paltek report report to our shareholders (january 1, 2012 to december 31, 2012) year ended december...

PALTEK REPORTTo Our Shareholders

(January 1, 2012 to December 31, 2012)

Year Ended December 31, 2012

CODE:7587

To Our Shareholders P.1

For the Future Growth P.3

Outlook for the FY2013 P.5

Message from the Chairman P.6

Progress of Smart Energy Business Vol.5 P.6

Financial Statements P.7

Company Profile/Stock Information P.10

Index

010_0664202982503.indd 2 2013/04/30 14:43:39

We would like to express our sincere gratitude to all shareholders for your

ongoing support of PALTEK CORPORATION.

Review of Fiscal Year 2012

In the electronics industry, where the PALTEK Group operates, fiscal year

2012 was a year of sharp contrasts, displaying both bright spots and

shadows in terms of customers and the product market. It was a year that

tes ted the adaptab i l i t y o f the bus iness . For example , in the

telecommunication infrastructure market, the rapid spread and expansion of

smartphones and tablet devices was accompanied by vibrant activity,

whereas in the AV equipment market, competition heated up with the rise of

overseas manufacturers, while the industrial applications market was sluggish due to the economic slump in

Europe and weakened growth in emerging countries.

In this market environment, while the PALTEK Group performed strongly in sales targeting telecommunication

infrastructure, sales aimed at medical equipment and industrial applications declined. As a result, net sales

amounted to 13,231 million yen (a 19.2% decrease compared to the previous period).

In terms of profit and loss, although we carried out reductions in selling and administrative expenses, an

operating loss of 317 million yen (operating income of 221 million yen for the previous period) was posted.

This was due to a decline in net sales, a rise in cost of sales associated with a decrease in yen valuation of

purchase discount due to yen appreciation, along with lower gross profit margin resulting from the write-

down of products whose salability had declined.

With regard to ordinary income or loss, although a foreign exchange gain of 145 million yen was posted for

the consolidated fiscal year under review, an ordinary loss of 185 million yen (ordinary income of 198 million

yen for the previous period) was recorded. In terms of net income or loss, a net loss of 106 million yen (net

income of 48 million yen for the previous period) was posted, mainly due to 46 million yen recorded as

restructuring loss.

In these circumstances, recognizing that improving the earning capacity of the semiconductor business is

an urgent task, the PALTEK Group has been resolutely carrying out a reform of the business structure since

the latter half of fiscal year 2012.

President and Representative Director

Naohide Yabuki

1

To O u r S h a r e h o l d e r s

010_0664202982503.indd 1 2013/04/30 14:43:40

Implementation of concentration and streamlining of management resources

Since the latter half of fiscal year 2012, the PALTEK Group has engaged in efficient allocation and use of management resources, with waste eliminated. We have identified highly profitable products, and signif icant ly revised assignment of human resources. In the PLD business, we have promoted a fur ther increase in added value through combinations with other products.

Furthermore, we have carried out drastic revisions in costs, achieving reductions of approximately 220 million yen in selling and a d m i n i s t r a t i v e e x p e n s e s a t t h e PA LT E K CORPORATION alone, bringing down the break-even point considerably.

Getting on track for growth through improved profit in the semiconductor business

The PALTEK Group believes that we can expect growth from fiscal year 2013 onwards through stabilization of profits in the semiconductor business.

Performance has been favorable in the design service business, which is becoming a stronger presence in high value-added designs. In order to enhance this business as a PALTEK Group strength, Explorer Inc., a superior company in design such as image processing, was added to the Group in July 2012. As a result, we are leveraging this business to draw up plans for ver t ica l expans ions o f “ in -house product development” etc., which are currently being put into practice.

The smart energy business is a frontier business not included within the framework of the electronics industry; taking advantage of telecommunications and other technologies built up in the electronics industry, it responds to the needs of society as a whole. We believe that this business can exert the true value of PALTEK, as a company that has combined the seeds of various technologies from around the world with the many needs of Japanese electronics manufacturers.

◆◇◆◇◆◇◆◇◆◇◆◇◆◇◆◇◆◇◆◇◆◇◆◇

I was raised in Saroma-cho in Hokkaido, and grew up amid its bitter winter cold. Even in such severe

winters, when the temperature falls below freezing, there are plants growing in the snow-covered ground, patiently awaiting springtime, that will put forth beautiful, vividly-hued flowers when the season comes.

