wacom annual report 2009

Annual Report

2009Creating harmony betweenpeople and technology

We looked inside ourselvesto find the thought that definesand drives everything we do.

An idea that helps us openup to experience the worldin a new way.

An idea to drive us forward.

2

Open up. Sense more.An idea. A dream. An inspiration.

3

The key to our success

Business Model

Our milestones Our Business

Board of Directors/Corporate Governance Financial Section Corporate DataInvestor Information

34

17183940

89

5Our message to you.

Where are we now?

11Our global model 15

DISCLAIMER

Contents

0

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30,000

35,000

0

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2,579

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20,000

944

2,146

21,033

25,152

29,221

25,631

(Millions of yen) (Millions of yen) (Millions of yen)(Millions of yen)

Wacom Co., Ltd. and Its Subsidiaries Years ended March 31

For the year: Net sales Gross profit Operating income Net income

At year end: Total assets Total net assets

Per share (yen and U.S. dollars) : Net income

Primary Diluted

Cash dividends applicable to the year

¥33,809,13816,761,1644,311,3782,579,025

17,796,487

¥ 6,213.936,197.783,000.00

$344,183 170,63243,89126,255

$260,929 181,172

$ 63.26 63.09 30.54

¥36,739,19618,640,3555,538,8713,501,360

¥29,221,33018,516,742

¥ 8,348.748,304.382,500.00

2008 2009 2009Thousands of yen

Thousands ofU.S. dollars*

*Note 1: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥98.23=U.S.$1, the approxima te exchange rateMarch 31, 2009 .

17,651

’05 ’06 ’07 ’08

36,73933,809

’09 ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08 ’09

Net sales Net income Total assets Total net assets

6,699

13,288

16,320

Financial Highlights

prevailing on

17,796

2,853

The key to our success

18,516

23,992

28,787

14,109

¥25,631,057

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 sectors, including medical firms, educational institutions, transportation/shipping 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 such as traveling executives, doctors and truck drivers. We incorporated pen-sensor components into Tablet PCs so that handwritten notes can be added more easily to documents during meetings and interviews. This makes data entry faster and more natural and efficient than ever before.

Our pen tablets continue to be adopted into new application areas, and we are committed to the ongoing develop-ment of exciting new technologies. Our aim is to revolutionize both the workplace and the home with our 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.

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Jun. 1988

Sep. 1998

Jun. 1999

Nov. 1999

Mar. 2000

Sep. 2001

Apr. 2003

Nov. 2003

Apr. 2004

Feb. 2005

Apr. 2005

Dec. 2005

Apr. 2006

May 2006

Feb. 2007

Jan. 2008

Nov. 2007

Oct. 2007

May 2007

Sep. 2007

Aug.1991

Jul. 1983

New Hewlett-Packard Company (HP) notebook PC for the consumer market adopts Wacom Penabled DualTouch technology

Berliner Sparkasse adopts Wacom LCD signature tablet for digital signature solution for its private client centers

Launch of Cintiq 12WX interactive pen display as a mobile companion, and as a secondary monitor in multi-monitor environments

Celebrated 25th anniversary, and announced new growth vision and new brand concept “Open up. Sense more.” for the future

Bamboo, with “Certified for Windows VistaＴＭ” compatibility, is launched for general consumer and business PC users

Received the first “Disclosure Newcomer Award” from the Tokyo Stock Exchange

Wacom Singapore Pte Ltd. (a fully owned subsidiary) is established in Singapore as a sales base for the South and Southeast Asian markets

Penabled DualPad is developed as a new pen and touch input device for mobile information products

Our stock is listed on the First Section of the Tokyo Stock Exchange

Wacom Australia Pty. Ltd. (a fully owned subsidiary) is established in North Ryde, NSW, Australia, as a sales base for the Oceania market

Cintiq 21UX launched, setting a new standard for digital pen-based imaging

Wacom Digital Solutions Co., Ltd. (presently Wacom Korea Co., Ltd., 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 Corporation (a fully owned subsidiary) is established in Beijing as a sales base 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 Corporation (a fully owned subsidiary) is established in Vancouver, Washington, U.S.A., as a marketing and sales base in the Americas

Wacom Computer Systems GmbH (presently Wacom Europe GmbH, a fully owned subsidiary) is established in Neuss, West Germany, as a marketing and sales base in Europe

Operation of Electronic Systems and Devices (ESD) and Engineering Collaborative Solutions (ECS) businesses beginsWacom Co., Ltd. is established in Ageo City, Saitama, Japan, with common stock of 48 million yen

Our milestones

Wacom Hong Kong Ltd. (a fully owned subsidiary) is establishedin Hong Kong as a sales base in the South China

May 2009 Launched Intuos4 professional pentabletsAnnounce of developing a new user interface device for professional DJ

Feb. 2009 The first digital notary document was signed on an CIntiq 12WX in France

Oct. 2008 Announce of development of a high performance multi-touch sensorcomponentWacom Taiwan Information Co., Ltd. (a fully owned subsidiary) is establishedin Taiwan as a marketing and customer service base for Taiwan market

Sep. 2008 ECAD/dio Ver. 9.0 released

We are pleased to present Wacom’s Annual Report for our 26th fiscal year, representing results from April 1, 2008 through March 31, 2009.

Our corporate vision is “creating harmony between people and technology.” We achieve this by providing tools and inspiration to help make our world a more creative place. We’ve designed our user interface solutions to be natural to use and people-friendly, and we are proud that our pen tablet products are used throughout the world in some of the most amazing digital art, films, fashion designs, medical and other industry projects.

As digital technology becomes an integral part of our lives, we know that intuitive, simple-to-use interface solutions will play an increasingly crucial role. We want to take a fresh new look at this brave new world and create solutions to enhance and enrich lives – supporting you to enjoy a life of creativity.

5

Our message to you.

Masahiko YamadaPresident & CEO

The world’s first tablet operated by cordless

electronic pen developed.

Core technology established with electronic pen.

Growth strategyInput

market

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AD

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Dig

ital

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Internet Multi-touchUbiquitousBroadband

Developmentand sales of ECAD

Electronicseals and

other securityapplications

Pen sensorcomponents

Interactivepen displays

Tablets forconsumer use

Tablets forprofessional

use

・Strengthening of the leadership in tablet business・Expansion of components business・Improvement and global development of branding・New Business Development, R&D

Pen Input

Development and Sales

Touch sencercomponents

Digitizerand software

Technology, expertise,and sales of PDM

6

Wacom enhances the life experienceby creating harmony between people and technology.

7

How did we do in our 26th year?

Where are we heading in our 27th year?

Your dividend

Our message to you

The 26th fiscal year was marked by the unprecedented scale of changes in the global economy. The financial crisis, rapid economic slow down and currency exchange rate fluctuation were among these changes and Wacom’s business was not free from their impact. Even today, the global economy seems full of uncertainties and recovery seems slow in coming.

Up to Q2, in spite of the signs of slow down, our business grew steadily and achieved a record in revenue and profit. However, the trend changed dramatically in Q3 as the financial crisis spread from the United States to all key regions. Channel contraction started and the Japanese currency appreciation gained pace. As a result, we had to make forecast adjustments twice during the second half alone and closed the fiscal year with negative growth in both revenue and profit.

While this business result was not in line with our original expectation, we were able to make significant progress in the areas of R&D and product development. We developed an original multi-finger touch technology that detects an unlimited number of fingers with high precision and speed, new generation digital DJ equipment “nextbeat”, as well as the development and launch of “Intuos4 series” a new generation of professional pen tablets. These successful projects laid the foundation for our growth into new business segments. Also, we continued to enhance our infrastructure in emerging markets by the founding of Wacom Taiwan and a new logistic center in Singapore. “Open up. Sense more,” the new corporate brand concept introduced in FY26 is gaining momentum and has started to have positive effects on our business. At a corporate level, the settlement of Chinese IP litigation, and the J-SOX compliant internal process were among key activities we focused on.

As a result, for the fiscal year ending March 31, 2009, we recorded net sales of ¥33,809 million (down 8.0%), operat-ing income of ¥4,311 million (down 22.2%), ordinary income of ¥4,179 million (down 25.1%), and net income of ¥2,579 million (down 26.3%).

To thank you for your support and reflecting the financial result of the fiscal year, we offered an ordinary dividend of ¥3,000 per share to our shareholders as of March 31, 2009. Also, we completed the repurchase of 20,000 shares as part of the investor return for the first time. 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.

We are committed to enhancing our corporate value with ongoing development of exciting new technologies, invest-ing in talented people and strengthening our business infrastructure, thus accelerating our business growth and achieving increased profitability. We also take seriously our social responsibility as a global company and corporate citizen, and will continue to improve our corporate gover-nance and compliance.

Your support is invaluable to us and is essential to our continuing success. We thank you very much for your unchanging support.

For the 27th fiscal year, we expect on-going uncertainty in the global economy. The potential risk of further deteriora-tion and high volatility in the currency exchange rates may become real if key regions cannot keep consistent fiscal policies and stimulus packages. Under such circum-stances, we take operational stability as the first priority, and will proactively manage the business risk.

On the other hand, we are witnessing the increase in demand for digital content on a global scale and emerging

markets maintain their growth. Also a new user interface field is opening up as multi finger touch operation is introduced to PC platforms by Windows 7 the new (OS) operating system from Microsoft. Taking on opportunities for long term growth, we will continue to invest in new technologies, new business segments, as well as make further infrastructure developments.

Taking into account our business outlook and necessary investments for the future, we project net sales of ¥35,500 million (up 5.0%), operating income of ¥3,550 million (down 17.7%), ordinary income of ¥3,500 million (down 16.2%), and net income of ¥2,130 million (down 17.4%) for the fiscal year ending March 31, 2010.

8

Business Model

Customers

Engineering CollabortaviceSystems Business (ECS)

Electronic System & DevicesBusiness (ESD)

Management Platform

R & DMarketing &

Sales

Supply ChainManagement

ProductManagement

Partnerships

User Needs

• Professional pen tablets• Consumer pen tablets• Interactive pen displays• Pen sensor components• Touch sensor components• New business development

• CAD systems for electrical engineering• CAD systems for mechanical engineering

• Graphic Design film, animation, comics, games, automotive,advertising, broadcasting, etc

• Medical hospitals, dental clinics, medical offices, etc.

• Education universities, schools, prep schools, e-learning, etc.

• Business office systems, shop systems, call centers, signature verification, etc.

• Administraion national and local government

• Pen Sensor Technology PCs, mobile phones, PDAs, games, ePaper, etc.

• Touch Sensor Technology PCs, mobile phone, games, ePaper, POS terminal, digital signage, game console, TV, etc.

• Control Panel Industry

• Electrical Machinery Industry

• Machine Assembling Industry

• Automotive Industry

• Food Industry

• Medical Equipment Industry

• Operating Systems (OS) vendor• Application vendor

• Display vendor• Stationary goods / vendor

mage created by Ted Blore

9

Where are we now?The next generation –professional pen tablet Intuos4 is here!

We developed a high performance multi-touch sensor forcoincidence detection of multiple fingers

Wacom unveiled the long anticipated Intuos4, a revolutionary new professional pen tablet for the field of illustration, animation, web, movie film and industrial design in March 2009. It was available through most national electrical stores and our own online shops from April.

