As filed with the Securities and Exchange Commission on August 6, 2012

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 20-F/A(Amendment No. 1)
‘
È

‘
‘

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2012
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report……….
For the transition period fromtoCommission file number: 1-15236

KABUSHIKI
KAISHA ADVANTEST(Exact name of registrant as specified in its charter)
ADVANTESTCORPORATION(Translation of registrant’s name into English)
Japan(Jurisdiction of incorporation or organization)
Shin-Marunouchi Center Building
1-6-2, Marunouchi
Chiyoda-ku
Tokyo 100-0005
Japan(Address of principal executive offices)
Hiroshi Nakamura, (81-3) 3214-7500, (81-3) 3214-7711,
Shin-Marunouchi Center Building
1-6-2, Marunouchi
Chiyoda-ku
Tokyo 100-0005
Japan(Name, telephone, facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:Name of each exchange on which registered:
Title of each class:American Depositary Shares*
The New York Stock Exchange
Common Stock***
American Depositary Receipts evidence American Depositary Shares, each American Depositary Share representing one share of the registrant’s Common
Stock.
** No par value. Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities andExchange Commission.
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual
report:Title of class:
Outstanding as of March 31, 2012:
Common Stock173,271,380
American Depositary Shareseach representing one share of Common Stock
720,843
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days: Yes È No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).: Yes È No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer È
Accelerated filer ‘
Non-accelerated filer ‘
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP È
International Financial Reporting Standards as issued
Other ‘By the International Accounting Standards Board ‘
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. Item 17 ‘ Item 18 ‘
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No ÈTABLE OF CONTENTS
EXPLANATORY NOTE
Page

PART IITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS . . . . . . . . . . . .

1

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

ITEM 3.

KEY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CAPITALIZATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
REASONS FOR THE OFFER AND USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
4
4
4

INFORMATION ON THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

4.A.
4.B.
4.C.
4.D.

HISTORY AND DEVELOPMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ORGANIZATIONAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTY, PLANTS AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14
15
35
35

ITEM 4A.

UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . . . . . . . . . . . . . . . .

36

OPERATING RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES . . . . . . . . . . . . . . . . . . . .
TREND INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OFF-BALANCE SHEET ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . .
SAFE HARBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36
51
52
53
54
54
54

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . .

55

DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BOARD PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SHARE OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55
63
64
65
66

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . .

68

7.A. MAJOR SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.B. RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.C. INTERESTS OF EXPERTS AND COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68
70
71

3.A.
3.B.
3.C.
3.D.
ITEM 4.

5.A.
5.B.
5.C.
5.D.
5.E.
5.F.
5.G.
ITEM 6.
6.A.
6.B.
6.C.
6.D.
6.E.
ITEM 7.

ITEM 8.

FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71

8.A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION . . . . . . . .
8.B. SIGNIFICANT CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71
71

ITEM 9.
9.A.
9.B.
9.C.
9.D.
9.E.
9.F.

THE OFFER AND LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72

OFFER AND LISTING DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MARKETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPENSES OF THE ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72
72
72
72
73
73

i

Page

ITEM 10.

ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73

10.A. SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.C. MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.D. EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.E. TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.F. DIVIDENDS AND PAYING AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.G. STATEMENT BY EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.H. DOCUMENTS ON DISPLAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.I. SUBSIDIARY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73
73
81
81
82
88
88
88
88

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . .

89

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES . . . . . . . . . . . . . .

90

12.A. DEBT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.B. WARRANTS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.C. OTHER SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.D. AMERICAN DEPOSITARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90
90
91
91

PART IIITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . . . . . . . . . . . . . . . . . .

93

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93

ITEM 15.

CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93

ITEM 16.

[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94

ITEM 16B. CODE OF ETHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . . . . .

95

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

95

ITEM 16F. CHANGE IN REGISTRAINT’S CERTIFYING ACCOUNTANT . . . . . . . . . . . . . . . . . . . . . .

96

ITEM 16G. CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

96

ITEM 16H. MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98

PART IIIITEM 17.

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99

ITEM 18.

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99

ITEM 19.

EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100

ii

EXPLANATORY NOTEOn June 27, 2012, Advantest filed an annual report for the fiscal year ended March 31, 2012 on Form 20-F
with the United States Securities and Exchange Commission. Advantest is filing this Form 20-F/A (Amendment
No. 1) in response to a comment letter received from the staff of the SEC dated July 31, 2012 (the “SEC
Comment Letter”). The date in the Section 906 certifications furnished in accordance with Item 601(b)(32) ofRegulation S-K, attached as Exhibit 13.1 that was previously filed with the Form 20-F has been amended andAdvantest is filing the correct version of the Section 906 certifications with this Form 20-F/A (Amendment No.
1).
Other than the correction described above, Advantest is not amending the previously filed Form 20-F in any
way. Solely for the convenience of the reader, this Form 20-F/A (Amendment No. 1) includes the full text of theForm 20-F. However, such inclusion should not be understood to mean that any statements contained in the Form
20-F are true or complete as of any date subsequent to the original filing date of June 27, 2012. This Form 20-F/
A (Amendment No. 1) does not reflect events occurring after the filing of our Form 20-F on June 27, 2012 anddoes not modify or update the disclosures therein in any way.

iii

As used in this annual report, the term “fiscal” preceding a year means the twelve-month period ended
March 31 of the year subsequent to the year referred to. For example, “fiscal 2011” refers to the twelve-month
period ended March 31, 2012. All other references to years refer to the applicable calendar year.
In parts of this annual report, certain amounts reported in Japanese yen have been translated into U.S.
dollars for the convenience of readers. Unless otherwise noted, the rate used for this translation was$1.00 = ¥82.19. This was the approximate exchange rate in Japan on March 31, 2012.
Unless otherwise noted, all references and discussions of the financial position of Advantest Corporation(the “Company”) and its consolidated subsidiaries (collectively, “Advantest”), results of operations and cash
flow in this annual report are made with reference to Advantest’s consolidated financial statements prepared inaccordance with accounting principles generally accepted in the United States, or U.S. GAAP. The segment sales
figures included in this annual report are presented before eliminating intercompany transactions.
See “Information on the Company—Business Overview—Glossary” for a description of certain technicalterms used in this annual report.

Cautionary Statement with Respect to Forward-Looking Statements
This annual report contains “forward-looking statements” that are based on Advantest’s current
expectations, estimates and projections. These statements include, among other things, the discussion ofAdvantest’s business strategy, outlook and expectations as to market and business developments, production andcapacity plans. Generally, these forward-looking statements can be identified by the use of forward-looking
terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “should” and similar
expressions. Forward-looking statements are subject to known and unknown risks, uncertainties and other factorsthat may cause Advantest’s actual results, levels of activity, performance or achievements to be materiallydifferent from those expressed or implied by such forward-looking statements, including:•changes in demand for the products and services produced and offered by Advantest’s customers,
including semiconductors, communications services and electronic goods;•

the environment in which Advantest purchases materials, components and supplies for the production of
its products, including the availability of necessary materials, components and supplies during asignificant expansion in the market in which Advantest operates;•

circumstances relating to Advantest’s investment in technology, including its ability to timely develop
products that meet the changing needs of semiconductor manufacturers and communications network
equipment and components makers and service providers; and•changes in economic conditions, competitive environment, currency exchange rates or political stability
in the major markets where Advantest produces, distributes or sells its products.

These risks, uncertainties and other factors also include those identified in “Operating and Financial Review
and Prospects,” “Key Information—Risk Factors” and “Information on the Company” set forth elsewhere in thisannual report.

iv

PART IITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
3.A. SELECTED FINANCIAL DATA
You should read the U.S. GAAP selected consolidated financial information presented below together with“Operating and Financial Review and Prospects” and Advantest’s consolidated financial statements together with
the notes included in this annual report.
U.S. GAAP Selected Consolidated Financial Data
The following selected financial data have been derived from Advantest’s audited consolidated financial
statements. These consolidated financial statements were prepared under U.S. GAAP. Advantest’s U.S. GAAP
audited consolidated financial statements for fiscal 2009, fiscal 2010 and fiscal 2011 were included in its
Japanese Securities Reports filed with the Director General of the Kanto Local Finance Bureau.
2008

Year ended March 31,
2009
2010
2011
(in millions, except per share and share data)

2012

2012
(thousands of $,exceptper share andshare data)

Consolidated Statement of
Income Data:
Net sales . . . . . . . . . . . . . . . .
¥182,767¥76,652¥53,225¥99,634¥141,048 $1,716,121
Operating income (loss) . . . .
22,716(49,457)(11,639)
6,111
837
10,184
Income (loss) before income
taxes and equity in earnings(loss) of affiliatedcompany . . . . . . . . . . . . . . . .
23,533(52,761)(9,926)
5,551(3,442)(41,879)
Net income (loss) . . . . . . . . . . .
16,550(74,902)(11,454)
3,163(2,195)(26,706)
Net income (loss) per share
Basic . . . . . . . . . . . . . . . . . . .
90.72(419.09)(64.09)18.03(12.67)(0.15)
Diluted . . . . . . . . . . . . . . . . . .
90.57(419.09)(64.09)18.03(12.67)(0.15)
Basic weighted average shares
outstanding . . . . . . . . . . . . . . 182,418,821 178,724,884 178,722,505 175,481,854 173,271,717 173,271,717
Diluted weighted average shares
outstanding . . . . . . . . . . . . . . 182,723,982 178,724,884 178,722,505 175,495,458 173,271,717 173,271,717

1Consolidated Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . .
Short term debt . . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . .

2008

2009

¥298,684—
32,363
254,184¥202,059—
32,363
163,6162008

As of March 31,
2010
2011
(in millions)¥188,663—
32,363150,242¥180,312—
32,363
138,132

As of March 31,
2009
2010
2011
(in millions, except per share data)

2012

2012
(in thousands)¥219,226
25,00032,363
131,552$2,667,307
304,173
393,758
1,600,584

2012

2012
(in thousands)

Other Data:
Capital expenditures . . . . . . . . . . . . . . . ¥ 14,083 ¥ 4,608 ¥ 3,425 ¥ 3,793 ¥ 6,984 $ 84,974
Research and development expenses . .
30,50723,713
17,896
21,19730,303368,694
Net cash provided by (used in)operating activities . . . . . . . . . . . . . .
24,166
2,357(17,746)(693)
12,302
149,678
Net cash provided by (used in)investing activities . . . . . . . . . . . . . .
(16,322) (32,507)
10,824(5,828) (37,670)(458,328)
Net cash provided by (used in)financing activities . . . . . . . . . . . . . .
(46,770)(8,930)(1,803) (12,028)
9,887
120,294
Operating margin(1) . . . . . . . . . . . . . . .
12.43% (64.52%) (21.87%)
6.13%
0.59%
Net income margin(2) . . . . . . . . . . . . . .
9.06% (97.72%) (21.52%)
3.17%(1.56%)(1) Operating income as a percentage of net sales.
(2) Net income as a percentage of net sales.
Dividends
The Company normally pays cash dividends semi annually, at mid-year and at year-end. Pursuant to its
articles of incorporation, the Company can make dividend payments pursuant to a resolution of its Board of
Directors, but the articles do not preclude the Company from making dividend payments pursuant to ashareholders resolution. The year-end dividend is paid to shareholders of record as of March 31 pursuant to theresolution of either the Board of Directors or the ordinary general shareholders’ meeting held usually in Juneevery year. The interim dividend is paid to shareholders of record as of September 30, pursuant to a resolution of
the Board of Directors, usually in December.

2

The following table sets forth the dividends paid by the Company for each of the periods shown, which are
the six months ended on that date. The U.S. dollar equivalent for the dividends shown are based on the exchange
rate in Japan on each record date shown.
Six months ended/Record date

Dividend per Share
Yen
Dollars

September 30, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25.0
25.0
25.0
5.0
5.0
5.0
5.0
5.0
5.0
10.0

0.25
0.25
0.24
0.05
0.06
0.05
0.06
0.06
0.07
0.12

The payment and the amount of any future dividends are subject to the level of Advantest’s future earnings,
its financial condition and other factors, including statutory restrictions on the payment of dividends.
Exchange Rates
In parts of this annual report, certain Japanese yen amounts have been translated into U.S. dollars for theconvenience of investors. Unless otherwise noted, the rate used for the translation was $1.00 = ¥82.19. This was
the approximate exchange rate in Japan on March 31, 2012.
The following table sets forth, for the periods and dates indicated, information concerning the noon buying
rate for Japanese yen announced by the Federal Reserve Bank of New York, expressed in Japanese yen per$1.00. The noon buying rate as of June 15, 2012 was $1.00 = 78.65. The Company does not intend to imply that
the Japanese yen or U.S. dollar amounts referred to in this annual report could have been or could be converted
into U.S. dollars or Japanese yen, as the case may be, at any particular rate, or at all.
Fiscal year ended/ending March 31,

At endof period

Average(of month-end rates)(¥ per $1.00)

High

Low

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99.85
99.15
93.40
82.76
82.41

113.61100.85
92.49
85.00
78.86

124.09110.48100.71
94.68
85.26

96.88
87.80
86.12
78.74
75.72

Month ended

High
Low
(¥ per $1.00)

December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 29, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3¥ 78.13
78.13
81.10
83.78
82.62
80.36

¥76.98
76.28
76.11
80.86
79.81
78.29

3.B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
3.D. RISK FACTORS
Risks Related to Advantest’s Business
Advantest’s business and results of operations are subject to significant demand volatility in thesemiconductor industry
Advantest’s business depends largely upon the capital expenditures of semiconductor manufacturers,
foundries and test houses. These companies, in turn, determine their capital expenditure and investment levels
largely based on current and anticipated market demand for semiconductors and products incorporating
semiconductors. Such demand is influenced significantly by the overall condition of the global economy.
Historically, the percentage reduction in capital expenditures by semiconductor manufacturers during downturns
in the semiconductor industry, including investment in semiconductor test systems, has typically been muchgreater than the percentage reduction in worldwide sales of semiconductors. The semiconductor industry has
been highly cyclical with recurring periods of excess inventory, which often have had a severe effect on thesemiconductor industry’s demand for semiconductor test systems, including those of Advantest. In particular, themarket for memory semiconductors shows higher demand volatility as compared to the market for non-memory
semiconductors. In fiscal 2011, net sales of test systems for memory semiconductors decreased by 18.8% from
43.3% in fiscal 2010; however, Advantest continues to derive significant sales from test systems for memory
semiconductors of 24.5% in the semiconductor and component test systems. Therefore, any downturn in thememory semiconductor market may continue to adversely affect Advantest’s business and results of operations.
The worldwide semiconductor market grew by 3.2% in 2007. In 2008 and 2009, the semiconductor market
contracted by 2.8% and 9.0%, respectively, compared to the previous year, reflecting the global economic
downturn that stemmed from the financial crisis. After the negative growth in 2008 and 2009, the market
significantly recovered in 2010, growing by 31.8% compared to 2009, primarily due to a surge in demand forelectronic equipment in developing nations. In 2011, due to the global economic recession and natural disasters
such as the Great East Japan Earthquake and the floods in Thailand reducing production activities of electronic
products, the semiconductor market only increased by 0.4% compared to 2010. Worldwide sales of memory
semiconductors declined by 1.1% and 19.9% in 2007 and 2008, respectively, mainly due to a substantial
reduction in capital expenditure by semiconductor manufacturers in response to a substantial decline in the priceof DRAM semiconductors and NAND-type flash memory semiconductors. Although the markets for personal
computers and cellular phones including smart phones remained steady in 2009, worldwide sales of memory
semiconductors in 2009 declined by 3.3% compared to 2008, reflecting the global economic downturn, resulting
in negative growth for three consecutive years. In 2010, primarily due to a steady demand for mobile DRAM test
systems for mobile devices, worldwide sales of memory semiconductors increased by 55.4% compared to 2009.
In 2011, worldwide sales decreased by 12.7% compared to 2010 due to a drop in the price of DRAM triggered bya downturn in demand for PCs and similar devices. Worldwide sales of non-memory semiconductors in 2007
increased by 4.5% from 2006, since demand in the consumer market and automobile market stabilized and thedata processing market was strong. Worldwide sales of non-memory semiconductors in 2008 increased by 2.3%
from 2007, primarily due to steady demand for mobile PCs despite the deterioration in the overall condition of
the global economy. In 2009, worldwide sales of non-memory semiconductors decreased by 10.3% compared to2008, primarily as a result of the impact of the global economic downturn stemming from the financial crisis thatstarted in 2008. In 2010, worldwide sales of non-memory semiconductors increased by 26.0% compared to 2009,4

primarily due to robust demand for smartphones, tablet-type devices, and other consumer electronics. In 2011,
worldwide sales of non-memory semiconductors further increased by 4.4% compared to 2010, due to continuing
robust demand for smartphones, tablet-type devices, and similar devices.
The significant volatility in demand for semiconductors is affected by various factors such as:•

the overall state of the global economy;•

demand in personal computer and server industries;•

demand in communication devices such as tablet-type devices and smartphones;•

consumer demand for digital consumer products such as flat-panel TVs, DVD/Blu-ray disc recorders,portable audio players and electronic books;•

levels of investment in communications infrastructure and trends in the mobile device industry;•

demand in the automobile industry; and•trends in the semiconductor industry.

In fiscal 2007, the price of semiconductors continued to decline and many semiconductor manufacturers
froze or postponed their capital expenditures. Primarily reflecting the foregoing, Advantest’s net sales in fiscal
2007 decreased by 22.2%, as compared to fiscal 2006, to ¥182,767 million, and net income decreased by 53.5%,
as compared to fiscal 2006, to ¥16,550 million. Furthermore, in fiscal 2008, the global economic downturn that
stemmed from the financial crisis led semiconductor manufacturers to maintain their prudent position, with many
implementing inventory adjustments and freezing or postponing their capital expenditures. Primarily reflecting
the foregoing, Advantest’s net sales in fiscal 2008 decreased by 58.1% as compared with fiscal 2007 to¥76,652 million. In fiscal 2009, the semiconductor manufacturers gradually resumed capital expenditures assemiconductor prices rose and equipment utilization rates climbed. Despite the gradual recovery in fiscal 2009,
Advantest’s net sales in fiscal 2009 decreased by 30.6%, as compared to fiscal 2008, to ¥53,225 million,
primarily due to the drop in orders seen in the second half of fiscal 2008. In fiscal 2010, despite a difficult
business environment with factors such as continuing appreciation of the Japanese yen and intensified pricecompetition, Advantest seized the positive growth opportunity in the semiconductor market and strived to expand
orders and revenues. As a result of the above, Advantest’s net sales in fiscal 2010 increased by 87.2% ascompared to fiscal 2009, to ¥99,634 million, and Advantest recorded a net income of ¥3,163 million in fiscal
2010. In fiscal 2011, Advantest expanded sales to meet areas of increasing demand growth such as test
equipment for application processors, CMOS image sensors, and other non-memory semiconductor sectors. In
addition, after the completion of the acquisition of Verigy Ltd. (“Verigy”) in July 2011, Advantest has enhanced
sales promotion to customers in the U.S. and Europe and has provided products tailored to better meet increasing
customer demand in the communications semiconductor market. As a result of the above, Advantest’s net sales
in fiscal 2011 increased by 41.6%, as compared to fiscal 2010, to ¥141,048 million. However, cumulative costs
associated with the Verigy acquisition and impairment losses on investment securities led to a year-on-year
decline in earnings, and Advantest recorded a net loss in fiscal 2011 of ¥2,195 million.
Advantest believes that its results are significantly impacted by the significant volatility in demand in thesemiconductor industry. While Advantest is unable to predict future trends in the semiconductor industry, if there
is a significant downturn in the semiconductor industry, Advantest’s financial condition and results of operations
will be adversely affected. Prices of semiconductors, which have continued to decrease significantly in recent
years, may not return to their original levels if, for example, the over-supply of semiconductors persists. Should
semiconductor prices remain at low levels, semiconductor manufacturers’ earnings could deteriorate, resulting intheir further restraint towards capital expenditures, and Advantest’s results of operations could be adversely
affected.

5

Failure by Advantest to meet demand for its products upon a sudden expansion of the markets forsemiconductor and component test systems and mechatronics systems may adversely affect its future market
share and financial results
Since the global economic downturn following the financial crisis, suppliers have typically adjusted theirproduction capacity through the reduction of production line and personnel. If the market for semiconductor andcomponent test systems and mechatronics systems were to suddenly expand, Advantest would require significant
increases in production capabilities including personnel, as well as materials, components and supplies fromsuppliers, in order to fully capitalize on such expansion. The failure of Advantest to adjust to such unanticipatedincreases in demand for its products during the period of recovery in demand could result in Advantest losing one
or more of its existing large-volume customers or losing the opportunity to establish a strong relationship withpotential large-volume customers with which it currently does little or no business. Such failure may adversely
affect Advantest’s future market share and its financial results.
If Advantest does not introduce new products meeting its customers’ technical requirements in a timely
manner and at competitive prices, its products may become obsolete and its financial condition and results ofoperations may suffer
Advantest sells its products to several industries that are characterized by rapid technological changes,
frequent introduction of new products and services, varying and unpredictable product lifecycles and evolving
industry standards. Advantest anticipates that future demand for its products will be driven, in large part, by
technological innovation in semiconductor technology, which creates new testing requirements that are notadequately addressed by currently-installed semiconductor test systems. Customer needs in response to thesetechnological innovations, and their need for greater cost-effectiveness and efficiency to respond to the market
environment, include:•

test solutions of non-memory semiconductors that incorporate more advanced memory semiconductors,
logic and analog circuits;•

test solutions of power semiconductors that control small and large motor drives;•

solutions for complexed IC incorporating RF, logic and memory chips in a single package in order toachieve IC with advanced 3D integration as well as downsizing and technical advantages, with TSVtechnology;•

mechatronics related products which transport devices faster, more accurately and more stably;•

test solutions of testing technologies that employ self-test circuit designs incorporated into
semiconductor chips;•

test solutions of testing technologies that employ test circuit designs for Device Under Test (DUT);•

introduction of mechatronics products that respond to reduced testing time resulting from advances incustomers’ back-end testing;•prompt response and quick repair in the event of failure; and•total solutions that allow customers to reduce their testing costs.

Advantest also believes demand for its products, including semiconductor and component test systems, isaffected by the level of demand for personal computers, high-speed wireless and wireline data services, digitalconsumer products and communication devices such as tablet-type devices and smartphones. It is likely that
advances in technologies used in those products and services will require new testing systems. Without the
timely introduction of semiconductor test systems capable of effectively testing and measuring equipment that
use these new technologies, Advantest’s products and services may become technologically obsolete over time.
A failure by Advantest to meet its customers’ technical requirements at competitive prices or to deliver
conforming equipment in a timely manner may result in its products being replaced by those of a competitor or6

an alternative technology solution. Furthermore, Advantest’s inability to provide a product that meets requested
performance criteria at an acceptable price when required by its customers would severely damage its reputation
with such customers and may adversely affect future sales efforts with respect to such customers.
Advantest may not realize the full anticipated benefits of the business combination with Verigy
Advantest believes that the business combination with Verigy would enable it to better satisfy customer
needs through the development and sale of a wider variety of high quality products, and to better address
customer needs through technological innovation that is supported by a stable financial base, leading tocontinued growth amidst a rapidly changing and challenging semiconductor market.
However, the business integration of two companies will be time-consuming and complex, and the businesscombination may not realize the anticipated benefits. The difficulties in integrating the two companies may arise
during various stages of combining the operations, including the following:•

consolidation of the two companies’ differing research and development, manufacturing and sales
processes;•

the elimination of inefficiencies that may arise out of overlapping departments and processes between
the two companies;•

the retention of Verigy’s valuable key management and employees; and•the integration of two companies with differing corporate cultures and languages.

If difficulties arise in connection with the business combination, including those mentioned above,
Advantest’s future financial results may be adversely affected.
Advantest has also granted stock options to employees that Advantest took over from Verigy. If theemployees exercise their stock options, voting rights of Advantest’s shareholders, total assets per share and shareprice may be diluted as a result.
Advantest’s dependence on certain subcontractors and its dependence on a sole source or a limited number ofsuppliers for its components and parts may prevent it from delivering products that meet specifications on atimely basis
Advantest relies on subcontractors to perform some of the assembly requirements for its products. In
addition, many of the components used in Advantest’s semiconductor and component test systems andmechatronics systems are produced by suppliers based on Advantest’s specifications. Advantest’s reliance onthese subcontractors and suppliers gives it less control over the manufacturing process and exposes it tosignificant risks, especially inadequate manufacturing capacity, late delivery, substandard quality, lack of labor
availability and high costs. In addition, Advantest depends on a sole source or a limited number of suppliers for a
portion of its components and parts. Advantest does not maintain long-term supply agreements with most of its
suppliers, and it purchases most of its components and parts through individual purchase orders. If suppliers
become unable to provide components or parts in the volumes needed and at acceptable prices, Advantest would
have to identify and procure acceptable replacements. Furthermore, the markets for semiconductors and otherspecialized components have, in the past, experienced periods of inadequate supply to meet demand. Moreover,there may be a shortage of components if a large scale natural disaster or electricity shortage occurs. The processof selecting subcontractors or suppliers and of identifying suitable replacement components and parts is lengthy
and may result in Advantest being unable to deliver products meeting customer requirements in a timely manner.
Advantest has, in the past, been unable to deliver its products according to production schedules primarily due tothe inability of suppliers to supply components and parts based on Advantest’s specifications and by othershortages in components and parts. Moreover, a deterioration in the financial position of Advantest’s
subcontractors or suppliers reflecting the decline in the economic environment may result in certain
subcontractors and suppliers being unable to meet Advantest’s requirements.
7

Advantest faces substantial competition in its businesses and, if Advantest does not maintain or expand its
market share, its business may be harmed
Advantest faces substantial competition throughout the world. Advantest’s primary competitors in thesemiconductor and component test system market include, among others, Teradyne, Inc., LTX-Credence
Corporation, Yokogawa Electronic Corporation, FROM30 CO., LTD., EXICON Ltd. and UniTest Inc. In themechatronics system related market, Advantest also competes with Delta Design, Inc., Seiko Epson Corporation,
Mirae Corporation and TechWing, Inc. in test handler devices, and with TSE Co., Ltd. and Secron Co., Ltd. in
device interfaces. Some of Advantest’s competitors have greater financial and other resources than Advantest.
Advantest faces many challenges in its businesses, including increased pressure from customers to produce
semiconductor and component test systems and mechatronics systems that reduce testing costs. To compete
effectively and maintain and expand its market share, Advantest must continue to enhance its business processes
to lower the cost of its products, as well as introduce enhancements that lower overall testing costs. Advantest
also expects its competitors to continue to introduce new products with improvements in price and performance,
as well as increasing their customer service and support offerings, and Advantest expects new market participants
to launch low-price testers. Significant increases in competition may erode Advantest’s profit margin and weakenits earnings.
Advantest’s largest customers currently account for a significant part of its net sales and, in addition to therisk of Advantest’s business being harmed by the loss of one or more of these customers or changes in theircapital expenditures, Advantest may not be able to recover its accounts receivables if its largest customers
experience a deterioration in their financial position
Advantest’s success depends on its continued ability to develop and manage relationships with its major
customers. A small number of such major customers currently account for a significant portion of its net sales.
Sales to Advantest’s largest customer as a percentage of its total sales were approximately 20% in fiscal 2009,
approximately 20% in fiscal 2010 and approximately 29% in fiscal 2011. Sales to Advantest’s five largest
customers accounted for approximately 43% of its total sales in fiscal 2009, approximately 49% in fiscal 2010
and approximately 56% in fiscal 2011. The loss of one or more of these major customers or changes in theircapital expenditures could materially harm Advantest’s business. Furthermore, if Advantest’s major customers
experience deterioration in their financial position and are unable to fulfill their payment obligations to Advantest
in accordance with the applicable terms, Advantest’s business, results of operations and financial position may be
adversely affected.
Advantest’s product lines are facing significant price pressure
Price pressure on Advantest’s businesses is adversely affecting Advantest’s operating margins. Irrespectiveof the trend in the demand for semiconductors, there is ongoing price pressure on semiconductors, which puts
continuous pressure on the market price for products in the Semiconductor and Component Test System Segment
and Mechatronics System Segment. Especially with the ongoing slowdown in the semiconductor industry, pricepressure is salient. During these periods, semiconductor manufacturers and test houses, which are Advantest’s
customers, seek to increase their production capacities while minimizing their capital expenditures. In addition,
increased competition in the market for digital consumer products and personal computers has driven down
prices of these goods, subsequently creating significant price pressure on Advantest’s product lines. If prices ofsemiconductors continue to decline, customers may postpone capital expenditures on new equipment byremodeling or adapting the usage of existing equipment. If price pressure further increases in the future,
Advantest’s financial condition and results of operations may be adversely affected.
Advantest may not recoup costs incurred in the development of new products
Enhancements to existing products and the development of new generations of products are, in most cases,
costly processes. Furthermore, because the decision to purchase semiconductor and component test systems
8

products and mechatronics systems generally involves a significant commitment of capital, the sale of thisequipment typically involves a lengthy sales period and requires Advantest to expend substantial funds and sales
efforts to secure the sale. Advantest’s enhancements or new generations of products may not generate net sales inexcess of development and sales costs if, for example, these new enhancements or products are quickly renderedobsolete by changing customer preferences, the introduction by Advantest’s competitors of products embodying
new technologies or features, the introduction by Advantest’s customers of new products that require different
testing functions or the failure of the market for Advantest’s customer’s products to grow at the rate, or to thelevels, anticipated by Advantest. This risk is believed to be particularly acute with respect to test systems fornon-memory semiconductors because, in general, new non-memory semiconductor product lines are introduced
to market more frequently than new memory semiconductor product lines. In some cases, Advantest must
anticipate industry trends and develop products in advance of the commercialization of its customers’ products.
This requires Advantest to make significant investments in product development well before it determines thecommercial viability of these innovations. If Advantest’s customers fail to introduce their devices in a timely
manner or the market rejects their devices, Advantest may not recover its investments in product development
through sales in significant volume.
The market for Advantest’s major products is highly concentrated, and Advantest may not be able to increase
sales of its products because of limited opportunities
The market for test systems for memory semiconductors in the Semiconductor and Component Test System
Segment is highly concentrated, with a small number of large semiconductor manufacturers, foundries and test
houses accounting for a large portion of total sales in the semiconductor and component test system industry.
Advantest believes that this market concentration could become even more severe in the future as larger
semiconductor device manufacturers, foundries and test houses acquire smaller semiconductor market
participants, and as corporate restructuring, such as elimination and consolidation of businesses, progresses.
Advantest’s ability to increase sales will depend in large part upon its ability to obtain or increase orders fromlarge-volume customers. Furthermore, in the event there is an over-supply of semiconductor and component test
system products on the second-hand market reflecting, among others, restructuring within the industry, Advantest
faces an additional risk of losing its sales opportunities.
Fluctuations in exchange rates could reduce Advantest’s profitability
The majority of Advantest’s net sales derive from products sold to customers located outside of Japan. Of
Advantest’s fiscal 2011 net sales, 88.6% were from products sold to overseas customers. Most of Advantest’s
products are manufactured in Japan, but approximately 42% of Advantest’s net sales in fiscal 2011 were derived
from currencies other than the Japanese yen, predominantly the U.S. dollar. If the Japanese yen remains strong,or further strengthens relative to foreign currencies (mostly U.S. dollar and, to a much lesser extent, othercurrencies), it would increase the prices of Advantest products as stated in U.S. dollars and in those othercurrencies, which could hurt sales in those countries.
In addition, significant fluctuations in the exchange rate between the Japanese yen and foreign currencies,
especially the U.S. dollar, could require Advantest to lower its prices with respect to foreign sales of its productsthat are priced in Japanese yen, and reduce the Japanese yen equivalent amounts of its foreign sales for productsthat are based in U.S. dollars or other foreign currencies, thereby reducing its profitability overall. Thesefluctuations could also cause prospective customers to push out or delay orders because of the increased relative
cost of Advantest’s products. In the past, there have been significant fluctuations in the exchange rate between
the Japanese yen and the foreign countries in which Advantest’s sales are denominated.
If a natural disaster comparable to the Great East Japan Earthquake were to occur, Advantest’s business may
suffer
If a natural disaster comparable to the Great East Japan Earthquake, which struck on March 11, 2011, wereto occur, and as a result suppliers’ facilities are destroyed, public utilities such as electricity, gas, and water at the9facilities suspend their services, or there is a shortage of necessary energy supply for the domestic industry,
Advantest may not be able to procure necessary components or resources, and may be unable to meet market
demand for the supply of its products. Furthermore, market trends for the semiconductor industry, and finishedproducts that are closely related to semiconductors such as household electric appliances, various computerequipment and automobiles, may become uncertain. Advantest’s business may be adversely affected as a resultof these factors.
Similar to the accident that occurred at the Fukushima Daiichi Nuclear Power Station, if a large quantity ofradioactive material is released as a result of substantial damage to a nuclear power plant caused by an aftershock
or a tsunami, and radiations on Advantest’s products as a result exceed the radiation standards set by importing
countries, or the radiation levels in Gunma Prefecture where Advantest’s major production facilities are locatedexceed national radiation standards and it becomes a quarantine zone, or electricity supply becomes unstable forlong periods of time due to a shut-down of nuclear plants, Advantest may be unable to meet market demand forthe supply of its products, or the competitiveness of its products may be impaired and Advantest’s business may
be adversely affected.
If Advantest’s main facilities for research and development, production or information technology systems for
its businesses, or the facilities of its subcontractors and suppliers, were to experience catastrophic loss, its
results of operations would be seriously harmed
Advantest’s main facilities for research and development for its Semiconductor and Component Test
Systems and Mechatronics System Segments production, as well as many of Advantest’s service bases, arelocated in Japan and particularly concentrated in Gunma Prefecture and Saitama Prefecture. In addition, the main
system server and the network hub are maintained in system centers approved by the Information System
Management System, or ISMS, and local network servers are located in certain operations offices in Japan. As
most recently evidenced by the Great East Japan Earthquake in March, 2011, Japan is a region that is susceptible
to frequent earthquakes.
If Advantest’s facilities, particularly its semiconductor and component test system manufacturing factories,
were to experience a catastrophic loss, it would materially disrupt Advantest’s operations, delay production,
shipments and revenue, and result in large expenses to repair or replace the facilities. Advantest has insurance tocover most potential losses at its manufacturing facilities, other than those that result from earthquakes. However,this insurance may not be adequate to cover all possible losses. Similar disruptions to Advantest’s business may
occur if the facilities of Advantest’s subcontractors and suppliers or if the facilities of Advantest’s information
system network were to experience a catastrophic loss.
Advantest has prepared itself for crises such as large-scale natural disasters, and each department ofAdvantest has documented its own disaster-response procedures and manuals. Furthermore, in order to preventany disruption of its core businesses, or in case of suspension, to re-start the suspended businesses, including therecovery of important facilities, in the shortest possible time, Advantest has formulated and is in the process of
implementing a “Business Continuity Plan.” However, if Advantest cannot implement such Business Continuity
Plan, or if upon implementation such Business Continuity Plan is not effective, Advantest’s core businesses
could be disrupted at a time of crisis, such as large-scale natural disasters, and could take a substantial amount oftime to recover.
Advantest’s business is subject to economic, political and other risks associated with international operations
and sales
Advantest’s business is subject to risks associated with conducting business internationally because it sells
its products, and purchases parts and components from around the world. In fiscal 2011, 62.5% of Advantest’s
total net sales came from Asia (excluding Japan), a majority of which consisted of sales in Taiwan, the People’s
Republic of China and Korea, 21.1% from the Americas and 5.0% from Europe. Advantest anticipates that net
10

sales from international operations will continue to represent a substantial portion of its total net sales. In
addition, some of Advantest’s distribution and support subsidiaries are located in the Americas, Europe, andAsian countries, including Singapore, Taiwan, the People’s Republic of China and Korea, and some ofAdvantest’s suppliers are also located overseas. Accordingly, Advantest’s future results could be harmed by avariety of factors, including:•political and economic instability, including further turmoil in connection with the European debt crisis,
natural calamities, epidemics or other risks related to countries where Advantest procures its
components and parts or sells its products;•

trade protection measures and import or export licensing requirements;•

potentially negative consequences from changes in tax laws;•

risks with respect to international taxation, including transfer pricing regulations;•difficulty in staffing and managing widespread operations;•differing protection of intellectual property;•

difficulties in collecting accounts receivable because of distance and different legal rules; and•risks with respect to social and political crises resulting from terrorism and war, among others.

We have recorded a significant amount of goodwill and other long-lived assets which may become impaired in
the future
Advantest may be required to record an impairment charge for the difference between the carrying amountof long-lived assets and the implied fair value of long-lived assets if circumstances indicate that impairment may
have occurred and the carrying amount of the assets may not be recoverable. Advantest has recorded a significant
amount of goodwill on its consolidated balance sheet in accordance with U.S. GAAP and goodwill is tested for
impairment at least annually. If the testing performed indicates that the carrying amount of reporting unit
goodwill exceeds, the implied fair value of that goodwill, Advantest recalculates the fair value of each reporting
unit goodwill and an impairment loss shall be recognized in an amount equal to that excess. Therefore, dependingon the expected future cash flow of long-lived assets or business operations to which goodwill relates, Advantest
may be required to record a significant impairment charge, which could have a material adverse effect on
Advantest’s financial condition and results of operations.
Advantest’s business may be negatively affected by factors relating to its marketing and sales capabilities andits branding
Advantest’s business may be negatively affected by factors relating to its marketing and sales capabilities
and its branding, including:•the long selling process involved in the sale of semiconductor and component test systems andmechatronics system;•

the relatively small number of total units sold in the semiconductor and component test system andmechatronics system market;•

order cancellations or postponement of capital expenditures by customers;•

delays in collection of accounts receivable, increases in losses resulting from bad-debt or increases inprovisions for doubtful receivables, reflecting the financial condition of customers;•

increases in required provisions for product warranty costs and write-downs of inventory; and•any real or perceived decrease in performance and reliability of Advantest products, which could lead toa decline in Advantest’s reputation.
11

Chemicals used by Advantest may become subject to more stringent regulations, and Advantest may berequired to incur significant costs in adapting to new requirements
Advantest uses chemicals in the manufacturing of its products, the manufacture, processing and distributionof which are subject to environmental related laws, regulations and rules of Japanese governmental agencies, aswell as by various industry organizations and other regulatory bodies in other countries. These regulatory bodies
may strengthen existing regulations governing chemicals used by Advantest and may also begin to regulate otherchemicals used by Advantest. While Advantest is taking measures to eliminate toxic substances included in parts
used to manufacture its products, Advantest uses solder, which contains lead for mounting electronic parts andcomponents for its products, in order to ensure the reliability of its products as a matter of priority. Further, as amethod to cool some of its semiconductor and component test systems and mechatronics systems, Advantest uses
fluorinated liquid which use is not currently regulated by laws. Advantest believes that it is in compliance withregulations with respect to the use of chemicals by promoting environmental policies for its products with thefocus on ensuring the safety and the reliability of its products; however, Advantest must be prepared to adapt toregulatory requirements in all relevant countries as requirements change. Advantest may be required to incur
significant cost in adapting to new requirements. Any failure by Advantest to comply with applicablegovernment or industry regulations could result in restrictions on its ability to carry on or expand its operations,
including being unable to sell its products.
Advantest could suffer significant liabilities, litigation costs or licensing expenses or be prevented from sellingits products if it is infringing the intellectual property of third parties
Advantest may be unknowingly infringing the intellectual property rights of third parties and may be held
responsible for that infringement. To date, Advantest has not been the subject of a material intellectual property
claim. However, any future litigation regarding patents or other intellectual property infringement could be costly
and time consuming and divert management and key personnel from Advantest’s business operations. If
Advantest loses a claim, it may be forced to pay significant damages, pay license fees, modify its products orprocesses, stop making products or stop using processes. A license could be very expensive to obtain or may not
be available at all. Changing Advantest’s products or processes to avoid infringing the rights of third parties may
be costly or impractical.
Advantest may be unable to protect its proprietary rights due to the difficulty of Advantest gaining access to,and investigating, the products believed to infringe Advantest’s intellectual property rights
Advantest relies on patents, utility model rights, design rights, trademarks and copyrights obtained invarious countries to actively protect its proprietary rights. For instance, with respect to the device interface
market, Advantest has taken legal action based on its patent and utility model rights against manufacturers thatsell replicas of Advantest’s products and, in some instances, has obtained injunctions against sales of such
replicas. However, in general, it is difficult for Advantest to gain access to, and investigate, the products believedto infringe its intellectual property rights. Therefore, Advantest cannot ensure that its intellectual property rights
will provide meaningful protection of its proprietary rights. Nevertheless, Advantest is focused on protecting its
intellectual property rights from third party infringement and will continue to monitor and enforce its rights.
The technology labor market is very competitive, and Advantest’s business may suffer if Advantest is unable tohire and retain engineers and other key personnel
Advantest’s future success depends partly on its ability to attract and retain highly qualified engineers for its
research and development and customer service and support divisions. If Advantest fails to hire and retain asufficient number of these personnel, it may not be able to maintain and expand its business. Advantest may needto revise its compensation and other personnel related policies to retain its existing officers and employees andattract and retain the additional personnel that it expects to require.

12Damage, interference or interruption to Advantest’s information technology networks and systems could
hinder business continuity and lead to substantial costs or harm Advantest’s reputation
Advantest relies on various information technology networks and systems, some of which are managed bythird parties, to process, transmit and store electronic information, including confidential data, and to carry out
and support a variety of business activities, including manufacturing, research and development, supply chain
management, sales and accounting. Advantest has established the Information Security Committee and Legal/
Security Control Department to address information security measures. However, attacks by hackers or computerviruses, wrongful use of the information security system, careless use, accidents or disasters could undermine thedefenses established by the Information Security Committee and Legal/Security Control Department and disrupt
business continuity, which could not only risk leakage or tampering of information but could also result in a legal
claim, litigation, damages liability or an obligation to pay fines. If this were to occur, Advantest’s reputation
could be harmed, Advantest could incur substantial costs, and it may have a material adverse effect upon
Advantest’s financial condition and results of operation.
Product defects and any damages stemming from Advantest’s product liability could harm Advantest’s
reputation among existing and potential customers and could have a material adverse effect upon Advantest’sbusiness results and financial condition
Advantest manufactures its products in accordance with internationally accepted quality control standards
such as ISO 9000. However, Advantest cannot guarantee that there are no defects in its products. Advantest
maintains product liability insurance, but cannot guarantee that such insurance will sufficiently cover the ultimate
amount of damages with respect to Advantest’s liabilities. Large scale accidents or any discovery of defects in its
products could harm Advantest’s reputation for not adequately addressing defects, could cause Advantest to incur
higher costs, could result in claims for damages and could have a material adverse effect upon Advantest’sbusiness results and financial condition.
Risks Related to Ownership of American Depositary Shares (“ADSs”) or Common StockJapanese yen-dollar fluctuations could cause the market price of the ADSs to decline and reduce dividend
amounts payable to ADS holders as expressed in U.S. dollars
Fluctuations in the exchange rate between the Japanese yen and the U.S. dollar may affect the U.S. dollar
equivalent of the Japanese yen price of the shares on the Tokyo Stock Exchange and, primarily reflecting theforegoing, are likely to affect the market price of the ADSs. The Company has historically paid dividends on its
shares twice a year. If the Company declares cash dividends, dividends on the shares represented by the ADSs
will be paid to the depositary in Japanese yen and then converted by the depositary into U.S. dollars. Therefore,
exchange rate fluctuations could also affect the dividend amounts payable to ADS holders following conversion
into U.S. dollars of dividends paid in Japanese yen on the shares represented by the ADSs.
A holder of ADSs has fewer rights than a shareholder has, and must act through the depositary to exercise
those rights
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving
dividends and distributions, bringing derivative actions, examining Advantest’s accounting books and records
and exercising appraisal rights, are available only to holders of record on the Company’s register of shareholders.
Because the depositary, through its custodian agents, is the registered holder of the shares underlying the ADSs,
only the depositary can exercise those rights in connection with the deposited shares. The depositary will makeefforts to vote the shares underlying a holder’s ADSs as instructed by the holder and will pay to the holder thedividends and distributions collected from Advantest. However, in the holder’s capacity as an ADS holder, that
holder will not be able to bring a derivative action, examine Advantest’s accounting books and records orexercise appraisal rights through the depositary.
13

There are restrictions on the withdrawal of shares from the Company’s depositary receipt facility
Under the Company’s ADS program, each ADS represents the right to receive one share. To withdraw any
shares, a holder of ADSs has to surrender for cancellation American Depositary Receipts, or ADRs, evidencing
100 ADSs or any integral multiple thereof. Each ADR bears a legend to that effect. As a result, holders of ADSs
are unable to withdraw fractions of shares or units or receive any cash settlement from the depositary in lieu of
withdrawal of fractions of shares or units. Holders of shares representing less than one unit, or 100 shares, may
require the Company to repurchase those shares, whereas holders of ADSs representing less than one unit ofshares are unable to exercise this right because the holders of these ADSs are unable to withdraw the underlying
shares. Under the Company’s ADS program, an ADS holder cannot cause the depositary to require the Company
to repurchase fractions of shares or units on its behalf. For a further discussion of the ADSs and the ADS
program, see “Description of American Depositary Receipts” set forth in the Company’s registration statement
on Form F-1 filed with the Securities and Exchange Commission on July 22, 2002. For a further discussion of theJapanese unit share system, see “Additional Information—Memorandum and Articles of Association—The Unit
Share System.”
Enforcement of Civil Liabilities
The Company is a limited liability, joint-stock corporation incorporated under the laws of Japan. Almost allof the Company’s directors, executive officers and corporate auditors reside in Japan. Substantially all of theCompany’s assets and the assets of these persons are located in Japan. It may not be possible, therefore, forinvestors to effect service of process within the U.S. upon the Company or these persons or to enforce against theCompany or these persons judgments obtained in U.S. courts predicated upon the civil liability provisions of thefederal securities laws of the U.S. The Company’s Japanese counsel, Nagashima Ohno & Tsunematsu, has
advised the Company that there is doubt as to the enforceability in Japan, in original actions or in actions for
enforcement of judgments of U.S. courts, of liabilities predicated solely upon the federal securities laws of theU.S.
ITEM 4. INFORMATION ON THE COMPANY
4.A. HISTORY AND DEVELOPMENT OF THE COMPANY
The Company commenced operations in July 1954, and was incorporated in December 1954 under the nameTakeda Riken Industry Co., Ltd. as a limited liability, joint-stock company in Japan under the Commercial Codeof Japan. At the time of incorporation, Takeda Riken’s primary business was the design, manufacture and sale ofmeasuring instruments for Japanese electronics manufacturers. Takeda Riken started focusing on semiconductor
test equipment for the semiconductor industry in 1968 and was the first to domestically produce semiconductor
test equipment in 1972. In 1971, Takeda Riken entered into its first distribution agreement with a foreign
distributor and, in 1973, established its first representative office in the U.S. to gather information on technology
and distribution and to establish dealer relationships. These two milestones launched the Company’s long-termgoal of becoming a global manufacturer of testing and measuring products. Takeda Riken has been listed on theTokyo Stock Exchange since February 1983. Takeda Riken changed its registered name to Kabushiki Kaisha
Advantest in October 1985.
Advantest applies its capital expenditures chiefly to the streamlining of development, production of new
products, the expansion of production capacity and capital leases to its customers. Advantest’s capital
expenditures were ¥3.4 billion, ¥3.8 billion and ¥7.0 billion in fiscal 2009, 2010 and 2011, respectively.
On July 4, 2011, Advantest acquired all of the outstanding shares of common stock of Verigy at US$
15.00 per share, pursuant to which Verigy became a wholly-owned subsidiary of Advantest. The total purchaseprice is ¥78.7 billion. On April, 2012, Advantest reorganized its subsidiaries and integrates with Verigy.

