FINANCIAL SECTION– 41 Management’s Discussion and Analysis– 43 Operating Risks– 44 Financial Summary– 46 Consolidated Balance Sheet– 48 Consolidated Statement of Income– 48 Consolidated Statement of Comprehensive Income– 49 Consolidated Statement of Changes in Net Assets– 50 Consolidated Statement of Cash Flows– 51 Notes to Consolidated Financial Statements– 69 Management’s Report on Internal Control
over Financial Reporting– 70 Report of Independent Auditors

40

LINTEC ANNUAL REPORT 2016

:: FINANCIAL SECTIONManagement’s Discussion and Analysis

Revenues and Expenses

In Industrial & material operations, sales of window films were

In the fiscal year under review, consolidated net sales increasedsluggish, due partly to the effects of an economic slowdown in China,

1.6% year-on-year, to ¥210.5 billion. This increase was attributable towhile sales of motorcycle- and automobile-use adhesive products

a variety of factors including substantial growth in Advanced materials

were steady, particularly in India.

operations backed by the effects of demand for smartphones andother items.

As a result of the above, net sales in Printing and Industrial
Materials Products were up 1.0% year-on-year, to ¥87.6 billion, andGross profit increased 7.0% year-on-year, to ¥53.6 billion, following

operating income decreased 3.2%, to ¥2.8 billion.

such factors as higher sales volumes and lower prices for petrochemical raw materials and fuel, which counteracted the rise in theElectronic & Optical Products

price of pulp resulted from yen depreciation. Operating income, how-

In Advanced materials operations, sales of semiconductor-related

ever, only grew 4.8%, to ¥17.7 billion, due to higher general adminis-

adhesive tapes posted significant growth backed by the effects oftrative expenses associated with the completion of new researchdemand for smartphones and other products, while sales ofcenter buildings. Profit before income taxes was ¥16.8 billion, down

semiconductor-related equipment decreased. Multilayer ceramic

4.3% year-on-year, as a result of the recording of foreign exchange

capacitor-related tapes grew significantly thanks to the effects oflosses and increased extraordinary loss. Income taxes were ¥6.0 bil-demand for smartphones and automotive products.

lion following the application of tax effect accounting, and profit

In Optical products operations, sales of LCD-related adhesive

attributable to owners of parent for the fiscal year under review

products were steady due to the effects of demand for medium- andamounted to ¥10.9 billion, a year-on-year decrease of 6.5%.

small-sized applications for smartphones.

Net income per share decreased from ¥161.63 in the previous fiscal
year to ¥151.07, and ROE declined from 7.2% to 6.4%.

As a result of the above, net sales in Electronic and Optical
Products were up 2.7% year-on-year, to ¥85.4 billion, and operating
income increased 4.9%, to ¥10.6 billion.

Performance by Operational Segment
Printing & Industrial Materials Products

Paper & Converted Products

In Printing & variable information products operations, sales of

In Fine & specialty paper products operations, sales of color papers

adhesive products for seals and labels in overseas markets decreased

for envelopes, mainstay products, were steady and sales of oil resis-

mainly due to the effects of an economic downturn in China and thetant papers grew backed by the effects of demand for products for

ASEAN region, but sales remained solid in Japan, particularly withconvenience stores and fast food restaurants.

regard to sales of beverage-, medical-, and cosmetic-use products.

Net Sales

Operating Income¥ Billion¥ Billion

207.3

2015

Printing andIndustrial
Materials
Products
+0.9

210.5

Electronic
andOpticalProducts+2.2

Paper andConverted
Products+0.2

2016(Fiscal years ended March 31)

17.7

16.9
Printing andIndustrial
Materials
Products
–0.1

2015

Electronic
andOpticalProducts+0.5

Paper andConverted
Products+0.3

Adjustment
+0.1

2016
(Fiscal years ended March 31)

LINTEC ANNUAL REPORT 201641

:: FINANCIAL SECTIONManagement’s Discussion and Analysis

In Converted products operations, sales of casting papers for[Net Assets]

carbon fiber composite materials were steady, centered on those for

Net assets as of March 31, 2016, were ¥172.1 billion, an increase of ¥0.4

use for aircraft, while sales of release papers and films declined due

billion compared with the end of the previous fiscal year. The main

to sluggish demand mainly for adhesive products, FPC cover lay films,

reasons for this increase were as follows:

and optical products.

· Retained earnings

As a result of the above, net sales in Paper and Converted Products
were up 0.4% year-on-year, to ¥37.4 billion, and operating income+¥ 7.1 billion· Foreign currency translation adjustments–¥3.4 billion· Remeasurements of defined benefit plans–¥3.0 billion

increased 7.7%, to ¥4.3 billion.
Cash Flows
Financial Condition

Cash and cash equivalents as of March 31, 2016, amounted to ¥60.3[Assets]billion, an increase of ¥4.3 billion, or 7.6%, compared with the end of

Total assets as of March 31, 2016, were ¥240.7 billion, an increase of

the previous fiscal year.

¥3.3 billion compared with the end of the previous fiscal year. The
main reasons for this increase were as follows:[Cash Flows from Operating Activities]· Cash and deposits+¥3.7 billion

Net cash provided by operating activities increased ¥4.4 billion year-· Trade notes and accounts receivable–¥ 1.8 billion

on-year, to ¥19.9 billion. The principal movements were as follows:· Inventories–¥ 1.1 billion· Increase in net defined benefit liability+¥5.5 billion· Property, plant and equipment+¥3.4 billion· Income taxes paid–¥ 1.6 billion· Net defined benefit asset–¥ 1.8 billion· Deferred tax assets+¥0.6 billion[Cash Flows from Investing Activities]
Net cash used in investing activities increased ¥4.8 billion year-on-year,[Liabilities]

to ¥9.9 billion. The principal movements were as follows:

Total liabilities as of March 31, 2016, were ¥68.6 billion, an increase of· Proceeds from withdrawal of time deposits–¥1.1 billion¥2.8 billion compared with the end of the previous fiscal year. The main

· Purchase of property, plant and equipment–¥3.5 billion

reasons for this increase were as follows:· Accrued income taxes–¥1 .1 billion[Cash Flows from Financing Activities]· Net defined benefit liability+¥3.6 billion

Net cash used in financing activities increased ¥0.9 billion year-on-year,to ¥4.0 billion. The principal movement was as follows:· Cash dividends paid

Net Assets

Cash Flows¥ Billion¥ Billion
Share
subscription
rights
+0.0

171.7

Total
shareholders’equity+7.1
Total accumulated
other comprehensive
income
–6.6
2015

42

LINTEC ANNUAL REPORT 2016

172.1
Noncontrollinginterests
–0.1

56.1

–¥0.7 billion

Effect ofexchange ratechange on cash
and cashequivalents–1.7

Net cashused ininvesting
Net cashactivities
provided by–9.9
operatingactivities
Net cash+19.9
used in financing
activities
–4.0

2016
(Fiscal years ended March 31)

2015

60.3

Increase in
cash andcash equivalentsfrom newly
consolidated
subsidiary
+0.0

2016
(Fiscal years ended March 31)

Operating Risks

The following is a summary of risks that could affect the LINTEC Group’s(4) Outbreaks of contagious diseases

operations. This summary provides specific examples of major risks(5) Unpredictable changes in laws and regulations, such as thosethat are anticipated, but it does not include all risks.

involving tax systems, foreign exchange, or customs(6) Problems arising between the Group and its business associates

1. Changes in Economic Conditions

or in the collection of accounts receivable due to differences in

The Group’s operations include development in a wide range ofcultures or business practices

industries. Therefore, domestic and overseas economic conditions affect
the Group’s operations directly and indirectly. As a result, future trends

6. New Product Developmentin economic conditions could affect the Group’s business results.

The Group pursues R&D activities with a view to realizing comprehensive

Furthermore, global trends in the electronics industry affect the Group’s

technological capabilities that cater to market demand and bringing

new businesses in the field of electronics-related products. Future

to market competitive, high-value-added products. Accordingly, theelectronics industry trends could affect the Group’s business results.

Group is stepping up allocations of management resources to increase
its number of researchers and to pursue such initiatives as joint research

2. Changes in Selling Prices
Due to intense competition in both the domestic and overseas

with other companies and academic institutions.
However, there is no guarantee that such investment of management

markets in which the Group operates, the Group may be unable toresources in R&D will result in the development of new products ormaintain selling prices to preserve sufficient earnings or sales share.

increase operating income. Due to such factors as extended development

Furthermore, the Group’s business results could be affected byperiods, it could become necessary to discontinue development, anddifficulties related to cost reductions aimed at maintaining profits

if product development costs cannot be recovered, it could affect theand recovering its share by refining customer services.

Group’s business results.

3. Changes in Raw Material Prices

7. Intellectual Property Rights

The Group uses a large quantity of pulp for paper and petrochemical

The Group takes necessary measures to protect intellectual property

products as raw materials and fuel. The prices of these materials andrights in Japan and overseas for various original production technologies

fuels fluctuate in accordance with market conditions, such as inven-that it has developed. However, legal measures alone do not provide

tories and the supply–demand balance. The Group purchases raw

complete protection, possibly preventing the Group from effectively

materials in light of careful monitoring of market trends. However,protecting the rights it has obtained. Furthermore, in the event thata dramatic change in raw material prices could affect the Group’s

a lawsuit is filed by a third party regarding intellectual property rights

business results.

infringement associated with the Group’s products, the Group’s businessresults could be affected.

4. Changes in Foreign Exchange Rates
The Group conducts foreign currency-denominated procurement and8. Significant Lawsuits

sales overseas as well as finance transactions between both domestic

In conducting business in Japan and overseas, the Group may be subject

and overseas Group companies. Therefore, changes in foreign

to lawsuits or other claims related to product liability, environmental,

exchange rates could affect the Group’s business results.

or intellectual property rights issues. Lawsuits or claims, dependingon their content, could affect the Group’s business results.

5. Overseas Operations
The Group conducts manufacturing and business operations in markets

9. Legal and Regulatory Systems

worldwide. In these countries, the following events could affect theIn the countries in which it conducts business operations, the Group isGroup’s business results.

subject to various legal and regulatory systems, and as such is working(1) Political instability or a deterioration in security due to such factors

to ensure rigorous compliance with these systems. In the event that theas terrorism, a political change, or a coup d’état(2) Labor disputes, such as those involving strikes or boycotts

systems are strengthened or changed, the Group’s business activities
could be restricted or the Group’s business results could be affected.

