseas bases. In
such a business form, developing globally active leaders has become essential. We will
work on developing human resources who have management abilities and language
skills as well as the technology and product knowledge.

Fine Plastic Molding Business
The fine plastic molding business consists of the manufacture and sales of molded
products mainly for medical applications. We will continue working on the activities togain the customers’ trust by managing the manufacturing environment that has
achieved a high degree of cleanliness, maintaining products quality, etc.

We look forward to your continuing support and assistance in the future.
We would like to express our heartfelt appreciation for your support.
August 2015
Hirokazu Okada
President & COO－4－

Consolidated Balance Sheets
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2014and 2015

2014

2015

Thousands of
U.S. dollars(Note 1)
2015

￥

￥

＄

Millions of yen

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

5,922

6,127

50,986Inventories ……………………………………………………
Deferred tax assets (Note 10) …………………………………
Other current assets …………………………………………..

6,255
(1)
6,254
3,175
48
314

7,258
(7)
7,251
3,453
76
501

60,398(58)
60,34028,734632
4,169

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

15,713

17,408144,861

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

4,191
12,544
12,092
162(18,366)

4,204
13,20912,61816(19,258)

34,984
109,919
105,001
133(160,256)

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

10,623

10,78989,781Other assets:
Investment securities (Note 4) ………………………………..
Deferred income taxes (Note 10) ……………………………..
Other ………………………………………………………….

1,829
128
839

2,576
111
851

21,436924
7,082

Total other assets ………………………………………….

2,796

3,538

29,442

Total assets ………………………………………………………

29,132

31,735

264,084

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

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

－5－Consolidated Balance Sheets
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2014and 2015

2014

2015

Thousands of
U.S. dollars(Note 1)
2015

￥

￥

＄

Millions of yen

LIABILITIES AND NET ASSETSLIABILITIESCurrent liabilities:
Short-term borrowings (Note 6) ………………………………….
Current portion of long-term debt (Note 6) ………………………
Notes and accounts payable ………………………………………
Accrued expenses(Note 2(12) and (13)) …………………………
Accrued income taxes …………………………………………….
Deferred tax liabilities(Note 10)……………………………………
Other current liabilities(Notes 2(11) and 6)………………………

1,601
1,373
2,583
395
103
60
945

834
1,591
2,572
787
106
63
1,176

6,940
13,24021,403
6,549
882
524
9,786

Total current liabilities …………………………………………

7,060

7,129

59,324Long-term liabilities:
Long-term debt (Note 6) ………………………………………….
Liability for retirement benefits(Notes 2(14) and 7) ………………
Deferred tax liabilities (Note 10) …………………………………
Other long-term liabilities ………………………………………..

3,193
764
203
2

2,846
287
405
7

23,683
2,388
3,370
59

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

4,162

3,545

29,500Total liabilities …………………………………………………

11,222

10,67488,824

NET ASSETS
Shareholders' equity (Note 8)
Common stock
Authorized: 80,000,000 shares
Issued :25,021,832 shares at 31st March, 2015…………………
Additional paid-in capital …………………………………………
Retained earnings …………………………………………………
Less: Treasury stock at cost ………………………………………

8,933
462
7,208
(9)

8,933
462
9,409
(9)

74,336
3,845
78,297(75)

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

16,594

18,795

156,403

Accumulated Other Comprehensive Income
Unrealized gain (loss) on other securities …………………………
Translation adjustments ……………………………………………
Retirement benefit adjustments……………………………………

510
512
36

1,024
789
134

8,521
6,566
1,115

Total accumulated other comprehensive income ………………

1,058

1,947

16,202

Minority interests ………………………………………………

258

319

2,655

Total net assets …………………………………………………

17,91021,061

175,260

Total liabilities and net assets …………………………………

29,132

31,735

264,084

Contingent liabilities (Note 13)

The accompanying notes are an integral part of these financial statements－6－Consolidated Statements of Income
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESTwo years ended March 31, 2015

Thousands of
U.S. dollars(Note 1 )2015

Millions of yen
2014

2015

￥

￥

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

17,165
12,623
4,542

21,204
14,972
6,232＄
176,450
124,590
51,860

Selling, general and administrative expenses (Notes 2(15) and 9)………

4,084

4,560

37,946

Operating Income……………………………………………………..

458

1,672

13,914

Other income (expenses)
Interest and dividend income……………………………………………
Interest expenses…………………………………………………………
Foreign exchange gains（losses) …………………………………………
Equity in earnings（losses) of affiliates……………………………………
Gain (Loss) on step acquisitions …………………………………………
Gain on subsidiaries liquidation …………………………………………
Insurance income ………………………………………………………
Loss on fire ………………………………………………………………
Provision for founder merit bonus ………………………………………
Other, net…………………………………………………………………
Total other income (expenses) ………………………………………

56
(74)
164
12
(2)
49
205

82
(75)
563
27
189
125
(57)
(300)
43
597

682
(624)
4,685
225
1,573
1,040
(474)
(2,496)357
4,968

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

663

2,269

18,882

Income taxes (Note 10)
Current ……………………………………………………………….
Deferred ……………………………………………………………..

