From the President

A Look Back at the Fiscal Year under Review

Sales and income were down due to sluggish conditions in theglobal economy and the impact of the strong yen.
In the fiscal year under review, ended March 31, 2012, the operating
environment was extremely difficult for LINTEC. It was plagued
with adversity in the form of disrupted production and consumption
activities following the Great East Japan Earthquake; decreased
exports due to the strong yen; reduced economic growth in emerging
countries due to financial tightening; stagnation in the global economy
as a result of the financial crisis in Europe; and the severe floodingin Thailand.
Amidst these conditions, the fiscal year under review was the firstyear of our three-year medium-term business plan, LINTEC Innovation
Plan III (LIP-III). Throughout the year, we advanced initiatives in accordance with the basic policy of this plan: “Achieve sustainable growthand maximize corporate value through aggressive and bold innovation.”
Sales and income declined in comparison with the fiscal year ended
March 31, 2011, when we achieved a record-setting business performance. Consolidated net sales were down 5.6% year on year, to ¥200.9billion, operating income decreased 33.1%, to ¥14.0 billion, and net
income declined 36.5%, to ¥8.6 billion.

Forecasts for the Fiscal Year Ending March 31, 2013

We will target higher sales and income by exercising the ideals of“immediate action” and “passionate sense of mission.”
In regard to forecasts, it is difficult to identify a definitive forecast
for the future state of the global economy due to sluggish economic
conditions in the United States, the resurfacing of financial crisis in
Europe, and the deceleration of economic growth in Asia following
a decline in exports. In Japan, the operating environment will also
remain highly opaque as a result of such concerns as the persistenceof the strong yen and the threat of electricity shortages.
In this environment, the Group will target the sustainable growthand max­imization of corporate value by exercising the ideals of“immediate action” and “passionate sense of mission” through theLINTEC ANNUAL REPORT 20129vigorous advancement of the initiatives outlined in LIP-III, which

Net Sales¥ Billion

entered into its second year in April 2012.

240210.0

In the fiscal year ending March 31, 2013, we are forecasting net
sales of ¥210.0 billion, up 4.5% year on year, operating income of ¥15.0

160billion, up 7.3%, and net income of ¥10.0 billion, up 15.6%.

80

Progress of the LIP-009

10111213

FY

Forecast

Medium-Term Business Plan

Going forward, we will aggressively advance the four
key initiatives.
I would now like to outline the progress of LIP-III in regard to each

Operating Income / Net Incomeof its key initiatives. The first is “Strengthen and expand overseas¥ Billionbusinesses.” At present, the LINTEC Group has 24 overseas subsidiaries,

24

located primarily in Asia. Of these, 19 are consolidated subsidiaries.
In particular, we strive to manufacture products at bases close to our15.0

16customers. We are advancing the globalization of our operations
10.0

based on this policy of local production that allows us to guarantee

8a stable supply. In the fiscal year ending March 31, 2013, we installed
additional adhesive coating facilities for film at LINTEC (SUZHOU)

00910111213FYForecast

TECH CORPORATION. Further, we will commence operations at LINTEC(THAILAND) CO., LTD., a subsidiary that possesses adhesive coating

Operating IncomeNet Income

Operating Income (forecast)

Net Income (forecast)facilities for film and production facilities for release papers. In theseways, we are steadily strengthening our overseas production systems.
Looking ahead, we will consider the construction of factories in India,

Capital Expenditures / Depreciation and Amortization

Vietnam, and other countries that are expected to be future growth¥ Billion

centers, and otherwise step up efforts geared toward meeting our1514.0

goal of achieving an overseas sales ratio of 40%.
The second key initiative is “Expand domestic businesses and in-10.5

10crease profitability by optimizing CD.” In this area, we increased
the number of surface improvement processing facilities for optical

5products at our Agatsuma Plant, located in Gunma Prefecture, during
the fiscal year under review. In the fiscal year ending March 31, 2013,

009

1011

1213

FY

Forecast

Capital Expenditures

Depreciation andAmortization

Capital Expenditures(forecast)Depreciation andAmortization (forecast)

we will sequentially conduct CD (quality, cost, delivery) optimization
initiatives including completing the construction of new releasefilm production facilities at our Kumagaya Plant, located in Saitama
Prefecture, and the planning and advancement of the “build andscrap” projects relating to the existing coating facilities at our Tatsuno
Plant, located in Hyogo Prefecture. The decision to conduct suchlarge-scale investments even in this harsh environment is based on10

