Annual Report

2013
Dainippon Screen GroupYear Ended March 31, 2013

With image processing technology as our core, we have
evolved from the fields of printing equipment into
semiconductor production equipment, and we are constantly
on the lookout for challenges in new fields of business.
Dainippon Screen has focused on research and development from its very beginnings. In our
ongoing quest to develop new businesses and products, we constantly monitor the needs ofour customers and society at large, always considering how to apply our technologies andproducts, and examining what is lacking.

Media And
Precision
Technology

Management Philosophy

Semiconductor
Equipment[] Shi Kou Ten Kai (thinking, considering, developing and opening
new businesses, products and technologies) is the ideology behind
Dainippon Screen’s business development. The phrase expresses ourcommitment to the challenge of developing new businesses and products
always considering how to apply our technologies and products, andexamining what is lacking. [], which is also pronounced Shi Kou
Ten Kai and means to implement reforms with a strong will.

C O N T E N T S
Editorial Policy . . . . . . . . .................... 02
Our Business . . . . . . . . . . . .................... 03
Performance Highlights ............... 04
To Our Stakeholders .................... 05
Research & Development ............. 09
Overview of Performanceby Company . . . . . . . . . . . . .................... 11

CSR Targets and Performance ...... 25
CSR Topics .................................. 27
CSR Performance Report ............. 31
Eleven-Year Trends in
Key Management Indicators ......... 37
Management’s Discussion
and Analysis ............................... 39

Semiconductor Equipment Company ............ 11
FPD Equipment Company . . . .................... 13
Media And Precision Technology Company ..... 15

CFO Message ................................... 39
Operating Results/
Financial Position and Liquidity/
Risk Factors ..................................... 39
Segment Information ........................... 46

Corporate Governance ................. 17
01

Consolidated Balance Sheets .................. . 47
Consolidated Statements of Income/Consolidated Statements ofComprehensive Income ........................ . 49
Consolidated Statements of Changes in
Net Assets ...................................... 50
Consolidated Statements of Cash Flows ...... . 51
Notes to the Consolidated
Financial Statements ............................ 52
Independent Auditor’s Report .................. . 63

Corporate Data/
Consolidated Companies/
Investor Information .................. . 64

FPD
Equipment

New
Business

Reporting Structure

To communicate the Group’s activities from various
points of view, we have integrated information on
business activities, as well as our reporting from afinancial, social and environmental perspective, into
this annual report. In addition to the printed Annual
Report 2013, we have made available on our website
an e-report (including CSR data sheets) that features
more extensive information related to corporate social
responsibility (CSR).

Investor Information

We prepared the e-report using the Global Reporting
Initiative (GRI) G3.1 Sustainability Reporting Guidelines*,and self-declare the report to GRI Application Level B.

* The GRI Content Index is available on our website.

WEB

Information posted on our website

Investors’ Guide

Printed Report

Disclaimer
Social andEnvironmental
Activities

Annual Report

CSR Data Sheets

Editorial Policy

e-Report
GRI Content Index

Website (http://www.screen.co.jp/eng)
We disclose a variety of IR, social and environmental informationin addition to that mentioned above on our website.

The plans, strategies and statements
related to the outlook for future results inthis document are in accordance withassumptions and beliefs determined bymanagement based on currently available
information. However, it should be notedthat there is a possibility that actual results
could differ significantly due to such factors
as social and economic conditions.
Notes:
1. All amounts shown in billions of yen are
truncated to the nearest billion.
Amounts shown in millions of yen are
rounded to the nearest million yen.
2. All years shown are for the accounting
year ending March 31 of the year shown.

02

Our Business

Semiconductor Equipment Company
In an environment characterized by the further circuit miniaturization ofsemiconductors, wafer cleaning processes are of growing importance.
We boast the top share of the global market in the three principal
categories of single wafer cleaning equipment, batch-type cleaning
equipment and spin scrubbers. We also handle coater/developers soldthrough SOKUDO Co., Ltd., a Dainippon Screen subsidiary.
Batch-type
Single wafer
cleaning equipment cleaning equipment Spin scrubbers(Sales amount basis in 2012)

Global Market Share No.1

75%*

55%*

* Source: Gartner, “Market Share: Semiconductor Manufacturing Equipment, Worldwide, 2012” Barbara Van et al. 4 April 2013
[Revenue from Shipments of Single Wafer Processors, Auto Wet Stations and Scrubbers, Worldwide]73%*

FPD Equipment Company
Using the principles of photographic development, coater/developers
coat a glass substrate with photosensitive material and develop it, as apart of the process of creating electronic circuits on it. We hold the top
share of the global market in coater/developers for the TFT arrays usedin the LCD panel production process.

(Unit basis in 2012)

Coater/developers

Global Market Share No.1

86%

* Source: Dainippon Screen estimate*

Nozzle printing equipment
for OLEDsMedia And Precision Technology Company
The Company develops, manufactures and sells digital printing
equipment and Computer to Plate (CTP) equipment to rationalize
production processes and enhance printing quality. We also supply
printed circuit board patterning systems and inspection equipment.

(Unit basis in 2012)

CTP equipment

Global Market Share No.1

38%

* Source: Dainippon Screen estimate

Digital printing press*

New BusinessIn our quest for future growth and to minimize the impact of suddenchanges in the semiconductor- and FPD-related businesses where
the market conditions tend to fluctuate drastically, we are working
toward the launch of new businesses (vacuum deposition andapplication for image processing/printing technology).

Guiding Principles of Screen’s Business• Management Philosophy• Business Philosophy

Shi Kou Ten Kai

1. Sharing the future
Earning the trust and meeting the expectations of society, while
keeping an eye on the future• Corporate Vision

Fit your needs, Fit your future
The Dainippon Screen Group, with the slogan of“ Challenge, Change, Collaboration + ONE*”,provides innovative solutions fitting the needs of achanging global society and shares the future benefits
with stakeholders by leveraging individual talents andcollaborations necessary to overcome challenges.
“+ONE” refers to our hope that Dainippon Screen* Groupemployees will take it upon themselves to workwithin their various organizations to deal with any
problems or issues that they may encounter.

03

2. Human resource development
Management
Philosophy
Business
Philosophy
Corporate Vision

Charter of Ethics

Human resource through better work

3. The pursuit of technology
Pursuing original technology and mixing it with existing technology• Charter of Ethics
1. Abiding by laws and ordinances
2. Contributing to society
3. Respecting human dignity
4. Pursuing the advancement of technology with environmental
awareness and responsibility
5. Ensuring employee health and safety
6. Maintaining openness and accountability
7. Ensuring proper use and protection of company assets
8. Making a commitment to integrity and ethical business practices

The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representationsof fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Annual Report) and the opinions expressed in the Gartner Report(s) are subject to change without notice.

Performance Highlights

Sales by Segment (Fiscal Year Ended March 31, 2013)Media And
Precision Technology¥ 46.3 billion (24.4%)

Other¥ 0.7 billion(0.4%)

Sales by Geographic Region (Fiscal Year Ended March 31, 2013)

Semiconductor Equipment¥ 131.0 billion (69.0%)

North America¥ 45.5 billionJapan¥ 47.3 billion(24.0%)(24.9%)

Graphic Arts Equipment¥ 40.1 billion (21.2%)

PCB-Related Equipment¥ 6.1 billion (3.2%)

FPD Equipment¥ 11.7 billion (6.2%)

Net Sales

Net Sales¥ 189.9billion¥ 189.9billionOther¥ 5.4 billion(2.8%)

Asia & Oceania

Europe¥ 15.4 billion¥ 76.2 billion(40.1%)(8.2%)

Consolidated Net Sales

Consolidated Operating Income (Loss) and Ratio of Operating
Income to Net Sales(Billions of yen)(Billions of yen)

320

60

10.5

30

26.8

254.9

240

250.0

219.0

0

–30

0

–60

2010

2011

2012

2013

Equity and Equity Ratio
200

50.0

34.4
28.1

36.7

34.3

29.8

90.0

64.6

80.6

50

40.0

–8.6

–12.0

2010

2012

2011

2013
(Years ended March 31)

Consolidated operating income (loss)
Ratio of operating income to net sales(Billions of yen)

40

34.2

34.0
25.1

2012

11.2

6.8
−2.1

−6.9

−4.1
−9.4

–20

−24.5
2011

21.5

20

20.0

0.0

0

2010

−27.1

–40

2013

2009

2010

−5.7
−15.3

−22.2
2012

2011

2013

(Years ended March 31)
EquityCO2 Emissions and Emissions per Unit of Production
60

23.2

27.0
15.0

15.7

(Number)

60

40
20

80

40

40

0

40

30

31

0

2009

2010

2011

38 *1

5
33

2012

Financing activities

Investing activities

Number of Incidents and Accidents(Metric tons/100 million yen)

160

26.7

(Years ended March 31)
Operating activities

Equity ratio(Thousands of metric tons)

120

–6.0

–3.7

0

10.0

2009

0.0

–2.1

30.0

87.1
69.3

–6.9

–14.0

Cash Flows(%)(Billions of yen)

100

–4.5

2009

(Years ended March 31)

150

6.0

13.4

80

2009

5.4

189.9

164.1

160

(%)

12.0

49 *1

37
17

20

28

27
13

5

8

20

15

14

17

15

2009

2010

2011

2012

7

42

23

22

13

0

2013

(Years ended March 31)
CO2 emissions (domestic Group)
CO2 emissions (overseas Group)
Emissions per unit of production (domestic Group)

2013(Years ended March 31)

Incidents (domestic Group)

Accidents (domestic Group)*1 Includes overseas Group from the fiscal year ended March 31, 2012.
04

To Our Stakeholders

We will continue to reconfigure the business structure to generatehigher earnings and build the foundations for future growth,
accelerating commercialization of promising new technologies.

Q.

Please describe the business environment andoperating performance in the fiscal year ended
March 31, 2013.

Market conditions became worse than we had
anticipated. Even though we stepped up urgent
countermeasures to address this situation, we stillrecorded losses.
The business environment in the fiscal year
CEO
ended March 31, 2013, was more difficult than we had
expected, due to protracted debt problems in Europe andeconomic deceleration in emerging markets, including China.
In the semiconductor industry, investment related
to such mobile devices as smartphones and tablets was
solid, but semiconductor manufacturers’ capital investment
related to personal computers—the driver of market growthin past years—was down overall.
In the LCD panel industry, as well, a worsening
supply–demand balance on TV panels caused new
TV-related investment to fall sharply, making conditions
increasingly difficult in the manufacturing equipment
industry overall.
Operating in this market environment, the Dainippon
Screen Group recorded consolidated net sales of ¥189.9
billion for the fiscal year ended March 31, 2013, down asubstantial 24.1% from the preceding fiscal year.
During the year, we stepped up urgent
COO
countermeasures, as we expected a significant fall in sales,
but ultimately the operating loss amounted to ¥6.9 billion,
and the ordinary loss was ¥7.2 billion. The net loss cameto ¥13.4 billion, owing to an extraordinary loss stemmingfrom a loss on valuation of investment securities and therecording of deferred income taxes following a partial
reversal of deferred tax assets.

Akira Ishida
Representative Director
Chairman
Chief Executive Officer (CEO)Q.

How were dividends for the fiscal year ended
March 31, 2013?

We decided to forgo dividends for the fiscal year
under review. We will do our utmost to move backinto the black and resume dividends in the upcoming
fiscal year.
Because of the large amount of losses theCEO
Company generated during the year, with sincere regret
we decided to forgo the year-end dividend for the fiscal05

year ended March 31, 2013.
We apologize sincerely to investors for this situation.
We are resolved to do our utmost to return the Company
to profitability and resume dividends in the upcoming
fiscal year, ending March 31, 2014.

Q.

What is your policy for staging a recovery inoperating performance?

We are building an earnings structure capable ofgenerating profits even at the level of sales recordedin the fiscal year under review.
As I see it, our biggest management issue at the
COO
moment is to quickly recover our reduced earning power.
At the time of the Lehman shock five years ago, we recovered
our profitability following reconstruction initiatives that
included cutting executive compensation, downsizing on
a Group scale and consolidating bases. After that point,
though, in the semiconductor industry application demand
shifted from personal computers to mobile devices. At thesame time, unit chip prices declined and device
manufacturers grew increasingly oligopolistic. In the LCD
panel industry, customers’ capital investment plunged as
the supply–demand balance on panels for TVs worsened.
In response to this drastic change in the operating
environment, we will further enhance the “urgent
countermeasures” we have already been pursuing, andpromote “structure reform” to radically boost our earning
power. We will move forward with initiatives that should
lower our breakeven point and are creating a constitution
capable of generating profits even if consolidated net sales
are at the levels they were during the fiscal year under review.
Our industry as a whole is entering a challenging
CEO
period. But I am convinced that we have the staying power
to survive. Amid the shakeout that equipment manufacturers
are facing in line with technological innovation insemiconductors, our market share has increased. In the
category of cleaning equipment that uses chemical solutions(liquids), I believe our strength lies in our sophisticatedtechnologies and expertise, which are unrivalled by othercompanies.
As long as we are able to create a constitution capableof generating profits even with consolidated net sales atthe levels we recorded during the fiscal year under review,
with such strength we should definitely be able to win out
even against severe competition.

Masahiro Hashimoto
Representative Director
President
Chief Operating Officer (COO)06

To Our Stakeholders

Q.

Please describe the Company’s “urgent
countermeasures.”In the short term, we are doing everything in our
power to secure profits.
In the third quarter of the fiscal year under review,
COO
when we saw the operating environment begin to worsen,
we made the decision to curtail executive compensation.
After that, we decided to reduce personnel costs, which
included cuts to manager salaries and allowances, and thenwe moved to reduce benefits and other expenses. The
results of these measures, which first became apparent in
the fourth quarter, were a ¥4.2 billion year-on-year
reduction in fixed costs.
We will keep these urgent countermeasures inCEOplace for the upcoming fiscal year, so that we secure profits
even in such a situation, as it is difficult to envision theoperating environment turning positive. That being said,
to eliminate fundamental problems we need to accomplish
structure reforms rather than urgent countermeasuresinvolving a host of sacrifices. Doing this will lower ourbreakeven point and enable us to generate profits from ourbusiness. I see this as our mission as management.

Q.

What does your “structure reform” entail?

We will accelerate manufacturing rationalization andefficiency improvements to lower variable costs.
First, we must do our utmost to strategically
COO
allocate and effectively utilize our limited resources, suchas research expenses and capital investment. As part ofthese measures, we have centralized the multiple
divisions involved in the creation of new businesses andtechnologies, converting to a structure that can develop
technologies swiftly while realizing synergies.

07

Our second move is to slim the organization evenmore. We are building a simpler structure by redoubling
our efforts to allocate employees optimally, including
those in Japan and overseas, utilizing personnel
effectively. We have already begun consolidating andrestructuring administrative departments and departments
within individual business companies.
Third, we are striving to reduce variable costs
CEOby improving productivity and quality. I think this is ourmost pressing task in response to the drastic changes in theoperating environment we currently face. We will reinforce
further the manufacturing rationalization and efficiency
improvements that have been performed separately by
individual business departments. The impact should be
most pronounced in the Semiconductor Equipment segment.
There, we are promoting efficiencies in design activities
by utilizing value engineering (VE) and 3D CAD, boostingoverseas procurement and curtailing costs for installing
and adjusting equipment. These measures are aimed at
reducing the variable cost ratio.
We need to go about these reforms with the strong
conviction that “without evolving, there is no value toexisting.” From April 2013, one of every two twice-monthly
Management Committee meetings has been held at the
Hikone site, the center of manufacturing for the
Semiconductor Equipment segment, our main business.
These meetings provide an opportunity for frank discussion
between upper management and managers of on-site
operations. This initiative is aimed to further reformawareness among all employees of the Group.

We will push forward with the development andcommercialization of technologies and products in
new fields, cultivating the seeds for future growth.
The fourth point of our structure reform is to
COOfurther accelerate the launch of new businesses. Here, for
new businesses we are pursuing developments of vacuum
deposition equipment and applications for image processing/
printing technology. At the same time, we are moving
steadily toward product launches and commercialization in
the area related to OLEDs, solar cells and lithium-ion batteries
that we have already been working on.
In recent year, attention has focused on new
CEOproduction techniques that make use of printing
technologies. We are focusing on R&D in this area, which
we call “printed electronics.” This technology involves
forming electronic circuits and elements by printing directlywith functional materials. This eliminates the need for
exposure and etching, which is expected to reduce
manufacturing processes and costs. We expect to be able
to announce a number of results from this research in thefiscal year ending March 31, 2014.

Approaches for Earnings Recovery
Reconstitution for Earnings Structure
Building a constitution capable of generating profits even at the levelof net sales for the fiscal year under review

Fixed costs: Cut by ¥4.2 billion (results for the fiscal year ended March 31, 2013)+ ¥1.6 billion (forecast for the fiscal year ending March 31, 2014)
Variable costs: Improve variable cost ratio in the Semiconductor Equipment segment
by 5 percentage points (forecast for the fiscal year ending March 31, 2014)

Structure Reform(Ongoing Measures)

Urgent Countermeasures(Short-Term Measures)

1. Efficient use of R&D expenses andcapital investment

1. Reduction in personnel costs>>Strict budgeting and check for execution

2. Streamlined organization>>Consolidation and reduction of
departments in parent company>>Salary & benefits cutbacks

2. Cost reduction>>General costs and benefits
cutbacks

3. Reduction of variable costs(SE: 5 percentage points)>>Value engineering, overseas procurement, review of design
work, efficient installation and launch

4. Reconstitution of business structure>>Improvement of unprofitable businesses and starting up new
businesses

Q.

What is your forecast for operating performancein the fiscal year ending March 31, 2014?

Above all, we will move back into the black, build astrong corporate constitution and prepare for growth.
In the fiscal year ending March 31, 2014, we
COO
expect the economic climate to be characterized by financial
uncertainty in Europe and slower growth in the Chinese
economy, but since the new government was elected theJapanese economy has been showing signs of growth dueto the effects of rising stock prices and yen depreciation.
Even so, looking at the semiconductor industry we
expect conditions to remain severe for semiconductor
manufacturers as the accelerating adoption of smartphones
and tablet devices causes demand for personal computers
to fall off sharply. We expect our Semiconductor Equipment
segment to deliver slightly better performance than during
the fiscal year under review. However, we expect sales inthe LCD business to recover in China. We do not anticipate
substantial improvements overall, but by pursuing urgent
countermeasures and structure reform, we should be able
to move back into the black somehow in the fiscal year
ending March 31, 2014, and build a stronger corporate
constitution, which will lead to further growth.
The upcoming fiscal year is the final year for
CEO
NextStage70, our three-year medium-term management
plan. Numerical targets under this plan are to achieve an
equity ratio above 50% and reduce net interest-bearing

debt to zero. Achieving these goals will be difficult, but
we will continue moving toward our objective of
re-establishing a stable earnings structure and building afoundation for new growth.

Q.

What policies underlie your CSR initiatives?

We have reinforced our structure for managing anentire group that extends globally.
The Group will work to fulfill our business-related
COO
social responsibilities, such as those related to compliance,
the environment, safety and quality. In this way, we aim toearn the trust of all our stakeholders and sustain ourdevelopment. We have striven to enhance our corporate
governance and promote CSR activities based on this wayof thinking. In the fiscal year ended March 31, 2013, weestablished the CSR Promotion Division to coordinate
groupwide efforts in line with the Electronic Industry
Citizenship Coalition Code of Conduct and ISO 26000.
As part of this move, we have focused on enhancing
our risk management structure. Going forward, we will
promote business continuity management throughout our
supply chain, aiming at strengthening our businesscompetitiveness and enhancing corporate value.
We will continue working to share our corporateCEOvision, “Fit your needs, Fit your future” among employees
throughout the Group and implement CSR management.
By achieving this, we will meet the expectations of ourshareholders and all other stakeholders and fulfill our social
responsibilities.
We ask our shareholders and other stakeholders foryour continued understanding and support of theDainippon Screen Group.
June 26, 2013

Akira Ishida

Masahiro Hashimoto

Representative Director
Chairman
Chief Executive Officer (CEO)

Representative Director
President
Chief Operating Officer (COO)08

Research & Development

By bravely taking on challenges in unknown
spheres, we aim to create the new technologies
that will underpin the future.
Below, Soichi Nadahara, who was appointed Chief Technology Officer (CTO) and General Manager of the Research &Development Center in April 2013, explains the Dainippon Screen’s R&D structure, initiatives and policies.

Dynamically Integrating Diverse Core Technologies toGenerate Major Trends
As our management philosophy of [] Shi Kou
Ten Kai (thinking, considering, developing and opening
new businesses, products and technologies) shows, wehave been steadily expanding our business fields on thebasis of developing applications of our technologies
cultivated through existing businesses into neighboring
fields. While responding to needs from societal trends
and customer demands, we are continuing our quest to
create new technologies, products and businesses thatwill support our sustained growth into the future.
With our business environment changing rapidly,
nowadays we must pursue speed and efficiency in R&D
like never before. We are called upon to dynamically

SoichiNadahara
Chief Technology Officer (CTO)
General Manager of Research& Development Center

integrate the diverse core technologies that we havecultivated in such areas as optics, image processing,mechatronics, controls and processing technologies,
leading to groundbreaking innovations. One of the keys
to achieving this aim will be to decide our directions andproceed along those vectors to maximize the net force of
sophisticated individual technologies, and accordingly toshift small currents of innovation to a sweeping andstrong trend. I believe that this is a CTO’s most importantmission as the conductor for these processes.

The Research & Development Center—The Nerve Centerof Our R&D Functions
Centralizing R&D Departments Involved in Creating New
Businesses and Technologies
The Group has a variety of R&D departments. Each of
our three internal companies has its own technology
departments. On a daily basis, these departments planand develop products in line with market trends andcustomer needs in various fields, improve existingproducts, and develop technologies and products tomeet market demands in a timely fashion.
Besides this, the Research & Development Center
serves as an R&D institution that goes beyond internal
company boundaries. The center’s primary role is tosupport the development functions of each internal
company by taking advantage of a host of basic researchand elemental technologies. In the Semiconductor
Equipment segment, we are taking this approach topromote the steady development of next-generation
R&D Framework
Research &Development Center

Internal Companies’ Own
R&D Departments

R&D Administration Division
Research & Development
Division
Software Development
Division
Green Technology
Development Division

Semiconductor
Equipment
Company•Managing development
throughout the Company•Searching for, planning andpromoting new businesses•Increasing the sophistication ofelemental technologies•Taking on challenges in
cutting-edge technical fields•Developing technologies foradvancing into new fields•Developing new products•Promoting overseas R&D

FPD Equipment
Company

Media And
Precision Technology
Company

Developing the next
models and improving
existing products

Legal & IP Center
Business Service Center09

Products

technologies, such as the handling of 450mm wafers andmolecular-level simulation technology.
Another important mission of the Research &Development Center is to promote R&D aimed atcreating a new business as a fourth pillar of operations tofollow our existing three segments. We are alreadymoving forward with the commercialization of products
and technologies related to OLEDs and solar cells. In
addition to in-house research, we aggressively encouragetechnology exchanges with other companies andoverseas Group companies and promote collaborative
research with universities and research institutions inJapan and overseas. In April 2013, we established the
R&D Administration Division and the Green Technology
Development Division within the Research &Development Center, centralizing R&D functions related
to new businesses and technologies under the Chief
Technology Officer (CTO) and General Manager of the
Research & Development Center. We set up this system
to exert synergies and promote swift technologicaldevelopment.

Pursuing Research into Such Fields as Printed Electronics
and Life Science to Create a Fourth Pillar of Operations
We are pursuing a diversity of research themes in the aimof creating a fourth pillar of operations for the Company.
One direction is printed electronics, which deploys
printing technologies in the field of electronics. Thisdevelopment involves the use of printing technology
capable of forming extremely fine patterns to produce
electronic circuits, which have been conventionallyproduced using photolithography principles, thereby
simplifying the process considerably and achieving cost
reductions. We are also combining our optics, image
processing and semiconductor-related technologies,
trying to develop applications in the field of life science(human-centered integrated systems).
Another aspect of our management philosophy is[], also pronounced Shi Kou Ten Kai, meaning
the implementation of reform with a strong will. As thisphilosophy shows, I believe that the true technologicalcreation is generated from looking at ideas from adifferent perspective with a higher aim beyond the simple
extension of existing technologies. To achieve this, eachand every researcher needs to always take on new
challenges and continue to make efforts, without being
satisfied with past performance and successes. Every
engineer dreams of creating entirely new technologies
and products that nobody has ever seen before. I will try
to cultivate a creative research environment that enables
our engineers to sustain this closely held dream.

R&D
Case
Study

Using Molecular-Level Simulation
Technology to Support theDevelopment of Next-Generation
Cleaning Equipment

One of the factors underpinning the Company’s highlevel of competitiveness in the semiconductor cleaning
equipment field is its simulation technology, which allows
predicting the performance of equipment and systems
and shedding light on various phenomena on thecomputer. Using the vast amount of data we haveaccumulated to simulate the behavior of chemicalsolutions on a wafer surface enabled us to efficiently
develop an optimal method for dripping chemical solutions
and the shape of nozzles to spray these solutions.
In the future, we will enter the era of ultraminiature line
widths, with circuit line widths measuring 10nm or less. Thislevel of precision will require the analysis of liquid movements
on a molecular level. To this end, we are collaborating with
Osaka University on the development of simulation
technology using the “molecular dynamics method.” Using
this method to simulate phenomena at the molecular levelshould support our efforts to develop next-generation
cleaning equipment and chemical solutions.