(3) Infrastructure failures, such as those related to electric power,
water, or communications
LINTEC ANNUAL REPORT 201643

:: FINANCIAL SECTION

Financial Summary
LINTEC Corporation and its consolidated subsidiaries
Years ended March 31

2016

2015

2014

2013

For the year:
Net sales
Operating income% of net sales
Profit before income taxes
Profit attributable to owners of parent
Return on equity
Return on assets¥210,501
17,692
8.4%
16,79910,8996.4%
7.4%¥207,255
16,881
8.1%
17,555
11,6597.2%
7.8%¥203,242
13,766
6.8%
12,883
8,501
5.8%
6.0%

¥190,844
10,564
5.5%
10,836
7,681
5.6%
5.2%

Per share data (yen):
Net income
Net assets
Cash dividends¥   151.07
2,370.49
54.00¥   161.63
2,363.81
48.00¥   114.22
2,100.87
42.00¥  102.83
1,909.57
34.00¥ 8,800(9,810)19,928(9,898)(4,044)¥ 8,713(6,299)15,485(5,104)(3,135)¥10,055(5,508)16,309(6,952)(8,020)¥ 10,141(13,823)
19,619(13,966)(2,877)¥163,647
56,389107,258
60,32364,859——240,720
172,101
71.1%¥163,017
57,058105,958
56,05061,503——
237,444
171,67471.8%¥149,396
54,82094,57544,99261,456——225,073
152,61067.3%¥138,505
56,911
81,59340,73964,915——
216,048
143,569
66.0%

76,564,240
4,246

76,564,240
4,413

76,564,240
4,223

76,564,240
4,270¥88,100
85,89554,576¥86,826
83,28154,564¥86,310
79,14352,781¥82,785
72,37252,061

2,785
10,5624,303

2,878
10,071
3,996

2,290
6,846
4,645

2,380
3,196
4,980

Depreciation and amortization
Purchase of property, plant and equipment
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
At year-end:
Current assets
Current liabilities
Working capital
Cash and cash equivalents
Property, plant and equipment, net
Long-term debt, less current portion% of shareholders’ equity
Total assets
Net assets% of total assets
Number of shares outstanding
Number of employees
Segment information:
Net sales:
Printing and Industrial Materials ProductsElectronic and Optical Products
Paper and Converted Products
Segment income:Printing and Industrial Materials ProductsElectronic and Optical Products
Paper and Converted Products(Supplementary information)
1.	Effective the year ended March 31, 2011, the “Accounting Standard for Disclosure about Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan (ASBJ)
Statement No. 17, issued by ASBJ on March 27, 2009) and the “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance
No. 20, issued by ASBJ on March 21, 2008) have been applied.
	Since it is impracticable to restate segment information of the fiscal years of 2010 and before complying revised accounting standards for segment information, only reportable segment
information for the year ended March 31, 2011 onward have been presented.
2.	Effective from the year ended March 31, 2016, the “Accounting Standard for Business Combinations” (Accounting Standards Board of Japan (ASBJ) Statement No. 21, issued by ASBJ
on September 13, 2013) has been applied, and the title “Net income” has been changed to “Profit attributable to owners of parent.”

44

LINTEC ANNUAL REPORT 2016

Millions of yen, except per share data, number of shares, and number of employees

2012

2011

2010

2009

2008

2007

¥200,905
13,975
7.0%
13,382
8,648
6.6%
6.5%

¥212,733
20,8899.8%
19,565
13,62210.9%
9.7%¥189,348
11,576
6.1%
11,399
7,284
6.2%
6.1%

¥194,901
8,498
4.4%
5,215
3,391
2.9%
3.0%

¥202,297
14,8947.4%
13,191
9,308
8.0%
6.6%

¥192,723
14,798
7.7%
14,298
10,2389.5%
7.7%¥  115.26
1,766.60
40.00¥  180.21
1,715.78
40.00¥ 96.36
1,596.37
24.00¥ 44.86
1,497.58
20.00¥ 123.15
1,598.30
24.00¥ 135.44
1,489.87
18.00¥ 10,079(8,760)18,910(12,262)(5,099)¥10,178(8,237)23,307(9,926)(2,820)¥10,537(7,777)22,259(9,253)(3,454)¥11,286(9,584)
12,979(9,752)(2,300)¥ 9,011(14,700)
17,739(15,071)(769)¥ 7,701(11,646)
13,734(12,200)(68)¥137,229
62,07575,15336,03662,273——
210,203132,84762.8%¥132,891
60,46572,42635,18861,888——206,188
130,57662.9%¥121,451
58,65462,79725,387
63,33754
0.0%
195,656
121,502
61.7%¥ 95,937
43,65552,282
15,37067,010107
0.1%
172,854
113,93065.5%¥120,028
67,631
52,397
17,31573,711201
0.2%
204,852
121,635
59.4%¥117,531
67,95049,581
15,55068,377280
0.3%
198,526
113,397
57.1%

76,564,240
4,286

76,564,240
4,198

76,564,240
4,037

76,564,240
3,987

76,564,240
3,802

76,564,240
3,708¥90,143
73,92553,225¥91,936
81,19355,317

—
—
—

—
—
—

—
—
—

—
—
—

5,213
3,942
4,846

7,990
6,732
6,129

—
—
—

—
—
—

—
—
—

—
—
—

LINTEC ANNUAL REPORT 201645

:: FINANCIAL SECTION

Consolidated Balance Sheet
LINTEC Corporation and its consolidated subsidiaries
March 31, 2016 and 2015

ASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

Current assets:
Cash and deposits (Notes 12, 14)¥   65,733¥   62,059$    583,363

Trade notes and accounts receivable (Note 14)

62,33164,094553,176

Inventories (Note 3)

31,06632,142

275,702

Deferred tax assets (Note 19)

1,121

1,879

9,949

Other (Notes 14, 16)

3,538

2,944

31,404

Allowance for doubtful accounts

(143)

(103)

(1,273)

163,647

163,017

1,452,322

Buildings and structures

69,97064,993620,967

Machinery, equipment and vehicles

116,352

113,258

1,032,589

Land

10,184

10,26390,387

Construction in progress

2,864

3,635

25,425

		Total current assets

Non-current assets:
Property, plant and equipment (Notes 6, 10, 13):

Other

12,07011,688107,117

211,442

203,839

1,876,488(146,583)(142,335)(1,300,881)

64,85961,503575,607

2,357

2,538

20,921

3,126

3,313

27,742

—

1,823

—

Deferred tax assets (Note 19)

4,978

3,578

44,179

Other

1,854

1,887

16,456

Allowance for doubtful accounts

(103)

(217)

(914)

Accumulated depreciation		Property, plant and equipment, net

Intangible assets (Note 13):
Investments and other assets:
Investment securities (Notes 14, 15)
Net defined benefit asset (Notes 7, 8, 17)		Total investments and other assets

9,855

10,38487,464

		Total non-current assets

77,07274,427683,993¥ 240,720¥ 237,444$ 2,136,316

Total assets
The accompanying notes are an integral part of the consolidated financial statements.

46

LINTEC ANNUAL REPORT 2016

LIABILITIES AND NET ASSETS

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

Current liabilities:
Trade notes and accounts payable (Note 14)¥ 39,683¥ 40,674$   352,177

Short-term borrowings (Notes 14, 26)

1,695

1,695

15,042

Accrued income taxes (Notes 14, 19)

2,272

3,413

20,172

Provision for directors’ bonuses
Other (Notes 14, 16, 26)
		Total current liabilities

93

111

833

12,644

11,164112,21256,38957,058500,438

Non-current liabilities:
Provision for environmental measures
Net defined benefit liability (Notes 7, 8, 17)
Other (Note 26)
		Total non-current liabilities

		Total liabilities

137

140

1,223

11,476

7,853

101,851

614

717

5,452

12,228

8,711

108,527

68,61865,770608,965

23,201

23,201205,904

Commitments and contingent liabilities (Note 2)
Net assets:
Shareholders’ equity (Note 25):
Common stock:		

Authorized: 300,000,000 shares in 2016 and 2015

		Issued: 76,564,240 shares in 2016 and 2015

Capital surplus

26,82926,830238,101

Retained earnings

123,713

116,638

1,097,921

Less: treasury stock, at cost:		

4,411,475 shares in 2016 and 4,428,615 shares in 2015

		Total shareholders’ equity(7,712)(7,741)(68,442)

166,032

158,928

1,473,484

Accumulated other comprehensive income
Net unrealized holding gain on securities

701

832

6,226

Foreign currency translation adjustments

7,812

11,256

69,337

Remeasurements of defined benefit plans (Notes 7, 8, 17)(3,509)(503)(31,143)

5,005

11,58644,420

169

166

1,502

		

Total accumulated other comprehensive income

Share subscription rights (Note 18)
Non-controlling interests

895

992

7,943

Total net assets

172,101

171,674

1,527,350

Total liabilities and net assets¥240,720¥237,444$2,136,316

		

LINTEC ANNUAL REPORT 201647

:: FINANCIAL SECTION

Consolidated Statement of Income
LINTEC Corporation and its consolidated subsidiaries
Years ended March 31, 2016 and 2015

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses (Notes 4, 5)
Operating income
Non-operating income:Interest income
Dividend income
Rent income
Gain on sales of noncurrent assets
Foreign exchange gains
Other income
		 Total non-operating income
Non-operating expenses:
Interest expenses
Loss on retirement of noncurrent assets
Compensation expenses
Foreign exchange losses
Other expenses
		 Total non-operating expenses
Ordinary income
Extraordinary gain:
Gain on sales of noncurrent assets (Note 6)
Gain on liquidation of subsidiaries
		 Total extraordinary gain
Extraordinary loss:
Special retirement expenses (Note 7)
Loss on abolishment of retirement benefit plan (Note 8)
Loss on temporary suspension of production (Note 9)
Impairment loss (Note 10)
		Total extraordinary losses
		 Profit before income taxes
Income taxes (Note 19):
Current
Deferred		Total income taxes
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent (Note 25)

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

¥210,501
156,877
53,62435,932
17,692¥207,255
157,12250,13333,251
16,881$1,868,139
1,392,239
475,899
318,888
157,011

308
59
58
7
—
318
752

335
55
55
45
1,487
369
2,349

2,733
524
523
63
—
2,830
6,676

18
357
129
124
189
820
17,623

21
388
753
—
166
1,329
17,901

167
3,170
1,153
1,105
1,684
7,281
156,405

11
—
11

259
69
329

103
—
103

438
265
131
—
835
16,799

—
—
—
674
674
17,555

3,893
2,354
1,170
—
7,418
149,090

5,339
689
6,029
10,769(129)¥ 10,899

5,851
48
5,899
11,656(2)¥ 11,659

47,3896,122
53,511
95,578(1,147)$   96,726

Millions of yen

Thousands of
U.S. dollars(Note 1)

Consolidated Statement of Comprehensive Income
LINTEC Corporation and its consolidated subsidiaries
Years ended March 31, 2016 and 2015

ProfitOther comprehensive income (Note 11)
Net unrealized holding gain on securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Notes 7, 8, 17)
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to:)Owners of parent
Non-controlling interests
The accompanying notes are an integral part of the consolidated financial statements.