107
(30)

138
7

1,149
58

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

586

2,124

17,675

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

18

28

233

Net Income……………………………………………………………

568

2,096

17,442

83.78
83.78
10.00

U.S. dollars(Note 1 )
＄
0.70
0.70
0.08

Amount per share of common stock (Note 2 (18) ):Net Income……………………………………………………………
Diluted net income ……………………………………………………
Cash dividends ………………………………………………………

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

－7－

￥

￥
22.72
22.72
10.00

Consolidated Statements of Comprehensive Income
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESTwo years ended March 31, 2015

Thousands of
U.S. dollars(Note 1 )2015

Millions of yen
2014

2015

￥
Income Before Minority Interests …………………………………………
Other Comprehensive Income
Unrealized gain on other securities……………………………………
Translation adjustment…………………………………………………
Remeasurements of defined benefit plans……………………………
Share of other comprehensive income of affiliates accounted for using
the equity method……………………………………………………
Total other comprehensive income
Comprehensive Income(Comprehensive income attributable to)Comprehensive income attributable to owners of the parent……………
Comprehensive income attributable to minority interests…………………

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

－8－

￥

＄

586

2,124

17,675

117
337
-

514
310
98

4,277
2,580
815

1
455
1,041

922
3,046

7,672
25,347

995
46

2,985
61

24,840507-

Consolidated Statements of Shareholders' Equity
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESTwo years ended March 31, 2015

Millions of yen
Shareholders' equity
Number of

Additional

Minority
interests

Unrealized

shares ofCommonpaid-in

Retainedcommon stock

stock

capitalearnings￥￥￥

Balance at March 31, 2013 …………………………………25,021,832

Accumulated othercomprehensive income
Treasury gain on otherstock￥

Retirement
Translation

benefit

Minority

Total

securities adjustments

adjustmentsinterests

net assets

￥

￥

￥

￥

￥

8,933

462

6,890

(9)

393

203

-

200

17,072

8,933

462

6,890

(9)

393

203

-

200

17,072

Cumulative effects of changes in accounting policies ……
Restated balance at March 31, 2013 ………………………25,021,832

Net Income ………………………………………………

-

-

-

568

-

-

-

-

-

568

Cash dividends……………………………………………

-

-

-

(250)

-

-

-

-

-

(250)

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

-

-

-

-

0

-

-

-

Net changes of items other than shareholders' equity ……

-

-

-

-

(9)

117
510

309
512

36
36

58
258

520
17,910

512

36

258

18,265

Balance at March 31, 2014 …………………………………25,021,832

8,933

462

7,208

8,933

462

7,563

(9)

510

-

0

355

Cumulative effects of changes in accounting policies ……
Restated balance at March 31, 2014 ………………………25,021,832

355

Net Income ………………………………………………

-

-

-

2,096

-

-

-

-

-

2,096

Cash dividends……………………………………………

-

-

-

(250)

-

-

-

-

-

(250)

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

-

-

-

-

0

-

-

-

-

Net changes of items other than shareholders' equity ……

-

-

-

-

(9)

277
789

98
134

Balance at March 31, 2015 …………………………………25,021,832

8,933

462

9,409

514
1,024

61
319

0
950
21,061Thousands of U.S.dollars (Note 1 )Accumulated other
Shareholders' equity
Number of

Minority

comprehensive income

Additional

Unrealized

shares ofCommonpaid-in

Retainedcommon stock

stock

capitalearnings＄＄＄

Balance at March 31, 2014 …………………………………25,021,832

74,336

3,845

59,982

74,336

3,845

Treasury gain on otherstock＄interests

Retirement
Translation

benefit

Minority

Total

securities adjustments

adjustmentsinterests

net assets

＄

＄

＄

＄

＄

(75)

4,244

4,261

300

2,147

149,040

62,935

(75)

4,244

4,261

300

2,147

151,993

2,953

Cumulative effects of changes in accounting policies ……
Restated balance at March 31, 2014 ………………………25,021,832

2,953

Net Income ………………………………………………

-

-

-

17,442

-

-

-

-

-

17,442

Cash dividends……………………………………………

-

-

-

(2,080)

-

-

-

-

-

(2,080)Net increase of treasury stock ……………………………

-

-

-

-

0

-

-

-

-

Net changes of items other than shareholders' equity ……

-

-

-

-

-

4,277

2,305

815

508

7,905

(75)

8,521

6,566

1,115

2,655

175,260

Balance at March 31, 2015 …………………………………25,021,832

74,336

3,845

78,297

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

－9－0Consolidated Statement of Cash Flows
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIESTwo years ended March 31, 2015

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

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

663

2015
￥
2,269

2015
＄
18,882

1,315
(12)
42
(56)
74
46
2
(2,367)
188
(15)
1,082
103
(20)
1,045
58
(77)
(91)
935

1,210
(27)
66
(82)
75
63
(871)
(178)
(126)
44
65
57
(186)
360
2,739
83
(76)
(133)
2,613

10,069
(225)
549
(682)
624
524
(7,248)(1,481)(1,049)366
541
474(1,548)2,996
22,792691(632)(1,107)
21,744

(7)

(7)

(58)

12

2014
￥

Cash Flows from Investing Activities:
Purchase of investment securities …………………………………………………………
Proceeds from purchase of investments in subsidiaries
resulting in change in scope of consolidation ……………………………
Purchase of shares of subsidiaries ……………………………………………….….
Purchase of property, plant and equipment ……………………………………………….
Sale of property, plant and equipment …………………………………………………….
Other, net …………………………………………………………………………………
Net cash provided by (used in) investing activities ………………………………………

(1,592)49(15)(1,553)(88)(1,415)35
22(1,453)(732)(11,775)291
183(12,091)

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

511
1,850
(1,190)
(100)
(0)
(250)
(1)
820

(779)
1,365
(1,404)
(100)
(0)
(250)
(5)
(1,173)(6,482)
11,359(11,683)(832)(0)(2,080)(43)(9,761)

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

65
267
5,267

96
83
5,534

799
691
46,051

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

5,534

5,617

46,742

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

－ 10 －

Notes to the Consolidated Financial Statements
TOWA CORPORATION AND CONSOLIDATED SUBSIDIARIES

1.

