LINTEC Annual Report 201 For the fiscal year ended March 31, 2018
Mission Statement
The company name LINTEC derives from "linkage" and "technology," two key components of our business philosophy, which emphasizes the importance of close relations, inside and outside the company, and leading-edge R&D programs. By bringing these together to develop innovative solutions, we have eestablished a reputation in Japan and overseas as a dynamic and reliable company that contributes to the prosperity of our stakeholders, to the growth of our industry, and to a brighter future for society as a whole. And underpinning all of our business activities is an unwavering emphasis on "Sincerity and Creativity," the twin values enshrined in our company motto.
For tomorrow we build today
Editorial Policy
This report is meant to help shareholders and other investors understand the LINTEC Group and its quest to achieve sustain- able growth and contribute to the further development of society as a whole. Based on the International Integrated Reporting Framework released by the International Integrated Reporting Council in December 2013, in addition to performance and finan- cial information, this report also introduces the technological capabilities, human resources, and other "intangible assets" accumulated by the LINTEC Group that are of the variety not listed in the financial statements. Information that could not be contained within this report is available on the following websites. REPORTING PERIOD This report covers the period from April 1, 2017 to March 31, 2018. However, some of the information includes content from April 2018 onward. FORWARD-LOOKING STATEMENTS This report includes forward-looking statements, such as forecasts of business results, based on information currently held and assumptions that have been judged as reasonable by the Company. The Company cannot quarantee the accuracy of these statements or definitively assure the realization of future numeri- cal targets and policies. Actual business results, etc., may vary due to various factors and circumstances.
Contents
OVERVIEW
COVER STORY

ESG
THE BASE THAT SUPPORTS GROWTH

STRATEGY
MANAGEMENT STRATEGY A Message from the President .............................................  12 SPECIAL FEATURE LINTEC’s Semiconductor-Related Business  ............  18

FINANCIAL
INFORMATION
FINANCIAL SECTION

Consolidated Statement of Changes in Net Assets.....  59 Consolidated Statement of Cash Flows ..........................  60 Notes to Consolidated Financial Statements  ...........  61 Management’s Report on Internal Control over 84 Report of Independent Auditors ............................................... 85 87 Valvaavo Гозтаят 2 0 SB TAMЯOFINI JAIONANF 1 LINTEC’s History
LINTEC’s
New Growth Stage
Since our founding in 1927 as FUJI SHOKAI, we have steadily grown through constant development of technologies and products that anticipate the needs of the times. In 1990, three companies merged to form LINTEC Corporation, which began stepping up globalization. Today, LINTEC products play important roles in a wide range of countries. Net Sales £102.6 billion Apr. 1990 LINTEC Corporation Formed through the merger of three companies Accumulating Technology Capabilities and Expanding Our Business Field Established in 1927 as a manufacturer of gummed tape for packaging, FUJI SHOKAI significantly expanded its businesses due to the demand for cardboard boxes, which were rapidly being used as a replacement for wooden boxes. In 1960, we began manufacturing and selling adhesive papers for labels, thereby building the foundations of our current mainstay businesses. From the 1970s, the Company started developing new markets for adhesive products, such as highly durable adhesive films used for motorcycles, automo- biles, and signboards and window films that are attached to the glass surfaces of buildings and other structures. After changing its name to FSK CORPORATION in 1984, the Company entered the semiconductor-related product field in 1986. LINTEC Corporation came into being in 1990 through a three-way merger with SHIKOKU PAPER CO., LTD. and SOHKEN KAKO CO., LTD. This led to significant extension of our business field into upstream areas including specialty papers as well as release papers and films. Main Highlights Apr. 1927 FUJI SHOKAI established in Sugamo, Tokyo Started production and sales of gummed tape for packaging Oct. 1934 The Company reorganized to establish FUJI SHIKO CORPORATION 1960 Started