Annual Report 2017We aim to think and create with customers. 6. Fairness: Being open and fair Act...

Annual Report2017

Table of Contents

Disclaimer for Forward-Looking Statements

Information concerning industry or market trends, or matters such as economic conditions,

contained in this Annual Report was prepared based on data available at the time of preparation

of such information. The Company makes no warranties regarding the authenticity, accuracy,

reasonableness and comprehensiveness of posted information. Information on the Group’s plans,

estimates, forecasts, and expectations, as well as all other information concerning the future,

is solely the expression of the Company’s judgment or opinions at the time of preparation of

such information. Actual business performance, financial conditions, and other results may differ

significantly from information in this Annual Report or conclusions drawn from such information,

because of changes in personal consumption or other economic conditions in Japan or elsewhere,

currency exchange conditions, trends in smartphone or other electronic device markets, the

management orientation of key customers, fluctuations in raw material prices, or other factors.

JDI develops, manufactures and delivers displays to the global

market that are essential in creating a visual interface capable of

transmitting large amounts of information instantaneously and

linking people to the world at large. JDI’s products are used in

smartphones and other mobile devices, automotive electronics,

which are becoming increasingly intelligent, digital cameras and

other consumer electronics, medical equipment and industrial

equipment. They are highly regarded in these diverse fields in

the global market.

By fully capitalizing on its advanced technological capabilities

to address needs and resolve issues in rapidly changing markets,

development capabilities to innovate and create new markets,

production know-how, and other management resources, JDI

aims to fulfill its vision — “To deliver an exciting Live Interface

to people around the world, thereby creating new value,” while

evolving as an enterprise indispensable for people worldwide.

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About Japan Display Inc. (JDI)

1 Introduction

4 Consolidated Financial Data

6 Message from the CEO

11 Overview by Application Category

13 Feature

The Key Persons of Technology Development Talk About JDI’s Development Scene and Its Future Prospect

14 Development of FULL ACTIVE™

Yuji Hayashi Hirokazu Morimoto

17 Continually overturning convention through development of new display technologies

Kazutaka Nagaoka Akio Takimoto

22 ESG Activities Conducted by JDI

23 Human Resources

26 Environmental Activities

28 Social Contribution Activities

29 Corporate Governance

34 Directors and Company Auditors

36 Financial Data

38 Corporate Profile

40 Stock Information

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Introduction

Feature

DialogueJDI’s Technology Development 1

Feature


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Management Philosophy

To contribute to the realization of a prosperous society by delivering beauty and excitement to the world's people through leading-edge technology.JDI aims to contribute to the enrichment of peoples’ lifestyles and cultures by developing and delivering to the world beautiful displays which generate surprise and excitement using state of the art technology.

Slogan Let’s create new value via Live InterfacThe aim is to deliver an exciting Live Interface to people and have it become a living interface with people around the world, thereby creating new value.

Code of Conduct

1. Creation: Being creation professionalsPrioritize imagination and creativity, and create actual value from progressive ideas.

2. Challenge: Boldly grappling with changesSet high goals, and even when confronted with difficulties, tackle them with full force in the spirit of challenge.

3. Responsibility: Accomplishing with responsibility and tenacityCarry out decisions without giving up.

4. Swiftness: Aiming for top speedCommit to working in a speedy and timely manner.

5. Customer-centered: Planning and creating with customersEverything starts with understanding the customer’s perspective. We aim to think and create with customers.

6. Fairness: Being open and fairAct truthfully and fairly with a high level of transparency.

7. Harmony: Contributing to the global environment and societyImplement corporate activity which aims to contribute to society and gives consideration to the global environment.

Just between you and the world

Roadmap for the Medium-Term Management Plan

Simultaneously promote structural reforms (scrap) and transformation of earnings structure (build)

Structural reforms / Transformation of

earnings structure

Establish FULL ACTIVE™ LCD and automotive display as pillars of earnings structure and accomplish OLED development

FY2016 FY2017 FY2018 FY2019

Complete in one year

Push through structural reforms Reduce excess production capacity

Achieve breakeven sales of 650 billion yen

Scrap

Operating incom

Over 40 billion yen(Operating income margin of 5%)

Free cash flow

Over 30 billion yenBuild

Accelerate establishment of mass-production technology and commercialization of OLED

Aim to become a leading company in the OLED space, deploying both evaporation and printing technologies

Establish partnerships with global companies

Shift resources to growth areas Strengthen growth areas (automotive, industrial, new business) Implement an in-house company system according to business

attributes


◀◀◀ ◀ 2 ▶Introduction

Pioneering the future of displays by high-added-value technology and creativity

JDI’s business fields in the display market

World’s No. 1 LTPS technology for displays (high resolution, low power consumption, narrow bezels, etc.)

JDI’s currentbusiness fields

Smartphones/tablets Medical

Automotive Digital cameras

Smartphones/tablets

Medical

Automotive

Digital cameras

High-resolution notebook PCs

Signage

Fingerprint authentication

Electronic shelf labels etc.

VR/AR

Wearable devices

LTPS LCDs

JDI’s future business fields

LTPS LCDs

Reflective LCDs

OLED displays

JDI’s strengths

Outstanding product lines and strong relationship with world’s first-class customers

JOLED, a leading printing OLED technology firm, as a Group company


◀◀◀ ◀ 3 ▶Introduction

Major Performance Indicators 2014.3 2015.3 2016.3 2017.3

Net sales 614,567 769,304 989,115 884,440

Operating income 27,624 5,147 16,710 18,502

Operating income margin(%) 4.5 0.7 1.7 2.1

Ordinary income (loss) 19,072 1,864 (12,934) (8,871)

Net income (loss) attributable to owners of parent 33,918 (12,270) (31,840) (31,664)

Comprehensive income (loss) 38,267 (1,211) (37,478) (36,321)

Net assets 405,144 402,626 365,249 327,085

Total assets 758,975 831,622 813,861 915,631

Interest-bearing debt 102,519 83,513 77,325 135,199

Cash flow from operating activities 39,707 73,320 151,442 112,004

Cash flow from investing activities (122,915) (96,346) (181,156) (142,592)

Cash flow from financing activities 151,990 (24,971) (6,098) 55,663

Ending balance, cash and cash equivalents 141,390 94,643 55,077 82,247

Net assets per share (yen) 673.28 666.92 603.83 540.16

Net income per share (yen) 135.09 (20.42) (52.94) (52.65)

Other Performance Indicators

Shareholders’ equity ratio (%) 53.3 48.2 44.6 35.5

ROA (Return on Assets) (%) 4.5 (1.5) (3.9) (3.5)

ROE (Return on Equity) (%) 16.9 (3.0) (8.3) (9.2)

EBITDA 90,279 75,708 93,661 100,836

Note: Figures are rounded down to the nearest million yen.

(Millions of yen)

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(Millions of yen)

Net income (loss) attributable to owners of the parent

(31,664)

33,918

(12,270)

2017.32014.3 2015.3

(31,840)

2016.3

(Millions of yen)

Ordinary income (loss)

(8,871)

19,072

1,864

2017.32014.3 2015.3

(12,934)

2016.3

(Millions of yen)

Net assets / Total assets

Net assets Total assets

327,085

831,622758,975

402,626405,144

2017.3

365,249

813,861

2016.32014.3 2015.3

915,631

EBITDA

100,83690,279

75,708

2017.3

93,661

2016.32014.3 2015.3

(Millions of yen)

(Millions of yen)

Cash flow

112,004151,442

(122,915)(96,346)

73,320

2017.32016.32014.3 2015.3

Operating cash flow Investing cash flow Free cash flow

(83,208) (30,588)(29,714)(23,026)(23,026)

(142,592)(181,156)

39,707

(%)

Shareholders’ equity ratio

35.548.2

2017.3

44.6

2016.32014.3 2015.3

53.3

(Millions of yen)

Operating income

18,502

27,624

5,147

2017.3

16,710

2016.32015.32014.3

(Millions of yen)

Capital expenditure

2017.32014.3 2015.3

133,412

2016.3

186,353

121,477108,429

(Millions of yen)

Depreciation and amortization

2017.32016.32014.3 2015.3

90,24980,852

64,193 70,854

(%)

ROA ROE

4.5

(1.5)

ROA/ROE

(9.2)2017.32014.3 2015.3

16.9

(3.0)

(3.5)

(8.3)

2016.3

(3.9)

(Millions of yen)

Mobile devices Automotive and Non-Mobile

Net sales

884,440

728,641

2017.32014.3 2015.3

615,052

614,567

476,616

155,798

989,115

838,143

2016.3

150,971154,252137,951

769,304

(Millions of yen)

R&D expenses

2017.32016.32014.3 2015.3

13,907

23,252

15,748 15,989


◀◀◀ ◀ 5 ▶Consolidated Financial Data

My name is Nobuhiro Higashiiriki and I am serving as Chairman and CEO of Japan Display Inc.JDI’s predecessors are the display operations of the six Japanese companies that had led Japan’s display industry: Sony Corporation, Toshiba Corporation, and Hitachi, Ltd., and going further back, Panasonic Corporation, Seiko Epson Corporation, and SANYO Electric Co., Ltd. Viewing the next three years as the final opportunity for us to demonstrate the potential of Japan’s display industry, I will lead structural reforms together with our employees.Our targets for fiscal 2019 are operating income of 40 billion yen, operating income margin of 5%, and achieving a positive free cash flow.

Message from the CEO

We will promote structural reforms to create the new JDI,an enterprise capable of earning profit,an enterprise where employees can work with confidence,and a promising enterprise.Chairman, Representative Director and CEOJapan Display Inc.

Nobuhiro Higashiiriki


◀◀◀ ◀ 6 ▶

In response to the fact that JDI has been unprofitable for the past three years, the principal objective of the medium-term management plan for the period from fiscal 2017 to fiscal 2019 is to reposition JDI as an enterprise capable of earning profit and generating cash.

To achieve the targets, we aim to complete structural reforms in fiscal 2017 and establish the foundation for an earnings structure with breakeven sales of 650 billion yen.

In parallel with promoting structural reforms, we will focus on achieving a full-scale ramp- up of FULL ACTIVE™ LCD, aiming to make it contribute to profits from fiscal 2018 onward.

On that basis, we will accelerate establishment of mass-production technology and commercialization of OLED for the smartphone market and shift resources to growth areas in order to transform the business portfolio. For OLED, in addition to the evaporation technology currently being developed by ourselves, we will also promote printing technology under development at our affiliated company JOLED Inc., of which we envisage expanded use in the near future. We aim to become a leading company in the OLED space, deploying both evaporation and printing technologies. As a shift of resources to growth areas, we will cultivate new business fields as new pillars, while also strengthening the business fundamentals for automotive displays and displays for industrial applications.

Complete structural reforms in one year and establish FULL ACTIVE™ LCD as a pillar of earnings

Management Reform Policy

Outline of the Medium-term Management Plan

Structural ReformsReduce fixed costs by about ¥50 billion a year through structural reforms to accomplish

transformation to a flexible and lean corporate structure

Strategic Direction Policy for Structural Reforms

Select and eliminate: shift resources to growth areas (OLED, automotive, new business)

Streamline front-end manufacturing in Japan

Terminate production at Nomi Plant in Dec. 2017; consider use of Nomi Plant by JOLED

Reduce excess production capacityStreamline back-end manufacturing overseas

Eliminate and consolidate overseas manufacturing subsidiaries; use EMS

Clarify lines of responsibility for earningsWrite off business and idle assets

Reduce fixed costs by application of impairment accounting, etc.

