NOTICE OF THE 156TH
ORDINARY GENERAL MEETINGOF SHAREHOLDERS
Date and Time

Place

Thursday, June 29, 2017,at 10 a.m. Japan time

Toranomon Hills Forum Hall B
Toranomon Hills Mori Tower 4F
23-3, Toranomon 1-chome, Minato-ku, Tokyo, JapanCONTENTS‌NOTICE OF ORDINARY GENERAL MEETING OF

SHAREHOLDERS�������������������������������������������������������������������� 1‌Reference Documents for the General Meeting of
Shareholders����������������������������������������������������������������������������� 4

Proposal 1: Distribution of Surplus
Proposal 2: ‌Share Consolidation
Proposal 3: ‌Partial Amendment to the
Articles of Incorporation
Proposal 4: Election of Ten (10) Directors
Attached Documents

Business Report����������������������������������������������������������������������� 19
Consolidated Financial Statements���������������������������������� 38
Non-consolidated Financial Statements������������������������� 41
Audit Report������������������������������������������������������������������������������� 44

Stock Exchange Code 8050

[Translation]
Note: This document has been translated from a part of the Japanese original for reference purposes
only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail.

(Stock Exchange Code 8050)
June 12, 2017

To Shareholders with Voting Rights:

Yoshinobu Nakamura
President

SEIKO HOLDINGS CORPORATION
5-11, Ginza 4-chome, Chuo-ku, TokyoNOTICE OF
THE 156TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We would like to express our appreciation for your continued support and patronage.
You are cordially invited to attend the 156th Ordinary General Meeting of Shareholders of SEIKO HOLDINGSCORPORATION (the “Company”). The meeting will be held for the purposes described below.
If you are unable to attend the meeting, you can exercise your voting rights in writing, or via the Internet. Please
review the attached Reference Documents for the General Meeting of Shareholders, and exercise your voting rights ineither of the methods described on pages 2 and 3 by 6 p.m. on Wednesday, June 28, 2017, Japan time.
1. Date and Time: Thursday, June 29, 2017, at 10 a.m. Japan time
2. Place: ‌Toranomon Hills Forum Hall B
Toranomon Hills Mori Tower 4F 23-3, Toranomon 1-chome, Minato-ku, Tokyo, Japan
3. Meeting Agenda:
Matters to be reported:

The Business Report, Non-consolidated Financial Statements, Consolidated
Financial Statements and results of audits by the Accounting Auditor and the Boardof Corporate Auditors of the Consolidated Financial Statements, for the Company’s
Fiscal Year Ended on March 31, 2017 (from April 1, 2016 to March 31, 2017)

Proposals to be resolved: Proposal 1: Distribution of Surplus
Proposal 2: Share Consolidation
Proposal 3: Partial Amendment to the Articles of Incorporation
Proposal 4: Election of Ten (10) Directors
4. Decisions Concerning Convocation(1) Should you choose to exercise your voting rights via a proxy, you may designate a shareholder other thanyourself, who is entitled to vote with respect to the Company, as your proxy. In such case, please have theproxy submit a power of attorney together with your Voting Rights Exercise Form to the reception desk.
(2) Should you diversely exercise your voting rights, please notify the Company in writing to this effect, together
with the reason thereof, at least three days prior to the date of the General Meeting of Shareholders.

1

NOTICE OF THE 156TH ORDINARY GENERAL MEETING OF SHAREHOLDERSRegarding disclosures on the Internet
 mong the documents to be provided with this Notice, the following items are posted on the Company’s website (at the URL
Aprovided below) via the Internet pursuant to laws and regulations and Article 16 of the Articles of Incorporation of theCompany; therefore, they are not included in the documents attached hereto:(i) “Notes to Consolidated Financial Statements” for Consolidated Financial Statements(ii) “Notes to Non-Consolidated Financial Statements” for Non-Consolidated Financial Statements
Documents attached hereto are some of the documents that the Board of Corporate Auditors and the Accounting Auditor
have audited when they prepare respective audit reports.
 hould any of the Reference Documents for the General Meeting of Shareholders, Business Report, Consolidated Financial
S
Statements or Non-consolidated Financial Statements require revisions, the revised versions will be posted on the Company’s
website (at the URL provided below).

English: http://www.seiko.co.jp/en/ir/, Japanese: http://www.seiko.co.jp/ir/

Notice regarding Exercise of Voting Rights
Voting rights may be exercised by any of the means described below. Shareholders are requested to review theReference Documents for the General Meeting of Shareholders before exercising voting rights.

Shareholders attending the meeting in person
Date and time of
the meeting

Thursday, June 29, 2017, at 10 a.m.,Japan time

When attending the meeting, please submit the enclosed Voting Rights Exercise Format the reception desk. Please also bring this convocation notice.

Shareholders not attending the meeting in person
Exercise of voting rights in writing (by mail)DeadlineMust reach the Company by 6 p.m. on Wednesday,June 28, 2017, Japan time

Please indicate your votes for or against the proposals on the enclosed Voting Rights
Exercise Form and return the same so that it is received by the deadline for exercising
voting rights.

Exercise of voting rights by electromagnetic means (via the Internet)
DeadlineBy 6 p.m. on Wednesday, June 28, 2017, Japan time

Please refer to the Notice regarding Exercise of Voting Rights through the Internet
provided on the next page, access the Company’s designated voting website (http://
www.it-soukai.com/), and enter your votes for or against the proposals in accordancewith the screen instructions.
NOTICE OF THE 156TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

2

Notice regarding Exercise of Voting Rights via the Internet

1

Exercise of voting rights via the Internet(1)	‌Voting rights may be exercised through the Company’s designated voting website (at the URL provided below),in lieu of exercising voting rights in writing. When voting via the Internet, you should log in by using your voting
rights exercise code and password displayed on the right-hand side of the enclosed Voting Rights Exercise
Form, and enter your votes in accordance with the screen instructions. Please note that you will be required tochange your password when you log in for the first time to ensure security.

http://www.it-soukai.com/(2)	‌The deadline for exercising voting rights is 6 p.m. on Wednesday, June 28, 2017, Japan time, and votes must
be entered by the above deadline. Please exercise your voting rights promptly.
(3)	‌If you exercise a voting right both in writing and via the Internet, the vote submitted through the Internet will betaken as the valid vote. If you exercise a voting right multiple times via the Internet, the vote last submitted will
be taken as the valid vote.
(4)	‌The password (including the password that may be changed by a shareholder) is valid only for this general
meeting of shareholders. A new password will be issued at the time of convocation of the next general meetingof shareholders.
(5) Please note that shareholders are responsible for any expenses incurred for accessing the Internet.
Notes The password is a means to verify the identification of the person casting the vote. Please note that the Company will not ask
for your password.
If a wrong password is entered a certain number of times, it will be locked and may no longer be used. If you have had yourpassword locked, please take the procedures in accordance with the screen instructions.
Although the operationability of the voting website is checked with a general Internet access device, you may not be able touse the voting website depending on the device you use to access the website.

2

Contact information
If you have any questions, please contact Stock Transfer Agent Department, Mizuho Trust & Banking Co., Ltd.,the shareholder register administrator, as below.

Inquiries regarding the operation of the voting website:
Toll free, accessible only in Japan

0120-768-524 (9:00 - 21:00 on weekdays)

Other inquiries regarding administration of shares:
Toll free, accessible only in Japan

30120-288-324 (9:00 - 17:00 on weekdays)

Conditions related to systems(1) The screen resolution is at least 800 dots (horizontal) x 600 dots (vertical) (SVGA).
(2) The following applications have been installed:
A. Microsoft® Internet Explorer Ver. 5.01 SP2 or higher
B. Adobe® Acrobat® Reader TM Ver. 4.0 or higher, or Adobe® Reader® Ver. 6.0 or higher(3)	The website can be used securely, as it uses an encryption technology (SSL 128bit) to prevent alteration or theftof information submitted in exercising voting rights.
For
reference3

Institutional investors may use the electronic proxy voting platform operated by ICJ, Inc.

NOTICE OF THE 156TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

Reference Documents for the General Meeting of Shareholders
Agenda of the Ordinary General Meeting of Shareholders
Proposal 1

Distribution of surplus

The Company has a policy to provide consistent dividend payments while considering the consolidated business results
for the year under review and taking into account the enrichment of internal reserves to strengthen our managementfoundation. Based on this policy, with regard to the year-end dividend for the fiscal year under review, we hereby
propose to distribute the surplus as described below.

Matters related to the year-end dividend
Type of dividend assets
Cash
Allotment of dividend property to shareholders and its total amountAmount per common share: 7.5 yen
Total amount of dividends: 1,550,510,783 yen
Effective date of distribution of surplus
June 30, 2017

Reference Documents for the General Meeting of Shareholders

4

Proposal 2

Share Consolidation

Reason for proposal
The Japanese Stock Exchange Conference has announced the “Action Plan for Aggregation of Trading Units”
and seeks to unify the trading units for common stock issued by all domestic listed corporations at 100 sharesby October 1, 2018.
As a corporation listed on the Tokyo Stock Exchange, the Company recognizes the aim of the Japanese
Stock Exchange Conference and has decided to change the share unit number, or trading unit, for shares of theCompany, from 1,000 shares to 100 shares. At the same time, the Company proposes to implement a shareconsolidation in order to maintain the investment unit level recommended by the Tokyo Stock Exchange (from50,000 yen to less than 500,000 yen).

Details of share consolidation(1) Class of shares subject to, and ratio of, share consolidation
The Company proposes to consolidate every five shares of its common stock into one share.
If fractional shares of less than one share are created through the share consolidation, the Company will
dispose of all such shares collectively pursuant to the Companies Act, and will deliver the proceeds
therefrom to the former holders of such fractional shares in amounts proportional to the former holdings ofsaid shareholders.

(2) Effective date of share consolidation
October 1, 2017(3) Total number of authorized shares as of the effective date of share consolidation
149,200,000 shares
Other matters
The proposed share consolidation will be executed subject to the approval of “Proposal 3: Partial amendment to
the Articles of Incorporation.” The Company requests that other procedural matters be left to the discretion of
the Board of Directors.

5

Reference Documents for the General Meeting of Shareholders

Proposal 3

Partial amendment to the Articles of Incorporation

Reason for proposal(1) The Company proposes to change the total number of authorized shares from 746,000,000 shares to 149,200,000
shares in proportion to the ratio of share consolidation (one share to five shares) in order to optimize the total
number of authorized shares, subject to the approval of “Proposal 2: Share Consolidation” as proposed. The
Company also recognizes the aim of the “Action Plan for Aggregation of Trading Units” announced by the Japanese
Stock Exchange Conference, and proposes to change the share unit number from 1,000 shares to 100 shares inorder to change the trading unit for shares of the Company.
The proposed changes will entail the addition of a supplemental provision to the Articles of Incorporation statingthat the new provisions will take effect on October 1, 2017, which is the effective date of the share consolidation aspresented in Proposal 2, and the said supplemental provision will be deleted as of the same date. (Articles 6 and 8,
and the supplemental provision of the proposed amendment)(2) In order to enable flexibility in the operation of the Board of Directors meetings, the Company proposes to change
the convener and chairperson thereof to the Representative Director predetermined by the Board of Directors.
(Article 27 of the proposed amendment)(3) The Company proposes to newly establish provisions for exempting its Directors and Corporate Auditors fromliability based on the liability exemption system granted to directors and corporate auditors as provided for in
Articles 426 and 427 of the Companies Act, in order to allow its Directors and Corporate Auditors to fully performthe functions expected of them, and to procure capable human resources on a continuous basis. The Company
has obtained the consent of each Corporate Auditor to the establishment of Article 32 of the proposed amendment.
(Articles 32 and 42 of the proposed amendment)(4) In addition to the above, the relevant articles will be renumbered as a result of the above amendments, and terms
and expressions will be inserted, deleted or modified in part. (Articles 10, 12, 15, 19, 22, 24, 30, 31, 35, 37, 38, 40
and 41 of the proposed amendment)(Underlines denote amendments.)

Current Articles of Incorporation

Proposed Amendment

CHAPTER II SHARESCHAPTER II SHARES(Total Number of Authorized Shares)
Article 6
The total number of authorized shares of theCompany shall be 746,000,000.

