ASAHI KASEI CORP Annual Report 2013

Plain-text annual report

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 3 ANNUAL REPORT 2013 Fiscal year 2012, ended March 31, 2013 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 2013.10 旭化成e_c1_0920入稿.indd c1-c2 旭化成e_c1_0920入稿.indd c1-c2 13/09/30 17:30 13/09/30 17:30 Corporate Philosophy Group Mission We, the Asahi Kasei Group, contribute to life and living for people around the world. Group Vision Providing new value to society by enabling “living in health and comfort” and “harmony with the natural environment.” Sincerity—Being sincere with everyone. Group Values Challenge—Boldly taking challenges, continuously seeking change. Creativity—Creating new value through unity and synergy. Group Slogan Creating for Tomorrow Overview Management Strategy Operations Governance & Sustainability Financial Section Additional Information Contents Overview Creating for Tomorrow Business Conﬁ guration Consolidated Financial Highlights Management Strategy To Our Shareholders Strategic Management Initiative Interview with the President Operations At a Glance Operating Segments Chemicals Fibers Homes Construction Materials 16 18 20 22 Electronics Health Care Critical Care 24 26 28 Research & Development Governance & Sustainability Corporate Governance Corporate Social Responsibility Directors, Corporate Auditors, Executive Ofﬁ cers Financial Section Contents Consolidated Eleven-Year Summary Management’s Discussion and Analysis Risk Analysis Consolidated Financial Statements Notes to Consolidated Financial Statements Report of Independent Auditors Additional Information Major Subsidiaries and Afﬁ liates Company Information Investors Information 2 4 5 6 7 8 14 16 30 32 36 38 39 40 42 48 50 56 79 80 82 83 Disclaimer The forecasts and estimates shown in this annual report are dependent on a variety of assumptions and economic conditions. Plans and ﬁ gures depicting the future do not imply a guarantee of actual outcome. Asahi Kasei Annual Report 2013 1 The history of the Asahi Kasei Group is rooted in Japan’s first ammonia production by chemical synthesis, which formed the basis for our fibers business. We grew over the years while constantly transforming our business portfolio to meet the changing needs of the times. In the 1960s and 1970s, we began expanding operations in the fields of petrochemicals, construction materials, and homes. We then further diversified our business portfolio by advancing into the fields of health care and electronics, establishing our distinctive character as a highly diversified chemical manufacturer. In 2011, we launched our five-year strategic management initiative “For Tomorrow 2015.” While proactively expanding our world-leading businesses, we are creating new value for society in businesses related to the environment & energy, residential living, and health care. We are “Creating for Tomorrow” based on our Group Vision of enabling living in health and comfort and harmony with the natural environment. Creating for Tomorrow FY 1995 Net sales ¥1,210.2 billion History of business portfolio transformation (sales composition) FY 1980 Net sales ¥800.1 billion •Development and expansion of housing business •Start of pharmaceutical business •Start of LSIs business FY 1965 Net sales ¥112.9 billion •Start of construction materials and housing businesses •Start of petrochemical business •Start of medical devices business FY 1950 Net sales ¥13.5 billion •Start of synthetic rubber business •Expansion into synthetic fiber business 2 Asahi Kasei Annual Report 2013 Overview Expansion of world-leading businesses ● ● ● ● ● ● ● ● ● Acrylonitrile (AN) Synthetic rubber for fuel-efficient tires (S-SBR) Bemberg™ cupro fiber Roica™ elastic polyurethane filament Hipore™ Li-ion battery separator LSIs Sunfort™ photosensitive dry film Planova™ virus removal filters Hemodialysis Critical Care 3.1% Others 1.0% Health Care 8.0% Electronics 7.9% Construction Materials 3.1% FY 2012 Net sales ¥1,666.6 billion Chemicals 41.1% Homes 29.2% Fibers 6.6% •Expansion into critical care business Creating new value for society Environment & Energy Residential Living Health Care Asahi Kasei Annual Report 2013 3 Business Conﬁ guration Asahi Kasei Group (as of March 31, 2013) Holding company Core operating companies Asahi Kasei Corporation Asahi Kasei Chemicals Asahi Kasei Fibers Asahi Kasei Homes Operating segments Chemicals Fibers Homes Asahi Kasei Construction Materials Construction Materials Business sectors Asahi Kasei Microdevices Asahi Kasei E-materials Asahi Kasei Pharma Asahi Kasei Medical ZOLL Medical Electronics Health Care Critical Care Chemicals & Fibers Homes & Construction Materials Electronics Health Care Employees (consolidated) Consolidated subsidiaries Equity-method afﬁ liates 28,363 people 126 companies 43 companies Overseas subsidiaries Manufacturing/R&D sites in Japan 95 companies in 19 countries 25 sites Consolidated net sales* (¥ billion) ¥1,666.6 billion Consolidated operating income (¥ billion) ¥92.0 billion Others Critical Care** Health Care Electronics Construction Materials Homes Fibers Chemicals Corporate expenses and eliminations Others Critical Care** Health Care Electronics Construction Materials Homes Fibers Chemicals FY Net sales ’08 ’09 ’10 ’11 ’12 1,521.2 1,392.2 1,555.9 1,573.2 1,666.6 FY Operating income ’08 35.0 ’09 57.6 ’10 122.9 ’11 104.3 ’12 92.0 * Beginning with ﬁ scal year 2011, the accounting policy for naphtha resale in the Chemicals segment was changed. This change is applied retroactively to net sales for ﬁ scal years 2008 through 2010. ** The “Critical Care” segment was added in ﬁ scal 2012, in which results of ZOLL Medical Corporation are reported. 4 Asahi Kasei Annual Report 2013 Overview Consolidated Financial Highlights Asahi Kasei Corporation and consolidated subsidiaries Overview of ﬁ scal 2012 results (cid:129) Net sales increased by 5.9% from a year ago to ¥1,666.6 billion, with strong performance in the Homes segment and pharmaceutical products in the Health Care segment, as well as the addition of the Critical Care segment due to consolidation of ZOLL Medical Corporation in April 2012. (cid:129) Operating income decreased by 11.8% from a year ago to ¥92.0 billion with deteriorating market conditions in the Electronics segment and monomer products in the Chemicals segment. (cid:129) Total assets increased by ¥389.6 billion from a year ago to ¥1,800.2 billion with increased intangible assets due to the acquisition of ZOLL Medical Corporation and an increase in investment securities largely due to higher fair market value. (cid:129) Interest-bearing debt increased by ¥197.3 billion from a year ago to ¥381.4 billion due to borrowings, etc., to ﬁ nance the acquisition of ZOLL Medical Corporation. Net income (¥ billion) ¥53.7 billion Total assets (¥ billion) ¥1,800.2 billion FY Net income ROE ’08 4.7 0.7% ’09 25.3 4.1% ’10 60.3 ’11 55.8 ’12 53.7 FY (end) ’08 ’09 ’10 ’11 ’12 Total assets 1,379.3 1,368.9 1,425.9 1,410.6 1,800.2 9.3% 8.1% 7.1% ROA 0.3% 1.8% 4.3% 3.9% 3.3% Net worth*** (¥ billion) ¥812.1 billion Interest-bearing debt (¥ billion) ¥381.4 billion FY (end) ’08 ’09 ’10 ’11 ’12 FY (end) Net worth*** 603.8 633.3 663.6 706.8 812.1 Interest-bearing debt Net worth/total assets 43.8% 46.3% 46.5% 50.1% 45.1% D/E ratio ’08 315.6 0.52 ’09 264.6 0.42 ’10 253.9 0.38 ’11 184.1 0.26 ’12 381.4 0.47 Free cash ﬂ ows (¥ billion) ¥(152.5) billion Net income per share (¥) ¥38.43 FY Free cash flows ’08 (66.9) ’09 69.1 ’10 69.3 ’11 51.8 ’12 (152.5) FY Net income per share ’08 3.39 ’09 ’10 ’11 ’12 18.08 43.11 39.89 38.43 *** Net assets less minority interest. Asahi Kasei Annual Report 2013 5 To Our Shareholders Taketsugu Fujiwara, President (left), Ichiro Itoh, Chairman (right) In accordance with our Group Mission of contributing to life opportunities in emerging changes in the operating climate. and living for people around the world, and our Group Vision To achieve our objectives we will continue to concentrate of enabling living in health and comfort and harmony with management resources on the ﬁ elds of the environment & the natural environment, we are working to create new value energy, residential living, and health care, “Creating for for society, taking the lead in achieving solutions to the Tomorrow” by swiftly adapting to changes in society with world’s problems, as we fulﬁ ll our corporate social measures that span across business units. We are also responsibility through the pursuit of sustainable growth. reinforcing our operational base through a group-wide effort Although there remain risks of instability in the global to improve our earnings structure. economy due to the European sovereign debt crisis and Although we can expect further changes in the business slowing growth in emerging economies, the overall operating climate, we will continue to contribute to society by acting climate shows positive signs with the considerable weakening with sincerity, taking challenges, and creating new value with of the Japanese yen, the Nikkei stock average up, and ﬁ rm our Group Mission and Group Vision as our unchanging guide. consumer spending thanks to the Japanese government’s pro-growth policies, as well as revival of the US economy due September 2013 to the shale gas revolution. Under our ﬁ ve-year strategic management initiative “For Tomorrow 2015,” we are expanding world-leading businesses and promoting businesses that create new value for society. We are now focused on obtaining performance results from Ichiro Itoh Chairman Taketsugu Fujiwara President the strategic actions taken, while ﬁ nding new businesses 6 Asahi Kasei Annual Report 2013 Management Strategy Strategic Management Initiative “For Tomorrow 2015” (FY 2011–2015) Leveraging our diversiﬁ ed strengths, we will offer new value from the perspectives of living in health and comfort and harmony with the natural environment by “Creating for Tomorrow.” Expansion of world-leading businesses Creation of new value for society Focused and proactive global development to build market leadership in growing markets. Chemicals: Acrylonitrile (AN) Synthetic rubber for fuel-efﬁ cient tires (S-SBR) Fibers: Bemberg™ cupro ﬁ ber, Roica™ elastic polyurethane ﬁ lament Electronics: Hipore™ lithium-ion battery separator, LSIs, Sunfort™ photosensitive dry ﬁ lm Health Care: Planova™ virus removal ﬁ lters, Hemodialysis Meeting emerging social needs for “living in health and comfort” and “harmony with the natural environment” in the following three ﬁ elds of focus through collabora- tion among different business units. Environment & Energy: Leveraging diverse technology to create a future in harmony with the natural environment (Hipore™ lithium-ion battery separator, LSIs, Microza™ hollow-ﬁ ber ﬁ ltration membranes, Neoma™ and Jupii™ phenolic foam insulation panels, etc.) Residential Living: Providing comfortable living to more cus- tomers, more quickly (Order-built homes, real-estate business, remodeling, Hebel™ auto- claved aerated concrete, etc.) Health Care: Providing unique products and technologies for a lively society of health and longevity (Teribone™ osteoporosis drug, hemodialysis, etc.) Creation of new businesses is advanced with “For Tomorrow” projects in each of these three ﬁ elds. Financial targets FY 2011– 2015 Long-term investment ¥1 trillion New operations, M&A, intermittent expansion of existing businesses ¥450 billion Investment in existing businesses ¥550 billion Progressing toward ¥200 billion of operating income after FY 2015 ¥20000.00 b ¥200.0 billion Operating income ¥122.9 billion ¥104.3 billion ¥92.0 billion ¥130.0 billion (record high) ¥160.0 billion FY 2010 2011 2012 2013 (forecast) 2015 (outlook) Target Asahi Kasei Annual Report 2013 7 Interview with the President Actions taken for growth are bearing fruit, we’re aiming for record-high operating income in ﬁ scal 2013 During the two years we’ve been implementing our “For Tomorrow 2015” strategic management initiative, the economic environment has changed dramatically. Rather than causing us to change course, these circumstances have only revalidated our basic strategy. We are returning to growth from ﬁ scal 2013 onward, with the strategic actions taken thus far making solid contributions to operating income. We will continue to accelerate actions for growth leveraging our diverse operating portfolio and unmatched ability to adapt to changes. Taketsugu Fujiwara, President Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Your operating income target is ¥200 billion, but ﬁ scal 2012 operating income was only ¥92.0 billion. What caused this? Have you considered changing your plans? One of your business strategies is “expansion of world-leading businesses.” How is it progressing so far? What are you planning next? How about your other business strategy, “creation of new value for society”? What is the outlook for your overall health care sector, including synergy among critical care, pharmaceuticals, and medical devices? How do you see the effects of the Japanese government’s growth policies? What is your outlook for ﬁ scal 2013? What is your dividend policy? 8 Asahi Kasei Annual Report 2013 Management Strategy Q1 Your operating income target is ¥200 billion, but ﬁ scal 2012 operating income was only ¥92.0 billion. What caused this? ‘ The economic environment changed dramatically after we formulated “For Tomorrow 2015,” and our global businesses struggled. On the other hand, our domestic businesses such as homes have thrived, and we are growing in health care as an area of strategic growth. We have also launched a project to heighten earnings, and expect to return to growth from ﬁ scal 2013 onward. In ﬁ scal 2012, our global businesses such as monomer products among chemicals and also electronics struggled due to the strong yen through the ﬁ rst three quarters, sluggish overall global demand, and a slowdown in China and other emerging economies. On the other hand, domestic businesses performed well, with homes achieving record-high sales, operating income, and orders for the second year in a row, and solid growth continuing for new pharmaceuticals. Meanwhile, critical care, which we entered with our April 2012 acquisition of ZOLL Medical Corporation, grew as expected. While the result was lower operating income on higher sales, we made steady progress in sowing the seeds of future growth in accordance with our basic strategy of “For ’ Tomorrow 2015.” We also launched a streamlining project to obtain an improved proﬁ t structure which will enhance our ability to weather economic downturns. By gaining greater efﬁ ciency and productivity throughout the Asahi Kasei Group, we are targeting cost reductions of at least ¥10 billion in ﬁ scal 2013, increasing to at least ¥20 billion by ﬁ scal 2015. Q2 Have you considered changing your plans? ‘ We are not changing course, but further advancing actions for growth that leverage our strengths. ’ Nothing that happened gives us any reason to change our basic strategy, and we remain committed to achieving our target of ¥200 billion in operating income. Nevertheless, considering the situation in electronics where swift response to changes in the market structure is required, and in chemicals where recovery of demand in Asia is lagging, we recognize that this is a challenging target to achieve. Reaching this level of operating income will entail further leveraging of our diverse operating portfolio and unmatched ability to adapt to changes as we continue to accelerate actions under our growth strategy. Performance of homes business Record-high results two years running, with growth centered on order-built homes Product strengths (cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:67)(cid:76)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:0)(cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0)(cid:38)(cid:57)(cid:0)(cid:18)(cid:16)(cid:17)(cid:18) (cid:115)(cid:0)(cid:40)(cid:73)(cid:71)(cid:72)(cid:13)(cid:69)(cid:78)(cid:68)(cid:0)(cid:85)(cid:82)(cid:66)(cid:65)(cid:78)(cid:0)(cid:72)(cid:79)(cid:77)(cid:69)(cid:83)(cid:0) (cid:8)(cid:68)(cid:85)(cid:82)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:12)(cid:0)(cid:69)(cid:65)(cid:82)(cid:84)(cid:72)(cid:81)(cid:85)(cid:65)(cid:75)(cid:69)(cid:15)(cid:70)(cid:73)(cid:82)(cid:69)(cid:0) (cid:82)(cid:69)(cid:83)(cid:73)(cid:83)(cid:84)(cid:65)(cid:78)(cid:67)(cid:69)(cid:9) (cid:115)(cid:0)(cid:44)(cid:73)(cid:70)(cid:69)(cid:83)(cid:84)(cid:89)(cid:76)(cid:69)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:79)(cid:83)(cid:65)(cid:76)(cid:83)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:0) (cid:69)(cid:77)(cid:69)(cid:82)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0)(cid:83)(cid:79)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:78)(cid:69)(cid:69)(cid:68)(cid:83) (cid:115)(cid:0)(cid:40)(cid:73)(cid:83)(cid:84)(cid:79)(cid:82)(cid:73)(cid:67)(cid:65)(cid:76)(cid:76)(cid:89)(cid:0)(cid:76)(cid:79)(cid:87)(cid:0)(cid:77)(cid:79)(cid:82)(cid:84)(cid:71)(cid:65)(cid:71)(cid:69)(cid:0)(cid:82)(cid:65)(cid:84)(cid:69)(cid:83) (cid:115)(cid:0)(cid:37)(cid:88)(cid:80)(cid:65)(cid:78)(cid:68)(cid:69)(cid:68)(cid:0)(cid:77)(cid:79)(cid:82)(cid:84)(cid:71)(cid:65)(cid:71)(cid:69)(cid:0)(cid:84)(cid:65)(cid:88)(cid:0)(cid:68)(cid:69)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78) (cid:35)(cid:79)(cid:85)(cid:78)(cid:84)(cid:69)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:13) (cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:70)(cid:84)(cid:69)(cid:82)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:85)(cid:77)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:84)(cid:65)(cid:88)(cid:0) (cid:82)(cid:73)(cid:83)(cid:69)(cid:12)(cid:0)(cid:69)(cid:88)(cid:80)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:72)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:13) (cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:69)(cid:88)(cid:84)(cid:69)(cid:78)(cid:68)(cid:0) (cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:71)(cid:82)(cid:79)(cid:87)(cid:84)(cid:72)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:0)(cid:80)(cid:73)(cid:76)(cid:76)(cid:65)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0) (cid:69)(cid:65)(cid:82)(cid:78)(cid:73)(cid:78)(cid:71)(cid:83) (¥ billion) 500 400 300 200 100 0 Remodeling Real estate Order-built homes (cid:35)(cid:79)(cid:83)(cid:84)(cid:0)(cid:82)(cid:69)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:78)(cid:0) (cid:79)(cid:82)(cid:68)(cid:69)(cid:82)(cid:13)(cid:66)(cid:85)(cid:73)(cid:76)(cid:84)(cid:0)(cid:72)(cid:79)(cid:77)(cid:69)(cid:83)(cid:12)(cid:0) (cid:69)(cid:88)(cid:80)(cid:65)(cid:78)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0) (cid:72)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:13)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83) FY 2005 Net sales 404.5 Operating income 28.2 2010 409.2 36.5 2011 452.0 46.3 2012 486.2 54.3 2013 (forecast) 526.0 60.0 Asahi Kasei Annual Report 2013 9 Q3 One of your business strategies is “expansion of world-leading businesses.” How is it progressing so far? What are you planning next? ‘ We have steadily advanced investments in line with our strategy. Several new plants have started up, and will contribute to earnings. For acrylonitrile (AN), in which we have established the leading position in Asia, we started commercial operation of a new plant in Thailand in January 2013 and a new line in Korea in February 2013, enhancing the cost competitiveness of our production infrastructure. In Singapore, we started commercial operation of the ﬁ rst line of a new plant for synthetic rubber for fuel-efﬁ cient tires (S-SBR) in April 2013, and are constructing a second line for start-up in the ﬁ rst half of 2015. We are also studying the construction of an additional overseas plant for S-SBR as we proactively expand production capacity to meet rapidly growing demand. ’ Nobeoka, Miyazaki, Japan, we are expanding our plant for Bemberg™ cupro ﬁ ber. We are also reinforcing our overseas processing facilities for Hipore™ lithium-ion battery (LIB) separator, with market growth forecasted in automotive applications, and our second Chinese plant for Sunfort™ photosensitive dry ﬁ lm will soon begin operation, meeting growing demand in smartphone and tablet PC applications. These measures for expansion of globally competitive businesses in accordance with our strategy will begin contributing to earnings in ﬁ scal 2013. Q4 How about your other business strategy, “creation of new value for society”? ‘ We made a full-ﬂ edged entry into the critical care business. We are making concerted investments in all three of our strategic ﬁ elds, with an emphasis on health care. ’ In November 2012 we started commercial operation of a new plant in Thailand for spunbond nonwovens for disposable diapers and other hygienic products, and in Our strategic expansion in the health care sector took a major step forward in April 2012 as we entered the critical care business with our ¥183 billion acquisition of ZOLL Medical Expansion of world-leading businesses Acrylonitrile (AN) Production sites S-SBR (synthetic rubber for fuel-efﬁ cient tires) Four essential characteristics of fuel-efﬁ cient tires Korea 560,000 tons/year Japan Kawasaki 　150,000 tons/year Mizushima 　300,000 tons/year Middle East 200,000 tons/year (under study) Thailand 200,000 tons/year fuel- efficiency continuous polymerization abrasion resistance good wet grip batch polymerization handling stability 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(cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:12)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:67)(cid:82)(cid:89)(cid:76)(cid:73)(cid:67)(cid:0)(cid:70)(cid:73)(cid:66)(cid:69)(cid:82)(cid:0)(cid:85)(cid:83)(cid:69)(cid:68)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:77)(cid:79)(cid:73)(cid:83)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:65)(cid:66)(cid:83)(cid:79)(cid:82)(cid:66)(cid:73)(cid:78)(cid:71)(cid:15)(cid:72)(cid:69)(cid:65)(cid:84)(cid:0) (cid:71)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:67)(cid:76)(cid:79)(cid:84)(cid:72)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:65)(cid:82)(cid:66)(cid:79)(cid:78)(cid:0)(cid:70)(cid:73)(cid:66)(cid:69)(cid:82)(cid:0)(cid:80)(cid:82)(cid:79)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78) (cid:115)(cid:0)(cid:50)(cid:69)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0)(cid:67)(cid:79)(cid:83)(cid:84)(cid:13)(cid:67)(cid:79)(cid:77)(cid:80)(cid:69)(cid:84)(cid:73)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:80)(cid:82)(cid:79)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:78)(cid:70)(cid:82)(cid:65)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0) (cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0)(cid:83)(cid:84)(cid:65)(cid:82)(cid:84)(cid:13)(cid:85)(cid:80)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:65)(cid:78)(cid:69)(cid:13)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:84)(cid:0)(cid:73)(cid:78)(cid:0)(cid:52)(cid:72)(cid:65)(cid:73)(cid:76)(cid:65)(cid:78)(cid:68) (cid:115)(cid:0)(cid:35)(cid:65)(cid:80)(cid:84)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:71)(cid:82)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:68)(cid:69)(cid:77)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:83)(cid:80)(cid:69)(cid:67)(cid:73)(cid:65)(cid:76)(cid:76)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:33)(cid:83)(cid:73)(cid:65) (cid:115)(cid:0)(cid:45)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:84)(cid:82)(cid:69)(cid:65)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:70)(cid:85)(cid:69)(cid:76)(cid:13)(cid:69)(cid:70)(cid:70)(cid:73)(cid:67)(cid:73)(cid:69)(cid:78)(cid:84)(cid:0)(cid:84)(cid:73)(cid:82)(cid:69)(cid:83) (cid:115)(cid:0)(cid:45)(cid:65)(cid:78)(cid:85)(cid:70)(cid:65)(cid:67)(cid:84)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:13)(cid:65)(cid:68)(cid:68)(cid:69)(cid:68)(cid:0)(cid:80)(cid:82)(cid:79)(cid:68)(cid:85)(cid:67)(cid:84)(cid:83)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:65)(cid:68)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:68)(cid:0) performance through continuous polymerization process utilizing unique technology (cid:115)(cid:0)(cid:37)(cid:88)(cid:80)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:86)(cid:69)(cid:82)(cid:83)(cid:69)(cid:65)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:0)(cid:71)(cid:82)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:68)(cid:69)(cid:77)(cid:65)(cid:78)(cid:68)(cid:0)(cid:68)(cid:85)(cid:69)(cid:0)(cid:84)(cid:79)(cid:0)(cid:76)(cid:65)(cid:66)(cid:69)(cid:76)(cid:73)(cid:78)(cid:71)(cid:0) requirements 10 Asahi Kasei Annual Report 2013 Management Strategy Corporation, a major US manufacturer of devices and systems for acute critical care. ZOLL’s fastest-growing product, the LifeVest™ wearable deﬁ brillator on the market in the US and Europe, is expanding at around 50% per year. In July 2013, ZOLL’s Japanese subsidiary Asahi Kasei ZOLL Medical received regulatory approval to market the LifeVest™ in Japan. In pharmaceuticals, we are advancing a global Phase III clinical study for Recomodulin™ anticoagulant, and in medical devices we are reinforcing overseas operations for artiﬁ cial kidneys. In the ﬁ eld of residential living, we constructed a demonstration house called “HH2015” in Fuji, Shizuoka, Japan, incorporating home health care systems and various other products and technologies from both within the Asahi Kasei Group and outside, and we are utilizing this venue to evaluate their practicality and commercial prospects. In the ﬁ eld of the environment & energy, we are constructing a second line for Neoma™ phenolic foam, which boasts the world’s highest-level insulation performance for the housing market. The ultraviolet light emitting diodes (UV LEDs) under development by Crystal IS, Inc., which we acquired in 2011, have achieved the world’s highest UV LED output, and we are constructing a pilot line in preparation for commercialization. Creation of new value for society FY 2011–2015 Long-term investment: ¥1 trillion (cid:115)(cid:0)(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:73)(cid:78)(cid:71)(cid:0)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:73)(cid:67)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:87)(cid:72)(cid:73)(cid:76)(cid:69)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:70)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:72)(cid:69)(cid:65)(cid:76)(cid:84)(cid:72) (cid:115)(cid:0)(cid:45)(cid:65)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:69)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:85)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:99)(cid:18)(cid:21)(cid:16)(cid:0)(cid:66)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78)(cid:0)(cid:82)(cid:69)(cid:77)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:78)(cid:69)(cid:87)(cid:0)(cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:12)(cid:0)(cid:45)(cid:6)(cid:33)(cid:12)(cid:0) (cid:0)(cid:0)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:78)(cid:84)(cid:0)(cid:69)(cid:88)(cid:80)(cid:65)(cid:78)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:70)(cid:85)(cid:82)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:71)(cid:82)(cid:79)(cid:87)(cid:84)(cid:72) (cid:36)(cid:69)(cid:67)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:65)(cid:68)(cid:79)(cid:80)(cid:84)(cid:69)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:38)(cid:57)(cid:0)(cid:18)(cid:16)(cid:17)(cid:17)– (cid:18)(cid:16)(cid:17)(cid:18) (cid:115)(cid:0)(cid:33)(cid:67)(cid:81)(cid:85)(cid:73)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:58)(cid:47)(cid:44)(cid:44)(cid:0) (cid:115)(cid:0)(cid:33)(cid:67)(cid:81)(cid:85)(cid:73)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:35)(cid:82)(cid:89)(cid:83)(cid:84)(cid:65)(cid:76)(cid:0)(cid:41)(cid:51) (cid:115)(cid:0)(cid:35)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:73)(cid:76)(cid:79)(cid:84)(cid:0)(cid:76)(cid:73)(cid:78)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:53)(cid:54)(cid:0)(cid:44)(cid:37)(cid:36)(cid:83) (cid:115)(cid:0)(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:74)(cid:79)(cid:73)(cid:78)(cid:84)(cid:0)(cid:86)(cid:69)(cid:78)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82) (cid:0)(cid:0) (cid:76)(cid:73)(cid:84)(cid:72)(cid:73)(cid:85)(cid:77)(cid:0)(cid:73)(cid:79)(cid:78)(cid:0)(cid:67)(cid:65)(cid:80)(cid:65)(cid:67)(cid:73)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0)(cid:8)(cid:44)(cid:41)(cid:35)(cid:83)(cid:9) Total approx. ¥200 billion (cid:46)(cid:69)(cid:87)(cid:0)(cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:12)(cid:0)(cid:45)(cid:6)(cid:33)(cid:12) (cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:78)(cid:84)(cid:0)(cid:69)(cid:88)(cid:80)(cid:65)(cid:78)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70) (cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83) (cid:99)(cid:20)(cid:21)(cid:16)(cid:0)(cid:66)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78) R e s o u r c e s f o r f u r t h (cid:38)(cid:57)(cid:0)(cid:18)(cid:16)(cid:17)(cid:19) (cid:79)(cid:78)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83) (cid:38)(cid:57)(cid:0)(cid:18)(cid:16)(cid:17)(cid:19) (cid:79)(cid:78)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83) e r g r o w t h (cid:36)(cid:69)(cid:67)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:65)(cid:68)(cid:79)(cid:80)(cid:84)(cid:69)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:38)(cid:57)(cid:0)(cid:18)(cid:16)(cid:17)(cid:17)–(cid:18)(cid:16)(cid:17)(cid:18) (cid:115)(cid:0)(cid:51)(cid:69)(cid:67)(cid:79)(cid:78)(cid:68)(cid:0)(cid:76)(cid:73)(cid:78)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:51)(cid:13)(cid:51)(cid:34)(cid:50)(cid:0)(cid:73)(cid:78)(cid:0)(cid:51)(cid:73)(cid:78)(cid:71)(cid:65)(cid:80)(cid:79)(cid:82)(cid:69) (cid:115)(cid:0)(cid:35)(cid:65)(cid:80)(cid:65)(cid:67)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:73)(cid:78)(cid:83)(cid:85)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78) (cid:0)(cid:0)(cid:0)(cid:80)(cid:65)(cid:78)(cid:69)(cid:76)(cid:83) (cid:115)(cid:0)(cid:35)(cid:65)(cid:80)(cid:65)(cid:67)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:34)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:71)(cid:152) Total approx. ¥200 billion (cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:73)(cid:78) (cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83) (cid:99)(cid:21)(cid:21)(cid:16)(cid:0)(cid:66)(cid:73)(cid:76)(cid:76)(cid:73)(cid:79)(cid:78) Asahi Kasei Annual Report 2013 11 Q5 What is the outlook for your overall health care sector, including synergy among critical care, pharmaceuticals, and medical devices? ‘ Asahi Kasei has always ﬂ exibly transformed its business portfolio. We aim to develop health care as a major pillar of business, with synergy among our different health care operations. In 2012 we established a Health Care Council to create synergies among critical care, pharmaceuticals and medical devices. The Council will serve as a forum for sharing know- how on obtaining regulatory approval and networks of contacts at medical institutions, as well as wide-ranging discussions on other potential synergies including combinations of technology accumulated in the Asahi Kasei Group with technology of ZOLL. We plan to build up the health care sector as the third major pillar of earnings together with chemicals and homes. ’ Scale-up of Health Care sector Scale-up of Health Care sector as a major pillar of business (cid:115)(cid:0)(cid:37)(cid:88)(cid:80)(cid:65)(cid:78)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:44)(cid:73)(cid:70)(cid:69)(cid:54)(cid:69)(cid:83)(cid:84)(cid:152)(cid:0) wearable defibrillator (cid:115)(cid:0)(cid:51)(cid:89)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0)(cid:40)(cid:69)(cid:65)(cid:76)(cid:84)(cid:72)(cid:0) Care sector Acquisition of ZOLL Entry into critical care businesses (cid:44)(cid:65)(cid:85)(cid:78)(cid:67)(cid:72)(cid:0)(cid:79)(cid:70)(cid:0)(cid:52)(cid:69)(cid:82)(cid:73)(cid:66)(cid:79)(cid:78)(cid:69)(cid:152)(cid:0) (cid:79)(cid:83)(cid:84)(cid:69)(cid:79)(cid:80)(cid:79)(cid:82)(cid:79)(cid:83)(cid:73)(cid:83)(cid:0)(cid:68)(cid:82)(cid:85)(cid:71) Critical Care ¥52.1 billion Health Care Net sales ¥116.4 billion ¥119.5 billion ¥133.5 billion Pharmaceuticals/ medical devices FY 2010 2011 2012 2015 (forecast) 2020 (target) 12 Asahi Kasei Annual Report 2013 Management Strategy Q6 How do you see the effects of the Japanese government’s growth policies? Q8 What is your dividend policy? ‘ We will obtain further growth by taking advantage of the government’s strategy for recovery and growth. ’ The Japanese economy is on the path of recovery thanks to correction of the overvalued yen and high expectations for the Abe government’s aggressive monetary and ﬁ scal policies. I hope increased corporate earnings, higher household income, and greater consumer spending will form a virtuous circle that drives further economic growth. The “For Tomorrow 2015” strategies we formulated in 2011 are in perfect alignment with the new government policies. For example, the government’s growth strategy, known as the “third arrow” of economic policy, emphasizes health care and energy—ﬁ elds we identiﬁ ed for the creation of new value for society. Additional government measures such as deregulation to foster greater competitiveness will provide further impetus as we advance our strategy for growth. Q7 What is your outlook for ﬁ scal 2013? ‘ We will make a major advance toward our “For Tomorrow 2015” goals this year, with recovering demand, a weaker yen, new plants contributing to earnings, and the effect of reduced operating costs.’ Chemicals will enjoy increased sales volumes due to full- ﬂ edged operation of new plants, and electronics enjoy a recovery of sales volumes and the effect of the weaker yen. Homes will record increased deliveries thanks to continuing growth in orders, and pharmaceuticals will continue to see increased sales of new drugs. We also expect cost reductions of ¥10 billion or more from our streamlining project in procurement, logistics, administration, etc. Taken together, we are forecasting increased sales with operating income reaching a record high of ¥130 billion. ’ ‘ We aim to further enhance corporate value through “For Tomorrow 2015,” with a basic standard for payout ratio of 30%. Our basic policy is to strive to continuously increase dividends through continuous earnings growth while maintaining an appropriate cash reserve based on consolidated ﬁ nancial results. Our cash reserve will be used as a source of funds required to achieve future earnings growth by expanding operations, both through investments in established businesses and through strategic investments, including M&A, and new business development expenditures in the environment & energy, residential living, and health care as ﬁ elds of strategic focus under “For Tomorrow 2015.” The annual dividend for ﬁ scal 2012 was maintained from the previous year at ¥14 per share, and we aim to maintain this dividend for ﬁ scal 2013 reﬂ ecting forecasted consolidated ﬁ nancial results. 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 (¥) 18 15 12 9 6 3 0 FY Dividends per share, left scale (%) 300 150 120 90 60 30 0 ’08 10 ’09 10 ’10 11 ’11 14 ’12 14 ’13 14 (plan) Payout ratio, right scale 295.0% 55.3% 25.5% 35.1% 36.4% 25.4% (forecast) Asahi Kasei Annual Report 2013 13 At a Glance Chemicals Fibers Homes Construction Materials P16 P18 P20 P22 Sales composition 41.1 % Operating income composition* 22.4 % Net sales (¥ billion) 6.6 % 3.9 % 29.2 % 53.0 % 3.1 % 3.9 % ¥684.6 billion ¥109.6 billion ¥486.2 billion ¥51.5 billion FY ’10 ’11 699.8 680.1 ’12 684.6 FY ’10 ’11 108.8 110.8 ’12 109.6 FY ’10 ’11 409.2 452.0 ’12 486.2 FY ’10 47.4 ’11 46.1 ’12 51.5 Operating income (loss) (¥ billion) ¥22.9 billion ¥4.0 billion ¥54.3 billion ¥4.0 billion FY ’10 64.4 ’11 44.5 9.2% 6.5% ’12 22.9 3.3% FY ’10 4.2 ’11 3.1 ’12 4.0 FY ’10 36.5 ’11 46.3 ’12 54.3 FY ’10 2.1 ’11 1.8 ’12 4.0 3.9% 2.8% 3.7% 8.9% 10.3% 11.2% 4.4% 4.0% 7.7% Operating income Operating margin Operating income Operating margin Operating income Operating margin Operating income Operating margin Overview of FY 2012 results Sales increased, but operating income decreased. Terms of trade for acrylonitrile and other monomer products deteriorated. Synthetic rubber for fuel-efﬁ cient tires performed well, as did coating materials. Sales decreased, but operating income increased. Sales volume of Bemberg™ cupro ﬁ ber increased, but Roica™ elastic polyurethane ﬁ lament struggled in overseas markets. Both sales and operating income increased. Deliveries of Hebel Haus™ unit homes and Hebel Maison™ apartment buildings increased. Real estate operations and remodeling operations performed well. Both sales and operating income increased. Sales of Hebel™ autoclaved aerated concrete (AAC) panels were ﬁ rm. Foundation systems and insulation materials performed well. * Not including corporate expenses and eliminations. ** The “Critical Care” segment was added in ﬁ scal 2012, in which results of ZOLL Medical Corporation are reported; subject to consolidation from April 27, 2012 to March 31, 2013. *** Operating income before amortization of goodwill and other intangible assets, etc., related to acquisition of ZOLL Medical Corporation. 14 Asahi Kasei Annual Report 2013 Operations Electronics Health Care Critical Care** Others P24 P26 P28 7.9 % 2.8 % 8.0 % 15.5 % 3.1 % (3.6) % 1.0 % 2.1 % ¥131.1 billion ¥133.5 billion ¥52.1 billion ¥18.0 billion FY ’10 ’11 158.3 146.1 ’12 131.1 FY ’10 ’11 116.4 119.5 ’12 133.5 FY ’10 — ’11 — ’12 52.1 FY ’10 16.0 ’11 18.6 ’12 18.0 ¥2.8 billion ¥15.9 billion ¥(3.7) billion ¥2.2 billion Gross operating income*** +7.3 Amortization of goodwill and other intangible assets, etc. (11.0) FY ’10 14.3 ’11 6.4 ’12 2.8 FY ’10 7.0 ’11 8.8 ’12 15.9 FY 9.0% 4.4% 2.2% 6.1% 7.4% 11.9% ’10 — — ’11 — — ’12 (3.7) — FY ’10 1.7 ’11 3.0 ’12 2.2 10.7% 16.0% 12.2% Operating income Operating margin Operating income Operating margin Operating loss Operating margin Operating income Operating margin Both sales and operating income decreased with lower shipment volumes and lower sales price due to the generally sluggish market. Both sales and operating income increased. Sales of Teribone™ osteoporosis drug grew smoothly. Sales of therapeutic apheresis devices were ﬁ rm. Operating income from LifeVest™ wearable deﬁ brillators increased steadily. An operating loss resulted as an effect of amortization of goodwill and other intangible assets, etc., amounting to ¥11.0 billion. Asahi Kasei Annual Report 2013 15 Operating Segments No. 2 global share No. 1 share in Asia 1 Acrylonitrile (AN) 2 Synthetic rubber for fuel-efﬁ cient tires (S-SBR) Water-clariﬁ cation membrane market No. 1 share in US No. 1 global share 3 Microza™ UF and MF 4 Ion-exchange membranes and electrolysis systems Chemicals Major businesses/products Chemicals and derivative products Nitric acid, caustic soda, acrylonitrile (AN), styrene, adipic acid, methyl methacrylate (MMA), 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, Frosch™ detergent, plastic ﬁ lm, sheet, and foam 16 Asahi Kasei Annual Report 2013 1 2 3 4 Sustained growth in demand for AN is forecasted in the main applications of acrylonitrile-butadiene-styrene (ABS) resin and acrylic ﬁ ber. We are Asia’s leading AN producer, with a capacity of 1.21 million tons per year at our four plants in Japan, Korea, and Thailand. By continuing to expand competitive production infrastructure utilizing our world-leading catalyst technology, we aim to become the largest AN producer in the world. S-SBR is an essential material for fuel-efﬁ cient tires, a ﬁ eld of dramatic demand growth in recent years. Leveraging our tech- nology which enables safety and lower fuel consumption, we will capture demand growth by proactively expanding produc- tion capacity in Singapore and other overseas locations. Microza™ ﬁ ltration modules containing unique hollow-ﬁ ber membranes are used to purify water and other liquids. Demand continues to grow as a solution to water shortage and contamination problems, and Microza™ microﬁ ltration (MF) and ultraﬁ ltration (UF) systems have been adopted at over 1,000 facilities throughout the world. Our ion-exchange membranes and membrane-process electrol- ysis systems are used to produce caustic soda and chlorine by electrolyzing brine. With advantages over the conventional process including lower energy consumption and elimination of the need to use harmful mercury, our world-leading membrane- process technology has been adopted at over 100 plants in 19 countries around the world. Operations Yuji Kobayashi President, Asahi Kasei Chemicals We are pursuing global growth opportunities in ﬁ elds Highlights (cid:129) Start of commercial operation of new plants for AN and MMA In January 2013, PTT Asahi Chemical Co., Ltd., an afﬁ liate of Asahi Kasei Chemicals in Thailand (owned 48.5% by Asahi Kasei Chemicals, 48.5% by PTT Public Company Limited, and 3.0% by Marubeni), began commercial operation of plants for AN and methyl methacrylate (MMA). The new AN plant is the world’s ﬁ rst propane-process plant, which uses propane directly as feedstock, and the new MMA plant is that make the most of our technological advantage and an acetone cyanohydrin (ACH) process plant, which uses byproduct optimizing our operational conﬁ guration in line with hydrogen cyanide from the AN plant as feedstock. the changing management climate, with a focus on The new operation in Thailand marks an important step in the strategic expansion of our AN business, together with an expansion of our plant in Korea in February 2013, and we are currently studying the construction of an AN plant in the Middle East. We will remain focused on maximizing earnings from AN as a world-leading business by extending production infrastructure in locations with superior feedstock availability and market access. enabling “living in health and comfort” and “harmony with the natural environment” throughout our broad range of business operations. “For Tomorrow 2015” Strategies Through ﬂ exible investment of management resources, we are building a business portfolio that will meet society’s future needs. 1. Aiming for leading position in globally competitive businesses (cid:129) AN: Constructing cost-competitive plants to meet global demand growth, aiming for world No. 1 position AN plant in Thailand (cid:129) S-SBR: Proactive capacity expansion to meet strong demand growth in the fuel-efﬁ cient tire market (cid:129) Completion of new plant for Saran Wrap™ A new plant for Saran Wrap™ in Suzuka, Mie, Japan, was completed 2. Business expansion in growing markets, particularly in Asia in May 2012. With ﬁ rm consumer recognition of its superior cling and (cid:129) Performance plastics: Expanding established position in Asian barrier performance, Saran Wrap™ has maintained the leading market markets through enhanced application development capability and global production infrastructure share in Japan ever since its debut in 1960. Transition to the new plant from the previous plant with a history of over 50 years facilitates (cid:129) Water treatment/membrane business: Further reinforcing greater productivity and more stringent quality control. membrane business, expanding operations in China (cid:129) Duranate™ HDI-based polyisocyanate: Expanding business in the rapidly growing Chinese market (cid:129) Health care materials: Major expansion of Ceolus™ microcrystalline cellulose in emerging markets, reinforcement of acetonitrile supply infrastructure 3. Creation of new businesses and business ﬁ elds as next strategic pillars New plant for Saran Wrap™ in Suzuka (cid:129) Establishment and expansion of new businesses in promising markets 4. Optimization of petrochemical operations in Japan for stable proﬁ tability Major Projects under Construction (cid:129) New S-SBR plant in Singapore (cid:129) New acetonitrile plant in Korea Asahi Kasei Annual Report 2013 17 Five plants around the world World’s only product of its kind 1 Roica™ spandex 2 Bemberg™ cupro ﬁ ber A wide range of innovative functional products No. 1 domestic market share in tire cord Expanding use in air bags 3 Nonwovens 4 Leona™ nylon 66 ﬁ lament Fibers Major businesses/products Roica™ elastic polyurethane ﬁ lament, Bemberg™ cupro ﬁ ber, Eltas™ spunbond, Lamous™ artiﬁ cial suede, and other nonwovens, Leona™ nylon 66 ﬁ lament 18 Asahi Kasei Annual Report 2013 1 2 3 4 With excellent stretch and recovery properties, Roica™ elastic polyurethane ﬁ lament (spandex/elastane) provides the advanced functionality to meet a wide variety of customer needs. It is used for women’s stockings, sportswear, diapers, and medical supporters. The global Roica™ supply network includes manufacturing plants in Japan, Taiwan, China, Thailand and Germany. Bemberg™ cupro is a regenerated cellulose ﬁ ber made from cotton linter, the short ﬁ bers on cotton seeds. The world’s only manufacturer, we have been producing Bemberg™ for over 80 years. Featuring a silk-like smooth feel and attractive luster, it is used in applications ranging from high-quality suit linings to outerwear, innerwear, sportswear, and beddings. The use of Bemberg™ for traditional garments is growing in India and Pakistan. A new plant for Eltas™ spunbond started up in Thailand in 2012 to meet rising demand in diapers and other hygienic product applications, most notably in Asia. In addition, we have wide range of other highly functional nonwoven products made with advanced and innovative production tech- nology. Precisé™ is a multifunctional nonwoven fabric with high barrier efﬁ ciency used in electronic applications. Bemliese™ is the world’s only 100% cellulose continuous-ﬁ lament nonwoven. Lamous™ artiﬁ cial suede is used for upholstery and automotive interiors. Leona™ nylon 66 ﬁ lament featuring exceptional strength, light weight, and heat resistance, is used as an industrial material, especially in automotive applications. In recent years, its use has been expanding in automotive air- bags and as reinforcement in aircraft tires. Demand for Leona™ ﬁ lament continues to grow in recognition of the high quality enabled by the ideal manufacturing process of continuous polymerization and direct spinning. Operations Toshio Takanashi President, Asahi Kasei Fibers Highlights (cid:129) Expansion of production capacity for Bemberg™ In April 2013 we began construction work to expand production facilities for Bemberg™ cupro ﬁ ber in Nobeoka, Miyazaki, Japan. Featuring a smooth feel and moisture absorption/release, Together with our customers, we are contributing to life and living for people around the world by securing Bemberg™ is increasingly used for traditional garments and functional innerwear, especially in emerging countries. In order the presence of our unique businesses with growth to ensure the stable supply of potential in world-leading ﬁ elds. “For Tomorrow 2015” Strategies high quality Bemberg™ products in line with further growth in the global market, we will continue to expand production capacity while enhancing production Enhancing the stable proﬁ t base in our unique established infrastructure. businesses with expansion and growth in world-leading ﬁ elds, in accordance with the two perspectives of “harmony with the natural environment” and “living in health and comfort.” Creating new businesses and markets by enhancing basic and applied technologies with technology collaboration both inside and outside the company. 1. Roica™ elastic polyurethane ﬁ lament (cid:129) Establishment of the world-leading brand in ﬁ elds where we have superiority in quality and function, in collaboration with customers Bemberg™ cupro ﬁ ber (cid:129) Start-up of a new spunbond plant in Thailand Our new spunbond plant in Thailand started operation in November 2012 to meet growing demand in the ﬁ eld of hygienic products such as disposable diapers in Asian countries. With production located in close proximity to market demand, it enables swift response to customer needs and stable supply to manufacturers of hygienic products from Japan and other countries that are expanding output (cid:129) Securing a presence in growing Asian markets and globally, with the plant in Thailand as a key manufacturing base in Asia. 2. Nonwovens (cid:129) Spunbond: Earnings growth in Asia with polypropylene spunbond for hygienic products produced at a new 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 3. Bemberg™ cupro ﬁ ber (cid:129) Expansion in Europe, China, and other overseas markets for linings, outerwear, functional apparel, and traditional garments (cid:129) Production processes innovation 4. Leona™ nylon 66 ﬁ lament (cid:129) Stable earnings in tire cord applications (cid:129) Expansion in air-bag applications Spunbond plant in Thailand Asahi Kasei Annual Report 2013 19 Long Life Homes Earthquake-resistance, ﬁ re-resistance, durability Innovative lifestyle proposals 1 Hebel Haus™ 2 Hebel Maison™ Building consensus for urban renewal Sustaining long-term satisfaction 3 Atlas™ condominiums 4 Remodeling Homes Major businesses/products Order-built homes operations (unit homes and apartment buildings) Hebel Haus™ unit homes, Hebel Maison™ apartments Real estate–related operations Management of Hebel Maison™ rental units, Atlas™ condominiums, Hebel Town™ housing developments, brokerage of used Hebel Haus™ homes Remodeling Exterior wall refurbishing, rerooﬁ ng, redesign, interior renovation, solar panel installation Financial and other services Mortgage ﬁ nancing, etc. 20 Asahi Kasei Annual Report 2013 1 2 3 4 Our “Long Life Homes” provide long-lasting safety, security, and comfort for over 60 years, through a combination of Hebel™ auto- claved aerated concrete (AAC) panels with our original steel-frame structural systems. We offer order-built homes featuring outstand- ing strength and durability which can withstand earthquake, ﬁ re, and typhoon. Since pioneering the two-generation home, we have created a vari- ety of new homes tailored to different needs that change over time, such as homes with features for living with pets, and homes for a family living with their parents and an unmarried sibling. We continue to advance innovative proposals that meet urban lifestyle needs. Our residential development business is centered on Atlas™ series condominium buildings, with a focus on replacing older housing complexes in urban areas with new condominiums together with comprehensive plans for urban renewal, which requires accord for rebuilding to be obtained among various stakeholders holding ownership rights. The exceptional negotiating skills we have accu- mulated through experience in the order-built homes business has proved to be effective as we advance the process of consensus- building and planning, providing full support for customers from the ﬁ rst step of consideration through ﬁ nal completion. Our remodeling services are focused on sustaining long-term satis- faction for residents. In addition to maintenance-related work, we provide innovative value-adding proposals for timely renovation to adapt to lifestyle changes such as enlargement, remodeling, and installation of solar panels. Operations Masahito Hirai President, Asahi Kasei Homes The order-built homes business will be expanded with Highlights (cid:129) Launch of innovative new Hebel Haus™ In August 2012 we launched a new Hebel Haus™ product with features speciﬁ cally designed for a family living with their parents and an unmarried sibling. The new home builds on our established know-how as a pioneer in homes for two-generation families, and we will continue to leverage this know-how to advance additional new proposals for homes with comfort which will be passed down for generations, dominant competitiveness as the differentiated market including features that provide new value by encouraging leader in the ﬁ eld of urban unit homes. Housing-related communication between family members, and homes that provide a operations will be developed as an array of businesses, comfortable living environment for unmarried family members. building and utilizing their own distinctive strengths. “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 to 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. 1. Houses, apartments (cid:129) Establishment of No. 1 position as a differentiated market leader with new residential lifestyle proposals that meet emerging social needs (cid:129) Promotion of community-speciﬁ c proposals to increase market share, and reinforcing marketing capabilities in selected urban areas of Japan (cid:129) Expansion of multi-dwelling homes business 2. Real estate New Hebel Haus™ Net Sales (Asahi Kasei Homes consolidated) (¥ billion) Others Remodeling Real estate–related Order-built homes Others Pre-built homes Order-built homes 1.6 52.5 82.9 1.9 46.3 70.6 72.7 29.9 75.3 32.1 79.3 27.8 88.7 23.7 307.3 282.3 302.1 339.6 367.3 389.0 (cid:129) Reinforcing condominium business based on obtaining accord among owners regarding exchange of equivalent value FY Net sales ’08 ’09 ’10 ’11 ’12* ’13 (forecast) 409.9 389.7 409.2 452.0 486.2 526.0 (cid:129) Maximizing utilization of land value through brokerage-related operations (cid:129) Heightening capability to secure tenants * Product categories are revised from FY 2012. A portion of sales previously included in pre-built homes is now included in order-built homes. Otherwise, sales in the previous pre-built homes category are now included in real estate–related. 