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Annual Report 2007
Basic Credo of the Asahi Kasei Group
Basic tenets
We the Asahi Kasei Group, through constant innovation and advances based in
science and the human intellect, will contribute to human life and human livelihood.
Guiding precepts
We will create new value, thinking and working in unison with the customer, from
the perspective of the customer.
We will respect the employee as an individual, and value teamwork and worthy
endeavor.
We will contribute to our shareholders, and to all whom we work with and serve, as
an international, high earnings enterprise.
We will strive for harmony with the natural environment and ensure the safety of our
products, operations, and activities.
We will progress in concert with society, and honor the laws and standards of society
as a good corporate citizen.
Contents
The Asahi Kasei History
.................................................................................................................. 01
Consolidated Financial Highlights
................................................................................................. 04
To Our Shareholders
....................................................................................................................... 05
Driving the Strategic Advance: Growth Action – 2010
................................................................... 06
Asahi Kasei Group Operations, Worldwide
................................................................................... 12
At a Glance
...................................................................................................................................... 14
Operating Segment
........................................................................................................................ 16
Corporate Governance
................................................................................................................... 32
Corporate Social Responsibility
...................................................................................................... 36
Directors, Corporate Auditors, Executive Officers
........................................................................ 38
Financial Section
............................................................................................................................. 39
Major Subsidiaries and Affiliates
................................................................................................... 70
Corporate Profile
............................................................................................................................ 72
Investors Information
..................................................................................................................... 73
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this annual report with respect to Asahi Kasei’s estimated future revenues and profits, strategies, tenets, financial forecasts, and
other statements that are not historical facts are forward-looking statements. Such forward-looking statements are based on management’s judgments,
predictions, and forecasts in light of information currently available and involve many potential risks and uncertainties that could cause actual results to differ
materially from the content of these statements. Accordingly, undue reliance should not be placed on such forward-looking statements.
This annual report was printed with
vegetable-based ink on recycled paper.
ASAHI KASEI CORPORATION
A copy of the Company,s annual report and further information
will be made available upon request in writing to:
Corporate Communications
Asahi Kasei Corporation
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-8440, Japan
Phone: +81-3-3507-2060
www.asahi-kasei.co.jp
Fax: +81-3-3507-2495
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Annual Report 2007
Basic Credo of the Asahi Kasei Group
Basic tenets
We the Asahi Kasei Group, through constant innovation and advances based in
science and the human intellect, will contribute to human life and human livelihood.
Guiding precepts
We will create new value, thinking and working in unison with the customer, from
the perspective of the customer.
We will respect the employee as an individual, and value teamwork and worthy
endeavor.
We will contribute to our shareholders, and to all whom we work with and serve, as
an international, high earnings enterprise.
We will strive for harmony with the natural environment and ensure the safety of our
products, operations, and activities.
We will progress in concert with society, and honor the laws and standards of society
as a good corporate citizen.
Contents
The Asahi Kasei History
.................................................................................................................. 01
Consolidated Financial Highlights
................................................................................................. 04
To Our Shareholders
....................................................................................................................... 05
Driving the Strategic Advance: Growth Action – 2010
................................................................... 06
Asahi Kasei Group Operations, Worldwide
................................................................................... 12
At a Glance
...................................................................................................................................... 14
Operating Segment
........................................................................................................................ 16
Corporate Governance
................................................................................................................... 32
Corporate Social Responsibility
...................................................................................................... 36
Directors, Corporate Auditors, Executive Officers
........................................................................ 38
Financial Section
............................................................................................................................. 39
Major Subsidiaries and Affiliates
................................................................................................... 70
Corporate Profile
............................................................................................................................ 72
Investors Information
..................................................................................................................... 73
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this annual report with respect to Asahi Kasei’s estimated future revenues and profits, strategies, tenets, financial forecasts, and
other statements that are not historical facts are forward-looking statements. Such forward-looking statements are based on management’s judgments,
predictions, and forecasts in light of information currently available and involve many potential risks and uncertainties that could cause actual results to differ
materially from the content of these statements. Accordingly, undue reliance should not be placed on such forward-looking statements.
This annual report was printed with
vegetable-based ink on recycled paper.
ASAHI KASEI CORPORATION
A copy of the Company,s annual report and further information
will be made available upon request in writing to:
Corporate Communications
Asahi Kasei Corporation
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-8440, Japan
Phone: +81-3-3507-2060
www.asahi-kasei.co.jp
Fax: +81-3-3507-2495
The Asahi Kasei History
Our roots
Growth in concert with the Japanese economy
Throughout Japan’s period of post-war recovery and into the 1990s, our expansion and growth was
largely driven by diversification. As it became clear that greater selectivity of businesses was required
to revitalize operations, we moved beyond this mode of growth through diversification and entered a
phase of selective diversification and structural transformation.
Asahi Kasei’s operating profit*
Japan’s GDP
FY 1960=100
Growth through
diversification
Selective
diversification and
structural
transformation
FY 1955
1965
1975
1985
1995
2005
* Three-year moving average, non-consolidated until FY 1980.
Growth through
diversification
A concerted drive to diversify into a
broad range of fields began in the
1950s. A rapid pace of growth was
sustained by successive advances into
new fields of business, which were
developed based on combinations of
new technology with the technology of
established businesses. When each
business began to mature, its growth
would naturally tend to slow. As this
happened, there were other businesses
which were new and growing quickly,
ensuring that a high overall rate of
growth was maintained.
Nonwoven
fiber
Hollow-fiber
membranes
Spandex
Microporous
membrane
Maturing
Growth
• Regenerated
fiber
• Chemical
fertilizer
• Explosives
Incubation
• Petrochemicals
• Synthetic
fibers
• Housing
• Construction
materials
• Electronics
• Pharmaceuticals &
medical devices
1923
Ammonia
Ammonium
sulfate
1924
Rayon
1931
Bemberg™
1932
Explosives
1953/1957
Saran™ fiber
Polystyrene
1959/1962
Acrylic fiber
Acrylonitrile
1964
Nylon fiber
Synthetic
rubber
1972
Ethylene plant
1967
Hebel™
1972
Hebel Haus™
1975
Artificial kidneys
1978
Hall elements
1981
Pharmaceuticals
business unit
Dry film resist
1983
LSIs
Shitagau
Noguchi
Our roots trace to the May 1922
establishment of Asahi Kenshoku
K.K. (Asahi Fabric) and the October
1923 start of ammonia production
by the Casale process in Nobeoka,
Miyazaki Prefecture, at Nihon
Chisso Hiryou K.K. (Japan
Nitrogenous Fertilizer), founded by
Shitagau Noguchi.
Utilizing this ammonia, Japan
Bemberg Fiber Co., Ltd. began
production of Bemberg™ rayon by
the cuprammonium process in April
1931, and in May of the same year
the Nobeoka plant of Nihon Chisso
Hiryou was spun off and established
as Nobeoka Ammonia Fiber Co.,
Ltd., the formal establishment date
of Asahi Kasei.
The first decades were a time of
growth through expansion in the
production of industrial chemicals
and chemical derivatives such as
caustic soda, chlorine, fertilizers,
nitrocellulose and industrial
explosives, Bemberg™ and viscose
rayon cellulosic fibers, and flavor
enhancer. The years following
World War II began broader ranging
expansion into new fields, which has
brought Asahi Kasei to the forefront
of the Japanese chemical industry.
Selective diversification and structural transformation
The seven years from fiscal 1999 to fiscal 2005 were a time of selective
diversification and structural transformation to establish a solid basis for renewed
growth and expansion.
With the Ishin-2000 initiative of fiscal 1999 to fiscal 2002, we accelerated the
transformation to a high-earnings operational structure, and made a transition to a
high-speed management system. Performance chemicals, electronics, and medical
devices were expanded as high-earnings businesses, while viscose rayon, foods, and
liquors, businesses with lower assets efficiency, were divested or closed.
With the Ishin-05 initiative of fiscal 2003 to fiscal 2005, we advanced the
transition to a high-earnings business portfolio, and in October 2003 made a
transformation to a holding company configuration with a core operating company
in each main field of business.
Improved earnings and financial strength
0.78
0.79
0.62
0.54
D/E ratio
Profit*, ¥ billion
Net income (loss), ¥ billion
96.0
74.3
51.2
17.4
20.5
25.2
45.7
5.2
0.64
0.62
0.49
0.40
104.7
95.6
80.4
61.6
56.5
59.7
27.7
Ishin-2000
Ishin-05
(66.8)
2003
FY 1998
* Operating profit prior to amortization of actuarial differences in retirement benefits.
2001
2002
1999
2000
2004
2005
Ishin-2000
Selectivity and focus
• Focus on competitive-superiority businesses
• Fostering next-generation growth drivers
• Divestment or closure of businesses with
low assets efficiency
• Stable financial foundation
Ishin-05
Selective diversification
• Building on strengths
• Creation of cash flow
• Management speed and autonomy
Share of operating profit in four main sectors
Homes &
Construction
Materials
29%
FY 1998
FY 2005
Homes &
Construction
Materials
29%
Chemical-
based
40%
Chemical-
based
44%
Pharma
21%
Pharma
10%
Electronics Materials
& Devices
9%
Electronics Materials
& Devices
18%
Investors Information
As of April 1, 2007
Stock Listings
Stock Code
Authorized Shares
Outstanding Shares
Transfer Agent
Independent Auditors
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo
3407
4,000,000,000
1,402,616,332
Sumitomo Trust & Banking Co., Ltd.
4-5-33 Kitahama, Chuo-ku
Osaka 541-8639, Japan
PricewaterhouseCoopers Aarata
Number of Shareholders
126,348
% of equity*
Largest Shareholders
Master Trust Bank of Japan, Ltd. TS ..............................................................4.99
Nippon Life Insurance Co. .............................................................................4.80
Japan Trustee Services Bank, Ltd. TS..............................................................3.56
Employees’ Stockholding ................................................................................2.65
Sumitomo Mitsui Banking Corp.....................................................................2.53
Japan Trustee Services Bank, Ltd. TS4 ...........................................................2.32
Dai-ichi Mutual Life Insurance Co. ...............................................................2.30
Tokio Marine & Nichido Fire Insurance Co., Ltd. .........................................2.22
Meiji Yasuda Life Insurance Co. .....................................................................1.76
Mizuho Corporate Bank, Ltd..........................................................................1.45
* Percentage of equity ownership after exclusion of treasury stock.
Distribution by Type of Shareholder
Distribution by Number of Shares Held
Japanese financial institutions
Foreign investors
Japanese individuals and groups
Japanese securities companies
Other Japanese companies
43.93%
27.72%
21.50%
2.05%
4.80%
100,000 or more
10,000–99,999
1,000–9,999
Less than 1,000
80.85%
6.40%
12.31%
0.44%
1,402,616,332 shares
TM: Trademark or registered trademark of Asahi Kasei Corporation, affiliated companies,
or third parties granting rights to Asahi Kasei Corporation or affiliated companies.
01
02
Annual Report 2007
73
Growth Action – 2010
Embarking on a new phase of growth
Through our previous strategic management initiatives, we established a solid foundation for a new
phase of growth for the Asahi Kasei Group. In the Growth Action – 2010 initiative of fiscal 2006 to fiscal
2010, we are expanding global businesses and enhancing domestic businesses with strategic investment
for growth to bring greater corporate value and brand strength.
Annual Report 2007
03
Consolidated Financial Highlights
Asahi Kasei Corporation and consolidated subsidiaries
Fiscal year beginning April 1
For the year
Net sales
Operating profit
Income before income taxes
and minority interest
Net income
Capital expenditure
Depreciation and amortization
R&D expenditures
At year-end
Total assets
Net worth†
Fiscal year beginning April 1
Per share
Net income
Net worth‡
Cash dividends
2006
￥1,623.8
127.8
114.9
68.6
84.4
71.6
52.4
¥ billion
2005
￥1,498.6
108.7
94.5
59.7
66.3
69.4
51.5
2004
￥1,377.7
115.8
91.1
56.5
68.5
71.5
50.7
￥1,459.9
645.7
￥1,376.0
594.2
￥1,270.1
511.7
2006
¥
2005
2004
￥ 49.00
￥ 42.46
￥ 40.16
461.50
12.00
424.34
10.00
365.43
8.00
US$ million *
2006
＄13,761
1,083
974
581
715
607
444
＄12,372
5,538
US$ *
2006
＄0.42
3.91
0.10
* U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of ¥118=US$1 as described in Note 4 of Notes to Consolidated Financial Statements.
† Net assets less minority interest in consolidated subsidiaries. Through the year beginning April 1, 2005, figures for shareholders’ equity shown.
‡ At fiscal year end.
Fiscal year beginning April 1
Key indexes
Operating profit margin
ROE
Net worth to total assets
D/E ratio
2006
7.9
%
11.1
%
44.2
%
0.34
2005
7.3
%
10.8
%
43.2
%
0.40
2004
8.4
%
11.7
%
40.3
%
0.49
Net Sales, Operating Profit Margin
Net Income, ROE
Total Assets, Net Worth
Net sales, left scale
Operating profit margin, right scale
Net income, left scale
ROE, right scale
%
12
¥ billion
90
11.7
1,624
1,499
7.9
8
60
56
7.3
1,378
8.4
11.1
69
10.8
60
¥ billion
1,800
1,200
600
4
0
30
0
2004
2005
Fiscal year
2006
0
2004
2005
Fiscal year
2006
04
Total assets
Net worth
%
12
¥ billion
1,500
1,270
1,376
1,460
8
4
0
1,000
500
0
512
594
646
2004
2005
Fiscal year
2006
To Our Shareholders
Although consumer spending remained moderate, the Japanese economy grew
with strong corporate earnings, an improved employment outlook, and
increased private-sector capital investment. The operating climate nevertheless
remained challenging, with persistently elevated prices for petroleum and
petrochemical feedstocks such as naphtha necessitating cost-cutting measures
and sales price increases.
In fiscal 2006, the first year of our Growth Action – 2010 initiative,
consolidated net sales grew by ¥125.2 billion from a year ago to ¥1,623.8
billion. Sales growth was greatest in chemicals operations, with product prices
rising to compensate for increased feedstocks costs. Operating profit grew by
¥19.1 billion to ¥127.8 billion. Operating profit growth was greatest in
chemicals operations, with strong overseas market conditions, in
pharmaceuticals operations, with significant licensing income, and in
electronics operations, with strong demand in consumer electronics
applications. Ordinary profit grew by ¥22.3 billion to ¥126.5 billion. Net
income grew by ¥8.9 billion to ¥68.6 billion. Each of theses results was a new
record high. In the light of these results, dividends were increased by ¥2 per
share to ¥12 per share.
Strategic investment is being advanced in fiscal 2007 as we lay the
foundation for expansion and growth to achieve our Growth Action – 2010
performance goals and obtain heightened corporate value and brand strength
for the Asahi Kasei Group.
August 2007
Left: Nobuo Yamaguchi, Chairman of the Board
Right: Shiro Hiruta, President
Nobuo Yamaguchi
Chairman of the Board
Shiro Hiruta
President
Annual Report 2007
05
Driving the Strategic Advance:
Growth Action – 2010
By executing our Growth Action – 2010 strategy, the Asahi Kasei Group
will gain a stronger presence in global markets and make more of a
contribution to people’s lives around the world.
Shiro Hiruta
President
With our previous strategic initiative, Ishin-05, we
implemented business portfolio realignments to effect our
refounding as a selectively diversified enterprise group,
transformed the operational structure for cash flow creation,
and adopted a holding company configuration to increase
management speed and autonomy. The result was rising
profitability, greater financial strength, and robust cash flow.
We nevertheless remain highly dependent on the Japanese
economy, and to outpace Japan’s GDP growth over the long
term we need to take bigger strides in the expansion of
globally competitive businesses and the creation and
development of new businesses. At the same time we need
to enhance our domestic businesses to obtain greater added
value and adapt to the changing industrial structure in
Japan. These are the strategic pillars of our Growth Action –
2010 initiative for fiscal 2006 through 2010, to advance our
business portfolio realignment for expansion and growth,
and to obtain greater corporate value and brand strength.
Performance targets for fiscal 2010 include ¥1,800 billion in
sales, ¥150 billion in operating profit, and ¥80 billion in net
income.
To achieve these goals we are stepping up the pace of
capital expenditure, with a ¥400 billion provision for
strategic investment over the five-year period over and above
our ordinary level of investments. Strategic investment,
which includes M&A, is centered on monomers,
specialized-function chemical-based products, electronics
06
materials and devices, and medical devices, fields where we
have the most potential for global growth based on our
inherent competitive advantages.
During fiscal 2006 we expanded production capacity in
many of our global businesses, including with new plants
located overseas, and advanced studies on further strategic
actions to expand these businesses. Fiscal 2007 is going to
be a key year for the execution of strategic investment in
these areas.
Asahi Kasei’s Operating Profit and Japan’s GDP
Asahi Kasei’s operating profit*
Japan’s GDP
FY 1960=100
(cid:0)(cid:1)(cid:2)(cid:3)(cid:4)(cid:5) (cid:7)(cid:8)(cid:4)(cid:9)(cid:2)(cid:10) (cid:11) (cid:12)(cid:13)(cid:14)(cid:13)
Exceeding Japan’s
GDP growth through
expansion of
global businesses
FY 1955
1965
1975
1985
1995
2005 ……
* Three-year moving average, non-consolidated until FY 1980.
Basic Framework
Long-term Investment Plan
Advancing Business Portfolio Realignment
Investment, past 3 years
Plan for FY 2006 to 2010
Global businesses
High growth businesses
Chemical-based,
specialized-
function
Electronic
materials
Medical
devices
Electronic
devices
Pursuing higher growth
with strong, stable base
Stable growth, stable earnings businesses
Monomers
Polymers
Acrylonitrile, MMA, styrene monomer, etc.
Including processed products
Domestic businesses
Housing, construction materials,
pharmaceuticals, home-use products, etc.
Expanding
global businesses
Enhancing
domestic businesses
Targets
Greater corporate value and
brand strength
Net sales
¥1,800
billion
Operating profit
¥150
billion
Net income
¥80
billion
Expansion of global businesses
Until the 1990s our global businesses accounted for only
about 40% of total sales. In fiscal 2005 this reached 54%,
and we are aiming to increase it to 60%. Overseas sales in
fiscal 2006 were 26.4% of total sales, and we want this to
reach at least one-third.
Most of the businesses we are expanding globally are not
in commodity product fields but in high value-added
specialty product fields. Rather than pursuing greater scale
in overseas markets, our strategy is to generate stable
earnings through overseas production of high value-added
products. We are not building plants overseas simply to
Expansion
Maintenance
Maintenance
Expansion
(a) ¥70 to ¥80 billion/year
¥800 billion over 5 years = (a)×5 +
strategic investment of ¥400 billion
Breakdown of Strategic Investment
Pharma
Homes &
Construction
Materials
Chemical-based
Electronics Materials &
Devices
Renewing ethylene center, etc.
Monomers
Specialized-function products
Electronics Materials & Devices
New business creation
Enhancing domestic businesses
(¥ billion)
Organic
M&A
20
40
40
50
40
30
–
–
50
100
–
–
Total
220
150
have more production bases, but only if and when they
make sense within our overall approach to a given market in
each region. Especially for specialty products, our plants in
Japan serve as the base for technology and R&D, while
overseas plants are constructed as deemed necessary from
the standpoint of matching the location of production with
that of demand.
Annual Report 2007
07
Driving the Strategic Advance: Growth Action – 2010
Global advances in fiscal 2006
In chemicals, we began commercial operation at a subsidiary
in Korea for process validation of the world’s first propane
process for production of acrylonitrile (AN), an
intermediate used in the manufacture of acrylic fiber and
ABS. We are planning a new AN plant in Thailand based
on this new process using natural gas-derived feedstock, and
a formal investment decision will be made in fiscal 2007. In
China, we began operation of a new plant for the assembly
of Microza™ microfiltration (MF), and advanced
construction of a new plant to produce Duranate™
hexamethylene diisocyanate (HDI)-based polyisocyanate.
In electronics, we expanded our plant in China for
Sunfort™ photosensitive dry film resist (DFR), and
advanced development of new functional materials for
flexible printed circuits and flat panel displays. We are
scheduled to start shipping paid samples of new optical
films in fiscal 2007. In medical devices, we are adding
production capacity for APS™ polysulfone-membrane
artificial kidneys and expanding our therapeutic apheresis
device business.
At the holding company, we established a subsidiary in
China to provide management support to the various group
operations there. In services ranging from business
infrastructure to market development and incubation of
new businesses, this will facilitate the expansion and growth
of operations in the increasingly important Chinese market.
Fiscal 2006 in strategic context
During the year, we had strong overseas demand, especially
in China, and made good progress on product price
increases to overcome high feedstock costs. The overall rise
in profits reflected sustained, wide-ranging growth in many
fields of operation. In all, we made a good start to our
Growth Action – 2010 initiative, with strongest performance
in chemicals and electronics, resulting in record-high sales
and profits.
The strong performance of chemicals operations in fiscal
2006 was a result of actions taken with our Ishin-05
initiative to build on our strong businesses, enabling us to
maintain a price spread even when feedstock costs rise.
At lot of investment since Ishin-2000 has been to strengthen
monomers businesses. Such proactive investments,
including infrastructure improvements, have raised the base
of performance to a higher level.
As we cannot expect much growth in the general market
for homes, management of housing operations is focused on
maintaining stable performance. Orders for fiscal 2006
were lower than we had expected, resulting in decreased
profits. We are working to achieve greater cost reductions
while enhancing new product development, gaining greater
marketing efficiency, and growing housing-related
businesses such as remodeling.
Pharmaceutical and medical device operations had
reimbursement price cuts but nevertheless increased profits
in fiscal 2006 with licensing income and growing medical
device sales. We are making a large increase in clinical
development expenses for pharmaceuticals in fiscal 2007,
and if all goes well our product pipeline will be filled
through 2012. We will soon be able to enjoy the fruits of
past research in pharmaceuticals. In artificial kidneys, we
will continue to solidify and expand on our world No. 2
position. We are advancing successive production capacity
expansions, established a manufacturing joint venture with
Kuraray Medical, and in October 2007 are scheduled to
integrate their artificial kidney business with ours. Global
development of the business will include expansion of sales
capabilities in Europe and the US.
Sales of electronic materials such as Sunfort™
photosensitive dry film resist and Pimel™ photosensitive
polyimide precursor, which enjoy high global market shares,
grew steadily in fiscal 2006, as did sales of LSIs and other
electronic devices, with strong demand in home electronics
applications. We will continue to expand capacity in our
established businesses, while pursuing M&A and alliances in
related areas where we can gain synergies.
Profitability in fibers for fiscal 2006 was affected by an
08
operating loss at the Dorlastan™ spandex business acquired
in March from Lanxess of Germany, but we have applied
Roica™ technology and both the US and German plants
are now profitable on a monthly basis. These businesses
will make a solid contribution to profits in fiscal 2007. We
will also complete a commercial plant this year for
Precisé™, a new highly functional nonwoven for industrial
applications, which will help nonwovens operations
overcome the challenge of high feedstock costs.
Performance in construction materials has steadily
improved, and operating profit rose to 7% of sales in fiscal
2006. We will not be pursuing large growth in sales, but
will focus on developing profitable new products that
contribute to safety and ecology.
Profits from consumable products were down slightly
in fiscal 2006 due to high feedstock costs, but the April
2007 integration of Asahi Kasei Life & Living with Asahi
Kasei Chemicals will provide greater resources for growth in
home-use products and enable the development of higher
value-added films and sheets with novel functionality,
together with the expansion into new applications, by
combining the polymer processing technologies and
marketing capabilities of the two companies for packaging
materials.
Financial Performance
Net sales
Operating profit
Ordinary profit
Net income
Total assets
Net worth *
Interest-bearing debt
D/E ratio
FY 2005
FY 2006
1,498.6
1,623.8
108.7
104.2
59.7
127.8
126.5
68.6
(¥ billion)
Percent
Change
+8.4
%
+17.5
%
+21.4
%
+14.9
%
(¥ billion, except D/E ratio)
FY 2005
FY 2006
Change
1,376.0
1,459.9
594.2
235.8
0.40
645.7
216.9
0.34
+83.9
+51.4
–18.9
–0.06
* Net assets less minority interest in consolidated subsidiaries. Figure for shareholders’ equity
shown for FY 2005.
