Our Time to
P
J U M
Annual Report 2015
April 1, 2014–March 31, 2015
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Profile
Toray Group is an integrated chemical industry group aiming to be a global top company in advanced materials based on
the firm belief that, “as the foundation of products, materials have the power to bring about fundamental transforma-
tions in society.”
Based on our core technologies of organic synthetic chemistry, polymer chemistry, biotechnology, and nanotechnol-
ogy as the sources of value creation, we develop the Core Growth Driving Businesses of Fibers & Textiles and Plastics
& Chemicals, Strategically Expanding Businesses of IT-related Products and Carbon Fiber Composite Materials, and
Intensively Developing and Expanding Businesses of Environment & Engineering and Life Science in 26 countries and
regions around the world.
Toray aims to be a corporate group with high value for all stakeholders and seeks to use the power of chemistry to
address social issues worldwide guided by our corporate philosophy of “contributing to society through the creation of
new value with innovative ideas, technologies and products.”
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
The Concept of our Corporate Slogan, “Innovation by Chemistry”
The Toray Group adopted “Innovation by Chemistry” as its corporate slogan in April 2006 as a dec-
laration of our intention to use chemistry as the driving force in our aim “to become a top global corporation in
advanced materials.”
The word “Chemistry” has two meanings. The obvious one is the science that forms the basis for the ad-
vanced materials which we supply. The other is rapport. For us, that means maintaining a good rapport with ev-
eryone who is involved with TORAY—customers, employees, stockholders, business partners, consumers, and
people in the local community—and maintaining good rapport among the companies in the TORAY group and
strong connections among our business offices throughout the world.
“Innovation” is how we will realize our corporate philosophy of “Contributing to society through the cre-
ation of new value with innovative ideas, technologies and products.” “Innovation” refers not only to technolog-
ical innovation but to our intention to pursue innovation in all aspects of our corporate activities.
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 assumptions regarding the
future business environment made at the present time. This annual report is not a guarantee of the Company’s future business performance.
Established in 1926 as a manufacturer of rayon, Toray has evolved into a wide range of busi-
ness areas from basic materials to processed products and a developer of a diverse range of products
including the three major synthetic fibers—nylon, polyester, and acrylic—as well as high-performance
films, engineering plastic resins, carbon fiber composite materials, electronics and information related
products, high-performance membranes, and pharmaceuticals and medical materials.
Innovation by Chemistry
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Contents
02 InnovatIon by ChemIstry
08 Integrated value CreatIon
08
10
12
22
27
Toray Group’s vision
Consolidated Financial & Non-financial Highlights
To Our Stockholders and Investors
Special Feature: Toray Enables the Future of Automobiles
Toray Group Segments
36 Integrated value management
37
43
56
R&D and Intellectual Property
Sustainable Management
Corporate Information
59 FInanCIal seCtIon
101 Investor Information and Corporate Data
Polymer
Chemistry
The Company has cultivated
its core technologies in
organic synthetic chemistry,
polymer chemistry, and
biotechnology since its
inception while broadening
its scope from fibers to
films, chemicals, and resins
and developing business in
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Advanced Materials Generate Future Industry
electronics and information
related products, carbon
fiber composite materials,
medical & health, and water
treatment. Toray recently
added nanotechnology as a
fourth core technology and is
developing a diverse array of
advanced materials targeted
at growth markets.
organic
synthetic
Chemistry
biotechnology
Advanced Materials Generate Future Industry
05
nanotechnology
Toray Industries, Inc.Annual Report 2015 History shows that advanced
materials created in one period
become the core drivers of
industry in the next period.
This means materials, which are
06
the foundation of all products,
have the power to potentially
bring about a fundamental
transformation in society and
people’s lives.
Toray Industries, Inc.Annual Report 2015 materials
can change
our lives
Fiber that absorbs
moisture From the skin
and produces heat
Toray combined four materials—acrylic with high moisture reten-
tion, rayon that generates heat from moisture vapor, polyester that
quickly absorbs and dries sweat, and polyurethane that stretch-
es for a soft fit to create the functional HEATTECH® innerwear that
quickly absorbs sweat and turns it into heat. Created by using the
power of chemistry to create the same level of functionality as nat-
ural fibers, HEATTECH® consistently provides world-class quality
and continues to be advanced to provide even greater comfort to
the people who wear it.
HEATTECH® is a registered trademark of Fast Retailing Co., Ltd.
carbon Fiber that is
substantially lighter
and stronger than
steel and will not rust
Carbon fiber is one quarter the weight while providing 10 times
the tensile strength of steel, plus it does not rust. Toray has tena-
ciously honed its stable production technology for high-quality car-
bon fiber over 50 years. Toray’s carbon fiber composite materials
are currently used for 50% of the structural weight, including in
the wings and fuselage, of Boeing Company’ state-of-the-art 787
Dreamliner enabling a significant reduction in weight and contrib-
uting to reducing fuel consumption and CO2 emissions. The next
area where Toray’s carbon fiber composite materials are poised to
provoke major innovation is in automobiles.
reverse osmosis
membranes using
nano-level Fine pores
to turn seawater to
Fresh water
The conventional approach to desalinating seawater is the energy-
intensive evaporation method in which seawater is evaporated for
the removal of its salt content and impurities. Toray was one of the
first to reverse osmosis membrane using fine pores enabling de-
salination without requiring evaporation. The Company is current-
ly developing sub-nanometer scale microstructure technology on
the one ten-billionth of a meter scale. In addition to seawater de-
salination, the technology is also being successfully used in a wide
range of areas, such as for reusing wastewater.
rustprooF
non-metal Film that
looks like metal
Picasus® is an environmentally-friendly multilayer laminate film
made of different polymers with thicknesses of just a few nanome-
ters that provides the sheen and texture of metal without requiring
coloring or plating. The film’s features include allowing electro-
magnetic waves to pass through for wireless communication, the
ability of integral molding with resin, the ease of applying print,
and resilience to heat and chemicals. Since rust is not a concern,
we are expanding the product’s applications from smartphones to
automobiles for products that require a metallic-looking finish.
Flame-retardant plastic
with strong heat and
chemical resistance
Torelina®, a polyphenylene sulfide (PPS) resin, is super engi-
neering plastic* that excels in such areas as heat resistance and
chemical resistance, flame retardance, mechanical strength, and
dimensional stability—even compared with other thermoplastic
resins. With these features, it is used widely as a material in au-
tomotive electronic components, electrical and electronic parts,
office automation equipment, and home appliances. As a light-
weight material, it is expected to find increased applications as a
replacement for metals.
* An engineering plastic developed by enhancing the properties of resin, which is normally vulner-
able to heat. Super engineering plastics can withstand temperatures of 150˚C and higher for long
periods of time.
Functional material
that biosenses
body signals
Toray took on a new challenge and collaborated with Nippon
Telegraph and Telephone Corporation (NTT) to develop and com-
mercialize hitoe™, a functional material capable of gathering
biological information. Nanofibers measuring just 1/100th the di-
ameter of a human hair are coated with special highly conductive
polymers and are used for biosensing clothing with the ability to
sense a heart rate, cardiographic waveforms, and other bioinfor-
mation. Highly durable, formfitting and breathable, the material
is attracting attention for use in sports, health, and medical fields
and a variety of industries.
Green innovation contributing to realizing
an environmentally-friendly and sustainable
low carbon society.
Life innovation in the medical field centered
on pharmaceuticals, medical materials and
biotools and the healthcare field using ad-
vanced materials.
Our innovation at the most fundamental lev-
el of materials vastly changes the world’s in-
dustries, enables richer lifestyles, and one by
one helps resolve the issues facing the earth’s
environment, people, and society.
Akihiro Nikkaku
President
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and MOre...
Medium-term Management Program: Project AP-G 2016: Project AP-G 2016 is a
three-year medium-term management program for implementing our growth strategies and fortifying our corporate
structure to put us in a position to achieve our long-term corporate vision. Under the previous Project AP-G 2013,
which completed in fiscal 2013, we made substantial progress expanding our businesses in growth business fields
and growth regions and set the Group on a new path for growth. We are continuing this proactive management
stance with Project AP-G 2016 that launched in fiscal 2014 and sets consolidated performance targets for fiscal
2016 of ¥2.3 trillion in net sales and ¥180 billion in operating income.
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Integrated value Creation
Trends in Operating Income
(Billion yen)
IT-II
IT-2010
NT-II
NT-21
AP-G 2016
300.0
AP-G 2013
180.0
150.0
123.5
102.4
103.4
93.0
81.1
107.7
100.1
105.3
83.4
51.2
56.8
33.0
18.8
36.0
40.1
FY
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
(Forecast)
2016
(Target)
Around
2020
(image)
Long-term Corporate Vision: AP-Growth TORAY 2020: Toray Group’s
vision is to be “a corporate group that continually increases revenues and profits,” “a corporate
group that proactively contributes to social development and environmental stewardship,” and “a
corporate group that provides high value for all stakeholders.” To realize this vision, we are stepping
up efforts to expand earnings and broaden our global operations while continuing to develop
the green innovation and life innovation businesses. Our performance objective is attaining
consolidated net sales of ¥3 trillion and operating income of ¥300 billion around
the year 2020.
Image of Financial Indicators Around 2020
Net Sales
¥3,000billion
Core Growth Driving
Businesses
¥1,500billion
(50%)
Strategically Expanding
Businesses and
Intensively Developing and
Expanding Businesses
¥1,500billion
(50%)
Green Innovation
Businesses
¥1,000billion
(33%)
Life Innovation
Businesses
¥300billion
(10%)
Asia, Americas,
Emerging Countries*
¥1,800billion
(60%)
09
( ) net sales ratio
* Under “Project AP-G 2013,” sales forecast to Asia and Emerging countries was 1,500 billion yen. Forecast is revised as above in
“Project AP-G 2016.”
Operating
Income
¥300billion
Operating
Income to
Net Sales ratio
10%
ROA
10%
ROE
13%
Trends in Operating Income
(Billion yen)
IT-II
IT-2010
NT-II
NT-21
AP-G 2016
300.0
AP-G 2013
180.0
150.0
123.5
102.4
103.4
93.0
81.1
107.7
100.1
105.3
83.4
51.2
56.8
33.0
18.8
36.0
40.1
FY
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Around
(Forecast)
(Target)
2020
(image)
Toray Industries, Inc.Annual Report 2015 Consolidated Financial & Non-financial Highlights
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31
Financial Highlights
For the year:
Net sales
Operating income
Net income
Millions of yen
Thousands of
U.S. dollars*1
2015
2014
2013
2012
2011
2015
¥2,010,734
¥1,837,778
¥1,592,279
¥1,588,604
¥1,539,693
$ 16,756,117
123,481
105,253
71,021
59,608
83,436
48,477
107,721
100,087
1,029,008
64,218
57,925
591,842
Cash flows from operating activities
141,282
161,455
100,815
104,410
129,214
1,177,350
Cash flows used in investing activities
(140,662)
(214,826)
(107,525)
(104,002)
(50,734)
(1,172,183)
Free cash flows
620
(53,371)
(6,710)
408
78,480
5,167
Cash flows from financing activities
Capital expenditures
Depreciation and amortization
R&D expenditure
(9,998)
41,475
124,929
118,207
81,480
59,504
78,743
55,500
26,167
99,135
67,588
53,342
(23,645)
(33,039)
(83,317)
98,384
67,443
51,450
55,942
70,479
46,566
1,041,075
679,000
495,867
At year-end:
Total assets
Net assets
¥2,357,925
¥2,119,683
¥1,731,933
¥1,581,501
¥1,567,470
$ 19,649,375
1,080,757
944,625
778,626
674,149
640,970
9,006,308
Per share of common stock (in yen and U.S. dollars):
10
Net income:
Basic
Diluted
Cash dividends
Net assets
Ratios:
Operating income to net sales
Equity ratio
ROA
ROE
Debt/equity ratio (times)
Non-financial Highlights
Number of employees
Toray
Domestic
Overseas
Percentage of women in
management positions (non-consolidated)*2
Employment rate for the handicapped
(non-consolidated)*3
¥ 44.33 ¥ 36.59
¥ 29.75
¥ 39.41
¥ 36.41
$ 0.37
44.28
11
35.70
10
28.90
10
37.46
10
34.43
7.5
616.70
527.32
444.45
384.90
363.90
0.37
0.09
5.14
6.1%
41.8%
5.5%
7.7%
0.71
5.7%
40.5%
5.5%
7.5%
0.76
5.2%
41.8%
5.0%
7.2%
0.73
6.8%
39.7%
6.8%
10.5%
0.77
6.5%
37.8%
6.4%
10.9%
0.83
7,232
10,299
28,258
7,123
10,247
28,511
7,097
10,177
25,310
6,976
10,303
22,948
6,797
10,261
21,682
8.33%
7.95%
7.49%
7.06%
6.77%
2.12%
2.07%
2.03%
1.96%
1.95%
Social contribution activities*4 (billions of yen)
1.2
1.1
1.1
1.2
1.3
*1: U.S. dollar amounts have been converted from yen at the exchange rate of ¥120=US$1, the approximate exchange rate prevailing on March 31, 2015.
*2: As of end April each year
*3: As of end June each year
*4: See page 11 for more details.
Toray Industries, Inc.Annual Report 2015 Net Sales
(Billions of yen)
2,500
2,000
1,500
1,000
500
Operating Income and
Operating Income to Net Sales
Net Income
(Billions of yen)
150
120
90
60
30
(%)
10
(Billions of yen)
100
8
6
4
2
0
80
60
40
20
0
Mar/
11
12
13
14
15
16
(Forecast)
Net Assets and Equity Ratio
Cash Dividend Per Share
0
Mar/
11
12
13
14
15
16
(Forecast)
0
Mar/
11 12 13 14 15
Operating income (left)
16
(Forecast)
Operating income to net sales (right)
Cash Flows
(Billions of yen)
200
150
100
50
0
-50
-100
-150
-200
-250
Mar/
11
12
13
14
15
Cash flows from operating activities
Cash flows used in investing activities
Free cash flows
(Billions of yen)
1,000
750
500
250
0
Mar/
11
12
13
14
15
Net assets (left)
Equity ratio (right)
(%)
60
45
30
15
0
ROA and ROE
Number of Employees
(%)
12
9
6
3
0
Mar/
ROA
ROE
50,000
40,000
30,000
20,000
10,000
11
12
13
14
15
0
Mar/
Toray
11
12
13
14
15
Domestic Overseas
11
(Yen)
12
10
8
6
4
2
0
Mar/
11
12
13
14
15
16
(Forecast)
Breakdown of
Social Contribution Activities
Academics, science
research, education
51%
Disaster relief and
other activities
12%
Environmental
preservation
4%
Community social
welfare, international
exchange
19%
Art, culture, sports
14%
Year ended
March
2015
Toray Industries, Inc.Annual Report 2015 To Our Stockholders and Investors
Toray Group is advancinG
GrowTh sTraTeGies and
iTs compeTiTiveness
in all aspecTs in iTs aim To be a corporaTe Group
wiTh hiGh value for all sTakeholders.
Fiscal 2014 Performance Review
12
Record levels of sales and profits
I would like to begin this report by expressing our pro-
found gratitude to our stockholders and investors for
their continuing support.
The global economy generally continued expand-
ing at a stable pace in fiscal 2014. Business conditions
steadily recovered in the United States and improved
overall in Europe while China’s rate of economic expan-
sion slowed and ASEAN region business conditions
were flat. The Japanese economy stalled during the year
as private demand and production activity suffered from
a demand fallback following the demand rush before
the increase in the consumption tax. Nevertheless, the
moderate recovery trend continued, supported by the
effects of government policies and other factors.
In these conditions, the Group continued steadily
advancing its growth strategies and further strength-
ened its total cost competitiveness in accordance with
the medium-term management program Project AP-G
2016, which was launched in April 2014 and will con-
tinue through fiscal 2016.
The result of these efforts were record levels of sales
and profit in all categories in fiscal 2014 with year-on-year
rises in consolidated net sales of 9.4% to ¥2,010.7 billion,
operating income 17.3% to ¥123.5 billion, and net income
19.1% to ¥71.0 billion. The Company also improved its
profitability and capital efficiency, raising the ratio of oper-
ating income to net sales by 0.4 percentage points to
6.1% and ROE by 0.2 points to 7.7%.
The Carbon Fiber Composite Materials segment led
the Company’s profit growth on brisk demand and a
widening range of product applications. The Plastics &
Chemicals segment’s results were boosted by higher
shipments of products for automotive and back sheets
for solar cells applications. The Fibers & Textiles seg-
ment overcame the impact of the consumption tax hike
on domestic sales of materials for apparel applications
to post sales and profit growth on brisk business in
other sectors led by automotive applications.
Based on the earnings performance for the period
under review and taking into account the need to main-
tain retained earnings necessary for future growth, Toray
raised the per-share dividend payment by ¥1 yen year on
year for an aggregate annual dividend of ¥11 per share in
fiscal 2014.
Toray Industries, Inc.Annual Report 2015
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Akihiro Nikkaku
President
To Our Stockholders and Investors
Innovation and proactive
management to make each business
the global leader
The Toray Group is actively implementing the medium-
term management program Project AP-G 2016, covering
the three fiscal years from 2014 to 2016. The project is
the current stage toward fulfilling its AP-Growth TORAY
2020 long-term corporate vision for its business struc-
ture and achieving the performance targets for consol-
idated net sales of ¥3 trillion and operating income of
¥300 billion around the year 2020.
Project AP-G 2016 is designed to continue advanc-
ing and building on our accomplishments expanding
businesses in growth fields and regions and to further
advance the cost reductions and other measures to rein-
force the business foundation while adding the third com-
ponent of innovation and proactive management. The
project sets fiscal 2016 consolidated targets of ¥2,300
billion in net sales and ¥180 billion in operating income.
To achieve these targets, we are accelerating our busi-
ness expansion into domains where we can fully lever-
age Toray Group’s strengths and tackling our tasks with
designing strategies to become the global leader in each
of our business segments.
At the same time, we will step up growth investment
while maintaining financial soundness using a D/E ratio
of 1 or below with the aim of steadily raising the divi-
dend payment in line with our earnings performance.
14
Project
ap-G 2016
Basic Strategies
Eyeglass frames made of Torayca®, Toray’s
lightweight high tensile strength carbon fiber
Toray Industries, Inc.Annual Report 2015 Pressing forward with
the Group-wide projects
In the eight basic strategies established in Project AP-G
2016, the priority measures identified are to expand
business in growth fields, expand business in growth
countries and regions, and bolster our competitiveness,
and these are being strongly promoted in our Group-
wide projects.
As a way to achieve business expansion in growth
fields, we are harnessing two key strengths, our tech-
nological capabilities and global business foundation, to
focus on developing advanced materials and new busi-
nesses in two thematic domains: the Green Innovation
Business Expansion (GR) Project, which contributes
to solutions for environmental, resource, and energy
issues, and the Life Innovation Business Expansion (LI)
Project, which centers on contributing to pharmaceuti-
cal, healthcare, and related fields.
Business expansion in growth countries and regions
is moving forward under the Asia, Americas and
Emerging Country Business Expansion (AE-II) Project
aimed at fully capturing the growing demand in coun-
tries and regions like emerging countries.
Total Cost Reduction (TC-III) Project continues the
advances in reducing variable and fixed costs while also
promoting production process innovation and total oper-
ational cost reduction in sales and marketing.
We have made significant progress with the Project
AP-G 2016 Group-wide projects, and I would like to
report the current status of each project.
15
Toray Industries, Inc.Annual Report 2015 To Our Stockholders and Investors
Increasing use of
carbon fiber composite materials in
aircraft plus automobiles
The Green Innovation Business Expansion (GR) Project
aims to expand business in fields that contribute to
resolving environmental, resource, and energy issues,
including energy conservation, new energy, biomass
derivatives, water treatment, air purification, low envi-
ronmental burden, recycling, and process innovation.
The GR Project generated net sales of ¥565.5 billion
in fiscal 2014, marking substantial progress toward the
¥700 billion target in fiscal 2016. Particular advances
16
Projec t AP-G 2016
Green Innovation
Business Expansion
(Gr) project
Green Innovation Business Expansion Plan
(Billion yen)
1,000
( ) net sales ratio
700.0
(approx. 30%)
565.5
(approx. 28%)
463.1
(approx. 25%)
800
600
400
200
0
FY
2013
Actual
2014
Actual
2016
Target
2020
Image
were made in new applications in the aircraft and auto-
motive fields for carbon fiber composite materials,
which promise to be a significant contributor as a next-
generation lightweight material for saving energy.
Agreement with Boeing to supply materials for
the 777X model aircraft
Toray entered into a basic
agreement with Boeing, of
the United States, to supply
TORAYCA® prepreg carbon
fiber materials for the aircraft
maker’s 777X model aircraft
planned to begin delivery in
2020 as the successor to
the 777 model. We are cur-
rently in talks with Boeing to extend the comprehen-
sive agreement begun in November 2005 under which
Toray is supplying TORAYCA® prepreg for use in the
wings, fuselage, and other sections of the 787 model
for another 10 years or more with the inclusion of the
777X model.
The total value of the materials supplied for the 787
and 777X model aircrafts is expected to exceed ¥1 trillion.
©Boeing
©Toyota Motor Corporation
Carbon fiber materials used in
the Toyota Mirai fuel cell vehicle
Toray’s carbon fiber mate-
rials are used in the Mirai
fuel cell vehicle, launched in
December 2014 by Toyota
Motor Corporation.
Toray and Toyota teamed up
to produce a carbon fiber rein-
forced thermoplastic (CFRTP)
material for use in the fuel
cell “stack frame,” which
protects the batteries and acts as all equivalent of a
floor section for the automobile. This is the world’s
first* use of CFRTP in the structural part of a (mass)
production vehicle. Carbon paper Toray has developed
for over 30 years was used for the electrode substrate
of fuel cell stack—the heart of a fuel cell vehicle—and
contributes to saving space while improving fuel cell
stack performance. The Mirai also uses Toray’s high
strength carbon fiber, which was specifically developed
for strength, weight, and safety, as material for its high
pressure hydrogen tank.
The Toray Group is accelerating the technological
development of carbon fiber composite materials for a
variety of automotive applications.
*Based on Toray research as of November 2014
Life Innovation Business Expansion Plan
(Billion yen)
( ) net sales ratio
approx. 140.0
(approx. 7%)
170.0
(approx. 7%)
approx. 120.0
(approx. 6%)
300
250
200
150
100
50
0
FY
2013
2014
Actual
Actual
2016
2020
Target
Image
Advanced Materials in LI Business
Pharmaceuticals & Medical
Toray Industries, Inc.Annual Report 2015 Developing new businesses while
expanding the pharmaceuticals and
medical businesses
The Life Innovation Business Expansion (LI) Project
aims to expand business in our present pharmaceuti-
cal and medical businesses and apply the Toray Group’s
advanced materials, core and fundamental technolo-
gies, and business foundation to improve the quality of
healthcare, ease the burden at medical institutions, and
contribute to health and longevity. In the pharmaceutical
and medical businesses, we will achieve this by creat-
ing new products and cultivating new business fields as
well as strengthening development of our competitive
advanced materials for medical equipment and health-
care products. We will also collaborate with strategic
partners, participate in medical clusters, and take other
steps to expand business, accelerate development, and
explore new business avenues.
The LI Project produced net sales of ¥140.0 billion in
fiscal 2014 as it steadily progressed toward the ¥170.0
billion target for fiscal 2016. The project is focused on
expanding the pharmaceuticals and medical businesses
while accelerating the development of new businesses.
in
Toray establishes its life innovation business brand
Toray made a key strate-
gic advancement
the
Innovation Business
Life
Expansion (LI) Project with
the establishment of a new
integrated brand logo for the
Group’s life innovation prod-
ucts, services, and related
activities. The Toray Group
is aiming to strengthen and expand the Life Innovation
Business driven by a strong desire to apply its advanced
materials and technologies to address social issues in
the medical, health, longevity, and other fields and realize
life innovation from a comprehensive perspective around
the world.