Basis of presenting Consolidated Financial Statements
TOWA CORPORATION (the ”Company”) and its domestic subsidiaries maintain their accounts andrecords in conformity with accounting principles and practices generally accepted in Japan (“JPGAAP”),
which are different, in certain respects from the application and disclosures and disclosure requirementsof International Financial Reporting Standards (“IFRS”).
The Company’s overseas subsidiaries maintain their accounts and records in conformity withgenerally accepted accounting principles and practices prevailing in their respective countries of domicile,and the Company makes necessary adjustments to its consolidated accounting process in case there areconsiderable differences as to application and disclosure requirements from International Financial
Reporting Standards.
The accompanying consolidated financial statements of the Company are prepared on the basis ofaccounting principles generally accepted in Japan, as required by the Financial Instruments and Exchange
Act of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications andrearrangements have been made to the consolidated financial statements issued domestically in order topresent them in a form which is more familiar readers outside Japan.
The consolidated financial statements are not intended to present the consolidated financial position,
results of operations and cash flows in accordance with the accounting principles and practices generally
accepted in countries and jurisdictions other than Japan.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience ofthe reader, using the approximate exchange rate at March 31, 2015, which was ¥120.17 to US$1.00.
These convenience translations should not be construed as representations that the Japanese yen amounts
have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rateof exchange.

2. Summary of Significant Accounting Policies(1) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
subsidiaries and affiliates. All significant inter-company transactions, account balances and unrealized
profits have been eliminated in consolidation. Fiscal year end of some subsidiaries is December 31, which
differs from that of the Company, March 31, and the Company consolidate such subsidiaries using theirprovisional settlements as of March 31. Shown below are the significant subsidiaries and affiliates of theCompany.

－ 11 －

Subsidiaries(All subsidiaries have been consolidated)
Name
BANDICK Corporation
TOWATEC Co., Ltd.
TOWAM Sdn. Bhd.
TOWA (Suzhou) Co., Ltd.
TONGJIN Corporation
TOWA Asia-Pacific Pte. Ltd.
TOWA (Shanghai) Co., Ltd.
TOWA TAIWAN Co., Ltd.
TOWA Jipal Technologies Co., Ltd. ※１
TOWA Semiconductor Equipment
Philippines Corp.
TOWA KOREA CO., LTD
TOWA USA Corporation
TOWA Europe B.V.
TOWA America Corporation ※２
TOWA Europe GmbH ※３

Ownership
100 %
100
100
100
50
100
100
100
60
100

Country of Incorporation
Japan
Japan
Malaysia
China
Korea
Singapore
China
TaiwanTaiwanPhilippines

100
100
100
100
100

Korea
The United States of America
Kingdom of the Netherlands
The United States of America
Germany

Affiliates(All affiliates are accounted for by the equity method)Name
Ownership
Country of Incorporation
Scientific and Semiconductor
20 %
Japan
Manufacturing Equipment RecyclingCo., Ltd※１．The Company acquired 60% portion of TOWA Jipal Technologies Co., Ltd. on April 8, 2013, andits financial statement is consolidated into accompanying financial statement for 2014 and 2015.
※２．Liquidation proceedings of TOWA America Corporation have been completed in the fiscal year
ended March 31,2015 and its financial statement isn’t consolidated into accompanying financial
statement for 2015.
※３．Liquidation proceedings of TOWA Europe GmbH have been completed in the fiscal year ended
March 31,2015 and its financial statement isn’t consolidated into accompanying financial
statement for 2015.

(2) Translation of Foreign Currency Items
In accordance with the Japanese accounting standard, every monetary assets and liabilities
denominated in foreign currencies are principally translated into Japanese yen at the exchange rate ineffect at the balance sheet date. The foreign exchange gains and losses from translation are recognized in
the statements of income.
With respect to financial statements of overseas subsidiaries, the balance sheet accounts are translated
into Japanese yen at the exchange rates in effect at the balance sheet date except for shareholders’ equity,which are translated at the historical rates. And revenue and expenses are translated at the exchange ratein effect at the balance sheet date. The differences resulting from translation in this manner are included
in “Translation adjustments” which is listed in Accumulated Other Comprehensive Income in theaccompanying consolidated balance sheets.

－ 12 －

(3) Cash and Cash Equivalents
For the purposes of cash flow statements, cash and cash equivalents comprise cash in hand, deposits
held at call with banks, net of overdrafts and all highly liquid investments with maturities of three months
or less.
Components of cash and cash equivalents as of March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars
Millions of Yen(Note 1)
2014
2015
2015
Cash on hand and at banks
Less: Time deposits with deposit termof over three months
Cash and cash equivalentat end of year

¥ 5,922¥6,127$50,986

¥ 388

¥510

$4,244¥ 5,534¥5,617$46,742(4) Securities
Securities are classified into four categories.
Categorization and valuation for investments in securities are as follows:1) Trading Securities
・ Such securities held for the purpose of generating profits from short-term price movements.
・ Unrealized gain/loss at the end of period resulting from the valuation by applying the fairvalue at such date is directly debited/credited to income;・ Such securities are treated in current assets in the balance sheet.
2) Held-to-maturity Debt Securities
・ Debt securities whose maturity dates are predetermined and are to be redeemed at par,acquired with intention to hold to their maturity dates;
・ The difference between the acquisition cost and the amount expected to gain at maturity isamortized or appreciated over the remaining period to maturity date. The amount amortized orappreciated is charged/credited to income for the respective period as interest expense orinterest income, as the case may be.
・ Unrealized loss will be required to be charged to income as impairment unless unrealized loss
is expected to recover within a reasonable period.
3) Shares in equity of Subsidiaries and Affiliates
・ Those securities are carried at cost unless such investment is regarded impaired.
4) Other Securities:
・ Such securities other than those categorized in 1 to 3 above;・ Other Securities with market quotation are valued at such market price at the end of period,
and those without market quotation are valued at cost.
・ Unrealized gain/loss at the end of period resulting from such valuation is charged to
Accumulated Other Comprehensive Income as “Unrealized gain/ (loss) on Other Securities”
after netting off the deferred income taxes thereto.
・ Unrealized loss which it incurred as the fair value is less than 50% of its acquisition cost will
be required to be charged to income.

