T
o
r
a
y
I
n
d
u
s
t
r
i
e
s
,
I
n
c
.
A
n
n
u
A
l
R
e
p
o
R
t
2
0
1
3
Defining The Way
AnnuAl RepoRT 2013
April 1, 2012–March 31, 2013
One goal of this year’s Annual Report is to inform our stakeholders about
the characteristics and strengths that Toray has evolved through more
than 80 years of experience, and about our vision and future direction.
I believe that materials have the power to bring about fundamental transformations in
our lives and culture. That is why I am proud to be involved in the management of Toray
as it fulfills its vital role as a materials manufacturer.
Toray was established in 1926 to manufacture viscous rayon, the world’s first man-
made fiber. In the eight decades since, we have become one of the world’s leading
manufacturers of advanced materials. The ultimate goal of Toray Group is to become the
world’s number one manufacturer of advanced materials. We continue to use the poten-
tial of the materials that we have created during those years to provide solutions for the
many challenges confronting the human race in the 21st century, including global envi-
ronment problems.
In this year’s Annual Report, we tell the corporate story of Toray, so that, by knowing
our origins and heritage, stakeholders might more fully understand our characteristics
as a company, the strengths acquired from our wide-ranging experience, and our think-
ing—together, they define our way.
Co nTe nT s
04 The Toray story
20 profile
21 Consolidated Financial Highlights
22 To Toray stockholders and Investors
28 Toray’s Global operations
34 Toray Group segments
36 Fibers & Textiles
37 Plastics & Chemicals
38 IT-related Products
39 Carbon Fiber Composite Materials
40 Environment & Engineering
41 Life Science
42 R&D and Intellectual property
48 sustainable Management
58 Corporate Information
61 Financial section
Cautionary statement with respect to forward-looking statements
Descriptions of predicted business results, projections and business
plans contained in this annual report are based on forecasts and as-
sumptions regarding the future business environment made at the pres-
ent time. This annual report is not a guarantee of the Company’s future
97 Investor Information and Corporate Data
business performance.
04
TOray InDuSTrIES, InC.
Akihiro Nikkaku
President
05
New Basic Materials — the Challenge of the Unknown
“Finally done it. Produced the wonderful new fiber. Quality excellent.”
Such a message was telegrammed to Yunosuke Yasukawa, Chairman of Toyo Rayon
Co., Ltd. (now Toray Industries, Inc.), on August 16, 1927 by James Starley, who was
then chief engineer at the Shiga Plant.
In that era, the development of new technology was led by advanced companies in
European countries, especially Germany, the United Kingdom and Italy. The creation of
new industries was an urgent priority for Japan. Toray furthered that goal by recruiting
from advanced countries 27 specialists in various fields and building a manufacturing
facility for chemical fibers to recreate the process for rayon, the leading advanced
fiber of its day. In August 1927, they achieved their breakthrough. Named in the United
States, rayon suggests “bright thread,” highlighting its similarity to silk.
In the same year that Toray began production of artificial fibers in Japan, Charles
Lindbergh made the first non-stop flight across the Atlantic. It was also a time when
more and more products of modern science were beginning to appear in day-to-day life.
This was the beginning of Toray’s history as a company that uses the most ad-
vanced chemistry of the era to create new materials and prepare for challenges just
beyond the horizon.
06
Toray IndusTrIes, Inc.
07
AnnuAl RepoRt 2013 08
Toray IndusTrIes, Inc. From its founding and into the 1930s, Toray
expanded its major plants in Japan while steadily
developing its own technology. The next chal-
lenge, in the late 1930s, was the development of
nylon fiber, the first new material created using
synthetic chemistry in the history of mankind.
Shortly after the end of World War II, Toray
began manufacturing nylon fiber using original
technology. The year was 1946.
The American company DuPont had pioneered
the development of nylon and was acquiring pat-
ents. Toray decided that the best way to establish
a full-scale nylon manufacturing business was to
enter into a technology agreement with DuPont,
which would also prevent competitors from
using DuPont technology to enter Japan’s nylon
market. In 1951, Toray acquired exclusive rights
to use DuPont’s patents relating to nylon fiber.
The agreement did not encompass the provision
of know-how. Yet, Toray had accumulated fiber-
making technology through its experience with
rayon and was confident in the future potential of
synthetic chemistry. All corporate resources were
therefore focused on the creation of a full-scale
nylon business.
Toray learned much through the develop-
ment and commercialization of nylon,
A New Era Built on Synthetic Chemistry
including the importance of R&D strategies for
advanced materials, and patent strategies in
the international business arena. In the 1950s
and 1960s, Toray earned vast profits as Japan’s
first industrial producer of nylon. Those profits
would provide the foundation for Toray’s future
growth and development.
09
AnnuAl RepoRt 2013 Surviving the Shocks
By the early 1960s Toray was the most profitable company in Japan. In addition to nylon, it had begun to produce
polyester fibers in 1958 and acrylic fibers in 1964, giving it a business based on the three major synthetic fibers.
However, its profits depended on exports, which were almost one-half of its sales. From the mid-1960s, newcom-
ers began to move into the nylon and polyester markets, and the overheated production triggered a structural
recession in the synthetic fiber industry in Japan.
In 1971, the value of the yen began to rise as a result of the Nixon Shock, while the signing of the Japan-U.S.
Textile Agreement caused a decline in exports to the United States. The 1973 and 1979 oil shocks added to the
challenges of this prolonged period of tribulation.
In 1970, the name of the company was changed from Toyo Rayon to Toray. Toray also began to work toward
sustainable growth through diversification into a number of new business areas that today encompass plastics,
which includes films and resins, new materials, such as carbon fiber, and life sciences business.
Toray also expanded its production operations into Southeast Asia and other overseas locations to create a
structure that would be less vulnerable to exchange rate fluctuations and better able to meet the needs of customers
that were also expanding globally.
10
Toray IndusTrIes, Inc.
11
AnnuAl RepoRt 2013 Global Operations
12
Toray IndusTrIes, Inc. The overseas production activities of Toray
Group began 50 years ago, in 1963, with the
start-up of a fiber production operation in
Thailand. Our production operations in Indone-
sia and Malaysia followed only 10 years later.
Until the 1980s, Toray struggled to earn
reliable income from these operations, in part
because of the negative impact of the oil shocks
and other factors. Toray achieved a clear
turnaround in Southeast Asia through in-depth
cost management and product quality raised
to a level at which it was possible to export to
Europe and the United States.
The success of overseas businesses cannot
be ensured simply by transferring technology
and management systems. It requires efforts
over many years, including the establishment of
forward-looking management strategies, local
training of employees and the establishment of
shared values.
Toray Group’s overseas infrastructure today
serves as a production and supply network for
global markets. Achievements based on our
past experience form the foundations for our
current global operations strategy.
13
AnnuAl RepoRt 2013 Toray’s DNA
Throughout its history, Toray has worked constantly to develop advanced technology to support its role as a manu-
facturer of materials. A key part of the corporate DNA that has been handed down within the Toray organization
is our commitment to research and technology development to create the keys for our success in the future. This
belief is manifested in a constant drive to maintain and strengthen our research and development capabilities.
Toray’s core technologies are organic synthetic chemistry, polymer chemistry, biotechnology and nano-
technology. Our efforts to achieve new advances in these areas individually also lead to the creation of new
integrated technologies.
One of the characteristics that make up Toray DNA is our unique approach to marketing through strategic
partnerships with customers. In addition to the creation of new materials, Toray has also focused continuously
on the development of applications for those materials.
We carefully monitor contemporary needs and work with midstream and downstream partner companies to offer
new fashion and lifestyle ideas. This commitment is as much a part of Toray DNA as technology development.
14
Toray IndusTrIes, Inc. 15
AnnuAl RepoRt 2013 16
Toray IndusTrIes, Inc. Contributing to Society through
Creation of New Value
Carbon fiber supplied by Toray makes up
50% of the airframe weight of the Boeing 787
Dreamliner, which made its first commercial
flight in 2011. The full acceptance of carbon
fiber as a material for structural aircraft
parts was a long-cherished dream for Toray,
which has long led the world in carbon fiber
development. By using carbon fiber, it has been
possible to reduce the weight of the airframe,
which in turn reduces the aircraft’s carbon
dioxide emissions by 20% and makes air
transport more earth-friendly.
As the world’s top manufacturer of reverse
osmosis membranes for seawater desalination
plants, Toray Group is also helping to alleviate
water shortages in various parts of the world.
The water problem ranks alongside the energy
problem as one of the key issues confronting
mankind in the 21st century. By helping to
solve this problem, Toray is making a major
contribution to society.
In the field of energy-related technologies,
Toray Group manufactures materials for
solar panels, fuel cells and other new energy
systems. Toray is also a leader in green in-
novation, including biomass-derived fibers and
resins. In addition, Toray will continue to take
up the challenges of contributing to humanity
and society through life innovation activities
leading to creation of revolutionary new phar-
maceuticals and medical devices.
17
AnnuAl RepoRt 2013
Toward a Brighter Future
We cannot bring about big changes simply by tweaking the shape of existing things.
However, we believe that we will help to create new products that can fundamentally
transform people’s lives by modifying the materials from which all things are made.
That belief drives Toray’s efforts to develop advanced materials.
In the same light, we will continue to work toward the solution of global environ-
mental problems and other issues affecting all of mankind through green innovation,
and we will also help to improve quality of life through our life innovation activities.
We believe that the mission of Toray Group is to offer our customers advanced mate-
rials made possible through continuing innovation driven by the power of chemistry.
18
Toray IndusTrIes, Inc.
Toray’s way
19
AnnuAl RepoRt 2013 Toray Profile: Overview and Philosophy
We are involved in global manufacturing, marketing and sales in three business categories covering six segments:
Foundation Businesses (Fibers & Textiles, Plastics & Chemicals), Strategically Expanding Businesses
(IT-related Products, Carbon Fiber Composite Materials) and Intensively Developing and
Expanding Businesses (Environment & Engineering, Life Science).
Our products are found in many everyday items, including apparel, interior products,
home appliances and electronic products, as well as in materials and parts for automobiles and aircraft,
IT products and water treatment facilities.
Today, we are active in 23 countries and regions. To successfully conduct our day-to-day operations,
we rely on the strong chemistry that we have created with our stakeholders, including Toray Group employees,
our customers and business partners, the people of the countries and regions in which we are active,
our stockholders and people working for financial institutions.
“Contributing to society through the creation of new value with innovative ideas, technologies and
products”—this is Toray Group’s corporate philosophy. We will continue to put this philosophy into practice
by creating new value in the spirit of respect for all of our stakeholders.
CoRpoRATe pHIlosopHy
Contributing to society through the creation of new value with innovative ideas, technologies and products
CoRpoRATe MIssIons
For our customers
To provide new value to our customers through high-quality products and superior services
For our employees
To provide our employees with opportunities for self development in a challenging environment
For our stockholders To provide our stockholders with dependable and trustworthy management
For society
To establish ties and develop mutual trust as a responsible corporate citizen
net sales
(Billions of yen)
2,000
1,500
1,000
500
0
operating Income and
operating Income to net sales
(Billions of yen)
120
80
40
0
net Income (loss)
(Billions of yen)
80
60
40
20
0
-20
(%)
7
6
5
4
3
2
1
0
Mar/
‘09
‘10
‘11
‘12
‘13
‘14
(Forecast)
Mar/
‘09
‘10
‘11
‘12
‘13
‘14
(Forecast)
Mar/
‘09
‘10
‘11
‘12
‘13
‘14
(Forecast)
Operating income (left)
Operating income to net sales (right)
20
Toray IndusTrIes, Inc.
Consolidated Financial Highlights
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31
For the year:
net sales
Operating income
net income (loss)
Cash flows from operating activities
Free cash flows
At year-end:
Total assets
net assets
Millions of yen
Thousands of
u.S. dollars
2013
2012
2011
2010
2009
2013
¥1,592,279
¥1,588,604
¥1,539,693
¥1,359,631
¥1,471,561
$16,939,138
83,436
48,477
100,815
107,721
64,218
104,410
(6,710)
408
100,087
57,925
129,214
(50,734)
78,480
40,107
(14,158)
166,215
36,006
(16,326)
38,447
887,617
515,713
1,072,500
(121,723)
(113,373)
(1,143,883)
44,492
(74,926)
(71,383)
¥ 1,731,830
¥ 1,581,501
¥1,567,470
¥1,556,796
¥1,523,603
$18,423,723
779,615
674,149
640,970
518,216
512,610
8,293,777
Cash flows used in investing activities
(107,525)
(104,002)
per share of common stock (in yen and u.s. dollars):
net income (loss) :
Basic
Diluted
Cash dividends
net assets
Ratios:
Operating income to net sales
Equity ratio
rOa
rOE
Debt/equity ratio (times)
¥ 29.75
¥ 39.41
¥ 36.41
¥ (10.12)
¥ (11.66)
$ 0.32
28.90
10.00
444.95
5.2%
41.9%
5.0%
7.2%
0.73
37.46
10.00
384.90
6.8%
39.7%
6.8%
10.5%
0.77
34.43
7.50
363.90
6.5%
37.8%
6.4%
10.9%
0.83
—
5.00
—
7.50
336.65
335.04
0.31
0.11
4.73
2.9%
30.3%
2.6%
(3.0)%
1.34
2.4%
30.8%
2.2%
(3.1)%
1.42
Note: U.S. dollar amounts have been converted from yen at the exchange rate of ¥94 = US$1, the approximate exchange rate prevailing on March 31, 2013.
Cash Flows
(Billions of yen)
180
net Assets and equity Ratio
Cash Dividend per share
(Billions of yen)
800
（%）
50
(Yen)
10
90
0
-90
-180
600
400
200
0
40
30
20
10
0
8
6
4
2
0
Mar/
‘09
‘10
‘11
‘12
‘13
Mar/
‘09
‘10
‘11
‘12
‘13
Mar/
‘09
‘10
‘11
‘12
‘13
‘14
(Forecast)
Cash flows from operating activities
Cash flows used in investing activities
Free cash flows
Net assets (left)
Equity ratio (right)
note: Forecast for year ended March 31, 2014, announced on august 6, 2013.
21
AnnuAl RepoRt 2013 To Toray Stockholders and Investors
Toray’s way
Toray Group is working proactively to achieve sustainable revenue and profit growth
under a long-term corporate vision with a 10-year time frame, combined with
medium-term management programs designed to realize that vision.
akihiro nikkaku
President
22
Toray IndusTrIes, Inc. Toray’s way
Group-wide projects under the Medium-term Management program—project Ap-G 2013
Green Innovation Business expansion (GR) project
Global development of Green Innovation Businesses based on our strengths in chemistry
Asia and emerging Country Business expansion (Ae) project
proactive development of business in Asia and emerging countries in other regions
Total Cost Reduction (TC-II) project
establishment of a robust business footing through initiatives based on group-wide projects
To achieve our long-term corporate vision, we are pursuing group-wide initiatives based
on the Green Innovation Business Expansion Project, the Asia and Emerging Country
Business Expansion Project and the Total Cost Reduction Project.
I would like to begin this report by expressing our profound
gratitude to stockholders and investors for their continuing
support.
In the year ended March 31, 2013 (fiscal 2012), we faced
challenging conditions in the world economy. real economic
trends in Europe entered a prolonged recession under the im-
pact of Europe’s sovereign debt problems, and this problem
was compounded by economic deceleration in China and the
slowing pace of economic recovery in the united States.
The Japanese economy followed a gradual recovery
trend, driven in part by reconstruction demand related to
the Great East Japan Earthquake. However, the economy
marked time from the summer of 2012 onwards, mainly
because of the slowing performance of overseas economies.
Some economic indicators began to show signs of improve-
ment, including the correction of the overvalued yen and the
revitalization of the stock market, in response to measures
implemented by the new abe administration that took office
in late 2012.
Toray Group is responding to this business environment
by working under its medium-term management program—
Project aP-G 2013—to implement growth strategies cen-
tering on business expansion in growth business fields and
growth regions. at the same time, we have further intensi-
fied our efforts to strengthen our total cost competitiveness.
We are seeking new growth paths through
shifting to a proactive management stance
under our medium-term management
program—Project AP-G 2013.
Since 2002, Toray Group has adopted long-term corporate
visions with a 10-year time frame and medium-term manage-
ment programs covering periods of 3–5 years. We have main-
tained a process of management reforms while progressively
revising our visions and programs.
In april 2011, we adopted a new long-term corporate
vision—aP-Growth TOray 2020—as an integrated manage-
ment guideline for our efforts to build a corporate group that
continually increases revenues and profits. We are currently
implementing Project aP-G 2013, a medium-term manage-
ment program covering the first three years under aP-Growth
TOray 2020. Our aims under this program are to expand
business in growth business fields and growth regions, and to
establish a robust business footing by cost reductions.
under Project aP-G 2013, we are seeking new paths for
growth through shifting to a proactive management stance,
while maintaining our commitment to management reforms
started under previous medium-term management programs.
The year ended March 2013 was the middle year of Proj-
ect aP-G 2013. The consolidated net sales of Toray Group
increased by 0.2% over the previous year’s level to ¥1,592.3
billion. Operating income was 22.5% lower at ¥83.4 billion,
and net income declined by 24.5% to ¥48.5 billion.
Business expansion in growth business fields and growth
regions was reflected in increased net sales. However, income
23
AnnuAl RepoRt 2013
To Toray Stockholders and Investors
Trends in net sales of
Green Innovation Business
(Billions of yen)
3,000
2,500
2,000
1,500
1,000
500
0
Fiscal/
‘10
‘11
(Actual)
‘12
‘13
(Initial Target)
‘15
‘20
Around
(Vision)
Total net sales
Net sales of Green Innovation Business
Trends in net sales and Ratio of Green Innovation Business
(Billions of yen)
Fiscal 2010
(actual)
Fiscal 2012
(actual)
Around 2015
(Vision)
Around 2020
(Vision)
net sales
ratio to total net sales
378.0
25%
450.4
28%
600
30%
1,000
33%
Our Green Innovation Businesses continue to expand steadily,
especially in the area of carbon fiber composite materials and
water treatment membranes.
was lower year on year, in part because of pressure on selling
prices due to a global downturn in demand.
On the other hand, we continued to make steady progress
in pursuing the growth strategies and strengthening the earn-
ings base, as defined in Project aP-G 2013.
Continuing Progress under
Project AP-G 2013
under Project aP-G 2013, we are implementing group-wide
the Green Innovation Business Expansion (Gr) Project, the
asia and Emerging Country Business Expansion (aE) Project
and the Total Cost reduction (TC-II) Project. These three proj-
ects are expected to deliver major benefits through group-
wide cross-organizational activities.
Green Innovation Business expansion (GR) project
The aim of the Gr Project is to achieve growth by using the
power of chemistry to contribute to the solution of global
problems relating to the environment, resources and energy.
We have identified four core business areas for prioritized
technology development and business expansion, outlined
below:
1. Carbon fiber composite materials
We are the world’s no. 1 manufacturer of carbon fiber
composite materials, which are used in a wide range of ap-
plications, and we aim to achieve further rapid expansion.
2. Water treatment membranes
We are also the leading company in the area of water treat-
ment membranes, and we are determined to consolidate our
no. 1 position by stepping up our global expansion efforts.
3. Battery materials for solar cells, fuel cells and lithium-ion
batteries
We are determined to use the total capabilities of Toray
Group to build a position for ourselves as the world’s top
manufacturer in the area of battery materials.
4. Biomass materials
We will develop and commercialize new products using
plant-derived materials.
In the year ended March 2013, net sales from Green
Innovation Businesses amounted to ¥450.4 billion, or 28% of
total consolidated net sales. We aim to increase this to ¥600
billion by around 2015 and to ¥1,000 billion by around 2020.
Key GR project Topics in the year ended March 2013
l Carbon fiber composite materials: We acquired 100% of
the shares in DOME CarBOn MaGIC LTD. and 75% of
the shares in its production subsidiary in Thailand. These
companies are now Toray subsidiaries.
l Water treatment membranes: We received orders to
supply reverse osmosis (rO) membranes to the al Zawra
Desalination Plant in the Emirate of ajman and the Ghali-
lah Desalination Plant in the Emirate of ra’s al Khaymah in
the united arab Emirates.
l printing plates: We decided to build a new production
facility for Toray Textiles Central Europe s.r.o., a subsidiary
based in the Czech republic.
24
Toray IndusTrIes, Inc.
Trends in net sales of
Green Innovation Business
Trends in net sales in
Growth Countries and Regions
(Billions of yen)
3,000
Trends in net sales and Ratio of Growth Countries and Regions
(Billions of yen)
Fiscal 2010
(actual)
Fiscal 2012
(actual)
Around 2015
(Vision)
Around 2020
(Vision)
net sales
ratio to total net sales
540.3
35%
569.5
36%
900
45%
1,500
50%
2,500
2,000
1,500
1,000
500
0
Fiscal/
‘10
‘11
(Actual)
‘12
‘13
(Initial Target)
‘15
‘20
Around
(Vision)
Total net sales
Net sales in Growth Countries and Regions
We are building our business activities in growth countries and regions,
by investing in future growth and expansion and establishing or expanding
facilities in ASEAN countries, China and the Republic of Korea.
Asia and emerging Country Business expansion (Ae) project
Emerging countries in asia and other regions are expected
to achieve major growth in the years ahead. The goal of the
aE Project is to harness this growth potential by dynamically
expanding Toray Group’s business activities in these countries
and regions.
Initiatives under the aE Project center on a number of priority
goals. First, we aim to develop products to meet needs specific
to asia and emerging countries and to strengthen our market-
ing and sales capabilities in those countries. Second, we are
strengthening the infrastructure of existing production opera-
tions and establishing new facilities in markets where we are not
yet active. Third, we are speeding up the process of business
expansion by forming alliances with leading local companies.
Fourth, we are expanding our activities in the field of advanced
materials to keep pace with demand growth driven by the
expansion of high-net-worth and middle-class populations.
net sales in asian emerging countries totaled ¥569.5 billion in
the year ended March 2013. Our goal is to increase this to ¥900
billion by around 2015 and to ¥1,500 billion by around 2020.
Key Ae project Topics in the year under Review
l ASeAN: We decided to expand our production facilities
in Thailand for nylon fibers used in automobile airbags, to
establish a new resin compound facility in Indonesia and to
expand our vapor deposition processing capacity for food
packaging films in Malaysia.
l Republic of Korea: a new carbon fiber carbonization facility
became operational.
l China: We established a new resin compound company in
Chengdu.
l Emerging countries: We expanded our sales network in Bra-
zil, and the Istanbul Liaison Office of Toray International Inc.
opened for business.
Total Cost Reduction (TC-II) project
The TC-II Project is a group-wide initiative to establish a ro-
bust business footing by reducing variable costs and control-
ling fixed costs.
Our target for variable costs is to achieve a reduction of at
least 3% per annum (based on the year ended March 2011)
and a total three-year reduction of 10% during the three
years covered by Project aP-G 2013. In numerical terms, this
represents a reduction of more than ¥70 billion. Our strate-
gies for reaching this target include the extension of unit
consumption improvement methods used in Toray Japanese
plants to our group companies in Japan and overseas, the
reduction of procurement and logistics costs through initia-
tives linked to business strategies and the establishment of
global procurement systems. In the year ended March 2013,
variable costs were reduced by ¥24.6 billion, or 4.0% com-
pared with the previous year.
We have introduced a new indicator, the “Performance”
(P) indicator, as a benchmark for our efforts to maintain an ap-
propriate scale for fixed costs during this business expansion
phase. The P indicator is calculated by dividing the rate of in-
crease in fixed costs by rate of increase in marginal profit. We
will manage fixed costs for each business division by keeping
this indicator at 1.0 or lower, or by maintaining budget ratios.
In the year ended March 2013, we reduced fixed costs by
¥17.3 billion relative to budgets. However, with a P indicator
of 1.05, we failed to achieve a budget ratio of 1.00.
25
AnnuAl RepoRt 2013
To Toray Stockholders and Investors
Trends in operating Income
(Billions of yen)
300
250
200
150
100
50
0
Fiscal/
‘10
‘12
‘11
(Actual)
‘13
(Forecast)
‘15
‘20
Around
(Vision)
Vision Targets for long-term Financial Indicators
(Billions of yen)
Fiscal 2010
(actual)
Fiscal 2012
(actual)
Around 2015
(Vision)
Around 2020
(Vision)
net sales
Operating income
1,539.7
1,592.3
100.1
83.4
2,000
180
3,000
300
Under Project AP-G 2013, Toray Group is implementing growth strategies centering
on business expansion in growth business fields and growth regions, while also targeting
further improvement in total cost competitiveness.
We aim to achieve record income
in the year ending March 2014,
the final year of Project AP-G 2013.
AP-Growth TORAY 2020—
Enhancing the Value of Our Corporate Role
In the year ending March 2014, the world economy is still af-
fected by lingering uncertainty surrounding responses to the
European sovereign debt problem. However, the overall eco-
nomic environment is expected to follow a gradual recovery
trend driven by factors that include the growth of China and
other emerging economies, and expectations of economic
expansion in the united States.
although there is also uncertainty about the outlook for
the Japanese economy, economic performance is expected
to move gradually toward recovery thanks to a combination
of factors, including an export rally linked to the correction of
the overvalued yen, the emergence of post-earthquake recon-
struction demand and a rise in confidence based on expecta-
tions toward the economic policies of the abe administration.
Toray Group aims to achieve record sales and operating
income in the year ending March 2014 through a continuing
focus on initiatives under Project aP-G 2013 and through
concerted group-wide efforts to realize growth strategies and
strengthen our earnings base.
as mentioned earlier, in February 2011 we adopted a long-
term corporate vision, known as aP-Growth TOray 2020,
which encapsulates our vision for Toray around 10 years in
the future, and Project aP-G 2013, a medium-term manage-
ment program covering the first three-year period.
In addition to the expansion of business revenue and prof-
it and the achievement of further global business expansion,
we are also focusing on and the expansion of our Green In-
novation Businesses under our long-term corporate vision—
aP-Growth TOray 2020. Our aim is to build a future as a
corporate group capable of continually increasing revenues
and profits, while also proactively contributing to social
development and environmental stewardship and providing
high value to all stakeholders.
under our medium-term management program, Project
aP-G 2013, which is based on this long-term corporate
vision, we are pursuing growth strategies and implement-
ing comprehensive and powerful initiatives designed to
strengthen our corporate structure during this period of
challenging business conditions in Japan and overseas. We
are also undertaking facility investment aimed at global
expansion in our various business fields and making steady
progress on research and development efforts targeted
toward the creation of new products and technologies in
the future.