48

LINTEC ANNUAL REPORT 2016

2016

2015

2016

¥10,769¥11,656$ 95,578(130)(3,443)(2,975)(6,549)¥ 4,220

476
5,885
595
6,958
¥18,614(1,161)(30,556)(26,406)(58,124)$ 37,454

4,318
(97)

18,55262

38,322(868)

Consolidated Statement of Changes in Net Assets
LINTEC Corporation and its consolidated subsidiaries
Years ended March 31, 2016 and 2015

Thousands

Millions of yen
Shareholders’ equity

Balance as at April 1, 2014

Accumulated other comprehensive income

Number ofshares ofcommonstock

Commonstock

CapitalsurplusRetainedearnings

Net
Total unrealized
Treasury shareholders’ holding gain
stock
equity on securities

76,564¥23,201¥26,830¥104,771¥(7,754)¥147,048

23,201

26,830107,497(7,754)

149,774

Total
Foreign Remeasure­ accumulated
ments of other com­currency
definedprehensive
translation
incomeadjustments benefit plans

Sharesubscription
rights

Noncontrollinginterests

Total net
assets¥355¥5,236¥(1,110)¥4,482¥148¥930¥152,610

355

5,236

(1,110)

4,482

148

930

155,336

Cumulative effects of changes
in accounting policies

2,725

Restated balance

2,725

2,725

Changes during the year:
Cash dividends(3,101)(3,101)(3,101)

11,65911,659Profit attributable to ownersof parent

11,659Purchase of treasury stock
Disposal of treasury stock(0)

Change of scope of consolidation

(2)

(2)

(2)

15

15

15

583

583

583

Net changes in items other
476

6,020

606

7,104

18

62

7,184

Total changes during the year

than shareholders’ equity
—

—

(0)

9,140

12

9,153

476

6,020

606

7,104

18

62

16,337

Balance as at March 31, 2015

76,564¥23,201¥26,830¥116,638¥(7,741)¥158,928¥832¥11,256¥(503)¥11,586

¥166

¥992

¥171,674

23,201

26,830116,638(7,741)

158,928

832

11,256(503)

11,586

166

992

171,674

Cumulative effects of changes
in accounting policies—

Restated balance—

Changes during the year:
Cash dividends(3,823)(3,823)(3,823)

10,89910,899Profit attributable to ownersof parent

10,899Purchase of treasury stock
Disposal of treasury stock

(0)

(2)

(2)

(2)

31

30

30

—

—

Change of scope of consolidation
Net changes in items other(130)(3,443)(3,006)(6,580)2(97)

Total changes during the year

than shareholders’ equity
—

—

(0)

7,075

29

7,103

(130)

(3,443)(3,006)(6,580)

2

(97)

427

Balance as at March 31, 2016

76,564¥23,201¥26,829¥123,713¥(7,712)¥166,032¥701¥7,812¥(3,509)¥5,005¥169¥895¥172,101

Thousands

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Balance as at April 1, 2015

(6,676)

Accumulated other comprehensive income

Commonstock

76,564$205,904$238,108 $1,035,126$(68,700) $1,410,439

205,904

238,108

1,035,126(68,700) 1,410,439(33,932)(33,932)(33,932)

96,72696,726

CapitalsurplusRetainedearnings

Net
Total unrealized
Treasury shareholders’ holding gain
stock
equity on securities

Total
Foreign Remeasure­ accumulated
ments of other com­currency
definedprehensive
translation
incomeadjustments benefit plans

Number ofshares ofcommonstock

Share
subscription
rights

Noncontrollinginterests

Total net
assets$7,387$99,900$(4,464)$102,824$1,479$8,811 $1,523,555

7,387

99,900(4,464)

102,824

1,479

8,811

Cumulative effects of changes
in accounting policies—

Restated balance—
1,523,555

Changes during the year:
Cash dividends
Profit attributable to ownersof parent

96,726

Purchase of treasury stock
Disposal of treasury stock

(7)

(23)

(23)

(23)

280

273

273

—

—

Change of scope of consolidation
Net changes in items otherthan shareholders’ equity
Total changes during the year——

Balance as at March 31, 2016

76,564$205,904(7)

62,794$238,101 $1,097,921(1,161)(30,563)(26,678)(58,404)

22

(868)

(59,250)

63,044(1,161)(30,563)(26,678)(58,404)

22

(868)

3,794

$(68,442) $1,473,484$6,226$69,337$(31,143)$44,420$1,502257$7,943 $1,527,350

The accompanying notes are an integral part of the consolidated financial statements.

LINTEC ANNUAL REPORT 201649

:: FINANCIAL SECTION

Consolidated Statement of Cash Flows
LINTEC Corporation and its consolidated subsidiaries
Years ended March 31, 2016 and 2015

Cash flows from operating activities:
Profit before income taxes
Depreciation and amortization
Amortization of goodwill
Increase (decrease) in net defined benefit liability
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Loss (gain) on sales of property, plant and equipment
Loss on retirement of property, plant and equipment
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Loss (gain) on sales of investment securities
Increase (decrease) in provision for environmental measures
Impairment loss
Loss (gain) on liquidation of subsidiaries
Special retirement expenses
Loss on abolishment of retirement benefit plan
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Special retirement expenses paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries
Proceeds from liquidation of subsidiaries
Payments of loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term borrowings
Cash dividends paid
Purchase of treasury stock
Repayments of lease obligations
Other, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of year (Note 12)
The accompanying notes are an integral part of the consolidated financial statements.

50

LINTEC ANNUAL REPORT 2016

Millions of yen

Thousands of
U.S. dollars(Note 1)

2016

2015

2016

¥16,799
8,800
71
788
(72)
(367)
18
(9)
163
966
582
(1,485)
(0)
(2)
—
—
438
265
(792)
26,166382(18)(6,534)(66)
19,928¥ 17,555
8,713
76(4,671)
(57)
(391)
21
(300)
325
1,449
(30)
(2,090)
(0)
7
674
(69)
—
—
(1,125)20,086397(21)(4,976)—
15,485$149,090
78,102
636
7,000
(646)
(3,258)
167
(85)
1,455
8,577
5,170
(13,185)
(0)
(21)
—
—
3,893
2,354
(7,029)232,2213,390(167)(57,990)(593)
176,860(9,653)
9,957(9,810)
26
(455)
(15)
0
—
—
(5)
2
56
(9,898)(10,353)
11,084(6,299)
472
(195)
(12)
0
(0)
105
(2)
34
61
(5,104)(85,668)
88,370(87,069)231(4,044)
(139)
0
—
—
(50)
19
501
(87,849)—(3,824)(2)(217)
0(4,044)(1,712)
4,273
56,0500¥60,323

185(3,103)(2)(214)
0(3,135)2,363
9,608
44,992
1,449¥ 56,050—(33,942)(23)(1,926)
0(35,891)(15,196)
37,922
497,4320$535,354

Notes to Consolidated Financial Statements
LINTEC Corporation and its consolidated subsidiaries
March 31, 2016

1. Summary of Significant Accounting Policies(a) Basis of presenting financial statements
LINTEC Corporation (the “Company”) maintains its accounting records
and prepares its consolidated financial statements in accordance withaccounting principles generally accepted in Japan, which are different incertain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards. The accompanying consolidated financial statements have been compiled from the consolidated
financial statements prepared by the Company as required by the
Financial Instruments and Exchange Act of Japan.
In addition, the notes to the consolidated financial statements include
information which is not required under accounting principles generally
accepted in Japan but is presented herein as additional information.
For the convenience of the readers, the accompanying consolidated
financial statements have been presented in U.S. dollars by translating
all Japanese yen amounts at the rate of ¥112.68=U.S.$1, the prevailingexchange rate as of March 31, 2016. This translation should not be
construed as a representation that the Japanese yen amounts could be
converted into U.S. dollars at this or any other rate of exchange.
As permitted under the Financial Instruments and Exchange Act ofJapan, amounts of less than one million yen have been omitted. As a result,
the totals shown in the accompanying consolidated financial statements
do not necessarily agree with the sum of the individual amounts.
Certain reclassifications of previously reported amounts have been
made to conform to the consolidated financial statements for the year
ended March 31, 2016 presentation.
(b) Consolidation
The accompanying consolidated financial statements include the accountsof the Company and its 33 significant subsidiaries as of March 31, 2016,
but exclude subsidiaries whose total assets, net sales, profit and retained
earnings are not material in relation to the comparable amounts in thesestatements. All significant intercompany accounts and transactions havebeen eliminated in consolidation.
Goodwill is amortized over periods of the estimated useful economic
lives (mainly 5 years) on a straight-line basis.
Investments in subsidiaries and affiliates, which are not consolidated or
accounted for by the equity method, are carried at cost. Where there has
been a permanent decline in the value of such investments, the Company
has written down the investments.
Certain subsidiaries are consolidated on the basis of fiscal period
ending December 31, which differ from that of the Company. The necessary
adjustments are made to the financial statements of such subsidiaries toreflect any significant transactions from their respective fiscal year ends
to March 31.
(c) Foreign currency translation
Receivables, payables and securities denominated in foreign currencies
are converted into Japanese yen at the exchange rates at fiscal year end.
Transactions in foreign currencies are recorded based on the prevailingexchange rates on the transaction dates and the resulting translation
gains or losses are included in statement of income.
In respect of the financial statement items of overseas subsidiaries, allassets and liabilities accounts are translated into Japanese yen by
applying the exchange rates in effect at the fiscal year end. All income andexpense accounts are translated into Japanese yen by applying the
average exchange rates during the fiscal year.
Translation differences after allocating to non-controlling interest for
portions attributable to non-controlling interest are reported as foreign
currency translation adjustments in a separate component of net assets
in the accompanying consolidated balance sheet.