(Total Number of Authorized Shares)
Article 6
The total number of authorized shares of theCompany shall be 149,200,000.

(Share Unit Number)
Article 8
The number of shares constituting one share unit of
the Company shall be 1,000.

(Share Unit Number)
Article 8
The number of shares constituting one share unit of
the Company shall be 100.
Reference Documents for the General Meeting of Shareholders

6

(Underlines denote amendments.)

7

Current Articles of Incorporation

Proposed Amendment(Additional Purchase of Shares of Less Than One
Unit)
Article 10
Shareholders of the company holding shares of lessthan one unit shall be entitled to demand that theCompany sell such number of shares as the sharesmay, together with the number of shares less than
one unit, constitute the share unit number, in
accordance with the “Share Handling Regulations”(“Additional Purchase”).

(Additional Purchase of Shares of Less Than One
Unit)
Article 10
Shareholders of the Company holding shares of lessthan one unit shall be entitled to demand that theCompany sell such number of shares as the sharesmay, together with the number of shares less than
one unit, constitute the share unit number, in
accordance with the Share Handling Regulations (the“Additional Purchase”).

(Share Handling Regulations)
Article 12
Registration of transfers of shares, purchase andAdditional Purchase of shares of less than one unit,
and other matters related to shares of the Company
shall be gover ned by the “Share Handling
Regulations” prescribed by the Board of Directors, inaddition to these Articles of Incorporation.

(Share Handling Regulations)
Article 12
Registration of transfers of shares, purchase andAdditional Purchase of shares of less than one unit,
and other matters related to shares of the Company
shall be governed by the Share Handling Regulationsprescribed by the Board of Directors, in addition to
the applicable laws and regulations, and these
Articles of Incorporation.

CHAPTER III GENERAL MEETING OF
SHAREHOLDERS

CHAPTER III GENERAL MEETING OF
SHAREHOLDERS(Convener and Chairperson)
Article 15
1. ‌The President shall convene and chair the general
meetings of shareholders.
2. ‌If the President is unable to so act, one of theother Directors in an order predetermined by the
Board of Directors shall convene or chair thegeneral meeting of shareholders.

(Convener and Chairperson)
Article 15
1. ‌The President shall convene and chair the general
meetings of shareholders.
2. ‌If the President is unable to so act, one of theother Directors in an order predetermined by the
Board of Directors shall convene and chair thegeneral meeting of shareholders.

(Minutes of the General Meetings of Shareholders)
Article 19
Minutes of the general meetings of shareholders shallbe prepared and kept by the company in accordancewith the provisions of Article 318 of the Companies
Act.

(Minutes of the General Meetings of Shareholders)
Article 19
Minutes of the general meetings of shareholders shallbe prepared in writing and kept by the Company inaccordance with the provisions of applicable laws
and regulations.

Reference Documents for the General Meeting of Shareholders

(Underlines denote amendments.)

Current Articles of Incorporation

Proposed Amendment

CHAPTER IV DIRECTORS AND BOARD OF
DIRECTORSCHAPTER IV DIRECTORS AND BOARD OF
DIRECTORS(Term of Office)
Article 22
1. ‌The term of office of Directors shall expire at theclosing of the ordinary general meeting ofshareholders concerning the last business year
ending within two (2) years after their election.
2. ‌If the number of Directors does not fall below thestatutory number of directors as a result of avacancy, the Company may choose not to elect a
Director to fill the vacancy. The term of office of a
Director who has been elected to fill a vacancy
shall expire when the term of office of his or her
predecessor would have otherwise expired.
3. ‌The term of office of a Director who has been
elected to increase the number of Directors shall
expire when the term of office of the otherincumbent Directors will expire.

(Term of Office)
Article 22
1. ‌The term of office of Directors shall expire at theclosing of the ordinary general meeting ofshareholders concerning the last business year
ending within two (2) years after their election.
2. ‌The term of office of a Director who has been
elected to increase the number of Directors or tofill a vacancy shall expire when the term of office ofthe other incumbent Directors will expire.

(Directors with Titles)
Article 24
The Board of Directors may, by its resolutions, electone Chairman, one President, and a small number
each of Executive Vice Presidents, Senior Executive
Directors, and Executive Directors.

(Directors with Titles)
Article 24
The Board of Directors may, by its resolutions,
appoint one Chairman, one President, and a small
number each of Executive Vice Presidents, Senior
Executive Directors, and Executive Directors.

(Convocation and Chairperson of Board of Directors
Meetings)
Article 27
1. ‌Unless otherwise stipulated by applicable laws or
regulations, the Chairman shall convene and chair
the Board of Directors meetings.

(Convener and Chairperson of Board of Directors
Meetings)
Article 27
1. ‌Unless otherwise stipulated by applicable laws or
regulations, a Representative Director shallc o nv e ne a nd c ha ir t he B o a rd o f D ire c t o rs
meetings.
2. ‌If there are more than one Representative
Directors, one of the Representative Directors
predetermined by the Board of Directors shallc o nv e ne a nd c ha ir t he B o a rd o f D ire c t o rs
meetings.

(Newly established)

Reference Documents for the General Meeting of Shareholders

8

(Underlines denote amendments.)

Current Articles of Incorporation

Proposed Amendment

2. ‌If there is a vacancy in the position of Chairman or
the Chairman is unable to so act, the President
shall convene and chair the Board of Directors
meeting, or if the President is unable to so act,
then one of the other Directors in an orderpredetermined by the Board of Directors shallconvene and chair the Board of Directors meeting.

3. ‌If there is a vacancy in the position of the convener
and chairperson of a Board of Directors meeting
under the provisions of the preceding two
paragraphs, or if such person is unable to so act,
one of the other Directors in an orderpredetermined by the Board of Directors shallconvene and chair the Board of Directors meeting.

(Minutes of the Board of Directors Meetings)
Article 30
Minutes of the Board of Directors meetings shall be
prepared in writing in accordance with the provisionsof the applicable laws and regulations, and kept by
the company after the Directors and Corporate
Auditors present thereat have affixed their names andseals thereto.

(Minutes of the Board of Directors Meetings)
Article 30
Minutes of the Board of Directors meetings shall be
prepared in writing in accordance with the provisionsof the applicable laws and regulations, and kept by
the Company after the Directors and Corporate
Auditors present thereat have affixed their names andseals thereto.

(Regulations of the Board of Directors)
Article 31
Operation of the Board of Directors shall be governedby the Regulations of the Board of Directors
prescribed by the Board of Directors.

(Regulations of the Board of Directors)
Article 31
Operation of the Board of Directors shall be governedby the Regulations of the Board of Directors
prescribed by the Board of Directors, in addition to
the applicable laws and regulations, or these Articles
of Incorporation.

(Newly established)

9

Reference Documents for the General Meeting of Shareholders(Exemption of Directors’ Liability)
Article 32
1. ‌The Company may, by a resolution of its Board of
Directors and pursuant to the provisions of Article
426, paragraph 1 of the Companies Act, exempt a
Director (including a former Director) from liability
under Article 423, paragraph 1 thereof, to theextent permitted by the applicable laws andregulations.
2. ‌The Company may, pursuant to the provisions ofArticle 426, paragraph 1 of the Companies Act,
execute an agreement with a Director (excluding
Executive Directors, etc.) that limits his or her
liability under Article 423, paragraph 1 thereof;
provided that the amount of liability pursuant tosuch agreement shall be limited to the amountprescribed by the applicable laws and regulations.

(Underlines denote amendments.)

Current Articles of Incorporation

Proposed Amendment

CHAPTER V CORPORATE AUDITORS AND BOARD
OF CORPORATE AUDITORSCHAPTER V CORPORATE AUDITORS AND BOARD
OF CORPORATE AUDITORS

Articles 32 to 33 (Provisions omitted)

Articles 33 to 34 (No amendment)(Term of Office)
Article 34
1. ‌The term of office of Corporate Auditors shall
expire at the closing of the ordinary general
meeting of shareholders concerning the lastbusiness year ending within four (4) years after
their election.
2. ‌If the number of Corporate Auditors does not fall
below the statutory number of corporate auditors
as a result of a vacancy, the Company may
choose not to elect a Corporate Auditor to fill thevacancy. The term of office of a Corporate Auditor
who has been elected to fill a vacancy shall expire
when the term of office of his or her predecessor
would have otherwise expired.

(Term of Office)
Article 35
1. ‌The term of office of Corporate Auditors shall
expire at the closing of the ordinary general
meeting of shareholders concerning the lastbusiness year ending within four (4) years after
their election.
2. ‌The term of office of a Corporate Auditor who has
been elected to fill a vacancy of a Corporate
Auditor who has retired before expiration of his or
her term of office shall expire when the term ofoffice of the Corporate Auditor who has retired
would have otherwise expired.

Article 35 (Provisions omitted)

Article 36 (No amendment)(Board of Corporate Auditors)
Article 36
The Board of Corporate Auditors may determine thematters related to the execution of duties of the
Corporate Auditors, in addition to the mattersprescribed by the applicable laws and regulations, or
the Articles of Incorporation; provided that the
Corporate Auditors shall not be precluded fromexercising their authority.

(Board of Corporate Auditors)
Article 37
The Board of Corporate Auditors may determine thematters related to the execution of duties of the
Corporate Auditors, in addition to the mattersprescribed by the applicable laws and regulations, orthese Articles of Incorporation; provided that the
Corporate Auditors shall not be precluded fromexercising their authority.

(Resolution of the Board of Corporate Auditors)
Article 37
Resolutions of the Board of Corporate Auditors shallbe adopted by a majority of all Corporate Auditors.

(Resolution of the Board of Corporate Auditors)
Article 38
Resolutions of the Board of Corporate Auditors shallbe adopted by a majority of all Corporate Auditors,
unless otherwise prescribed by the applicable laws
and regulations.

Article 38 (Provisions omitted)

Article 39 (No amendment)

Reference Documents for the General Meeting of Shareholders

10(Underlines denote amendments.)

Current Articles of Incorporation

Proposed Amendment(Minutes of the Board of Corporate Auditors
Meetings)
Article 39
Minutes of the Board of Corporate Auditors meetings
shall be prepared in writing in accordance with theprovisions of the applicable laws and regulations, andkept by the company after the Corporate Auditorspresent thereat have affixed their names and seals
thereto.

(Minutes of the Board of Corporate Auditors
Meetings)
Article 40
Minutes of the Board of Corporate Auditors meetings
shall be prepared in writing in accordance with theprovisions of the applicable laws and regulations, andkept by the Company after the Corporate Auditorspresent thereat have affixed their names and seals
thereto.

(Regulations of the Board of Corporate Auditors)
Article 40
Operation of the Board of Corporate Auditors shall begover ned by the Regulations of the Board of
Corporate Auditors prescribed by the Board of
Corporate Auditors.

(Regulations of the Board of Corporate Auditors)
Article 41
Operation of the Board of Corporate Auditors shall begover ned by the Regulations of the Board of
Corporate Auditors prescribed by the Board of
Corporate Auditors, in addition to the applicable laws
and regulations, or these Articles of Incorporation.

(Newly established)

CHAPTER VI ACCOUNTING
Articles 41 to 44 (Provisions omitted)(Newly established)

11

Reference Documents for the General Meeting of Shareholders(Exemption of Directors’ Liability)
Article 42
1. ‌The Company may, by a resolution of its Board of
Directors and pursuant to the provisions of Article
426, paragraph 1 of the Companies Act, exempt a
Corporate Auditor (including a former Corporate
Auditor) from liability under Article 423, paragraph
1 thereof, to the extent permitted by the applicablelaws and regulations.
2. ‌The Company may, pursuant to the provisions ofArticle 427, paragraph 1 of the Companies Act,
execute an agreement with a Corporate Auditor that
limits his or her liability under Article 423, paragraph 1
thereof; provided that the amount of liability pursuant
to such agreement shall be limited to the amountprescribed by the applicable laws and regulations.
CHAPTER VI ACCOUNTING
Articles 43 to 46 (No amendment)
Supplementary provision
Article 1
Amendments to Articles 6 and 8 shall take effect asof October 1, 2017. This supplementary provision
shall be deleted after the lapse of the effective date ofsuch amendments.