The Intuos series provides indispensable functionality for high-quality digital content production and has already received high praise as a de-facto standard tool by professionals.Intuos4, the highest performance professional pen tablet yet, was developed as a design tool to offer increased precision, control and productivity to the user. Based on analysis of the user’s work flow, Intuos4 was designed using new User Centered product design techniques incorporating universal design and ergonomics. It is equipped with a newly developed IC (integrated circuit) and sensor, which offers near-zero (one gram) starting pen pressure against the tablet surface, as well as delivering 2,048 levels of pressure sensi-tivity, doubling that of previous models. Intuos4 provides users with a natural writing and drawing feel, just like traditional pencils and paint brushes.

Wacom aims to sell 500,000 units worldwide within the first year from when the product was launched.

Wacom developed the original high performance multi-touch sensor system which offers users the means to navigate and control input on a computer display with multiple fingers.

Wacom applied cultivated high precision sensor technology with pen tablet technology for the detection of multiple fingers, and adopted the original technology for the IC controller of the touch sensor. Wacom’s multi-touch sensor system realizes high speed and high precision position sensing of unlimited numbers of finger touch as well as featuring incredible stability, even when installed in notebook PCs of which power consumption is limited in battery mode.Windows 7, Microsoft’s next generation OS, newly supports touch input solutions as a standard function. Wacom offers the promising multi-touch sensor system to the market for notebooks and desktop PCs as well as larger LCDs and aims at further expansion of its component product sales.

Wacom’s interactive pen displays were adopted as the most intuitive and flexible interface tool available. More than 100 pen displays were installed on all seats and form the centerpiece in the Advanced Concept Teaching Space “ACTS” of the University of Queensland in Australia.

The lecture space offers such innovative teaching services that partici-pants can communicate via pictures and words, take notes and review them using interactive pen displays. New lecture styles will continue to be developed using the futuristic system described in this case study. In Japan, about 2,600 educational institutions have already adopted a total of 80,000 units of Wacom’s pen tablets and they are enjoying a high standard of learning using our tools.

The French Government recog-

nized the importance of digital

signature technology and the law

was enacted which authorizes

documents to be signed with a

digital signature. In the launch

ceremony of the digital notary

document system which realizes

a totally paperless process, the

first sample was signed on

Wacom’s Cintiq12WX.

The digital notary document system makes it possible to simplify and

speed up procedures in legal process. For example, while French notaries

had to autograph each legal sheet of about 40 pages in the previous

notary system, the new system needs just one digital signature for one

notary document.

Furthermore, notaries and other legal professions expect that electronic

signatures will contribute to saving paper and improving information

security.

The first digital notary document was signed onan interactive pen display in France.

10

Interactive pen displays are the centerpiece of a new advanced concept teaching space in the University of Queensland in Australia.

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Our Businesses

ESD(Electronic Systems and Devices)

We have two types of pen tablets; both open up a world of possibilities and help our customers experience more. Our high-performance, professional range is for specialists and skilled amateurs. Our consumer pen tablets are for more general users and are easy and fun to operate.

Our interactive pen displays enable users to write, draw, sketch and scribble directly on the screen. Without getting too technical, this is due to the pen sensor being incorporated into the LCD display. Almost all Tablet PC manufacturers worldwide use our pen sensors. Our components allow notebook PCs to be operated with a digital pen or even with the touch of fingers. Our multi-touch sensor system which realizes with high-speed and high-precision, position sensing of

multiple fingers also is being developed.

Our successful and varied product line-up makes us the clear leader in the pen tablet market. We command an impressive 86 percent of the global market (our estimate) and 95.4 percent of the Japanese market (BCN research 2009). It will not stop there. We expect the market to accelerate substantially. Not only Windows Vista installed pen input function as standard, but also next generation OS Windows 7 will support multi-touch input in addition. We believe our compo-nent business will be the way forward.

Our company is made up of two business sectors – Electronic Systems and Devices (ESD) and Engineering Collabora-tive Solutions (ECS). ESD develops and manufacturers pen tablets and pen sensor components as well as touch technologies. These are the tools that enable users to input digital data in the same way as using a traditional pen on paper or a paint brush on canvas. ECS develops CAD-based software packages and related systems for the manufac-turing industry.

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Pen tablet families

Our professional pen tablets – Intuos4Throughout the world, our professional range is unrivalled and acknowl-edged to be an industry standard with our unique technology, high performance and quality. It has also been highly acclaimed by our customers: those professionals who create inspirational movies, anima-tion, digital art, advertisements and web designs. The Intuos4, enjoys a high reputation for the new product design techniques, incorporating universal design and ergonomics, as well as for a design tool to offer high productivity to professional users.

Our consumer pen tablets – BambooBamboo, our new consumer family of pen tablets, provides a natural-to-use tool for expressing creative ideas and communicating in a unique and more personal way. We have used all of our skill and experience from our professional market products to create Bamboo, incorporating the quality and user-friendly features synonymous with our products. Bamboo can be used and enjoyed by everyone: male or female, young or old. Our best -selling models are Bamboo and Bamboo Fun. The former unlocks powerful, pen-based features found in current operating systems, particularly Microsoft Windows Vista. Bamboo Fun enables users to intuitively draw, paint, sketch, write or retouch digital photo-graphs. To sum it up, Bamboo is a new, fun way of working with a computer.

Our interactive pen displays – Cintiq & DTX/PLProviding the freedom to work with the pen directly on screen, our interactive pen displays come in two ranges: the Cintiq, which is designed for professional graphic artists, and the DTX/PL Series, which is for more general users. Cintiq interactive pen displays include the high performance and functionality and are used by many professionals from photographers to car designers. Not just for the graphics market, these pen tablets are also invaluable for a variety of additional tasks such as medical recording, educational systems opening of a bank account, digital signature and order processing.

Our ComponentsNot only are our pen sensor components incorporated into our own high-quality products, but other companies use them. Our brand name for this patented sensor technology is “Penabled.” The Penabled family now offers user interface technology solutions to most Tablet PCs. Moreover, we are developing a multi-touch sensor system which realizes high performance position sensing of multiple fingers.

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Wacom Solutions

Medical care

Education

Business

Meetings and presentations

Not only are they essential tools for graphics professionals, our pen tablets are also garnering praise in other fields, such as healthcare, education and business. Pen input technology is changing lives by replacing the constraints of pen and paper with the advanced functionality of digital products.

Did you know that our interactive pen displays have become popular in a variety of medical areas, including electronic medical charts, pathological reports, endoscopic diagnostic systems, nursing support, diagnostic imaging and bedside terminals? For example, by using digital medical charts instead of conventional paper-based records, medical information can be shared more easily within differ-ent hospital departments. Handwritten data and sketches are also being input digitally during interviews and surgical operations. Crucially, this saves time and effort. These charts also significantly reduce the storage space required for medical data and enable easy access to important information.

Presenting educational materials on a screen using a PC and a projec-tor has become common practice in educational institutions from primary and secondary schools, colleges and universities to profes-sional schools, training centers and private e-learning programs. With interactive pen displays, teachers and lecturers can write notes or draw diagrams directly on the LCD display, which are then displayed instantly on the large screen for all to see. In addition, the use of TV phones and web-based whiteboards helps with remote instruction and the online correction of student work.

The use of interactive pen displays is increasingly common among businesspeople in order centers, call centers, cosmetic and beauty salons, corporate and governmental office reception areas and in industrial design environments. The digital pen can be used to capture information during face-to-face meetings with customers, where data in a corporate style can be entered using a handwriting interface. This is simply not possible with a keyboard. Consequently, our pen technology is opening up fresh opportunities in the business arena.

Using an interactive pen display can bring meetings and presenta-tions to life. During discussions, digital data can be viewed on an LCD and notes and amendments added and stored spontaneously during the meeting. Not only can the use of such a product help speed up decision-making and communication, but it can also prevent the need for large volumes of photocopying. Using a digital pen to highlight information in real time makes the message stronger, more immediate and easier to comprehend.

Lovely 3D graphicscharacters harmonizedwith inspiration andtechnology

ECS

ECAD/dio

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Mr. Hiroshi Yoshii is one of the most promising illustrator and character designers in Japan. He began to use the Wacom pen tablet in 1992. He always uses three units of the professional pen tablet, “Intuos4” as well as “Cintiq 12WX”.He had been known as a user of Corel’s “Painter” before, however, has shifted to 3D graphics recently. Now he prefers “ZBrush” and “modo”, specializing in crystallizing graphic characters for his clients’ needs with little direction.His current work is a short animation series, “YANS! GANS! (MEAT OR DIE)” in charge of character design.

Library

Design/DevelopmentPlanning/Sales

M

aintenance/Market Demand Manufacturing

Meta-Info/BOM Bus

LANDMARK VIEW Harness Designer WIRE-CAM

SolidWorks Routing

Mitsumori Ban-chan

wiring listParts management

ECAD/dio

Our ECS business develops CAD systems for electrical engineering firms that specialize in the design of electrical appliances and control equipment, as well as mechanical engineering firms. ECAD/dio, Japan’s leading CAD system for electrical design, streamlines overall operations by helping users to create electrical system design diagrams, while synchronizing design data with control equipment and peripheral devices.

15

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 and Taiwan. In addition to these subsidiaries, we also have sales bases in Shanghai and Moscow. Each of our regional subsidiaries performs multiple functions. These functions are carried out with localized execution approaches and staff to help forge close regional ties. We believe that this balanced approach between global strategy and localized execution maximizes our strength as a global company and helps us to continually offer dynamic products and services that exceed customer expectations. This has been proven by the fact that the percentage of our overseas sales was 77.9% in our 26th fiscal year.

Our market is global, and therefore it is vital to our success that we continue to enhance our global organi-zations and optimize our business models to offer leading technology, and the most competitive products in terms of features, quality and value across the globe.

Marketing and product managementThe United States is home to the world’s most advanced computer graphics market, so naturally this is where we concentrate on building new partnerships and planning new professional products. The focus for our consumer products is different however. For our consumer products, we focus on Europe, which covers the widest range of use patterns and is the most competitive market, and Japan, where consumers are keen for new trends and demand highly sophisticated products. Asia/Oceania, typical of an emerging region, shows very strong demand in the corporate sector. Therefore, our current emphasis in this region is on business products.

Product developmentJapan is where we develop most of our technology and design hardware products. This is due to the country’s strong infrastructure for technological development, as well as its geographic location being close to our main manufacturing bases in China and Taiwan.

The development of our driver software is performed in the United States. Here, we are close to all the global OS developers, such as Microsoft and Apple, as well as leading software application developers. This proximity allows us to work in close partnership with these companies in developing emerging OS and application standards.

ManufacturingWe focus on developing optimal manufacturing models for cost, scalability and product quality leadership. To achieve this, all critical components continue to be made by Wacom, and all high-volume manufacturing is done by partners in China and Taiwan. These manufac-turing partners are under the guidance of our QA division to ensure the highest and most consistent product quality. We also have a supply chain manage-ment (SCM) base in China.

We regularly organize global executive conferences for strategic planning, business updates and knowledge-sharing. These conferences provide a platform for us to build and promote our corporate vision and business strategies, and reinforce our company’s global position as the industry leader.