(d) Investment securities
Securities with market value are stated at fair value, and changes in fairvalue are recorded as a separate component of net assets at an amount,net of tax, and the moving average method is used to calculate the originalcost. Securities without market value are stated at cost determined by themoving average method.
(e) Derivatives
Derivatives are stated at fair value.
(f) Inventories
Inventories mainly apply the cost method based on the weighted-averagemethod, which determines the amount of the inventories shown on the
consolidated balance sheet by writing them down based on the decreasein their profitability.
Machinery applies the cost method based on the specific identification
method, which determines the amount of the inventories shown on the
consolidated balance sheet by writing them down based on the decreasein their profitability.
(g) Property, plant and equipment (Excluding leased assets)
Depreciation in the Company is principally computed by the decliningbalance method over the estimated useful lives of the respective assets
except for the buildings acquired on or after April 1, 1998, for which thestraight-line method is used.
Depreciation in its consolidated foreign subsidiaries is computed by thestraight-line method over the useful lives of the respective assets.
The significant useful lives are summarized as follows:		 Buildings and structures
2 — 50 years
		 Machinery, equipment and vehicles
3 — 17 years(h) Intangible assets (Excluding leased assets)
Capitalized costs of software for internal use are amortized using thestraight-line method over estimated lives (5 years).
(i) Leased assets
Leased assets arising from finance lease transactions which transfer
ownership to the lessees are depreciated as the same as the owned
property, plant and equipment.
Leased assets arising from finance lease transactions which do nottransfer ownership to the lessees are depreciated to a residual value ofzero by the straight-line method using the contract term as the useful life.
(j) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at the amount of estimateduncollectible accounts, based on individual collectability with respect toidentified doubtful receivables and past experience of doubtful receivables.
(k) Provision for directors’ bonuses
Bonus to directors is accrued at the year end and to be paid in thefollowing year when such bonuses are attributable.
(l) Accounting method for retirement benefits(1)	Method of attributing expected retirement benefits to periods
	In calculating retirement benefit obligations, the benefit formula basis
is used to attribute expected retirement benefits to periods throughthe end of the fiscal year.
(2)	Method of amortizing actuarial gain and loss and prior service cost	Actuarial gain and loss are amortized in the year following the year
in which the gain or loss is recognized by the straight-line method
principally over 15 years. Prior service cost is being amortized by thestraight-line method principally over 15 years.
(m) Provision for environmental measures
The provision for environmental measures is estimated and recorded toprovide for future potential costs, such as costs related to removal anddisposal of toxic substances based on related legal requirements.
(n) Accounting for consumption taxes
Transactions subject to consumption taxes are recorded at amounts
exclusive of consumption taxes.
LINTEC ANNUAL REPORT 201651

:: FINANCIAL SECTION(o) Cash and cash equivalents
Cash and cash equivalents are composed of cash and time deposits
having maturities within three months from acquisition, all of which are
low-risk, short-term financial instruments readily convertible into cash.
(p) Research and development costs
Research and development costs are charged to income when incurred.
(q) Income taxes
Deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and aremeasured using enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
(r) Shareholders’ equity
The Corporation Law of Japan provides that an amount equal to 10%of the amount to be distributed as distributions of capital surplus (otherthan the capital reserve) and retained earnings (other than the legal
reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve
equals 25% of the common stock account. Such distributions can be madeat any time by resolution of the shareholders or by the Boardof Directors if certain conditions are met, but neither the capital reserve
nor the legal reserve is available for distributions.
(s) Changes in accounting principles
The Company has applied the “Accounting Standard for Business
Combinations” (Accounting Standards Board of Japan (ASBJ) Statement
No. 21, September 13, 2013), the “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22, September 13, 2013) andthe “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7,
September 13, 2013) from this consolidated fiscal year. Under the adopted
accounting standards, differences arising from the change in the Company’sownership interest in subsidiaries are recorded as capital surplus as longas the Company retains control over its subsidiaries, and acquisition-related
costs are recorded as expenses in the fiscal year in which such costs are
incurred. For business combinations which occur on or after the beginning of this consolidated fiscal year, adjustments of the provisional
allocation of acquisition costs for a business combination shall be reflectedin the consolidated financial statements for the fiscal year in which thebusiness combination occurred. Furthermore, the title “Net income” hasbeen changed to “Profit attributable to owners of parent,” and the title“Minority interests” has been changed to “Non-controlling interests.”
To reflect these changes in presentation, the consolidated financial statements for the previous consolidated fiscal year have been reclassified.
In accordance with the transitional treatment set forth in Article 58-2
(4) of the “Accounting Standard for Business Combinations,” Article 44-5
(4) of the “Accounting Standard for Consolidated Financial Statements,”
and Article 57-4 (4) of the “Accounting Standard for Business
Divestitures,” the aforementioned accounting standards have been applied
prospectively from the beginning of this consolidated fiscal year.
In addition, there was no applicable event for the year ended March 31,
2016, and no impact on the consolidated financial statements andamounts per share as well.
The Company has applied the “Revised Practical Solution on Accounting for
Unification of Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements” (ASBJ Practical Issues Task Force(PITF) No. 18, March 26, 2015) from this consolidated fiscal year. In accordance with the transitional treatment set forth in the PITF, the Company
has selected amortization treatment as in the past in which amortization
is based on the remaining amortization period for goodwill in the consolidated financial statements. In addition, this adoption does not affect theconsolidated financial statements and amounts per share.

2. Commitments and Contingent Liabilities
The Company and its consolidated subsidiaries had unused lines of credit for short-term financing aggregating ¥22,208 million (U.S. $197,094 thousand)and ¥22,286 million at March 31, 2016 and 2015, respectively.
3. Inventories
Finished goods and merchandise, work in process, and raw materials and supplies as of March 31, 2016 and 2015 were as follows:
Millions of yen

Thousands of
U.S. dollars

Finished goods and merchandise

2016¥10,956

2015¥10,7142016$ 97,239

Work in process

11,513

11,678102,175

Raw materials and supplies

8,596

9,749

76,288¥31,066¥32,142$275,702

Millions of yen

Thousands of
U.S. dollars

2015¥ 5,250

2016$ 46,806

Total

4. Selling, General and Administrative Expenses
Major items included in selling, general and administrative expenses for the years ended March 31, 2016 and 2015 were as follows:

Transportation and warehousing expenses
Provision for allowance for doubtful accounts
Salaries and allowances

48

15

431

8,011

7,430

71,0982,521

Retirement benefit expenses

284

396

Provision for directors’ bonuses

93

111

833

1,068

1,059

9,482

Depreciation
Research and development expenses

7,644

6,771

67,838Other

13,507

12,215

119,876¥35,932¥33,251$318,888

Total

52

2016
¥ 5,274

LINTEC ANNUAL REPORT 2016

5. Research and Development Expenses
Research and development expenses, all of which were included in selling, general and administrative expenses, for the years ended March 31, 2016 and2015 were ¥7,644 million (U.S.$67,838 thousand) and ¥6,771 million, respectively.
6. Gain on Sales of Noncurrent Assets
Gain on sales of noncurrent assets was principally related to sales of buildings and structures for the year ended March 31, 2016 and sales of land forthe year ended March 31, 2015.
7. Special Retirement Expenses
The Company has recognized special retirement expenses for downsizing of consolidated subsidiaries in the U.S. for the year ended March 31, 2016.
8. Loss on Abolishment of Retirement Benefit Plan
The Company has recognized settlement loss for partial settlement of a retirement benefit plan of consolidated subsidiaries in the U.S. for the year
ended March 31, 2016.
9. Loss on Temporary Suspension of Production
The Company has recognized extraordinary loss for temporary suspension of production at a manufacturing plant operated by a subsidiary in Indonesia
due to a labor strike for the year ended March 31, 2016.
10. Impairment Loss on Property, Plant and Equipment
The Company has recognized impairment loss on the following classes of assets for the year ended March 31, 2015:
Major use

Company housing for employees

Pressure-sensitive adhesive related
products manufacturing equipment
Total

Location

Kumagaya city, Saitama

Massachusetts State, U.S.A.

Category

Millions of yen

Buildings and structures

¥ 46

Land

197

Other

0

Subtotal

243

Machinery, equipment and vehicles

417

Other

13

Subtotal

430¥674(1) Circumstances leading to the recognition of impairment loss•T he impairment loss for the company housing has been recognized because the asset has been idled and the market price in real estate has been
declined. That asset is planned to be sold since it is not planned to be used in the future.
•T he impairment loss for the pressure-sensitive adhesive related products manufacturing equipment has been recognized because the asset has
decreased in profitability.
(2) Method of calculating recoverable amounts
The recoverable amounts used for the measurement of the impairment losses above are the net realizable value.
•T he recoverable amount of land for the company housing is based on the appraisal value after deduction of the estimated cost of the disposal.
The recoverable amounts of other assets are the nominal value.
•T he recoverable amounts of the assets above for the pressure-sensitive adhesive related products manufacturing equipment are based on athird-party appraisal value.

LINTEC ANNUAL REPORT 201653

:: FINANCIAL SECTION

11. Comprehensive Income
Reclassification adjustment and tax effect of other comprehensive income for the years ended March 31, 2016 and 2015 were as follows:
Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥  (202)¥   642$ (1,799)

(0)

(0)

(0)

(202)

642

(1,799)Net unrealized holding gain on securities:
Amount incurred during the fiscal year
Reclassification adjustment
		

Prior to deducting tax effect		Tax effect		

Net unrealized holding gain on securities

71

(165)

637

(130)

476

(1,161)(3,443)

5,885(30,556)―——(3,443)

5,885(30,556)

Foreign currency translation adjustments:
Amount incurred during the fiscal year
Reclassification adjustment
		

Prior to deducting tax effect		Tax effect

―

—

—

(3,443)

5,885(30,556)(4,656)755(41,322)

381

202

3,385

(4,274)958(37,936)

		Tax effect

1,299

(362)

11,530		

(2,975)595(26,406)¥(6,549)¥6,958$(58,124)

		Foreign currency translation adjustments

Remeasurements of defined benefit plans:
Amount incurred during the fiscal year
Reclassification adjustment
		

Prior to deducting tax effectRemeasurements of defined benefit plans

Total other comprehensive income

12. Cash and Cash Equivalents
Reconciliation between cash and cash equivalents in the consolidated statement of cash flows and cash and deposits in the consolidated balance sheet
as of March 31, 2016 and 2015 were as follows:

Cash and deposits
Time deposits with maturity of more than 3 months
Cash and cash equivalents

2016¥65,733

Millions of yen

Thousands of
U.S. dollars

2015¥62,0592016$583,363(5,409)(6,009)(48,008)¥60,323¥56,050$535,354

Assets and liabilities related to finance lease transactions newly recognized for the years ended March 31, 2016 and 2015 were ¥105 million(U.S. $931 thousand) and ¥186 million, respectively.
13. Leases(Lessee’s accounting)For finance lease transactions that transfer ownership, leased assets recognized as property, plant and equipment are mainly production facilities for theyears ended March 31, 2016 and 2015, and are depreciated in the same way as the owned property, plant and equipment.
For finance lease transactions that do not transfer ownership, leased assets recognized as property, plant and equipment are mainly production facilities
and vehicles, and those recognized as intangible assets are mainly software for the years ended March 31, 2016 and 2015. These leased assets are
depreciated to a residual value of zero by the straight-line method using the contract term as the useful life.
The minimum lease payments under noncancellable operating leases as of March 31, 2016 and 2015 were as follows:

Due within 1 year
Due after 1 year
Total

54

LINTEC ANNUAL REPORT 2016

2016
¥312

Millions of yen

Thousands of
U.S. dollars

2015
¥241

2016
$2,773

343

273

3,046

¥655

¥514

$5,82014. Financial Instruments
1. Status of financial instruments(1) Policy regarding financial instruments
The LINTEC Group (the “Group”) limits the scope of its cash and fundmanagement activities to short-term deposits and has a policy of relying
principally on bank borrowings.
The Group makes use of derivatives only to reduce risk of foreign
currency exchange fluctuations and has a policy of not engaging inderivative transactions for speculative purposes.
(2) Details of financial instruments and associated risk andrisk management system
In the course of its business activities, the Group is exposed to credit risk
arising from trade notes and accounts receivable that are outstanding
from its customers. Regarding the risk pursuant to the internal regulations
for managing its credit exposure and trade receivables, due dates andbalances are managed appropriately for each customer, to mitigate risks
of uncollectible accounts.