26
Toray IndusTrIes, Inc.
Toray’s way
The fundamental long-term focus of Toray Group is the continuing realization of our corporate
philosophy of “contributing to society through the creation of new value with innovative ideas,
technologies and products” based on the development of innovative advanced materials.
Toray Group aims to achieve sustainable growth by provid-
ing solutions to various social priorities through the measures
described above. We will continue to work toward the real-
ization of the group’s corporate philosophy of “contributing
to society through the creation of new value with innovative
ideas, technologies and products.”
Toray Group aims to maintain robust growth as one of the
world’s leading manufacturers of basic materials, while build-
ing a reputation as a good and trusted partner for society.
We look forward to the continuing support of our stock-
holders and investors.
We will help to build a brighter future for
society through our role as a supplier of
basic materials.
Toray Group remains fundamentally committed to our role
as a corporate group that is helping to build a brighter
future for society through the supply of basic materials and
development of advanced materials based on the power
of chemistry. We express this commitment in our corporate
slogan “Innovation by Chemistry.”
as the basic building blocks for all products, basic mate-
rials have the power to transform society intrinsically. as a
leading manufacturer of basic materials, we believe that we
must continue to play a pioneering role in meeting the chal-
lenge of technological innovation.
Because the development of advanced materials de-
pends on major breakthroughs, research and development
in this field requires a long-term perspective. Long-term
development is not sustainable without commitment, and I
believe that this commitment is the driving force for inno-
vation.
July 2013
President
27
AnnuAl RepoRt 2013 Toray’s Global Operations —Toray’s way
Global Expansion Guided by
Global Expansion Guided by
Global Expansion Guided by
Long-term Perspectives and
Long-term Perspectives and
Long-term Perspectives and
the “Made in Toray”* Spirit
the “Made in Toray”* Spirit
the “Made in Toray”* Spirit
Toray is continually strengthening and expanding its global production network
Toray is continually strengthening and expanding its global production network
Toray is continually strengthening and expanding its global production network
in Japan and overseas. That network is key to Toray’s ability to adapt flexibly to
in Japan and overseas. That network is key to Toray’s ability to adapt flexibly to
in Japan and overseas. That network is key to Toray’s ability to adapt flexibly to
exchange rate fluctuations and demand trends.
exchange rate fluctuations and demand trends.
exchange rate fluctuations and demand trends.
*“Made in Toray” guarantees that all Toray Group products, regardless of where in the world they are made, will always meet the same quality standards.
*“Made in Toray” guarantees that all Toray Group products, regardless of where in the world they are made, will always meet the same quality standards.
*“Made in Toray” guarantees that all Toray Group products, regardless of where in the world they are made, will always meet the same quality standards.
28
28
28
TOray InDuSTrIES, InC.
TOray InDuSTrIES, InC.
TOray InDuSTrIES, InC.
Global Expansion Guided by
Global Expansion Guided by
Global Expansion Guided by
Long-term Perspectives and
Long-term Perspectives and
Long-term Perspectives and
the “Made in Toray”* Spirit
the “Made in Toray”* Spirit
the “Made in Toray”* Spirit
Basic Strategy of Global Operations— Achieve growth through strong local roots
Toray began to develop overseas
production operations far earlier than
most Japanese companies. Toray
Group’s first overseas production
started in Thailand in 1963. Our pro-
duction network expanded to encom-
pass Southeast asia in the 1960s and
1970s, Europe and the united States
in the 1980s, and the republic of
Korea and China in the 1990s.
Today, Toray Group is building a
global operating structure based on
stronger organic cooperation between
overseas and Japanese facilities. This
structure has given Toray Group a key
advantage—the ability to adapt flex-
ibly to exchange rate fluctuations and
demand trends.
regardless of the country or region
in which they are made, all Toray
products must meet Toray Group’s
own standard of technology and qual-
ity according to “Made in Toray”. Our
plants in Japan support our global
growth strategy through their role as
mother plants, including research and
development focusing on advanced
and innovative technologies, the de-
velopment of advanced materials, and
the development and implementation
of innovative processes.
We target business expansion by
using this global network of produc-
tion facilities in Japan and overseas to
manufacture each item at the optimal
location. Our global expansion is driven
by our fundamental determination to
ensure that each production facil-
ity established goes on to put down
strong local roots and achieve growth
and success in partnership with local
communities.
50th Anniversary of
Business in Thailand
This year marks the 50th anniversary
of Toray Group’s first overseas pro-
duction operation, Thai Toray Textile
Mills, which was established in 1963 to
produce polyester-rayon blend fabrics.
Since then we have built a wide range
of business operations in Thailand,
including Luckytex (Thailand), which
spins polyester-cotton fibers, pro-
duces textiles for airbags, etc., and
weaves and dyes the fabrics, and Thai
Toray Synthetics, a manufacturer of
nylon and polyester filament yarns.
Thailand will continue to be a key
focus for the expansion of Toray
Group’s business activities in the
aSEan region.
In Indonesia, we established Cen-
tury Textile Industry, which produces
polyester-cotton blend fabrics, and
the polyester-rayon blend fabrics man-
ufacturer Indonesia Synthetic Textile
Mills, in 1972. Other companies were
subsequently established, includ-
ing production subsidiaries for nylon
filament yarns, high-performance
polypropylene, non-woven fabrics
and other products. These companies
achieved strong growth thanks to
their excellent cost competitiveness.
Our activities in Malaysia began
with the establishment of several tex-
tile production sites during the 1970s.
Today we have integrated production
operations spanning all stages from
fibers to textiles, including polyester
staple fibers, and spun, woven, dyed
and printed polyester-cotton blend
products. Our diverse business opera-
tions also include the production of
resins and films.
Science Foundations
Four Decades of Business
Development in Indonesia
and Malaysia
Toray first began to develop business
operations in Indonesia and Malaysia
40 years ago.
In 1993 and 1994, Toray established
science foundations in Indonesia,
Malaysia and Thailand. These founda-
tions contribute to the development
of scientific technology in the aSEan
region by supporting the improvement
and development of scientific technol-
ogy and culture in all three countries.
29
AnnuAl RepoRt 2013
Global Expansion of
Carbon Fiber Business
Expanding Our Global
Production Capacity to
Match Demand
Active Development of
New Applications
World demand for polyacrylonitrile
(Pan) carbon fibers expanded to
around 39,000 tons in 2012 and is
expected to remain on a steep growth
trend of 15% growth per year.
Toray leads the global carbon fiber
industry as the world’s number one
producer. Our global production net-
work consists of production facilities
in Japan, the united States, France
and the republic of Korea. We plan
to invest around ¥45 billion in these
four bases to increase our carbon fiber
production capacity by 6,000 tons per
year. This will bring Toray Group’s to-
tal capacity to 27,100 tons per year by
March 2015, enhancing our ability to
stably supply high-quality, high-grade
carbon fibers reliably to customers
throughout the world.
Toray Group is actively developing
new applications for carbon fibers.
In June 2011, we established a
joint venture with the German com-
pany Daimler to manufacture and sell
automobile parts made from carbon
fiber composite materials. This com-
pany has dramatically enhanced the
productivity of resin transfer molding
(rTM) technology based on thermo-
setting resin. It has started to supply
Daimler with mass-produced parts.
In april 2013, we acquired DOME
CarBOn MaGIC LTD., which has an
excellent reputation in the automobile
industry through its involvement in
racing car design and manufacturing.
DOME CarBOn MaGIC LTD., brings
advanced design and analysis technol-
ogies and prototyping capabilities—
together with a Thai manufacturing
subsidiary—giving Toray a robust,
vertically integrated supply chain with
excellent cost competitiveness.
We are also expanding our markets
for environmental and energy-related
applications. Examples of products
in this category include compressed
natural gas tanks to meet demand
growth resulting from the commer-
cialization of shale gas in the united
States.
30
Expansion of Production
Operations in Asia’s
Emerging Markets
Harnessing the Growth
Potential of the ASEAN
Region
The plan calls for the installation of
production facilities with capacity
for 6,000 tons per year, with a target
start-up date of november 2013.
Toray has shifted to a more proac-
tive management stance under the
aP-G 2013 medium-term manage-
ment program. In line with the basic
strategy defined in aP-G 2013, we are
focusing our global expansion efforts
on countries and regions that offer
particularly strong growth potential
through group-wide initiatives based
on asia and Emerging Country Busi-
ness Expansion (aE) Project.
Our target is to raise Toray Group’s
sales in asia and emerging countries of
other regions from ¥569.5 billion in the
year ended March 2013 (fiscal 2012) to
¥1,500 billion by around 2020.
Decision to establish new Resin
Compound Facility
Toray has decided to establish the first
resin compound facility for engineer-
ing plastics in Indonesia. Demand for
engineering plastics in Indonesia is
expected to increase by around 9%
annually in volume terms, and the
creation of local production capacity
will allow Toray to respond quickly to
the needs of local customers and pro-
vide in-depth technical services. as a
result, Toray will be able to expand its
business by moving quickly and effec-
tively to capture the growing demand
for engineering plastics in Indonesia.
Decision to Increase production of
nylon Fibers for Airbags
Demand for airbags is growing, in part
because of the increasing percentage
of airbag-equipped vehicles in emerg-
ing markets. Toray is determined to
capture this demand growth and has
decided to expand its production
capacity in Thailand for nylon 66 fiber
for automobile airbags. The new facili-
ties, which will have an annual produc-
tion capacity of about 7,000 tons, are
scheduled to come on line in January
2015. This capacity boost will bring
Toray’s total production capacity for
nylon 66 airbag fiber in Japan and
Thailand to approximately 32,000 tons
per year.
Decision to expand production of
packaging Films
Demand for packaging materials in the
aSEan region is expected to increase
by 3–5% annually in step with improv-
ing living standards. Toray Group aims
to harness this demand growth by
expanding the capacity of its vapor
deposition equipment in Malaysia for
packaging films used for food and
other products. The new facilities are
scheduled to become operational in
april 2014.
31
Trends in net sales in
Growth Countries and Regions
(Billions of yen)
3,000
2,500
2,000
1,500
1,000
500
0
Fiscal/
‘10
‘11
(Actual)
‘12
‘13
(Initial Target)
‘15
‘20
Around
(Vision)
Total net sales
Net sales in Growth Countries and Regions
AnnuAl RepoRt 2013
cially high in China, and Toray has
cially high in China, and Toray has
cially high in China, and Toray has
therefore established a production
therefore established a production
therefore established a production
facility for Torayca® resin compounds
facility for Torayca® resin compounds
facility for Torayca® resin compounds
in southern China.
in southern China.
in southern China.
expansion of Dialysis Business
in China
at present imported products are
at present imported products are
at present imported products are
used to meet the majority of de-
used to meet the majority of de-
used to meet the majority of de-
mand for dialysis-related products,
mand for dialysis-related products,
mand for dialysis-related products,
including dialysis machines and
including dialysis machines and
including dialysis machines and
dialyzers. Toray is building supply
dialyzers. Toray is building supply
dialyzers. Toray is building supply
capacity within China to support a
capacity within China to support a
capacity within China to support a
timely response to market needs. a
timely response to market needs. a
timely response to market needs. a
joint venture established with a lo-
joint venture established with a lo-
joint venture established with a lo-
cal company in June 2011 has built
cal company in June 2011 has built
cal company in June 2011 has built
a dialysis machine plant and has
a dialysis machine plant and has
a dialysis machine plant and has
been producing and selling dialysis
been producing and selling dialysis
been producing and selling dialysis
machines since april 2012. a pro-
machines since april 2012. a pro-
machines since april 2012. a pro-
duction facility for dialyzers is now
duction facility for dialyzers is now
duction facility for dialyzers is now
being built within the grounds of
being built within the grounds of
being built within the grounds of
the dialysis machine plant in prepa-
the dialysis machine plant in prepa-
the dialysis machine plant in prepa-
ration for the commencement of
ration for the commencement of
ration for the commencement of
sales in 2014.
sales in 2014.
sales in 2014.
Continuing Focus on
China’s Growth Potential
establishment of new Resin
Compound Company
Current projections indicate that
Current projections indicate that
Current projections indicate that
China’s demand for engineering
China’s demand for engineering
China’s demand for engineering
plastics, especially for use in au-
plastics, especially for use in au-
plastics, especially for use in au-
tomobiles and home appliances,
tomobiles and home appliances,
tomobiles and home appliances,
will grow by around 12% annually.
will grow by around 12% annually.
will grow by around 12% annually.
Growth is expected to be even
Growth is expected to be even
Growth is expected to be even
higher at 17% per annum in western
higher at 17% per annum in western
higher at 17% per annum in western
China. In July 2012, Toray estab-
China. In July 2012, Toray estab-
China. In July 2012, Toray estab-
lished a new resin compound com-
lished a new resin compound com-
lished a new resin compound com-
pany in Chengdu, in addition to its
pany in Chengdu, in addition to its
pany in Chengdu, in addition to its
three existing facilities in southern,
three existing facilities in southern,
three existing facilities in southern,
eastern and northern China.
eastern and northern China.
eastern and northern China.
Toray plans to expand its involve-
Toray plans to expand its involve-
Toray plans to expand its involve-
ment to include nylon, PBT and PPS
ment to include nylon, PBT and PPS
ment to include nylon, PBT and PPS
resins for use in automobiles and
resins for use in automobiles and
resins for use in automobiles and
home appliances. Future plans also
home appliances. Future plans also
home appliances. Future plans also
include the production of com-
include the production of com-
include the production of com-
pounds based on carbon fibers with
pounds based on carbon fibers with
pounds based on carbon fibers with
enhanced added value.
enhanced added value.
enhanced added value.
establishment of Facility for
Torayca® Resin Compounds
Carbon fiber reinforced thermo-
Carbon fiber reinforced thermo-
Carbon fiber reinforced thermo-
plastics (CFrTPs) are made by
plastics (CFrTPs) are made by
plastics (CFrTPs) are made by
compounding carbon fibers with
compounding carbon fibers with
compounding carbon fibers with
materials to increase their strength.
materials to increase their strength.
materials to increase their strength.
World demand for these materials is
World demand for these materials is
World demand for these materials is
expected to grow by over 10% annu-
expected to grow by over 10% annu-
expected to grow by over 10% annu-
ally, rising from around 30,000 tons
ally, rising from around 30,000 tons
ally, rising from around 30,000 tons
in 2012 to 70,000 tons in 2020. The
in 2012 to 70,000 tons in 2020. The
in 2012 to 70,000 tons in 2020. The
rate of growth is likely to be espe-
rate of growth is likely to be espe-
rate of growth is likely to be espe-
32
32
32
TOray InDuSTrIES, InC.
TOray InDuSTrIES, InC.
TOray InDuSTrIES, InC.
Developing Growth
Markets beyond Asia
In addition to its activities in asia,
Toray Group is also laying foundations
for business development in emerging
markets in other regions.
Toray’s business in Brazil is worth
around ¥6 billion at present. We aim
to expand this to ¥20 billion over the
next five years.
Expansion in Brazil
New Representative Office
in Turkey
In november 2012, Toray’s local sub-
sidiary in Brazil was restructured under
a new management structure. Local
staff numbers were increased, and
Japanese staff members were assigned
to the company for the first time. With
double the number of personnel, the
potential of this company as a sales
base has been significantly enhanced.
With a population of 190 mil-
lion and a land area over 20 times
greater than Japan’s Brazil is the
biggest country in South america. as
the world’s sixth biggest economy,
Brazil has continued to achieve stable
economic growth, as evidenced by
an average real GDP growth rate of
around 4% over the past five years.
Brazil will host the Soccer World
Cup in 2014 and the Olympic Games in
2016. These major international sporting
events are expected to provide addition-
al impetus for economic development.
Toray International, the trading arm of
Toray Group, has operated a repre-
sentative office in Istanbul, Turkey’s
largest city, since July 2012. around
one-half of Turkey’s estimated popu-
lation of 74 million consists of young
people aged 29 or below. The Turk-
ish economy continues to expand
steadily, and real GDP has grown by
an average of about 5% over the past
eight years.
Since the opening of its representa-
tive office in Istanbul, Toray Interna-
tional has been working to expand
Toray Group’s business in Turkey and
neighboring countries in product cat-
egories ranging from industrial fibers
and textiles to printing materials. Its
approach is based on the utilization
of local facilities, such as partnerships
with local companies, to provide a
timely response to customer needs.
15%
17%
14%
55%
Japan
China
Other Asia
Europe
North America,
etc.
Regional Contributions to net sales
in the year ended March 2013
(Fiscal 2012)
In this year, overseas sales were ¥722.0
billion, or 45% of total sales. We use all
of the Group’s resources and capabili-
ties, such as extensive management re-
sources and our overseas infrastructure,
to drive the expansion of our overseas
business.
33
AnnuAl RepoRt 2013 Toray Group Segments
Business Categories
Foundation Businesses
Net Sales
Ratio
64.6%
Operating
Income Ratio
59.5%
Net Sales
Ratio
19.8%
Operating
Income Ratio
29.3%
Net Sales
Ratio
14.7%
Operating
Income Ratio
9.7%
Segments
Main products
Application examples
Note: Excludes other businesses, equivalent to ¥14.1 billion (0.9%) in net
sales and ¥1.6 billion (1.5%) in operating income, and adjustment of
operating income of –¥20.0 billion.
34
Fibers & Textiles
plastics & Chemicals
Filament yarns, staple
fibers, and woven and
knitted fabrics of nylon,
polyester and acrylic fibers,
etc.; non-woven fabrics,
man-made suede and
apparel products
• Women’s and men’s clothes
(coats: man-made suede,
dress shirts: polyester-cotton
blended fabric, stockings:
nylon fiber, apparel products,
swimwear)
• automobiles
(car seats: polyester fiber,
airbags: nylon fiber,
seatbelts: polyester fiber)
• Sportswear
• F urniture & interior
(sofas: man-made suede,
carpets: BCF nylon, curtains:
halogen-free, flame retardant
materials)
• Disposable diapers:
polypropylene filament yarn
non-woven fabric
• Tents: polyester fiber
nylon, aBS, PBT, PPS and
other resins and molded
products, polyolefin foam;
polyester, polypropylene, PPS
and other films and processed
film products; raw materials
for synthetic fibers and other
plastics; zeolite catalysts; fine
chemicals for pharmaceuticals
and agrochemicals; veterinary
medicine (excludes film and
resin covered in IT-related
Products segment)
• automobiles
(radiator tanks: nylon resin,
intake manifold: nylon resin,
connectors: PBT resin,
capacitor for hybrid cars:
polypropylene film)
• Home appliances
(housing for washing
machines, vacuum cleaners,
air conditioners: aBS resin)
• Power tools
(circular tools housing: nylon
resin)
• Helmets (nylon resin)
• Solar battery panels
(PET film)
• Potato chip bags
(polypropylene film)
• Veterinary medicine
(for dogs and cats)
• Flat panel display televisions
(PET film, PDP)
Toray IndusTrIes, Inc.
strategically expanding Businesses
Intensively Developing and expanding Businesses
Net Sales
Ratio
64.6%
Operating
Income Ratio
59.5%
Net Sales
Ratio
19.8%
Operating
Income Ratio
29.3%
Net Sales
Ratio
14.7%
Operating
Income Ratio
9.7%
IT-related products
Carbon Fiber
Composite Materials
environment &
engineering
life science
Films and plastic products
for information and tele-
communications related
products; materials for
electronic circuits and
semiconductors; color
filters for LCDs and related
materials and equipment;
materials for plasma display
panels; magnetic recording
materials; graphic materials
and related equipment
• Flat panel display televisions
(PET film, PDP rear panel
pastes, LCD color filter
manufacturing equipment)
• PCs (circuit materials, PET
film, polyimide coatings)
• Cellular phones
(color filters, LCP resin,
circuit materials, PET film)
• Printing (waterless printing
plates, relief printing on
resins, printing equipment)
• Digital video camera
recording film (PET film)
• In-vehicle multimedia Lans
(optical fiber)
• Semiconductors
(semiconductor coating
materials)
Carbon fibers, carbon
fiber composite materials
and their molded products
Pharmaceuticals and
medical products; analysis,
physical evaluation and
research services
Comprehensive engineering;
condominiums; industrial
equipment and machinery;
environment-related
equipment; water treatment
membranes and related
equipment; materials for
housing, building and civil
engineering
• aircraft structure
(carbon fiber composite
materials)
• Bridge pier reinforcement
(carbon fiber woven
fabrics)
• PC chassis (carbon fiber
molded products)
• Wind-power generator
blades (carbon fibers)
• Marine vessels (carbon
fibers)
• Industrial equipment
materials (carbon fiber,
carbon fiber composite
materials)
• Seawater desalination
• Pharmaceuticals
(natural interferon-beta
preparation, prostacyclin,
antipruritus drug)
• Medical treatment
devices (hemodialyzers,
dialyzer and equipment)
• Physical analytical
services
facilities
(water treatment mem-
branes and equipment)
• Sewage and waste-water
treatment facilities (water
treatment membranes and
equipment)
• Condominiums
• Housing (wall siding for
houses, interior materials
for buildings)
• Plants and manufacturing
facilities (comprehensive
engineering services)
35
AnnuAl RepoRt 2013 Toray Group Segments
Foundation Businesses
Fibers & Textiles
Fiscal
net sales
Operating income
2011
2012
Changes
2013 Forecast
(Billions of yen)
638.4
45.3
632.2
43.2
-1.0%
-4.6%
740.0
53.0
Fiscal 2013 forecasts announced on Aug. 6, 2013.
638.4 632.2
45.3
43.2
rOa
FY2011 FY2012
FY2011 FY2012
Net Sales
Operating Income
Operating income
to net sales
Capital
expenditures
9.8%
6.8%
¥27.9 billion
summary of Consolidated Financial Results for the year ended
March 31, 2013 (Fiscal 2012)
In the Japanese market for industrial applications, sales of automotive
applications followed a firm trend in the first half of the year, but
the expiry of the eco-car subsidy program was reflected in slower
performance in the second half. In the area of apparel applications,
there was a strong demand for materials used in functional fall and
winter apparel, but demand for general apparel applications remained
weak because of the economic recession and other factors.
Trends in overseas markets continued to show the effects of
prolonged economic stagnation in Europe and slower demand in
asia due to the deceleration of domestic demand in China. In the
first half of the year, production and sales were also impacted by the
floods in Thailand.
net sales for the Fibers & Textiles segment in the year under review
were 1.0% lower year on year at ¥632.2 billion, while operating income
declined by 4.6% to ¥43.2 billion.
outlook for the year ending March 2014 (Fiscal 2013)
Within Japan, the correction of the strong yen is expected to bring
growth in business fields relating to import replacement and export-
ing. reconstruction after the Great East Japan Earthquake is also
likely to contribute to demand expansion. Overseas, there is concern
about the prospect of chronic economic stagnation in Europe, but we
anticipate generally firm trends in economic conditions in the united
States and China, and also in aSEan and other emerging economies.
In this business environment, Toray will aggressively pursue demand
in growth business fields, such as fibers and textiles for automobile
airbags, disposable diaper applications and the environment, and
in growth regions, such as China and emerging economies. We will
also work to strengthen and expand our garment business, which is
structured around a planning and proposal business model based on
the development of new materials. By strengthening our corporate
structure through cost reduction and other strategies, we aim to
achieve earnings growth and global business expansion in keeping
with expectations as a Foundation Business.
36
TOPICS
Decision to Increase production
Capacity of Nylon Fiber for
Automobile Airbags in Thailand
Toray has decided to increase its produc-
tion facilities for nylon 66 fiber, which is
used in automobile airbags, at the ayut-
thaya Plant of its subsidiary Thai Toray
Synthetics Co., Ltd. in Thailand. When
the new facilities become operational in
January 2015, they will have production
capacity for approximately 7,000 tons per
year. The company’s current capacity will
increase by around 40% to 23,000 tons per
year. Toray Group’s total production capac-
ity for nylon 66 fiber for airbags, including
production at the Okazaki Plant in aichi
Prefecture, Japan, will expand to 32,000
tons per year.
Toray has been expanding its airbag
business globally since 2003. Original yarn
produced in Japan and Thailand is sup-
plied to textile manufacturing plants in
Japan, Thailand, China and the Czech re-
public, creating an integrated production
chain from yarn to fabric. We will use this
integrated structure to enhance our quality
competitiveness, while also strengthening
our global production network and our
research and development and marketing
functions. Our aim is to supply products
that match global needs.
Toray IndusTrIes, Inc.
Foundation Businesses
plastics & Chemicals
Fiscal
net sales
Operating income
2011
2012
Changes
2013 Forecast
(Billions of yen)
397.8
27.4
395.8
-0.5%
18.3
-33.2%
460.0
24.0
Fiscal 2013 forecasts announced on Aug. 6, 2013.
397.8 395.8
27.4
18.3
rOa
FY2011 FY2012
FY2011 FY2012
Net Sales
Operating Income
Operating income
to net sales
Capital
expenditures
4.2%
4.6%
¥23.2 billion
summary of Consolidated Financial Results for the year ended
March 31, 2013 (Fiscal 2012)
There was volume growth in sales of engineering plastics for automo-
tive applications in the first half of the year because of increased
production by automobile manufacturers, especially in Japan. However,
the expiry of eco-car subsidy scheme brought a decline in demand
for plastic resins from the third quarter onwards. Overseas, shipments
of general-purpose aBS resins remained slow because of stagnation
in the Chinese market. However, there was growth in sales of resin
compounds and other automotive applications in the united States.
In the films business, economic stagnation and other factors were
reflected in slower demand in domestic and overseas markets. In
addition, the global expansion of production resulted in a deteriorat-
ing supply-demand balance and escalating price competition.
net sales for the Plastics & Chemicals segment declined by 0.5%
year on year to ¥395.8 billion. Operating income was 33.2% lower at
¥18.3 billion.
outlook for the year ending March 2014 (Fiscal 2013)
Despite continuing uncertainties, including wide fluctuations in the
prices of raw materials and fuels, we anticipate increased demand
driven by the recovery of the Japanese economy and the expan-
sion of our customers’ exports due to the correction of the strong
yen. Particularly high growth is expected in high value-added
fields. Overseas economies, centered on emerging countries, are
expected to lead a recovery in global demand.
