Business Report April to December, 2016 (Q3 of FY...

Business ReportApril, 2016 to December, 2016

(Q3 of FY ending March 31, 2017)

Wacom Co., Ltd.

(TSE Sec.1 6727)

All Rights Reserved. Copyright © 2017 Wacom Co., Ltd. 2

Contents Index3-4 Q3 FY 03/2017 (Apr. to Dec. 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 Strategies30-48 FY 03/2017 Financial Forecast, Shareholders Return Policy49-50 Wacom Strategic Business Plan SBP-201951-53 Our Branding54 Disclaimer


Q3 FY 03/17 (Apr. to Dec. 2016) Results OverviewOperating environment Uncertainty in the global economy grew due to unexpected political changes such as the UK’s decision to

exit from the EU and the transition to the new administration in the U.S. In the later part of the period, the expectation for the global economic recovery led by the U.S. was also observed.

Japanese yen strengthened against the U.S. dollar and euro, and the yen appreciated against emerging market currencies such as the renminbi in H1. After November, the yen shifted to weaken against major currencies led by the stronger U.S. dollar.

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 during product lifecycle transitions. Operating income decreased due to depreciation and subcontractor expenses associated with global IT infrastructure, and higher R&D expenses for new products. We posted a net loss due to tax expenses such as reversal of deferred tax assets.

Sales in the Brand Business 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 due to the strong yen, despite favorable shipments for tablets. The recall of Samsung’s Galaxy Note 7 in October led to discontinuance of production for the Note 7.


Q3 FY 03/17 (Apr. to Dec. 2016) Results Overview

Average Forex rate Q3FY 03/17 YOY Change

1 USD 107.88 JPY -11.2% (Strong JPY)

1 EUR 119.13 JPY -10.9% (Strong JPY)

Business Performance Q3 FY 03/17 YOY Change

Net Sales 54.74 bn -10.1％

Operating Income 0.63 bn -87.1%

Ordinary Income 0.77 bn -84.3%

Net Profit aft. Tax -0.10 bn -- (Prev. Q3: 3.09 bn )

Financial Indices Q3 FY 03/17 Q3 FY 03/2016

EPS -0.61 JPY 18.68 JPY

BPS (Book Value per Share) 166.38 JPY 197.47 JPY

Financial Summary (JPY)

(For reference)

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


Consolidated P/L Q3 FY 03/16 Q3 FY 03/17 YOY Change

04/15-12/15 04/16-12/16 Amount Ratio

Net Sales 60,892 54,739 -6,153 -10.1%

Gross Profit 24,383 21,943 -2,440 -10.0%

profit margin % 40.0% 40.1%

SG&A 19,549 21,317 1,768 9.0%

Operating Income 4,834 626 -4,208 -87.1%


Ordinary Income 4,893 768 -4,125 -84.3%

Net Profit after

Tax3,085 -99 -3,184 --

(Unit: Million JPY)

• Effects of forex fluctuations: The US dollar weakened by 13.61 JPY Sales -5,310 mil*, OP -440 mil*The Euro weakened by 14.54 JPY Sales -1,230 mil, OP -730 mil

･ Net Profit aft. Tax： Loss on retirement of smartphone-related non-current asset (approx. 300 mil), tax expenses (corporate tax) such as reversal of deferred tax assets by taking account of full yearforecast of financial deficit in non-consolidated basis (approx. 500 mil)

* The impacts in the US dollar are including the following effects of

depreciation in Asian currencies. Sales -1,250 mill, OP -830 mil


Consolidated Sales Comparison

37,57633,004

22,847

21,254

469

481

0

10,000

20,000

30,000

40,000

50,000

60,000

Q3 FY 03/16 Q3 FY 03/17

Brand biz Tech. Solution biz Other biz

+2.4%

-12.2%

-7.0%

-10.1%60,892

54,739

(Unit: Million JPY)

Change

Ratio


Consolidated Profit Comparison

4,834

626

4,893

768

3,085

-99 -500

500

1,500

2,500

3,500

4,500

Q3 FY 03/16 Q3 FY 03/17

Operating Income Ordinary Income Net Profit

-87.1%

-84.3%

--

(Unit: Million JPY)


