Annual Report

2010
Dainippon Screen GroupYear Ended March 31, 2010

Introducing Our Operations

Underwater
vehicle/manipulator
systems (UVMSs)

Printing andprepress-related
equipment

Since 1943

with color vision
sensors

Industrial-use
inkjet printers

Batch-type
cleaning
equipment
CtP

Digital printers(Inkjet type)

Digitalprinters

FPD-related
inspection
systems

PCB final
inspection
systems

Image
setters(Platerecorders)

Directscanners

PCB
outputequipment

PCB direct
imagingsystems

Process
cameras,printing frames
andstep-and-repeat
machines

PCB solder
coaters

Mask
directimagingsystems

Coater/developers

Single wafer
spray cleaning
equipment

Lamp
annealersFlash lamp
annealers

Since 1975

Etchers

Glass screens(Photolithographic
technology)

Semiconductor
production equipment

Etchers

Exposuresystems

PCB production
equipment

Cleaning
equipment

Coater/developers

Since 1970

OLED
manufacturingsystems

Direct imaging
equipment forcolor filters

FPD production
equipment

Since 1976

Meeting the Changing Needs of the Times throughOur Shi Kou Ten Kai Philosophy
Dainippon Screen has focused on research and development from its very beginnings, and our management philosophy of
Shi Kou Ten Kai (thinking, considering, developing and opening new businesses, products and technologies) reflects
this fact. Based on this philosophy, we have leveraged the image processing technologies cultivated over many years to develop
business in related fields to meet the changing needs of the times.
This phrase expresses our commitment to the challenge of developing new businesses and products by constantly monitoring the needsof our customers and society at large, always considering how to apply our technologies and products, and examining what is lacking.

CONTENTS
Performance Highlights ................. 3
To Our Stakeholders ..................... 5
Feature Article/Creating New
Products and Technologies ............. 11
Overview of Performance by Company
Semiconductor Equipment Company ..... 15
FPD Equipment Company ................ 19
Media And Precision Technology
Company ................................. 23

1

Corporate Data (As of March 31, 2010)
GovernanceCorporate Governance ................... 27

Environment

Environmental Activities .................. 31

Society

Initiatives from a Social Perspective ...... 33
Business Performance .................. 38
Consolidated Companies/
Investor Information ..................... 66

Company Name: Dainippon Screen Mfg. Co., Ltd.
Established: October 11, 1943
Representative Directors: Akira Ishida, Chairman and CEO
Masahiro Hashimoto, President and COO
Capital: ¥54 billion
Employees : 4,679 employees (Consolidated)
2,124 employees (Nonconsolidated)
Business and Manufacturing Sites: Head Office, Kuze, Rakusai (WHITE CANVAS RAKUSAI),
Kumiyama, Yasu, Hikone, Taga and Kudan

Sales by Segment

Semiconductor Equipment Company(Fiscal Year Ended March 31, 2010)
Media And Precision
Technology
Company¥ 42.7 Billion(26.0%)

Semiconductor
Equipment
Company
Semiconductor Production
Equipment¥ 100.9 Billion(61.5%)

Graphic Arts
Equipment

Other¥ 38.4 Billion ¥ 0.5 Billion(23.4%)(0.4%)
Electronic Equipment
and Components¥ 125.0 Billion(76.2%)In an environment characterized by the ever-increasing miniaturization ofsemiconductors, wafer cleaning processes are of growing importance.
We boast the top share of the global market in the three principal
categories of batch-type cleaning equipment, single wafer spray cleaning
equipment and spin scrubbers. We also produce coater/developers
sold through SOKUDO Co., Ltd., a Dainippon Screen subsidiary.

Major Products

wafer spray•Singlecleaning equipment
cleaning•Batch-type
equipmentSpinscrubbers•Annealing systems•

Global Market Share (Sales value basis in 2009)

Single wafer cleaning.........................
equipment
Batch-type cleaning ............................
equipment
Spin scrubbers ........................................

69.7%
81.3%
85.2%

Single wafer spraycleaning equipment

Batch-type cleaning
equipment

Spin scrubber(Source: Gartner, “Market Share: Semiconductor Etch and Clean
Process Equipment, Worldwide, 2009”, 19 April 2010)
FPD Production
Equipment
Other
Electronic Equipment
and Components¥ 19.8 Billion(12.1%)¥ 4.2 Billion(2.6%)FPD Equipment
Company

FPD Equipment Company
Coater/developers operate using the principles of photographic
development to create electronic circuits on the surface of a substrate,
handling all processes from coating with photosensitive material todeveloping. We hold the top share of the global market in coater/developers for the TFT arrays used in LCD panels.

Major Products•Coater/developers
etchers•Wet
strippers•ResistExposuresystems•
Coater/developer

Sales by Geographic Region(Fiscal Year Ended March 31, 2010)
Japan

North America

26.0%

11.0%

Global Market Share (Unit basis in 2009)

Coater/developers used ..................
on TFT arrays

69.0%(Source: DisplaySearch)

Wet etcher

Media And Precision Technology Company
Sales for the Fiscal Year
Ended March 2010

¥164.1 Billion

The Company manufactures and sells Computer to Plate (CTP)-related
products and digital printing equipment to rationalize production
processes and enhance printing quality. We also supply printed circuitboard pattern forming and inspection equipment.

Global Market Share (Unit basis in 2009)

CTP equipment .......................................
Other

1.3%

EuropeAsia & Oceania

8.4% 53.3%

Editorial Policy
Through the fiscal year ended March 31, 2009, the Dainippon Screen Group
reported the economic portion of information related to its triple bottom line
(economic, environmental and social perspectives) in its Annual Report, andinformation from the environmental and social perspectives in a Social andEnvironmental Report. This publication (for the fiscal year ended March 31,2010), integrates the reporting from these two perspectives. Sections aremarked as
Economy,Environment orSociety to make relevant
information easy to locate. Please see our website(http://www.screen.co.jp/index.html) for additional information.

34.8%(Source: Dainippon Screen estimate)

Major Products
Graphic Arts Equipment

printing equipment•Digital(plate recorders)•CTP
Workflow•Fonts RIP•
CTP (plate recorder)

PCB Production Equipment

optical inspection•Automatic
systems
Plotters•Exposure systems•Pattern measurement systems•Film thickness measurement•systems
POD equipment

The plans, strategies and statements related to the outlook for future resultsin this document are in accordance with assumptions and beliefs determinedby management based on currently available information. However, it
should be noted that 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 thenearest million yen.
2) All years shown are for the accounting year ending March 31 of
the year shown.

2Performance Highlights

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

For the Year:Net sales
Cost of sales
Cost of sales to net sales (%)
Operating income (loss)
Operating income to net sales (%)
Net income (loss)
Depreciation and amortization
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Capital expenditures
R&D expenses

Per Share of Common Stock:
Net income (loss)
Net income—diluted
Cash dividends
Net assets

2010

2009

2008

2007

2006

¥ 164,129
137,82784.0 %¥ (14,046)−8.6 %¥ (8,003)
7,012
25,113
6,885(27,124)
1,911
11,615¥ 219,049
169,391
77.3 %¥ (4,510)−2.1 %¥ (38,191)
8,414(24,593)(6,921)
34,071
4,007
16,073¥ 279,816
208,266
74.4 %¥ 14,628
5.2 %¥ 4,578
5,563
7,934(16,510)669
12,866
16,248¥ 301,312
211,159
70.1 %¥ 30,541
10.1 %¥ 18,452
4,113
23,645(8,519)(8,875)
14,42016,884¥ 246,534
173,62870.4 %¥ 18,568
7.5 %¥ 15,236
3,823
14,906(7,482)(13,442)
5,906
13,269(33.71)¥ (160.86)

¥

¥

¥

272.15292.12

18.81
17.39
10.00
514.26¥ 216,622−3.5 %¥ 139,984
45,41393,874
48,19564,60729.8 %−11.9 %
¥ 54,045
731¥ 246,918−14.2 %
¥ 168,191
50,955
132,431
32,967
69,35328.1 %−39.9 %
¥ 54,045
8,734¥ 291,114
1.5 %¥ 196,989
49,069123,70240,644122,09441.9 %
3.6 %¥ 54,045
49,390¥ 319,519
6.3 %¥ 223,463
42,346
133,784
43,900133,062
41.6 %
14.2 %¥ 54,045
48,497¥ 270,238
5.8 %¥ 181,077
36,096106,134
24,674
126,392
46.8 %
13.5 %¥ 53,999
32,536

253,974
4,679

253,974
4,992

253,974
5,041

253,974
4,798

253,792
4,672¥

At Year End:
Total assets
Return on total assets (%)
Current assets
Property, plant and equipment, net
Current liabilities
Long-term debt
EquityEquity ratio (%)
Return on equity (%)
Common stock
Retained earnings (deficit)
Number of shares issued (in thousands)
Number of employees

74.05
68.63
15.00
542.13

60.66
55.81
10.00
500.30Notes: 1. Dollar figures are translated, for convenience only, at the rate of ¥93 to US$1.00.
2. Net income (loss) per share of common 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 common stock is not shown for the years that net losses were recorded. Net assets per share of common 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 ending March 31, 2004.

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

Consolidated Net Sales(Billions of Yen)

(Billions of Yen)

320
240

301.3
246.5

60

279.8

30

219.0
164.1

160
80

12.0

18.5

30.5

5.2

6.0

14.6

0

0.0

–4.5

–30

0

–2.1

–14.0
–8.6

–60

2006

2007

2008

2009

2010

2006
Operating Income (Loss)

3

(%)

10.1
7.5

2007

2008

2009

2010

Ratio of Operating Income to Net Sales

–6.0
–12.0

Millions of yen

Thousands of
U.S. dollars

2005

2004

2003

2002

2001

2000

2010

¥ 269,341
190,63970.8 %¥ 25,292
9.4 %¥ 14,454
5,944
22,301(5,108)(16,775)
6,146
12,628¥ 191,939
135,38970.5 %¥ 9,600
5.0 %¥ 4,851
4,000
14,681(82)(10,157)
2,465
11,134¥ 167,942
121,03672.1 %¥ 3,225
1.9 %¥ (3,466)
4,901
87
4,304
(4,923)
1,813
10,770¥ 174,218
126,882
72.8 %¥140
0.1 %¥ (18,900)
7,223(7,124)(2,663)43
3,918
10,025¥ 242,726
170,896
70.4 %¥ 23,903
9.8 %¥ 17,806
7,534
21,197(3,175)(8,666)
6,256
9,960

¥ 174,812
133,64176.4 %¥ (4,628)–2.6 %¥ (7,029)
8,246(2,963)(1,272)
7,342
4,172
9,051

$ 1,764,828
1,482,011$ (151,032)$(86,054)
75,398270,032
74,032(291,656)
20,548124,892

Yen

¥

59.88
52.57
7.50
408.03

¥

23.04
18.29
3.00
334.93¥(18.65)¥ (101.08)

238.28269.75

¥

97.20
84.88
5.00
369.54¥

U.S. dollars(40.00)(0.36)$

286.51

2.93
Thousands of
U.S. dollars

Millions of yen¥ 256,398
5.8 %¥ 179,012
34,308111,998
31,80399,21938.7 %
16.4 %¥ 51,331
19,284¥ 240,512
2.1 %¥ 165,506
35,627
113,771
38,16377,43432.2 %
7.9 %¥ 48,172
3,514¥ 218,653–1.5 %¥ 149,713
38,140116,899
47,49145,10020.6 %−7.3 %¥ 37,142(1,314)¥ 234,972–7.0 %¥ 153,149
45,041
120,545
57,19050,435
21.5 %−31.6 %
¥ 36,544(13,147)¥ 301,784
6.4 %¥ 214,756
50,351
154,396
74,067
69,09922.9 %
29.7 %¥ 36,544
6,767¥ 256,596–2.8 %¥ 162,172
52,538127,11477,36550,63019.7 %–13.4 %
¥ 33,100(25,892)

243,164
4,547

231,390
4,460

189,369
4,468

186,987
4,429

186,987
4,715

176,713
4,672$ 2,329,269$ 1,505,204
488,3121,009,398
518,226
694,699$

581,1297,860

5. For the year ended March 31, 2005, depreciation and amortization includes ¥2,299 million of nonrecurring depreciation of property, plant and equipment and other assets
from the withdrawal from the CRT mask business.
6. Equity in the above table represents the total of shareholders’ equity and valuation gain/loss, translation gain/loss, etc. in the consolidated balance sheets. This is due to theadoption 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, valuation gain/loss, translation gain/loss, etc. 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
without considering the related income tax effects. The accompanying consolidated financial statements after the year ended March 31, 2006 have been prepared in accordancewith the new accounting standards, whereas the statements for the previous years are presented pursuant to the previous presentation rules.

Equity and Equity Ratio

Cash Flows(Billions of Yen)

200
150

(%)

46.8

41.6

50.0

41.9

40.0

126.3 133.0

122.0

28.1

29.8

40
20

34.0
14.9

23.6
7.9

30.0

100

0

69.3
50

64.6

0.0

2006

2007

Return on Equity

2008

2009

2010

25.1
6.8

0.6

20.0
10.0

0

Equity(Billions of Yen)

–20

−7.4
−13.4

−8.5 −8.8

−6.9
−16.5

–40

2006
Operating Activities

2007

2008

Investing Activities

−24.5
2009

−27.1
2010

Financing Activities

4

To Our Stakeholders

Staging a Return to Profitability
In the first half of the fiscal year ended March 31, 2010, the difficult market conditions of the preceding fiscal year persisted.
As we moved into the second half, however, the economy recovered slightly, boosted by growth in China and otheremerging countries and the impact of various countries’ economic stimulus measures. This improvement was particularly
evident in the semiconductor production equipment business, as orders began to pick up from the second quarter.
Through the ongoing implementation of our companywide restructuring plan, we concentrated on reducing fixed costs. As
a result, we moved back into the black in the second half. In the fiscal year ending March 31, 2011, we anticipate a solid uptrend in
market prices in the Electronic Equipment and Components segment, which should return us to profitability for the year.

5

Akira Ishida

Masahiro Hashimoto

Chairman and CEO

President and COO

Q

Please describe the business environmentand operating performance in the fiscal
year ended March 31, 2010.

staged a return to recovery in the second half,
A We
but owing to sluggish market prices in the firsthalf we reported a net loss for the fiscal year.

President: Sales improved in the second half, owing to an upturnin sales of semiconductor production equipment, in line withimproved economic circumstances. Sales of flat panel display(FPD) production equipment and graphic arts equipment,
however, were sluggish. Consequently, net sales for the year
amounted to ¥164.1 billion, down ¥54.9 billion, or 25.1%, fromthe preceding fiscal year. On the profitability front, owing to
the rapid recovery in semiconductor production equipment
and the cost-reduction effects of our restructuring plan, we
returned to profitability on an operating basis in the second
half. However, owing to lackluster first-half sales and thesubstantial effects of a loss on the revaluation of inventory
assets, the Company posted an operating loss for the year of¥14.0 billion, compared with a ¥4.5 billion operating loss in thepreceding fiscal year. The net loss was ¥8.0 billion, comparedwith a net loss of ¥38.1 billion in the preceding fiscal year.

Q

How were dividends in the fiscal year
ended March 31, 2010?

We refrained from the payment of cash
A dividends.
We will do our utmost to stage areturn to profitability in the fiscal year ending
March 31, 2011.

Chairman: Owing to the fact that we again posted a net loss,
as in the preceding fiscal year, it was with deep regret that
we refrained from the payment of cash dividends during theyear. We recognize that two consecutive years without

dividend payments represents a substantial inconveniencefor our shareholders, and we apologize sincerely for thissituation.
Market prices turned steadily upward in the second
half of the fiscal year ended March 31, 2010. This fact,
combined with the effects of the cost cuts implemented
as part of our restructuring plan have put operating
performance on a recovery track. All Dainippon Screen’s
directors and employees are putting forth their best efforts
to stage an early return to profitability and resumption ofdividend payments. We would like to ask for your ongoingsupport of our efforts to achieve these objectives.

Q

ensure sufficient on-hand liquidity, we took out
A Toa syndicatedloan of ¥40 billion. We have accelerated
payments on this loan, returning ¥20 billion.

President: Amid uncertain economic circumstances, in thefirst half we raised ¥55 billion in funds thanks to cooperationfrom financial institutions. Benefiting from the results of cost
cuts introduced through our restructuring plan, the reductionof inventories and receivables, and a recovery in thesemiconductor industry, cash flow from operating activities
recovered in the second quarter. Consequently, late in thesecond quarter we were able to pay back ¥20 billion of a ¥40
billion syndicated loan. However, as the economic outlook
appears likely to remain uncertain for the foreseeable future,
we have retained a line of credit totaling ¥40 billion.
On the fisical year ended March 31, 2010, interest-bearing
debt amounted to ¥77,217 million, down ¥25,363 million,or 24.7%, from one year earlier. Consequently, as of March
31, 2010, our equity ratio was 29.8%, up 1.7 percentage
points from the 28.1% recorded one year previously.

The List of Restructuring Plan

Workforce reductions• Cutback of regular employees and temporary workers• Stop new hiring (Fiscal year ended March 2010)

Business review andorganizational restructuring

Increased R&D efficiency• Review of R&D framework• Reduction and withdrawal from unprofitable businesses• Restructuring and consolidation of sites for Group companies• Unification and reorganization of sites (offices and sites)

Reduction and centralization of sites

How is the financial position?

Measures for
Restructuring• Streamlining of R&D expenses through selectivity and focus• Early release of new products and heightened competitivenessof existing products

Curtailed capital investment• Temporary closure of semiconductor production
equipment manufacturing facilities

Personnel expense cuts

Thorough cost reductions• Reductions in directors’ salaries• Cuts in personnel expenses for management
and general employees6To Our Stakeholders

Q

Please outline the progress of therestructuring plan.

success in reducing costs outperformed our
A Our
expectations.

Chairman: The restructuring plancalled for the Dainippon Screen Groupto cut costs amounting to a total of¥40 billion in the fiscal years ended
March 31, 2010 and 2011. This plan
was put into effect when the operating
environment began its sharp downturnin the second half of 2008. As sales
began to fall, we took urgent initiatives
to create an organization neverthelesscapable of generating profits. In
addition to reducing cost of sales andSG&A expenses, we temporarilyclosed some plant facilities, consolidated sales bases and mergedor liquated certain Group companies, and reduced our labor
force by accepting voluntary retirements. As we are pushingahead with efforts to reinforce our structure for generating
revenue and profits through operational reform and improving
the variable cost ratio, these have been targeted as key issues toaddress in the fiscal year ending March 31, 2011.

Q

How do you view the operating environment
for the fiscal year ending March 31, 2011?

in the semiconductor and FPD
A Companies
industries are boosting their capital investments,
but the printing industry appears flat.

Chairman: In the semiconductor production equipment business,
we expect that expanding demand for personal computersand smartphones will trigger increased capital investment by

manufacturers. We expect the operating environment to remain
positive for the foreseeable future. Owing to these circumstances,in April 2010 we recommenced operations at a section of the Taga
Site, which had ceased operations in February 2009. In the FPD
production equipment business, capital investment by LCD panel
manufacturers in China, Taiwan and South Korea is becoming
more active. In the graphic arts equipment business, where
market prices are soft, we will continue to cut fixed costs andsecure sales through expanded product lineups. We have alsoestablished Dainippon Screen MT (Hangzhou) Co., Ltd., in China
as a base from which to product printing-related equipment
for Dainippon Screen. We will shift manufacturing to thisfacility as part of our efforts to lower the break-even point.
In May 2010, we succeeded in securing numerous
orders for CTP and POD equipment at the IPEX trade show,
exceeding our expectations. This trade show, which is heldin the United Kingdom, is one of the world’s four largest
trade shows featuring equipment for the printing industry.

Q

What is your forecast of operating performancein the fiscal year ending March 31, 2011?

the successful implementation of our
A Throughrestructuring plan, we intend to return firmly to
profitability.

President: Looking at the Dainippon Screen Group’s operating
environment for the year ending March 31, 2011, we expect
semiconductor and LCD panel manufacturers to step up their capital
investments against a background of rising demand for personal
computers, smartphones and LCD televisions. We anticipate sales
increases of Semiconductor and FPD production equipment.
However, we expect sales related to graphic arts equipment to be flat.
Although we anticipate expanded sales in emerging countries, we
expect difficult market conditions to prevail in developed countries.
In terms of profits, we expect to benefit from higher sales as well as the

Restructuring Plan Progress2009 2010 2011
Year ended March 31

Net sales:¥Year ended March 31

Year ending March 31

Return to
profitability

219.0 billion¥¥

164.1 billion¥

Operatingincome(loss):

7¥–4.5 billion¥

214.0 billion–14.0 billion

11.0 billion

1. Cut personnel .............
Achieved
expenditures
2. Curtail R&D ................
Achieved
spending
3. Reduce............. Achieved
general costs
4. Restructure ............... Ongoing
operations
5. Improve the variable .......
Ongoing
cost ratio

Future Measures
Restructure operations
1. Return loss-making
subsidiaries to profitability
2. Bolster subordinate operations

Improve the variable
cost ratio
1. Reduce cost of sales
2. Shorten lead times
3. Pursue standardization
4. Differentiate productseffects of ongoing cost-cutting measures. However, the sales prices ofour products are likely to fall as a result of foreign exchange fluctuations.
Consequently, we expect the operating enviroment to remain difficult.
For these reasons, in the fiscal year ending March 31,
2011, our consolidated forecast is for net sales of ¥214 billion,
operating income of ¥11 billion, ordinary income of ¥10billion and net income of ¥9 billion. Ensuring that theDainippon Screen Group restructuring plan is completed,
we are confident of returning to profitability.
At this stage, we have made no decision regarding
dividends, as demand situations remain uncertain, particularly
for the second half of the fiscal year.

Q

What is your future growth strategy?

will optimize our business portfolio, including
A We
through new business development.

Chairman: The semiconductor production equipment business,
which accounts for approximately 60% of Dainippon Screen’s
consolidated net sales, is subject to the ups and downs of theso-called “silicon cycle,” which creates significant shifts in
profitability. Furthermore, business dropped off substantially asa result of what some have called a “once-in-a-century” financial
crisis, which hit in the first half of the preceding fiscal year.
As it is unlikely that the effects of this downturn will
disappear completely from the markets, we have sought tominimize their impact through an improved corporate andearnings structures. To this end, we progress restructuring plan
during the fiscal year ended March 31, 2010. We labeled efforts toimprove our corporate structure as “defensive” measures. We will
now shift to an offensive approach, mounting a strategic structure
atop the defensive base that we have built.
Our future focus will be the pursuit of progress. In otherwords, by revising our corporate and earnings structures weTechnologies

aim to achieve growth and generate substantial profits. To
achieve this objective, we will optimize our business portfolio,
including through new business development.
Dainippon Screen has a management philosophy that canbe translated as the “development of thought.” This philosophy
has seen our evolution from a glass screen manufacturer to a
maker of printing plate-making equipment, with onward
development to become an industry leader in semiconductor
production and FPD production equipment.
In our new business development, we will begin byobserving broad-based trends and then distill down our focus torelatively smaller achievable areas targeted for steady development.
President: In terms of development costs, we will focus our spendingby pursuing a path of selection and concentration. This perspective
differs from our previous approach of earmarking investment forthe semiconductor, FPD or printing industries. Rather, we will lookat overall global trends and then drill down to a decision basedon our understanding of the overall trends, the knowledge ofwhat Dainippon Screen is capable of achieving and what products
and operations require development. To create new products andoperations, we will reinforce efforts toward collaboration among
our in-house companies and with other business partners.

Q

What new businesses are underdevelopment?

are pursuing developments involving
A We
promising new products and fields, including
solar cells, organic EL displays and POD.

President: The Dainippon Screen Group is implementing a
restructuring plan that aims to create an earnings structure
capable of withstanding downturns in the business environment.
Developing future activities upon this base, we will optimize
our business portfolio, including through new businessdevelopment, aiming to ensure ongoing growth and substantial

Environment
Cleaning technologies

Image transfer andprinting technologies

Liquid coating technologies

Chemical etching technology

Technologies
Annealing and temperature
control technologies

Laser etching technologies

Inkjet technologies

Nozzle printing technologies

SafetyEnergy8

To Our Stakeholders

profits. We will work to achieve this by remaining sensitive toglobal trends that go beyond the scope of our individualcompanies’ operations, creating marketing strategies that take
into account the Dainippon Screen Group’s overall directions.
From the standpoint of new business development,
demand for solar power generation is increasing. We are meetingthese needs through the development of measurement andevaluation technologies for thin film solar cells. In addition,
we are deploying technologies that will reduce the cost oflarge-panel OLED displays and make their manufacture
practical. In the graphic arts equipment business, we areconcentrating on inkjet printers. In particular, we are cultivating
the POD market (see the feature article).
Going forward, we will focus our management resources
on promising new areas that take into consideration theenvironment, energy and safety, and that have long-term
growth potential.
Chairman: In addition to developing new businesses, we areworking to create new business structures. In the Semiconductor
Equipment Company, we have established a department tofocus on post-sales operations. By providing customers withongoing services, we intend to offset the fluctuations causedby the silicon cycle. We have established SOKUDO Co., Ltd.,
as a joint venture with Applied Materials, Inc., of the UnitedStates. In June 2009, we converted SOKUDO, which specializes
in the development and sale of coater/developers, into a
consolidated subsidiary. Through SOKUDO and at overseas
bases, we will optimize and raise the efficiency of our sales
and service structures, working to slim our organization
quickly. SOKUDO will also handle new product releases andbecome part of the system we are establishing to respondflexibly to market demands. Given the current business climate
and based on the agreement of both companies, going forward
SOKUDO will strive to raise its operational value and boost its
competitiveness by making aggressive use of Dainippon Screen’s

infrastructure to optimize its scale of operations. In addition,
Dainippon Screen will manufacture products on consignmentfor SOKUDO. The decision to turn SOKUDO into a subsidiary
was based on the need for a closer relationship in order toachieve these objectives more quickly than in the past.
A new product SOKUDO DUO launched in April, 2009
have received high acclaim as new products and will contributeto Dainippon Screen’s recovery in the coater/developer market.