14

The Company’s principal executive offices are located at Shin-Marunouchi Center Building, 1-6-2,
Marunouchi, Chiyoda-ku, Tokyo 100-0005 Japan. The Company’s telephone number in Japan is(81-3) 3214-7500.
The Company’s agent in the United States is Advantest America Inc., located at 3201 Scott Boulevard,
Santa Clara, California 95054, U.S.A.
4.B. BUSINESS OVERVIEW
Overview
As of June 27, 2012, Advantest is comprised of the Company and its 29 consolidated subsidiaries and one
investee which is accounted for by the equity method. Advantest conducts its business in the following segments:•

Semiconductor and Component Test System Segment;•

Mechatronics System Segment, focusing on peripheral devices including test handlers and device
interfaces; and•Services, Support and Others Segment.

Semiconductor and Component Test System Segment
The Semiconductor and Component Test System Segment provides customers with test system products forthe semiconductor industry and the electronic component industry. The products in this segment include test
systems for memory semiconductors and test systems for non memory semiconductors. The test systems for non
memory semiconductors are divided into test systems for SoC semiconductors, LCD driver integrated circuits
and semiconductors used in car electronics.
Mechatronics System Segment
The Mechatronics System Segment focuses on peripheral devices to the semiconductor and component test
systems. This business includes test handlers applying mechatronics technologies, which handle semiconductor
devices and automate testing, device interfaces with measured devices, and operations related to nanotechnology.
Services, Support and Others Segment
The Services, Support and Others Segment consists of comprehensive customer solutions provided inconnection with the Semiconductor and Component Test System and Mechatronics System Segments, support
services and an equipment lease business.
Sales by Segment
The following table illustrates net sales by each segment for the last three fiscal years.

Segment

Fiscal 2009
Sales
(in millions)%Fiscal 2010
Sales
(in millions)%

Semiconductor and Component Test System
Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mechatronics System Segment . . . . . . . . . . . . . . . .
Services, Support and Others Segment . . . . . . . . . .
Intercompany transactions elimination . . . . . . . . . .

¥32,572
11,237
11,838(2,422)

61.2
21.1
22.2
(4.5)

¥69,333
18,515
14,166(2,380)69.6 ¥105,608
18.6
20,61614.2
18,807(2.4)(3,983)

74.9
14.6
13.3
(2.8)

Total Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥53,225100.0% ¥99,634

100.0% ¥141,048

100.0%

15

Fiscal 2011
Sales
(in millions)%Industry Overview
Advantest offers products in semiconductor and component test systems, mechatronics systems, andservices, support and others. Advantest’s main customers are semiconductor manufacturers, foundries and test
houses. Advantest believes that the following factors promote growth of the business carried out by its main
customers:•

the move to lower-cost, smaller, faster and more powerful and energy efficient semiconductors andelectronic components;•

the increase in demand for higher performance servers and personal computers;•

the increase in demand for communication devices such as tablet-type devices and smartphones;•

the increase in demand for digital consumer products such as flat-panel TVs, DVD/Blu-ray discrecorders, portable audio players and electronic books;•

the increasing levels of wireless high-speed data transmission worldwide reflecting the expansion of themobile device industry;•

the increasing demand for electronic devices that incorporate semiconductor and communications
technologies in developing countries;•

the development of higher speed and high capacity communications infrastructure; and•the increase in demand for electronic components including semiconductors and sensors, in response totechnological advancement of automobiles such as electric vehicles (EV) and hybrid electric vehicles(HEV).

Advantest believes that these factors will continue to provide long-term growth opportunities for Advantest
because they lead to additional capital expenditures by its customers, resulting in an expansion of businesses for
Advantest. However, the capital expenditures of Advantest’s customers may be adversely affected by thefollowing factors:•

the level of demand for semiconductors and electronic components;•

advancements in semiconductor and electronic component technology; and•changes in semiconductor and electronic component manufacturing processes.

Demand for Semiconductors and Electronic Components
Demand for semiconductor and component test systems and mechatronics systems is closely related to thevolume of semiconductors and electronic components produced and the resulting capital expenditure ofsemiconductor manufacturers and others.
Semiconductors are generally classified as either memory semiconductors or non memory semiconductors.
Memory semiconductors are used in electronic systems to store data and programs. Non memory semiconductors
include various semiconductors that incorporate non memory circuits, which include logic and analog circuits.
Logic circuits process digital data to control the operations of electronic systems. Analog circuits process analog
signals translated from real world phenomena such as sound, light, heat and motion. SoC semiconductors are asubset of non memory semiconductors that combine digital circuits with analog, memory and RF circuits, among
others, on a single semiconductor chip. SoC semiconductors are used in a variety of sophisticated products,
including wireless communications, fiber optic equipments and digital consumer products.
Semiconductor sales have increased significantly over the long-term. However, semiconductors, particularly
memory semiconductors, have experienced significant cyclical variations in growth rates. According to World
Semiconductor Trade Statistics (WSTS), worldwide semiconductor sales in 2007 increased by approximately
16

$7.9 billion or 3.2% to approximately $255.6 billion. However, sales in 2008 decreased by approximately $7.0
billion or 2.8% compared to the previous year to approximately $248.6 billion, mainly due to the substantial
decline in the price of memory semiconductors. Sales in 2009 also decreased compared to the previous year, byapproximately $22.3 billion or 9.0% to approximately $226.3 billion, mainly due to the slow economy persistingsince the previous year. Sales in 2010 increased compared to the previous year, by approximately $72.0 billion or
31.8% to approximately $298.3 billion, mainly due to increased demand for electronic components in developing
nations. Sales in 2011 increased compared to the previous year, by approximately $1.2 billion or 0.4% toapproximately $299.5 billion, mainly due to the global economic recession and natural disasters such as the Great
East Japan Earthquake and the floods in Thailand reducing production activities of electronic products. The
following table sets forth the size of the market for memory semiconductors, non memory semiconductors and all
semiconductors between 2007 and 2011 and the projected market size between 2012 and 2014 as compiled andestimated by WSTS as of June 2012.
Actual Year ended December 31,
2007

2008

2009

Projections for Years ending December 31,

2010

2011

2012

2013

2014

(in millions)

Memory . . . . . . . . . . . . . . . . . . . .
Non memory . . . . . . . . . . . . . . . . .

$ 57,854
197,791$ 46,348
202,255$ 44,797
181,516$ 69,614
228,701$ 60,749
238,772$ 58,861
241,998$ 61,714
260,710$ 62,470
274,035

Total . . . . . . . . . . . . . . . . . . . . . . .

$255,645$248,603$226,313$298,315$299,521$300,859$322,424$336,505

The non memory semiconductor market is not as volatile as the memory semiconductor market because nonmemory semiconductors are used in a larger variety of consumer products and equipment. In periods of rapid
decline in the semiconductor market, the capital expenditures of semiconductor manufacturers, including theirpurchases of semiconductor test systems, generally decline at a faster pace than the decline in semiconductor
sales. In addition, following a downturn in the semiconductor market or a decline in the price of semiconductors,
investment is generally restrained until semiconductor manufacturers determine that the market for
semiconductors is experiencing a substantive recovery and accordingly, sales of semiconductor test systems
generally do not experience significant increase. Advantest believes these trends will continue in the future.
The semiconductor market remained steady in 2007. However, the semiconductor market experienced
negative growth in 2008 for the first time in seven years primarily due to the global economic crisis and further
declined in 2009 reflecting the conditions continuing from the previous year. The market significantly recoveredin 2010 compared to the previous year, due to a surge in demand for electronic equipment in developing nations.
In 2011 the market only increased slightly compared to the previous year due to the global economic recession
and natural disasters such as the Great East Japan Earthquake and the floods in Thailand reducing production
activities of electronic products. According to data published by WSTS, the market for memory semiconductors
is expected to decrease slightly by 3.1% in 2012 as compared with 2011, after which it is expected to grow byapproximately 5% in 2013 and by approximately 1% in 2014. WSTS expects that the market for memory
semiconductors will grow to approximately $62.5 billion in 2014. Advantest believes that demand for memory
semiconductors will be generated in the foreseeable future by the prevalence of DDR3-SDRAM, the next
generation DDR4-SDRAM, flash memory and other high-end semiconductors. WSTS estimates that the nonmemory semiconductor market will grow by approximately 1% in 2012, by approximately 8% in 2013, and by
approximately 5% in 2014. WSTS expects that the market for non memory semiconductors will grow toapproximately $274.0 billion in 2014. Advantest believes that the demand for non memory semiconductors will
generally grow in the foreseeable future, led by the further prevalence of, and new developments in, digitalconsumer products and personal computers.
Advancements in Semiconductor and Electronic Component Technology
Advantest believes that demand for semiconductor and component test systems and mechatronics systems is
also affected by the rate of change and development in semiconductor and electronic component technology.
Current changes in the semiconductor and electronic component industry relate to the innovation of digitalconsumer products and communications technologies.
17

Furthermore, Advantest believes that technical innovation and a growth in demand for semiconductors usedin vehicles, such as electronic control units and on-board LANs, in connection with the increasing use ofelectronics in the automobile industry may have a big impact on the semiconductor industry and electronic
components industry.
Demand for faster semiconductors and electronic components that are smaller in size, incorporate morefunctions and require less power to operate is being driven by:•

growing demand for, and continuous improvements in, personal computers and digital consumer
products, such as flat-panel TVs, DVD/Blu-ray disc recorders, digital cameras, electronic books andmobile phone handsets;•

increase in demand for, and improvements in technology for, communication devices such as tablet-typedevices and smartphones;•

requirements of communications network equipment, such as network routers, switches and basestations, as well as wireless handsets and other Internet access devices, to enable advances in Internet
hardware and software applications, increases in infrastructure performance and simplification andminiaturization of Internet access devices; and•the move from vehicles with internal combustion engines to hybrid or electric vehicles partially or
wholly driven by electric motors in response to society’s increasing call for environmental measures andgreater energy efficiency

Demand for personal computers, servers, smartphones and tablet-type devices with higher performance andcapabilities are also driving changes in the memory semiconductor sector. This demand is causing manufacturers
to shift to the production of the DDR4-SDRAM high-speed data transfer memory semiconductor, and to further
expand production of lower power LPDDR2 for mobile devices and large capacity and nonvolatile and highspeed read or writable flash memory semiconductors. Advantest believes that this shift is creating demand fortest systems for memory semiconductors capable of handling these new types of memory semiconductors, aswell as contributing to a reduction in testing costs. In addition, Advantest believes that additional demand formechatronics systems, including test handlers and device interfaces connecting semiconductor devices andsemiconductor test systems, will be created and will grow in line with advances in semiconductor technologies.
The development of SoC semiconductors with smaller size, higher performance and lower power
consumption has created demand for sophisticated semiconductor and component test systems that cansimultaneously test SoC semiconductors’ logic, analog and memory circuits. Further innovations in non memory
semiconductor technologies including SoC semiconductor technology are expected, and Advantest believes these
innovations will create demand for new, high-performance semiconductor and component test systems optimized
for use with these advanced semiconductors.
Advantest believes that the integration of non memory semiconductors into a range of digital consumer
products will drive demand for test systems for non memory semiconductors which contribute to the reduction of
testing costs. Non memory semiconductors are often customized for applications in specific products, which
results in a large variety of non memory semiconductors that are often produced in relatively smaller volumes.
Changes in Semiconductor and Electronic Component Manufacturing Processes
Semiconductor and electronic component manufacturers are promoting production outsourcing,technological innovation in manufacturing processes and testing technology to improve productivity.
Production Outsourcing
In recent years, semiconductor manufacturing and testing processes have become more complex and capitalintensive. Primarily reflecting the foregoing, an increasing portion of the manufacturing and testing functions are18

being subcontracted out, not only by fabless companies, but also by industrial, design and manufacturing
companies which had previously designed and manufactured semiconductors, in order to reduce capital
expenditures. This trend has resulted in an increase in the number of test houses that accept test process
outsourcing and foundries that accept manufacturing process outsourcing. Foundries either perform testing
in-house or outsource their testing needs to test houses. This trend towards production outsourcing, particularly
to test houses, has increased the number of potential customers for semiconductor test system manufacturers,
although it has not significantly affected the total demand for Advantest’s products. In addition, Advantest
believes that it is most appropriate to use semiconductor and component test systems which have been designed
using module structure, which enables the formation of semiconductor test systems that can meet the multiple
needs of the customers of test houses and foundries. Outsourcing has also been utilized for electronic component
manufacturing.
Technological Innovation in Manufacturing Processes
One of the innovations in semiconductor manufacturing processes is the use of 300 millimeter wafers.
Wafers are circular flat pieces of silicon from which multiple semiconductor chips are made using photo-etchingand other manufacturing processes. The use of 300 millimeter wafers allows manufacturers to increase
semiconductor production per wafer twofold or more when compared to production using the conventional 200
millimeter wafers. From 2007, investment has remained at low levels mainly due to factors such as excess supply
and increased price competition. However from the latter half of 2010, as a result of a rapid expansion of themobile device market which resulted in an increase in the manufacture of low power memory, capital
expenditures related to 300mm wafers have increased, and demand for new semiconductor and component test
systems and test handlers has been increasing.
New Testing Technologies
Semiconductor designers and manufacturers are striving to further reduce costs in connection with
manufacturing semiconductors, especially the cost of testing semiconductors. Thus, there is a stronger demand
for semiconductor test systems that can simultaneously test more semiconductors and accommodate a larger
number of pins at higher speeds and with high throughput capabilities. On the other hand, there is an increasingpressure on semiconductor test systems to be energy efficient, smaller in size and less expensive. In order to
respond to this demand, semiconductor test system manufacturers are taking measures to reduce semiconductor
test system costs by making the development and manufacturing process of semiconductor test systems more
efficient, strengthening peripheral devices such as test handlers and device interfaces and improving service andsupport systems. Furthermore, although certain semiconductors are now tested in a simplified manner in which
self-test technologies are designed into circuits, or are tested in a manner that is close to actual operation by using
firmware used to operate final products or even sold without being tested, Advantest believes that it has become
increasingly important for semiconductor test systems to ensure the reliability of semiconductors since
semiconductors are expected to become more complex and advanced going forward.
Advantest believes that semiconductor and electronic component manufacturing processes will continue to
evolve. The introduction of new manufacturing processes will likely result in test costs constituting a higher
percentage of the total cost of manufacturing and, therefore; increase price pressure on the semiconductor test
system industry. Furthermore, advances in the semiconductor and electronic component industry will require
semiconductor test systems with new and more sophisticated testing functions. Advantest believes that thesetrends provide it with an opportunity to distinguish itself from its competitors through the delivery of new
products that are priced and designed to meet the specific needs of its customers.
Business Strategy
Advantest is currently facing a challenging business environment primarily due to the recent downturn inthe global economy and weakened demand for semiconductors. In order to create a stable foundation amidst the19fast-changing and challenging semiconductor market, on July 4, 2011, Advantest acquired Verigy, pursuant towhich Verigy became a wholly-owned subsidiary of Advantest. On April, 2012, Advantest reorganized its
subsidiaries and integrates with Verigy. Furthermore Advantest has established the following core business goals
to achieve mid- to long-term growth:•

focusing on the development of semiconductor test systems which can respond to changes incapabilities of memory and non memory semiconductors;•

increasing its market share for test systems for non memory semiconductors and maintaining its large
market share for test systems for memory semiconductors;•

increasing its market share for test handlers for memory and non memory semiconductors;•

developing, designing and supplying high quality device interfaces in a shorter period of time;•

reducing product cost of goods to withstand price pressures on products•

enhancing its operating efficiency to improve profitability, through promotion of production
innovations;•strengthening its ability to provide comprehensive solutions to satisfy customer needs; and•promoting the development and establishment of new businesses in the measuring instruments fieldoutside of its semiconductor-related business.

To achieve these goals, Advantest plans to:Continue to address industry trends, identify customer needs and deliver new products ahead of its competitors
Advantest will continue to work closely with major semiconductor manufacturers beginning in the productdesign stage of semiconductor and component test systems to understand customer needs relating to emerging
technologies and applications. Based on this knowledge and its technological expertise, Advantest seeks todevelop more advanced semiconductor and component test systems, test handlers, device interfaces andcomprehensive solutions ahead of its competitors. For example, Advantest is pursuing the following strategies:•

developing semiconductor and component test systems with increased test speeds and throughput
capabilities and test handlers in line with the technological development of memory semiconductors andnon memory semiconductors;•

proactively developing products to address the recent shift in emphasis in the semiconductor industry
toward front-end testing of dies;•

actively applying high-frequency analog technology developed for measuring instruments for thewireless communications market to test systems for non memory semiconductors including test systems
for SoC semiconductors;•

in addition to Advantest’s existing technologies, actively utilizing Verigy’s technologies, including thehigh-frequency test technology or the per-site processor architecture, and promoting productdevelopment that utilizes the strengths of both companies;•

developing testing solutions for complexed IC incorporating RF, logic and memory chips in a single
package in order to achieve IC with advanced 3D integration as well as downsizing and technicaladvantages with TSV technology;•

offering semiconductor and component test systems and device interfaces with high throughput in orderto test recent devices incorporating interfaces with data rates of several gigabits per second; and•developing device interfaces that can optimize the performance of semiconductor and component test
systems and test handlers in responding to semiconductors with higher speed and large pin counts.
20

Strengthen the test system business for non memory semiconductors
Advantest believes that in 2011 the market for test systems for non memory semiconductors wasapproximately four times the size of the market for test systems for memory semiconductors. Advantest has
therefore devoted its resources to develop test systems and modules for non memory semiconductors to meet thedemands of a large number of manufacturers for the testing of a wide variety of non memory semiconductors.
Advantest is utilizing the test module structure in test systems for non memory semiconductors. Advantest
believes the primary benefits of these test module structures are reduced testing costs. In addition, Advantest
hopes that the reduction in testing costs, and thus the lowering of overall manufacturing costs of non memory
semiconductors, will help foster further demand for non memory semiconductors to be used in digital consumer
products and other products.
Furthermore, through its integration with Verigy, Advantest aims to utilize the strengths of both companies
to rapidly develop efficient, low cost products to break into the low-end non memory device market and highspeed telecommunications market that were previously difficult to enter into.
Focus sales and support efforts on key customer accounts
Advantest believes that a small number of large semiconductor manufacturers, foundries and test houses
account for a large portion of total sales in the semiconductor and component test system industry. Advantest
sells semiconductor and component test systems and mechatronics systems to many of these customers andsupports them on a regular basis. Advantest is seeking to continue to expand its business with these key
customers and develop new relationships with the remaining potential major customers. Many of Advantest’ssales and support offices are located near the corporate headquarters or main research and development andmanufacturing facilities of these key customers. In addition, in Europe, the U.S. and Asia, Advantest is further
expanding its customer base and strengthening technical support and services by utilizing offices near thecustomer base of Verigy (now acquired by Advantest). These offices also facilitate Advantest’s efforts tocontinue conducting collaborative development activities with leading semiconductor manufacturers.
Advantest acquired Verigy, then Advantest reorganized its subsidiaries and integrates with Verigy
On July 4, 2011, Advantest acquired all of the outstanding shares of common stock of Verigy, a leading
manufacturer of semiconductor test systems, which became a wholly-owned subsidiary of Advantest. In April,2012, Advantest reorganized its subsidiaries and integrates with Verigy, and currently sells Verigy’s products
under the Advantest brand. The purpose of this acquisition and business combination is mainly threefold as set
out below.
(1) Highly Complementary Technology and Products
Building on Advantest’s strength in memory semiconductor test systems and mass production lines andVerigy’s strength in non memory semiconductor test systems and research and development, Advantest expects
to drive technological innovation in the more comprehensive field of automatic semiconductor test equipment.
Advantest will also work to enhance growth and profitability by reallocating resources currently devoted to areasof duplicative research and development, with a goal of accelerating Advantest’s combined technical capabilities
and developing new business.
(2) Customer Relationships
Advantest will have a wide and comprehensive range of products, which will enable it to provide customers
with the most advanced collection of test solutions, such as improved test efficiency and reduced cost. Expanding
Advantest’s scale of operations is also expected to enhance Advantest’s ability to provide long-term andconsistent service to Advantest’s customers.
21

(3) Global Business Development
Through the combination of Advantest, which has developed its business primarily in Japan and Asia, andVerigy, which has a significant presence in the United States and Europe, Advantest intends to expand its global
customer base. Advantest expects to accelerate its globalization efforts at the operation level by acquiring
excellent human resources on a global scale.
Products
As of fiscal 2011, Advantest’s main products are products developed, manufactured and sold in the
Semiconductor and Component Test System Segment and Mechatronics System Segment. They are as follows:
Semiconductor and Component Test Systems Segment
Semiconductor and component test systems are used during the semiconductor and electronic component
manufacturing process to confirm that a semiconductor functions properly. Semiconductor and component test
systems consist of test systems for memory semiconductors and test systems for non memory semiconductors.
The following table sets forth the amount of net sales of Advantest’s semiconductor and component test
systems, for memory and non memory semiconductors for the periods presented.
Category

Fiscal 2009

Fiscal 2010
(in millions)Fiscal 2011

Test systems for memory semiconductors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Test systems for non memory semiconductors . . . . . . . . . . . . . . . . . . . . . . . . .

¥12,444
20,128¥30,016
39,317¥ 25,913
79,695

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥32,572¥69,333¥105,608

Test Systems for Memory Semiconductors
Advantest’s test systems for memory semiconductors are test systems designed to test high-speed/highperformance and low power consumption DRAM semiconductors used in personal computers, servers,
smartphones and tablet-type devices as well as flash memory semiconductors used in digital consumer products
and communication devices such as smartphones.
Test systems for memory semiconductors consist of a mainframe and one or more test heads. During testing,a device interface is attached to the test head. During the front-end testing process, wafers are loaded by a proberand are connected to the test system for memory semiconductors through the device interface. Electric signals
between the die and the test systems for memory semiconductors are transmitted through probe pins located in
the device interface and tested. After front-end testing is completed, the wafer is diced into separate dies andproperly functioning dies are packaged. During back-end testing, test handlers are used to load these packaged
devices onto the test heads, and electric signals are transmitted between the devices and the test heads via thedevice interface and tested. The test results are analyzed by the test systems for memory semiconductors’
hardware circuits and software programs. Customized software programs for each semiconductor are required toanalyze the semiconductor tests and test data.
Characteristics of the performance and other characteristics of test systems for memory semiconductors thatare important to customers include:
Throughput. Throughput is measured by the number of semiconductors that can be tested by test systems formemory semiconductors during a specified time.
22Test Speed. Test speed is the speed at which the test systems for memory semiconductors test
semiconductors during testing. Test speed is measured in terms of hertz (Hz), or Bits Per Second (bps).
Timing Accuracy. Timing accuracy is the test system for memory semiconductors’ accuracy of control over
the timing of testing signals generated.
Maximum Pin Count. Maximum pin count is the number of channels for test signals (at the maximum) usedby test systems for memory semiconductors.
Size. Smaller machines reduce the amount of floor space occupied and electricity consumed by the test
systems for memory semiconductors.
Temperature. Semiconductor manufacturers perform tests on semiconductors at varying temperatures toensure proper operation under extreme conditions.
Compatibility. Test systems for memory semiconductors that are compatible with predecessor systems cut
down on the time required to develop new test programs and otherwise allow for effective utilization bycustomers of existing resources.
Quality. Quality is determined by the reliability of test results produced and whether the equipment canmaintain stable operation under different testing environments.
Advantest estimates that its market share in test systems for memory semiconductors was approximately
37% in fiscal 2009, but recovered to approximately 62% and 57% (which includes Verigy for 2011) in 2010 and2011, respectively, as a result of increasing capital expenditure in test system for DRAM semiconductors.
Advantest has a substantially larger market share in test systems for DRAM memory semiconductors than in test
systems for flash memory semiconductors. Advantest is currently seeking to increase its market share in test
systems for flash memory semiconductors.
Advantest’s main product lines of test systems for memory semiconductors are the T5500 series, the T5300
series, the T5700 series, HSM series and V6000 series.
T5500 Series. The T5588 is a test system for mass production suitable for testing speeds of up to 800 Mbps
for DDR3-SDRAM cell testing and LPDDR. The T5503 and T5503A are memory semiconductor test systems
suitable for the mass production of DDR3-SDRAM, LPDDR2 and LPDDR3 (1 Gbps-2 Gbps class high-speed
memory semiconductors). The T5511, which is the top of the range model in the T5500 series, is a memory
semiconductor test system which can handle testing speeds of up to 8 Gbps and is suitable for the evaluation andproduction of ultra high-speed memory semiconductors such as DDR4-SDRAM and GDDR. The T5500 series
are Advantest’s best selling line of test systems used for the back end testing of DRAM semiconductors.
T5300 Series. The T5383 is a test system for the front-end testing of DRAM semiconductors and for the
back-end testing of flash memory semiconductors. The T5383, which is capable of simultaneously testing up to
384 devices, is a test system with a maximum testing rate of 286 MHz/572 Mbps, which is twice the testing rateof Advantest’s previous model. This allows for DRAM wafer testing “at speed” testing, or testing for KGD, andback-end testing for flash memory semiconductors, at high-speed and with high-throughputs capabilities. The
T5385, which is capable of simultaneously testing up to 768 devices with a maximum testing rate of 266 MHz/
533 Mbps, succeeds the T5383. The T5300 series is Advantest’s best selling test systems for memory
semiconductors product line for front-end testing of DRAM semiconductors and for back-end testing of flash
memory semiconductors.
T5700 Series. Because variations in memory cell characteristics must be kept within a defined range,
front-end testing for flash memory semiconductors require more types of testing than is required in front-end
23

testing for DRAM semiconductors. Accordingly, front-end testing for flash memory semiconductors contributes
to higher testing costs. Furthermore, although the volume of production with respect to NAND-type flash
memory semiconductors is rapidly growing, prices have fallen substantially and there is a demand for higher
efficiency for test systems. As a result, by specializing in NAND-type flash memories Advantest introduced theT5773 memory test system, which enabled a significant reduction in testing costs compared to existing products.
The T5700 series will provide effective solutions that will enable everything from design to mass production of
flash memories.
HSM Series. The HSM series are test systems developed by Verigy for the research and development andmass production of high-speed DRAM. The products in this series are capable of test speeds from 2 Gps to 8Gps.
Products can be upgraded by exchanging certain parts or modules, allowing users to set up an optimal system in atimely manner for minimal cost as memory device speeds increase.
V6000 Series. The V6000 series are test systems developed by Verigy for the research and development andmass production of flash memory. The V6000 series as a test system for flash memories is capable of industry
class-leading test speeds of 880 Mbps. The test systems are made so that they can be attached to both wafer
probers and handlers, and can be switched to back end or front end lines depending on the user’s needs. As thetest systems have multiple test controllers, they can realize high productivity in MCP-type memory device testing
as well as flash memory.
Test Systems for Non Memory Semiconductors
Advantest’s main line of test systems for non memory semiconductors relates to test systems for SoC
semiconductors, test systems for LCD driver integrated circuits, test systems for image sensor and test systems
for semiconductors used in car electronics. Test systems for SoC semiconductors test SoC semiconductors thatcombine circuits such as digital, analog, memory and RF circuits on a single semiconductor chip. Test systems
for LCD driver integrated circuits test semiconductors with specific functions, such as LCD driver integrated
circuits that display images on LCD panels. The factors that are important to customers in the performance andother characteristics of test systems for memory semiconductors described above also apply to test systems fornon memory semiconductors. Advantest’s market share in test systems for non memory semiconductors wasapproximately 47% (which includes Verigy for 2011) as a result of the integration with Verigy in fiscal 2011,
compared with approximately 18% in fiscal 2010.
Advantest’s main product lines of test systems for non memory semiconductors are the T2000, the V93000
series, the T6500 series, the T6300 series and the T7720 series.
T2000. In 2003, Advantest introduced to the market the T2000 test systems for non memory semiconductors
which used the test module structure. Advantest believes that the development of modules for the T2000
compatible semiconductor test systems for non memory semiconductors and the increase in product lineup will
increase Advantest’s market share in test systems for non memory semiconductors. Main compatible component
modules for the T2000 include modules designed for digital testing, power supply testing, analog testing, powerdevice testing, image sensor testing and RF testing. Mainframes for the T2000 may be chosen to meet customers’
needs. Furthermore, Advantest developed the EPP (Enhanced Performance Package) which is a new system
option. Advantest believes that introducing EPP compatible modules into the market will help customers reduce
testing costs and testing development time.
V93000 series. The V93000 series are non memory semiconductor test systems developed by Verigy, using
a test module structure. These products feature test processor per pin architecture and scalable platform and as aresult of higher performance and lower test costs, Advantest believes that these products are capable ofexpanding their share of the non memory semiconductor test system market. The main modules in the line up are
the top of the line 12.8 Gbps digital module, 6 GHz BW analog module, 8 GHz RF module and DC module.
24T6500 Series. The T6577 test systems for SoC semiconductors in the T6500 series were primarily
developed to test MCU and SoC semiconductors that control digital consumer products at the production lines.
The T6500 series is approximately one-third in size and uses approximately 50% less power than Advantest’s
predecessor product line.
T6300 Series. The T6300 series are test systems for LCD driver integrated circuits used with high-definition
LCD displays. A maximum of 1,536 LCD testing pins may be used with the T6362 and T6372 systems and amaximum of 3,072 LCD testing pins may be used with the T6373 system. Each of these systems cansimultaneously test multiple LCD driver integrated circuits.
T7720 Series. The T7721, T7722 and T7723 are test systems for non memory semiconductors for mixed
signal integrated circuits. The T7723 targets highly complex semiconductors used in car electronics and is theresult of the development of Advantest’s constituent technology that measures analog signals. Also, the T7723
uses a direct current signal generator with a range of 150V to 64V and floating power supply of 60V/10A or
30V/30A (pulse), utilizes up to a maximum of 256 pins, and has the capacity to simultaneously measure multiple
devices.
Mechatronics System Segment
The main products in the Mechatronics System Segment are test handlers which handle semiconductor
devices and automate the testing, and device interfaces which are the interfaces with devices being tested.
Test Handlers
Test handlers are used with semiconductor and component test systems to handle, condition temperature,contact and sort semiconductors and other electronic components during the back-end testing of thesemiconductor manufacturing process.
Advantest’s test handlers are sold primarily in conjunction with the sale of its semiconductor andcomponent test systems. A majority of Advantest’s test handlers for memory semiconductors, measured in units,
are sold to customers of Advantest’s semiconductor and component test systems. Advantest’s test handlers arecompatible with the semiconductor and component test systems of its competitors.
Test handlers are designed with different characteristics for memory and non memory semiconductors.
Memory semiconductors require relatively long test times. Advantest’s test handlers for memory semiconductors
handle up to 512 semiconductors per test head at a time. Non memory semiconductors, including SoC
semiconductors, require relatively short test times. Advantest’s test handlers for non memory semiconductors
require short time and handle up to 16 semiconductors at a time.
Test Handlers for Memory Semiconductors. The M6242 test handler for test systems for memory
semiconductors, including DDR-3SDRAM, can handle up to 512 semiconductors at a time. The M6242’s
maximum throughput is 42,200 semiconductors per hour through the use of a new high-speed handlingtechnology that shortens the time between tests to approximately half of the time associated with Advantest’s
ordinary model. In addition, the M6242 has a built-in temperature control device which can minimize thetemperature fluctuation within a 1.5°C range for temperatures between -10°C and 100°C. Advantest also has
other test handler product line for test systems for memory semiconductors that meet varying cost and functional
needs of its customers.
Test Handlers for Non Memory Semiconductors. Advantest’s test handlers for non memory semiconductors,
including SoC semiconductors, are the M4841, the M4741A and the M4742A, among others. With a rate of 16
semiconductors at a time, the M4841 can handle approximately twice as many semiconductors at a time as
Advantest’s previous model. The M4841’s maximum throughput of up to 18,500 semiconductors per hour istriple the maximum throughput of the previous model. Furthermore, the M4841 is also capable of testing in awide range of temperatures, from as low as -55°C or as high as 125°C.
25The M4741A employs the vision alignment system which enables high-accuracy positioning of contact
sockets for smallsized/narrow-pitched integrated circuits used in cellular phones and other products. Through the
adoption of the vision alignment system, various types of measurement device can be operated under certain
conditions without switching the change kit. M4742A realizes a reduction in contact pitch exchange time inhandling of various products, visualization of operation screen, visibility check of internal devices, andimprovement of operability, hence contributing to the reduction of test costs.
In addition, as a common feature in Advantest’s test handlers for memory/non memory semiconductors,
numerous functions to improve operating rate are installed.
Device Interfaces
Device interfaces are components which transmit test signals between the device being tested and thesemiconductor and component test system. These components are divided into motherboards, socket boards,
performance boards and sockets all of which transmit signals to compatible components of a device under test;
components compatible with a test handler device; and device interfaces and change kits with a device handlingmechanisms and contact mechanisms, and probe card for front-end testing.
Advantest develops and manufactures device interfaces for semiconductor and component test systems andsupplies device interfaces such as high performance and high density connectors, socket boards and sockets tomeet the demands of next- generation semiconductors that are becoming more high-speed and more diversified.
Advantest believes that the rate at which new semiconductor designs are introduced to market will continue toincrease in the long term, and customers’ requests to accelerate development of main parts of device interfacesthat are compatible with such new semiconductor designs will increase accordingly.
Motherboards: For test systems for memory semiconductors, Advantest provides motherboards capable ofhandling a maximum of 512 semiconductors at a time. For test systems for non memory semiconductors,
Advantest provides motherboards that are compatible with a maximum of 3,072 signals. Advantest also provides
motherboards designed for use in front-end testing.
Socket Boards and Performance Boards: Advantest provides custom manufacturing of socket boards andperformance boards for each device under test in accordance with customers’ specifications.
Sockets: Advantest provides sockets for test systems for memory semiconductors. Advantest provides
low-inductance (0.4nH) sockets and fine pitch (0.4mm) sockets for semiconductors that are becoming more highspeed and more compact in size.
Change Kits: Advantest provides carrying and contacting mechanism components compatible with eachdevice under test for test handlers for memory semiconductors and test handlers for non memory semiconductors.
Probe Card: Advantest provides probe card used for the front-end testing for memory semiconductors.
Advantest competes with numerous small and independent electronics manufacturers in providing device
interfaces for its semiconductor and component test systems. However, Advantest believes that as the complexityof the testing requirements of next-generation semiconductors increases, Advantest will enjoy competitive
advantages by applying its technical knowledge, such as high speed signal transmission, derived from designingand manufacturing semiconductor and component test systems to device interfaces.
Customers
Advantest’s semiconductor and component test systems and mechatronics systems are shipped anddelivered to world’s leading semiconductor manufacturers, as well as some foundries and test houses. Sales to26

INTEL Corporation in fiscal 2009, INTEL Corporation and Hynix Semiconductor Inc. in fiscal 2010 and INTELCorporation and Samsung Electronics Co., Ltd. in fiscal 2011 each accounted for 10% or more of Advantest’s
net sales in each of those respective years. Advantest’s five largest customers, all of which are semiconductor
and component test system customers, accounted for approximately 43% of net sales in fiscal 2009,
approximately 49% in fiscal 2010 and approximately 56% in fiscal 2011.
Geographic SalesOf Advantest’s fiscal 2011 net sales, 88.6% were derived from products sold to customers located outside
Japan. The following table sets forth Advantest’s net sales by geographic area, as well as net sales by geographic
area as a percentage of total net sales, for Advantest’s last three fiscal years. Net sales are classified into
geographic areas based on the location to which the products are shipped.

MarketFiscal 2009
Net Sales(in millions)%Fiscal 2010
Net Sales(in millions)%Fiscal 2011
Net Sales(in millions)%Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia (excluding Japan) . . . . . . . . . . . . . . . . . . . . . .
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥11,976
34,182
4,930
2,137

22.5
64.2
9.3
4.0

¥22,398
65,706
9,278
2,252¥ 16,095
88,19629,742
7,015

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥53,225100.0% ¥99,634

22.5
65.9
9.3
2.3

100.0% ¥141,048

11.4
62.5
21.1
5.0
100.0%

Japan. Advantest enjoys a significant market position in Japanese markets for test systems for memory
semiconductors, with a market share of approximately 73% in 2011. In addition, Advantest had a market share of
approximately 48% in the Japanese test systems for non memory semiconductors market in 2011. Sales of SoC
semiconductors in the Japanese non memory semiconductor market were led by peripheral devices
predominantly consisting of Blu-ray disc recorders and flat-panel TVs in 2010, but 2011 was a significant change
and sales were led by analog/power devices and CMOS image sensor devices. Advantest is working to maintainand expand its large market share in Japan by continuing to work closely with its major customers to identify
their needs during the early stages of their product development cycles. Since 2011 Japan’s semiconductor
manufacturers have been increasingly outsourcing its manufacturing to Taiwan, Korea and China rather thaninvesting in-house, and Advantest has also been actively pursuing outsourcing its manufacturing support
overseas.
Asia (excluding Japan). Asia is the largest market for semiconductor and component test systems andmechatronics systems, with semiconductor manufacturers, assembly makers and test houses located in Taiwan,
Korea, the People’s Republic of China and Singapore accounting for a majority of semiconductor production in
Asia. Advantest views its relationships with these companies as critical to its semiconductor and component test
system and mechatronics system business. Many Japanese, U.S. and European semiconductor manufacturers
have shifted production to Asia, either to subsidiaries or foundries and test houses. Capital expenditure decisions
for subsidiaries are usually made at the Company’s headquarters. Foundries and test houses, a majority of which
are located in Taiwan, often consult with their customers before investing in semiconductor and component test
systems. Therefore, Advantest’s performance in Asia will also depend on its ability to maintain strong
relationships with customers in Japan, the U.S. and Europe. In addition, some of Advantest’s customers havepartnered with semiconductor manufacturers in Asia and outsourced manufacturing processes, thus further
increasing the reliance on net sales to the Asia geographic market.
Americas. Advantest’s marketing efforts in this region are centered in the United States, which accounted
for approximately 21% of its total sales in fiscal 2011. Advantest’s market share of semiconductor andcomponent test systems sold in the U.S. increased by approximately 63% (which includes Verigy for 2011) as aresult of the integration with Verigy compared to a 16% increase in 2010. Semiconductor and component test
systems are marketed and sold in the Americas primarily through Advantest’s subsidiary, Advantest America,
Inc.
27

Europe. Sales in Europe constituted approximately 5% of Advantest’s sales in fiscal 2011. Advantest’s
market share of semiconductor and component test systems sold in Europe increased by approximately 40%(which includes Verigy for 2011) as a result of the integration with Verigy from approximately 8% in 2010.
Advantest’s principal European markets are Germany, Italy and France.
Sales and Marketing
Advantest has further expanded its sales channels as a result of its integration with Verigy, and sells its
semiconductor and component test systems and mechatronics systems globally. Advantest’s direct sales
department includes engineers who have in-depth knowledge of the customer’s business and technology needs.
Currently, Advantest has sales offices in Japan, Taiwan, Singapore and other parts of Asia, the Americas andEurope. Advantest maintains its sales and support centers in close physical proximity to key customer sites to
identify its customers’ needs in the early stage of product development and to provide required support in atimely fashion. Advantest is also strengthening its relationships with test houses through limited minority
investments as a part of its sales and marketing strategy. In addition, Advantest offers operating lease contracts
for semiconductor and component test systems through its subsidiary, Advantest Finance Inc.
Advantest believes that the best marketing strategy is to demonstrate the ability to develop products thatmeet the customer’s specific needs, produce and deliver them in the required time and quantity, and support thecustomer and the product with sufficient technical and maintenance support. Advantest holds exhibitions fromtime to time to demonstrate and market its products to target customers. Advantest also markets its products byparticipating in industry trade shows and advertising in trade magazines.
Support and Customer Service
Advantest’s support and customer service programs are designed to respond to all of the semiconductor
testing-related needs of its customers. Advantest provides its services through its worldwide network of sales andcustomer support offices. These services consist of the following elements:•

Testing Technology Support. Advantest engineers work with customers from the design phase of new
products to the development of testing methods and device interfaces. Advantest also supports
customers’ initiatives to reduce costs at the large-scale production phase by proposing procedures toimprove production yield and throughput, and offering advice in connection with the operation ofsemiconductors and component test systems and other test products.

•

Application Software Support. Each different semiconductor design requires customized software
programs for analysis of test data. As a part of its solution services, Advantest engineers assist
customers in designing device interface, application software and test programs that optimize production
throughput, reliability and capacity.

•

Procurement Support. The procurement process for semiconductor and component test systems andmechatronics systems is time consuming and complicated. Semiconductor and component test systems
consist of a combination of multiple components, including test handlers or probers, device interfaces
and software. Advantest sales personnel and engineers work with customers to identify thesemiconductor and component test systems and mechatronics systems and related optional functions
that best address their needs.

•

Installation and Warranty Support. The introduction of a new line of semiconductors by amanufacturer typically requires either the purchase of new semiconductor and component test systems
and mechatronics systems or warranty support for the customer’s existing system. Upon the sale of a
new system, Advantest’s engineers provide installation services and work with the customer to integrate
the purchased system with the customer’s existing manufacturing infrastructure.

•

Training Support. Advantest engineers prepare customer training materials related to the operation andmaintenance of Advantest’s semiconductor and component test systems and mechatronics systems, andoffer their customers suitable training on-site and at Advantest’s facilities in a timely manner.
28•

Maintenance Support. Advantest’s maintenance support services consist of:•Call Center Support. Advantest previously offered call center support services for hardware andsoftware in Japan. However, as a result of the integration with Verigy, Advantest now offers callcenter support services to customers in Japan, Singapore, U.S. and Germany.

•Internet Support. The Advantest customer support website offers maintenance tips and access to a
database with possible solutions to semiconductor and component test system problems. Advantest
customers can also make on-line requests for maintenance work and check the status of equipment
sent in for repair through Advantest’s web page.

•

Repairs and Parts. Requests for repairs or parts can be made through the Advantest website or byphone. Advantest has established a system under which it endeavors to deliver requested parts tocustomers in Japan within 24 hours of request, and for customers in Asia (excluding Japan), theAmericas and Europe within 48 hours. Equipment for maintenance is located in Germany,
Singapore and Japan to supplement each other in the event of a major natural disaster. To provide
for quick and efficient repairs, Advantest’s repair factories in Japan serve as the hub, and those inGermany, Singapore, U.S., Korea, Taiwan and China also undertake repairs of test boards.

•

Remote Surveillance. Advantest can equip its semiconductor and component test systems with aremote surveillance function. This function allows Advantest engineers to remotely monitor the
performance of its customers’ semiconductor and component test systems for more timely andeffective maintenance.

•

Worldwide Presence. Advantest provides maintenance support through customer support centers inJapan; other parts of Asia, including Korea, China, Taiwan and Singapore; the Americas andEurope.

