business report april, 2016 to september, 2016 (q2 of fy...

Business ReportApril, 2016 to September, 2016

(Q2 of FY ending March 31, 2017)

Wacom Co., Ltd.

(TSE Sec.1 6727)

All Rights Reserved. Copyright © 2016 Wacom Co., Ltd. 2

Contents Index3-4 Q2 FY 03/2017 (Apr. to Sep. 2016) Results Overview5-7 Consolidated P/L, Operating Expenses Comparison8 Operating Expenses Comparison9-10 Business Segment Sales/Profit Comparison 11-18 Business Highlights19-21 Sales by Product Line22-24 Sales by Region, Sales Changes for Local Currencies25-26 Consolidated B/S, C/F27-29 FY 03/2017 Business Strategies30-49 FY 03/2017 Financial Forecast (vs. previous forecast)50-51 Shareholders Return Policy for FY 03/201752-57 FY 03/2017 Financial Forecast (vs. previous fiscal year)58-59 Wacom Strategic Business Plan SBP-201960-61 Our Branding62 Disclaimer


Q2 FY 03/17 (Apr. to Sep. 2016) Results OverviewOperating environment Global economic recovery plateaued on growing uncertainties such as a slowdown in China, a

sluggish Japanese recovery, and the UK’s exit from the EU. The yen strengthened against US dollar and euro from the end of last year and further strengthened

during the first quarter. Yen appreciation also progressed against emerging currencies such as the renminbi.

In addition to the penetration of mobile products, cloud computing and SNS, the emergence of new fields such as IoT and VR in the IT industry is causing major changes in our business environment.

Performance overview Consolidated net sales fell below the previous comparable fiscal period, due to the strong yen and

decreased sales in the Brand Business segment during product lifecycle transitions. We posted an operating loss and a net loss due to depreciation and subcontractor expenses associated with global IT infrastructure, and higher R&D expenses for new products.

Sales in the Brand Business segment fell below the previous comparable fiscal period. Creative Business shipments increased in unit base but overall sales decreased due to the strong yen, changes in the product mix, and transitions to new models. Consumer Business and Business Solution segments also struggled due to foreign exchange rates and changes in the market environment.

Sales in the Technology Solution Business fell below the previous comparable fiscal period mainly due to the strong yen and the discontinuation of the Turkish government project. Despite strong shipments for the new Galaxy Note 7 smartphone in Q2, concerns triggered by quality control issues were widespread after September.

.


Q2 FY 03/17 (Apr. to Sep. 2016) Results Overview

Average Forex rate Q2 FY 03/17 YOY Change

1 USD 106.43 JPY -12.4% (Strong JPY)

1 EUR 119.12 JPY -11.5% (Strong JPY)

Business Performance Q2 FY 03/17 YOY Change

Net Sales 33.80 bn -13.2％

Operating Income -0.90 bn -- ( Prev. Q2: 2.05 bn )

Ordinary Income -1.02 bn -- ( 2.10 bn )

Net Profit aft. Tax -1.23 bn -- ( 1.26 bn )

Financial Indices Q2 FY 03/17 Q2 FY 03/2016

EPS -7.48 JPY 7.62 JPY

BPS (Book Value per Share) 150.42 JPY 187.16 JPY

Financial Summary (JPY)

(For reference)

(Note) Net Profit is equivalent to net profit attributable to shareholders of Wacom Co., Ltd.


Consolidated P/L Q2 FY 03/16 Q2 FY 03/17 YOY Change

04/15-09/15 04/16-09/16 Amount Ratio

Net Sales 38,956 33,797 -5,159 -13.2%

Gross Profit 15,057 13,241 -1,816 -12.1%

profit margin % 38.7% 39.2%

SG&A 13,003 14,139 1,136 8.7%

Operating Income 2,053 -898 -2,951 --

profit margin % 5.3% -2.7%

Ordinary Income 2,098 -1,021 -3,119 --

Net Profit after

Tax1,261 -1,226 -2,487 --

(Unit: Million JPY)

• Effects of forex fluctuations: The US dollar weakened by 15.07 JPY Sales -3,770 mil*, OP -300 mil*The Euro weakened by 15.48 JPY Sales -700 mil, OP -340 mil

･ Net Profit aft. Tax： Tax expenses (corporate tax) by reversal of deferred tax assets by takin accountof full year forecast of financial deficit in non-consolidated basis.