Redesign role and responsibilityIntegrate OLED pilot lines

Close OLED pilot line at Ishikawa Plant; integrate it with G6 OLED line at Mobara Plant

Create an effective executive meeting structure

Transition to an in-house company system

Establish an organizational structure according to customer attributes

Reform the HR schemeStreamline organizations

Improve production efficiency; streamline hierarchical layers

(Approx. ¥170 billion extraordinary losses expected in FY2017, of which ¥30 billion is cash payments)

Second Foundat ion

Selection and Elimination

Establish “new JDI” that can secure robust profit

Scrap and Build

Reform earning structure and accelerate growth strategy for

new business areas


◀◀◀ ◀ 7 ▶Message from the CEO

Let me explain the concrete measures for structural reforms based on the strategic direction.

Firstly, regarding front-end manufacturing in Japan, we will terminate LCD panel production at the Nomi Plant to reduce production capacity, which is now excessive. We will consider utilizing the freed-up space and its TFT backplane production equipment at Nomi Plant, including the possibility of use by JOLED.

Secondly, we will eliminate and consolidate inefficient back-end production lines at manufacturing subsidiaries overseas. We will manage back-end manufacturing by increasing use of electronics manufacturing services (EMS).

Thirdly, we will record impairment losses of business assets whose profitability declined and for which recoupment of investment cannot be expected and on idle assets that are unlikely to be used in the future.The fourth measure is integration of OLED pilot lines. Until this summer, a pilot production line in the Ishikawa Plant was in charge of prototype production on G4.5 glass substrates. As prototyping at G6 line has started at the Mobara Plant, we are now concentrating resources on the Mobara Plant to promote efficient development. The OLED project launched in July 2017, which directly reports to President Aruga, is taking the initiative in this matter.

The fifth measure is transition to an in-house company system from October 1. This initiative relates to clarification of lines of responsibility for earnings. Customer attributes vary among our mobile display business, automotive display business, and display solutions business. Accordingly, we will establish three in-house companies according to customer classification.

The sixth measure is the streamlining of organizations. Reflecting the fact that JDI was established through a merger involving three companies, the issue of excessive hierarchical layers has persisted since the establishment. Therefore, we will abolish excess hierarchical layers while clarifying authority and responsibility.

Mindful that this will be our final round of structural reforms and our final opportunity, we have included all the reductions and changes that can be done at present.

To resolve management issues through structural reforms, we have set a strategic direction comprising six elements: 1) Select and eliminate: shift resources to growth areas, 2) Reduce excess production capacity, 3) Clarify lines of responsibility for earnings, 4) Redesign role and responsibility, 5) Create an effective executive meeting structure, and 6) Reform the human resouces scheme. By promoting structural reforms in accordance with this strategic direction, we aim to reduce fixed costs by about 50 billion yen a year. As business structure improvement expenses, we plan to record extraordinary losses amounting to approximately 170 billion yen in fiscal 2017, of which 30 billion yen is cash payments.

Reduce fixed costs by about 50 billion yen a year to accomplish transformation to a flexible and lean corporate structure


◀◀◀ ◀ 8 ▶Message from the CEO

JDI has been emphasizing the non-mobile business, including automotive displays that enjoy a high profit margin. This strategy has gradually started to bear fruit. We intend to expand the non-mobile business by further shifting resources to it. In fiscal 2016, the mobile business accounted for 82% of net sales and the non-mobile business 18%. We intend to raise the ratio of the non-mobile business to 30% in fiscal 2019. The plan calls for raising it to 45% or higher in fiscal 2021, since we envisage that the non-mobile business will grow to account for almost half of JDI’s sales.

Regarding FULL ACTIVE™, which leverages proprietary JDI technology and a focus of rising customer expectations, we are confident that FULL ACTIVE™ LCD will make a large contribution to profit from fiscal 2017 onward and FULL ACTIVE™ OLED to start contributing to revenue from fiscal 2019 onward.

Let me announce the new JDI’s commitment: operating income of 40 billion yen and operating income margin of 5% in fiscal 2019. We have announced these quantitative targets in our medium-term management plan and achievement of these targets is a prerequisite for regaining

Establish partnerships with global companies.Become an enterprise capable of continually earning profit and generating positive cash flow

Make FULL ACTIVE™ OLED contribute to revenue in fiscal 2019 and increase the ratio of sales from the non-mobile business to 45% or higher in fiscal 2021

Achieve operating income of ¥40 billion and operating income margin of 5% in FY2019

Reduce fixed costs by about ¥50 billion a year and achieve breakeven sales of ¥650 billion through structural reforms

Establish partnerships with global companies

Focus company resources on growth areas to become capable of continuously earning profits and generating positive cash flow

123

Mobile : Make profit with FA-LCD; achieve high added value with OLED

Automotive : Establish as a core revenue base

New businesses

: Foster to establish as the third business pillar

*FA: FULL ACTIVE™

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the confidence of the stock market in JDI. We are resolved to achieve these targets through three initiatives.

Firstly, we will reduce fixed costs by about 50 billion yen a year and achieve breakeven sales of 650 billion yen by completing structural reforms. JDI will accomplish transformation to an enterprise capable of earning profit.

Secondly, we will establish partnerships with global companies. Investment in OLED will require partners, which may be our customers, strategic partners, other panel makers, or financial investors. At present, no specific plan has been determined. We will seek partners while promoting structural reforms and yielding positive results.

Thirdly, we will focus resources on growth areas to become capable of continuously earning profits and generating positive cash flow. In the Mobile Display Category, we will work to make FULL ACTIVE™ LCD contribute largely to profit in fiscal 2018 and fiscal 2019. The automotive display business, which is growing strongly, will play a more important role in line with the widespread adoption of autonomous driving. We will endeavor to establish even stronger relationships of trust with our customers through provision of products with high reliability, high performance and high designability, so as to strengthen the earnings base. Moreover, capitalizing on our strengths in high-value-added displays based on JDI’s core technologies, such as Pixel Eyes™, we will foster new businesses as the third pillar. In addition, new signage using reflective displays and virtual reality (VR) in games, etc. are also growth areas. To transform our organizations by accomplishing a shift in focus from conventional manufacturing based on the product-out approach to manufacturing based on the market-in approach, JDI has created new positions for marketing specialists and has started using external professionals. Going forward, we will strengthen efforts to reflect customer needs and global trends, notably in commercialization, by leveraging JDI’s existing technologies.

By thoroughly implementing these three initiatives, we intend to attain net profit in fiscal 2018 and a positive free cash flow in fiscal 2019.

I am convinced that JDI is a technology-based enterprise capable of delivering new technologies. In a world where displays are destined to fulfill ever-greater roles in line with the progress of IoT, smart homes, smart kitchens, and automotive displays, JDI is capable of creating thrilling products that benefit society.

In order to fulfill JDI’s potential, we must make JDI an enterprise whose employees work with confidence and take pride in working for JDI, telling their children and relatives that JDI is an excellent company. Although JDI is currently in a challenging situation, our highly motivated engineers aspire to make JDI a top performer in every respect. I am a believer in “persistence pays off.” To make sure our employees recognize that change is afoot and seize the initiative, I will accurately communicate the company’s moves to them, engage in dialogue, offer encouragement, and tenaciously implement measures. Therefore, for the time being, President Aruga and I will divide responsibilities. I will be the interface with our employees while President Aruga will be the interface with our customers.

We will communicate the changes at JDI to our shareholders and investors, engage in dialogue with them, and make every effort to gain their understanding. Amid ongoing structural reforms and transformation of the earnings structure, I would appreciate your continued support to JDI.

Striving to gain understanding of shareholders and investors by committing to structural reforms together with our employees.Count on JDI’s transformation.

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Overview by Application Category

1Mobile Device CategoryDisplays for smartphones, tablets and feature phones

Sales in the Mobile Devices Category were 728,641 million yen for the fiscal year

ended March 31, 2017, down 13.1% year on year, and accounted for 82.4% of

JDI’s net sales.

Overall sales in fiscal 2016 fell owing partly to the impact of a stronger yen

against the dollar relative to fiscal 2015. In such circumstances, by region, sales in

China increased due mainly to a recovery of market share. However, sales in the US/

Europe fell year on year largely because a change in the product mix led to a decline

in blended average selling prices. In other regions the absence of a major order in

fiscal 2016 compared with the previous fiscal year contributed to a drop in sales.

Fiscal 2016 Business Overview

Mobile Device Category

Sales

2014.3 2015.3 2016.3 2017.3

476,616 615,052 838,143 728,641

Mass production of advanced WQHD LCD module for premium mobile products started

(Announced on January 19, 2017)

The small/medium display market, which is the JDI Group’s core business area, is

likely to continue to expand for the time being centering on smartphones. However,

the rate of smartphone display market growth is expected to moderate compared with

recent years in light of the extensive spread of smartphones in developed countries and

in China. At the same time, OLED displays are gaining greater market attention with

the launch of a globally branded smartphone model equipped with an OLED display.

In response to these market developments, the Group is accelerating development

Future Outlook of evaporation OLED technology at an OLED pilot line at its Mobara Plant that is taking

advantage of highly efficient manufacturing methods.

Given the accelerated adoption of OLED displays for smartphones and the growing

production capacity of China’s display makers, JDI is facing an increasingly difficult

competitive environment. In this environment, JDI has surplus production capacity that

represents a significant burden on the company’s manufacturing fixed costs. Therefore,

JDI will overhaul its manufacturing system to bring it in line with a changing market

and reduce the level of fixed costs to improve earnings.

(Millions of yen)

Slim bezel design “FULL ACTIVE™” LCDfor smartphones developed

(Announced on August 9,2016)

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Overview by Application Category

2Automotive and Non-Mobile CategoryDisplays for automotive applications, consumer electronics (digital cameras, game consoles, etc.) and industrial devices (such as medical equipment monitors); income from patents and other sources

Sales in the Automotive and Non-Mobile Category for the fiscal year ended

March 31, 2017 were 155,798 million yen, up 3.2% year on year, and accounted

for 17.6% of JDI’s net sales.

Fiscal 2016 automotive display sales were higher year on year helped by strong

automobile sales in the US/Europe. However, total sales in this category were

virtually unchanged from the previous year due to lower sales of displays for digital

cameras and other consumer electronics.

Fiscal 2016 Business Overview

The JDI Group is promoting transformation of the business portfolio and is working

to increase the ratio of sales in the Non-Mobile Category by expanding the automotive

applications business and developing new application businesses.

The market for automotive displays, which will be a pillar of the Non-Mobile

Category, is expected to grow at a compound annual growth rate exceeding 10%

with an increase in the number of displays mounted per vehicle. Anticipating greater

demand for automotive display applications, the Group decided to expand automotive

Fiscal 2016 Business Overview panel production capacity of its Tottori Plant, which is JDI’s major manufacturing

site for automotive displays, by 12%. Whereas amorphous silicon LCDs have been

mainstream for automotive applications, we plan to increase shipments of low-

temperature polycrystalline silicon (LTPS) LCDs for higher definition and higher

designability.

In addition, we will further strengthen sales initiatives in the new non-mobile

business field, including the launch of reflective displays for signage and high resolution

LTPS LCDs for notebook PCs and entry to the VR/AR market.

Automotive and Non-Mobile Category

Sales

2014.3 2015.3 2016.3 2017.3

137,951 154,252 150,971 155,798

10.2” Pixel Eyes™ LCD module with peripheral touch controls for automotive applications developed and sample delivery to start in December 2017(Announced on June 15, 2017)

(Millions of yen)

Tottori Plant set for an increase in production capacity


◀◀◀ ◀ 12 ▶

Displays have evolved with technological

progress to deliver higher resolution and lower

power consumption. Today, development

is progressing on the replacement of hard,

square panels with flexible displays, which have

the potential to fulfill new roles in all kinds of

social and lifestyle situations in the future. JDI’s

R&D and product development have created

products whose technology brings astonishment

to customers and society alike—from FULL

ACTIVE™ bezel-free displays for smartphones

and other electrical products and flexible LCDs

that many had thought impossible to transparent

displays that promise to take the augmented

reality (AR) experience to the next level. Below

we discuss how JDI is transforming itself from a

specifications-driven component manufacturer to

a company that shares a future with customers

and proposes concepts and designs that transcend

the conventional boundaries of displays.