Nanoscale Simulation Using the Molecular
Dynamics Method
Water molecules

Circuit pattern

Simulation technology used tovisualize water molecules
entering into the trough of aseveral-nanometer-width circuit
pattern10Overview of Performance by Company

Semiconductor Equipment Company

We are aiming to improve profitability
through business reform, as well as toincrease our market share through newtechnologies and products.
During the fiscal year ended March 31, 2013, many semiconductor manufacturers heldback on capital investments due to concerns about the uncertain economic outlook
and sluggish demand for personal computers. As a result, Semiconductor Equipment
Company net sales fell 21.8% year on year, to ¥131.0 billion. On the earnings front,
we recorded an operating loss of ¥5.8 billion, owing to the decline in sales as well as aworsening profit ratio due to the change in our product mix and low factory utilization.

Q Operating Environment during the YearA Semiconductor manufacturers

Q Key Initiatives during the Year
A We strove to expand sales ofDuring the fiscal year ended March 31,
2013, sluggish demand for personal
computers prompted manufacturers oflogic chips and memories to restrain
capital investment, with the exception ofsome leading-edge investments. At thesame time, foundries producing
processors for mobile devices such as
smartphones and tablets maintainedrobust capital investment.
The semiconductor industry iscurrently characterized by a shift toward
customer oligopolies, with investment
trends differing widely depending on
final products. This situation makes themarket outlook exceedingly difficult tojudge. Also, because processors formobile devices such as smartphones
and tablets are priced lower than PC
processors, our business model that
more complex production processes(miniaturization) generatecommensurately higher earnings nolonger applies. In other words, risingproduction costs do not translate tohigher product prices, which puts
increasing pressure on the supply chain.

Looking at specific products, single wafer
cleaning equipment such as the SU-3200
has been evaluated highly by customers
for its ability to meet demands for circuit
miniaturization. Accordingly, Dainippon
Screen’s share of the market*1 for single
wafer cleaning equipment rose from 51%
in 2011 to 55% in 2012. Also, as part ofour “frontier strategy,” which aims toleverage existing technologies to cultivate
new markets, we launched the SU-2000
cleaning system and the ZI-2000
inspection system for wafers measuring
200mm or less. Both products earned
high ratings. The average selling priceof equipment in this field is relatively
low, but given our prospects for businessexpansion we aim to continue steadily
gaining a larger share of the market.
At the same time, we worked tofurther reinforce our manufacturing
ability, including making design
processes more efficient by using 3D
CAD, PLM and so on. We also pushedforward with value chain reforms
intended to maximize customer

substantially reduced capital
investment.

Tadahiro
SuharaPresident,
Semiconductor Equipment
Company

Composition of Net Sales

products such as the SU-3200 andpushed forward with reforms
aimed at raising profitability.

Net Sales ¥131.0 billion(As of March 31, 2013)(Billions of yen)

200.0

174.2 167.5
150.0

69.0%

100.0

131.0
89.7 100.9

50.002009 2010 2011 2012 2013
(Years ended March 31)

11

TOPICS
We participated in
SEMICON Japan 2012.
We took part in SEMICON Japan
2012, an international exhibition
held at Makuhari Messe, Japan,
in December 2012. We explained
our latest products in various
categories, including ourmainstay semiconductor cleaning
equipment. In addition, we
introduced the SU-2000 cleaningsystem and the ZI-2000 inspection
system for the 200mm wafer
market, both of which attracted
attention from numerous visitors.

satisfaction and enhance profitability andpursued maximum marginal profits bythoroughly managing all departments’
activities, from development to sales,
reviewing them against numerical targets.

*1 Source: Gartner, “Market Share: Semiconductor
Manufacturing Equipment, Worldwide, 2012”
Barbara Van et al. 4 April 2013, sales amounts
based on single-wafer processors

Q Outlook for the Operating

Environment and Major Initiatives in
the Upcoming Fiscal Year

A We intend to raise profitability andincrease share, centering on thesmartphone and tablet markets.

We expect mobile devices such as
smartphones and tablets to continue
driving the semiconductor market in
the fiscal year ending March 31, 2014.
In the memory category, we expect
investment in NAND flash memories toregain momentum following demand for
DRAMs for mobile phones, for whichinvestment has been on a recovery trend
since early 2013. Among new products,
the Company will introduce newcleaning systems in the Back End Of
Line (BEOL) category, where our share
has not been high, aiming to further
augment our share in single wafer
cleaning equipment. In addition, we

intend to lower our variable cost ratio by
continuing to make further inroads onstandardization beginning at the design
stage and augmenting our overseas
procurement ratio on parts and materials.

Q Medium- to Long-Term Strategies
A We will further strengthen our

technological development
capabilities in preparation for theera of the 450mm wafer.

We recognize that strengthening ourtechnological development capabilities
is essential to expand our businesswith leading-edge manufacturers, as
increasing levels of oligopoly have
limited the number of clientcompanies. To this end, in April 2013
we merged the coater/developer
engineering division of SOKUDO Co.,
Ltd., a Group company, with our own
single wafer cleaning equipment
engineering division, aiming for moreinnovation by generating synergies forboth parties.
We are steadily preparing for the eraof next-generation 450mm wafers, aswell, in ways such as providing
equipment for evaluation to the Global
450 Consortium (G450C), which was
set up in the United States.

Dainippon Screen booth at SEMICONJapan 2012

ZI-2000 inspection system

SU-2000 cleaning system

Market Share for Single Wafer Cleaning Equipment
Company A

Company A

1%2%

Company B

10%Company C

19%Company D

19.0%

2011
Dainippon
Screen51%

Company B

12%Company C

15%Company D

2012
Dainippon
Screen55%

16%

Source: Gartner, “Market Share: Semiconductor Manufacturing Equipment, Worldwide, 2012”
Barbara Van et al. 4 April 201312

Overview of Performance by Company

FPD Equipment Company

We will make further efforts to reformthe business structure and create aprofit-generating constitution.
During the fiscal year ended March 31, 2013, as in the preceding year the FPD
market was characterized by a slowdown in demand for panels used inlarge-screen LCD televisions, resulting in lower sales of our mainstay products.
As a result, net sales for the FPD Equipment Company dropped 63.9% year on
year, to ¥11.7 billion, and we posted an operating loss of ¥0.8 billion. However,by making structural reforms early on, we succeeded in reducing the operating
loss compared with the preceding fiscal year, and in the fourth quarter of the
fiscal year we were profitable for the first time in five quarters.

Q Operating Environment during the Year
A The market for large LCD panels

slumped, and capital investment insmall and medium-sized panels
was below our expectations as well.

HayatoHayashiPresident,
FPD Equipment Company

The fiscal year ended March 31, 2013,
was exceedingly difficult for our company.
Due to the worsened supply–demandbalance for LCD panels, investment
opportunities related to large LCD panels
for televisions decreased significantly.
Given that the market for final
products was booming, we had anticipatedvigorous capital investment in the market
for the small and medium-sizedhigh-definition LCD panels used in
mobile devices such as smartphones andtablets, but new investments were much
lower than we had expected at the
beginning of the fiscal year, so sales fell
below our forecasts in this area as well.

stepped up efforts to streamline ourorganization, and we continued with a
special project to thoroughly reduceother fixed costs. For variable costs, aswell, we pursued value engineering (VE)
activities in key product categories
together with partner companies anddid our best to significantly slash costsby reviewing products from the basic
design stage.
We also expanded our overseas
procurement of parts. For processedparts in particular, we employed stringent
quality management from the design
stage, and by boosting our overseas
procurement ratio we lowered purchasecosts and boosted price competitiveness.

Q Outlook for the Operating Environment
and Major Initiatives in the Upcoming
Fiscal Year

A We will move forward with structurereforms, boost sales in the Chinese
market and pursue technologicaldevelopments corresponding tohigher-definition panels.

Q Key Initiatives during the Year
A We proceeded with extensive
business structure reform.

Business structure reform was ouroverriding focus during the year. We had
anticipated an extremely difficult scenario
in view of market trends, so we began
enacting structural reforms in the previous
fiscal year. To lower fixed costs, weComposition of Net Sales

China’s fundamental strategy is todomestically produce all the panels for
LCD TVs that are manufactured there.
In the fiscal year ending March 31, 2014,as televisions made in China accountfor a growing share of the global total,

Net Sales ¥11.7 billion(Fiscal Year Ended March 31, 2013)(Billions of yen)

80.0
60.0

6.2%

62.3

40.0
20.0

32.7 32.6
19.8

11.7

0

2009 2010 2011 2012 2013
(Years ended March 31)

13

TOPICS
We introduced our battery
electrode material coating
and drying equipment at theInternational Rechargeable
Battery Expo.

we anticipate increased investment by
panel manufacturers to build newfactories and augment production as
demand for panels recovers.
Assuming that our businessnegotiations for China that are underway
lead steadily to orders, at the moment wepredict a significant improvement inboth sales and profits. We will continue
striving to implement structure reforms,
reinforce our VE activities and expand
overseas procurement further.
We are moving toward products
corresponding to higher definition andthinner glass. Demand for mobile devices
such as smartphones and tablets aretrending toward higher levels ofbrightness, higher definition, lower
power consumption and lighter weight.
To meet these needs, we are focusing
on the development and sales ofcoater/developers for low-temperaturepolysilicon TFT LCDs, which will
harness our strength, namely
technological superiority.
We are also embarking on thebusiness of modifying equipment wehave sold in the past to meet the needfor higher definition. As we have many
coater/developers in operation in themarketplace, by making maximum useof these assets we aim to expand ourmodification business.

Q Medium- to Long-Term Strategies
A Operating in a mature industry,

we are working to secure steadyprofits and develop new
mainstay products.

As we believe that large-scale investmentsin the LCD panel industry are no longer
likely going forward, we consider it urgent
to cultivate new core products that will
become a new pillar of business. One ofour most promising development projects
is nozzle printers for large OLED TVs.
Looking into a host of methods for
producing large OLED TVs, we haveconcluded that our nozzle printing
method is superior in terms of mass
production. Customers’ decisions on
production processes for moving to mass
production on OLED TVs have been
delayed, but we are increasing our levelof readiness so that we can provide our
products as soon as demand emerges,
and we are rapidly making preparations
to ship.
We also have high hopes for vacuum
deposition equipment for solar cells.
This equipment forms high-quality thinfilms swiftly, contributing to substantial
increases in conversion efficiency of solar
cells. We are putting every effort toward
the launch of these new businesses.

To boost our business in the energy
field, in February 2013 we introduced
our lithium-ion battery electrodematerial coating and drying equipment
at the BATTERY JAPAN, International
Rechargeable Battery Expo, heldat Tokyo Big Sight. Applying thehigh-definition coating technology
we have cultivated in the FPD
field, this system meets the needto mass produce large,
high-performance batteries, forwhich demand is expected to
grow. At the expo, we introduced
some of the actual coatings, aswell as the system, showcasing
its high performance level.

Dainippon Screen booth at theInternational Rechargeable Battery Expo
Battery electrode coating
and drying
equipment

Coating

SK-N1300G coater/developer

Nozzle printing equipment for OLEDs

RE-8000 measurement system
for thin film solar cells

14Overview of Performance by Company

Media And Precision Technology Company

We are working to bolster sales andprofits through the introduction of new
strategic products.
During the fiscal year ended March 31, 2013, in graphic arts equipment, sales ofcomputer to plate (CTP) equipment increased, but print on demand (POD) equipment
sales declined, causing sales in graphic arts equipment to fall. Printed circuitboard (PCB)-related equipment sales increased, buoyed by rising sales of direct
imaging systems. As a result, net sales for the Media And Precision Technology
Company amounted to ¥46.3 billion, down 5.8% year on year, but operating
income remained in the black following the previous fiscal year, at ¥1.4 billion.

Q Operating Environment during the Year
A The going was tough in POD

Q Major Achievements during the Year
A We worked to boost our priceSales of POD equipment recoveredfrom the second half of the fiscal year
ended March 31, 2013, centered on North
America, but the European market was
sluggish due to prolonged financial
uncertainty throughout the term. As aresult, sales in this category were down
year on year. In CTP equipment, in
China a slowdown in economic growth
and the rise of local manufacturers
caused unit sales to decline in thatmarket. Vigorous demand for renewal
in the Japanese market, however,helped to push up overall sales of CTP
equipment, compared with theprevious year’s levels.
In PCB-related equipment, in linewith the growing prevalence of such
mobile devices as smartphones andtablets, sales increased for the Ledia 5
direct imaging system that we launchedin the previous fiscal year, leading to anincrease in sales and profits from theprevious fiscal year.

We continued efforts to increase ourearning power in the fiscal year ended
March 31, 2013, reducing fixed costs
and improving our variable cost ratios ineach department.
With regard to CTP equipment, wereleased a new product targeted at China
and other emerging markets. To boost
its price competitiveness, on this productwe conducted all processes in China,
from development to design andproduction. For POD equipment, at
our showrooms in Japan and overseas,
we sought to expand our business byproposing total solutions centered on
our digital printing equipment combining
pre- and post-printing processes.
On the sales front, we concentrated
on reinforcing our sales network, suchas by augmenting our distributors in
Europe.

equipment, but in the area of
PCB-related equipment,
performance for direct imaging
systems was favorable.

Katsuhiko
Aoki
President,
Media And Precision
Technology Company

Composition of Net Sales

competitiveness for CTP
equipment, and in POD equipment
we strove to link pre- andpost-printing processes.

Net Sales ¥46.3 billion(Fiscal Year Ended March 31, 2013)(Billions of yen)

Graphic arts equipment
PCB-related equipment

80.0
60.0

24.4%

8.0

40.0
20.0

57.0

4.2

6.8

5.6

6.1

38.4

40.4

43.5

40.1

0

2009 2010 2011 2012 2013
(Years ended March 31)

15

TOPICS
Showcasing Our Ability
to Respond to Various
Printing Needs at
drupa 2012

Q Outlook for the Operating Environment
and Major Initiatives in the Upcoming
Fiscal Year

A We will introduce strategic products
in each field, which should lead to
growth in market share.

from the second half of the fiscal year.
In PCB-related equipment, we will
launch the Ledia 5F (fine), our new direct
imaging system, and the FP-9000 automatic
final visual inspection system, responding
to the needs for higher levels of precision.

Q Medium- to Long-Term Strategies
A We will transform our businessWith regard to CTP equipment, weplan to further raise the productcompetitiveness by increasing further
the number of items for which we
conduct integrated production entirely
in China. We will also focus on CTP
equipment for flexo printing inpackaging market which is expected to
grow. In POD equipment, we plan tolaunch a color high-precision model ofour mainstay Truepress Jet520,
increasing the number of variations. In
addition, we will continue working tolink the pre- and post-printing processes,
striving to increase businesses by forging
stronger alliances with peripheral
equipment manufacturers.
As part of our new market cultivation
efforts, in the summer of 2013 we plan
to release new POD equipment forlabel printing. This is a strategic producton which we have involved in a crossfunctional team within the company fromthe initial stages of development. We areworking toward a global vertical startup

In order for us to continue to grow overthe medium to long term in the printing
business, which is a mature industry, ourbusiness model itself needs to evolve.
In the solutions business, forexample, we plan to revise our businessmodel from one of selling packaged
software to an approach involving
ongoing charges according to the use ofcloud-based application software.
Also, instead of offering support
services and selling consumables as
adjuncts to the equipment business wewill take a proactive approach toward
developing this as an independent businesswith a recurring income model. Basedon this, in April 2013 we established the
Solution Business Division controlling
solution and support departments. This
department will spearhead our efforts tocreate a new business model going forward.

Ledia 5 direct imaging system

Truepress Jet520ZZ POD equipment

We exhibited at drupa 2012 heldin Germany in May 2012, thelargest printing equipment
exhibition in the world. Dainippon
Screen products on display
included the Truepress Jet
L350UV, our inkjet printer forlabel printing, and the EQUIOS
integrated workflow, showcasing
our ability to respond to a diverse
range of printing needs.
In August 2012, we also
participated in the JPCA Show
2012 in Tokyo. At this PCB
industry exhibition, we attracted
attention for our inspection
technology for transparent
electrodes of touch panels.

model aiming at further growth.

Dainippon Screen booth at drupa 2012

Dainippon Screen booth at JPCA Show 2012

Truepress Jet L350UV POD equipment forlabel printing

16

Corporate GovernanceFostering Trust-Based Relationships with All Stakeholders
The Dainippon Screen Group strives to enhance its corporate governance structure on an ongoing basis, as part of theGroup’s efforts to foster trust-based relationships with all stakeholders. During the fiscal year ended March 31, 2013, weestablished the CSR Promotion Division and reinforced our risk management system.

Corporate Governance Structure
Supervising the Execution of Business by the Board of Directors
The Board of Directors is responsible for decisions andapproval regarding important matters and for supervising
the implementation of business operations. To foster a
rapid response to changes in the operating environment,
we shortened the term of office for directors to one year.
Furthermore, to augment the management auditing function, of
the nine directors we have designated three as outside directors.
Since April 1999, the Company has employed a
corporate officer system to speed decision-making byincreasing management efficiency and strengthening
operational functions. Furthermore, in April 2002 theGroup introduced an internal company system andestablished the Management Committee as the Group’s
highest operational decision-making body. The
Management Committee comprises the standing directors,
corporate officers, company presidents and generalmanagers of centers that handle R&D and business services.
In principle, the Management Committee meets twice amonth. Furthermore, the Company has established theConsolidated Management Committee which includes all
Management Committee members, as well as outside
directors and Group company presidents. This council
meets quarterly.
We also have structures in place to ensure fairness andtransparency in appointing directors and setting theircompensation. The Board of Directors selects director
candidates by considering their career history and specialization,
and appointments are made at annual shareholders’ meetings.
We employ a system in which director compensation is linked
to the Company’s operating performance. Outside specialists
propose compensation amounts, taking benchmarks into
account. After figures are agreed upon with the representative
directors, these amounts are submitted to the Compensation
Advisory Committee. If approved, they are submitted to theBoard of Directors for a decision.
The Board of Directors is responsible for the approvalof any transactions involving conflicts of interest forindividual directors.

Ensuring the Appropriate Execution of Business by the
Board of Corporate Auditors
The Company’s Board of Corporate Auditors comprises four
members, including two outside corporate auditors. Corporate
auditors conduct hearings of directors and corporate officers,
attend important management-related meetings and undertake
audits of organizations and Group companies.
Corporate auditors receive reports on the state ofmanagement, finance, compliance and risk management fromdirectors and corporate officers, as well as reports from theGroup Auditing Department—which takes charge of internal
audits and internal control evaluations—and the external
accounting auditor. The auditors confirm the appropriatenessof directors’ execution of business based on these reports.

Corporate Governance Organization
Shareholders’ Meeting
Board of Directors

Representative Director and Chairman (CEO)
Representative Director and President (COO)
Management Committee

Board ofCorporate Auditors

External Accounting
Auditor

Audit instructions

Group Auditing
Department

Audit Reports

Internal Audit
ReportingInstructions

Promotion ofInternal Control

17

CSR Promotion Division

Centers

Companies

Corporate

Group companies

Group companies

Group companies

Highlight

We established the CSR Promotion Division and reinforced
our risk management structure.

Establishing the CSR Promotion Division
The Group promotes CSR management, which
strives to foster trust-based relationships withstakeholders and targets increases in corporate value.
In December 2012, we launched the CSR
Promotion Division to promote the Group’s
overall CSR management efforts pertaining to theElectronic Industry Citizenship Coalition (EICC)
Code of Conduct, the international standard for
CSR in the electronics industry supply chain, andISO 26000, the international standard for social
responsibility. This division comprises the CSR
Promotion Department, which is in charge ofcompliance, risk management, internal control
systems, and business continuity management(BCM) and environmental (including energy),
health and safety (EHS) management; as well as the
Security Export Control Department.
We set up the CSR Promotion Division toincrease the efficiency and coherence ofCSR-related activities that in the past had beenhandled independently within departments,
thereby consolidating planning and promotional
functions. By linking departments in this way, we
aim to promote stronger CSR management
throughout the Group, including overseas.

deployment of risk countermeasures, thereby
boosting the efficiency of risk management activities
and fostering their development globally.
Each department and Group company will
identify risks in the categories of human rights,
compliance, labor, safety and the environment,
finance, security export controls, information
security and quality. They will then evaluate theserisks and consider and introduce countermeasures ina risk management PDCA cycle. The CSR Promotion
Division will summarize these evaluation results andcountermeasures and report those deemed
important to the Management Committee, thereby
promoting risk management throughout the Group.
By operating this effective risk management
structure, the Group expects to substantiallyreduce risks with the potential to affect management.
We believe this approach will raise the level ofcertainty of management planning and enhance
corporate value.

Reinforcing the Risk Management Structure
In April 2011, we formulated the Principles forDainippon Screen Group Risk Management Outline
to reduce risks with the potential to affect Groupmanagement. During the fiscal year ended March 31,
2012, we created Risk Management Operating Rules
as a basis for the Company and its Group companies
to conduct Group risk management under thisoutline. We designated the president as the personwith topmost responsibility for risk management
and appointed as “risk managers” executives incharge of each division and the presidents of 20
domestic Group companies and 17 overseas Group
companies. This structure was established to handle
risk management for the Group as a whole.
Going forward, the CSR Promotion Division
will support these risk managers in their promotionof risk management and encourage the lateral

Yukihiro
Kitamura
Division Head,CSR Promotion Division18

Corporate GovernanceInternal Control System
Fulfilling Our Corporate Social Responsibility
In line with our business philosophy of “Sharing the future,”“Human resource development” and “The pursuit oftechnology,” we consider it our corporate social responsibility
to forge relationships of trust with our stakeholders, including
shareholders, customers, business partners, investors,
employees and local communities. We also comply with legal
statutes and societal norms in Japan and other countries, andconduct business in an increasingly moral manner.
Based on this fundamental stance, we have systems inplace to ensure the appropriateness of operations, and theGroup Auditing Department evaluates these internal
structures and their status of operations. We haveformulated the Dainippon Screen Group Internal Control
Design Principles for Financial Reporting, and establishedsystems to ensure that financial reports are trustworthy.

Compliance
Promoting Compliance throughout the Group,
Including Overseas
We conduct compliance in accordance with the Dainippon
Screen Group Code of Ethics. This code includes our Charterof Ethics, which lays out the universal principles by which we
expect all executives and employees of the Group to comply
with legal statutes and abide by social norms, as well as a Codeof Conduct and Implementation Guidelines, spelling out
specifically how to apply and implement these ethics ineveryday operations. We have compiled the Business Ethics
Handbook to ensure that all executives and employees arethoroughly aware of this code of ethics and apply it in theireveryday operations. The handbook is distributed to all
executives and employees throughout the Group.
In the past, Compliance Committees have formed thecore of the Company’s structure for promoting compliance. In
December 2012, however, we set up the new CSR Promotion
Division to promote compliance as part of our CSR activities.
At each overseas Group company, we appoint complianceofficers to work with local attorneys conversant in local laws
to determine the state of compliance, clarify any issues andimplement improvement measures.
The Group Auditing Department conducts internal
audits on the status of legal compliance and adherence tocorporate ethics. During the fiscal year ended March 31, 2013,
this department conducted internal audits at 27 organizations,
including 11 overseas Group companies. The department also
conducts follow-up audits each year to confirm that issues
identified in the previous year’s audits have been resolved.
We also formed a new internal audit team in the fiscal
year ended March 31, 2013, aimed at preventing fraudulent

activity by executives and employees.
We have set up the Corporate Ethics Help Line for all
executives and employees of the domestic Group, and ourLegal Division works to ensure thorough awareness throughcompliance training. We have also set up a help line tofacilitate reporting by all employees of Group companies in
Europe, and two Group companies in the United States have
set up help lines. Preparations are currently underway to set
up similar systems at other Group companies in the UnitedStates, as well as Group companies in China.
We conduct training aimed at raising complianceawareness among executives and all employees in Japan andoverseas. In the fiscal year ended March 31, 2013, we held
lectures on customer information management at eachoverseas Group company. We also held lectures in the
United States on overall compliance.

Conducting Thorough Management as a Security Export
Control and Authorized Economic Operator (AEO)
Within the CSR Promotion Division, the Security Export
Control Department handles CSR promotion on the key
issue of security export control, ensuring thoroughcompliance with legislation on exporting products andparts. This department obtains updates on the Foreign
Exchange and Foreign Trade Act and other export
control-related legislation, making this information
available to executives and employees involved inexport-related business. Furthermore, the department
promotes and supports export control processes definedby internal regulations, such as product classification andtransaction screening.
In May 2011, the Company was recognized by the
Director of Osaka Customs as an “authorized exporter”
under the Authorized Economic Operator (AEO) programfor exporters that exhibit superior compliance. During the
fiscal year ended March 31, 2013, the Security Export
Control Department and the Finance Division’s Export And
Import Operations Support Department conducted joint
audits and general training to sustain AEO activities.

Preventing Anti-Competitive Behavior and Corruption
To prevent collusion, private monopoly and other behavior
that runs counter to anti-monopoly and other anti-competition
legislation, the Group’s code of ethics espouses fairtransactions, and the Group provides training on
anti-competition legislation to ensure awareness among
executives and employees. We have also reinforced thesupervisory function of outside directors and are working toprevent anti-competitive behavior and corruption.
During the fiscal year ended March 31, 2013, noviolations constituting anti-competitive behavior or
anti-trust or monopolistic practices were observed.

Status of SRI Index Involvement
Companies are included in socially responsible investing (SRI) indices not only for their financial
performance but also in recognition of their CSR activities. The Company has been included in
the FTSE4Good Index (a joint venture between the Financial Times and the London Stock
Exchange) since its launch in 2004.

19

WEB

Business Continuity Management (BCM)
Formulation of Incident Management Plans (IMPs) at
Seven Principal Sites
The Company considers BCM that minimizes potential
damage from emergency situations such as natural disasters
and ensuring the continuation and early resumption ofbusiness operations a key element of CSR. In May 2012, weformulated the Business Continuity Management Regulation,
which defines BCM promotion, management and execution
systems. We are working to strengthen our BCM system on
the basis of this regulation. Under this guideline, thepresident forms a Screen Disaster Headquarter in the eventof a major calamity—such as a large-scale earthquake or
new outbreak of pandemic influenza.
During the fiscal year, we completed IMPs at ourseven principal sites, and completed the formulation ofbusiness continuity plans (BCPs) at all operatingcompanies, the Research & Development Center and two
overseas Group companies.
In the fiscal year ending March 31, 2014, we will
introduce a Safety Confirmation Support System forexecutives and employees throughout the domestic Group.
This system will be constructed for initial response toquickly confirm safety in the event an earthquake measuring
5-upper or greater on the seismic intensity scale occurs.
During the year, we will also reinforce our BCM system byincorporating it into our EHS management system.