Proposal 4

Election of Ten (10) Directors

The Company proposes the election of ten (10) Directors, as the term of office of all twelve (12) Directors will expire at
the closing of this General Meeting of Shareholders.
The candidates for Director are as follows:
NumberName

Date of Birth

Current Position

Classification

1

Shinji Hattori

January 1, 1953

Chairman & Group CEO

Reappointed

2

Yoshinobu Nakamura

October 21, 1949

President

Reappointed

3

Akihiro Okuma

September 9, 1960

Executive Director

Reappointed

4

Hiromi Kanagawa

September 30, 1962

Director

Reappointed

5

Shimesu Takizawa

July 2, 1963

Director

Reappointed

6

Shuji Takahashi

August 29, 1957

Director

Reappointed

7

Akio Naito

November 9, 1960

Director

Reappointed

8

Shuntaro Ishii

August 4, 1958

Director

Reappointed

9

Carsten Fischer

September 7, 1962

Director

Candidate for outside Director
Reappointed Independent Director

10Nobuhiro Endo

November 8, 1953—

Candidate for outside Director
Newly Appointed Independent Director

Reference Documents for the General Meeting of Shareholders

12

1

Shinji Hattori (January 1, 1953)

Reappointed

Number of shares of the Company held
11,396,448
Career, positions, responsibilities and significant concurrent positions
April 1975
April 1984
April 1996
June 2001
June 2003
June 2007
June 2009
April 2010
October 2012
June 2014
June 2015
April 2017

Joined Mitsubishi Corporation
Joined Seikosha Co., Ltd. (currently Seiko Clock Inc. and Seiko Precision Inc.)
Director of Seiko Precision Inc.
President of Seiko Precision Inc.
President & CEO of SEIKO WATCH CORPORATION
Director of the Company
Executive Vice President of the Company
President of the Company
Chairman & Group CEO of the Company (to present)
Outside Director of JAPAN POST INSURANCE Co., Ltd. (to present)
President & CEO of SEIKO WATCH CORPORATION
Chairman & CEO of SEIKO WATCH CORPORATION (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Shinji Hattori as a candidate for Director, expecting him to perform full functions as a Board member inthe decision-making to execute important business and supervise the other Directors’ execution of their duties by utilizing his wealth ofexperience and achievement, including the following: (i) having served as President of the Company and its group companies; and (ii)currently being engaged in strategic planning and management direction for the entire Company Group from a medium- to long-term, andglobal perspective as Chairman & Group CEO of the Company.

13

Reference Documents for the General Meeting of Shareholders

2

Yoshinobu Nakamura (October 21, 1949)

Reappointed

Number of shares of the Company held
82,000Career, positions, responsibilities and significant concurrent positions
April 1972
Joined Seikosha Co., Ltd. (currently Seiko Clock Inc. and Seiko Precision Inc.)
June 2001
Director of Seiko Precision Inc.
June 2003
Director of the Company
June 2004
Executive Director & CFO of SEIKO WATCH CORPORATIONMarch 2008
President of Seiko Clock Inc.
June 2008
Director of the Company
December 2008 Senior Executive Director of the Company
May 2010
Representative Director and Senior Executive Director of the Company
October 2012 President of the Company (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Yoshinobu Nakamura as a candidate for Director, expecting him to perform full functions as a Board memberin the decision-making to execute important business and supervise the other Directors’ execution of their duties by utilizing his wealth ofexperience and achievement, including the following: (i) having directed the Company Group’s management as President of the Company formany years; and (ii) mainly having promoted the business portfolio restructuring to improve financial standing and maximize business income.

3

Akihiro Okuma (September 9, 1960)

Reappointed

Number of shares of the Company held
15,000Career, positions, responsibilities and significant concurrent positions
April 1984
Joined the Company
September 2007 General Manager, General Affairs Department of SEIKO WATCH CORPORATION
July 2009
General Manager, Human Resources Department of the Company
May 2010
Director of Seiko Clock Inc.
June 2013
Director of the Company
January 2015
Director and Managing Executive Officer of SEIKO Solutions Inc.
June 2016
Executive Director of the Company (to present)
January 2017
Outside Director of OHARA INC. (to present)
April 2017
Executive Director in charge of Secretariat, Human Resources, General Affairs, IT
Planning, and Long-Term Management Strategies of the Company (to present)
April 2017
Director and Executive Vice President of SEIKO Solutions Inc. (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Akihiro Okuma as a candidate for Director, expecting him to perform full functions as a Board member inthe decision-making to execute important business and supervise the other Directors’ execution of their duties by utilizing his wealth ofexperience and achievement, including the following: (i) having been engaged mainly in human resource and general affairs as a memberof the Company Group since joining the Company; and (ii) currently being in charge of the secretariat, human resources, general affairs, IT
planning, and long-term management strategies as Executive Director of the Company.
Reference Documents for the General Meeting of Shareholders

14

4

Hiromi Kanagawa (September 30, 1962)

Reappointed

Number of shares of the Company held
7,000
Career, positions, responsibilities and significant concurrent positions
Joined the Company
General Manager, Sales & Marketing Department I, Sales & Marketing Division II,
SEIKO WATCH CORPORATION
Senior Vice President of SEIKO WATCH CORPORATION
Director of the Company (to present)
Director in charge of Public Relations, Sports Branding, and Corporate Culture, andGeneral Manager, Public Relations of the Company (to present)

April 1985
April 2012
April 2014
June 2016
April 2017

Reasons for nomination as candidate for director
The Company nominates Ms. Hiromi Kanagawa as a candidate for Director, expecting her to perform full functions as a Board member inthe decision-making to execute important business and supervise the other Directors’ execution of their duties by utilizing her wealth ofexperience and achievement, including the following: (i) having been engaged mainly in marketing as a member of the Company Groupsince joining the Company; and (ii) currently being in charge of public relations, sports branding and corporate culture as Director of theCompany.

5

Shimesu Takizawa (July 2, 1963)

Reappointed

Number of shares of the Company held
4,000
Career, positions, responsibilities and significant concurrent positions
April 1987
August 1993
June 2010
June 2016
March 2017
April 2017

Joined the Company
Seconded to SEIKO U.K. Limited
General Manager, Finance & Accounting Department of the Company
Director in charge of Corporate Strategy & Planning, Finance & Accounting, andLegal & Intellectual Property of the Company (to present)
General Manager, Corporate Strategy &Planning Department of the Company(to present)
Director, Executive Vice President of Seiko Instruments Inc. (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Shimesu Takizawa as a candidate for Director, expecting him to perform full functions as a Board memberin the decision-making to execute important business and supervise the other Directors’ execution of their duties by utilizing his wealth ofexperience and achievement, including the following: (i) having been engaged mainly in finance & accounting, and corporate strategy& planning as a member of the Company Group since joining the Company; and (ii) currently being in charge of corporate strategy &planning, finance & accounting, and legal & intellectual properties as Director of the Company.

15

Reference Documents for the General Meeting of Shareholders

6

Shuji Takahashi (August 29, 1957)

Reappointed

Number of shares of the Company held
12,000Career, positions, responsibilities and significant concurrent positions
April 1980
April 2004
February 2011
June 2012
June 2013
April 2014
June 2015
June 2016
April 2017
April 2017

Joined the Company
General Manager, Merchandising Department II of SEIKO WATCH CORPORATION
Senior Vice President of SEIKO WATCH CORPORATION
Director, Senior Vice President of SEIKO WATCH CORPORATION
Director of the Company
Director, Executive Vice President of SEIKO WATCH CORPORATION
Director, Senior Executive Vice President of SEIKO WATCH CORPORATION
Executive Director of the Company
Director in charge of Watches Business of the Company (to present)
President & COO & CMO of SEIKO WATCH CORPORATION (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Shuji Takahashi as a candidate for Director, expecting him to perform full functions as a Board member tosupervise the other Directors’ execution of their duties by utilizing his wealth of experience and achievement, including the following: (i)having been engaged mainly in public relations and promotion, marketing, and merchandising as a member of the Company Group sincejoining the Company; and (ii) currently being engaged in management direction as President & COO & CMO of SEIKO WATCHCORPORATION.

7

Akio Naito (November 9, 1960)

Reappointed

Number of shares of the Company held
27,000Career, positions, responsibilities and significant concurrent positions
April 1984
January 2002
April 2006
June 2011
June 2013
June 2016
June 2016
May 2017

Joined the Company
Managing Director of SEIKO Australia Pty. Ltd.
General Manager, Legal & Intellectual Property Department of the Company
Director of the Company
Executive Director of the Company
Director of the Company (to present)
Director, Senior Executive Vice President of SEIKO WATCH CORPORATION (to present)
Chairman, President and CEO of SEIKO Corporation of America (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Akio Naito as a candidate for Director, expecting him to perform full functions as a Board member in thedecision-making to execute important business and supervise the other Directors’ execution of their duties by utilizing his wealth ofexperience and achievement, including the following: (i) having been engaged in legal & intellectual properties, and general affairs as amember of the Company Group since joining the Company; and (ii) currently being in charge of the U.S. Watches Business as Director,
Senior Executive Vice President of SEIKO WATCH CORPORATION.
Reference Documents for the General Meeting of Shareholders

168

Shuntaro Ishii (August 4, 1958)

Reappointed

Number of shares of the Company held
16,000Career, positions, responsibilities and significant concurrent positions
April 1983
October 2005
August 2009
June 2010
June 2013
August 2013
August 2013
June 2016
June 2017

Joined the Company
General Manager, Merchandising Department of SEIKO WATCH CORPORATION
General Manager, Finance & Accounting Department of the Company
Director of the Company
Executive Director of the Company
Director of the Company (to present)
Director, Executive Vice President of Seiko Instruments Inc.
Director, Senior Executive Vice President of Seiko Instruments Inc.
Representative Director, Senior Executive Vice President of Seiko Instruments Inc. (to present)

Reasons for nomination as candidate for director
The Company nominates Mr. Shuntaro Ishii as a candidate for Director, expecting him to perform full functions as a Board member tosupervise the other Directors’ execution of their duties by utilizing his wealth of experience and achievement, including the following: (i)having been engaged mainly in merchandising, finance & accounting, and corporate strategy & planning as a member of the Company
Group since joining the Company; and (ii) currently being in charge of the Electronic Devices Business as Representative Director, Senior
Executive Vice President of Seiko Instruments Inc.

9

Carsten Fischer (September 7, 1962)

Candidate for outside Director
Reappointed Independent Director

Number of shares of the Company held
30,000Career, positions, responsibilities and significant concurrent positions
October 1979
March 1996
January 1999
July 2003
July 2004
January 2007
April 2010
April 2012
June 2015
July 2016

Joined Hans Schwarzkopf GmbH (Hamburg)
President and C.E.O. of Schwarzkopf & Henkel K.K.
President and C.E.O. of Wella Japan Co., Ltd.
Executive-Vice President of Wella AG
Corporate Officer and President, Professional Care at Procter & Gamble Company
Corporate Executive Officer of Shiseido Company, Limited
Senior Corporate Executive Officer of Shiseido Company, Limited
Representative Director and Senior Corporate Executive Officer of Shiseido
Company, Limited
Outside Director of the Company (to present)
Outside Director of Kate Spade & Company (to present)

Reasons for nomination as candidate for outside director
The Company nominates Mr. Carsten Fischer as a candidate for Outside Director, expecting him to provide valuable comments for theCompany’s Board of Directors from an objective perspective based on his professional marketing knowledge and experience cultivated in
his career as a management member of global corporations and to perform appropriate supervisory functions.