Manufacturing and Supplies
Advantest’s principal factories at which semiconductor and component test systems and mechatronics
systems are manufactured are its Gunma Factory and Gunma Factory 2 located in Gunma Prefecture, Japan andJabil Circuit Sdn Bhd’s Penang Factory in Malaysia to which manufacturing is outsourced. Printed circuit boards,
on which electronic parts and other components are mounted, for use in these products are manufactured at the
Gunma Factory 2. The Gunma Factory assembles final products and conducts tests. Jabil Circuit Sdn Bhd’s
Penang Factory produces Verigy semiconductor and component test system printed circuit boards and assembles
the final products and conducts tests. The Gunma Factory is highly automated, and testing and production
systems within the factory are interconnected by a sophisticated local area network using advanced data
management software. This network allows Advantest factory managers to check on the status of systems under
production at any given time.
Advantest uses a sophisticated enterprise resource planning (ERP) system that processes new information ona real time basis and converts sales order information into production specifications and manufacturing plans.
This system also interconnects Advantest’s multiple production and warehousing facilities to its information
network.
Advantest has integrated many production processes in an effort to introduce a new production system basedon the just-in-time production system and to improve upon the existing production system with a view toattaining a shorter production cycle, cost reduction and reduction of inventories.
Advantest is reducing its electricity consumption and setting up its own electricity generator in order toavoid manufacturing disruptions as a result of possible future scheduled blackouts as a result of the Great East
Japan Earthquake and the nuclear power plant accident.
Advantest purchases substantially all of its components and parts from outside suppliers.
29

The average costs of components and parts used by Advantest during the last three fiscal years haveremained relatively stable. Advantest believes this relative price stability results from the fact that Advantest
negotiates the terms of the purchase orders directly with its suppliers and the fact that the prices of the
made-to-order components set forth in the purchase orders are primarily influenced by the technicalspecifications of the relevant components and parts.
Device interfaces, one of Advantest’s products in its Mechatronics System Segment, are manufactured inJapan as well as overseas, including in Korea, Taiwan and Malaysia, in order to reduce lead time and reduce
manufacturing costs.
Seasonality
As Advantest’s sales levels of semiconductor and component test systems and mechatronics systems are notdependent on any particular season and are subject, in large part, to sales levels of the semiconductors in themarket that can fluctuate significantly from year to year, Advantest does not traditionally experience seasonality
in the sense of higher sales during any certain period of the year as compared to other periods of the year.
Competition
Advantest faces substantial competition throughout the world in all of their business segments. In particular,
competition in the semiconductor and component test system market is currently intensifying, which may lead torestructuring within the industry and certain companies may be eliminated or consolidated. Advantest believes
that the principal factors of competition are:•Performance. The performance of products is determined by its accuracy, test speed, throughput andability to test semiconductors with large pin counts. High performance products reduce the customer’s
cost of testing.

•Reliability. Products that operate with minimal downtime allow semiconductor production andengineering work to proceed without frequent intervention and provides more cost-effective operation.

•

Delivery Time. Semiconductor manufacturers require timely delivery of products, especially in periodsof high demand.

•

Price. The need for more sophisticated products often translates into higher testing costs forsemiconductor manufacturers. In addition, primarily as a result of increased efficiency in the fabrication
process and lower market prices for semiconductors, test costs have come to represent a higher
proportion of the total cost of manufacturing. Advantest currently faces significant price pressure on its
Semiconductor and Component Test System Segment.

•

System Architecture. Product architecture that is modular expands the product life because the system
can be adapted to meet the customer’s new requirements, while largely retaining compatibility withexisting test programs.

•

Software. Products that use software that is easier to use and more powerful reduce the amount ofengineering resources needed to develop and operate test programs.

•

Customer Support. Customer specific applications programs, worldwide service and customer training
contribute to the efficient use of products and minimize the customer’s cost of testing.

•

Qualified Technical Personnel. Having in place a team of highly qualified engineers and other customer
service and support personnel is essential for securing sales and maintaining and developing strong
relationships with key customers.

According to a report issued by a research company, Advantest maintained the highest market share in thesemiconductor test system market for five consecutive years until 2007. However, from 2008 to 2010, Teradyne,
30Inc. achieved the highest share. In 2011 Advantest achieved the highest share (which includes Verigy for 2011).
Other companies following Advantest include Teradyne, Inc., LTX-Credence Corporation and Yokogawa
Electronic Corporation. Some of Advantest’s other competitors include FROM30 CO., LTD., EXICON Ltd., and
UniTest Inc. In addition, Advantest also competes in the mechatronics system market with, among others, Delta
Design, Inc., Seiko Epson Corporation, Mirae Corporation and TechWing Inc. for test handlers, and TSE Co.,
Ltd. and Secron Co., Ltd. for device interfaces. In addition, in the Services, Support and Others Segment,
Advantest has been competing with companies providing similar services. It also has been suggested bycustomers that Advantest competes with start-up companies with newer technologies or products in the market
for both the test systems for memory semiconductors and test systems for non memory semiconductors.
Licenses and Intellectual Property Rights
Advantest has a policy of seeking licenses and intellectual property rights worldwide on technology
considered of particular strategic importance. While Advantest does not consider any one or group of licenses
and intellectual property rights to be so important that their expiration or termination would materially affect
Advantest’s business, Advantest considers all of its licenses and intellectual property rights to be important.
Legal Proceedings
Based on information currently available to Advantest, Advantest believes that its losses from any pending
legal proceedings would not have a material adverse effect on Advantest’s financial position, operating results or
cash flows.
Environmental
Advantest established and implemented the “Advantest Group Environmental Management Plan”. Under
this management plan, in addition to improving its environmental management systems, Advantest is supportingits customers’ environmental management by developing new products with lower power consumption anddealing with top priority environmental issues, for example by taking measures to prevent global warming.
Advantest’s primary environmental activities during fiscal 2011 are as follows:•

ISO 14001 Certification. Advantest has received ISO 14001 Uniform Certification for all eight of its
domestic manufacturing and research and development facilities. With respect to its overseas
manufacturing and research and development activities, seven principal facilities in Asia, Europe andNorth America regions are receiving ISO 14001 Uniform Certification.

•

Environmental Measures for Products. Advantest is actively involved in the development ofenvironmentally friendly product lines. Advantest conducts environmental assessments of all its new
products from their development stages. In fiscal 2011, twelve models complied with Advantest’s
internal environment-oriented design standards, and have qualified as environmentally friendly “Green”
products.

•

Reduce Waste. Advantest has implemented a recycling program and introduced liquid waste disposal
capabilities at its facilities. Through such initiatives, Advantest’s waste volume was a total of 296 tons
in fiscal 2011.

•

Use of Safe Components. Advantest has established an internal procurement standard for parts andcomponents and has procured parts and components for its new products that do not contain specified
toxic substances. Primarily reflecting the foregoing, Advantest has eliminated most regulated toxic
substances from approximately 97% of the surface-mounted components on its new products after 2008,
except lead solder, which is used for mounting parts and components for its products.
31

•Prevention of Global Warming. Through the use of energy efficient equipment and the re-evaluation of
manufacturing processes, Advantest strives to reduce levels of carbon dioxide emissions resulting fromenergy consumption relating to its business activities. Advantest’s carbon dioxide emissions was
27,373-CO2 tons in fiscal 2011.

As one of its activities designed to contribute to society and to the environment, Advantest implements
reforestation of seedlings, both in Japan and overseas.
Advantest spent approximately ¥572 million during fiscal 2011 to further implement its environmental
protection activities.
Advantest has been addressing issues of corporate management, social activities and environmental issues
from a global perspective. With increased attention in recent years on corporate ethics, Advantest believes that itshould focus more on the issue of CSR (Corporate Social Responsibility). Accordingly, Advantest hasestablished a CSR & Environmental Affairs Promotion Office and nine committees (Disclosure Committee,
Personnel Mediation Committee, Human Rights Protection Committee, Information Security Committee,
Committee on Environmental Conservation, Internal Control Committee, Corporate Ethics Committee, Product
Liability Committee and Safety and Health Committee), and engages in corporate social responsibility efforts.

32

Glossary
Analog circuits . . . . . . . . . . . . . . . . . . . . Circuits on a semiconductor that monitor, condition, amplify ortransform analog signals, which are signals that vary continuously
over a wide range of values. Analog circuits process analog signals
translated from real world phenomena such as sound, light, heat andmotion.
DDR-SDRAM . . . . . . . . . . . . . . . . . . . . . Double Data Rate Synchronous Dynamic Random Access Memory.
Memory semiconductor that can be read from, or written to, at double
the rate of traditional SDRAM semiconductors.
DDR2-SDRAM . . . . . . . . . . . . . . . . . . . . Advanced DDR-SDRAM semiconductors that can be read from, or
written to, at a significantly higher rate than DDR-SDRAM
semiconductors.
DDR3-SDRAM . . . . . . . . . . . . . . . . . . . . DDR-SDRAM semiconductors that be read from, or written to, at asignificantly higher rate than DDR2-SDRAM semiconductors.
DDR4-SDRAM . . . . . . . . . . . . . . . . . . . . The next generation advanced DDR-SDRAM semiconductors thatcan be read from, or written to, at a significantly higher rate than
DDR3-SDRAM semiconductors.
Digital circuits . . . . . . . . . . . . . . . . . . . . . Circuits that perform binary arithmetic functions on data represented
by a series of on/off states.
DRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . Dynamic Random Access Memory. Devices that store a large volumeof data and can read and write data freely. Because of their volatile
characteristics, periodic re-writing of data is required to maintainmemory information.
Foundries . . . . . . . . . . . . . . . . . . . . . . . . . Semiconductor manufacturing service providers that manufacture
semiconductors based on their customers’ semiconductor designs.
Fabless . . . . . . . . . . . . . . . . . . . . . . . . . . . Manufacturers that outsource their entire production to external
entities, instead of having their own manufacturing facilities.
Flash memory . . . . . . . . . . . . . . . . . . . . . Memory devices that electrically erase or write data freely. Devices
with nonvolatile memory which is maintained even when the power isturned off.
GDDR . . . . . . . . . . . . . . . . . . . . . . . . . . . Graphics DDR. DDR memory standard specifically designed for use
in RAM video cards.
Integrated circuit . . . . . . . . . . . . . . . . . . . An electric part made of a combination of many transistors on asilicon wafer.
LCD driver integrated circuits . . . . . . . . Integrated circuits that operate LCD (Liquid Crystal Display).
Logic circuits . . . . . . . . . . . . . . . . . . . . . . Circuits that perform binary arithmetic functions.
LPDDR . . . . . . . . . . . . . . . . . . . . . . . . . . Low Power DDR memory.
33

LPDDR 2 . . . . . . . . . . . . . . . . . . . . . . . . . DDR2 memory that has higher speed and lower power consumption
than LPDDR.
LPDDR 3 . . . . . . . . . . . . . . . . . . . . . . . . . DDR3 memory that has higher speed and lower power consumption
than LPDDR2.
Memory circuits . . . . . . . . . . . . . . . . . . . Circuits that store data and programs.
MCP . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multi Chip Package. A package which combines multiple chips withdifferent functions.
MCU . . . . . . . . . . . . . . . . . . . . . . . . . . . . Micro Controller Unit. An integrated circuit that contains allnecessary functions required for a small-scale computer system.
MPU . . . . . . . . . . . . . . . . . . . . . . . . . . . . Microprocessor unit. A microprocessor that incorporates most or allof the functions of a computer’s central processing unit on a single
integrated circuit.
NAND . . . . . . . . . . . . . . . . . . . . . . . . . . . A type of flash memory that is primarily used for data storage due to
its large storage capability.
Per site processor architecture . . . . . . . . . Computing architecture that can control test functions, at each target
device for testers that simultaneously measure multiple devices.
SDRAM . . . . . . . . . . . . . . . . . . . . . . . . . . Synchronous Dynamic Random Access Memory—DRAM that issynchronized with the system bus.
SoC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . System on a Chip. A chip that integrates functions, including logic,
memory and signaling, that are conventionally executed with multiple
chips and requires smaller space and significantly less electricity.
Scalable platform . . . . . . . . . . . . . . . . . . . Platform that can be optimally structured for small systems through tolarge systems, depending on the size/type of the target devices and thenumber of devices being measured simultaneously.
Test houses . . . . . . . . . . . . . . . . . . . . . . . Providers of semiconductor test services.
Test processor per pin architecture . . . . . Architecture which is able to perform test functions using sequencers
mounted on a single pin.
Testing for KGD . . . . . . . . . . . . . . . . . . . Known Good Die. Testing for KGD is conducted to guarantee that
semiconductor bare chips are in good quality.
TSV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Through-Silicon Via) A technique for mounting semiconductors
which are electronic components. Involves a vertical electrodepassing through a silicon semiconductor chip.

34

4.C. ORGANIZATIONAL STRUCTURE
As of June 1, 2012, Advantest had 11 Japanese subsidiaries, 18 overseas subsidiaries and one investee
which is accounted for by the equity method. The following table sets forth for each of Advantest’s principal
subsidiaries, the country of incorporation and the principal activities of the subsidiary.
Name of Subsidiary

Country ofIncorporation

Advantest Laboratories Ltd. . . . . . . . . . . . . . . . . . . .

JapanJapan Engineering Co., Ltd. . . . . . . . . . . . . . . . . . . .

JapanAdvantest Finance Inc. . . . . . . . . . . . . . . . . . . . . . . .

JapanAdvantest America, Inc. . . . . . . . . . . . . . . . . . . . . . .

U.S.

Advantest Europe GmbH . . . . . . . . . . . . . . . . . . . . .

Germany

Advantest Taiwan Inc. . . . . . . . . . . . . . . . . . . . . . . .
Advantest (Singapore) Pte. Ltd. . . . . . . . . . . . . . . . .
Advantest Korea Co., Ltd. . . . . . . . . . . . . . . . . . . . .
Advantest (Suzhou) Co., Ltd. . . . . . . . . . . . . . . . . . .

TaiwanSingapore
Korea
China

*

Principal Activities

Research and development of measuring andtesting technologies
Development, manufacture and sales ofAdvantest’s products
Leasing Advantest’s products and sales ofsecond-hand products
Development and sales of Advantest’s
products
Development and sales of Advantest’s
products
Sales of Advantest’s products
Sales of Advantest’s products
Sales support of Advantest’s products
Sales support of Advantest’s products

Each of the subsidiaries listed above is a direct or indirect wholly-owned subsidiary of the Company.

4.D. PROPERTY, PLANTS AND EQUIPMENT
Set forth below is a list of each of Advantest’s material properties, the use and location of the property andthe approximate size of the property on which the facility is located.
Location

Approximate
Size (m2)Gunma R&D Center . . . . . . . . . . . . . . . .

Gunma, Japan

250,887

Saitama R&D Center . . . . . . . . . . . . . . .

Saitama, Japan

56,978

Kitakyushu R&D Center . . . . . . . . . . . .

Fukuoka, Japan

5,461

Advantest Laboratory and Sendai
Factory . . . . . . . . . . . . . . . . . . . . . . . .

Miyagi, Japan

66,904

Gunma Factory . . . . . . . . . . . . . . . . . . . .

Gunma, Japan

88,512

Gunma Factory 2 . . . . . . . . . . . . . . . . . .

Gunma, Japan

93,112

Name

Use

Research and development ofsemiconductor and component test
systems and mechatronics systems
Research and development for andmanufacturing of mechatronics
systems
Research and development ofsemiconductor and component test
systems
Basic technology research, andresearch for and manufacturing of key
devices installed in semiconductor
and component test systems
Manufacture of semiconductors andcomponent test systems and test
handlers
Manufacture of semiconductor andcomponent test systems and device
interfaces

In addition to the above-mentioned manufacturing facilities, Advantest has manufacturing facilities in Korea
and Malaysia, sales offices and customer support centers in various regions of the world, and owned or leased
research facilities in Japan, the U.S. and Germany. Advantest owns each of its significant properties.
35

Advantest considers all of its principal manufacturing facilities and other significant properties to be in goodcondition and adequate to meet the needs of its operations. Advantest does not maintain internal records of theexact productive capacity and extent of utilization of its manufacturing facilities. It would require unreasonable
effort and expense to determine this information because Advantest alters the volume, quantity and nature of its
manufactured products as necessary in response to changes in demand and other market conditions, and revamps
its manufacturing processes to take advantage of technological innovations. However, Advantest believes that its
manufacturing facilities are currently operating at utilization levels that are substantially in line with prevailingmarket demand for its products.
Advantest believes that there are no material environmental issues that may affect utilization of its assets.
Advantest has prepared itself for crises such as large-scale natural disasters, and each department ofAdvantest has drafted its own disaster procedures and manuals. Furthermore, in order to prevent any disruptionof its core businesses, or in case of suspension, to re-start the suspended businesses, including the recovery ofimportant facilities, in the shortest possible time, Advantest has developed its “Business Continuity Plan” and is
promoting its implementation. However, if Advantest is not successful in implementing such BusinessContinuity Plan, or if upon implementation, such Business Continuity Plan is not effective, Advantest’s corebusinesses could be disrupted at a time of crisis, such as large-scale natural disasters, and could take a substantial
amount of time to recover.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

5.A. OPERATING RESULTS
The following discussion and analysis of Advantest’s financial condition and results of operations should beread with “Key Information—Selected Financial Data” and the audited consolidated financial statements forfiscal 2009, 2010 and 2011 as well as the notes to such consolidated financial statements appearing elsewhere inthis annual report. These consolidated financial statements have been prepared in accordance with U.S. GAAP.
Overview
Advantest manufactures and sells semiconductor and component test systems and mechatronics-related
products such as test handlers and device interfaces. Advantest also engages in research and development
activities and provides maintenance and support services associated with these products.
The Semiconductor and Component Test System Segment provides customers with test system products forthe semiconductor industry and the electronic parts industry. Product lines in the Semiconductor and Component
Test System Segment include test systems for memory semiconductors and non memory semiconductors. Test
systems for non memory semiconductors include test systems for SoC semiconductors, test systems for LCD
driver ICs and test systems for semiconductors used in car electronics. This business segment is the mostimportant segment, accounting for 74.9% of Advantest’s net sales in fiscal 2011.
The Mechatronics System Segment provides product lines such as test handlers, mechatronic-applied
products for handling semiconductor devices, device interfaces that serve as interfaces with the devices that aremeasured and operations related to nano-technology products. This business segment accounted for 14.6% of
Advantest’s net sales in fiscal 2011.

36

The Services, Support and Others Segment consists of comprehensive customer solutions provided inconnection with the Semiconductor and Component Test Systems and Mechatronics System Segments, support
services, equipment lease business and others. This business segment accounted for 13.3% of Advantest’s net
sales in fiscal 2011.
Semiconductor and Component Test System Segment
The market for semiconductor and component test systems is subject to high demand volatility, iscompetitive, and depends on capital expenditures of customers. Their capital expenditures depend, to a large
extent, on:•demand for semiconductors and electronic components;•

innovation in semiconductor and electronic component technology; and•changes in semiconductor and electronic component manufacturing processes.

The business environment in which the Semiconductor and Component Test System Segment operates grewless than expected in fiscal 2011, and many semiconductor manufacturers adjusted supply levels downwards
following the summer of 2011 as demand for products such as PCs and LCD televisions suffered a sharp
downturn.
As a result, despite strong sales inquiries from customers for non memory semiconductors used insmartphones and tablet-type devices, the overall semiconductor test equipment market contracted in fiscal 2011.
The drop in prices for DRAM semiconductors for computers was particularly significant, and most capital
expenditure in memory semiconductor test systems was frozen.
Amidst these market conditions, Advantest has focused on expanding sales of non memory semiconductors
such as application processors and CMOS image sensors. Advantest has also focused on maximizing the benefitsof its acquisition of Verigy in July 2011, including enhancing Advantest’s product marketing to customers in the
U.S. and Europe and tailoring products to meet the needs of customers in the communications semiconductor
market.
As a result of the above, net sales of the Semiconductor and Component Test Systems Segment totaled¥105,608 million in fiscal 2011, a 52.3% increase compared to that of fiscal 2010. For a detailed discussion ofthese factors, see “Information on the Company—Business Overview—Industry Overview.”
Performance of the test systems for the non memory semiconductor business in the Semiconductor andComponent Test Systems Segment improved significantly, due to a number of large orders for microprocessor(MPU) test equipment. Against a backdrop of growth in the smartphone and tablet-type device, and with theadded contribution of sales of Verigy products, which are strong in this area, sales of test systems forsemiconductors such as application processors to be used for these devices grew solidly.
Performance of the test systems for the non memory semiconductor business in the Semiconductor andComponent Test Systems Segment, however, continued to suffer, despite active capital investment in DRAM
semiconductors for PCs from spring to early summer, as weaker demand later in the year in the PC market,
which is a major source of revenue for DRAM semiconductors, forced manufacturers to cut back their DRAM
capital investment programs.
Advantest believes that price pressure with respect to semiconductor and component test systems tends to be
the strongest during periods when semiconductor manufactures are subject to price pressure despite an increasein demand for their products. Advantest continues to face significant price pressure. Even when the37semiconductor industry experienced a recovery, increased competition in the market for digital consumer
products and personal computers drove down prices of these goods, subsequently creating significant pricepressure on its products and restriction on capital expenditure.
Mechatronics System Segment
In the Mechatronics System Segment sales of scanning electron microscopes used for inspection of photomasks increased significantly against a backdrop of progress in semiconductor miniaturization.
Mainly as a result of the above, net sales of the Mechatronics System Segment totaled ¥20,616 million in
fiscal 2011, an 11.3% increase compared to that of fiscal 2010.
Services, Support and Others Segment
In the Services, Support and Others Segment, Advantest has focused on maintenance services such as
installation and repair of Advantest’s products and lease and rental services of its products as a part ofAdvantest’s effort to provide customers with comprehensive solutions. In fiscal 2011, net sales of the Services,
Support and Others Segment expanded as a result of overall increased sales of test systems, as well as benefits
from the integration with Verigy.
As a result of the above, net sales of the Services, Support and Others Segment totaled ¥18,807 million in
fiscal 2011, a 32.8% increase compared to that of fiscal 2010.
Research and Development
Research and development expenses represent a significant portion of Advantest’s annual operating
expenses. Advantest’s research and development expenses were ¥17,896 million and ¥21,197 million in fiscal
2009 and 2010, respectively. In fiscal 2011, as a result of the combination with Verigy, research anddevelopment expenses were ¥30,303 million. Consequently research and development expenses were 33.6%,
21.3% and 21.5% of net sales, in fiscal 2009, 2010 and 2011, respectively.
Personnel
As of March 31, 2012, Advantest had a total of 4,464 full-time employees, an increase of 1,301 persons, or
41.1%, compared to that of March 31, 2011. The result of this increase is primarily due to the acquisition of
Verigy as a wholly-owned subsidiary of Advantest.
Advantest plans to continue its periodic recruitment of new graduates as part of its mid-to long-term growthstrategy. Advantest expects that a majority of these new hires will join the Semiconductor and Component Test
System Segment and Mechatronics System Segment to support the growth of Advantest’s businesses. Other newhires are expected to join Advantest’s maintenance support division or administrative divisions. The addition ofthese new hires may increase Advantest’s future selling, general and administrative expenses and its research anddevelopment expenses.
Currency Fluctuations
Advantest is affected to some extent by fluctuations in foreign currency exchange rates. Advantest is
principally exposed to fluctuations in the value of the Japanese yen against the U.S. dollar and currencies of othercountries where Advantest does business Advantest’s consolidated financial statements, which are presented inJapanese yen, are affected by foreign currency exchange fluctuations through both translation risk andtransaction risk.
Translation risk is the risk that Advantest’s consolidated financial statements for a particular period or for aparticular date will be affected by changes in the prevailing exchange rates of the currencies in which
38

subsidiaries of the Company prepare their financial statements against the Japanese yen. Even though thefluctuations of currencies against the Japanese yen can be substantial and, therefore, significantly impact
comparisons with prior accounting periods and among various geographic markets, the translation effect is areporting consideration and does not reflect Advantest’s underlying results of operations.
Transaction risk is the risk that the currency structure of Advantest’s costs and liabilities will deviate fromthe currency structure of sales proceeds and assets. Advantest produces many of its products, including all
semiconductor and component test systems, in Japan. A portion of the components and parts used in Advantest’s
semiconductor and component test systems is purchased in currencies other than the Japanese yen,predominantly the U.S. dollar.
Advantest enters into foreign exchange forward contracts to reduce its transaction risk. This has reduced, but
not eliminated, the effects of foreign currency exchange rate fluctuations against the Japanese yen, which in someyears can be significant.
Generally, the weakening of the Japanese yen against other foreign currencies, particularly the U.S. dollar,
has a positive effect on Advantest’s operating income and net income. The strengthening of the Japanese yen
against other foreign currencies, particularly the U.S. dollar, has the opposite effect. In fiscal 2009, the Japanese
yen started from the high ¥90s to the dollar and strengthened gradually to the ¥80s to the dollar during the third
quarter of the fiscal year, yet the Japanese yen depreciated to the low ¥90s to the dollar to the dollar toward theend of the fiscal year. In the first quarter of fiscal 2010, the Japanese yen started from the low ¥90s to the dollar
and strengthened to the high ¥80s to the dollar and appreciated to the low ¥80s to the dollar during the second
half of the fiscal year. Immediately after the Great East Japan Earthquake on March 11, 2011, the Japanese yen
appreciated to the ¥70s to the dollar, but then depreciated to the low ¥80s to the dollar by the end of fiscal 2010.
In fiscal 2011, the appreciation of the yen continued, going from the low ¥80s to the dollar to the high ¥70s to thedollar after the second quarter and at one point reaching the ¥76 mark in the third quarter, the highest level sinceWorld War II. However, by the end of the fiscal year, the Japanese yen had returned to the low ¥80s to the dollar.
Advantest’s business is subject to risks associated with doing business internationally, and its business could
be impacted by certain governmental, economic, fiscal, monetary, taxation or political policies or factors,
including trade protection measures and import or export licensing requirements, that may materially affect,
directly or indirectly, Advantest’s operations or its future results.
Critical Accounting Policies and Estimates
Advantest has made a number of estimates and assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities in preparing its consolidated financial statements inconformity with U.S. GAAP. Critical accounting policies are accounting policies that require the application ofmanagement’s most difficult, subjective or complex judgments and often require management to make estimates
about the effect of matters that are inherently uncertain and may change in subsequent periods. The following is
not intended to be a comprehensive list of all of Advantest’s accounting policies. Advantest’s significant
accounting policies are more fully described in note 1 to Advantest’s consolidated financial statements included
elsewhere in this annual report. In many cases, U.S. GAAP specifically dictates the accounting treatment of aparticular transaction, with no need for judgment in its application. There are also areas in which management’s
judgment in selecting an available alternative could produce materially different results. Set forth below is a
description of accounting policies under U.S. GAAP that Advantest has identified as critical to understanding its
business and the reported financial results and condition of the Company.
Revenue Recognition
In October 2009, the Financial Accounting Standards Board (“FASB”) amended the accounting guidance
for revenue recognition under multiple-deliverable arrangements. The guidance modifies the criteria for39

separating deliverables and allocating consideration in multiple-deliverable arrangements. The allocation ofrevenue is based on estimated selling price if neither vendor-specific objective evidence nor third-party evidenceof selling price is available. The guidance was adopted by the Company and its subsidiaries in the first quarter2011. The adoption of the guidance did not have a significant impact on its consolidated results of operations andfinancial condition.
In October 2009, the FASB amended accounting guidance for software revenue recognition. This guidancechanges the accounting model for revenue arrangements that include both tangible products and software
elements. It provides guidance on how to determine which software, if any, relating to the tangible product would
be excluded from the scope of the software revenue guidance. The guidance was adopted by Advantest in thefirst quarter 2011. The adoption of the guidance did not have a significant impact on its consolidated results ofoperations and financial condition.
GeneralAdvantest recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurredor the services have been rendered, the sales price is fixed or determinable and collection of the related
receivable is reasonably assured.
Sales of Products
Sales of products which require installation are recognized when the related installation is completed andother sales recognition criteria are met since the installation is essential to the functionality of the equipment.
When customer acceptance is uncertain, revenue is deferred until customer acceptance has been received. Whenthe final payment is subject to customer acceptance, a portion of revenue for the final payment is deferred until
an enforceable claim has become effective.
Sales of products and component which do not require installation service by Advantest is recognized upon
shipment if the terms of the sale are free on board (FOB) shipping point or upon delivery if the terms are FOB
destination which coincide with the passage of title and risk of loss.
Long-term Service contracts
Revenue from fixed-price, long-term service contracts is recognized on the straight-line basis over thecontract term.
Leasing Income
Revenue from operating leases is primarily recognized on the straight-line basis over the lease term.
Multiple deliverables
Advantest’s revenue recognition policies provide that, when a sales arrangement contains multiple elements
such as hardware and software products and services, Advantest allocates revenue to each element based on aselling price hierarchy and recognizes revenue when the criteria for revenue recognition have been met for eachelement. The selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”), if
available, third-party evidence (“TPE”) if VSOE is not available, or estimated selling price, if neither VSOE nor
TPE is available.
Inventories
Advantest’s inventories consist of on-hand inventory, including inventory located at customer sites, andinventory that is on-order and subject to a contract that is non-cancelable. Advantest states its inventories at the40lower of cost or market. Cost is determined using the average cost method. Advantest determines the market forfinished goods by determining net realizable value and for raw materials by identifying replacement cost.
Advantest reviews its inventories and determines the appropriate amount of any inventory write-downs
periodically based on these reviews. Write-downs occur from the discontinuation of product lines, inventory inexcess of estimated usage, the release of new products which renders inventory obsolete and declines in net
realizable value of Advantest’s inventory leased to customers. Advantest recognizes inventory write-downs incost of sales. Advantest may be required to take additional charges for excess and obsolete inventory in fiscal
2012 or other future periods if future weakness in its businesses causes further reductions to Advantest’s
inventory valuations. In addition, unexpected changes in testing technology can render Advantest’s inventories
obsolete. Advantest evaluates its inventory levels based on its estimates and forecasts of demand for its products.
Advantest’s inventories increased by ¥6,343 million, or 27.0%, during fiscal 2011 to ¥29,836 million as ofMarch 31, 2012 due to improvements in backlogs of orders and expansion of the business scale by integration
with Verigy.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
On April 1, 2011, the Company and its domestic subsidiaries elected to change the method of depreciating
fixed assets from the fixed-percentage-on-declining base application to the straight line method.
The Company analyzed the sales mixture of memory and non-memory business to evaluate the future
production requirements and pattern of benefit from utilizing its fixed assets. Based on this analysis, Advantest’s
management believes that the straight line method of depreciation is preferable as it better reflects the pattern ofconsumption of the future benefits to be derived from those assets being depreciated and provides a better
matching of costs and revenues over the assets’ estimated useful lives, in light of product life cycles and current
change in product mix to expand non-memory business. In accordance with Accounting Standards Codification(“ASC”) 250, “Accounting Changes and Error corrections”, this change in depreciation method represents achange in accounting estimate effected by a change in accounting principle.
Accordingly, the effects of the change are accounted for prospectively beginning with the period of change
and prior period results have not been restated. The change in depreciation method reduced depreciation expense
and resulted in decreases in loss before income taxes and equity in earnings of affiliated company and net loss by¥560 million, respectively, for year ended March 31, 2012. Also basic net income per share and diluted net
income per share decreased by ¥3.23, respectively, for year ended March 31, 2012.
The depreciation period for significant assets ranges from 15 years to 50 years for buildings, 4 years to
10 years for machinery and equipment, and 2 years to 5 years for tools, furniture and fixtures.
Depreciation expense was ¥4,101 million, ¥3,977 million and ¥4,326 million for the fiscal years 2009, 2010
and 2011, respectively.
Impairment of Long-Lived Assets
Advantest evaluates the impairment of long-lived assets including certain identifiable intangibles withdefinite useful lives by reviewing for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by theamount by which the carrying amount of the assets exceeds the fair value of the assets.
41

In fiscal 2009 and 2010, Advantest did not incur impairment of long-lived assets. In fiscal 2011, Advantest
recognized an impairment loss of ¥920 million on certain building and land asset that was reclassified as assets
held for sale.
Business Combinations
Advantest allocates the fair value of purchase consideration to the tangible assets acquired, liabilities
assumed and intangible assets acquired, including in-process research and development (“IPR&D”), based on
their estimated fair values. The excess of the fair value of purchase consideration over the fair values of theseidentifiable assets and liabilities is recorded as goodwill. Advantest engages independent third-party appraisal
firms to assist us in determining the fair values of assets acquired and liabilities assumed. Such valuations require
management to make significant estimates and assumptions, especially with respect to intangible assets.
Critical estimates in valuing certain intangible assets include but are not limited to future expected cash
flows and discount rates. Management’s estimates of fair value are based upon assumptions believed to bereasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ fromestimates.
Goodwill and Intangible Assets
Advantest reviews goodwill and intangible assets with indefinite lives for impairment annually andwhenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The
provisions of the accounting standard for goodwill and other intangibles require that Advantest performs a
two-step impairment test on goodwill. In the first step, Advantest compares the fair value of each reporting unit
to its carrying value. Advantest’s reporting units are consistent with the reportable segments identified in Note 20
to the Consolidated Financial Statements. Advantest determines the fair value of its reporting units based on an
income approach. Under the income approach, Advantest calculates the fair value of a reporting unit based on thepresent value of estimated future cash flows. If the fair value of the reporting unit exceeds the carrying value ofthe net assets assigned to that unit, goodwill is not impaired and Advantest is not required to perform further
testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting
unit, then Advantest must perform the second step of the impairment test in order to determine the implied fairvalue of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fairvalue, then Advantest records an impairment loss equal to the difference.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant
estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins
used to calculate projected future cash flows and risk-adjusted discount rates. Advantest bases its fair value
estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual
future results may differ from those estimates. In addition, Advantest makes certain judgments and assumptions
in allocating corporate assets and liabilities to determine the carrying values for each of its reporting units.
Advantest’s annual goodwill impairment analysis indicated no impairments of goodwill. In order to evaluate
the sensitivity of the fair value calculations on the goodwill impairment analysis, Advantest applied ahypothetical and approximate 10% decrease to the fair value of each reporting unit. As a result of the sensitivity
analysis, as of March 31, 2012, Advantest does not have any reporting units that are at risk that the carrying
amount of the reporting unit would reasonably likely exceed its fair value.
Intangible assets primarily consist of customer relationships, patented technologies, developed technologies
and other intangible assets. Advantest has estimated the weighted average amortization period for the customer
relationship, patented technologies and developed technologies to be 8 years, 9 years and 8 years, respectively.
The weighted average amortization period for all intangible assets is approximately 8 years.
42

Trade Receivables
Advantest’s trade receivables, less allowance for doubtful accounts was ¥24,119 million as of March 31,
2012, as compared with ¥22,707 million as of March 31, 2011. Advantest maintains allowances for doubtful
accounts for estimated losses resulting from the inability of its customers to make required payments. Advantest
provides an allowance for doubtful accounts for all specific accounts receivable that it judges are probable of not
being collected.
Advantest periodically reviews its estimated allowances for doubtful accounts taking into account thecustomer’s payment history, assessing the customer’s current financial position and considering otherinformation that is publicly available and the customer’s credit worthiness. Additional reviews are undertaken
upon significant changes in the financial condition of Advantest’s customers and the semiconductor industry.
Increases in allowance for doubtful accounts are charged to selling, general and administrative expenses.
At the end of fiscal 2011, Advantest increased its allowance for doubtful accounts to ¥483 million, an
increase of ¥331 million from fiscal 2010. A reversal of allowances made for accounts receivable that are latercollected, depending upon the recovered financial status of its customers and Advantest’s collection efforts, will
decrease the selling, general and administrative expenses for the accounting period during which such collection
takes place. Conversely, additional allowances may be necessary in the future if conditions in the industries ofsome of Advantest’s customers do not improve in the near-term.
Accrued Warranty Expenses
Advantest’s products are generally subject to a product warranty. In addition, under certain circumstances,
Advantest is responsible for the repair of defective components and parts. Advantest provides an allowance for
estimated product warranty expenses when product revenue is recognized as part of its selling, general andadministrative expenses. The allowance for estimated product warranty expenses represents management’s best
estimate at the time of sale of the total costs that Advantest will incur to repair or replace components or parts
that fail while still under warranty. Advantest records its allowance for estimated product warranty expenses
based on the historical ratio of actual repair expenses to corresponding sales, and any facts and circumstancesthat occurred. The foregoing evaluations are inherently uncertain as they require estimates as to maintenancecosts and failure rates related to different product lines. Consequently, actual warranty costs may differ from theestimated amounts and could result in additional product warranty expenses. If actual warranty costs significantly
exceed the amount of Advantest’s allowance for product warranty expenses, it would negatively affect the future
results of operations of Advantest.
Accrued warranty expenses were ¥2,129 million at March 31, 2012, an increase of ¥375 million from
¥1,754 million at March 31, 2011.
Stock-Based Compensation
Advantest applies the fair-valued-based method of accounting for stock-based compensation and recognizes
stock-based compensation expense in the consolidated statements of operations. The cost of employee services
received in exchange for an award of equity instrument is measured based on the grant-date fair value of thestock options granted to employees. The cost is recognized on a straight line basis over the period during which
an employee is required to provide service in exchange for the award. The Black Scholes pricing model is used toestimate the value of the stock options.
Expected dividend yield is determined by the Company’s dividend ratio of the past and other associatedfactors. Risk free interest rate is determined by Japanese government bond yield for the period corresponding to
expected life. Expected volatility is determined by historical volatility and trend of the Company’s share prices,and other associated factors. Expected life is determined by the Company’s option exercise history, post vesting
employment termination behavior for similar grants, and other pertinent factors.
43

Advantest has recorded ¥143 million, ¥165 million and ¥583 million as stock-based compensation expensein fiscal 2009, 2010 and 2011, respectively.

Accrued Pension and Severance Cost
The Company and certain of its Japanese subsidiaries have unfunded retirement and severance plans (pointbased benefits system). Under a point-based benefits system, the benefits are calculated based on accumulated
points allocated to employees each year according to their job classification and their performance. The
Company and certain of its Japanese subsidiaries also have a defined benefit corporate pension plan covering
substantially all employees. Under the cash balance pension plan, the benefits are calculated based on
accumulated points allocated to employees each year according to their job classification and their performancewith a certain interest rate calculated based on the upper and lower limit of a market interest rate.
Certain overseas subsidiaries also have defined benefit pension plans covering substantially all of theiremployees. Benefits payable under the plans are based on employee compensation levels and years of service.
The retirement benefit costs are estimated from actuarial valuations. Inherent in these valuations are key
assumptions in estimating pension costs including mortality, withdrawal, retirement, changes in compensation,
discount rate and expected return on plan assets. Advantest is required to estimate the key assumptions by taking
into account various factors including personnel demographics, current market conditions and expected trends ininterest rates. Advantest determines the discount rate by looking to available information about rates implicit inreturn on high-quality fixed-income governmental and corporate bonds. Accordingly, the discount rate is likely
to change from period to period based on these ratings. A decrease in the discount rate results in an increase inactuarial pension benefit obligations. Increases and decreases in the pension benefit obligation affect the amountof the actuarial gain or loss which is amortized into income over the service lives of employees. Changes in the
key assumptions may have a material effect on Advantest’s financial position and results of operations.
Management believes that estimation of the key assumptions is reasonable under the various underlying factors.
Pension related adjustments (net of tax) recognized in other comprehensive income (loss) for the year ended
March 31, 2010, 2011 and 2012 were ¥1,566 million, (¥121 million), and (¥6,328 million), respectively. Pension
related adjustments of (¥6,328 million) for the year ended March 31, 2012 were recognized due to the reductionof discount rate used to determine benefit obligations for Japanese plans and losses on plan assets.
Advantest has recorded ¥2,158 million, ¥1,911 million and ¥2,251 million as benefit cost in fiscal 2009,2010 and 2011, respectively.

Deferred Tax Assets
In assessing the realizability of deferred tax assets, management considers whether it is more likely than notthat some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. Based upon projections for futuretaxable income over the periods in which the deferred tax assets are deductible including management’s
expectations of future semiconductor market and semiconductor and component test systems market prospects
and other factors, management believes it is more likely than not that Advantest will realize the benefits of thesedeductible differences, net of valuation allowance. The valuation allowance in fiscal 2011 was decreased by
1,894 million primarily due to the reduction of the effective tax rate resulting from the tax reform in Japan. The
net (decreases) increases in valuation allowance increased ¥3,274 million and ¥793 million for fiscal years 2009
and 2010, respectively.
44

As a result of acquisition Verigy on July 4, 2011, at March 31, 2011, Advantest has recorded on its
consolidated balance sheet, deferred tax assets of ¥53,480 million of which ¥30,352 million represents net
operating loss (“NOL”). Advantest has also recorded a valuation allowance of ¥52,082 million, and as a result,net deferred tax assets were ¥1,398 million. At March 31, 2012, Advantest has recorded on its consolidatedbalance sheet, deferred tax assets of ¥59,694 million of which ¥31,800 million represents NOL. Advantest has
also recorded a valuation allowance of ¥50,188 million, and as a result, net deferred tax assets were ¥9,506
million. NOL carry forwards utilized were ¥2,421 million, ¥554 million and ¥25 million in fiscal years 2009,2010 and 2011 respectively.
Although Advantest’s management believes that the amount of net deferred tax assets may be realized, this
could change in the near term if estimates of future taxable income are revised and effect on the Company’s
consolidated financial position and results of operations could be significant.

Income Taxes
Advantest recognizes the financial statement effects of tax positions when they are more likely than not,based on technical merits, that the tax positions will be sustained upon examination by the tax authorities.
Benefits from tax positions that meet the more-likely-than-not recognition threshold are measured at the largest
amount of benefit that is greater than 50 percent likelihood of being realized upon settlement. Advantest
recognizes interest and penalty accruals related to unrecognized tax benefits in income taxes in the consolidated
statements of operations.

Fair Value
Investment securities
The fair value of available-for-sale equity securities is based on quoted market prices at the reporting date
for those investments. The fair value of available-for-sale debt securities is based on unobservable inputs as themarket for the assets was not active at the measurement date.

Plan assets
Plan assets are comprised principally of listed equity securities, pooled funds, hedge funds and investments
in life insurance company’s general accounts. Listed equity securities are based on quoted market prices on thereporting date for those investments. Pooled funds and hedge funds are valued at their net asset values which arecalculated by the sponsors of the funds. Investments in life insurance company’s general accounts are valued atconversion value.

Results of Operations—Fiscal 2011 Compared with Fiscal 2010
Net Sales
Advantest’s net sales increased by ¥41,414 million, or 41.6%, compared with fiscal 2010, to¥141,048 million in fiscal 2011. This was primarily due to robust sales for test systems for non memory
semiconductors and the integration with Verigy. It is estimated that the fluctuations in exchange rates during
fiscal 2011 brought down Advantest’s net sales by ¥4,433 million in fiscal 2011.
The following is a discussion of net sales for Advantest’s Semiconductor and Component Test System,
Mechatronics System and Services, Support and Others Segments. Net sales amounts discussed include
intercompany sales between segments.
45

Semiconductor and Component Test System Segment
In fiscal 2011, net sales of Advantest’s Semiconductor and Component Test System Segment accounted for
74.9% of total net sales. Net sales of Advantest’s Semiconductor and Component Test System Segment for fiscal
2011 increased by ¥36,275 million, or 52.3%, compared with fiscal 2010, to ¥105,608 million. It is estimated thatfluctuations in exchange rates during fiscal 2011 brought down Advantest’s net sales in its Semiconductor andComponent Test System Segment by ¥3,226 million.
Net sales of test systems for non memory semiconductors in fiscal 2011 increased by ¥40,378 million, or
102.7%, compared with fiscal 2010 to ¥79,695 million. This increase was mainly due to a steady growth in thesales of T2000 series test systems for SoC semiconductors and the addition of sales of Verigy’s V93000.
Net sales of test systems for memory semiconductors in fiscal 2011 decreased by ¥4,103 million, or 13.7%,
compared with fiscal 2010 to ¥25,913 million. This decrease was mainly due to reduced inquiries for T5300
series front-end test systems which resulted from weaker demand for PCs which constrained new capital
expenditures.
Mechatronics System Segment
Net sales of the Mechatronics System Segment including test handlers and device interfaces increased by¥2,101 million, or 11.3%, compared to fiscal 2010 to ¥20,616 million in fiscal 2011. This increase was mainly
due to a significant increase in the number of units sold for Multi Vision Metrology Scanning Electron
Microscope testing system for photomasks, which benefited from the developments of semiconductor
miniaturization.
Services, Support and Other Segment
Net sales of the Services, Support and Other Segment increased by ¥4,641 million, or 32.8%, compared withfiscal 2010 to ¥18,807 million in fiscal 2011, mainly due to a steady growth in sales of test systems, and theintegration with Verigy. The main businesses in the Services, Support and Others Segment for fiscal 2011 weremaintenance services and leasing and rentals.
Geographic Markets
Advantest experienced an increase of 41.6% in net sales in fiscal 2011, which was primarily due to thegrowth in sales in the Americas, Korea and Taiwan.
Net sales in Japan decreased by ¥6,303 million, or 28.1%, compared with fiscal 2010 to ¥16,095 million in
fiscal 2011. This decrease was mainly due to demand for the T5300 series front-end test systems for mobile
DRAM test systems, which had shown strong demand in fiscal 2010.
Net sales in the Americas increased by ¥20,464 million compared with fiscal 2010 to ¥29,742 million in
fiscal 2011. This increase was mainly due to a steady growth in sales of the T2000 for MPU testers for major
semiconductor manufacturers and the accounting for sales of Verigy’s V93000. It is estimated that fluctuations in
exchange rates during fiscal 2011 brought down Advantest’s net sales in the Americas by approximately¥1,232 million, primarily due to a continued Japanese yen appreciation against the U.S. dollar.
Net sales in Europe increased by ¥4,763 million compared to fiscal 2010 to ¥7,015 million in fiscal 2011.
This increase was mainly due to increased sales of the T2000 for MPU testers. It is estimated that fluctuations ineffect of changes in exchange rates during fiscal 2011 brought down Advantest’s net sales in Europe byapproximately ¥285 million.
Net sales in Asia (excluding Japan) increased by ¥22,490 million, or 34.2%, compared with fiscal 2010 to¥88,196 million in fiscal 2011. Net sales in Korea increased by ¥8,935 million, or 43.1%, compared with fiscal
46

2010. This increase was mainly due to increased capital expenditures in a variety of semiconductors forcommunication devices such as smartphones. Net sales in Taiwan increased by ¥5,756 million, or 26.4%,
compared with fiscal 2010. This increase was mainly due to the accounting for sales of Verigy’s V93000. Net
sales in China and the rest of Asia (excluding Japan, Taiwan and Korea) increased by ¥7,799 million, or 33.7%,
compared with fiscal 2010. This increase resulted from increased sales of the T2000 for MPU testers. It isestimated that fluctuations in exchange rates during fiscal 2011 brought down Advantest’s net sales in Asia byapproximately ¥2,769 million.
Advantest’s overseas sales as a percentage of total sales was 88.6% and 77.5% for fiscal 2011 and 2010,
respectively.
Operating Expenses
In fiscal 2011, Advantest’s operating expenses increased by ¥46,688 million, or 49.9%, compared withfiscal 2010 to ¥140,211 million.
In fiscal 2011, cost of sales increased by ¥21,136 million, or 41.3%, compared to fiscal 2010 to¥72,300 million. This increase was mainly due to a ¥41,414 million increase in net sales and the accounting for¥3,532 million in one time costs associated with acquisition accounting for Verigy.
In fiscal 2011, research and development expenses increased by ¥9,106 million, or 43.0%, compared tofiscal 2010 to ¥30,303 million. This increase in research and development expenses was mainly due to increased
costs for materials for future product development, increased payments for outsourced research, as well as
increased personnel expenses and the accounting for ¥986 million in costs associated with the integration with
Verigy.
In fiscal 2011, selling, general and administrative expenses increased by ¥16,446 million, or 77.7%,
compared to fiscal 2010 to ¥37,608 million. This increase was mainly due to an increase in sales expenses
resulting from increased net sales, an increase in personnel expenses and costs of ¥3,819 million
applicable to the acquisition of Verigy.
Operating Income
In fiscal 2011, operating income decreased by ¥5,274 million, compared to fiscal 2010, to a profit of¥837 million.
Other Income and Expenses
In fiscal 2011, interest and dividend income decreased by ¥3 million, or 0.9%, compared with fiscal 2010 to¥323 million.
In fiscal 2011, interest expenses increased by ¥150 million compared with fiscal 2010 to ¥153 million. This
increase was mainly due to financing from banks for the Verigy acquisition.
In fiscal 2011, impairment loss on investment securities increased by ¥1,742 million, compared with fiscal
2010 to ¥2,254 million.
In fiscal 2011, total other expense increased by ¥3,719 million, compared with fiscal 2010, to¥4,279 million. This increase was mainly due to an increase in foreign currency exchange loss of ¥1,811 million
compared with fiscal 2010 resulting in a loss of ¥2,319 million in fiscal 2011 which was caused by the continued
appreciation of the Japanese yen against the U.S. dollar other than impairment losses on investment securities.
Currency exchange profits/losses represent the difference between the value of foreign currency-denominated47

sales, translated at prevailing exchange rates, and either (i) the value of sales settled during the same fiscal year,
including those settled using foreign exchange forward contracts, or (ii) the value of cash and cash equivalents,
accounts receivable and payables outstanding remeasured at the exchange rate in effect as of March 31, 2012.

