ASAHI KASEI CORP Annual Report 2011

Plain-text annual report

Annual Report 2011 ASAHI KASEI CORPORATION A S A H I K A S E I C O R P O R A T O N I A N N U A L R E P O R T 2 0 1 1 *表紙e_PDFヨウ.indd c2 *表紙e_PDFヨウ.indd c2 11/12/01 10:31 11/12/01 10:31 We, the Asahi Kasei Group, contribute to life and living for people around the world. History of Business Portfolio Transformation (Sales Composition) FY 1950 FY 1965 Fibers Net sales ¥13.5 billion Chemicals Fibers Net sales ¥112.9 billion Homes & Construction Materials FY 1980 Chemicals Net sales ¥800.1 billion FY 1995 Electronics Health Care Homes & Construction Materials Net sales ¥1,210.2 billion Fibers Chemicals (cid:115)Expansion into synthetic rubber business (cid:115)Expansion into synthetic fiber business Fibers (cid:115)Start of construction materials and housing businesses (cid:115)Start of petrochemical business (cid:115)Start of medical devices business (cid:115)Start of pharmaceutical business (cid:115)Start of LSI business Chemicals *旭化成2011_ePDFヨウ.indd C2 *旭化成2011_ePDFヨウ.indd C2 11/12/01 10:14 11/12/01 10:14 Always transforming its business portfolio to meet the changing needs of the times, the Asahi Kasei Group has developed into one of Japan’s leading chemical manufacturers, with a selectively diversiﬁ ed array of businesses. With Asahi Kasei Corp. as a holding company, businesses are advanced by nine core operating companies in the four business sectors of Chemicals & Fibers, Homes & Construction Materials, Electronics, and Health Care. In anticipation of emerging changes in social structures, we will offer new value from the perspectives of “living in health and comfort” and “harmony with the natural environment,” aiming to achieve continuous growth in accordance with our Group Slogan—Creating for Tomorrow. Business sectors Holding company Asahi Kasei Chemicals & Fibers Homes & Construction Materials Core operating companies Core operating companies Core operating companies Asahi Kasei Chemicals Asahi Kasei Homes Asahi Kasei Microdevices Asahi Kasei Fibers Asahi Kasei Construction Materials Asahi Kasei E-materials Core operating companies Asahi Kasei Pharma Asahi Kasei Kuraray Medical Asahi Kasei Medical Electronics Health Care FY 2010 Net sales ¥1,598.4 billion Chemicals 46.4% Construction Materials 3.0% Others 1.0% Homes 25.6% Health Care 7.3% Fibers 6.8% Electronics 9.9% Contents 02 Consolidated Financial Highlights 04 To Our Shareholders 06 A Message from the President 11 New mid-term management initiative: “For Tomorrow 2015” 16 At a Glance 18 Operating Segments 18 Chemicals 20 Homes 22 Health Care 24 Fibers 26 Electronics 28 Construction Materials 30 Others 31 Toward Sustainable Growth 39 Financial Section 78 Major Subsidiaries and Afﬁ liates 80 Corporate Proﬁ le 81 Investors Information Asahi Kasei Annual Report 2011 1 *旭化成2011_ePDFヨウ.indd 1 *旭化成2011_ePDFヨウ.indd 1 11/12/01 10:14 11/12/01 10:14 Consolidated Financial Highlights Asahi Kasei Corporation and consolidated subsidiaries Fiscal year beginning April 1 2010 2009 ¥ billion 2008 2007 2006 US$ million* 2010 For the year Net sales Operating income Net income Comprehensive income Free cash ﬂ ows At year end Total assets Net worth† Interest-bearing debt Per share Net income Net worth‡ Cash dividends Key indexes Operating margin Payout ratio ROA ROE Net worth to total assets‡ D/E ratio‡ ¥ 1,598.4 122.9 60.3 45.1 69.3 ¥ 1,433.6 ¥ 1,553.1 ¥ 1,696.8 ¥ 1,623.8 $ 19,258 57.6 25.3 35.0 4.7 127.7 69.9 — — — 69.1 (66.9) 3.8 127.8 68.6 — 47.1 1,481 726 543 835 ¥ 1,425.9 ¥ 1,368.9 ¥ 1,379.3 ¥ 1,425.4 ¥ 1,459.9 $ 17,179 663.6 253.9 633.3 264.6 666.2 211.4 645.7 216.9 603.8 315.6 ¥ 7,995 3,059 US$* ¥ 43.11 474.59 11.00 ¥ 18.08 452.91 10.00 ¥ 3.39 431.77 10.00 ¥ 50.01 ¥ 49.00 $ 0.52 476.39 13.00 461.50 12.00 5.72 0.13 7.7% 25.5% 4.3% 9.3% 46.5% 0.38 4.0% 55.3% 1.8% 4.1% 46.3% 0.42 2.3% 295.0% 0.3% 0.7% 43.8% 0.52 7.5% 26.0% 4.8% 10.7% 46.7% 0.32 7.9% 24.5% 4.8% 11.1% 44.2% 0.34 * U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of ¥83=US$1 as described in Note 1 of Notes to Consolidated Financial Statements. † Net assets less minority interest. ‡ At ﬁ scal year end. Net Sales (¥ billion) 2,000 1,696.8 1,623.8 1,553.1 1,598.4 1,433.6 1,500 1,000 500 0 FY 06 07 08 09 10 2 Asahi Kasei Annual Report 2011 Operating Income, Operating Margin Net Income, ROE (¥ billion) (¥ billion) 127.8 127.7 (%) 15 122.9 12 7.9 7.5 7.7 57.6 4.0 35.0 2.3 06 07 08 09 10 9 6 3 0 150 120 90 60 30 0 FY 80 60 40 20 0 FY 68.6 69.9 11.1 10.7 (%) 20 60.3 15 10 9.3 5 0 25.3 4.1 4.7 0.7 Operating income, left scale Operating margin, right scale Net income, left scale ROE, right scale 06 07 08 09 10 *旭化成2011_ePDFヨウ.indd 2 *旭化成2011_ePDFヨウ.indd 2 11/12/01 10:14 11/12/01 10:14 Strategic Management Initiatives (¥ billion) 2,000 1,600 1,200 800 400 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Ishin2000 (FY 1999–2002) Selectivity and focus Disposal of negative legacies Ishin-05 (FY 2003–2005) Selective diversification Creation of cash flow Management speed and autonomy (FY 2006–2010) Business portfolio realignment for expansion and growth Strategic investment FY 2011–2015 (¥ billion) 150 120 90 60 30 0 FY (30) (60) (90) Operating income, left scale Net income (loss), left scale Net sales, right scale Total Assets, Net Worth to Total Assets Interest-Bearing Debt, D/E Ratio Free Cash Flows (¥ billion) (¥ billion) (¥ billion) 1,500 1,459.9 (%) 60 1,425.4 1,379.3 1,368.9 1,425.9 44.2 46.7 43.8 46.3 46.5 40 20 0 1,000 500 0 350 300 250 200 150 100 50 0 315.6 0.7 0.6 216.9 211.4 0.34 0.32 264.6 0.52 253.9 0.5 0.42 0.4 0.38 0.3 0.2 0.1 0.0 FY* 06 07 08 09 10 FY* 06 07 08 09 10 Total assets, left scale Net worth to total assets, right scale * At year end. Interest-bearing debt, left scale D/E ratio, right scale * At year end. 80 60 40 20 0 (20) (40) (60) (80) FY 69.1 69.3 47.1 3.8 (66.9) 06 07 08 09 10 Asahi Kasei Annual Report 2011 3 *旭化成2011_ePDFヨウ.indd 3 *旭化成2011_ePDFヨウ.indd 3 11/12/01 10:14 11/12/01 10:14 To Our Shareholders The Japanese economy was recovering in the first half of fiscal 2010 as corporate performance improved with the effect of government stimulus measures and thanks to economic recovery in emerging markets. In the second half, however, the economy was severely affected by the rapid rise of the yen, a decline in automotive sales due to the expiration of government subsidies for fuel-efficient vehicles, high feedstock prices driven by political unrest in North Africa and the Middle East, and the impact of the Great East Japan Earthquake, resulting in uncertainty regarding the economic outlook. Consolidated results of Asahi Kasei Corp. and its consolidated subsidiaries and equity-method affiliates (the Asahi Kasei Group) reflected substantially stronger performance buoyed by higher market prices and increased overseas demand in the Chemicals segment as well as favorable performance in the Homes and Electronics segments. Net sales were ¥1,598.4 billion, an increase of ¥164.8 billion (11.5%) from a year ago. Operating income increased by ¥65.3 billion (113.3%) from a year ago to ¥122.9 billion. Ordinary income increased by ¥61.9 billion (109.7%) to ¥118.2 billion. Net income increased by ¥35.0 billion (138.4%) to ¥60.3 billion. Based on these results, we paid a year-end dividend of ¥6 per share, which, combined with the interim dividend, brought the total annual dividend to ¥11 per share. This April, the Asahi Kasei Group launched a new medium-term strategic management initiative, “For Tomorrow 2015,” for the five-year period from fiscal 2011 through fiscal 2015. At the same time, we also adopted a renewal of our Group Mission and Group Vision—with “Contributing to life and living for people around the world” as our Group Mission, and “Providing new value to society by enabling living in health and comfort and harmony with the natural environment” as our Group Vision. “For Tomorrow 2015” provides a clear vision for the Asahi Kasei Group, with a focus not only on the proactive expansion of our globally competitive businesses, but also on the expansion of operations in fields related to the environment & energy, residential living, and health care from the perspectives of living in health and comfort and harmony with the natural environment. To further heighten corporate value, we will pursue growth by focusing the strengths of the Group on anticipating emerging social needs through our key strategies of “expansion of world-leading businesses” and “creation of new value for society.” August 2011 Ichiro Itoh Chairman Taketsugu Fujiwara President 4 Asahi Kasei Annual Report 2011 Ichiro Itoh, Chairman (left), Taketsugu Fujiwara, President (right) *旭化成2011_ePDFヨウ.indd 5 *旭化成2011_ePDFヨウ.indd 5 11/12/01 10:14 11/12/01 10:14 Asahi Kasei Annual Report 2011 5 A Message from the President Boldly advancing our “For Tomorrow 2015” management initiative, for the continuous enhancement of corporate value. Taketsugu Fujiwara, President The Asahi Kasei Group has launched “For Tomorrow 2015,” our new strategic management initiative for the ﬁ ve years through ﬁ scal 2015. Strategies for growth are to expand world-leading businesses and to create new value for society in environment and energy, residential living, and health care–related ﬁ elds. 6 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 6 *旭化成2011_ePDFヨウ.indd 6 11/12/01 10:14 11/12/01 10:14 Review of “Growth Action – 2010” Our previous strategic initiative, “Growth Action – 2010,” for the ﬁ ve-year period from April 2006 to March 2011, was focused on business portfolio realignment for expansion and growth with two key strategies of expanding global businesses and enhancing domestic businesses. For the expansion of global businesses, we concentrated investments on businesses with competitive superiority in global markets. In petrochemicals, we adopted decisions to build a new acrylonitrile (AN) plant in Thailand and Korea, and a new solution-polymerized styrene-butadiene rubber (S-SBR) plant in Singapore. In electronics materials, we built a new plant for Hipore™ lithium-ion battery (LIB) separator in Hyuga, and expanded capacity at our plant in Moriyama. In electronics devices, we made a large expansion of our business for electronic compasses used in smartphones and other mobile electronics, and entered the ﬁ eld of power-management LSIs by acquiring the semiconductor business of Toko, Inc. In medical-related products, we formed strategic alliances in the ﬁ eld of hemodialysis with Kawasumi Laboratories, Inc. and NxStage Medical, Inc., and expanded our bioprocess equipment business by acquiring the business of TechniKrom, Inc. We also took a number of steps for the enhancement of domestic businesses. In pharmaceuticals, we began marketing Recomodulin™ recombinant thrombomodulin and Famvir™ anti-herpes agent, and ﬁ led an application for approval for Teribone™ for osteoporosis. In homes, we developed a new framing system for next-generation energy conservation, and launched several new products for urban markets. In petrochemicals, we addressed an intermediate-term challenge related to the competitiveness of our naphtha cracker in Mizushima by establishing Nishi Nippon Ethylene LLP together with Mitsubishi Chemical. Uniﬁ ed management of our naphtha crackers began in April 2011, enabling unparalleled ﬂ exibility to adapt to changes in the operating environment. Key results of “Growth Action – 2010” Expanding global businesses Enhancing domestic businesses Globally competitive petrochemicals business (cid:129) Construction of new AN and methyl methacrylate (MMA) plants in Thailand, capacity expansion for AN in Korea (cid:129) Construction of new solution SBR plant in Singapore Electronics (cid:129) Capacity expansion for Hipore™ LIB separator (cid:129) Electronic compass business, power- management semiconductors for cell phones and smartphones (acquisition of Toko, Inc.’s semiconductor business, etc.) Health Care (cid:129) Polysulfone hollow-ﬁ ber membrane artiﬁ cial kidneys business (incl. tie-ups with Kawasumi Laboratories, Inc. and NxStage Medical, Inc.) (cid:129) Market entry in bioprocess equipment and advanced medical devices businesses Reinforcing pharmaceuticals business (cid:129) Market launch of Recomodulin™ recombinant thrombomodulin and Famvir™ anti-herpes agent, application for approval to manufacture and sell Teribone™ (teriparatide acetate) as an osteoporosis drug (cid:129) Strengthening homes business (three-story houses for urban life, peripheral businesses, etc.) Restructuring (cid:129) Uniﬁ ed management of naphtha crackers in Mizushima, Japan; closure of polyester ﬁ lament plant, etc. (¥ billion) FY 2010 results FY 2010 original targets Net sales 1,598.4 1,800 Operating income 122.9 150 Net income 60.3 80 ROE 9% ≥10% Asahi Kasei Annual Report 2011 7 *旭化成2011_ePDFヨウ.indd 7 *旭化成2011_ePDFヨウ.indd 7 11/12/01 10:14 11/12/01 10:14 Operating performance exceeded our targets in ﬁ scal 2006 and 2007, but the impact of the global ﬁ nancial crisis in autumn 2008 caused results to undershoot our targets by a wide margin in ﬁ scal 2008 and 2009. In ﬁ scal 2010, although we were unable to meet our original targets, a strong recovery of demand in emerging economies and an expansion of homes operations enabled our performance to recover to pre-crisis levels. All in all, I feel that we successfully strengthened our operational base during the ﬁ ve-year period under “Growth Action – 2010” for a new phase of development, even as we swiftly adjusted to drastic changes in the operating environment. For Tomorrow 2015 We launched a new medium-term management initiative, “For Tomorrow 2015,” in April 2011. In formulating our strategies and plans, in addition to analyzing the major global trends that will be prominent over the coming years, we took a step back and had a fresh look at our basic principles, including our Group Mission and Group Values. We realized that our proper course for advancement was to create new value by anticipating changes in society from the two perspectives of living in health and comfort and harmony with the natural environment. This is the core concept of “For Tomorrow 2015,” the naming of which is an expression of our aspiration to create new value for the future. Our two main strategies for growth are the expansion of world-leading businesses and the creation of new value for society. For the expansion of world-leading businesses, we will build on our established No. 1 and No. 2 global positions, advancing proactively in markets where we can exert leadership, with a focus on growth in developing countries. For the creation of new value for society, we will concentrate resources on the expansion of businesses related to the environment and energy, residential living, and health care, as ﬁ elds that contribute to living in health and comfort and harmony with the natural environment. Leveraging the diverse strengths of the Asahi Basic strategy and targets of “For Tomorrow 2015” The Asahi Kasei Group is creating new things for the future based on the perspectives of “living in health and comfort” and “harmony with the natural environment.” Pursuit of growth 1. Expansion of world-leading businesses 2. Creation of new value for society Promotion of businesses based on living in health and comfort and harmony with the natural environment (cid:129) Environment/energy-related (cid:129) Residential living-related (cid:129) Health care-related 8 Asahi Kasei Annual Report 2011 FY 2010 results 1,598.4 122.9 60.3 9% 7% 28% (39%) Net sales Operating income Net income ROE ROIC Overseas sales ratio (excl. Homes & Const. Mat.) (¥ billion) FY 2015 targets 2,000 200 110 ≥10% ≥7% 32% (45%) *旭化成2011_ePDFヨウ.indd 8 *旭化成2011_ePDFヨウ.indd 8 11/12/01 10:14 11/12/01 10:14 Kasei Group in these ﬁ elds, we have established three “For Tomorrow” projects which extend across our various business units, to anticipate the world’s emerging needs with unique solutions that only we can provide. To achieve these strategies we plan to invest some ¥1 trillion for the creation of new business over the ﬁ ve-year period through ﬁ scal 2015, including M&A. We are targeting consolidated net sales of ¥2 trillion and operating income of ¥200 billion in ﬁ scal 2015. Effect of the Great East Japan Earthquake To all those affected by the Great East Japan Earthquake, the Asahi Kasei Group expresses its sincere sympathy. It is our genuine hope that the afﬂ icted areas will be restored and revitalized as soon as possible. In terms of direct damage to Asahi Kasei Group assets, four of our plants were damaged by the earthquake: The Ishinomaki Plant of Asahi Kasei Power Devices Corp. in Miyagi Prefecture, the Sakai Plant and Neoma Foam Plant of Asahi Kasei Construction Materials Corp. in Ibaraki Prefecture, and the Tomobe Plant of Asahi Kasei Metals Ltd. in Ibaraki Prefecture. We established an emergency disaster response headquarters right after the quake to coordinate efforts to conﬁ rm the safety of all personnel and to minimize the effects on operations. All of the damaged plants resumed operation in May, and are now operating normally. The direct impact of the disaster on our ﬁ scal 2010 operating results was an extraordinary loss of ¥800 million. We are forecasting the effect on ﬁ scal 2011 results to be relatively minor. Fiscal 2011 Outlook Although there are some positive economic developments, such as a rebound in manufacturing activity following the temporary slowdown due to the earthquake, as well as growth in exports, the operating environment for the Asahi Kasei Group in ﬁ scal 2011 generally remains obscure, with uncertain economic prospects in the US and Europe, the persistent strength of the yen, and electric power shortages in Japan. Even in these challenging circumstances, the Asahi Kasei Group is determined to achieve growth guided by our “For Tomorrow 2015” strategies of expanding our world-leading businesses and expanding businesses related to the ﬁ elds of the environment and energy, residential living, and health care. The outlook for ﬁ scal 2011 by business sector is as follows. In Chemicals & Fibers, we are forecasting lower operating income in Chemicals as an effect of higher feedstock costs and the strengthening yen, although we believe shipments to Asian markets will remain favorable and market prices will be high, most notably for acrylonitrile. In Fibers, we are forecasting slightly lower operating income as an effect of higher feedstock costs, even as shipments are expected to grow in all major product areas. *旭化成2011_ePDFヨウ.indd 9 *旭化成2011_ePDFヨウ.indd 9 11/12/01 10:14 11/12/01 10:14 Asahi Kasei Annual Report 2011 9 In Homes & Construction Materials, we are forecasting higher operating income in Homes with deliveries of Hebel Haus™ unit homes increasing as an effect of strong growth in orders from ﬁ scal 2010. In Construction Materials, we are forecasting higher operating income thanks to cost reductions in housing and building materials operations and shipment growth in foundation systems and insulation materials operations. In Health Care, we are forecasting higher operating income with shipment growth for Recomodulin™ in pharmaceuticals and shipment growth for APS™ artiﬁ cial kidneys and Planova™ virus removal ﬁ lters in devices. In Electronics, we are forecasting higher operating income with shipment growth in each product category in both electronic materials and electronic devices. Overall, we believe operating income will be slightly lower than in the previous year, though net sales, ordinary income, and net income will all be higher. Return to Shareholders The annual dividend for ﬁ scal 2010 was raised by ¥1 per share to ¥11, reﬂ ecting the improvement in ﬁ nancial results. For ﬁ scal 2011, we believe further improved results will enable us to raise it by another ¥2 to ¥13 per share. Our basic policy is to strive to continuously increase dividends through earnings growth while maintaining an appropriate cash reserve based on consolidated income. Our cash reserve will be used as a source of funds required in order to achieve future earnings growth by expanding operations, both through investments in established businesses and through strategic investments and new business development expenditures in ﬁ elds related to the environment and energy, residential living, and health care as the strategic focus of “For Tomorrow 2015.” We aim to continuously increase dividends by expanding earnings under “For Tomorrow 2015,” with a basic standard for payout ratio of 30%. Dividends per Share, Payout Ratio (¥) 15 12 9 6 3 0 13 12 295.0 13 (plan) 10 10 11 55.3 (%) 300 120 90 60 30 24.5 26.0 25.5 26.4 (forecast) 0 FY 06 07 08 09 10 11 Dividends per share, left scale Payout ratio, right scale 10 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 10 *旭化成2011_ePDFヨウ.indd 10 11/12/01 10:15 11/12/01 10:15 Asahi Kasei Group’s new mid-term management initiative: “For Tomorrow 2015” (ﬁ scal 2011– 2015) Offering new value based on “living in health and comfort” and “harmony with the natural environment” in anticipation of changing social needs. Continuously enhancing our corporate value in accordance with our Group Slogan: Creating for Tomorrow. (¥ billion) Operating income Net income (FY 2011–2015) Long-term investment ¥1 trillion Net sales ¥1,598.4 billion Net sales ¥2 trillion Operating income ¥200 billion Operating income ¥122.9 billion Net income 60.3 billion Net income ¥110 billion Net sales ¥2.5–3.0 trillion Operating income over ¥250 billion Net income over¥140 billion 300 250 200 150 100 50 0 FY 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 target 2017 2018 2019 2020 target ROE ROIC Overseas sales ratio (excl. Homes & Const. Mat.) %9 %7 %28 39 % ) ( %10 %7 %32 %45 ) ( 1 2 3 4 Expansion of world-leading businesses Creation of new value for society Reformation of corporate systems Performance plan by business sector & long-term investment plan Asahi Kasei Annual Report 2011 11 *旭化成2011_ePDFヨウ.indd 11 *旭化成2011_ePDFヨウ.indd 11 11/12/01 10:15 11/12/01 10:15 1 Expansion of world-leading businesses We will expand our global No. 1 and No. 2 businesses with a focus on growth in emerging markets. For other businesses that are able to attain a leading position by utilizing our technology and market strengths, we will proactively expand as a global market leader. Overseas sales ratio of world-leading businesses %62 %69 FY 2010 FY 2015 Acrylonitrile (AN) Based on our technological strengths of having the world’s highest-yielding catalyst and the world’s ﬁ rst propane process, we plan to gain the global No. 1 position through expansion centered in Asia. • Completion of a new plant in Thailand (start-up in 2011) • Capacity expansion in Korea (start-up in 2013) • Establishment of a joint venture to implement a project to produce AN in Saudi Arabia Share of production capacity in Asia (Asahi Kasei estimate) %25 %40 FY 2010 FY 2015 Solution SBR (S-SBR) Proﬁ t* (¥ billion) 120 100 80 60 40 20 0 FY Net sales ¥620 billion Net sales ¥430 billion 2010 2015 target * Operating income of each business plus equity in earnings of AN afﬁ liates. Asahi Kasei production capacity for AN (thousand tons/year) 1,500 1,400 1,200 Middle East Korea expansion Thailand 950 750 1,000 500 0 FY 2010 2011 2013 2015 S-SBR is an essential material for fuel-efﬁ cient tires, with particularly strong demand growth in Asia. Asahi Kasei is proactively expanding capacity for S-SBR which enables the production of tires that provide greater fuel efﬁ ciency while maintaining safety performance. Asahi Kasei production capacity for S-SBR used in fuel-efﬁ cient tires (thousand tons/year) 300 • Construction of a new S-SBR plant in Singapore (start-up in 2013) • Capacity expansion at the Singapore plant (start-up in 2015) Share of production capacity (Asahi Kasei estimate) %18 %26 FY 2010 FY 2015 Other world-leading businesses • Electronics: Hipore™ lithium-ion battery separator, LSIs, dry ﬁ lm photoresist, pellicles • Health Care: Artiﬁ cial kidneys (dialyzers), Planova™ virus removal ﬁ lters • Fibers: Roica™ elastic polyurethane ﬁ lament 12 Asahi Kasei Annual Report 2011 200 100 0 FY 2010 2013 2015 2020 Second overseas site First overseas site (Phase 2) First overseas site (Phase 1) Domestic capacity expansion *旭化成2011_ePDFヨウ.indd 12 *旭化成2011_ePDFヨウ.indd 12 11/12/01 10:15 11/12/01 10:15 2 Creation of new value for society We are concentrating resources on ﬁ elds new projects—“Environment & Energy for related to the environment & energy, residential Tomorrow,” “Residential Living for Tomorrow,” living, and health care, to expand businesses and “Health Care for Tomorrow”—have been which meet emerging social needs for living in launched to create new system-based, health and comfort and harmony with the combined-unit businesses, making the most of natural environment. To advance into these the Asahi Kasei Group’s diverse competencies. ﬁ elds across different business units, three Fields of focus Environment & Energy Residential Living Health Care Basis of established businesses Chemicals & Fibers Electronics Homes & Construction Materials Health Care Combined-unit projects Production process technology, materials/ processing technology Production process technology, materials/ processing technology Production process technology, materials/ processing technology Energy-conserving devices, battery materials Insulation, highly durable construction materials Sensors, energy- conserving devices, battery materials Unit homes, multi- dwelling homes, peripheral businesses Environment & Energy for Tomorrow Residential Living for Tomorrow Medical equipment applications Rental homes for the elderly Pharmaceuticals, medical-related devices & systems Health Care for Tomorrow Net sales (¥ billion) 2,000 1,500 1,000 500 0 FY 2,000.0 1,598.4 2010 2015 target Operating income (¥ billion) 200 200.0 Others Health Care Residential Living Environment & Energy 150 100 50 0 FY Others Health Care Residential Living Environment & Energy 122.9 2010 2015 target Asahi Kasei Annual Report 2011 13 *旭化成2011_ePDFヨウ.indd 13 *旭化成2011_ePDFヨウ.indd 13 11/12/01 10:15 11/12/01 10:15 Environment & Energy Pushing diverse technology to tackle environmental challenges Strategy for major businesses Creation of new businesses through combined-unit projects (cid:129) Hipore™ lithium-ion battery (LIB) separator In addition to No. 1 position in LIBs for electronics, establish- ing ﬁ rm lead in technology and market for automotive LIBs. (cid:129) Sensors, power-saving LSIs Greater focus on infrastructure and automotive applications in addition to consumer electronics. Expansion focused on global markets in addition to Japan. (cid:129) Neoma™ phenolic foam panels Helping society to conserve energy by supplying materials with world-leading insulation performance. (cid:129) Water treatment/membrane business Accelerating the development of business in China with growing markets for water treatment. Based on our group technologies with competitive superiority, the Environment & Energy for Tomorrow project will advance the development of innovative materials and devices as well as the establishment of systems for application at each stage from power generation to energy storage and consumption—including cutting-edge battery materials, lithium ion capacitor modules and systems, next- generation energy-saving devices, and LED materials. Residential Living Providing comfortable living to more customers, more quickly Strategy for major businesses Creation of new businesses through combined-unit projects (cid:129) Houses, apartments Pursuing superior structural technology and lifestyle innovation to anticipate emerging needs in three-story and two-generation urban homes. Developing unique apartment buildings for the elderly, single women, pet owners, etc. (cid:129) Real estate (condominium development, brokerage, subleasing) Maximizing the utilization of land value through consensus- building among diverse interested parties, etc. (cid:129) Remodeling Providing greater satisfaction to Hebel Haus™ owners through remodeling and renovation aligned to lifestyle changes. Not only selling homes in the mature urban market, but providing innovative lifestyle proposals that add new value for society, for instance by showcasing our services in concept houses. Expansion of our housing business by emphasizing such elements as healthy and comfortable living environments, interpersonal bonds, energy and resource conservation, and maximum utilization of land value. The Residential Living for Tomorrow project will bring together technologies from a fresh perspective, including those of the Asahi Kasei Group and those of generally available products. In addition, we will adopt innovative technologies, products, and systems from our Health Care for Tomorrow project and Environment & Energy for Tomorrow project for practical application in residential settings. Health Care Providing unique products and technologies for a lively society of health and longevity Strategy for major businesses Creation of new businesses through combined-unit projects (cid:129) Pharmaceuticals Focusing on the expansion of Recomodulin™ anticoagulant, launch and expansion of Teribone™ as an osteoporosis drug, reinforcement of pipeline by in-licensing new drugs, and strengthening of clinical development capability in the US. (cid:129) Blood puriﬁ cation (artiﬁ cial kidneys, apheresis) Accelerating full coverage of Europe, North America, and emerging markets, while enhancing cost competitiveness and product performance. (cid:129) Bioprocess-related business Leading the market for process equipment and media for biologics through the provision of distinctive membrane modules and the expansion of sales together with biopro- cess equipment. We seek to contribute to the advancement and widespread dissemination of Japanese medical technology as well as the establishment of Japanese society as a model for healthy longevity, through proactive collaboration with outside organizations, combining industry and academia and combining medicine and engineering. While utilizing the technology and know-how of the Asahi Kasei Group, we will execute M&As and form alliances to establish the platforms on which business expansion will be based, as we take on the three challenges of “heightening emergency and critical care,” “utilizing medical IT to support healthy life,” and “applying cell therapy and regenerative medicine.” 