Operating Expenses ComparisonQ3 FY 03/16 Q3 FY 03/17 YOY Change

04/15-12/15 04/16-12/16 Amount Ratio

Personnel 7,113 7,291 178 2.5%

R&D 2,907 3,176 269 9.3%

Ad. & Promo. 2,487 2,423 -64 -2.6%

Others 7,043 8,428 1,385 19.7%

Total 19,549 21,317 1,768 9.0%

SG&A ratio % 32.1% 38.9%

(Unit: Million JPY)

Key changes in SG&A

Increase of depreciation (+410 mil) and subcontractor expenses (+670 mil)* in Others and personnel expense* for global IT infrastructure development.

* SG&A decreased by 1,600 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

Q3 FY 03/16 Q3 FY 03/17 YOY Change

04/15-12/15 04/16-12/16 Amount Ratio

Net Sales 60,892 54,739 -6,153 -10.1%

Brand Business 37,575 33,004 -4,571 -12.2%

Tech. Solution Biz. 22,847 21,254 -1,593 -7.0%

Other Business 469 481 12 2.4%

Operating Income 4,834 626 -4,208 -87.1%

Brand Business 7,251 5,172 -2,079 -28.7%

Tech. Solution Biz 3,118 2,501 -617 -19.8%

Other Business 41 -37 -78 --

Corp. and others -5,576 -7,010 -1,434 25.7%


(Unit: Million JPY)


Business Highlights:-12.2%

Intuos 3D

(Unit: JPY)

33.00 bn

Emerging market model

(One by Wacom)

Brand Business

Creative Business 28.99 bn -9.4%

Shipment increased by 10% in unit base driven by the emerging market.

However, overall sales fell due to the strong yen and the impact of transitions to new

models, despite the focus on the next generation products launch from Q3.

Pen Tablet (subsection) 17.07 bn -8.0%

Shipment of Intuos Pro for high-end creative users remained at the same level in unit

base, but sales fell due to the strong yen and the impact of transition to new models.

We introduced the next model Wacom Intuos Pro in January, which built a high

reputation for offering a new seamless paper-to-digital workflow.

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

Shipment of the emerging market model increased by 60% in unit base, reflecting an increase in new customers in China, India, and South America.


Business Highlights:13/16

(Unit: JPY)

Brand Business

Creative Business

Mobile (subsection) 2.65 bn -27.2%

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.

Until H1, demand for the existing model Cintiq Companion 2 slowed due

to product life cycle transitions, and the strong yen led to sales decease.

We introduced Wacom MobileStudio Pro 13/16 in October 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. Three- month

sales from October to December increased 40% to the previous fiscal

year.


Brand Business

Creative Business

Display (subsection) 9.27 bn -5.4%

Shipment of display products expanded approx. 15% in unit base.

Introduced Wacom Cintiq Pro 13/16 as a next generation model with 4K high-resolution display and stronger color management . The shipment started from the 13 inch model, which contributed to the sales.

Sales of the existing models slightly decreased due to the strong yen and product life cycle transitions.

27 QHD touch22HD touch

27 QHD

13HD

13

Business Highlights: (Unit: JPY)


Wacom InkLayer Language

Inkspace,

Bamboo Paper

apps


Brand Business

Consumer Business 1.03 bn -44.4%

Sales of Bamboo Spark, an existing model of digital stationery that

transforms handwritten notes on paper into digital ink for editing and

sharing, decreased significantly. In September, we introduced the next

models Bamboo Slate and Bamboo Folio to establish a category of

digital stationery.

Sales of stylus products for iPad largely decreased. We introduced

new models in September to recover sales.

We provided Wacom Cloud services to store and utilize digital ink

through cloud services.


DTU-1031DTU-1141

STUシリーズSTU-540/430

DTH-2242DTK-1651


Brand Business

Business Solution 2.98 bn -20.4%

Sales dropped largely in the Eurozone due to changes in the competitive

environment such as the expansion of electronic payment by mobile devices

as well as the strong yen.

STU series expanded in unit shipments owing to increased demand for

digital signature solutions for credit card transactions and over-the-counter

services at retailers in Japan and public services in India.

