Wacom Annual Report 2012
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Transcript of Wacom Annual Report 2012
© 2012 Wacom Co., Ltd. Wacom is a trademark of the Wacom Company, Ltd. All rights reserved. All other company names and product names are trademarks or registered trademarks of their respective owners.
JIS Q 9001:2008JIS Q 14001:2004
JSAQ2067, JSAE1201
Annual Report
2012
We looked inside ourselvesto find the thought that definesand drives everything we do.
An idea that helps us open upto experience the world in a new way.
An idea to drive us forward.
Open up. Sense more.An idea. A dream. An inspiration.
4
Our MilestonesApr. 2012
Mar. 2012
Oct. 2011
Jun. 2011
May. 2011
Mar. 2011
Feb. 2011
Jan. 2011
Oct. 2010
Sep. 2010
Jul. 2010
Mar. 2010
Oct. 2009
Aug. 2009
Oct. 2008
Nov. 2007
Oct. 2007
Sep. 2007
May. 2007
Feb. 2007
May. 2006
Apr. 2006
Dec. 2005
Apr. 2005
Feb. 2005
Apr. 2004
Nov. 2003
Apr. 2003
Sep. 2001
Mar. 2000
Nov. 1999
Jun. 1999
Sep. 1998
Aug. 1991
Jun. 1988
Jul. 1983
Bamboo Stylus Duo joined the Bamboo Stylus family, Duo provides both a nibof conductive rubber and a ballpoint pen in one stylus
Intuos 5 professional pen tablet with pen and multi-touch function is released
Samsung adopts Wacom’s pen sensor component in the Galaxy Note
Launch of Cintiq 24HD professional interactive pen display as the flagship model
New bamboo series with pen and multi-touch functions for consumers is released
Introduction of Wacom Inkling, a new digital sketch pen for professionals
Launch of Bamboo paper for iPad users to create ideas with handwritten notes
Bamboo Stylus specially designed for iPad is released.
Acquisition of software business of digital signature from Florentis in UK
Received the 16th “Disclosure Award” from Tokyo Stock Exchange
ASUS adopts Wacom’s pen and touch sensor component to a Tablet-typedevice “Eee Slate”
Wacom India (a fully owned subsidiary) is established
ECAD dio 2010 featuring harness design function for electrical design released
Business solution partnership program starts to expand handwritingfeatures for vertical market in Japan
Launch of Cintiq 21UX, 21.3” professional interactive pen display featured withnew high-performance pen
Introduction of a new technology brand for user interface solutions,Wacom feel IT technologies
Mass production and shipment of a new sensor system supporting themulti-touch functions to PC manufacturers
Announce of development of a multi-touch sensor component
Wacom Taiwan Information (a fully owned subsidiary) is establishedin Taiwan as a marketing and customer service base for Taiwan market
Development of a multi-touch sensor component is announced
Berliner Sparkasse adopts Wacom STU series of signature tablet for digitalsignature solution for its private client centers
Launch of Cintiq 12WX interactive pen display as a mobile companion, and asa secondary monitor in multi-monitor environments
Celebrated 25th anniversary, and announced new growth vision andnew brand concept “Open up. Sense more.” for the future
Bamboo is launched for general consumer PC users
Received the first “Disclosure Newcomer Award” from the TSE
Wacom Singapore (a fully owned subsidiary) is established in Singaporeas a sales base for the South and Southeast Asian markets
Wacom Hong Kong (a fully owned subsidiary) is established in Hong Kongas a sales base in the South China
Wacom pen sensor components are adopted in e-Book devices with e-paper
Our stock is listed on the First Section of Tokyo Stock Exchange(TSE)
Wacom Australia (a fully owned subsidiary) is established in Australia,as a sales base for the Oceania market
Cintiq 21UX launched, setting a new standard for digital pen-based imaging
Wacom Digital Solutions (presently Wacom Korea a fully owned subsidiary)is established in Seoul as a sales base in South Korea
HP Tablet PC adopts Wacom’s Penabled pen sensor component
Listed on the JASDAQ market
Launch of Cintiq, a line of interactive pen displays
Wacom China (a fully owned subsidiary) is established in China
Launch of Graphire/FAVO, a line of consumer pen tablets
Launch ECAD/dio, a CAD system for electrical engineering
Launch of Intuos, a line of professional pen tablets
Wacom Technology (a fully owned subsidiary) is established in Vancouver,Washington, as a marketing and sales base in the Americas
Wacom Computer Systems (presently Wacom Europe a fully ownedsubsidiary) is established in Neuss, Germany, as a marketing and salesbase in Europe
Operation of tablet product and CAD system for electrical engineering begins
Wacom Co., Ltd. is established in Ageo City, Saitama, Japan, withcommon stock of 48 million yen
3 4
20109 2011 2011
The key to our success
Where are we now?
Our milestones Our global model
Financial section Corporate dataInvestor information
34
19
4679
5To our shareholders
Our businesses
15Our Team
DISCLAIMER
Contents
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
5,000
10,000
15,000
20,000
(Millions of yen) (Millions of yen)
Wacom Co., Ltd. and Its Subsidiaries Years ended March 31
For the year:Net salesGross profitOperating incomeNet incomeComprehensive income
At year end:Total assetsTotal net assets
Per share (yen and U.S. dollars) :Net incomePrimaryDilutedCash dividends applicable to the year
¥40,705,57817,895,936
4,067,4752,181,3412,007,351
¥5,463.955,458.663,000.00
$495,262217,73949,48926,54024,423
$415,250230,173
$66.4866.4236.50
¥33,030,35915,634,4453,252,0861,967,0831,408,053
¥27,093,50318,481,946
¥4,895.484,885.723,000.00
Thousands of yenThousands ofU.S. dollars*
*Note 1: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥82.19=U.S. $1, the approximate exchange rateprevailing on March 31, 2012.
’08 ’08 ’09 ’10 ’09 ’10 ’11
36,739
32,045
’12 ’11’10’09’08
Net sales Net income Total assets Total net assets
Financial highlights
17,796 18,270 18,482
The key to our success
’12
18,517
¥34,129,39818,917,895
Our corporate vision is “creating harmony between people and technology.” How do we do this? By providing technologically-sophisticated tools that are natural to use and people-friendly. Anyone can use them.
In the 1980s we pioneered the development of cordless and battery-free pen tablets – a brand new way of working that opened up fresh, creative possibilities. Graphic artists around the world immediately prized the pen tablet’s user-friendly interface and versatility. To this day, the pen tablet is an absolute must-have in the world of graphics.
We did not stop there. We thought, “What if you could draw directly on to a computer screen?” Our interactive pen displays enable users to do just that. These products are now hugely popular in many business fields as well as graphical applications, including medical firms, educational institutions, financial companies and those enterprises that need more natural and interactive ways to use computers.
We then looked at how we could make life better for mobile users. We incorporated our sophisticated components into smart phones and computers so that handwriting and finger touch operations are available during meetings and web communications. These technologies make people able to enjoy not only creating but also consuming content more naturally and intuitively than ever before. We more recently delivered stylus pens and an original note taking application to respond to market demand in the UI area.
Our pen tablets continue to be adopted into new application fields, and we are committed to the ongoing development of exciting new technologies. Our aim is to revolutionize both the workplace and the home with our natural user interface technology. We’re looking forward to seeing where this takes us. It’s going to be an exciting journey.
Forward-looking statements regarding future events and performance contained in this annual report are based on currently available information and involve risks and uncertainties, including macroeconomic conditions, trends of the industry in which the company is engaged, and progress in technologies. Please note that actual results could materially differ from those expressed or implied by the forward-looking statements in this annual report due to these risks and uncertainties.
2012 20122011
0
500
1,000
1,500
2,000
2,500
3,000
3,5003,501
2,579
1,968 1,9672,181
(Millions of yen) (Millions of yen)’11 ’12
33,809 33,030
40,706
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
29,221
25,631
’11’10’09’08 ’12
28,19927,094
34,129
18,918
17
45
Firstly, please let me express our sincere appreciation for your unchanging support to Wacom during FY29. The year was full of unexpected business risks, but thanks to your support, Wacom could manage them and grew the business successfully. We are pleased to present Wacom’s Annual Report for our 29th fiscal year, representing the results from April 1, 2011 through March 31, 2012.
Under our corporate vision of “creating harmony between people and technology”, we have been serving the world with natural, intuitive and human-friendly user interface solutions to help our customers. We are proud that our products serve a wide range of professional users around the world in creating 3D films and games, auto designs, as well as medical and education solutions, etc. Also, our products are used by a wide range of consumer users at home who enjoy creativity and sharing with friends. Our technology is helping to create new category products such as Smartphones, e-Books and tablet devices.
In the spirit of our brand concept “Open up. Sense more.”, Wacom will continue to pursue making natural user interface solutions to support human creativity and for enriching life.
How did we do in our 29th fiscal year?We started FY29 with unprecedented business risks caused by the earthquake in Japan. During the fiscal year our business was also affected by other risks such as the flood in Thailand, European credit crisis and economic slowdown in emerging countries as well as rapid appreciation of the Japanese Yen. Our business in FY29 was marked with the test of our resiliency against business risks and unfavorable market environments.
In our branded product business, while managing supply chain risks, we successfully developed and launched new generation products in professional and consumer product lines, and continued to grow our digital signature products in financial markets. We also expanded our numbers of users in mobile segments by introducing new category products such as “Bamboo Stylus” , an accessory type pen for iPad, “Bamboo Paper” , a note-taking application for iPad, as well as “Inkling” , a pen for digital sketching.
In our component business, revenue grew significantly with the mass production and shipment of pen components for “Samsung Galaxy Note” Smartphone. The traditional tablet PC business and e-Books grew steadily as well.
For supporting the growth and for mitigating business risks, we also invested in development of the SCM organization in China, establishment of a key component supply base in China and stated the operation on a new ERP system.
As a result, for the fiscal year ending March 31, 2012, we recorded net sales of ¥40,706 million (up 23.2%), operating income of ¥4,067 million (up 25.1%), ordinary income of ¥3,892 million (up 15.7%) and net income of ¥2,181 million (up 10.9%).
Where are we heading in our 30th fiscal year?For our 30th fiscal year we expect to see a slow recovery of the global economy, mainly lead by emerging markets. However the growing uncertainty from European credit risk and economic slowdown on a global scale will continue to be lingering risk factors. Japanese Yen will stay strong as Euro uncertainty remains. U.S. and other key counties continue to stimulate the economy. In the IT industry Smartphones and tablet-type devices will establish themselves as the new mainstream IT platforms and start impacting the PC industry.
During FY30 we will continue to enhance our global leadership through new technology developments, new products for professionals, consumers and business users. Also we will expand our brand awareness among general consumer users through new pen products and applications for tablet-type devices such as iPad.
In our component business, we will strive to establish the leadership in Smartphone and Windows 8 based tablet devices, as well as building a foundation for touch component segments. In the area of business infrastructure development, we will enhance the SCM organization for component business and ERP support for Asia Pacific countries.
Taking into account our business outlook and necessary investments for the future, we project net sales of ¥50,400 million (up 23.8%), operating income of ¥5,600 million (up 37.7%), ordinary income of ¥5,570 million (up 43.1%), and net income of ¥3,600 million (up 65.0%) based on the assumed exchange rate of ¥75 per 1 US dollar and ¥100 per 1 EURO for the fiscal year ending March 31, 2013.
We regret that the mid-term business plan of WP-1015 that targets net sales of ¥100 billion and operating income over 15% by the fiscal year ending March 31, 2014 will not be achievable within the original time frame. Taking into account the rapidly changing market environment, the result in FY30 and high volatility in currency exchange rate, we will need to revise the mid-term plan. For FY30, we will focus on achieving our financial target and improving our ROE while maintaining the ongoing risk measures.
Your dividendTo thank you for your support and in reflecting the financial result for the fiscal year, we offered an ordinary dividend of ¥3,000 per share to our shareholders as of March 31, 2012. While we will manage the financial base carefully, we intend to continue stable dividend payouts and take other investor return measures as we see fit.
Our message to youAs the IT industry shifts toward natural and intuitive user interface solutions, we see a wide range of new opportunities ahead of us. We are committed to enhance our corporate value through the development of leading user interface technologies, global product and market leadership, investment in global talents and investment in business infrastructure while improve efficiency and profitability. We take our social responsibility seriously and continue to improve our corporate governance and culture of compliance.
Your support is invaluable and is essential to our continuing success. We thank you very much again for your unchanging support.
To Our Shareholders
Masahiko YamadaPresident & CEO
Wacom enhances the life experience
65by creating harmony between people and technology.
7 8
Dive to digital content creation with Wacom’s redefined Intuos 5
Wacom introduced a new ink communication with Bamboo Stylus and Bamboo Paper
Where are we now?
Wacom’s pen technologies sharpened the edge of Samsung’s innovation in GALAXY Note
Samsung adopts a pen sensor system of Wacom’ s component business for their premium smart phone, GALAXY Note. GALAXY Note features the combina-tion of 5.3 inch size Organic EL display and S pen with our digital pen solution which can be stored in a slim body less than 1 cm in thickness. This model is highly acclaimed by users and has become a worldwide hit, selling as the first smart phone that provides natural and intuitive pen input. Not only was it a hit at the start of sales in Europe in October 2011 but also at its next markets in Asia, U.S., and Japan.The pen-input interface is supported by Google and adopted in Android 4.0 OS as a standard. As a result, increasing numbers of memo writing apps and ink communication tools with a digital pen will contribute to the further sales expansion of our component busi-ness into smart phones and tablet-type devices.
Cintiq 24HD was unveiled for creative professionals seeking the ultimate pen interactive display
Cintiq 24HD was launched in October 2011 as the high-end model for LCD pen tablets. It has instantly gained a favorable reputation among the film industry which continues to progress in 3D production and the automobile industry which highly values natural and intuitive industrial design tools. In the Cintiq 24HD, Wacom delivers a host of features such as the ergonomically designed counter-weighted stand, easy access to the Touch Ring, shortcut and modifier Express Keys to enhance workflow and user comfort, toppe d o f f by Wacom’ s mos t rea l i s t i c pen technologies ever which include sophisticated pressure sensitivity, etc.Since its launch, favorable sales continued beyond the Company’ s expectation and signif icantly contributed to the sales expansion of its Professional Tablet Business for the fiscal year ended March 31, 2012.
Dur ing March 2012, Wacom redef ined In tuos fo r professional graphics users and unveiled its latest new model in almost three years called Intuos 5. It includes not only existing pen technologies such as 2048 levels of pressure sensitivity, minimum activation pressure of less than 1g and 40 degrees of tilt control but also has superior new features of multi-touch gesture support. These new features allow intuitive input to zoom, scroll, pan and rotate digital content, plus an express view, a Heads-Up Display (HUD) that displays the current setting on the PC screen without being distracted by the input device. In addition, Wacom offers wireless connectivity by installing the wireless accessory that charges through USB and bundled graphics applications to meet various user’ s needs and expand its sales potential even further.