The brand logo for the Life Innovation Business links
the first letters of life and innovation creating an image
connecting the “i” representing human innovation and the
surprise and smiles evoked by an exclamation point “!”.
Toray participates in a development project for
the next-generation cancer diagnostic system
Toray is participating in an
industry-academia-government
collaboration project to develop
the Company’s high sensitivity
DNA chip 3D-Gene® for use
in the world’s first biotool for
early detection of biomarkers
for dementia and 13 types of
cancer, including breast and
colon cancer.
Proj ect A P- G 2016
Life Innovation
Business Expansion
(li) project
17
Life Innovation Business Expansion Plan
(Billion yen)
300
( ) net sales ratio
approx. 140.0
(approx. 7%)
170.0
(approx. 7%)
approx. 120.0
(approx. 6%)
250
200
150
100
50
0
FY
2013
Actual
2014
Actual
2016
Target
2020
Image
Advanced Materials in LI Business
Pharmaceuticals & Medical
Green Innovation Business Expansion Plan
(Billion yen)
1,000
( ) net sales ratio
700.0
(approx. 30%)
565.5
(approx. 28%)
463.1
(approx. 25%)
800
600
400
200
0
FY
2013
2014
Actual
Actual
2016
2020
Target
Image
Toray Industries, Inc.Annual Report 2015 To Our Stockholders and Investors
Further strengthening organic
integration of overseas bases, developing
new markets, and expanding business
The Asia, Americas and Emerging Country Business
Expansion (AE-II) Project encompasses numerous ini-
tiatives, including developing products and strengthen-
ing marketing and sales capabilities to meet the specific
needs of each country, strengthening existing produc-
tion infrastructure and establishing facilities in markets
where we are not yet active, accelerating business
expansion through alliances with leading local compa-
nies, and expanding the advanced materials business
to meet demand growth from expanding middle- and
upper-income demographics.
AE-II Project net sales continued steadily rising in fis-
cal 2014 to reach ¥944.0 billion and represents 47% of
18
Projec t AP-G 2016
Asia, Americas and Emerging Country
Business Expansion
(ae-ii) project
the Company’s total sales. The Toray Group is continu-
ing to strengthen the organic integration of its overseas
bases and establish new business bases as it seeks to
attain ¥1,150.0 billion in net sales representing approxi-
mately 50% of total sales in fiscal 2016.
Key AE-II Project topics in fiscal 2014 are as stated below.
Initiatives in Asia and emerging countries
china:
New R&D system established
in Shanghai
A new research facility was completed at Toray Advanced
Materials Research Laboratories (China) Co., Ltd. (TARC)
and a new R&D system was established for the Shanghai,
China base. The new research facility has fully equipped
testing, analysis, and assessment facilities, including
molding and printing equipment, and provides complete
product development and technical service functions for
the Film, Carbon Fiber Composite Materials, Electronic &
Information Materials, and other operations in China.
indonesia:
Expanded production facilities for
high-performance polypropylene
spunbond nonwoven fabric
The Company committed to expanding the production
facility for high-performance polypropylene (PP) spun-
bond at P.T. Toray Polytech Jakarta (TPJ), in Indonesia.
Demand for disposable diapers, which is the primary
application for PP spunbond, is expected to grow rap-
idly in ASEAN countries as income levels rise, and the
Company is preparing to meet strong demand by bol-
stering its supply structure from its bases in South
Korea, China, and Indonesia.
Asia, Americas and Emerging Country
Business Expansion Plan
(Billion yen)
1,800
( ) net sales ratio
1,150.0
(approx. 50%)
944.0
(47%)
809.3
(44%)
1,500
1,200
900
600
300
0
FY
2013
Actual
2014
Actual
2016
Target
2020
Image
Major Capital Expenditure Projects
FY March 2015
▶ Toray
▶ CFA (Toray Carbon Fibers America,
Inc.)
▶ CFE (Toray Carbon Fibers Europe
S.A.)
▶ TAK (Toray Advanced Materials
Korea Inc.)
FY March 2016
▶ TAK (Toray Advanced Materials
Korea Inc.)
▶ TPJ (P.T. Toray Polytech Jakarta)
▶ TCK （Toray Chemical Korea Inc.)
▶ TCA (Toray Composites (America),
Inc.)
Carbon fiber production facilities
128.5
120
113.9
77.1
77.5
62.5
59.5
55.5
Capital Expenditures
Consolidated
subsidiaries
Depreciation
Consolidated
subsidiaries
R&D Expenses
(Billion yen)
150
Toray
142.0
(Billion yen)
100
Toray
92.0
(Billion yen)
Consolidated
subsidiaries
Toray
PPS (polyphenylene sulfide) resin
production facilities
High-performance polypropylene
spunbond production facilities
Polyester staple fiber production facilities
Carbon fiber TORAYCA® prepreg
production facilities
90
60
30
0
80
60
40
20
0
70
60
50
40
30
20
10
0
FY
2013
2014
2015
FY
2013
2014
2015
FY
2013
2014
2015
Forecast
Forecast
Forecast
Toray Industries, Inc.Annual Report 2015 Thailand:
Preparing for growing CFRP parts
demand in Japan and Thailand
Toray committed to increasing the production capacity
of carbon fiber reinforced plastic (CFRP) parts at Toray
Carbon Magic Co., Ltd. (TCM) and its mass production
plant in Thailand. Toray plans to introduce production
and after processing facilities, such as autoclave mold-
ing, machining, and painting, which will become opera-
tional from the second half of 2014 through 2016. TCM is
serving as the core of the Company’s CFRP composites
business and is collaborating with the overseas bases in
Germany and the United States to develop markets and
broaden applications for CFRP. The Group is enhancing
all stages of its supply chain from upstream carbon fibers
to midstream intermediate materials and downstream
CFRP composites to support strong business growth for
the carbon fiber composite material business.
india:
Automotive airbag base fabric business
established
Toray and Kusumgar Corporates Private Limited to
established Toray Kusumgar Advanced Textile Private
Limited (TKAT) to manufacture and distribute airbag
base fabric in India with operations planned to start in
October 2016. The Toray Group has been boosting the
quality competitiveness of its airbag business by inte-
grating production of all materials from yarns to airbag
textiles while strengthening its global production sys-
tems and enhancing the R&D and marketing functions.
Initiatives in the Americas
mexico:
Construction of
a resin compounding base
Toray and its U.S. subsidiary Toray Resin Co. (TREC)
established Toray Resin Mexico S.A. de C.V. (TRMX)
in Mexico, making Toray the first Japanese engineer-
ing plastic manufacturer to establish its own resin com-
pounding production base in the country. Constructed
inside the Mexico plant of Zoltek Companies, Inc. which
became a wholly owned Toray subsidiary in February
2014, the plant began operations in February 2015 with
production capacity of 10,000 tons of nylon and poly-
butylene terephthalate (PBT) resin compound annually.
The TREC Indiana plant and New Mexico facility com-
bine to give Toray an annual resin compound production
capacity of 34,000 tons in the Americas.
The Toray Group is seeking to grow its resin business
by establishing a global network of resin compound-
ing production bases with the aim of strengthening its
supply structure and capturing the new demand aris-
ing from the rapidly developing automobile industry in
Mexico where automakers are setting up manufactur-
ing bases to produce vehicles for export to the U.S. and
other countries.
Actively investing in global growth
Project AP-G 2016 calls for aggressive investment in
R&D and facilities aimed at realizing sustaining global
growth. For the three years beginning in fiscal 2014,
the program projects spending ¥400.0 billion for capi-
tal investment and ¥180.0 billion for investment in R&D
in such areas as strengthening core products and tech-
nologies, advancing in new fields, and technologies,
and production process innovation. In fiscal 2015, the
Company plans to increase its investment in corporate
growth from the previous fiscal year.
19
Capital Expenditures
Consolidated
subsidiaries
Depreciation
Consolidated
subsidiaries
R&D Expenses
Asia, Americas and Emerging Country
Major Capital Expenditure Projects
Business Expansion Plan
(Billion yen)
1,800
( ) net sales ratio
FY March 2015
▶ Toray
1,150.0
(approx. 50%)
944.0
(47%)
809.3
(44%)
1,500
1,200
900
600
300
0
▶ CFA (Toray Carbon Fibers America,
Inc.)
S.A.)
▶ CFE (Toray Carbon Fibers Europe
▶ TAK (Toray Advanced Materials
Korea Inc.)
FY March 2016
▶ TAK (Toray Advanced Materials
Korea Inc.)
▶ TPJ (P.T. Toray Polytech Jakarta)
▶ TCK （Toray Chemical Korea Inc.)
▶ TCA (Toray Composites (America),
PPS (polyphenylene sulfide) resin
production facilities
High-performance polypropylene
spunbond production facilities
Polyester staple fiber production facilities
Carbon fiber TORAYCA® prepreg
production facilities
(Billion yen)
150
Toray
142.0
(Billion yen)
100
Toray
92.0
(Billion yen)
70
Carbon fiber production facilities
128.5
120
113.9
90
60
30
0
77.1
77.5
80
60
40
20
0
60
50
40
30
20
10
0
FY
2013
2014
Actual
Actual
2016
2020
Target
Image
Inc.)
FY
2013
2014
2015
Forecast
FY
2013
2014
2015
Forecast
FY
2013
2014
2015
Forecast
62.5
59.5
55.5
Consolidated
subsidiaries
Toray
Toray Industries, Inc.Annual Report 2015 To Our Stockholders and Investors
Creating a resilient business structure
Target to reduce costs by ¥200 billion
from 2014 to 2016
The Total Cost Reduction (TC-III) Project seeks to con-
stantly strengthen our corporate structure and create
a resilient business structure with the aim of reducing
costs by ¥200 billion from 2014 to 2016 and thereby
achieve a world-leading level of cost competitiveness.
The primary objective of TC-III will be to extend and
deepen the TC-II Project’s AP-G 2013 initiatives to cut
variable costs and control fixed costs while also focusing
on production process innovation and total operational
cost reduction in sales and marketing.
In fiscal 2014, the Company reduced variable costs
by ¥30.1 billion and fixed costs by ¥19.9 billion. The
Company has introduced a Performance Ratio (P-ratio)
to monitor the ratio of growth rates for fixed costs and
marginal profit with the aim of maintaining a rise in fixed
costs in line with growth in profit during the business
expansion. Management is seeking to hold the P-ratio at
1.0 or lower or otherwise maintain fixed costs within the
divisional budgets.
Production process innovation and total operational
cost reductions saved another ¥14.6 billion in fiscal 2014,
bringing the total reductions achieved under TC-III Project
to ¥64.6 billion.
While implementing the growth strategies described
earlier, the Toray Group is also implementing compre-
hensive measures to enhance its competitiveness.
Projec t AP-G 2016
Total Cost Reduction
(Tc-iii) project
20
Continuation
of
TC-II
Innovation of
Production
Process
• Continuing activities to reduce variable
costs (over 3% each year and over
10% in three years)
• Controlling fixed costs through P-ratio*
accounting method
(P-ratio = under 0.96 each fiscal year)
• Activities involve participation of em-
ployees group-wide
• Set up innovative production process-
es to achieve drastic cost reductions
based on new perspectives and ap-
proaches
• Collaborate across organizations, be-
tween research, technical, production
and engineering departments
Total
Operational
Cost Reduction
in Sales and
Marketing
• Establish a highly competitive supply
chain, by analyzing and understand-
ing the operational costs and logistics
systems
Results of FY2014
Variable costs:
Reduced 30.1 billion yen
(Reduction ratio 3.6%)
Fixed costs:
Reduced 19.9 billion yen
(P-ratio=0.98)
Effects from innovation
of production processes
and total operational cost
reduction in sales and
marketing
Total: 14.6 billion yen
(Billion yen)
200
150
100
50
Reduce costs
200 billion yen
in three years
Reduced
64.6
billion yen
0
FY
Target
2014
Actual
*P(Performance)-ratio= fixed cost growth rate/marginal profit growth rate. Keep P-ratio below 1.0, or manage fixed costs for each division versus budget
Toray Industries, Inc.Annual Report 2015
Rising sales and profits supported by
ongoing economic recovery
The Company got off to a solid start for the Project AP-G
2016 in fiscal 2014, the first year of the project, supported
by ongoing general moderate economic recovery.
The global economy is expected to continue steadily
expanding overall driven by the U.S. and developed
country economies. However, risk factors will need
to be monitored, including slowing economic growth
in China and some emerging countries and the poten-
tial impacts from instability in the foreign exchange and
international commodities markets. Moderate recovery
is also expected for the Japanese economy supported
by improving employment and income environments,
recovery in exports, declining oil prices, and a boost
from economic policies. The primary risk factor to mon-
itor would be a downturn in overseas economic condi-
tions, which could put downward pressure on Japanese
business conditions.
In these conditions, the Toray Group’s consolidated
forecasts for fiscal 2016 are for net sales of ¥2,250.0 bil-
lion, operating income of ¥150.0 billion, and net income
attributable to equity holders of the parent of ¥87.0 bil-
lion. Based on this outlook, we aim to increase our div-
idend for a second consecutive year to an annual cash
dividend of ¥12 per share.
fiscal 2015
Perf orm anc e Forecast
21
The Toray Group will continue constantly seeking to be a
global pioneer of technological advances and to develop
and commercialize leading-edge technologies and new
materials under the firm belief that, as the foundation of
products, materials have the power to bring about fun-
damental transformations in society. The Toray Group
continues to strive to be “a corporate group that con-
tinually increases revenues and profits,” “a corporate
group that proactively contributes to social develop-
ment and environmental stewardship,” and “a corpo-
rate group that provides high value for all stakeholders.”
Toray Industries, Inc.Annual Report 2015Consolidated Performance Results Forecast for Fiscal 2015(Billions of yen)(Billions of yen)FY2015 (Forecast)ChangesNet Sales2,250.0+11.9%Operating Income150.0+21.5%Net Income Attributable to Equity Holders of the Parent87.0+22.5%Our forecasts are predicated on an assumed foreign currency exchange rate of ¥115/US$1.
Special Feature
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TOrA y en Ables The
FUTUre OF AUTOMObIles
Toray’s fibers, resins, films, and carbon fibers are used in automobiles around the world.
Toray’s advanced materials capabilities are creating new possibilities for the automobiles of the future.
It all started from rAyOn
Toray’s presence in the automobile industry dates back
to 1941 when it began providing reinforced rayon fiber
for tire cords to Tier 1 and Tier 2 suppliers of automobile
manufacturers.
The products we supply expanded from fibers to
resin (plastics) and films and on to carbon fiber com-
posite materials, and today our products are used in a
virtually endless list of automotive parts and compo-
nents from tire cords to airbags, seatbelts, switches,
connectors, LCD color films, cabin filters, propel-
ler shafts, spoilers, and hoods. Automotive materi-
als currently account for approximately 10% of Toray
Group’s sales with plastics resins comprising about
50% of these sales.
List of Applications for
Toray Materials
Interior
• Instrument panel
• Seat
• Door
• Carpet
• Ceiling
FCV
(Fuel Cell Vehicle)
• PCU (Power Control Unit)
• Battery module
• LiB (Lithium-ion Battery)
• Motor
• Fuel cell (stack)
• CHG tank
HEV
(Hybrid Electric Vehicle)
• Engine
• Propeller shaft
• PCU (Power Control Unit)
• Battery module
• Motor
• Battery charger
Exterior
• Side glass
• Rear glass
• Front bumper
• Rear bumper
• Mirror
• Indicator
• Back door
• Roof
• Grill
• Lamp
• Door
• Tire
Electrical
• Wire harness
• Optical fiber harness
• Meter
• Car navigation
• Millimeter-wave radar
• A/C
• Onboard camera
• Solar cell
EV
(Electric Vehicle)
23
• PCU (Power Control Unit)
• Battery module
• Motor
• Battery charger
Power train
• ECU (Engine Control Unit)
• Front end module
• Power steering
• Suspension
• Wire harness
• Propeller shaft
• Engine
the key word is lIGhTer
In this way, the use of Toray’s diverse variety of mate-
rials in automotive parts and materials has played a
role in the history of making automobiles lighter. Even
today, automobiles continue to use more and more
electronics, and automakers are seeking components
made from lighter materials because each new elec-
tronic control device also adds to vehicle weight.
Steelmakers are also working with automakers to
make vehicles lighter through the development of
more advanced, thin, and easy-to-process high-tensile-
strength steel plates for use as structural materials
such as car bodies. In the same way, automakers
are looking to lighten vehicle weight by using plas-
tic or aluminum rather than ferrous metal for com-
ponents that are not part of the vehicle structure.
Leveraging its strengths from many years of sup-
plying resin materials to auto parts makers, Toray is
increasing its market share in materials for automo-
tive applications.
Toray Industries, Inc.Annual Report 2015
Fuel-cell battery
Stack frame
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the One-MInUTe
takt-time barrier
In addition, carbon fiber is now in the spotlight for offer-
ing 10 times the tensile strength at one-fourth of the
weight of steel. This is a huge business opportunity for
Toray, the world’s largest maker of carbon fiber.
Toray’s top priority for the carbon fiber reinforced plas-
tic (CFRP) business is developing products for the auto-
mobile market, following up on its product development
for the aircraft market. In 2011, the Company created the
ultra lightweight TEEWAVE® electric vehicle concept car
to show the potential of vehicle bodies made of carbon
fiber. At present, however, carbon fiber is used for spoil-
ers, propeller shafts, radiator supports, and similar parts
while its use in the core body structure (monocoque) is
still limited to race cars and some luxury vehicles.
The reasons carbon fiber are not being used are mold-
ing time (takt time) and cost. Specifically, the molding
technology does not meet the “one minute” takt time
required by Japanese automaker production lines and
automation technology has not been developed. For
Toray, the first barrier to overcome will be developing
technology to enable shorter CFRP molding time.
High tension steel has short takt times because
of various welding methods, such as spot welding.
Unlike cases where Toray is the sole supplier of car-
bon fiber materials such as for tens of aircraft a month,
one-of-a-kind race cars, or hand-built supercars, in the
case of economy models produced at a 30,000-car-per-
month level at a factory using the kanban system, a
long takt time would substantially increase production
costs because adapting around this would require add-
ing assembly lines and holding more in-progress stock
as inventories.
World’s first* Use OF CFr TP
in automobile structural parts
The arrival of electric vehicles and fuel-cell vehicles in
recent years as a way to address global environment,
natural resource, and energy issues has spurred the use
of carbon fiber in automobile body structures for their
need to be lighter. This led to the carbon fiber reinforced
thermoplastic (CFRTP) developed by Toray in collabora-
tion with automakers becoming the world’s first CFRTP
to be used in the structural section of mass production
vehicles. The CFRTP fuel cell stack frames are harder
than steel and lighter than aluminum and protect the fuel
cells that are the very heart of the vehicles.
Whereas thermoset CFRP becomes harder when
heated, CFRTP melts as it is heated and hardens as it
cools. As these characteristics enable an easy mold-
ing process, CFRTP can be applied to high tensile steel
frames in the press molding stage.
*Based on Toray research as of November 2014
The TEEWAVE® AR1 electric vehicle concept car
Toray made with a carbon fiber body in 2011
COMPleMenTAry
relATIOnshIP
with other materials
It will be several more years before CFRTP can be com-
bined with other materials as part of an automated
assembly process resembling the often-seen image of
an automobile assembly line with sparks flying as indus-
trial robots spot weld high tensile joints. Neither do we
think an era when the structural materials of automobiles
will be made entirely of carbon fiber is close at hand. It
is clear use of carbon fiber as a replacement material will
grow sharply in the future, and Toray is actively work-
ing to increase carbon fiber applications in the automo-
bile market.
That said, our aim is not to completely replace steel,
aluminum, and other materials with carbon fiber, as we
believe it can be used in a complementary relationship
with them. Since most automobile parts and materials
are composites of various materials, we are focusing on
developing technologies to combine CFRTP with other
materials to provide advanced materials that are opti-
mized to automaker specifications.
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CrOss-dIvIsIOn Al
materials development t eams
Yukio Ishino
Director,
Automotive Material Strategic
Planning Dept.
The Automotive Material Strategic Planning Dept. acts as a coordinator across
the various materials development teams with the aim of connecting the Toray
Group’s potential, including rediscovering and applying buried technology, to
customer needs in the automobile industry.
In the past, the materials teams have each focused directly on specific cus-
tomer needs and based their development activities solely on the specifica-
tions provided by individual customers.
As part of its external marketing activities, the Automotive Material Strategic
Planning Department acts as the contact point for customers and materials
teams, thereby facilitating Toray’s ability to apply its comprehensive strengths.
Global Automobile Production Forecasts and a Map of Toray Automotive Material Supply Hubs Source: IHS Automotive
Europe
(Thousands)
Greater China
(Thousands)
Japan/Korea
(Thousands)
North America
(Thousands)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
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Toray automotive material global hubs
Middle East/Africa
(Thousands)
South Asia
(Thousands)
South America
(Thousands)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
10 11 12 13 14 15 16 17 18 19 20 21
the IMPOrTAnCe of being
an approved supplier in europe
Worldwide automobile production is expected to continue
increasing as populations grow and income levels rise in
developing countries. Toray is responding to these trends
by expanding globally in ways that account for the regional
characteristics of Japan, the United States, Europe, China,
South Korea, Asia, and developing countries.
We believe it will be particularly important to be an
approved supplier in Europe in the future. Automakers in
Europe are actively introducing technologies to reduce
vehicle weight not only to comply with strict environmental
regulations but also to enhance fundamental vehicle perfor-
mance features such as speed, turning, and braking. These
European-developed technologies to lighten vehicles are
gaining traction for uses in China, Brazil, and other emerg-
ing countries. While market growth in Asia, especially
China, and other emerging countries will certainly drive unit
production growth, we believe as a materials maker it is
very important for our strategic global expansion to ele-
vate our reputation in Europe. Toray is accordingly focusing
its efforts on strengthening its unified supply chain for its
globally competitive CFRP materials from carbon fiber to
intermediate materials and molded products using its sub-
sidiaries in France, Germany, and Italy as bases.
TOrA y will change automobiles
around the world
We believe there is unlimited potential for materials that are
friendly to people and the environment and for technologies
that contribute to a more affluent society through materials.
Toray will broaden the scope of what is possible in
developing innovative automobiles around the world by
leveraging its strengths in materials to enable automakers
to address many challenges such as environmental and
energy issues, demand for improved vehicle safety, com-
fort, and impact resistance, and needs arising from grow-
ing use of information and electronics technologies.
G r o w t h D r i v i n g Businesses
e
r
o
C
F I B E R S &
T E X T I L E S
P L A S T I C S &
C H E M I C A L S
I
n
t
e
n
s
i
v
e
l
y
D
e
v
e
l
o
p
i
n
g
a
n
d
L I F E
S C I E N C E
I T - R E L A T E D
P R O D U C T S
E N V I R O N M E N T &
C A R B O N F I B E R
E N G I N E E R I N G
C O M P O S I T E
M A T E R I A L S
E
x
p
a
n
d
i
n
g
B
u
sin
esses
s
e
s
s
e
n
i
s
u
B
g
n
i
d
n
a
p
x
g ic ally E
t r a t e
S
Toray Group Segments
G r o w t h D r i v i n g Businesses
e
r
o
C
F I B E R S &
T E X T I L E S
P L A S T I C S &
C H E M I C A L S
L I F E
S C I E N C E
I T - R E L A T E D
P R O D U C T S
I
n
t
e
n
s
i
v
e
l
y
D
e
v
e
l
o
p
i
n
g
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E
x
p
E N V I R O N M E N T &
E N G I N E E R I N G
C A R B O N F I B E R
C O M P O S I T E
M A T E R I A L S
a
n
d
i
n
g
B
u
sin
esses
s
e
s
s
e
n
i
s
u
B
g
n
i
d
n
a
p
x
g ic ally E
t r a t e
S
The Toray Group is able to secure stable expansion and profit growth from the Core Growth
Driving Businesses of Fibers & Textiles and Plastics & Chemicals, while it actively works to
expand earnings through the Strategically Expanding Businesses of IT-related Products and
Carbon Fiber Composite Materials that it views as the drivers of its earnings growth over the
medium- and long-term. Moreover, the Toray Group is nurturing the Intensively Developing and
Expanding Businesses of Environment & Engineering and Life Science as core earnings sources
for future businesses to seek sustainable growth.