Feature

Key Persons from Technology Development Talk About JDI’s Development Sceneand Its Future Prospect

Kazutaka NagaokaManaging Executive OfficerDivision Manager, Mobile Business Group In charge of Technology Division

Akio TakimotoExecutive OfficerChief Technology OfficerDivision Manager, Research & Development Center

YujiHayashiDivision Manager, Technology Division

Hirokazu MorimotoSenior General Manager, Module Technology Dept., Design Technology Unit, Technology Division

Feature

Dialogue

JDI’s Technology Development 1

Feature

Dialogue

JDI’s Technology Development 2

Continually overturning convention through development of new display technologies

Development of FULL ACTIVE™


◀◀◀ ◀ 13 ▶

Customers have been amazed by JDI’s FULL

ACTIVE™ display, which entered mass production in

June 2017. Featuring a slim bezel design on all four

sides of the LCD, FULL ACTIVE™ enables the size

of a smartphone device to be nearly the same as

the display size. Not only that, but it is also helping

JDI undergo a corporate transformation from

component supplier to proposer of concepts and

designs. In this section, Yuji Hayashi, the Technology

Division Manager who led the development team

discusses FULL ACTIVE™ with Hirokazu Morimoto

from the Design Technology Unit.

Development of FULL ACTIVE™

Yuji HayashiDivision Manager, Technology Division

Hirokazu MorimotoSenior General Manager, Module Technology Dept., Design Technology Unit, Technology Division

Feature



◀◀◀ ◀ 14 ▶

What is FULL ACTIVE™?A new display that offers greater freedom in product design

Morimoto: Bezels on all four sides of the display have been a universal motif

of smartphone design. The aim with FULL ACTIVE™, which we succeeded in

developing in August 2016, was to make bezels as slim as possible on every

four sides to create greater design freedom and allow new smartphones that

are almost the same size as the display. The FULL ACTIVE™ displays currently

in mass production are second-generation Pixel Eyes™ which have touch

sensors integrated into the display panels. This product realizes deeper blacks

while making the device easier to operate even with wet hands. This is also

a platform technology with the potential for adaptation to other applications

such as auto or note PCs.

Hayashi: Until now JDI has focused mainly on responding to customer

needs by developing displays with improved specifications in terms of screen

brightness or resolution. Traditionally the calls for slimmer bezels have applied

only to the left and right edges of the display. We, and also our customers, had

thought it impossible to reduce the size of the bezels at the top and bottom of

the screen.

Morimoto: The idea of FULL ACTIVE™ originated when we asked the

fundamental question of what sort of display would be really attractive to our

customers. Putting the technical restraints to one side, we discussed at length

what sort of final product would be cool to be displayed on store fronts, and

that in turn led to the concept of creating full-screen displays.

Creating a new development approachFocus shifts from specifications to concept

Hayashi: Talking about dreams changes the way you do things. Since we

first established the concept of creating slim bezel full-screen displays, we

could not back away from this challenge. Once we had built the mock-up (a

prototype similar to the real product), we were able to visualize the goal. This

approach was different to the conventional display development method, and

much closer to commercial product development, I think.

Morimoto: Conventionally, we have developed displays by finding out

from customers their needs in terms of screen brightness, display resolution,

touch-screen functionality and other specifications then dividing up the task

of satisfying these technical requirements between the various departments.

This time, though, since we were consciously adopting a different approach,

we needed those departments in charge of panel, module, systems and

The FULL ACTIVE™ display for smartphonesallows a slim bezel design on all four sides

Feature



◀◀◀ ◀ 15 ▶

production technologies to collaborate closely with one another on roles,

timing and other aspects of development. The common motivation for the 150

project members was to realize the FULL ACTIVE™ concept.

Hayashi: Everyone got a real sense of achievement when we first managed

to actually display an image on the screen. Our customers were also amazed

by the new product.

Greater collaboration with customersThe new world of FULL ACTIVE™

Hayashi: The first FULL ACTIVE™ that we developed was the 5.5-inch Full-

HD module for smartphones. We have received numerous customer inquiries

about this product, not only from handset manufacturers, but also from firms

in the automotive and PC-related sectors. For many customers, the FULL

ACTIVE™ encourages them to think about what they could do with such a

product.

Morimoto: I think the slim bezel design also opens up possibilities in terms

of changing the world of augmented reality (AR). New games could be created

through the seamless merger of the real world with virtual reality.

Hayashi: FULL ACTIVE™ signals the transformation of existing displays. It

not only looks different, it could also be mounted on locations not found

with conventional displays. Since there are probably more applications for the

technology than we can imagine, we are showing demonstration prototypes

to device makers operating in sectors that JDI would not previously have

considered.

Change in thinking triggered by FULL ACTIVE™New awareness of JDI’s potential among stakeholders

Morimoto: Many members of the development team were a little skeptical

at the outset whether we could develop the FULL ACTIVE™ concept. Now that

we have successfully changed the development approach from specification

targeting to concept creation, I believe the potential inherent in JDI’s technical

expertise is becoming apparent to our internal and external stakeholders.

Hayashi: JDI should have many employees capable of coming up with

completely new concepts, and the next goal is to work in partnership with

our suppliers to develop new concepts such as making display bezels slimmer.

I think we can best satisfy stakeholder expectations by realizing these new

ideas.

FULL ACTIVE™ on exhibit at SID Display Week 2017, one of the world’s largest international conventions in the field of displays. It received a Best in Show award.

Feature



◀◀◀ ◀ 16 ▶

JDI has successfully developed display technologies

that overturn conventional thinking, including

flexible LCDs, transparent displays and aerial

displays. The integration of backplane, frontplane

and system technologies developed over many

years with new technical and design concepts

has led to entirely new types of display products.

Kazutaka Nagaoka, a manager with a wealth of

experience in joint product commercialization with

customers, and Akio Takimoto, who is an expert

in the technical development field, discuss the

strengths of JDI and where displays are headed.

Kazutaka NagaokaManaging Executive OfficerDivision Manager, Mobile Business Group In charge of Technology Division

Akio TakimotoExecutive OfficerChief Technology OfficerDivision Manager, Research & Development Center

Feature


Continually overturning convention through development of new display technologies


◀◀◀ ◀ 17 ▶

Fundamental backplane technologiesLTPS evolution driving development of high-performance displays

Nagaoka: As a leading company in small/medium displays, it is part of JDI’s

mission to propose original, world-class, advanced technologies. I believe

the meaning of our existence as a company is to develop these amazing

technologies to continue to contribute to society.

Takimoto: Backplane technology enabling large-scale integration of low-

temperature polycrystalline silicon (LTPS) transistors is one of the fundamental

strengths supporting JDI as a leader in the field. By embedding these LTPS

transistors in high density into the display substrate, it is possible for us

to make displays with higher resolution, thinner bezels and lower power

consumption. We can also boost the drive frequency to increase signal

throughput, which will in turn enable smoother video playback. Conversely,

we can lower the frequency to reduce signal throughput to help lower power

consumption. The technology has evolved in various ways.

Nagaoka: Whether the frontplane is LCD or OLED, the LTPS backplane

technology to fabricate transistors is a critical factor in determining display

performance. The evolution of this technology promises to open up completely

new possibilities for displays.

Takimoto: A promising new direction in backplane technology is the

integration with transparent amorphous oxide semiconductors (TAOS), which

have different properties to LTPS.

Nagaoka: The benefit of LTPS is that you can build the peripheral circuitry

on the panel substrate, and you can also make circuits using complementary

metal-oxide-semiconductor (CMOS) which enables lower power consumption.

With TAOS, the advantage is that the amount of leakage current from

transistors is small. By combining both these technologies, we should be able

to lower power consumption further, which is a major preoccupation of our

customers.

Frontplane technologies for LCD and OLED panelsDeveloping products that combine various strengths

Takimoto: The conventional backplane approach is to drive the transistors

on the glass substrate. By replacing the glass with a plastic film, it is possible to

create a backplane that can bend. OLED panels based on curved designs have

been commercialized in the market, but creating flexible LCD panels had been

a more difficult challenge structurally. One of our younger engineers achieved

a breakthrough in this area by finding a way for us to combine our proprietary

technologies, and this has helped us succeed in developing flexible LCDs. My

involvement in LCD development stretches over decades, but I remember

LCD

BacklightTransmissive LCD Reflective LCD OLED Device X

LCD Something newOLED

LTPS LTPS LTPSLTPS

LTPS: Low Temperature Polycrystalline Silicon, LCD: Liquid Crystal Display, OLED: Organic LED

Frontplane

Backplane

Configuration drawing of display (frontplane and backplane)

Feature



◀◀◀ ◀ 18 ▶

being truly amazed at the concept when I saw the test sample created by him.

Nagaoka: By leveraging our leading-edge LTPS backplane technology, we

are also accelerating development of OLED which has been gaining increase

attention. The advantages of OLED are its fast response speed and high

contrast ratio, plus its flexibility provides greater design freedom. The issues

with OLED are the high mass-production cost and the need to improve

reliability. In contrast, LCD can deliver ultra-high resolution and is highly

reliable. Furthermore, by using LCDs in reflective display mode, we can realize

incredibly low power consumption and better visibility in direct sunlight. And

JDI can now make flexible LCDs as well. In this way, it is important in product

development to take advantage of OLED or LCD characteristics in light of the

intended application.

Takimoto: For OLED development, we are currently using a pilot production

line at JDI’s Mobara Plant based on G6 half substrates (925 x 1500 mm).

JDI is entering the OLED field later than some of our competitors, but our

aim is to manufacture OLED displays with more advanced performance than

existing displays by applying a different evaporation method. Our prototype

OLED display manufactured using fine processing technology achieves a real

resolution of 400ppi, which is on a par with LCD for smartphone applications.

19

I am confident our product will be competitive.

Nagaoka: We listen to the voices of our customers: What kind of

applications do they have in mind for OLED? Which aspects of the current

OLED do they find unsatisfactory? What should be improved? We hope to

meet such customer demands by combining the backplane technologies in

which JDI specializes with OLED frontplane to create products with the high

resolution of LCD plus benefits LCD cannot deliver. Once we have developed

the mass-production technology of OLED, we plan to advance to product

commercialization.

System technologies for enhanced ease of useChanging displays to create human interfaces

Nagaoka: System technologies add functionality to the high-performance

displays we have created through the integration of backplane and

frontplane technologies to enhance customer usability. They play an

important role in adding value to displays. Pixel Eyes™ capitalizes on a

system technology we have developed and offers improved ease of use

with touch-screen functionality embedded in a display panel. The next

Flexible OLED Sample and Development Status

Panel spec. 5.5-inch FHD (1080x1920)

Resolution 401ppi (Real)

Peak luminance >700cd/m2

(@10% area)

Contrast ratio >100,000

Color space >110%@DCI

Side-by-side (SBS) 5.5-inch real FHD (401ppi) Advanced-LTPS flexible OLED commenced prototype production at Mobara G6 pilot line

Feature



◀◀◀ ◀ 19 ▶

19

challenge is to develop high-value-added displays that have both output

and input functions to create a human interface based on more advanced

sensory functions such as variable touch-panel sensitivity, hover sensing,

stylus input, and fingerprint recognition capabilities.