－ 13 －

・ Unrealized loss which it incurred as the fair value is 30% ~50% of its acquisition cost will be
required to be charged to income unless the unrealized loss is expected to recover within areasonable period.
The moving average method is applied for calculation of the costs of securities.
(5) Inventories
Inventories are mainly stated at the lower of cost or net selling value, the cost being determined bymainly specific identification method for finished products and work-in-process, by mainly
moving-average method for raw materials and by the last purchase cost method for supplies.
(6) Allowance for Doubtful Accounts
The Company and its domestic subsidiaries have provided the allowance based on the past
uncollectible receivable experience for a certain reference period. Furthermore, for receivables which arefrom the debtors with financial difficulty, the allowance is provided for estimated unrecoverable amounts
individually. Overseas subsidiaries have provided an allowance for doubtful accounts in the estimatedamounts of possible bad debts.
(7) Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation for property, plant and equipment of the Company and its domestic subsidiaries iscalculated by applying declining-balance method, except for buildings acquired on and after April 1, 1998
which are applied the straight-line method, over the estimated useful lives.
The principal estimated useful lives are as follows:
Buildings and structures
3 ～ 50 years
Machinery and equipment
2 ～ 10 years
Depreciation for those of overseas subsidiaries is computed by the straight-line method.
(8) Leased Assets
Leased assets are depreciated to a residual value of zero by the straight-line method using the contract
term as the useful life.
However, finance lease transactions other than those in which titles to leased property are determined
to be transferred to lessees, which transactions started on or before March 31, 2008, are stated by applying
the accounting treatment applicable to ordinary operating lease transactions.
(9) Derivatives
The Company has entered into interest rate agreements to hedge the fluctuation of interest rate
exposures, and not for speculative purposes. The instruments include interest rate swap agreements.
These instruments were accounted by the deferral hedge accounting. The Company has accounted forinterest rate swap agreements by the exception accounting.

－ 14 －

(10) Goodwill
Goodwill is amortized over a period of 3 years by the straight-line method.
(11) Product Warranties
The Company has accounted for the estimate amounts of maintenance expenses as the productwarranties, which corresponded to the sales based on the prior track record for the outcome ofmaintenance expenses of the sold products during the period of warranty.
As of March 31, 2015, the liability for expected warranty costs was ¥98 million ($816thousand).
(12) Accrued Bonus
The Company and its subsidiaries provide for accrued bonuses to directors and employees for the
expected payment of their bonuses for the current fiscal year to those directors and employees serving at
the end of the fiscal year.
(13)Founder merit bonus
At the board of director’s meeting on September 26, 2014, the company submitted a resolution topresent ¥300 million ($2,496thousand) as a founder merit bonus to late Kazuhiko Bandoh, who was afounder of the company and passed away suddenly on June 2014. This resolution was approved by thecompany’s 37th annual meeting of stockholders.
(14) Accounting for retirement Benefits
1) Allocation of expected retirement benefit payments
When calculating retirement benefit obligations, the benefit formula basis is used to allocate
expected retirement benefit payments to the period as of the fiscal year-end.
2) Method for treating actuarial difference expenses
Actuarial differences are amortized by the declining-balance method over a period, which is within
the estimated average remaining years of service of the eligible employees (mainly 10 years) andcharged to income from the fiscal year following each respective incurrence.
3) Method for treating unrecognized actuarial difference
Unrecognized actuarial differences are recorded in remeasurements of defined benefit plans ofaccumulated other comprehensive income under net assets, after tax effects have been adjusted.
(15) Research and Development Costs
Research and development expenditure is charged to income when incurred.
(16) Income Taxes
Income taxes of the Company and its domestic subsidiaries consist of corporate income taxes, local
taxes and enterprise taxes. Enterprise taxes are deductible when paid for the computation of other taxes.

－ 15 －

Deferred income taxes are recognized using the asset and liability approach, whereby deferred tax
assets and liabilities were recognized in respect of temporary differences between the tax basis of assets
and liabilities and those as reported in the financial statements.
(17) Appropriation of Retained Earnings
Under the Japanese Corporate Law and the Articles of Incorporation of the Company, theappropriation of retained earnings or disposition of accumulated deficit could be adopted by the Board of
Directors. The appropriations of retained earnings reflected in the accompanying consolidated financial
statements include the results of such appropriations applicable to the immediately preceding financial
year as approved by the Board of Directors, and effected, during the relevant year. Dividends are paid toshareholders on the shareholders' register as at the end of each financial year.
(18) Per Share Information
Net income per share and diluted net income per share are computed based on the weighted-average
number of shares of common stock outstanding during each year and stock splits are reflected in thecalculation of the weighted-average number of shares of common stock.
Cash dividend per share is the total of the per-share amounts of interim cash distribution and the yearend cash dividends for the income of the respective financial periods.
3.