* The followiing FX

impacts in the US

dollar are including

effects of

depreciation in

Asian currencies.


Consolidated Sales Comparison

22,85319,327

15,788

14,142

315

328

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Q2 FY 03/16 Q2 FY 03/17

Brand biz Tech. Solution biz Other biz

+4.1%

-15.4%

-10.4%

-13.2%38,956

33,797

(Unit: Million JPY)

Change

Ratio


Consolidated Profit Comparison

2,053

-898

2,098

-1,021

1,261

-1,226

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

Q2 FY 03/16 Q2 FY 03/17

Operating Income Ordinary Income Net Profit

(Unit: Million JPY)


Operating Expenses ComparisonQ2 FY 03/16 Q2 FY 03/17 YOY Change

04/15-09/15 04/16-09/16 Amount Ratio

Personnel 4,705 4,829 124 2.6%

R&D 2,033 2,265 232 11.4%

Ad. & Promo. 1,716 1,505 -211 -12.3%

Others 4,548 5,539 991 21.8%

Total 13,003 14,139 1,136 8.7%

SG&A ratio % 33.4% 41.8%

(Unit: Million JPY)

Key changes in SG&A

Increase of depreciation (+280 mil) and subcontractor expenses (+430 mil)* in Others and personnel expense* for global IT infrastructure development.

* SG&A decreased by 1,200 mil due to the stronger yen for expenses incurred at subsidiaries.

・Increase of R&D expanses for new products


Business Segment & Business Unit

Technology Solution Business Pen sensor systems for Smartphones and Tablets EMR, AES pen components & modules (feelTM)

Other Business Engineering Solution ・ECAD dio

Consumer Business Makes daily lives more creative and enjoyable

Product Lines: Digital Stationery, etc.

Business Solution Serves society by providing innovative solutions

Product lines: Signature Tablet, Pen Display, etc.

Creative Business Serves the passion of professional and consumer creativity

Product Lines: Pen Tablet, Mobile, Display

Bra

nd

Bu

sin

es

s

Platform &applications

Provides

technology,

apps and

platforms

Cloud Apps

& Services

WILL (digital

Ink solution)


Consolidated P/L by Business Segment

Q2 FY 03/16 Q2 FY 03/17 YOY Change

04/15-09/15 04/16-09/16 Amount Ratio

Net Sales 38,956 33,797 -5,159 -13.2%

Brand Business 22,853 19,327 -3,526 -15.4%

Tech. Solution Biz. 15,788 14,142 -1,646 -10.4%

Other Business 315 328 13 4.1%


Brand Business 3,642 2,051 -1,591 -43.7%

Tech. Solution Biz 2,114 1,788 -326 -15.4%

Other Business 34 -13 -47 --

Corp. and others -3,737 -4,724 -987 26.4%


(Unit: Million JPY)


Business Highlights:

Brand Business

Creative Business 16.88 bn -15.0%

Shipment increased more than 10% in unit base driven by the emerging

market, but overall sales fell due to the strong yen, a change in product

mix, and the impact of transitions to new models. We continued R&D for

the next generation products.

Pen Tablet (subsection) 9.79 bn -12.3%

Shipment of Intuos Pro maintained the same level in unit base, but sales

fell due to the strong yen. We plan to release the next model in Q4, three

years after the launch of the current model.

Intuos maintained the same level in unit base, but the proportion of lower-end models increased. A new model for entry users in 3D modeling was introduced in September.

Shipment of the emerging market model increased by 80% in unit base, reflecting an increase in new customers in China, India, and South America.

19.33 bn -15.4%

Emerging market model

(One by Wacom)

(Unit: JPY)

Intuos 3D


Brand Business

Creative Business

Mobile (subsection) 1.22 bn -52.4%

Changes in the competitive environment driven by an increase in

digital pen-adopted devices have given creative users more

choices of tablet devices. Demand for highly-functional creative

tablets continues to support users' workflow

Demand for Cintiq Companion 2 slowed due to product life cycle

transitions and the impact of the strong yen.