Wacom launched Bamboo Stylus for iPad in May, 2011 as a new product field. The design, ergonomics and natural feel of the Bamboo Stylus brought potential demands to iPad uses for a premium pen writing and sketching experi-ence. It demonstrated favorable sales growth so a hand-writing application called Bamboo Paper, which allows iPad users to create and share ideas visually with notes and sketches, was also offered to iPad users in June 2012 and recorded over 3 million downloads worldwide by the end of March 2012. Following the successful launch of the original Bamboo Stylus, Wacom added various new types such as 5 colored bodies or a dual-purpose model with built in ball-point ink pen and aims to open up new fields.
Throughout the world, our professional product range is unrivalled and acknowledged to be the industry standard with our unique technology, high perfor-mance and quality. Intuos is highly acclaimed by professionals who create inspirational movies, anima-tion, games, digital art, and web designs. Cintiq series, interactive displays providing the freedom to work with the pen directly on screen, enjoy a global reputation for offering high productivity to many professionals from photographers to car designers. Inkling digital sketch pen captures a digital likeness of your work while you sketch with its ballpoint tip on any sketchbook or standard piece of paper.
Professional products
If you have never watched “American Chopper”, the hit reality televsion show on the Discovery Channel that features custom motorcycle
manufacturing at its finest, then you are missing out on some quality enertainment. There are a variety of spirited characters that work for Orange
County Choppers (OCC) on the show including Jason Pohl, lead designer for the OCC team. Jason, a Wacom Cintiq user for close to a decade,
enjoys the intuitive and natural feel of designing directly on screen with the Cintiq’s pressure-sensitive pen along with creative applications such
as Adobe Photoshop, Illustrator and others. Says Jason of his recently acquired Cintiq 24HD – “The Cintiq workflow allows me to effectively
collaborate with colleagues and customers as well as meet production deadlines. Wacom’s latest Cintiq emulates working with traditional media
and provides the comfort, color and control I need to keep my drawings fresh and original.”
Brand BusinessWe have various types of pen tablets; the models open up a world of possibilities and help our customers to experi-ence more with our unique digital pen and multi-touch technologies. We command an impressive 80 % (our estimate approximately) of the global market and 89.8 % of the Japanese market (BCN Inc. 2011). It will not stop there as Wacom expects the market to accelerate substantially.
Our Businesses
Our company is made up of three business sectors in the fiscal year ending March 31, 2013 – Brand products, Compo-nents and Other businesses. We develop, manufacture, and sell solution products which create harmony between people and electronic devices in the field of interface technologies.
Consumer products
Bamboo series, our consumer pen tablets, provide a natural-to-use tool for expressing creative ideas and communicating with friends, colleagues, and family through social networks in a personal way. Wacom has expanded models combining pen and touch technol-ogy. Bamboo not only enables users to intuitively draw, paint, sketch, and retouch digital photographs, but also simplifies for everyone navigating around the computer and the Internet.
Bamboo Stylus offers a brand new way to experience hand-written note-taking, sketching, and drawing with creative expression, specifically for Apple iPad users. It enables a more intuitive and accurate way to take notes in meetings and classroom settings or to sketch out rough ideas. Bamboo Stylus is available in six colors and Bamboo Stylus duo features the same responsive smooth pen nib plus a ballpoint nib.Bamboo Paper opens up new ways of creativity and gives a real pen and paper feeling for iPad users. Bamboo Paper turns any iPad into a digital notebook with the ability to share handwritten or sketched ideas and concepts.
9 10
ECAD dio 2011
CAD system – ECAD dioECAD dio, Japan’ s leading CAD system for electrical design, stream-lines overall operations by helping users to create electrical system design diagrams, while synchronizing design data with control equip-ment and peripheral devices. It also enhances wire harness design capability for industrial machinery, etc.
Pen sensor componentsNot only are our pen sensor components incorporated into our own high-quality products, but many other companies use them. Our supe-rior pen sensor technologies are adopted in a popular global smart phone model as well as most Tablet PCs, Tablet-type devices, and e-books devices of OEMs (Original Equipment Manufacturers) which recognize pen functionality for IT devices.
Touch sensor componentsSupporting the multi-touch function of PCs, our touch sensor compo-nents were developed and adopted by major PC manufacturers. Our multi-touch sensor system allows users to intuitively control a PC by touching the LCD display. In addition, it can be incorporated together with our pen sensor system which provides for handwritten input and image-editing by pen.
Component Business
Others
DT/PL and STU series, interactive pen displays are invaluable for a variety of tasks for more general users such as settlement processing, medical recording equipment, and educational systems, etc.
A major smart phone manufacturer and many PC makers worldwide have adopted our pen sensor compo-nents plus pen and multi-touch sensor solutions.Our components allow IT devices to be operated naturally with a digital pen and even with the touch of fin-gers with our original IC controller. Our component business is growing with the expansion of new markets such as smart phones, Tablet-type devices, and e-book devices.
Business products
The digital signature solution with STU series is an accepted best practice among financial institutions. It makes a contribution to not only saving customer information as secured digital data in each corporate style but also conserving paper resources. In Europe, Berliner Sparkasse and others adopted our signature tablets to digitally sign documents for opening accounts. La Laport a major mall management com-pany in Japan and IKEA in Germany use our products for credit-card transactions with a digital signature.
The H i l ton Hote l in Milan, Italy also utilizes STU-520 for the digital check-in to improve work processes.
Digital signature
Wacom and i ts par tners have worked c lose ly together over the last few years to develop a reli-able electronic flight strip system, replacing the tra-ditional paper based air traffic management. The German Air Navigation Services “DFS Deutsche Flugsicherung GmbH” has also adopted our inter-active pen displays at their air traffic control centers and towers in Germany after extensive research and tes ts . Our in te rac t ive pen d isp lays have become the standard for controllers because of the ease in handling electronic flight strips, guarantee-ing a seamless transition to digital.
Air traffic control sector
Our interactive pen displays have become popular in medical areas in Japan. For example, by using digita l medical char ts instead of paper-based records, medical information can be shared more easily within different hospital departments. Pre-senting educational materials with our interactive displays also maximizes the opportunity for interac-tion between teachers and students in a teaching setting. Our DT/PL series are adopted in other fields such as interactive whiteboards, video conferencing systems, ca l l centers, and T V panel show for smoother communication. We recently introduced Wacom Allwrite which allows annotation of Office documents on PCs for penetrating traditional office work flows with digital pens.
Medical care, education, and others
Wacom feel IT Technologies is the brand that pro-vides user interface technology directly from Wacom. By integrat-ing user interface technology such as multi-touch sensor, pen sensor, controller and device driver in the most sophisticated method, the brand provides highly natural and intuitive user inter-face experiences for smart phones, Tablet-type devices, PCs, e-books and other IT devices.
11 12
Product portfolio
STU series
Component products
Professional・Business Consumer
Mobile
Desktop
The world’s first tablet operated by cordless
electronic pen developed.
Core technology established with electronic pen.
Growth strategyInput
market
Tab
let
mar
ket
20021983 1990 1995 2007 2010 2012 Nearfuture
Tow
ard
bec
om
ing
the
de
fact
o st
and
ard
fo
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e D
igita
l Pap
er e
ra
Electronicseals and
other securityapplications
Pen sensorcomponents
Interactivepen displays
Pen tablets forconsumer use
Pen tablets forprofessional
use
・Strengthening of the leadership in Pen tablet field・Expansion of components business・Improvement and global development of branding・New business development, R&D
Pen input
Development and Sales
Touch sencercomponents
Digital pen,Stylus pen,
and Applications
Digitizerand software
Internet Broadband Multi-touchUbiquitousStandard Support
on Windows Vista OS
PCs,Cellular Phones,
PDAs etc.
e-Learning,Rich Digital Contents,
Informtion Security etc.
Standard Supporton Windows 7 OS,
Android OS
Ink communicationStandard Supporton Android 4.0 OS,
Windows 8 OS
Digital Paper,Multifunctional
Terminals, Tablet PCs etc.
13 14
15 16
Wacom
Asia/Oceania
Asia/Oceania
Sales Breakdown by RegionDomestic Pen Tablet Market ShareGlobal Pen Tablet Market Share
Japan
Japan
America
For the year ended March 31
Bar graphs indicating sales by region Units (figures in black-letter): Millions of yen
Units in America (figures in red-letter): Thousands of U.S. dollarsUnits in Europe (figures in blue-letter): Thousands of Euro
America
Others Others
Europe
Europe
Source: Wacom’s estimateSource: BCN research
80%
11.3%
21.9%(Components
28.5%)
44.5%
22.3%
’10 ’11 ’12’10 ’11 ’12’10 ’11 ’12’10 ’11 ’12
Wacom89.8%
Wacom Technology CorporationWacom Technology Corporation was established in 1991 in Vancou-ver, Washington, in the United States. The company is not only responsible for sales and customer support in North and Latin America, but also plays a central role in global marketing and product planning for pen tablets.
Wacom Technology Services, Corp.Wacom Technology Service Corp. was established as a subsidiary of Wacom Technology Corporation for Internet retailing in 2010 in Vancouver, Washington, in the United States.
Wacom Europe GmbHWacom Europe GmbH was established in 1988 in Neuss, Germany, and was subsequently moved to Krefeld. The company is responsible for sales and customer support in the European, Middle Eastern, and African markets and also plays a key role in global marketing and product planning for pen tablets. The company provides market support in eight languages.
Wacom China CorporationWacom China Corporation was established in 2000 in Beijing, China. The company is responsible for sales customer support, and others in China. Its Shanghai and the other offices also enable it to cover a wide range market.
Wacom Korea Co., Ltd. Wacom Korea Co., Ltd. was established in 2004 in Seoul, South Korea as Wacom Digital Solutions in order to enhance sales in the South Korean market.
Wacom Australia Pty. Ltd. Wacom Australia Pty. Ltd. was established in 2005 in NSW, Australia, as a sales base for the Oceania market.
Wacom Singapore Pte Ltd. Wacom Singapore Pte Ltd. was established in May 2006 in Singapore as a sales base for South and Southeast Asia.
Wacom Hong Kong Ltd.Wacom Hong Kong Ltd. was established in May 2006 in Wanchai, Hong Kong, as a sales base for the Hong Kong market.
Wacom Taiwan Information Co., Ltd.Wacom Taiwan Information Co., Ltd. was established in 2008 in Taipei, Taiwan, as a marketing and other base for pen tablets and component fields in the Taiwan market.
Wacom India Pvt. Ltd.Wacom India Pvt. Ltd. was established in October 2010 in New Delhi, India, as a sales base for the promising Indian market.
8,909
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17,6
59
63,0
89
67,4
49
4,58
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3,59
2
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11,951
9,060
114,
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9,28
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86
99,74
9
107,0
36
Our Global Operations
Interview from a global leader of WacomWacom continues to optimize our global business model. A global leader, Mr. Hartmut Woerrlein of GPM (Global Product Management) comments on business as follows;
1. What does GPM do? In a simplified way you could say that in each business there are only two things: Customers and Products. Happy customers like to buy our products and recommend to buy Wacom products to their f r iends, family and business partners. GPM makes sure that we understand which products to develop and when to bring them to the market. We define products, l ine ups, an entire portfolio, the positioning in the market, the look and feel, the materials and many other things, too. We closely collaborate with all the regional sales offices and almost every department in the company.
2. What are GPM members’ regional backgrounds? We have GPM members in Japan, the US, in Europe and in Taiwan. They are global but in their passports they are from the UK, the US, Germany, Japan and Taiwan and they speak several languages. They have worked in marketing, sales, engineering, supply chain management, quality control in manufacturing and other areas. Quite a good mix of skills. I am very proud of my excellent team. Very proud.
3. What are the merits in Global Product Management as being global? AAs Wacom is a global company doing business in almost all countries around the globe in a nicely balanced way (not only in one or two countries) it is
essential to understand customers around the globe. Customers are not global. They live where they live and they live in their culture. To understand how we can best serve them we decided to spread the team across the globe also. Let me give you a practical example what this could mean: For customers in Japan Manga Art is part of their culture. In Europe and the US Manga is known only by some (young) people but very few do Manga Art. It’ s just not part of their culture.
4. What are the d i f f icu l t ies in Global Product Management with being global?Time zones. I spend most of my time in Japan. My wife and my kids live in Germany. I call them at 6am (23:00 over there) or late at night. The US team is another nine hours behind. To make things worse there is winter time with one hour plus or minus. And it doesn’ t change on one day globally. Sometimes I show up at meetings one hour late - i t can be embarrassing. Imagine meetings from 23:00 in the US, 8am in Europe, 14:00 in Taiwan, 15:00 in Japan. Sometimes we are attending meetings from 1am to 5am and then again from 7am to 9am.Besides the time zones we have to work very hard to understand and accept cultural differences.
5. What are the important points you keep in your mind as a GPM leader?Customers, good team work, success for Wacom and (maybe my most important one) a lot of fun.
Our Global Model
Back in the 1980s, we set up our corporate headquarters in Japan. We extended our global operations to the United States and Germany, and then expanded to China, Korea, Australia, Singapore, Hong Kong, Taiwan, and India. Each of our regional subsidiaries maximizes our strength as a global company and helps us offer dynamic products and services that exceed customer expectations as well as performing regional business functions.
Hartmut Woerrlein Director Global Product Management
17
Our Team – The Board of Directors, Corporate Auditors and Executive Officers / Corporate Governance
Corporate Governance
Corporate AuditorsHaruo Mizuno (Full-time), Takeshi Ebitani, Takashi Kamura
Executive OfficersMasahiko Yamada CEO, Shigeki Komiyama Japan-Asia Pacific Region, Wataru Hasegawa Chief Financial Officer,Sadao Yamamoto R&D Office, Hidetoshi Kamoto Component Business Division,Masahiro Oba Tablet Business Unit SCM Division, Koji Shimoda Tablet Business Unit Product Development Division,Joseph Deal Wacom Technology, Han Stoffels Wacom Europe
Board of Directors
Execution of Operations, Audit, and Internal Control Systems as of June 23, 2012
General Meeting of Shareholders
Internal Audit Office
Chief Executive Officer
Corporate Management Meeting(8 Executive Officers)
Board of Corporate Auditors(3 Auditors)
Risk Management Committee
Accounting AuditorsAccounting audit
Cooperation
Cooperation
Election/dismissal
Operating audit
Accounting audit
Election/dismissal
Board of Directors(5 Directors)
Risk Hotline
Election/dismissal Report
Report
(From the left)Sadao Yamamoto, Shigeki Komiyama, Masahiko Yamada,Wataru Hasegawa, Yasuyuki Fujishima
The Board of Directors and Board of Corporate Auditors are responsible for corporate governance at Wacom. We currently have 5 directors, including one non-executive director. We have three independent corporate auditors and one full-time corporate auditor. In addition, to ensure the smooth running of our business, we have introduced a corporate executive officer team with clearly-defined responsibilities. The Corporate Management Meetings, comprising the executive officers and chief general managers, are held twice a month to supervise the implementation of the business plan, control the budget and review
agreed-upon actions. The Internal Audit Office, overseen by the Chief Executive Officer, is responsible for auditing the compliance of each of our companies with regard to laws, regulations and social values, together with ensuring adherence to the Company’s rules. In addition, the Risk Management Committee is responsible for the internal control of compliance, information security, risk management and elimination of anti-social activity. Furthermore, we have estab-lished a risk hotline system, operated by an indepen-dent organization, to monitor and minimize potential damage associated with compliance risks.
