S C R E E N G roupA n n u al Repo rt 2 0 1 6

Annual Report

SCREEN GroupYear ended March 31, 2016

Tenjinkita-machi 1-1, Teranouchi-agaru 4-chome, Horikawa-dori,
Kamigyo-ku, Kyoto 602-8585, Japan
Tel: +81-75-414-7131 Fax: +81-75-431-6500
IR-AR2016E 2016.08 001IC-Sh

2016

Challenge—Creating a Brighter Future
Starting with our first photographic glass screens,a spirit of continuous innovation has led our business fields into printing,electronics and various new areas.
Our cutting-edge solutions open up a brighter future.

Message from the President

Fostering Trust to Create
GrowthThe Challenge2016 Medium-Term Management Plan
Under Challenge2016, its medium-term management plan for the three-year period of fiscal 2015 through2017, the SCREEN Group is striving to achieve its long-term goal of establishing a stable earnings structure.

Enhance
Corporate Value
Policy onshareholder returns
Total consolidated
shareholder return
ratio targetof 25%

Raise ROE
Toward JPX-Nikkei
Index 400

Maximize
Free Cash Flow
Raise ratings

The Challenge2016 Medium-term Management Plan
Profit Structure Reform
Achieve an operating
income ratio of 10%
or above

New Business
Creation

Financial Structure
Enhancement

Generate profits in each offour new business fields

Achieve an equity ratioof 50% or above

Contents

01
02
03

Message from the President

04
07
08
09
10
12

To Our Stakeholders

14

SCREEN Finetech Solutions

Message from the Chairman
Message from the Senior
Managing Director

Message from the CFO

16
19
20
22
24
26

Corporate Governance

28
29
30
32

Quality Management

Message from the CTO
New Businesses
SCREEN Semiconductor Solutions
SCREEN Graphic and Precision
Solutions34

Financial Section
35
43
44
46

Corporate Officers
Messages from the Outside Directors
SCREEN Group’s CSR
Environmental Conservation

47

Human Resource andLabor Management48
49

Local Community Relations
Performance Highlights
Eleven-Year Trends in Key
Financial Indicators

62

63

Management’s Discussion and Analysis
Segment Information
Consolidated Balance Sheets
Consolidated Statements ofOperations/Consolidated Statements ofComprehensive Income
Consolidated Statements of Changes in
Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial
Statements
Independent Auditor’s Report

Right now, a shift up to a higher level is required from the SCREEN
Group. I have felt this strongly ever since taking the position of president in April 2014. Looking at the SCREEN Group’s history, we have
evolved from making screens for photoengraving to creating graphic
arts equipment, expanded our business into the electronics industry
with semiconductors and LCDs, and taken these businesses global.
And yet it seems that we have not found adequate solutions to theparticular challenges posed by the rapidly changing industries inwhich we operate. To address this shortcoming, in October 2014 wetransitioned to the holding company structure, and since then we
have been steadily advancing structural reforms. As a result of these
efforts, I think major gears have begun to turn in earnest in the direction that we need to move.
To maintain and add to this momentum, it is essential that weachieve the three goals of the Challenge2016 medium-term management plan: Profit Structure Reform, New Business Creation, andFinancial Structure Enhancement. To do so, we need to encourage
the understanding and penetration our management philosophy
along with the plan throughout the Group, while we in management
must continue to strive determinedly toward the achievement ofthese goals and reinforce the mechanisms for realizing the plan.
Our employees now share a new awareness of the importance oftaking on new challenges. We have turned our attention from ourimmediate situation toward the medium and long term, and we are
beginning to take action. By demonstrating such accomplishments
to our stakeholders, we intend to build a new level of trust in the
SCREEN Group. Working together as a united Group, we will move
forward and toward the next stage in our evolution.

Eiji Kakiuchi
President
Member of the Board
Chief Executive Officer
SCREEN Holdings Co., Ltd.

Corporate Data/Consolidated
Companies/Stock Information/
Editorial Policy/Reporting Structure

SCREEN Holdings is a member of the FTSE4Good Index, an equity index series that is designed to facilitate investment in companies
that meet globally recognised corporate responsibility standards.

1

Message from the Chairman

Message from the Senior Managing Director

Bold and Nimble Management
to Achieve Sustainable Growth

Becoming a Company
Composed of Active Thinkers

In April 2016, I stepped down as representative director. Going forward, as chairman, I will provide guidance and oversight to the
SCREEN Group as it aims for further growth.
The history of the SCREEN Group is one of constantly taking on
new challenges and embracing change alongside our stakeholders.
Under our founder’s credo, Shi Kou Ten Kai,* we have repeatedly
revamped our business portfolio, aiming for innovation as we expand
existing business and create new business, and reworked our management structure. The past two years, in particular, have seen innovation in management, with the switch to the holding company
structure, the implementation of the Challenge2016 medium-term
management plan, and a change in representatives, all aimed atreaching even greater heights.
Technological innovation in the SCREEN Group’s business areas
continues to accelerate; the more it does, the more opportunities there
are for growth. To precisely grasp these opportunities, we are taking on
new business creation using open innovation, including the possibility of
M&As. Today, our new businesses are beginning to germinate and growin areas where we have never before operated. These include the fields
of energy, in such areas as lithium-ion batteries and fuel cells, as wellas life science, in areas related to iPS cells and pharmaceutical R&D.
To continue this latest shift and extension of our main businesses,
it is essential that the holding company provide strong governanceand employees throughout the Group, including those at business
operating and functional support companies, maintain a strong senseof personal responsibly toward the achievement of the goals of
Challenge2016. Furthermore, in part to push such innovation evenfurther, fostering the next generation of human resources is also
extremely important, and we must invest in such efforts.
We are now at an important turning point for building a strong
future. I intend to keep this at the forefront of my mind as I look to thebig picture even while diligently dealing with immediate tasks. In thisway, we will achieve agile, bold management.

I was both honored and humbled to assume the position of representative in April 2016. The SCREEN Group is currently advancing
reforms aimed at achieving the goals of Challenge2016. We arestrengthening our resolve to not let the drive toward change die out
with the close of the medium-term management plan, but to continue as we go forward. In line with our corporate philosophy of“Sharing the future,” “Human resource development,” and “Thepursuit of technology,” throughout the Group we are now seeing
positive momentum focused building our future. We are working toensure that these efforts continue unflaggingly and lead to ongoingdevelopment.
Taking a closer look at our corporate philosophy, I believe that theidea of “Sharing the future” guides us as individuals toward long-term
thinking as part of the overall Group. “The pursuit of technology”
refers to the pursuit of new technologies and their combination withexisting technologies, the force that has driven changes in our portfolio, even as we maintain the size of our existing core businesses,
since our founding.
“Human resource development,” meanwhile, is my most importanttask in my role as head of CSR management. Before employees are
members of a company, they are individuals, and it is my strong
desire that each of these individuals maintains a strong awarenessof ethics and takes the initiative to think and act for themselves
accordingly. Based on this viewpoint, we are focusing on cultivating
human resources as a key task in fiscal 2017. In this regard, I am
sure that the CSR Charter, our basic guidelines for these efforts, will
be useful throughout the global Group. To thoroughly implement
these principles among our employees around the world, we areworking to spread awareness of the CSR charter and our corporate
philosophy by providing the same level of training and educational
opportunities in all regions.
As we move forward, I will do my utmost to help a corporate
culture of strong ethical awareness take firm root so that we canevolve into a corporate group with even greater value.

* “Shi Kou Ten Kai” can be written two ways in Japanese (思考展開 or 志高転改), each with a different meaning reflecting a distinct side of the Group’s philosophy. Shi Kou Ten Kai written as 思考展
開 refers to the strong will to bravely strive for the creation of new businesses and products, constantly thinking, “How can we connect new ideas to SCREEN’s technologies and products?” and“Is there anything that can be done better?” “Shi Kou Ten Kai” written as 志高転改 refers to thespirit of reform that continues to promote innovation and improvement in an age of rapid change,
pursues the best results with high aspirations, and strives to further improve corporate value.

Akira Ishida
Chairman of the Board
SCREEN Holdings Co., Ltd.

2Shin Minamishima
Senior Managing Director
Member of the Board
Chief Officer of CSR Management
SCREEN Holdings Co., Ltd.

3

To Our Stakeholders: Interview with the President

Q1

Entering a New Stage of
Sustainable Growth
Eiji Kakiuchi
President
Member of the Board
Chief Executive Officer

Fiscal 2016 PerformanceWith regard to the business conditions surrounding the
SCREEN Group in fiscal 2016, ended March 31, 2016, inthe semiconductor industry, capital investment amongmemory manufacturers was firm, backed by increasing
demand for high-capacity data servers. In addition,reflecting expanding demand for IoT-related electronic
devices for automobiles and other applications, the market for equipment for sub-200 mm wafers showed signsof growth in demand. With regard to the graphic arts
equipment industry, demand in the Japanese market continued to recover. In the FPD business field, investment inlarge-sized LCD panels for televisions increased in China,
as did investment in small- and medium-sized LCD panels
in Taiwan and Japan.

4

Under these favorable circumstances, the SCREEN
Group posted consolidated net sales of ¥259.6 billion forfiscal 2016, an increase of ¥22.0 billion, or 9.3%, from theprevious fiscal year. Operating income grew ¥6.3 billion, or
37.2%, year on year to a strong ¥23.5 billion, surpassing¥20 billion for the first time in five years. The operating
income to net sales ratio was 9.1%, and ordinary income
amounted to ¥23.1 billion, up ¥7.0 billion, or 44.0%, year
on year. Profit attributable to owners of parent totaled¥18.8 billion, up ¥6.6 billion, or 55.2%, compared with theprevious fiscal year. We have thus achieved increases insales and profit for three consecutive years and are wellwithin sight of our 10% operating income to net sales ratio
target, a major goal set for the final year of
Challenge2016, our current medium-term management
plan covering fiscal 2015–2017.

More than a year has passed since the transition to the holding company structure. What has changed?

Under Challenge2016, we have made steady progressand have implemented management structure reforms.
Specifically, In October 2014, which was in the first year of
the plan, we transitioned to the holding company structure. The next year, in November 2015, we announced
our in-depth response to the Corporate Governance
Code, aiming to promote transparency, soundness, andefficiency while aware of the need for management structure reforms. Then, in April 2016, we overhauled theCompany’s executive system, which included enhancing
the corporate officer system.
Due to these changes to the management structure, ateach business execution site we are seeing steady
improvement in the speed of decision making as well as
the mindsets of those involved. We also strengthened theoversight functions of the holding company, which is now
advancing various initiatives to strengthen and optimize
Groupwide governance. By transitioning to the holding
company structure, we have been better able to follow

Q2

Please tell us your thoughts about the medium-term management plan and its progress.

For the SCREEN Group to grow, I think it is necessary tobalance its long-term vision with short- and medium-term
initiatives. The current medium-term management plan,established under our long-term vision, serves in part as abridge to the next medium-term plan. I think that a very
important task for us under the current plan is to first fulfill
our commitment to our stakeholders to earn a greater levelof trust. Awareness of the importance of this is growing
within the Group, and in fiscal 2016, we achieved increases
in revenue and profit for a third consecutive period. Moreover,Q3

developments at all our business sites, more finely monitor
business management, and respond faster when necessary. As a result, in fiscal 2017, the current and final yearof the medium-term plan, we are beginning to see thefruits of our structural reforms taking shape.
Since my appointment as president two years ago, I
have been aware of the urgent need to steadily strengthen
the fundamentals that support the Group’s growth.
Without the reinforcement of profitability and the financial
structure laid out under the medium-term management
plan, there is no future growth. To achieve this reinforcement, it is important to clearly define the processes bywhich management and employees will carry out theirrespective commitments. I believe that only by combining
and maximizing our strengths can we fulfill these commitments. It is vital that both employees and those of us inmanagement seek to actively take on new challenges. It isprecisely that energy that will make our businesses stronger.

the operating income to net sales ratio grew steadily,bringing us within range of the final goals of the plan.
Another major goal of the current medium-term management plan is to develop into a Group that generates
stable profit even when the market environment changes.
This entails raising profitability, strengthening our financialbase, and diversifying our business portfolio by accelerating new business development. By doing so, I hope toposition the Group for even greater growth under the next
medium-term management plan.

What can you tell us about SCREEN’s initiatives aimed at medium- and long-term growth?

Seeking to make strong businesses even stronger, we areinvesting actively in development in existing business areasthat already boast numerous products with top global
market shares. This involves stepping up our focus on
creating new technologies and bringing in new businesses
and technologies from adjacent business areas.
Over the Group’s long history, we have expanded ourbusiness areas by pursing technological innovation anddiversification. I believe that such initiatives are expressionsof the very essence of the SCREEN Group as encapsulated

in our Corporate Philosophy as “The Pursuit of Technology.
Over the medium to long term, I think it will be vital todiversify our business portfolio by growing new businesses
and further expanding our core businesses. To do so,rather than depending solely on our own technologies,
resources, and ideas, we will need to strengthen cooperation with other companies. We are therefore consideringrevising our existing business model while actively employing M&As, alliances, and other such means to support
growth going forward.

5

Message from the CFO

Q4What kinds of new business initiatives are you advancing?

I believe that new business creation is a natural result of
the SCREEN Group’s essential stance of expanding its
business areas by diversifying its technologies. The centerof each of our new businesses is existing core Grouptechnology. By extending our basic technologies into different areas and applications, we are focusing on creating
new markets and finding new contact points with customers in domains where we had not previously been involved.
Examples of such new areas include businesses thatserve pharma companies in the life science field andforged component inspection equipment businesses thattarget automotive component manufacturers. These forays
into new areas demonstrate exactly what I mean by the

Q5What are your thoughts about business opportunity and risk?

The nature and number of business opportunities that acompany may come across depend greatly on its ability tocreate businesses, including by diversifying the applicationsof its core technologies, and on its having the marketing
capabilities to spot areas where this can be effective. To
ensure that we don’t let business chances slip by, we areworking to strengthen marketing capabilities within theGroup by, for example, better utilizing specialized resources
overseas. I think that stronger marketing is indispensable
not only for expanding new businesses, but also in suchareas as collaboration with other companies and M&As.

Q6

including those overseas, is an important task.
Another of the Group’s main roles is to contribute tosocial development through technology and products.
Leveraging the comprehensive strength of our diverse
employees in various regions, we seek to fulfill this
responsibility and thereby enhance our corporate value.

Is there anything else you would like to share with stakeholders?

I’d like to thank our stakeholders for their support as wetransition from a phase of structural reform to one of growth.
With regard to our policy on shareholder returns, inMarch 2015, we made our first ever announcement of atarget ratio for total consolidated shareholder returns,
setting it at 25%. We have received varying feedback
about this number from shareholders and investors.
Before addressing that, I would like to reach the target wehave set. Going forward, while securing the resources
necessary to grow our businesses and withstand rapid
6

In terms of risk, in addition to the obvious risks posedby the shifting macro economy, there are the risks thatcome with changes in the market environments of thesemiconductor and FPD industries. To hedge against
such risks, we are improving the precision of our conventional monitoring of advance indicators and increasing thefrequency of monitoring in order to strengthen our ability
to foresee downturns in both the business environmentand our results. This is closely related to our efforts tolower the break-even point in sales.

What are the SCREEN Group’s CSR-related tasks as it aims for further growth?

The SCREEN Group currently has over 5,000 employees
worldwide, with more than 30% based overseas. The
Group as a whole is supported by employees who are
diverse in terms of race, nationality, religion, gender, sexual
orientation, age, and many other factors. As such, I believethat strengthening compliance among all Group employees,

Q7

diversification of applications of Group technologies.
We have now just reached the point of having released
products in all four of our new business fields. There havebeen differences between the new fields regarding the
speed of commercialization, but, having gone through theprocess of receiving and responding to exacting customer
evaluations, all have now entered the sales phase. I feel
that, through technological and sales channel cooperation
with other companies as well as M&As, we have moved
our new businesses a real step forward.
I believe that there is still ample room to broaden theuse of SCREEN’s basic technologies as we continue
these efforts.

changes in the business environment, we may executeshare buybacks as we seek to return profits to shareholders in a balanced, optimal way.
Though the current medium-term management plan,
we are realizing structural reforms and changing ways ofthinking, and I am confident that we have made a real
step forward. I look forward to showing that the SCREEN
Group is one that continually takes on new challenges andstrives for sustainable growth.

Building a Solid Financial Base Resilient to Shifts in theExternal Environment
Yoichi Kondo
Managing Director, Member of the Board
Chief Financial Officer

tell us about your fiscal
Q Please2016 initiatives and their results.
Disciplined Financial Management has
Improved Profitability Groupwide
To pursue our goals under the Challenge2016 mediumterm management plan of an operating income to net
sales ratio of 10% or above and an equity ratio of 50%
or above, we focused on strengthening earnings power.
Results of these efforts have steadily begun to appear.
A major factor in this progress has been the successful implementation of financial management. In
particular, the business operating companies havetaken a greater responsibility for not just profit and loss,
but also the balance sheets, and we have been effectivein clearly identifying issues and priorities.
The first half of the fiscal year saw economic turmoil
in Greece and China, and orders in the semiconductor
industry weakened. Recognizing the potential risks
posed by these circumstances, we took preventive
measures that included reducing inventories.
Fortunately, our situation never became as serious as it
could have been, thanks to the Group’s proactive,
anticipatory management and response.

Growth in orders received and profits, is often accompanied by inflation of receivables, inventories, and tradenotes and accounts payable. We will therefore carefully
monitor the business environment so that we can react
swiftly and control such items at appropriate levels.
The current fiscal year is also the final year of themedium-term management plan, so we will continue towork to generate cash for use in the Group’s next growth
push. In part because our mainstay semiconductor
equipment business operates in a cyclical market, weare aiming to secure greater liquidity to ensure preparedness for any unexpected developments. At present,
the cash conversion cycle is improving, and we arefocusing on maximizing free cash flow and enhancing
asset management efficiency. This year, we expect tofinally achieve a net cash position, a goal that we havebeen working toward for some time.

is your financial management
Q Whatpolicy for fiscal 2017?

do you have any other
Q Lastly,
message for stakeholders?

Focusing on the Balance Sheets while
Aiming for a 50% Equity Ratio

Continuing Reforms to Maintain a Strong
Financial BaseOur equity ratio at the end of March 2016 was 44.3%,
largely unchanged from a year earlier. With regard tomonetary value, however, shareholder’s equity reachedapproximately ¥120 billion, finally returning to the prefinancial crisis level. In fiscal 2017, our management of
inventories and trade accounts payable at business operating companies will be even more thorough. Also, withregard to financing, we will seek to anticipate and act
ahead of changes in the market. I expect that these measures will put our goal of a 50% equity ratio within reach.

Through our activities in fiscal 2016, I think we haveshown that we are committed to keeping the promises
we make. In fiscal 2017, we aim to attain the final goalsof the medium-term management plan. We will therefore keep a close eye on exchange rate fluctuations
and the global economy while building a strong financialbase that can weather rapid changes in the macro
economy and our business environment, seeking to
put our stakeholders at ease by staying vigilant andpursuing further reforms.

Targets andPerformance

Medium-term Targets

Operating income ratio
10% or above

Equity ratio 50% or above

As of March 31, 2016

9.1%

44.3%
7

Message from the CTO

New Businesses

Aiming for Business Expansion, Drawing
on our Researchers’ Drive for Research
give an overview of fiscal
Q Please2016 from an R&D perspective.

do you think are the major
Q Whatchallenges going forward?

Achieving SCREEN’s TechnologicalPotential

Generating Added Value for Equipment
and Products

In fiscal 2016, our R&D departments not only further

In fiscal 2016, we released products in each of our four new

advanced SCREEN’s basic technologies, they promoted

business fields. We are now in a phase in which we are col-open innovation aimed at developing technologies across alaborating with customers to make further improvements andvariety of fields to meet needs expected to emerge as aadjustments for mass production. In the current fiscal year,

result of social change.

we are working to expand applications for products to

For example, in our collaborative research with RIKEN and
Organ Technologies, Inc., aimed at creating next-generation
bined know-how cultivated in our semicondu
semiconductor production

tion and basic research, we will look toward development

equipment business wit
with organ culture

outside the scope of our current products in the four new

rather than sto
stopping after a

Please tell us about your approachto human resource development.
Supporting Wide-Ranging New
Initiatives and Cultivating Potential

product is com
completed, we canFirst of all, I want to make sure that we value and make theevaluate the pr
products we havemost of our researchers’ passion for research. That’s why wedeveloped to better pursue

are working to create environments that facilitate ambitious

our ideas. O
One of the greatand creative research spanning wide-ranging specializations,benefits of this approachseeking to cultivate researchers who are adept in two or threehas been tthat it has helped

different fields. We have also been increasingly involved in aca-

us to see and understanddemic conferences and collaborative research in recent years,

the possib
possibilities of not justand, as a result of such involvement with the outside world,

SCREENSCREEN’s core technol-

we have seen real improvement in our researchers’ abilities.

create an envi
environment where,

b the as-yet
ogies, buton the market resulting from the technologies they helped
develop, they will understand, concretely, the meaningfulness

these technologies. Iof their own work, and this will help raise motivation andco dent that thisam confi

expand the curiosity they bring to their research. I hope too work will prokind ofcontinue to cultivate the potential of all the employees andfvide footholds
for cre-help them achieve further growth.

ManagManaging
Director
Memb
Member of the Board
Chief T
Technology Officer (CTO)

8

Surfaceprocessing
Technologies for modifying
surfaces using coating,cleaning and etching material
application devices

Direct imaging
Technologies for directly
forming patterns andimages on substrates
using lithographic andinkjet devices

Image
processing
Technologies forretouching, verifying
and converting
image data

EnergyDeveloping Production Facilities
for Lithium Ion Batteries andFuel Cells

SCREEN Finetech Solutions Co., Ltd. has applied high-precision coating technologies for manufacturing displays together with WEB transfer
technologies to develop roll to roll coater/dryers (the RT series) for use
in manufacturing lithium ion and other secondary batteries. These
products are being delivered to production sites around the world. In
production equipment for fuel cells, SCREEN’s proprietary direct coating and process technologies have garnered praise. We have received
orders for mass-productionlines and are advancing
production targeting delivery
by the end of 2016.
Roll to roll coater/dryer for fuel cells
In addition to such wet
coating equipment, we have also begun sales of dry coating equipment equipped with proprietary vacuum deposition technology and areplanning to expand into other markets, such as architectural materials.

medicine, in which there are great expectations regarding the application of iPS cells.

Inspection
andMeasurement

A Lineup of Innovative
Inspection Equipment

By applying semiconductor- and printed circuit board-related visualinspection technologies with proprietary image processing technologies, we are developing inspection equipment that achieves unprecedented high resolution. As a result of these efforts, we released theIM-3100 automatic optical inspection system
for forged automobile components in
November 2015 and the IM-4100 automatic
optical inspection system for assembled
components in June 2016. With these andother products, we are meeting a wide range
of inspection needs. (As of July 2016, the two
above products are available only in Japan.)
IM-4100

I think that if our researchers can see the actual devices

that lie in applications ofSoichi Nadahara
Soic

Three CoreTechnologies

Main Initiatives

Q

unexplo
unexploredpossibilities

ating new businesses.