LINTEC ANNUAL REPORT 2012

LINTEC Group’s Global Network

Manufacturing subsidiary
Sales subsidiary, branch, office, R&D baseour judgment that the risks of missing out on potential business
opportunities by curtailing investment outweighed the short-term
profitability risks associated with conducting these investments.
As we move forward, we will continue to proactively allocate
management resources in a concentrated manner to prepare us
for the next leap forward. Further, we are pursuing quality improvement, cost reductions, and shortened delivery turnaround times
at our production sites through the advancement of improvement
projects that incorporate external guidance. We have already begun
to see the results of these efforts.
The third key initiative is “Create original new products that will
support the next generation.” In this area, we are continuing to focus
on the development of highly functional products that will drive ourgrowth, such as those for environment- and energy-­related products
and electronics- and optical device-related products. At the sametime, we are accelerating R&D projects aiming to quickly respondto customer needs.
The last key initiative defined in the plan is “Strengthen globalmanagement.” In the current era, domestic industries are greatly influenced by overseas economic conditions and Japanese companies arebeing forced to compete directly with overseas companies. This meansthat it is absolutely essential for Japanese companies to globalize.
In order to pursue such globalization, the Company is continuing toLINTEC (SUZHOU) TECH CORPORATION

LINTEC ANNUAL REPORT 201211

develop and reinforce its global management systems through thedevelopment of its IT foundations. At the same time, based on a longterm perspective, we are introducing new human resources systems
Basic Policy
Achieve sustainable growth and maximize corporate value through aggressive
and bold innovation
Key Initiatives
1. Strengthen and expand overseas
businesses (Targeted overseas sales
ratio: 40%)and cultivating human resources capable of competing on the global
stage. Further, we aim to practice corporate social responsibility (CSR)
based management, and in April 2011 we announced our participationin the UN Global Compact and affirmed our intention to adhere to its
ten principles. In addition, we are progressively achieving compatibility
with ISO 26000, an international standard for social responsibility thatis applicable to various types of organizations.

2. Expand domestic businesses and increase profitability by optimizing CD

Corporate Governance and CSR

3. Create original new products that will
support the next generation

We are further strengthening governance systems and practicing
CSR-based management in accordance with global standards.

4. Strengthen global management

In regard to corporate governance, in June 2011, we introduced
an executive officer system with the goal of separating importantmanagement decision-making processes from operational execution,
invigorating the Board of Directors, and improving management efficiency through swift decision making. The Board of Directors consistsof eight directors and two external directors. It works to ensure speedy
management decisions and business advancement amid the fluctuating management environment based on the principles of holding
Board of Directors meetings once a month. Further, management
meetings are also held once a month, attended by directors and executive officers. Through the holding of such meetings, we are working todevelop optimal management strategies. Additionally, LINTEC employsa statutory auditor system and ensures swift management and theeffectiveness of its oversight systems. The Statutory Auditors’ Meetingis held monthly in principle and is attended by the Company’s twostatutory auditors and two external auditors. In this meeting, by
sharing the results of the business audits performed by each auditor,
the auditors confirm the appropriateness and effectiveness of thedecisions and operational execution of the Company’s management.
The Company views CSR as one of the most important issues formanagement. Going forward, we aim to contribute to society as astrong, vigorous company that is well trusted.
For this reason, we have established the CSR Management
Office, which reports directly to the president. In addition, we12

LINTEC ANNUAL REPORT 2012

have established six CSR subcommittees—Corporate Ethics; Investor
Relations; Customer Satisfaction; Environmental Preservation; SocialContribution; and Safety, Disaster Prevention, and Health—which
consist of members from all areas of the Company. These bodies
implement a wide variety of CSR activities. Through these efforts,
we will continue to promote corporate management that balances
its responsibilities to the economy, society, and the environment.
In the fiscal year under review, we worked to reduce usage and emissions of substances that impact the environment and developedand increased sales of products that reflect consideration for theenvironment. We also took part in social contribution activities closely
linked to local communities, such as participating in cleanup activities
in the areas around our operating bases and providing support for people with disabilities. Further, we provided support to the reconstruction
effort following the earthquake. Moreover, we have enhanced andthoroughly instituted corporate ethics training and disseminated asound understanding of good corporate ethics throughout the Company. In these ways, we implemented a multi­faceted CSR program
during the year.

