ANNUAL REPORT 2012 - Hamamatsu Photonics · In fiscal year 2012, sales of these products accounted for 43.1% of the company’s total revenue. Sales of opto-semiconductors In opto-semiconductor

ANNUAL REPORT 2012For the year ended September 30, 2012

HAMAMATSU PHOTONICS K.K.


325-6, Sunayama-cho, Naka-ku, Hamamatsu City 430-8587, JapanTelephone:81-53-452-2141, Fax:81-53-456-7889

Homepage Address:http://www.hamamatsu.com

HEADQUARTERS



Table of contents

FINANCIAL HIGHLIGHTS...2

TO OUR SHAREHOLDERS...4

DIVISIONAL REVIEW...6

RESEARCH & DEVELOPMENT...8

TOPICS...10

FINANCIAL REVIEW...12

FIVE-YEAR SUMMARY...14

CONSOLIDATED SUBSIDIARIES...15

CONSOLIDATED BALANCE SHEETS...16

CONSOLIDATED STATEMENTS OF INCOME...18

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME...18

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS...19

CONSOLIDATED STATEMENTS OF CASH FLOWS ...20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...21

REPORT OF INDEPENDENT AUDITORS...29

DIRECTORS AND CORPORATE AUDITORS...30

CORPORATE DATA...31

PROFILE OF THE HAMAMATSU FAMILY...32

2

FINANCIAL HIGHLIGHTS

(*) The U.S. dollar amounts above and elsewhere in this report represent translations, solely for the convenience of the reader, using the exchange rate of Japanese ¥78 = U.S.$1.

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Consolidated:

Millions of Japanese Yen

Thousands of U.S. Dollars (*)

2011 2012 2011 2012

Net sales ...................................................................................... ¥ 101,858 ¥ 98,067 $ 1,305,880 $ 1,257,276 Operating income ......................................................................... 21,830 17,587 279,876 225,480 Income before income taxes and minority interests .................... 21,719 17,812 278,456 228,364 Net income ................................................................................... 13,702 11,206 175,672 143,672

Total assets .................................................................................. 188,091 189,970 2,411,430 2,435,515 Net assets .................................................................................... 133,434 140,873 1,710,694 1,806,064

R & D expenses ........................................................................... 10,081 10,765 129,251 138,023

Per share data (in Yen and U.S. Dollars)Net income ............................................................................. ¥ 170.44 ¥ 139.39 $ 2.18 $ 1.78 Cash dividends ....................................................................... ¥ 44.00 ¥ 46.00 $ 0.56 $ 0.58

Annual Report 2012

3

Non-consolidated:


Thousands of U.S. Dollars (*)

2011 2012 2011 2012

Net sales ...................................................................................... ¥ 90,732 ¥ 85,108 $ 1,163,240 $ 1,091,139 Operating income ......................................................................... 18,328 13,682 234,981 175,419 Income before income taxes ........................................................ 19,680 15,306 252,319 196,236 Net income ................................................................................... 12,689 9,531 162,684 122,201

Total assets .................................................................................. 175,032 174,725 2,244,001 2,240,067 Net assets .................................................................................... 125,445 131,347 1,608,273 1,683,947

R & D expenses ........................................................................... 9,934 10,517 127,362 134,840

Per share data (in Yen and U.S. Dollars)Net income ............................................................................. ¥ 157.57 ¥ 118.36 $ 2.02 $ 1.51 Cash dividends ....................................................................... ¥ 44.00 ¥ 46.00 $ 0.56 $ 0.58

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4

TO OUR SHAREHOLDERS

Dear Shareholders:

On behalf of everyone at Hamamatsu Photonics, I would like

to express our gratitude to all shareholders for their continued

support over the past year. In what follows, I will report on the

overall condition of our Company during the consolidated fiscal

year that ended on September 30, 2012.

At the beginning of this period, we saw some signs of

improvement in the Japanese economy as recovery demand

from the Great East Japan Earthquake spurred slight rebounds

in industry and capital investment. But this trend was not robust

and had come to a standstill by the end of the fiscal year.

Meanwhile, the world economy struggled with difficulties such

as the financial crisis in Europe, and the high valuation of the

Japanese yen against other currencies continued unabated.

Given these severe circumstances, as a Company we found

ourselves in as challenging a selling environment as ever. To

maintain revenue and profit, we strove to develop new products

for customers’ needs by leveraging our optical technology,

derived from our basic and applied research in photonics.

These efforts were bolstered by proactive sales activities.

In terms of financial results, the Company’s overall revenue in

fiscal year 2012 was ¥98,067 million. Despite a small increase

in revenue from the Japanese market, this revenue figure

represents a decrease of ¥3,791 (3.7%) million compared to

the previous fiscal year. Unfortunately, decrease in revenue

was accompanied by decrease in profits. Operating income

was ¥17,587 million, which was ¥4,242 million (19.4%) less than

the previous period. As for net profit, this was ¥11,206 million,

which was ¥2,495 million (18.2%) less than the prior period.

Annual Report 2012

5

Akira HirumaPresident and CEODecember 20, 2012

Although our financial results were not as hoped for, this can partly be attributed to the fact that some of our customers

entered a phase of inventory adjustment in fiscal year 2012 after having purchased excess stock due to supply-chain

concerns following the Great East Japan Earthquake. But again, in general we have been operating within a world

economy where concerns over European public finances and its possible effects on other economic drivers, such as

the employment rate in the United States and the growth rate of Asian economies, make it difficult for us to see what

lies ahead, and where uncertainty over currency exchange also leaves us guessing.

Nevertheless, as an organization dedicated to research and development, Hamamatsu Photonics will stay on the

long-term path to fostering innovation through the technologies of light. In business, we will strive to quickly meet

the demands of Asian markets, where product development requirements may differ from those in Japan, the United

States or Europe. And, true to our mission, we will continue to seek opportunities for developing new photonics-based

industries.

As our Company moves ahead, I look forward to even greater support and encouragement of our activities. Thank you.

Sincerely,

6

DIVISIONAL REVIEW

Electron Tube Division

For over 50 years, Hamamatsu Photonics has developed and manufactured photomultiplier tubes. This technology continues to evolve today at the Electron Tube Division, one of the company’s primary manufacturing divisions. The Electron Tube Division also develops and manufactures a variety of products for use in medical applications, chemical analysis, measurement, industrial testing, and academic research. These products include photomultiplier tubes, electron multipliers, microchannel plates, image intensifiers, X-ray products, and a wide variety of light sources. In fiscal year 2012, sales of these products accounted for 43.1% of the company’s total revenue.

Sales of photomultiplier tubes

Photomultiplier tubes (PMT) are used in a wide variety of applications. For oil well logging, which requires PMTs that can withstand harsh operating conditions when used thousands of meters underground, we released new devices that contributed to increased sales. However, overall sales of PMTs decreased due to factors such as inventory adjustment by overseas customers in the medical field (PET imaging systems, blood analyzers, etc.). As a result, sales of PMTs in fiscal year 2012 were ¥24,468 million, a decrease of 4.0% over the previous fiscal year.

Sales of imaging devices and light sources

In this category, growth in sales were achieved among products such as scintillators for converting X-rays into visible light as well as light sources for analytical and industrial applications. On the other hand, reduction in capital spending in the industrial sector had an adverse affect on the sales of microfocus X-ray sources for non-destructive testing. Sales of our Stealth Dicing Engine for high-speed, high-quality dicing of various types of wafers were similarly affected. As a result, sales of imaging devices and light sources in fiscal year 2012 were ¥17,777 million, a decrease of 3.3% over the previous fiscal year.

PMT for oil well logging

Application of X-ray scintillators

Image sensor

X-ray scintillators

X-ray

Annual Report 2012

7

Solid State Division

The Solid State Division develops and manufactures opto-semiconductors for demanding applications in medical imaging, high-energy physics, and scientific measurement. Products from this division include silicon photodiodes, photo IC components, position sensitive detectors, infrared detectors, image sensors for low-light-level imaging and X-ray imaging, mini-spectrometers, and light emitting devices. In fiscal year 2012, sales of these products accounted for 43.1% of the company’s total revenue.