Q

Asia, we will strengthen our services and
A Inmaterials
procurement. We will also work toward
the globalization of our personnel.

Chairman: Dainippon Screen generates approximately 70% of
its sales overseas (the fiscal year ended March 31, 2010), andaround 70% of this amount originates in Asia. In the past, wecreated an Asian service structure; we will increase our efforts
in this regard. In addition, to achieve further cost reductions
we are redoubling the procurement of materials from China.
President: Approximately 30% of Dainippon Screen Group
personnel are stationed in Asia. As our business becomesincreasingly global, international staff will become even more
important. We will endeavor to enhance individual employees’capabilities, further expand sales and enhance our service
structure to increase customer satisfaction.

Q

Shi Kou Ten Kai ”

Thinking, consideration, development,
opening new business, products and technologies

intentions directly.

Chairman: The validity period for Anti-Takeover Defense

Eight Standards

Management
Philosophy

Three Beliefs
Sharing the future
Earning society’s trust and living up to society’s
expectations, while keeping our eyes on the future

Business Philosophy

Developing better people
Developing people who find joy in their work

The pursuit of technology
Pursuing unique new technologies andnew combinations of existing technologies

9What are the rules that set in force
takeover defense measures?

on a report by an independent committee,
A Basedwe have resolved to confirm shareholders’Management Guidelines“

What are your overseas strategies going
forward?

Charter of Ethics

1. Abiding by laws and ordinances
2. Contributing to society
3. Respecting human dignity
4. Pursuing the advancement of technology withenvironmental awareness and responsibility
5. Ensuring employee health and safety
6. Maintaining openness and accountability
7. Ensuring proper use and protection ofcompany assets
8. Making a commitment to integrity andethical business practices

Policy introduced following approval by shareholders at the
66th Annual Shareholders’ Meeting, held in June 2007, expiredin June 2009. We tabled the topic of a structure to better reflect
shareholders’ intentions by confirming these intentions directly,
based on the recommendations of an independent committee.
We gained approval for new measures at the 68th Annual
Shareholders’ Meeting.

Q
A

What are your CSR initiatives?
We are placing importance on compliance,
the environment, safety and product quality.

Chairman: The Dainippon Screen Group sees its corporatesocial responsibility (CSR) as revolving around the core elementsof compliance, the enviroinment, safety and product quality.
We contribute to society by paying taxes and distributing
profits to shareholders and other investors. We seek to provide
products and services that satisfy our cusomters. With regard
to suppliers, we strive to steadily increase transaction volumes.
We provide employees with steady and appropriate levels of
remuneration. Through such efforts, Dainippon Screen aims
to enhance its corporate value. Against this background, we
sincerely regret our recent downturn in operating performanceand the need for workforce reduction.
President: Looking forward, we are striving to raise operating
results through the successful ongoing implementation of ourrestrucutirng plan. We ask for the understanding of ourshareholders as we apply our full energy toward increases in
Dainippon Screen’s economic, environmental and social value.
We are addressing environmental problems throughproducts related to solar cells, OLED display and POD,
which will conserve energy and reduce CO2 emissions forour customers. In our production processes, as well, we are
striving to conserve energy, reduce CO2 emissions, lower

our use of hazardous substances and reduce waste emissions.
In terms of safety and quality, we conduct thorough risk
management on the products and services we provide tocustomers. We also provide training on working with large
equipment as well as training for unskilled employees. In
these ways, we aim to raise the level of workplace safety.

Q

What are some important future
management focuses?

will be making the adjustment fromA We
a restructuring plan to growth strategies.

President: In the fiscal year ended March 31, 2010, market
conditions improved steadily in the second half. This situation,plus the effects of the restructuring plan, caused performance
to improve. Rather than rest on our laurels now that thesituation appears to be improving, in the fiscal year ending
March 31, 2011, we will accelerate the implementation of
our restructuring plan, as we work to toward the imperativeof returning to profitability.
The growth strategies outlined in the Dainippon ScreenGroup’s medium- to long-term plan call for a recovery inoperating performance during the
fiscal year ending March 31, 2011.
We will announce these results assoon as is feasible.
Chairman: To build a morerobust base of earnings, expand
profitability and strengthen our
financial base, we will complete
the implementation of ourrestructuring plan and shift to
growth strategies. We ask for the
support of our stakeholders as weundertake these endeavors.

June 25, 2010
Dainippon Group’s CSR
Provide satisfactory products and services

Akira Ishida

Masahiro Hashimoto

Chairman and CEO

President and COO

Customers

SafetyBusiness
partners

Employees
Ongoing
employment
Appropriatecompensation

Quality

EconomyCompliance
Environment

Environment

Stabilize andincreasetransactions

SocietyLocal
communities

Shareholders

Tax payments

Dividends

10Feature Article

Creating New Products and Technologies

Cultivating New Markets under the Theme of Solving
Environmental Problems
Print on Demand (POD) Inkjet Printers

Print Exactly the Right Number, Just When Needed, on Variously Shaped
Objects Made of Different Materials
Reducing the Printing Industry’s Environmental
Impact while Boosting Productivity
According to Japan’s Ministry of Economy, Trade and Industry(METI), shipments of printing paper used in Japan in fiscal 2007
totaled approximately 23 million metric tons. Furthermore,
approximately 13 million metric tons of CO2 were emitted toprovide the energy used in the papermaking process. The volatileorganic compounds (VOCs) emitted by inks and cleaning
agents used in the printing process are also said to have a negative
effect on humans and the ozone layer.
POD Market Forecast
Even worse, typically between 20%(Shipment value)(Billions of U.S. dollars)and 30% (and sometimes more) of a150
print run ends up as dead stock, which is
100
processed as waste. The need to find ways
50
to eliminate these wastes of energy, raw0materials and costs is a common theme
2008
2013 (CY)
throughout the printing industry inSource: InfoTrends
Japan, as well as the rest of the world.

Dainippon Screen has addressed this situation by
developing the PlateRite series of Computer to Plate (CTP)
products for the commercial printing market, which involves
the printing of catalogs and magazines. Whereas conventional
printing called for prepress processing, which requires prepress
film, the PlateRite series eliminates this need, helping to saveenergy, resources and costs, while boosting productivity. The
global printing industry has embraced this series, evidenced
by our approximately 35% share of the global CTP market.
We are also working to meet growing needs in the POD
market, which allows customers to print exactly the rightnumber of copies, just when needed.
Our development of the Truepress Jet520 series of POD
inkjet printers required us to combine the expertise we had
cultivated in imaging technology, precision equipment
manufacturing technology and inkjet technology. In addition
to being well suited to small-lot printing, this series handles
variable printing, which means that it can print documents in

Printing Processes (Simplified)•Conventional offset printing process
Equipment used

DTP

Prepress (film output

plate output)

PC

Image setter

Plate exprosure unit

Press

Film

Aluminum printing plates

Ink, paper

DTP

Prepress (plate output)

Printing

PC

CTP

Press

Aluminum printing plates

Ink, paper

Consumables•CTP offset printing process
Equipment used
Consumables•POD process
Equipment used
Consumables

11

DTP
PC

Printing

Printing
Press
Ink, paper

Truepress Jet520

which individual pages of each copy contain different
information. Financial institutions, among other customers,
have found this series helpful for printing the notifications they
send out to clients. Such variable printing needs as these are
growing worldwide, and we have high hopes for sales of the
TruePress Jet520 series to meet this market expansion.
Environmental performance also is excellent. The
Truepress Jet520 is a series of inkjet printers, so no printing
plate is needed. Also, printing requires fewer processes,
which helps reduce costs and shorten delivery times, saving
resources and energy. According to Dainippon Screen’s
calculations, using this series for a print run of 1,000 results ina reduction in CO2 emissions of around 55%, compared withthe conventional printing process that requires prepress film.

Expanding Global Printing Market for Billboards,
Automobiles and Consumer Electronics
We have also begun full-fledged marketing efforts for our
Truepress JetUV series. This series employs UV inkjet technology
developed by Dainippon Screen subsidiary company Inca
Digital Printers, a U.K.-based company acquired in 2005.

CO2 Emissions from the Inkjet Process

Fiscal 2005 VOC Emissions by Industry(kg-CO2)

700
600
500
400
300
200
100
0

UV ink resists color fading due to sunlight exposureand dries quickly, making it an excellent choice for billboards
and exterior signage. In addition to paper and cloth, thisseries facilitates printing on synthetic resins, metals and ahost of other materials, and it takes advantage of the inkjet
technology’s ability to print on curved surfaces as well as flat.
These strengths suit the series to printing on various sortsof packaging, materials used in automotive interiors and theexteriors of consumer electronics.
Furthermore, the Truepress JetUV series is highly valued
for its environmental performance. The series prints using
ultraquick-drying UV-cured ink, which reduces VOC emissions.
The shipment value of materials printed via POD is said
to be rising throughout the world. According to an InfoTrends
survey, in 2008 shipments were valued at $110 billion, andby 2013 this market is expected to grow by nearly 40%, toa value of $150 billion. Dainippon Screen looks forward tomeeting this expanding demand for POD printing. We alsoplan to promote the use of Truepress Jet series inkjet printers
to meet diverse industrial printing needs involving billboards,
automobiles and consumer electronics.

Other 31%Reduction of
approximately 55%

500 copies
Offset printing

1,000 copies

2,000 copies

5,000 copies

Truepress Jet520

Source: Dainippon Screen (November 2009). Calculation based on power consumed byequipment and paper used and plates.

Integrated manufacturers 12%

Laundry, hair care,beauty, bathhouse
operators 3%

Transportation equipment
manufacturers

Petroleum andcoal productmanufacturers 5%

Other retailers 10%

Plastic productmanufacturers 6%
Chemical manufacturers 7%

12%

Printing andrelated industries 7%
Metal product manufacturers 7%

Source: Fiscal 2007 Report on Volatile Organic Compound (VOC) Emission Inventory,
Ministry of the Environment

12Creating New Products and Technologies

Feature Article

Production Technology for Organic EL Displays

Making OLED Displays, a Leading Post-LCD Candidate, Larger and Less
Expensive and Reducing Their Environmental Impact
OLED displays work by applying an electric voltage to an organic
material, causing it to emit photons. Different from liquid crystal
displays (LCDs), OLED displays require no backlights or color filters,
which makes them thinner, more lightweight and more energy
efficient. At the same time, they offer superior visibility because of
their high levels of brightness, wide viewing angle and high response
speed. These advantages make OLED displays a top contender
for the next generation of displays that will succeed LCDs.
A survey by DisplaySearch, LLC, suggests that the market
for OLED displays, which was valued at $826 million in 2009,
will rise to $5,201 million in 2016. This number could climb
even higher if screen sizes continue toMarket Forecast forincrease, driving anticipated additional
OLED Displays(Billions of U.S. dollars)demand for televisions and PCs.
Conventional production technologies 6.0
5.2
present an obstacle, however. In addition 4.0
2.0
to size limitations on the vacuum
0.80equipment used for deposition of the2016 (CY)2008
OLED film, masking is necessary. The
Source: DisplaySearchmaterials that adhere to the masks are

LCD Televisions vs. OLED Displays•LCD television

Vacuum Deposition vs. Nozzle Printing•Television with OLED Display
B
R

R

G

G

B

B

Backlight
LCD panel
White lightsource always on

13•Vacuum Deposition

OLED material
Materials that emit red,green or blue light

Expanded•Nozzle Printing

Substrate
Guide (wall)
Mask
Organic material
Mask

R
Color filters

wasted, which drives up production costs. Furthermore,masking-related processes are time-consuming.
Dainippon Screen has addressed these problems by applying
its LCD resist coating development technology, in which it enjoys the
top share of the world market. In 2005, Dainippon Screen became thefirst in the world to successfully develop the nozzle printing method.
This technique uses numerous tiny nozzles to discharge organic material
steadily and with high precision, coating troughs in a substrate thatmeasure approximately 40 microns in width. As no vacuum equipment
or masks are needed, no material is wasted, which has the benefits ofholding down manufacturing costs and shortening production time.
The keys to our success with this technology were our
coating technologies and development of proprietary liquid OLED
materials from DuPont. At the end of 2008, our exclusive patrnershipwith DuPont culminated in our success in creating the first nozzle
printer capable of handling fourth-generation glass substrates(730 × 920mm). This process has attracted worldwide attention
because in addition to conserving materials, it halves the production
time needed for each substrate. Our new process is being evaluatedfor use in the manufacturing processes for larger displays.

NozzleOrganic material
wastedElectrode
Electric current causesorganic materials to emit light

Organic
material

40
microns

Deposition source(organic material vaporized from here)

CoatingchannelGuide(wall)

Substrate· Efficient use of materials, low cost
· Applicable to larger panels

Technology for Next-Generation Measurement System for Thin Film Solar Cells

Sales Launch of a Film Thickness Measurement System for Thin Film Solar Cells
with only 1/100th the Previous Silicon Requirement
Nowadays, many universities and companies are working topromote the spread of solar cell generation as a new-energy
alternative to fossil fuels, and are promoting aggressive
research and development toward this end. In this environment,
Dainippon Screen developed a spectroscopic ellipsometricfilm thickness measurement system for thin film solar cells,
which launched in 2008. Employing techniques used inmeasuring film thicknesses on semiconductors and LCD
panels, this equipment allows the measurement of thinsilicon films for solar cell panels. Used by leading Japanesemanufacturers of solar cell panels, this technology helps
improve energy conversion efficiency and stabilization.
Also in 2008, we began conducting joint research with
Gifu University’s Center of Innovative Photovoltaic Systems,
pursuing measurement technologies involving next-generation
thin film solar cells. The shift to thin film cells was promptedby a shortage in supply and consequent rise in prices, between
2004 and 2008, on silicon for solar cells and semiconductors.
Silicon prices have stabilized since 2009, thanks to production
increases, but there is little doubt that global demand for solar
Location of the RE-8000 within the Thin Film Solar Panel
Production Process

Setting various
parameters to facilitatequick conversion

cells and semiconductors will continue to expand. Thin-film
solar cells employ only 1/100th the amount of silicon that was
required for conventional silicon crystal solar cells. As
thin film solar cell production processes tend to require lesstime and be more efficient, their production has the benefitsof saving energy and reducing costs.
Making a spectroscopic ellipsometric film thickness
measurement system for thin film solar cells compatible withthe measurement of thin film solar cells required a bettermethod of measuring amorphous and microcrystalline siliconon complex textures. Our joint research with Gifu University
removed that roadblock, and, in November 2009, we unveiled
the RE-8000 measurement system for thin film solar cells.
As one of these systems will be needed on each production
line, we anticipate strong demand. We displayed our new
system at SEMICON China 2010, held in Shanghai in March
2010, as part of our efforts to expand overseas orders,
particularly from rapidly growing markets related to thedevelopment of solar cells in China, Taiwan, South Korea
and other parts of Asia.

Forecast Global Demand for Solar Cell Equipment by Region
and Global Demand for High-Purity Silicon Materials(MW)(104 tons)

25,00010

20,0005

15,0000

10,000
5,000
0

2000

2002

2004

2006

2008

2010

2013

(FY)

EuropeUnited States
Japan
Other
Silicon materials for semiconductors
Silicon materials for solar cells
Source: European Photovoltaic Industry Association (April 2009)
Trends in Science and Technology, January 2007 edition, National Institute of
Science and Technology Policy

14

Overview of Performance by Company

Semiconductor Equipment Company

Leveraging Leading Market Share and Shifting
Operations Swiftly into Top Gear
As we moved into 2009, demand continued to fall, and thecompany began to brace itself for the fiscal year ended
March 31, 2010, which appeared certain to be difficult.
However, around summer 2009, orders recovered
sharply, as major customers in Taiwan commenced
aggressive capital investment. Furthermore, manycustomers recommenced “investments in miniaturization,”and our operations in this category began showing
signs of improvement in January 2010.

The forecasts were severe. In 2009, the market for
semiconductor production equipment was expected to shrink
to around half its 2008 level. This forecast proved inaccurate—in a positive sense—as the Semiconductor Equipment
Company recorded a 12.5% increase in sales during the
fiscal year ended March 31, 2010, to ¥100.9 billion.
The main reason for this favorable performance wasthat sales of single wafer cleaning equipment offset the
decline in sales of wet stations (batch-type cleaning
equipment), while scrubbers sustained a high market share.
Furthermore, sales of flash lamp annealing equipment,
which had been sluggish, rebounded substantially.
At present, semiconductor manufacturers are making
an aggressive effort to supply products for mobile devices,such as smartphones. As numerous research companies
predict that in 2010 the semiconductor production
equipment market will grow by between 40% and 80%,
compared with 2009 levels, this company should enjoy asignificant leap in performance in the fiscal year ending
March 31, 2011.

15

Q Please describe your business reorganization initiatives.

A We aim to expand market share and reduce costs.

Although we had closed down the Taga Site in February 2009,
we recommenced production in April 2010 to meet increased
demand. Also, while pushing forward with product R&D in aneffort to boost our share of the market for single wafer cleaning
equipment, we are continuing to reduce fixed costs. In other words,
our theme for the fiscal year ending March 31, 2011, will be thetwofold goal of further expanding market share and reducing costs.
We maintain a leading share of the market for cleaning
equipment, and we are working to stay a step ahead of customer
needs by pushing forward with product standardization andunification before this demand actually emerges. In the future,
we will pursue cooperation with other companies in our bid to
reduce part counts, curtailing costs through unification. In
addition, from the standpoint of upstream design we are shifting
toward the inclusion of high-end 3D CAD software in thedesign process. This will enable us to accelerate design fromexperimental production mass to production lines. In addition,
by holding down fixed and variable costs, this approach will
enable us to increase revenues and boost profitability.

Q What products and businesses will be future focuses?
A We will concentrate on expanding our share inpromising new areas, such as single wafer cleaning
equipment and flash lamp annealing equipment.

We already enjoy the leading share of the market for single wafer
cleaning equipment, but competitors are also stepping up theirinitiatives in this promising new field. We will focus on reinforcing
the strength of our products, thereby expanding our market share.

Composition of Net Sales(Fiscal Year Ended March 31, 2010)

Semiconductor Equipment
Company sales rose
12.5% year on year, to¥100.9 billion.

61.5%

Net Sales ¥100.9 billion(Billions of Yen)

200
150
100

170.5

173.7

114.4

89.7

100.9

2009

2010

50
0

2006

With regard to flash lamp annealing equipment, which isquickly turning into our second mainstay product, customers are
calling for higher levels of performance and greater flexibility
in the range of applicable processes (see following page).
Meanwhile, to expand the markets for the products that havebeen mainstays to date, we will pursue aggressive product development
and marketing. Furthermore, we are putting energy into post-sales
operations, as we aim to bolster earnings from after-sales services.
In coater/developers, thanks to a substantial increase inproductivity at SOKUDO Co., Ltd., a subsidiary company, we
expect the full-fledged launch of the SOKUDO DUO to bolster
sales. Preparing to respond to an increase in orders, we areworking to shorten production lead times.
To leverage our advantage as a leading manufacturer, we areshifting operations into top gear as we strive to mount a recovery.

2007

2008

while conserving energy and resources and reducing CO2
emissions. In terms of social contribution activities, in March 2009,
we hosted High Tech U, a program operated by industry
organization Semiconductor Equipment and Materials
International (SEMI®). This initiative, a free-of-charge program
to help train the next generation, involved opening the company’s
mainstay Hikone Site to help university
students. The tour, which helped themunderstand the role semiconductors
play and communicate their intrigue,
was a pronounced success.
Going forward, we plan to continue
applying our technological capabilities Single wafer spray cleaning
equipment SU−3100
to play a role in society.

Q Please outline your environmental conservation andother CSR initiatives.
A Our focus is on reducing the environmental
impact of our products when in use.

We are concentrating on lowering the environmental impactof our products when in use. Semiconductor production
equipment uses large amounts of chemicals and pure water,
but by reducing these requirements we can simultaneously
meet the needs of our customers: to improve productivity

Tadahiro
SuharaPresident,
Semiconductor
Equipment Company

Global Market Share (Sales value basis in 2009)
(%)

60.3

60.0
40.0

41.0

37.3

40.6

6.4

4.6

3.3

2005

2006

2007

29.1

20.0
0

Flash Lamp Annealing Equipment

69.7

5.4

2008

2009

(CY)

Single Wafer Cleaning Equipment

Source: Gartner, “Market Share: Semiconductor Implant and Thermal Equipment, Worldwide,2009”, 20 April 2010, “Market Share: Semiconductor Etch and Clean Process
Equipment, Worldwide, 2009” 19 April 201016

Semiconductor Equipment Company= Economic
perspective

Company Management Highlights= Environmental
perspective= Social perspective

Here, we introduce our recent initiatives from the standpoint of a “triple bottom line.”

New Type of Flash Lamp Annealing Equipment Developed

Creation of a Product Energy-Efficiency Roadmap

Offers Improved Performance and Expanded
Process Applicability

CO2 Emissions during Use Down 67% from2000 Levels

Conventional flash lamp annealing equipment was only
suited for miniaturization technologies down to nodes of 45
nanometers. Meeting customer demand for further performanceincreases and greater flexibility in process applicability, we
created a new lineup of products capable of miniaturization
down to 32 nanometers.
The new models feature numerous upgrades andimprovement. As a result, rather than just to the circuits
formed on the wafer surface, heat is transmitted moredeeply to eliminate defects atdeeper junctions. In addition to
enabling its use on productionlines for leading-edge logic
devices, these features should
suit the model for use on
memory device production
Flash lamp annealing equipment
lines.
LA-3000-F

Of the CO2 emitted during the semiconductor production
equipment lifecycle, more than 90% is emitted whencustomers use these products in manufacturing.
For this reason, in addition to our own production
processes, we have concentrated on conserving energy use by
products themselves. Measuring energy consumption by using
such guidelines as SEMI S23*1, we have created our own productenergy-efficiency roadmap in accordance with ITRS*2. As aresult, we have achieved a 67%*3 reduction in CO2 emissions on
single wafer cleaning equipment, compared with 2000 levels.
SEMI S23: A guide to the conservation of energy, utilities and materials*1 consumed
by semiconductor production equipment.
ITRS (International Technology Roadmap for Semiconductors): A report made*2 byrepresentatives from five economic regions: the United States, Japan, Europe,
South Korea and Taiwan.

*3 Comparison of annual energy consumption calculated per wafer on the basis of surface area
Single Wafer Cleaning Equipment Energy Reduction (2001=100)
(%)

100.0

100.0
60.5

50.0

Launch of the SOKUDO DUO Coater/Developer

World’s Fastest Processing with Up to 40% Higher
Wafer Output per Unit Area
In April 2009, SOKUDO Co., Ltd., a Group company ofDainippon Screen, commenced sales of the SOKUDO DUO,
a coater/developer that achieves unprecedentedly high levelsof output per unit area.
Employing a dual-track system that simultaneously
applies a photosensitive coating on one line and develops on
the other raises throughput to 300 wafers per hour—a world
record. The SOKUDO DUO improves wafer output per unit
area by up to 40% compared with previous single-track systems.
Furthermore, through technologies that can be applied
to immersion lithography and other leading-edge
miniaturization processes, as well as the employment ofproprietary cleaning technologies
that boost yields, the new system
helps create an environment
suitable for the production of
next-generation semiconductors.
Coater/developer SOKUDO DUO

32.9

0

2001 (MP-2000)

2004 (SU-3000)

2008 (SU-3100)

Energy Consumption Calculated per Wafer on the Basis of Surface Area

“Best Delivery Support Award” from Taiwan Semiconductor
Manufacturing Company, Ltd. (TSMC)

Customer Support System Rated Highly
Dainippon Screen won the fiscal 2009 “Best Delivery Support
Award” from TSMC*, the largest semiconductor manufacturingfoundry in the world. This award, presented by TSMC at its
supplier chain management forum, is given to suppliers who
have made the largest contributions to the company’s
success. In the “delivery” category, the award is based onstrict quarterly reviews that, among other factors, consider
the speed with which the supplier is able to deliver productsthat meet TSMC’s demands, the efficiency of system setup
and the stability of product operations.
Dainippon Screen delivered many semiconductor
cleaning systems that met TSMC’s exacting demands. TSMC
awarded high ratings to Dainippon Screen’s comprehensive
service system that provides support every step of the way
from system delivery to operation.

* Established in 1987 and located in the city of Hsinchu, Taiwan Semiconductor
Manufacturing Company, Ltd. (TMSC), is the world’s largest dedicatedsemiconductor foundry.

17

Stakeholder Messages

Supplier Comment

Working Together to Create Products with Strong Environmental
Performance and High Productivity

Hiroki Hayashi
Corporate Vice President, Deputy General Manager,
Business Division , General Manager,
System Unit Business Unit,
Business Division , USHIO INC.

The flash lamp annealing equipment employing the concave surface susception method,which we developed in cooperation with Dainippon Screen, received the Japan
Machinery Federation President’s award in the 2007 Excellent Saving Energy
Equipment category. Compared with equipment employing halogen lamps, this systemcuts operational power requirements to one-third or less and reduces to one-half or lessthe average power required per wafer. We are currently delivering major flash lamp
annealing equipment components under consignment for Dainippon Screen. For thisproduction, we are conserving energy through plant power management andreducing resource losses through careful management. In addition, we are striving to cut
back on the use of specific chemicals by using alternative substances.
By combining the companies’ technologies, we are working together to reduce
the environmental impact of our customers. At the same time, we are creating productsthat contribute to productivity improvements.

Comment from Industry Organization

Cooperating in the Education of the Next Generation of Human Resources
SEMI is an international industry organization serving the companies that manufacture
products, provide materials and offer services related to the semiconductor, FPD,
photovoltaic generation and other fields. In 2007, we inaugurated High Tech U, aprogram designed to further the education of high school students by communicating
to them the intrigue of science and technology and the importance of semiconductors.
Dainippon Screen was the first of our sponsoring companies to open its doors to theprogram, which led to a tour of its Hikone Site by approximately 50 high school
students in 2009.
Dainippon Screen is playing an integral role in activities related to Global Care™,
our environmental, health and safety initiative. Going forward, I look forward tocommunicating to more companies information related toDainippon Screen’s activities and Global Care.