.
c
n
I
,
s
e
i
r
t
s
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d
n
I
y
a
r
o
T
27
5
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
Toray Group Segments
Business Categories
Segments
Core Growth Driving
Businesses
Net Sales
Ratio
67.3%
Operating
Income Ratio
55.2%
28
Strategically Expanding
Businesses
Intensively Developing
and Expanding
Businesses
Net Sales
Ratio
20.2%
Operating
Income Ratio
35.2%
Net Sales
Ratio
11.8%
Operating
Income Ratio
8.4%
FI B E R S &
TE X T I L E S
PL A S T I C S &
CH E M I C A L S
I T -R E L A T E D
PR O D U C T S
CA R B O N FI B E R
CO M P O S I T E
MA T E R I A L S
EN V I R O N M E N T &
EN G I N E E R I N G
LI F E SC I E N C E
Notes: 1 Each percentage shows the share of net sales/operating income in the consolidated net sales/consolidated operating income respectively in the segment.
2 Excludes other businesses, equivalent to ¥14.3 billion (0.7%) in net sales and ¥1.9 billion (1.2%) in operating income, and adjustment of operating
income of -¥20.7 billion.
Toray Industries, Inc.Annual Report 2015
Main Products
Application Examples
Filament yarns, staple fibers, and woven and
knitted fabrics of nylon, polyester and acrylic
fibers, etc.; non-woven fabrics, ultra-microfi-
ber non-woven fabric with suede texture and
apparel products
Nylon, ABS, PBT, PPS and other resins and
molded products, polyolefin foam; polyester,
polypropylene, PPS and other films and pro-
cessed film products; raw materials for synthetic
fibers and other plastics; zeolite catalysts; fine
chemicals for pharmaceuticals and agrochemi-
cals; veterinary medicine (excludes film and resin
covered in IT-related Products segment)
Films and plastic products for information and
telecommunications related products; materi-
als for electronic circuits and semiconductors;
color filters for LCDs and related materials;
magnetic recording materials; graphic materi-
als and IT equipment
Carbon fibers, carbon fiber composite materi-
als and their molded products
• Women’s and men’s clothes (stockings: nylon fiber, dress shirts: polyester-
cotton blended fabric, apparel products, coats: ultra-microfiber non-woven
fabric with suede texture)
• Automobiles (airbags: nylon fiber, car seats, seatbelts: polyester fiber)
• Furniture & interior (sofas: ultra-microfiber non-woven fabric with suede
texture, carpets: BCF nylon, curtains: halogen-free, flame retardant materials)
• Disposable diapers: polypropylene filament yarn non-woven fabric
• Tents: polyester fiber
• Automobile components (radiator tanks, intake manifold: nylon resin, con-
nectors: 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)
• Backsheet of solar panels: PET film
• Packs for snack: polypropylene film, PET film
• Veterinary medicine (for dogs and cats)
• Flat panel display televisions: PET film and LCD color filter manufacturing
equipment
• PCs: PET film, circuit materials, polyimide coatings
• Cellular phones: color filters, LCP resin, circuit materials, PET film
• Printing: waterless printing plates, relief printing on resins, printing equipment
• Backup tapes for server: PET film
• In-vehicle multimedia LANs: optical fiber
• Semiconductors: semiconductor coating materials
• Aircraft structure: carbon fiber composite materials
• Sports gear and goods (golf shafts, tennis rackets: carbon fiber composite materials)
• Bike frames: carbon fiber composite materials
• 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
• Bridge pier reinforcement: carbon fiber woven fabrics
Comprehensive engineering; condominiums;
industrial equipment and machinery; environ-
ment-related equipment; water treatment mem-
branes and related equipment; materials for
housing, building and civil engineering
• Seawater desalination facilities: water treatment membranes 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
Pharmaceuticals and medical products; analy-
sis, physical evaluation and research services
• Pharmaceuticals (natural interferon-beta preparation, oral prostacyclin-
derivative, oral anti-pruritus drugs)
• Medical treatment devices (hemodialyzers, blood purifiers for severe
sepsis, dialysis equipment)
29
Toray Industries, Inc.Annual Report 2015 Toray Group Segments
Core Growth Driving Businesses
Fibers & Textiles
Fiscal
Net sales
Operating income
Assets
2013
755.5
52.9
618.5
2014
856.7
55.6
705.5
Fiscal 2015 forecasts announced on May 8, 2015.
Changes
13.4%
5.1%
(Billions of yen)
2015 Forecast
920.0
63.0
Net Sales
Operating Income
856.7
755.5
(Billions
of yen)
52.9
55.6
Net Sales
ROA
(Operating income/Assets)
496.4
470.5
Operating income to
net sales
18.0
(Billions
of yen)
Operating Income
23.9
8.4%
6.5%
¥36.1 billion
2014
2013
(FY)
2013
2014
2013
2014
(FY)
Capital
expenditures
2013
2014
topics
Decision to establish the airbag
base fabric business in India
Toray joined with India functional textile man-
ufacturing and sales company Kusumgar
Corporates to establish Toray Kusumgar
Advanced Textile Private Limited with the
plan to start mass production and distribu-
tion of airbag base fabric in October 2016.
Toray is raising its quality competitiveness
to a higher level through integrated produc-
tion from yarn to fabric while also augment-
ing its global production system, research
and development functions, and marketing
capabilities. The creation of the airbag base
fabric manufacturing and sales company in
India is a key step in this direction. We are
organically integrating the functions for our
airbag business bases to create fully local-
ized operations from product development
to production and supply to meet the needs
of automobile makers and airbag module
makers worldwide.
30
Summary of Consolidated Financial Results for
the Year Ended March 31, 2015 (Fiscal 2014)
Fibers & Textiles segment net sales increased 13.4% year on year to
¥856.7 billion. Operating income rose 5.1% to ¥55.6 billion.
(Billions
of yen)
Net Sales
Net Sales
Operating Income
Operating Income
26.2
16.9
24.5
24.6
2013
2014
2013
2014
158.4
248.0
245.7
113.3
(Billions
of yen)
In Japan, demand for apparel applications remained weak in gen-
eral due to the prolonged impact of the consumption tax rate increase.
Against this backdrop, Toray Group worked to expand sales and
sophisticate the business through promotion of a business that inte-
grated fibers, textiles, to final products, businesses. In industrial appli-
cations, sales were robust led by those to automotive applications.
Overseas, while being affected by a slowdown in demand in
Europe and sluggish domestic demand in China, textile subsidiaries in
Southeast Asia and China pursued sales expansion and a shift towards
high value added products. Also shipment for automotive applications,
and hygiene products in emerging countries remained strong.
Toray Chemical Korea Inc., which became a consolidated sub-
Operating Income
sidiary at the end of the previous fiscal year, contributed to sales
increase of the segment, but amortization of goodwill affected profit.
Operating Income
Net Sales
Net Sales
(Billions
of yen)
180.2
180.0
2013
2014
2013
2014
58.2
57.0
(FY)
(Billions
of yen)
(FY)
8.0
5.6
6.4
4.1
2013
2014
2013
2014
Outlook for the Year Ending March 2016
(Fiscal 2015)
We anticipate a gradual economic recovery in Japan even as the
sluggish demand caused by the consumption tax hike and con-
ditions that do not yet allow an optimistic outlook. Overseas, we
expect demand to remain sluggish in Europe and underlying weak-
ness in domestic demand in China. At the same time, solid eco-
nomic conditions are anticipated in the United States.
2013
2014
2013
2014
(FY)
(FY)
In this business environment, the segment will continue strength-
ening and expanding the integrated fibers, textiles, to final products,
businesses, which is a core strength of the Toray Fibers & Textiles seg-
ment, while seeking to grow sales of applications for automotive air-
bags and disposable diapers, the environmental field, and other growth
fields, and in China, emerging countries, the United States, and other
growth regions. The segment will also strengthen its business struc-
ture through cost cuts and other measures and aim to fulfill the earn-
ing potential of its core business and expand its global business.
Toray Industries, Inc.Annual Report 2015
Core Growth Driving Businesses
Plastics & Chemicals
Fiscal
Net sales
Operating income
Assets
2013
470.5
18.0
507.1
2014
Changes
(Billions of yen)
2015 Forecast
496.4
5.5%
570.0
23.9
32.6%
30.0
562.1
Fiscal 2015 forecasts announced on May 8, 2015.
Net Sales
Operating Income
Net Sales
Operating Income
856.7
755.5
52.9
55.6
(Billions
of yen)
470.5
496.4
(Billions
of yen)
23.9
18.0
ROA
(Operating income/Assets)
Operating income to
net sales
2013
2014
2013
2014
(FY)
2013
2014
2013
2014
(FY)
Capital
expenditures
4.5%
4.8%
¥21.3 billion
Net Sales
Operating Income
245.7
248.0
(Billions
of yen)
24.6
24.5
2013
2014
2013
2014
(FY)
Net Sales
Operating Income
180.2
180.0
(Billions
of yen)
8.0
6.4
2013
2014
2013
2014
(FY)
Net Sales
Summary of Consolidated Financial Results for
the Year Ended March 31, 2015 (Fiscal 2014)
Plastics & Chemicals segment net sales increased 5.5% year on
year to ¥496.4 billion. Operating income rose 32.6% to ¥23.9 billion.
In the resin business, overall domestic shipment remained strong
despite sluggish shipment due to the impact of the consumption tax
rate increase in some applications including automobiles. Overseas,
shipment at the subsidiaries in the U.S. and China expanded for
automotive applications.
Operating Income
(Billions
of yen)
113.3
158.4
16.9
26.2
(FY)
2013
2014
2014
In the film business, shipment expanded led by increased
2013
demand in China for films for solar cell back sheets and Toray Group
pursued a shift towards high value added products for food pack-
aging applications. The business, although partly affected by price
competition, remained strong on the whole.
5.6
58.2
57.0
(Billions
of yen)
Net Sales
Operating Income
Outlook for the Year Ending March 2016
(Fiscal 2015)
The business outlook for Japan includes various unstable factors,
such as the potential for sharp fluctuations in raw material and fuel
prices, along with ongoing concerns in other areas including a slow
recovery in automobile production and sluggish demand for home
appliances and general industrial applications. We expect overseas
demand to continue strong centered on North America and emerg-
ing countries.
2014
2013
2014
2013
4.1
(FY)
In this business environment, in the resins business, we plan
to maximize sales of strong-selling products and expand sales in
the United States, China, ASEAN, and emerging countries through
local technology centers while quickly incorporating material and
fuel costs rises into our product prices to maintain and expand the
spread between these costs and sales prices. In the films busi-
ness, although we expect strong pressure from customers to lower
prices, we will continue expanding sales of high value-added prod-
ucts for packaging and industrial applications.
31
topics
New resin compounding base in
Mexico starts operations
Toray and subsidiary Toray Resin Co.
(TREC), of the United States, jointly estab-
lished a new company, Toray Resin Mexico
S.A. de C.V. (TRMX) in Mexico. Automotive
industry manufacturers are actively setting
up operations in Mexico, which offers a
fully developed infrastructure and is becom-
ing an export production base for the United
States and other countries. TRMX is the first
Japanese engineering plastic manufacturer
to establish its own resin compound pro-
duction base in Mexico. Constructed inside
the Mexico plant of large tow carbon fiber
manufacturer Zoltek Companies, Inc. which
became a wholly owned Toray subsidiary
in February 2014, TRMX began operations
in February 2015 with annual production
capacity of 10,000 tons of nylon and poly-
butylene terephthalate (PBT) resin com-
pound. The TREC Indiana plant and new
Mexico facility combine to give Toray an
annual resin compound production capacity
of 34,000 tons in the Americas.
The addition of TRMX gives the Toray Group
11 resin compound bases in eight countries—
Japan, China (Shenzhen, Suzhou, Tianjin,
Chengdu), Thailand, Malaysia,
Indonesia,
South Korea (scheduled to start operations in
fiscal 2015), the United States, and Mexico.
The local production capabilities enable us to
supply products in a timely manner and ser-
vices specifically catered to customer needs.
Toray Industries, Inc.Annual Report 2015
Toray Group Segments
755.5
Operating Income
Net Sales
Strategically Expanding Businesses
470.5
(Billions
of yen)
856.7
Net Sales
496.4
55.6
52.9
IT-related Products
Operating Income
(Billions
of yen)
23.9
18.0
2014
2013
2014
(FY)
2013
2013
Fiscal
Net sales
Operating income
Assets
2013
245.7
24.6
361.1
2014
248.0
24.5
360.4
Fiscal 2015 forecasts announced on May 8, 2015.
2014
Changes
2013
(Billions of yen)
2014
2015 Forecast
(FY)
0.9%
-0.4%
280.0
29.0
Net Sales
Operating Income
245.7
248.0
(Billions
of yen)
24.6
24.5
Net Sales
ROA
(Operating income/Assets)
158.4
Operating income to
113.3
net sales
(Billions
of yen)
Operating Income
26.2
6.8%
9.9%
¥17.9 billion
2014
16.9
2013
(FY)
2013
2014
2013
2014
(FY)
Capital
expenditures
2013
2014
32
Summary of Consolidated Financial Results for
the Year Ended March 31, 2015 (Fiscal 2014)
IT-related Products segment net sales increased 0.9% year on year
to ¥248.0 billion. Operating income declined 0.4% to ¥24.5 billion.
8.0
6.4
57.0
58.2
180.0
180.2
(Billions
of yen)
Net Sales
Net Sales
Operating Income
Operating Income
In the IT-related Products segment, shipment of large LCD
panel-related materials such as films and processed film products
increased, reflecting the recovery in production by panel manufac-
turers and the shift to larger displays. Shipment of smartphone- and
tablet terminal-related materials was strong in general, although
the business was affected by some production adjustments by end
customers. On the other hand, shipment of PDP-related materials
declined, as a major customer withdrew from the PDP business.
Also, all materials continued to be affected by price competition.
2014
2013
2014
2013
2013
2014
2013
2014
5.6
4.1
(FY)
(Billions
of yen)
(FY)
Sub-segments
Fiscal
Display materials
Electronic components,
semiconductors, electric circuit
materials
Data storage materials
Equipment, others
2013
85.5
2014
83.8
106.6
109.7
30.9
22.7
33.7
20.7
(Billions of yen)
Changes
-2%
3%
9%
-9%
Outlook for the Year Ending March 2016
(Fiscal 2015)
We expect demand to grow for 4K-TV and other products but anticipate
an overall adjustment phase materializing for large LCD panel demand.
We expect demand for materials used in smartphones and tablet
devices to continue at last year’s levels. We also expect the downward
pressure on prices to continue growing more intense.
In this business environment, we will seek to expand sales and
market share for our high value-added films and processed film prod-
ucts for display and electronic component applications by focusing on
application segments where demand is strongest. We will also focus
on raising sales of other products including organic EL materials, semi-
conductor materials, printing materials, and battery separator films.
topics
Battery separator film supply
structure fortified in Malaysia
Toray installed new slitting lines at wholly-
owned subsidiary Penfibre Sdn. Berhad, a
maker of polyester (PET) film in Penang,
Malaysia, and in January 2015 commenced
commercial production of SETELA™ battery
separator film.
SETELA™ provides a high level of safety
while effectively responding to demand
for higher capacity and higher output bat-
tery performance and is gaining widespread
usage as a separator for lithium-ion second-
ary batteries used in computers, portable
devices, and electric vehicles. Applications
are expected to expand in line with the
stricter environmental regulations in all coun-
tries and in the energy efficiency vehicle
(EEV) market, which includes hybrid, plug-
in, and electric vehicles, in ASEAN countries
with rapid economic growth.
Malaysia is advancing a national initiative
to be a hub of EEV production for Southeast
Asia, and adding Malaysia to its SETELA™
production and sales bases in Japan, the
United States, France, South Korea, and
China enables Toray to also capture the
strong demand in the ASEAN region.
Toray Industries, Inc.Annual Report 2015
Net Sales
Operating Income
856.7
755.5
(Billions
of yen)
52.9
55.6
Operating Income
Net Sales
Strategically Expanding Businesses
470.5
(Billions
of yen)
496.4
23.9
Carbon Fiber Composite Materials
18.0
2013
2014
2013
2014
(FY)
2013
Fiscal
2014
2013
2014
(FY)
Net sales
Operating income
Assets
2013
113.3
16.9
341.8
2014
158.4
26.2
436.8
Changes
(Billions of yen)
2015 Forecast
39.7%
190.0
54.9%
32.0
Fiscal 2015 forecasts announced on May 8, 2015.
Net Sales
Operating Income
Net Sales
Operating Income
245.7
248.0
(Billions
of yen)
158.4
24.6
24.5
113.3
(Billions
of yen)
26.2
16.9
ROA
(Operating income/Assets)
Operating income to
net sales
2013
2014
2013
2014
(FY)
2013
2014
2013
2014
(FY)
Capital
expenditures
6.7%
16.6%
¥45.2 billion
Net Sales
Operating Income
180.2
180.0
(Billions
of yen)
8.0
6.4
2013
2014
2013
2014
(FY)
Summary of Consolidated Financial Results for
the Year Ended March 31, 2015 (Fiscal 2014)
Carbon Fiber Composite Materials segment net sales increased
39.7% year on year to ¥158.4 billion. Operating income increased
54.9% to ¥26.2 billion.
Operating Income
Net Sales
(Billions
of yen)
5.6
4.1
57.0
2014
2013
In the Carbon Fiber Composite Materials segment, demand
58.2
for aircrafts as well as that in the environment and energy fields
including compressed natural gas tank applications expanded and
automotive-related demand was also strong such as in Europe,
while shipment of carbon fibers and intermediate products (pre-
preg) increased for aerospace applications and general industrial
applications. Toray Group also worked on restoration of prices of
general products used in sports and industrial applications.
Zoltek Companies, Inc., which became a consolidated subsidiary
at the end of the previous fiscal year, contributed to sales increase
of the segment, but amortization of goodwill affected profit.
2014
2013
(FY)
Sub-segments
Fiscal
Aircraft
Sporting goods
Industrial
2013
57.2
14.2
41.9
(Billions of yen)
Changes
36%
13%
54%
2014
78.0
16.0
64.4
Outlook for the Year Ending March 2016
(Fiscal 2015)
We anticipate strong growth in worldwide demand for carbon fiber in
2015 supported driven by continuing demand for aircraft and energy-
related applications. In the Asian market, we expect ongoing pricing
competition for general-purpose industrial and sports applications while
the recovery pace for prices slows due to the weak value of the yen.
In this business environment, we plan to maintain steady shipments of
carbon fiber for aircraft applications centered on our Boeing 787 account
and to expand general industrial application sales in line with the grow-
ing demand for environment and energy-related product applications. In
carbon fiber products for sports applications, we will shift to high value-
added products and revise prices on general-purpose products.
33
topics
Agreement to supply TORAYCA®
Prepreg for the Boeing 777X
Toray and Boeing Company, of the United
States, entered into a fundament agreement
for Toray to supply carbon fiber TORAYCA®
prepreg for the new Boeing 777X aircraft.
The companies are accordingly negotiat-
ing the existing comprehensive agreement
signed in November 2005 to supply prepreg
for the 787 Dreamliner with aim to include
777X and extend its contract period for
more than ten years.
Boeing is developing the 777X aircraft
as a large-sized twin-engine passenger air-
craft as the successor to the existing 777
with a plan to deliver the first plane in 2020.
The Company will use TORAYCA® prepreg
as the material for the aircraft’s main wings.
TORAYCA® prepreg is currently used in the
main wings and fuselage of the Boeing 787.
Boeing is planning to increase monthly pro-
duction of the 787 from the current 10 air-
craft to 12 in 2016 and 14 by the end of
2019. The total value of materials the Toray
Group will supply for the 787 and 777X pro-
grams is expected to surpass ¥1 trillion.
Toray Composites (America), Inc. is cur-
rently expanding its TORAYCA® prepreg
production lines with the aim of starting
production with the new facilities in January
2016, and plans will soon be finalized for
production at the South Carolina business
site acquired in February 2014.
Toray Industries, Inc.Annual Report 2015
Net Sales
Operating Income
Net Sales
Operating Income
856.7
755.5
52.9
55.6
(Billions
of yen)
470.5
496.4
(Billions
of yen)
23.9
18.0
2013
2014
2013
2014
(FY)
2013
2014
2013
2014
(FY)
Toray Group Segments
Net Sales
Intensively Developing and Expanding Businesses
245.7
Operating Income
Net Sales
248.0
158.4
(Billions
of yen)
Operating Income
(Billions
of yen)
24.5
24.6
environment & engineering
113.3
26.2
16.9
2013
Fiscal
2014
2013
2014
(FY)
2013
2013
2014
2014
Changes
2013
(Billions of yen)
2014
2015 Forecast
(FY)
Net sales
180.2
180.0
-0.1%
215.0
Operating income
6.4
8.0
25.4%
10.0
Assets
202.1
204.2
Fiscal 2015 forecasts announced on May 8, 2015.
Net Sales
Operating Income
180.2
180.0
(Billions
of yen)
8.0
6.4
Net Sales
ROA
(Operating income/Assets)
58.2
57.0
5.6
Operating income to
net sales
2013
2014
2013
2014
(FY)
Capital
expenditures
2013
2014
Operating Income
(Billions
of yen)
3.9%
4.5%
¥3.3 billion
2014
4.1
2013
(FY)
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Summary of Consolidated Financial Results for
the Year Ended March 31, 2015 (Fiscal 2014)
Environment & Engineering segment net sales declined 0.1% year
on year to ¥180.0 billion. Operating income increased 25.4% to
¥8.0 billion.
In the water treatment business, amid weakness of demand in
the global market, the shipment of reverse osmosis membranes,
etc. for seawater desalination projects increased and Toray Chemical
Korea Inc., which became a consolidated subsidiary at the end of the
previous fiscal year, contributed to the business performance.
Among domestic subsidiaries in the segment, an engineering subsid-
iary performed strongly on the back of progress in plant construction.
Outlook for the Year Ending March 2016
(Fiscal 2015)
The outlook for water treatment business conditions includes an
ongoing strong market in North America but uncertain conditions
elsewhere around the world due to factors including the low oil
prices and political instability in the Middle East and the financial
issues in Europe. In this business environment, the Company will
focus on expanding sales while implementing widespread cost
reductions.
In the engineering business, we will aim to increase plant con-
struction projects and raise orders for industrial equipment and
equipment related to lithium-ion batteries and semiconductors.
topics
Contributing to realizing the
Kitakyushu Zero-Emission
Transportation System
Kitakyushu TEK & FP LLC and HKK & TEK
LLC, which are Group companies affiliated
with Toray Engineering Co., Ltd., in April 2015
began full operation of the zero-emission
transportation system in Wakamatsu Ward,
Kitakyushu. The city of Kitakyushu is col-
laborating with the Toray Group and other
private enterprises to realize a completely
carbon dioxide and other emission-free
transportation system as part of its goal to
be “the world’s environmental city.” The
system uses large rechargeable batteries
to store electricity produced by solar power
and provide power for electric buses used
on city bus routes.
The electric buses started running in
March 2014 and the system became a pri-
marily solar-powered and completely zero-
emission transportation system in October
with the installation of the solar power gen-
eration system and large storage batteries
to provide a stable power source. The Toray
Group was involved in every step of the
operation from providing the raw materials
and solar panels to designing, constructing,
operating, and maintaining the facility.