Likewise, the PALTEK Group is continuing its efforts in an adverse environment, and we will work to further improve management and to increase profitability so that, like these blooming flowers, PALTEK will be able to overcome this difficult period and make great strides forward.

I would like to ask all our shareholders for their continued support and understanding as we move the PALTEK Group forward.

Identify products on which to concentrate

∙ Concentrate on products with high profitability, for which growth is predicted in the future

Review allocation of resources

∙ Shift resources mainly to products with high profitability and growth

Further increase profitability centered

on PLD

∙ Enhance sales to small-to-mid-size enterprises

∙ Synergies with high performance analog, high quality power supply, and high speed memory, etc.

Lowering the break-even point

∙ Substantial reduction of office costs

∙ Review human resources costs

Promote streamlining of business procedures

∙ Implementation of new ERP system

Revision of group companies

∙ Remove Spinnaker Systems, Inc. from scope of consolidation

Increasepro�tability

of semiconductorbusiness

Technological capacityAdvanced technical

support capacityProposal capacity of

system-based solutions

Enhance designservice business

Promote smartenergy business

■ Measures to concentrate and streamline management resources

2

Message to Our Shareholders

010_0664202982503.indd 2 2013/04/30 14:43:40

The Japanese electronics industry is experiencing

extremely fierce global competition due to the

emergence of new forces in the Asian countries.

However, even in that context, we believe that Japan

has retained its competitive advantage, and will

continue to do so, in business domains in which it

excels such as industrial applications, automotive-

related, and medical equipment.

Looking at the domestic market, it is believed that

demand related to reconstruction and investment in

social infrastructure will continue, and we will expand

and improve our solutions targeting these markets

that will grow in the future.M

arke

t sc

ale

Larg

eMa

rket s

cale

Small

Smartphones

Smart metersHome appliances, etc.

Telecommunication infrastructure

FA systemsEndoscopesBroadcasting equipment, etc.

Design service

PLD GeneralPurpose IC

Analog IC

NXP Semiconductors N.V.

Linear Technology Corporation

Microchip Technology, Inc.

Micron Technology, Inc.

Mass productionDevelopment Prototype Verification

Product development process

Applicationspecific IC

Growth markets Reason for growth Application

Telecommunication field

Market expectations for high-speed transmission of high-definition image data, etc.

LTE-compatible base station devices[New markets] Smartphones, mobile devices

Industrial applications field

Market expectations for social infrastructure enhancement and capital investment, etc.

FA system related equipment, broadcasting equipment related devices (file base related equipment, ultra high definition cameras, etc.)[New markets] ITS system, surveillance system

Medical fieldMarket expectations for aging society and increased health/wellness awareness

Endoscopes and the related devices, diagnostic imaging equipment, various analyzing devices[New markets] Blood pressure monitors, bathroom scales,

intravenous pumps

Energy fieldMarket expectations for power saving/next generation regenerated energy/power grids

Proposal of solutions for energy management (power saving), power control, power storage systems, energy conservation, etc.[New markets] Smart meters, inverters, converters, lighting

(LED) related equipment

Growth markets

The PALTEK Group will further hone its strengths,

and increase its competitive advantage, in order to

raise profitability and thereby overcome the harsh

business environment.

To that end, we will work on the following two

points:

1) Expanding and improving solutions for growth

markets

2) Enhancing the design service business and

expanding the business domain

Approach to growth marketsBy concluding distribution agreements with major

semiconductor manufacturers in 2011 and 2012, the

PALTEK Group has been able to propose even more

products in major markets which we could not cover

fully previously. We will continue to accelerate

proposals aimed at growth markets.

Efforts to increase profitability

Expanding and improving solutions for growth markets

3

Special Topic/For the Future Growth

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Expanding the business domainThe addition of Explorer Inc. to the PALTEK Group

will propel our design service business to the next

stage. For one, we will promote the ODM business*

utilizing Explorer’s image compression and image

processing technologies, as well as fabless business

knowhow; secondly, this will allow us to make a full-

fledged entry into the in-house product business with

video and image processing-related products, etc.

With the full-scale launch of the ODM business, we

will be able to accept manufacturing contracts for

mass produced products, and further expand our

business results. In addition, we can exert synergistic

effects by incorporating PALTEK products at the time

of design, thus contributing to increased profitability

in the semiconductor business.