Senior Corporate Officer
Chief Officer of New Businesses

business fields and allocate human resources appropriately.

entail working wiwith research insticompanies, hahave allowed us to

Masahiro Joshi

expand markets to increase their use.
As we go forward, continuing to advance open innova-

tutions, academacademia, and otherIn the year ended March 31, 2016, we were pleased to release theproducts we developed in each of our new business fields. I believethat this accomplishment is attributable to the unflagging determination and strong will to take on new challenges of everyone involved indevelopment in these fields.
Entering new markets is not at all easy. However, new businesses
are established by continually striving
to live up to the trust and expectations of the customers that havechosen our products. Knowing this,we will continue advancing new
business development to raise thelevel of our products and deliver
even greater customer satisfaction.

increase added value, strengthen their competitiveness, andsystems and equipment for organ perfusion culture, we com-technologies. Such projects, which

Creating New Businesses Targeting Growth Markets

Life
ScienceAcquired a Manufacturer of
Scientific Analytical instruments
for iPS Cell-Related Fields

In this field, we are focusing mainly on the Cell³iMager, a threedimensional cell culture scanner that can rapidly measure and analyze
cell growth and changes in morphology without the use of reagents,and on the DP-i3000 inkjet pharmaceutical tablet printer.
Furthermore, the SCREEN Group announced the acquisition of
Alpha MED Scientific Inc. in February 2016. This company makes
systems that measure extracellular field potential for drug candidate
safety assessments using iPS cell-derived cardiomyocytes andneurons. The acquisition has helped to accelerate the Group’s businessdevelopment into the areas of pharmaceutical R&D and regenerative

PrintedElectronics(PtE)

Making the Mass Productionof Circuits Possible with
the UP-5000S

We have developed printing technology that enables the simplified
batch formation of even complex electronic circuits. In January 2016,
we released the UP-5000S ultra
precision printing system for PtE
using this technology (available onlyin Japan as of July 2016). This equipment has enabled the mass production of highly detailed circuits that
until now were very difficult to form
using existing PtE technologies.
UP-5000S

9

Overview of Performance by Business Operating Company

SCREEN Semiconductor Solutions Co., Ltd.
Semiconductor Solutions (SE) Segment

Tadahiro Suhara
President, SCREEN Semiconductor Solutions Co., Ltd.

Business Overview: SCREEN Semiconductor Solutions Co., Ltd. provides equipment for the surface processing that is an
essential part of circuit formation on silicon wafers for semiconductor devices. Processing includes
cleaning, coating/developing and annealing.

Q1: Please tell us about the overall segment results for fiscal 2016.

Share of Net Sales

Overall Performance Was Strong, Reflecting Our Steady Efforts
Thus Far
We Will Not Be Content, However, and Aim Even Higher

Fiscal Year Ended March 31, 2016

63.8%
The Group’s net sales¥259.6 billion

Segment Sales & Operating Income Ratio(%)(Billions of yen)
180

163.1

157.4

165.8

150

15

120

10.0

11.3

12
9

90
60

18

5.4

6

30

3
0

0

2014

2015

2016

(Fiscal years ended March 31)

왎 Sales

Operating income ratio

Market Share for Single-Wafer
Cleaning Equipment*

We achieved favorable results in fiscal 2016, the year ended March 31,
2016. This was the result of themeasures we have been steadily
implementing over the past three
years. We committed to our plans
and achieved success.
Looking at sales by application,
sales to logic chip manufacturers
and foundries were down from theprevious fiscal year but those to memory and image sensor manufacturers
were up. By product, overall sales of cleaning equipment rose year on year,
reflecting sales of our mainstay SU-3200 single-wafer cleaning system and abrisk market for batch-type cleaning equipment due to increased capital
investment in memory. In addition, sales of Frontier Project products for sub200mm wafers, especially coater/developers, increased. As a result, segment net sales amounted to ¥165.8 billion, up 5.3% year on year. Operating
income in this segment came to ¥18.7 billion, up 18.9% from the previous
fiscal year. This was due largely to an improvement in the variable cost ratio
as a result of ongoing improvements in design and manufacturing that offset
an increase in such fixed costs as R&D expenses, including in the areas ofequipment enhancement and new platform creation, as well as increased
personnel costs overseas as a result of exchange rate fluctuations.

Q2: What kind of performance do you expect for fiscal 2017?
CY2015The SCREEN Group40%
No. 1 Global Share* Source: Gartner “Market Share: Semiconductor Wafer-Level
Manufacturing Equipment, Worldwide, 2015,”
31 March 2016
Chart created by SCREEN based on Gartner research
Revenue from Shipments of Single-Wafer Processors,
worldwide 2015
Calendar year
Note: The Gartner Report(s) described herein, (the “Gartner
Report(s)”) represent(s) research opinion or viewpoints
published, as part of a syndicated subscription service,
by Gartner, Inc. (“Gartner”), and are not representationsof fact. Each Gartner Report speaks as of its original
publication date (and not as of the date of this Annual
Report) and the opinions expressed in the Gartner
Report(s) are subject to change without notice.

10

Launching New Products in Each Field
During fiscal 2017, we plan to launch new products in every one of our business fields, from our core cleaning equipment business to coater/developers.
We are also working on mass production equipment for products that
employ cutting-edge miniaturization technologies. In BEOL processes, weare using the SU-3200 system as a base to extend applications, and in thearea of assembly and testing processes, we are working to meet growing
demand for direct imaging equipment.
In terms of the market environment, capital investment in the miniaturization of logic chips and foundry products, areas of strength for us, is currently

up from the previous fiscal year. Looking at memory chips, investment inmass production of 3D-NAND is also firm.
With regard to investment in China, recently a hot topic in the semiconductor industry, while we are not yet seeing volume on par with that of thedisplay business, we expect growth going forward among both existing andnew customers. In this environment, it will be more important than ever tocontinue offering apt solutions to the technological and cost-related problems that our customers face. I think that such initiatives, backed by our
know-how and technologies developed mainly in wafer cleaning, will serve
as a strength for us.
To improve profitability, we will step up equipment standardization. At thesame time, we are advancing a project aimed at shortening the productdevelopment cycle to about one quarter of its current length. As for localizationof overseas field operations, we expect to be able to offer service in all our
global business areas by the end of the fiscal year.

Q3: What is your next step under the current medium-term
management plan?
Shifting from Revising Operations to Maximizing Results
From a medium- and long-term perspective, improving daily operations andlinking these changes to tangible results is, of course, important. To that end,
we have been working to improve profitability by strategically standardizing
equipment and are considering various other measures, including renovating
our IT infrastructure in order to shorten our income management period frommonthly to weekly.
In another bid to boost profitability, we are building a more strategic, efficient development framework for forward-looking development based on
customer needs, aiming to maximize the results of development efforts.
Though this initiative, we are shifting to a more proposal-oriented businessstructure to reinforce competitiveness.
From a management perspective, I hope to emphasize the creation of
new applications and the achievement of a strong presence in the markets
for especially promising applications. To achieve this, it is essential to change
the way each and every one of our employees thinks. We are therefore working to share monthly information on business goals, status, and issues
throughout the company and to promote the greater permeation of a sharedrecognition of the importance of putting customers first. By doing so, we willbuild trust with customers and reinforce the business structure to be more
profitable. We aim to be the benchmark of excellence in the industry that
other companies look to.

Terminology
 Single-wafer cleaning equipment
Cleaning equipment that processes one
wafer at a time.

 BEOLIn semiconductor manufacturing, FEOL
processes refer to the substrate processes
preceding the formation of integrated circuit
chips on the wafer, while BEOL processes
refer to the wiring processes afterward.

 Batch-type cleaning equipment
Cleaning equipment that processes multiple
wafers at once.

 3D-NAND
A form of flash memory with a three-dimensional
structure.

11

Overview of Performance by Business Operating Company

SCREEN Graphic and Precision Solutions Co., Ltd.
Graphic and Precision Solutions (GP) Segment

Tsuneo Baba
President, SCREEN Graphic and Precision Solutions Co., Ltd.

Business Overview: SCREEN Graphic and Precision Solutions Co., Ltd. encompasses the graphic arts equipment business,
which provides a range of equipment and services for use in printing processes, and the printed circuitboard (PCB)-related equipment business, which provides equipment and services for manufacturing
printed circuit boards for mounting and wiring electronic components.

Q1: Please tell us about the overall segment results for fiscal 2016.
A Third Straight Year of Increased Sales and Profits, with Signs
of Replacement Demand in Europe
In graphic arts equipment, as a result of efforts to further penetrate the print
on demand (POD) equipment market as well as the depreciation of the yen,sales of POD and computer-to-plate (CTP) equipment increased year on
year. Furthermore, sales in China and the rest of Asia picked up and included
multiple orders received for cutting-edge POD equipment from a major publishing group in China. Sales of PCB-related equipment were roughly flat year
on year, as sales of mainstay direct imaging systems fell in Japan, but performance improved in China.
As a result, net sales in this segment came to ¥61.2 billion, up 10.0%
year on year. Despite a rise in the variable cost ratio due to changes in the
product mix and an increase in fixed costs, including R&D expenses andpersonnel costs, segment operating income grew 11.6% year on year to¥3.1 billion thanks to the increase in net sales. We thus achieved our third
consecutive year of growth in both sales and profit.

printing presses, in both North
America and Europe. This has
enlarged our POD equipment sales
network, and we expect it to contribute to both sales and profit. In June
2016, we exhibited at drupa, theworld’s largest comprehensive printing equipment exhibition, held every
four years in Dusseldorf, Germany. At
the event, we presented our new
CTP, POD, and ink products as well as our new TRUST Service Desk service
system, which utilizes internet of things (IoT) and cloud computing technologies. By rebuilding our after-sales businesses, to realize excellent earnings
power, we aim to further improve both customer satisfaction and profitability.
Furthermore, in the PCB-related equipment business, with demand forautomotive-use products growing, we expect to see rising sales of both ourmainstay Ledia direct imaging systems and inspection equipment.

Share of Net Sales
Fiscal Year Ended March 31, 2016

23.6%
The Group’s net sales¥259.6 billion

Segment Sales & Operating Income Ratio(Billions of yen)
70

(%)
14

61.2
60

52.1

Q4: In April 2016, you became president of SCREEN GP. What
Q2: What are you doing to improve operating income?
Still Only Halfway to Becoming a High-Profit Company, We Must
Fundamentally Reexamine our Approach
During fiscal 2016, improvement in operating income, which had been an
issue, was less than robust. Becoming a high-profit company thus remains atask for us in fiscal 2017.
To cut costs, we need to significantly reduce both fixed and variable costs,
and have created new project teams to do so. Each team is working to nail
down the business tasks it needs to address in terms of key performanceindicator (KPI) targets, and is implementing exacting, KPI-centered management. To achieve our targets in fiscal 2017, I think that we must fundamentally reexamine our previous approach and initiatives as we move forward.

Q3: Please tell us about your specific initiatives for fiscal 2017.
Focusing on Strengthening Overseas Sales through Business
Alliances and Automotive-Related Needs in PCB-Related Equipment
In the graphic arts equipment business, looking to effectively combine oursales forces, we entered into a strategic business contract with Komori
Corporation, which enjoys an established reputation in the area of offset

do you see as the company’s greatest medium- and longterm challenges?

10

40

8

30
20

We Must Keep up with Rapid Change, Advancing Business with
Foresight and Speed
The main challenge we now face is to expand sales. Our sales area and rangeof products are broad, so to grow sales, we will need to develop sophisticatedinformation in each business and area in order to customize our sales
approach for each. Strengthening our worldwide marketing in order to more
precisely gauge demand and stay ahead of issues is also extremely important.
In the graphic arts equipment business, we are accelerating our entry into
packaging and adhesive label printing, areas which are undergoing digitization. We intend to further strengthen our after-sales businesses, such as those
involved in the sale of ink, other consumables, and components, as well as
support services. Furthermore, we will step up cooperation with other companies and product development.
In PCB-related equipment, we aim to introduce new equipment for manufacturing products used in automobiles, demand for which is expected torise, and expand our sales channels. While anticipating the changes that willhold the keys to growth and future market needs, we will work with various
partners to swiftly promote product development and expand sales channels.

12

55.7

50

6

5.3

5.2

5.1

10

4
2

0

0

2014

2015

2016

(Fiscal years ended March 31)

왎 Sales

Operating income ratio

Market Share of CTP Equipment

CY2015The SCREEN Group33%
No. 1 Global Share

Note: Market share is based on total sales for each equipment group 2015, according to a SCREEN survey.

Terminology
 CTP
A method for creating printing plates throughdirect output from a computer to printing plates.

12

 POD
Printing of the number of copies needed when
they are needed.

 Printed circuit board
A substrate made of resin or other materials on
which metal lines are printed to support andconnect electronic components and integrated
circuits.

 Direct imaging systems
Equipment that directly plots (exposes) circuit
patterns at high speed and high definition. By
eliminating masking, these systems greatly
increase productivity.

13

Overview of Performance by Business Operating Company

SCREEN Finetech Solutions Co., Ltd.
Finetech Solutions (FT) Segment

Toshio Hiroe
President, SCREEN Finetech Solutions Co., Ltd.

Business Overview: SCREEN Finetech Solutions Co., Ltd. provides a range of equipment and services for the
manufacturing of displays used in such digital devices as LCD TVs and smartphones.

Q1: Fiscal 2016 results were favorable. Please tell us about

Share of Net Sales

your progress in improving profitability.

Fiscal Year Ended March 31, 2016

Dynamic Structural Reforms Contributing to Profit

12.2%
The Group’s net sales¥259.6 billion

Segment Sales & Operating Income Ratio(Billions of yen)
40

(%)
12

31.5
30

9

23.7
20

19.8

6

1.4

10

0

8.7

3

0

-2.1

-3

2014

2015

2016

(Fiscal years ended March 31)

왎 Sales

Operating income ratio

Market Share of Coater/Developers

Our performance during the year
under review, particularly in our
display-related business, wasextremely favorable. Sales of production equipment for large-sized
LCD panels increased significantly in
China, as did sales of production
equipment for small- and mediumsized LCD panels in Taiwan andJapan. As a result, segment net
sales rose ¥7.8 billion, or 32.9%, year on year to ¥31.5 billion. Operating
income, boosted by the rise in sales, jumped up to ¥2.7 billion from ¥0.3 billion in the previous fiscal year. In terms of improving profitability, we continued
efforts to improve the variable cost ratio through value engineering. Furthermore,in fiscal 2016, we expanded the range of reforms to encompass the entire
supply chain, including standardization, consideration of unit price revisions,logistics, and off-site assembly.
In particular, regarding product delivery, we developed a framework forshipping each unit directly to a customer site, reducing the burden of preassembly, from the second unit onward. This has greatly reduced costs andhelped shrink lead times. As the next step, we are working toward direct
shipment from even the first unit. To reduce fixed costs, we are working to
improve profit by consolidating our sites and optimizing personnel allocation.

Q2: Please tell us about your plans for fiscal 2017.
Clearing the 10% Operating Income Ratio MarkCY2015The SCREEN Group80%
No. 1 Global Share

Note: Market share is based on total sales for each equipment group 2015, according to a SCREEN survey.

Structural reforms and growth strategies are the two core aspects of management. We are implementing structural reforms while laying the foundations
for the future. For example, as part of cash management, we are continuingsuch risk hedging measures as taking advances from customers when theyplace orders for display production equipment, which has a manufacturing
lead time of more than 10 months. Furthermore, we are working to speed up
delivery and inspection, seeking to reduce installation and set-up time byaround 25% year on year in fiscal 2017. We also plan to make revisions at
production sites to increase profitability.

In terms of businesses, we are aiming to enter assembly processing in
display manufacturing in collaboration with a new business partner. We arealso accelerating new business initiatives, mainly in the area of deposition
technologies. We are aiming to achieve an operating income ratio of 10% for
the year, in line with the Challenge2016 target, and to build a framework thatwill consistently yield a ratio of over 10% every year.

Q3: Please tell us about progress in new businesses.
Applying Deposition Technologies to Expanding Existing
Business and Creating New BusinessIn our dry deposition business, in March 2016, we established new deposition
technology for creating high-performance coatings based on our unique
low-inductance antenna (LIA) plasma vacuum deposition technology. We are
now creating products that employ this technology and expanding into newmarkets, including that for architectural materials, which is expected to growin the run-up to the 2020 Tokyo Olympics. In our wet deposition business,
we are developing products in the energy field, mainly for lithium ion batteries
and fuel cells. Demand for lithium ion batteries is expected to see particular
growth as the global use of electric cars and buses, drones, and robots
increases, and we will seek to help meet that demand.

Q4: Please tell us about the nurturing of new businesses todrive longer term growth.
Providing Equipment for Next-Generation Displays
OLED display technology is gaining attention for its usefulness in creating
flexible displays. In March 2016, SCREEN launched the SK-P Series polyimide
coating systems for such flexible displays.
Furthermore, in light of the growing importance of the IoT and anticipating
growing demand for displays used in vehicles, we have entered a comprehensive business partnership with FUK Co., Ltd., a company with a solid
reputation in assembly processing in display manufacturing for its abrasive
cleaning and cover glass bonding equipment. We will work to leverage synergies with FUK and apply our proprietary deposition technologies to contribute to the mass production of increasingly diverse next-generation displays.

Terminology
 VE
Short for value engineering. A method toincrease the value of products and services
by optimizing the balance of function andcosts.

14

 LIA plasma vacuum deposition technology
Technology that uses small antennae with a
special structure to generate uniform, highdensity plasma for low-damage deposition
on substrates.

 OLED Display
A type of next-generation display made usingorganic materials that emit light when a voltage
is applied. These displays offer such excellent
features as thinness, lightness, low power consumption, fast response time, and high contrast.

 Polyimide
Flexible substrates made with polyimide arethin, lightweight, and bendable, and therefore
promising for such applications as wearable
devices, electronic paper, and displays used in
automobiles.

 Wet deposition, dry deposition
Wet deposition forms films by applying coatingsof chemical solutions. Dry deposition refers totechnologies to form films through plasma
enhanced chemical vapor deposition in vacuum
conditions.

15

Corporate Governance

Under its Corporate Philosophy, the SCREEN Group strives to enhance corporate governance to further improve trans-

maintains a management committee to deliberate mattersoutside directors and outside corporate auditors, applying

parency, soundness, and efficiency in management and thus benefit shareholders and all stakeholders.

related to management and facilitates the decision making of

the Tokyo Stock Exchange’s standards of independence as

their respective boards of directors and representative directors.

well as the Group’s own Criteria for Independence of Outside

Corporate Governance Systemstrengthen management oversight. The Company has

Management and Executive System

adopted a corporate officer system to promote faster, more

Board of Corporate Auditors

directors and corporate auditors are registered with the

The SCREEN Group takes the form of a company with aefficient management.

The Board of Corporate Auditors holds two regular meetings

Tokyo Stock Exchange as independent directors and corpo-

per month and additional meetings as necessary. The corpo-

rate auditors.

board of corporate auditors. The Group strives to ensure that

Furthermore, the Management Committee, comprising the

Directors and Outside Corporate Auditors. All five outside

To maximize the efficacy of Board of Director’s meetings,

the board maintains a balanced perspective for maximum

full-time directors and corporate officers, ordinarily meetsrate auditors monitor the business execution of the directors

efficiency and effectiveness while strengthening its manage-

twice a month to deliberate matters related to management

to help ensure that the Company is being run in a sound,

the outside directors and corporate auditors are provided

ment oversight over the entire Group. Currently, the Board ofand business execution and facilitate the decision making ofsustainable manner that is aimed at sustainable growth.

with information and explanations of proposals to be

Directors comprises nine directors, and the Board of

the Board of Directors and representative directors. The

Corporate auditors attend such important meetings as those

discussed ahead of time.

Corporate Auditors comprises four corporate auditors.

presidents of the business operating and functional supportof the Board of Directors and Management Committee andcompanies (five companies in total) also participate as needed.

conduct inquiries using periodic hearings and reports on theManagement Compensation

directors’ business execution. They also review documents

Directors’ compensation consists of three elements: (i) fixed

The Board of Directors decides and approves the Group’s
basic management policy, basic strategy, and importantmatters related to business execution, in addition to oversee-

Management and Executive System for Business

related to major decisions and conduct on-site audits of the

remuneration, (ii) stock allowances (for the purchase of sharesing business execution. The board holds regular monthly

Operating and Functional Support Companies

Company’s headquarters and the Group’s major businessof treasury stock) and (iii) performance-based bonuses

meetings and additional meetings as necessary. To clarify the

To clarify management oversight and business execution

sites, including overseas locations.

(decided based on the degree to which annual performance

responsibilities of directors and promote an operationalroles, in April 2016 the Group business operating and func-

structure that is able to rapidly respond to changes in thetional support companies adopted corporate officer systems

Outside Directors and Outside Corporate Auditors

on a compensation table (created using the amounts paid out

business environment, the term of office for said directors is

like that in place at SCREEN Holdings Co., Ltd. By clearly

Outside directors and outside corporate auditors are

by 13 other listed companies of similar size as a benchmark)set at one year, and they are elected to office by shareholders

defining the responsibilities and authority of the businessselected based on experience and expertise, with the aim ofwith the advice of outside specialists. The amounts areannually at the General Meeting of Shareholders.

operating and functional support companies, we are building

drawing on a variety of perspectives to ensure the objectivity

decided by resolution of the Board of Directors after delibera-a system that facilitates nimble and bold decision making. Inof management.

tion by the Nomination and Compensation Advisory

The Board of Directors includes three outside directors to
improve its transparency and soundness as well as

addition, as at the holding company, each of these companies

targets are achieved). These amounts are calculated based

The Group works to ensure the independence of theCommittee, which comprises the representative directors

Outside Directors and Outside Corporate Auditors (fiscal year ended March 31, 2016)

Corporate Governance Structure

Name

Shareholders’ Meeting

Relation to the Group

Contributions

AttendanceOutside Directors
Proposal and report

Appointment and dismissal

Request foradvisory

Representative Directors
Management Committee
Proposal andreportImprovement
instructions

Oversight(Managerial oversight)

Oversight
President

Management Committee

Proposal andreportSubsidiaries of the Business Operating,
Functional Support, and Holding Companies

Management Grand Design / CSR Charter(SCREEN Group Code of Management / Regulations)

Oversight

Proposal and report

Yoshio Tateishi(Honorary Chairman,
OMRON Corporation)
In office since June 2006

OMRON Corporation is a
Provided opinions from various perspectives
business partner of the Group, but based on his deep insight fostered during years
the volume of trade is insignificant of management experience and his wide-ranging
experience in the business community.

Board of Directors
14/16

Shosaku Murayama(Representative Director andPresident, iPS PORTAL, Inc.)
In office since June 2013

iPS PORTAL, Inc. is a business
partner of the Group, but thevolume of trade is insignificant

Provided insight from various perspectives basedon the wealth and breadth of his experience at
the Bank of Japan and other companies.

Board of Directors
15/16

Shigeru Saito(Chairman and CEO,TOSE CO., LTD.)
In office since June 2013

No special relationship with theGroup

Provided insight from various perspectives basedon the wealth of his experience in corporate
management and elsewhere.