EHS management
Green Value (GV) 21 Phase II
In 2009, the Group formulated Green Value (GV) 21, its
medium-term strategy on the three themes of environmental
conservation, occupational safety and health management. In
April 2011, we integrated our environmental management
system, which is based on ISO 14001; our energy
management system, which is compliant with ISO 50001;
and our occupational health and safety management system,compliant with OHSAS 18001, and we have continued to
conduct our management systems on this basis since thattime. We established a structure that we call Integrated EHS
Management System, for “environment,” “health” and“safety.” Under this system, we are working to manage theoverarching risks the Group faces, including climate change,
increasingly stringent international environmental regulations
and growing demand for products having low environmental
impact, rising occupational safety risk in line with larger
products, and more complex employee health management
attendant to more diverse forms of employment.
In the fiscal year ended March 31, 2012, we launched
GV21, Phase II (lasting through the fiscal year ending March
31, 2014), in line with our three-year medium-term businessplan, NextStage70. We have also formulated an Environmental,
Health, Safety and Energy Policy for the entire Group anddecided on four long-term commitments. We have defined
long-term targets to be met by the fiscal year ending March 31,
2016, and are working toward medium-term targets to be metby the fiscal year ending March 31, 2014. (Please refer to “CSR
Targets and Performance” on pages 25–26.)

CSR Management/ISO certification status

The domestic Group has obtained third-party
certification for its integrated EHS management system
under ISO 14001, OHSAS 18001 and ISO 50001.
Our Long-Term Commitment to Green Value (GV) Phase II
Green Products andTechnologies

Develop technologies and products that
help reduce environmental impact.
•Reduce by half the environmental impact of our products at customer sites by thefiscal year ending March 31, 2016 (compared with levels for the fiscal year ended
March 31, 2010).
•By the end of the fiscal year ending March 31, 2016, eliminate the use in our
products of prohibited substances (employ alternatives).

Promote workplace
health and safety.
• Eliminate all incidents
resulting in four or moredays of lost work.

Green Factories andOfficesN

Safety and Health
W

E

Preserve the environmentand conserve energy
at factories and offices.

S• By the end of the fiscal year ending
March 31, 2016, reduce theamount of energy consumed atbusiness sites by 6% (comparedwith levels for the fiscal year ended
March 31, 2010, on a unit basis).

CSR Management

Reinforce our environmental safety system.
•Establish a global EHS audit system.
•Incorporate business continuity into EHS management.

Environmental, Health, Safety and Energy Policy
1. We will contribute to the formation of a new environmentallyconscious society through our operations.
Specifically, the Dainippon Screen Group aims to achieve the objectives
outlined below via its products, actions and services.
a. Develop technologies and products that help reduce environmental
impact.
b. Promote workplace health and safety.
c. Preserve the environment and conserve energy at our factories andoffices.
d. Reinforce our environmental safety system.
2. We will conform to applicable laws and regulations, and meetstakeholder expectations.
We will identify hazards as well as environmental and energy-related
aspects of our business.
We will comply with laws, regulations and the wishes of our
stakeholders.
Furthermore, we will set voluntary standards and strive to prevent
injury, illnesses and environmental pollution.
3. We will establish, maintain and periodically review an EHS
management system.
We will also prepare for crises by implementing a business
continuity management process in line with our business
continuity policy.
4. We will set specific targets.
We will set targets that are consistent with business characteristics andorganizational roles, and strive for continual improvement in EHS
performance, including energy.
We will also ensure that we use information and resources
employed to reach the targets we have set.
5. We will conduct training and publicity activities to communicate
to all employees activities related to this policy.
6. We will make this policy available to the public, as well as
within the Company.
April 1, 2013

Shin Minamishima
EHS Management Supervisor
Director
Dainippon Screen Mfg. Co., Ltd.

20

Corporate Governance

Creating a Global System for EHS Internal Audits
We conducted EHS internal audits at 34 locations in Japan
during the fiscal year ended March 31, 2013. Despite someminor nonconformities and observations, we found no
examples of significant non-compliance. We are now
preparing to extend EHS internal audits to overseas Group
companies in our efforts to roll out the EHS system globally.
During the fiscal year ended March 31, 2013, we
prepared global audit standards and checklists concentratingon compliance in the areas of the environment andoccupational health and safety. We conducted a global audit
test on one overseas Group company.

EHS Training System
We are creating an integrated EHS education and training
system as part of our efforts to conduct integrated EHS
management throughout the Group. We have set up a
Basic Course for employees, supervisors and managers;
an EHS Management Course for people in charge of EHS
management; and courses specific to certain job types
and organizations.
In the fiscal year ended March 31, 2013, the EHS
Management Course contained risk assessment
implementation methods and we held the Assessor Training
Course, containing related regulations. Some 112 people atour six principal sites attended this training. We also
conducted training for internal EHS auditors in the Tokyo
area and appointed five new auditors, raising our total to
310 auditors.
Furthermore, we are in the process of creating training
materials about EHS-related legislation and conducting
training on an ongoing basis.

Quality Management
Striving to Enhance Customer Satisfaction Based on ISO 9001
The Group recognizes boosting customer satisfaction andearning their trust as topmost priorities. As part of thisendeavor, we are acquiring ISO 9001 international quality
management system certification.
Going forward, in addition to creating a quality
management system based on ISO 9001 we will strive toenhance customer satisfaction with our products andservices in line with the quality policies established by eachinternal company.
Quality Policies (Outline)
Semiconductor Equipment Company
We are pursuing a level of quality that contributes to our customers’
businesses through the provision of products and services that meetcustomer needs.
FPD Equipment Company
We strive to gain a clear understanding of customer demands, and workon ongoing improvements to provide products that satisfy customers.
Media And Precision Technology Company
We provide products and solutions that satisfy customers.

21

WEB

ISO Certification Status/CSR Procurement

Supply Chain Management
Complying with the EICC Code of Conduct
The Company strives to meet the requirements outlined in
the EICC Code of Conduct, which is a standard for CSR
among the electronics industry supply chain. We areresponding steadily to the issue of conflict minerals*1.
In the past, the Company endeavored to conduct fairprocurement transactions based on basic policies. In April
2012, we formulated CSR Procurement Standards to workwith our suppliers in promoting CSR initiatives andcommenced CSR procurement on that basis.
In the fiscal year ended March 31, 2013, we surveyed
the compliance of 219 companies with our CSR
Procurement Standards. Suppliers that had low
evaluations were requested to make improvements.
Meanwhile, in May 2013 we formulated the new SCREEN
Supplier Code of Conduct, which consolidates the former
Procurement Standards and CSR Procurement Standards
and includes our policy regarding conflict minerals.

*1 Conflict minerals are minerals (tin, tantalum, tungsten and gold) determined
to have originated in politically unstable parts of Central Africa. The
excavation and sale of these minerals has become an international issue
because of their role in funding armed insurgency groups in the Democratic
Republic of the Congo and surrounding region.

Information Security
Promoting the Standardization of Security Levels
throughout the GroupThe Company has established Rules for the Management ofSecuring Confidential Information and Trade Secrets, which
cover the handling of confidential information held by theCompany and Information Security Management
Regulations, for information systems managed by theCompany. Group companies have also establishedregulations with similar content.
To manage confidential information, we have prepared
English- and Chinese-language versions of our SecuringConfidential Information and Trade Secrets Handbook
and distributed it to overseas Group companies.
Employee training focuses during the fiscal year
ended March 31, 2013, included lectures and e-learning
conducted for employees at Dainippon Screen and its
domestic and overseas Group companies in relation to
the management of confidential information.
INITOUT Japan Co., Ltd., MT Service Japan East Co.,
Ltd. and MT Service Japan West Co., Ltd.—have acquired
certification for information security management under
ISO/IEC 27001.
To ensure the consistency of security levels throughout
the Group, in the fiscal year ended March 31, 2013, we
introduced a network-based system to manage information
centrally. This system is designed to prevent information
leaks and security accidents from occurring and respondquickly to stop damage from spreading. Going forward,
we plan to roll out the system at Group companies as well.

Disclosure
Providing Accurate, Timely and Easily Understandable
Disclosure
Our basic policy on investor relations (IR) involves making
the utmost effort to reflect feedback from our shareholders
and investors in Company management while
communicating our management vision, status ofoperations and financial content in a precise, timely andeasy-to-understand fashion, as well as achieving sustained
increases in our corporate value.
In the fiscal year ended March 31, 2013, we expanded
our dialogue-based IR activities by increasing from six to
10 our number of presentations to individual investors andthe personnel at securities firms in charge of individual
investors. We also took advantage of drupa (the leadinginternational trade fair for the print and media industry),
which is held in Germany once every four years, to invite
securities analysts and domestic institutional investors to
drupa and took them on a tour of a semiconductor
research institution in Belgium (the Interuniversity
Microelectronics Centre, IMEC). The purpose of the tour
was to deepen participants’ understanding of the positionof the Company and its products in the global printing
equipment market, as well as our cooperative relationshipwith IMEC. As in previous years, we continued to holdpresentations and group meetings for domestic
institutional investors. As part of our overseas IR activities,
we visited Canada for the first time, in addition to otherparts of North America and Europe.
We continue to provide disclosure to shareholders andinvestors through our annual report, investors’ guide and ourquarterly Japanese-language shareholder newsletter, SCREEN
NOW. We use these tools to communicate messages fromtop management, quarterly performance reports and updates
Dialogue-Based IR Activities in the Fiscal Year Ended
March 31, 2013
•Earnings presentations: Four•Overseas IR activities: Five•Institutional investor events, domestic conferences: Nine
•Plant tours for Institutional investors: five•Corporate presentations for individual investors: 10•Meetings with institutional investors/analysts—approximately 450

Corporate presentation for individual investors

on our technologies and operations. We solicit shareholders’comments through enclosed questionnaires. Our IR website
contains IR materials, news and schedules and provides
answers to frequently asked questions.

Aiming at Open Annual Shareholders’ Meetings
In its aim to hold open annual shareholders’ meetings, theCompany avoids scheduling the meeting on days whenother companies’ meetings tend to be concentrated. Since
2007, we have enabled shareholders to exercise their voting
rights over the Internet. We also create easily understood
charts and other materials to report on business and explain
items for resolution, which are displayed on large video
monitors throughout the venue.
At the conclusion of the annual shareholders’ meeting,
we hold a roundtable discussion attended by the chairman,
the president and executives to foster communication andhelp shareholders understand us better.

Consideration for Local Communities
Managing the Impact of Our Business Activities on Local
Communities
The Group conducts evaluations of internal controls
targeting the Company’s departments and Group companies.
These evaluations cover the environmental and social impactof our business activities on local communities.
With regard to impact on the environment, we
conduct employee training, introduce facility
countermeasures and strive to manage our operations
appropriately to prevent leaks containing hazardous andother substances into groundwater under our EHS
management system.
In the fiscal year ended March 31, 2013, we recorded
no incidents in which our operations had environmental orsocial impacts on local communities. There were also no
economic effects resulting from the relocation of sites orchanges in their businesses.

Continuing to Conduct Community Contribution Activities,
Including Efforts to Cultivate the Next Generation
Contributing to industrial development through innovation
and returning profits to society are fundamental to theGroup’s efforts to forge relationships of trust with thecommunity. In this manner, we undertake corporate social
initiatives in which each employee can participate. At eachof our sites, we strive to develop the next generation byoffering site tours to elementary school through touniversity students. We also conduct activities to beautify
the areas surrounding our business sites. Many ongoing
activities such as these are conducted every year.
One such activity is the Kyoto Manufacturing
Workshop courses, with which we have cooperated since thefiscal year ended March 31, 2011. In the fiscal year ended
March 31, 2013, we hosted a total of 297 students from sevenmunicipal elementary schools in Kyoto, offering them acourse entitled “Printing Technology Changing the World.”
The course involved an easy-to-understand introduction of
the history of printing technology, and we used a puzzle of aphoto that had been separated into four colors to help themlearn how printing works.
22

Corporate GovernanceDuring the year, some 63 elementary school
students visited our WHITE CANVAS MON-NAKA
showroom in Tokyo’s Monzennaka-cho. In addition toviewing the showroom, they learned how calendars andposters are printed.
Principal Community Contribution Activities in
the Fiscal Year Ended March 31, 2013
Developing thenext generationof talented
employees• Cooperated with Kyoto Manufacturing Workshop courses (fourcourses)• Held lecture on the “Practical CSR Theory” at Faculty of Policy
Science Ryukoku University.
• Work experience tours for elementary school through to university
students (Rakusai, Kumiyama, Hikone and Monzennakacho sites)• Cooperation with local festivals (Hikone Site, Kumiyama Site)
Commitment tolocal communities • Cooperation with “Parent and Child PET Bottle Rocket Contest”
and cultural(Taga Site)inheritanceInternational
exchange• Participated in TABLE FOR TWO, contributing to meals for children
in developing countries at ¥20 per meal (Head Office and Hikone
Site cafeteria)• Participated in collection of PET bottle caps (eco-cap movement)(sites in Japan)• Participated in the Stanford 5-Kilometer Run, which donates entry
fees to Habitat for Humanity, an NGO that supports housing
construction (Silicon Light Machines Corporation, our Group
company in the United States)

Social welfare• Provided employment support for people with disabilities throughsnack sales by a social welfare corporation (Hikone Site cafeteria)• Volunteer activity using horse riding as rehabilitation for people
with disabilities (Dainippon Screen (Korea) Co., Ltd., our Group
company in South Korea)• Support for children from low-income families (book donations,making bread and kimchi, video viewing and other activities)(Dainippon Screen (Korea) Co., Ltd., our Group company in South
Korea)

Sports andculture• Posted signboard for the Kyoto Sanga F.C. Field• Lending pitch to local boys’ soccer team (Hikone Site)

Environmental
conservation• Held cleanup along a river in Takamiya-cho, Hikone (Ota River)(Hikone Site)• Monthly participation in Ohmi Eco-Foster (Hikone Site)• Conducted beautification activities near our sites(headquarters
and other sites)• Participated in Earth Aware (Dainippon Screen (Australia) Pty. Ltd.,
our Group company in Australia)“Printing Technology Changing the World” course underway

23

Public Policy and Relations with
Administrative Institutions and Political Bodies
Working toward Sector Growth and Regional Industrial
Development
The Company is a member of the Semiconductor
Equipment Association of Japan (SEAJ) and otherorganizations that strive to make policy recommendations
that support the growth of Japan’s semiconductor
production equipment, FPD production equipment andprinting equipment industries. The Chairman also serves as
senior adviser of the Kyoto Industrial Support Organization
21, and we participate in other organizations aiming topromote corporate and industrial development in Kyoto,where our headquarters is located.
We do not make donations or contributions topolitical parties, politicians or related institutions. During
the fiscal year ended March 31, 2013, we received
government subsidies and other financial support totaling¥191 million.

Respect for Human Rights
Specifying Respect for Human Rights in Our Charter of
Ethics and Striving to Create a Workplace Environment
Free of Human Rights Violation
The Group’s Charter of Ethics vows respect for thefundamental human rights of each person and repudiates
discriminatory or disadvantageous treatment of any kind
within the Company based on position, job type, age,gender, place of birth, ancestry, nationality, race, disability,
religion, or marital status.
To prevent power, sexual and other types ofharassment in the workplace, we hold lectures about power
harassment for all executives and employees of the domestic
Group, including temporary workers. In the fiscal year
ended March 31, 2013, more than 90% of these people
attended the lectures. We have set up the Corporate Ethics
Help Line to facilitate reporting of and consultation
regarding harassment or other human rights abuses, as wellas unfair or illegal business practices. (Refer to “Compliance”
on page 19.)

Director(As of June 26, 2013)

Akira Ishida

Masahiro Hashimoto

Osamu Ryonai

Eiji Kakiuchi

Representative Director
Chairman
Chief Executive Officer (CEO)

Representative Director
President
Chief Operating Officer (COO)

Senior Managing Director
Chief Financial Officer (CFO)
Chief Officer of CSR Promotion,
Legal & I.P., and Group Auditor

Director
Chief Officer of PR & IR,
GPS, and Imaging & Solutions

Shin Minamishima

Katsutoshi Oki

Yoshio Tateisi

Shosaku Murayama

Shigeru Saito

Director
General Manager of Management
Operational Division
General Manager of Business
Service Center

Director
Deputy General Manager ofBusiness Service Center

Director
Honorary Chairman,
OMRON Corporation

Director
President & CEO,iPS Academia Japan, Inc.

Director
President and CEO,TOSE CO., LTD.

Tatsuo Miyawaki

Kazuya Noguri

Mikio Mori

Tsutomu Tsutsumi

Senior Corporate Auditor

Corporate Auditor

Corporate Auditor
President and Representative
Director, Shigagin JCB Co., Ltd.

Corporate Auditor
President and Representative
Director, Kyoyu Shoji Co., Ltd.

Corporate Auditor

Substitute Corporate Auditor: Katsuyuki Toyobe

Managing Director of The Bank of Kyoto, Ltd.

Corporate Officer
Senior Corporate Executive Officer Tadahiro Suhara

President of Semiconductor Equipment Company

Corporate Executive Officer

Hayato Hayashi

President of FPD Equipment Company

Corporate Officer (Senior)

Soichi Nadahara

Chief Technology Officer (CTO)
General Manager of Research & Development Center
Deputy General Manager of Research & Development Center
President of Media And Precision Technology Company
Vice President of Semiconductor Equipment Company
Deputy Chief Financial Officer
Deputy General Manager of Business Service Center

Toshio Hiroe
Katsuhiko Aoki
Hirofumi Uchida
Yoichi Kondo

Corporate Officer

Katsumi Shimaji
Hitoshi Yamamoto
Kimito Ando
Masato Goto
Hirotaka Wada
Yoshinori Tsuruya

General Manager of Manufacturing Management Division
Vice President of Media And Precision Technology Company
Vice President of Semiconductor Equipment Company
Vice President of Semiconductor Equipment Company
General Manager of Legal & I.P. Center
Vice President of Media And Precision Technology Company

24

CSR Targets and Performance

Fiscal Year Ended March 31, 2013
Key Measure

Department

ResultEvaluation Related Page

Ensure that Green Products (environmentallyfriendly designated products) account for at least
65% of sales.

Percentage of sales of 93 Green Products(environmentally friendly designated products):
83%.

Page 27

Reduce environmental impact of the products at
customer sites according to the roadmap.

Conducted environmental impact reduction
measures in accordance with each internal
company’s roadmap. Environmental impact
reduction measures included consuming less power,
utilities, VOCs and hazardous substances.

Page 27

Substitute the substance in three years after it isdesignated as “Substances whose use is limited”.
(Eliminate prohibited substances by Mar. 31, 2016)

Continued working to eliminate RoHS prohibited
substances and find alternatives to substances
whose use is limited. Completed companywide
deployment of REACH-compliance chemical
substance survey system.

Page 33

Development

Develop environmental technologies by 160% ormore compared to fiscal year ended Mar. 31, 2011.

Developed of environmental technologies 160% oflevel in year ended Mar. 31, 2011.

—

Logistics

Reduce greenhouse gases (CO2) by 18% or morecompared to fiscal year ended Mar. 31, 2010, perunit of production in domestic product transporting.

CO2 emissions in transporting products per unit of was
0.53 metric ton of CO2/¥100 million, decreased 24%
compared to the fiscal year ended Mar. 31, 2010.

Page 31

Product

Reduce residual risks in product risk assessments
according to the roadmap.

Reduced residual risks in each internal company
according to the roadmap.

—

Reduce the number of incidents to one or lessresulting in four or more days of lost work.

One incident resulting in more than four or moredays of lost work.

CSR Data Sheets,
page 4

Reduce the number of accidents or incidents at
customers to five or less.

Nine accidents and incidents at customer sites.

CSR Data Sheets,
page 4

Reduce the number of traffic accidents resulting ininjury to five or less.

Traffic accidents resulting in injury numbered 14.

CSR Data Sheets,
page 4

Reduce emissions of greenhouse gases (CO2)attributable to energy per unit of production andarea use by 3% or more compared to the fiscal year
ended Mar. 31, 2010.

CO2 emissions per unit of production was 27.0
metric ton of CO2/¥100 million, increased 16%
compared to the fiscal year ended Mar. 31, 2010.

Page 31Reduce energy cost per unit of production by 3% ormore compared to the baseline.*2

Energy cost per unit of production amounted to¥1.21 million/¥100 million. Up 33% compared tothe baseline.

—

Reduce waste emissions per unit of production by 3%compared to the fiscal year ended Mar. 31, 2010.

Waste emissions per unit of production was 1.06
metric ton of CO2/¥100 million, up 47% comparedto the fiscal year ended Mar. 31, 2010.

Page 32

Increase material recycling ratio of waste emissions
to 85% or more.

Material recycling ratio of waste outside thecompany was 85%.

Page 32

Determine current issues in order to increase thepercentage reduction in water use.

Found that the Hikone Site accounted for 90% ormore of water used by the Company, and made thisa site of particular emphasis.

Page 32

Entireorganization

Implement social contribution initiatives targetingthe environment.

Conducted social contribution activities at each site
including the cleaning of surrounding areas andrivers, participating in local activities andcooperation with the schools.

Page 22 & 32

BSC*1

Conduct stratified training and training for workers
dispatched overseas.

Conducted training for new employees, promoted
employees and mid-career hires. Prepared training
materials based on education and training chart.

Page 21

Entireorganization

Continue operations of integrated EHS management.

Continued to operate integrated EHS management
systems.

Page 20

Product
Developtechnologies
and productsthat help
reduceenvironmental
impactPromoteworkplacehealth andsafetyTargetEntireorganization

Entireorganization

Preserve theenvironmentand conserve
energy atfactories andoffices
BSC*1

Reinforce ourenvironmental
safety system*1 Business Service Center
average from fiscal year ended March 31, 2008,*2 Yearly
to fiscal year ended March 31, 2010.
25

Evaluation standard: Achieved: Partially achieved (50% or more): Not achieved (less than 50%)

Fiscal Year Ending March 31, 2014
Key Measure

Department

TargetEnsure that Green Products (environmentally friendly designated products) account for at least 70% of sales.

Product
Developtechnologies
and productsthat help
reduceenvironmental
impactPromoteworkplacehealth andsafetyAchieve the roadmap. Reduce energy consumption (including utilities) on performance basis by 30% or more compared with fiscal year
ended Mar. 31, 2010.

Substitute the substance in three years after it is designated as “Substances whose use is limited”. (Eliminate prohibited substances by
Mar. 31, 2016)

Development

Develop environmental technologies by 200% or more compared to fiscal year ended Mar. 31, 2011.

Logistics

Reduce greenhouse gases (CO2) by 20% or more compared to fiscal year ended Mar. 31, 2010, per unit of production in domestic
product transporting.

Product

Reduce residual risks in product risk assessments by half compared to fiscal year ended Mar. 31, 2011.

Reduce the number of incidents to zero resulting in four or more days of lost work.
Entireorganization

Reduce the number of accidents or incidents at customers to five or less.

Reduce the number of traffic accidents resulting in injury to five or less.

Reduce emissions of greenhouse gases (CO2) attributable to energy per unit of production and area use by 4% or more compared to thefiscal year ended Mar. 31, 2010.

Entireorganization

Preserve theenvironmentand conserve
energy atfactories andoffices

Reduce energy cost per unit of production by 5% or more compared to the baseline.*2

Reduce waste emissions per unit of production by 5% compared to the fiscal year ended Mar. 31, 2010.

Increase material recycling ratio of waste emissions to 90% or more.
BSC*1
Establish target for increasing the percentage reduction in water use based on results for the year ending Mar. 31, 2013.

Entireorganization

Implement social contribution initiatives targeting the environment.

BSC*1

Conduct stratified training and training for workers dispatched overseas.

Entireorganization

Continue operation of integrated EHS management.

Reinforce ourenvironmental
safety system

Note: Targets for the fiscal year ending March 31, 2015, or later are currently being formulated.

26

CSR Topics

are working to develop and popularize green products,
1 We
which feature reduced use of energy and chemicals.

TopicsPromoting the Development andPopularization of Green Products
The Dainippon Screen Group promotes
the development of products that excel
in areas such as energy savings,
resource conservation, degree ofdisassembly and reuse of resources.
Products that meet our proprietary
standards are certified as “green
products.” We encourage the take-up ofthese products through methods suchas introducing them on our website.
More than 90% of the CO2
emitted during the lifecycles of oursemiconductor production equipment isgenerated during customer use. Amid
calls by customers to reduce energy use

by manufacturing equipment at theirplants, during the fiscal year ended
March 31, 2011, we revised theassessment criteria that we use whencertifying products. Using the SEMI S23
standard*1, an energy conservation
guide for semiconductor production
equipment, as a standard, we calculate
the amounts of exhaust, ultra purewater, nitrogen and other utilities used,convert these figures to their electricity
equivalent and evaluate the results. Thisapproach has enabled us to better assessoverall energy consumption. The checksheet used for this assessment contains
a function that automatically creates a
product’s eco profile (a Dainippon

Green Product Certification Standards
Requirements:
Evaluated according to five stages, at levels 1–5 for energy saving,
resource conservation, degree of disassembly, reuse of resources,
environmental protection and safety, and information availability
Certification standards:
Must be level 2 or higher for all requirements (same as for previous
models). Also, one of the three standards below must be satisfied.
Standard 1: Average of requirements level 3 or above
Standard 2: A level 4 or above for energy saving, resource conservation orenvironmental protection and safety
Standard 3: Achieves either a reduction of 25% in energy; achieves asavings of 25% in materials consumed during use; or has agreen procurement ratio of 100%
Note: Reductions in energy and materials consumed during use are basedon design performance.