17

Reference Documents for the General Meeting of Shareholders

10Nobuhiro Endo (November 8, 1953)

Candidate for outside Director
Newly Appointed Independent Director

Number of shares of the Company held0
Career, positions, responsibilities and significant concurrent positions
April 1981
April 2006
April 2009
June 2009
April 2010
April 2016
June 2016

Joined NEC Corporation
Senior Vice President, Executive General Manager of Mobile Network Operations of
NEC Corporation
Executive Vice President of NEC Corporation
Executive Vice President and Member of the Board of NEC Corporation
President (Representative Director) of NEC Corporation
Chairman of the Board (Representative Director) of NEC Corporation (to present)
Outside Director of JAPAN POST INSURANCE Co., Ltd. (to present)

Reasons for nomination as candidate for outside director
The Company nominates Mr. Nobuhiro Endo as a candidate for Outside Director, expecting him to provide valuable comments for
the Company’s Board of Directors from an objective perspective based on his knowledge and experience cultivated in his career as amanagement member of corporations over many years, and to perform appropriate supervisory functions.
(Notes)1. There is no special relationship of interest between the Company and each candidate for Director.
2. Messrs. Carsten Fischer and Nobuhiro Endo are candidates for Outside Director as defined in Article 2, paragraph 3, item 7 of theOrdinance for Enforcement of the Companies Act.
3. The Company has reported Mr. Carsten Fischer to the Tokyo Stock Exchange as an independent officer under the rules thereof. If his
reappointment is approved at this Ordinary General Meeting of Shareholders, Mr. Fischer will continue to be an independent officer. Further,Mr. Nobuhiro Endo satisfies the requirements of an independent officer under the rules of the Tokyo Stock Exchange, and will be reported
thereto as an independent officer if his appointment is approved at this Ordinary General Meeting of Shareholders.
4. Mr. Carsten Fischer is currently Outside Director of the Company, and he will have served in this position for two years at the conclusion ofthis Ordinary General Meeting of Shareholders.
5. NEC Corporation (“NEC”), for which Mr. Nobuhiro Endo serves as Chairman of the Board (Representative Director), was found by the Japan
Fair Trade Commission (the “JFTC”) on July 12, 2016 to have acted in violation of the Antimonopoly Act, concerning transactions with
Tokyo Electric Power Company Holdings, Inc. (formerly Tokyo Electric Power Corporation) on telecommunications equipment for electric
power systems. In addition, the JFTC issued a cease and desist order and an order to pay a surcharge against NEC on February 2, 2017
for activities in violation of the Antimonopoly Act with respect to transactions for fire-fighting emergency radio systems, and on February 15,2017 with respect to transactions for hybrid optical communication equipment and equipment for transmission lines for Chubu Electric Power
Co., Inc. After recognizing the fact, Mr. Endo has been committed to promoting recurrence prevention measures and performing his duties byfurther enhancing the Company’s compliance system, and reinforcing the development and operation of the internal control system.
6. If Messrs. Carsten Fischer and Nobuhiro Endo are elected Outside Directors, the Company plans, subject to the approval of “Proposal 3:
Partial amendment to the Articles of Incorporation” as proposed, to execute an agreement with each of them that limits their liability fordamages under Article 423, paragraph 1 of the Companies Act pursuant to the provisions of its Articles of Incorporation, and Article 427,
paragraph 1 of the Companies Act. The limit on the liability for damages under the said agreement will be the minimum limit of liability
prescribed in Article 425, paragraph 1 of the Companies Act.

[For reference]<Decision process of the nomination of the Director candidates>
In order to procure the objectivity and transparency of the process to nominate officer candidates and to determine
compensation for officers, the Company established the Corporate Governance Committee, a majority of the membersof which are outside officers, as an advisory body for the Board of Directors.
The nomination of the Director candidates listed in Proposal 4 was determined by the Board of Directors after being
deliberated on by that committee.
Reference Documents for the General Meeting of Shareholders

18

Attached Documents

Business Report for the Fiscal Year Ended March 2017 (From April 1, 2016 To March 31, 2017)

Matters related to current status of the Corporate Group(1) Business developments and results
During the fiscal year ended March 31, 2017, the world

and the Electronic Devices Business declined year on

economy slowed in the first half against the backdrop ofyear, due to the impact of yen appreciation and otherfactors including a stall in the U.S. economy, concerns

factors, while the Systems Solutions Business grew

about the economic slowdown in China, and confusioncompared to the previous fiscal year. On an overall

in financial markets due to the U.K.’s planned exit fromconsolidated basis, domestic net sales came to 134.8

the EU. However, there was a moderate recovery in thebillion yen (a year-on-year decrease of 7.5%), andsecond half, as the U.S. economy made steady progress

overseas net sales were 122.2 billion yen (a year-on-yearon expectations that policies of the new U.S. president

decrease of 18.9%). Overseas net sales comprised

would generate higher growth, while the Chinese

47.6% of net sales overall.

economy propped up the world economy.

In terms of income, operating income decreased 5.8

The Japanese economy continued to stall in the firstbillion yen compared to the previous fiscal year to 7.4

half, due to the impact of yen appreciation and a decline

billion yen (a year-on-year decrease of 43.7%), due to ain consumption by foreign tourists. However, the second

decrease in net sales and other factors. Ordinary income

half saw a weakening of the yen and higher stock prices.

declined by 5.2 billion yen from the previous fiscal year

Also, signs of a recovery began to appear in personal

to become 6.6 billion yen (a year-on-year decrease of

consumption, which had been stagnant. Meanwhile,

43.8%), despite improvement in non-operating income

there is an expected risk of lower stock prices and a

and expenses mainly due to reduction of interest

higher yen due to uncertainty in the global economic

expenses. Gain on sales of non-current assets of 0.4

outlook stemming from deflated expectations for thebillion yen was posted as extraordinary income, andU.S. policies and growing protectionism in various

settlement payment related to patent contracts of 0.5

countries.

billion yen, restructuring expenses of 0.4 billion yen andothers were posted as extraordinary losses. As a result,

19

For the fiscal year ended March 31, 2017, the Company

profit attributable to owners of parent minus income

reported consolidated net sales of 257.1 billion yen, ataxes and profit attributable to non-controlling interests

year-on-year decrease of 39.5 billion yen, or 13.3%. On

came to 5.3 billion yen (a year-on-year decrease ofa per-segment basis, sales under the Watches Business

55.6%).

Business ReportResults for each segment are as follows.

Watches Business
Composition of net sales

Net sales (Billions of yen)

Operating income (Billions of yen)trend, albeit moderately, as the decline in consumption
by foreign tourists begins to slow and sales of trendy

1,644

51.9%

1,345

products to Japanese consumers show signs of picking

127

76

up. On the overseas front, sales shrank due to factors
including the impact of yen appreciation, as well as afalling off in department store distribution channels in the

FY2015FY2016FY2015FY2016*The above ratio was calculated based on values after the adjustment of intersegment
sales or transfers.

U.S. market. On a local currency basis, performance
was strong and sales grew in markets in many countries
and regions, including Germany and the Netherlands in

Net sales under the Watches Business came to 134.5

Europe, and Thailand and Australia in Asia and Oceania.

billion yen, a year-on-year decrease of 29.8 billion yen, or

In addition, Seiko Boutiques were opened in Miami in the

18.2%. In Japan, sales fell due to factors including a

U.S. and Beijing and Guangzhou in China. Sales ofdecline in consumption by foreign tourists and sluggish

watch movements fell substantially from the previous

sales of high-end products due to stagnant personal

fiscal year due to the impact of a change in distribution

consumption. Ladies’ models in the Grand Seikoof products handled, as well as the slump in the markets

mainstay product line saw strong performance, whileof the U.S. and China.

sales of the men’s models were down year on year.

With regard to income, the decrease in net sales

Sales of the Astron and Prospex struggled, falling fromresulted in a year-on-year decrease of 5.1 billion yen in

the previous fiscal year, while sales of the Presage andoperating income, bringing it to 7.6 billion yen (a year-on-

Alba fared well, remaining mostly at the same level asyear decrease of 40.1%).

the previous fiscal year. Sales are shifting to a recovery

Business Report20

Electronic Devices Business
Composition of net sales

Net sales (Billions of yen)

949

Operating income (Billions of yen)

38

840

29

FY2016FY201531.1%
FY2015FY2016*The above ratio was calculated based on values after the adjustment of intersegment
sales or transfers.

Net sales under the Electronic Devices Business cameto 84.0 billion yen (a year-on-year decrease of 11.4%),
and operating income to 3.8 billion yen (a year-on-yearincrease of 30.6%). Semiconductors mainly forsmartphone components performed steadily on a
volume basis. Performance was also strong for someproducts including high performance metal products forsemiconductor manufacturing facilities. However, net
sales in the segment overall declined year on year due tofactors including the impact of yen appreciation and thetransfer of the wide format printer business in theprevious fiscal year.

Systems Solutions Business
Composition of net sales

Net sales (Billions of yen)

Operating income (Billions of yen)

Net sales under the Systems Solutions Business cameto 20.2 billion yen (a year-on-year increase of 4.3%), and

194

202

12

operating income to 1.2 billion yen (a year-on-yearincrease of 252.3%). Sales were favorable in some

7.8%

businesses such as data services, mainly in payment-

3
FY2015FY2016FY2015related businesses, and mobile solutions for home
FY2016security.

*The above ratio was calculated based on values after the adjustment of intersegment
sales or transfers.

OthersComposition of net sales

Net sales (Billions of yen)

Operating income (Billions of yen)

9

9.2%

282

270

FY2015FY20163
FY2015FY2016*The above ratio was calculated based on values after the adjustment of intersegment
sales or transfers.

21

Business Report

Net sales under Others amounted to 27.0 billion yen (ayear-on-year decrease of 4.2%), and operating income
to 0.3 billion yen (a year-on-year decrease of 66.4%).
Among segments included in Others, net sales under the
Wako Business fell due to a decline in consumption byforeign tourists, while the Clock Business performed
strongly due to an increase in net sales in Japan.

(2) Issues that need to be addressed by the Corporate Group
Sixth Medium-Term Management Plan (from the fiscal year ended March 31, 2017 through the fiscal year ending March 31, 2019)
The Company formulated and is promoting the Sixth

Reinforcing profitability and investment for growth

Medium-Term Management Plan beginning in the fiscal(i) The Watches segment will be steered toward further

year ended March 31, 2017, as described below.

g ro w t h a s t h e G ro u p ’s c o re b u s i n e s s ( p ro f i t
expansion)

Long-term vision(ii) The Electronic Devices segment will generate profits

The Seiko Holdings Group has established its long-termby focusing management resources on core businessvision of what the Group aims to be 10 years in the

sectors (profitability improvement)

future, based on the Group slogan, ‘SEIKO Moving
Ahead, Touching Hearts’.

(iii) The Systems Solutions Business will reinforce its
business foundation as a third mainstay business(profitability reinforcement)

We aim to be a trend-setting and innovative global
g ro u p t h a t s h a re s e x c i t e m e n t w i t h a l l i t s(iv) Other businesses will maintain their stable profit
constitution (stabilization of profitability)

stakeholders around the world by providing
products and services that exceed the highest
expectations of our customers.

Reinforcing the management foundation(i) Reinforcing corporate communication(ii) Continuing the basic policy for capital and financial
measures

Basic policy(iii) Reinforcing corporate governance

The Company will “reinforce profitability and investment(iv) Reinforcing organizational and group functions, andfor growth,” and “reinforce the management foundation”

continuing the basic policy for personnel measures

to become a highly profitable group centered on the
Watches segment.

Business Report

22Target figures under the Sixth Medium-Term Management Plan(i) Consolidated income forecast(Billions of yen)

ActualMedium-Term Management Plan

FY2016FY2016FY2018

257.1

290

310

Operating income

7.4

12

17

Ordinary income

6.6

12

18

Net income attributable to owners of parent

5.3

10

12.5

Net sales(ii) Net sales by segment

(Billions of yen)

ActualMedium-Term Management Plan

FY2016FY2016FY2018

134.5

160

190

Electronic Devices Business

84

90

75

Systems Solutions Business

20.2

20

25

27

29

30

257.1

290

310

Watches Business

OthersConsolidated total(iii) Operating income by segment

(Billions of yen)

Actual23

Medium-Term Management Plan

FY2016FY2016FY2018Watches Business

7.6

12

17

Electronic Devices Business

3.8

3

2.5

Systems Solutions Business

1.2

1

1.5

Others0.3

1

1

Consolidated total

7.4

12

17

Business Report

(iv) Balance sheet items

(Billions of yen)

ActualMedium-Term Management Plan

FY2016FY2018

Total assets

328.8

340

Net assets

107.1

120

Equity capital ratio

29.8%

35%

Net interest-bearing liabilities

101.2

75

‌
Developmentsin the fiscal year ended March
31, 2017(i) Reinforcing profitability and investment for growth
In the Watches Business, the Company made efforts
to increase profit aiming for further growth as a corebusiness of the Group. The Company conducted
aggressive marketing activities in markets in Japan,
Europe, North America and Asia, focusing on thethree global brands, namely, the Grand Seiko, a highend product that became an independent brandaiming for a further increase in sales, the ASTRON,
which is the world’s first GPS solar watch, and the
PROSPEX sports watch for serious athletes.
Nevertheless, in the fiscal year ended March 31,
2017, both sales and operating income in the
Watches segment were not able to achieve the target
figures for the first year of the Medium-Term
M a n a g e m e n t P l a n . E v e n u n d e r t h e s e s e v e recircumstances, the Company will not reduceinvestments to improve the value of these brands andwill continue investments for future growth, with agoal of “developing SEIKO to be a true global brandaiming for 2020 and becoming the leading company
in the global watch market” from a mid- and longterm perspective.