16

Wacom

Asia/Oceania

Asia/Oceania

Sales Breakdown by RegionDomestic Market ShareGlobal Market Share

Japan

Japan

America

For the year ended March 31

(Millions of yen)

America

Others Others

Europe

Europe

Source: Wacom’s estimateSource: BCN research

86%

9.5%

23.7% 37.8%

29.0%

’07 ’08 ’09 ’07 ’08 ’09 ’07 ’08 ’09 ’07 ’08 ’09

6,417

8,449

2,254

3,691

11,03

0

13,57

09,08

6

11,03

07,99

5

42,68

8

52,19

1

55,35

8

3,224

12,77

3

9,816

77,65

5

96,64

4

97,55

8

Wacom95.4%

Wacom Technology CorporationWacom Technology Corporation was established in 1991 in Vancouver, 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 professional pen tablets, and the development of driver software.

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 consumer pen tablets. The company provides market support in eight languages.

Wacom China CorporationWacom China Corporation was established in 2000 in Beijing. The company established and implemented a unique sales strategy for low-price tablets in the Chinese market. Its Shanghai Office is respon-sible for sales in the southern region of China as well as the component business nationwide.

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.South Korea is the most advanced country in the world in Internet usage and the market is expected to grow further.

Wacom Australia Pty. Ltd. Wacom Australia Pty. Ltd. was established in April 2005 in North Ryde, 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. (Hong Kong)Wacom Hong Kong Ltd. was established in May 2006 in Wanchai, Hong Kong, as a sales base for Hong Kong market.

Wacom Taiwan Information Co., Ltd. (Taiwan)Wacom Taiwan Information Co., Ltd. was established in October 2008 in Taipei, Taiwan, as a marketing and customer service base of tablet and component business for Taiwan market.

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 Global Marketing and Sales Division, Wataru Hasegawa Chief Financial Officer, Sadao Yamamoto R&D Division, Takeshi Oki General Affairs Division, Hidetoshi Kamoto Component Business Division, Yuji Wakabayashi ECS Division, Masahiro Oba Supply Chain Management Division, Koji Shimoda Product Management Division, Joseph Deal Wacom Technology Corporation, Han Stoffels Wacom Europe GmbH

Board of Directors

Execution of Operations, Audit, and Internal Control Systems as of July 1, 2009

General Meeting of Shareholders

Internal Audit Office

Chief Executive Officer

Corporate Management Meeting(11 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(6 Directors )

Risk Hotline

Election/dismissal Report

(From the left)Sadao Yamamoto, Masahiko Yamada, Yasuyuki Fujishima, Shigeki Komiyama, Takeshi Oki, Wataru Hasegawa

The Board of Directors and Board of Corporate Auditors are responsible for corporate governance at Wacom. We currently have six 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 respon-sible for the internal control of compliance, information security, risk management and elimination of anti-social activity. Furthermore, we have established a risk hotline system, operated by an independent organization, to monitor and minimize potential damage associated with compliance risks.

Five-Year Summary

Overview of Business Performance

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Auditors

19

20

23

25

26

27

28

38

Corporate data39

Investor Information40

Contents

Financial Section

18

4,311

16,761

’05 ’06 ’07 ’08

(Millions of yen)

0

5,000

10,000

15,000

20,000

25,000

35,000

40,000

30,000

’09 ’05 ’06 ’07 ’08 ’09 ’05 ’06 ’07 ’08

(Millions of yen) (%) (Millions of yen) (%)

0

5,000

10,000

15,000

20,000

35

40

45

50

55

0

1,000

2,000

3,000

4,000

6,000

5,000

0

5

10

15

20

30

25

’09

(For the year’s ended March 31) (For the year’s ended March 31) (For the year’s ended March 31)

Five-Year Summary

17,651

Net sales Operating income/Operating marginGross profit/Gross profit margin

For the year:Net salesGross profit Operating incomeIncome before income taxes Net income

At year end:Cash and cash equivalentsTotal net assetsTotal assets

Net income per share(yen and U.S. dollars):**

BasicDiluted

Equity ratio(%)***Return on equity (%)Number of employees

2006

¥23,992,20611,970,7623,424,3653,400,6782,145,821

10,342,64313,287,90421,032,863

5,420.515,283.96

63.221.5465

¥33,809,13816,761,1644,311,3784,179,6612,579,025

11,014,11417,796,48725,631,057

¥36,739,19618,640,3555,538,8715,564,0823,501,360

13,577,19418,516,74229,221,330

8,348.748,304.38

63.520.1584

2009

$344,183170,63243,89142,55026,255

112,126181,172260,929

20092008

¥28,787,06615,027,6414,564,5934,738,2192,853,274

12,707,15316,320,08125,152,191

6,886.196,784.24

64.919.3511

2007

¥17,650,9328,926,7081,841,3581,717,237

944,392

4,233,1876,698,503

14,109,303

9,826.499,386.80

47.515.2436

2005

Thousands of yenThousands ofU.S. dollars*

Year ended March 31Year ended

March 31

Five-Year Summary

Wacom Co., Ltd. and Its Subsidiaries

23,992

28,787

36,739

33,809

8,927

11,971

15,028

18,640

50.6

49.9

50.7

52.2

1,841

3,424

4,565

10.4

14.3

15.9

5,539

15.1

12.8

19

49.6

¥6,213.93¥6,197.78

69.414.2637

$63.26$63.09

*Note 1: U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥98.23=U.S.$1, the approximate exchange rate prevailing on March 31, 2009.**Note 2: Common shares were split on a five-for-one basis on November 20, 2003 and a four-for-one basis on November 18, 2005.

***Note 3: 20,000 shares were repurchesed as treasury stock for 1.85BJPY in 2009.3 F.Y..

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)

(%)

(%)

’05 ’06 ’07 ’08 ’09

’05 ’06 ’07 ’08 ’09

’05 ’06 ’07 ’08 ’09

(For the year’s ended March 31)



Overview of Business Performance

How did the global economy affectour business in our 26th year?

(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.

Wacom Co., Ltd. and Its Subsidiaries

Net income per share (basic)

ROE/ROA

Equity ratio

2,457

5,421

6,886

8,349

6,214

15.2

21.5

19.320.1

7.0

12.2 12.4 12.9

14.2

9.4

47.5

63.264.9 63.5

69.4

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.

20

Despite a sudden rise in materials our business in fiscal 2008, the year ended March 31, 2009 was satisfactory with the highest sales and net profit as a 1H result. On the other hand, we for the 2H faced the drastic global economic drop of the century, due to the global recession, caused by the financial crisis in the US in addition to a rapid appreciation of the Japanese yen against other currencies.

The Japanese economy entered a recessionary phase for the first time in six years, due to a decrease of corporate invest-ment in plant and equipment and sluggish consumer consumption. In the US., an unprecedented deepening of the financial crisis led to the bankruptcies of several major financial institutions, which in turn caused a further reduction in consumer spending, a corresponding decline in corporate profit and a credit crunch. The EU area also experienced the first recession since the introduction of Euro currency, despite steady growth in Germany at the beginning of the period. The economy in Asia-Oceania countries showed a slowdown of growth due to the Sichuan earthquake in China and the global recession as well as rapid depreciations of Asian local curren-cies, despite steady economic growth in China and India.

Under the above conditions, our performance in fiscal 2008 was lower compared to the previous fiscal year although the Company made the greatest efforts in reducing spending and so on.

On the technology development side, we devoted itself to developing the touch technology with its own IC technologies for Microsoft’s next OS, Windows 7. The high-performance multi-touch sensor technology was announced at WinHEC (Windows Hardware Engineering Conference) in November, 2008. In new business development, we also developed and announced the launch of a professional DJ interface device, “nextbeat” which is scheduled for an initial release in Japan and Europe next summer. In March, 2009 we announced the “Intuos4”, the latest product of the company’s main model Intuos series for the professional graphics field in four and a half years. The “Intuos4”, enjoys a high reputation for a design tool to offer high productivity to professional users.In the ASEAN area, we established a subsidiary in Taiwan and its logistic base in Singapore to enhance sales, marketing and customer service. For the intellectual property, we filed patent infringement lawsuits against Hanwang Technology Corpora-tion and entered into a comprehensive settlement agreement in April, 2008. We also enjoyed a smooth start for compliance with the Financial Instruments and Exchange Law (J-SOX) from the beginning of fiscal 2008.

As a result, the consolidated business results ended in sales of ¥33.81bn (-8.0% YoY), OP ¥4.31bn (-22.0% YoY), recurring profit ¥4.18bn (-25.1% YoY), and net profit ¥2.58bn (-26.3% YoY).




Overview of Business Performance Wacom Co., Ltd. and Its Subsidiaries

Our results by business sector

’09 33,058

’08 35,843

(Millions of yen)

(Millions of yen)

Sales

Operatingincome

ESD Business

DOWN 7.8%

DOWN 22.0%

6,211

’07

’09

7,961’08

2009

¥33,809

Sales Breakdown by Business

ECS Business 2.2%

751’09

897’08

(Millions of yen)

Sales

Operatingincome

ECS Business

DOWN 16.3%

49

DOWN 64.9%

’09

140’08

ESD Business 97.8%

2008

¥36,739ECS Business 2.4%

ESD Business 97.6%

21

Electronic Systems and Devices (ESD)businessGlobal sales of our pen tablets recorded lower sales compared to the previous fiscal year, due to the significant appreciation of the Japanese yen, despite its steady distribution.

In the professional graphics segment, total sales decreased compared to the previous fiscal year, due to the slowdown in sales of “Inuos3” in 2H, although the new product “Inuos4” was released and received a high evaluation in March. On the consumer tablet side, the “Bamboo” series, which was released in the previous fiscal year, recorded a slight sales decrease despite the steady distribution achieved by constantly launching new products. As for LCD tablets, despite a sharp slowdown in corporate demand, sales kept to the same level and the volume increased considerably compared with the previous fiscal year, thanks to the introduction of a professional LCD tablet “Cintiq 12WX” released in 2007, and the favorable sales of a new product “DTU-1931”.

With regards to the components business, whose major customers are Tablet PC manufacturers, our pen-sensor components experienced drastic changes in the business environment between 1H and 2H. Although the components sales of Tablet PCs for consumers expanded until 1H, its result for the full business year decreased due to the global economic slowdown, the appreciation of the Japanese yen and the change of the competitive environment.As a result, the ESD business sales ended at ¥33.06bn (-7.8% YoY), and operating profit ¥6.21bn (-22.0% YoY).

Engineering Collaborative Solutions (ECS) businessECS released its latest product “ECAD / dio” Ver. 9.0 which was significantly improved in its operability and functionality in September as an electronic design segment of the CAD market. The business provided incentives for existing users to upgrade, and for other CAD product users to replace their existing software with “ECAD / dio”. In addition there was improvement of ECS website and domestic exhibitions. However, the sales remained at a lower level due to the remarkable decrease of corporate investments in 2H. For the PDM market, the business proposed new solutions and promoted software packages to existing users. However, our ECS business decided on the cessation of sales activities due to a remarkable sales decrease. As a result, the ECS business sales ended at ¥751mn (-16.3% YoY) and OP ¥49mn (-64.9% YoY).