Investment securities are stocks being exposed to market price risk, andthese are mainly the stocks of companies with which the Group has business
relationships and they are periodically confirmed the market value.
All of the trade payables – trade notes and accounts payable – are due
within 1 year.
The Group has commitment line contracts with financial institutions andthe borrowings are raised mainly for business activities and capital
investments.
The Group is exposed to liquidity risk from its business-related obligations
and borrowings but the Company and its consolidated subsidiaries prepare
and implement financing plans to manage the liquidity risk.
The Group conducts and manages derivative transactions based oninternal rules and regulations. Director of administration division is in chargeof managing derivative transactions and related reports are submitted to top
management for each case.
In addition, the contract amounts of derivative transactions described
below in Note 16, “Derivatives,” do not represent the market risk associatedwith derivative transactions.

2. Estimated fair value and other matters related to financial instruments
Carrying value on the consolidated balance sheet as of March 31, 2016 and 2015 along with their fair value and the variance were shown in the following table.
Thousands of
U.S. dollars

Millions of yen

2016(1) Cash and deposits(2) Trade notes and accounts receivable

Carrying value

Estimated
fair value

Variance¥ 65,733¥ 65,733¥—

62,331

62,331—

Carrying value

Estimated
fair value

Variance$ 583,363$ 583,363$—

553,176

553,176—(3) Investment securities
2,469

2,469

—

21,913

21,913—(4) Trade notes and accounts payable

Other securities(39,683)(39,683)—(352,177)(352,177)—(5) Short-term borrowings(1,695)(1,695)—(15,042)(15,042)—(6) Accrued income taxes(2,272)(2,272)—(20,172)(20,172)—(7) Derivative instruments

4

4

—

36

36

—

Note: i. Figures shown in parentheses are liability items.
ii. The value of assets and liabilities arising from derivative instruments is shown by net value.
Millions of yen
2015(1) Cash and deposits(2) Trade notes and accounts receivable

Carrying value

Estimated
fair value

Variance¥ 62,059¥ 62,059¥—

64,09464,094—(3) Investment securities
Other securities(4) Trade notes and accounts payable

2,656

2,656

—

(40,674)(40,674)—(5) Short-term borrowings(1,695)(1,695)—(6) Accrued income taxes(3,413)(3,413)—(7) Derivative instruments

(3)

(3)

—

Notes: i. Figures shown in parentheses are liability items.

LINTEC ANNUAL REPORT 201655

:: FINANCIAL SECTION

Note 1:	Method of computing the estimated fair value of financial instruments, securities andderivative instruments(1) Cash and deposits; (2) Trade notes and accounts receivable	Since these items are settled in a short period of time and have estimated fair values
that are virtually the same as the carrying value on the ledger, the carrying value has
been used.
(3) Investment securities
	The market value of investment securities is determined by the price of the stock
traded on an exchange market.
(4) Trade notes and accounts payable; (5) Short-term borrowings; (6) Accrued income taxes	Since these items are settled in a short period of time and have estimated fair values
that are virtually the same as the carrying value on the ledger, the carrying value has
been used.
(7) Derivative instruments
Please see Note 16, “Derivatives.”

Note 2:	Financial instruments for which obtaining an estimated fair value is deemed to be
extremely difficult:Millions of yen

Unlisted stocks

Thousands of
U.S. dollars

2016

2015

2016

Carrying value

Carrying value

Carrying value

¥656

¥656

$5,828The unlisted stocks in the preceding table do not have market values, and as estimating
their future cash flows is deemed to be extremely difficult, they are not included in the abovetable “(3) Investment securities.”
Note 3:	Planned redemption amounts after the balance sheet date for held-to-maturity
securities and receivables were as follows:
Millions of yen

Cash and deposits
Trade notes and accounts
receivable
Total

Thousands of
U.S. dollars

2016

2015

2016

Within 1 year

Within 1 year

Within 1 year

¥ 65,711¥ 62,005$   583,166

62,331¥128,043

64,094¥126,100

553,176$1,136,343

15. Marketable and Investment Securities
The carrying value and acquisition cost of other securities as of March 31, 2016 and 2015 were as follows:
Millions of yen

Thousands of
U.S. dollars

2016
Carrying value

Acquisition cost

Unrealized gain
(loss)

Carrying value

Acquisition cost

Unrealized gain
(loss)

Stocks¥2,143¥1,018¥1,124$19,021$ 9,037$ 9,983

Bonds

—

—

—

—

—

—

Other

—

—

—

—

—

—

¥2,143¥1,018¥1,124$19,021$ 9,037$ 9,983

Description

Securities whose carrying value
exceeds their acquisition cost
Subtotal
Securities whose acquisition costexceeds their carrying value

Stocks¥   325¥   495¥  (169)$ 2,892$ 4,400$(1,507)

Bonds

—

—

—

—

—

—

Other

—

—

—

—

—

—

Subtotal¥   325¥   495¥  (169)$ 2,892$ 4,400$(1,507)

		Total¥2,469¥1,514¥   955$21,913$13,438$ 8,475

Millions of yen

2015
Carrying value

Acquisition cost

Unrealized gain
(loss)

Stocks¥2,163¥   976¥1,187

Bonds

—

—

—

Other

—

—

—

¥2,163¥   976¥1,187

Stocks¥   492¥   522¥     (29)

Bonds

—

—

—

Other

—

—

—

Subtotal¥   492¥   522¥     (29)		Total¥2,656¥1,498¥1,157

Description

Securities whose carrying value
exceeds their acquisition cost
Subtotal
Securities whose acquisition costexceeds their carrying value

56

LINTEC ANNUAL REPORT 2016

16. Derivatives
Derivative transactions to which the Company did not apply hedge accounting as of March 31, 2016 and 2015 were as follows:(Currency related)

Millions of yen

2016
Contract amounts
Total

Over 1 year

Estimated
Fair value

Sell : U.S. dollars (buy Japanese yen)

¥422

¥—

¥5

¥5

Buy : Korean won (sell U.S. dollars)

114

—

(1)

(1)

Buy : Korean won (sell Japanese yen)

30

—

(0)

(0)

¥567

¥—

¥4

¥4

Nature of transaction

Off-market transactions

Unrealized gain
(loss)

Forward exchange contracts to:		TotalThousands of U.S. dollars

2016
Contract amounts
Total

Over 1 year

Estimated
Fair value

Unrealized gain
(loss)

Sell : U.S. dollars (buy Japanese yen)

$3,748

$—

$ 52

$ 52

Buy : Korean won (sell U.S. dollars)

1,017

—

(14)

(14)

Buy : Korean won (sell Japanese yen)

273

—

(0)

(0)

$5,039

$—

$ 36

$ 36

Nature of transaction

Off-market transactions

Forward exchange contracts to:		TotalNote: Method of computing the estimated fair value is based on information provided by financial institutions at the end of the fiscal year.
Millions of yen

2015
Contract amounts
Nature of transaction

Off-market transactions

		Total

Total

Over 1 year

Estimated
Fair value

Unrealized gain
(loss)

Forward exchange contracts to:
Sell : U.S. dollars (buy Japanese yen)

¥305

¥—

¥(1)

¥(1)

Buy : Korean won (sell U.S. dollars)

112

—

(1)

(1)

Buy : Korean won (sell Japanese yen)

33

—

(0)

(0)

¥451

¥—

¥(3)

¥(3)

Note: Method of computing the estimated fair value is based on information provided by financial institutions at the end of the fiscal year.

LINTEC ANNUAL REPORT 201657

:: FINANCIAL SECTION

17. Retirement Benefits
The Company has defined benefit plans of a corporate pension fund plan under the Japanese Defined Benefit Corporate Pension Law and lump-sum
payment plan.
Domestic consolidated subsidiaries have lump-sum payment plans and certain foreign consolidated subsidiaries have defined contribution plans andlump-sum payment plans.
The following summarizes information related to retirement benefits for the years ended March 31, 2016 and 2015.
1. Defined benefit plans(1) Reconciliation statement for the beginning balance and the ending balance of retirement benefit obligations

Retirement benefit obligations at beginning of year
Cumulative effects of changes in accounting policies

2016¥33,518

Millions of yen

Thousands of
U.S. dollars

2015¥36,7882016$297,467―(4,235)―

Restated balance

33,51832,552

297,467

Service cost

1,352

1,539

12,007

Interest cost

426

430

3,784

Actuarial gains (losses)

3,971

203

35,243Retirement benefits paid

(1,390)(1,511)(12,341)

Abolishment of retirement benefit plan

(1,330)―(11,805)

Increase (decrease) from foreign currency translation

(46)

247

(416)

Other

48

57

428

¥36,549¥33,518$324,369

Millions of yen

Thousands of
U.S. dollars

2015¥20,779

2016$243,953

Retirement benefit obligations at end of year
Note: For some of the consolidated subsidiaries, the simplified method is used to calculate retirement benefit obligations.

(2) Reconciliation statement for the beginning balance and the ending balance of plan assets

Plan assets at beginning of year2016
¥27,488

Expected return on plan assets

733

711

6,505

Actuarial gains (losses)

(802)

1,018

(7,122)Contributions from the employer

536

5,561

4,761

Retirement benefits paid

(1,336)(776)(11,864)

Abolishment of retirement benefit plan

(1,361)—(12,085)

6

195

54

(189)

—

(1,685)¥25,073¥27,488$222,517

Increase (decrease) from foreign currency translation
Other
Plan assets at end of year

Note: “Contributions from the employer” for the year ended March 31, 2015 includes contribution of ¥5,000 million to retirement benefit trust.