In the Electronic Devices segment, the Company
sought to generate profit and improve profitability by
distributing its management resources mainly to thecore business. Since the organization andimprovement of unprofitable businesses, that theCompany has been working on for several years,
advanced, profitability significantly increased from theprevious fiscal year. Although sales were not able toachieve the target figures for the first year of theMedium-Term Management Plan partly because of
the yen’s appreciation, operating income exceeded
the target figures for the first year of the plan.
In the Systems Solutions Business, the Company
reinforced the business foundation as the third corebusiness and made efforts to reinforce profitability. The
payment-related business drove profits and the mobilerelated business expanded the business scale.
Supported by the penetration of business
management focusing on profit, and advances inmanagement rationalization after the integration wascompleted, both sales and operating income exceeded
the target figures for the first year of the plan.
Business Report24

In the businesses included in Others, theCompany made efforts to ensure stable profitability inorder to continue stable corporate earnings. While theClocks Business firmly grew centering on sales for thedomestic market, the Wako Business and the System
Clocks Business faced issues of stable profitability,
resulting in sales and operating income being below
the target figures for the first year of the plan as awhole.
(ii) Reinforcing the management foundation
In order to reinforce corporate communication, theCompany engaged in active branding activities
through sports, music and social contribution to raisethe value of the SEIKO brand.
Regarding the policy for capital measures, theCompany will distribute an annual dividend of 15 yen
per share aiming for continuous and stable dividends,
which is a basic policy. While the capital adequacy
ratio improved to 29.8%, the Company will makefurther improvements to reach 35%, the target figures
for the last fiscal year of the plan. Regarding the policy
f o r f i n a n c i a l m e a s u re s , t h e C o m p a n y m a d econtinuous efforts to reduce interest-bearing liabilities;
however, net interest-bearing liabilities of 101.2 billion

yen were recorded. The Company will advance further
reduction efforts aiming at 75.0 billion yen, which is
the target figure for the last year of the plan.
In order to reinforce corporate governance,
including in response to the Corporate Governance
Code, the Company made efforts to reinforce internal
systems such as introducing a performance-based
remuneration system for officers and establishing a
corporate governance committee centered on
independent outside officers.
In order to reinforce organizational and groupfunctions, the Company led the planning for theGroup’s management policies or implementation
strategies, and reinforced their support for theoperating companies, resulting in an improvement of
profitability for the businesses at issue, and an
integration of functions within the Group. In order todevelop various human resources, which is a basic
personnel policy, the Company will raise global humanresources and executive candidates who will lead thenext generation and aggressively promote measures
to further women’s active participation.

(3) Financing
There are no matters of special note.

(4) Capital expenditures
The Company invested 2,752 million yen in the Watches Business, 4,866 million yen in the Electronic Devices Business,and 1,975 million yen in the Systems Solutions Business respectively, primarily to reinforce and renew manufacturing
and other facilities.

25

Business Report(5) Trends in assets and profit/loss
The operating results and assets in the fiscal year ended March 31, 2017 and the past three years are as follows.
(i) Consolidated 
Item

FY2013

Net sales(Millions of yen)

Ordinary income(Millions of yen)

Net income attributable toowners of parent (Millions of yen)
Net income per share(Yen)

Total assets(Millions of yen)

Net assets(Millions of yen)Book-value per share(Yen)

Net sales(Billions of yen)

FY2014

2,934

2,967

FY2016308,286

293,472

296,705

257,115

10,165

12,373

11,879

6,671

7,422

21,77812,142

5,392

36

105

59

26

366,753

333,701

329,115

328,857

64,766

92,589102,692

107,161

304

438

457

476

Ordinary income

123
3,082

FY2015(Billions of yen)

Profit attributable to owners of parent

118

217

101

2,571

66

121
74

FY2013

FY2014FY2015

Total assets

3,667

FY2016(Billions of yen)

3,337

3,291

FY2013

FY2014FY2015

Net assets

FY2016FY201353
FY2014FY2015FY2016(Billions of yen)

925

3,288

(Billions of yen)

1,026

1,071

FY2015FY2016647

FY2013

FY2014FY2015FY2016FY2013

FY2014

Business Report26

(ii) Non-consolidated
Item

FY2013Operating revenue(Millions of yen)

Ordinary income(Millions of yen)

Net income(Millions of yen)

Earnings per share(Yen)

Total assets(Millions of yen)

Net assets(Millions of yen)Book-value per share(Yen)

FY2014FY2015FY2016

10,836

9,972

11,984

10,361

3,390

1,730

4,393

2,324

3,349

14,953

3,370

3,271

16

72

16

16

181,108

158,703

147,145

161,853

40,23056,26754,964

59,346

195

272

266

288

Note 1 “Earnings per share” is calculated on the basis of the average number of shares during the fiscal year.
Note 2 ‌Treasury shares are indicated as a deduction item on net assets, and the values of earnings per share and of net assets are calculated by deducting
the number of treasury shares from the average number of shares during the fiscal year and the total number of outstanding shares, respectively.

Operating income

108(Billions of yen)

119
99

Ordinary income(Billions of yen)

Net income(Billions of yen)

149

103

43
33

23

17

FY2013

FY2014FY2015

Total assets

1,811

FY201327

Business Report

FY2016(Billions of yen)

1,587

FY2014

1,471

FY2015FY2013

FY201433

FY2015

Net assets

1,618

FY2016(Billions of yen)

562

549

FY2014FY2015593

402

FY2016FY2013

FY2016FY2013

FY201433

32

FY2015FY2016

(6) Status of major parent companies and subsidiaries(i) Relationship with parent companies
Not applicable.
(ii) Status of major subsidiaries
Company Name

Paid-in Capital

Capital Contribution Ratio

SEIKO WATCH CORPORATION

5,000 million yen

100.0%

Sales of watches

Details of Major Business Activities

US$111,000

100.0%(*)

Sales of watches and other products

SEIKO Hong Kong Ltd.

HK$129,300,000

100.0%(*)

Sales of watches and other products

Seiko Instruments Inc.

9,756 million yen

100.0%

Manufacturing and sales of precision instruments,
electronic devices, and other products

Morioka Seiko Instruments Inc.

1,000 million yen

100.0%(*)

Manufacturing watches

SII Semiconductor Corporation

9,250 million yen

60.0%(*)

Manufacturing and sales of semiconductors

Seiko Instruments (H.K.) Ltd.

HK$128,700,000

100.0%(*)

Manufacturing and sales of precision instruments,
electronic devices, and other products

Seiko Instruments Singapore Pte. Ltd.

S$32,288,000

100.0%(*)

Manufacturing and sales of precision instruments,
electronic devices, and other products

SEIKO Solutions Inc.

500 million yen

100.0%Development, sales, etc. of informationand telecommunication systems, etc.

SEIKO Corporation of America

Note 1: Asterisked ratios in the “Capital Contribution Ratio” column include indirect holdings.
Note 2: The status of a specified wholly-owned subsidiary as of the last day of the fiscal year ended March 31, 2017 is as follows:
Name of the specified wholly-owned subsidiary

Seiko Instruments Inc.

Address of the specified wholly-owned subsidiary

8, Nakase 1-chome, Mihama-ku, Chiba-shi, Chiba, Japan

Book value of shares of the specified whollyowned subsidiary in the books of theCompany and its wholly-owned subsidiaries

33,783 million yen

Total assets of the Company

161,853 million yen(7) Major business segments of the Corporate GroupThe Company is a holding company. The details of business activities, main merchandise and finished goods of eachbusiness are as follows:Business Segment

Details of Business Activities

Main merchandise and products

Watches Business

Manufacturing and sales

Watches, watch movements

Electronic Devices Business

Manufacturing and sales

Semiconductors, quartz crystals, micro batteries and materials, printers, harddisk drive components, shutters for cameras

Systems Solutions Business

Manufacturing and sales

Wireless communication equipment, information network systems, data services

OthersManufacturing, sales andother activities

Clocks, high-end jewelry, apparel, fashion accessories, systems clocks,
othersBusiness Report28

(8) Major business locations of the Corporate GroupThe Company has its headquarters in Chuo-ku, Tokyo, and the major location of each business is as follows:Business Segment

Location

Watches Business

Chuo-ku, Tokyo

Electronic Devices Business

Mihama-ku, Chiba-shi, Chiba

Systems Solutions Business

Mihama-ku, Chiba-shi, Chiba

OthersChuo-ku, Tokyo(9) Status of employees of the Corporate GroupThe number of employees of the Company and its consolidated subsidiaries is 13,065 (a decrease of 372 from theprevious fiscal year-end).

(10) Major lenders and amounts borrowed(Millions of yen)

Lenders

29

Outstanding Balance of Loans

Mizuho Bank, Ltd.

49,578

Sumitomo Mitsui Banking Corporation

22,417

Aozora Bank, Ltd.

9,975

The Chiba Bank, Ltd.

9,606

Business ReportMatters related to the Company shares(1) Total number of shares authorized to be issued
		746,000,000 shares(2) Total number of shares issued and outstanding				

Breakdown by type of shareholder
The Company, etc. (3 shareholders)
543,947shares (0.3%)

Securities companies (48 shareholders)
4,083,194shares (2.0%)

Financial institutions (37 shareholders)
39,637,156shares (19.1%)(including 286,538 treasury shares)

Foreign corporations, etc.
(190 shareholders)
32,794,708 shares (15.8%)

207,021,309 shares(3) ‌Number of shareholders at the end of the
fiscal year ended March 31, 2017		

14,065(4) Major shareholders (top 10)

Other domestic corporations(137 shareholders)
37,322,565 shares (18.0%)

Individuals and others(13,650 shareholders)
92,639,739 shares (44.8%)* The “Company, etc.” refers to shares owned by the Company and its subsidiaries
and affiliates.

Name
Sanko Kigyo K.K.

Number of shares held

Percentage of shares held

(shares)(%)

23,677,501

11.5
8.7

Etsuko Hattori

18,069,542

Shinji Hattori

11,396,448

5.5

The Dai-ichi Life Insurance Company, Limited

9,000,000

4.4

Hideo Hattori

8,104,276

3.9

Japan Trustee Services Bank, Ltd. (Trust Account)

5,520,000

2.7

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

5,467,000

2.6

STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST, BOSTONSSBTC A/C UK LONDON BRANCH CLIENTS- UNITED KINGDOM

4,488,000

2.2

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC/HENDERSON HHF SICAV

3,753,000

1.8

SHIMIZU CORPORATION

3,721,000

1.8Note 1: Percentages of shares held have been rounded to one decimal place.
Note 2: The foregoing was stated based on the shareholders’ register as of March 31, 2017.
The following Large Shareholding Report is available for public inspection; however, the Company has not yet confirmed the number of shares
substantially held by them and did not include them in the above.
Filer: Mizuho Bank, Ltd. and three joint holders
Filing date: January 11, 2017
Number of share certificates held: 10,383,639 shares
Percentage of share certificates held: 5.02%

Matters related to stock acquisition rights issued by the Company
Not applicable.
Business Report30

Matters related to officers(1) Name, etc. of Directors and Corporate Auditors (as of March 31, 2017)
Name

Shinji Hattori

Position and responsibility at the Company
Chairman & Group CEO

Significant concurrent positions at other entities
President & CEO of SEIKO WATCH CORPORATION(Outside) Director of JAPAN POST INSURANCE Co., Ltd.