* ODM (Original Design Manufactured): a term used for contracted

manufacturing which consists not only of the production of products

under the brand name of the ordering company, but also the design

Enhancing the design service business and expanding the business domain

484

■ Contracted Design Results (Year ended December 31, 2012)

21%

19%14%12%

8%

0

3%

11%12%

■ Design Service Business Results Trends

Sales

Year ended December

31, 2008

372

Year ended December

31, 2009

527

Year ended December

31, 2010

626

Year ended December

31, 2011

572

Year ended December

31, 2012

1,050

Year ending December 31, 2013 (forecast)

1,200(Millions of yen)

1,000

800

600

400

200

0%

Pro�t margin

60%

50%

40%

30%

20%

10%

■ R&D/Other■ Aviation/Space/Defense■ Video/Broadcasting■ Medical■ FA (Inspection Devices/Measurement)■ Industrial Applications■ Communications■ Automotive Related

Covering a broad range of markets in which Japan excels

Enhancing the design service businessIn comparison with the semiconductor business, the

design service business is highly profitable, with

gross profit margin exceeding 40%. Applications of

contracted design cover a broad range of markets in

which Japan excels, and that have potential for future

growth. Additionally, in order to enhance the design

service business, Explorer Inc., a company with

strengths in image processing solutions, was added

to the Group in July 2012, considerably bolstering

our design development capacity. Accordingly, we

are predicting net sales of over 1.0 billion yen for

fiscal year 2013.

Product development process of customers

Product planning

Contracted Design

ODMNew business

domain

Synergistic effects with semiconductor business

Development of in-house products

Research and development Design and development Prototype and verification

Example: low latency HDTV H.264 manufactured by Explorer

Encoder/decoder devices

Mass production

Des

ign

Ser

vice

Bus

ines

s

4

Special Topic/For the Future Growth

010_0664202982503.indd 4 2013/04/30 14:43:41

Outlook for fiscal year 2013

From the economic perspective for Japan in fiscal year 2013, signs of recovery can be seen as a result of demand related to reconstruction after the earthquake, and the shift from an extraordinary appreciation of the yen to a weaker yen against the dollar. However, some uncertainty is expected to remain due to concerns about factors for a potential downturn such as the ongoing financial crisis in Europe and the rising price of energy.

The electronics industry, in which the PALTEK Group operates, is marked by tough conditions including intensifying global competition resulting from the appearance of new manufacturers in emerging nations. Even so, there is a prospect of moderate recovery, which is likely to be driven by the shift from an extraordinary appreciation of the yen to a weaker yen against the dollar, the adoption of smarter approaches in energy conservation and energy systems to deal with electricity shortages and the te lecommunicat ion in f rast ructure investments to cope wi th the increase in communication traffic.

In such an economic environment, regarding the PALTEK Group’s focus fields, efforts will be directed toward continuing to expand sales through technical support for customers connected with the telecommunication infrastructure and industrial applications fields, while moving ahead with cultivation of middle-level and small-to-medium size enterprise customers. In addition, we will expand sales by increasing sales of products from the three major semiconductor manufacturers with whom we entered into distribution agreements in recent years. Furthermore, in the design service business, to which PALTEK has dedicated efforts in the past several years, the repeat customer segment is increasing, and the business is in the process of steady growth. Also, with the addition to the Group of Explorer Inc. in July 2012, we have built a foundation that will allow us not only to handle contracted design, but also to receive ODM contracts and to expand in-house product business with video and image processing-related products, etc., thus advancing the business in order to further increase its degree of contribution to profitability.

Business results forecast for fiscal year 2013

Through these efforts, our consolidated full-year results forecasts are for 14.5 billion yen in net sales, 150 million yen in operating income, 120 million yen in ordinary income, and 72 million yen in net income. Regarding dividends, we plan to distribute a term end dividend of 5 yen per share.


15,000

10,000

5,000

Year ended December

31, 2009

Year ended December

31, 2010

Year ended December

31, 2011

Year ended December

31, 2012

16,367

0

14,762

16,499

13,231


14,500

221 198

(317)

(185)

400

600(Millions of yen)

200

-400

-200

322

0

(103)

448

(182)

Operating income (loss)Ordinary income (loss)

Year ended December

31, 2009

Year ended December

31, 2010

Year ended December

31, 2011

Year ended December

31, 2012

150 120


(106)

200

300 30

20

10

0

-20

-10

(Millions of yen) (yen)

100

-200

-100

0

Net income (loss)Net income (loss) per share

238

48

(60)

Year ended December

31, 2009

Year ended December

31, 2010

Year ended December

31, 2011

Year ended December

31, 2012

72


Operating income (loss) / Ordinary income (loss)

Net income (loss) / Net income (loss) per share

Net sales

5

O u t l o o k fo r t h e F Y 2 013Outlook for the FY2013

010_0664202982503.indd 5 2013/04/30 14:43:41

“Competent mediators” needed now more than ever

I would like to express my sincere gratitude to all shareholders for your ongoing support of PALTEK CORPORATION.