14 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 14 *旭化成2011_ePDFヨウ.indd 14 11/12/01 10:15 11/12/01 10:15 3 4 Reformation of corporate systems Our October 2003 transformation to a holding resource policies, management control, and company conﬁ guration gave the core operating resource allocation. companies autonomous and independent Our previous new business development management, resulting in improved cash ﬂ ow strategy was based on market-focused R&D and greater management speed. Nevertheless, performed by the relevant core operating we recognized the need to draw together the company, and other R&D performed by the power of the Asahi Kasei Group for the creation holding company. With the start of the new of new value for society amidst the dramatically mid-term initiative, we have adopted a new changing economic climate. We therefore conﬁ guration in which key projects that extend reviewed a number of our corporate structures across different business units are performed and systems, including for the creation of new either as “For Tomorrow” projects or by our businesses, global business expansion, human Central R&D Laboratories. Performance plan by business sector & long-term investment plan Targets under “For Tomorrow 2015” include billion and operating income of ¥15 billion in consolidated net sales of ¥2 trillion and ﬁ scal 2015. Long-term investments of some operating income of ¥200 billion in ﬁ scal 2015. ¥1 trillion will be made over the ﬁ ve-year period For our new combined-unit “For Tomorrow” through ﬁ scal 2015 to achieve these targets. projects, we are aiming for net sales of ¥100 Net sales Operating income FY 2010 FY 2015 target FY 2010 FY 2015 target (¥ billion) Long-term investment plan Chemicals & Fibers 851.0 880.0 Homes & Const. Mat. 456.6 570.0 68.6 38.6 14.3 7.0 75.0 50.0 40.0 25.0 Chemicals & Fibers Intermittent expansion of established businesses, establishment of new businesses, M&A Long-term investment of some ¥1 trillion Homes & Const. Mat. Electronics 158.3 250.0 116.4 180.0 Electronics Health Care Others Subtotal “For Tomorrow” projects 16.0 20.0 (5.5) (5.0) 1,598.4 1,900.0 122.9 185.0 100.0 (FY 2020) approx. 300 15.0 (FY 2020) approx. 50 Health Care Total 1,598.4 2,000.0 122.9 200.0 Asahi Kasei Annual Report 2011 15 *旭化成2011_ePDFヨウ.indd 15 *旭化成2011_ePDFヨウ.indd 15 11/12/01 10:15 11/12/01 10:15 At a Glance Operating segments Core operating companies, main businesses/products Major consolidated subsidiaries Chemicals Asahi Kasei Chemicals Corp. Homes Health Care Chemicals and derivative products: Ammonia, nitric acid, caustic soda, acrylonitrile (AN), styrene, adipic acid, methyl methacrylate (MMA), and acrylic resin. Polymer products: Stylac™-AS styrene-acrylonitrile, Stylac™-ABS acrylonitrile- butadiene-styrene, Tenac™ polyacetal, Xyron™ modiﬁ ed polyphenylene ether (mPPE), Leona™ nylon 66, Suntec™ polyethylene (PE), synthetic rubber and elastomer, polystyrene. Specialty products: Coating materials, latex, Ceolus™ microcrystalline cellulose, explosives, explosion-bonded metal clad, Microza™ UF and MF membranes and systems, ion-exchange membranes and electrolysis systems, Saran Wrap™ cling ﬁ lm, Ziploc™ storage bags, plastic ﬁ lm, sheet, and foam. Asahi Kasei Homes Corp. Hebel Haus™ houses, Hebel Maison™ apartments, condominiums, residential land development, remodeling, real estate brokerage, home ﬁ nancing. Asahi Kasei Pharma Corp. Asahi Kasei Kuraray Medical Co., Ltd. Asahi Kasei Medical Co., Ltd. Pharmaceutical-related: Pharmaceuticals including Recomodulin™, Elcitonin™, Flivas™, Toledomin™, and Bredinin™, Lucica™ GA-L glycated albumin assay kit, L-series enriched liquid diets. Medical device–related: APS™ polysulfone-membrane artiﬁ cial kidneys (dialyzers), therapeutic apheresis devices, Planova™ virus removal ﬁ lters, Sepacell™ leukocyte reduction ﬁ lters. Fibers Asahi Kasei Fibers Corp. Roica™ elastic polyurethane ﬁ lament, Bemberg™ regenerated cellulose ﬁ ber, nonwovens including Eltas™ spunbond and Lamous™ artiﬁ cial suede, Leona™ nylon 66 ﬁ lament. (cid:129) Asahi Kasei Pax Corp. (cid:129) Asahi Kasei Home Products Corp. (cid:129) Japan Elastomer Co., Ltd. (cid:129) PS Japan Corp. (cid:129) Tong Suh Petrochemical Corp., Ltd. (cid:129) Asahi Kasei Plastics Singapore Pte. Ltd. (cid:129) Asahikasei Plastics (America) Inc. (cid:129) Asahi Kasei Performance Chemicals Corp. (cid:129) Asahi Kasei Microza (Hangzhou) Co., Ltd. (cid:129) Asahi Kasei Jyuko Co., Ltd. (cid:129) Asahi Kasei Mortgage Corp. (cid:129) Asahi Kasei Reform Co., Ltd. (cid:129) Asahi Kasei Real Estate, Ltd. (cid:129) Asahi Kasei Home Construction Corp. (cid:129) Med-Tech Inc. (cid:129) Asahi Kasei Bioprocess, Inc. (cid:129) Asahi Kasei Medical (Hangzhou) Co., Ltd. (cid:129) Kyokuyo Sangyo Co., Ltd. (cid:129) Thai Asahi Kasei Spandex Co., Ltd. (cid:129) Hangzhou Asahikasei Spandex Co., Ltd. (cid:129) Asahi Kasei Spandex Europe GmbH (cid:129) Asahi Kasei Spandex America, Inc. (cid:129) Asahi Chemical (HK) Ltd. (cid:129) Hangzhou Asahikasei Textiles Co., Ltd. Electronics Asahi Kasei Microdevices Corp. Asahi Kasei E-materials Corp. Electronic devices: Mixed-signal LSIs, Hall elements. Electronic materials: Hipore™ Li-ion battery separator, photomask pellicles, APR™ photosensitive resin and printing plate making systems, Pimel™ photosensitive polyimide precursor, Sunfort™ dry ﬁ lm photoresist, glass fabric for printed wiring boards. (cid:129) Asahi Kasei Power Devices Corp. (cid:129) AKM Semiconductor, Inc. (cid:129) Asahi Kasei Electronics Materials (Suzhou) Co., Ltd. (cid:129) Asahi-Schwebel (Taiwan) Co., Ltd. (cid:129) Asahi Kasei Wah Lee Hi-Tech Corp. (cid:129) Asahi Photoproducts (Europe) SA/NV Construction Materials Asahi Kasei Construction Materials Corp. Hebel™ autoclaved aerated concrete (AAC) panels, Neoma™ foam insulation panels, piles and foundation systems, steel-frame structural components. (cid:129) Asahi Kasei Foundation Systems Corp. (cid:129) Asahi Kasei Extech Corp. Others Plant engineering, environmental engineering, research and analysis, personnel stafﬁ ng and placement. (cid:129) Asahi Research Center Co., Ltd. (cid:129) Asahi Finance Co., Ltd. (cid:129) Asahi Kasei Engineering Co., Ltd. (cid:129) Asahi Kasei Amidas Co., Ltd. 16 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 16 *旭化成2011_ePDFヨウ.indd 16 11/12/01 10:15 11/12/01 10:15 Fiscal 2010 composition of sales, operating income Net sales (¥ billion) Operating income (¥ billion), operating margin (%) Net sales 46.4% Operating income 49.5% Net sales 25.6% Operating income 28.0% Net sales 7.3% Operating income 5.4% Net sales 6.8% Operating income 3.2% Net sales 9.9% Operating income 11.0% Net sales 3.0% Operating income 1.6% Net sales 1.0% Operating income 1.3% 800 600 400 200 0 FY 500 400 300 200 100 0 FY 150 100 50 0 FY 150 100 50 0 FY 200 150 100 50 0 FY 80 60 40 20 0 FY 40 30 20 10 0 FY 689.3 622.1 742.2 08 09 10 409.9 389.7 409.2 08 09 10 119.6 113.2 116.4 08 09 10 116.4 101.2 108.8 08 09 10 142.7 158.3 129.7 08 09 10 60.9 47.0 47.4 80 60 40 20 0 (20) FY 40 30 20 10 0 FY 15 12 9 6 3 0 FY 6 4 2 0 (2) (4) FY 15 12 9 6 3 0 FY 3 2 1 0 64.4 8.7 20.0 15.0 10.0 5.0 0.0 -5.0 26.1 4.2 -0.9 (6.5) 08 09 Operating income (loss), left scale 10 Operating margin, right scale 36.5 8.9 25.3 6.5 21.9 5.3 08 09 10 Operating income, left scale Operating margin, right scale 12.0 10.1 08 3.5 4.0 09 7.0 6.1 10 Operating income, left scale Operating margin, right scale 4.2 3.9 -1.3 (1.5) -2.7 (2.8) 10.0 7.5 5.0 2.5 0.0 15.0 12.0 9.0 6.0 3.0 0.0 6.0 4.0 2.0 0.0 -2.0 -4.0 08 09 Operating income (loss), left scale 10 Operating margin, right scale 14.3 9.0 5.6 7.3 5.1 7.2 08 09 10 Operating income, left scale Operating margin, right scale 10.0 8.0 6.0 4.0 2.0 0.0 6.0 1.7 2.8 4.4 4.0 2.1 2.6 1.2 09 10 08 09 10 FY 08 Operating income, left scale Operating margin, right scale 27.3 17.6 16.0 08 09 10 6 4 2 0 FY 5.6 20.6 08 10.3 1.8 09 10.7 10.0 1.7 10 0.0 2.0 0.0 30.0 20.0 Operating income, left scale Operating margin, right scale Asahi Kasei Annual Report 2011 17 *旭化成2011_ePDFヨウ.indd 17 *旭化成2011_ePDFヨウ.indd 17 11/12/01 10:15 11/12/01 10:15 Operating Segments Chemicals We are pursuing opportunities in growing markets that make the most of our strengths and optimizing our operational conﬁ guration in line with the changing management climate, with a focus on enabling “living in health and comfort” and “harmony with the natural environment” throughout our broad range of business operations. Masaki Sakamoto President, Asahi Kasei Chemicals Net sales ¥742.2 billion vs. ﬁ scal 2009 +19.3% Operating income vs. ﬁ scal 2009 ¥64.4 billion +147.0% Financial Highlights (¥ billion) Fiscal year beginning April 1 2008 2009 2010 2011 forecast Net sales Overseas sales ratio Operating income (loss) Operating margin R&D expenditure R&D expenditure as % of net sales Capital expenditure Depreciation and amortization ¥689.3 38.7% (6.5) -0.9% 14.6 2.0% 36.3 32.2 ¥622.1 39.2% ¥742.2 41.0% 26.1 4.2% 14.0 2.3% 27.6 32.4 64.4 8.7% 15.5 2.1% 23.2 31.9 ¥800.0 —% 54.5 6.8% — —% 30.0 — “Growth Action – 2010” recap (cid:129) New acrylonitrile (AN) and methyl methacrylate (MMA) plants in Thailand, capacity expansion for AN in Korea. (cid:129) New solution-polymerized styrene-butadiene rubber (S-SBR) plant in Singapore. (cid:129) New plant in China for assembly of Microza™ ﬁ ltration modules for large-scale water treatment. (cid:129) Capacity expansion for ion-exchange membranes and for synthetic rubber and elastomer. (cid:129) Establishment of a limited liability partnership (LLP) with Mitsubishi Chemical for integrated and uniﬁ ed management of naphtha cracker operations in Mizushima, Japan. (cid:129) Structural improvement of fertilizer and industrial explosives operations through consolidation with other producers. “For Tomorrow 2015” strategies Aiming for leading position in globally competitive businesses (cid:129) Acrylonitrile: Serving global demand growth with the construction of cost- competitive plants, aiming for No. 1 position in the world. (cid:129) S-SBR: Proactive capacity expansion, aiming for No. 1 position in Asia in the growing fuel-efﬁ cient tire market. Business expansion in growing emerging markets, particularly in Asia (cid:129) Performance plastics: Enhancing established position in target markets in Asia. (cid:129) Water treatment/membrane businesses: Further reinforcing membrane business, expanding operations in China. (cid:129) Duranate™ HDI-based polyisocyanate: Expanding business in Chinese market. (cid:129) Ceolus™ microcrystalline cellulose: Major expansion in emerging markets. Creation of new businesses and business ﬁ elds as next strategic pillars (cid:129) Expansion in healthcare areas (Ceolus™ microcrystalline cellulose, acetonitrile, active pharmaceutical ingredients, etc.) (cid:129) Establishment and expansion of new businesses in promising markets. 18 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 18 *旭化成2011_ePDFヨウ.indd 18 11/12/01 10:15 11/12/01 10:15 design, the development of modiﬁ ed polyphenylene ether (mPPE) expandable beads with high ﬂ ame retardance and high heat resistance, as well as the development of new composite materials using interface control technology. Computer-aided engineering (CAE) technology we developed in-house has become an essential element of our R&D capability, and is playing an increasingly signiﬁ cant role in new market development and joint development with customers. In specialty products, low-cost, safe, and low-waste processes to manufacture active pharmaceutical ingredients (APIs) are under development, utilizing our rich base in process development technology. In the ﬁ eld of membrane separation, the focus is on the development of membranes for the reduction of NOx emissions from diesel engines as well as for bacteria separation in bioprocess applications. The creation and development of new products and businesses are advancing through the accelerated development of materials for renewable energy and energy conservation, combining technologies not only within the Asahi Kasei Group but also with outside companies. Industries Corp. (SABIC) and Mitsubishi Corp. to establish a joint venture for a project to produce AN in Saudi Arabia. Fiscal 2010 Review Major Investments Sales increased by ¥120.1 billion (19.3%) from a year ago to ¥742.2 billion, and operating income increased by ¥38.3 billion (147.0%) to ¥64.4 billion. Operating income in chemicals and derivative products operations increased as market prices for acrylonitrile and adipic acid remained high, buoyed by favorable demand in Asia. Operating income in polymer products operations increased as demand recovery in automotive and electronics applications led to greater shipments. Operating income in specialty products operations increased as home-use products such as Saran Wrap™ as well as functional additives and coating materials performed well. Fiscal 2011 Outlook We forecast sales to increase and operating income to decrease during ﬁ scal 2011. Although sales of chemicals and derivative products to Asia are forecasted to remain favorable with high market prices, margins are expected to deteriorate due to higher feedstock prices. Highlights Decision to construct a new solution SBR plant in Singapore Asahi Kasei Chemicals reached a decision to construct a new plant to produce solution-polymerized styrene- butadiene rubber (S-SBR) in Singapore. With tightening environmental regulations and heightening environmental awareness, demand for high-performance tires which provide improved fuel efﬁ ciency is growing throughout the world. Under construction in ﬁ scal 2010 (cid:129) New power generation facility for use with wood biomass fuel (cid:129) New AN and MMA plants in Thailand R&D Throughout the Chemicals segment, R&D focused on the environment, resources, and energy is advanced to provide new value to society through the enhancement of our established core technologies and the acquisition of new technologies. In chemicals and derivative products, we are advancing the veriﬁ cation of two new process technologies to enable feedstock diversiﬁ cation: the “E-ﬂ ex” process for highly efﬁ cient production of propylene using C2 fractions or bioethanol as feedstock, and the “BB-ﬂ ex” process to produce butadiene from butane. Studies on their commercialization are in progress. Current projects slated for completion within 1–2 years include the development of new processes to produce diphenyl carbonate (DPC) and isocyanate using CO2 as feedstock. In polymer products, current projects include the development of polyamide with ultra-high heat resistance, high rigidity, and excellent moldability using novel molecular Demand for S-SBR which enables the production of tires that provide greater fuel efﬁ ciency while maintaining safety performance is therefore growing briskly. With its new S-SBR plant in Singapore, Asahi Kasei Chemicals will meet both the growing demand and heightening customer requirements. Capacity expansion for acrylonitrile in Korea In January 2011, Asahi Kasei Chemicals made a decision to construct a large new plant in Korea to expand its production capacity for acrylonitrile (AN), an intermediate chemical for plastic used in consumer electronics. Global demand growth for AN is forecasted to continue, and in April 2011 Asahi Kasei Chemicals also signed an agreement with Saudi Basic Passenger car tire AN plant in Korea Asahi Kasei Annual Report 2011 19 *旭化成2011_ePDFヨウ.indd 19 *旭化成2011_ePDFヨウ.indd 19 11/12/01 10:15 11/12/01 10:15 Homes The order-built homes business will be expanded with dominant competitiveness as the differentiated market leader in the ﬁ eld of urban unit homes. Housing-related operations will be developed as an array of businesses, building and utilizing their own distinctive strengths. Masahito Hirai President, Asahi Kasei Homes Net sales ¥409.2 billion vs. ﬁ scal 2009 +5.0% Operating income ¥36.5 billion vs. ﬁ scal 2009 +43.9% Financial Highlights (¥ billion) Fiscal year beginning April 1 2008 2009 2010 2011 forecast Net sales Overseas sales ratio Operating income Operating margin R&D expenditure R&D expenditure as % of net sales Capital expenditure Depreciation and amortization ¥409.9 ¥389.7 ¥409.2 ¥445.0 —% 21.9 5.3% 2.5 0.6% 7.0 3.4 —% 25.3 6.5% 2.1 0.5% 6.0 4.3 —% 36.5 8.9% 2.0 0.5% 6.3 4.3 —% 42.0 9.4% — —% 8.0 — “Growth Action – 2010” recap (cid:129) Launch of new products: Fine Hebel Haus™, Smart Hebel Haus™, Hebel Haus™ homes featuring electric power generation, Hebel Haus™ Frex “G3”, Hebel Haus™ “i_co_i”, Hebel Haus™ RONDO, Hebel Haus™ with lower living room ﬂ oor, Hebel Haus™ Frex “monado”, etc. (cid:129) Increased promotion with Hebel Haus™ “street-corner showrooms.” (cid:129) Establishment of new housing R&D center. (cid:129) Development of a new framing system for next-generation energy conservation performance. (cid:129) Shared procurement with other home builders. “For Tomorrow 2015” strategies Our focus is on enhancing three-story houses and other products which incorporate innovative lifestyle proposals in order to secure the leading position in the urban homes market. We aim provide comfortable living to as many customers as possible, as quickly as possible, based on our commitment to providing fulﬁ llment in living in a mature urban setting. Houses, apartments (cid:129) Establishment of No. 1 position as a differentiated market leader in our competitive ﬁ elds. (cid:129) Promotion of community-speciﬁ c proposals to increase market share. (cid:129) Expansion of multi-dwelling homes business. Real estate (cid:129) Reinforcing condominium business based on obtaining accord in exchange of equivalent value. (cid:129) Maximizing utilization of land value through brokerage-related operations. (cid:129) Heightening capability to secure tenants. Expansion of housing-related operations (cid:129) Expansion of remodeling and renovation work. (cid:129) Enhancement of the energy-conservation product lineup. 20 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 20 *旭化成2011_ePDFヨウ.indd 20 11/12/01 10:15 11/12/01 10:15 Fiscal 2010 Review R&D Sales increased by ¥19.5 billion (5.0%) from a year ago to ¥409.2 billion and operating income increased by ¥11.1 billion (43.9%) to ¥36.5 billion. Orders for order-built homes increased by ¥47.7 billion to ¥354.5 billion. Operating income in order-built and pre- built homes operations increased with a rise in orders resulting in greater deliveries of both Hebel Haus™ unit homes and Hebel Maison™ apartment buildings, and with continuous cost reductions. Although our in-house mortgage securitization business was impacted by an increase in the proportion of customers utilizing the “Flat 35” ﬁ xed-rate mortgage, remodeling and real estate businesses performed well and operating income in housing-related operations was level with a year ago. Fiscal 2011 Outlook With increased deliveries of order-built homes buoyed by a rise in orders, sales and operating income are forecasted to increase in ﬁ scal 2011. Evaluation/simulation technology is being enhanced to enable customers to more intuitively appreciate the real-world effects of variations and modiﬁ cations, ensuring that the design of each home is optimized to match each customer’s preferences. 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 efﬁ ciency and environmental compatibility in homes optimized for health and comfort. R&D is focused on enhancing core technologies. Shelter technology brings greater safety and security through earthquake resistance, seismic damping, base isolation, and ﬁ re 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 energy conservation and reduced CO2 emissions. Lifestyle technology brings greater comfort, convenience, and satisfaction. Sales Trends (Asahi Kasei Homes non-consolidated) Orders Received (Asahi Kasei Homes non-consolidated) (¥ billion) 400 300 200 100 0 FY 347.5 1.0 28.9 317.6 338.7 1.5 29.9 322.5 1.0 24.5 297.1 307.3 332.4 2.5 27.8 302.1 316.4 1.9 32.1 282.3 06 07 08 09 10 Others Pre-built homes Order-built homes 362.0 2.5 25.0 334.5 11 Forecast (¥ billion) 400 300 303.4 306.1 291.1 306.9 354.5 360.0 200 100 0 FY 06 07 08 09 10 11 Forecast Highlights Successive launch of products incorporating innovative lifestyle proposals Asahi Kasei Homes launched several new products that incorporate innovative lifestyle proposals, based on the results of research on urban lifestyle conducted by our Lifestyle R&D Laboratory. In April 2010, we launched Hebel Haus™ “i_co_i” two- generation homes with features to facilitate raising grandchildren. Hebel Haus™ RONDO two-generation homes integrating rental units were launched in July with features to adapt to changing family structure, and Hebel Haus™ with lower living room ﬂ oor for greater comfort was launched in August. Launch of Hebel Haus™ Frex “monado” Asahi Kasei Homes launched Hebel Haus™ Frex “monado” enhanced three-story houses for urban life. Improvements to the frame structure enable the creation of large, open living spaces within conﬁ ned urban plots, which have many space constraints such as limited area and narrow frontage. Hebel Haus™ i_co_i two-generation home Hebel Haus™ Frex “monado” Asahi Kasei Annual Report 2011 21 *旭化成2011_ePDFヨウ.indd 21 *旭化成2011_ePDFヨウ.indd 21 11/12/01 10:15 11/12/01 10:15 Health Care We are focused on providing the world with innovative new drugs that address unmet medical needs, as a specialized global pharmaceutical company. Toshio Asano President, Asahi Kasei Pharma We are growing as a comprehensive leader in blood-related healthcare systems by providing optimal treatment and preventive therapy based on our unique experience and know-how in blood puriﬁ cation. Yutaka Shibata President, Asahi Kasei Kuraray Medical & Asahi Kasei Medical Net sales ¥116.4 billion vs. ﬁ scal 2009 +2.8% Operating income ¥7.0 billion vs. ﬁ scal 2009 +76.1% Financial Highlights (¥ billion) Fiscal year beginning April 1 2008 2009 2010 2011 forecast Net sales Overseas sales ratio Operating income Operating margin R&D expenditure ¥119.6 24.4% 12.0 10.1% 16.4 ¥113.2 22.3% 4.0 3.5% 18.4 ¥116.4 22.9% 7.0 6.1% 16.5 R&D expenditure as % of net sales 13.7% 16.3% 14.2% Capital expenditure Depreciation and amortization 31.6 10.3 9.2 12.2 7.4 11.4 ¥124.0 —% 8.0 6.5% — —% 14.0 — “Growth Action – 2010” recap Pharmaceutical-related: (cid:129) Market launch of two new products, Recomodulin™ anticoagulant for disseminated intravascular coagulation and Famvir™ anti-herpes agent. (cid:129) Application for approval to manufacture and sell Teribone™ teriparatide acetate as an osteoporosis drug in Japan. (cid:129) Acquisition of exclusive rights to develop and sell zoledronic acid as an osteoporosis drug in Japan. (cid:129) Acquisition of exclusive rights to develop and market XIAFLEX® collagenase clostridium histolyticum in Japan. (cid:129) Divestment of sales and R&D operations for contact lenses and related products. Medical device–related: (cid:129) Capacity expansion for artiﬁ cial kidneys and Sepacell™ leukocyte reduction ﬁ lters. (cid:129) New plant for therapeutic apheresis devices. (cid:129) Capacity expansion for Planova™ virus removal ﬁ lters in Oita, Japan. (cid:129) Integration of dialyzer business with Kuraray Medical Inc. (cid:129) Launch of Planova™ BioEX virus removal ﬁ lters and BioOptimal™ MF-SL microﬁ lters for bioprocessing. (cid:129) Acquisition of all shares of Med-tech Inc., making it a wholly owned subsidiary. (cid:129) Establishment of sales subsidiaries in China, Taiwan, and Korea. (cid:129) Expansion of polysulfone hollow-ﬁ ber membrane artiﬁ cial kidneys business (incl. tie- ups with Kawasumi Laboratories, Inc. and US-based NxStage Medical, Inc.) (cid:129) Market entry in bioprocess equipment business (acquisition of business from US-based TechniKrom, Inc.) Note: XIAFLEX is a registered trademark of Auxilium Pharmaceuticals, Inc. 22 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 22 *旭化成2011_ePDFヨウ.indd 22 11/12/01 10:15 11/12/01 10:15 “For Tomorrow 2015” strategies Pharmaceutical-related: In Japan, the primary objective is to increase earnings by fostering the growth of Recomodulin™ and Teribone™ as high-selling drugs. R&D-related investments will be increased to further reinforce the new drug pipeline, and clinical development will be accelerated. In our main therapeutic ﬁ eld of orthopedics, we are advancing the development of drugs related to locomotive syndrome, including drugs for osteoporosis and rheumatoid arthritis, in order to build a world-leading position in this area. Overseas, we are entering a new phase as a specialized global pharmaceutical company through the advancement of the clinical development of Recomodulin™ in Europe and the US, as well as reinforcement of our capabilities for clinical development and marketing in East Asia. In diagnostics, we are reinforcing efforts to further expand the use of Lucica™ GA-L glycated albumin assay kit in Japan and to obtain approval for it overseas, while advancing the development of infectious disease diagnostic kits. Medical device–related: We are shifting the focus of our business from individual devices for extracorporeal circulation to blood-related healthcare systems, spanning from disease treatment to preventive medicine and blood- based risk-factor analysis/diagnosis, while further developing business in the ﬁ elds of regenerative medicine and the nervous system. Our objective is to achieve a leading position in blood-related healthcare systems, establishing a new value chain of optimal treatment and preventive therapy that leverages our extensive experience and know-how in blood-related healthcare. We will also utilize the comprehensive strengths of the Asahi Kasei Group, increase emphasis on personnel development, and enhance management speed and agility. Fiscal 2010 Review Sales increased by ¥3.2 billion (2.8%) from a year ago to ¥116.4 billion and operating income increased by ¥3.0 billion (76.1%) to ¥7.0 billion. Operating income in pharmaceuticals operations increased as Recomodulin™ recombinant thrombomodulin made a substantial contribution to results, and as shipments of the Flivas™ therapy for benign prostatic hyperplasia increased although NHI price revisions had a negative impact on product prices. Operating income in devices-related operations increased with greater shipments of APS™ polysulfone- membrane artiﬁ cial kidneys and of therapeutic apheresis devices, although the strong yen had an impact on performance in each product category. Fiscal 2011 Outlook The overall sales and operating income for the segment are forecasted to increase. In pharmaceuticals operations, shipments of Recomodulin™ recombinant thrombomodulin are forecasted to increase, but we expect an impact from increased R&D expenses as well as higher selling, general and administrative expenses due to an increase in medical representatives. In devices-related operations, shipments of APS™ polysulfone-membrane artiﬁ cial kidneys and Planova™ virus removal ﬁ lters are forecasted to increase. Major Investments Completed in ﬁ scal 2010 (cid:129) New plant for therapeutic apheresis devices (cid:129) New plant for Planova™ virus removal ﬁ lters in Oita, Japan Under construction in ﬁ scal 2010 (cid:129) Medical Material Laboratory R&D In pharmaceuticals, we are focused on addressing unmet medical needs, which are increasing together with maturing markets and the aging population, particularly in the ﬁ elds of orthopedics and urology. To swiftly identify such needs and provide solutions, we are not only searching for new subjects for R&D, but also pursuing continuous proprietary technological innovation and enhanced collaboration with world-leading technologies. In medical devices and related systems, we are