Junko Collins
Senior Manager, EHS & Advocacies
SEMI Japan

Employee Comment

Contributing to Customer Growth

Junichi Suketa
Deputy General Manager
Sales Department 1, Sales Operations Division
Semiconductor Equipment Company

I am in charge of several dozen customers, including a number of leading Japanese
semiconductor manufacturers.
These companies curtailed capital investment in 2009, but recent signs indicatethat investment levels will increase steadily throughout the industry in 2010. Demandis particularly strong for single wafer cleaning equipment that helps achieve
semiconductor miniaturization—a market segment in which our products enjoy aparticularly strong reputation and a growing share of the market. In addition tocleaning equipment, demand is growing for our external wafer inspection equipment,
which finds application in PCB and LCD production technologies.
Our company’s customer-targeted slogan is to “focus on your future.” As they
recommence their capital expenditures, we will put forth our best efforts to deliverproducts featuring the levels of quality, service and delivery schedules that will
propel them toward future success.

18Overview of Performance by Company

FPD Equipment Company

Pursuing Cost Reductions and Strategic Development
to Emerge Victorious from Intense Market Competition
To survive the competition in increasingly vigorous
Asian markets, we worked to reduce costs and bolster
our competitiveness.
We also endeavored to exploit the technologies wehave amassed to date and took proactive measuresinvolving strategic development and collaboration both
inside and outside the company to facilitate our entry
into promising new fields.

HayatoHayashiPresident,
FPD Equipment
Company19

During the fiscal year ended March 31, 2010, the FPD
Equipment Company posted sales of ¥19.8 billion, down
68.1% from the preceding fiscal year.
Difficult market conditions, which commenced in autumn
2008, continued throughout the fiscal year ended March 31, 2010.
Price competition intensified, particularly against South Korean
manufacturers. Under these circumstances, we endeavored tomaintain sales levels while reducing costs. We addressed theissue of low-cost products through aggressive ODM sourcing(products that are designed and produced by another company,
an original design manufacturer, are specified and branded byanother firm) from South Korea. We also prepared to expand
parts procurement from China, which included thereinforcement of our quality management system.

Q Please describe your business reorganization initiatives.
A While shoring up our defenses, we arepreparing to take the offensive.

In addition to ODM procurement from South Korea, we are
expanding parts procurement from China. FEBACS Co., Ltd., oursubsidiary that handles maintenance, has also initiated a project torestructure and expand its operations. This project addresses
operations from the defensive standpoint of reducing variable andfixed costs, as well as introducing offensive measures involving thepost-LCD business (see the page 21). In the fiscal year ending
March 31, 2011, we plan to be particularly proactive in the Chinese
market, which is slated for growth. As we believe that the structureof our service organization in China will prove important, we aremoving ahead with internal evaluations on this front.
In the field of flat panel display (FPD) production equipment,
we have completed the development of coater/developers that are

Composition of Net Sales(Fiscal Year Ended March 31, 2010)

During the year, thecompany’s sales plunged
68.1% year on year, to¥19.8 billion.

12.1%
Net Sales ¥19.8 billion(Billions of Yen)

80
60

60.6

62.3

56.4

40

32.4

20

19.8

0

2006

compatible with 11th-generation glass substrates. To reduce costs
through process simplification, we have employed a new concept todevelop an inkjet spacer printer. With a customer, we are pursuing
the test operation and evaluation of equipment that should result inorders for systems that are operational on mass production lines,
assuming that capital investments proceed as planned.
In pursuit of sales for OLED display production equipment
to panel manufacturers for the South Korean and Taiwanesemarkets, which have begun making aggressive capital
investments, we aim to secure orders for pilot lines in thefiscal year ending March 31, 2011.

Q What products and businesses will be future focuses?
A We are pursuing strategic development in areasthat promise growth, including solar cells,lithium-ion batteries and flexible displays.

We are concentrating on strategic development that will enable
us to enter industries promising future growth. In particular,
we are focusing our R&D investments on three related areas:
solar cells, lithium-ion batteries and flexible displays.
In solar cells and lithium-ion batteries, we are deploying
the company’s core coating technologies toward equipment
development. We plan to commercialize these technologies
in the fiscal years ending March 31, 2012 and 2013.
With regard to flexible displays, recent trends havebrought electronic books and electronic paper into thelimelight. In addition to the format in which this information
Top Global Market Share in 2009 (Unit base)69%

Coater/developers

42%

Wet etchers* Production equipment for TFT LCD array processing

52%

Resist strippers

2007

2008

2009

2010

is viewed, such developments involve major changes in
distribution networks and could have a substantial effect on
the entire printing industry. This recent upheaval presents
an opportunity for our company. Given the size of thismarket, we plan to extend our focus from the manufactureand sale of production equipment into the new domain of
production processes.
Developing products in new fields will require us tocollaborate with other in-house companies, as well as thoseoutside the Group. To this end, we are currently enhancing
cooperative relationships with customers, materials
manufacturers and equipment manufacturers like ourselves. Such
activity represents one aspect of our strategic development, andby searching for fields in which to apply our own technologies,
we are strengthening our product development team.

Q Please outline your environmental conservation andother CSR initiatives.
A We are concentrating on the design of equipmentthat saves energy and requires fewer resourses.

Production equipment for LCD panel manufacturers currently
accounts for around 80% of our company’s sales. The size of LCD
panels is increasing steadily, and the required amounts ofpower, water and chemical solutions rise in proportion to
the size of their glass substrates. The FPD Equipment
Company is working to design equipment that reduces
energy and material requirements relative to glass substrate
size. In addition, we strive to reduce the environmental
impact of customers’ production processes by developing
equipment capable of creating thin films,
using chemical solutions as sparingly
as possible, and we intend to
redouble efforts in thisregard.
10th-generation
glass-substrate-compatible
wet processing equipment

Source: DisplaySearch

20

FPD Equipment Company

Company Management Highlights= Economic
perspective= Environmental
perspective= Social perspective

Here, we introduce our recent initiatives from the standpoint of a “triple bottom line.”

SK Series of Coater/Developers

Progress with the Restructuring and Business Expansion Project

Top Market Share and Industry-Leading
Performance for Sixth Consecutive Year

Moving into the Black in the Fiscal Year Ending
March 31, 2011

The coater/developers used in FPD production employ
photolithography to apply a coating to a resist, which is thendeveloped.
In 2003, Dainippon Screen announced that it would
integrate into its existing SK series of coater/developers used in FPD
production, which already enjoyed a reputation for quality andreliability, the Linearcoater ® system. We proposed that LCD
panel manufacturers try new production methods to takeadvantage of coater/developers with this superior resist coating
system that conserved material and energy use. We followed up
this activity with technology and product development
initiatives in a bid to meet customer needs for larger glass
substrates and low-temperature polysilicon TFTs, among others.
As a result of this addition, the SK series now offers theworld’s top throughput, while achieving a reduced environmental
impact. In 2009, our coater/developers for TFT arrays accounted
for 69% of total unit shipments, earning us the world’s top
share of the market for the sixth consecutive year, since 2004.
We also maintained our leading industry position in the wet
etcher and resist stripper categories.
Twenty years ago, the first generation of LCD glass
substrates measured only 320 millimeters by 400 millimeters.
Substrates have now progressed into their 10th generation,
at 2,850 millimeters by 3,050 millimeters. Meanwhile,
demand has mounted for higher productivity, lower costs,
greater precision and reduced environmental impact.
By responding promptly to increasingly diverse customer
needs in line with FPD advancements, we intend to maintainour leadership position in coater/developers used in FPD
production.
Compatible with 10th-generation
glass substrates,
coater/developer
SK-2800GIn April 2009, FEBACS, our subsidiary in charge of
maintenance for the products we sell, initiated its KJ-PJ
initiative. FEBACS has promoted this initiative, which is
linked with Dainippon Screen’s companywide restructuring
project, among all its employees.
KJ-PJ comprises two projects: restructuring (K-PJ) andbusiness expansion (J-PJ). K-PJ involves six themes, including
reducing variable costs of production, cutting overheads andimproving cash flows. Through these cost improvements,
the project seeks to lower the break-even point. J-PJ,
meanwhile, emphasizes expansion through the targeting of
post-LCD business areas.
Attesting to its success in rollingout these projects, in the fiscal year
ended March 31, 2010, the company
substantially reduced its losses. In thefiscal year ending March 31, 2011, we
aim to put our operations back in theblack, despite the severe economic
KJ-PJ Badge
environment.

Meeting the Call for Lower Costs

Expanding Parts Procurement from China
The trend toward falling market prices on LCDs has resulted
in intense price competition in the market for LCD production
equipment. At the same time, while being called upon tolower costs sharply, equipment manufacturers must maintainhigh levels of quality.
To meet these demands, as one aspect of its restructuring
project (K-PJ), the company is working to increase its
procurement of parts from China. In April 2010, we stationed
personnel in Shanghai, signaling the full-fledged start of the
project. This procurement will be in line with our stringent
green procurement standards*. We will strive to reduce
logistics and other expenses, enabling us to manufacture
products in accordance with customers’ needs.

* Please refer to the following website for information on green procurement standards.
U R L http://www.screen.co.jp/environmentE/green.html

Linearcoater ® resist coating system

21

Stakeholder Messages

Supplier Comment

Hoping to Increase Technology and Personnel Exchanges
SEMES is a South Korean manufacturer of FPD production equipment that operates
under consignment from Dainippon Screen. For wet processing equipment, we handle
all processes from design to parts procurement, processing, assembly and testing. To
meet Dainippon Screen’s strict quality requirements, we conduct quality control inaccordance with ISO 9001 and the SEMES Product System. Our environmental
management is based on ISO 14001 guidelines. Out of consideration for our employees,
we strive to ensure that our workplace is safe and clean.
As we endeavor to respond quickly and appropriately to changing market needs,in the future we hope to ramp up technology and personnel exchange activities with
Dainippon Screen. This cooperation should enable us to take full advantage of bothcompanies’ strengths.

Ha-Sang Yoo
Vice President/Board Director
Display Business Division
SEMES Co., Ltd.

Supplier Comment

Looking Forward to Candid Opinions and Guidance

Makoto Kikuchi
Managing Director
Musashinoseiki Co., Ltd.

Although precision equipment processing is our core technology, the products that wedeliver to Dainippon Screen are unique for their high degree of precision and difficultyin handling, because of their weight. For these reasons, we take special care whenmanufacturing these products.
In terms of quality management, we received ISO 9001 certification in November
2005. Our unique technologies in precision processing, combined with our ISO
management skills, enable us to meet exacting quality requirements. In the area ofenvironmental management, we received ISO 14001 certification in January 2004,
qualifying us under green purchasing requirements. Going forward, we look forward to
Dainippon Screen’s candid input and guidance with regard to quality and environmental
management, as well as measures for ensuring workplace safety.

Employee Comment

Working to Shorten the Interval between Equipment Delivery andthe Start of Mass Production
I am involved in processing technology for the coater/developers used in FPD production.
In recent years, the plants that manufacture LCD panels have reduced dramaticallythe interval between equipment introduction and the start of mass production. Consequently,
the level of cleanliness required of the equipment we deliver has risen. To comply withthis demand, we assemble equipment in clean rooms and clean all equipment thoroughly
prior to delivery. This level of care helps shorten the interval between delivery and thestart of mass production. In addition, as equipment increases in size, we address the riskof accidents during assembly and setup by conducting safety training companywide,
including courses for partner companies. This type of preventive action has raised ourability to ensure workplace safety. I am working to raise quality and workplace safety levels
during the assembly and setup processes, as well as for the equipment itself.

Koji Kizaki
Manager, Production Department 1
Hikone Plant
FPD Equipment Company

22Overview of Performance by Company

Media And Precision Technology Company

Developing and Supplying Products in Response to
Industry Shifts and Changing Trends
Affected directly by the economic recession, during the
fiscal year ended March 31, 2010, the Media And Precision
Technology Company strove to respond to the changing
market environment and made preparations for a future
demand recovery. We are preparing for ongoing increases
in sales of our inkjet Print on Demand (POD) systems in thefiscal year ending March 31, 2011. We are also working
vigorously in the area of film thickness measurement systems
for thin film solar cells—an area harboring promising growthpotential. We expect our R&D and market launches in thiscategory to support the company’s return to profitability.

KyoheiFujisawa
President,
Media And Precision
Technology Company

During the fiscal year ended March 31, 2010, Media And
Precision Technology Company sales amounted to ¥42.7
billion, down 34.4% from the preceding fiscal year.
During the first half, unit sales of Plate Recorders (CTP)—theGraphic Arts Equipment segment mainstay—fell sharply,
reflecting the global economic recession. Sales rebounded slightly
in the second half, causing the year-on-year decline to be smaller
than we had initially expected. A cooling market for digitalprinters resulted in lower unit sales of equipment related to inkjet
printers. Within Other Electronic Equipment and Components, thecompany fell short of its sales target in the printed circuit board
segment, as customers continued to hold back on capital investment.
In the second half of the year, however, a sharp recovery centeredon the Taiwanese market, prompted a rise in orders for automatedoptical inspection systems and direct imaging systems.

Q What are your business reorganization initiatives?
A We are working to restrain fixed costs andreinforce product capabilities through a focus
on selection and concentration.

The progress of our restructuring measures has succeeded inlowering the break-even point. Despite this improvement,
however, the company posted a substantial operating loss,
stemming from a sharp falloff in sales.
Our efforts toward business reorganization include cutting
fixed costs further, securing sales levels by reinforcing our productcapabilities and seeking further cost reductions by boosting ourcapacity in China. In addition, we are pursuing a path of selection
and concentration by investing aggressively in R&D in areas ofpotential growth. Through these combined efforts, we aim to
return to profitability in the fiscal year ending March 31, 2011.
23

Composition of Net Sales(Fiscal Year Ended March 31, 2010)

During the year, sales of graphic
arts equipment dropped 32.7%
year on year, and sales of otherelectronic equipment fell 46.9%.
As a result, the company
recorded sales of ¥42.7 billion.

26.0%

Net Sales ¥42.7 billion(Billions of Yen)

80
60

12.0

9.5

7.9

8.0
4.2

40
20

58.0

62.4

62.9

57.0

2006

2007

2008

2009

38.4

0

Graphic Arts Equipment

Q What products and businesses will be future focuses?
A We are concentrating on variable printing andbusiness related to solar cells.

The printing industry is in a transitional phase characterized by major
restructuring. In commercial printing, the previous status quo—
demand for high-volume, low-cost printing—is giving way to demandfor POD, or printing on an as-needed basis of precisely the number ofcopies required. In addition to helping reduce costs, this approach isconsistent with current societal focuses on the conservation of energy
and resources. Consequently, we expect demand in this category to
expand. POD is particularly well suited to printing direct mailers andtransactional documents, such as invoices and account statements.
Compared with conventional commercial printing, the demand forthis sort of document is relatively impervious to economic
fluctuations. Accordingly, we anticipate steady increases in demandfor POD-related products (see the feature article on this topic).
Variable printing allows the printing of individualtransactional documents that contain unique information—such as
the addressee’s personal information. Equipment considerations forvariable printers are more elaborate than for conventional printers.
We believe that this situation plays to our strengths in inkjet
POD equipment. Providing these systems in combination withinspection equipment should contribute to higher sales and profits.
The face of the POD printing industry is changing dramatically, andthe Media And Precision Technology Company is responding quickly tothe shifting trends by rounding out its portfolio of products featuring
higher performance. At IPEX 2010, an international printing industry trade
show that began in the United Kingdom on May 18, 2010, we exhibited
the Truepress JetSX, a full-color variable printing system that handles paper
up to B2 size. In addition to print quality rivaling that of offset printing,Global Market Share of Plate Recorders (CTP) (Unit base)
(%)

50.0

35.6

35.9

32.0

37.3

34.8

2005

2006

2007

2008

2009

25.0
0
(CY)

2010

Other Electronic Equipment

expectations run high for the system because of its ability to meetmarket trends toward small-lot, variable printing with short lead times.
For CTP-related equipment, we are increasing the number ofmodels that we produce in China, in line with efforts to achieve further
cost reduction and better price competitiveness. We are also in theprocess of developing a flagship top-performance CTP product.
In Electronic Equipment and Components, we have developed
direct patterning systems for manufacturing flexible printed
circuits (FPCs) that dramatically reduce power and resource
requirements. We expect our systems to have a revolutionary
impact on the manufacturing process for FPCs, which arefinding increased application in such products as mobile
phones and digital cameras (see the following page).
We also have high expectations for film thickness
measurement systems for thin film cells, which we have introduced
for use in the solar cell industry. We have already delivered such
systems to leading Japanese solar cell manufacturers. From the highmarks we have received, as solar cell production increases, we lookforward to expanded demand for our systems (see feature article).

Q Please outline your environmental conservation andother CSR initiatives.
A We have already begun supplying environmental
improvement solutions.

The Media And Precision Technology Company makes it a top
management priority to provide products and services that help its
customers save energy and resources. Media Technology Japan Co.,
Ltd., a subsidiary that handles domestic sales, working in cooperation
with OMRON Corporation,
has launched a businessthat involves proposing
environmental
improvement solutions,mainly through energy
savings, to customers in
Truepress JetSX
the printing industry.
24Media And Precision Technology Company

Company Management Highlights= Economic
perspective= Environmental
perspective= Social perspective

Here, we introduce our recent initiatives from the standpoint of a “triple bottom line.”

Development and Launch of the Truepress Jet520EX

Meeting the Demand for Monochrome Variable
Printing
In recent years, on-demand printing has grown more commonplace.
POD is particularly well suited for printing monochrome materials,
such as accounting forms and product manuals, in precisely therequired numbers and exactly when needed. In May 2010, thecompany launched the Truepress Jet520EX. This high-performancemonochrome inkjet printing system features print speeds of up to
128 meters/minute. This model rounds out the company’s Truepress
Jet series, which previously had included only color inkjet printers.
This model attracted attention at IPEX 2010, an international
printing industry tradeshow
held in Birmingham, theUnited Kingdom, from May
18 to 25, 2010.
Truepress Jet520EX

Development of the New Hiragino Kaku Gothic Simplified Chinese Version FontFirst Font by a Japanese Manufacturer to Receive
Chinese Government Certification
In August 2009, we launched the Hiragino Kaku Gothic Simplified
Chinese Version, the newest addition to our Hiragino series offonts, which have earned high acclaim for their quality, both inJapan and overseas. This is the first Chinese font developed by aJapanese manufacturer to receive certification from the Chinese
government under the GB18030-2000 official Chinese character
sets and coding standard. This font’s strengths include a modern
design that sets it apart from existing Chinese fonts and qualitythat can be clearly recognized even at small sizes. The font is ideal
for applications that demand readability and superior design, suchas packaging, brochures and catalogs for products designed for the
Chinese market, as well as books, magazines, websites and signs.
As China’s markets continue to expand in tandem withthe country’s economic growth, global companies are creating
China-oriented sales promotion strategies and conducting
brand-building exercises. We support these activities fromthe standpoint of font design.

Launch of the PlateRite 8000N Series

New CTP Model Featuring Robust Environmental
Performance and Enhanced Operability
In January 2010, we launched the PlateRite 8000N series ofthermal plate recorders. This series offers enhanced environmental
performance, as it helps conserve ink, chemicals solutions and power.
25

Compared with conventional models, the PlateRite 8000N
uses up to 28% less power per plate. Furthermore, the model
achieves productivity of 36 plates per hour and offers enhanced
operability and futher functionality.

Development of Direct Patterning System for Manufacturing Flexible Printed Circuits

Dainippon Screen Earns JPCA Award for Tripling
Productivity
Conventional flexible printed circuit (FPC) formation involves
the processes of coating photoresist materials, producing andexposing pattern masks and developing and fixing the circuit
patterns. Our new direct patterning system streamlines theseprocesses, allowing resist patterns to be printed directly onto
the FPCs from drawing data. We unveiled this system in June 2009
through a reference display at the JPCA Show 2009, held by theJapan Electronics Packaging and Circuits Association (JPCA).
Exhibition-goers showed strong interest in our new system,
which triples the productivity of conventional methods, lowers
equipment and materials costs and features reduced environmental
impact. The system’s strong showing earned us our fifth JPCA Award,
and we conducted a special seminar in a separate conference room.

Direct patterning system

At the award ceremony

EQUIOSNET: Turning a New Printing Concept into Reality

Various Problems Resolved through Full Process
Automation
In May 2008, we announced our new EQUIOSNET integrated
workflow concept at drupa2008, the world’s largest trade fair
for the print media industry. EQUIOSNET, which integrates
the CTP and POD workflows, attracted industry attention.
Later, in June 2009, we initiated an EQUIOSNET partnershipprogram to turn this concept into reality by offering a solutionthat fully automates all printing processes and employs an
open-access environment, providing the solution to printing
companies in collaboration with vendor partners.
The advances that this program has made possible havehelped to solve a number of persistent issues in the printing
industry, such as concentration of personnel and the tendency
for mistakes to arise during printing.

Stakeholder Messages

Customer Comment

Partnering with Us to Expand the Variable Printer Market

Daisuke Segawa

To move into the variable printer market, we are working to expand sales of the InfoPrint
5000, which is capable of the high-speed printing of different information on each sheet
in a roll of continuous forms. We have commissioned Dainippon Screen to manufacture
this printer for us on an OEM basis. The biggest reason our partnership with Dainippon
Screen has come to fruition was that we recognized that the inkjet technology used in
its Truepress Jet520 would be optimal for variable printing.
By adding various functions, we plan to turn the InfoPrint 5000 into a series. In
the process, we look forward to forging an even stronger relationship with Dainippon
Screen as we together develop inkjet printing systems and expand the market.

President and CEO
InfoPrint Solutions Company, LLC

Affiliated Company Comment

Striving to Reduce Costs while Maintaining Japanese Quality Levels
A Dainippon Screen subsidiary based in China, we manufacture printing-related
equipment. Our goal is to help reduce costs, while maintaining quality levels equivalent
to production in Japan, and thus far our products have been well received in markets
throughout the world. To reach our objectives, we are enhancing our manufacturingsystem to stabilize output meeting higher demand levels. We are also working toprocure higher quality parts locally on a stable basis. In the process, we are transferring
to China technologies amassed in Japan; we consider the accumulation and developmentof these technologies in China to be our corporate mission.
In addition to exporting to Japan, we supply products for the Chinese market.
The printing market is expanding rapidly, in line with the country’s economic growth.
We anticipate future increases in sales for CTP, which is garnering attention for its ability
to curtail printing costs.

Masato Suemori
Gerenal Manager
Dainippon Screen MT (Hangzhou) Co., Ltd.

Employee Comment

Making Further Advances in Full-Color Variable Printing

Hiroshi Okamoto
Manager
Inkjet Product Development Department
Product Development Division
Media And Precision Technology Company

I am involved in the development of inkjet products, for which demand is expected tocontinue growing. In recent years, demand for variable printing has increased, as it
facilitates printing that can be tailored to individuals, which is particularly useful for suchitems as direct mail flyers and credit card invoices, which contain different informationfor each recipient. Our Truepress Jet520 series full-color variable printing system is well
suited to this task, as it enables text and images to be changed on every printed page. In
addition, the lineup is extensive, and these systems feature high-speed, high-quality
printing. To meet mounting demand, we are incorporating a host of proprietary
technologies involving conveyance, drying, dot formation and color management.
At present, I lead a team that is evaluating the performance of inkjet heads andinks. Our mission is to develop the basic technologies and enhanced image quality thatwill be used in next-generation products. I believe that our team’s research efforts on adaily basis will enable further advances in full-color variable printing.

26

Corporate GovernanceCorporate Governance and Internal Control Systems

Dainippon Screen will pursue transparent management,
financial health, and efficiency.
By enhancing corporate governance, the Screen Group is aiming for transparent management, financial health,and efficiency in order to comprehensively ensure profits for all stakeholders.

Basic Policy
We Aim to Secure Overall Benefits for Shareholders andOther Stakeholders
To ensure its provision of overall benefits to shareholders and otherstakeholders, the Dainippon Screen Group is endeavoring toenhance its corporate governance framework, with the aim of greater
management transparency, more soundness and higher efficiency.
Moreover, the Group is implementing Corporate Social
Responsibility (CSR) Management. Three specific areas are being
addressed: “Strengthened Corporate Governance,” “Enhanced Internal
Control Functions” and “Environmental and Safety Management.”

Corporate Governance Structure
Outside Directors and Outside Corporate Auditors Provide
Management Check/Audit Function
As the highest management decision-making body of the Dainippon
Screen Group, the Board of Directors is responsible for decisions
and approval regarding important matters and for supervising theimplementation of business operations. The Board convenes
regularly once a month, and at other times as deemed necessary.
In 2000, the Group began appointing outside directors toprovide a management checking function. At present, the Group hasseven directors, three of whom are outside directors. In addition, sinceApril 1999, Dainippon Screen has employed a corporate officer system
to speed decision-making by increasing management efficiency andstrengthening operational functions. In April 2002, the Group
introduced an internal company system and established theManagement Committee as the Group’s highest operational
decision-making body. The Management Committee comprises thestanding directors, corporate officers, company presidents and generalmanagers of centers. In principle, the Management Committee meets
twice a month. In addition, the Company has established theConsolidated Management Committee Meeting, which includes all
Management Committee members, as well as outside directors andGroup company presidents. This council meets four times per year.
The Dainippon Screen Group has adopted the corporate
auditor system. The Board of Auditors comprises four members,
including two outside corporate auditors. Auditors conduct director
hearings, attend important meetings and undertake audits of Group
offices and companies. These audits are conducted to confirm
whether operations are being conducted appropriately and meetlegal compliance requirements. The Group Auditing Department
operates the system that promotes internal control groupwide.