3. Expansion of housing-related operations (cid:129) Expansion of remodeling and renovation work (cid:129) Enhancement of the energy-conservation product lineup Orders Received (¥ billion) FY ’08 ’09 ’10 ’11 ’12 ’13 (forecast) Orders received 291.1 306.9 354.5 371.9 412.4 426.0 Asahi Kasei Annual Report 2013 21 No. 1 World’s top-class insulation performance share in Japan Thermal conductivity of 0.020 WmK 1 Hebel™ autoclaved aerated concrete (AAC) panels 2 Neoma™ phenolic foam insulation panels Meeting various changing needs Undamaged by major earthquakes 3 Eazet™ screw-tip piles 4 BasePack™ column base attachment system Construction Materials Major businesses/products Hebel™ and Hebel Powerboard™ autoclaved aerated concrete (AAC) panels, Neoma™ and Jupii™ phenolic foam insulation panels, Eazet™, ATT Column™, and other piling systems, BasePack™ column base attachment systems 22 Asahi Kasei Annual Report 2013 1 2 3 4 Featuring light weight which enables easy installation as well as excellent durability, thermal insulation, and ﬂ ame resistance, Hebel™ panels are used in various applications ranging from unit homes to skyscrapers. Hebel™ panels have maintained the leading position in Japan since their market launch in 1967, with continu- ous R&D and quality improvements. Neoma™ phenolic foam insulation panels featuring world-leading insulation performance are used not only in construction applica- tions but also for insulation in transportation vehicles. Further demand growth is expected due to the Japanese government’s announcement of a roadmap toward mandatory energy conserva- tion standards for homes. The Eazet™ piling system for small-scale construction enables installation in conﬁ ned spaces while generating little noise or vibration and no soil for disposal. These advantages make Eazet™ suitable not only for home construction, but also increasingly for the foundations of mobile phone masts, elevators, and escalators, as well as for seismic retroﬁ tting of existing structures. The BasePack™ column base attachment system enhances the strength of steel-frame buildings by ﬁ rmly attaching steel col- umns to the concrete foundation. Its exceptional earthquake resistance was demonstrated during the Great Hanshin Earthquake of 1995 and Great East Japan Earthquake of 2011, when no BasePack™ attachments suffered any damage. Operations Tomihiro Maeda President, Asahi Kasei Construction Materials Highlights (cid:129) Expansion of capacity for phenolic foam insulation panels In April 2012, Asahi Kasei Construction Materials ﬁ nalized a decision to increase production capacity of Neoma™ high-performance phenolic foam insulation panels and Jupii™ ﬂ oor insulation panels developed based on Neoma™ technology. The market for high-performance insulation panels is anticipated to grow dramatically against a We are focused on the development and provision of background of heightened demand for energy conservation and better products that provide safety, security, and comfort, insulated homes, with renewed consumer interest in “smart” and “zero- based on constant innovation in our core areas of AAC- energy” homes as well as the Japanese government’s roadmap toward related products, foundation systems, insulation mate- mandatory energy conservation standards for homes in 2020. To meet rials, and structural components. “For Tomorrow 2015” Strategies growing demand, Asahi Kasei Construction Materials will add a new production line at its plant in Ibaraki, Japan. As Japan’s leading manufacturer of phenolic foam insulation panels, the company will continue to strengthen operations through the reliable supply of high- quality, high-performance products that contribute to improved thermal Pursuing business expansion in ﬁ elds of competitive superiority while transforming the business to be more solution oriented. environments in architectural works. We are focusing management resources 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. We are also advancing a transformation of business to achieve a shift from simply selling products to a more solution-oriented conﬁ guration encompassing peripheral ﬁ elds and including systems and combination products based on the customer’s perspective. 1. AAC-related Enhancing cost competitiveness with measures to gain further efﬁ ciency and maintain stable proﬁ tability. Strengthening business for Hebel Powerboard™ AAC panels for wood-frame houses by extending peripheral operations, including with broader lineup of specialty coatings for greater durability and longer service life. Leveraging our superior technology to strengthen the exterior renovation business targeting the extensive number of houses built with our AAC panels. 2. Foundation systems Expanding business by further development of ﬁ elds that make the most of our product features, including mobile phone masts, transportation infrastructure, and seismic retroﬁ tting, centered on competitive Eazet™ and ATT Column™ small-diameter steel-pipe piling systems. 3. 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. 4. Structural materials Increasing sales of BasePack™ column base attachment systems by raising awareness of its superior earthquake resistance. Expanding the overall structural materials business by reinforcing the product lineup with both new products and new variations of current products. Jupii™ Major Projects under Construction (cid:129) Capacity expansion for phenolic foam insulation panels in Ibaraki, Japan Asahi Kasei Annual Report 2013 23 No. 1 global share No. 1 global share 1 Electronic compass 2 Hall elements and Hall ICs No. 1 global share A world leader 3 Hipore™ Li-ion battery separator 4 Sunfort™ photosensitive dry ﬁ lm Electronics Major businesses/products 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/PBO precursor, Sunfort™ photosensitive dry ﬁ lm, glass fabric for printed wiring boards 24 Asahi Kasei Annual Report 2013 1 2 3 4 The electronic compass is a sensor which determines direction by detecting the Earth’s magnetism. We started mass production of the world’s ﬁ rst 3-axis electronic compasses for mobile devices in 2003, and our products are the de facto global standard in smartphones and tablet PCs. As the world’s leading electronic compass manufacturer, we continue to advance R&D for further product enhancement while ensuring stable supply as the market grows. Hall elements are high-precision magnetic sensors which provide an output signal that is proportional to the intensity of the detected mag- netic ﬁ eld. Hall ICs, comprising a combination of Hall elements and sig- nal processing circuits, are used in various applications including air conditioner fans and mobile phone open/close detection switches. We have a variety of products with added features to meet various needs. Hipore™ is the world’s leading Li-ion battery (LIB) separator, a micropo- rous membrane that insulates the electrodes electrically while allowing lithium ions to pass through. Notable demand growth for Hipore™ is forecasted in automotive applications, and we aim to achieve the global- leading share in the automotive market with continuous technological developments while enhancing our supply infrastructure both domestically and globally. Sunfort™ is one of the global leaders in the photosensitive dry ﬁ lm market, and widely used for the formation of circuit patterns on print- ed wiring boards. We will continue to expand our overseas production facilities to meet growing demand in the global electronics market, while developing new grades that meet emerging needs for greater performance and higher added value. Operations Makoto Konosu President, Asahi Kasei Microdevices Shigeki Takayama President, Asahi Kasei E-materials Making the most of our unique technology, we are building our position as a leading supplier of electronic components, continuing to develop and supply category-leading products to the global market, and expanding business as an electronic device manufacturer that customers throughout the world can rely on. We are focused on materials that lead to reduced envi- ronmental 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 sustain- able growth and prosperity, using chemical technology for green electronic materials, enhancing the environ- mental performance of electronic products.” “For Tomorrow 2015” Strategies Electronic devices We are continuing to develop and supply category-leading products to the global electronic devices market, with a strategic product lineup that makes the most of our unique strength in having both silicon semiconductor technology and compound semiconductor technology. We are advancing business expansion through the development of new electronic devices such as infrared sensors and current sensors with the potential to establish market leadership in their respective categories, as exempliﬁ ed in our electronic compass which has a dominant market share as an essential component of portable devices. In each application we are developing new high-quality products that keenly match customer’s needs, further building relationships of mutual trust and reliance, in a wide range of ﬁ elds including infrastructure, industrial, and automotive, in addition to consumer electronics. Highlights (cid:129) Receipt of the Imperial Invention Prize for technology to automatically adjust electronic compasses In June 2012, a patent for technology to automatically adjust electronic compasses was recognized with the 2012 Imperial Invention Prize, the highest award to be presented at the 2012 National Commendation of Invention by the Japan Institute of Invention and Innovation. Electronic compasses measure geomagnetism to determine direction. This is used for electronic map applications such as pedestrian navigation systems to rotate the map to match the direction the users are facing. The award- winning technology has been applied to a wide range of portable devices, especially smartphones. The Imperial Invention Prize recognized the achievement which enables continuous and accurate adjustment while the device is in use, contributing to the expansion of the smartphone market. The award ceremony Electronic materials We are expanding business and enhancing supply capabilities for our leading businesses such as semiconductor process materials and circuit board materials, with a focus on high- performance, green electronic materials that reduce environmental burdens. For Hipore™ LIB separator, by leveraging our superior technology and marketing platform gained as the market leader in consumer electronics applications, we will proactively increase production capacity and develop new membranes that match individual customer needs to expand sales in rapidly emerging automotive applications. We will also continue expanding production capacity for Sunfort™ photosensitive dry ﬁ lm in China to meet growing demand, in accordance with our focus on expanding business in growth markets based on our technological advantage. (cid:129) Start-up of a Hipore™ slitting facility in China In August 2012, we started commercial operation of a new slitting facility in Suzhou, Jiangsu, China, for Hipore™ LIB separator. While market growth continues in mainstream LIB applications for portable devices such as smartphones and tablet PCs, signiﬁ cant additional growth is forecasted in electric vehicle applications. As the world’s leading supplier of LIB separator, we will continue to expand capacity proactively in line with demand growth. At the same time, we will continue to enhance our infrastructure for overseas processing of master rolls from Japan, ensuring stable and timely supply to overseas LIB manufacturers. Hipore™ Major Projects under Construction (cid:129) New plant in China for Sunfort™ photosensitive dry ﬁ lm (cid:129) Capacity expansion for Hipore™ LIB separator in Miyazaki, Japan Asahi Kasei Annual Report 2013 25 Gaining leadership in the ﬁ eld of locomotive syndrome Going global 1 Teribone™ osteoporosis drug 2 Recomodulin™ anticoagulant No. 1 share in Japan No. 1 global share 3 APS™ polysulfone-membrane artiﬁ cial kidneys 4 Planova™ virus removal ﬁ lters Health Care Major businesses/products Pharmaceutical-related Teribone™, Recomodulin™, Elcitonin™, Flivas™, Toledomin™, Bredinin™, and other pharmaceuticals, 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 26 Asahi Kasei Annual Report 2013 1 2 3 4 Subcutaneous injection formulation of Teribone™ for the indica- tion of osteoporosis with high risk of fracture facilitates bone for- mation with weekly administration. Since osteoporosis carries an increased risk of a bone fracture that could result in conﬁ nement to bed, the effective treatment of osteoporosis is an important social issue. By decreasing the risk of fracture, Teribone™ is mak- ing a signiﬁ cant contribution to osteoporosis therapy. A transder- mal patch formulation is now under development. Recomodulin™ anticoagulant for treatment of disseminated intravascular coagulation is the world’s ﬁ rst thrombomodulin agent produced through genetic engineering. We are advancing a global Phase III clinical trial to examine the safety and efﬁ cacy of this agent in patients with severe sepsis and coagulopathy. APS™ polysulfone-membrane artiﬁ cial kidneys, sold in over 70 countries, are used for the clinical puriﬁ cation of blood as a sub- stitute for normal kidney function. We are advancing further product development to meet the different needs of various patients, while expanding local production in cooperation with other companies. The world’s ﬁ rst virus removal ﬁ lter, Planova™ contributes to enhanced safety in the production of plasma derivatives and bio- pharmaceuticals throughout the world. As demand for Planova™ continues to grow with tighter regulations and the spread of bio- similar drugs, we are extending marketing efforts in Asia, comple- menting our main markets of the US and Europe. Operations Toshio Asano President, Asahi Kasei Pharma Yutaka Shibata President, Asahi Kasei Medical In order to contribute to life and living for people around the world, we are focused on providing the world with innovative new drugs that address unmet medical needs, as a specialized global pharmaceutical company. Advanced medical technology provides expanded pos- sibilities for preserving life and improving health. We contribute to health care throughout the world by sup- plying both therapeutic devices and products which enhance safety in the production of pharmaceuticals. “For Tomorrow 2015” Strategies Pharmaceutical-related We are growing business with our new high-selling drugs as major pillars of earnings, and focusing on the development of novel drugs in the ﬁ elds of orthopedics and urology for worldwide markets. 1. Japanese operations We will continue to increase earnings by advancing 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. In diagnostics, we are working to expand use of the Lucica™ GA-L glycated albumin assay kit, while advancing the development of infectious disease diagnostic kits. 2. Overseas operations 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 obtain approval for Lucica™ GA-L overseas. Highlights (cid:129) Conclusion of Joint Sales Agreement on overactive bladder therapeutic drug In June 2013, Hisamitsu Pharmaceutical Co., Inc. and Asahi Kasei Pharma Corp. began joint sales of NEOXY™ Tape, a transdermal overactive bladder treatment medication (generic name: oxybutynin hydrochloride transdermal therapeutic formulation) for which Hisamitsu received approval for manufacturing and marketing in Japan, based on a Joint Sales Agreement concluded between the two companies. NEOXY™ Tape Major Projects under Construction (cid:129) New research complex in Pharmaceutical Research Center in Fuji, Shizuoka, Japan Medical device–related Leveraging our technological strengths in membrane separation and selective absorption, we are expanding our dialysis-related business and developing new applications that meet therapeutic needs as we reinforce our global presence. 1. Blood puriﬁ cation To meet forecasted growth in demand for artiﬁ cial kidneys, we are strengthening our hemodialysis business by developing new variations of APS™ polysulfone-membrane artiﬁ cial kidneys and making continuous investments for expansion. For therapeutic apheresis devices that enable new possibilities for the treatment of intractable diseases and for the prevention of illnesses, we are enhancing our manufacturing process technology and heightening competitiveness as we continue to grow as the world leader in this ﬁ eld. 2. Blood transfusion We will continue to meet expanding global needs for our world leading Sepacell™ leukocyte reduction ﬁ lters by enhancing the product lineup and reinforcing our supply capability. 3. Bioprocess products As the manufacturer of Planova™, a hollow-ﬁ ber membrane ﬁ lter that is the world’s leading virus removal ﬁ lter for enhancing safety in the production of biotherapeutics, we will maintain the stable supply of high-quality products to meet growing demand. (cid:129) Strengthening of strategic alliance with NxStage Medical In May 2012, Asahi Kasei Medical and NxStage Medical, Inc. of the US concluded an agreement to further strengthen their strategic alliance in the ﬁ eld of hemodialysis. As part of the reinforcement of the strategic alliance, Asahi Kasei Medical has taken an ownership stake in NxStage Medical. The two companies have been advancing a project to expand capacity for assembly of dialyzers in Germany utilizing Asahi Kasei Medical’s polysulfone hollow-ﬁ ber membranes and NxStage Medical’s assembly technology. Asahi Kasei Medical and NxStage Medical will continue to examine additional opportunities to expand their strategic alliance and build on their established partnership. Asahi Kasei Annual Report 2013 27 World’s only product of its kind Immense potential demand No. 2 worldwide market share Global market of US$1.5 billion 1 LifeVest™ wearable deﬁ brillator 2 Deﬁ brillators Market leading intravascular temperature management system No. 1 software provider to emergency medical marketplace in US 3 Intravascular Temperature Management (IVTM™)—Thermogard XP™ 4 RescueNet™ data solutions for emergency services Critical Care Major businesses/products Deﬁ brillators R Series™, X Series™ and other deﬁ brillators, AED Plus™, AED Pro™ and other automated external deﬁ brillators Wearable deﬁ brillators LifeVest™ Automated CPR AutoPulse™ Temperature management system Intravascular Temperature Management (IVTM™)—Thermogard XP™ Data solutions RescueNet™ Software 28 Asahi Kasei Annual Report 2013 1 2 3 4 It is worn by patients at risk of sudden cardiac arrest, which is responsible for more than 350,000 deaths every year in the US alone. Over 100,000 patients have used LifeVest™ in the US and Europe to date, and revenue is growing briskly, at some 50% per year. These products have the leading share in the US, which accounts for two-thirds of the global deﬁ brillator market, and the No. 2 share worldwide. ZOLL continues to advance technological innovation and heightened functionality in deﬁ brillators as its core business, with a broad product lineup including automated external deﬁ brillators (AEDs) for lay rescuers and deﬁ brillators for medical professionals. A system to adjust body temperature using intravascular cathe- ters, it is used at leading medical centers. It enables effective management of body temperature with reduced workload for nursing staff. Clinical studies to expand indications for use are planned. Software and data management systems for ﬁ re and emergen- cy medical services, enabling efﬁ cient and integrated dispatch of emergency vehicles, billing, management of patient infor- mation, and many other functions. Used at over 1,500 organi- zations. Operations Richard A. Packer CEO, ZOLL Medical Corporation Highlights (cid:129) Establishment of Asahi Kasei ZOLL Medical in Japan Asahi Kasei ZOLL Medical Corp. began operation in November 2012 as ZOLL’s subsidiary in Japan. While the bulk of ZOLL’s business is currently in the US and Europe, it is expanding in Japan and other parts of Asia. With its new subsidiary in Japan, ZOLL will accelerate the growth of its business in the Japanese market with Our ﬁ rst year as part of the Asahi Kasei family was exciting. We exceeded our targets on two important fronts, revenue and proﬁ t. We also continued to invest aggressively in our future business growth, with strong support from the Asahi Kasei group. Our joint vision of ZOLL becoming the world’s undisputed leader in the ﬁ eld of acute critical care is in the early stages of realization. We are well on our way to “Creating for Tomorrow” thanks to our shared value of improving the lives of the global population. products such as the ZOLL AED Plus™ automated external deﬁ brillator, Thermogard™ intravascular temperature management system, and LifeVest™ wearable deﬁ brillator. “For Tomorrow 2015” Strategies In order to expand from a focus primarily on resuscitation to the broader critical care market, we have two key areas of concentration over the next several years. 1. Rapidly expand today’s businesses (cid:129) Dramatically increase the LifeVest™ salesforce to bring this one-of-a-kind product to more patients globally (cid:129) Accelerate the clinical trial program for Intravascular Temperature Management (IVTM™) in an effort to expand the approved indications for use worldwide, including in Japan where this type of technology was the ﬁ rst to receive regulatory approval in 2012 AED Plus™ (cid:129) Indications of growth (cid:129) Launch of our X Series™ professional deﬁ brillator in March 2012 (cid:129) Launching a new, ﬁ rst-of-its-kind pediatric electrode with a built-in sensor that displays depth and rate of chest compressions during cardiopulmonary resuscitation (CPR) on young children up to 8 years of age, in May 2013 (cid:129) The American Heart Association (AHA) issued an internationally inﬂ uential Consensus Statement in June 2013 emphasizing the importance of improving CPR quality, including appropriate depth and rate of compressions and other aspects that ZOLL’s technologies have been providing for more than a decade. (cid:129) Extend the reach of our core deﬁ brillator and data segments to include signiﬁ cantly more international customers Revenue from LifeVest™ (index based on FY 2010 as 100) (cid:129) Support each product approval in Japan to ensure timely market share gain 2. Leverage ZOLL’s strength in resuscitation to capture the broader critical care market (cid:129) Identify products, technologies and services that are synergistic with our existing resuscitation platform, including those that can predict or monitor symptoms of acute fatal risks, or treat such high-risk patients (cid:129) Expand geographically, with greater focus on areas outside the US and Europe 400 300 200 100 0 FY* Growing by some 50% per year 2010 2011 2012 2013 (forecast) * Recalculated to ﬁ scal years from April to March. Asahi Kasei Annual Report 2013 29 Research & Development The holding company and core operating companies of the Asahi Kasei Group each have their own R&D organization, with the conﬁ guration for key projects extending across different business units. R&D at the holding company is focused on the creation of new businesses that will drive the future growth of the Asahi Kasei Group, whereas R&D at the core operating companies is focused on heightening existing operations and expanding in peripheral areas. Under our three strategic “For Tomorrow” projects to create new businesses in the ﬁ elds of the environment & energy, residential living, and health care, we are concentrating resources on R&D in a conﬁ guration that extends across different business units. Breakdown of R&D expenses R&D expenses (¥ billion) Others 0.1% Critical Care 5.5% Corporate expenses 10.6% Health Care 28.1% FY 2012 ¥71.1 billion Electronics 24.8% Construction Materials 1.5% Chemicals 22.4% Fibers 3.9% Homes 3.1% R&D strategies Holding Company Group-wide strategic projects in the ﬁ elds of the environment & energy, residential living, and health care are established in the holding company, with proactive investment of resources for R&D and the creation of new businesses, including M&A and alliances with other companies. In the environment & energy, we are advancing the development of high-efﬁ ciency, long-life ultraviolet light emitting diodes (UV LEDs) using high-quality aluminum nitride (AlN) substrates, and the lithium ion capacitor (LIC) as a next-generation energy storage device. In residential living, we are advancing the development of new lifestyle proposals through a demonstration house which incorporates the latest products and services related to the environment and home health care. In health care, we are advancing R&D in the ﬁ eld of cell therapy and regenerative medicine, including cell processing equipment for cancer treatment. In addition, we are working on creating new businesses through synergy between our established health care businesses and the critical care businesses of ZOLL Medical Corporation. Chemicals Throughout the Chemicals segment, R&D focused on the environment, resources, and energy is advanced to create new value for 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 butene. Studies on their commercialization are in progress. In polymer products, we are advancing the development of a number of innovative products including polyamide with ultra-high heat resistance, high rigidity, and excellent moldability using novel molecular design; S-SBR for next-generation fuel-efﬁ cient tires; modiﬁ ed 30 Asahi Kasei Annual Report 2013 FY R&D expenses ’08 60.8 ’09 62.9 ’10 62.3 ’11 66.3 ’12 71.1 polyphenylene ether (mPPE) expandable beads with high ﬂ ame retardance and high heat resistance; and a new resin having optically isotropic properties in all directions. Projects in specialty products include the development of LED encapsulants based on our silicone modiﬁ cation technology, and the development of low-cost, safe, and low-waste processes to manufacture active pharmaceutical ingredients (APIs) through a combination of our organic synthesis technology and process technology, with studies for commercialization advancing. In the ﬁ eld of membrane separation we have developed a phosphorus adsorbent with a porous structure to enable the world’s fastest selective, high-level removal and high-purity recovery of phosphorus from treated water, and trials at large-scale water treatment facilities have been completed. Fibers 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 based on our unique technologies and manufacturing process innovation are advancing for Roica™ polyurethane ﬁ lament, Bemberg™ cupro ﬁ ber, Leona™ nylon 66 ﬁ lament, and various nonwovens. In addition, the creation of new cellulose-related business and the development of new nonwovens and functional textiles are advancing in accordance with the concepts of “living in health and comfort” and“harmony with the natural environment.” Homes 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 Operations Pharmaceutical Product Pipeline (as of May 2013) Code name, form, generic name Classiﬁ cations Indication Remarks Approved AK-120, oral, famciclovir Antiviral Herpes simplex Additional indication AK-156, injection, zoledronic acid Bisphosphonate Osteoporosis New efﬁ cacy, new dose; once-yearly administration AK-160, injection AT-877, oral, fasudil hydrochloride hydrate Collagenase clostridium histolyticum Dupuytren’s contracture New biologic Rho-kinase inhibitor Pulmonary arterial hypertension Additional indication, new dosage form HC-58, injection, elcatonin Calcitonin Shoulder-hand syndrome Additional indication ART-123, injection, recombinant thrombomodulin alpha Recombinant human thrombomodulin Sepsis with coagulopathy New biologic AK106 Anti-inﬂ ammatory Rheumatoid arthritis New chemical entity Phase III Phase II Phase III (overseas) Phase II (overseas) Origin Licensed Licensed Licensed In-house In-house In-house In-house satisfaction. 