further advancing technological developments in hemodialysis, therapeutic apheresis, leukocyte reduction, and virus removal, while also focusing on next-generation ﬁ elds of research including regenerative medicine utilizing autohemotherapy. Pharmaceutical Product Pipeline Development stage Code name, form, generic name Classiﬁ cations Indication Remarks (as of May 2011) Pending approval MN-10-T, injection, teriparatide acetate Synthetic human para- thyroid hormone (PTH) Osteoporosis New chemical entity Phase III AK-120, oral, famciclovir Antiviral Herpes simplex Additional indication Phase II Phase II (overseas) AT-877, oral, fasudil hydrochloride hydrate Rho-kinase inhibitor Pulmonary arterial hypertension Additional indication, new dosage form AK150, injection, pentosan polysulfate sodium Anti-osteoarthritic Osteoarthritis New chemical entity ART-123, injection, recombinant thrombomodulin alpha Recombinant human thrombomodulin Sepsis with disseminated intravascular coagulation New biologic AK106 Anti-inﬂ ammatory Rheumatoid arthritis New chemical entity Highlights Completion of a new plant for therapeutic apheresis devices To meet forecasted global demand growth, Asahi Kasei Kuraray Medical constructed a new plant in Oita, Japan, for greater efﬁ ciency and productivity in manufacturing therapeutic apheresis devices. Production equipment located in several separate production sections within the existing plant was transferred to the new plant and incorporated into integrated production lines featuring the latest technology. Construction was completed and manufacturing at the new plant began in September 2010. As the world’s pioneer in therapeutic apheresis, New plant for therapeutic apheresis devices we are accelerating the global growth of this business, pursuing new possibilities for the treatment of autoimmune disorders and intractable diseases which are difﬁ cult to treat with conventional therapies, while fulﬁ lling our responsibility for reliable quality and stable supply as the world-leading manufacturer. Application for approval to manu- facture and sell Teribone™ in Japan Asahi Kasei Pharma ﬁ led an application for approval to manufacture and sell Teribone™ (generic name: teriparatide acetate) as an osteoporosis drug in Japan in October 2010. With approval and market launch in 2011, we believe Teribone™ will make a signiﬁ cant contribution to the treatment of osteoporosis, a disease which affects a greater number of people as the population ages. Asahi Kasei Annual Report 2011 23 *旭化成2011_ePDFヨウ.indd 23 *旭化成2011_ePDFヨウ.indd 23 11/12/01 10:15 11/12/01 10:15 Fibers We are proactively expanding unique businesses with growth potential as well as our world-leading businesses, based on the concepts of “harmony with the natural environment” and “living in health and comfort.” Hidefumi Takai President, Asahi Kasei Fibers Net sales ¥108.8 billion vs. ﬁ scal 2009 +7.5% Operating income vs. ﬁ scal 2009 ¥4.2 billion Financial Highlights – % (¥ billion) Fiscal year beginning April 1 2008 2009 2010 2011 forecast Net sales Overseas sales ratio Operating income (loss) Operating margin R&D expenditure R&D expenditure as % of net sales Capital expenditure Depreciation and amortization ¥116.4 31.2% (1.5) -1.3% 3.9 3.8% 12.4 5.2 ¥101.2 32.7% (2.8) -2.7% 3.8 3.8% 4.6 7.7 ¥108.8 34.4% 4.2 3.9% 3.2 2.9% 3.7 7.0 ¥113.0 —% 4.0 3.5% — —% 4.5 — “Growth Action – 2010” recap (cid:129) Capacity expansion for Roica™ spandex in Thailand. (cid:129) Establishment of a spunbond manufacturing company in Thailand. (cid:129) Establishment of a new technology and R&D center. (cid:129) Launch of Precisé™ spunbond nonwovens and dECOb™ environmentally efﬁ cient ﬁ lter bag. (cid:129) Closure of polyester ﬁ lament plant and withdrawal from the ﬁ eld of monoﬁ lament. (cid:129) Withdrawal from PTT ﬁ ber operations. “For Tomorrow 2015” strategies Proactive expansion of unique businesses with growth potential as well as world- leading businesses, in accordance with the two perspectives of “harmony with the natural environment” and “living in health and comfort.” Leveraging our strengths as a materials specialist in collaborative projects for the creation of new businesses. Roica™ elastic polyurethane (cid:129) Development and commercialization of new high-function yarns. (cid:129) Securing a presence in growing Asian markets, with the plant in Thailand as a key manufacturing base. Nonwovens (cid:129) Spunbond: Earnings growth in Asia with polypropylene spunbond for hygiene materials produced at plant in Thailand, expansion of Precisé™ spunbond nonwovens. (cid:129) Bemliese™ cupro cellulosic nonwoven: Securing stable earnings in the IT ﬁ eld in Asia, expansion in the medical and cosmetics ﬁ elds. (cid:129) Lamous™ artiﬁ cial suede: Steady expansion in Japanese, Europe, and US markets for car seat applications, development of new applications in industrial ﬁ elds. (cid:129) Eutec™ oil-water separation ﬁ lter: Establishing niche market leadership in oil-water separation, expansion in applications with microﬁ ltration, as well as in the solid-liquid and gas- liquid separation ﬁ elds. Bemberg™ regenerated cellulose (cid:129) Expansion in overseas markets for lining, particularly in Europe and China. (cid:129) Development and expansion of non- lining applications, including outerwear, innerwear, and beddings in Europe and the US. (cid:129) Production processes innovation. Leona™ nylon 66 ﬁ lament (cid:129) Stable earnings in tire cord applications. (cid:129) Expansion in air-bag applications. 24 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 24 *旭化成2011_ePDFヨウ.indd 24 11/12/01 10:15 11/12/01 10:15 increase, but we anticipate an impact from high feedstock prices. R&D In cooperation with other companies within the Asahi Kasei Group as well as with outside companies, we are enriching and enhancing our R&D functions to achieve results more quickly. Development of high- value added grades which meet market needs is advancing for Roica™ polyurethane, Bemberg™ regenerated cellulose, Leona™ nylon 66, and various nonwovens. In addition, the creation of new cellulose-related business and the development of new nonwovens are advancing in accordance with the concepts of “living in health and comfort” and “harmony with the natural environment.” Fiscal 2010 Review Sales increased by ¥7.6 billion (7.5%) from a year ago to ¥108.8 billion and operating income increased by ¥7.0 billion to ¥4.2 billion. Operations throughout the segment were impacted by the strong yen and high feedstock costs. Operating income from Bemberg™ regenerated cellulose increased with substantially greater shipments in non- lining applications such as innerwear and outerwear. Operating income from Roica™ elastic polyurethane ﬁ lament increased with growing sales of functional yarns, from nonwovens with growing shipments in disposable diaper applications, and from Leona™ nylon 66 ﬁ lament with growing shipments in automotive applications. Fiscal 2011 Outlook We forecast sales to increase and operating income to decrease slightly during ﬁ scal 2011. Shipments of Roica™, spunbond, and Leona™ ﬁ lament are expected to Highlights Launch of Pulshut™ – a thin, lightweight noise suppression sheet Asahi Kasei Fibers launched Pulshut™ as a high-performance noise suppression sheet in August 2010. In recent years, the evolution of electronics products has advanced rapidly, with greater miniaturization and higher performance in terms of speed and capacity, making it increasingly important to suppress the electromagnetic noise generated by the individual components within such products. Using Precisé™, a specialty nonwoven fabric made with innovative technology, the thin, lightweight Pulshut™ provides a high noise suppression effect across a wide range of frequencies. Its adoption in a wide variety of electronic devices is forthcoming. Establishment of a spunbond manufacturing company in Thailand Asahi Kasei Fibers made a decision in February 2011 to establish Asahi Kasei Spunbond (Thailand) Co., Ltd. as a subsidiary for the manufacture and sale of spunbond nonwovens in Thailand. With two spunbond production sites in Japan (Moriyama, Shiga, and Nobeoka, Miyazaki), Asahi Kasei Fibers has mainly focused on the Japanese market. As China, ASEAN, and other Asian markets continue their remarkable economic development, overseas demand for hygiene materials, particularly for disposable diapers, is forecasted to continue to increase signiﬁ cantly. Asahi Kasei Fibers will study the expansion of spunbond production capacity in Thailand in line with further market growth. Pulshut™ – a thin, lightweight noise suppression sheet Asahi Kasei Annual Report 2011 25 *旭化成2011_ePDFヨウ.indd 25 *旭化成2011_ePDFヨウ.indd 25 11/12/01 10:15 11/12/01 10:15 Electronics Making the most of our unique technology, we are building our position as a leading supplier of electronic components, which continues to develop and supply category- leading products to the global market, and expand business for all applications based on the trust we have earned from customers throughout the world. Hideki Kobori President, Asahi Kasei Microdevices We are focused on materials that lead to reduced environmental burdens—both materials for energy storage and power generation devices, and electronics-related materials that enable energy conservation— based on our corporate commitment of “contributing to sustainable growth and prosperity, using chemical technology for green electronic materials, enhancing the environmental performance of electronic products.” Makoto Konosu President, Asahi Kasei E-materials 26 Asahi Kasei Annual Report 2011 Net sales ¥158.3 billion vs. ﬁ scal 2009 +11.0% Operating income ¥14.3 billion vs. ﬁ scal 2009 +96.9% Financial Highlights (¥ billion) Fiscal year beginning April 1 2008 2009 2010 2011 forecast Net sales Overseas sales ratio Operating income Operating margin R&D expenditure ¥129.7 43.4% 7.3 5.6% 18.4 ¥142.7 46.5% 7.2 5.1% 18.4 ¥158.3 50.3% 14.3 9.0% 18.4 R&D expenditure as % of net sales 20.1% 12.9% 11.6% Capital expenditure Depreciation and amortization 31.8 19.8 22.8 23.6 20.3 23.9 ¥169.0 —% 15.5 9.2% — —% 16.0 — “Growth Action – 2010” recap Electronic devices: (cid:129) Expansion of LSI production capacity. (cid:129) Incorporation of local marketing subsid- iaries in Korea, Europe, China and Taiwan. (cid:129) Full-scale entry into power management LSI business by acquisition of semicon- ductor business from Toko, Inc. (cid:129) Launch and expansion of electronic compass business. Electronic materials: (cid:129) Capacity expansion for Hipore™ Li-ion battery separator: plant expansion in Moriyama, Shiga, Japan, and new plant in Hyuga, Miyazaki, Japan. (cid:129) Capacity expansion for dry ﬁ lm photo- resist in China. (cid:129) Capacity expansion for Pimel™ semi- conductor buffer coat. (cid:129) New production line for photomask pellicles for 10G LCD panels. (cid:129) Establishment of pellicle sales subsid- iary in Taiwan, market launch of new pellicle compatible with ArF exposure and capacity expansion for semicon- ductor pellicles. (cid:129) Strategic alliance in optical materials with Luminit, LLC. “For Tomorrow 2015” strategies Electronic devices: Building our position as a leading suppli- er of electronic components, which con- tinues to develop and supply category- leading products to the global electronic devices market, with a strategic product lineup that makes most of our unique strength in having both silicon semicon- ductor technology led by world-leading mixed-signal LSI technology, and com- pound semiconductor technology gained over many years of experience with mag- netic sensors. Advancing well-balanced business expansion while maintaining high earnings, through the development and provision of high-quality products with new functions as required in the infrastructure, automotive, and industrial ﬁ elds, in addition to our established applications in the ﬁ eld of consumer electronics, including mobile terminal devices. Electronic materials: Reducing environmental burdens with “energy materials” for energy storage and power generation devices, and with electronics-related materials that enable energy conservation—based on our cor- porate commitment of “contributing to sustainable growth and prosperity, using chemical technology for green electronic materials, enhancing the environmental performance of electronic products.” Providing products that support living in health and comfort, including semicon- ductor process materials, interconnecting and insulation materials for electronics, and materials for information printing and display. *旭化成2011_ePDFヨウ.indd 26 *旭化成2011_ePDFヨウ.indd 26 11/12/01 10:15 11/12/01 10:15 conservation, reduced environmental burdens, and living in health and comfort is advancing based on our core technologies for polymer design and synthesis, membrane formation, and precision surface processing. Environment and energy–related materials such as high-performance lithium- ion battery materials for both portable electronics and automotive applications, and materials for solar cells are currently under development, as are new materials which correspond to leading technological trends for ﬁ ner patterning in both semiconductors and printed wiring boards. Fiscal 2010 Review Sales increased by ¥15.6 billion (11.0%) from a year ago to ¥158.3 billion and operating income increased by ¥7.0 billion (96.9%) to ¥14.3 billion. Operating income in electronic devices operations increased as growth in shipments of LSIs for smartphones and other portable devices, particularly overseas, outweighed a sharp impact from the strong yen. In electronic materials operations, although shipments grew, most notably in Hipore™ Li-ion battery (LIB) separator, operating income decreased slightly with the impact of declining product prices and high feedstock costs. Fiscal 2011 Outlook We forecast an increase in both sales and operating income during ﬁ scal 2011. In electronic materials, shipments are projected to increase, but we expect an impact from increased depreciation as a result of capacity expansions and from higher feedstock prices. In electronic devices, shipments of LSIs for smartphones and other portable devices are expected to increase, but we anticipate an impact from the strong yen. Major Investments Completed in ﬁ scal 2010 (cid:129) New plant for Hipore™ LIB separator in Hyuga Under construction in ﬁ scal 2010 (cid:129) Capacity expansion for Hipore™ LIB separator in Hyuga R&D Swift R&D to keep pace with the rapid technology innovation of the electronics industry is directed toward the creation of products that meet the emerging needs and demanding requirements which are identiﬁ ed through close interaction with customers. In electronic devices, advanced development of high-performance products is based on both compound semiconductor process technology gained through development of high-sensitivity magnetic sensors and mixed-signal LSI technology. Development of new electronic materials which contribute to energy and resource Highlights Development of world’s ﬁ rst* surface mount current sensor Asahi Kasei Microdevices developed the world’s ﬁ rst and smallest-class surface mount current sensor with a magnetic core. Current sensors have been mainly used in control systems for industrial equipment. Miniaturization enables their use in a much broader range of applications, including consumer-oriented uses. It is expected that this new current sensor will lead to signiﬁ cantly enhanced energy conservation not only by enabling real- time monitoring of home appliances in smart grid and smart home systems, but also by enabling higher-precision and higher-efﬁ ciency control of power consumption in energy-saving home appliances. * Asahi Kasei Microdevices estimate Capacity expansion for Hipore™ Asahi Kasei E-materials adopted decisions in April and June 2010 to increase production capacity for Hipore™ LIB separator at its plant in Hyuga, Miyazaki, Japan. In addition to the mainstream applications for notebook computers and mobile phones, Hipore™ is now being used in hybrid electric and all-electric vehicles worldwide. The company has been advancing a program of strategic expansion of its Hipore™ separator business to meet this growing demand in the LIB market. World’s ﬁ rst* surface mount current sensor Hipore™ LIB separator Asahi Kasei Annual Report 2011 27 *旭化成2011_ePDFヨウ.indd 27 *旭化成2011_ePDFヨウ.indd 27 11/12/01 10:15 11/12/01 10:15 Construction Materials We are focused on the development and provision of products that provide safety, security, and comfort, in our core areas of AAC-related products, foundation systems, insulation materials, and structural components. Hiroshi Kobayashi President, Asahi Kasei Construction Materials Net sales ¥47.4 billion vs. ﬁ scal 2009 +0.8% Operating income ¥2.1 billion vs. ﬁ scal 2009 +74.0% Financial Highlights Fiscal year beginning April 1 Net sales Overseas sales ratio Operating income Operating margin R&D expenditure R&D expenditure as % of net sales Capital expenditure Depreciation and amortization 2008 ¥60.9 —% 1.7 2.8% 1.0 1.7% 2.4 3.6 2009 ¥47.0 —% 1.2 2.6% 1.1 2.3% 1.2 3.3 (¥ billion) 2010 2011 forecast ¥47.4 —% 2.1 4.4% 1.1 2.4% 1.7 2.8 ¥54.0 —% 3.5 6.5% — —% 4.5 — “Growth Action – 2010” recap (cid:129) Launch of Jupii™ ﬂ oor insulation panels for wood-frame houses. (cid:129) Start of handling of “Triangle A” ﬁ re insurance product for wood-frame homes built with AAC walls. (cid:129) Launch of DynaWing™ pre-cast concrete piling system featuring minimal soil disposal and high load-bearing capacity. (cid:129) Launch of CSV™ soil improvement system for small-scale architecture, featuring minimal soil disposal and semi-dry application. (cid:129) Launch of Freedonut™ system for reinforcement of openings to pass plumbing and wiring through I-beams. (cid:129) Opening of “Construction Materials Gallery” to showcase products. (cid:129) Reoptimization of AAC production infrastructure: closure of Shiraoi plant and one of two production lines in Hozumi. 28 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 28 *旭化成2011_ePDFヨウ.indd 28 11/12/01 10:15 11/12/01 10:15 “For Tomorrow 2015” strategies 1. Business expansion in ﬁ elds of competitive superiority Management resources are focused on businesses where we can exert our strengths in markets which are growing in step with ongoing changes, such as heightening environmental awareness and a society-wide transformation to longer-lasting, more sustainable infrastructure. 2. Transformation to solution-oriented business A transformation of business is advancing to effect a shift from simply selling products to a more solution-oriented conﬁ guration encompassing peripheral ﬁ elds and including systems and combination products. AAC-related: Enhancing cost competitiveness while pursuing further efﬁ ciency, in order to maintain stable proﬁ tability. Strengthening business for Hebel Powerboard™ AAC panels for wood-frame houses by expanding related businesses including painting. Utilizing our superior technology to reinforce the exterior renovation business targeting the extensive number of houses built with our AAC panels. Foundation systems: Expanding business by further reinforcement in ﬁ elds other than homes and buildings, including transportation infrastructure and seismic reinforcement, centered on competitive Eazet™ and ATT Column™ small-diameter steel-pipe piling systems. Insulation materials: Expanding business centered on our two phenolic foam insulation panel products, Neoma™ and Jupii™, whose competitiveness is further increasing with the growing adoption of next-generation standards for insulation performance in energy-efﬁ cient homes. Structural materials: Expanding business by reinforcing the product lineup with both new products and new variations of current products. Fiscal 2010 Review Sales increased by ¥0.4 billion (0.8%) from a year ago to ¥47.4 billion and operating income increased by ¥0.9 billion (74.0%) to ¥2.1 billion. Although operating costs in housing and building materials operations were reduced, operating income decreased with fewer shipments of Hebel™ autoclaved aerated concrete panels. Operating income in foundation system operations increased with growing shipments of Eazet™ and ATT Column™ small-scale piles in new applications. Operating income in insulation materials operations increased as shipments of Neoma™ phenolic foam insulation panels grew substantially, supported by government policy such as the eco-point program for energy conservation. Operating income in Highlights Launch of Jupii™ ﬂ oor insulation panels for wood- frame houses Asahi Kasei Construction Materials launched Jupii™ high-performance phenolic foam insulation panels for ﬂ oors of wood-frame houses in October 2010. The new panels enable wood-frame houses to meet the performance standards speciﬁ ed in preferential policies for energy efﬁ cient structural materials operations increased with growing shipments of the BasePack™ earthquake-resistant column base attachment system. performance foundation systems, as well as on the proactive development of new products in peripheral areas. Fiscal 2011 Outlook We forecast an increase in sales and operating income during this ﬁ scal year, thanks to continuing cost reductions in housing and building materials, an expansion of housing materials business, and increased shipments in foundation systems and insulation materials. R&D R&D is focused on strengthening the operational base for established businesses of AAC, phenolic foam insulation, and high- homes, including for long-life quality housing and the eco-point system for housing, without any structural modiﬁ cation. The company is focused on making further growth in insulation materials, positioning Jupii™ as a new ﬂ agship product together with its Neoma™ foam panels. Jupii™ phenolic foam insulation panels for wood-frame houses Asahi Kasei Annual Report 2011 29 *旭化成2011_ePDFヨウ.indd 29 *旭化成2011_ePDFヨウ.indd 29 11/12/01 10:15 11/12/01 10:15 Others Net sales ¥16.0 billion Operating income ¥1.7 billion vs. ﬁ scal 2009 –9.2% vs. ﬁ scal 2009 –6.4% (¥ billion) 2010 2011 forecast ¥16.0 7.5% 1.7 ¥19.0 —% 2.0 Financial Highlights Fiscal year beginning April 1 Net sales Overseas sales ratio Operating income Operating margin R&D expenditure R&D expenditure as % of net sales Capital expenditure Depreciation and amortization 2008 ¥27.3 2009 ¥17.6 20.9% 10.9% 5.6 1.8 20.6% 10.3% 10.7% 10.5% 0.09 0.3% 1.1 0.8 0.21 1.2% 0.9 0.8 0.28 1.7% 1.0 0.9 — —% 0.5 — Fiscal 2010 Review R&D Engineering developments in progress include technology to inspect for internal pipe corrosion as well as a joint project for the development of high-performance inspection equipment. Sales decreased by ¥1.6 billion (9.2%) from a year ago to ¥16.0 billion and operating income decreased by ¥0.1 billion (6.4%) to ¥1.7 billion. Operating income in engineering operations decreased as a curtailment of capital investments led to a decline in orders received. Fiscal 2011 Outlook Overall sales and operating income are forecasted to increase in ﬁ scal 2011 thanks to ﬁ rm performance in engineering operations. 30 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 30 *旭化成2011_ePDFヨウ.indd 30 11/12/01 10:15 11/12/01 10:15 Toward Sustainable Growth Contents 32 Corporate Governance 36 Corporate Social Responsibility 38 Directors, Corporate Auditors, Executive Ofﬁ cers *旭化成2011_ePDFヨウ.indd 31 *旭化成2011_ePDFヨウ.indd 31 11/12/01 10:15 11/12/01 10:15 Asahi Kasei Annual Report 2011 31 Corporate Governance Basic Concept for Corporate Governance We believe that constant effort to increase the efﬁ ciency and transparency of management is essential for continuous enhancement of the corporate value of the Asahi Kasei Group. One major reform for this purpose was the adoption of the structure of a holding company and core operating companies, since which time the Asahi Kasei Group has exercised corporate governance for the Group based on the following two principles. 1) Based on the structure of a holding company and core operating companies, the core operating companies are responsible for business execution and the holding company is responsible for oversight. 2) The Group Approval Authority Regulations are positioned as the highest ranking among all the regulations governing the overall Group for decision- making in executing business. Authority is distributed to each organ of the holding company and the core operating companies in accordance with the degree of inﬂ uence on management. In this context, corporate governance is further enhanced by implementing various measures, including the election of multiple Outside Directors and the institutionalization of Internal Auditing and Internal Control. We will continue to advance measures to heighten corporate governance for the further enhancement of corporate value. Structures Related to Management Decision-Making, Execution, and Oversight Management Conﬁ guration (as of March 31, 2011) Holding company Asahi Kasei Board of Corporate Auditors Shareholders Internal Auditing Internal Control Board of Directors Group Advisory Committee Chairman President Strategic Management Council CSR Council Group staff functions (cid:115)(cid:0)(cid:51)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:73)(cid:67)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:6)(cid:0)(cid:65)(cid:78)(cid:65)(cid:76)(cid:89)(cid:83)(cid:73)(cid:83) (cid:115)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:6)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84) (cid:115)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:83)(cid:0)(cid:65)(cid:68)(cid:77)(cid:73)(cid:78)(cid:73)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78) New Business Development Executive Officer for Chemicals & Fibers Executive Officer for Homes & Construction Materials Executive Officer for Electronics Executive Officer for Health Care Core operating companies Asahi Kasei Fibers Asahi Kasei Chemicals Fiber, textiles Chemicals Asahi Kasei Construction Materials Construction materials Asahi Kasei Homes Asahi Kasei Microdevices Asahi Kasei E-materials Asahi Kasei Pharma Housing Electronic devices Electronic materials Pharmaceuticals Asahi Kasei Kuraray Medical Medical devices Asahi Kasei Medical Medical-related products/ systems Chemicals & Fibers business sector Homes & Construction Materials business sector Electronics business sector Health Care business sector 32 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 32 *旭化成2011_ePDFヨウ.indd 32 11/12/01 10:15 11/12/01 10:15 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. Group Advisory Committee The advisory body to the holding company’s Board of Directors. Meets twice per year. Corporate Governance System An outline of the corporate governance system of the Asahi Kasei Group is as follows. 1) Asahi Kasei Corporation is a holding company and has elected to take the form of a company with a Board of Corporate Auditors. 2) Two Outside Directors were elected in June 2007 to enable oversight of the management of the Asahi Kasei Group based on their wealth of experience and broad range of insight, for the further strengthening of the management oversight function of the Board of Directors. Furthermore, an additional Outside Director was installed in June 2008 and the Company currently has three Outside Directors out of ten Directors. 3) The company has a Group Advisory Committee as an advisory body to the Board of Directors, enabling the receipt of various advice and recommendations of knowledgeable persons from outside the Company for the beneﬁ t of the overall management of the Asahi Kasei Group. 4) Internal Auditing serves as the corporate organ for internal audits of the execution of duties in the Asahi Kasei Group in accordance with basic corporate regulations for internal audits. Results of the internal audits conducted by each group staff function are also reported to Internal Auditing, so that all information regarding results of internal audits in the Asahi Kasei Group are centralized at Internal Auditing. Board of Corporate Auditors Comprises four Corporate Auditors, two of whom are Outside Corporate Auditors. Corporate Auditors exchange views, deliberate, and decide on substantive matters relating to auditing. Meets at least once per quarter. We employ an Executive Ofﬁ cer system, under which we have ten Directors, including three Outside Directors, and sixteen Executive Ofﬁ cers, including six who concurrently serve as Director, as well as a Corporate Auditor system, under which we have four Corporate Auditors, including two Outside Corporate Auditors. (as of June 29, 2011) To help ensure that Directors and Corporate Auditors may perform their duties to the fullest extent, in accordance with Article 426 Paragraph 1 of the Corporation Law our Articles of Incorporation provide for the indemniﬁ cation of Directors (including former Directors) and Corporate Auditors (including former Corporate Auditors) from liability stipulated in Article 423 Paragraph 1 of the Corporation Law, through resolution of the Board of Directors, within limitations set forth by law or ordinance. 