(3) Reconciliation statement for the ending balance of retirement benefit obligations and plan assets and net defined benefit liability or asset recorded in
the consolidated financial statements
Thousands of
U.S. dollars

Retirement benefit obligations of a funded pension plan2016
¥ 35,8672015¥ 32,818

2016$ 318,311

Plan assets(25,073)(27,488)(222,517)

10,793

5,330

95,793

682

699

6,058

Net amount of liabilities and assets recorded in the consolidated balance sheet¥ 11,476¥   6,029$ 101,851

Net defined benefit liability¥ 11,476¥   7,853$ 101,851―(1,823)―¥ 11,476¥   6,029$ 101,851

Retirement benefit obligations of an unfunded pension plan

Net defined benefit asset
Net amount of liabilities and assets recorded in the consolidated balance sheet

58

Millions of yen

LINTEC ANNUAL REPORT 2016

(4) Components of retirement benefit expenses

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses (gains)
Amortization of prior service cost
Other
Retirement benefit expenses for the defined benefit plans
Special retirement expenses
Loss on abolishment of retirement benefit plan2016
¥1,352
426
(733)
400
(284)
(7)
¥1,155¥   438
265

Millions of yen

Thousands of
U.S. dollars

2015¥1,539
430
(711)
487
(284)
—
¥1,460
¥   —
―

2016
$12,007
3,784(6,505)3,555(2,524)(64)$10,253$ 3,893
2,354

Notes: i. Retirement benefit expenses of consolidated subsidiaries using the simplified method are included in service cost.
ii. Employee’s contributions to the corporate pension fund are not included in the retirement benefit expenses for the defined benefit plans.
iii. “Special retirement expenses” and “Loss on abolishment of retirement benefit plan” are recognized in extraordinary loss.

(5) Remeasurements of defined benefit plans
Breakdown of items (before tax effect) recorded in other comprehensive income of remeasurements of defined benefit plans are as follows:

Prior service cost
Actuarial losses (gains)
Total

2016
¥   284
3,990¥4,274

Millions of yen

Thousands of
U.S. dollars

2015¥   284(1,242)¥  (958)2016$ 2,524
35,412$37,936(6) Remeasurements of defined benefit plans
Breakdown of items (before tax effect) recorded in accumulated other comprehensive income of remeasurements of defined benefit plans are as follows:

Unrecognized prior service cost
Unrecognized actuarial losses (gains)
Total

2016
¥  (828)
5,886¥5,057

Millions of yen

Thousands of
U.S. dollars

2015¥(1,112)1,895¥   7822016$ (7,351)
52,236$44,884(7) Items related to plan assets
1. Breakdown of major items
		 The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2016 and 2015 was as follows:
Bonds
StocksCash on hand and in banks
Other
Total

2016
56.8%
20.0%
20.4%
2.8%
100.0%

2015
52.6%
20.1%
24.8%
2.5%
100.0%

2. Method for determining the long-term expected rate of return on plan assets
		In determining the long-term expected rate of return on plan assets, estimates are considered based on the current and expected allocationof plan assets and the long-term current and expected rate of return from the various assets comprising the plan assets.
(8) Major actuarial assumptions as of March 31, 2016 and 2015 were as follows:
Discount rateLong-term expected rate of return on plan assets
Expected rates of pay raises

2016
Mainly 0.5%
Mainly 3.5%
Mainly 2.8%

2015
Mainly 1.3%
Mainly 3.5%
Mainly 2.8%

2. Defined contribution plan
Some of the consolidated subsidiaries contributed ¥171 million (U.S. $1,521 thousand) and ¥144 million, for the years ended March 31, 2016 and 2015 to
the defined contribution plans, respectively.

LINTEC ANNUAL REPORT 2016

59

:: FINANCIAL SECTION

18. Stock Option Plan
Components of stock-based compensation expense for the years ended March 31, 2016 and 2015 were as follows:

Cost of sales
Selling, general and administrative expenses

Millions of yen

Thousands of
U.S. dollars

2016
¥ 4

2015
¥ 3

2016
$ 42

28

29

253

The following table summarizes contents of stock options as of March 31, 2016:
The 2006 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2007 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2008 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2009 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2010 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
60

LINTEC ANNUAL REPORT 2016

The Company
August 10, 2006
Directors, 17
Common stock 10,500 shares
August 25, 2006
Persons who have received allotment of share subscription rights must hold the position of directorof the Company at the time of grant.
—
From August 26, 2006 to August 25, 2026

The Company
August 9, 2007
Directors, 17
Common stock 9,300 shares
August 24, 2007
Persons who have received allotment of share subscription rights must hold the position of directorof the Company at the time of grant.
—
From August 25, 2007 to August 24, 2027

The Company
August 8, 2008
Directors, 14
Common stock 9,800 shares
August 25, 2008
Persons who have received allotment of share subscription rights must hold the position of directorof the Company at the time of grant.
—
From August 26, 2008 to August 25, 2028

The Company
August 7, 2009
Directors, 14
Common stock 15,000 shares
August 24, 2009
Persons who have received allotment of share subscription rights must hold the position of directorof the Company at the time of grant.
—
From August 25, 2009 to August 24, 2029

The Company
August 9, 2010
Directors, 16
Common stock 14,100 shares
August 24, 2010
Persons who have received allotment of share subscription rights must hold the position of directorof the Company at the time of grant.
—
From August 25, 2010 to August 24, 2030

The 2011 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2012 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2013 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2014 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period
The 2015 plan
Name of Company
Date of approval of the Board of Directors
Position and number of grantees
Class and number of stocks
Date of grantCondition and settlement of rights
Period of providing service for stock options
Exercise period

The Company
August 9, 2011
Directors, 8Common stock 7,600 shares
August 24, 2011
Persons who have received allotment of share subscription rights must hold the position of directorof the Company at the time of grant.
—
From August 25, 2011 to August 24, 2031

The Company
August 8, 2012
Directors, 8 and Executive Officers, 12
Common stock 15,900 shares
August 23, 2012
Persons who have received allotment of share subscription rights must hold the position of director
or executive officer of the Company at the time of grant.
—
From August 24, 2012 to August 23, 2032

The Company
August 7, 2013
Directors, 10 and Executive Officers, 12
Common stock 22,000 shares
August 22, 2013
Persons who have received allotment of share subscription rights must hold the position of director
or executive officer of the Company at the time of grant.
—
From August 23, 2013 to August 22, 2033

The Company
August 6, 2014
Directors, 10 and Executive Officers, 12
Common stock 18,300 shares
August 21, 2014
Persons who have received allotment of share subscription rights must hold the position of director
or executive officer of the Company at the time of grant.
—
From August 22, 2014 to August 21, 2034

The Company
August 6, 2015
Directors, 11 and Executive Officers, 12
Common stock 14,600 shares
August 21, 2015
Persons who have received allotment of share subscription rights must hold the position of director
or executive officer of the Company at the time of grant.
—
From August 22, 2015 to August 21, 2035

LINTEC ANNUAL REPORT 2016

61

:: FINANCIAL SECTION

The following tables summarize the scale and movement of stock options for the years ended March 31, 2016 and 2015:(Non-vested stock options)
Stock options outstanding
at April 1, 2015
Stock options granted
Forfeitures	Conversion to vested
stock options
Stock options outstandingat March 31, 2016

(unit: shares)
The 2006 plan

The 2007 plan

The 2008 plan

The 2009 plan

The 2010 plan

The 2011 plan

The 2012 plan

The 2013 plan

The 2014 plan

The 2015 plan

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
14,600
—

—

—

—

—

—

—

—

—

—

14,600

—

—

—

—

—

—

—

—

—

—

The 2006 plan

The 2007 plan

The 2008 plan

The 2009 plan

The 2010 plan

The 2011 plan

The 2012 plan

The 2013 plan

The 2014 plan

The 2015 plan

4,900

4,500

7,900

12,00010,9007,600

14,50022,00018,300

—

—
1,600
—

—
1,600
—

—
2,700
—

—
4,300
—

—
3,700
—

—
800
—

—
900
—

—
1,400
—

—
1,100
—

14,600
—
—

3,300

2,900

5,200

7,700

7,200

6,800

13,60020,60017,20014,600(Vested stock options)
Stock options outstanding
at April 1, 2015
Conversion fromnon-vested stock options
Stock options exercised
Forfeitures
Stock options outstandingat March 31, 2016

(unit: shares)

The following table summarizes the price information of stock options as of March 31, 2016:

Exercise price
Average market price of thestock at the time of exercise
Fair value at the date of grant

The 2006 plan

The 2007 plan

The 2008 plan

The 2009 plan

The 2010 plan

The 2011 plan

The 2012 plan

The 2013 plan

The 2014 plan

The 2015 plan¥    1¥    1¥    1¥    1¥    1¥    1¥    1¥    1¥    1¥    1

2,546
2,788

2,546
1,947

2,510
1,481

2,510
1,726

2,510
1,474

2,746
1,303

2,746
1,203

2,746
1,595

2,746
1,825

—
2,283

The fair value of stock options granted during the year ended March 31, 2016 was valued by using the Black Scholes option pricing model with thefollowing assumptions:
The 2015 plan

Volatility
Expected remaining period
Expected dividend per share
Risk free interest rate

The expected remaining period for stock options is assumed to be the mid-point of the exercise period.