We introduced Wacom MobileStudio Pro 13/16 in Q3 as a new

model, adding features such as next generation pen technology,

and advanced 3D and color management functions in order to

solidify our global market leadership and realize growth recovery.

Business Highlights: (Unit: JPY)

companion 2


Brand Business

Creative Business

Display (subsection) 5.86 bn -4.2%

Shipment of Display products expanded approx. 20% in unit base.

Sales of Cintiq 27 QHD decreased due to the strong yen.

Sales of Cintiq 22HD were steady despite having been on the market for four years.

Shipment of Cintiq 13HD increased, particularly in Asian countries.

We continued R&D for the new models, and plan to launch the next models of all product lines in Q3 and Q4.

13HD


27 QHD touch

22HD touch

13HD touch

27 QHD(Unit: JPY)


Brand Business

Consumer Business 0.47 bn -31.4%

Sales of stylus products for iPad largely decreased due to

market changes and adjustment for model transition before new

models launched in September.

Bamboo Spark, a digital stationery that transforms handwritten

notes on paper into digital ink for editing and sharing,

contributed to sales. In September, we introduced the next

models Bamboo Slate, Bamboo Folio to be launched in Q3.

We provided Wacom Cloud services to stores and utilized digital

ink through cloud services.


Wacom InkLayer Language

Inkspace,

Bamboo Paper

apps



Brand Business

Business Solution 1.99 bn -14.4%

Sales dropped in the Eurozone due to prolonged investment projects

in the economic uncertainties as well as the strong yen.

STU series expanded in units shipment owing to increased demand for

digital signature solutions at retailers in Japan and public services in

India, and for credit card transactions and over-the-counter services.

LCD signature tablets, the DTU series, expanded widely in sales for

over-the-counter use in the finance field. DTU-1141 adopted by Citi

Bank Korea.

STU series

STU-540/430

DTU-1031DTU-1141 DTH-2242DTK-1651



Tech. Solution Business

Pen Sensor System

for Smartphones 8.44 bn -10.5%

Mass production of Samsung’s Galaxy Note 7 expanded in Q2,

but sales decreased due to the strong yen.

Concerns about Galaxy Note 7 quality control problem

occurred in September, evolving into an October recall, which

caused negative impact in H2.

Continued pen technology development for the next generation

model.

Shipment for Galaxy Note 5 remained stable.

Focused on automation of new cartridge type digital pen.

Continued new customer development.

14.14 bn -10.4%

(Unit: JPY)

Smartphone models


Business Highlights:Tech. Solution Business

Pen Sensor System

for Tablets 5.16 bn +0.2%

Sales of Active ES pen solution increased with favorable demand

from tablet PC manufacturers, including steady orders from Huawei.

Sales remained at the same level of the previous fiscal year in spite

of the strong yen and discontinuation of orders of educational

tablets for the government of Turkey.

Developing standardized digital pen for Windows 10 OS tablets with

Microsoft.

Pen Sensor System

for Notebook PCs 0.55 bn -55.3%

Continued shift in demand from notebook PCs to 2in1 tablets.

(Unit: JPY)

Tablet ・PC models



Other Business

CAD software and others 0.33 bn +4.1%

Sales of major product ECAD dio series maintained a steady level.

0.33 bn

(Unit: JPY)

+4.1%

F&A (Corporate)

Continued to invest in business infrastructure for growth and operational efficiency. Major projects include new SCM system for e-commerce and IT infrastructure for global integrated operations.

Promoted WILL (Wacom Ink Layer Language) under our open partnership policy as a new framework to standardize digital ink and engaged in activities for partnership development.

Made preparations for the establishment of the Digital Stationery Consortium in October, held Connected Ink events in Las Vegas, Shanghai and Berlin in January, May and September, 2016 to promote digital ink.