Change in Accounting Policies
Effective from the fiscal year ended March 31, 2015, the Company and its domestic subsidiaries
adopted the provisions of the main clauses of Paragraph 35 of the “Accounting Standard for Retirement
Benefits” (ASBJ Statement No.26 of May 17, 2012) and Paragraph 67 of the “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No.25 of March 26, 2015). Under these provisions,the Company and its domestic subsidiaries reviewed the calculation method for projected benefit
obligation and current service costs, and changed the method of attributing expected benefits to periods
from the straight-line basis to the benefit formula basis. In addition, the Company and its domestic
subsidiaries changed the method for determining the discount rate to one that uses a single weighted
average discount rate reflecting the estimated timing and amount of benefit payment.
Application of the Accounting Standard for Retirement Benefits and Guidance on AccountingStandard for Retirement Benefits is in line with the transitional measures provided in Paragraph 37 of the
Accounting Standard for Retirement Benefits, and the effect of the revision to the calculation method for
projected benefit obligation and current service costs has been added to or deducted from retained
earnings as of April 1, 2014.
As a result, as of April 1, 2014, liability for retirement benefits decreased ¥355 million($2,953thousand), and retained earnings increased by ¥355 million ($2,953thousand).
The effect of this application on profit and loss for the fiscal year ended March 31, 2015, profit
decreased ¥15 million ($125thousand). For additional information, net assets per share increased ¥13.60($0.11) as of March 31, 2015, and earnings per share decreased ¥0.60 ($0.00).

－ 16 －

4.

Securities(1) The following is a summary of investments in affiliates and other securities at March 31, 2014:
Other securities:
Millions of yen
2014
Unrealized
gains

Unrealized
lossesBook Value(Estimatedfair value)

¥ 940
¥ 940

¥ 701
¥ 701

¥ 13
¥ 13

¥ 1,628¥ 1,628

3
¥ 943

¥ 701

¥ 13

3
¥ 1,631

Cost
Market value available:
Equity securities
Market value not available:
Equity securities
Other securities total
Investments in affiliates:

Millions of yen
2014Book Value
Market value not available:
Equity securities

¥ 198
¥ 198
¥ 1,829

Total(2) The following is a summary of investments in affiliates and other securities at March 31, 2015
Other securities:
Millions of yen
2015
Unrealized
gains

Unrealized
lossesBook Value(Estimatedfair value)

¥ 947
¥ 947

¥ 1,406¥ 1,406¥ 3¥ 3¥ 2,350¥ 2,3503¥ 950¥ 1,406¥ 3

3¥ 2,353

Cost
Market value available:
Equity securities
Market value not available:
Equity securities
Other securities total
Investments in affiliates:

Millions of yen
2015Book Value
Market value not available:
Equity securities

¥ 223
¥ 223
¥ 2,576

Total－ 17 －

Other securities:
Thousands of U.S. dollars (Note 1)
2015
Unrealized
gains

Unrealized
lossesBook Value(Estimatedfair value)$ 7,881$ 7,881$ 11,699$ 11,699

$ 25
$ 25

$ 19,555$ 19,555

25$ 7,906$ 11,699$ 25

25$ 19,580

Cost
Market value available:
Equity securities
Market value not available:
Equity securities
Other securities total
Investments in affiliates:

Thousands of
U.S. dollars(Note 1)
2015
Book Value
Market value not available:
Equity securities$ 1,856$ 1,856$ 21,436

Total

5.

Estimated Fair Value of Financial Instruments
As of March 31, 2014 and 2015, the book value and fair value of financial instruments and thedifferences between these figures are set forth in the table below. The table does not include financial
instruments for which it is extremely difficult to determine the fair value.

Cash and deposits
Notes and accounts receivable
Less:Allowance for Doubtful Accounts
Investment securities
Total assets
Notes and accounts payable
Short-term borrowings
Bonds
Long-term borrowings
Total liabilities

Book Value¥ 5,9226,255(1)¥ 6,254
1,628¥ 13,804

Millions of yen
2014
Fair Value¥ 5,922

Difference¥ -¥ 6,254
1,628¥ 13,804

¥ ¥ -

2,583
1,601
340
4,226
¥ 8,750

2,583
1,601
342
4,226
¥ 8,752

2
0
¥ 2

¥ -

¥ (27)¥ (27)

Derivative financial instruments－ 18 －Cash and deposits
Notes and accounts receivable
Less:Allowance for Doubtful Accounts
Investment securities
Total assets
Notes and accounts payable
Short-term borrowings
Bonds
Long-term borrowings
Total liabilities

Book Value¥ 6,1277,258(7)¥ 7,251
2,350¥ 15,728

Investment securities
Total assets
Notes and accounts payable
Short-term borrowings
Bonds
Long-term borrowings
Total liabilities

Difference¥ -¥ 7,251
2,350¥ 15,728

¥ ¥ -

2,572
834
240
4,196
¥ 7,842

2,572
834
241
4,193
¥ 7,840

1
(3)
¥ (2)

¥ -

¥ (20)¥ (20)

Derivative financial instruments

Cash and deposits
Notes and accounts receivable
Less:Allowance for Doubtful Accounts

Millions of yen
2015
Fair Value¥ 6,127

Thousands of U.S. dollars (Note 1)
2015
Book Value
Fair Value
Difference$ 50,986$ 50,986$ 60,398(58)$ 60,340$ 60,340$ 19,555
19,555$ 130,881$ 130,881$ 21,403
6,940
1,998
34,917$ 65,258

21,4036,940
2,005
34,892$ 65,240

7(25)$ (18)$ -$ (166)$ (166)

Derivative financial instruments

Financial instruments for which it is extremely difficult to determine the fair value as of March 31, 2014
and 2015 were as follows, respectively.

Millions of Ｙen
2014
2015
¥ 201
¥ 226

Unlisted equity securities

Thousands of
U.S. dollars(Note 1)2015
$ 1,881

Because no quoted market prices are available and it is extremely difficult to determine the fair value, theabove financial instruments are not included in “Investment securities” in the preceding table.
The redemption schedule for bonds and long-term borrowings is disclosed in Note6.

－ 19 －

6.