Toray Industries, Inc.Annual Report 2015
Net Sales
Operating Income
Net Sales
Operating Income
856.7
755.5
52.9
55.6
(Billions
of yen)
470.5
496.4
(Billions
of yen)
23.9
18.0
2013
2014
2013
2014
(FY)
2013
2014
2013
2014
(FY)
Net Sales
Operating Income
245.7
248.0
(Billions
of yen)
24.6
24.5
2013
2014
2013
2014
(FY)
Net Sales
Intensively Developing and Expanding Businesses
Operating Income
158.4
(Billions
of yen)
26.2
life science
16.9
2014
2013
2014
(FY)
113.3
2013
Fiscal
Net sales
Operating income
Assets
2013
58.2
5.6
76.4
2014
Changes
(Billions of yen)
2015 Forecast
-2.0%
-27.4%
60.0
5.0
57.0
4.1
82.9
Fiscal 2015 forecasts announced on May 8, 2015.
Net Sales
Operating Income
Net Sales
Operating Income
180.2
180.0
(Billions
of yen)
58.2
57.0
(Billions
of yen)
8.0
6.4
5.6
4.1
ROA
(Operating income/Assets)
Operating income to
net sales
2013
2014
2013
2014
(FY)
2013
2014
2013
2014
(FY)
Capital
expenditures
5.1%
7.1%
¥2.6 billion
Summary of Consolidated Financial Results for
the Year Ended March 31, 2015 (Fiscal 2014)
Life Science segment net sales declined 2.0% year on year to ¥57.0
billion. Operating income decreased 27.4% to ¥4.1 billion.
In the pharmaceutical business, while shipment of REMITCH®*,
an oral anti-pruritus drug for hemodialysis patients, expanded robustly,
that of natural-type interferon beta preparation FERON® was weak
due to the impact of intensified competition, and orally active prosta-
cyclin derivative DORNER® was affected by the NHI drug price revi-
sion and the increasing sales of its generic versions. License revenue
also decreased compared with the previous fiscal year. In the medical
devices business, shipment of dialyzers grew strongly.
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
Outlook for the Year Ending March 2016
(Fiscal 2015)
The pharmaceutical and medical device markets are expected to
grow steadily overall even as competition continues intensifying
from the growing number of generic drugs.
In these conditions, we will seek to continue expanding sales of
the REMITCH® and NOPICOR® oral anti-pruritus drugs for hemodi-
alysis and chronic liver disease patients in the pharmaceuticals busi-
ness and dialyzers, dialysis equipment, and other equipment in the
medical devices business.
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
topics
Distribution agreement for acute
blood purification devices in
eight European countries
Toray signed an exclusive distribution
in
agreement covering eight countries
Europe with Fresenius Medical Care AG
& Co. KGaA, of Germany, for Toray’s
TORAYMYXIN®, a blood purification device
for removing endotoxin, and a polymethyl-
methacrylate (PMMA) hemofilter for contin-
uous hemofiltration. Since its introduction in
1994, TORAYMYXIN® has often been used
in clinical practice in Japan to treat severe
sepsis and septic shock mainly as a blood
purification device with an absorption col-
umn for removing endotoxin, a cause of
sepsis. A continuous blood filtration device
with a PMMA hemofilter, TORAYMYXIN®
obtained approval for manufacture in 1991
and is often used in the emergency and
intensive care fields to treat acute kidney
failure and to support organ dysfunction.
35
Toray Industries, Inc.Annual Report 2015
Toray Group aims to be a corporate group that delivers exceptional value to each and every one of its stake-
holders. Based on its corporate philosophy, “contributing to society through the creation of new value with innova-
tive ideas, technologies and products by creating new value,” the Group advances its global operations through the
strategy trinity of Business, R&D, and Intellectual Property. At the same time, the Group promotes bolstered safety,
accident prevention, and environmental preservation, corporate ethics, and legal compliance to fulfill its corporate
social responsibility (CSR) as its top priority management theme to achieve sustainable growth.
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Integrated value Management
R&D and Intellectual Property
Since its founding,
Toray has carried out R&D on
advanced materials based on the
firm conviction that “research and
technical development provide
the key to building the
Toray of tomorrow.”
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r&d
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Features,
and strengths
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Toray R&D Features
1 Culture of Commitment to basic research
Our culture prioritizes basic research that takes in the larger picture, rec-
ognizes the value of material and is not swayed by popular trends and so
provides a fertile foundation for continuing to create innovative advanced
materials like our carbon fibers and reverse osmosis membranes.
2 long-term and Persistent efforts to Pursue
Advanced Materials and Technology to the limit
Our commitment to unceasing pursuit in R&D—exemplified in our
strong preference for advanced materials and belief that delving deeper
into a single theme yields new inventions and discoveries—has taken
root in the form of persistent efforts over the long term. We believe this
“super-continuity” approach spurs innovation.
3 specialist Teams in Many Fields
Toray’s teams of specialists have abundant knowledge and experience
in a wide variety of fields including polymer design, function enhance-
ment technology, and drug discovery, formulation, and pharmacology,
which are applications of our core technologies.
4 Undivided r&d Organization
The Technology Center serves as the nexus for all R&D functions
enabling advanced materials created in one field to be rapidly applied
to other fields.
5 leader in Industry-government-academia
Collaborative research
Toray actively engages in technology fusion through external collabora-
tion and open innovation activities with industries, governments, and aca-
demic institutions in Japan and overseas with the aim of continuing to
create innovative advanced materials.
6 strategic Partnerships with Industry leaders
Toray produces first-to-market advanced materials in growth markets
through collaborations with leading companies and venture companies
in Japan and overseas.
7 Advanced Analytical Capabilities
Toray works closely with Toray Research Center Inc., which has exten-
sive achievements in commissioned analysis and research studies, to
enhance the Company’s analysis capabilities for its R&D and produc-
tion technology.
Aiming to be the Global Leader in Advanced Materials
Toray Group aims to be the global leader in advanced materials. Following our motto that “innovative products only come with
innovative materials,” we are deepening and integrating our four core technologies of organic synthetic chemistry, polymer
chemistry, biotechnology, and nanotechnology to pursue innovation and play an active role developing society as well as con-
serving and existing in harmony with the environment.
Material
Design
Textile Technology
TORAY’s
Core
Technologies
Fiber
Technology
Fine Technology
Synthetic
Fibers
Textiles,
Apparels
Industrial Materials,
Amenity Materials
Man-made Suede
Polymer
Chemistry
Organic
Synthetic
Chemistry
Carbonization Technology
Carbon Fibers
Molding
Technology
Advanced Composite
Materials
Engineering
Plastics
39
Film
Technology
Film Processing
Technology
Dispersion Control
Technique
Coating
Technology
Fine Patterning
Biotechnology
Microstructure Technology
Surface Control
Technology
Gene Utilization Technology
Nanotechnology
Medicinal Technology
Fermentation Technology
High-performance
Films
Electronic
Materials
Printing
Materials
High-performance
Membranes, Water
Treatment Systems
Artificial Organs,
Medical Devices
Biotools
Pharmaceuticals
Veterinary Medicines,
Fine Chemicals
Synthetic, Plastic
Raw Materials
Toray Industries, Inc.Annual Report 2015 Toray Group’s R&D facilitates fortifying the stable revenue bases and enhanc-
ing the earnings of the two Core Growth Driving Businesses of Fibers &
Textiles and Plastics & Chemicals. R&D also supplies a steady stream of
advanced materials in the Group’s four priority growth fields of environment,
water-related and energy; information, telecommunications and electronics;
automobiles and aircraft; and life science.
Percentage Breakdown of Total R&D Expenses
in Fiscal 2014
FIBERS &
TEXTILES
PLASTICS &
CHEMICALS
IT-RELATED
PRODUCTS
CARBON FIBER
COMPOSITE
MATERIALS
ENVIRONMENT &
ENGINEERING
LIFE SCIENCE
HEAD OFFICE R&D
10%
13%
19%
9%
5%
10%
34%
Core Growth Driving
Businesses
Strategically Expanding
Businesses
r&d
r&d expenditure
and
achievements
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and Expanding
Businesses
59.5
billion yen
R&D Expenses
(Billions of yen)
60
50
40
30
20
10
0
Fiscal/
10
11
12
13
14
Toray
Consolidated subsidiaries
Percentage Breakdown of Total R&D Expenses
in Fiscal 2014
Fiscal 2014 R&D Achievements
R&D Topics
Core Growth Driving
Businesses
FIBERS &
TEXTILES
PLASTICS &
CHEMICALS
IT-RELATED
PRODUCTS
Strategically Expanding
Businesses
CARBON FIBER
COMPOSITE
MATERIALS
ENVIRONMENT &
ENGINEERING
LIFE SCIENCE
Intensively Developing
and Expanding
Businesses
HEAD OFFICE R&D
10%
13%
19%
9%
5%
10%
34%
R&D Expenses
(Billions of yen)
59.5
billion yen
60
50
40
30
20
10
0
Fiscal/
10
11
12
13
14
Toray
Consolidated subsidiaries
Newly developed products include the Salacona® nylon
filament yarn textile with a high-quality texture and soft,
fresh feel, Technoclean® soil-resistant textile made with
nanoscale processing technology, and Pentas® Alpha
polyester-raw cotton created to provide a soft feel and
high moisture absorption and wicking properties.
Toray developed a self-repairing coating film with high
elasticity—up to 300%—and superior scratch resistance
that maintains its luster even with long-term use. The
segment also developed a high-performance polyphenyl-
ene sulfide (PPS) film that enables strong thermal adhe-
sion of different materials, such as metal and fiber sheet.
Toray developed a heat-resistant photosensitive resist
that vastly simplifies the ion injection processes for sili-
con carbide transistors that will be used in next-generation
power electronics. The segment also developed a white
LED phosphor sheet that can improve the brightness of
a white LED device by 10% or more without increasing
input power.
Toray developed new prepreg sheet using unidirection-
ally arrayed chopped strands (UACS) that provides supe-
rior moldability for even complex shapes and the same
mechanical properties as existing unidirectional (UD)
prepreg using single-direction continuous fiber.
In the water treatment field, The Chemical Society of
Japan awarded Toray the 63rd Chemical Technology
Award in recognition of its development of an innovative
high performance (high water quality, energy efficient)
and contamination resistant reverse osmosis mem-
brane. The segment also developed a new water purifier
cartridge for pitchers with high particle removal perfor-
mance and a faster filtering rate of one liter of water in
about three minutes compared to the Company’s exist-
ing cartridges that require about five minutes.
In the pharmaceuticals field, the Company filed for
an additional indication of improvement of pruritus in
chronic liver disease patients in Japan for REMITCH®
CAPSULES 2.5 µg. Also in the medical field, Toray
launched sales of the RAY-FAST® high-sensitivity pro-
tein detection system (for research use) and applied for
approval to manufacture and market a catheter ablation
system for patients with paroxysmal atrial fibrillation.
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
In electrolytic membranes for fuel cells, the segment col-
lected data showing that using Toray’s hydrocarbon films
can vastly reduce the amount of platinum use in the bat-
teries. Toray also joined an industry-academic-government
collaboration project led by the New Energy and Industrial
Technology Development Organization (NEDO) to develop
a next-generation cancer diagnosis system.
TO P I C S
1
Development begun of
a next-generation cancer
diagnosis system capable of
detecting several types of cancer
from a single blood sample
Toray joined in an industry-academic-government col-
laboration project with National Cancer Center (NCC)
and other institutions and began developing the world’s
most advanced diagnosis system for simple detection
of cancer and dementia at standard health exams. The
project is applying Toray’s 3D-Gene® highly sensitive
DNA microarray technology and the innovative micro-
RNA (micro-ribonucleic acids found in blood and urine)
biomarker identification method Toray jointly developed
with NCC to the massive amount of samples in the
NCC biobank with
the aim of develop-
ing the world’s first
practical-use biotool
for early detection of
biomarkers for 13 types
of cancers, including
breast and bowel can-
cers, and dementia.
41
TO P I C S
2 Development of a white LED
phosphor sheet with improved
brightness
Toray developed a phosphor sheet that can improve
the brightness of a white LED device by 10% or more
without increasing input power. White LEDs have a
wide range of uses from backlight for liquid-crystal dis-
plays and smartphone camera flashes to lighting for
homes and stores. White LED light is challenging, how-
ever, because of the difficulty achieving high bright-
ness and because the white light becomes uneven
from phosphors settling or flocculating. Toray success-
fully developed a unique method to increase bright-
ness and minimize color variation by evenly distributing
phosphor particles on a sheet made using silicon resin.
The material can also contributes to a vast reduction
in processing costs by enabling a phosphor layer to be
formed efficiently only on the light-emitting face of the
LED chip. In addition, the decreased amount of phos-
phors used allows us to reduce rare earth usage.
Toray Industries, Inc.Annual Report 2015 Toray Patents Filed in
Year Ended March 31, 2015
Overseas
Domestic
1,552
3,096
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Intellectual
Property
basic Policy and
Priority strategies
Total Patents Held to Date
Overseas
Domestic
614
1,198
Intellectual property strategies must be organically linked
to business strategies and R&D strategies. Toray pursues
an intellectual property strategy with coordination of these
three areas in line with management policies.
While continuing to create innovative new materials
and technologies, Toray seeks to firmly maintain its tech-
nical advantages by pursuing an intellectual property strat-
egy comprising the following four points, the realization of
which would be entry barriers for competitors.
1. Further enhance the quality of patents
2. Construct a globally competitive network of patents
3. Protect the Company’s technical advantages with effec-
tive measures including strategic patent applications
4. Cultivate personnel with deep knowledge of overseas
intellectual property
The Company is currently stepping up patent applications
and rights acquisitions and constructing a strong patent
portfolio globally with a priority in the growth areas of the
Project AP-G 2016 medium-term management program’s
Green Innovation Business Expansion (GR) Project and Life
Innovation Business Expansion (LI) Project.
Under the Asia, America and Emerging Country
Business Expansion (AE-II) Project, the Company is formu-
lating and advancing intellectual property strategies cor-
related with the business strategies and R&D strategies
that Toray Group is implementing globally with a focus on
growth countries and regions showing promise for future
business expansion. While fortifying Toray’s patent applica-
tions and rights acquisitions overseas, Toray Group compa-
nies overseas are also stepping up patent application and
rights acquisition activities to properly protect inventions
created at Group R&D bases worldwide.
In fiscal 2014, Toray Group filed 1,552 patent applica-
tions in Japan and 3,096 overseas, and 614 patents in Japan
and 1,198 overseas were registered.
Toray publishes an annual Intellectual Property Report
describing the intellectual property initiatives by the Toray
Group. The report is available for download at:
http://www.toray.com/ir/library/lib_005.html
Sustainable Management
The Fifth CSR Road Map
Creation of
New Value
Governance
• Contributing solutions
to social issues through
business activities
• Corporate governance and
management transparency
• Corporate ethics and legal
compliance
• Risk management
CSR
Guidelines
• Train personnel and
promote human rights
• Product safety and quality
• Facilitate CSR initiatives
throughout the supply chain
• Communication
• Social contribution
activities
• Emphasize safety, accident
prevention, and environmen-
tal preservation
Society
Environment
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We regard advancing CSR, especially safety, accident prevention and environmental preserva-
tion as well as corporate ethics and legal compliance, as one of the most important manage-
ment priorities for Toray Group. Our goal is to earn respect and support in the international
community and become a corporate group that contributes social value for all our stakehold-
ers through our core business activities.
Sustainable Management
CSR Initiatives
Toray Group’s Corporate Philosophy
and Csr Activities
Toray’s Management Philosophy and Code of Conduct
Management
Philosophy
Corporate
Philosophy
Declaration outlining
the obligations of
Toray Group as a
good corporate citizen
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
44
Toray Group views the objective of CSR to be to realize
Our Management Philosophy is also supported by our
sustainable social and corporate development by applying
Corporate Ethics and Legal Compliance Code of Conduct,
“Response + Ability” to social issues and changes.
which provide a reference for specific standards of conduct
Throughout our history, our mission has been to contrib-
for all employees.
ute to society through our core business activities following
Toray Group’s CSR activities are conducted in an orga-
our Corporate Philosophy of “contributing to society through
nized and systematic manner following the three-year CSR
the creation of new value with innovative ideas, technolo-
Roadmap. Toray Group is strategically practicing social
gies and products,” and our Management Philosophy is to
responsibility under its Fifth CSR Road Map for fiscal years
realize this mission by fulfilling our CSR.
2014 to 2016, which consists of carefully defined CSR strate-
gies, medium- and long-term tasks, and a detailed action plan.
Toray Industries, Inc.Annual Report 2015 environmental
Management Initiatives
Promotion of LCM-based Environmental
Management
Toray Group implements environmentally responsible man-
agement considering the entire produce life cycle. The Group
considers the entire life cycle of products and services in
all business activities with the aim of reducing its environ-
mental impact while raising its corporate and social value. It
is the foundation of Toray’s Green Innovation Businesses.
To implement Lifecycle Management, Toray Group has
adopted LCA*1 methods and the Toray Eco-Efficiency
Analysis (T-E2A)*2 tool, and is working to entrench and pro-
mote them throughout its business activities.
*1 Lifecycle Assessment (LCA) is a method for quantitatively assessing the
resources that have gone into a product and the impact the product.
*2 Toray Eco-Efficiency Analysis (T-E2A) is an environmental analysis tool
developed by Toray. It produces a map of multiple products plotted along
the axes of environmental impact and economic performance, enabling
users to select the most environmentally friendly and economical products.
Initiatives to Fight Global Warming
Toray Group was an early adopter of greenhouse gas (GHG)
reduction initiatives aimed at realizing a sustainable low-car-
bon society. Under the Fourth Medium-Term Environmental
Plan launched in fiscal 2011, the Group has systematically
implemented measures to reduce GHG emissions, includ-
ing improving its processes to conserve energy and install-
ing gas cogeneration systems.
Voluntary Reduction in Atmospheric
Emission of Chemical Substances
Toray Group regards the reduction of environmental loads,
including releases of chemical substances into the atmo-
sphere, as one of its most important priorities. We are work-
ing to achieve this goal through group level initiatives.
Under the Fourth Medium-Term Environmental Plan,
launched in April 2011, we are systematically implementing
voluntary initiatives to resolutely achieve the targets of fiscal
2015 for reducing emissions of substances covered by the
PRTR law and volatile organic substances (VOCs).
Initiatives to Prevent Air and Water
Pollution
Toray Group’s environmental preservation activities include
permanent measures to prevent air and water pollution at its
production facilities. Efforts in Japan and overseas in recent
years include installing desulfurization systems, converting
to alternative fuels to reduce sulfur oxide (SOx) emissions,
and expanding our wastewater treatment facilities and other
measures to lower chemical oxygen demand (COD) levels.
Water Resource Management Initiatives
Toray Group, through its water treatment business, is
addressing water resource issues around the world based
on the following principles. The Group also takes steps to
ensure the proper management of water resources used
in its business activities, including using recycled water to
enhance water usage efficiency.
1. Toray Group recognizes that water is one of the most
important resources for humanity, and that people are
confronting problems related to water resources in many
areas of the world.
2. Toray Group is committed to helping to solve global water
resources problems through its products, technologies
and services.
3. Toray Group continuously monitors the state of regional
water resources, and conducts appropriate management
of water resources according to the basic principle of
sharing precious water resources with the local commu-
nities where the Group operates.
Initiatives to Reduce Waste
Toray Group is seeking to achieve zero waste emissions
to help create a sustainable, recycling-oriented society. The
Group is implementing measures to achieve the Fourth
Medium-Term Environmental Plan’s fiscal 2015 numeri-
cal targets for simply disposed waste, landfill, and recy-
cling ratios set as indicators for measuring progress toward
attaining zero emissions.
Biodiversity Conservation Initiatives
Toray Group recognizes the protection of biodiversity as an
important theme in its initiatives for reducing greenhouse
gases and confronting global environmental problems.
Toray Group formulated the Biodiversity Initiatives in fis-
cal 2010 to position the protection of biodiversity. Since
classifying Toray Group’s activities under the Biodiversity
Initiatives, Toray Group has been formulating three-year
road maps for fiscal 2013 to fiscal 2015 and implementing
measures in order of priority. Fiscal 2014 was the second
fiscal year for the activities in the second roadmap, and the
Group also launched initiatives to address new challenges.
In 2012, Toray Group revised its policies on greenery
adopted in 1973 to formulate Toray Group’s Basic Policy
for Increasing Green Areas. This responded to recent pub-
lic expectations for companies to give consideration to bio-
diversity as well as protect green areas made up of natural
forests*3 at plants that have been protected since opera-
tions began. Under the policy, in 2013, each Toray plant for-
mulated a policy and plan with a view to 2020 and initiated
efforts aimed at sustainable preservation activities.
*3 Natural forests: Natural groves or forestation by species based on potential
native vegetation
45
Toray Industries, Inc.Annual Report 2015
Sustainable Management
CSR Initiatives
Csr Procurement
and Purchasing
Training and
human rights
CSR Procurement and Purchasing Activities
Toray Group works with suppliers and distribution partners
to ensure that its supply chain meets social expectations.
The Group has created CSR Procurement Guidelines to
ensure that it is providing customers with environmentally
friendly and socially responsible materials and products.
While providing materials and products as a manufac-
turer of advanced materials, Toray Group emphasizes the
needs of its product users as the starting point for its man-
agement of production facilities and procured raw materi-
als and resources. Accordingly, the Group has established
its Basic Purchasing Policies to realize this approach and
ensure that the transactions it conducts are fair.
Toray has established contact points for CSR procure-
ment, through which we manage and internally share cus-
tomer and supplier information.
Environmentally Conscious Distribution
Policies
Toray’s Basic Distribution Policies emphasize environmental
preservation, together with fair and equitable transactions.
While continuing to work to improve quality and reduce
environmental impact, Toray also promotes understand-
ing of its distribution policies. This is done through Basic
Distribution Policy Briefings, held annually for distribution-
partner companies.
46
Promoting Human Rights
Toray Group believes that respect for human rights is a man-
datory principle for corporate management. The Group works
to promote and raise awareness of human rights, and in its
Corporate Ethics and Legal Compliance Code of Conduct out-
lines the importance of respecting human rights. Discrimination
of any kind based on race, creed, skin color, gender, religion,
nationality, language, physical characteristics, possessions,
place of birth, or any other personal characteristic is strictly for-
bidden in every process—from recruiting and hiring to work
placement, compensation, training, and retirement.
In fiscal 2014, the Group launched new initiatives to
eliminate discrimination based on gender identification and
sexual preference.
Toray Group takes stringent measures to comply with the
related laws and regulations of each country in which it oper-
ates. Furthermore, the Group respects international stan-
dards including the United Nations Universal Declaration of
Human Rights and the International Labour Organization’s
standards prohibiting all forced labor and child labor.
Retaining and Nurturing Employees who
Generate New Value
The success or failure of a company is decided by its peo-
ple—employees shape its destiny. Guided by this concept,
Toray Group considers securing and developing outstanding
human resources as one of its most important tasks and a
fundamental management priority.
As part of future global business development, Toray Group
will continue to secure and develop human resources that
operate on a global level with a strong sense of commitment.
To develop human resources in the following three
objectives, Toray Group conducts various kinds of training
programs tailored to each of the three goals. These pro-
grams are systematic and logically organized, and they are
offered to employees of all levels working in every field in
the Group. With a view to strengthening international oper-
ations, Toray Group has designed the training to improve
management capabilities, sales performance, production
technical skills, and specialized skills.
• Development of fair-minded individuals who act with
high ethical standards and a sense of responsibility
• Training of professionals with advanced expertise,
technical skills and originality in problem solving
• Development of leaders who act with foresight and a
sense of balance
Toray Industries, Inc.Annual Report 2015
Promoting Diversity
Toray Group promotes diversity to help create thriving
workplaces where people from diverse backgrounds can
perform to their full potential.
Toray has long supported career advancement for
women and seeks to provide a work environment that
meets their needs. The Company appointed its first female
manager in 1958 and introduced a childcare leave program
in 1974, almost 20 years before the related law was passed;
in 2003 a Toray Group company appointed a woman as
president. The Company has continued to improve its sys-
tems and programs in this area, most recently initiating the
Advancement of Women Project in 2004.
As a result of the ongoing implementation of such initia-
tives, the number and percentage of women holding man-
agement positions at Toray continues to rise each year. As
of end April 2015, 8.33% of unit manager or higher positions
and 4.42% of section manager or higher positions were held
by women.