5) In accordance with the audit policy adopted by the Board of Corporate Auditors, each Corporate Auditor audits Directors in the discharge of their duties by attending Board of Directors’ meetings and examining business performance. Corporate Auditors of the Company and Corporate Auditors of the core operating companies exchange information on a regular basis. Our Corporate Auditors Ofﬁ ce has multiple dedicated personnel who, independently from Directors, support the Corporate Auditors in their duties. 6) PricewaterhouseCoopers Aarata performs ﬁ nancial audits of the Company and the core operating companies in accordance with the Corporation Law and the Financial Instruments and Exchange Act. 7) Company standards stipulate that as a general rule a Director is not to concurrently serve as Director at four or more other companies whose shares are stock- market listed. 8) The Company has a performance-linked remuneration system as stated above, and remuneration of Directors is determined by the Board of Directors within the range stipulated therein. Given the above, the current corporate governance system of the Asahi Kasei Group is considered to be optimum within the formulation of a holding company/ core operating company conﬁ guration and a company with a Board of Corporate Auditors. Asahi Kasei Annual Report 2011 33 *旭化成2011_ePDFヨウ.indd 33 *旭化成2011_ePDFヨウ.indd 33 11/12/01 10:15 11/12/01 10:15 Audits 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 Ofﬁ ce provides staff to support Corporate Auditors in their duties. PricewaterhouseCoopers Aarata is contracted as the Independent Auditors to perform ﬁ nancial audits in accordance with the Companies Act and Financial Instruments and Exchange Act. Partners of the Independent Auditors designated to perform the audit for ﬁ scal 2010 were Mr. Katsunori Sasayama and Mr. Keiichi Otsuka. The Independent Auditors form a team of assistants for performance of the audit in accordance with its audit plan. The team mainly comprises certiﬁ ed public accountants and junior accountants, and also includes certiﬁ ed 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 conﬁ rm 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 ﬁ nancial audit of Asahi Kasei each quarter and each ﬁ scal year. Adoption of Shareholder Rights Plan The Asahi Kasei Group has established a basic corporate policy concerning the nature of parties who would control the company’s ﬁ nancial and operational decisions. The adoption of a Shareholder Rights Plan, comprising measures in response to large acquisition of shares to prevent control of the company’s ﬁ nancial and operational decisions by inappropriate parties in light of this basic corporate policy, was approved at the Ordinary General Meeting of Shareholders held in June 2008. Furthermore, renewal of the Shareholder Rights Plan was approved at the Ordinary General Meeting of Shareholders held in June 2011. The purpose of the Shareholder Rights Plan is to secure and heighten the company’s corporate value and the common interest of shareholders in the event of a purchase of 20% or more of the company’s shares, by ensuring necessary and sufﬁ cient information and time for shareholders to make proper judgment, by obtaining an opportunity to negotiate with the purchasing party, and otherwise. Please refer to the relevant news release at http://www.asahi-kasei.co.jp/asahi/en/news/2011/ e110511.html for more details. 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 it or an equivalent standard applies to all majority-held subsidiaries the world over. Protection of Personal Information Asahi Kasei is committed to the proper handling and use of personal information, in accordance with our basic policy. Education and training for all employees, including the distribution of an information security handbook which covers issues related to personal information protection, is monitored by the Corporate Ethics Committee. 34 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 34 *旭化成2011_ePDFヨウ.indd 34 11/12/01 10:15 11/12/01 10:15 Information Disclosure Policy The Asahi Kasei Group has established an Information Disclosure Policy, enhancing the management and disclosure of corporate information to obtain greater corporate value. Corporate regulations for information disclosure based on this policy were adopted on July 1, 2008. The basic principles of the Information Disclosure Policy are shown below. fundamental element of our Corporate Ethics – Basic Policy. We proactively engage in information disclosure and communication based on these basic concepts. (cid:129) Corporate information is disclosed fairly, impartially, accurately, and as swiftly as possible to stakeholders such as customers, suppliers, shareholders, investors, employees, and local communities, and to the general public. (cid:129) With our Group Mission of “contributing to life and living for people around the world,” we hold “progressing in concert with society, and honoring the laws and standards of society as a good corporate citizen” as a Guiding Precept. “Ensuring transparency” is a (cid:129) In our communication with stakeholders and with the general public, we strive for dialog which fosters a relationship of trust, promoting greater understanding of the Asahi Kasei Group and its operations, to increase brand strength and heighten corporate value. Compliance Monitoring by the Corporate Ethics Committee Monitoring of compliance and oversight of education and training for compliance throughout the Asahi Kasei Group are performed by the Corporate Ethics Committee, which was formed in July 1998. Where shortcomings are discovered, the committee formulates and implements measures for improvement. The committee discusses the training programs implemented at each group company, measures for prevention of sexual harassment, environmental countermeasures, the state of compliance with laws and regulations including personal information protection law, and operation of the Compliance Hotline. Risk Management The Asahi Kasei Group has a Risk Management Committee under its CSR Council to enhance the risk management system for prevention of operational crises and minimization of the effects should a crisis occur. Our Basic Risk Management Regulations, which were established by the Board of Directors in March 2007 (effective April 1, 2007), provide clear guidelines to heighten the capability and effectiveness for risk management and emergency response throughout the Asahi Kasei Group. In June 2010, the Risk Management Committee introduced a Safety Conﬁ rmation System throughout the Asahi Kasei Group. Using this system, the safety of over 90% of our personnel was conﬁ rmed within two days after the Great East Japan Earthquake of March 2011. In addition, the Asahi Kasei Group established an Emergency Disaster Response Headquarters to coordinate additional efforts to conﬁ rm the safety of personnel and collect information regarding the state of damage to our facilities. It also distributed emergency provisions to personnel who were unable to return home, and delivered relief supplies to the affected operating bases. In support of the people in the areas damaged by the earthquake and tsunami, the Asahi Kasei Group made a donation of ¥100 million and 500,000 rolls of Saran Wrap™ cling ﬁ lm, and delivered 60,000 boxes of Ziploc™ storage bags and 60,000 Ziploc™ freezer bags. *旭化成2011_ePDFヨウ.indd 35 *旭化成2011_ePDFヨウ.indd 35 11/12/01 10:15 11/12/01 10:15 Asahi Kasei Annual Report 2011 35 Corporate Social Responsibility CSR at the Asahi Kasei Group CSR in Action We believe that CSR is achieved by raising corporate value for our various stakeholders through our business operations in accordance with our Group Mission of contributing to life and living for people around the world. CSR Fundamentals Based on a clear understanding of the effects of our operations on the global environment and the global community, our efforts and actions related to CSR are focused on four CSR Fundamentals: Compliance, Respect for Employee Individuality, Responsible Care*, and Corporate Citizenship. Asahi Kasei Group CSR The Community Community outreach The Employee Employee fulfillment 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 2010, fifty-four countries throughout the world have a Responsible Care program. 36 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 36 *旭化成2011_ePDFヨウ.indd 36 11/12/01 10:15 11/12/01 10:15 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. At the same time, it monitors speciﬁ c CSR initiatives implemented by its seven committees, including the Corporate Ethics Committee to ensure regulatory compliance and the Responsible Care Committee to guide efforts for environment, health, and safety. 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October 2010. As part of this initiative, the Nobeoka Power Supply Dept. of Asahi Kasei Chemicals is advancing a project for the sustainable utilization of the forest resources of the Gokase River watershed area as biomass fuel for power generation at a new power plant currently under construction. The sustainable utilization of forest resources in this way is expected to make a signiﬁ cant contribution to the preservation of biodiversity in the area. *旭化成2011_ePDFヨウ.indd 37 *旭化成2011_ePDFヨウ.indd 37 11/12/01 10:15 11/12/01 10:15 Asahi Kasei Annual Report 2011 37 Directors, Corporate Auditors, Executive Ofﬁ cers (As of June 29, 2011) Ichiro Itoh Chairman & Representative Director Taketsugu Fujiwara Koji Fujiwara President & Representative Director Presidential Executive Ofﬁ cer Director Primary Executive Ofﬁ cer Yasuyuki Yoshida Director Primary Executive Ofﬁ cer Tsutomu Inada Yuji Mizuno Masanori Mizunaga Director Senior Executive Ofﬁ cer Director Senior Executive Ofﬁ cer Director Senior Executive Ofﬁ cer Yukiharu Kodama Outside Director Morio Ikeda Outside Director Norio Ichino Outside Director Kenji Nakamae Corporate Auditor Katsuhiko Yamazoe Senior Executive Ofﬁ cer Makoto Konosu Executive Ofﬁ cer Shoichiro Tonomura Executive Ofﬁ cer Toshiyuki Kawasaki Corporate Auditor Ryo Matsui Lead Executive Ofﬁ cer Masaki Sakamoto Executive Ofﬁ cer Yoshihiro Wada Executive Ofﬁ cer Kazuo Tezuka Outside Corporate Auditor Toshikatsu Sunami Lead Executive Ofﬁ cer Masahito Hirai Executive Ofﬁ cer Yuji Aoki Outside Corporate Auditor Shinichiro Nei Lead Executive Ofﬁ cer Toshio Asano Executive Ofﬁ cer 38 Asahi Kasei Annual Report 2011 *旭化成2011_ePDFヨウ.indd 38 *旭化成2011_ePDFヨウ.indd 38 11/12/01 10:15 11/12/01 10:15 Financial Section Contents 40 Consolidated Eleven-Year Summary 42 Management’s Discussion and Analysis 48 Risk Analysis 50 Consolidated Balance Sheets 52 Consolidated Statements of Income 53 Consolidated Statements of Comprehensive Income 54 Consolidated Statements of Changes in Net Assets 55 Consolidated Statements of Cash Flows 56 Notes to Consolidated Financial Statements 77 Report of Independent Auditors *旭化成e_fs_PDF用.indd 39 *旭化成e_fs_PDF用.indd 39 11/12/01 10:27 11/12/01 10:27 Asahi Kasei Annual Report 2011 39 Consolidated Eleven-Year Summary Asahi Kasei Corporation and Consolidated Subsidiaries For the years ended March 31 Net sales Chemicals Life & Livinga Chemical and Chemical-related Chemicals and Plastics Homes Housing and Construction Materials Health Careb Fibersb Electronicsb Construction Materials Special Products and Services Electronics Membranes and Systems Biotechnology and Medical Products Engineering and Others Othersb Domestic sales Overseas sales Operating income Ordinary income Income (loss) before income taxes Net income (loss) Comprehensive income 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 worthc Net worth per share, yen Net worth/total assets, % Number of employees 2011 2010 2009d 2008 ¥ 1,598,387 ¥ 1,433,595 ¥ 1,553,108 ¥ 1,696,789 742,243 622,093 689,323 879,235 — — — — — — — — — — — — 409,224 389,728 409,882 386,227 — — — — 116,387 113,207 119,619 111,232 108,761 101,201 116,405 114,072 158,337 142,700 129,655 113,267 47,418 47,024 60,927 55,732 — — — — — — — — — — — — — — — — — — — — 16,017 17,642 27,297 37,024 1,149,098 1,063,186 1,159,143 1,209,452 449,289 370,409 393,965 487,337 122,927 118,219 98,342 60,288 45,088 43.11 66,014 84,092 62,320 11.00 57,622 56,367 46,056 25,286 — 18.08 34,959 127,656 32,500 120,456 19,031 105,599 4,745 69,945 — 3.39 83,990 126,725 86,166 62,924 10.00 79,436 60,849 10.00 — 50.01 82,911 73,983 56,170 13.00 2011 20120100 2009 2008 ¥ 1,425,879 ¥ 1,368,892 ¥ 1,379,337 ¥ 1,425,367 256,248 251,084 273,539 272,372 418,354 447,497 441,271 424,193 220,773 226,331 218,477 234,873 663,566 633,343 603,846 666,244 474.59 452.91 431.77 476.39 46.5 46.3 43.8 46.7 25,016 25,085 24,244 23,854 a. The Life & Living segment was combined with the Chemicals segment in the year ended March 31, 2008. b. For continuity, ﬁ gures for business categories which were renamed are shown on the same line. (cid:129) From the year ended March 31, 2004, through the year ended March 31, 2009: Figures shown as Health Care are for the previous Pharma segment, and ﬁ gures shown as Electronics are for the previous Electronics Materials & Devices segment. (cid:129) From the year ended March 31, 2001, through the year ended March 31, 2003: Figures shown as Fibers are those for the previous Fibers and Textiles sector, and ﬁ gures shown as Others are those for the former Liquors, Services and Others sector. (cid:129) From the year ended March 31, 2004, through the year ended March 31, 2010: Figures shown as Others are those for the previous Services, Engineering and Others segment. c. Net assets less minority interest. Though the year ended March 31, 2006, ﬁ gures for shareholders’ equity shown. d. For comparison purposes, results for the year ended March 31, 2009, are recalculated to reﬂ ect the April 2010 transfer of electronic materials operations from the Chemicals segment and from Corporate Expenses to the Electronics segment, and the April 2010 transfer of Leona™ nylon 66 ﬁ lament operations from the Chemicals segment to the Fibers segment. 40 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 40 *旭化成e_fs_PDF用.indd 40 11/12/01 10:27 11/12/01 10:27 2007 2006 2005e 2004 2003f 2003 2002 2001g 2001 ¥ 1,623,791 ¥ 1,498,620 ¥ 1,377,697 ¥ 1,253,534 ¥ 1,193,614 ¥ 1,193,614 ¥ 1,195,393 ¥ 1,269,415 ¥ 1,269,415 Millions of yen, except where noted 752,632 660,402 570,182 453,707 424,673 52,558 51,942 59,149 59,813 52,908 — — — — — — — — — — — — — — — 405,695 404,539 375,755 361,273 320,553 — 477,581 440,698 449,470 — — — — — 430,934 — — — — — — — 383,654 408,474 433,440 433,440 104,474 105,842 103,933 105,965 105,463 105,463 98,686 95,481 — 106,639 89,704 91,518 101,514 110,551 110,551 125,908 134,791 134,791 112,094 102,859 60,818 56,512 93,024 59,908 82,484 60,622 71,579 63,101 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 71,579 64,062 95,999 — — — — — — 270,250 96,228 18,307 95,481 60,234 — — — — — — 28,881 26,821 24,228 28,156 44,786 44,786 57,565 60,234 1,195,751 1,125,454 1,067,893 1,011,366 981,064 981,064 1,006,810 1,086,219 1,086,219 428,040 373,166 309,804 242,168 212,550 212,550 188,583 183,196 183,196 127,801 108,726 115,809 126,507 104,166 112,876 114,883 68,575 — 49.00 84,413 71,646 52,426 12.00 94,481 59,668 — 42.46 66,310 69,399 51,467 10.00 91,141 56,454 — 40.16 68,479 71,531 50,715 8.00 60,932 53,643 61,555 50,389 61,555 50,389 54,820 (100,869) (100,869) 27,672 (66,791) (66,791) — 19.62 86,387 64,408 48,420 6.00 — (47.63) 93,985 60,808 49,311 6.00 — (47.63) 93,985 60,808 49,311 6.00 45,664 39,849 10,679 5,180 — 3.61 74,826 60,676 49,574 6.00 96,024 86,747 50,318 25,177 — 17.45 69,188 62,222 49,768 6.00 96,024 86,747 50,318 25,177 — 17.45 69,188 62,222 49,768 6.00 2007 2006 2005 2004 2003 2003 2002 2001 2001 ¥ 1,459,922 ¥ 1,376,044 ¥ 1,270,057 ¥ 1,249,206 ¥ 1,212,374 ¥ 1,212,374 ¥ 1,193,011 ¥ 1,240,008 ¥ 1,240,008 240,006 214,062 202,521 181,609 176,788 176,788 180,826 196,510 196,510 426,959 414,368 419,969 428,302 427,188 427,188 415,193 419,168 419,168 281,502 284,390 223,958 226,825 198,697 198,697 181,618 176,177 176,177 645,655 594,211 511,726 450,451 407,639 407,639 496,826 516,013 516,013 461.50 424.34 365.43 321.41 290.92 290.92 353.16 357.70 357.70 44.2 43.2 40.3 36.1 33.6 33.6 41.6 41.6 41.6 23,715 23,030 23,820 25,011 25,730 25,730 26,227 26,695 26,695 e. For comparison purposes, results for the year ended March 31, 2005, are recalculated to reﬂ ect the April 2005 transfer of Leona™ nylon 66 ﬁ lament operations from the Fibers segment to the Chemicals segment. f. 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 conﬁ guration adopted on October 1, 2003. (cid:129) 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 reclassiﬁ ed as the Chemicals segment. (cid:129) The Housing and Construction Materials sector is separated into the Homes segment and the Construction Materials segment. (cid:129) The Fibers and Textiles sector is renamed the Fibers segment. (cid:129) With the divestment of liquors operations, the Liquors, Services and Others sector is renamed the Services, Engineering and Others segment. g. 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. (cid:129) Operations of the “membranes and systems” segment combine with the Chemicals and Plastics sector to form the Chemical and Chemical-related sector. (cid:129) The “electronics” segment is reclassiﬁ ed as the Electronics sector. (cid:129) Operations of the “biotechnology and medical products” segment are reclassiﬁ ed as the Health Care sector. (cid:129) The remaining operations comprise the Liquors, Services and Others sector, in place of the “engineering and others” segment. Asahi Kasei Annual Report 2011 41 *旭化成e_fs_PDF用.indd 41 *旭化成e_fs_PDF用.indd 41 11/12/01 10:27 11/12/01 10:27 Management’s Discussion and Analysis Fiscal year 2010 (April 1, 2010 – March 31, 2011) Overview of Fiscal 2010 Consolidated Results Operating environment The Japanese economy was recovering in the ﬁ rst half as Non-operating income and expenses, ordinary income Net non-operating expenses were ¥4.7 billion, ¥3.5 billion higher than the ¥1.3 billion of a year earlier, largely due to an increase in foreign exchange loss and the occurrence of corporate performance improved with the effect of government litigation related expenses, although equity in earnings of stimulus measures and thanks to economic recovery in emerging afﬁ liates increased. As a result, ordinary income increased by markets. In the second half, however, the economy was severely ¥61.9 billion (109.7%) to ¥118.2 billion. affected by the rapid rise of the yen, a decline in automotive sales due to the expiration of government subsidies for fuel-efﬁ cient vehicles, high feedstock prices driven by political unrest in North Extraordinary income and loss Extraordinary losses of ¥21.6 billion included ¥10.0 billion in Africa and the Middle East, and the impact of the Great East business structure improvement expenses and a ¥4.9 billion Japan Earthquake, resulting in uncertainty regarding the loss on disposal of noncurrent assets. Combined with economic outlook. extraordinary income, the net extraordinary loss was ¥19.9 billion, ¥9.6 billion higher than a year earlier. Net sales, operating income Consolidated net sales for the ﬁ scal year increased by ¥164.8 billion (11.5%) from a year ago to ¥1,598.4 billion. Overseas sales Net income With ordinary income of ¥118.2 billion and the net increased, largely in Chemicals, by ¥78.9 billion (21.3%) to extraordinary loss of ¥19.9 billion, income before income ¥449.3 billion, and increased by 2.3 percentage points as a taxes was ¥98.3 billion. Income tax expense was ¥36.7 billion portion of consolidated net sales from 25.8% to 28.1%. (current income taxes of ¥39.6 billion less deferred income Domestic sales increased by ¥85.9 billion (8.1%) to ¥1,149.1 billion with high feedstock prices as well as high market prices taxes of ¥3.0 billion). Minority interests in income of consolidated subsidiaries was ¥1.4 billion. As a result, net buoyed by robust demand in the Chemicals segment. income increased by ¥35.0 billion (138.4%) to ¥60.3 billion, Operating income increased by ¥65.3 billion (113.3%) to and net income per share increased by ¥25.03 to ¥43.11 from ¥122.9 billion. As a percentage of net sales, cost of sales the ¥18.08 of a year earlier. increased by 2.1 percentage points to 74.7%, largely due to improved operating rates driven by demand recovery. SG&A increased by ¥6.5 billion, but decreased as a percentage of net sales by 1.6 percentage points to 17.6% due to the large increase in sales. Operating margin increased by 3.7 percentage points to 7.7%. Net Sales, Overseas Sales Ratio (¥ billion) 2,000 1,500 1,000 500 0 Operating Income, Operating Margin (¥ billion) 150 120 90 60 30 (%) 40 30 20 10 0 0 SG&A, SG&A Ratio (%) 15 (¥ billion) 300 12 240 9 6 3 0 180 120 60 0 (%) 20 16 12 8 4 0 Net Income, Net Income per Share (¥ billion) 80 60 40 20 0 (¥) 60 45 30 15 0 FY 06 07 08 09 10 FY 06 07 08 09 10 FY 06 07 08 09 10 FY 06 07 08 09 10 Net sales, left scale Operating income, left scale SG&A, left scale Net income, left scale Overseas sales ratio, right scale Operating margin, right scale SG&A ratio, right scale Net income per share, right scale 42 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 42 *旭化成e_fs_PDF用.indd 42 11/12/01 10:27 11/12/01 10:27 Results by Operating Segment increased as demand recovery in automotive and electronics applications led to greater shipments. Operating income in Beginning in ﬁ scal 2010, Accounting Standard for Disclosures specialty products operations increased as home-use about Segments of an Enterprise and Related Information products such as Saran Wrap™ as well as functional additives issued by the Accounting Standards Board of Japan (ASBJ and coating materials performed well. Statement No. 17) and Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Guidance No. 20) have been applied, Homes Sales increased by ¥19.5 billion (5.0%) from a year ago to resulting in six reporting segments: Chemicals, Homes, Health ¥409.2 billion and operating income increased by ¥11.1 billion Care, Fibers, Electronics, and Construction Materials. (43.9%) to ¥36.5 billion. Orders for order-built homes In describing the state of the Asahi Kasei Group’s increased by ¥47.7 billion to ¥354.5 billion. businesses by major business classiﬁ cation, businesses not Operating income in order-built and pre-built homes included in the above six reporting segments are categorized operations increased with a rise in orders resulting in greater as “Others.” The “Others” category is equivalent to the deliveries of both Hebel Haus™ unit homes and Hebel previous Services, Engineering and Others segment, including Maison™ apartment buildings, and with continuous cost plant engineering and environmental engineering, research reductions. Although our in-house mortgage securitization and analysis, and employment agency/stafﬁ ng operations. business was impacted by an increase in the proportion of The operating expenses of one consolidated subsidiary customers utilizing the “Flat 35” ﬁ xed-rate mortgage, previously included in Services, Engineering and Others have remodeling and real estate businesses performed well and been included in “corporate expenses” beginning in ﬁ scal operating income in housing-related operations was level with 2010. The impact of this is immaterial. a year ago. Chemicals Sales increased by ¥120.1 billion (19.3%) from a year ago to ¥742.2 billion and operating income increased by ¥38.3 billion (147.0%) to ¥64.4 billion. Operating income in chemicals and derivative products operations increased as market prices for acrylonitrile and adipic acid remained high, buoyed by favorable demand in Asia. Operating income in polymer products operations ROE (%) 12 9 6 3 0 Chemicals (¥ billion) 1,000 (¥ billion) 100 800 600 400 200 0 -0.9% 8.7% 4.2% 80 60 40 20 0 Homes (¥ billion) (¥ billion) 500 400 300 200 100 5.3% 6.5% 8.9% 50 40 30 20 10 0 FY 06 07 08 09 10 FY 08 09 10 (20) 0 FY 08 09 10 Net sales, left scale Net sales, left scale Operating income (loss), right scale Operating income, right scale Operating margin (%) Operating margin (%) Asahi Kasei Annual Report 2011 43 *旭化成e_fs_PDF用.indd 43 *旭化成e_fs_PDF用.indd 43 11/12/01 10:27 11/12/01 10:27 Health Care Sales increased by ¥3.2 billion (2.8%) from a year ago to Electronics Sales increased by ¥15.6 billion (11.0%) from a year ago to ¥116.4 billion and operating income increased by ¥3.0 billion ¥158.3 billion and operating income increased by ¥7.0 billion (76.1%) to ¥7.0 billion. (96.9%) to ¥14.3 billion. Operating income in pharmaceuticals operations Operating income in electronic devices operations increased as Recomodulin™ recombinant thrombomodulin increased as growth in shipments of LSIs for smartphones made a substantial contribution to results, and as shipments and other portable devices, particularly overseas, outweighed of the Flivas™ therapy for benign prostatic hyperplasia a sharp impact from the strong yen. In electronic materials increased although NHI price revisions had a negative impact operations, although shipments grew, most notably in on product prices. Operating income in devices-related Hipore™ Li-ion battery separator, operating income operations increased with greater shipments of APS™ decreased slightly with the impact of declining product prices polysulfone-membrane artiﬁ cial kidneys and of therapeutic and high feedstock costs. apheresis devices, although the strong yen had an impact on performance in each product category. Fibers Sales increased by ¥7.6 billion (7.5%) from a year ago to Construction Materials Sales increased by ¥0.4 billion (0.8%) from a year ago to ¥47.4 billion and operating income increased by ¥0.9 (74.0%) billion to ¥2.1 billion. ¥108.8 billion and operating income increased by ¥7.0 billion Although operating costs in housing and building to ¥4.2 billion. materials operations were reduced, operating income Operations throughout the segment were impacted by the strong yen and high feedstock costs. Operating income decreased with fewer shipments of Hebel™ autoclaved aerated concrete panels. Operating income in foundation from Bemberg™ regenerated cellulose increased with system operations increased with growing shipments of substantially greater shipments in non-lining applications such Eazet™ and ATT Column™ small-scale piles in new as innerwear and outerwear. Operating income from Roica™ applications. Operating income in insulation materials elastic polyurethane ﬁ lament increased with growing sales of operations increased as shipments of Neoma™ phenolic foam functional yarns, from nonwovens with growing shipments in insulation panels grew substantially, supported by government disposable diaper applications, and from Leona™ nylon 66 policy such as the eco-point program for energy conservation. ﬁ lament with growing shipments in automotive applications. Operating income in structural materials operations increased with growing shipments of the BasePack™ earthquake- resistant column base attachment system. Health Care (¥ billion) (¥ billion) Fibers (¥ billion) Electronics (¥ billion) (¥ billion) (¥ billion) 150 120 90 60 30 0 FY 150 120 90 60 30 0 10.1% 20 16 12 3.5% 6.1% 8 4 0 -1.3% -2.7% 7.5 6.0 4.5 3.9% 3.0 1.5 0.0 (1.5) (3.0) (4.5) 200 160 120 80 40 0 5.6% 5.1% 30 24 9.0% 18 12 6 0 08 09 10 FY 08 09 10 FY 08 09 10 Net sales, left scale Net sales, left scale Net sales, left scale Operating income, right scale Operating income (loss), right scale Operating income, right scale Operating margin (%) Operating margin (%) Operating margin (%) 44 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 44 *旭化成e_fs_PDF用.indd 44 11/12/01 10:27 11/12/01 10:27 Others Sales decreased by ¥1.6 billion (9.2%) from a year ago to Net assets increased by ¥30.9 billion (4.8%) from ¥644.7 billion to ¥675.6 billion. Net income was ¥60.3 billion, and ¥16.0 billion and operating income decreased by ¥0.1 billion dividend payments were ¥14.0 billion. Foreign currency translation adjustments decreased by ¥9.2 billion, and valuation difference on other securities decreased by ¥7.0 billion. As a result, net worth per share increased by ¥21.68 to ¥474.59, net worth/total assets increased from 46.3% to 46.5%, and debt-to-equity ratio decreased by 0.04 to 0.38. (6.4%) to ¥1.7 billion. Liquidity and Capital Resources Financial position Total assets at ﬁ scal year end were ¥1,425.9 billion, ¥57.0 billion (4.2%) higher than a year earlier. Current assets increased by ¥95.2 billion (14.4%) to ¥755.7 billion, mainly because cash and deposits increased by ¥46.4 billion and notes and accounts receivable, trade, increased by ¥34.5 billion primarily due to a year-on-year increase in fourth quarter net sales. Noncurrent assets decreased by ¥38.3 billion (5.4%) to ¥670.2 billion, with property, plant and equipment decreasing by ¥29.1 billion largely because capital expenditure was lower than depreciation and amortization, and with investment