Board of Directors
15/16

Tsutomu Tsutsumi(President and Representative
Director, Kyoyu Shoji Co., Ltd.)
In office since June 2012

No special relationship with theGroup

Provided insight from a neutral, objective
perspective based on the wealth of his experiencein corporate management and elsewhere.

Board of Directors
15/16
Board ofCorporate Auditors
23/24

Kenzaburo Nishikawa(President and Representative
Director, Shigagin Lease CapitalCo., Ltd.)
In office since June 2014

No special relationship with theGroup

Provided insight from a neutral, objective
perspective based on the wealth of his experiencein corporate management and elsewhere.

Board of Directors
13/13*
Board ofCorporate Auditors
24/24

Outside Corporate Auditors

Proposal andreportBoard of Directors

Oversight(Business execution)

Business Operating
and Functional
Support Companies

Cooperation

Internal Audit

16

Make arecommendation

Proposal andreportAppointment, dismissal,and oversight

Director and Corporate Officer
Executive Division

Audit

Accounting Auditor

Monitoring

Holding Company

Board of Directors
Board of Corporate
Auditors

Nomination and Compensation
Advisory Committee

ReportGroup Committee• Timely Disclosure Committee• CSR Committee• Disaster Prevention EHS Committee

Appointment
and dismissal* Board of Directors Meetings held after July 2015

New Outside Corporate Auditor

Yoshio Nishi
No special relationship with the(Chairman and RepresentativeGroup
Director, Karasuma Shoji Co., Ltd.)
In office since June 2016

Expected to provide insight from a neutral, objective perspective
based on the wealth of his experience in corporate management andelsewhere.

17Directors and Auditors(As of June 28, 2016)

and outside directors, such that the total compensation paid

the SCREEN Group Disclosure Policy, aimed at helping

to all directors is within the scope decided by the Generalshareholders, investors, and all stakeholders better under-

Meeting of Shareholders. Outside directors’ compensation

stand the Group. The disclosure policy serves as a founda-

does not include stock allowances, while corporate auditors’tion for efforts to ensure that disclosure that is transparent,

compensation consists of fixed remuneration only.

fair, ongoing, timely, and appropriate.

Regarding the compensation of full-time directors,

The SCREEN Group will continue to actively disclose infor-

although the Company abolished its retirement benefit

mation considered to be useful for facilitating constructive

system in 2005, it has adopted a stock allowance scheme todialogue with shareholders and investors.

create incentives to improve performance and stock priceover the medium- to long-term.

SCREEN Holdings, Co., Ltd.
Directors

Akira Ishida

Eiji Kakiuchi

Shin Minamishima

Katsutoshi Oki

Chairman of the Board

President
Member of the Board
Chief Executive Officer

Senior Managing Director
Member of the Board
Chief Officer of CSR Management

Managing Director
Member of the Board
Chief Officer of Corporate Strategy

Soichi Nadahara

Yoichi Kondo

Yoshio Tateishi

Shosaku Murayama

Shigeru Saito

Managing Director
Member of the Board
Chief Technology Officer

Managing Director
Member of the Board
Chief Financial Officer

Director
Member of the Board(Honorary Chairman, OMRONCorporation)

Director
Member of the Board(Representative Director andPresident, iPS PORTAL, Inc.)

Director
Member of the Board(Chairman and CEO, TOSE
CO., LTD.)

Tatsuo Miyawaki

Akio Umeda

Kenzaburo Nishikawa

Yoshio Nishi

Senior Corporate Auditor

Corporate Auditor

Corporate Auditor(President and Representative Director,
Shigagin Lease Capital Co., Ltd.)

Corporate Auditor(Chairman and Representative
Director, Karasuma Shoji Co., Ltd.)

Dialogue with Shareholders
Our basic policy in investor relations (IR) is to communicate

Internal Control Systems

our vision, business conditions, and financial position in a

Systems to Ensure the Appropriateness of Operations

precise, timely, and clear-cut fashion, while aiming to make

The SCREEN Group systematically ensures the appropriate-

the most of the feedback from our shareholders and inves-ness of business execution, supported by rules and struc-tors to improve Company management and thereby achievetures to promote proper and efficient management andthe sustained enhancement of our corporate value.

operations, well-defined business processes and a risk

In the fiscal year ended March 31, 2016, we continued

management system.

efforts to enhance dialogue-based IR.

Internal Control of Financial Reportingand investors through our annual report, investors’ guide,

We maintain internal control with regard to financial reportingand quarterly Japanese-language shareholder newsletter.

in accordance with the SCREEN Group Internal Control

Our IR website contains our disclosure policy, reference

Design Principles. The Group Audit Department evaluatesmaterials, news, and schedules and provides answers to

the maintenance and operation of the control system,

frequently asked questions.

We also continue to provide disclosure to shareholders

thereby ensuring trustworthy reporting.

Corporate Auditors

We avoid scheduling the General Meeting of Shareholders
on days when other companies’ meetings tend to be

Responding to the Corporate Governance Codeconcentrated and send out invitations to the meeting well in

The SCREEN Group has taken measures to respond to theadvance to maximize the number of shareholders who canJune 2015 application of the Tokyo Stock Exchange’s

attend. Individual and corporate shareholders can also exer-

Corporate Governance Code. The Group’s previous

cise their voting rights via the internet, and institutional inves-

Compensation Advisory Committee has been reinforced andtors can do so via an electronic voting platform. For overseas

renamed the Nomination and Compensation Advisory

investors, we provide a summary version of the invitation in

Committee. Furthermore, the Group has implemented evalu-

English on TDnet (the Timely Disclosure network operated byations of the Board of Directors’ effectiveness, and the board

the Tokyo Stock Exchange) and on our website. Furthermore,monitors the status of important strategic stocks held. The

we post the invitation to the General Meeting of Shareholders

Group has also more clearly specified the division of roles

as well as the voting results on our website to ensure thebetween the holding company and the business operatingtransparency of the meeting.

Substitute Corporate Auditor: Tetsuo Kikkawa (President and Attorney-at-Law, Kyoto Mirai Law Firm)

Directors of Business Operating Companies and Functional Support Companies
SCREEN Semiconductor Solutions Co., Ltd.

SCREEN Graphic and Precision Solutions Co., Ltd.

and functional support companies as well as the selection
criteria for directors and corporate auditors, including outside
directors and corporate auditors.
Under its Corporate Philosophy, the SCREEN Group works
to implement a corporate governance system appropriate forits business structure and to ensure timely disclosure. We willcontinue to pursue transparency, soundness, and efficiency
as we aim for the overall benefit of all our stakeholders.
Disclosure Policy
Based on the principle of “Appropriate Disclosure of

Number of Dialogue-Based IR Activities(Fiscal year ended March 31, 2016)• Earnings presentations: 4• Meetings with institutional investors/analysts:
Approximately 400

Tadahiro Suhara

Masato Goto

Olivier Vatel

Tsuneo Baba

Tetsuo Hirose

Representative Director
President

Director
Corporate Executive Officer

Director
Corporate Executive Officer

Representative Director
President

Director
Senior Corporate Executive Officer

SCREEN
Finetech Solutions Co., Ltd.

SCREEN
Manufacturing Support
Solutions Co., Ltd.

SCREENBusiness Support Solutions
Co., Ltd.

Toshio Hiroe

Katsumi Shimaji

Tadashi Kawarabayashi

Representative Director
President

Representative Director
President

Representative Director
President• Overseas IR activities: 2 (North America and Europe)• Institutional investor events, domestic conferences: 7• Plant tours for institutional investors: 2• Corporate presentations for individual investors: 14

Company Information” laid out in the SCREEN Group CSR
Charter, the SCREEN Group has established and published18

19

Messages from the Outside Directors

Supporting Growth from an Outside Perspective

To ensure the continuous improvement of corporate value, the SCREEN Group has

There are two things I try hard to do as an outside director. The first is to help make sureappointed outside directors since 2000.

that SCREEN’s employees and management do not become so caught up in the

The outside directors have important responsibilities spanning various fields, including

Company’s unique way of thinking and culture that they drift away from what the wider
world agrees on as common sense. The second is to apply my own experience andcorporate management. At SCREEN, these directors contribute to constructive debate

insight in the financial and pharmaceutical industries to SCREEN’s management, partic-

and discussion on the Board of Directors based on their wealth of insight and experience.

ularly the life science field. As part of the Board of Directors, I endeavor to actively speak

Our current outside directors, Yoshio Tateishi, Shosaku Murayama, and Shigeru Saito,

up from an objective perspective, including about things that might be difficult for
employees within the Group to address.

have each offered comments from their individual perspectives on their roles as outside

I have never worked for a production equipment manufacturer, but I think that, insofar

directors as well as the Group’s transformation thus far and how it can increase its corpo-

as R&D is critical to both, production equipment manufacturers and pharmaceuticalrate value going forward.

companies aren’t so different. SCREEN has been successful in deeply devel-

Shosaku Murayama

oping and further specializing in its existing business areas. The key to growth
going forward will thus be expanding its core technologies into new fields in line

April 1972

Joined Bank of Japan

February 1981

Economist, Representative Officein New York, Bank of Japan

Strengthening Oversight to Continuously Raise
Corporate Value

March 2002

President and CEO,
Teikoku Seiyaku Co., Ltd.

June 2002

Outside Director, SHIKOKUCHEMICALS CORPORATION

For the Board of Directors, strengthening corporate governance is important but, ulti-

June 2011

President and CEO,iPS Academia Japan, Inc.

June 2013

Director of the Company(current position)

June 2014

Outside Director, TOHO HOLDINGS
CO., LTD. (current position)

July 2014

Representative Director and President,
iPS PORTAL, Inc. (current position)mately, just a means to an end; the board’s true purpose, we mustn’t forget, is to continuously increase corporate value. As an outside director, I therefore give weight tooversight functions that serve to increase the effectiveness of corporate governancewith a focus on sustained improvement of corporate value. To this end, the monitoringof personnel and compensation is especially important. I make particular efforts towith changing needs. To do this, I think it is important to invest management
resources in development and market research, support open-ended research,and create environments that support the passion of the Group’s researchers.
Going forward, I will work to employ my full knowledge, experience, andbusiness contact network in whatever ways I can to help the SCREEN Group
maintain strong performance by supporting new businesses as well as throughactive R&D, steady cost-cutting, and the improvement of governance.

ensure that the Nomination and Compensation Advisory Committee, established in

Aiming for Growth by Aligning Business Vectors
with Social Trends

November 2015, functions as intended.
Currently, important business execution issues include promising growth fields related

Yoshio Tateishi
April 1963
June 1987

Joined TATEISI ELECTRONICS
CO. (Now OMRON Corporation)
President and CEO, OMRONTATEISI ELECTRONICS CO.

June 2003

Chairman and Representative
Director, OMRON Corporation

June 2006

Director of the Company(current position)

May 2007

Chairman, Kyoto Chamber ofCommerce and Industry(current position)

June 201120

Honorary Chairman,
OMRON Corporation(current position)

to the internet of things (IoT), in which SCREEN is expanding sales, and iPS cells, inwhich the Group is involved through new businesses. For operations in these fields toWhen thinking about the growth of companies in industries with cyclical markets, I focus

grow as business pillars, the Group will need to create business models based on cus-on two things: utilizing information resources to even out results and ensuring thattomer value, a matter of greatest importance. By customer value, I mean not just theemployees thoroughly understand the company and are working toward the same goals.

value provided to the purchasers of SCREEN products, but the value provided to the

Like SCREEN, the company I head is subject to major cyclical ups and downs. By

users of the end products and services created using SCREEN products as well as thefocusing of gathering, analyzing, and controlling information, we have been able tovalue provided to society as a whole.

smooth out the hills and valleys somewhat, and, as a result, have remained profitable for

I intend to utilize my many years of management experience to offer opinions from mythe 36 years since our founding. I regard passing along this know-how as part of myparticular position outside the Group on such matters as strategic themes that requirerole at as external director. Early in my time with SCREEN, I suggested the creation of amajor investment, engaging actively in the discussion of the accuracy of expected returns.

specialized analytical unit within the Group. I believe that it is important to maintain

Shigeru Saito

robust information networks to control information while keeping tabs on trends in thewider world in order to optimally allocate management resources and make decisions
for the medium and long term.

November 1979

Joined TOSE CO., LTD.
Head of Development
Division, TOSE CO., LTD.

February 1987

President, TOSE CO., LTD.

but also effective is using various media from outside the company to instill a consistent

September 2004

President and CEO,TOSE CO., LTD.

corporate mindset. It is also important to ensure that stakeholders more broadly under-

June 2013

Director of the Company(current position)

December 2015

Chairman and CEO,TOSE CO., LTD.
(current position)

Aligning everyone’s vectors of progress is fundamental to corporate growth. Internal
explanations and education on company policy are important to achieving such unity,

stand this orientation. If a company can do this, it will naturally grow stronger.
Going forward, I hope to continue to utilize my specialized knowledge in the content
industry to provide suggestions and advice to SCREEN from a variety of angles as we
look together toward the future.

21

SCREEN Group’s CSR

Carrying on the founder’s credo and in line with our corporate philosophy of “Sharing the future,” “Human resource devel-

Business Continuity and EHS Management

opment,” and “The pursuit of technology,” the SCREEN Group strives to fulfill its corporate social responsibility (CSR) by

Following the Great East Japan Earthquake, the SCREEN Group positioned business continuity management (BCM) as a priority

putting into practice the core values expressed in its CSR Charter in areas including compliance, respect for human rights,

issue, launching its first initiatives in 2012. From the fiscal year ended March 31, 2015, the Group has integrated its previous

product responsibility, and supply chain management. In addition to complying with legal statutes, we seek to contribute toenvironmental, occupational health and safety (EHS) management systems with business continuity management (BCM) under athe sustainable development of society by satisfying the expectations of our stakeholders, including shareholders andnew business continuity and EHS management system. The Group now advances initiatives in these areas under a common

investors, customers, suppliers, employees, local communities, creditors, and administrative bodies, through highly moral

SCREEN Group Business Continuity and EHS Policy.

and transparent business conduct.

In line with the enhancement of business continuity and EHS management, the Group is implementing BCM-related initiatives

We implement CSR Charter training for SCREEN Group employees worldwide, and have achieved a 100% participation
rate. The training is part of efforts to increase awareness and respect for the diversity of all people, including LGBT individuals.

as a pillar of Phase III of the Group’s medium-term strategy for EHS initiatives, Green Value (GV) 21. The Group will continue tocomprehensively manage risks and opportunities under the business continuity and EHS management system.
GV 21, Phase III: Long-Term Commitment

The SCREEN Group’s Priority Issues—Selecting Tasks of High Materiality

Green Products & Technology

On April 1, 2014, the SCREEN Group formulated the Management Grand Design, a vision for the Group’s future that reflects theDevelop technologies and products that help reduce
environmental impact
쎲 Reduce the environmental impact of our products at customer
sites by 50% by March 31, 2017 and by 65% by March 31, 2021*(compared with levels for the year ended March 31, 2010)

technologies it has built up since its founding, its relationships with society, society’s expectations of it, and the social issues it
must address going forward. The Management Grand Design provided the base on which we created our three-year mediumterm management plan. Within the scope of this plan, we have identified high-materiality items to be addressed through a threeyear CSR plan.

Safety & Health* In accordance with the International Technology Roadmap for Semiconductors (ITRS) 2013

Promote workplace health and safety쎲 Eliminate incidents resulting in fouror more days of lost work쎲 Reduce illness-related absences

High-Materiality CSR Tasks

쎲 Comply with green procurement standards (eliminate or replace allprohibited substances in products; respond to REACH and RoHS)

A. Provision of products and services of value to society (p.28 Quality Management etc.)
Business Continuity and EHS Management

B. Promotion of CSR awareness (p.22 SCREEN Group’s CSR etc.)

Establishing disaster prevention and business recovery systems
쎲 Acquire BCMS (ISO 22301) certification and integrate ourmanagement systems into a High-Level Structure (HLS)쎲 Improve capacity to respond to and recover fromlarge-scale disasters

C. Promotion of appropriate transactions (p.22 Compliance and Risk Management etc.)
D. Ensuring compliance (p.22 Compliance and Risk Management etc.)
E. Respect for human rights/ Proper use and development of human resources (p.22 CSR Charter, p.26 Human Resource
Evaluation and Development etc.)
F. Creation of work environments that are people- and earth-friendly (p.23 Business Continuity and EHS Management etc.)
G. Appropriate disclosure of corporate information (p.22 Compliance and Risk Management etc.)
H. Maintenance and efficient use of Group assets (p.16 Corporate Governance etc.)
I.

Key Measures

Objective

Fiscal 2017 Targets

Develop technologies andproducts that help reduce
environmental impact

Reduce environmental impact of our products at
customer sites

Reduce energy consumption* (including energy use for water and utilities)
by 50% or more compared with fiscal 2010
* Performance basis

Increase share of sales accounted for by Green
Products

At least 85% share of sales

Comply with Green Procurement Standards

Green procurement rate of 98% or above(Eliminate the use of all prohibited substances; replace substances
designated as restricted substances within three years of said designation)

Promote green technology

Increase the number of environment-related inventions by 30% or morecompared with fiscal 2013

Reduce emissions of CO2 attributable to energy use

Reduce emissions per unit weight of product shipment at least 3%
compared with the baseline

Reduce waste emissions

Reduce emissions per unit weight of product shipment at least 3%
compared with the baseline

J. Contribution to society as a corporate citizen (p.29 Local Community Relations etc.)

Compliance-Related Initiatives

Throughout the Group, we promote sound corporate activities

Compliancein line with the SCREEN Group CSR Charter. Overseas, Group
companies work with local lawyers to understand laws, identify compliance issues, and work toward improvement.
The SCREEN Group has established a Groupwide risk
management structure to alleviate risks that could impact theGroup’s businesses. Within this structure, the holding

Product Responsibility

Promotion framework andtraining

Appropriate information
provision

Security export control

Response to chemical
substance regulations

Prevention of anti-competitive
behavior and corruption
Respect for Human Rights

Supply Chains

Inclusion in CSR Charter

Conflict minerals

the CSR & Group Audit Department serve as the secretariat.

Supplier surveys

Supplier surveys

Details regarding trade secret management methods are

Preserve the environmentand conserve energy atfactories and offices

Promote environmental management
Promote workplace healthand safety

BCM

available on our website.
For information on other main initiatives, please visit our
website.

Implement and promote the Green Value Award
Improve management of chemicals and gases

Response to the EICC

company’s president acts as the topmost risk manager andGreening and saving energy at factories and offices
Reduce CO2 emissions resulting fromenergy use by 3% by March 31, 2017,and by 7% by March 31, 2021 (on a perunit basis compared with a baseline
set based on levels recorded in thefiscal years ended March 31, 2012
through 2014)

Green Value (GV) 21, Phase III (Fiscal 2015-Fiscal 2017): Targets

Promotion of business continuity initiatives (p.23 Business Continuity and EHS Management etc.)

Compliance and Risk Management

Green Fab & Office

Improve emergency
response and businessrecovery systems

Eliminate accidents resulting in four or more lost
workdays

Zero accidents

Globally reduce the number of accidents leading tolost work days

Ten or fewer such accidents (up to five in Japan and five overseas,
including at customer sites)

Reduce work days lost due to illness** The number of employees who lose seven or moredays in a given fiscal year (Apr. 1–Mar. 31)

Reduce by at least 10% compared with the baseline

Implement thorough orderliness, cleanliness andeducation-related initiatives

Implement improvements based on potential hazard reports

Acquire certification for business continuity
management system (BCMS)

Acquire ISO 22301 certification (expected within fiscal 2015)

Improve capacity to respond to and recover fromlarge-scale disasters

Response rate to safety confirmation drills* of 95% or higher* Response rate=number of respondents/number of employees solicited for
response (within seven hours of incident)
Conduct practical drills once or more per year

Notes: 1. Fiscal years from April 1, 2014 to March 31, 2017. Fiscal 2016 is the fiscal year ended March 31, 2016.
2. Baseline is the three-year average of the fiscal years from April 1, 2011 to March 31, 2014.
3. Results for fiscal 2016 are available on our website.
4. Targets were revised in fiscal 2015.

22

23

Environmental Conservation

Highlight

The SCREEN Group is committed to reducing the life cycle CO2 emissions of its products (emissions due to resource

Reducing
Environmental
Impact at
Customer Sites

procurement, equipment manufacturing, equipment transport, and use by customers) as well as its own energy andresource use.
SCREEN Group CO2 Emissions by Product Life Cycle Stage

Resource
Procurement

Equipment
Manufacturing

2

Equipment
Transport

2

%

-56

%

Use by Customers

0.03

%

The Ledia 5 direct imaging system for printed circuitboards received the Japan Machinery Federation
Chairman’s Award in the Japan Machinery Federation’s
2015 Energy-Efficient Machinery Awards. The system
uses 56% less electricity than previous models.

95%

Contributing to Customers’ Environmental Preservation

Reducing CO2 Emissions from the Use of Our Products

Efforts

The SCREEN Group works to reduce the energy, water, andThe SCREEN Group strives to develop technologies andchemical solutions needed during the use of its products. In

products that help reduce environmental impact and thus tothis way, we seek to meet increasing societal demand toactively contribute to its customers’ environmental preserva-

reduce CO2 emissions and resource use throughout thetion efforts.

supply chain.

%

For example, 95% of our wafer cleaning equipment’s life
cycle CO2 emissions occur during customer use, so we areHighlight

promoting the development of equipment that uses less
Operational improvements to heating and coolingsystems and boilers at the production building of the
SCREEN Group’s Yasu Plant, which manufactures printed
circuit board-related equipment, led to a 15% year-onyear reduction in the plant’s total annual CO2 emissions.

Reducing theEnvironmental
Impact of
Our Businesses

water and cuts processing time in order to reduce the total
CO2 emissions of our products-15%

Ledia 5Highlight

Reducing the Environmental Impact of Our Businesses

Reducing Waste

Operational improvements to heating and cooling systems

During the fiscal year ended March 31, 2016, the Groupand boilers at the production building of SCREEN Group’s

generated waste amounting to 1,848 metric tons, down 9%

Yasu Plant, which manufactures printed circuit board-related

year on year. Disposal of equipment in the Semiconductor

equipment, led to a year-on-year reduction in CO2 emissions

Solutions segment decreased.

of 466 metric tons in fiscal 2016. 15% of the Yasu Plant’sGroup met its annual target of reducing the volume of waste

to this decrease.

disposed of per unit weight of product shipment to at least

The SCREEN Group’s CO2 emissions in fiscal 2016

2% below the baseline.

amounted to 52,523 metric tons, roughly unchanged from* The baseline is the three-year average of the fiscal years from April 1, 2011 toMarch 31, 2014.

the previous fiscal year.
In fiscal 2016, we accomplished our target for the domestic
Group of reducing CO2 emissions per unit weight of productVolume of Waste and Waste per Unit Weight of
Product Shipment

shipment to at least 2% below the baseline.*(Metric tons)
4,000* The baseline is the three-year average of the fiscal years from April 1, 2011 toMarch 31, 2014.