Our Team – The Board of Directors Biographies
Brief of Biography
MasahikoYamada
ShigekiKomiyama
March 31, 1958
March 28, 1959
April, 1986
June, 1996
April, 1999
June, 2003
April, 2004
June, 2004
Joined Wacom.
Served as a Director, Division Managerof Electronic Systems and Devices (ESD).
Served as an Executive Director,the Division Manager of ESD.
Served as an Executive Director,the Senior Executive Officer.
Served as an Executive Vice President,the Chief Operating Officer.
Served as the President & CEO. (present post)
April, 1981
January, 2000
December, 2002
March, 2004
June, 2005
April, 2010
Joined Citizen Watch.
Served as the President, Handspring.
Joined SGI Japan as the Vice President, Marketing.
Joined Wacom as an Executive Officer ofGlobal Marketing and Sales.
Served as an Executive Director, the Executive Officerof Global Marketing and Sales.
Served as an Executive Director, Executive Officer ofthe Asia-Pacific Region. (present post)
9,420
32
WataruHasegawa
March 26, 1959 April, 1982
June. 2000
April, 2002
June, 2004
June, 2005
Joined Sumitomo Electric Industries.
Joined Cisco Systems.
Joined Oracle Corporation Japan as theGeneral Manager of Accounting.
Joined Wacom as the Chief Financial Officer.
Served as an Executive Director, theChief Financial Officer. (present post)
12
SadaoYamamoto
April 13, 1961 March, 1987
April, 1998
June, 1999
June, 2004
April, 2010
Joined Wacom.
Served as the General Manager of Basic Developmentof ESD.
Served as an Executive Director.
Served as an Executive Director, the Chief R&D Officer.
Served as an Executive Director, the Chief R&D Officer,General Manager of R&D Office. (present post)
1,880
YasuyukiFujishima
March 25, 1947 July, 1969
July, 1997
July, 1998
March, 2001
November, 2002
April, 2008
August, 2010
Entered the Ministry of International Trade and Industry.
Joined the Policy Board of the Bank of Japan andServed as a delegate of the Economic Planning Agency.
Entered the Ministry of Foreign Affairs as theAmbassador of the Republic of Panama.
Joined Nissho Iwai (the present company name is Sojitz)as an Advisor.
Joined Wacom as an Executive Director. (present post)
Served as Vice President, a Senior Executive Officerat Sojitz.
Joined Mutual Service Aid Guarantee Corp. as thePresident & CEO. (present post)
180
Name Date of birth Number ofshares owned
18
15,667
17,896
’08 ’09 ’10
(Millions of yen)
0
5,000
10,000
15,000
20,000
25,000
35,000
40,000
30,000
’11 ’12 ’08 ’09 ’10 ’11 ’08 ’09 ’10
(Millions of yen) (%) (Millions of yen) (%)
0
5,000
10,000
15,000
20,000
35
40
45
50
55
’120
1,000
2,000 10
3,000
4,000
6,000
5,000
0
5
15
20
30
25
’11
(For the year’s ended March 31) (For the year’s ended March 31) (For the year’s ended March 31)
Net sales Operating income/Operating marginGross profit/Gross profit margin
Five-Year SummaryWacom Co., Ltd. and Its Subsidiaries
33,075
40,706
36,739
33,80932,045
9.9
3,284
’12
4,067
10.0
47.4
44.0
16,76115,668
18,640
50.749.6
48.9 4,311
5,539
15.1
12.8
9.8
3,128
For the year:Net salesGross profit Operating incomeIncome before income taxes
Net incomeComprehensive income
At year end:Cash and cash equivalents
Total net assetsTotal assets
Net income per shareBasicDiluted
Equity ratio(%)Return on equity (%)Number of employees
$495,262217,73949,48942,63926,54024,423
$145,637415,250230,173
$66.4866.42
Five-Year Summary
Note 1: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥82.19=U.S. $1, the approximate exchange rate prevailing on March 31, 2012.Note 2: Repurchase of 20,000 own shares for 1.85BJPY in 2009. 3 F.Y. and 5,000 own shares for 0.44BJPY in 2012. 3 F. Y.Note 3: The figures in 2011. 3 F. Y. were recalculated retroactively because of the adoption of the new accounting principles in revenue recognition.Note 4: The tablet business was reorganized into three categories of Professional Products, Consumer Products, and “Business Products” by use in in 2012. 3. F. Y.
Thousands ofU.S. dollarsYear endedMarch 31
2012
¥36,739,19618,640,355
5,538,8715,564,0823,501,360
-
¥13,577,19418,516,74229,221,330
¥8,348.748,304.38
63.520.1584
¥33,809,13816,761,1644,311,3784,179,6612,579,025
-
¥11,014,11417,796,48725,631,057
¥6,213.936,197.78
69.414.2637
¥32,044,57815,668,147
3,127,8223,120,8671,968,406
-
¥12,350,11318,269,59028,199,429
¥4,899.574,888.56
64.810.9702
¥40,705,57817,895,936
4,067,4753,504,5372,181,3412,007,351
¥11,969,87334,129,39818,917,895
¥5,463.955,458.66
55.211.7785
Thousands of yen
Year ended March 312008 2010 2012
¥33,030,35915,634,4453,252,0862,952,5081,967,0831,408,053
¥10,454,82027,093,50318,481,946
¥4,895.484,885.72
68.110.7747
20112009
20
Five-Year Summary
Overview of Business Performance
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
20
21
24
26
27
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
28
29
30
44
Corporate data45
Investor Information46
Contents
Financial Section
19
Overview of Business Performance
How did the global economy affectour business in our 29th year?
Wacom Co., Ltd. and Its Subsidiaries
For the fiscal year ended March 31, 2012 of our 29th year under review, the operating environment for Wacom Group was influenced by the suspension of manufacturing and a weak domestic economy in Japan in the aftermath of the Great East Japan Earthquake during the first quarter, and subsequently in the second quarter by disruptions to the supply chain for PCs and other products due to flooding in Thailand. Globally, the US economy appeared to stabilize somewhat with improvements in employment and other factors, while in Europe uncertainty increased amid the continued debt crisis. Although relatively high growth rates con-tinued in emerging economies such as China and India, a number of factors caused a slowing of this growth, including inflation concerns and a decrease in exports to Europe.
The yen remained strong against the US dollar and the euro, and this adversely impacted the performance of Wacom Group. In the IT industry, there was rapid growth in new product categories such as smartphones and tablets, while major manufacturers of PC and mobile phone handsets undertook initiatives to expand their product line and establish their posi-tions in these new markets.
In markets where Wacom Group offers products, a number of trends were evident. In Professional Products, 3D production progressed and the adoption of digital design technology accelerated in the movies and games industries. In Asia, industrial design and digital content industries expanded. In Consumer Products, there has been growth in the use of electronic pens for illustrations, photo retouching and web design, as well as for communication on social networks such as facebook. The spread of tablet and e-book devices has revealed a strong need for natural and intuitive input by hand. In Business Products, the use of LCD tablet prod-ucts is increasing, with a growing demand for improved security and paperless environments across a broad range of sectors, including medi-cine, education and finance. Electronic settlement using digital signatures is attracting particular attention as a highly effective way to protect indi-vidual information, improve operational efficiency and reduce document handling costs. In Component business, there is a growing need for pen and/or multi-touch technology for Windows and Android tablet PCs, tablet devices, smartphones, e-book readers and other such devices.Moreover, there are also opportunities in the emerging category heralded by the October announcement in Europe of Samsung’ s Galaxy Note, a smartphone that incorporates a pen function.
Wacom Group’ s activities for the year under review included announcing and launching a record number of new products in the market, while con-tinuing to manage business risks such as natural disaster and foreign exchange rate fluctuations. We expanded our lineup of products for tablet devices, pursued web-based and other marketing initiatives, enhanced our supply chain management, worked on the development of new tech-nology, and took steps to improve operating profitability. We also intro-duced a new ERP system, which has been performing steadily since August, as part of our investment in IT systems to support higher produc-tivity and growth.
During the year we recorded extraordinary losses for a number of items, including expenses concomitant with withdrawal from our pension fund after it had been deemed an increasing financial risk, repair costs for head office premises damaged in the Great East Japan Earthquake, and expenses associated with the planned July 2012 transfer of the Tokyo branch office.
Accordingly, for the full year Wacom Group’ s consolidated net sales increased 23.2% to ¥40,705 million, operating income increased 25.1% to ¥4,067 million, ordinary income increased 15.7% to ¥3,891 million and net income increased 10.9% to ¥2,181 million.
0
2,000
4,000
6,000
8,000
10,000
0
5
10
15
20
25
30
40
50
60
70
80
(Millions of yen)
(%)
(%)
’08 ’09 ’10 ’11 ’12
’08 ’09 ’10 ’11 ’12
’08 ’09 ’10 ’11 ’12
(For the year’s ended March 31)
(For the year’s ended March 31)
(For the year’s ended March 31)
(ROE)
(ROA)
Note: Common shares were split on a four-for-one basis on November 18,2005. Per share data before 2005.3.F.Y.term reflect the above share splits.
Net income per share (basic)
ROE/ROA
Equity ratio
4,8955,464
8,349
6,214
4,900
10.7
7.1
11.7
7.1
20.1
12.9
14.2
10.9
7.3
9.4
68.1
63.5
69.4
64.8
Note 1: ROA equals net income/average total assets.Note 2: During its 23rd fiscal year, the Group procured through a
public offering approximately 4.2 billion yen in capital funds by allocating new shares to a third party.
55.2
21
(For the year’s ended March 31)
(For the year’s ended March 31)
Overview of Business Performance Wacom Co., Ltd. and Its Subsidiaries
’12 28,507
26,466’11
(Millions of yen)
(Millions of yen)
Sales
Operatingincome
Tablet Business
UP 7.7%
DOWN 9.0%
5,125
5,630
’12
’11
Operatingincome
Operatingincome
1,091
△236
’12
’11
2012
¥40,706
Sales Breakdown by Business
6,117
11,683
’11
’12
(Millions of yen)
(Millions of yen)
Sales
Component Business
UP 91.0%
1.4%
Tablet Business %2011
¥33,030
Other Business 1.3%
Component Business 28.7%
Component Business 18.5%
Tablet Business 70.0
80.1
%
Our results by business sector
Tablet businessAlthough business in this area was affected by the strength of the yen, sales increased as a result of new product releases. In Professional Products, new products included the extremely sophisticated Cintiq 24HD and the Intuos 5 were well received and sales grew steadily. We also released Inkling, a digital pen, which was selected by TIME magazine as one of its Top 50 inventions in 2011. In Con-sumer Products, sales of the Bamboo series were broadly unchanged, reflecting weakness in the European and North American markets. However, overall sales progressed steadily, supported by continued strong sales of Bamboo Stylus pens for the iPad. In Business Products, we doubled sales of our digital signature tablets. However, overall sales in the category declined by the termination of a certain OEM project in the U. S. Looking at sales by region, in U. S., sales were largely with a decline in Business Products offset by steady progress in sales of Professional Products and Con-sumer Products. In Europe, sales increased steadily in all product lines, supported by the launch of new products. In Japan, sales increased with the impact of the earthquake disaster offset by such factors as strong sales of the Cintiq series and growth in Consumer Products. In Asia & Oceania, overall performance was firm. Reflecting the above initia-tives and outcomes, sales in the Tablet business category increased 7.7% to ¥28.51bn, with operating income decreasing 9.0% to ¥5.12bn.
Component businessSales increased significantly, primarily due to the start of commercial production of Wacom’ s pen-sensor system adopted by Samsung for its Galaxy Note smartphone. Solid shipments were also made of products destined for use in Windows PCs, tablet devices, smartphones, e-book read-ers, etc. In new product development, progress was made in developing a new sensor controller IC, a Windows 8-compatible sensor system, and in other areas. Reflecting the above initiatives and outcomes, sales in the Compo-nents business category for the year ended March 31, 2012 increased 91.0% to ¥11.68bn, with operating income of ¥1.09bn compared to an operating loss in the previous year of ¥0.24bn.
Other businessIn Software business, sales increased steadily due to improved operating efficiency arising from stronger partner-ships with major domestic distributors, along with the com-mencement of a harness sales proposal approach. Sales were also supported by the launch of a new version of ECAD dio 2012, enhanced to facilitate large-scale design. Sales in the Other business increased 15.3% to ¥0.52bn, with operating income of ¥0.07bn compared to an operating loss in the previous year of ¥0.15bn.
447’11
515’12
Sales
Other Business
UP 15.3%
△150’11
70’12
Other Business
22
Our financial positionTotal assets increased by ¥7.04bn to ¥34.13bn compared to the end of the previous year. The main reasons were a ¥2.96bn increase in notes and accounts receivable, a ¥1.52bn increase in cash and cash equivalents, and a ¥1.01bn increase in merchandise and finished goods.Total liabilities increased by ¥6.60bn to ¥15.21bn compared with the end of the previous year. The main reasons for the increase were a ¥4.31bn in notes and accounts payable and a ¥1.15bn in income tax payable.Total net assets increased by ¥0.44bn to ¥18.92bn. The main reason for the increase was a ¥2.18bn of net profit despite the decrease due to a ¥1.21bn payment of shareholders’ dividends and a ¥0.44bn repurchase of own shares.