Sales of opto-semiconductors

In opto-semiconductor business, strong sales of image sensors for dental X-ray imaging were achieved, particularly in overseas markets, thanks to increased market demand and the suitability of our products for customers’ needs. However, sales of the major product line of silicon photodiodes were less than the previous period because of overstocking in 2011 by customers after the Great East Japan Earthquake. Also, the high valuation of the Japanese yen had a negative impact on sales of products such as Photo ICs, which are used for optical communication networks in cars. In summary, sales of opto-semiconductors were ¥42,228 million in fiscal year 2012, a decrease of 2.4% compared to the previous fiscal year.

Systems Division

The Systems Division develops and manufactures a wide variety of cameras for scientific and industrial applications, as well as specialized instruments for use in fields such as pharmaceutical development, semiconductor manufacturing, X-ray nondestructive inspection, spectrophotometry, and optical communications. In fiscal year 2012, sales of these products accounted for 11.2% of the company’s total revenue.

Sales of imaging and measurement systems

Among our various systems, the FDSS (Functional Drug Screening System) for drug discovery had strong sales thanks to its high sensitivity and high reliability. As for digital cameras, while the new ORCA-Flash4.0 did well in the scientific measurement market, this product category as a whole had significantly lower sales due to inventory adjustments at our customers and also to reduction in research funds by the U.S. government. Similarly, sales of failure analysis systems for semiconductor manufacturing were negatively affected by changes in the capital spending plans of Japanese customers. Overall sales of imaging and measurement systems were ¥10,983 million in fiscal year 2012, a decrease of 11.0% compared to the previous fiscal year.

CCD area image sensors

ORCA-Flash4.0

8

RESEARCH & DEVELOPMENT

With decades of accumulated expertise in the development of photonic technologies to rely upon, Hamamatsu Photonics conducts basic research to discover new knowledge and create new industries in the fields of biotechnology, medicine, information technology, communications, energy, materials, astronomy, and agriculture. We also strive to continuously develop exciting new products and enhance existing products with added functionality. In fiscal year 2012, funds allocated to research and development totaled ¥10,765 million, an increase of 6.8% over the previous fiscal year. Some highlights of our R&D efforts are presented here.

Basic research

Observation of intercellular communication in live cells

In biology, we continue to research the use of quantitative phase microscopy, which differs from electron microscopy and fluorescence microscopy in that it enables non-invasive imaging of live cells. So far, we have successfully used the technique to capture 3D moving images of intercellular communication. It is hoped that quantitative phase microscopy will be adopted as an advanced research tool for observing the interaction of cells in applications such as cyto screening, drug screening, and cellular immune therapy.

LCOS-SLM module for 3D multipoint control of laser light

In the field of optical information processing, a LCOS-SLM (liquid crystal on silicon, spatial light modulator) module was developed for focusing laser light at multiple points(*1). The module can be used to split one short laser pulse into a desired number of focused points in a desired pattern, which makes it possible to perform 2D or 3D laser processing on quickly moving objects at once. The development of this module is intended to help make laser processing more versatile and suitable for new applications.

(*1)PartofthisprojectwasconductedincollaborationwithKyotoUniversityandcommissionedbyJapan’sNEDO(NewEnergyandIndustrialTechnologyDevelopmentOrganization).

Intercellular communication as captured by quantitative phase microscopy

Annual Report 2012

9

Product development

Large-diameter (8-inch) hybrid photodetector for neutrino measurement

Until now, photomultiplier tubes (PMTs) have been the conventional choice for detecting neutrinos and other subatomic particles. But now there is another choice as we have successfully developed a large-diameter hybrid photodetector in which a high-speed, high-sensitivity opto-semiconductor is used as the photomultiplication element of the detector. In this new hybrid photodetector, energy resolution is approximately twice that of a similarly-sized PMT, and time resolution has been improved by roughly 10 times. The hybrid photodetector also contains fewer components, which simplifies manufacturing and allows us to expect excellent mass production. We believe this new device will be contribute to basic research in physics and astrophysics, as well as find use in industrial applications.

Extremely small, high-performance MEMS mirrors

Through the application of our proprietary MEMS(*2) processing technology, we have developed ultra-small magnetic-actuation MEMS mirrors that offer high reflectivity and low power consumption. The scanning angle of the mirror can be operated at low voltage, and is manipulated to change the direction of laser light from semiconductor lasers to project an image. Among the possible applications of this device are head-up displays in cars (to show information from various meters and the navigation system) and microprojectors installed in smartphones or portable computers.

(*2)MEMS(micro-electro-mechanicalsystems)referstoextremelysmallmechanicaldeviceswhicharefabricatedwithsemiconductormanufacturingtechnologies. MEMS mirrors

Hybrid photodetector

10

Miniature multifunction photo IC for smartphones

In recent years, more and more sensors have been added to smartphones, including color sensors for automatic color adjustment, illuminance sensors for automatically adjusting the brightness of the screen, and proximity sensors to prevent errant operations and to save battery power. In 2012, we developed the world’s first photo IC to integrate all three of these sensors into a single miniature package (1.7 mm x 5.3 mm x 1.0 mm). This inexpensive photo IC also offers minimal power consumption due to low-voltage operation and an automatic sleep mode. In the future, we will find more ways to combine our deep expertise in opto-semiconductors with our capabilities in CMOS and MEMS technologies, as we seek to become more involved in the development of new miniaturized, multifunction optical sensors for smartphones.

Establishment of West Japan sales office to enhance sales activities

To improve our service to customers in West Japan (comprising the Sanyo area, Kyushu, and Okinawa) and to grow our revenue from that region, we established our sixth domestic sales office on October 1, 2012. The new West Japan sales office is located in Fukuoka city. It assumes the responsibilities previously held by the Osaka sales office for this region, where there are many manufacturers of semiconductors, industrial machines, robots, medical instruments, etc. The new sales office will help us quickly respond to requests from our customers and to provide them with technical support. Also, we intend to strengthen our overall sales activities in this area by working more closely with existing customers and offering proposals to their potential needs, and also by finding new customers.

TOPICS

Two sides of the multifunction photo IC: the photodiode and 3 color LEDs (top), and flip chip (middle).

For size comparison, a millimeter ruler at bottom.

Annual Report 2012

11

Further involvement in PET research

The Hamamatsu PET Center was founded to help realize a healthier society in which people can live longer lives without cancer or dementia. In fiscal year 2012, the facility was expanded by merging its functions with those of the adjoining Hamamatsu Medical Center’s diagnostic clinic, and was renamed the Hamamatsu Medical Imaging Center. The combined facility has a track record of providing over 20,000 cancer screenings to more than 8,000 people. Now, in addition to cancer screenings, its staff will be involved in other PET-related activities such as diagnosis, research, and clinical trials. Research into the applications of photonics for nuclear medicine and neuroscience will also be conducted.

Among the key systems of this facility are a diagnostic imaging information system developed by Hamamatsu Photonics, diagnostic support system, and cutting-edge TOF-PET/CT system featuring Hamamatsu Photonics-developed detectors. Knowledge gained from the use of such systems in a clinical environment goes into the development of new products.

In fiscal year 2012, we also continued to make strides in PET-related research. In the area of PET detectors, we developed a 3D radiation detection device (crystal cube)(*1) that uses our innovative opto-semiconductor Multi-Pixel Photon Counters. The new device can detect radiation coming in at diagonal angles with high resolution, thus delivering dramatic improvements in PET image resolution while maintaining sensitivity.

In other research, we found that by controlling the injection speed of a treatment agent used in PET, it is possible to evaluate its response with just one measurement, as opposed to the standard method of making two measurements. This may improve the utility of PET for drug development, and may also contribute to accelerating the development of therapeutic medicines for use in PET.

(*1)Part of this PET (positron emission tomography) research was commissioned byJST(JapanScienceandTechnologyAgency)andconductedasajointcollaborationamongHamamatsuPhotonics,theNationalInstituteofRadiologicalSciences,ChibaUniversity,andTokyoUniversity.