Sales by Product Line in Brand Business

11,1729,794

2,571

1,224

6,112

5,858

677

465

2,321

1,986

0

5,000

10,000

15,000

20,000

Q2 FY 03/16 Q2 FY 03/17

Creative・Pen tablet Creative・Mobile Creative・DisplayConsumer Business Solution

-52.4%

-12.3%

-4.2%

-14.4%

19,327

22,853-15.4%

Creative

biz

19,855

Creative

biz

16,876

-15.0%

-31.4%

(Unit: Million JPY)

Change

Ratio


Sales by Product Line in Tech. Solution Business

9,4198,435

5,1505,162

1,219

545

0

5,000

10,000

15,000

Q2 FY 03/16 Q2 FY 03/17

Pen for Smartphone Pen for Tablet Pen for Notebook PC, etc.

-55.3%

+0.2%

-10.5%

14,142

15,788-10.4%

(Unit: Million JPY)

Change

Ratio


0

5000

10000

15000

20000

25000

13/10-12 14/1-3 14/4-6 14/7-9 14/10-12 15/1-3 15/4-6 15/7-9 15/10-12 16/1-3 16/4-6 16/7-9

Creative Consumer(Stylus, etc.) Business(VM) Tech. Solution CAD, etc.

Quarterly Trend by Product Line

23,389

20,786

13,669

18,342

24,954

17,592

15,142

23,814

21,936

16,676

13,261

20,536

(Unit: Million JPY)


Sales by Region

15,788 14,142

3,5843,270

7,387

5,422

6,474

5,368

5,723

5,595

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Q2 FY 03/16 Q2 FY 03/17

Tech. Solution Japan U.S. Germany Asia Oceania

(-16.1%)

(-5.8%)

-2.2%

-26.6%

-8.7%

-10.4%

-17.1%

38,956

33,797

※2,764

※2,838

(※+17.5%)

-13.2%(Unit: Million JPY)

Change

Ratio※Sales in China

of Asia Oceania

(※% growth based

on local currency)

( ) % growth based

on local currency

(Note) There are no regional segments in the Tech. Solution Biz.


（Ref.） Sales Changes in Local Currency Base

Region CurrencyYOY

Change Ratio

Japan(excluding Tech. Solution biz)

JPY -8.7％

U.S. USD -16.1％

Europe EUR -5.8％

China CNY +17.5％

Korea KRW +17.3％

Australia AUD +3.9％

Singapore USD +21.5％

Hong Kong USD -34.0％

Taiwan NTD -6.6％

India INR +84.3％


0

5,000

10,000

15,000

20,000

25,000

13/10-12 14/1-3 14/4-6 14/7-9 14/10-12 15/1-3 15/4-6 15/7-9 15/10-12 16/1-3 16/4-6 16/7-9


Quarterly Trend by Region

23,389

20,786

13,669

18,342

24,954

17,592

15,142

23,814

21,936

16,676

13,261

20,536

(Unit: Million JPY)



Consolidated B/SKey Changes

Assets

・ Increase in notes and accounts receivable

2,465Liabilities

・ Increase in long-term loans 7,000

・ Increase in notes and accounts payable

2,946

Net Assets

・ Decrease in shareholders’ equity -4,925(decrease with net loss and dividends paid, etc.)

End of Mar. 2016

End of Sep. 2016

Change

Current Assets 37,874 40,822 2,949

Noncurrent Assets 13,693 13,537 -156

Total Assets 51,567 54,360 2,793

Current Liabilities 16,479 18,370 1,891

Noncurrent Liabilities 3,992 11,426 7,434

Total Liabilities 20,470 29,796 9,325

Minority Interest in

Subsidiaries0 0 0

Net Assets 31,096 24,564 -6,532

Total Liabilities and Net Assets 51,567 54,360 2,793

Equity Ratio 60.0% 44.9% -15.1%

(Unit: Million JPY)


Consolidated C/F Major Activities in Q2 FY 03/17

C/F from operating activities

・ Increase in notes and accounts

receivable-trade -4,908

・ Net loss before tax -1,074

・ Increase in notes and accounts

payable-trade 3,475

・ Depreciation 1,240

C/F from investing activities

・ Purchase of fixed assets -1,828(global IT infrastructure, etc.)

・ Proceeds from sales of property 521 (sales of property in US subsidiary, etc.)