3,000

313

329

329

318

2,000

1,806

1,744*

1,893*

2,048*

CO2 Emissions and Emissions per Unit Weight of
Product Shipment
80
60
40

9.19
53

49
38
5
33

20
0

9.33

8.47

8.52

1,000

8.47
52

6.76
53

10

7

4

4

4

43

49

48

49

5
0

2012

308

250
1,848*

88

125

124

93

1,656

1,768

1,924

1,755

2013

2014

2015

2016

(Years ended March 31)
왎 Volume of waste (SCREEN Group in Japan)왎 Volume of waste (SCREEN Group overseas)쎲 Waste per unit weight of product shipment (actual for SCREEN Group in Japan)
쎲 Waste per unit weight of product shipment (target for SCREEN Group in Japan)* Includes the overseas SCREEN Group from the fiscal year ended March 31, 2013.

2013

2014

2015

-40

%

2016

왎 CO2 emissions (SCREEN Group in Japan) 왎 CO2 emissions (SCREEN Group overseas)쎲 Emissions per unit weight of product shipment (actual for SCREEN Group in Japan)
쎲 Emissions per unit weight of product shipment (target for SCREEN Group in Japan)

Green Printing Certification

Expanding Sales of Green Products

In our graphic arts equipment business, we are working toAmong the Group’s products, those meeting its own stringent

reduce environmental impact and promote recycling in thecriteria related to environmental performance are designatedthree areas of materials procurement, production, and use. As“Green Products.” We are working to expand sales of suchof March 31, 2016, 11 of our products in this business haveproducts. For details on the environmental performance ofreceived the maximum three-star green printing certification.*

individual products, please refer to the Green Products* Green printing certification: A certification system based on a set of voluntary
printing industry environmental standards run by the Japan Federation of
Printing Industries.

section of the SCREEN Group CSR website.

200
0

In fiscal 2016, Green Products accounted for 92% of theGroup’s net sales.

Newly Certified Product• PlateRite 4600Z/S/E

Green Products as a Percentage of Sales andthe Number of Designated Products(Unit)
160
120
80

92

80

83

89

92

60
85

65
93

70
104

116 75 119 80

2012

2013

85
(Target)

(%)
100
50
0

40

Information on water usage is available on our website.
2012(Years ended March 31)

24

0(Kg/Metric tons)
400

340

(t-CO2/Metric tons)

8.89

The PlateRite 4600Z thermal plate recorder released in
March 2016 uses 40% less electricity than previous
models.

During the fiscal year ended March 31, 2016, the domestic

total reduction in CO2 emissions for the year can be attributed(Thousands of metric tons)

Reducing
Environmental
Impact at
Customer Sites

0

2014

2015

2016

2017

(Years ended March 31)
왎 Number of designated products
쎲 Percentage of sales (actual) 쎲 Percentage of sales (target)25

Human Resource and Labor Management

One of our most important priorities is to promote workplace health and safety, and we strive to provide a workplace that

Work-Life Balance

Employee-Employer Relations

enables diverse employees to maximize their potential.

SCREEN Holdings Co., Ltd. and its major subsidiaries strive to

As of March 31, 2016, labor union participation at SCREEN

maintain an environment that fosters individuality among theirHoldings Co., Ltd. and major subsidiaries stands at 97.3%.

personnel and allows employees to fully utilize their talents

Labor–management meetings with the labor union are held

regardless of changes accompanying different life stages.

at least once a year (held six times in fiscal 2016) to discuss

Work-life balance initiatives:

16

Five new initiatives were begun in fiscal 2016.

Return rate of employees
who took childrearing leave:

90%

10 employees took childrearing leave in fiscal 2016.

Highlight

Human Resource
Development
Initiatives

various issues pertaining to the working environment. Labor
Main Initiatives in Fiscal 2016

union members also attend Health and Safety Committee

Flextime system (for all regular employees)

meetings, where we decide on annual occupational health

Program wherein those taking less than 50% of their paid leave
during a given year must take at least five consecutive days off
in the following year.

and safety action plans to promote health and safety on anChildrearing leave program (extendable until the child reaches
18 months)

agreements concerning hiring and work conditions are

Reduced working hours system for those engaged in childrearing(daily work hours reduced by up to two hours a day until children
reach third grade)level negotiations are held twice a month.

everyday basis.
In principle, notices of the ratification of labor-management
posted at least one month in advance, and regular working-Occupational Health and Safety
To strengthen development of globally oriented human resources, the Group offers
opportunities for overseas training and study abroad as well as short-term employee
dispatches to overseas Group companies.

Limits on work outside normal work hours and late at night for
those engaged in childrearing (until children reach the third grade)based on the Group’s OHSAS 18001-compliant
New professional career track established in 2015 allowing thoseunable to relocate due to childrearing or nursing responsibilities towork in a specified area
Provision of online skills development programs for employees onchildrearing leave

Employment and Remuneration

Reinforcing Globally Oriented Recruitment and Skills

The SCREEN Group respects fundamental human rights andDevelopment

strives to ensure hiring free of discrimination based on race,

Business activities overseas are becoming ever more impor-skin color, ethnicity, religion, gender, sexual orientation, country

tant. We are therefore working to recruit and train globallyof origin, age, physical or mental disability, or genetic traits.

oriented individuals and facilitate the global exchange of

The Group uses compensation that reflects individual

people in our workplaces.

contributions and corporate performance to reward employees
who exercise their abilities to the fullest and engage ambitiously with their work. This system is predicated on a firm
commitment to discrimination-free remuneration and compliance with the remuneration-related laws of each country.
Human Resource Evaluation and Development
The SCREEN Group believes that people are the foundationof successful business. We therefore apply a long-term
perspective to implement frameworks and measures aimed
at helping each individual grow and systematically developing
diverse human resources. We use fair and reasonable evalu-

Main Initiatives• Overseas training/study abroad
Study abroad at business and law schools in the UnitedStates (Columbia University, UCLA and others)
Short-term dispatch to overseas group companies• Dispatching young researchers to overseas research
institutions
IMEC, Stanford University, and others• Training to improve foreign language skills (with specificinstruction for different positions, skills levels and goals)

ations based on job roles to create frameworks that allow• Encouraging temporary transfers of employees fromoverseas Group companies to Japan

individuals and the SCREEN Group to grow together.

• Accepting students studying abroad in Japan as interns

For example, we offer opportunities for younger employees

All SCREEN Group companies in Japan conduct initiatives

Subsidies, including daycare cost coverage, for employees who
have recently returned to the workplace from childrearing leave
Launch of system allowing employees with childrearing or nursing
care responsibilities to do some of their work from home
Subsidies related to childrearing (partial compensation for reduced
wages due to leave or reduced working hours for childrearing)
Systems for leave and reduced working hours for nursing care(for up to a total of 365 days)
Nursing-care working hours (exemption from work outside normal
hours for up to 12 months upon request)
Consultation point for issues related to nursing care

Occupational Health and Safety Management System. These
activities include assessing risks, executing preemptive
health and safety reviews, inspecting heavy load operations,and enhancing training for operators and supervisors withlimited experience. We are reinforcing our occupational
health and safety management activities overseas, as well.
For GV 21, Phase III, we are working toward goals related
to globally eliminating accidents leading to lost work andimplementing a new health management system. (Please refer
to “GV 21, Phase III: Targets” on page 23.)
Expanding Physical and Mental Health Management
The SCREEN Group works to ensure that all employees,
including those stationed overseas, receive health check-ups.
We have achieved a near 100% check-up rate for Group
employees in Japan. In order to achieve the same target

Subsidies related to nursing care (partial compensation for reduced
wages due to leave or reduced working hours for nursing care)among overseas employees, we have created health check-up
plans and send check-up reminders to employees on a regu-

Nursing care equipment subsidy system (partial subsidies for thepurchase or rental of nursing care equipment)lar basis.

Online mental health consultation service

conducts stress management checks in line with updated쏋 : New initiatives begun in fiscal 2016

legal requirements, promotes self-care, works to improve

With regard to mental health management, the Groupworking environments, implements e-learning, and provides
counseling with industrial health staff as necessary.
The Group also has in place a reintegration program

to take graduate courses, work temporarily in research insti-

designed to help employees on leave due to mental healthtutions in fields outside their specialty, or receive structured

issues quickly recover and return to work and prevent thetechnical training. Through these and other efforts, we seek toneed for additional leave.

cultivate broad perspectives and to pass on the engineering
mindset to our younger employees.

26

27

Quality Management

Local Community Relations

Highlight

Quality
Improvement
Initiatives

Highlight• In fiscal 2016, SCREEN Group products and services received praise from multiple
customers and industry groups.
• SCREEN Group company Laser Systems & Solutions of Europe SASU newly
acquired ISO 9001 quality management system certification.

SocialContribution
Activities

In addition to social contribution activities in Japan, the SCREEN Group carries out
activities related to social welfare and environmental beautification in South Korea,
the United States, Israel, and other locations overseas.

ISO 9001-Based Quality Management

Public Policy and Relations with Administrative

Managing the Impact of Our Businesses on Local

All Group business operating companies as well as seventeen domestic and overseas Group companies are ISO 9001 certified.

Institutions and Political Bodies

Communities

To maintain these certifications and increase customer satisfaction, we apply a quality management system that conforms to

SCREEN Holding Co., Ltd. and major subsidiaries are

The Group conducts internal assessments of departments

ISO 9001 to improve our products and services.

members of the Semiconductor Equipment Association of

and Group companies that include monitoring of the environ-Japan (SEAJ) and other organizations that make policy

mental and social impact of our business activities on local

Initiatives at the Business Operating Companies

recommendations to support the growth of the semiconduc-communities. We strive toward the appropriate management

Each of the business operating companies has established and uses a quality management policy that is updated as necessary.

tor production equipment, FPD production equipment, andof our impact on the environment under our EHS management

printing equipment industries. We also participate in various

system. To this end, we employ such means as employee

organizations aimed at promoting corporate and industrial

training and facility-related countermeasures.

More details about these initiatives are available on our website.
SCREEN Semiconductor Solutions Co., Ltd.

Operating a new design evaluation systemdevelopment in Kyoto, where our headquarters is located.
Operating a quality management improvement evaluation system
SCREEN Graphic and Precision Solutions
Co., Ltd.

During the fiscal year ended March 31, 2016, we received

In the fiscal year ended March 31, 2016, we recorded no
incidents in which our operations had negative environmental

Beginning reforms to update quality management system for current needs

subsidies and other financial benefits from governments

or social impacts on local communities. There were also no

Providing services at customer facilities as a trusted, regular provider

totaling ¥284 million.

economic effects resulting from the relocation of businesssites or changes in our businesses.

SCREEN Finetech Solutions Co., Ltd.

Reforming quality management system to promote awareness of quality, cost, and delivery

Ongoing Community Contribution Activities,
AwardsIncluding Education-Related Activities

The SCREEN Group strives to provide beneficial products and services using its proprietary technology. The Group’s products

Contributing to industrial development through innovation andreceived praise and recognition from many customers in fiscal 2016. We will continue to contribute to society through our prod-

returning profits to society are fundamental to the Group’s

ucts and services.

efforts to forge relationships of trust with the community. At

Award

Given in Recognition ofGrand Prix in the semiconductor production
equipment division of the 2015 Semiconductorof the Year awards given by SangyoTimes, Inc.

The highly even coating technology of the 80EX Spray Coater SCREEN Semiconductor
photoresist coating system
Solutions Co., Ltd.

Excellent Performance Award for Clean andTrack Equipment given by TSMC, one of thelargest semiconductor foundries in the world

Improvements in cleaning equipment and achievement of
cost-efficient coater/developer productivity as well as theresults of cutting-edge R&D and overall equipment excellence

the level of each business site, we work to contribute to the

Recipientcommunity on an ongoing basis through such activities as

Major Community Contribution Activities

Japan Machinery Federation Chairman’s Award Technology that flexibly accommodates customer needs,in the 36th Energy-Efficient Machinery Awards including the development and application of technology togiven by the Japan Machinery Federation
reduce electricity consumption and freely control the
wavelength output level of printed circuit boards

SCREEN Graphic andPrecision Solutions Co., Ltd.

Preferred Quality Supplier (PQS) Award given
by Intel Corporation

SCREEN Semiconductor
Solutions Co., Ltd.

28

Wafer cleaning equipment, annealing equipment, services
related to semiconductor manufacturing, and playing aleading role in the industry

inviting schoolchildren and students to site tours.

Support for the development andeducation of the next generation

The SCREEN Group supports the development and education of the next generation by providing various
learning experiences, including facility tours and work experience events for elementary, junior high, andhigh school students. The Group also sponsors a robot technology competition in New York.

Interaction with the local
community

SCREEN Holdings employees carried parade floats and volunteered in a garbage elimination campaign at
the Gion Festival, one of Japan’s three most famous festivals, thus deepening ties with the community.

Social benefit activities

The SCREEN Group participates in efforts to raise money to support children in developing countries andemployees volunteer at events at facilities for the disabled as part of its support for the employment ofpeople with disabilities.
At our facilities in South Korea, we perform a range of activities to benefit children, low-income families,
the sick, and others.
Facilities in Israel make donations, including of food, for families in need. These facilities also donate toan organization of the visually impaired and volunteers help out at the organization’s facilities.

Cleanup activities

The SCREEN Group regularly holds clean-up activities in the areas around all its facilities. The Group also
conducts clean-ups around Lake Biwa and river areas in Takamiya-cho, Hikone.

29Performance Highlights

Sales by Segment (fiscal year ended March 31, 2016)

Sales by Region (fiscal year ended March 31, 2016)

Finetech Solutions

EuropeOther¥20.1 billion (7.8%)¥3.3 billion (1.3%)

Other andIntersegment Sales¥31.5 billion (12.2%)¥1.0 billion (0.4%)

PCB-related
Equipment

8.9 billion (3.5%)

Graphic andPrecision Solutions¥61.2 billion(23.6%)Net Sales

Net Sales¥259.6billion¥259.6billion

Asia & Oceania

Graphic Arts Equipment

52.3 billion (20.1%)¥165.8 billion (63.8%)¥(Number)
35

Shipmentbasis

Completion of
installation basis

250.0

235.9

North America¥36.2 billion(13.9%)

Shipmentbasis

Completion of
installation basis

52

4
48

53

4
49

(%)
15

17.1
13.4

10

5

5.4

0

43

10

2012

9.1

(Years ended March 31)

7
17

17

22

11

2013

2014

2015

2016

0

2012

2013

2014

2015

Number of Employees

Number of New Employees and Their Retention
Rate After Three Years(Persons)
6,000(Persons)
80

4,890

4,954

5
40

3,000

2,228

2,130

2,089

4
49

43

89.5

54

90

87.8

47

38

80

2,187

2,212

22
20

1,000

(Years ended March 31)
 Consolidated operating income (loss)  Ratio of operating income to net sales

0

2013

(%)
100

100

7

4,000

0

100

5,182

5,082

4,968

98.4

60

-5

2012

2016
(Years ended March 31)

 Occupational accidents (SCREEN Group in Japan) Incidents (SCREEN Group in Japan)

5,000
5

-4.8

-10

2016

18

8

 CO2 emissions (SCREEN Group in Japan)  CO2 emissions (SCREEN Group overseas) Emissions per unit weight of product shipment (SCREEN Group in Japan)

2,000

2015

15

15

-2.4
2014

5

7

5

10

50

2013

23

22

3.8

0

2012

25
20

7.2

8.9

100

0

32
29

30

15

0

23.5
20

150

5
33

20

4
49

7

8.52
6.76

8.47

53

49
40

259.6

199.7

9.19

(Years ended March 31)(Billions of yen)
30

237.6

9.33

38

(t-CO2/Metric tons)
10

8.89

60

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

Consolidated Net Sales

200(Thousands of metric tons)
80

8.47

¥73.
73.2 billion(28.2%(28.2%)¥126.7 billion (48.8%)

Semiconductor
Solutions250

Number of Accidents

Japan
Japa

¥

(Billions of yen)
300

CO2 Emissions and Emissions per Unit of Weight of
Product Shipment

2014

2015

2016

2012

2013

2014

2015

2016
(Years ended March 31)

 SCREEN employees  SCREEN Group employees

0

70

2012

2013

2014

2015

2016

60

(April) New SCREEN employees*  Retention rate after three years (SCREEN employees)*Those who joined the company on April 1 or October 1 of each fiscal year

Equity and Equity Ratio(Billions of yen)
150

ROE

Shipmentbasis

Completion of
installation basis

90.0

86.4

(%)
60

119.6

110.8

125
100

36.7

44.3

44.4

76.2

Shipmentbasis

Completion of
installation basis

50
40

16.3

20

20

25

Capital Expenditures and R&D Expenses(Number)
5,000(Billions of yen)
16

4,160

6.7

5.2

30

50

Number of Patents Held

12.3

37.2
32.8

75

(%)
40

4,000

3,441

0

3,000

3,602

3,709

1,695

2012

2013

2014

2015

0

2016

-20

2012

-14.2
2013

15.1

12.2

2,124

1,718

8

10

0

12.6
12

2,033
1,633

13.9

13.8

4,222

7.3

2,000

6.6

6.4

6.3

4.5
2014

2015

2016

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

1,000

1,808

1,907

1,991

2,127

2,098

4

 Equity  Equity ratio
0

2012

2013

2014

2015

2016

0

2012

2013

2014

Interest-bearing Debt and Debt/Equity Ratio(Billions of yen)
80

Shipmentbasis

 Japan  Overseas

Cash Flows

Completion of
installation basis(Times)2.0(Billions of yen)
40

1.5

20

21.5

47.6

41.3

40

20

0

39.6

39.6

1.0

0.92
0.53
2012

0.48
2013

2014

2015

2016

14.7

0

0.5

-20

0.0

-40

-4.1
-9.4

-5.7
-15.3

-4.2

2012

2013

2014

-1.4 -3.8 -2.5 -2.8
-6.3

-29.3
2015

(Years ended March 31)
 Interest-bearing debt  Debt/equity ratio Capital expenditures  R&D expenses

24.7

11.2

0.33

0.36

2016

Note: SCREEN employees refer to those employed by SCREEN Holdings Co., Ltd., SCREEN Semiconductor Solutions Co., Ltd., SCREEN Graphic and Precision Solutions Co., Ltd.,SCREEN Finetech Solutions Co., Ltd., SCREEN Manufacturing Support Solutions Co., Ltd. and SCREEN Business Support Solutions Co., Ltd.

70.4
60

2015

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

2016(Years ended March 31)

 Operating activities  Investing activities  Financing activities

Note: Effective from the fiscal year ended March 31, 2014, as for main unit sales in the Semiconductor Solutions segment and the Finetech Solutions segment, the revenue recognition method
was changed to the completion of installation basis. Accordingly, amounts for the fiscal year ended March 31, 2013 have been reclassified with amounts calculated by applying thischange of accounting policies retroactively.

30

31

Eleven-Year Trends in Key Financial Indicators
Consolidated Eleven-Year Summary
SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

For the Year:

2016

Millions of yen

Thousands of U.S. dollars

Net sales¥259,675¥237,646¥235,946¥199,795¥250,090¥254,953¥164,129¥219,049¥279,816¥301,312¥246,534$2,298,009

Cost of sales

178,677

165,192

177,175

157,790

187,325

182,990

137,827

169,391

208,266

211,159

173,628

1,581,213

68.8%

69.5%

75.1%

79.0%

74.9%

71.8%

84.0%

77.3%

74.4%

70.1%

70.4%

¥ 23,557¥ 17,168¥

8,903¥ (4,833)¥ 13,498¥ 26,811¥ (14,046)¥ (4,510)¥ 14,628¥ 30,541¥ 18,568

3.8%

-2.4%

¥

5,419

¥ (11,333)

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

9.1%

7.2%

¥ 18,816¥ 12,122

5.4%

10.5%

-8.6%

-2.1%

4,637

¥ 25,687¥ (8,003)¥ (38,191)

Comprehensive income

11,56724,01814,262(6,031)

4,192

22,576(5,257)

Depreciation and amortization

5,030

4,880

4,101

4,731

4,986

5,805

Cash flows from operating activities

14,721

Cash flows from investing activities(2,558)(1,492)

24,703(15,320)

11,279(6,318)(4,201)(5,768)(4,162)

Cash flows from financing activities(2,846)(3,823)(29,302)21,534

Capital expenditures

6,352

6,659

4,574

R&D expenses

15,166

13,972

Profit (loss) attributable to owners of parent

5.2%

10.1%

7.5%

4,578

¥ 18,452¥ 15,236$ 166,513

—

—

—

—

102,363

7,012

8,414

5,563

4,113

3,823

44,51334,29925,113(24,593)7,934

23,645

14,906130,274(2,191)

6,885(6,921)(16,510)(8,519)(7,482)(22,637)(9,468)(22,250)(27,124)

34,071669(8,875)(13,442)(25,186)

6,450

7,347

3,613

1,911

4,007

12,866

14,4205,906

56,212

12,274

12,685

13,88912,13011,615

16,073

16,24816,884

13,269134,21222.83¥ (47.75)

19.54¥ 108.21¥ (33.71)¥ (160.86)¥¥

Per Share of Capital Stock:
Net income (loss)
Net income—diluted$ 208,469

Yen

¥

79.35

¥

51.07

¥

¥

¥

18.81

¥

74.05

¥

60.66

U.S. dollars

$

0.70

—

—

—

—

—

—

—

—

17.39

68.63

55.81

—

Cash dividends

12.00

7.00

3.00

—

5.00

5.00

—

—

10.00

15.00

10.00

0.11

Net assets

506.68467.13364.23321.24379.44367.00272.15292.12514.26542.13500.30

4.48

At Year-end:
Total assets
Return on total assets (%)
Current assets

Millions of yen¥270,094¥249,517¥232,376¥232,390¥245,382¥253,127¥216,622¥246,918¥291,114¥319,519¥270,238

7.2%

5.0%

2.3%

-4.8%

1.9%

10.9%

-3.5%

-14.2%

1.5%

6.3%

5.8%

Thousands of U.S. dollars$2,390,212¥188,522¥160,367¥157,327¥161,614¥177,543¥183,523¥139,984¥168,191¥196,989¥223,463¥181,077$1,668,336

Property, plant and equipment, net

43,37842,606

40,711

39,902

38,66940,69945,41350,95549,06942,34636,096

383,876

Current liabilities

120,857

92,750114,367

120,014

123,223

148,132

93,874132,431

123,702

133,784

106,134

1,069,531

Long-term debt

18,986

32,666

21,94329,642

25,988

10,634

48,19532,96740,64443,90024,674

168,018

Equity119,650

110,865

86,44876,24890,06987,11864,607

69,353122,094

133,062

126,392

1,058,849

44.3%

44.4%

37.2%

32.8%

36.7%

34.4%

29.8%

28.1%

41.9%

41.6%

46.8%

Equity ratio (%)
Return on equity (%)
Capital stock
Retained earnings (deficit)
Number of shares issued (in thousands)
Number of employees

16.3%

12.3%

6.7%

-14.2%

5.2%

33.9%

-11.9%-39.9%

3.6%

14.2%

13.5%

¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 54,045¥ 53,999$ 478,274

71,60254,44841,82436,40555,44026,418731

8,734

49,39048,49732,536633,646

253,974

253,974

253,974

253,974

253,974

253,974

253,974

253,974

253,974

253,974

253,792

5,182

5,082

4,968

4,955

4,890

4,732

4,679

4,992

5,041

4,798

4,672

Notes: 1. Dollar figures are translated, for convenience only, at the rate of ¥113 to US$1.00.
2. Net income (loss) per share of capital stock is calculated based on the weighted average number of shares outstanding during each term, excluding theCompany’s treasury stock. Fully diluted net income per share of capital stock is not shown for the years that net losses were recorded or no dilutive stock
existed. Net assets per share of capital stock is calculated based on the fiscal year-end total number of shares outstanding, excluding the Company’s treasury stock.
3. Return on total assets and return on equity are calculated on the basis of average total assets and average equity, respectively, at the current and previous
fiscal year-ends.
4. Equity in the above table represents the total of shareholders’ equity and accumulated other comprehensive income in the consolidated balance sheets.
This is due to the adoption of the new accounting standards for presentation of net assets in the balance sheet, which require former shareholders’ equity
and non-controlling interests to be presented as net assets, and net assets to be classified as shareholders’ equity, accumulated other comprehensive
income and non-controlling 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 accordance with the new accounting standards, whereas the statements for theprevious years are presented pursuant to the previous presentation rules.