Annual Report 2007
09
Driving the Strategic Advance: Growth Action – 2010
Major Investments
Completed in FY 2006
Chemicals
Expansion of plant for Hipore™ Li-ion rechargeable battery separators
Segment
Project
New assembly plant for Microza™ microfiltration membranes
Application of propane process at one AN line of Tong Suh Petrochemical
Location
Japan
China
Korea
Fibers
Installation of Roica™ production equipment at Asahi Kasei Spandex Europe plant
Germany
Electronics Materials &
Devices
Expansion of plant for LSIs
Expansion of plant for Sunfort™ dry film resist
Under construction at
FY 2006 year-end
Chemicals
Homes
Pharma
New plant for compound semiconductor wafer processing
New plant for Duranate™ hexamethylene diisocyanate-based polyisocyanate
New housing R&D center
Expansion of assembly plant for APS™ artificial kidneys
Expansion of assembly plant for Planova™ virus removal filters
Japan
China
Japan
China
Japan
China
Japan
Fibers
Installation of Roica™ production equipment at Asahi Kasei Spandex America plant
US
Electronics Materials &
Devices
New plant for Precisé™ nonwovens
Expansion of plant for photomask pellicles
Japan
Japan
Fiscal 2007 outlook
Sales growth will largely be in chemicals, with continuingly
strong overseas demand, and in fibers, with the inclusion of
a full year of sales from the spandex business acquired from
Lanxess. Though our underlying profitability continues to
grow, we are forecasting a slight decrease in reported
operating profit due to decreased licensing income in
pharmaceuticals and a projected ¥4.7 billion effect of new
accounting standards for depreciation of fixed assets.
We are forecasting record-high net income of ¥70 billion or
more. This will also be the year for advancing strategic
investments in many businesses to enable us to achieve
our performance targets in fiscal 2010.
10
Shareholder returns
We would like to provide returns to shareholders first and
foremost through continuous dividend increases over the
long term. As set forth in Growth Action – 2010, internal
financial reserves based on consolidated performance will be
directed toward strategic investments to bring continuous
profit growth, enabling continuous dividend increases.
Annual dividends were ¥6 per share in fiscal 2003, the first
year of our Ishin-05 initiative, and ¥12 per share in fiscal
2006. We would like to increase dividends each year by at
least ¥1 per share. In February 2007 we cancelled 40 million
shares of treasury stock to heighten shareholder value.
Continuous Earnings and Dividends Increase through Strategic Investment
Strategic investment
(¥220 billion + M&A ¥150 billion)
Cash flows
Interest-bearing debt
Net worth/total assets & D/E ratio
(up to 50% & 0.5 w/M&A)
Continuous
earnings increase
(6% p.a. for net income)
Improved ROA
(target of 5%)
Improved ROE
(target of 10%)
Continuous
dividends increase
(resources of ¥20–30 billion)
Payout ratio
(target of 20–30%)
Share buybacks
Return to shareholders in fiscal 2006
• ¥2 increase in dividends from ¥10 to ¥12 per share.
• Cancellation of 40 million shares of treasury
stock on February. 28, 2007.
Net Income, Cash Dividends
¥ billion
150
120
90
60
Net income
Cash dividends
13
12
10
8
6
56.5
59.7
68.6
70.0
30
27.7
0
2003 2004
2005
2006
2007
Forecast
Fiscal year
¥
15
12
9
6
3
0
Long term vision for growth
Once achieving our performance targets in Growth Action –
2010, if we maintain the same rate of growth through fiscal
2015, operating profit will be double what it was in fiscal
2005. As we achieve this, our corporate value will rise
commensurately. We are now launching a group-wide
project to formulate action plans in promising growth fields.
By fiscal 2015, global businesses will probably be 60% or
more of our total, with many products having high global
market shares in specialty areas. Asahi Kasei will have a
much stronger global presence, make more of a contribution
to people’s lives around the world.
Annual Report 2007
11
Asahi Kasei Group Operations, Worldwide (As of April 1, 2007)
Operations of the Asahi Kasei Group extend to many locations throughout the world. The growth of these operations
is a key element in the expansion of global businesses as part of our Growth Action – 2010 strategic initiative.
Zhangjiagang
● Asahi-DuPont POM (Zhangjiagang)
Co., Ltd.
Suzhou
● Asahikasei (Suzhou) Plastics
Compound Co., Ltd.
● Asahi Kasei Electronics
Materials (Suzhou) Co., Ltd.
Nantong
● Asahi Kasei Performance
Chemicals Corp.
Shanghai
● Asahi Kasei Business
Management (Shanghai) Co., Ltd.
● Asahikasei Plastics (Shanghai)
Co., Ltd.
Hangzhou
● Asahi Kasei Microza (Hangzhou) Co., Ltd.
● Asahi Kasei Medical (Hangzhou) Co., Ltd.
● Hangzhou Asahikasei Spandex Co., Ltd.
● Hangzhou Asahikasei Textiles Co., Ltd.
Korea
● Tong Suh Petrochemical Corp., Ltd.
● Asahi Kasei Adipic Acid (Korea) Co., Ltd.
● Delaglas Korea Corp.
● Nikkiso Asahi Kasei Medical Korea Co., Ltd.
● Asahi Kasei EMD Korea Corp.
Japan
Hong Kong
● Asahi Kasei Plastics
(Hong Kong) Co., Ltd.
● Asahi Chemical (HK) Ltd.
China
Thailand
● Asahikasei Plastics (Thailand) Co., Ltd.
● Thai Asahi Kasei Spandex Co., Ltd.
Taiwan
● Formosa Asahi Spandex Co., Ltd.
● Asahi Kasei EMD Taiwan Corp.
● Asahi-Schwebel (Taiwan) Co., Ltd.
● Asahi Kasei Wah Lee Hi-Tech Corp.
Singapore
● Asahi Kasei Plastics Singapore Pte. Ltd.
● Polyxylenol Singapore Pte. Ltd.
Indonesia
● PT Nippisun Indonesia
Europe
● NV Asahi Thermofil (Europe) SA
● NV Asahi Photoproducts (Europe) SA
● Asahi Photoproducts (UK) Ltd.
● AK&N (UK) Ltd.
● Asahi Thermofil (UK) Ltd.
● Asahi Thermofil (France) SA
● Asahi Kasei Medical Europe GmbH
● Asahi Pharma Spain, SL
● Asahi Kasei Spandex Europe GmbH
● Asahi Kasei Fibers Italy SRL
● Asahi Kasei Fibers Deutschland GmbH
12
Expanding global businesses – Share of sales by character of business
FY 1998
Domestic
Businesses
57%
Global
Businesses
43%
FY 2005
FY 2010 target
Domestic
Businesses
Global
Businesses
45% 55%
Domestic
Businesses
Global
Businesses
40% 60%
Gunma
Saitama
Ageo
Kawasaki
Hozumi
Shiga
Moriyama
Ono
Mizushima
Iwakuni
Osaka head office
Wakayama
Chikushino
Oita
Nobeoka
Shiraoi
Mibu
Tomobe
Sakai
Tokyo head office
Chiba
Ohito
Fuji
Nagoya
Suzuka
America
● Asahi Kasei America, Inc.
● Asahikasei Plastics (America) Inc.
● Asahi Kasei Plastics North America, Inc.
● Asahi Chemical Intermediates Inc.
● Sun Plastech Inc.
● Asahi Kasei Spandex America, Inc.
● AKM Semiconductor, Inc.
● ：
● ：
● ：
● ：
● ：
Holding company
Chemicals segment
Pharma segment
Fibers segment
Electronics Materials &
Devices segment
Annual Report 2007
13
At a Glance
Segments, Core Operating Companies
Core Operating Company Directors *
Chemicals
Homes
Pharma
Fibers
Taketsugu Fujiwara
Keiji Kamei
Masanori Warabi
Shigeru Mizutani
Masami Fujimori
Kyosuke Komiya
Hajime Nagahara
Tadashi Akaishi
President & Representative Director,
Presidential Executive Officer
Director, Vice-Presidential Executive Officer
Director, Primary Executive Officer
Director, Primary Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Toshiaki Okamoto
Shingo Hatano
Tsuyoshi Shimizu
Morio Watanabe
Eisuke Ikeda
Chairman of the Board & Director
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Kei Oe
Yasuyuki Yoshida
Tsutomu Inada
Akio Kobayashi
President & Representative Director,
Presidential Executive Officer
Director, Primary Executive Officer
Director, Primary Executive Officer
Director, Senior Executive Officer
Masaki Sakamoto
Ryo Matsui
Hidefumi Takai
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Director, Executive Officer
Electronics Materials &
Devices
Makoto Konosu
Katsuhiko Yamazoe
Koji Yamada
Hajime Nagahara
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Director, Executive Officer
Director
Construction Materials
Hiroshi Kobayashi
Fumio Nakagawa
Masafumi Funaki
Tsuyoshi Shimizu
President & Representative Director,
Presidential Executive Officer
Director, Senior Executive Officer
Director, Senior Executive Officer
Director
Life & Living
Asahi Kasei Life & Living Corp. was integrated with Asahi Kasei Chemicals Corp. on April 1, 2007.
Services, Engineering
and Others
14
* As of April 1, 2007
FY06 Composition of Net sales,
Operating Profit *
Net sales
Operating profit
46%
¥752.6
billion
39%
¥52.0
billion
Major Consolidated Subsidiaries
Main Businesses
Sanyo Petrochemical Co., Ltd.
Japan Elastomer Co., Ltd.
Asahi Kasei Technoplus Co., Ltd.
Tong Suh Petrochemical Corp., Ltd.
Asahi Kasei Plastics Singapore Pte. Ltd.
Asahikasei Plastics (America) Inc.
Asahi Kasei Performance Chemicals Corp.
Organic and inorganic industrial chemicals, synthetic resin,
synthetic rubber, high-compound fertilizer, coating
materials, latex, pharmaceutical and food additives,
explosives, photopolymers and platemaking systems,
separation and ion-exchange membranes, systems, and
equipment.
Net sales
Operating profit
Asahi Kasei Jyuko Co., Ltd.
Asahi Kasei Mortgage Corp.
Asahi Kasei Reform Co., Ltd.
Asahi Kasei Real Estate, Ltd.
Hebel Haus™ houses, Hebel Maison™ apartments,
condominiums, remodeling, real estate, residential land
development, financial services.
Net sales
Operating profit
Asahi Kasei Medical Co., Ltd.
Asahi Kasei N&P Co., Ltd.
Asahikasei Aime Co., Ltd.
Asahi Kasei Medical (Hangzhou) Co., Ltd.
Pharmaceuticals, pharmaceutical intermediates, feed
additives, diagnostic reagents, hemodialyzers and other
medical devices.
Net sales
Operating profit
Kyokuyo Sangyo Co., Ltd.
Thai Asahi Kasei Spandex Co., Ltd.
Hangzhou Asahikasei Spandex Co., Ltd.
Asahi Kasei Spandex Europe GmbH
Asahi Kasei Spandex America, Inc.
Asahi Chemical (HK) Ltd.
Hangzhou Asahikasei Textiles Co., Ltd.
Roica™ elastic polyurethane filament (spandex), Eltas™
spunbond, Lamous™ artificial suede, Bemliese™ cupro
cellulosic nonwoven, Bemberg™ cupro cellulosic fiber,
polyester filament, Solotex™ polytrimethylene
terephthalate (PTT) fiber.
Net sales
Operating profit
Asahi Kasei Microsystems Co., Ltd.
Asahi-Schwebel Co., Ltd.
Asahi Kasei Electronics Co., Ltd.
Asahi Kasei Electronics Materials (Suzhou) Co., Ltd.
Asahi-Schwebel (Taiwan) Co., Ltd.
Pimel™ photosensitive polyimide precursor, Sunfort™
photosensitive dry-film resist, Hall elements, LSIs, glass
fabric for printed circuit boards.
Net sales
Operating profit
Asahi Kasei Foundation Systems Corp.
Asahi Kasei Marinetech Co., Ltd.
Hebel™ autoclaved lightweight concrete, construction
piles, Neoma™ foam and other thermal insulation, artificial
fish reef and other marine structures.
Net sales
Operating profit
Asahi Kasei Pax Corp.
Asahi Home Products Co., Ltd.
Asahi Home Products Co., Ltd. was renamed Asahi Kasei
Home Products Corp. on April 1, 2007.
Saran Wrap™ cling film, Ziploc™ storage bags, plastic film,
sheet, and foam.
Net sales
Operating profit
Asahi Research Center Co., Ltd.
Asahi Finance Co., Ltd.
Asahi Kasei Engineering Co., Ltd.
Asahi Kasei Amidas Co., Ltd.
Plant, equipment, process engineering, employment agency,
think tank.
25%
¥405.7
billion
21%
¥27.5
billion
6%
¥104.5
billion
10%
¥13.9
billion
7%
¥106.6
billion
3%
¥4.2
billion
7%
¥112.1
billion
17%
¥22.6
billion
4%
¥60.8
billion
4%
¥5.0
billion
3%
¥52.6
billion
3%
¥4.6
billion
2%
¥28.9
billion
3%
¥3.9
billion
* Before corporate expenses and eliminations
Annual Report 2007
15
Operating Segment
Chemicals
With the basic ideal Creating the Future with Chemistry to guide the
advancement and growth of operations, all businesses have been classified as
those for strategic expansion and those for stable earnings. Management
resources are focused on advancing the growth of strategic expansion
businesses, while stable earnings businesses are strengthened and enhanced to
heighten profitability.
Taketsugu Fujiwara
President, Asahi Kasei Chemicals
Major Products
Chemicals and derivative products
Ammonia, nitric acid, caustic soda, acrylonitrile (AN), styrene, adipic acid, methyl methacrylate (MMA).
Polymer products
Suntec™ polyethylene (PE), Stylac™-AS styrene-acrylonitrile, Stylac™-ABS acrylonitrile-butadiene-styrene, polymethyl methacrylate (PMMA), synthetic
rubber and elastomer, styrene-butadiene latex, Tenac™ polyacetal, Xyron™ modified polyphenylene ether (mPPE), Leona™ nylon 66 polymer and filament.
Specialty products
Coating materials, Ceolus™ microcrystalline cellulose, explosives, explosion-bonded metal clad, APR™ photosensitive resin, AFP™ photosensitive plates,
printing plate making systems, Microza™ UF and MF membranes and systems, Hipore™ microporous membrane, ion-exchange membranes and electrolysis
systems.
Growth Action – 2010
Each business is classified either as a strategic expansion business, with management
resources focused on achieving growth and high earnings, or as a stable growth, stable
earnings business, with efforts focused on strengthening and enhancement to heighten
profitability.
Strategic expansion businesses, characterized by the potential to attain greater
earnings and stronger market position through expansion of scale, include AN, MMA,
and synthetic rubber and elastomers. Those characterized by the potential to attain
growth through linkage with growing market segments, building on established
strengths, and extension into peripheral fields, include battery/fuel cell materials and
water treatment systems.
Stable earnings businesses, characterized by the potential to attain greater added
value and stable earnings growth through a leading position in growing market
segments, include polymers/compounds and performance chemicals. Those
characterized by the potential to maintain stable earnings through a strengthened
operational base and structure include petrochemicals, basic chemicals, and ethylene
center derivatives with the exception of those marked for strategic expansion.
16
Net Sales
¥ billion
900
750
600
450
300
150
0
831.0
752.6
660.4
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
60
50
40
30
20
10
0
%
12
10
8
6
4
2
0
56.5
52.0
6.9
6.8
40.5
6.1
2005
2006
2007
Forecast
Fiscal year
The Year in Review
Sales for the segment grew by ¥92.2 billion to ¥752.6
billion, a 14.0% increase. Operating profit grew by ¥11.5
billion to ¥52.0 billion, a 28.3% increase.
Sales and operating profit in volume products,
comprising chemicals/derivative products and polymer
products, increased. Product price increases and strong
overseas demand helped to overcome higher feedstock costs.
In chemicals and derivative products, operating profit
increased with strong overseas demand for acrylonitrile and
styrene, and with a sharp rise in the market price of adipic
acid due to a tight market balance. In polymer products,
profitability of Leona™ nylon 66 resin and filament
increased.
Sales and operating profit in specialty products grew with
increased shipments of Hipore™ Li-ion rechargeable battery
separators following plant expansion, export of membrane
process chlor-alkali electrolyzers to China, and increased
shipments of ion-exchange membranes for chlor-alkali.
Notable Developments
A new production line in Moriyama for Hipore™ Li-ion
rechargeable battery separators began operation in October
2006. The decision was made in December 2006 to install
a new steam boiler and power generation turbine to use
lower-cost fuel at the Mizushima Works, with start-up in
fiscal 2009. Working together with adjacent companies, the
project will strengthen competitiveness in Mizushima. A
new plant in China for assembly of Microza™
microfiltration (MF) membrane for water treatment began
operation in December 2006. Korean subsidiary Tong Suh
Petrochemical began commercial operation for validation of
the world’s first propane process for acrylonitrile production
in January 2007. The decision was made in January 2007
to expand production capacity in Kawasaki for ion-exchange
membranes for chlor-alkali with start-up in fiscal 2008.
Market Environment Outlook
for fiscal 2007
Demand for volume products will remain strong, but the
outlook for feedstock prices is unclear. The focus in
chemicals and derivative products will be on maintaining
appropriate pricing and stable operation. In polymer
products, profit growth will be obtained through expansion
of differentiated grades.
Specialty products will perform well with continuing
strong demand in IT, home electronics, and automotive
applications. Expanded production capacity for Hipore™
Li-ion rechargeable battery separators, the new assembly line
for Microza™ MF in China, and the start-up of a new plant
in China for Duranate™ hexamethylene diisocyanate-based
polyisocyanate will enable further expansion of sales.
R&D
Technology development in line with the basic ideal of
Creating the Future with Chemistry is directed toward the
fields of petrochemicals, electronics and optics, and
environment and energy.
The focus in petrochemicals and monomers is on
advances and innovations in catalysts and chemical processes
for diversification of feedstocks, the most recent example
being the validation and commercial operation of the world’s
first propane process for AN. In electronics and optics,
functional sheets and films for LCDs and other flat-panel
displays are nearing commercialization. Development in the
field of energy will be expanded from the base of Hipore™
Li-ion rechargeable battery separator technology. In
ecology, development of water treatment materials
technology is advancing for expansion into promising new
markets. In polymers/compounds and performance
chemicals, the focus is on obtaining higher added value.
Annual Report 2007
17
Highlights
World’s first commercial propane-process
AN plant
Asahi Kasei Chemicals developed the world’s first process
technology for production of AN from propane gas, with
validation and commercial operation beginning in January
2007 at Tong Suh Petrochemical, its subsidiary in Korea.
AN is a production material for acrylic fiber and ABS resin,
which is used in home appliances. It is conventionally
produced from propylene derived from naphtha,
a petroleum-based feedstock. The propane process
technology enables production of AN without using
naphtha or other petroleum-based feed. A large-scale
propane-process AN plant is scheduled for start-up in late
2009 in Thailand, near abundant natural gas deposits.
With the continuing expansion and growth of operations
in Asia, we are aiming for the world’s top share in AN.
AN plants in Korea
New steam boiler and power generation turbine
at Mizushima Works
In December 2006 the decision was made to install a new
steam boiler and power generation turbine using lower-cost
fuel to strengthen competitiveness at the Mizushima Works.
Start-up is scheduled for fiscal 2009. The facilities, to be
operated jointly with Zeon Corp., will use SDA pitch
supplied from a petroleum refinery of Nippon Oil Corp.
in Mizushima. This project has been selected by NEDO
18
(New Energy and Industrial Technology Development
Organization) for support for energy conservation.
Our Mizushima Works
Expansion of ion-exchange membrane
production capacity
In January 2007, the decision was made to expand
production capacity for ion-exchange membranes in
Kawasaki, to meet growing demand worldwide. Start-up
is scheduled for fiscal 2008. The ion-exchange membranes
are used in the electrolysis of brine to produce chlorine and
caustic soda. There is a clear outlook for growing
membrane demand, as new membrane-process chlor-alkali
plants and plant expansions will be required to enable
increased production of PVC and caustic soda, for which
the market is particularly strong in the fast-growing
economies of China and India. Asahi Kasei Chemicals is
world’s only supplier of the complete range of essential
technology for membrane-process chlor-alkali, including its
own electrolyzers, electrodes, ion-exchange membranes, and
operating technology. The expansion of production capacity
for ion-exchange membranes will further strengthen the
business and solidify AKC’s position as the world’s top supplier
of both the membranes and chlor-alkali electrolysis systems.
Membrane-process chlor-alkali plant
Operating Segment
Homes
Marketing resources are focused on demand for rebuilding in urban areas
backed by the Long Life Home product strategy to maintain and enhance
customer satisfaction over the long term.
Shingo Hatano
President, Asahi Kasei Homes
Major Products
Hebel Haus™ houses, Hebel Maison™ apartments, condominiums, remodeling, real estate, residential land development, home financing.
Growth Action – 2010
Marketing of order-built homes is focused on demand for home rebuilding in major
urban areas, as a high-earnings operational structure is reinforced and expanded.
Specific actions include:
• Successive development of new products tailored to specific market characteristics in
different regions.
• Advancement of cost reductions through shared logistical networks with other home
builders.
• Productivity enhancements through reduced home construction time.
• Advanced development of technology to enhance the Long Life Home product
strategy.
Long-term customer relationships are maintained through the provision of
remodeling, real estate, and financial services. Specific actions include:
• Expansion of real estate operations in brokerage of used Hebel Haus™ homes.
• Expansion of remodeling operations through high value-added services for long-term
maintenance and enhancement of home asset value.
• Establishment of stable earnings in home financing operations with mortgage
securitization and development of homeowners insurance business.
• Development of new businesses utilizing proprietary technology, know-how, and the
asset value of Hebel Haus™ homes.
Net Sales
¥ billion
500
400
300
200
100
0
404.5 405.7
410.0
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
30
28.2
27.5
29.0
25
20
15
10
5
0
7.0
6.8
7.1
2005
2006
2007
Forecast
Fiscal year
%
12
10
8
6
4
2
0
Annual Report 2007
19
Sales Trends of Home Segment
Orders Received
Others
Pre-built homes
Order-built homes
¥ billion
400
300
280.0
16.7
332.0
1.1
20.1
318.2
1.1
36.0
354.1 347.5
1.1
1.0
33.6
28.9
344.0
1.0
26.0
200
100
0
263.3 281.1 310.7 319.4 317.6
317.0
2002
2003
2004
2005
2006
2007
Forecast
Fiscal year
¥ billion
400
289.3
300
318.1
301.8
313.3 303.4
310.0
200
100
0
2002
2003
2004
2005
2006
2007
Forecast
Fiscal year
heighten efforts to maintain sales amid weak demand.
Asahi Kasei Homes will focus on increasing unit-home
orders from customers who are rebuilding in urban markets
where it has established strengths, further advancing
product development and promotion based on the Long
Life Home concept.
R&D
R&D is focused on enhancing core technologies. Shelter
technology brings greater safety and security through
earthquake resistance, seismic damping, and fire resistance;
greater long-term usability through physical durability/
evaluation, systematic maintenance, and ease of remodeling;
enhanced livability through thermal insulation, air circulation,
and sound barrier; and enhanced ecology through recycling
and incorporation of greenery. Lifestyle technology brings
greater comfort, convenience, and satisfaction, while
evaluation/simulation technology is being enhanced to
enable buyers to more intuitively appreciate the real-world
effects of variations and modifications to a home design so
that it is optimized to taste before building. Additional
research is focused on the physiological and psychological
aspects of comfort, and how these can be utilized through
technological development to achieve greater energy
efficiency and environmental compatibility in homes
optimized for health and comfort.
The Year in Review
Sales for the segment grew by ¥1.2 billion to ¥405.7 billion,
a 0.3% increase. Operating profit decreased by
¥0.7 billion to ¥27.5 billion, a 2.5% decline.
Unit prices of order-built homes increased, but the
number of deliveries of both order-built homes and
condominiums declined, and sales and operating profit in
housing operation decreased. Marketing efforts for order-
built homes were focused on eliciting demand for
rebuilding, but new orders worth ¥303.4 billion received
during the period were ¥10.0 billion less than a year ago.
Sales and operating profit in housing-related operations
increased. Real estate operations had rising income from
rentals. Remodeling operations also grew.
Notable Developments
Construction of a new R&D center in Fuji began in
November 2006. The new center will perform research on
basic technology for the Long Life Home product concept,
and drive the development of next-generation products,
with opening scheduled for October 2007. The Hebel
Haus Luft™ with living space optimized for the senior
couple went on sale in January 2007.