The environment surrounding the electronics industry remains harsh amid buffeting global waves. I see these waves not as a temporary phenomenon limited to the electronics industry, but as the start of the collapse and reform of existing industry structures, triggered by the energy crisis that arose after the earthquake in March 2011. Existing organizations, including cities and towns, are facing problems that cannot be resolved by acting within the traditional framework of our industries. Now, as those problems have become evident, it is indeed the dawn of a revolution giving birth to new business needs that transcend the framework of business categories.

The ability to adapt to the waves of this revolution will be an essential condition for companies to survive into the next generation. I believe that the type of company demanded in this revolutionary era is not the large-scale, comprehensive model of business structure that has trouble optimizing details, but the “competent mediator” that can make proposals by flexibly combining specialized teams from each sector. Through the smart energy business* that PALTEK has been pursuing since April 2010, we have realized the need for competent mediators, and have built up a record of solution proposals that are not confined to existing frameworks.

Since the founding of PALTEK, I have constantly affirmed that business is “the knack of responding to changes.” PALTEK is currently pressing ahead with preparations to make the shift to cope with the new framework a step ahead of other companies. I invite you to expect a lot from the PALTEK smart energy business.* Name changed from “smart grid business” to “smart energy business”

Chairman and Representative Director

Tadahito Takahashi

Progress of Smart Energy Business Vol. 5

Launch of “power outage measures system for hospitals,” which combines the medical UPS evolved for hospitals from conventional storage battery system, lithium-ion storage battery and low pressure LP gas generator

Applications:∙ Operates medical equipment without interruption even

during power outages, through medical UPS which meets safety standards for medical electricity.

∙ Effectively supplies electricity to medical equipment in hospital wards (mechanical ventilators, infusion pumps, syringe pumps, vital signs monitors, etc.)

∙ Recommended for medical inst i tut ions where electricity needs are increasing due to increase of advanced medical equipment (including cases where generators initially installed at the facility can no longer provide an adequate supply of electricity)

Advantages of installation:∙ Allows medical institutions to provide a supply of safe

electricity over long periods (100 hours per LP gas 50 kg container) primarily for hospital wards during power outages.

∙ Does not require much space to install, and is therefore highly suitable as a supplementary system for the facility’s own generator.

LPG-powered potable inverter generator

Lithium-ion storage battery + Medical-use UPS

Medical equipment / In-hospital facilities

Patient monitors

Syringe pumps

Infusion pumps

RespiratorsAvailable only from LP

gas suppliers

(Outdoor operation) Ordinary conditions

Power outage

Expected lifespan: 10 years or more

Capacity 2.4kWh

Output 1,500VA

(Indoor installation)

6

Message from the ChairmanMessage from the Chairman

010_0664202982503.indd 6 2013/04/30 14:43:41

Year ended December 31, 2010



Assets

Current assets 9,307,042 9,595,080 8,635,545

Noncurrent assets 467,191 390,464 630,949

Total assets 9,774,233 9,985,545 9,266,495

Liabilities

Current liabilities 1,455,756 1,692,484 1,118,056

Noncurrent liabilities 234,287 239,909 258,479

Total liabilities 1,690,044 1,932,393 1,376,535

Net assets

Shareholders’ equity 8,087,236 8,055,419 7,891,601

Capital stock 1,339,634 1,339,634 1,339,634

Capital surplus 2,698,526 2,698,526 2,698,526

Retained earnings 4,244,493 4,212,696 4,048,957

Treasury stock (195,417) (195,437) (195,516)

Accumulated other comprehensive income (3,047) (2,268) (1,642)

Total net assets 8,084,189 8,053,151 7,889,959

Total liabilities and net assets 9,774,233 9,985,545 9,266,495

Consolidated balance sheets (Summary) (Thousands of yen)