Internal Control System
Internal Controls Evaluated; Operating Status Audited by
the Group Auditing Department
In accordance with a Board of Directors resolution passed in May
2006, the Group created an Internal Control Promotion Department.
Upon its creation of an internal control system, this department wasabsorbed into the Group Auditing Department in October 2009.
The Group Auditing Department manages theoperational status of the internal control system by performinginternal control audits, which include the confirming thereliability of operational processes and financial indicators.
Purposes of the Internal Control System
1.Disseminating information on the importance and content of the internal
control system
2.Documenting the major operations performed by each organizational unit andGroup company
3.Building a compliance system
4.Building a business risk management system
5.Building a system for ensuring the reliability of financial reporting

Corporate Governance Organization
Shareholders’ Meeting
Cooperation

Board of Directors

Chairman, Chief Executive Officer (CEO)President, Chief Operating Officer (COO)

Management Committee
ReportingExternal Accounting Auditor

Board of Auditors

Audit,
Reporting for
Improvement

Directions for Improvement

Confirmation,
Directions for
Improvement

Internal Audit

Centers

Companies

Corporates

Group Auditing Department
Promotion of Internal Control

27

Directors

Akira Ishida

Masahiro Hashimoto

Osamu Ryonai

Representative Director
Chairman
Chief Executive Officer (CEO)

Representative Director
President
Chief Operating Officer (COO)

Senior Managing Director
Director
Chief Financial Officer (CFO)
Chief Technology Officer (CTO)
Chief Officer of Corporate Strategy,
General Manager of Technology
Finance and Accounting,
Centerand General Affairs
General Manager of Management Operation Division
General Manager of Business Service Center

Masashi Arita

Yoshio Tateisi

Takeshi Isayama

Toru Matsumoto

Director
Chairman of the Board of Directors,
OMRON Corporation

Director
Senior Advisor to The Carlyle Japan LLC,
Outside Director of Terumo Corporation,
Outside Director of Renault S.A.S.

Director
Attorney at Law, Admitted to the Bar
in Japan and New York,
Aqua Yodoyabashi Law Offices

Corporate Auditors

Kazuya Noguri

Hiroshi Yamamoto

Hideaki Shirota

Mikio Mori

Katsuyuki Toyobe

Senior Corporate Auditor

Corporate Auditor

Corporate Auditor
Advisor to Kyogin
Lease & Capital Co., Ltd.

Corporate Auditor
President of
Shiga DC Card Co., Ltd.
President of
Shigagin JCB Co., Ltd.

Substitute Corporate Auditor
Managing Director of
The Bank of Kyoto, Ltd.

Corporate Officers
Corporate Executive Officers

Akira Yamano
Kyohei Fujisawa
Eiji Kakiuchi

Vice President and Chief Technology Officer (CTO) of SOKUDO Co., Ltd.
President of Media And Precision Technology Company
Chief Officer of security trade, GPS Department and sales promotion support

Corporate Officers (Senior)

Tatsuo Miyawaki
Hayato Hayashi
Tadahiro Suhara

Deputy General Manager of Business Service Center
President of FPD Equipment Company
President of Semiconductor Equipment Company, President and CEO of SOKUDO Co., Ltd.,

Corporate Officers

Shunichi Kadowaki
Soichi Nadahara
Katsumi Shimaji
Toshio Hiroe
Shin Minamishima
Hisao Nishizawa

Vice President of Semiconductor Equipment Company
Vice President of Semiconductor Equipment Company
Deputy General Manager of Development & Manufacturing Management Division
Deputy General Manager of Research & Development Center
Deputy General Manager of Business Service Center
General Manager of Development & Manufacturing Management Division28

Corporate GovernanceCompliance and Risk Management

The company appropriately manages business risk by
ensuring thorough legal compliance.
The Dainippon Screen Group emphasizes compliance and risk management as the foundation of its business management andcorporate social responsibility (CSR). We practice fair and appropriate Group management through comprehensive auditing of
our overall operations.

Compliance Policy
Revising Our “Code of Ethics” to Strengthen Security Trade Control
Since 2002, when the Dainippon Screen Group instituted its Charterof Ethics stating its commitment to comply with legal statues andabide by societal norms, the Group has striven for complete
compliance by its officers and employees. When we formulated theCharter of Ethics, we also created a Code of Ethics at a Glance
handbook, which provides cautionary notes on the protection ofhuman rights in daily work, gift-giving and business entertainment,
and discusses how to eliminate unethical business practices. We
have also continually advanced compliance education, including
yearly stratified courses making use of the handbook for
employees of Dainippon Screen and the Group companies.
We revised the Code of Ethics in April 2009, incorporating
new articles concerning full observance of each country’s export
laws, internal monitoring of compliance status and thoroughverification of the intended uses and purchasers of certain
products. These new articles specify to all our employees theissues that the Group must constantly bear in mind as amanufacturer and exporter of cutting-edge industrial equipment
for electronics manufacturing, in light of the growing societal
demand for security trade control triggered by recent concerns
about global terrorism and nuclear weapon stockpiles.

Compliance Auditing
Horizontal Deployment of Audit Results within the Group
via the Group Auditing Department
The status of legal compliance and adherence to corporate ethics is
audited internally by the Group Audit Department, which reports
directly to a representative director and performed a total of 19 audits on
departments and Group companies in the fiscal year ended March 31, 2010.
Based on the audits of the Group Audit Department, we
promptly took measures to correct problems and implemented
these measures laterally among all the Group companies. We
plan to strengthen audits of overseas Group companies in thefiscal year ending March 31, 2011.

Compliance Promotion System

Risk Management

A Compliance Committee Focused on Observance of the
Subcontract Act, Appropriate Contracting and Temporary
Employment, and Elimination of Insider Trading

Thorough Risk Ascertainment and Management via the Internal
Control Committee, and Comprehensive Risk Audits via
the Group Auditing Department

The Group maintains a Compliance Committee as its compliancepromotion body. Members of the committee, chaired by the
executive in charge of compliance affairs, comprise people
in charge of management at corporate departments and ofeach company and center (organizations that provide various
services to the Group companies). The Committee is operated
with legal advice provided by a lawyer.
In the fiscal year ended March 31, 2010, under unusually severe

To promote its risk management functions, the Group maintains
an Internal Control Committee chaired by the President, aCompliance Committee, a Disaster Risk Committee, an
Environmental Steering Committee, a Committee for theProtection of Trade Secrets and a Timely Disclosure Committee.
In the fiscal year ended March 31, 2010, we establisheddisaster risk management rules in April to enhance themanagement structure. We also provided training for new
employees on legal matters, internal controls and security tradecontrol. Moreover, we administered six security trade control
internal certification tests and six product classifier tests.
The Group Auditing Department performs risk audits on
general work processes and carries out audits and correcting action
through management systems, such as ISO 14001, and via security
trade control and management of confidential sales information.

Compliance Commitee
President (COO)
Chairman
LawyerSecretariat
Person in charge ofeach center
29

economic conditions, the Committee emphasized observance of the
Subcontract Act, appropriate contracting and temporary employment,
and elimination of insider trading. To ensure observance of the
Subcontract Act and appropriate contracting and temporary employment,
we held hearings following direct inspection requests issued to personnel
at each business site and reviewed contracts with suppliers and work
processes. To eliminate insider trading, we furnished top management
at each company with specific examples of internal information that
could influence share prices to enhance their understanding andencouraged greater familiarity with information management.

Person in charge ofeach company

Person in charge ateach corporate

Management of the Environment, Safety and Quality

We comprehensively promote environmental conservation,
occupational health and safety management.
The Dainippon Screen Group emphasizes its corporate social responsibilities (CSR) concerning the environment, health and safety, and quality.
In launching its three-year environment, health and safety management plan, Green Value (GV) 21, in April 2009, the Group supplemented
environmental conservation with occupational health and safety management and created a framework for managing these commitments.

Management System (MS) Integration Plan
Formulating Green Value (GV) 21 with the Aim of Integrating
the Three Management Systems: Environment, Occupational
Health and Safety, and Quality
Dainippon Screen formulated its medium-term environment,
health and safety management plan, Green Value (GV) 21, inMarch 2009 with three themes: environmental conservation
focusing on curbing global warming, occupational safety thateliminates occupational injury risks attendant to larger productsizes and diversification of employment forms, and healthmanagement that protects the mind and body from illness.
Propelled by innovation, GV21 is a three-year plan tointegrate the environmental and occupational health and safety
management systems of the whole Group worldwide. In
achieving this integration, we aim to boost the Group’s
corporate value and enhance management quality in the eyes ofour customers, employees and all our stakeholders. (See Fig. 1)
As shown below, we completed Phase I of the integrationin the fiscal year ended March 31, 2010, with the integration of theenvironment MS (ISO 14001) into the Group. For Phase II, we plan
Green Value (GV) 21 <Fig. 1>
Environmental Conservation
Reducing CO2 emissions and the environmental
impact of the company’s products for our customers

HealthManagement
Fostering mental andphysical healthInnovation
Streamlining andglobalization of environmentand health and safety
management

Labor Safety
From zero accidents
to zero risks

to complete the integration of the environment MS and theoccupational health and safety MS (OHSAS 18001) in thefiscal year ended March 31, 2012, having commenced
preparations for integration and operation of the environment
MS and the occupational health and safety MS in April 2010.
In Phase III (GV21, Phase II), we would like to complete
integration of the environment and occupational heath and safety
MS with the quality MS (ISO 9001) by March 31, 2015. (See Fig. 2)

The EHS Management System
Management System for the Environment andOccupational Health and Safety (EHS)
In October 2009, the Dainippon Screen Group integrated theenvironment MS (ISO 14001) certifications that each of its
business sites and the subsidiaries had obtained at that time.
Alongside this integration, we established a Group
Environmental Policy that unified the environmental policiesof the Company and its subsidiaries in Japan. We intend toextend this environmental policy to cover even the businesssites and service stations of the subsidiaries in Japan.
In the 13th Evaluation of Environmental Management
Level announced in December 2009 by Nikkei Inc., Dainippon
Screen ranked No. 125 out of all manufacturers, representing asubstantial jump from the previous ranking of No. 230. This
improvement recognizes our environmental activities andother efforts that cut across the organization, thanks to theintegration of the environment MS into the subsidiaries.
The EHS Management System <Fig. 3>
Board of Directors

Management Quality

Chairman (CEO) and President (COO)

Improving corporate value

EHS Executive

Three Management Systems Integration Plan <Fig. 2>
2009
Eco Value 21

2010

2011

2012

Green Value (GV) 21

Integration
Phase I

Integration
Phase II

(Environment
MS integration)(Environment MS and occupational
health and safety MS integration)

Domestic
subsidiaries

Domestic
subsidiaries

2013

2014

2015

GV21 Phase II

Integration
Phase III
Establishing a global IMS(Integration of environment,
health and safety, and quality)

Including major overseas
subsidiaries

Please refer to our website for information regarding the status of management system
certification. U R L http://www.screen.co.jp/environmentE/iso.html

Environmental Management
Activities

Occupational Health and
Safety Management Activities

ISO 14001 Certification Departments(including subsidiaries)

OHSAS 18001 Certification Departments(including subsidiaries)

Environmental Steering Committee

Health and Safety Committee

Environmental Target
Management Committee

OHSMS Target Management
Committee

Product EHS Committee

OHSMS System Committee

Green Logistics Committee
EMS Committee
Energy Committee
Please refer to our website for information about our “Basic Policy on Environmental, Health and
Safety Management.” U R L http://www.screen.co.jp/environmentE/concept.html

30

Environmental Activities

We will lessen the environmental impact of all aspectsof our business activities.
In addition to minimizing the environmental impact of its manufacturing activities, the Dainippon Screen Group actively
contributes to its customers’ environmental efforts by pursuing products that are kind to people and the planet.

Reducing CO2 Emissions

Reduction of Emissions

Improved Methods of Equipment Utilization Cut Emissions by
23% Compared with the Preceding Fiscal Year

From Waste Reduction to Reduction of Total Emissions

In the fiscal year ended March 31, 2010, Dainippon Screen optimized
its equipment utilization methods, designated “no-overtime”
days at Headquarters and each business site, and saved energy
used in running computers, with the goal of reducing total CO2
emissions originating from electric power used in the company’sbusiness activities by 5% compared with the preceding fiscal year.
Such efforts lowered CO2 emissions resulting from thecompany’s business activities by 23%* compared with thepreceding fiscal year, to about 30,000 metric tons.

* Please refer to the “Greenhouse Gases” section of the data sheets for
information concerning the basis for calculation.

CO2 Emissions* and Emissions per Unit of Production(Thousands of metric tons)

160
120
80
40
0

50.1

(Metric tons/100 million yen)

47.6
21.9

22.1

26.7

19.2

21.5

20.8

36
2
34
2007

40
2
38

39
2
38
2009

50.1

76
31
45
2001

28.2

40
8
32
2006

2008

23.3

60
40
20
0

30
26 4
2010

CO2 Emissions* and Emissions per Unit of Production from
Logistics Operations(Metric tons/100 million yen)

0.586

0.580

0.481

0.448

0.574

1,008

934

2008

2009

0.705
0.552

2,250
1,500

0.592

1,213

1,194

750

0.8
0.4
0.0

595

0

2006

2007

Total emissions
Emissions per unit of production (actual)

2010

Emissions per unit of production (target)* Cargo weight (in tons) multiplied by the distance transported (in kilometers)
31

2,000
0

(Metric tons/100 million yen)

3.20

4.0

3.12
1.06

3.20

1.02

0.99

1.46

4,847
0.81
0.73
0.73
0.72
2,316 2,086
1,098
1,501 1,313
159 937 188
220
234
765
2,532
1,080
1,282
939
1,321
750
2010
2001
2006
2008
2009
2007

2.0
0.0

Volume of waste (sites)
Volume of waste (subsidiaries)
Emissions per unit of production (actual)
Emissions per unit of production (target)

Dainippon Screen is promoting a modal shift from using trucks
for shipping to using marine and rail shipping. We are also
expanding our use of low-pollution vehicles for truck shipping.
In the fiscal year ended March 31, 2010, we promoted the use ofdomestic vessels and Japan Railways containers for shipping between
Osaka and Shimonoseki/Hakata. We especially increased utilization ofdomestic vessels for shipments for which they were an option to 57%,
surpassing the preceding fiscal year’s 45% utilization rate.

0.592

10,0004,000

Advancing Marine Shipping and Other Modal Shifts

0.581(Metric tons)

6,000* CO2 emissions are rounded to the nearest hundred metric tons.

3,000

Volume of Emissions (Volume of Waste)* outside the Company
and Emissions per Unit of Production

8,000

CO2 emissions (subsidiaries)
CO2 emissions (sites)
Emissions per unit of production (actual)
Emissions per unit of production (target)(Metric tons)

In the fiscal year ended March 31, 2010, the company expanded its
calculations of emissions from its business sites to include all emissions
outside the company—both wastes and valuable resources—insteadof only counting wastes. We also divided recyclables into thermal
and material resources to create another mechanism to curtail
environmental impact both quantitatively and qualitatively.
To reduce packaging materials, we advanced mainly new
packaging arrangements (SPA) using reinforced corrugatedfiberboard to package semiconductor production equipment
for export. The changeover to SPA enables a reduction in
lumber usage of approximately 50% or more, through which
we succeeded in saving approximately 260 metric tons of lumber.

* Indicates volume of waste through March 31, 2009; indicates volume of emissions outside
the Company in the year ended March 31, 2010

* Volume of emissions (volume of waste) outside the Company are rounded to the nearest metric tons.

Expanding the Range of Green Products
Disclosing Environmental Performance to Boost Green
Products to 40% of Total Sales
Since the year ended March 31, 2007, the Dainippon Screen Grouphas designated products that meet its own assessment standards forlow energy and resource usage as “green products” (environmentallyfriendly products) and worked to expand such products.
In the fiscal year ended March 31, 2010, we promoted the virtuesof green products on the business introduction pages of our website,
aiming to have green products account for at least 40% of our net sales.
Assessment Criteria• Enegy saving • Resource conservation • Reuse or recycle• Safety and chemical substance management• Information availability

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

72

160
120

31

80

10

20

40

40
0

45

(%)

80

45

40

30

63

54

50

(Target)60(Target)

40
0

9
2007

2008

Number of designated products
Percentage of sales (target)

2009

2010

2011

2012

Percentage of sales (actual)

Chemical Substance Management
Managing Substances Requiring Notification under the
RoHS Directive as Prohibited Substances
The Company manages 16 groups of chemical substances
contained in its products as prohibited substances. These
substances include those requiring notification of emission
quantities under Japan’s Pollutants Release and Transfer Register(PRTR) Law, those specified in the European Union’s REACH
regulation on chemical substances and those covered in the
E.U.’s RoHS Directive, which restricts the use of designatedhazardous substances in electrical and electronic devices.
We are steadily pursuing alternative substances basedon surveys of the substances contained in the components
and parts of major products, with the aim of fully eliminating
the use of prohibited substances in major products during the
fiscal year ending March 31, 2012.

Preventing Water and Soil Pollution
At our sites subject to applicable laws and regulations in
Kuze, Kumiyama, Yasu and Hikone, we measure wastewaterand the groundwater quality as part of our efforts to prevent
water and soil pollution to verify that there are no issues.
Under an agreement with the local government, the Yasu
Site even tests for heavy metals that it does not use, reporting
the results to government agencies and cooperating in surveys
on the presence, absence and changes in levels of contaminants.

Environmental Education
Holding Study Sessions on Environmentally Friendly Design
and the “Eco Test”
In December 2009, the Kyoto Industrial Association held the Fifth
Ordinary Meeting of the Kyoto Environmental Management Study
Group at the Company’s Head Office. Themed around the European
Union’s ErP Directive* seeking ecological design for products,
the meeting included lectures on how Japan’s manufacturingindustry should accommodate the directive. Eighteen
employees of Dainippon Screen attended—most of them on
the Product EHS Committee.
Since April 2009, the subsidiary Media Technology Japan
Co., Ltd., has also been holding study sessions in a concerted
effort for its employees to undertake the Certification Test
for Environmental Specialists (Eco Test) administered by the
Tokyo Chamber of Commerce and Industry. Out of approximately
120 employees, nearly 70% havealready passed the test and are using
it to enhance their environmental
awareness and implement
environmental business practices.

* An E.U. directive requiring environmentallyfriendly design for products that rely onelectricity or fossil fuels

An Eco Test study session

Environmental Accounting
Expense Reduction through Integration of ISO 14001
In the fiscal year ended March 31, 2010, the management- andactivities-related maintenance costs for expenditure on environmental
conservation did not change significantly compared with the preceding
year. However, resource circulation costs–which are directly linked to
production quantities–fell, thanks to a decline in the amount of waste.
For administration costs not originating from production
quantities, we were also able to cut necessary expenditures forcertification and conventional procedures by approximately 50%,
through Group integration of ISO 14001 (unifying seven programs
into one).
Preserving Biodiversity

International Water Forum for HighSchool Students Giving Tours ofWastewater Treatment Facilities
Tomohiko Horie

Manager, Hikone General Affairs Section, General Affairs
Department, General Affairs Group, Business Service Center

In February 2010, 19 high school students from Japan and overseas
who were participating in the International Water Forum for HighSchool Students in Shiga Prefecture visited the Company’s Hikone
Site to tour its wastewater treatment facilities. The forum, hosted
by Ritsumeikan Moriyama Senior High School, invited high school
students from Japan and abroad in order to raise awareness aboutwater environments and biodiversity. Dainippon Screen was chosen
as a tour site because it is one of thecompanies whose wastewater treatment
respects the biodiversity of Lake Biwa.
Comments from the visiting students included,“I was surprised that you were taking waterfrom Lake Biwa and making it clean again.”For further information on “Environmental Initiatives,” please refer to the Detailed Environmental
Information Edition and the Data Sheets. U R L http://www.screen.co.jp/environmentE/list.html

32

Initiatives from a Social Perspective

Our Responsibility to Employees

We are promoting the creation of a safe and comfortableworkplace.
We make an effort to create a safe, healthy and nondiscriminatory work environment so that each of our employees canfully develop his or her skills, minds and individuality.

Human Resources Basic Policy

Respecting Human Rights

Skills and Performance, Respect for Opinions and Aptitude

Nondiscrimination Declaration

The two basic policies: switching from seniority-based promotions
to ability and performance-driven promotions; and valuing
employee opinions and aptitudes, have been behind several
personnel systems and measures we have implemented, including
a target monitoring system, an in-house internship system, a
job certification bonus system for employees who obtain
qualifications, and an in-house FA (Free Agent) system.
In April 2009, we employed 62 new university
graduates (88 over the entire Group). We are also continuing
efforts to promote the employment of disabled people.
Those hired are involved in digitizing product information
at the Hikone Site.

The Dainippon Screen Charter of Ethics vows to respect thefundamental human rights of each person and repudiate
discriminatory or disadvantageous treatment of any kind within
the Company based on position, job type, age, gender, place ofbirth, ancestry, nationality, races, disability, religion, or marital
status. We also do not allow sexual or power harassment as
stipulated in our ethical guidelines and employment regulations.
We have established a Corporate Ethics Help Line toprovide consultation on human rights and other issues,
including a special section for reporting sexual or power
harassment.
As of the fiscal year ended March 31, 2010, there have been no
incidences of child labor or forced labor anywhere in the entire Group.

Occupational Health and Safety

Respecting Intellectual Property Rights

Reducing Accidents or Incidents
In the fiscal year ended March 31, 2010, we focused efforts on
occupational health and safety activities based on the renewal of our
OHSAS 18001 certification, acquired in the preceding fiscal year.
The number of incidents fell from 20 in the preceding fiscal
year to 15 in the fiscal year ended March 31, 2010, while thenumber of accidents declined from 17 in the preceding fiscal year to
13 in the period under review as a result of initiatives to provide
comprehensive training to operators and supervisors with limited
experience inspecting heavy load operations, a key issue for the Company.
Number of Accidents and Incidents
60

50
21

43
11

48
16

20

29

32

2006

2007

32

0

Incidents

2008

Technology Education Lectures Motivate
the Creation of New Technologies

37
17

28
13

20

15

2009

2010

Accidents

Stress Management Tests
To support the mental health of our employees, we introduced a stressmanagement checklist in fiscal year ended March 31, 2010, based on the
Ministry of Health, Labour and Welfare’s occupational stress questionnaire.
We also enhanced options for individual consultation withhealthcare staff and strengthened our employee mental andphysical health support structure.
33

Dainippon Screen regulations stipulate that employees will
be appropriately compensated if an invention made by an
employee is inherited by the Company.
In the fiscal year ended March 31, 2010, 69 patents werereviewed for inventor compensation. To encourage the submissionof invention applications, engineers are provided with training
in general patent knowledge, including how to write invention
applications and how to research prior art materials.
Employee Education(No. of cases)

40

Encouraging the Submission of Invention Applications

Megumi Takada
Control Engineering Department, Research &Development Group, Research & Development Center

The panel discussion by the heads of research departments left an
impression on me. I was particularly impressed by the way they spokeof advising and fostering a sense of
expectation among young employees,
regardless of whether they had been labeled“winners” or “losers” when they were younger.
These words inspired me to expand myhorizons and create new technologies.

For further information on “Responsibility to Employees,” please refer to the Data Sheets.
U R L http://www.screen.co.jp/environmentE/list.html

Our Responsibility to Customers

We aim to provide quality products in a stable manner.
All employees engage in quality improvement activities, ensuring a stable supply of quality products to satisfy customers.

Quality Policy

Information Security

Each Operating Company Establishes Independent Policies
in Pursuit of Improved Customer Satisfaction

Revised Guidelines for the Management and Inspection ofConfidential Sales Information

We constantly work to improve the reliability of our products
and services in response to the trust our customers place in us.
In the fiscal year ended March 31, 2010, we concentrated thecollective wisdom and energy of our employees on the qualityof products and services and initiatives focused on quality
improvements by reducing spoilage costs (outside claims, internal
spoilage) and early completion of technological inspections.
To this end, we are continuing the thorough development ofquality management system (ISO 9001) activities.

At Dainippon Screen, we manage confidential information regarding
customers and ourselves according to regulations for the managementof confidential sales information. In the fiscal year ended March 31, 2010,
the Committee for the Protection of Trade Secrets, the companywide
administrative authority for confidential sales information, revised theguidelines for the management of confidential sales information upon
review of classification policies, improving the method of operation.
In addition, an internal audit was conducted on the Company
policy determining the handling of information from important
meetings. Concrete internal management rules were created for thehandling of Company schematics. Furthermore, an improved
awareness of security procedures was inculcated through training
on confidential sales information for new employees and activities
to notify all employees about the strict management ofconfidential sales information.

Quality Policies of Each Operating Company• Semiconductor Equipment Company
Pursuing a level of quality that contributes to our customers’ businesses
through the provision of products and services that meet customer needs.

• FPD Equipment Company
To gain a clear understanding of customer demands, and work on ongoing
improvements to provide products that satisfy customers.

• Media And Precision Technology Company
To provide products and solutions that satisfy customers.

Technological Standardization Activities
Thorough Quality Improvements through TechnologicalStandardization Activities
To provide products with functionality, prices and safety thatmeet customer needs, we are engaged in the precise standardizationof products that is reflected at each stage of the design andmanufacturing process in Japan and overseas, as well as theformulation of technological standards regarding internal expertise,technology and technological understanding. At present,
approximately 60 employees are participating in the successive
revision of 49 different technology standards. We are also engaged inexternal technological standardization activities, with approximately
20 employees serving as committee leaders and members in variousorganizations in Japan and overseas. The technological standards
gleaned through these activities are reflected in internal standards.
In addition to reviewing and enhancing the companywide
structure for developing these standards, we revised 11
technology standards and formulated one new standard in
fiscal year ended March 31, 2010.

Business Continuity Initiatives
Formulating Various Regulations to Prepare for New Strainsof Influenza
In the event of risks involving natural disasters, accidents orillness, we are engaged in various activities to ensure thestable provision of products and services to our customers.
In the fiscal year ended March 31, 2010, we formulated
disaster risk regulations to prepare for earthquakes and an
outbreak of H1N1 and other new strains of influenza. To thisend, we launched a contagion information system and provided
face masks and hand sanitizers in the workplace. We also equippedsome of our overseas companies with emergency equipment.
Product Safety Improvements

Providing Safe Equipment throughComprehensive Risk Assessment
Hiroshi Shibazaki
Manager, Production Administration Department,
Hikone Factory, FPD Equipment Company

High altitude and robotic maintenance work are required for the stable
operation of FPD production equipment. We
conduct a thorough risk assessment not
only at the design stage but on the actual
equipment in an effort to manufacture safe
equipment and avoid overlooking any risks.