General Meeting of Shareholders
Appointment / Dismissal

Appointment /Dismissal

Appointment /Dismissal

Management decision

CSR Management Office• Corporate Ethics Committee• Investor Relations Committee• Customer Satisfaction Committee• Environmental PreservationCommittee• Social Contribution Committee• Safety, Disaster Prevention,and Health Committee

ReportingBoard of Directors(Directors)

Guidance /Promotion

President

Account /Operational
Auditing

Statutory
Auditors’Meeting

Cooperation

Cooperation

Management Meeting(Directors andExecutive Officers)

Administrative,Marketing,Production, andTechnical Divisions;
Domestic andOverseas Subsidiaries

InternalAuditing

Independent
Auditors

Account
Auditing

InternalControl
Auditing

Audit Office(InternalControl)

Operational execution

LINTEC ANNUAL REPORT 201213

As mentioned previously, we have announced our support of the UN
Global Compact as well as our participation in this initiative. This wasdecided based on the perspective of global management including
both domestic and overseas subsidiaries. Using this as a starting point,
we will further strengthen our efforts to address issues in the fourareas covered by the Compact’s ten principles: human rights, labour,environment, and anti-corruption. In addition, we will practice CSRbased management centered on globally recognized standards, suchas ISO 26000, with the aim of being a company that is trusted andhighly respected by the international community.
Moreover, LINTEC will continue to ensure swift decision making,management transparency, enhanced management oversight systems, and thorough compliance by strengthening its internal control
systems and risk management systems.

Shareholder Returns

Dividend payments were issued as planned, despite the reduction
in net income.
LINTEC’s basic policy on the appropriation of profits is to increasebusiness earnings and strengthen the Company’s financial position
from a long-term perspective while paying dividends that reflect
consolidated business results. Acting in accordance with this policy, we
are working to increase shareholder returns.
For the fiscal year under review, we had initially forecast net income
per share of ¥173.30, based on which we intended to issue dividend
payments of ¥40.00 per share, making for a consolidated payout ratioof 23.1%. Unfortunately, net income per share was much lower thanexpected, at ¥115.26. Regardless, we chose to issue dividend payments
Cash Dividends per Shareas initially planned, paying ¥40.00 per share, which resulted in a con-¥solidated payout ratio of 34.7%. This was a reflection of our desire to45

thank shareholders for their continued support.

34.0

For the fiscal year ending March 31, 2013, we are forecasting30

consolidated net income of ¥10.0 billion, which will equate to net
income per share of ¥133.88. Accordingly, we intend to issue dividend

15

payments of ¥34.00 per share, making for a consolidated payout ratio009

10111213
Forecast

14

LINTEC ANNUAL REPORT 2012

FYof 25.4%. Going forward, we will work to raise income and subsequently improve shareholder returns.

We must expand domestic businesses
and make them highly profitable.
At the same time, it is vital that weare steadfast in our efforts to develop
operations in emerging countries,
particularly those in Asia, as thesecountries are anticipated to become
the driving force behind the globaleconomy going forward.
In Closing

Recently, the speed at which society changes has been rapidly increasing. It is now incredibly common for products that were of the utmost
importance to suddenly become unneeded overnight. In order to survive in this volatile environment, it is absolutely essential for theLINTEC Group to stay ahead of the times and quickly take advantage of
new demand and create new products.
To ensure that LINTEC continues to grow into the future, we mustraise our competitiveness in terms of product quality and costs as wellas other factors while also expanding domestic businesses and making them highly profitable. At the same time, it is vital that we are
steadfast in our efforts to develop operations in emerging countries,
particularly those in Asia, as these countries are anticipated to become
the driving force behind the global economy going forward. Fully leveraging the management resources we have accumulated to date, wewill steadily implement growth strategies to realize these ends.
In closing, I would like to ask our shareholders and other investors
for their continued support.
August 2012

Akihiko OuchiPresident and CEO

LINTEC ANNUAL REPORT 201215