Short-term Borrowings and Long-term Debt
Short-term borrowings represent loans from banks. The annual average interest rates applicable toshort-term borrowings at March 31, 2014 are 1.2% and 2015 are 0.9%, respectively.
Long-term debt as of March 31, 2014 and 2015 consisted of the following:

Millions of Ｙen
2014
2015
¥ 4,226¥ 4,196
180
120
160
120
3
10
(1,374)(1,593)¥ 3,195¥ 2,853

Borrowings from financial institutions
0.6% Yen Bonds due 2016
0.5% Yen Bonds due 2017
Other Long term liabilities
Less: Portion due within one year

Thousands of
U.S. dollars(Note 1)
2015
$ 34,917
999
999
83(13,256)$ 23,742

The aggregate annual maturity of long-term debt after March 31, 2015 is summarized as follows:
Thousands of
U.S. dollars
Millions of Ｙen
Years ending March 31,(Note 1)2016
¥ 1,593$ 13,2562017
1,418
11,800
2018
852
7,090
2019 and thereafter
583
4,852
¥ 4,446$ 36,998
At March 31, 2014 and 2015, the following assets were pledged as collateral for short-termborrowings and long-term debt:

Millions of Yen
2014
2015
Principal of debt:
Short-term borrowings
Portion due within one year
Long-term borrowings

Assets pledged as collateral:
Buildings and structures
Machinery and equipment
Land－ 20 －

Thousands of
U.S. dollars(Note 1)
2015

¥ 43
58
16
¥ 117

¥ 54
11
7
¥ 72

$ 449
92
58
$ 599

¥ 154
1
106
¥ 261

¥ 148
0
119
¥ 267

$ 1,232
0990$ 2,222

Regarding loan payables, the syndicate loan contract with limit of ¥675 million ($5,617 thousand),commitment line contracts with limits of ¥2,500 million ($20,804 thousand), convertible term loan
contract with limit of ¥75 million ($624 thousand), and convertible term loan contract with limit of ¥125
million ($1,040 thousand) respectively include financial covenant terms. The contractor triggers
acceleration and is enforced to repay the full principal and interest if the contractor breaches either of thefollowing terms.
(Financial covenant terms included in the syndicate loan contract)(1) The amount of Net Assets on the consolidated balance sheets at the end of each fiscal year andeach semiannual period must be maintained ¥10,710 million ($89,124 thousand) or more.
(2) The ordinary losses before depreciation in both consolidated statements of income for each fiscal
year must not be existed in two successive periods after the fiscal year ended March 31, 2013.
(Financial covenant terms included in the commitment line contracts)(1) The amount of Net Assets on the consolidated balance sheets at the end of each fiscal year andeach semiannual period must be maintained ¥11,150 million ($92,785 thousand) or more.
(2) The ordinary losses in both consolidated statements of income for each fiscal year must not be
existed in two successive periods after the fiscal year ended March 31, 2013.
(Financial covenant terms included in the convertible term loan contract with limit of ¥75 million yen)
(1) The amount of Net Assets on the consolidated balance sheets at the end of each fiscal year andeach semiannual period must be maintained ¥9,040 million ($75,227 thousand) or more.
(2) The ordinary losses in both consolidated statements of income for each fiscal year must not be
existed in two successive periods after the fiscal year ended March 31, 2010.
(Financial covenant terms included in the convertible term loan contract with limit of ¥125 million yen)
(1) The amount of Net Assets on the consolidated balance sheets at the end of each fiscal year andeach semiannual period must be maintained ¥10,710 million ($89,124 thousand) or more.
(2) The ordinary losses before depreciation in both consolidated statements of income for each fiscal
year must not be existed after the fiscal year ended March 31, 2013.
7.

Retirement Benefits
The Company and its consolidated subsidiaries have set up funded and unfunded defined benefit plansand defined contribution plans to provide for employees’ retirement benefits. Under the defined benefit
pension plans, which are funded, lump-sum payments or pensions mainly based on the salary amount andservice periods. Under the lump-sum payment plans, which are unfunded, lump-sum payments areprovided mainly based on the salary amount and service periods.
Certain consolidated subsidiaries have adopted a simplified method of calculation with liability for
retirement benefits and retirement benefits expense.

－ 21 －

(1) Defined benefit plans
1) The changes in defined benefit obligation for the year ended March 31, 2014 and 2015 were as follows:
Thousands of
U.S. dollars
Millions of Yen(Note 1)
2014
2015
2015
Retirement benefit obligations at beginning of year
¥ 1,918¥1,960$ 16,310
Cumulative effects of changes in accounting(355)(2,953)
policies
Restated balance, at beginning of year
1,918
1,605
13,357
Service cost
126
148
1,232
Interest cost
24
16
133
Actuarial (gain) loss
(30)
18
150
Retirement benefits paid
(84)
(47)
(391)
Others6540Retirement benefit obligations at end of year
¥ 1,960
1,7455$ 14,521
2) The changes in plan assets for the year ended March 31, 2014 and 2015 were as follows:

Millions of Yen
2014
2015
¥ 1,037¥1,196
51
24
47
129
132
132
(71)
(23)
¥ 1,196
1,458

Plan assets at beginning of year
Expected return on plan assets
Actuarial gain (loss)
Contributions from the employer
Retirement benefits paid
Plan assets at end of year

Thousands of
U.S. dollars(Note 1)2015
$ 9,953
200
1,073
1,098
(191)
$ 12,133

3) The balance of retirement benefit obligations and plan assets at fair value as of March 31, 2014 and2015, liabilities and assets recognized in the consolidated balance sheet were as follows:

Funded retirement benefit obligations
Plan assets at fair value
Unfunded retirement benefit obligations
Net liability recognized in the consolidated balance sheet
Liability for retirement benefits
Net liability recognized in the consolidated balance sheet－ 22 －

Millions of Yen
2014
2015
¥ 1,716¥1,494(1,196)(1,458)
520
36
244
251
¥ 764
¥287
764
¥ 764

287
¥287

Thousands of
U.S. dollars(Note 1)2015
$ 12,432(12,133)299
2,089$ 2,388
2,388$ 2,388