34

Initiatives from a Social Perspective

Our Responsibility to Shareholders and Investors

The Company endeavors to provide easily understandable
disclosure and encourage dialogue.
We make an effort to engage in a two-way conversation with our shareholders and investors by listening to their needs
and providing accurate, timely and easily understandable disclosure.

between the Financial Times and the London Stock
Exchange) since its launch in 2004.

IR Activities
Focusing on Two-Way Communication with Shareholders
We make an effort to reflect the voice of our shareholders
and investors in Company management while communicating
performance, financial content and management vision ina precise timely and easy-to-understand fashion.
In terms of dialogue-based IR activities, we conduct
earnings announcements, technical seminars and plant visits
for institutional investors as well as provide earnings
explanations for our individual shareholders. Also, we
participate in a variety of investor events and do our best to
provide institutional investors and analysts with opportunities
for one-on-one meetings with management.
Our information disclosure activities include thepublication of annual reports and investor guides. The IRpages on our corporate website provide regulatory and voluntary
disclosure, schedules ofupcoming announcements
and an IR library in addition
to explanations of current andcutting-edge technologies
under development and aglossary of technical terms.
Indivisual invester presentation
Dialogue-Based IR Activities in the Fiscal Year Ended
March 31, 2010

At the Annual Shareholders’ Meeting
Avoiding Intensive One-Day Meeting,
Providing Easily Understood and Informal Communication
Dainippon Screen aims to provide an open annual
shareholders’ meeting.
In addition to avoiding an intensive one-day meetingwith all shareholders present, we utilize the Internet toenable shareholders who are not present to exercise theirvoting rights.
We also have created easily understood charts and othermaterials to report on business and explain items forresolution, which are displayed on large video monitors
throughout the venue.
At the conclusion of theannual shareholders’ meeting,a roundtable discussion that
includes the chairman,
president and executive
officers is held to provide
shareholders with a deeper
The 68th Annual Shareholders’ Meeting
understanding of the Company. in 2009
Disclosure

Earnings presentations

4

Technical seminars

1

Overseas IR road shows

4

Institutional investor events

5

conferences held by securities companies,( Threeone semiconductor booth tour and one explanation of operations )Institutional investor plant visits
Meetings with institutional investors /analysts

3
approximately 300 times per year

SRI Index Involvement
Part of the FTSE4 Good Index since 2004
Companies are included in socially responsible investing(SRI) indices not only for their financial
performance but also in recognition of
their CSR activities.
Dainippon Screen has been includedin the FTSE4 Good Index (a joint venture35

Masahiro Joshi
Deputy General Manager, PR/IR Department

3

Individual investor presentations

Recipient of Daiwa IR’s 2009 Award
for Corporate Excellence in Internet IR

In 2009, Dainippon Screen was the proud recipient of Daiwa
Investor Relations Co. Ltd. Award for Corporate Excellence inInternet IR. Recognized for clearly conveying messages fromsenior management and providing financial data in a professionaland standardized format for institutional
investors, ours was one of 56 sites
chosen out of a total of 1,223 companies.
In the future, we will continue to provide
even more of our stakeholders with aneasy-to-use IR website.

Our Responsibility to Suppliers

We are building partnerships to achieve mutual benefit
and prosperity.
We aim to deepen relationships of mutual benefit and prosperity in Japan and overseas based on four basic policies:
open and fair, partnerships, global orientation, and green procurement.

Purchasing Basic Policy
Strengthening Partnerships in Japan and Overseas
We conduct procurement activities based on four basic policies: open
and fair, partnerships, global orientation, and green procurement.
Dainippon Screen has basic transactional agreements in place withapproximately 1,500 companies. Of these, around 265 are with our
in-house companies’ key suppliers. Amid the economic downturn in thefiscal year ended March 31, 2010, we endeavored to forge new links with
our suppliers. These efforts took us a step closer to our goal of mutual
benefit and prosperity. Also, owing to our progress in expanding overseas
procurement, the number of overseas countries in which we conductbusiness with suppliers rose from 10 to 12 in the year under review.
Four Basic Policies
Open and fair: Fair and impartial procurement activities
Partnerships: Creating mutual prosperity from mutual trust
Global orientation: Internationally minded procurement
Green procurement: Environmental preservation work

Fair Transactions
Making Order-Placement Decisions More Visible
through Our Internet-Based Estimate System
Dainippon Screen was an early adopter of creating an Internet-based
electronic procurement system. In the fiscal year ended March 31,
2010, the number of suppliers registered on our Internet-based
estimate system numbered approximately 610 companies.
The objective of this system is to enhance the visibilityof our decision-making process when placing orders, thereby
facilitating transaction speed and fairness.

too far in their negotiations and ensuring appropriate payment.
No situations constituting violations of the Subcontract Act
were recognized during the fiscal year ended March 31, 2010.

Sharing Management Policies andPresenting Awards
Creating Various Opportunities to Deepen Dialogue withTop Management
Dainippon Screen creates a variety of opportunities to engage
suppliers in dialogue with top management, to reinforce relationships,build credibility and promote mutual business development.
In June 2009, we held informal discussions with 265 of our key
suppliers. During these talks, Dainippon Screen’s president and thepresidents of operating companies explained the Company’s own goals
and directions including medium term forecast. We awarded prizes to theseven companies that offered proposals that contributed the most toward
value engineering*. In addition,
each December we hold a Best
Partner Party. At the most recent
gathering, Dainippon Screen’s
president presented awards to 11
suppliers in recognition of theirhigh levels of contribution.
Best Partner party* Value engineering: The technique of maintaining functionality and productquality while minimizing costs

Consideration for Business Partners’ Occupational Health and Safety

Holding Hearings on Occupational Health and
Safety Management Activities at Partner
Companies, and Supporting Improvements
Norizo Takao

Compliance with the Subcontract Act

Manager, Safety & Environmental Department,
General Affairs Group, Business Service Center

Conducting Training Seminars to Prevent Employees
from Pushing Subcontractor Companies Too Far

In the fiscal year ended March 31, 2010, we prioritized theaccident eradication enforcement initiatives by strengthening these
efforts targeting partners companies. As part of these activities,
we held hearings on occupational health and safety management
activities at partner companies and offered guidance in areas
where improvements were needed. At the same time, we offeredsafety training and provided educational materials on the subject
to partner companies, as part of ouroverall guidance on safety and healthmanagement. We plan to continue these
activities, which should support accident
eradication at partner companies.

We conduct periodic seminars to familiarize personnel in charge ofpurchasing at the Dainippon Screen Group with the Subcontract
Act. During these sessions, we explain the Subcontract Act andrelated legislation, hold a question-and-answer session andexplain methods of conducting voluntary checks.
Our legal department reviews the results of these voluntary
checks and suggests remedial measures, as necessary.
In future seminars, we plan to ensure thorough legal
compliance by preventing employees from pushing subcontractors

36

Initiatives from a Social Perspective

Our Responsibility to Local Communities

We strive to build trust-based relationships in the regions
where we operate and work to resolve societal issues.
Providing products and services that feature superior environmental and safety performance is at the core of an industrial
company’s growth. From this perspective, we foster trust-based relationships in the regions where our plants operate andconduct local community contribution activities in which all employees can participate.
Supporting Children in Developing Countries

Basic Policy
The Dainippon Screen Group’s Charter of Ethics states that it will“contribute to society by putting into practice the ideals of our
Corporate Philosophy, especially by providing products and servicesof outstanding environmental awareness and safety.”
Contributing to industrial development through innovation in
our business activities andBasic Policy
creating a revenue structure thatEnvironmental
generates stable earnings andconservation
Sports and culture
profits (thereby contributing toSocial welfare
society through tax payments)
International interchange
Academic study
are core components of our CSR
Commitment tolocal communities &
activities. The scope of such
cultural inheritanceContribution toactivities extends beyond the Developing the next generation industrial developmentof talented employees
regional and onto the global level
Innovation
as we strive to meet societal needs
Charter of Ethics
Development from our base in Kyoto
in the broadest possible sense.

The Dainippon Screen Group participates in PET bottle cap collection
activities. We donate the collected bottle caps to an NPO, which sells
them to a recycling company. The NPO delivers to developing
countries the vaccines that it buys with the resulting revenues. We
began collecting bottle caps at the Hikone Site, our largest factory, inthe fiscal year ended March 31, 2010, collecting 58,000 caps. The
resulting revenue bought vaccines for approximately 70 people.
Since the fiscal year ended March 31, 2009, we have continued
our participation in the ‘‘Table for Two (TFT) program.” Under thisprogram, when employees order a healthy meal option from a special
TFT lunch menu at the Head Office or the Hikone Site, a donationequivalent to one cafeteria meal ismade to a school in a developing
country. During fiscal year ended
March 31, 2010, we contributed
12,642 cafeteria meals through thisprogram, raising our cumulative
total to approximately 25,000 meals. PET bottle cap collection box

Corporate Social Initiatives

Communicating with Local Communities

Developing the Next Generation through Company Field
Trips for Students

Holding Clean ups and Participating in Commemorative
Activities and Other Events

Dainippon Screen has hosted student tours for a number of years,
as part of its efforts to develop the next generation of talented
employees. We continued this activity in the fiscal year ended
March 31, 2010.
On July 15, 2009, 21 second-year students from the
Ritsumeikan Moriyama Senior High School toured our Hikone Site.
The tour gave them an opportunity to look into the future of thesemiconductor industry and gain a better understanding ofsemiconductor production equipment. Also, on December 9, 2010,
the Kyoto Job Park, a job-search support organization for Kyoto andcertain other prefectures, sponsored a tour of our headquarters.
During this tour, we explained our products and technologies to
19 university students in Kyoto. One participant commented that,“I gained a new respect for Japan’s technical prowess.”

We meet our duty of disclosure by periodically disseminating
information on the environmental impact of our businessactivities and reductions to this level.
Recognizing the importance of community involvement, we
conduct community clean ups in the areas surrounding our sites
and participate in commemorative activities and various other events.

Contributing to Society through Our Business Activities

High school students touring

37

The Entire Company Experience tour

Community Clean ups

Kumiyama Site Joins Corporate Community
Environmental Beautification Movement
Maki Yamamoto
Environmental Planner, Kumiyama General Affairs Section, General
Affairs Department, General Affairs Group, Business Service Center

This site participates in the Kumiyama Industrial Activation Vision
Association, sponsored by the Kumiyama Chamber of Commerce.
One association activity is the Corporate Community Environmental
Beautification Movement, through which
the local government and companies
operating in the community facilitate
active communication with the community
to raise individual employee awareness ofenvironmental beautification.

Business Performance
CSR Targets and Performance .................................. 39
Segment Information .............................................. 41
Management’s Discussion and Analysis
Operating Results ............................................... 43
Financial Position and Liquidity .............................. 46
Risk Factors ...................................................... 48
Consolidated Balance Sheets ................................ 49
Consolidated Statements of Operations .................... 51
Consolidated Statements of Changes in Net Assets .... 52
Consolidated Statements of Cash Flows ................... 53
Notes to the Consolidated Financial Statements ........ 54
Independent Auditors’ Report ................................... 65
Consolidated Companies/Investor Information .............. 66

Organization Chart
Shareholders’ Meeting
Board of Directors
Board of Auditors

Group Auditing Department
CEO
COO

Secretarial Department
PR & IR Department
Security Export Control
Department
GPS Department
Management Operational Division
Development & Manufacturing
Management Division
Semiconductor Equipment
Company
FPD Equipment Company
Media And Precision Technology
Company
Research & Development Center
Business Service Center(Financial/General Affairs/
Human Capital Management/
Legal/Information Systems)

38

CSR Targets and Performance Promotion of Green Value 21
Performance during the Fiscal Year Ended March 31, 2010, andTargets for the Fiscal Year Ending March 31, 2011
Performance during the Fiscal Year Ended March 31, 2010
The fiscal year ended March 31, 2010 was the first year of ourGreen Value 21, the medium-term environmental, health andsafety management plan for the three fiscal years ending March
31, 2012. Under the overarching objective of creating an integrated
groupwide environmental management system, the plan establishes
a number of key issues to be addressed. These include the promotingof green factories, expanding our range of green products andensuring product safety, enhancing green logistics, and enhancing
efforts to eradicate accidents or incidents.

Owing to lower unit shipments, the Group was unable to achievea modal shift efficiently. Consequently, the amount of CO2 per unitof production increased as a result of higher emissions during
product transport.
With regard to efforts to eradicate accidents or incidents,
although the number of incidents fell to the lowest number in nine
years, it did not drop to zero. To ensure mental health, we
introduced stress management, which we judge necessary in thecurrent era in which stress is commonplace.

CSR Targets and Performance (Fiscal Year Ended March 31, 2010 )Category

Resource
conservation

Key measure

Promotion of green
factories

Development of green IT

Expanding range ofgreen products andensuring product safety
Environmental Productconservation stewardship

Enhancing green
logistics

TargetResultReduce emissions of greenhouse gases (CO2)attributable to energy use by 5% compared to
the fiscal year ended Mar. 31, 2009.
Find out the amount of external emissions and consider
issues related to the reduction of these emissions.
Achieve a green purchasing ratio for newcomputer systems of at least 20%.
Ensure that environmentally friendly products
account for at least 40% of sales.

CO2 emissions of 29,993 ton-CO2, down
23% from levels during the fiscal year ended
Mar. 31, 2009.
External emissions (waste and resources) of 937 metrictons (waste 647 tons, resources 291 metric tons).

Workplace health andsafetyImproving environmental
awareness

Innovation

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

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

•Environmental
information
detailed version

Implement safety measures based on productrisk assessment according to the product risk
reduction roadmap.

According to the roadmap, reduced risks
remaining in product risk reduction measures.

Reduce the environmental impact of domestic
product transport according to the roadmap.

Reduced CO2 emissions during product transport, butemissions per unit of production rose compared withlevels during the fiscal year ended Mar. 31, 2009.

Find out the current situation and consider
related issues pertaining to the reduction of waste
associated with domestically procured materials.

Unable to implement, owing to organizational
restructuring.

Carry out training under the companywide
environmental education system.

Conducted social contribution activities at eachplant, including the cleaning of surrounding areas
and rivers and participating in local activities.
Conducted general education on environmental
management system, training to raise skills ofenvironmental auditors and lectures on
eco-design compliance.

Reducing company vehicle
accidents and accidents
that occur while commuting

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

Trafic accidents resulting in injury numbered 17.

Aiming to reduce workplace health risks,
introduce stress management initiatives andimplement surveys regarding stress.

Introduced stress management checklist
based on the Ministry of Health, Labour andWelfare’s occupational stress questionnaire.

Understand the results of periodic healthchecks and establish methods to analyze
these results in order to understand trends
within the company and instruct employees.

Summarized results of periodic health checkand determined company trends, but did notprovide instruction.

Create an integrated groupwide environmental
management system.

Newly included five Group companies and individually
verified for each operational site that integrated
environmental management system is in effect.

Evaluation standard

39•Data Sheets•Page 31

•Data Sheets•Page 31

Aiming to achieve zero incidents resulting infour or more days of lost work, reduce thenumber of such accidents to two or less.
Aiming to reduce the number of accidents orincidents at customer sites to seven or less.

Streamlining andglobalization of
EHS management•Data Sheets•Page 31

No new IT equipment introduced.

Enhance efforts toeradicate accidents
or incidents

Creating secure,comfortable, andhealthy workplaces

Related
Page

Percentage of sales of 63 environmentallyfriendly products: 72%.

Implement social initiatives targeting theenvironment.
Community
service

Evaluation•Data Sheets•Page 31

•Page 37

•Data Sheets•Page 32

Four incidents resulting in more than four ormore days of lost work.
Nine accidents and incidents at customer sites.

: Achieved: Partially achieved (50% or more)•Page 33

•Page 30
: Not achieved (less than 50%)

Targets for the Fiscal Year Ending March 31, 2011
In the fiscal year ending March 31, 2011, we will strengthen various
initiatives related to our key issues. We will redouble efforts to reduce
CO2 emmissions and external waste emissions, expand our range of green
products, decrease the environmental impact of our products, lower
product risks, eradicate accidents or incidents and improve mental health.

In addition, from the fiscal year ending March 31, 2012, we will
endeavor to make our management system (MS) more efficient by
taking an integrated approach to environmental, health and safety
management.

CSR Targets (Fiscal Years Ending March 31, 2011 and 2012 )Category

Resource
conservation

Key measure

Promotion of green
factories

Development of green IT

Expanding range ofgreen products andensuring product safety
Environmental Productconservation stewardship

Enhancing green
logistics

Community
serviceWorkplace health andsafetyImproving environmental
awareness

Target (Fiscal year ending March 31, 2012)

Reduce emissions of greenhouse gases (CO2) attributableto energy use by 1% compared to the fiscal year ended
Mar. 31, 2010.
Reduce external emissions per unit of production by 1% comparedwith levels during the fiscal year ended Mar. 31, 2010.
Achieve a green purchasing ratio for new computer systems
of at least 90%.
Ensure that environmentally friendly products account for
at least 50% of sales.

Reduce emissions of greenhouse gases (CO2) per unit ofproduction by 2%, compared with levels during the fiscal
year ended Mar. 31, 2010.
Reduce external emissions per unit of production by 3% comparedwith levels during the fiscal year ended Mar. 31, 2010.
Achieve a green purchasing ratio for new computer systems
of at least 90%.
Ensure that environmentally friendly products account for
at least 60% of sales.

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

Achieve roadmap objectives.

Implement safety measures based on product risk
assessment according to the product risk reduction roadmap.

Achieve roadmap objectives.

Reduce greenhouse gases (CO2) per unit of production generated
in relation to fuel used in transporting products in Japan by 10%of levels during the fiscal year ended Mar. 31, 2009.

Reduce greenhouse gases (CO2) per unit of production generated
in relation to fuel used in transporting products in Japan by 15%of levels during the fiscal year ended Mar. 31, 2009.

Determine the environmental impact of global productshipments.

Reduce the environmental impact of global productshipments.

Implement social initiatives targeting the environment.

Implement social initiatives targeting the environment.

Carry out training under the companywide environmental
education system.

Carry out training under the companywide environmental
education system.

Enhance efforts toeradicate accidents
or incidents

Aiming to achieve zero incidents resulting in four or moredays of lost work, reduce the number of such incidents toone or less.
Reduce the number of fatal accidents or incidents at
customers to six or less.

Reducing company vehicle
accidents and accidents
that occur while commuting

Reduce the number of trafic accidents resulting in injury tofive or less.

Reduce the number of trafic accidents resulting in injury tofive or less.

Perform stress management. (Introducing stress checks
for 100% of employees).

Reduce the number of days taken off due to mental healthissues.

Ensure that 100% of employees undergo periodic andspecial health checks.

Ensure that 100% of employees undergo periodic andspecial health checks.

Ensure health checks by 100% of employees posted
overseas.

Ensure health checks by 100% of employees posted
overseas.

Prepare to integrate the Environmental MS and the
Occupational Health & Safety MS, and operate integrated
system from fiscal year ending Mar.31, 2012.

Conduct operations integrating the Environmental MS andthe Occupational Health & Safety MS.

Creating secure,comfortable, andhealthy workplaces

Innovation

Target (Fiscal year ending March 31, 2011)

Streamlining andglobalization of
EHS management

Reduce to zero the number of incidents resulting in four ormore days of lost work.
Reduce the number of fatal accidents or incidents at
customers to five or less.

U R L For further information on our CSR targets and performance, please refer to the Data Sheets.

http://www.screen.co.jp/environmentE/list.html

40Segment Information
Segment Information by Business Field

Millions of yen

Years ended March 31,

Net Sales*Note1

2010

2009

2008

2007

2006

¥ 125,086¥ 160,157¥ 214,350¥ 236,522¥ 187,040

38,44857,09562,92762,46858,080

595

1,797

2,539

2,322

1,414

Consolidated¥ 164,129¥ 219,049¥ 279,816¥ 301,312¥ 246,534

Electronic Equipment and Components¥ (11,449)

¥

¥

9,825

¥ 27,234¥

Electronic Equipment and Components
Graphic Arts Equipment
Other

Operating Income (Loss)

Graphic Arts Equipment
Other
Consolidated(5,920)(2,491)

1,601

4,023

2,300

(106)

(191)

780

1,007

¥ (14,046)¥(4,510)¥14,628¥30,541

16,596
1,361
611

¥

18,568Notes: 1. Sales to customers outside of the Company and its consolidated subsidiaries.

2. Consolidated domestic subsidiaries have adopted a new accounting standard for directors’ bonuses from the year ended March 31, 2007. As a result of this change, operating expenses for the year ended
March 31, 2007 increased by ¥32 million in the Electronic Equipment and Components segment, ¥20 million in the Graphic Arts Equipment segment and ¥35 million in the Other segment, andoperating income decreased by the same amounts, respectively, compared with amounts that would have been recorded using the previously applied method.
3. Pursuant to an amendment to the Corporation Tax Law, effective from the fiscal year ended March 31, 2008, the Company and its consolidated domestic subsidiaries adopted a new depreciation
method under the amended Corporation Tax Law for property, plant and equipment acquired after April 1, 2007. As a result of this change, operating expenses for the year ended March 31, 2008
increased by ¥136 million in the Electronic Equipment and Components segment, ¥26 million in the Graphic Arts Equipment segment and ¥2 million in the Other segment, and operating income
decreased by the same amounts, respectively, compared with amounts that would have been recorded using the previously applied method. Furthermore, the Company and its consolidated domestic
subsidiaries depreciate the difference between 5% of the acquisition cost of assets acquired on or before March 31, 2007 and the memorandum value of said assets uniformly over a five-year period,
starting the year following the fiscal year in which the depreciated value of said assets reaches 5% of the acquisition price using the pre-amendment depreciation method. Depreciated amounts areincluded in depreciation expenses.
As a result of this change, operating expenses for the year ended March 31, 2008 in the Electronic Equipment and Components segment, Graphic Arts Equipment segment and Other segment
increased by ¥128 million, ¥52 million and ¥0 million, respectively, while operating income in those segments decreased by the same amounts, compared with amounts that would have been recorded
using the previously applied method.
4. Changes in accounting policies(Changes in evaluation standards and methods for inventories)
Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9 issued on July 5, 2006). As a result of this change, operating loss for the fiscal year ended March 31, 2009 in the Electronic Equipment and Components segment increased by ¥847
million, operating income in the Graphic Arts Equipment segment decreased by ¥525 million and operating loss in the Other segment increased by ¥1 million, compared with amounts that would
have been recorded using the previously applied method.
(Application of the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”)
Effective from the fiscal year ended March 31, 2009, the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force No. 18 issued on May 17, 2006) has been adopted and the necessary adjustments have been made for consolidation. As a result of this change, operating loss for the fiscal
year ended March 31, 2009 in the Electronic Equipment and Components segment increased by ¥140 million and operating income in the Graphic Arts Equipment segment increased by ¥7 million,
compared with amounts that would have been recorded using the previously applied method.
(Application of the “Accounting Standard for Lease Transactions”)
On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, the “Accounting Standard for Lease Transactions,” 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. Formerly, the Company and its
consolidated domestic subsidiaries accounted transactions with which the ownership of the leased assets did not transfer to the lessee as operating leases. However, the revised accounting standard
requires that all finance lease transactions be capitalized. Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the accounting
standard. As a result of this change, operating loss for the fiscal year ended March 31, 2009 in the Electronic Equipment and Components segment decreased by ¥259 million, operating income in theGraphic Arts Equipment segment increased by ¥10 million and operating loss in the Other segment increased by ¥36 million, compared with amounts that would have been recorded using thepreviously applied method.
(Change in the Depreciation Method for Fixed Assets in Accordance with Tax Reform)
Following revisions to the taxation system in Japan, effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries changed the estimated useful lives of
their assets. As a result of this change, operating loss for the fiscal year ended March 31, 2009 in the Electronic Equipment and Components segment decreased by ¥289 million and operating incomein the Graphic Arts Equipment segment increased by ¥5 million, compared with amounts that would have been recorded using the previously applied method.

Domestic Sales and Overseas Sales

Millions of yen

Years ended March 31,

Domestic sales*Note 1¥

42,714¥72,281

2008¥

95,214

2007¥

99,567

2006¥

94,450Overseas sales*Note 2

121,415

146,768

184,602

201,745

152,084

North America

18,012

38,46741,22756,23836,796

Asia & Oceania

87,57980,603

105,468

113,348

89,315

Europe13,74820,017

25,681

28,212

24,591Others

2,076

7,681

12,226

3,947

1,382

74.0%

67.0%

66.0%

67.0%

61.7%

¥ 164,129¥ 219,049¥ 279,816¥ 301,312¥ 246,534

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

41

2009

2010

Segment Information by Geographic Area* Note 1

Millions of yen

Years ended March 31,

Net Sales*

Note 2

2010

2009

2008

2007

2006

¥ 132,373¥ 149,054¥ 183,195¥ 195,852¥ 169,445

31,75669,99596,621

105,460

77,089North America

10,64430,822

39,66553,84540,347

Asia & Oceania

10,895

18,26023,944

22,11016,462

Japan
Overseas

Operating Income (Loss)

Europe10,217

20,91333,01229,50520,280Consolidated¥ 164,129¥ 219,049¥ 279,816¥ 301,312¥ 246,534Japan¥ (16,402)

¥

¥

¥

16,856

11,747¥ 25,944

3,681

5,122

North America

(84)

696

1,067

1,121

192

Asia & Oceania

1,468

1,780

2,420

2,628

1,190

1,317

1,841

(67)

(1,027)

194

1,373

459

Total

(15,085)(4,341)

15,42831,066

18,697

Eliminations

1,039

(169)

(800)

(525)

(129)

Consolidated¥ (14,046)

¥

Japan

¥ 148,077¥ 183,370¥ 208,857¥ 229,523¥ 186,536

37,67737,801

55,724

62,16750,735

North America

10,862

12,38015,031

22,30917,707

Asia & Oceania

14,973

14,13520,70917,771

14,013

Europe11,842

11,286

19,98422,087

19,015

185,754

221,171

264,581291,690237,271

EuropeAssets(5,790)1,449

Overseas

Overseas

Total
Eliminations/Corporate
Consolidated(4,510)¥14,628¥30,541¥

18,56830,86825,747

26,53327,82932,967¥ 216,622¥ 246,918¥ 291,114¥ 319,519¥ 270,238

Notes: 1. For the Company and its consolidated subsidiaries located in the respective geographic areas.