Market Environment Outlook
for fiscal 2007
The market for housing will be generally slack as retirement
of the baby-boom generation reduces aggregate national
disposable income and as purchasing desire is moderated by
apprehension that salary deductions for social security will
increase. Competition will likely intensify as home sellers
20
Highlights
Hebel Haus Luft™
With living space optimized for the senior couple, the Hebel
Haus Luft™ went on sale in January 2007. Designed to
meet the needs of couples in their 50s and 60s who are
rebuilding, the home enables the residents to maintain loose
contact from a comfortable distance while engaging in
separate activities. The concept for this style of home layout
emerged from a study performed by Asahi Kasei Homes,
which found that many couples whose children have moved
out want to have their own spaces to spend time in, but do
not want these spaces to be separated by walls or partitions
that inhibit communication and interaction. Asahi Kasei
Homes will continue to develop new products like this one
which meet the specific needs of customers for rebuilding.
Housing R&D center
In November 2006 Asahi Kasei Homes began construction
of a new R&D center in Fuji, the central location of R&D
facilities for the Asahi Kasei Group. With opening
scheduled for October 2007, the new center will perform
research on basic technology for the Long Life Home product
concept, and drive the development of next-generation
products. The housing technology R&D function will be
transferred from its current location at a laboratory in Tokyo.
The new location in Fuji will afford a larger scale and wider
range of facilities, and enable synergies through interaction
with the other Asahi Kasei Group researchers at the same site.
The site of the new R&D center will also feature a 10,000 m2
zone for ecology and the environment, where a diverse
natural ecosystem will be nurtured.
Hebel Haus Luft™
Hebel Haus Greenplus™
Featuring rich greenery in a confined urban setting,
the Hebel Haus Greenplus™ went on sale in
September 2006. Several innovations were applied
to maximize the integration of trees and plants
within the limited space of an urban land parcel.
These include a system to support plants in front of
a wall face, and a new range of durable steel planters,
in addition to the rooftop gardening system
previously available. Together with the optimal utilization of
natural wind and sunlight, these raise the level of relaxing
greenery and environmentally friendly living which can be
obtained in a small urban plot. Asahi Kasei Homes will
continue to develop new urban home products like this one
which provide enhanced comfort and ecology.
Housing R&D center in Fuji
Hebel Haus Greenplus™
Rooftop gardening system
Annual Report 2007
21
Operating Segment
Pharma
The pharmaceutical business is advancing as a specialized, R&D-centered
operation, with the field of orthopedics the central focus of management
resources. The medical device business is directed toward for global leadership
in systems for therapeutic blood filtration.
Kei Oe
President, Asahi Kasei Pharma
Major Products
Elcitonin™, Bredinin™, Flivas™, Toledomin™, and other pharmaceuticals, pharmaceutical intermediates, functional food additives, diagnostic reagents,
APS™ artificial kidneys, Sepacell™ leukocyte reduction filters, Cellsorba™ leukocyte adsorption columns, Planova™ virus removal filters, contact lenses.
Growth Action – 2010
Pharmaceuticals business:
Advancement as a specialized, R&D-centered operation, with management resources
focused on selected therapeutic fields. Expansion of operations through structural
reform and slim, robust management, building on an established presence in selected
therapeutic fields in the Japanese market. In pharmaceutical intermediates and
diagnostic reagents, structural reform is advancing to enable global growth and
expansion in selected fields of competitive superiority.
Asahi Kasei Medical:
Directed toward global leadership in therapeutic blood filtration systems. Global
growth and expansion as a high-earnings enterprise based on consolidation in the field
of hemodialysis, eliciting new demand for plasmapheresis and leukocytapheresis
products, expanding demand for Sepacell™ leukocyte reduction filters, and expanding
demand for Planova™ virus removal filters.
22
Net Sales
¥ billion
120
100
80
60
40
20
0
105.8 104.5
109.0
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
15
13.9
12
11.1
11.5
%
20
16
9
6
3
0
13.3
12
10.6
10.4
2005
2006
2007
Forecast
Fiscal year
8
4
0
Pharmaceutical Product Pipeline
Development stage
Product
Objective
Class
Indication
Pending approval
ART-123 (injection)
New biologic
Recombinant human thrombomodulin
Disseminated intravascular coagulation
AK-120 (oral)
New chemical entity
Antiviral
Herpes zoster
Phase III
AT-877 (injection)
Additional indication
Rho-kinase inhibitor
Acute cerebral thrombosis
Phase II
AT-877 (oral)
Additional indication
Rho-kinase inhibitor
Angina pectoris
PTH (injection)
Additional indication
Synthetic human parathyroid hormone
Osteoporosis
KT-611 (oral)
Additional indication
α-1 blocker
Neurogenic bladder
Phase II (overseas)
ART-123 (injection)
New biologic
Recombinant human thrombomodulin
Disseminated intravascular coagulation
The Year in Review
Sales for the segment decreased by ¥1.4 billion to ¥104.5
billion, a 1.3% decline. Operating profit grew by ¥2.8
billion to ¥13.9 billion, a 25.5% increase.
Sales in pharmaceutical operations decreased with
reimbursement price cuts and decreased shipments of
pharmaceutical intermediates. Operating profit grew with
licensing income for fasudil hydrochloride rho-kinase inhibitor.
Sales and operating profit in devices grew with increased
shipments of APS™ polysulfone-membrane artificial
kidneys and Planova™ virus removal filters, and with
measures to reduce operating costs.
Notable Developments
Expansion of the Nagoya Pharmaceuticals Plant, the main
site for production of pharmaceuticals, was completed in
February 2007. Asahi Kasei Medical and Kuraray Medical
reached basic agreement for the integration of their dialyzer
businesses in October 2007.
Market Environment Outlook
for fiscal 2007
Pharmaceuticals operations will remain challenging, with a
low birthrate and aging population prompting curtailments
in national healthcare expenditures, with intensified
competition, and with increased R&D expenditure. Sales
growth will be obtained through measures to reinforce our
main products, including the launch of Flivas™ 75 mg
orally disintegrating tablets. In medical devices, a new plant
in Nobeoka for dry-pack APS™ polysulfone-membrane
dialyzers is under construction with integrated spinning and
assembly lines as part of a plan to expand production
capacity to 30 million modules/year by fiscal 2010.
R&D
In pharmaceuticals, the focus is on new drug development
in the fields of orthopedics, the central nervous system, and
urology, and on extension of market life through enhanced
product conformation. In medical devices, developments are
advancing in fields related to hemodialysis, apheresis,
leukocyte removal, and virus removal. Next-generation fields
of research include autohemotherapy and cell therapy.
Highlights
New drug development
In August 2006 Asahi Kasei Pharma (AKP) applied for
Japanese regulatory approval for a new anticoagulant, ART-
123, and licensed overseas rights to Artisan Pharma Inc.
Discovered by AKP, ART-123 features a novel mechanism
of anticoagulation. Artisan Pharma, newly established with
venture-capital financing, obtains rights for development
and sale of the compound in several overseas markets.
With this development, business related to ART-123 will
expand to many countries outside Japan.
Integration of dialyzer businesses
Asahi Kasei Medical (AM) and Kuraray Medical (KM) have
agreed to integrate their dialyzer businesses. AM produces
APS™ dialyzers based on polysulfone hollow-fiber membrane
technology, the global standard for high-performance,
and dialyzers based on cellulose hollow-fiber membrane
technology, while KM produces dialyzers based on ethylene-
vinyl alcohol copolymer (EVOH) hollow-fiber membrane
technology which enables mild and gentle hemodialysis.
The integrated operation, scheduled to start in October
2007 as Asahi Kasei Kuraray Medical, will enjoy an
enhanced position as Japan’s leading dialyzer producer with
growing business worldwide.
APS™ polysulfone-membrane hemodialyzer
Annual Report 2007
23
Operating Segment
Fibers
The focus is on achieving growth by advancing a transformation from a
business structure centered on products for the Japanese market for apparel
through expansion of overseas business and development of business in non-
apparel, industrial-use materials.
Masaki Sakamoto
President, Asahi Kasei Fibers
Major Products
Roica™ elastic polyurethane filament, Eltas™ spunbond, Lamous™ artificial suede, and other nonwovens, Bemberg™ cupro cellulosic fiber,
polyester filament.
Growth Action – 2010
Achieving continuous growth by advancing a transformation from a business structure
centered on products for the Japanese market for apparel through expansion of
overseas business and development of business in non-apparel, industrial-use materials.
R&D is focused on driving the growth of business in industrial-use materials to
develop as a new core field of operation.
For greater earnings in established businesses:
• Development and expansion in global markets and industrial materials.
• Full utilization of available resources to expand earnings. Proactive investment
for expansion.
• Establishment of new pricing structure through a shift of resources to high-earnings
application fields and geographic regions.
• Continuous cost reduction.
For expansion of new businesses:
• Expansion of Solotex™ polytrimethylene terephthalate (PTT) fiber business in new
application fields. Commercialization of Cyberlon™ polyketone fiber business.
• Development of new businesses peripheral to established cellulosic fibers and
nonwovens businesses. Rapid scale-up to form new core business.
• Extension of business domain based on established technology and know-how, in
growth fields not limited to fiber production.
• Advancement of alliances and joint projects with partners within and outside the
Asahi Kasei Group.
24
Net Sales
¥ billion
120
100
89.7
115.0
106.6
80
60
40
20
0
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
6
5
4
3
2
1
0
%
12
10
8
6
4
2
0
5.5
4.0
4.2
4.5
3.9
4.8
2005
2006
2007
Forecast
Fiscal year
The Year in Review
Sales for the segment grew by ¥16.9 billion to ¥106.6
billion, an 18.9% increase. Operating profit grew by ¥0.1
billion to ¥4.2 billion, a 3.4% increase.
Sales of elastic polyurethane filament grew with increased
shipments of Roica™, improved market conditions, and the
inclusion of the Dorlastan™ business acquired from
Lanxess, but operating profit decreased as the Dorlastan™
business operated at a loss. Roica™ production equipment
is being installed at the Dorlastan™ plants in the US and
Europe, and the business is forecast to become profitable in
fiscal 2007.
Sales and operating profit in Bemberg™ cupro grew with
increased exports. Nonwovens operations were impacted by
the effect of elevated feedstock costs, but sales and operating
profit grew with increased shipments of Lamous™ artificial
suede in car seat applications.
Notable Developments
Roica™ SF went on sale in February 2007 as the eighth in
the series of Roica™ performance yarns. A large-scale plant
for Precisé™ is under construction in Moriyama with start-
up scheduled for autumn 2007.
Market Environment Outlook
for Fiscal 2007
Continuing full production and rising product prices are
forecast with increased demand for Roica™, though the
operating environment will remain challenging with high
feedstock costs. Processing costs for Bemberg™ will
increase and demand in Japan will be weak, but increased
sales volume is forecast in non-lining applications and in
overseas markets. Shipments of Lamous™ will increase,
mainly for car seats in the US and Europe, and development
will be advanced for nonwovens.
R&D
The ratio of R&D expenditure on new materials to that on
existing materials is 2:3 and increasing as greater emphasis is
focused on development of new materials. R&D on existing
materials is directed toward the development of new high
value-added grades of Roica™ spandex, Bemberg™ cupro,
and nonwovens which meet market needs for advanced
performance. R&D on new materials is directed toward the
development of unique products which will elicit new
demand. A pilot plant for polyketone filament started up
at the beginning of 2006, with samples supplied to users
for evaluation.
Highlights
New nonwoven Precisé™
A new polyester nonwoven with a highly uniform structure
of layers of filament with different denier, Precisé™ went
on sale in August 2006. Precisé™ features a previously
unavailable combination of heat resistance, strength, and
rigidity, providing outstanding performance and
functionality in a wide range of applications including
filtration and separation, food packaging, and medical tape.
A large-scale plant for Precisé™ is under construction in
Moriyama, with production capacity expansions to be made
as demand increases.
Market launch of Roica™ SF
The latest high-function Roica™ spandex yarn, Roica™
SF, went on sale in February 2007. Roica™ SF, the eighth
in this series, features high inter-yarn adhesion for resistance
to runs and fraying, while maintaining elasticity and heat
resistance. The result is a previously unavailable level of
quality and durability in stockings and other garments.
Spandex yarns, characterized by excellent stretch and
recovery, are often used in sportswear and stockings. The
Roica™ product lineup includes many specialty grades with
additional performance features that set them apart from
ordinary spandex. These high-performance Roica™ grades
have been adopted for a wide range of uses around the
world. Asahi Kasei Fibers will continue to develop specialty
Roica™ grades with new features and functions that meet
demanding market needs.
Stocking made with ordinary spandex (left) and Roica™ SF (right)
after stocking run test
Annual Report 2007
25
Operating Segment
Electronics Materials
& Devices
Growth of a high-earnings operational structure is obtained through leadership
in the development of products for emerging applications in each market
segment for electronic materials and electronic devices.
Makoto Konosu
President, Asahi Kasei EMD
Major Products
Pimel™ photosensitive polyimide precursor (PSPI), Sunfort™ photosensitive dry film resist (DFR), photomask pellicles, Luminous™ plastic optical fiber,
LSIs, Hall elements, glass fabric.
Growth Action – 2010
In electronic devices:
• Established LSI and sensor businesses are being expanded.
• New high-performance hybrid devices combining sensors and LSIs are
being developed.
• Marketing is being expanded world-wide.
In electronic materials:
• Industry-leading positions are being reinforced for Sunfort™ DFR, Pimel™ PSPI,
and photomask pellicles for LCD panel production.
• Other core businesses including glass fabric are also being expanded.
• Development of new applications is being advanced, including materials for flat-
panel displays using established core technology in photosensitive materials and
materials for semiconductor packaging.
26
Net Sales
¥ billion
150
120
112.1
102.9
123.0
90
60
30
0
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
25
20
15
10
5
0
22.6
20.2
19.3
18.8
23.5
%
25
20
19.1
15
10
5
0
2005
2006
2007
Forecast
Fiscal year
The Year in Review
Sales for the segment grew by ¥9.2 billion to ¥112.1 billion,
a 9.0% increase. Operating profit grew by ¥3.3 billion to
¥22.6 billion, a 17.0% increase.
Sales and operating profit in electronic devices grew as
shipments of LSIs and magnetic sensors increased with
strong demand in cell phone and home electronics
applications.
Sales and operating profit in electronic materials grew as
shipments of Sunfort™ photosensitive dry film resist
increased following a large expansion of production capacity
and shipments of ultra-thin grades of glass fabric for printed
circuit boards increased.
Notable Developments
Research, development, marketing, and sales functions of
Asahi Kasei Microsystems, Asahi Kasei Electronics, and
Asahi-Schwebel were transferred to Asahi Kasei EMD in
April 2007. Fully integrated operation will bring greater
speed and sharper market focus throughout the electronics
materials and electronics devices business.
Market Environment Outlook
for Fiscal 2007
The overall operating environment is forecast to be firm,
with an end to the inventory adjustments for PCs and flat-
panel displays which began in late 2006. Foreseeable risk
factors include a slowdown in the US economy, a rapid
appreciation of the Chinese yuan, declining product prices,
and rising materials costs. Development of differentiated
products for high-growth applications will advance, and
an ongoing review of the operational structure will be
performed from a mid-term strategic perspective.
R&D
R&D is directed toward meeting needs and providing
solutions to problems identified through interaction with
the customer. Developments in electronics devices include
combinations of sensor technology with digital/analog
mixed-signal LSI technology for hybrid devices with unique
functions. Developments in electronics materials include
high-performance structural materials for LCD panels and
next-generation package substrate materials compatible with
emerging standards for high transmission speeds,
performance, and reliability.
Highlights
Expansion of capacity at DFR plant in China
Production capacity for Sunfort™ photosensitive dry film
resist (DFR) at Asahi Kasei Electronics Materials (Suzhou)
Co., Ltd. was expanded in July 2006 to meet strong
demand growth. The subsidiary in Suzhou now has the
largest DFR plant in China. DFR is used to form circuit
patterns on printed wiring boards for PCs, cell phones, and
automotive electronics. Sunfort™ DFR holds the top share
in Japan and a leading position in the global market, and
further expansions of production capacity will enable
growing market share even as demand increases.
Sunfort™ photosensitive dry film resist
Start-up of compound semiconductor wafer
processing plant
A new compound semiconductor wafer processing plant in
Fuji began commercial operation in December 2006. Hall
ICs manufactured at the plant feature greatly improved
temperature dependency and sensing precision. Sales of
products with these performance features are growing in
consumer electronics applications which require precise
position detection, and in automotive applications which
require reliable tolerance to extreme temperature conditions.
The new compound semiconductor wafer processing plant in Fuji
Annual Report 2007
27
Operating Segment
Construction Materials
With a reinforced commitment to customer focus, safety, security, and comfort,
operational reform is advancing for heightened competitiveness of established
businesses, expansion and development of new business, and establishment of
new business models.
Hiroshi Kobayashi
President, Asahi Kasei Construction Materials
Major Products
Hebel™ autoclaved lightweight concrete (ALC) panels, steel-frame structural components, piles and foundation systems, Neoma™ foam insulation panels,
artificial fish reefs and other marine structures.
Growth Action – 2010
Further reinforcing the enhanced operational structure with growth through
the expansion and development of new businesses and the establishment of new
business models.
Enhancing competitiveness of established businesses:
• Ongoing operating cost reductions and enhanced product quality and service to
ensure stable profitability of the Hebel™ ALC business.
• Expansion and reinforcement of Hebel Lite™, Hebel Powerboard™, and small-
scale piles businesses.
Expansion and development of new businesses:
• Wide-ranging study of new business opportunities, both domestic and overseas.
• Swift commercialization of projects under development.
• Collaboration with Asahi Kasei Homes.
Establishment of new business models:
• Expansion of installation business for piles and foundation systems and for ALC
panels and other exterior wall products.
• Identification of new research projects based on customer needs.
• Intensified marketing of housing materials and insulation materials through direct
contact with builders and constructors.
28
Net Sales
¥ billion
70
60.8
63.0
56.5
60
50
40
30
20
10
0
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
6
5
4
3
2
1
0
%
12
10
8
6
4
2
0
5.5
8.7
5.0
8.3
3.8
6.8
2005
2006
2007
Forecast
Fiscal year
The Year in Review
Sales for the segment grew by ¥4.3 billion to ¥60.8 billion,
a 7.6% increase. Operating profit grew by ¥1.2 billion to
¥5.0 billion, a 32.0% increase.
Building materials and housing materials operations were
affected by high feedstock and fuel costs for production of
Hebel™ autoclaved lightweight concrete (ALC) panels, but
sales and operating profit grew with measures to reduce
operating costs and with higher sales prices.
Sales and operating profit in foundation systems grew
with an expansion of new applications for Eazet™ and
ATT Column™ piles for small-scale construction. Sales
and operating profit in insulation materials grew with a
successful expansion of the user base for Neoma™
high-performance phenolic foam panels resulting in
increased shipments.
Notable Developments
A television advertising campaign for Neoma™ foam
insulation panels began in October 2006.
Market Environment Outlook
for Fiscal 2007
The Japanese economy is forecast to remain firm, with the
number of new private-sector construction projects and the
number of housing starts being about the same as in fiscal
2006. Given this operating environment, shipment
volumes will increase and profitability will be maintained
through continuing cost reductions and product price rises
to overcome elevated feedstock and fuel prices.
R&D
The phenolic foam thermal insulation business will be
expanded through developments to enhance production
efficiency and enable composite product variations. High
performance materials for housing, ecoefficient building
foundation systems, and ALC panels with additional
functions are under development.
Highlights
DynaWing™ piling system
Full-scale marketing began in May 2006 for the
DynaWing™ pre-cast concrete piling system featuring
minimal soil disposal and high load-bearing capacity. The
new system combines an advanced boring technique and
pile design to greatly reduce the amount of soil disposal
required for a high-load piling installation. Foundation
systems of Asahi Kasei Construction Materials include a
wide range of innovative products featuring high-
performance, ease of installation, and ecoefficiency, from
large pre-cast concrete piles to specialty piles for small-scale
construction such as Eazet™ and ATT Column™. The
addition of DynaWing™ enhances the pre-cast concrete
pile lineup as a core field of business.
DynaWing™ installation
FreeDonut™ I-beam reinforcement system
Nation-wide marketing began in September 2006 for the
FreeDonut™ system for reinforcement of openings to pass
plumbing and wiring through steel I-beams. To make the
most efficient use of space, such openings are often
employed in the horizontal frame members of steel-frame
buildings. The FreeDonut™ system greatly reduces the
cost and labor required to reinforce beams where these
openings are made, resulting in faster, more efficient
construction.
Asahi Kasei Construction Materials has developed a range
of innovative structural systems and components, including
the BasePack™ earthquake-resistant column base
attachment system, the Fabluxe™-G steel frame connection
node, and the E-coupler™ steel column coupling system.
The addition of the FreeDonut™ system enhances the
product lineup in this growing field of business.
Plug weld
Sleeve
Ring
FreeDonut™ installation schematic
Annual Report 2007
29
Operating Segment
Life & Living
Major Products
Saran Wrap™ cling film, Ziploc™ storage bags, film, sheet,
foam.
Net Sales
¥ billion
60
50
40
30
20
10
0
51.9
52.6
¥
2005
2006
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
%
15
12
9
6
3
0
¥ billion
5
4.8
4.6
4
3
2
1
0
30
9.3
8.7
2005
2006
Fiscal year
The Year in Review
Sales for the segment grew by ¥0.6 billion to ¥52.6 billion,
a 1.2% increase. Operating profit decreased by ¥0.2 billion
to ¥4.6 billion, a 5.0% increase.
Sales of home-use products grew with increased
shipments of Saran Wrap™ cling film and Saran™ fiber,
but operating profit decreased with higher feedstock and
packaging costs and increased advertising expenses.
Sales of packaging materials were on par with a year ago,
but operating profit decreased as a result of the impact of
elevated feedstock costs.
Highlights
Integration with Asahi Kasei Chemicals
The operations of Asahi Kasei Life & Living were integrated
with Asahi Kasei Chemicals on April 1, 2007. The business
in home-use products such as Saran Wrap™ cling film was
transferred to Asahi Kasei Home Products Corp., which will
expand operations as a subsidiary of Asahi Kasei Chemicals.
Integration of polymer processing technologies and
marketing functions will bring synergy in the development
of high performance, high value-added films and sheets for
new applications.
Limited-edition Saran Wrap™ packaging
Saran Wrap™ with limited-edition packaging featuring
summer festival scenes went on sale in the Tohoku and
Shikoku regions in July 2006. This was followed in
December 2006 with limited-edition packaging in the same
regions featuring winter landscapes and natural scenery. In
Hokkaido, Saran Wrap™ with limited-edition packaging
featuring the Fighters professional baseball team went on
sale in April 2007. Further such limited-edition packaging
for Saran Wrap™ will be developed to promote sales in
specific regions around Japan.
Limited-edition Saran Wrap™
Operating Segment
Services,
Engineering and
Others
Major Products
Plant engineering, environmental engineering, personnel
staffing and placement, think tank services.
Net Sales
¥ billion
35
31.0
28.9
26.8
30
25
20
15
10
5
0
2005
2006
2007
Forecast
Fiscal year
Operating Profit,
Operating Profit Margin
Operating profit, left scale
Operating profit margin, right scale
¥ billion
5
4
3
2
1
0
%
20
16
3.9
4.0
3.3
12.2
13.5
12.9
12
8
4
0
2005
2006
2007
Forecast
Fiscal year
The Year in Review
Sales for the segment grew by ¥2.1 billion to ¥28.9 billion,
a 7.7% increase. Operating profit grew by ¥0.6 billion to
¥3.9 billion, a 17.4% increase.
Sales and operating profit in engineering operations grew
with strong business in overseas plant engineering. Sales in
personnel staffing and placement operations increased with
growing demand, and operating profit was on par with a
year ago.
Market Environment Outlook
for Fiscal 2007
Although private-sector capital investment will remain firm,
discretion will be required in bidding for new orders for
engineering projects due to the sharp rise in the price of
steel, especially stainless steel, and the growing selectivity
of subcontractors.
In the personnel staffing and placement business,
profitability is forecast to decline with difficulty in securing
staff. Growth is forecast for business within the Asahi Kasei
Group such as contract staffing of production personnel and
implementation of education and training programs.
R&D
Engineering developments in progress include a system to
test for minute metallic impurities in an electronic material
production process, a joint project for next-generation
automotive safety features, technology to inspect for
internal pipe corrosion, and technology for diagnosis of
sliding bearings.