4) The components of retirement benefit expenses for the year ended March 31, 2014 and 2015 were as
follows:
Thousands of
U.S. dollars
Millions of Yen(Note 1)
2014
2015
2015
Service cost
¥ 126
¥148
$ 1,232
Interest cost
23
16
133
Expected return on plan assets
(51)
(24)
(200)
Amortization of actuarial (gain) loss
17
(11)
(92)
Retirement benefit expenses
¥ 115
¥129
$ 1,0735) Remeasurements of defined benefit plans in other comprehensive income (before tax effect) for theyear ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars
Millions of Yen(Note 1)
2014
2015
2015
Actuarial gain (loss)
¥ 99
$ 823
Total
¥ 99
$ 823

6) Unrecognized actuarial gain included in accumulated other comprehensive income (before tax effect) asof March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars
Millions of Yen(Note 1)
2014
2015
2015
Unrecognized actuarial gain (loss)
¥ 27
¥ 126
$ 1,049
Total
¥ 27
¥ 126
$ 1,049
7) Plan assets, by major category, as a percentage of total plan assets as of March 31, 2014 and 2015 wereas follows:
2014
2015
Debt securities
37%
37%
Equity securities
40%
41%
General accounts at life insurance companies
19%
18%
Others
4%
4%
Total
100%
100%
The expected rate of return on plan assets is determined considering the allocation of the plan assets
expected currently and in the future and the long-term rates of return which are expected currently and in
the future from the various components of the plan assets.
8) The major assumptions used in accounting for the above plans as follows:
2014
Discount rate
Expected long-term rates of return on plan assets
Expected pay raise rate

2015
0.67%
4.89%
2.00%

－ 23 －

0.25%
2.00%
2.00%

(2) Defined Contribution plans
Certain consolidated subsidiaries have defined contribution plans and amount of the contribution forthe year ended March 31, 2014 and 2015 were ¥26million and ¥34million ($283thousand).
8.

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

9.

Research and Development Costs
Research and development costs charged to income for the years ended March 31, 2014 and 2015
were ¥130million and ¥194million ($1,614 thousand), respectively.

10. Income Taxes
The company is subject to a number of different income taxes, which in the aggregate, result in astatutory tax rate in Japan of approximately 37.9% and 35.6% for the year ended of March 31, 2014 and2015.
The deferred tax assets and deferred tax liabilities at March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars
Millions of Ｙen(Note 1)
2014
2015
2015
Deferred tax assets:
Inventory write down
¥ 179
¥ 123
$ 1,024
Impairment loss of fixed assets
451
395
3,287
Retirement and severance benefits
278
133
1,107
Trial product for development
290
273
2,272
Net operating loss carried forward
644
717
5,967
Other, net
605
720
5,991
Valuation Allowance(2,254)(2,155)(17,933)
193
206
1,715
Deferred tax liabilities:
Other, net
(280)
(487)
(4,053)(280)(487)(4,053)Net deferred tax assets/(liabilities)¥ (87)¥ (281)$ (2,338)－ 24 －

11. Other Comprehensive Income(Loss)
The reclassification adjustments and tax effects for components of other comprehensive income (loss)
for the year ended March 31, 2014 and 2015 are as follows:
Thousands of
U.S. dollars
Millions of Ｙen(Note 1)
2014
2015
2015
Unrealized gain on other securities:
Amount arising during the year
¥ 172
¥ 715
$ 5,950
Before Tax effect
172
715
5,950
Tax effect
(55)
(201)
(1,673)
Total unrealized gain on other securities
Translation adjustments:
Amount arising during the year
Reclassification adjustments for losses(gains) realized in net income
Total translation adjustments
Remeasurements of defined benefit plans:
Amount arising during the year
Reclassification adjustments for losses(gains) realized in net income
Before Tax effectTax effectTotal remeasurements of defined benefit
plans
Share of other comprehensive income ofaffiliates accounted for using the equity
method:Amount arising during the year
Total other comprehensive income (loss)

117

514

4,277

337

497

4,136

-

(187)

(1,556)

337

310

2,580

-

110

915

-

(11)

(92)

-

99
(1)

823
(8)

-

98

815

1
¥ 455

¥ 922

$ 7,672

12. Leases
The Company and its consolidated subsidiaries and equity method affiliates have been utilizing
finance lease arrangements other than those deemed to transfer the ownership of the leased property to thelessee to employ certain machinery and equipment.
The finance lease transactions, which do not transfer ownership to lessee, started before April 1, 2008
were accounted for as operating leases.
13. Contingent Liabilities
The Companies have no significant contingent liabilities.

－ 25 －

14. Business Combinations
Business combination through acquisition for the year ended March 31, 2015.
(1) Overview of the business combination(i) Acquired company name and its main business
Acquired company name: ADVANCED LASYS Co.,Ltd.
Main business: Processing of an electronic device part, production and sales of cutoff
equipment.
(ii) Purpose of the acquisition
To aim for expansion of the business scale and improvement of earning capacity by doing thedevelopment of the application of Singulation technology cultivated through semiconductor
equipment business.
(iii) Date of completion business combination
April 30, 2014(Date of the acquisition of shares)June 30, 2014(Date regarded as date of the acquisition)(iv) Legal form of business combination
Acquisition of shares for cash consideration (Note)(Note)After the share acquisition, the Company implemented a merger in which TOWA
KOREA CO., LTD became a surviving company and ADVANCED LASYS Co.,Ltd. becamea merged company at June 25, 2014.
(v) Name of the company after business combination
TOWA KOREA CO., LTD(vi) Acquired voting rights
100%(vii) Main reason to decide the acquiring company
It is because TOWA KOREA CO., LTD, a wholly owned subsidiary of the Company,
acquired the shares of ADVANCED LASYS Co.,Ltd. for cash consideration.
(2) Period for which the operating results of the acquired company are included in the
Company’s consolidated financial statements
The company doesn’t include operating results of ADVANCED LASYS Co.,Ltd. in the
consolidated financial statements.
(3) The breakdown of acquisition cost for the acquired company
Millions of
yen
32
¥ 32