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. 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. 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. Construction Materials R&D guided by our vision of “the development and provision of products that provide safety, security, and comfort” is focused on heightening basic technology in our four businesses of AAC, phenolic foam insulation materials, high-function foundation systems, and steel-frame structural materials. We are also proactively advancing R&D to establish new solution-oriented businesses by creating services and products in ﬁ elds peripheral to existing businesses, such as remodeling services for exterior AAC walls and non-construction applications for steel-pipe piling systems. Electronics With a wealth of design assets and an organically integrated organization of design engineers, we develop unique electronic devices in a timely fashion to keep pace with the rapid technology innovation of the electronics industry. 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 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 Health Care In pharmaceuticals, we are focused on contributing to “living in health and comfort” by addressing unmet medical needs which are increasing together with maturing markets and the aging population, particularly in the ﬁ elds of orthopedics and urology. 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 utilizing our comprehensive strength to advance R&D to provide products, technology, and services that extend the potential of medical treatment as well as heighten medical standards. We are further advancing technological developments in established ﬁ elds of hemodialysis, therapeutic apheresis, leukocyte reduction, and virus removal, while also focusing on next- generation ﬁ elds of research including regenerative medicine utilizing autohemotherapy. Critical Care Research and development in the Critical Care segment is continuing to help save lives around the globe thanks to a multidisciplinary approach to product design that includes substantial electrical, mechanical, biomedical, and software engineering efforts. In addition to developing next-generation product platforms, current research efforts include advancing both therapeutic temperature management capabilities and wearable deﬁ brillator technology for treatment of critically ill patients, as well as enhancing data management capabilities for customers. Staying ahead of trends in resuscitation, patient care, and data has enabled this business to transform ideas into products with features and beneﬁ ts that set them apart from the competition. Highlight Dr. Akira Yoshino awarded the Global Energy Prize In April 2013, Asahi Kasei Fellow Dr. Akira Yoshino was chosen for the 2013 Global Energy Prize in recognition of his invention of the lithium-ion battery. The award ceremony was held in St. Petersburg, Russia, in June 2013. The lithium-ion battery In 1985, Dr. Yoshino invented the world’s ﬁ rst lithium-ion battery (LIB) using carbon as the negative electrode and lithium cobalt oxide as the positive electrode. He also developed other technologies that were essential for the successful commercialization of the LIB as a small, lightweight rechargeable battery. Not only has the LIB facilitated widespread adoption of many portable electronic devices such as mobile phones and notebook computers, but it is also increasingly used in electric vehicles as an environmentally friendly means of transportation. AP/Aﬂ o Asahi Kasei Annual Report 2013 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. 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. 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. In this context, corporate governance is further enhanced by implementing various measures, including the election of multiple Outside Directors and the institutionalization of an Internal Audit Dept. 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 June 27, 2013) Holding company Board of Corporate Auditors Shareholders Board of Directors Group Advisory Committee Chairman President Internal Audit Dept. Strategic Management Council (cid:35)(cid:51)(cid:50)(cid:0)(cid:35)(cid:79)(cid:85)(cid:78)(cid:67)(cid:73)(cid:76) 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 Core operating companies Asahi Kasei Chemicals Asahi Kasei Fibers Asahi Kasei Homes Chemicals Fibers, textiles Housing Asahi Kasei Construction Materials Construction materials Asahi Kasei Microdevices Asahi Kasei E-materials Asahi Kasei Pharma Asahi Kasei Medical ZOLL Medical Electronic devices Electronic materials Pharmaceuticals Medical devices and systems Critical care devices and systems Chemicals & Fibers business sector Homes & Construction Materials business sector Electronics business sector Health Care business sector 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. 32 Asahi Kasei Annual Report 2013 Governance & Sustainability 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. We employ an Executive Ofﬁ cer system, under which we have ten Directors, including three Outside Directors, and ﬁ fteen 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 27, 2013) Group Advisory Committee The advisory body to the holding company’s Board of Directors. Meets twice per year. 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. 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) The Internal Audit Dept. 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 the Internal Audit Dept., so that all information regarding results of internal audits in the Asahi Kasei Group are centralized at the Internal Audit Dept. 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, 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 2013 33 Outside Directors and Corporate Auditors We have three Outside Directors and two Outside Corporate Auditors. The function of Outside Directors is to conﬁ rm that management decisions are made appropriately from an independent perspective based on their wealth of experience and broad range of insight. The function of Outside Corporate Auditors is to audit based on their wealth of experience, broad range of insight, and specialized knowledge of corporate law, ﬁ nance, and accounting. In the selection of candidates for election as Outside Director and Outside Corporate Auditor, we investigate their independence in accordance with the standards for “Independent Director/Auditor” established by relevant ﬁ nancial instruments exchanges to conﬁ rm if they have ever been employed by the company, ever been an important counterparty, and ever been employed by an important counterparty, and furthermore if they have ever received a large amount of money or other property from the company. We then make a comprehensive judgment as to whether or not any conﬂ ict with the interests of ordinary shareholders would arise. The relevant ﬁ nancial instruments exchanges have been notiﬁ ed that all of our Outside Directors and Outside Corporate Auditors are designated as Independent Director/Auditor. Audits The Internal Audit Dept. (15 personnel as of March 31, 2013) is a corporate organ under the direct authority of the President of the holding company. Each year, the Internal Audit Dept. 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 2012 were Mr. Keiichi Ohtsuka, Mr. Takahiro Nakazawa, and Mr. Taisuke Shiino. 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. The Internal Audit Dept., 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 renewed 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 www.asahi-kasei.co.jp/asahi/en/news/2011/e110511.html for more details. 34 Asahi Kasei Annual Report 2013 Governance & Sustainability 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. 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. • 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 fundamental element of our Corporate Ethics Compliance Monitoring by the Corporate Ethics Committee – Basic Policy. We proactively engage in information disclosure and communication based on these basic concepts. • 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. • 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. 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 ﬁ scal 2012, in the effort for preparedness for the possibility of a major earthquake in the Greater Tokyo Metropolitan area, we practiced setting up an emergency response headquarters. We also decided where to transfer the emergency response headquarters if it becomes impossible to use the head ofﬁ ce in Tokyo, and reconsidered the role of the emergency response headquarters to handle head ofﬁ ce functions for continuation of operations in such a case. At the outbreak of avian ﬂ u (H7N9) in China, we increased stocks of surgical masks and disinfectant for use by personnel in China in the case of a pandemic, while informing personnel stationed elsewhere overseas of proper precautions to take. When riots in China and terrorism in Algeria occurred, we directly contacted personnel stationed in relevant areas and posted notices on the corporate intranet regarding business travel to raise awareness of possible risks and proper precautions to take. Asahi Kasei Annual Report 2013 35 Corporate Social Responsibility As the world faces various environmental challenges such as global warming and the depletion of natural resources, corporate enterprises are expected to not only achieve economic performance but also advance business activities that meet society’s needs in a well-balanced manner. We believe that corporate social responsibility (CSR) is achieved by heightening 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. Our efforts and actions related to CSR are focused on four CSR Fundamentals: Compliance, Responsible Care*, Corporate Citizenship, and Respect for Employee Individuality. * 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 ﬁ rm producing and handling chemical products. CSR at the Asahi Kasei Group Contributing to life and living for people around the world Group Mission CSR in Action Group Vision Providing new value to society by enabling “living in health and comfort” and “harmony with the natural environment” Business strategy under the “For Tomorrow 2015” strategic management initiative (cid:129) Expansion of world-leading businesses (cid:129) Creation of new value for society Performing business activities which enable “living in health and comfort” and “harmony with the natural environment” is CSR in Action. CSR Fundamentals Compliance Responsible Care Corporate Citizenship Respect for Employee Individuality Based on clear understanding of the effects of our operation on the global environment and local communities, our efforts and actions related to CSR are focused on four CSR Fundamentals. Framework for Advancement President of holding company Corporate Ethics Committee (cid:115)(cid:0)(cid:48)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:34)(cid:65)(cid:83)(cid:73)(cid:67)(cid:0)(cid:48)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:35)(cid:79)(cid:68)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:35)(cid:79)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:67)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:0)(cid:69)(cid:84)(cid:72)(cid:73)(cid:67)(cid:83) 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pillars of environmental protection, product safety, operational safety, workplace safety & hygiene, health maintenance, and community outreach. One notable example of a measure implemented related to global warming is the construction of our ﬁ rst power plant designed to use mainly biomass as fuel. The new plant started operation in Nobeoka, Miyazaki, Japan, in August 2012, and is expected to reduce CO2 emissions by 170 thousand tons per year by using scrap wood from construction sites in the region as biomass fuel. Corporate Citizenship We are committed to advancing in harmony with society from a global perspective through fair information disclosure and proactive employment of management resources for corporate responsibility and citizenship. For example, we conduct school visits to promote understanding and heighten interest in science and technology among elementary, junior high, and high school students. Our personnel visit schools to give explanations and demonstrations of science and technology and on environmental issues. In addition, we participated in an afforestation program in the Horqin Desert of Inner Mongolia, China, planting 8,300 trees in 2012 as part of an effort to heighten people’s awareness for the preservation of natural forest and water environments. Respect for Employee Individuality Opening Ceremony of the new biomass power plant The site of afforestation in Inner Mongolia The Asahi Kasei Group considers fulﬁ lling and satisfying working conditions and workplace culture, in which personnel feel motivated to achieve and take pride in their career, to be a key to business performance. The Human Resources Principles established in 2006 are a distillation of the values and beliefs held in common by all employees, a key aspect of a corporate culture where personal growth and corporate development are mutually reinforcing. We encourage personnel to reevaluate their working habits from the perspective of balancing work and family life. For example, we adopted a system for paid holidays to be used in two-hour units, allowing personnel to utilize paid leave more ﬂ exibly. Furthermore, to increase the utilization of parental leave by male personnel, we simpliﬁ ed the necessary procedures and arranged for their supervisors encourage such utilization. Human Resources Principles Corporate Commitment The basic commitment to human resources is to provide the venue for a dynamic and fulﬁ lling career as a part of a lively and growing corporate group Basic Expectations Expectations of Leaders • Enterprise and growth through challenge and change • Integrity and responsibility in action • Respect for diversity • Building the team, heightening performance and achievement • Going beyond conventional boundaries, in thought and action • Contributing to mutual development and growth Asahi Kasei Annual Report 2013 37 Directors, Corporate Auditors, Executive Ofﬁ cers (As of June 27, 2013) Ichiro Itoh Chairman & Representative Director Taketsugu Fujiwara Hideki Kobori Hiroshi Kobayashi President & Representative Director Presidential Executive Ofﬁ cer Director Senior Executive Ofﬁ cer Director Senior Executive Ofﬁ cer Masafumi Nakao Hiroshi Sawayama Yoshihiro Wada Director Lead Executive Ofﬁ cer Director Lead Executive Ofﬁ cer Director Lead Executive Ofﬁ cer Yukiharu Kodama Norio Ichino Masumi Shiraishi Outside Director Outside Director Outside Director Toshiyuki Kawasaki Corporate Auditor Ryo Matsui Senior Executive Ofﬁ cer Makoto Konosu Executive Ofﬁ cer Naoki Okada Executive Ofﬁ cer Hajime Nagahara Corporate Auditor Yuji Mizuno Senior Executive Ofﬁ cer Kazuo Tezuka Outside Corporate Auditor Shinichiro Nei Lead Executive Ofﬁ cer Koji Kobayashi Outside Corporate Auditor Masahito Hirai Executive Ofﬁ cer Yuji Kobayashi Executive Ofﬁ cer Toshio Asano Executive Ofﬁ cer Shoichiro Tonomura Executive Ofﬁ cer 38 Asahi Kasei Annual Report 2013 Financial Section Financial Section Contents Consolidated Eleven-Year Summary Management’s Discussion and Analysis Risk Analysis Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Net Assets Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 1. Major policies for preparing the consolidated ﬁ nancial statements 2. Signiﬁ cant accounting policies 3. Changes in signiﬁ cant accounting policies 4. Notes to Consolidated Balance Sheets 5. Notes to Consolidated Statements of Income 6. Notes to Consolidated Statements of Comprehensive Income 7. Notes to Consolidated Statements of Changes in Net Assets 8. Note to Consolidated Statements of Cash Flows 9. Leases 10. Financial instruments 11. Marketable securities and investment securities 12. Derivative ﬁ nancial instruments 13. Provision for retirement beneﬁ ts 14. Taxes 15. Business combinations 16. Asset retirement obligations 17. Business segment information 18. Information on related parties 19. Per share information 20. Borrowings Report of Independent Auditors Asahi Kasei Annual Report 2013 40 42 48 50 52 53 54 55 56 56 56 57 58 59 60 61 62 62 63 67 68 70 71 72 73 74 77 77 78 79 39 Consolidated Eleven-Year Summary Asahi Kasei Corporation and Consolidated Subsidiaries For the years ended March 31 2013b 2012 2011c,d 2010c,e 2009c,e Net sales Chemicals Life & Living Chemical and Chemical-related ¥1,666,640 ¥ 1,573,230 ¥ 1,555,945 ¥ 1,392,212 ¥ 1,521,178 684,582 680,112 699,801 580,709 657,393 — — — — — — — — — — Homes 486,182 451,965 409,224 389,728 409,882 Housing and Construction Materials — — — — — Health Care Fibers Electronics Construction Materials Critical Care Others 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 wortha Net worth per share, yen Net worth/total assets, % Number of employees 133,450 109,613 131,148 51,504 52,131 18,031 119,483 110,849 146,113 46,146 116,387 108,761 158,337 47,418 113,207 101,201 142,700 47,024 — — — 18,562 1,181,429 1,151,705 485,211 421,525 91,960 95,125 82,302 53,712 117,515 38.43 113,785 80,050 71,120 14.00 104,258 107,567 94,866 55,766 62,561 39.89 85,124 78,440 66,269 14.00 16,017 1,106,656 449,289 122,927 118,219 98,342 60,288 45,088 43.11 66,014 84,092 62,320 11.00 17,642 1,021,803 370,409 57,622 56,367 46,056 25,286 — 18.08 83,990 86,166 62,924 10.00 119,619 116,405 129,655 60,927 — 27,297 1,127,213 393,965 34,959 32,500 19,031 4,745 — 3.39 126,725 79,436 60,849 10.00 2013 2012 2011 2010 2009 ¥1,800,170 ¥ 1,410,568 ¥ 1,425,879 ¥ 1,368,892 ¥ 1,379,337 309,677 461,581 263,704 812,080 581.05 45.1 28,363 279,206 416,119 227,489 706,846 505.72 50.1 25,409 256,248 418,354 220,773 663,566 474.59 46.5 25,016 251,084 447,497 226,331 633,343 452.91 46.3 25,085 273,539 441,271 218,477 603,846 431.77 43.8 24,244 a. Net assets less minority interest. Through the year ended March 31, 2006, ﬁ gures for shareholders’ equity shown. b. Beginning with the year ended March 31, 2013, Critical Care was added as a new segment in which results of ZOLL Medical Corporation of the US and its subsidiaries are reported. c. Beginning with the year ended March 31, 2012, the accounting policy for naphtha resale in the Chemicals segment was changed. This change is applied retroactively to net sales for the years ended March 31, 2008, through March 31, 2011. d. In the year ended March 31, 2011, the Services, Engineering and Others segment was replaced with the Others category. Figures under the previous classiﬁ cation are shown on the same line. e. In the year ended March 31, 2010, the following segment name changes and intersegment transfers were made. For comparison purposes, results for the year ended March 31, 2009, are recalculated to reﬂ ect these intersegment transfers. (cid:129) The Pharma segment was renamed the Health Care segment, and the Electronics Materials & Devices segment was renamed the Electronics segment. Figures under the previous classiﬁ cations are shown on the same line. (cid:129) Electronic materials operations were transferred from the Chemicals segment and from corporate expenses to the Electronics segment. (cid:129) Leona™ nylon 66 ﬁ lament operations were transferred from the Chemicals segment to the Fibers segment. f. In the year ended March 31, 2008, the Life & Living segment was combined with the Chemicals segment. 40 Asahi Kasei Annual Report 2013 Financial Section 2009c 2008c,f 2007 2006g 2005 2004h Millions of yen, except where noted 2003h 2003 ¥ 1,521,178 ¥ 1,663,778 ¥ 1,623,791 ¥ 1,498,620 ¥ 1,377,697 ¥ 1,253,534 ¥ 1,193,614 ¥ 1,193,614 709,556 846,224 752,632 660,402 557,439 453,707 424,673 — — — — 52,558 51,942 59,149 59,813 52,908 — — — — — 477,581 409,882 386,227 405,695 404,539 375,755 361,273 320,553 — — — — — — — — 383,654 119,619 102,176 91,721 60,927 111,232 114,072 113,267 55,732 104,474 106,639 112,094 60,818 105,842 89,704 102,859 56,512 103,933 104,261 93,025 59,908 105,965 101,514 82,484 60,622 105,463 110,551 71,579 63,101 — — — — — — — 27,297 1,127,213 393,965 34,959 32,500 19,031 4,745 37,024 1,176,441 487,337 127,656 120,456 105,599 69,945 28,881 1,195,751 428,040 127,801 126,507 114,883 68,575 26,821 1,125,454 373,166 108,726 104,166 94,481 59,668 24,228 1,067,893 309,804 115,809 112,876 91,141 56,454 28,156 1,011,366 242,168 60,932 53,643 54,820 27,672 44,786 981,064 212,550 61,555 50,389 (100,869) (100,869) (66,791) (66,791) — — 105,463 110,551 71,579 — — 44,786 981,064 212,550 61,555 50,389 — — — — — — — 3.39 126,725 79,436 60,849 10.00 50.01 82,911 73,983 56,170 13.00 49.00 84,413 71,646 52,426 12.00 42.46 66,310 69,399 51,467 10.00 40.16 68,479 71,531 50,715 8.00 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 2009 2008 2007 2006 2005 2004 2003 2003 ¥ 1,379,337 ¥ 1,425,367 ¥ 1,459,922 ¥ 1,376,044 ¥ 1,270,057 ¥ 1,249,206 ¥ 1,212,374 ¥ 1,212,374 273,539 441,271 218,477 603,846 431.77 43.8 24,244 272,372 424,193 234,873 666,244 476.39 46.7 23,854 240,006 426,959 281,502 645,655 461.50 44.2 23,715 214,062 414,368 284,390 594,211 424.34 43.2 23,030 202,521 419,969 223,958 511,726 365.43 40.3 23,820 181,609 428,302 226,825 450,451 321.41 36.1 25,011 176,788 427,188 198,697 407,639 290.92 33.6 25,730 176,788 427,188 198,697 407,639 290.92 33.6 25,730 g. In the year ended March 31, 2006, Leona™ nylon 66 ﬁ lament operations were transferred from the Fibers segment to the Chemicals segment. h. In the year ended March 31, 2004, business categories were 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. For comparison purposes, results for the year ended March 31, 2003, are recalculated in accordance with the revised categories. Asahi Kasei Annual Report 2013 41 Management’s Discussion and Analysis Fiscal year 2012 (April 1, 2012 – March 31, 2013) Operating Environment Although there were signs of economic recovery in the US and Non-operating income and expenses, ordinary income Net non-operating income was ¥3.2 billion, a ¥0.1 billion other countries, the overall operating climate remained decline from the ¥3.3 billion net non-operating income of a challenging during the ﬁ scal year as the global economy was year earlier. While the previous year’s foreign exchange loss impacted by the European sovereign debt crisis and slowing transitioned to foreign exchange gains and insurance income growth in China and other emerging economies. For the increased, equity in earnings of afﬁ liates transitioned to equity Japanese economy, expectations of recovery rose with domestic in losses of afﬁ liates and costs associated with idle portion of demand underpinned by ﬁ rm consumer spending and with facilities increased. As a result, ordinary income decreased by conditions for exports improving due to the depreciation of ¥12.4 billion (11.6%) to ¥95.1 billion. the exchange value of the yen since the end of 2012. Overview of Consolidated Results Extraordinary income and loss Extraordinary loss of ¥13.2 billion included ¥6.4 billion in business structure improvement expenses, a ¥4.0 billion loss Net sales, operating income Consolidated net sales for the ﬁ scal year increased by ¥93.4 on disposal of noncurrent assets, and ¥2.1 billion in impairment loss. The net extraordinary loss of ¥12.8 billion billion (5.9%) to ¥1,666.6 billion. Overseas sales increased, was ¥0.1 billion higher than a year ago. largely due to the addition of the Critical Care segment, by ¥63.7 billion (15.1%) to ¥485.2 billion, and increased by 2.3 percentage points as a portion of consolidated net sales from Net income With ordinary income of ¥95.1 billion and the net 26.8% to 29.1%. Domestic sales increased by ¥29.7 billion extraordinary loss of ¥12.8 billion, income before income (2.6%) to ¥1,181.4 billion with strong performance in the taxes and minority interests was ¥82.3 billion. Income tax Homes segment. expense was ¥28.4 billion (current income taxes of ¥27.9 Operating income decreased by ¥12.3 billion (11.8%) to billion combined with a deferred income tax obligation of ¥92.0 billion. As a percentage of net sales, cost of sales ¥0.5 billion). Minority interests in income of consolidated decreased by 0.6 percentage points to 74.4%. SG&A subsidiaries were ¥0.2 billion. As a result, net income increased by ¥45.2 billion, increasing as a percentage of net decreased by ¥2.1 billion (3.7%) to ¥53.7 billion, and net sales by 1.7 percentage points to 20.1% despite the increase income per share decreased by ¥1.46 to ¥38.43 from the in sales. Operating margin decreased by 1.1 percentage points ¥39.89 of a year earlier. to 5.5%. Net Sales, Overseas Sales Ratio Operating Income, Operating Margin (¥ billion) 2,000 (%) 40 (¥ billion) 150 1,500 1,000 500 0 30 20 10 120 90 60 30 0 0 (%) 15 12 9 6 3 0 SG&A, SG&A Ratio Net Income, Net Income per Share (¥ billion) 400 (%) 40 (¥ billion) 80 300 200 100 0 30 60 20 40 10 20 0 0 (¥) 60 45 30 15 0 FY ’08 ’09 ’10 ’11 ’12 FY ’08 ’09 ’10 ’11 ’12 FY ’08 ’09 ’10 ’11 ’12 FY ’08 ’09 ’10 ’11 ’12 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 2013 Financial Section Results by Operating Segment Homes Sales increased by ¥34.2 billion (7.6%) from a year ago to The Asahi Kasei Group’s operations are described by major ¥486.2 billion, and operating income increased by ¥7.9 billion business classiﬁ cation: seven reportable segments of (17.1%) to ¥54.3 billion. Orders for order-built homes Chemicals, Homes, Health Care, Fibers, Electronics, increased by ¥40.5 billion to ¥412.4 billion. Construction