Sales of LCD signature tablets, the DTU series decreased due to a drop of

the number of projects, despite DTU-1141 adoption by Citi Bank Korea.



Tech. Solution Business

Pen Sensor System

for Smartphones 12.26 bn -12.4%

Mass production for Samsung’s Galaxy Note 7 expanded in Q2, but sales

decreased due to the strong yen. The recall of Samsung’s Galaxy Note 7

led to discontinuance of production for the Note 7 in H2.

Shipment for Galaxy Note 5 remained stable, which contributed to sales.

Continued pen technology development for the next generation model.

Focused on automation of a new cartridge-type digital pen.

Continued new customer development efforts.

21.25 bn -7.0%

Smartphone models


Tablet ・PC models

Tech. Solution Business

Pen Sensor System

for Tablets 8.27 bn +15.0%

Sales of the Active ES pen solution increased with favorable demand

from tablet PC manufacturers, including orders from Huawei.

Successful products such as Lenovo Yoga Book increased demand for

EMR pen.

Sales increased despite the strong yen and discontinuation of orders of

educational tablets for the government of Turkey.

Developing a standardized digital pen for Windows 10 OS tablets with

Microsoft.

Adoption of a pen sensor system was expanded for Google

Chromebook.

Pen Sensor System

for Notebook PCs 0.73 bn -56.0%

Demand continued to shift from notebook PCs to 2in1 tablets.



(Unit: JPY)Business Highlights:Other Business

CAD software and others 0.48 bn +2.4%

Sales of major product ECAD DCX series remained a favorable level.

+2.4%0.48 bn

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.

Held Connected Ink events in Shanghai, Berlin, Tokyo and Las Vegas in May, September, October, 2016 and January, 2017 to promote digital ink. Established the Digital Stationery Consortium and started its operation from October.


Sales by Product Line in Brand Business

18,552 17,074

3,6342,646

9,805

9,274

1,846

1,034

3,739

2,976

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q3 FY 03/16 Q3 FY 03/17

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

-27.2%

- 8.0%

-5.4%

-20.4%

33,004

37,576-12.2%

Creative

biz

31,991

Creative

biz

28,994

-9.4%

-44.0 %

(Unit: Million JPY)

Change

Ratio


Sales by Product Line in Tech. Solution Business

13,99312,255

7,1928,268

1,662731

0

5,000

10,000

15,000

20,000

25,000

Q3 FY 03/16 Q3 FY 03/17

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

-56.0%

+15.0%

-12.4%

21,25422,847

-7.0%(Unit: Million JPY)

Change

Ratio


0

5000

10000

15000

20000

25000

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 16/10-12

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

Quarterly Trend by Product Line

20,786

13,669

18,342

24,954

17,592

15,142

23,814

21,936

16,676

13,261

20,535 20,943

(Unit: Million JPY)


Sales by Region

22,847 21,254

5,5665,120

12,31410,104

11,543

10,045

8,622

8,216

0

10,000

20,000

30,000

40,000

50,000

60,000

Q3 FY 03/16 Q3 FY 03/17

Tech. Solution Japan U.S. Germany Asia Oceania

(-7.6%)

(-2.4%)

-4.7%

-17.9%

-8.0%

-7.0%

-13.0%

60,892

54,739

※4,158

※4,257

(※+16.5%)

-10.1%(Unit: Million JPY)

Change

Ratio※Sales in China

of Asia Oceania

(※% growth based

on local currency)

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

( ) % growth based

on local currency


（Ref.） Sales Changes in Local Currency Base

Region CurrencyYOY

Change Ratio

Japan(excluding Tech. Solution biz)

JPY -8.0％

U.S. USD -7.6％

Europe EUR -2.4％

China CNY +16.5％

Korea KRW +9.5％

Australia AUD -0.7％

Singapore USD +9.4％

Hong Kong USD -32.2％

Taiwan NTD -6.5％

India INR +51.2％


0

5,000

10,000

15,000

20,000

25,000

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 16/10-12


Quarterly Trend by Region

20,786

13,669

18,342

24,954

17,592

15,142

23,814

21,936

16,676

13,261

20,53520,943

(Unit: Million JPY)



Consolidated B/SKey Changes

Assets

・ Increase in notes and accounts receivable (sales increase in Brand Business) 3,762

・ Increase in cash and deposits 2,870

Liabilities

・ Increase in long-term loans 8,000

・ Increase in notes and accounts payable

2,688

Net Assets

・ Decrease in shareholders’ equity(decrease by net loss and dividends paid, etc.)