2. Sales to customers outside of the Company and its consolidated subsidiaries.
3. Consolidated domestic subsidiaries have adopted a new accounting standard for directors’ bonuses from the year ended March 31, 2007. As a result of this change, operating expenses for the year ended
March 31, 2007 increased by ¥87 million, and operating income decreased by the same amount in Japan, compared with amounts that would have been recorded using the previously applied method.
4. Pursuant to an amendment to the Corporation Tax Law, effective from the fiscal year ended March 31, 2008, the Company and its consolidated domestic subsidiaries adopted a new depreciation
method under the amended Corporation Tax Law for property, plant and equipment acquired after April 1, 2007. As a result of this change, operating expenses for the year ended March 31, 2008
increased by ¥164 million, and operating income decreased by the same amount in Japan, compared with amounts that would have been recorded using the previously applied method. Furthermore, theCompany and its consolidated domestic subsidiaries depreciate the difference between 5% of the acquisition cost of assets acquired on or before March 31, 2007 and the memorandum value of said
assets uniformly over a five-year period, starting the year following the fiscal year in which the depreciated value of said assets reaches 5% of the acquisition price using the pre-amendment
depreciation method. Depreciated amounts are included in depreciation expenses.
As a result of this change, operating expenses for the year ended March 31, 2008 increased by ¥180 million, while operating income decreased by the same amount in Japan, compared with amounts
that would have been recorded using the previously applied method.
5. Changes in accounting policies(Changes in evaluation standards and methods for inventories)
Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9 issued on July 5, 2006). As a result of this change, operating loss for the fiscal year ended March 31, 2009 increased by ¥1,373 million in Japan, compared with amounts that would
have been recorded using the previously applied method.
(Application of the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”)
Effective from the fiscal year ended March 31, 2009, the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force No. 18 issued on May 17, 2006) has been adopted and the necessary adjustments have been made for consolidation. As a result of this change, operating income for the
fiscal year ended March 31, 2009 in Asia and Oceania increased by ¥37 million while operating loss in Europe increased by ¥170 million, compared with amounts that would have been recorded
using the previously applied method.
(Application of the “Accounting Standard for Lease Transactions”)
On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, the “Accounting Standard for Lease Transactions,” 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. Formerly, the Company andits consolidated domestic subsidiaries accounted transactions with which the ownership of the leased assets did not transfer to the lessee as operating leases. However, the revised accounting standard
requires that all finance lease transactions be capitalized. Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the accounting
standard. As a result of this change, operating loss for the fiscal year ended March 31, 2009 decreased by ¥233 million in Japan, compared with amounts that would have been recorded using thepreviously applied method.
(Change in the Depreciation Method for Fixed Assets in Accordance with Tax Reform)
Following revisions to the taxation system in Japan, effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries changed the estimated useful lives of
their assets. As a result of this change, operating loss for the fiscal year ended March 31, 2009 decreased by ¥294 million in Japan, compared with amounts that would have been recorded using thepreviously applied method.

42

Management’s Discussion and Analysis
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
Fiscal years ended March 31, 2010, and 2009This section presents an analysis of the consolidated financial statements prepared in accordance with generally accepted accounting
standards in Japan.

Operating Results•SalesConsolidated net sales for the fiscal year ended March 31, 2010,

affected by year-on-year declines in sales of Computer to Platedecreased 25.1% year on year, to ¥164,129 million.

(CTP)-related equipment in Japan, Europe and North America, as

In the Electronic Equipment and Components segment, asecond-half resurgence in capital investment by semiconductor

well as lower sales of Print on Demand (POD) products andlarge-format inkjet printers.

manufacturers resulted in a year-on-year increase in semiconductor

Total overseas sales fell ¥25,353 million, or 17.3% year on year,

production equipment (SPE) sales. By product, sales ofto ¥121,415 million, but rose 7.0 percentage points as a percentage

coater/developers were down, but sales of single wafer cleaningof total sales, to 74.0%. North American sales plunged 53.2% year

equipments and flash lamp annealing equipments expanded inon year, to ¥18,012 million, on the back of declining sales of SPE

response to growing industry demand for miniaturization. By

and graphic arts equipment. In Asia & Oceania, sales of FPD

region, sales in Japan and North America declined, but sales in

production equipment and graphic arts equipment fell, but a sharp

Asia—centered on Taiwan—increased. Meanwhile, owing to liquid

second-half upturn in sales of semiconductor production

crystal display (LCD) panel manufacturers’ moves to hold back onequipment resulted in sales of ¥87,579 million for this region, up

capital investment, sales of flat panel display (FPD) production

8.7% year on year. In Europe, sales of SPE increased, while sales ofequipment plunged. Sales of other electronic equipment andgraphic arts equipment dropped sharply to ¥13,748 million, down

components also decreased year on year, owing to lower capital

31.3%. In other regions, a sharp decline in sales of SPE resulted in

expenditures by printed circuit board (PCB) manufacturers.

regional sales of ¥2,076 million, down 73.0%.

Performance in the Graphic Arts Equipment Segment was

Consolidated Net Sales by Business Field

Domestic Sales, Overseas Sales and Ratio ofOverseas Sales to Net Sales(Billions of Yen)

(Billions of Yen)

(%)

300

300

80

225

225

60

150

150

40

75

75

20

0

0

2006

2007

Electronic Equipment and Components

2008

2009

Graphic Arts Equipment

2010
Other

0

2006
Domestic Sales

2007
Overseas Sales

2008

2009

2010

Ratio of Overseas Sales to Net Sales•Cost of Sales and SGA Expenses
The Group’s restructuring measures involved robust cost-cutting

Selling, general and administrative (SGA) expenses fell by ¥13,820

through the focusing of R&D activity, the solicitation of voluntary

million, or 25.5%, to ¥40,348 million, owing to the impact ofretirements and the introduction of wage cuts, and the reduction of

restructuring measures on reducing personnel and R&D expenses,

capital expenditure, among other expenses. As a result, we succeeded

as well as decreased packaging and shipping costs and a reduction

in significantly lowering fixed costs, such as R&D spending,in the transfer to allowance for doubtful receivables. As a result of

personnel expenditure and amortization and depreciation.

our efforts to cut expenses amid the sharp drop in sales, The ratio of

Despite reducing fixed costs through restructuring measures, asubstantial decline in sales and an increase in the loss on valuationof inventories contrived to raise the cost of sales ratio to 84.0%,
from the preceding year’s 77.3%.

43

SGA expenses to net sales fell to 24.6% for the fiscal year underreview, down from 24.7% 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 (%)

2010

2009

2008

2007

2006

¥164,129
137,82784.0%¥ 26,302
40,34824.6%¥219,049
169,391
77.3%¥ 49,658
54,16824.7%¥279,816
208,266
74.4%¥ 71,550
56,922
20.3%¥301,312
211,159
70.1%¥ 90,153
59,61219.8%¥246,534
173,628
70.4%¥ 72,906
54,33822.1%•Research and Development Expenses
During the year, the Group invested ¥11,615 million in R&D.

commercialization of an inkjet printing system capable of dual-sided

In the Electronic Equipment and Components segment, our SPE

printing and B2-size sheet-fed printing with a quality level thatdevelopment targeted next-generation cleaning equipment, and weapproaches offset printing, we developed a workflow system thatcommercialized a coater/developer featuring a substantially smaller

integrates the CTP and POD processes. The Group’s research andfootprint and higher productivity. In FPD production equipment,

development expenditures in this segment were ¥2,320 million.

we completed our development of coating equipment forIn the Other segment, R&D expenses totaled ¥183 million.

11th-generation glass substrates and began working on thePart of this investment was spent on the development of adevelopment of an inkjet spacer printer that employs a new concept

three-dimensional sight system for a robot developed using

to simplify the process, thereby reducing costs. In other electronic

image-processing technology.

equipment and components, we commercialized a direct patterning
system for manufacturing flexible printed circuits (FPCs). This

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

system employs an electrophotographic process to print resist
patterns directly onto an FPC, thereby achieving low running costs(Billions of Yen)(%)

and high levels of quality and productivity. R&D expenditures on

20

8

the above-mentioned developments in this segment amounted to15

6¥9,112 million.

10

4

5

2

In the Graphic Arts Equipment segment, we redoubled efforts tomeet such environmental demands as significantly lower power
consumption, commercializing a CTP system that achieves this goal,as well as increased productivity. In addition to working toward the

0

0

2006
R&D Expenses

2007

2008

2009

2010

Ratio of R&D Expenses to Net Sales

Millions of yen
Years ended March 31,

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

2010

2009

2008

2007

2006

¥ 11,615
7.1%¥ 16,073
7.3%¥ 16,248
5.8%¥ 16,884
5.6%¥ 13,269
5.4%•Segment Information
Sales in the Electronic Equipment and Components segment fell

¥5,920 million during the previous term.

21.9% during the year, to ¥125,086 million. A recovery in capital

Sales in the Graphic Arts Equipment segment fell 32.7% during

investment by semiconductor manufacturers in the second half ofthe year, to ¥38,448 million. Owing to the worldwide economic

the fiscal year resulted in a year-on-year increase in sales ofrecession, sales of CTP-related products were down year on year,

semiconductor

capitaland sales of POD equipment and large-format inkjet printers were

expenditure cutbacks by customers for FPD production equipment

sluggish. As a result, the segment posted a ¥2,491 million operating

and other electronic equipment and components caused sales toloss, compared with operating income of ¥1,601 million in the

decline significantly in these sectors. On the profit front, these sales

preceding fiscal year.

production

equipment.

Meanwhile,

declines, combined with a loss on valuation of inventories related to

In the Other segment, sales declined 66.9%, to ¥595 million. We

semiconductor production equipment, resulted in an operating loss

posted an operating loss for the segment of ¥106 million, comparedof ¥11,449 million for the year, compared with operating loss ofwith operating loss of ¥191 million for the previous fiscal year.

44•Earnings Analysis

Ratio of Operating Income to Net Sales
Ratio of Net Income to Net Sales

As is explained earlier, the operating environment improved inrelation to SPE in the second half of the fiscal year, boosting sales inthis category, but sales of FPD production equipment and graphic
arts equipment dropped off significantly. Consequently, during the

(%)

20
10

year Group net sales fell 25.1%, or ¥54,920 million, to ¥164,129

0

million. In terms of profits, the sharp rebound in SPE, coupled with-10

the cost reductions stemming from the implementation of the-20

restructuring plan, brought the Group back into the black on an

2006

2007

Ratio of Operating Income to Net Sales

operating basis in the second half. For the full fiscal year, however,

2009

2008

2010

Ratio of Net Income to Net Sales

the effects of lower sales and a loss on valuation of inventories in thefirst half prompted an operating loss of ¥14,046 million, ¥9,536 million

Net Income per Share of Common Stockworse than in the preceding fiscal year. The ratio of operating income to(Yen)

net sales consequently fell 6.5 percentage points, to minus 8.6%.

80

Net other income and expenses improved from a net expense amountof ¥21,363 million in the preceding fiscal year, to net income of ¥2,932

40
0million during the year under review. The conversion of SOKUDO Co.,
Ltd., to a consolidated subsidiary caused equity in losses of affiliates todecrease, and the Company recorded nonoperating income from the

-40
-170

2006

gain on the step acquisition of the subsidiary, as well as a gain on

2007

2008

2009

2010

2008

2009

2010

negative goodwill. In addition to posting a gain on sales of investment
securities, business structure improvement expenses decreased year on

Return on Equity
Return on Total Assets

year, as did the loss on valuation of investment securities.
As a result of the above, we recorded a loss before income taxes for the

(%)

40

year of ¥11,114 million, an improvement of ¥14,759 million on theprevious year’s figure. Tax expenses fell substantially, because deferred

20

tax assets, all of which had been reversed in the previous year, were0

recorded by the Company again. As a result, the net loss improved by-20¥30,188 million to ¥8,003 million. The ratio of net income to net sales
consequently improved by 12.5 percentage points, to a negative 4.9%.
Net loss per share of common stock improved from the previous

-40

2006
Return on Equity

2007

Return on Total Assets

year’s figure of ¥127.15 to ¥33.71, and return on equity improved
28.0 percentage points, to minus 11.9%. Similarly, return on total
assets improved 10.7 percentage points, to a minus 3.5%.

Millions 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 common stock (yen)Net income (loss)
Net income-diluted
Return on equity (%)
Return on total assets (%)

2010

2009

2008

2007

2006

¥(14,046)—8.6%¥ (8,003)—4.9%¥ (4,510)—2.1%¥(38,191)—17.4%¥14,628
5.2%¥ 4,578
1.6%¥30,541
10.1%¥18,452
6.1%¥18,568
7.5%¥15,236
6.2%¥ (33.71)——11.9%—3.5%¥(160.86)——39.9%—14.2%¥ 18.81
17.39
3.6%
1.5%

¥ 74.05
68.63
14.2%
6.3%

¥ 60.66
55.81
13.5%
5.8%

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.

45

Financial Position and Liquidity•Assets, Liabilities and Net Assets
Total assets stood at ¥216,622 million as of March 31, 2010, down

earnings to fall ¥8,003 million. As a result, equity, which represents¥30,296 million, or 12.3%, from the end of the previous fiscal year.

net assets minus minority interests, fell by ¥4,746 million, or 6.8%,

Within current assets, inventories decreased ¥22,767 million, andcompared with the previous fiscal year-end, to ¥64,607 million.

notes and accounts receivable declined ¥13,970 million.

Consequently, the equity ratio improved 1.7 percentage points, toIn liabilities, current liabilities at year-end were down ¥38,557

29.8%, from 28.1% as of the previous fiscal year-end.

million, or 29.1%, from a year earlier. Principal factors included arise in purchases to respond to higher orders pushed up trade notes
and accounts payable by ¥9,603 million, while short-term debt fell
¥39,095 million. Long-term liabilities increased ¥12,934 million, or

Equity and Equity Ratio

28.9%, from the previous year-end. The main reason for this rise(Billions of yen)(%)

was a ¥15,228 million increase in long-term debt resulting from the

160

60

Group’s raising of funds through a syndicated loan. Interest-bearing

120

45

80

30

In net assets, an increase in the value of securities held resulted in

40

15

an increase of ¥3,224 million on unrealized holding gain on

0

debt as of March 31, 2010, was down ¥25,363 million, or 24.7%
from a year earlier, to ¥77,218 million.

0

2006

securities, and foreign currency translation adjustments increased¥103 million. However, the recording of a net loss caused retained

2009

2008

2010

Equity ratio

EquityWorking Capital

2007

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

(Yen)

100

600

75

450

50

300

25

150

0

0

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

Millions of yen
As of March 31,

Total assets
Electronic Equipment and Components
Graphic Arts Equipment
Other
Eliminations/Corporate
Working capital
EquityEquity ratio (%)
Net assets per share of common stock (yen)

2010

2009

2008

2007

2006

¥216,622
130,577
35,637
3,427
46,981
46,11064,60729.8%¥ 272.15¥246,918
159,141
39,9596,250
41,56835,76069,35328.1%¥ 292.12¥291,114
178,234
50,011
7,531
55,33873,287122,09441.9%¥ 514.26¥319,519
195,371
52,685
7,093
64,37089,679133,06241.6%¥ 542.13¥270,238
144,51251,7305,553
68,44374,943
126,392
46.8%¥ 500.30•Capital Expenditures and Depreciation and Amortization
Capital expenditures for the whole Group during the year stood at

expenditure for the year was down compared with ¥4,007 million¥1,911 million. These expenditures centered on R&D facilitiesof the preceding year.

and production facilities in the Electronic Equipment andDepreciation and amortization during the year amounted toComponents segment. Measures to rebuild the Company included¥7,012 million, down ¥1,402 million from the preceding term,

curtailing capital expenditures. As a result, the level of capitalowing partly to lower capital expenditure.

46

Capital Expenditures

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

16

10

12

7.5

8

5

4

2.5

0

0

2006

2007

2008

2009

2010

2006

2007

2009

2008

2010

Millions of yen
Years ended March 31,

Capital expenditures
Electronic Equipment and Components
Graphic Arts Equipment
Other
Corporate
Depreciation and amortization
Electronic Equipment and Components
Graphic Arts Equipment
Other
Corporate
Impairment loss
Electronic Equipment and Components
Graphic Arts Equipment
Other
Corporate

2010

2009

2008

2007

2006

¥ 1,911
1,393
338
62
118
7,012
5,011
744
154
1,103
780
717
5
—
58

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

¥12,866
9,233
856
123
2,654
5,563
3,771
763
129
900
—
—
—
—
—

¥14,420
10,797
810
240
2,573
4,113
2,774
632
97
610
—
—
—
—
—

¥ 5,906
2,749
847
53
2,257
3,823
2,825
538
55
405
—
—
—
—
—

•Cash FlowsNet cash provided by operating activities during the year wasconversion of an affiliated company to a consolidated subsidiary,¥25,113 million, compared with ¥24,593 million used in theseproceeds from sales of investments in securities and proceeds from

activities during the preceding term.

sale of property of plant and equipment.

Major uses of cash included a ¥11,114 million loss before income

Net cash used in financing activities amounted to ¥27,124

taxes, as well as business structure improvement expenses of ¥6,737

million, compared with ¥34,071 million in net cash provided bymillion. Other factors included depreciation and amortization ofthese activities in the previous term. Although the Group raised¥7,012 million, a decrease in notes and accounts receivable of ¥14,067

funds through a syndicated loan, which caused long-term loans

million, a decrease in inventories of ¥22,954 million and an increase inpayable to increase, as well as through a sale-and-leaseback scheme,

trade notes and accounts payable of ¥9,695 million.

the maturation of convertible notes with stock acquisition rights,

Net cash provided by investing activities came to ¥6,885 million,
compared with ¥6,921 million in net cash used in these activities incombined with repayments of short-term and long-term borrowings
caused this reversal in cash from financing activities.

the preceding fiscal year. Factors included income related to theMillions of yen
Years ended March 31,

2010

Cash flows from operating activities¥25,113
Cash flows from investing activities
6,885
Cash flows from financing activities(27,124)
Effect of exchange rate changes on cash and cash equivalents(80)
Net increase (decrease) in cash and cash equivalents¥ 4,794
Increase (decrease) in cash and cash equivalents in line—with changes in scope of consolidation

47

2009

2008

2007

2006

¥(24,593)(6,921)
34,071(2,335)¥222¥ 7,934(16,510)669(1,103)¥ (9,010)¥23,645(8,519)(8,875)494¥ 6,745¥ 14,906(7,482)(13,442)617¥ (5,401)

(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 todeterioration in market supply-demand balance which leads tocyclical upturns and downturns known as the silicon and crystal
cycles. Given such market conditions, the Dainippon Screen Group ismaking every effort to create a business structure that canconsistently generate profits during cyclical downturns. However,
unexpectedly large cyclical downturns can have a material impact on
the Group’s financial condition and business performance.
(2) Exchange rate fluctuations
The overseas sales ratio for the Group for the fiscal year under review
was 74.0%. While the Group is working to minimize the impact of
exchange rate fluctuations by using forward exchange contracts andother measures to minimize the impact on its business performance,
rapid fluctuations in exchange rates can have a material impact on theGroup’s financial condition and business performance.
(3) 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.
(4) Intellectual property rights
The Group has over the years continually strived 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 and protect
its intellectual property rights under related intellectual property
laws and in contracts with other companies. However, given theincreasing complexity of intellectual property rights in leading-edge
technology fields, there is the risk that the Group could in the
future become involved in intellectual property disputes, and thatsuch disputes could have a material impact on the Group’s financial
condition and business performance.
(5) Interest rate fluctuations
The Group’s total interest-bearing debt at the end of the fiscal year
under review was ¥77,218 million and included interest-bearing
debt with variable interest rates. In order to minimize the risk ofinterest rate fluctuations, the Group fixes a portion of these variable
rates through the use of interest rate swaps and other means.
Nevertheless, the Group’s financial condition and businessperformance could be materially affected by the impact of interest
rate fluctuations on interest-bearing debt at variable interest rates
and on new fund procurement.
(6) Retirement benefit obligations
The Group calculates accrued pension and severance costs based onassumed discount rates set by actuarial calculations and on expectedpension asset investment returns. Given differences between actual

results and assumed costs, changes in assumed parameters and/or
declines in pension fund returns, future cumulative differences inthese 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 a conversion froma qualified retirement pension system to a cash balance plan and adefined contribution plan and taking other measures to reduce theimpact of retirement benefit obligations, worse than forecasted
investment returns and other factors could have a material impact on
the Group's financial condition and business performance.
(7) 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.
(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.
(9) 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.
(10) Financial condition
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 the repayment, the Company may forfeit thebenefit of time in relation to such loans. In such case, the Company
may in conjunction forfeit the benefit of time in relation to its bonds
and other loans. If the Company forfeits the benefit of time for its
loans and incurs the obligation of lump-sum repayment, it could
have a material impact on the Group’s financial condition.
(11) 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, thespread of epidemics, the stock markets, commodity markets,regulations by government and etc., the supply systems of businessassociates and employment conditions. Adverse developments in any of
the above areas could therefore have a material impact on the Group’s
financial condition and business performance.
48

Consolidated Balance Sheets
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2010 and 2009
Thousands of
U.S. dollars

Millions of yen

Assets

2009

2010

2010

Current Assets:
Cash and cash equivalents¥

29,905¥

25,111$

321,559

Time deposits

1,349

789

14,505Trade notes and accounts receivable

52,03066,000559,462

Allowance for doubtful receivables(1,428)(1,360)(15,355)

Inventories

49,464

72,231

531,871

Deferred tax assets

4,027

1,191

43,301

Prepaid expenses and other

4,637

4,229

49,861

Total current assets

139,984

168,191

1,505,204

Land

9,419

9,694

101,280

Buildings and structures

54,63455,097

587,462

Machinery, equipment and other

41,14543,375442,420

Lease assets

9,417

7,073

101,258

197

287

2,118

114,812

115,526

1,234,538(69,399)(64,571)(746,226)

45,41350,955488,312Investments in securities

21,681

18,478233,129

Investments in affiliates

Property, Plant and Equipment, at Cost:

Construction in progress
Total property, plant and equipment
Accumulated depreciation
Net property, plant and equipment

Investments and Other Assets:
2,067

1,728

22,226

Lease assets

830

1,248

8,925

Deferred tax assets

569

954

6,118

6,078

5,364

65,355

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

49

31,22527,772335,753¥ 216,622¥ 246,918$ 2,329,269

Thousands of
U.S. dollars

Millions of yen

Liabilities and Net Assets

2009

2010

2010

Current Liabilities:
Short-term debt—

¥ 39,095

Current portion of long-term debt

19,773

22,822

212,613

Lease obligations

2,862

1,671

30,774Trade52,38942,786563,323

Construction and other

3,192

3,085

34,323

Accrued expenses

4,960

4,809

53,333

Income taxes payable

1,037

910

11,151

Accrued product warranty costs

3,816

3,963

41,032

Accrued bonuses to directors

22

38

237

Allowance for business structure improvement

—

6,079

—

Allowance for loss on orders received

516

325

5,548

5,307

6,848

57,064

93,874132,4311,009,398¥$—

Notes and accounts payable—

Other current liabilities
Total current liabilities
Long-Term Liabilities:
Long-term debt

48,19532,967518,226

Accrued pension and severance costs

487

665

5,237

Estimated termination and retirement allowances
for directors and corporate auditors

118

124

1,269

6,388

6,026

68,688

37

46

398

2,482

4,945

26,68757,70744,773

620,505

Lease obligations
Reserve for loss on guarantees
Other long-term liabilities
Total long-term liabilities
Contingent Liabilities (Note 8)
Net Assets:
Shareholders’ Equity:
Common stock—
Authorized—900,000,000 shares in 2010 and 2009
Issued—253,974,333 shares in 2010 and 2009

54,04554,045581,129

Capital surplus

30,15530,156324,247

Retained earnings

731

8,734

7,860

(12,225)(12,220)(131,452)

72,70680,715

781,784

3,400
(68)

176
(4)

36,559(731)(11,431)(11,534)(8,099)(11,362)(122,913)(87,085)

Treasury stock, at cost—
16,578,859 shares in 2010 and 16,562,258 shares in 2009
Total shareholders’ equity
Valuation Gain/Loss, Translation Gain/Loss, etc.:
Net unrealized holding gain on securities
Deferred hedge income and loss
Foreign currency translation adjustments
Total valuation gain/loss, translation gain/loss, etc.
Minority Interests:
Minority interests
Total net assets
Total Liabilities and Net Assets

434

361

4,667

65,041

69,714

699,366¥ 216,622¥ 246,918$ 2,329,269

50

Consolidated Statements of Operations
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009
Thousands of
U.S. dollars

Millions of yen

Net Sales

2010

2009

2010

¥ 164,129¥ 219,049$ 1,764,828

137,827

169,391

1,482,011

26,30249,658282,817

Cost of Sales
Gross profit
Selling, General and Administrative Expenses

40,34854,168433,849(14,046)(4,510)(151,032)

Interest and dividend income

(420)

(725)

(4,516)

Interest expense

2,397

1,490

25,774

358

1,249

3,849

(2,761)—(29,688)

31

83

333

Equity in losses of affiliates

437

5,955

4,699

Gain on step acquisitions(2,613)—(28,097)

Gain on negative goodwill

Operating loss
Other (Income) Expenses:

Exchange loss on foreign currency transactions, net
Gain on sale of investments in securities
Loss on disposal of property, plant and equipment(2,471)—(26,570)

Subsidy income

(398)

(756)

(4,280)

Revenue from service contracts

(108)

(711)

(1,161)

(74)

(122)

(796)

1,306

7,278

14,043

Impairment loss

780

1,442

8,387

Loss on investments in securities

46

1,688

495

Loss on valuation of inventories

—

2,427

—

One-time amortization of goodwill

—

1,312

—

Other, net

558

753

6,001

(2,932)

21,363(31,527)(11,114)(25,873)(119,505)

Current

967

1,478

10,398Deferred(3,552)

10,837(38,193)(2,585)

12,315(27,795)(526)

3(8,003)¥ (38,191)

Insurance income
Business structure improvement expenses

Net other (income) expenses
Loss Before Income Taxes
Income Taxes

Total income taxes
Minority Interests in Net Income (Loss) of Consolidated Subsidiaries
Net Loss¥

Per Share of Common Stock:Yen(86,054)

U.S. dollars¥ (33.71)¥ (160.86)

Net income-diluted

—

—

—

Cash dividends, applicable to earnings for the year

—

—

—

Net loss

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

51(5,656)$$(0.36)

Consolidated Statements of Changes in Net Assets
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009
Millions of yen
Valuation gain/loss,translation gain/loss, etc.