Annual Report 2007
31
Corporate Governance
The Asahi Kasei Group constantly endeavors to heighten
fast-moving and transparent management as essential for
maximum corporate value and greater earnings. The effort
for enriched and enhanced corporate governance is ongoing,
building on the October 2003 transformation to a holding
company configuration with separate execution and
oversight functions which established a management
framework with clear delineation of executive authority and
responsibility.
Corporate Governance System
Shareholders
Holding Company
Asahi Kasei
Board of Corporate Auditors
Board of Directors
Group Advisory Committee
Chairman of the Board
President
Strategic Management Council
CSR Council
Group staff functions
• Strategic planning & analysis
• Compliance & risk management
• Resources administration
Development of new businesses
Internal Auditing
Internal Control Project
Group Executives Council
Core Operating
Companies,
business fields
Asahi Kasei
Chemicals
Asahi Kasei
Homes
Asahi Kasei
Pharma
Chemicals
Housing
Pharmaceuticals,
medical products
Asahi Kasei
Fibers
Fiber, textiles
Asahi Kasei
EMD
Electronics
materials
and devices
Asahi Kasei
Construction
Materials
Construction
materials
(As of April 1, 2007)
Board of Directors
Oversees group management, and deliberates and decides
on basic group policy and strategy, and on substantive
proposals by the Strategic Management Council. The
Chairman of the holding company chairs meetings of the
Board of Directors. Meets once or twice per month.
Strategic Management Council
Deliberates and decides on substantive matters relating to
the operation of the holding company and of the group. Its
decisions are made by the President of the holding company,
who chairs meetings of the council, after deliberation by the
attending constituent members. Meets twice per month.
32
Group Advisory Committee
The advisory body to the holding company Board of
Directors, composed of the Chairman and the President of the
holding company and outside advisors. Meets twice per year.
Group Executives Council
Conducts the dissemination of substantive group
information and the exchange of group information, and
deliberates on matters requiring coordination among the
core operating companies. Meets once per month.
Board of Corporate Auditors
Comprises four Corporate Auditors, of which two are
Outside Corporate Auditors. Corporate Auditors exchange
views, deliberate, and decide on substantive matters relating
to auditing. Meets at least once per quarter.
Executive Officer System
An executive officer system of management is employed at
the holding company and at each core operating company.
Authority and responsibility for the management of each
core operating company is held by the President and the
other Executive Officers of that company. Authority and
responsibility for the management of the holding company
and of the group is held by the President and the other
Executive Officers of the holding company.
The President of the holding company oversees the
executive management and performance of the core
Election of Outside Directors
operating companies and of their Presidents. The holding
company Board of Directors oversees the executive
management and performance of the holding company
President and of the group.
For both the holding company and the core operating
companies, the number of Directors and Executive Officers
is as small as possible. In all cases, the term of office is one
year, and management results and performance are reviewed
each fiscal year.
Two Outside Directors, Yuzo Seto, former President and
Representative Director of Asahi Breweries, Ltd., and
Yukiharu Kodama, former Administrative Vice Minister of
the Ministry of International Trade and Industry, were elected
at the 116th Ordinary General Meeting of Shareholders held
in June 2007.
Internal Control System
Recognizing the importance of an optimum system of
internal control to ensure high management quality, reliable
financial reporting, and effective risk management and legal
compliance, we formed an Internal Control Project in
October 2005 to prepare an internal control system for
implementation throughout the Asahi Kasei Group.
Application of the system on a trial basis began in April 2006.
Our Board of Directors adopted a basic policy for internal
control in May 2006 in accordance with Article 362 of the
Corporation Law, which requires a Board resolution related to
the preparation of an internal control system, and Article 100
of the Ordinance for Implementation of the Corporation
Law, which specifies certain elements required of such a
system. The basic policy was revised in March 2007.
Audits
The Financial Instruments and Exchange Law enacted in
June 2006 will require the management of companies with
market-listed shares to assess the effectiveness of internal
controls for financial reporting, and to have these assessments
audited by independent CPAs or auditing firms. Taking
effect from the fiscal year starting on or after April 1, 2008,
these requirements will be applied in accordance with
standards issued by the Business Accounting Council of the
Financial Services Agency on February 15, 2007.
The Asahi Kasei Group’s comprehensive system of internal
control, including internal controls for financial reporting,
will be fully completed in fiscal 2007, with operational
implementation beginning in April 2008.
Internal Auditing is a corporate organ under the direct
authority of the President of the holding company. Each
year, Internal Auditing prepares plans for an internal audit
in accordance with basic corporate regulations for internal
audits, obtains the President’s approval for these plans, and
then performs the internal audit.
In accordance with the audit policy adopted by the Board
of Corporate Auditors, each Corporate Auditor attends
meetings of the Board of Directors and audits Directors in
the discharge of their duties through examination of
business performance. The Corporate Auditors Office
provides staff to support Corporate Auditors in their duties.
PricewaterhouseCoopers Aarata is contracted as the
Independent Auditors to perform financial audits in
accordance with the Commercial Code and Securities Law,
succeeding the previously contracted firm, ChuoAoyama
PricewaterhouseCoopers, now Misuzu Audit Corp., which
was sanctioned by the Financial Services Agency with a two-
month suspension of auditing services from July 1, 2006 to
August 31, 2006 and thus lost standing to serve as the
company’s Independent Auditors on July 1, 2006. The
Board of Corporate Auditors met in July 2006 and
Annual Report 2007
33
appointed PricewaterhouseCoopers Aarata as Interim
Independent Auditors.
Partners of the Independent Auditors designated to
perform the audit for fiscal 2006 were as follows.
• Katsunori Sasayama
• Takahiro Nakazawa
The Independent Auditors form a team of assistants for
performance of the audit in accordance with its audit plan.
The team mainly comprises certified public accountants and
junior accountants, and also includes certified information
systems accountants and other specialist accountants.
Internal Auditing, the Board of Corporate Auditors, and
the Corporate Auditors of core operating companies and
other subsidiaries regularly meet to confirm the effectiveness
of internal governance systems for legal compliance and risk
management. The Board of Corporate Auditors provides
counsel to the Independent Auditors with respect to its
audit plan, and receives the results of the consolidated
financial audit of Asahi Kasei for the fiscal half-year and
fiscal year.
Compliance Hotline
The Asahi Kasei Group began operating a Compliance
Hotline in April 2005 to ensure that personnel have secure
and trusted recourse to report any possible ethical lapses
which may be encountered or observed. Reports can be
made through the corporate intranet or by post, in the
name of the reporting party or anonymously. Structures are
in place to ensure that the reporting party incurs no disfavor
or disadvantage as a result of having made a report.
Compliance
Corporate Ethics
Our Corporate Ethics – Basic Policy and Code of Conduct is
the standard and guide for ethical conduct throughout the
day-to-day work of each and every member of the Asahi
Kasei Group. It has been translated into English and
Chinese, and applies to all majority-held subsidiaries the
world over.
Corporate Ethics – Basic Policy
• Creating value, contributing to society
• Caring for environment, health, and safety
• Honoring law and norms of society
• Excluding subversive elements
• Respecting the individual
• Ensuring transparency
• Respecting information and intellectual property
• Practicing corporate ethics
34
Risk Management
Risk Management Committee
The Risk Management Committee was established under
the CSR Council in April 2005 to enhance the risk
management system for prevention of operational crises and
minimization of the effects of crises which occur. The
Board of Directors in March 2007 enacted Basic Risk
Management Regulations, effective April 1, 2007, providing
clear guidelines to heighten the capability and effectiveness
for risk management and emergency response throughout
the Asahi Kasei Group.
Corporate Risk Management
Corporate Risk Management works with the various
divisions and departments to guide the proper response to
any major accidents, incidents, or problems which cause
significant damage to Asahi Kasei Group operations or
which may foreseeably cause Asahi Kasei Group operations
to have adverse effects on the general public. In fiscal 2006,
Corporate Risk Management provided guidance to personnel
traveling abroad on business or stationed abroad, and
coordinated the response to the damage caused by a tornado.
Role of Corporate Risk Management
Corporate Risk
Management
Information disclosure through
Corporate Communications
Direction and guidance
Stakeholders
Employees
Emerging crisis
Fact checking,
coordination
Typhoon,
earthquake, or
other natural disaster;
industrial accident
causing pollution
or injury; terrorism;
infectious disease;
product safety
incident, etc.
Response
Responsible division
or department
Annual Report 2007
35
Corporate Social Responsibility
CSR at the Asahi Kasei Group
CSR in Action
We believe that CSR is achieved through the sustainable
expansion of operations effecting increased corporate value,
enabling fulfillment of the needs and expectations of our
various stakeholders, in accordance with our basic tenets of
contribution to human life and human livelihood through
constant innovation and advances based in science and the
human intellect.
CSR Fundamentals
Based in an understanding of the effects of our operations
on the global environment and the global community,
efforts and actions related to CSR are based in our four CSR
Fundamentals: Compliance, Respect for Employee
Individuality, Responsible Care*, and Corporate
Citizenship.
Asahi Kasei Group CSR
The
employee
Employee
fulfillment
The
community
Community
outreach
The
environment
Environmental
protection
The
customer
Customer
satisfaction
Sustainable increase
in corporate value
The
shareholder
Shareholder
returns
The
supplier
Fair business
dealings
The local
economy
Local economic
participation
Business operations
CSR Fundamentals
Compliance
Respect for Employee
Individuality
Responsible Care
Corporate Citizenship
* Responsible Care represents the commitment and initiative to secure and improve safety and environmental protection at every step of the product life-cycle through
the individual determination and responsibility of each firm producing and handling chemical products. As of October 2006, fifty-two countries throughout the world
have a Responsible Care program.
36
Framework for advancement
The CSR Council, formed in April 2005 with the holding
company President serving as chair, formulates CSR policy
and guides the CSR effort throughout the Asahi Kasei
Group. Specific CSR initiatives are implemented by the
committees under the authority of the CSR Council,
including the Corporate Ethics Committee to ensure
regulatory compliance and the Responsible Care Committee
President
CSR Council
• Formulation of unified policy and
action plans
• Guidance and counsel for the
subordinate committees
• Preparation of reports
• Monitoring of independent
evaluation
• Disclosure of CSR information
to guide efforts for environment, health, and safety. The
Risk Management Committee formulates the response to
contingencies such as a major earthquake. The Community
Fellowship Committee promotes and coordinates the effort
for outreach and fellowship in each local community where
we operate.
Corporate Ethics
Committee
Advancement of ethics education and
operation of compliance hotline
Market Compliance
Committee
Compliance with Antimonopoly Law
and prevention of violation
Export Control
Committee
Compliance with export-related
regulations and prevention of violation
Responsible Care
Committee
Environmental preservation, product
safety, physical integrity and safe
operation, workplace safety, hygiene,
and health, and community outreach
Risk Management
Committee
Crisis prevention and damage
minimization
Community Fellowship
Committee
Advancement of community
fellowship activities
Award for Prevention of Global Warming
Asahi Kasei Chemicals and Asahi Kasei Engineering received
the Environment Minister’s Award for Prevention of Global
Warming in December 2006. The award cited the
development of technology for thermal decomposition of
the greenhouse gas N2O, a by-product of adipic acid
production, into nitrogen and oxygen, and reduction of
N2O emission by approximately 6 million tons CO2-
equivalent. The Asahi Kasei Group has also joined the
Environment Ministry’s “Team Minus 6%” campaign for
global warming prevention, and reduced domestic
greenhouse gas emission in fiscal 2006 by 51% from the
fiscal 1990 baseline set forth in the Kyoto Protocol.
Equipment for thermal decomposition of N2O
Annual Report 2007
37
Directors, Corporate Auditors, Excecutive Officers
(As of June 28, 2007)
Yuji Tsuchiya
Corporate Auditor
Kenji Nakamae
Corporate Auditor
Katsuo Wajiki
Outside Corporate Auditor
Kazuo Tezuka
Outside Corporate Auditor
Masanori Mizunaga
Lead Executive Officer
Tsutomu Inada
Executive Officer
Hajime Nagahara
Executive Officer
Yoshio Hayashi
Executive Officer
Nobuo Yamaguchi
Chairman of the Board &
Representative Director
Shiro Hiruta
President & Representative
Director, Presidential Executive
Officer
Ichiro Itoh
Director, Vice-Presidential
Executive Officer
Strategy; Accounting & Finance
Kunio Kohga
Director, Primary Executive
Officer
ESH; Production Technology; PL
Katsuhiko Sato
Director, Senior Executive
Officer
Procurement
Kiyoshi Tsujita
Director, Senior Executive
Officer
Human Resources; Compliance
Kageyasu Akashi
Director, Executive Officer
R&D
Koji Fujiwara
Director, Executive Officer
Strategy; Accounting & Finance
Yuji Mizuno
Director, Executive Officer
Legal & General Affairs;
Compliance
Yuzo Seto
Outside Director
Yukiharu Kodama
Outside Director
38
Financial Section
Contents
Consolidated Eleven-Year Summary
.............................................................................................. 40
Management’s Discussion and Analysis
......................................................................................... 42
Risk Analysis
.................................................................................................................................... 49
Consolidated Balance Sheets
......................................................................................................... 50
Consolidated Statements of Income
.............................................................................................. 52
Consolidated Statements of Shareholders’ Equity
........................................................................ 53
Consolidated Statements of Changes in Net Assets
..................................................................... 53
Consolidated Statements of Cash Flows
........................................................................................ 54
Notes to Consolidated Financial Statements
................................................................................. 55
Report of Independent Auditors
................................................................................................... 69
Annual Report 2007
39
Consolidated Eleven-Year Summary
Asahi Kasei Corporation and Consolidated Subsidiaries
For the year ended March 31
Net Sales
Chemicals
Chemical and Chemical-related
Chemicals and Plastics
Homes
Housing and Construction Materials
Pharmaa
Fibersa
Electronics Materials & Devicesa
Construction Materials
Life & Living
Special Products and Services
Electronics
Membranes and Systems
Biotechnology and Medical Products
Speciality Products
Foods and Liquors
Engineering and Othersa
Services, Engineering and Othersa
Domestic sales
Overseas sales
Operating profit
Ordinary profit
Income (loss) before income taxes
Net income (loss)
Net income (loss) per share, yen
Capital expenditure
Depreciation and amortization
R&D expenditures
Cash dividends per share, yen
As of March 31
Total assets
Inventories
Property, plant and equipment
Investments and other assets
Net worthb
Net worth per share, yen
Net worth/total assets, %
Number of employees
2007
2006
2005c
2004
2003d
¥1,623,791
752,632
–
–
405,695
–
104,474
106,639
112,094
60,818
52,558
–
–
–
–
–
–
–
28,881
1,195,751
428,040
127,801
126,507
114,883
68,575
49.00
84,413
71,646
52,426
12.00
¥1,498,620
660,402
–
–
404,539
–
105,842
89,704
102,859
56,512
51,942
–
–
–
–
–
–
–
26,821
1,125,454
373,166
108,726
104,166
94,481
59,668
42.46
66,310
69,399
51,467
10.00
¥1,377,697
570,182
–
–
375,755
–
103,933
91,518
93,024
59,908
59,149
–
–
–
–
–
–
–
24,228
1,067,893
309,804
115,809
112,876
91,141
56,454
40.16
68,479
71,531
50,715
8.00
¥1,253,534
453,707
–
–
361,273
–
105,965
101,514
82,484
60,622
59,813
–
–
–
–
–
–
–
28,156
1,011,366
242,168
60,932
53,643
54,820
27,672
19.62
86,387
64,408
48,420
6.00
¥1,193,614
424,673
–
–
320,553
–
105,463
110,551
71,579
63,101
52,908
–
–
–
–
–
–
–
44,786
981,064
212,550
61,555
50,389
(100,869)
(66,791)
(47.63)
93,985
60,808
49,311
6.00
2007
2006
2005
2004
2003
¥1,459,922
240,066
426,959
281,502
645,655
461.50
44.2
23,715
¥1,376,044
214,062
414,368
284,390
594,211
424.34
43.2
23,030
¥1,270,057
202,521
419,969
223,958
511,726
365.43
40.3
23,820
¥1,249,206
181,609
428,302
226,825
450,451
321.41
36.1
25,011
¥1,212,374
176,788
427,188
198,697
407,639
290.92
33.6
25,730
a. For continuity, figures for business categories which were renamed are shown on the same line.
• Through the year ended March 31, 2003: Figures shown as Pharma are those for the previous Health Care sector, figures shown as Fibers are those for the previous Fibers and Textiles
sector, figures shown as Electronics Materials & Devices are those for the previous Electronics sector, and figures shown as Services, Engineering and Others are those for the previous
Liquors, Services and Others sector.
• With the divestment of foods operations, the “foods and liquors” and “engineering and services” segments are combined as “engineering and others.” Through the year ended March 31,
1999, figures shown as “engineering and others” are those for the previous “engineering and services” segment.
b. Net assets less minority interest in consolidated subsidiaries. Though the year ended March 31, 2006, figures for shareholders’ equity shown.
c. For comparison purposes, results for the year ended March 31, 2005 are recalculated to reflect the April 2005 transfer of Leona™ nylon 66 filament operations from the Fibers segment
to the Chemicals segment.
d. For comparison purposes, results by business category for the year ended March 31, 2003 are recalculated in accordance with the revised categories for the year ended March 31, 2004,
which are aligned with the core operating companies in the holding company configuration adopted in October 1, 2003.
• The “fabricated home products” segment of the Chemical and Chemical-related sector is separated to an independent Life & Living segment. The remainder of the Chemical and
Chemical-related sector is reclassified as the Chemicals segment.
• The Housing and Construction Materials sector is separated into the Homes segment and the Construction Materials segment.
40
2003
2002
2001e
2001
2000
1999
1998f
1998
1997
Millions of yen, except where noted
¥1,193,614
–
477,581
–
–
383,654
105,463
110,551
71,579
–
–
–
–
–
–
–
–
–
44,786
981,064
212,550
61,555
50,389
(100,869)
(66,791)
(47.63)
93,985
60,808
49,311
6.00
¥1,195,393
–
440,698
–
–
408,474
98,686
125,908
64,062
–
–
–
–
–
–
–
–
–
57,565
1,006,810
188,583
45,664
39,849
10,679
5,180
3.61
74,826
60,676
49,574
6.00
¥1,269,415
–
449,470
–
–
433,440
95,481
134,791
95,999
–
–
–
–
–
–
–
–
–
60,234
1,086,219
183,196
96,024
86,747
50,318
25,177
17.45
69,188
62,222
49,768
6.00
¥1,269,415
–
–
430,934
–
433,440
–
134,791
–
–
–
270,250
96,228
18,307
95,481
–
–
60,234
–
1,086,219
183,196
96,024
86,747
50,318
25,177
17.45
69,188
62,222
49,768
6.00
¥1,194,462
–
–
379,677
–
412,954
–
139,181
–
–
–
262,650
80,653
17,967
93,460
–
–
70,570
–
1,044,630
149,832
74,323
85,853
39,615
20,525
14.23
63,213
63,629
50,015
6.00
¥1,171,845
–
–
375,048
–
372,649
–
148,277
–
–
–
275,871
66,212
18,133
88,050
–
90,068
13,408
–
1,009,439
162,406
51,237
42,443
37,525
17,392
12.06
70,461
63,845
56,844
6.00
¥1,281,675
–
–
400,420
–
425,553
–
181,542
–
–
–
274,160
63,235
20,828
82,703
–
88,478
18,916
–
1,127,590
154,085
62,814
56,271
40,264
20,809
14.43
74,981
67,117
57,023
6.00
¥1,281,675
–
–
373,874
–
424,532
–
181,542
–
–
–
301,727
62,337
–
82,703
33,593
88,478
34,616
–
1,127,590
154,085
62,814
56,271
40,264
20,809
14.43
74,981
67,117
57,023
6.00
¥1,291,599
–
–
363,589
–
451,407
–
184,065
–
–
–
292,538
59,457
–
82,058
29,464
89,014
32,545
–
1,133,811
157,788
72,103
60,686
49,259
25,353
17.57
73,217
70,897
55,591
6.00
2003
2002
2001
2001
2000
1999
1998
1998
1997
¥1,212,374
176,788
427,188
198,697
407,639
290.92
33.6
25,730
¥1,193,011
180,826
415,193
181,618
496,826
353.16
41.6
26,227
¥1,240,008
196,510
419,168
176,177
516,013
357.70
41.6
26,695
¥1,240,008
196,510
419,168
176,177
516,013
357.70
41.6
26,695
¥1,180,372
181,771
416,881
127,013
476,159
330.07
40.3
26,580
¥1,185,249
193,691
435,005
132,251
464,339
321.88
39.2
29,263
¥1,206,872
198,651
424,499
141,388
455,250
315.64
37.7
27,792
¥1,206,872
198,651
424,499
141,388
455,250
315.64
37.7
27,792
¥1,250,921
206,253
424,002
151,804
442,730
306.89
35.4
26,721
• The Health Care sector is renamed the Pharma segment.
• The Fibers and Textiles sector is renamed the Fibers segment.
• The Electronics sector is renamed the Electronics Materials & Devices segment.
• With the divestment of liquors operations, the Liquors, Services and Others sector is renamed the Services, Engineering and Others segment.
e. For comparison purposes, results by business category for the year ended March 31, 2001 are recalculated in accordance with the revised categories for the year ended March 31, 2002.
• Operations of the “membranes and systems” segment combine with the Chemicals and Plastics sector to form the Chemical and Chemical-related sector.
• The “electronics” segment is reclassified as the Electronics sector.
• Operations of the “biotechnology and medical products” segment are reclassified as the Health Care sector.
• The remaining operations comprise the Liquors, Services and Others sector, in place of the “engineering and others” segment.
f. For comparison purposes, results by business category for the year ended March 31, 1998 are recalculated in accordance with the revised categories for the year ended March 31, 1999.
• Photopolymer and explosives operations are transferred from the Special Products and Services sector to the Chemicals and Plastics sector.
• Artificial fish reef operations are transferred from the Special Products and Services sector to the Housing and Construction Materials sector.
• Within the Special Products and Services sector, functional membrane operations are transferred from the “speciality products” segment to the “membranes and systems” segment, and
ion-exchange product operations are transferred from the “engineering and services” segment to the “membranes and systems” segment.
Annual Report 2007
41
Management’s Discussion and Analysis
Fiscal 2006 (April 1, 2006 – March 31, 2007)
Overview of Fiscal 2006
Consolidated Results
Operating Environment
Although consumer spending remained moderate, the
Japanese economy grew with strong corporate earnings, an
improved employment outlook, and increased private-sector
capital investment. The operating climate nevertheless
remained challenging, with persistently elevated prices for
petroleum and petrochemical feedstocks such as naphtha
necessitating cost-cutting measures and sales price increases.
Net Sales, Operating Profit
Consolidated net sales grew by ¥125.2 billion from a year
ago to ¥1,623.8 billion, an 8.4% increase. Sales growth was
greatest in chemicals operations, with product prices rising
to compensate for increased feedstock costs.
Operating profit grew by ¥19.1 billion to ¥127.8 billion,
a 17.5% increase. Operating profit growth was greatest in
chemicals operations, with strong overseas market conditions,
in pharmaceuticals operations, with significant licensing
income, and in electronics operations, with strong demand
in consumer electronics applications. As a percentage of net
sales, cost of sales increased by 0.2 percentage points to
75.4%, largely due to increases in the cost of naphtha and
other feedstocks. SG&A increased by ¥9.6 billion, but
decreased as a percentage of net sales by 0.8 percentage
points to 16.7% due to the higher rate of growth in net
sales. Operating profit as a percentage of net sales increased
by 0.6 percentage points to 7.9%.
Non-operating Income and Expenses, Ordinary Profit
Net non-operating expenses were ¥1.3 billion, ¥3.3 billion
lower than the ¥4.6 billion of a year earlier. Loss on disposal
of inventories was ¥4.4 billion, ¥1.7 billion higher than the
¥2.7 billion of a year earlier. Insurance recoveries were ¥4.6
billion, ¥3.3 billion higher than the ¥1.3 billion of a year
earlier. Equity in net earnings of unconsolidated subsidiaries
and affiliates was ¥2.6 billion, ¥2.1 billion higher than the
¥0.5 billion of a year earlier. As a result, ordinary profit
grew by ¥22.3 billion to ¥126.5 billion, a 21.4% increase.