production and sales of adhesive papers for labels and later commenced production and sales of adhesive films Oct. 1984 Company name changed to FSK CORPORATION 1986 Developed UV curable dicing tape and made full-scale entry into the semiconductor-related product field Sep. 1987 Acquired U.S. window film manufacturer MADICO, INC. 1991 Made full-scale entry into LCD-related product field May 1994 PT. LINTEC INDONESIA established as manufacturing base for adhesive products for labels V3N9990 9 S3 Globalization and Reinforcement of R&D Capabilities Usher in a New Growth Phase Following the merger, LINTEC entered the LCD-related product field in 1991. Further, from the mid-1990s the Company became proactive in setting up over- seas bases. Globalization has progressed further since the turn of the century with a more rapid increase in the number of manufacturing and sales bases, principally in Asia. In 2016, we acquired three companies* in Europe and the United States and began a new growth phase. Meanwhile, regarding the strength- ening of R&D capabilities, a new building for the research center that is currently our core R&D facility was completed in 1995. In 2015, next to the research center, we built the Advanced Technology Building, which includes leading-edge testing facilities. We are working continually to accelerate product development and to establish new technologies with a view to further growth. * Three companies: MACTAC AMERICAS, LLC and VDI, LLC in the United States and LINTEC GRAPHIC FILMS LIMITED, currently LINTEC EUROPE (UK) LIMITED, in the United Kingdom TAMЯOTINI JAIDNANI
Dec. 1995
New building for Research Center constructed in Saitama Prefecture Jun. 2002 LINTEC (SUZHOU) TECH CORPORATION in China established as manufacturing base for adhesive products for labels and casting papers for synthetic leather Sep. 2004 LINTEC KOREA, INC., established as manufacturing base for electronics-related products
Jun. 2011
LINTEC (THAILAND) CO., LTD., established as manufacturing base for adhesive products for labels Jan. 2015 LINTEC ASIA PACIFIC REGIONAL HEADQUARTERS PRIVATE LIMITED in Singapore established as regional headquarters for Southeast Asia
May 2015
Advanced Technology Building constructed in Saitama Prefecture
Oct.–Dec. 2016
Acquired three companies in Europe and the United States, including manufacturer of adhesive products for labels MACTAC AMERICAS, LLC 3 LINTEC’s Distinct Features
We are drawing on the original technological capabilities we have built up over the years to establish a firm position as a leading company in adhesive products and specialty papers. Based on our philosophy of “customer first" and innovative new ideas, we will continue to work on developing high-value-added products we can offer to customers to meet their diverse range of needs.
LINTEC’s Competitive Advantages
— Integrated Production System for Adhesive Products and Provision of Comprehensive Solutions LINTEC's expertise extends beyond adhesives development and coating to a wide variety of proprietary technologies in the manufacture of base paper for release papers, the development of release materials and related coating processes, and facestock improvement coating. The Group has thus built an integrated production system for adhesive products. The resulting ability to manufacture and procure release papers and films for adhesive products in-house gives us advantages in quality, costs, and delivery lead times. Additionally, by combining different processing technologies, we are able to create adhesive products for use in a diverse range of fields. In areas other than adhesive products, we bring to market large numbers of unique products designed for use with upstream technologies, such as industrial-use release papers and films and specialty papers. We also develop and manufacture equipment that fully leverages the properties of our adhesive products. This includes labeling machines that automatically apply labels to packaging and equipment used in semiconductor production. Comprehensive solutions incorporating materials and such equipment are another advantage of the LINTEC Group. 4 2
Stable Business Structure That Is Not Susceptible to Market Volatility
in Any Single Industry