Materials, and Critical Care, together with an Operating income from order-built homes increased as “Others” category. Critical Care is a new segment added deliveries of both Hebel Haus™ unit homes and Hebel beginning with the ﬁ rst quarter of ﬁ scal 2012, in which results Maison™ apartment buildings increased. Operating income of ZOLL Medical Corporation of the US and its subsidiaries from real estate–related operations rose as deliveries of (hereinafter “ZOLL”), acquired on April 26, 2012, US Eastern condominiums increased and rental management performed time, are reported. Chemicals Sales increased by ¥4.5 billion (0.7%) from a year ago to ¥684.6 billion, and operating income decreased by ¥21.6 billion (48.5%) to ¥22.9 billion. well. Operating income from remodeling operations rose with increased orders for solar panel installation and other renovation work. Health Care Sales increased by ¥14.0 billion (11.7%) from a year ago to Operating income from chemicals and derivative products ¥133.5 billion, and operating income increased by ¥7.1 billion decreased as terms of trade for monomer products such as (81.0%) to ¥15.9 billion. acrylonitrile deteriorated with higher feedstock prices and low Although pharmaceuticals operations were impacted by sales prices due to continuing weak demand in China and reduced reimbursement prices and higher R&D expenses, other Asian countries. Although synthetic rubber for fuel- operating income increased with solid sales growth of efﬁ cient tires performed well, operating income from polymer Teribone™ osteoporosis drug and Recomodulin™ products decreased with high feedstock prices impacting recombinant thrombomodulin. products such as polyethylene. Operating income from Although sales of therapeutic apheresis devices remained specialty products increased as coating materials and ﬁ rm, operating income from devices-related operations functional chemicals for pharmaceutical manufacture decreased as APS™ polysulfone-membrane artiﬁ cial kidneys performed well. were impacted by intensiﬁ ed competition and reduced reimbursement prices. Chemicals segment operating income increases/decreases Homes segment operating income increases/decreases Health Care segment operating income increases/decreases Sales prices +2.7 Sales volume +9.1 54.3 46.3 Operating costs and others -3.9 (¥ billion) 50 44.5 40 30 20 10 Sales volume -5.3 Foreign exchange +5.7 Sales prices -11.6 22.9 Operating costs and others -10.4 (¥ billion) 60 50 40 30 20 10 0 FY ’11 ’12 0 FY ’11 ’12 (¥ billion) 30 25 20 15 10 5 0 FY 8.8 ’11 Sales volume +16.2 Foreign exchange +0.1 Sales prices -3.0 15.9 Operating costs and others -6.2 ’12 Asahi Kasei Annual Report 2013 43 Fibers Sales decreased by ¥1.2 billion (1.1%) from a year ago to Construction Materials Sales increased by ¥5.4 billion (11.6%) from a year ago to ¥109.6 billion, but operating income increased by ¥0.9 billion ¥51.5 billion, and operating income increased by ¥2.1 billion (28.4%) to ¥4.0 billion. (117.2%) to ¥4.0 billion. Although Roica™ elastic polyurethane ﬁ lament struggled Sales of Hebel™ autoclaved aerated concrete panels in overseas markets, operating income in ﬁ bers increased as remained ﬁ rm. Shipments of Neoma™ high-performance Bemberg™ regenerated cellulose performed well in markets phenolic foam insulation panels and other insulation materials for outerwear and ethnic garments, and nonwovens remained increased. In foundation systems, new applications expanded ﬁ rm. Electronics Sales decreased by ¥15.0 billion (10.2%) from a year ago to ¥131.1 billion, and operating income decreased by ¥3.6 billion (56.0%) to ¥2.8 billion. Although sales of mixed-signal LSIs for smartphones were smoothly for Eazet™ and ATT Column™ piling systems for small-scale construction. Sales of structural materials increased. Operating income increased throughout the segment. Critical Care Sales were ¥52.1 billion, and an operating loss of ¥3.7 billion ﬁ rm, operating income in electronic devices decreased as an was recorded. effect of a general deterioration in the operating climate. In Operating income from LifeVest™ wearable deﬁ brillators electronic materials, although sales of high-end products increased steadily, while deﬁ brillators for professional use and expanded in each product category, operating income other products performed well. An operating loss resulted as decreased due to generally sluggish growth in shipment an effect of amortization of goodwill and other intangible volumes and decreased sales prices for Hipore™ Li-ion battery assets, etc., amounting to ¥11.0 billion. separator and other products. Fibers segment operating income increases/decreases Electronics segment operating income increases/decreases Construction Materials segment operating income increases/decreases (¥ billion) 5 4 3 2 1 (¥ billion) 8 6.4 Operating costs and others +1.1 4.0 3.1 Foreign exchange +0.8 Sales volume -0.9 Sales prices -0.2 4 0 -4 Operating costs and others +6.3 2.8 Sales volume -4.0 Foreign exchange +1.4 Sales prices -7.3 (¥ billion) 5 4 3 2 1 Operating costs and others +1.2 4.0 Sales prices +0.3 Sales volume +0.7 1.8 0 FY ’11 ’12 -8 FY ’11 ’12 0 FY ’11 ’12 44 Asahi Kasei Annual Report 2013 Financial Section Others Sales decreased by ¥0.5 billion (2.9%) from a year ago to Current liabilities increased by ¥153.3 billion (34.1%) to ¥602.9 billion, mainly as a result of a ¥55.0 billion increase in ¥18.0 billion, and operating income decreased by ¥0.8 billion commercial paper and a ¥38.6 billion increase in short-term (26.1%) to ¥2.2 billion. loans payable. Liquidity and Capital Resources Financial position Total assets at ﬁ scal year end were ¥1,800.2 billion, ¥389.6 Noncurrent liabilities increased by ¥131.2 billion (54.3%) to ¥372.9 billion, mainly as a result of a ¥84.2 billion increase in long-term loans payable. Interest-bearing debt increased by ¥197.3 billion to ¥381.4 billion. billion (27.6%) higher than a year earlier. Net assets increased by ¥105.2 billion (14.6%) from Current assets increased by ¥97.7 billion (13.5%) to ¥719.3 billion to ¥824.5 billion. Net income was ¥53.7 billion, ¥819.5 billion, mainly as notes and accounts receivable–trade foreign currency translation adjustments increased by ¥44.8 increased by ¥40.2 billion, inventories increased by ¥30.5 billion, and net unrealized gain on other securities increased billion, and cash and deposits increased by ¥6.6 billion. by ¥22.5 billion, while dividend payments were ¥19.6 billion. Noncurrent assets increased by ¥291.9 billion (42.4%) As a result, net worth per share increased by ¥75.33 to to ¥980.7 billion, notably with a ¥210.2 billion increase in ¥581.05, net worth/total assets decreased from 50.1% to intangible assets and a ¥47.4 billion increase in investment 45.1%, and debt-to equity ratio increased by 0.21 to 0.47. securities largely due to higher fair market value. Critical Care segment operating income increases/decreases Others operating income increases/decreases (¥ billion) 5 0 -5 FY ’11 Operating costs and others -3.7 -3.7 ’12 (¥ billion) 4 3 3.0 2 1 0 FY ’11 2.2 Sales volume -0.8 Operating costs and others -0.0 Total Assets, Net Worth (¥ billion) 2,000 1,500 1,000 500 0 ’12 FY ’08 ’09 ’10 ’11 ’12 Total assets Net worth Asahi Kasei Annual Report 2013 45 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, labor-saving, maintenance, and IT systems to bring greater product reliability and cost reductions. Capex by operating segment shown below is for property, plant and equipment and intangible assets (other than goodwill), combined, excluding consumption tax. A total of ¥113.8 billion was invested during the ﬁ scal year for the expansion of businesses with competitive superiority, particular in the Chemicals, Health Care, and Electronics segments, as well as for modiﬁ cation and rationalization. Notable capex by operating segment was as follows. Chemicals Capacity expansion for Saran Wrap™, capacity expansion for acrylonitrile, construction of facilities for biomass power generation, rationalization of facilities in Mizushima, other rationalization, labor-saving, and maintenance. Homes Leases, rationalization, labor-saving, and maintenance. Health Care Acquisition of rights to distribute overactive bladder therapeutic drug, rationalization, labor-saving, and maintenance. Totals for the year (¥ million) Compared to previous year (%) Fibers Construction of facilities for spunbond, rationalization, labor- Chemicals Homes Health Care Fibers Electronics Construction Materials Critical Care Others Combined 47,290 9,527 14,275 6,833 17,011 2,186 5,416 1,140 103,677 Corporate assets and eliminations 10,108 Consolidated 113,785 121.0 151.9 133.7 119.9 126.7 134.0 — 145.0 133.7 133.9 133.7 saving, and maintenance. 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. Critical Care Rationalization, labor-saving, and maintenance. Others Rationalization, labor-saving, and maintenance. Corporate assets R&D equipment, IT systems, and maintenance. Net Worth to Total Assets Interest-Bearing Debt, D/E Ratio Capex, Depreciation and Amortization (%) 60 50 40 30 20 10 0 (¥ billion) 400 300 200 100 0 0.8 0.6 0.4 0.2 0.0 (¥ billion) 150 120 90 60 30 0 FY ’08 ’09 ’10 ’11 ’12 FY ’08 ’09 ’10 ’11 ’12 FY ’08 ’09 ’10 ’11 ’12 Interest-bearing debt, left scale Capex D/E ratio, right scale Depreciation and amortization 46 Asahi Kasei Annual Report 2013 Financial Section Cash ﬂ ows Free cash ﬂ ows* were a negative ¥152.5 billion, as cash used, Cash ﬂ ows from ﬁ nancing activities Cash used included ¥19.6 billion for dividend payments. principally for acquisition of ZOLL, exceeded cash generated, A ¥189.2 billion increase in loans payable, bonds payable, principally from income before income taxes and minority and commercial paper was associated with the acquisition of interests and from depreciation and amortization. Cash ﬂ ows ZOLL. Net cash provided by ﬁ nancing activities was ¥166.2 from ﬁ nancing activities were a net ¥166.2 billion generated, billion, ¥257.3 billion more than a year earlier. principally due to increased borrowings associated with the acquisition of ZOLL. As a result, cash and cash equivalents at ﬁ scal year end were ¥104.0 billion, ¥7.7 billion more than a year earlier. Cash ﬂ ows from operating activities Cash used included ¥21.8 billion for increase in inventories and ¥22.2 billion for income taxes paid. Income before income taxes and minority interests generated ¥82.3 billion and depreciation and amortization generated ¥80.0 billion. Net cash provided by operating activities was ¥126.0 billion, ¥15.3 billion less than a year earlier. Cash ﬂ ows from investing activities Cash used included ¥88.2 billion for purchase of property, plant and equipment for continuing expansion of competitively superior operations and enhancement of overall competitiveness, ¥15.8 billion for purchase of intangible assets, and ¥174.5 billion for purchase of shares in subsidiaries resulting in change in scope of consolidation related to the acquisition of ZOLL. Net cash used in investing activities was ¥278.5 billion, ¥189.0 billion more than a year earlier. * Total of net cash provided by (used in) operating activities and net cash provided by (used in) investment activities. Financial Policy We aim to increase free cash ﬂ ows with increased earnings through enhanced cost efﬁ ciency, greater product competitiveness, and business structure improvements, and with greater capital efﬁ ciency through utilization of group ﬁ nance and maintenance of optimum inventory levels. A wide range of fund-raising methods including bank borrowings, bonds, and commercial paper will be utilized dynamically in accordance with the ﬁ nancial circumstances of the Asahi Kasei Group in order to obtain stable ﬁ nancing at low cost. These resources will be used to fund strategic investments under the “For Tomorrow 2015” strategic management initiative focused on the expansion of world- leading businesses and the creation of new value for society by expanding operations in the ﬁ elds of the environment & energy, residential living, and health care, as well as dividends for shareholders. Advancing these measures will enable us to further enhance corporate value and provide an appropriate return to shareholders while maintaining discipline for a sound ﬁ nancial constitution. Free Cash Flows (¥ billion) 80 40 0 (40) (80) (120) (160) Cash Flows (¥ billion) 200 100 0 (100) (200) (300) FY ’08 ’09 ’10 ’11 ’12 FY ’08 ’09 ’10 ’11 ’12 Net cash provided by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities Asahi Kasei Annual Report 2013 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 are Operations in the Homes segment are affected by Japanese affected by prices for crude oil and naphtha. If crude oil tax policies as they relate to home acquisition and by and naphtha prices rise, selling prices for products derived ﬂ uctuations in Japanese interest rates. Changes in Japanese from these feedstocks must be increased in a timely tax policy, including consumption taxes, or ﬂ uctuations in manner to maintain sufﬁ cient price spreads. Price spreads Japanese interest rates may result in diminished housing may diminish, thereby affecting our consolidated demand, thereby affecting our consolidated performance performance and ﬁ nancial condition. 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 Pharmaceutical, medical device, and critical device Overseas operations may face a variety of risks which businesses cannot be foreseen, including the existence or emergence of economically unfavorable circumstances due to legal Pharmaceutical, medical device, and critical care device and regulatory changes, vulnerability of infrastructure, businesses may be signiﬁ cantly affected by government difﬁ culty in hiring/retaining qualiﬁ ed employees, or other measures regarding health care or other changes in factors, and social or political instability due to terrorism, government policy in various countries. Unforeseeable side war, or other factors. Overseas operations may be impaired effects or complications may emerge, signiﬁ cantly affecting by such scenarios, thereby affecting our consolidated these businesses. Product approval may be withdrawn as a performance and business plans. result of reexamination, and that competition may intensify 48 Asahi Kasei Annual Report 2013 Financial Section as a result of the market entry of generics. For products Business and capital alliances under development, regulatory approval may be prolonged or fail to be obtained, market demand may be lower than Acquisitions, business alliances, and capital alliances may expected, and reimbursement prices may be lower than bear lower results or less synergy than anticipated due to expected. Such scenarios may affect our consolidated deterioration of the operating environment, thereby performance and ﬁ nancial condition. affecting our consolidated performance and ﬁ nancial Industrial accidents and natural disasters loss for goodwill, etc., thereby affecting our consolidated performance and ﬁ nancial condition. condition. Poor performance at companies in which we have invested may require the recording of an impairment 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. Asahi Kasei Annual Report 2013 49 Consolidated Balance Sheets Asahi Kasei Corporation and Consolidated Subsidiaries March 31, 2013 and 2012 ASSETS Current assets: Cash and deposits (Notes 8 and 10) Notes and accounts receivable–trade (Note 4(e)) Short-term investment securities (Notes 8, 10 and 11) Merchandise and ﬁ nished goods Work in progress Raw materials and supplies Deferred tax assets (Note 14) Other Allowance for doubtful accounts Total current assets Noncurrent assets: Property, plant and equipment Buildings and structures (Note 4(b), (d)) Accumulated depreciation Buildings and structures, net Millions of yen Thousands of U.S. dollars (Note 1) 2013 2012 2013 ¥109,513 306,222 124 145,470 100,513 63,695 21,945 73,619 (1,631) 819,469 ¥102,875 266,056 360 138,133 87,450 53,623 19,454 54,835 (1,017) 721,770 428,616 (241,191) 187,425 410,057 (235,060) 174,997 $1,164,908 3,257,334 1,319 1,547,389 1,069,173 677,534 233,433 783,098 (17,349) 8,716,828 4,559,260 (2,565,589) 1,993,671 13,148,718 Machinery, equipment and vehicles (Note 4(b), (d)) 1,236,111 1,203,905 Accumulated depreciation (1,082,480) (1,075,668) (11,514,520) Machinery, equipment and vehicles, net 153,631 128,237 1,634,198 Land (Note 4(d)) Lease assets (Note 9) Accumulated depreciation Lease assets, net Construction in progress Other (Note 4(b), (d)) Accumulated depreciation Other, net Subtotal Intangible assets Goodwill (Note 15(d)) Other Subtotal Investments and other assets 58,176 13,980 (7,173) 6,806 41,482 129,716 (115,656) 14,060 461,581 55,667 11,694 (4,804) 6,890 37,787 122,426 (109,884) 12,542 416,119 618,828 148,708 (76,300) 72,397 441,251 1,379,811 (1,230,252) 149,559 4,909,914 134,303 121,114 255,417 8,502 36,687 45,189 1,428,603 1,288,310 2,716,913 Investment securities (Notes 4(a), 10 and 11) 224,903 177,513 2,392,331 Long-term loans receivable (Note 10) Deferred tax assets (Note 14) Other Allowance for doubtful accounts Subtotal 5,248 8,487 25,311 (245) 5,559 18,965 25,692 (240) 55,824 90,278 269,237 (2,606) 263,704 227,489 2,805,063 Total noncurrent assets 980,702 688,798 10,431,890 Total assets ¥1,800,170 ¥1,410,568 $19,148,708 The accompanying notes are an integral part of these statements. 50 Asahi Kasei Annual Report 2013 LIABILITIES AND NET ASSETS Liabilities: Current liabilities: Notes and accounts payable–trade (Notes 4(e) and 10) Short-term loans payable (Notes 4(b), 10 and 20) Commercial paper (Notes 10 and 20) Current portion of bonds payable (Notes 10 and 20) Lease obligations (Notes 9, 10 and 20) Accrued expenses Income taxes payable (Note 10) Advances received Provision for periodic repairs Provision for product warranties Provision for removal cost of property, plant and equipment Asset retirement obligations (Note 16) Other (Note 4(e)) Total current liabilities Noncurrent liabilities: Bonds payable (Notes 10 and 20) Long-term loans payable (Notes 4(b), 10 and 20) Lease obligations (Notes 9, 10 and 20) Deferred tax liabilities (Note 14) Provision for retirement beneﬁ ts (Note 13) Provision for directors’ retirement beneﬁ ts Provision for periodic repairs Provision for removal cost of property, plant and equipment Asset retirement obligations (Note 16) Long-term guarantee deposits (Note 10) 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 7(b)(ii)) Treasury stock (2013—5,016,645 shares, 2012—4,925,730 shares) Total shareholders’ equity Accumulated other comprehensive income Net unrealized gain on other securities Deferred gains or losses on hedges Foreign currency translation adjustments Total accumulated other comprehensive income Minority interests Total net assets Commitments and contingent liabilities (Notes 4(c) and 9) Financial Section Millions of yen Thousands of U.S. dollars (Note 1) 2013 2012 2013 ¥172,630 113,043 70,000 5,000 2,415 91,646 13,978 61,953 2,359 2,143 1,910 722 65,064 602,864 40,000 146,929 4,051 39,985 107,776 767 4,255 2,960 2,834 18,396 4,902 372,855 975,719 103,389 79,403 553,557 (2,431) 733,918 62,622 (900) 16,440 78,162 12,371 824,451 ¥143,194 $1,836,294 74,490 15,000 — 2,207 92,663 8,380 49,950 6,045 2,151 1,818 460 53,242 449,600 25,000 62,710 4,707 11,402 1,202,457 744,602 53,186 25,689 974,854 148,686 659,004 25,093 22,795 20,317 7,680 692,097 6,412,765 425,487 1,562,908 43,091 425,327 106,277 1,146,431 806 1,977 4,204 3,242 18,286 3,072 241,683 691,283 103,389 79,404 516,401 (2,388) 696,805 40,148 (1,734) (28,374) 10,040 12,439 719,285 8,159 45,261 31,486 30,146 195,681 52,143 3,966,121 10,378,885 1,099,766 844,623 5,888,278 (25,859) 7,806,808 666,121 (9,573) 174,875 831,422 131,592 8,769,822 Total liabilities and net assets ¥1,800,170 ¥1,410,568 $19,148,708 The accompanying notes are an integral part of these statements. Asahi Kasei Annual Report 2013 51 Consolidated Statements of Income Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2013 and 2012 Net sales (Note 17) Cost of sales (Note 5(b)) Gross proﬁ t Selling, general and administrative expenses (Note 5(a)) Operating income (Note 17) Non-operating income: Interest income Dividends income Equity in earnings of afﬁ liates Foreign exchange gains Insurance income Other Total non-operating income Non-operating expenses: Interest expense Equity in losses of afﬁ liates Foreign exchange loss Costs associated with idle portion of facilities Other Total non-operating expenses Ordinary income Extraordinary income: Gain on sales of investment securities Gain on sales of noncurrent assets (Note 5(c)) Gain on step acquisitions Total extraordinary income Extraordinary loss: Loss on valuation of investment securities Loss on disposal of noncurrent assets (Note 5(d)) Impairment loss (Note 5(e)) Environmental expenses (Note 5(f)) Loss on disaster (Note 5(g)) Business structure improvement expenses (Note 5(h)) Total extraordinary loss Income before income taxes and minority interests Income taxes (Note 14) — 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 2013 Millions of yen Thousands of U.S. dollars (Note 1) 2013 2012 2013 ¥1,666,640 ¥1,573,230 $17,728,327 1,239,452 1,178,968 13,184,257 427,188 335,228 91,960 1,301 2,949 — 4,285 1,661 3,623 13,821 3,339 166 — 2,190 4,961 10,656 95,125 81 247 — 328 511 4,011 2,069 206 — 6,355 13,151 82,302 27,873 526 28,399 53,903 191 394,261 290,003 104,258 1,434 2,744 669 — 648 5,323 10,817 2,685 — 162 306 4,354 7,507 107,567 191 494 2,277 2,961 1,898 3,546 460 277 1,027 8,454 15,662 94,866 31,152 6,829 37,981 56,885 1,119 4,544,070 3,565,876 978,194 13,839 31,369 — 45,580 17,668 38,538 147,016 35,517 1,766 — 23,295 52,771 113,350 1,011,860 862 2,627 — 3,489 5,436 42,666 22,008 2,191 — 67,599 139,889 875,460 296,490 5,595 302,085 573,375 2,032 ¥53,712 ¥55,766 $571,343 Consolidated Statements of Comprehensive Income Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2013 and 2012 Financial Section Millions of yen Income before minority interests Other comprehensive income Net increase in unrealized gain on other securities Deferred gains or 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 6) Comprehensive income (Note 6) Comprehensive income attributable to: Owners of the Parent Minority interests The accompanying notes are an integral part of these statements. 2013 ¥53,903 22,383 786 34,595 5,848 63,612 117,515 116,505 ¥1,010 2012 ¥56,885 10,553 (1,594) (1,029) (2,255) 5,676 62,561 61,597 ¥963 Thousands of U.S. dollars (Note 1) 2013 $573,375 238,092 8,361 367,993 62,206 676,651 1,250,027 1,239,283 $10,744 Asahi Kasei Annual Report 2013 53 Consolidated Statements of Changes in Net Assets Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2013 and 2012 Shareholders’ equity Accumulated other comprehensive income Millions of yen Capital stock Capital surplus Retained earnings (Note 7(b)) Treasury stock Total shareholders’ equity Net unrealized gain on other securities Deferred gains or losses on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Minority interests Total net assets Balance at March 31, 2012 ¥103,389 ¥79,404 ¥516,401 ¥(2,388) ¥696,805 ¥40,148 ¥(1,734) ¥(28,374) ¥10,040 ¥12,439 ¥719,285 Changes during the ﬁ scal year Dividends from surplus Net income Purchase of treasury stock Disposal of treasury stock (19,567) 53,712 (0) (49) 6 Change of scope of consolidation (8) (19,567) 53,712 (49) 6 (8) 3,020 3,020 Effect of change in the reporting period of consolidated subsidiaries and afﬁ liates Net changes of items other than shareholders’ equity Total changes of items during the period — (0) 37,156 (43) 37,113 22,474 834 44,814 68,122 (68) 105,167 22,474 834 44,814 68,122 (68) 68,054 Balance at March 31, 2013 ¥103,389 ¥79,403 ¥553,557 ¥(2,431) ¥733,918 ¥62,622 ¥(900) ¥16,440 ¥78,162 ¥12,371 ¥824,451 Shareholders’ equity Accumulated other comprehensive income Millions of yen Capital stock Capital surplus Retained earnings (Note 7(b)) Treasury stock Total shareholders’ equity Net unrealized gain on other securities Deferred gains or losses on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Minority interests Total net assets 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 Changes during the ﬁ scal year Dividends from surplus Net income Purchase of treasury stock Disposal of treasury stock Change of scope of equity method Increase resulting from corporate split Effect of change in the reporting period of consolidated subsidiaries and afﬁ liates Net changes of items other than shareholders’ equity Total changes of items during the period (18,173) 55,766 1 (291) 18 (111) 71 168 (18,173) 55,766 (291) 19 (111) 71 168 (18,173) 55,766 (291) 19 (111) 71 168 — 1 37,720 (273) 37,448 10,501 (1,594) (3,075) 5,832 403 43,683 10,501 (1,594) (3,075) 5,832 403 6,235 Balance at March 31, 2012 ¥103,389 ¥79,404 ¥516,401 ¥(2,388) ¥696,805 ¥40,148 ¥(1,734) ¥(28,374) ¥10,040 ¥12,439 ¥719,285 Shareholders’ equity Accumulated other comprehensive income Thousands of U.S. dollars (Note 1) Capital stock Capital surplus Retained earnings (Note 7(b)) Treasury stock Total shareholders’ equity Net unrealized gain on other securities Deferred gains or losses on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Minority interests Total net assets Balance at March 31, 2012 $1,099,766 $844,634 $5,493,043 $(25,402) $7,412,031 $427,061 $(18,445) $(301,819) $106,797 $132,316 $7,651,154 Changes during the ﬁ scal year Dividends from surplus Net income Purchase of treasury stock Disposal of treasury stock (208,137) 571,343 (4) Change of scope of consolidation (85) (208,137) 571,343 (521) 60 (85) (521) 64 32,124 32,124 Effect of change in the reporting period of consolidated subsidiaries and afﬁ liates Net changes of items other than shareholders’ equity Total changes of items during the period — (4) 395,235 (457) 394,777 239,060 8,871 476,694 724,625 (723) 1,118,679 239,060 8,871 476,694 724,625 (723) 723,902 Balance at March 31, 2013 $1,099,766 $844,623 $5,888,278 $(25,859) $7,806,808 $666,121 $(9,573) $174,875 $831,422 $131,592 $8,769,822 The accompanying notes are an integral part of these statements. 