Special Gains and Losses
Special gains of ¥3.1 billion included gains on sale of
investment securities. Special losses of ¥14.7 billion included a
¥9.1 billion loss on disposal of property, plant, and equipment
and ¥4.8 billion in restructuring charges. The net special loss
of ¥11.6 billion was ¥1.9 billion higher than a year earlier,
when a ¥5.7 billion gain on sale of idle land was recorded.
Net Income
With ordinary profit of ¥126.5 billion and the net special
loss of ¥11.6 billion, income before income taxes and
minority interest was ¥114.9 billion. Currently payable
income taxes of ¥42.2 billion and deferred income tax
Operating Profit,
Operating Profit Margin
¥ billion
150
120
90
60
30
0
SG&A,
SG&A Ratio
¥ billion
300
240
180
120
60
0
%
10
8
6
4
2
0
%
20
16
12
8
4
0
Net Income,
Net Income per Share
¥ billion
80
60
40
20
0
¥
60
45
30
15
0
04
05
Fiscal year
06
04
05
Fiscal year
06
04
05
Fiscal year
06
Operating profit, left scale
Operation profit margin, right scale
SG&A, left scale
SG&A ratio, right scale
04
05
Fiscal year
06
Net income, left scale
Net income per share, right scale
Net Sales
¥ billion
2,000
1,500
1,000
500
0
42
obligation of ¥3.6 billion combined for an income tax
expense of ¥45.8 billion. Minority interest in income of
consolidated subsidiaries was ¥0.5 billion. As a result,
net income grew by ¥8.9 billion to ¥68.6 billion, a 14.9%
increase, and net income per share increased by ¥6.54 to
¥49.00 from the ¥42.46 of a year earlier.
Results by Segment
Operating Segments
Seven operating segments correspond to the core operating
companies, and the Services, Engineering and Others
segment comprises the remainder of operations.
Chemicals
Sales for the segment grew by ¥92.2 billion to ¥752.6
billion, a 14.0% increase. Operating profit grew by ¥11.5
billion to ¥52.0 billion, a 28.3% increase.
Sales and operating profit in volume products, comprising
chemicals/derivative products and polymer products, increased.
Product price increases and strong overseas demand helped
to overcome higher feedstock costs. In chemicals and
derivative products, operating profit increased with strong
overseas demand for acrylonitrile and styrene, and with a
sharp rise in the market price of adipic acid due to a tight
market balance. In polymer products, profitability of
Leona™ nylon 66 resin and filament increased.
Sales and operating profit in specialty products grew with
increased shipments of Hipore™ Li-ion rechargeable battery
separators following plant expansion, export of membrane-
process chlor-alkali electrolyzers to China, and increased
shipments of ion-exchange membranes for chlor-alkali.
Homes
Sales for the segment grew by ¥1.2 billion to ¥405.7 billion,
a 0.3% increase. Operating profit decreased by ¥0.7 billion
to ¥27.5 billion, a 2.5% decline.
Unit prices of order-built homes increased, but the number
of deliveries of both order-built homes and condominiums
declined, and sales and operating profit in housing operations
decreased. Marketing efforts for order-built homes were
focused on eliciting demand for rebuilding, but new orders
worth ¥303.4 billion received during the period were ¥10.0
billion less than a year ago.
Sales and operating profit in housing-related operations
increased. Real estate operations had rising income from
rentals. Remodeling operations also grew.
In November 2006 construction began for a housing
R&D center in Fuji to enhance product development in
line with the Long Life Home strategy.
Pharma
Sales for the segment decreased by ¥1.4 billion to ¥104.5
billion, a 1.3% decline. Operating profit grew by ¥2.8
billion to ¥13.9 billion, a 25.5% increase.
ROE
%
15
10
5
0
Chemicals
¥ billion
800
600
400
200
0
¥ billion
%
80
8
60
6
40
4
20
2
0
Homes
¥ billion
500
400
300
200
100
0
¥ billion
%
30
10
24
8
18
6
12
4
6
2
0
Pharma
¥ billion
150
120
90
60
30
0
¥ billion
%
15
15
12
12
9
9
6
6
3
3
0
04
05
Fiscal year
06
04*
05
Fiscal year
06
04
05
Fiscal year
06
04
05
Fiscal year
06
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
* Including Leona™ filament operations.
Annual Report 2007
43
Sales in pharmaceuticals operations decreased with
reimbursement price cuts and decreased shipments of
pharmaceutical intermediates. Operating profit grew with
licensing income for fasudil hydrochloride rho-kinase
inhibitor.
Sales and operating profit in devices grew with increased
shipments of APS™ polysulfone-membrane artificial
kidneys and Planova™ virus removal filters, and with
measures to reduce operating costs.
Fibers
Sales for the segment grew by ¥16.9 billion to ¥106.6
billion, an 18.9% increase. Operating profit grew by ¥0.1
billion to ¥4.2 billion, a 3.4% increase.
Sales of elastic polyurethane filament grew with increased
shipments of Roica™, improved market conditions, and
the inclusion of the Dorlastan™ business acquired from
Lanxess, but operating profit decreased as the Dorlastan™
business operated at a loss. Roica™ production equipment
is being installed at the Dorlastan™ plants in the US and
Europe, and the business is forecast to become profitable
in fiscal 2007.
Sales and operating profit in Bemberg™ cupro grew with
increased exports. Nonwovens operations were impacted by
the effect of elevated feedstock costs, but sales and operating
profit grew with increased shipments of Lamous™ artificial
suede in car seat applications.
Electronics Materials & Devices
Sales for the segment grew by ¥9.2 billion to ¥112.1 billion,
a 9.0% increase. Operating profit grew by ¥3.3 billion to
¥22.6 billion, a 17.0% increase.
Sales and operating profit in electronic devices grew as
shipments of LSIs and magnetic sensors increased with
strong demand in cell phone and home electronics
applications.
Sales and operating profit in electronic materials grew
as shipments of Sunfort™ photosensitive dry film resist
increased following a large expansion of production capacity
and shipments of ultra-thin grades of glass fabric for printed
circuit boards increased.
Construction Materials
Sales for the segment grew by ¥4.3 billion to ¥60.8 billion, a
7.6% increase. Operating profit grew by ¥1.2 billion to ¥5.0
billion, a 32.0% increase.
Building materials and housing materials operations were
affected by high feedstock and fuel costs for production of
Hebel™ autoclaved lightweight concrete (ALC) panels, but
sales and operating profit grew with measures to reduce
operating costs and with higher sales prices.
Sales and operating profit in foundation systems grew
with an expansion of new applications for Eazet™ and ATT
Column™ piles for small-scale construction. Sales and
operating profit in insulation materials grew with a
Fibers
¥ billion
150
120
90
60
30
0
Electronics Materials & Devices
Construction Materials
¥ billion
%
10
10
8
8
6
6
4
4
2
2
0
¥ billion
150
120
90
60
30
0
¥ billion
%
30
25
24
20
18
15
12
10
6
5
0
¥ billion
90
60
30
0
¥ billion
%
6
9
4
6
2
3
0
04*
05
Fiscal year
06
04
05
Fiscal year
06
04
05
Fiscal year
06
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
* Not including Leona™ filament operations.
44
successful expansion of the user base for Neoma™ high-
performance phenolic foam panels resulting in increased
shipments.
Life & Living
Sales for the segment grew by ¥0.6 billion to ¥52.6 billion, a
1.2% increase. Operating profit decreased by ¥0.2 billion to
¥4.6 billion, a 5.0% decline.
Sales of home-use products grew with increased shipments
of Saran Wrap™ cling film and Saran™ fiber, but operating
profit decreased with higher feedstock and packaging costs
and increased advertising expenses.
Sales of packaging materials were on par with a year ago,
but operating profit decreased as a result of the impact of
elevated feedstock costs.
With the April 2007 merger of Asahi Kasei Life & Living
Corp. with Asahi Kasei Chemicals Corp., the business of the
Life & Living operating segment is included in the Chemicals
operating segment starting with the new fiscal year.
Services, Engineering and Others
Sales for the segment grew by ¥2.1 billion to ¥28.9 billion, a
7.7% increase. Operating profit grew by ¥0.6 billion to ¥3.9
billion, a 17.4% increase.
Sales and operating profit in engineering operations grew
with strong business in overseas plant engineering. Sales in
personnel staffing and placement operations increased with
growing demand, and operating profit was on par with a
year ago.
Geographical Information
Geographic segment information is not shown because over
90% of total sales were from operations domiciled in Japan
and over 90% of total assets were located in Japan.
Overseas Sales
Overseas sales increased, largely in Chemicals, by ¥54.9
billion to ¥428.0 billion, a 14.7% increase and a 1.5
percentage point increase to 26.4% of consolidated net sales.
Liquidity and Capital Resources
Financial Position
Total assets at fiscal year end were ¥1,459.9 billion, ¥83.9
billion (6.1%) higher than a year earlier, with ¥25.1 billion
of the increase as an effect of the closing date falling on a
bank holiday.
Current assets increased by ¥78.8 billion (12.2%) to
¥723.0 billion. Notes and accounts receivable, trade, increased
by ¥30.9 billion with the closing date bank holiday and high
selling prices and greater sales in Chemicals. Inventories
increased by ¥25.9 billion, largely in Chemicals and Homes.
Cash on hand and in banks increased by ¥15.1 billion with
the closing date bank holiday.
Life & Living
¥ billion
80
60
40
20
0
Services, Engineering and Others
¥ billion
%
8
12
6
9
4
6
2
3
0
¥ billion
40
30
20
10
0
¥ billion
%
4
16
3
12
2
8
1
4
0
04
05
Fiscal year
06
04
05
Fiscal year
06
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Net sales, left scale
Operating profit, right scale (upper)
Operating profit margin, right scale (lower)
Annual Report 2007
45
Fixed assets increased by ¥5.1 billion (0.7%) to ¥736.9
billion. Tangible fixed assets increased by ¥12.6 billion as
the value of asset acquisitions exceeded the value of depre-
ciation and disposals. Intangible fixed assets decreased by
¥4.6 billion, and the market value of investment securities
decreased by ¥6.9 billion.
Current liabilities increased by ¥63.8 billion (14.5%) to
¥503.6 billion. Notes and accounts payable, trade, increased
by ¥53.9 billion with the closing date bank holiday and the
previous year’s closing date coming during a maintenance
turnaround in Chemicals. Short-term borrowings increased
by ¥7.6 billion.
Long-term liabilities decreased by ¥32.4 billion (9.7%) to
¥302.8 billion. Bonds decreased by ¥24.0 billion, and accrued
pension and severance costs decreased by ¥6.3 billion.
Interest-bearing debt decreased by ¥18.9 billion to ¥216.9
billion, with ¥23.0 billion of bonds redemption and a ¥7.6
billion increase in short-term borrowings.
Net assets increased by ¥52.4 billion (8.7%) from the
¥601.1 billion of a year ago to ¥653.5 billion. Net unrealized
gain on securities decreased by ¥5.6 billion, while retained
earnings increased by ¥38.1 billion. Net worth per share
increased by ¥37.16 to ¥461.50. Net worth/total assets
increased from 43.2% to 44.2%, and debt-to-equity ratio
decreased from 0.40 to 0.34.
Total Assets,
Net Worth
¥ billion
150
100
50
0
Net Worth to Total Assets
%
50
40
30
20
10
0
04
05
Fiscal year
06
04
05
Fiscal year
06
Total assets
Net worth
46
Capital Expenditure
Capital expenditure was primarily for new and expanded
production plant and equipment in long-term growth fields.
Investments were also made for rationalization, modification,
maintenance, and IT systems to bring greater product
reliability and cost reductions. Capital expenditure by
operating segment shown below is for tangible and
intangible fixed assets, combined, before consumption tax.
For comparison purposes, the previous year’s segment figures
have been revised to reflect the April 2005 transfer of Leona™
nylon 66 filament operations from Fibers to Chemicals.
Chemicals
Homes
Pharma
Fibers
Electronics Materials & Devices
Construction Materials
Life & Living
Services, Engineering and Others
Combined
Corporate assets and eliminations
Consolidated
Totals for the year
(¥ million)
42,569
2,701
5,722
6,362
16,234
2,301
3,455
760
80,104
4,308
84,413
Compared to
previous year (%)
159.8
75.4
116.9
117.4
108.5
99.5
74.2
73.3
126.2
153.1
127.3
Notable capital expenditure by operating segment was as
follows:
• Chemicals: Modification of acrylonitrile plant to use
propane process, capacity expansion for Hipore™ Li-ion
rechargeable battery separators, new facility for assembly
Interest-Bearing Debt,
D/E Ratio
¥ billion
400
300
200
100
0
04
05
Fiscal year
06
Interest-bearing debt, left scale
D/E ratio, right scale
Capital Expenditure,
Depreciation and Amortization
¥ billion
1.00
100
0.75
0.50
0.25
0.00
75
50
25
0
04
05
Fiscal year
06
Capital expenditure
Depreciation and amortization
of Microza™ water treatment membranes, new facility for
thermal power generation.
• Homes: IT systems, construction system modification,
rationalization, maintenance.
• Pharma: Plant modification, rationalization, maintenance.
• Fibers: Modification of spandex plant to use Roica™
technology.
• Electronics Materials & Devices: Installation of finer process
plant for LSIs, capacity expansion for LSIs, capacity
expansion for Sunfort™ photosensitive dry film resist.
• Construction Materials: Plant modification,
rationalization, and maintenance.
• Life & Living: Plant modification, rationalization, and
maintenance.
• Services, Engineering and Others: IT systems,
rationalization, labor-saving, and maintenance.
• Corporate assets: Corporate research facilities; maintenance.
Cash Flows
Free cash flows were ¥47.1 billion as cash generated, prin-
cipally operating profit and depreciation and amortization,
exceeded cash used, principally for acquisition of fixed
assets and investment securities. Cash flows from financing
activities, principally for reduction of interest-bearing debt
and payment of dividends, were a net ¥36.0 billion cash
used. After including ¥3.6 billion cash and cash equivalents
held by newly consolidated subsidiaries, cash and cash
equivalents at fiscal year end were ¥101.7 billion, ¥15.3
billion greater than a year earlier.
Cash flows from operating activities
Higher selling prices in Chemicals and the closing date
bank holiday resulted in increases in notes and accounts
receivable, trade, aggregating ¥26.4 billion cash used,
increased inventories, notably in Homes, resulted in ¥23.0
billion cash used, and ¥45.5 billion was used for payment
of income taxes. Income before income taxes and minority
interest generated ¥114.9 billion, depreciation and amor-
tization generated ¥71.6 billion, and an increase in notes
and accounts payable, trade, generated ¥51.6 billion. Net
cash generated from operating activities was ¥128.4 billion,
¥19.8 billion more than a year earlier.
Cash flows from investing activities
Cash used included ¥77.4 billion for acquisition of tangible
fixed assets for continuing expansion of competitive-
superiority operations and enhancement of overall compet-
itiveness and ¥4.9 billion for acquisition of intangible fixed
assets. Cash generated from sales of property, plant and
equipment aggregated ¥3.0 billion. Net cash used in
investing activities was ¥81.3 billion, ¥21.0 billion more
than a year earlier.
Cash flows from financing activities
A net ¥21.7 billion was used for interest-bearing debt such
as borrowings and bonds. A further ¥14.0 billion was used
for payment of parent-company dividends. A net ¥36.0
billion was used in financing activities, ¥5.1 billion more
than a year earlier.
Free Cash Flows
¥ billion
Cash Flows
¥ billion
50
40
30
20
10
0
200
100
0
(100)
(200)
04
05
Fiscal year
06
04
05
Fiscal year
06
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Annual Report 2007
47
Housing-Related Tax Policy, Interest Rate Fluctuation
Operations in the Homes segment are affected by Japanese
tax policies as they relate to home acquisition and by
fluctuations in Japanese interest rates. Changes in Japanese
tax policy, including consumption taxes, or fluctuations in
Japanese interest rates may result in diminished housing
demand, thereby affecting our consolidated performance
and financial condition.
Profitability of Electronics-Related Businesses
The electronics industry is characterized by sharp market
cycles. The profitability of electronics-related businesses
may decline significantly in a relatively short time, thereby
affecting our consolidated performance and financial
condition. Because products in this field rapidly become
obsolete, the timely development and commercialization of
leading-edge devices and materials is required. New product
development may be delayed, or demand fluctuations may
exceed expectations, thereby affecting our consolidated
performance and financial condition.
Pharmaceuticals and Medical Devices
Pharmaceutical and medical device businesses may be
significantly affected by government measures to curtail
health care expenditure or other changes in government
policy. Unforeseeable side effects or complications may
emerge, significantly affecting these businesses. The
pharmaceutical business additionally faces the possibility
that product approval may be withdrawn as a result of
Japan’s reexamination system, and that competition may
intensify as a result of the market entry of generics. For
pharmaceuticals and medical devices under development,
regulatory approval may fail to be obtained, market
demand may be lower than expected, and the national
reimbursement prices may be lower than expected. Such
scenarios may affect our consolidated performance and
financial condition.
Risk Analysis
Operating risks and non-operating risks which may
influence investor decisions are described below. The
management maintains awareness of the possibility that
these scenarios may emerge, and measures to avoid their
emergence and to minimize their impact on corporate
performance in the event that they do emerge are
implemented to the fullest possible extent.
The description of risks given here includes elements
which may emerge in the future, but being based on current
evaluations as this report is being prepared it does not
include risks which could not be foreseen at this time.
Crude Oil and Naphtha Prices
Operating costs in operations based on petrochemicals are
affected by prices for crude oil and naphtha. If crude oil
and naphtha prices rise, selling prices for products derived
from these feedstocks must be increased in a timely manner
to maintain sufficient price spreads. Price spreads may
diminish, thereby affecting our consolidated performance
and financial condition.
Exchange Rate Fluctuation
Operations based overseas maintain accounts in the local
currency where they operate. The yen value of items carried
in these accounts is affected by the rate of exchange at the
time of conversion to yen. Although measures such as
currency exchange hedges are utilized to minimize the short-
term effects of exchange rate fluctuations, such fluctuations
may exceed the foreseeable range over the short to long
term, thereby affecting our consolidated performance and
financial condition.
Overseas Operations
Overseas operations may face a variety of risks which cannot
be foreseen, including the existence or emergence of
economically unfavorable circumstances due to legal and
regulatory changes, vulnerability of infrastructure, difficulty
in hiring/retaining qualified employees, or other factors, and
social or political instability due to terrorism, war, or other
factors. Overseas operations may be impaired by such
scenarios, thereby affecting our consolidated performance
and business plans.
48
Industrial Accidents and Natural Disasters
The occurrence of a significant industrial accident or natural
disaster at a plant or elsewhere may result in a loss of public
trust, the emergence of costs associated with accident
response, including compensation, and the emergence of
costs associated with plant shutdown, including opportunity
loss and compensation to customers, thereby affecting our
consolidated performance and financial condition.
Intellectual Property, Product Liability, and Legal
Regulation
An unfavorable ruling may emerge in a dispute relating to
intellectual property, a product defect resulting in a large-
scale recall and compensation whose costs exceed insurance
coverage may emerge, and detrimental legal and regulatory
changes may emerge in any country where we operate.
Such scenarios may affect our consolidated performance
and financial condition.
Irrecoverable Credits
Credits extended to customers may become irrecoverable
to an unforeseeable extent, necessitating additional losses
or allowances to be recorded in financial accounts, and
thereby affecting our consolidated performance and
financial condition.
Annual Report 2007
49
Consolidated Balance Sheets
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2007 and 2006
ASSETS
Current assets:
Cash on hand and in banks (Note 6)
Notes and accounts receivable, trade (Note 7)
Marketable securities (Notes 6 and 8)
Inventories
Deferred income taxes (Note 12)
Other current assets (Note 7)
Allowance for doubtful accounts
Fixed assets:
Property, plant and equipment, net of
accumulated depreciation (Notes 9 and 10) –
Buildings
Machinery and equipment
Land
Construction in progress
Other
Intangible fixed assets –
Goodwill
Other
Investments and other assets –
Investment securities (Notes 7 and 8)
Long-term receivables (Note 7)
Deferred income taxes (Note 12)
Other
Allowance for doubtful accounts
Millions of yen
2007
2006
¥ 101,514
300,385
400
240,006
26,650
55,831
(1,791)
722,995
¥
86,422
269,509
446
214,062
29,385
45,828
(1,460)
644,192
Thousands of
U.S. dollars
(Note 4)
2007
$
860,288
2,545,636
3,390
2,033,949
225,847
473,144
(15,178)
6,127,076
158,953
174,776
55,192
21,935
16,103
426,959
155,630
170,364
55,240
18,108
15,026
414,368
1,347,060
1,481,152
467,729
185,890
136,466
3,618,297
6,045
22,421
28,466
5,700
27,394
33,094
51,229
190,008
241,237
241,696
4,636
10,479
24,769
(78)
281,502
248,616
3,043
8,915
24,680
(864)
284,390
2,048,271
39,288
88,805
209,907
(661)
2,385,610
736,927
731,852
6,245,144
Total assets
¥1,459,922
¥1,376,044
$12,372,220
The accompanying notes are an integral part of these statements.
50
LIABILITIES AND NET ASSETS
Liabilities:
Current liabilities –
Notes and accounts payable, trade (Note 7)
Short-term borrowings (Notes 7 and 10)
Current portion of long-term debt (Note 10)
Accrued income taxes
Accrued expenses (Note 7)
Advances received
Other current liabilities
Long-term liabilities –
Long-term debt (Note 10)
Accrued pension and severance costs (Note 11)
Deferred income taxes (Note 12)
Customers’ guarantee deposits
Other long-term liabilities
Net assets:
Shareholders’ equity:
Common stock –
Authorized – 4,000,000,000 shares
Issued and outstanding – 1,402,616,332 shares
Capital surplus
Retained earnings (Note 20)
Treasury stock, at cost
(2007 – 3,570,390 shares, 2006 – 42,799,834 shares)
Valuation, translation adjustments and others
Net unrealized gain on securities
Net deferred profit on hedges
Revaluation surplus (Note 13)
Cumulative translation adjustments
Millions of yen
2007
2006
¥ 186,900
51,273
36,555
18,232
111,027
48,873
50,709
503,569
129,074
126,266
26,210
18,660
2,632
302,842
¥ 132,980
46,380
32,842
19,511
110,231
48,877
48,902
439,723
156,300
132,433
27,781
18,306
373
335,193
Thousands of
U.S. dollars
(Note 4)
2007
$ 1,583,898
434,517
309,788
154,508
940,881
414,178
429,763
4,267,533
1,093,847
1,070,051
222,119
158,136
22,305
2,566,458
806,411
774,916
6,833,911
103,389
79,396
380,515
(1,544)
561,756
79,823
58
1,106
2,913
83,900
103,389
79,433
342,450
(17,311)
507,961
85,383
–
966
(99)
86,250
876,178
672,847
3,224,703
(13,084)
4,760,644
676,466
492
9,373
24,686
711,017
Minority interest in consolidated subsidiaries (Note 3 (a))
7,855
6,917
66,568
Commitments and contingent liabilities (Notes 17 and 21)
653,511
601,128
5,538,229
Total liabilities and net assets
¥1,459,922
¥1,376,044
$12,372,220
The accompanying notes are an integral part of these statements.
Annual Report 2007
51
Consolidated Statements of Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006
Net sales (Notes 7 and 18)
Cost of sales (Notes 7 and 14)
Gross profit
Selling, general and administrative expenses (Note 14)
Operating profit (Note 18)
Non-operating income:
Interest and dividend income
Equity in net earnings of unconsolidated subsidiaries and affiliates
Insurance recoveries
Other
Total non-operating income
Non-operating expenses:
Interest expense
Loss due to disasters
Loss on disposal of inventories
Other
Total non-operating expenses
Ordinary profit
Special gains:
Gain on sales of investment securities (Note 8)
Gain on sale of property, plant and equipment
Reversal of allowance for doubtful account
Gain on change in equity
Total special gains
Special losses:
Loss on sales of investment securities (Note 8)
Loss on devaluation of investment securities
Loss on disposal of property, plant and equipment
Impairment loss (Note 15)
Restructuring charges (Notes 15 and 16)
Total special losses
Income before income taxes and minority interest
Income taxes (Note 12) – currently payable
– deferred (obligation)/benefit
Minority interest in income of consolidated subsidiaries
Net income
Per share data:
Net income (Note 22) – Basic
– Diluted
Cash dividends
The accompanying notes are an integral part of these statements.