62

LINTEC ANNUAL REPORT 201635.883%10 years¥ 48
0.360%

19. Income Taxes
1. The Company and its consolidated subsidiaries are subject to a number of taxes based on income which, in the aggregate, resulted in a statutory tax
rate of approximately 33.06% and 35.64% for the years ended March 31, 2016 and 2015, respectively. Income taxes of the foreign consolidated subsidiaries
are based generally on-the tax rates applicable in their countries of incorporation. The effective tax rates reflected in the consolidated statement ofincome for the years ended March 31, 2016 and 2015 differ from the statutory tax rate for the following reasons:2016
33.06%

2015
35.64%

0.40(10.49)0.34(8.77)(2.93)
5.52
13.95
1.53
3.28
35.89%

0.39(10.66)0.31(7.36)(2.38)
2.05
10.95
2.83
1.83
33.60%

Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥    698
135
720
3,462
1,348
497
269
121
371
385
575
8,587
(912)
7,675

¥    740
182
413
2,421
1,616
498
246
102
435
299
613
7,570
(406)
7,163

$   6,201
1,205
6,390
30,726
11,970
4,415
2,393
1,082
3,300
3,422
5,107
76,215(8,096)
68,118

(192)
(253)
(211)
(846)
―
(97)
(1,601)¥ 6,074

(208)
(325)
(274)
(435)
(595)
(62)
(1,902)¥ 5,260(1,708)(2,249)(1,873)(7,515)―(865)(14,211)$ 53,906

Millions of yen

Thousands of
U.S. dollars

Statutory tax rate
Effect of:Permanently non-deductible expenses for income tax purposes such as entertainment expenses
Permanently non-taxable income for income tax purposes such as dividend income
Municipal Tax
The difference of tax rates applied to foreign subsidiaries
Tax deduction in accordance with special tax measures
Decrease of valuation allowance for such as net operating loss carryforward
Consolidating adjustment of dividend income from consolidated subsidiaries
Effect of revised corporate tax rate
Other, net
Effective tax rate

2. The significant components of deferred tax assets and liabilities as of March 31, 2016 and 2015 were as follows:

Deferred tax assets:
Accrued bonuses
Accrued enterprise taxes
Operating loss carryforwards
Net defined benefit liability
Retirement benefit trust
Research and development cost
Loss on valuation of inventories
Allowance for doubtful accounts
Unrealized gain
Excess depreciation expense
Other
		 Gross deferred tax assets
Valuation allowance
Deferred tax liabilities:
Revaluation of fixed assets in accordance with special tax measures
Net unrealized holding gain on securities
Depreciation expense of subsidiaries
Dividend income from consolidated subsidiaries
Net defined benefit asset
Other
		

Net deferred tax assets

Note: The net deferred tax assets as of March 31, 2016 and 2015 were included in the following items on the consolidated balance sheets:

Current assets-Deferred tax assets

2016¥1,1212015¥1,8792016$ 9,949

Noncurrent assets-Deferred tax assets

4,978

3,578

44,179Current liabilities-Other

14

17

128

Noncurrent liabilities-Other

10

178

94

LINTEC ANNUAL REPORT 2016

63

:: FINANCIAL SECTION

3. Adjustments of deferred tax assets and liabilities due to the change of statutory tax rate
In accordance with the establishment in the national assembly on March 29, 2016, of the “Act for Partial Revision of the Income Tax Act” and the “Act for
Partial Revision of the Local Tax Act,” the statutory effective tax rate used to calculate the Company’s deferred tax assets and liabilities (limited tosettlements made after April 1, 2016) was changed from 32.3% to 30.9% for taxable items between April 1, 2016 and March 31, 2018, and to 30.6% fortaxable items after April 1, 2018.
Due to the change, the net amount of deferred tax assets decreased by ¥327 million (U.S. $2,909 thousand), deferred income taxes increased by¥257 million (U.S. $2,282 thousand), net unrealized holding gain on securities increased by ¥13 million (U.S. $123 thousand), and remeasurementsof defined benefit plans decreased by ¥84 million (U.S. $750 thousand) for the year ended March 31, 2016.
20. Business Combinations
There is no business combination for the year ended March 31, 2016.
21. Asset Retirement Obligations
There is no asset retirement obligation as of March 31, 2016 and 2015.
22. Rental Property
No specific disclosure for rental property has been made as of March 31, 2016 and 2015 because of its immateriality.
23. Segment Information
1. Overview of reportable segments(1) Decision procedures for reportable segments
The business segments of our group are subject to periodic review, because each of them provides its own financial information separately from otherbusiness units of our group and the board of directors not only makes a decision on allocation of management resources, but also evaluates theperformance of them.
Our group consists of 6 business segments, each of which develops comprehensive strategies and conducts business activities in overseas anddomestic markets.
Based on product manufacturing methods and similarity of the markets where the products are introduced, we aggregate these business segments
into 3 distinguishable units, such as “Printing and Industrial Materials Products,” “Electronic and Optical Products,” and “Paper and Converted
Products,” to include in this report.
(2) Products and services handled in each segment
Products and services handled in each segment were as follows:
Reportable segments
Printing and Industrial Materials
Products

Main products and services
Adhesive products for seals and labels, Label printing machines, Barcode printers, Labeling machines, Automobile-use
adhesive products, Industrial-use adhesive tapes, Window films, Films for outdoor signs and advertising, Interior
finishing mounting sheets

Electronic and Optical Products

Semiconductor-related adhesive tapes, Semiconductor-related equipment, Multilayer ceramic capacitor-related tapes,
LCDs-related adhesive products

Paper and Converted Products

Color papers for envelopes, Colored construction papers, Special function papers, High-grade printing papers,
High-grade papers for paper products, Release papers for general-use, Release films for optical-related products,
Casting papers for synthetic leather, Casting papers for carbon fiber composite materials

2. Method of calculating sales and income (loss), assets, and other items by reportable segment reported
The reported information regarding business segments is processed mostly following the accounting procedures listed in “Significant Accounting
Policies” used as basis for preparing consolidated financial statements.
The profits of the segments reported are based on operating income.
The values for internal sales and transfers conducted between segments are given based on the market price for transactions between consolidated
companies, and on the first cost for transactions within the same company.

64

LINTEC ANNUAL REPORT 2016

3. Information on sales and income (loss), assets, and other items by reportable segment for the years ended March 31, 2016 and 2015 are outlined asfollows:
Millions of yen

2016
Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Adjustments

Consolidation¥87,638¥85,422¥37,440¥210,501¥     —

¥210,501

461

473

17,135

18,070(18,070)—¥88,100¥85,895¥54,576¥228,572¥(18,070)¥210,501¥ 2,785¥10,562¥ 4,303¥ 17,651¥     40

¥ 17,692

Depreciation and amortization¥ 2,974¥ 3,068¥ 2,757¥  8,800¥     —¥  8,800

Amortization of goodwill¥    71¥    —¥    —¥     71¥     —

¥     71

Net sales
Net sales to external customers
Intra-segment sales and transfers
Total
Segment income
OthersThousands of U.S. dollars

2016
Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Adjustments

Consolidation$777,766$758,098$332,274$1,868,139$       —

$1,868,139

4,095

4,200

152,072

160,369(160,369)—$781,862$762,298$484,347$2,028,508$(160,369)$1,868,139$ 24,723$ 93,737$ 38,194$  156,655$     356$   157,011

Depreciation and amortization$ 26,397$ 27,235$ 24,470$   78,102$       —$   78,102

Amortization of goodwill$    636$     —

$     —

$      636$       —

$      636

Net sales
Net sales to external customers
Intra-segment sales and transfers
Total
Segment income
Others

Notes: i. Segment income adjustments show elimination of the amount of intra-segment transactions.
ii. Segment income is adjusted to be reported as operating income in the consolidated statement of income.
iii. The amounts to be written off as depreciation and amortization of goodwill are allocated among the business segment on the basis of reasonable criteria.
iv. Since companies, offices, and factories serve as the base for administrative classification of segment’s assets, no allocation to the business segment is done.
Millions of yen

2015
Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Adjustments

Consolidation¥86,764¥83,207¥37,283¥207,255¥     —

¥207,255

61

73

17,281

17,417(17,417)—¥86,826¥83,281¥54,564¥224,672¥(17,417)¥207,255¥ 2,878¥10,071¥ 3,996¥ 16,946¥    (64)¥ 16,881

Depreciation and amortization¥ 2,919¥ 3,155¥ 2,638¥  8,713¥     —¥  8,713

Amortization of goodwill¥    76¥    —¥    —¥     76¥     —

¥     76

Net sales
Net sales to external customers
Intra-segment sales and transfers
Total
Segment income
Others

Notes: i. Segment income adjustments show elimination of the amount of intra-segment transactions.
ii. Segment income is adjusted to be reported as operating income in the consolidated statement of income.
iii. The amounts to be written off as depreciation and amortization of goodwill are allocated among the business segment on the basis of reasonable criteria.
iv. Since companies, offices, and factories serve as the base for administrative classification of segment’s assets, no allocation to the business segment is done.

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Related Information
1. Information by product and service
Since the Company and its consolidated subsidiaries disclose the same information in its segment information section, it has been omitted.
2. Information by geographical segment
Millions of yen

Thousands of U.S. dollars

2016
Sales

Japan

Asia

Others

Total

Japan

Asia

OthersTotal¥128,239¥70,301¥11,960¥210,501$1,138,084$623,906$106,148$1,868,139

50,303

12,914

1,641

64,859446,427

114,614

14,564575,607

Property, plant and equipment

Note: Sales information is based on location of customers and it is classified by country or region.
Millions of yen
2015

Sales

Japan

Asia

OthersTotal¥126,914¥69,593¥10,747¥207,255

45,945

13,901

1,655

61,503

Property, plant and equipment

Note: Sales information is based on location of customers and it is classified by country or region.

3. Information by principal customers
Millions of yen

Name of the customer

Related reportable segment

Sumitomo Chemical Company, Limited

Electronic and Optical Products

Thousands of
U.S. dollars

2016

2015
Sales

2016

¥―

¥21,383$―

Since there are no outside customers that make up more than 10% of net sales on the consolidated statement of income for the year ended March 31,
2016, it has been omitted.
Information on impairment losses on noncurrent assets by reportable segment
There is no impairment loss on noncurrent assets for the year ended March 31, 2016.
Millions of yen

2015

Impairment loss

Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Consolidation

¥—

¥—

¥—

¥—

¥674

Note: Since companies, offices, and factories serve as the base for administrative classification of segment’s assets, no allocation to the segment of the enterprise is done.

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LINTEC ANNUAL REPORT 2016

Information related to the amount of amortization of goodwill and the unamortized amount of goodwill by reportable segment
Millions of yen

2016

Unamortized amount of goodwill

Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Consolidation

¥—

¥—

¥—

¥—

¥22

Thousands of U.S. dollars

2016

Unamortized amount of goodwill

Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Consolidation

$—

$—

$—

$—

$200

Notes: i. Since the Company and its consolidated subsidiaries disclose the same information of the amount of amortization of goodwill in the reportable segment information section, it has been omitted.
ii. Since companies, offices, and factories serve as the base for administrative classification of segment’s assets, no allocation to the segment of the enterprise is done.
Millions of yen

2015

Unamortized amount of goodwill

Printing andIndustrial Materials
Products

Electronic and
OpticalProducts

Paper andConverted
Products

Total

Consolidation

¥—

¥—

¥—

¥—

¥93

Notes: i. Since the Company and its consolidated subsidiaries disclose the same information of the amount of amortization of goodwill in the reportable segment information section, it has been omitted.
ii. Since companies, offices, and factories serve as the base for administrative classification of segment’s assets, no allocation to the segment of the enterprise is done.