Takimoto: One of the areas where human interfaces are important is the

increasing use of IT in cars; automotive displays are evolving rapidly with

the development of system technologies. For example, there is a need for

electronic mirror technology to replace side mirrors, with cameras being

used to capture non-blurry, undistorted images and display them inside the

vehicle without delay. We are also developing new system technologies

to realize high-performance automotive displays based on augmented

reality (AR). This involves projecting onto the windscreen information such

as speed or other dashboard indicators, or directional arrows to aid with

navigation.

Innovative futuristic technologiesSuccessful development of transparent displays and aerial displays

Nagaoka: At JDI, we are also focusing on ways of adding value by taking

display technology into the professional workplace. In the medical field,

we are working with physicians and manufacturers of medical monitors

to create displays that can, for example, show the detail of blood vessels

for use in surgery, or else be used in monitors that require a combination

of high contrast, multi-tone and high uniformity. In collaboration with

Japan’s national broadcaster NHK, we have also successfully developed an

on-site 17-inch monitor for verification of television broadcasting that can

deliver 8K image resolution at a high frequency of 120 Hz for smooth video

production. This monitor has been well received.

Takimoto: We are developing devices for the future at JDI’s Research &

Development Center. These include transparent displays, which can display

still or moving images but have a see-through back, and aerial displays

that can display images in mid-air through clever positioning of the optical

materials. Both these concepts, for which future commercialization is

expected, have succeeded in their development and we expect the range

of applications for both types of display to expand in the future. With LCD

transparent displays, the color filter and polarizer together significantly

reduce the transmission of the light from the backlight. By eliminating

LCD side mirrorsConventional product Developed product

Image

Image blur

Liquid crystal response time 20ms 8ms

Frame frequency 60Hz 240Hz

Delay in transmission from camera to display

100ms 4ms

Feature



◀◀◀ ◀ 20 ▶

these two components, we have achieved transmittance of up to 80%,

compared with about 30–40% typical for rival displays. On top of that, our

display can also show moving color images.

Nagaoka: Displays have become more advanced with higher resolution

as communication protocols evolve. The development of new devices will

be necessary in view of the completely new world that will emerge as

we move into the age of 5G networks, which will have data transmission

speeds of over 10Gbps. Naturally our goal is to ensure that our customers

trust JDI products, but we also want to be a company that our partners can

count on for innovative products and technologies.

Takimoto: Now that we can transmit huge volumes of data at high

speeds, we are starting to see the development of futuristic display

technologies as seen in science fiction movies. The possibilities are

endless, given the variation in the forms of displays and the devices to

which they will be applied. By making the most of the technologies that

JDI has developed to date and harnessing the creativity of our youthful

development teams to realize novel concepts, we will supply our customers

and society with display products that create original value.

Highly-transmissive transparent color displays with transmissivity of 80%

Highly-transmissive transparent color displays and FULL ACTIVETM displays awarded Best in Show at international conference SID Display Week 2017

(from left) Mr. Kentaro Okuyama, Research & Development Center; Mr. Yuji Hayashi, Division Manager, Technology Division; Mr. Akio Takimoto, Chief Technology Officer and Division Manager, Research & Development Center; Dr. Wei Chen, Chairman, Display Industry Awards Committee

Feature



◀◀◀ ◀ 21 ▶

ESG activities conducted by JDI

1HR Initiatives

3Social Contribution

Activities

Aiming to be a company capable of responding effectively to the needs and aspirations existing in society, JDI is promoting activities that contribute to the communities in which it operates and to society at large.

JDI is pursuing initiatives concerning human resources development, including promoting an appreciation of the value of diversity, and occupational health and safety, as part of our efforts to help achieve an affluent global society.

2Environmental Initiatives

As a corporate citizen, JDI is working to reduce the environmental impacts of its products and business activities, as well as throughout the supply chain, while also addressing the issue of biodiversity conservation.

JDI Code of Ethics

JDI has established JDI Code of Ethics, a set

of specific guidelines to which all officers and

employees are required to adhere in order

to practice management in compliance with

laws and regulations and corporate ethics. JDI

Code of Ethics covers various issues, including

respect for human rights, improvement of

the workplace environment, protection of

the global environment, fostering of good

relations with local communities, eschewing

connections with antisocial forces, and

prohibition of bribery and other misconduct

in violation of laws and regulations or

contrary to social norms. Japan Display Group

companies are conducting business activities

in compliance with local laws and regulations

in accordance with JDI Code of Ethics.

The full text of JDI Code of Ethics is available at:

http://www.j-display.com/english/ir/governance/pdf/compliance_rm02.pdf

P23-25

P28P26-27

4Corporate Governance

JDI considers corporate governance one of the most important management priorities and strives to ensure management efficiency and soundness.

P29-33

Mid-career Employees Leading JDI into the Future


◀◀◀ ◀ 22 ▶



While improving the HR development system centering on OJT, the HR department has established a framework for fostering next-generation business leaders, including a program whereby candidates for next-generation executive roles are selected at an early stage and trained. In the technology field, a range of education & training programs are available that keep abreast of JDI’s evolving products and technologies, in order to ensure the seamless handover of technologies from one generation to the next.

JDI Group companies overseas receive education & training on technology and quality provided by the headquarters. In addition, key employees of Group companies overseas are invited to Japan every year as trainees for technology handover and knowledge sharing as part of efforts to ensure stable supply of products worldwide. This personnel interaction may be as short as two weeks or as long as a year or so. In addition to the skill enhancement of overseas employees, these interaction programs at the heart of global HR development provide valuable opportunities for overseas employees and their counterparts in Japan to deepen mutual understanding and stimulate one another’s personal growth.

In accordance with JDI Code of Ethics, a code of ethical conduct, JDI respects human rights and diversity.

To prevent discrimination or harassment in the company, we provide e-learning and group education & training for all our employees in Japan. We also hold a contest for human rights slogans in Japan, commend the authors of superior slogans and post them at workplaces. Activities to raise awareness of human rights are continuously carried out at overseas sites, too. In Japan, the Act on Securing Equal Opportunity and Treatment of Men and Women in Employment and the Act on Child Care and Family Care Leave Act were revised in January 2017. In accordance with these revised laws, our education & training concerning human rights also covers prevention of “maternity harassment” and “care harassment.” JDI is continuing its efforts to raise awareness of human rights and improve the working environment. Overseas, we comply with local laws and regulations. JDI Code of Ethics expressly prohibits the use of forced labor and child labor and forbids harassment within the company.

To promote the success of female employees, we provide assistance for balancing work and child rearing and in career development through programs such as childcare leave and a short-time working system as well as employee education in the form of career design training.

Respect for Human Rights and Diversity

HR Initiatives

To contribute to the achievement of an affluent society by delivering beauty and excitement to people everywhere through leading-edge technology as a global enterprise, JDI strategically and systematically develops human resources based on the four facets of our ideal personnel profile.

HR Development

The Basic Policy on Health and Safety states, “The JDI Group accords the highest priority to securing health and safety throughout its business activities and works to ensure safe and efficient working environments so as to contribute to realization of a safe and comfortable society.” Implementing this policy throughout the JDI Group, we are striving to create safe and comfortable workplaces and to protect the health of employees.

Occupational Health and Safety

Ideal Personnel Profile

People who can think from a global, forward-oriented perspective unconstrained by past assumptions and practices

People who can thoroughly think through the value JDI offers from a customer-oriented perspective and create value in a collaborative endeavor involving the people around them while always retaining an open mind

People with purpose and passion for change and innovation who can act expeditiously

People who always act in compliance with laws, social norms, and ethical principles

Human Resources Table ofcontents Previous Page Next

◀◀◀ ◀ 23 ▶

Mid-career Employees to Lead JDI’s Future

Transforming excellent technology into customer valueI am involved in the planning of marketing strategies to develop new IoT-oriented applications for the 5G

environment, promoting collaboration with partners in other industries, and creating new businesses. At JDI our core competence is low-temperature polycrystalline silicon (LTPS) and other cutting-edge technologies. It is critically important that we transform excellent technology into outstanding customer value. I was involved in planning in my previous job, too. Based on my experience in planning, my role is to monitor trends and propose innovative customer-centric markets and business models that offer customers benefits they will value. The task of embodying technology in captivating products and proposing them to the world, working with engineers and other people from the departments concerned, is inspiring and challenging. Amid a shift in emphasis toward non-mobile applications, I relish the opportunity to play my part in JDI’s transformation into an enterprise capable of proposing industry-leading products and services that compete with the best the world can offer in terms of design and attractiveness.

Fruitful ideasThe other day at an electronics and home appliance retailer, I was delighted to see products incorporating an

idea that I proposed at my previous job a few years ago. To know that my idea had taken wing, rather than crashed and burned, gave me a bit of confidence that my inspiration and steady work were on the right track. I realized that ideas really do bear fruit.

In quest of new markets and applicationsAs a marketer, I always prize the ability to collect and analyze information and having a sure grasp of the market.

At JDI, if you make a proposal that has value for the company, you can see it through to implementation regardless of your age or position. JDI’s “flat” working environment makes work so much more rewarding. I will be flying around the world searching my potential market for new products and applications in five years. As someone eager to help women flourish in the world of work, another ambition of mine is to become a mentor for female employees.

Current Initiatives and ProspectsSachiko TakataBusiness Strategy Group, Business Strategy Department, Strategic Planning Division

Proposing Innovative Customer-centric Markets and Business Models


◀◀◀ ◀ 24 ▶

Transforming JDI’s core competence into captivating products for the world

I am engaged in marketing new products and new technologies and in formulating business models designed to expand new markets and applications of automotive displays. In my work, I need to grasp the frank opinions of customers in Japan and around the world through various encounters— events, technology meetings, and so on. I also have to identify JDI’s strengths and link them to the development of new products and technologies.

Freedom to think and take the initiativeThe grounding in marketing that I gained through training proved useful when I got down to actual

work, helping me grow in confidence and effectiveness. The product I helped plan based on market analysis cultivated a new market and pleased the customer.

By working with customers and colleagues around the world, I have come to appreciate differences in values and attitude as well as cultural diversity. I think the experience has helped me broaden my horizon. You have to take responsibility for your work, but the freedom to think and take the initiative is ultimately satisfying.

Proposing added value to future customersAs the development lead time for automotive displays is relatively long, JDI has to continually forecast

evolving customer preferences and create value that delights the customer. It follows that all of us have to strive to achieve a surer grasp of the voice of customers and of needs emerging in the market, so that we can propose added value to captivate future customers. The more people we have at JDI who can do this, the better. With a 5- to 10-year horizon, I will continue seeking ways for JDI products to prevail. It is a future to which I am very much looking forward.

Kei TamuraGroup Manager, Marketing Group, Sales Department Automotive Display Division, Automotive Display Business Group

With a 5- to 10-year Horizon, Find Ways for JDI Products to Prevail

Grow and Prosper with SuppliersI am procuring parts for automotive LCD modules. In line with greater use of automotive electronics,

the automotive display market is rapidly expanding and competition is intensifying. In addition to high quality and stable supply, which have always been crucial considerations, cost competitiveness has become a decisive factor. JDI’s manufacturing operations are a collaborative endeavor involving numerous suppliers. By striving to maintain excellent communication with our suppliers, I aim to cultivate relationships grounded in trust that facilitate mutual growth and prosperity.

“When in Rome, do as the Romans do”I worked in the Chinese city of Suzhou as a procurement manager for five years from 2010. At first,

I tried to do things the Japanese way but soon found it didn’t work. So I tried adopting useful elements of the local way. As a result, I was able to build a highly effective procurement team. I realized “When in Rome, do as the Romans do” really works.