Consolidated cash & cash equivalents increased by ¥1.52bn (¥1.90bn decrease in the previous year) to ¥11.97bn compared to the end of the previous year.(Cash Flow from Operating Activities)Earned operating cash flow gained was ¥4.88bn (¥1.18bn gained in the previous year). The main reasons for the increase were a ¥3.50bn in the sum of NPBT and a ¥4.35bn increase in accounts payable despite a ¥3.12bn increase in account receivable.(Cash Flow from Investing Activities)Investing cash flow expended was ¥1.70bn (¥1.47bn expended in the previous year). The main reasons were the purchase of the ERP system for ¥0.87bn in software, the purchase of molds of ¥0.53bn in fixed assets, and the purchase of ¥0.17bn for investment securities.(Cash Flow from Financing Activities)Financing cash flow expended was ¥1.63bn (¥1.2bn expended in the previous year). The reason was a ¥1.2bn payment of shareholders’ dividends and a repurchase of own shares of ¥0.44bn.
(For the year’s ended March 31)
0
1,000
2,000
Cash Dividends per Share / Payout Raito
’09 ’10 ’11’08
Cash Dividends per share(yen)Pay out Raito(%)
60.7
3,000
60
50
40
30
20
10
29.9
48.3
2,500
3,000
61.2
3,0003,000
’12
54.9
3,000
(Millions of yen)
(Millions of yen)
’08 ’09 ’10
’08 ’09-2000
-1500
-1000
-500
-300
-200
-100
0
’10
’08 ’09 ’10 ’11 ’12
’11 ’12
(For the year’s ended March 31)
(For the year’s ended March 31)
(For the year’s ended March 31)
Cash f lows from operating activities
Cash f lows from investing activities
(Millions of yen)
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
Cash f lows from f inancing activities
-2,676
-1,199
-511
-1,174
-1,470
’11
-1,697
’12
-805
-1,539
1,179
4,881
1,478
3,6063,461
-1,202-1,627
23
0
1000
2000
3000
4000
5000
Wacom Co., Ltd. and Its Subsidiaries
Consolidated Balance Sheets
The accompanying notes are an integral part of these financial statements.
24
Assets:
¥10,454,8204,216,9582,876,770
183,468709,995548,328
1,975,708(16,335)
20,949,712
3,509,188(1,891,644)
1,617,544216,020
(125,043)90,977
1,908,180(1,417,911)
490,2691,436,4893,635,279
956,112 68,554
1,218,7142,243,380
14,77823,815
243,138(16,599)265,132
6,143,791
¥27,093,503
$145,63787,29347,2954,5999,889
13,47726,480
(201)334,469
43,102(23,913)
19,1892,433
(1,598)835
27,142(20,622)
6,52017,46544,009
23,121571
6,44830,140
2,374168
4,283(193)
6,63280,781
$415,250
March 31 March 31Thousands of yen
Thousands ofU.S. dollars
(Note 1)
2012 20122011
Current assets -Cash and deposits (Note 9)Notes and accounts receivable-trade (Note 5)Merchandise and finished goods (Note 2)Work in process (Note 2)Raw materials and supplies (Note 2)Deferred tax assets OthersAllowance for doubtful accounts (Note 2)
Total current assets
Noncurrent assets - Property, plant and equipment: (Note 2)
Buildings and structuresAccumulated depreciationBuildings and structures, netMachinery, equipment and vehiclesAccumulated depreciationMachinery, equipment and vehicles, netTools, furniture and fixturesAccumulated depreciationTools, furniture and fixtures, netLand
Total property, plant and equipmentIntangible assets:
SoftwareGoodwill (Note 2)Others
Total intangible assetsInvestments and other assets:
Investment securities (Note 2)Deferred tax assetsOthersAllowance for doubtful accounts (Note 2)
Total investments and other assetsTotal noncurrent assets
Total assets
¥11,969,8737,174,6403,887,185
377,985812,756
1,107,6632,176,394
(16,480)27,490,016
3,542,535(1,965,429)
1,577,106199,974
(131,317)68,657
2,230,773(1,694,893)
535,8801,435,4693,617,112
1,900,29646,905
529,9602,477,161
195,11513,786
352,069(15,861)545,109
6,639,382
¥34,129,398
Consolidated Statements of IncomeWacom Co., Ltd. and Its Subsidiaries
The accompanying notes are an integral part of these financial statements.
¥40,705,57822,809,64217,895,93613,828,4614,067,475
28,5796,945
25,30260,826
8,229203,08725,284
236,600
3,891,701
1,337 -
1,337
2,05710,751
- - -
253,77559,15062,768
388,501
3,504,537
1,865,168 -
(541,972)1,323,196
2,181,341¥2,181,341
¥33,030,35917,395,91415,634,44512,382,3593,252,086
73,24656,74823,413
153,407
9,26228,658
4,26942,189
3,363,304
1,2084,5585,766
87312,74220,00028,578
134,243 - -
220,126416,562
2,952,508
1,416,492(354,437)
(76,630)985,425
1,967,083¥1,967,083
$495,262277,523217,739168,25049,489
34884
308740
1002,471
3082,879
47,350
16 -
16
25131
- - -
3,088720763
4,727
42,639
22,693 -
(6,594)16,099
26,540$26,540
Thousands of yen
Thousands ofU.S. dollars
(Note 1)
2012 20122011
Net salesCost of sales (Note 6)
Gross profitSelling, general and administrative expenses (Note 6)
Operating income
Non-operating income:Interest and dividends incomeRefund of value added tax in foreign subsidiaryOthersTotal non-operating income
Non-operating expenses:Interest expensesForeign exchange lossesOthersTotal non-operating expenses
Ordinary income
Extraordinary income:Gain on sales of noncurrent assets (Note 6)Reversal of allowance for doubtful accountsTotal extraordinary income
Extraordinary loss:Loss on sales of noncurrent assets (Note 6)Loss on retirement of noncurrent assets (Note 6)Loss on valuation of investment securitiesLoss on adjustment for changes of accounting standard for asset retirement obligationsLoss on business liquidation Loss on withdrawal from employees' pension fund (Note 6)Office transfer expenses (Note 6)OthersTotal extraordinary losses
Income before income taxes
Income taxes-currentIncome taxes-correctionIncome taxes-deferredTotal income taxes
Income before minority interestsNet income
26
Year ended March 31Year ended March 31
¥8,307,536600,000
1,375,072613,70889,174
- -
60,8003,149,516
14,195,806
46,227511,26115,495
442,7141,015,697
15,211,503
4,203,4694,044,882
14,776,193(2,287,245)20,737,299
8,443(1,918,442)(1,909,999)
90,59518,917,895
¥34,129,398
¥3,994,330600,000221,326274,98730,254
197,21225,403
- 2,241,0207,584,532
30,481479,11748,596
468,8311,027,0258,611,557
4,196,4054,037,819
13,800,300(1,848,486)20,186,038
- (1,736,009)(1,736,009)
31,91718,481,946
¥27,093,503
The accompanying notes are an integral part of these financial statements.
$101,0777,300
16,7307,4671,085
- -
74038,320
172,719
5626,220
1895,387
12,358185,077
51,14349,214
179,781(27,829)252,309
103(23,342)(23,239)
1,103230,173
$415,250
March 31 March 31Thousands of yen
Thousands ofU.S. dollars
(Note 1)
2012 20122011
Liabilities:Current liabilities -
Notes and accounts payable-trade (Note 5)Short-term loans payableIncome taxes payableProvision for bonuses (Note 2)Provision for directors' and statutory corporate auditors' bonuses (Note 2)Provision for loss on disaster (Note 2)Provision for loss on business liquidation (Note 2)Asset retirement obligationsOthers
Total current liabilities
Noncurrent liabilities -Deferred tax liabilitiesProvision for retirement benefits (Notes 2)Asset retirement obligationsOthers
Total noncurrent liabilitiesTotal liabilities
Net Assets:Shareholders' equity - (Note 8)
Capital stockCapital surplusRetained earningsTreasury stock
Total shareholders' equityAccumulated other comprehensive income -
Valuation difference on available-for-sale securitiesForeign currency translation adjustment (Note 2)
Total accumulated other comprehensive incomeSubscription rights to shares - (Notes 8)
Total net assets
Total liabilities and net assets
25
Wacom Co., Ltd. and Its Subsidiaries
Consolidated Balance Sheets
¥2,181,341
8,443 (182,433)(173,990)
2,007,351
2,007,351 -
¥1,967,083
- (559,030)(559,030)
1,408,053
1,408,053 -
The accompanying notes are an integral part of these financial statements.
$26,540
103 (2,220)(2,117)
24,423
24,423 -
March 31
Thousands ofU.S. dollars
(Note 1)Year ended March 31
2012 20122011
Income before minority interestsOther comprehensive income
Valuation difference on available-for-sale securitiesForeign currency translation adjustmentTotal other comprehensive income (Note 7)
Comprehensive income (Note 7)(Comprehensive income attributable to)
Comprehensive income attributable to owners of the CompanyComprehensive income attributable to minority interests
27
Wacom Co., Ltd. and Its Subsidiaries
Consolidated Statements of Comprehensive Income
Year ended March 31
Consolidated Statements of Changes in Net AssetsWacom Co., Ltd. and Its Subsidiaries
The accompanying notes are an integral part of these financial statements.
Shareholders' equity:Capital stock -
Balance at the end of previous period Changes of items during the period:
Issuance of new shares Total changes of items during the period
Balance at the end of current period Capital surplus -
Balance at the end of previous periodChanges of items during the period:
Issuance of new shares Total changes of items during the period
Balance at the end of current periodRetained earnings -
Balance at the end of previous period Cumulative effect of changes in accounting policiesRetained earnings as restatedChanges of items during the period:
Dividends from surplusNet incomeTotal changes of items during the period
Balance at the end of current periodTreasury stock -
Balance at the end of previous period Changes of items during the period:
Purchase of treasury stockTotal changes of items during the period
Balance at the end of current periodTotal shareholders' equity -
Balance at the end of previous periodCumulative effect of changes in accounting policiesShareholders equity as restatedChanges of items during the period:
Issuance of new shares Dividends from surplus Net income Purchase of treasury stockTotal changes of items during the period
Balance at the end of current period Accumulated other comprehensive income:Valuation difference on available-for-sale securities -
Balance at the end of previous periodChanges of items during the period:
Net changes of items other than shareholders' equity Total changes of items during the period
Balance at the end of current period Foreign currency translation adjustment -
Balance at the end of previous periodChanges of items during the period:
Net changes of items other than shareholders' equity Total changes of items during the period
Balance at the end of current period Total accumulated other comprehensive income -
Balance at the end of previous periodChanges of items during the period:
Net changes of items other than shareholders' equity Total changes of items during the period
Balance at the end of current period Stock acquisition right:
Balance at the end of previous periodChanges of items during the period:
Net changes of items other than shareholders' equity Total changes of items during the period
Balance at the end of current period Total net assets -
Balance at the end of previous periodCumulative effect of changes in accounting policiesNet assets as restatedChanges of items during the period:
Issuance of new sharesDividends from surplusNet incomePurchase of treasury stockNet changes of items other than shareholders' equityTotal changes of items during the period
Balance at the end of current period
¥4,196,405
7,064 7,064
4,203,469
4,037,819
7,063 7,063
4,044,882
13,800,300 -
13,800,300
(1,205,448)2,181,341
975,89314,776,193
(1,848,486)
(438,759)(438,759)
(2,287,245)
20,186,038 -
20,186,038
14,127(1,205,448)2,181,341(438,759)551,261
20,737,299
-
8,4438,4438,443
(1,736,009)
(182,433)(182,433)
(1,918,442)
(1,736,009)
(173,990)(173,990)
(1,909,999)
31,917
58,67858,67890,595
18,481,946 -
18,481,946
14,127(1,205,448)2,181,341(438,759)(115,312)435,949
¥18,917,895
¥4,196,405
- -
4,196,405
4,037,819
- -
4,037,819
13,060,831(22,166)
13,038,665
(1,205,448)1,967,083
761,63513,800,300
(1,848,486)
- -
(1,848,486)
19,446,569(22,166)
19,424,403
- (1,205,448)1,967,083
0761,635
20,186,038
-
- - -
(1,176,979)
(559,030)(559,030)
(1,736,009)
(1,176,979)
(559,030)(559,030)
(1,736,009)
-
31,917 31,917 31,917
18,269,590(22,166)
18,247,424
- (1,205,448)1,967,083
- (527,113)234,522
¥18,481,946
$51,057
$86$86
51,143
49,128
$86$86
49,214
167,907 -
167,907
(14,666)26,54011,874
179,781
(22,490)
($5,339)($5,339)(27,829)
245,602 -
245,602
172(14,667)26,540(5,338)6,707
252,309
-
103103103
(21,122)
(2,220)(2,220)
(23,342)
(21,122)
(2,117)(2,117)
(23,239)
389
714714
1,103
224,869 -
224,869
172(14,667)26,540(5,338)(1,403)5,304
$230,173
Thousands of yen
Thousands ofU.S. dollars
(Note 1)
2012 20122011March 31 March 31
28
29
Consolidated Statements of Cash FlowsWacom Co., Ltd. and Its Subsidiaries
Net cash provided by (used in) operating activities :Income before income taxesDepreciation and amortizationShare-based compensation expensesIncrease (decrease) in allowance for doubtful accountsIncrease (decrease) in provision for bonusesIncrease (decrease) in provision for directors' bonusesIncrease (decrease) in provision for loss on disasterIncrease (decrease) in provision for loss on business liquidationIncrease (decrease) in provision for retirement benefitsIncrease (decrease) in provision for directors' retirement benefitsLoss on adjustment for changes of accounting standard for asset retirement obligationsInterest and dividends incomeInterest expensesLoss (gain) on valuation of investment securitiesForeign exchange losses (gains)Loss (gain) on sales and retirement of noncurrent assetsDecrease (increase) in notes and accounts receivable-tradeDecrease (increase) in inventoriesIncrease (decrease) in notes and accounts payable-tradeOthers, net
Sub totalInterest and dividends income receivedInterest expenses paidSettlement package paidPayments for loss on disasterPayments for loss on business liquidationPayment for withdrawal from employees' pension fundIncome taxes paidIncome taxes (paid) refundOthers, net
Net cash provided by (used in) operating activitiesNet cash provided by (used in) investing activities:
Purchase of property, plant and equipment Purchase of intangible assetsPurchase of softwarePurchase of investment securitiesProceeds from sales of noncurrent assetsPayments for acquisition of businessPayments for lease and guarantee depositsProceeds from collection of lease and guarantee depositsOthers, net
Net cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities:
Proceeds from issuance of common stockPurchase of treasury stockCash dividends paid
Net cash provided by (used in) financing activitiesEffect of exchange rate change on cash and cash equivalentsNet increase (decrease) in cash and cash equivalentsCash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 9)
¥3,504,537 1,068,140
58,678 176
338,217 59,963
- -
33,404 - -
(28,579)8,229
- (50,149)11,471
(3,115,094)(1,371,687)4,346,111 1,135,384 5,998,801
27,933 (8,242)
- (144,102)(24,696)
(253,775)(696,692)
- (18,684)
4,880,543
(526,039)(47,906)
(865,288)(167,703)
31,129 -
(125,811) 3,596
643 (1,697,379)
14,049 (439,603)
(1,201,162)(1,626,716)
(41,395)1,515,053
10,454,820
¥11,969,873
The accompanying notes are an integral part of these financial statements.