TOF-PET/CT system

Hamamatsu Medical Imaging Center

1mm3

Crystal cube

12

FINANCIAL REVIEW

Net salesAt the beginning of the consolidate fiscal period, there were some signs of improvement in the Japanese economy as recovery demand from the Great East Japan Earthquake spurred slight rebounds in industry and capital investment. But this trend was not robust and had come to a standstill by the end of the fiscal period. Overseas, the world economy struggled with difficulties such as the financial crisis in Europe, and the high valuation of yen against other currencies continued unabated. As a result, consolidated net sales for the fiscal year ended September 30, 2012 were ¥98,067 million (US$ 1,257,276 thousand), down by 3.7% or ¥3,791 million (US$ 48,603 thousand) over the previous year. Sales in the Electron Tube segment including Photomultiplier Tubes, Imaging Devices and Light Sources amounted ¥42,245 million (US$ 541,614 thousand), 3.7% decrease by ¥1,631 million (US$ 20,916 thousand) the previous year. Sales of the Optο-semiconductor was ¥42,228 million (US$ 541,395 thousand), down by 2.4% or ¥1,042 million (US$ 13,362 thousand) over the previous year. Sales of the Imaging and Measurement Instruments segment including Image Processing and Measurement Systems dropped 11.0% to ¥10,983 million (US$ 140,813 thousand). Net sales from other business, mainly Semiconductor laser business and hotel operations, were ¥2,609 million (US$ 33,454 thousand), up by 10.0% over last year.

Operating incomeCost of sales decreased 2.5% or ¥1,232 million (US$ 15,803 thousand) over the previous year to ¥47,836 million (US$ 613,288 thousand) due to a decrease in material cost. The cost of sales ratio weakened 0.6 points to 48.8% this year. Selling, general and administrative expenses were ¥21,877 million (US$ 280,484 thousand), up by 4.8%, ¥1,000 million (US$ 12,824 thousand). Research and development expenses were ¥10,765 million (US$ 138,023 thousand), up by 6.8% from previous year. As a result, operating income was ¥17,587 million (US$ 225,480 thousand), down by 19.4%. Operating income for Electron tube, Opto-Semiconductοr and Imaging and measurement instruments business segment was ¥16,215 million (US$ 207,884 thousand), down by 6.5%, ¥14,034 million (US$ 179,933 thousand), up by 11.3% and ¥587 million (US$ 7,526 thousand), down by 60.9%, respectively. Other business recorded an operating loss of ¥197 million (US$ 2,536 thousand).

Net incomeOther income, on net basis, was ¥225 million (US$ 2,884 thousand), compared with ¥110 million (US$ 1,419 thousand) net of other expenses. Reflecting the sales growth and previously cited factors, net income for the fiscal year ended September 30, 2012 was down by 18.2% to ¥11,206 million (US$ 143,672 thousand) from ¥13,702 million (US$ 175,672 thousand). Consequently, basic net income per share decreased from ¥170.44 (US$ 2.18) to ¥139.39 (US$ 1.78). Dividend per share applicable to the fiscal year was ¥46 (US$ 0.58).

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Annual Report 2012

13

Financial positionCurrent assets increased 2.8% to ¥126,996 million (US$ 1,628,163 thousand). This is mainly from increases in cash and deposits and in inventories, while there was a decrease in securities. Property, plant and equipment decreased from ¥52,247 million (US$ 669,841 thousand) to ¥51,359 million (US$ 658,455 thousand) due mainly to a decrease in property, plant and equipment. Investments and other assets were ¥11,613 million (US$ 148,896 thousand), down by 5.6% or ¥687 million (US$ 8,814 thousand). Total Assets at the end of fiscal year 2012 were ¥189,970 million (US$ 2,435,515 thousand), up by ¥1,878 million (US$ 24,084 thousand). Current liabilities decreased from ¥31,698 million (US$ 406,392 thousand) to ¥29,669 million (US$ 380,383 thousand). This is mainly from decreases in income taxes payable and in notes and accounts payable-trade, while there was an increase in current portion of long-term loans payable. Noncurrent liabilities decreased from ¥22,958 million (US$ 294,343 thousand) to ¥19,427 million (US$ 249,067 thousand) due mainly to decreases in long-term debts and in provision for retirement benefits. Total liabilities for the fiscal year ended September 30, 2012 were ¥49,097 million (US$ 629,450 thousand), down by 10.2%. Net Assets were ¥140,873 million (US$ 1,806,064 thousand), up by 5.6% or ¥7,438 million (US$ 95,370 thousand) over previous year. The net assets ratio was 74.2%, compared to 70.9% at a year before.

Cash flowsAt the end of this fiscal year, cash and cash equivalent stood at ¥35,764 million (US$ 458,522 thousand), up by ¥2,719 million (US$ 34,859 thousand) from the end of the previous fiscal year. Net cash provided by operations for the period was ¥14,939 million (US$ 191,530 thousand), down by ¥5,478 million (US$ 70,238 thousand) over last year. This is mainly from decreases in net income before income taxes and in notes and accounts payable-trade. Investment activity required a cash flow of ¥8,800 million (US$ 112,832 thousand), down by ¥3,158 million (US$ 40,490 thousand) from previous year due mainly to net decrease in time deposits and purchase of short-term investment securities, while there was a decrease in proceeds from sales of short-term investment securities. Financial activity decreased cash flow by ¥3,505 million (US$ 44,937 thousand) due mainly to increase in payment of dividend.

Capital expendituresCapital expenditures during fiscal year 2012 totaled ¥8,633 million (US$ 110,687 thousand), 17.5% or ¥1,285 million (US$ 16,481 thousand) higher than previous fiscal year. Capital expenditures for the Electron tube segment were ¥3,426 million (US$ 43,929 thousand), mainly for expanding and improving manufacturing, research and development facilities. In the Opto-semiconductor segment, major investments were made in expanding and improving manufacturing, research and development facilities. Total investment for this segment amounted to ¥2,578 million (US$ 33,063 thousand) for the fiscal year. Investments in Imaging and Measurement Instrument segment were ¥511 million (US$ 6,556 thousand), mainly for expanding and improving the manufacturing, research and development facilities. There was no major sale or disposal of material fixed assets during this fiscal year.

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FIVE-YEAR SUMMARY

HamamatsuPhotonicsK.K.andConsolidatedSubsidiariesYearsendedSeptember30

Millions of Japanese Yen2008 2009 2010 2011 2012

For the year:Net sales ....................................................... ¥ 98,811 ¥ 71,976 ¥ 90,958 ¥ 101,858 ¥ 98,067 Operating income .......................................... 20,052 3,741 15,751 21,830 17,587 Income before income taxes

and minority interests ............................... 20,654 3,333 16,145 21,719 17,812 Net income .................................................... 13,117 1,791 11,491 13,702 11,206

Capital expenditures...................................... 8,568 9,431 9,236 7,348 8,633 Depreciation .................................................. 8,887 9,501 8,354 7,750 8,223 R&D expenses .............................................. 10,160 9,520 9,550 10,081 10,765

At year-end:Working capital .............................................. ¥ 76,634 ¥ 67,712 ¥ 81,318 ¥ 91,843 ¥ 97,326 Total assets ................................................... 174,991 158,026 176,407 188,091 189,970 Common stock .............................................. 34,926 34,928 34,928 34,928 34,928 Net assets ..................................................... 122,363 117,452 124,481 133,434 140,873

Number of shares issued (thousands) .......... 83,763 83,764 83,764 83,764 83,764 Number of employees ................................... 3,762 3,793 4,002 4,188 4,386

Japanese YenPer share data:

Net incomeBasic......................................................... ¥ 163.28 ¥ 22.29 ¥ 142.93 ¥ 170.44 ¥ 139.39 Diluted ...................................................... 161.94 22.12 - - -

Cash dividends .............................................. 46.00 30.00 40.00 44.00 46.00 Net assets ..................................................... 1,501.62 1,441.44 1,539.16 1,650.23 1,745.18

PercentRatios:

Equity ratio .................................................... 69.0 73.3 70.1 70.5 73.9 Return on net sales ....................................... 13.3 2.5 12.6 13.5 11.4 Return on assets ........................................... 7.6 1.1 6.9 7.5 5.9 Return on equity ............................................ 11.2 1.5 9.6 10.7 8.2

Annual Report 2012

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Japan

Takaoka Electronics Co., Ltd. Hamamatsu City, Shizuoka Pref., Japan Koso Corporation Iwata City, Shizuoka Pref., Japan Hamamatsu Electronic Press Co., Ltd. Iwata City, Shizuoka Pref., Japan Iwata Grand Hotel Inc. Iwata City, Shizuoka Pref., Japan China Healthcare K.K. Hamamatsu City, Shizuoka Pref., Japan

China

Hamamatsu Photonics (China) Co., Ltd. Beijing, China Beijing Hamamatsu Photon Techniques, Inc. Beijing, China Hangzhou Hamamatsu Photonics Science and Technology Co., Ltd. Hangzhou, Zhejiang, China

U.S.A.