Shareholders’ equity

Balance at March 31, 2008

Shares ofissuedcommonstock(thousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock

253,974¥ 54,045¥ 30,176 ¥ 49,390¥ (12,238)

Net
unrealized Deferred
Foreignholding
hedge
currency
gain onincome translation
securities and loss adjustments¥ 6,347¥ (6)¥ (5,620)

Minority
Totalinterests net assets¥ 781¥ 122,875

Net loss(38,191)(38,191)

Cash dividends paid, ¥10.00 per share(2,374)(2,374)

Effects of changes in accounting policies
applied to foreign subsidiaries

(91)

(91)
(6,171)

Net unrealized holding gain on securities
Deferred hedge income and loss

(6,171)
2

2(5,914)Foreign currency translation adjustments(18)

Acquisition of treasury stock(20)

Disposal of treasury stock

(18)

36

16

Other
Balance at March 31, 2009

253,974¥ 54,045¥ 30,156 ¥ 8,734¥ (12,220)

¥ 176

¥ (4)

¥(11,534)

(420)

(420)

¥ 361

¥ 69,714(8,003)Net loss(8,003)3,224

Net unrealized holding gain on securities

3,224
(64)

Deferred hedge income and loss

(64)
103

Foreign currency translation adjustments
Acquisition of treasury stock(1)

Disposal of treasury stock
253,974¥ 54,045¥30,155 ¥ 731

103

(7)

(7)

2

1

Other
Balance at March 31, 2010

(5,914)¥ (12,225)¥ 3,400¥ (68)¥ (11,431)

73

73

¥ 434

¥ 65,041

Thousands of U.S. dollars
Valuation gain/loss,translation gain/loss, etc.

Shareholders’ equity

Commonstock

Balance at March 31, 2009

CapitalsurplusRetainedearnings

Treasurystock$ 581,129 $ 324,258 $ 93,914 $ (131,398)

Net
unrealized Deferred
Foreignholding
hedge
currency
gain onincome translation
securities and loss adjustments

Minority
Totalinterests net assets$ 1,892 $ (43)

$ 3,883$ (124,022)(86,054)

Net loss(86,054)
34,667Net unrealized holding gain on securities

34,667(688)

Deferred hedge income and loss

(688)
1,109

Foreign currency translation adjustments(11)

Disposal of treasury stock

(76)

22

11
784

Other
Balance at March 31, 2010

1,109

(76)

Acquisition of treasury stock$ 749,613$ 581,129 $ 324,247 $ 7,860 $ (131,452) $ 36,559 $ (731)$ (122,913)

784$ 4,667 $ 699,366

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

52

Consolidated Statements of Cash Flows
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009
Thousands of
U.S. dollars

Millions of yen

Cash Flows from Operating Activities:
Loss before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
One-time amortization of goodwill
Equity in losses of affiliates
Gain on negative goodwill
Gain on step acquisitions
Loss on investments in securities
Loss on disposal of property, plant and equipment
Gain on sale of investments in securities
Decrease in accrued pension and severance costs
Decrease in accrued bonuses to directors
Decrease in accrued product warranty costs
Increase in allowance for loss on orders received
Business structure improvement expenses
Interest and dividend income
Interest expense
Decrease in trade notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in trade notes and accounts payable
Decrease in accrued expenses
Decrease in other current liabilities
Other, net
SubtotalInterest and dividends received
Interest paid
Contribution in connection with the transition toa defined contribution pension plan
Payment of business structure improvement expenses
Income taxes paid
Net cash provided by (used in) operating activities
Cash Flows from Investing Activities:
Increase (decrease) in time deposits, net
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of investments in securities
Proceeds from sale of investments in securities
Purchase of investments in subsidiaries
Acquisition of shares of a newly consolidated subsidiary
Proceeds from purchase of investments in subsidiaries resulting
in change in scope of consolidation
Payments from sale of investments in subsidiaries resulting
in change in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities:
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from sale and leaseback
Repayment of finance lease obligations
Redemption of bonds with subscription rights to shares
Increase in treasury stock, net
Cash dividends paid
Cash dividends paid to minority interests
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Decrease in Cash and Cash Equivalents in Line with Changes
in Scope of Consolidation
Cash and Cash Equivalents at End of Year
The accompanying notes to the consolidated financial statements are an integral part of these statements.

53

2010

2009

2010

¥ (11,114)
7,012
780
—
—
437
(2,471)(2,613)46
31(2,761)
(179)
(16)
(280)
191
1,306
(420)
2,397
14,067
22,954
(69)
9,695
(310)
(1,479)(884)
36,320425(2,416)¥ (25,873)
8,414
1,442
1,056
1,312
5,955
—
—
1,688
83
—
(630)
(58)
(64)
325
7,278
(725)
1,490
18,376(1,844)635(30,417)(3,638)(4,909)(322)(20,426)740(1,526)$ (119,505)
75,398
8,387
—
—
4,699
(26,570)(28,097)495
333(29,688)(1,925)(172)(3,011)
2,054
14,043(4,516)25,774
151,258
246,817(742)
104,247(3,333)(15,903)(9,506)
390,537
4,570(25,978)(1,010)(944)(6,737)(1,469)25,113(259)(2,178)(24,593)(10,860)(72,441)(15,796)
270,032(513)(1,003)
1,984
(13)
4,213
—
—

179
(4,935)
75
(213)
—
(300)
(1,276)(5,516)(10,785)
21,333(140)
45,301
—
—

2,615

—

28,118

(5)
(393)
6,885

—
(451)
(6,921)(54)(4,225)74,032(38,588)
55,000(27,823)
1,627(2,331)(14,999)(6)—(4)(27,124)(80)
4,794
25,111

27,295
17,451(6,375)—(1,917)—(2)(2,374)(7)
34,071(2,335)
222
24,980(414,925)
591,398(299,172)
17,495(25,065)(161,280)
(64)
—
(43)
(291,656)(860)
51,548270,011—¥ 29,905(91)¥ 25,111—$ 321,559

Notes to the Consolidated Financial Statements
Dainippon Screen Mfg. Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009

Note 1: Summary of Significant Accounting and Reporting Policies(a) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Dainippon
Screen Mfg. Co., Ltd. (the “Company”) have been prepared inaccordance 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 in certain respects as to application and disclosure
requirements from International Financial Reporting Standards.
Prior to the year ended March 31, 2009, the accounts of consolidated
overseas subsidiaries had been based on their accounting records
maintained in conformity with generally accepted accounting
principles prevailing in the respective countries of domicile. As
discussed in below, the accounts of the consolidated overseas
subsidiaries for the year ended March 31, 2009 were prepared inaccordance with either International Financial Reporting Standards or
U.S. generally accepted accounting principles, with adjustments for thesix specified items as applicable. 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 andExchange Law. Some supplementary information included in thestatutory Japanese language consolidated financial statements, but notrequired for fair presentation, is not presented in the accompanying
consolidated financial statements.
Effective from the fiscal year ended March 31, 2009, the “Practical
Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements” (AccountingStandards Board of Japan (“ASBJ”) Practical Issues Task Force No. 18
issued on May 17, 2006) has been adopted and the necessary
adjustments of six items have been made for consolidation. As aresult of this change, operating loss and loss before income taxes forthe year ended March 31, 2009 increased by ¥133 million and ¥189
million, respectively, compared with amounts that would have beenrecorded using the previously applied method. The effect on segment
information is presented in each related section.
Effective from the fiscal year ended March 31, 2010, the“Accounting Standard for Financial Instruments” (ASBJ Statement
No. 10 revised on March 10, 2008) and the “Guidance on Disclosuresabout Fair Value of Financial Instruments” (ASBJ Guidance No. 19
revised on March 10, 2008) have been adopted. This adoption has
had no effect on profit.
The “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21 issued on December 26, 2008), the “AccountingStandard for Consolidated Financial Statements” (ASBJ Statement
No. 22 issued on December 26, 2008), the “Partial amendments to
Accounting Standard for Research and Development Costs” (ASBJ
Statement No. 23 issued on December 26, 2008), the “Revised
Accounting Standard for Business Divestitures” (ASBJ Statement
No. 7 (Revised 2008) issued on December 26, 2008), the “Revised
Accounting Standard for Equity Method of Accounting forInvestments” (ASBJ Statement No. 16 (Revised 2008) released on
December 26, 2008), and the “Revised Guidance on AccountingStandard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10 (Revised 2008)
issued on December 26, 2008) have been adopted, as they have been able
to be applied to business combinations, business divestures, etc.,
implemented for the first time after the fiscal year beginning on April
1, 2009. Changing the evaluation method of subsidiaries’ assets andliabilities from the partial fair value evaluation method to the full fair value
evaluation method has had no effect on profit or segment information.
The accompanying consolidated financial statements have beentranslated into U.S. dollars solely for the convenience of readers
outside Japan, using the prevailing exchange rate as of March 31,
2010, ¥93 to U.S.$1.00. This translation should not be construed asa representation that the amounts shown could be converted into
U.S. dollars.
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 conditions evidencing control by the Company.
Investments in affiliates are accounted for by the equity method.
SOKUDO Co., Ltd. and its subsidiary company SOKUDO USA,
LLC, former affiliated companies accounted for by the equity
method, are included within the range of consolidation because theCompany purchased additional shares and companies were converted
from joint venture companies to subsidiaries of the Company.
Prior to the year ended March 31, 2010, in the elimination of
investments in subsidiaries, the portion of a subsidiary’s assets andliabilities attributable to the shares owned by the Company had
been evaluated based on the fair value at the time when the
Company acquired control of the subsidiary. The portion of theassets and liabilities attributable to minority shareholders’ shares ofthe subsidiary had been determined using the financial statementsof the subsidiary. Effective from the fiscal year ended March 31,
2010, as described above, “Accounting Standard for Business
Combinations” (ASBJ Statement No. 21 issued on December 26,2008) and other standards have been adopted. As a result of thischange, the assets and liabilities attributable to both the shares
owned by the Company and minority shareholders’ shares havebeen evaluated based on the fair value at the time of the acquisitionof the control of the subsidiary.
(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 athistorical rates, balance sheets of 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 ofconsolidated 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 mainly
state inventories calculated either by the first-in, first-out method or54

the specific identification method (with regard to the amounts
stated in the balance sheet, book value devaluation method basedon decline in profitability).
Consolidated overseas subsidiaries mainly state inventories at thelower of cost or market either by the first-in, first-out method or the
specific identification method.
(Changes in Accounting Policy)
Effective from the fiscal year ended March 31, 2009, the Company
and its consolidated domestic subsidiaries have adopted the“Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9 issued on July 5, 2006). As a result of this change,
operating loss and loss before income taxes for the year ended
March 31, 2009 increased by ¥1,373 million, and ¥3,800 million,
respectively, compared with amounts that would have beenrecorded using the previously applied method. The effect on
segment information is presented in each related section.
(e) Installment sales
Certain consolidated domestic subsidiaries have installment sales
and recognize profits as the related receivables become due.
Unrealized income is included in other current liabilities in theaccompanying consolidated balance sheets.
(f) Securities
The Company and its consolidated subsidiaries classify securities as
all other securities (hereafter, “available-for-sale securities”).
Available-for-sale securities with available fair values are stated atfair value. Unrealized holding gains (losses) on these securities arereported, net of applicable income taxes, as a separate component of
net assets. Realized gains and losses on the sale of such securities arecomputed using moving average cost. Other securities with noavailable fair values are stated at moving average cost.
(g) Depreciation
Depreciation of property, plant and equipment of the Company andits consolidated domestic subsidiaries is computed primarily by the
declining balance method.
Depreciation of property, plant and equipment of the consolidated
overseas subsidiaries is mainly computed by the straight-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 does not transfer to the lessee are depreciated in thesame manner 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.
(Additional Information)
Following revisions to the taxation system in Japan effective fromthe fiscal year ended March 31, 2009, the Company and its
consolidated domestic subsidiaries changed the estimated useful
lives of their assets. As a result of this change, operating loss andloss before income taxes for the year ended March 31, 2009
decreased by ¥294 million and ¥301 million, respectively,
compared with amounts that would have been recorded using thepreviously applied method. The effect on segment information ispresented in each related section.
55(h) 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 therecoverable amount is recognized as impairment loss.
(i) 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).
(j) Research and development
Expenses related to research and development activities, which arecharged to income as incurred, amounted to ¥11,615 million($124,892 thousand) in 2010 and ¥16,073 million in 2009.
(k) 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.
(l) 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. However, when no significant differencein the amounts exists, it is amortized at one time.
(m) Accounting for leases
On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, the“Accounting Standard for Lease Transactions,” which revised theformer accounting standard for lease transactions issued on June
17, 1993, and ASBJ Guidance No. 16, the “Guidance on AccountingStandard for Lease Transactions,” which revised the former
guidance issued on January 18, 1994.
Formerly, the Company and its consolidated domestic
subsidiaries accounted transactions with which the ownership ofthe leased assets does not transfer to the lessee as operating leases.
However, the revised accounting standard requires that all financelease transactions be capitalized. Effective from the fiscal year ended
March 31, 2009, the Company and its consolidated domestic
subsidiaries have adopted the accounting standard. As a result of
this change, operating loss for the year ended March 31, 2009
decreased by ¥233 million, and loss before income taxes increasedby ¥189 million, compared with amounts that would have beenrecorded using the previously applied method. The effect on
segment information is presented in each related section.
(n) Bond issue costs
Bond issue costs are charged to expenses as incurred.
(o) Income taxes
The Company and its consolidated subsidiaries record deferred tax
assets and liabilities on loss carryforwards and temporary
differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax
purposes by using the asset and liability approach.
(p) Allowance for doubtful receivables
An allowance for doubtful receivables is provided to cover possible
losses on collection. The Company and its consolidated domestic
subsidiaries provide the allowance for doubtful receivables by adding
individually estimated uncollectible amounts of specific items to an
amount based on the actual rate of past uncollected receivables.
The consolidated overseas subsidiaries provide the allowance for
doubtful receivables based mainly on the estimated uncollectible
amounts of specific receivables.

(q) Accrued bonuses to directors
Certain consolidated domestic subsidiaries provide an allowancefor directors’ bonuses based on the estimated amounts of payments
for the fiscal year.
(r) Employees’ severance and retirement benefits
The Company and its consolidated subsidiaries provide two typesof postemployment 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 ofwages and salaries at the time of retirement or termination, lengthof service and certain other factors.
The Company and certain consolidated subsidiaries have defined
contribution pension plans.
The Company and its consolidated domestic subsidiaries provide
accrued pension and severance costs 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.
As the fair value of plan assets as of March 31, 2010 and 2009
exceeded the projected benefit obligation (excluding the unrecognizedactuarial differences) of the Company and certain consolidated
domestic subsidiaries, the difference has been recognized as “Other
assets” in Investments and Other assets.
(Change in accounting policy)
Effective from the fiscal year ended March 31, 2010, the “Partial
Amendments to Accounting Standard for Retirement Benefits (Part3)” (ASBJ Statement No. 19 issued on July 31, 2008) have been
adopted. This adoption has had no effect on profit.
(s) Retirement benefits for directors and corporate auditors
Certain consolidated domestic subsidiaries have unfunded retirement
and termination allowance plans for directors and statutory auditors.
The amounts required under the plans have been fully accrued.
(t) Accrued product warranty costs
The Company and certain consolidated subsidiaries provide estimatedproduct warranty costs for the warranty period after product delivery
based on the rate of actual payments in the past.
(u) Reserve for loss on guarantees
A reserve for loss on guarantees is provided in an estimated amountfor leases of customers after consideration of the customers’
financial position, solvency, etc.
(v) Allowance for business structure improvement
The Company and certain consolidated subsidiaries provided
estimated expenses for the fiscal year ended March 31, 2009, suchas the premium severance pay accrued in the following fiscal year
under the business restructuring plans, including business reforms,
the streamlining of organizations and business sites as well as
personnel adjustments.
The main items of business structure improvement expenses in“Other Expenses” for the year ended March 31, 2010, were early
retirement benefits and reemployment assistance expenses of ¥254
million ($2,731 thousand) and loss on disposal of inventories fromthe withdrawal from the direct imaging system for TFT LCD
business of ¥622 million ($6,688 thousand). The main items ofbusiness structure improvement expenses in “Other Expenses” forthe year ended March 31, 2009 were early retirement benefits andreemployment assistance expenses of ¥6,260 million, loss on
disposal of inventories from the withdrawal from the direct imaging
system for color filter business of ¥626 million, and loss on disposalof property, plant and equipment from the withdrawal from thedirect imaging system for color filter business of ¥318 million.
(w) Allowance for loss on orders received
The Company and certain consolidated subsidiaries provide for
estimated loss accrued in or after the next fiscal year to coverpossible 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 calculating based on the “AccountingStandard for Measurement of Inventories” (ASBJ Statement No. 9
issued on July 5, 2006), the amounts are provided for as anallowance for loss on orders received.)(x) Derivatives and hedge accounting
If derivative financial instruments are used as hedges and meetcertain hedging criteria, the Company defers recognition of gains orlosses resulting from changes in the fair value of the derivative
financial instruments until the related losses or gains on the hedged
items are recognized.
When a forward foreign exchange contract meets certain conditions, thehedged item is stated at the forward exchange contract rate.
Also, if interest rate swap contracts are used as hedges and meetcertain hedging criteria, the net amount to be paid or received under
the interest rate swap contract is added to or deducted from the intereston 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 foreignexchange contracts, the Company uses them within the amounts offoreign currency receivables and authorized forecast transactions.
The following table summarizes the derivative financial
instruments used in hedge accounting and the related items hedged
as of March 31, 2010.
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 transactions inaccordance with established internal policies and specified limits on
the amounts of derivative transactions allowed. The derivativetransactions are reported to and approved by the Board of Directors.
The Company evaluates hedge effectiveness semiannually bycomparing the cumulative changes in the hedging derivative
instruments and the items hedged.

56

Note 2: Consolidated Statements of Cash FlowsThe noncash financing activities for the year ended March 31, 2010 were as follows:
Newly booked assets and liabilities relating to finance leases
Millions of yen

Lease assets
Lease obligations

¥ 237
249

Thousands of
U.S. dollars$ 2,548
2,677

Significant components of assets and liabilities of the newly consolidated subsidiary by acquiring its shares were as follows:

Current assets
Property, plant and equipment
Current liabilities
Long-term liabilities
Minority interests
Negative goodwill
Shares of SOKUDO Co., Ltd. at cost
Cash and cash equivalents of SOKUDO Co., Ltd.
Net income by acquiring SOKUDO Co., Ltd.

Millions of yen

Thousands of
U.S. dollars¥ 7,499
2,166(4,981)(1,633)(580)(2,471)—(2,615)¥ 2,615$ 80,635
23,290(53,559)(17,559)(6,237)(26,570)—(28,118)$ 28,118

Note 3: Income Taxes
The Company is subject to several taxes based on income with anrespective future taxable incomes of these companies.

aggregate statutory tax rate of approximately 39.5% in 2010 and 2009.

Significant components of the Company and its consolidated

As of March 31, 2010, the Company and certain consolidated

subsidiaries’ deferred tax assets and liabilities as of March 31, 2010

subsidiaries had net tax loss carryforwards aggregating ¥67,268

and 2009 were as follows:

million ($723,312 thousand), which were available to offset theThousands of
U.S. dollars

Millions of yen
2009

2010

Deferred tax assets (current)
Accrued bonuses for employees
Loss on valuation of inventories
Accrued product warranty costs
Allowance for business structure improvement expenses
Other
Valuation allowance
Deferred tax liabilities (current)
Adjustment of allowance for doubtful accounts and other
Net deferred tax assets
Deferred tax assets (noncurrent)
Net operating loss carryforwards
Loss on investments in securities
Accrued pension and severance costs
Depreciation
Other
Valuation allowance
Deferred tax liabilities (noncurrent)
Undistributed earnings of consolidated overseas subsidiaries
Net unrealized holding gain on securities
Other
Net deferred tax assets (liabilities)

¥

571
6,553
1,397
—
2,198
(6,689)

¥

628
3,486
1,532
2,394
1,605
(8,451)
(26)

2010

$

6,140
70,462
15,022—
23,634(71,925)(20)¥ 4,010¥ 1,168(215)$ 43,118¥24,693
483
222
3,861
3,157
(30,402)

10,536
632
317
3,983
2,572
(17,072)$265,516
5,194
2,387
41,51633,946(326,903)(989)(1,672)(537)¥ (1,184)

(855)
(198)
(304)
(389)

(10,634)(17,978)(5,775)$ (12,731)¥

The significant differences between the aggregate statutory tax rates and the effective tax rates of the Company and its consolidated
subsidiaries for financial statement purposes for the years ended March 31, 2010 and 2009 are not shown due to the loss before income taxes.

57

Note 4: Short-Term and Long-Term Debt
Short-term debt generally represents short-term notes from banks. The average interest rate on these borrowings at March 31, 2009 was 1.1%.
There was no short-term debt at March 31, 2010.
Long-term debt as of March 31, 2010 and 2009 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2009

2010

296
11,667$ 217,699
70,871

10,000
3,652

—
5,352

107,527
39,269

5,000
2,979
7,000
2,500
10,000

—
3,975
7,000
2,500
10,00053,76332,03275,26926,882
107,527—
67,968(19,773)¥ 48,195

14,99955,789(22,822)¥ 32,967—
730,839(212,613)$ 518,226

2010

1.37% to 2.16% loans from Japanese banks, due in installments through 2015—secured—unsecured
0.7% to 2.53% loans from a governmental institution, due in installments
through 2015—secured—unsecured
1.84% to 2.57% loans from an insurance company, due in installments
through 2015—secured—unsecured
2.13% unsecured notes, due Februrary 8, 2013
0.88% unsecured notes, due January 31, 2012
1.66% unsecured notes, due Februrary 8, 2011
Zero coupon unsecured convertible notes (with stock acquisition rights),
due September 30, 2009
Total
Current portion of long-term debt shown in current liabilities
Long-term debt, less current portion¥ 20,246
6,591¥

As of March 31, 2010, certain long-term debt of ¥35,246 million

The Company and a certain domestic subsidiary have contracts for($378,989 thousand) was secured by property, plant and equipment

commitment lines and convertible term loans for financing by whichwith a net book value of ¥28,208 million ($303,312 thousand).

banks are bound to extend loans up to a prearranged amount upon

As is customary in Japan, substantially all of the bankrequest. As of March 31, 2010, the total financing available underborrowings are subject to general agreements with each bankthese contracts amounted to ¥20,000 million ($215,054 thousand)which provide, among other things, that additional security andeach, and no amount of these contracts had been used.

guarantees for present and future indebtedness will be given upon

The aggregate annual maturities of long-term debt are as follows:

request by the bank and that any collateral so furnished will beapplicable to all indebtedness to that bank. In addition, theagreements provide that the bank has the right to offset cash
deposited against any long-term or short-term debt that becomesdue and, in case of default and certain other specified events,
against all other debts payable to the bank. To date, the Company

Years ended March 31,

Millions of yen

Thousands of
U.S. dollars

2012
2013
2014
2015
2016 and thereafter
Total¥ 37,561
8,360
1,660
614
—
¥ 48,195$ 403,883
89,892
17,8496,602—$ 518,226

has not received any such requests from its banks.

Note 5: Net Assets and Per Share Data
Under Japanese laws and regulations, the entire amount paid for new

Additional paid-in capital and legal earnings reserve may not beshares is required to be designated as common stock. However, a

distributed as dividends. Under the Law, all additional paid -in

company may, by a resolution of the Board of Directors, designate an

capital and all legal earnings reserve may be transferred to otheramount not exceeding one-half of the price of the new shares ascapital surplus and retained earnings, respectively, and are

additional paid-in capital, which is included in capital surplus.

potentially available for dividends. Both of these appropriations

Under the Japanese Corporate Law (“the Law”), in cases in which

generally require a resolution of the shareholders’ meeting.

a dividend distribution of surplus is made, the smaller of an amountThe maximum amount that the Company can distribute as dividends

equal to 10% of the dividend or the excess, if any, of 25% ofis calculated based on the nonconsolidated financial statements of thecommon stock over the total of additional paid-in capital and legal

Company in accordance with Japanese laws and regulations.

earnings reserve must be set aside as additional paid-in capital or

Net income per share is based on the weighted average number

legal earnings reserve. Legal earnings reserve is included in retainedof shares of common stock outstanding. Diluted net income perearnings in the accompanying consolidated balance sheets.

share is computed using the weighted average number of shares
58

Diluted net income per share of common stock for the year

after assuming conversion of all dilutive convertible notes and theended March 31, 2010 is not shown due to the net loss.

exercise of stock acquisition rights.