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

(Millions of yen)

(Millions of yen)

’05 ’06 ’07 ’08

’05 ’06 ’07 ’08-1600

-1500

-1000

-400

-300

-200

-100

0

’09

’05 ’06 ’07 ’08 ’09

’09





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

-723

3,720

-1,229

-511

-1,174

-24

-93

-323

-1,539

1,478

1,162

2,270

3,7583,461

0

1,000

2,000

3,000

10

20

30

40

Cash Dividends per Share / Payout Raito

’06

1,000

’08

2,500

’09

3,000

’07

1,500

’05

500

20.418.4

21.8

29.9

48.3

Cash Dividends per share(yen)Pay out Raito(%)

22

Our financial position

Total assets decreased by ¥3.59bn to ¥25.63bn compared with the end of the previous fiscal year. The main reasons were a ¥1.85bn decrease in cash and cash equivalents due to repurchase of own shares and a ¥0.94bn decrease in total of notes and accounts receivable and inventories. Total liabilities decreased by ¥2.83bn to ¥7.83bn compared with the end of the previous fiscal year. The main reasons were a ¥1.82bn decrease in notes and accounts payable and a ¥748mn decrease in accrued income tax. Total net assets decreased by ¥765mn to ¥17.80bn. The main reasons were a ¥1.85bn of repurchase of own shares, a ¥1.05bn payment of shareholders’ dividends, and a 585mn decrease in foreign currency translation adjustments despite a ¥2.58bn increase in retained earnings.

Consolidated cash & cash equivalents decreased by ¥2.56bn (+870mn YoY) to ¥11.01bn compared with the end of the previous fiscal year.

(Cash Flow from Operating Activities)Earned operating cash flow was ¥1.48bn (3.46bn in the previous year). The main reasons were ¥4.18bn of NPBT, an increase in ¥2.26bn of corporate tax paid.(Cash Flow from Investing Activities)Investing cash flow was ¥1.17bn (1.54bn in the previous year). The main reason was the purchase of fixed assets of ¥956mn.(Cash Flow from Financing Activities)Financing cash flow was ¥2.68bn (511mn in the previous year). The main reasons were a repurchase of own shares of ¥1.85bn and a payment of shareholders’ dividends of ¥1,05bn.

23

The accompanying notes are an integral part of these financial statements.

Consolidated Balance SheetsWacom Co., Ltd. and Its Subsidiaries

Assets:Current assets - Cash and deposits (Note 14) Notes and accounts receivable-trade Short-term investment securities (Notes 2 and 5) Inventories (Note 2 and 4) Merchandise and finished goods (Note 2 and 4) Work in process (Note 2 and 4) Raw materials and supplies (Note 2) Deferred tax assets (Note 15) Other Allowance for doubtful accounts (Note 2) Total current assets

Noncurrent assets - Property, plant and equipment: (Note 2) Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Tools, furniture and fixtures (Note 4) Accumulated depreciation Tools, furniture and fixtures, net Land Construction in progress Other (Note 4) Accumulated depreciation Other, net Total property, plant and equipment Intangible assets: Goodwill (Notes 2 and 22) Other Total intangible assets Investments and other assets: Investment securities (Notes 2 and 5) Deferred tax assets (Note 15) Other Allowance for doubtful accounts (Note 2) Total investments and other assets Total noncurrent assets

Total assets

¥9,994,114 3,897,615 1,520,000

- 2,164,512

162,442 747,434 734,755

1,623,022 (35,689)

20,808,205

3,553,377 (1,685,860)1,867,517

180,529 (93,585)86,944

1,728,011 (1,190,212)

537,799 1,452,507

25,390 - - -

3,970,157

110,098 538,427 648,525

35,277 4,480

166,331 (1,918)

204,170 4,822,852

¥25,631,057

¥8,078,235 4,537,959 5,500,000 3,373,683

- - -

825,339 2,023,911

(31,094)24,308,033

3,144,716 (1,592,115)1,552,601

186,144 (93,491)92,653

- - -

1,454,588 28,804

1,454,331 (1,079,531)

374,800 3,503,446

180,021 563,954 743,975

536,429 3,412

128,258 (2,223)

665,876 4,913,297

¥29,221,330

$101,742 39,678 15,474

- 22,035

1,654 7,609 7,480

16,523 (364)

211,831

36,174 (17,162)19,012

1,838 (953)885

17,591 (12,116)

5,475 14,787

258 - - -

40,417

1,121 5,482 6,603

359 46

1,693 (20)

2,078 49,098

$260,929

March 31 March 31Thousands of yen

Thousands ofU.S. dollars

(Note 1)

2009 20092008

Liabilities:Current liabilities - Notes and accounts payable-trade Short-term loans payable (Note 7) Income taxes payable Provision for bonuses (Note 2) Provision for directors' and statutory corporate auditors’ bonuses (Note 2) Other Total current liabilities

Noncurrent liabilities - Deferred tax liabilities (Note 15) Provision for retirement benefits (Notes 2 and 8) Provision for directors' and statutory corporate auditors’ retirement benefits (Note 2) Other Total noncurrent liabilities Total liabilities

Net Assets:Shareholders' equity (Note 13) - Capital stock Capital surplus Retained earnings Treasury stock Total shareholders' equityValuation and translation adjustments - Foreign currency translation adjustment (Note 2) Total valuation and translation adjustments Total net assets

Total liabilities and net assets

¥3,895,717 600,000 414,881 343,537

- 1,613,275 6,867,410

115,334 420,151 429,227

2,448 967,160

7,834,570

4,195,345 4,036,759

12,297,513 (1,848,486)

18,681,131

(884,644)(884,644)

17,796,487

¥25,631,057


¥5,717,425 600,000

1,163,242 475,189 23,695

1,731,738 9,711,289

191,050 370,605 379,343

7,301 948,299

10,659,588

4,082,842 3,924,258

10,853,924 -

18,861,024

(299,282)(299,282)

18,561,742

¥29,221,330

$39,659 6,108 4,224 3,497

- 16,423 69,911

1,174 4,277 4,370

25 9,846

79,757

42,709 41,095

125,191 (18,818)

190,177

(9,005)(9,005)

181,172

$260,929

24

March 31 March 31Thousands of yen


(Note 1)

2009 20092008

25


Consolidated Statements of IncomeWacom Co., Ltd. and Its Subsidiaries

Net salesCost of sales (Notes 9 and 20) Gross profitSelling, general and administrative expenses (Notes 10, 11 and 20) Operating income

Non-operating income: Interest and dividends income Other Total non-operating income

Non-operating expenses: Interest expenses Foreign exchange losses Other Total non-operating expenses

Ordinary income

Extraordinary income: Gain on sales of noncurrent assets (Note 12) Reversal of allowance for doubtful accounts Settlement received Total extraordinary income

Extraordinary loss: Loss on sales of noncurrent assets (Note 12) Loss on retirement of noncurrent assets (Note 12) Loss on valuation of investment securities Provision for directors' retirement benefits for prior periods Total extraordinary losses

Income before income taxes

Income taxes-current Income taxes-deferred Total income taxes

Net income

¥33,809,138 17,047,974 16,761,164 12,449,786 4,311,378

85,102 27,638

112,740

12,375 204,410 28,264

245,049

4,179,069

155 -

14,217 14,372

446 13,334

- -

13,780

4,179,661

1,528,131 72,505

1,600,636

¥2,579,025

¥36,739,196 18,098,841 18,640,355 13,101,484 5,538,871

159,069 32,278

191,347

12,291 117,369 19,354

149,014

5,581,204

108 91,537

- 91,645

1,517 11,759 20,000 75,491

108,767

5,564,082

2,190,198 (127,476)

2,062,722

¥3,501,360

$344,183 173,552 170,632 126,741 43,891

866 281

1,147

126 2,081

287 2,494

42,544

2 -

145 147

5 136

- -

141

42,550

15,557 738

16,295

$26,255

Year ended March 31 Year ended March 31Thousands of yen


(Note 1)

2009 20092008


Consolidated Statements of Changes in Net AssetsWacom Co., Ltd. and Its Subsidiaries

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 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 Retained earnings - Balance at the end of previous period Effect of changes in accounting policies applied to foreign subsidiaries Changes of items during the period: Dividends from surplus Net income Change of scope of consolidation Total changes of items during the period Balance at the end of current period Treasury stock - Balance at the end of previous period Changes of items during the period: Purchase of treasury stock Total changes of items during the period Balance at the end of current period Total shareholders' equity - Balance at the end of previous period Effect of changes in accounting policies applied to foreign subsidiaries Changes of items during the period: Issuance of new shares Dividends from surplus Net income Change of scope of consolidation Purchase of treasury stock Total changes of items during the period Balance at the end of current period Valuation and translation adjustments Foreign currency translation adjustment - Balance at the end of previous period Changes 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 valuation and translation adjustments - Balance at the end of previous period Changes 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 period Effect of changes in accounting policies applied to foreign subsidiaries Changes of items during the period: Issuance of new shares Dividends from surplus Net income Change of scope of consolidation Purchase of treasury stock Net changes of items other than shareholders' equity Total changes of items during the period

Balance at the end of current period

¥4,082,842

112,503 112,503

4,195,345

3,924,258

112,501 112,501

4,036,759

10,853,924 (29,344)

(1,050,390)2,579,025

(55,702)1,472,933

12,297,513

-

(1,848,486)(1,848,486)(1,848,486)

18,861,024 (29,344)

225,004 (1,050,390)2,579,025

(55,702)(1,848,486)

(150,549)18,681,131

(299,282)

(585,362)(585,362)(884,644)

(299,282)

(585,362)(585,362)(884,644)

18,561,742 (29,344)

225,004 (1,050,390)2,579,025

(55,702)(1,848,486)

(585,362)(735,911)

¥17,796,487

¥3,988,001

94,841 94,841

4,082,842

3,829,418

94,840 94,840

3,924,258

7,980,608 -

(628,044)3,501,360

- 2,873,316

10,853,924

-

- - -

15,798,027 -

189,681 (628,044)

3,501,360 - -

3,062,997 18,861,024

522,054

(821,336)(821,336)(299,282)

522,054

(821,336)(821,336)(299,282)

16,320,081 -

189,681 (628,044)

3,501,360 - -

(821,336)2,241,661

¥18,561,742

$41,564

1,145 1,145

42,709

39,950

1,145 1,145

41,095

110,495 (299)

(10,693)26,255

(567)14,995

125,191

-

(18,818)(18,818)(18,818)

192,009 (299)

2,290 (10,693)26,255

(567)(18,818)

(1,533)190,177

(3,047)

(5,958)(5,958)(9,005)

(3,047)

(5,958)(5,958)(9,005)

188,962 (299)

2,290 (10,693)26,255

(567)(18,818)

(5,958)(7,491)

$181,172



(Note 1)