Always rise to the challengeProcurement is a people business. Personal relationships are key. When tackling a big issue, I cooperate

with various people inside and outside JDI. It is deeply satisfying when I manage to overcome the issue. The application field for displays seems certain to grow ever wider. Rising to the challenge, I would like to help launch a business in a new field by leveraging my experience and the network I have cultivated.

Jun AkemaModular Parts Procurement Section 2, Procurement Department 2, Procurement Division

Leverage Human Networks to Build Businesses in New Fields

Note: Positions and assignments are as of the date of the interviews.


◀◀◀ ◀ 25 ▶

Environmental Policy

• We will continually improve our environmental management system to work to reduce the environmental burden, considering the lifecycle of our display products.

• We will comply with domestic and foreign legal requirements and other voluntarily accepted requirements.

• We will set environmental objectives or others on the following priority themes and promote activities for their achievement to work for prevention of pollution and protection of the environment.

We will reduce the environmental burden of business activities.

—1 Promote measures to mitigate global warming, for energy conservation and in the efficient use of water;

—2 Thoroughly manage chemical substances and promote their reduction and substitution;

—3 Promote 3R (Reduce, Reuse, Recycle) activities in waste management.

We will reduce the environmental bur

—1 Promote the development of environmentally conscious products;

—2 Thoroughly manage chemical substances contained in products;

—3 Promote green procurement.

We will engage in activities for conservation of biodiversity and environmental activities at local communities.

To effectively carry out our environmental conservation activities, we thoroughly communicate this policy to all employees and provide environmental education for them. Our business partners are also requested to join us in these endeavors.

Basic policy

Priority themes

Management of Chemical Substances Contained in Products

The JDI Group works as one to manage the chemical substances contained in its products so that it conforms to legal requirements such as the RoHS Directive and REACH Regulations and is responsive to its customers’ demands.

(1) JDI - Establishment of Green Procurement GuidelinesWe established the Green Procurement Guidelines to reflect both legal restrictions in various countries on the chemical substances contained in our products, as well as our customers’ demands. We ask our suppliers to comply with the guidelines. The Green Procurement Guidelines are reviewed annually and are disclosed on our website.

(2) Procurement stage - Confirmation of chemical substancesWe operate a management system for chemical substances contained in procured items such as parts and material, related to our products. We call the system jDesc*. Under this system, suppliers register environmental information about the procured items. At the product design stage, we confirm that our product meets both the Green Procurement Guidelines and customers’ demands based on both environmental information received from suppliers and information on the composition of the product.

(3) Suppliers - Establishment and confirmation of suppliers’ management systems for the chemical substances contained in procured items

We ask our suppliers to establish a management system for the chemical substances contained in procured items to follow the Guidelines for chemical management in products of the Joint Article Management Promotion-consortium or JAMP. Using the system that links suppliers with JDI, which we call jDesc Survey Site, we confirm that our supplier establishes the management system. We ask suppliers that do not meet our standards to correct and improve their management systems.

(4) Production stage - Confirmation of procured itemsAt the production stage, we periodically sample procured items. With a fluorescent X-ray spectrometer, we check that restricted substances of the RoHS Directive such as lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls, polybrominated diphenyl ethers, are below restricted levels.

*JD Environmental information System for Chemical substance

Under the management philosophy, recognizing that global environmental conservation is one of the most important challenges for humanity, we at Japan Display Inc. Group respect people and the environment, and aim to contribute to a sustainable society.

Environmental Activities



◀◀◀ ◀ 26 ▶

Prod

uctio

n activities

Energy

Electricity(purchased power)

Japan 1,290,375 MWh

Overseas 121,030 MWh

Electricity(solar power)

Japan 116 MWh

Overseas 0 MWh

City gas Japan 16.225 million m3

Overseas 0.211 million m3

Heavy fuel oil Japan 4,447 kL

Overseas 60 kL

LPG Japan 2,805 t

Overseas 0 t

LNG Japan 1,507 t

Overseas 0 t

Diesel oil Japan 0 kL

Overseas 1,424 kL

INPUT

Amount of water received

Japan 15.364 million m3


Amount of priority controlled chemical substances*1 used

Japan 25,022 t

Overseas 180 t

CO2

Energy-derived CO2 *2

Japan 672,000 t-co2

Overseas 84,000 t-co2

Greenhouse gases *3

Japan 77,000 t-co2

Overseas 0 t-co2

OUTPUT

Wastewater

Japan 14.885 million m3


Amount of priority controlled chemical substances*1 emitted

Japan 261 t

Overseas 23 t *4

Amount of total waste (including valuables) released

Total waste, etc. Japan 30,639 t

Overseas 5,030 t

Industrial waste Japan 19,794 t

Overseas 1,324 t

Valuables Japan 10,570 t

Overseas 2,011 t

General waste Japan 275 t

Overseas 1,695 t

*1. The priority controlled chemical substances are 38 substances designated by JDI as priority control targets.

*2. The CO2 emissions coefficient from electricity in Japan is 0.476t-CO2/MWh (receiving-end CO2 emissions basic unit for FY2011 announced by the Federation of Electric Power

Companies of Japan). The other conversion factors are from the Act on the Rational Use of Energy and the Act on Promotion of Global Warming Countermeasures. Local

emissions coefficients for China, Taiwan, and the Philippines were used for the CO2 emissions coefficients from electricity in other countries.

*3. Among substances covered in the Act on Promotion of Global Warming Countermeasures, JDI uses the term “greenhouse gases” to refer to these seven substances:

PFC (CF4, c-C4F8), HFC (CHF3, C2HF5), SF6, NF3, N2O. JDI uses AR4 for the emissions coefficient.

*4. Within Japan, this refers only to emissions of the 38 priority controlled chemical substances designated by JDI, and overseas it refers only to emissions of VOC.

Environmental TargetsWe set environmental targets in accordance with JDI’s environmental policy

and are striving to achieve continuous improvement.

Our FY2016 results relative to domestic environmental targets are shown in the table below. In all cases, targets were achieved.

FY2016

Item Indicator Target value Actual value Evaluation

Reduce emissions of energy-derived CO2 *1

Reduction rate forbasic unit

*4

(Baseline: FY2013)

18.5% 24.1%

Reduce the amount of water received 2.4% 22.2%

Reduce emissions of priority controlled chemical substances *2 22.2%*6 25.4%

Reduce emissions of waste, etc. *3 7.5% 12.6%

Continue biodiversity conservation activities and environmental activities in local communities Implemented as planned Implementedas planned

Supply environmentally conscious products that take product lifecycles into consideration

Proportion ofenvironmentally conscious products

*5

(excluding causes attributable to customers)100% 100%

Confirm chemical substances contained in products in the development process Appropriate management of judgments on contained chemical substances All cases appropriate

Promote environmentally conscious procurement activities

Discussion of revision of the Green Procurement Guidelines in light of legal and other considerations

Revision carried out

FY2017

Our domestic environmental targets for FY2017 are shown in the table below.

Item Indicator Target value

Reduce emissions of energy-derived CO2

Reduction rate for basic unit(Baseline: FY2013)

8.1%

Reduce the amount of water received 1.0%

Reduce emissions of priority controlled chemical substances 20.3%

Reduce emissions of waste, etc 5.3%

Continue biodiversity conservation activities and environmental activities in local communities Implemented as planned

Supply environmentally conscious products that take product lifecycles into consideration

Proportion of environmentally conscious products(excluding causes attributable to customers) 100%

Confirm chemical substances contained in products in the development process Appropriate management of judgments on contained chemical substances

Promote environmentally conscious procurement activitiesDiscussion of revision of the Green Procurement Guidelines in

light of legal and other considerations

Scope: Items cover five plants in Japan (Tottori, Higashiura, Ishikawa, Nomi, Mobara). [The scope for the base year included closed Fukaya Plant.]

*1. The CO2 emissions coefficient from electricity is 0.476 t-CO2/MWh (receiving-end CO2 emissions basic unit for FY2011 announced by the Federation of Electric Power

Companies of Japan). The other conversion factors are from the Act on the Rational Use of Energy and the Act on Promotion of Global Warming Countermeasures.

*2. The priority controlled chemical substances are 38 substances designated by JDI as priority control targets. They include volatile organic compounds (VOC) and substances

subject to PRTR and account for the majority of JDI’s emissions and consumption.

*3. Waste, etc. = General waste + Industrial waste + Valuables *4. The denominator for the basic unit is the glass substrate area (converted value).

*5. Proportion of environmentally conscious products = Number of environmentally conscious products for the fiscal year in question / Number of total products developed in the

fiscal year in question *6. Corrected value reflecting the impact of the change in the product mix on the initial target value (27.8%)


Environmental Burden (JDI’s Input and Output in Fiscal 2016)


◀◀◀ ◀ 27 ▶

JDI Code of Ethics highlights the importance of maintaining an appropriate relationship with society. In terms of basic principles, it requires us to be socially responsible at all times and to act in good faith and in accordance with ethical standards.

Relationship with Society

Recognizing that we must be socially responsible at all times, we will act in good

faith and in accordance with good public morals in performing corporate activities.(from Basic Principles, JDI Code of Ethics)

We will be sincerely engaged in protecting the global environment.

We will perform our corporate activities with high ethical standards.

We will maintain respectful and amicable relationships with local communities.

We will have no connection with antisocial organizations.

We will make donations and political contributions in compliance with applicable laws and regulations.

We will comply with import/export-related laws.

We will be committed to the protection of personal information.

(Excerpts from JDI Code of Ethics)

Examples of JDI’s social contribution activities

Social contribution

Donation

Blood donation

Environmental education for children

Contribution to welfare

Charity fair for products produced by welfare facilities

Employment of persons with disabilities

Accepting persons with disabilities for OJT

Contribution to local communities

Cooperation with local festivals

Beautification activities

Accepting students’ educational visits

Interaction with communities

Communication with local community associations

Holding of festivals at factories for communication with local residents

Social Contribution Activities

Social Contribution Activities


◀◀◀ ◀ 28 ▶

JDI aims to contribute to the enrichment of peoples’ lifestyles and cultures by developing and delivering to the world beautiful displays which generate surprise and excitement using leading-edge technology. This is the basic policy underlying the Company’s management.

The Company considers corporate governance one of the most important management priorities. In order to achieve sustainable growth and enhance medium- to long-term corporate value, the Company has established the Corporate Governance Policies to stipulate basic matters for corporate governance and strives to ensure management efficiency and soundness.

JDI is a company with Board of Company Auditors. Accordingly, the Board of Directors of the Company makes decisions on important management issues and oversees business execution, and the Company Auditors and the Board of Company Auditors audit the status of business execution, etc. independently of the Board of Directors. In order to make prompt decisions on business execution, the Company has adopted an Executive Officers system and has established the Management Committee as a decision-making organ for directing business execution at the Company.

Furthermore, to ensure management transparency, the Company has established optional committees resolved by the Board of Directors, which deliberate and decide matters delegated by the Board of Directors.

The Board of Directors is responsible for enabling the Company to sustainably grow and maximize corporate value over the medium to long term through the realization of efficient and effective corporate governance based on entrustment from shareholders.

At present, the Board of Directors consists of seven Directors whose terms of office are one year. Outside Directors constitute a majority of the Board of

Corporate Governance System

Corporate Governance System

General Meeting of Shareholders

Independent Auditor

Board ofCompany Auditors

Nominating and CompensationAdvisory Committee

Compliance Committee

Internal Audit Department

Individual Divisions and Sections, Group Companies

Board of Directors

President, Directorand COO

Executive Officers

Management Committee

Chairman, Representative Director and CEO

Board of Directors

Directors. There are five Outside Directors, three of whom are Independent Outside Directors. The Company has put in place a framework where opinions of Directors who have abundant experience and knowledge from career such as corporate managers or academic experts are appropriately reflected in the Company’s management.