27

Screen standard). Simply entering thefigures into the sheet automaticallygenerates graphs showing how a
product compares with previous models
in terms of its green procurement ratio,energy use, material use, materials
consumed, volatile organic compounds(VOCs) and other aspects. As a result,
we can compare the environmental
performance of products at a glance.

*1 Guide for conservation of energy, utilities andmaterials used by semiconductor manufacturing
equipment. The basic methodology of SEMI S23
is to convert to an energy equivalent (kWh) theamount of electricity, ultra pure water, exhaustand other inputs required by a product over thecourse of a year and to then express the result as
total energy use. Utilities are prioritized toreduce the total amount of energy used.

Green Products as a Percentage of Sales and the Number of
Designated Products(Units)

80

72

160

83

(%)

80

60
45
120

80

30

54

40

63

50

76

85

65
93

2012

2013

60

70
(Target)

40

0

40

0

2009

2010

2011

2014
(Years ended March 31)

Number of designated products
Percentage of sales (actual)

Percentage of sales (target)Ledia 5 Standard Product Comparison
Ledia 5

Standard productInstallation space(footprint)

Electricity consumed
during processing

down 56%

down 26%(based on design performance)

Cubic volume

Energy saving

down 18%
Massdown 46%

5

Resource
conservation(based on
design performance)

4
3
2
1
0

Environmental protection and safety

Use of LEDs as an
imaging light source

Information availability

Including of environmental
information in product manual
Degree of disassembly

Reuse of resources

Setting Targets for Green Products
as a Percentage of Total Sales
The Group has set numerical targets
for green products as a percentage of
total sales, and we strive to meet theselevels. During the fiscal year ended
March 31, 2013, we greatly exceeded
our 65% target, with green products
accounting for 83% of total sales. By
company, the Semiconductor
Equipment Company achieved a rateof 84%, the FPD Equipment Company
65% and the Media And Precision
Technology Company 96%.

The Ledia 5, Which Uses LED Light
Sources in Place of Mercury Lamps
The rapid proliferation ofsmartphones and tablet devices inrecent years has called for further
improvements in the productivity ofprinted circuit board manufacturing
facilities. To meet these needs andrespond to the environmental
considerations of our customers, inJanuary 2012 the Media And
Precision Technology Company
launched the Ledia 5 direct imaging
system for printed circuit boards.
In place of conventional mercury
lamps, this product employs aworld-first high-intensity ultraviolet
LED exposure head capable of exposing
multiwavelength light, as well as a
newly designed autoloader. The result isa unit that delivers 1.6 times the
productivity of conventional products.
Because it does not use mercury
lamps, the Ledia 5 clears increasingly
stringent industry standards on the

Ledia 5use of such light sources. Aiming toprevent environmental pollution anddamage to health, a United Nations
treaty on mercury is set for adoption
in the second half of 2013, and inprinciple the production, import,
export and disposal of products using
mercury are likely to be prohibited
after 2020.

Energy Consumption Down 56%
Compared with Conventional
Products, with Eight Times the Light
Source Life
By using LEDs—which reduce
electricity consumption and offer longlife—we have substantially lowered
the electricity consumption of the lightsource unit, decreasing the amount ofelectricity required for imaging one
side of a printed circuit board by 56%
compared with conventional
equipment. At the same time, the lifeof the light source is increased
eightfold, thereby contributing tolower running costs. Furthermore,
the use of LEDs means that the timeand hassle involved in applying todispose of mercury-containing waste
can be avoided.
Going forward, the Group aims
to continue contributing toenvironmental preservation throughthe development and popularizationof green products such as these.

Stakeholder Comment

Mr. Karel
TavernierManaging Director,
Ucamco

The Ledia 5 is garnering
industry attention in Europe,
which is proactive in the areasof energy conservation and the
management of chemical
substances.
Ucamco develops and sells CAD/CAM
software to companies that handle
printed circuit boards, as well as being
involved in the sale of manufacturing
equipment. One year ago, we beganselling Dainippon Screen’s Ledia 5.
European countries, particularly
Germany, are sensitive to the issues ofenergy savings and chemical waste.
The Ledia 5, which uses an LED
light source, earns high marks for its
dramatic reduction in energy use
compared with conventional lightsources, as well as lasers. The Ledia 5
is also the first direct imaging system in
the industry to expose solder masks*1
effectively, and it is attracting industry
attention for this fact, as well as for its
improved yields and reduction inchemical waste.
We look forward to maintaining along cooperative relationship with
Dainippon Screen going forward.
layers on the surfaces of printed circuit*1 Insulation
boards to protect circuit patterns

28

CSR Topics

People Completing Safety Education(Number)

250

200

Percentage
completion

up 44%
173
14

150

120
100

50

94

15
73

65
0

32

2012

2013
(Years ended March 31)

Dainippon Screen
Partner companies

Group companies

Experiential safety education

are conducting safety education for employees of Group and2 We
partner companies, as well as employees of Dainippon Screen.

TopicsAiming to Promote Workplace Healthand Safety
One of the Company’s most importantpriorities is to “promote workplace
health and safety.” We have createdan occupational health and safety
management system that is compliant
with OHSAS 18001 for all domestic
Group companies, and initiatives
include risk assessments, advance
health and safety review processes,
inspections of heavy load operations
and training of operators andsupervisors.
Each internal company also
conducts safety education and strives toenhance workplace health and safety.

Promoting Safety Education at the
Global Training Center
For example, at the Global Training
Center—an integrated training facility
that the Semiconductor Equipment
Company set up at the Yasu Site in2008—we conduct safety training for
employees of domestic and overseas
Group companies, as well for theCompany’s employees. The center
supports employee efforts to obtain
qualifications for work in high places,
electrical work, industrial robots,
piping and the handling of chemicalsolutions, among others, mainly
29

targeting people involved in the
installation, assembly, start-up andrepair of semiconductor equipment.
The center also provides training
recommended by the Semiconductor
Equipment Association of Japan(SEAJ) on fundamental knowledge
and techniques for safe work inside
clean rooms.
In addition to training via
classroom lectures, we conduct
experiential safety education as practicaltraining. This helps employees develop
their ability to anticipate danger,
preventing workplace accidents.
In the past, we had provided thistraining to field service engineers at
the Company, as well as domestic andoverseas Group companies. In thefiscal year ended March 31, 2013, we
also opened the training to employeesof partner companies outside theGroup, as much of our work has beenrelegated to these companies in recent
years. During the fiscal year ended
March 31, 2013, we also began
incorporating experiential safety
education into safety training for
newly appointed managers. As a result,the number of people who havecompleted safety training rose to 173,
up 44% year on year.

Stakeholder Comment
Mr. Koichi
FukudaSection Head
Customer Service
Section 1
KYOTOTECHNICA,
INC.

Participating in experiential
safety education reconfirmed
the importance of being awareof the safety of my surroundings.
Our company is involved in the
production, adjustment, testing,installation and start-up of equipment
related to semiconductor production.
During my recent participation in
Dainippon Screen’s experiential safety
education, I experienced staged incidents
involving chemical solutions, electricalleaks and falling objects. Our company
emphasizes safety awareness, but thistraining taught me anew the importance ofconfirming the safety of my surroundings.
When you work at a job site every day,you tend to grow less sensitive on the safety
front. The training taught me the fearfulnessof accidents and provided an importantlearning opportunity regarding safety
procedures and protective equipment. I
hope Dainippon Screen will continue
offering this sort of education in the future.

Overview of Quality Reform Activities
Quality system assessments

Basic plan for improving issues

Launch of five project teams (PTs)

SS-3200

SU-3200

Formulation of
new operating
schemesincorporating
quality reforms
for eachproject team

•Design Quality Reform PT•Quality Management Reform
PT•Production Quality Reform PT•Product Assurance Reform PT•Quality System Reform PT

focus on providing highly productive cleaning systems and3 We
reducing quality defects.

TopicsCleaning Systems That Offer
World-Leading Cleaning
Performance, Improve Yields andReduce Energy Consumption
Wafer cleaning accounts forapproximately 30% of semiconductor
production processes. As electronic
terminals have grown more compact andhigher-performance in recent years,
circuits have evolved toward ultrafine
line widths and multilayered wiring. This
trend has spurred demand for cleaningsystems that offer superior cleaning
performance and high productivity.
The SS-3200, a scrubber-type
wafer cleaning system that the
Semiconductor Equipment Company
launched in November 2011, now
employs the transport system used on
our newest single wafer cleaningsystem, the SU-3200. As a result, theSS-3200 achieves cleaning speeds of up
to 800 wafers per hour, the world’s
highest cleaning performance anddouble that of previous scrubber-type
cleaning equipment. Furthermore, tomeet emerging needs as semiconductor
devices move to ultrafine line widths
and three-dimensional structures theSS-3200 uses a spray-based cleaningsystem that cleans wafers without
damaging ultrafine patterns,
contributing greatly to higher yields.

The SS-3200 is also excellent interms of operability and maintenance.
In addition, the system helps to reduceenergy consumption—an important issue
as production processes grow increasingly
complex and their number increases.

Deploying Quality Reforms Aimed at
Reducing Quality Defects
During the fiscal year ended March 31,
2012, the Semiconductor Equipment
Company set up a specializedorganization to provide steady
feedback about design defects to thedevelopment and design verification
process as part of its efforts to stabilize
quality for its mainstream single wafer
cleaning equipment. Since then, thecompany has been working on efforts
to prevent defects from recurring.
In April 2012, this organization
played a central role in thecommencement of new quality reform
activities. First, it created quality systemassessments that incorporated othercompanies’ benchmarks and proposed
basic plans for making improvements on
issues that arise. In accordance with thisbasic plan, the organization then set up
five project teams to promote “design
quality reforms,” “quality management
reforms,” “production quality reforms,”“product assurance reforms” and“quality system reforms,” and designed a
new operational scheme taking thesequality reforms into account.
Thereafter, the organization
piloted the new operational scheme,
limited to the SU-3200. After
incorporating the results of pilot
operations and making improvements,
we plan to deploy the operational
scheme to each operation from thefiscal year ending March 31, 2014,
launching it into actual operation.

External quality evaluation

PQS award ceremony

In April 2013, we received the Preferred
Quality Supplier (PQS) award from Intel
Corporation—one of our customers—inrecognition of our ongoing quality
improvement activities.
Criteria for the PQS award arescores of 80% or more against targets on
cost, quality, supply system, technologicalcapabilities and environmental, social andgovernance programs.

30

CSR Performance Report

Responding to Energy Shortages by Promoting
Electricity-Saving Activities

Environmental Conservation
The Dainippon Screen Group actively contributes to its
customers’ environmental efforts by pursuing productsthat are kind to people and the planet. We are working to
reduce CO2 emissions from our manufacturing activities,
manage and decrease chemical use and lower waste.

Reducing CO2 Emissions
Initiatives for Reducing CO2 Emissions in Our Business
Activities(Reduction Efforts under “Scope1+2” of the GHG Protocol*1)
During the fiscal year ended March 31, 2013, total CO2
emissions by the Group came to 49,208 metric tons, up 30%
year on year. Our target for the domestic Group was to reduce
CO2 emissions derived from the use of energy in production
activities by 3% or more compared to the fiscal year ended
March 31, 2010, but we missed this target, exceeding it bymore than 16 percentage points. The main reason for thisrise was the increase in the emission factors*2, resulting fromfactors such as the halt of nuclear power plant operations
following the Great East Japan Earthquake. The emission
factor of Kansai Electric Power Company, our principal
supplier of electricity, was up by 45% year on year. Had theemission factors not changed, CO2 emissions by the domestic
Group would have been down 3% year on year.
In 2011, we began responding to a CDP*3questionnaire concerning its CO2 emissions and efforts to
reduce them.

*1 An international standard for calculating greenhouse gases (GHGs) emitted

during corporate activities. The standard comprises three categories,
depending on the form of the emissions. Scope 1 involves emissions emitted
directly as a result of corporate activities; Scope 2 is for indirect emissions
resulting from energy used in corporate activities; and Scope 3 is for indirectemissions other than those covered by Scope 2.
*2 CO2 emissions per unit of electricity used
*3 CDP, which got its start in the United Kingdom in 2000, is a not-for-profit
organization operated through the support of investors from various
countries. CDP sends questionnaires to private-sector companies andanalyzes and publicizes information related to climate changed based on
their responses.

CO2 Emissions and Emissions per Unit of Production(Thousands of metric tons)(Metric tons/100 million yen)

160

120

60

26.7

23.2

80

40

40

23.1

22.8

27.0

15.0

15.7

22.6

31

0

2009

20

38*

1

30

2010

2011

40

5
33

2012

0

49 *1

The domestic Group continued efforts from the previous
fiscal year to reduce peak electricity. We introduced“demand monitoring systems” at eight locations, including
our principal sites. This system sends out alerts via email
and public address systems when summertime electricity
consumption is in danger of exceeding seasonal targets andprompts temporary shutdowns in cooling and lighting
systems. We have also introduced initiatives such as
reducing lighting counts, “cool biz” (lightweight clothing insummer) and “warm biz” (warmer clothing in winter).
Thanks to these initiatives, in the summer of 2012 weachieved an average 22% reduction in peak electricity
consumption, compared with the volume of electricity
initially contracted. As a result, the domestic Group’s
electricity consumption was down 8% compared to levels in
the fiscal year ended March 31, 2010.
Electricity Used
(Hundreds of thousands of kWh)

800
700

61

65
694

707

0

2009

2010

Electricity used (domestic Group)

2011

2012

2013

(Years ended March 31)
Electricity used (overseas Group)*1 Includes the overseas Group from the fiscal year ended March 31, 2012.

Efforts to Reduce CO2 Emissions from Logistics Operations(Reduction Efforts under “Scope 3” of the GHG Protocol)
The Group is working to reduce the amount of CO2 emitted
during the shipping of its products. To reach our target for
the fiscal year ended March 31, 2013, which was to reduce
CO2 by 18% or more compared to the fiscal year ended
March 31, 2010, per unit of production in domestic producttransport, we promoted a modal shift from using trucks forshipping to using marine and rail shipping. We also worked
to make packaging materials more lightweight.
As a result, during the fiscal year ended March 31,
2013, CO2 emissions (per unit of production) arising fromthe transport of our products was 0.534 metric ton per ¥100
million. This figure amounted to a year-on-year reduction of
24% (down 24% compared with levels for the fiscal year
ended March 31, 2010), meeting our target.
CO2 Emissions*1 and Emissions per Unit of Production from
Logistics Operations(Metric tons/100 million yen)

(Metric tons)

42

2,250

*1 Includes the overseas Group from the fiscal year ended March 31, 2012.

759 *1768 *1

721

100

3,000

(Years ended March 31)
CO2 emissions (domestic Group)
CO2 emissions (overseas Group)
Emissions per unit of production (domestic Group actual)
Emissions per unit of production (domestic Group target)

755

600

7

2013

747

0.581

1,500
750

0.574

934

0.705

0.552

595

0.651

0.701

0.578

0.614

0.600

0.534

860

975

2011

2012

0.4
0.0

546

0

2009

2010

2013
(Years ended March 31)

CO2 emissions (domestic Group)
Emissions per unit of production (domestic Group actual)
Emissions per unit of production (domestic Group target)*1 Cargo weight (in tons) multiplied by the distance transported (in kilometers)

31

0.8

Reduction of Waste
Initiatives to Calculate and Reduce Valuable Waste andWaste Outside the Company
During the fiscal year ended March 31, 2013, the Group’s
volume of waste amounted to 1,744 metric tons, down 3%
year on year.
In the fiscal year ended March 31, 2010, the domestic
Group commenced initiatives to reduce “waste outside theCompany,” comprising both waste and valuable resources.
During the fiscal year ended March 31, 2013, waste emitted
outside the Company per unit of production was up 23%
year on year, to 1.06 metric tons per ¥100 million (up 47%
compared with levels for the fiscal year ended March 31,2010). This level was short of our target of reducing thiswaste by 3% or more compared with levels for the fiscal year
ended March 31, 2010. The main reasons for the increase inwaste were changes in production volume and a rise in theamount of metal, plastic and paper stemming from thedisposal of prototypes and other items. At the same time,the material recycling ratio for waste during the fiscal year
ended March 31, 2013, was 85%, meeting our target of 85%
or more.

ways to reduce our use, and we plan to set numerical targets
with a view to reducing this usage. The water that is taken
in as part of our business activities has no particular impact
on water sources.

Preserving Water Quality at Lake Biwa
The Company, which operates at three sites in Shiga
Prefecture, recognizes an important social responsibility inthe preservation of water quality at Lake Biwa, which has ahigh level of biodiversity. Our environmental impact
evaluations take respecting biodiversity into consideration.
As Shiga Prefecture has set strict ordinance-based
wastewater standards, our three sites meet theserequirements by using wastewater processing equipment totreat effluent appropriately.
We join local residents in clean-up activities along the
Ota River, which feeds into Lake Biwa. In July 2012, 103
employees participated.

Volume of Emissions outside the Company and Emissions per
Unit of Production(Metric tons)(Metric tons/100 million yen)

2.0

10,000
8,000
6,000

0.75

0.72

0.79

0.86

0.71

0.71

1,794

1,806

1.06
0.71

1.0
0.0

Clean-up activity along the Ota River, a firefly habitat

4,000
2,000

1,098

937

0

2009

2010

2011

2012

1,744 *1
88

Promoting EHS Activities,

1,656Internal Award System to Recognize Employee Participation2013(Years ended March 31)

Volume of emissions outside the Company (domestic Group)
Volume of emissions outside the Company (overseas Group)
Emissions per unit of production (domestic Group actual)
Emissions per unit of production (domestic Group target)*1 Includes the overseas Group from the fiscal year ended March 31, 2013.
Note: Indicates volume of waste through March 31, 2009; indicates volume ofemissions outside the Company from the year ended March 31, 2010.

To foster a greater sense of awareness and encourage
employee participation in EHS activities, we set up aninternal award system, the “Green Value Award,” in thefiscal year ended March 31, 2013.
This system offers awards in eight categories for
activities, products and services that have been particularly
effective from an EHS standpoint, based on innovation,
originality, social spirit and applicability.

Conserving Water Resources
Working to Reduce Water Usage Volume
The Company used 2.15 million metric tons of water during
the fiscal year ended March 31, 2013, up 1% from thepreceding fiscal year. We are conducting an investigation on
Water Used
(Thousands of m3)

2,500

2,381

2,000

1,918

2,084

2,113

500

2,151 *1
19
2,132

Green Value Award 2013 ceremony

0

2009

2010

2011

2012

2013
(Years ended March 31)

Water used (domestic Group)

Water used (overseas Group)*1 Includes the overseas Group from the fiscal year ended March 31, 2013.

32

CSR Performance ReportWEB

Managing and Reducing Chemical Substances
Contained in Products
Appropriately Managing Chemical Substances Based on
Green Procurement Standards and Product Chemical
Management Standards
The Company manages chemical substances appropriately,with development and design departments following
management and product presentation methods prescribedby Product Chemical Management Standards andprocurement departments following Green Procurement
Standards stipulating prohibited substances. We provide
information on Green Procurement Standards on our
website so that suppliers can refer to these guidelines.
We have initiated compliance in our policy on conflictminerals, which are covered in the “Screen Supplier Code of
Conduct,” formulated in May 2013.

Compliance with Legislation Related to Chemical Substances
In response to the EU’s REACH*1, we have introduced an
information system capable of collectively gathering andmanaging information on designated chemical substances,and we began using this system companywide during the
fiscal year ended March 31, 2013. In the past, each internal
company created its own frameworks, which meant that insome cases suppliers received requests for and needed torespond to requests for examinations from each of thesecompanies. This situation presented issues with regard to
information collection speed and accuracy. Under the
recently introduced system, component response data canbe shared smoothly throughout the Company, allowing us
to respond swiftly to customer requests for information
about contained substances. The new system makes use of
the information distribution platform of the cross-industry
body JAMP*2 for the creation and diffusion of structures for
managing chemical substances, and the substances wemanage make reference to JAMP Declarable Substances.
Companywide System for Gathering and Managing Information
on Chemical Substances
Semiconductor
Equipment
Company

FPD Equipment
Company

Media And
Precision
Technology
Company

Affiliatedcompanies*1 An EU regulation requiring the comprehensive registration, evaluation,authorization and restriction of chemicals by companies that manufacture
and import equipment.
*2 Acronym for the Joint Article Management Promotion-consortium.
*3 An EU directive that restricts the use of designated hazardous substances inelectrical and electronic devices. RoHS 2 describes compliance standards for
products entering the European market on or after January 2, 2013, andrequires the attachment of CE markings.

Green Products
Reducing the Environmental Impact of Products Based on
Our Own Certification System(Including Reduction Efforts under “Scope 3” of the GHG Protocol)
The Group designates products that meet its own
assessment standards, chiefly for reduced energy
consumption, as “green products.” We promote their use byintroducing these products on our website. (Please refer topage 27 for details.)
Examples of Green Products
Semiconductor Equipment Company:

SU-3200 Single Wafer Cleaning Equipment(Launch: Fiscal Year Ended March 31, 2011)

In addition to achieving the world’s
fastest cleaning speed, theSU-3200 also uses significantly
less energy than other models. The
SU-3200 uses approximately 82%
less energy per wafer than ourprevious single wafer cleaning
equipment, launched in 2001.

SK-N1500G Coater/Developer
Request for examination
Summaries of products
containing chemical
substances, etc.

JAMP-IT

Suppliers

Regarding the EU’s RoHS directive*3, we are working
to respond to the recast RoHS directive (RoHS 2), which
went into application in January 2013.
The Media And Precision Technology Company hasraised its use of alternative components to 98% and uses theCE marking to declare conformity on products that meet all
EU requirements. As the principal products of the
Semiconductor Equipment Company and the FPD
Equipment Company fall under the exemption of large-scalestationary industrial tools, they are not subject to RoHS 2.
We are moving forward with efforts to conform with
RoHS 2 category 9 (industrial monitoring and control
instruments) and category 11 (other electrical and electronicequipment) regulations.

FPD Equipment Company:

Companywide system

Companywide
databaseof chemical
substances

CSR Procuremeut/Green Products

Suppliers(Launch: Fiscal Year Ended March 31, 2013)

The SK-N1500G, a member of the
SK-N Series developed in response
to rising demand for panels for use
in smartphones and tablet devices,uses 16% less photo resist and
19% less electricity than previous
models.

Media And Precision Technology Company:

Ledia 5 Direct Imaging System for
Printed Circuit Boards.
(Launch: Fiscal Year Ended March 31, 2012)
Suppliers33

Suppliers

Please refer to page 28 for details.

Occupational Health and Safety andan Employee-Friendly Workplace
One of our most important priorities is to promote
workplace health and safety, and we strive to provide a
workplace that enables diverse employees to maximize
their potential.

Occupational Health and Safety
Based on OHSAS 18001, we are strengthening efforts to
reduce incidents and accidents and enhancing mental
health and disaster prevention measures.
One of the targets in GV21, Phase II, is to reduce to zero thenumber of incidents resulting in four or more days of lostwork. Accordingly, Dainippon Screen is moving forwardwith efforts to eradicate accidents and incidents. (Please refer
to “CSR Targets and Performance” on pages 25-26.) We areconducting initiatives companywide in Japan, including at
Group companies, based on OHSAS 18001. These activities
include risk assessments, advance health and safety review
processes, the extension of training to operators andsupervisors with limited experience and inspecting heavy
load operations. We are developing an occupational healthand safety management infrastructure overseas, as well.
In the fiscal year ended March 31, 2013, we conductedrisk assessments, seeking to reduce the amount of work
involving a high degree of risk. As a result, the total numberof days of work lost to incidents reached the lowest number
in 10 years. These figures include such measures asconducting worksite confirmation surveys of incidents andaccidents that occur, analyzing the factors behind suchoccurrences, introducing countermeasures and measuring
their effectiveness.
We continued with mental health measures conductedin the previous fiscal year. In addition to mental healthchecks involving discussions with occupational healthnurses, we enacted stress management check tests for
employees, including those on temporary assignment
overseas. During the fiscal year ended March 31, 2013, we
commenced training for worksite managers using casestudies to aid in the early detection of issues and a returnto health within their organizations. These initiatives
were instrumental in reducing the number of days required
for employees to return to the workplace.
On the disaster prevention front, we distributed theSurvival Card, which outlines responses and conduct for all
executives and employees of domestic Group in the event ofan earthquake. As in the previous fiscal year, we continued
to conduct e-learning programs to teach employees thefundamentals of how to respond to earthquakes, educatingthem on internal regulations and imparting basic
knowledge. During the fiscal year ended March 31, 2013,
we reinforced our safety measures overseas by producing
the new Overseas Safety Manual for employees posted
overseas or on business trips. Going forward, we will also
distribute this manual to business partners’ employees
posted overseas or on business trips.

In the fiscal year ending March 31, 2014, which is the
final year for GV21, Phase II, we will conduct safety training
targeting specific types of accidents and incidents, stepping up
efforts to reduce the number of accidents and incidents to zero.

Human Resource Development
Cultivating Skills in a Well-Planned Manner
For each of our departments, we have assigned a person to be
in charge of encouraging the cultivation of skills within thatgroup. These members attend meetings to help them consider
ways for cultivating employee skills, set required andrecommended education and training courses for each skill
level and facilitate employee training. Required training at
each level helps to develop expertise in such areas ascompliance, mental health, labor management andinformation security. In the fiscal year ended March 31, 2013,as a recommended course we held management training for
employees at the stage prior to becoming managers.
We also focus on training engineers, seeking toprovide well-planned training and cultivate an engineering
mindset among young engineers. Throughout the Group,
we provide a host of announcement and award
opportunities, one of these being Frontier Gate 2012, atechnology presentation held in October 2012. The
presentation was attended by 320 people throughout theGroup, and awards were presented for 12 of the 26
presentations given.