32

5. Effective from the fiscal year ended March 31, 2011, the “Accounting Standard for Presentation of Comprehensive Income” has been adopted. Under the
new accounting standard, the above table includes comprehensive income whereas these amounts are not shown before the years ended March 31,
2010.
6. Effective from the fiscal year ended March 31, 2014, for main unit sales in the Semiconductor Solutions (SE) segment and the Finetech Solutions (FT)
segment, the revenue recognition method was changed to the completion of installation basis. Accordingly, amounts for the fiscal year ended March 31,
2013 have been reclassified with amounts calculated by applying this change of accounting policies retroactively.

33

Financial Section
Management’s Discussion and Analysis
SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
Fiscal Years Ended March 31

This section provides an analysis of the Group’s consolidated financial statements. The consolidated financial statements arecompiled in accordance with generally accepted accounting principles in Japan.

Operating Results
Dollar figures are translated, for convenience only, at the rate of ¥113 to US$1.00.

Sales
Consolidated net sales for fiscal 2016, ended March 31,
2016, rose 9.3% year on year to ¥259,675 million.
In the Semiconductor Solutions (SE) segment, sales tologic chip manufacturers and foundries decreased year on
year, but those to memory and image sensor manufacturers
went up. By product, overall sales of cleaning equipment
were up year on year, reflecting strong sales of batch-type
equipment. Sales of coater/developers for sub-200 mm
wafers also increased.
In the Graphic and Precision Solutions (GP) segment, due toincreased sales in Japan as a result of efforts to further penetrate the print on demand (POD) equipment market as well as
the depreciation of the yen, sales of graphic arts equipment
increased year on year. Sales of printed circuit board (PCB)related equipment were roughly flat year on year, as sales ofmainstay direct imaging systems grew in China but fell in Japan.
In the Finetech Solutions (FT) segment, sales in Taiwan andJapan of production equipment for small- and medium-sized
LCD panels increased significantly year on year.
Total overseas sales rose ¥2,283 million, or 1.2%, year on
year to ¥186,446 million. The ratio of overseas sales toconsolidated net sales fell 5.7 percentage points to 71.8%. In
North America, sales in the SE segment decreased, resulting
in regional sales of ¥36,219 million, down 31.7% year on
year. In Asia & Oceania, sales rose in the SE and FT segments,
leading regional sales to climb 37.3% year on year to¥126,717 million. In Europe, while sales in the GP segmentrose, those in the SE segment fell, leading to regional salesof ¥20,160 million, down 45.3% year on year. In otherregions, net sales rose 65.8% year on year to ¥3,350 million.

Consolidated Net Sales by Reportable Segment

Domestic Sales, Overseas Sales andRatio of Overseas Sales to Net Sales(Billions of Yen)

(Billions of Yen)

(%)

300

300

90

250

250

75

200

200

60

150

150

45

100

100

30

50

50

15

0

2012

2013

2014

2015

0

2016

2012

2013

2014

2015

Contents
35 Management’s Discussion and Analysis
43 Segment Information
44 Consolidated Balance Sheets
46 Consolidated Statements of Operations/Consolidated
Statements of Comprehensive Income

47 Consolidated Statements of Changes in Net Assets
48 Consolidated Statements of Cash Flows
49 Notes to Consolidated Financial Statements

왎 SE 왎 GP 왎 FT 왎 Other

2016

0

(Years ended March 31)(Years ended March 31)
왎 Domestic Sales 왎 Overseas Sales 쎲 Ratio of Overseas Sales to Net Sales

Cost of Sales and SGA Expenses
The cost of sales improved due to the increase in sales andreductions in variable costs made to boost profitability,
among other factors, despite increases in such fixed costs as
R&D expenses and personnel costs. As a result, the ratio of
cost of sales to net sales fell from 69.5% in the previous
fiscal year to 68.8% during the year under review. In spite ofcost-cutting efforts, selling, general and administrative (SGA)
expenses increased ¥2,155 million, or 3.9%, year on year to¥57,441 million due to increased personnel costs and R&D
expenses. The ratio of SGA expenses to net sales improved
from 23.3% in the previous fiscal year to 22.1% in the fiscal
year under review, reflecting the increase in net sales, evenas SGA expenses also grew.
As a result, operating income rose ¥6,389 million year on
year to ¥23,557 million.

62 Independent Auditor’s ReportThousands of
U.S. dollars

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 (%)

2016

2015

2014

2013

2012

2016

¥259,675
178,677
68.8%¥ 80,998
57,44122.1%¥237,646
165,192
69.5%¥ 72,454
55,28623.3%¥235,946
177,175
75.1%¥ 58,771
49,86821.1%¥199,795
157,790
79.0%¥ 42,005
46,83823.4%¥250,090
187,32574.9%¥ 62,765
49,26719.7%$2,298,009
1,581,213$ 716,796
508,327

Note: Effective from the fiscal year ended March 31, 2014, as for main unit sales in the SE and FT segments, the revenue recognition method was changed to the completion of installationbasis. Accordingly, amounts for the fiscal year ended March 31, 2013 have been reclassified with amounts calculated by applying this change of accounting policies retroactively.

34

35

Financial Section

Research and Development Expenses
At the SCREEN Group, we maintain close relationships
between SCREEN Holdings Co., Ltd. and Group companies
to foster the combination and application of the diverse technologies that are key to photolithography, including cleaning,coating, image processing, optical systems, and inspection
and measurement technologies. This approach enables us tolaunch aggressive R&D initiatives spanning basic researchthrough product development.
On April 1, 2015, a new organization was launched within
SCREEN Holdings Co., Ltd., bringing together R&D, sales,and marketing functions at WHITE CANVAS RAKUSAI, oneof the Group’s R&D sites, to accelerate the formation of businesses in new fields.
During the year under review, the Group invested ¥15,166
million in R&D. We invested mainly in reinforcing and expanding existing businesses, particularly those in the SE segment,
as well as in aggressive R&D for new business creation in the
new business fields of life science, inspection and measurement, printed electronics, and energy.
The Group’s main R&D achievements in the fiscal year
under review are as follows.
With regard to the SE segment, focusing on the development of ultra-miniaturization technologies to create IC circuitswith line widths of under seven nanometers, the Group
continued joint development with overseas research institutions of cutting-edge semiconductor processes, including
cleaning, wet etching, and lithography (coater/developers).
Also, to meet customer demand, including for higher productivity and compatibility with next-generation processes, we
worked to further increase the speed and functionality of the
SU-3200 single wafer cleaner. In light of the growing importance of the Internet of Things (IoT) and power devices, theSE segment is targeting 200mm wafer processes through its“Frontier Project,” under which it is developing equipment fora wide range of sensors, inverters, and analog devices. This
segment’s R&D expenses amounted to ¥7,115 million.
In the GP segment, with regard to graphic arts equipment,
the Group advanced development aimed at further improving
the speed, resolution, and functionality of its roll inkjet printing presses that can accommodate variable data printing.
The segment also advanced product development of
PCB-related equipment to expand its lineup of direct imaging
equipment. This segment’s R&D expenses amounted to¥3,885 million.
In the FT segment, we developed the SK-P series, a new
coating system designed for the mass production of OLEDand other high-quality flexible displays. The SK-P series
rapidly coats substrates of up to 1,500 by 1,850 mm (socalled sixth-generation substrates) with thin, even layers ofhighly adhesive polyimide material while minimizing air
bubbles and contaminants. The Group also commercialized36

the VC series vacuum chemical vapor deposition (CVD)
equipment and VS series vacuum sputtering equipment.
Compatible with the Group’s proprietary low-inductanceantenna (LIA) plasma vacuum deposition technology, thisequipment is equipped with deposition technology to formhigh-performance films that provide such new added value
features as damage protection and ornamental processing
for various materials. This segment’s R&D expenses
amounted to ¥980 million.
In addition to the above segments, SCREEN Holdings Co.,
Ltd. also engaged in basic research and R&D related to new
business fields. R&D expenses in these areas amounted to¥3,186 million.
In the life science field, the Group developed the
Cell3iMager duos, a cell morphology analysis imaging systemthat allows both quantitative analysis of cell cultures andchanges in morphology as well as high-definition imaging
comparable to biological microscopes. The system requires
no reagents and can be used with both flat and three-dimensional cell cultures. It is expected to be highly useful in theareas of drug discovery research and regenerative medicine.
We also began full-scale collaborative research with anational research institution aimed at creating systems andequipment for next-generation organ perfusion culture thatenables long-term storage and function restoration of
excised organs for transplantation. Furthermore, the
SCREEN Group acquired Alpha MED Scientific Inc., whichmakes systems that measure extracellular field potential for
drug candidate safety assessments using iPS cell-derived
cardiomyocytes and neurons. Through these efforts, we areworking to expand our life science business.
In the inspection and measurement field, we developed
the IM-4100 automatic optical inspection system for assembled components. Designed for mixed production systems
producing multiple types of assembled components, thissystem can perform complete inspection to automaticallydetect missing parts or assembly errors. We also began
development of new lighting that enables more flexible imaging to improve the capabilities of inspection equipment.

R&D Expenses and Ratio of R&D Expenses to Net Sales(Billions of Yen)

(%)

20

8

15

6

10

4

5

2

0

2012

2013

2014

2015

2016

0

(Years ended March 31)

In the printed electronics field, the Group combined its
proprietary technologies with gravure offset printing to establish an engraving technology that allows easy line formationin one pass, without the need for repeated printing, evenwhen forming complex circuits with multiple line widths.
Based on this technology, we developed ultra precision
gravure offset printing plates and the UP-5000S ultra precision gravure offset flatbed printing system.
On March 25, 2016, the Company established a wholly
owned subsidiary as a preparatory successor company.

On October 1, 2016, this company will become the successor of certain software development businesses of theCompany through a demerger and thereafter work to expand
said businesses.
Note that basic research expenses are, in principle, allocated to their respective segments and calculated as part ofsegment income or loss reported under Segment Information.

Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

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

2016

2015

2014

2013

2012

2016

¥15,166
5.8%¥13,972
5.9%¥12,274
5.2%¥12,685
6.3%¥13,889
5.6%$134,212

Segment Information
In the SE segment, sales to logic chip manufacturers andfoundries decreased year on year, but those to memory andimage sensor manufacturers went up. By product, overallsales of cleaning equipment were up year on year, reflecting
strong sales of batch-type cleaning equipment. Sales ofcoater/developers for sub-200 mm wafers also increased. By
region, sales in the United States and Europe fell, but sales in
Taiwan and Japan rose. As a result, net sales in this segment
amounted to ¥165,801 million, up 5.3% year on year.
Operating income in this segment came to ¥18,716 million,
up 18.9% from the previous fiscal year, reflecting an improvement in the variable cost ratio and the increase in net sales,
despite an increase in fixed costs, including R&D expenses
and personnel costs.
In the GP segment, due to increased sales in Japan as aresult of efforts to further penetrate the print on demand(POD) equipment market as well as the depreciation of theyen, sales of graphic arts equipment increased year on year.

Sales of printed circuit board (PCB)-related equipment wereroughly flat year on year, as sales of mainstay direct imaging
systems grew in China but fell in Japan. As a result, net sales
in this segment came to ¥61,280 million, up 10.0% year on
year. Despite a rise in the variable cost ratio due to changes
in the product mix and an increase in fixed costs, including
R&D expenses and personnel costs, the segment posted
operating income of ¥3,169 million, an increase of 11.6% fromthe previous fiscal year, thanks to the increase in net sales.
In the FT segment, sales of production equipment forsmall- and medium-sized LCD panels in Taiwan and Japan
increased significantly year on year. As a result, net sales inthis segment amounted to ¥31,590 million, up ¥7,816
million, or 32.9%, year on year. Reflecting the increase in net
sales, this segment posted operating income of ¥2,748
million, a significant increase from the ¥339 million recordedin the previous fiscal year.

Earnings Analysis
Reflecting the across-the-board increases in sales in the SE,
GP, and FT segments, net sales for the Group as a wholerose ¥22,029 million, or 9.3%, year on year to ¥259,675
million. Operating income came to ¥23,557 million, up¥6,389 million year on year due to the increase in sales andimprovement in the variable cost ratio, despite the increase in
fixed costs, including personnel costs and R&D expenses.
The ratio of operating income to net sales improved 1.9
percentage points from the previous fiscal year to 9.1%.
There was a ¥1,772 million turnaround in net other income
and expenses from a net expense in the preceding fiscal year
to net income of ¥386 million in the year under review. This

was largely attributable to gain on sales of investment securities, reflecting the sale of held stocks.
Income before income taxes was ¥23,943 million, up¥8,161 million year on year, and profit attributable to ownersof parent was ¥18,816 million, up ¥6,694 million. The ratio of
profit attributable to owners of parent to net sales improved
2.1 percentage points from the previous term to 7.2%.
Net income per share of common stock was ¥79.35, an
improvement of ¥28.28 compared with the previous fiscal year,
and return on equity improved 4.0 percentage points from theprevious term to 16.3%. Return on total assets improved
2.2 percentage points from the previous term to 7.2%.

왎 R&D Expenses 쎲 Ratio of R&D Expenses to Net Sales

37

Financial Section

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

10

Net Income Per Share of Capital Stock

Working Capital

Equity and Equity Ratio(Yen)(Billions of Yen)

(Billions of Yen)

100

80

5

60
50

0

40
0

-5
-10

(%)

120

60

100

50

80

40

60

30

40

20

20

10

20

2012

2013

2014

2015

-50

2016

2012

2013

2014

(Years ended March 31)

2015

0

2016

2012

2013

2014

2015

(Years ended March 31)

0

2016

2012

2013

2014

2015

0

2016

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

쎲 Ratio of Operating Income to Net Sales 쎲 Ratio of Net Income to Net Sales왎 Equity 쎲 Equity Ratio

Interest-Bearing Debt

Net Assets Per Share of Capital Stock(Billions of Yen)

(Yen)

Return on Equity and Return on Total Assets
80

(%)

600

20

500

60

400

10
40

300

0

200
20
100

-10
0
-20

2012

2013

2014

2015

2012

2013

2014

2015

0

2016

2012

2013

2014

2015

2016

(Years ended March 31)

2016(Years ended March 31)(Years ended March 31)
쎲 Return on Equity 쎲 Return on Total Assets

Thousands of
U.S. dollars

Millions of yen

2016

2015

2014

2013

2012

2016

¥23,557
9.1%¥17,168
7.2%¥8,903
3.8%¥ (4,833)-2.4%¥13,498
5.4%$208,469¥18,816
7.2%¥12,1225.1%¥5,4192.3%¥(11,333)-5.7%¥ 4,637
1.9%$166,513¥ 79.35
—
16.3%
7.2%

¥ 51.07
—
12.3%
5.0%

¥22.83—6.7%
2.3%¥ (47.75)—-14.2%-4.8%¥ 19.54
—
5.2%
1.9%

$

Years ended March 31,

Operating income (loss)
Operating income to net sales (%)
Profit (loss) attributable to ownersof parent
Net income to net sales (%)
Per share of capital stock (yen)Net income (loss)
Net income—diluted
Return on equity (%)
Return on total assets (%)

0.70—

Notes: 1. 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.
2. Effective from the fiscal year ended March 31, 2014, for main unit sales in the SE and FT segments, the revenue recognition method was changed to the completion of installationbasis. Accordingly, amounts for the fiscal year ended March 31, 2013 have been reclassified with amounts calculated by applying this change of accounting policies retroactively.

Thousands of
U.S. dollars

Millions of yen
As of March 31,

Total assets
Reportable Segment: SE
GP
FT
Other
Adjustments
Working capitalInterest-bearing debt
EquityEquity ratio (%)
Net assets per share ofcapital stock (yen)

2016

2015

2014

2013

2012

2016

¥270,094
132,524
50,33428,372
6,637
52,227
67,66539,636
119,65044.3%¥249,517
114,733
53,28920,624
4,979
55,892
67,61739,677
110,86544.4%¥232,376
119,015
48,963
13,664
3,566
47,16842,96041,37586,44837.2%¥232,390
117,71446,653
13,4284,043
50,552
41,60070,44376,24832.8%¥245,382
133,927
41,226
15,662
4,763
49,80454,32047,67690,06936.7%$2,390,212
1,172,779
445,434
251,080
58,733462,186
598,805
350,761
1,058,849¥ 506.68¥ 467.13¥ 364.23¥ 321.24¥ 379.44$

4.48

Note: Effective from the fiscal year ended March 31, 2014, for main unit sales in the SE and FT segments, the revenue recognition method was changed to the completion of installation basis.
Accordingly, amounts for the fiscal year ended March 31, 2013 have been reclassified with amounts calculated by applying this change of accounting policies retroactively.

Financial Position and Liquidity
Capital Expenditures and Depreciation and Amortization

Assets, Liabilities, and Net Assets
Total assets as of March 31, 2016 stood at ¥270,094 million,
an increase of ¥20,577 million, or 8.2%, compared with
March 31, 2015. This was largely due to increases in tradenotes and accounts receivable and cash and time deposits,
despite a decrease in investment securities.
Total liabilities amounted to ¥149,805 million, up ¥11,801
million, or 8.6%, compared with the end of the previous fiscal
year. This was mainly attributable to increases in trade notes
and accounts payable and advances received. Interestbearing debt decreased ¥41 million, or 0.1%, from March 31,
2015 to ¥39,636 million. Net interest-bearing debt, or interest-bearing debt minus cash and time deposits, decreased

38¥6,773 million compared with the previous fiscal year-end to¥7,264 million.
Total net assets amounted to ¥120,289 million, up ¥8,776
million, or 7.9%, from March 31, 2015. This was mainly
attributable to the increase in retained earnings as a result of
the recording of profit attributable to owners of parent,
despite decreases in valuation difference on available-for-salesecurities and foreign currency translation adjustment due todecreases in the market values of held stocks and the appreciation of the yen.
As a result, the equity ratio as of March 31, 2016 was
44.3%.

For the year ended March 31, 2016, Group capital expenditures, including expenditures for intangible fixed assets,
totaled ¥6,352 million.
In the SE segment, capital expenditures, centered on R&D
and manufacturing facilities for semiconductor production
equipment, amounted to ¥3,571 million.
Capital expenditures in the GP segment, centered on R&D
and manufacturing facilities for graphic arts equipment, were¥823 million.
In the FT segment, capital expenditures, invested mainly in
R&D and other facilities for FPD production equipment,
totaled ¥181 million.

Capital expenditures for other businesses, which went
mainly to R&D facilities, came to ¥245 million.
On a Groupwide basis, capital expenditures, centered oncore business systems and facilities related to our businesssite in Kumamoto, Japan, amounted to ¥1,532 million.
Depreciation and amortization during the year came to¥5,030 million, up ¥150 million, or 3.1%, from the previous
fiscal year.

39

Financial Section

Capital Expenditures

Depreciation and Amortization

Risk Factors(Billions of Yen)

(Billions of Yen)

86(1) Semiconductor and FPD market trends
While the semiconductor and FPD markets have recorded
significant growth on rapid technological innovation, they arealso susceptible to deterioration in market supply-demandbalance which leads to cyclical upturns and downturns.
Given such market conditions, the SCREEN Group is
promoting business portfolio reform so that it can consistently generate profits during market downturns. However,
unexpectedly large market downturns can have a material
impact on the Group’s financial condition and businessperformance.

6
4
4
2
2
0

2012

2013

2014

2015

0

2016

2012

2013

2014

(Years ended March 31)

2015

2016
(Years ended March 31)

Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

2016

2015

2014

2013

2012

2016

Capital expenditures
Reportable Segment: SE
GP
FT
Other
Adjustments
Depreciation and amortization
Reportable Segment: SE
GP
FT
Other
Adjustments¥6,352
3,571
823
181
245
1,532
¥5,030
2,490
646
88
185
1,621

¥6,659
4,221
866
172
139
1,261
¥4,880
2,620
625
59
119
1,457

¥4,574
2,224
868
86
206
1,190
¥4,101
2,542
485
80
110
884

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

¥7,347
2,951
1,041
448
114
2,793
¥4,986
3,204
310
329
112
1,031

$56,21231,602
7,283
1,602
2,167
13,558$44,513
22,035
5,717
779
1,637
14,345

Cash Flows
Cash flows during the fiscal year ended March 31, 2016,
were as follows.
Net cash provided by operating activities came to ¥14,721
million, compared with ¥1,492 million used in operating activities in the previous fiscal year. This was because income
before income taxes, increases in trade notes and accounts
payable and advances received, and other inflows surpassed
such cash outflows as increases in trade notes and accounts
receivable and inventories.
Net cash used in investing activities amounted to ¥2,558
million, compared with ¥6,318 million used in investing activi-

ties in the previous fiscal year. This was attributable to thepurchase of property, plant and equipment, such as equipment for R&D, which was partially offset by the sale of investment securities.
Net cash used in financing activities amounted to ¥2,846
million, compared with ¥3,823 million used in financing activities in the previous fiscal year. This was attributable mainly tocash dividends paid and the acquisition of treasury stock.
As a result, cash and cash equivalents as of March 31,
2016, totaled ¥30,157 million, up ¥8,166 million from March
31, 2015.

Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of exchange rate changes
on cash and cash equivalents
Net increase (decrease) in cash
and cash equivalents

40

2016

2015

2014

2013

2012

2016

¥14,721(2,558)(2,846)¥(1,492)(6,318)(3,823)¥24,703(4,201)(29,302)¥(15,320)(5,768)21,534¥11,279(4,162)(9,468)$130,274(22,637)(25,186)(1,151)

2,062

2,335

1,949

(400)

(10,186)¥ 8,166¥(9,571)¥ (6,465)¥ 2,395¥ (2,751)$ 72,265(2) Concentration of transactions with specific customers
The SCREEN Group delivers production equipment to leading semiconductor manufacturers in Japan and overseas.
However, as raising production capacity and responding tominiaturization trends in this industry requires huge capital
investments, certain leading manufacturers are consolidating.
Accordingly, the Group’s sales are tending to concentrate on
specific customers. As a result, fluctuations in capital investments and orders by these specific customers could have amaterial impact on the Group’s financial condition and business performance.
(3) Concentration of production sites
The SCREEN Group’s domestic manufacturing sites areconcentrated in the Kyoto and Shiga regions, and a largescale earthquake or other disaster affecting this area could
seriously damage the Group’s operations. To minimize thepotential for loss and ensure continuation or early resumptionof business operations, the Group has been promoting business continuity management (BCM). However, the halting ofoperations at a production site as a result of such a disaster
could have a material impact on the Group’s financial condition and business performance.
(4) Product quality
The SCREEN Group has created its quality management
system on the basis of standards for quality management
systems (ISO 9001) and works to enhance the quality of its
products and services. Nevertheless, if a product defectshould arise and lead to a large-scale recall or product liability resulting in losses to a customer, the Group could incur
significant additional expenses and suffer a decrease in trust,
prompting a decline in sales. Such cases could have a material impact on the Group’s financial condition and businessperformance.

(5) New product development
In order to strengthen its earnings structure by expanding
market share, the Group is working to concentratedevelopment themes in line with the respective strategies ofeach in-house company to share technologies held within
the Group and effectively utilize external technology
resources to strengthen and invigorate its development
capabilities in the timely introduction of products that incorporate the latest technologies. This notwithstanding,extended development periods could result in delays in new
product releases that could have a material impact on theGroup’s financial condition and business performance.
(6) Intellectual property rights
Over the years the Group has striven to introduce into themarket products utilizing the latest technologies and has
created various proprietary technologies within each business division. 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 the increasing complexity of intellectual property rights in leading-edge technology fields, there is the riskthat the Group could in the future become involved in intellectual property disputes and that such disputes could havea material impact on the Group’s financial condition andbusiness performance.
(7) Information security
In the course of its business operations, the Group handles
various personal, customer and technological information.
The Group has established Network System Management
Regulations to strengthen the security of internal information
systems as well as the SCREEN Group CSR Charter, which
establishes a Code of Conduct for all Group employees tocomply with in their business operations, seeking to reinforce
information management. However, unforeseen leaks ofconfidential information could have a material impact on theGroup’s financial condition and business performance.
(8) Corporate acquisitions and capital participation
The Group may engage in corporate acquisitions or capital
participation in other companies as part of its business strategy. While the Group will thoroughly examine each specificproject before taking action, business plans may not proceed
as originally planned after an acquisition or a business alliance is concluded, and this could have a material impact on
the Group’s financial condition and business performance.

41

Financial Section
Segment Information(9) Major lawsuits
The SCREEN Group could become the target of a lawsuit fora variety of reasons related to its business activities. If theGroup were to become the subject of a major lawsuit, saidlawsuit could, depending on its outcome, have a material
impact on the Group’s financial condition and businessperformance.

While the Group is working through a conversion from aqualified retirement pension system to a cash balance plan
and a defined contribution plan and taking other measures toreduce the impact of retirement benefit obligations, worse
than forecasted investment returns and other factors could
have a material impact on the Group’s financial condition andbusiness performance.

(10) Interest rate fluctuations
All the Group’s interest-bearing debt as of the end of the
fiscal year was fixed-rate debt and was, therefore, notsubject to interest rate fluctuation risk. Nevertheless, theGroup’s financial condition and business performance could
be materially affected by the impact of interest rate fluctuations
on new fund procurement at variable interest rates.

(14) Impact of impairment accounting
Due to the application of impairment accounting for fixed
assets, future trends in property prices and the earnings
outlook for the business could have a material impact on theGroup’s financial condition and business performance.

(11) Procurement of funds
Certain loan contracts of the Company provide for financial
covenants regarding its consolidated net assets at the end ofeach fiscal year and its consolidated ordinary income (loss) ofeach fiscal year. If these covenants were to be breached andthe financial institutions required repayment, the Company
could be forced to forfeit the benefit of time in relation to suchloans. In such a case, the Company could also forfeit thebenefit of time in relation to its bonds and other loans. If theCompany forfeits the benefit of time for its loans and incurs theobligation to make a lump-sum repayment, it could have amaterial impact on the Group’s financial condition.
(12) Exchange rate fluctuations
As the Group has a high overseas sales ratio, we make aproactive effort to avoid exchange rate risks on export sales
by conducting transactions denominated in yen. However,some transactions are denominated in foreign currencies.
While the Group is working to minimize the impact of
exchange rate fluctuations by using forward exchange
contracts and other measures to minimize the impact on its
business performance, rapid fluctuations in exchange rates
could have a material impact on the Group’s financial condition and business performance.

(15) Recoverability of deferred tax assets
The SCREEN Group records deferred tax assets against
temporary differences due to future losses and loss carryforwards for tax purposes based on rational forecasts of future
income taxes and its judgments of their recoverability. The
Group reviews its assumptions on future income taxes basedon such factors as changes in the management environment.
A resulting decision that some or all of these deferred tax
assets are unrecoverable and that the writing down ofdeferred tax assets is necessary could have a material
impact on the Group’s financial condition and businessperformance.
(16) Other risks
In addition to the above described risks, the Group’s business
operations are affected, as are those of other companies, byrisks of the global and domestic political environment, theeconomic environment, natural disasters such as earthquakes and floods, wars, terrorism, epidemics, stock
markets, commodity markets, regulations by government,
etc., the supply systems of business associates 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.

Net Sales and Income (Loss) in Reportable Segments
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

Net Sales

Operating
Income(Loss)

Reportable Segment: SE
GP
FT
Other
Intersegment sales
Consolidated
Reportable Segment: SE
GP
FT
Other
Total
Adjustments
Consolidated

2016

2015

2014

2013

2012

2016

¥165,801
61,28031,5901,085(81)¥259,675¥ 18,716
3,169
2,748
(1,138)¥ 23,495
62¥ 23,557¥157,479
55,707
23,774770(84)¥237,646¥ 15,738
2,840
339
(805)
¥ 18,112(944)¥ 17,168¥163,132
52,156
19,850808—¥235,946¥ 8,760
2,768
(422)
(652)
¥ 10,454(1,551)¥ 8,903¥140,690
46,324
12,042739—¥199,795¥ (3,753)
1,475
(836)
(158)
¥ (3,272)(1,561)¥ (4,833)¥167,593
49,16432,611
722—¥250,090¥ 13,628
2,305(1,217)3¥ 14,719(1,221)¥ 13,498$1,467,265
542,301
279,558
9,603(718)$2,298,009$ 165,628
28,04424,319(10,071)$ 207,920
549$ 208,469

Notes: 1. The SCREEN Group has created three business segments for reporting: “Semiconductor Solutions (SE),” “Graphic and Precision Solutions (GP),” and “Finetech Solutions (FT).”The products and services of each segment are as follows:
SE: Development, manufacturing, sale, and maintenance services of semiconductor production equipment
GP: Development, manufacturing, sale, and maintenance services of graphic arts equipment and PCB related equipment
FT: Development, manufacturing, sale, and maintenance services of FPD production equipment
2. The “Other” category incorporates operations not included in reportable segments, including development, manufacturing and sales of equipment in life science business and other,software development, planning and production of printed matter and other businesses.
3 For more information such as details of each reportable segment, see Note 7, “Segment Information.”
4. Effective from the fiscal year ended March 31, 2014, for main unit sales in the SE and FT segments, the revenue recognition method was changed to the completion of installationbasis. Accordingly, amounts for the fiscal year ended March 31, 2013 have been reclassified with amounts calculated by applying this change of accounting policies retroactively.

Domestic Sales and Overseas Sales
Thousands of
U.S. dollars

Millions of yen
Years ended March 31,

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

2016

2015

2014

2013

2012

2016

¥ 73,229
186,446
36,219126,717
20,1603,350¥ 53,483
184,163
52,992
92,321
36,8292,021¥ 53,300
182,646
47,094
111,555
21,9142,083¥ 44,109
155,686
45,18580,395
19,227
10,879¥ 62,135
187,955
53,47992,063
26,138
16,275$ 648,044
1,649,965
320,522
1,121,389
178,407
29,647

71.8%

77.5%

77.4%

77.9%

75.2%

¥259,675¥237,646¥235,946¥199,795¥250,090$2,298,009

Notes: 1. Sales to customers in Japan by the Company and its consolidated subsidiaries.
2. Sales to customers outside Japan by the Company and its consolidated subsidiaries.
3. For information by geographic area, see Note 7, “Segment Information.”
4. Effective from the fiscal year ended March 31, 2014, for main unit sales in the SE and FT segments, the revenue recognition method was changed to the completion of installationbasis. Accordingly, amounts for the fiscal year ended March 31, 2013 have been reclassified with amounts calculated by applying this change of accounting policies retroactively.

(13) Retirement benefit obligations
The Group calculates accrued pension and severance costs
based on assumed discount rates set by actuarial calculations and on expected returns on pension asset investments.
If differences arise between actual results and assumed
costs, changes in assumed parameters and/or declines inpension fund returns, the recognition of future costs and therecording of benefit obligations could be affected.

42

43

Financial Section
Consolidated Balance Sheets
SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2016 and 2015
Thousands of
U.S. dollars

Millions of yen

AssetsLiabilities and Net Assets

2016

2015

2016

¥ 30,157¥ 21,991$ 266,876

Time deposits (Note 9)

2,215

3,650

19,602

Lease obligations (Notes 2 and 9)

Trade notes and accounts receivable (Note 9)

67,58755,054598,115

Notes and accounts payable—

Current Assets:
Cash and cash equivalents (Note 9)

Allowance for doubtful receivables (Note 9)

Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

Current Liabilities:
Current portion of long-term debt (Notes 4 and 9)¥ 17,680

3,680$ 156,460

411

¥

397

3,637

Trade (Note 9)

70,06062,382620,000

Construction and other

3,415

3,839

30,221

(789)

(795)

(6,982)Inventories

76,63370,311

678,168

Deferred tax assets (Note 3)

5,156

4,793

45,628

Accrued expenses

7,708

7,879

68,212

Prepaid expenses and other

7,563

5,363

66,929

Income taxes payable

4,430

2,375

39,204

188,522160,367

1,668,336

Provision for product warranties

4,564

4,557

40,389Provision for bonuses

1,044

—

9,239

Provision for directors’ bonuses

73

126

646

Provision for loss on order received

2

18

18

Total current assets

Other current liabilities
Total current liabilities

11,4707,497

101,505

120,857

92,7501,069,531

Long-Term Liabilities:
Long-term debt (Notes 4 and 9)

Property, Plant and Equipment, at Cost:

18,986

32,666

168,018

Net defined benefit liability (Note 12)

737

716

6,522

Provision for directors' retirement benefits

103

114

912

Lease obligations (Notes 2 and 9)

2,559

2,934

22,64653,000

Land

9,766

9,939

86,425

Deferred tax liabilities (Note 3)

5,989

8,357

Buildings and structures

53,57852,804474,142

Asset retirement obligations

49

49

434

Machinery, equipment and other

50,89549,810450,398

Other long-term liabilities

525

418

4,645

Lease assets

6,613

6,705

58,522

28,94845,254

256,177

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

1,074

1,470

9,504

121,926

120,728

1,078,991(78,548)(78,122)(695,115)

43,37842,606

383,876

Total long-term liabilities
Contingent Liabilities (Note 8)
Net Assets (Note 5):
Shareholders’ Equity:
Capital stock
Authorized—900,000,000 shares in 2016 and 2015

54,04554,045478,274

Capital surplus

Issued—253,974,333 shares in 2016 and 2015

4,583

4,583

40,558Retained earnings

71,60254,448633,646

Treasury stock, at cost
17,830,849 shares in 2016 and 16,642,614 shares in 2015

(13,273)(12,263)(117,460)

116,957

100,813

1,035,018

Total shareholders’ equity
Accumulated Other Comprehensive Income:Investments and Other Assets:
Investment securities (Notes 9 and 11)

28,54036,346

252,566

Valuation difference on available-for-sale securities

8,364

12,58674,018Foreign currency translation adjustment(3,910)(1,394)(34,603)

Remeasurements of defined benefit plans(1,761)(1,140)(15,584)

2,693

10,052

23,831

639

648

5,655

Investments in unconsolidated subsidiaries andaffiliated companies (Notes 9 and 11)

—

39

—

Lease assets (Notes 2 and 6)

34

38

301

4,280

4,748

37,876

496

292

4,389

Non-controlling interests:

4,844

5,081

42,868Non-controlling interests

Net defined benefit asset (Note 12)
Deferred tax assets (Note 3)
Other assets
Total investments and other assets
Total Assets

Total accumulated other comprehensive income

38,19446,544

338,000

Total net assets

120,289

111,513

1,064,504¥270,094¥249,517$2,390,212

Total Liabilities and Net Assets¥270,094¥249,517$2,390,212

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

44

45

Financial Section
Consolidated Statements of Operations

Consolidated Statements of Changes in Net Assets

SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2016 and 2015

SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2016 and 2015

Net Sales (Note 7)
Cost of Sales (Note 7)
Gross profit
Selling, General and Administrative Expenses
Operating income (Note 7)
Other (Income) Expenses:
Interest and dividend income
Interest expenses
Exchange loss on foreign currency transactions, net
House rent income
Compensation income
Subsidy income
Loss on retirement of non-current assets
Gain on sales of investment securities (Note 9)
Gain on bargain purchase
Loss on valuation of investment securities
Office transfer expenses
Impairment loss
Loss on valuation of investments in capital
Other, net
Net other (income) expenses
Income before Income Taxes
Income Taxes (Note 3)
Current
Deferred
Total income taxes
ProfitProfit Attributable to Non-controlling Interests
Profit Attributable to Owners of Parent

Millions of yen

Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

¥259,675
178,677
80,99857,441
23,557¥237,646
165,192
72,45455,286
17,168$2,298,009
1,581,213
716,796508,327
208,469

(661)
1,095
253
(170)
(179)
(308)
302
(993)
—
1
—
227
—
47
(386)
23,943

(620)
1,020
851
(208)
(70)
(110)
146
(91)
(181)
—
364
181
41
63
1,386
15,782(5,850)9,690
2,239(1,504)(1,584)(2,726)
2,673(8,788)
—
9
—
2,009
—
416
(3,416)211,885

5,922
(923)
4,999
18,944128¥ 18,816

3,419
163
3,582
12,20078¥ 12,122

52,407(8,168)44,239167,646
1,133$ 166,513

Accumulated othercomprehensive income

Shareholders’ equity

RemeasureForeign
Valuation
Nonments ofcurrency
difference on
controllingdefinedavailable-for- translation
sale securities adjustments benefit plans interests

Shares ofissued capitalstock(thousands)

Capitalstock

CapitalsurplusRetainedearnings

Treasurystock

Balance at the beginning of fiscal 2015

253,974¥54,045¥4,583¥41,824¥(12,251)¥ 7,089¥(4,834)¥(4,008)¥649¥ 87,097

Cumulative effects of changes inaccounting policies

—

—

—

1,214

—

—

—

—

—

1,214

Currently stated balance, as of beginning ofcurrent period

Total net
assets

253,974¥54,045¥4,583¥43,038¥(12,251)¥ 7,089¥(4,834)¥(4,008)¥649¥ 88,311

Profit attributable to owners of parent

—

—

—

12,122

—

—

—

—

—

12,122

Cash dividends paid, ¥3.00 per share

—

—

—

(712)

—

—

—

—

—

(712)

Valuation difference on
available-for-sale securities

—

—

—

—

—

5,497

—

—

—

5,497

Foreign currency translation adjustments

—

—

—

—

—

—

3,440

—

—

3,440

Remeasurements of defined
benefit plans

—

—

—

—

—

—

—

2,868

—

2,868

Acquisition of treasury stock

—

—

—

—

(12)

—

—

—

—

(12)

Other

—

—

—

—

—

—

—

—

(1)

(1)

Balance at the end of fiscal 2015

253,974¥54,045¥4,583¥54,448¥(12,263)¥12,586¥(1,394)¥(1,140)¥648¥111,513

Balance at the Beginning of Fiscal 2016

253,974¥54,045¥4,583¥54,448¥(12,263)¥12,586¥(1,394)¥(1,140)¥648¥111,513

—

—

—

—

—

—

—

—

—

—

Cumulative effects of changes inaccounting policies
Currently stated balance, as of beginning ofcurrent period

253,974¥54,045¥4,583¥54,448¥(12,263)¥12,586¥(1,394)¥(1,140)¥648¥111,513

Profit attributable to owners of parent

—

—

—

18,816

—

—

—

—

—

18,816

Cash dividends paid, ¥7.00 per share

—

—

—

(1,662)

—

—

—

—

—

(1,662)

Valuation difference on
available-for-sale securities

—

—

—

—

—

(4,222)———(4,222)Foreign currency translation adjustments

—

—

—

—

—

—

(2,516)——(2,516)

Remeasurements of defined
benefit plans

—

—

—

—

—

—

—

(621)

—

(621)

Acquisition of treasury stock

—

—

—

—

(1,010)

—

—

—

—

(1,010)

Other
Balance at the End of Fiscal 2016

—

—

—

—

—

—

—

—

(9)

(9)

253,974¥54,045¥4,583¥71,602¥(13,273)¥ 8,364¥(3,910)¥(1,761)¥639¥120,289

Per Share of Capital Stock:
Yen

2016

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

¥

2015

79.35
—
12.00

Thousands of U.S. dollars

U.S. dollars

¥

51.07
—
7.00

2016

$

0.70
—
0.11

Capitalstock

Balance at the Beginning of Fiscal 2016

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

Accumulated othercomprehensive income

Shareholders’ equity

Cumulative effects of changes inaccounting policies

CapitalsurplusRetainedearnings

Treasurystock$478,274 $40,558 $481,841 $(108,522)

RemeasureForeign
Valuation
Nonments ofcurrency
difference on
controllingdefinedavailable-for- translation
sale securities adjustments benefit plans interests

Total net
assets$111,381$(12,338)$(10,088)$5,735$ 986,841

—

—

—

—

—

—

$478,274 $40,558 $481,841 $(108,522)

—

—

—

Consolidated Statements of Comprehensive Income

Currently stated balance, as of beginning ofcurrent period$111,381$(12,338)$(10,088)$5,735$ 986,841

SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2016 and 2015

Profit attributable to owners of parent——

166,513

—

—

—

—

—

166,513

Cash dividends paid, $0.06 per share——(14,708)

—

—

—

—

—

(14,708)

Valuation difference on
available-for-sale securities

—

—

—

—

(37,363)———(37,363)

Foreign currency translation adjustments

—

—

—

—

—

(22,265)——(22,265)

Remeasurements of defined
benefit plans

—

—

—

—

—

—

(5,496)—(5,496)

Acquisition of treasury stock

—

—

—

(8,938)

—

—

—

—

(8,938)

—

—

—

—

—

—

—

(80)

(80)

$478,274 $40,558 $633,646 $(117,460)$ 74,018$(34,603)$(15,584)$5,655$1,064,504

Thousands of
U.S. dollars

Millions of yen

2016

ProfitOther Comprehensive Income (Note 13)
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive Income (Note 13)
Comprehensive income attributable to
Owners of parent
Non-controlling interests¥18,9442015¥12,200

2016$167,646(4,223)(2,533)(621)(7,377)¥11,567

5,498
3,452
2,868
11,818¥24,018(37,372)(22,415)(5,496)(65,283)$102,363

11,456111

23,926
92

101,381982

Other
Balance at the End of Fiscal 2016

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

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

46

47

Financial Section
Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2016 and 2015

SCREEN Holdings Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2016 and 2015
Thousands of
U.S. dollars

Millions of yen

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Loss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Loss on valuation of investments in capitalGain on bargain purchase
Office transfer expenses
Loss on retirement of non-current assets
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for loss on order received
Interest and dividend income
Interest expenses
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in trade notes and accounts payable
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Contribution in connection with the shift toa defined contribution pension plan
Income taxes paid
Net cash provided by (used in) operating activities
Cash Flows from Investing Activities:
Decrease (increase) in time deposits, net
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Purchase of treasury shares of subsidiaries
Other, net
Net cash used in investing activities
Cash Flows from Financing Activities:
Increase (decrease) in short-term debt, net
Proceeds from long-term debt
Repayments of long-term debt
Repayments of finance lease obligations
Redemption of bonds
Decrease (increase) in treasury stock, net
Cash dividends paid
Cash dividends paid to non-controlling interests
Net cash used in financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

2016

2015

2016

¥23,943
5,030
227
1
(993)
—
—
—
302
(113)
1,044
(54)
45
(16)
(661)
1,095
(12,919)(8,536)(1,506)
8,551
4,046
288
19,774675(1,097)¥15,782
4,880
181
—
(91)
41
(181)
364
146
(328)
—
71
(514)
(557)
(620)
1,020
(9,168)
1,248(1,219)(5,993)(3,125)
(713)
1,224
614
(1,024)$211,885
44,5132,009
9(8,788)———2,673(1,000)
9,239
(478)
398
(142)
(5,850)9,690(114,327)(75,540)(13,327)
75,67335,805
2,549
174,991
5,973(9,708)(0)(4,631)
14,721(1)(2,305)(1,492)(0)(40,982)
130,274

1,176(5,458)
97
(20)
2,510

(660)
(4,655)
22
(200)
105

10,407(48,301)
858(177)
22,212

(23)

—

(204)

—
(840)
(2,558)

(102)
(828)
(6,318)—(7,432)(22,637)—
4,000(3,680)(398)—(1,010)(1,662)(96)(2,846)(1,151)
8,166
21,991¥30,157(102)
15,400(3,251)(1,142)(14,000)
(11)
(712)
(5)
(3,823)
2,062(9,571)
31,562¥21,991—
35,398(32,566)(3,522)—(8,938)(14,708)(850)(25,186)(10,186)
72,265
194,611$266,876

Note 1: Summary of Significant Accounting and Reporting Policies(a) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of SCREEN
Holdings Co., Ltd. (the “Company”) have been prepared in accordance with the provisions set forth in the Financial Instruments andExchange 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. The
accounts of the consolidated overseas subsidiaries have been
prepared in accordance with either International Financial ReportingStandards or U.S. generally accepted accounting principles, withadjustments for the five specified items as applicable. The accompanying consolidated financial statements have been restructured andtranslated into English, with some expanded descriptions, from theconsolidated financial statements of the Company prepared inaccordance with Japanese GAAP and filed with the appropriate
Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law. Some supplementary
information included in the Japanese language statutory consolidated financial statements, but not required for fair presentation, is
not presented in the accompanying consolidated financial statements. Certain Japanese yen amounts in the accompanying consolidated financial statements have been translated into U.S. dollar
amounts solely for the convenience of readers outside Japan, using
the prevailing exchange rate as of March 31, 2016, which was ¥113
to U.S. $1.00. This translation should not be construed as a representation that the amounts shown could be converted into U.S.
dollars at this or any other rate of exchange. Certain amounts in theprior years’ consolidated financial statements have been reclassified
to conform to the current year’s presentation.
(b) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which theCompany has power of control through majority voting rights or the
existence of certain other conditions evidencing control by theCompany. Investments in unconsolidated subsidiaries are accounted
for by the equity method.
(c) Translation of foreign currencies
Receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates. Except for shareholders’ equity accounts, which are translated at historical rates,balance sheets of the consolidated overseas subsidiaries are translated into Japanese yen at year-end rates. Except for transactions
with the Company, which are translated at rates used by theCompany, income statements of the consolidated overseas subsidiaries are translated at average rates. The resulting translation adjustments are presented as foreign currency translation adjustments in
net assets.