Photonics Management Corp. Bridgewater, New Jersey, U.S.A. Hamamatsu Corporation Bridgewater, New Jersey, U.S.A. Universal Spectrum Corporation Middlesex, New Jersey, U.S.A.

Europe

Hamamatsu Photonics Europe GmbH Herrsching, Germany Hamamatsu Photonics Deutschland GmbH Herrsching, Germany Hamamatsu Photonics France S.A.R.L. Massy Cedex, France Hamamatsu Photonics UK Limited Welwyn Garden City, United Kingdom Hamamatsu Photonics Norden AB Kista, Sweden Hamamatsu Photonics Italia S.r.l. Arese, Italy

CONSOLIDATED SUBSIDIARIES

16

CONSOLIDATED BALANCE SHEETS

HamamatsuPhotonicsK.K.andConsolidatedSubsidiariesAsofSeptember30,2011and2012

ASSETSMillions of

Japanese YenThousands of

U.S. Dollars (Note 1)

2011 2012 2011 2012

Current assets:Cash and deposits ................................................................ ¥ 71,073 ¥ 74,559 $ 911,199 $ 955,891 Receivables:

Notes and accounts receivable-trade ............................. 23,781 23,469 304,890 300,895 Less: Allowance for doubtful accounts ........................... (145) (134) (1,860) (1,730)

Short term investment securities .......................................... 1,500 - 19,230 -Inventories:

Merchandise and finished goods .................................... 6,014 6,446 77,114 82,643 Work in process .............................................................. 11,183 12,430 143,378 159,362 Raw materials and supplies ............................................ 5,147 5,478 65,992 70,234

Other ..................................................................................... 1,648 1,684 21,131 21,596 Deferred tax assets (Note 7) ................................................ 3,338 3,063 42,801 39,269

123,542 126,996 1,583,878 1,628,163

Property, plant and equipment (Note 4):Land ...................................................................................... 15,565 15,149 199,562 194,227 Buildings and structures ....................................................... 54,620 55,018 700,267 705,363 Machinery, equipments and vehicles ................................... 82,867 87,120 1,062,400 1,116,927 Construction in progress ...................................................... 1,777 2,831 22,790 36,297

154,831 160,119 1,985,021 2,052,815 Less: Accumulated depreciation .......................................... (102,584) (108,760) (1,315,180) (1,394,359)

52,247 51,359 669,841 658,455

Investments and other assets:Investment securities (Note 5) .............................................. 1,335 1,237 17,121 15,866 Investments in and advances to non-consolidated

subsidiaries and affiliates ............................................... 764 837 9,798 10,733 Other ..................................................................................... 3,070 3,166 39,370 40,602 Deferred tax assets (Note 7) ................................................ 7,130 6,372 91,419 81,694

12,301 11,613 157,710 148,896

¥ 188,091 ¥ 189,970 $ 2,411,430 $ 2,435,515

SeeNotestoConsolidatedFinancialStatements.

Annual Report 2012

17

LIABILITIES AND NET ASSETSMillions of


U.S. Dollars (Note 1)

2011 2012 2011 2012

Current liabilities:Short-term loans payable (Note 4) ....................................... ¥ 865 ¥ 1,345 $ 11,098 $ 17,245 Current portion of long-term loans payable (Note 4) ............ 281 3,290 3,604 42,184 Payables:

Notes and accounts payable-trade ................................. 13,454 11,657 172,494 149,459 Construction and other ................................................... 4,654 4,178 59,667 53,573

Income taxes payable (Note 7) ............................................ 4,698 1,321 60,239 16,946 Accrued expenses ................................................................ 5,045 5,084 64,679 65,189 Other ..................................................................................... 2,699 2,791 34,608 35,784

31,698 29,669 406,392 380,383

Noncurrent liabilities:Long-term loans payable (Note 4) ........................................ 7,326 4,123 93,926 52,863 Provision for retirement benefits (Note 6)............................. 15,175 14,741 194,556 188,994 Other ..................................................................................... 325 396 4,175 5,077 Deferred tax liabilities (Note 7) ............................................. 131 166 1,685 2,132

22,958 19,427 294,343 249,067

Net assets:Shareholders’ equity

Capital stock, no par value: ............................................ 34,928 34,928 447,803 447,803 Authorized - 250,000,000 sharesIssued - 83,764,984 shares in 2011 - 83,764,984 shares in 2012

Capital surplus ................................................................ 34,672 34,672 444,520 444,520 Retained earnings (Note 9) ............................................. 74,902 82,484 960,285 1,057,499 Less: Treasury stock ....................................................... (6,048) (6,048) (77,539) (77,539)

Accumulated other comprehensive incomeValuation difference on available-for-sale securities ...... 163 157 2,090 2,022 Foreign currency translation adjustment ........................ (5,948) (5,892) (76,261) (75,541)

Minority interests .................................................................. 764 569 9,796 7,300 133,434 140,873 1,710,694 1,806,064

¥ 188,091 ¥ 189,970 $ 2,411,430 $ 2,435,515


18

CONSOLIDATED STATEMENTS OF INCOME

HamamatsuPhotonicsK.K.andConsolidatedSubsidiariesYearendedSeptember30,2011and2012 Millions of


U.S. Dollars (Note 1)2011 2012 2011 2012

Net sales ................................................................................................ ¥ 101,858 ¥ 98,067 $ 1,305,880 $ 1,257,276

Operating costs and expenses:Cost of sales ..................................................................................... 49,069 47,836 629,092 613,288 Selling, general and administrative expenses ................................. 20,877 21,877 267,659 280,484 Research and development expenses ............................................. 10,081 10,765 129,251 138,023

Operating income ................................................................................. 21,830 17,587 279,876 225,480

Other income (expenses):Interest and dividend income ........................................................... 186 198 2,394 2,543 Interest expenses ............................................................................. (117) (115) (1,510) (1,484)Other, net .......................................................................................... (179) 142 (2,303) 1,825

Income before income taxes and minority interests ....................... 21,719 17,812 278,456 228,364

Income taxes (Note 7)Current .............................................................................................. 8,466 5,702 108,549 73,105 Deferred ............................................................................................ (508) 1,067 (6,515) 13,684

7,958 6,769 102,034 86,790

Income before minority interests ....................................................... 13,760 11,042 176,422 141,574

Minority interests in income ............................................................... (58) 163 (750) 2,097

Net income ............................................................................................. ¥ 13,702 ¥ 11,206 $ 175,672 $ 143,672

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Note 3)

HamamatsuPhotonicsK.K.andConsolidatedSubsidiariesYearendedSeptember30,2011and2012 Millions of


U.S. Dollars (Note 1)2011 2012 2011 2012

Income before minority interests ........................................................ ¥ 13,760 ¥ 11,042 $ 176,422 $141,574

Other comprehensive incomeValuation difference on available-for-sale securities ........................ 119 (5) 1,534 (67)Foreign currency translation adjustment ........................................... (1,337) 62 (17,147) 799 Share of other comprehensive income of associates

accounted for using equity method ............................................. (27) (3) (356) (39)Total other comprehensive income ................................................... (1,245) 54 (15,969) 692

Comprehensive income ........................................................................ ¥ 12,515 ¥ 11,096 $ 160,452 $ 142,267

Comprehensive income attributable toComprehensive income attributable to owners of the parent ........... ¥ 12,473 ¥ 11,257 $ 159,912 $ 144,325 Comprehensive income attributable to minority interests ................ 42 (160) 539 (2,057)

Japanese Yen U.S. Dollars (Note 1)2011 2012 2011 2012

Per share of common stock:Net income ........................................................................................ ¥ 170.44 ¥ 139.39 $ 2.18 $ 1.78 Cash dividends applicable to the year ............................................. 44.00 46.00 0.56 0.58


Annual Report 2012

19

HamamatsuPhotonicsK.K.andConsolidatedSubsidiariesYearendedSeptember30,2011and2012

Millions ofJapanese Yen

Thousands ofU.S. Dollars (Note 1)

2011 2012 2011 2012

Capital stock:Balance at the beginning of current period .......................... ¥ 34,928 ¥ 34,928 $ 447,803 $ 447,803 Total changes of items during the period ............................. - - - - Balance at the end of current period .................................... 34,928 34,928 447,803 447,803