Corporate Governance

Basic Policy


◀◀◀ ◀ 29 ▶

established the Compliance Committee to enable the prevention and early detection of compliance breaches and improve the mobility of the self-purification process.

Matters concerning business execution not resolved by the Board of Directors are delegated to the Representative Director and Chairman, the Director and President, and Executive Officers, and each Executive Officer executes business in his or her area of responsibility under the oversight of the Representative Director and Chairman and the Director and President.

The Board of Directors, in principle, meets once a month. The Board of Directors shall conduct multi-faceted and adequate examinations of proposals concerning important matters and engage in constructive discussion conducive to the sustainable growth and increased corporate value of the Company over the medium to long term.

The role and responsibility of the Company Auditors and the Board of Company Auditors include the audit of Directors’ performance of their duties, the exercise of authority for appointment and dismissal of the Independent Auditor as well as the determination of its compensation, from an independent and objective standpoint.

Full-time Company Auditors grasp the status of the realization of corporate governance mainly by attending the meetings of the Management Committee and other important meetings relating to business execution of the Company and collecting necessary information primarily through hearings with business divisions. They share the information with the Outside Company Auditors at the meeting of the Board of Company Auditors held, in principle, once every month. Through these measures, the Company ensures that the functions of the Board of Company Auditors are highly effective.

In order to ensure prompt and decisive decisions by the Representative Director and Chairman, the Director and President, and Executive Officers as well as management objectivity and transparency, the Company has set up the Nominating and Compensation Advisory Committee, which deliberates and decides upon the selection of candidates for Directors and Executive Officers, etc. and the evaluation of their performance.

The Company has established compliance-related rules in order to ensure compliance of the Group, including subsidiaries. The Company also has

Fiscal year Items

Number of Directors

Number of Company Auditors

Internal Outside Internal Outside

2012 Establishment of the Basic Policy on the Internal Control System

Establishment of the Compliance Committee Establishment of the Basic Policy on Severing Relationships with Antisocial Forces Establishment of the JDI Ethics

2 7 1 2

2014 Partial revision to the JDI EthicsPartial revision to the Regulations of the Board of Directors (tightening of the criteria for matters to be submitted for deliberation at meetings of the Board of Directors)

2 4(3 Independent

Outside Directors)2

2(2 Independent

Outside Company Auditors)

2015 Partial revision to the Basic Policy on the Internal Control System (response to the revised Companies Act, such as the widening of the scope to cover the Group)Establishment of the Management PhilosophyEstablishment of the Corporate Governance Policies

24

(3 Independent Outside Directors)

22

(2 Independent Outside Company

Auditors)

2016 Performance of evaluation of the effectiveness of the Board of DirectorsChange of the structure of the Compliance Committee(change of the chairperson)

24

(3 Independent Outside Directors)

22

(2 Independent Outside Company

Auditors)

2017 Establishment of the Nominating and Compensation Advisory Committee 2

5(3 Independent

Outside Directors)2

2(2 Independent

Outside Company Auditors)

Initiatives

Board of Company Auditors

Optional Committees

Executive Officers

Corporate Governance Table ofcontents Previous Page Next

◀◀◀ ◀ 30 ▶

Process for Selection of Candidates for Directors and Executive Officers

The Company has established the Nominating and Compensation Advisory Committee as an advisory institution for the Board of Directors in order to ensure transparency and objectivity of the process for selecting candidates for Directors and Executive Officers and the process for determining their compensation. Outside Directors constitute a half of the Nominating and Compensation Advisory Committee and the chairperson of the committee is selected from among Outside Directors.

In selecting candidates for Directors and Executive Officers, the Nominating and Compensation Advisory Committee deliberates on appropriateness and provides recommendations to the Board of Directors. Regarding candidates for Outside Directors, in particular, independence and diversity are also reflected in evaluation and the balance of capabilities, experience, and other

attributes are also taken into consideration for determining the candidates.

In accordance with the Corporate Governance Policies, at the ordinary meeting of the Board of Directors in April 2017, analysis and evaluation of the effectiveness of the Board of Directors as a whole for fiscal 2016 were performed. For evaluation, a questionnaire survey was conducted covering all Directors and Company Auditors, and the Board of Directors deliberated, referring to the compiled results of the questionnaire survey.

As a result, the following items were highly regarded.1) Outside Directors constitute a majority of the Board of Directors of the Company and half the Company Auditors are Outside Company Auditors. The Board of Directors has an atmosphere conducive to free and vigorous discussions, capitalizing on the Directors’ specialties and abundant experience in their respective fields and vigorous, substantive discussions take place.

2) The medium-term business plan and the annual business plan are considered in combination and, as in the case of other specified important matters, efforts are made to secure an environment for sufficient deliberation, such as reporting at the planning phase and informal briefing, prior to resolution at the Board of Directors.3) In accordance with the Information Disclosure Policies decided by the Board of Directors, the Company discloses necessary information in a prompt, precise, and fair manner. The Representative Director and other executives in the management team are vigorously engaged in dialogues with institutional investors in Japan and overseas.On the other hand, the need for further improvement of the methods of

providing information was pointed out in view of the increasing importance of timely information sharing with Outside Directors and Outside Company Auditors amid major change in the business environment. Regarding discussion of human resources development concerning executives in the management team, including fostering of successors, and compensation, the need for further vitalization and further improvement of the oversight functions of the Board of Directors was pointed out. Reflecting these opinions, the previous committee structure was overhauled and the Human Resource Development and Reward Committee was reorganized as the Nominating and Compensation Advisory Committee.

For the eight risk categories, namely, natural disaster and accident risks, legal (litigation) risks, financial risks, economic risks, labor risks, political risks, social risks, and business activity risks, the JDI Group performs assessment of assumed risks in terms of their probability and their impact if they were to materialize, considers and formulates countermeasures for risks whose degree is greater than the predetermined level, and implements countermeasures throughout the Group following management review.


Nominating and Compensation Advisory Committee

Evaluation of Effectiveness of the Board of Directors

Risk Management System


◀◀◀ ◀ 31 ▶

taking into consideration the degree of difficulty of acquiring human resources, hours on duty, the degree of participation in committees etc., and other factors to enhance transparency and objectivity.

The Nominating and Compensation Advisory Committee deliberates on and decides the policy on determination of compensation for Executive Officers and granting of stock options.

Compensation for Company Auditors is a fixed amount in view of their role and independence and is determined through deliberation by Company Auditors within the total amount approved by the General Meeting of Shareholders.

Outside Directors and Company Auditors are outside the scope of bonus payment or stock-compensation-type stock options.

In accordance with the Fundamental Policy for Compliance, the Company has instituted the Compliance Committee as a forum where representatives from related units deliberate and implement measures to establish and inculcate compliance promotion systems and programs. A compliance administrator is assigned to each division to ensure awareness of compliance measures among the employees of each division.

The Compliance Committee is supervised by the chairperson appointed by the Board of Directors and consists of the representatives of divisions that prepare compliance-related policies and measures. The Committee meets once every half-year and holds extraordinary meetings as necessary. Furthermore, the Meeting of Compliance Administrators is held, which is a venue for deepening understanding of the results of deliberations by the Compliance Committee and for information sharing among compliance administrators.

The Group reviews items and content of risk assessment (setting of the degree of significance) every year.

The Company has prepared necessary rules and systems to prevent risks from materializing and to minimize the impact if a risk event occurs.

The Company extracts and identifies risk factors in the course of information sharing and reporting of day-to-day business execution and verifies the status of implementation of measures to prevent risks from materializing and to minimize the impact of risk events.

In formulating the annual business plan and the medium-term business plan, we analyze risks in the formulation process and incorporate risk countermeasures into the plans.

Furthermore, in Business Continuity Planning (BCP), we anticipate scenarios (natural disasters, public health emergencies, information security crises and accidents, etc.), estimate their impacts with regard to customers, suppliers and other aspects of the Company’s supply chain, and implement countermeasures in advance and other preparations to minimize the impacts and enable rapid recovery.

The Company has introduced stock options for compensation for Directors, excluding Outside Directors, to enhance their motivation toward improving the Company’s performance and corporate value over the medium to long term. For the short term, compensation is designed to reflect the results of the Company’s performance. The Nominating and Compensation Advisory Committee deliberates on and determines amount of directors’ remuneration to be proposed to Board of Directors based on performance evaluation for each fiscal year as well as matters concerning granting of stock options.

Compensation for Outside Directors is a fixed amount in view of their roles and independence. The appropriate amount is computed,

Compensation for Directors and Company Auditors

Compliance

Corporate Governance Table ofcontents Previous Page Next

◀◀◀ ◀ 32 ▶

The Company has instituted the Whistleblower System to enable the prevention and early detection of compliance violations, increase flexibility in the self-policing process, and correct compliance violations and, in so doing, ensure public trust in JDI. Employees and other persons who have discovered compliance violations or suspected violations can use the Whistleblower System to seek consultation and make reports. As such, the system helps to instill compliance awareness in employees, etc. The Company has set an outside point of contact in addition to an in-house point of contact as contacts for the Whistleblowing System, and explicitly, in accordance with the Company’s regulations, prohibits any disadvantageous treatment of a whistleblower while taking due measures to protect whistleblowers, such as managing whistleblowing information as strictly confidential.

To avoid the risk of leakage of various types of information handled by the JDI Group, the Company has established the Policies on Information Security and other rules and takes steps to ensure all officers and employees are familiar with the rules and that they are properly implemented. We have instituted the Information Security Committee to implement groupwide information security-related measures. The Committee conducts risk assessment and risk management and engages in continuous activities to prevent the loss, leakage, or theft of confidential information. The Committee also supervises the safeguarding of information assets and the establishment of information management systems in response to the actual conditions of each business field.

The Company recognizes information disclosure as one of its management responsibilities and proactively conducts public relations and investor relations activities that emphasize fairness and transparency to earn the trust of all stakeholders, including shareholders and investors, customers, suppliers, and the communities in which the Company operates.

Further, in recognition that it is important to maintain active dialogue with shareholders at all times and reflect their opinions and requests in its management in order to promote sustainable growth and increased corporate value over the medium to long term, the Company endeavors to improve its IR structure to proactively respond to inquiries from shareholders and investors, and develop opportunities for dialogue with them.

The Company has established the “Information Disclosure Policies” and, as a listed company, discloses corporate information important for shareholders and investors’ decisions on investment in JDI in an easy-to-understand, prompt, precise, and fair manner, while endeavoring to facilitate shareholders’ and investors’ deeper understanding and appropriate

evaluation of the Company.

*The content presented in the items of Corporate Governance describes the current status as of August 1, 2017.