Income Taxes
In fiscal 2011, Advantest’s effective tax rate was 36.0%, while the tax rate for fiscal 2010 was 42.4%. The
statutory tax rate of the Company and its domestic consolidated subsidiaries was 40.4% for fiscal 2011. For a
more detailed discussion on income taxes of Advantest in fiscal 2011 and fiscal 2010, see Note 14 to Advantest’s
consolidated financial statements.

Net Income
In fiscal 2011, Advantest’s net income decreased by ¥5,358 million, compared to fiscal 2010, to a loss of¥2,195 million.

Other Comprehensive Income (Loss)
In fiscal 2011, Advantest’s other comprehensive income (loss), net of tax, declined by ¥893 million
compared to fiscal 2010, to a loss of ¥4,304 million. This decline was mainly due to an increase of ¥6,207
million in pension liability adjustments from a loss of ¥121 million in fiscal 2010 to a loss of ¥6,328 million in
fiscal 2011.

Results of Operations—Fiscal 2010 Compared with Fiscal 2009
Net Sales
Advantest’s net sales increased by ¥46,409 million, or 87.2%, compared with fiscal 2009, to¥99,634 million in fiscal 2010. This was primarily due to increases in capital expenditures by semiconductor
manufacturers. The estimated effect of changes in exchange rates during fiscal 2010 was to decrease Advantest’s
net sales by ¥2,808 million.
The following is a discussion of net sales for Advantest’s Semiconductor and Component Test System,
Mechatronics System and Services, Support and Others Segments. Net sales amounts discussed include
intercompany sales between segments.

Semiconductor and Component Test System Segment
In fiscal 2010, net sales of Advantest’s Semiconductor and Component Test System Segment accounted for
69.6% of total net sales. Net sales of Advantest’s Semiconductor and Component Test System Segment increasedby ¥36,761 million, or 112.9%, compared with fiscal 2009, to ¥69,333 million in fiscal 2010. The estimatedeffect of changes in exchange rates during fiscal 2010 was to decrease Advantest’s net sales in its Semiconductor
and Component Test System Segment by ¥2,004 million.
Net sales of test systems for memory semiconductors in fiscal 2010 increased by ¥17,572 million, or
141.2%, compared with fiscal 2009 to ¥30,016 million. This increase was mainly due to stronger than expecteddemand for Advantest’s DRAM semiconductor test systems especially for the T5300 series front-end test
systems and the T5500 series back-end test systems, reflecting increased capital expenditures by semiconductor
manufacturers for PC DRAM and mobile DRAM.
48

Net sales of test systems for non memory semiconductors in fiscal 2010 increased by ¥19,189 million, or
95.3%, compared with fiscal 2009 to ¥39,317 million. This increase was mainly due to a steady growth in thesales of T2000 series test systems for SoC semiconductors.
Mechatronics System Segment
Net sales of the Mechatronics System Segment including test handlers and device interfaces increased by¥7,278 million, or 64.8%, compared to fiscal 2009 to ¥18,515 million in fiscal 2010.
This steady growth of test systems for memory and non memory semiconductors, led to an increase indemand for test handlers device interface products, which are used together with semiconductor and component
test systems.
Services, Support and Other Segment
Net sales of the Services, Support and Other Segment increased by ¥2,328 million, or 19.7%, compared withfiscal 2009 to ¥14,166 million in fiscal 2010, mainly due to an increase in demand for maintenance services
reflecting the strong performance of the semiconductor market. The main businesses in the Services, Support andOthers Segment for fiscal 2010 were maintenance services and leasing and rentals.
Geographic Markets
Advantest experienced an increase of 87.2% in its net sales in fiscal 2010, which was primarily due to thegrowth in sales in Japan, Korea, Taiwan and China.
Net sales in Japan significant increased by ¥10,422 million, or 87.0%, compared with fiscal 2009 to¥22,398 million in fiscal 2010. This increase was mainly due to a growth in demand for the T5300 series
front-end test systems for mobile DRAM test systems.
Net sales in the Americas increased by ¥4,348 million, or 88.2%, compared with fiscal 2009 to¥9,278 million in fiscal 2010. This increase was primarily due to steady sales of the T2000 for MPU testers for
major semiconductor manufacturers. The estimated effect of changes in exchange rates during fiscal 2010 was todecrease Advantest’s net sales in the Americas by approximately ¥754 million, primarily due to a continued
Japanese yen appreciation against the U.S. dollar.
Net sales in Europe increased by ¥115 million, or 5.4%, compared to fiscal 2009 to ¥2,252 million in fiscal
2010. The estimated effect of changes in exchange rates during fiscal 2010 was to decrease Advantest’s net salesin Europe by approximately ¥194 million.
Net sales in Asia (excluding Japan) increased by ¥31,524 million, or 92.2%, compared with fiscal 2009 to¥65,706 million in fiscal 2010. Net sales in Korea and Taiwan increased by ¥10,418 million and ¥9,030 million,or 100.8% and 70.5%, respectively, compared with fiscal 2009. This increase was primarily due to increased
capital expenditures for PC DRAM. Net sales in China and the rest of Asia (excluding Japan, Taiwan and Korea)
increased by ¥12,076 million, or 109.4%, compared with fiscal 2009. This increase resulted from increased salesof the T2000 for MPU testers in China. The estimated effect of changes in exchange rates during fiscal 2010 was
to decrease Advantest’s net sales in Asia by approximately ¥1,844 million.
Advantest’s overseas sales as a percentage of total sales was 77.5% for both fiscal 2010 and 2009.

49

Operating Expenses
In fiscal 2010, Advantest’s operating expenses increased by ¥28,659 million, or 44.2%, compared withfiscal 2009 to ¥93,523 million.
In fiscal 2010, cost of sales increased by ¥23,867 million, or 87.4%, compared to fiscal 2009 to¥51,164 million. This increase was attributed to a ¥46,409 million increase in net sales.
In fiscal 2010, research and development expenses increased by ¥3,301 million, or 18.4%, compared tofiscal 2009 to ¥21,197 million. This increase in research and development expenses was mainly due to increased
costs for materials for future product development, increased payments for outsourced research as well as
increased bonuses and personnel expenses for fiscal 2010.
In fiscal 2010, selling, general and administrative expenses increased by ¥1,491 million, or 7.6%, comparedto fiscal 2009 to ¥21,162 million. This increase was mainly due to an increase in sales expenses resulting fromincreased net sales and an increase in bonuses and personnel expenses.
Operating Income
In fiscal 2010, operating income improved by ¥17,750 million, compared to fiscal 2009, to a profit of¥6,111 million.
Other Income and Expenses
In fiscal 2010, interest and dividend income decreased by ¥253 million, or 43.7%, compared with fiscal
2009 to ¥326 million. This decrease reflects the decrease in interest income caused primarily by a decrease of
cash and cash equivalents and a decline of interest rates.
In fiscal 2010, interest expenses decreased by ¥1 million, or 25.0%, compared with fiscal 2009 to¥3 million.
In fiscal 2010, impairment loss on investment securities increased by ¥196 million compared with fiscal
2009 to ¥512 million.
In fiscal 2010, other non-operating income decreased by ¥1,825 million, compared with fiscal 2009, to aloss of ¥371 million. This decrease was primarily due to an increase in foreign currency exchange loss of¥1,580 million compared with fiscal 2009 resulting in a loss of ¥508 million in fiscal 2010, which was caused by
the continued appreciation of the Japanese yen against the U.S. dollar. Currency exchange profits/losses represent
the difference between the value of foreign currency-denominated sales, translated at prevailing exchange rates,and either (i) the value of sales amounts settled during the fiscal year, including those settled using foreignexchange forward contracts, or (ii) the value of cash and cash equivalents, accounts receivable and payables
outstanding remeasured at the exchange rate in effect at March 31, 2011.
Income Taxes
In fiscal 2010, Advantest’s effective tax rate was 42.4%, as the Company did not record tax benefits on
pretax losses; the tax rate for fiscal 2009 was 14.7%. The statutory tax rate of the Company and its domestic
consolidated subsidiaries was 40.4% for fiscal 2010. For a more detailed discussion on income taxes ofAdvantest in fiscal 2010 and fiscal 2009, see note 12 to Advantest’s consolidated financial statements.

50

Net Income
In fiscal 2010, Advantest’s net income improved by ¥14,617 million, compared to fiscal 2009, to an incomeof ¥3,163 million.
Other Comprehensive Income (Loss)
In fiscal 2010, Advantest’s other comprehensive income (loss), net of tax, declined by ¥3,139 million
compared to fiscal 2009, to a loss of ¥3,411 million. This decline was primarily due to a decreaseof ¥1,687 million in pension liability adjustments from an income of ¥1,566 million in fiscal 2009 to a loss of¥121 million in fiscal 2010. No tax effect was recognized on the pension liability adjustments recorded in theother comprehensive income (loss).
5.B. LIQUIDITY AND CAPITAL RESOURCES
Advantest’s cash and cash equivalents balance decreased by ¥17,105 million in fiscal 2011 to¥58,218 million as of March 31, 2012. As of March 31, 2012, approximately 45% of Advantest’s cash and cash
equivalents were held in Japanese yen.
Net loss in operating activities was ¥2,195 million. However, as a result of a decrease of ¥4,613 million ininventories and an adjustment of noncash items such as depreciation and amortization, net cash provided inoperating activities was ¥12,302 million in fiscal 2011. Net cash provided in operating activities improved by¥12,995 million in fiscal 2011 compared to ¥693 million in net cash used in operating activities in fiscal 2010.
The main reason for the improvement in fiscal 2011 was an increase of ¥7,285 million in inventories in fiscal
2010 and a decrease of ¥4,613 million in inventories in fiscal 2011.
Net cash used in investing activities was ¥37,670 million in fiscal 2011. This amount was primarily
attributable to payments in connection with the acquisition of Verigy in the amount of ¥57,145 million, payment
for short-term investments in the amount of ¥14,387 million and proceeds from the sale of available-for-salesecurities in the amount of ¥10,717 million. Compared to net cash used in investing activities in the amount of¥5,828 million in fiscal 2010, the increase was ¥31,842 million, which was primarily due to the payments inconnection with the Verigy acquisition in the amount of ¥57,145.
Net cash provided by financing activities was ¥9,887 million in fiscal 2011. Compared to net cash used infinancing activities in the amount of ¥12,028 million in fiscal 2010, the increase was ¥21,915 million. This
amount was primarily attributable to a net increase of ¥25,466 million in short term debt, which was offset bypayments for redemption of senior convertible notes of the acquired subsidiary in the amount of ¥13,835 million.
Net effect of exchange rate changes on cash and cash equivalents was unfavorable by ¥1,624 million in
fiscal 2011, an improvement of ¥943 million compared to fiscal 2010.
Advantest has various retirement and severance plans for employees, including non-contributory defined
benefit retirement and severance plans consisting primarily of the Employees Provident Fund (“EPF”) plan. As
mentioned in Note 17 to the consolidated financial statements, in the balance sheet as of March 31, 2012, theamount of ¥23,444 million has been recognized as accrued severance and pension costs. Advantest hascontributed to the EPF plan in accordance with local statutory requirements. Advantest’s cash funding
requirements would be affected by any changes in interest rates, rate of returns on plan assets and government
regulations. The contributions paid by Advantest under the EPF were ¥1,606 million in fiscal 2010 and¥1,917 million in fiscal 2011. Advantest expects to contribute ¥1,825 million under the EPF in fiscal 2012.
In accordance with Advantest’s funding and treasury policy (including funding for capital expenditures),which is overseen and controlled by its Accounting Department, Advantest funds its cash needs through cash
51

from operating activities and cash and cash equivalents on hand, and is able to procure funds as necessary by
issuance of debt and equity securities in domestic and foreign capital markets and bank loans.
If conditions in the semiconductor industry, and thus the semiconductor and component test system
industry, experience a downturn in the medium term, Advantest may need to fund future capital expenditures andother working capital needs through the incurrence of additional debt or dilutive issuances of equity securities.
Advantest obtained several short-term bank loans in connection with the Verigy acquisition in fiscal 2011.
Furthermore, it issued ¥25.0 billion in Japan in unsecured bonds on May 25, 2012 and repaid short-term loans
from banks.
Advantest has entered into agreements for committed lines of credit with several banks to ensure thatnecessary financing may be procured efficiently. The term of a commitment line agreement is three years andAdvantest can elect to obtain a two year loan at the end of the term. A commitment line agreement generally has
financial covenants. For Advantest, it is annually required to maintain certain minimum net asset levels. Also it isrequired to maintain a BBB- rating or above with Rating and Investment Information, Inc (R&I). Advantest’s
unused commitment lines totaled ¥10.0 billion as of March 31, 2012. R&I’s issuer rating of Advantest as ofMarch 31, 2012 is A.
5.C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
Research and Development and Product Enhancement
In order to support technology on the leading-edge, Advantest undertakes research and development
initiatives to develop products which play a central role in the area of measuring technologies to support
electronics, information and communications, and semiconductor manufacturing. Advantest’s research anddevelopment focuses on the development of new products and the improvement of existing products. In
particular, in the Semiconductor and Component Test System Segment, a large and ongoing investment inresearch and development is necessary in order to maintain market competitiveness and to provide many types of
products that meet the various needs of the customers. Advantest also conducts research of basic technologies.
Advantest’s expenditures for research and development were approximately ¥17.9 billion in fiscal 2009 and¥21.2 billion in fiscal 2010. Due to integration with Verigy, Advantest’s expenditures for research anddevelopment were approximately ¥30.3 billion in fiscal 2011. Advantest employs over 1,000 engineers and otherpersonnel in its research and development division.
The contents and achievements to date of Advantest’s current research and development activities include:
Basic Technology•

development of constituent technologies in the field of terahertz;•

development of constituent technologies, including high speed, energy-saving micro switches and highspeed samplers used in semiconductor and component test systems and millimeter wave measuring
instruments;•

development of methods to detect timing jitters in high bit-rate signals; and•development of compound semiconductor devices, including less-distortion devices used forsemiconductor and component test systems.

Semiconductor and Component Test System Segment•

development of semiconductor and component test systems that enable testing of super high speed
memory semiconductors at actual motion speed;•

development of semiconductor and component test systems that enhance the functionality of testing of
DRAM semiconductors and flash memory semiconductors and require less floor space;52•development of semiconductor and component test systems that have the capacity to simultaneously test
multiple complex SoC semiconductors with large pin counts and require less floor space;•development of semiconductor and component test systems with specialized applications;•development of measurement modules for devices that operate at extremely high frequencies and for
networks that carry extremely high density transmissions;•development of high speed transmission technologies for high speed large pin counts and high speedtransmission signal contact technologies; and•development of application software for interface between the semiconductor designing environmentand semiconductor and component test systems, as well as development of software to analyze defective
semiconductors.

Mechatronics System Segment•

development of test handlers for memory semiconductors enabling measuring of multiple
semiconductors for high throughput testing;•development of test handlers for SoC semiconductors that respond to diversified device types andpackages; and•development of real Active Thermal Control technology with high speed response for high powerdevices.

Advantest has four research and development facilities in Japan, four in the U.S., three in the Europe andone in China.
Advantest promotes joint development efforts between its various research facilities to capitalize on thecapabilities of its researchers worldwide. Advantest’s research and development team for semiconductor andcomponent test systems in Japan works closely with Advantest research and development teams in the U.S. andEurope for the development of hardware and software.
Advantest has been carrying out research and development activities for its burn-in system, concentrating its
development resources on Japan Engineering Co., Ltd, a subsidiary of Advantest.
Advantest is currently engaged in the research and development of electron-beam, or e-beam, lithography
technology used to draw circuit patterns directly on semiconductor wafers, as well as the research anddevelopment of electron-beam length measuring systems used to measure the microscopic size of the circuit
pattern of a photomask. Due to their throughput limitations, e-beam lithography systems are currently only usedin the production of high value-added semiconductors with limited production volumes and semiconductor
prototypes. Advantest believes that further research and development will be necessary in order to attain highprecision technologies for the leading semiconductor design and manufacturing process, in addition to thedevelopment of technologies for throughput responding to the demand for next generation equipment.
For a description of Advantest’s patents, licenses and other intellectual property, see “Information on the
Company—Business Overview—Licenses and Intellectual Property Rights.”
5.D. TREND INFORMATION
For a discussion of the trends that affect Advantest’s business and financial condition and results ofoperations, see “Information on the Company—Business Overview,” “Operating and Financial Review—Operating Results” and “Operating and Financial Review and—Liquidity and Capital Resources.”53

5.E. OFF-BALANCE SHEET ARRANGEMENTS
As of March 31, 2012, Advantest had no material off-balance sheet arrangements.
Advantest does not participate in transactions that derecognize assets or liabilities through unconsolidated
entities, structured finance or special purpose entities that were created for the purpose of facilitating off-balance
sheet arrangements or other limited purposes.
5.F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The following table reflects Advantest’s current obligations and commitments to make future payments
under contracts, contractual obligations and commercial commitments as of March 31, 2012.

Contractual Cash Obligation

Total

Payments due by PeriodLess than
1-3
3-5
1 yearyears
years(in millions)

More than
5 years

Short-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Debt, including current portion . . . . . . . . . . . . . . . .
Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥25,000
—
2,322
3,770

¥25,000
—
775
3,770

¥ —
—
1,010
—

¥—
—
518
—

¥—
—
19
—

Total Contractual Cash Obligations . . . . . . . . . . . . . . . . . . . . . .

¥31,092¥29,545¥1,010¥518¥ 19

The contractual cash obligation table excludes our long-term deferred tax liabilities because we cannot makea reliable estimate of the timing of cash payments. For details see Note 14, “Income Taxes.”
5.G. SAFE HARBOR
All information that is not historical in nature disclosed under “Item 5. Operating and Financial Review andProspects—Off-Balance Sheet Arrangements” and “—Tabular Disclosure of Contractual Obligations” is deemed
to be a forward-looking statement. See “Cautionary Statement with Respect to Forward-Looking Statements.”

54

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. DIRECTORS AND SENIOR MANAGEMENT
Directors, Corporate Auditors and Executive Officers
Directors, corporate auditors and executive officers of the Company as of June 26, 2012 and their respective
business experience are listed below.
Name (Date of birth)

Toshio Maruyama(April 17, 1948)

Position(Group executive/function)

Date ofcommencement

Chairman of the Board
and Representative
Director

4/1973
6/19896/1995
6/19996/20015/20036/20036/20055/20067/20083/20094/20096/20097/20094/20115/20113/20125/2012Haruo Matsuno(February 14, 1960)

Representative Director,
President and CEO

4/19846/20066/20071/20086/20086/20096/2010
Naoyuki Akikusa
Director(December 12, 1938)

4/1961
6/198855

Business experience

Joined Advantest Corporation
Director
Managing Director
Senior Managing Director
Senior Vice President, ATE Sales Group
Representative Director and President
Director, Environmental Management Center
Representative Director, President and COO
Representative Director, President and CEO
Director of the Association of SuperAdvanced Electronics Technologies
SEMI Director (present position)
Senior Vice President, New Concept ProductInitiative
Director, CSR & Environmental Affairs
Promotion Center
Chairman of the Board and Representative
Director (present position)
Director of Nippon Keidanren
Director of Japan Electronics and Information
Technology Industries Association (present
position)
Executive Director of Semiconductor
Equipment Association of Japan
Executive Member of Nippon Keidanren(present position)
Vice Chairman of Semiconductor Equipment
Association of Japan (present position)
Joined Advantest Corporation
Senior Vice President, Procurement Group
Senior Vice President, Procurement &Logistics Group
Senior Vice President, Production Group
Executive Officer
Representative Director, President and CEO(present position)
Director, CSR & Environmental Affairs
Promotion Center (present position)
Executive Vice President, New Concept
Product Initiative (present position)
Joined Fuji Communication Apparatus Mfg.
Co., Ltd. (currently Fujitsu Limited)
Director, Fujitsu Limited

Name (Date of birth)

Position(Group executive/function)

Date ofcommencement

6/1991
6/1992
6/19986/20036/20056/20066/20086/2010
Yasushige Hagio
Director(November 24, 1947)

4/1972
4/1982
4/1998
12/20036/20046/2006
Osamu Karatsu(April 25, 1947)

Director

4/1975
6/1991

6/1997

4/19994/20006/2012Shinichiro Kuroe(March 30, 1959)

Director, Managing
Executive Officer
Strategic Business4/1981
3/19986/20006/20014/20022/2003

56

Business experience

Managing Director of Fujitsu Limited
Senior Managing Director, Fujitsu Limited
Representative Director and President,
Fujitsu Limited
Representative Director and Chairman of theBoard, Fujitsu Limited
Corporate Auditor of FANUC LTD
Corporate Auditor of Advantest Corporation
Director, Advantest Corporation (present
position)
Senior Executive Advisor and Director of
Fujitsu Limited
Senior Executive Advisor of Fujitsu Limited(present position)
Assistant Judge, Tokyo District Court
Judge, Tokyo District Court
Instructor, Legal Training and ResearchInstitute
Chief of the Shizuoka District Court
Registered as an attorney-at-Law
Joined Seiwa Patent office & Law (present
position)
Director, Advantest Corporation (present
position)
Joined Nippon Telegraph and Telephone
Public Corporation
Executive Manager, LSI Laboratories,
Nippon Telegraph and Telephone
Corporation
Vice President and Director, Advanced
Telecommunications Research InstituteInternational
Principal Consultant, SRI Consulting K.K.
Chief Executive Director, SRI International,Japan
Director, Advantest Corporation (present
position)
Joined Advantest Corporation
Manager, 1st Product Development
Department
Manager, Memory Tester Development
Department
General Manager, Memory Tester Business
Division
In Charge of Memory Tester Product, ATE
Business Group
General Manager, 1st Memory Tester
Business Division
General Manager, Memory Tester Business
Division

Name (Date of birth)

Position(Group executive/function)

Date ofcommencement

6/20054/2007
12/20076/20084/20096/20096/20106/2011

Sae Bum Myung
Director, Managing(September 16, 1954) Executive Officer Sales
and Marketing

4/19894/20046/20066/20084/20096/2011Hiroshi Nakamura(December 4, 1957)

Director, Managing
Executive Officer
Corporate
Administration

4/1981
6/19986/20026/20066/20076/20086/20096/20106/2012

57

Business experience

Executive Officer
Vice President, Sales and Marketing Group
General Manager, Solution Business Division
General Manager, Soc Strategic Sales Team
General Manager, 1st SoC Tester Business
Division
Senior Vice President, SoC Tester BusinessGroup
Senior Vice President, Test System BusinessGroup
General Manager, Memory Tester Business
Division
Director, Managing Executive Officer(present position)
Technology Development Group and Test
System Business Group
Test System Business
General Manager, System Planning Division
Strategic Business (present position)
Executive Vice President, Strategic Business
Unit (present position)
Joined Advantest Corporation
Manager, International Sales Department 3
Representative Director and President,
Advantest Korea Co., Ltd.
Executive Officer
Asia Sales, Sales and Marketing Group
Leader, Korea Account Sales Initiatives
Director, Managing Executive Officer(present position)
Sales and Marketing (present position)
Executive Vice President, Sales andMarketing Group (present position)
Joined Advantest Corporation
Manager, Business Accounting Department,
Corporate Affairs GroupManager, Accounting Department, Corporate
Affairs Group
Executive Officer
Vice President, Corporate Affairs Group
Senior Vice President, Financial Group
Senior Director, Accounting Department
Vice President, Corporate Administration
Group
General Manager, Accounting and Finance
DivisionManaging Executive Officer
Executive Vice President, Corporate
Administration Group (present position)
Director, Managing Executive Officer(present position)
Corporate Administration (present position)

Name (Date of birth)

Position(Group executive/function)

Yuichi Kurita(July 28, 1949)

Standing Corporate
AuditorDate ofcommencement

4/19733/2001
10/2001
4/20026/20036/20046/2005
11/2006
6/20076/20084/20096/20096/20106/2012
Akira Hatakeyama
Standing Corporate(December 20, 1950) Auditor

4/1973
5/19954/20016/20056/20086/2011

Megumi Yamamuro(March 8, 1948)

Corporate Auditor

4/1974
4/1984
4/1988
4/19977/2004

10/2004
6/20056/200658

Business experience

Joined Fujitsu Limited
Joined Advantest Corporation
General Manager, Investor Relations Office
Manager, Finance Department
Executive Officer
Vice President, Corporate Affairs Group
Vice President, Corporate Affairs Group(overseeing Finance)
Senior Vice President, Corporate Relations
Group
Senior Vice President, Corporate PlanningGroup
Director, e-Shuttle, Inc. (present position)
Director, Managing Executive Officer
Corporate Affairs
Corporate Administration
Senior Vice President, Corporate
Administration Group
Assistant Director (Administration),
Environmental Management Center
In Charge of Corporate Ethics Office
Assistant Director (Administration), CSR &Environmental Affairs Promotion Center
Corporate Planning and Administration
Director, Senior Executive Officer
Corporate Auditor, Tera Probe, Inc.
Standing Corporate Auditor (present position)
Joined Advantest Corporation
General Manager, ATE Engineering andManufacturing Division
Representative Director, President and CEO,Japan Engineering Co., Ltd.
Executive Officer
AdvisorStanding Corporate Auditor (present position)
Assistant Judge, Tokyo District Court
Judge, Tokyo District Court
Instructor, Legal Training and ResearchInstitute
Judge, Tokyo High Court
Registered as an attorney-at-Law
Joined CAST Law P.C. (currently URYU &ITOGA) (present position)
Professor, The University of Tokyo Graduate
School of Law and Politics
Corporate Auditor, Fujitsu Limited (present
position)
Corporate Auditor, Advantest Corporation(present position)

Name (Date of birth)

Position(Group executive/function)

Date ofcommencement

6/200910/2010Masamichi Ogura(June 30, 1946)

Corporate Auditor

4/19696/20006/20024/20036/20036/20046/20066/20086/2011

Yoshiaki Yoshida(February 8, 1958)

Managing
Executive Officer

4/19996/20006/20066/20076/20083/20096/20096/20104/20126/2012

Masao Shimizu(February 24, 1953)

Managing
Executive Officer
System Solution
Business

4/19734/20006/20014/20026/20036/20044/20056/20066/200759

Business experience

Corporate Auditor, NIFTY Corporation(present position)
Professor, The University of Nihon Graduate
School of Law (present position)
Joined Fujitsu Limited
Director, Fujitsu Limited
Managing Executive Officer, Fujitsu Limited
Senior Executive Officer, Fujitsu Limited
Director, Senior Executive Officer, Fujitsu
LimitedCorporate Auditor, Fujitsu General Limited(present position)
Vice President and Representative Director,
Fujitsu LimitedStanding Corporate Auditor, Fujitsu Limited(present position)
Corporate Auditor, Advantest Corporation(present position)
Joined Advantest Corporation
Director, Advantest Finance Inc.
Representative Director, Advantest FinanceInc.
Executive Officer
Vice President, Corporate Planning Group
Executive Vice President, Corporate PlanningGroup (present position)
Senior Vice President (Officer), New
Concept Product Initiative (present position)
Managing Executive Officer (present
position)
Senior Vice President, Launch PlanningGroup for Certification Association
Leader, Power Device Enabling Group(present position)
Assistant Director (Administration), CSR &Environmental
Affairs Promotion Center (present position)
Joined Advantest Corporation
General Manager, SoC Tester Business
Division
Director
General Manager, 1st SoC Tester Business
Division
Executive Officer
Vice President, ATE Business Group(overseeing SoC Tester product)
Senior Vice President, 1st Test System
Business Group
Senior Vice President, DI Business Group
General Manager, DI Business Division
Director, Fujitsu Interconnect Technologies
Limited (present position)

Name (Date of birth)

Position(Group executive/function)

Date ofcommencement

4/20096/20096/20106/2011
Hideaki Imada(April 19, 1955)

Managing
Executive Officer

4/19784/20022/20036/20034/20046/20044/20056/20084/20096/20096/2011
Yasuhiro Kawata(October 5, 1953)

Executive Officer

4/19746/20014/20022/20036/20055/20076/200860

Business experience

Vice President (DI), System Solution
Business Group
General Manager, DI Business Division
General Manager, DI Solution Business
Division
Senior Vice President, System Solution
Business Group
General Manager, CE Support Division
Managing Executive Officer (present
position)
System Solution Business (present position)
Executive Vice President, System Solution
Group
Joined Advantest Corporation
General Manager, 2nd SoC Tester Business
Division
Leader, OAI Business Initiatives
Executive Officer
Vice President, ATE Sales Group
Vice President, Sales and Marketing Group
Vice President, Sales and Marketing Group(overseeing OAI)
Senior Vice President, 2nd Test System
Business Group
General Manager, Product Design
Initiatives 2
General Manager, Memory Tester Business
Division
Senior Vice President, Memory Tester
Business Group
Vice President (SE), System Solution
Business Group
Executive Vice President, Production Group(present position)
Managing Executive Officer (present
position)
Joined Advantest Corporation
General Manager, ATE Product Engineering
Division
General Manager, 2nd Memory Tester
Business Division
General Manager, 2nd SoC Tester Business
Division, ATE Business Group
Executive Officer (present position)
General Manager, 2nd SoC Tester Business
Division, 1st Test System Business Group
Senior Vice President, Cost Planning Group
General Manager, Cost Planning Division
Executive Vice President, Quality AssuranceGroup (present position)
General Manager, Quality Assurance
Division

Name (Date of birth)

Position(Group executive/function)

Date ofcommencement

4/2009Takashi Sugiura(March 8, 1957)

Executive Officer

4/19799/19986/2001
10/2001
6/20022/20036/20056/20066/20094/20107/2010Takashi Sekino(May 30, 1957)

Executive Officer

4/1982
4/1998
6/19986/2001
11/2001
4/20056/20065/20076/20096/2011
Soichi Tsukakoshi(February 1, 1960)

Executive Officer

4/19834/20086/20081/201061

Business experience

Assistant Director (Technology),
Environmental Management Center
Assistant Director (Technology), CSR &Environmental Affairs Promotion Center(present position)
Joined Advantest Corporation
Manager, ATE Global Marketing Department
Manager, ATE SoC Solution Business
Department
General Manager, Product Design Initiatives
General Manager, ATE Product Design
Initiatives
General Manager, Product Design Initiatives
General Manager, Product Design
Initiatives 1
Executive Officer (present position)
Senior Vice President, FA Business Group
General Manager, Handler Division
Vice President, Corporate Administration
Group
General Manager, Legal and Intellectual
Property Division
General Manager, Launch Planning Group
for Certification Association
Executive Vice President, Field Service
Group (present position)
Joined Advantest Corporation
Manager, 1st R&D Department, ATE
Technology Division
Manager, 2nd R&D Department, ATE 1st
Technology Division
Manager, 3rd R&D Department, ATE 1st
Technology Division
General Manager, ATE 1st Technology
Division
General Manager, 1st Technology Division
Executive Officer (present position)
Vice President, Technology Development
Group
Senior Vice President, Technology
Development Group
General Manager, 3rd Technology Division
Executive Vice President, ATE Unit
Development Group (present position)
Joined Advantest Corporation
General Manager, Strategic Sales Division
Executive Officer (present position)
Senior Vice President (Officer), Sales andMarketing Group
Leader, Domestic Account Sales Initiatives

Name (Date of birth)

Josef
Schraetzenstaller(June 16, 1957)

Position(Group executive/function)

Executive Officer

Date ofcommencement

Business experience

6/2012

Senior Vice President, Sales Division 1
Senior Vice President (Officer), Production
Group (present position)

11/1996
10/1997
4/20006/20084/20094/2012

R. Keith Lee
Executive Officer(December 15, 1955)

8/1984
7/19961/20046/20084/20094/2012
Makoto Nakahara(July 23, 1959)

Executive Officer

4/19835/2002
11/2006
1/20081/20106/20111/20124/2012
Toshiyuki Okayasu(June 2, 1962)

Executive Officer

4/19876/20076/200962

Joined Advantest (Europe) GmbH (currently
Advantest Europe GmbH)
Prokurist, Advantest (Europe) GmbH(currently Advantest Europe GmbH)Managing Director, Advantest (Europe)
GmbH (currently Advantest Europe GmbH)
Executive Officer, Advantest Corporation(present position)
Europe Sales, Sales and Marketing Group
Leader, EU Account Sales Initiatives
Managing Director (CEO), Advantest EuropeGmbH (present position)
Joined Takeda Riken America, Inc. (currently
Advantest America, Inc.)
General Manager, Custom Design
Engineering, Advantest America, Inc.
Chairman of the Board, President and CEO,
Advantest America, Inc.
Director, President and CEO, Advantest
America Corporation (Holding Co.)
Executive Officer, Advantest Corporation(present position)
America Sales, Sales and Marketing Group
Leader, US Account Sales Initiatives
Director, President and CEO, Advantest
America, Inc. (Present position)
Joined Advantest Corporation
Director, Chief Executive Officer andPresident, Advantest America Measuring
Solutions, Inc.
Manager, Development Purchasing &Innovative Procurement Planning
Department, Procurement GroupManager, 1st Purchasing department,
Production Group
General Manager, Global Marketing Division
Executive Officer (present position)
Senior Vice President (Officer), Strategic
Business Unit
Senior Vice President (Officer), Sales andMarketing Group (present position)
Division Manager, Sales Division 2 (present
position)
Joined Advantest Corporation
Manager, 5th R&D Department, 1stTechnology Division
Vice President, Technology Development
Group
General Manager, 2nd Technology Division

Name (Date of birth)Hans-Juergen
Wagner(January 19, 1960)

Position(Group executive/function)

Executive Officer

Date ofcommencement

6/2011

Executive Officer (present position)
Executive Vice President, ATE System
Development Group (present position)

1/19856/20067/2011Joined Hewlett-Packard Company
Vice President, Verigy Germany GmbH
Executive Officer (present position)
EVP, SOC Products, Verigy Ltd.
Chairman of the Board, President and CEO,Verigy Ltd.
Managing Director (R&D, CTO), Advantest
Europe GmbH (present position)

10/20114/2012
Yih-Neng Lee(June 23, 1958)

Executive Officer

11/1983
8/20054/20126/2012CH Wu(February 26, 1961)

Executive Officer

7/1984
12/1990
6/20066/2012

Kazuhiro Yamashita Executive Officer(December 18, 1961)

4/1984
10/20116/2012

Kenji Sato
(May 2, 1962)

Executive Officer

Business experience

4/19856/20064/20126/2012Joined Hewlett-Packard Company
VP and GM, Asia Sales Operation, Verigy(Shanghai) Co., Ltd.
Managing Director (CEO), Advantest(Singapore) Pte. Ltd. (present position)
Executive Officer (present position)
Joined Philips Electronic Taiwan Inc.
Joined Advantest Taiwan Inc.
CEO, Advantest Taiwan Inc. (present
position)
Executive Officer (present position)
Joined Advantest Corporation
Principal, Global Marketing, Strategic
Business Unit
Executive Officer (present position)
Executive Vice President, System Solution
Group (present position)
Joined Yokogawa-Hewlett-Packard Company
Representative Director and President,
Verigy (Japan) K.K.
Joined Advantest Corporation
Senior Vice President, Sales Division 1, Sales
and Marketing Group (present position)
Executive Officer (present position)
Senior Vice President (Officer), Sales andMarketing Group (present position)

None of the persons listed above was selected as director, corporate auditor or executive officer pursuant toan arrangement or understanding with Advantest’s major shareholders, customers, suppliers or others. There areno family relationships between any of the persons listed above.
6.B. COMPENSATION
Executive Compensation
The aggregate amount of compensation of all of the Company’s directors and corporate auditors wasapproximately ¥590 million during fiscal 2011. Of the foregoing, the aggregate amount of compensation for theCompany’s directors (outside corporate directors excluded) was ¥494 million (¥278 million in fixedcompensation, ¥101 million in bonus and ¥115 million in qualifying stock options), ¥57 million for theCompany’s corporate auditors (outside corporate auditors excluded) (¥38 million in fixed compensation,63¥14 million in bonus and ¥5 million in qualifying stock options) and ¥39 million for outside directors and outside
corporate auditors (¥29 million in fixed compensation and ¥10 million in qualifying stock options). The amountof compensation for Director Toshio Maruyama was ¥124 million (¥68 million in fixed compensation,¥26 million in bonus and ¥30 million in qualifying stock options). The amount of compensation for Director
Haruo Matsuno was ¥110 million (¥56 million in fixed compensation, ¥24 million in bonus and ¥30 million inqualifying stock options).
Compensation for directors and corporate auditors was authorized by resolutions of the general meeting ofshareholders on June 27, 2007 and to the extent compensation is within the authorized range, further
authorization is not required. For a description of the Company’s equity-based compensation plans, see “—ShareOwnership.”
The amounts of compensation for directors and corporate auditors set forth above includes fixedcompensation paid to two directors and two auditors who retired from their positions as of the closing of the 69th
ordinary general meeting of shareholders, which was held on June 24, 2011.
6.C. BOARD PRACTICES
Directors
The Board of Directors has the ultimate responsibility for the administration of the affairs of the Company.
The Company’s articles of incorporation limit the number of directors to ten. Directors are elected at a general
meeting of shareholders, and the standard term of directors is one year. Directors may serve any number ofconsecutive terms. The Board of Directors elects one or more representative directors from among its members,
each of whom has the authority individually to represent the Company. From among its members, the Board of
Directors may elect the chairman and the vice chairman. None of the directors of the Company has a service
contract with the Company that provides for benefits upon termination of service.
Pursuant to the Company Law of Japan (hereinafter in Item 6.C., “Company Law”) and the Company’s
articles of incorporation, and to the extent permitted by the laws and regulations, the Company may, byresolution of the Board of Directors, exempt liabilities of its directors (including persons who have previously
served as the Company’s directors) for failing to perform their duties. The Company may enter into contracts
with outside directors to limit their liabilities for a failure to perform their duties, provided that the maximum
amount of liabilities under such contracts shall be the total of the amounts provided in each item of Article 425,
Paragraph 1 of the Company Law.
Corporate Auditors
The Company’s articles of incorporation provide for no more than five corporate auditors and the Company
currently has two Standing Corporate Auditors and two outside corporate auditors. Corporate auditors are elected
at the general meeting of shareholders and the standard term of office of corporate auditors is four years. Under
the Company Law, at least half of the corporate auditors are required to be persons who have not been a director,
accounting counselor (if an accounting counselor is a corporation, an employee of such corporation who executes
its duties), executive officer, manager, or employee of the Company or any of its subsidiaries at any time in thepast. Corporate auditors may not at the same time be directors, accounting counselors (if an accounting counselor
is a corporation, an employee who executes its duties), executive officers, managers, or employees of theCompany or any of its subsidiaries. The Company increased the number of required outside corporate auditorsfrom one to two at the general meetings of shareholders held in June 2003 in order to strengthen the auditing
function of the board of corporate auditors. Corporate auditors are under a statutory duty to oversee theadministration of the Company’s affairs by its directors, to audit its financial statements to be submitted by its
Board of Directors to the general meetings of the shareholders and to report their opinions thereon. They are also
required to attend the meetings of the Board of Directors and to express their opinions, but are not entitled to
vote.
64

Corporate auditors constitute the board of corporate auditors. The board of corporate auditors has a statutory
duty to prepare and submit an audit report to the directors each year. A corporate auditor may note his or her
opinion in the audit report if his or her opinion is different from the opinion expressed in the audit report. The
board of corporate auditors is empowered to establish audit policy, methods to investigate the state of business
operations and assets and other matters relating to the execution of duties by corporate auditors.
Pursuant to the Company Law and the Company’s articles of incorporation, and to the extent permitted by
the laws and regulations, the Company may, by resolution of the Board of Directors, exempt liabilities of its
corporate auditors (including persons who have previously served as the Company’s corporate auditors) for
failing to perform their duties. The Company may enter into contracts with outside corporate auditors to limit
their liabilities for a failure to perform their duties, provided that the maximum amount of liabilities under suchcontracts shall be the total of the amounts provided in each item of Article 425, Paragraph 1 of the Company
Law.
6.D. EMPLOYEES
Set forth below is a table listing the total number of full-time employees and a breakdown of persons
employed by main category of activity and by geographic location, as of March 31, 2010, March 31, 2011 andMarch 31, 2012. The increase of the number of employees as of March 31, 2012 is primarily due to theacquisition of Verigy as a wholly-owned subsidiary of Advantest.
As of March 31,
2010
2011
2012

Full-Time Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,151 3,163
By Category of Activity:
Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
358
321
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
246
256
Customer Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
731
700
Manufacturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
579
674
Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,139 1,121
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
91
By Geographic Location:
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,413 2,404
Asia (excluding Japan) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
400
409
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
173
183
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
165
167

4,464
444
475
1,123
829
1,510
83
2,504
816
585
559

Most regular employees of the Company and its subsidiaries in Japan are members of one of the four labor
unions. None of Advantest’s overseas employees is a member of a union. Advantest considers its labor relations
with all of its workers to be good.
During the fiscal years ended March 31, 2010, 2011 and 2012, Advantest had an annual average of 217, 223
and 279 temporary employees, respectively.

656.E. SHARE OWNERSHIPThe following table sets forth the beneficial ownership of shares of common stock of the Company as ofMarch 31, 2012 of each of the Company’s directors, corporate auditors and executive officers as of March 31,
2012 and of directors, corporate auditors and executive officers newly elected in June, 2012.
Name of Record/Beneficial Owner

Number of Shares

Toshio Maruyama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Haruo Matsuno . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Naoyuki Akikusa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yasushige Hagio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yuichi Kurita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shinichiro Kuroe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sae Bum Myung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yuri Morita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Akira Hatakeyama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Megumi Yamamuro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masamichi Ogura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hiroshi Nakamura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yoshiaki Yoshida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masao Shimizu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hideaki Imada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yasuhiro Kawata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Takashi Sugiura . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Takashi Sekino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Soichi Tsukakoshi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Josef Schraetzenstaller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R. Keith Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Makoto Nakahara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Toshiyuki Okayasu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hans-Juergen Wagner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Osamu Karatsu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yih-Neng Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CH Wu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kazuhiro Yamashita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kenji Sato . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

160,162
143,472
20,76621,807101,114
86,63572,00027,85820,652
20,7245,000
81,00476,92872,00073,146
61,15175,74864,77561,50860,00060,00026,48026,23030,0000
12,00020,0004,000
6,000

Each of the persons listed above owns less than one percent of the issued and outstanding shares of common
stock of the Company.
The number of shares owned by the Company’s directors, corporate auditors and executive officers include
options that are currently exercisable for 1,401,000 shares of the Company’s common stock. For a description ofthese options, see “Stock Option Plan” below. The number of shares of common stock owned by the Company’s
directors, corporate auditors and executive officers reflects the number of shares that are owned through thedirector and corporate auditor stock ownership association and allocated to an individual director, corporate
auditor or executive officer. For a description of this association, see “—Stock Ownership Associations.” For a
description of the unit share system, see “Additional Information—The Unit Share System.”
Stock Option PlanAt the general ordinary meetings of shareholders or meeting of Board of Directors held in June 2008, June
2009, June 2010, June 2011, July 2011 and June 2012, the shareholders or the Board Directors of the Company
approved stock option plans for selected directors, corporate auditors, executive officers and employees of66

Advantest. The shareholders of the Company also approved the compensation amount of stock acquisition rights
to be granted as stock options to directors and corporate auditors of the Company. The following table shows
selected information related to these stock options.

Date of grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares to be issued/ delivered . . . . . . . . .
Issuance price per unit (100 shares) . . . . . . . . . . . . .
Exercise price per share . . . . . . . . . . . . . . . . . . . . . . .
Beginning of exercise period . . . . . . . . . . . . . . . . . . .
End of exercise period . . . . . . . . . . . . . . . . . . . . . . . .
Number of directors, corporate auditors andexecutive officers of the Company . . . . . . . . . . . .
Number of other employees . . . . . . . . . . . . . . . . . . .