Capital surplus:Balance at the beginning of current period .......................... 34,672 34,672 444,520 444,520 Total changes of items during the period ............................. - - - - Balance at the end of current period .................................... 34,672 34,672 444,520 444,520

Retained earnings:Balance at the beginning of current period .......................... 64,743 74,902 830,040 960,285 Dividends from retained earnings ........................................ (3,543) (3,623) (45,426) (46,459)Net income ........................................................................... 13,702 11,206 175,672 143,672 Balance at the end of current period .................................... 74,902 82,484 960,285 1,057,499

Treasury stock:Balance at the beginning of current period .......................... (6,047) (6,048) (77,531) (77,539)Purchase of treasury stock ................................................... (0) - (8) -Balance at the end of current period .................................... (6,048) (6,048) (77,539) (77,539)

Valuation difference on available-for-sale securities:Balance at the beginning of current period .......................... 43 163 555 2,090 Net changes of items other than shareholders’ equity ......... 119 (5) 1,534 (67)Balance at the end of current period .................................... 163 157 2,090 2,022

Foreign currency translation adjustment:Balance at the beginning of current period .......................... (4,599) (5,948) (58,967) (76,261)Net changes of items other than shareholders’ equity ......... (1,348) 56 (17,294) 720 Balance at the end of current period .................................... (5,948) (5,892) (76,261) (75,541)

Minority interests:Balance at the beginning of current period .......................... 740 764 9,499 9,796 Net changes of items other than shareholders’ equity ......... 23 (194) 296 (2,495)Balance at the end of current period .................................... 764 569 9,796 7,300

Total net assets ........................................................................ ¥ 133,434 ¥ 140,873 $ 1,710,694 $ 1,806,064


CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

20

CONSOLIDATED STATEMENTS OF CASH FLOWS

HamamatsuPhotonicsK.K.andConsolidatedSubsidiariesYearendedSeptember30,2011and2012

Millions ofJapanese Yen

Thousands ofU.S. Dollars (Note 1)

2011 2012 2011 2012

Operating activities:Income before income taxes and minority interests ........................ ¥ 21,719 ¥ 17,812 $ 278,456 $ 228,364 Depreciation and amortization ......................................................... 8,090 8,734 103,719 111,978 Impairment loss ................................................................................ - 424 - 5,440 Increase (decrease) in allowance for doubtful accounts ................. 22 (8) 289 (106)Increase (decrease) in provision for bonuses .................................. 313 (362) 4,016 (4,641)Decrease in provision for retirement benefits .................................. (377) (431) (4,841) (5,527)Interest and dividends income ......................................................... (186) (198) (2,394) (2,543)Interest expenses ............................................................................. 117 115 1,510 1,484 Foreign exchange gains ................................................................... (3) (6) (48) (88)Equity in earnings of affiliates .......................................................... (51) (83) (654) (1,073)Loss on retirement of property, plant and equipment ...................... 149 44 1,910 572 Gain on sales of property, plant and equipment .............................. (0) (7) (4) (101)Loss on valuation of investment securities ...................................... 272 91 3,491 1,175 Decrease (increase) in notes and accounts receivable-trade ......... (1,535) 322 (19,691) 4,130 Increase in inventories...................................................................... (2,215) (2,004) (28,399) (25,701)Increase (decrease) in notes and accounts payable-trade .............. 1,779 (1,841) 22,808 (23,603)Other, net .......................................................................................... 1,012 1,333 12,979 17,089

Subtotal ...................................................................................... 29,105 23,934 373,147 306,849 Interest and dividends income received ........................................... 186 198 2,395 2,541 Interest expense paid ....................................................................... (117) (115) (1,510) (1,484)Income taxes paid ............................................................................ (8,756) (9,077) (112,262) (116,375)Net cash provided by operating activities ........................................ 20,418 14,939 261,769 191,530

Investing activities:Net increase in time deposits ........................................................... (23,756) (772) (304,565) (9,899)Purchase of short-term investment securities ................................. (10,000) - (128,205) -Proceeds from sales of short-term investment securities ............... 28,500 1,500 365,384 19,230 Purchase of property, plant and equipment ..................................... (6,162) (8,915) (79,000) (114,295)Proceeds from sales of property, plant and equipment ................... 36 35 473 457 Purchase of intangible assets .......................................................... (564) (603) (7,237) (7,738)Other, net .......................................................................................... (13) (45) (172) (586)Net cash used in investing activities ................................................ (11,959) (8,800) (153,322) (112,832)

Financing activities:Net increase (decrease) in short-term loans payable ...................... (1,073) 474 (13,767) 6,082 Proceeds from long-term loans payable .......................................... 1,525 90 19,557 1,153 Repayment of long-term loans payable ........................................... (243) (283) (3,118) (3,636)Purchase of treasury stock ............................................................... (0) - (8) - Cash dividends paid ......................................................................... (3,546) (3,627) (45,465) (46,511)Other, net .......................................................................................... (110) (158) (1,410) (2,025)Net cash used in financing activities ................................................ (3,448) (3,505) (44,212) (44,937)

Effect of exchange rate change on cash and cash equivalents ..... (711) 85 (9,126) 1,098 Net increase in cash and cash equivalents ....................................... 4,298 2,719 55,108 34,859 Cash and cash equivalents at beginning of period .......................... 28,747 33,045 368,555 423,663 Cash and cash equivalents at end of period ..................................... ¥ 33,045 ¥ 35,764 $ 423,663 $ 458,522


Annual Report 2012

21

(a) Principles of ConsolidationThe consolidated financial statements as of and for the year ended September 30, 2011 and 2012 included the accounts of the Company, five domestic subsidiaries and twelve foreign subsidiaries in the United States of America, EU and People’s Republic of China. The Company has adopted the equity method of accounting for its investment in four affiliates for the years ended September 30, 2011 and 2012. Investment in other affiliates is carried at cost due to its immateriality. All significant intercompany balances and transactions have been eliminated in consolidation.

(b) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, readily available deposits and highly liquid investments with insignificant risk of changes in value, which have original maturities of three months or less.

(c) Investment SecuritiesMarketable securities are valued by market price method based on the fair market price at the balance sheet date (unrealized gain or loss, net of applicable income taxes, included directly in net assets) and non-marketable securities are stated at cost determined by the total average method.

(d) InventoriesInventories of the Company and consolidated subsidiaries are mainly stated at cost determined by the total average method of reducing book value when the contribution of inventories to profitability declines.

(e) Property, Plant and Equipment, and DepreciationProperty, plant and equipment are stated at cost. Significant renewals and additions are capitalized. Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred. Interest expense relating to the construction of plant and equipment is not capitalized. Depreciation of plant and equipment is determined by the declining-balance method over the estimated useful lives of the individual assets for the Company and its domestic subsidiaries. The straight-line method over the estimated useful lives of the individual assets is primarily applied to the plant and equipment of foreign subsidiaries.

(f) Retirement and Severance BenefitsThe allowance for retirement and severance benefits represent the projected benefit obligations in excess of the plan asset at the balance sheet date. Prior service cost is amortized by the straight-line method over 10 years. Actuarial gain or loss is amortized by the straight-line method over 10 years from the following fiscal year. The Company provides the allowance for retirement benefits for directors and corporate auditors based on the internal corporate policy.

(g) Foreign Currency TranslationMonetary assets and liabilities denominated in foreign currencies are translated into yen at the exchange rates in effect on the respective balance sheet dates or at the rate of each forward exchange contract. Assets and liabilities accounts of foreign consolidated subsidiaries are translated into yen amounts at the exchange rates in effect at the each balance sheet date. Revenue and expense accounts of foreign consolidated subsidiaries were translated into yen amounts at average rates for the period for each fiscal year. Any resulting translation differences are included in Minority interests in consolidated subsidiaries and adjustments arising from translation of accounts of foreign consolidated subsidiaries as a separate component of net assets.

(h) Hedging AccountThe Companies have entered into foreign forward contracts in order to manage the exposures to risk arising from fluctuations in foreign currency exchange rates. All derivative financial instruments are recognized as either assets or liabilities and measured at fair value with any changes in unrealized gain or loss recognized in the statements of income, except for those which meet the criteria for deferral hedge accounting under which unrealized loss or gain is deferred as an asset or liability until maturity of the hedged transactions.