Cash paid for the acquisition
Total acquisition costs(4) Goodwill(i) Amount of goodwill¥73million ($607 thousand)(ii) Cause of goodwill
Anticipated future profitability in excess of net asset value(iii) Method and period of amortization of goodwill
Straight line method over 3 years－ 26 －

Thousands of
U.S. dollars(Note 1)266
$ 266

(5) Assets acquired and liabilities assumed as of the acquisition dateThousands ofMillions of
U.S. dollars
yen(Note 1)
Current assets
¥ 25
$ 208
Non-current assets
11
92
Total assets
¥ 36
$ 300
Current liabilities
Non-current liabilities
Total liabilities

¥ 76
¥ 76

$ 632
$ 632

(6) Effect on the consolidated statement of income assuming the acquisition was completed at the
beginning of the fiscal year ended March 31, 2015 and the measurement method
Omitted due to immateriality.
The measurements were not audited.
15. Segment Information(1) Segment by products
Millions of Ｙen

Year ended March 31, 2014

Semiconductor Fine plastic
equipment
mold
Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income (loss)
Ⅱ.Assets
Total assets
Depreciation and amortization
Amortization of goodwill
Investments in associates accounted
for using equity method
Capital expenditure

Elimination/
Unallocated
AssetsConsolidated¥ 15,741
15,741¥1,424
1,424¥-¥ 17,165
17,165

15,511
¥ 230

1,196
¥ 228

¥-

16,707¥ 458¥ 27,784¥ 1,240¥ 42¥ 1,348¥ 75¥ -¥ ¥ ¥ -

¥ 29,132¥ 1,315¥ 42¥ 198¥ 1,318¥ ¥ 165

¥ ¥ -

¥ 198
¥ 1,483－ 27 －

Millions of Ｙen

Year ended March 31, 2015

Semiconductor Fine plastic
equipment
mold
Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income
Ⅱ.Assets
Total assets
Depreciation and amortization
Amortization of goodwill
Investments in associates accounted
for using equity method
Capital expenditure

Year ended March 31, 2015

Ⅰ.Sales and operating income
Net sales to customers
Inter-segment sales
Cost of sales andOperating expenses
Operating income
Ⅱ.Assets
Total assets
Depreciation and amortization
Amortization of goodwill
Investments in associates accounted
for using equity method
Capital expenditure

Elimination/
Unallocated
AssetsConsolidated¥ 19,994
19,994¥1,2101,210¥-¥ 21,204
21,204

18,436¥ 1,558

1,096
¥ 114

¥-

19,532¥ 1,672¥ 30,070¥ 1,138¥ 66¥ 1,665¥ 72¥ -¥ ¥ ¥ -

¥ 31,735¥ 1,210
¥ 66

¥ 223
¥ 916

¥ ¥ 386

¥ ¥ -

¥ 223
¥ 1,302

Thousands of U.S. dollars (Note 1)
Elimination/
Semiconductor Fine plastic
Unallocatedequipment
mold
AssetsConsolidated$ 166,381
166,381$ 10,069
10,069$ -$ 176,450
176,450

153,416$ 12,965

9,120
$ 949

$ -

162,536$ 13,914$ 250,229$ 9,470$ 549$ 13,855$ 599$ -$ $ $ -

$ 264,084$10,069$ 549$ 1,856$ 7,623$ $ 3,212$ $ -$ 1,856$ 10,835－ 28 －

(2) Sales by region

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

Millions of Ｙen
2014
2015
¥ 3,150¥ 3,701
13,448429
138
14,015¥ 17,165－ 29 －

16,505912
86
17,503¥ 21,204

Thousands of
U.S. dollars(Note 1)2015
$ 30,798
137,347
7,589
716
145,652$ 176,450

Corporate Information
as of June 26, 2015
Corporate Data
Corporate Name:
Headquarters/Factory:

Board of Directors

TOWA CORPORATION
5 Kamichoshi-cho, Kamitoba,

President & COO
Hirokazu Okada

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

April 17, 1979

Directors

Operations:

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

Tsuyoshi Amakawa
Hisaji Konishi
Hiroshi Uragami
Yoshizumi Tamura
Hajime Kuwaki

Standing Corporate Auditor
Paid-in Capital:¥8,932,627,777

Hisayoshi Kobayashi

Common Stock
Authorized:

80,000,000

Issued Number of Shares:

25,021,832

Masanori Sugiyama

100

Daisuke Wake

Unit for Trading:
Stock Listings:
Transfer Agents:

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

Corporate Auditors

First Section of the Tokyo Stock Exchange
Mizuho Trust & Banking Co., Ltd

From April 1 to March 31445
http://www.towajapan.co.jp
BANDICK Corporation
TOWATEC Co., Ltd.
TOWAM Sdn. Bhd.
TOWA Asia-Pacific Pte. Ltd.
TOWA Semiconductor Equipment Philippines Corp.
TOWA USA Corporation
TOWA Europe B.V.
TOWA (Shanghai) Co., Ltd.
TOWA (Suzhou) Co., Ltd.
TOWA TAIWAN Co., Ltd.
TOWA KOREA Co., Ltd..
TONGJIN Corporation
TOWA-Jipal Technologies Co., Ltd.
Scientific and Semiconductor Manufacturing Equipment Recycling Co., Ltd.

－ 30 －

5 Kamichoshi-cho, Kamitoba, Minami-ku,
Kyoto 601-8105, JapanTEL (075) 692-0250 FAX (075) 692-0273