54 Asahi Kasei Annual Report 2013 (19,567) 53,712 (49) 6 (8) 3,020 (208,137) 571,343 (521) 60 (85) 32,124 Consolidated Statements of Cash Flows Asahi Kasei Corporation and Consolidated Subsidiaries Years Ended March 31, 2013 and 2012 Cash ﬂ ows from operating activities: Income before income taxes and minority interests 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 removal cost of property, plant and equipment Increase (decrease) in provision for retirement beneﬁ ts Interest and dividend income Interest expense Equity in losses (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 step acquisition (Increase) decrease in notes and accounts receivable–trade Increase in inventories Increase in notes and accounts payable–trade (Decrease) increase in accrued expenses Increase (decrease) in advances received Other, net Subtotal Interest and dividend income, received Interest expense paid Income taxes paid 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 Purchase of shares in subsidiaries resulting in change in scope of consolidation (Note 8(b)) Additional purchase of investments in consolidated subsidiaries Payments for transfer of business 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 Redemptions of commercial paper Proceeds from long-term loans payable Repayment of long-term loans payable Proceeds from issuance of bonds payable Repayments 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 Effect of change in the reporting period of consolidated subsidiaries and afﬁ liates Cash and cash equivalents at end of year (Note 8(a)) The accompanying notes are an integral part of these statements. Financial Section Millions of yen Thousands of U.S. dollars (Note 1) 2013 2012 2013 ¥82,302 80,050 2,069 6,989 (231) (1,408) (171) (1,152) 1,469 (4,251) 3,339 166 (81) 511 (247) 4,011 — (21,385) (21,758) 21,423 (6,783) 10,090 (8,893) 146,059 5,744 (3,556) (22,240) 126,008 (5,977) 13,820 (88,194) 548 (15,789) (3,161) 650 (174,472) (1,333) (282) (11,476) 9,417 (2,267) (278,518) 282,368 (248,073) 203,000 (148,000) 114,083 (34,185) 20,000 (2,539) (50) 6 (19,567) (667) (131) 166,244 (853) 12,881 96,351 102 (5,327) ¥104,008 ¥94,866 78,440 460 1,179 (231) 2,652 (317) (2,973) (999) (4,178) 2,685 (669) (191) 1,898 (494) 3,546 (2,277) 4,918 (22,532) 6,859 3,905 (2,488) 21,331 185,391 5,555 (2,787) (46,899) 141,260 (11,930) 10,917 (67,435) 1,205 (9,224) (5,251) 543 (7,080) — — (5,144) 5,224 (1,328) (89,503) 45,588 (76,627) 15,000 (23,000) 2,384 (32,911) — (2,063) (299) 19 (18,173) (805) (143) (91,030) (823) (40,096) 134,450 1,528 469 ¥96,351 $875,460 851,505 22,008 74,343 (2,457) (14,977) (1,819) (12,254) 15,626 (45,219) 35,517 1,766 (862) 5,436 (2,627) 42,666 — (227,476) (231,443) 227,880 (72,152) 107,329 (94,596) 1,553,654 61,100 (37,826) (236,571) 1,340,368 (63,578) 147,006 (938,134) 5,829 (167,950) (33,624) 6,914 (1,855,888) (14,179) (3,000) (122,072) 100,170 (24,114) (2,962,642) 3,003,595 (2,638,794) 2,159,345 (1,574,301) 1,213,520 (363,632) 212,743 (27,008) (532) 64 (208,137) (7,095) (1,393) 1,768,365 (9,074) 137,017 1,024,902 1,085 (56,664) $1,106,350 Asahi Kasei Annual Report 2013 55 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 con- solidated 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 consolidated ﬁ nancial statements. In addition, the notes to the consolidated ﬁ nancial state- ments include certain ﬁ nancial information which is not required under the disclosure regulations in Japan, but is presented herein as additional information. The U.S. dollar amounts presented in the consolidated 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 accor- dance with generally accepted translation procedures, the approxi- mate current exchange rate of ¥94=US$1 prevailing on March 31, 2013, has been used. Consolidation and investments in afﬁ liated companies The consolidated ﬁ nancial statements consist of the accounts of the parent company and 126 subsidiaries (105 subsidiaries at March 31, 2012, hereinafter collectively referred to as the “Company”) which, with minor exceptions due to immateriality, 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 Medical Co., Ltd., Asahi Kasei Fibers Corp., Asahi Kasei Microdevices Corp., Asahi Kasei E-materials Corp., Asahi Kasei Construction Materials Corp. and ZOLL Medical Corporation), and Tong Suh Petrochemical Corp. Ltd. (Korea). Material inter-company transactions and accounts have been eliminated. 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 therefore 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 realizable value. Residential lots and dwell- ings 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 depreci- ated using the straight-line method, at rates based on estimated use- ful 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 mainly 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 being charged to income as incurred. 56 Asahi Kasei Annual Report 2013 Investments in unconsolidated subsidiaries and 20% to 50% owned companies in which the Company exercises signiﬁ cant inﬂ u- ence are accounted for, with minor exceptions due to immateriality, using the equity method of accounting. There were 43 such unconsol- idated subsidiaries and 20% to 50% owned companies to which the equity method is applied at March 31, 2013 (46 at March 31, 2012), 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 nan- cial statements using a ﬁ scal year ending December 31. Material dif- ferences in inter-company transactions and accounts arising from the use of different ﬁ scal year-ends are appropriately adjusted for through consolidation procedures. Among the consolidated subsidiaries whose closing date was December 31 until the ﬁ scal year ended March 31, 2012, accounting treatment for 20 companies was changed from the conventional method of applying appropriate accounting adjustments to reﬂ ect their signiﬁ cant transactions which occur between December 31 and March 31. Beginning with the ﬁ scal year ended March 31, 2013, those 20 subsidiaries either provisionally close their accounts on March 31, or have changed their formal closing date to March 31. The impact of this change is shown in the consolidated statements of changes in net assets and, as an adjustment to cash and cash equiva- lents at the beginning of the ﬁ scal year, in the consolidated statements of cash ﬂ ows as “effect of change in the reporting period of consoli- dated subsidiaries and afﬁ liates.” All assets and liabilities of acquired companies are measured at their fair value and any difference between the net assets and the cost of investment is recognized as goodwill or negative goodwill. Goodwill, and negative goodwill incurred through business combina- tions which took place before April 1, 2010, are amortized using the straight-line method over a reasonable period during which their effects would last, with the exception of minor amounts which are charged to income as incurred. (d) Signiﬁ cant allowances i) Allowance for doubtful accounts Estimates of the unrecoverable portion of receivables, generally based on historical rates and for speciﬁ c receivables of particular concern based on individual estimates of recoverability, are recog- nized 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 are recognized as provision for product warranties. iv) Provision for removal cost of property, plant and equipment Provision for removal cost of property, plant and equipment is recorded based on estimated future removal cost of property, plant and equipment at each year end. v) 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 actu- arial 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. Financial Section vi) Provision for directors’ retirement beneﬁ ts Provision is made for lump-sum indemnities to directors and cor- porate 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 esti- mated using the percentage of costs incurred to the total project- ed costs) is applied. ii) Other construction activities The completed-contract method is used. (f) Financial instruments i) Securities Securities are classiﬁ ed into four categories: trading securities, held-to-maturity debt securities, equity securities of unconsolidat- ed subsidiaries and afﬁ liates, and other securities. At March 31, 2013 and 2012, 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 immateriality, 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, net of income taxes, being included as a component of net assets. 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 aver- age cost method and are reﬂ ected in the consolidated income statements. 3. Changes in signiﬁ cant accounting policies (a) Accounting standards issued but not yet applied Accounting standard for retirement beneﬁ ts The Accounting Standards Board of Japan (ASBJ) issued ASBJ Statement No. 26, “Accounting Standard for Retirement Beneﬁ ts” and ASBJ Guidance No. 25, “Guidance on Accounting Standard for Retirement Beneﬁ ts,” replacing the Accounting Standard for Retirement Beneﬁ ts that had been issued by the Business Accounting Council in 1998 and other related guidance. Under these revised accounting standards, the accounting treatment of unrecognized actuarial gain or loss and prior service cost, calculation method of retirement beneﬁ t obligations and service cost and method of disclo- sures were mainly revised. These revisions were made considering the viewpoint of enhancing ﬁ nancial reporting and the international con- vergence of accounting standards. The Company will apply the revised accounting standard from the end of the ﬁ scal year ending March 31, 2014, with the exception of the amendment of the calculation meth- od for present value of retirement beneﬁ t obligations and current ser- vice costs which will be applied from the beginning of the ﬁ scal year ending March 31, 2015. The effect of the adoption of this revised accounting standard is now under assessment at the time of prepara- tion of the accompanying consolidated ﬁ nancial statements. (b) Change in presentation Consolidated statements of income In the ﬁ scal year ended March 31, 2013, “insurance income,” which had previously been included in “others” under non-operating income, and “costs associated with idle portion of facilities,” which had previ- ously been included in “others” under non-operating expenses, exceeded 10% of total of non-operating income and total non-operating expenses, respectively, and are reported separately. The consolidated statements of income for the ﬁ scal year ended March 31, 2012, have been ii) Derivative ﬁ nancial instruments All derivatives are stated at fair value. Gains or losses arising from changes in fair value are recognized in the period in which they arise, except for derivatives that are designated as hedging instru- ments. Gains or losses arising from changes in fair value of these qualifying hedges are deferred as “Deferred gains or losses on hedges” until being offset against gains or losses of the underlying hedged assets and liabilities. (g) Taxes Accrued income taxes are stated at the estimated amount of payables for corporation, enterprise, and inhabitant taxes. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company has elected to ﬁ le its return under the consolidated tax ﬁ ling system in Japan. The consumption tax system in Japan is designed so that all goods and services are taxed at a ﬂ at rate of 5% unless otherwise speciﬁ ed. Assets, liabilities, and proﬁ t and loss accounts are stated net of consumption tax. (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 to income for the period. Assets and liabilities of foreign subsidiaries 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 is trans- lated into Japanese yen at the historical exchange rates. The transla- tion differences in Japanese yen amounts arising from the use of different rates are recognized as foreign currency translation adjust- ments in the consolidated 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 consolidated balance sheets. reclassiﬁ ed accordingly, resulting in “others” under non-operating income being ¥648 million lower than previously reported, reﬂ ecting the separa- tion of ¥648 million as “insurance income,” and “others” under non- operating expenses being ¥306 million lower than previously reported, reﬂ ecting the separation of ¥306 million as “costs associated with idle portion of facilities.” “Gain on reversal of provision for noncurrent assets removal cost” under non-operating income and “donation” under non- operating expenses, which were reported separately in the ﬁ scal year ended March 31, 2012, are now less than 10% of total of non- operating income and total non-operating expenses, respectively, and are therefore included in “others” in the ﬁ scal year ended March 31, 2013. The consolidated statements of income for the ﬁ scal year ended March 31, 2012, have been reclassiﬁ ed accordingly, resulting in ¥2,236 million which had been reported as “gain on reversal of provision for noncurrent assets removal cost” now being included in “others” under non-operating income, and ¥979 million which had been reported as “donation” now being included in “others” under non-operating expenses. (c) Change in accounting policy which is difﬁ cult to distinguish between a change in an accounting policy and a change in an accounting estimate In accordance with an amendment to the Corporation Tax Act, the parent company and its consolidated subsidiaries located in Japan changed the method of depreciation of property, plant and equipment acquired on or after April 1, 2012. This change took effect beginning with the ﬁ scal year ended March 31, 2013. Consequently, operating income, ordinary income, and income before income taxes in the ﬁ scal year ended March 31, 2013, are each ¥1,743 million higher than they would have been using the previous method of depreciation. Asahi Kasei Annual Report 2013 57 4. Notes to Consolidated Balance Sheets (a) Investment securities Among investment securities, shares of unconsolidated subsidiaries and afﬁ liates as of March 31, 2013 and 2012, amounted to ¥73,807 million (US$785,097 thousand) and ¥64,099 million, respectively. Included in those amounts are investments in joint ventures of ¥37,669 million (US$400,691 thousand) and ¥31,415 million, respectively. (b) Pledged assets and secured debt A summary of assets pledged as collateral and secured debt as of March 31, 2013 and 2012, is shown below: Pledged assets Buildings and structures Machinery, equipment and vehicles Other Secured debt Short-term loans payable Long-term loans payable Millions of yen 2013 ¥183 4 — ¥187 ¥6 309 ¥315 2012 ¥251 7 0 ¥258 ¥107 315 ¥423 Thousands of U.S. dollars 2013 $1,947 43 — $1,989 $64 3,287 $3,351 Besides the above, investment securities pledged to suppliers as transaction guarantees at March 31, 2013 and 2012, were ¥44 million (US$468 thousand) and ¥40 million, respectively. (c) Contingent liabilities Contingent liabilities at March 31, 2013 and 2012, 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 2013 ¥37,542 486 236 17,341 11 ¥55,616 2012 ¥33,464 491 114 17,163 17 ¥51,249 Thousands of U.S. dollars 2013 $399,340 5,170 2,510 184,459 117 $591,597 The parent company and certain of its subsidiaries and afﬁ liates are defendants in several pending lawsuits. However, based upon the infor- mation currently available to both the Company and its legal counsel, management of the Company believes that any damages from such law- suits will not have a material impact to the Company’s consolidated ﬁ nancial statements. (d) Deferred gain on property, plant and equipment deducted for tax purposes The accumulated reduced-value entries, which is directly deducted from property, plant and equipment, as of March 31, 2013 and 2012, were ¥9,349 million (US$99,447 thousand) and ¥7,631 million, respectively. The breakdown of reduced-value entries as of March 31, 2013 and 2012, is as follows: Buildings and structures Machinery, equipment and vehicles Land Other Millions of yen 2013 ¥3,298 5,664 230 157 ¥9,349 2012 ¥3,134 4,103 230 164 ¥7,631 Thousands of U.S. dollars 2013 $35,081 60,249 2,447 1,670 $99,447 (e) Notes maturing on March 31, 2013 Although ﬁ nancial institutions in Japan were closed on March 31, 2013 and 2012, and notes maturing on those dates were actually settled on the following business days, April 1, 2013, and April 2, 2012, those were accounted for as if settled on March 31, 2013 and 2012. The breakdown of those notes at March 31, 2013 and 2012, were as follows: Millions of yen 2013 ¥3,117 1,793 ¥529 2012 ¥3,443 1,807 ¥372 Thousands of U.S. dollars 2013 $33,156 19,072 $5,627 Notes and accounts receivable–trade Notes and accounts payable–trade Current liabilities–other 58 Asahi Kasei Annual Report 2013 Financial Section 5. 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 2013 ¥32,832 119,917 ¥53,364 2012 ¥33,435 101,863 ¥48,537 Thousands of U.S. dollars 2013 $349,239 1,275,577 $567,642 * The aggregate amounts of research and development expenses included in manufacturing costs and selling, general and administrative expenses for the years ended March 31, 2013 and 2012, were ¥71,120 million (US$756,515 thousand) and ¥66,269 million, respectively. (b) Gain or loss on devaluation of inventories Inventories held for sale in the ordinary course of business are stated at the lower of cost or net realizable value. Losses on devaluation of inven- tories for the years ended March 31, 2013 and 2012, were as follows: (c) Gain on sales of noncurrent assets Major components of gain on sales of noncurrent assets are as follows: Land Machinery Other Millions of yen 2013 ¥173 2012 ¥983 Millions of yen 2013 ¥107 45 ¥94 2012 ¥261 101 ¥132 Thousands of U.S. dollars 2013 $1,840 Thousands of U.S. dollars 2013 $1,138 479 $1,000 (d) Loss on disposal of noncurrent assets Loss on disposal of noncurrent assets for the years ended March 31, 2013 and 2012, 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 loss Impairment losses for the years ended March 31, 2013 and 2012, were as follows: Use Asset class Location Idle assets Land Patents for light shaping diffuser, etc. Patents Production facility for textiles Production facility for semiconductors Production facility for polystyrene Machinery and equipment, etc. Buildings, machinery and equipment, etc. Machinery and equipment, etc. Izunokuni, Shizuoka, etc. Fuji, Shizuoka Amakusa, Kumamoto Tateyama, Chiba Ichihara, Chiba Production facility for ﬁ ne-pattern devices Machinery and equipment, etc. Hyuga, Miyazaki Production facility for electrolytic cell frame Buildings, etc. Nobeoka, Miyazaki Others Production facility for glass fabric Production facility for microcrystalline cellulose Production facility for resin molding Structures, etc. Machinery and equipment, etc. Machinery and equipment, etc. Machinery and equipment, etc. Izunokuni, Shizuoka, etc. Moriyama, Shiga Nobeoka, Miyazaki Kawasaki, Kanagawa 2013 ¥512 486 413 270 242 166 159 453 — — ¥— Millions of yen 2012 ¥127 — — 1,120 — 77 — — 3,761 137 ¥119 Thousands of U.S. dollars 2013 $5,446 5,170 4,393 2,872 2,574 1,766 1,691 4,819 — — $— Grouping of operating assets is based on managerial accounting categories, with consideration given to production process, geographic loca- tion, and domain of authority for making investment decisions. Idle assets are recorded separately in each ﬁ xed assets class. With respect to patents for light shaping diffuser, etc., and part of others, the book value was reduced to the recoverable amount due to dis- appearance of prospects for future use, and with respect to production facilities as 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 based on dis- counted future cash ﬂ ow with applicable discount rate of 6% as of March 31, 2013 and 2012. Asahi Kasei Annual Report 2013 59 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. The resulting extraordinary losses for production facilities for semiconductors and polystyrene, and part of others, were recorded under business structure improvement expenses for the year ended March 31, 2013. The resulting extraordinary losses for production facilities for glass fabric and semiconductors were recorded under business structure improvement expenses for the year ended March 31, 2012. (f) Environmental expenses Environmental expenses for the years ended March 31, 2013 and 2012, were mainly for decontamination of idle land, etc. (g) Loss on disaster Major components of loss on disaster were as follows: Repair or maintenance expenses related to delivered homes in housing operations Fixed costs incurred during suspension of operations Others (h) Business structure improvement expenses Major components of business structure improvement expenses were as follows: Impairment of ﬁ xed assets Additional payment of retirement beneﬁ ts due to application of early retirement, etc. (*1) Loss on disposal and devaluation of inventory and others (*1,2) Millions of yen 2013 ¥— — — ¥— 2012 ¥423 58 546 ¥1,027 Millions of yen 2013 ¥634 2,812 2,910 ¥6,355 2012 ¥4,881 258 3,315 ¥8,454 Thousands of U.S. dollars 2013 $— — — $— Thousands of U.S. dollars 2013 $6,744 29,912 30,954 $67,599 (*1) “Additional payment of retirement beneﬁ ts due to application of early retirement, etc.” which was included in “loss on disposal and devaluation of inventory and others” in the ﬁ scal year ended March 31, 2012, is reported separately in the ﬁ scal year ended March 31, 2013, due to increased signiﬁ cance. Figures for the ﬁ scal year ended March 31, 2012, have been reclassiﬁ ed accordingly, resulting in ¥258 million which had been included as “loss on disposal and devaluation of inventory and others” now being reported as “additional payment of retirement beneﬁ ts due to application of early retirement, etc.” (*2) “Loss on restructuring of group companies,” which was reported separately in the ﬁ scal year ended March 31, 2012, is included in “loss on disposal and devaluation of inventory and others” in the ﬁ scal year ended March 31, 2013, due to decreased signiﬁ cance. Figures for the ﬁ scal year ended March 31, 2012, have been reclassiﬁ ed accordingly, resulting in ¥1,883 million which had been reported as “loss on restructuring of group companies” now being included in “loss on disposal and devaluation of inventory and others.” 6. Notes to Consolidated Statements of Comprehensive Income Recycling adjustment and tax effects on other comprehensive income are as follows: Net unrealized gain on other securities Changes during the ﬁ scal year Recycling adjustment Pre-tax effect Tax effect Net increase in unrealized gain on other securities Deferred gains or losses on hedges Changes during the ﬁ scal year Recycling adjustment Adjustment of assets acquisition costs Pre-tax effect Tax effect Deferred gains or losses on hedges Foreign currency translation adjustment Changes during the ﬁ scal year Pre-tax effect Tax effect Foreign currency translation adjustment Share of other comprehensive income of afﬁ liates accounted for using equity method Changes during the ﬁ scal year Recycling adjustment Share of other comprehensive income of afﬁ liates accounted for using equity method Total other comprehensive income 60 Asahi Kasei Annual Report 2013 Millions of yen 2013 2012 ¥34,229 486 34,715 (12,332) 22,383 (2,449) 125 3,321 997 (211) 786 34,495 34,495 100 34,595 5,847 2 5,848 ¥63,612 ¥12,194 228 12,421 (1,868) 10,553 (2,005) (180) — (2,185) 591 (1,594) (1,029) (1,029) — (1,029) (2,251) (4) (2,255) ¥5,676 Thousands of U.S. dollars 2013 $364,100 5,170 369,269 (131,178) 238,092 (26,050) 1,330 35,326 10,605 (2,244) 8,361 366,929 366,929 1,064 367,993 62,196 21 62,206 $676,651 Financial Section 7. Notes to Consolidated Statements of Changes in Net Assets For the year ended March 31, 2013 (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, 2012 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, 2013 Thousands of shares 1,402,616 1,402,616 4,926 4,926 — — 103 103 — — 12 12 1,402,616 1,402,616 5,017 5,017 Notes: 1. The increase of 103 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 12 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 9, 2012. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥9,784 million (US$104,074 thousand) ¥7.00 (US$0.07) March 31, 2012 June 6, 2012 2) The following was resolved by the Board of Directors on November 1, 2012. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥9,784 million (US$104,074 thousand) ¥7.00 (US$0.07) September 30, 2012 December 3, 2012 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 The following was resolved by the Board of Directors on May 9, 2013. Dividends for common stock Total dividends Source of dividends Dividend per share Date of record Payment date ¥9,783 million (US$104,063 thousand) Retained earnings ¥7.00 (US$0.07) March 31, 2013 June 5, 2013 For the year ended March 31, 2012 (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, 2011 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, 2012 Thousands of shares 1,402,616 1,402,616 4,421 4,421 — — 541 541 — — 36 36 1,402,616 1,402,616 4,926 4,926 Notes: 1. The increase of 541 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 36 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 11, 2011. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥8,389 million ¥6.00 March 31, 2011 June 7, 2011 Asahi Kasei Annual Report 2013 61 2) The following was resolved by the Board of Directors on November 2, 2011. Dividends for common stock Total dividends Dividend per share Date of record Payment date ¥9,784 million ¥7.00 September 30, 2011 December 1, 2011 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 The following was resolved by the Board of Directors on May 9, 2012. Dividends for common stock Total dividends Source of dividends Dividend per share Date of record Payment date ¥9,784 million Retained earnings ¥7.00 March 31, 2012 June 6, 2012 8. Note to Consolidated Statements of Cash Flows (a) 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, 2013 and 2012, 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 Millions of yen 2013 ¥109,513 (5,629) 124 ¥104,008 2012 ¥102,875 (6,884) 360 ¥96,351 Thousands of U.S. dollars 2013 $1,164,908 (59,877) 1,319 $1,106,350 (b) Assets and liabilities of newly consolidated subsidiaries through acquisition of shares Assets and liabilities of acquired companies (ZOLL Medical Corporation and its subsidiaries) and net cash outﬂ ow for such acquisition is as follows: Current assets Noncurrent assets Goodwill Current liabilities Noncurrent liabilities Acquisition cost of shares Cash and cash equivalents Net cash used for acquisition 9. Leases Millions of yen 2013 ¥26,833 75,336 113,439 (7,998) (26,910) 180,700 (6,351) ¥174,349 Thousands of U.S. dollars 2013 $285,427 801,362 1,206,670 (85,076) (286,246) 1,922,136 (67,557) $1,854,579 (a) Financing lease transactions Financing lease transactions without title transfer i) Components of lease assets are as follows: 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 Note 2. Signiﬁ cant accounting policies (c) Noncurrent assets and depreciation/amortization. The ﬁ nancing lease transactions with- out title transfer which occurred prior to March 31, 2008, are accounted for on a basis similar to an operating lease. If such lease transactions accounted for as an operating lease had been accounted for as a ﬁ nancing lease, the cost and related accumulated amortization, computed using the straight-line method over the term of the lease, at March 31, 2013 and 2012, would have been as follows: Machinery, equipment and vehicles Property, plant and equipment, other Intangible ﬁ xed assets, other 62 Asahi Kasei Annual Report 2013 Millions of yen 2013 Accumulated depreciation/ amortization ¥82 86 33 ¥201 Net amount ¥37 7 5 ¥49 Cost ¥119 94 38 ¥250 Financial Section Millions of yen 2012 Accumulated depreciation/ amortization ¥89 253 163 ¥505 Thousands of U.S. dollars 2013 Accumulated depreciation/ amortization $872 915 351 $2,138 Net amount ¥53 47 19 ¥119 Net amount $394 74 53 $521 Cost ¥143 300 182 ¥625 Cost $1,266 1,000 404 $2,659 Machinery, equipment and vehicles Property, plant and equipment, other Intangible ﬁ xed assets, other Machinery, equipment and vehicles Property, plant and equipment, other Intangible ﬁ xed assets, other The future lease payments under the Company’s ﬁ nancing leases at March 31, 2013 and 2012, including amounts representing interest, were as follows: Due within one year Due after one year Millions of yen 2013 ¥23 26 ¥49 2012 ¥70 49 ¥119 Thousands of U.S. dollars 2013 $245 277 $521 Lease charges were ¥64 million (US$681 thousand) and ¥359 million for the years ended March 31, 2013 and 2012, respectively. The amortiza- tion amounts of the leased assets, computed using the straight-line method over the term of the leases and no residual value, were ¥64 million (US$681 thousand) and ¥359 million for the years ended March 31, 2013 and 2012, 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, 2013 and 2012, were as follows: Due within one year Due after one year 10. Financial instruments (a) Overview 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 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. ii) Components of ﬁ nancial instruments, their risks and risk management structure 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 credit condition for each customer. Investment securities are exposed to the risk of ﬂ uctuations in market price, but they are mainly equity securities of companies with which the Company has business relationships. These Millions of yen 2013 ¥5,036 3,426 ¥8,462 2012 ¥4,975 5,147 ¥10,121 Thousands of U.S. dollars 2013 $53,569 36,443 $90,012 securities are held for the purpose of maintaining the business relationships. 