PLD Analog ASSP Memory

20,000


15,000

10,000

5,000

16,499

20,726

5,950

3,231

5,518

5,657

6,384

7,064

1,619

0

1,80014,762

4,692

3,018

5,535

1,516 13,231

6,519

409

5,341

960

Year ended December

31, 2008

Year ended December

31, 2009

Year ended December

31, 2010

Year ended December

31, 2012

16,367

7,555

876

6,508

1,427

Year ended December

31, 2011

• Net sales

Net assets Total assets Capital ratio

100

90

80

70

60

50

12,000

9,600

7,200

2,400

4,800

8,084

9,774

7,905

9,102

10,321

8,137

0

(Millions of yen) (%)

8,053

9,985

Year ended December

31, 2009

Year ended December

31, 2010

Year ended December

31, 2011

Year ended December

31, 2012

Year ended December

31, 2008

78.8%

82.7%

86.8%

80.6%7,889

9,26685.1%

• Total assets, Net assets, Capital ratio

POINT 2 Current liabilities

This is attributable to such factors as deceases in notes and accounts payable–trade and advances received.

POINT 1 Current assets

This is attributable to such factors as deceases in cash and deposits, notes and accounts receivable–trade, and advance payments–trade.

1

2

7

F i n a n c i a l S t a t e m e n t s

010_0664202982503.indd 7 2013/04/30 14:43:42




Net sales 16,499,956 16,367,707 13,231,898

Cost of sales 13,635,544 13,581,224 11,106,472

Gross profit 2,864,411 2,786,482 2,125,426

Selling, general and administrative expenses 2,541,566 2,564,598 2,443,290

Operating income (loss) 322,844 221,883 (317,864)

Nonoperating income 154,624 15,059 164,946

Nonoperating expenses 28,914 38,250 32,270

Ordinary income (loss) 448,554 198,692 (185,187)

Extraordinary income 39 0 14,349

Extraordinary loss 2,252 47,601 51,940

Income (loss) before income taxes and minority interests 446,341 151,091 (222,779)

Income taxes 208,127 102,884 (116,186)

Income (loss) before minority interests — 48,206 (106,592)

Net income (loss) 238,213 48,206 (106,592)

Consolidated statements of income (Summary) (Thousands of yen)




Income (loss) before minority interests — 48,206 (106,592)

Other comprehensive income

Valuation difference on available-for-sale securities — 146 626

Deferred gains or losses on hedges — 632 —

Total other comprehensive income — 779 626

Comprehensive income — 48,985 (105,966)

Consolidated Statements of Comprehensive Income (Summary) (Thousands of yen)

POINT 4 Nonoperating income/Nonoperating expenses

Foreign exchange gains of 145 million yen were posted in fiscal year 2012 (foreign exchange gains of 132 million yen were posted in fiscal year 2010, while foreign exchange losses of 3 million yen were posted in fiscal year 2011).

POINT 3 Gross profit

Gross profit margin declined from 17.0% in fiscal year 2011 to 16.1% in fiscal year 2012 due to factors including the write-down of products whose salability is low.

POINT 5 Extraordinary loss

Loss on adjustment for changes of accounting standard for asset retirement obligations of 34 million yen was posted in fiscal year 2011, while restructuring loss of 46 million yen was posted in fiscal year 2012.

POINT 6 Cash Flows

(Net Cash Provided by (used in) Operating Activities)

Net cash used in operating activities amounted to 202 million yen, attributable to such factors as a decrease in trade receivables, as well as the posting of loss before income taxes and minority interests of 222 million yen, an increase in accounts receivable–other, and a decrease in trade payables.

(Net Cash Provided by (used in) Investing Activities)

Net cash used in investing activities amounted to 495 million yen, attributable to such factors as the acquisition of shares in Explorer Inc., the sales of shares in Spinnaker Systems, Inc. and the resultant exclusion of the said company from the scope of consolidation.

(Net Cash Provided by (used in) Financing Activities)

Net cash used in financing activities amounted to 67 million yen, attributable to such factors as payment of dividends.