¥2,952,508 749,373 31,917 (4,589)
(35,100)327
197,212 25,020 43,168
(452,089)28,578 (73,246)
9,262 20,000 71,197 12,407
363,288 (958,113)(877,947)371,119
2,474,292 73,210 (9,474)
(21,113) - - - -
(1,337,958) -
1,178,957
(409,386) -
(781,514) -
6,606 (291,637)(13,791) 19,680
- (1,470,042)
- -
(1,202,132)(1,202,132)
(402,076)(1,895,293)
12,350,113
¥10,454,820
$42,639 12,996
714 2
4,115 730
- -
406 - -
(348)100
- (610)140
(37,901)(16,689)52,879 13,814 72,987
340 (100)
- (1,753)
(300)(3,088)(8,477)
- (227)
59,382
(6,400)(583)
(10,528)(2,040)
379 -
(1,531) 44
7 (20,652)
171 (5,349)
(14,614)(19,792)
(504)18,434
127,203
$145,637
Year ended March 31 Year ended March 31Thousands of yen
Thousands ofU.S. dollars
(Note 1)
2012 20122011
Notes to Consolidated Financial StatementsWacom Co., Ltd. and Its Subsidiaries
30
1. Basis of presenting consolidated financial statements:
The accompanying consolidated financial statements have been prepared from the consolidated financial statements of Wacom Co., Ltd. (the “Company”) and its subsidiaries filed with the Director of the Kanto Local Finance Bureau in accordance with the Financial Instruments and Exchange Law of Japan and its related accounting regulations, and in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects from the application and disclosure require-ments of International Financial Reporting Standards.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and principally operates. The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of the readers outside Japan and has been calculated at the rate of JP¥82.19 = U.S.$1.00, the approximate rate of exchange on March 31, 2012. Such translations should not be construed as representations that the Japanese yen amounts could have been or could be converted into U.S. dollars at that or any other rate.
2.Summary of significant accounting policies:(1)Principles of consolidation -The consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries (10 companies). Majority-owned subsid-iaries are as follows;
•Wacom Europe GmbH•Wacom Technology Corporation•Wacom China Corporation•Wacom Korea Co., Ltd.•Wacom Australia Pty. Ltd.•Wacom Hong Kong Ltd.•Wacom Singapore Pte. Ltd.•Wacom Taiwan Information Co., Ltd.•Wacom Technology Services, Corp.•Wacom India Pvt. Ltd.
There are no unconsolidated subsidiaries or affiliates accounted for by the equity method.
The fiscal year end of Wacom China Corporation is December 31. However, for consolidation purposes, a provisional settlement of accounts as of March 31 is utilized.
(2)Valuation methods for major assets -(a)Securities:Securities for which market price or quotations are not available are stated at cost based on the moving-average method.
(b)Derivatives:All derivatives are stated at fair value, with changes in fair value included in net income or loss in the period in which they arise.
(c)Inventories:Inventories held by the Company are stated at lower of
cost or realizable value, cost being determined by the average cost method.
(3)Depreciation and amortization of major assets -(a)Property, plant and equipment:The Company adopted the declining-balance method of depreciation using rates based on the estimated useful lives of the assets (depreciation of buildings acquired by the domestic company after April 1, 1998 is computed using the straight-line method of depre-ciation). Depreciation of property, plant and equipment held by at the foreign consolidated subsidiaries is computed using the straight-line method over their estimated useful lives.
Useful lives of major classes of property, plant and equipment are as follows:
Buildings and structures 3 to 65 yearsMachinery, equipment and vehicles 3 to 7 yearsTools, furniture and fixtures 2 to 20 years
(b)Intangible assets:The Company has adopted the straight-line method for computing amortization of intangible assets. Software capitalized for in-house use is amortized based on the straight-line method over an expected useful economic life of 5 years. Software capitalized for sale is amortized based on the estimated volume of sales, with the minimum amortization amount calculated based on a useful life of 3 years.
(4)Basis of provision -(a)Allowance for doubtful accounts:An allowance for doubtful accounts is provided in an amount sufficient to cover probable losses on collec-tion of notes and accounts receivable. The allowance for doubtful accounts is computed based on the calcu-lated historical bad debt experience ratio for trade receivables, in addition to the estimated amount of doubtful receivables on an individual account basis.Foreign consolidated subsidiaries mainly compute the allowance for doubtful accounts based on the estimated amount of doubtful receivables on an individual account basis.
(b)Provision for bonuses:The provision for bonuses to employees is provided based on the estimated amounts expected to be paid to employees.
(c) Provision for directors’ and statutory corporate auditors’ bonuses:The provision for directors’ and statutory corporate auditors’ bonuses is provided based on the estimated amounts expected to be paid to directors and statu-tory corporate auditors.
(d)Provision for retirement benefits:The provision for retirement benefits for employees is provided based on the actuarially calculated present value of projected benefit obligations except for, as permitted under the accounting standard for employ-ees’ retirement benefits, the unrecognized actuarial gains or losses. The unrecognized actuarial gains or losses are amortized on a straight-line basis over 5
31
years beginning in the year after they arise. Actuarial gains or losses are recognized as incurred in the foreign consolidated subsidiaries.
(5)Foreign currency translation -The Company’s functional currency is Japanese yen. Assets and liabilities denominated in foreign currency as of year-end are translated at the current exchange rate. Exchange gains and losses resulting from foreign currency transactions and the translation of assets and liabilities denominated in foreign currencies are included in the consolidated statements of income. All assets, liabilities, income and expense accounts of foreign subsidiaries are translated using the current exchange rates at the respective balance sheet dates. Foreign currency translation adjustments resulting from such procedures are recorded in the consoli-dated balance sheets as a separate component of net assets.
(6)Amortization of goodwill - Goodwill is amortized on a straight-line basis over its remaining useful life.
(7)Cash and cash equivalents -Cash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, those that are readily convertible to known amounts of cash and, thus, present an insignifi-cant risk of changes in value.
(8)Consumption taxes -The consumption tax withheld upon sale and consumption tax paid by the Companies on their purchases of goods and services is not included in revenue and cost or expense items in the accompany-ing consolidated statements of income.
3. Changes in accounting policies:Change in accounting principles and policies for the year ended March 31, 2012 is as follows.
(Accounting for earnings per share)The Company has adopted “Accounting Standard for Earnings Per Share” (Accounting Standards Board of Japan Statement No. 2 issued on June 30, 2010) and “Guidance on Accounting Standard for Earnings Per Share” (Accounting Standards Board of Japan Guid-ance No. 4 issued on June 30, 2010) from the fiscal year ended March 31, 2012.In accordance with the guidance, the Company has changed the method of calculating diluted earnings per share. In this revised method, a portion of the fair value of stock options, which relates to the services to be rendered in the future, is included in the assumed proceeds by the exercise of stock options.This change was retroactively applied, and the diluted earnings per share for the year ended March 31, 2011 has been restated.The effect on earnings per share information is presented in Note 21.
(Changes in revenue recognition)The Company has changed the timing of rev recogni-tion for the Company’s standard products to recognize
revenue at the point of arrival at the customer’s location rather than upon shipment from the beginning of fiscal year ended March 31, 2012. This change was made to more accurately present profit and loss as we concluded that it was more appropriate to recognize revenue at the time of customer’s receipt as a result of the current international harmonization of accounting treatments and the review of our company structure by the introduction of new accounting system.This change has been retroactively applied and the financial statements for the year ended March 31, 2011 were restated.As a result, in consolidated balance sheets as of March 31, 2011 notes and accounts receivable-trade and retained earnings decreased by ¥106,692 thousand and ¥41,585 thousand, respectively, and merchandise and finished goods and deferred tax assets (current assets) increased by ¥37,727 thousand and ¥27,380 thousand, respectively. Also, in consolidated state-ments of income for the year ended March 31, 2011 net sales and cost of sales decreased by ¥44,818 thousand and ¥12,620 thousand, operating income, ordinary income and income before income taxes decreased by ¥19,418 thousand, respectively. In consolidated statements of comprehensive income for the year ended March 31, 2011 income before tax and minority interests and comprehensive income decreased by ¥19,418 thousand, respectively.In consolidated statements of cash flows for the year ended March 31, 2011 income before income taxes decreased by ¥32,198 thousand, decrease (increase) in notes and accounts receivable-trade increased by ¥44,818 thousand and decrease (increase) in invento-ries decreased by ¥12,620 thousand.Due to the cumulative effect of change in accounting policy which was reflected to net assets balance at the beginning of fiscal year ended March 31, 2011, the retained earnings balance at the beginning in consoli-dated statements of changes in net assets for the year ended March 31, 2012 decreased by ¥22,166 thousand.The effect on earnings per share information is presented in Note 21.
32
March 312012
March 312012
Thousands ofU.S. dollars
Thousands of yen
Amount of overdraft limit Utilized overdraft facilities
Net amount
¥2,000,000 -
¥2,000,000
¥2,000,000 -
¥2,000,000
$24,334 -
$24,334
March 312011
March 312012
March 312012
Thousands ofU.S. dollars
Thousands of yen
Notes receivable Notes payable
¥ - -
¥1,900118,622
March 312011
24 issued on December 4, 2009) and “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (Accounting Standards Board of Japan Guidance No. 24 issued on December 4, 2009) for accounting changes and error corrections conducted from the fiscal year ended March 31, 2012.
6. Consolidated balance sheets:Information regarding the consolidated balance sheets as of March 31, 2011 and 2012 is as follows.
(1)Overdraft facility -For effective funding to meet working capital requirements, the Company has established overdraft facilities with two banks. Unutilized overdraft facilities under these contracts as of March 31, 2011 and 2012 are as follows:
(2)Notes maturing as of the fiscal year end -Notes maturing as of the fiscal year end are settled on the clearance date. Therefore, the following notes which matured as of the fiscal year end have been included in the fiscal year end balance sheets due to the holiday of financial institutions.
Notes to Consolidated Financial Statements
$23 1,443
4. Changes in presentation methods:Change in accounting principles and policies for the year ended March 31, 2012 is as follows.(Consolidated balance sheets)“Accounts receivable-other”, which was presented separately under current assets in the year ended March 2011, is included in “Others” in the year ended March 31, 2012 as its significance to the consolidated balance sheets has decreased. To reflect this change, the financial statements for the year ended March 31, 2011 have been reclassified. As a result, ¥1,562,297 thousand of “Accounts receivable-other” is reclassi-fied to “Others” under current assets in the consoli-dated balance sheets for the year ended March 31, 2011.
“Software”, which was included in “Others” under intangible assets in the year ended March 31, 2011, is presented separately in the year ended March 31, 2012 as its significance has increased to be greater than 5% of total assets. To reflect this change, the financial statements for the year ended March 31, 2011 havebeen reclassified. As a result, ¥2,174,826 thousand of “Others” is reclassified to ¥956,112 of “Software” and ¥1,218,714 of “Others” under intangible assets in the consolidated balance sheets for the year ended March 31, 2011.
(Consolidated statements of income)“Loss on disaster”, which was presented separately under extraordinary loss in the year ended March 31, 2011, is included in “Others” in the year ended March 31, 2012 as its significance to the consolidated statements of income has decreased. To reflect this change, the financial statements for the year ended March 31, 2011 have been reclassified. As a result, ¥197,212 thousand of “Loss on disaster” is reclassified to “Others” under extraordinary loss in the consolidated statements of income for the year ended March 31, 2011.
(Consolidated statements of cash flows)“Payments for lease and guarantee deposits” and “Proceeds from collection of lease and guarantee deposits”, which were included in “Others, net” in the year ended March 31, 2011, have been presented separately under net cash provided by (used in) investing activities in the year ended March 31, 2012 as their significance has increased. To reflect this change, the financial statements for the year ended March 31, 2011 have been reclassifiedAs a result, ¥5,889 thousand of “Others” were reclassified to (¥13,791) thousand of “Payments for lease and guarantee deposits” and ¥19,680 thousand of “Proceeds from collection of lease and guarantee deposits” under net cash provided by (used in) investing activities in the consolidated balance sheets for the year ended March 31, 2011.
5. Additional information:(Accounting for accounting changes and error corrections)The Company has adopted “Accounting Standard for Accounting Changes and Error Corrections” (Accounting Standards Board of Japan Statement No.
33
(6)Loss on retirement of noncurrent assets -
(7)Loss on withdrawal from employee’ s pension fund -The loss on withdrawal from employee’ s pension fund relates to expenses which were recognized in connection with the withdrawal from the Saitama prefectural industrial park multi employer plan to avoid the asset management risk of our pension fund in the future.
(8)Office transfer expenses -Office transfer expenses relate to expenses incurred for the transfer of Tokyo branch office.
8. Consolidated statements ofcomprehensive income:
Information regarding comprehensive income and other comprehensive income for the year ended March 31, 2012 is as follows.
(1)Reclassification adjustments relating to other comprehensive income
(2) Income tax effect relating to other comprehensive income
Year endedMarch 31, 2012
Year endedMarch 31, 2012
Thousands ofU.S. dollars
Thousands of yen
¥331542
-
¥873
¥7921,265
0
¥2,057
$10150
$25
Year endedMarch 31, 2011
Machinery, equipment and vehiclesTools, furniture and fixturesSoftware
Total
Year endedMarch 31, 2012
Year endedMarch 31, 2012
Thousands ofU.S. dollars
Thousands of yen
¥695 -
8,6481,6751,724
¥12,742
¥217648
3,0721,5375,277
¥10,751
$38
371964
$131
Year endedMarch 31, 2011
Buildings and structuresMachinery, equipment and vehiclesTools, furniture and fixturesSoftwareOther intangible assets
Total
2012 2012
Thousands ofU.S. dollars
Thousands ofyen
¥12,950-
12,950
(182,433)
(169,483)(4,507)
(¥173,990)
7. Consolidated statements of income:Information regarding consolidated statements of income for the years ended March 31, 2011 and 2012 is as follows.
(1)Cost of sales -Inventory is recognized at net realizable value. Loss (Gain on reversal of loss) on valuation of inventories which is included in cost of sales for the years ended March 31, 2011 and 2012 were ¥28,399 thousand and (¥16,859) thousand ($205 thousand), respectively.
(2)Selling, general and administrative expenses -The major components of “Selling, general and administrative expenses” are as follows:
(3)Research and development expenditures -Research and development expenditures are included in selling, general and administrative expenses. Such expenses amounted to ¥1,290,576 thousand and ¥1,842,439 thousand ($22,417 thousand) for the years ended March 31, 2011 and 2012, respectively.