Yoshinobu Nakamura President
Shuji Takahashi

Executive Director in charge of Public Relations
and Secretariat

Director, Senior Executive Vice President of SEIKO WATCHCORPORATION

Akihiro Okuma

Executive Director in charge of Human
Resources, General Affairs, and IT Planning

Director and Managing Executive Officer of SEIKO Solutions Inc.
(Outside) Director of OHARA INC.

Hiromi Kanagawa

Director in charge of Sports Branding, and Corporate Culture

Shimesu Takizawa

Director in charge of Corporate Strategy & Planning,
Finance & Accounting, and Legal & Intellectual Property
General Manager of the Corporate Strategy&Planning Department

Akio Naito

Director

Director, Senior Executive Vice President of SEIKO WATCH CORPORATION
Chairman of SEIKO Corporation of America

Yoshihide Fujii

Director

Chairman of Seiko Instruments Inc.
Chairman of SII Semiconductor Corporation

Hitoshi Murakami

Director

President of Seiko Instruments Inc.

Shuntaro Ishii

Director

Director, Senior Executive Vice President of Seiko Instruments Inc.

Hirohiko Umemoto

Director

President of BIC Co., Ltd.

Akio Harada

Director(Outside) Director of Sumitomo Corporation(Outside) Director of Yamazaki Baking Co., Ltd.
Representative director of Japan Criminal Policy Society,general incorporated foundation
Representative director of International Civil and Commercial
Law Centre Foundation, public interest incorporated foundation
Chairman, Management Committee, Nuclear Damage
Compensation and Decommissioning Facilitation Corporation
LawyerCarsten Fischer

Director(Outside) Director of Kate Spade & Company

Seiichi MikamiStanding Corporate Auditor(Outside) Corporate Auditor of OHARA INC.

Haruhiko TakagiStanding Corporate Auditor

Yoshiaki Yamauchi Corporate Auditor

31

Yoshiro Aoki

Corporate Auditor

Tomoyasu Asano

Corporate Auditor

Business Report(Outside) Audit & Supervisory Board Member of STANLEY ELECTRIC CO., LTD.
Certified public accountant
Director, Senior Managing Executive Officer of The Dai-ichi Life Holdings, Inc.
(Outside) Auditor of Tokyu Fudosan Holdings Corporation

Note 1: Messrs. Akio Harada and Carsten Fischer, Directors, are outside directors set forth in Article 2, item 15 of the Companies Act.
Note 2: ‌Messrs. Yoshiaki Yamauchi, Yoshiro Aoki, and Tomoyasu Asano, Corporate Auditors, are outside company auditors set forth in Article 2, item 16 of
the Companies Act.
Note 3: ‌The Company has reported to the Tokyo Stock Exchange Messrs. Akio Harada and Carsten Fischer, Directors, and Mr. Yoshiaki Yamauchi,
Corporate Auditor, as independent officers.
Note 4: Mr. Yoshiaki Yamauchi, Corporate Auditor, is a certified public accountant, and has high-degree knowledge about finance and accounting.
Note 5: ‌The Dai-ichi Life Insurance Company, Limited, a subsidiary of The Dai-ichi Life Holdings, Inc., at which Mr. Tomoyasu Asano, outside company
auditor, concurrently holds a position, is the lender of the Company. There are no other special relationships of interest between the Company andthe entities at which outside directors or outside company auditors hold concurrent positions.
Note 6: Mr. Satoshi Doi, Director, resigned from his office as of June 2, 2016.
Note 7: Mr. Akio Naito, Director, retired from Outside Director of OHARA INC. as of January 26, 2017.
Note 8: ‌Mr. Hirohiko Umemoto, Director, retired from Representative Director, Chief Operating Officer of SEIKO WATCH CORPORATION and Senior
Executive Director of Seiko Instruments Inc. as of June 1, 2016.
Note 9: Mr. Akio Harada, Director, retired from Outside Audit & Supervisory Board Member of Shiseido Company, Limited as of March 28, 2017.
Note 10: Mr. Akio Harada, Director, passed away on April 6, 2017 and retired from his office.

(2) Amount of compensation, etc. for Directors and Corporate Auditors
Classification

Number of payees

Director
Corporate Auditor
Total

14
7
21

Amount of compensation, etc.

Remarks

249 million yen
68 million yen
315 million yen

Note 1: ‌The foregoing includes one Director who retired from his office as of June 2, 2016 and two Corporate Auditors who retired from their offices at theclose of the 155th Ordinary General Meeting of Shareholders held on June 29, 2016.
Note 2: ‌The amount of compensation, etc. above does not include the expenses recorded for the fiscal year ended March 31, 2017 of the “BBT (Board
Benefit Trust)”, which is a performance-based share compensation system that records expenses for several years depending on the subject periodof compensation. The amount of expenses recorded for the fiscal year ended March 31, 2017 is 13 million yen (payees: 6 Executive Directors).

(3) Matters related to outside officers
Main activities of outside officers
Classification

Name

Director

Akio Harada

Director

Carsten Fischer

Corporate Auditor

Yoshiaki Yamauchi

Corporate Auditor

Yoshiro Aoki

Corporate Auditor

Tomoyasu Asano

Main activities
He attended 8 of the 13 Board of Directors meetings held during the fiscal year ended
March 31, 2017, and made necessary remarks on discussion items and deliberation items,
mainly from the expert viewpoint of a lawyer.
He attended 12 of the 13 Board of Directors meetings held during the fiscal year ended
March 31, 2017, and made necessary remarks on discussion items and deliberation items,
mainly based on his broad experience through managing global companies and as amarketing expert.
He attended all of 13 Board of Directors meetings and 10 of the 11 Audit Committee
meetings held during the fiscal year ended March 31, 2017, and made remarks, asnecessary, mainly from the expert viewpoint of a certified public accountant.
He attended all of 13 Board of Directors meetings and all of 11 Board of Corporate Auditors
meetings held during the fiscal year ended March 31, 2017, and made remarks, asnecessary, mainly based on his broad experience through managing companies.
He attended all of 10 Board of Directors meetings and all of 8 Board of Corporate Auditors
meetings held after his assumption of office of Corporate Auditor in June 2016, and maderemarks, as necessary, mainly based on his broad experience through managing insurancecompanies.

Aggregate amount of compensation, etc. for outside officers
Number of payees

Amount of compensation, etc.

Compensation, etc. for officers paid by the Company’s subsidiaries

6

45 million yen

4 million yen

Note: ‌The foregoing includes one Corporate Auditor who retired from his office at the close of the 155th Ordinary General Meeting of Shareholders held on
June 29, 2016.

Business Report

32Matters related to the Accounting Auditor(1) Name of the accounting auditor
KPMG AZSA LLC(2) ‌Amount of compensation, etc. for theaccounting auditor for the current fiscal
year(i) Total amount of compensation, etc. for the services(auditing and attesting financial documents) set
forth in Article 2, paragraph 1 of the “Certified
Public Accountants Act (Act No. 103 of 1948)”
payable by the Company and its subsidiaries to theaccounting auditor�������������������������������������������������������������������������������������� 221 million yen(ii) Amount of compensation, etc. (out of (i) above)
payable by the Company to the accounting auditor������������������������������������������������������������������������������������������ 60 million yen(iii) Total amount of monies and other financial benefits
payable by the Company and its subsidiaries to theaccounting auditor���������������������������������������������������������������������������������������� 228 million yen
Note 1: ‌Under the audit contract with the accounting auditor, the amountof compensation, etc. for audits under the Companies Act andthat for audits under the Financial Instruments and Exchange Act
are not clearly separated, and those amounts cannot practicallybe separated; as such, the aggregate of those amounts is shownas the amount of compensation, etc. for the services.
Note 2: ‌Among the Company’s major subsidiaries listed in “1. Mattersrelated to current status of the Corporate Group, (6) Status ofmajor parent companies and subsidiaries”, SEIKO Corporation ofAmerica, SEIKO Hong Kong Ltd., Seiko Instruments (H.K.) Ltd.,and Seiko Instruments Singapore Pte. Ltd. were audited bycertified public accountants (or audit corporations) other than the
Company’s accounting auditor.

33

Business Report(3) ‌Reasons for the Board of Corporate
Auditors’ agreement to the amount ofcompensation, etc. for the accounting
auditor
The Board of Corporate Auditors evaluated audit records
during the fiscal year ended March 31, 2016, andconfirmed the content of the audit plan, the performancestatus of the auditing auditor, and rationale of theestimate compensation during the fiscal year ended
March 31, 2017; as a result, the Board of Corporate
Auditors agreed to the amount of compensation, etc. forthe accounting auditor as set forth in Article 399,
paragraph 1 of the Companies Act.

(4) Non-audit operations
The Company and its subsidiaries entrusted to theaccounting auditor, and paid compensation for, theagreed procedural service that was outside of theservices set forth in Article 2, paragraph 1 of the Certified
Public Accountants Act.

(5) ‌Policy for determining dismissal or nonreappointment of the accounting
auditorPursuant to laws and regulations, if any reasonable event
occurs to the accounting auditor, the Board of Corporate
Auditors shall dismiss the accounting auditor with
unanimous consent of the Corporate Auditors; if it isdeemed difficult for the accounting auditor to properly
perform audits, the Company shall propose a resolution
for dismissal or non-reappointment of the accounting
auditor to the General Meeting of Shareholders .

Systems and policies of the Company
Overview of a resolution to establish systems to ensure the proper operations of the Company(1) ‌System to ensure that the duties of Directors and employees are executed in compliance with laws and regulations
and the Articles of Incorporation
In order for Directors and employees to comply with corporate ethics, laws and regulations, and internal rules, theCompany shall establish the “Basic Principles of Corporate Ethics” and the “Action Guidelines for Corporate Ethics”
to thoroughly ensure their compliance with corporate ethics and laws and regulations, as follows:1) ‌The President shall repeatedly convey the spirit of the “Basic Principles of Corporate Ethics” to all Directors andemployees to ensure that compliance with corporate ethics and the laws and regulations are the basis for every
corporate activity.
2) ‌The “Corporate Ethics Committee” chaired by the President shall discuss corporate ethical issues that mightsignificantly affect the Company and its subsidiaries (the “Company Group”) and matters related to revisions of thesystem to comply with corporate ethics, and report the discussion results to the Board of Directors.
3) ‌The Company shall develop a system where any Director or employee who finds any action suspected of violating
the laws and regulations can promptly report it to the “Corporate Ethics Committee”, and establish a “Corporate
Ethics Helpline” as means for transmitting information.
4) ‌The Company shall continuously provide training sessions on corporate ethics for Directors and employees to fosterand enhance their awareness of compliance with corporate ethics and laws and regulations.
(2) System to store and manage information regarding execution of the duties of Directors(i)	P ursuant to the “Internal Document Management Rules”, the Company shall record information regarding
execution of the duties of Directors in a document or electromagnetic medium, and properly store and manage it.
(ii)	Directors and Corporate Auditors may inspect such document or medium at any time pursuant to the “Internal
Document Management Rules”.
(3) Regulations and systems for loss risk management of the Company and its subsidiaries(i)	Pursuant to the “Risk Management Rules”, the Company shall set forth the basic policy for risk management of theCompany Group and develop a risk management system.
(ii)	The Company shall establish the “Risk Management Committee” chaired by the President in order to build, develop
and monitor risk management processes, including understanding business risks that might affect the activities of
the Company Group, and identifying, analyzing, evaluating and monitoring risks.
(iii)	The Risk Management Committee shall report the status of each risk to the Board of Directors, regularly or asnecessary, pursuant to the “Risk Management Rules”.
(4) System to ensure that the duties of Directors of the Company and its subsidiaries are efficiently executed(i)	The Company shall develop a Medium-Term Business Plan as the target to be shared by Directors and employeesof the Company Group. It shall also review the progress of annual budgets consisting of the plan quarterly using themanagement accounting method, and discuss and implement remedial measures therefor, thereby promoting theefficiency of operations.
Business Report34