In this business environment, through every possible effort
we aim to maximize sales of best-selling products in the plastic
resins business. We anticipate sales growth in China, aSEan
and emerging countries, and we aim to maintain and expand the
spreads between selling prices and fuel and raw material prices
by passing on increased costs quickly to selling prices. In the films
business, there is likely to be strong price-reduction pressure from
customers, but we will focus on the expansion of sales of high
value-added packaging and industrial applications.
TOPICS
expansion of packaging Film
production in Japan and Asia
Decisions were taken to expand vapor
deposition facilities used in the metalliza-
tion processing of food packaging films
at several production sites in asia. Toray
advanced Film Co., Ltd. (TaF) plans
to commence production with a newly
installed state-of-the-art vapor deposi-
tion equipment for polypropylene (PP)
packaging film at its Fukushima Plant in
October 2013. In addition, the Malaysian
company Penfibre Sdn. Berhad plans
to install state-of-the-art vapor deposi-
tion equipment with technical support
from TaF in preparation for the start of
metallized polyester (PET) packaging film
production. The advanced vapor deposi-
tion equipment installed at the Fukushima
Plant is capable of producing 580 tons of
film per month and will double the plant’s
current vapor deposition capacity. The
existing PET film-production facilities in
Malaysia have a monthly capacity of 3,600
tons. The new facilities will have capacity
for 375 tons of metallized PET film per
month and will allow the company to
newly enter into processed film business.
In Thailand, Thai Toray Synthetics, Ltd.
completed its vapor deposition capac-
ity for cast polypropylene (CPP) film in
October 2012. The total investment by
these three companies will amount to
approximately ¥3 billion.
37
AnnuAl RepoRt 2013
Toray Group Segments
strategically expanding Businesses
IT-related products
Fiscal
net sales
Operating income
2011
2012
Changes
2013 Forecast
(Billions of yen)
243.4
34.5
237.6
-2.4%
23.0
-33.5%
270.0
35.0
Fiscal 2013 forecasts announced on Aug. 6, 2013.
243.4 237.6
34.5
23.0
rOa
FY2011 FY2012
FY2011 FY2012
Net Sales
Operating Income
Operating income
to net sales
Capital
expenditures
7.0%
9.7%
¥21.7 billion
summary of Consolidated Financial Results for the year ended
March 31, 2013 (Fiscal 2012)
With LCD panel production adjustments necessitated by a slump in
the flat-screen television market mostly completed, a gradual recovery
trend emerged. While this produced a recovery trend in demand for
products used in flat-screen televisions, such as films and processed
film products, price competition intensified. In the area of materi-
als for small and medium-sized flat panel displays (FPDs), sales of
smartphone-related products remained strong, but demand for other
applications was generally slow.
net sales for the IT-related Products segment in the year under re-
view were 2.4% lower year on year at ¥237.6 billion. Operating income
declined by 33.5% to ¥23.0 billion.
sub-segments
Fiscal
Display Materials
Electronic components, semiconductors,
electric circuit materials
Data storage materials
Equipment, others
(Billions of yen)
2011
2012
Changes
90.3
79.0
-13%
86.2
96.6
+12%
34.1
32.8
31.2
30.7
-8%
-6%
outlook for the year ending March 2014 (Fiscal 2013)
With television demand in China lacking in buoyancy, the outlook
for manufacturers of medium and large flat-screen televisions
looks increasingly uncertain. This is reflected in continuing price-
reduction pressure from customers. Demand for materials used in
smartphones is expected to remain on a growth trend.
Our priority in this business environment is to increase sales
of and expand our market shares for high value-added films and
processed film products for use in displays and electronic compo-
nents. Our approach to this goal will include capacity expansion.
We will also work to increase sales of organic EL materials, semi-
conductor materials and graphic materials.
38
TOPICS
New plant for Waterless printing
plates in the Czech Republic
Toray, decided to build a new plant for
waterless printing plates at Toray Textiles
Central Europe s.r.o. (TTCE), its subsidiary
in the Czech republic. Waterless print-
ing plates are extremely friendly to the
environment. They do not require damp-
ening agents containing isopropyl alcohol
(IPa), which is subject to environmental
restrictions, and because alkaline develop-
ing solution is not used, the waste effluent
is not contaminated. In addition, these
products reduce production losses and
improve printing quality and stability while
also helping to reduce printing costs. The
environment-friendly characteristics of
waterless plates have earned considerable
recognition in Europe, where there is a
strong awareness of environmental issues.
Toray already has a production facility in
Japan, but the new facility will be the first
large-scale dedicated production plant in
Europe. The addition of the new facility
to the plant in Okazaki, Japan will double
total production capacity for waterless
plates.
Toray IndusTrIes, Inc. strategically expanding Businesses
Carbon Fiber Composite Materials
Fiscal
net sales
Operating income
2011
2012
Changes
2013 Forecast
(Billions of yen)
69.9
7.7
77.6
+11.0%
7.3
-4.8%
105.0
13.0
Fiscal 2013 forecasts announced on Aug. 6, 2013.
69.9
77.6
7.7
7.3
FY2011 FY2012
FY2011 FY2012
Net Sales
Operating Income
rOa
Operating income
to net sales
Capital
expenditures
3.4%
9.4%
¥15.3 billion
summary of Consolidated Financial Results for the year ended
March 31, 2013 (Fiscal 2012)
Expanding demand for aircraft and environment and energy-related
products such as compressed natural gas (CnG) tanks, was reflected in
firm trends in sales of aerospace and industrial applications. Delayed
recovery in demand for sporting goods applications, affected by
global economic stagnation, resulted in escalating price competition.
net sales for the Carbon Fiber Composite Materials segment
increased by 11.0% year on year to ¥77.6 billion in the year under
review. at ¥7.3 billion, operating income was 4.8% below the previous
year’s level.
sub-segments
Fiscal
aircraft
Sporting goods
Industrial
(Billions of yen)
2011
2012
Changes
26.7
13.3
29.9
30.4
12.2
35.0
+14%
-8%
+17%
outlook for the year ending March 2014 (Fiscal 2013)
World demand for carbon fiber is expected to remain on a steady
growth trend, led by aircraft applications and environment and
energy-related applications. However, due to an oversupply
situation, especially in Europe and asia, severe share competition
is predicted in the commodity areas of industrial and sporting
goods applications, and the recovery of market prices is likely to
take a little longer.
In these business circumstances, we anticipate continued
strong sales of aircraft applications, including for Boeing for the
787. In addition, we will also expand our sales to manufacturers
of environment and energy-related products, take advantage of
continuing market growth in those areas. In sporting goods appli-
cations, we will make efforts to shift our sales to high value-added
products, and normalize prices of commodity products.
TOPICS
Acquisition of DoMe CARBoN
MAGIC LTD.
In april 2013, we purchased the entire
stake in DOME CarBOn MaGIC LTD.
from the DOME Group, a racing car de-
signer and manufacturer highly acclaimed
by the automobile industry, in order
to expand our carbon fiber composite
materials business, especially for auto-
motive applications. (The newly acquired
company was renamed as Toray Carbon
Magic Co., Ltd.) We also acquired a 75%
stake in Dome Composites (Thailand) Co.,
Ltd., the DOME Group’s manufacturing
subsidiary in Thailand, and renamed it
Carbon Magic (Thailand) Co., Ltd.
These acquisitions dramatically
enhance Toray’s CFrP (Carbon Fiber
reinforced Plastic) parts design technol-
ogy, and the synergy effects with its
existing various CFrP molding tech-
nologies should strengthen the Toray
Group’s ability to rapidly respond to
customer requirements. We will also be
able to build a highly competitive supply
chain linking all stages from materials,
parts designing and prototype proposal
to mass production.
39
AnnuAl RepoRt 2013
Toray Group Segments
Intensively Developing and expanding Businesses
environment & engineering
Fiscal
net sales
2011
2012
Changes
2013 Forecast
(Billions of yen)
170.2
178.4
+4.8%
195.0
Operating income
4.9
2.6
-46.2%
6.0
Fiscal 2013 forecasts announced on Aug. 6, 2013.
170.2 178.4
4.9
2.6
FY2011 FY2012
FY2011 FY2012
Net Sales
Operating Income
rOa
Operating income
to net sales
Capital
expenditures
1.5%
1.5%
¥4.3 billion
summary of Consolidated Financial Results for the year ended
March 31, 2013 (Fiscal 2012)
The water treatment business was affected by slow demand in key
markets, including Europe, the united States, the Middle East and
China. We continued our efforts to expand global sales of reverse
osmosis (rO) and other water treatment membranes and reduce costs.
Japanese subsidiaries were generally able to increase their sales.
However, construction and real estate subsidiaries were affected by
cost increases, while the order prices of an engineering subsidiary
were eroded by increasing competition.
In the year under review, the net sales for the Environment &
Engineering segment increased by 4.8% year on year to ¥178.4 billion.
Operating income was 46.2% lower at ¥2.6 billion.
outlook for the year ending March 2014 (Fiscal 2013)
In the water treatment business, we anticipate continuing strong
trends in asia and a gradual recovery in the markets of the united
States and China. We will target further sales growth while working
to minimize costs.
We still face challenges in the business environment for the engi-
neering business. However, we aim to expand orders for industrial,
solar cell-related and lithium-ion battery-related equipment.
40
TOPICS
Continuing orders for
RoMeMBRA® Reverse osmosis
(Ro) Membranes for Two Seawater
Desalination plants in the United
Arab emirates
In recent years, the arabian Gulf countries
have been extensively investing in
infrastructure using profits from rising oil
prices. Of particular significance is the
proliferation of plans for the construction
of seawater desalination plants to secure
drinking water supplies. Toray is already
the industry leader in the area of rO
membranes, having supplied products to
seawater desalination plants in Bahrain,
Kuwait, Saudi arabia and other arabian
Gulf countries. This track record allowed
Toray to win continuing orders for the
supply of rO membranes to two seawater
desalination plants at al Zawra, Emirate
of ajman and Ghalilah, Emirate of ra’s al
Khaimah in the united arab Emirates.
Toray supply rO membranes to plants
with the capacity to produce more than
30.7 million cubic meters of water per day.
This equals enough water for home use
for 120 million people (about 1.7% of the
world population). The rO membranes
Toray has shipped for seawater desalina-
tion to these plants cumulatively produce
more than 7 million cubic meters per day,
giving Toray the biggest market share in
this field.
Toray IndusTrIes, Inc.
Intensively Developing and expanding Businesses
life science
Fiscal
net sales
Operating income
2011
2012
Changes
2013 Forecast
(Billions of yen)
55.6
6.0
56.6
+1.9%
7.5
+24.7%
65.0
7.0
Fiscal 2013 forecasts announced on Aug. 6, 2013.
55.6
56.6
7.5
6.0
rOa
FY2011 FY2012
FY2011 FY2012
Net Sales
Operating Income
Operating income
to net sales
Capital
expenditures
11.6%
13.2%
¥3.7 billion
summary of Consolidated Financial Results for the year ended
March 31, 2013 (Fiscal 2012)
Toray Group recorded increased sales of medical devices, including the
polysulfone membrane dialyzer TOrayLIGHT™ nV, and TOrayMyXIn™,
a hemoperfusion absorption column for removing endotoxin. Sales of
pharmaceuticals were affected by escalating competition and lowering
of selling prices following the april 2012 adjustments to the national
health insurance pricing scheme.
In the year under review, net sales for the Life Science segment
amounted to ¥56.6 billion, a year-on-year increase of 1.9%. Operating
income was 24.7% higher at ¥7.5 billion.
outlook for the year ending March 2014 (Fiscal 2013)
In general we expect the market for pharmaceuticals and medical
devices to expand. However, competition is likely to remain intense
because of expanding sales of generic pharmaceuticals.
One of our goals in the area of pharmaceuticals in this environment
is to achieve further growth in sales of rEMITCH®*, an oral pruritus
improvement drug for hemodialysis patients. In the medical products
field, we will work to expand sales of dialyzers including TOray-
LIGHT™ nV and dialysis machines, including Tr-3000Ma.
*rEMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
TOPICS
Construction of New production
Facility for ToRAYMYXIN™
Toray decided to build a new production
facility for TOrayMyXIn™ at the Okazaki
Plant. TOrayMyXIn™ has been manu-
factured at the Shiga Plant, but we now
have a plan to invest approximately ¥1.8
billion to construct a new facility, which
has double the production capacity, at the
Okazaki Plant. The aims of this movement
are to expand our business on a full scale
all over the world including Europe and
the united States and to aggregate and
intensify the efficiency of the development
and manufacturing of medical devices.
TOrayMyXIn™ is a hemoperfusion
column approved for use in endotoxin re-
moval with a blood purification treatment.
First launched in Japan in 1994, it is now
clinically used in many countries to treat
patients complicated with severe sepsis
and septic shock leading to multiorgan
dysfunction.
41
AnnuAl RepoRt 2013
R&D and Intellectual Property
R&D and Intellectual Property
Toray is built on research and development, and as a manufacturer of basic materials,
will continue to pursue highly original advances and technologies.
42
CoreTechnologiesPolymer ChemistryBiotechnologyOrganic Synthetic ChemistryNanotechnologyMedical ChemistryFilm TechnologySpecialty PolymersFine PatterningTextile TechnologyMicrostructure ControlMoldingHigh-performance PolymersPolymer DesignFiber TechnologyPharmaceuticalsFine Chemicals,Veterinary MedicinesArtificial Organs andMedical DevicesPrinting MaterialsMan-made SuedeSynthetic Raw MaterialsElectronic MaterialsHigh-performance Membranes,Water Treatment SystemsIndustrial Materials andAmenity MaterialsEngineering PlasticsTextiles, ApparelsCarbon Fibers, AdvancedComposite MaterialsHigh-performance FilmsSynthetic FibersUltramicro FiberTechnologyFilm ProcessingTechnologyCarbonization TechnologyFine and CompositeTechnologyToray IndusTrIes, Inc. Property
Basic R&D Policy—Characteristics and Strengths
Toray’s Approach to R&D
Founded on the belief that its future would be built on a
foundation of research and technological development,
Toray has worked continually to create new technologies
and expand the scope of its technological resources.
Our mission is to protect the environment of the planet
on which we all live and bring safety and security to everyone’s
life by continually creating advanced materials through
technological innovation. The concepts that guide these
continuing efforts are the pursuit of new breakthrough
technologies, and the convergence of technologies. Toray’s
four core fields of technology are organic synthetic chemistry,
polymer chemistry, biotechnology and nanotechnology. We
create new value and contribute to society through the
creation of advanced materials based on these four fields.
Characteristics and Strengths
lCulture of Commitment to Basic Research
Toray has maintained a culture of commitment to basic
research as a vital step toward the development of
revolutionary materials. Continuing R&D are the sources
of our competitiveness. Our carbon fiber materials and
RO membranes have reached their present stage of
development and gained market recognition thanks to a
management policy that emphasizes R&D based on long-
term perspectives.
lExpertise from Many Fields
Toray’s team of specialists develops world-class advanced
materials using their wide-ranging experience and knowl-
edge in fields that include polymer design, functional
enhancement technology, drug development and formula-
tion and pharmacology. All of this work is linked to Toray’s
four core fields of technology: organic synthetic chemistry,
polymer chemistry, biotechnology and nanotechnology.
lIntegrated R&D Organization
Toray’s unified R&D organization works as a single, undi-
vided unit. At the core of the organization is the Technology
Center, which formulates company-wide R&D strategies and
proposes key projects. By supporting cross-organizational
technology sharing, this structure provides an environment
that is conducive to inspiration, new ideas and technology
convergence. In addition, individual technologies and basic
chemical materials combined with those created in other
fields can make major contributions to a variety of business
activities through this structure.
lLeadership in Research Based on Industry-govern-
ment-academia Collaboration
As part of its commitment to the continuous creation of revo-
lutionary advanced materials, Toray Group is strengthening
its involvement in external collaboration linking industry, the
government and academia, including national projects, and
global open innovation. We also accelerate the creation of
advanced materials by working with leading companies and
venture businesses in Japan and overseas through strategic
partnerships and other relationships.
lAdvanced Analytical Capabilities
Toray Research Center Inc. (TRC), which was spun off from
Toray’s R&D organization as an independent company in
1978, provides technical support based on its analytical
technology, including the analysis of physical properties.
TRC has improved its technology through the process
surviving against fierce competition from independent
analysis. It continues to contribute to maintenance of Toray
Group’s advanced analytical capabilities through by carrying
out analyses, including analyses of physical properties, in
response to requests from Toray for assistance with identify-
ing the causes of the problems and finding solutions.
43
AnnuAl RepoRt 2013 R&D Expenditure and Achievements
Through its R&D activities, Toray Group aims to expand
its earnings by building and strengthening reliable income
streams in two Foundation Businesses: Fibers & Textiles
and Plastics & Chemicals. R&D also plays a major role
in our ability to supply advanced materials in four major
growing business fields: environment, water-related and
energy; information, telecommunications and electronics;
automobiles and aircraft, and life science. R&D expenses
by Toray Group in the year ended March 31, 2013 (fiscal
2012) amounted to ¥53.3 billion.
Percentages of Total R&D
Expenses in Fiscal 2012
R&D Expenses
(Billions of yen)
8%
14%
37%
53.3
billions of yen
19%
14%
4%
4%
Fibers & Textiles
Plastics & Chemicals
IT-related Products
Carbon Fiber Composite Materials
Environment & Engineering
Life Science
Head Office R&D
60
50
40
30
20
10
0
Fiscal/
‘08
‘09
‘10
‘11
‘12
Toray
Consolidated subsidiaries
44
R&D and Intellectual Property
R&D Achievements
Fibers & Textiles
Our goal is to strengthen stable income streams and expand
earnings in this foundation business area through the pursuit of
breakthrough technologies that lead to the creation and expan-
sion of high-performance products and advanced materials.
One key success in this segment was the development of
the world’s thinnest modified cross-section nanofibers. We also
developed UTS-MelangeTM, ultramicro polyester filament yarns
that provide a mottled effect based on a mixture of colors.
Another development success was PoliloftTM NP, which helps
to reduce environmental loads as a polyester filament yarn with
dye-affinity at normal atmospheric pressure.
Plastics & Chemicals
R&D activities in this foundation business segment are targeted to-
ward the reinforcement and expansion of a stable income structure,
and the development of a sustainable recycling-based society.
A key achievement was the full-scale start of sales of 0S (“Zero
S”) Grade, a new type of Toraypef® polyolefin foam with supe-
rior flexibility and formability. We also developed a high-plant
grade of the environment-friendly biomass resin Ecodear®. Over
50% of the polylactic resin in the new product is plant-derived.
IT-related Products
Our R&D activities in this field reflect its status as a core strate-
gically expanding business area.
A major achievement was the development of an olefin-
based mold release film that combines the previously incompat-
ible characteristics of heat resistance and enhanced formability.
We also installed the PS Laboratory, a semiconductor mounting
R&D system, at the Shiga Plant to improve the efficiency and
speed of R&D relating to semiconductor materials and expand
the range of applications. In addition, we won the National
Commendation for Invention award for the invention of a light-
sensitive paste for use in plasma display barriers.
Carbon Fiber Composite Materials
This is a key area of market leadership for Toray, and has been
targeted for strategic expansion as a business area offering key
environmental benefits.
Significant achievements include the acquisition of all shares
in DOME CARBON MAGIC LTD. from the Dome Group, which
became a wholly owned subsidiary, with the aim of strength-
ening our design technology. In addition, Toray received the
Prime Minister Prize in the 41st Japan Industrial Grand Prix for
the development of carbon fiber and prepreg materials for use
in the Boeing 787, as well as the Chemical Society of Japan’s
61st Chemical Technology Award for the commercialization of a
lightweight composite material for use in aircraft.
Environment & Engineering
R&D activities in these areas reflect this segment’s selection for
intensive development and expansion.
An important success in the field of water treatment was
the winning of an order for the supply of ROMEMBRA® reverse
osmosis (RO) membranes for seawater desalination plants in the
United Arab Emirates. In addition, the TorayvinoTM CassettyTM
205MX won the 2012 Good Design Award. We also commenced
sales of the TorayvinoTM PT304V, a pot-type water purifier that
combines large capacity with ease of storage.
Life Science
R&D activities in this area reflect the Life Science segment’s sta-
tus as a field selected for intensive development and expansion.
In the medical area, we concluded a licensing agreement
for the injectable antipruritic agent TRK-820, which was jointly
developed with Fresenius Medical Care AG&Co KGaA, the
world’s biggest supplier of dialysis services and related equip-
ment. Another success in the medical products field was the
development of the Filtryzer® NF. Developed using membrane
processing technology, this new dialyzer uses polymethylmeta-
crylate (PMMA) membranes to provide improved functionality
compared with earlier products.
Basic Research, Development of Foundational
Technologies
Though not linked to any particular business segment, basic
research and the development of foundational technologies are
a priority for Toray because of their importance to the creation
of new businesses and products for the future.
Our management policy in relation to bio-based polymers,
innovative battery materials and organic membrane solar pan-
els is to contribute to the establishment of a sustainable low-
carbon society by making the global environment the focus
for all business strategies. We have also decided to make a full
commitment to the development of Nanoalloy® technology as
a technology brand because of its potential to enhance the per-
formance and functions of polymer materials. Toray holds basic
patents, key manufacturing patents and application patents.
45
AnnuAl RepoRt 2013
ToPIcs1
Development of the World’s Thinnest
Innovative Nanofibers
Toray has succeeded in developing the world’s thinnest
filament nanofiber with a diameter of just 150nm—just
one-half the thickness of previous minimum fiber diam-
eter of 300nm, and a Y-shaped modified cross-section
nanofiber with a diameter of 500nm. These fibers allow
a greater surface area per unit of fiber weight than was
previously possible. In addition, the spaces between the
fibers can be modified at will to enhance various charac-
teristics, including moisture absorption, water absorp-
tion, water retention and friction coefficients. It will also
be possible to achieve higher levels of filtration, separa-
tion and elimination performance.
The functional properties of the innovative nanofibers
created using this technology will be ideal for use in
apparel and sportswear providing new levels of comfort
and functionality. There are many other potential appli-
cations, including filter materials, medical materials and
other high-performance industrial materials.
ToPIcs2
Environment-friendly Biodegradable
Microporous Film
Toray has succeeded in the development of a biode-
gradable multiporous polylactic* film that can be used as
a new material for various applications, including agricul-
tural multifilm, healthcare products, such as disposable
diapers, and disposable heat packs. There are still issues
with existing multiporous polyethylene film products, in-
cluding waste disposal and the environmental load. The
newly developed multiporous polylactic film is expected
to make an important contribution to the development
of a sustainable, recycling-based society, since all of the
polymers used are biodegradable, and the product is
largely based on biomass materials. Toray is determined
to commercialize the product as soon as possible and
has accelerated efforts to develop mass-production
technology.
* Polylactic polymers are biodegradable substances
synthesized from starch obtained from maize and other
biomass materials.
46
R&D and Intellectual Property
Basic Policy and Priority Strategies on Intellectual Property
http://www.toray.com/ir/library/lib_005.html
For detailed information, please refer to the Intellectual Prop-
erty Report, which describes intellectual property initiatives by
Toray Group
Intellectual Property Strategies
Intellectual property strategies must be organically linked
to business strategies and R&D strategies. Toray is pursu-
ing intellectual property strategies based on an integrated
trinity of these elements in line with management policies.
One priority of the medium-term management program
AP-G 2013 is the expansion of Green Innovation Busi-
nesses. Toray is currently filing patent applications and
strengthening its rights in four major growing business
fields: environment, water-related and energy; information,
telecommunications and electronics; automobiles and air-
craft; and life science. We are building a patent portfolio in
fields with the potential to solve to the world’s increasingly
urgent and significant environmental problems.
To support business expansion in growth business fields
and regions, we are strategically moving to converge the
R&D activities and intellectual property activities of the
global Toray Group. The parent company will step up
its efforts to secure overseas patents and rights, while
overseas group companies will work to protect inventions
made at Toray Group R&D facilities in various countries by
intensifying their patent application activities and efforts
to secure rights.
In the year ended March 31, 2013 (fiscal 2012), Toray
Group filed 1,683 applications in Japan and 4,220 in other
countries. The Group holds 1,013 patents in Japan and
1,001 overseas.
Toray Patents Filed in
Year Ended March 31, 2013
Total Patents Held to Date
1,683
1,013
4,220
1,001
Overseas
Domestic
Overseas
Domestic
47
Sustainable Management
For our
customers
Provide new value
through high-quality
products and
superior services
Basic Management
Philosophy
For our
employees
Provide opportunities
for self development in
a challenging working
environment
Product safety and quality
Green Innovation
Businesses
CSR procurement
Promoting human rights
and human resource
development
Safety, accident prevention,
environmental
protection
CSR
guidelines
Safety,
accident prevention,
environmental protection
Communication
Social contribution
activities
Corporate governance
and management
transparency
Business ethics and
regulatory compliance
Risk management
For society
Establish ties and
develop mutual trust
as a responsible
corporate citizen
For our
stockholders
Provide dependable
and trustworthy
management
sustainable
Management
We regard safety, accident prevention and environmental
preservation as well as corporate ethics and legal compliance as the
most important management priorities for Toray Group. Our goal
is to earn respect and support in the international community and
provide high value for all stakeholders by contributing to society
through our core business activities.
48
Toray IndusTrIes, Inc. CSR Initiatives
Toray Group’s Corporate Philosophy and
CSR Activities
Environmental Management Initiatives
The Corporate Philosophy of Toray Group is expressed in
the words “Contributing to society through the creation of
new value with innovative ideas, technologies and products.”
Throughout our history, we have sought to contribute to
society through our core business activities. Today we continue
to put this philosophy into effect through carefully planned
CSR activities.
Our Corporate Missions identify four key types of stake-
holders: stockholders, customers, employees and society.
Our commitment to good corporate citizenship is reflected
in our Corporate Guiding Principles, which set targets for the
conduct of individual employees. Our Corporate Philosophy is
also supported by our Corporate Ethics and Legal Compliance
Code of Conduct, which define specific standards of conduct
to which all employees can refer.