2009 20092008

26

27


Consolitated Statements of Cash FlowsWacom Co., Ltd. and Its Subsidiaries

Net cash provided by (used in) operating activities : Income before income taxes Depreciation and amortization Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in provision for directors' bonuses Increase (decrease) in provision for retirement benefits Increase (decrease) in provision for directors' retirement benefits Interest and dividends income Interest expenses Foreign exchange losses (gains) Loss (gain) on sales and retirement of noncurrent assets Loss (gain) on valuation of investment securities Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable-trade Other, net Sub total Interest and dividends income received Interest expenses paid Income taxes paid Net cash provided by (used in) operating activitiesNet cash provided by (used in) investing activities : Purchase of property, plant and equipment Purchase of intangible assets Purchase of software Proceeds from sales of noncurrent assets Purchase of investments in subsidiaries Purchase of investment securities Payments for lease and guarantee deposits Proceeds from collection of lease and guarantee deposits Other, net Net cash provided by (used in) investing activitiesNet cash provided by (used in) financing activities : Repayments of long-term loans payable Proceeds from issuance of common stock Purchase of treasury stock Cash 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 14)

¥4,179,661 664,439 14,254

(125,070)(23,695)48,912 57,382 (85,102)12,375 (78,350)13,625

- 737,805 (36,483)

(1,623,667)(84,487)

3,671,599 79,379 (12,424)

(2,260,908)1,477,646

(955,752)(200)

(197,934)7,479

- -

(50,325)23,022

- (1,173,710)

- 222,293

(1,852,061)(1,046,500)(2,676,268)

(190,748)(2,563,080)

13,577,194

¥11,014,114

¥5,564,082 518,500 (107,147)

5,599 (6,105)

43,175 126,428 (159,069)

12,291 22,227 13,168 20,000

(618,776)(1,539,455)1,993,906

(120,962)5,767,862

151,422 (11,153)

(2,447,508)3,460,623

(414,760)(6,389)

(186,407)3,111

(420,216)(500,000)(28,121)15,337 (1,123)

(1,538,568)

(70,000)186,915

- (627,869)(510,954)(541,060)870,041

12,707,153

¥13,577,194

$42,550 6,764

145 (1,273)

(241)498 584 (866)126 (798)139

- 7,511

(371)(16,529)

(861)37,378

808 (126)

(23,017)15,043

(9,730)(2)

(2,015)76 - -

(512)234

- (11,949)

- 2,263

(18,854)(10,654)(27,245)

(1,941)(26,092)

138,218

$112,126



(Note 1)

2009 20092008

Notes to Consolidated Financial StatementsWacom Co., Ltd. and Its Subsidiaries

28

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 account-ing principles and practices generally accepted in Japan, which are different in certain respects from the applica-tion and disclosure requirements of International Finan-cial 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¥98.23 = U.S.$1.00, the approximate rate of exchange on March 31, 2009. 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 (8 Companies). Majority-owned subsidiaries 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.

In May 2007, the Company acquired 100% of the issued shares of Touchscreen Konnection Oasis, Inc. (TouchKO). The consolidated financial statements of the Company include TouchKO for the fiscal year ended March 31, 2008.

The Company established Wacom Taiwan Information Co., Ltd. in 2008, it is included in the consolidated financial statements for the fiscal year endedMarch 31, 2009.

Wacom Components Europe Ltd. was liquidated in 2008. It is excluded from the consolidated financial statements for the fiscal year ended March 31, 2009.

Wacom Digital Solutions Co., Ltd. changed its company’s title name to Wacom Korea Co., Ltd in April 2008.

There are no unconsolidated subsidiaries or affiliates accounted for by the equity method in the previous fiscal years for consolidations.

The fiscal year end of Wacom China Corporation is December 31. However, for consolidation purposes, the provisional settlement of accounts as of March 31 is utilized.

(2) Valuation methods for major assets -(a) Securities:Securities held by the Company and its subsidiaries are classified as follows:

Held-to-maturity debt securities are stated at cost after accounting for any premium or discount at acquisition, which is amortized over the period to maturity.

Other 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 profit or loss in the period in which they arise.

(c) Inventories:Inventories held by the Company are stated at the lower of cost or realizable value, cost is mainly determined by the gross average method.

(Accounting changes)“Accounting Standard for Measurement of Inventories” (Accounting Standards Board of Japan Statement No. 9, issued on July 5, 2006) has been adopted effective for the fiscal year ended March 31, 2009. As a result, operating profit , ordinary income and income before income taxes decreased by ¥40,330 thousand ($411 thousand) compared with what would have been reported under the previous accounting policy that inventories held by the Company had been stated at cost. The impact on segment information is explained in Note 20.

(3) Depreciation and amortization of major assets -(a) Property, plant and equipment:The Company adopted the declining-balance method at rates based on the estimated useful lives of the assets. However, depreciation of buildings acquired by the domestic company after April 1, 1998 is computed using the straight-line method.

Depreciation of the foreign consolidated subsidiaries is computed in the straight-line method over 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

29

(Additional information)Useful lives of Machinery and equipment have been changed in conformity with the Corporate Tax Law revised in 2008. The impact on the consolidated statement of income is not significant.

(b) Intangible assets:The Company adopted the straight-line method for computing amortization. Software for in-house use is amortized based on the straight-line method over the expected useful economic life of 5 years. Software for sale is amortized based on an 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 collection. The allowance for doubtful accounts of the Company is computed based on the past bad debt experience ratio for normal receivables, plus the estimated irrecoverable amount of doubtful receivables on an individual account basis.

Foreign consolidated subsidiaries mainly compute the allowance for doubtful accounts based on the estimated irrecoverable amount of doubtful receivables on an individual account basis.

(b) Provisions for bonuses:The provisions for bonuses to employees are provided based on the estimated amounts expected to be paid to the employees.

(c) Provisions for directors’ and statutory corporate auditors’ bonusesThe provisions for directors’ and statutory corporate auditors’ bonuses are provided based on the estimated amounts expected to be paid for directors and statutory 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 employees’ retirement benefits, the unrecognized actuarial differ-ences. The unrecognized actuarial differences are amortized on a straight-line basis over 5 years beginning in the year after they arise.

(e) Provision for directors’ and statutory corporate auditors’ retirement benefits:The Company provides an accrued lump-sum severance indemnity for directors’ and statutory corporate auditors’ at the full amount which would be required to be paid if all directors and statutory corporate auditors retired at the balance sheet date based on the Company’s internal regulations.

(5) Foreign currency translation -The Company’s functional currency is Japanese Yen. The translation of assets and liabilities denominated in

foreign currency at the year-end is made at the current exchange rate. Exchange gains and losses resulting from foreign currency transactions and 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 consolidated balance sheets as a separate component of net assets.

(6) Consumption taxes -The consumption tax withheld upon sale and consump-tion tax paid by the Companies on their purchases of goods and services is not included in revenue and cost or expense items in the accompanying consolidated statements of income.

(7) Valuation method for assets and liabilities of subsidiar-ies - Assets and liabilities of subsidiaries are measured at fair value when consolidated.

(8) Amortization of goodwill - Goodwill is amortized equally over the effective periods.

(9) 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.

3. Accounting changes:(1)Practical solution on unification of accounting policies applied to foreign subsidiaries for the consolidated financial statements - “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements” (Accounting Standards Board of Japan Practical Issues Task Force No. 18 issued on May 17, 2006) has been adopted effective for the fiscal year ended March 31, 2009. As a result, operating profit, ordinary income and income before income taxes are decreased by ¥17,576 thousand ($179 thousand) compared with what would have been reported under the previous accounting policy that consolidated subsidiaries overseas had applied generally accepted accounting principles in each country to their own financial statements and no adjustments had been made to their financial statements on consolidation. The impact on segment information is explained in Note 20.

(2)Lease accounting - Finance lease transactions that do not transfer ownership of the assets had been accounted for using the same method as for operating leases. However, “Accounting Standard for Lease Transactions” (Accounting Standards Board of Japan Statement No. 13, originally issued on June 17, 1993 and revised on March 30, 2007) and “Guidance on Accounting Standard for Lease Transac-tions” (Accounting Standards Board of Japan Guidance No. 16, originally issued on January 18, 1994 and revised

on March 30, 2007) have been adopted effective from the fiscal year beginning on and after April 1, 2008.

As for Finance lease transactions that do not transfer ownership which commenced before April 1, 2008, the Company has applied the same method as for operating leases continuously.

The adoption did not have any impact on the consoli-dated statement of income.

4. Changes to presentation methods:(Consolidated Balance Sheets)(1) “Merchandise and finished goods”, “Work in process” and “Raw materials and supplies” accounts are separately presented from this fiscal year, which was included in “Inventories” account in the previous years. Each amount of “Merchandise and finished goods”, “Work in process” and “Raw materials and supplies” accounts in the previous year is ¥2,349,469 thousand ($23,918 thousand), ¥177,043 thousand ($1,802 thousand) and ¥847,171 thousand ($8,624 thousand), respectively.

(2) “Tools, furniture and fixtures” account and its “Accumu-lated depreciation” account is separately presented from this fiscal year, which was included in “Other” of “Property, plant and equipment” in the previous fiscal years, as its signifi-cance has increased. Each amount of “Tools, furniture and fixtures” account and its “Accumulated depreciation” account in the previous year is ¥1,454,331 thousand ($14,805 thousand) and 1,079,531 thousand ($10,990 thousand), respectively.

5. Investment securities:Marketable and investment securities:The following is certain information relating to the aggregate acquisition cost and market value of securities in fiscal year 2008.

(i) Held-to-maturity debt securities with fair market value

(ii) Securities for which market price or quotations are not available.

(iii) Redemption scheduleThe redemption schedule of held-to-maturity debt securities as of March 31, 2008

30

March 31, 2009 March 31, 2009

Thousands of U.S. dollars

Thousands of yen

Amount of overdraft limitUtilized overdraft facilities

Net amount

¥2,000,000–

¥2,000,000

$20,360–

$20,360

Thousands of yenMarch 31, 2009

Securities with fair market value not exceeding book carrying amount-other: Book carrying amount Fair market value

Difference

¥500,000 499,250

(¥750)

March 31, 2009 March 31, 2009

¥500,000 490,400

(¥9,600) ($98)

$5,090 4,992


Thousands of yen

Securities with fair market value not exceeding book carrying amount-other: Book carrying amount Fair market value

Difference

March 31, 2009 March 31, 2009

Thousands of yenMarch 31, 2009Book carrying

amount

Other securities: Non-marketable equity securities Other

¥36,4295,500,000

Thousands of yen

Bonds (1) Government bonds, Municipal bonds, etc. (2) Corporate bonds (3) Others Other Total

Due 2008 Due 2009～2012

Due 2013～2017

Due 2013～2018

¥––

–

¥–

¥––

500,000 –

¥500,000

¥––

– –¥–

¥––

– –¥–

¥35,2771,020,000

$35910,384


Thousands of yen

Other securities: Non-marketable equity securities Other

Book carryingamount

Book carryingamount

The following is certain information relating to the aggregate acquisition cost and market value of securities in fiscal year 2009.

(i) Held-to-maturity debt securities with fair market value

(ii) Securities for which market price or quotations are not available.