Communication
Activities
Toray Group has established Basic Policies to Promote
Dialogue with Stakeholders, designed to ensure that its
management gives serious consideration to each type of
stakeholder when deciding on basic management objec-
tives. These policies guide Toray Group’s efforts to commu-
nicate with stakeholders across the spectrum of its business
activities. A management-led Corporate Communications
Committee meets twice a year to regularly report on and
discuss communication activities.
Strengthening Communication via Our
Global Website
In fiscal 2014, the first year of the Project AP-G 2016
medium-term management program, we enhanced
information reporting through our internal systems, the
Company website, and other media to promote and deepen
the understanding of our stakeholders both inside and out-
side the Company. Under the Asia, America, and Emerging
Country Business Expansion (AE-II) Project, the Toray Group
global website has been expanded and country-specific
sites have been enhanced or added for the United States,
China, Indonesia, Thailand, Malaysia, India, and Taiwan.
Preparations are also under way to create websites for
Europe, Brazil, and South Korea.
The Group’s websites are configured using responsive
web design to make them easy to use and enable optimal
viewing on smartphones, tablets, and other devices with
any screen size.
Stakeholder Communication
The Group actively communicates with institutional inves-
tors and securities company analysts by providing infor-
mation materials when requested and holding same-day
results briefings when quarterly earnings are announced.
The Group also provides a wide variety of information about
management policy and strategy as well as financial and
earnings information through its annual report and informa-
tion pages on the website for shareholders and investors.
The Group endeavors to provide full and fair information dis-
closure by making materials used in meetings with insti-
tutional investors and English-language versions of all
materials promptly available on its website. In fiscal 2014,
Toray held four results briefings and held 773 meetings with
investors and analysts.
Toray believes that customers come first, and as part
of this commitment conducts regular customer satisfac-
tion surveys.
Toray Group holds policy briefings and carries out CSR
procurement surveys for business partners to foster mutual
understanding and closer collaboration.
The Group communicates with employees through in-
house newsletters, intranet, company-wide bulletin boards
and other media. To share information and deepen under-
standing of management and business topics, messages
from the Company president, Japanese, English, and
Chinese versions of in-house newsletters, and explanations
of management and business topics and projects are made
available via all types of media.
Toray recognizes that public relations and corporate
communication activities have a role in fulfilling responsi-
bilities for information disclosure as well as influencing pub-
lic opinion. Accordingly, Toray’s Corporate Communications
Department reports directly to the president, and actively
engages with a wide range of media organizations, linking
the Company with the public. Based on Toray’s Information
Disclosure Principles, the department provides fair and
impartial information, even if it may cast the Company in a
bad light, in a timely and appropriate manner. In fiscal 2014,
the Company issued 184 press releases and responded to
336 requests for information.
Toray Group strives to engage in active dialogue with
nearby residents in a variety of settings, including participat-
ing in events sponsored by local governments and inviting
local residents onto the factory grounds for summer festivals.
Principal SRI indexes in which Toray is included
• FTSE KLD Global Climate 100 Index
• Morningstar Socially Responsible Investment Index
(as of March 31, 2015)
47
Toray Industries, Inc.Annual Report 2015
Sustainable Management
CSR Initiatives
social Contribution
Activities
Our Social Contribution Policy
Toray Group established the Toray Group Social Initiative
Contributing to Future Generations
For many years, as part of its efforts to promote science
Policies in 2005 to articulate its approach to voluntary, ongo-
and technology, Toray Group has been carrying out vari-
ing efforts to contribute to society as a responsible corpo-
ous educational programs for people pursuing science and
rate citizen. These policies were formulated based on the
engineering. The Group has broadened these activities to
Group’s corporate philosophy of “contributing to society
include elementary and junior high school students in recent
through the creation of new value with innovative ideas,
years. Incorporating information on its products into teach-
technologies and products.”
ing materials, the Group is implementing educational pro-
In fiscal 2014, Toray invested some ¥1.2 billion on a con-
grams and other initiatives as it works to actively support
solidated basis (0.9% of consolidated ordinary income)
education around the world.
48
and some ¥800 million on a non-consolidated basis (1.7%
In July 2014, all four student representatives from Japan
of non-consolidated ordinary income). The main beneficia-
that won events at the Japan Biology Olympiad, which
ries were the Toray Science Foundation in Japan and three
Toray has hosted since 2007, also earned medals—one gold
ASEAN countries (Malaysia, Thailand, and Indonesia).
medal and three silver medals—at the 25th International
Biology Olympiad in Malaysia. This was an outstanding
accomplishment among the 239 participants from 61 coun-
tries and regions.
Toray Industries, Inc.Annual Report 2015
Topic
Promoting vegetation growth and boosting
agricultural productivity in desert and degraded
areas of South Africa using ROLL PLANTER® made
of eco-friendly Ecodear® polylactic acid fiber
Emerging countries often lack the technical resources to
respond to drought conditions that can cause desertifica-
tion and soil degradation that ultimately exacerbate a food
crisis. Dust pollution from mining activities is also becoming
a major health issue in many countries.
The Toray Group is applying its leading technologies to
address these environmental issues through a consortium
In agricultural applications, water and fertilizer is added to the
soil in the ROLL PLANTER® to promote plant growth. At mine
tailing sites, meteoric water is collected and used to grow
vegetation in the planters, which helps reduce the amount of
dust blown into the air. The ROLL PLANTER® is completely
environmentally friendly and made of Toray’s Ecodear® poly-
lactic acid fiber, which is composed of plant-based materials
launched in 2012 with Japanese knit fabric maker Mitsukawa
and biodegraded into water and carbon dioxide by microor-
Co., Ltd. and Netafim Japan Co., Ltd., a developer of drip irri-
gation systems in Israel. Using the ROLL PLANTER®, the con-
sortium is developing an easy installation and handling system
ganisms after five to ten years. In addition to UV resistance,
the planter’s excellent ventilation and water retention prop-
erties maintain optimal root temperatures and enable maxi-
to promote vegetation growth and boost agricultural produc-
tivity in desert and degraded regions. The feasibility study and
the demonstration experiments in South Africa were con-
mum crop growth with minimal use of water and fertilizer.
The ROLL PLANTER® is also being developed for use
in rooftop gardens and school playgrounds in Japan and
ducted with the support of the Japanese Ministry of Economy,
have potential to be effective for controlling wind-blown
Trade and Industry and the United Nations Development
Programme. The tests successfully demonstrated the sys-
tem’s ability to grow cash crops for harvest in desert and
sand in China.
The ROLL PLANTER® system, in recognition of its poten-
tial as unparalleled problem-solving technology that can be
degraded soil conditions, promote vegetation growth in mine
readily introduced into emerging countries as a system to
tailing sites, and contribute to local job creation.
The tube-shaped ROLL PLANTER® is filled with sand
and soil and embedded into the ground surface to serve
promote the planting of vegetation and crops on desert and
degraded lands, received the METI* Minister award in the
24th annual convocation of the Fuji Sankei Group’s “The
as a foundation for vegetation. Crop seeds are then sown
and root growth is promoted inside the ROLL PLANTER®.
Grand Prize for the Global Environment Award” program.
*METI refers to the Ministry of Economy, Trade, and Industry.
1
3
49
4
2
Crop Cultivation
1 Local manufacturing of ROLL PLANTER®
2 ROLL PLANTER® placement and seeding at
degraded soil sites
3 Bell peppers growing in ROLL PLANTER®
Vegetation at former mining sites
4 ROLL PLANTER® placement at mine tailing sites
5 Vegetation growth at mine tailing sites
*ROLL PLANTER® is a registered trademark of Mitsukawa Co., Ltd.
For more information on CSR, please see:
http://www.toray.com/csr/
5
Toray Industries, Inc.Annual Report 2015 Sustainable Management
Corporate Governance
Toray Group’s
basic Policy on
Corporate Governance
of the Board and the exchange of opinions.
There are rules on the resolution of important
matters based on the level of importance that deter-
mine whether a matter is resolved by the Board of
Directors, by the President, or by divisional General
Managers.
In the case of capital investment, for example,
such matters are resolved depending on the amount
of investment involved (the degree of importance).
The Executive Committee and Board of Senior Vice
Presidents each play a deliberative role in facilitat-
ing resolutions by the Board of Directors and approv-
als by the President. The Executive Committee is
Toray Group’s basic policy on corporate governance is con-
responsible for policy deliberations, while the Board
tained in our Corporate Missions, which requires us to
of Senior Vice Presidents addresses issues related to
provide stockholders with dependable and trustworthy
planning and implementation.
management. Our Corporate Guiding Principles require us
Additionally, for every key management issue,
to obtain the trust of society and meet their expectations by
company-wide committees are established in order to
acting fairly while maintaining high ethical standards and a
play a supplementary role in management execution.
strong sense of responsibility and maintaining transparency
(2) There are four corporate auditors, including two out-
in management. We regard these as our most important
side corporate auditors. The outside corporate audi-
management policies.
50
Outline of Corporate Governance Structure
Our Board of Directors has 25 members.
tors have no business dealings whatsoever with Toray.
Under Toray’s system for monitoring execution of oper-
ations by members of the Board, corporate auditors
attend Board of Directors meetings, and meet with
the President, all members of the Board, and divisional
(1) As a manufacturer that supplies a wide range of indus-
General Managers. They also perform regular audits of
tries with basic materials, Toray must base manage-
all Toray offices, plants, and Japanese and overseas sub-
ment judgments and decision-making on a specialized
sidiaries and affiliates in accordance with plans for each
knowledge of each business. Also in light of the man-
fiscal year adopted by Board of Corporate Auditors meet-
agements’ accountability to stockholders, we believe
ings, which are held at least once every three months.
that decision-making and execution of duties, under
Auditing Department performs planned
internal
the supervision of diverse perspectives by members
audits not only that of the Company but also audits of
of the Board well-versed in Toray’s businesses who are
Japanese and overseas subsidiaries and affiliates.
elected at general stockholders meetings ensure fulfill-
ment of management responsibility and transparency.
Toray’s new outside director was elected at the Ordinary
For this reason, we have not introduced an operating
General Meeting of Stockholders held in June 2015. This
officer system.
move is intended to bring a broader perspective to the
Rather, in the matter of decision-making we adhere
supervisory duties of the board and to further increase trans-
strictly to the authority of top management. Toray’s busi-
parency and objectivity in management. This addition raises
ness execution has the following three characteristics.
the number of outside directors to two.
a. Strict adherence to the authority reserved to the
Toray operates under a corporate auditor system. Two
Board of Directors, President, and General Managers.
members of the four-member Board of Corporate Auditors
b. Strict adherence to roles and functions expected of
are outside corporate auditors.
each executive meeting.
To ensure management transparency and objec-
c. The Board of Directors does not only function as a
tive and impartial management oversight, the Board of
decision-making body concerning important matters,
Corporate Auditors is completely independent from the
including those as stipulated by the Corporation Law,
Board of Directors.
but also serves as a mechanism for the mutual moni-
Outside directors are appointed in consideration of the
toring of respective duties of members of the Board
Tokyo Stock Exchange criteria for establishing the indepen-
through the presentation of reports by each member
dence of “independence directors,” and Toray has notified
Toray Industries, Inc.Annual Report 2015
the Tokyo Stock Exchange that its two outside directors
of business operations. The purpose of these systems is
and its two outside corporate auditors (all four independent
to ensure that all Toray Group executives and employees
directors) meet the its criteria for independence.
are able to realize the Corporate Philosophy, Corporate
Basic Policy on Internal Control Systems
and Their Development
We develop and maintain internal control systems as a
Missions and Corporate Guiding Principles of the 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
framework for the development of appropriate organi-
systems as required to ensure that our business operations
zational structures, the formulation of rules and regula-
are conducted efficiently and in compliance with the law.
tions, the dissemination of information and the monitoring
The following systems and items have been established.
• System 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
• System to ensure the efficient execution of duties by members of the Board
• System for preserving and managing information pertaining to the execution of duties by the members of
the Board
• Rules and other systems pertaining to controls over risks of loss
• System for ensuring the appropriateness of subsidiary operations
• System for reporting to the corporate auditors and system for confirming that the Toray Group directors,
employees, or others that reported information do not use the system for unacceptable purposes
• Items concerning the accounting policy for expenses and debts incurred by corporate auditors in the execu-
tion of their duties
51
• Items concerning employees assisting auditors with their duties, items concerning employee independence
from directors, and items concerning confirmation of the effectiveness of instructions by corporate auditors
to employees
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
Management execution
Company-wide
Committees
CSR Committee
Toray’s
Divisions
and plants
Japanese
subsidiaries
and
affiliates
Overseas
subsidiaries
and
affiliates
Departmental Committees
Toray Industries, Inc.Annual Report 2015
Sustainable Management
Corporate Governance
Auditing by
Corporate Auditors,
Internal Auditors
meeting with all members of the Board, divisional and
departmental general managers and conducted periodic
audits of Toray offices and plants worldwide, including sub-
sidiaries 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
The corporate auditors, including the outside corporate
structure. Its task is to conduct internal audits of Toray and
auditors, possess considerable expertise concerning finan-
its subsidiaries and affiliated companies. Information is con-
cial and accounting affairs. In fiscal 2014, too, they attended
tinually exchanged. For example, all audit reports submitted
meetings of the Board of Directors and other important
to the President by the Audit Department are also submit-
meetings earlier in the deliberation process, and they held
ted to the corporate auditors.
52
Remuneration
(I) Details of Remuneration in Fiscal 2014
Position
Total
remuneration
(millions of
yen)
Total remuneration by type (millions of yen)
Basic
Bonuses
Provision for the
allowance for
retirement benefits
Stock
options as
remuneration
Recipients
Members of the Board (excluding outside directors)
1,539
1,098
157
Corporate auditors (excluding outside corporate auditors)
Outside director
Outside corporate auditors
86
9
21
79
9
19
7
—
2
22
—
—
—
261
—
—
—
29
2
1
2
Notes: 1. Recipients included four members of the Board who retired during fiscal 2014.
2. Total amounts of remuneration do not include ¥75 million paid in salaries to nine employee-directors.
(II) Total Remuneration Received by Members of the Board and Corporate Auditors
Name
Total
consolidated
remuneration
(millions of yen)
Position
Status of
company
Basic
Bonuses
Total consolidated remuneration by type (millions of yen)
Sadayuki Sakakibara
Akihiro Nikkaku
146
142
Member of the Board
Filing company
Member of the Board
Filing company
107
103
17
17
Note: Information about consolidated remuneration is shown only for persons receiving more than ¥100 million.
Provision for the
allowance for
retirement benefits
—
Stock
options as
remuneration
22
—
22
(III) Policy on Remuneration for Members of the Board and Corporate Auditors
Remuneration for members of the Board consists of
The maximum total amount of monthly remuneration is
monthly remuneration, a bonus and stock acquisition rights
determined by resolution at the Ordinary General Meeting
in the form of stock options; meanwhile remuneration for
of Stockholders. Resolutions are passed as required to
corporate auditors consists of monthly remuneration. The
determine whether or not bonuses should be paid and the
purpose of this structure is to ensure management trans-
amount of such bonuses.
parency and fairness, and to provide enhanced incentives
Ordinary General Meetings of Stockholders set upper
for the improvement of financial performance and corporate
limits for the number of stock options granted to members
value from short-, medium- and long-term perspectives.
of the Board as remuneration, and for the total amount of
Furthermore, the amount of remuneration to directors
remuneration provided. The Board of Directors determines
and auditors is determined while taking into account the
the number of stock options granted to members of the
results of research conducted by a third-party organization
Board within those limits according to internal regulations
to ensure an objective perspective.
established by the Company.
Toray Industries, Inc.Annual Report 2015
Corporate ethics and
legal Compliance
at its group companies in Japan, and appointed execu-
tives and section managers in charge of legal compliance.
Furthermore, relevant departments at Toray’s headquarters
collaborate to hold a group-wide corporate ethics and legal
compliance meeting annually to improve understanding of
revised laws and particular issues.
CSR/legal compliance committees have also been estab-
lished at Toray’s group companies around the world. With
support from Toray’s International Division, CSR Operations
Department, and other relevant sections, the committees
independently promote initiatives related to legal compli-
ance and corporate ethics.
All of us at Toray Group are working as one to uphold corpo-
The Corporate Ethics and Legal Compliance Code of
rate ethics and ensure legal compliance in accordance with
Conduct is a strict set of standards that every Toray Group
clear guidelines established by and under the leadership of
executive and employee closely follows when performing
the top management.
Framework for Promoting Corporate Ethics
and Legal Compliance
Toray has established a Corporate Ethics Committee and a
corporate activities both in Japan and abroad. In the event
that a violation is discovered, strict discipline is carried out
in consultation with the Company’s Rewards and Sanctions
Committee, and exhaustive steps are taken to publicly dis-
close relevant information, investigate the causes, and
Company-Wide Legal Compliance Committee. Chaired by
implement measures to prevent a recurrence.
the company president, the Corporate Ethics Committee dis-
All Toray executives and employees, including con-
cusses comprehensive policies on corporate ethics with labor-
tracted, part-time and temporary personnel, receive a copy
management cooperation. Operating under this committee,
of the Corporate Ethics and Legal Compliance Handbook,
the Company-Wide Legal Compliance Committee is primarily
which explains expectations for proper conduct in detail.
comprised of section managers, and promotes independent
In fiscal 2015, the Company plans to update the hand-
activities that place importance on direct communication with
book and expand its application to all affiliated companies
upper management while addressing group-wide issues. CSR/
in Japan. The Company is also working to ensure the com-
legal compliance committees at the division- and plant-level
prehensiveness of its efforts, preparing complete codes
encourage employees to perform related on-site activities.
of conduct, guidelines, handbooks, and other materials for
Toray has established CSR/legal compliance committees
affiliated companies overseas.
53
Framework for Promoting Corporate Ethics and
Legal Compliance in Toray
Corporate
Ethics
Committee*
* Chaired by Toray’s president
Company-wide Legal
Compliance Committee
Division-and Plant-level
CSR/Legal Compliance
Committees
Toray Industries, Inc.Annual Report 2015 Sustainable Management
Corporate Governance
risk Management
times and to manage the functions of planning and promo-
tion of company-wide risk management measures in an inte-
grated manner.
Under the Risk Management Committee, local risk man-
agement committees have been established at each of
Toray’s divisions, departments, offices, and plants. Each
committee works to minimize risks specific to its respec-
tive business site, while taking measures to prevent inci-
dents from occurring.
Group companies are also promoting activities to reduce
risks specific to them and report the status of activities each
fiscal year to the Group-Wide Risk Management Committee.
In identifying risks to the Toray Group, we assess all
Toray Group believes risk management is a fundamental ele-
potential risks that could affect our operations from a group-
ment of corporate management. It operates a Group-wide risk
wide perspective and decide what risks to address and how
management system based on three-year cycles, and strives
to rank them based on their magnitude of impact and content
to identify and reduce potential risks. The Group has also
(priority risks), and we work to improve measures aimed at
established Crisis Management Regulations. Accordingly, an
reducing our exposure to these risks through a PDCA cycle.
emergency quick response system is ready for deployment
across the entire company in the event of a major crisis to
prevent crisis escalation and carry out rapid recovery.
Developing Risk Management System
Toray has established the Group-wide Risk Management
Dealing with Priority Risks
The Toray Group’s response to priority risks is proceed-
ing under units responsible for each risk category as well
as working groups that span multiple divisions and depart-
ments. The Group-Wide Risk Management Committee
Committee under the CSR Committee in order to monitor
receives regular reports about each priority risk and the sta-
the status of company-wide risk reduction efforts in normal
tus of response measures and assesses progress toward
54
Toray Industries, Inc.Annual Report 2015
the reduction of risks after seeking input from the director
in charge of each area. In fiscal 2015, we will continue to
Security Trade Administration
Toray maintains strict control over exports of all products,
work to implement countermeasures we have been unable
equipment, materials and samples and provision of technol-
to execute owing to relative priority in our ranking.
ogies to overseas entities, with particular emphasis placed
1. Information security risks
on control over items which are subject to the list control
Toray continued to use e-learning to provide security train-
ing. In fiscal 2014, a total of 8,401 employees completed
this program. In addition, we strengthen our information
and whose exports require permission by the Minister of
Economy, Trade and Industry, such as TORAYCA® resin
compounds, carbon fiber composite materials, coatings for
security by switching to a system where we can compre-
semiconductors and water treatment membranes.
hensively follow four security management targets from
our previous system centered on working groups.
2. Supply-chain risks
Toray Group checked the status of use of conflict min-
Promotion of Business Continuity Plan
(BCP)
We have always regarded major earthquakes as a signifi-
erals with regard to all products manufactured by the
cant risk factor and conducted activities under our Major
Group and ensured that customer inquiries are answered
Earthquake Business Continuity Plan.
promptly and efficiently based on central management
In fiscal 2014, training activities were conducted in a sce-
of data.
nario of a major earthquake along the Nankai Trough caus-
ing various types of damage to Toray Group companies and
Crisis Management System
Toray’s Crisis Management Regulations set out basic prin-
plants from Shizuoka westward in Japan. We also imple-
mented business continuity measures, including steps to
ciples for a group-wide response to serious risks affecting
reduce risk by developing a safety confirmation system
Toray Group. The purpose of the regulations is to ensure a
covering all domestic Group companies, systematically
consistent and comprehensive response in a crisis situation.
implementing earthquake-proofing of plant buildings, and
The regulations are revised as appropriate so as to pre-
verifying our business continuity planning for products for
pare for new risks that may emerge as a result of change in
which we have a strong responsibility to supply to society.
the social environment.
Further, the Great East Japan Earthquake reconfirmed
the importance of promptly and effectively verifying the
damage status at the Toray Group and business partners,
and the Company formulated and began operating the
Toray Damage Map System utilizing data from the internal
company system (business partner information) and exter-
nal services (maps, damage reports).
55
Toray Industries, Inc.Annual Report 2015
Corporate Information
Board of Directors and Corporate Auditors
(As of June 24, 2015)
President and
Representative Member
of the Board
Akihiro Nikkaku
Executive Vice President
and Representative
Member of the Board
Eizo Tanaka
Executive Vice President
and Representative
Member of the Board
Koichi Abe
Senior Vice President
(Member of the Board & Member
of the Executive Committee)
Moriyuki Onishi
Senior Vice President
(Member of the Board & Member
of the Executive Committee)
Shinichi Okuda
Senior Vice President
(Member of the Board & Member
of the Executive Committee)
Kazushi Hashimoto
Senior Vice President
(Member of the Board & Member
of the Executive Committee)
Ryo Murayama
Senior Vice President
(Member of the Board & Member
of the Executive Committee)
Yukichi Deguchi
Senior Vice President
(Member of the Board & Member
of the Executive Committee)
Akira Umeda
56
Senior Vice President
(Member of the Board)
Akira Uchida
Senior Vice President
(Member of the Board)
Shogo Masuda
Senior Vice President
(Member of the Board)
Akio Sato
Senior Vice President
(Member of the Board)
Hiroshi Otani
Senior Vice President
(Member of the Board)
Satoru Hagiwara
Senior Vice President
(Member of the Board)
Toru Fukasawa
Vice President
(Member of the Board)
Kunihiko Yoshida
Vice President
(Member of the Board)
Yasuo Suga
Vice President
(Member of the Board)
Hirofumi Kobayashi
Vice President
(Member of the Board)
Masashi Fujita
Vice President
(Member of the Board)
Kazuhiko Shutou
Vice President
(Member of the Board)
Tetsuya Tsunekawa
Vice President
(Member of the Board)
Satoru Nishino
Vice President
(Member of the Board)
Yoshiyuki Tanaka
Vice President
(Member of the Board)
Kunio Ito*1
Vice President
(Member of the Board)
Ryoji Noyori*1
Corporate Auditors
Kiyoshi Fukuchi
Corporate Auditors
Motoyuki Yagita
Corporate Auditors
Toshio Nagai*2
Corporate Auditors
Kazuya Jono*2
*1 Kunio Ito and Ryoji Noyori are outside directors.