-3,798

End of Mar. 2016

End of Dec. 2016

Change

Current Assets 37,874 44,597 6,723

Non-current Assets 13,693 13,519 -174

Total Assets 51,567 58,116 6,550

Current Liabilities 16,479 19,488 3,009

Non-current Liabilities 3,992 11,473 7,481

Total Liabilities 20,470 30,961 10,491

Minority Interest in

Subsidiaries 0 0 0

Net Assets 31,096 27,156 -3,941

Total Liabilities and Net Assets 51,567 58,116 6,550

Equity Ratio 60.0% 46.5% -13.5%

(Unit: Million JPY)


Consolidated C/F Major Activities in Q3 FY 03/17

C/F from operating activities

・ Increase in notes and accountspayable-trade 2,550

・ Depreciation 1,883

・ Net profit before tax 409

・ Increase in notes and accountsreceivable-trade -4,617

C/F from investing activities

・ Purchase of fixed assets -2,721(global IT infrastructure, etc.)

・ Proceeds from sales of property 530 (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 -2,957

・ Purchase of treasury stock -753

Q3

FY 03/16

Q3

FY 03/17

YoY

Change

04/15-12/15 04/16-12/16 Amount

C/F from operating

activities1,302 1,598 296

C/F from investing

activities-3,553 -2,241 1,312

C/F from financing

activities1,208 3,300 2,092

Effect of change in

exchange rate -134 213 347

Increase-decrease of

cash & cash equivalent -1,177 2,870 4,047

Beginning balance of

cash & cash equivalent 16,687 14,365 -2,322

Ending balance of cash

and cash equivalent 15,510 17,235 1,725

(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.


Unit of

sensitivityPer 1 JPY in case of the stronger JPY

FY 03/17 (forecast) (for ref.) FY 03/16 (actual)

Currency USD EUR USD EUR

Sales -460 -130 -400 -112

Operating Income +10 -90 +33 -71

Assumptions for FY 03/17 Financial Forecast

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

Revised our consolidated financial forecast, based on recent forex fluctuation and our

further market review in mid January, 2017.

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 February, 2017

1 USD = 110 JPY (YOY +9.4% stronger JPY) (prev. assumption 103 JPY)1 EUR = 120 JPY (YOY +9.7% stronger JPY) (prev. assumption 114 JPY)

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

(Unit:

Million JPY)


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 70,300 71,500 1,200

Operating Income -500 -0.7% -500 -0.7% 0

Ordinary Income -650 -0.9% -650 -0.9% 0

Net Profit aft. tax -1,500 -2.1% -1,500 -2.1% 0

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

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

Sales 77,568 71,500 -6,068

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

(Unit: Million JPY)

(vs. Previous Forecast as of Nov. 9)


(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 70,300 71,500 1,200 1.7%

Brand biz 48,400 45,700 -2,700 -5.6%

Tech. Solution biz 21,200 25,100 3,900 18.4%

Other biz 700 700 0 0.0%

Operating Income -500 -500 0 0.0%

Brand biz 7,300 6,500 -800 -11.0%

Tech. Solution biz 900 2,000 1,100 --

Other biz 100 0 -100 -100.0%

Corp. and others -8,800 -9,000 -200 2.3%

profit margin % -0.7% -0.7%

(Unit: Mil JPY)

(vs. Previous Forecast as of Nov. 9)


Major factors of Sales Forecast Revision by Seg. -1-

• Brand Business: Sales forecast was revised downward due to the rapid changes of competitive

environment in Business Solution and the delay for a part of new product development in Creative

Business.

Creative Business

• As for pen tablet products, new Intuos Pro series were launched on schedule. But slower sale

of existing models, Intuos series are expected to lower overall sales. (impact: -400 mil.)