(d) Inventories
The Company and its consolidated domestic subsidiaries state thevalue of inventories mainly by either the first-in, first-out method or
the specific identification method. With regard to the amounts statedin the balance sheet, the book value devaluation method is used towrite down the value of inventory in the event of a decline in profitability. Consolidated overseas subsidiaries state inventories mainly at
the lower of cost or net realizable value either by the first-in, first-out
method or the specific identification method.
(e) Securities
The Company and its consolidated subsidiaries classify securities as“available-for-sale securities.” Available-for-sale securities with available fair values are stated at fair value. Unrealized holding gains(losses) on these securities are reported, net of applicable income
taxes, as a separate component of net assets. Realized gains andlosses on the sales of such securities are computed using moving
average cost. Other securities with no available fair values are statedat moving average cost.
(f) Depreciation
Depreciation of property, plant and equipment of the Company andits consolidated domestic subsidiaries is computed primarily by thestraight-line method. Depreciation of property, plant and equipmentof the consolidated overseas subsidiaries is computed mainly by thestraight-line method. The estimated useful lives are as follows:
Buildings and structures 2-60 years Machinery and equipment 2-70
years Maintenance and repairs, including minor renewals and betterments, are charged to income as incurred. Leased assets related tofinance lease transactions in which ownership transfers to the lessee
are depreciated in the same manner as owned property, plant andequipment. Leased assets related to finance lease transactions inwhich ownership does not transfer are depreciated on a straight-line
basis, with the lease periods as the useful life and no residual value.
(g) Impairment of fixed assets
The Company and its consolidated subsidiaries evaluate the bookvalue of fixed assets for impairment. If the book value of a fixed asset
is impaired, the amount by which the book value exceeds the recoverable amount is recognized as impairment loss.
(h) Software
Software, included in “Other assets,” is amortized using the straightline method over its estimated useful life (3-5 years for internal use
software and 3 years for software for sale).
(i) Research and development
Expenses related to research and development are charged toincome as incurred and amounted to ¥15,166 million ($134,212
thousand) in 2016 and ¥13,972 million in 2015.
(j) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits placedwith banks on demand or with maturities of three months or less.

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

48

49

Financial Section(k) Goodwill
Goodwill, which represents the excess of the purchase price overthe fair value of net assets acquired, is amortized on a straight-line
basis over a period of five years. However, when no significant difference in the amounts exists, it is expensed in the year of the acquisition.
(l) Bonds issue costs
Bonds issue costs are charged to expenses as incurred.
(m) Income taxes
The Company and its consolidated subsidiaries record deferred tax
assets and liabilities on loss carryforwards and temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes
by using the asset/ liability approach.
(n) Allowance for doubtful receivables
An allowance for doubtful receivables is provided to 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.
(o) Provision for bonuses
The Company and its consolidated subsidiaries provide provision forcertain employees’ bonuses based on the estimated amounts of
payments to be accrued in the fiscal year.
(p) Provision for directors’ bonuses
Certain consolidated subsidiaries provide provision for directors’
bonuses based on the estimated amounts of payments for the
fiscal year.
(q) Employees’ severance and retirement benefits
The Company and its consolidated subsidiaries provide funded or
unfunded defined benefit plans and defined contribution plans for
employees’ severance and retirement benefits. The Company andcertain consolidated domestic subsidiaries have a cash balance planin defined benefit pension plans combined with defined contribution
pension plans. Certain consolidated domestic subsidiaries have
unfunded lump- sum payment plans. Certain consolidated overseas
subsidiaries have defined contribution plans. In calculating retirement
benefit obligations, the method of attributing expected benefit toperiods up to the end of the fiscal year is based on a benefit formulabasis. Actuarial gains and losses are recognized in expenses using
the straight-line method within the average of the estimated remaining service years (mainly 13 years) commencing with the following
period.
(r) Retirement benefits for directors and corporate auditors
Certain consolidated subsidiaries have unfunded retirement andtermination allowance plans for directors and statutory auditors. The
amounts required under the plans have been fully accrued.
(s) Provision for product warranties
The Company and certain consolidated subsidiaries provide for estimated product warranty costs for the warranty period after productdelivery based on actual payments in the past.

50(t) Provision for loss on order received
Estimated loss accrued in or after the next fiscal year is provided tocover possible future loss related to orders received if future losses is
expected and can be reasonably estimated. (If the net sales value isnegative after calculations based on the “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No. 9, issued on July
5, 2006), the amounts are provided for as provision for loss on order
received.)(u) Derivatives and hedge accounting
If derivative financial instruments are used as hedges and meetcertain hedging criteria, the Company defers recognition of gain orloss resulting from a change in the fair value of the derivative financial
instrument until the related loss or gain on the hedged item is recognized. When a forward foreign exchange contract meets certain
conditions, the hedged item is stated at the forward exchange
contract rate. If interest rate swap contracts are used as hedges andmeet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted fromthe interest on the assets or liabilities for which the swap contract
was executed.
The Company uses forward foreign exchange contracts, interest
rate swap contracts and interest rate cap contracts only for the
purpose of mitigating future risk of fluctuation in 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 hedged items.
Hedging instruments:

Hedged items:

Forward foreign exchange contracts

Foreign currency receivables

Interest rate swap contracts

Interest on short-term and long-term debt

accounting policies to recognize in capital surplus the differences
arising from the changes in the Company’s ownership interest of
subsidiaries over which the Company continues to maintain control
and to record acquisition related costs as expenses in the fiscal year
in which the costs are incurred. In addition, the Company changed its
accounting policy for the reallocation of acquisition costs due to thecompletion following provisional accounting to reflect such reallocationin the consolidated financial statements for the fiscal year in which thebusiness combination took place. The Company also changed thepresentation of net income and the term “non-controlling interests” isused instead of “minority interests.” Certain amounts in the prior year
comparative information were reclassified to conform to such changes
in the current year presentation.
With regard to the application of the Business Combination
Accounting Standards, the Company followed the provisional treatments in article 58-2 (4) of Statement No. 21, Article 44-5 (4) ofStatement No. 22 and Article 57-4 (4) of Statement No. 7 with application from the beginning of the fiscal year ended March 31, 2016
prospectively.
In the consolidated statement of cash flows, cash flows fromacquisition or disposal of shares of subsidiaries with no changes inthe scope of consolidation are included in “Cash flows from financing
activities” and cash flows from acquisition related costs for shares ofsubsidiaries with changes in the scope of consolidation or costs
related to acquisition or disposal of shares of subsidiaries with nochanges in the scope of consolidation are included in “Cash flows
from operating activities.”
The effect of this change on the consolidated financial statements
is immaterial.

(Accounting standards issued but not yet applied)“Revised Implementation Guidance on Recoverability of Deferred Tax
Assets” (ASBJ Guidance No. 26, March 28, 2016 (hereinafter,“Guidance No. 26”)
(1) Overview
Following the framework in Auditing Committee Report No. 66 “Audit
Treatment regarding the Judgment of Recoverability of Deferred Tax
Assets”, which prescribes estimation of deferred tax assets according to the classification of the entity by one of five types, the following
treatments were changed as necessary:
1. Treatment for an entity that does not meet any of the criteria in
types 1 to 5;
2. Criteria for types 2 and 3;
3. Treatment for deductible temporary differences which an entity
classified as type 2 is unable to schedule;
4. Treatment for the period which an entity classified as type 3 is able
to reasonably estimate with respect to future taxable income
before consideration of taxable or deductible temporary differences that exist at the end of the current fiscal year; and5. Treatment when an entity classified as type 4 also meets the criteria for types 2 or 3.
(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2017(3) Effects of application of the Guidance
The Company and its consolidated domestic subsidiaries are
currently in the process of determining the effects of “Revised
Implementation Guidance on Recoverability of Deferred Tax Assets”
on the consolidated financial statements.

Note 2: Consolidated Statements of Cash Flows
The Company executes and manages derivative transactions inaccordance with established internal policies and specified limits on
the amounts of derivative transactions allowed. The derivative transactions are reported to and approved by the Board of Directors. The
Company evaluates hedge effectiveness semiannually by comparing
the cumulative changes in the hedging derivative instruments andthe items hedged.
(Changes of accounting policies)(Adoption of revised accounting standard for businesscombinations, etc.)
Effective from the fiscal year ended March 31, 2016, SCREEN
Holdings and its consolidated domestic subsidiaries adopted“Revised Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, September 13, 2013 (hereinafter, “Statement No.
21”)), “Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, September 13, 2013 (hereinafter, “Statement No. 22”)) and “Revised Accounting Standard forBusiness Divestitures” (ASBJ Statement No. 7, September 13, 2013
(hereinafter, “Statement No. 7”)) (together, the “Business Combination
Accounting Standards”). As a result, the Company changed its

Significant noncash financing activities for the years ended March 31, 2016 and 2015 were as follows:
Newly booked assets and liabilities related to finance leases
Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

Lease assets¥37¥1,118$327

Lease obligations

38

1,398

336

51

Financial Section

Note 3: Income Taxes

Note 4: Short-Term and Long-Term Debt

The Company is subject to several taxes based on income with anaggregate statutory tax rate of approximately 33.0% in 2016 and35.5% in 2015. As of March 31, 2016, the Company and certain
consolidated subsidiaries had net tax loss carryforwards aggregating¥60,655 million ($536,770 thousand), which were available to offset
the respective future taxable incomes of these companies.

Significant components of the Company and its consolidated
subsidiaries’ deferred tax assets and liabilities as of March 31, 2016
and 2015 were as follows:

Short-term debt generally consists of short-term notes from banks. There was no short-term debt as of March 31,2016 and 2015.
Long-term debt as of March 31, 2016 and 2015 consisted of the following:

2016

Thousands of
U.S. dollars

2016

2015

¥ 1,133

¥

2016

¥

—

¥—

Unsecured

18,087

17,153160,062996$ 10,027

—

—

—

2,600

2,400

23,009Secured

2,396

2,607

21,204

1,310

1,398

11,593

SecuredUnsecured

Unrealized income on inventories

1,153

353

102,204

Other

2,351

2,532

20,803

2.00% unsecured notes, due June 7, 2016

Valuation allowance(3,181)(3,087)(28,150)

1.34% unsecured notes, due September 26, 2016
Total

(9)

(15)

(79)

¥ 5,153¥ 4,784$ 45,602—

1.32% to 1.59% loans from an insurance company, due in installments
through 2021

Provision for product warranties

Deferred tax liabilities (current)$

0.59% to 1.58% loans from a governmental institution, due in installments
through 2021

Loss on valuation of inventories

Net deferred tax assets (current)

2016

SecuredUnsecuredDeferred tax assets (current)

Adjustment of allowance for doubtful accounts and other2015

0.35% to 1.69% loans from Japanese banks, due in installments through 2021

Millions of yen

Accrued bonuses for employees/ Provision for bonuses

Thousands of
U.S. dollars

Millions of yen

Current portion of long-term debt shown in current liabilities
Long-term debt, less current portion

—

—

—

2,379

3,193

21,053

8,600

8,600

76,106

5,000

5,000

44,24836,66636,346324,478(17,680)(3,680)(156,460)¥18,986¥32,666$168,018

Deferred tax assets (noncurrent)
Net operating loss carryforwards¥18,224¥23,727$161,274

Research and development expenses

1,236

1,371

10,938Depreciation

1,163

1,074

10,292

Net defined benefit liability
Other
Valuation allowance

585

403

5,177

2,881

3,043

25,495(22,949)(28,864)(203,088)

Deferred tax liabilities (noncurrent)
Undistributed earnings of consolidated overseas subsidiaries(1,477)(1,504)(13,071)

Valuation difference on available-for-sale securities(3,291)(5,381)(29,124)

Net defined benefit asset(1,860)(1,875)(16,460)

(5)

(59)

(44)

Other
Net deferred tax liabilities (noncurrent)¥ (5,493)

A reconciliation of the aggregate statutory income tax rate and theeffective income tax rate as a percentage of income before income
taxes for the years ended March 31, 2016 and 2015 was as follows:

Statutory income tax rate
Nondeductible expenses

2016

2015

33.0%

35.5%

0.6

0.9

(12.3)(15.6)

Effect of changes in tax rates

0.5

0.6

Tax rate difference fromparent company

(2.1)

(3.7)

Undistributed earnings ofconsolidated
overseas subsidiaries

(0.1)

2.7

Valuation allowance

Consolidated overseas subsidiaries’ sourceof dividends

1.7

1.4

Other, net

(0.4)

0.9

20.9%

22.7%

Effective income tax rate52

¥ (8,065)$ (48,611)(Additional information)
On March 29, 2016, amendments to the Japanese tax regulations
were enacted in the Diet. Based on the amendments, the statutory
income tax rates utilized for the measurement of deferred tax assets
and liabilities expected to be settled or realized from April 1, 2016 to
March 31, 2018 and on or after April 1, 2018 are changed from 32.2%
for the fiscal year ended March 31, 2016 to 30.8% and 30.5%, respectively, as of March 31, 2016.
Due to these changes in statutory income tax rates, net deferred tax
assets (after deducting the deferred tax liabilities) and net deferred tax
liabilities (after deducting the deferred tax assets) decreased by ¥202
million ($1,788 thousand) and ¥271 million ($2,398 thousand), respectively, and deferred income taxes and valuation difference on availablefor-sale securities increased by ¥114 million ($1,009 thousand) and¥183 million ($1,619 thousand), respectively, compared with theamounts that would have been reported without the changes.
In addition, following the revised system for the carryforward of net
tax losses, the maximum amount of deduction will be equivalent to 60%of the amount of income before carryforward for the fiscal year beginning on April 1, 2016, 55% for the fiscal year beginning on April 1, 2017
and 50% for the fiscal year beginning on after April 1, 2018. As a resultof this change, deferred tax assets decreased by ¥25 million ($221
thousand), and deferred income taxes increased by the same amount.

As is customary in Japan, substantially all of the bank borrowings are
subject to general agreements with each bank which provide, among
other things, that additional security and guarantees for present andfuture indebtedness will be given upon request by the bank and thatany collateral so furnished will be applicable to all indebtedness tothat bank. In addition, the agreements provide that the bank has theright to offset cash deposited against any long-term or short-term
debt that becomes due and, in case of default and certain otherspecified events, against all other debts payable to the bank. To
date, the Company has not received any such requests from its banks.
The Company has contracts for commitment lines by which banks
are bound to extend loans up to a prearranged amount upon request.

As of March 31, 2016, the total financing available under thesecontracts amounted to ¥30,000 million ($265,487 thousand), and noamount of these commitment lines had been used.
The aggregate annual maturities of long-term debt are as follows:
Millions of yen

Thousands of
U.S. dollars

2018¥ 4,079$ 36,097

2019

5,680

50,265

2020

6,504

57,558

2021

2,614

23,133Years ended March 312022 and thereafter
Total

109

965

¥18,986$168,018

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

The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statements of the Company in accordance with Japanese laws andregulations. Net income per share is based on the weighted average
number of shares of capital stock outstanding. Diluted net income
per share is computed using the weighted average number of shares
after assuming conversion of all dilutive convertible notes and theexercise of all outstanding stock acquisition rights. Diluted net
income per share of capital stock for the fiscal year ended March 31,
2016 is not shown because there was no dilutive stock. At theannual shareholders’ meeting held on June 28, 2016, the shareholders approved cash dividends of ¥12.00 ($0.11) per share, totaling¥2,834 million ($25,080 thousand). The application had not been
accrued in the consolidated financial statements as of March 31,
2016. Such appropriations are recognized in the period in which they
are approved by the shareholders.

53Financial Section

3. Information about reportable segment income (loss), segment assets and other material items

Note 6: Leases
1. Finance leases
A. Information relating to finance leases for which the ownershipof the leased assets is considered to be transferred to thelessee as of and for the years ended March 31, 2016 and 2015
was as follows:(As lessee)
1) Description of leased assets
1. Tangible fixed assets: Mainly the production facilities in the
Semiconductor Solutions business ( “Machinery, equipment
and other”)
2. Intangible fixed assets: Software2) Depreciation method for leased assets
As described in Note 1, “Summary of Significant Accounting andReporting Policies, (f) Depreciation”
B. Information related to finance leases, excluding those leases forwhich the ownership of the leased assets is considered to betransferred to the lessee, as of and for the years ended March
31, 2016 and 2015 was as follows:(As lessee)
1) Description of leased assets
1. Tangible fixed assets: Mainly the production facilities and the
R&D facilities in the Semiconductor Solutions business(“Buildings and structures”and “Machinery, equipment
and other”)
2. Intangible fixed assets: Software2) Depreciation method for leased assets
As described in Note 1, “Summary of Significant Accounting andReporting Policies, (f) Depreciation”

As of and for the year ended March 31, 2016

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

SE

FT

OthersAdjustments

Consolidated¥165,8010
165,801¥ 18,716¥132,524¥61,23149
61,280¥ 3,169¥50,334¥31,558
32
31,590¥ 2,748¥28,372¥ 1,085
11,553
12,638¥ (1,138)¥ 6,637¥—(11,634)(11,634)¥62¥52,227¥259,675—
259,675¥ 23,557¥270,094

2,490
3,571

646
823

88
181

185
245

1,621
1,532

5,030
6,352

Adjustments

Consolidated

2. Operating leases(As lessee)
Future minimum lease payments as lessee:

Millions of yen
Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

Due within one year

¥ 429

¥304

$3,796

Due after one year

688

576

6,089

Total

¥1,117¥880$9,885Note 7: Segment Information
1. General information about reportable segments(1) Calculation method for reportable segments
The SCREEN Group’s reportable segments are the business units forwhich the Company is able to obtain respective financial information
separately in order for the Board of Directors to conduct periodic
investigations to determine distribution of management resourcesand evaluate their business results.
Effective October 1, 2014, the Company changed to a holding
company structure. The internal companies categorized as productor service segments underwent a company split and became Groupsubsidiaries. These subsidiaries inherit the internal companies’ functions, including planning and execution of overall business plans intheir specific areas of operation.
Consequently, the SCREEN Group has created three businesssegments for reporting: the Semiconductor Solutions (SE) segment,
the Graphic and Precision Solutions (GP) segment and the Finetech
Solutions (FT) segment, categorized by products based on theabove subsidiaries.

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

As of and for the year ended March 31, 2015

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

SE

Reportable segment
GP

FT¥157,478
1¥157,479¥ 15,738¥114,733¥55,67730¥55,707¥ 2,840¥53,289¥23,72153¥23,774¥ 339¥20,624770
9,612¥10,382¥ (805)¥ 4,979—(9,696)¥ (9,696)¥ (944)¥55,892¥237,646—¥237,646¥ 17,168¥249,517

2,620
4,221

625
866

59
172

119
139

1,457
1,261

4,880
6,659

Adjustments

Consolidated$—(102,956)(102,956)$
549$ 462,186$2,298,009—
2,298,009$ 208,469$2,390,212

14,345
13,55844,51356,212Others¥¥Thousands of U.S. dollars
Reportable segment
As of and for the year ended March 31, 2016

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

SE

GP

FT

Others$1,467,265
0
1,467,265$ 165,628$1,172,779$541,867
434
542,301$ 28,044$445,434$279,274
284
279,558$ 24,319$251,080

9,603
102,238
111,841$ (10,071)$ 58,733

22,03531,602

5,717
7,283

779
1,602

1,637
2,167

$

Notes: 1. The “Other” category incorporates operations not included in reportable segments, including development, manufacturing and sales of equipment in life science business and other,software development, planning and production of printed matter and other businesses.
2. Segment operating income (loss) adjustments of ¥62 million ($549 thousand) for the year ended March 31, 2016 are the Company’s profit (loss) not attributable to reportable segment.
Segment operating income (loss) adjustments of ¥(944) million for the year ended March 31, 2015 are the corporate profit (loss) not attributable to each reportable segment.
Corporate profit (loss) consists mainly of general and administrative expenses not attributable to segments.
Segment assets adjustments of ¥52,227 million ($462,186 thousand) and ¥55,892 for the year ended March 31, 2016 and 2015, respectively, are the corporate assets not apportioned to each reportable segment.
3. Segment income (loss) is adjusted with operating income (loss) under consolidated statements of operations.

<Related Information>
1. Information about geographic areas(1) Net Sales
Thousands of
U.S. dollars

Millions of yen

2016

Years ended March 31,

Japan
TaiwanSouth Korea
China
United States
EuropeOthersTotal¥ 73,229
65,576
20,66631,99635,733
20,16012,315¥259,675

2015(28.2%)(25.2%)(8.0%)(12.3%)(13.8%)(7.8%)(4.7%)(100.0%)¥ 53,483
45,44811,30929,01052,291
36,8299,276¥237,646(22.5%)(19.1%)(4.8%)(12.2%)(22.0%)(15.5%)(3.9%)(100.0%)2016$ 648,044
580,319
182,885
283,150
316,221
178,407108,983$2,298,009

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

54

55

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

2. Fair values of financial instruments
As of March 31, 2016 and 2015, the book value and fair value of financial instruments and the differences between these figures are set forth in
the table below. The table does not include financial instruments whose fair values were not readily determinable. (See Note 2, “Consolidated
Statements of Cash Flows.”)

2. Information about major customers

Millions of yen

Year ended March 31, 2016

Millions of yen

Thousands of
U.S. dollars

Net sales

Years ended March 31,

Book value¥35,337$312,717(2) Trade notes and accounts receivableYear ended March 31, 2015

Available-for-sale securities

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

Total assets¥30,218(3) Lease obligations

Note 8: Contingent Liabilities

Total liabilities

As of March 31, 2016 and 2015, the Company and its consolidated subsidiaries were contingently liable for the following:

2016

2015

2016

Customers’ lease payments

¥ —

¥

$

As guarantors of—

Employees’ housing loans

66

94

584

Trade notes receivable endorsed

47

50

416

Liquidation of receivables with recourse

—

81

—

¥113

¥226

$1,000Total

Note 9: Financial Instruments
1. Qualitative information on financial instruments
A. Qualitative information on financial instruments
The SCREEN Group procures funds necessary to conduct business by means such as loans from financial institutions and the issuance ofbonds in accordance with 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 in exchange rates and interest rates. Speculativetransactions are not undertaken.