securities decreasing by ¥8.7 billion mainly due to decreased fair value. Current liabilities increased by ¥55.1 billion (12.7%) to ¥489.9 billion, with a ¥15.0 billion increase in notes and accounts payable, trade, a ¥14.9 billion increase in short-term loans payable, and a ¥14.5 billion increase in advances received. Noncurrent liabilities decreased by ¥29.0 billion (10.0%) to ¥260.4 billion, largely due to a ¥30.2 billion decrease in long-term loans payable. Interest-bearing debt decreased by ¥10.7 billion to ¥253.9 billion. Construction Materials Others Total Assets, Net Worth Net Worth to Total Assets (¥ billion) (¥ billion) (¥ billion) (¥ billion) (¥ billion) 90 60 30 0 6 4 2 0 40 30 20 10 0 12 1,500 9 6 20.6% 10.3% 10.7% 3 1,200 900 600 300 0 0 4.4% 2.6% 2.8% (%) 50 40 30 20 10 0 FY 08 09 10 FY 08 09 10 FY 06 07 08 09 10 FY 06 07 08 09 10 Net sales, left scale Net sales, left scale Operating income, right scale Operating income, right scale Operating margin (%) Operating margin (%) Total assets Net worth Asahi Kasei Annual Report 2011 45 *旭化成e_fs_PDF用.indd 45 *旭化成e_fs_PDF用.indd 45 11/12/01 10:27 11/12/01 10:27 Capital expenditure Capital expenditure (capex) was primarily for new and expanded production plant and equipment in long-term growth ﬁ elds. Investments were also made for rationalization, Notable capex by operating segment was as follows. Chemicals Rationalization of equipment in Mizushima, other modiﬁ cation, maintenance, and IT systems to bring greater rationalization, labor-saving, and maintenance. product reliability and cost reductions. Capex by operating segment shown below is for property, plant and equipment and intangible assets, Homes Leases, rationalization, labor-saving, and maintenance. combined, before consumption tax. A total of ¥66.0 billion was invested during the ﬁ scal year for the expansion of businesses with competitive superiority, Health Care New molding plant for Planova™ virus removal ﬁ lters, new particularly in the Chemicals and Electronics segments, as plant for therapeutic apheresis devices, rationalization, labor- well as for modiﬁ cation and rationalization. saving, and maintenance. Totals for the year (¥ million) Compared to previous year (%) Fibers Rationalization, labor-saving, and maintenance. Chemicals Homes Health Care Fibers Electronics Construction Materials Others Combined 23,174 6,304 7,427 3,668 20,267 1,684 981 63,505 Corporate assets and eliminations 2,509 Consolidated 66,014 83.8 104.9 81.0 80.5 89.0 141.4 105.8 87.9 21.4 78.6 Electronics Capacity expansion for Hipore™ Li-ion battery separator, capacity expansion for LSIs, IT systems, rationalization, labor- saving, and maintenance. Construction Materials Rationalization, labor-saving, and maintenance. Others Rationalization, labor-saving, and maintenance. Corporate assets R&D equipment, IT systems, maintenance. Interest-Bearing Debt, D/E Ratio Capex, Depreciation and Amortization (¥ billion) (¥ billion) 350 300 250 200 150 100 50 0 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 150 120 90 60 30 0 FY 06 07 08 09 10 FY 06 07 08 09 10 Interest-bearing debt, left scale Capex D/E ratio, right scale Depreciation and amortization 46 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 46 *旭化成e_fs_PDF用.indd 46 11/12/01 10:27 11/12/01 10:27 Cash ﬂ ows Free cash ﬂ ows* were a positive ¥69.3 billion, as cash bearing debt, including loans, ¥14.0 billion was used for dividend payments. Net cash used in ﬁ nancing activities was generated, principally from operating income and depreciation ¥26.1 billion, ¥48.9 less than a year earlier. and amortization, exceeded cash used, principally for acquisition of noncurrent assets and acquisition of investment * Total of net cash provided by (used in) operating activities and net cash provided by (used in) investment activities. securities. Cash ﬂ ows from ﬁ nancing activities were a net ¥26.1 billion cash used, principally due to repayment of long- term loans payable. As a result, cash and cash equivalents at ﬁ scal year end were ¥134.4 billion, ¥41.3 billion more than a year earlier. Cash ﬂ ows from operating activities Cash used included a ¥36.5 billion increase in notes and accounts receivable, trade, largely in Chemicals, and ¥25.3 billion in income taxes paid. Income before income taxes generated ¥98.3 billion, and depreciation and amortization generated ¥84.1 billion. Net cash provided by operating activities was ¥148.1 billion, ¥21.2 billion less than a year earlier. Cash ﬂ ows from investing activities Cash used included ¥63.7 billion for purchase of property, plant and equipment for continuing expansion of competitively superior operations and enhancement of overall competitiveness, ¥5.3 billion for purchase of intangible assets, and ¥7.6 billion for purchase of investment securities. Net cash used in investing activities was ¥78.8 billion, ¥21.3 billion less than a year earlier. Cash ﬂ ows from ﬁ nancing activities In addition to ¥11.7 billion of net cash used to reduce interest- Free Cash Flows Cash Flows (¥ billion) 80 60 40 20 0 (20) (40) (60) (80) (¥ billion) 200 100 0 (100) (200) FY 06 07 08 09 10 FY 06 07 08 09 10 Net cash provided by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities *旭化成e_fs_PDF用.indd 47 *旭化成e_fs_PDF用.indd 47 11/12/01 10:27 11/12/01 10:27 Asahi Kasei Annual Report 2011 47 Risk Analysis Operating risks and non-operating risks which may materially inﬂ uence investor decisions are described below. The management maintains awareness of the possibility that these scenarios may emerge and, to the fullest possible extent, implements measures to avoid their emergence and to minimize their impact on corporate performance in the event that they do emerge. The description of risks given here includes elements which may emerge in the future, but as it is based on current evaluations at the time of preparation of this report, it does not include risks which could not be foreseen. Crude oil and naphtha prices Housing-related tax policy, interest rate ﬂ uctuation Operating costs in operations based on petrochemicals Operations in the Homes segment are affected by are affected by prices for crude oil and naphtha. If crude oil Japanese tax policies as they relate to home acquisition and naphtha prices rise, selling prices for products derived and by ﬂ uctuations in Japanese interest rates. Changes in from these feedstocks must be increased in a timely Japanese tax policy, including consumption taxes, or manner to maintain sufﬁ cient price spreads. Price spreads ﬂ uctuations in Japanese interest rates may result in may diminish, thereby affecting our consolidated diminished housing demand, thereby affecting our performance and ﬁ nancial condition. consolidated performance and ﬁ nancial condition. Exchange rate ﬂ uctuation Proﬁ tability of electronics-related businesses Operations based overseas maintain accounts in the local The electronics industry is characterized by sharp market currency where they operate. The yen value of items cycles. The proﬁ tability of electronics-related businesses carried in these accounts is affected by the rate of may decline signiﬁ cantly in a relatively short time, thereby exchange at the time of conversion to yen. Although affecting our consolidated performance and ﬁ nancial measures such as currency exchange hedges are utilized condition. Because products in this ﬁ eld rapidly become to minimize the short-term effects of exchange rate obsolete, the timely development and commercialization of ﬂ uctuations, such ﬂ uctuations may exceed the foreseeable leading-edge devices and materials is required. New range over the short to long term, thereby affecting our product development may be delayed, or demand consolidated performance and ﬁ nancial condition. ﬂ uctuations may exceed expectations, thereby affecting our consolidated performance and ﬁ nancial condition. Overseas operations Pharmaceuticals and medical devices Overseas operations may face a variety of risks which cannot be foreseen, including the existence or emergence Pharmaceutical and medical device businesses may be of economically unfavorable circumstances due to legal signiﬁ cantly affected by government measures to curtail and regulatory changes, vulnerability of infrastructure, health care expenditure or other changes in government difﬁ culty in hiring/retaining qualiﬁ ed employees, or other policy. Unforeseeable side effects or complications may factors, and social or political instability due to terrorism, emerge, signiﬁ cantly affecting these businesses. The war, or other factors. Overseas operations may be pharmaceutical business additionally faces the possibility impaired by such scenarios, thereby affecting our that product approval may be withdrawn as a result of consolidated performance and business plans. Japan’s reexamination system, and that competition may 48 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 48 *旭化成e_fs_PDF用.indd 48 11/12/01 10:27 11/12/01 10:27 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 ﬁ nancial condition. Industrial accidents and natural disasters The occurrence of a signiﬁ cant 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 opportunity loss due to plant shutdown caused by damage to plant facilities, supply chain disruptions which impede raw materials procurement, etc., thereby affecting our consolidated performance and ﬁ nancial 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 ﬁ nancial condition. Irrecoverable credits Credits extended to customers may become irrecoverable to an unforeseeable extent, necessitating additional losses or allowances to be recorded in ﬁ nancial accounts, and thereby affecting our consolidated performance and ﬁ nancial condition. *旭化成e_fs_PDF用.indd 49 *旭化成e_fs_PDF用.indd 49 11/12/01 10:27 11/12/01 10:27 Asahi Kasei Annual Report 2011 49 Consolidated Balance Sheets Asahi Kasei Corporation and Consolidated Subsidiaries March 31, 2011 and 2010 ASSETS Current assets: Cash and deposits (Notes 9 and 11) Notes and accounts receivable, trade Short-term investment securities (Notes 9, 11 and 12) Merchandise and ﬁ nished goods Work in progress Raw materials and supplies Deferred tax assets—current (Note 15) Other Allowance for doubtful accounts Total current assets Noncurrent assets: Property, plant and equipment Buildings and structures (Note 5(b), (d)) Accumulated depreciation Buildings and structures, net Millions of yen Thousands of U.S. dollars (Note 1) 2011 2010 2011 ¥ 140,319 ¥ 93,928 $ 1,690,589 273,414 371 129,898 76,551 49,799 23,131 63,240 (1,072) 755,651 238,931 985 124,557 75,044 51,484 23,106 54,027 (1,654) 660,408 409,263 (231,474) 177,789 404,974 (224,608) 180,366 3,294,144 4,472 1,565,031 922,300 599,990 278,689 761,930 (12,921) 9,104,224 4,930,883 (2,788,847) 2,142,036 14,363,040 Machinery, equipment and vehicles (Note 5(b), (d)) 1,192,132 1,169,979 Accumulated depreciation Machinery, equipment and vehicles, net Land (Note 5(d)) Lease assets (Note 10) Accumulated depreciation Lease assets, net Construction in progress Other (Note 5(b), (d)) Accumulated depreciation Other, net Subtotal Intangible assets Goodwill Other Subtotal (1,047,912) (1,005,094) (12,625,447) 144,220 55,243 8,581 (3,118) 5,463 22,173 118,718 (105,252) 13,466 418,354 164,885 55,031 5,808 (1,132) 4,676 27,380 115,024 (99,867) 15,158 447,497 1,737,593 665,580 103,383 (37,561) 65,822 267,140 1,430,339 (1,268,097) 162,242 5,040,413 5,087 26,015 31,101 5,927 28,729 34,656 61,287 313,429 374,715 Investments and other assets Investment securities (Notes 5(a), 11 and 12) 166,317 175,059 2,003,822 Long-term receivable (Note 11) Deferred tax assets—noncurrent (Note 15) Other Allowance for doubtful accounts Subtotal 5,181 22,005 27,507 (237) 6,074 15,383 29,962 (147) 62,416 265,122 331,404 (2,851) 220,773 226,331 2,659,913 Total noncurrent assets 670,228 708,485 8,075,042 Total assets ¥ 1,425,879 ¥ 1,368,892 $ 17,179,265 The accompanying notes are an integral part of these statements. 50 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 50 *旭化成e_fs_PDF用.indd 50 11/12/01 10:27 11/12/01 10:27 LIABILITIES AND NET ASSETS Liabilities: Current liabilities: Millions of yen Thousands of U.S. dollars (Note 1) 2011 2010 2011 Notes and accounts payable, trade (Note 11) ¥ 136,407 ¥ 121,409 $ 1,643,461 Short-term loans payable (Notes 5(b), 11 and 21) Commercial paper (Notes 11 and 21) Lease obligations (Notes 10, 11 and 21) Income taxes payable (Note 11) Accrued expenses Advances received Provision for periodic repairs Provision for product warranties Asset retirement obligations (Notes 3(b) and 17) Other Total current liabilities Noncurrent liabilities: Bonds payable (Notes 11 and 21) Long-term loans payable (Notes 5(b), 11 and 21) Lease obligations (Notes 10 and 11) Deferred tax liabilities (Note 15) Provision for retirement beneﬁ ts (Note 14) Provision for directors’ retirement beneﬁ ts Provision for periodic repairs Asset retirement obligations (Notes 3(b) and 17) Long-term guarantee deposited (Note 11) Other Total noncurrent liabilities Total liabilities Net assets: Shareholders’ equity Capital stock Authorized—4,000,000,000 shares Issued and outstanding—1,402,616,332 shares Capital surplus Retained earnings (Note 8(b)(ii)) Treasury stock (2011—4,420,688 shares, 2010—4,228,468 shares) Total shareholders’ equity Accumulated other comprehensive income Valuation difference on other securities Deferred gains (losses) on hedges Foreign currency translation adjustments Total accumulated other comprehensive income Minority interests Total net assets Commitments and contingent liabilities (Notes 5(c) and 10) 108,889 23,000 1,522 24,085 97,745 52,346 3,239 2,465 512 39,668 489,878 25,000 91,722 3,802 6,374 107,309 1,119 2,131 3,316 18,340 1,284 260,399 750,277 103,389 79,402 478,681 (2,115) 659,357 29,647 (140) (25,299) 4,209 12,036 675,602 93,962 19,000 1,123 12,160 91,371 37,815 8,191 3,607 — 46,189 434,827 25,000 121,921 3,593 7,597 109,450 1,225 169 — 18,321 2,101 289,378 724,204 103,389 79,403 432,114 (2,017) 612,888 36,692 (109) (16,128) 20,455 11,346 1,311,915 277,108 18,333 290,183 1,177,649 630,680 39,021 29,701 6,164 477,928 5,902,143 301,205 1,105,090 45,812 76,794 1,292,878 13,486 25,679 39,957 220,966 15,468 3,137,336 9,039,479 1,245,645 956,656 5,767,244 (25,481) 7,944,064 357,196 (1,686) (304,802) 50,708 145,014 644,688 8,139,787 Total liabilities and net assets ¥ 1,425,879 ¥ 1,368,892 $ 17,179,265 The accompanying notes are an integral part of these statements. Asahi Kasei Annual Report 2011 51 *旭化成e_fs_PDF用.indd 51 *旭化成e_fs_PDF用.indd 51 11/12/01 10:27 11/12/01 10:27 Consolidated Statements of Income Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2011 and 2010 Net sales (Note 18) Cost of sales (Note 6(a), (b)) Gross proﬁ t Selling, general and administrative expenses (Note 6(a)) Operating income (Note 18) Non-operating income: Interest income Dividends income Equity in earnings of afﬁ liates Other Total non-operating income Non-operating expenses: Interest expense Foreign exchange loss Litigation related expenses Other Total non-operating expenses Ordinary income Extraordinary income: Gain on sales of investment securities Gain on sales of noncurrent assets (Note 6(c)) Reversal of allowance for doubtful accounts Gain on change in equity Gain on business transfer (Note 16) Gain as a result of arbitration award Total extraordinary income Extraordinary loss: Loss on sales of investment securities Loss on valuation of investment securities Loss on disposal of noncurrent assets (Note 6(d)) Impairment loss (Notes 6(e) and 18) Environmental expenses (Note 6(f)) Cumulative adjustment for adoption of accounting standard for asset retirement obligations (Note 17) Loss on disaster (Note 6(g)) Business structure improvement expenses (Notes 6(h) and 18) Total extraordinary loss Income before income taxes and minority interests Income taxes (Note 15) — current — deferred Total income taxes Income before minority interests Minority interests in income Net income The accompanying notes are an integral part of these statements. 52 Asahi Kasei Annual Report 2011 Millions of yen Thousands of U.S. dollars (Note 1) 2011 2010 2011 ¥ 1,598,387 ¥ 1,433,595 $ 19,257,678 1,193,646 1,100,688 14,381,278 404,741 281,814 122,927 332,907 275,285 57,622 1,118 2,273 2,212 4,248 9,851 3,313 3,880 1,908 5,458 14,560 118,219 416 463 84 — 736 — 1,699 380 651 4,879 2,404 1,185 1,240 821 10,016 21,576 98,342 39,628 (2,952) 36,675 61,667 1,379 1,071 2,276 1,151 3,394 7,891 3,714 702 — 4,730 9,146 56,367 112 152 — 153 — 6,502 6,919 — 1,918 2,944 836 1,482 — — 10,050 17,230 46,056 17,107 3,377 20,483 25,573 286 4,876,400 3,395,350 1,481,051 13,471 27,380 26,649 51,187 118,686 39,921 46,745 22,992 65,758 175,416 1,424,321 5,014 5,574 1,017 — 8,869 — 20,474 4,578 7,845 58,779 28,959 14,277 14,944 9,890 120,674 259,946 1,184,848 477,440 (35,568) 441,873 742,976 16,620 ¥ 60,288 ¥ 25,286 $ 726,356 *旭化成e_fs_PDF用.indd 52 *旭化成e_fs_PDF用.indd 52 11/12/01 10:27 11/12/01 10:27 Consolidated Statements of Comprehensive Income Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2011 and 2010 Millions of yen Thousands of U.S. dollars (Note 1) Income before minority interests Other comprehensive income Valuation difference on other securities Deferred gains (losses) on hedges Foreign currency translation adjustment Share of other comprehensive income of afﬁ liates accounted for using equity method Total other comprehensive income (Note 7(b)) Comprehensive income (Note 7(a)) Comprehensive income attributable to: Owners of the parent Minority interests The accompanying notes are an integral part of these statements. 2011 2010 2011 ¥ 61,667 ¥ — $ 742,976 (7,059) (31) (7,114) (2,375) (16,579) 45,088 44,042 — — — — — — — (85,052) (368) (85,711) (28,612) (199,743) 543,233 530,624 ¥ 1,047 ¥ — $ 12,609 *旭化成e_fs_PDF用.indd 53 *旭化成e_fs_PDF用.indd 53 11/12/01 10:27 11/12/01 10:27 Asahi Kasei Annual Report 2011 53 Consolidated Statements of Changes in Net Assets Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2011 and 2010 Shareholders’ equity Accumulated other comprehensive income Millions of yen Capital stock Capital surplus Retained earnings (Note 8(b)) Treasury stock Total shareholders’ equity Valuation difference on other securities Deferred gains (losses) on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Minority interests Total net assets Balance at March 31, 2010 ¥ 103,389 ¥ 79,403 ¥ 432,114 ¥ (2,017) ¥ 612,888 ¥ 36,692 ¥ (109) ¥ (16,128) ¥ 20,455 ¥ 11,346 ¥ 644,688 Changes during the ﬁ scal year Dividends from surplus Net income Purchase of treasury stock Disposal of treasury stock Change of scope of consolidation Change of scope of equity method Net changes of items other than shareholders’ equity Total changes of items during the period (13,984) 60,288 307 (43) (0) (116) 18 (13,984) 60,288 (116) 18 307 (43) (13,984) 60,288 (116) 18 307 (43) — (0) 46,568 (98) 46,469 (7,045) (31) (9,170) (16,246) 691 30,914 (7,045) (31) (9,170) (16,246) 691 (15,555) Balance at March 31, 2011 ¥ 103,389 ¥ 79,402 ¥ 478,681 ¥ (2,115) ¥ 659,357 ¥ 29,647 ¥ (140) ¥ (25,299) ¥ 4,209 ¥ 12,036 ¥ 675,602 Shareholders’ equity Valuation, translation adjustments Millions of yen Capital stock Capital surplus Retained earnings (Note 8(b)) Treasury stock Total shareholders’ equity Valuation difference on other securities Deferred gains (losses) on hedges Foreign currency translation adjustment Total valuation, translation adjustments Minority interests Total net assets Balance at March 31, 2009 ¥ 103,389 ¥ 79,404 ¥ 418,292 ¥ (1,946) ¥ 599,139 ¥ 23,301 ¥ (178) ¥ (18,416) ¥ 4,708 ¥ 7,504 ¥ 611,351 Changes during the ﬁ scal year Dividends from surplus Net income Purchase of treasury stock Disposal of treasury stock Change of scope of consolidation Change of scope of equity method Net changes of items other than shareholders’ equity Total changes of items during the period (1) (11,188) 25,286 (10) (267) (96) 25 (11,188) 25,286 (96) 24 (10) (267) (11,188) 25,286 (96) 24 (10) (267) — (1) 13,821 (71) 13,749 13,391 68 2,287 15,747 3,841 33,338 13,391 68 2,287 15,747 3,841 19,588 Balance at March 31, 2010 ¥ 103,389 ¥ 79,403 ¥ 432,114 ¥ (2,017) ¥ 612,888 ¥ 36,692 ¥ (109) ¥ (16,128) ¥ 20,455 ¥ 11,346 ¥ 644,688 Shareholders’ equity Accumulated other comprehensive income Thousands of U.S. dollars (Note 1) Capital stock Capital surplus Retained earnings (Note 8(b)) Treasury stock Total shareholders’ equity Valuation difference on other securities Deferred gains (losses) on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Minority interests Total net assets Balance at March 31, 2010 $ 1,245,645 $ 956,657 $ 5,206,187 $ (24,297) $ 7,384,192 $ 442,075 $ (1,317) $ (194,318) $ 246,440 $ 136,695 $ 7,767,328 Changes during the ﬁ scal year Dividends from surplus Net income Purchase of treasury stock Disposal of treasury stock Change of scope of consolidation Change of scope of equity method Net changes of items other than shareholders’ equity Total changes of items during the period (168,478) 726,356 (168,478) 726,356 (1,399) (1,399) (1) 215 3,700 (521) 214 3,700 (521) (168,478) 726,356 (1,399) 214 3,700 (521) — (1) 561,057 (1,185) 559,872 (84,878) (369) (110,485) (195,732) 8,319 372,459 (84,878) (369) (110,485) (195,732) 8,319 (187,413) Balance at March 31, 2011 $ 1,245,645 $ 956,656 $ 5,767,244 $ (25,481) $ 7,944,064 $ 357,196 $ (1,686) $ (304,802) $ 50,708 $ 145,014 $ 8,139,787 The accompanying notes are an integral part of these statements. 54 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 54 *旭化成e_fs_PDF用.indd 54 11/12/01 10:27 11/12/01 10:27 Consolidated Statements of Cash Flows Asahi Kasei Corporation and Consolidated Subsidiaries Years ended March 31, 2011 and 2010 Millions of yen Thousands of U.S. dollars (Note 1) 2011 2010 2011 Cash ﬂ ows from operating activities: Income before income taxes Depreciation and amortization Impairment loss Amortization of goodwill Amortization of negative goodwill (Decrease) increase in provision for periodic repairs Decrease in provision for product warranties Decrease in provision for retirement beneﬁ ts Interest and dividend income Interest expense Equity in earnings of afﬁ liates Gain on sales of investment securities Loss on valuation of investment securities Gain on sale of property, plant and equipment Loss on disposal of noncurrent assets Gain on business transfer Gain as a result of arbitration award Increase in notes and accounts receivable, trade (Increase) decrease in inventories Increase in notes and accounts payable, trade Increase in accrued expenses Increase (decrease) in advances received Other, net Subtotal Interest and dividend income, received Interest expense, paid Proceeds from arbitration award Income taxes (paid) refund Net cash provided by operating activities Cash ﬂ ows from investing activities: Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sales of investment securities Proceeds from purchase of investments in subsidiaries resulting in change in scope of consolidation Additional purchase of investments in consolidated subsidiaries Proceeds from business transfer Payments of loans receivable Collection of loans receivable Other, net Net cash used in investing activities Cash ﬂ ows from ﬁ nancing activities: Increase in short-term loans payable Decrease in short-term loans payable Proceeds from issuance of commercial paper Redemption of commercial paper Proceeds from long-term loans payable Decrease in long-term loans payable Proceeds from issuance of bonds Redemption of bonds Repayment of lease obligations Purchase of treasury stock Proceeds from disposal of treasury stock Cash dividends paid Cash dividends paid to minority shareholders Other, net Net cash provided by (used in) ﬁ nancing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Increase in cash and cash equivalents resulting from changes in scope of consolidation Cash and cash equivalents at end of year (Note 9) The accompanying notes are an integral part of these statements. ¥ 98,342 84,092 2,404 1,073 (266) (2,990) (1,139) (2,050) (3,391) 3,313 (2,212) (36) 651 (463) 4,879 (736) — (36,454) (4,841) 13,618 6,676 15,309 (3,405) 172,376 4,458 (3,424) — (25,282) 148,128 (11,720) 6,773 (63,651) 1,092 (5,333) (7,619) 1,303 — (408) 2,538 (5,840) 6,513 (2,486) (78,838) 71,335 (72,682) 46,000 (42,000) 6,910 (19,878) — — (1,345) (119) 18 (13,984) (547) 147 (26,144) (2,698) 40,449 93,125 ¥ 46,056 86,166 836 1,089 (190) 2,187 (5,790) (1,284) (3,347) 3,714 (1,151) (112) 1,918 (152) 2,944 — (6,502) (25,106) 33,994 1,603 2,555 (2,476) 20,048 157,003 4,418 (3,758) 6,502 5,143 169,308 — — (84,482) 675 (6,876) (11,291) 5,272 914 — — (12,623) 11,665 (3,438) (100,185) 7,744 (9,956) 59,000 (95,000) 5,633 (29,863) 20,000 (20,000) (908) (99) 24 (11,188) (342) (115) (75,071) 620 (5,327) 98,092 $ 1,184,848 1,013,162 28,959 12,923 (3,199) (36,020) (13,726) (24,703) (40,850) 39,921 (26,649) (436) 7,845 (5,574) 58,779 (8,869) — (439,207) (58,320) 164,069 80,437 184,446 (41,018) 2,076,817 53,715 (41,256) — (304,599) 1,784,676 (141,204) 81,601 (766,875) 13,156 (64,254) (91,792) 15,702 — (4,918) 30,574 (70,363) 78,473 (29,956) (949,855) 859,459 (875,685) 554,217 (506,024) 83,258 (239,491) — — (16,208) (1,432) 212 (168,478) (6,586) 1,772 (314,986) (32,501) 487,333 1,121,989 876 ¥ 134,450 360 ¥ 93,125 10,557 $ 1,619,879 Asahi Kasei Annual Report 2011 55 *旭化成e_fs_PDF用.indd 55 *旭化成e_fs_PDF用.indd 55 11/12/01 10:27 11/12/01 10:27 Notes to Consolidated Financial Statements Asahi Kasei Corporation and Consolidated Subsidiaries 1. Major policies for preparing the consolidated ﬁ nancial statements The consolidated ﬁ nancial statements, which are ﬁ led with the prime minister of Japan as required by the Financial Instruments and Exchange Act 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 ﬁ nancial statements are a translation of those ﬁ led with the prime minister of Japan and incorporate certain modiﬁ cations to enhance foreign readers’ understanding of the ﬁ nancial statements. In addition, the notes to the consolidated ﬁ nancial statements include certain ﬁ nancial information which is not required under the disclosure regulations in Japan, but is presented herein as additional information. In addition, certain reclassiﬁ cations of previously reported amounts have been made to conform to current year’s presentation. Such modiﬁ cations or reclassiﬁ cations have no effect on net income or retained earnings. The U.S. dollar amounts presented in the ﬁ nancial 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 convenience only, and are not intended to be computed in accordance with generally accepted translation procedures, the approximate current exchange rate of ¥83=US$1 prevailing on March 31, 2011, has been used. Consolidation and investments in afﬁ liated companies The consolidated ﬁ nancial statements consist of the accounts of the parent company and 101 subsidiaries (98 subsidiaries at March 31, 2010, hereinafter collectively referred to as the “Company”) which, with minor exceptions due to materiality, are all majority and wholly owned companies, including 9 core operating companies (Asahi Kasei Chemicals Corp., Asahi Kasei Homes Corp., Asahi Kasei Pharma Corp., Asahi Kasei Kuraray Medical Co., Ltd., Asahi Kasei Medical Co., Ltd., Asahi Kasei Fibers Corp., Asahi Kasei Microdevices Corp., Asahi Kasei E-materials Corp. and Asahi Kasei Construction Materials Corp.), Tong Suh Petrochemical Corp. Ltd. (Korea), and Sanyo Petrochemical Co., Ltd. Material inter-company transactions and accounts have been eliminated. Investments in unconsolidated subsidiaries and 20% to 50% owned companies in which the Company exercises signiﬁ cant inﬂ uence are accounted for, with minor exceptions due to materiality, using the equity method of accounting. There were 49 such unconsolidated subsidiaries and 20% to 50% owned companies to which the equity method is applied at March 31, 2011 (49 at March 31, 2010), including Asahi Kasei Metals Ltd., Asahi Kasei Geotechnologies Co., Ltd. and Asahi Organic Chemicals Industry Co., Ltd. Certain subsidiaries results are reported in the consolidated ﬁ nancial statements using a December 31 year-end. Material differences in inter-company transactions and accounts arising from the use of different ﬁ scal year-ends are appropriately adjusted for through consolidation procedures. All assets and liabilities of consolidated subsidiaries are valued using the fair value method. The excess of the cost over the underlying net equity of investments in subsidiaries and afﬁ liated companies accounted for using the equity method of accounting is allocated to identiﬁ able assets and liabilities based on fair values at the date of acquisition. The unassigned residual value in excess of the cost over the underlying net equity (the cost below the underlying net equity) is recognized as goodwill or negative goodwill. Amortization of goodwill and negative goodwill incurred through business combinations which took place before April 1, 2010, are performed by straight-line amortization over a reasonable period during which their effects would last, with the exception of minor amounts which are charged or credited to income in the year of acquisition. 