(4)Gain on sales of noncurrent assets
(5)Loss on sales of noncurrent assets -
$158 -
158
(2,220)
(2,062)(55)
($2,117)
Valuation difference on available-for-sale securities:Changes of items during the periodReclassification adjustmentsNet change during the period
Foreign currency translation adjustment:Changes of items during the period
Total other comprehensive income,Before income tax effect
Income tax effectTotal other comprehensive income
Valuation difference on available-forsale securities:Foreign currency translationadjustment:
Total other comprehensive income
Thousands of yen
March 31, 2012
¥12,950(182,433)
(¥169,483)
(¥4,507)-
(¥4,507)
¥8,443(182,433)
(¥173,990)
Before Incometax effect
Net of Imcometax effect
Valuation difference on available-forsale securities:Foreign currency translationadjustment:
Total other comprehensive income
Incometax effect
Thousands of U.S. dollars
March 31, 2012
$158(2,220)
($2,062)
($55)-
($55)
$103(2,220)
($2,117)
Before Incometax effect
Net of Imcometax effect
Incometax effect
Year endedMarch 31, 2012
Year endedMarch 31, 2012
Thousands ofU.S. dollars
Thousands of yen
Machinery, equipment and vehiclesTools, furniture and fixtures
Total
¥604604
¥1,208
¥1,28354
¥1,337
$151
$16
Year endedMarch 31, 2011
Year endedMarch 31, 2012
Thousands ofU.S. dollars
Thousands of yen
Provision for allowance fordoubtful accounts
Salaries
Pension expenses
Provision for bonuses
Provision for directors’ andstatutory corporate auditors’bonuses
Research and developmentexpenses
6,053
3,018,133
126,711
231,603
31,905
1,290,576
3,094
3,119,079
102,708
450,755
87,595
1,842,439
Year endedMarch 31, 2011
38
37,950
1,250
5,484
1,066
22,417
Year endedMarch 31, 2012
Dividend payments approved at the board meeting held on April 27, 2011 are as follows:
(b)Dividends of which record date is attributable to the accounting period ended March 31, 2011 and 2012, respectively, but are effective after said accounting period.
The Company resolved approval at the board meeting held on April 27, 2011 as follows:
The Company resolved approval at the board meeting held on April 26, 2012 as follows:
10. Consolidated statements of cash flows:Information regarding consolidated statements of cash flows for the years ended March 31, 2011 and 2012 is as follows.
Cash and cash equivalents as of March 31, 2011 and 2012, is consisted of as follows -
Notes to Consolidated Financial Statements
34
9. Consolidated statements of changes in net assets:
Information regarding consolidated statements of changes in net assets for the years ended March 31, 2011 and 2012 is as follows.
(1)Type and number of shares outstanding and treasury stock
Notes:a) The increase in the number of shares outstanding was due to exercises of stock options.b) The increase in the number of treasury stock was due to the purchase of treasury stock based on the resolution of board of directors.
(2)Matters related to subscription rights to shares -Balance of subscription rights to shares (stock options) as of March 31, 2011 and 2012 is as follows. The first date of the exercise period of these rights has not yet arrived as of March 31, 2012.
(3)Matters related to dividends -(a)Dividend paymentsDividend payments approved at the board meeting held on April 30, 2010 are as follows:
(Approval by)
Board meeting onApril 27, 2011
Type ofshares
Commonstock
Total amountof dividends(Thousands
of yen)
¥1,205,448
Dividendsper share
(yen)
¥3,000
Recorddate
March 31,2011
Effectivedate
June 2, 2011
(Approval by)
Board meeting onApril 26, 2012
Type ofshares
Commonstock
Total amountof dividends(Thousands
of yen)
¥1,192,848
Dividendsper share
(yen)
¥3,000
Recorddate
March 31,2012
Effectivedate
June 4, 2012
(Approval by)
Board meeting onApril 26, 2012
Type ofshares
Commonstock
Total amountof dividends
(Thousands ofU.S. dollars)
$14,513
Dividendsper share
(dollar)
$37
Recorddate
March 31,2012
Effectivedate
June 4, 2012
Thousands of yen Thousands ofU.S. dollars
Cash and depositsCash and cash equivalents
¥10,454,820¥10,454,820
¥11,969,873¥11,969,873
$145,637$145,637
2011 2012 2012
2012 2012
Thousands ofU.S. dollars
Subscription rights to shares ¥90,595
2011
Thousands of yen
¥31,917 $1,103
(Approval by)
Board meeting onApril 30, 2010
Type ofshares
Commonstock
Total amountof dividends(Thousands
of yen)
¥1,205,448
Dividendsper share
(yen)
¥3,000
Recorddate
March 31,2010
Effectivedate
June 3, 2010
(Approval by)
Board meeting onApril 27, 2011
Type ofshares
Commonstock
Total amountof dividends(Thousands
of yen)
¥1,205,448
Dividendsper share
(yen)
¥3,000
Recorddate
March 31,2011
Effectivedate
June 2, 2011
(Approval by)
Board meeting onApril 27, 2011
Type ofshares
Commonstock
Total amountof dividends
(Thousands ofU.S. dollars)
$14,667
Dividendsper share
(dollar)
$37
Recorddate
March 31,2011
Effectivedate
June 2, 2011
Total TotalCommon
stock
Type of treasurystock
Type of sharesoutstanding
Number of shares as ofMarch 31, 2010 (Unit: shares)
Number of shares increasedduring the accounting periodended March 31, 2011 (Unit: shares)
Number of shares decreasedduring the accounting periodended March 31, 2011 (Unit: shares)
Number of shares as ofMarch 31, 2011 (Unit: shares)
421,816
-
-
421,816
421,816
-
-
421,816
20,000
-
-
20,000
20,000
-
-
20,000
Commonstock
Total TotalCommon
stock
Type of treasurystock
Type of sharesoutstanding
Number of shares as ofMarch 31, 2011 (Unit: shares)
Number of shares increasedduring the accounting periodended March 31, 2012 (Unit: shares)
Number of shares decreasedduring the accounting periodended March 31, 2012 (Unit: shares)
Number of shares as ofMarch 31, 2012 (Unit: shares)
421,816
800
-
422,616
421,816
800
-
422,616
20,000
5,000
-
25,000
20,000
5,000
-
25,000
Commonstock
35
11. Leases:Finance lease transactions that do not transfer owner-ship of the assets have been accounted for as ordinary sale and purchase transactions. Such contracts, however, have not been entered for the fiscal year ended March 31, 2011 and 2012.Finance lease transactions that do not transfer owner-ship of the assets which commenced before April 1, 2008, have been accounted for using the same method as for operating leases continuously. Such lease trans-actions of the Company and its subsidiaries, as a lessee, are shown below:
(1)Finance leases, which do not transfer ownership of the assets to the lessee and are accounted for as operating leases, are as follows:
(a)Acquisition costs of leased assets under finance leases are as follows:
There are no applicable items for the year ended March 31, 2012, as the lease term of lease contract which was subject to disclosure was expired.
(b)Future lease payments under finance leases are as follows:
(c)Lease payments and amounts representing depre-ciation and interest are as follows:
(2)Calculation method of depreciation equivalentsDepreciation equivalents are based on the annual declining-balance method depreciation for tangible fixed assets over the lease terms with residual value of 10%. To calculate the depreciation equivalents, the annual depreciation expense is multiplied by 10 and divided by 9. The straight-line method for the intan-gible assets over the lease terms without residual value.
(3)Allocation of interest expense equivalentsThe di f fe rence between tota l lease expenses expected to be paid over the life a lease and the capi-talized lease asset is comprised of interest expense equivalents and insurance, maintenance and certain
other operating costs. Interest expense equivalents are allocated using the interest method over the lease terms.
(4)Minimum lease payments under non-cancelable operating leases are as follows:
There has been no impairment losses allocated to leased assets.
12. Financial instruments:(1)Matters relating to financial instruments - (a)Policy for financial instruments: The Group's financing is mainly covered by internal fund, which provides stable and low-cost financing. However, some short-term financial needs and work-ing capital needs may be covered by short-term loans. Long-term financing is also obtained based on demand by selecting the appropriate vehicle such as the issuance of new bond, or issuance of new shares. Investment of surplus fund is limited in relatively secure financial instruments with high liquidity and high credit ratings. The derivatives are used only for the purpose to avoid a risk of future currency fluctuations, and any specu-lative trading is strictly prohibited.
(b)Content of financial instruments and their risks and risk management scheme: “Notes and accounts receivable – trade” are exposed to the credit risk of customers. Such risks are con-trolled by the scheme to keep track of the due date and outstanding balance for every customer, and check customer's credit status on a regular basis according to the Company’ s credit limit management policy. “Notes and account payable – trade” are mostly due within one year. “Short-term loans payable” account is primarily utilized for financing relating to business transactions. Liquidity risk for the operating payables and the short-term loans payable is controlled by a monthly cash flow forecast. As to derivative transactions, in order to hedge the risk of fluctuation in foreign currency monetary assets and liabilities, the Company uses forward exchange contracts. For execution and management of deriva-tive transactions, the finance department is respon-sible for executing such transactions upon an approval from authorized personnel in accordance with the Company’s derivatives transaction policy that defines approval authority and the trading limit of transactions. In addition, to reduce the risk of default on derivatives trading, the Company limits trading counterparties to high rated financial institutions only.
Thousands of yen Thousands ofU.S. dollars
Due within one yearDue after one year
Total minimum lease payments
¥96,36494,668
¥191,032
¥131,415191,241
¥322,656
$1,5992,327
$3,926
2011 2012 2012
Accumulateddepreciation
Thousands of yen
Machinery, equipment and vehicles ¥2,705 ¥2,573 ¥132
Acquisitioncost
Net balance as ofMarch 31, 2011
Thousands of yen Thousands ofU.S. dollars
Due within one yearDue after more than one year
¥482-
¥482
¥ --
¥ -
$ --
$ -
2011 2012 2012
Thousands of yen Thousands ofU.S. dollars
Lease paymentsAmount representing depreciationAmount representing interest
¥1,65457582
¥48213217
$620
2011 2012 2012
Notes to Consolidated Financial Statements
(c)Supplementary information concerning the fair value of financial instruments: The amount of derivatives contracts in the Notes to "Derivatives Transaction" is the nominal value of derivatives contracts or the calculated notional amount only, and it does not show the size of market risk relating to the derivative transaction itself.
(2)Fair value of financial instruments - The following table presents the carrying amounts recorded in the consolidated balance sheets as of March 31, 2011 and 2012, estimated fair values of financial instruments and the differences. Financial instruments deemed extremely difficult to calculate the current market value are not included. (See Note: b)
(*) Derivatives are presented in net amount of receivables and payables. Notes: Matters related to method for calculating market value of financial instruments and securities and derivatives transactions.
Assets (1)Cash and deposits, (2)notes and accounts receiv-ableDue to expected settlement with in a short period of time, we estimate that the carrying amount is equiva-lent to market value.
Liabilities (1)Notes and accounts payable – trade, (2)short-term loans payable and (3)income taxes payable
36
Due over oneyear to 5 years
Due Over10 years
Due over 5 yearsto 10 years
Thousands of yen
March 31, 2011
Cash and deposits
Notes and accountsreceivable - trade
Total
¥10,454,820
4,216,958
¥14,671,778
¥ -
-
¥ -
¥ -
-
¥ -
¥ -
-
¥ -
Due withinone year
Due over oneyear to 5 years
Due Over10 years
Due over 5 yearsto 10 years
Thousands of yen
March 31, 2012
Cash and deposits
Notes and accountsreceivable - trade
Total
¥11,969,873
7,174,640
¥19,144,513
¥ -
-
¥ -
¥ -
-
¥ -
¥ -
-
¥ -
Due withinone year
Due over oneyear to 5 years
Due Over10 years
Due over 5 yearsto 10 years
Thousands of U.S. dollars (Note 1)
March 31, 2012
Cash and deposits
Notes and accountsreceivable - trade
Total
$145,637
87,293
$232,930
$ -
-
$ -
$ -
-
$ -
$ -
-
$ -
Due withinone year
Due to expected settlement with in a short period of time, we estimate that the carrying amount is equiva-lent to market value.
Derivatives transaction See Note 13 “Derivatives” .
b) Financial instruments per which there is no readily available information are reported at their carrying value as of March 31, 2011 and 2012 are as follows.
These financial instruments do not have readily avail-able market prices to calculate the current market value, thus have been omitted from fair market value presentation in a).
c)Redemption schedule of financial instruments after year ended March 31, 2011 and 2012.
d)Change in accounting policyThe Company has changed the timing of revenue rec-ognition for the Company’ s standard products to rec-ogn ize revenue a t the po in t o f a r r i va l a t the customer’ s location rather than upon shipment from the beginning of fiscal year ended March 31, 2012. This change has been retroactively applied and notes and accounts receivable-trade for the year ended March 31, 2011 were restated.
2012 2012
Thousands ofU.S. dollars
Thousands of yen
Unlisted securities ¥14,778 ¥195,115 $2,374
2011
Carrying amount Carrying amountCarrying amount
Thousands of yen
(1)Cash and deposits (2)Notes and accounts receivable - tradeTotal assets (1)Notes and accounts payable - trade (2)Short-term loans payable(3)Income taxes payable Total liabilities Derivatives (*)
¥10,454,8204,216,958
¥14,671,7783,994,330
600,000221,326
¥4,815,656(¥32,113)
¥10,454,820 4,216,958
¥14,671,778 3,994,330
600,000221,326
¥4,815,656 (¥32,113)
¥ --
¥ - ---
¥ -¥ -
March 31, 2011
Carrying Amount Fair value Difference
Thousands of yen
(1)Cash and deposits (2)Notes and accounts receivable - tradeTotal assets (1)Notes and accounts payable - trade (2)Short-term loans payable(3)Income taxes payable Total liabilities Derivatives (*)
¥11,969,873 7,174,640
¥19,144,513 8,307,536
600,0001,375,072
¥10,282,608(¥60,320)
¥ --
¥ - ---
¥ -¥ -
March 31, 2012
Carrying Amount Fair value Difference
¥11,969,873 7,174,640
¥19,144,513 8,307,536
600,0001,375,072
¥10,282,608(¥60,320)
Thousands of U.S. dollars (Note 1)
(1)Cash and deposits (2)Notes and accounts receivable - tradeTotal assets (1)Notes and accounts payable - trade (2)Short-term loans payable(3)Income taxes payable Total liabilities Derivatives (*)
$145,63787,293
$232,930101,077
7,30016,730
$125,107($734)
$ --
$ ----
$ -$ -
March 31, 2012
Carrying Amount Fair value Difference
$145,63787,293
$232,930101,077
7,30016,730
$125,107($734)
15. Provision for retirement benefits:The Company has an unfunded retirement allowance plan (the “Plan” ) covering substantially all of its em-ployees who meet eligibility requirements under the Plan. A portion of the overseas subsidiaries have defined contribution pension plans.The Company had historically been a member of the Saitama prefectural industrial park multi employer pension plan (the “Pension Plan” ). The Company withdrew from the Pension Planfor the year ended March 31 2012, and recognized the subsequent loss of ¥253,775 thousand ($3,088 thousand) in the year ended March 31 2012.One of the overseas subsidiaries had a defined ben-efit pension plan, but transferred it to a defined contri-bution pension plan during the year ended March 31, 2012.