3

4

4

5

8

Financial Statements

010_0664202982503.indd 8 2013/04/30 14:43:42




Net cash provided by (used in) operating activities (163,338) 543,781 (202,315)

Net cash provided by (used in) investing activities (26,637) (24,459) (495,096)

Net cash provided by (used in) financing activities (58,741) (81,284) (67,483)

Effect of exchange rate changes on cash and cash equivalents (28,118) 14,481 25,404

Net increase (decrease) in cash and cash equivalents (276,834) 452,519 (739,490)

Cash and cash equivalents at beginning of period 2,302,915 2,026,080 2,478,600

Cash and cash equivalents at end of period 2,026,080 2,478,600 1,739,109

Shareholders’ equity

Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity

Balance as of Jan. 1, 2012 1,339,634 2,698,526 4,212,696 (195,437) 8,055,419

Changes of items during the period

Dividends from surplus (57,145) (57,145)

Net loss (106,592) (106,592)

Purchase of treasury stock (79) (79)

Net changes of items other than shareholders’ equity

Total changes of items during the period — — (163,738) (79) (163,818)

Balance as of Dec. 31, 2012 1,339,634 2,698,526 4,048,957 (195,516) 7,891,601

Accumulated other comprehensive income

Total net assetsValuation difference on available-for-sale securities

Total accumulated other comprehensive income

Balance as of Jan. 1, 2012 (2,268) (2,268) 8,053,151

Changes of items during the period

Dividends from surplus (57,145)

Net loss (106,592)

Purchase of treasury stock (79)

Net changes of items other than shareholders’ equity 626 626 626

Total changes of items during the period 626 626 (163,192)

Balance as of Dec. 31, 2012 (1,642) (1,642) 7,889,959

Consolidated statements of cash flows (Summary) (Thousands of yen)

Consolidated statements of changes in net assets, Year ended December 31, 2012 (Thousands of yen)

Net cash provided by (used in) operating activities

Net cash provided by (used in) financing activities

Net cash provided by (used in) investing activities

600 (Millions of yen)

-600

0

200

400

-200

-400

Year ended December

31, 2010

Year ended December

31, 2012

Year ended December

31, 2011

(163)

(26)(58)

(495)

(67)

543

(24)(81)

(202)

Trend of cash flows

6

6

6

9

F i n a n c i a l S t a t e m e n t sFinancial Statements

010_0664202982503.indd 9 2013/04/30 14:43:43

Company Profile (as of December 31, 2012)

Stock Information (as of December 31, 2012)• Total number of authorized shares 23,562,000 shares

• Total number of shares issued 11,849,899 shares

• Number of shares per lot 100 shares

• Number of shareholders 2,378

• Breakdown of shareholders by volume owned

• Breakdown of ownership by shareholder type

• Principal shareholders

Name Number of shares held

Equity ownership

(%)

Endeavor Corporation 3,575,480 31.28

Nomura PB Nominees TK 1 Limited 2,227,900 19.49

Goldman Sachs International 734,100 6.42

Dave Brauer 592,440 5.18

Deutsche Bank AG London PB Nontreaty Clients 613 439,900 3.84

Tadahito Takahashi 313,940 2.74

PALTEK Employee Share Ownership Plan 276,344 2.41

Mitsuyo Hirasawa 177,200 1.55

Ryo Mukai 150,000 1.31

Ryuta Osawa 86,000 0.75

Notes: 1. The equity ownership is calculated with treasury stock of 420,917 shares excluded. 2. PALTEK maintains 420,917 shares of treasury stock (accounting for 3.55% of the

total number of shares issued). However, PALTEK is excluded from the above list of principal shareholders.

• Directors and Corporate Auditors (as of December 31, 2012)

Chairman and Representative Director Tadahito Takahashi

President and Representative Director Naohide Yabuki

Director Ryoji Shibata

Director Takahiro Mituya

Director Hiroki Inoue

Director Hiroyuki Takasaki

Standing Audit & Supervisory Board Member Satoshi Sekimoto

Audit & Supervisory Board Member Makoto Fukui

Audit & Supervisory Board Member Koichi Hasegawa

1,000 lots or more6

500 lots or more3

100 lots or more47

50 lots or more60

Less than 1 lot283

10,000 lots or more2

5,000 lots or more2

10 lots or more557

5 lots or more282

1 lots or more1,136

1 / 420,917 shares

Individuals and others2,326 / 3,604,183 shares

Treasury stock Financial institutions5 / 93,000 shares

Financial instruments firms

9 / 63,097 shares

Foreign institutions20 / 4,055,091 shares

Other corporations

17 / 3,613,611 shares

• Offices

● Head OfficeShin-Yokohama Square Bldg.,2-3-12 Shin-Yokohama, Kouhoku-ku, Yokohama, Kanagawa222-0033, JapanTEL: +81-45-477-2000 FAX: +81-45-477-2012