*2 Toshio Nagai and Kazuya Jono are outside corporate auditors.
Toray Industries, Inc.Annual Report 2015 Organization
(As of July 1, 2015)
Board of Directors
Corporate Strategic Planning Division
President & Executive Vice President
Personnel & Industrial Relations Division
General Administration & Legal Division
Executive Committee &
Board of Senior Vice Presidents
Board of Corporate Auditors
Corporate Auditors
Finance & Controller’s Division
Investor Relations Dept.
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.
Life Innovation Business Strategic Planning Dept.
57
Branch
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
Toray Industries, Inc.Annual Report 2015 58
Toray Group Worldwide Network
(Major consolidated subsidiaries and affiliates)
(As of March 31, 2015)
Toray Group operates businesses in 26 countries and
regions including Japan.
Japan Overseas Total
Consolidated subsidiaries
Subsidiaries accounted
for by equity method
Total subsidiaries
Affiliates accounted
for by equity method
Companies subject to
consolidation
58
27
85
13
98
98
156
32
130
59
215
25
38
155
253
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 Subsidiary
l Alcantara S.p.A.
Subsidiaries Accounted for by Equity Method
n Toray International Italy S.r.l. (TIIT)
n Composite Materials (Italy) S.r.l. (CIT)
Czech Republic
Consolidated Subsidiary
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 Toray Sakai Weaving & Dyeing (Nantong)
Co., Ltd. (TSD)
l Toray Polytech (Nantong) Co., Ltd. (TPN)
l Toray Jifa (Qingdao) Textile Co., Ltd. (TJQ)
n l Toray Plastics (China) Co., Ltd. (TPCH)
n l Toray Plastics (Shenzhen) Ltd. (TPSZ)
n l Toray Plastics (Chengdu) Co., Ltd. (TPCD)
n l Toray Plastics Precision (Hong Kong) Ltd.
(TPPH)
n l Toray Plastics Precision (Zhongshan) Ltd.
(TPPZ)
n Toray Industries (H.K.) Ltd. (THK)
n Toray International (China) Co., Ltd. (TICH)
n Toray Film Products (Hong Kong) Ltd. (TFH)
n Toray Film Products (Zhongshan) Ltd. (TFZ)
l Toray BlueStar Membrane Co., Ltd. (TBMC)
n Toray Medical (Qingdao) Co., Ltd. (TMQ)
Others
Affiliate Accounted for by Equity Method
n Yihua Toray Polyester Film Co., Ltd. (YTP)
Taiwan
Consolidated Subsidiary
n Toray Advanced Film Kaohsiung Co., Ltd.
(TAFK)
Subsidiary Accounted for by Equity Method
n Toray International Taipei Inc. (TITP)
Others
Republic of Korea
Consolidated Subsidiaries
l n l Toray Advanced Materials Korea Inc. (TAK)
l STEMCO, Ltd. (STEMCO)
l n l Toray Chemical Korea Inc. (TCK)
Affiliates Accounted for by Equity Method
l STECO, Ltd. (STECO)
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
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)
l P.T. Toray Polytech Jakarta (TPJ)
Subsidiaries Accounted for by Equity Method
n P.T. Toray Industries Indonesia (TIN)
n Toray BASF PBT Resin Sdn. Berhad (TBPR)
Others
Singapore
Consolidated Subsidiary
n Toray International Singapore Pte. Ltd. (TISP)
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 Toray Carbon Magic Co., Ltd.
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
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 Thai 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)
n Zoltek Companies, Inc. (Zoltek)
l Toray Membrane USA, Inc. (TMUS)
Others
Mexico
Subsidiary Accounted for by Equity Method
n Toray Resin Mexico, S.A. de C.V. (TRMX)
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
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
Germany
Toray Industries, Inc., Europe
Office (TEU)
Hugenottenallee 175, 63263
Neu-Isenburg, Germany
Telephone: (49) 6102-7999-1000
Facsimile: (49) 6102-7999-1008
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 Fl., 155, Mapo-daero, Mapo-gu,
Seoul 121-721, Republic of Korea
Telephone: 82 (2) 707-0381—2
Facsimile: 82 (2) 707-0067
India
Toray Industries (India) Private
Limited (TID)
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. (TBL)
Av. Paulista, 1048-Conj 71 Bela Vista
Sao Paulo - SP 01310-100, Brasil
Telephone/Facsimile: 55 (11) 4314-7792
Toray Industries, Inc.Annual Report 2015
Financial section
59
Cont ents
60 Six-Year Summary of Selected Financial Data
61 Management’s Discussion and Analysis
66 Consolidated Balance Sheets
68 Consolidated Statements of Income
68 Consolidated Statements of Comprehensive Income
69 Consolidated Statements of Changes in Net Assets
70 Consolidated Statements of Cash Flows
71 Notes to Consolidated Financial Statements
100 Independent Auditor’s Report
Toray Industries, Inc.Annual Report 2015 Six-Year Summary of Selected Financial Data
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31
Net sales*1
Fibers & Textiles
Plastics & Chemicals
IT-related Products
Millions of yen
2015
2014
2013*2
2012
2011
2010
¥ 2,010,734
¥ 1,837,778
¥ 1,592,279 ¥ 1,588,604 ¥ 1,539,693 ¥ 1,359,631
856,676
755,474
632,150
638,375
584,115
525,204
496,370
470,542
395,835
397,815
382,299
332,735
247,975
245,741
237,593
243,404
262,027
230,433
Carbon Fiber Composite Materials
158,365
113,342
77,620
69,914
67,018
50,676
Environment & Engineering
179,988
180,197
178,355
170,247
178,183
159,787
Life Science
Others
Operating income
Income (loss) before income
taxes and minority interests
Net income (loss)
Net cash provided by
operating activities
57,039
58,205
56,599
55,554
52,430
46,656
14,321
14,277
14,127
13,295
13,621
14,140
123,481
105,253
83,436
107,721
100,087
40,107
114,469
97,760
77,828
101,091
82,893
(2,415)
71,021
59,608
48,477
64,218
57,925
(14,158)
141,282
161,455
100,815
104,410
129,214
166,215
Depreciation and amortization
81,480
78,743
67,588
67,443
70,479
74,904
Capital expenditures
124,929
118,207
99,135
98,384
55,942
57,073
Total assets
2,357,925
2,119,683
1,731,933 1,581,501 1,567,470 1,556,796
Property, plant and equipment, net
855,593
781,235
627,240
561,923
531,595
580,344
Interest-bearing liabilities
700,258
654,163
532,002
481,906
493,509
632,160
Net assets
1,080,757
944,625
778,626
674,149
640,970
518,216
60
Yen
Per share of common stock:
Net income (loss):
Basic
Diluted
Cash dividends
Net assets
Ratios:
Operating income to net sales
Net income (loss) to net sales
Equity ratio
Return on equity
¥
44.33
¥
36.59
¥
29.75 ¥
39.41 ¥
36.41 ¥
(10.12)
44.28
35.70
28.90
37.46
34.43
11.00
10.00
10.00
10.00
7.50
—
5.00
616.70
527.32
444.45
384.90
363.90
336.65
6.14%
3.53
41.8
7.7
5.73%
5.24%
6.78%
6.50%
2.95%
3.24
40.5
7.5
3.04
41.8
7.2
4.04
39.7
10.5
0.77
3.76
37.8
10.9
0.83
Debt/equity ratio (times)
0.71
0.76
0.73
Yen
Common stock price range:
High
Low
¥ 1,057.5 ¥
786 ¥
654 ¥
631 ¥
643 ¥
626
584
421
511
420
(1.04)
30.3
(3.0)
1.34
591
390
Number of employees
45,789
45,881
42,584
40,227
38,740
37,936
*1 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.
*2 Effective from the year ended March 31, 2014, certain overseas subsidiaries applied IAS 19 “Employee Benefits” (revised on June 16, 2011). As this change in
accounting policy is applied retrospectively, the related financial data for 2013 reflect the retrospective application.
Toray Industries, Inc.Annual Report 2015
Management’s Discussion and Analysis
OVERVIEW
INCOME ANALYSIS
During the period covered by year ended March 31, 2015 (fis-
cal 2014), the global economy in general continued to grew
steadily. While the pace of economic expansion in China
remained slow and the economy of the ASEAN region also
remained stagnant, the U.S. economy recovered steadily and
European economy as a whole picked up gradually. Japan con-
tinued to register modest economic recovery on the back of
steady improvement in employment and income situations as
well as policy effects, despite signs of weakness in consumer
spending and production due to the reaction to the last-minute
demand caused by the consumption tax rate increase.
Under such circumstances, Toray Group in April 2014
its new medium-term management program
launched
“Project AP-G 2016” with the final year being fiscal year 2016,
and implemented the growth strategy with focus on business
expansion in growth business fields and business expansion in
growth countries and regions and bolstered its total cost com-
petitiveness in accordance with the program.
As a result of these efforts, Toray Group posted a year-on-
year increase in both revenues and earnings. Consolidated net
sales, operating income and net income were the highest ever.
Net Sales
Consolidated net sales in the year ended March 31, 2015
amounted to ¥2,010.7 billion, up 9.4% or ¥173.0 billion from
the previous fiscal year. Sales increased in all business seg-
ments but Environment & Engineering and Life Science.
Costs and Expenses
The ratio of total costs and expenses to net sales for the year
was 93.9%, down 0.4 percentage points from the previous fis-
cal year.
Consolidated net sales increased 9.4% year on year, and
cost of sales increased 8.5%. As a result, the cost of sales
ratio decreased 0.7 percentage points to 80.1%.
Selling, general and administrative expenses increased
¥28.4 billion, or 11.5%, to ¥275.8 billion. The ratio of selling,
general and administrative expenses to net sales increased 0.3
percentage points to 13.7%.
R&D expenses increased ¥4.0 billion, or 7.2%, to ¥59.5 billion.
Net Sales by Segment
Net Sales by Segment
Operating Income by Segment
Operating Income by Segment
61
(Billions of yen)
2,500
(Billions of yen)
2,500
2,000
2,000
2,010.7
2,010.7
1,837.8
1,837.8
1,500
1,539.7
1,500
1,359.6
1,588.6 1,592.3
1,539.7
1,588.6 1,592.3
1,359.6
1,000
1,000
500
500
0
0
(Billions of yen)
150
(Billions of yen)
150
120
100.1
120
107.7
100.1
83.4
123.5
123.5
107.7
105.3
105.3
83.4
40.1
90
60
30
0
40.1
90
60
30
0
-30
-30
Mar/ ‘10
‘11
‘12
Mar/ ‘10
‘11
‘13
‘14
‘12
‘15
‘13
‘14
‘15
Mar/‘10
‘11
‘12
Mar/‘10
‘11
‘13
‘14
‘12
‘15
‘13
‘14
‘15
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Life Science ■ Others
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Life Science ■ Others
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Life Science ■ Others ■ Adjustment
■ Life Science ■ Others ■ 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
Interest-bearing Liabilities and D/E Ratio
Information” (ASBJ Guidance No.20 of March 21, 2008) are applied. Accordingly, segment Information for the year ended March 31, 2010 is restated.
Interest-bearing Liabilities and D/E Ratio
Total Assets and Net Assets
Total Assets and Net Assets
*2 Operating income by segment that is not attributable to any segment is included in “Adjustment.”
(Billions of yen)
2,400
(Billions of yen)
700
(%)
80
(%)
80
2,357.9
2,357.9
(Billions of yen)
700
(Billions of yen)
2,400
700.3
(Times)
1.60
654.2
654.2
700.3
(Times)
1.60
2,119.7
2,119.7
632.2
632.2
1,800
1,800
1,556.8 1,567.5 1,581.5
1,731.9
1,556.8 1,567.5 1,581.5
1,731.9
60
60
1,200
600
1,200
37.8
30.3
518.2
641.0
600
39.7
41.8
40.5
39.7
41.8
41.8
1,080.8
37.8
944.6
30.3
778.6
778.6
674.1
518.2
641.0
674.1
41.8
40
1,080.8
40.5
40
944.6
20
20
600
500
600
1.34
493.5
500
481.9
1.34
532.0
493.5
481.9
532.0
1.40
1.40
1.20
1.20
400
400
1.00
1.00
300
0.83
300
0.83
0.80
0.80
0.77
0.73
0.77
0.76
0.71
0.73
0.76
0.71
200
200
0.60
0.60
100
100
0.40
0.40
0
0
0
0
Mar/
‘10
‘11
Mar/
‘12
‘10
‘13
‘11
‘14
‘12
‘15
‘13
‘14
‘15
0
0
0.20
0.20
Mar/
‘10
‘11
Mar/
‘12
‘10
‘13
‘11
‘14
‘12
‘15
‘13
‘14
‘15
■ Total Assets ■ Net Assets —Equity Ratio
■ Total Assets ■ Net Assets —Equity Ratio
■ Interest-bearing Liabilities
■ Interest-bearing Liabilities
—D/E Ratio
—D/E Ratio
Cash Flows
Cash Flows
(Billions of yen)
(Billions of yen)
166.2
166.2
200
150
129.2
161.5
141.3
161.5
141.3
104.4
129.2
100.8
104.4
100.8
78.5
200
150
100
50
0
-50
-100
-150
-200
-250
100
78.5
50
0
-50
-50.7
-100
-200
-250
44.5
44.5
0.4
-6.7
0.4
0.6
-6.7
0.6
-50.7
-53.4
-53.4
-121.7
-150
-104.0 -107.5
-121.7
-104.0 -107.5
-140.7
-140.7
-214.8
-214.8
Mar/
‘10
‘11
Mar/
‘12
‘10
‘13
‘11
‘14
‘12
‘15
‘13
‘14
‘15
■ Cash Flows from Operating Activities
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
—Free Cash Flows
Toray Industries, Inc.Annual Report 2015 62
Operating Income and Net Income
Consolidated operating income increased ¥18.2 billion or
17.3% from the previous fiscal year, to ¥123.5 billion, and the
ratio of operating income to net sales rose 0.4 percentage
point to 6.1%. Operating income rose in the Fibers & Textiles,
Plastics & Chemicals, Carbon Fiber Composite Materials and
Environment & Engineering segments.
In net other income (expenses), Toray Group reported
¥9.0 billion in expenses, a ¥1.5 billion year-on-year increase.
Interest and dividend income increased ¥0.3 billion over the
previous fiscal year to ¥4.1 billion, while interest expense
increased ¥1.5 billion to ¥6.3 billion. As a result, net financial
expenses increased ¥1.1 billion to ¥2.2 billion. Equity in earn-
ings of unconsolidated subsidiaries and affiliated companies
increased ¥4.1 billion to ¥11.8 billion. Loss on impairment of
fixed assets decreased ¥6.5 billion year on year to ¥7.9 billion.
Loss on sales and disposal of property, plant and equipment,
net, increased by ¥0.5 billion to ¥5.7 billion.
As a result of the above, income before income taxes and
minority interests increased ¥16.7 billion to ¥114.5 billion.
After deductions for income taxes and minority interests in
earnings of consolidated subsidiaries, net income amounted
to ¥71.0 billion, up ¥11.4 billion from the previous fiscal year.
Net income per share was ¥44.33, an increase of ¥7.74.
The Company declared a year-end cash dividend of ¥6.00 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
¥11.00 per share.
Business Performance by Segment
Fibers & Textiles
In Japan, demand for apparel applications remained weak in
general due to the prolonged impact of the consumption tax
rate increase. Against this backdrop, Toray Group worked to
expand sales and sophisticate the business through promo-
tion of a business that integrates fibers to textiles to final prod-
ucts. In industrial applications, sales were robust led by those
to automotive applications.
Overseas, while being affected by a slowdown in demand
in Europe and sluggish domestic demand in China, textile sub-
sidiaries in Southeast Asia and China pursued sales expansion
and a shift towards high value added products. Also shipment
for automotive applications, and hygiene products in emerging
countries remained strong.
Toray Chemical Korea Inc., which became a consolidated
subsidiary at the end of the previous fiscal year, contributed
to sales increase of the segment, but amortization of goodwill
affected profit.
As a result, overall sales of Fibers & Textiles segment in the
fiscal year ended March 31, 2015 increased 13.4% to ¥856.7
billion from the previous year and operating income increased
5.1% to ¥55.6 billion.
Plastics & Chemicals
In the resin business, overall domestic shipment remained
strong despite sluggish shipment due to the impact of the
consumption tax rate increase in some applications includ-
ing automobiles. Overseas, shipment at the subsidiaries in the
U.S. and China expanded for automotive applications.
In the film business, shipment expanded led by increased
demand in China for films for solar cell back sheets and Toray
Group pursued a shift towards high value added products for
food packaging applications. The business, although partly
affected by price competition, remained strong on the whole.
As a result, overall sales of Plastics & Chemicals segment
increased 5.5% to ¥496.4 billion from the previous year and
operating income increased 32.6% to ¥23.9 billion.
IT-related Products
In the IT-related Products segment, shipment of large LCD
panel-related materials such as films and processed film prod-
ucts increased, reflecting the recovery in production by panel
manufacturers and the shift to larger displays. Shipment of
smartphone- and tablet terminal-related materials was strong
in general, although the business was affected by some pro-
duction adjustments by end customers. On the other hand,
shipment of PDP-related materials declined, as a major cus-
tomer withdrew from the PDP business. Also, all materials
continued to be affected by price competition.
As a result, overall sales of IT-related Products segment
increased 0.9% to ¥248.0 billion from the previous year and
operating income decreased 0.4% to ¥24.5 billion.
Carbon Fiber Composite Materials
In the Carbon Fiber Composite Materials segment, demand for
aircrafts as well as that in the environment and energy fields
including compressed natural gas tank applications expanded
and automotive-related demand was also strong such as in
Europe, while shipment of carbon fibers and intermediate
products (prepreg) increased for aerospace applications and
general industrial applications. Toray Group also worked on
restoration of prices of general products used in sports and
industrial applications.
Zoltek Companies, Inc., which became a consolidated sub-
sidiary at the end of the previous fiscal year, contributed to
sales increase of the segment, but amortization of goodwill
affected profit.
As a result, overall sales of Carbon Fiber Composite
Materials segment increased 39.7% to ¥158.4 billion from
the previous year while operating income increased 54.9% to
¥26.2 billion.
Environment & Engineering
In the water treatment business, amid weakness of demand
in the global market, the shipment of reverse osmosis mem-
branes, etc. for seawater desalination projects increased and
Toray Industries, Inc.Annual Report 2015
Net Sales by Segment
(Billions of yen)
2,500
Toray Chemical Korea Inc., which became a consolidated sub-
sidiary at the end of the previous fiscal year, contributed to the
business performance.
Among domestic subsidiaries in the segment, an engineer-
ing subsidiary performed strongly on the back of progress in
plant construction.
As a result, overall sales of Environment & Engineering seg-
ment decreased 0.1% to ¥180.0 billion from the previous year,
Net Sales by Segment
while operating income increased 25.4% to ¥8.0 billion.
(Billions of yen)
2,500
Life Science
In the pharmaceutical business, while shipment of REMITCH®*,
an oral anti-pruritus drug for hemodialysis patients, expanded
2,000
robustly, that of natural-type interferon beta preparation
FERON® was weak due to the impact of intensified compe-
1,539.7
tition, and orally active prostacyclin derivative DORNER® was
1,500
affected by the NHI drug price revision and the increasing
sales of its generic versions. License revenue also decreased
compared with the previous fiscal year. In the medical devices
1,000
business, shipment of dialyzers grew strongly.
As a result, overall sales of Life Science segment decreased
2.0% to ¥57.0 billion from the previous year while operating
income declined 27.4% to ¥4.1 billion.
1,588.6 1,592.3
1,539.7
1,588.6 1,592.3
1,359.6
2,010.7
2,010.7
1,837.8
1,837.8
500
1,359.6
2,000
1,500
1,000
500
*REMITCH® is a registered trademark of Torii Pharmaceutical Co., Ltd.
0
0
‘14
‘12
‘11
‘13
‘12
Mar/ ‘10
Mar/ ‘10
‘11
Others
Net sales increased 0.3% to ¥14.3 billion from the previous
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
year while operating income declined 4.3% to ¥1.9 billion.
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Life Science ■ Others
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Life Science ■ Others
‘15
‘13
‘14
‘15
FINANCIAL POSITION
Operating Income by Segment
Analysis of Assets, Liabilities and Net Assets
As of March 31, 2015, Toray Group’s total assets stood at
¥2,357.9 billion, up ¥238.2 billion from the end of the pre-
vious fiscal year, as current assets rose by ¥97.5 billion pri-
marily reflecting an increase in inventory as well as notes and
accounts receivable while fixed assets rose by ¥140.7 billion
Operating Income by Segment
due mainly to increase in property, plant and equipment and
(Billions of yen)
(Billions of yen)
investment securities.
150
150
123.5
Total liabilities rose ¥102.1 billion from the end of the previ-
ous fiscal year to ¥1,277.2 billion, primarily due to an increase
100.1
100.1
120
120
in interest-bearing debts.
83.4
Net assets grew by ¥136.1 billion compared with the end
of the previous fiscal year to ¥1,080.8 billion, reflecting the
increase in retained earnings from net income and fluctuation
in foreign currency translation adjustment. Net assets less
minority interests and stock acquisition rights stood at ¥985.7
billion. The equity ratio at the end of the fiscal year came to
41.8%, a 1.3 percentage-point increase compared with the
level at the end of the previous fiscal year.
107.7
105.3
107.7
105.3
123.5
40.1
40.1
83.4
30
60
90
30
60
90
0
0
CASH FLOWS
-30
-30
‘11
‘11
‘13
‘14
‘12
‘12
Mar/‘10
Mar/‘10
In the year ended March 31, 2015, net cash provided by oper-
ating activities exceeded net cash used in investing activities
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
by ¥0.6 billion. On the other hand, net cash used in financing
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Carbon Fiber Composite Materials ■ Environment & Engineering
■ Life Science ■ Others ■ Adjustment
■ Life Science ■ Others ■ Adjustment
‘15
‘13
‘14
‘15
63
Total Assets and Net Assets
Total Assets and Net Assets
Interest-bearing Liabilities and D/E Ratio
Interest-bearing Liabilities and D/E Ratio
(Billions of yen)
2,400
(Billions of yen)
2,400
2,357.9
(%)
80
2,357.9
(%)
80
2,119.7
2,119.7
1,800
1,800
1,556.8 1,567.5 1,581.5
1,731.9
1,556.8 1,567.5 1,581.5
1,731.9
60
60
1,200
600
1,200
37.8
30.3
518.2
641.0
600
39.7
41.8
40.5
39.7
41.8
41.8
37.8
944.6
30.3
674.1
518.2
778.6
641.0
674.1
1,080.8
778.6
41.8
40
1,080.8
40.5
40
944.6
20
20
(Billions of yen)
700
(Billions of yen)
700
632.2
632.2
700.3
(Times)
1.60
654.2
654.2
700.3
(Times)
1.60
600
500
600
1.34
493.5
500
481.9
1.34
532.0
493.5
481.9
532.0
1.40
1.40
1.20
1.20
400
400
1.00
1.00
300
0.83
300
0.83
0.80
0.80
0.77
0.73
0.77
0.76
0.71
0.73
0.76
0.71
200
200
0.60
0.60
100
100
0.40
0.40
0
Mar/
‘10
0
0
0
0
0
0.20
0.20
‘11
Mar/
‘12
‘10
‘13
‘11
‘12
‘14
‘15
‘13
‘14
‘15
Mar/
‘10
‘11
Mar/
‘12
‘10
‘13
‘11
‘12
‘14
‘15
‘13
‘14
‘15
■ Total Assets ■ Net Assets —Equity Ratio
■ Total Assets ■ Net Assets —Equity Ratio
■ Interest-bearing Liabilities
—D/E Ratio
■ Interest-bearing Liabilities
—D/E Ratio
* Effective from the year ended March 31, 2014, certain overseas subsidiar-
ies applied IAS 19 “Employee Benefits” (revised on June 16, 2011). As this
change in accounting policy is applied retrospectively, the related financial
data for 2013 reflect the retrospective application.