2. Signiﬁ cant accounting policies (a) Cash and cash equivalents For cash ﬂ ow 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 insigniﬁ cant risk of changes in value due to changes in interest rates. (b) Inventories Inventories held for sale in the ordinary course of business are stated at the lower of cost or net sales value. Residential lots and dwellings for sale are stated at speciﬁ cally identiﬁ ed costs. (c) Noncurrent assets and depreciation/amortization Property, plant and equipment (except for lease assets) are stated at cost. Signiﬁ cant 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 depreciated using the straight-line method, at rates based on estimated useful lives of the assets, principally ranging from 5 to 60 years for buildings and from 4 to 22 years for machinery and equipment and vehicles. Intangible ﬁ xed assets (except for lease assets), including software for internal use, are amortized using the straight-line method over the estimated useful lives of the assets. The estimated useful life of software for internal use is mainly 5 years. Lease assets (ﬁ nancing lease transactions without title transfer) are depreciated/amortized on a straight-line basis over the period of the lease with no residual value. For ﬁ nancing lease transactions without title transfer whose transaction date is before March 31, 2008, the previous method of accounting for lease transactions continues to be applied, with periodic lease charges for ﬁ nancing leases charged to income as incurred. (d) Signiﬁ cant allowances i) Allowance for doubtful accounts Estimates of the unrecoverable portion of receivables, generally 56 Asahi Kasei Annual Report 2011 based on historical rates and for speciﬁ c receivables of particular concern based on individual estimates of recoverability, are recognized as allowance for doubtful accounts. ii) Provision for periodic repairs The portion of foreseeable periodic repair expenses deemed to correspond to normal wear and tear of plant and equipment as of the closing date of the consolidated ﬁ scal period is recognized as provision for periodic repairs. iii) Provision for product warranties Estimates of product warranty expenses based on historical rates and the amount required for remediation of deﬁ cient eave assembly speciﬁ cation are recognized as provision for product warranties. iv) Provision for retirement beneﬁ ts Provision for retirement beneﬁ ts represent the estimated present value of projected beneﬁ t obligations in excess of the fair value of the plan assets. 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 10 years. Unrecognized prior service costs are amortized on a straight-line basis primarily over the following 10 years. v) Provision for directors’ retirement beneﬁ ts 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) Signiﬁ cant revenue and expense recognition i) Construction activities that are realizable as of current ﬁ scal year end. The percentage-of-completion method (progress of work is estimated using the percentage of costs incurred to the total projected costs). ii) Other construction activities The completed-contract method. *旭化成e_fs_PDF用.indd 56 *旭化成e_fs_PDF用.indd 56 11/12/01 10:27 11/12/01 10:27 (f) Financial instruments i) Securities Securities are classiﬁ ed into four categories: trading securities, held-to-maturity debt securities, equity securities of unconsolidated subsidiaries and afﬁ liates, and other securities. At March 31, 2011 and 2010, the Company did not have trading securities or held-to-maturity debt securities. Equity securities of unconsolidated subsidiaries and afﬁ liates are accounted for, with minor exceptions due to materiality, using the equity method of accounting. Other securities whose fair values are readily determinable 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 are stated at cost. In cases where any signiﬁ cant 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 reﬂ ected in the income statements. ii) Derivative ﬁ nancial 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 “Deferred gains or losses on hedges” to be offset against gains or losses of the underlying hedged assets and liabilities. (g) Taxes Accrued income taxes are stated at the estimated amount payable 3. Changes in signiﬁ cant accounting policies (a) Application of Accounting Standard for Equity Method of Accounting for Investments and Practical Solution on Uniﬁ cation of Accounting Policies Applied to Afﬁ liates Accounted for Using the Equity Method Accounting Standard for Equity Method of Accounting for Investments (Accounting Standards Board of Japan (ASBJ) Statement No. 16) and Practical Solution on Uniﬁ cation of Accounting Policies Applied to Afﬁ liates Accounted for Using the Equity Method (PITF No. 24) have been applied beginning from the ﬁ scal year ended March 31, 2011. This change has no impact on the consolidated ﬁ nancial statements. (b) Application of Accounting Standard for Asset Retirement Obligations Accounting Standard for Asset Retirement Obligations (ASBJ Statement No. 18) and Guidance on Accounting Standard for Asset Retirement Obligations (ASBJ Guidance No. 21) have been applied beginning from the ﬁ scal year ended March 31, 2011. As a result, income before income taxes and minority interests was ¥1,738 million (US$20,936 thousand) lower than it would have been if the previous method had been used. The impact on operating income and ordinary income was immaterial. 4. Additional information 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. In Japan, the consumption tax system is designed so that all goods and services are taxed at a ﬂ at rate of 5% unless speciﬁ ed otherwise. Assets, liabilities, and proﬁ t and loss accounts are stated net of consumption tax. The Company has elected to ﬁ le its return under the consolidated tax ﬁ ling system. (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 and liabilities 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, and income and expenses of same are translated into Japanese yen at the average exchange rate for the ﬁ scal year. 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 foreign currency translation adjustments in the balance sheets. A portion of the foreign currency translation adjustment is allocated to minority interest and the Company’s portion is presented as a separate component of net assets in the balance sheets. (c) Application of Accounting Standard for Business Combinations and related matters Accounting Standard for Business Combinations (ASBJ Statement No. 21), Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22), Partial Amendments to Accounting Standard for Research and Development Costs (ASBJ Statement No. 23), Revised Accounting Standard for Business Divestitures (ASBJ Statement No. 7), Revised Accounting Standard for Equity Method of Accounting for Investments (ASBJ Statement No. 16), and Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ Guidance No. 10) have been applied beginning from the ﬁ scal year ended March 31, 2011. With the application of Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22), the evaluation method for assets and liabilities of consolidated subsidiaries changed from the partial fair value evaluation method to the full fair value evaluation method. The impact of this change on the consolidated ﬁ nancial statements was immaterial. A consolidated subsidiary, Asahi Kasei Pharma Corp. has an ongoing legal action against Actelion Ltd. of Switzerland which acquired CoTherix, Inc. of the US, claiming compensation for damages incurred due to unlawful acts in relation to performance of a license agreement to develop Fasudil Rho-kinase inhibitor. For this, a total of ¥1,908 million (US$22,993 thousand) was recorded as litigation related expenses under non-operating expenses in the consolidated statements of income for the year ended March 31, 2011. 5. Notes to Consolidated Balance Sheets (a) Investment securities Among investment securities, shares of unconsolidated subsidiaries and afﬁ liates as of March 31, 2011 and 2010, amounted to ¥63,690 million (US$767,346 thousand) and ¥61,501 million, respectively. Included in those amounts are investments in joint ventures of ¥34,266 million ( US$412,839 thousand) and ¥33,654 million, respectively. (b) Hypothecated assets and secured debt A summary of assets pledged as collateral and secured debt as of March 31, 2011 and 2010, is shown below: Asahi Kasei Annual Report 2011 57 *旭化成e_fs_PDF用.indd 57 *旭化成e_fs_PDF用.indd 57 11/12/01 10:27 11/12/01 10:27 Hypothecated assets Buildings and structures Machinery, equipment and vehicles Other Secured debt Short-term loans payable Long-term loans payable Millions of yen 2011 ¥ 341 12 0 ¥ 353 ¥ 109 423 ¥ 531 2010 ¥ 433 16 0 ¥ 449 ¥ 24 620 ¥ 644 Thousands of U.S. dollars 2011 $ 4,114 139 2 $ 4,255 $ 1,308 5,092 $ 6,400 Besides the above, investment securities pledged to suppliers as transaction guarantee at March 31, 2011 and 2010, were ¥87 million (US$1,047 thousand) and ¥98 million, respectively. (c) Contingent liabilities Contingent liabilities at March 31, 2011 and 2010, arising in the ordinary course of business are as follows: Loans guaranteed Commitment for guarantees Letters of awareness Completion guarantees Notes discounted Millions of yen 2011 ¥ 31,592 760 309 15,002 37 ¥ 47,700 2010 ¥ 8,920 1,144 797 10,605 13 ¥ 21,479 Thousands of U.S. dollars 2011 $ 380,630 9,151 3,725 180,746 452 $ 574,703 The parent company and certain of its subsidiaries and afﬁ liates are 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 ﬁ nancial statements. (d) Reduction entries due to state subsidies, etc. Cumulative reduction entries due to state subsidies, etc. for the acquisition of property, plant and equipment as of March 31, 2011 and 2010, were ¥7,268 million (US$87,570 thousand) and ¥5,936 million, respectively. The breakdown of reduction entries as of March 31, 2011, is as follows: Buildings and structures Machinery, equipment and vehicles Land Other 6. Notes to Consolidated Statements of Income (a) Selling, general and administrative expenses Major components of selling, general and administrative expenses are as follows: Freight and storage Salaries and beneﬁ ts Research and development* Millions of yen 2011 ¥ 3,095 3,810 226 137 ¥ 7,268 2010 ¥ 2,612 2,958 252 113 ¥ 5,936 Thousands of U.S. dollars 2011 $ 37,291 45,904 2,728 1,646 $ 87,570 Millions of yen 2011 ¥ 33,946 94,383 44,745 2010 ¥ 32,102 90,623 44,846 Thousands of U.S. dollars 2011 $ 408,985 1,137,148 539,094 * The aggregate amounts of research and development expenses included in manufacturing costs and selling, general and administrative expenses for the years ended March 31, 2011 and 2010, were ¥62,320 million (US$750,846 thousand) and ¥62,924 million, respectively. (b) Loss on devaluation of inventories Inventories held for sale in the ordinary course of business are stated at the lower of cost or net sales value. Loss on devaluation of inventories for the years ended March 31, 2011 and 2010, was as follows: Millions of yen 2011 ¥(429) 2010 ¥(5,241) Thousands of U.S. dollars 2011 $(5,172) 58 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 58 *旭化成e_fs_PDF用.indd 58 11/12/01 10:27 11/12/01 10:27 (c) Gain on sales of noncurrent assets Gain on sales of noncurrent assets for the year ended March 31, 2011, was primarily gain on the sale of land, etc. amounting to ¥423 million (US$5,097 thousand). Gain on sales of noncurrent assets for the year ended March 31, 2010, was comprised of sales of machinery and equipment, etc. amounting to ¥152 million. (d) Loss on disposal of noncurrent assets Loss on disposal of noncurrent assets for the years ended March 31, 2011 and 2010, was primarily loss on abandonment and sale of buildings, machinery and equipment, etc. The abandonment and sale of buildings, machinery and equipment, etc. was performed under a single, all-inclusive contract for each facility. (e) Impairment losses Impairment losses for the years ended March 31, 2011 and 2010, were as follows: Use Production facility for ammonia Production facility for synthetic ﬁ bers Asset class Machinery and equipment, etc. Machinery and equipment, etc. Location Kurashiki, Okayama USA Production facility for autoclaved aerated concrete (AAC) panels Machinery and equipment, etc. Mizuho, Gifu Production facility for synthetic resin Production facility for resin molding Production facility for benzene Production facility for performance paper Research facility for pharmaceuticals Rental facilities Idle assets Production facility for ﬁ ne-pattern devices Production facility for synthetic resin Machinery and equipment, etc. Machinery and equipment, etc. Machinery and equipment, etc. Machinery and equipment, etc. Machinery and equipment, etc. Sodegaura, Chiba Fuji, Shizuoka Kurashiki, Okayama Gobo, Wakayama Fuji, Shizuoka Buildings, etc. Nobeoka, Miyazaki Land Machinery and equipment, etc. Machinery and equipment, etc. Atsugi, Kanagawa, and elsewhere Hyuga, Miyazaki Kurashiki, Okayama Millions of yen 2011 2010 Thousands of U.S. dollars 2011 ¥ 3,154 ¥ — $ 37,994 1,977 — — 708 651 — 330 295 — 79 52 — 1,365 955 — — 531 — — 198 108 — 23,821 — — 8,525 7,841 — 3,979 3,555 — 956 627 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 ﬁ xed assets class. With respect to assets shown in the above table, the book value was reduced to the recoverable amount due to diminished proﬁ tability. The recoverable amount is stated as value for future usage, which is calculated as discounted future cash ﬂ ow with applicable discount rate of 6% and 5%, as of March 31, 2011 and 2010, respectively. The resulting extraordinary losses for production facility for ammonia, production facility for resin molding, production facility for benzene and research facility for pharmaceuticals were recorded under business structure improvement expenses for the year ended March 31, 2011. The resulting extraordinary losses for production facility for autoclaved aerated concrete (AAC) panels and production facility for synthetic resin was recorded under business structure improvement expenses for the year ended March 31, 2010. For idle land of which the market value has signiﬁ cantly decreased, the book value is reduced to the recoverable amount. The recoverable amount is measured at the net selling price primarily based on the value appraised by real estate appraisers. (f) Environmental expenses Environmental expenses for the year ended March 31, 2011, were mainly for decontamination of idle land, etc. and those for the year ended March 31, 2010, were mainly for the treatment of polychlorinated biphenyl (PCB) wastes, etc. (g) Loss on disaster Loss on disaster for the year ended March 31, 2011, was primarily ﬁ xed costs incurred during suspension of operations amounting to ¥410 million (US$4,940 thousand), loss on disposal of inventories amounting to ¥332 million (US$4,002 thousand) and loss on disposal of facilities, etc. amounting to ¥79 million (US$948 thousand). (h) Business structure improvement expenses Major components of business structure improvement expenses were as follows: Loss on disposal and devaluation of assets and others Impairment of ﬁ xed assets Millions of yen 2011 ¥ 5,174 4,842 ¥ 10,016 2010 ¥ 7,730 2,320 ¥ 10,050 Thousands of U.S. dollars 2011 $ 62,335 58,339 $ 120,674 Asahi Kasei Annual Report 2011 59 *旭化成e_fs_PDF用.indd 59 *旭化成e_fs_PDF用.indd 59 11/12/01 10:27 11/12/01 10:27 7. Notes to Consolidated Statements of Comprehensive Income For the year ended March 31, 2011 (a) Comprehensive income for the previous ﬁ scal year Comprehensive income attributable to owners of the parent company Comprehensive income attributable to minority interests (b) Other comprehensive income for the previous ﬁ scal year Valuation difference on other securities Deferred gains on hedges Foreign currency translation adjustment Share of other comprehensive income of afﬁ liates accounted for using equity method Millions of yen 2010 ¥ 41,033 458 ¥ 41,492 Millions of yen 2010 ¥ 13,332 69 2,045 473 ¥ 15,919 Thousands of U.S. dollars 2010 $ 494,377 5,523 $ 499,900 Thousands of U.S. dollars 2010 $ 160,625 827 24,643 5,700 $ 191,796 (Additional information) Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No. 25) has been applied beginning from the ﬁ scal year ended March 31, 2011. The items “accumulated other comprehensive income” and “total accumulated other comprehensive income” are exactly the same as “valuation and translation adjustments” and “total valuation and translation adjustments” of the previous ﬁ scal year, respectively. 8. Notes to Consolidated Statements of Changes in Net Assets For the year ended March 31, 2011 (a) Class and total number of issued and outstanding shares and treasury stock Issued and outstanding shares Common stock Total Treasury stock Common stock (Notes 1 & 2) Total Number of shares as of March 31, 2010 Increase in number of shares during the ﬁ scal year Decrease in number of shares during the ﬁ scal year Number of shares as of March 31, 2011 Thousands of shares 1,402,616 1,402,616 4,228 4,228 — — 230 230 — — 37 37 1,402,616 1,402,616 4,421 4,421 Notes: 1. The increase of 230 thousand shares in common stock of treasury stock was due to purchase of shares in quantities of less than one share unit. 2. The decrease of 37 thousand shares in common stock of treasury stock was due to sale of shares in quantities of less than one share unit. (b) Dividends i) Cash dividends paid 1) The following was resolved by the Board of Directors on May 10, 2010. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥6,992 million (US$84,240 thousand) ¥5.00 (US$0.06) March 31, 2010 June 7, 2010 2) The following was resolved by the Board of Directors on November 2, 2010. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥6,992 million (US$84,245 thousand) ¥5.00 (US$0.06) September 30, 2010 December 1, 2010 ii) Dividends for which the date of record falls within the ﬁ scal year under review but the payment date occurs in the following ﬁ scal year 1) The following was resolved by the Board of Directors on May 11, 2011. Dividends for common stock Total dividends Source of dividends Dividend per share Date of record Payment date 60 Asahi Kasei Annual Report 2011 ¥8,389 million (US$101,074 thousand) Retained earnings ¥6.00 (US$0.07) March 31, 2011 June 7, 2011 *旭化成e_fs_PDF用.indd 60 *旭化成e_fs_PDF用.indd 60 11/12/01 10:27 11/12/01 10:27 For the year ended March 31, 2010 (a) Class and total number of issued and outstanding shares and treasury stock Issued and outstanding shares Common stock Total Treasury stock Common stock (Notes 1 & 2) Total Number of shares as of March 31, 2009 Increase in number of shares during the ﬁ scal year Decrease in number of shares during the ﬁ scal year Number of shares as of March 31, 2010 Thousands of shares 1,402,616 1,402,616 4,071 4,071 — — 211 211 — — 53 53 1,402,616 1,402,616 4,228 4,228 Notes: 1. The increase of 211 thousand shares in common stock of treasury stock was due to purchase of shares in quantities of less than one share unit. 2. The decrease of 53 thousand shares in common stock of treasury stock was due to sale of shares in quantities of less than one share unit. (b) Dividends i) Cash dividends paid 1) The following was resolved by the Board of Directors on May 12, 2009. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥4,196 million ¥3.00 March 31, 2009 June 3, 2009 2) The following was resolved by the Board of Directors on November 2, 2009. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥6,992 million ¥5.00 September 30, 2009 December 1, 2009 ii) Dividends for which the date of record falls within the ﬁ scal year under review but the payment date occurs in the following ﬁ scal year 1) The following was resolved by the Board of Directors on May 10, 2010. Dividends for common stock Total dividends Source of dividends Dividend per share Date of record Payment date ¥6,992 million Retained earnings ¥5.00 March 31, 2010 June 7, 2010 9. Note to Consolidated Statements of Cash Flows Cash and cash equivalents Reconciliation of cash and cash equivalents on the consolidated statements of cash ﬂ ows to the amounts disclosed on the consolidated balance sheets at March 31, 2011 and 2010, is as follows: Cash and deposits Time deposits with deposit term of over 3 months Money market funds and others included in short-term investment securities Cash and cash equivalents 10. Leases (a) Financing lease transactions Financing lease transactions without title transfer i) Components of lease assets are as follows: Millions of yen 2011 ¥ 140,319 (6,240) 371 ¥ 134,450 2010 ¥ 93,928 (1,788) 985 ¥ 93,125 Thousands of U.S. dollars 2011 $ 1,690,589 (75,182) 4,472 $ 1,619,879 1) Property, plant and equipment: Mainly model homes (buildings and structures) for housing operations 2) Intangible ﬁ xed assets: Software ii) Depreciation of lease assets: As stated in 2. Signiﬁ cant accounting policies (c) Noncurrent assets and depreciation/amortization. The ﬁ nancing lease transactions without title transfer which occurred prior to March 31, 2008, are accounted for on a basis similar to operating lease. Asahi Kasei Annual Report 2011 61 *旭化成e_fs_PDF用.indd 61 *旭化成e_fs_PDF用.indd 61 11/12/01 10:27 11/12/01 10:27 Such lease transactions accounted for as operating lease be accounted for as ﬁ nancing lease, cost and related accumulated amortization, computed using the straight-line method over the term of the lease, at March 31, 2011 and 2010, would have been as follows: Buildings and structures Machinery, equipment and vehicles Property, plant and equipment, other Intangible ﬁ xed assets, other Buildings and structures Machinery, equipment and vehicles Property, plant and equipment, other Intangible ﬁ xed assets, other Buildings and structures Machinery, equipment and vehicles Property, plant and equipment, other Intangible ﬁ xed assets, other Millions of yen 2011 Accumulated amortization ¥ 1,868 134 497 179 ¥ 2,678 Millions of yen 2010 Accumulated amortization ¥ 4,503 156 678 149 ¥ 5,486 Thousands of U.S. dollars 2011 Accumulated amortization $ 22,512 1,609 5,991 2,152 $ 32,264 Cost ¥ 2,118 212 639 241 ¥ 3,210 Cost ¥ 5,863 269 981 259 ¥ 7,372 Cost $ 25,524 2,549 7,698 2,898 $ 38,669 Net amount ¥ 250 78 142 62 ¥ 532 Net amount ¥ 1,360 113 303 110 ¥ 1,886 Net amount $ 3,012 940 1,707 746 $ 6,405 The future lease payments under the Company’s ﬁ nancing leases at March 31, 2011 and 2010, including amounts representing interest, were as follows: Due within one year Due after one year Millions of yen 2011 ¥ 412 119 ¥ 532 2010 ¥ 1,333 552 ¥ 1,886 Thousands of U.S. dollars 2011 $ 4,968 1,437 $ 6,405 Lease charges were ¥1,213 million (US$14,610 thousand) and ¥2,229 million for the years ended March 31, 2011 and 2010, respectively. The amortization amounts of the leased assets, computed using the straight-line method over the term of the leases and no residual value, were ¥1,213 million (US$14,610 thousand) and ¥2,229 million for the years ended March 31, 2011 and 2010, respectively. No impairment loss is allocated to the leased assets. (b) Operating lease transactions Future lease payments for the non-cancelable portion of the Company’s operating leases at March 31, 2011 and 2010, were as follows: Due within one year Due after one year 11. Financial instruments (a) State of ﬁ nancial instruments i) Policy related to ﬁ nancial instruments The Company raises long-term funds as required mainly for its planned capital expenditures by borrowing from banks, borrowing from life insurance companies, issuing bonds, etc. A portion of the surplus funds is invested only in highly stable ﬁ nancial assets. Short-term working funds are raised 62 Asahi Kasei Annual Report 2011 Millions of yen 2011 ¥ 4,456 7,856 ¥ 12,312 2010 ¥ 4,651 11,697 ¥ 16,349 Thousands of U.S. dollars 2011 $ 53,688 94,655 $ 148,342 by bank borrowings, issuance of commercial paper, etc. Derivative transactions are mainly entered into for the purpose of reducing risks related to assets and liabilities which are exposed to risks of ﬂ uctuations of exchange rate and interest rate. Derivatives are not traded for speculative purposes. *旭化成e_fs_PDF用.indd 62 *旭化成e_fs_PDF用.indd 62 11/12/01 10:27 11/12/01 10:27 ii) Components of ﬁ nancial instruments, their risks, and management of risks As operating receivables, notes and accounts receivable, trade, are exposed to credit risk of customers. As the business of the Company spans a wide range of ﬁ elds, operating receivables are not excessively concentrated on speciﬁ c customers, but each group company monitors and manages the state of credit for each customer. Investment securities are exposed to the risk of ﬂ uctuations in market price, but they are mainly shares in supplier companies, etc., held for policy purposes. Fair value is periodically evaluated, and the ﬁ nancial condition of the issuing company is monitored. As operating liabilities, notes and accounts payable, trade, generally have a payment term of 1 year or less. Variable interest-rate borrowings are exposed to the risk of interest rate ﬂ uctuations, but derivatives (interest currency swaps, interest-rate swaps) are used as hedges to ﬁ x interest expenses for a portion of long-term variable interest- rate borrowings. Operating receivables and operating liabilities include those denominated in currencies other than Japanese yen, and are thus exposed to the risk of exchange rate ﬂ uctuations. In order to minimize the effects of short-term exchange-rate ﬂ uctuations, the Company hedges with derivative transactions (forward exchange contracts) in principle within the range of the underlying receivables and liabilities. Derivative transactions are exposed to the credit risk of transacting ﬁ nancial institutions, but the state of credit is veriﬁ ed through periodical monitoring. Such transactions are performed and managed in accordance with each company’s internal regulations which stipulate the related authority, procedures, limits, etc. Borrowings are exposed to liquidity risk, but the parent company speciﬁ es standards for required on-hand funds based on the Company’s funding plans, prepares and revises plans for cash receipts and disbursements as appropriate, and enters into commitment- line agreements with transacting ﬁ nancial institutions to manage such risk. Loan securitization in housing operations is exposed to the risk of interest rate ﬂ uctuations between the time of execution of housing loans and the time of execution of their securitization, but derivative transactions (interest rate swaps) are entered into to reduce such risk. iii) Supplementary explanation of fair value of ﬁ nancial instruments Fair value of ﬁ nancial instruments includes value based on market price, and, in the case where no market price exists, a reasonably calculated value. As variable factors are incorporated in its calculation, fair value may change due to the adoption of different assumptions, conditions, etc. Amount of contract regarding derivative transactions in the note 13 “Derivative ﬁ nancial instruments” is not itself an indication of the market risk of the derivative transactions. (b) Fair value of ﬁ nancial instruments Amounts carried on the consolidated balance sheets, their fair values, and the differences between them as of March 31, 2011 and 2010, are as shown below. Financial instruments whose fair values are deemed extremely difﬁ cult to determine are not included in this table (See Notes 2), 3) and 4) below). Cash and deposits Notes and accounts receivable, trade Allowance for doubtful accounts (*1) Short-term investment securities Other securities Investment securities Other securities Long-term receivables Allowance for doubtful accounts (*1) Total assets Notes and accounts payable, trade Short-term loans payable Commercial paper Income taxes payable Bonds payable Long-term loans payable Lease obligations Long-term guarantee deposited Total liabilities Derivative ﬁ nancial instruments (*2) Carrying amount ¥ 140,319 273,414 (1,028) 272,386 Millions of yen 2011 Fair value ¥ 140,319 272,386 116 116 93,921 5,860 (11) 5,849 512,590 136,407 76,611 23,000 24,085 25,000 123,493 5,324 5,845 419,766 (419) 93,921 6,249 512,991 136,407 76,611 23,000 24,085 25,311 125,156 5,343 5,731 421,644 (419) Difference ¥ — — — — 400 400 — — — — (311) (1,663) (19) 114 (1,879) — Asahi Kasei Annual Report 2011 63 *旭化成e_fs_PDF用.indd 63 *旭化成e_fs_PDF用.indd 63 11/12/01 10:27 11/12/01 10:27 Cash and deposits Notes and accounts receivable, trade Allowance for doubtful accounts (*1) Short-term investment securities Other securities Investment securities Other securities Long-term receivables Allowance for doubtful accounts (*1) Total assets Notes and accounts payable, trade Short-term loans payable Commercial paper Income taxes payable Bonds payable Long-term loans payable Lease obligations Long-term guarantee deposited Total liabilities Derivative ﬁ nancial instruments (*2) Cash and deposits Notes and accounts receivable, trade Allowance for doubtful accounts (*1) Short-term investment securities Other securities Investment securities Other securities Long-term receivables Allowance for doubtful accounts (*1) Total assets Notes and accounts payable, trade Short-term loans payable Commercial paper Income taxes payable Bonds payable Long-term loans payable Lease obligations Long-term guarantee deposited Total liabilities Derivative ﬁ nancial instruments (*2) Carrying amount ¥ 93,928 238,931 (1,543) 237,388 Millions of yen 2010 Fair value ¥ 93,928 237,388 112 112 105,303 6,844 (73) 6,770 443,501 121,409 78,302 19,000 12,160 25,000 137,406 4,716 5,694 403,686 (200) 105,303 7,125 443,856 121,409 78,302 19,000 12,160 24,808 138,385 4,774 5,583 404,421 (200) Thousands of U.S. dollars 2011 Fair value $ 1,690,589 3,281,758 Carrying amount $ 1,690,589 3,294,144 (12,386) 3,281,758 1,394 1,394 1,131,577 1,131,577 70,601 (130) 70,471 6,175,788 1,643,461 923,023 277,108 290,183 301,205 75,292 6,180,610 1,643,461 923,023 277,108 290,183 304,949 1,487,870 1,507,902 64,146 70,424 5,057,420 (5,051) 64,376 69,052 5,080,054 (5,051) Difference ¥ — — — — 355 355 — — — — 192 (980) (58) 111 (735) — Difference $ — — — — 4,821 4,821 — — — — (3,745) (20,032) (230) 1,372 (22,634) — (*1) Speciﬁ c allowance for doubtful accounts is deducted from notes and accounts receivable, trade, and long-term loans receivable. (*2) Net amount of assets and liabilities resulted from derivative transactions is shown. In the case of a net liability, the amount is shown in parentheses. 