In recent years, the earnings drivers among LINTEC’s diverse range of products have been products for the semiconductor, electronic component, and LCD industries, which have undergone rapid market growth. Meanwhile, sales and profit have been comparatively stable in relation to mainstay adhesive products for labels used for food, daily necessities, pharmaceuticals, automobiles, and consumer electronics, and these products can be seen as foundation businesses that firmly underpin our earnings. The production of a wide range of products in growth and foundation businesses and sales to a broad range of industries without reliance on any particular industry are the distinguishing characteristics of our business structure. The resulting steady earnings that are not susceptible to market volatility in any single industry are one of our strengths. W3IV Я3 V0 0 S3 5 LINTEC’s Business Model
The numerous assets amassed by the LINTEC Group since the time of its founding are vital capital for our business activities and the driving force in our manufacturing as we respond to wide-ranging social needs. We will continue to return the resulting profits to our stakeholders and invest with an eye to the future as we seek to create new value. Corporate Governance  P.449 6 Strategy for Growth
Accumulation & Advancement W3IV Я3V0 YOETA ST 2 osa IOITAMЯQINI JAIDNANIA 7
Performance Highlights
LINTEC Corporation and its consolidated subsidiaries Years ended March 31
FINANCIAL HIGHLIGHTS
Net Sales Profit Attributable to Owners of Parent / Return on Equity (ROE) ROE Total Assets / Net Assets ■ ■■ Operating Income ■on Operating Profit Margin (right) Net Income per Share / Cash Dividends per Share Dividends per Share Cash Dividends per Share (right) ■■ Net Cash Provided by Operating Activities ■■■ Net Cash Used in Investing Activities ■■■ Net Cash Provided by (Used in) Financing Activities Financial Summary Please see pages 54–55. Capital Expenditures NON-FINANCIAL HIGHLIGHTS Number of Employees 794 Depreciation and Amortization (Excluding amortization of goodwill) CO 2 Emissions thousand tons WEINSBAO YOETA ST 2 0 S3 R&D Expenses Toluene Handling Volume / Toluene Emission Volume Handling Volume mission Volume ■ ■■ Toluene Emission Volume 9
CORPORATE Apr. 1 Began new three-year medium-term business plan, LIP-2019 Sep. 7 Participated in the 2017 Mizuho Investment Conference Tokyo Jun. 22 Announced rationalization of the business management of U.S. manufacturing subsidiary MADICO, INC. 2017 Apr. Jun. Jul. Aug. Sep. PRODUCTS May 1 Launched new-model equipment for the applica- tion of surface protective tapes to semiconductor wafers that realizes high performance and saves space May 1 Added deepest-color-type auto- motive window film to WINCOS Automotive Film lineup Jul. 10 Launched new-model automatic labeling machine with a simpler, more practical design
Focus 1
Exhibited at Labelexpo Europe 2017
We exhibited many original high-value- added products in a large 450m² booth immediately beside the venue's main recep- tion desk. Many people visited our booth and the exhibition helped us in our effort to expand sales and enhance our brand power in Europe and the rest of the world.
Focus 2
We participated in several IR conferences spon-
sored by securities companies
We participated in three IR conferences held by securities companies in Tokyo at which domestic and international institutional investors gathered. In the meetings we held with many overseas investors, President Nishio explained LINTEC's business strategy and management policy in detail, helping to promote understanding of the Company. WENSELVO
Dec. 1
Merged LINTEC's Hiratsuka Office and FUJI-LIGHT, INC., to establish SHONAN LINTEC KAKO, INC., as a slitting and processing subsidiary Nov. 1 Merged sales subsidiary LINTEC BKK PTE LIMITED with manufacturing subsid- iary LINTEC (THAILAND) CO., LTD. in Thailand Mar. 8 Participated in Daiwa Investment Conference Tokyo 2018 Feb. 28 Participated in SMBC NIKKO Japan Series, Executive Conference Tokyo 2018 Mar. 16 and 29 Held company briefings for individual inves- tors in Osaka and Tokyo Mar. 22 Announced abolition of "rules of large-scale purchase" in relation to large-scale purchases of the Company's shares ГӘЗТАЯТ 2 Oct. Nov. Dec. Jan. 2018 Feb. Mar. 0 SB Oct. 20 Added to lineup of anti-tamper label materials by launching non-transferable type Nov. 21 Added to lineup of oil-tolerant labelstock by launching transparent type Dec. 1 Launched WINCOS Paint Protection Film, which pro- tects the paintwork of auto- motive bodies from dirt and scratching Jan. 19 Revamped the lineup of PAROI decorative films for interiors, which are usable for commer- cial facilities, offices, hotels, and a wide range of other applications ГАМЯОЧИІ  JAIDNANP 11