Overview of the multi-employer pension plan is as follows, under which the required contributions to the plan are charged to income.
The funded status of the pension plan as of March 31, 2011 and 2012 is as follows.
The ratio of the number of company’ s employees to total employees in the multi-employer pension plan as of March 31, 2011 was 18.8%.
The provision for retirement benefits for employees as of March 31, 2011 and 2012 can be analyzed as follows:
Thousands of yen
Foreign exchange forward contracts:To sell Euros
To buy U.S. dollars
Total
¥1,606,427
¥165,640
-
(¥60,617)
297
(¥60,320)
(¥60,617)
297
(¥60,320)
March 31, 2011
Contract amount Fair valueUnrealized gain/
(loss)
Thousands of U.S. dollars
Foreign exchange forward contracts:To sell Euros
To buy U.S. dollars
Total
$19,545
2,015
$ -
($738)
4
($734)
($738)
4
($734)
March 31, 2012
Contract amount Fair valueUnrealized gain/
(loss)
Thousands of yen Thousands ofU.S. dollars
The amount of pension assets
The amount of benefitobligations under pensionfunding programs
Net
¥6,570,527
(7,126,403)
(¥555,876)
¥ -
-
¥ -
¥ -
-
¥ -
March 312011
March 312012
March 312012
Thousands of yen Thousands ofU.S. dollars
(1)Projected benefit obligation
(2)Unrecognized actuarial loss
(3)Provision for retirementbenefits for employees (1)+(2)
(¥511,576)
32,459
(¥479,117)
(¥546,834)
35,573
(¥511,261)
($6,653)
433
($6,220)
2011 2012 2012
13. Investment securities:Investment securities of ¥14,778 thousand on the con-solidated balance sheets for the fiscal year ended March 31, 2011 do not have market prices. As there is no readily available information to calculate the cur-rent market value, these securities have been omitted from the fair market value presentation.
The loss on impairment of investment securities for the fiscal year ended March 31, 2011 was ¥20,000 thousand. If net value at end of fiscal year declines to 50% or less of acquisition cost, the company recog-nizes a loss on impairment of investment securities after considering future recoverability.
Investment securities of ¥195,115 thousand ($2,374 thousand) on the consolidated balance sheets for the fiscal year ended March 31, 2012 do not have readily available market prices to calculate the current market value, and thus these securities have been omitted from the fair market value presentation.
14. Derivatives:All derivative transactions are entered into to hedge foreign currency exposures within the Company’ s business. Accordingly, the market risk in these derivatives is offset by opposite movements in the value of hedged assets or liabilities. The Company does not hold derivatives for trading or speculative purposes. Because the counterparties to these derivatives are limited to major international finance institutions, the Company does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Company have been executed in accordance with internal poli-cies, which regulate the authorization and credit limit amount of transactions.
The amount of the derivative contracts does not nec-essarily indicate the significance of the risk.Certain information on outstanding derivative con-tracts is shown below.
37
Thousands of yen
Foreign exchange forward contracts:To sell U.S. dollarsTo sell Euros
To buy U.S. dollars
Total
¥186,497812,356
116,980
-
(¥3,958)(25,575)
(2,580)
(¥32,113)
(¥3,958)(25,575)
(2,580)
(¥32,113)
March 31, 2011
Contract amount Fair valueUnrealized gain/
(loss)
Notes to Consolidated Financial Statements
The components of the net periodic pension expense for the years ended March 31, 2011 and 2012 are as follows:
The assumptions used as of March 31, 2011 and 2012 are as follows:
16. Stock options:Information regarding stock options for the year ended March 31, 2012 is as follows:
(1)Account name and amount regarding share-based compensation expenses
(2)Contents, scale and changes of stock options(a)Contents of stock options
November 8, 2002
June 24, 2010
June 23, 2011
EmployeesSubsidiaries’ executive officersSubsidiaries’ employeesDirectorsExecutive officersEmployeesSubsidiaries’ directorsSubsidiaries’ employeesEmployeesSubsidiaries’ employees
19,160
2,985
1,160
23,305
1136
3363
703
635550
Person grantedNumber of
options granted(shares)
Date of ordinaryshareholders’
meeting
(b)Scale and changes in stock optionsi)Number of stock options
ii) Unit price information
(3) Method for estimating fair market price related to stock options
(a) The Black-Scholes Model is used for estimating the fair market price of stock options(b) Key assumptions in valuation model:
Notes:i)Stock price volatility is determined based on stock market performance from February 2008 to August 2011.
ii)Since there is no accumulation of enough data and it’s difficult to make reasonable estimate of average life, it’s estimated by way of exercising at the middle of the exercise period.
iii)Expected dividend is based on cash dividend for the year ended March 2011.
iv)Risk-free interest rate is the yield of government bonds for expected life.
Regarding the method for estimating the number of effective rights of stock options, the number of expired options is estimated based upon the past attrition rate.
Outstanding atMarch 31, 2011
Granted
Exercised
Expired
Outstanding atMarch 31, 2012
Exercise periods
940
-
800
140
-
2,930
-
-
215
2,715
-
1,160
-
40
1,120
November 8,2002
June 24, 2010
June 23, 2011
Date of ordinaryshareholders’
meeting
(Unit: shares)
From November 9,2004 to October31, 2011
From August 12,2012 to August11, 2015
From August 12,2013 to August11,2016
November 8, 2002
June 24, 2010
June 23, 2011
¥17,659
103,730
83,743
¥96,310
-
-
¥ -
35,420
25,674
Exercise priceper share
(exact yen)
Average price pershare at exercise
(exact yen)
Fair market price pershare at grant
(exact yen)
Date of ordinaryshareholders’
meeting
Stock price volatilityExpected average lifeExpected dividendRisk-free interest rate
56.091%3.5 years
¥3,000 per share0.254%
38
Yen U.S. dollars
Cost of sales
Selling, general andadministrative expenses
¥3,301
28,616
¥6,660
52,018
$81
633
March 312011
March 312012
March 312012
Thousands of yen Thousands ofU.S. dollars
(1)Service cost(2)Interest cost(3)Recognized actuarial loss(4)Contribution(5)Extra retirement payments
(6)Net periodic pension expense
¥53,3007,5136,775
89,0707,217
¥163,875
¥68,0466,0558,303
50,9425,522
¥138,868
$82874
10162067
$1,690
2011 2012 2012
(1)Discount rate
(2)Method of attributing the projectedbenefits to periods of service
(3)Amortization of unrecognizedactuarial differences
Mainly 1.24%
Straight-linebasis
Mainlystraight-lineover 5 years
Mainly 0.99%
Straight-linebasis
Mainlystraight-lineover 5 years
2011 2012
17. Income taxes:(1) Significant components of deferred tax assets and liabilities
(Note 1) Net deferred tax assets are expressed in Consolidated Balance Sheet for the years ended March 31, 2011 and 2012 as follows.
(Note 2) The Company has changed the timing of rev-enue recognition for the Company’ s standard prod-ucts to recognize revenue at the point of arrival at the customer’ s location rather than upon shipment from the beginning of fiscal year ended March 31, 2012. The change has been retroactively applied to the financial statements for the year ended March 31, 2011.
Statutory effective tax rate
Tax credit of corporation tax
Taxes on undistributed earnings of overseasSubsidiaries
Non deductible expenses for tax purposes
Equalization tax
Difference in foreign subsidiaries tax rate
Adjustment of prior year income taxesrelated to transfer price
Others
Effective income tax rate
39.7%
(3.2)
(1.0)
0.6
0.4
(2.1)
(1.8)
0.8
33.4%
March 31, 2011
(2)Reconciliation between the statutory tax rate and the effective income tax rate
The reconciliation between the statutory tax rate and the effective income tax rate in the consolidated statements of income for the year ended March 31, 2012 is omitted because the difference of both rates is less than 5% of statutory effective tax rate.
(3)Adjustments of deferred tax assets and liabilities amounts according to the change of income tax rate
On December 2, 2011, “Amendment to Income Tax Laws to Reform Tax Rates Corresponding to the Change in Social Economy Structures” (Law Number 114) and “Special Measures to Secure Financial Re-sources to Implement the Restoration from 2011 Tohoku Earthquake” (Law Number 117) were issued and, effective from the fiscal years beginning April 1, 2012, the corporate income taxes was consequently reduced whereas temporary special purpose tax was added on for the recovery from the ear thquake damage.
Accordingly, for estimating deferred tax assets and liabilities, the effective tax rates to be applied on the temporary differences expected to be settled in the three fiscal years beginning April 1, 2012 and from the fiscal years beginning April 1, 2015 will be reduced to 37.1% and 34.8%, respectively, from the current effective tax rate of 39.7%.
This tax rate change resulted in the net deferred tax assets (net of deferred tax liabilities) to be decreased by ¥80,737 thousand ($ 982 thousand) , income taxes-deferred increased by ¥81,371 thousand ($990 thousand), and valuation difference on available-for-sale securities increased by ¥634 thousand ($8 thou-sand).
39
Thousands of yen Thousands ofU.S. dollars
¥226,677
71,078
87,462
186,827
44,611
156,933
18,035
51,771
12,671
41,379
11,965
18,212
98,414
27,380
1,053,415
(464,894)
(46,860)
(2,490)
(514,244)
¥539,171
¥521,406
205,163
200,834
177,918
149,484
130,464
86,619
51,201
31,527
20,166
15,773
15,082
83,514
-
1,689,151
(547,422)
(59,126)
(7,381)
(613,929)
¥1,075,222
$6,344
2,496
2,444
2,165
1,819
1,587
1,054
623
384
245
192
183
1,016
-
20,552
(6,660)
(719)
(91)
(7,470)
$13,082
2011 2012 2012
Deferred tax assets:
Inventory-inter-company profit
Accrued expenses
Accrued bonuses
Accrued retirement benefits
Software development costs
Accrued severance indemnities fordirectors and statutory corporate auditors
Enterprise tax
Account receivables
Share-based compensation expenses
Inventories
Accrued vacation payable
Net loss carried forward for tax purposes
Others
Accounting Policy Change inRevenue Recognition (Note 2)
Total deferred tax assets
Deferred tax liabilities:
Undistributed earnings ofoverseas subsidiaries
Fixed assets of overseassubsidiaries
Others
Total deferred tax liabilities
Net deferred tax assets(Note 1)
Thousands of yen Thousands ofU.S. dollars
¥548,328
23,815
(2,491)
(30,481)
¥1,107,663
13,786
-
(46,227)
$13,477
168
-
562
2011 2012 2012
Current assets –Deferred tax assets
Noncurrent assets –Deferred tax assets
Current liabilities –Deferred tax liabilities
Noncurrent liabilities –Deferred tax liabilities
18. Asset retirement obligations:Information regarding asset retirement obligations recognized in the consolidated balance sheets is as follows.
(1)Overview of asset retirement obligation -Asset retirement obligations mainly consist of restitu-tion costs associated with the office rental contract of Tokyo branch office.(2)Method to calculate asset retirement obligations -Amount of asset retirement obligations is calculated by using the following assumptions.
(a)Expected duration of use Mainly 15 years from acquisition
(b)Discount rate 1.391%
(3)Increase and decrease of asset retirement obliga-tions -Increase and decrease of the amount of asset retire-ment obligations during the year ended March 31, 2011 and 2012 is as follows.
Note: Balance at the beginning of current period is the balance as of the beginning of the year ended March 31, 2011 adjusted by adopting “Accounting Standards for Asset Retirement Obligations” (Accounting Stan-dards Board of Japan Statement No. 18 issued on March 31, 2008) and “Guidance on Accounting Stan-dards for Asset Retirement Obligations” (Accounting Standards Board of Japan Guidance No. 21 issued on March 31, 2008).
(4)Change in estimation of asset retirement obliga-tions -During the year ended March 31, 2012 the Company made the decision to transfer its Tokyo branch office. Accordingly the company recalculated the estimation of restitution cost to reflect the change in the period of the restitution. The amount of ¥26,964 thousand ($329 thousand) consequently increased in the change of the estimation is included in asset retire-ment obligations as “Increase by the change in esti-mation ”.
19. Segment information:(1)Segment information -
(a)Overview of reportable segmentsThe Company’ s reportable segments represent com-ponents of the company for which separate financial information is available and the board of directors reviews on a regular basis in determining how to allo-cate the Company’ s resources and evaluate perfor-mance.The Company establishes business units by product and service and each business unit develops compre-hensive domestic and overseas strategies about the products and services. Accordingly, the Company’ s operations comprise segments which are separated by product and ser-vice based on the business unit and has 2 reportable segments: Tablet business and Component business.Tablet business and Component business are engaged in development, manufacture and sales of the following products, respectively.
i)Tablet business: Tablets and related software
ii)Component business: Components and modules (Electronic pen, multi-touch sensor, touch panel etc.)
(b)Methods for calculating the amounts of net sales, operating income (loss), assets and other items by reportable segment The accounting for reportable segments is the same as specified in “Summary of significant accounting policies”.