Date of grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares to be issued/ delivered . . . . . . . . .
Issuance price per unit (100 shares) . . . . . . . . . . . . .
Exercise price per share . . . . . . . . . . . . . . . . . . . . . . .
Beginning of exercise period . . . . . . . . . . . . . . . . . . .
End of exercise period . . . . . . . . . . . . . . . . . . . . . . . .
Number of directors, corporate auditors andexecutive officers of the Company . . . . . . . . . . . .
Number of other employees . . . . . . . . . . . . . . . . . . .

Date of grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares to be issued/ delivered . . . . . . . . .
Issuance price per unit (100 shares) . . . . . . . . . . . . .
Exercise price per share . . . . . . . . . . . . . . . . . . . . . . .
Beginning of exercise period . . . . . . . . . . . . . . . . . . .
End of exercise period . . . . . . . . . . . . . . . . . . . . . . . .
Number of directors, corporate auditors andexecutive officers of the Company . . . . . . . . . . . .
Number of other employees . . . . . . . . . . . . . . . . . . .

Twentieth series

Twenty-first series

Twenty-second series

July 10, 2008
182,000¥36,900¥2,653
April 1, 2009
March 31, 2013

July 10, 2008
522,000¥0¥2,653
April 1, 2009
March 31, 2013

April 1, 2009
12,000¥0¥2,653
May 1, 2009
March 31, 2013

13
0

15
174

0
8

Twenty-third series

Twenty-fourth series

Twenty-fifth series

July 10, 2009
338,000¥41,700¥1,844
April 1, 2010
March 31, 2014

July 12, 2010
308,000¥53,500¥2,089April 1, 2011
March 31, 2015

July 12, 2011
988,000¥49,600¥1,529April 1, 2012
March 31, 2016

25
0

23
0

23
228

Twenty-sixth series

Twenty-seventh series

August 16, 2011
658,000¥26,100¥1,529April 1, 2012
March 31, 2016

July 12, 2012
2,542,000
to be determined
to be determined
April 1, 2013
March 31, 2017

5
55

28
325

67

The Company acquired Verigy on July 2011. As one of the conditions precedent to such acquisition, theCompany has assumed the stock options which had been granted by Verigy to the directors and employees of
Verigy and its subsidiaries at the time of the acquisition, and has granted them stock options with terms andconditions that are substantively the same as those under which the relevant stock options were granted by
Verigy. The Board of Directors of the Company on July, 2011 has passed a resolution to grant to the directors
and employees of Verigy and its subsidiaries the stock options to be issued by the Company. The following tableshows selected information related to these stock options.
Plan first ~ Plan
eighty-ninth

Date of grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares to be issued/ delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issuance price per unit (100 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise price per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Beginning of exercise period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
End of exercise period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of directors, corporate auditors and executive officers of the Company . . . . . . .
Number of other employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

July 20, 2011
2,387,046 (total 89
types of stock
options)¥4 ~ ¥854$7.84 ~ $34.76
July 20, 2011
July 29, 2011 ~January 31, 2018
0386 (total 89 types ofstock options)

Employee Stock Purchase Program
Since August 1, 2002, eligible employees of Advantest America Corporation and its U.S. subsidiaries areable to participate in an employee stock purchase program. Under the program, each eligible employee may
authorize payroll deductions of up to 15% of their base salary toward the purchase of ADRs representing sharesof common stock of the Company. In addition, the Company will make an additional contribution equal to 15%
of each eligible employee’s payroll deductions toward the purchase of the ADRs.
Stock Ownership Associations
The Company’s director and corporate auditor stock ownership association is a partnership formed by thecurrent and former directors, executive officers and corporate auditors of the Company for the purpose of
acquiring the Company’s shares of common stock. Only current directors, executive officers and corporate
auditors and company advisors that formerly were directors, corporate auditors and executive officers of theCompany may join the director and corporate auditor stock ownership association. The Company established its
director and corporate auditor stock ownership association in 1983. Any member of the association may requestthat record ownership of the stock held by that member be transferred, in lots of a single unit, to that member. As
of March 31, 2012, 23 current and former directors, executive officers, corporate auditors and company advisors
were members of the director, executive officer and corporate auditor stock ownership association, and theassociation held 34,416 shares of the Company’s common stock. The Company also has an employee stock
ownership association for other employees in Japan. As of March 31, 2012, the association had 557 members andheld 457,816 shares of the Company’s common stock.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. MAJOR SHAREHOLDERS
As of March 31, 2012, 173,271,380 shares of the Company’s common stock were outstanding. Beneficial
ownership of the Company’s common stock in the table below was prepared from publicly available records ofthe filings made by the Company’s shareholders regarding their ownership of the Company’s common stock
under the Financial Instruments and Exchange Law of Japan.
68Under the Financial Instruments and Exchange Law of Japan, any person who becomes, beneficially andsolely or jointly, a holder, including, but not limited to, a deemed holder who manages shares for another holder
pursuant to a discretionary investment agreement, of more than 5% of the shares with voting rights of a company
listed on a Japanese stock exchange (including ADSs representing such shares) must file a report concerning theshareholding with the Director of the relevant local finance bureau. A similar report must be filed, with certain
exceptions, if the percentage of shares held by a holder, solely or jointly, of more than 5% of the total issued
shares of a company increases or decreases by 1% or more, or if any change to a material matter set forth in any
previously filed reports occurs.
Based on publicly available information, the following table sets forth the beneficial ownership of holders ofmore than 5% of the Company’s common stock as of the dates indicated in the reports described below.
Name of Beneficial Owner

Fujitsu Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Bank of Tokyo-Mitsubishi UFJ, Ltd., and its related entities . . . . . . . . .
Sumitomo Mitsui Trust Bank, Limited and its related entities . . . . . . . . . . . .
Nomura Securities Co., Ltd. and its related entities . . . . . . . . . . . . . . . . . . . .

Number of Shares

Percentage of
Outstanding Shares

20,142,792
16,240,791
14,536,300
10,074,023

10.09%
8.14%
7.28%
5.05%

The number of shares owned by Fujitsu Limited is based on a report filed under the Securities and Exchange
Law of Japan stating that Fujitsu held or was deemed to hold beneficially, as of February 23, 2005,
20,142,792 shares of the Company’s common stock. This figure includes 20,142,600 shares of the Company’scommon stock held by the trustee of a retirement benefit plan of Fujitsu. Fujitsu retained beneficial ownership ofthese 20,142,600 shares of common stock.
The number of shares owned by The Bank of Tokyo-Mitsubishi UFJ, Ltd. and its related entities is based onreports filed under the Financial Instruments and Exchange Law of Japan stating that The Bank of TokyoMitsubishi UFJ, Ltd. and its related entities held or were deemed to hold beneficially, as of December 12, 2011,16,240,791 shares of the Company’s common stock.
The number of shares owned by Sumitomo Mitsui Trust Bank, Limited and its related entities is based onreports filed under the Financial Instruments and Exchange Law of Japan stating that Sumitomo Mitsui Trust
Bank, Limited and its related entities held or were deemed to hold beneficially, as of April 13, 2012, 14,536,300
shares of the Company’s common stock.
The number of shares owned by Nomura Securities Co., Ltd. and its related entities is based on reports filed
under the Financial Instruments and Exchange Law of Japan which state that Nomura Securities Co., Ltd. and its
related entities held or were deemed to hold beneficially, as of April 13, 2012, 10,074,023 shares of theCompany’s common stock.
Based on information made publicly available on or after April 1, 2009, the following table describes
transactions resulting in a 1% or more change in the percentage ownership held by major beneficial owners of theCompany’s common stock.

69

Name of Shareholder
The Bank of Tokyo-Mitsubishi UFJ,
Ltd. and its related entities . . . . . .
J.P.Morgan Securities Ltd. and its
related entities . . . . . . . . . . . . . . . .
Nomura Securities Co., Ltd. and its
related entities . . . . . . . . . . . . . . . .
J.P.Morgan Securities Ltd. and its
related entities . . . . . . . . . . . . . . . .
J.P.Morgan Whitefriars Inc. and its
related entities . . . . . . . . . . . . . . . .
Manning & Napier Advisors, Inc. . . .
J.P.Morgan Whitefriars Inc. and its
related entities . . . . . . . . . . . . . . . .
Manning & Napier Advisors, Inc. . . .
Manning & Napier Advisors, Inc. . . .
The Sumitomo Trust and Banking
Co., Ltd. and its related entities . .
Manning & Napier Advisors, Inc. . . .
Manning & Napier Advisors, Inc. . . .
Manning & Napier Advisors, Inc. . . .
Manning & Napier Advisors, Inc. . . .
Nomura Securities Co., Ltd. and its
related entities . . . . . . . . . . . . . . . .

Shares Owned
Prior toTransaction

July 27, 2009

10,034,102

December 15, 2009—

January 29, 2010

10,171,766

5.10%

May 31, 2010

10,712,896

5.37%

July 30, 2010
August 3, 2010——

September 15, 2010
November 9, 2010
March 10, 2011

10,007,937
10,019,910
12,188,570

5.01%
5.02%
6.11%

April 15, 2011
May 27, 2011
August 15, 2011
August 18, 2011
August 23, 2011—14,274,147
16,710,647
14,141,527
12,096,627

—
7.15%
8.37%
7.09%
6.06%

April 13, 2012—

Date ofTransaction

Percentage

Number of
SharesChangedShares Owned
After theTransaction

Percentage

5.03%

4,535,136

14,569,238

7.30%

—

10,712,896

5.37%(3,061,933)

7,109,773

3.56%(1,490,751)

9,222,145

4.62%

10,007,937
10,019,910

5.01%
5.02%

(1,153,468)
2,168,660
2,085,577

8,854,469
12,188,570
14,274,147

4.44%
6.11%
7.15%

—
2,436,500(2,569,120)(2,044,900)(2,440,100)

13,703,400
16,710,647
14,141,527
12,096,627
9,656,527

6.87%
8.37%
7.09%
6.06%
4.84%

10,074,023

5.05%

—

—
—

—

—
—

—

As of March 31, 2012, the Company had 173,271,380 outstanding shares of common stock. According to
JPMorgan Chase Bank, depositary for the Company’s ADSs, as of March 31, 2012, 720,843 shares of theCompany common stock were held in the form of ADRs and there were three ADR holders of record in the U.S.
According to the Company’s register of shareholders, as of March 31, 2012, there were 51,373 holders ofcommon stock of record worldwide. As of March 31, 2012, there were 82 record holders of the Company’scommon stock with addresses in the U.S., whose shareholdings represented 7.6% of the outstanding common
stock on that date. Because some of these shares were held by brokers or other nominees, the number of record
holders with addresses in the U.S. might not fully show the number of beneficial owners in the U.S.
None of the Company’s shares of common stock entitles the holder to any preferential voting rights.
Advantest knows of no arrangements the operation of which may at a later time result in a change ofcontrol.
7.B. RELATED PARTY TRANSACTIONSBusiness Relationships
Advantest sells products to and purchases parts from Fujitsu Limited, which owns approximately 12% of thevoting rights of Advantest, and its subsidiaries. Advantest sells products to Fujitsu and its subsidiaries in arm’slength transactions. Advantest purchases parts from Fujitsu and its subsidiaries after receiving competitive bids
from several suppliers. Advantest derived net sales of ¥1,847 million in fiscal 2011 from the sale of products to
Fujitsu and its subsidiaries. Advantest purchased parts from Fujitsu and its subsidiaries in the amount of¥6,155 million in fiscal 2011. Advantest had receivables from Fujitsu and its subsidiaries in the amount of¥459 million as of March 31, 2012. Advantest had payables to Fujitsu and its subsidiaries in the aggregate
amount of ¥2,653 million as of March 31, 2012 Advantest expects to continue to engage in arm’s-lengthtransactions with Fujitsu and its subsidiaries in the future.
Mr. Akikusa, a Director of the Company since 2006, currently serves as a Senior Executive Advisor of
Fujitsu Limited. Mr. Yamamuro, a Corporate Auditor of the Company since 2006, currently serves as a corporate
auditor of Fujitsu Limited. Mr. Ogura, a Corporate Auditor of the Company since 2011, currently serves as a fulltime standing corporate auditor of Fujitsu Limited.
70

Loans
As of March 31, 2012, the Company has no outstanding loans to its directors and executive officers.
7.C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8.

FINANCIAL INFORMATION

8.A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
1-4. Consolidated Financial Statements. Advantest’s audited consolidated financial statements are included
under “Item 18—Financial Statements.” Except for Advantest’s consolidated financial statements included under
Item 18, no other information in this annual report has been audited by Advantest’s independent registered public
accounting firm.
5. Not applicable.
6. Export Sales. See “Information on the Company—Business Overview—Geographic Sales.”7. Legal and Arbitration Proceedings. See “Information on the Company—Business Overview—Legal
Proceedings.”
8. Dividend Policy. See “Key Information—Selected Financial Data—Dividends.”
8.B. SIGNIFICANT CHANGES
See “Operating and Financial Review and Prospects,” “Key Information—Risk Factors” and “Informationon the Company—Business Overview—Industry Overview” for a discussion of significant adverse changes since
the date of Advantest’s latest annual financial statements.

71

ITEM 9.

THE OFFER AND LISTING

9.A. OFFER AND LISTING DETAILSThe following table sets forth for the periods shown the reported high and low sales prices of theCompany’s common stock on the Tokyo Stock Exchange and the ADSs on the New York Stock Exchange.
Tokyo Stock Exchange
Price Per Share
High
Low

New York Stock Exchange
Price Per ADS
High
Low

Fiscal year ended March 31,

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,770
3,100
2,615
2,516
1,663

2,070
996
1,423
1,179
671

48.47
29.71
28.07
26.89
19.95

19.45
10.82
15.14
15.86
8.89

2,516
2,020
1,916
1,924
1,663
1,591
970
1,323

1,860
1,571
1,456
1,179
1,387
802
718
671

26.89
22.72
22.68
22.90
19.95
19.36
12.23
15.99

20.58
18.87
18.32
15.86
17.17
10.38
9.25
8.89

899
882
1,186
1,323
1,349
1,386

718
671
837
1,047
1,104
1,040

11.30
11.43
14.20
15.99
16.69
17.22

9.25
8.89
11.34
13.08
13.78
13.44

Financial quarter ended/ending

June 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Month ended

December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 29, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
April 30, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.B. PLAN OF DISTRIBUTION
Not applicable.
9.C. MARKETSThe Company’s common stock is traded on the First Section of the Tokyo Stock Exchange. In April 2000,
the Company’s common stock was added to the Nikkei Stock Average, which is an index of 225 selected stocks
from the First Section of the Tokyo Stock Exchange.
Since September 17, 2001, ADSs evidenced by ADRs have been traded and listed on the New York Stock
Exchange through a sponsored ADR facility operated by JPMorgan Chase Bank, as depositary. Each ADS
represents one share of the Company’s common stock.
9.D. SELLING SHAREHOLDERS
Not applicable.
729.E. DILUTION
Not applicable.
9.F. EXPENSES OF THE ISSUE
Not applicable.
ITEM 10.

ADDITIONAL INFORMATION

10.A. SHARE CAPITAL
Not applicable.
10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION
Set forth below is information relating to the Company’s common stock, including brief summaries of therelevant provisions of the Company’s articles of incorporation and share handling regulations and of theCompany Law of Japan (the “Company Law,” hereinafter in Item 10.B. the same) and related legislation, all as
currently in effect.
GeneralThe Company’s authorized number of shares to be issued is 440,000,000 shares. The number of theCompany’s issued share capital as of March 31, 2012, including treasury shares, was 199,566,770. All of theissued shares are fully paid and non-assessable.
The Company’s share registration agent is Tokyo Securities Transfer Agent Co., Ltd., located at 6-2,
Otemachi 2-chome, Chiyoda-ku, Tokyo 100-0004, Japan. The shares have no par value.
On June 27, 2012, the Company changed its share registration agent to Mitsubishi UFJ Trust and Banking
Corporation, located at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan.
The registered holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly,
holders of ADSs will not be able to directly assert their shareholders’ rights against the Company.
In January 2009, the share certificates of all Japanese companies listed on stock exchanges in Japan,
including the common stock of the Company, were delisted and became subject to a new book-entry transfer
system. Under the new system, the Company’s shares are administered by being recorded in a shareholder’stransfer account book at the Japan Securities Depositary Center, Inc. (“JASDEC”), which is a book-entry transfer
institution, or at securities firms, banks and other account management institutions. JASDEC will provide theCompany with information pertaining to the Company’s shareholders that it has collated from each of therelevant account management institutions as of March 31 and September 30, or at such time as the Company
makes a request for information pertaining to its shareholders based on justifiable grounds. The Company willrecord or register such information received from JASDEC on its register of shareholders.
Shareholders wishing to assert the minority rights and other rights set forth in Article 147, Paragraph 4 of
the Law on Book-Entry Transfer of Corporate Bonds, Stock and Other Securities must submit an individual
shareholder notice to the account management institution at which such shareholder has opened a transfer
account. The account management institution will promptly inform JASDEC of such individual shareholder
notice and JASDEC will, in turn, provide information pertaining to the shareholder (the individual shareholder
notice) to Advantest through its share registration agent.
73

In order for a transfer of shares to become effective, the amount of shares transferred must be recorded on
the transfer account books. Moreover, the Company requires that a transfer of shares must be recorded in its
shareholders’ register in order for such transfer to be perfected.
Objects and Purposes
Article 2 of the Company’s articles of incorporation states that its objective is to engage in the following
business activities:•

the manufacture and sale of electric, electronic and physicochemical appliances and their applied
equipment;•

the manufacture and sale of appliances, equipment and software related to any of the foregoing items;•

the lease and rental of equipment, appliances and other products incidental to each of the foregoing
items;•

the temporary personnel service business; and•any and all businesses incidental to any of the foregoing items.

Dividends
Dividends—General
Under its articles of incorporation, the Company’s fiscal year closes on March 31 of each year, and year-end
dividends, if any, are paid to shareholders (or registered pledgees thereof) of record at that date.
Under the Company Law, subject to certain limitation on the distributable surplus, dividends, if any, may be
paid to shareholders and pledgees of shares of record as of a record date as set forth by the Company’s articles ofincorporation or as determined by the Board of Directors from time to time. Dividends shall be paid by way of
distribution of surplus. Dividends may be distributed in cash, or in kind subject to certain conditions being met.
The Company may make distribution of dividends by a resolution of a general meeting of shareholders or by aresolution of the Board of Directors.
Dividends—Interim cash dividends
In addition to year-end cash dividends, pursuant to Article 459, Paragraph 1, Item 4 of the Company Law,
the Board of Directors may by resolution declare, an interim cash surplus dividend to shareholders, and pledgesof record at September 30 of each year.
Dividends—Legal reserve
When a stock company like the Company makes distribution of surplus, it shall set aside in its legal reserveor additional paid-in capital an amount equal to 10 percent of the amount of the surplus to be decreased as aresult of such distribution of surplus in accordance with the provisions set forth in an ordinance of the Ministry ofJustice.
Dividends—Distributable amountUnder the Company Law, the Company is permitted to make distribution of surplus to the extent that theaggregate book value of the assets to be distributed to shareholders does not exceed the Distributable Amount (asdefined below) as at the effective date of such distribution of surplus.
74

The amount of surplus at any given time shall be the amount of the Company’s assets and the book value of
the Company’s treasury stock after subtracting the amounts of the following items (1) through (4) as they appear
on the Company’s non-consolidated balance sheet as at the end of the Company’s last fiscal year, and afterreflecting the changes in the Company’s surplus after the end of the Company’s last fiscal year, by adding theamounts of the following items (5), (6) and (7) and/or subtracting the amounts of the following items (8), (9) and(10):(1) its liabilities;(2) its stated capital;(3) its additional paid-in capital and legal reserve;(4) other amounts as provided for by an ordinance of the Ministry of Justice;(5) (if the Company transferred its treasury stock after the end of the last fiscal year) the amount of thetransfer price of its treasury stock after subtracting the book value thereof;(6) (if the Company decreased its stated capital after the end of the last fiscal year) the amount of decrease
in its stated capital (excluding the amount transferred to the additional paid-in capital or legal reserve);(7) (if the Company decreased its additional paid-in capital or legal reserve after the end of the last fiscal
year) the amount of decrease in its additional paid-in capital or legal reserve (excluding the amounttransferred to the stated capital);(8) (if the Company cancelled its treasury stock after the end of the last fiscal year) the book value of its
treasury stock so cancelled;(9) (if the Company distributed surplus to shareholders after the end of the last fiscal year) the amount of
the assets distributed to shareholders by way of such distribution of surplus; and(10) other amounts as provided for by an ordinance of the Ministry of Justice including (if the Company
reduced the surplus and increased its stated capital, additional paid-in capital or legal reserve after theend of the last business year) the amount of such reduction and (if the Company has distributed thesurplus to the shareholders after the end of the last fiscal year) the amount set aside in additional
paid-in capital or legal reserve (if any) as required by the ordinances of the Ministry of Justice.
The Distributable Amount of the Company at any given time shall be the aggregate amount of (a) the
surplus and (b) the amount of the transfer price of its treasury stock in the same period, after subtracting theamounts of the following items:(1) the book value of its treasury stock;(2) (if the Company transferred its treasury stock after the end of the last fiscal year) the amount of thetransfer price of its treasury stock; and(3) other amounts as provided for by an ordinance of the Ministry of Justice including (if the sum of
one-half of goodwill and the deferred assets exceeds the total of stated capital, additional paid-in
capital and legal reserve, each such amount being that appearing on the non-consolidated balance sheet
as of the end of the last fiscal year) all or certain part of such exceeding amount as calculated inaccordance with the ordinances of the Ministry of Justice.
In addition, if the Company elects to become a company that uses its consolidated balance sheet forcalculating distributable dividends (thus, becomes “a company subject to regulations in respect of dividends
determined based on consolidated accounts”), the Company would be required to deduct the excess amountcalculated in the following manner from the distributable amount of surplus. Such excess amount is determinedas (x) the total amount of the amount of shareholders’ equity on unconsolidated balance sheet at the end of thelast fiscal year and other amounts as provided for by an ordinance of the Ministry of Justice exceeds (y) the total
amount of the amount of shareholders’ equity on its consolidated balance sheet at the end of its last fiscal year
and other amounts as provided for by an ordinance of the Ministry of Justice.
75

If the Company prepares extraordinary financial statements (as described below) and such extraordinary
financial statements are approved at a meeting of the Board of Directors or the shareholders (if the Company
Law so requires), the Company would be required to adjust the distributable amount for surplus by considering
the profits and losses and the amount in respect of issuance of treasury stock during the period covered in such
extraordinary financial statements.
The Company may prepare extraordinary unconsolidated financial statements that consist of a balance sheet
as of a date within the fiscal year immediately following the last fiscal year (an extraordinary settlement date)and profit and loss covering a period of the first day of the current fiscal year up to such extraordinary settlement
date. Such extraordinary financial statements prepared in the foregoing manner must be audited by corporate
auditors and accounting auditors.
Dividends—Ex-dividend date and prescription
In Japan, the ex-dividend date and the record date for dividends precede the date of determination of theamount of the dividend to be paid. The market price of shares generally becomes ex-dividend on the third
business day before the record date.
Under the articles of incorporation, the Company is not required to pay any cash dividends unclaimed for aperiod of three years after the date on which the dividends first become payable.
For information as to Japanese taxes on dividends, see “—Taxation—Japanese Taxation.”
Capital Accounts
The amount of the issue price of new shares (with certain exceptions) is required to be accounted for asstated capital, although the Company may account for an amount not exceeding one-half of the issue price asadditional paid-in capital.
Under the Company Law, a resolution of general meetings of shareholders is generally required for suchtransfer of the additional paid-in capital and legal reserve to the stated capital.
The Company may also reduce the sum of its legal reserve and additional paid-in capital by resolution of ageneral meeting of shareholders. Under the Company Law, the Company may reduce the sum of its legal reserve
and additional paid-in capital without the limitation of the amount to be reduced as mentioned above.
All or any part of the surplus which may be distributed as dividends may also be transferred to stated capitalby resolution of a general meeting of shareholders.
Stock Split
The Company may at any time split the outstanding shares into a greater number of shares by resolution of
the Board of Directors. The Company must give public notice of the stock split, specifying a record date for thestock split, not less than two weeks prior to the record date.
Consolidation of Shares
The Company may at any time consolidate shares in issue into a smaller number of shares by a special
shareholders resolution (See “Voting Rights”). When a consolidation of shares is to be made, the Company must
give public notice or notice to each shareholder within two weeks from the date of entry into force. The
Company must disclose the reason for the consolidation of shares at the general meeting of shareholders.
76

The Unit Share System
GeneralConsistent with the requirements of the Company Law, the Company’s articles of incorporation provide that
100 shares constitute one “unit.” Although the number of shares constituting a unit is included in the articles ofincorporation, any amendment to the articles of incorporation reducing (but not increasing) the number of sharesconstituting a unit or eliminating the provisions for the unit of shares may be made by a resolution of the Boardof Directors rather than by a special shareholders resolution, which is otherwise required for amending thearticles of incorporation. The number of shares constituting one unit, however, cannot exceed 1,000 shares orone-200th of the number of the Company’s issued share capital (including treasury stock).

Voting Rights under the Unit Share System
Under the unit share system, shareholders shall have one voting right for each unit of shares that they hold.
Any number of shares less than a full unit will carry no voting rights.

Repurchase by the Company of Shares Constituting Less Than a Full Unit
A holder of shares constituting less than a full unit may require the Company to purchase those shares attheir market value in accordance with the provisions of the Company’s share handling regulations.

Request by a Holder of Shares of Sales by the Company of Shares to Constitute a Full Unit
The Company’s articles of incorporation provide that a holder of shares constituting less than a full unit may
request the Company to sell to such holder such amount of shares which will, when added together with theshares constituting less than a full unit, constitute a full unit of shares in accordance with the provisions of theCompany’s share handling regulations.

Effect of the Unit Share System on Holders of ADRs
A holder who owns ADRs evidencing less than 100 ADSs will indirectly own less than a whole unit ofshares of common stock. Although, as discussed above, under the unit share system holders of less than a unit
have the right to require the Company to purchase their shares, holders of ADRs evidencing ADSs that represent
other than integral multiples of whole units are unable to withdraw the underlying shares of common stock
representing less than a unit and, therefore, are unable, as a practical matter, to exercise the rights to require theCompany to purchase such underlying shares. As a result, access to the Japanese markets by holders of ADRs
through the withdrawal mechanism will not be available for dispositions of shares of common stock in lots lessthan a unit. The unit share system does not affect the transferability of ADSs, which may be transferred in lots ofany size.

General Meeting of Shareholders
The Company holds its ordinary general meeting of shareholders within three months after the end of a
fiscal year and normally in June of each year in Tokyo, Japan. In addition, the Company may hold anextraordinary general meeting of shareholders whenever necessary by giving at least two weeks’ advance notice.
Under the Company Law, notice of any shareholders’ meeting must be given to each shareholder having voting
rights or, in the case of a non-resident shareholder, to his resident proxy or mailing address in Japan inaccordance with the Company’s share handling regulations, at least two weeks before the date of the meeting.
The record date for an ordinary general meeting of shareholders is March 31 each year.
77Any shareholder holding at least 300 voting rights or 1% of the total number of voting rights for a period of
six months or longer may propose a matter to be considered at a general meeting of shareholders by submitting arequest to a representative director of the Company at least eight weeks before the date of such meeting.
Voting Rights
A holder of shares constituting one or more whole units is entitled to one voting right per unit of sharessubject to the limitations on voting rights set forth in the following paragraph. In general, under the Company
Law, a resolution can be adopted at a general meeting of shareholders by a majority of voting rights represented
at the meeting. The Company Law and the Company’s articles of incorporation require a quorum for the electionof directors and corporate auditors of not less than one-third of the voting rights of all shareholders. The
Company’s shareholders are not entitled to cumulative voting in the election of directors. A corporateshareholder whose outstanding shares are directly or indirectly owned by the Company or, due to other causes,
whose management is being controlled in substance by the Company as provided for by an ordinance of the
Ministry of Justice, does not have voting rights.
Shareholders may exercise their voting rights through proxies if those proxies are also shareholders who
have voting rights.
The Company Law provides that a quorum of at least one-third of voting rights of shareholders that are
eligible to vote must be present at a shareholders’ meeting to approve any material corporate actions, such as:(1) amendment of the articles of incorporation (except in cases in which a shareholders’ resolution is not
required);(2) acquisition of its own shares from a specific party;(3) consolidation of shares;(4) any issue or transfer of new or treasury shares at a “specially favorable” price (or any issue of stockacquisition rights, or bonds with stock acquisition rights at “specially favorable” conditions) to any
persons other than shareholders;(5) the removal of a corporate auditor;(6) the exemption of liability of a director or corporate auditor with certain exceptions;(7) a reduction of stated capital meeting certain conditions;(8) a distribution of in-kind dividends which meets certain requirements;(9) dissolution, merger, or consolidation with certain exceptions in which a shareholders’ resolution is not
required;(10) the transfer of the whole or a material part of the business;(11) the taking over of the whole of the business of any other corporation with certain exceptions in which ashareholders’ resolution is not required;(12) share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships
with certain exceptions in which a shareholders’ resolution is not required; or(13) separating of the corporation with certain exceptions in which a shareholders’ resolution is not
required.
At least two-thirds of voting rights eligible to vote that are represented at the meeting must approve theseactions.
The voting rights of holders of ADSs are exercised by the depositary based on instructions from those
holders. With respect to voting by holders of ADRs, see “Description of American Depositary Receipts” set forthin the Company’s registration statement on Form F-1 filed with the Securities and Exchange Commission on
July 22, 2002.
78

Rights to be Allotted Shares
Holders of shares have no preemptive rights under the Company’s articles of incorporation. Under theCompany Law, the Board of Directors may, however, determine that shareholders shall be given rights to be
allotted shares in connection with a particular issue or transfer of new or treasury shares, or stock acquisitionrights. In this case, the rights must be given on uniform terms to all shareholders as of a specified record date byat least two weeks’ prior public notice to shareholders of the record date.
Rights to be allotted new or treasury shares are non-transferable. A shareholder, however, may be allocatedstock acquisition rights for free, in which case such stock acquisition rights may be transferred to a third party.
Stock Acquisition Rights
Subject to certain requirements, the Company may issue stock acquisition rights by resolution of the Boardof Directors. Except where the issue would be on “especially favorable” terms, the issue of stock acquisitionrights may be authorized by a resolution of the Board of Directors. Holders of stock acquisition rights may
exercise their rights to acquire a certain number of shares within the exercise period as prescribed in the terms of
their stock acquisition rights. Upon exercise of stock acquisition rights, the Company will be obliged to issue therelevant number of new shares or alternatively to transfer the necessary number of existing shares held by it.
Liquidation Rights
In the event of a liquidation of the Company, the assets remaining after payment of all debts, liquidation
expenses and taxes will be distributed among the shareholders in proportion to the respective numbers of shares
they own.
Liability to Further Calls or Assessments
All of the Company’s currently outstanding shares, including shares represented by the ADSs, are fully paid
and non-assessable.
Record Date
March 31 of each year is the record date for the Company’s year-end dividends, if declared. A holder ofshares constituting one or more whole units who is registered as a holder on the Company’s register ofshareholders at the close of business as of March 31 is entitled to exercise shareholders’ voting rights at theordinary general meeting of shareholders with respect to the fiscal year ending on that March 31. September 30
of each year is the record date for interim dividends, if declared. In addition, the Company may set a record datefor determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’public notice.
The shares generally trade ex-dividend or ex-rights in the Japanese stock exchanges on the third business
day before a record date (or if the record date is not a business day, the fourth business day prior thereto), for the
purpose of dividends or rights offerings.
Repurchase by the Company of Shares
The Company may acquire its own shares (i) through a stock exchange on which such shares are listed or by
way of tender offer (pursuant to an ordinary resolution of a general meeting of shareholders or a resolution of theBoard of Directors), (ii) by purchase from a specific party (pursuant to a special resolution of a general meetingof shareholders), or (iii) from a subsidiary of the Company (pursuant to a resolution of the Board of Directors).
When such acquisition is made by the Company from a specific party other than a subsidiary of the Company,
79

any other shareholder may make a demand to a representative director, more than five calendar days prior to therelevant shareholders’ meeting, that the Company also purchase the shares held by such shareholder. However,under the Company Law, the acquisition of its own shares at a price not exceeding the then market price to beprovided under an ordinance of the Ministry of Justice will not trigger the right of any shareholder to include
him/her as the seller of his/her shares in such proposed purchase. Any such acquisition of shares must satisfy
certain requirements and shall be integrated into regulations governing financial resources relating to the
distribution of distributable surplus to shareholders. See “Additional Information—Memorandum and Articles of
Association—Dividends—Distributable amount.”
Shares acquired by the Company may be held by it for any period or may be cancelled by resolution of theBoard of Directors. The Company may also transfer to any person the shares held by it, subject to a resolution of
the Board of Directors, and subject also to other requirements similar to those applicable to the issuance of newshares. The Company may also utilize its treasury stock for the purpose of transfer to any person upon exercise ofstock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange or
corporate split through exchange of treasury stock for shares or assets of the acquired company.
The Company Law generally prohibits any subsidiary of the Company from acquiring shares of theCompany.
Disposal of the Shares by the Company
The Company is not required to send notices to a shareholder if notices to such shareholder fail to arrive
continuously for five years or more at the registered address of the shareholder in the Company’s register ofshareholders or at the address otherwise notified to the Company.
In addition, the Company may dispose of the Shares at the then market price of the Shares by a resolution of
the Board of Directors and after giving at least three months’ prior public notice as well as individual notice tothe shareholder at the registered address of the shareholder in the Company’s register of shareholders or to theaddress otherwise notified to the Company, and hold or deposit the proceeds for the shareholder, the location ofwhich is unknown, if (i) notices to the shareholder fail to arrive continuously for five years or more at theregistered address of the shareholder in the Company’s register of shareholders or at the address otherwise
notified to the Company, and (ii) the shareholder fails to receive surplus dividends on the Shares continuously forfive years or more at the address registered in the Company’s register of shareholders or at the address otherwise
notified to the Company.
Acquisition or Disposition of Shares
Under the Foreign Exchange and Foreign Trade Law and the cabinet orders and ministerial ordinances
thereunder (collectively, the “Foreign Exchange Regulations”), all aspects of regulations on foreign exchange
and trade transactions are, with minor exceptions relating to inward direct investments (which are not generally
applicable to the Company’s shares), only subject to post transaction reporting requirements. Acquisitions anddispositions of shares of common stock or ADSs by non-residents of Japan (including foreign corporation notresident in Japan) are generally not subject to this reporting requirement. However, the Minister of Finance has
the power to impose a licensing requirement for transactions in limited circumstances.
Dividends and Proceeds of Sales
Under the Foreign Exchange Regulations as currently in effect, dividends paid on, and the proceeds of salesin Japan of, shares held by non-residents of Japan may in general be converted into any foreign currency andrepatriated abroad. The acquisition of shares by non-residents of Japan by way of stock splits is not subject to anyof the foregoing notification or reporting requirements.
80Reporting of Substantial Shareholdings
Pursuant to the Financial Instruments and Exchange Law of Japan and regulations thereunder, a person orgroup of persons beneficially holding more than 5% of the total shares with voting rights (for this purpose sharesissuable upon exercise of stock acquisition rights held by the person or persons are counted in the calculation of
the holding and the total shares in issue) of a company listed on any Japanese stock exchange is required to filewith the director of a competent local finance bureau, within five business days a report containing the identity ofsuch person or persons, the purpose of such holding and certain other information prescribed by regulations. A
similar report must also be made (with certain exceptions) if the percentage of such holding subsequently
increases or decreases by 1% or more or if any change occurs in material matters set out in reports previously
filed.
10.C. MATERIAL CONTRACTS
The material contracts entered into by the Company during the two years preceding this filing, which were
not entered into in the ordinary course of business are as follows:
On March 28, 2011, Advantest and Verigy agreed to a business combination of the two companies. For
more details of the contract, see Item 19 “EXHIBITS”-4.1 “IMPLEMENTATION AGREEMENT BY AND
BETWEEN ADVANTEST CORPORATION AND VERIGY LTD.” On July 4, 2011, the Company acquired all
outstanding ordinary shares of Verigy for US$15.00 per share in cash.
10.D. EXCHANGE CONTROLSThe Foreign Exchange Regulations govern the acquisition and holding of shares of capital stock of theCompany by “exchange non-residents” and by “foreign investors.” The Foreign Exchange Regulations currently
in effect do not, however, affect transactions between exchange non-residents to purchase or sell shares outside
Japan using currencies other than Japanese yen.
Exchange non-residents are:•individuals who do not reside in Japan; and•corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations that are located within Japan are regarded
as residents of Japan. Conversely, branches and other offices of Japanese corporations located outside Japan are
regarded as exchange non-residents.
Foreign investors are:•individuals who are exchange non-residents;•

corporations that are organized under the laws of foreign countries or whose principal offices are locatedoutside of Japan; and•corporations (1) of which 50% or more of the total voting rights of their shares are held by individuals
who are exchange non-residents or corporations (a) that are organized under the laws of foreigncountries or (b) whose principal offices are located outside of Japan or (2) a majority of whose officers,
or officers having the power of representation, are individuals who are exchange non-residents.

In general, the acquisition of shares of a Japanese company (such as the shares of capital stock of theCompany) by an exchange non-resident from a resident of Japan is not subject to any prior filing requirements.
In certain limited circumstances, however, the Minister of Finance may require prior approval of an acquisitionof this type. While prior approval, as described above, is not required, in the case where a resident of Japan81

transfers shares of a Japanese company (such as the shares of capital stock of the Company) for consideration
exceeding ¥100 million to an exchange non-resident, the resident of Japan who transfers the shares is required toreport the transfer to the Minister of Finance within 20 days from the date of the transfer, unless the transfer was
made through a bank, securities company or financial futures trader licensed under Japanese law.
If a foreign investor acquires shares of a Japanese company that is listed on a Japanese stock exchange (suchas the shares of capital stock of the Company) and, as a result of the acquisition, the foreign investor, in
combination with any existing holdings, directly or indirectly holds 10% or more of the issued shares of therelevant company, the foreign investor must file a report of the acquisition with the Minister of Finance and anyother competent Ministers having jurisdiction over that Japanese company within 15 days from and including thedate of the acquisition, except where the offering of the company’s shares was made overseas. In limited
circumstances, such as where the foreign investor is in a country that is not listed on an exemption schedule in
the Foreign Exchange Regulations, a prior notification of the acquisition must be filed with the Minister ofFinance and any other competent Ministers, who may then modify or prohibit the proposed acquisition.
Under the Foreign Exchange Regulations dividends paid on, and the proceeds of sales in Japan of, shares
held by non-residents of Japan may in general be converted into any foreign currency and repatriated abroad.
Under the terms of the deposit agreement pursuant to which the Company’s ADSs are issued, the Depositary is
required, to the extent that in its judgment it can convert Japanese yen on a reasonable basis into dollars andtransfer the resulting dollars to the U.S., to convert all cash dividends that it receives in respect of deposited
shares into dollars and to distribute the amount received (after deduction of applicable withholding taxes) to theholder of ADSs.
10.E. TAXATION
The following discussion is a general summary of the principal U.S. federal income and Japanese national
tax consequences of the acquisition, ownership and disposition of the shares of common stock of the Company(the “Shares”) or ADSs. This summary does not purport to address all the material tax consequences that may be
relevant to the holders of the Shares or ADSs, and does not take into account the specific circumstances of any
particular investors, some of which (such as tax-exempt entities, banks, insurance companies, broker-dealers,
traders in securities that elect to use a mark-to-market method of accounting for their securities holdings,
regulated investment companies, real estate investment trusts, investors liable for alternative minimum tax,
partnerships and other pass-through entities, investors that own or are treated as owning 10% or more of theCompany’s voting stock, investors that hold the Shares or ADSs as part of an arbitrage, options trading, hedge,
conversion or constructive sale transaction or other integrated transaction and U.S. Holders (as defined below)
whose functional currency is not the U.S. dollar) may be subject to special tax rules. This summary is based on
the federal income tax laws and regulations of the United States and the national tax laws of Japan, judicial
decisions and published rulings and administrative pronouncements as in effect on the date hereof, as well as on
the current income tax convention between the United States and Japan (the “Treaty”), as described below, all ofwhich are subject to change (possibly with retroactive effect), and/or to differing interpretations.
For purposes of this discussion, a “U.S. Holder” is any beneficial owner of the Shares or ADSs that, for U.S.
federal income tax purposes, is:(1) an individual who is a citizen or resident of the United States;(2) a corporation or other entity organized in or under the laws of the United States or any State thereof or
the District of Columbia;(3) an estate the income of which is subject to U.S. federal income tax without regard to its source; or(4) a trust that is subject to the primary supervision of a U.S. court and the control of one or more U.S.
persons, or that has a valid election in effect under applicable Treasury regulations to be treated as a
U.S. person.
82

An “Eligible U.S. Holder” is a U.S. Holder that:(1) is a resident of the United States for purposes of the Treaty;(2) does not maintain a permanent establishment in Japan (a) with which the Shares or ADSs are
effectively connected and through which the U.S. Holder carries on or has carried on a business or(b) of which the Shares or ADSs form part of the business property; and(3) is eligible for benefits under the Treaty with respect to income and gain derived in connection with the
Shares or ADSs.
If a partnership (including any entity treated as a partnership for U.S. federal income taxation purposes)
holds the Shares or ADSs, the tax treatment of a partner generally will depend upon the status of the partner andthe activities of the partnership. A partner of a partnership holding the Shares or ADSs is urged to consult its tax
advisor.
This summary does not address any aspects of U.S. federal tax law other than income taxation and does notdiscuss any aspects of Japanese tax law other than income taxation as limited to national taxes, inheritance andgift taxation and securities transfer taxation. This summary also does not cover any state or local, or non-U.S.,
non-Japanese tax considerations. Investors are urged to consult their tax advisors regarding the U.S. federal,state, local and Japanese and other tax consequences of acquiring, owning and disposing of Shares or ADSs. In
particular, where relevant, investors are urged to confirm their status as Eligible U.S. Holders with their tax
advisors and to discuss with their tax advisors any possible consequences of their failure to qualify as Eligible
U.S. Holders.
This summary is also based in part upon the representations of the depositary and the assumption that eachobligation in the deposit agreement referred to in “Description of American Depositary Receipts” set forth in the
Company’s registration statement on Form F-1 filed with the Securities and Exchange Commission on July 22,
2002, and in any related agreement, will be performed under its terms.
In general, for purposes of the Treaty, and for U.S. federal and Japanese national income tax purposes,
owners of ADRs evidencing ADSs will be treated as the owners of the Shares represented by those ADSs, andexchanges of the Shares for ADSs, and exchanges of ADSs for the Shares, will not be subject to U.S. federal or
Japanese income tax.
This discussion below is intended for general information only and does not constitute a complete analysisof all tax consequences relating to ownership of Shares or ADSs. Investors in Shares or ADSs should consult
their own tax advisors concerning the tax consequences of their particular situations.
Japanese Taxation
The following is a summary of the principal Japanese tax consequences (limited to national taxes) to holdersof the Shares and of ADRs evidencing ADSs representing the Shares who are either individuals who are notresidents of Japan or non-Japanese corporations, without a permanent establishment in Japan (“non-resident
Holders”).
Generally, a non-resident of Japan or a non-Japanese corporation is subject to Japanese withholding tax on
dividends paid by Japanese corporations. Stock splits in themselves are, in general not a taxable event.
In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of Japanese
withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax
applicable to dividends paid by Japanese corporations to non-residents of Japan or non-Japanese corporations isgenerally 20%. With respect to dividends paid on listed shares issued by a Japanese corporation (such as the83

Shares) to any corporate or individual shareholders (including those shareholders who are non-Japanese
corporations or non-residents of Japan, such as non-resident Holders), other than any individual shareholder who
holds 5% or more of the total issued shares of the relevant Japanese corporation, the aforementioned 20%
withholding tax rate is reduced to (i) 7% for dividends due and payable on or before December 31, 2013, and(ii) as a general rule, 15% for dividends due and payable on or after January 1, 2014. At the date of this annual
report, Japan has income tax treaties, conventions or agreements whereby the above-mentioned 20% withholding
tax rate is reduced, in most cases to 15% for portfolio investors with, among other countries, Australia, Belgium,
Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, Singapore, Spain,
Sweden and Russia, and 10% for portfolio investors under the income tax treaty with, among others, France, theU.K., India, Australia, China, Pakistan, Vietnam, Poland, Romania, the Netherlands, Switzerland and the UnitedStates.
Under the Treaty, the maximum rate of Japanese withholding tax which may be imposed on dividends paidby a Japanese corporation to an Eligible U.S. Holder that is a portfolio investor is generally reduced to 10% of
the gross amount actually distributed and Japanese withholding tax with respect to dividends paid by a Japanese
corporation to an Eligible U.S. Holder that is a pension fund is exempt from Japanese taxation by way of
withholding or otherwise, unless such dividends are derived from the carrying on of a business, directly or
indirectly, by such pension fund.
If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by the Company
to any particular non-resident Holder is lower than the withholding tax rate otherwise applicable under Japanese
tax law or any particular non-resident Holder is entitled to a reduced rate or exemption from Japanese income tax
with respect to such dividends under the income tax treaty applicable to such particular non-resident Holder, suchnon-resident Holder who is entitled to a reduced rate of, or exemption from, Japanese withholding tax on
payment of dividends on the Shares by the Company is required to submit an Application Form for Income Tax
Convention Regarding Relief from Japanese Income Tax on Dividends (together with any other required forms
and documents) in advance through the Company to the relevant tax authority before the payment of dividends.
A standing proxy for non-resident Holders of a Japanese corporation may provide this application service. With
respect to ADSs, this reduced rate or exemption is applicable if the Depositary or its agent submits two
Application Forms (one before payment of dividends, the other within eight months after the Company’s fiscal
year-end or semi-fiscal year-end). To claim this reduced rate or exemption, any relevant non-resident Holder of
ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and toprovide other information or documents as may be required by the Depositary. A non-resident Holder who isentitled, under an applicable income tax treaty, to a reduced treaty rate lower than the withholding tax rateotherwise applicable under Japanese tax law or an exemption from the withholding tax, but failed to submit therequired application in advance will be entitled to claim the refund of withholding taxes withheld in excess of therate under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate under theapplicable income tax treaty) or the whole of the withholding tax withheld (if such non-resident Holder is entitled
to exemption under the applicable income tax treaty) from the relevant Japanese tax authority.
Gains derived from the sale of the Shares or ADSs outside Japan by a non-resident Holder holding such
Shares or ADSs as a portfolio investor are, in general, not subject to Japanese income tax or corporation tax.
Eligible U.S. Holders are not subject to Japanese income or corporation tax with respect to such gains under theTreaty.
Japanese inheritance and gift taxes at progressive rates may be payable by an individual who has acquired
the Shares or ADSs as a legatee, heir or donee even though neither the individual nor the deceased nor donor is aJapanese resident.
Holders of the Shares or ADSs should consult their tax advisors regarding the effect of these taxes and, inthe case of U.S. Holders, the possible application of the Estate and Gift Tax Treaty between the U.S. and Japan.
84