Boosting Efforts to Cultivate Employees Effective in a
Global Atmosphere
Overseas sales account for 75% of our total, and given theimportance of overseas business activities we strive to cultivate
employees who can be effective in a global atmosphere.
We have expanded the language training component of
our recommended level-specific training. Also, we dispatch
employees in Japan to overseas Group companies for shortperiods of time, have in place a overseas study and training
systems and conduct function-specific training as part ofour efforts to cultivate leaders with a global perspective.
Furthermore, we encourage the global intermingling of
employees, such as by hosting employees on temporarytransfer from overseas Group companies.

Employment and Reward
Making Steady Inroads on a Personnel System Targeting
Roles and Operating Performance, Focused on Recruiting
Globally Competitive Personnel
In April 2013, we introduced a role classification system,
marking a shift from a personnel system focused on job
capabilities to one that emphasizes roles and operating
performance.
Our recruiting efforts aim at ensuring employee diversity
and globally competitive human resources. To that end, on
new graduate recruiting sites we have expanded website
descriptions of opportunities for women and exchange
students. We also hold recruiting briefings in locations
throughout Japan as part of our proactive new graduate
recruiting efforts. During the fiscal year ended March 31, 2013,
we employed 38 new graduates (61 throughout the Group).
34

CSR Performance Report

Respecting Diversity
Fostering an Environment Where Diverse Human
Resources Can Make the Most of Their Capabilities andMaking Steady Progress Toward 100% Returns of
Employees on Childcare Leave
The Company endeavors to maintain an environment that
fosters individuality among its personnel, encourages employees
to work vigorously and is responsive to changing life stages.
Encouraging women to make the most of their skills, we arepromoting their recruitment as general employees. As of March
31, 2013, we had hired 58 women on this basis. During the
fiscal year ended March 31, 2013, nine employees took
advantage of our child-rearing leave program, and all of them
returned to work afterward. Also, all the people who returned
from child-rearing leave in the preceding fiscal year haveremained in their positions for one year or more. A total of 42
employees are taking advantage of our system that permits
employees who are raising children to work shorter hours.
Furthermore, we are encouraging employees to takepaid leave. We have set up a program whereby people taking
less than 50% of the paid leave allotted to them during one
year must take at least five days of consecutive leave in thefollowing year. From the fiscal year ended March 31, 2013, webegan encouraging employees to take regular leave by sendinga reminder email to employees and their superiors once every
two months. During the fiscal year ended March 31, 2013,
the percentage of people taking paid leave was 72.2%.
To enable employees to be more flexible in theirpost-employment lifestyle decisions, we have introduced adefined benefit corporate pension offering a reduced
provision period or lump-sum payment, as well as a defined
contribution corporate pension.

Respecting Intellectual Property Rights
Compensating Employees Appropriately for Their Inventions
The Group regulations stipulate that employees will beappropriately compensated if an invention made by an
employee is inherited by the Company. In the fiscal
year ended March 31, 2013, 31 patents were reviewed
for inventor compensation.
During the year, we encouraged employee invention
by conducting seminars for engineers on the importance ofintellectual property rights and holding the Frontier Gate2012 intellectual property awards. Going forward, we plan
to simplify our system for submitting invention applications
in order to increase their number.

Respecting Workers’ Rights
Developing Cooperative Health and Safety Activities forLabor and Management
We regularly hold labor–management meetings with thelabor union (participation rate in the fiscal year ended March
31, 2013: 96.8%) to discuss various themes related
to the working environment, building positive relations
between labor and management. Labor union members also
attend Health and Safety Committee meetings, where we
decide on annual occupational health and safety action plansfor pursuing health and safety activities on an everyday basis.
35

Maintaining and Improving Quality
All internal companies are working to enhance the qualityof their products and services through a quality
management system based on ISO 9001. In addition to theappropriate dissemination of information and marketing,
we are taking thorough action on information security
based on our personal information protection policy.
We have in place structures to ensure compliancewith security export control legislation when exporting
products and repair parts.

Semiconductor Equipment Company
Ensuring Safety and Promoting Quality Improvement
In accordance with its fundamental policy on providing
products and services in compliance with various types ofrules and regulations and thorough operations to ensure
safety and no accidents, the Semiconductor Equipment
Company evaluates product safety in accordance withSEMI S2 Standards, semiconductor production equipment
safety guidelines that are broadly employed worldwide,
EU Machinery Directive and our own internal standards.
Furthermore, the Legal & I.P. Center cooperates on
preliminary reviews to ensure fair advertising andpromotion, compliance with anti-monopoly legislation.
intellectual property protection and rules of conduct.
In the fiscal year ended March 31, 2013, we conductedfull-fledged quality improvement activities to reduce
product defects. (See page 30 for details.) We also extended
our product training and safety education for field service
engineers handling after-sales service on products.

FPD Equipment Company
Focusing on Raising Customer Satisfaction by Using
Satisfaction Surveys to Clarify Customer Requirements
The FPD Equipment Company’s basic policy is to provide
products and services that meet customer demand and legal
and regulatory requirements, as well as conforming to a hostof technological standards for such factors as performance,
safety and reliability. In accordance with this policy, we
conduct initiatives to ensure that products meet customer
requirements and comply with the laws in their region ofdestination. We also perform double checks and have inplace controls for external announcements and notifications
to ensure that they are accurate and present no issues on thelegal and intellectual property fronts.
Furthermore, we conduct questionnaires to determine
our level of customer satisfaction. We evaluate these on ascale of five according to six categories—performance,
reliability, operability, cost, delivery time and support—andwork to sustain customer satisfaction based on theseevaluations.

Cooperating with Group Companies on Activities to Reduce
Quality Issues and Augmenting Support Locations Overseas
To boost quality management, we hold monthly quality
meetings to discuss outstanding quality-related issues, andreport on and confirm the progress of corrective actions.
We also cooperate with two Group companies on activities
designed to reduce quality issues. In the fiscal year ended
March 31, 2013, we held joint monthly meetings attended
by our production and sales departments, as well as
members of Group companies, to share information about
quality issues and work on ways to improve design andproduction quality.
We operate a total of nine service stations that conduct
after-sales service in Japan, Taiwan, South Korea and China.
During the fiscal year ending March 31, 2014, we plan toopen two new stations in China, where we anticipate anumber of equipment installations.
As leaks of technical information occurred in our
industry during the fiscal year ended March 31, 2013, wehave redoubled our own vigilance when taking out andmanaging the customer information required to provide ourservices.

Media And Precision Technology Company
Formation of a Specialized Department to Reinforce
Quality Assurance
The Media And Precision Technology Company ensuresthat its product safety complies with international safety
standards, individual countries’ regulations on chemical
substances and other laws and regulations. We also acquire
verifications by third-party institutions to ensure that thelevel of our product safety guarantees is sufficient. Our PR& IR Department and Legal & I.P. Center vet product andservice information prior to its external release. In this way,
we work to prevent leaks of trademark reviews, intellectual
property rights and confidential information.
In the fiscal year ended March 31, 2013, we set up a
new Quality Assurance Department within the existing
Production Division to handle efforts to maintain andimprove manufacturing quality, thereby strengthening
and improving our quality assurance system.

Business Service Center
Separating Planning and Control Functions to Boost
Operational Quality and Efficiency throughout the GroupIn July 2012, we reorganized the Business Service Center,
which takes charge of planning and control functions for
the Group’s back-office departments, such as finance,
general affairs, global human resources and information
systems, to enhance operational quality and efficiency. We
separated the finance, general affairs and global humanresources groups from organizational and operational
support sections that handle planning and control functions
and clarify their individual roles. This move was designed tofurther reinforce Group management on the planning andcontrol fronts. At the same time, we consolidated
back-office processes for support functions, increasing theirefficiency and speed. As a result, we aim to slim theorganization and cut costs.
This reorganization is in line with the objective of“establishing a stable earnings structure and building afoundation for new growth”, one of the fundamental
policies of our three-year medium-term plan, NextStage70.
Eliminating the inefficiency of having multiple
organizations and personnel handle the same operations,
we divide the organization along functional lines toimprove overall operational quality.

Status of Regulatory Compliance
Thorough Regulatory Compliance at Each Internal
Company
In the fiscal year ended March 31, 2013, there were no legal
violations at any internal company regarding the provisionof information and labeling concerning products andservices or in relation to marketing.
Going forward, we intend to conduct thorough checksof each internal company to ensure that this state of no
infractions continues.

Promoting Quality Improvements and Increasingly Supply
Stability through Engineer Interchanges with Suppliers
In the past, we have conducted engineer interchanges with
suppliers in order to boost quality and increase the stabilityof supply for our mainstay products. We are now
accelerating our efforts to share information and resolve
issues. Each year, we continue to provide education andtraining to bolster quality management.
To augment support services, we have added a remotemonitoring function to our CTP products to gather
information on equipment operations. We have also
provided a remote maintenance function on our inspection
systems for PCB-related equipment that allows testing
conditions to be set remotely, allowing efficientmaintenance. Going forward, we plan to continue
augmenting remote operating functions that support
customer operations.

36

Eleven-Year Trends in Key Management Indicators

Consolidated Eleven-Year Summary
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

2013

2012

2011

2010

2009

¥ 189,924¥ 250,090¥ 254,953¥ 164,129¥ 219,049

150,072

187,325

182,990

137,827

169,391

For the Year:Net sales
Cost of sales

79.0 %

Cost of sales to net sales (%)
Operating income (loss)¥

74.9 %¥ 13,498–3.7 %

Operating income to net sales (%)
Net income (loss)(6,987)¥ (13,487)

5.4 %
¥

71.8 %¥ 26,811

84.0 %¥ (14,046)

10.5 %

4,637¥ 25,687–8.6 %¥(8,003)77.3 %¥(4,510)–2.1 %¥ (38,191)

Comprehensive income(8,184)

4,192

22,576(5,257)—

Depreciation and amortization

4,731

4,986

5,805

7,012

8,414

Cash flows from operating activities(15,320)

11,27934,29925,113(24,593)

Cash flows from investing activities(5,768)(4,162)(2,191)

6,885(6,921)

Cash flows from financing activities

21,534(9,468)(22,250)(27,124)

34,071

Capital expenditures

6,450

7,347

3,613

1,911

4,007

R&D expenses

12,685

13,88912,13011,615

16,073

Per Share of Capital Stock:
19.54¥ 108.21(33.71)¥ (160.86)

Net income—diluted

—

—

—

—

—

Cash dividends

—

5.00

5.00

—

—

339.61379.44367.00272.15292.12¥ 235,023¥ 245,382¥ 253,127¥ 216,622¥ 246,918

Net income (loss)

Net assets¥(56.82)¥¥

At Year End:
Total assets
Return on total assets (%)
Current assets–5.6 %¥ 164,247

1.9 %¥ 177,543

10.9 %–3.5 %¥ 183,523¥ 139,984–14.2 %
¥ 168,191

Property, plant and equipment, net

39,902

38,66940,69945,41350,955Current liabilities

118,285

123,223

148,132

93,874132,431

Long-term debt

29,642

25,988

10,634

48,19532,967

Equity80,61090,06987,11864,607

69,353Equity ratio (%)

34.3 %

36.7 %

34.4 %

29.8 %

28.1 %

Return on equity (%)–15.8 %

5.2 %

33.9 %–11.9 %

–39.9 %

¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045

40,76755,44026,418731

8,734

253,974

253,974

253,974

253,974

253,974

4,955

4,890

4,732

4,679

4,992

49,20837,85831,312

29,99339,164CO2 emissions per unit of production(metric tons/100 million yen)*2

27.0

15.7

15.0

23.2

26.7

Water used (thousands of m3)*3

2,151

2,113

2,084

1,918

2,381

Volume of emissions outside
the Company (metric tons)*3

1,744

1,806

1,794

937

1,098

Incidents*2

15

17

14

15

20

Accidents*2

8

5

13

13

17

Capital stock
Retained earnings (deficit)
Number of shares issued (in thousands)
Number of employees

Key Environmental and Safety Indicators
CO2 emissions (metric tons)*1

Notes: 1. Dollar figures are translated, for convenience only, at the rate of ¥94 to US$1.00.
2. Net income (loss) per share of capital stock is calculated based on the weighted average number of shares outstanding during each term, excluding the Company’streasury stock. Fully diluted net income per share of capital stock is not shown for the years that net losses were recorded or that no dilutive stock existed. Net
assets per share of capital stock is calculated based on the fiscal year-end total number of shares outstanding, excluding the Company’s treasury stock.
3. Return on total assets and return on equity are calculated on the basis of average total assets and average equity, respectively, at the current and previous fiscal year-ends.
4. The definition of “employee” was revised in the fiscal year ended March 31, 2004.
5. For the year ended March 31, 2005, depreciation and amortization included ¥2,299 million of nonrecurring depreciation of property, plant and equipment andother assets from the withdrawal from the CRT mask business.
6. Equity in the above table represents the total of shareholders’ equity and accumulated other comprehensive income in the consolidated balance sheets. This is due tothe adoption of the new accounting standards for presentation of net assets in the balance sheet, which require former shareholders’ equity and minority interests to bepresented as net assets, and net assets to be classified as shareholders’ equity, accumulated other comprehensive income and minority interests. Under the new
accounting standards, the net assets section includes deferred hedge income and loss, net of taxes, which was previously included in the assets or liabilities section

37

2013

2008

2007

2006

2005

2004

2003

¥ 279,816¥ 301,312¥ 246,534¥ 269,341¥ 191,939¥ 167,942$ 2,020,468

208,266

211,159

173,628

190,639

135,389

121,036

1,596,511

Millions of yen

74.4 %¥ 14,628

70.1 %¥ 30,541

5.2 %
¥

4,578

70.4 %¥ 18,568

10.1 %¥ 18,452

70.8 %¥ 25,292

7.5 %¥ 15,236

70.5 %¥

9.4 %¥ 14,454

9,600

72.1 %
¥

5.0 %
¥

4,851

Thousands of U.S. dollars

$

3,225

¥

(3,466)$ (143,479)(87,064)

—

—

—

—

—

—

5,563

4,113

3,823

5,944

4,000

4,901

50,3307,934

23,645

14,90622,301

14,681

87(162,979)(16,510)(8,519)(7,482)(5,108)

(82)

4,304

(61,362)669(8,875)(13,442)(16,775)(10,157)(4,923)229,085

12,866

14,420

5,906

6,146

2,465

1,813

68,617

16,24816,884

13,26912,628

11,134

10,770134,947

Yen¥(74,330)

1.9 %

18.81

¥

74.05

¥

60.66

¥

59.88

¥

23.04

¥

(18.65)

U.S. dollars$(0.60)

17.39

68.63

55.81

52.57

18.29

—

—

10.00

15.00

10.00

7.50

3.00

—

—

514.26542.13500.30408.03334.93238.283.61¥ 291,114¥ 319,519¥ 270,238¥ 256,398¥ 240,512¥ 218,653

Millions of yen

1.5 %

6.3 %

5.8 %

5.8 %

2.1 %

Thousands of U.S. dollars$ 2,500,245–1.5 %¥ 196,989¥ 223,463¥ 181,077¥ 179,012¥ 165,506¥ 149,713

49,06942,34636,09634,30835,627

38,140$ 1,747,309
424,489

123,702

133,784

106,134

111,998

113,771

116,899

1,258,351

40,64443,90024,67431,80338,16347,491

315,340

122,094

133,062

126,392

99,21977,434

45,100857,553

41.9 %

41.6 %

46.8 %

38.7 %

32.2 %

20.6 %

3.6 %

14.2 %

13.5 %

16.4 %

7.9 %–7.3 %¥ 54,045¥ 54,045¥ 53,999¥ 51,331¥ 48,172¥ 37,142

49,39048,49732,536

19,284

3,514(1,314)

253,974

253,974

253,792

243,164

231,390

189,369

5,041

4,798

4,672

4,547

4,460

4,468

39,90335,74940,40855,98762,06960,334

22.1

20.9

28.2

32.5

52.6

53.1

2,528

2,527

4,101

6,113

6,579

6,616

1,313

1,501

2,086

3,564

4,720

4,561

32

32

29

23

27

30

16

11

21

14

22

19

$

574,947
433,691

without considering the related income tax effects. The accompanying consolidated financial statements after the year ended March 31, 2006 have been preparedin accordance with the new accounting standards, whereas the statements for the previous years are presented pursuant to the previous presentation rules.
7. Effective from the fiscal year ended March 31, 2011, the “Accounting Standard for Presentation of Comprehensive Income” has been adopted. Under the new
accounting standard, the above table includes comprehensive income, whereas these amounts are not shown before the years ended March 31, 2010.
2 emissions are calculated based on “Guidelines for Calculating Greenhouse Gas Emission from Businesses” prepared by the Ministry of the Environment. Through the*1 CO
fiscal year ended March 31, 2009, the emission conversion factors = average of greenhouse gas emissions of domestic power companies 0.378 kg CO2/kWh. From thefiscal year ended March 31, 2010, these figures have been calculated on the basis of domestic electric power companies’ emission factors and includes overseas Group
from the fiscal year ended March 31, 2012.
only domestic Group.
*23 Includes
Includesoverseas Group from the fiscal year ended March 31, 2013.
*38

Management’s Discussion and Analysis

This section presents an analysis of the consolidated financial statements prepared in accordance with generally accepted accounting
standards in Japan.

CFO Message

We will reinforce our financial underpinnings, enabling us to reconstitute ourbusiness and earnings structures and respond to global economic trends.
We consider that there were three principal factors affecting business results for the fiscal year ended March
31, 2013, where both sales and profits were substantially lower than our forecasts at the beginning of the fiscal
year. The first was the shrinking of overall semiconductor and electronics market, to which the Dainippon
Screen Group belongs. Second, the customer structure and capital investment trends in the semiconductor andelectronics market have changed. The third factor stems from a problem with the earnings structure of ourbusiness itself, leading to a situation in which we were unable to generate the profits we had aimed for due tohigh variable cost ratios in our core businesses. As chief financial officer, I am most concerned about this third
factor. In the fiscal year ending March 31, 2014, we will promote thorough structural reforms through theactions across the Company aimed at improving the variable cost ratio.
We were unable to reinforce our financial structure during the fiscal year ended March 31, 2013, as businessperformance worsened. However, we will continue working toward this goal, proceeding with reconstituting ourbusiness and earnings structures to ensure that we have in place the strong financial underpinnings that can standup to a difficult operating environment.
However, the financial strength that will enable us to aggressively make strategic investments, such as
developing equipment for 450mm wafers, at critical moments is vital. With an eye to uncertain global economic
trends such as protracted financial uncertainty in Europe and a growing sense of economic slowdown in China, wewill implement a balanced financial strategy between protective and proactive operations as we bolster ourability to handle financial risks and make strategic investments.

Operating Results•SalesConsolidated net sales for the fiscal year ended March 31, 2013,

Osamu
Ryonaifell 24.1% year on year, to ¥189,924 million.

Senior Managing
Director
Chief Financial
Officer (CFO)

manufacturers reduced capital investment sharply. By product,

In the Semiconductor Equipment segment, semiconductor
sales of batch-type cleaning equipment decreased significantly
compared with the preceding fiscal year, but the rate of decline insales of single wafer cleaning equipment was relatively small. By
region, sales to Asia increased, whereas sales in Japan and toEurope and the United States declined.
In the FPD Equipment segment, the Group faced a decline
in sales of production equipment for small and medium-sizedhigh-definition LCD panels, as well as for large LCD panels.
In the Media and Precision Technology segment, sales ofgraphic arts equipment decreased year on year, reflecting falling
sales of print on demand (POD) equipment, although sales ofcomputer to plate (CTP) equipment increased and wide-format
sheet-fed inkjet printers began to contribute to sales. Sales ofprinted circuit board (PCB)-related equipment increased year on
year, reflecting rising sales of direct imaging systems.
Total overseas sales fell ¥45,336 million, or 24.1% year on year,to ¥142,619 million, and 0.1 percentage point as a percentage of total
sales, to 75.1%. In North America, sales in the Semiconductor
Equipment and Media and Precision Technology segments
decreased, resulting in regional sales of ¥45,525 million, down

39

14.9% year on year. In Asia & Oceania, sales increased in the

Equipment and Media and Precision Technology segments led to a

Semiconductor Equipment segment but declined in the FPD

40.8% year-on-year drop in sales in this region, to ¥15,479 million. In

Equipment segment, causing sales in this region to fall 17.2% year onother regions, lower sales in the Semiconductor Equipment segment

year, to ¥76,204 million. In Europe, lower sales in the Semiconductor

prompted a 66.8% year-on-year decline, to ¥5,411 million.

Consolidated Net Sales by Business Field/
Reportable Segment(Billions of Yen)

Domestic Sales, Overseas Sales and Ratio ofOverseas Sales to Net Sales

Calculated on the bases of both the previous
and the current segment categorizations(%)(Billions of Yen)

300

80

225

225

60

150

150

40

75

75

20

300

0

0

0

2009

2010

2011

2012

2013

(Years ended March 31)
Consolidated Net Sales by Business Field
Electronic Equipment and Components
Graphic Arts Equipment
Other
Consolidated Net Sales by Reportable Segment
SE
FE
MP
Other

2009

2010

2011

2012

2013
(Years ended March 31)

Domestic Sales

Overseas Sales

Ratio of Overseas Sales to Net Sales•Cost of Sales and SGA Expenses
Fixed costs such as personnel and R&D expenses were down

and administrative (SGA) expenses decreased ¥2,428 million, or

compared with the previous year, but cost of sales worsened due

4.9% year on year, to ¥46,839 million, as logistic costs including

to the sharp decline in sales, changes in our product mix andpacking and freightage expenses, R&D and other expenses fell in

lower factory utilization, among other factors. As a result, theline with the decrease in sales. The ratio of SGA expenses to net

ratio of cost of sales to net sales rose from 74.9% in the previous

sales rose to 24.7% for the fiscal year under review, up fromfiscal year to 79.0% during the year under review. Selling, general

19.7% in the preceding term.
Millions of yen

Years ended March 31,

Net sales
Cost of sales
Cost of sales to net sales (%)
Gross profit
SGA expenses
SGA expenses to net sales (%)

2013

2012

2011

2010

2009

¥189,924
150,072
79.0%¥ 39,852
46,83924.7%¥250,090
187,32574.9%¥ 62,765
49,26719.7%¥254,953
182,990
71.8%¥ 71,963
45,15217.7%¥164,129
137,82784.0%¥ 26,302
40,34824.6%¥219,049
169,391
77.3%¥ 49,658
54,168
24.7%•Research and Development Expenses
At the Dainippon Screen Group, we maintain a close relationshipfor the transition to larger semiconductor wafers. As a result,between the Research & Development Center, internal companies

the Group’s R&D expenses for this segment amounted toand Group companies to foster the combination and development¥6,195 million.

of diverse technologies that are a key to photolithography, such as

In the FPD Equipment segment, R&D expenses came tocleaning, coating, graphic arts, optical system, and inspection and¥539 million. These expenditures went toward increasing themeasurement technologies. This approach enables us to launchsize of nozzle printers for OLED TVs.

aggressive R&D initiatives spanning the basic research to productdevelopment.

In the Media and Precision Technology segment, within thearea of graphic arts equipment we pursued initiatives to further

Consequently, during the year the Group invested ¥12,685
million in R&D. We invested aggressively in our field of focus,

R&D Expenses and Ratio of R&D Expenses to Net Sales

the Semiconductor Equipment segment, as well as in R&D(Billions of Yen)targeting an energy-related and other field for additional growth.

20

8

In the Semiconductor Equipment segment, we worked on

15

6

10

4

well as three-dimensional technologies for semiconductors of

5

2

increasing density. We also developed new products compatible0

the development of ultraminiaturization technologies forsemiconductor circuits having line widths of less than 10nm, as(%)

0with the Back End Of Line (BEOL). Furthermore, we pursued the2009

development of technologies for 450mm wafers, in preparation

R&D Expenses

2010

2011

2012

2013
(Years ended March 31)

Ratio of R&D Expenses to Net Sales

40

increase the precision of UV inkjet printers targeting the label

direct imaging system for PCBs that enables imaging for evenprinting industry, which is expected to grow substantially. In the

more precise circuit patterns. R&D expenses in this sector totaled

category of PCB-related equipment, we developed the Ledia 5F, a¥1,867 million.
Millions of yen

Years ended March 31,

R&D expenses
R&D expenses to net sales (%)

2013

2012

2011

2010

2009

¥ 12,685
6.7%¥ 13,889
5.6%¥ 12,130
4.8%¥ 11,615
7.1%¥ 16,073
7.3%•Segment Information
Sales in the Semiconductor Equipment segment fell 21.8% duringhigh-definition LCD panels, as well as for large LCD panels.

the year, to ¥131,073 million. As semiconductor manufacturers

Despite the substantial sales decline, a decrease in the loss on

reduced capital investment sharply, sales of batch-type cleaningvaluation of inventories and a reduction of fixed costs resulting

equipment decreased significantly compared with the precedingfrom the transfer of the R&D department for the alternative energy

fiscal year, but the rate of decline in sales of single wafer cleaning

field narrowed the operating loss to ¥860 million, compared withequipment was relatively small. By region, sales to Asia increased,

an operating loss of ¥1,217 million in the previous fiscal year.

but sales in Japan and to Europe and the United States declined.

Sales in the Media and Precision Technology segment

On the profit front, factors such as the significant drop in sales,amounted to ¥46,324 million, down 5.8% from the precedingchanges in our product mix and lower factory utilization caused

year. Sales of graphic arts decreased year on year, reflecting

profitability to fall. Consequently, the segment generated an

falling sales of POD equipment, although sales of CTP equipment

operating loss of ¥5,882 million for the year, compared withincreased and wide-format sheet-fed inkjet printers began tooperating profit of ¥13,628 million in the preceding fiscal year.

contribute to sales. Sales of PCB-related equipment increased

Sales in the FPD Equipment segment dropped 63.9% year

year on year, reflecting rising sales of direct imaging systems.

on year, to ¥11,787 million. This decrease reflected a decline in

Affected by the drop in sales, operating income declined 36.0%

sales of production equipment for small and medium-sized

year on year, to ¥1,475 million.