(c) Information regarding net sales, operating income (loss), assets and other items by reportable segment for the year ended March 31, 2011 and 2012 are as follows:
Thousands of yen
Year ended March 31, 2011
Net sales:(1)Outside customers(2)Inter-segmentTotal
Operating income (loss):
Assets:
Other items:DepreciationAmortization of goodwill
Increase or decrease ofproperty, plant andequipment andintngible assets
¥26,465,928 -
¥26,465,928
¥5,629,951
¥13,910,839
¥503,744 -
861,273
¥6,117,184-
¥6,117,184
(¥235,864)
¥3,890,013
¥78,513 21,536
54,938
¥32,583,112 -
¥32,583,112
¥5,394,087
¥17,800,852
¥582,257 21,536
916,211
¥33,030,359-
¥33,030,359
¥3,252,086
¥27,093,503
¥727,83721,536
1,590,906
¥33,030,359-
¥33,030,359
¥5,244,012
¥18,167,591
¥624,391 21,536
938,279
¥447,247-
¥447,247
(¥150,075)
366,739
¥42,134 -
22,068
¥--
¥-
(¥1,991,926)
¥8,925,912
¥103,446 -
652,627
Reportable segmentsTablet Component Total
Others(Note a)
TotalAdjustments(Note b)
Consolidated(Note c)
40
Thousands ofyen
Thousands ofU.S. dollars
Balance at the beginning ofcurrent period (Note)
Increase by the acquisition ofproperty, plant and equipment
Interest expenses
Increase by the change inestimation
Others
Balance at the end of currentperiod
¥48,596
-
715
26,964
20
¥76,295
$591
-
9
329
0
$929
2011
Thousands ofyen
¥45,585
2,309
702
-
-
¥48,596
2011 2011
41
Thousands of yen
Year ended March 31, 2012
Net sales ¥12,780,756 ¥9,148,302 ¥8,650,728 ¥9,424,116 ¥701,676 ¥40,705,578
Japan U.S.A Europe Asia/Oceania
Others Total
Thousands of dollars
Year ended March 31, 2012
Net sales $155,503 $111,307 $105,253 $114,663 $8,536 $495,262
Japan U.S.A Europe Asia/Oceania
Others Total
Thousands of yen
As of March 31, 2011
Property,plant andequipment ¥2,840,521 ¥538,068 ¥145,217 ¥111,473 ¥3,635,279
Japan NorthAmericaA
Europe Asia/Oceania
Total
Thousands of yen
As of March 31, 2012
Property,plant andequipment ¥2,770,789 ¥505,663 ¥116,655 ¥224,005 ¥3,617,112
Japan NorthAmericaA
Europe Asia/Oceania
Total
Thousands of dollars
As of March 31, 2012
Property,plant andequipment $33,712 $6,152 $1,419 $2,726
Japan NorthAmericaA
Europe Asia/Oceania
Total
Notes:a)Others for the year ended March 31, 2011 consist of Software and DJ device businesses, which are not included in reportable segments. Others for the year ended March 31, 2012 consist of Software busi-nesses, which are not included in reportable seg-ments.b)Adjustments mainly include expenses incurred in administrative divisions such as finance division and business administration division, which do not belong to reportable segments.c)Operating income (loss) is adjusted to consolidated operating income.d)The Company has changed the timing of revenue recognition for the Company’ s standard products to recognize revenue at the point of arr ival at the customer’ s location rather than upon shipment from the beginning of fiscal year ended March 31, 2012. This change has been retroactively applied and seg-ment information for the year ended March 31, 2011 was restated.
(2)Related information -
(a)Information by product and serviceInformation by product and service is omitted as the similar information is presented in Segment informa-tion section.
(b)Information by geography
i) Net sales
Information regarding net sales by geography as of March 31, 2011 and 2012 are as follows:
ii) Property, plant and equipment
Information regarding property, plant and equipment by geography as of March 31, 2011 and 2012 are as follows:
$44,009
Thousands of U.S. dollars
Year ended March 31, 2012
Net sales:(1)Outside customers(2)Inter-segmentTotal
Operating income (loss):
Assets:
Other items:DepreciationAmortization of goodwill
Increase or decrease ofproperty, plant andequipment andintangible assets
$346,845-
$346,845
$62,352
$215,509
$9,069-
10,576
$142,145-
$142,145
$13,268
$68,063
$1,729263
2,946
$488,990-
$488,990
$75,620
$283,572
$10,798263
13,522
$495,262-
$495,262
$49,489
$415,250
$12,733263
16,807
$495,262-
$495,262
$76,474
$287,827
$11,320263
14,380
$6,272-
$6,272
$854
$4,255
$522-
858
$--
$-
($26,985)
$127,423
$1,413 -
2,427
Reportable segmentsTablet Component Total
Others(Note a)
TotalAdjustments(Note b)
Consolidated(Note c)
Thousands of yen
Year ended March 31, 2011
Net sales ¥7,035,225 ¥9,249,529 ¥7,385,325 ¥8,640,823 ¥719,457 ¥33,030,359
Japan U.S.A Europe Asia/Oceania
Others Total
Thousands of yen
Year ended March 31, 2012
Net sales:(1)Outside customers(2)Inter-segmentTotal
Operating income (loss):
Assets:
Other items:DepreciationAmortization of goodwill
Increase or decrease ofproperty, plant andequipment andintangible assets
¥28,507,159-
¥28,507,159
¥5,124,727
¥17,712,705
¥745,383-
869,220
¥11,682,921-
¥11,682,921
¥1,090,508
¥5,594,110
¥142,14621,651
242,140
¥40,190,080 -
¥40,190,080
¥6,215,235
¥23,306,815
¥887,52921,651
1,111,360
¥40,705,578-
¥40,705,578
¥4,067,475
¥34,129,398
¥1,046,48921,651
1,381,378
¥40,705,578-
¥40,705,578
¥6,285,428
¥23,656,530
¥930,37921,651
1,181,860
¥515,498-
¥515,498
¥70,193
¥349,715
¥42,850-
70,500
¥--
¥-
(¥2,217,953)
¥10,472,868
¥116,110-
199,518
Reportable segmentsTablet Component Total
Others(Note a)
TotalAdjustments(Note b)
Consolidated(Note c)
Notes to Consolidated Financial Statements
(c) Information by major customer
(3)Information regarding the impairment loss of non-current assets by reportable segment -
There were no applicable transactions under this cat-egory for the year ended March 31, 2011, and the year ended March 31, 2012.
(4)Information regarding amortization and unamor-tized balance of goodwill by reportable segment -
Unamortized balance of goodwill by segment as of March 31, 2011 and 2012 are as follows:
Note: Information regarding amortization of goodwill is omitted as the similar information is presented in Segment information section.
(5)Information regarding gain on negative goodwill by reportable segment -There were no applicable transactions under this cat-egory for the year ended March 31, 2011 and year ended March 31, 2012.
20. Related party transactions:There were no applicable transactions under this cat-egory for the year ended March 31, 2011 and year ended March 31, 2012.
21. Earnings per share information:The computation of net income per share is based on the weighted-average number of common shares out-standing during each fiscal year. Treasury stocks held during these fiscal years have been excluded.
Note: The basis for calculating net assets per share is as follows.
Note: The basis for calculating basic and diluted earn-ings per share is as follows.
42
Yen U.S. dollars
Net assets per shareNet income per shareDiluted net income per share
¥45,916.614,895.484,885.72
¥47,350.465,463.955,458.66
$576.1166.4866.42
2011 2012 2012March 31 March 31
Thousands of yen Thousands ofU.S. dollars
Total net assets
Amount deducted fromtotal net assets(subscription rights to shares)
Net assets available tocommon shareholders
The number of commonshares at the end of eachfiscal year that was used tocalculate net assets pershare (shares)
¥18,481,946
31,917
18,450,029
401,816
¥18,917,895
90,595
18,827,300
397,616
$230,173
1,103
229,070
-
2011 2012 2012March 31 March 31
Thousands of yen
As of March 31, 2011
Unamortizedbalance ofgoodwill ¥ - ¥68,554 ¥ - ¥ - ¥68,554
Tablet Component Others Elimination/Corporate
Total
Thousands of yen
As of March 31, 2012
Unamortizedbalance ofgoodwill ¥ - ¥46,905 ¥ - ¥ - ¥46,905
Tablet Component Others Elimination/Corporate
Total
Thousands of dollars
As of March 31, 2012
Unamortizedbalance ofgoodwill $ - $571 $ - $ - $571
Tablet Component Others Elimination/Corporate
Total
2011Related segment
¥7,061
Net sales(Thousands of yen)
Name of customer
SUMSUNG JAPANCORPORATION Component
Related segment2012
¥5,086,360
Net sales(Thousands of yen)
Name of customer
SUMSUNG JAPANCORPORATION Component
2012Related segment
$61,885
Net sales(Thousands of U.S. dollars)
Name of customer
SUMSUNG JAPANCORPORATION Component
43
(Changes in accounting policies)
1. Accounting for earnings per shareAs stated in Note No. 3 “Changes in accounting prin-ciples and policies” , the Company has adopted “Ac-c oun t i ng S t a nda rd fo r E a r n ing s Pe r S ha re” (Accounting Standards Board of Japan Statement No. 2 issued on June 30, 2010) and “Guidance on Ac-coun t i ng S tanda rd fo r Ea r n i ngs Pe r Sha re” (Accounting Standards Board of Japan Guidance No. 4 issued on June 30, 2010) from the fiscal year ended March 31, 2012.In accordance with the guidance, the Company has changed the method of calculating diluted earnings per share. In this revised method, a portion of the fair value of stock options, which relates to the services to be rendered in the future, is included in the assumed proceeds by the exercise of stock options.This change was retroactively applied, and the diluted earnings per share for the year ended March 31, 2011 has been restated. If these new accounting standards had not been applied, the amount of diluted net income per share for the year ended March 31, 2011 would have been 4,880.63 yen.
2. Changes in revenue recognitionAs stated in Note No. 3 “Changes in accounting prin-ciples and policies” , the Company has changed the timing of revenue recognition for the Company’ s stan-dard products to recognize revenue at the point of arrival at the customer’ s location rather than upon shipment from the beginning of fiscal year ended March 31, 2012. This change has been retroactively applied and net assets per share, net income per share and diluted net income per share for the year ended March 31,
2011 were restated.As a result, net assets per share, net income per share and diluted net income per share for the year ended March 31, 2011 decreased by 103.49 yen, 48.33 yen and 48.23 yen, respectively.
22. Subsequent events:There were no applicable items under this category.
Thousands of yen Thousands ofU.S. dollars
Basic net income andshare information
Net income
Net income not available tocommon shareholders
Net income available tocommon shareholders
Weighted-average number ofshares outstanding (shares)
Diluted net income andshare information
Amount of net incomeadjustment
Increase in the number ofcommon shares outstandingduring each fiscal year thatwould result in exercisingoptions to issue newshares (shares)
Summary and number ofshares not included incalculating diluted earningsper share due to no effect ofdilution
¥1,967,083
-
1,967,083
401,816
-
803
-
¥2,181,341
-
2,181,341
399,224
-
387
2,715
$26,540
-
26,540
-
-
-
-
2011 2012 2012March 31 March 31
Report of Independent Auditors
44
Corporate Data
Trade Name Head Office/ Factory
Branch/Offices
InternationalAffiliates
Wacom Co., Ltd.
Established
Capital
Employees
Business Segments
July 12, 1983
¥4,203 million (As of March 31, 2012)
Consolidated: 785Non-consolidated: 397
(As of March 31, 2012)
1. Brand Business Development, manufacture,sales of computer input devices
• Professional products• Consumer products• Business products
2. Component BusinessDevelopment, manufactureand sales of smart phone, computer,and other device input components
• Pen sensor components• Touch sensor components
3. Other BusinessDevelopment, manufacture,sales of CAD solution and others
• CAD Software for electrical and mechanical engineering
Banks Mizuho Bank, Ltd.The Bank of Tokyo-Mitsubishi UFJ, Ltd.Saitama Resona Bank, Ltd.
2-510-1 Toyonodai Kazo-shi,Saitama 349-1148, JapanTEL: +81-480-78-1211 (Main)FAX: +81-480-78-1220
Tokyo BranchSumitomo Fudosan Shinjuku Grand Tower 31F,8-17-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo160-6131, Japan
Nagoya OfficeOrigin Nishiki Bldg. 8th Floor, 1-6-17 Nishiki Naka-ku, Nagoya-shi, Aichi 460-0003, Japan
Osaka OfficeShogyo 2nd Bldg. 6th Floor, 5-4-9 Toyosaki Kita-ku, Osaka-shi, Osaka 531-0072, Japan
Fukuoka OfficeHakata Ekimae Daini Bldg.5th Floor, 2-6-23 Hakataeki Higashi,Hakata-ku Fukuoka-shi, Fukuoka812-0013, Japan
Wacom Technology Corporation (U.S.A.)Wacom Technology Services, Corp. (U.S.A.)*1311 SE Cardinal Court, Vancouver, WA 98683, U.S.A.*The Subsidiary of Wacom Technology Corporation for Internet retailing
Wacom Europe GmbH (Germany)Europark Fichtenhain A9 D-47807, Krefeld, Germany
Wacom China Corporation (China)Unit 1103, Beijing IFC West Tower, No. 8Jianwai Ave., Chaoyang District, Beijing, China
Wacom Korea Co., Ltd. (Korea)Rm #1211, 12F, KGIT Sangam Center,402 worldcup bukro, Mapo-gu,Seoul 121-913, Korea
Wacom Australia Pty. Ltd. (Australia)Unit 8, Stage 1 Cumberland Green2-8 South Street, Rydalmere NSW 2116 Australia
Wacom Singapore Pte. Ltd. (Singapore)#12-09 Suntec Tower Five 5Temasek Boulevard, Singapore 038985
Wacom Taiwan Information Co., Ltd. (Taiwan)9F-1, No.237 Songjiang Rd.,Zhongshan Dist. Taipei 104, Taiwan
Wacom India Pvt. Ltd. (India)2nd Floor, Elegance Tower, District Centre,Mathura Road, New Delhi 110025, India
(As of July 30, 2012)
45
Investor Information
Major Shareholders (As of March 31, 2012)
Shareholder Distribution (As of March 31, 2012)
Foreign enterprises, etc.
<134 shareholders>
Other enterprises
8.17%
<108 shareholders>
Financial institutions
17.60%
Treasury stock
<29 shareholders>
25,000 shares,<1 shareholder>
Securities companies
1.02%
<34 shareholders>
Individuals and other shareholders
44.81%
<21,958 shareholders>
1,380,000422,61622,264
Name of shareholderNumber of
shares ownedPercentage of
voting rights (%)
Stock Exchange ListingTokyo Stock Exchange First Section (Trade code 6727)
Share Data (As of March 31, 2012) Total number of shares to be issued Total number of issued shares Total number of shareholders
JP Morgan Chase Bank 385174
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Eto Yoji Office
Yoji Eto
Wilnau Co.
State Street Bank and Trust Company 505103
Masahiko Yamada
The Chase Manhattan Bank, N. A. London SL Omnibus Account
MASA-JAPANESE EQUITY
25,060
23,179
18,235
17,000
12,320
12,100
11,497
9,420
9,280
5,535
6.30
5.83
4.59
4.28
3.10
3.04
2.89
2.37
2.33
1.39
4,309 shares,
189,410 shares,
34,507 shares,
94,994 shares,
422,616shares
22,264shareholders
5.92%
22.48%
74,396 shares,
*Wacom has 25,000 shares of treasury stock at the end of the fiscal year, which isn't included in the above list.*Percentage of voting rights are calculated after deduction of treasury stock.
46