Cash Flows
Cash Flows
(Billions of yen)
200
(Billions of yen)
200
166.2
166.2
161.5
141.3
161.5
141.3
129.2
100.8
104.4
100.8
78.5
150
100
50
0
-50
-100
-150
-200
-250
150
129.2
104.4
100
78.5
50
0
-50
-50.7
-100
-200
-250
44.5
44.5
0.4
-6.7
0.4
0.6
-6.7
0.6
-50.7
-53.4
-53.4
-121.7
-150
-104.0 -107.5
-121.7
-104.0 -107.5
-140.7
-140.7
-214.8
-214.8
Mar/
‘10
‘11
Mar/
‘12
‘10
‘13
‘11
‘14
‘12
‘15
‘13
‘14
‘15
■ Cash Flows from Operating Activities
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
—Free Cash Flows
Toray Industries, Inc.Annual Report 2015
Net Sales by Segment
(Billions of yen)
2,500
2,000
2,010.7
1,837.8
1,588.6 1,592.3
1,539.7
1,500
1,359.6
1,000
500
0
‘14
‘13
‘12
‘11
Mar/ ‘10
activities was ¥10.0 billion due mainly to purchase of treasury
stock. Including fluctuations in foreign currency exchange rates,
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
cash and cash equivalents at fiscal year-end stood at ¥112.5 bil-
■ Carbon Fiber Composite Materials ■ Environment & Engineering
lion, down ¥0.6 billion or 0.6% from the end of the previous fis-
■ Life Science ■ Others
cal year.
‘15
Cash Flows from Operating Activities
Net cash provided by operating activities amounted to ¥141.3
Total Assets and Net Assets
billion, down ¥20.2 billion from the previous fiscal year. Major
(Billions of yen)
factors for provision of cash include income before income
2,400
taxes and minority interests of ¥114.5 billion and depreciation
and amortization of ¥81.5 billion, while major factors for use of
cash include an increase in trade receivables of ¥33.9 billion
1,800
and income taxes paid of ¥29.5 billion.
(%)
80
1,731.9
2,119.7
2,357.9
60
1,556.8 1,567.5 1,581.5
Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥140.7 billion,
40.5
1,200
down ¥74.2 billion from the previous fiscal year. Main factors
944.6
include capital expenditures of ¥126.9 billion.
1,080.8
37.8
39.7
41.8
41.8
40
30.3
778.6
20
600
518.2
641.0
674.1
Cash Flows from Financing Activities
Net cash used in financing activities was ¥10.0 billion, up
¥51.5 billion from the previous fiscal year. Main factors include
repayment of long-term debt of ¥104.3 billion, purchase of
treasury stock of ¥20.1 billion and cash dividends paid of ¥17.5
billion, which contrasted with proceeds from long-term debt of
¥136.9 billion.
■ Total Assets ■ Net Assets —Equity Ratio
Mar/
‘11
‘12
‘13
‘14
‘15
‘10
0
0
64
Cash Flows
(Billions of yen)
200
166.2
161.5
141.3
129.2
104.4
100.8
78.5
44.5
0.4
-6.7
0.6
-50.7
-53.4
-121.7
-104.0 -107.5
-140.7
-214.8
150
100
50
0
-50
-100
-150
-200
-250
Mar/
‘10
‘11
‘12
‘13
‘14
‘15
■ Cash Flows from Operating Activities
■ Cash Flows from Investing Activities
—Free Cash Flows
Operating Income by Segment
(Billions of yen)
123.5
107.7
105.3
100.1
83.4
150
120
90
60
30
0
40.1
-30
BUSINESS RISKS
Mar/‘10
‘11
‘12
‘13
‘14
‘15
■ Fibers & Textiles ■ Plastics & Chemicals ■ IT-related Products
Operational and other risks faced by Toray Group that could
■ Carbon Fiber Composite Materials ■ Environment & Engineering
have a major influence on the decisions of investors are
■ Life Science ■ Others ■ Adjustment
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.
Interest-bearing Liabilities and D/E Ratio
(Billions of yen)
700
(Times)
1.60
654.2
700.3
632.2
600
1.40
0.83
1.34
500
400
300
532.0
481.9
493.5
1.20
1.00
(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 pur-
chasing policies of business partners. In addition to severe
0.77
competition with other companies, Toray Group’s various busi-
nesses 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 busi-
ness. Although Toray Group takes steps to maintain its com-
petitive 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.
■ Interest-bearing Liabilities
—D/E Ratio
Mar/
0.20
0.40
0.60
0.80
100
200
0.73
0.76
0.71
‘10
‘11
‘12
‘13
‘14
‘15
0
(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 nega-
tively affected.
(3) Capital expenditures, joint ventures,
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 expendi-
tures, 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 operat-
ing 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 oper-
ations and financial conditions could be negatively affected.
Toray Industries, Inc.Annual Report 2015
(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 envi-
ronment, commercial trading, labor, intellectual property, taxa-
tion 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 envi-
ronmental 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 sub-
ject to government sanctions initiated by a fair trade commis-
sion, 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 nega-
tively 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 regu-
lar accident prevention inspections, maintenance of its manu-
facturing 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 finan-
cial conditions.
(11) Information security risk
The Toray Group’s information systems and networks are fun-
damentally essential elements in the execution of the Group’s
business operations and every security precaution is taken in
their formulation and operation. Unauthorized access, data
alteration, theft or deletion, an interruption of system opera-
tions that causes a work stoppage or leads to a lost of trust
in the Group, or a leak of confidential information outside the
Company, or other such incident could negatively impact the
Toray Group’s earnings and financial conditions.
65
(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 cur-
rencies are translated into yen. Toray Group takes measures,
such as entering forward exchange contracts, to alleviate risks
associated with transactions denominated in foreign curren-
cies. However, unforeseen exchange rate fluctuations could
have an impact on Toray Group’s results of operations and
financial conditions.
Moreover, rapid and unforeseen changes in interest rates
and other aspects of financial market turmoils, 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 pay-
ments 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 esti-
mates of future taxable income, Toray Group’s results of oper-
ations 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 finan-
cial conditions could be negatively affected.
— Unforeseen introduction, changes or abolition of laws and
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 situa-
tions 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 activ-
ities, Toray Group faces the risk of being targeted by legal
action pertaining to various matters such as intellectual prop-
erty, 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.
Toray Industries, Inc.Annual Report 2015
Consolidated Balance Sheets
Toray Industries, Inc. and Consolidated Subsidiaries
March 31, 2015 and 2014
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
66
Accumulated depreciation
Property, plant and equipment, net
Intangible assets (Note 13):
Goodwill
Other
Total intangible assets
Investments and other assets:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2015
2014
2015
¥
84,402 ¥
80,582
$
703,350
31,791
33,556
264,925
26,548
25,685
378,782
326,409
391,629
370,822
31,034
25,600
75,384
60,204
(1,702)
(2,493)
221,233
3,156,517
3,263,575
258,617
628,200
(14,183)
1,017,868
920,365
8,482,233
78,327
76,403
585,009
547,810
652,725
4,875,075
1,981,679 1,819,635
16,513,992
68,865
97,810
573,875
2,713,880 2,541,658
22,615,667
(1,858,287) (1,760,423)
(15,485,725)
855,593
781,235
7,129,942
63,369
72,300
35,137
27,784
98,506
100,084
528,075
292,808
820,883
Investments in unconsolidated subsidiaries and affiliated companies (Note 5)
121,164
100,643
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
185,078
146,232
1,523
1,551
13,294
21,441
67,733
50,454
(2,834)
(2,322)
1,009,700
1,542,317
12,692
110,783
564,442
(23,617)
385,958
317,999
3,216,317
Total assets
¥ 2,357,925 ¥ 2,119,683
$ 19,649,375
See accompanying notes to consolidated financial statements.
Toray Industries, Inc.Annual Report 2015
Liabilities and Net Assets
Current liabilities:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2015
2014
2015
Short-term bank loans (Notes 4, 5 and 7)
¥ 142,346 ¥ 131,444
$ 1,186,217
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
57,338
77,201
5,000
10,000
36,557
33,403
183,616
176,062
13,027
16,411
57,596
52,439
105,373
99,622
477,817
41,667
304,642
1,530,133
108,558
479,967
878,108
600,853
596,582
5,007,108
Long-term debt (Notes 4, 5 and 7)
490,717
428,932
4,089,308
Deferred tax liabilities (Note 10)
43,669
20,758
363,908
Net defined benefit liability (Note 8)
106,293
93,172
885,775
Customers’ guarantee deposits and other liabilities (Note 4)
35,636
35,614
296,967
Total liabilities
1,277,168 1,175,058
10,643,067
67
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
Remeasurements of defined benefit plans
147,873
147,873
136,727
136,735
544,557
505,834
1,232,275
1,139,392
4,537,975
(21,345)
(1,455)
(177,875)
807,812
788,987
6,731,767
79,093
49,546
(387)
(508)
100,097
37,664
(947)
(16,688)
659,108
(3,225)
834,142
(7,892)
Total accumulated other comprehensive income
177,856
70,014
1,482,133
Stock acquisition rights (Note 9)
Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets
1,207
991
93,882
84,633
10,058
782,350
1,080,757
944,625
9,006,308
¥ 2,357,925 ¥ 2,119,683
$ 19,649,375
Toray Industries, Inc.Annual Report 2015
Consolidated Statements of Income
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014
Net sales
Costs and expenses:
Millions of yen
Thousands of
U.S. dollars (Note 2)
2015
2014
2015
¥ 2,010,734 ¥ 1,837,778
$ 16,756,117
Cost of sales (Notes 3, 8, 13 and 14)
1,611,469 1,485,171
13,428,908
Selling, general and administrative expenses (Notes 8, 13 and 14)
275,784
247,354
2,298,200
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 (Note 15)
Gain on sales and loss on write-down of investment securities, net
Other, net
Income before income taxes and minority interests
Income taxes (Note 10):
Current
Deferred
Income before minority interests
68
Minority interests in earnings of consolidated subsidiaries
1,887,253 1,732,525
15,727,108
123,481
105,253
1,029,008
(6,347)
(4,894)
4,121
11,816
3,794
7,700
(5,708)
(5,241)
(7,915)
(14,390)
446
(5,425)
360
5,178
(9,012)
(7,493)
114,469
97,760
24,945
26,558
14,792
39,737
74,732
5,641
32,199
65,561
(3,711)
(5,953)
(52,892)
34,342
98,467
(47,567)
(65,958)
3,717
(45,208)
(75,100)
953,908
207,875
123,267
331,142
622,767
(30,925)
Net income
¥
71,021 ¥
59,608
$
591,842
See accompanying notes to consolidated financial statements.
Consolidated Statements of Comprehensive Income
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014
Income before minority interests
Other comprehensive income (Note 16)
Net unrealized gains on securities
Net deferred gains on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
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
Thousands of
U.S. dollars (Note 2)
2015
2014
2015
¥ 74,732
¥ 65,561
$ 622,767
31,308
97
64,185
15,619
5,186
13,951
332
94,354
(82)
5,212
260,900
808
534,875
130,158
43,217
116,395
113,767
969,958
¥ 191,127
¥ 179,328
$ 1,592,725
¥ 180,678
¥ 167,273
$ 1,505,650
10,449
12,055
87,075
Toray Industries, Inc.Annual Report 2015
Consolidated Statements of Changes in Net Assets
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014
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
Remeasure-
ments of
defined
benefit plans
Total
accumulated
other compre-
hensive
income
Stock
acquisition
rights
Minority
interests in
consolidated
subsidiaries
Total net
assets
¥ 147,873 ¥ 136,748 ¥ 462,536 ¥ (1,170) ¥ 745,987
¥ 35,388
¥ (883) ¥ (55,515) ¥ (816) ¥ (21,826)
¥ 566 ¥ 53,899 ¥ 778,626
147,873
136,748
462,536
(1,170)
745,987
35,388
(883)
(55,515)
(816)
(21,826)
566
53,899
778,626
—
—
(16,300)
59,608
(13)
(10)
(16,300)
59,608
(394)
96
(10)
(394)
109
14,158
(16,300)
59,608
(394)
96
(10)
375
375
93,179
(15,872)
91,840
425
30,734
122,999
93,179
(15,872)
91,840
425
30,734
165,999
Balance as of April 1, 2013
Cumulative effect of changes in
accounting policies
Restated balance
Changes in:
Dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Other
Items other than
stockholders’ equity, net
Total changes
—
(13)
43,298
(285)
43,000
14,158
Balance as of March 31, 2014 ¥ 147,873 ¥ 136,735 ¥ 505,834 ¥ (1,455) ¥ 788,987
¥ 49,546
¥ (508) ¥ 37,664 ¥ (16,688) ¥ 70,014
¥ 991 ¥ 84,633 ¥ 944,625
Balance as of April 1, 2014
Cumulative effect of changes in
accounting policies
Restated balance
Changes in:
Dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Other
Items other than
stockholders’ equity, net
¥ 147,873 ¥ 136,735 ¥ 505,834 ¥ (1,455) ¥ 788,987
¥ 49,546
¥ (508) ¥ 37,664 ¥ (16,688) ¥ 70,014
¥ 991 ¥ 84,633 ¥ 944,625
(15,989)
(15,989)
(15,989)
147,873 136,735 489,845
(1,455)
772,998
49,546
(508)
37,664
(16,688)
70,014
991
84,633
928,636
(16,145)
71,021
(16,145)
71,021
(41)
33
(164)
(20,054)
(20,054)
165
(1)
124
(132)
(16,145)
71,021
(20,054)
124
(132)
69
29,547
121
62,433
15,741
107,842
216
9,249
117,307
Total changes
—
(8)
54,712
(19,890)
34,814
29,547
121
62,433
15,741
107,842
216
9,249
152,121
Balance as of March 31, 2015 ¥147,873 ¥136,727 ¥544,557 ¥ (21,345) ¥807,812
¥79,093
¥(387) ¥ 100,097 ¥ (947) ¥ 177,856
¥ 1,207 ¥ 93,882 ¥1,080,757
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
Remeasure-
ments of
defined
benefit plans
Total
accumulated
other compre-
hensive
income
Stock
acquisition
rights
Minority
interests in
consolidated
subsidiaries
Total net
assets
$ 1,232,275 $ 1,139,458 $ 4,215,283
$ (12,125) $ 6,574,892
$ 412,883
$ (4,233)
$ 313,867
$ (139,067)
$ 583,450
$ 8,258
$ 705,275 $ 7,871,875
(133,242)
(133,242)
(133,242)
1,232,275
1,139,458
4,082,042
(12,125)
6,441,650
412,883
(4,233)
313,867
(139,067)
583,450
8,258
705,275
7,738,633
(134,542)
591,842
(134,542)
591,842
(342)
275
(1,367)
(167,117)
(167,117)
1,375
(8)
1,033
(1,100)
(134,542)
591,842
(167,117)
1,033
(1,100)
246,225
1,008
520,275
131,175
898,683
1,800
77,075
977,558
Balance as of April 1, 2014
Cumulative effect of changes in
accounting policies
Restated balance
Changes in:
Dividends
Net income
Purchase of treasury stock
Disposition of treasury stock
Other
Items other than
stockholders’ equity, net
Total changes
—
(67)
455,933
(165,750)
290,117
246,225
1,008
520,275
131,175
898,683
1,800
77,075
1,267,675
Balance as of March 31, 2015
$1,232,275 $1,139,392 $4,537,975
$(177,875) $6,731,767
$ 659,108
$ (3,225)
$ 834,142
$ (7,892) $ 1,482,133
$ 10,058
$782,350 $9,006,308
See accompanying notes to consolidated financial statements.
Toray Industries, Inc.Annual Report 2015
Consolidated Statements of Cash Flows
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014
Cash flows from operating activities:
Income before income taxes and minority interests
¥ 114,469
¥ 97,760
$ 953,908
Millions of yen
Thousands of
U.S. dollars (Note 2)
2015
2014
2015
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
Insurance income
(Decrease) increase in net defined benefit liability
Increase in trade receivables
Increase in inventories
Decrease in trade payables
Other, net
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Proceeds from insurance
81,480
7,915
(4,121)
(11,816)
6,347
5,708
(857)
—
(364)
(33,861)
(5,006)
(694)
9,395
78,743
14,390
(3,794)
(7,700)
4,894
5,241
(343)
(6,818)
3,066
(6,330)
(18,908)
(1,582)
15,933
679,000
65,958
(34,342)
(98,467)
52,892
47,567
(7,142)
—
(3,033)
(282,175)
(41,717)
(5,783)
78,292
168,595
174,552
1,404,958
8,456
(6,277)
8,208
(4,962)
(29,492)
(23,161)
—
6,818
70,467
(52,308)
(245,767)
—
70
Net cash provided by operating activities
141,282
161,455
1,177,350
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
Acquisition of shares of consolidated subsidiaries resulting in
change in scope of consolidation
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net decrease in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Purchase of treasury stock
Cash dividends paid
Other, net
Net cash (used in) provided by financing activities
(126,889)
(112,905)
(1,057,408)
(5,893)
(10,513)
4,608
4,061
2,057
954
(702)
(91,391)
(49,108)
38,400
33,842
(5,850)
(15,847)
(3,028)
(132,058)
(140,662)
(214,826)
(1,172,183)
(3,707)
(9,716)
(30,892)
136,850
170,139
1,140,417
(104,266)
(100,266)
(20,058)
(17,530)
(1,287)
(9,998)
(398)
(17,357)
(927)
41,475
(868,883)
(167,150)
(146,083)
(10,725)
(83,317)
72,750
(5,400)
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
8,730
(648)
17,343
5,447
Cash and cash equivalents at beginning of year
113,137
107,690
942,808
Cash and cash equivalents at end of year
¥ 112,489
¥ 113,137
$ 937,408
See accompanying notes to consolidated financial statements.
Toray Industries, Inc.Annual Report 2015
Notes to Consolidated Financial Statements
Toray Industries, Inc. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014
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 subsid-
iaries 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 appli-
cation and disclosure requirements of International Financial
Reporting Standards.
For the preparation of consolidated financial statements,
the accounting policies and procedures applied to a par-
ent company and its subsidiaries for similar transactions and
events under similar circumstances should be unified, in princi-
ple. However, financial statements prepared by overseas sub-
sidiaries in accordance with International Financial Reporting
Standards or the generally accepted accounting principles in
the United States tentatively may be used for the consolida-
tion 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 finan-
cial statements in Japanese have been reclassified for the con-
venience 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 elim-
inated in consolidation. The difference between the acquisition
cost and the underlying net assets of the subsidiaries is recog-
nized 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, 2015 and 2014 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:
Millions of yen
Thousands of
U.S. dollars
Cash
Time deposits
Less — Time deposits with
maturities of over 3 months
Marketable securities with
original maturities of 3
months or less
Cash and cash equivalents
2015
2014
¥ 84,402 ¥ 80,582 $ 703,350
31,791 33,556 264,925
2015
(7,437)
(1,001)
(61,975)
3,733
—
31,108
¥ 112,489 ¥ 113,137 $ 937,408
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 con-
solidated 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 avail-
able 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 result-
ing losses are included in net income or loss for the period.
Hedge Accounting:
71
Gains or losses arising from changes in fair value of deriv-
atives 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 transac-
tions 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 pol-
icy 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 eval-
uate the effectiveness of hedging activities by refer-
ence to the accumulated gains or losses on the hedging
instruments and the related hedged items from the com-
mencement 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.
Toray Industries, Inc.Annual Report 2015
72
f) Inventories
Inventories are stated at the lower of acquisition cost, princi-
pally determined by the moving average method, or net sell-
ing 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) is principally computed by the straight-line method at
rates based on estimated useful lives that are as follows:
Buildings
3–60 years
Machinery and equipment 3–15 years
Principally, a depreciation method of leased assets is iden-
tical 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 deter-
mined 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 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 con-
tribution pension plan provide, in general, pension payments
for life commencing from age 60.
To provide for the payment of retirement benefits to employ-
ees, net defined benefit liability is recognized at an amount
equal to the expected retirement benefit obligations net of the
fair value of pension assets at the end of the period.
Past service cost is amortized as incurred using the straight-
line method over a certain period within the employees’ aver-
age remaining years of service (primarily 14 years).
Actuarial gains and losses are amortized from the follow-
ing fiscal year after recognition using the straight-line method
over a certain period within the employees’ average remaining
years of service (primarily 14 years).
Unrecognized actuarial gains and losses and unrecog-
nized past service cost are recognized in remeasurements of
defined benefit plans in accumulated other comprehensive
income under the net assets section, net of deferred taxes.
Allowance for retirement benefits for members of the
Board and corporate auditors (“executives”) of the Company
and certain of its domestic consolidated subsidiaries is pro-
vided based on the companies’ pertinent rules and is calcu-
lated 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 liabili-
ties” on the consolidated balance sheets.
j) Appropriation of Retained Earnings
Cash dividends are recorded in the fiscal year when the pro-
posed 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 cur-
rencies, 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 over-
seas subsidiaries into Japanese yen for consolidation pur-
poses is made by using the current exchange rates prevailing
at their balance sheet dates, with the exception that the trans-
lation 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 pre-
sented as “foreign currency translation adjustments” in net
assets except for the portion belonging to minority stockhold-
ers, which is included in “minority interests in consolidated
subsidiaries” in net assets.
m) Changes in Accounting Policy Resulting from Revisions
to Accounting Standards
Effective from the year ended March 31, 2015, the Company
and its domestic consolidated subsidiaries adopted provisions
described in the main clause of Section 35 of “Accounting
Standard for Retirement Benefits” (the Accounting Standards
Board of Japan (ASBJ) Statement No. 26, May 17, 2012, here-
inafter “the Standard”) and provisions described in the main
clause of Section 67 of “Guidance on Accounting Standard for
Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015).
Accordingly, the Company and its domestic consolidated sub-
sidiaries have revised the calculation method for retirement
benefit obligations and service costs, have changed the method
for attributing projected retirement benefits to each period
Toray Industries, Inc.Annual Report 2015
from a straight-line basis to a benefit formula basis, and have
changed the method for determining the discount rate as well.
The application of the Standard and guidance is subject to
the tentative treatment set forth in Section 37 of the Standard,
and the cumulative effect of the changes in the calculation
method of retirement benefit obligations and service costs was
added to or deducted from retained earnings at the beginning
of the year ended March 31, 2015.
As a result, the beginning balance of net defined benefit lia-
bility at April 1, 2014 increased by ¥13,995 million ($116,625
thousand), net defined benefit asset decreased by ¥10,482
million ($87,350 thousand), and retained earnings decreased
by ¥15,989 million ($133,242 thousand). Operating income
increased by ¥2,023 million ($16,858 thousand) and income
before income taxes and minority interests increased by ¥2,048
million ($17,067 thousand) for the year ended March 31, 2015.
In addition, net assets per share decreased by ¥9.13 ($0.08),
and basic net income per share and diluted net income per
share increased by ¥0.87 ($0.01), respectively.
n) Changes in Accounting Policy Difficult to Distinguish
from Changes in Accounting Estimate
The primary depreciation method of property, plant and
equipment (except lease assets), which was previously the
declining-balance method for the Company and its domestic
consolidated subsidiaries, has been changed to the straight-
line method from the year ended March 31, 2015.
Toray Group implemented a new medium-term manage-
ment program from the year ended March 31, 2015 to plan the
priority allocation of capital expenditure to overseas countries
and regions with expected economic growth as part of its capi-
tal expenditure strategy. Taking this opportunity, the Group has
examined the demand trends and operating situation of domes-
tic production facilities and has confirmed that the domestic
production facilities are likely to operate stably over their useful
lives in the future. The Group has therefore judged that it should
adopt the straight-line method for depreciating domestic prop-
erty, plant and equipment (except lease assets) to calculate peri-
odic profit and loss more precisely.