•Earnings Analysis
As is described above, sales decreased in the Semiconductor

fixed assets in the FPD Equipment segment posted in the

Equipment, FPD Equipment and Media and Precision Technology

previous year decreased, as did a provision of allowance forsegments. Consequently, net sales for the Group as a whole weredoubtful accounts covering trade notes and accounts receivable.

down ¥60,166 million, or 24.1% year on year, to ¥189,924

The loss before income taxes was ¥7,629 million, compared

million. This significant decline in sales led to an operating loss

with income before income taxes of ¥7,278 million in the previousof ¥6,987 million, compared with operating profit of ¥13,498

year, and the net loss was ¥13,487 million, compared with net

million in the preceding fiscal year. The ratio of operating profit

income of ¥4,637 million. The ratio of net income to net sales

to net sales worsened 9.1 percentage points year on year, tonegative 3.7%.

Net Income per Share of Capital Stock(Yen)

Net other income and expenses improved from a net

120

expense amount of ¥6,220 million in the preceding fiscal year to60

a net expense amount of ¥642 million in the year under review.

0

The loss stemmed from a loss on valuation of investment-60

securities due to a fall in the market values of stocks held.
However, the reduction of interest-bearing debt caused interest

-170

2009

expense to decline during the year, and impairment losses on

2010

2011

2013
(Years ended March 31)

Return on Equity
Return on Total Assets

Ratio of Operating Income to Net Sales
Ratio of Net Income to Net Sales
(%)

(%)

20

40

10

20

0

0

-10

-20
-40

-20

2009

2010

2011

2012

2013

2009

2010

2011

Ratio of Operating Income to Net Sales

Ratio of Net Income to Net Sales

2012

2013
(Years ended March 31)(Years ended March 31)

41

2012

Return on Equity

Return on Total Assets

worsened 9.0 percentage points year on year, to negative 7.1%.
Net loss per share of common stock was ¥56.82, comparedwith net income per share of ¥19.54 in the previous year, andpreceding fiscal year, to a negative 15.8%. Return on total assets
worsened 7.5 percentage points from the previous term, tonegative 5.6%.

return on equity worsened 21.0 percentage points from theMillions of yen
Years ended March 31,

Operating income (loss)
Operating income to net sales (%)
Net income (loss)
Net income to net sales (%)
Per share of capital stock (yen)Net income (loss)
Net income - diluted
Return on equity (%)
Return on total assets (%)

2013

2012

2011

2010

2009

(6,987)-3.7%¥ (13,487)-7.1%¥ 13,498
5.4%¥ 4,637
1.9%¥ 26,811
10.5%¥ 25,687
10.1%¥(14,046)–8.6%¥ (8,003)–4.9%¥ (4,510)–2.1%¥(38,191)–17.4%¥¥ 19.54
—
5.2%
1.9%

¥ 108.21
—
33.9%
10.9%

¥ (33.71)—–11.9%–3.5%¥(160.86)—–39.9%–14.2%¥(56.82)—-15.8%-5.6%

Note: Return on equity and return on total assets are calculated on the basis of average equity and average total assets, respectively, for the current and previous fiscal year-ends.

Financial Position and Liquidity•Assets, Liabilities and Net Assets
Total assets as of March 31, 2013, were ¥235,023 million, down

down ¥9,380 million, or 10.4%, from a year earlier. This was¥10,359 million, or 4.2% from the end of the previous fiscal year,

mainly attributable to a decrease in retained earnings due to theowing to a decrease in trade notes and accounts receivable.

payment of cash dividends and posting of a net loss for the year,

Total liabilities were down ¥979 million, or 0.6% year on

although the valuation difference on available-for-sale securities

year, to ¥153,807 million, reflecting a decrease in trade notes andand foreign currency translation adjustment each increased, due

accounts payable, although short-term loans payable rose.

to the effects from declining yen values and the rising market

Interest-bearing debt was ¥70,443 million as of March 31, 2013, up

values of stocks held. As a result, equity, the balance of net assets¥22,767 million compared with the end of preceding term. Net

less minority interests, decreased ¥9,459 million, or 10.5%,

interest-bearing debt, which is interest-bearing debt excluding

compared with the previous fiscal year-end, to ¥80,610 million.

cash and deposits, increased ¥20,009 million from the previous

Consequently, the equity ratio worsened 2.4 percentage points,

fiscal year-end, to ¥30,022 million.

to 34.3%, from 36.7% as of the previous fiscal year-end.

Total net assets were ¥81,216 million at fiscal year-end,

Working Capital

Equity and Equity Ratio(Billions of yen)(%)(Billions of yen)

100

160

60

75

120

45

50

80

30

25

40

15

0

0

2009

2010

2011

2012

2013
(Years ended March 31)

Interest-Bearing Debt

0

2009

2010

2011

2012

(Years ended March 31)

Equity Ratio

Equity2013

Net Assets per Share of Capital Stock(Billions of yen)

(Yen)

120

600

90

450

60

300

30

150

0

0

2009

2010

2011

2012

2013
(Years ended March 31)

2009

2010

2011

2012

2013
(Years ended March 31)42Millions of yen
As of March 31,

Total assets
Reportable segment: SE
FE
MP
Other
Adjustments
Electronic Equipment and Components
Graphic Arts Equipment
Other
Eliminations/Corporate
Working capitalInterest-bearing debt
EquityEquity ratio (%)
Net assets per share of capital stock (yen)

2013

2012

2011

2010

2009

¥235,023
119,748
14,02746,653
4,043
50,552————45,96270,44380,61034.3%¥ 339.61¥245,382
133,927
15,662
41,226
4,763
49,804————54,32047,67690,06936.7%¥ 379.44¥253,127
129,061
26,446
39,684
4,047
53,889————35,39155,59087,11834.4%¥ 367.00¥216,622
103,11324,89440,916
3,426
44,273
130,577
35,637
3,427
46,981
46,11077,21864,60729.8%¥ 272.15¥246,918—————
159,141
39,9596,250
41,56835,760102,581
69,35328.1%¥ 292.12

Notes: 1. Effective from the fiscal year ended March 31, 2011, the “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” has been adopted. The information forthe year ended March 31, 2010 is provided in conformity with the previous and new reportable segment.
2. Effective from the fiscal year ended March 31, 2009, the Company and its subsidiaries have adopted the “Accounting Standard for Lease Transactions” (ASBJ Statement No. 13, issued on March
30, 2007), which revised the former accounting standard for lease transactions issued on June 17, 1993, and ASBJ Guidance No. 16, the “Guidance on Accounting Standard for Lease
Transactions,” which revised the former guidance issued on January 18, 1994. As a result, interest-bearing debt in the above table includes lease obligations from the fiscal year ended March 31,
2009.

•Capital Expenditures and Depreciation and Amortization
Capital expenditures for the whole Group during the year stoodfor R&D and manufacturing facilities for graphic arts equipment.

at ¥6,450 million. In the Semiconductor Equipment segment,

Capital expenditures for other segments came to ¥154 million,

capital expenditures amounted to ¥4,238 million, centered ongoing toward areas such as information system-related equipment.

R&D and manufacturing facilities for semiconductor production

On a companywide basis, capital expenditures amounted toequipment. In the FPD Equipment segment, capital expenditures¥1,027 million, centering on R&D facilities.

totaled ¥132 million, stemming from R&D and manufacturing
facilities for FPD production equipment. Capital expenditures in

Depreciation and amortization during the year came to ¥4,731
million, down ¥255 million, or 5.1%, from the preceding term.

the Media and Precision Technology segment were ¥899 million,

Capital Expenditures

Depreciation and Amortization(Billions of yen)(Billions of yen)

16

10

12

7.5

8

5

4

2.5

0

0

2009

2010

2011

2012

2013
(Years ended March 31)

43

2009

2010

2011

2012

2013
(Years ended March 31)

Millions of yen
Years ended March 31,

Capital expenditures
Reportable segment: SE
FE
MP
Other
Adjustments
Electronic Equipment and Components
Graphic Arts Equipment
Other
Corporate
Depreciation and amortization
Reportable segment: SE
FE
MP
Other
Adjustments
Electronic Equipment and Components
Graphic Arts Equipment
Other
Corporate
Impairment loss
Reportable segment: SE
FE
MP
Other
Adjustments
Electronic Equipment and Components
Graphic Arts Equipment
Other
Corporate

2013

2012

2011

2010

2009

¥ 6,450
4,238
132
899
154
1,027
—
—
—
—
¥ 4,731
2,970
79
407
103
1,172
—
—
—
—
¥
—
—
—
—
—
—
—
—
—
—

¥ 7,347
2,951
448
1,041
114
2,793
—
—
—
—
¥ 4,986
3,204
329
310
112
1,031
—
—
—
—
¥ 2,866
848
1,840
—
—
178
—
—
—
—

¥ 3,613
2,510
323
539
89
152
—
—
—
—
¥ 5,805
3,452
460
674
121
1,098
—
—
—
—
¥ 1,656
—
—
1,656
—
—
—
—
—
—

¥ 1,911
1,184
185
362
62
118
1,393
338
62
118
¥ 7,012
4,426
599
879
166
942
5,011
744
154
1,103
¥
780
717
—
5
—
58
717
5
—
58

¥ 4,007
—
—
—
—
—
2,665
438
119
785
¥ 8,414
—
—
—
—
—
5,934
951
249
1,280
¥ 1,442
—
—
—
—
—
—
567
766
109

Notes: Effective from the fiscal year ended March 31, 2011, the “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” has been adopted. The information for theyear ended March 31, 2010 is provided in conformity with the previous and new reportable segment.

•Cash FlowsNet cash used in operating activities during the year was ¥15,320

Net cash used in investing activities came to ¥5,768 million,

million, compared with ¥11,279 million provided by thesecompared with ¥4,162 million in net cash used in these activities

activities during the preceding term. Major factors included a loss

in the preceding fiscal year. This was mainly due to the purchase of

before income taxes of ¥7,629 million, depreciation andproperty, plant and equipment, such as equipment for R&D.

amortization of ¥4,731 million, a decrease in trade notes andNet cash provided by financing activities amounted toaccounts receivable of ¥15,162 million, a ¥21,144 million decline¥21,534 million, compared with ¥9,468 million in net cash usedin trade notes and accounts payable, a ¥2,010 million decrease inin these activities in the previous year. The positive figure,accrued expenses and income taxes paid of ¥2,475 million.

despite the redemption of bonds, repayment of long-term loans

In the fourth quarter, however, operating activities

payable and cash dividends paid, was due to the procurement ofprovided net cash of ¥4,412 million, as the Group posted

funds through indirect financing methods to cover the net cash

quarterly income before income taxes.

used in operating and investing activities.
Millions of yen

Years ended March 31,

2013

Cash flows from operating activities¥(15,320)(5,768)Cash flows from investing activities
Cash flows from financing activities
21,534
Effect of exchange rate changes on cash and cash equivalents
1,949
Net increase (decrease) in cash and cash equivalents¥ 2,395
Increase (decrease) in cash and cash equivalents resulting—
from change of scope of consolidation

2012

2011

2010

2009

¥ 11,279(4,162)(9,468)(400)¥ (2,751)¥34,299(2,191)(22,250)(1,380)¥ 8,478¥25,113
6,885(27,124)(80)¥ 4,794¥(24,593)(6,921)
34,071(2,335)
¥
222

—

—

—

(91)

Risk Factors(1) Semiconductor and FPD market trends
While the semiconductor and FPD markets have recorded
significant growth on rapid technological innovation, they are also
susceptible to deterioration in the market supply-demand balance
which leads to cyclical upturns and downturns. Given such market
conditions, the Dainippon Screen Group is making every effort tocreate a market structure that can consistently generate profits
during cyclical downturns. However, unexpectedly large market
downturns can have a material impact on the Group’s financial
condition and business performance.
(2) Concentration of Transactions with Specific Customers
The Dainippon Screen Group delivers production equipment to44

leading semiconductor manufacturers in Japan and overseas.
However, as raising production capacity and responding tominiaturization trends in this industry requires huge capital
investments, certain leading manufacturers are consolidating.
Accordingly, the Group’s sales are tending to concentrate on
specific customers. As a result, fluctuations in capital investments
and orders by these specific customers could have a material impact
on the Group’s financial condition and business performance.
(3) Concentration of Production Sites
The Dainippon Screen Group’s domestic manufacturing sites areconcentrated in the Kyoto and Shiga regions, and a large-scale
earthquake or other disaster affecting this area could seriously
damage the Group’s operations. To minimize the potential for
losses and ensure continuation or early resumption of business
operation, the Group has formulated its business continuity plan
(BCP). However, the halting of operations at a production site as aresult of such a disaster could have a material impact on theGroup’s financial condition and business performance.
(4) Product Quality
The Dainippon Screen Group has created its quality management
system on the basis of standards for quality management systems(ISO 9001) and works to enhance the quality of its products andservices. Nevertheless, if a product defect should arise and lead toa large-scale recall or product liability, resulting in losses to acustomer, the Group could incur significant additional expenses
and suffer a decrease in trust, prompting a decline in sales. Suchcases could have a material impact on the Group’s financial
condition and business performance.
(5) New product development
In order to strengthen its earnings structure by expanding market
share, the Group is working to concentrate development themes inline with the respective strategies of each in-house company, toshare technologies held within the Group and effectively utilize
external technology resources to strengthen and invigorate its
development capabilities in the timely introduction of products
incorporating the latest technologies. This notwithstanding,extended development periods could result in delays in new
product releases, which could have a material impact on theGroup’s financial condition and business performance.
(6) Intellectual property rights
The Group has over the years continually striven to introduce
products utilizing the latest technologies into the market and has
created various proprietary technologies within each businessdivision. In addition, the Group has worked to establish andprotect its intellectual property rights under related intellectual
property laws and in contracts with other companies. However,given the increasing complexity of intellectual property rights inleading-edge technology fields, there is the risk that the Group
could in the future become involved in intellectual property
disputes, and that such disputes could have a material impact on
the Group’s financial condition and business performance.
(7) Information security
The Group in the course of its business operations handles various
personal, customer and technology information. The Group has
established “Network System Management Regulations” in order tostrengthen the security of internal information systems and is
working to thoroughly implement corporate ethics through the“Dainippon Screen Code of Ethics” in order to strengthen its
information management system. However, unforeseen leaks ofconfidential information could have a material impact on theGroup’s financial condition and business performance.
(8) Corporate acquisitions and capital participation
The Group may engage in corporate acquisitions or capital
participation in other companies as part of its business strategy.
While the Group will thoroughly examine each specific project
before taking action, business plans may not proceed as originallyplanned after an acquisition or a business alliance is concluded, andthis could have a material impact on the Group's financial condition
and business performance.
45(9) Interest rate fluctuations
All the Group’s interest-bearing debt as of the end of the fiscal year
was fixed-rate debt and was, therefore, not subject to interest rate
fluctuation risk. Nevertheless, the Group’s financial condition andbusiness performance could be materially affected by the impact ofinterest rate fluctuations on new fund procurement at variableinterest rates.
(10) Procurement of funds
Certain loan contracts of the Company provide for financial
covenants regarding its consolidated net assets at the end of eachfiscal year, and its consolidated ordinary income (loss) of each fiscal
year. If these covenants were to be breached and the financial
institutions required repayment, the Company could be forced toforfeit the benefit of time in relation to such loans. In such case, theCompany could also forfeit the benefit of time in relation to its
bonds and other loans. If the Company forfeits the benefit of time forits loans and incurs the obligation to make a lump-sum repayment,
it could have a material impact on the Group’s financial condition.
(11) Exchange rate fluctuations
As the Group has a high overseas sales ratio, we make a proactive
effort to avoid exchange rate risks on export sales by conducting
transactions denominated in yen. However, some transactions aredenominated in foreign currencies. While the Group is working tominimize the impact of exchange rate fluctuations by using forward
exchange contracts and other measures to minimize the impact on
its business performance, rapid fluctuations in exchange rates could
have a material impact on the Group’s financial condition andbusiness performance.
(12) Retirement benefit obligations
The Group calculates accrued pension and severance costs based onassumed discount rates set by actuarial calculations and on expected
returns on pension asset investments. If differences arise between
actual results and assumed costs, changes in assumed parameters
and/or declines in pension fund returns, future cumulative
differences in these obligations must be recognized, generally having
an effect on the recognition of future costs and the recording of
benefit obligations. While the Group is working through aconversion from a qualified retirement pension system to a cash
balance plan and a defined contribution plan and taking othermeasures to reduce the impact of retirement benefit obligations,worse than forecasted investment returns and other factors could
have a material impact on the Group's financial condition andbusiness performance.
(13) Impact of impairment accounting
Due to the application of impairment accounting for fixed assets,
future trends in property prices and the earnings outlook for thebusiness could have a material impact on the Group’s financial
condition and business performance.
(14) Recoverability of deferred tax assets
The Dainippon Screen Group records deferred tax assets against
temporary differences due to future losses and loss carryforwards
for tax purposes based on rational forecasts of future income
taxes and its judgments of their recoverability. The Group
reviews its assumptions on future income taxes based on suchfactors as changes in the management environment. A resulting
decision that some or all of these deferred tax assets are
unrecoverable and that the drawing down of deferred tax assets isnecessary could have a material impact on the Group’s financial
condition and business performance.
(15) Other risks
In addition to the above described risks, the Group’s business
operations are affected, as are other companies, by risks of the global
and domestic political environment, the economic environment,
natural disasters such as earthquakes and floods, wars, terrorism,
epidemics, stock markets, commodity markets, regulations bygovernment and etc., the supply systems of business associates andemployment conditions. Adverse developments in any of the above
areas could, therefore, have a material impact on the Group’s
financial condition and business performance.

Segment Information

Net Sales and Income (Loss) in Reportable Segments

Millions of yen

Years ended March 31,

Net sales

2012

2011

2010

Reportable segment: SE¥ 131,073¥ 167,593¥ 174,279¥ 100,932

FE

11,78732,611

32,711

19,898—MP

46,324

49,16447,30642,704

—

740

722

657

595

Consolidated¥ 189,924¥ 250,090¥ 254,953¥ 164,129¥—

Reportable segment: SE

¥

¥

¥

¥

¥

—

Other
Operating income (loss)

2009

2013

(5,882)

13,62828,141¥——(7,334)FE(860)(1,217)34(1,672)

—

MP

1,475

2,305

(1,304)(4,674)

—

(159)

3

303

16

¥

27,174¥ (13,664)

(363)

(382)

¥

26,811¥ (14,046)

Other
Total

(5,426)¥¥

14,719(1,221)(1,561)

Adjustments
Consolidated(6,987)¥¥

13,498

—
¥

—

¥

—

—

Notes: 1. Effective from the fiscal year ended March 31, 2011, the business segment information is provided in conformity with the “Accounting Standard for Disclosures about Segments of an Enterpriseand Related Information” (ASBJ Statement No.17, (Revised 2009) issued on March 27, 2009), and Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation (ASBJ Guidance No.20, issued on March 21, 2008). Segment information is provided in conformity with the new reportable segments from the fiscal year ended March 31, 2010.
2. The Dainippon Screen Group has created three business segments for reporting: “Semiconductor Equipment,” “FPD Equipment” and “Media and Precision Technology,” categorized by products
based on respective internal companies. Products and services of each segment are as follows:
SE: Development, manufacturing and sale of and maintenance services for semiconductor production equipment
FE: Development, manufacturing and sale of and maintenance services for FPD production equipment
MP: Development, manufacturing and sale of and maintenance services for graphic arts equipment and PCB related equipment
3. The “Other” category incorporates operations not included in reportable segments, including software development, planning and production of printed matter, logistics operations and other businesses.
4. For more information such as details of each reportable segment, see Note 7, “Segment Information.”

Segment Sales and Income (Loss) by Business Field

Millions of yen

Years ended March 31,

Net sales

Operating income (loss)

2012

2013

Electronic Equipment and Components

¥

¥

—

2010

2009

—

¥ 125,086¥ 160,157
57,0952011—¥

Graphic Arts Equipment

—

—

—

38,448

Other

—

—

—

595

1,797

Consolidated¥

Electronic Equipment and Components

¥

—

¥

—

¥

—

¥

—

¥ 164,129¥ 219,049

—

¥

¥

—

¥ (11,449)

Graphic Arts Equipment

—

—

—

(2,491)

Other

—

—

—

(106)

—

¥ (14,046)

Consolidated

¥

¥

—

—

¥

(5,920)
1,601
(191)

¥

(4,510)Notes: 1. The amounts in the above table are presented pursuant to the previous segment standard.
2. Primary products of each segment category were as follows:
Electronic Equipment and Components: Semiconductor production equipment, FPD production equipment, PCB production equipment, and maintenance and repair services
Graphic Arts Equipment: CTP (Plate recorders), digital press machines, other printing and prepress machines, fonts, maintenance and repair services
Other: Printing, logistics services and other businesses

Domestic Sales and Overseas Sales

Millions of yen

Years ended March 31,

Domestic sales

2012

2013

¥

47,305¥

62,135

2011¥

52,6292010¥

42,714

2009¥

72,281

142,619

187,955

202,324

121,415

146,768

North America

45,52553,47954,36518,012

38,467

Asia & Oceania

76,204

92,063

114,787

87,57980,603

Europe15,47926,13826,573

13,74820,017

Others

5,411

16,275

6,599

2,076

7,681

79.4%

74.0%

67.0%

Overseas sales

Ratio of overseas sales to net sales (%)
Net sales

75.1%¥ 189,924

75.2%¥ 250,090¥ 254,953¥ 164,129¥ 219,049

Notes: 1. Sales to customers in Japan by the Company and its consolidated subsidiaries.
2. Sales to customers outside Japan by the Company and its consolidated subsidiaries.
3. For information by geographic areas, see Note 7, “Segment Information.”46

Consolidated Balance Sheets
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2013 and 2012

Thousands of
U.S. dollars

Millions of yen

Assets

2012

2013

2013

Current Assets:
Cash and cash equivalents¥

38,027¥35,632$404,543

Time deposits

2,394

2,031

25,468Trade notes and accounts receivable

57,42072,949610,851

Allowance for doubtful receivables(935)(1,125)(9,947)

Inventories

59,45057,118632,447

Deferred tax assets

3,985

7,214

42,394

Prepaid expenses and other

3,906

3,724

41,553

Total current assets

164,247

177,543

1,747,309

Land

9,811

9,742

104,372

Buildings and structures

51,58750,929548,798

Machinery, equipment and other

43,787

39,240465,820

Lease assets

6,294

7,390

66,957

Construction in progress

1,260

1,558

13,404

112,739

108,859

1,199,351(72,837)(70,190)(774,862)

39,902

38,669424,489

231,894

Property, Plant and Equipment, at Cost:

Total property, plant and equipment
Accumulated depreciation
Net property, plant and equipment

Investments and Other Assets:
Investment securities

21,798

21,110Investments in affiliates

38

38

404

Lease assets

271

479

2,883

Deferred tax assets
Other assets
Total investments and other assets
Total Assets
The accompanying notes to the consolidated financial statements are an integral part of these statements.

47

365

587

3,883

8,402

6,956

89,38330,87429,170328,447¥ 235,023¥ 245,382$ 2,500,245

Thousands of
U.S. dollars

Millions of yen

Liabilities and Net Assets

2012

2013

2013

Current Liabilities:
Short-term debt
Current portion of long-term debt¥

33,783

¥

8,049

$

359,394

3,350

8,650

35,638

733

1,348

7,798

Trade

60,75181,459646,287

Construction and other

2,656

4,593

28,255

4,792

6,477

50,979

844

1,586

8,979

4,940

5,522

52,553

Lease obligations
Notes and accounts payable —Accrued expenses
Income taxes payable
Provision for product warranties
Provision for directors' bonuses

40

58

426

Provision for loss on order received

133

247

1,415

Other current liabilities
Total current liabilities

6,263

5,234

66,627

118,285

123,223

1,258,351

Long-Term Liabilities:
Long-term debt

29,642

25,988315,340

Provision for retirement benefits

152

315

1,617

Provision for directors’ retirement benefits

79

110

840

Lease obligations

2,934

3,641

31,213

Deferred tax liabilities

22,862

2,149

835

Asset retirement obligations

49

49

521

Other long-term liabilities

517

625

5,501

35,522

31,563377,894574,947

Total long-term liabilities

Contingent Liabilities (Note 8)
Net Assets:
Shareholders’ Equity:
Capital stock
Authorized—900,000,000 shares in 2013 and 2012
Issued—253,974,333 shares in 2013 and 2012

54,04554,045

Capital surplus

4,583

4,583

48,755Retained earnings

40,76755,440433,691

Treasury stock, at cost
16,613,829 shares in 2013 and 16,605,094 shares in 2012(12,245)(12,241)(130,266)

87,150101,827

927,127

2,717(9,257)

1,386(13,144)

28,904(98,478)(6,540)(11,758)(69,574)

Total shareholders’ equity
Accumulated Other Comprehensive Income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Minority Interests:
Minority interests
Total net assets
Total Liabilities and Net Assets

606

527

6,447

81,21690,596

864,000¥ 235,023¥ 245,382$ 2,500,245

48

Consolidated Statements of Operations
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Thousands of
U.S. dollars

Millions of yen

Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses
Operating income (loss)
Other (Income) Expenses:
Interest and dividend income
Interest expense
Exchange loss on foreign currency transactions, net
Insurance income
Subsidy income
Sales discounts
Gain on sales of investment securities
Impairment loss
Provision of allowance for doubtful accounts
Loss on valuation of investment securities
Loss on disaster
Other, net
Net other expenses
Income (Loss) Before Income Taxes
Income Taxes
Current
Deferred
Total income taxes
Income (Loss) Before Minority Interests
Minority Interests in Net Income of Consolidated Subsidiaries
Net Income (Loss)

2013

2012

2013

¥ 189,924
150,072
39,852
46,839(6,987)¥ 250,090
187,325
62,76549,267
13,498$ 2,020,468
1,596,511
423,957
498,287(74,330)

(502)
1,049
63
(303)
(156)

(508)
1,497
299
(102)
(125)
331
(36)
2,866
1,323
830
19
(174)
6,220
7,278

(5,340)11,160670(3,223)(1,660)

113
(353)
—
(3)
776
—
(42)
642
(7,629)
1,535
4,266
5,801
(13,430)57¥ (13,487)

Per Share of Capital Stock:

¥

—
(32)
8,255
—
(447)
6,830
(81,160)
16,33045,38361,713(142,872)
$

Yen

¥

(56.82)——606(143,479)

U.S. dollars
2012

2013

Net income (loss)
Net income—diluted
Cash dividends, applicable to earnings for the year

2,041
542
2,583
4,695
58
4,637

1,202
(3,755)

¥

19.54
—
5.00

2013

$

(0.60)——

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

Consolidated Statements of Comprehensive Income
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

2012

2013

Income (Loss) Before Minority Interests
Other Comprehensive Income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive Income
Comprehensive income attributable to
Owners of the parent
Minority interests
The accompanying notes to the consolidated financial statements are an integral part of these statements.