● West Japan BranchTCS Bldg.,1-14-33 Esaka-cho, Suita, Osaka 564-0063, JapanTEL: +81-6-6384-2281 FAX: +81-6-6338-1681

● Fukuoka BranchOnuki Hakataekimae Bldg., 3-6-12 Hakataekimae, Hakata-ku,Fukuoka, Fukuoka 812-0011, JapanTEL: +81-92-432-5701 FAX: +81-92-432-5703

● Singapore Branch10 Anson Road #24-06 International Plaza Singapore 079903TEL: (65)-6423-0776 FAX: (65)-6423-0494

● Machida Logistics CenterTenko Bldg. 17,687-1 Tsuruma, Machida, Tokyo 194-0004, Japan(Logistics Center) TEL: +81-42-788-5560(Programming Center) TEL: +81-42-788-5561

• Company Name PALTEK CORPORATION

• Established October 1982

• President and Representative Director

Naohide Yabuki

• Employees Parent basis: 202Consolidated basis: 233

• Capital 1,339,634 thousand yen

• Subsidiaries Explorer Inc.PALTEK Hong Kong Limited

• Main Banks Sumitomo Mitsui Banking Corporation,The Bank of Tokyo-Mitsubishi UFJ, Ltd.,Mizuho Bank., Ltd.,Mitsubishi UFJ Trust and Banking Corporation,Yokohama Bank, Ltd.

• Main Customers NEC Corporation, Sony Corporation, Sumitomo Electric Industries, Ltd., Anritsu Corporation,Olympus Corporation, Fujitsu Limited, Hitachi, Ltd.,Toshiba Corporation, KYOCERA Corporation, etc.

• Main Suppliers Xilinx Inc. (U.S.A.)AudioCodes, Ltd. (Israel)Ikanos Communications (U.S.A.)Linear Technology Corporation (U.S.A.)Microchip Technology, Inc. (U.S.A.)Micron Technology, Inc. (U.S.A.)NXP Semiconductors N.V. (The Netherlands)PLX Technology, Inc. (U.S.A.)Synaptics Inc. (U.S.A.)Bellnix Co., Ltd. (Japan) etc.

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Company Profile/Stock InformationCompany Profile/Stock Information

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Business year From January 1 to December 31

Register closing date for dividend receivable Term end dividend, December 31

Interim dividend, June 30

Annual general meeting of shareholders March each year

Transfer agentAccount management institution for special account

Mitsubishi UFJ Trust and Banking Corporation

Contact Transfer Agent Department, Mitsubishi UFJ Trust and Banking Corporation

10-11, Higashisuna 7-chome, Koto-ku, Tokyo 137-8081

Tel. 0120-232-711 (Toll free number)

Listed stock exchange Osaka Securities Exchange’s Jasdaq market

Method of public notice Electronic public notices:

URL-posted public notice: http://www.paltek.co.jp/corporate/index.htm

However, should electronic public notices become unavailable in the event of a contingency, the Nihon Keizai Shimbun shall be used for public notices.

Shin-Yokohama Square BLDG.,2-3-12 Shin-Yokohama, Kouhoku-ku, Yokohama,Kanagawa 222-0033, Japan

http://www.paltek.co.jp/

Editor’s NoteYoshinori Shibasaki, Investor Relations

Tel. +81-45-477-2000 (main) email contact: [email protected]

The power outage measures system developed by PALTEK was born out of the challenge of finding ways to secure electricity during power outages at evacuation centers, in the context of activities to support recovery after the Great East Japan Earthquake. This system evolved into a power outage measures system for hospitals, and was implemented at a general hospital in November 2012. In order to install the system, we surveyed the power consumption of medical equipment at the hospital, and determined how to coordinate the existing power generating equipment at the facility with the PALTEK system, making it possible to effectively operate medical equipment required during power outages. PALTEK positions this power outage measures system as a product with great social significance and needs, and those responsible for the system are highly motivated in proposing it to our customers.

Going forward, we will continue to offer even better products that will bring delight to our customers and smiles to our own faces as well.

We will continue to report on PALTEK Group endeavors in the PALTEK Report, and any opinions or thoughts you may have are most welcome.

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S h a r e h o l d e r M e m o

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paltek report report to our shareholders (january 1, 2012 to december 31, 2012) year ended december...

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