General plans for CSR activities are shared across the
entire Toray Group, and we formulate CSR road maps as
the basis for continuing initiatives based on a continual
PDCA cycle. In the year ended March 31, 2013 (fiscal 2012),
our progress along our CSR roadmap was generally in line
with our plans. However, there were some key performance
indicators (KPIs) that were not achieved. We will continue to
work dynamically toward the achievement of our targets for
the end of fiscal 2013.
Toray’s Management Philosophy and Code of Conduct
Declaration outlining
the obligations of
Toray Group as a good
corporate citizen
Corporate
Philosophy
Management
Philosophy
Corporate Missions
Basic objectives are
based on a breakdown of
the Corporate Philosophy as
related to each type of stakeholder
Corporate Guiding Principles
Putting the Corporate Philosophy and
the Corporate Mission into practice together with
the aims and goals of each and every employee
Corporate Ethics and Legal Compliance Code
of Conduct
Concrete standards relating to ethics and compliance
with laws and regulations
Promotion of LCM-based Environmental Management
Toray Group’s approach to environmental management is
based on lifecycle management (LCM). With the LCM concept,
all business activities are viewed from the perspective of
product and service lifecycles. The aim is to improve economic
and social value while reducing environmental loads. Our
Green Innovation products all embody this concept. Our LCM
initiatives include the introduction of lifecycle assessment and
the T-E2A efficiency analysis tool. We are now working to
disseminate and consolidate these concepts.
A key source of impetus for LCM-based environmental
management has been the guidelines used to calculate con-
tributions to the reduction of CO2 emissions. We are currently
using the Japanese guidelines, which were published by the
Japan Chemical Industry Association in February 2012. Global
guidelines are now being developed and should be completed
before the end of 2013. Toray is cooperating fully in the
formulation of both the Japanese and international versions of
the guidelines.
Initiatives to Fight Global Warming
Since 2000, Toray Group has enhanced and expanded its ef-
forts to prevent global warming and contribute to the emer-
gence of a recycling- oriented society through independent
initiatives under Three-year Environmental Plans.
Fiscal 2011 was the first year of the Fourth Medium-Term
Environmental Plan, under which we will further expand our
environmental initiatives. We are working systematically to re-
duce greenhouse gas (GHG) emissions. For example, we have
reduced energy consumption through process improvements,
and we have switched from fuel oil to city gas. The entire
Toray Group is implementing carefully planned measures to
ensure the achievement of targets under this plan, which runs
through fiscal 2015.
Voluntary Reduction of Atmospheric Emission of
Chemical Substances
Toray Group regards the reduction of environmental loads, in-
cluding releases of chemical substances into the atmosphere, as
one of its most important priorities. We are working to achieve
this goal through group-level initiatives.
Under the Fourth Medium-Term Environmental Plan, launched
in April 2011, we are systematically implementing voluntary initia-
tives to resolutely achieve the targets of fiscal 2015 for reducing
emissions of substances covered by the PRTR law and volatile
organic substances (VOCs).
49
AnnuAl RepoRt 2013 Sustainable Management
CSR Initiatives
Initiatives to Prevent Air and Water Pollution
Measures to prevent air and water pollution are an important
part of Toray Group’s efforts to protect the environment at the
production stage. We have reduced SOx emissions by install-
ing desulfurization systems and switching to alternative fuels
at our facilities, including those in other countries. We are also
working to reduce chemical oxygen demand (COD) levels by
expanding our wastewater treatment facilities.
Water Resource Management Initiatives
Toray Group has long relied on the following policies to de-
velop solutions to water resource problems around the world
through water treatment projects and other initiatives from its
business activities.
1. Toray Group recognizes that water is one the most
important resources for the human race, and that people
in many parts of the world face problems relating to
water resources.
2. Toray Group will contribute to the solution of the world’s
water resource problems through its products, technol-
ogy and services.
3. Toray Group is committed to the appropriate manage-
ment of water resources, in line with its basic policy that
the status of water resources in each region should be
constantly monitored so that regional communities can
share these precious resources.
50
Initiatives to Reduce Waste
As part of its contribution to a sustainable, recycling-oriented
society, Toray Group aims to achieve zero-emission status.
Related initiatives under the Fourth Medium-Term Environ-
mental Plan are based on numerical targets linked to specific
indicators for fiscal 2015, including simple disposal ratios,
landfill disposal ratios and recycling ratios.
Biodiversity Conservation Initiatives
Together with the reduction of greenhouse gas emissions,
biodiversity conservation is recognized by Toray Group as a
key global environmental priority. Our initiatives relating to
biodiversity conservation and sustainable use are guided by
the Toray Group Biodiversity Basic Policy, which was adopted
in 2010.
Mapping the Relationship between Business Activities
and Biodiversity
Biodiversity is affected by the business activities of Toray
Group at all lifecycle stages, starting with the procurement of
raw materials. An in-house working group has analyzed this
relationship from the perspectives of risks and opportunities
and produced a relationship map.
CSR Procurement and Purchasing
CSR Procurement and Purchasing Activities
As a manufacturer of advanced materials, Toray places consid-
erable importance on source control linked to end-user needs
in a number of areas, such as raw materials used to make the
materials and products that it supplies, and also in relation to
its production facilities. This perception, and our commitment
to fair trade, are reflected in our Basic Purchasing Policies. We
have also formulated CSR Procurement Guidelines, which call
for the development of value chains that allow us to fulfill our
social responsibilities in partnership with our suppliers, and for
the supply of environmentally and socially responsible materi-
als and products to our customers. Toray has also adopted
CSR procurement compliance rules covering all corporate
activities to ensure that it is able to provide customers with
accurate reports about its CSR initiatives.
Toray has established contact points for CSR procurement,
through which we manage and internally share customer and
supplier information.
Toray IndusTrIes, Inc. Environmentally Conscious Distribution Policies
Toray’s Basic Distribution Policies defines key policies relat-
ing to the equity and fairness of business transactions, and to
environmental preservation. In addition to our ongoing efforts
to reduce logistics-related environmental loads and improve
quality, we also hold annual briefings on our Basic Distribu-
tion Policies to ensure that our logistics partners are fully
conversant with Toray policies on logistics, and to enhance
performance.
Training and Human Rights
Promoting Human Rights
Toray Group regards respect for human rights as a vital aspect
of its business operations. In addition to our efforts to improve
awareness of human rights, we totally prohibit discrimination
based on ethnicity, beliefs, gender, educational background,
nationality, religion, physical characteristics or other attributes.
This prohibition applies to recruitment activities, deployment,
remuneration, education and retirement. In compliance with
international rules, including the United Nations Universal
Declaration of Human Rights and the ILO Convention, we also
prohibit forced labor and child labor. In addition, we are com-
mitted to full compliance with the laws and regulations of each
country and region.
Retaining Key Employees
Protection of employment is a basic management policy of
Toray Industries, Inc. Staffing adjustments are not made for
short-term reasons, and we aim to provide stable, continuous
employment for our core employees, regardless of economic
trends or corporate performance.
Toray Group needs highly motivated employees capable
of working globally and will actively recruit and train talented
people in Japan and overseas. We will also continue to provide
a wide range of training programs to strengthen the manage-
ment and market skills of employees at all levels and in all
areas, to improve their knowledge of production technology
and other specialist fields, and to enhance their ability to adapt
to a globalized environment.
Promoting Diversity
Toray Group promotes diversity as part of its efforts to create
energetic workplaces in which people from wide-ranging
backgrounds can achieve their full potential. Throughout its
history Toray has actively employed women and sought to
create amenable working environments for them. In recent
years, we have improved our systems to help both male and
female workers achieve a healthy work-life balance for their
chosen lifestyles. Our systems, which provide readily acces-
sible support according to the circumstances of individual
employees, exceed the legally mandated requirements relat-
ing to childcare, care for aged and infirm family members,
and maternity protection.
51
Sustainable Management
CSR Initiatives
Communication Activities
Social Contribution Activities
Our Social Contribution Policy
Through our core business activities, we fulfill our Corporate
Philosophy of “Contributing to society through the creation of
new value with innovative ideas, technologies and products.”
We also contribute to society in various other ways under
the Toray Group Social Initiative Policies. Our wide-ranging
activities include the provision of funding for the Toray Science
Foundation (Public Interest Incorporated Foundation), which
was founded in 1960.
Contributing to Future Generations
Children will inherit the future. Toray Group supports educa-
tion by providing products, technology and human resources.
Employees act as special instructors for elementary and junior
high school programs that teach children to enjoy scientific
experiments and understand the role of technology in solving
global environmental problems. Toray and Toray Research
Center Inc. host science camps, which are science and technol-
ogy experiment programs for high school students with an
interest in science. Front-line researchers and engineers use
experiments and other activities to provide direct instruction
to high schools students from throughout Japan.
All of our business activities depend on good dialog with
stakeholders. Toray Group is committed to communication
in good faith, including the timely disclosure of accurate
information, as the basis for mutual understanding with our
wide-ranging stakeholders, including stockholders, customers,
employees and local communities.
Stakeholder Communication
One way we communicate with stockholders and investors is
through quarterly financial presentations. We also hold requi-
site briefings for individual investors. In addition, we communi-
cate directly with investors and analysts in individual meetings,
as required. We also ensure fair disclosure of information by
distributing annual reports and other documents, and by post-
ing information that is useful to stockholders and investors on
our website.
Toray lives up to its reputation for putting the customer
first by actively communicating with our customers, primarily
through our sales and marketing divisions. Many customers
also attend our exhibitions and briefings.
Various media, including in-house newsletters, the intranet
and other methods, are used to communicate with employ-
ees. In addition to messages from the President, these chan-
nels are also used to share information about management
and business topics and build understanding about these and
other matters.
Dialog with the local communities surrounding group
companies, offices and plants is an important priority for Toray
Group. Regular gatherings are held for local residents, includ-
ing briefings on our business activities and products. We also
build friendly relations with communities through initiatives, in-
cluding clean-up projects for rivers and roads near our plants.
Principal SRI indexes in which Toray is included
l FTSE KLD Global Climate 100 Index
l Morningstar Socially Responsible Investment Index
(as of March 31, 2013)
http://www.toray.com/csr/index.html
The Toray Group CSR Report contains information about the CSR
activities of Toray Group. Detailed information can be found at this
website.
52
Toray IndusTrIes, Inc. ToPIcs
Helping to Establish the Toray UsM Knowledge
Transfer centre
Toray has been active in Malaysia since
the 1970s. Today there are four group
companies involved in fibers & textiles,
plastics and other fields. Our fundamen-
tal approach to activities is to achieve
growth through our local roots. In 1993,
we established the Malaysia Toray
Science Foundation with the aim of
contributing to the advancement of sci-
ence and technology in Malaysia. Each
year the Foundation awards prizes and
grants, including support from Toray
Group companies in Malaysia.
To commemorate the 40th anniversary
of Toray’s presence in Malaysia, we do-
nated 4 million ringgits (approximately
¥110 million) to the Universiti Sains
Malaysia (USM) in Penang. The funds
will be used to establish the Toray USM
Knowledge Transfer Centre, a place for
human resource development and the
preservation and study of Malaysia’s
culture, history and traditions. A build-
ing for the facility will be built on the
main USM campus and is expected to
complete in 2015.
The USM is one of Malaysia’s lead-
ing educational institutions. It is highly
regarded for its research activity and
was selected by the Ministry of Higher
Education as the base for the Acceler-
ated Programme for Excellence (APEX).
USM graduates work for Toray Group
companies in Malaysia, and Toray Indus-
tries Inc. supports internship training for
USM students.
In keeping with its corporate phi-
losophy of “contributing to society
through the creation of new value with
innovative ideas, technologies and
products,”Toray Group carries out a va-
riety of CSR initiatives focused on local
communities.
53
AnnuAl RepoRt 2013
Sustainable Management
Corporate Governance
Toray Group’s Basic Policy on Corporate
Governance
Toray Group’s basic policy on corporate governance is
contained in our Corporate Missions, which requires us
to provide stockholders with dependable and trustworthy
management. Our Corporate Guiding Principles require us
to obtain the trust of society and meet the expectations by
acting fairly while maintaining high ethical standards and a
strong sense of responsibility and maintaining transparency in
management.
We regard these as our most important management
policies.
Outline of Corporate Governance Structure and Rea-
sons for Adoption
Our Board of Directors has 26 members. As a company in the
basic material sector, Toray is involved in a wide range of busi-
ness fields globally based on our core technologies, including
organic synthetic chemistry, polymer chemistry, biotechnol-
ogy and nanotechnology. Our present governance structure
reflects our belief that when decisions are taken by members
of the Board who have extensive knowledge of our business
activities it helps us accomplish our management responsibili-
ties to stockholders.
Toray operates under a corporate auditor system. Two
members of the four-member Board of Corporate Auditors are
outside corporate auditors. To ensure management transpar-
ency and objective and impartial management oversight, the
Board of Corporate Auditors is completely independent from
the Board of Directors. The selection of outside corporate au-
ditors is based on the stock exchange standards for decisions
concerning the independence of independent auditors. The
task of the outside corporate auditors is to improve oversight
of the performance of duties by members of the Board from
an independent perspective.
Basic Policy on Internal Control Systems and Their
Development
We develop and maintain internal control systems as a
framework for the development of appropriate organizational
structures, the formulation of rules and regulations, the dis-
semination of information and the monitoring of business
operations. The purpose of these systems is to ensure that
all Toray Group executives and employees are able to realize
the Corporate Philosophy, Corporate Missions and Corporate
Guiding Principles of Toray Group, as expressed in the words
“contributing to society through the creation of new value with
innovative ideas, technologies and products.” We review and
improve these systems as required to ensure that our business
operations are conducted efficiently and in compliance with
the law. The following specific systems have been established.
lSystem to ensure that the execution of duties by members of the Board and employees comply with
laws and regulations and the Company’s Articles of Incorporation
lSystem to ensure the efficient execution of duties by members of the Board
lSystem for preserving and managing information pertaining to the execution of duties by the members
of the Board
lRules and other systems pertaining to controls over risks of loss
lSystem of reporting to corporate auditors and other systems for ensuring effective implementation of
audits by corporate auditors
lItems pertaining to employees assisting with corporate auditors’ duties and items pertaining to the
independence of said employees
lSystem for ensuring appropriate business operations by Toray Group
54
Toray IndusTrIes, Inc. Governance Structure
Toray Group is determined to justify the trust placed in it by society by working in good faith to maintain
highly transparent governance systems.
General Stockholders Meeting
Election
Election
Election
Audit
Board of
Corporate Auditors
Audit
Board of Directors
Resolution
Auditing Department
President
Approval
Deliberations Council Executive
Committee and Board of
Senior Vice Presidents
Accounting Auditor
Internal audit
Audit
Company-wide
Committees
CSR Committee
Management
execution
Divisions
and plants
in Japan
Japanese
subsidiaries
and
affiliates
Overseas
subsidiaries
and
affiliates
Departmental Committees
Auditing by Corporate Auditors,
Internal Auditors
The corporate auditors, including the outside corporate au-
ditors, possess considerable expertise of financial matters
and accounting. They thoroughly monitor the execution of
duties by members of the Board by attending important cor-
porate meetings, including meetings of the Board of Direc-
tors, and meeting with all members of the Board, divisional
and departmental general managers, and by conducting on-
site audits of Toray offices and plants worldwide, including
subsidiaries and affiliated companies.
The corporate auditors also work closely with internal
control organizations. For example, they attend as observ-
ers at meetings of the Corporate Ethics Committee, which
was established to promote corporate ethics and regulatory
compliance as key elements of corporate social responsibil-
ity, and the Company-Wide Legal Compliance Committee.
The Audit Department, which reports directly to the
President, was established as part of our internal control
structure. Its task is to conduct internal audits of Toray and
its subsidiaries and affiliated companies. Information is con-
tinually exchanged. For example, all audit reports submitted
to the President by the Audit Department are also submit-
ted to the corporate auditors.
55
AnnuAl RepoRt 2013 Sustainable Management
Corporate Governance
Remuneration
1. Details of Remuneration
Position
Total
remuneration
(millions of yen)
Total remuneration (millions of yen) by type
Basic
Bonuses
Provision for the allowance
for retirement benefits
Stock
options as
remuneration
Recipients
Members of the Board
Corporate auditors (excluding
outside corporate auditors)
Outside corporate auditors
1,568
1,153
125
85
21
79
19
6
2
32
—
—
257
—
—
33
3
2
Notes: 1. Recipients included seven directors who retired during fiscal 2012, and one corporate auditor (excluding outside corporate auditors).
2. Total amounts of remuneration do not include ¥84 million paid in salaries to eleven employee-directors.
2. Total Remuneration Received by Members of the Board and Corporate Auditors
Name
Total
consolidated
remuneration
(millions of yen)
Position
Status of
company
Basic
Bonuses
Provision for the allowance
for retirement benefits
Total remuneration (millions of yen) by type
Sadayuki Sakakibara
Akihiro Nikkaku
149
132
Member of the Board
Filing company
Member of the Board
Filing company
115
98
13
13
—
—
Note: Information about consolidated remuneration is shown only for persons receiving more than ¥100 million.
Stock
options as
remuneration
21
21
3. Policy on Remuneration for Members of the Board and
Corporate Auditors
Remuneration for members of the Board and corporate auditors
consists of monthly remuneration, a bonus and stock acquisition
rights in the form of stock options. The purpose of this structure is
to ensure management transparency and fairness, and to provide
enhanced incentives for the improvement of financial perfor-
mance and corporate value in the short-, medium- and long-term
perspectives. Remuneration for corporate auditors consists of
monthly remuneration and a bonus.
Furthermore, the amount of remuneration to directors and
auditors members of the Board and corporate auditors is deter-
mined while taking into account the results of research conduct-
ed by a third-party organization to ensure objectivity.
The maximum total amount of monthly remuneration is deter-
mined by resolution at the Ordinary General Meeting of Stock-
holders. Resolutions are passed as required to determine whether
or not bonuses should be paid and the amount of such bonuses.
General Ordinary Meetings of Stockholders set upper limits
for the number of stock options granted to members of the
Board as remuneration, and for the total amount of remunera-
tion provided. The Board of Directors determines the number of
stock options granted to members of the Board within those lim-
its according to internal regulations established by the Company.
Corporate Ethics and Legal Compliance
Corporate ethics and legal compliance are among Toray Group’s
most important management priorities. Our top management
has established clear guidelines and provides proactive leader-
ship with the aim of ensuring that all Toray Group employees
will maintain high ethical standards and a strong commitment to
compliance with laws and regulations.
Framework for Promoting Corporate Ethics and Legal
Compliance
Toray has established a Corporate Ethics Committee under the
chairmanship of the President as a framework for cooperative
initiatives by labor and management. This committee deliberates
on all policies pertaining to corporate ethics. The Company-Wide
Legal Compliance Committee works under the auspices of the
Corporate Ethics Committee to promote independent activi-
ties, and is specifically tasked with advancing initiatives relating
Framework for Promoting Corporate Ethics and
Legal Compliance in Toray
Corporate
Ethics
Committee
* Chaired by Toray’s
company president
Company-wide Legal
Compliance Committee
Division-and Plant-level
CSR/Legal Compliance Committees
56
Toray IndusTrIes, Inc.
to company-wide priorities. The committee’s administration is
based on close communication between committee members,
who are mainly section managers from each business line, and
top management. All divisions, offices and plants have estab-
lished CSR/Legal Compliance Committees to carry out activities
involving individual employees in their workplaces.
To ensure that all executives and employees, including
contract, part-time and temporary employees, are fully informed
about compliance requirements, we distribute copies of the Cor-
porate Ethics and Legal Compliance Handbook, which defines
standards of conduct and provides detailed information about
aspects that require special care. The Handbook is updated as
required, such as when laws and regulations are amended.
The subsidiaries and affiliated companies in Japan and overseas
have also established CSR/Legal Compliance Committees and
are working to ensure consistent compliance by compiling similar
codes of conduct, guidelines, handbooks and other materials.
Risk Management
We regard risk management as a fundamental element in the
corporate management of Toray Group. Under our corporate risk
management policies, which are administered over three-year
cycles, we aim to identify and reduce potential risk factors in our
business activities and prevent recurrences. We have also formu-
lated Crisis Management Regulations as the basis for the devel-
opment and administration of an Emergency Quick Response
System designed to prevent emergency situations from expand-
ing and ensuring the early restoration of normal operations.
Promotion of Group-Wide Risk Management
Under the corporate risk management system introduced in fiscal
2008, we evaluate potential risk factors that could affect the busi-
ness operations of Toray Group from a group-wide perspective.
This system consists of a series of specific steps based on the
Plan-Do-Check-Act cycle.
Step 1 (Plan): A risk survey is carried out using questionnaires
and interviews. Step 2: Results from these surveys are used to as-
sess risks, and the seriousness of potential risks is calculated by mul-
tiplying probability by impact. Step 3 (Do): A risk map is compiled
based on findings from Step 2. This is used to provide an overview
of all risks and identify major risks. Step 4: Priority risks are selected
from among the risks identified through Step 3 (Group-Wide Risk
Management Committee and CSR Committee) and countermea-
sures are implemented by the units concerned. Step 5 (Check,
Act): Activities undertaken to reduce priority risks are checked
and added, and follow-up measures are implemented (Group-
Wide Risk Management Committee and CSR Committee).
Risk reduction measures relating to priority risks are imple-
mented by the units responsible for each risk category, or by
working groups. The Group-Wide Risk Management Committee
receives regular reports about priority risks and assesses prog-
ress toward the reduction of risks after seeking input from the
director in charge of each area.
Working groups are established to take action in relation to
the following types of priority risks.
1. Information security risks
Toray uses e-learning to provide security training for its execu-
tives. A total of 1,108 executives have completed this pro-
gram to date, which is designed to improve awareness among
front-line management personnel.
2. Supply-chain risks
Toray has developed initiatives to ensure that customer
inquiries about conflict minerals are answered promptly and
efficiently. Steps taken by affiliated companies in Japan and
overseas in relation to conflict minerals are also checked.
Crisis Management System
Toray’s Crisis Management Regulations set out basic principles
for a group-wide response to serious risks affecting Toray Group.
The purpose of the regulations is to ensure a consistent and com-
prehensive response in a crisis situation.
When anti-Japanese demonstrations occurred in China in
August 2012, Toray immediately established an Emergency Re-
sponse Headquarters in accordance with the Crisis Management
Regulations. By implementing timely and effective measures, we
were able to minimize the impact on Toray Group.
Promotion of Business Continuity Plan (BCP)
We have always regarded major earthquakes as a significant risk
factor. Activities under our Major Earthquake Business Continuity
Plan include drills concerning the confirmation of personnel safety
systems, including its effect on the supply chain.
In the year ended March 31, 2013 (fiscal 2012), we applied
lessons learned through the Great East Japan Earthquake to the
development administration guidelines for a Company-Wide Re-
sponse Headquarters. We also conducted division-level drills on
setting up a company-wide earthquake response headquarters
based on a scenario in which a Tokyo is directly hit by a major
earthquake. Around 1,000 people took part.
In April 2013, the Tokyo Metropolitan Government enacted
an ordinance concerning measures to assist people stranded by
natural disasters. In accordance with the ordinance, Toray imple-
mented an e-learning program for all employees at its Tokyo Of-
fice concerning initial response measures in the event of a major
earthquake.
Other measures include the introduction of a system to check
the safety and whereabouts of employees at all Toray offices and
plants, a program of earthquake strengthening for plant build-
ings, a review of continuity planning for corporate functions and
key business operations, and the identification of potential prob-
lems affecting supply chains for each product. We are continu-
ally working to mitigate risk factors with the potential to affect
business continuity.
57
AnnuAl RepoRt 2013
Corporate Information
Board of Directors and Corporate Auditors
(As of June 26, 2013)
Chairman of the Board and
Representative Member of
the Board
President and
Representative Member of
the Board
Sadayuki Sakakibara
Akihiro Nikkaku
Executive Vice President and
Representative Member of
the Board
Executive Vice President and
Representative Member of
the Board
Executive Vice President and
Representative Member of
the Board
Junichi Fujikawa
Eizo Tanaka
Nobuo Suzui
In charge of General Administration &
Legal Division (Security Trade
Administration Department);
General Manager, Corporate
Strategic Planning Division; General
Manager, IT Business SBU
In charge of Marketing and Sales;
In charge of Corporate Marketing
Planning Department, Automotive
Material Strategic Planning Department
and branches; General Manager,
Fibers & Textiles Division;
General Manager, Osaka Head Office
In charge of Purchasing &
Logistics Division; Product Safety &
Quality Assurance Planning Depart-
ment; General Manager,
Manufacturing Division
Senior Vice President and
Representative Member of the Board
(Member of the Executive Committee)
Koichi Abe
Senior Vice Presidents
(Members of the Board &
Members of the Executive Committee)
Moriyuki Onishi
Shinichi Okuda
Kazushi Hashimoto
Ryo Murayama
Senior Vice Presidents
(Members of the Board)
Akira Uchida
Susumu Yamaguchi
Shogo Masuda
Akira Umeda
Yukichi Deguchi
Hiroshi Murakami
Akio Sato
Vice Presidents
(Members of the Board)
Hisae Sasaki
Hiroshi Otani
Minoru Yoshinaga
Kunihiko Yoshida
Toru Fukasawa
Mitsuo Oya
Satoru Hagiwara
Yasuo Suga
Hirofumi Kobayashi
Corporate Auditors
(Full-time)
Kiyoshi Fukuchi
Motoyuki Yagita
Corporate Auditors
Mitsuaki Yahagi
Makoto Matsuo
58
Toray IndusTrIes, Inc. Organization
(As of July 1, 2013)
Corporate Strategic Planning Division
General Administration & Legal Division
Board of Directors
Personnel & Industrial Relations Division
President & Executive Vice President
Investor Relations Dept.
Finance & Controller’s Division
Executive Committee &
Board of Senior Vice Presidents
Board of Corporate Auditors
Corporate Auditors
Corporate Communications Dept.
Auditing Dept.
Intellectual Property Division
Information Systems Division
Purchasing & Logistics Division
International Division
Advertising Dept.
Corporate Marketing Planning Dept.
Automotive Material Strategic Planning Dept.