Note 6: Leases(As lessee)

1. Finance leases
A. Information relating to finance leases for which the1) Description of leased assets
1. Tangible fixed assets

ownership of the leased assets is considered to be transferredto the lessee as of and for the years ended March 31, 2010

Mainly the production facilities and the R&D facilities in theand 2009 was as follows:

Electronic Equipment and Components business (“Buildings
and structures”and “Machinery, equipment and other”)(As lessee)

2. Intangible fixed assets

1) Description of leased assets

Software

1. Tangible fixed assets2) Depreciation method for leased assets
As described in Note 1, Summary of Significant Accounting and

Mainly the production facilities in the Electronic Equipment
and Components business

Reporting Policies, (g) Depreciation(“Machinery, equipment and other”)
2. Intangible fixed assets

2. Operating leases

Software(As lessee)2) Depreciation method for leased assets
As described in Note 1, Summary of Significant Accounting

Future minimum lease payments as lessee:

and Reporting Policies, (g) Depreciation
B. Information relating to finance leases, excluding those leases

Millions of yen

for which the ownership of the leased assets is considered to
be transferred to the lessee, as of and for the years ended
March 31, 2010 and 2009, was as follows:

Due within one year
Due after one year
Total

2010

2009

459
661
¥ 1,120

¥ 264
427
¥ 691

¥

Thousands of
U.S. dollars
2010

$

4,935
7,108
$ 12,043

Note 7: Segment Information
Segment Information by Business Field
Year ended March 31, 2010

Net sales and operating loss
Sales to customers
Intersegment sales
Total
Operating expenses
Operating loss
AssetsDepreciation and amortization
Impairment loss
Capital expenditures

Millions of yen
Electronic Equipment
and Components

Graphic Arts
Equipment¥ 125,086—
125,086
136,535¥ (11,449)¥ 130,577
5,011
717
1,393

¥ 38,448—
38,44840,939¥ (2,491)¥ 35,637744
5
338Electronic Equipment
and Components

Graphic Arts
Equipment

Other¥ 160,157—
160,157
166,077¥ (5,920)¥ 159,141
5,934
—
2,665

¥ 57,095—
57,09555,494¥ 1,601¥ 39,959
951
567
438

¥ 1,797
8,160
9,957
10,148¥ (191)¥ 6,250
249
766
119

Other

¥

595
6,073
6,668
6,774
¥ (106)¥ 3,427
154—
62

Eliminations/
Corporate

Consolidated—(6,073)(6,073)(6,073)¥—¥ 46,981
1,103
58
118

¥ 164,129—
164,129
178,175¥ (14,046)¥ 216,622
7,012
780
1,911

Eliminations/
Corporate

Consolidated¥

Millions of yen
Year ended March 31, 2009

Net sales and operating income (loss)
Sales to customers
Intersegment sales
Total
Operating expenses
Operating income (loss)
AssetsDepreciation and amortization
Impairment loss
Capital expenditures
59¥—(8,160)(8,160)(8,160)¥—¥ 41,568
1,280
109
785

¥ 219,049—
219,049
223,559¥ (4,510)¥ 246,918
8,414
1,442
4,007

Thousands of U.S. dollars
Year ended March 31, 2010

Net sales and operating loss
Sales to customers
Intersegment sales
Total
Operating expenses
Operating loss
AssetsDepreciation and amortization
Impairment loss
Capital expenditures

Electronic Equipment
and Components

Graphic Arts
Equipment$ 1,345,011—
1,345,011
1,468,119$ (123,108)$ 1,404,054
53,882
7,709
14,978$ 413,419—
413,419440,204$ (26,785)$ 383,194
8,000
54
3,634

Eliminations/
Corporate

Other

$

6,398
65,301
71,69972,838$ (1,139)$ 36,849
1,656
—
667

$

—
(65,301)(65,301)(65,301)$—$ 505,172
11,860624
1,269

Consolidated$ 1,764,828—
1,764,828
1,915,860$ (151,032)$ 2,329,269
75,398
8,387
20,548Notes: 1. Eliminations/Corporate includes corporate assets of ¥59,973 million ($644,871 thousand) and ¥53,478 million for the years ended March 31, 2010 and 2009, respectively.

2. Changes in accounting policies(Changes in evaluation standards and methods for inventories)
Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9 issued on July 5, 2006). As a result of this change, operating loss for the fiscal year ended March 31, 2009 in the Electronic Equipment and Components segment increased by ¥847
million, operating income in the Graphic Arts Equipment segment decreased by ¥525 million and operating loss in the Other segment increased by ¥1 million, compared with amounts that would
have been recorded using the previously applied method.
(Application of the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”)
Effective from the fiscal year ended March 31, 2009, the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force No. 18 issued on May 17, 2006) has been adopted and the necessary adjustments have been made for consolidation. As a result of this change, operating loss for the fiscal
year ended March 31, 2009 in the Electronic Equipment and Components segment increased by ¥140 million and operating income in the Graphic Arts Equipment segment increased by ¥7 million,
compared with amounts that would have been recorded using the previously applied method.
(Application of the “Accounting Standard for Lease Transactions”)
On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, the “Accounting Standard for Lease Transactions,” 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. Formerly, the Company and its
consolidated domestic subsidiaries accounted transactions with which the ownership of the leased assets did not transfer to the lessee as operating leases. However, the revised accounting standard
requires that all finance lease transactions be capitalized. Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the accounting
standard. As a result of this change, operating loss for the fiscal year ended March 31, 2009 in the Electronic Equipment and Components segment decreased by ¥259 million, operating income in theGraphic Arts Equipment segment increased by ¥10 million and operating loss in the Other segment increased by ¥36 million, compared with amounts that would have been recorded using thepreviously applied method.
(Change in the Depreciation Method for Fixed Assets in Accordance with Tax Reform)
Following revisions to the taxation system in Japan, effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries changed the estimated useful lives of
their assets. As a result of this change, operating loss for the fiscal year ended March 31, 2009 in the Electronic Equipment and Components segment decreased by ¥289 million and operating incomein the Graphic Arts Equipment segment increased by ¥5 million, compared with amounts that would have been recorded using the previously applied method.

Segment Information by Geographic Area
Year ended March 31, 2010

Net sales and operating income (loss)
Sales to customers
Intersegment sales
Total
Operating expenses
Operating income (loss)
AssetsMillions of yen
Japan

North America

Asia & Oceania

EuropeEliminations/
Corporate

Consolidated¥ 132,373
14,396
146,769
163,171¥ (16,402)¥ 148,077¥ 10,644
1,580
12,224
12,308(84)¥¥ 10,862¥ 10,895
4,049
14,944
13,476¥ 1,468¥ 14,973¥ 10,217
1,107
11,324
11,391(67)¥¥ 11,842¥—(21,132)(21,132)(22,171)¥ 1,039¥ 30,868¥ 164,129—
164,129
178,175¥ (14,046)¥ 216,622

Eliminations/
Corporate

Consolidated

Millions of yen
Year ended March 31, 2009

Net sales and operating income (loss)
Sales to customers
Intersegment sales
Total
Operating expenses
Operating income (loss)
AssetsJapan

North America

Asia & Oceania

Europe¥ 149,054
41,481
190,535
196,325¥ (5,790)¥ 183,370¥ 30,822
1,274
32,096
31,400¥696¥ 12,380¥ 18,260
4,887
23,147
21,367¥ 1,780¥ 14,135¥ 20,913
525
21,43822,465¥ (1,027)¥ 11,286¥—(48,167)(48,167)(47,998)¥ (169)¥ 25,747¥ 219,049—
219,049
223,559¥ (4,510)¥ 246,918

Eliminations/
Corporate

Consolidated

Thousands of U.S. dollars
Year ended March 31, 2010

Net sales and operating income (loss)
Sales to customers
Intersegment sales
Total
Operating expenses
Operating income (loss)
AssetsJapan

North America

Asia & Oceania

Europe$ 1,423,365
154,797
1,578,162
1,754,528$ (176,366)$ 1,592,226$ 114,452
16,989131,441
132,344(903)$$ 116,796$ 117,151
43,537
160,688
144,903$ 15,785$ 161,000$ 109,860
11,903
121,763
122,483(720)$$ 127,333$— $ 1,764,828(227,226)—(227,226)
1,764,828(238,398)
1,915,860$ 11,172 $ (151,032)$ 331,914 $ 2,329,269

Notes: 1. Segment information by geographic area is for the Company and its consolidated subsidiaries located in the respective geographic areas. Eliminations/Corporate includes corporate assets of¥59,973 million ($644,871 thousand) and ¥53,478 million for the years ended March 31, 2010 and 2009, respectively.
2. Changes in accounting policies

60

(Changes in evaluation standards and methods for inventories)
Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9 issued on July 5, 2006). As a result of this change, operating loss for the fiscal year ended March 31, 2009 increased by ¥1,373 million in Japan, compared with amounts that would
have been recorded using the previously applied method.
(Application of the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”)
Effective from the fiscal year ended March 31, 2009, the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force No. 18 issued on May 17, 2006) has been adopted and the necessary adjustments have been made for consolidation. As a result of this change, operating income for the
fiscal year ended March 31, 2009 in Asia and Oceania increased by ¥37 million while operating loss in Europe increased by ¥170 million, compared with amounts that would have been recorded
using the previously applied method.
(Application of the “Accounting Standard for Lease Transactions”)
On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, the “Accounting Standard for Lease Transactions,” 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. Formerly, the Company and its
consolidated domestic subsidiaries accounted transactions with which the ownership of the leased assets did not transfer to the lessee as operating leases. However, the revised accounting standard
requires that all finance lease transactions be capitalized. Effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries have adopted the accounting
standard. As a result of this change, operating loss for the fiscal year ended March 31, 2009 decreased by ¥233 million in Japan, compared with amounts that would have been recorded using thepreviously applied method.
(Change in the Depreciation Method for Fixed Assets in Accordance with Tax Reform)
Following revisions to the taxation system in Japan, effective from the fiscal year ended March 31, 2009, the Company and its consolidated domestic subsidiaries changed the estimated useful lives of
their assets. As a result of this change, operating loss for the fiscal year ended March 31, 2009 decreased by ¥294 million in Japan, compared with amounts that would have been recorded using thepreviously applied method.

Domestic Sales and Overseas Sales

Thousands of
U.S. dollars

Millions of yen
2010

Years ended March 31,¥

42,714
121,415
18,012
87,57913,7482,076
74.0%¥ 164,129

Domestic sales
Overseas sales
North America
Asia & Oceania
EuropeOthersRatio of overseas sales to net sales
Net sales

2010

2009

¥

72,281
146,768
38,46780,60320,017
7,681
67.0%¥ 219,049$

459,290
1,305,538
193,677
941,710
147,828
22,323$ 1,764,828

Notes: 1. Domestic sales are sales to customers in Japan by the Company and its consolidated subsidiaries.

2. Overseas sales are sales to customers outside Japan by the Company and its consolidated subsidiaries.

Note 8: Contingent Liabilities
As of March 31, 2010, the Company and its consolidated subsidiaries were contingently liable for the following:
Millions of yen

As guarantors of—Customers’ business loans
Customers’ lease payments
Employees’ housing loans
Trade notes receivable endorsed
Total

¥

6
427
374
23
¥830

Thousands of
U.S. dollars

$ 65
4,591
4,022
247
$8,925Note 9: Financial Instruments
1. Qualitative information on financial instruments
A. Policies for using financial instruments
The Company and its consolidated subsidiaries procure funds necessary to conduct business by means such as loans from financial
institutions and the issuance of bonds, based on annual funding plans. Investments of capital are limited to instruments that satisfy safety
and liquidity requirements. Derivative transactions are used only to hedge financial risk such as the risk of fluctuations of 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
Loans, bonds and lease obligations
61—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 of
The risk is hedged by using forward foreign exchange contracts on
foreign currency exchange rates more than certain portion of the receivables.
Risk of fluctuation of
Fair values and financial conditions of issuers are regularly monitored.
market prices
Funding plans are prepared and renewed, and certain level of
Liquidity risk
liquidity on hand is maintained.
Risk of fluctuation of
The risk is hedged by using interest rate swaps and interest rate caps.
interest rates

Derivative transactions which the company uses are forward foreign exchange contracts, interest rate swap contracts and interest rate cap
contracts only for the purpose of mitigating risks of fluctuation of foreign currency exchange rates and interest rates. For information
about hedging instruments, hedged items, hedging policies, evaluation of hedge effectiveness and management of derivative transactions,see Note 1(x), Summary of Significant Accounting and Reporting Policies - Derivatives and hedge accounting. The Company believes thatthe credit risk is very small as contractors of derivative transactions are creditable financial institutions.
C. Supplemental information on fair values
Contract amounts of derivative transactions described in Note 11, Derivative Transactions, themselves do not reflect the market risks ofderivative transactions.
2. Fair values of financial instruments
As of March 31, 2010, the book value and fair value of financial instruments and the differences between these figures are set forth in thetable below. The table does not include financial instruments whose fair values are not readily determinable. (See Note 2.)

Millions of yen
2010
Fair value

Difference¥Year ended March 31,

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

¥ 31,254
52,030(1,428)50,602¥ 31,254

50,60020,995¥102,851¥ 52,389
67,9689,250¥129,607¥(3) Investments in securities
Available-for-sale securities
Total assets(1) Notes and accounts payable - Trade(2) Long-term debt
(3) Lease obligations
Total liabilities
Derivative transactions (*2)
(1) Without application of hedge accounting(2) With application of hedge accounting
Total derivative transactions

¥

(41)
(67)
(108)

—

Thousands of U.S. dollars
2010Book value
Fair value
Difference$ 336,065(2)$ 336,065
559,462(15,355)544,107544,085(22)

20,995¥102,849¥ 52,389
66,519
11,624¥130,532

—
¥ (2)
¥ —
(1,449)
2,374
¥ 925

225,753$1,105,925$ 563,323
730,839
99,462$1,393,624

225,753$1,105,903$ 563,323
715,258
124,989$1,403,570—$ (22)$—(15,581)
25,527$ 9,946

¥

¥

$

$

$

¥

(41)
(67)
(108)

¥

—
—
—

$

(441)
(720)
(1,161)

$

(441)
(720)
(1,161)

$

$

—

—
—
—

(*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.
Note 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 calculated based on their applicable book values.
(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 12, Securities.
Liabilities(1) Notes and accounts payable -Trade
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 calculated based on their applicable book values.
(2) Long-term debt
The fair values of bonds with market prices are based on the market prices. The fair values of bonds without market prices and other long-term debt are based on the current value, which is theprincipal discounted with consideration for the length of time until repayment and credit risk.
(3) 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 11, Derivative Transactions.
Note 2. The book value of financial instruments whose fair values were deemed to be exceedingly difficult to estimate as of March 31, 2010 was as follows:

Category
Non-listed equity securities

Millions of yen

Thousands of
U.S. dollars

2010Book value¥2,752

2010
Book value$29,591

The amount in the left table includes investments in affiliates of ¥2,067 million ($22,226 thousand).
These items do not have market prices and are deemed to require excessive cost to estimate thefuture cash flows. Therefore, they are not included in (3) “Investments in securities” as it is deemed
to be exceedingly difficult to estimate the fair values.

Note 3. Expected redemption amounts of receivables and securities with maturities after the consolidated financial statement dateCash, cash equivalents and time deposits
Trade notes and accounts receivable
Investments in securities - available-for-sale securities with maturities
Total

Due within
one year¥31,254
51,809—¥83,063

Millions of yen
2010
Due between one year Due between fiveand five years
years and ten years
¥ —
¥—
221
—
—
—
¥221
¥—

Due after ten years
¥—
—
—
¥—

Due within
one year$336,065
557,086—$893,151

Thousands of U.S. dollars
2010
Due between one year Due between fiveand five years
years and ten years
$ —
$—
2,376
—
—
—
$2,376$—

Due after ten years
$—
—
—
$—

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

62

Note 10: Related Party Transactions
There were no transactions with significant affiliates for the year
ended March 31, 2010. Sales to and balances due from significant
affiliates as of and for the year ended March 31, 2009 were as follows:

Millions of yen
2009

SOKUDO Co., Ltd.
(a) Sales and other revenue for the year(b) Receivables at year end¥10,240
3,917

Note 11: Derivative Transactions
Outstanding derivative transactions as of March 31, 2010 and 2009 were as follows:
Millions of yen

Years ended March 31

Contracted
amountNon-exchange tradedforward foreignexchange contracts(Sell–U.S. dollars) ¥2,121
1,801(Sell–Euro)¥3,922
Total

2009

2010
PortionexceedingFair
one year
value

¥—
—
¥—

¥(64)
23
¥(41)

Recognizedgain (loss)

Contracted
amountPortionexceeding
one year

Fair
value

Recognizedgain (loss)

¥(64)
23
¥(41)

¥1,408763¥2,171¥——¥—¥1,462804¥2,266

¥(54)
(41)
¥(95)

Thousands of U.S. dollars
2010
PortionContracted exceeding
Fair
Recognizedamountone yearvalue
gain (loss)$22,806
19,366$42,172$——$—$(688)
247$(441)$(688)
247$(441)

Notes: 1. Method of estimating fair value
The fair value of exchange forward transactions as of March 31, 2010 was estimated based on the prices presented by financial institutions.
The fair value of exchange forward transactions as of March 31, 2009 was translated at the forward foreign exchange rate as of March 31, 2009.
2. The above table does not list derivative transactions for which hedge accounting has been applied.

Note 12: Securities
A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values as of March 31, 2010
and 2009:
Available-for-sale securities
Millions of yen
Acquisition
cost

Book value

Difference

Acquisition
cost

Book value

Difference

Thousands of U.S. dollars
2010
Acquisition
Bookvalue Difference
cost¥11,213—¥11,213¥17,360—¥17,360¥ 6,147—¥ 6,147¥ 5,939—¥ 5,939¥9,289—¥9,289¥ 3,350—¥ 3,350$120,570 $186,667——$120,570 $186,667$ 66,097—$ 66,097¥ 4,69417¥ 4,711¥ 3,62214¥ 3,636¥ (1,072)(3)¥ (1,075)¥11,451
31¥11,482¥8,47927¥8,506¥(2,972)(4)¥(2,976)$ 50,473 $ 38,946
151
183$ 50,656 $ 39,097$ (11,527)(32)$ (11,559)

2009

2010

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

B. The following tables summarize book values of available-for-sale securities whose fair values were not readily determinable as of March 31,
2009. For the information as of March 31, 2010, please see Note 9, Financial instruments.
Millions of yen
2009

Available-for-sale securities:
Non-listed equity securities
Total

¥683
¥683

C. Total sales of available-for-sale securities for the year ended March 31, 2010 amounted to ¥4,213 million ($45,301 thousand), and therelated total gain amounted to ¥2,761 million ($29,688 thousand). Total sales of available-for-sale securities sold in the year ended March
31, 2009 amounted to ¥0 million, and the related total gain amounted to ¥0 million.

63

Note 13: Employees’ Severance and Pension Benefits
Accrued pension and severance costs included in the liability section of the consolidated balance sheets as of March 31, 2010 and 2009
consisted of the following:
2010

2009

Thousands of
U.S. dollars
2010¥27,867(21,434)(7,256)
1,310
¥ 487

¥31,680(21,117)(10,597)
699¥ 665$299,646(230,473)(78,022)
14,086$ 5,237

Millions of yen

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial differences
Prepaid pension expenses
Accrued pension and severance costs

Severance and pension benefit expenses included in the consolidated statements of income for the years ended March 31, 2010 and 2009
consisted of the following:
2010

2009

Thousands of
U.S. dollars
2010¥1,356600(1,147)
1,029¥1,838598¥2,436¥1,427600(1,378)596¥1,245720¥1,965$14,580
6,452(12,334)
11,065$19,763
6,431$26,194

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 2.0% in 2010 and 2009. The rate of expected return on plan assets was 5.70% in 2010 and 2009. The estimatedamount of all retirement benefits to be paid at future retirement dates is allocated equally to each service year using the estimated number of total service years.

Note 14: Impairment of Fixed Assets
For assessing fixed asset impairment, the Company groups its

amounts based on similar transactions. The Company and its

assets at the business unit level, which is also the basis of theconsolidated subsidiaries recorded impairment loss of ¥780

segment information by business field. The consolidated

million ($8,387 thousand), mainly related to buildings andsubsidiaries generally group their assets at the subsidiary level. The

structures and leased tangible assets for the year ended March 31,

Company and its consolidated subsidiaries group their idle assets

2010. The Company and its consolidated subsidiaries recordedby the individual asset. The recoverable amounts of the business

impairment loss of ¥1,442 million, mainly related to intangible

assets and idle assets are based on the net sale values, calculated byassets and land, for the year ended March 31, 2009.

subtracting the estimated cost of disposal from the estimatedNote 15: Business Combinations
The business combination through acquisition for the year ended March 31, 2010 was as follows.
On June 23, 2009, the Company purchased additional shares of its

shareholding ratio of SOKUDO became 81.0% (previously 52.0 %),affiliated company SOKUDO Co., Ltd. ( “SOKUDO” ), whose principle

and SOKUDO became inapplicable as a joint venture company, thereby

business was the development, manufacture, sale and maintenance of

the Company became the acquiring party. Also as a result of thesemiconductor-related coat/develop track equipment, and made SOKUDO

purchase, the Company has newly included SOKUDO and its 100%and its subsidiary, SOKUDO USA, LLC, subsidiaries of the Company on

subsidiary, SOKUDO USA, LLC, within its scope of consolidation fromthe same date. This acquisition was made because the Company judged

the fiscal year ended March 31, 2010. In the consolidated financial

that the best way to improve business value and competitiveness ofstatements for the fiscal year ended March 31, 2010, SOKUDO’ s

SOKUDO would be to streamline the scale of business by promoting theperformance from July 1, 2009 to March 31, 2010 is included, as theutilization of the Company’ s functions, and realize nimbler business

deemed acquisition date is June 30, 2009. For the period from April 1,

operations by further strengthening the cooperation with the Company.

2009 to June 30, 2009, SOKUDO was regarded as an affiliate and its

As a result of the acquisition of shares without cost, the Company’s

performance was accounted for by the equity method.
64

Through this acquisition, the Company recorded ¥2,613 million($28,097 thousand) of gain on step acquisitions and ¥2,471
million ($26,570 thousand) of gain on negative goodwill.
Negative goodwill was recorded because the fair value of theacquired SOKUDO’ s net assets exceeded the acquisition cost of the

Net sales
Operating income
Income before income taxes
Net income

Millions of yen

Thousands of
U.S. dollars¥ (134)(1,158)
(232)
¥ (1)

$ (1,441)(12,452)(2,495)$ (11)Yen

U.S. dollars

Company’ s additionally acquired shares of SOKUDO. For
information about the amounts and significant components of

Net income per share of common stock ¥(0.01)

assets and liabilities recorded at the acquisition date, see Note 2,*The amounts indicated as the estimated impact of the combination are the differences between theamount of sales and income calculated by adding adjustments such as the elimination of internal sales
and equity in losses of affiliates with the assumption that the business combination was concluded on
April 1, 2009 and the amount of sales and income recorded in the consolidated statements of operationsof the Company. The estimated amounts of the impact of the combination have not been audited.

Consolidated Statements of Cash Flows.
With the assumption that the business combination was$ (0.00)

concluded on April 1, 2009, the estimated impact on the
consolidated statements of operations in the current consolidated
fiscal year is as follows:

Independent Auditors’ Report
To the Board of Directors of Dainippon Screen Mfg. Co., Ltd. :We have audited the accompanying consolidated balance sheets of Dainippon Screen Mfg. Co., Ltd. (the“Company”) and its
consolidated subsidiaries as of March 31, 2010 and 2009, and the related consolidated statements of operations, changes in net
assets and cash flows for the years then ended, expressed in Japanese yen. These consolidated financial statements are theresponsibility of the Company’s management. Our responsibility is to independently express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company and its consolidated subsidiaries as of March 31, 2010 and 2009, and the consolidated results of
their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to the following:
As discussed in Note 1 to the consolidated financial statements, the “Accounting Standard for Business Combinations” (ASBJ
Statement No.21 issued on December 26, 2008) etc. have been adopted from the fiscal year ended March 31, 2010.
As discussed in Note 1 to the consolidated financial statements, effective April 1, 2009, the Company and its consolidated
domestic subsidiaries adopted the “Accounting Standard for Measurement of Inventories.”
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2010
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 & Co.
Osaka, Japan
June 25, 201065

Consolidated Companies (As of March 31, 2010)
Dainippon Screen (Korea) Co., Ltd. / SEMES 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.

Overseas
North America
D.S. North America Holdings, Inc. / DNS Electronics, LLC/
Dainippon Screen Graphics (USA), LLC/S. Ten Nines California, LLC/
D.S. Venture Investments International, Incorporated / Silicon Light
Machines Corporation/ SOKUDO USA, LLC

Domestic
EuropeTech In Tech Co., Ltd. / SEBACS Co., Ltd. / SOKUDO Co., Ltd./
Quartz Lead Co., Ltd. / FASSE 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 Link Ring Co., Ltd. /GERANT Co., Ltd. / MIXA Co., Ltd.*

Dainippon 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 (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. /* Affiliates accounted for by the equity method

Investor Information (As of March 31, 2010)
Stock Information

Bank References

900,000,000
Authorized Number of Shares:
253,974,333
Number of Shares Issued:
18,791
Number of Shareholders:Number of Shares Held by
Non-Japanese Companies and Individuals: 46,541,929 (18.32%)
Tokyo and Osaka
Listings:
7735
Code Number:

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
The 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. /Cosmo Securities Co., Ltd.

Japan Trustee Services Bank, Ltd. (Accounting in trust )15,569

6.13

The Master Trust Bank of Japan, Ltd. (Accounting in trust )14,771

5.81

Nippon Life Insurance Company

11,300

4.44

JP Morgan Chase Bank 385078

6,996

2.75

The Bank of Kyoto, Ltd.

6,730

2.65

Resona Bank, Limited

4,562

1.79

Dainippon Screen’s Business Partners Shareholders’
Association Synchronize

1.71

Non-Japanesecompanies andindividuals

Individuals and others

4,363

The Shiga Bank, Ltd.

4,241

1.67

18.32%

Dainippon Screen’s Employees Shareholders’ Association

3,844

1.51

Government andprefecture organizations

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

3,823

1.50

Other Japanesecompanies

Breakdown by type of shareholder
Securities companies

Treasury stock

6.52%

1.93%
25.48%

0.00%

11.33%

Dainippon Screen Mfg. Co.,Ltd. holds 16,578,859 shares (6.52%) in treasury stock,* Whilethis is not included in the above list of major shareholders.

Financial institutions

36.38%

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
60,0000

006/4 5

7

9

11

07/1

3

5

7

9

11

08/1

3

5

7

9

11

09/1

3

5

7

9

11

10/1

3

5,000

5

66

The Dainippon Screen Group is participating in the Challenge 25
Campaign.Through a broad-based appeal to Japanese citizens to
reduce CO 2 emissions, this national movement for the preventionof global warming establishes Japan’ s target of reducing its
greenhouse gas emissions by 25% by 2020 compared to the 1990 level.

Tenjinkita-machi 1-1, Teranouchi-agaru 4-chome, Horikawa-dori,
Kamigyo-ku, Kyoto 602-8585, Japan
Tel: +81-75-414-7233 Fax: +81-75-431-6500

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