C/F from financing activities

・ Increase in long-term loans payable 8,000

・ Decrease in short-term loans payable -1,000

・ Cash dividends paid -2,953

・ Purchase of treasury stock -753

Q2

FY 03/16

Q2

FY 03/17

YoY

Change

04/15-09/15 04/16-09/16 Amount

C/F from operating

activities-1,014 -756 259

C/F from investing

activities-2,360 -1,339 1,021

C/F from financing

activities1,210 3,304 2,093

Effect of change in

exchange rate -88 -897 -808

Increase-decrease of

cash & cash equivalent-2,252 313 2,565

Beginning balance of

cash & cash equivalent16,687 14,365 -2,322

Ending balance of cash

and cash equivalent14,435 14,678 243

(Unit: Million JPY)

FY 03/2017

Basic Strategies and

Business Focus


Initial Assumptions of Business Environment for FY 03/17Global Economy

• Modest growth trends will be supported by financial policies in each country.

• Destabilizing factors are increasing such as refugees in Europe, low oil prices and economic slowdowns in U.S. and China.

• Rapid appreciation of the Japanese Yen and the impact from the Kumamoto earthquake in April are concerns for the Japanese economic recovery.

IT industry and our business environment

• 3D market growth accelerates triggered by 3D design, VR and 3D printing.

• Creative markets in emerging countries continue to expand in both professional and consumers segments.

• 2in1 tablet market starts to grow as the smartphone market at standstill.

• Tablet market for educational and enterprise sectors expand.

• Digital stationery creates new value through integration with Apps and Cloud services.

• Digital signature expands by improving workflow and security.


Basic Strategies and Initiatives Expand Creative Business and enhance the market leadership.

Extend 3D design and color management functions with the next generation of product lines.

Accelerate the growth of Creative Business in emerging markets

Establish a new consumer segment by integrating digital stationery and Cloud services.

Promote standardization of digital ink by WILL (Wacom Ink Layer Language).

Enhance paperless workflow and security business with digital signature.

Promote standardization of digital pen and expand Technology Solution Business.

Enhance the collaboration among global organizations and improve business efficiency by

leveraging the new global IT infrastructure.

Enhance corporate governance and processes for improving corporate value.


Assumptions for FY 03/17 Financial Forecast

(Note) Each figure of the above sensitivities shows a opposite sign in case of the weaker JPY.

(Unit: Million JPY)

Revised downward our consolidated financial forecast, based on our further market review

in mid October, 2016.

As for Technology Solution Business, actual results may materially differ from our latest

financial forecast in the short term due to its business nature.

Forex rate assumptions for FY 03/17, effective from November, 2016

1 USD = 103 JPY (YOY +12.9% stronger JPY) (no revision)1 EUR = 114 JPY (YOY +11.8% stronger JPY) (no revision)

Forex exchange sensitivity: 12-month forecast *Assumption: Asian currencies are pegged to USD.

Unit of

sensitivityPer 1 JPY in case of the stronger JPY

FY 03/17 (revised) FY 03/17 (previous)(for ref.) FY 03/16

(result)

Currency USD EUR USD EUR USD EUR

Sales -460 -130 -500 -140 -400 -112

Operating

Income+10 -90 +40 -100 +33 -71


Summary for FY 03/17 Forecast

H2 FY 03/17 (prev.) H2 FY 03/17 (rev.) Prev. vs.

Rev.

10/16-03/17 10/16-03/17 Change

Sales 43,720 36,503 -7,217

Operating Income 3,470 7.9% 398 1.1% -3,072

Ordinary Income 3,440 7.9% 371 1.0% -3,069

Net Profit aft. tax 2,490 5.7% -274 -0.8% -2,764

FY 03/17 (prev.) FY 03/17 (rev.) YOY

04/16-03/17 04/16-03/17 Growth rate

Sales 77,900 70,300 -7,600

Operating Income 2,400 3.1% -500 -0.7% -2,900

Ordinary Income 2,300 3.0% -650 -0.9% -2,950

Net Profit aft. tax 1,620 2.1% -1,500 -2.1% -3,120

ROE 5.5% -5.3% -10.8%

(Unit: Million JPY)

(vs. Previous Forecast as of Aug. 5)


(Note) Due to risks and uncertainties involved in the forecast of customer demand and market in Technology Solution Business,

actual results may materially differ from forward-looking statements in the short term.