Global Environment Business Strategic Planning Dept.
Affiliated Companies Division
Fibers & Textiles Division
Resins & Chemicals Division
Films Division
Torayca & Advanced Composites Division
Electronic & Information Materials Division
Pharmaceuticals & Medical Products Division
Water Treatment & Environment Division
Product Safety & Quality Assurance Planning Dept.
Regulatory Compliance Division
Technology Center
Manufacturing Division
Engineering Division
Research & Development Division
59
AnnuAl RepoRt 2013 Corporate Information
Toray Group Worldwide Network
(Major consolidated subsidiaries and affiliates)
(As of March 31, 2013)
EUROPE
United Kingdom
Consolidated Subsidiaries
l Toray Textiles Europe Ltd. (TTEL)
n Toray International U.K. Ltd. (TIUK)
France
Consolidated Subsidiaries
n l Toray Films Europe S.A.S. (TFE)
n Toray Carbon Fibers Europe S.A. (CFE)
Switzerland
Subsidiary Accounted for by Equity Method
l Toray Membrane Europe AG (TMEu)
Italy
Consolidated Subsidiaries
l Alcantara S.p.A.
Subsidiary Accounted for by Equity Method
n Toray International Italy S.r.l. (TIIT)
Czech Republic
Consolidated Subsidiaries
l Toray Textiles Central Europe s.r.o. (TTCE)
Germany
Consolidated Subsidiaries
n Toray International Europe GmbH (TIEU)
Others
ASIA
China
Consolidated Subsidiaries
n Toray Industries (China) Co., Ltd. (TCH)
l Toray Fibers (Nantong) Co., Ltd. (TFNL)
l
l Toray Polytech (Nantong) Co., Ltd. (TPN)
l Toray Jifa (Qingdao) Textile Co., Ltd. (TJQ)
Toray Sakai Weaving & Dyeing (Nantong) Co., Ltd. (TSD)
n l Toray Plastics (Shenzhen) Ltd. (TPSZ)
n l Toray Plastics (China) Co., Ltd. (TPCH)
n l Toray Sanko Precision (Zhongshan) Ltd. (RKZ)
n l Toray Sanko Precision (Hong Kong) Ltd. (RKH)
n Toray Industries (H.K.) Ltd. (THK)
n Toray International (China) Co., Ltd. (TICH)
n Toray Film Products (Zhongshan) Ltd.
n Toray Film Products (Hong Kong) Ltd.
l Toray BlueStar Membrane Co., Ltd. (TBMC)
Others
Subsidiaries Accounted for by Equity Method
n Toray Industries (South China) Co., Ltd. (TSCH)
Others
Affiliate Accounted for by Equity Method
n Yihua Toray Polyester Film Co., Ltd. (YTP)
Republic of Korea
Consolidated Subsidiaries
l n l Toray Advanced Materials Korea Inc.
l STEMCO, Ltd. (STEMCO)
Affiliates Accounted for by Equity Method
l STECO, Ltd. (STECO)
Others
Chinese Taipei
Subsidiary Accounted for by Equity Method
n Toray International Taipei Inc. (TITP)
Others
Malaysia
Consolidated Subsidiaries
l Penfabric Sdn. Berhad (PAB)
l n l Penfibre Sdn. Berhad (PFR)
n l Toray Plastics (Malaysia) Sdn. Berhad (TPM)
Others
Subsidiary Accounted for by Equity Method
n Toray Industries (Malaysia) Sdn. Berhad (TML)
Affiliate Accounted for by Equity Method
n Toray BASF PBT Resin Sdn. Berhad (TBPR)
Singapore
Consolidated Subsidiary
n Toray International Singapore Pte. Ltd. (TISP)
Consolidated subsidiaries
Subsidiaries accounted
for by equity method
Total subsidiaries
Affiliates accounted
for by equity method
Companies subject to
consolidation
Japan Overseas Total
86 147
61
27
88
12
24
51
110 198
26
38
100
136 236
(As of March 31, 2013)
Japan
Consolidated Subsidiaries
l n Ichimura Sangyo, Co., Ltd.
l n l Toray Fine Chemicals Co., Ltd.
n l Toyo Plastic Seiko Co., Ltd.
n l Toray Advanced Film Co., Ltd.
l Toray KP Films Inc.
l Toray Battery Separator Film Co., Ltd.
n Soda Aromatic Co., Ltd.
l l Toray Engineering Co., Ltd.
l Toray Construction Co., Ltd.
l Suido Kiko Kaisha, Ltd.
n Toray Medical Co., Ltd.
n Toray Research Center Inc.
n Toray International, Inc.
n Chori Co., Ltd.
Others
Subsidiaries Accounted for by Equity Method
n Toyo Business Support Inc.
Others
Affiliates Accounted for by Equity Method
l n l Du Pont-Toray Co., Ltd.
l Toray Opelontex Co., Ltd.
n l Dow Corning Toray Co., Ltd.
n Sanyo Chemical Industries, Ltd.
Others
Indonesia
Consolidated Subsidiaries
l P.T. Acryl Textile Mills (ACTEM)
l P.T. Century Textile Industry Tbk (CENTEX)
l P.T. Easterntex (ETX)
l P.T. Indonesia Synthetic Textile Mills (ISTEM)
l P.T. Indonesia Toray Synthetics (ITS)
Subsidiaries Accounted for by Equity Method
n P.T. Toray Industries Indonesia (TIN)
Others
Affiliates Accounted for by Equity Method
n P.T. Petnesia Resindo (PNR)
Others
Thailand
Consolidated Subsidiaries
l Luckytex (Thailand) Public Co., Ltd. (LTX)
l Thai Toray Textile Mills Public Co., Ltd. (TTTM)
l n l Toray Synthetics Co., Ltd. (TTS)
Subsidiary Accounted for by Equity Method
n Toray Industries (Thailand) Co., Ltd. (TTH)
Affiliate Accounted for by Equity Method
n Thai PET Resin Co., Ltd. (TPRC)
NORTH AMERICA
U.S.A.
Consolidated Subsidiaries
l Toray Fluorofibers (America), Inc. (TFA)
l n Toray International America Inc. (TIAM)
n Toray Plastics (America), Inc. (TPA)
n Toray Resin Co. (TREC)
n Toray Carbon Fibers America, Inc. (CFA)
n Toray Composites (America), Inc. (TCA)
l Toray Membrane USA, Inc. (TMUS)
Others
n Regional Supervisory Organization
l Fibers & Textiles
n Plastics & Chemicals
l IT-related Products
n Carbon Fiber Composite Materials
l Environment & Engineering
n Life Science & Other Businesses
n Trading
Major Offices in Japan
Overseas Offices and Branches
2nd Head Office Building
8-1, Mihama 1-chome,
Urayasu, Chiba 279-8555, Japan
Telephone: 81 (47) 350-6001
Facsimile: 81 (47) 350-6075
Osaka Head Office
Nakanoshima Mitsui Building,
3-3, Nakanoshima 3-chome,
Kita-ku, Osaka 530-8222, Japan
Telephone: 81 (6) 6445-4101
Facsimile: 81 (6) 7688-3774
New York
Toray Industries (America) Inc. (TAM)
461 Fifth Ave., 9th Fl., New York,
NY 10017, U.S.A.
Telephone: 1 (212) 697-8150
Facsimile: 1 (212) 972-4279
London
Toray Industries, Inc., Europe Office
(TEU)
Verulam Gardens, 70 Gray’s Inn Road,
London, WC1X 8NH, U.K.
Telephone: 44 (20) 7663-7760
Facsimile: 44 (20) 7663-7770
Beijing
Toray Industries, Inc., Beijing Office
Beijing Fortune Bldg., No. 917,
5, Dong San Huan Bei-Lu, Chao Yang
District, Beijing 100004, China
Telephone: 86 (10) 6590-8961—3
Facsimile: 86 (10) 6590-8964
Seoul
Toray Industries, Inc., Seoul Office
10th Floor, LG Mapo Bldg., 275,
Gongdeok2-dong, Mapo-gu, Seoul,
121-721 Korea
Telephone: 82 (2) 707-0381—2
Facsimile: 82 (2) 707-0067
India
Toray Industries, Inc., India Liaison Office
Unit No. 504, 5th Floor, Vatika City Point,
MG Road Gurgaon, Haryana
122002, India
Telephone: 91 (12) 4387-7900
Facsimile: 91 (12) 4387-7901
Brazil
Toray do Brasil Ltda.
Av. Paulista, 1048-Conj 71 Bela Vista
Sao Paulo - SP 01310-100, Brasil
Telephone/Facsimile: 55 (11) 4314-7792
60
Toray IndusTrIes, Inc.
Financial Section
Co n t e n t s
62 SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA
63 MANAGEMENT’S DISCUSSION AND ANALYSIS
68 CONSOLIDATED BALANCE SHEETS
70 CONSOLIDATED STATEMENTS OF INCOME
70 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
71 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
72 CONSOLIDATED STATEMENTS OF CASH FLOWS
73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
96 INDEPENDENT AUDITOR’S REPORT
61
SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31
2013
2012
2011
2010
2009
2008
Millions of yen
net sales*
¥1,592,279
¥1,588,604
¥1,539,693
¥1,359,631
¥1,471,561
¥1,649,670
Fibers & Textiles
Plastics & Chemicals
IT-related Products
Carbon Fiber Composite Materials
Environment & Engineering
Life Science
Others
Life Science & Other Businesses
operating income
Income (loss) before income taxes
and minority interests
net income (loss)
net cash provided
by operating activities
Depreciation and amortization
Capital expenditures
total assets
632,150
395,835
237,593
77,620
178,355
56,599
14,127
—
83,436
77,828
48,477
638,375
397,815
243,404
69,914
170,247
55,554
13,295
—
584,115
382,299
262,027
67,018
178,183
52,430
13,621
—
107,721
100,087
525,204
332,735
230,433
50,676
159,787
46,656
14,140
—
40,107
568,996
377,644
229,421
70,390
160,207
—
—
64,903
36,006
637,343
404,015
283,734
83,580
173,213
—
—
67,785
103,429
101,091
82,893
(2,415)
(19,751)
78,565
64,218
57,925
(14,158)
(16,326)
48,069
100,815
104,410
129,214
166,215
38,447
110,367
67,588
99,135
67,443
98,384
70,479
55,942
74,904
57,073
83,764
92,349
86,423
146,787
1,731,830
1,581,501
1,567,470
1,556,796
1,523,603
1,698,226
Property, plant and equipment, net
Interest-bearing liabilities
net assets
627,240
532,002
779,615
561,923
481,906
674,149
531,595
493,509
640,970
580,344
632,160
518,216
596,261
663,945
512,610
680,993
591,182
642,159
Yen
Per share of common stock:
Net income (loss):
Basic
Diluted
Cash dividends
Net assets
Ratios:
¥ 29.75
¥ 39.41
¥ 36.41
¥ (10.12)
¥ (11.66)
¥ 34.34
28.90
10.00
444.95
37.46
10.00
384.90
34.43
7.50
363.90
—
5.00
—
7.50
336.65
335.04
—
10.00
423.78
Operating income to net sales
5.24%
6.78%
6.50%
2.95%
2.45%
6.27%
Net income (loss) to net sales
Equity ratio
Return on equity
Debt/equity ratio (times)
3.04
41.9
7.2
0.73
4.04
39.7
10.5
0.77
(1.04)
30.3
(3.0)
1.34
(1.11)
30.8
(3.1)
1.42
2.91
34.9
8.1
1.00
3.76
37.8
10.9
0.83
Yen
Common stock price range:
High
Low
¥ 654
¥ 631
¥ 643
¥ 591
¥ 694
¥ 998
421
511
420
390
350
529
number of employees
42,584
40,227
38,740
37,936
37,924
38,565
* Effective from the year ended March 31, 2011, “Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related Information”
(Accounting Standards Board of Japan (ASBJ) Statement No.17, March 27, 2009) and “Guidance on the Accounting Standard for Disclosures about Segments of
an Enterprise and Related Information” (ASBJ Guidance No.20, March 21, 2008) are applied. Accordingly, segment information for the year ended March 31, 2010
is restated.
62
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
63
MANAGEMENT’S DISCUSSION AND ANALYSIS
oVeRVIeW
InCoMe AnALYsIs
During the period covered by year ended March 31, 2013 (fiscal
2012), the global economy on the whole remained under harsh
conditions, as the European real economy’s protracted struggle
with its sovereign debt problems continued while the Chinese
economy and the U.S. economic recovery slowed down. The
Japanese economy recovered at a gradual pace on the back of
mainly reconstruction demand related to the Great East Japan
Earthquake, though the recovery leveled off from summer
reflecting primarily the global economic slowdown. Since the
end of 2012, there have been some positive signs on the back
of expectations for the economic measures by the administration
led by Prime Minister Shinzo Abe.
Under such circumstances, Toray Group has been
implementing the growth strategy with focus on pursuing
business expansion in growth business fields and growth regions
and further bolstering its total cost competitiveness in
accordance with the medium-term management program
“Project AP-G 2013.”
As a result, Toray Group achieved an increase in revenues from
the previous fiscal year but earnings fell during the same period.
net sales
Consolidated net sales in the year ended March 31, 2013
amounted to ¥1,592.3 billion, up 0.2% or ¥3.7 billion from the
previous fiscal year. Sales increased in the Carbon Fiber
Composite Materials, the Environment & Engineering, the Life
Science segments and the Others.
sales by segment
Fibers & Textiles
Total sales in this segment declined ¥6.2 billion, or 1.0%, to
¥632.2 billion.
In Japan, while sales of industrial-use materials grew
strongly fueled by factors including rising sales for automotive
applications reflecting production expansion by automobile
manufacturers in the first half, the demand showed a
decelerating trend in the second half as the subsidies for
purchase of eco-cars ended. Demand for apparel applications
remained weak due to the slowing economy, except for
functional apparel materials for fall and winter, sales of which
were strong. Overseas, in addition to sluggish demand in Asia
given the impact of the slowdown in the United States and
European economies and deceleration of China’s domestic
demand, both production and sales in the first half were
affected by the floods in Thailand.
net sales by segment
(Billions of yen)
operating Income by segment
(Billions of yen)
1,649.7
1,471.6
1,588.6 1,592.3
1,539.7
1,359.6
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
103.4
107.7
100.1
83.4
40.1
36.0
120
90
60
30
0
-30
Mar/’08 ’09 ’10 ’11 ’12 ’13
Mar/’08 ’09 ’10 ’11 ’12 ’13
n Fibers & Textiles n Plastics & Chemicals n IT-related Products
n Carbon Fiber Composite Materials n Environment & Engineering
n Life Science & Other Businesses n Life Science n Others
n Fibers & Textiles n Plastics & Chemicals n IT-related Products
n Carbon Fiber Composite Materials n Environment & Engineering
n Life Science & Other Businesses n Life Science
n Others n Elimination & Corporate n Adjustment
*1 Effective from the year ended March 31, 2011, “Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related Information”
(ASBJ Statement No.17 of March 27, 2009) and “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related
Information” (ASBJ Guidance No.20 of March 21, 2008) are applied. Accordingly, segment Information for the year ended March 31, 2010 is restated.
*2 Operating income by segment that is not attributable to any segment is included in “Elimination & Corporate” for the fiscal years ended March 31, 2008 and
2009, respectively, and included in “Adjustment” for the fiscal years ended March 31, 2010, 2011, 2012 and 2013, respectively.
62
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
63
Plastics & Chemicals
Total sales in this segment decreased ¥2.0 billion, or 0.5%, to
¥395.8 billion.
Sales volume of engineering plastics for automotive
applications in the resin business increased in the first half on
expanded production primarily by automobile manufacturers in
Japan, though demand declined from the third quarter due to the
ending of subsidies for purchase of eco-cars. Overseas, while
freight movement of general-purpose ABS resins remained
sluggish reflecting the continued stagnation in the Chinese market,
sales of resin compounds, etc. for automotive applications in the
United States expanded. Demand for film products remained
sluggish in Japan and overseas due to the worldwide economic
slowdown, while price competition continued to intensify.
IT-related Products
Total sales in this segment declined ¥5.8 billion, or 2.4%, to
¥237.6 billion.
Despite production adjustments for LCD panels caused by
the slowdown in the flat-screen television market being almost
over and production showing signs of recovery, the flat-screen
television-related products including films and processed film
products did not reach the levels marked in the same period a
year earlier, as recovery in demand was slow, and price
competition intensified. Among materials for small and mid-
sized displays, sales of smartphone-related products
increased, while those for other applications remained
sluggish in general.
Carbon Fiber Composite Materials
Total sales in this segment rose ¥7.7 billion, or 11.0%, to
¥77.6 billion.
Sales in aerospace and general industrial applications were
strong, as demand for aircraft applications grew and that for
environmental and energy-related applications, including
compressed natural gas tank applications, expanded. The
recovery of the market for sporting goods applications stalled
reflecting the economic slowdown in Japan and abroad, and
price competition has been intensifying.
Environment & Engineering
Total sales in this segment increased ¥8.1 billion, or 4.8%, to
¥178.4 billion.
Demand for water treatment membranes was sluggish in
main markets such as Europe, the United States, Middle East
and China. Japanese subsidiaries in general expanded sales,
while an engineering subsidiary was affected by order price
declines due to intensifying competition.
Life Science
Total sales in this segment were up ¥1.0 billion, or 1.9%, to
¥56.6 billion.
Sales of medical products including TORAYLIGHTTM NV, a
polysulfone membrane dialyzer, and TORAYMYXIN TM a
hemoperfusion absorption column for removing endotoxins,
increased strongly. Sales of pharmaceutical products, however,
were affected by intensified competition as well as the lowering
of the selling price under the National Health Insurance price
revision in April 2012.
Others
Net sales rose ¥0.8 billion, or 6.3%, to ¥14.1 billion.
Costs and expenses
The ratio of total costs and expenses to net sales for the year was
94.8%, up 1.5 percentage points from the previous fiscal year.
Consolidated net sales increased 0.2% year on year, and
cost of sales increased 1.5%. As a result, the cost of sales ratio
increased 1.0 percentage points to 80.4%.
Selling, general and administrative expenses increased ¥8.4
billion, or 3.8%, to ¥228.2 billion. The ratio of selling, general
and administrative expenses to net sales increased 0.5
percentage points to 14.3%.
R&D expenses increased ¥1.9 billion, or 3.7%, to ¥53.3 billion.
operating Income and net Income
Operating income fell ¥24.3 billion, or 22.5%, from the previous
fiscal year, to ¥83.4 billion, while operating income to net sales
fell 1.5 percentage points to 5.2%.
By segment, operating income decreased in all segments
except for the Life Science segment and Others.
Operating income in the Fibers & Textiles segment fell ¥2.1
billion, or 4.6%, from the previous fiscal year to ¥43.2 billion. Demand
was soft in the Asia region, due to the economic situation in Europe
and the United States and to the slowdown in Chinese demand,
while first-half results were also affected by the floods in Thailand.
In the Plastics & Chemicals segment, operating income
decreased ¥9.1 billion, or 33.2% to ¥18.3 billion. In the resin
business, demand decreased for automotive applications in Japan
due to the end of eco-car subsidies, while overseas, the continued
slowdown in the Chinese market led to lower movement of goods.
In the film business, there was weakening demand due to such
factors as the worldwide economic slowdown, as well as the
continued intensification of price competition.
Operating income in the IT-related Products segment fell
¥11.6 billion, or 33.5%, to ¥23.0 billion. A major contributor was
the weakness that emerged in small and mid-size display-related
materials outside of smartphone-related products.
In the Carbon Fiber Composite Materials segment,
operating income decreased from the previous fiscal year by
¥0.4 billion, or 4.8%, to ¥7.3 billion. Major contributors were the
slow speed of demand recovery for sporting goods applications,
as a result of a weak economy, both in Japan and overseas, and
intensifying price competition.
Operating income in the Environment & Engineering
segment fell ¥2.3 billion, or 46.2%, to ¥2.6 billion. Major factors
include cost increases at a construction and real estate
subsidiary and falling order prices stemming from intense price
competition at an engineering subsidiary.
In the Life Science segment, operating income rose ¥1.5 billion,
or 24.7%, to ¥7.5 billion, boosted by strong sales expansion in
medical products and other factors.
Operating income of Others increased ¥0.2 billion, or 16.7%, to
¥1.6 billion.
64
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
65
In net other income (expenses), Toray Group reported ¥5.6
billion in expenses, a ¥1.0 billion year-on-year decrease. Interest
and dividend income was generally even at ¥3.2 billion, while
interest expense fell ¥0.3 billion to ¥5.5 billion. This led to a
¥0.4 billion improvement in net financial expenses to ¥2.2
billion. Equity in earnings of unconsolidated subsidiaries and
affiliated companies increased ¥2.2 billion to ¥7.4 billion. Loss
on impairment of fixed assets increased ¥1.7 billion year on year
to ¥2.0 billion. Loss on sales and disposal of property, plant and
equipment, net, increased by ¥0.4 billion to ¥4.4 billion.
As a result of the above, income before income taxes and
minority interests decreased ¥23.3 billion to ¥77.8 billion. After
deductions for income taxes and minority interests in earnings
of consolidated subsidiaries, net income amounted to ¥48.5
billion, down ¥15.7 billion from the previous fiscal year.
Net income per share was ¥29.75, a decrease of ¥9.66. The
Company declared a year-end cash dividend of ¥5.00 per share in
light of the profit conditions for the year under review and the profit
outlook for the next fiscal term. Added to the interim cash dividend,
this brought the total annual dividend to ¥10.00 per share.
FInAnCIAL PosItIon
Assets
Total assets on March 31, 2013, stood at ¥1,731.8 billion, up
¥150.3 billion or 9.5% from the end of the previous fiscal year.
This was mainly due to the increases in cash and time deposits,
in inventories and in property, plant and equipment, net of
depreciation.
total Assets and net Assets
(Billions of yen)
2,000
(%)
60
1,698.2
1,731.8
1,500
1,523.6 1,556.8 1,567.5 1,581.5
34.9
39.7
37.8
1,000
30.8
30.3
642.2
641.0 674.1
500
512.6 518.2
0
45
41.9
30
779.6
15
0
Mar/’08 ’09 ’10 ’11 ’12 ’13
n Total Assets
n Net Assets
Equity Ratio
Current Assets
Current assets were up 9.7%, or ¥70.5 billion, to ¥796.7 billion.
Cash and time deposits were up 33.5%, or ¥27.3 billion, to
¥108.7 billion. Inventories rose to ¥313.7 billion, up ¥18.0 billion
or 6.1%.
Property, Plant and equipment
Property, plant and equipment, net of depreciation compared
with the end of the previous fiscal year grew 11.6%, or ¥65.3
billion, to ¥627.2 billion. Capital expenditures totaled ¥98.0 billion,
up 3.9% or ¥3.7 billion based on our policy of investing selectively
in prospective growth areas while streamlining and modernizing
production facilities to enhance production efficiency.
In the Fibers & Textiles segment, capital expenditures totaled
¥27.9 billion, which included new polypropylene spunbond
production facilities at P.T. Toray Polytech Jakarta. In the Plastics
& Chemicals segment, capital expenditures amounted to ¥23.2
billion, which included additional PPS resin production facilities at
the Company. Capital expenditures in the IT-related Products
segment were ¥21.7 billion, which included new polyolefin film
production facilities at Toray Advanced Film Kaohsiung Co., Ltd.
In the Carbon Fiber Composite Materials segment, capital
expenditures amounted to ¥15.3 billion, which included
additional carbon fiber production facilities at Toray Carbon
Fibers Europe S.A. and new one at Toray Advanced Materials
Korea Inc. In the Environment & Engineering segment, capital
expenditures amounted to ¥4.3 billion. In the Life Science
segment, capital expenditures amounted to ¥3.7 billion, which
included new dialyzer production facilities at Toray Medical
(Qingdao) Co., Ltd.
Liabilities
Total liabilities increased ¥44.9 billion, or 4.9%, to ¥952.2 billion.
A major factor was the increase in total interest-bearing
liabilities—consisting of short-term bank loans, current portion
of long-term debt, commercial paper, long-term debt and lease
obligations—up ¥50.1 billion, or 10.4%, to ¥532.0 billion.
net Assets
Net assets came to ¥779.6 billion and net assets less minority
interests in consolidated subsidiaries and stock acquisition rights
stood at ¥725.0 billion. As a result, net assets per share
increased ¥60.05 to ¥444.95. The equity ratio rose 2.2
percentage points to 41.9%, while the debt/equity ratio
improved by 0.03 point to 0.73.
CAsH FLoWs
In the year ended March 31, 2013, net cash used in investing
activities exceeded net cash provided by operating activities by
¥6.7 billion. On the other hand, net cash provided by financing
activities was ¥26.2 billion due mainly to an increase in interest-
bearing liabilities. As a result of these and other factors, cash and
cash equivalents at fiscal year-end stood at ¥107.7 billion, up
¥26.4 billion or 32.5% from the end of the previous fiscal year.
64
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
65
Cash Flows from operating Activities
Net cash provided by operating activities amounted to ¥100.8
billion, down ¥3.6 billion from the previous fiscal year. Major
factors for provision of cash include income before income taxes
and minority interests of ¥77.8 billion and depreciation and
amortization of ¥67.6 billion, while major factors for use of cash
include an increase in trade receivables of ¥10.2 billion, and
income taxes paid of ¥20.9 billion.
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥107.5 billion, up
¥3.5 billion from the previous fiscal year. Main factors include
capital expenditures of ¥105.1 billion.
Cash Flows from Financing Activities
Net cash provided by financing activities was ¥26.2 billion, up
¥49.8 billion from the previous fiscal year. Main factors include
proceeds from long-term debt of ¥101.6 billion, which
contrasted with repayment of long-term debt of ¥53.8 billion
and cash dividends paid of ¥17.2 billion.
BUsIness RIsKs
Operational and other risks faced by Toray Group that could
have a major influence on the decisions of investors are
described below. Toray Group works constantly to avoid such
potential risks, minimize their impact, and build a system to
enable swift responses and accurate information disclosure on
the occurrence of unforeseen situations. Please note that the
risks described below are those identified by Toray Group when
this annual report was produced, and do not represent all the
operational and other risks that could affect Toray Group.