52
Millions of yen
2007
2006
¥1,623,791
1,224,041
399,750
271,949
127,801
¥1,498,620
1,127,530
371,090
262,364
108,726
3,015
2,647
4,558
2,861
13,081
4,118
–
4,380
5,877
14,375
126,507
1,516
919
–
656
3,091
–
701
9,074
189
4,751
14,715
114,883
(42,247)
(3,553)
(508)
68,575
2007
¥49.00
¥
–
¥12.00
¥
2,653
536
1,292
2,935
7,416
3,570
1,285
2,703
4,418
11,976
104,166
–
5,670
210
–
5,880
854
703
7,038
3,799
3,171
15,565
94,481
(38,963)
4,417
(267)
59,668
Yen
2006
¥42.46
¥
–
¥10.00
¥
Thousands of
U.S. dollars
(Note 4)
2007
$13,760,941
10,373,229
3,387,712
2,304,653
1,083,059
25,551
22,432
38,627
24,246
110,856
34,898
–
37,119
49,805
121,822
1,072,093
12,848
7,788
–
5,559
26,195
–
5,940
76,898
1,602
40,263
124,703
973,585
(358,026)
(30,110)
(4,305)
581,144
U.S. dollars
(Note 4)
2007
$0.42
$
–
$0.10
$
Consolidated Statements of Shareholders’ Equity
Asahi Kasei Corporation and Consolidated Subsidiaries
Year ended March 31, 2006
Balance at March 31, 2005
Gain on sales of treasury stock
Net income for the year ended March 31, 2006
Decrease in retained earnings due to
newly consolidated subsidiaries
and affiliates, or subsidiaries and affiliates
excluded from consolidation
Net change in unrealized gain on securities
Foreign currency translation adjustments
Purchase of treasury stock
Cash dividends
Bonuses to directors and corporate auditors
Balance at March 31, 2006
Common
stock
¥103,389
Capital
surplus
¥79,423
10
¥103,389
¥79,433
Retained
earnings
(Note 20)
¥295,594
59,668
(11)
(12,602)
(199)
¥342,450
Revaluation
surplus
(Note 13)
¥966
Net unrealized
gain on
securities
¥54,703
Cumulative
translation
adjustments
¥(5,380)
Treasury stock,
at cost
¥(16,969)
30,680
5,281
(342)
¥966
¥85,383
¥
(99)
¥(17,311)
Millions of yen
Total
¥511,726
10
59,668
(11)
30,680
5,281
(342)
(12,602)
(199)
¥594,211
Consolidated Statements of Changes in Net Assets
Asahi Kasei Corporation and Consolidated Subsidiaries
Year ended March 31, 2007
Millions of yen
Balance at March 31, 2006
Changes of items during the period
Year-end dividend
Interim dividend
Bonuses to directors and corporate auditors
Net income
Increase due to newly consolidated subsidiaries
Decrease due to newly consolidated subsidiaries
Increase due to unconsolidated subsidiaries and affiliates
for which the equity method newly applies
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Net increase (decrease) in net assets
others than shareholders’ equity
Total changes of items during the period
Balance at March 31, 2007
Balance at March 31, 2006
Changes of items during the period
Year-end dividend
Interim dividend
Bonuses to directors and corporate auditors
Net income
Increase due to newly consolidated subsidiaries
Decrease due to newly consolidated subsidiaries
Increase due to unconsolidated subsidiaries and affiliates
for which the equity method newly applies
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Net increase (decrease) in net assets
others than shareholders’ equity
Total changes of items during the period
Balance at March 31, 2007
Shareholders’ equity
Valuation, translation adjustments and others
Common
stock
¥103,389
Capital
surplus
¥79,433
Retained
earnings
(Note 20)
¥342,450
Treasury
stock,
at cost
¥(17,311)
Total
shareholders’
equity
¥507,961
Net
unrealized
gain on
securities
¥85,383
Net
deferred Revaluation Cumulative
translation
surplus
profit on
adjustments
(Note 13)
hedges
(99)
¥ 966
¥ –
¥
Total
valuation,
translation
adjustments
and others
¥86,250
Minority
interest in
consolidated
subsidiaries
¥6,917
(6,999)
(6,998)
(228)
68,575
22
(2)
20
18
(55)
(16,325)
(634)
21
16,380
(6,999)
(6,998)
(228)
68,575
22
(2)
20
(634)
39
–
Total
net assets
¥601,128
(6,999)
(6,998)
(228)
68,575
22
(2)
20
(634)
39
–
–
¥103,389
(37)
¥79,396
38,065
¥380,515
15,767
¥ (1,544)
53,795
¥561,756
(5,560)
(5,560)
¥79,823
58
58
¥58
140
140
¥1,106
3,012
3,012
¥ 2,913
(2,350)
(2,350)
¥83,900
938
938
¥7,855
(1,412)
52,383
¥653,511
Shareholders’ equity
Valuation, translation adjustments and others
Common
stock
$876,178
Capital
surplus
$673,161
Retained
earnings
(Note 20)
$2,902,119
Treasury
stock,
at cost
Total
shareholders’
equity
$(146,703) $4,304,755
Net
unrealized
gain on
securities
$723,586
Net
deferred Revaluation Cumulative
translation
surplus
profit on
adjustments
(Note 13)
hedges
$ (839)
$8,186
$ –
Total
valuation,
translation
adjustments
and others
$730,933
Minority
interest in
consolidated
subsidiaries
$ 58,619
Total
net assets
$5,094,307
Thousands of U.S. dollars (Note 4)
(59,314)
(59,305)
(1,932)
581,144
186
(17)
169
153
(467)
(138,347)
(5,373)
178
138,814
(59,314)
(59,305)
(1,932)
581,144
186
(17)
169
(5,373)
331
–
(59,314)
(59,305)
(1,932)
581,144
186
(17)
169
(5,373)
331
–
–
$876,178
(314)
$672,847
322,584
$3,224,703
133,619
455,889
$ (13,084) $4,760,644
(47,120)
(47,120)
$676,466
492
492
$492
1,187
1,187
$9,373
25,525
25,525
$24,686
(19,916)
(19,916)
$711,017
7,949
7,949
(11,967)
443,922
$66,568 $5,538,229
The accompanying notes are an integral part of these statements.
Annual Report 2007
53
Consolidated Statements of Cash Flows
Asahi Kasei Corporation and Consolidated Subsidiaries
Years ended March 31, 2007 and 2006
Cash flows from operating activities:
Income before income taxes and minority interest
Depreciation and amortization
Impairment loss
Amortization of goodwill
Amortization of negative goodwill
Decrease in accrued pension and severance costs
Interest and dividend income
Interest expense
Equity in net earnings of unconsolidated subsidiaries and affiliates
Gain on sales of investment securities
Loss on sales of investment securities
Loss on devaluation of investment securities
Gain on sale of property, plant and equipment
Loss on disposal of property, plant and equipment
Increase in notes and accounts receivable, trade
Increase in inventories
(Decrease) increase in notes and accounts payable, trade
(Decrease) increase in accrued expenses
Decrease in advances received
Other
Sub total
Interest and dividend income, received
Interest expense, paid
Income taxes, paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of time deposits
Proceeds from maturities of time deposits
Payments for purchases of marketable securities
Proceeds from sales of marketable securities
Payments for acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for acquisition of intangible fixed assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Proceeds from sales of consolidated subsidiaries
Payments for loan receivables
Collections of loan receivables
Other
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from short-term borrowings
Repayment of short-term borrowings
Proceeds from issuance of commercial papers
Repayment of commercial papers
Proceeds from long-term loans
Repayment of long-term loans
Repayment of bonds
Payments for purchases of treasury stock
Proceeds from sale of treasury stock
Dividends paid by parent company
Dividends paid to minority interests in consolidated subsidiaries
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents held by newly consolidated subsidiaries
Cash and cash equivalents at end of year (Note 6)
The accompanying notes are an integral part of these statements.
54
Millions of yen
2007
2006
¥ 114,883
71,646
189
824
(196)
(6,701)
(3,015)
4,118
(2,647)
(1,516)
–
701
(919)
9,074
(26,425)
(23,006)
51,605
(399)
(85)
(14,921)
173,210
4,941
(4,210)
(45,508)
128,433
(192)
473
(14)
1
(77,357)
2,976
(4,872)
(3,003)
2,557
–
(5,655)
4,195
(456)
(81,347)
39,760
(36,293)
150,000
(150,000)
8,337
(10,456)
(23,000)
(501)
40
(13,991)
(136)
215
(36,025)
¥ 94,481
69,399
3,799
259
–
(3,127)
(2,653)
3,570
(536)
–
854
703
(5,670)
7,038
(16,393)
(11,075)
(2,075)
11,532
(1,192)
(11,695)
137,219
4,110
(3,656)
(29,053)
108,620
(498)
125
–
30
(59,074)
8,824
(7,341)
(6,848)
1,099
1,962
(5,293)
7,600
(959)
(60,373)
25,019
(7,923)
–
–
2,903
(6,584)
(31,000)
(378)
33
(12,592)
(355)
(4)
(30,881)
643
11,704
86,390
3,625
¥ 101,719
426
17,792
68,456
142
¥ 86,390
Thousands of
U.S. dollars
(Note 4)
2007
$ 973,585
607,170
1,602
6,983
(1,661)
(56,788)
(25,551)
34,898
(22,432)
(12,848)
–
5,940
(7,788)
76,898
(223,941)
(194,966)
437,331
(3,382)
(720)
(126,449)
1,467,881
41,873
(35,678)
(385,661)
1,088,415
(1,627)
4,009
(119)
8
(655,568)
25,220
(41,288)
(25,449)
21,670
–
(47,924)
35,551
(3,864)
(689,381)
336,949
(307,568)
1,271,186
(1,271,186)
70,653
(88,610)
(194,915)
(4,246)
339
(118,568)
(1,153)
1,822
(305,297)
5,449
99,186
732,119
30,720
$ 862,025
Notes to Consolidated Financial Statements
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2007 and 2006
1. Major policies for preparing the consolidated financial statements
The consolidated financial statements, which are filed with the
Japanese Ministry of Finance (hereinafter called the “MOF”)
as required by the Securities and Exchange Law in Japan, are
prepared in accordance with accounting principles generally
accepted in Japan, which are different in certain respects from the
application and disclosure requirements of International Financial
Reporting Standards. The accompanying consolidated financial
statements are a translation of those filed with the MOF and
incorporate certain modifications to enhance foreign readers’
understanding of the financial statements. In addition, the notes
to the consolidated financial statements include certain financial
information which is not required under the disclosure regulations
in Japan, but is presented herein as additional information. In
addition, certain reclassifications of previously reported amounts
have been made to conform to current classifications. Such
modifications or reclassifications have no effect on net income or
retained earnings.
Consolidation and investments in affiliated companies –
The consolidated financial statements consist of the account
of parent company and 111 subsidiaries (105 subsidiaries at
March 31, 2006) (hereinafter collectively referred to as the
“Company”) which, with minor exceptions due to materiality, are
all majority and wholly owned companies, including 7 Core
operating companies (Asahi Kasei Chemicals Corporation, Asahi
Kasei Homes Corporation, Asahi Kasei Pharma Corporation, Asahi
Kasei Fibers Corporation, Asahi Kasei EMD Corporation, Asahi
Kasei Construction Materials Corporation, and Asahi Kasei Life &
2. Significant accounting policies
(a) Cash and cash equivalents
For cash flow statement purposes, cash and cash equivalents
include all highly liquid investments, generally with original
maturities of three months or less, which are readily convertible
to known amounts of cash and are so near maturity that they
present an insignificant risk of changes in value due to changes
in interest rates.
(b) Inventories
Inventories are principally stated at the lower of average cost or
market value. Residential lots and dwellings of sale are stated at
specifically identified costs.
(c) Fixed assets and depreciation/amortization
Property, plant and equipment are stated at cost. Significant
renewals and improvements are capitalized at cost, while
maintenance and repairs are charged to income as incurred.
Depreciation is provided for under the declining-balance method
for property, plant and equipment, except for buildings which are
Living Corporation), Tong Suh Petrochemical Corp. Ltd. (Korea),
Sanyo Petrochemical Co., Ltd., Asahi Kasei Microsystems Co.,
Ltd. and Asahi Kasei Medical Co., Ltd. All significant inter-
company transactions and accounts have been eliminated.
Investments in unconsolidated subsidiaries and 20% to 50%
owned companies in which the Company exercises significant
influence are accounted for, with minor exceptions due to
materiality, using the equity method of accounting. There were 53
such unconsolidated subsidiaries and 20% to 50% owned
companies to which the equity method is applied at March 31,
2007 (55 at March 31, 2006), including Asahi Kasei Metals Ltd.,
Asahi Kasei Finechem Co., Ltd. and Asahi Organic Chemicals
Industry Co., Ltd.
Certain subsidiaries results are reported in the consolidated
financial statements using a December 31, or a February 28 year-
end. Material differences in inter-company transactions and
accounts arising from the use of different fiscal year-ends are
appropriately adjusted for through consolidation procedures.
The excess of the cost over the underlying net equity of
investments in subsidiaries and affiliated companies accounted for
using the equity method of accounting is allocated to identifiable
assets and liabilities based on fair values at the date of acquisition.
The unassigned residual value of the excess of the cost over the
underlying net equity is recognized as goodwill or negative
goodwill. The Company amortizes goodwill and negative goodwill
using the straight-line method over the estimated period of benefit
over a five or twenty-year period, with the exception of minor
amounts, which are charged to income in the year of acquisition.
depreciated using the straight-line method, at rates based on
estimated useful lives of the assets, principally ranging from five
to sixty years for buildings and from four to twenty-two years for
machinery and equipment.
Intangible fixed assets, including software for internal use, are
amortized using the straight-line method over the estimated useful
lives of the asset. The estimated useful life of software for internal
use is mainly five years.
(Accounting for impairment of fixed assets)
On August 9, 2002, the Business Accounting Council in Japan
issued “Accounting Standards for Impairment of Fixed Assets.”
The standard became effective for the fiscal year ended March 31,
2006. The Company adopted this standard in the fiscal year
ended March 31, 2006. The standard requires that fixed assets
should be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. An impairment loss is recognized in the income
Annual Report 2007
55
statement by reducing the carrying amount of impaired assets or a
group of assets to the recoverable amount to be measured as the
higher of the net selling price or value in use. The Company
deducts accumulated impairment losses on fixed assets directly
from the corresponding assets in the consolidated balance sheets.
(d) Accrued pension and severance costs
Accrued pension and severance costs at March 31, 2007 and 2006
represent the estimated present value of projected benefit oblig-
ations in excess of the fair value of the plan assets. Unrecognized
prior service costs are amortized on a straight-line basis primarily
over ten years. Unrecognized actuarial gains/losses, resulting from
variances between actual results and economic estimates or
actuarial assumptions, are amortized on a straight-line basis
primarily over the following ten years.
(Change in method of amortization of unrecognized actuarial
gains/losses)
The parent company and certain Japanese subsidiaries have been
fully amortizing unrecognized actuarial gains/losses in the year
following that in which they arose. Beginning with the fiscal year
ended March 31, 2006, actuarial gains/losses which arise each
year are amortized on a straight-line basis over the following ten
years. Actuarial gain of ¥23,604 million occurred in the year ended
March 31, 2006 would be amortized on a straight-line basis over
the following ten years. Consequently, net pension and severance
costs would be ¥21,244 million higher, ordinary profit would be
¥19,639 million lower, and income before income taxes and
minority interests would be ¥19,639 million lower in the year
ended March 31, 2007 than if one-year amortization were
continued.
In the fiscal year ended March 31, 2007, the effect of this
change on profits for the fiscal year ended March 31, 2007 was
not significantly different than one described in the financial
statements for the year ended March 31, 2006.
Provision is made for lump-sum indemnities to directors and
corporate auditors equal to the estimated liability calculated
under the internal rules of the Company.
(e) Financial instruments
i) Securities
Securities are classified into four categories; trading securities,
held-to-maturity debt securities, equity securities of unconsolidated
subsidiaries and affiliates, and other securities. At March 31,
2007 and 2006, the Company did not have trading securities
or held-to-maturity debt securities.
Equity securities of unconsolidated subsidiaries and affiliates
are accounted for, with minor exceptions due to materiality,
using the equity method of accounting.
are stated at cost. In cases where any significant decline in the
realizable value is assessed to be other than temporary, the cost of
other securities is devalued by the impaired amount and is
charged to income.
Realized gains and losses are determined using the average
cost method and are reflected in the income statement.
ii) Derivative financial instruments
All derivatives are stated at fair value. Gains or losses arising
from changes in fair value are charged or credited to income for
the period in which they arise, except for derivatives that are
designated as hedging instruments. Gains or losses arising from
changes in fair value of these qualifying hedges are deferred as
“Net deferred profit on hedges” to be offset against gains or
losses of the underlying hedged assets and liabilities.
(f) Taxes
Accrued income taxes are stated at the estimated amount payable
for corporation, enterprise, and inhabitant taxes. The asset and
liability approach is used to recognize deferred tax assets and
liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of
assets and liabilities.
The Company has elected to file its return under the
consolidated tax filing system.
(g) Leases
Under Japanese accounting practices, financing leases must be
capitalized by the lessee except for those leases that do not transfer
ownership of the leased asset to the lessee as part of the lease. Such
exceptions can be accounted for either as financing leases or
operating leases with an appropriate footnote disclosure.
Periodic lease charges for financing leases entered into by the
parent company and its Japanese subsidiaries, where lessors
retain the ownership of the leased assets, are charged to income
as incurred.
(h) Translation of foreign currencies
Foreign currency receivables and payables are translated into
Japanese yen at the exchange rates prevailing at the balance sheet
date. Resulting gains and losses are charged or credited to income
for the period.
Assets, liabilities, income and expenses of foreign subsidiaries
and 20% to 50% owned companies accounted for using the equity
method of accounting are translated into Japanese yen at year-end
exchange rates. Shareholders’ equity of foreign subsidiaries and
20% to 50% owned companies is translated into Japanese yen at
the historical exchange rates. The translation differences in Japanese
yen amounts arising from the use of different rates are recognized
as cumulative translation adjustments in the balance sheets.
Other securities, whose fair values are readily determinable,
A portion of the cumulative translation adjustments is allocated
are carried at fair value with net unrealized gains or losses
included as a component of net assets, net of related taxes.
Other securities, whose fair values are not readily determinable,
to “Minority interest in consolidated subsidiaries” and the
Company’s portion is presented as a separate component of
net assets in the balance sheets.
56
3. Changes in significant accounting policies
(a) Presentation of net assets in the balance sheet(s)
On December 9, 2005, the Accounting Standards Board of Japan
(ASBJ) issued its “Accounting Standard for Presentation of Net
Assets in the Balance Sheet” and its “Guidance on Accounting
Standard for Presentation of Net Assets in the Balance Sheet.”
The parent company and its Japanese subsidiaries adopted this
standard in the fiscal year ended March 31, 2007, with application
in accordance with this guidance. Previously, the balance sheets
had comprised assets, liabilities, minority interest in consolidated
subsidiaries, and shareholders’ equity. The balance sheets now
comprise assets, liabilities, and net assets; net assets comprising
shareholders’ equity, valuation, translation adjustments and others,
and minority interest in consolidated subsidiaries. Minority
interest in consolidated subsidiaries, which had been presented
between liabilities and shareholders’ equity, is now included in net
assets. Valuation, translation adjustments and others is presented
net of applicable deferred income taxes. Under the previous
accounting policy, shareholders’ equity would have been ¥645,597
million (US$5,471,161 thousand) as of March 31, 2007.
(b) Bonuses to directors and corporate auditors
On November 29, 2005, the ASBJ issued its “Accounting
Standard for Directors’ Bonus.” The parent company and its
4. United States dollar amounts
The U.S. dollar amounts presented in the financial statements are
included solely for the convenience of readers. These translations
should not be construed as representations that the Japanese yen
amounts actually represent, or have been or could be converted
into U.S. dollars. As the amounts shown in U.S. dollars are for
5. Derivative financial instruments
The Company operates internationally, giving rise to exposure to
market risks from fluctuations in foreign currency exchange and
interest rates. In the normal course of its risk management efforts,
the Company uses a variety of derivative financial instruments,
which include foreign currency forward exchange contracts,
interest rate swap agreements and currency swap agreements, to
reduce its exposures. In accordance with the Company’s policy,
these financial instruments are utilized solely for hedging purposes
and the Company does not hold or issue financial instruments for
trading or speculation purposes.
The Company has entered into foreign currency forward
exchange contracts with banks as hedges against receivables and
payables denominated in foreign currencies. As these foreign
currency forward exchange contracts are utilized solely for
hedging purposes, the resulting gains or losses are offset against
foreign exchange gains or losses on the underlying hedged assets
and liabilities.
Japanese subsidiaries adopted this standard in the fiscal year ended
March 31, 2007. Previously, bonuses to directors and corporate
auditors were appropriated from retained earnings. Bonuses to
directors and corporate auditors are now treated as operating
expenses during the fiscal period in which they occur. Under the
previous accounting policy, operating profit, ordinary profit, and
income before income taxes and minority interest would have
been ¥222 million (US$1,881 thousand) higher in the fiscal year
ended March 31, 2007. The effect by industry segment is shown
in Note 18.
(c) Business combinations and divestitures
On October 31, 2003, the Business Accounting Council in Japan
issued its “Accounting Standard for Business Combinations,” and
on December 27, 2005, the ASBJ issued its “Accounting Standard
for Business Divestitures” and “Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business
Divestitures.” On December 22, 2006, the ASBJ revised its
“Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures.” The parent
company and its Japanese subsidiaries adopted these standards in
the fiscal year ended March 31, 2007, with application in
accordance with this guidance.
convenience only, and are not intended to be computed in
accordance with generally accepted translation procedures, the
approximate current exchange rate of ¥118= US$1 prevailing on
March 31, 2007 has been used.
Interest rate swap agreements and currency swap agreements are
used to limit the Company’s exposure to losses in relation to
interest expense from adverse fluctuations in foreign currency
exchange and interest rates. The related differentials to be paid or
received under the interest rate swap agreements are recognized in
interest expense over the terms of the agreements. Currency swap
agreements are accounted for in a manner similar to that used for
foreign currency forward exchange contracts.
The Company does not anticipate any credit loss from
nonperformance by the counter-parties to foreign currency
forward exchange contracts, interest rate swap agreements or
currency swap agreements.
Since the derivative financial instruments of the Company are
solely for hedging purposes, gains or losses arising from changes in
fair value are deferred as “Net deferred profit on hedges” to be
off-set against foreign exchange gains or losses on the underlying
hedged assets and liabilities. Accordingly, the information relating
to fair values is not applicable.
Annual Report 2007
57
6. Cash and cash equivalents
Reconciliation of cash and cash equivalents on the consolidated statements of cash flows to the amounts disclosed on the balance sheets at
March 31 is as follows:
Cash on hand and in banks
Time deposits with deposit term of over 3 months
Money market funds, medium-term government bond funds
and others included in marketable securities
Cash and cash equivalents
Millions of yen
2006
2007
¥101,514
(192)
¥86,422
(454)
Thousands of
U.S. dollars
2007
$860,288
(1,627)
397
¥101,719
422
¥86,390
3,364
$862,025
7. Account balances and transactions with affiliated companies
Major account balances with unconsolidated subsidiaries and 20% to 50% owned companies accounted for under the equity method of
accounting are as follows:
Notes and accounts receivable, trade
Other current assets
Investment securities
Long-term receivables
Notes and accounts payable, trade
Short-term borrowings
Accrued expenses
Millions of yen
2006
2007
¥22,077
8,869
47,491
2,263
7,490
1,520
2,711
¥15,606
7,692
44,383
2,064
5,171
1,093
4,028
Thousands of
U.S. dollars
2007
$187,093
75,161
402,466
19,178
63,475
12,881
22,975
Major transactions between the Company and its unconsolidated subsidiaries and 20% to 50% owned companies accounted for using
the equity method of accounting are as follows:
Sales
Purchases
8. Marketable securities and investment securities
Millions of yen
2006
2007
¥78,040
19,874
¥65,818
13,436
Thousands of
U.S. dollars
2007
$661,356
168,424
(a) Other securities with available fair value —
The aggregate cost, carrying amount which was identical to fair value, gross unrealized gains and losses of debt and equity securities
classified as other securities for which fair values were available at March 31 are as follows:
Millions of yen
2007
Unrealized
gains
(losses)
Cost
Carrying
amount
¥39,675
¥173,612
¥133,937
802
23
825
¥40,500
629
23
652
¥174,264
(173)
–
(173)
¥133,764
Securities with unrealized gains:
Equity securities
Securities with unrealized losses:
Equity securities
Debt securities
58
Securities with unrealized gains:
Equity securities
Securities with unrealized losses:
Equity securities
Debt securities
Securities with unrealized gains:
Equity securities
Securities with unrealized losses:
Equity securities
Debt securities
Millions of yen
2006
Unrealized
gains
(losses)
Cost
Carrying
amount
¥38,774
¥181,704
¥142,930
130
24
154
¥38,928
106
24
130
¥181,834
(24)
–
(24)
¥142,906
Thousands of U.S. dollars
2007
Cost
Carrying
amount
Unrealized
gains
(losses)
$336,228
$1,471,288
$1,135,060
6,797
195
6,992
$343,220
5,331
195
5,526
$1,476,814
(1,466)
–
(1,466)
$1,133,594
Losses on devaluation of other securities, whose fair values were readily determinable, for the year ended March 31, 2007, totaled ¥213
million (US$1,805 thousand).