Forecast by Business Segment

FY 03/17 (prev.) FY 03/17 (rev.) Prev. vs. Rev.

04/16-03/17 04/16-03/17 Amount Change

Net Sales 77,900 70,300 -7,600 -9.8%

Brand biz 53,200 48,400 -4,800 -9.0%

Tech. Solution biz 23,900 21,200 -2,700 -11.3%

Other biz 800 700 -100 -12.5%


Brand biz 9,660 7,300 -2,360 -24.4%

Tech. Solution biz 1,390 900 -490 -35.3%

Other biz 190 100 -90 -47.4%

Corp. and others -8,840 -8,800 40 -0.5%


(Unit: Mil JPY)

(vs. Previous Forecast as of Aug. 5)


Major Impacts on P/L Forecast Revision -1

• Revised consolidated business forecast for FY 03/17 in response to market trend and

demand forecast in the middle of October, 2016.

• Brand Business: Sales forecast was revised downward due to the delay of new product

launches of several models planned during H2 in addition to the changes competitive

environment,

Creative Business

• The launch of new generation pen tablet models are planned in Q4. However product mix shift

toward low price model in emerging market may cause the decrease of overall sales.

• The delay of product introduction in new display products may have an impact in H2 sales.

• As for mobile products, new models to be launched in Q3 will contribute to the recovery in H2.

(All comparisons are with the previous forecast as of August 2016 unless otherwise stated )

Consumer Business

• Sales in H2 will be lowered due to severe competitive environment in stylus products market,

delay of new model development to be launched in Q3, and downward forecast of Bamboo

Slate / Folio.


Major Impacts on P/L Forecast Revision -1

Business Solution

• Closely re-evaluated the business risk attributable to the changes in competitive environment in

Europe and prolonged investment projects.

(All comparisons are with the previous forecast as of August 2016 unless otherwise stated )

• Technology Solution Business: Full year sales is expected to largely fall below the previous

forecast due to recall issue of Samsung’s new smartphone.

For smartphones

• Sales in H2 will significantly decrease due to the recall and discontinuation of Galaxy Note 7.

• Sales in H2 will consist of the sales of remaining materials for Galaxy Note 7 and the shipment

for previous models only.

For tablet PCs and notebook PCs

• Sales for tablet PCs is expected to be steady with increased digital pen-enabled models.

• Sales for notebook PCs is expected to decrease due to continued shift in toward tablet PCs.


Major Impacts on P/L Forecast Revision -1 (All comparisons are with the previous forecast as of August 2016 unless otherwise stated )

• Corporate expenses

• SG&A remains high and SG&A ratio will increase. System development continues for global IT

infrastructure aiming for business growth and efficiency improvement.. Expenses for ERP

system in Japan continues in H2 for the cut-over in early next fiscal year.

• Extraordinary loss to be reported in H2, due to disposal of non-current assets such as

equipment and mold related to Samsung. (approx. 300 mil. JPY)

• Tax expenses will increase due to reversal of deferred tax assets by taking account of

downward revision of profitability. (approx. 450 mil. JPY)


New products in FY 03/17 (as of November)

13/16 13/16

Brand Business Creative Business

Highest performance tablet with Intel i7 and GPU

4 times higher pressure ranges with Wacom Pro Pen 2

High resolution and high color precision 4K display

Fully 3D design and modeling support with 3D camera



3D

3D Modeling solution for beginners

Integrated solution with 3D printing process

Standard service of 3D printing and delivery

Brand Business Creative Business


New Creative Brand Approach


Brand CI Great Brand Marketing

Great Products

Great Distribution

Great people


Brand CI Great Brand Marketing

Great Products

Great Distribution

Great people

Brand Implementation at POS


Brand Business Consumer Business

Inkspace,

Bamboo Paper



Other Business CAD Software

DTK-1651STU-540

ECAD DCX 2017

Brand Business Business Solution



• Delaware Corporation founded on

October 26, 2017.