49

Thousands of
U.S. dollars

Millions of yen¥ (13,430)

¥

1,331
—
3,915
5,246
(8,184)(8,267)
83

¥

4,695

¥

41
42
(586)
(503)
4,192
4,142
50

2013

$

(142,872)$

14,160—41,64855,808(87,064)(87,947)883

Consolidated Statements of Changes in Net Assets
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Millions of yen
Accumulated othercomprehensive income

Shareholders’ equity
Shares ofissuedcapitalstock(thousands)

Capitalstock

CapitalsurplusRetainedearnings

Treasurystock

253,974¥ 54,045¥30,155 ¥26,418¥ (12,236)¥ 1,345¥ (42)¥ (12,567)¥ 482¥ 87,600

Net income

—

—

—

4,637

—

—

—

—

—

4,637

Transfer to retained earnings from capitalsurplus——(25,572)

25,572

—

—

—

—

—

—

Balance at the beginning of fiscal 2012

Valuationdifference Deferred
Foreign
on available- gains orcurrency
for-sale losses on translation
securities hedges adjustments

Minority
Totalinterests net assets

Cash dividends paid, ¥5.00 per share

—

—

—

(1,187)

—

—

—

—

—

(1,187)

Valuation difference on available-for-salesecurities

—

—

—

—

—

41

—

—

—

41

Deferred gains or losses on hedges

—

—

—

—

—

—

42

—

—

42

Foreign currency translation adjustments

—

—

—

—

—

—

—

(577)

—

(577)

Acquisition of treasury stock

—

—

—

—

(5)

—

—

—

—

(5)

Disposal of treasury stock

—

—

—

—

0

—

—

—

—

0

Other

—

—

—

—

—

—

—

—

45

45

Balance at the end of fiscal 2012

253,974¥ 54,045¥ 4,583 ¥55,440¥ (12,241)¥ 1,386¥ —¥ (13,144)¥ 527¥ 90,596

Balance at the beginning of fiscal 2013

253,974¥ 54,045¥ 4,583 ¥55,440¥ (12,241)¥ 1,386¥ —¥ (13,144)¥ 527¥ 90,596——— (13,487)

—

—

—

—

—

(13,487)

—

—

—

—

—

(1,186)Net loss
Cash dividends paid, ¥5.00 per share

—

—

—

(1,186)

Valuation difference on available-for-salesecurities

—

—

—

—

—

1,331

—

—

—

1,331

Foreign currency translation adjustments

—

—

—

—

—

—

—

3,887

—

3,887

—

—

(4)

—

—

—

—

(4)

—

—

—

—

—

—

79

79

¥ 4,583 ¥40,767¥ (12,245)¥ 2,717¥ —¥ (9,257)¥ 606¥ 81,216

Acquisition of treasury stock
Other
Balance at the end of fiscal 2013

—

—

—

—

253,974¥ 54,045

Thousands of U.S. dollars
Accumulated othercomprehensive income

Shareholders’ equity

Capitalstock

Balance at the beginning of fiscal 2013

CapitalsurplusRetainedearnings

Treasurystock

Valuationdifference Deferred
Foreign
on available- gains orcurrency
for-sale losses on translation
securities hedges adjustments$ 574,947 $ 48,755 $ 589,787 $ (130,223) $ 14,745 $Minority
Totalinterests net assets$ 5,606 $963,787—$(139,830)—— (143,479)

—

—

—

—

—

(143,479)

Cash dividends paid, $0.05 per share——(12,617)

—

—

—

—

—

(12,617)

Valuation difference on available-for-sale securities

—

—

—

—

14,159———14,159Foreign currency translation adjustments

—

—

—

—

—

—

41,352—

41,352Acquisition of treasury stock

—

—

—

(43)

—

—

—

—

(43)

—

—

—

—

—

841

841

Net loss

Other
Balance at the end of fiscal 2013

$ 574,947 $ 48,755 $ 433,691 $ (130,266) $ 28,904 $

—

—

—

$ (98,478)$ 6,447 $864,000

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

50

Consolidated Statements of Cash Flows
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Thousands of
U.S. dollars

Millions of yen
2012

2013

2013

Cash Flows from Operating Activities:
Income (loss) before income taxes¥(7,629)¥7,278$ (81,160)
50,330

4,731

4,986

Impairment loss

—

2,866

—

Loss (gain) on valuation of investment securities

776

830

8,255

Loss (gain) on sales of investment securities

(353)

(36)

(3,755)

Increase (decrease) in provision for retirement benefits

(164)

36

(1,745)

Depreciation and amortization

Increase (decrease) in provision for directors' bonuses

(18)

(10)

(191)

Increase (decrease) in provision for product warranties

(639)

(535)

(6,798)

Increase (decrease) in provision for loss on order received

(114)

(90)

(1,213)

Interest and dividend income

(502)

(508)

(5,340)Interest expenses

1,049

1,497

11,160Decrease (increase) in trade notes and accounts receivable

15,162(1,835)

161,298

Decrease (increase) in inventories

(924)

3,033

(9,830)Decrease (increase) in other current assets

135

627

1,436

Increase (decrease) in trade notes and accounts payable(21,144)(605)(224,936)

Increase (decrease) in accrued expenses(2,010)(2,341)(21,383)

Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Contribution in connection with the shift toa defined contribution pension plan
Income taxes paid
Net cash provided by (used in) operating activities

32

(396)

340

(667)

(478)

(7,096)(12,279)

14,319(130,628)

497

499

5,287

(1,045)(1,496)(11,117)

(18)

(55)

(191)

(2,475)(1,988)(26,330)(15,320)

11,279(162,979)

Cash Flows from Investing Activities:
Decrease (increase) in time deposits, net

(23)

(490)

(245)

Purchase of property, plant and equipment(6,037)(4,491)(64,223)

Proceeds from sales of property, plant and equipment

364

1,856

3,872

Purchase of investment securities

(85)

(13)

(904)

Proceeds from sales of investment securities

947

125

10,074

—

(313)

—

Purchase of investments in subsidiaries resulting
in change in scope of consolidation

(934)

(836)

(9,936)(5,768)(4,162)(61,362)

Increase (decrease) in short-term debt, net

25,725

7,547

273,670

Proceeds from long-term debt

7,000

5,000

74,468

Repayments of long-term debt

(1,646)(35,227)(17,510)

Repayments of finance lease obligations(1,350)(1,986)(14,362)—

18,895—(7,000)(2,500)(74,468)

Other, net
Net cash used in investing activities
Cash Flows from Financing Activities:

Proceeds from issuance of bonds
Redemption of bonds
Decrease (increase) in treasury stock, net
Cash dividends paid
Cash dividends paid to minority shareholders

(5)

(43)

(1,187)(12,617)

(5)

(5)

(53)

21,534(9,468)229,085

Effect of Exchange Rate Changes on Cash and Cash Equivalents

1,949

(400)

20,735Net Increase (Decrease) in Cash and Cash Equivalents

2,395(2,751)

25,479Cash and Cash Equivalents at Beginning of Year35,63238,383379,064

Cash and Cash Equivalents at End of Year¥38,027¥ 35,632$ 404,543

Net cash provided by (used in) financing activities

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

51(4)(1,186)

Notes to the Consolidated Financial Statements
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2013 and 2012

Note 1: Summary of Significant Accounting and Reporting Policies(a) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements ofDainippon Screen Mfg. Co., Ltd. (the “Company”) have been
prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Law and its related
accounting regulations and in conformity with accounting
principles generally accepted in Japan, which are different incertain respects as to application and disclosure requirementsfrom International Financial Reporting Standards.
The accounts of the consolidated overseas subsidiaries havebeen prepared in accordance with either International Financial
Reporting Standards or U.S. generally accepted accounting
principles, with adjustments for the six specified items asapplicable. The accompanying consolidated financial statements
have been restructured and translated into English, with some
expanded descriptions, from the consolidated financial
statements of the Company prepared in accordance withJapanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial
Instruments and Exchange Law. Some supplementary
information included in the Japanese language statutory
consolidated financial statements, but not required for fairpresentation, is not presented in the accompanying consolidated
financial statements.
Certain Japanese yen amounts in the accompanying
consolidated financial statements have been translated into U.S.
dollar amounts solely for the convenience of readers outside Japan,
using the prevailing exchange rate as of March 31, 2013, whichwas ¥94 to U.S. $1.00. This translation should not be construed asa representation that the amounts shown could be converted into
U.S. dollars at this or any other rate of exchange.
Certain amounts in the prior years’ consolidated financial
statements have been reclassified to conform to the current year’s
presentation.
(b) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights or the
existence of certain other conditions evidencing control by theCompany.
Investments in affiliates are accounted for by the equity method.
(c) Translation of foreign currencies
Receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates.
Except for shareholders’ equity accounts, which are translated
at historical rates, balance sheets of the consolidated overseas
subsidiaries are translated into Japanese yen at year-end rates.
Except for transactions with the Company, which are translated
at the rates used by the Company, income statements of theconsolidated overseas subsidiaries are translated at average rates.
The resulting translation adjustments are presented as foreign
currency translation adjustments in net assets.
(d) Inventories
The Company and its consolidated domestic subsidiaries state
the value of inventories mainly by either the first-in, first-out
method or the specific identification method. With regard to theamounts stated in the balance sheet, the book value devaluation

method is used to write down the value of inventory in the eventof a decline in profitability.
Consolidated overseas subsidiaries state inventories mainly at
the lower of cost or market either by the first-in, first-out methodor the specific identification method.
(e) Securities
The Company and its consolidated subsidiaries classify securities
as “available-for-sale securities.” Available-for-sale securities
with available fair values are stated at fair value. Unrealized
holding gains (losses) on these securities are reported, net of
applicable income taxes, as a separate component of net assets.
Realized gains and losses on the sales of such securities arecomputed using moving average cost. Other securities with noavailable fair values are stated at moving average cost.
(f) Depreciation
Depreciation of property, plant and equipment of the Company
and its consolidated domestic subsidiaries is computed primarily
by the declining balance method.
Depreciation of property, plant and equipment of theconsolidated overseas subsidiaries is computed mainly by thestraight-line method.
Estimated useful lives are as follows:
Buildings and structures 2–60 years
Machinery and equipment 2–17 years
Maintenance and repairs, including minor renewals andbetterments, are charged to income as incurred.
Leased assets related to finance lease transactions in which
ownership transfers to the lessee are depreciated in the samemanner as owned property, plant and equipment.
Leased assets related to finance lease transactions in which
ownership does not transfer are depreciated on a straight-line
basis, with the lease periods as the useful life and no residual value.
(g) Impairment of fixed assets
The Company and its consolidated subsidiaries evaluate the bookvalue of fixed assets for impairment. If the book value of a fixed
asset is impaired, the amount by which the book value exceeds
the recoverable amount is recognized as impairment loss.
(h) Software
Software, included in “Other assets,” is amortized using thestraight-line method over its estimated useful life (3-5 years forinternal use software and 3 years for software for sale).
(i) Research and development
Expenses related to research and development are charged toincome as incurred and amounted to ¥12,685 million ($134,947
thousand) in 2013 and ¥13,889 million in 2012.
(j) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits placedwith banks on demand or with maturities of three months or less.
(k) Goodwill
Goodwill, which represents the excess of purchase price over thefair value of net assets acquired, is amortized on a straight-line
basis over a period of five years.
(l) Bonds issue costs
Bonds issue costs are charged to expenses as incurred.
(m) Income taxes
The Company and its consolidated subsidiaries record deferred tax
assets and liabilities on loss carryforwards and temporary52

differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes by using the asset/ liability approach.
(n) Allowance for doubtful receivables
An allowance for doubtful receivables is provided to coverpossible losses on collection. The Company and its consolidated
domestic subsidiaries provide the allowance for doubtfulreceivables by adding individually estimated uncollectible
amounts of specific items to an amount based on the actual rateof past uncollected receivables.
The consolidated overseas subsidiaries provide the allowancefor doubtful receivables based mainly on the estimateduncollectible amounts of specific receivables.
(o) Provision for directors’ bonuses
Certain consolidated subsidiaries provide provision for directors’
bonuses based on the estimated amounts of payments for the
fiscal year.
(p) Employees’ severance and retirement benefits
The Company and its consolidated subsidiaries provide two types ofpostemployment benefit plans, an unfunded lump-sum payment
plan and a funded non-contributory pension plan, under which all
eligible employees are entitled to benefits based on the level of wages
and salaries at the time of retirement or termination, length ofservice and certain other factors.
The Company and certain consolidated subsidiaries have defined
contribution pension plans.
The Company and certain consolidated domestic subsidiaries
provide provision for retirement benefits at the end of the fiscal year
based on the estimated amounts of projected benefit obligation andthe fair value of the plan assets at that date.
Actuarial gains and losses are recognized in expenses using thestraight-line method within the average of the estimated remaining
service years (14 years) commencing with the following period.
If the fair value of plan assets at the end of the fiscal year exceeds
the projected benefit obligation (excluding the unrecognizedactuarial differences), the difference is recognized as prepaid
pension expenses included in “Other assets” in Investments andOther assets.
(q) Retirement benefits for directors and corporate auditors
Certain consolidated subsidiaries have unfunded retirement andtermination allowance plans for directors and statutory auditors.
The amounts required under the plans have been fully accrued.
(r) Provision for product warranties
The Company and certain consolidated subsidiaries provide for
estimated product warranty costs for the warranty period after
product delivery based on actual payments in the past.
(s) Provision for loss on order received
Estimated loss accrued in or after the next fiscal years is provided
to cover possible future loss related to orders received contracts,
if future loss is expected and can be reasonably estimated. (If the
net sales value is negative after calculations based on the“Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9, issued on July 5, 2006), the amounts areprovided for as provision for loss on order received.)(t) Derivatives and hedge accounting
If derivative financial instruments are used as hedges and meetcertain hedging criteria, the Company defers recognition of gainor loss resulting from a change in the fair value of the derivative
financial instrument until the related loss or gain on the hedged

53

item is recognized.
When a forward foreign exchange contract meets certain
conditions, the hedged item is stated at the forward exchange
contract rate.
Also, if interest rate swap contracts are used as hedges andmeet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or
deducted from the interest on the assets or liabilities for which
the swap contract was executed.
The Company uses forward foreign exchange contracts,
interest rate swap contracts and interest rate cap contracts only
for the purpose of mitigating future risk of fluctuation of foreign
currency exchange rates and interest rates. In terms of forward
foreign exchange contracts, the Company uses them within theamounts of foreign currency receivables and authorized forecast
transactions.
The following table summarizes the derivative financial
instruments used in hedge accounting and the related hedged
items.
Hedging instruments:
Forward foreign exchange contracts
Interest rate swap contracts
Interest rate cap contracts

Hedged items:
Foreign currency receivables
Interest on short-term and long-term debt
Interest on short-term and long-term debt

The Company executes and manages derivative transactionsin accordance with established internal policies and specified
limits on the amounts of derivative transactions allowed. The
derivative transactions are reported to and approved by the Boardof Directors.
The Company evaluates hedge effectiveness semiannually bycomparing the cumulative changes in the hedging derivative
instruments and the items hedged.
(Changes of accounting policies)(Changes in depreciation method)
From the first quarter under review, following the revision of the
Corporation Tax Act, the Company and its consolidated
domestic subsidiaries changed the depreciation method based on
the revised Corporation Tax Act for property, plant andequipment acquired on or after April 1, 2012. As a result of thischange, operating loss for the year ended March 31, 2013
decreased by ¥94 million ($1,000 thousand), and loss before
income taxes decreased by ¥94 million ($1,000 thousand),
respectively, compared with amounts that would have beenrecorded using the previously applied method.
(Accounting standards issued but not yet applied)•Accounting Standard for Retirement Benefits (ASBJ Statement
No. 26, May 17, 2012)•Guidance on Accounting Standard for Retirement Benefits(ASBJ Guidance No. 25, May 17, 2012)
1. Summary
To improve financial reporting and in consideration ofinternational trends, the application of these accounting
standards is intended to improve the accounting methods applied
to actuarial gains and losses and past service costs that are yet tobe recognized and the calculation method for retirement benefit
obligations and service cost, and expand disclosure.

2. Date of application
The Company expects to apply the accounting standards fromthe end of the fiscal year ending March 31, 2014. However, theamendment of the calculation method for present value of defined
benefit obligations and current service costs will be adopted fromthe beginning of the fiscal year ending March 31, 2015.

3. Effect of applying these accounting standards
The effect of applying these accounting standards was underassessment at the time of preparation of the accompanying
consolidated financial statements.

Note 2: Consolidated Statements of Cash FlowsThe significant noncash financing activities for the years ended March 31, 2013 and 2012 were as follows:
Newly booked assets and liabilities relating to finance leases

Thousands of
U.S. dollars

Millions of yen
2012

2013

Lease assets
Lease obligations

¥

¥

27
28

84
87

2013

$

287
298

Note 3: Income Taxes
The Company is subject to several taxes based on income withan aggregate statutory tax rate of approximately 37.9% in 2013
and 39.5% in 2012. As of March 31, 2013, the Company andcertain consolidated subsidiaries had net tax loss carryforwards
aggregating ¥74,845 million ($796,223 thousand), which wereavailable to offset the respective future taxable incomes of thesecompanies. Significant components of the Company and its
consolidated subsidiaries’ deferred tax assets and liabilities as ofMarch 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen
2012

2013

Deferred tax assets (current)
Accrued bonuses for employees
Loss on valuation of inventories
Provision for product warranties
Other
Valuation allowance
Deferred tax liabilities (current)
Adjustment of allowance for doubtful accounts and other
Net deferred tax assets (current)
Deferred tax assets (noncurrent)
Net operating loss carryforwards
Research and development expenses
Depreciation
Other
Valuation allowance
Deferred tax liabilities (noncurrent)
Undistributed earnings of consolidated overseas subsidiaries
Valuation difference on available-for-sale securities
Prepaid pension cost
Other
Net deferred tax liabilities (noncurrent)

2013

524
2,825
1,763
1,722
(2,845)¥ 1,173
2,448
2,119
3,928
(2,452)$(13)¥ 3,976(6)¥ 7,210(139)$ 42,298¥28,270
1,640
1,675
3,854
(34,072)¥ 21,578
1,619
1,779
4,371
(27,469)$300,745
17,447
17,81941,000(362,468)(964)(1,139)(1,028)(20)¥ (1,784)

(780)
(509)
(831)
(6)
(248)

(10,255)(12,117)(10,936)(214)$ (18,979)

¥

¥

5,574
30,05318,75518,321(30,266)

A reconciliation of the aggregate statutory income tax rate and the effective income tax rate as a percentage of income before income
taxes for the year ended March 31, 2013 is not shown due to the loss before income taxes.
The reconciliation for the year ended March 31, 2012 is not shown due to the fact that the rate difference was not greater than five
hundredths of the aggregate statutory income tax rate.

54

Note 4: Short-Term and Long-Term Debt
Short-term debt generally consists of short-term notes from banks. The average interest rate on these borrowings at March 31, 2013 and2012 was 0.70% and 0.55%, respectively.
Long-term debt as of March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012

2013

1.02% to 1.9% loans from Japanese banks, due in installments through 2019
SecuredUnsecured
0.99% to 1.99% loans from a governmental institution, due in installments
through 2018
SecuredUnsecured
1.59% to 2.17% loans from an insurance company, due in installments
through 2018
SecuredUnsecured
1.34% unsecured notes, due September 26, 2016
1.06% unsecured notes, due September 26, 2014
2.13% unsecured notes, due February 8, 2013
Total
Current portion of long-term debt shown in current liabilities
Long-term debt less current portion

As of March 31, 2013, certain long-term debt of ¥ 100 million($1,064 thousand) was secured by property, plant and equipmentwith a net book value of ¥ 5 million ($53 thousand).
As is customary in Japan, substantially all of the bank borrowings
are subject to general agreements with each bank which provide,
among other things, that additional security and guarantees forpresent and future indebtedness will be given upon request by thebank and that any collateral so furnished will be applicable to allindebtedness to that bank. In addition, the agreements provide thatthe bank has the right to offset cash deposited against any
long-term or short-term debt that becomes due and, in case ofdefault and certain other specified events, against all other debts
payable to the bank. To date, the Company has not received any
such requests from its banks.

¥

100
4,714

¥

150
5,200

2013

$

1,064
50,149

—
4,837

—
1,401

—
51,457

—
4,341
5,000
14,000—32,992(3,350)¥ 29,642

—
1,887
5,000
14,0007,000
34,638(8,650)¥ 25,988—
46,18153,191
148,936—
350,978(35,638)$ 315,340

The Company has contracts for commitment lines by whichbanks are bound to extend loans up to a prearranged amount uponrequest. As of March 31, 2013, the total financing available underthese contracts amounted to ¥ 30,000 million ($319,149 thousand),and no amount of these commitment lines had been used.
The aggregate annual maturities of long-term debt are as
follows:
Years ended March 31,

Millions of yen

Thousands of
U.S. dollars

2015
2016
2017
2018
2019 and thereafter
Total¥ 16,299
1,686
6,685
1,686
3,286
¥ 29,642$ 173,394
17,936
71,117
17,936
34,957$ 315,340

Note 5: Net Assets and Per Share Data
Under Japanese laws and regulations, the entire amount paid for
new shares is required to be designated as capital stock. However, acompany may, by a resolution of the Board of Directors, designate
an amount not exceeding one half of the price of the new shares asadditional paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (the “Law” ), in cases inwhich a dividend distribution of surplus is made, the smaller of anamount equal to 10% of the dividend or the excess, if any, of 25%
of capital stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in capital or
legal earnings reserve. Legal earnings reserve is included in retained
earnings in the accompanying consolidated balance sheets.
Additional paid-in capital and legal earnings reserve may not be
distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to other55

capital surplus and retained earnings, respectively, and arepotentially available for dividends. Both of these appropriations
generally require a resolution of the shareholders’ meeting.
The maximum amount that the Company can distribute as
dividends is calculated based on the nonconsolidated financial
statements of the Company in accordance with Japanese laws andregulations.
Net income per share is based on the weighted average numberof shares of capital stock outstanding. Diluted net income per shareis computed using the weighted average number of shares after
assuming conversion of all dilutive convertible notes and theexercise of all outstanding stock acquisition rights.
Diluted net income per share of capital stock for the fiscal year
ended March 31, 2013 is not shown because there was a net loss
recorded and there was no dilutive stock.

Note 6: Leases
1. Finance leases
A. Information relating to finance leases for which theownership of the leased assets is considered to be transferredto the lessee as of and for the years ended March 31, 2013
and 2012 was as follows:(As lessee)
1) Description of leased assets
1. Tangible fixed assets: Mainly the production facilities in
the Semiconductor Equipment business ( “Machinery,equipment and other”)
2. Intangible fixed assets: Software2) Depreciation method for leased assets
As described in Note 1, Summary of Significant Accounting
and Reporting Policies, (f) Depreciation
B. Information relating to finance leases, excluding thoseleases for which the ownership of the leased assets is
considered to be transferred to the lessee, as of and for theyears ended March 31, 2013 and 2012 was as follows:(As lessee)
1) Description of leased assets
1. Tangible fixed assets: Mainly the production facilities
and the R&D facilities in the Semiconductor Equipment
business (“Buildings and structures” and “Machinery,equipment and other”)
2. Intangible fixed assets: Software2) Depreciation method for leased assets
As described in Note 1, Summary of Significant Accounting
and Reporting Policies, (f) Depreciation
2. Operating leases(As lessee)
Future minimum lease payments as lessee:
Millions of yen
2012

2013

Due within one year
Due after one year
Total

¥ 313
466
¥ 779

¥
¥

192
232
424

Thousands of
U.S. dollars
2013$ 3,330
4,957$ 8,287

Note 7: Segment Information
1. General information about reportable segments(1) Calculation Method for Reportable Segments
The Dainippon Screen Group’ s reportable segments are thebusiness units for which the Company is able to obtain respective
financial information separately in order for the Board of
Directors to conduct periodic investigations to determine the
distribution of management resources and evaluate the businessresults.
The Dainippon Screen Group has adopted an internal company
system in which each internal company develops business activities
and establishes its own comprehensive strategy for both Japan andoverseas markets in accordance with the products it handles.
Consequently, the Dainippon Screen Group has created threebusiness segments for reporting: the Semiconductor Equipment(SE) segment, the FPD Equipment (FE) segment and the Mediaand Precision Technology (MP) segment, categorized by products

based on respective internal companies.
(2) Products and Services of Reportable Segments
The SE segment develops and manufactures semiconductor
production equipment and conducts sales and maintenanceservices. The FE segment develops, manufactures and markets FPD
production equipment, and it also conducts maintenance services.
In the MP segment, graphic arts equipment and PCB related
equipment are developed, manufactured, sold and maintained.
2. Basis of measurement about reportable segment income(loss), segment assets and other material items
The accounting methods applied to reported business segments are
identical to those stated in Note 1, “Summary of Significant
Accounting and Reporting Policies.” Income for each reportablesegment reflects operating income. Intersegment revenues andtransfers reflect market prices.