(1) Domestic and overseas demand and market trends
As a supplier of basic materials to a broad range of industries,
Toray Group is exposed to various factors that could cause a
sharp drop in demand for its products. These include changes in
both worldwide and regional supply-demand conditions,
increased use of substitute materials, and changes to the
purchasing policies of business partners. In addition to severe
competition with other companies, Toray Group’s various
businesses also face the risk of new players entering the market.
Price fluctuations, stemming from the reduction of National
Health Insurance (NHI) drug prices and reimbursement prices,
also affect the pharmaceuticals and medical products business.
Although Toray Group takes steps to maintain its competitive
advantage, a decline in demand for, or falling prices of, such
items, or the appearance of a credit risk affecting Toray Group’s
business partners, could have a negative impact on Toray
Group’s results of operations and financial conditions.
(2) Rising prices of fuel and raw materials
The prices of petrochemical raw materials and fuel used by Toray
Group are subject to significant fluctuations. If Toray Group is
unable to fully pass the increases in such prices on to its product
prices, or cannot raise its product prices due to lack of progress in
shifting to high-value-added products, its results of operations
and financial conditions could be negatively affected.
Interest-bearing Liabilities and D/e Ratio
(Billions of yen)
700
663.9
632.2
600
591.2
1.42
(Times)
1.60
1.40
1.20
1.00
1.34
532.0
493.5 481.9
1.00
0.83
0.77
0.80
0.73
0.60
0.40
0.20
500
400
300
200
100
0
Cash Flows
(Billions of yen)
200
150
100
50
0
-50
166.2
129.2
110.4
104.4 100.8
78.5
38.4
44.5
0.4
-6.7
-53.8
-100
-74.9
-50.7
-113.4
-121.7
-104.0 -107.5
-150
-200
-164.2
Mar/’08 ’09 ’10 ’11 ’12 ’13
Mar/’08 ’09 ’10 ’11 ’12 ’13
n Interest-bearing Liabilities
D/E Ratio
n Cash Flows from Operating Activities
n Cash Flows from Investing Activities
Free Cash Flows
66
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
67
(3) Capital expenditures, joint ventures,
— Unforeseen introduction, changes or abolition of laws and
alliances and acquisitions
Toray Group makes capital expenditures in a wide range of
business fields. Its other activities include formation of various
joint ventures or strategic alliances with third parties, as well as
business acquisitions.
When Toray Group becomes involved in capital expenditures,
joint ventures, alliances and acquisitions, it considers the potential
for profitability and return on investment. However, there is not
necessarily any guarantee that the outcome will be consistent
with expectations. If unforeseen market changes or significant
discrepancies between actual results and initial business plans
occur due to sudden changes in the operating environment, there
could be a loss on impairment of fixed assets or equity in losses
of unconsolidated subsidiaries and affiliated companies. As a
result, Toray Group’s results of operations and financial conditions
could be negatively affected.
(4) Foreign currency, interest rate and
securities market fluctuations
Foreign currency exchange rate fluctuations affect Toray Group’s
consolidated financial statements when the financial statements
of the overseas operations presented in local currencies are
translated into yen. Toray Group takes measures, such as entering
forward exchange contracts, to alleviate risks associated with
transactions denominated in foreign currencies. However,
unforeseen exchange rate fluctuations could have an impact on
Toray Group’s results of operations and financial conditions.
Moreover, changes in interest rates and other aspects of
financial markets, as well as changes in the value of securities
and pension assets held by Toray Group, may have an impact
on Toray Group’s results of operations and financial conditions.
(5) Changes in assumptions on which forecasts are
based that might affect employee retirement benefit
obligations and deferred tax assets
Toray’s consolidated financial statements contain employee
retirement benefit obligations based on future pension
payments calculated in accordance with certain criteria, as well
as deferred tax assets stated according to likely tax refunds
based on taxable income estimates for the future fiscal years.
However, if changes in the criteria used to calculate pension
payments were to occur, or if fluctuations arose in the estimates
of future taxable income, Toray Group’s results of operations
and financial conditions could be affected.
(6) Overseas operations
Toray Group is developing a broad geographical presence, with
operations in various countries of Asia, Europe, and the
Americas. Some of the major potential risks associated with
various regions are summarized below. If such risks were to
become reality, Toray Group’s results of operations and financial
conditions could be negatively affected.
regulations such as changes in taxation systems
—Unforeseen economic or political events
—Social upheaval, including acts of terror or war
(7) Product liability
Toray Group strives to supply the world’s best-in-class product
quality. However, it cannot always guarantee against a major
unforeseen quality problem. If quality-related serious situations
were to occur, Toray Group’s results of operations and financial
conditions could be negatively affected.
(8) Lawsuits
In the course of conducting its wide range of business activities,
Toray Group faces the risk of being targeted by legal action
pertaining to various matters such as intellectual property,
product liability, environment, and labor issues. If Toray Group
were subject to a major lawsuit, its results of operations and
financial conditions could be negatively affected.
(9) Laws and regulations, taxes,
competition policies and internal controls
Various laws and regulations apply in the countries and regions
where Toray Group conducts its business. These laws and
regulations include regulations related to the environment,
commercial trading, labor, intellectual property, taxation and
foreign exchange, investment approval protocols and import/
export controls, and policies on competition based on antitrust
laws. Through the establishment and maintenance of internal
control systems, Toray Group endeavors to comply with all such
laws and regulations. However, changes to such laws and
regulations, including the introduction of new environmental
regulations and taxes, as well as changes to the corporate
income tax rate could affect Toray Group’s results of operations
and financial conditions. Also, if Toray Group is judged as
having violated such laws and regulations, is subject to
government sanctions initiated by a fair trade commission,
receives a notice of correction from tax authorities, has an
employee who engages in illicit behavior, or is unable to uphold
internal controls pertaining to financial statements, its results of
operations and financial conditions could be negatively affected.
(10) Natural disasters and accidents
Toray Group places top priority on safety, accident prevention,
and environmental preservation. To minimize losses caused by
the suspension of production, Toray Group conducts regular
a c c i d e n t p r e v e n t i o n i n s p e c t i o n s , m a i n t e n a n c e o f i t s
manufacturing facilities, and safety activities. However, the
advent of a major natural disaster or unprecedented accident
could cause damage to Toray Group’s manufacturing facilities,
or could cause inadequate supply of raw materials, which could
have a negative impact on its results of operations and
financial conditions.
66
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
67
CONSOLIDATED BALANCE SHEETS
Toray Industries, Inc. and Consolidated Subsidiaries
March 31, 2013 and 2012
Assets
Current assets:
Cash (Note 5)
Time deposits (Notes 4 and 5)
Trade receivables (Notes 5 and 7):
Notes receivable
accounts receivable
Inventories (Note 3)
Deferred tax assets (Note 10)
Prepaid expenses and other current assets (Notes 5 and 6)
allowance for doubtful accounts
Total current assets
Property, plant and equipment (Notes 4 and 13) :
Land
Buildings
Machinery and equipment
Construction in progress
accumulated depreciation
Property, plant and equipment, net
Intangible assets (Note 13) :
Goodwill
Other
Total intangible assets
Investments and other assets:
Investments in unconsolidated subsidiaries and affiliated companies (Note 5)
Investment securities (Notes 4, 5 and 6)
Long-term loans receivable
Deferred tax assets (Note 10)
Other (Note 8)
allowance for doubtful accounts
Total investments and other assets
Millions of yen
Thousands of
U.S. dollars (Note 2)
2013
2012
2013
¥ 87,276
¥ 63,519
$ 928,468
21,390
17,879
227,553
32,747
275,483
313,707
21,405
46,852
(2,128)
34,935
248,693
295,745
18,220
49,517
(2,269)
348,372
2,930,670
3,337,309
227,713
498,426
(22,638)
796,732
726,239
8,475,872
69,672
489,399
69,595
454,542
741,191
5,206,372
1,572,900
1,439,318
16,732,979
62,998
76,971
670,191
2,194,969
2,040,426
23,350,734
(1,567,729)
(1,478,503)
(16,677,968)
627,240
561,923
6,672,766
29,767
12,853
42,620
31,862
10,758
42,620
316,670
136,734
453,404
78,031
120,851
929
19,399
48,144
(2,116)
265,238
72,023
98,949
1,236
34,067
46,836
(2,392)
250,719
830,117
1,285,649
9,883
206,372
512,170
(22,511)
2,821,681
Total assets
¥ 1,731,830
¥ 1,581,501
$ 18,423,723
See accompanying notes to consolidated financial statements.
68
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
69
Liabilities and net Assets
Current liabilities:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2013
2012
2013
Short-term bank loans (Notes 4, 5 and 7)
¥ 98,633
¥ 101,758
$ 1,049,287
Current portion of long-term debt (Notes 4, 5 and 7)
Commercial paper (Note 5)
Trade payables (Notes 5 and 7):
Notes payable
accounts payable
Income taxes payable (Note 10)
accrued liabilities
Other current liabilities (Notes 4 and 10)
Total current liabilities
98,225
30,000
31,077
154,850
9,764
45,593
82,136
56,246
25,000
35,756
146,315
12,494
43,969
94,291
1,044,947
319,149
330,606
1,647,340
103,872
485,032
873,787
550,278
515,829
5,854,021
Long-term debt (Notes 4, 5 and 7)
302,739
295,961
3,220,628
Deferred tax liabilities (Note 10)
9,214
5,674
98,021
Accrued employees’ retirement benefits (Note 8)
68,101
65,684
724,479
Customers’ guarantee deposits and other liabilities (Note 4)
Total liabilities
21,883
952,215
24,204
907,352
232,798
10,129,947
Commitments and contingent liabilities (Note 12)
net assets (Note 11):
Stockholders’ equity:
Common stock:
authorized—4,000,000,000 shares
Issued—1,631,481,403 shares
Capital surplus
Retained earnings
Treasury stock, at cost
Total stockholders’ equity
accumulated other comprehensive income:
Net unrealized gains on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Total accumulated other comprehensive income
Stock acquisition rights (Note 9)
Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets
147,873
136,748
462,536
(1,170)
745,987
35,388
(883)
(55,515)
(21,010)
566
54,072
779,615
147,873
136,740
430,365
(1,194)
713,784
20,659
(78)
(107,254)
(86,673)
287
46,751
674,149
1,573,117
1,454,766
4,920,596
(12,447)
7,936,032
376,468
(9,394)
(590,585)
(223,511)
6,021
575,234
8,293,777
¥1,731,830
¥1,581,501
$18,423,723
68
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
69
CONSOLIDATED STATEMENTS OF INCOME
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012
net sales
Costs and expenses:
Cost of sales (Notes 3, 8, 13 and 14)
Selling, general and administrative expenses (Notes 8, 13 and 14)
Operating income
other income (expenses):
Interest expense
Interest and dividend income
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Loss on sales and disposal of property, plant and equipment, net
Loss on impairment of fixed assets
Gain on sales and loss on write-down of investment securities, net
Restructuring costs
Other, net
Income before income taxes and minority interests
Income taxes (Note 10):
Current
Deferred
Income before minority interests
Minority interests in earnings of consolidated subsidiaries
Net income
See accompanying notes to consolidated financial statements.
Millions of yen
Thousands of
U.S. dollars (Note 2)
2013
2012
2013
¥1,592,279
¥1,588,604
$16,939,138
1,280,649
228,194
1,508,843
83,436
1,261,114
219,769
1,480,883
107,721
13,623,926
2,427,596
16,051,521
887,617
(5,460)
3,247
7,431
(4,444)
(1,972)
(1,267)
(287)
(2,856)
(5,608)
77,828
(5,766)
3,200
5,194
(4,064)
(232)
(49)
(1,629)
(3,284)
(6,630)
101,091
(58,085)
34,543
79,053
(47,277)
(20,979)
(13,479)
(3,053)
(30,383)
(59,660)
827,957
17,876
8,870
26,746
51,082
(2,605)
¥ 48,477
18,639
14,689
33,328
67,763
(3,545)
¥ 64,218
190,170
94,362
284,532
543,426
(27,713)
$ 515,713
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012
Income before minority interests
Other comprehensive income (Note 15)
Net unrealized gains (losses) on securities
Net deferred losses on hedges
Foreign currency translation adjustments
Share of other comprehensive income of unconsolidated subsidiaries and
affiliated companies accounted for by the equity method
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Minority interests
See accompanying notes to consolidated financial statements.
Millions of yen
2013
¥ 51,082
14,981
(807)
52,466
2,607
69,247
¥120,329
2012
¥ 67,763
(441)
(185)
(13,778)
(706)
(15,110)
¥ 52,653
Thousands of
U.S. dollars (Note 2)
2013
$ 543,426
159,372
(8,585)
558,149
27,734
736,670
$1,280,096
¥114,140
6,189
¥ 50,528
2,125
$1,214,255
65,840
70
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
71
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012
Stockholders’ equity
Accumulated other comprehensive income
Millions of yen
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock,
at cost
Total
stockholders’
equity
Net
unrealized
gains on
securities
Net
deferred
losses on
hedges
Foreign
currency
translation
adjustments
Total
accumulated
other
comprehensive
income
Stock
acquisition
rights
Minority
interests in
consolidated
subsidiaries
Total net
assets
Balance as of April 1, 2011
¥147,873
¥136,739
¥382,454
¥(1,160)
¥665,906
¥21,164
¥ 105
¥(94,252)
¥(72,983)
¥ —
¥48,047
¥640,970
Changes in:
Dividends
Net income
acquisition of treasury stock
Disposition of treasury stock
Other
Items other than
stockholders’ equity, net
(16,302)
64,218
1
(5)
(16,302)
64,218
(38)
5
(5)
(38)
4
(16,302)
64,218
(38)
5
(5)
(505)
(183)
(13,002)
(13,690)
287
(1,296)
(14,699)
Total changes
—
1
47,911
(34)
47,878
(505)
(183)
(13,002)
(13,690)
Balance as of March 31, 2012
¥147,873
¥136,740
¥430,365
¥(1,194)
¥713,784
¥20,659
¥ (78)
¥(107,254)
¥(86,673)
Balance as of April 1, 2012
¥147,873
¥136,740
¥430,365
¥(1,194)
¥713,784
¥20,659
¥ (78)
¥(107,254)
¥(86,673)
287
¥287
¥287
(1,296)
33,179
¥46,751
¥674,149
¥46,751
¥674,149
Changes in:
Dividends
Net income
acquisition of treasury stock
Disposition of treasury stock
Other
Items other than
stockholders’ equity, net
(16,302)
48,477
8
(4)
(16,302)
48,477
(36)
68
(4)
(36)
60
14,729
(805)
51,739
65,663
Total changes
—
8
32,171
24
32,203
14,729
(805)
51,739
65,663
(16,302)
48,477
(36)
68
(4)
279
279
7,321
73,263
7,321
105,466
Balance as of March 31, 2013
¥147,873
¥136,748
¥462,536
¥(1,170)
¥745,987
¥35,388
¥(883)
¥ (55,515)
¥(21,010)
¥566
¥54,072
¥779,615
Stockholders’ equity
Accumulated other comprehensive income
Thousands of U.S. dollars (Note 2)
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock,
at cost
Total
stockholders’
equity
Net
unrealized
gains on
securities
Net
deferred
losses on
hedges
Foreign
currency
translation
adjustments
Total
accumulated
other
comprehensive
income
Stock
acquisition
rights
Minority
interests in
consolidated
subsidiaries
Total net
assets
Balance as of April 1, 2012
$1,573,117 $1,454,681 $4,578,351 $(12,702) $7,593,447 $219,777
$ (830)
$(1,141,000)
$(922,053)
$3,053
$497,351 $7,171,798
Changes in:
Dividends
Net income
acquisition of treasury stock
Disposition of treasury stock
Other
Items other than
stockholders’ equity, net
(173,426)
515,713
85
(43)
(173,426)
515,713
(383)
723
(43)
(383)
638
(173,426)
515,713
(383)
723
(43)
156,691
(8,564)
550,415
698,543
2,968
77,883
779,394
Total changes
—
85
342,245
255
342,585
156,691
(8,564)
550,415
698,543
2,968
77,883
1,121,979
Balance as of March 31, 2013
$1,573,117 $1,454,766 $4,920,596 $(12,447) $7,936,032 $376,468
$(9,394)
$ (590,585)
$(223,511)
$6,021
$575,234 $8,293,777
See accompanying notes to consolidated financial statements.
70
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
71
CONSOLIDATED STATEMENTS OF CASH FLOWS
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012
Cash flows from operating activities:
Income before income taxes and minority interests
¥ 77,828
¥ 101,091
$ 827,957
Millions of yen
Thousands of
U.S. dollars (Note 2)
2013
2012
2013
adjustments to reconcile income before income taxes and
minority interests to net cash provided by operating activities:
Depreciation and amortization
Loss on impairment of fixed assets
Interest and dividend income
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Interest expense
Loss on sales and disposal of property, plant and equipment, net
Gain and loss on sales and loss on write-down of investment securities, net
Increase (decrease) in accrued employees’ retirement benefits
Increase in trade receivables
Increase in inventories
(Decrease) increase in trade payables
Other, net
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Purchases of investment securities
Proceeds from sales of property, plant and equipment
Proceeds from sales of investment securities
additional acquisition of shares of consolidated subsidiaries
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net (decrease) increase in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
effect of exchange rate changes on cash and cash equivalents
net increase (decrease) in cash and cash equivalents
67,588
1,972
(3,247)
(7,431)
5,460
4,444
1,442
1,844
(10,223)
(4,473)
(5,170)
(12,364)
117,670
9,647
(5,565)
(20,937)
100,815
(105,093)
(1,951)
1,635
257
(374)
(1,999)
(107,525)
(5,788)
101,565
(53,806)
(17,210)
1,406
26,167
6,811
26,268
67,443
232
(3,200)
(5,194)
5,766
4,064
54
(1,116)
(2,301)
(26,210)
1,810
(18,055)
124,384
7,569
(5,896)
(21,647)
104,410
(90,284)
(5,509)
1,236
299
(4,389)
(5,355)
719,021
20,979
(34,543)
(79,053)
58,085
47,277
15,340
19,617
(108,755)
(47,585)
(55,000)
(131,532)
1,251,809
102,628
(59,202)
(222,734)
1,072,500
(1,118,011)
(20,755)
17,394
2,734
(3,979)
(21,266)
(104,002)
(1,143,883)
56,197
22,341
(85,094)
(17,067)
(22)
(23,645)
(1,658)
(24,895)
(61,574)
1,080,479
(572,404)
(183,085)
14,957
278,372
72,457
279,447
Cash and cash equivalents at beginning of year
81,289
105,257
864,777
Beginning balance of cash and cash equivalents at subsidiaries
not previously included in consolidation
133
927
1,415
Cash and cash equivalents at end of year
¥ 107,690
¥ 81,289
$ 1,145,638
See accompanying notes to consolidated financial statements.
72
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012
1. sIGnIFICAnt ACCoUntInG PoLICIes
a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Toray
Industries, Inc. (the “Company”) and its consolidated
subsidiaries have been prepared in accordance with the
provisions set forth in the Financial Instruments and Exchange
Law of Japan and its related accounting regulations, and in
conformity with accounting principles and practices generally
accepted in Japan, which are different in certain respects as to
application and disclosure requirements of International
Financial Reporting Standards.
For the preparation of consolidated financial statements,
the accounting policies and procedures applied to a parent
company and its subsidiaries for similar transactions and events
under similar circumstances should be unified, in principle.
However, financial statements prepared by overseas subsidiaries
in accordance with International Financial Reporting Standards
or the generally accepted accounting principles in the United
States tentatively may be used for the consolidation process. In
addition, some items should be adjusted in the consolidation
process so that net income is accurately accounted for, unless
they are not material.
Certain items presented in the original consolidated
financial statements in Japanese have been reclassified for the
convenience of readers outside Japan.
b) Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and substantially all of its subsidiaries.
Assets and liabilities of the consolidated subsidiaries are
revalued to fair market value when the majority interest in the
subsidiaries is purchased.
Investments in unconsolidated subsidiaries and affiliated
companies are accounted for by the equity method.
All intercompany accounts and transactions have been
eliminated in consolidation. The difference between the
acquisition cost and the underlying net assets of the subsidiaries
is recognized as goodwill and amortized principally over its
estimated useful life not exceeding twenty years on a straight-
line method.
c) Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2013 and 2012 include
cash, short-term time deposits which may be withdrawn on
demand without diminution of principal and highly liquid
investments with original maturities of three months or less.
Cash and cash equivalents consisted of:
Cash
Time deposits
Less — Time deposits with
maturities of over 3 months
Millions of yen
Thousands of
U.S. dollars
2013
¥ 87,276
21,390
2012
2013
¥63,519 $ 928,468
227,553
17,879
(976)
(109)
(10,383)
Cash and cash equivalents ¥107,690
¥81,289 $1,145,638
d) Financial Instruments
Derivatives:
All derivatives are stated at fair value, with changes in fair
value included in net income or loss for the period in which
they arise, except for derivatives that are designated as
“hedging instruments” (see Hedge Accounting below).
Securities:
Held-to-maturity debt securities that the Company and its
consolidated subsidiaries have the intent to hold to maturity,
are stated at cost after accounting for premium or discount on
acquisition, which are amortized over the period to maturity.
Other securities for which market quotations are
available are stated at fair value. Net unrealized gains or
losses on these securities are reported as a separate item in
net assets at a net-of-tax amount.
Other securities for which market quotations are unavailable
are stated at cost, except as stated in the paragraph below.
In cases where the fair value of held-to-maturity debt
securities or other securities has declined significantly and
such impairment of the value is not deemed temporary, those
securities are written down to fair value and the resulting
losses are included in net income or loss for the period.
Hedge Accounting:
Gains or losses arising from changes in fair value of
derivatives designated as “hedging instruments” are
deferred as a separate item of net assets at a net-of-tax
amount and included in net income or loss in the same
period during which the gains and losses on the hedged
items or transactions are recognized.
The derivatives designated as hedging instruments by
the Company and its consolidated subsidiaries are principally
interest rate swaps and forward foreign exchange contracts.
The related hedged items are trade accounts receivable and
payable, long-term bank loans and debt securities issued by
the Company and its consolidated subsidiaries.
The Company and its consolidated subsidiaries have a
policy to utilize the above hedging instruments in order to reduce
their exposure to the risk of interest rate and foreign currency
fluctuations. Thus, their purchases of the hedging instruments are
limited to, at maximum, the amounts of the hedged items.
The Company and its consolidated subsidiaries evaluate
the effectiveness of hedging activities by reference to the
accumulated gains or losses on the hedging instruments
and the related hedged items from the commencement of
the hedges.
e) Allowance for Doubtful Accounts
In the Company and its domestic consolidated subsidiaries, an
allowance for doubtful accounts, including receivables and
loans, is determined from the amounts considered unlikely to be
recovered, estimated from past actual bad debt ratio records for
general receivables and from studying the probability of
recovery in individual cases where there is concern over claims.
72
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
73
f) Inventories
Inventories are stated at the lower of acquisition cost, principally
determined by the moving average method, or net selling value
to reflect any decreased profitability of inventories.
g) Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation for property, plant and equipment (except
leased assets) of the Company and its domestic consolidated
subsidiaries is principally computed by the declining balance
method, and depreciation for those of its overseas consolidated
subsidiaries is principally computed by the straight-line method
at rates based on estimated useful lives that are as follows:
Buildings
Machinery and equipment
3–60 years
3–15 years
Principally, a depreciation method of leased assets is
identical to the method applicable to its own fixed assets. In the
Company and its domestic consolidated subsidiaries, finance
lease transactions which do not transfer ownership of the leased
assets whose lease inceptions are on or before March 31, 2008
are accounted for by a method similar to the method applicable
to ordinary operating lease transactions.
h) Income Taxes
Income taxes of the Company and its domestic consolidated
subsidiaries consist of corporate income taxes, local inhabitants
taxes and enterprise taxes. Deferred income taxes are
determined using the asset and liability approach, where
deferred tax assets and liabilities are recognized for temporary
differences between the tax basis of assets and liabilities and
their reported amount in the financial statements. The
Company also provides for the anticipated tax effect of future
remittances of retained earnings from overseas subsidiaries
and affiliated companies.
i) Retirement Benefits
The Company and its domestic consolidated subsidiaries have
an unfunded lump-sum benefit plan, a funded contributory
pension plan and a defined contribution pension plan covering
all eligible employees.
Under the terms of the unfunded lump-sum benefit plan,
eligible employees are entitled under most circumstances, upon
mandatory retirement or earlier voluntary severance, to
indemnities based on compensation at the time of severance
and years of service.
The funded contributory pension plan and the defined
contribution pension plan provide, in general, pension payments
for life commencing from age 60.
Accrued employees’ retirement benefits represents the
estimated present value of projected benefit obligations in
excess of the fair value of the plan assets except that, as
permitted under the standard, unrecognized actuarial
differences and unrecognized prior service cost are amortized
on a straight-line basis over a period of 15 years.
Allowance for retirement benefits for members of the Board
and corporate auditors (“executives”) of the Company and
certain of its domestic consolidated subsidiaries is provided
based on the companies’ pertinent rules and is calculated as the
estimated amount which would be payable if all executives were
to retire at the balance sheet date. Any amounts payable to
executives upon retirement are subject to approval at the annual
stockholders’ meeting. The amount is included in “customers’
guarantee deposits and other liabilities” on the consolidated
balance sheets.
j) Appropriation of Retained Earnings
Cash dividends are recorded in the fiscal year when the
proposed appropriation of retained earnings is approved by the
Board of Directors and/or stockholders.
k) Foreign Currency Transactions
All monetary assets and liabilities denominated in foreign
currencies, whether long-term or short-term, are translated into
Japanese yen at the exchange rates prevailing at the balance
sheet date. Resulting gains and losses are included in net
income or loss for the period.
l) Translation of Foreign Currency Financial Statements
Translation of foreign currency financial statements of overseas
subsidiaries into Japanese yen for consolidation purposes is
made by using the current exchange rates prevailing at their
balance sheet dates, with the exception that the translation of
stockholders’ equity is made by using historical rates. Revenue
and expense accounts are principally translated at the average
exchange rates during the year. Differences in yen amounts
arising from the use of different rates are presented as “foreign
currency translation adjustments” in net assets except for the
portion belonging to minority stockholders, which is included in
“minority interests in consolidated subsidiaries” in net assets.
m) Standards Issued but Not Yet Adopted
On May 17, 2012, the Accounting Standards Board of Japan
(ASBJ) issued “Accounting Standard for Retirement Benefits”
(ASBJ Statement No.26) and “Guidance on Accounting
Standard for Retirement Benefits” (ASBJ Guidance No.25),
which replaced the Accounting Standard for Retirement Benefits
that had been issued by the Business Accounting Council in
1998 with an effective date of April 1, 2000 and the other
related practical guidance, being followed by partial
amendments from time to time through 2009.