Whistleblower System

Information Security System

Information Disclosure Policies


◀◀◀ ◀ 33 ▶

Chairman and President Directors

Chairman, Representative Director and CEO

Nobuhiro Higashiiriki (Born on July 23, 1948)

1974 Joined Nippon Mining Co., Ltd. (now JX Nippon Mining & Metals Corporation)

1999 President and Representative Director of Orbotech Display Pacific Ltd.

2001 President and Representative Director of Orbotech Japan Ltd.

2011 Chairman, President and Representative Director of Orbotech Japan Ltd.

2013 Chairman and Representative Director of Orbotech Japan Ltd.

2013 Retired as Chairman and Representative Director of Orbotech Japan Ltd.

2013 Honorary Chairman and Representative Director of Orbotech Japan Ltd.

2014 Retired as Honorary Chairman of Orbotech Japan Ltd.

2014 President, Representative Director and Chief Executive Officer (CEO) of JOLED Inc. (current position)

2017 Vice Chairman and Executive Officer of the Company

2017 Chairman, Representative Director and CEO of the Company (current position)

Director and President and COO

Shuji Aruga(Born on March 22, 1959)

1983 Joined Suwa Seikosha Co., Ltd. (now Seiko Epson Corporation)

2006 Executive Officer of Seiko Epson CorporationPresident and Representative Director of Epson Imaging Devices Corporation

2009 Director and Executive Vice President of Sony Mobile Display Corporation

2011 President and Representative Director of Sony Mobile Display CorporationManaging Director of the mobile display business of Sony Corporation’s Professional Devices Solutions Group

2012 Executive Officer of the former Japan Display Inc.

2013 Executive Officer of the Company

2013 Director and Chief Business Officer of the Company

2014 Executive Officer and COO, CBO of the Company

2015 President, Representative Director and COO of the Company

2017 President, Director and COO of the Company (current position)

Outside Director

Mikihide Katsumata(Born on May 21, 1960)

1983 Joined Industrial Bank of Japan, Limited (now Mizuho Bank, Ltd.)

1999 Joined Merrill Lynch Japan Securities Company, Limited as Global Principal Investments Director

2002 Established Nippon Mirai Capital Co., Ltd. as Director, Partner & CFO

2007 Established New Frontier Capital Management Co., Ltd. as Chief Executive Officer (CEO)

2010 Joined Mobile Internet Capital, Inc. as President & Chief Executive Officer (CEO)

2015 Joined Innovation Network Corporation of Japan as Senior Corporative Executive Officer and Managing Director

2015 President and Chief Operating Officer (COO), Member of the Board of Innovation Network Corporation of Japan (current position)

2017 Outside Director of the Company (current position)

Outside Director*

Katsuhiko Shirai(Born on September 24, 1939)

1965 Outside Research Associate, School of Science & Engineering, Waseda University

1975 Professor, School of Science & Engineering, Waseda University

1994 Dean, Academic Affairs and Executive Director, International Center, Waseda University

1998 Vice President of Waseda University

2002 President and Chairman of Waseda University

2010 Honorary advisor on educational issues for Waseda University

2011 Chairman of The Open University of Japan

2011 Outside Director of IFTL-Solar Inc. (now inQs Co., Ltd.) (current position)

2012 Outside Director of the former Japan Display Inc.Director of NIPPON TELEGRAPH AND TELEPHONE CORPORATION (current position)


Outside Director*

Kazuhiko Shimokobe(Born on December 12, 1947)

1974 Registered as attorney at law, joined the Tokyo Bar Association

2005 Outside Director and Industrial Revitalization Committee Member of Industrial Revitalization Corporation of Japan

2007 President of the Tokyo Bar AssociationVice President of the Japan Federation of Bar Associations

2007 Outside Director and Audit Committee Member of JAPAN POST HOLDINGS Co., Ltd.

2011 President of Fujiwara Natural History Foundation (current position)

2011 Outside Auditor of CHORI CO., LTD.

2011 Outside Auditor of Frontier Management Inc.(current position)

2011 Chairperson of the Management Committee of Nuclear Damage Compensation Facilitation Corporation

2012 Chairman of Tokyo Electric Power Company, Incorporated

2014 Outside Auditor of Industrial Growth Platform, Inc. (current position)

2015 Outside Director of CHORI CO., LTD.

2016 Outside Director (Audit & Supervisory Committee Member) of CHORI CO., LTD. (current position)


Outside Director*

Takahisa Hashimoto(Born on September 21, 1943)

1967 Joined IBM Japan, Ltd.

1990 Plant Manager of Yasu Plant of IBM Japan, Ltd.

1991 Director of Technical Development (display) Center, Yamato Laboratory of IBM Japan, Ltd.

2000 Director of IBM Japan, Ltd.

2001 Established International Display Technology Corporation as President and Representative DirectorVice Chairman of Chi Mei Optoelectronics Corp.

2004 Established NVTech as President and Representative Director

2005 Established InfoVision Optoelectronics Kunshan Co., Ltd. as President and CEO

2011 Vice Chairman of InfoVision Optoelectronics Kunshan Co., Ltd.

2015 Retired as Vice Chairman of InfoVision Optoelectronics Kunshan Co., Ltd.


Note: The Company has designated the Directors and Company Auditors marked with *as independent directors and auditors pursuant to the regulations of the Tokyo Stock Exchange and notified the said exchange of their designation.

Directors and Company AuditorsDirectors


◀◀◀ ◀ 34 ▶

Company Auditors

Company Auditor

Kazuo Kawasaki(Born on March 1, 1953)

1977 Joined Tokyo Shibaura Electric Co., Ltd. (now Toshiba Corporation)

2002 Director of TFPD Corporation

2003 General Manager of Ishikawa Plant of Toshiba Matsushita Display Technology Co., Ltd.

2007 Chief Executive Officer (President) of AFPD PTE., LTD.

2010 Corporate Auditor of Toshiba Mobile Display Co., Ltd.

2012 Company Auditor of the former Japan Display Inc.Company Auditor of the Company (current position)

Company Auditor

Takao Yasuda(Born on December 25, 1953)

1987 Joined Pricewaterhouse Consulting, Co., Ltd.

1990 Joined Sony Corporation

2000 General Manager of Business Administration Department, Corporate Planning Division of Sony Corporation

2002 Director and General Manager of Planning and Control Department of Sony Energy Devices Corporation

2005 Senior General Manager of Corporate Planning Division, Component Company of Sony Corporation

2007 Director of Sony Mobile Display Corporation

2009 Director and Senior General Manager of Planning and Control Division of Sony Mobile Display Corporation

2012 Executive Officer and Chief Administrative Officer of the former Japan Display Inc.

Chair of Compliance Committee of the former Japan Display Inc.

2013 Executive Officer and Chief Administrative Officer of the CompanyChair of Compliance Committee

2016 Company Auditor of the Company (current position)

Company Auditor (Part-time)*

Youichi Etou(Born on August 11, 1950)

1978 Registered as attorney at law

2003 Vice president of Daiichi Tokyo Bar Association

2004 Established Integral Law OfficeRepresentative Partner of Integral Law Office (current position)

2005 Vice President of Kanto Federation of Bar Associations

2006 Outside Auditor of TSUNEISHI SHIPBUILDING Co., Ltd. (current position)

2010 President of Daiichi Tokyo Bar Association and Vice President of the Japan Federation of Bar Associations

2011 Outside Audit & Supervisory Board Member of NICHIAS Corporation

2012 Company Auditor of the former Japan Display Inc.


2015 Outside Director of NICHIAS Corporation (current position)

Company Auditor (Part-time)*

Toshiaki Kawashima(Born on June 14, 1947)

1970 Joined Arthur Andersen Accounting Office

1982 Joined Salomon Brothers Asia Ltd., finally served as Chief Financial Officer and Chief Administrative Officer

1999 General Manager of Financial Affairs Division of Nikko Salomon Smith Barney Securities, Ltd.

2004 Managing Executive Officer and General Manager of Financial Affairs Division of Citigroup Global Markets Japan, Inc.

2006 Advisor of Citigroup Global Markets Japan, Inc.

2010 Established Kawashima CPA Office

2011 External Auditor of Citibank Japan, Ltd. (current position)

2012 Company Auditor of the former Japan Display Inc.


Note: The Company has designated the Directors and Company Auditors marked with * as independent directors and auditors pursuant to the regulations of the Tokyo Stock Exchange and notified the said exchange of their designation.

Directors

Outside Director

Nobuyuki Higashi(Born on March 31, 1964)

1987 Joined Nomura Research Institute, Ltd.

1998 Joined Nomura Securities Co., Ltd.

2000 Seconded to Nomura Principal Finance Co., Ltd.

2011 Returned to Nomura Securities Co., Ltd.

2012 Joined Innovation Network Corporation of Japan as Investment Business Group Managing Director (current position)

2017 Outside Director of JOLED Inc. (current position)


Directors and Company AuditorsDirector / Company Auditors


◀◀◀ ◀ 35 ▶

FY2016(March 31, 2016)

FY2017(March 31, 2017)

Assets

Current assets

Cash and deposits 55,077 82,247

Accounts receivable - trade 80,688 128,636

Accounts receivable - other 57,127 91,999

Merchandise and finished goods 54,176 32,318

Work in process 41,090 51,764

Raw materials and supplies 18,861 16,815

Deferred tax assets 7,251 7,757

Other 8,731 6,804

Allowance for doubtful accounts (182) (182)

Total current assets 322,822 418,159

Non-current assets

Property, plant and equipment

Buildings and structures 170,431 229,185

Accumulated depreciation (91,870) (85,504)

Buildings and structures, net 78,560 143,681

Machinery, equipment and vehicles 408,209 566,766


Machinery, equipment and vehicles, net 90,455 185,054

Land 14,482 14,392

Lease assets 133,105 74,352


Lease assets, net 73,063 36,955

Construction in progress 167,642 54,781

Other 55,580 58,702


Other, net 12,580 12,718

Total property, plant and equipment 436,784 447,584

Intangible assets

Goodwill, 19,000 15,903

Other intangible assets, 10,664 8,680

Total intangible assets, 29,664 24,584

Investments and other assets

Deferred tax assets 17,884 911

Other 8,898 26,608

Allowance for doubtful accounts (2,192) (2,218)

Total investments and other assets 24,590 25,302

Total non-current assets 491,039 497,471

Total assets 813,861 915,631

(Millions of yen)Consolidated Balance Sheets

FY2016(March 31, 2016)

FY2017(March 31, 2017)

Liabilities

Current liabilities

Accounts payable - trade 138,053 201,016

Short-term loans payable — 25,700

Current portion of long-term loans payable 8,543 —

Current portion of lease obligations 35,740 20,519

Income tax payable 1,255 2,653

Provision for bonuses 5,105 5,521

Advance received 131,913 179,397

Other 62,060 34,732

Total current liabilities 382,671 469,540

Non-current liabilities

Bonds with subscription rights to shares — 45,000

Long-term loans payable 138 30,000

Lease obligations, 32,904 13,980

Net defined benefit liability 32,058 27,408

Other 838 2,616

Total non-current liabilities 65,940 119,005

Total liabilities 448,612 588,546

Net assets

Shareholders’ equity

Capital stock 96,863 96,863

Capital surplus 257,040 256,386

Retained earnings 3,379 (28,788)

Total shareholders’ equity 357,283 324,461

Accumulated other comprehensive income

Deferred gains or losses on hedges — (42)

Foreign currency translation adjustment 13,126 9,368

Remeasurements of defined benefit plans (7,260) (8,927)

Total accumulated other comprehensive income 5,865 398

Subscription rights to shares 18 45

Non-controlling interests 2,082 2,179

Total net assets 365,249 327,085

Total liabilities and net assets 813,861 915,631

(Millions of yen)

Download financial information (PDF). JDI Website


More detailed financial dataare available.Financial Data


◀◀◀ ◀ 36 ▶

http://v4.eir-parts.net/v4Contents/View.aspx?cat=yuho_pdf&sid=2365490

http://www.j-display.com/english/ir/library/pdf/financialreport2017.pdf

http://www.j-display.com/english/ir/index.html

FY2015 FY2016

Net sales 989,115 884,440

Cost of sales 912,275 816,035

Gross profit 76,839 68,405

Selling, general and administrative expenses 60,129 49,902

Operating profit 16,710 18,502

Non-operating income

Interest income 119 85

Subsidy income 5,026 2,526

Rent income 516 560

Fiduciary obligation fee 723 1,118

Other 1,187 2,613

Total non-operating income 7,573 6,905

Non-operating expenses

Interest expenses 2,385 2,761

Share of loss of entities accounted for using equity method — 2,094

Foreign exchange losses, 21,911 11,211

Depreciation 3,901 7,915

Loss on reduction of non-current assets 3,507 —

Other 5,512 10,296

Total non-operating expenses 37,218 34,279

Ordinary loss (12,934) (8,871)