(b) The realized gains and losses on the sale of other securities during the year ended March 31 are as follows:
Selling amount
Gain on sales of securities
Loss on sales of securities
Millions of yen
2006
¥587
267
4
2007
¥1,310
832
0
(c) The carrying amounts of other securities for which fair values were not readily determinable at March 31 are as follows:
Equity investment in funds
Equity investments in nonpublic companies
(d) Redemption schedules for maturity of debt securities at March 31 are as follows:
Millions of yen
2006
2007
¥10,001
6,996
¥10,001
7,521
Thousands of
U.S. dollars
2007
$11,102
7,051
0
Thousands of
U.S. dollars
2007
$84,754
59,288
Millions of yen
2007
Debt securities:
Government and municipal bonds
Due within one year
Due after one year,
within five years
Due after five years,
within ten years
Due after
more than ten years
¥5
¥5
¥9
¥9
¥ 2
¥ 2
¥ –
¥ –
Annual Report 2007
59
Debt securities:
Government and municipal bonds
Debt securities:
Government and municipal bonds
Millions of yen
2006
Due within one year
Due after one year,
within five years
Due after five years,
within ten years
Due after
more than ten years
¥23
¥23
¥1
¥1
¥ –
¥ –
¥ –
¥ –
Thousands of U.S. dollars
2007
Due within one year
Due after one year,
within five years
Due after five years,
within ten years
Due after
more than ten years
$42
$42
$76
$76
$17
$17
$ –
$ –
9. Accumulated depreciation
Accumulated depreciation at March 31 is comprised of the following:
Buildings
Machinery and equipment
Other
10. Borrowings
Millions of yen
2006
2007
¥ 213,372
935,316
85,842
¥1,234,530
¥ 208,128
891,598
84,591
¥1,184,317
Thousands of
U.S. dollars
2007
$ 1,808,237
7,926,407
727,475
$10,462,119
Short-term borrowings at March 31, 2007 and 2006 represented loans, principally from banks. The weighted average interest rates on these
borrowings were 1.84 % in 2007 and 1.23 % in 2006.
Long-term debt at March 31 is comprised of the following:
Loans, principally from banks and insurance companies due 2007 to 2023 with weighted
average interest rates of 2.86% (short-term portion) and 1.84% (long-term portion):
Secured
Unsecured
Unsecured 1.02% to 2.15% yen bonds due 2007 to 2009
Unsecured 1.0% to 1.8% step up coupon Euro yen bonds due 2011
Unsecured 10 years constant manurity swap rate less 6 months yen LIBOR multiplied
by 0.45% Euro yen bonds due 2006
Unsecured 0.29% to 2.83% Euro yen bonds due 2007 to 2009
Unsecured US$1.9% to 3.5% reversal dual currency Euro yen bonds due 2007 to 2013
Less – Portion due within one year
Millions of yen
2006
2007
¥ 1,003
80,626
45,000
10,000
–
17,000
12,000
165,629
(36,555)
¥129,074
¥
1,354
80,788
65,000
10,000
2,000
18,000
12,000
189,142
(32,842)
¥156,300
Thousands of
U.S. dollars
2007
$
8,500
683,271
381,356
84,745
–
144,068
101,695
1,403,635
(309,788)
$1,093,847
60
The aggregate annual maturities of long-term debt after March 31, 2007 are as follows:
Years ending March 31
2008
2009
2010
2011 and thereafter
Millions of yen
¥ 36,555
32,195
37,100
59,779
¥165,629
Thousands of
U.S. dollars
$ 309,788
272,839
314,407
506,601
$1,403,635
A summary of assets pledged as collateral for short-term loans and long-term debt at March 31, 2007 is as follows:
Property, plant and equipment
11. Accrued pension and severance costs
Upon terminating employment, employees of the parent company
and its major subsidiaries in Japan are entitled, under most
circumstances, to lump-sum severance indemnities and/or pension
payments determined by reference mainly to their current basic
rate of pay and length of service. Additional benefits may be
granted to employees depending on the conditions under which
termination of employment occurs. Certain foreign subsidiaries
have defined benefit pension plans or defined contribution plans.
Millions of yen
¥4,685
Thousands of
U.S. dollars
$39,703
The obligation for these severance indemnity benefits is
provided for through accruals, contributory funded defined
benefit pension plans, contributory funded defined benefit
enterprise pension plans and non-contributory funded tax-
qualified pension plans.
Information on accrued severance and pension costs as at March 31, 2007 and 2006 are as follows:
Projected benefit obligations
Fair value of plan assets
Unrecognized actuarial gains/losses
Unrecognized prior service costs
Prepaid pension cost
Retirement benefits for employees
Retirement benefits for directors and corporate auditors
Accrued pension and severance costs
2007
¥(302,528)
215,846
(86,682)
(25,631)
(8,403)
(4,648)
(125,364)
(902)
¥(126,266)
Millions of yen
2006
¥(300,327)
206,022
(94,305)
(23,619)
(9,797)
(3,896)
(131,617)
(816)
¥(132,433)
Thousands of
U.S. dollars
2007
$(2,563,797)
1,829,203
(734,594)
(217,212)
(71,212)
(39,390)
(1,062,408)
(7,643)
$(1,070,051)
Note: The figures in the above table do not include additional benefit payables amounting to ¥82 million (US$695 thousand) and ¥1,352 million at March 31, 2007 and 2006,
respectively. The amounts are recorded as part of current liabilities on the consolidated balance sheets at March 31, 2007 and 2006.
Annual Report 2007
61
Net periodic pension and severance costs for employees for the years ended March 31, 2007 and 2006 include the following components:
Service cost (*1)
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gains/losses
Amortization of unrecognized prior service costs
Net pension and severance costs
2007
¥ 8,775
7,385
(5,229)
(2,380)
(1,393)
¥ 7,158
Millions of yen
2006
¥ 8,697
7,293
(4,409)
(2,726)
(1,394)
¥ 7,461
Thousands of
U.S. dollars
2007
$ 74,364
62,585
(44,314)
(20,169)
(11,805)
$ 60,661
*1: The figures in the above table do not include the contributions made by employees.
*2: In addition to the above costs, additional benefits amounting to ¥782 million (US$ 6,627 thousand) and ¥1,962 million were charged to income for the year ended March 31, 2007 and
2006, respectively.
The assumptions used in calculation of the above information are as follows:
Discount rate
Expected rate of return on plan assets
Method of attributing the projected benefits to periods of employee service
Amortization of unrecognized prior service costs
Amortization of unrecognized actuarial gains/losses
12. Taxes
2007
2.5%
2.5%
Straight-line basis
Mainly 10 years
Mainly 10 years
2006
2.5%
2.5%
Straight-line basis
Mainly 10 years
1 year
Income taxes applicable to the parent company and subsidiaries in Japan include (1) corporation tax, (2) enterprise tax and (3) inhabitants tax.
Significant components of the deferred tax assets and liabilities at March 31 are as follows:
Millions of yen
2006
2007
Thousands of
U.S. dollars
2007
¥ 50,524
8,611
7,080
4,674
4,107
3,387
2,401
2,060
1,094
375
353
12,560
97,226
(9,997)
87,229
¥ 53,496
8,317
6,205
3,196
4,130
3,016
2,145
1,308
1,037
525
425
13,817
97,617
(6,203)
91,414
(56,513)
(14,995)
(1,070)
(3,732)
(76,310)
(60,281)
(15,777)
(1,621)
(3,216)
(80,895)
$ 428,169
72,975
60,000
39,610
34,805
28,703
20,347
17,458
9,271
3,178
2,992
106,441
823,949
(84,720)
739,229
(478,924)
(127,076)
(9,068)
(31,627)
(646,695)
¥ 10,919
¥ 10,519
$ 92,534
Deferred tax assets:
Accrued pension and severance costs
Accrued bonuses
Loss on disposal of property, plant and equipment
Tax loss carryforwards
Unrealized gain on fixed assets and others
Devaluation of inventories
Accrued enterprise tax
Impairment loss
Devaluation of investment securities
Allowance for doubtful accounts
Depreciation
Other
Sub total deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains on securities
Reserve for fixed assets reduction
Reserve for special depreciation
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)
62
Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the year ended March 31 is
as follows:
Statutory tax rate
Increase (reduction) in taxes resulting from:
Non-deductible expenses and non-taxable income
Equalization inhabitants taxes
R&D expenses deductible from income taxes
Amortization of goodwill
Equity in earnings of unconsolidated
subsidiaries and affiliates
Other
Effective income tax rate
2007
40.7%
2.0
0.4
(3.9)
0.1
(0.9)
1.5
39.9%
Statutory tax rate
Increase (reduction) in taxes resulting from:
Non-deductible expenses and non-taxable income
Equalization inhabitants taxes
R&D expenses deductible from income taxes
IT investments deductible from income taxes
Amortization of goodwill
Equity in earnings of unconsolidated
subsidiaries and affiliates
Other
Effective income tax rate
2006
40.7%
2.1
0.4
(6.4)
(0.4)
0.1
(0.2)
0.3
36.6%
In Japan, the consumption tax system is designed so that all goods and services are taxed at a flat rate of 5% unless specified otherwise.
Assets, liabilities and profit and loss accounts are stated net of consumption tax.
13. Revaluation surplus
A revaluation surplus is recorded by a consolidated foreign subsidiary, based on the applicable laws.
14. Selling, general and administrative expenses
Major components of selling, general and administrative expenses are as follows:
Freight and storage
Salaries and benefits
Depreciation
Research and development (*)
Advertising
Rent
Millions of yen
2006
2007
¥34,287
87,819
11,176
37,307
14,744
28,392
¥32,554
87,117
10,718
35,832
13,411
28,072
Thousands of
U.S. dollars
2007
$290,568
744,229
94,712
316,161
124,949
240,610
(*) The aggregate amounts of research and development expenses included in manufacturing costs and selling, general and administrative expenses for the years ended March 31, 2007 and
2006 are ¥52,426 million (US$ 444,288 thousand) and ¥51,467 million, respectively.
15. Impairment loss
Grouping of operating assets is based on managerial accounting
categories, with consideration given to production process,
geographic location, and domain of authority for making
investment decisions. Idle assets are recorded separately in each
fixed assets class.
In the fiscal year ended March 31, 2007, the book value of
machinery and equipment with no specific prospect for conversion
of use and of land with diminished market value was reduced to
the recoverable amount, resulting in a special loss of ¥189 million
(US$ 1,602 thousand) as impairment loss and ¥1,659 million
(US$ 14,059 thousand) as a restructuring charge. In the fiscal year
ended March 31, 2006, resulting in a special loss of ¥3,799 million
was recorded as impairment loss. Recoverable amount for machinery
and equipment was taken as disposable value less cost of disposal,
and that for land was taken as net selling price mainly based on the
appraisal value as determined by a real estate appraiser.
Annual Report 2007
63
16. Restructuring charges
Major components of the restructuring charges are as follows:
Loss on disposal and devaluation of assets and others
Impairment of fixed assets
Loss on liquidation of subsidiaries and others
17. Leases
Periodic lease charges for the Company’s financing leases, where
lessors retain the ownership of the leased assets, are charged to
income. Such lease charges are ¥4,551 million (US$38,568
Millions of yen
2006
¥2,456
–
715
¥3,171
2007
¥2,577
1,659
515
¥4,751
Thousands of
U.S. dollars
2007
$21,839
14,509
4,365
$40,263
thousand) and ¥4,554 million for the years ended March 31, 2007
and 2006, respectively.
The future lease payments under the Company’s financing leases and non-cancelable operating leases at March 31, including amounts
representing interest, were as follows:
Due within one year
Due after one year
Millions of yen
2006
2007
¥ 4,287
5,770
¥10,057
¥ 3,971
6,161
¥10,132
Thousands of
U.S. dollars
2007
$36,331
48,898
$85,229
The leased assets under the Company’s financing leases, where lessors retain ownership of the leased assets were accounted for as
operating leases by the Company. If the leases had been capitalized, then the cost of the assets and the related accumulated amortization,
computed using the straight-line method over the term of the lease, at March 31, 2007 and 2006 would have been as follows:
Buildings
Machinery and equipment
Other tangible fixed assets
Intangible fixed assets – other
Buildings
Machinery and equipment
Other tangible fixed assets
Intangible fixed assets – other
Thousands of
U.S. dollars
2007
Net
amount
$73,508
1,907
8,119
1,695
$85,229
Millions of yen
2007
Net
amount
¥ 8,674
225
958
200
¥10,057
Millions of yen
2006
Net
amount
¥ 8,738
238
883
273
¥10,132
Accumulated
amortization
¥8,026
328
1,050
358
¥9,762
Accumulated
amortization
¥6,387
378
841
355
¥7,961
Cost
¥16,700
553
2,008
558
¥19,819
Cost
¥15,125
616
1,724
628
¥18,093
The amortization amount of the leased assets, computed using the straight-line method over the term of the leases, would have been
¥4,551 million (US$38,568 thousand) and ¥4,554 million for the years ended March 31, 2007 and 2006, respectively.
No impairment loss is allocated to the leased assets.
64
18. Business segment information
(1) Industry segments —
Sales and operating profit (loss) for the year ended March 31:
Sales:
Customers
Intersegment
Total
Operating expenses
Operating profit (loss)
Chemicals
Homes
Pharma
Fibers
¥752,632
16,590
769,222
717,255
¥ 51,967
¥405,695
316
406,011
378,502
¥ 27,509
¥104,474
9
104,483
90,610
¥ 13,873
¥106,639
1,870
108,509
104,356
¥ 4,153
Sales:
Customers
Intersegment
Total
Operating expenses
Operating profit (loss)
Chemicals
Homes
Pharma
Fibers
¥660,402
16,659
677,061
636,549
¥ 40,512
¥404,539
111
404,650
376,432
¥ 28,218
¥105,842
19
105,861
94,803
¥ 11,058
¥89,704
2,262
91,966
87,950
¥ 4,016
Sales:
Customers
Intersegment
Total
Operating expenses
Operating profit (loss)
Chemicals
Homes
Pharma
Fibers
$6,378,237
140,594
6,518,831
6,078,433
$ 440,398
$3,438,093
2,678
3,440,771
3,207,644
$ 233,127
$885,373
76
885,449
767,881
$117,568
$903,721
15,847
919,568
884,373
$ 35,195
Construction
Materials Life & Living
Services,
Engineering
and Others
¥60,818
12,465
73,283
68,246
¥ 5,037
¥52,558
3,875
56,433
51,848
¥ 4,585
¥28,881
29,305
58,186
54,331
¥ 3,855
Construction
Materials Life & Living
Services,
Engineering
and Others
¥56,512
11,596
68,108
64,292
¥ 3,816
¥51,942
3,624
55,566
50,740
¥ 4,826
¥26,821
27,247
54,068
50,785
¥ 3,283
Combined
¥1,623,791
65,639
1,689,430
1,555,829
¥ 133,601
Combined
¥1,498,620
62,510
1,561,130
1,446,068
¥ 115,062
Construction
Materials Life & Living
Services,
Engineering
and Others
Combined
Millions of yen
2007
Corporate
expenses and
eliminations Consolidated
¥
–
(65,639)
(65,639)
(59,839)
¥ (5,800)
¥1,623,791
–
1,623,791
1,495,990
¥ 127,801
Millions of yen
2006
Corporate
expenses and
eliminations Consolidated
¥
–
(62,510)
(62,510)
(56,174)
¥ (6,336)
¥1,498,620
–
1,498,620
1,389,894
¥ 108,726
Thousands of U.S. dollars
2007
Corporate
expenses and
eliminations Consolidated
$515,407
105,635
621,042
578,356
$ 42,686
$445,407
32,839
478,246
439,390
$ 38,856
$244,754
248,348
493,102
460,432
$ 32,670
$13,760,941
556,263
14,317,204
13,184,992
$ 1,132,212
$
$13,760,941
–
–
(556,263)
13,760,941
(556,263)
12,677,882
(507,110)
$ (49,153) $ 1,083,059
Electronics
Materials
& Devices
¥112,094
1,209
113,303
90,681
¥ 22,622
Electronics
Materials
& Devices
¥102,858
992
103,850
84,517
¥ 19,333
Electronics
Materials
& Devices
$949,949
10,246
960,195
768,483
$191,712
Identifiable assets, depreciation and amortization, impairment loss and capital expenditure as of and for the year ended March 31:
Chemicals
Homes
Pharma
Fibers
Electronics
Materials
& Devices
Construction
Materials Life & Living
Services,
Engineering
and Others
Millions of yen
2007
Corporate
assets and
Combined
eliminations Consolidated
¥594,205
¥212,739
¥120,926
¥115,575
¥123,764
¥55,141
¥49,473
¥317,537
¥1,589,360
¥(129,438)
¥1,459,922
31,934
164
42,569
2,383
–
2,701
6,553
1,659
5,722
5,302
–
6,362
13,356
–
16,234
3,040
–
2,301
4,152
–
3,455
735
–
760
67,455
1,823
80,104
4,191
25
4,309
71,646
1,848
84,413
Chemicals
Homes
Pharma
Fibers
Electronics
Materials
& Devices
Construction
Materials Life & Living
Services,
Engineering
and Others
Millions of Yen
2006
Corporate
assets and
Combined
eliminations Consolidated
¥529,100
¥200,066
¥118,721
¥105,718
¥114,743
¥49,557
¥50,970
¥317,171
¥1,486,046
¥(110,002)
¥1,376,044
31,281
–
26,632
2,448
251
3,583
6,364
–
4,897
5,337
–
5,417
12,051
–
14,960
3,129
–
2,313
4,352
–
4,655
715
–
1,038
65,677
251
63,495
3,722
3,548
2,815
69,399
3,799
66,310
Identifiable assets
Depreciation
and amortization
Impairment loss
Capital expenditure
Identifiable assets
Depreciation
and amortization
Impairment loss
Capital expenditure
Annual Report 2007
65
Chemicals
Homes
Pharma
Fibers
Electronics
Materials
& Devices
Construction
Materials Life & Living
Services,
Engineering
and Others
Thousands of U.S. dollars
2007
Corporate
assets and
Combined
eliminations Consolidated
Identifiable assets
Depreciation
and amortization
Impairment loss
Capital expenditure
$5,035,636 $1,802,873 $1,024,797 $979,449
$1,048,847
$467,297
$419,263
$2,690,991
$13,469,153
$(1,096,933) $12,372,220
270,627
1,390
$ 360,754 $
20,195
–
22,890 $
44,932
55,534
14,059
–
48,491 $ 53,915
113,187
–
$ 137,576
25,763
–
$ 19,500
35,187
–
$ 29,280
$
6,229
–
6,441
$
571,654
15,449
678,847
$
35,516
212
36,517
$
607,170
15,661
715,364
Note 1: The Company’s industry segments are aggregated into eight segments based primarily upon similarities of products, services, and economic characteristics.
Chemicals–
The Company produces, processes and sells monomers and basic chemicals (such as ammonia, nitric acid, caustic soda, acrylonitrile, styrene monomer, methyl methacrylate
(MMA) monomer, PMMA resin, high-compound fertilizers, and adipic acid), polymer and elastomers (such as Suntec™ polyethylene (PE), Stylac™ -AS (styrene-acrylonitrile),
Stylac™-ABS (acrylonitrile-butadiene-styrene), synthetic rubber, Tenac™ polyacetal, Xyron™ modified polyphenylene ether (mPPE), and Leona™ nylon 66 polymer and
filament), specialty products and systems (such as coating materials, latex, Ceolus™ microcrystalline cellulose, explosives, explosion-bonded metal clad, APR™ photosensitive resin
and printing plate making systems, Microza™ UF and MF membranes and systems, Hipore™ microporous membrane, and ion-exchange membranes and electrolysis systems).
Homes–
The Company builds Hebel Haus™ pre-fabricated, custom-built homes, and Hebel Maison™ apartments, and operates related businesses such as condominiums, remodeling,
real estate, residential land development, and home financing.
Pharma–
The Company produces and sells pharmaceuticals (such as Elcitonin™, Bredinin™, Flivas™, and Toledomin™), pharmaceutical intermediates, diagnostics reagents.
The Company also manufactures APS™ artificial kidneys, Sepacell™ leukocyte reduction filters, Cellsorba™ leukocyte adsorption columns, Planova™ virus removal filters,
and contact lenses.
Fibers–
The Company produces and sells Roica™ elastic polyurethane filament, nonwoven fabrics (such as Eltas™ spunbond and Lamous™ artificial suede), Bemberg™ cuprammonium
rayon, and polyester filament.
Electronics Materials & Devices–
The Company produces and sells Pimel™ photosensitive polyimide, Sunfort™ photosensitive dry film resist (DFR), photomask pellicles, LSIs, Hall elements, and glass fabric.
Construction Materials–
The Company produces and sells autoclaved lightweight concrete (ALC) panels (such as Hebel™), piles, Neoma™ foam insulation panels, and artificial fish reefs.
Life & Living–
The Company produces and sells Saran Wrap™ cling film, Ziploc™ storage bags, and plastic films, sheets, and foams.
Services, Engineering, and Others–
The Company provides plant engineering, environmental engineering, personnel staffing and placement, and think tank services.
2: Accounting Standard for Directors’ Bonus became effective for the fiscal year ended March 31, 2007. The Company applies this new standard in the fiscal year ended March 31,
2007. The effect by industry segment is that operating expenses in the following segments are higher by the following amounts: “Chemicals” ¥35 million (US$296 thousand),
“Homes” ¥35 million (US$296 thousand), “Pharma” ¥15 million (US$127 thousand), “Fibers” ¥14 million (US$119 thousand), “Electronics Materials & Devices” ¥10 million
(US$85 thousand), “Construction Materials” ¥16 million (US$136 thousand), “Life & Living” ¥6 million (US$51 thousand), “Corporate” ¥91 million (US$771 thousand) in the
year ended March 31, 2007 than if the previous method had been continued. This had the effect of decreasing the operating profit of each segment.
3: Accounting Standards for Impairment of Fixed Assets became effective for the fiscal year ended March 31, 2006. The Company applies this new standard in the fiscal year ended
March 31, 2006.
4: The parent company and certain Japanese subsidiaries have been fully amortizing unrecognized actuarial gains/losses in the year following that in which they arose. Beginning with
the fiscal year ended March 31, 2006, actuarial gains/losses are amortized on a straight-line basis over the ten years following that in which they arise. Actuarial gain of ¥23,604
million occurred in the year ended March 31, 2006 would be amortized on a straight-line basis over the following ten years, net pension and severance costs would be ¥19,639
million higher than if one-year amortization had been continued. The effect by industry segment is that operating expenses would be higher by the following amounts: “Chemicals”
¥6,064 million, “Homes” ¥3,097 million, “Pharma” ¥2,830 million, “Fibers” ¥1,869 million, “Electronics Materials & Devices” ¥1,077 million, “Construction Materials” ¥1,368
million, “Life & Living” ¥855 million, “Corporate” ¥2,478 million in the year ended March 31, 2007 than if one-year amortization had been continued.
In the fiscal year ended March 31, 2007, the effect of this change by industry segment on profits was not significantly different than one described in the financial statements for
the year ended March 31, 2006.
5: Corporate operating expenses included in “Corporate expenses and eliminations” as of the years ended March 31, 2007 and 2006 amount to ¥14,325 million (US$121,398
thousand) and ¥15,209 million, respectively.
6: Corporate assets such as surplus funds (cash on hand and in banks), long-term-investment funds (investment securities etc.) and land etc. included in “Corporate assets and
eliminations” for the years ended March 31, 2007 and 2006 amount to ¥443,000 million (US$3,754,237 thousand) and ¥447,076 million, respectively.