(1) Overview
Revisions apply mainly to the accounting treatments for
unrecognized actuarial differences as well as unrecognized
prior service costs, the calculation methods for projected
benefit obligations as well as service costs, and broadening
disclosure taking into consideration improvements to
financial reporting and international trends.
(2) Scheduled Date of Adoption
The revised accounting standard and guidance are
scheduled to be adopted from the end of the fiscal year
74
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
75
ending March 31, 2014. However, revisions to the
calculation methods for projected benefit obligations and
service costs are scheduled to be adopted from the
beginning of the fiscal year ending March 31, 2015.
(3) Impact of Adopting Revised Accounting Standard
and Guidance
The impact of adopting the revised accounting standard
and guidance on consolidated financial statements is
currently under evaluation.
2. U.s. DoLLAR AMoUnts
The Company and its domestic consolidated subsidiaries
maintain their accounting records in yen. The U.S. dollar
amounts included in the accompanying consolidated financial
statements and notes thereto represent the arithmetic results of
translating yen into U.S. dollars at the rate of ¥94 to $1.00, the
approximate exchange rate prevailing on March 31, 2013. The
inclusion of such U.S. dollar amounts is solely for the
convenience of readers outside Japan and is not intended to
imply that yen amounts and assets and liabilities that originated
in yen have been or could be readily converted, realized or
settled in U.S. dollars at this or at any other rate.
3. InVentoRIes
At March 31, 2013 and 2012, inventories consisted of the following:
Merchandise and finished goods
Work in process
Raw materials and supplies
Millions of yen
2013
¥175,553
70,121
68,033
¥313,707
2012
¥161,757
73,032
60,956
¥295,745
Thousands of
U.S. dollars
2013
$1,867,585
745,968
723,755
$3,337,309
Losses recognized and charged to cost of sales as a result of valuation at March 31, 2013 and 2012 were ¥2,139 million ($22,755
thousand) and ¥3,593 million, respectively.
4. sHoRt-teRM BAnK LoAns, LonG-teRM DeBt AnD LeAse oBLIGAtIons
Short-term bank loans at March 31, 2013 and 2012 represented bank overdrafts and short-term notes. The Company is not required to
pay commitment fees on unused balances of the bank overdraft agreements.
Long-term debt and lease obligations at March 31, 2013 and 2012 were as follows:
Loans principally from banks and insurance companies with interest rates
primarily from 0.04% to 7.05%, maturing serially through 2020:
unsecured
Lease obligations maturing serially through 2022:
unsecured
yen notes with an interest rate of 2.00% due 2013
yen notes with an interest rate of 1.61% due 2013
yen notes with an interest rate of 0.93% due 2022
Zero coupon convertible bonds due 2014
Less amounts due within one year
Millions of yen
2013
2012
Thousands of
U.S. dollars
2013
¥320,964
¥282,207
$3,414,511
2,405
—
10,000
20,000
50,000
403,369
99,115
¥304,254
2,941
10,000
10,000
—
50,000
355,148
57,044
¥298,104
25,585
—
106,383
212,766
531,915
4,291,160
1,054,415
$3,236,745
74
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
75
At March 31, 2013, assets pledged as collateral were as follows:
Time deposits
Property, plant and equipment, net
Investment securities
Others
Millions of yen
¥ 8
5,933
633
376
¥6,950
Thousands of
U.S. dollars
$ 85
63,117
6,734
4,000
$73,936
The annual maturities of long-term debt and lease obligations subsequent to March 31, 2013 were as follows:
years ending March 31:
2014
2015
2016
2017
2018
2019 and thereafter
Millions of yen
Thousands of
U.S. dollars
¥ 99,115
69,548
57,291
30,661
59,002
87,752
¥403,369
$1,054,415
739,872
609,479
326,181
627,681
933,532
$4,291,160
5. FInAnCIAL InstRUMents
Conditions of Financial Instruments
a) Policy in Relation to Financial Instruments
The policy of the Company and its consolidated subsidiaries is
to manage funds only by short-term deposits, etc. and to raise
funds by borrowing from banks and issuing corporate bonds.
The Company and its consolidated subsidiaries use derivatives
to hedge risks associated with foreign currency exchange rates
and fluctuations of borrowing interest rates and do not enter
into derivative transactions for speculative or trading purposes.
b) Contents and Risk of Financial Instruments and
Risk Management System
Trade receivables are operating receivables and therefore are
exposed to customer credit risk. Under their internal regulations,
the Company and its consolidated subsidiaries carefully manage
payment periods for receivables and outstanding balances of all
customers and regularly monitor the credit standing of major
clients. Operating receivables and payables denominated in
foreign currencies that arise from the global business operations
are also exposed to foreign currency exchange risk. The
Company and its consolidated subsidiaries hedge this risk
mainly through the use of forward exchange contracts against
positions after netting receivables and payables denominated in
the same foreign currencies. Likewise, the Company and its
consolidated subsidiaries mainly use currency swaps to hedge
the foreign currency exchange risk of bank loans denominated
in foreign currencies.
Investment securities are exposed to the risk of market price
fluctuations. Most of these securities are the shares of
corporations with which the Company and its consolidated
subsidiaries have business relationships.
The fair value and financial positions of the issuing entities
(clients) are regularly monitored.
Trade payables are operating payables, most of which are
due and payable within one year.
Short-term bank loans and commercial paper are financing
instruments mainly for operating transactions, while long-term
bank loans and bonds (due within ten years, in principle) are
primarily for capital expenditures. Bank loans and bonds are
exposed to the risk of interest rate fluctuation. Bank loans at
floating interest rates carry the risk of higher interest expenses
when rates rise, while bank loans and bonds at fixed interest
rates carry the risk of higher interest expenses when rates fall.
The Company and its consolidated subsidiaries use derivative
transactions (interest rate swap transactions) to minimize the risk
of interest rate fluctuation, taking into consideration the balance
between fixed interest rates and floating interest rates.
Hedging instruments, hedged items, the policy for utilizing
such hedging instruments and the method for evaluating the
effectiveness of hedging activities are described in Note 1.
S I G N I F I C A N T A C C O U N T I N G P O L I C I E S d ) F i n a n c i a l
I n s t r u m e n t s , H e d g e A c c o u n t i n g i n t h e N o t e s t o t h e
Consolidated Financial Statements.
Derivative transactions are executed and managed in
accordance with the internal regulations prescribing the
authorization for transactions. To mitigate credit risk, the
Company and its consolidated subsidiaries carry out derivative
transactions only with highly rated financial institutions.
c) Supplemental Explanation on Fair Value of
Financial Instruments
The fair value of financial instruments is based on market prices,
or reasonable estimate of fair value for instruments for which
market prices are not available. Estimates of fair value are
76
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
77
subject to fluctuation because they employ various factors and
assumptions. In addition, the contract amount of derivatives in
Note 7. DERIVATIVES in the Notes to the Consolidated Financial
Statements is not an indicator of market risk associated with
derivative transactions.
Fair Value of Financial Instruments
Carrying value, fair value and unrealized gain (loss) as of March 31, 2013 and 2012 were as follows.
In addition, financial instruments, for which it is extremely difficult to measure the fair value, are not included. (Please refer to Note 2 below).
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Investment securities in subsidiaries and affiliated companies
Other securities
assets
Trade payables
Short-term bank loans
Commercial paper
Bonds *1
Long-term bank loans *2
Liabilities
Derivative transactions *3
Hedge accounting is not applied
Hedge accounting is applied
Derivative transactions
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Investment securities in subsidiaries and affiliated companies
Other securities
assets
Trade payables
Short-term bank loans
Commercial paper
Bonds *1
Long-term bank loans *2
Liabilities
Derivative transactions *3
Hedge accounting is not applied
Hedge accounting is applied
Derivative transactions
Millions of yen
2013
Carrying value
Fair value
Unrealized gain (loss)
¥108,666
308,230
¥108,666
308,230
92
15,355
115,575
¥547,918
¥185,927
98,633
30,000
80,000
320,964
¥715,524
¥ 426
(1,145)
¥ (719)
92
9,817
115,575
¥542,380
¥185,927
98,633
30,000
80,222
327,307
¥722,089
¥ 426
(1,145)
¥ (719)
Millions of yen
2012
¥ —
—
—
(5,538)
—
¥(5,538)
¥ —
—
—
222
6,343
¥ 6,565
¥ —
—
¥ —
Carrying value
Fair value
Unrealized gain (loss)
¥ 81,398
283,628
177
14,674
92,962
¥472,839
¥182,071
101,758
25,000
70,000
282,207
¥661,036
¥ 955
3,408
¥ 4,363
¥ 81,398
283,628
177
10,564
92,962
¥468,729
¥182,071
101,758
25,000
69,861
288,507
¥667,197
¥ 955
3,408
¥ 4,363
¥ —
—
—
(4,110)
—
¥(4,110)
¥ —
—
—
(139)
6,300
¥ 6,161
¥ —
—
¥ —
76
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
77
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Investment securities in subsidiaries and affiliated companies
Other securities
assets
Trade payables
Short-term bank loans
Commercial paper
Bonds *1
Long-term bank loans *2
Liabilities
Derivative transactions *3
Hedge accounting is not applied
Hedge accounting is applied
Derivative transactions
Thousands of U.S. dollars
2013
Carrying value
Fair value
Unrealized gain (loss)
$1,156,021
3,279,043
$1,156,021
3,279,043
$ —
—
979
163,351
1,229,521
$5,828,915
$1,977,947
1,049,287
319,149
851,064
3,414,511
$7,611,957
979
104,436
1,229,521
$5,770,000
$1,977,947
1,049,287
319,149
853,426
3,481,989
$7,681,798
$ 4,532
(12,181)
$ (7,649)
$ 4,532
(12,181)
$ (7,649)
—
(58,915)
—
$(58,915)
$ —
—
—
2,362
67,479
$ 69,840
$ —
—
$ —
*1: Bonds include bonds due within one year.
*2: Long-term bank loans include long-term bank loans due within one year.
*3: Receivables and payables arising from derivative transactions are indicated in net amounts. Total net payables, if any, are shown in parentheses.
Notes:
1. Estimation method for fair value of financial instruments and items related to securities and derivative transactions
Assets
Cash and time deposits and Trade receivables
Carrying value is used for fair value since the items will be settled within the short term and the fair value is approximately equal
to the carrying value.
Investment securities
Securities are valued at quoted market price. Debt securities are valued at quoted market price or at the price provided by
correspondent financial institutions. For information on securities classified by holding purpose, please refer to Note 6.
SECURITIES of the Notes to the Consolidated Financial Statements.
Liabilities
Trade payables, Short-term bank loans and Commercial paper
Carrying value is used for fair value since the items will be settled within the short term and the fair value is approximately equal
to the carrying value.
Bonds
The fair value of bonds issued by the Company is based on market price. However, in cases where the special accounting
method for interest rate swaps is applied, the fair value is approximately equal to the carrying value because the interest rates
fluctuate and are adjusted periodically. Therefore, the fair value is based on the carrying value.
Long-term bank loans
The fair value of long-term bank loans is estimated by discounting the principal amounts and interest based on estimated
interest rates if similar new loans were entered into in the current period. The fair value of long-term bank loans for which the
special accounting method for interest rate swaps is applied is estimated by discounting the total principal amount and interest
(accounted for together with the interest rate swaps) based on estimated interest rates if similar new loans were entered into in
the current period. For long-term bank loans at floating interest rates, however, the fair value is approximately equal to the
carrying value because the interest rates are adjusted periodically. Therefore, the fair value is based on the carrying value.
Derivative transactions
Please refer to Note 7. DERIVATIVES in the Notes to the Consolidated Financial Statements.
78
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
79
2. Financial instruments for which it is extremely difficult to determine the fair value
unlisted securities
Millions of yen
2013
¥54,075
2012
¥52,382
Thousands of
U.S. dollars
2013
$575,266
Unlisted securities have no quoted market price and the fair value is extremely difficult to determine. Therefore, they are not
included in the preceding table.
3. Redemption schedule for receivables and investment securities with maturities at March 31, 2013 and 2012
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
Millions of yen
2013
Due within one year
Due after one year
through five years
Due after five years
through ten years
Due after ten years
¥108,666
308,230
14
—
¥416,910
¥ —
—
72
574
¥646
¥ —
—
6
10
¥16
¥ —
—
—
800
¥800
Millions of yen
2012
Due within one year
Due after one year
through five years
Due after five years
through ten years
Due after ten years
¥ 81,398
282,738
22
—
¥364,158
¥ —
890
147
504
¥1,541
¥—
—
8
—
¥ 8
¥ —
—
—
800
¥800
Thousands of U.S. dollars
2013
Due within one year
$1,156,021
3,279,043
149
—
$4,435,213
Due after one year
through five years
Due after five years
through ten years
Due after ten years
$ —
—
766
6,106
$6,872
$ —
—
64
106
$170
$ —
—
—
8,511
$8,511
4. The redemption schedule for long-term debt is disclosed in Note 4. SHORT-TERM BANK LOANS, LONG-TERM DEBT AND LEASE
OBLIGATIONS of the Notes to the Consolidated Financial Statements.
78
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
79
6. seCURItIes
At March 31, 2013 and 2012, information on securities classified as held-to-maturity debt securities was as follows:
Held-to-maturity debt securities
¥92
Carrying
value
Fair
value
¥92
Unrealized
gains
Unrealized
losses
¥—
¥—
Carrying
value
$979
Fair
value
$979
Unrealized
gains
Unrealized
losses
$—
$—
Millions of yen
2013
Thousands of U.S. dollars
2013
Held-to-maturity debt securities
Carrying
value
¥177
Fair
value
¥177
Unrealized
gains
Unrealized
losses
¥—
¥—
Millions of yen
2012
At March 31, 2013 and 2012, information on securities classified as other securities was as follows:
Millions of yen
2013
Thousands of U.S. dollars
2013
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Other securities
¥115,575
¥62,341
¥56,236
¥3,002
$1,229,521 $663,202 $598,255
$31,936
Millions of yen
2012
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Other securities
¥92,962
¥62,569
¥36,611
¥6,218
80
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
81
7. DeRIVAtIVes
The Company and its consolidated subsidiaries had the following derivative contracts outstanding at March 31, 2013 and 2012:
Hedge accounting is not applied
Millions of yen
Thousands of U.S. dollars
Forward foreign exchange contracts:
Buying u.S. dollar
Buying euro
Buying Thai baht
Buying Japanese yen
Selling u.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Japanese yen
Foreign currency swaps:
Contract
amount
¥4,468
281
422
362
5,314
218
147
50
823
2013
Fair
value
¥292
0
116
(9)
(30)
0
0
1
16
Unrealized
gain (loss)
Contract
amount
¥292
0
116
(9)
(30)
0
0
1
16
$47,532
2,989
4,489
3,851
56,532
2,319
1,564
532
8,755
2013
Fair
value
$3,106
0
1,234
(96)
(319)
0
0
11
170
Unrealized
gain (loss)
$3,106
0
1,234
(96)
(319)
0
0
11
170
Receiving u.S. dollar, paying Korean won
1,477
(31)
(31)
15,713
(330)
(330)
Foreign currency options:
Buying Japanese yen (put)
Selling Japanese yen (call)
Interest rate swaps:
600
600
76
0
76
0
6,383
6,383
809
0
809
0
Floating-rate receipt, fixed-rate payment
693
¥ —
(5)
¥426
(5)
¥426
7,372
$ —
(53)
$4,532
(53)
$4,532
Forward foreign exchange contracts:
Buying u.S. dollar
Buying euro
Buying Indonesian rupiah
Buying Thai baht
Buying Japanese yen
Selling u.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Japanese yen
Foreign currency swaps:
Receiving Japanese yen, paying u.S. dollar
Receiving u.S. dollar, paying Korean won
Receiving u.S. dollar, paying Malaysian ringgit
Interest rate swaps:
Floating-rate receipt, fixed-rate payment
Millions of yen
2012
Fair
value
Unrealized
gain (loss)
¥238
13
0
43
(4)
(71)
2
(2)
0
(6)
807
(52)
(5)
(8)
¥955
¥238
13
0
43
(4)
(71)
2
(2)
0
(6)
807
(52)
(5)
(8)
¥955
Contract
amount
¥6,532
260
466
485
306
3,639
139
88
5
787
3,140
1,978
829
622
¥ —
80
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
81
Hedge accounting is applied
Millions of yen
2013
Hedge accounting method Type of derivative and principal hedged items
Contract amount
Fair value
Estimation method for fair value
Deferral hedge
method
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables
Buying u.S. dollar
Buying euro
Buying Japanese yen
Selling u.S. dollar
Selling euro
Selling Japanese yen
Foreign currency options:
accounted for as part of trade payables
Buying Japanese yen (call)
Selling Japanese yen (put)
Interest rate swaps:
¥ 26
199
5,818
402
107
783
¥ 2 Forward foreign exchange quotes
7
(463)
8
2
86
5,787
2,974
(520) the price provided by
269
correspondent financial institutions
accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
8,386
(224)
the price provided by
correspondent financial institutions
special accounting
method for interest
rate swaps
Interest rate swaps:
accounted for as part of bonds
and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating-rate payment
72,500 *1
49,400
48,000
—
Allocation method
for forward foreign
exchange contracts
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables (Forecasted transactions)
Buying u.S. dollar
Buying euro
Buying Canadian dollar
Buying Czech koruna
Buying Chinese yuan
Selling u.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
20,183
1,232
467
1,800
510
14,639
2,070
3
1
501 Forward foreign exchange quotes
18
(5)
(33)
100
(639)
(61)
0
0
Foreign currency swaps:
accounted for as part of long-term bank loans
(Forecasted transactions)
Receiving u.S. dollar, paying Japanese yen
20,000
(193)
the price provided by
correspondent financial institutions
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables
Buying u.S. dollar
Buying euro
Buying Canadian dollar
Buying Thai baht
Selling u.S. dollar
Selling euro
Selling British pound
Selling Canadian dollar
Selling Thai baht
Foreign currency swaps:
accounted for as part of long-term bank loans
Receiving u.S. dollar, paying Japanese yen
Receiving australian dollar,
paying Japanese yen
15,161 *2
44
3
4
30,361
4,258
15
21
75
44,417 *2
3,129
¥ —
¥(1,145)
—
—
82
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
83
Hedge accounting method Type of derivative and principal hedged items
Contract amount
Fair value
Estimation method for fair value
Millions of yen
2012
Deferral hedge
method
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables
Buying u.S. dollar
Buying Japanese yen
Selling u.S. dollar
Selling euro
Foreign currency swaps:
Forward foreign exchange quotes
¥ 81
1,314
54
125
¥ (1)
81
0
0
accounted for as part of long-term bank loans
Receiving Japanese yen, paying u.S. dollar
10,715
3,708
The price provided by
correspondent financial institutions
Interest rate swaps:
accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
8,624
(207)
Interest rate caps:
accounted for as part of long-term bank loans
216
0
The price provided by
correspondent financial institutions
The price provided by
correspondent financial institutions
special accounting
method for interest
rate swaps
Interest rate swaps:
accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating-rate payment
81,200*1
30,700
28,000
Allocation method
for forward foreign
exchange contracts
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables (Forecasted transactions)
Buying u.S. dollar
Buying euro
Buying Canadian dollar
Buying Chinese yuan
Buying Korean won
Selling u.S. dollar
Selling euro
Selling British pound
Selling Thai baht
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables
Buying u.S. dollar
Buying euro
Selling u.S. dollar
Selling euro
Selling British pound
Selling Canadian dollar
Selling Thai baht
Foreign currency swaps:
accounted for as part of long-term bank loans
Receiving u.S. dollar, paying Japanese yen
225
58
0
(44)
10
(364)
(57)
0
(1)
16,396
7,051
8
1,668
1,423
10,376
1,950
18
9
11,659*2
57
27,433
3,987
20
40
75
16,138*2
¥ —
¥3,408
—
Forward foreign exchange quotes
—
—
82
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
83
Hedge accounting method Type of derivative and principal hedged items
Contract amount
Fair value
Estimation method for fair value
Thousands of U.S. dollars
2013
Deferral hedge
method
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables
Buying u.S. dollar
Buying euro
Buying Japanese yen
Selling u.S. dollar
Selling euro
Selling Japanese yen
Foreign currency options:
accounted for as part of trade payables
Buying Japanese yen (call)
Selling Japanese yen (put)
Interest rate swaps:
$ 277
2,117
61,894
4,277
1,138
8,330
$ 21 Forward foreign exchange quotes
74
(4,926)
85
21
915
61,564
31,638
(5,532) the price provided by
2,862
correspondent financial institutions
accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
89,213
(2,383)
the price provided by
correspondent financial institutions
special accounting
method for interest
rate swaps
Interest rate swaps:
accounted for as part of bonds
and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating-rate payment
771,277 *1
525,532
510,638
—
Allocation method
for forward foreign
exchange contracts
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables (Forecasted transactions)
Buying u.S. dollar
Buying euro
Buying Canadian dollar
Buying Czech koruna
Buying Chinese yuan
Selling u.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
214,713
13,106
4,968
19,149
5,426
155,734
22,021
32
11
5,330 Forward foreign exchange quotes
191
(53)
(351)
1,064
(6,798)
(649)
0
0
Foreign currency swaps:
accounted for as part of long-term bank loans
(Forecasted transactions)
Receiving u.S. dollar, paying Japanese yen
212,766
(2,053)
the price provided by
correspondent financial institutions
Forward foreign exchange contracts:
accounted for as part of trade receivables
and trade payables
Buying u.S. dollar
Buying euro
Buying Canadian dollar
Buying Thai baht
Selling u.S. dollar
Selling euro
Selling British pound
Selling Canadian dollar
Selling Thai baht
Foreign currency swaps:
accounted for as part of long-term bank loans
Receiving u.S. dollar, paying Japanese yen
Receiving australian dollar,
paying Japanese yen
161,287 *2
468
32
43
322,989
45,298
160
223
798
472,521 *2
33,287
—
—
*1 The fair value of interest rate swaps to which a special accounting method is applied is included in the fair value of bonds and long-term bank loans in Note 5.
FINANCIAL INSTRUMENTS of the Notes to the Consolidated Financial Statements because such interest rate swaps are accounted for together with the
corresponding bonds and long-term bank loans.
*2 The fair value of forward foreign exchange contracts to which the allocation method is applied, except for forecasted transactions, is included in the fair value of
trade receivables, trade payables and long-term bank loans in Note 5. FINANCIAL INSTRUMENTS of the Notes to the Consolidated Financial Statements since
such forward foreign exchange contracts are accounted for together with the corresponding trade receivables, trade payables and long-term bank loans.
$ — $(12,181)
84
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
85
8. RetIReMent BeneFIt PLAn
Accrued employees’ retirement benefits as of March 31, 2013 and 2012 were analyzed as follows:
Projected benefit obligations
Plan assets
unrecognized actuarial differences
unrecognized prior service cost
Prepaid pension cost (included in other assets)
accrued employees‘ retirement benefits
Millions of yen
2013
¥(181,735)
117,661
(64,074)
44,204
(19,222)
(39,092)
29,009
¥ (68,101)
2012
¥(190,661)
115,172
(75,489)
59,886
(22,174)
(37,777)
27,907
¥ (65,684)
Thousands of
U.S. dollars
2013
$(1,933,351)
1,251,713
(681,638)
470,255
(204,489)
(415,872)
308,606
$ (724,479)
The components of net periodic benefit cost related to the employees’ retirement benefits for the years ended March 31, 2013 and
2012 were as follows:
Service cost
Interest cost
Expected return on plan assets
amortization of actuarial differences
amortization of prior service cost
Net periodic benefit cost
Contribution to defined contribution pension plan and other
Millions of yen
2013
¥ 5,552
3,782
(3,359)
6,976
(2,871)
10,080
4,706
¥14,786
2012
¥ 5,728
3,863
(3,575)
6,834
(2,965)
9,885
3,657
¥13,542
Thousands of
U.S. dollars
2013
$ 59,064
40,234
(35,734)
74,213
(30,543)
107,234
50,064
$157,298
In addition to the above, special severance payments of ¥752 million ($8,000 thousand) and ¥1,283 million were charged to net income
for the years ended March 31, 2013 and 2012, respectively.
Assumptions used in calculation of the above information were as follows:
Method of attributing the projected benefits to periods of services
Discount rate
Expected rate of return on plan assets
amortization period of prior service cost
amortization period of actuarial differences
2013
straight-line basis
primarily 2.0%
primarily 3.0%
primarily 15 years
primarily 15 years
2012
straight-line basis
primarily 2.0%
primarily 3.0%
primarily 15 years
primarily 15 years
84
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
85
9. stoCK oPtIon PLAns
1. Stock option expense included in selling, general and administrative expenses amounted to ¥345 million ($3,670 thousand) and
¥287 million for the years ended March 31, 2013 and 2012, respectively.
2. Information on stock options issued
The following table summarizes the stock options outstanding as of March 31, 2013.
Position and number
of grantees
Type and number of shares
to be issued upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
no.1 stock option Plan
no.2 stock option Plan
Members of the Board
of the Company
Directors of
the Company
28
32
Common stock
747,000 shares
August 20, 2011
26
32
844,000 shares
August 4, 2012
Based on the number of months
that have elapsed during
the vesting period
Based on the number of months
that have elapsed during
the vesting period
June 24, 2011 – June 22, 2012
August 21, 2011 – August 20, 2041
June 22, 2012 – June 26, 2013
August 5, 2012 – August 4, 2042
The following table summarizes movement of stock options during the year and price information on stock options as of March 31, 2013.
Number of stock options are translated into the number of shares.