(i) Income TaxesDeferred income taxes are provided on the asset and liability method by which deferred tax assets and liabilities are recognized based on the temporary differences between the assets and liabilities for financial reporting and those for tax purpose, and are measured by applying currently enacted tax laws.

2. Summary of Significant Accounting Policies

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements of Hamamatsu Photonics K.K. (the “Company”) and consolidated subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan. For convenience, the accompanying consolidated financial statements have been presented in U.S. dollars by arithmetically translating all Japanese yen amounts at ¥ 78 = US$1, the exchange rate prevailing on September 30, 2012. The translations should not be construed as a representation that Japanese yen have

been, could have been, or could in the future be, converted into U.S. dollars at that or any other rate.In preparing the consolidated financial statements, certain rearrangements and reclassifications have been made and certain additional financial information has been included in the consolidated financial statements issued in Japan for the convenience of readers outside Japan. Amount less than one million yen and one thousand dollars have been omitted. As a result, the total in Japanese yen and U.S. dollars shown in the financial statements do not necessarily agree with the individual amounts.

22


3. Other Comprehensive Income

Reclassification adjustments and income tax effect allocated to each component of other comprehensive income for the year ended September 30, 2012 were as follows:


Thousands of U.S. Dollars

2012 2012

Valuation difference on available-for-sale securities:Amount arising during the year ¥ (97) $ (1,255)Reclassification adjustments 91 1,175

Amount before income tax effect (6) (79)Income tax effect 0 11 Valuation difference on available-for-sale securities (5) (67)

Foreign currency translation adjustment:

Amount arising during the year 62 799

Share of other comprehensive income of associates accounted for using equity method:Amount arising during the year (3) (39)

Total other comprehensive income ¥ 54 $ 692

4. Short-Term and Long-Term Loans Payable

Short-term bank loans represent notes maturing generally within six months. The average annual interest rate applicable to the short-term bank loans at September 30, 2012 was 1.1%.Long-term debt at September 30, 2011 and 2012 were as follows:

Millions of Japanese Yen Thousands of U.S. Dollars2011 2012 2011 2012

Loans principally from banks due serially through 2026 ¥ 7,607 ¥ 7,413 $ 97,531 $ 95,048 Less current portion (281) (3,290) (3,604) (42,184)

¥ 7,326 ¥4,123 $ 93,926 $ 52,863

At September 30, 2011 and 2012, property, plant and equipment which had a carrying amount of ¥5,235 million (US$67,123 thousand) and ¥5,144 million (US$65,960 thousand) were pledged as collateral for short-term bank loans and long-term debt, respectively.

(j) Per share informationNet income per share is computed based on the net income available for distribution to the shareholders of common stock and the weighted average number of shares outstanding during the year. Cash dividends per share shown for each year in the consolidated statements of income represent dividends declared as applicable to the respective periods.

(k) Accounting ChangesEffective the year ended September 30, 2011, the Company adopted the Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No.25 issued on June 30, 2010).

(l) Additional informationThe “Accounting Standard for Accounting Changes and Error Corrections” (Accounting Standards Board of Japan (“ASBJ”) Statement No.24, issued on December 4, 2009) and the “Guidance on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ) Guidance No.24, issued on December 4, 2009) have been applied to the accouning changes which are made after the beginning of the fiscal year ended September 30, 2012 and corrections of prior period errors.

Annual Report 2012

23

5. Investment Securities

Information regarding the marketable securities classified as other securities as of September 30, 2011 and 2012 were as follows:

Millions of Japanese Yen Thousands of U.S. Dollars2011 2011

Cost Carrying amount

Unrealized gain

Unrealized loss Cost Carrying

amountUnrealized

gainUnrealized

lossEquity securities ¥ 1,003 ¥ 1,175 ¥ 172 - $ 12,859 $ 15,066 $ 2,206 - Other 1,500 1,500 - - 19,230 19,230 - -

¥ 2,503 ¥ 2,675 ¥ 172 - $ 32,090 $ 34,297 $ 2,206 -


Cost Carrying amount

Unrealized gain

Unrealized loss Cost Carrying

amountUnrealized

gainUnrealized

lossEquity securities ¥ 911 ¥ 1,077 ¥ 165 - $ 11,683 $ 13,811 $ 2,127 - Other - - - - - - - -

¥ 911 ¥ 1,077 ¥ 165 - $ 11,683 $ 13,811 $ 2,127 -

The information of available-for-sale securities which were sold during the year ended September 30, 2011 and 2012 were as follows:


Proceeds Unrealized gain

Unrealized loss Proceeds Unrealized

gainUnrealized

lossEquity securities - - - - - - Other ¥ 28,500 - - $ 365,384 - -

¥ 28,500 - - $ 365,384 - -


Proceeds Unrealized gain

Unrealized loss Proceeds Unrealized

gainUnrealized

lossEquity securities - - - - - - Other ¥ 1,500 - - $ 19,230 - -

¥ 1,500 - - $ 19,230 - -

The impairment losses on the marketable securities for the year ended September 30 2011 and 2012 were ¥271 million (US$3,485 thousand) and ¥91 million (US$1,175 thousand), respectively.

24


6. Retirement and severance benefitsThe Company and certain domestic subsidiaries have retirement and severance benefit plans for employees who are entitled to annuity and lump-

sum payments, the amounts of which are determined based on basic rate of pay, length of service and other conditions. Certain of the overseas

subsidiaries have their own retirement and severance benefit plans for covering substancially all employees who meet the eligibility requirements.

The Company has retirement benefit plan for directors and corporate auditors. The liability for which at September 30, 2011 and 2012 were ¥1,245

million (US$15,973 thousand) and ¥1,370 million (US$17,567 thousand), respectively.

The liability for employees’ retirement and severance benefits at September 30, 2011 and 2012 consisted of the following:


Projected benefit obligation ¥ (21,974) ¥ (22,800) $ (281,721) $ (292,314)

Fair value of plan asset 7,015 9,010 89,940 115,524

Unrecognized actuarial gain 1,807 1,110 23,177 14,233

Unrecognized prior service cost (778) (691) (9,978) (8,869)

¥ (13,929) ¥ (13,371) $ (178,582) $ (171,426)

The components of net periodic benefit cost for the year ended September 30, 2011 and 2012 were as follows:


Service cost ¥ 1,044 ¥ 1,140 $ 13,394 $ 14,621

Interest cost 397 434 5,095 5,571

Expected return on plan assets (115) (138) (1,474) (1,778)

Amortization of prior service cost (86) (86) (1,108) (1,108)

Amortization of actuarial gain or loss 317 306 4,064 3,923

¥ 1,557 ¥ 1,655 $ 19,971 $ 21,228

Assumptions used in calculation for the year ended September 30, 2011 and 2012 were as follows:

2011 2012

Discount rate 2.0 % 2.0 %

Expected rate of return on plan assets 2.0 % 2.0 %

Allocation method of projected benefit to service periods Straight-line Straight-line

Amortization period of prior service cost 10 years 10 years

Amortization period of unrecognized actuarial differences 10 years 10 years

Annual Report 2012

25

7. Income Taxes

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in normal

effective statutory tax rate of approximately 39.74% for the year ended September 30, 2011 and 2012.

Significant components of deferred tax assets and liabilities at September 30, 2011 and 2012 were as follows:


Deferred tax assets:

Provision for retirement benefits ¥ 5,483 ¥ 4,758 $ 70,304 $ 61,012 Depreciation 1,700 1,883 21,806 24,146 Provision for bonuses 1,278 1,044 16,388 13,392 Unrealized gain on sales of inventories 1,175 1,212 15,072 15,550 Provision for directors’ retirement benefits 495 477 6,347 6,118 Write down of investment securities 345 240 4,431 3,079 Impairment loss 339 320 4,347 4,104 Write down of inventories 315 397 4,043 5,094 Others 935 870 11,995 11,155 Less valuation allowance (1,545) (1,731) (19,808) (22,201)

Total deferred tax assets ¥ 10,524 ¥ 9,473 $ 134,927 $ 121,453 Amount set off against deferred tax liabilities (55) (38) (706) (489)

Net deferred tax assets ¥ 10,469 ¥ 9,435 $ 134,221 $ 120,963

Deferred tax liabilities

Deferred income under preferential tax treatment ¥ 110 ¥ 146 $ 1,416 $ 1,877 Others 104 81 1,333 1,041

Total deferred tax liabilities ¥ 214 ¥ 227 $ 2,749 $ 2,918 Amount set off against deferred tax assets (55) (38) (706) (489)

Net deferred tax liabilities ¥ 159 ¥ 189 $ 2,043 $ 2,429

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated

statements of income for the years ended September 30, 2011 and 2012 were as follows:

2011 2012Normal effective statutory tax rate for the Company 39.74 % 39.74 %

Tax credit (3.13) (5.94)Statutory tax rates variance of overseas subsidiaries (2.00) (3.31)Net changes in valuation allowance 0.83 1.26 Expenses not deductible for income tax purposes 0.79 1.13 Reduction in deferred tax assets due to tax rate changes - 4.80 Other, net 0.41 0.33

Actual effective tax rate 36.64 % 38.01 %

26


8. Segment Information

Effective the fiscal year ending September 30, 2011, “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement No. 17, issued by ASBJ on March 27, 2009) and the “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, issued by ASBJ on March 21, 2008) have been applied.