(iii) Redemption scheduleThe redemption schedule of held-to-maturity debt securities as of March 31, 2009

6. Overdraft facility:(1) For effective funding to meet working capital require-ments, the Company has established overdraft facilities with two banks. Unutilized overdraft facilities under these contracts at the end of this fiscal year are as follows:


¥––

500,000–

¥500,000

¥––

– –

¥–

¥––

– –

¥–

¥––

– –

¥–

Thousands of yen

Bonds (1) Government bonds, Municipal bonds, etc. (2) Corporate bonds (3) Others Other

Total

Due 2009 Due 2010～2013

Due 2014～2018

Due after2019

Due 2009 Due 2010～2013

Due 2014～2018

Due after2019

$––

5,090–

$5,090

$––

– –

$–

$––

– –

$–

$––

– –

$–


Bonds (1) Government bonds, Municipal bonds, etc. (2) Corporate bonds (3) Others Other

Total

The components of the net periodic pension expense for the years ended March 31, 2008 and 2009 are as follows:

Note: The net periodic pension expense of ¥81,175 thousand ($826 thousand) for the year ended March 31, 2008 excluded the contribution expense to the Saitama prefectural industrial park multi-employer pension plan.

The assumptions used as of March 31, 2008 and 2009 are as follows:

Some of consolidated subsidiaries overseas have defined contribution pension plans.

31

Advertising expensesProvision for allowance for doubtful accountsSalariesPension expensesProvisions for retirement benefits of directors and statutory corporate auditors Provisions for bonuses to employeesResearch and development expensesProvisions for bonuses to directors and statutory corporate auditorsCommission paid


Thousands of yen

Year ended March 31

20092008 2009

$14,032

84129,2621,539

5842,746

14,679

––

¥1,378,351

82,6262,874,375

151,176

57,382269,786

1,441,953

––

¥1,617,543

9,3492,651,928

86,812

47,835602,186

–

23,6951,433,588

2009

(1) Discount rate (2) Method of attributing the projected benefits to periods of service (3) Amortization of unrecognized actuarial differences

2008

2.0%Straight-line

basisStraight-lineover 5 years

2.0%Straight-line

basisStraight-lineover 5 years

(1) Projected benefit obligation (2) Unrecognized actuarial loss (3) Provision for retirement benefits for employees (1)+(2)

Thousands of U.S. dollarsThousands of yen

20092008 2009

($4,333)56

($4,277)

(¥425,615)5,464

(¥420,151)

(¥383,101)12,496

(¥370,605)

(1) Service cost (2) Interest cost (3) Recognized actuarial loss (4) Contribution

(5) Net periodic pension expense


Thousands of yen

20092008 2009

$4607463

896

$1,493

¥45,1617,2826,186

88,076

¥146,705

¥42,6236,5845,298

–

¥54,505

The amount of pension assetsThe amount of benefit obligations under pension funding programs

Net


Thousands of yen

March 312009

March 312008 2009

$71,245

(75,929)

($4,684)

¥6,998,395

(7,458,524)

(¥460,129)

¥7,615,148

(6,931,374)

¥683,774

Averageinterestrate (%)

Due dateof

paymentMarch 31 March 31


Thousands of yen

Short-term debtLong-term debt due within one yearLease obligation due within one yearLong-term debtLease obligation-Other interest bearing liabilities: Accounts payableLong-term accounts payable Total

2008 2009 2009

¥600,000

–

–––

2,855

2,448¥605,333

$6,108

–

–––

29

25$6,162

–

–

–––

–Due 2010

2011

1.277

–

–––

9.040

9.040

¥600,000

–

–––

4,914

7,301¥612,215

7. Short-term and long-term debt:

Notes: a) Average interest rate is a weighted average interest rate to the ending balance of debts. b) Five-year schedule of other interest bearing liabilities excluding the amount due within one year is as follows:

8.Provision for retirement benefits:The Company has an unfunded retirement allowance plan (the “Plan”) covering substantially all of its employees who meet eligibility requirements under the Plan. In addition, the Company is a member of the Saitama prefectural industrial park multi-employer pension plan, which covers substan-tially all of its employees and provides for benefits under the governmental welfare pension benefit plan, which would otherwise be provided by the Japanese government.

This multi-employer pension plan does not permit us to reasonably calculate the value of the pension plan assets based on our contributions. As a result, this multi-employer pension plan is excluded from the calculation of projected benefit obligation.

Overview of the multi-employer pension plan is as follow, under which the required contributions to the plan are charged to income.

(1)The funded status of the pension plan as of March 31, 2008 and 2009

(2) The ratio of the number of company’s employees to total employees in the multi-employer pension plan as of March 31, 2008 is 15.2% and 2009 is 16.2% , respectively.

The provision for retirement benefits for employees as of March 31, 2008 and 2009 can be analyzed as follows:

9. Cost of sales:Devaluation amount due to decrease of net realizable value is reflected in inventory amount for the end of fiscal year March 31, 2009. As a result, cost of sales includes loss on inventory devaluation of ¥40,330 thousand ($411 thousand).

10. Selling, general and administrative expenses:The major components of “Selling, general and administra-tive expenses” are as follows:

11. Research and development expenditures:Research and development expenditures are included in selling, general and administrative expenses. Such expenses amounted to ¥1,111,911 thousand and ¥1,441,953 thousand ($14,679 thousand) for the years ended March 31, 2008 and 2009, respectively.

Due after1 year to 2 year

¥892


¥1,556


¥–


¥–

Thousands of yen

Long-term accounts payable


$9


$16


$–


$–


Long-term accounts payable

Year ended March 31


32

b) Dividends of which record date is attributable to the accounting period ended March 31, 2008 and 2009, respectively, but to be effective after said accounting period.

Board meeting onMay 29, 2007

(Approval by)

June 1, 2007

March 31, 2007$15 $6,269Common

stock

Total amont of dividends(Thousands

of U.S. dollars)

Type of shares

Dividends per share

(dollar)

Record date

Effective date

�

Board meeting onApril30, 2008

(Approval by)

June 3, 2008

March 31, 2008¥2,500¥1,050,390Common

stock


of yen)

Type of shares

Dividends per share

(yen)

Record date

Effective date

Board meeting onApril 30, 2008

(Approval by)

June 3, 2008

March 31, 2008$25$10,484Common

stock


of U.S. dollars)

Type of shares

Dividends per share

(dollar)

Record date

Effective date

�


(Approval by)

June 3, 2009

March 31, 2009¥3,000¥1,205,088Common

stock


of yen)

Type of shares

Dividends per share

(yen)

Record date

Effective date


(Approval by)

June 3, 2009

March 31, 2009$31 $12,268Common

stock


of U.S. dollars)

Type of shares

Dividends per share

(dollar)

Record date

Effective date

�


(Approval by)

June 3, 2008

March 31, 2008¥2,500¥1,050,390Common

stock


of yen)

Type of shares

Dividends per share

(yen)

Record date

Effective date


(Approval by)

June 3, 2008

March 31, 2008$25$10,484Common

stock


of U.S. dollars)

Type of shares

Dividends per share

(dollar)

Record date

Effective date

Number of shares as of March 31, 2008 (Unit: shares)Number of shares increased during the accounting periodended March 31, 2009 (Unit: shares)Number of shares decreased during the accounting period ended March 31, 2009 (Unit: shares)

Number of shares as of March 31, 2009 (Unit: shares)

420,156

1,540

-

421,696

420,156

1,540

-

421,696

-

20,000

-

20,000

-

20,000

-

20,000

Note: a) Increase in the number of shares was due to exercise of stock options. b) Increase in the number of treasury stock was due to purchase of treasury stock based on the resolution of the board meeting.

(2) Matters related to dividend - a)Dividend payment Dividend payment approved at the board meeting held on May 29, 2007 are as follows:

Dividends payment approved at the board meeting held on April 30, 2008 are as follows:

The Company resolved approval at the board meetingheld on April 30, 2008 as follows:

The Company resolved approval at the board meeting heldon May 8, 2009 as follows:

12.Gain and loss on sale and retirement of noncurrent assets:

13.Changes in net assets:(1) Type and number of shares outstanding and treasury stock -

Tools, furniture and fixtures

Total


Thousands of yen

Year ended March 312009

Year ended March 312008 2009

$2

$2

¥155

¥155

¥108

¥108

(1) Gain on sales of noncurrent assets -

Machinery, equipment and vehiclesTools, furniture and fixtures

Total


Thousands of yen



$5-

$5

¥446-

¥446

¥1,45166

¥1,517

(2) Loss on sales of noncurrent assets -

Buildings and structuresMachinery, equipment and vehiclesTools, furniture and fixturesSoftware

Total


Thousands of yen



$51

-796

$136

¥4,954

-7,777

603

¥13,334

¥1,467

1010,282

-

¥11,759

(3) Loss on retirement of noncurrent assets -

Number of shares as of March 31, 2007 (Unit: shares)Number of shares increased during the accounting periodended March 31, 2008 (Unit: shares)Number of shares decreased during the accounting period ended March 31, 2008 (Unit: shares)

Number of shares as of March 31, 2008 (Unit: shares)

Common stockType of shares outstanding

Total Common stockType of treasury stock

Total

Common stockType of shares outstanding

Total Common stockType of treasury stock

Total

Note: Increase in the number of shares was due to exercise of stock options.

418,696

1,460

-

420,156

418,696

1,460

-

420,156

-

-

-

-

-

-

-

-

�

(Approval by)

June 1, 2007

March 31, 2007

¥1,500¥628,044Common

stock


of yen)

Type of shares

Dividends per share

(yen)

Record date

Effective date


33

(2) Minimum lease payments under non-cancelable operating leases are as follows:

There is no impairment losses allocated to leased assets.

¥4,2614,576

¥8,837

¥2,4402,136

¥4,576

$2522

$47

Due within one yearDue after more than one year


Thousands of yen

2008 2009 2009

¥17,68312,232

533

¥4,2612,463

300

$4325

3

Lease paymentsAmount representing depreciationAmount representing interest

2008 2009 2009

¥56,76239,474

¥96,236

¥109,381115,089

¥224,470

$1,1131,172

$2,285

Due within one yearDue after one year

Total minimum lease payments


Thousands of yen

2008 2009 2009

The reconciliation between the statutory tax rate and the effective income tax rate in the consolidated statement of income for the year ended March 31, 2008 is as follows:

Statutory effective tax rate

Non deductible expenses for tax purposes Equalization tax Tax credit of corporation tax Others

Effective income tax rate

39.7%

0.7 0.2(1.9)(1.6)

37.1%

March 31,2008

The difference between the statutory income tax rate and the effective income tax rate for the year ended March 31, 2009 was less than 5% of the statutory income tax rate, and accordingly, the reconciliation between these two rates has been omitted.