• As for display products, a new 13 inch model was launched in Q3. Delay of 16 inch model

launch in H2 is expected to lower overall sales. (impact: -700 mil.)

• As for mobile products, new models were launched on schedule in Q3. Despite favorable sales

of 16 inch models, slower sales of 13 inch models were expected to lower overall sales.

(impact: -600 mil.)

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

Consumer Business

• Delay of new model launch in stylus products is expected to lower overall sales. (impact: -100 mil.)

Business Solution• Rapid changes in competitive environment are expected to lower overall sales mainly in Europe.

(impact: -900 mil.)


Major factors of Sales Forecast Revision by Seg. -2-

• Technology Solution Business: Sales forecast was revised upward owing to a clearance of

remaining materials for Galaxy Note 7 and a favorable sales for tablet PCs.

For smartphones

• Prompt clearance of remaining materials for Galaxy Note 7 by Samsung, and continued

shipment for existing Galaxy Note 5 are expected to further increase overall sales. (impact:

+2,400 mil.)

For tablet PCs and notebook PCs

• Favorable sales trend of digital pen-enabled tablet models in PC market is expected to further

increase overall sales. (impact: +1,500 mil.)

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


New products in FY 03/17 (as of January)Brand Business Creative Business

8mm thick and sleek design using premium materials

4 times higher pressure ranges with Wacom Pro Pen 2

Paper Edition offers a new paper-to-digital workflow

with Finetip Pen or Ballpoint Pen


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

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


Brand Business Consumer Business

Inkspace,

Bamboo Paper



Other Business CAD Software

DTK-1651STU-540

ECAD DCX 2017

Brand Business Business Solution



• Started operation in October, 2016

• 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 Las Vegas

January 6, 2017

http://www.digitalstationeryconsortium.org/


Investment, depreciation and R&D Capital expenditure

3.80 bn JPY (YOY -21.8％) (no revision)

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

Depreciation

2.60 bn JPY (YOY +29.8％) (no revsion)

・ 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 03/17Dividend 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) (no revision)

• Payout ratio --% (128.6% for FY 03/16)


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


(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 71,500 -6,068 -7.8%

Brand biz 48,931 45,700 -3,231 -6.6%

Tech. Solution biz 27,974 25,100 -2,874 -10.3%

Other biz 663 700 37 5.6%

Operating Income 3,664 -500 -4,164 --

Brand biz 8,036 6,500 -1,536 -19.1%

Tech. Solution biz 3,130 2,000 -1,130 -36.1%

Other biz 36 0 -36 -100.0%

Corp. and others -7,538 -9,000 -1,462 19.4%

profit margin % 4.7% -0.7%

(Unit: Mil JPY)

(vs. previous fiscal year)


（Ref.）Sales Forecast by Business Segment

48,931 45,700

27,97425,100

663700

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)

Brand biz Tech. Solution biz Other biz

+5.6%

-6.6%

-10.3%

-7.8%77,568

71,500

(Unit: Million JPY)

Change

Ratio

（YOY change）


24,148 22,700

4,453 4,800

13,223 12,600

2,1491,500

4,9584,100

0

10,000

20,000

30,000

40,000

50,000


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

-30.2%

+7.8%

-6.0%

-4.7%

-17.3%

48,931-6.6%

Creative

biz

41,824

45,700

Creative

biz

40,100

-4.1%

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

(Unit: Million JPY)

Change

Ratio


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

16,35312,900

9,532

10,600

2,089

1,600

0

5,000

10,000

15,000

20,000

25,000


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

-23.4%

+11.2%

-21.1%

25,100

27,974-10.3%

（YOY change）(Unit: Million JPY)

Change

Ratio


27,974 25,100

7,9147,720

15,63114,210

14,84513,800

11,204

10,670

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000



-4.8%

-9.1%

-2.5%

-10.3%

-7.0%

注）ﾃｸﾉﾛｼﾞｰｿﾘｭｰｼｮﾝ事業は所在地別区分なし

77,568

-7.8%

71,500

（Ref.）Sales Forecast by Region （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.


1


our brand

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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