1. Summary of Reporting SegmentsThe Company’s reportable segments are components of the Company about which separate financial information is available. These segments are subject to periodic examinations to enable the Company’s board of directors to decide how to allocate resources and assess performance.The Company’s business divisions are based on product and service categories. Each of the divisions conduct business based on comprehensive strategies formulated for the products and services that they handle.Therefore, the Company’s business segments, based on the products and services handled by each of the divisions, comprise its three principal reporting segments, which are Electron tube, Opto-semiconductor, and Imaging and measurement instruments.The electron tube business segment manufactures and sells Photomultiplier tubes (PMTs) and light sources and imaging devices. The Opto-semiconductor business segment manufactures and sells opto-semiconductor devices. The imaging and measurement instruments business segment manufactures and sells image processing and measurement systems.

2. Method for Calculating the Sales, Income (Loss), Assets, and Other Items for Reporting SegmentsFigures for income in reporting segments are based on an operating income. Intersegment sales and transfers are based on prevailing market prices.

3. Information on the Amounts of Sales, Income (Loss), Assets, and Other Items for Reporting Segments


Reportable Segment

Others Total Adjustment Consolidated totalYear ended or as of September 30, 2011 Electron

tubeOpto-

semiconductor

Imaging and measurement instruments

Total

Net salesOutside customers ¥ 43,877 ¥ 43,271 ¥ 12,338 ¥ 99,486 ¥ 2,371 ¥ 101,858 - ¥ 101,858 Intersegment 1,285 723 78 2,088 551 2,639 (2,639) -

Total net sales 45,163 43,994 12,417 101,574 2,922 104,497 (2,639) 101,858

Segment income ¥ 17,338 ¥ 15,818 ¥ 1,501 ¥ 34,659 ¥ (260) ¥ 34,399 ¥ (12,569) ¥ 21,830

Assets ¥ 35,762 ¥ 33,962 ¥ 10,589 ¥ 80,314 ¥ 4,527 ¥ 84,841 ¥ 103,249 ¥ 188,091 Other items

Depreciation and amortization ¥ 2,793 ¥ 2,570 ¥ 845 ¥ 6,209 ¥ 251 ¥ 6,460 ¥ 1,546 ¥ 8,007 Increase in property, plant and equipment and intangible assets ¥ 3,173 ¥ 3,017 ¥ 601 ¥ 6,792 ¥ 161 ¥ 6,954 ¥ 1,580 ¥ 8,534

Millions of Japanese YenReportable Segment


tubeOpto-

semiconductorImaging and

measurement instruments

Total

Net salesOutside customers ¥ 42,245 ¥ 42,228 ¥ 10,983 ¥ 95,458 ¥ 2,609 ¥ 98,067 - ¥ 98,067 Intersegment 1,246 617 46 1,910 390 2,300 (2,300) -

Total net sales 43,492 42,846 11,029 97,368 2,999 100,368 (2,300) 98,067 Segment income ¥ 16,215 ¥ 14,034 ¥ 587 ¥ 30,836 ¥ (197) ¥ 30,639 ¥ (13,051) ¥ 17,587

Assets ¥ 37,696 ¥ 33,803 ¥ 9,829 ¥ 81,328 ¥ 4,328 ¥ 85,657 ¥ 104,312 ¥ 189,970 Other items

Depreciation and amortization ¥ 2,934 ¥ 2,840 ¥ 931 ¥ 6,706 ¥ 261 ¥ 6,967 ¥ 1,702 ¥ 8,670 Increase in property, plant and equipment and intangible assets ¥ 3,557 ¥ 2,619 ¥ 933 ¥ 7,110 ¥ 296 ¥ 7,407 ¥ 1,827 ¥ 9,235

Annual Report 2012

27


Reportable Segment


tubeOpto-

semiconductor

Imaging and measurement instruments

Total

Net sales

Outside customers $ 562,530 $ 554,757 $ 158,184 $ 1,275,472 $ 30,407 $ 1,305,880 - $ 1,305,880

Intersegment 16,483 9,277 1,009 26,770 7,066 33,837 (33,837) -

Total net sales 579,014 564,035 159,193 1,302,243 37,473 1,339,717 (33,837) 1,305,880

Segment income $ 222,294 $ 202,807 $ 19,252 $ 444,353 $ (3,335) $ 441,018 $ (161,142) $ 279,876

Assets $ 458,490 $ 435,414 $ 135,768 $ 1,029,673 $ 58,040 $ 1,087,714 $ 1,323,716 $ 2,411,430

Other items

Depreciation and amortization $ 35,818 $ 32,949 $ 10,837 $ 79,605 $ 3,224 $ 82,830 $ 19,827 $ 102,657 Increase in property, plant and equipment and intangible assets $ 40,688 $ 38,681 $ 7,711 $ 87,081 $ 2,075 $ 89,157 $ 20,263 $ 109,421


Reportable Segment


tubeOpto-

semiconductorImaging and

measurement instruments

Total

Net salesOutside customers $ 541,614 $ 541,395 $ 140,813 $ 1,223,822 $ 33,454 $ 1,257,276 - $ 1,257,276 Intersegment 15,985 7,917 593 24,496 5,000 29,497 (29,497) -

Total net sales 557,599 549,312 141,406 1,248,319 38,454 1,286,773 (29,497) 1,257,276

Segment income $ 207,884 $ 179,933 $ 7,526 $ 395,344 $ (2,536) $ 392,808 $ (167,328) $ 225,480

Assets $ 483,283 $ 433,372 $ 126,017 $ 1,042,673 $ 55,496 $ 1,098,169 $ 1,337,345 $ 2,435,515 Other items

Depreciation and amortization $ 37,618 $ 36,418 $ 11,942 $ 85,979 $ 3,350 $ 89,329 $ 21,832 $ 111,162 Increase in property, plant and equipment and intangible assets $ 45,607 $ 33,588 $ 11,966 $ 91,163 $ 3,799 $ 94,962 $ 23,435 $ 118,397

28


8. Segment Information (continued)

Geographic Information


Year ended September 30, 2011 Japan North America Europe Asia Other Consolidated

totalSales ¥ 34,804 ¥ 27,258 ¥ 24,996 ¥ 14,387 ¥ 411 ¥ 101,858



totalSales $ 446,214 $ 349,468 $ 320,464 $ 184,460 $ 5,272 $ 1,305,880



totalSales ¥ 35,477 ¥ 24,020 ¥ 24,221 ¥ 13,849 ¥ 499 ¥ 98,067



totalSales $ 454,834 $ 307,950 $ 310,536 $ 177,557 $ 6,398 $ 1,257,276

9. Subsequent Events

(a) Appropriations of retained earningsUnder the Corporation law of Japan, a plan for the appropriation of retained earnings (primarily for cash dividend payments) proposed by the board of directors is to be approved at a shareholders’ meeting held within three months from the end of the fiscal year.

On December 20, 2012, the shareholders of the Company approved the plan for the appropriation of retained earnings, which resulted in the following deductions from retained earnings at September 30, 2012:



Cash dividends ¥ 1,852 $ 23,745

(b) Discontinuance of directors’ retirement benefitsAt the meeting of Board of Directors held on November 12, 2012, and at the annual general meeting of shareholders held on December 20, 2012, it was resolved to discontinue the retirement benefits scheme for directors, pay out accrued retirement benefits to the directors, corporate auditors serving at that time. This is because the scheme is based largely on seniority and end-of-service lump-sum payment.