16. Leases:Finance lease transactions that do not transfer


¥2,70520,024

¥22,729

¥1,28417,096

¥18,380

¥1,4212,928

¥4,349

Thousands of yenNet balance as of

March 31, 2008Acquisition

costAccumulateddepreciation

$28167

$195

$20156

$176

$811

$19


Thousands of U.S. dollarsNet balance as of



Thousands of yenNet balance as of




¥2,70516,419

¥19,124

¥1,91915,319

¥17,238

¥7861,100

¥1,886

14. Cash and cash equivalents:Cash and cash equivalents as of March 31, 2009, is consisted of as follows:

Cash and depositsShort-term investment securitiesLess: Held-to-maturity debt securities due within one yearLess: Time deposits with maturities exceeding three months

Cash and cash equivalents


Thousands of yen

2009

$101,742 15,474

(5,090)

-

$112,126

¥9,994,114 1,520,000

(500,000)

-

¥11,014,114

¥8,078,235 5,500,000

-

(1,041)

¥13,577,194

15. Income taxes:The significant components of deferred tax assets and liabilities for the years ended March 31, 2008 and 2009 are as follows:

Deferred tax assets: Inventory-inter-company profit Accrued retirement benefits Accrued severance indemnities for directors and statutory corporate auditors Accrued bonuses Accrued expenses Software development costs Enterprise tax Inventories Net loss carried forward for tax purposes Account receivables Lump-sum depreciation assets Trademark rights Others Total deferred tax assets

Deferred tax liabilities: Undistributed earnings of overseas subsidiaries

Fixed assets of overseas subsidiaries Others Total deferred tax liabilities

Net deferred tax assets

Thousands of yenThousands of

U.S. dollars20092008 2009

$4,525 1,653

1,389 1,161

739 398 395 292

281 211 174 77

330 11,625

(4,503)

(318)(452)

(5,273)

$6,352

¥444,472 162,331

136,470 114,052 72,633 39,125 38,846 28,682

27,597 20,744 17,118 7,556

32,329 1,141,955

(442,402)

(31,269)(44,383)

(518,054)

¥623,901

¥488,141 142,989

121,931 119,270 63,206 45,625 86,872

-

- -

19,848 -

21,360 1,109,242

(415,522)

- (56,019)

(471,541)

¥637,701

ownership of the assets have been accounted for as ordinary sale and purchase transactions. These standards (See Note 3) are applied to new lease contracts entered since the fiscal year ended March 31, 2009. Such, however, new contracts have not been entered for the fiscal year ended March 31, 2009.

Finance lease transactions that do not transfer ownership of the assets which commenced before April 1, 2008, have been accounted for using the same method as for operating leases continuously. Such finance lease transactions 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:

(b) Future lease payments under finance leases are as follows:

(c) Lease payments and amounts representing depreciation and interest are as follows:

2008 2009


Thousands of yen

The changes in stock options for the year endedMarch 31, 2008 are as follows

November 8, 2002

June 26, 2003

June 24, 2004

June 23, 2005

Date of ordinary

shareholders’ meeting

¥17,659

158,951

306,139

242,865

Exercise price per share

(exact yen)

¥203,550

256,391

-

-

Average price per share at exercise(exact yen) Exercise periods

From November 9, 2004 to October 31, 2011From June 27, 2005 to June 26, 2008From June 25, 2006 to June 24, 2009From June 24, 2007 to June 23, 2010


19. Stock options:The following are the stock options granted to directors and employees, which would result in an increase in the number of common shares with the following exercise prices.

¥44,178.228,348.748,304.38

¥44,303.376,213.936,197.78

$451.0163.2663.09

Net assets per shareNet income per shareDiluted net income per share

U.S. dollarsYenMarch 31 March 31

March 31

2008 2009 2009

18. Earnings per share information:The computation of net income per share is based on the weighted-average number of common shares outstanding during each fiscal year. Treasury stocks held during these fiscal years are excluded.

¥3,501,360

- 3,501,360

419,388

-

2,240

¥2,579,025

- 2,579,025

415,039

-

1,082

$26,255

-26,255

-

-

-

Basic net income per share

Net incomeNet income not available to common shareholdersNet income available to common shareholdersWeighted-average number of shares outstanding (shares)

Diluted net income per share

Amount of net income adjustmentIncrease in the number of common shares outstanding during each fiscal year that would result in exercising options to issue new shares(shares)

Thousands of U.S. dollarsThousands of yen

March 312008 2009 2009

November 8, 2002

June 26, 2003

June 24, 2004

June 23, 2005

Date of ordinary

shareholders’ meeting

1136

334

6613

249169

EmployeesSubsidiaries’ executive officersSubsidiaries’ employeesExecutive officersEmployeesSubsidiaries’ employeesExecutive officersEmployeesSubsidiaries’ employeesExecutive officersEmployeesSubsidiaries’ employees

Person granted

19,160

7,440

1,200

800

28,600

Number of options granted

(shares)

(3) Calculation method of depreciation equivalentsDepreciation equivalents are calculated using the declining-balance method for tangible fixed assets over the lease terms with residual value by 10%, before multiplying by 10 and being divided by 9 and on the straight-line method for the intangible assets over the lease terms without residual value.

(4) Allocation of interest expense equivalentsDifferences between total lease expenses and pur-chase price equivalents of the leased properties comprise interest expense equivalents and insurance, maintenance and certain other operating costs. Interest expense equivalents are allocated using the interest method over the lease terms.

17. Derivatives:All derivative transactions are entered into in order to hedge foreign currency exposures within the Company’s business. Accordingly, the market risk in these derivatives is basically 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 policies, which regulate the authorization and credit limit amount.

The amount of the derivative contracts does not necessarily indicate the significance of the risk.Certain information on outstanding derivative contracts is shown below.

1,439,624680,435

-

¥2,120,059

1,432,717680,217

-

¥2,112,934

¥6,907218

-

¥7,125

Foreign exchange forward contracts: To sell U.S. dollars To sell Euros To sell British Pound

Total


Contractamount

Fair valueUnrealizedgain/(loss)

¥972,403538,65289,292

¥1,600,347

¥1,011,634545,32885,173

¥1,642,135

(¥39,231)(6,676)4,119

(¥41,788)


Total


Contractamount


$9,8995,484

909

$16,292

$10,2995,551

867

$16,717

($400)(67)42

($425)


Total

Thousands of U.S. dollarsMarch 31, 2009

Contractamount


Note: The basis for calculating basic and diluted earning per share is as follows

34

35

Outstanding at March 31, 2008

GrantedExercisedExpiredOutstanding

at March 31, 2009Exercise periods

1,200-

140-

1,060From November 9,

2004 to October31, 2011

2,140-

1,400740

-From June 27,2005 to June 26, 2008

844--

40

804From June 25,2006 to June 24, 2009

800---

800From June 24,2007 to June 23, 2010

Date of ordinary shareholders’ meeting

November 8, 2002

June 26, 2003

June 24, 2004

June 23, 2005

The changes in stock options for the year endedMarch 31, 2009 are as follows:

20. Segment information:(1) Segments by industry -

Year ended March 31, 2008

I. Net sales:(1) Outside customers(2) Inter-segment

Total

Operating expenses

Operating income

II. Assets, depreciation and capital expenditure:

AssetsDepreciationCapital expenditure

¥896,545-

896,545

756,969

¥139,576

¥36,739,196-

36,739,196

28,638,569

¥8,100,627

¥ - (-)(-)

2,561,756

(¥2,561,756)

¥36,739,196-

36,739,196

31,200,325

¥5,538,871

¥35,842,651-

35,842,651

27,881,600

¥7,961,051

¥16,227,230403,617341,982

¥539,22738,08225,512

¥16,766,457441,699367,494

¥12,454,87376,80171,378

¥29,221,330518,500438,872

Thousands of yen

ECSbusiness

ESDbusiness Total

Elimination/Corporate Consolidated



Total

Operating expenses

Operating income



¥750,742-

750,742

701,693

¥49,049

¥33,809,138-

33,809,138

27,548,793

¥6,260,345

¥ - (-)(-)

1,948,967

(¥1,948,967)

¥33,809,138-

33,809,138

29,497,760

¥4,311,378

¥33,058,396-

33,058,396

26,847,100

¥6,211,296

¥14,480,863513,311940,194

¥476,06045,17724,643

¥14,956,923558,488964,837

¥10,674,134105,951209,659

¥25,631,057664,439

1,174,496

Thousands of yen

ECSbusiness

ESDbusiness Total


Segment information by business activity is determined based upon consideration of the product line and management control of the business.

The main products of each business segment include the following:i) ESD business: Professional graphics tablet, Consumer graphics tablet, LCD tablet, Pen sensor component, etc.ii) ECS business: ECAD/dio, ENOVIA SmarTeam, etc.

Notes:a)

b)

Elimination or Corporate expenses of ¥2,561,756 thousand and ¥1,948,967 thousand ($19,840 thousand) during the years ended March 31, 2008 and 2009, respectively, mainly include the administrative expenses of the Company.

Elimination or Corporate assets of ¥12,454,873 thousand and ¥10,674,134 thousand ($108,665 thousand) at March 31, 2008 and 2009, respectively, mainly include cash, investment securities and assets belonging to the general and administrative departments of the Company.

Effective from the fiscal year ended March 31, 2009, the Company changed accounting policies as stated in Note 3 (3) Inventory valuation. As a result, operating profit decreased by ¥40,130 thousand ($409) for ESD business and ¥200 thousand ($2) for ECS business compared with what would have been reported under the previous accounting policy.

Effective from the fiscal year ended March 31, 2009, the Company changed accounting policies as stated in Note 3 (1) Practical solution on unification of accounting policies applied to foreign subsidiaries for the consolidated financial statements. As a result, operating profit decreased by ¥17,576 thousand ($179) for ESD business compared with what would have been reported under the previous accounting policy.

c)

d)

e)

f)

（Unit:shares）

（Unit:shares）

Outstanding at March 31, 2007

GrantedExercisedExpiredOutstanding

at March 31, 2008Exercise periods

1,500-

300-

1,200From November 9,

2004 to October31, 2011

3,380-

1,16080

2,140

From June 27,

2005 to June26, 2008

844---

844From June 25,

2006 to June24, 2009

800---

800From June 24,

2007 to June23, 2010

Date of ordinary shareholders’ meeting

June 24, 2004

June 23, 2005

June 26, 2003

November 8, 2002



Total

Operating expenses

Operating income



$7,642-

7,642

7,143

$499

$4,846460251

$344,183-

344,183

280,452

$63,731

$152,2645,6869,822

$ - (-)(-)

19,840

($19,840)

$108,6651,07

2,134

$344,183-

344,183

300,292

$43,891

$260,9296,764

11,956

$336,541-

336,541

273,309

$63,232

$147,4185,2269,571


ECSbusiness

ESDbusiness Total


36

Segment information by geographic area is determined by taking into account the geographic area where the Company or its subsidiaries are located.

The countries in each geographic segment excluding Japan and U.S.A.:i) Europe: Germany, United Kingdomii) Asia/Oceania: China, South Korea, Australia, Hong Kong, Singapore and Taiwan Elimination or Corporate expenses of ¥2,561,756 thousand and ¥1,948,967 thousand ($19,840 thousand) during the years ended March 31, 2008 and 2009, respectively, mainly include the administrative expenses of the Company.

Elimination or Corporate assets of ¥12,454,873 thousand and ¥10,674,134 thousand ($108,665 thousand) at March 31, 2008 and 2009, respectively, mainly include cash, investment securities and assets belonging to the general and administrative departments of the Company.