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-rate and curren- cy swaps, interest-rate swaps) are used as hedges to ﬁ x interest expenses for a portion of long-term variable interest-rate borrow- ings. 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 mini- mize 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 receiv- ables and liabilities amount. Derivative transactions are exposed to the credit risk of trans- acting ﬁ nancial institutions, but the credit condition of those ﬁ nancial institutions is reviewed through periodical monitoring. Such transactions are performed and managed in accordance with the Company’s internal regulations which stipulate the related authority, procedures, limits, etc. Asahi Kasei Annual Report 2013 63 Borrowings are exposed to liquidity risk, but the parent compa- iii) Supplementary explanation of fair value of ﬁ nancial ny 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 com- mitment-line agreements with transacting ﬁ nancial institutions to manage such risk. Loan securitization in the housing business is exposed to the risk of interest-rate ﬂ uctuations between the time of origination of housing loans and the time of execution of their securitization, but derivative transactions (interest-rate swaps) are entered into to reduce such risk. instruments The fair value of ﬁ nancial instruments is based on their quoted market price, if available. In the case where no quoted market price is available, a reasonably estimated fair value is used. As variable factors are incorporated in its estimation, fair value may change due to the adoption of different assumptions, conditions, etc. Amount of contract regarding derivative transactions in Note 12 “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, 2013 and 2012, 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) Investment securities Other securities Long-term loans receivable 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 deposits Total liabilities Derivative ﬁ nancial instruments (*2) Cash and deposits Notes and accounts receivable–trade Allowance for doubtful accounts (*1) Investment securities Other securities Long-term loans receivable 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 deposits Total liabilities Carrying amount ¥109,513 306,222 (1,538) 304,684 144,149 6,103 564,449 172,630 78,725 70,000 13,978 45,000 181,248 6,466 6,335 574,382 ¥(1,787) Carrying amount ¥102,875 266,056 (938) 265,118 105,130 6,539 479,662 143,194 44,751 15,000 8,380 25,000 91,942 6,914 6,109 341,289 Millions of yen 2013 Fair value ¥109,513 304,684 144,149 6,124 564,470 172,630 78,725 70,000 13,978 46,458 184,293 6,489 6,323 578,896 ¥(1,787) Millions of yen 2012 Fair value ¥102,875 265,118 105,130 7,097 480,220 143,194 44,751 15,000 8,380 25,953 93,901 6,915 6,006 344,100 Derivative ﬁ nancial instruments (*2) ¥(2,822) ¥(2,822) 64 Asahi Kasei Annual Report 2013 Difference ¥— — — 21 21 — — — — (1,458) (3,045) (23) 13 (4,514) ¥— Difference ¥— — — 558 558 — — — — (953) (1,959) (1) 102 (2,811) ¥— Financial Section Thousands of U.S. dollars 2013 Fair value $1,164,908 3,240,974 1,533,337 65,142 6,004,361 1,836,294 837,411 744,602 148,686 494,181 1,960,355 69,025 67,259 6,157,813 Carrying amount $1,164,908 3,257,334 (16,360) 3,240,974 1,533,337 64,919 6,004,138 1,836,294 837,411 744,602 148,686 478,672 1,927,965 68,780 67,386 6,109,797 Cash and deposits Notes and accounts receivable–trade Allowance for doubtful accounts (*1) Investment securities Other securities Long-term loans receivable 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 deposits Total liabilities Derivative ﬁ nancial instruments (*2) $(19,009) $(19,009) Difference $— — — 223 223 — — — — (15,509) (32,390) (245) 138 (48,016) $— (*1) This reduction represents speciﬁ c allowance for doubtful accounts related to notes and accounts receivable–trade. (*2) The amounts represent net amount of assets and liabilities resulting from derivative transactions. In the case of a net liability, the amount is shown in parentheses. Note 1) Method to determine the estimated 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) Investment securities The stock exchange prices are used to determine fair value of these traded stocks. Refer to the Note 11 “Marketable securities and investment securities” for information on securities classiﬁ ed holding purpose. 3) Long-term loans receivable The carrying amounts shown include long-term loans receivable scheduled for repayment within one year. Their fair values are determined based on the present value of principal and interest, discounted using current assumed rates for similar long-term loans receivable. For long-term loans receivable bearing variable interest rates, as they are deemed to reﬂ ect market interest rates within a short term, book values are used as fair value. ii) Liabilities 1) Notes and accounts payable–trade; short-term loans payable; commercial paper; income taxes payable As their fair values approximate book value due to their short maturity, the corresponding book value amounts are used as fair value. 2) Bonds payable Fair value of the bonds payable issued by the parent company is based on the quoted market price determined by the market price. For those without quoted market price that are subject to special treatment for interest-rate swaps, fair value is based on the present value by totaling the amount of principal and interest, together with related interest-rate swaps, discounted by the interest rate that would apply if equivalent bonds were newly issued. 3) Long-term loans payable The carrying amounts shown include long-term loans payable that are scheduled for repayment within one year of March 31, 2013 and 2012, amounted to Note 5) ¥34,319 million (US$365,057 thousand) and ¥29,739 million, respectively. Their fair values are based on present value of principal and interest discounted using the current assumed rates for similar long-term loans payable. Of long-term loans payable bearing variable interest rates, fair value of those subject to special treatment of interest-rate swaps is based on present value by totaling the amount of principal and interest, together with related interest-rate swaps, discounted by the interest rate that would apply if equivalent long-term loans were newly entered. For other long-term loans payable, book value is used as fair value as they are deemed to reﬂ ect market interest rates within a short term. 4) Lease obligations The carrying amounts shown are the total amount of lease obligations under current liabilities and lease obligations under noncurrent liabilities. Present value is 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 deposits In case where the deposit period can be estimated, the fair value of long-term guarantee deposits is determined using a discounted cashﬂ ow over that period. iii) Derivative transactions Refer to the Note 12 “Derivative ﬁ nancial instruments.” For equity investments in nonpublic companies, with a carrying amount as of March 31, 2013 and 2012, amounting to ¥80,878 million (US$860,313 thousand) and ¥72,743 million, respectively, fair value is not included in investment securities, as no quoted market price is available and it is deemed extremely difﬁ cult to determine fair value due to the impossibility of estimating future cash ﬂ ows. For long-term loans payable, the fair value having a carrying amount as of March 31, 2012, amounting to ¥507 million, is not included as no quoted market price is available and it is deemed extremely difﬁ cult to determine fair value due to the impossibility of estimating future cash ﬂ ows. For long-term guarantee deposits, the fair value of a portion having a carrying amount as of March 31, 2013 and 2012, amounting to ¥12,060 million (US$128,284 thousand) and ¥12,178 million, respectively, is not included as no quoted market price is available and it is deemed extremely difﬁ cult to determine fair value due to the impossibility of estimating future cash ﬂ ows. For monetary credits and securities with maturity, amount scheduled for redemption subsequent to the closing date. Millions of yen 2013 Note 2) Note 3) Note 4) 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 Notes and accounts receivable–trade Short-term investment securities and investment securities available-for-sale securities with contractual maturity (Japanese government and municipal bonds) Long-term loans receivable ¥109,513 306,222 — 854 ¥416,589 ¥— — — 5,181 ¥5,181 ¥— — — 67 ¥67 ¥— — — — ¥— Asahi Kasei Annual Report 2013 65 Millions of yen 2012 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 Notes and accounts receivable–trade Short-term investment securities and investment securities available-for-sale securities with contractual maturity (Japanese government and municipal bonds) Long-term loans receivable ¥102,875 266,056 2 979 ¥369,913 ¥— — — 5,344 ¥5,344 ¥— — — 215 ¥215 ¥— — — — ¥— Cash and deposits Notes and accounts receivable–trade Short-term investment securities and investment securities available-for-sale securities with contractual maturity (Japanese government and municipal bonds) Long-term loans receivable Thousands of U.S. dollars 2013 Due after one year, within ﬁ ve years Due after ﬁ ve years, within ten years Due after more than ten years Due within one year $1,164,908 3,257,334 $— — — 9,084 $4,431,326 — 55,111 $55,111 $— — — 713 $713 $— — — — $— 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. Short-term loans payable ¥78,725 — — — — ¥— Short-term loans payable ¥44,751 — — — — ¥— Short-term loans payable $837,411 — — — — $— Millions of yen 2013 Commercial paper Bonds payable Long-term loans payable ¥70,000 — — — — ¥— ¥5,000 — — — 20,000 ¥20,000 Millions of yen 2012 ¥34,319 18,747 30,217 27,470 16,288 ¥54,208 Commercial paper Bonds payable Long-term loans payable ¥15,000 — — — — ¥— ¥— 5,000 — — — ¥20,000 ¥29,739 23,071 6,862 2,197 4,212 ¥25,860 Thousands of U.S. dollars 2013 Commercial paper Bonds payable Long-term loans payable $744,602 — — — — $— $53,186 — — — 212,743 $212,743 $365,057 199,415 321,423 292,203 173,258 $576,620 Lease obligations ¥2,415 1,778 1,342 800 119 ¥13 Lease obligations ¥2,207 2,039 1,365 923 370 ¥10 Lease obligations $25,689 18,913 14,275 8,510 1,266 $138 Year ending March 31 2014 2015 2016 2017 2018 2019 and thereafter Year ending March 31 2013 2014 2015 2016 2017 2018 and thereafter Year ending March 31 2014 2015 2016 2017 2018 2019 and thereafter 66 Asahi Kasei Annual Report 2013 Financial Section 11. Marketable securities and investment securities (a) Other securities with available fair value The aggregate cost, carrying amount which were identical to fair value, and gross unrealized gains and losses of debt and equity securities classi- ﬁ ed as other securities for which fair values are available at March 31, 2013 and 2012, are as follows: Securities with unrealized gains: Equity securities Securities with unrealized losses: Equity securities Carrying amount Millions of yen 2013 Cost Unrealized gains (losses) ¥133,234 ¥34,656 ¥98,578 10,915 ¥144,149 12,489 ¥47,145 (1,573) ¥97,005 Note) For equity investment in nonpublic companies, with a carrying amount of ¥80,878 million, fair value is not included in short-term investment securities or in investment securities, as no quoted market price is available and it is deemed extremely difﬁ cult to determine fair value. Securities with unrealized gains: Equity securities Securities with unrealized losses: Equity securities Carrying amount Millions of yen 2012 Cost Unrealized gains (losses) ¥97,644 ¥32,027 ¥65,617 7,486 ¥105,130 10,840 ¥42,867 (3,354) ¥62,263 Note) For equity investment in nonpublic companies, with a carrying amount of ¥72,743 million, fair value is not included in short-term investment securities or in investment securities, as no quoted market price is available and it is deemed extremely difﬁ cult to determine fair value. Securities with unrealized gains: Equity securities Securities with unrealized losses: Equity securities Thousands of U.S. dollars 2013 Carrying amount Cost Unrealized gains (losses) $1,417,232 $368,642 $1,048,591 116,105 $1,533,337 132,848 $501,489 (16,732) $1,031,858 Note) For equity investment in nonpublic companies, with a carrying amount of US$860,313 thousand, fair value is not included in short-term investment securities or in investment securities, as no quoted market price is available 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 years ended March 31, 2013 and 2012, are as follows: Selling amount Gain on sales of securities Loss on sales of securities Millions of yen 2013 ¥617 81 ¥— 2012 ¥541 191 ¥— Thousands of U.S. dollars 2013 $6,563 862 $— (c) Loss on other devaluation of investment securities whose fair values are readily determinable for the years ended March 31, 2013 and 2012, was ¥511 million (US$5,436 thousand) and ¥1,898 million, respectively. Asahi Kasei Annual Report 2013 67 12. 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 Millions of yen 2013 Off-market transactions Foreign exchange forward contracts Selling U.S. dollar Euro Thai baht Singapore dollar Buying U.S. dollar ¥16,869 5,627 744 — 1,828 ¥25,068 ¥— — — — — ¥— ¥(498) (36) (71) — (10) ¥(615) ¥(498) (36) (71) — (10) ¥(615) Millions of yen 2012 Classiﬁ cation Items Amount of contract Amount of contract over 1 year Fair value Proﬁ t (loss) from valuation Off-market transactions Foreign exchange forward contracts Selling U.S. dollar Euro Thai baht Singapore dollar Buying U.S. dollar ¥12,155 4,070 594 21 2,138 ¥18,978 ¥— — — — — ¥— ¥(376) (227) (32) (0) 6 ¥(630) ¥(376) (227) (32) (0) 6 ¥(630) Thousands of U.S. dollars 2013 Classiﬁ cation Items Amount of contract Amount of contract over 1 year Fair value Proﬁ t (loss) from valuation Off-market transactions Foreign exchange forward contracts Selling U.S. dollar Euro Thai baht Singapore dollar Buying U.S. dollar $179,438 59,855 7,914 — 19,445 $266,652 $— — — — — $— (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 $(5,297) (383) (755) — (106) $(6,542) Millions of yen 2013 Amount of contract over 1 year Foreign exchange forward contracts Selling Principle- based accounting U.S. dollar Euro U.S. dollar Buying U.S. dollar Accounts receivable–trade Accounts receivable–trade Investment securities Accounts payable–trade ¥8,870 145 — 827 ¥9,841 ¥382 — — — ¥382 $(5,297) (383) (755) — (106) $(6,542) Fair value ¥(1,200) (1) — 29 ¥(1,172) 68 Asahi Kasei Annual Report 2013 Financial Section Classiﬁ cation Items Hedged assets/liabilities Amount of contract Millions of yen 2012 Amount of contract over 1 year Foreign exchange forward contracts Selling Principle- based accounting U.S. dollar Euro U.S. dollar Buying U.S. dollar Accounts receivable–trade Accounts receivable–trade Investment securities Accounts payable–trade ¥8,001 146 144,500 264 ¥152,911 ¥410 — — — ¥410 Classiﬁ cation Items Hedged assets/liabilities Amount of contract Thousands of U.S. dollars 2013 Amount of contract over 1 year Foreign exchange forward contracts Selling Principle- based accounting U.S. dollar Euro U.S. dollar Buying U.S. dollar Accounts receivable–trade Accounts receivable–trade Investment securities Accounts payable–trade $94,352 1,542 — 8,797 $104,680 $4,063 — — — $4,063 ii) Interest-rate swaps, and interest-rate and currency swaps Fair value ¥(390) (1) (1,804) 2 ¥(2,192) Fair value $(12,765) (11) — 308 $(12,467) Classiﬁ cation Special treatment for interest-rate swaps Special treatment for interest-rate and currency swaps Classiﬁ cation Special treatment for interest-rate swaps Special treatment for interest-rate and currency swaps Items Hedged assets/liabilities Amount of contract Millions of yen 2013 Amount of contract over 1 year Fair value Interest-rate swaps Pay ﬁ xed/receive ﬂ oating Interest-rate and currency swaps U.S. dollar receive ﬁ xed/ Long-term loans payable ¥96,306 ¥84,756 (*) Japanese yen pay ﬂ oating Bonds payable U.S. dollar receive ﬂ oating/ Thai baht pay ﬁ xed Long-term loans payable 5,000 650 — 325 ¥101,956 ¥85,081 (*) (*) — Items Hedged assets/liabilities Amount of contract Millions of yen 2012 Amount of contract over 1 year Fair value Interest-rate swaps Pay ﬁ xed/receive ﬂ oating Interest-rate and currency swaps U.S. dollar receive ﬁ xed/ Long-term loans payable ¥27,044 ¥16,304 Japanese yen pay ﬂ oating Bonds payable 5,000 5,000 U.S. dollar receive ﬂ oating/ Thai baht pay ﬁ xed Long-term loans payable 747 ¥32,791 498 ¥21,802 (*) (*) (*) — Asahi Kasei Annual Report 2013 69 Classiﬁ cation Special treatment for interest-rate swaps Special treatment for interest-rate and currency swaps Items Hedged assets/liabilities Amount of contract Thousands of U.S. dollars 2013 Amount of contract over 1 year Fair value Interest-rate swaps Pay ﬁ xed/receive ﬂ oating Interest-rate and currency swaps U.S. dollar receive ﬁ xed/ Long-term loans payable $1,024,423 $901,564 (*) Japanese yen pay ﬂ oating Bonds payable 53,186 — U.S. dollar receive ﬂ oating/ Thai baht pay ﬁ xed Long-term loans payable 6,914 3,457 $1,084,523 $905,021 (*) (*) — (*) Fair value of interest-rate swaps and interest currency swaps, for which special treatment is applied, is included in fair value of the corresponding long-term loans payable and bonds payable for which hedge accounting is applied. 13. 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 ser- vice. Additional beneﬁ ts may be granted to employees depending on the conditions under which termination of employment occurs. Certain for- eign 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, 2013 and 2012, 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 2013 ¥(331,038) 177,112 (153,927) 50,634 94 (103,199) 4,577 ¥(107,776) 2012 ¥(311,561) 161,838 (149,723) 49,107 (1,309) (101,925) 4,353 ¥(106,277) Thousands of U.S. dollars 2013 $(3,521,306) 1,883,970 (1,637,347) 538,602 1,000 (1,097,745) 48,686 $(1,146,431) Note: The ﬁ gures in the above table do not include additional beneﬁ t payables amounting to ¥2,747 million (US$29,220 thousand) and ¥93 million at March 31, 2013 and 2012, respectively. The amounts were recorded as part of current liabilities on the consolidated balance sheets at March 31, 2013 and 2012. Periodic retirement beneﬁ t expenses for employees for the years ended March 31, 2013 and 2012, 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 2013 ¥9,858 6,116 (3,993) 5,297 (1,403) ¥15,875 2012 ¥9,744 6,312 (4,060) 4,760 (1,380) ¥15,376 Thousands of U.S. dollars 2013 $104,861 65,057 (42,474) 56,345 (14,924) $168,865 Note: In addition to the above costs, additional beneﬁ ts amounting to ¥3,180 million (US$33,826 thousand) and ¥340 million for the years ended March 31, 2013 and 2012, respectively, and contributions to the deﬁ ned contribution plans amounting to ¥414 million (US$4,404 thousand) for the year ended March 31, 2013, were charged to income. * 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 Method of attributing the projected beneﬁ ts to periods of employee service Amortization of unrecognized prior service costs Amortization of unrecognized actuarial gains/losses 2013 2012 Mainly 1.4% Mainly 2.5% Straight-line basis Mainly 10 years Mainly 10 years Mainly 2.0% Mainly 2.5% Straight-line basis Mainly 10 years Mainly 10 years 70 Asahi Kasei Annual Report 2013 Financial Section 14. 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, 2013 and 2012, were as follows: Deferred tax assets: Provision for retirement beneﬁ ts Tax loss carry forwards Accrued bonuses Impairment loss Unrealized gain on noncurrent assets and others Depreciation Loss on disposal of noncurrent assets Experiment and research expenses Provision for periodic repairs Unrealized loss on investment securities Accrued enterprise tax Asset retirement obligations Provision for product warranties Devaluation of inventories Allowance for doubtful accounts Environmental expenses Deferred gains or losses on hedges Other Subtotal deferred tax assets Less: Valuation allowance Total deferred tax assets Deferred tax liabilities: Unrealized gain on other securities Identiﬁ ed intangible assets during business combination Deferred gain on property, plant and equipment Depreciation—overseas subsidiaries Accelerated depreciation Other Total deferred tax liabilities Millions of yen 2013 2012 ¥38,003 21,444 8,027 3,873 3,825 3,543 2,859 2,825 2,710 2,308 1,455 1,315 1,298 1,220 990 538 456 9,736 106,426 (29,072) 77,354 (36,645) (29,763) (10,952) (3,606) (240) (5,749) (86,956) ¥37,608 16,377 8,272 4,104 4,233 1,964 3,434 919 2,989 3,411 1,368 1,415 889 1,022 341 662 834 6,979 96,821 (24,557) 72,263 (24,168) (3,698) (11,862) (775) (249) (4,495) (45,247) Thousands of U.S. dollars 2013 $404,244 228,103 85,385 41,198 40,687 37,687 30,412 30,050 28,827 24,551 15,477 13,988 13,807 12,977 10,531 5,723 4,851 103,563 1,132,071 (309,244) 822,827 (389,799) (316,594) (116,498) (38,358) (2,553) (61,153) (924,965) Net deferred tax assets (liabilities) ¥(9,602) ¥27,017 $(102,138) Net deferred tax assets (liabilities) at March 31, 2013 and 2012, 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—other Non-current liabilities—deferred tax liabilities Millions of yen 2013 ¥21,945 8,487 (49) ¥(39,985) 2012 ¥19,454 18,965 — ¥(11,402) Thousands of U.S. dollars 2013 $233,433 90,278 (521) $(425,327) Asahi Kasei Annual Report 2013 71 Reconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2013 and 2012, was as follows: Statutory tax rate 2013 38.0% Statutory tax rate Increase (reduction) in taxes resulting from: Increase (reduction) in taxes resulting from: Non-deductible expenses and non-taxable income Equalization of inhabitants taxes R&D expenses deductible from income taxes Amortization of goodwill and negative goodwill Equity in earnings of unconsolidated subsidiaries and afﬁ liates Undistributed earnings of foreign subsidiaries Difference of tax rates for foreign subsidiaries Valuation allowance Decrease in deferred tax asset due to the change in statutory tax rate 0.7 0.6 (5.5) 2.8 (0.2) 1.0 (1.0) (1.8) — Non-deductible expenses and non-taxable income Equalization of inhabitants taxes R&D expenses deductible from income taxes Amortization of goodwill and negative goodwill Equity in earnings of unconsolidated subsidiaries and afﬁ liates Undistributed earnings of foreign subsidiaries Difference of tax rates for foreign subsidiaries Valuation allowance Decrease in deferred tax asset due to the change in statutory tax rate Other Effective income tax rate (0.1) 34.5% Other Effective income tax rate 2012 40.7% 1.5 0.5 (6.3) 0.2 (0.3) (0.5) (3.2) 1.4 5.7 0.4 40.0% 15. Business combinations Business combination accounted for by the purchase method was as follows: ZOLL Medical Corporation (a) Outline of business combination 1) Name of acquiree ZOLL Medical Corporation 2) Nature of the businesses Manufacture and sale of critical care medical devices 3) Main reasons for the acquisition I) By utilizing the know-how and the resources built up through the Company’s established pharmaceutical and medical device businesses, it is possible to accelerate the expansion of ZOLL’s business in Japan and Asia, and also contribute to the reinforcement of the competitiveness of ZOLL’s products. II) Having ZOLL’s globally strong platform in critical care enables the Company to obtain additional investment opportunities for further growth. III) Through sharing information on customer needs with the Company’s established medical device business and through joint marketing, etc., the Company is able to obtain oppor- tunities for global business expansion and to deal with new therapeutic ﬁ elds. 4) The acquisition date April 26, 2012 5) Statutory form of business combination Stock purchase for cash as consideration 6) Name of company after transaction ZOLL Medical Corporation 7) Acquired voting right Voting right before the acquisition 0% Voting right after the acquisition 100% 8) Basic means of materializing the acquisition Stock purchase for cash as consideration by a special purpose subsidiary of the Company (b) The period of acquiree’s results included in the consolidated ﬁ nancial statements From April 27, 2012 to March 31, 2013 (c) Cost of acquisition and details Stock purchase price Acquisition related direct cost Purchase price Millions of yen Thousands of U.S. dollars ¥179,573 $1,910,148 1,128 11,999 ¥180,700 $1,922,136 (d) The amount of goodwill, measurement principle, amortization method and useful life 1) Amount of goodwill ¥113,439 million (US$1,206,670 thousand) 2) Measurement principle Goodwill is measured as the excess of the purchase price over the fair value of identiﬁ able assets acquired and liabilities assumed. 