64 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 64 *旭化成e_fs_PDF用.indd 64 11/12/01 10:27 11/12/01 10:27 Note 1) Method of calculating fair value of ﬁ nancial instruments; securities and derivative ﬁ nancial instruments i) Assets 1) Cash and deposits; notes and accounts receivable, trade As their fair value approximates book value due to their short maturity, the corresponding book value amount is used as fair value. 2) Short-term investment securities, investment securities The stock exchange price is used to determine fair value of these traded stocks. Refer to the Note 12 “Marketable securities and investment securities” for information regarding securities based on each objective for which they are held. 3) Long-term receivables The carrying amount shown includes long-term loans receivable scheduled for repayment within one year. Their fair value is determined by a method of calculation in which the total amount of principal and interest is discounted using the interest rate that would apply if equivalent long-term loans were newly issued. For long-term loans receivable that have a variable interest rate, as they are deemed to reﬂ ect market interest rates within a short term, book value is used as fair value. ii) Liabilities 1) Notes and accounts payable, trade; short-term loans payable; commercial paper; income taxes payable As their fair value approximates book value due to their short maturity, the corresponding book value amount is used as fair value. 2) Bonds payable With regard to fair value of the bonds payable issued by the parent company, for those with market price, fair value is determined by the market price. For those without market price that are subject to exceptional treatment for interest rate swaps, fair value is determined by a method of calculation in which the total amount of principal and interest, treated as a unit with such interest rate swaps, is discounted using the interest rate that would apply if equivalent bonds were newly issued. term loans payable that have a variable interest rate, fair value of those subject to exceptional treatment of interest rate swaps is determined by a method of calculation in which the total amount of principal and interest, treated as a unit with such interest rate swaps, is discounted using the interest rate that would apply if equivalent long-term loans were newly entered, and book value is used as fair value of others, as they are deemed to reﬂ ect market interest rates within a short term. 4) Lease obligations The carrying amount shown is the total amount of lease obligations under current liabilities and lease obligations under noncurrent liabilities. Present value, calculated by discounting the total amount of principal and interest using the presumed interest rate that would apply if lease transactions were newly made, is used as the fair value. 5) Long-term guarantee deposited In case where the deposit period can be estimated, the fair value of long-term guarantee deposited is determined through calculation of the discount over that period. iii) Derivative transactions Refer to the Note 13 “Derivative ﬁ nancial instruments.” Note 2) For equity investments in nonpublic companies, with a carrying amount as of March 31, 2011 and 2010, amounting to ¥72,652 million (US$875,323 thousand) and ¥70,630 million, respectively, fair value is not included in short-term investment securities or in investment securities, as no market price exists and it is deemed extremely difﬁ cult to determine fair value due to the impossibility of estimating future cash ﬂ ows. Note 3) A portion of the carrying amount of long-term loans payable, as of March 31, 2011 and 2010, amounting to ¥507 million (US$6,112 thousand) and ¥176 million, respectively, is for loans from the Japan Science and Technology Agency, and the timing of repayment is yet to be determined as it begins after development success is certiﬁ ed. Fair value is not included as it is deemed extremely difﬁ cult to determine due to the impossibility of estimating future cash ﬂ ows. 3) Long-term loans payable Note 4) Within long-term guarantee deposited, the fair value of a portion having a carrying The carrying amount shown includes long-term loans payable that are scheduled for repayment within one year of March 31, 2011 and 2010, amounted to ¥32,278 million (US$388,892 thousand) and ¥15,660 million, respectively. Their fair value is determined by a method of calculation in which the total amount of principal and interest is discounted using the interest rate that would apply if equivalent long-term loans were newly entered. Of long- amount as of March 31, 2011 and 2010, amounting to ¥12,495 million (US$150,542 thousand) and ¥12,628 million, respectively, is not included as no market price exists and it is deemed extremely difﬁ cult to determine fair value due to the impossibility of estimating future cash ﬂ ows. Note 5) For monetary credits and securities with maturity, amount scheduled for redemption subsequent to the closing date. Cash and deposits Notes and accounts receivable, trade Short-term investment securities, investment securities Government and municipal bonds Long-term receivables Cash and deposits Notes and accounts receivable, trade Short-term investment securities, investment securities Government and municipal bonds Long-term receivables Millions of yen 2011 Due within one year Due after one year, within ﬁ ve years Due after ﬁ ve years, within ten years Due after more than ten years ¥ 140,319 273,414 2 679 ¥ 414,414 ¥ — — 2 5,166 ¥ 5,168 ¥ — — — 15 ¥ 15 Millions of yen 2010 ¥ — — — — ¥ — Due within one year Due after one year, within ﬁ ve years Due after ﬁ ve years, within ten years Due after more than ten years ¥ 93,928 238,931 2 769 ¥ 333,631 ¥ — — 5 6,059 ¥ 6,064 ¥ — — — 15 ¥ 15 Thousands of U.S. dollars 2011 ¥ — — — — ¥ — Due within one year Due after one year, within ﬁ ve years Due after ﬁ ve years, within ten years Due after more than ten years Cash and deposits $ 1,690,589 $ — Notes and accounts receivable, trade 3,294,144 Short-term investment securities, investment securities Government and municipal bonds Long-term receivables 27 8,184 $ 4,992,944 — 27 62,236 $ 62,263 $ — — — 181 $ 181 $ — — — — $ — Note 6) For bonds payable, long-term loans payable, lease obligations, and other interest-bearing debt, amount scheduled for repayment subsequent to the closing date. Refer to Note 21 “Borrowings” Asahi Kasei Annual Report 2011 65 *旭化成e_fs_PDF用.indd 65 *旭化成e_fs_PDF用.indd 65 11/12/01 10:27 11/12/01 10:27 12. Marketable securities and investment securities (a) Other securities with available fair value The aggregate cost, carrying amount which was identical to fair value, and gross unrealized gains and losses of debt and equity securities classiﬁ ed as other securities for which fair values were available at March 31, 2011 and 2010, were as follows: Securities with unrealized gains: Equity securities Securities with unrealized losses: Equity securities Debt securities Carrying amount Millions of yen 2011 Cost Unrealized gains (losses) ¥ 85,780 ¥ 32,629 ¥ 53,151 8,141 116 8,256 ¥ 94,037 11,440 116 11,555 ¥ 44,185 (3,299) — (3,299) ¥ 49,852 Note) For equity investment in nonpublic companies, with a carrying amount of ¥72,652 million, fair value is not included in short-term investment securities or in investment securities, as no market price exists and it is deemed extremely difﬁ cult to determine fair value. Securities with unrealized gains: Equity securities Securities with unrealized losses: Equity securities Debt securities Carrying amount Millions of yen 2010 Cost Unrealized gains (losses) ¥ 96,284 ¥ 33,280 ¥ 63,004 9,019 0 9,019 ¥ 105,303 10,415 0 10,415 ¥ 43,695 (1,396) — (1,396) ¥ 61,608 Note) For equity investment in nonpublic companies, with a carrying amount of ¥70,630 million, fair value is not included in short-term investment securities or in investment securities, as no market price exists and it is deemed extremely difﬁ cult to determine fair value. Securities with unrealized gains: Equity securities Securities with unrealized losses: Equity securities Debt securities Thousands of U.S. dollars Carrying amount 2011 Cost Unrealized gains (losses) $ 1,033,499 $ 393,126 $ 640,372 98,078 1,394 99,472 137,829 1,394 139,222 $ 1,132,970 $ 532,348 (39,750) — (39,750) $ 600,622 Note) For equity investment in nonpublic companies, with a carrying amount of US$875,323 thousand, fair value is not included in short-term investment securities or in investment securities, as no market price exists and it is deemed extremely difﬁ cult to determine fair value. (b) The realized gains and losses on the sale of other securities during the year ended March 31 2011 and 2010, were as follows: Selling amount Gain on sales of securities Loss on sales of securities Millions of yen 2011 ¥ 1,292 416 380 2010 ¥ 275 112 — Thousands of U.S. dollars 2011 $ 15,567 5,014 4,578 (c) Loss on other devaluation of investment securities whose fair values are readily determinable for the years ended March 31, 2011 and 2010, was ¥651 million (US$7,845 thousand) and ¥1,918 million, respectively. 66 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 66 *旭化成e_fs_PDF用.indd 66 11/12/01 10:27 11/12/01 10:27 13. Derivative ﬁ nancial instruments (a) Derivative ﬁ nancial instruments for which hedge accounting is not applied i) Foreign exchange forward contracts Classiﬁ cation Items Amount of contract Amount of contract over 1 year Fair value Proﬁ t (loss) from valuation Foreign exchange forward contracts Millions of yen 2011 Off–market transactions Selling U.S. dollar Euro Thai baht Buying U.S. dollar ¥ 13,234 2,359 469 1,505 ¥ 17,567 ¥ — — — — ¥ — ¥ (159) (104) (15) 12 ¥ (268) ¥ (159) (104) (15) 12 ¥ (268) Millions of yen 2010 Classiﬁ cation Items Amount of contract Amount of contract over 1 year Fair value Proﬁ t (loss) from valuation Foreign exchange forward contracts Off–market transactions Selling U.S. dollar Euro Thai baht Buying U.S. dollar ¥ 11,406 3,518 479 1,311 ¥ 16,714 ¥ — — — — ¥ — ¥ (105) (8) (27) 16 ¥ (124) ¥ (105) (8) (27) 16 ¥ (124) Thousands of U.S. dollars 2011 Classiﬁ cation Items Amount of contract Amount of contract over 1 year Fair value Proﬁ t (loss) from valuation Foreign exchange forward contracts Off–market transactions Selling U.S. dollar Euro Thai baht Buying U.S. dollar $ 159,445 28,425 5,648 18,130 $ 211,648 $ — — — — $ — $ (1,922) (1,259) (184) 139 $ (3,225) (b) Derivative ﬁ nancial instruments for which hedge accounting is applied i) Foreign exchange forward contracts Classiﬁ cation Items Hedged assets / liabilities Amount of contract Foreign exchange forward contracts Millions of yen 2011 Amount of contract over 1 year Selling U.S. dollar Principled treatment Euro Buying U.S. dollar Euro Singapore dollar Accounts receivable, trade ¥ 9,467 Accounts receivable, trade Accounts payable, trade Accounts payable, trade Accounts payable, trade 936 370 4 13 ¥ — — — — — $ (1,922) (1,259) (184) 139 $ (3,225) Fair value ¥ (121) (40) 9 (0) 0 ¥ 10,790 ¥ — ¥ (152) Asahi Kasei Annual Report 2011 67 *旭化成e_fs_PDF用.indd 67 *旭化成e_fs_PDF用.indd 67 11/12/01 10:27 11/12/01 10:27 Classiﬁ cation Items Hedged assets / liabilities Amount of contract Foreign exchange forward contracts Millions of yen 2010 Amount of contract over 1 year Selling U.S. dollar Principled treatment Euro Buying U.S. dollar Euro Accounts receivable, trade Accounts receivable, trade Accounts payable, trade Accounts payable, trade ¥ 3,263 698 53 60 ¥ 4,075 ¥ — — — — ¥ — Classiﬁ cation Items Hedged assets / liabilities Amount of contract Foreign exchange forward contracts Selling U.S. dollar Principled treatment Euro Buying Accounts receivable, trade Accounts receivable, trade $ 114,059 11,278 U.S. dollar Euro Singapore dollar Accounts payable, trade Accounts payable, trade Accounts payable, trade 4,460 45 159 Thousands of U.S. dollars 2011 Amount of contract over 1 year $ — — — — — Fair value ¥ (79) 5 (1) (1) ¥ (77) Fair value $ (1,453) (480) 106 (3) 4 ii) Interest rate swaps, and interest rate and currency swaps $ 130,002 $ — $ (1,826) Classiﬁ cation Exceptional treatment for an interest rate swaps Exceptional treatment for an interest rate swap and currency swaps Classiﬁ cation Exceptional treatment for an interest rate swaps Exceptional treatment for an interest rate swap and currency swaps Items Hedged assets / liabilities Amount of contract Interest rate swaps Millions of yen 2011 Amount of contract over 1 year Fair value Receive ﬁ xed/pay ﬂ oating Long-term loans payable Pay ﬁ xed/receive ﬂ oating Long-term loans payable ¥ 5,000 43,884 ¥ — 25,915 Interest rate and currency swaps U.S. dollar receive ﬁ xed/ Japanese yen pay ﬂ oating U.S. dollar receive ﬂ oating/ Thai baht pay ﬁ xed Bonds payable 5,000 5,000 Long-term loans payable 1,093 ¥ 54,978 820 ¥ 31,735 (*) (*) (*) (*) — Items Hedged assets / liabilities Amount of contract Interest rate swaps Millions of yen 2010 Amount of contract over 1 year Fair value Receive ﬁ xed/pay ﬂ oating Long-term loans payable Pay ﬁ xed/receive ﬂ oating Long-term loans payable ¥ 5,000 45,178 ¥ 5,000 44,054 Interest rate and currency swaps U.S. dollar receive ﬁ xed/ Japanese yen pay ﬂ oating U.S. dollar receive ﬂ oating/ Thai baht pay ﬁ xed Bonds payable 5,000 5,000 Long-term loans payable 731 585 ¥ 55,909 ¥ 54,638 (*) (*) (*) (*) — 68 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 68 *旭化成e_fs_PDF用.indd 68 11/12/01 10:27 11/12/01 10:27 Classiﬁ cation Exceptional treatment for an interest rate swaps Exceptional treatment for an interest rate swap and currency swaps Items Hedged assets / liabilities Amount of contract Interest rate swaps Thousands of U.S. dollars 2011 Amount of contract over one year Fair value Receive ﬁ xed/pay ﬂ oating Long-term loans payable $ 60,241 $ — Pay ﬁ xed/receive ﬂ oating Long-term loans payable 528,727 312,231 Interest rate and currency swaps U.S. dollar receive ﬁ xed/ Japanese yen pay ﬂ oating U.S. dollar receive ﬂ oating/ Thai baht pay ﬁ xed Bonds payable 60,241 60,241 Long-term loans payable 13,174 9,881 $ 662,383 $ 382,353 (*) (*) (*) (*) — (*) Fair value of interest rate swaps and interest currency swaps for which exceptional treatment is applied, is included in fair value of the corresponding long-term loans payable and bonds payable for which hedge accounting is applied. 14. Provision for retirement beneﬁ ts 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 beneﬁ ts may be granted to employees depending on the conditions under which termination of employment occurs. Certain foreign subsidiaries have deﬁ ned beneﬁ t pension plans or deﬁ ned contribution plans. The obligation for these severance indemnity beneﬁ ts is provided for through accruals, contributory funded deﬁ ned beneﬁ t pension plans, contributory funded deﬁ ned beneﬁ t enterprise pension plans and non-contributory funded tax-qualiﬁ ed pension plans. Information on provision for retirement beneﬁ ts at March 31, 2011 and 2010, was as follows: (a) Projected beneﬁ t obligations (b) Fair value of plan assets (c) Unfunded beneﬁ t obligations [(a)+(b)] (d) Unrecognized actuarial gains/losses (e) Unrecognized prior service costs (f) Amount shown on balance sheet [(c)+(d)+(e)] (g) Prepaid pension cost (h) Provision for retirement beneﬁ ts [(f)-(g)] Millions of yen 2011 ¥ (310,990) 164,396 (146,593) 46,746 (2,692) 2010 ¥ (295,842) 170,895 (124,947) 24,478 (4,019) Thousands of U.S. dollars 2011 $ (3,746,865) 1,980,680 (1,766,185) 563,210 (32,440) (102,539) (104,488) (1,235,415) 4,769 4,961 57,463 ¥ (107,309) ¥ (109,450) $ (1,292,878) Note: The ﬁ gures in the above table do not include additional beneﬁ t payables amounting to ¥111 million (US$1,341 thousand) and ¥45 million at March 31, 2011 and 2010, respectively. The amounts were recorded as part of current liabilities on the consolidated balance sheets at March 31, 2011 and 2010. Periodic retirement beneﬁ t expenses for employees for the years ended March 31, 2011 and 2010, include the following components: Service cost* Interest cost Expected return on plan assets Amortization of unrecognized actuarial gains/losses Amortization of unrecognized prior service costs Retirement beneﬁ t expenses Millions of yen 2011 ¥ 9,031 7,237 (4,219) 2,317 (1,378) 2010 ¥ 9,235 7,313 (3,797) 3,969 (1,375) Thousands of U.S. dollars 2011 $ 108,804 87,193 (50,831) 27,910 (16,602) ¥ 12,987 ¥ 15,346 $ 156,474 Note: In addition to the above costs, additional beneﬁ ts amounting to ¥878 million (US$10,584 thousand) and ¥717 million were charged to income for the years ended March 31, 2011 and 2010, respectively. * Not including contributions made by employees. The assumptions used in calculation of the above information are as follows: Discount rate Expected rate of return on plan assets 2011 Mainly 2.0% Mainly 2.5% 2010 Mainly 2.5% Mainly 2.5% Method of attributing the projected beneﬁ ts to periods of employee service Straight-line basis Straight-line basis Amortization of unrecognized prior service costs Amortization of unrecognized actuarial gains/losses Mainly 10 years Mainly 10 years Mainly 10 years Mainly 10 years Asahi Kasei Annual Report 2011 69 *旭化成e_fs_PDF用.indd 69 *旭化成e_fs_PDF用.indd 69 11/12/01 10:27 11/12/01 10:27 15. Taxes Income taxes applicable to the parent company and subsidiaries in Japan include (1) corporation tax, (2) enterprise tax, and (3) inhabitants tax. Signiﬁ cant components of the deferred tax assets and liabilities at March 31, 2011 and 2010, were as follows: Deferred tax assets: Provision for retirement beneﬁ ts Tax loss carryforwards Accrued bonuses Loss on disposal of noncurrent assets Impairment loss Unrealized gain on noncurrent assets and others Devaluation of investment securities Accrued enterprise tax Provision for repairs Depreciation Devaluation of inventories Asset retirement obligations Provision for product warranties Environmental expenses Allowance for doubtful accounts Other Subtotal deferred tax assets Less: Valuation allowance Total deferred tax assets Deferred tax liabilities: Valuation difference on other securities Reserve for noncurrent assets reduction Reserve for special depreciation Other Total deferred tax liabilities Millions of yen 2011 2010 ¥ 43,436 12,741 8,904 5,533 4,605 4,302 3,287 2,322 2,316 2,146 1,459 1,456 1,171 953 412 7,445 102,488 (21,904) 80,585 (22,454) (13,402) (247) (5,720) (41,822) ¥ 44,158 11,377 6,994 4,061 2,684 4,053 2,853 1,330 3,346 649 1,296 — 1,636 1,146 823 9,267 95,673 (18,336) 77,336 (27,166) (13,316) (149) (5,814) (46,445) Thousands of U.S. dollars 2011 $ 523,329 153,501 107,274 66,660 55,485 51,834 39,604 27,976 27,901 25,856 17,576 17,542 14,106 11,484 4,967 89,703 1,234,799 (263,900) 970,899 (270,534) (161,466) (2,971) (68,912) (503,882) Net deferred tax assets ¥ 38,762 ¥ 30,891 $ 467,017 Net deferred tax assets (liabilities) at March 31, 2011 and 2010, were included in the following line items on the consolidated balance sheets. Current assets—deferred tax assets Non-current assets—deferred tax assets Current liabilities—deferred tax liabilities Non-current liabilities—deferred tax liabilities Millions of yen 2011 ¥ 23,131 22,005 — (6,374) 2010 ¥ 23,106 15,383 — (7,597) Thousands of U.S. dollars 2011 $ 278,689 265,122 — (76,794) Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2011 and 2010, was as follows: Statutory tax rate Increase (reduction) in taxes resulting from: Non-deductible expenses and non-taxable income Equalization of inhabitants taxes Equity in earnings of unconsolidated subsidiaries and afﬁ liates Undistributed earnings of foreign subsidiaries Difference of tax rates for foreign subsidiaries Valuation allowance R&D expenses deductible from income taxes Other Effective income tax rate 2011 40.7% 1.4 0.4 (0.8) 0.7 (4.4) 4.0 (5.1) 0.4 37.3% Statutory tax rate Increase (reduction) in taxes resulting from: Non-deductible expenses and non-taxable income Equalization of inhabitants taxes Amortization of goodwill Equity in earnings of unconsolidated subsidiaries and afﬁ liates Undistributed earnings of foreign subsidiaries Valuation allowance Unrealized proﬁ t R&D expenses deductible from income taxes Other Effective income tax rate 2010 40.7% 4.0 1.0 0.4 (0.8) 1.5 7.2 (2.2) (8.1) 0.8 44.5% 70 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 70 *旭化成e_fs_PDF用.indd 70 11/12/01 10:27 11/12/01 10:27 16. Business combinations, etc. For the year ended March 31, 2011 Business divestiture Business divestiture in the ﬁ scal year ended March 31, 2011, was as follows: (a) Outline of the business divestiture i) Name of the transferee Aime Corp. ii) Nature of the divested businesses Contact lens and lens-care product businesses of Asahi Kasei Aime Co., Ltd, a consolidated subsidiary of the parent company iii) Main reasons for the divestiture Asahi Kasei Aime Co., Ltd. had developed its businesses with conventional (long-term use) hard and soft contact lenses as the main products. During the past 10 years in the contact lens market, demand for disposable lenses increased rapidly, while demand for conventional lenses decreased dramatically. As disposable lenses became dominant in the soft contact lens market where Asahi Kasei Aime had enjoyed strength, the expansion of this business was signiﬁ cantly impacted. Under these circumstances, US-based CooperVision, Inc., with which Asahi Kasei Aime had a business alliance in the development of contact lens materials, etc., suggested a transfer of Asahi Kasei Aime’s business to them. After extensive negotiations, on December 1, 2010, Asahi Kasei Aime’s contact lens and lens-care product businesses (excluding manufacturing functions), were transferred to Aime Corp., which was newly established in Japan by CooperVision. This was based on a judgment that joint development with CooperVision’s product lineup, rather than Asahi Kasei Aime on its own, would enhance business efﬁ ciency and competitiveness, and thus be optimal for the development of businesses focused on contact lenses. iv) Date of divestiture December 1, 2010 v) Overview of transactions including statutory form Business transfer for which consideration received is limited to assets including cash. (b) Overview of accounting treatment implemented i) Amount of gain on business transfer ¥736 million (US$8,869 thousand) ii) Appropriate book value of assets and liabilities pertaining to the transferred businesses Current assets Noncurrent assets Total assets Current liabilities Total liabilities Millions of yen Thousands of U.S. dollars 2011 ¥ 1,677 133 1,810 4 4 2011 $ 20,204 1,598 21,802 52 52 iii) Accounting treatment Considering that investments related to the transferred contact lens and lens-care businesses were liquidated, the differences between the fair value of assets received in consideration of such transfer and the amount corresponding to shareholders’ equity pertaining to the transferred businesses was recognized as gain on transfer. (c) Name of reporting segment in which the divested businesses were included Health Care (d) Approximate amount of income (loss) pertaining to the divested businesses recorded in the consolidated statements of income during the ﬁ scal year ended March 31, 2011. Net sales Operating loss Millions of yen 2011 ¥ 2,077 (302) Thousands of U.S. dollars 2011 $ 25,026 (3,639) For the year ended March 31, 2010 Transactions under common control, etc. Transactions under common control, etc. in the ﬁ scal year ended March 31, 2010, were as follows: (a) Establishment of Asahi Kasei E-materials Corp. through a business split of the electrochemicals-related operations of Asahi Kasei Chemicals Corp. and Asahi Kasei Microdevices Corp. i) Name and nature of business subject to transaction, statutory form of business combination, name of company after transaction, and outline and purpose of transaction 1) Name and nature of business subject to transaction Name of business: Electronics-related operations of the parent company and of consolidated subsidiaries Asahi Kasei Chemicals Corp. and Asahi Kasei Microdevices Corp. Nature of business: Production and sales of Hipore™ Li-ion rechargeable battery separators, light diffusion plates, APR™ photopolymer and printing plate making systems, Pimel™ photosensitive polyimide precursor, Sunfort™ dry ﬁ lm photoresist, glass fabric for printed wiring boards, photomask pellicles, etc. 2) Statutory form of business combination Establishment of Asahi Kasei E-materials Corp. by business split of electrochemicals-related operations of the parent company, Asahi Kasei Chemicals Corp., and Asahi Kasei Microdevices Corp. 3) Name of company after transaction Asahi Kasei E-materials Corp. 4) Outline and purpose of transaction Asahi Kasei E-materials Corp. was established through a business split of the electrochemicals-related operations of the parent company, Asahi Kasei Chemicals Corp., and Asahi Kasei Microdevices Corp. in order to clarify those operations as a ﬁ eld of focus for growth for the Asahi Kasei Group and to facilitate greater management efﬁ ciency in a structure for swift execution of strategic decisions and resource investment. ii) Outline of the accounting treatment implemented This transaction was accounted for as a transaction under common control based on the Accounting Standard for Business Combinations issued by the Business Accounting Council in Japan and the Accounting Standard for Business Divestitures (Accounting Standard No. 7) and Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (Accounting Asahi Kasei Annual Report 2011 71 *旭化成e_fs_PDF用.indd 71 *旭化成e_fs_PDF用.indd 71 11/12/01 10:27 11/12/01 10:27 Standard Guidance No. 10) issued by the Accounting Standards Board of Japan. (b) Business split of Leona™ ﬁ lament business from Asahi Kasei Chemicals Corp. to Asahi Kasei Fibers Corp. i) Name and nature of business subject to transaction, statutory form of business combination, name of company after transaction, and outline and purpose of transaction 1) Name and nature of business subject to transaction Name of business: Leona™ ﬁ lament business of consolidated subsidiary Asahi Kasei Chemicals Corp. Nature of business: Production and sale of Leona™ nylon 66 ﬁ lament 2) Statutory form of business combination Business split from Asahi Kasei Chemicals Corp. to Asahi Kasei Fibers Corp. 3) Name of company after transaction Asahi Kasei Fibers Corp. 4) Outline and purpose of transaction For the further expansion and development of the Leona™ ﬁ lament business, it is essential to reinforce and accelerate applications development based on advanced 17. Asset retirement obligation technical know-how in the ﬁ eld of ﬁ bers. Asahi Kasei Fibers Corp. holds the realignment of its business portfolio from apparel to industrial-use materials as a pillar of mid-term management strategy, and it can be expected that by transferring the Leona™ ﬁ lament business, which is focused on industrial applications such as tire cord and air bags, this portfolio realignment can be accelerated through the pursuit of synergies with existing ﬁ ber business, in both technology and marketing. The Leona™ ﬁ lament business of Asahi Kasei Chemicals Corp. was therefore split off to be absorbed by Asahi Kasei Fibers Corp. ii) Outline of the accounting treatment implemented This transaction was accounted for as a transaction under common control based on the Accounting Standard for Business Combinations issued by the Business Accounting Council in Japan and the Accounting Standard for Business Divestitures (Accounting Standard No. 7) and Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (Accounting Standard Guidance No. 10) issued by the Accounting Standards Board of Japan. As of March 31, 2011 Asset retirement obligations recorded on the consolidated balance sheet (a) Outline of relevant asset retirement obligations Due to commitments pertaining to restoration to original state before vacating in accordance with land lease agreements such as for ofﬁ ces, and due to commitments to dismantle leased buildings upon termination of lease period, etc., in accordance with lease agreements for model home parks, relevant asset retirement obligations are recorded in the consolidated balance sheet. In accordance with building lease agreements such as for the head ofﬁ ces, commitments pertaining to restoration to original state before vacating are recognized as asset retirement obligations. However, instead of recording the relevant asset retirement obligations as liabilities, the amount of deposit that can not ultimately be expected to be collected was calculated in a reasonable manner, and of that, the amount corresponding to the ﬁ scal year ended March 31, 2011, was recorded under operating expenses. (b) Method of calculating the amount of relevant asset retirement obligations The calculation of asset retirement obligations is based on the following: expected term of use of 4 to 55 years, inﬂ ation rate of 0.0% to 3.3%, and discount rate of 0.3% to 6.0%. (c) Increase (decrease) in the total amount of asset retirement obligations in the ﬁ scal year ended March 31, 2011. Balance at beginning of year* Increase due to asset retirement obligations accrued Adjustment due to passage of time Decrease due to fulﬁ llment of asset retirement obligations Decrease due to foreign exchange ﬂ uctuation Balance at end of year Millions of yen 2011 ¥ 4,038 346 173 (420) (310) Thousands of U.S. dollars 2011 $ 48,648 4,168 2,090 (5,056) (3,729) ¥ 3,828 $ 46,121 * Balance at beginning of year after application of Accounting Standard for Asset Retirement Obligations (ASBJ Statement No. 18) and Guidance on Accounting Standard for Asset Retirement Obligations (ASBJ Guidance No. 21). With regard to asset retirement obligations for which the method of calculating the amount of deposit that can not ultimately be expected to be collected and then recording the amount corresponding to the ﬁ scal year ended March 31, 2011, under operating expenses rather than recording the asset retirement obligations as liabilities, the amount of such deposit calculated at the beginning of the ﬁ scal year was ¥1,553 million. With adjustment to include ¥66 million accrued due to lease agreements newly entered into, the total amount recorded in the ﬁ scal year was ¥1,619 million. 