56

3. Information about reportable segment income (loss), segment assets and other material items
Millions of yen
As of and for the year ended March 31, 2013

Sales
Sales to outside customers
Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Impairment loss
Capital expenditures

SE

Reportable segment
FEMP¥ 131,073—
131,073¥ (5,882)¥ 119,748¥ 11,787—
11,787(860)¥¥ 14,027¥ 46,324—
46,324¥ 1,475¥ 46,653

740
7,309
8,049
¥ (159)¥ 4,043

2,970
—
4,238

79
—
132

407
—
899

103
—
154

OthersAdjustments

Consolidated¥—(7,309)(7,309)¥ (1,561)¥ 50,552¥ 189,924—
189,924¥ (6,987)¥ 235,023

1,172
—
1,027

4,731
—
6,450

OthersAdjustments

Consolidated

¥

¥

¥

Millions of yen
As of and for the year ended March 31, 2012

Sales
Sales to outside customers
Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Impairment loss
Capital expenditures

SE

Reportable segment
FE

MP¥ 167,593—
167,593¥ 13,628¥ 133,927¥ 32,611—
32,611¥ (1,217)¥ 15,662¥ 49,164—
49,164¥ 2,305¥ 41,226

722
8,657
9,379
¥
3
¥ 4,763—(8,657)(8,657)¥ (1,221)¥ 49,804¥ 250,090—
250,090¥ 13,498¥ 245,382

3,204
848
2,951

329
1,840
448

310
—
1,041

112
—
114

1,031
178
2,793

4,986
2,866
7,347

Adjustments

Consolidated$—(77,755)(77,755)$ (16,607)$ 537,787$ 2,020,468—
2,020,468$ (74,330)$ 2,500,245

12,468—
10,92650,330—68,617

Thousands of U.S. dollars
As of and for the year ended March 31, 2013

Sales
Sales to outside customers
Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other
Depreciation and amortization
Impairment loss
Capital expenditures

SE

Reportable segment
FEMP$ 1,394,394—
1,394,394(62,574)$$ 1,273,915$ 125,394—
125,394$ (9,149)$ 149,223$ 492,809—
492,809$ 15,691$ 496,309

7,871
77,75585,626$ (1,691)$ 43,011

31,596—45,085

840
—
1,404

4,330
—
9,564

1,096
—
1,638

Others$

Notes: 1. The “Other” category incorporates operations not included in reportable segments, including software development, planning and production of printed matter, logistics operations and otherbusinesses.
2. Segment operating income (loss) adjustments of ¥(1,561) million ($(16,607) thousand) and ¥(1,221) million for the years ended March 31, 2013 and 2012, respectively, are the corporate
expenses not apportioned to each reportable segment. Corporate expenses consist mainly of the headquarters’ general and administrative expenses not usually attributed to segments.
Segment assets adjustments of ¥50,552 million ($537,787 thousand) and ¥49,804 million for the years ended March 31, 2013 and 2012, respectively, are the corporate assets not apportioned toeach reportable segment. Corporate assets consist mainly of administrative assets of the parent company not usually attributed to segments.
3. Segment income (loss) is adjusted with operating income (loss) under consolidated statements of operations.

<Related Information>
1. Information about geographic areas(1) Net sales

2012

2013

Years ended March 31,

Japan
TaiwanSouth Korea
China
United States
EuropeOthers
Total

Thousands of
U.S. dollars

Millions of yen¥

47,305
49,13415,092
7,166
45,171
15,47910,577¥ 189,924(24.9%)(25.9%)(7.9%)(3.8%)(23.8%)(8.1%)(5.6%)(100.0%)¥62,13532,28630,043
20,742
52,873
26,13825,873¥ 250,090(24.8%)(12.9%)(12.0%)(8.3%)(21.1%)(10.5%)(10.4%)(100.0%)2013$

503,245
522,702160,553
76,234
480,543
164,670
112,521$ 2,020,468

Notes: 1 Net sales are categorized by country or geographic area based on the location of the customer.
2 The numbers shown in parentheses are component ratios.

(2) Property, plant and equipment
Information about property, plant and equipment by geographic area is omitted because the amount of fixed assets held in Japanexceeds 90% of the amount of property, plant and equipment on the consolidated balance sheet.

57

2. Information about major customers
Year ended March 31, 2013

Millions of yen

Net sales
Taiwan Semiconductor Manufacturing Co., Ltd. (related segment: SE)¥

Year ended March 31, 2012

Millions of yen

Net sales
Taiwan Semiconductor Manufacturing Co., Ltd. (related segment: SE)¥

42,615

Thousands of
U.S. dollars$

453,351

25,064Note 8: Contingent Liabilities
As of March 31, 2013, the Company and its consolidated subsidiaries were contingently liable for the following:
Millions of yen

As guarantors of
Customers’ lease payments
Employees’ housing loans
Trade notes receivable endorsed
Liquidation of receivables with recourse
Total

¥ 29
185
52
16
¥ 282

Thousands of
U.S. dollars

$

309
1,968
553
170
$ 3,000

Note 9: Financial Instruments
1. Qualitative information on financial instruments
A. Qualitative information on financial instruments
The Dainippon Screen Group procures funds necessary to conduct business by means such as loans from financial institutions and theissuance of bonds, in accordance with annual funding plans. Investments of capital are limited to instruments that satisfy safety andliquidity requirements. Derivative transactions are used only to hedge financial risk such as the risk of fluctuations in exchange rates
and interest rates. Speculative transactions are not undertaken.
B. Details of financial instruments used, risks and processes for risk management
Financial instruments
Trade notes and accounts receivable
Accounts receivable denominated inforeign currency
Investments in securities
Trade notes and accounts payable, loans,bonds and lease obligations
Portion of loans

Risks

Processes for risk management
The amounts outstanding are managed for each client and by due date.
Credit risk of clients
Also, the financial condition of clients are monitored.
Risk of fluctuation in
The risk is hedged by using forward foreign exchange contracts on
foreign currency exchange rates certain portions of the receivables.
Risk of fluctuation in
The fair values of the instruments and financial conditions of issuers
market prices
are regularly monitored.
Funding plans are prepared and renewed, and a certain level of
Liquidity risk
liquidity on hand is maintained.
Risk of fluctuation in
The risk is hedged by using interest rate swaps.
interest rates

The derivative transactions which the Company uses are forward foreign exchange contracts and interest rate swap contracts and are
only used for the purpose of mitigating risks of fluctuation in foreign currency exchange rates and interest rates. For information
about hedging instruments, hedged items, hedging policies, evaluation of hedge effectiveness and management of derivativetransactions, see Note 1(t), Summary of Significant Accounting and Reporting Policies - Derivatives and hedge accounting. The Company
believes that its credit risk is insignificant as the counterparties to its derivative transactions are limited to creditable financial institutions.
C. Supplemental information on fair values
The contract amounts of the derivative transactions described in Note 10, Derivative Transactions, do not reflect the market risks ofthe derivative transactions themselves.

582. Fair values of financial instruments
The book value and fair value of financial instruments and the differences between these figures as of March 31, 2013 and 2012 are set
forth in the table below. The table does not include financial instruments whose fair values were not readily determinable. (See note 2.)
Millions of yen
Years ended March 31,

Book value

2013
Fair value

DifferenceBook value

2012
Fair value(1) Cash, cash equivalents and time deposits(2) Trade notes and accounts receivable
Allowance for doubtful receivables (*1)

¥ 40,421
57,420(935)
56,485¥ 40,421
57,420(935)
56,485¥(0)¥ 37,663
72,949(1,125)71,824¥ 37,663
72,949(1,125)71,824

21,161¥ 118,067¥ 60,751
33,78332,992
3,667¥ 131,193

21,161¥ 118,067¥ 60,751
33,78332,4286,158¥ 133,120

—
(0)
—
—
(564)
2,491
¥ 1,927

20,497¥ 129,984¥ 81,459
8,049
34,6384,989¥ 129,135

20,497¥129,984¥ 81,459
8,049
34,834
7,966¥132,308¥¥¥ (223)—¥ (223)(3) Investments in securities
Available-for-sale securities
Total assets(1) Notes and accounts payable - trade(2) Short-term debt
(3) Long-term debt
(4) Lease obligations
Total liabilities
Derivative transactions (*2)
(1) Without application of hedge accounting(2) With application of hedge accounting
Total derivative transactions

¥
¥

(353)
0
(353)

¥
¥

(353)
0
(353)

—

¥
¥

—
—
—

¥

¥

(223)
—
(223)

Thousands of U.S. dollars
2013Book value
Fair value
Difference

Difference

¥

—

$

(0)

$ 430,011 $ 430,011
610,851
610,851(9,947)(9,947)600,904
600,904

—
(0)
—
—
196
2,977
¥ 3,173

225,117
225,117$ 1,256,032 $1,256,032$ 646,287 $ 646,287
359,394359,394
350,978
344,978
39,011
65,511$ 1,395,670 $1,416,170

—
(0)
—
—
(6,000)26,500$ 20,500

¥

$

¥
¥

¥

—
—
—

(3,755) $0(3,755) $$(3,755)0(3,755)

—

(0)

$
$

$
$

—
—
—

(*1) Allowance for doubtful receivables recorded for trade notes and accounts receivable is subtracted.
(*2) Net assets and liabilities incurred by derivative transactions are shown in net figures, and items whose total amounts are liabilities are indicated in parentheses.
Notes: 1. Method of estimating fair values of financial instruments and items regarding investment in securities and derivative transactions
Assets(1) Cash, cash equivalents and time deposits
As these assets are settled on a short-term basis, their fair values are approximately equal to their book values. For this reason, their fair values are reported based on their applicable bookvalues.
(2) Trade notes and accounts receivable
The fair values of these assets are based on the current value classified by length of time until settlement and discounted with consideration for the length of time until settlement and credit risk.
(3) Investments in securities
The fair values of securities are based on market prices on the stock exchange. For information about securities classified by purpose, see Note 11, Securities.
Liabilities(1) Notes and accounts payable -trade and (2) Short-term debt
As these liabilities are settled on a short-term basis, their fair values are approximately equal to their book values. For this reason, their fair values are reported based on their applicable bookvalues.
(3) Long-term debt
The fair values of bonds are based on the “Reference Statistical Prices [Yields] for OTC Bond Transactions” released by Japan Securities Dealers Association. The fair values of other long-term
debt are based on the current value, which is the principal discounted with consideration for the length of time until repayment and credit risk.
(4) Lease obligations
The fair values of lease obligations are based on the current value, which is the principal discounted with consideration for the length of the remaining period of lease obligation and credit risk.
Derivative transactions
See Note 10, Derivative Transactions.
2. The total book value of financial instruments whose fair values were deemed to be exceedingly difficult to estimate as of March 31, 2013 and 2012 was as follows:
Thousands of
U.S. dollars
2013Book value$ 7,181Millions of yen
Category
Non-listed equity securities

2013
Book value
¥ 675

2012
Book value¥
651

The amount in the left table includes investments in affiliates of ¥38 million ($404
thousand). These items do not have market prices and are deemed to require excessive costto estimate the future cash flows. Therefore, they are not included in (3) “Investments insecurities” as it is deemed to be exceedingly difficult to estimate the fair values.

3. Expected redemption amounts of receivables and securities with maturities after the consolidated financial statement dateMillions of yen

Cash, cash equivalents and time deposits
Trade notes and accounts receivable
Investments in securities - available-for-salesecurities with maturities
Total

2013
Due within Due between Due between
one year
one yearfive years andand five years
ten years¥ 40,390¥ —¥—57,270150—

Due after
ten years¥——

Due within
one year¥ 37,626
72,939Due after
ten years¥——

Thousands of U.S. dollars
2013
Due within Due between Due between
one year
one yearfive years andand five years
ten years$ 429,681 $—$—
609,255 1,596—

Due after
ten years
$—
—

—

—

—

—

—

—

—

—

—

—

—

—

¥ 97,660

¥ 150

¥—

¥—

¥ 110,565

¥ 10

¥—

¥—

$ 1,038,936 $1,596$—$—

4. Expected repayment amounts of long-term debt after the consolidated financial statements date
See Note 4, Short-Term and Long-Term Debt.

59

2012
Due between Due between
one yearfive years andand five years
ten years
¥ —
¥—
10
—

Note 10: Derivative Transactions
Outstanding derivative transactions as of March 31, 2013 and 2012 were as follows:
Millions of yen

Years ended March 31,

2013
PortionContracted exceeding
Fairamountone yearvalue

Non-exchange tradedforward foreignexchange contracts(Sell–U.S. dollars)(Sell–Euro)
Total¥3,9091,079¥4,988

¥
¥

—
—
—

2012
PortionRecognized Contracted exceeding
Fairgain (loss)
amountone yearvalue¥(202)(152)¥(354)¥(202)(152)¥(354)¥3,172
1,808¥4,980¥¥———¥(129)(94)¥(223)

Thousands of U.S. dollars
2013
PortionRecognized Contracted exceeding
Fair
Recognizedgain (loss)
amountone yearvalue
gain (loss)¥(129)(94)¥(223)$41,585
11,479$53,064$$— $(2,149) $(2,149)— (1,617) (1,617)— $(3,766) $(3,766)

Notes: 1. Method of estimating fair value
The fair values of exchange forward transactions as of March 31, 2013 and 2012 were estimated based on the prices presented by financial institutions.
2. The above table does not list derivative transactions for which hedge accounting has been applied.

Note 11: Securities
1. The following table summarizes acquisition costs and book values and any differences between these amounts of securities withavailable fair values as of March 31, 2013 and 2012:
Available-for-sale securities
Millions of yen
Acquisition
cost

Book value

Difference

Acquisition
cost

Book value

Difference

Thousands of U.S. dollars
2013
Acquisition
Bookvalue Differencecost¥ 9,994—¥ 9,994¥15,278—¥15,278¥ 5,284—¥ 5,284¥ 7,335—¥ 7,335¥10,900—¥10,900¥ 3,565—¥ 3,565$106,319 $162,532——$106,319 $162,532$ 56,213—$ 56,213¥ 7,312—¥ 7,312¥ 5,884—¥ 5,884¥ (1,428)—¥ (1,428)¥11,249
18¥11,267¥ 9,584
13¥ 9,597¥(1,665)(5)¥(1,670)$ 77,787 $ 62,596——$ 77,787 $ 62,596$ (15,191)—$ (15,191)

2012

2013

Securities with book values
exceeding acquisition costs:
Equity securities
Others
Total
Other securities:
Equity securities
OthersTotal

2. Total sales of available-for-sale securities for the year ended March 31, 2013 amounted to ¥947 million ($10,074 thousand), and therelated total gain and loss amounted to ¥353 million ($3,755 thousand) and ¥0 million ($0 thousand), respectively. Total sales ofavailable-for-sale securities for the year ended March 31, 2012 amounted to ¥125 million, and the related total gain and loss amounted to¥39 million and ¥2 million, respectively.

60

Note 12: Employees’ Severance and Pension Benefits
Provision for retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2013 and 2012
consisted of the following:
2013

2012

Thousands of
U.S. dollars
2013¥33,262(27,808)(8,177)
2,875
¥ 152

¥28,404(23,833)(6,631)
2,375
¥ 315

$353,851(295,830)(86,989)
30,585$ 1,617

Millions of yen

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial differences
Prepaid pension expenses
Provision for retirement benefits

Severance and pension benefit expenses included in the consolidated statements of income for the years ended March 31, 2013 and 2012
consisted of the following:
2013

2012

Thousands of
U.S. dollars
2013¥1,137
529
(669)
947
¥1,944482¥2,426¥1,355
522
(626)
927
¥2,178593¥2,771$12,096
5,628(7,117)
10,074$20,681
5,128$25,809

Millions of yen

Service costs—benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial differences
Severance and pension benefit expenses
OthersTotal

The discount rate used by the Company was 0.90% in 2013 and 2.00% in 2012. The rate of expected return on plan assets was 3.00% in 2013 and 2012.
The estimated amount of all retirement benefits to be paid at the future retirement dates is allocated equally to each service year using the estimatednumber of total service years.

Note 13: Impairment of Fixed Assets

61

For assessing fixed asset impairment, the Company groups itson the basis of their memorandum values. The recoverable

assets at the business unit level, which is also the basis ofamounts of assets to be sold are based on their net sales values,

segment information. The consolidated subsidiaries generally

which are the estimated sales values less agents’ commission

group their assets at the subsidiary level. The Company and its

fees.

consolidated subsidiaries group their idle assets and assets

For the year ended March 31, 2012, the Company and its

planned for sale by individual asset. The recoverable amounts ofconsolidated subsidiaries recorded impairment loss of ¥2,688

the business assets are based on the net sales values, and assets

million mainly related to buildings and structures and machinery,

whose sales values are deemed difficult to estimate are assessed

equipment and vehicles and ¥178 million, related to land.

Note 14: Consolidated Statements of Comprehensive Income
Amounts reclassified as net income (loss) in the current period that were recognized in other comprehensive income in the current or
previous periods and the tax effects for each component of other comprehensive income for the year ended March 31, 2013 and 2012 wereas follows:2012

Thousands of
U.S. dollars
2013

(941)
798
(143)
184
41

$ 16,362
4,500
20,862(6,702)
14,160

—
—
—
—
—

(1)
43
42
—
42

—
—
—
—
—

3,915

(586)

41,648(503)$ 55,808

Millions of yen
2013

Valuation difference on available-for-sale securities:
Increase (decrease) during the year
Reclassification adjustments
Subtotal, before tax
Tax (expense) or benefit
Subtotal, net of tax
Deferred gains or losses on hedges:
Increase (decrease) during the year
Reclassification adjustments
Subtotal, before tax
Tax (expense) or benefit
Subtotal, net of tax
Foreign currency translation adjustment:
Increase (decrease) during the year
Total other comprehensive income¥ 1,538
423
1,961
(630)
1,331

¥ 5,246¥¥

Note 15: Related Party Transactions
Transactions between the Company and related parties for the year ended March 31, 2013 are not shown because there were no
significant transactions.
Significant transactions between the Company and one of its directors for the year ended March 31, 2012 were as follows:
Name of related party
Toru Matsumoto

Description of transactions
Fees for legal services for the year

Millions of yen¥ 10Notes: With respect to the fees for legal services, the services were provided by Toru Matsumoto, a director of the Company, as part of his attorney services. The conditions for providing the services andthe remuneration received by Mr. Matsumoto were determined using the same method as that for third party transactions.

Note 16: Significant Subsequent Events
The issuance of unsecured notes
Based on the resolution made at the Board of Directors' meeting held on May 10, 2013, the Company issued unsecured notes as follows:
Dainippon Screen Mfg. Co., Ltd. 16th unsecured notes(1) Total amount of issue: ¥8,600 million ($91,489 thousand)(2) Issuance price: 100% of the principal amount(3) Coupon rate: 2.00% per annum(4) Closing date: June 7, 2013(5) Maturity date: June 7, 2016
(6) Redemption price: 100% of the principal amount(7) Use of proceeds: Funds for repayments of long-term loans payable and redemption of notes(8) Covenant: Negative pledge clause62Independent Auditor’s Report
To the Board of Directors of Dainippon Screen Mfg. Co., Ltd.:We have audited the accompanying consolidated financial statements of Dainippon Screen Mfg. Co., Ltd. and its consolidated
subsidiaries, which comprise the consolidated balance sheet as at March 31, 2013, and the consolidated statement ofoperations, statement of comprehensive income, statement of changes in net assets and statement of cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatements,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, weconsider internal control relevant to the entity’ s preparation and fair presentation of the consolidated financial statements inorder to design audit procedures that are appropriate in the circumstances, while the objective of the financial statement
audit is 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 reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated 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 present fairly, in all material respects, the financial position ofDainippon Screen Mfg. Co., Ltd. and its consolidated subsidiaries as at March 31, 2013, and their financial performance andcash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31,
2013 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts
and, in our opinion, such translation has been made on the basis described in Note 1 to the consolidated financial
statements.

KPMG AZSA LLC
June 26, 2013
Osaka, Japan

63

Corporate Data (As of March 31, 2013)
Company Name ........................... Dainippon Screen Mfg. Co., Ltd.
Established .................................. October 11, 1943
Representative Director .............. Akira Ishida, Chairman and CEO
Masahiro Hashimoto, President and COO
Capital .......................................... ¥54 billion
Employees ................................... 4,955 employees (Consolidated)
2,130 employees (Nonconsolidated)

Business andManufacturing Sites .................... Head Office, Rakusai (WHITE CANVAS RAKUSAI),
Kumiyama, Yasu, Hikone, Taga, Kudan, Otsuka andMonzennakacho (WHITE CANVAS MON-NAKA)

Consolidated Companies (As of March 31, 2013)
Overseas

Dainippon Screen (Korea) Co., Ltd. / Dainippon Screen Electronics (Taiwan) Co., Ltd. /DNS Feats (Taiwan) Co., Ltd. / Dainippon Screen (Taiwan) Co., Ltd. /Dainippon Screen Singapore Pte. Ltd. / Dainippon Screen (Australia) Pty. Ltd.

North America
D.S. North America Holdings, Inc. / DNS Electronics, LLC /Dainippon Screen Graphics (USA), LLC / Silicon Light Machines Corporation /SOKUDO USA, LLC

Domestic
Tech In Tech Co., Ltd. / SEBACS Co., Ltd. / Quartz Lead Co., Ltd. /FASSE Co., Ltd. / SOKUDO Co., Ltd. /Scientific and Semiconductor Manufacturing Equipment Recycling Co., Ltd. /FEBACS Co., Ltd. / MEBACS Co., Ltd. / Media Technology Japan Co., Ltd. /MT Service Japan East Co., Ltd. / MT Service Japan West Co., Ltd. /S. Ten Nines Kyoto Co., Ltd. / Tec Communications Co., Ltd. / DS Finance Co., Ltd. /INITOUT Japan Co., Ltd. / TRANSUP Japan Co., Ltd. / ReVersion 65 Co., Ltd. /Miyako LinkRing Co., Ltd. / GERANT Co., Ltd. / EMD Corporation /SCREEN KUMAMOTO Co., Ltd. / MIXA Co., Ltd.*

EuropeDainippon Screen (U.K.) Ltd. / Inca Digital Printers Ltd. /Dainippon Screen (Deutschland) GmbH / Dainippon Screen Ireland Ltd. /Dainippon Screen Electronics France Sarl / Dainippon Screen Italy S.R.L. /Dainippon Screen Israel Ltd. / Dainippon Screen Unterstuetzungskasse GmbH /Dainippon Screen (Nederland) B.V.
Asia & Oceania
Dainippon Screen Electronics (Shanghai) Co., Ltd. / Dainippon Screen (China) Ltd. /Screen Media Technology Ltd. / Dainippon Screen Mt (Hangzhou) Co., Ltd. /* Affiliate accounted for by the equity method

Investor Information (As of March 31, 2013)
Stock Information

Bank References

Authorized Number of Shares ....................................... 900,000,000
Number of Shares Issued ............................................. 253,974,333
Number of Shareholders ............................................... 16,528
Number of Shares Held by
Non-Japanese Companies and Individuals ................. 38,701,152 (15.23%)
Listings ........................................................................... Tokyo and Osaka
Code Number ................................................................. 7735

Major Shareholders

The Bank of Tokyo-Mitsubishi UFJ, Ltd./Resona Bank, Ltd./The Bank of Kyoto, Ltd./The Shiga Bank, Ltd./
Development Bank of Japan Inc.

Underwriter
Nomura Securities Co., Ltd.

Sub-Underwriters

Number of shares Percentage of(thousands)
total shares (%)

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd./Daiwa Securities Co. Ltd.

Japan Trustee Services Bank, Ltd. (Accounting in trust)

23,271

9.16

The Master Trust Bank of Japan, Ltd.
(Accounting in trust)

20,557

8.09

Nippon Life Insurance Company

10,170

4.00

Securities companies

The Bank of Kyoto, Ltd.

6,730

2.65

3.36%

Dainippon Screen’s Business Partners Shareholders’
Association Synchronize

4,613

1.81

Resona Bank, Limited

4,562

1.79

Non-Japanesecompanies andindividuals

The Shiga Bank, Ltd.

4,241

1.67

15.23%

Dainippon Screen’s Employees Shareholders’ Association

4,150

1.63

Trust & Custody Services Bank, Ltd. (Investment trust account)

3,969

1.56

Other Japanesecompanies

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3,923

1.54

10.50%Breakdown by Type of Shareholder
Treasury stock

6.54%
Individuals and others

21.64%

Financial institutions

Dainippon Screen Mfg. Co., Ltd. holds 16,613,829 shares (6.54%) in treasury stock,* Whilethis is not included in the above list of major shareholders.

42.70%

Stock Price Range and Turnover
(Yen)

1,350

Dainippon Screen Stock Price (left scale)(Yen)

Nikkei Stock Average (upper right scale)

Dainippon Screen Stock Turnover (lower right scale)

20,000900

15,000450

10,000(Thousandsof shares )180,000
120,000
60,000
0

0

09/5

7

9

11

10/1

3

5

7

9

11

11/1

3

5

7

9

11

12/1

3

5

7

9

11

13/1

3

5,000

5

64

Tenjinkita-machi 1-1, Teranouchi-agaru 4-chome, Horikawa-dori,
Kamigyo-ku, Kyoto 602-8585, Japan
Tel: +81-75-414-7111 Fax: +81-75-431-6500

IR-AR2013E 2013.07 008BC-Sh