3) Amortization method and useful life Straight-line method over 20 years (e) Details of assets acquired and liabilities assumed as of the acquisition date Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Total liabilities Millions of yen ¥26,833 75,336 102,169 7,998 26,910 ¥34,908 Thousands of U.S. dollars $285,427 801,362 1,086,789 85,076 286,246 $371,322 72 Asahi Kasei Annual Report 2013 Financial Section (f) Amount of identiﬁ able intangible assets other than 2) Major weighted average useful life goodwill, its details and major weighted average useful life 1) Purchase price allocated to intangible assets and its major items Technology-related assets Trademarks Customer-related assets Millions of yen ¥40,189 14,614 ¥10,100 Thousands of U.S. dollars $427,497 155,452 $107,435 Technology-related assets Trademarks Customer-related assets Total 17 years 20 years 19 years 18 years (g) Pro forma effects on the consolidated statements of income assumed the business combination occurs at the beginning of ﬁ scal year and its measurement. Information is omitted due to immateriality. This note is not sub- ject to audit. 16. Asset retirement obligations (a) Outline of 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 sheets. 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 them as the relevant asset retirement obligations under lia- bilities, the amount of lease deposit that cannot ultimately be expected to be collected was estimated in a reasonable manner, and of that, the amount corresponding to the ﬁ scal year ended March 31, 2013, 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 4.1%, and discount rate of 0.2% to 5.1%. (c) Increase (decrease) in the total amount of asset retirement obligations in the ﬁ scal year ended March 31, 2013 Balance at beginning of year Increase due to asset retirement obligations accrued Adjustment due to passage of time Decrease due to accounting estimates* Decrease due to fulﬁ llment of asset retirement obligations Increase (decrease) due to foreign exchange ﬂ uctuation Balance at end of year Millions of yen 2013 ¥3,701 126 124 (349) (379) 334 ¥3,556 2012 ¥3,828 148 151 — (317) (108) ¥3,701 Thousands of U.S. dollars 2013 $39,368 1,340 1,319 (3,712) (4,031) 3,553 $37,826 * A ¥349 million (US$3,712 thousand) decrease in asset retirement obligations was made in the ﬁ scal year ended March 31, 2013, as it became clear that the cost of asset retirement will be less than originally estimated at the time of asset acquisition. The amount of lease deposit which will be written off for a certain percentage at the end of the lease period is charged to expense rather than recording the asset retirement obligation. Increase (decrease) in those expensed amounts for the ﬁ scal year ended March 31, 2013 and 2012, were as follows: Balance at beginning of year Increase due to new lease agreements Decrease due to the cancelation of existing lease agreements Balance at end of year Millions of yen 2013 ¥1,643 56 (70) ¥1,629 2012 ¥1,619 37 (13) ¥1,643 Thousands of U.S. dollars 2013 $17,477 596 (745) $17,328 Asahi Kasei Annual Report 2013 73 17. 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 nine business ﬁ elds. Separate ﬁ nancial information is available in these nine units, and the Board of Directors carries out periodic review to allocate manage- ment resources and evaluate business performance. The nine units are combined into seven reportable segments of Chemicals, Homes, Health Care, Fibers, Electronics, Construction Materials, and Critical Care through application of Paragraph 13 of “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information.” The “Critical Care” segment is newly added during the ﬁ rst quar- ter of ﬁ scal 2012, as the result of completion of the acquisition of ZOLL Medical Corporation and its subsidiaries on April 26, 2012 (US Eastern standard time). Main products of the seven reportable segments are as follows: Chemicals The Company produces, processes, and sells chemicals and derivative products (such as 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 polyphenyl- ene ether (mPPE), Leona™ polyamide 66, Suntec™ polyethylene, synthetic rubber, and polystyrene), and 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™ unit homes and Hebel Maison™ apartments, and operates real estate business (such as management of Hebel Maison™ rental units, Atlas™ condominiums, Hebel Town™ housing developments, and brokerage of used Hebel Haus™ homes), remodeling business (such as exterior wall refurbishing, rerooﬁ ng, redesign, interior renovation, and solar panel installation), and ﬁ nan- cial and other services (such as mortgage ﬁ nancing, etc.). Health Care The Company manufactures and sells pharmaceuticals (such as Teribone™, 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 polyure- thane ﬁ lament, Bemberg™ cupro ﬁ ber, nonwoven fabrics (such as Eltas™ spunbond and Lamous™ artiﬁ cial suede), and Leona™ nylon 66 ﬁ lament. Electronics The Company manufactures and sells Hipore™ Li-ion battery separa- tors, photomask pellicles, APR™ photosensitive resin and printing plate making systems, 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™ and Hebel Powerboard™ autoclaved aerated concrete (AAC) panels, Neoma™ and Jupii™ phe- nolic foam insulation panels, Eazet™, ATT Column™, and other piling systems, and BasePack™ column base attachment systems. Critical Care The Company manufactures and sells deﬁ brillators for medical profes- sionals, LifeVest™ wearable deﬁ brillators, ZOLL AED Plus™ automated external deﬁ brillators, and IVTM—Thermogard XP™ intravascular tem- perature management systems. (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 reportable segment Millions of yen 2013 Chemicals Homes Health Care Fibers Electronics Construction Materials Critical Care (Note 1) Subtotal Others (Note 2) Total Sales: External customers ¥684,582 ¥486,182 ¥133,450 ¥109,613 ¥131,148 ¥51,504 ¥52,131 ¥1,648,610 ¥18,031 ¥1,666,640 Intersegment Total 20,678 215 66 1,794 420 15,948 — 39,120 23,967 63,088 705,260 486,397 133,516 111,406 131,569 67,451 52,131 1,687,730 41,998 1,729,728 Operating income (loss) 22,925 54,266 15,932 4,030 2,824 3,962 (3,667) 100,272 2,195 102,467 Assets Other items 650,519 304,675 183,836 115,584 167,723 46,804 240,318 1,709,460 59,240 1,768,700 Depreciation (Note 3) 29,993 5,266 10,493 6,099 15,003 2,271 436 41,313 — — 1,005 — 12 42 4,667 2,489 — — 6,933 5,337 76,058 6,790 934 199 76,992 6,989 — 48,512 16,643 65,154 Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets ¥47,290 ¥9,527 ¥14,275 ¥6,833 ¥17,011 ¥2,186 ¥5,416 ¥102,538 ¥1,140 ¥103,677 Notes: 1. The “Critical Care” segment is newly added during the ﬁ rst quarter of ﬁ scal 2012, as the result of completion of the acquisition of ZOLL Medical Corporation and its subsidiaries on April 26, 2012 (US Eastern standard time). 2. The “Others” category is equivalent to the former Services, Engineering and Others segment, including plant engineering and environmental engineering, research and analysis, and employment agency/stafﬁ ng operations. 3. Amortization of goodwill is not included. 74 Asahi Kasei Annual Report 2013 Financial Section Millions of yen 2012 Sales: External customers ¥680,112 ¥451,965 ¥119,483 ¥110,849 ¥146,113 ¥46,146 ¥1,554,668 ¥18,562 ¥1,573,230 Chemicals Homes Health Care Fibers Electronics Construction Materials Subtotal Others (Note 1) Total Intersegment Total Operating income Assets Other items Depreciation (Note 2) Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets 20,506 63 23 1,743 608 15,268 38,211 700,617 452,028 119,506 112,593 146,721 61,414 1,592,879 44,486 46,340 8,804 3,140 6,423 1,824 111,015 23,665 42,227 2,969 61,876 1,635,106 113,984 580,351 293,452 180,241 106,000 162,951 42,620 1,365,615 57,462 1,423,077 29,215 435 34,413 4,794 10,892 6,445 20,911 2,419 — — 657 260 — 39 3,825 2,020 — — 74,676 1,131 852 47 75,528 1,179 40,518 17,519 58,037 ¥39,080 ¥6,272 ¥10,678 ¥5,697 ¥13,429 ¥1,631 ¥76,787 ¥786 ¥77,572 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. Thousands of U.S. dollars 2013 Chemicals Homes Health Care Fibers Electronics Construction Materials Critical Care (Note 1) Subtotal Others (Note 2) Total Sales: External customers $7,282,013 $5,171,599 $1,419,530 $1,165,972 $1,395,043 $547,857 $554,526 $17,536,539 $191,799 $17,728,327 Intersegment Total 219,955 2,287 702 19,083 4,468 169,642 — 416,126 254,941 671,078 7,501,968 5,173,886 1,420,232 1,185,044 1,399,521 717,488 554,526 17,952,665 446,740 18,399,404 Operating income (loss) 243,857 577,236 169,471 42,868 30,039 42,144 (39,006) 1,066,610 23,349 1,089,959 Assets Other items 6,919,679 3,240,879 1,955,494 1,229,486 1,784,097 497,862 2,556,303 18,183,810 630,146 18,813,956 Depreciation (Note 3) 319,041 56,015 111,616 64,876 159,589 24,157 73,747 809,042 4,638 439,453 — — 10,690 — 128 447 49,644 26,476 — — 56,771 72,226 9,935 2,117 818,977 74,343 — 516,030 177,034 693,054 Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets $503,032 $101,340 $151,846 $72,684 $180,949 $23,253 $57,611 $1,090,714 $12,126 $1,102,829 Notes: 1. The “Critical Care” segment is newly added during the ﬁ rst quarter of ﬁ scal 2012, as the result of completion of the acquisition of ZOLL Medical Corporation and its subsidiaries on April 26, 2012 (US Eastern standard time). 2. The “Others” category is equivalent to the former Services, Engineering and Others segment, including plant engineering and environmental engineering, research and analysis, and employment agency/stafﬁ ng operations. 3. 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 2013 2012 ¥1,687,730 41,998 (63,088) ¥1,666,640 ¥1,592,879 42,227 (61,876) ¥1,573,230 Millions of yen 2013 ¥100,272 2,195 1,469 (11,975) ¥91,960 2012 ¥111,015 2,969 690 (10,416) ¥104,258 Thousands of U.S. dollars 2013 $17,952,665 446,740 (671,078) $17,728,327 Thousands of U.S. dollars 2013 $1,066,610 23,349 15,626 (127,380) $978,194 * Corporate expenses, etc. include corporate revenue, basic research expense, and group management expense, etc. which are not allocated to reporting segments. Asahi Kasei Annual Report 2013 75 Assets Total of reporting segments Assets in “Others” category Elimination of intersegment transactions Corporate assets* Total assets on consolidated balance sheets Millions of yen 2013 2012 ¥1,709,460 59,240 (200,347) 231,817 ¥1,800,170 ¥1,365,615 57,462 (206,324) 193,814 ¥1,410,568 Thousands of U.S. dollars 2013 $18,183,810 630,146 (2,131,124) 2,465,876 $19,148,708 * Corporate assets include assets of the parent company—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 2013 2012 2013 2013 2012 2013 2013 2012 2013 2013 2012 2013 Depreciation (Note 2) ¥76,058 ¥74,676 $809,042 ¥934 ¥852 $9,935 ¥3,058 ¥2,912 $32,528 ¥80,050 ¥78,440 $851,505 Amortization of goodwill Investments in afﬁ liates accounted for using equity method Increase in property, plant and equipment, and intangible assets 6,790 1,131 72,226 199 47 2,117 48,512 40,518 516,030 16,643 17,519 177,034 — — — — — 6,989 1,179 74,343 — 65,154 58,037 693,054 ¥102,538 ¥76,787 $1,090,714 ¥1,140 ¥786 $12,126 ¥10,108 ¥7,551 $107,520 ¥113,785 ¥85,124 $1,210,350 Notes: 1. Adjustments include elimination of intersegment transactions and corporate expenses, etc. 2. Amortization of goodwill is not included. (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 2013 Other regions Total Japan China 2012 Other regions Millions of yen Thousands of U.S. dollars 2013 Total Japan China Other regions Total ¥1,181,429 ¥155,570 ¥329,641 ¥1,666,640 ¥1,151,705 ¥151,286 ¥270,238 ¥1,573,230 $12,567,057 $1,654,824 $3,506,446 $17,728,327 2) Property, plant and equipment Millions of yen 2013 Other regions Japan Total Japan Thousands of U.S. dollars 2013 Other regions Total ¥369,481 ¥92,100 ¥461,581 $3,930,231 $979,683 $4,909,914 Geographic information for the year ended March 31, 2012, is not shown because over 90% of the amount of property, plant and equip- ment on the consolidated balance sheets was 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 consolidated statements of income. 76 Asahi Kasei Annual Report 2013 Financial Section 18. Information on related parties 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 An afﬁ liated company PTT Asahi Chemical Co., Ltd. Rayong, Thailand 14,246 million Thai baht Chemicals 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 Guarantee for completion of manufacturing facilities Nature of transaction ¥17,341 million in the year ended March 31, 2013, ¥17,163 million in the year ended March 31, 2012 — — Amount name Balance at end of year Transaction amount 19. Per share information Basic and diluted net assets per share and net income per share for the years ended March 31, 2013 and 2012, were 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 interests Net assets allocated to capital stock Yen 2013 ¥581.05 ¥38.43 2012 ¥505.72 ¥39.89 Millions of yen 2013 2012 U.S. dollars 2013 $6.18 $0.41 Thousands of U.S. dollars 2013 ¥824,451 ¥719,285 $8,769,822 12,371 (12,371) 12,439 (12,439) 131,592 (131,592) ¥812,080 ¥706,846 $8,638,230 Number of shares of capital stock outstanding at ﬁ scal year end used in calculation of net assets per share (thousand) 1,397,600 1,397,691 1,397,600 (b) Net income per share Net income Amount not allocated to capital stock Net income allocated to capital stock Weighted-average number of shares of capital stock (thousand) Millions of yen 2013 ¥53,712 — 2012 ¥55,766 — ¥53,712 ¥55,766 1,397,651 1,397,872 Thousands of U.S. dollars 2013 $571,343 — $571,343 1,397,651 As the Company had no dilutive securities at March 31, 2013 and 2012, the Company does not disclose diluted net income per share for the years ended March 31, 2013 and 2012. Asahi Kasei Annual Report 2013 77 20. Borrowings (a) Bonds payable at March 31, 2013 and 2012, comprised the following: Unsecured 1.90% Euro yen bonds due in 2013 (of which, current portion of bonds) Unsecured 1.46% yen bonds due in 2019 Unsecured 0.30% yen bonds due in 2017 Total (of which, current portion of bonds) Note 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, 2013, are as follows: Year ending March 31 2014 2015 2016 2017 2018 2019 and thereafter (b) Loans payable at March 31, 2013 and 2012, comprised the following: Millions of yen 2013 ¥5,000 (¥5,000) 20,000 20,000 ¥45,000 (¥5,000) 2012 ¥5,000 (¥—) 20,000 — ¥25,000 (¥—) Millions of yen ¥5,000 — — — 20,000 20,000 ¥45,000 Millions of yen Short-term loans payable with interest rate 0.52% Current portion of long-term loans payable with interest rate 1.71% Current portion of lease obligations with interest rate 1.94% 2013 ¥78,725 34,319 2,415 Long-term loans payable (except portion due within one year) with interest rate 0.77% 146,929 Lease obligations (except portion due within one year) with interest rate 1.50% Commercial paper with interest rate 0.10% (due within one year) 4,051 70,000 ¥336,439 2012 ¥44,751 29,739 2,207 62,710 4,707 15,000 ¥159,114 Thousands of U.S. dollars 2013 $53,186 ($53,186) 212,743 212,743 $478,672 ($53,186) Thousands of U.S. dollars $53,186 — — — 212,743 212,743 $478,672 Thousands of U.S. dollars 2013 $837,411 365,057 25,689 1,562,908 43,091 744,602 $3,578,758 Note 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, 2014, are as follows: Long-term loans payable Lease obligations Year ending March 31 Millions of yen 2015 2016 2017 2018 2019 and thereafter ¥18,747 30,217 27,470 16,288 ¥54,208 Thousands of U.S. dollars $199,415 321,423 292,203 173,258 $576,620 Millions of yen ¥1,778 1,342 800 119 ¥13 Thousands of U.S. dollars $18,913 14,275 8,510 1,266 $138 78 Asahi Kasei Annual Report 2013 Report of Independent Auditors Financial Section Asahi Kasei Annual Report 2013 79 Major Subsidiaries and Afﬁ liates As of April 1, 2013 Main products/business line Chemicals Packaging products and solutions Specialty chemicals Cling ﬁ lm, other household products Aluminum paste Sale of civil engineering materials Shotgun cartridges Water treatment equipment, environmental chemicals Processed plastic products Synthetic rubber Polystyrene Biaxially oriented polystyrene sheet Silicone Industrial explosives Coloring and compounding of performance resin Compounded performance resin operations Sale of purging compound Acrylonitrile, sodium cyanide Sale of adipic acid High-performance HDI-based polyisocyanate Polyacetal Industrial ﬁ ltration membranes and systems Sale of performance resin Sale of performance resin Sale of performance resin Company Chemicals Segment Asahi Kasei Chemicals Corp.* Asahi Kasei Pax Corp.* Asahi Kasei Finechem Co., Ltd.* Asahi Kasei Home Products Corp.* Asahi Kasei Metals Ltd.* Asahi Kasei Geotechnologies Co., Ltd. Asahi SKB Co., Ltd. Asahi Kasei Clean Chemical Co., Ltd. Asahi Kasei Technoplus Co., Ltd.* Japan Elastomer Co., Ltd.* PS Japan Corp.* Sundic Inc. Wacker Asahikasei Silicone Co., Ltd. Kayaku Japan Co., Ltd. Asahi Kasei Plastics North America, Inc.* Asahikasei Plastics (America) Inc.* Sun Plastech Inc.* Tong Suh Petrochemical Corp., Ltd.* Asahi Kasei Chemicals Korea Co., Ltd. Asahi Kasei Performance Chemicals Corp.* Asahi Kasei POM (Zhangjiagang) Co., Ltd.*** Asahi Kasei Microza (Hangzhou) Co., Ltd.* Asahikasei Plastics (Shanghai) Co., Ltd. Asahi Kasei Plastics (Guangzhou) Co., Ltd. Asahi Kasei Plastics (Hong Kong) Co., Ltd. Asahikasei (Suzhou) Plastics Compound Co., Ltd. Coloring and compounding of performance resin Asahi Kasei Synthetic Rubber Singapore Pte. Ltd.* Synthetic rubber Performance resin Asahi Kasei Plastics Singapore Pte. Ltd.* PPE powder Polyxylenol Singapore Pte. Ltd.* Coloring and compounding of performance resin Asahikasei Plastics (Thailand) Co., Ltd. Acrylonitrile, methyl methacrylate PTT Asahi Chemical Co., Ltd. Asahi Kasei Plastics Europe SA/NV* Sale of compounded performance resin Fibers Segment Asahi Kasei Fibers Corp.* Asahi Kasei Intertextiles Corp.*, **** DuPont-Asahi Flash Spun Products Co., Ltd. Hangzhou Asahikasei Spandex Co., Ltd.* Hangzhou Asahikasei Textiles Co., Ltd.* Formosa Asahi Spandex Co., Ltd. Asahi Chemical (HK) Ltd.* Asahi Kasei Spunbond (Thailand) Co., Ltd.* Thai Asahi Kasei Spandex Co., Ltd.* Asahi Kasei Spandex Europe GmbH* Asahi Kasei Fibers Italy SRL* Asahi Kasei Fibers Deutschland GmbH Homes Segment Asahi Kasei Homes Corp.* Asahi Kasei Fudousan Residence Corp.* Asahi Kasei Jyuko Co., Ltd.* Asahi Kasei Mortgage Corp.* Asahi Kasei Reform Co., Ltd.* Asahi Kasei Home Construction Corp.* Asahi Kasei Chintai Support Corp.* Fibers, textiles Processing of ﬁ bers and textiles Flash spun products Spandex Warp-knit spandex textiles Spandex Promotion and marketing of ﬁ bers and textiles Spunbond nonwovens Spandex Spandex Sale of cupro cellulosic ﬁ ber Sale of artiﬁ cial suede Housing ¥ Real eatate development, brokerage, and related business ¥ ¥ Steel frames ¥ Financial services ¥ Home maintenance and remodeling ¥ Construction of homes ¥ Apartment rental insurance Paid-in capital (million) Equity interest (%) 3,000 490 325 250 250 132 100 100 160 1,000 5,000 1,500 1,050 60 ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ ¥ US$ US$ US$ 1 KRW 237,642 KRW 1,500 149 CNY 125 CNY 69 CNY 18 CNY 10 US$ 2.6 US$ 50 CNY 125 US$ 46 US$ 35 US$ THB 140 THB 14,246 A 5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.4 75.0 62.1 50.0 50.0 50.0 21.7 ** 100.0 17.8 ** 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 51.0 100.0 100.0 70.0 100.0 48.5 100.0 ¥ ¥ ¥ CNY CNY NT$ HK$ THB THB A A A 3,000 80 450 154 78 1,003 65 900 1,350 100.0 100.0 50.0 100.0 82.5 50.0 100.0 90.0 60.0 19.6 ** 100.0 100.0 100.0 3 0.3 3,250 3,200 2,820 1,000 250 100 50 100.0 100.0 100.0 100.0 100.0 100.0 100.0 * Consolidated subsidiary ** Including capital reserve *** As of August 2013 **** As of October 2013 80 Asahi Kasei Annual Report 2013 Additional Information Additional Information Paid-in capital (million) Equity interest (%) ¥ ¥ ¥ 3,000 200 50 ¥ 3,000 ¥ 3,000 ¥ 300 ¥ 50 ¥ 50 50 ¥ KRW 7,962 2.9 US$ 820 KRW 181 CNY 143 CNY 14 CNY 10 NT$ 1 NT$ 49 NT$ 326 NT$ 387 NT$ A 3.0 A 3.4 0.3 £ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 80.6 51.0 50.0 100.0 100.0 100.0 3,000 3,000 140 100.0 ¥ 100.0 ¥ 100.0 ¥ 49** 100.0 US$ 100.0 30 US$ 100.0 0.5 US$ 100.0 KRW 1,000 100.0 165 CNY 100.0 NT$ 5 A 100.0 17.8 A 100.0 0.5 A 100.0 0.1 100.0 0.1 YTL US$ ¥ 1,723 ** 100.0 100.0 10 Construction materials Installation of piles Exterior wall panel installation Electronic devices Electronic materials Epoxy resin LSIs Glass fabric Hall elements Energy and electronic materials Sale of LSIs Electronic devices marketing and technical support Electronic devices marketing and technical support Electronic devices marketing and technical support Sale of pellicles Photosensitive dry ﬁ lm Glass fabric Glass fabric Electronic devices marketing and technical support Sale of photopolymer, printing-plate making systems Sale of photopolymer, printing-plate making systems Pharmaceuticals Medical devices, medical systems Medical devices Clinical trials for new drugs, sale of pharmaceuticals Bioprocess equipment and systems Sale of medical devices, medical systems Sale of medical devices, medical systems Hemodialyzers; sale of medical devices Sale of medical devices, medical systems Sale of medical devices, medical systems Sale of virus removal ﬁ lters Pharmaceuticals Sale of medical devices, medical systems Critical care devices and systems Sale of critical care devices in Japan Main products/business line Company Construction Materials Segment Asahi Kasei Construction Materials Corp.* Asahi Kasei Foundation Systems Corp.* Asahi Kasei Extech Corp.* 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 E-materials Korea Inc.* AKM Semiconductor, Inc.* Asahi Kasei Microdevices Korea Corp. Asahi Kasei Electronics Materials (Suzhou) Co., Ltd.* Photosensitive dry ﬁ lm Asahi Kasei Electronics Materials (Changshu) Co., Ltd. Photosensitive dry ﬁ lm Asahi Kasei Microdevices (Shanghai) Co., Ltd. Asahi Kasei Microdevices Taiwan Corp. Asahi Kasei EMD Taiwan Corp. Asahi Kasei Wah Lee Hi-Tech Corp.* Asahi-Schwebel (Taiwan) Co., Ltd.* Nittobo Asco Glass Fiber Co., Ltd. Asahi Kasei Microdevices Europe SAS Asahi Photoproducts (Europe) SA/NV* Asahi Photoproducts (UK) Ltd.* Health Care Segment Asahi Kasei Pharma Corp.* Asahi Kasei Medical Co., Ltd.* Med-Tech Inc.* Asahi Kasei Pharma America Corp.* Asahi Kasei Bioprocess, Inc.* Asahi Kasei Medical America Inc.* Asahi Kasei Medical Trading (Korea) Co., Ltd.* Asahi Kasei Medical (Hangzhou) Co., Ltd.* Asahi Kasei Medical Trading (Taiwan) Co., Ltd.* Asahi Kasei Medical Europe GmbH* Asahi Kasei Bioprocess Europe SA/NV* Asahi Pharma Spain, SL Asahi Kasei Medical Trading Ltd. Sti.* Critical Care Segment ZOLL Medical Corporation* Asahi Kasei ZOLL Medical Corp.* Others Asahi Research Center Co., Ltd.* Asahi Kasei Engineering Corp.* Asahi Kasei Trading Co., Ltd.* Asahi Kasei Commerce Co., Ltd.* Asahi Kasei Amidas Co., Ltd.* AJS Inc. Asahi Organic Chemicals Industry Co., Ltd. Asahi Kasei America, Inc.* Asahi Kasei Holdings US, Inc.* Crystal IS, Inc.* Asahi Kasei (China) Co., Ltd.* Asahi Kasei India Pvt. Ltd. ¥ Information and analysis ¥ Plant, equipment, process engineering ¥ Sale of Asahi Kasei products ¥ Sale of Asahi Kasei products ¥ Employment agency, consulting ¥ Computer software, IT systems ¥ Synthetic resin, fabricated plastic products US$ Business support services Holding company of ZOLL US$ Development of aluminum nitride substrates and UV LEDs US$ CNY Investment and business support services INR Business support services 1,000 400 98 94 80 800 5,000 0.1 100.0 100.0 100.0 100.0 100.0 49.0 30.1 100.0 1,723 ** 100.0 31.9** 100.0 100.0 275 100.0 45 * Consolidated subsidiary ** Including capital reserve Asahi Kasei Annual Report 2013 81 Company Information Corporate Proﬁ le (as of March 31, 2013) Company Name Asahi Kasei Corporation Date of Establishment May 21, 1931 Paid-in Capital ¥103,389 million Employees 28,363 (consolidated) 1,138 (non-consolidated) Asahi Kasei Group Ofﬁ ces Asahi Kasei Corporation Core Operating Companies 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 Asahi Kasei (China) 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 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 America, Inc. 535 Madison Avenue, 33rd Floor New York, NY 10022 USA Phone: +1-212-371-9900 Fax: +1-212-371-9050 Asahi Kasei India Pvt. Ltd. The Capital 801C, Plot No.C70, G Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 India Phone: +91-22-6710-3962 82 Asahi Kasei Annual Report 2013 Asahi Kasei Chemicals 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3200 Asahi Kasei Fibers 3-3-23 Nakanoshima, Kita-ku Osaka 530-8205 Japan Phone: +81-6-7636-3500 Asahi Kasei Homes 1-24-1 Nishi-shinjuku, Shinjuku-ku Tokyo 160-8345 Japan Phone: +81-3-3344-7111 Asahi Kasei Construction Materials 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3500 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 Pharma 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3600 Asahi Kasei Medical 1-105 Kanda Jinbocho, Chiyoda-ku Tokyo 101-8101 Japan Phone: +81-3-3296-3750 ZOLL Medical Corporation 269 Mill Rd., Chelmsford, MA 01824-4105 USA Phone: +1-978-421-9655 Investors Information (As of March 31, 2013) 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 Mitsui Trust Bank, Ltd. Independent Auditors PricewaterhouseCoopers Aarata Number of Shareholders 109,298 Additional Information Largest Shareholders % of equity* Master Trust Bank of Japan, Ltd. (trust account) Nippon Life Insurance Co. Japan Trustee Services Bank, Ltd. (trust account) Asahi Kasei Group Employee Stockholding Assn. Sumitomo Mitsui Banking Corp. SSBT OD05 Omnibus Account Treaty Clients The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account Mizuho Corporate Bank, Ltd. Tokio Marine & Nichido Fire Insurance Co., Ltd. Sumitomo Life Insurance Co. * Percentage of equity ownership after exclusion of treasury stock. 5.71 5.22 4.27 3.63 2.53 1.98 1.47 1.45 1.45 1.40 Distribution by Type of Shareholder Distribution by Number of Shares Held Japanese financial institutions 43.89% Foreign investors 27.43% Japanese individuals and groups 22.52% Other Japanese companies 4.19% Japanese securities companies 1.61% Treasury stock 0.36% Less than 1,000 0.28% 1,000–9,999 11.85% 10,000–99,999 7.09% 100,000 or more 80.78% Stock Chart Share price (¥) 800 600 400 200 0 Volume (thousand shares) 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 ’10/10 11 12 ’11/1 2 3 4 5 6 7 8 9 10 11 12 ’12/1 2 3 4 5 6 7 8 9 10 11 12 ’13/1 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 2013 83 旭化成e_c1_0920入稿.indd c4 旭化成e_c1_0920入稿.indd c4 13/09/30 17:22 13/09/30 17:22 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 3 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 2013.10 旭化成e_c1_0920入稿.indd c1 旭化成e_c1_0920入稿.indd c1 13/09/30 17:22 13/09/30 17:22

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