Annual Report 2012

29

REPORT OF INDEPENDENT AUDITORS

30

DIRECTORS AND CORPORATE AUDITORS

Board of Directors and Corporate Auditors

Chairman of the Board

Teruo Hiruma

President and CEO

Akira Hiruma, Representative Director

Vice President

Haruji Ohtsuka, Representative Director

Senior Managing Directors

Koei Yamamoto, Representative DirectorJunichi Takeuchi, Representative Director

Managing Directors

Hitoshi IidaKenji Suzuki

Mitsutaka TakemuraTsutomu HaraKenji Yoshida

Directors

Hirofumi UchiyamaTakashi Koike

Tadahiko ShimazuSoichiro Okudaira

Corporate Auditors

Fumio Muramatsu (Standing)Kazuhiko Mori (Standing)

Masaharu HamakawaYuji Maki

Annual Report 2012

31

Hamamatsu Photonics K.K.(Registered address)

1126-1 Ichino-cho, Higashi-ku, Hamamatsu CityShizuoka Prefecture 435-8558, Japan

Telephone : (81)53-434-3311

Established: September 29, 1953

Paid-in Capital: 34,928,648,325 yen

Common Stock Authorized: 250,000,000 shares Issued: 83,764,984 shares

Stock Listing: Tokyo Stock Exchange (1st Section) ID number 6965 Trading Unit 100 shares

Number of Shareholders: 30,293

Number of Employees: 4,386

Independent Auditors: Ernst & Young ShinNihon LLC Hamamatsu City, Shizuoka Prefecture Transfer Agent and Registrar: Sumitomo Mitsui Trust Bank, Limited Chiyoda-ku, Tokyo

Annual Meeting: The annual meeting of shareholders is held in December of each year in Hamamatru City, Japan

Price range of stock traded(Thousand yen)

2.4

2.6

2.8

3.0

3.2

3.4

10/11 11 12 1/12 2 3 4 5 6 7 8 9

Major shareholders Percentage to totalAs of September 30, 2012 shares outstanding (%)

Toyota Motor Corporation ............................................................................................................. 5.01 Hamamatsu Photonics K.K. employees ....................................................................................... 4.47 The Master Trust Bank of Japan, Ltd. (Trust Account) ................................................................. 4.05 Japan Trustee Services Bank, Ltd. (Trust Account) ..................................................................... 3.91 Teruo Hiruma................................................................................................................................. 2.35 The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account .............................. 1.83 The Nomura Trust and Banking Co., Ltd. (Investment Trust)........................................................ 1.73 Mellon Bank Treaty Clients Omnibus .............................................................................................1.41 Nomura Bank (Luxembourg) S.A. S/A Nomura Multi Currncy JP Stock Leaders FD .................. 1.35 SSBT OD05 Omnibus Account - Treaty Clients ........................................................................... 1.31

CORPORATE DATA

32

PROFILE OF THE HAMAMATSU FAMILY

Hamamatsu Photonics Italia S.r.l.Main officeStrada della Moia, 1 int. 620020 Arese (Milano), ItalyTelephone: (39)02-93581733

Rome officeViale Cesare Pavese, 43500144 Roma, ItalyTelephone: (39)06-50513454

Hamamatsu Photonics UK LimitedMain office2 Howard Court, 10 Tewin RoadWelwyn Garden CityHertfordshire AL7 1BW, UKTelephone: (44)1707-294888

South African officePO Box 1112Buccleuch 2066Johannesburg, South AfricaTelephone: (27)11-802-5505

Europe

Hamamatsu Photonics Deutschland GmbHMain officeArzbergerstr. 10D-82211 Herrsching am Ammersee, GermanyTelephone: (49)8152-375-0

North West officeKonrad-Adenauer-Str. 58D-47608 Geldern, GermanyTelephone: (49)2831-94506

Danish officeLautruphøj 1-3DK-2750 Ballerup, DenmarkTelephone: (45)7020-93 69

Netherlands officeTelevisieweg 2NL-1322 AC Almere, The NetherlandsTelephone: (31)36-5382123

Poland officeul. sw. A. Boboll 8PL-02525 Warsaw, Poland Telephone: (48)22-646-0016

Hamamatsu Photonics France S.A.R.L.Main office19, Rue du Saule TrapuParc du Moulin de Massy91882 Massy Cedex, FranceTelephone: (33)1 69 53 71 00

Grenoble officeBuro Club Meylan29 Boulevard des Alpes38246 Meylan Cedex, FranceTelephone: (33)4 76 61 44 50

Swiss officeDornacherplatz 74500 Solothurn, SwitzerlandTelephone: (41)32 625 60 60

Belgian officeScientific Park, 7, Rue du BosquetB-1348 Louvain-La-Neuve, BelgiumTelephone: (32)10 45 63 34

Spanish officeC. Argenters, 4 edif 2Parque Tecnológico del Vallés08290 Cerdanyola (Barcelona), SpainTelephone: (34)93 582 44 30

Hamamatsu Photonics Norden ABMain officeTorshamnsgatan 35SE-164 40 Kista, SwedenTelephone: (46)8-509 031 00

Russian officeVyatskaya St. 27, bld. 13RU-127015 Moscow, RussiaTelephone: (7)495 258 85 18

Annual Report 2012

33

U.S.A.

Photonics Management Corp.360 Foothill Road,Bridgewater, NJ 08807, U.S.A.Telephone: (1)908-231-0960

Hamamatsu CorporationMain office360 Foothill Road,Bridgewater, NJ 08807, U.S.A.Telephone: (1)908-231-0960

Factory250 Wood Ave.Middlesex, NJ 08846, U.S.A.Telephone: (1)732-356-1203

Western Sales officeSuite 200 & Suite 1102875 Moorpark Ave. San Jose, CA 95128, U.S.A.Telephone: (1)408-261-2022

Southwest Sales officeSuite 200 (2nd Floor)6310 Greenwich Drive San Diego, CA 92122, U.S.A. Telephone: (1)858-210-6701

Midwest Sales office4711 Golf Road, Suite 805Skokie, IL 60076, U.S.A.Telephone: (1)847-825-6046

Northeast Sales office20 Park Plaza, Suite 312Boston, MA 02116, U.S.A. Telephone: (1)617-536-9900

Universal Spectrum Corporation250 Wood Ave.Middlesex, NJ 08846, U.S.A.Telephone: (1)732-805-1965

Asia

Hamamatsu Photonics (China) Co., Ltd.B1201 Jiaming Center, No.27 Dongsanhuan Beilu, Chaoyang District, Beijing 100020, ChinaTelephone: (86)10-6586-6006

Beijing Hamamatsu Photon Techniques, Inc.Head office11-18 Bldg., 188 South 4th Ring Rd. West,Fengtai District, Beijing 100070, ChinaTelephone:(86)10-6370-6370

Hangzhou Hamamatsu Photonics Science and Technology Co., Ltd.R401 Jiliang Bldg., 252Wantang Road, Xihu District, Hangzhou 310012, ChinaTelephone:(86)571-8717-8237

Japan

Hamamatsu Photonics K.K.Headquarters325-6, Sunayama-cho, Naka-kuHamamatsu City, Shizuoka Pref.430-8587, JapanTelephone: (81)53-452-2141

Electron Tube Division314-5, ShimokanzoIwata City, Shizuoka Pref.438-0193, JapanTelephone: (81)539-62-3151

Solid State Division1126-1, Ichino-cho, Higashi-kuHamamatsu City, Shizuoka Pref.435-8558, JapanTelephone: (81)53-434-3311

Systems Division812, Joko-cho, Higashi-kuHamamatsu City, Shizuoka Pref.431-3196, JapanTelephone: (81)53-435-1560

Central Research Laboratory5000, Hirakuchi, Hamakita-kuHamamatsu City, Shizuoka Pref.434-8601, JapanTelephone: (81)53-586-7111




325-6, Sunayama-cho, Naka-ku, Hamamatsu City 430-8587, JapanTelephone:81-53-452-2141, Fax:81-53-456-7889

Homepage Address:http://www.hamamatsu.com

HEADQUARTERS

Documents

ANNUAL REPORT 2012 - Hamamatsu Photonics · In fiscal year 2012, sales of these products accounted for 43.1% of the company’s total revenue. Sales of opto-semiconductors In opto-semiconductor