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StrengthsWeaknessesOpportunitiesThreats25LINTEC ANNUAL REPORT 2018FINANCIAL INFORMATIONESGSTRATEGYOVERVIEWSWOT Analysis• Long record of supplying numerous customers and large market share centered on high-value-added products in domestic market • Ability to provide comprehensive solutions that combine adhesive products for labels and labeling machines• Expected new demand for products with approach of 2020• Southeast Asia’s favorable market and stable growth of U.S. market• Sales networks, delivery capabilities, brand power, and price competitiveness in overseas markets• Profitability of manufacturing subsidiaries in the United States and Indonesia• Deceleration of growth in domestic market overall and possibility of major overseas manufacturers’ full-scale forays into domestic market• Emergence of local manufacturers in Southeast Asia’s market and other markets and intensification of competitionThe Significance of Acquiring North American Adhesive Products for Labels Manufacturer MACTAC AMERICAS, LLCAcquired in 2016, MACTAC AMERICAS, LLC, boasts the third largest share of the North American market and sales of more than ¥35.0 billion. Acquiring the company was a very large step forward for the LINTEC Group. As well as hot-melt adhesive formulation technology that realizes outstanding environmental and cost performance, the company has sales channels covering North America’s vast market.We will use this acquisition to rapidly create synergy benefits by leveraging these sales channels to increase sales of our high-value-added products in the North American market and by actively rolling out the products of MACTAC AMERICAS, LLC, in Southeast Asia and other markets outside North America. In May, at Labelexpo Southeast Asia 2018 in Bangkok, Thailand, we began a full-fledged rollout of the company’s products in the Southeast Asian market under the LMGP (Lintec Mactac Global Products) brand. This product lineup has already established a track record in the region for such application areas as food.8642-22018201420152016201705.4(0.8)0.15.5The Rebuilding of Window Film Manufacturer MADICO, INC., an Urgent TaskLINTEC acquired the U.S. company MADICO, INC., in 1987. At the time, its head factory was in the Massachusetts. In response to a rapid increase in sales of PV backsheets, which was a new busi-ness area for MADICO, INC., the company acquired a window film manufacturer in Florida in September 2010. This allowed the Massachusetts production base to concentrate on the manufac-ture of PV backsheets. MADICO, INC., established a product supply system based on these two plants. However, in the year following this acquisition, prices fell and orders decreased for PV backsheets due to the rapid commod-itization of solar panels. As a result, MADICO, INC., has been recording operating losses since 2012.At present, we are radically rationalizing management. In addition to withdrawing fully from the PV backsheets business last year, we have acquired new land and buildings in Florida. Plans call for establishing a new production base at the site and consolidating manufacturing facilities there. Moreover, MADICO, INC., is strengthening collaboration with functional films manufacturer VDI, LLC, acquired in 2016, to step up the development and marketing of new products. In the current fiscal year, MADICO, INC., aims to move into the black for the first time in seven fiscal years.TOPICSMADICO, INC.MACTAC AMERICAS, LLCLMGP brand adhesive films(Fiscal year ended / ending December 31)¥ BillionMADICO’s Business Results Net Sales Operating Income (Loss)(Forecast)