• Promotes WILL “Wacom Ink Layer

Language” as new digital ink

standard and development of new

digital stationery market

www.digitalstationeryconsortium.org

Founding ofDigital Stationery Consortium

Connected Ink Tokyo

October 27, 2016

http://www.digitalstationeryconsortium.org/


Sales Forecast by Business Segment

53,20048,400

23,900

21,200

800

700

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

FY 03/17 (previous) FY 03/17 (revised)


-12.5%

-9.0%

-11.3%

-9.8%77,900

70,300

（forecast change）

(Unit: Million JPY)

Change

Ratio


Sales Forecast by Product line in Brand Product

23,800 23,100

5,800 5,400

14,60013,300

2,5001,600

6,500

5,000

0

10,000

20,000

30,000

40,000

50,000



-36.0%

-6.9%

-2.9%

-8.9%

-23.1%

48,400

53,200-9.0%

Creative

biz

44,200

Creative

biz

41,800

-5.4%

(Unit: Million JPY)

Change

Ratio



Sales Forecast by Product line in Tech. Solution

13,00010,500

8,600

9,300

2,300

1,400

0

5,000

10,000

15,000

20,000

25,000



-39.1%

+8.1%

-19.2%

21,200

23,900

-11.3%(Unit: Million JPY)

Change

Ratio



Sales Forecast by Region

23,900 21,200

9,3108,480

16,01014,400

16,190

14,680

12,490

11,540

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000



-7.6%

-10.1%

-8.9%

-11.3%

-9.3%

77,900-9.8%

70,300

(Unit: Million JPY)Change

Ratio




Investment, depreciation and R&D

Capital expenditure

3.80 bn JPY (YOY -21.8％) (previous forecast: 4.00 bn JPY)

• Key items: Mold for new products and global IT systems (mainly ERP), etc.

Depreciation

2.60 bn JPY (YOY +29.8％) (previous forecast: 2.80 bn JPY)

・ Key items: Depreciation of new global IT systems, etc.

R&D expense

4.60 bn JPY (YOY + 5.9％) (no revision)

• Key items: New products development in Brand Business,next generation ICs and basic technology research, etc.


Shareholders Return Policy for FY 03/17

Dividend policy

• Continue steady dividend payout to shareholders while ensuring necessary retained earnings for future business development and sound financial base.

• Target payout ratio maintains approximately 40% or more to attract global investment.

• Revised downward dividend forecast for FY3/17 to reflect our revised business forecast, and maintain sound financial base.

Dividend per share

• 6.00 JPY per share for FY 03/17 (18.00 JPY for FY 03/16) (previous forecast: 12.00 JPY )

• Payout ratio --% (128.6% for FY 03/16) (previous estimation: 121.3%)


Shareholders Return Policy for FY 03/17Acquisition of own shares and Cancellation of treasury stock

Acquire its own shares for the purpose of enhancing return to shareholders, improving capital efficiency, and ensuring a flexible capital policy management in response to changes in the Company’s business environment. Executed cancellation of certain treasury stocks in accordance with acquisition. Resolved discontinuance of acquisition of own shares along with dividend cut as of November 9, 2016.

Acquisition of own shares

• Total acquisition number of shares: 2,156,500 shares (43.1% of number of shares

resolved in May, equivalent of 1.33% for outstanding shares)

• Total acquisition cost: 7.52 bn JPY

• Acquisition period: From May 12, 2016 May 12, 2016 to September 2, 2016

Cancellation of treasury stock

• Total number of shares cancelled: 2,500,000 shares (equivalent of 1.48% for outstanding

shares)

• Date of cancellation: May 25, 2016


Summary for FY 03/17 ForecastH2 FY 03/16 (rslt.) H2 FY 03/17 (rev.) YOY

10/15-03/16 10/16-03/17 Change

Sales 38,612 36,503 -2,109

Operating Income 1,611 4.2% 398 1.1% -1,213

Ordinary Income 1,678 4.3% 371 1.0% -1,307

Net Profit aft. tax 1,048 2.7% -274 -0.8% -1,322

FY 03/16 (rslt.) FY 03/17 (rev.) YOY

04/15-03/16 04/16-03/17 Growth rate

Sales 77,568 70,300 -7,268

Operating Income 3,664 4.7% -500 -0.7% -4,164

Ordinary Income 3,777 4.9% -650 -0.9% -4,427

Net Profit aft. tax 2,310 3.0% -1,500 -2.1% -3,810

ROE 7.1% -5.3% -12.4%

(Unit: Million JPY)

(vs. previous fiscal year)


(Note) Due to risks and uncertainties involved in the forecast of customer demand and market in Technology Solution Business,

actual results may materially differ from forward-looking statements in the short term.