(ii)	In order to respect autonomous and independent management of its subsidiaries while contributing to the properand efficient operation of the Group management, the Company shall develop basic management rules therefor. It
shall also establish the “Management Council” comprising standing Directors of the Company and respective
President of major subsidiaries, to share the management policy and management information of the Group.
(iii)	The Company shall clarify the assignment of duties among the Directors, and the responsibility and authority ofeach division/department, thereby securing the efficient execution of duties.
(5) System to ensure the proper operations of the Corporate Group comprising the Company and its subsidiaries(i)	The Company shall assist its subsidiaries to develop a system to comply with corporate ethics, and laws andregulations, and other systems to ensure their proper operations.
(ii)	Each subsidiary shall share the “Basic Principles of Corporate Ethics” and the “Action Guidelines for Corporate
Ethics” established by the Company, and manage its operations pursuant to them. The Company shall set forth therules for reporting any violation of laws and regulations by any subsidiary, and assist its subsidiaries to develop theirinternal reporting systems.
(iii)	Pursuant to the “Consolidated Business Management Rules”, the Company shall request that each subsidiaryconsult in advance with, and report to, the Company regarding significant management-related matters, andwhenever necessary, shall dispatch its officers or employees as Directors or Corporate Auditors of the subsidiary toproperly supervise and audit the subsidiary.
(iv)	Pursuant to the “Consolidated Business Management Rules”, each subsidiary shall report its business results,financial position and other important matters to the Company, and whenever necessary, the President of therelevant subsidiary shall report the execution status of the operations to the Company’s Board of Directors.
(v)	The Company’s Internal Audit Department shall conduct internal audits on each subsidiary regarding the execution
status of the operations, compliance with laws and regulations, and the Articles of Incorporation, and risk
management.
(6) Matters related to employees to assist the duties of Corporate Auditors(i) There shall be a system where the Internal Audit Department will assist the duties of Corporate Auditors.
(ii)	Employees posted to the Internal Audit Department shall not concurrently hold duties related to the execution ofoperations.
(iii)	Regarding any replacement of the General Manager of the Internal Audit Department, the President shall discusswith the Board of Corporate Auditors in advance, and respect the Board of Corporate Auditors’ opinions.
(7) System for reporting to Corporate Auditors(i)	Each Director and employee of the Company shall regularly report the status of finance, compliance with corporate
ethics, risk management, and internal audits to Corporate Auditors; if any Director/employee finds any fact likely tosignificantly damage the Company or its subsidiaries or any violation of laws and regulations or internal rules, he/she shall immediately report it to Corporate Auditors.
(ii)	The Company shall develop a reporting system where if any Director, Corporate Auditor or employee of a subsidiaryfinds any material violation of laws and regulations or internal rules regarding the execution of operations of theCompany or the subsidiary, or any fact likely to significantly damage the Company, he/she or the person who wasreported by him/her shall report it to the Company’s Corporate Auditors.
35

Business Report(iii)	The Company shall develop necessary systems so that the person who made the report in the preceding two
paragraphs might not be treated disadvantageously because of having made such report.
(iv)	In conducting internal audits, the General Manager of the Internal Audit Department shall cooperate with standing
Corporate Auditors in advance, and make efforts to report important matters to standing Corporate Auditors in atimely manner. In addition, the General Manager shall report the results of internal audits to standing Corporate
Auditors without delay, and regularly report them to the Board of Corporate Auditors.
(8) Other systems to ensure that audits by Corporate Auditors are effectively conducted(i)	The Company shall ensure a system where, besides the Internal Audit Department, the General Affairs Department
and the Finance & Accounting Department will assist audits by Corporate Auditors from time to time based on
respective instructions of Corporate Auditors.
(ii)	The Company shall ensure that Corporate Auditors will attend important meetings and committees established toensure proper operations, and to be held in a timely manner, by the Board of Directors.
(iii)	The President shall meet with the Board of Corporate Auditors, as necessary, and exchange opinions regarding
important management issues.
(iv)	If a Corporate Auditor requests that the Company pay expenses incurred in executing his/her duties, the Company
shall promptly pay them unless the Company proves that they are not necessary for the Corporate Auditor to
execute his/her duties.

Overview of the implementation status of the system to ensure proper operations(1) System for compliance with corporate ethics and laws and regulations(i)	The Company convenes a Corporate Ethics Committee chaired by the President twice a year to discuss corporate
ethical issues and the system for compliance with corporate ethics, including those relating to its subsidiaries, andreports the result of discussions to the Board of Directors.
(ii)	The Company has established a “Corporate Ethics Helpline” internally and at a law firm as a contact point toreceive consultations or whistle-blowing from employees regarding violations of laws and regulations within the
Company. The Company has made sure all employees are well informed about how to use these helplines by
posting them on the internal intranet and distributing portable cards, etc.
(iii)	The Company regularly provides training sessions on corporate ethics to enhance awareness of compliance withcorporate ethics and laws and regulations. During the fiscal year ended March 31, 2017, the Company provided
training sessions titled “Fraud Risk” for standing officers and “Harassment” for employees.
(2) Risk management system(i)	The Company convenes the Risk Management Committee chaired by the President to discuss the Company
Group’s risk management system and various risk issues.
	The Committee also reports the matters discussed thereat and important risks to be addressed horizontally withingroups to the Board of Directors.
(ii)	Regarding responses when risks occur, the “Crisis Management Manual” sets out for the Company’s basic policy
therefor and measures to respond to respective risks, such as disasters.
Business Report36

(3) System to ensure that the duties of Directors are efficiently executed(i)	The Company has determined the assignment of duties for each Director upon a resolution of the Board of
Directors, and the responsibility and authority of each division/department in accordance with the “Duty
Assignment Rules”.
(ii)	The Company has established a council called the “Strategic Conference for Management” where the President
and Executive Directors exchange opinions and share information with other Directors, Corporate Auditors, orGeneral Managers of divisions/departments when they decide on and execute important matters relating to
execution of their duties. The Strategic Conference for Management held 43 meetings during the fiscal year ended
March 31, 2017.
(iii)	The Company has provided the “Consolidated Business Management Rules” for the execution of the operations of
its subsidiaries in order to perform its management and support functions from the viewpoint of consolidated
management.
(4) System to ensure the proper operations of the Company Group(i)	Pursuant to the “Consolidated Business Management Rules”, the Company properly discusses with its subsidiaries
in advance regarding their business plan, annual budgets, and measures to respond to important corporate ethicalissues, receives reports on material business matters from them, and dispatches its officers or employees tosubsidiaries, as necessary, to supervise and audit them. As of the end of the fiscal year ended March 31, 2017, theCompany has dispatched ten Directors, two Corporate Auditors, and three employees.
	Furthermore, the President of each subsidiary reports the execution status of its operations to the Company’s
Board of Directors as necessary; during the fiscal year ended March 31, 2017, six subsidiaries made such reports.
(ii)	Each division/department of the Company assists its subsidiaries to develop a system to comply with corporate
ethics and laws and regulations, and a system to comply with business operation laws. During the fiscal year
ended March 31, 2017, briefings were held to discuss topics such as “Fraud Risk”, “Response to International
Taxation”, and “Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors”.
(5) System to ensure that audits by Corporate Auditors are effectively conducted(i)	The Internal Audit Department holds a regular meeting once a month with standing Corporate Auditors and reports
the performance status of internal audits.
(ii)	Standing Corporate Auditors attend important meetings such as the Strategic Conference for Management, theRisk Management Committee, and the Corporate Ethics Committee, etc.
(iii)	The President attends the Board of Corporate Auditors’ meetings to exchange opinions and gather information
relating to material business issues, etc.

37

Business ReportConsolidated Financial Statements
Consolidated Balance Sheet (As of March 31, 2017)(Millions of yen)

Item

AmountItem(Assets)
I. Current assets:(

153,925)

Cash and deposits

35,355

Notes and accounts receivables - trade

39,730

Merchandise and finished goods

43,514Work in process

13,627

Raw materials and supplies

9,035

Accounts receivable - other

3,679

Deferred tax assets

3,992

Other

6,250

Allowance for doubtful accounts∆1,260

II. Non-current assets:
1. Property, plant and equipment:(

174,931)(

95,998)

Buildings and structures

72,678

Machinery, equipment and vehicles

83,501Tools, furniture and fixtures

31,297

Other

2,908

Accumulated depreciation∆144,359

Land

48,945Construction in progress

1,026

2. Intangible assets:(

16,336)

Goodwill

7,298

Other

9,038

3. Investments and other assets:(

62,596)

Investment securities

48,131

Deferred tax assets

8,060

Other

6,583

Allowance for doubtful accounts∆178

Total assets

328,857(Liabilities)
I. Current liabilities:
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - other
Income taxes payable
Deferred tax liabilities
Provision for bonuses
Provision for goods warranties
Other provision
Asset retirement obligations
Other
II. Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Provision for environmental measures
Provision for gift certificate exchange losses
Provision for long-term goods warranties
Provision for loss on business withdrawal
Provision for directors’ retirement benefits
Other provision
Net defined benefit liability
Asset retirement obligations
Other
Total liabilities(Net assets)
I. Shareholders’ equity:
1 Capital stock
2 Capital surplus
3 Retained earnings
4 Treasury shares
II. Accumulated other comprehensive income:1 Valuation difference on available-for-sale securities
2 Deferred gains or losses on hedges
3 Revaluation reserve for land
4 Foreign currency translation adjustment
5 Remeasurements of defined benefit plans
III. Non-controlling interests
Total net assets
Total liabilities and net assets

Amount
(

(

(

(

(

136,767)
21,196
7,021
49,46830,03813,311
936
20
3,995
432
213
0
10,131
84,928)54,055
7,381
3,614
217
162
77
52
39
18
12,428702
6,177
221,696
76,451)
10,0007,245
59,535∆329
21,668)
14,962
39
8,190
∆402
∆1,121
9,042)
107,161
328,857

Consolidated Financial Statements

38Consolidated Statements of Income (From April 1, 2016 to March 31, 2017)(Millions of yen)

Item

AmountI. Net sales

257,115

II. Cost of sales

160,823

Gross profit

96,292

III. Selling, general and administrative expenses

88,804

Operating income
IV. Non-operating income:

7,487
(

Interest income

147

Dividend income

734

House rent and other rental revenues

422

Royalty revenue

333

Other
V. Non-operating expenses:

1,007
(

1,779

Other

1,681

Ordinary income

6,671
(

Gain on sales of non-current assets
VII. Extraordinary losses:

490)
490

(

1,046)

Settlement money for patent agreement-related disputes

530

Restructuring expenses

403

Business structure improvement expenses

112

Profit before income taxes

6,115

Income taxes - current

1,668

Income taxes - deferred

0ProfitConsolidated Financial Statements

3,460)

Interest expenses

VI. Extraordinary income:

39

2,645)

6,285

Profit attributable to non-controlling interests

892

Profit attributable to owners of parent

5,392

Consolidated Statements of Changes in Equity (From April 1, 2016 to March 31, 2017)(Millions of yen)

Shareholders’ equity
Capital stock

Capital surplus

10,0007,246Balance at beginning of current period
Changes of items during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Treasury stock possession ofstock ownership plan trust
Change of scope of consolidation
Change in ownership interest ofparent due to transactions
with non-controlling interests
Other
Net changes of items otherthan shareholders' equity
Total changes of items during period
Balance at end of current period

Retained earnings
57,323

Treasury shares

Total shareholders’ equity∆158

74,411∆1∆3,101
5,392
∆1

∆170

∆170

∆3,101
5,392

∆54

∆54

∆0

∆0
∆24

—
10,000

∆0
7,245

2,212
59,535

∆24

∆171
∆329

2,039
76,451(Millions of yen)

Accumulated other comprehensive income

Balance at beginning of current period
Changes of items during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Treasury stock possession ofstock ownership plan trust
Change of scope of consolidation
Change in ownership interest ofparent due to transactions
with non-controlling interests
Other
Net changes of items otherthan shareholders' equity
Total changes of items during period
Balance at end of current period

Valuationdifference on
available-forsale securities

Deferred
gains orlosses onhedges

Revaluation
reserve forland

Foreigncurrencytranslation
adjustment

Remeasurementsof defined benefit
plans

Total accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets

10,719

∆28

8,190

1,647

∆417

20,1108,170

102,692∆3,101
5,392
∆1
∆170
∆54
∆0
∆24

4,242

67

—

∆2,049

∆703

1,557

871

2,429

4,242
14,962

67
39

—
8,190

∆2,049∆402∆703∆1,121

1,557
21,668

871
9,042

4,469
107,161(Note) ‌The amount of -24 million yen in “Other” of the retained earnings is a decrease in connection with the disposal of shares of the Company’s affiliates
accounted for by the equity method.