U.S. Federal Income Taxation
U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to U.S.
Holders that hold Shares or ADSs as capital assets (generally, for investment purposes).
Taxation of Dividends
Subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any
distribution made by the Company in respect of Shares or ADSs (without reduction for Japanese withholding
taxes) will constitute a taxable dividend to the extent paid out of current or accumulated earnings and profits of
the Company, as determined under U.S. federal income tax principles. The U.S. dollar amount of such a dividend
generally will be included in the gross income of a U.S. Holder, as ordinary income, when the dividend isactually or constructively received by the U.S. Holder, in the case of Shares, or by the depositary, in the case of
ADSs. Dividends paid by us will not be eligible for the dividends-received deduction generally allowed to U.S.
corporations in respect of dividends received from other U.S. corporations.
Under current law, dividends received on shares or ADSs of certain foreign corporations in taxable years
beginning before January 1, 2013 by non-corporate U.S. investors may be subject to U.S. federal income tax atlower rates than other types of ordinary income if certain conditions are met. Dividends received by
non-corporate U.S. Holders with respect to Shares or ADSs are expected to be eligible for these reduced rates oftax. U.S. Holders should consult their own tax advisors regarding the eligibility of such dividends for a reduced
rate of tax.
The U.S. dollar amount of a dividend paid in Japanese yen will be determined based on the Japanese yen/
U.S. dollar exchange rate in effect on the date that dividend is included in the gross income of the U.S. Holder,
regardless of whether the payment is converted into U.S. dollars on such date. If the Japanese yen received as adividend is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in such
Japanese yen equal to its U.S. dollar value on the date of receipt. Generally, any gain or loss resulting fromcurrency exchange fluctuations during the period from the date the dividend payment is included in the grossincome of a U.S. Holder through the date that payment is converted into U.S. dollars (or the U.S. Holder
otherwise disposes of the Japanese yen) will be treated as U.S. source ordinary income or loss. U.S. Holders
should consult their own tax advisors regarding the calculation and U.S. federal income tax treatment of foreign
currency gain or loss.
To the extent, if any, that the amount of any distribution received by a U.S. Holder in respect of Shares or
ADSs exceeds the Company’s current and accumulated earnings and profits, as determined under U.S. federal
income tax principles, the distribution first will be treated as a tax-free return of capital to the extent of the U.S.
Holder’s adjusted tax basis in those Shares or ADSs, and thereafter will be treated as U.S. source capital gain.
Distributions of additional Shares that are made to U.S. Holders with respect to their Shares or ADSs andthat are part of a pro rata distribution to all of the Company’s shareholders generally will not be subject to U.S.
federal income tax.
For U.S. foreign tax credit purposes, dividends included in gross income by a U.S. Holder in respect ofShares or ADSs will constitute income from sources outside the United States, and will generally be “passive
category income” or, for certain U.S. Holders, “general category income”. Subject to generally applicable
limitations under U.S. federal income tax law and the Treaty, any Japanese withholding tax imposed in respect of
the Company dividend may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder,or if the U.S. Holder does not elect to claim a foreign tax credit for any foreign taxes paid during the taxable
year, as a deduction from such U.S. Holder’s taxable income. Special rules generally will apply to the calculation85

of foreign tax credits in respect of dividend income that qualifies for preferential tax rates of U.S. federal income
tax. Additionally, special rules may apply to individuals whose foreign source income during the taxable year
consists entirely of “qualified passive income” and whose creditable foreign taxes paid or accrued during thetaxable year do not exceed $300 ($600 in the case of a joint return). Further, under some circumstances, a U.S.
Holder that:(i)has held Shares or ADSs for less than a specified minimum period, or(ii) is obligated to make payments related to the Company dividends,
will not be allowed a foreign tax credit for Japanese taxes imposed on the Company dividends. Investors are
urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular
circumstances. The U.S. Internal Revenue Service (the “IRS”) has expressed concern that parties to whom ADSs
are released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. Holders
of ADSs. Accordingly, investors should be aware that the discussion above regarding the creditability ofJapanese withholding tax on dividends could be affected by future actions that may be taken by the IRS.
Taxation of Capital Gains
In general, upon a sale or other taxable disposition of Shares or ADSs, a U.S. Holder will recognize gain orloss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized on
the sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in those Shares or ADSs. A
U.S. Holder generally will have an adjusted tax basis in the Shares or ADSs equal to their U.S. dollar cost.
Subject to the PFIC rules discussed below, gain or loss recognized on the sale or other taxable disposition
generally will be capital gain or loss and, if the U.S. Holder’s holding period for those Shares or ADSs exceeds
one year, will be long-term capital gain or loss. Non-corporate U.S. Holders, including individuals, are currently
eligible for preferential rates of U.S. federal income tax in respect of long-term capital gain. Under U.S. federal
tax law, the deduction of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder inrespect of the sale or other disposition of Shares or ADSs generally will be treated as derived from U.S. sources
for foreign tax credit purposes.
Deposits and withdrawals of Shares in exchange for ADSs will not result in the realization of gain or loss
for U.S. federal income tax purposes.
PFIC
A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any
taxable year in which, after applying look-through rules, either (1) at least 75% of its gross income is passive
income, or (2) on average at least 50% of the gross value of its assets is attributable to assets that produce passive
income or are held for the production of passive income. Passive income for this purpose generally includes
dividends, interest, royalties, rents and gains from commodities and securities transactions. The PFIC
determination is made annually and generally is based on the value of a non-U.S. corporation’s assets (including
goodwill) and the composition of its income for the relevant tax year.
Based on current estimates of its income and assets, the Company does not believe that it will be a PFIC for
its current taxable year, and intends to continue its operations in such a manner that it will not become a PFIC in
the future. However, because the PFIC determination is made annually at the close of the taxable year, the86Company can provide no assurance that it will not become a PFIC in the current or any future taxable year due tochanges in its asset or income composition, a decrease in the price of its Shares (which is used as a measure of
goodwill as an active asset) or for other reasons. If the Company becomes a PFIC, U.S. Holders could be subject
to additional U.S. federal income taxes on gain recognized with respect to the Shares or ADSs and on certain“excess” distributions (generally distributions in excess of 125% of the average distribution over a three-year
period, or, if shorter, the holding period for the Shares or ADSs). In addition, an interest charge may apply to the
portion of the U.S. federal income tax liability on such gains or distributions treated under the PFIC rules as
having been deferred by the U.S. Holder. Moreover, dividends that a non-corporate U.S. Holder receives fromthe Company will not be eligible for the reduced U.S. federal income tax rates applicable to dividends describedabove if the Company is a PFIC either in the taxable year of the distribution or the preceding taxable year. The
Company will inform U.S. Holders if it believes that it will be classified as a PFIC in any taxable year. If a
U.S. Holder holds Shares or ADSs in any taxable year in which the Company is a PFIC, such U.S. Holder
generally will be required to file an information statement or form specified by the U.S. Department of theTreasury with the U.S. Internal Revenue Service IRS in each year that the Company is a PFIC.
U.S. Holders are urged to consult their tax advisors concerning the U.S federal income tax consequences ofholding Shares or ADSs if the Company were considered a PFIC in any year.
Non-U.S. Holders
The following discussion is a summary of the principal U.S. federal income tax consequences to beneficial
holders of Shares or ADSs that are neither U.S. Holders nor partnerships, nor entities taxable as partnerships for,
U.S. federal income tax purposes (“Non-U.S. Holders”).
A Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of
distributions in respect of the Shares or ADSs unless the distributions are effectively connected with the conduct
by the Non-U.S. Holder of a trade or business within the United States (and, if an applicable tax treaty requires,are attributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder).
A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized ona sale or other taxable disposition of Shares unless (i) the gain is effectively connected with a trade or businessconducted by the Non-U.S. Holder within the United States (and, if an applicable tax treaty requires, isattributable to a U.S. permanent establishment or fixed base of such Non-U.S. Holder), or (ii) the Non-U.S.
Holder is an individual who was present in the United States for 183 or more days in the taxable year of thedisposition and other conditions are met.
Income that is effectively connected with a U.S. trade or business of a Non-U.S. Holder (and, if anapplicable income tax treaty applies, is attributable to a U.S. permanent establishment or a fixed base of such
Non-U.S. Holder) generally will be taxed in the same manner as the income of a U.S. Holder. In addition, undercertain circumstances, any effectively connected earnings and profits realized by a corporate Non-U.S. Holder
may be subject to additional “branch profits tax” at the rate of 30% or at a lower rate that may be prescribed by
an applicable income tax treaty.
Backup Withholding and Information Reporting
In general, except in the case of certain exempt recipients, information reporting requirements will apply to
dividends paid to a U.S. Holder in respect of Shares or ADSs, and to the proceeds received by a U.S. Holder
upon the sale, exchange or redemption of Shares or ADSs within the United States or through certain U.S.related financial intermediaries. Furthermore, backup withholding (currently at a rate of 28%) may apply to suchpayments or proceeds if a U.S. Holder fails to provide an accurate tax identification number and makeappropriate certifications in the required manner.
87

Dividends paid to a Non-U.S. Holder in respect of Shares or ADSs, and proceeds received upon the sale,exchange or redemption of Shares or ADSs by a Non-U.S. Holder generally are exempt from information
reporting and backup withholding under current U.S. federal income tax law. However, a Non-U.S. Holder may
be required to provide certification under penalty of perjury to ensure that exemption. Persons required toestablish their exempt status generally must provide such certification on IRS Form W-9, entitled Request for
Taxpayer Identification Number and Certification, in the case of U.S. Holders, and on IRS Form W-8BEN,
entitled Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (or otherappropriate IRS Form W-8), in the case of Non-U.S. Holders.
Backup withholding is not an additional tax. The amount of backup withholding imposed on a payment may
generally be refunded or allowed as a credit against the holder’s U.S. federal income tax liability provided thatthe required information is properly and promptly furnished to the IRS in a timely manner.
Certain U.S. Holders who are individuals that hold certain foreign financial assets (which may include theShares or ADSs) are required to report information relating to such assets, subject to certain exceptions. U.S.
Holders should consult their tax advisors regarding the effect, if any, of this reporting requirement on theirownership and disposition of the Shares or ADSs.
THE SUMMARY OF U.S. FEDERAL INCOME AND JAPANESE NATIONAL TAX CONSEQUENCESSET OUT ABOVE IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. INVESTORS IN
THE SHARES OR ADSs ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS WITHRESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING OR DISPOSING OF
SHARES OR ADSs BASED ON THEIR PARTICULAR CIRCUMSTANCES.
10.F. DIVIDENDS AND PAYING AGENTS
Not applicable.
10.G. STATEMENT BY EXPERTS
Not applicable.
10.H. DOCUMENTS ON DISPLAY
The Company files annual reports on Form 20-F and furnishes quarterly and other periodic reports on Form
6-K with the Commission. You may read and copy any reports, statements or other information on file at the
public reference facilities maintained by the Commission at 100F Street, N.E., Room 1580, Washington,
D.C. 20549 or by accessing the Commission’s home page (http://www.sec.gov). Copies of the Company’s annual
reports on Form 20-F, semi-annual and other periodic reports on Form 6-K are also available on its website at
http://www.advantest.co.jp/investors/en-index.shtml. The ADSs are listed on the New York Stock Exchange
under the symbol “ATE,” and the Company’s reports and other information may also be inspected at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005. In addition, copies of contracts referred toin this annual report may be inspected at the principal executive offices of the Company, located at ShinMarunouchi Center Building, 1-6-2, Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan.
10.I. SUBSIDIARY INFORMATION
Not applicable.

88

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKAdvantest is exposed to market risk from changes in foreign currency exchange rates, interest rates andequity security prices and credit.
Foreign Currency Exchange Rate Risk
The tables below summarize information as of March 31, 2012 and March 31, 2011 on instruments andtransactions that are sensitive to foreign currency exchange rates, including assets and liabilities denominated in
U.S. dollars, Euros, New Taiwan dollars and Korean won, and forward contracts. The information in each table ispresented in Japanese yen equivalents, which is the Company’s reporting currency.
Foreign Currency Denominated Assets and Liabilities
Foreign currency denominated assets and liabilities that are sensitive to exchange rates between such foreign
currency and the Japanese yen are presented by denominated currency. All of these assets and liabilities arestated at fair value.
As of March 31, 2012
Assets and Liabilities Denominated in
U.S.$
Euro
NT$
KRW
(in millions)Cash, cash equivalents and short-term investments . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payables and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥23,913 ¥3,920 ¥ 927 ¥1,220
8,822
169
486
974
(7,105)(290) (162)(444)
As of March 31, 2011
Assets and Liabilities Denominated in
U.S.$
Euro
NT$
KRW
(in millions)Cash, cash equivalents and short-term investments . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payables and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥26,680 ¥5,646 ¥1,512 ¥1,281
12,711
171
1,256
439
(1,628)
(387)
(306)
(223)

Other foreign currency denominated assets and liabilities that are sensitive to exchange rates between suchforeign currency and a currency other than the Japanese yen are presented on a combined basis below. All of theassets and liabilities are stated at fair value.
As of March 31, 2012
Yen Value of Cross Currency Assets and Liabilities(in millions)

Cash and cash equivalents and short-term investments . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payables and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,852
1,003(885)
As of March 31, 2011
Yen Value of Cross Currency Assets and Liabilities(in millions)

Cash and cash equivalents and short-term investments . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payables and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . .

89

¥ 189
162
(12)

Foreign Exchange Contracts
Advantest uses foreign exchange forward contracts and currency options to manage currency exposure,
resulting from changes in foreign currency exchange rates, on planned foreign currency transactions and tradereceivables. Foreign exchange contracts have terms of a year. Foreign exchange forward contracts are presented
by the notional balances with weighted average exchange rates. All of the foreign exchange forward contracts
outstanding as of March 31, 2012 and March 31, 2011 are listed below.
As of March 31, 2012
Average
Contract
Contractual
Amounts Fair Value Exchange Rate(in millions)

To sell Euro/receive Japanese yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell Japanese yen/receive Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell U.S. dollars/receive Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell Euro/receive U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell U.S. dollars/receive Singapore dollars . . . . . . . . . . . . . . . . . . . . . . . .

¥

1
234
206
10
482

¥ (0)
1
6
(0)
14

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥933

¥21

¥108.66¥109.18$1.3001$1.3072$0.7719

As of March 31, 2011
Average
Contract
Contractual
Amounts Fair Value Exchange Rate(in millions)

To sell Euro/receive Japanese yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell Japanese yen/receive Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell U.S. dollars/receive Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To sell Euro/receive U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥123
399
67
19

¥ (6)
22
3
(1)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥608

¥18

¥112.28111.411.36411.3747

Interest Rate Risk
Advantest has no long-term debt obligations as of March 31, 2011 and March 31, 2012.
Securities Value Risk
The table below shows the acquisition price and fair value of securities that Advantest holds as of March 31,
2012 and March 31, 2011. Advantest does not hold or issue financial commodities with the purpose to trade.
Advantest holds equity or debt securities as available-for-sale securities.
As of March 31, 2011
As of March 31, 2012
Acquisition Price Fair Value Acquisition Price Fair Value(in millions)Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12.

¥4,309¥5,608¥3,422DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. DEBT SECURITIES
Not applicable.
12.B. WARRANTS AND RIGHTS
Not applicable.
90¥5,479

12.C. OTHER SECURITIES
Not applicable.
12.D. AMERICAN DEPOSITARY SHARESFees and Charges for Holders of American Depositary Receipts
JPMorgan Chase Bank, N.A. (“Depositary”), as depositary of the Company’s ADS, collects the following
fees from holders of ADRs or intermediaries acting in their behalf. The Depositary may sell (by public or privatesale) sufficient securities and property received prior to such deposit to pay such fees.
(a) Depositing or substituting the underlying shares
Each person to whom ADSs are issued, will be charged U.S. $5.00 for each 100 ADSs (or portion thereof)
issued or delivered (as the case may be).
(b) Receiving or distributing dividends
A fee of U.S. $0.02 or less per ADS (or portion thereof) for any cash distribution made.
(c) Selling or exercising rights
A fee for the distribution or sale of securities, being in an amount equal to the fee for the execution anddelivery of ADSs which would have been charged U.S.$5.00 for each 100 ADSs (or portion thereof) as a resultof the deposit of such securities (treating all such securities as if they were shares of stock).
(d) Withdrawing an underlying security
Each person surrendering ADSs for withdrawal of deposited securities or whose ADSs are cancelled or
reduced for any other reason will be charged U.S. $5.00 for each 100 ADSs (or portion thereof) reduced,
cancelled or surrendered (as the case may be).
(e) Transferring, splitting or grouping receipts
A fee of U.S. $1.50 per ADR or ADRs for transfers made.
(f)

General depositary services, particularly those charged on an annual basis

A fee of U.S. $0.02 per ADS (or portion thereof) per year for the services performed by the Depositary inadministering the ADRs (which fee shall be assessed against holders as of the record date or dates set by the
Depositary not more than once each calendar year and shall be payable at the sole discretion of the Depositary bybilling such holders or by deducting such charge from one or more cash dividends or other cash distributions).
(g) Expenses of the Depositary
Such fees and expenses incurred by the Depositary (including without limitation expenses incurred onbehalf of holders in connection with foreign exchange control regulations or any law or regulation relating toforeign investments) in connection with the delivery of deposited securities or otherwise to comply with the
Depositary’s or its custodian’s compliance procedures, applicable law, rule or regulation.
(i)stock transfer or other taxes and other governmental charges (which are payable by holders or
persons depositing stock);(ii) cable, telex and facsimile transmission and delivery charges incurred at the request of persons
depositing, or Holders delivering stock, ADRs or deposited securities (which are payable by such
persons or holders);91

(iii) transfer or registration fees for the registration or transfer of deposited securities on any applicableregister in connection with the deposit or withdrawal of deposited securities;(iv) expenses of the Depositary in connection with the conversion of foreign currency into U.S.
dollars; and(v) any other charge payable by any of the Depositary, any of the Depositary’s agents, including,
without limitation, the custodian, or the agents of the Depositary’s agents in connection with theservicing of the stock or other deposited securities.
Fees and Other Payments Made by the Depositary to the Company
The Depositary has agreed to reimburse certain reasonable expenses of the Company related to theCompany’s ADR program and incurred by the Company in connection with the ADR program. In fiscal 2011,
the Company received the following payments from JPMorgan Chase Bank, N.A., as depositary of theCompany’s ADS.
Category of Expenses (Direct Payments)

Amount Reimbursed for FY2011

Listing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investor relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

US$38,000.00
US$50,000.00

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

US$88,000.00

92

PART IIITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
OF PROCEEDS
None.
ITEM 15.

CONTROLS AND PROCEDURES(a) Disclosure Controls and Procedures
Advantest performed an evaluation of the effectiveness of the design and operation of its disclosure controls
and procedures as of March 31, 2012. Disclosure controls and procedures are designed to ensure that the material
financial and non-financial information required to be disclosed in the reports that Advantest files, or submits,
under the Exchange Act is accumulated and communicated to its management including the chief executive
officer and principal accounting and financial officer to allow timely decisions regarding required disclosure. The
disclosure controls and procedures also ensure that the reports that it files or submits under the Exchange Act arerecorded, processed, summarized and reported within the time periods specified in the Commission’s rules andforms. The evaluation was performed under the supervision of Advantest’s Representative Director, President
and CEO and Director and Senior Executive Officer. Advantest’s disclosure and controls and procedures provide
reasonable assurance that its objectives will be met. Managerial judgment was necessary to evaluate the costbenefit relationship of possible controls and procedures. Advantest’s Representative Director, President and CEO
and Director and Senior Executive Officer have concluded that Advantest’s disclosure controls and procedures
are effective at the reasonable assurance level.
(b) Management’s Annual Report on Internal Control Over Financial Reporting
The management of Advantest is responsible for establishing and maintaining adequate internal control overfinancial reporting. Advantest’s internal control system was designed to provide reasonable assurance withrespect to the preparation of financial statements in accordance with U.S. GAAP and the reliability of suchfinancial statements.
Internal control over financial reporting has inherent limitations underlying internal control systems andmisstatements may not be prevented or detected. Furthermore, if the evaluation results regarding theeffectiveness of internal control are expected to remain the same going forward, it is important to recognize that
there are risks, under which changes in circumstances may lead the controls in place to be inadequate or that theextent to which policies or procedures are complied with may lower.
Advantest’s management assessed the effectiveness of the company’s internal control over financial
reporting as of March 31, 2012. In making this assessment, it used the criteria set forth in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). Based on this assessment, management has concluded that, as of March 31, 2012, Advantest’s internal
control over financial reporting was effective based on those criteria.
Ernst & Young ShinNihon LLC, Advantest’s independent registered public accounting firm, has issued anattestation report on the effectiveness of our internal control over financial reporting as of March 31, 2012. This
report appears in Item 18.
(c) Attestation Report of the Independent Registered Public Accounting Firm
This report appears in Item 18.
93

(d) Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the year ended
March 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control overfinancial reporting.
ITEM 16.

[RESERVED]ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERTThe Company’s Board of Corporate Auditors has determined that Masamichi Ogura is an “audit committee
financial expert” as defined by Item 16.A. of Form 20-F. Mr. Ogura met the independence requirements, as theterm is defined under the New York Stock Exchange listing standards. For details regarding Mr. Ogura’s
business experiences, see “6.A. DIRECTORS AND SENIOR MANAGEMENT.”
ITEM 16B.

CODE OF ETHICS

The Company has adopted a code of ethics that applies to its directors and executive officers, including its
principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions. A copy of the Company’s code of ethics was attached to the annual report on Form
20-F for fiscal 2003 and is attached as an exhibit to this Form 20-F for reference.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Ernst & Young ShinNihon LLC served as the Company’s independent registered public accounting firm forfiscal 2009, 2010 and 2011. The audited financial statements for these fiscal years are included in the respective
year’s annual report filed on Form 20-F.
The chart below sets forth the aggregate fees for professional services and other services rendered to
Advantest by Ernst & Young ShinNihon LLC and its member firms in fiscal 2010 and 2011.
Fiscal 2010 Fiscal 2011
(in millions)Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥279
39
15
—

¥372
2
42
0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥333

¥416

(1) Audit Fees consist of fees billed for the annual audit services engagement and other audit services, which
are those services that only the external auditor reasonably can provide, and include the group audit;
statutory audits; the issuance of consents; and assistance with and review of documents filed with the SEC.
(2) Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to theperformance of the audit or review of the Company’s financial statements or that are traditionally performedby the external auditor, and include consultations concerning financial accounting and reporting standards;
and review of security controls and operational effectiveness of systems.
(3) Tax Fees include fees billed for tax compliance services, including the preparation of original and amended
tax returns and claims for refund; tax consultations, such as assistance in connection with tax audits andadvice related to transfer pricing, and requests for rulings or technical advice from taxing authorities; andexpatriate tax services.
(4) All Other Fees include fees billed for training; and process improvement and advice.
94

Policies and Procedures of the Board of Corporate Auditors
Below is a summary of the current policies and procedures of the board of corporate auditors for the
pre-approval of audit and permissible non-audit services performed by Advantest’s independent public
accountants.
Under the policy, the board of corporate auditors authorizes general pre-approval of audit and permissible
non-audit services for the following fiscal year. Upon the general pre-approval of the board of corporate auditors,
no specific pre-approval for audit and permissible non-audit services is required so long as those services fallwithin the scope of the general pre-approval provided.
Applications to provide services that require specific pre-approval by the board of corporate auditors will be
submitted to the board of corporate auditors.
The board of corporate auditors makes further determination as to whether or not to revise the generalpre-approval for the applicable fiscal year. Such request may include adding to or subtracting from any audit or
permissible non-audit services listed in the general pre-approval. The performance of audit and permissible
non-audit services and the payment of fees are subject to the review by the board of corporate auditors once
every fiscal year.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESThe Company does not have an audit committee. The Company is relying on the general exemption
contained in Rule 10A-3(c)(3) under the Exchange Act, which provides an exemption from the NYSE’s listing
standards relating to audit committees for foreign companies like the Company that have a board of corporate
auditors. The Company’s reliance on Rule 10A-3(c) (3) does not, in its opinion, materially adversely affect theability of its board of corporate auditors to act independently and to satisfy the other requirements of Rule 10A-3.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
The following table sets forth Advantest’s purchases of its common stock during fiscal 2011:

Period(a) Total Number of
Shares Purchased1(b) Average Price
Paid per Share(Yen)(c) Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs2

2011
April 1 – April 30 . . . . . . . . . . . . . . . . . .
May 1 – May 31 . . . . . . . . . . . . . . . . . . .
June 1 – June 30 . . . . . . . . . . . . . . . . . . .
July 1 – July 31 . . . . . . . . . . . . . . . . . . . .
August 1 – August 31 . . . . . . . . . . . . . . .
September 1 – September 30 . . . . . . . . .
October 1 – October 31 . . . . . . . . . . . . .
November 1 – November 30 . . . . . . . . .
December 1 – December 31 . . . . . . . . . .

98
35
108
24
20
48
48
94
352

¥1,501
1,513
1,432
1,454
1,206
878
878
833
770

N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

2012
January 1 – January 31 . . . . . . . . . . . . . .
February 1 – February 29 . . . . . . . . . . . .
March 1 – March 31 . . . . . . . . . . . . . . . .

72
N/A
N/A

704
N/A
N/A

N/A
N/A
N/A

N/A
N/A
N/A

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

899

¥ 998

N/A

N/A

95

(d) Maximum Number of
Shares thatMay Yet Be Purchased
Under the Plans
or Programs

1

2

All purchases are made through repurchase of shares constituting less than one unit, which is 100 shares ofcommon stock, or through repurchase of shares pursuant to a resolution of Board of Directors. The purchaseof shares that are a fraction of a unit are made in accordance with the provisions of the Company’s sharehandling regulations. The Company is required to comply with such requests pursuant to the Company Law.
See “Additional Information—Memorandum and Articles of Association—The Unit Share System.”
The Company can repurchase its shares through stock exchanges where the Company’s shares are listed or
pursuant to a takeover bid when there is a resolution of Board of Directors in accordance to Article 41 of the
Articles of Incorporation.

ITEM 16F. CHANGE IN REGISTRAINT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G.

CORPORATE GOVERNANCE

Significant Differences in Corporate Governance Practices between the Company and U.S. Companies
Listed on the New York Stock Exchange
Pursuant to home country practices exemptions granted by the New York Stock Exchange, or the NYSE, theCompany is permitted to follow certain corporate governance practices complying with Japanese laws,
regulations and stock exchange rules in lieu of NYSE’s listing standards. The SEC approved changes to the
NYSE’s listing standards related to corporate governance practices of listed companies in November 2003, as
further amended in November 2004. The Company is exempted from the approved changes, except forrequirements that (a) the Company’s board of corporate auditors satisfy the requirements of Rule 10A-3 under
the U.S. Securities Exchange Act of 1934 as amended, or the Exchange Act, (b) the Company must disclosesignificant differences in the corporate governance practices followed by the Company as compared to thosefollowed by domestic companies under the NYSE listing standards, (c) the Company’s CEO must notify the
NYSE of any non-compliance with (a) and (b), and (d) the Company must submit annual and interim written
affirmations to the NYSE. The Company’s corporate governance practices and those followed by domestic
companies under the NYSE listing standards, or NYSE Corporate Governance, have the following significant
differences:
1. Directors. The Company currently has three outside directors on its Board of Directors. Unlike NYSE
Corporate Governance, the Company Law of Japan and related legislation (hereinafter in Item 16G., the“Company Law”), do not require Japanese companies with boards of corporate auditors such as the Company tohave any outside directors on its Board of Directors. While NYSE Corporate Governance requires that the
non-management directors of each listed company meet at regularly scheduled executive sessions without
management, the Company currently has no non-management director on its Board of Directors. Unlike NYSE
Corporate Governance, the Company Law does not require, and accordingly the Company does not have, aninternal corporate organ or committee comprised of only outside directors.
2. Committees. The Company has not established committees responsible for director nomination,
corporate governance and executive compensation as required by NYSE Corporate Governance, but it has
adopted a system of corporate auditors based on the Company Law and integrated such system into theCompany’s corporate governance structure. In addition, in connection with such system of corporate auditors, theCompany has elected to establish a nomination and compensation committee, which is an optional committee
under the Company Law.
Pursuant to the Company Law, the Company’s Board of Directors nominates and submits a proposal for
appointment of directors for shareholder approval. The shareholders vote on such nomination at the Company’s
general meeting of shareholders. The Company Law requires that the respective total amount of remuneration,
among others, (remuneration, bonus, and other consideration for services related to employment) to be paid to all96directors and all corporate auditors must be determined by a resolution of the general meeting of shareholders,
unless their remuneration is provided for in the articles of incorporation. The distribution of remuneration among
directors is broadly delegated to the Company’s Board of Directors and the distribution of remuneration amongcorporate auditors is determined by the board of corporate auditors.
3. Audit Committee. The Company avails itself of paragraph (c)(3) of Rule 10A-3 of the Exchange Act,
which provides a general exemption from the audit committee requirements to a foreign private issuer with aboard of corporate auditors, subject to certain requirements which continue to be applicable under Rule 10A-3.
Consistent with the requirements of the Company Law, the Company elects its corporate auditors through a
resolution adopted at a general meeting of shareholders. The Company currently has four corporate auditors,
which exceeds the minimum number of corporate auditors required pursuant to the Company Law.
Unlike NYSE Corporate Governance, the Company Law, among others, does not require corporate auditors
to establish an expertise in accounting nor are they required to present other special knowledge and experience.
Under the Company Law, the board of corporate auditors may determine audit policy, methods to investigate thestate of business operations and assets and other matters relating to the execution of duties by corporate auditors,
prepare corporate auditors’ reports and give consent to proposals of the nomination of corporate auditors andaccounting auditors.
The Company currently has two corporate auditors who satisfy the requirements of “outside corporate
auditor” under the Company Law. Unlike NYSE Corporate Governance, under the Company Law, at least
one-half of the corporate auditors of the Company must be “outside corporate auditors,” which is a person who
was not a director, an accounting counselor (if an accounting counselor is a corporation, an employee of suchcorporation who carries out its duties), executive officer, general manager, or any other employee of theCompany or any of its subsidiaries at any time in the past. Corporate auditors may not at the same time bedirectors, an accounting counselor (if an accounting counselor is a corporation, an employee who carries out its
duties), executive officer, general manager, or any other employee of the Company or any of its subsidiaries.
4. Corporate Governance Guidelines. The Company is required to adopt or disclose corporate governanceguidelines under Japanese laws and regulations, including the Company Law and the Financial Instruments andExchange Law of Japan or rules of Tokyo stock exchange. Pursuant to the Company Law, the Company isrequired to decide to implement a structure as required by an ordinance of the Ministry of Justice (the “Internal
Control System”) in order to ensure directors’ compliance with applicable laws and regulations and theCompany’s articles of incorporation while executing their duties and joint stock companies’ proper business
operation, and is required to disclose the decision to implement the Internal Control System, policies and theconditions of its corporate governance in its business report, annual securities report and certain other disclosure
documents in accordance with the Company Law, the Financial Instruments and Exchange Law, and applicableCabinet ordinances and rules of Tokyo stock exchange in respect of timely disclosure.
5. Code of Business Conduct and Ethics. Unlike NYSE Corporate Governance, under Japanese law(including the Company Law and the Financial Instruments and Exchange Law of Japan), and the rules of theTokyo stock exchange, the Company is not required to adopt a code of business conduct and ethics for directors,
officers and employees. Accordingly, the Company is not required to adopt and disclose a code of businessconduct and ethics for these individuals. However, in accordance with the Company Law, the Company has
decided to implement the Internal Control System as a structure to ensure that director’s execution of their duties
at meetings of the Board of Directors complies with applicable laws and regulations and the Company’s articles
of incorporation. Furthermore, the Company has established a code of ethics consistent with Section 406 of the
Sarbanes-Oxley Act.
6. Shareholder Approval of Equity Compensation Plans. Unlike NYSE Corporate Governance, in whichmaterial revisions to equity-compensation plans of the listed companies are subject to shareholder approval,
97

pursuant to the Company Law, if a joint stock company desires to adopt an equity-compensation plan for
directors as compensation to directors other than cash, such company is generally required to obtain shareholder
approval by an “ordinary resolution.” In addition to the above approval, when the Company previously desired toadopt an equity-compensation plan under which stock acquisition rights are granted on favorable terms to therecipient under the plan (except where such rights are granted to all of its shareholders on a pro-rata basis at thesame time), the Company has obtained shareholder approval by a “special resolution” of a general meeting ofshareholders, where the quorum is one-third of the total number of voting rights and the approval of at least
two-thirds of the voting rights represented at the meeting is required.
ITEM 16H.

MINE SAFETY DISCLOSURE

None.

98

PART IIIITEM 17.

FINANCIAL STATEMENTS

Not applicable.
ITEM 18.

FINANCIAL STATEMENTS

The following financial statements are filed as part of this annual report on Form 20-F.

99

ADVANTEST CORPORATION
AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-2

Consolidated Balance Sheets as of March 31, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-4

Consolidated Statements of Operations
for the years ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-6

Consolidated Statements of Comprehensive Income (Loss)for the years ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-7

Consolidated Statements of Stockholders’ Equity
for the years ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-8

Consolidated Statements of Cash Flowsfor the years ended March 31, 2010, 2011 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-9Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-10

All schedules are omitted as permitted by the rules and regulations of the Securities and Exchange Commission,as the required information is presented in the notes to consolidated financial statements, or the schedules are notapplicable.

F-1

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Advantest Corporation
We have audited the accompanying consolidated balance sheets of Advantest Corporation and subsidiaries
as of March 31, 2011 and 2012, and the related consolidated statements of operations, comprehensive income(loss), stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2012. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Advantest Corporation and subsidiaries at March 31, 2011 and 2012, and theconsolidated results of its their operations and their cash flows for each of the three years in the period ended
March 31, 2012, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, Advantest Corporation and its domestic
subsidiaries elected to change the method of depreciating fixed assets from the fixed-percentage-on-decliningbase application to the straight line method, effective April 1, 2011.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), Advantest Corporation’s internal control over financial reporting as of March 31, 2012, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated June 27, 2012 expressed an unqualified
opinion.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 27, 2012

F-2

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Advantest Corporation
We have audited Advantest Corporation and subsidiaries’ internal control over financial reporting as ofMarch 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Advantest
Corporation and subsidiaries’ management is responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting included in theaccompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is toexpress an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control basedon the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of thecompany’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.
In our opinion, Advantest Corporation and subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of March 31, 2012, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated balance sheets of Advantest Corporation and subsidiaries as of March 31, 2011
and 2012, and the related consolidated statements of operations, comprehensive income (loss), stockholders’equity, and cash flows for each of the three years in the period ended March 31, 2012 and our report dated
June 27, 2012 expressed an unqualified opinion thereon.
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
June 27, 2012

F-3

ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2011 and 2012
Yen (Millions)
2011
2012

AssetsCurrent assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 75,323
12,651
22,70723,493
2,995

58,218—24,11929,836
6,522

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

137,169

118,695

Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,432
31,878
874
645
2,314

5,929
34,206
15,79436,496
8,106

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥180,312

219,226

See accompanying notes to consolidated financial statements.
F-4

ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2011 and 2012
Yen (Millions)
2011
2012

Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 11,729
Short term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,329
Accrued warranty expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,754
Customer prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,740
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,955

15,65925,00012,068
2,129
2,228
3,288

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24,507
14,0693,604

60,372
23,444
3,858

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingent liabilities

42,18087,674

Stockholders’ equity:
Common stock,
Authorized 440,000,000 shares; issued 199,566,770 shares . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, 26,294,819 shares in 2011 and 26,295,390 shares in 2012, at cost . . . .

32,36332,36340,62842,280183,009 179,081(18,270) (22,574)(99,598) (99,598)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

138,132

131,552

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥180,312

219,226

See accompanying notes to consolidated financial statements.
F-5

ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended March 31, 2010, 2011 and 20122010

Yen (Millions)
2011

2012

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 53,225
27,297

99,634
51,164141,048
72,300Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,92848,47068,748

Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,896
19,671

21,197
21,16230,30337,608Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11,639)

6,111

837

Other income (expense):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses on investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

579
(4)
(316)
1,454

326
(3)
(512)
(371)

323
(153)
(2,254)(2,195)

Total other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,713

(560)

(4,279)

Income (loss) before income taxes and equity in earnings (loss) ofaffiliated company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9,926)

5,551(3,442)

Income taxes (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings (loss) of affiliated company . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,457
(71)

2,352
(36)

(1,240)7

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(11,454)

3,163(2,195)

2010

Yen
2011

2012

¥ (64.09)(64.09)

18.03
18.03

(12.67)(12.67)

Net income (loss) per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

See accompanying notes to consolidated financial statements.
F-6

ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
Years ended March 31, 2010, 2011 and 20122010

Comprehensive income (loss)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on investment securities:
Net unrealized gains (losses) arising during the year . . . . . . . . . . .
Less reclassification adjustments for net gains (losses) realized inearnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension related adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(11,454)(2,195)(2,614) (3,231)

1,422

742

(311)

(216)

34

252

818

776
1,566

(59)
(121)

602
(6,328)(272) (3,411)(4,304)¥(11,726)

See accompanying notes to consolidated financial statements.
F-7

2012

3,163

Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen (Millions)
2011

(248)

(6,499)ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity
Years ended March 31, 2010, 2011 and 20122010

Yen (Millions)
2011

Common stock
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 32,363
Changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—2012

32,363—32,363—

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32,36332,36332,363

Capital surplus
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the year—Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,320143

40,463
165

40,628
1,652

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,46340,62842,280

194,848

181,606

183,009(11,454)(1,787)(1)

3,163(1,760)(0)(2,195)(1,733)(0)Total changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13,242)

1,403(3,928)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

181,606

183,009

179,081

Retained earnings
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the year
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated other comprehensive income (loss)
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the year—Other comprehensive income (loss), net of tax . . . . .

(14,587) (14,859) (18,270)(272) (3,411) (4,304)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(14,859) (18,270) (22,574)

Treasury stock
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the year
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(89,328) (89,331) (99,598)

Total changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in the year
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1)1(3) (10,267)

0(89,331) (99,598) (99,598)
163,616150,242

138,132(11,454)3,163(272) (3,411)(1,787) (1,760)143165(4) (10,267)
00(2,195)(4,304)(1,733)
1,652
(1)
1

(13,374) (12,110)(6,580)¥150,242

131,552

See accompanying notes to consolidated financial statements.
F-8(4) (10,267)
1
0

138,132

ADVANTEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended March 31, 2010, 2011 and 20122010

Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income (loss) to net cash provided by (used in)operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock option compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses on investment securities . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities, net of effect of acquisition:
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued warranty expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) operating activities . . . . . . . . . . . .