Forecast by Business Segment

FY 3/16 (rslt.) FY 3/17 (rev.) YOY Change

04/15-03/16 04/16-03/17 Amount Ratio

Net Sales 77,568 70,300 -7,268 -9.4%

Brand biz 48,931 48,400 -531 -1.1%

Tech. Solution biz 27,974 21,200 -6,774 -24.2%

Other biz 663 700 37 5.6%


Brand biz 8,036 7,300 -736 -9.2%

Tech. Solution biz 3,130 900 -2,230 -71.2%

Other biz 36 100 64 --

Corp. and others -7,538 -8,800 -1,262 16.8%


(Unit: Mil JPY)

(vs. previous fiscal year)


（Ref.）Sales Forecast by Business Segment

48,931 48,400

27,97421,200

663

700

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

FY 03/16 (result) FY 03/17 (forecast)


+5.6%

-1.1%

-24.2%

-9.4%77,568

70,300

(Unit: Million JPY)

Change

Ratio

（YOY change）


（Ref.）Sales Forecast by Product line in Brand Product

24,148 23,100

4,453 5,400

13,223 13,300

2,149 1,600

4,958 5,000

0

10,000

20,000

30,000

40,000

50,000



-25.6%

+21.3%

-4.3%

+0.6%

+0.9%

48,931

-1.1%

48,400

Creative

biz

41,800

-0.1%

(Unit: Million JPY)

Change

Ratio

（YOY change）

Creative

biz

41,824


（Ref.）Sales Forecast by Product line in Tech. Solution

16,353

10,500

9,532

9,300

2,089

1,400

0

5,000

10,000

15,000

20,000

25,000



-33.0%

-2.4%

-35.8%

21,200

27,974-24.2%

（YOY change）(Unit: Million JPY)

Change

Ratio


（Ref.）Sales Forecast by Region

27,97421,200

7,914

8,480

15,631

14,400

14,845

14,680

11,204

11,540

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000



+3.0%

-7.9%

+7.2%

-24.2%

-1.1%

77,568

-9.4%

70,300

（YOY change）

(Unit: Million JPY)Change

Ratio


Wacom Strategic Business Plan

SBP-2019Evolve the business model toward mobile and

Cloud for reaching new customers as well as

expanding existing business. In addition, improve

the speed and profitability by leveraging our global

business infrastructure.

Financial Goals by FY ending March, 2019

• Consolidated sales: 120 billion JPY

• Consolidated operating profit margin: 12%

• Consolidated ROE: 20% or higher

We proceed to review and revise the

plan, as we have difficulty to accomplish

its financial goal by March 2019.


SBP-2019 Basic Strategy

Evolve the business toward mobile, Cloud and ecosystems.

Accelerate the growth with a new global business organization and enhanced global integration.

Accelerate creative business with mobile product line expansion, 3D penetration and emerging market investment.

Reach new consumer users with Digital Stationery and Cloud.

Expand the Technology Solution Business with AES and WILL (Wacom Ink Layer Language).

Enhance business workflow and security solutions by leveraging WILL and digital signature solutions.

Leverage global business system for efficiency, speed and profitability.


our vision

DisclaimerForward-looking statements regarding future events and

performance contained in this presentation 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 new technologies. Please

note that actual results could materially differ from those expressed

or implied by the forward-looking statements in this presentation

due to these risks and uncertainties.

Investor Relations Inquiries

TEL: +81-3-5337-6502 FAX: +81-3-5337-6519

Wacom Co., Ltd.

Sumitomo Fudosan Shinjuku Grand Tower 31F,

8-17-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo

160-6131, Japan

Wacom Co., Ltd.

http://www.wacom.com

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