Notes:a)

b)

c)

d)




Total

Operating expenses

Operating income

II. Assets


U.S.A.Japan EuropeAsia/

Oceania TotalElimination/Corporate Consolidated

$99,9322,372

102,304

98,677

$3,627

$50,877

$81,394-

81,394

77,803

$3,591

$35,071

$32,826532

33,358

32,909

$449

$13,955

$344,183152,776496,959

434,797

$62,162

$194,853

$- (152,776)(152,776)

(134,505)

($18,271)

$66,076

$344,183-

344,183

300,292

$43,891

$260,929

$130,031149,872279,903

225,408

$54,495

$94,950


I.Overseas salesII.Consolidated sales

III.Percentage of overseas sales to consolidated sales

Thousands of yen

¥7,916,818-

23.4%

¥8,243,340-

24.4%

¥303,777-

0.9%

¥26,321,63933,809,138

77.9%

¥9,857,704-

29.2%





$80,595-

23.4%

$83,919-

24.4%

$3,092-

0.9%

$267,959344,183

77.9%

$100,353-

29.2%

Countries or regions are determined by geographical proximity.

Principal countries or regions belonging to each segment:i) North America: U.S.A. and Canadaii) Europe: United Kingdom, Germany, France, Netherlands, etc.iii) Asia/ Oceania: South Korea, Taiwan, Australia, China, etc.iv) Others: Middle East, South America, Africa, etc.

Overseas sales comprise the sales of the Company and its subsidiaries outside Japan.

Notes:a)

b)

c)

NorthAmerica

Asia/Oceania Others TotalEurope

NorthAmerica





Thousands of yen

¥8,277,094-

22.5%

¥9,573,488-

26.1%

¥414,055-

1.1%

¥29,261,35836,739,196

79.6%

¥10,996,721-

29.9%

(3) Overseas sales

NorthAmerica




Total

Operating expenses

Operating income

II. Assets

Thousands of yen



¥9,816,329233,032

10,049,361

9,693,111

¥356,250

¥4,997,714

¥7,995,377-

7,995,377

7,642,570

¥352,807

¥3,444,995

¥3,224,47652,195

3,276,671

3,232,594

¥44,077

¥1,370,768

¥33,809,13815,007,15548,816,293

42,710,140

¥6,106,153

¥19,140,396

¥- (15,007,155)(15,007,155)

(13,212,380)

(¥1,794,775)

¥6,490,661

¥33,809,138-

33,809,138

29,497,760

¥4,311,378

¥25,631,057

¥12,772,956 14,721,928 27,494,884

22,141,865

¥5,353,019

¥9,326,919



Total

Operating expenses

Operating income

II. Assets

Thousands of yen



¥11,029,962212,874

11,242,836

10,531,834

¥711,002

¥5,364,589

¥8,448,701-

8,448,701

7,916,478

¥532,223

¥3,744,090

¥3,690,89624,158

3,715,054

3,321,545

¥393,509

¥1,521,749

¥36,739,19617,173,54753,912,743

45,447,565

¥8,465,178

¥21,342,165

¥- (17,173,547)(17,173,547)

(14,247,240)

(¥2,926,307)

¥7,879,165

¥36,739,196-

36,739,196

31,200,325

¥5,538,871

¥29,221,330

¥13,569,63716,936,51530,506,152

23,677,708

¥6,828,444

¥10,711,737

(2) Segments by geography - Effective from the fiscal year ended March 31, 2009, the Company changed accounting policies as stated in Note 3 (3) Inventory valuation. As a result, operating profit decreased by ¥40,330 thousand ($411) for Japan compared with what would have been reported under the previous accounting policy. Effective from the fiscal year ended March 31, 2009, the Company changed accounting policies as stated in Note 3 (1) Practical solution on unification of accounting policies applied to foreign subsidiaries for the consolidated financial statements. As a result, operating profit decreased by ¥17,576 thousand ($179) for U.S.A. compared with what would have been reported under the previous accounting policy.

e)

f)

(2) Period, for which the operating results of the acquired company are included in theaccompanying consolidated financial statements -

From June 1, 2007 to March 31, 2008

(3) The acquisition cost - a) Acquisition cost ¥420,497 thousand ($3,455 thousand) b) Breakdown of the acquisition cost Stock acquisition cost ¥408,878 thousand ($3,360 thousand) Cost associated with stock acquisition (Such as due diligence cost) ¥11,619 thousand ($95thousand)

Note: All acquisition cost above has been disbursed in cash.

Current assets

Fixed assets

Total assets

Thousandsof Yen

¥11,499

264,821

¥276,320

Thousandsof U.S.dollars

$94

2,176

$2,270

LiabilitiesAssets

Current liabilities

Non-current LiabilitiesTotal liabilities

Thousands of Yen

¥ −

74,474

¥74,474


$ −

612

$612

(4) Goodwill recognized - a) Amount of goodwill ¥218,652 thousand ($1,797 thousand) b) Goodwill is recognized for the amount which the acquisition cost exceeds a fair value of the equity of the acquired company. c) Amortization method and period Goodwill is not amortized because Wacom Technology Corporation applies U.S. GAAP.

(5) Fair value of the assets and liabilities of the acquired company at the acquisition date are summarized below -

(6) Major intangible assets which are not classified as goodwill and their weighted average period of amortization are summarized below -

(7) Estimated impact on the consolidated income statement - Estimated unaudited impact on the consolidated income statement assuming this business combination would have been completed at the beginning of the fiscal year ended March 31, 2008 is not significant.

Note: The above-mentioned estimated impact has not been audited by the Company’s independent auditors.There were no business combinations in fiscal year 2009.

23.Subsequent events:There were no applicable items under this category.

Major intangible assets

Patents

Other intellectual properties

Thousands of Yen

¥36,507

219,042


$300

1800

Weighted average period of amortization

7 years

7 years

37

Name of acquired companyBusiness acquired

Purpose of the acquisition

Acquisition dateLegal structure of the acquisition

Name of the companyafter acquisition Acquired voting rights

Touchscreen Konnection Oasis, Inc.Designing, manufacturing and salesof resistive-type touch sensor andcapacitive-type touch sensorExpansion of business by combiningtechnology of the acquiredcompany’s electrostatic combinationtouch sensor. May 31, 2007After a stock purchase ofTouchscreen Konnection Oasis, Inc. bythe Company, the Companytransferred the entire stock to its 100%subsidiary, Wacom TechnologyCorporation through an investment in kind, and then Wacom TechnologyCorporation merged with TouchscreenKonnection Oasis, Inc.Wacom Technology Corporation

100.0%

22.Business combination:(1)Summary of business combination -The following is certain information relating to the aggregate acquisition cost and market value of securities in fiscal year 2008.

21. Related party transactions:There were no applicable transactions under this category for the year ended March 31, 2008 and year ended March 31, 2009, respectively.

(Additional information)“Accounting Standard for Related Party Transactions” (Accounting Standards Board of Japan Statement No. 11, issued on October 17, 2006) and “Implementation Guidance on Accounting Standard for Related Party Transactions” (Accounting Standards Board of Japan Guidance No. 13, issued on October 17, 2006) has been adopted effective for the fiscal year ended March 31, 2009.

As a result, in addition to directors who are included in disclosure scope for related party transactions in past years, directors of significant subsidiaries of the Company, Joseph E. Deal (Wacom Technology Corporation) and Han Stoffels (Wacom Europe GmbH) have been included in a disclosure scope for related party transactions for the year ended March 31, 2009.

Report of Independent Auditors

38

Corporate DataEstablished

Capital

Employees

Business Segments

Head Office / Factory

Branch / Offices

International Affiliates

July 12, 1983

¥4,195 million (As of March 31, 2009)

Consolidated: 637Non-consolidated: 388

(As of March 31, 2009)

1. Electronic Systems and Devices (ESD) BusinessDevelopment, manufacture, and sale of computer input devices• Professional pen tablets• Consumer pen tablets• Interactive pen displays• Components

2. Engineering Collaborative Solutions (ECS) BusinessDevelopment, manufacture, sale, support, and maintenance of industrial systems• Electronic design CAD software

Banks Mizuho Bank, Ltd.The Bank of Tokyo-Mitsubishi UFJ, Ltd.Saitama Resona Bank, Ltd.

2-510-1 Toyonodai Otonemachi, Kita Saitama-Gun, Saitama 349-1148, JapanTEL: +81-480-78-1211 (Main)FAX: +81-480-78-1220

Tokyo BranchHarmony Tower 21th Floor, 1-32-2 Hon-cho, Nakano-ku, Tokyo 164-0012, 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, Fukuoka 812-0013, Japan

Wacom Technology Corporation (U.S.A.)1311 SE Cardinal Court, Vancouver, WA 98683, U.S.A.

Wacom Europe GmbH (Germany)Europark Fichtenhain A9 D-47807, Krefeld, Germany

Wacom China Corporation (China)Unit 2807, 28th Floor, Capital Tower, No. 6 Jia, Jianguomenwai Avenue, Beijing, China

Wacom Korea Co., Ltd. (Korea)25th Floor DMC iaan Sangam 2nd Complex, 1653, Sangam-dong, Mapo-gu, Seoul, Korea, 121-270

Wacom Australia Pty. Ltd. (Australia)Unit 8, 2-8 South Street, Rydalmere NSW 2116, Australia

Wacom Singapore Pte Ltd. (Singapore) 3 Bishan Place, CPF Bishan Building #06-08 Singapore 579838

(As of July 31, 2009) 39

Wacom Hong Kong Ltd. (Hong Kong)Room 2108, 21F, C. C. Wu Building302-308 Hennessy Road Wanchai, Hong Kong

Wacom Taiwan Information Co., Ltd. (Taiwan)Suite 605, 6th floor, No. 205 Tun Hwa NorthRoad, Taipei, Taiwan 105 R.O.C.

Investor Information

Major Shareholders (As of March 31, 2009)

Shareholder Distribution (As of March 31, 2009)

Foreign enterprises, etc.

17.71%74,671 shares,<128 shareholders>

Other enterprises

5.20%21,926 shares,<147 shareholders>

Financial institutions

16.98%

Treasury stock

4.74%

71,609 shares,<30 shareholders>

20,000 shares<1 shareholder>

Securities companies

1.03%4,343 shares,

<20 shareholders>

Individuals and other shareholders

54.34%229,147 shares,

<25,784 shareholders>

1,380,000421,696

26,110

Name of shareholder Number of

shares ownedPercentage of

voting rights (%)

421,696shares

26,110shareholders

Stock Exchange ListingTokyo Stock Exchange First Section (Trade code 6727)

Share Data (As of March 31, 2009) Total number of shares to be issued Total number of issued shares Total number of shareholders

40

Yoji Eto

Japan Trustee Services Bank, Ltd. (Trust Account 4G)

Japan Trustee Services Bank, Ltd. (Trust Account)

The Master Trust Bank of Japan, Ltd. (Trust Account)

State Street Bank and Trust Company

Wilnau Co.

Trust and Custody Services Bank, Ltd. (Trust Account)

Masahiko Yamada

JPMCB Omnibus U.S. Pension Treaty Jasdec 380052

MASA-JAPANESE EQUITY

31,320

16,606

16,535

16,401

14,986

12,100

8,938

7,420

6,043

5,655

7.80

4.13

4.12

4.08

3.73

3.01

2.23

1.85

1.50

1.41

＊Wacom has 20,000 shares of treasury stock at the end of 2009 F.Y., which isn't included in the above list.＊Percentage of voting rights are calculated after deduction of treasury stock.

© 2009 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.

wacom annual report 2009

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