(1) Number of stock options
no.1 stock option Plan
no.2 stock option Plan
Stock acquisition rights not yet vested
as of March 31, 2012
Granted
Forfeited
Vested
as of March 31, 2013
Stock acquisition rights already vested
as of March 31, 2012
Vested
Exercised
Forfeited
as of March 31, 2013
(2) Price information
Exercise price
Weighted average exercise price
Fair value per share at the grant date
Exercise price
Weighted average exercise price
Fair value per share at the grant date
211,000
—
—
211,000
—
536,000
211,000
129,000
—
618,000
—
844,000
—
607,000
237,000
—
607,000
—
—
607,000
no.1 stock option Plan
¥ 1
529
513
Yen
U.S. dollars
no.2 stock option Plan
¥ 1
—
394
no.1 stock option Plan
$0.01
5.63
5.46
no.2 stock option Plan
$0.01
—
4.19
86
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
87
3. Estimation method and assumptions used for the per share fair value of stock options
(1) Estimation method
Black-Scholes model
(2) Assumptions used for the per share fair value of stock options.
Expected volatility *1
Expected holding period *2
Expected dividend *3
Risk-free rate *4
no.2 stock option Plan
32.885%
8 years
¥10 per share ($0.11)
0.476%
*1 Expected volatility is based on actual share prices during 8 years from August 5, 2004 to August 3, 2012.
*2 The expected holding period is calculated based on the service period of past members of the Board.
*3 This is based on the dividend for the year ended March 31, 2012.
*4 The risk-free interest rate is the yield on government bonds for the period that corresponds to the remaining life of the option.
Because it is difficult to reasonably estimate the number of options that will expire in the future, only the number of options that have
actually forfeited is applied.
10. InCoMe tAXes
The statutory tax rates in Japan used for calculating deferred tax assets and liabilities for the years ended March 31, 2013 and 2012
were 38.0% and 40.7%, respectively.
At March 31, 2013 and 2012, significant components of deferred tax assets and liabilities were as follows:
Deferred tax assets:
accrued bonuses
accrued employees’ retirement benefits
Tax loss carryforwards
unrealized intercompany profits
Investments in subsidiaries and affiliated companies
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for advanced depreciation
Depreciation
undistributed earnings of overseas subsidiaries and affiliated companies
unrealized gains on securities
Other
Total deferred tax liabilities
Net deferred tax assets
Millions of yen
2013
2012
¥ 5,975
27,232
35,273
11,464
22,631
34,602
137,177
(41,467)
95,710
10,220
14,711
7,926
19,181
12,091
64,129
¥ 31,581
¥ 5,923
26,777
26,017
11,371
33,942
35,833
139,863
(39,981)
99,882
10,507
12,190
6,081
12,195
12,478
53,451
¥ 46,431
At March 31, 2013 and 2012, deferred tax assets and liabilities were classified as follows:
Deferred tax assets - current
Deferred tax assets - non-current
Deferred tax liabilities - current (included in other current liabilities)
Deferred tax liabilities - non-current
Millions of yen
2013
¥21,405
19,399
9
9,214
2012
¥18,220
34,067
182
5,674
Thousands of
U.S. dollars
2013
$ 63,564
289,702
375,245
121,957
240,755
368,106
1,459,330
(441,138)
1,018,191
108,723
156,500
84,319
204,053
128,628
682,223
$ 335,968
Thousands of
U.S. dollars
2013
$227,713
206,372
96
98,021
86
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
87
The reconciliation of the statutory tax rates and the effective income tax rates for the years ended March 31, 2013 and 2012 was as follows:
Statutory tax rates
Increase (decrease) in taxes resulting from:
Permanent differences
Recognition of certain deferred tax assets by reversal of valuation allowance
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Differences of tax rates for overseas consolidated subsidiaries
undistributed earnings of overseas subsidiaries and affiliated companies
Change in statutory tax rate
Differences of tax rates for special reconstruction corporation tax
amortization of goodwill
Other
Effective income tax rates
2013
38.0%
0.7
(1.1)
(3.6)
(7.2)
2.4
—
1.6
1.5
2.1
34.4%
2012
40.7%
0.6
(2.5)
(2.1)
(6.4)
0.6
3.4
—
—
(1.3)
33.0%
11. net Assets
The Corporation Law of Japan provides that an amount equal to
10% of the amount to be disbursed as distributions of capital
surplus (other than the capital reserve) and retained earnings
(other than the earned reserve) be transferred to the capital
reserve and the earned reserve, respectively, until the sum of
the capital reserve and the earned reserve equals 25% of the
capital stock account. Such distributions can be made at any
time by resolution of the stockholders, or by the Board of
Directors if certain conditions are met.
At the June 2013 annual stockholders’ meeting, stockholders
approved the payment of cash dividends of ¥5.00 per share,
aggregating to ¥8,151 million ($86,713 thousand) which has not
been reflected in the accompanying consolidated financial
statements for the year ended March 31, 2013.
12. CoMMItMents AnD ContInGent LIABILItIes
At March 31, 2013, commitment line of credit to unconsolidated subsidiaries and affiliated companies was as follows:
Total commitment line of credit
Loans receivable outstanding
Balance
This commitment does not necessarily imply that the unused amount may be fully utilized.
At March 31, 2013 and 2012, contingent liabilities were as follows:
Millions of yen
¥775
355
¥420
Thousands of
U.S. dollars
$8,245
3,777
$4,468
as guarantors of loans to:
unconsolidated subsidiaries and affiliated companies
Other
Export bills discounted
Notes endorsed
Contingent liabilities associated with securitization of receivables
Millions of yen
2013
2012
¥ 1,432
6,959
¥ 8,391
¥ 541
640
¥10,361
¥ 1,056
6,368
¥ 7,424
¥ 1,564
269
¥10,233
Thousands of
U.S. dollars
2013
$ 15,234
74,032
$ 89,266
$ 5,755
6,809
$110,223
88
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
89
13. LeAses
Finance leases
The Group holds certain buildings, machinery and equipment
and intangible assets by leases.
Finance lease transactions which do not transfer ownership
of the leased assets whose lease inceptions are on or before
March 31, 2008 are accounted for by a method similar to the
method applicable to ordinary operating lease transactions.
Total lease payments under these leases were ¥383 million
($4,074 thousand) and ¥729 million for the years ended March
31, 2013 and 2012, respectively. Pro forma information relating
to acquisition costs, accumulated depreciation/amortization and
accumulated loss on impairment and net book value for
property held under finance lease transactions which do not
transfer ownership of the leased property to the lessee on an “as
if capitalized” basis at March 31, 2013 and 2012 was as follows:
March 31, 2013:
Machinery and equipment
March 31, 2012:
Buildings
Machinery and equipment
Intangible assets
March 31, 2013:
Machinery and equipment
Millions of yen
Accumulated
depreciation/
amortization
¥1,793
¥1,793
Millions of yen
Accumulated
depreciation /
amortization
¥ 62
2,815
377
¥3,254
Acquisition costs
¥2,160
¥2,160
Acquisition costs
¥ 64
3,503
458
¥4,025
Thousands of U.S. dollars
Acquisition costs
$22,979
$22,979
Accumulated
depreciation/
amortization
$19,074
$19,074
Future minimum lease payments under finance leases subsequent to March 31, 2013 and 2012 were as follows:
Due within one year
Due after one year
Total
Millions of yen
2013
¥220
147
¥367
2012
¥405
366
¥771
Net book value
¥367
¥367
Net book value
¥ 2
688
81
¥771
Net book value
$3,904
$3,904
Thousands of
U.S. dollars
2013
$2,340
1,564
$3,904
The acquisition costs and future minimum lease payments under finance leases include the imputed interest expense portion.
Operating leases
Future minimum lease payments under noncancellable operating leases subsequent to March 31, 2013 and 2012 were as follows:
Due within one year
Due after one year
Total
Millions of yen
2013
¥247
586
¥833
2012
¥203
635
¥838
Thousands of
U.S. dollars
2013
$2,628
6,234
$8,862
88
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
89
14. ReseARCH AnD DeVeLoPMent eXPenses
Research and development expenses included in cost of sales and selling, general and administrative expenses for the years ended
March 31, 2013 and 2012 were ¥53,342 million ($567,468 thousand) and ¥51,450 million, respectively.
15. otHeR CoMPReHensIVe InCoMe
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive income
for the years ended March 31, 2013 and 2012.
Net unrealized gains (losses) on securities:
amount arising during the year
Reclassification adjustments for gains and losses included in net income
Before tax effect
Tax effect
Net unrealized gains (losses) on securities
Net deferred losses on hedges:
amount arising during the year
Reclassification adjustments for gains and losses included in net income
assets acquisition cost adjustment
Before tax effect
Tax effect
Net deferred losses on hedges
Foreign currency translation adjustments:
amount arising during the year
Reclassification adjustments for gains and losses included in net income
Foreign currency translation adjustments
Share of other comprehensive income of unconsolidated subsidiaries
and affiliated companies accounted for by the equity method:
amount arising during the year
Reclassification adjustments for gains and losses included in net income
Share of other comprehensive income of unconsolidated subsidiaries
and affiliated companies accounted for by the equity method
Millions of yen
2013
2012
¥21,611
1,467
23,078
(8,097)
14,981
(955)
(17)
(385)
(1,357)
550
(807)
51,585
881
52,466
2,614
(7)
2,607
¥ (3,252)
28
(3,224)
2,783
(441)
(212)
(124)
4
(332)
147
(185)
(13,778)
—
(13,778)
(706)
—
(706)
Thousands of
U.S. dollars
2013
$229,904
15,606
245,511
(86,138)
159,372
(10,160)
(181)
(4,096)
(14,436)
5,851
(8,585)
548,777
9,372
558,149
27,809
(74)
27,734
Total other comprehensive income
¥69,247
¥(15,110)
$736,670
90
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
91
16. seGMent InFoRMAtIon
(Segment information)
1. Outline of reportable segments
The reportable segments of the Group are components for which discrete financial information is available and whose operating results
are regularly reviewed by the Board of Directors to make decisions about resource allocation to the segments and assess performance.
The Company identifies the following six segments according to the nature of the products and market for their products.
Reportable segment
Main products
Fibers & Textiles
Plastics & Chemicals
IT-related Products
Filament yarns, staple fibers, and woven and knitted fabrics of nylon, polyester and acrylic fibers,
etc.; non-woven fabrics, man-made suede and apparel products
Nylon, aBS, PBT, PPS and other resins and molded products, polyolefin foam; polyester, polypro-
pylene, PPS and other films and processed film products; raw materials for synthetic fibers and
other plastics; zeolite catalysts; fine chemicals for pharmaceuticals and agrochemicals; veterinary
medicine (excludes film and resin covered in IT-related Products segment)
Films and plastic products for information and telecommunications related products; materials
for electronic circuits and semiconductors; color filters for LCDs and related materials and equip-
ment; materials for plasma display panels; magnetic recording materials; graphic materials and
related equipment
Carbon Fiber Composite Materials Carbon fibers, carbon fiber composite materials and their molded products
Environment & Engineering
Comprehensive engineering; condominiums; industrial equipment and machinery; environment-
related equipment; water treatment membranes and related equipment; materials for housing,
building and civil engineering
Life Science
Pharmaceuticals and medical products
2. Measurement of sales, income, assets and other material items of reportable segments
The accounting policies for the reportable segments are the same as those described in Note 1. SIGNIFICANT ACCOUNTING POLICIES.
The figures of segment income are based on operating income.
Intersegment sales are determined based on consideration of the market price and related information.
3. Information on sales, income, assets and other material items of reportable segments
Year ended
March 31, 2013:
Sales to outside customers
Intersegment sales
Total sales
Segment income
Segment assets
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
Fibers
&
Textiles
¥632,150
839
¥632,989
¥ 43,222
¥456,704
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Millions of yen
Environment
&
Engineering Life Science
Others
Total
Adjustments
Consolidated
Total
¥395,835
27,946
¥423,781
¥ 18,302
¥456,669
¥237,593
7,403
¥244,996
¥ 22,959
¥334,140
¥ 77,620
652
¥ 78,272
¥ 7,299
¥233,085
¥178,355
64,485
¥242,840
¥ 2,628
¥176,568
¥56,599
1
¥56,600
¥ 7,456
¥69,087
¥14,127
16,301
¥30,428
¥ 1,557
¥47,238
¥1,592,279
117,627
¥1,709,906
¥ 103,423
¥1,773,491
¥ —
(117,627)
¥(117,627)
¥ (19,987)
¥ (41,661)
¥1,592,279
—
¥1,592,279
¥ 83,436
¥1,731,830
15,572
17,704
15,850
11,760
2,626
1,905
1,257
66,674
914
67,588
16,308
36,386
3,205
224
6,938
2,933
5,075
71,069
(631)
70,438
Capital expenditures
27,297
24,521
23,393
15,561
4,251
4,488
889
100,400
(1,265)
99,135
90
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
91
year ended
March 31, 2012:
Sales to outside customers
Intersegment sales
Total sales
Segment income
Segment assets
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Millions of yen
Environment
&
Engineering Life Science
Others
Total
Adjustments
Consolidated
Total
¥397,815
27,829
¥425,644
¥ 27,381
¥416,545
¥243,404
7,663
¥251,067
¥ 34,512
¥324,137
¥ 69,914
679
¥ 70,593
¥ 7,671
¥192,898
¥170,247
57,320
¥227,567
¥ 4,882
¥166,834
¥55,554
1
¥55,555
¥ 5,981
¥59,016
¥13,295
16,358
¥29,653
¥ 1,334
¥38,500
¥1,588,604
110,505
¥1,699,109
¥ 127,088
¥1,623,090
¥ —
(110,505)
¥(110,505)
¥ (19,367)
¥ (41,589)
¥1,588,604
—
¥1,588,604
¥ 107,721
¥1,581,501
Fibers
&
Textiles
¥638,375
655
¥639,030
¥ 45,327
¥425,160
17,006
17,681
14,593
11,827
2,614
2,030
1,222
66,973
470
67,443
14,641
36,140
2,643
188
5,126
3,038
4,674
66,450
(723)
65,727
Capital expenditures
23,928
24,215
28,271
13,531
3,028
3,913
2,017
98,903
(519)
98,384
Year ended
March 31, 2013:
Sales to outside customers
Intersegment sales
Total sales
Segment income
Segment assets
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Thousands of U.S. dollars
Environment
&
Engineering Life Science
Others
Total
Adjustments
Consolidated
Total
8,926
297,298
$6,725,000 $4,211,011 $2,527,585 $ 825,745 $1,897,394
686,011
$6,733,926 $4,508,309 $2,606,340 $ 832,681 $2,583,404
$ 459,809 $ 194,702 $ 244,245 $ 77,649 $ 27,957
$4,858,553 $4,858,181 $3,554,681 $2,479,628 $1,878,383
78,755
6,936
$602,117
11
$602,128
$ 79,319
$734,968
1,251,351
$150,287 $16,939,138 $ — $16,939,138
—
173,415
$323,702 $18,190,489 $(1,251,351) $16,939,138
$ 16,564 $ 1,100,245 $ (212,628) $ 887,617
$502,532 $18,866,926 $ (443,202) $18,423,723
(1,251,351)
165,660
188,340
168,617
125,106
27,936
20,266
13,372
709,298
9,723
719,021
173,489
387,085
34,096
2,383
73,809
31,202
53,989
756,053
(6,713)
749,340
Capital expenditures
290,394
260,862
248,862
165,543
45,223
47,745
9,457
1,068,085
(13,457)
1,054,628
Notes:
1) “Others” represents service-related businesses such as analysis, survey and research.
2) a) “Adjustments” of segment income for the year ended March 31, 2013 of ¥(19,987) million ($(212,628) thousand) includes
intersegment eliminations of ¥(27) million ($(287) thousand) and corporate expenses of ¥(19,960) million ($(212,340) thousand).
“Adjustments” of segment income for the year ended March 31, 2012 of ¥(19,367) million includes intersegment eliminations of
¥(793) million and corporate expenses of ¥(18,574) million. The corporate expenses consist of the headquarters’ research
expenses, etc. that are not allocated to each reportable segment.
b) “Adjustments” of segment assets for the year ended March 31, 2013 of ¥(41,661) million ($(443,202) thousand) includes
intersegment eliminations of ¥(61,374) million ($(652,915) thousand) and corporate assets of ¥19,713 million ($209,713 thousand).
“Adjustments” of segment assets for the year ended March 31, 2012 of ¥(41,589) million includes intersegment eliminations of
¥(63,215) million and corporate assets of ¥21,626 million. The corporate assets consist of the headquarters’ research assets, etc.
that are not allocated to each reportable segment.
3) “Segment income” is reconciled to operating income.
92
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
93
(Related information)
Geographic information
Sales to outside customers
Year ended March 31, 2013:
Sales to outside customers
year ended March 31, 2012:
Sales to outside customers
Year ended March 31, 2013:
Sales to outside customers
Japan
China
Others
Millions of yen
Asia
North America, Europe
and other areas
Total
¥870,315
¥222,514
¥268,291
¥231,159
¥1,592,279
Japan
China
Others
Millions of yen
Asia
North America, Europe
and other areas
Total
¥876,224
¥203,419
¥284,430
¥224,531
¥1,588,604
Thousands of U.S. dollars
Japan
China
Others
Asia
North America, Europe
and other areas
Total
$9,258,670
$2,367,170
$2,854,160
$2,459,138
$16,939,138
Sales amounts are allocated to countries or regions according to the customers’ location.
Property, plant and equipment, net
Millions of yen
Asia
March 31, 2013:
Japan
Republic of Korea
Others
North America, Europe
and other areas
Total
Property, plant and equipment, net
¥317,658
¥84,534
¥124,686
¥100,362
¥627,240
March 31, 2012:
Japan
Republic of Korea
Others
Millions of yen
Asia
North America, Europe
and other areas
Total
Property, plant and equipment, net
¥319,736
¥60,344
¥92,898
¥88,945
¥561,923
March 31, 2013:
Japan
Republic of Korea
Others
Asia
North America, Europe
and other areas
Total
Property, plant and equipment, net
$3,379,340
$899,298
$1,326,447
$1,067,681
$6,672,766
Thousands of U.S. dollars
(Information about loss on impairment of fixed assets by reportable segments)
Year ended
March 31, 2013:
Loss on impairment
Fibers
&
Textiles
¥150
Plastics
&
Chemicals
IT-related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
¥280
¥225
¥264
¥990
Life
Science
¥63
Others
¥—
Elimination
& corporate
Total
¥—
¥1,972
Millions of yen
Year ended March 31, 2012:
No significant items to be reported.
Year ended
March 31, 2013:
Fibers
&
Textiles
Plastics
&
Chemicals
IT-related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Loss on impairment
$1,596
$2,979
$2,394
$2,809
$10,532
Life
Science
$670
Others
$—
Elimination
& corporate
Total
$—
$20,979
Thousands of U.S. dollars
92
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
93
(Information about amortization and balance of goodwill by reportable segments)
Year ended
March 31, 2013:
Fibers
&
Textiles
Plastics
&
Chemicals
IT-related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
amortization of goodwill
¥(248)
¥ 16
¥ 3,132
¥ 238
¥(16)
Balance of goodwill
(72)
907
27,871
1,060
—
Life
Science
¥—
—
Others
¥1
1
Elimination
& corporate
¥—
—
Total
¥ 3,123
29,767
Millions of yen
year ended
March 31, 2012:
Balance of goodwill
Fibers
&
Textiles
¥(320)
Plastics
&
Chemicals
IT-related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
¥29
¥31,003
¥1,164
¥(16)
Life
Science
¥—
Others
¥2
Elimination
& corporate
Total
¥—
¥31,862
Millions of yen
Year ended
March 31, 2013:
Fibers
&
Textiles
Plastics
&
Chemicals
IT-related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
amortization of goodwill
$(2,638)
$ 170
$ 33,319 $ 2,532
$(170)
Balance of goodwill
(766)
9,649
296,500
11,277
—
Life
Science
$—
—
Others
$11
11
Elimination
& corporate
Total
$—
—
$ 33,223
316,670
Thousands of U.S. dollars
“Others” represents service-related businesses such as analysis, survey and research.
17. AMoUnts PeR sHARe
Basic net income per share is computed based on the net
income attributable to stockholders of common stock and the
weighted-average number of shares of common stock
outstanding during the year.
Diluted net income per share is computed based on the net
income available for distribution to the stockholders and the
weighted-average number of shares of common stock
outstanding during the year after giving effect to the dilutive
potential of shares of common stock to be issued upon the
exercise of warrants and stock acquisition rights.
Amounts per share of net assets are computed based on
the net assets available for distribution to the stockholders and
the number of shares of common stock outstanding at year end.
Cash dividends per share represent the cash dividends
proposed by the Board of Directors applicable to the respective
years together with any interim cash dividends paid.
Net income:
Basic
Diluted
Cash dividends applicable to the year
Net assets
Yen
2013
2012
¥ 29.75
28.90
10.00
444.95
¥ 39.41
37.46
10.00
384.90
U.S. dollars
2013
$0.32
0.31
0.11
4.73
94
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
95
18. ReLAteD PARtY tRAnsACtIons
Year ended March 31, 2013
Related Party Transactions
No items to be reported.
Year ended March 31, 2012
Related Party Transactions
Name
Category
Location
Common stock
Description of the business
Ownership percentage of voting rights
Relationship
The Company’s transaction with the related company
Repayment of deposits
Balance at year end
Other current liabilities
Toray Battery Separator Film Godo Kaisha
Subsidiary
Tochigi, Japan
¥301 million
Production and sales of battery separator film
Direct 100%
Repayment of deposits
¥28,464 million
—
Consumption taxes are not included in the above amounts. Toray Tonen Specialty Separator Godo Kaisha, which was formerly
disclosed as an affiliated company, became a consolidated subsidiary during the fiscal year ended March 31, 2012, and ceased to
qualify as a related party. Therefore, transactions during the period Toray Tonen Specialty Separator Godo Kaisha was an affiliated
company are reported. In addition, its name has been changed to Toray Battery Separator Film Godo Kaisha. The interest rate for the
deposits received from Toray Battery Separator Film Godo Kaisha is determined based on consideration of market interest rates.
94
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
95
96
TORay INDuSTRIES, INC.
aNNuaL REPORT 2013
PB
Investor Information
(As of March 31, 2013)
Common Stock:
Issued:
1,630,179,785 shares
(excluding treasury stock)
Number of Stockholders: 187,006
Annual General Meeting:
The annual general meeting of stockholders is
normally held in June in Tokyo.
Listings:
Common stock is listed on the Tokyo Stock Exchange,
the Osaka Securities Exchange and three other
domestic stock exchanges. Overseas listings are
on exchanges in London and Luxembourg.
Independent Auditors:
Ernst & Young ShinNihon LLC
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited 1-4-1,
Marunouchi Chiyoda-ku, Tokyo 100-0005, Japan
Cash Dividends Per Share
Total for the year
Interim
Principal Stockholders
The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Nippon Life Insurance Co.
Mitsui Life Insurance Co., Ltd.
SSBT OD05 OMNIBUS ACCOUNT — TREATY CLIENTS
Sumitomo Mitsui Banking Corporation
Japan Trustee Services Bank, Ltd. (Trust 4 account)
Mitsui Fudosan Co., Ltd.
Mitsui Sumitomo Insurance Co., Ltd.
Sumitomo Mitsui Trust Bank, Ltd.
2013
2012
¥10.00
¥10.00
5.00
5.00
Percentage of
shares held
Thousands of
shares
7.77
4.76
4.37
2.21
1.90
1.84
1.38
1.19
1.08
1.04
126,677
77,522
71,212
35,961
30,966
30,022
22,550
19,460
17,638
17,018
* Percentage of shares held is calculated excluding 1,301,618 shares of treasury stock.
Stock Price Range
Composition of Stockholders (Thousands of shares)
(Yen)
1,200
1,000
800
600
400
200
0
Individuals and
Others
486,869
29.84%
Companies and
Individuals in
Foreign Countries
359,334
22.03%
Financial
Institutions
618,415
37.91%
Securities
Companies
20,229
1.24%
Other
Japanese
Companies
146,634
8.99%
2008
April
2009
April
2010
April
2011
April
2012
April
2013
March
Corporate Data
(As of March 31, 2013)
Toray Industries, Inc.
Head Office
Nihonbashi Mitsui Tower, 1-1,
Nihonbashi-Muromachi 2-chome,
Chuo-ku, Tokyo 103-8666, Japan
Telephone: 81 (3) 3245-5111
Facsimile: 81 (3) 3245-5054
URL:
http://www.toray.com
Established:
January 1926
Paid-in Capital:
¥147,873,030,771
Number of Employees:
42,584
Parent company:
7,097
Japanese subsidiaries: 10,177
Overseas subsidiaries: 25,310
97
AnnuAl RepoRt 2013
Toray Industries, Inc.
Toray Industries, Inc.
Toray Industries, Inc.
1-1, nihonbashi-Muromachi 2-chome,
1-1, nihonbashi-Muromachi 2-chome,
1-1, nihonbashi-Muromachi 2-chome,
Chuo-ku, tokyo 103-8666, Japan
Chuo-ku, tokyo 103-8666, Japan
Chuo-ku, tokyo 103-8666, Japan
telephone: 81(3)3245-5111
telephone: 81(3)3245-5111
telephone: 81(3)3245-5111
Facsimile: 81(3)3245-5054
Facsimile: 81(3)3245-5054
Facsimile: 81(3)3245-5054
uRl:
uRl:
uRl:
http://www.toray.com
http://www.toray.com
http://www.toray.com
For questions about this report:
For questions about this report:
For questions about this report:
Contact IR Dept.
Contact IR Dept.
Contact IR Dept.
telephone: 81(3)3245-5113
telephone: 81(3)3245-5113
telephone: 81(3)3245-5113
Facsimile: 81(3)3245-5459
Facsimile: 81(3)3245-5459
Facsimile: 81(3)3245-5459
e-mail:
e-mail:
e-mail:
ir@nts.toray.co.jp
ir@nts.toray.co.jp
ir@nts.toray.co.jp
T
o
r
a
y
I
n
d
u
s
t
r
i
e
s
,
I
n
c
.
A
n
n
u
A
l
R
e
p
o
R
t
2
0
1
3
Printed in Japan
Printed in Japan
Printed in Japan
Issued: October 2013
Issued: October 2013
Issued: October 2013