Consolidated Financial Statements

40Non-consolidated Financial Statements
Non-Consolidated Balance Sheet (As of March 31, 2017)(Millions of yen)

Item

AmountItem(Assets)
Current assets:

45,297
11,843

Prepaid expenses

537

Current liabilities:

23,305Current portion of long-term loans payable

20,701

Lease obligations (current)

1
3,322

27,250Accounts payable - otherAccounts receivable - other

4,859

Accrued expenses

300

Income taxes payable

257

528

Unearned income∆21

Provision for bonuses

Buildings

23,091
4,100

Furniture and fixtures
Land

805
18,17310
1,201

Allowance for doubtful accounts

116,556450

Deposit received

Other

Property, plant and equipment

49,333

Short-term loans payable

Short-term loans receivable

Non-current assets:

Non-current liabilities
Long-term loans payable
Lease obligations (non-current)

81
53,17437,407
10

Deferred tax liabilities

5,674

Deferred tax liabilities for land revaluation

3,614

Provision for loss on subsidiaries and affiliates

2,360

Provision for Board Benefit Trust

13

Leased assets

12

Provision for environmental measures

9

Intangible assets:

2,565

Asset retirement obligations (non-current)

123

1,952

Guarantee deposits received

Leasehold
Trademark rights

13

Software

579

Other

20

Investments and other assets:

90,899Investment securities

28,435

Shares of subsidiaries and affiliates

59,889Contributions in subsidiaries and affiliates

0Long-term loans receivable from subsidiaries and affiliates

9,100

Bankruptcy and reorganization claims

10Long-term prepaid expenses

9

Guaranty money deposited
Other

41

(Liabilities)

Cash and deposits

Deferred tax assets

Amount

2,414
198

Other

3,839
121

Total liabilities

102,507(Net assets)
Shareholders’ equity:

36,833

Capital stock

10,000Capital surplus

6,625

Capital reserve

2,378

Other capital surplus
Retained earnings
Retained earnings reserve

4,246
20,512121

Other retained earnings
Retained earnings carried forward
Treasury shares

20,390∆303

Valuation and translation adjustments

22,512

Valuation difference on available-for-sale securities

14,322

Revaluation reserve for land

8,190

Allowance for doubtful accounts∆9,159Total net assets

59,346

Total assets

161,853

Total liabilities and net assets

161,853

Non-consolidated Financial Statements

Non-Consolidated Statements of Income (From April 1, 2016 to March 31, 2017)(Millions of yen)

Item
Operating income:Amount10,361Dividend received from subsidiaries and affiliates

5,799

Proceeds from management guidance

1,953

Royalty revenue

2,608

Operating expenses:

8,729

Operating income

1,632

Non-operating income:

1,580Interest income

434

Dividend income

720

Service contract fee

154

Other

271

Non-operating expenses:

888Interest expenses

709

Property lease expenses

121

Other

57
Ordinary income

Extraordinary income:Gain on forgiveness of consolidated tax debt
Extraordinary losses:
Transfers to provision for loss on
investments to subsidiaries and affiliates
Profit before income taxes

2,324
62
62
120
120
2,266

Income taxes - current∆439

Income taxes - deferred∆564

Profit3,271

Non-consolidated Financial Statements

42

Non-Consolidated Statements of Changes in Equity (From April 1, 2016 to March 31, 2017)(Millions of yen)

Shareholders’ equity
Capital surplus
Capital stock

CapitalOther capital

Total capitalreserve

surplussurplus

2,378

4,246

6,625

Retainedearnings
reserve

Other retained
earnings

Total retained

Retained earnings

earnings

carried forward
20,22020,342

Dividends of surplus∆3,101∆3,101

Profit

3,271

3,271

Balance at beginning of current period

10,000Retained earnings

121

Changes of items during period

Purchase of treasury shares
Treasury stock possession ofstock ownership plan trust
Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period

—

—

—

—

—

170

170

10,000

2,378

4,246

6,625

121

20,39020,512(Millions of yen)

Shareholders’ equity
TreasurysharesBalance at beginning of current period∆131

Valuation and translation adjustments

Total
Valuation difference Deferred gains
shareholders’ on available-foror losses on
equitysale securities
hedges36,835

9,942∆3

Revaluation
reserve for
land
8,190

Total valuationand translation
adjustments

Total net
assets18,12954,964

Changes of items during period
Dividends of surplus

Treasury stock possession ofstock ownership plan trust∆3,101

3,271

3,271

∆1

∆1

∆1

∆170

∆170

∆170

ProfitPurchase of treasury shares∆3,101

Net changes of items other thanshareholders' equity

43

4,379

3

—

4,383

4,383

Total changes of items during period

∆171

∆1

4,379

3

—

4,383

4,381

Balance at end of current period∆303

36,833

14,322—

8,190

22,512

59,346

Non-consolidated Financial Statements

Audit Report[Translation]

Certified copy of audit report on the consolidated financial statements by the Accounting Auditor
Independent Auditor’s Report
The Board of Directors
SEIKO HOLDINGS CORPORATION

May 9, 2017
KPMG AZSA LLC
Junichi Obi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Akira Nishino [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Osamu Takagi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising the consolidated balance sheets, the consolidated
statements of income, the consolidated statements of changes in shareholders’ equity and the notes to the consolidated
financial statements of SEIKO HOLDINGS CORPORATION for the consolidated fiscal year from April 1, 2016 to March
31, 2017 in accordance with Article 444, Paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with corporate accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit as independent
auditor. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence for the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In
making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fairpresentation of the consolidated financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the application thereof, and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position and results of operations for the period covered by the aforementioned consolidated financial statements of thecorporate group comprising SEIKO HOLDINGS CORPORATION and its consolidated subsidiaries in conformity withcorporate accounting principles generally accepted in Japan.
Conflicts of Interest
Our firm or its engagement partners have no interest in the Company which should be disclosed in compliance with theCertified Public Accountants Act.
Audit Report44[Translation]

Certified copy of audit report (on the non-consolidated financial statements) by the Accounting Auditor
Independent Auditor’s Report
The Board of Directors
SEIKO HOLDINGS CORPORATION

May 9, 2017
KPMG AZSA LLC
Junichi Obi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Akira Nishino [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant
Osamu Takagi [seal]
Designated Limited Partner
Engagement Partner
Certified Public Accountant

We have audited the financial statements, comprising the balance sheets, the statements of income, the statements ofchanges in shareholders’ equity and the notes to the financial statements, and accompanying schedules thereto of
SEIKO HOLDINGS CORPORATION for the 156th fiscal year from April 1, 2016 to March 31, 2017 in accordance with
Article 436, Paragraph 2, Item 1 of the Companies Act.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements and accompanying
schedules thereto in accordance with corporate accounting principles generally accepted in Japan, and for designingand operating such internal control as management determines is necessary to enable the preparation and fairpresentation of financial statements and accompanying schedules thereto that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements and accompanying schedules thereto based on
our audit as independent auditor. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether thefinancial statements and accompanying schedules thereto are free from material misstatement.
An audit involves performing procedures to obtain audit evidence for the amounts and disclosures in the financial
statements and accompanying schedules thereto. The procedures selected depend on the auditors’ judgment, including
the assessment of risks of material misstatement of the financial statements and accompanying schedules thereto,whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to theentity’s preparation and fair presentation of the financial statements and accompanying schedules thereto in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the application thereof, and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements and accompanying schedules thereto.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the financial statements and accompanying schedules thereto referred to above present fairly, in allmaterial respects, the financial position and results of operations for the period covered by the aforementioned financial
statements and accompanying schedules thereto in conformity with corporate accounting principles generally acceptedin Japan.
Conflicts of Interest
Our firm or its engagement partners have no interest in the Company which should be disclosed in compliance with theCertified Public Accountants Act.

45

Audit Report[Translation]

Certified copy of audit report by the Board of Corporate Auditors
Audit Report
The Board of Corporate Auditors has deliberated on, prepared and submitted this Audit Report as below, based on theaudit reports made by the Corporate Auditors concerning the execution of duties by Directors for the fiscal year ended
March 31, 2017 (from April 1, 2016 to March 31, 2017).
1. Methods and contents of the audit by Corporate Auditors and Board of Corporate Auditors(1) ‌The Board of Corporate Auditors established the audit policies and division of duties, received reports regarding
the implementation of the audit and results thereof from the respective Corporate Auditors, as well as reports
regarding the execution of duties from Directors and the Accounting Auditor, and requested explanations asnecessary.
(2) ‌In accordance with the audit policies and division of duties determined by the Board of Corporate Auditors, each
Corporate Auditor made efforts to collect information and establish proper circumstances for the audit bycommunicating with the Directors, the internal audit department and other employees, and performed an audit
using the following methods:(i)	Attending Board of Directors meetings and other important meetings to receive reports regarding theexecution of duties from Directors and employees, and requested explanations as necessary. Each Corporate
Auditor also inspected important decision-making documents and other materials, and examined the status ofoperations and the condition of the assets of the Company. With regard to subsidiaries, the Corporate
Auditors communicated and exchanged information with directors and corporate auditors thereof, andreceived reports on business from those subsidiaries as necessary.
(ii)	With regard to the resolutions by the Board of Directors, described in the business report, regarding theestablishment of systems to ensure that the Directors’ duties are performed in conformity of laws, regulations
and the Articles of Incorporation of the Company and those other systems which are provided for in Article
100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act of Japan as systems
necessary to ensure proper business operations of a corporate group comprised of a stock company and its
subsidiaries, as well as the systems (internal control system) established in accordance with theaforementioned resolutions of the Board of Directors, the Corporate Auditors also periodically received reports
from Directors and employees regarding the development and operation thereof, requested explanations asnecessary, and expressed opinions.
(iii)	The Corporate Auditors monitored and examined whether the Accounting Auditor was maintaining an
independent position and conducting audits appropriately, obtained reports on the execution of duties fromthe Accounting Auditor, and requested explanations as necessary. In addition, the Corporate Auditors were
informed by the Accounting Auditor that a “system to ensure the duties are performed properly” (the matters
stipulated in the respective items of Article 131 of Corporate Accounting Rules) had been implemented inaccordance with the “quality management standards concerning audits” (Business Accounting Deliberation
Council, October 28, 2005), and requested explanations as necessary.
In accordance with the aforementioned procedures, the Corporate Auditors reviewed the business report andaccompanying schedules thereto, and the financial statements (non-consolidated balance sheets, non-consolidated
statements of income, non-consolidated statements of changes in shareholders’ equity, and notes to nonconsolidated financial statements) and accompanying schedules thereto, and consolidated financial statements(consolidated balance sheets, consolidated statements of income, consolidated statements of changes inshareholders’ equity, and notes to consolidated financial statements) for the fiscal year ended March 31, 2017.
Audit Report46

2. Results of audits(1) ‌Results of the audit on business reports and related materials(i)	The business report and accompanying schedules thereto fairly present the condition of the Company inaccordance with the laws, regulations and the Articles of Incorporation of the Company.
(ii)	Regarding the execution of duties by Directors, there were no instances of misconduct or material matters inviolation of laws, regulations, or the Articles of Incorporation of the Company.
(iii)	The contents of resolutions by the Board of Directors with regard to the internal control system are reasonable.
Additionally, regarding the descriptions of the relevant internal control system in the business report and theexecution of duties by Directors under the relevant internal control system, there are no matters to be pointedout.
(2) ‌Results of the audit of the non-consolidated financial statements and accompanying schedules thereto
The methods and results of the audit by KPMG AZSA LLC, Accounting Auditor, are fair and reasonable.
(3) ‌Results of the audit of the consolidated financial statements
The methods and results of the audit by KPMG AZSA LLC, Accounting Auditor, are fair and reasonable.
May 10, 2017
Board of Corporate Auditors
SEIKO HOLDINGS CORPORATION
Seiichi Mikami [seal]
Standing Corporate Auditor
Haruhiko Takagi [seal]
Standing Corporate Auditor
Yoshiaki Yamauchi [seal]
Outside Corporate Auditor
Yoshiro Aoki [seal]
Outside Corporate Auditor
Tomoyasu Asano [seal]
Outside Corporate Auditor

47

Audit Report