3,163(2,195)

4,314
(148)
143
316

4,209
425
165
512

6,838
(3,663)583
2,254(5,457)(6,942)
6,525(1,126)
(8)
24
1,386
(5,319)(17,746)(7,645)(7,285)1,146
2,540(1,040)
1,276
225
1,616
(693)

616
4,613
902
39
164
(1,815)975
2,991
12,302

13,8812——
287(2,798)(215)(333)
10,824(2,446) 14,387
6 10,717—(57,145)
—
620
12
89
(3,138) (5,931)
(323)
(329)
61
(78)
(5,828) (37,670)——
25,466——(13,835)(4) (10,268)(1)(1,796) (1,760) (1,729)
(3)
0
(14)
(1,803) (12,028)
9,887(291) (2,567) (1,624)(9,016) (21,116) (17,105)
105,455 96,439 75,323¥ 96,439 75,323 58,218

Supplemental data:
Cash paid during the year for:
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,083
10

See accompanying notes to consolidated financial statements.
F-9

2012

¥ (11,454)

Cash flows from investing activities:(Increase) decrease in short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of available-for-sales securities . . . . . . . . . . . . . . . . . . . . . .
Acquisition of subsidiary, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease of other investment in equity method investee . . . . . . . . . . . . . . . . . .
Proceeds from sale of property, plant and equipment . . . . . . . . . . . . . . . . . . . .
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . .
Cash flows from financing activities:
Increase (decrease) in short term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of senior convertible notes of acquired subsidiary . . . . . . . . . . . .
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . .
Net effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . .
Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen (Millions)
2011

1,412
4

3,267
153

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements(1) Description of Business and Summary of Significant Accounting Policies and Practices(a) Description of Business
The Company and its consolidated subsidiaries (collectively, “Advantest”) manufacture and sell
semiconductor and component test system products and mechatronics-related products such as test handlers anddevice interfaces. Advantest also engages in research and development activities and provides maintenance andsupport services associated with these products.
Description of the business by segment is as follows:
The semiconductor and component test system segment provides customers with test system products forthe semiconductor industry and the electronic parts industry. Product lines provided in the semiconductor andcomponent test system segment include test systems for memory semiconductors for memory semiconductor
devices and test systems for SoC (“System-on-a-Chip”) semiconductors for non memory semiconductor devices.
The mechatronics system segment provides product lines such as test handlers, mechatronic-applied
products for handling semiconductor devices, device interfaces that serve as interfaces with the devices that aremeasured and operations related to nano-technology products.
The services, support and others segment consists of comprehensive customer solutions provided inconnection with the above segments, support services, equipment lease business and others.
(b) Principles of Consolidation
Advantest’s consolidated financial statements include financial statements of the Company and its
subsidiaries, all of which are wholly-owned. Investment in an affiliated company over which Advantest has theability to exercise significant influence, but does not hold a controlling financial interest, is accounted for by theequity method. All significant intercompany balances and transactions have been eliminated in consolidation.
(c) Cash Equivalents
Cash equivalents consist of deposits and certificates of deposit with an original maturity of three months orless from the date of purchase. Advantest considers all highly liquid debt instruments with original maturities ofthree months or less to be cash equivalents.
(d) Short-term investments
Short-term investments consist of time deposit with fixed maturities greater than three months and Japanesemoney trusts with fixed maturities of three months, which are carried at cost, based on the characteristics of its
fixed maturities, fixed interest rates, restriction of early redemption and non negotiability. The Japanese money
trusts amounted to ¥12,000 million at March 31, 2011. There is no balance for the Japanese money trusts at
March 31, 2012.
(e) Allowance for Doubtful Accounts
Advantest recognizes an allowance for doubtful accounts to ensure that trade receivables are not overstated due touncollectability, which represents Advantest’s best estimate of the amount of probable credit losses in Advantest’s
existing trade receivables. An allowance for doubtful accounts is provided at an amount calculated based on historical
write off experience and a specific allowance for estimated amounts considered to be uncollectable after reviewing
individual factors such as the customer’s current financial position, significant changes in the semiconductor industry,other information that is publicly available and the customer’s credit worthiness.
F-10

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(f) Inventories
Inventories are stated at the lower of cost or market. Cost is determined using the average cost method.
(g) Investment Securities
Investment securities consist of debt securities, marketable and non-marketable equity securities. Fair value
is determined based on quoted market prices, projected discounted cash flow or other valuation techniques asappropriate.
Debt and Marketable Equity Securities
Advantest classifies its debt and marketable equity securities as available-for-sale.
Available-for-sale securities are recorded at fair value. Unrealized gains and losses, net of the related tax
effect, on available-for-sale securities are excluded from earnings and are reported as a component ofaccumulated other comprehensive income (loss) until realized. A decline in the fair value of any
available-for-sale security below cost that is deemed to be other than temporary results in an impairment loss.
The impairment loss is charged to earnings and a new cost basis for the security is established. Dividend andinterest income are recognized when earned.
On a periodic basis, Advantest evaluates the available-for-sale securities for possible impairment. Factors
considered in assessing whether an indication of other than temporary impairment exists include: the degree ofchange in ratio of market prices per share to book value per share at the date of evaluation compared to theacquisition date, the financial condition and prospects of each investee company, industry conditions in which
the investee company operates, the period of time the fair value of an available-for-sale security has been below
the cost basis of the investment and other relevant factors. Advantest generally has the intention and ability toretain available-for-sale securities which it determines that their impairment is not other than temporary for aperiod of time sufficient to allow for any anticipated recovery in market value. The impairment to be recognizedis measured based on the amount by which the carrying amount of the investment exceeds the fair value of theinvestment.
The cost of a security sold or the amount reclassified out of accumulated other comprehensive income (loss)
into earnings is determined by the average cost method.
Non-marketable Equity Securities
Non-marketable equity securities are carried at cost. On a periodic basis, Advantest evaluates theseinvestments for possible impairment. Non-marketable equity securities that have impairment indicators were
evaluated to determine whether the investments were impaired and the impairment, if any, is other than
temporary. If the impairment is other than temporary, Advantest recognizes an impairment loss to reduce thecarrying amount to the fair value and a new cost basis for the security is established.
(h) Derivative Financial Instruments
All derivative instruments in the consolidated balance sheets are stated at fair value. The accounting forchanges in the fair value (that are, gains or losses) of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship and, if so, the purpose for holding the instrument. If
certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures tochanges in fair values, cash flows, or foreign currencies.
F-11

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
If the hedged exposure is a fair value exposure, the gain or loss on the derivative instrument is recognized inearnings in the period of change together with the offsetting loss or gain on the hedged item attributable to therisk being hedged. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on thederivative instrument is reported initially as a component of other comprehensive income (loss) and subsequently
reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from theassessment of hedge effectiveness as well as the ineffective portion of the gain or loss are reported in earnings
immediately. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings
in the period of change.
(i) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
On April 1, 2011, the Company and its domestic subsidiaries elected to change the method of depreciating
fixed assets from the fixed-percentage-on-declining base application to the straight line method.
The Company analyzed the sales mixture of memory and non-memory business to evaluate the future
production requirements and pattern of benefit from utilizing its fixed assets. Based on this analysis, Advantest
management believes that the straight line method of depreciation is preferable as it better reflects the pattern ofconsumption of the future benefits to be derived from those assets being depreciated and provides a better
matching of costs and revenues over the assets’ estimated useful lives, in light of product life cycles and current
change in product mix to expand non-memory business. In accordance with Accounting Standards Codification(“ASC”) 250, “Accounting Changes and Error corrections”, this change in depreciation method represents achange in accounting estimate effected by a change in accounting principle.
Accordingly, the effects of the change are accounted for prospectively beginning with the period of change
and prior period results have not been restated. The change in depreciation method reduced depreciation expense
and resulted in decreases in loss before income taxes and equity in earnings of affiliated company and net loss by¥560 million, respectively, for year ended March 31, 2012. Also basic net income per share and diluted net
income per share decreased by ¥3.23, respectively, for year ended March 31, 2012.
The depreciation period for significant assets ranges from 15 years to 50 years for buildings, 4 years to
10 years for machinery and equipment, and 2 years to 5 years for tools, furniture and fixtures.
(j) Goodwill and Intangible Assets
Goodwill and intangible assets with indefinite useful lives are not amortized but are tested for impairment atleast annually. Intangible assets with definite useful lives are amortized over their respective estimated useful
lives and reviewed for impairment.
Business combinations are accounted for using the acquisition method. Advantest allocates the purchaseprice to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition,
including intangible assets that can be identified and named. The purchase price in excess of the fair value of the
net assets is recorded as goodwill. Acquisition costs are expensed as incurred.
Intangible assets consist of customer relationships, patented technologies, developed technologies and otherintangible assets. Advantest has estimated the weighted average amortization period for the customer
relationship, patented technologies and developed technologies to be 8 years, 9 years and 8 years, respectively.
The weighted average amortization period for all intangible assets is approximately 8 years.
F-12

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(k) Impairment of Long-Lived Assets
Advantest reviews impairment of long-lived assets including certain identifiable intangibles with definite
useful lives whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In such circumstances, if the carrying value of the asset is less than the estimated undiscounted
cash flows expected to be generated by the asset or asset group, Advantest recognizes an impairment loss. The
impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds thefair value.
(l) Accrued Warranty Expenses
Advantest’s products are generally subject to warranty, and Advantest provides an allowance for such
estimated costs when product revenue is recognized. To provide for future repairs during warranty periods,
estimated repair expenses over the warranty period are accrued based on the historical ratio of actual repair
expenses to corresponding sales, and any facts and circumstances that occurred.
(m) Accrued Pension and Severance Costs
The Company and certain of its subsidiaries have retirement and severance defined benefit plans covering
substantially all of their employees. Prior service benefit and cost, and actuarial gains and losses are recognizedin accumulated other comprehensive income (loss) and are amortized using the straight-line method over the
average remaining service period of active employees. The funded status, which is the difference between the fairvalue of plan assets and the projected benefit obligations, of its pension plans is recognized in the consolidatedbalance sheet, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax.
The adjustment to accumulated other comprehensive income (loss) represents the unrecognized actuarial loss,
and unrecognized prior service cost. These amounts will be subsequently recognized as net periodic benefit cost
pursuant to Advantest’s accounting policy for amortizing such amounts.
(n) Revenue Recognition
In October 2009, the Financial Accounting Standards Board (“FASB”) amended the accounting guidance
for revenue recognition under multiple-deliverable arrangements. The guidance modifies the criteria forseparating deliverables and allocating consideration in multiple-deliverable arrangements. The allocation ofrevenue is based on estimated selling price if neither vendor-specific objective evidence nor third-party evidenceof selling price is available. The guidance was adopted by the Company and its subsidiaries (collectively,“Advantest”) in the first quarter 2011. The adoption of the guidance did not have a significant impact on its
consolidated results of operations and financial condition.
In October 2009, the FASB amended accounting guidance for software revenue recognition. This guidancechanges the accounting model for revenue arrangements that include both tangible products and software
elements. It provides guidance on how to determine which software, if any, relating to the tangible product would
be excluded from the scope of the software revenue guidance. The guidance was adopted by Advantest in thefirst quarter 2011. The adoption of the guidance did not have a significant impact on its consolidated results ofoperations and financial condition.
GeneralAdvantest recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurredor the services have been rendered, the sales price is fixed or determinable and collection of the related
receivable is reasonably assured.
F-13

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Sales of Products
Sales of products which require installation are recognized when the related installation is completed andother sales recognition criteria are met since the installation is essential to the functionality of the equipment.
When customer acceptance is uncertain, revenue is deferred until customer acceptance has been received. Whenthe final payment is subject to customer acceptance, a portion of revenue for the final payment is deferred until
an enforceable claim has become effective.
Sales of products and components which do not require installation service by Advantest is recognized upon
shipment if the terms of the sale are free on board (FOB) shipping point or upon delivery if the terms are FOB
destination which coincide with the passage of title and risk of loss.
Long-term Service Contracts
Revenue from fixed-price, long-term service contracts is recognized on the straight-line basis over thecontract term.
Leasing Income
Revenue from operating leases is primarily recognized on the straight-line basis over the lease term.
Multiple Deliverables
Advantest’s revenue recognition policies provide that, when a sales arrangement contains multiple elements,
such as hardware and software products and services, Advantest allocates revenue to each element based on aselling price hierarchy and recognizes revenue when the criteria for revenue recognition have been met for eachelement. The selling price for a deliverable is based on its vendor specific objective evidence (“VSOE”), if
available, third party evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor
TPE is available.
(o) Shipping and Handling Costs
Shipping and handling costs totaled ¥741 million, ¥929 million and ¥1,409 million for the years ended
March 31, 2010, 2011 and 2012, respectively, and are included in selling, general and administrative expenses in
the consolidated statements of operations.
(p) Research and Development Expenses
Research and development costs are expensed as incurred.
(q) Advertising Costs
Advertising costs totaled ¥80 million, ¥104 million and ¥178 million for the years ended March 31, 2010,2011 and 2012, respectively, and are expensed as incurred.
(r) Stock-Based Compensation
Advantest applies the fair-valued-based method of accounting for stock-based compensation and recognizes
stock-based compensation expense in the consolidated statements of operations. The cost of employee services
F-14

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
received in exchange for an award of equity instruments is measured based on the grant-date fair value of thestock options granted to employees. The cost is recognized on the straight line basis over the period during which
an employee is required to provide service in exchange for the award. The Black Scholes pricing model is used toestimate the value of stock options.
Expected dividend yield is determined by the Company’s dividend ratio of the past and other associatedfactors. Risk free interest rate is determined by Japanese government bond yield for the period corresponding to
expected life. Expected volatility is determined by historical volatility and trend of the Company’s share prices,and other associated factors. Expected life is determined by the Company’s option exercise history, post vesting
employment termination behavior for similar grants, and other pertinent factors.
(s) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities arerecognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases, and operating loss carryforwards and tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply totaxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. Advantest records a valuation allowance to reduce the deferred tax assets to theamount that is more likely than not to be realized.
Advantest recognizes the financial statement effects of tax positions when it is more likely than not, basedon technical merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits
from tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount ofbenefit that is greater than 50 percent likelihood of being realized upon settlement. Advantest recognizes interest
and penalty accruals related to unrecognized tax benefits in income taxes in the consolidated statements ofoperations.
(t) Net Income (Loss) per Share
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average
number of shares outstanding during the year. Diluted net income per share is calculated by dividing net incomeby the sum of the weighted average number of shares plus additional shares that would have been outstanding if
potential dilutive shares had been issued for granted stock options.
(u) Foreign Financial Statements
The financial statements of foreign operations whose functional currency is a local currency are translated
into Japanese Yen. Assets and liabilities are translated at the period-end exchange rates and revenues andexpenses are translated at the average exchange rate for the period. Resulting translation adjustments are shown
as a component of other comprehensive income (loss).
The financial statements of foreign operations whose functional currency is Japanese Yen are remeasured
into Japanese Yen. All exchange gains and losses from remeasurement of monetary assets and liabilities
denominated in the local currency are included in other income (expense) for the period in which theremeasurement is made.
F-15

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(v) Foreign Currency Transactions
Assets and liabilities denominated in foreign currencies at the balance sheet date are translated by using theapplicable current rate prevailing at that date. All revenue and expenses associated with foreign currencies aretranslated by using the rate of exchange prevailing when such transactions occur. Those gains (losses) are
included in other income (expense) in the accompanying consolidated statements of operations.
Foreign exchange gains (losses) were ¥1,072 million, (¥508) million and (¥2,319) million for the years
ended March 31, 2010, 2011 and 2012, respectively.
(w) Use of Estimates
Management of Advantest has made a number of estimates and assumptions relating to the reporting ofassets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the periods to prepare these consolidated
financial statements in conformity with accounting principles generally accepted in the United States (“U.S.
GAAP”). Significant items subject to such estimates and assumptions include valuation of trade receivables,
inventories, goodwill, long-lived assets and deferred tax assets, various accruals such as accrued warranty
expenses, and assets and obligations related to employees retirement and severance plans. Actual results could
differ from those estimates.
(x) New Accounting Standards
In June 2011, the FASB amended the accounting guidance for the presentation of comprehensive income.
This new guidance eliminates the option to present the components of other comprehensive income as part of thestatement of changes in stockholders’ equity and provides the option to present the total of comprehensive
income, the components of net income, and the components of other comprehensive income either in a single
continuous statement of comprehensive income or in two separate but consecutive statements. In December
2011, the FASB issued its standard to defer the effective date for amendments to the presentation ofreclassifications of items out of accumulated other comprehensive income in the new standard on thepresentation of comprehensive income. The guidance is effective for fiscal years, and interim periods withinthose years, beginning after December 15, 2011. The guidance is required to be adopted by Advantest in the firstquarter beginning April 1, 2012. Other than enhanced disclosures, the adoption of the guidance is not expected tohave a material impact on its consolidated results of operations and financial condition.
In September 2011, the FASB amended the accounting guidance for testing goodwill for impairment. This
new guidance gives entities the option to perform the two-step process only if they first perform a qualitative
assessment to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of areporting unit is less than its carrying amount and conclude that it is more likely than not that the fair value of areporting unit is less than its carrying amount. The guidance is effective for annual and interim goodwill
impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted.
The guidance is required to be adopted by Advantest in the first quarter beginning April 1, 2012. Advantest is
currently evaluating the effect that this adoption will have on its consolidated results of operations and financial
condition but does not expect to have a material impact.
(y) Reclassifications
Certain reclassifications have been made to the prior years’ consolidated financial statements to conform tothe current year presentation.
F-16

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(2) Business Combinations
On July 4, 2011, Advantest acquired all outstanding ordinary shares of Verigy Ltd. (collectively “Verigy”),
for US$15.00 per share in cash. Verigy became a wholly-owned subsidiary of Advantest. In addition, as part ofthe consideration in the acquisition, Advantest assumed the obligation for stock options which had been granted
by Verigy to certain directors and employees.
Summary of the total purchase price is as follows.
Yen (Millions)

Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assumed stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77,661
1,068

Total purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,729Acquisition-related costs for the year ended March 31, 2012 were ¥1,285 million. These costs are included
in “Selling, general and administrative expenses” in the consolidated statements of operations. Acquisition
related costs incurred in periods prior to March 31, 2011 were ¥656 million.
Verigy has historically been strong in the non-memory tester and research and development markets inNorth America and Europe. The complementary strengths in products, customer base, research and development,
sales and service are expected to enhance combined company’s competitiveness in the global market. The
acquisition will allow Advantest to provide more and better diversified solutions to its customers in thesemiconductor test equipment sector.
This acquisition was accounted for using the acquisition method.
The table below summarizes the allocation of the purchase price based on the fair value of assets acquired
and liabilities assumed as follows.
Yen (Millions)

Assets acquired and liabilities assumed
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,516
2,104
11,013
3,316
16,89935,14020,145(3,136)(27,268)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,729Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,729Goodwill recognized is attributable primarily to expected synergies from combining operations of Verigy
and Advantest. None of the goodwill is expected to be deductible for income tax purposes.
F-17

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Net Sales and loss before income taxes of Verigy that are included in the consolidated statements ofoperations for the year ended March 31, 2012 are ¥27,449 million and ¥5,181 million, respectively.
The following represents the unaudited pro forma results of operations of Verigy for the years ended March,2011 and 2012, as if the acquisition of Verigy had occurred on April 1, 2010. The pro forma information does notnecessarily reflect the actual results of operations had the acquisition been consummated at April 1, 2010, nor isit necessarily indicative of future operating results. The pro forma information does not give effect to any
potential revenue enhancements, cost synergies or other operating efficiencies that could result from theacquisition (other than those realized subsequent to the July 4, 2011 acquisition date).
Yen (Millions)Year ended
Year ended
March 31, 2011 March 31, 2012

Pro forma net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pro forma income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

146,704(2,599)149,916(1,862)The pro forma result for the year ended March 31, 2011 includes an increase in cost of sales by¥3,804 million due to the acquired inventory fair value adjustment and amortization expense related to intangible
assets of ¥2,792 million.
(3) Trade Receivables
Trade receivables at March 31, 2011 and 2012 were as follows:
Yen (Millions)
2011
2012

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,021
20,838157
24,445Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22,859152

24,602483¥22,707

24,119(4) Allowance for Doubtful Accounts
Changes in the allowance for doubtful accounts for the years ended March 31, 2010, 2011 and 2012 were as
follows:
2010

Yen (Millions)
2011

2012

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for (reversal of) allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 585
(255)
(84)

246
(90)
(4)

152
331
—

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 246

152

483

F-18

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(5) Inventories
Inventories at March 31, 2011 and 2012 were composed of the following:
Yen (Millions)
2011
2012

Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 5,681
12,243
5,569

8,318
11,303
10,215¥23,493

29,836(6) Property, Plant and Equipment
Property, plant and equipment at March 31, 2011 and 2012 were composed of the following:
Yen (Millions)
2011
2012

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tools, furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥16,138
28,156
14,63814,13042

14,03524,383
20,595
14,216363

Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73,104
41,22673,59239,386¥31,878

34,206

Depreciation expense was ¥4,101 million, ¥3,977 million and ¥4,326 million for the years ended March 31,
2010, 2011 and 2012, respectively.
(7) Goodwill and Intangible Assets
The components of intangible assets excluding goodwill at March 31, 2011 and 2012 were as follows:
Yen (Millions)
2011
2012
Gross carrying Accumulated Gross carrying Accumulated
amountamortization
amountamortization

Intangible assets subject to amortization:
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . .
Patented technologies . . . . . . . . . . . . . . . . . . . . . . .
Developed technologies . . . . . . . . . . . . . . . . . . . . .
In-process technologies . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,338
—
—
—
—
54

1,698
—
—
—
—
44

¥ 2,704
2,227
4,365
6,238
1,726
1,690

1,998
215
389
603
—
175

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,392

1,742¥18,950

3,380

F-19

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Intangible assets not subject to amortization at March 31, 2011 and 2012 were insignificant.
Aggregate amortization expense for the years ended March 31, 2010, 2011 and 2012 was ¥213 million,¥232 million and ¥2,512 million, respectively. Estimated amortization expense for the next five years ending
March 31 is ¥2,392 million in 2013, ¥2,227 million in 2014, ¥2,157 million in 2015, ¥1,927 million in 2016, and¥1,817 million in 2017, respectively.
Goodwill at March 31, 2010 and 2011 was ¥645 million. Goodwill was related to the semiconductor andcomponent test system segment. Changes in the carrying amount of goodwill for the year ended March 31, 2012were as follows:
Yen (Millions)2012
Semiconductor
and Component
Test System
Business

Mechatronics
SystemBusiness

Services,
Supportand Others

Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Verigy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥645
20,844
422

—
—
—

—
14,296289

645
35,140711

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,911—

14,58536,496

Advantest performed its annual impairment test for goodwill at the reporting unit level and identified no
impairments at March 31, 2010, 2011 and 2012.
(8) Investment Securities
Marketable equity securities are classified as available-for-sale securities. The acquisition cost, grossunrealized gains, gross unrealized losses and fair value at March 31, 2011 and 2012 were as follows:

Acquisition
cost

Noncurrent:
Available-for-sale:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥4,309Acquisition
cost

Noncurrent:
Available-for-sale:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-20¥3,422

Yen (Millions)
2011
Gross
Gross
unrealized unrealized
gains
losses1,455

156

Yen (Millions)
2012
Gross
Gross
unrealized unrealized
gains
losses

2,248

191

Fair
value

5,608

Fair
value

5,479

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Equity securities consist primarily of stocks issued by Japanese listed companies.
No proceeds from the sale of available-for-sale securities and no gross gains and losses were realized on thesale of available-for-sale securities for the year ended March 31, 2010. Proceeds from the sale ofavailable-for-sale securities and gross realized gains on the sale of available-for-sale securities for the year ended
March 31, 2011 were insignificant. No losses were realized on the sale of available-for-sale securities for theyear ended March 31, 2011. Proceeds from the sale of available-for-sale securities and gross realized gains onavailable-for-sales securities for the year ended March 31, 2012 were ¥10,717 million and ¥19 million. Grossrealized losses on the sale of available-for-sale securities for the year ended March 31, 2012 were insignificant.
Net realized gains and losses of the sale of available-for-sale securities are based on the averaged cost
method and are included in “other income (expense)” in the consolidated statements of operations.
For the years ended March 31, 2010, 2011 and 2012, Advantest recognized impairment losses of¥57 million, ¥426 million and ¥1,259 million, respectively, on available-for-sale securities, which wereconsidered other-than-temporarily impaired and wrote them down to the fair value.
Gross unrealized losses on available-for-sale securities and the fair value of the related securities,
aggregated by length of time that individual securities have been in a continuous unrealized loss position, at
March 31, 2011 and 2012, were as follows:
Yen (Millions)
2011
Less than 12 months
12 months or longer
Gross
Gross
Fair
unrealized
Fair
unrealized
value
lossesvalue
lossesNoncurrent:
Available-for-sale:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,019

130

237

26

Yen (Millions)2012
Less than 12 months
12 months or longer
Gross
Gross
Fair
unrealized
Fair
unrealized
value
lossesvalue
lossesNoncurrent:
Available-for-sale:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 825

178

179

13

Advantest maintains non-marketable equity securities, which are recorded at cost. The carrying amounts ofnon-marketable equity securities were ¥1,824 million and ¥450 million at March 31, 2011 and 2012,
respectively. Advantest had not estimated the fair value of other non-marketable equity securities aggregating¥1,812 million and ¥50 million at March 31, 2011 and 2012, respectively, since it was not practicable to estimate
the fair value of the investments due to the lack of readily determinable fair values and difficulty in estimating
fair value without incurring excessive cost. Non-marketable equity securities that had impairment indicators were
F-21

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
evaluated to determine whether the investments were impaired and the impairment, if any, was other than
temporary. For the years ended March 31, 2010, 2011 and 2012, non-marketable equity securities with apurchase cost of ¥376 million, ¥98 million and ¥1,395 million were written down to their estimated fair values of¥117 million, ¥12 million and ¥400 million, resulting in other-than-temporary impairment charges of¥259 million, ¥86 million and ¥995 million, respectively, which were included in impairment losses oninvestment securities in the accompanying consolidated statements of operations.
(9) Derivative Financial Instruments
Advantest uses derivative instruments primarily to manage exposures to foreign currency. The primaryobjective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes inforeign currency. The program is not designated for trading or speculative purposes. Derivative financial
instruments contain an element of risk in the event the counterparties are unable to meet the terms of theagreements. However, Advantest minimizes risk exposure by limiting the counterparties to major internationalbanks and financial institutions meeting established credit guidelines. Management of Advantest does not expect
any counterparty to default on its obligations and, therefore, does not expect to incur any losses due tocounterparty default on its obligations. Advantest generally does not require or place collateral for thesederivative financial instruments.
In accordance with U.S. GAAP, Advantest recognizes derivative instruments as either assets or liabilities on
the balance sheet at fair value. Changes in fair value of the derivatives are recorded as cost of sales, operating
expenses, other income (expense), or as accumulated other comprehensive income (loss).
Cash Flow Hedges
Advantest uses forward contracts designated as cash flow hedges to hedge a portion of future forecasted
purchases in Singapore dollar and Euro. Changes in the fair value of derivatives that do not qualify for hedge
accounting treatment, as well as the ineffective portion of hedges, if any, are recognized in the consolidated
statement of operations. The effective portion of the foreign exchange gain (loss) is reported as a component ofaccumulated other comprehensive income (loss) in stockholders’ equity and is reclassified into the consolidated
statement of operations when the hedged transaction affects earnings. Changes in fair value of foreign exchange
contracts due to changes in time value are excluded from the assessment of effectiveness and are recognized inearnings. If the transaction being hedged fails to occur, or if a portion of any derivative is deemed to beineffective, Advantest will recognize the gain (loss) on the associated financial instrument in other income(expense) in the consolidated statement of operations. Advantest did not have any ineffective hedges during theperiods presented. There were no outstanding forward contracts in place that hedged future purchases at
March 31, 2011 and 2012.
Derivatives not designated as hedging instruments
Other derivatives not designated as hedging instruments consist primarily of forward contracts to reduce
Advantest’s risk associated with exchange rate fluctuations, as gains and losses on these contracts are intended tooffset exchange losses and gains on underlying exposures. Changes in fair value of foreign exchange contracts
are recognized in earnings under the caption of other income (expense).
Advantest had foreign exchange contracts to exchange currencies among Japanese yen, US dollar and Euroat March 31, 2011 and 2012. The notional amounts of outstanding forward contracts for foreign currency
purchases were approximately ¥142 million and ¥653 million, and the outstanding forward contracts for foreign
currency sales were ¥466 million and ¥280 million at March 31, 2011 and 2012, respectively.
F-22

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Fair Value of Derivative Contracts
There were no derivatives designated as hedging instruments at March 31, 2011 and 2012. Fair values ofderivatives not designated as hedging instruments at March 31, 2011 and 2012 were as follows:
Derivatives not designated as hedging instruments
Yen (Millions)
March 31, 2011
March 31, 2012
Balance Sheet Location
Fair Value
Balance Sheet Location
Fair Value

AssetsForeign exchange contracts . . . . .

Other current assets¥24

Other current assets

21

Liabilities
Foreign exchange contracts . . . . .

Other current liabilities¥ 6

Other current liabilities

0

Effect of derivative instruments on the consolidated statements of operations
Derivatives designated as hedging instruments
There was no gain (loss) recognized in other comprehensive income (loss) and reclassified fromaccumulated other comprehensive income into cost of sales and operating expenses for the years ended
March 31, 2010 and 2011. Amounts of gain (loss) recognized in other comprehensive income (loss) (for theeffective portions) and reclassified from accumulated other comprehensive income into cost of sales andoperating expenses for the year ended March 31, 2012 were as follows:
Yen (Millions)
2012
Amount of gain (loss)
recognized in OCI onderivatives(effective portion)

Foreign exchange contracts . . . . . . . . . . . . .

¥(55)

Gain (loss) reclassified fromaccumulated OCI
into earnings(effective portion)

Location

Cost of Sales¥30

Operating Expenses

25

Derivatives not designated as hedging instruments
The effects of derivatives not designated as hedging instruments on the consolidated statements ofoperations for the years ended March 31, 2010, 2011 and 2012 were as follows:

Foreign exchange contracts . . . . . . . . . . . . . . . . . . .

Location of gain (loss) recognized
in income on derivatives

Yen (Millions)
Amount of gain (loss) recognized
in income on derivatives
2010
2011
2012

Other income (expense)

¥361

F-23

223

630

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(10) Fair Value Measurement
Disclosure about the fair value of Financial Instruments
The following table presents the carrying amounts and estimated fair values of Advantest’s financial
instruments at March 31, 2011 and 2012. Fair value estimates are made at a specific point in time based on
relevant market information and information about the financial instrument. These estimates are subjective innature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
Yen (Millions)
2011
2012
Carrying
Fair
Carrying
Fair
amountvalue
amountvalue

Financial assets:
Investment securities
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,608
24

5,608
24

¥5,479
21

5,479
21

Financial liabilities:
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

6

0

0

The carrying amounts of available-for-sale securities are included in the consolidated balance sheets underinvestment securities. The carrying amounts of foreign exchange contracts are included in other current assets
and other current liabilities.
The following methods and assumptions are used to estimate the fair value of each class of financial
instruments:
Cash and cash equivalents, short-term investments, trade receivables, trade accounts payable, short term
debt, accrued expenses and customer prepayments: The carrying amounts approximate fair value because of theshort maturity of these instruments.
Available-for-sale securities: The fair values of available-for-sale equity securities are based on quoted
market prices at the reporting date for those investments.
Foreign exchange contracts: The fair value of foreign exchange contracts are estimated by obtaining quotes
from financial institutions.
Fair Value Hierarchy
U.S. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer aliability (an exit price) in the principal or most advantageous market for the asset or liability in an orderlytransaction between market participants at the measurement date. Additionally the inputs to valuation techniques
used to measure fair value are prioritized into the following three levels:
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement date.
Level 2—Observable inputs other than quoted prices included within Level 1 for the asset or liability, either
directly or indirectly.
Level 3—Unobservable inputs for the asset or liability.
F-24

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Assets / Liabilities Measured at Fair Value on a Recurring Basis
As of March 31, 2011 and 2012, carrying amount of assets and liabilities that were measured at fair value on
a recurring basis by level was as follows:

Total

Yen (Millions)
Fair Value Measurements
at March 31, 2011
QuotedSignificant
Prices in
Other
Significant
ActiveObservable Unobservable
Markets
Inputs
Inputs(Level 1)(Level 2)(Level 3)

AssetsAvailable-for-sale equity securities . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,608
24

5,608
—

—
24

—
—

Total assets measured at fair value . . . . . . . . . . . . . . . . . . . . . .

5,632

5,608

24

—

Liabilities
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

—

6

—

6

—

6

—

Total liabilities measured at fair value . . . . . . . . . . . . . . . . . . . .

¥

Total

Yen (Millions)
Fair Value Measurements
at March 31, 2012
QuotedSignificant
Prices in
Other
Significant
ActiveObservable Unobservable
Markets
Inputs
Inputs(Level 1)(Level 2)(Level 3)

AssetsAvailable-for-sale equity securities . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥5,479
21

5,479
—

—
21

—
—

Total assets measured at fair value . . . . . . . . . . . . . . . . . . . . . .

5,500

5,479

21

—

Liabilities
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0

—

0

—

0

—

0

—

Total liabilities measured at fair value . . . . . . . . . . . . . . . . . . . .

¥Adjustments to fair value of available-for-sale equity securities are recorded as an increase or decrease, netof tax, in accumulated other comprehensive income (loss) except where losses are considered to be other than
temporary, in which case the losses are recorded in impairment losses on investment securities. Changes in fairvalue of foreign exchange contracts are recorded as cost of sales, operating expenses, other income (expense), oras other comprehensive income (loss).

F-25

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Changes in the Level 3 assets and liabilities measured on a recurring basis for the years ended March 31,
2011 and 2012 were as follows:
Yen (Millions)
2011
Debt
Securities
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

411
(43)
(368)
¥ —

411
(43)
(368)
—

Yen (Millions)
2012
Debt
Securities
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Verigy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥——1,685 1,685(1,649) (1,649)
(36)
(36)
¥ —
—

During the year ended March 31, 2011, debt securities that were redeemable at the option of Advantest weretransferred out of Level 3 due to a conversion into non-marketable common stocks.
Assets / Liabilities Measured at Fair Value on a Nonrecurring Basis
As of March 31, 2011 and 2012, carrying amount of assets and liabilities, which were measured at fair value
on a nonrecurring basis by level during the years ended March 31, 2011 and 2012, was as follows:

Total

AssetsNon-marketable equity securities . . . . . . . . . . . . . .

¥Total gains (losses) for assets held as of March 31,
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-26

12

Yen (Millions)
Fair Value Measurements
at March 31, 2011
QuotedSignificant
Prices in
Other
Significant
ActiveObservable Unobservable
Markets
Inputs
Inputs(Level 1)(Level 2)(Level 3)

—

—

12

Total gains(losses) for
the year
ended
March 31,
2011

(86)
(86)

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)

Total

Yen (Millions)
Fair Value Measurements
at March 31, 2012
QuotedSignificant
Prices in
Other
Significant
ActiveObservable Unobservable
Markets
Inputs
Inputs(Level 1)(Level 2)(Level 3)

AssetsNon-marketable equity securities . . . . . . . . . . . . . . .
400
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,471

—
—

400
—

0
1,471

Total assets measured at fair value . . . . . . . . . . . . . .

—

400

1,471

1,871

Total gains (losses) for assets held as of March 31,
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total gains(losses) for
the year
ended
March 31,
2012

(995)
(920)

(1,915)

Advantest recognized impairment losses of non-marketable equity securities when their fair values were
below the carrying amounts and the decline in fair values was considered to be other than temporary. The
non-marketable equity securities are valued using the market and income approaches. The fair value of
non-marketable equity securities is based on quoted prices in markets that are not active at the reporting date, orpresent value of expected future cash flows for those investments. For the year ended March 31, 2012, Advantest
recognized an impairment loss of ¥920 million on certain building and land included as a corporate asset that wasreclassified as assets held for sale. The fair value was determined based on a third-party appraisal using similar
assets and sales. The impairment loss was included in selling, general and administrative expenses in theaccompanying consolidated statements of operations. The fair value of the assets held for sale was reclassified toother current assets on the consolidated balance sheets. The fair value is classified as Level 3 because significant
unobservable inputs were involved in the fair value measurements.
(11) Leases—Lessor
Advantest provides leases that enable its customers to use semiconductor test systems. All leases areclassified as operating leases. Lease terms range from 1 year to 5 years, and certain of the lease agreements arecancelable. The gross amount of machinery and equipment and the related accumulated depreciation underoperating leases as of March 31, 2011 and 2012 were as follows:
Yen (Millions)
2011
2012

Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥6,577
4,640

8,406
4,841

¥1,9373,565

Depreciation of machinery and equipment held under operating leases is included with depreciation
expense. These assets are included in property, plant and equipment.

F-27

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Future minimum lease income under noncancelable operating leases as of March 31, 2012 is as follows:Year ending March 31

Yen (Millions)2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,880
1,049
482
312
79
19

Total minimum lease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,821(12) Leases—Lessee
Advantest has several noncancelable operating leases, primarily for office space and office equipment. Rent
expense, including rental payments for cancelable leases, for the years ended March 31, 2010, 2011 and 2012was ¥1,227 million, ¥1,122 million and ¥1,565 million, respectively.
Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms
in excess of one year) as of March 31, 2012 are as follows:Year ending March 31

Yen (Millions)2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 775
550
460
430
88
19

Less sublease income to be received in the future under noncancelable subleases . . . . . . . . . . . . . .

2,322
749

Net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,573(13) Short term debt
Short term debt at March 31, 2011 and 2012 are as follows:
Yen (Millions)
2011
2012

Unsecured borrowing, with weighted average annual interest 0.38% . . . . . . . . . . . . . . . . . . . . . . .

¥—25,000¥—25,000On May 25, 2012, the Company issued under its existing domestic bond shelf registration ¥25,000 millionof unsecured corporate bonds. The funds procured from this issuance were applied to repay short term debt
outstanding at March 31, 2012. The bonds have interest rates and maturity dates as follows:
Amount¥10,000 million . . . . . . . .
¥15,000 million . . . . . . . .

Interest rate

Maturity date

0.416% per annum
0.606% per annum

May 25, 2015
May 25, 2017

F-28

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(14) Income Taxes
The components of income before income taxes and equity in earnings (loss) of affiliated company andprovision (benefit) for income taxes as shown in the consolidated statements of operations were as follows:
2010

Income before income taxes and equity in earnings (loss) of affiliated company:
The Company and domestic subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provision (benefit) for income taxes:
Current:
The Company and domestic subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred:
The Company and domestic subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen (Millions)
2011

2012

¥(13,376) (1,130)
3,450
6,681

(2,775)(667)¥ (9,926)

5,551(3,442)

2010

Yen (Millions)
2011

2012

¥ 856
818

813
1,160

555
1,841

(272)
55

330
49

(1,513)(2,123)¥1,457

2,352(1,240)

The Company and its domestic subsidiaries are subject to a number of income taxes, which in the aggregate
resulted in statutory income tax rates of 40.5%, 40.4% and 40.4% for the years ended March 31, 2010, 2011 and2012, respectively.
Amendments to the Japanese tax regulations were enacted into law on December 2, 2011. As a result of
these amendments, the statutory income tax rate will be reduced to approximately 37.8% effective from the year
beginning April 1, 2012, and to approximately 35.4% effective from the year beginning April 1, 2015. The
adjustments of deferred tax assets and liabilities for these changes in the tax rate resulted in a net decrease of¥5,160 million to deferred tax assets. However, there was a corresponding decrease to the valuation allowance.
The acquired company, Verigy, was a Singapore corporation and had negotiated tax incentives with theSingapore Economic Development Board (“EDB”), an agency of the Government of Singapore, which had been
approved by Singapore’s Ministry of Finance and Ministry of Trade and Industry. Subsequent to the acquisition,
our reorganization of subsidiaries in Singapore was developed, and such tax incentives were terminated on
March 31, 2012. New tax incentives were granted by the EDB effective April 1, 2012. Under the new incentive, aportion of the income we earn in Singapore during the incentive periods is subject to reduced rates of Singapore
income tax. The incentive will expire on March 31, 2014. The Singapore corporate income tax rates that would
apply, absent the incentive, is 17% for fiscal year ended March 31, 2012. Due to the low level of taxable income
attributable to Singapore, the impact on our income taxes was immaterial for the fiscal year ended March 31,
2012.

F-29

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
A reconciliation of the Japanese statutory income tax rate and the effective income tax rate as a percentage
of income before income taxes was as follows:

Statutory rates for expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effects on income taxes resulting from:
Earnings of foreign subsidiaries taxed at different rate from the statutory ratein Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expiration of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of enacted changes in tax laws and rates on Japanese tax . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2011

2012

(40.5)%

40.4%(40.4)%

(2.1)
5.5
0.8
—
(1.1)
52.3
—
(0.2)

(16.2)(13.7)
2.6
11.0
3.8
13.0
—
1.5

12.3
(60.9)
4.3
9.5(20.0)(92.1)
149.9
1.4

14.7%

42.4%

(36.0)%The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets anddeferred tax liabilities at March 31, 2011 and 2012 were presented below.
Yen (Millions)
2011
2012

Deferred tax assets:
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued warranty expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses capitalized for tax purposes . . . . . . . . . . . . . . . . .
Operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 4,356
681
5,732
1,557
2,245
30,352
3,054
3,616
1,887

3,820
722
8,426
2,088
1,807
31,800
3,449
5,873
1,709

53,480 59,694(52,082) (50,188)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,398

9,506

Deferred tax liabilities:
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—(528)(2,567)(22)(1,615)
(676)
(932)
(57)

Total gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3,117)(3,280)Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ (1,719)

6,226

At March 31, 2011, deferred tax liabilities were provided for all foreign subsidiaries with undistributed
earnings. Management of Advantest intends to reinvest certain undistributed earnings of the Company’s foreign
F-30

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
subsidiaries for an indefinite period of time. As a result, no deferred tax liabilities has been recognized on
undistributed earnings of these subsidiaries not expected to be remitted in the foreseeable future, aggregating¥6,712 million at March 31, 2012. Deferred tax liabilities will be recognized when Advantest expects that it willrealize those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of theinvestments. The related deferred tax liability would have been ¥1,134 million at March 31, 2012.
Included in other current assets and other assets were deferred tax assets of ¥354 million and ¥7,337 million
at March 31, 2011 and 2012, respectively.
Included in other current liabilities and other liabilities were deferred tax liabilities of ¥2,073 million and¥1,111 million at March 31, 2011 and 2012, respectively.
At March 31, 2012, Advantest had total net operating loss carry forwards for income tax purposes of¥106,566 million which are available to reduce future income taxes. Operating losses of ¥78,354 million
attributable to the Company and domestic subsidiaries in Japan will expire during the years ending March 31,
2015 through 2021. Other net operating losses of ¥24,300 million have no expiration dates and remaining othernet operating losses of ¥3,912 million will expire predominately during the years ending March 31, 2032. Net
operating loss carryforwards utilized during the years ended March 31, 2010, 2011 and 2012 were ¥2,421
million, ¥554 million and ¥25 million, respectively.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than notthat some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. Based upon projections for futuretaxable income over the periods in which the deferred tax assets are deductible including management’s
expectations of future semiconductor market and semiconductor and component test systems market prospects
and other factors, management believes it is more likely than not that Advantest will realize the benefits of thesedeductible differences, net of valuation allowance.
The changes in valuation allowance for the years ended March 31 were as follows:
Yen (Millions)
2011

2012

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥48,015
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,274
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—51,289793—

52,082—
1,894

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52,08250,1882010¥51,289

For the year ended March 31, 2010, valuation allowance increased primarily due to an increase in net
operating loss carryforwards, which was partially offset by decreases in deferred tax assets associated withinventory and property, plant and equipment. For the year ended March 31, 2011, valuation allowance increased
primarily due to an increase in net operating loss carryforwards, which was partially offset by decreases indeferred tax assets associated with inventory and research and development expenses capitalized for tax
purposes. For the year ended March 31, 2012, the valuation allowance decreased due to reductions in deferred
tax assets associated with change of tax rate in Japan.
F-31

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
The amount of the deferred tax assets considered realizable, however, could be changed in the near term if
estimates of future taxable income are revised and the effect on the company’s consolidated financial position
and results of operations could be significant.
There were no unrecognized tax benefits for the years ended March 31, 2010 and 2011. Unrecognized tax
benefits for the year ended March 31, 2012 were as follows:
Yen (Millions)
2012

Balance, April 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Verigy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase for tax positions of previous years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase for current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of the applicable statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ —
1,671
148
57
(47)
(341)
(4)

Balance, March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,484

Although Advantest believes its estimates and assumptions of unrecognized tax benefits are reasonable,
uncertainty regarding the final determination of tax audits, settlements and any related litigation could affect theeffective tax rate in the future periods. The total amount of unrecognized tax benefits that would reduce theeffective tax rate, if recognized, are ¥1,484 million at March 31, 2012. As of March 31, 2012, Advantest does notexpect changes in its tax positions that would significantly increase or decrease unrecognized tax benefits within
next 12 months. Both interest and penalties accrued are included in other liabilities in the accompanying
consolidated balance sheets, and both interest and penalties are included in the income tax provision in theaccompanying consolidated statements of operations.
Advantest files income tax returns in Japan and various foreign tax jurisdictions. As of March 31, 2012,
Advantest had open tax years beginning April 1, 2007 for Japan, 2010 for Taiwan, and 2006 for the UnitedStates.

F-32

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(15) Other Comprehensive Income (Loss)
The accumulated balances for each classification of other comprehensive income (loss), net of tax, for theyears ended March 31, 2010, 2011 and 2012 were as follows:
Yen (Millions)
Foreigncurrencytranslation
adjustments

Net unrealized
gains (losses)
on investment
securities

Pensionrelatedadjustment

Net unrealized
gains (losses)
on derivative
instruments

Accumulated
othercomprehensive
income (loss)

Balance at March 31, 2009 . . . . . . . . . . . . .

¥ (8,893)

56(5,750)—(14,587)

Change during the year . . . . . . . . . . . . . . . .
Reclassification adjustments . . . . . . . . . . . .

(2,614)
—

742
34

1,241
325

—
—

(631)
359

(2,614)

776

1,566

—

(272)

Balance at March 31, 2010 . . . . . . . . . . . . .

¥(11,507)

832(4,184)—(14,859)

Change during the year . . . . . . . . . . . . . . . .
Reclassification adjustments . . . . . . . . . . . .

(3,231)
—

(311)
252

(401)
280

—
—

(3,943)532(3,231)

(59)

(121)

—

(3,411)

Balance at March 31, 2011 . . . . . . . . . . . . .

¥(14,738)

773(4,305)—(18,270)

Change during the year . . . . . . . . . . . . . . . .
Reclassification adjustments . . . . . . . . . . . .

864
558

(216)
818

(6,565)
237

(55)
55

(5,972)
1,668

1,422

602

(6,328)—(4,304)¥(13,316)

1,375(10,633)—(22,574)

Balance at March 31, 2012 . . . . . . . . . . . . .

F-33

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
The related tax effects allocated to each component of other comprehensive income (loss) for the years
ended March 31, 2010, 2011 and 2012 were as follows:
Before-tax
amountYear ended March 31, 2010:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) arising during the year . . . . . . . . . . . . . . .
Less reclassification adjustments for net gains (losses) realized inearnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension related adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended March 31, 2011:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) arising during the year . . . . . . . . . . . . . . .
Less reclassification adjustments for net gains (losses) realized inearnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension related adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended March 31, 2012:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) arising during the year . . . . . . . . . . . . . . .
Less reclassification adjustments for net gains (losses) realized inearnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension related adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen (Millions)Tax (expense)or benefit

Net-of-tax
amount¥(2,614)—(2,614)

1,224

(482)

742

57

(23)

34

1,281
1,566
¥ 233

(505)
—
(505)

776
1,566
(272)

¥(3,231)—(3,231)

(540)

229

(311)

423

(171)

252

(117)
(121)
¥(3,469)

58
—
58

(59)
(121)
(3,411)¥ 1,422

—

1,422

(509)

293

(216)

1,267

(449)

818

758
(7,191)¥(5,011)

(156)
863
707

602
(6,328)(4,304)(16) Stock-Based Compensation
Advantest has stock-based compensation plans using stock options as incentive plans for directors,
executive officers, corporate auditors and selected employees. Stock options have been issued to directors,
executive officers, corporate auditors and certain employees of the Company and its subsidiaries under stock
option plans approved by the Board of Directors. Options were generally granted with an exercise prices of per
share that were equal to the higher of (1) 1.05 times the average price of the Company’s common shares of thepreceding month on the date of grant and (2) the closing price of the Company’s common shares traded on theTokyo Stock Exchange on the date of grant. The options have an exercise period of 4 years.

F-34

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
In connection with the acquisition of Verigy, the Company assumed the stock options previously granted to
Verigy directors and employees. Therefore, replacement options were granted for all 89 types of stock options
arrangements previously granted to the directors and employees of Verigy and its subsidiaries under a stock
option plan approved by the Board of Directors of Advantest. The terms and conditions of the granted options aresubstantially the same as those for the Verigy stock options. The number of granted shares totaled 2,387,046.
Options were granted with exercise prices from ¥620 to ¥2,748 per share. All options are exercisable from
July 20, 2011. The options have expiration dates from July 29, 2011 to January 31, 2018.
The exercise price of the stock options is subject to adjustment, if there is a stock split or consolidation ofshares, or if new shares are issued or treasury stocks are sold at a price that is less than the market price.
Stock option activity during the years ended March 31, 2010, 2011 and 2012 was as follows:2010

Number ofshares2011
Weighted
average
exercise
price

Number ofshares2012
Weighted
average
exercise
price

Number ofshares

Weighted
average
exercise
price

Outstanding at beginning of year . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . .

3,938,980 ¥4,804
350,000
1,872(1,117,980) 4,309(111,000) 4,854

3,060,000 ¥4,647
308,000
2,089(1,262,000) 5,881(158,000) 5,287

1,948,000 ¥3,392
4,033,046
1,399(595,840) 5,302(497,000) 2,396

Outstanding at end of year . . . . . . . . . . . .

3,060,000

4,647

1,948,000

3,392

4,888,206

1,616

Exercisable at end of year . . . . . . . . . . . . .