1 8. Business segment information (a) Overview of reportable segments The Company is organized under a holding company conﬁ guration with core operating companies performing operations in eight business ﬁ elds. Separate ﬁ nancial information is available in these eight units, and the Board of Directors carries out periodic review to allocate management resources and evaluate business performance. The eight units are combined into six reportable segments of Chemicals, Homes, Health Care, Fibers, Electronics, and Construction Materials through application of Paragraph 13 of “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information.” Main products of the six reportable segments are as follows: 72 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 72 *旭化成e_fs_PDF用.indd 72 11/12/01 10:27 11/12/01 10:27 Chemicals The Company produces, processes and sells chemicals and derivative products (such as ammonia, nitric acid, caustic soda, acrylonitrile, styrene, adipic acid, methyl methacrylate (MMA) and acrylic resin), polymer products (such as Stylac™-AS styrene- acrylonitrile, Stylac™-ABS acrylonitrile-butadiene-styrene, Tenac™ polyacetal, Xyron™ modiﬁ ed polyphenylene ether (mPPE), Leona™ poyamide 66, Suntec™ polyethylene, synthetic rubber, and polystyrene), specialty products (such as coating materials, latex, Ceolus™ microcrystalline cellulose, explosives, explosion-bonded metal clad, Microza™ UF and MF membranes and systems, ion- exchange membranes and electrolysis systems, Saran Wrap™ cling ﬁ lm, Ziploc™ storage bags, and plastic ﬁ lms, sheets, and foams). Homes The Company constructs Hebel Haus™ order-built unit homes and Hebel Maison™ apartments, and operates related businesses such as condominiums, residential land development, remodeling, real estate, and home ﬁ nancing. Health Care The Company manufuctures and sells pharmaceuticals (such as Recomodulin™, Elcitonin™, Flivas™, Toledomin™, and Bredinin™), Lucica™GA-L assay kits, L series enriched liquid diets, APS™ polysulfone-membrane artiﬁ cial kidneys, therapeutic apheresis devices, Planova™ virus removal ﬁ lters, and Sepacell™ leukocyte reduction ﬁ lters. Fibers The Company produces, processes, and sells Roica™ elastic polyurethane ﬁ lament, Bemberg™ cupro ﬁ ber, nonwoven fabrics (such as Eltas™ spunbond and Lamous™ artiﬁ cial suede), Leona™ nylon 66 ﬁ lament, and polyester ﬁ lament. Electronics The Company manufactures and sells Hipore™ Li-ion battery separators, photomask pellicles, APR™ photosensitive resin and printing plate making systems, Pimel™ photosensitive polyimide precursor, Sunfort™ dry ﬁ lm photoresist, mixed-signal LSIs, Hall elements, and glass fabric for printed wiring boards. Construction Materials The Company produces and sells Hebel™ autoclaved aerated concrete (AAC) panels, Neoma™ phenolic foam insulation panels, foundation piles, and steel-frame structural components. (b) Methods to determine net sales, income or loss, assets, and other items by reportable business segment Proﬁ t by reportable business segment is stated on an operating income basis. Intersegment net sales and transfers are based on the values of transactions undertaken between third parties. (c) Information concerning net sales, income or loss, assets, and other items for each repotable segment Millions of yen 2011 Sales: External customers ¥ 742,243 ¥ 409,224 ¥ 116,387 ¥ 108,761 ¥ 158,337 ¥ 47,418 ¥ 1,582,370 ¥ 16,017 ¥ 1,598,387 Chemicals Homes Health Care Fibers Electronics Construction Materials Sub total Others (Note 1) Total Intersegment Total Operating income Assets Other items 18,657 160 81 1,732 729 14,152 35,510 23,950 59,461 760,899 409,384 116,468 110,493 159,066 61,570 1,617,880 39,968 1,657,848 64,379 36,476 7,045 4,197 14,258 2,091 128,444 1,706 130,151 563,034 265,342 165,277 102,163 178,739 39,570 1,314,126 49,268 1,363,394 Depreciation (Note 2) 31,460 4,266 10,833 6,945 23,882 2,795 443 36,295 — — 610 272 5 14 4,124 2,759 — — 80,181 1,073 862 — 81,043 1,073 43,450 15,975 59,425 Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets 23,174 6,304 7,427 3,668 20,267 1,684 62,524 981 63,505 Millions of yen 2010 Chemicals Homes Health Care Fibers Electronics Construction Materials Sub total Others (Note 1) Total Sales: External customers ¥ 622,093 ¥ 389,728 ¥ 113,207 ¥ 101,201 ¥ 142,700 ¥ 47,024 ¥ 1,415,953 ¥ 17,642 ¥ 1,433,595 Intersegment Total 16,495 24 96 1,772 1,159 13,048 32,593 23,541 56,134 638,588 389,752 113,303 102,973 143,859 60,072 1,448,547 41,182 1,489,729 Operating income (loss) 26,068 25,340 3,999 (2,764) 7,243 1,202 61,087 1,822 62,909 Assets Other items 533,296 232,031 164,161 110,426 174,131 39,981 1,254,027 46,506 1,300,533 Depreciation (Note 2) 31,968 4,309 11,556 7,719 23,587 3,263 447 17,302 — — 635 356 — 6 4,228 2,315 — — 82,403 1,089 799 — 83,201 1,089 24,202 16,489 40,691 Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets 27,649 6,009 9,173 4,556 22,761 1,191 71,339 927 72,266 Asahi Kasei Annual Report 2011 73 *旭化成e_fs_PDF用.indd 73 *旭化成e_fs_PDF用.indd 73 11/12/01 10:27 11/12/01 10:27 Chemicals Homes Health Care Fibers Electronics Construction Materials Sub total Others (Note 1) Total Thousands of U.S. dollars 2011 Sales: External customers $ 8,942,683 $ 4,930,410 $ 1,402,253 $ 1,310,373 $ 1,907,673 $ 571,307 $ 19,064,699 $ 192,980 $ 19,257,678 Intersegment Total Operating income Assets Other items 224,778 1,930 976 20,863 8,786 170,503 427,837 288,558 716,395 9,167,461 4,932,341 1,403,229 1,331,236 1,916,459 741,810 19,492,535 481,538 19,974,073 775,646 439,466 84,876 50,565 171,779 25,190 1,547,521 20,559 1,568,080 6,783,545 3,196,891 1,991,295 1,230,880 2,153,485 476,747 15,832,843 593,585 16,426,428 Depreciation (Note 2) 379,036 51,402 130,514 83,676 287,734 33,674 966,036 10,383 976,419 Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets 5,339 437,283 — — 7,355 60 168 3,277 49,687 33,247 — — 12,923 — 12,923 523,495 192,465 715,960 279,203 75,955 89,482 44,194 244,180 20,287 753,301 11,818 765,119 Notes: 1. The “Others” category is equivalent to the previous Services, Engineering and Others segment, including plant engineering and environmental engineering, research and analysis, and employment agency/stafﬁ ng operations. 2. Amortization of goodwill is not included. (d) Reconciliation of differences between total amounts of reportable segments and amounts appearing in the consolidated ﬁ nancial statements (adjustment of difference) Sales Total of reporting segments Net sales in “Others” category Elimination of intersegment transactions Net sales on consolidated statements of income Operating income Total of reporting segments Operating income in “Others” category Elimination of intersegment transactions Corporate expenses, etc.* Operating income on consolidated statements of income Millions of yen 2011 2010 ¥ 1,617,880 39,968 (59,461) ¥ 1,598,387 ¥ 1,448,547 41,182 (56,134) ¥ 1,433,595 Millions of yen 2011 ¥ 128,444 1,706 708 (7,932) ¥ 122,927 2010 ¥ 61,087 1,822 1,438 (6,726) ¥ 57,622 *Corporate expenses, etc. include corporate revenue, basic research expense, and group management expense, etc. which are not allocated to reporting segments. Assets Total of reporting segments Assets in “Others” category Elimination of intersegment transactions Corporate assets* Total net assets on consolidated balance sheets Millions of yen 2011 2010 ¥ 1,314,126 49,268 (167,618) 230,103 ¥ 1,425,879 ¥ 1,254,027 46,506 (164,202) 232,562 ¥ 1,368,892 Thousands of U.S. dollars 2011 $ 19,492,535 481,538 (716,395) $ 19,257,678 Thousands of U.S. dollars 2011 $ 1,547,521 20,559 8,532 (95,561) $ 1,481,051 Thousands of U.S. dollars 2011 $ 15,832,843 593,585 (2,019,494) 2,772,331 $ 17,179,265 * Corporate assets include assets of the parent company and those of a ﬁ nancial subsidiary—surplus operating funds (cash and deposits), long-term investment capital (investment securities, etc.), and land, etc. Total of reportable segments Others Adjustments (Note 1) Amounts from consolidated ﬁ nancial statements Millions of yen Thousands of U.S. dollars Millions of yen Thousands of U.S. dollars Millions of yen Thousands of U.S. dollars Millions of yen Thousands of U.S. dollars Other items 2011 2010 2011 2011 2010 2011 2011 2010 2011 2011 2010 2011 Depreciation (Note 2) ¥ 80,181 ¥ 82,403 $ 966,036 ¥ 862 ¥ 799 $ 10,383 ¥ 3,049 ¥ 2,965 $ 36,738 ¥ 84,092 ¥ 86,166 $ 1,013,158 Amortization of goodwill Investments in associates accounted for using equity method Increase in property, plant and equipment, and intangible assets ¥ 1,073 ¥ 1,089 $ 12,923 ¥ — ¥ — $ — ¥ — ¥ — $ — ¥ 1,073 ¥ 1,089 $ 12,923 ¥ 43,450 ¥ 24,202 $ 523,495 ¥ 15,975 ¥ 16,489 $ 192,465 ¥ — ¥ — $ — ¥ 59,425 ¥ 40,691 $ 715,960 ¥ 62,524 ¥ 71,339 $ 753,301 ¥ 981 ¥ 927 $ 11,818 ¥ 2,509 ¥ 11,724 $ 30,224 ¥ 66,014 ¥ 83,990 $ 795,344 Notes: 1. Adjustments include elimination of intersegment transactions and Corporate expenses, etc. 2. Amortization of goodwill is not included. 74 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 74 *旭化成e_fs_PDF用.indd 74 11/12/01 10:27 11/12/01 10:27 (Additional information) Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Statement No. 17) and the Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (ASBJ Guidance No. 20) have been applied beginning from the ﬁ scal year ended March 31, 2011. (e) Related Information i) Information on products and services Please refer to (c) Information concerning net sales, income or loss, assets, and other items for each reportable segment. ii) Geographic information 1) Net sales Japan China 2011 Other regions Total Japan China 2010 Other regions Millions of yen Thousands of U.S. dollars 2011 Total Japan China Other regions Total ¥1,149,098 ¥169,637 ¥279,652 ¥1,598,387 ¥1,063,186 ¥134,271 ¥236,138 ¥1,433,595 $13,844,558 $2,043,814 $3,369,307 $19,257,678 2) Property, plant and equipment Geographic information is not shown because over 90% of the amount of property, plant and equipment on the consolidated balance sheets is located in Japan. 3) Information by major customer Information by major customer is not shown because no customer accounts for 10% or more of net sales on the statements of income. 19. Information about related parties For the year ended March 31, 2011 Related party transactions Transactions between consolidated subsidiaries of the company submitting the consolidated ﬁ nancial statements and related parties Subsidiaries, afﬁ liates, etc. of the company submitting the consolidated ﬁ nancial statements Type of related party Name of company Location Paid-in capital Business line Holding ratio of voting rights (of which, indirect holding ratio) 48.5% (48.5%) Debt guarantee Relationship with the related party Completion guarantee Nature of transaction ¥15,002 million Transaction amount — Item — Balance at end of year An afﬁ liated company PTT Asahi Chemical Co., Ltd. Rayong, Thailand 14,246 million Thai baht Chemicals 20. Per share information Reconciliation of the differences between basic and diluted net assets per share and net income per share for the years ended March 31, 2011 and 2010, was as follows: Basic net assets per share Basic net income per share (a) Net assets per share Total net assets Amount deducted from total net assets of which, minority interest Net assets allocated to capital stock Yen U.S. dollars 2011 ¥ 474.59 ¥ 43.11 2010 ¥ 452.91 ¥ 18.08 Millions of yen 2011 2010 2011 $5.72 $0.52 Thousands of U.S. dollars 2011 ¥ 675,602 ¥ 644,688 $ 8,139,787 12,036 12,036 11,346 11,346 145,014 145,014 ¥ 663,566 ¥ 633,343 $ 7,994,772 Number of shares of capital stock outstanding at ﬁ scal year end used in calculation of net assets per share (thousand) 1,398,196 1,398,388 1,398,196 *旭化成e_fs_PDF用.indd 75 *旭化成e_fs_PDF用.indd 75 11/12/01 10:27 11/12/01 10:27 Asahi Kasei Annual Report 2011 75 (b) Net income per share Net income Amount not allocated to capital stock Net income allocated to capital stock Millions of yen 2011 2010 Thousands of U.S. dollars 2011 ¥ 60,288 ¥ 25,286 $ 726,356 — — — ¥ 60,288 ¥ 25,286 $ 726,356 Weighted-average number of shares of capital stock (thousand) 1,398,311 1,398,463 1,398,311 As the Company had no dilutive securities at March 31, 2011 and 2010, the Company does not disclose diluted net income per share for the years ended March 31, 2011 and 2010. 21. Borrowings (a) Bonds payable at March 31, 2011 and 2010, comprised the following: Unsecured 1.90% Euro yen bonds due in 2013 Unsecured 1.46% yen bonds due in 2019 Notes 1) The current portion of bonds payable is recorded under current liabilities on the consolidated balance sheets. 2) In the case of ﬂ oating interest rates, the rate at the end of March is shown. 3) The aggregate annual maturities of long-term debt after March 31, 2011, are as follows: Year ending March 31 2012 2013 2014 2015 2016 and thereafter (b) Loans payable at March 31, 2011 and 2010, are comprised of the following: Millions of yen 2011 ¥ 5,000 20,000 ¥ 25,000 2010 ¥ 5,000 20,000 ¥ 25,000 Millions of yen ¥ — — 5,000 — 20,000 ¥ 25,000 Millions of yen 2011 2010 Thousands of U.S. dollars 2011 $ 60,241 240,964 $ 301,205 Thousands of U.S. dollars $ — — 60,241 — 240,964 $ 301,205 Thousands of U.S. dollars 2011 Short-term loans payable with interest rate 0.88% ¥ 76,611 ¥ 77,763 $ 923,023 Current portion of long-term loans payable with interest rate 1.10% Current portion of lease obligations with interest rate 2.36% Long-term loans payable (except portion due within one year) with interest rate 1.07% Lease obligations (except portion due within one year) with interest rate 2.28% Commercial paper with interest rate 0.20% (due within one year) 32,278 1,522 91,722 3,802 23,000 16,199 1,123 121,921 3,593 19,000 388,892 18,333 1,105,090 45,812 277,108 ¥ 228,935 ¥ 239,600 $ 2,758,259 Notes 1) Interest rates shown are weighted average interest rates for the balance outstanding at the end of March. 2) The aggregate annual maturities of long-term loans payable and lease obligations (except portion due within one year) after March 31, 2012, are as follows: Year ending March 31 2013 2014 2015 2016 2017 and thereafter Long-term loans payable Lease obligations Millions of yen ¥ 29,805 23,404 7,444 1,891 28,671 Thousands of U.S. dollars $ 359,092 281,980 89,686 22,788 345,432 Millions of yen ¥ 1,556 1,363 658 206 20 Thousands of U.S. dollars $ 18,747 16,423 7,924 2,483 236 3) The timing of repayments for the loan payables from Japan Science and Technology Agency have yet to be determined as they begin after the development success is certiﬁ ed. Thus, the related aggregate annual maturities for these long-term loans payable after March 31, 2011 are not included in the above. 76 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 76 *旭化成e_fs_PDF用.indd 76 11/12/01 10:27 11/12/01 10:27 *旭化成e_fs_PDF用.indd 77 *旭化成e_fs_PDF用.indd 77 11/12/01 10:27 11/12/01 10:27 Asahi Kasei Annual Report 2011 77 Main products/business line Paid-in capital (million) Equity interest (%) Major Subsidiaries and Afﬁ liates As of April 1, 2011 Company Chemicals Segment Asahi Kasei Chemicals Corp.* Asahi Kasei Pax Corp.* Chemicals Packaging products and solutions Asahi Kasei Home Products Corp.* Cling ﬁ lm, other household products Asahi Kasei Metals Ltd. Asahi Kasei Finechem Co., Ltd.* Aluminum paste Specialty chemicals Asahi Kasei Geotechnologies Co., Ltd. Sale of civil engineering materials Asahi SKB Co., Ltd. Shotgun cartridges Asahi Kasei Clean Chemical Co., Ltd. Water treatment equipment, environmental chemicals Asahi Kasei Technoplus Co., Ltd.* Processing of plastic and ﬁ ber Japan Elastomer Co., Ltd.* Synthetic rubber Sundic Inc. Biaxially oriented polystyrene sheet Wacker Asahikasei Silicone Co., Ltd. Silicone Okayama Chemical Co., Ltd. Kayaku Japan Co., Ltd. PS Japan Corp.* Caustic soda, chlorine Industrial explosives Polystyrene Asahikasei Plastics (America) Inc.* Compounded performance resin operations Asahi Kasei Plastics North America, Inc.* Coloring and compounding of performance resin Sun Plastech Inc.* Tong Suh Petrochemical Corp., Ltd.* Sale of purging compound Acrylonitrile, sodium cyanide Asahi Kasei Chemicals Korea Co., Ltd. Sale of adipic acid Asahikasei Plastics (Shanghai) Co., Ltd. Sale of performance resin Asahikasei (Suzhou) Plastics Compound Co., Ltd. Coloring and compounding of performance resin Asahi-DuPont POM (Zhangjiagang) Co., Ltd. Polyacetal Asahi Kasei Performance Chemicals Corp.* High-performance HDI-based polyisocyanate Asahi Kasei Microza (Hangzhou) Co., Ltd.* Industrial ﬁ ltration membranes and systems Asahi Kasei Plastics (Hong Kong) Co., Ltd. Sale of performance resin Asahi Kasei Plastics Singapore Pte. Ltd.* Performance resin Polyxylenol Singapore Pte. Ltd.* PPE powder Asahi Kasei Synthetic Rubber Singapore Pte. Ltd. Synthetic rubber PTT Asahi Chemical Co., Ltd. Acrylonitrile, methyl methacrylate Asahikasei Plastics (Thailand) Co., Ltd. Coloring and compounding of performance resin PT Nippisun Indonesia Coloring and compounding of styrenic resin Asahi Kasei Plastics Europe SA/NV* Sale of compounded performance resin 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.* Housing Steel frames Financial services Home maintenance and remodeling Home leasing, real estate brokerage Asahi Kasei Home Construction Corp.* Construction of homes Health Care Segment Asahi Kasei Pharma Corp.* Asahi Kasei Kuraray Medical Co., Ltd.* Asahi Kasei Medical Co., Ltd.* Pharmaceuticals Hemodialyzers, therapeutic apheresis devices Medical devices, medical systems Med-Tech Inc.* Medical devices Asahi Kasei Bioprocess, Inc.* Bioprocess equipment and systems Asahi Kasei Medical America Inc.* Sale of medical devices, medical systems Asahi Kasei Medical Trading (Korea) Co., Ltd.* Sale of medical devices, medical systems Asahi Kasei Medical (Hangzhou) Co., Ltd.* Hemodialyzers; sale of medical devices Asahi Kasei Medical Trading (Taiwan) Co. Ltd.* Asahi Kasei Medical Europe GmbH* Sale of medical devices, medical systems Sale of medical devices, medical systems * Consolidated subsidiary ** Including capital reserve 78 Asahi Kasei Annual Report 2011 1.0 W 50,642 ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ US$ US$ US$ W CNY CNY US$ CNY CNY US$ US$ US$ US$ B B US$ A ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ 3,000 490 250 250 325 132 100 100 160 1,000 1,500 1,050 1,000 60 5,000 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.4 75.0 50.0 50.0 50.0 50.0 62.1 17.8** 100.0 21.7** 100.0 100.0 100.0 100.0 100.0 51.0 50.0 100.0 100.0 100.0 100.0 70.0 100.0 48.5 1,500 18 50 32.0 149 49 2.6 46.0 35.0 15.0 12,400 140 100.0 6.3 5.0 25.7 100.0 3,250 2,820 1,000 250 200 100 3,000 800 200 140 100.0 100.0 100.0 100.0 100.0 100.0 100.0 93.0 100.0 68.3 US$ US$ W CNY NT$ A 30.0 100.0 0.5 93.0 1,000 100.0 163 5 0.2 93.0 100.0 93.0 *旭化成e_fs_PDF用.indd 78 *旭化成e_fs_PDF用.indd 78 11/12/01 10:27 11/12/01 10:27 Company Main products/business line Asahi Kasei Medical Trading Ltd. Sti. Asahi Kasei Bioprocess Europe SA/NV* Sale of medical devices, medical systems Sale of virus removal ﬁ lters Asahi Pharma Spain, SL Fibers Segment Asahi Kasei Fibers Corp.* Kyokuyo Sangyo Co., Ltd.* DuPont-Asahi Flash Spun Products Co., Ltd. Asahi Kasei Spandex America, Inc.* Hangzhou Asahikasei Spandex Co., Ltd.* Pharmaceuticals Fibers, textiles Processing of ﬁ bers and textiles Flash spun products Spandex Spandex Hangzhou Asahikasei Textiles Co., Ltd.* Warp-knit spandex textiles Formosa Asahi Spandex Co., Ltd. Spandex Asahi Chemical (HK) Ltd.* Promotion and marketing of ﬁ bers and textiles Thai Asahi Kasei Spandex Co., Ltd.* Spandex Asahi Kasei Spunbond (Thailand) Co., Ltd. Spunbond nonwovens Asahi Kasei Spandex Europe GmbH* Spandex Asahi Kasei Fibers Italy SRL* Sale of cupro cellulosic ﬁ ber Asahi Kasei Fibers Deutschland GmbH Sale of artiﬁ cial suede Electronics Segment Asahi Kasei Microdevices Corp.* Asahi Kasei E-materials Corp.* Asahi Kasei Epoxy Co., Ltd.* Asahi Kasei Microsystems Co., Ltd.* Asahi-Schwebel Co., Ltd.* Asahi Kasei Electronics Co., Ltd.* Asahi Kasei Power Devices Corp.* AKM Semiconductor, Inc.* Electronic devices Electronic materials Epoxy resin LSIs Glass fabric Hall elements Power management semiconductors Sale of LSIs Asahi Kasei Microdevices Korea Corp. Electronic devices marketing and technical support Asahi Kasei E-materials Korea Inc. Energy and electronic materials Asahi Kasei Electronics Materials (Suzhou) Co., Ltd.* Dry ﬁ lm photoresist Asahi Kasei Microdevices (Shanghai) Co., Ltd. Electronic devices marketing and technical support Asahi Kasei Microdevices Taiwan Corp. Electronic devices marketing and technical support Asahi Kasei EMD Taiwan Corp. Asahi Kasei Wah Lee Hi-Tech Corp.* Asahi-Schwebel (Taiwan) Co., Ltd.* Sale of pellicles Dry ﬁ lm photoresist Glass fabric Asahi Kasei Microdevices Europe SAS Electronic devices marketing and technical support Asahi Photoproducts (Europe) SA/NV* Sale of photopolymer, printing-plate making systems Asahi Photoproducts (UK) Ltd.* Construction Materials Segment Asahi Kasei Construction Materials Corp.* Asahi Kasei Foundation Systems Corp.* Asahi Kasei Extech Corp.* Sale of photopolymer, printing-plate making systems Construction materials Installation of piles Exterior wall panel installation Others (formerly Services, Engineering and Others segment) Asahi Research Center Co., Ltd.* Asahi Finance Co., Ltd. Asahi Kasei Engineering Corp.* Asahi Kasei Trading Co., Ltd.* Sun Trading Co., Ltd.* Asahi Kasei Amidas Co., Ltd.* AJS Inc. Information and analysis Investment, ﬁ nance Plant, equipment, process engineering Sale of Asahi Kasei products Sale of Asahi Kasei products Employment agency, consulting Computer software, IT systems Asahi Organic Chemicals Industry Co., Ltd. Synthetic resin, fabricated plastic products Asahi Kasei America, Inc.* Business support services Asahi Kasei Business Management (Shanghai) Co., Ltd. * Consolidated subsidiary ** Including capital reserve Business support services Paid-in capital (million) Equity interest (%) YTL A A 5,000 0.5 100.0 100.0 0.1 100.0 ¥ ¥ ¥ US$ CNY CNY NT$ HK$ B B A A A ¥ ¥ ¥ ¥ ¥ ¥ ¥ US$ W W CNY CNY NT$ NT$ NT$ NT$ A A £ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ 3,000 80 450 100.0 100.0 50.0 32.3** 100.0 132 78 802 65 1,350 100.0 82.5 50.0 100.0 60.0 225 100.0 19.6** 100.0 3.0 0.3 100.0 100.0 3,000 3,000 300 50 50 50 100 2.9 820 100.0 100.0 100.0 100.0 100.0 100.0 80.0 100.0 100.0 5,500 100.0 181 14 10 1.0 49 326 0.4 3.4 0.3 3,000 200 50 1,000 800 400 98 94 80 800 5,000 100.0 100.0 100.0 100.0 80.6 51.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 49.0 30.1 US$ US$ 0.1 100.0 3.0 100.0 Asahi Kasei Annual Report 2011 79 *旭化成e_fs_PDF用.indd 79 *旭化成e_fs_PDF用.indd 79 11/12/01 10:27 11/12/01 10:27 Corporate Proﬁ le As of March 31, 2011 Company Name Asahi Kasei Corporation Date of Establishment May 21, 1931 Paid-in Capital ¥103,388,521,767 Employees 25,016 (consolidated) 810 (non-consolidated) Asahi Kasei Group Ofﬁ ces Asahi Kasei Corporation Core Operating Companies Asahi Kasei Chemicals 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3200 Asahi Kasei Homes 1-24-1 Nishi-shinjuku, Shinjuku-ku Tokyo 160-8345 Japan Phone: +81-3-3344-7111 Asahi Kasei Pharma 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3600 Asahi Kasei Kuraray Medical 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3750 Asahi Kasei Medical 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3750 Asahi Kasei Fibers 3-3-23 Nakanoshima, Kita-ku Osaka 530-8205 Japan Phone: +81-6-7636-3500 Asahi Kasei Microdevices 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3911 Asahi Kasei E-materials 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3939 Asahi Kasei Construction Materials 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3500 Tokyo Head Ofﬁ ce 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3000 Fax: +81-3-3296-3161 Osaka Head Ofﬁ ce 3-3-23 Nakanoshima, Kita-ku Osaka 530-8205 Japan Phone: +81-6-7636-3111 Fax: +81-6-7636-3077 Beijing Ofﬁ ce Room 1407 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 Asahi Kasei Business Management (Shanghai) Co., Ltd. 8/F, One ICC Shanghai International Commerce Centre No. 999 Huai Hai Zhong Road Shanghai 200031 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 80 Asahi Kasei Annual Report 2011 *旭化成e_fs_PDF用.indd 80 *旭化成e_fs_PDF用.indd 80 11/12/01 10:27 11/12/01 10:27 Investors Information As of March 31, 2011 Stock Listings Tokyo, Osaka, Nagoya, Fukuoka, Sapporo Stock Code 3407 Authorized Shares 4,000,000,000 Outstanding Shares 1,402,616,332 Transfer Agent Sumitomo Trust & Banking Co., Ltd. 4-5-33 Kitahama, Chuo-ku Osaka 541-8639 Japan Largest Shareholders % of equity* Master Trust Bank of Japan, Ltd. (trust account) Japan Trustee Services Bank, Ltd. (trust account) Nippon Life Insurance Co. Asahi Kasei Group Employee Stockholding Assn. Sumitomo Mitsui Banking Corp. Tokio Marine & Nichido Fire Insurance Co., Ltd. SSBT OD05 Omnibus Account Treaty Clients Japan Trustee Services Bank, Ltd. (trust account 9) Independent Auditors PricewaterhouseCoopers Aarata Number of Shareholders 116,237 Mizuho Corporate Bank, Ltd. Sumitomo Life Insurance Co. * Percentage of equity ownership after exclusion of treasury stock. Distribution by Type of Shareholder Distribution by Number of Shares Held Japanese financial institutions 46.86% Foreign investors 24.52% 100,000 or more 80.38% Japanese individuals and groups 22.79% 10,000–99,999 6.96% Other Japanese companies 4.42% 1,000–9,999 12.33% Japanese securities companies 1.41% Less than 1,000 0.33% Stock Chart Share price (¥) 600 400 200 0 6.63 5.67 5.22 3.25 2.53 1.84 1.77 1.56 1.45 1.40 Volume (thousand shares) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 ’08/10 11 12 ’09/1 2 3 4 5 6 7 8 9 10 11 12 ’10/1 2 3 4 5 6 7 8 9 10 11 12 ’11/1 2 3 In this annual report, the TM symbol indicates a trademark or registered trademark of Asahi Kasei Corporation, afﬁ liated companies, or third parties granting rights to Asahi Kasei Corporation or afﬁ liated companies. Asahi Kasei Annual Report 2011 81 *表紙e_PDFヨウ.indd c4 *表紙e_PDFヨウ.indd c4 11/12/01 10:31 11/12/01 10:31 A S A H I K A S E I C O R P O R A T O N I A N N U A L R E P O R T 2 0 1 1 1-105 Kanda Jinbocho, Chiyoda-ku, Tokyo 101-8101 Japan www.asahi-kasei.co.jp Corporate Communications Tel: +81-3-3296-3008, Fax: +81-3-3296-3162 Printed in Japan 2011.11 *表紙e_PDFヨウ.indd c1 *表紙e_PDFヨウ.indd c1 11/12/01 10:31 11/12/01 10:31

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