66
(2) Geographic areas —
Total sales and assets of consolidated subsidiaries located in countries or regions outside of Japan as of and for the years ended March 31,
2007 and 2006 were not significant.
(3) Overseas sales —
Overseas sales for the years ended March 31, 2007 and 2006 were as follows:
Millions of yen
Millions of yen
Thousands of U.S. dollars
Others
2007
Total
East Asia
Others
2006
Total
East Asia
Others
2007
Total
¥182,764 ¥ 428,040
1,623,791
–
¥222,377
–
¥150,789
–
¥ 373,166
1,498,620
$2,078,611
–
$1,548,847 $ 3,627,458
13,760,941
–
East Asia
¥245,276
–
15.1%
11.3%
26.4%
14.8%
10.1%
24.9%
Overseas sales
Consolidated net sales
Percentage of
consolidated
net sales (%)
Note 1: Geographical distance is considered in the classification of country or area.
2: Major countries or areas included in each category are as follows;
East Asia: China, Korea and Taiwan
Others: Southeast Asia (except East Asia), U.S.A., Europe and others.
3: Overseas sales represent the sales of the Company to countries and areas outside of Japan.
19. Related Party Transactions
Transactions for the year ended March 31, 2007 between the Company and related parties are as follows:
Type of
related parties
Name
Occupation
Equity ownership
in the Company
Nature of
transactions
Amount (*1)
Millions of yen
Thousands of U.S. dollars
Corporate Auditor
Yuichiro Miyake
Attorney
0.0%
Attorney’s fees (*2)
58
492
*1: Not including consumption tax.
*2: Amounts of attorney’s fees were determined using a reasonable method of calculation based on guidelines formerly issued by the Japan Federation of Bar Associations and other standards.
There were no transactions for the year ended March 31, 2006 between the Company and related parties.
20. Appropriation of retained earnings
Appropriations of retained earnings are not accrued in the financial
statements for the period to which they relate, but are recorded in
the subsequent accounting period after approval by the Board of
Directors. Retained earnings at March 31, 2007 include amounts
21. Contingent liabilities
representing final cash dividends of ¥9,795 million (US$83,008
thousand) which were approved at the Board meeting held on May
8, 2007.
Contingent liabilities at March 31, arising in the ordinary course of business are as follows:
Notes discounted
Loans guaranteed
Commitment for guarantees
Letters of awareness
Millions of yen
2006
2007
¥
141
11,185
2,363
235
¥13,924
¥
296
15,569
2,646
734
¥19,245
Thousands of
U.S. dollars
2007
$ 1,195
94,788
20,025
1,992
$118,000
The parent company and certain of its subsidiaries and affiliates were defendants in several pending lawsuits. However, based upon the
information currently available to both the Company and its legal counsel, management of the Company believes that any damages from
such lawsuits will not have a material effect on the Company’s consolidated financial statements.
Annual Report 2007
67
22. Reconciliation of the differences between basic and diluted net income per share
Reconciliation of the differences between basic and diluted net income per share for the years ended March 31 is as follows:
Net income
Amount not allocated to the common stock
Net income allocated to the common stock
Effect of dilutive securities
Net income allocated to the common stock for computation of diluted net income per share
Weighted-average shares
Effect of dilutive securities
Weighted-average shares for computation of diluted net income per share
Basic net income per share
Diluted net income per share
Thousands of
U.S. dollars
2007
$581,144
–
$581,144
–
$581,144
Millions of yen
2006
2007
¥68,575
–
¥68,575
–
¥68,575
¥59,668
(218)
¥59,450
–
¥59,450
Thousands of shares
2006
2007
1,399,462
–
1,399,462
1,400,109
–
1,400,109
2007
¥49.00
Yen
2006
¥42.46
¥
–
¥
–
U.S. dollars
2007
$0.42
$
–
As the Company had no dilutive securities as at March 31, 2007 and 2006, the Company does not disclose diluted net income for the
years ended March 31, 2007 and 2006.
23. Subsequent event
Subsequent to March 31, 2007, Asahi Kasei Life & Living Corp.,
a wholly-owned subsidiary, was merged into Asahi Kasei Chemicals
Corp., a wholly-owned subsidiary, on April 1, 2007. Accordingly,
a result of re-evaluation of the Company's industry segment
configuration, the Life & Living segment would be combined with
the Chemicals segment based on the similarity of product types
and characteristics and the unification of the organization.
68
Annual Report 2007
69
Major Subsidiaries and Affiliates
As of April 1, 2007
Company
Main products/business line
Paid-in capital
(million)
Equity
interest (%)
Chemicals
Benzene, ethylene
Packaging products and solutions
Epoxy resin
Cling film, other household products
Aluminum paste
Specialty chemicals
Shotgun cartridges
Sale of industrial explosives, civil engineering materials
Processing and sale of plastic and fiber
Synthetic rubber
Silicone
Caustic soda, chlorine
Biaxially oriented polystyrene sheet
Polystyrene
Fertilizer
Synthetic resin, fabricated plastic products
Compounded performance resin operations
Coloring and compounding of performance resin
Sale of acrylonitrile
Sale of purging compound
Acrylonitrile, sodium cyanide
Adipic acid, microporous membrane
PMMA sheet for light-guide plates
Sale of performance resin
Coloring and compounding of performance resin
Polyacetal
High-performance HDI-based polyisocyanate
Industrial membranes and systems
Sales of performance resin
Performance resin
PPE powder
Coloring and compounding of performance resin
Coloring and compounding of styrenic resin
Sale of compounded performance resin
Sale of photopolymer, printing plate making systems
Sale of photopolymer, printing plate making systems
Compounded performance resin operations
Coloring and compounding of performance resin
Coloring and compounding of performance resin
Housing
Steel frames
Financial services
Home maintenance and remodeling
Home leasing, real estate brokerage
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
US$
US$
US$
US$
W
W
W
CNY
CNY
US$
CNY
CNY
HK$
US$
US$
B
US$
A
A
£
£
£
A
¥
¥
¥
¥
¥
3,000
2,000
490
300
250
250
175
100
132
160
1,000
1,050
1,000
1,050
5,000
305
5,000
17.8**
21.7**
16.4
1.0
50,642
1,500
5,000
18
50
32.0
149
29
20.0
46.0
35.0
140
6.3
5.0
3.4
0.3
11.1
5.3
4.3
3,250
2,820
500
250
200
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.4
75.0
50.0
50.0
50.0
45.0
35.0
29.8
100.0
100.0
100.0
100.0
100.0
100.0
60.0
100.0
51.0
50.0
100.0
100.0
100.0
100.0
70.0
100.0
25.7
100.0
100.0
100.0
65.0
65.0
65.0
100.0
100.0
100.0
100.0
100.0
Chemicals Segment
Asahi Kasei Chemicals Corp.*
Sanyo Petrochemical Co., Ltd.*
Asahi Kasei Pax Corp.*
Asahi Kasei Epoxy Co., Ltd.*
Asahi Kasei Home Products Corp.*
Asahi Kasei Metals Ltd.
Asahi Kasei Finechem Co., Ltd.
Asahi SKB Co., Ltd.
Asahi Kasei Geotechnologies Co., Ltd.
Asahi Kasei Technoplus Co., Ltd.*
Japan Elastomer Co., Ltd.*
Wacker Asahikasei Silicone Co., Ltd.
Okayama Chemical Co., Ltd.
Sundic Inc.
PS Japan Corp.
Chisso Asahi Fertilizer Co., Ltd.
Asahi Organic Chemicals Industry Co., Ltd.
Asahikasei Plastics (America) Inc.*
Asahi Kasei Plastics North America, Inc.*
Asahi Chemical Intermediates Inc.*
Sun Plastech Inc.*
Tong Suh Petrochemical Corp., Ltd.*
Asahi Kasei Chemicals Korea Co., Ltd.
Delaglas Korea Corp.
Asahikasei Plastics (Shanghai) Co., Ltd.
Asahikasei (Suzhou) Plastics
Compound Co., Ltd.
Asahi-DuPont POM (Zhangjiagang) Co., Ltd.
Asahi Kasei Performance Chemicals Corp.*
Asahi Kasei Microza (Hangzhou) Co., Ltd.*
Asahi Kasei Plastics (Hong Kong) Co., Ltd.
Asahi Kasei Plastics Singapore Pte. Ltd.*
Polyxylenol Singapore Pte. Ltd.*
Asahikasei Plastics (Thailand) Co., Ltd.
PT Nippisun Indonesia
NV Asahi Thermofil (Europe) SA*
NV Asahi Photoproducts (Europe) SA*
Asahi Photoproducts (UK) Ltd.*
AK&N (UK) Ltd.*
Asahi Thermofil (UK) Ltd.*
Asahi Thermofil (France) SA*
Homes Segment
Asahi Kasei Homes Corp.*
Asahi Kasei Jyuko Co., Ltd.*
Asahi Kasei Mortgage Corp.*
Asahi Kasei Reform Co., Ltd.*
Asahi Kasei Real Estate, Ltd.*
* Consolidated subsidiary
** Including capital reserve
70
Company
Main products/business line
Paid-in capital
(million)
Equity
interest (%)
Pharma Segment
Asahi Kasei Pharma Corp.*
Asahi Kasei Medical Co., Ltd.*
Asahi Kasei N&P Co., Ltd.*
Asahikasei Aime Co., Ltd.*
Nikkiso Asahi Kasei Medical Korea Co., Ltd.
Asahi Kasei Medical (Hangzhou) Co., Ltd.*
Asahi Kasei Medical Europe GmbH
Asahi Pharma Spain, SL
Fibers Segment
Asahi Kasei Fibers Corp.*
Kyokuyo Sangyo Co., Ltd.*
DuPont-Asahi Flash Spun Products Co., Ltd.
Solotex Corp.
Asahi Kasei Spandex America, Inc.*
Hangzhou Asahikasei Spandex Co., Ltd.*
Hangzhou Asahikasei Textiles Co., Ltd.*
Formosa Asahi Spandex Co., Ltd.
Asahi Chemical (HK) Ltd.*
Thai Asahi Kasei Spandex Co., Ltd.*
Asahi Kasei Spandex Europe GmbH*
Asahi Kasei Fibers Italy SRL
Asahi Kasei Fibers Deutschland GmbH
Electronics Materials & Devices Segment
Asahi Kasei EMD Corp.*
Asahi Kasei Microsystems Co., Ltd.*
Asahi-Schwebel Co., Ltd.*
Asahi Kasei Electronics Co., Ltd.*
AKM Semiconductor, Inc.*
Asahi Kasei EMD Korea Corp.
Asahi Kasei Electronics
Materials (Suzhou) Co., Ltd.*
Asahi Kasei EMD Taiwan Corp.
Asahi Kasei Wah Lee Hi-Tech Corp.*
Asahi-Schwebel (Taiwan) Co., Ltd.*
Construction Materials Segment
Asahi Kasei Construction Materials Corp.*
Asahi Kasei Foundation Systems Corp.*
Asahi Kasei Marinetech Co., Ltd.*
Services, Engineering and Others Segment
Asahi Research Center Co., Ltd.*
Asahi Finance Co., Ltd.*
Asahi Kasei Engineering Co., Ltd.*
Asahi Kasei Trading Co., Ltd.*
Sun Trading Co., Ltd.*
Asahi Kasei Amidas Co., Ltd.*
AJS Inc.
Asahi Kasei America, Inc.*
Asahi Kasei Business Management
(Shanghai) Co., Ltd.
* Consolidated subsidiary
** Including capital reserve
Pharmaceuticals, medical products
Medical devices, medical systems
Functional food ingredients
Contact lenses
Sale of medical devices
Hemodialyzers
Sale of medical devices, medical systems
Pharmaceuticals
Fiber, textiles
Processing and sale of fiber, textiles
Flash spun
Polytrimethylene terephthalate fiber
Spandex
Spandex
Warp-knit spandex textiles
Spandex
Promotion and marketing of fiber and textiles
Spandex
Spandex
Sale of spandex and cupro cellulosic fiber
Sale of artficial suede
Electronics materials and devices
LSIs
Glass fabric
Hall elements
Sale of LSIs
Sale of pellicles
Photosensitive dry film resist
Sale of pellicles
Photosensitive dry film resist
Glass fabric
Construction materials
Installation of piles
Sale of marine structures
Information and analysis
Investment, finance
Plant, equipment, process engineering
Sale of Asahi Kasei products
Sale of Asahi Kasei products
Employment agency, consulting
Computer software, IT systems
Business support services
Business support services
¥
¥
¥
¥
W
CNY
A
A
¥
¥
¥
¥
US$
CNY
CNY
NT$
HK$
B
A
A
A
¥
¥
¥
¥
US$
W
CNY
NT$
NT$
NT$
¥
¥
¥
¥
¥
¥
¥
¥
¥
¥
US$
US$
3,000
800
495
480
4,400
163
0.2
0.1
3,000
80
450
250
10.2
132
78
801
65
700
10.0**
3.0
0.3
3,000
50
50
50
2.9
820
181
1.0
49
326
3,000
200
30
3,000
800
400
98
94
80
800
0.1
100.0
100.0
100.0
100.0
50.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
100.0
100.0
82.5
50.0
100.0
60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
80.6
51.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
49.0
100.0
3.0
100.0
Annual Report 2007
71
Corporate Profile
As of March 31, 2007
Company Name
Asahi Kasei Corporation
Date of Establishment
May 21, 1931
Paid-in Capital
Employees
¥103,388,521,767
23,715 (Consolidated)
786 (Non-consolidated)
Asahi Kasei Group Offices
Asahi Kasei Corporation
Tokyo Head Office
1-1-2 Yurakucho, Chiyoda-ku
Tokyo 100-8440, Japan
Phone: +81-3-3507-2060
Fax: +81-3-3507-2495
Osaka Head Office
1-2-6 Dojimahama, Kita-ku
Osaka 530-8205, Japan
Phone: +81-6-6347-3111
Fax: +81-6-6347-3077
Beijing Office
Room 1408
New China Insurance Tower
No.12 Jian Guo Men Wai Avenue
Chao Yang District
Beijing 100022, China
Phone: +86-10-6569-3939
Fax: +86-10-6569-3938
Shanghai Office
Room 2321
Shanghai Central Plaza
381 Huaihai Zhong Road
Shanghai 200020, China
Phone: +86-21-6391-6111
Fax: +86-21-6391-6686
Asahi Kasei America, Inc.
535 Madison Avenue, 33rd Floor
New York, NY 10022, USA
Phone: +1-212-371-9900
Fax: +1-212-371-9050
72
Core Operating Companies
Asahi Kasei Chemicals
1-1-2 Yurakucho, Chiyoda-ku
Tokyo 100-8440, Japan
Phone: +81-3-3507-2220
Asahi Kasei Homes
1-24-1 Nishi-shinjuku, Shinjuku-ku
Tokyo 160-8345, Japan
Phone: +81-3-3344-7111
Asahi Kasei Pharma
9-1 Kanda Mitoshiro-cho, Chiyoda-ku
Tokyo 101-8481, Japan
Phone: +81-3-3259-5777
Asahi Kasei Fibers
1-2-6 Dojimahama, Kita-ku
Osaka 530-8205, Japan
Phone: +81-6-6347-3500
Asahi Kasei EMD
1-23-7 Nishi-shinjuku, Shinjuku-ku
Tokyo 160-0023, Japan
Phone: +81-3-6911-2700
Asahi Kasei Construction Materials
2-12-7 Higashi-shinbashi, Minato-ku
Tokyo 105-0021, Japan
Phone: +81-3-5473-5251
Asahi Kasei Life & Living*
1-1-2 Yurakucho, Chiyoda-ku
Tokyo 100-8440, Japan
* Merged with Asahi Kasei Chemicals on April 1, 2007.
The Asahi Kasei History
Our roots
Growth in concert with the Japanese economy
Throughout Japan’s period of post-war recovery and into the 1990s, our expansion and growth was
largely driven by diversification. As it became clear that greater selectivity of businesses was required
to revitalize operations, we moved beyond this mode of growth through diversification and entered a
phase of selective diversification and structural transformation.
Asahi Kasei’s operating profit*
Japan’s GDP
FY 1960=100
Growth through
diversification
Selective
diversification and
structural
transformation
FY 1955
1965
1975
1985
1995
2005
* Three-year moving average, non-consolidated until FY 1980.
Growth through
diversification
A concerted drive to diversify into a
broad range of fields began in the
1950s. A rapid pace of growth was
sustained by successive advances into
new fields of business, which were
developed based on combinations of
new technology with the technology of
established businesses. When each
business began to mature, its growth
would naturally tend to slow. As this
happened, there were other businesses
which were new and growing quickly,
ensuring that a high overall rate of
growth was maintained.
Nonwoven
fiber
Hollow-fiber
membranes
Spandex
Microporous
membrane
Maturing
Growth
• Regenerated
fiber
• Chemical
fertilizer
• Explosives
Incubation
• Petrochemicals
• Synthetic
fibers
• Housing
• Construction
materials
• Electronics
• Pharmaceuticals &
medical devices
1923
Ammonia
Ammonium
sulfate
1924
Rayon
1931
Bemberg™
1932
Explosives
1953/1957
Saran™ fiber
Polystyrene
1959/1962
Acrylic fiber
Acrylonitrile
1964
Nylon fiber
Synthetic
rubber
1972
Ethylene plant
1967
Hebel™
1972
Hebel Haus™
1975
Artificial kidneys
1978
Hall elements
1981
Pharmaceuticals
business unit
Dry film resist
1983
LSIs
Shitagau
Noguchi
Our roots trace to the May 1922
establishment of Asahi Kenshoku
K.K. (Asahi Fabric) and the October
1923 start of ammonia production
by the Casale process in Nobeoka,
Miyazaki Prefecture, at Nihon
Chisso Hiryou K.K. (Japan
Nitrogenous Fertilizer), founded by
Shitagau Noguchi.
Utilizing this ammonia, Japan
Bemberg Fiber Co., Ltd. began
production of Bemberg™ rayon by
the cuprammonium process in April
1931, and in May of the same year
the Nobeoka plant of Nihon Chisso
Hiryou was spun off and established
as Nobeoka Ammonia Fiber Co.,
Ltd., the formal establishment date
of Asahi Kasei.
The first decades were a time of
growth through expansion in the
production of industrial chemicals
and chemical derivatives such as
caustic soda, chlorine, fertilizers,
nitrocellulose and industrial
explosives, Bemberg™ and viscose
rayon cellulosic fibers, and flavor
enhancer. The years following
World War II began broader ranging
expansion into new fields, which has
brought Asahi Kasei to the forefront
of the Japanese chemical industry.
Selective diversification and structural transformation
The seven years from fiscal 1999 to fiscal 2005 were a time of selective
diversification and structural transformation to establish a solid basis for renewed
growth and expansion.
With the Ishin-2000 initiative of fiscal 1999 to fiscal 2002, we accelerated the
transformation to a high-earnings operational structure, and made a transition to a
high-speed management system. Performance chemicals, electronics, and medical
devices were expanded as high-earnings businesses, while viscose rayon, foods, and
liquors, businesses with lower assets efficiency, were divested or closed.
With the Ishin-05 initiative of fiscal 2003 to fiscal 2005, we advanced the
transition to a high-earnings business portfolio, and in October 2003 made a
transformation to a holding company configuration with a core operating company
in each main field of business.
Improved earnings and financial strength
0.78
0.79
0.62
0.54
D/E ratio
Profit*, ¥ billion
Net income (loss), ¥ billion
96.0
74.3
51.2
17.4
20.5
25.2
45.7
5.2
0.64
0.62
0.49
0.40
104.7
95.6
80.4
61.6
56.5
59.7
27.7
Ishin-2000
Ishin-05
(66.8)
2003
FY 1998
* Operating profit prior to amortization of actuarial differences in retirement benefits.
2001
2002
1999
2000
2004
2005
Ishin-2000
Selectivity and focus
• Focus on competitive-superiority businesses
• Fostering next-generation growth drivers
• Divestment or closure of businesses with
low assets efficiency
• Stable financial foundation
Ishin-05
Selective diversification
• Building on strengths
• Creation of cash flow
• Management speed and autonomy
Share of operating profit in four main sectors
Homes &
Construction
Materials
29%
FY 1998
FY 2005
Homes &
Construction
Materials
29%
Chemical-
based
40%
Chemical-
based
44%
Pharma
21%
Pharma
10%
Electronics Materials
& Devices
9%
Electronics Materials
& Devices
18%
Investors Information
As of April 1, 2007
Stock Listings
Stock Code
Authorized Shares
Outstanding Shares
Transfer Agent
Independent Auditors
Tokyo, Osaka, Nagoya, Fukuoka, Sapporo
3407
4,000,000,000
1,402,616,332
Sumitomo Trust & Banking Co., Ltd.
4-5-33 Kitahama, Chuo-ku
Osaka 541-8639, Japan
PricewaterhouseCoopers Aarata
Number of Shareholders
126,348
% of equity*
Largest Shareholders
Master Trust Bank of Japan, Ltd. TS ..............................................................4.99
Nippon Life Insurance Co. .............................................................................4.80
Japan Trustee Services Bank, Ltd. TS..............................................................3.56
Employees’ Stockholding ................................................................................2.65
Sumitomo Mitsui Banking Corp.....................................................................2.53
Japan Trustee Services Bank, Ltd. TS4 ...........................................................2.32
Dai-ichi Mutual Life Insurance Co. ...............................................................2.30
Tokio Marine & Nichido Fire Insurance Co., Ltd. .........................................2.22
Meiji Yasuda Life Insurance Co. .....................................................................1.76
Mizuho Corporate Bank, Ltd..........................................................................1.45
* Percentage of equity ownership after exclusion of treasury stock.
Distribution by Type of Shareholder
Distribution by Number of Shares Held
Japanese financial institutions
Foreign investors
Japanese individuals and groups
Japanese securities companies
Other Japanese companies
43.93%
27.72%
21.50%
2.05%
4.80%
100,000 or more
10,000–99,999
1,000–9,999
Less than 1,000
80.85%
6.40%
12.31%
0.44%
1,402,616,332 shares
TM: Trademark or registered trademark of Asahi Kasei Corporation, affiliated companies,
or third parties granting rights to Asahi Kasei Corporation or affiliated companies.
01
02
Annual Report 2007
73
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
7
A
S
A
H
I
K
A
S
E
I
C
O
R
P
O
R
A
T
O
N
I
Annual Report 2007
Basic Credo of the Asahi Kasei Group
Basic tenets
We the Asahi Kasei Group, through constant innovation and advances based in
science and the human intellect, will contribute to human life and human livelihood.
Guiding precepts
We will create new value, thinking and working in unison with the customer, from
the perspective of the customer.
We will respect the employee as an individual, and value teamwork and worthy
endeavor.
We will contribute to our shareholders, and to all whom we work with and serve, as
an international, high earnings enterprise.
We will strive for harmony with the natural environment and ensure the safety of our
products, operations, and activities.
We will progress in concert with society, and honor the laws and standards of society
as a good corporate citizen.
Contents
The Asahi Kasei History
.................................................................................................................. 01
Consolidated Financial Highlights
................................................................................................. 04
To Our Shareholders
....................................................................................................................... 05
Driving the Strategic Advance: Growth Action – 2010
................................................................... 06
Asahi Kasei Group Operations, Worldwide
................................................................................... 12
At a Glance
...................................................................................................................................... 14
Operating Segment
........................................................................................................................ 16
Corporate Governance
................................................................................................................... 32
Corporate Social Responsibility
...................................................................................................... 36
Directors, Corporate Auditors, Executive Officers
........................................................................ 38
Financial Section
............................................................................................................................. 39
Major Subsidiaries and Affiliates
................................................................................................... 70
Corporate Profile
............................................................................................................................ 72
Investors Information
..................................................................................................................... 73
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this annual report with respect to Asahi Kasei’s estimated future revenues and profits, strategies, tenets, financial forecasts, and
other statements that are not historical facts are forward-looking statements. Such forward-looking statements are based on management’s judgments,
predictions, and forecasts in light of information currently available and involve many potential risks and uncertainties that could cause actual results to differ
materially from the content of these statements. Accordingly, undue reliance should not be placed on such forward-looking statements.
This annual report was printed with
vegetable-based ink on recycled paper.
ASAHI KASEI CORPORATION
A copy of the Company,s annual report and further information
will be made available upon request in writing to:
Corporate Communications
Asahi Kasei Corporation
1-1-2 Yurakucho, Chiyoda-ku, Tokyo 100-8440, Japan
Phone: +81-3-3507-2060
www.asahi-kasei.co.jp
Fax: +81-3-3507-2495