(1) Without application of hedge accounting

Investments in securities
Trade notes and accounts payable, loans,bonds and lease obligations
Portion of loans

227,717

27,717—¥ 25,641 ¥ 25,641 ¥Book value—

Fair value

Difference$ 286,478 $ 286,478 $

55,054598,115—

598,132

(795)

(795)

(6,982)(6,982)

54,25954,259(0)591,133

591,150

35,521

35,521—

245,283

245,2832¥115,421 ¥115,421 ¥—¥ 62,382 ¥ 62,382 ¥

36,66637,051

385

17

2,970

4,699

1,729

—

(0) $1,122,894 $1,122,911 $—

36,34636,553

207

3,331

5,356

2,025

17

$ 620,000 $ 620,000 $—

324,478

327,885

3,407

26,283

41,58415,301¥109,696 ¥111,810 ¥2,114¥102,059 ¥104,291 ¥2,232$ 970,761 $ 989,469 $18,708

¥

¥

$

130 ¥

130 ¥

—

—

—

—

130 ¥

130 ¥

—

(2) With application of hedge accounting
Total derivative transactions¥¥(13) ¥(13) ¥————(13) ¥(13) ¥—

Credit risk of clients

The amounts outstanding are managed for each client and by
due date. Also, the financial condition of the clients is monitored.

Risk of fluctuation in foreign
currency exchange rates

The risk is hedged by using forward foreign exchange
contracts on certain portions of the receivables.

Risk of fluctuation in market
prices

The fair values of the instruments and financial conditions ofissuers are regularly monitored.

Liquidity risk

Funding plans are prepared and renewed, and a certain levelof liquidity on hand is maintained.

Risk of fluctuation in interest rates The risk is hedged by using interest rate swaps.

The derivative transactions which the Company uses are forward foreign exchange contracts and interest rate swap contracts and are only used
for the purpose of mitigating risks of fluctuation in foreign currency exchange rates and interest rates. For information about hedging instruments,
hedged items, hedging policies, evaluation of hedge effectiveness and management of derivative transactions, see Note 1, “Summary of
Significant Accounting and Reporting Policies (t) Derivatives and hedge accounting.” The Company believes that its credit risk is insignificant as
the counterparties to its derivative transactions are limited to creditable financial institutions.

1,151 $————

1,151 $

1,151 $—

2. The book value of financial instruments whose fair values were deemed to be exceedingly difficult to estimate as of March 31, 2016 and 2015 was as follows:
Millions of yen

Category

Processes for risk management$

1,151 $(*1) Allowance for doubtful receivables recorded for trade notes and accounts receivable is subtracted.
(*2) Net assets and liabilities incurred by derivative transactions are shown in net figures, and items whose total amounts are liabilities are indicated in parentheses.
Notes: 1. Method of estimating fair values of financial instruments and items regarding investment in securities, and derivative transactions
Assets(1) Cash, cash equivalents and time deposits
As these assets are settled on a short-term basis, their fair values are approximately equal to their book values. For this reason, their fair values are reported based on their applicable 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 11, “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 reported based on their applicable book values.
(2) Long-term debt
The fair values of bonds are based on the “Reference Statistical Prices [Yields] for OTC Bond Transactions” released by Japan Securities Dealers Association. The fair values ofother long-term debt are based on the current value, which is the principal discounted with consideration for the length of time until repayment and credit risk.
(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 10, “Derivative Transactions.”

B. Details of financial instruments used, risks and processes for risk management
Risks

(789)
66,800Difference

Derivative transactions (*2)
Thousands of
U.S. dollars

1

(789)
66,7982016

Fair value

55,054¥ 70,060 ¥ 70,060 ¥(2) Long-term debt

Millions of yen—

Book value

67,589¥126,887 ¥126,889 ¥(1) Notes and accounts payable—trade

Accounts receivable denominated inforeign currency

Difference(3) Investments in securities

Millions of yen

Net sales

Trade notes and accounts receivable

Fair value

67,587

Allowance for doubtful receivables (*1)

Financial instruments

2015(1) Cash, cash equivalents and time deposits ¥ 32,372 ¥ 32,372 ¥Taiwan Semiconductor Manufacturing Co., Ltd. (related segment: SE)

Thousands of U.S. dollars

2016

Non-listed equity securities

Thousands of U.S. dollars

2016

2015

2016

Book value

Book value

Book value

¥823

¥864

$7,283

The amount as of March 31, 2015 in the above table includes investments in unconsolidated subsidiary of ¥39 million. These items do not have market prices and are deemed to require
excessive cost to estimate the future cash flows. Therefore, they are not included in (4) “Investments in securities” as it is deemed to be exceedingly difficult to estimate the fair values.
3. Expected redemption amounts of receivables and securities with maturities after the consolidated financial statement dateMillions of yen

Thousands of U.S. dollars

2016

Due within
one year2015

DuebetweenDue between five years
one yearand
Due afterand five years ten years ten years

Due within
one year2016

DuebetweenDue between five years
one yearand
Due afterand five years ten years ten years

Due within
one yearCash, cash equivalents and time deposits¥32,352

¥ —

¥—

¥—

¥25,617

¥ —

¥—

¥—

$286,301

Trade notes and accounts receivable

67,117

470——

54,862

192——

593,956

Investments in securities—
available-for-sale securities with maturities
Total

Due
betweenDue between five years
one yearand
Due afterand five years ten years ten years

$

—

$—

$—

4,159

—

—

—

—

—

—

—

—

—

—

—

—

—

—

¥99,469

¥470

¥—

¥—

¥80,479

¥192

¥—

¥—

$880,257$4,159$—$—

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

C. Supplemental information on fair values
The contract amounts of the derivative transactions described in Note 10, “Derivative Transactions,” do not reflect the market risks of the derivative transactions themselves.

56

57

Financial Section

Note 10: Derivative Transactions

Note 12: Employees’ Severance and Pension Benefits

Outstanding derivative transactions as of March 31, 2016 and 2015 were as follows:

Breakdown related to retirement benefit plans for the years ended March 31, 2016 and 2015 was as follows:

Millions of yen

Thousands of U.S. dollars

2016Years ended March 31,

PortionContracted exceeding
amountone year

2015
Fair
value

Recognized
gain(loss)

PortionContracted exceeding
amountone year

2016
Recognized
gain(loss)

Fair
value

PortionContracted exceeding
amountone year

Recognized
gain(loss)

Fair
value

1. Defined benefit plans(1) Movements in retirement benefit obligations

Non-exchange tradedforward foreign
Balance at beginning of year

exchange contracts(Sell–U.S. dollars)(Sell–Euro)(Sell-Australian dollars)(Sell–Singapore dollars)
Total¥4,808

¥—

¥158

¥158

¥4,485

¥—

¥(80)

¥(80)

$42,549$—$1,398 $1,398

1,922

—

6

6

1,608

—

58

58

17,009

—

53

53

102

—

(1)

(1)

—

—

—

—

903

—

(9)

(9)

329
¥7,161

—

(3)

¥—

¥160

(3)
¥160

—

—

¥6,093

¥—

—
¥(22)

—

2,911

¥(22)

$63,372

—
$—

(26)

(26)

$1,416 $1,416

Millions of yen

Fair
value

2015

2016

¥32,949$283,292—(1,881)—

Currently stated balance, at beginning of year

32,012

31,068283,292

Service cost

1,468

1,796

12,991

Interest cost

341

369

3,018

Actuarial loss (gain)

(272)

(329)

(2,407)(1,108)(1,231)(9,805)

Other
Balance at end of year

2015
Recognized
gain(loss)

2016¥32,012

160

339

1,416

¥32,601¥32,012$288,505

Thousands of U.S. dollars

2016
PortionContracted exceeding
amountone year

Cumulative effects of changes in accounting policies

Benefits paid

Notes: 1. Method of estimating fair value
The fair values of exchange forward transactions as of March 31, 2016 and 2015 were estimated based on the prices presented by financial institutions.
2. The above table does not list derivative transactions for which hedge accounting has been applied.

Years ended March 31,

Thousands of
U.S. dollars

Millions of yen

PortionContracted exceeding
amountone year

2016
Recognized
gain(loss)

Fair
value

PortionContracted exceeding
amountone year(2) Movements in plan assets
Recognized
gain(loss)

Fair
value

Non-exchange traded
Balance at beginning of year

forward foreign

Expected return on plan assets

exchange contracts

Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

¥36,043¥31,858$318,965

977

893

8,646

(1,124)

1,392(9,947)
10,434(Buy–U.S. dollars)

¥616

¥—

¥(30)

¥(30)

¥1,911¥—¥9¥9$5,451$—$(265)$(265)

Actuarial loss (gain)

Total

¥616

¥—

¥(30)

¥(30)

¥1,911¥—¥9¥9$5,451$—$(265)$(265)

Contributions paid by the employer

1,179

2,615

Benefits paid

(1,080)(1,201)(9,558)149

486

1,3109¥36,144¥36,043$319,859

Notes: 1. Method of estimating fair value
The fair values of exchange forward transactions as of March 31, 2016 and 2015 were estimated based on the prices presented by financial institutions.
2. The above table does not list derivative transactions for which hedge accounting has been applied.

Other
Balance at end of year

Note 11: Securities(3) Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits

1. The following table summarizes acquisition costs and book values and any differences between these amounts of securities with available fairvalues as of March 31, 2016 and 2015:
Available-for-sale securities
Millions of yen

Thousands of U.S. dollars

2016

2015

2016

Book value

Difference

Acquisition
cost

Book value

Difference

Acquisition cost

Book value

Difference¥14,050¥26,122¥12,072¥15,704¥33,816¥18,112$124,336$231,168$106,832——

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

—

2016

2015

2016

Funded retirement benefit obligations¥32,581¥31,993$288,328

Plan assets

36,14436,043319,859(3,563)(4,050)(31,531)

Unfunded retirement benefit obligations

Acquisition
cost

—

—

—

—

—

—

¥14,050¥26,122 ¥12,072¥15,704¥33,816 ¥18,112$124,336$231,168$106,832¥ 2,012¥ 1,595 ¥(417)¥ 1,833¥ 1,705(128)$ 17,805$ 14,115$ (3,690)

—

—

—

—

—

—

—

—

Thousands of
U.S. dollars

Millions of yen

Total net liability (asset) for retirement benefits

20

18

177

¥ (3,543)¥ (4,032)$ (31,354)

Net defined benefit liability

737

716

6,522

Net defined benefit asset

4,280

4,748

37,876¥ (3,543)¥ (4,032)$ (31,354)

Total net liability (asset) for retirement benefits

Other securities:
Equity securities
OthersTotal—¥ 2,012¥ 1,595 ¥(417)¥ 1,833¥ 1,705

¥
¥

(128)

$ 17,805$ 14,115

Thousands of
U.S. dollars

Millions of yen$ (3,690)

2. Total sales of available-for-sale securities for the year ended March 31, 2016 amounted to ¥2,510 million ($22,212 thousand), and the related
total gain and loss amounted to ¥1,006 million ($8,903 thousand) and ¥13 million ($115 thousand), respectively. Total sales of available-for-salesecurities for the year ended March 31, 2015 amounted to ¥105 million, and the related total gain amounted to ¥91 million.

58(4) Retirement benefit costs

Service cost

2016

2015

2016

¥1,468¥1,796$12,991

Interest cost

341

369

3,018

Expected return on plan assets

(977)

(893)

(8,646)

Net actuarial loss amortization

233

1,147

2,062

Total retirement benefit costs¥1,065¥2,419$ 9,42559

Financial Section(5) Remeasurements of defined benefit plans in other comprehensive income
Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

Actuarial gains and losses¥(621)¥2,868$(5,496)

Total balance¥(621)¥2,868$(5,496)(6) Remeasurements of defined benefit plans in accumulated comprehensive income
Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

Actuarial gains and losses that are yet to be recognized¥(1,761)¥(1,140)$(15,584)

Total balance¥(1,761)¥(1,140)$(15,584)(7) Plan assets
1. Plan assets comprise:
2016

2015

(8) Actuarial assumptions
The principal actuarial assumptions at March 31, 2016 and 2015
were as follows:

Bonds

56%

50%

Equity securities

21%

28%

Discount rate

Cash and cash equivalents

3%3%Long-term expected rateof returnLife insurance company
general accounts
Total

20%

19%

100%

100%

2. Long-term expected rate of return
Current and target asset allocations, historical and expected
returns on various categories of plan assets have been considered in determining the long-term expected rate of return.

2016

2015

0.9%~1.3%

0.9%~1.3%

3.0%

3.0%

The Group does not take into account an expected pay raise ratein calculating retirement benefit costs.
2. Defined contribution plans
Contributions paid by the Company and its consolidated subsidiaries
to defined contribution plans for the fiscal year ended March 31,
2016 and 2015 amounted to ¥734 million ($6,496 thousand) and¥719 million, respectively.

Note 13: Consolidated Statements of Comprehensive Income
Amounts reclassified as net income (loss) in the current period that were recognized in other comprehensive income in the current or previous
periods and the tax effects for each component of other comprehensive income for the years ended March 31, 2016 and 2015 were as follows:
Thousands of
U.S. dollars

Millions of yen

2016

2015

2016

Valuation difference on available-for-sale securities:
Increase (decrease) during the year
Reclassification adjustments¥(5,336)(993)¥ 7,585(91)$(47,221)(8,788)Subtotal, before tax(6,329)7,494(56,009)

Tax (expense) or benefit

2,106(1,996)

18,637

Subtotal, net of tax(4,223)

5,498(37,372)(2,533)

3,452(22,415)

(874)

1,974

(7,735)Note 14: Significant Subsequent Events(Reverse share split etc.)
The Company passed a resolution at the Board of Directors meeting
held on May 10, 2016 to submit proposals for a reverse share split (aone-for-five consolidation of shares) and a change in the number ofshares per share unit (a change from 1,000 shares to 100 shares) tothe 75th Ordinary General Meeting of Shareholders held on June 28,
2016, and the two proposals were approved by the Ordinary General
Meeting of Shareholders.

(3) Impact of reverse share split
The reverse share split will decrease the total number of outstanding
shares to one-fifth of the current number. However, as theCompany’s net asset and other value will remain unchanged, thevalue of net assets per share will increase by the same proportion.
Therefore, the asset value of the Company’s shares will not change,
unless such value is exposed to changes in stock market conditions
or other factors.

(1) Purpose of reverse share split
The Japanese stock exchanges collectively announced the “Action
Plan for Consolidating Trading Units,” which aims to standardize thetrading units for common stock issued by all listed domestic corporations at 100 shares, with the plan’s transition period being set to
expire on October 1, 2018.
As a corporation listed on the Tokyo Stock Exchange, theCompany respects the objectives of the plan and has thus decided
to change the number of shares per share unit, or trading unit, for its
stock from 1,000 shares to 100 shares. In addition, the Company
will execute a reverse share split with an eye to realizing the level ofinvestment unit (50,000 yen or more and less than 500,000 yen) thatis considered desirable by the stock exchange.

(4) Handling of fractional shares of less than one share
In cases where fractional shares of less than one share are createdthrough the reverse share split, the Company will dispose of all suchshares in accordance with the Japanese Company Law and will
reimburse the proceeds therefrom to the former holders of such fractional shares in amounts proportional to the former holdings of said
shareholders.

(2) Details of reverse share split(i) Class of shares subject to reverse share split
Common stock(ii) Method and consolidation ratio of reverse share split
Based on the number of shares held by shareholders listed in the
final shareholders’ register as of September 30, 2016, every five
shares will be consolidated into one share. The reverse share split
will be effective on October 1, 2016.
(iii) Decrease in number of shares due to reverse share split
Total number of outstanding shares before
reverse share split (as of March 31, 2016)

253,974,333

Decrease in number of shares due to reverse
share split

203,179,467

Total number of outstanding shares after reverse
share split

50,794,866(5) Total number of authorized shares as of the effective date forreverse share split
As the total number of outstanding shares is expected to decrease
due to the reverse share split, the Company will optimize the total
number of authorized shares by proportionally decreasing thenumber of such shares (one-fifth shares) in conjunction with theeffective date of reverse share split (October 1, 2016).
Total number of authorized shares prior to change

900,000,000

Total number of authorized shares after change(as of October 1, 2016)

180,000,000(6) Impact on per share data
Per share data as of and for the years ended March 31, 2016 and2015, calculated based on the assumption that reverse share split
had been carried out at the beginning of the year ended March 31,
2015, is as follows.
Yen

Note: “Decrease in number of shares due to reverse share split” and “Total number ofoutstanding shares after reverse share split” are based on theoretical figures
calculated using “Total number of outstanding shares before reverse share split”
and the consolidation ratio described in the preceding note (ii).

2016
Net assets per share ofcapital stock
Basic earnings per share

U.S. dollars

2015¥2,533.41 ¥2,335.65
396.75255.372016$22.42
3.51

Note: Fully diluted basic earnings per share are not shown because there was no dilutive stock.

Foreign currency translation adjustment:
Increase (decrease) during the year
Remeasurements of defined benefit plans:
Increase (decrease) during the year
Reclassification adjustments

253

894

2,239

Subtotal, before tax

(621)

2,868

(5,496)

Tax (expense) or benefit
Subtotal, net of tax
Total other comprehensive income

60

—

—

—

(621)

2,868

(5,496)¥(7,377)¥11,818$(65,283)

61

Financial Section
Independent Auditor’s Report

Corporate Data / Consolidated Companies / Stock Information /Editorial Policy and Reporting Structure
Corporate Data

To the Board of SCREEN Holdings Co., Ltd.:(As of March 31, 2016)

Company Name:
Established:
Representatives

We have audited the accompanying consolidated financial statements of SCREEN Holdings Co., Ltd. and its consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2016, and the consolidated income statement, statement ofCapital:

SCREEN Holdings Co., Ltd.
October 11, 1943
Eiji Kakiuchi, President and CEO
Shin Minamishima, Senior Managing Director(Appointed April 1, 2016)¥54 billion

Employees:
Major Business andManufacturing Sites:

5,182 employees (Consolidated)
Head Office, Rakusai (WHITE CANVASRAKUSAI), Kumiyama, Yasu, Hikone, Taga,
Shinagawa, Kudan and Monzennakacho(WHITE CANVAS MON-NAKA), Kumamoto

comprehensive income, statement of changes in net assets and statement of cash flows for the year then ended, and a summary ofsignificant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements.

Consolidated Companies(As of March 31, 2016)

Overseas

Domestic

North America
SCREEN SPE USA, LLC / SCREEN GP Americas, LLC / Silicon Light
Machines Corporation / SCREEN North America Holdings, Inc.

SCREEN Semiconductor Solutions Co., Ltd. / Tech In Tech Co., Ltd. /SEBACS Co., Ltd. / Quartz Lead Co., Ltd. / FASSE Co., Ltd. /Scientific and Semiconductor Manufacturing Equipment Recycling Co., Ltd. /SCREEN Graphic and Precision Solutions Co., Ltd. / Media Technology
Japan Co., Ltd. / MT Service Japan East Co., Ltd. / MT Service JapanWest Co., Ltd. / MEBACS Co., Ltd. / SCREEN Finetech Solutions Co., Ltd. /FEBACS Co., Ltd. / SCREEN Manufacturing Support Solutions Co., Ltd. /TRANSUP Japan Co., Ltd. / SCREEN Kumamoto Co., Ltd. /SCREEN Business Support Solutions Co., Ltd. / Tec Communications
Co., Ltd. / INITOUT Japan Co., Ltd. / Link Ring Japan Co., Ltd. /GERANT Co., Ltd. / S. Ten Nines Kyoto Co., Ltd. / EMD Corporation /Alpha MED Scientific Inc. / two other companies

Europe
SCREEN SPE Germany GmbH / SCREEN SPE Ireland Ltd. /SCREEN SPE France SARL / SCREEN SPE Italy S.R.L. /SCREEN SPE Israel Ltd. / Laser Systems & Solutions of Europe SASU /Inca Digital Printers LTD. / SCREEN GP IJC Ltd. /SCREEN GP Europe B.V. / Dainippon Screen Unterstützungskasse GmbH
Asia & Oceania
SCREEN Electronics Shanghai Co., Ltd. / SCREEN SPE Taiwan Co., Ltd. /SCREEN HD Singapore PTE. Ltd. / SCREEN GP China Co., Ltd. /SCREEN GP Shanghai Co., Ltd. / SCREEN GP Hangzhou Co., Ltd. /SCREEN HD Korea Co., Ltd. / SCREEN GP Taiwan Co., Ltd. /SCREEN GP Australia PTY., Ltd. / SCREEN FT Taiwan Co., Ltd.

Stock Information(As of March 31, 2016)

Stock Information

Bank References

Authorized Number of Shares: 900,000,000
Number of Shares Issued:
253,974,333
Number of Shareholders:
10,833
Number of Shares Held by Non-JapaneseCompanies and Individuals:
59,202,919 (23.31%)
Listings:
Tokyo
Code Number:
7735

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

Nomura Securities Co., Ltd.

Sub-Underwriters
Major Shareholders
Major Shareholders

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Underwriter

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. / Daiwa Securities Co. Ltd.
Number of shares Percentage of total(thousands)
shares issued (%)

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

27,250

10.72

Japan Trustee Services Bank, Ltd. (Trust Account)

20,547

8.09

Nippon Life Insurance Company

9,153

3.60

OpinionThe Bank of Kyoto, Ltd.

6,730

2.65

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of SCREEN Holdings

STATE STREET BANK AND TRUST COMPANY 505001

5,758

2.26

STATE STREET BANK AND TRUST COMPANY 505223

4,930

1.94

SCREEN’s Business Partners Shareholders’
Association Synchronize

4,770

1.87

Resona Bank, Limited

4,562

1.79

The Shiga Bank, Ltd.

4,241

1.67

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

3,987

1.56

Co., Ltd. and its consolidated subsidiaries as at March 31, 2016, and their financial performance and cash flows for the year thenended in accordance with accounting principles generally accepted in Japan.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2016 are

Breakdown by Type of Shareholder
Securities companies
3.70%

Treasury stock
7.02%
Individuals and others
14.28%

Non-Japanesecompanies andindividuals
23.31%

Other Japanesecompanies
9.39%

Financial institutions
42.28%

presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,
Editorial Policy
Our annual reports integrate information on business

Reporting Structure
Printed Reportreporting of our corporate activities. Additional detailed
information is published on our website, along with a

KPMG AZSA LLC
June 28, 2016
Kyoto, JapanPDF version of the annual report, CSR data sheets,

Investors’ Guide

activities and financial, social, and environmental
performance for the purpose of more comprehensive

Disclaimer

Investor Information

Annual ReportSocial andEnvironmental
Activities
CSR Data Sheets

such translation has been made on the basis described in Note 1 to the consolidated financial statements.

and a GRI content index.
We provide CSR-related information using the
Global Reporting Initiative G4 Sustainability Reporting
Guidelines.

outlook for future results in this document are in accordance with assumptions and beliefs determined bymanagement based on currently available information.
However, it should be noted that there is a possibility
that actual results could differ significantly due to suchfactors as social and economic conditions.

e-Report
GRI Content Index

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

62

The plans, strategies, and statements related to theNotes: 1. All amounts shown in billions of yen are truncated to
the nearest billion. Amounts shown in millions of yen
are rounded to the nearest million yen.
2. All years shown are for the accounting year ending
March 31 of the year shown.

6363

S C R E E N G roupA n n u al Repo rt 2 0 1 6

Annual Report

SCREEN GroupYear ended March 31, 2016

Tenjinkita-machi 1-1, Teranouchi-agaru 4-chome, Horikawa-dori,
Kamigyo-ku, Kyoto 602-8585, Japan
Tel: +81-75-414-7131 Fax: +81-75-431-6500
IR-AR2016E 2016.08 001IC-Sh

2016