2,722,000¥4,995

1,640,000¥3,636

3,585,206¥1,648Stock based compensation expense recognized was ¥143 million, ¥165 million and ¥583 million, which was
included in selling, general and administrative expenses for the years ended March 31, 2010, 2011 and 2012,
respectively. The recognized tax benefits were ¥53 million, ¥61 million and ¥153 million for the years ended
March 31, 2010, 2011 and 2012, respectively. In addition, the stock options, granted during the fiscal years ended
March 31, 2007 and 2008 subsequent to a change in Japanese tax law effective April 1, 2006, expired unused
during the fiscal year ended March 31, 2011 and 2012, and the related deferred tax assets of ¥610 and¥328 million were reversed, respectively. As of March 31, 2010, 2011 and 2012, a valuation allowance wasrecorded against substantially all related deferred tax assets.
The weighted average fair value per share for stock options that were granted during the years ended
March 31, 2010, 2011 and 2012 were ¥409, ¥535 and ¥448, respectively. These figures were calculated based on
the Black Scholes option pricing model by using the following weighted average estimates:
2010

Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.6%
Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.5%Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45.3%
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 years

2011

2012

1.6%
0.2%
45.4%
3.9 years

0.4%
0.5%
49.3%
3.1 years

No stock options were exercised during the years ended March 31, 2010, 2011 and 2012. The total fair valueof shares vested during the years ended March 31, 2010, 2011 and 2012 was ¥ 251 million, ¥ 141 million and ¥1,244 million, respectively. No intrinsic value of options exercised was recognized for the years ended March 31,
2010, 2011 and 2012.
F-35

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
At March 31, 2012, all of the outstanding stock options were as follows:
Outstanding

Exercisable
Weighted
averageremaining
contractuallife

Number ofoptions

Weighted
average
exercise
price

Weighted
averageremaining
contractuallife

Exercise price

Number ofoptions

Weighted
average
exercise
price¥620 - ¥1,529¥1,531 - ¥2,748

3,255,144
1,633,062

1,298
2,250

4.0 years
1.9 years

1,952,144
1,633,062

1,144
2,250

3.9 years
1.9 years

4,888,206

1,616

3.3 years

3,585,206

1,648

3.0 years

The aggregate intrinsic value for the options outstanding and exercisable at March 31, 2012 was¥ 455 million.
(17) Accrued Pension and Severance Costs
The Company and certain of its Japanese subsidiaries have unfunded retirement and severance plans (pointbased benefits system). Under a point-based benefits system, the benefits are calculated based on accumulated
points allocated to employees each year according to their job classification and their performance.
The Company and its Japanese subsidiaries also have a defined benefit corporate pension plan covering
substantially all employees. Under the cash balance pension plan, the benefits are calculated based on
accumulated points allocated to employees each year according to their job classification and their performancewith a certain interest rate calculated based on the upper and lower limit of a market interest rate.
Certain overseas subsidiaries also have defined benefit pension plans covering substantially all of theiremployees. Benefits payable under the plans are based on employee compensation levels and years of service.
Information about the retirement and severance plans of Advantest for the years ended March 31 was asfollows:

Components of net periodic benefit cost:Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of unrecognized:
Net actuarial (gain) or loss . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service (benefit) cost . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . .

F-36

2010
Japaneseplans

Yen (Millions)
2011
2012
Japanese Japanese Non-Japanese
plans
plans
plans

¥1,320
745
(280)

1,362
724
(486)

1,355
748
(405)

227
242
(237)

560
(176)
—

487
(176)
—

511
(172)
(18)

—
—
—

¥2,169

1,911

2,019

232

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
The following table sets forth the plans’ benefit obligation, fair value of plan assets, funded status atMarch 31, 2011 and 2012.
2011
Japaneseplans

Yen (Millions)2012
Japanese Non-Japanese
plans
plans

Change in benefit obligation:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 33,100
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,362Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
724
Actuarial (gain) or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(417)
Plan amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(484)
Acquisition of Verigy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—34,285
1,355
748
2,464
123
—
(542)
—
—

230
227
242
2,349
—
66
(80)
7,518
(338)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34,28538,433

10,214

Change in plan assets:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return or (loss) on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Verigy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,427
1,606
—
(331)
(420)
—
—

20,282
1,786—(1,594)
(479)
—
—

—
131
66
(278)
(35)
5,051
(299)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,282

19,995

4,636

Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(14,003) (18,438)(5,578)Amounts recognized in the consolidated balance sheets at March 31, 2011 and 2012 were as follows:
2011
Japaneseplans

Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-37

¥

Yen (Millions)2012
Japanese Non-Japanese
plans
plans

(164)
(183)
(13,839) (18,255)(389)(5,189)(14,003) (18,438)(5,578)ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Pension related adjustments (net of tax) recognized in accumulated other comprehensive income (loss) at
March 31, 2011 and 2012 were as follows:
2011
Japaneseplans

Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yen (Millions)2012
Japanese Non-Japanese
plans
plans

¥(5,185) (9,405)
880
751(1,979)—(4,305) (8,654)(1,979)Changes in pension related adjustments (net of tax) recognized in other comprehensive income (loss) for theyear ended March 31, 2011 and 2012 were summarized as follows:

Current year actuarial gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current year prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service benefit and other . . . . . . . . . . . . . . . . . . . . . . . . .

2011Japaneseplans

Yen (Millions)2012
Japanese Non-Japanese
plans
plans

¥(401)
369—(89)(4,463)
243
(123)
(6)

(1,979)
—
—
—

(121)

(4,349)(1,979)The estimated prior service cost and actuarial loss for the defined benefit pension plans that will beamortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next year
are summarized as follow:
Yen (Millions)Japanese Non-Japanese
plans
plans

Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 791
(168)

¥241
—

623

241

Pension plans with accumulated benefit obligations in excess of plan assets at March 31, 2011 and 2012were summarized as follows:

Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-38

2011
Japaneseplans

Yen (Millions)2012
Japanese Non-Japanese
plans
plans

¥34,285
33,454
20,28238,43337,531
19,995

10,2148,638
4,636

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Other information about the retirement and severance plans of Advantest was as follows:
Measurement date:
The measurement date for the pension plans is March 31.
Assumptions:
Weighted-average assumptions used to determine benefit obligations as of March 31:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2011Japaneseplans

Japanese
plans

2.2%
3.0%

1.8%
3.0%

2012
Non-Japanese
plans

3.7%
2.8%

Weighted-average assumptions used to determine net periodic benefit cost for the years ended March 31:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010Japanese
plans

2011
Japaneseplans

Japanese
plans

2.3%
1.5%
3.0%

2.2%
2.5%
3.0%

2.2%
2.0%
3.0%

2012
Non-Japanese
plans

4.8%
6.6%
2.8%

Advantest determines the expected return based on the asset portfolio, historical returns and estimated future
returns.
Plan assets:
Advantest’s investment policies are designed to ensure adequate plan assets are available to provide future
payments of pension benefits to eligible participants by attaining necessary long-term total returns on plan assets.
Taking into consideration the expected returns, associated risks and correlations of returns between asset
categories in plan assets, Advantest determines an optimal combination of equity, debt securities and otherinvestments as Policy Asset Allocation (“PAA”). Plan assets are invested in accordance with PAA with mid-term
to long-term viewpoint, which is revised periodically to the extent considered necessary to achieve the expectedlong-term rate of return on plan assets.
Japanese benefit plans’ weighted-average asset allocation at March 31, 2011 and 2012 by asset category
were as follows:

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Life insurance company general accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-39

2011

2012

Target

45.3%
24.9
9.5
11.7
8.6
100.0%

39.1% 45.0%
26.9
30.0
5.6
2.0
16.3
10.0
12.1
13.0
100.0% 100.0%

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Non-Japanese benefit plans’ weighted-average asset allocation at March 31, 2012 by asset category were as
follows:

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2012Target

38.4%
12.3
42.4
6.9

34.8%
14.0
47.3
3.9

100.0% 100.0%
The three levels of inputs that may be used to measure fair value of plan assets are as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets.
Level 2: Observable inputs other than quoted prices included within Level 1 for the assets, either directly or
indirectly.
Level 3: Unobservable inputs for the assets.
Japanese benefit plans’ asset allocation at March 31, 2011 and 2012 by asset level were as follows:

Total

Yen (Millions)
Fair Value Measurements
at March 31, 2011
(Level 1) (Level 2) (Level 3)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
Japanese companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pooled funds (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
Pooled funds (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedge funds (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Life insurance company general accounts . . . . . . . . . . . . . . . . . . . . . . . . . .

1,929

1,929

—

—

1,436
7,756

1,436
—

—
7,756

—
—

5,044
1,736
2,381

—
—
—

5,044
303
2,381

—
1,433
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,282

3,365

15,484

1,433(a) These funds invested in listed equity securities consisting of approximately 60% Japanese listed companies
and 40% foreign listed companies. This category included both long and short positions aggregating¥2,249 million, invested in Japanese listed companies’ equity.
(b) These funds invested in approximately 45% foreign government bonds, 40% Japanese government bonds,
10% Japanese municipal bonds, and 5% Japanese corporate bonds.
(c) These hedge funds invested in stock price index futures / options, bond futures / options, bonds and private
equity and others.

F-40

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)

Total

Yen (Millions)
Fair Value Measurements
at March 31, 2012
(Level 1) (Level 2) (Level 3)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
Japanese companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pooled funds (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
Pooled funds (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedge funds (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Life insurance company general accounts . . . . . . . . . . . . . . . . . . . . . . . . . .

1,110

1,110

—

—

1,509
6,319

1,509
—

—
6,319

—
—

5,375
2,415
3,267

—
—
—

5,375
1,278
3,267

—
1,137
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19,995

2,619

16,2391,137(d) These funds invested in listed equity securities consisting of approximately 50% Japanese listed companies
and 50% foreign listed companies. This category included both long and short positions aggregating¥1,070 million, invested in Japanese listed companies’ equity.
(e) These funds invested in approximately 45% foreign government bonds, 40% Japanese government bonds,
10% Japanese corporate bonds, and 5% Japanese municipal bonds.
(f) These hedge funds invested in stock price index futures / options, bond futures / options, bonds and private
equity and others.
Level 1 assets are comprised principally of listed equity securities, which are valued based on quoted market
prices at the reporting date for those investments.
Level 2 assets are comprised principally of pooled funds and investments in life insurance company generalaccounts. Pooled funds are valued at their net asset values that are calculated by the sponsors of the funds.
Investments in life insurance company general accounts are valued at conversion value. Level 2 also includes
certain hedge funds that are redeemable in the near term at their net asset values.
Level 3 assets are comprised of hedge funds, which are valued at their net asset values that are calculated by
the sponsors of the funds.
Changes in the Level 3 plan assets for the year ended March 31, 2011 and 2012 were as follows:
Yen (Millions)
2011
Hedge funds
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net realized / unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, issuances and settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer in and / or out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,132
97
(796)
—

2,132
97
(796)
—

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,433

1,433

F-41

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Yen (Millions)2012
Hedge funds
Total

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net realized / unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, issuances and settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer in and / or out of Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 1,433(1,572)
1,276
—

1,433
(1,572)
1,276—

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 1,137

1,137

Non-Japanese benefit plan asset allocation at March 31, 2012 by asset level were as follows:

Total

Yen (Millions)
Fair Value Measurements
at March 31, 2012
(Level 1) (Level 2) (Level 3)

Cash and cash equivalents (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
Pooled funds (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities:
Pooled funds (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,967

1,967

—

—

1,779

—

1,779

—

571
319

—
—

571
319

—
—

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,636

1,967

2,669

—

(a) Cash equivalents were primarily in short-term investment funds, which consisted of short-term money
market instruments that were valued using quoted prices for similar assets and liabilities in active markets.
(b) These funds invested in listed equity securities consisting of Foreign equities.
(c) These funds invested in International bonds.
Cash flows:
Advantest expects to contribute ¥1,812 million and ¥13 million to its Japan defined benefit plans and
Non-Japan benefit plans during the year ending March 31, 2013.
Estimated future benefit payments:
The following benefit payments, which reflect expected future service, as appropriate, are estimated asfollows:
Year ending March 31

Yen (Millions)Japanese Non-Japanese
plans
plans

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 through 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 803
915
934
1,019
1,136
8,281

F-42

59
66
85
100
119
1,251

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(18) Stockholders’ Equity
Changes in the number of shares issued and treasury stock during the years ended March 31, 2010, 2011 and2012 were as follows:

Number of shares as of April 1, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total shares ofcommon stock

Shares oftreasury stock

199,566,770

20,843,298

Purchase of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares as of March 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

——199,566,770

Purchase of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

2,112
(232)
20,845,178
5,449,721(80)

Number of shares as of March 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199,566,770

26,294,819

Purchase of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

899
(328)

Number of shares as of March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199,566,770

26,295,390

The Companies Act of Japan provides that an amount equal to 10% of distributions paid by the Company
shall be appropriated as additional paid-in capital or a legal reserve until the total amount of the additional
paid-in capital and the legal reserve equals to 25% of common stock. Certain foreign subsidiaries are also
required to appropriate their earnings to legal reserves under the laws of the respective countries.
Cash dividends for the years ended March 31, 2010, 2011 and 2012 represent dividends paid out during
those years. The accompanying consolidated financial statements do not include any provision for a dividend of¥10 per share, aggregating ¥1,733 million for the second-half of the year ended March 31, 2012, subsequently
proposed by the Board of Directors.
The amount available for future payment of dividends was determined under the Companies Act of Japanand amounted to ¥55,734 million at March 31, 2012.
(19) Accrued Warranty Expenses
Advantest issues contractual product warranties under which it generally guarantees the performance of
products delivered and services rendered for a certain period. Changes in accrued warranty expenses for the years
ended March 31, 2010, 2011 and 2012 were summarized as follows:2010

Yen (Millions)
2011
2012

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Verigy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Addition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,811 2,802 1,754——
209
3,364 2,653 3,432(3,372) (3,693) (3,269)
(1)
(8)
3

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 2,802

F-43

1,754

2,129

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)(20) Operating Segment and Geographic Information
Advantest manufactures and sells semiconductor and component test system products and mechatronicsrelated products such as test handlers and device interfaces. Advantest also engages in research and development
activities and provides maintenance and support services associated with these products. Advantest’sorganizational structure consists of three reportable operating segments, which are the design, manufacturing,and sale of semiconductor and component test systems, mechatronics systems and services, support and others.
These reportable operating segments are determined based on the nature of the products and the markets.
Segment information is prepared on the same basis that Advantest’s management reviews financial informationfor operational decision making purposes.
The semiconductor and component test system segment provides customers with test system products forthe semiconductor industry and the electronic parts industry. Product lines provided in the semiconductor andcomponent test system segment include test systems for memory semiconductors for memory semiconductor
devices and test systems for SoC semiconductors for non memory semiconductor devices.
The mechatronics system segment provides product lines such as test handlers, mechatronic-applied
products, for handling semiconductor devices, device interfaces that serve as interfaces with the devices that aremeasured and operations related to nano-technology products.
The services, support and others segment consists of comprehensive customer solutions provided inconnection with the above segments, support services, equipment lease business and others.
Fundamental research and development activities and headquarters functions are represented by Corporate.

F-44

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Reportable operating segment information during the years ended March 31, 2010, 2011 and 2012 was asfollows:
Yen (Millions)

As of and for the year ended March 31, 2010:
Net sales to unaffiliated customers . . . . . . . . . . .
Inter-segment sales . . . . . . . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .
Operating income (loss) before stock optioncompensation expenses . . . . . . . . . . . . . . . . . . . . . .
Adjustment:
Stock based compensation expense . . . . . . . . . . .

Semiconductor
andComponent
Test System
Business

Mechatronics
SystemBusiness

Services,
SupportandOthersElimination
andCorporate

Total¥ 30,168
2,404

11,21918

11,838——(2,422)53,225—32,572
1,364

11,237
470

11,8381,977(2,422)503

53,2254,314(7,042)(1,897)

2,175(4,732)(11,496)
143

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .

(11,639)

Expenditures for additions to long- lived assets . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

942
38,782396
10,478

1,856
11,474

231
127,929

3,425
188,663

As of and for the year ended March 31, 2011:
Net sales to unaffiliated customers . . . . . . . . . . .
Inter-segment sales . . . . . . . . . . . . . . . . . . . . . . . .

¥ 67,070
2,263

18,398117

14,166——(2,380)99,634—

69,333
1,417

18,515533

14,166
1,755(2,380)504

99,634
4,209

9,857

(251)

2,133

(5,463)

6,276

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .
Operating income (loss) before stock optioncompensation expenses . . . . . . . . . . . . . . . . . . . . . .
Adjustment:
Stock based compensation expense . . . . . . . . . . .

165

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .

6,111

Expenditures for additions to long- lived assets . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,350
53,570374
11,780

1,733
9,226

336
105,736

3,793
180,312

As of and for the year ended March 31, 2012:
Net sales to unaffiliated customers . . . . . . . . . . .
Inter-segment sales . . . . . . . . . . . . . . . . . . . . . . . .

¥101,831
3,777

20,410206

18,807——(3,983)141,048—

105,608
2,658

20,616627

18,807
3,070(3,983)483

141,048
6,838

9,845

(1,324)

1,614(8,715)

1,420

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . .
Operating income (loss) before stock optioncompensation expenses . . . . . . . . . . . . . . . . . . . . . .
Adjustment:
Stock based compensation expense . . . . . . . . . . .

583

Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Expenditures for additions to long- lived assets . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

837
2,398
93,603F-45

750
12,7893,492
30,713344
82,121

6,984
219,226

ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Adjustments to operating income (loss) in Corporate principally represent corporate general andadministrative expenses and research and development expenses related to fundamental research activities thatare not allocated to operating segments.
Advantest uses the operating income (loss) before stock option compensation expenses for management’s
analysis of business segment results.
Additions to long-lived assets included in Corporate consist of purchases of software and fixed assets forgeneral corporate use.
Total assets included in Corporate consist of cash and cash equivalents, assets for general corporate use andassets used for fundamental research activities, which are not allocated to reportable segments.
One customer and its related entities mainly in the semiconductor and component test system segment andthe mechatronics system segment accounted for approximately 20%, 20% and 29% of total consolidated net sales
for the years ended March 31, 2010, 2011 and 2012, respectively. Other customer accounted for approximately
6%, 7% and 12% for the years ended March 31, 2010, 2011 and 2012, respectively. Another customer accounted
for approximately 2%, 13% and 2% for the years ended March 31, 2010, 2011 and 2012, respectively.
Information as to Advantest’s net sales and property, plant and equipment in various geographical areas was
as follows:
Net sales to unaffiliated customers for the years ended March 31, 2010, 2011 and 2012 were as follows:2010

Yen (Millions)
2011
2012

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,976 22,398
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,930
9,278
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,137
2,252
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,182 65,706
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53,225

99,63416,09529,742
7,015
88,196141,048

Net sales to unaffiliated customers are based on the customer’s location. Net sales indicated as Asia weregenerated in Korea, Taiwan and China and others in the amount of ¥10,334 million, ¥12,805 million and¥11,043 million for the year ended March 31, 2010, ¥20,752 million, ¥21,835 million and ¥23,119 million for theyear ended March 31, 2011, and ¥29,687 million, ¥27,591 million and ¥30,918 million for the year ended
March 31, 2012, respectively. Substantially all net sales indicated as Americas were generated in the UnitedStates of America.
Property, plant and equipment as of March 31, 2010, 2011 and 2012 were as follows:2010

Yen (Millions)
2011
2012

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥29,750 29,280 28,234
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
214
281
1,073
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
539
563
1,582
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,378
1,754
3,317
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-46¥32,881

31,87834,206ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Property, plant and equipment are those assets located in each geographic area.
There was no individually material country with respect to property, plant and equipment outside Japan.
Substantially all property, plant and equipment indicated as Americas were located in the United States ofAmerica. Substantially all property, plant and equipment indicated as Europe were located in Germany. Property,
plant and equipment in Asia were primarily located in Taiwan, Singapore and China.
(21) Related Party Transactions
Advantest sells products to and purchases raw materials from Fujitsu Limited, its 11.6% stockholder as ofMarch 31, 2012 and its group companies (collectively, “Fujitsu”). The terms of sales are the same as those withthird parties. Advantest purchases raw materials after receiving competitive bids from several suppliers.
Advantest also purchases various software products for internal use, information system related services,
research and development materials and services from Fujitsu. Advantest had the following transactions with
Fujitsu as of and for the years ended March 31:
Yen (Millions)
2011
2012

2010

Sales of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2,085 2,461 1,847
Purchases of raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,065 4,622 6,155
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
826
696
459
Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,372 2,717 2,653
Purchases of software, hardware and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
199
442
95
Research and development expenses, computer rentals, maintenance and otherexpenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,056 1,779 1,976
Advantest is holding approximately 35% of common stock of e-Shuttle, Inc., a subsidiary of Fujitsu, since
the initial investment, which is accounted for by equity method of accounting.
(22) Per Share Data
The following table sets forth the computation of basic and diluted net income (loss) per share as ofMarch 31:
Yen (Millions) except per share data
2010
2011
2012

Numerator:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(11,454)

3,163(2,195)

Denominator:
Basic weighted average shares of common stock
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of exercise of stock options . . . . . . . . . . . . . . . .

178,722,505—

175,481,854
13,604

173,271,717—

Diluted weighted average shares of common stock
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

178,722,505

175,495,458

173,271,717

18.03
18.03

(12.67)(12.67)

Basic net income (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . .
F-47¥(64.09)(64.09)ADVANTEST CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
At March 31, 2010, 2011 and 2012, Advantest had outstanding stock options into 3,060,000, 1,610,000 and
4,888,206 shares of common stock, respectively, which were anti-dilutive and excluded from the calculation ofdiluted net income per share but could potentially dilute net income per share in future periods.
(23) Concentrations of credit risk
Advantest is exposed to credit risk in the event of default by financial institutions to cash and cash
equivalents, but such risk is considered mitigated by the high credit rating of the financial institutions.
At March 31, 2011 and 2012, Advantest had two foreign semiconductor customers with significant
receivables. Receivables from these customers accounted for 36% and 32% of consolidated trade receivables at
March 31, 2011 and 2012, respectively. Although Advantest does not expect that these customers will fail tomeet their obligations, Advantest is potentially exposed to concentrations of credit risk if these customers failed
to perform according to the terms of the contracts.
(24) Commitments and Contingent Liabilities
Advantest is involved in various claims and legal actions arising in the ordinary course of business. In theopinion of management, the ultimate disposition of these matters will not have a material adverse effect on
Advantest’s consolidated financial position, results of operations, or cash flows.
Advantest entered into a contract to purchase land in Cheonan City, Korea for a new plant in the amount of¥1,362 million on March 30, 2012 and paid the full amount on April 23, 2012. In addition, outstanding
commitments for the purchase of property, plant and equipment totaled ¥78 million and for the purchase of partsand raw materials totaled ¥2,330 million at March 31, 2012.
Advantest maintains a commitment line agreement with a number of banks and pays commitment fees as
consideration in order to secure a financing source for business operations. The commitment agreement term
ends in March 2015, and the unused availability under this agreement as of March 31, 2012 amounted to ¥10,000
million.

F-48

ITEM 19.

EXHIBITS
Index to Exhibits

1.1

Amended and Restated Articles of Incorporation of the Registrant (English translation)**

1.2

Regulations of the Board of Directors of the Registrant (English translation)

1.3

Regulations of the Board of Corporate Auditors of the Registrant (English translation)***2.1

Share Handling Regulations of the Registrant (English translation)

2.2

Form of Deposit Agreement among the Registrant, JPMorgan Chase Bank (as successor to Morgan
Guaranty Trust Company of New York), as depositary, and the owners and beneficial owners from time
to time of American Depositary Receipts****2.3

Form of Amendment No. 1 to Deposit Agreement among the Registrant, JPMorgan Chase Bank, N.A.
as depositary, and all holders from time to time of American Depositary Receipts, including the form ofAmerican Depositary Receipt*****

2.4

Form of ADR (included in Exhibit 2.3)

4.1

Implementation Agreement by and between Advantest Corporation and Verigy Ltd.*

8.1

List of Principal Subsidiaries (See “Organizational Structure” in “Information on the Company”)

11.1

Code of Ethics of the Registrant applicable to its directors and executive officers, including its principal
executive officer, principal financial officer, principal accounting officer or controller, or persons
performing similar functions******

12.1

Certifications of the Registrant’s Representative Director, President and Chief Executive Officer andDirector and Senior Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

13.1

Certifications of the Registrant’s Representative Director, President and Chief Executive Officer andDirector and Senior Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

15.1

Consents of Independent Registered Public Accounting Firm*

Incorporated by reference to the Company’s report on Form 20-F filed with the SEC on June 24, 2011
(file no. 1-15236).
**
Incorporated by reference to the Company’s report on Form 20-F filed with the SEC on June 26, 2009
(file no. 1-15236).
***
Incorporated by reference to the Company’s report on Form 20-F filed with the SEC on June 26, 2008
(file no. 1-15236).
**** Incorporated by reference to the Company’s registration statement on Form 20-F filed with the SEC on
September 4, 2001 (file no. 1-15236).
***** Incorporated by reference to the Post Effective Amendment to the Company’s registration statement on
Form F-6 Filed with the SEC on September 12, 2006 (file no. 333-13886).
******Incorporated by reference to the Company’s annual report on Form 20-F filed with the SEC on June 29,
2004 (file no. 1-15236).

100

SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this Form 20-F/A (Amendment No. 1) on its behalf.
Date: August 6, 2012
ADVANTEST CORPORATION
By:
Name:
Title:/s/ HIROSHI NAKAMURA
Hiroshi Nakamura
Director, Managing Executive Officer

Exhibit 1.2(Translation)

REGULATIONS OF THE BOARD OF DIRECTORSADVANTEST CORPORATIONREGULATIONS OF THE BOARD OF DIRECTORS
Article 1.

(Purpose)

Except as otherwise provided for by laws and ordinances or the Articles of Incorporation, any matters related
to the Board of Directors of Advantest Corporation (the “Company”) shall be governed by these regulationsof the Board of Directors (the “Regulations”).
Article 2.

(Responsibilities)

The Board of Directors shall, in addition to making decisions on significant matters concerning the executionof business and basic management policies, including the Internal Control System, oversee the execution ofduties of the Representative Director.
Article 3.

(Convocation)

The Ordinary Meeting of the Board of Directors shall be held once a month in principal, and theExtraordinary Meeting of the Board of Directors shall be held at any time whenever necessary.
Article 4.

(Place)The meeting of the Board of Directors shall be held at the head office of the Company; provided, however,that the place of the meeting may be changed whenever necessary.
Article 5.

(Convener and Chairperson)

The Chairperson of the Board shall convene and act as the chairperson of the meeting of the Board of
Directors. Should the Chairperson of the Board be unable to act, another director shall take his/her place inaccordance with an order of priority previously determined by the Board of Directors.
Article 6.

(Request for Convocation)

1.

A director may, by submitting a matter to be discussed at a meeting of the Board of Directors to theConvener stipulated in the preceding Article, request that a meeting of the Board of Directors beconvened.

2.

A corporate auditor may, where it is deemed necessary, request the Convener stipulated in the preceding
Article to convene a meeting of the Board of Directors.

Article 7.

(Procedure for Convocation)

1.

Notice for convocation of the meeting of the Board of Directors shall be dispatched in writing to eachdirector and corporate auditor at least three (3) days prior to the date set for the meeting; provided,
however, that such period may be shortened or the meeting may be convened orally or electronically if
the convocation is urgently required.

2.

If the consent of all directors and corporate auditors is obtained, the meeting of the Board of Directors
may be held without taking the procedure for convocation.

Article 8.
1.

(Matters to be Resolved)

Matters which are required to be resolved by the Board of Directors are stipulated in the annex hereto.

-2-

Article 9.

(Method of Adopting Resolutions)

1.

Resolutions of the Board of Directors shall be adopted by a majority vote of the directors present at themeeting at which a majority of directors are present. In the event of a tie, the chairperson of the meeting
may defer the resolution and submit the same proposal again at the following meeting of the Board of
Directors.

2.

Any director having a special interest in the matter to be resolved may not exercise his or her voting
rights.

Article 10.

(Omission of Resolutions)

If the chairperson of the meeting submits a resolution in respect of a matter that is subject to a resolution by
the Board of Directors, if all directors (limited to those directors who are entitled to participate in resolving
such matter) consent to such resolution in writing or electronically, and no corporate auditor objects to such
resolution, such resolution shall be deemed approved by the Board of Directors.
Article 11.

(Matters to be Reported)

1.

The Representative Director or the director in charge shall report to the Board of Directors on the statusof execution of business during such period.

2.

The Representative Director may, where it is deemed necessary in a report pursuant to the previous
paragraph, cause another person responsible for the execution of the relevant business to report on thestatus of such matter.

3.

Any director who intends to engage in i) transactions which will compete with the business of theCompany or ii) transactions with the Company, shall disclose the important facts to and obtain approvals
from the Board of Directors, and shall report the important facts concerning the transactions to the Boardof Directors without delay after the completion thereof.

4.

Matters which are required to be reported to the Board of Directors are stipulated in the annex hereto.

Article 12.

(Appointment and Dismissal of Executive Officers)

1.

The Board of Directors may appoint executive officers and assign the performance of operations ofbusiness of the Company to them.

2.

The Board of Directors may appoint, from the executive officers, one (1) person for the office ofPresident of Executive Officers, and several persons for the office of Vice-President of Executive
Officers, Senior Executive Officer and Managing Executive Officer, respectively, by its resolution.

3.

Basic matters such as the appointment, authority, duties and retirement of executive officers shall beseparately determined by the Regulations of Executive Officers.

Article 13.

(Attendance of Related Persons)

If the Chairperson deems it necessary for deliberation at a meeting of the Board of Directors, he or she may
have any executive officer responsible for business related to any of the proposals and/or other persons he or
she deems appropriate to attend the meeting and express his or her opinions and/or provide explanations.
Article 14.

(Minutes)

1.

The substance of the proceedings of the meeting of the Board of Directors, the results thereof and othermatters provided for in relevant laws and regulations shall be recorded in the minutes and the directors
and corporate auditors present at the meeting shall affix their names and seals thereto or put theirelectronic signatures thereon.

2.

The minutes shall be kept at the head office of the Company for the period of ten (10) years.
-3-Article 15.

(Notification to Directors and Corporate Auditors Not Present)

Directors and corporate auditors who were not present at a meeting of the Board of Directors shall be notifiedof the substance of the proceedings and the results thereof.
Article 16.

(Amendment)

Any amendment to these Regulations shall be made by a resolution of the Board of Directors.
SUPPLEMENTARY PROVISION
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted
Amended and Enacted

May 1, 2012
January 1, 2008
June 27, 2006
May 1, 2006;
June 27, 2003;
June 27, 2002;
June 28, 2001;
May 1, 1998;
April 1, 1992; andOctober 1, 1990.

-4-

ANNEX
MATTERS TO BE RESOLVED
1. Matters provided for by laws and ordinances or the Articles of Incorporation:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)

Convocation of the General Meeting of Shareholders and proposals to be referred thereto(Article 298 of the Company Law (“CL”));
Determination and the order of directors to act as the Convener and the Chairperson at the General
Meeting of Shareholders;Establishment and amendment of the Regulations of Board of Directors;
Development of the Internal Control System (CL362);
Appointment or dismissal of the Representative Director or directors with titles (CL362);
The amount of remuneration, among others, and time of payment of remuneration to directors upon
resolution of the General Meeting of Shareholders;Approval of the transactions by directors which will compete with the business of the Company andthe transactions between directors and the Company (CL365);
Exemption of directors’ and corporate auditors’ liabilities under the Articles of Incorporation(CL362);
Appointment or dismissal of a Counselor or an Advisor;
Approval of accounting documents, business reports and annexed specifications thereof (CL436);
Matters concerning distribution of surplus and related matters (CL459);
Establishment of a record date;
Matters concerning a share split and amendment to the Articles of Incorporation with respect to anincrease of the total number of issuable shares corresponding to such share split (CL183, CL184);
Allotment of shares without consideration (CL186);
Acquisition of treasury shares under the Articles of Incorporation (CL165);
Retirement of treasury shares of the Company (CL178);
Matters concerning the issuance of offering shares (CL201);
Decrease of the number of shares constituting one unit of shares or abolishment of the provisions
which define such number (CL195);
Matters concerning the issuance of bonds, stock acquisition rights and bonds with stock acquisitionrights (CL362, 240);
Sale of shares owned by non est shareholders (CL197);
Establishment and amendment of the Share Handling Regulations;Appointment of the share registration agent and its handling office;Any and all other significant matters under the laws and ordinances or the Articles of Incorporation.

2. Important Execution of Business

Threshold for approval(1)

Matters concerning budgets and settlement ofaccounts;(2)

Matters concerning material contracts, businessalliances or lawsuits;
Matters concerning other important executionof business.

(3)

-5-

•

budget for the first and second half of the
fiscal year, financial statements for the fiscal
year, interim period and quarterly period, etc.

3. Disposal or Acquisition of Important Assets and Loansof Large Amount
(1)

All;

(2)

Establishment, merger, transfer, dissolution,liquidation, capital increase or capital decreaseof affiliate or joint venture;
Acquisition or sale of businesses;(3)

Capital subscription or investment;(4)

Acquisition, sale or lease of fixed assets or trade
rights;

One hundred million yen (¥100,000,000) or
more per each;Three hundred million yen (¥300,000,000) or
more per each (including land and buildings);(5)

Disposal of fixed assets or inventory;(6)

Loans and borrowings;(7)

Leasing;(8)Creation of security right;(9)

Guarantee of liabilities;(10)

Depreciation or waiver of credit; and(11)

Donation.

All;

One hundred million yen (¥100,000,000) or
more per each;Three hundred million yen (¥300,000,000) or
more per each;
Five million yen (¥5,000,000) or more permonth per each;
One hundred million yen (¥100,000,000) or
more per each;
Thirty million yen (¥30,000,000) or more per
each;Thirty million yen (¥30,000,000) or more per
each; andThirty million yen (¥30,000,000) or more per
each.
(note) These items also cover subsidiaries.
However, other than (1), these items do not
apply to matters within the Advantest group.

4. Important corporate organization and personal affairs(1)

Amendment to corporate organization;•

Groups or Divisions (only in the casewhere there are no upper Groups).

(2)

Appointment or dismissal of executive officers,
or amount of remuneration, and time of paymentof remuneration thereto;
Personnel changes; and•Assignment of business responsibilities todirectors and corporate executive officers,or personnel changes of representative
directors of important affiliates.

(3)

(4)

Appointment of directors or corporate executive
officers to an affiliate, other company or outsideorganization, or change thereof.

MATTERS TO BE REPORTED
1.
2.
3.
4.
5.

Monthly settlement of accounts (excluding those months in which the fiscal, interim or quarterly
settlement of accounts are subject to resolution)
Matters subject to the resolution of the Board of Managing Executive Officers which are consideredmaterial by the Representative Director
Matters which will have a material impact on the management of the Company
Matters stipulated in Article 11, Paragraph 3 of the Regulations of the Board of Directors (competitivetransactions and conflict of interest transactions)
Other matters in respect of which the Chairperson requests a report-6-

Exhibit 2.1(Translation)

SHARE HANDLING REGULATIONSADVANTEST CORPORATIONSHARE HANDLING REGULATIONSCHAPTER I. GENERAL PROVISIONS
Article 1(Purpose)

Matters related to the procedures of execution of shareholders’ rights, and the handling and fees of shares ofAdvantest Corporation (the “Company”) shall be governed by these Share Handling Regulations pursuant to theprovisions of the Articles of Incorporation of the Company, in addition to the provisions set forth by Japan
Securities Depository Center, Inc. (“JASDEC”) and the securities companies or other account management
institutions at which the Company’s shareholders hold their respective transfer accounts (each a “Securities
Company”).
Article 2(Share Registration Agent)

The share registration agent (the “Share Registration Agent”) of the Company and the handling office thereof(the “Handling Office”) shall be as follows:
Share Registration Agent:
Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Handling Office:Corporate Agency Division of Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo
CHAPTER II. RECORDING IN THE SHAREHOLDERS’ REGISTER
Article 3(Recording in the Shareholders’ Register)

1.

Changes to the items registered in the shareholders’ register (the “Shareholders’ Register”) shall be made bya notice from JASDEC such as the general shareholders notification (excluding the notices set forth in
Article 154, Paragraph 3 of the Act on Transfer of Bonds, Shares, etc., the “Individual Shareholder
Notification”).

2.

In addition to the preceding paragraph, changes to the items registered in the Shareholders’ Register shall bemade without notice from JASDEC in the event of issuance of new shares, or as otherwise provided by laws
and regulations.

3.

Entries in the Shareholders’ Register shall be recorded using the letters and symbols specified by JASDEC.

Article 4(Notification Concerning Recorded Items in Shareholders’ Register)

Each shareholder shall submit a notification of his/her name or corporate name and address through their
Securities Company and JASDEC in accordance with the provisions set forth by JASDEC. The same shall apply
in the case of any change thereto.
Article 5(Representative of Corporation)

Any shareholder that is a corporation shall designate one (1) representative and submit a notification of such
representative’s name through their Securities Company and JASDEC in accordance with the provisions set forth
by JASDEC. The same shall apply in the case of any change to such representative.

1

Article 6(Representative for Joint Shareholder)

Any shareholder who jointly own shares shall designate one (1) representative and submit a notification of such
representative’s name or corporate name and address through their Securities Company and JASDEC in
accordance with the provisions set forth by JASDEC. The same shall apply in the case of any change to such
representative.
Article 7(Statutory Agent)

Any parental authority, guardian or other statutory agent of shareholders shall submit a notification of his/hername or corporate name and addresses through their Securities Company and JASDEC in accordance with theprovisions set forth by JASDEC. The same shall apply in the case of any change thereto.
Article 8(Notification of Address at which the Non-Resident Shareholder will Receive Notice)

Any non-resident shareholder and registered pledgee of shares residing abroad or their statutory agent shallappoint a standing proxy in Japan, or designate an address in Japan at which they will receive notices, and submit
a notification of the name or corporate name and address of their standing proxy or the place at which notices areto be received through their Securities Company and JASDEC in accordance with the provisions set forth by
JASDEC. The same shall apply in the case of any change in such matters.
Article 9(Method of Verification of Notifications Made through JASDEC)

Notifications submitted to the Company by a shareholder through their Securities Company and JASDEC shallbe deemed to have been made by such shareholder.
CHAPTER III. CONFIRMATION OF SHAREHOLDERS
Article 10(Confirmation of Shareholders)1.

When a shareholder (including a shareholder who has made an Individual Shareholder Notification) makes arequest or exercise the rights as a shareholder (a “Request”), the shareholder shall attach or submit
documentation evidencing that such Request is being made in accordance with such shareholder’s intent(the “Documentary Evidence”). Notwithstanding, if the Company is able to confirm that a Request is being
made directly by the shareholder, the Documentary Evidence will not be necessary.

2.

If a shareholder makes a Request against the Company through their Securities Company and JASDEC,
such Request will be considered to have been made directly by the shareholder, and the Documentary
Evidence shall not be required.

3.

If a shareholder makes a Request through an agent, such agent shall attach a power of attorney either signedby the shareholder or with his or her name and seal affixed, in addition to the procedures set forth inParagraphs 1 and 2 above. The power of attorney shall state the name or corporate name and address of theperson to whom authority has been granted.

4.

The provisions of Paragraphs 1 and 2 above shall also apply mutatis mutandis to the agent.
CHAPTER IV. PROCEDURES FOR EXERCISING SHAREHOLDERS’ RIGHTS

Article 11(Minority Shareholders’ Rights)

In the event that a minority shareholder exercises those rights which are set forth in Article 147, Paragraph 4 of
the Act on Transfer of Bonds, Shares, etc., directly against the Company, such shareholder shall exercise his or
her rights by attaching written documentation bearing the signature or the name and seal of the shareholder
together with a request for an Individual Shareholder Notification.
2

CHAPTER V. PURCHASE OF SHARES CONSTITUTING LESS THAN ONE UNIT
Article 12(Request for Purchase of Shares Constituting Less Than One Unit)

If any shareholder requests the Company to purchase those shares constituting less than one unit that he or she
holds, such shareholder shall submit the request through their Securities Company and JASDEC in accordancewith the provisions set forth by JASDEC.
Article 13(Effective Date of Request for Purchase of Shares Constituting Less Than One Unit)

The request for purchase of shares constituting less than one unit shall be effective on the day when the
documentation pertaining to the request for purchase is received at the Handling Office of the Share Registration
Agent.
Article 14(Purchase Price of Shares Constituting Less Than One Unit)

1.

The purchase price of shares constituting less than one unit, the purchase of which has been requested inaccordance with the provisions of the preceding articles, shall be equal to the amount to be obtained bymultiplying the purchase price per share as provided for under Paragraph 2 below by the number of sharesconstituting less than one unit the purchase of which has been requested.

2.

The purchase price per share of shares constituting less than one unit, the purchase of which has beenrequested, shall be equal to the closing price per share at which the shares of the Company are sold on theTokyo Stock Exchange on the day when the request for the purchase as provided for in the preceding article
is received at the Handling Office of the Share Registration Agent as set forth in Article 2 above, and should
no sales transaction be performed on the shares of the Company on the said day then the price per share atwhich the shares of the Company are first sold at the said stock Exchange thereafter.

Article 15(Payment of Purchase Price of Shares Constituting Less Than One Unit)

Unless otherwise separately provided for by the Company, the amount of the money payable for the sharesconstituting less than one unit, the purchase of which has been requested, shall be paid by depositing money intoa bank savings account which is designated by the person who requested the purchase of shares or by cash
payment at Japan Post Bank Co., Ltd. on the fourth business day from the day when the purchase price per shareis fixed as provided for under Paragraph 2 of the preceding article; provided, that should the purchase price pershare be a price which reflects the right to receive dividends from surplus or distribution of new shares by stock
split, the payment shall be made on or before the record date thereof.
Article 16(Transfer of Purchased Shares Constituting Less Than One Unit)

The shares purchased in accordance with the provisions for the purchase of shares constituting less than one unit
shall transfer to the account of the Company in accordance with the preceding article on the day on which thepayment of the purchase price is made or the payment procedures has been completed.
CHAPTER VI. SALE OF SHARES CONSTITUTING LESS THAN ONE UNIT
Article 17(Method of Request for Sale)

If any shareholder holding shares constituting less than one unit requests the Company to sell such shareholder
the number of shares needed to make one unit when added with the less than one unit already held by suchshareholder (a “Request for Sale”), such shareholder shall submit the request through their Securities Company
and JASDEC in accordance with the provisions set forth by JASDEC.

3

Article 18(Request for Sale of Shares Exceeding the Number of Treasury Stock)

If the aggregate number of shares the sale of which has been requested on any one day exceeds the number oftreasury stock reserved by the Company for the Request for Sale, no such Request for Sale made on that day shallbecome effective.
Article 19(Effective Date of Request for Sale)

The Request for Sale of shares constituting less than one unit shall become effective on the day on which such
request is received by the Handling Office of the Share Registration Agent.
Article 20(Suspension Period of Request for Sale)

1.

The Company shall suspend acceptance of the Request for Sale every year during (i) the period
commencing the tenth business day prior to March 31 and ending on March 31, (ii) the period commencing
the tenth business day prior to September 30 and ending on September 30, and (iii) the period commencing
the tenth business day prior to the shareholder record date and ending on such shareholder record date thatare provided by JASDEC.

2.

Notwithstanding the immediately preceding paragraph, the Company may establish any other period tosuspend acceptance of the Request for Sale whenever the Company deems it necessary.

Article 21(Determination of Sale Price)1.

The sale price per share shall be the last selling price per share of the Company on the Tokyo Stock
Exchange on the effective date of the Request for Sale; provided, that if no share of the Company wastraded on the Tokyo Stock Exchange on such date or such date was not a business day of the Tokyo Stock
Exchange, the sale price shall be the price at which the shares of the Company are first traded subsequent
thereto.

2.

The sale price shall be calculated by multiplying the sale price per share stipulated in the immediately
preceding paragraph by the number of shares for which the Request for Sale has been made.

Article 22(Transfer of Shares Sold)

The Company shall submit an application to transfer those treasury stock sold by the Company pursuant to a
Request for Sale to the transfer account of the shareholder making the Request for Sale on the day on which theCompany confirms that such shareholder has deposited, through their Securities Company and in accordancewith the provisions set forth by JASDEC, into the bank account designated by the Company, the sale price for the
relevant shares.
CHAPTER VII. SPECIAL CASE FOR SPECIAL ACCOUNTS
Article 23(Special Case for Special Accounts)

Matters relating to special accounts, including the verification of the identity of any shareholder who has opened
a special account, shall be administered in accordance with the provisions set forth by JASDEC and theprovisions set forth by the institution managing such special account.

4

SUPPLEMENTARY PROVISIONS
Article 1
These Share Handling Regulations shall be established or amended upon the proposal of the Department
Manager of Personnel and General Affairs Department and by resolution of the meeting of the Board of
Directors.
Article 2
These Share Handling Regulations have been amended on June 27, 2012.
(End of Document)

5

Exhibit 12.1
CERTIFICATION
I, Haruo Matsuno, certify that:1.

I have reviewed this annual report on Form 20-F/A (Amendment No. 1) of Advantest Corporation (the“registrant”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Boardof Directors (and persons performing the equivalent function):(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: August 6, 2012
ADVANTEST CORPORATION
By:

/s/

HARUO MATSUNO

Name:
Title:

Haruo Matsuno
Representative Director, President and CEO

CERTIFICATION
I, Hiroshi Nakamura, certify that:1.

I have reviewed this annual report on Form 20-F/A (Amendment No. 1) of Advantest Corporation (the“registrant”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to statea material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the period covered by the annual report that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Boardof Directors (and persons performing the equivalent function):(a) All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.

Date: August 6, 2012
ADVANTEST CORPORATIONHIROSHI NAKAMURA

By:

/s/

Name:
Title:

Hiroshi Nakamura
Director, Managing Executive Officer

Exhibit 13.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
each of the undersigned officers of Advantest Corporation, a Japanese corporation (the “Company”), does hereby
certify that, to such officer’s knowledge:
1.

The accompanying Annual Report of the Company on Form 20-F/A (Amendment No. 1) for the period
ended March 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and2.

The information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.

Date: August 6, 2012
By:

/s/

HARUO MATSUNO

Name: Haruo Matsuno
Title: Representative Director, President and CEO
Date: August 6, 2012
By:/s/ HIROSHI NAKAMURA
Name: Hiroshi Nakamura
Title: Director, Managing Executive Officer

Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:(1) Registration Statement (Form S-8 No. 333-175704) of Advantest Corporation,(2) Registration Statement (Form S-8 No. 333-175666) of Advantest Corporation,(3) Registration Statement (Form S-8 No. 333-169624) of Advantest Corporation,(4) Registration Statement (Form S-8 No. 333-161977) of Advantest Corporation,(5) Registration Statement (Form S-8 No. 333-153610) of Advantest Corporation,(6) Registration Statement (Form S-8 No. 333-146218) of Advantest Corporation,(7) Registration Statement (Form S-8 No. 333-141394) of Advantest Corporation, and(8) Registration Statement (Form S-8 No. 333-97107) of Advantest Corporation;of our reports dated June 27, 2012, with respect to the consolidated financial statements and the effectiveness ofinternal control over financial reporting of Advantest Corporation and subsidiaries, included in this Form 20-F/A(Amendment No. 1).
/s/ Ernst & Young ShinNihon LLC
Tokyo, Japan
August 6, 2012