Information on profit arising from negative goodwill by reportable segment
There is no profit arising from negative goodwill for the years ended March 31, 2016 and 2015.
24. Related Party Transactions
The Company and its consolidated subsidiaries have transactions with NP Trading Co., Ltd., a subsidiary of Nippon Paper Industries Co., Ltd.
The transactions between the companies for the years ended March 31, 2016 and 2015 were as follows:
Millions of yen

For the year
Sales of fine & specialty paper products and converted products
Purchase of stencil, chemicals and equipment

At year-end

Thousands of
U.S. dollars

2016

2015

2016

¥11,578¥11,431$102,756

5,053

4,969

44,852Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

Trade notes and accounts receivable¥4,085¥ 4,034$36,256

Trade notes and accounts payable

1,979

1,804

17,568

33

47

296

Yen

U.S. dollars

Other liabilities

These related party transactions are carried out on an arm’s-length basis similar to third party transactions.
25. Amounts Per Share
The amounts per share of net assets and net income as of and for the years ended March 31, 2016 and 2015 were as follows:
2016

2015

2016

¥2,370.49¥2,363.81$21.04

Net income (basic)

151.07161.63

1.34

Net income (diluted)

150.86161.41

1.34

Net assets

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The bases for calculation were as follows:(1) Basic and diluted net income per share

Net income (basic) per share:
Profit attributable to owners of parent
Amount not attributable to common shareholders
Profit attributable to owners of parent attributable to common shares
Weighted-average number of common shares issued during the year (thousand)Net income (diluted) per share:
Adjustment of profit attributable to owners of parent related to dilutive securities
Adjustment of dilutive securities (thousand)		 [Share subscription rights (thousand)]Millions of yen

Thousands of
U.S. dollars

2016

2015

2016

¥10,899—¥10,899
72,144¥11,659—¥11,659
72,134$96,726—$96,726
72,144¥    —
102[102]¥     —98
[98]$     —
102
[102]

Millions of yen

Thousands of
U.S. dollars(2) Net assets per share

Total net assets
Amount deducted from total net assets[Share subscription rights][Non-controlling interests]
Net assets attributable to common shares
Number of shares of common stock outstanding used in calculation of net assets per share (thousand)

2016

2015

2016

¥172,101
1,064
[169]
[895]
¥171,037
72,152¥171,674
1,159
[166]
[992]
¥170,514
72,135$1,527,350
9,445[1,502][7,943]$1,517,904
72,152

26. Short-Term Borrowings, Long-Term Debts and Other Interest-Bearing Debts
Short-term bank loans are represented generally by 30-day or 90-day notes issued by the Company and its consolidated subsidiaries to banks at annualinterest rates from 0.27% to 0.66% at March 31, 2016 and from 0.33% to 0.68% at March 31, 2015.
Short-term borrowings as of March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Short-term bank loans
Current portion of long-term debt

2016

2015

2016

¥1,695—¥1,695¥1,695—¥1,695$15,042—$15,042Millions of yen

Thousands of
U.S. dollars

Other interest-bearing debts as of March 31, 2016 and 2015 consisted of the following:

Short-term lease obligation
Long-term lease obligation

2016

2015

2016

¥196
349

¥199
471

$1,7403,098

Planned repayment amounts after the balance sheet date (March 31, 2016) for long-term debt and lease obligation are as follows:
Millions of yen

Thousands of U.S. dollars

2016

Lease obligation

Over 1 year
within 2 years

Over 2 years
within 3 years

Over 3 years
within 4 years

Over 4 years
within 5 years

Over 1 year
within 2 years

Over 2 years
within 3 years

Over 3 years
within 4 years

Over 4 years
within 5 years

¥164

¥118

¥61

¥4

$1,457$1,054$545$38

27. Subsequent Event
The following distribution of retained earnings was approved at a meeting of the board of directors held on May 10, 2016.
Millions of yen

Thousands of
U.S. dollars¥1,948$17,289

2016
Cash dividends (¥27 per share)

68

LINTEC ANNUAL REPORT 2016

Management’s Report on Internal Control
over Financial Reporting

Basic Framework of Internal Control over Financial Reporting
Hiroyuki Nishio, Representative Director, President, CEO and COO of LINTEC Corporation, and Hitoshi Asai, Director, Vice President Executive Officer &Chief Financial Officer of LINTEC Corporation, are responsible for designing and operating adequate internal control over financial reporting for consolidated financial statements of LINTEC Corporation and consolidated subsidiaries (the “Company”) in accordance with the basic framework set forth in“Standards and Practice Standards for Management Assessment and Audit concerning Internal Control Over Financial Reporting” issued by BusinessAccounting Council.
Internal control achieves its objectives to a reasonable extent given that all individual components of internal control are integrated and function
as a whole. Internal control over financial reporting for consolidated financial statements may not completely prevent or detect misstatements in financial reporting.
Scope of Assessment, Assessment Date and Assessment Procedure
We assessed the effectiveness of the Company’s internal control over financial reporting for the accompanying consolidated financial statements asof March 31, 2016 in accordance with the standards for assessment of internal control over financial reporting generally accepted in Japan. For thisassessment, we first evaluated the company-level controls which would have a material impact on the reliability of overall financial reporting on aconsolidated basis. We then selected the process-level controls to be assessed based on the results of the company-level control assessment.
For the process-level control assessment, we evaluated the effectiveness of internal control by analyzing processes in scope, identifying key controls thatwould have a material impact on the reliability of the financial reporting, and assessing the design and operation of such key controls.
We determined the scope of assessment by selecting consolidated subsidiaries based on their materiality of impact on the reliability of financial
reporting. We determined their materiality of impact by considering both quantitative and qualitative aspects. The scope of our process-level control
assessment was determined based on the results of our assessment of company-level controls, which included its 16 consolidated subsidiaries.
We excluded 18 consolidated subsidiaries from the scope of the company-level control assessment since their quantitative and qualitative impacts weredeemed insignificant.
For the purpose of determining the scope of process-level controls assessment, we selected 2 consolidated subsidiaries as “Significant Business
Locations,” which contributed approximately two thirds of the Company’s net sales on a consolidated basis for the fiscal year ended March 31, 2015. For
the Significant Business Locations, we primarily included business processes related to sales, accounts receivable, and inventory in the scopeof assessment as the aforementioned accounts were closely associated with the Company’s business objectives. In addition, we included certain
business processes in the scope of assessment not only from “Significant Business Locations” but also from all subsidiaries and affiliates, which wererelated to significant accounts involving estimates and management’s judgment or include high-risk operations and/or transactions, as “businessprocesses with a material impact on financial reporting.”
Assessment Result
Based on the results of our assessment with the above mentioned scope, date and procedures, we concluded that Company’s internal control over financial reporting for the accompanying consolidated financial statements as of March 31, 2016 was effective.

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Report of Independent Auditors

70

LINTEC ANNUAL REPORT 2016

LINTEC ANNUAL REPORT 2016

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Investor Information
As of March 31, 2016

Head Office23-23, Honcho, Itabashi-ku, Tokyo 173-0001, Japan
Phone: +81-3-5248-7711 Fax: +81-3-5248-7760
URL: http://www.lintec-global.com/
Established
October 15, 1934
Fiscal Year-End
March 31
Net Assets¥172,101 million
Common Stock
Authorized: 300,000,000 shares
Issued: 76,564,240 shares
Stock Listing
Tokyo Stock Exchange, 1st Section
Securities Code: 7966
Shareholder Register Agent for Common Stock
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku,
Tokyo 100-8212, Japan
Number of Employees
4,246 (Consolidated)
2,535 (Parent company only)
Major Shareholders
Nippon Paper Industries Co., Ltd.�������������������������������������������������������������������� 30.1 2%
Japan Trustee Services Bank Ltd. (Trust Account)������������������������������������� 3.20%
National Mutual Insurance Federation of Agricultural Cooperatives���� 3.1 8%
Ichigo Trust�������������������������������������������������������������������������������������������������������������������� 2.49%
Tamie Shoji������������������������������������������������������������������������������������������������������������������� 2.49%

Ownership and Distribution of Shares

Major Subsidiaries * Consolidated Subsidiary
Domestic
LINTEC COMMERCE, INC.*
LINTEC SIGN SYSTEM, INC.*
FUJI-LIGHT, INC.*
LINTEC SERVICES, INC.
LINTEC CUSTOMER SERVICE, INC.
PRINTEC, INC.
TOKYO LINTEC KAKO, INC.
OSAKA LINTEC KAKO, INC.
Overseas
LINTEC USA HOLDING, INC.*
MADICO, INC.*
LINTEC OF AMERICA, INC.*
LINTEC EUROPE B.V.*
LINTEC ADVANCED TECHNOLOGIES (EUROPE) GMBH*
LINTEC (SUZHOU) TECH CORPORATION*
LINTEC (TIANJIN) INDUSTRY CO., LTD.*
LINTEC PRINTING & TECHNOLOGY (TIANJIN) CORPORATION*
LINTEC ADVANCED TECHNOLOGIES (SHANGHAI), INC.*
LINTEC SPECIALITY FILMS (TAIWAN), INC.*
LINTEC HI-TECH (TAIWAN), INC.*
LINTEC ADVANCED TECHNOLOGIES (TAIWAN), INC.*
LINTEC KOREA, INC.*
LINTEC SPECIALITY FILMS (KOREA), INC.*
LINTEC ADVANCED TECHNOLOGIES (KOREA), INC.*
LINTEC ASIA PACIFIC REGIONAL HEADQUARTERS PRIVATE LIMITED*
LINTEC SINGAPORE PRIVATE LIMITED*
PT. LINTEC INDONESIA*
PT. LINTEC JAKARTA*LINTEC (THAILAND) CO., LTD.*
LINTEC BKK PTE LIMITED*
LINTEC INDUSTRIES (MALAYSIA) SDN. BHD.*
LINTEC INDUSTRIES (SARAWAK) SDN. BHD.*
LINTEC KUALA LUMPUR SDN. BHD.*
LINTEC ADVANCED TECHNOLOGIES (MALAYSIA) SDN. BHD.*
LINTEC VIETNAM CO., LTD.*
LINTEC HANOI VIETNAM CO., LTD.*
LINTEC ADVANCED TECHNOLOGIES (PHILIPPINES), INC.*
LINTEC PHILIPPINES (PEZA), INC.*
LINTEC INDIA PRIVATE LIMITED*
Share Price / Trading Volume
Share Price
Share Price¥¥3,500Financial Institutions.............................. 17.54%

3,500
3,000
3,000

Individuals and Other.............................. 16.38%

2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000

Treasury Stock.......................................... 5.76%

Trading Volume
Trading Volume

Securities Companies............................... 1.23%
Other Companies.................................... 33.66%
Overseas Companies.............................. 25.43%

Million shares
Million15 shares

15
12
12
9
9
6
6
3
3
0
0

72

LINTEC ANNUAL REPORT 2016

Apr. 2013
Apr. 2013

Apr. 2014
Apr. 2014

Apr. 2015
Apr. 2015

LINTEC Corporation
23-23, Honcho, Itabashi-ku,
Tokyo 173-0001, Japanwww.lintec-global.com/

Printed on LINTEC high-grade printing paper and fancy paper

Printed in Japan