Extraordinary losses

Impairment loss 1,101 744

Business structure improvement expenses 13,933 —

Early extra retirement payments — 1,620

Total extraordinary losses 15,034 2,365

Loss before income taxes (27,969) (11,236)

Income tax - current 5,519 2,755

Income tax -deferred (2,127) 16,837

Total income taxes 3,391 19,593

Net loss (31,361) (30,830)

Profit (loss) attributable to non-controlling interests 479 834

Profit (loss) attributable to owners of the parent (31,840) (31,664)

(Millions of yen)Consolidated Statements of IncomeFY2015 FY2016

Cash flows from operating activitiesLoss before income taxes (27,969) (11,236)Depreciation 78,326 87,869Amortization of goodwill 2,509 2,379Increase (decrease) in allowance for doubtful accounts 41 (58)Impairment loss 1,101 744Subsidy income (5,026) (2,526)Loss on reduction of non-current assets 3,507 395Business structure improvement expenses 13,933 —Interest expenses 2,385 2,761Foreign exchange losses 9,272 3,318Decrease in net defined benefit liability (2,201) (3,344)Share of loss of entities accounted for using equity method — 2,094Decrease (increase) in notes and accounts receivable - trade 56,413 (50,292)Decrease (increase) in inventories (11,746) 11,236Increase (decrease) in notes and accounts payable -trade (56,385) 59,880Decrease (increase) in accounts receivable-other 5,354 (34,457)Increase (decrease) in accounts payable-other 11,839 (7)Increase (decrease) in accrued expenses (5,680) 560Decrease in consumption taxes receivable 14,451 105Increase in advances received 66,671 47,507Other, net 2,856 97Subtotal 159,655 117,028Interest and dividend income received 123 121Interest expenses paid (2,395) (2,792)Income taxes paid (6,682) (2,788)Income taxes refund 740 435Net cash provided by (used in) operating activities 151,442 112,004

Cash flows from investing activitiesPurchase of non-current assets (186,353) (133,412)Purchase of investment securities (50) (19,750)Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation — 1,281Proceeds from subsidy income 5,026 2,126Other, net 222 7,161Net cash provided by (used in) investing activities (181,156) (142,592)

Cash flows from financing activitiesNet increase (decrease) in short-term loans payable — 25,081Proceeds from long-term loans payable 174 30,000Repayment of long-term loans payable (8,993) (8,671)Proceeds from issuance of bonds — 45,000Repayment of lease obligations (30,840) (35,772)Proceeds from sales and leasebacks 33,489 1,503Proceeds from issuance of common shares 12 —Payment from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation — (1,478)Proceeds from disposal of treasury shares 60 —Net cash provided by (used in) financing activities (6,098) 55,663

Effect of exchange rate change on cash and cash equivalents (3,753) 2,094Net increase (decrease) in cash and cash equivalents (39,565) 27,170Cash and cash equivalents at beginning of period 94,643 55,077Cash and cash equivalents at end of period 55,077 82,247

(Millions of yen)Consolidated Statements of Cash Flows


Financial DataDownload financial information (PDF). JDI Website

More detailed financial dataare available.

( )from April 1, 2015to March 31, 2016 ( )from April 1, 2016

to March 31, 2017 ( )from April 1, 2015to March 31, 2016 ( )from April 1, 2016

to March 31, 2017


◀◀◀ ◀ 37 ▶

http://www.j-display.com/english/ir/library/pdf/financialreport2017.pdf

http://www.j-display.com/english/ir/index.html

Company name Japan Display Inc.

Business start April 1, 2012

Capital 96.9 billion yen

Security code 6740 (First Section of Tokyo Stock Exchange)

Business Development, design, production and sale of small/medium display devices and related products

Headquarters 7-1, Nishi-shinbashi 3-chome, Minato-ku, Tokyo 105-0003, Japan

Employees 13,173 (consolidated)

Outline (as of March 31, 2017)

Executive Officers

Nobuhiro Higashiiriki Chief Executive Officer

Shuji Aruga Chief Operating Officer

Norikazu Houshi Executive Vice President; In charge of New Business Promotion, Sales in China, Cost Innovation and Manufacturing Innovation

Isao Fukui Managing Executive Officer; Chief Strategy Officer (Strategic Planning Division, Division Manager)

Kazutaka Nagaoka Managing Executive Officer; In charge of Mobile Business Group and Technology Division

Yoshiyuki Tsukizaki Automotive and Industrial Display Division, Division Manager

Sadahiro Numazawa Mobile Business Group Mobile Display Division, Division Manager

(as of August 1, 2017)

Jeff Hsu JDIT President

Tomiaki Yamamoto Manufacturing Division, Division Manager

Hiroshi Ikeuchi Strategic Planning Division (In charge of Corporate Planning, Intellectual Property, Public Relations, Business Alliance and Sales Administration)

Nobuhiko Kobayashi Strategic Planning Division (In charge of Supply Chain Management and Information Technology)

Akio Takimoto Chief Technology Officer (Research & Development Center, Division Manager)

Yoshio Iwai Mobile Business Group Advanced Display Division, Division Manager

Takanobu Oshima Chief Financial Officer (Accounting and Finance Division, Division Manager)

Directors and Company Auditors (as of June 21, 2017)

Chairman and Representative Director

Nobuhiro Higashiiriki President, Representative Director and Chief Executive Officer (CEO) of JOLED Inc.

President and Director Shuji Aruga

Director (Part-time) Katsuhiko Shirai Outside Director of NIPPON TELEGRAPH AND TELEPHONE CORPORATION; Outside Director of inQs Co., Ltd.

Director (Part-time) Kazuhiko Shimokobe Outside Director (Audit & Supervisory Committee Member) of CHORI CO., LTD.; Outside Auditor of Frontier Management Inc.; Outside Auditor of Industrial Growth Platform, Inc.

Director (Part-time) Takahisa Hashimoto

Director (Part-time) Mikihide Katsumata President and Chief Operating Officer (COO), Member of the Board of Innovation Network Corporation of Japan (INCJ)

Director (Part-time) Nobuyuki Higashi Investment Business Group Managing Director of Innovation Network Corporation of Japan (INCJ); Outside Director of JOLED Inc.

Company Auditor Kazuo Kawasaki

Company Auditor Takao Yasuda

Company Auditor (Part-time) Youichi Etou Representative Partner of Integral Law Office; Outside Auditor of TSUNEISHI SHIPBUILDING Co., Ltd.; Outside Director of NICHIAS Corporation

Company Auditor (Part-time) Toshiaki Kawashima Head of Kawashima CPA Office

Corporate ProfileTable ofcontents Previous Page Next

◀◀◀ ◀ 38 ▶

Mobara Plant3300 Hayano, Mobara-shi, Chiba Prefecture

Higashiura Plant50 Kamifunaki, Ogawa, Higashiura-cho, Chita-gun, Aichi Prefecture

Tottori Plant3-117-2 Minamiyoshikata, Tottori-shi, Tottori Prefecture

Domestic manufacturing plantsIshikawa Plant26-2 Yamadasenden, Kawakita-machi, Nomi-gun, Ishikawa Prefecture

Nomi Plant1-47 Iwauchi-cho, Nomi-shi, Ishikawa Prefecture

Hakusan Plant2480-1 Takematsu-machi, Hakusan-shi, Ishikawa Prefecture

Manufacturing plants

Mobara Plant G6 LTPS

Ishikawa Site Ishikawa Plant G4.5 LTPS

Nomi Plant　 G5.5 LTPS*Production will be ceased in December 2017.

Hakusan Plant G6 LTPS

Higashiura Plant G3.5 LTPS

Tottori Plant G4 a-Si

Landic 2nd Bldg., 3-7-1, Nishi-shinbashi, Minato-ku, Tokyo

Headquarters

Western Japan Office

Nissay Shin-Osaka Minamiguchi Bldg., 5-14-5, Nishi-Nakajima, Yodogawa-ku, Osaka

Sales Base

Ebina Office

Ebina Prime Tower, 2-9-50, Chuo, Ebina-shi, Kanagawa Prefecture

Design and Development Base

a-Si ：Plants adopting amorphous silicon TFT technology

LTPS ：Plants adopting low-temperature polycrystalline silicon TFT technology

Overseas Sales Subsidiaries

Overseas Manufacturing

Subsidiaries

JDI Display America, Inc. San Jose, CA, USA

JDI Europe GmbH München, Germany

JDI China Inc. Shanghai, PRC

JDI Hong Kong Limited Kowloon, Hong Kong

JDI Taiwan Inc. Taipei, Taiwan

JDI Korea Inc. Seoul, Korea

Suzhou JDI Devices Inc. Suzhou, PRC

Suzhou JDI Electronics Inc. Suzhou, PRC

Shenzhen JDI Inc. Shenzhen, PRC

Nanox Philippines Inc. Pampanga, Philippines

Kaohsiung Opto-Electronics Inc. Kaohsiung, Taiwan

Overseas Business LocationsHeadquarters Sales Subsidiaries Manufacturing Subsidiaries

Suzhou JDI Devices Inc.Suzhou JDI Electronics Inc.

JDI China Inc.

Shenzhen JDI Inc.

JDI Hong Kong Limited

JDI Korea Inc.

JDI Taiwan Inc.

Kaohsiung Opto-Electronics Inc.

Nanox Philippines Inc.

JDI Europe GmbH. JDI Display America, Inc.

Corporate Profile Table ofcontents Previous Page Next

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Basic Stock Information

Total number of authorized shares 1,840,000,000

Total number of shares issued 601,411,900

Number of shareholders 71,975

Number of shares per unit 100

Shareholding by Ownership

Category Number of shareholders Number of shares held Shareholding ratio (%)

Japanese individuals and others 70,594 178,045,721 29.6

Japanese financial institutions 33 50,776,700 8.4

Other Japanese corporations 888 239,676,600 39.9

Foreign institutions and individuals 407 117,718,075 19.6

Japanese securities firms 53 15,194,804 2.5

Major Shareholders

Name of shareholders Number of shares held Shareholding ratio (%)

Innovation Network Corporation of Japan 214,000,000 35.6

BNYM SA/NV FOR BNYM FOR BNYM GCM CLIENT ACCTS M ILM FE 21,464,669 3.6

GOLDMAN SACHS INTERNATIONAL 14,726,956 2.4

BNY GCM CLIENT ACCOUNT JPRD AC ISG(FE-AC) 10,766,287 1.8

Sony Corporation 10,700,000 1.8

Japan Trustee Services Bank, Ltd. (Trust Account) 10,450,100 1.7

Japan Trustee Services Bank, Ltd. (Trust Account 9) 7,866,100 1.3

Japan Trustee Services Bank, Ltd. (Trust Account 5) 6,859,200 1.1

The Master Trust Bank of Japan, Ltd. (Trust Account) 6,551,500 1.1

UBS AG LONDON A/C IPB SEGREGATED CLIENT ACCOUNT 6,063,900 1.0

Ownership and Distribution of Shares

Japanese securities firms 15,194,804 shares

2.5%

Foreign institutions and individuals 117,718,075 shares

19.6%

Other Japanese corporations 239,676,600 shares

39.9%

Japanese financial institutions 50,776,700 shares

8.4%

Japanese individuals and others 178,045,721 shares

29.6%

600

0

300

450

150

800,000

600,000

400,000

200,000

02016/04 05 06 07 08 10 11 12 2017/01 0209 03 04 05 06

Trading volume (thousand shares) Share price (yen)

Share price and trading volume

Stock Information(as of March 31, 2017)


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Annual Report 2017We aim to think and create with customers. 6. Fairness: Being open and fair Act...

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