As a result, operating income for the year ended March
31, 2015 increased by ¥7,818 million ($65,150 thousand) and
income before income taxes and minority interests increased
by ¥8,001 million ($66,675 thousand).
o) Standards Issued but Not Yet Adopted
Accounting Standards for Business Combinations
On September 13, 2013, the ASBJ issued “Revised Accounting
Standard for Business Combinations” (ASBJ Statement No.21),
“Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No.22), “Revised Accounting
Standard for Business Divestitures” (ASBJ Statement No.7),
“Revised Accounting Standard for Earnings Per Share” (ASBJ
Statement No.2), “Revised Guidance on Accounting Standard
for Business Combinations and Accounting Standard for
Business Divestitures” (ASBJ Guidance No.10), and “Revised
Guidance on Accounting Standard for Earnings Per Share”
(ASBJ Guidance No.4).
(1) Overview
Under these revised accounting standards, the accounting
treatment for any changes in a parent’s ownership interest in
a subsidiary when the parent retains control over the subsid-
iary and the corresponding accounting for acquisition-related
costs were revised. In addition, the presentation method of
net income was amended, the reference to “minority inter-
ests” was changed to “non-controlling interests,” and tran-
sitional provisions for these accounting standards were
also defined.
(2) Scheduled Date of Adoption
The Company expects to adopt these revised accounting
standards and guidance from the beginning of the year
ending March 31, 2016.
73
(3) Impact of Adopting Revised Accounting Standards and Guidance
The impact of adopting the revised accounting standards
and guidance on consolidated financial statements is cur-
rently under evaluation.
p) Changes in Accounting Estimate
When accounting for retirement benefits, actuarial gains and
losses and past service costs were previously amortized pri-
marily over 15 years but are now amortized primarily over 14
years, effective from the year ended March 31, 2015, due to a
decrease in the employees’ average remaining years of service.
As a result, operating income for the year ended March
31, 2015 decreased by ¥1,946 million ($16,217 thousand), and
income before income taxes and minority interests decreased
by ¥1,953 million ($16,275 thousand).
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 ¥120 to $1.00, the approximate exchange
rate prevailing on March 31, 2015. The inclusion of such U.S. dol-
lar amounts is solely for the convenience of readers outside Japan
and is not intended to imply that yen amounts and assets and lia-
bilities that originated in yen have been or could be readily con-
verted, realized or settled in U.S. dollars at this or at any other rate.
Toray Industries, Inc.Annual Report 2015
3. INVENTORIES
At March 31, 2015 and 2014, inventories consisted of the following:
Merchandise and finished goods
Work in process
Raw materials and supplies
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 220,763
¥ 211,837
$ 1,839,692
78,606
92,260
74,546
84,439
655,050
768,833
¥ 391,629
¥ 370,822
$ 3,263,575
Losses recognized and charged to cost of sales as a result of valuation at March 31, 2015 and 2014 were ¥2,193 million ($18,275
thousand) and ¥2,559 million, respectively.
4. SHORT-TERM BANK LOANS, LONG-TERM DEBT AND LEASE OBLIGATIONS
Short-term bank loans at March 31, 2015 and 2014 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, 2015 and 2014 were as follows:
Loans principally from banks and insurance companies with interest rates
primarily from 0.01% to 7.05%, maturing serially through 2025:
74
Unsecured
Secured
Lease obligations maturing serially through 2028:
Unsecured
Yen notes with an interest rate of 0.42% due 2018
Yen notes with an interest rate of 0.93% due 2022
Yen notes with an interest rate of 1.01% due 2023
Zero coupon convertible bonds due 2019
Zero coupon convertible bonds due 2021
Korean won notes with an interest rate of 5.7% due 2014
U.S. dollar notes with an interest rate of 3 month U.S. dollar
LIBOR+1.3% due 2014
Less amounts due within one year
At March 31, 2015, assets pledged as collateral were as follows:
Time deposits
Property, plant and equipment, net
Investment securities
Others
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 408,025
¥ 441,883
$ 3,400,208
—
20,197
—
4,857
30
20,000
20,000
50,000
50,000
6,586
—
20,000
20,000
—
—
—
2,998
—
1,055
40,475
250
166,667
166,667
416,667
416,667
—
—
552,912
512,719
4,607,600
58,608
78,959
488,400
¥ 494,304
¥ 433,760
$ 4,119,200
Millions of yen
Thousands of
U.S. dollars
¥
4
$
33
5,953
40
467
49,608
333
3,892
¥ 6,464
$ 53,867
Toray Industries, Inc.Annual Report 2015
The annual maturities of long-term debt and lease obligations subsequent to March 31, 2015 were as follows:
Years ending March 31:
2016
2017
2018
2019
2020
2021 and thereafter
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 its internal reg-
ulations, the Company carefully manages the payment peri-
ods for receivables and outstanding balances of all customers
and regularly monitors the credit standing of major clients.
Consolidated subsidiaries also monitor and manage the credit
standings of their 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 pay-
ables denominated in the same foreign currencies. Likewise,
the Company and its consolidated subsidiaries mainly use cur-
rency 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 corpora-
tions with which the Company and its consolidated subsidiaries
have business relationships. The fair value and financial posi-
tions of the issuing entities (clients) are regularly monitored.
Trade payables are operating payables, most of which are
due and payable within one year.
Millions of yen
Thousands of
U.S. dollars
¥ 58,608
$ 488,400
54,914
105,380
32,115
52,227
457,617
878,167
267,625
435,225
249,668
2,080,567
¥ 552,912
$ 4,607,600
Short-term bank loans and commercial paper are financ-
ing 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
and bonds at floating interest rates carry the risk of higher inter-
est 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 subsidiar-
ies use derivative transactions (interest rate swap transactions)
to minimize the risk of interest rate fluctuation, taking into con-
sideration the balance between fixed interest rates and floating
interest rates.
Hedging instruments, hedged items, the policy for utiliz-
ing such hedging instruments and the method for evaluat-
ing the effectiveness of hedging activities are described in
Note 1. SIGNIFICANT ACCOUNTING POLICIES d) Financial
Instruments, Hedge Accounting
the
Consolidated Financial Statements.
Derivative transactions are executed and managed in accor-
dance with the internal regulations prescribing the authoriza-
tion for transactions. To mitigate credit risk, the Company and
its consolidated subsidiaries carry out derivative transactions
only with highly rated financial institutions.
the Notes
to
in
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 subject to fluctuation because they employ various factors
and assumptions. In addition, the contract amount of deriva-
tives in Note 7. DERIVATIVES in the Notes to the Consolidated
Financial Statements is not an indicator of market risk associ-
ated with derivative transactions.
75
Toray Industries, Inc.Annual Report 2015
Fair Value of Financial Instruments
Carrying value, fair value and unrealized gain (loss) as of March 31, 2015 and 2014 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
76
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
2015
Carrying value
Fair value
Unrealized gain
¥ 116,193
¥ 116,193
¥ —
405,330
405,330
84
27,486
84
27,593
181,235
181,235
—
0
107
—
¥ 730,328
¥ 730,435
¥
107
¥ 220,173
¥ 220,173
¥ —
142,346
142,346
5,000
5,000
—
—
140,030
408,025
166,617
413,250
26,587
5,225
¥ 915,574
¥ 947,386
¥ 31,812
¥
(193)
¥
(193)
¥ —
(398)
(398)
—
¥
(591)
¥
(591)
¥ —
Millions of yen
2014
Carrying value
Fair value
Unrealized gain (loss)
¥ 114,138
352,094
¥ 114,138
352,094
¥
94
17,753
94
13,665
139,491
139,491
—
—
(0)
(4,088)
—
¥ 623,570
¥ 619,482
¥ (4,088)
¥ 209,465
¥ 209,465
¥
131,444
131,444
10,000
44,053
10,000
44,089
—
—
—
36
462,080
468,931
6,851
¥ 857,042
¥ 863,929
¥ 6,887
¥
(85)
¥
(539)
(624)
¥
¥
(85)
(539)
(624)
¥
¥
—
—
—
Toray Industries, Inc.Annual Report 2015
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
2015
Carrying value
Fair value
Unrealized gain
$ 968,275
$ 968,275
$
3,377,750
3,377,750
700
700
229,050
229,942
1,510,292
1,510,292
$ 6,086,067
$ 6,086,958
$ 1,834,775
$ 1,834,775
1,186,217
1,186,217
41,667
41,667
$
$
—
—
0
892
—
892
—
—
—
1,166,917
1,388,475
221,558
3,400,208
3,443,750
43,542
$ 7,629,783
$ 7,894,883
$ 265,100
$
(1,608)
$
(1,608)
$
(3,317)
(3,317)
$
(4,925)
$
(4,925)
$
—
—
—
*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, etc. 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 with market price is based on market price. The fair value of bonds without market price is estimated
by discounting the principal amounts and interest based on interest rates adjusted for the remaining periods and credit risk
of the bonds. However, for floating-rate bonds or fixed-rate bonds converted to floating using interest rate swaps accounted
for under the special accounting treatment for interest rate swaps, 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.
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 inter-
est (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.
77
Toray Industries, Inc.Annual Report 2015
2. Financial instruments for which it is extremely difficult to determine the fair value
Unlisted securities
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 79,533
¥ 72,663
$ 662,775
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, 2015 and 2014
Cash and time deposits
Trade receivables
Investment securities
Held-to-maturity debt securities
Other securities
78
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
2015
Due within
one year
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
¥ 116,193
405,329
7
4,282
¥ 525,811
¥ —
1
70
—
¥ 71
¥ —
—
7
10
¥ 17
¥ —
—
—
700
¥ 700
Millions of yen
2014
Due within
one year
Due after one year
through five years
Due after five years
through ten years
Due after
ten years
¥ 114,138
352,094
3
725
¥ 466,960
¥ —
—
82
—
¥ 82
¥ —
—
9
10
¥ 19
Thousands of U.S. dollars
2015
Due within
one year
Due after one year
through five years
Due after five years
through ten years
$ 968,275
$ —
3,377,742
8
58
35,683
$ 4,381,758
583
—
$ 592
$ —
—
58
83
$ 142
¥ —
—
—
800
¥ 800
Due after
ten years
$ —
—
—
5,833
$ 5,833
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.
Toray Industries, Inc.Annual Report 2015
6. SECURITIES
At March 31, 2015 and 2014, information on securities classified as held-to-maturity debt securities was as follows:
Held-to-maturity debt securities
¥ 84
Carrying
value
Millions of yen
2015
Thousands of U.S. dollars
2015
Fair
value
¥ 84
Unrealized
gains
Unrealized
losses
¥ 0
¥ —
Carrying
value
$ 700
Fair
value
$ 700
Unrealized
gains
Unrealized
losses
$ 0
$ —
Held-to-maturity debt securities
¥ 94
Carrying
value
Millions of yen
2014
Fair
value
¥ 94
Unrealized
gains
Unrealized
losses
¥ —
¥ 0
At March 31, 2015 and 2014, information on securities classified as other securities was as follows:
Millions of yen
2015
Thousands of U.S. dollars
2015
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Other securities
¥ 181,235 ¥ 67,556 ¥ 114,383
¥ 704
$ 1,510,292 $ 562,967 $ 953,192
$ 5,867
Millions of yen
2014
Carrying
value
Acquisition
cost
Unrealized
gains
Unrealized
losses
Other securities
¥ 139,491
¥ 65,303
¥ 75,558
¥ 1,370
79
Toray Industries, Inc.Annual Report 2015 7. DERIVATIVES
The Company and its consolidated subsidiaries had the following derivative contracts outstanding at March 31, 2015 and 2014:
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
2015
Fair
value
Unrealized
gain (loss)
Contract
amount
2015
Fair
value
Unrealized
gain (loss)
¥ 4,843
¥ 59
¥ 59
$ 40,358 $
492
$ 492
42
366
2,578
8,628
477
131
8
1,099
0
34
(27)
0
34
(27)
350
3,050
21,483
0
283
(225)
0
283
(225)
(189)
(189)
71,900
(1,575)
(1,575)
2
(1)
0
(5)
2
(1)
0
(5)
3,975
1,092
67
9,158
17
(8)
0
(42)
17
(8)
0
(42)
Receiving U.S. dollar, paying Korean won
1,198
(74)
(74)
9,983
(617)
(617)
Receiving U.S. dollar, paying Thai baht
1,835
Interest rate swaps:
Floating-rate receipt, fixed-rate payment
1,098
4
4
4
4
15,292
9,150
33
33
33
33
¥ —
¥ (193)
¥ (193)
$
— $ (1,608)
$ (1,608)
80
Millions of yen
2014
Fair
value
Contract
amount
Unrealized
gain (loss)
¥ 4,802
¥ 37
¥ 37
44
5
442
1
3
879
6,891
196
130
8
1,304
0
0
(2)
0
0
(23)
(4)
1
0
0
34
0
0
(2)
0
0
(23)
(4)
1
0
0
34
Forward foreign exchange contracts:
Buying U.S. dollar
Buying euro
Buying British pound
Buying Thai baht
Buying Australian dollar
Buying New Zealand dollar
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Japanese yen
Foreign currency swaps:
Receiving U.S. dollar, paying Korean won
1,449
(144)
(144)
Interest rate swaps:
Floating-rate receipt, fixed-rate payment
1,000
16
16
¥ —
¥ (85)
¥ (85)
Toray Industries, Inc.Annual Report 2015
Hedge accounting is applied
Millions of yen
2015
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
Special accounting
method for interest
rate swaps
Allocation method
for forward foreign
exchange contracts
and trade payables
Buying U.S. dollar
Buying Japanese yen
Selling U.S. dollar
Selling euro
Foreign currency options:
Accounted for as part of trade payables
Buying Japanese yen (call)
Selling Japanese yen (put)
Foreign currency swaps:
Accounted for as part of long-term bank loans
Receiving U.S. dollar, paying Korean won
Interest rate swaps:
Accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
Interest rate swaps:
Accounted for as part of bonds
¥
103
1,349
606
255
210
126
¥ 5 Forward foreign exchange quotes
(23)
(12)
(2)
(8) The price provided by
5
correspondent financial institutions
3,460
(35)
The price provided by
correspondent financial institutions
641
(15)
The price provided by
correspondent financial institutions
and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating rate payment
26,200 *1
37,600
53,000
—
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
Buying Indian rupee
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Thai baht
Selling Japanese yen
Foreign currency swaps:
Accounted for as part of long-term bank loans
(Forecasted transactions)
Receiving U.S. dollar, paying Japanese yen
Forward foreign exchange contracts:
Accounted for as part of trade receivables
and trade payables
Buying U.S. dollar
Buying euro
Buying British pound
Buying Chinese yuan
Buying Korean won
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
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
81
26,003
2,594
475
1,993
152
1,084
23,822
1,550
6
285
57
107
316 Forward foreign exchange quotes
(90)
(1)
60
8
3
(335)
62
0
(4)
(1)
(1)
20,000
(330)
The price provided by
correspondent financial institutions
21,497 *2
258
11
82
155
4
36,436
2,904
34
1,399
78
154,320 *2
3,129
—
—
¥
— ¥ (398)
Toray Industries, Inc.Annual Report 2015
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
Millions of yen
2014
Special accounting
method for interest
rate swaps
Allocation method
for forward foreign
exchange contracts
82
and trade payables
Buying U.S. dollar
Buying Japanese yen
Selling U.S. dollar
Selling euro
Foreign currency options:
Accounted for as part of trade payables
Buying Japanese yen (call)
Selling Japanese yen (put)
Foreign currency swaps:
Accounted for as part of bonds
and long-term bank loans
Receiving U.S. dollar, paying Korean won
Interest rate swaps:
Accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
Interest rate swaps:
Accounted for as part of bonds
¥
221
2,991
738
131
1,270
875
¥ (4) Forward foreign exchange quotes
(202)
8
4
(67) The price provided by
44
correspondent financial institutions
4,076
(74)
The price provided by
correspondent financial institutions
5,011
(92)
The price provided by
correspondent financial institutions
and long-term bank loans
Floating-rate receipt, fixed-rate payment
Floating-rate receipt, floating-rate payment
Fixed-rate receipt, floating-rate payment
58,200 *1
57,600
68,000
Forward foreign exchange contracts:
Accounted for as part of trade receivables
and trade payables (Forecasted transactions)
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Korean won
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Japanese yen
Forward foreign exchange contracts:
Accounted for as part of trade receivables
and trade payables
Buying U.S. dollar
Buying euro
Buying Chinese yuan
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
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
26,027
1,186
1,259
4,185
15,848
2,199
1
43
40
18,528 *2
64
15
4
35,901
4,703
30
189
108
152,156 *2
3,129
—
36 Forward foreign exchange quotes
17
(23)
(57)
(74)
(55)
0
0
0
—
—
¥
—
¥ (539)
Toray Industries, Inc.Annual Report 2015
Hedge accounting method Type of derivative and principal hedged items
Forward foreign exchange contracts:
Deferral hedge
method
Accounted for as part of trade receivables
Special accounting
method for interest
rate swaps
Allocation method
for forward foreign
exchange contracts
and trade payables
Buying U.S. dollar
Buying Japanese yen
Selling U.S. dollar
Selling euro
Foreign currency options:
Accounted for as part of trade payables
Buying Japanese yen (call)
Selling Japanese yen (put)
Foreign currency swaps:
Accounted for as part of long-term bank loans
Receiving U.S. dollar, paying Korean won
Interest rate swaps:
Accounted for as part of long-term bank loans
Floating-rate receipt, fixed-rate payment
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
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
Buying Indian rupee
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Thai baht
Selling Japanese yen
Foreign currency swaps:
Accounted for as part of long-term bank loans
(Forecasted transactions)
Receiving U.S. dollar, paying Japanese yen
Forward foreign exchange contracts:
Accounted for as part of trade receivables
and trade payables
Buying U.S. dollar
Buying euro
Buying British pound
Buying Chinese yuan
Buying Korean won
Buying Japanese yen
Selling U.S. dollar
Selling euro
Selling British pound
Selling Chinese yuan
Selling Thai baht
Foreign currency swaps:
Accounted for as part of long-term bank loans
Thousands of U.S. dollars
2015
Contract amount Fair value
Estimation method for fair value
$
858
11,242
5,050
2,125
$ 42 Forward foreign exchange quotes
(192)
(100)
(17)
1,750
1,050
(67) The price provided by
42
correspondent financial institutions
28,833
(292)
The price provided by
correspondent financial institutions
5,342
(125)
The price provided by
correspondent financial institutions
218,333 *1
313,333
441,667
216,692
21,617
3,958
16,608
1,267
9,033
198,517
12,917
50
2,375
475
892
—
2,633 Forward foreign exchange quotes
(750)
(8)
500
67
25
(2,792)
517
0
(33)
(8)
(8)
166,667
(2,750)
The price provided by
correspondent financial institutions
83
179,142 *2
2,150
92
683
1,292
33
303,633
24,200
283
11,658
650
—
—
Receiving U.S. dollar, paying Japanese yen 1,286,000 *2
Receiving Australian dollar,
26,075
paying Japanese yen
*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.
$
— $ (3,317)
Toray Industries, Inc.Annual Report 2015
8. RETIREMENT BENEFIT PLAN
The changes in the retirement benefit obligation during the years ended March 31, 2015 and 2014 were as follows:
Retirement benefit obligation at beginning of the year
¥ 192,516
¥ 181,735
$ 1,604,300
Cumulative effect of changes in accounting policies
24,477
—
203,975
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
Restated balance
Service cost
Interest cost
Actuarial gains and losses
Retirement benefit paid
Past service cost
Effect of significant business combinations
Other
216,993
181,735
1,808,275
7,358
1,769
(610)
(16,100)
(97)
—
1,438
5,927
3,590
12,106
(15,650)
(33)
3,115
1,726
61,317
14,742
(5,083)
(134,167)
(808)
—
11,983
Retirement benefit obligation at end of the year
¥ 210,751
¥ 192,516
$ 1,756,258
The changes in the plan assets at fair value during the years ended March 31, 2015 and 2014 were as follows:
84
Plan assets at beginning of the year
Expected return on plan assets
Actuarial gains and losses
Contributions
Retirement benefit paid
Effect of significant business combinations
Other
Plan assets at end of the year
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 123,844
¥ 117,661
$ 1,032,033
2,657
18,024
6,809
2,408
8,516
4,724
(11,612)
(12,000)
—
1,710
819
825
22,142
150,200
56,742
(96,767)
—
6,825
¥ 140,541
¥ 123,844
$ 1,171,175
The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of
March 31, 2015 and 2014 for the Company’s and its consolidated subsidiaries’ defined benefit plans:
Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheets
Net defined benefit liability
Net defined benefit asset (included in other non-current assets)
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 114,841
¥ 112,024
$ 957,008
(140,541)
(123,844)
(1,171,175)
(25,700)
95,910
70,210
106,293
(36,083)
(11,820)
80,492
68,672
93,172
(24,500)
(214,167)
799,250
585,083
885,775
(300,692)
Net liability for retirement benefits in the balance sheets
¥ 70,210
¥ 68,672
$ 585,083
Toray Industries, Inc.Annual Report 2015
The components of retirement benefit expense for the years ended March 31, 2015 and 2014 were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains and losses
Amortization of past service cost
Retirement benefit expense
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 7,358
¥ 5,927
$ 61,317
1,769
(2,657)
9,234
(3,566)
3,590
(2,408)
6,522
(2,866)
14,742
(22,142)
76,950
(29,717)
¥ 12,138
¥ 10,765
$ 101,150
In addition to the above, special severance payments of ¥519 million ($4,325 thousand) and ¥733 million were recognized for
the years ended March 31, 2015 and 2014, respectively. Contributions to the defined contribution pension plan of ¥5,544 million
($46,200 thousand) and ¥5,224 million were recognized for the years ended March 31, 2015 and 2014, respectively.
The components of remeasurements of defined benefit plans included in other comprehensive income (before tax effect) for the years
ended March 31, 2015 and 2014 were as follows:
Past service cost
Actuarial gains and losses
Total
Millions of yen
2015
¥ (3,469)
27,580
¥ 24,111
2014
¥ —
(105)
¥ (105)
Thousands of
U.S. dollars
2015
$ (28,908)
229,833
$ 200,925
The components of remeasurements of defined benefit plans included in accumulated other comprehensive income (before tax
effect) as of March 31, 2015 and 2014 were as follows:
85
Unrecognized past service cost
Unrecognized actuarial gains and losses
Total
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ (12,909)
¥ (16,378)
$ (107,575)
13,816
41,396
¥
907
¥ 25,018
115,133
$
7,558
The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2015 and 2014 was as follows:
Bonds
Stocks
Life insurance
Cash and time deposits
Other
Total
2015
2014
11%
59%
22%
4%
4%
13%
53%
28%
6%
0%
100%
100%
The expected return on plan assets has been estimated based on the anticipated allocation to each asset class and the expected
long-term returns on assets held in each category.
The assumptions used in accounting for the above plans were as follows:
Discount rate
Expected rate of return on plan assets
Expected rate of salary increase
2015
2014
primarily 0.6% primarily 2.0%
primarily 2.0% primarily 2.0%
primarily 7.5% primarily 7.5%
Toray Industries, Inc.Annual Report 2015
9. STOCK OPTION PLANS
1. Stock option expense included in selling, general and administrative expenses amounted to ¥347 million ($2,892 thousand) and
¥322 million for the years ended March 31, 2015 and 2014, respectively.
2. Information on stock options issued
The following table summarizes the stock options outstanding as of March 31, 2015.
Company name
Toray Industries, Inc.
Position and number
of grantees
Type and number of
shares to be issued
upon exercise
Grant date
Vesting conditions
86
Vesting period
Exercise period
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
No.4 Stock
Option Plan
Members of the Board
of the Company
Directors of the
Company
28
32
26
32
26
26
25
27
Common stock
747,000 shares
844,000 shares
583,000 shares
569,000 shares
August 20, 2011
August 4, 2012
August 10, 2013
August 9, 2014
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
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
June 22, 2012-
June 26, 2013
June 26, 2013-
June 25, 2014
June 25, 2014-
June 24, 2015
August 21, 2011-
August 20, 2041
August 5, 2012-
August 4, 2042
August 11, 2013-
August 10, 2043
August 10, 2014-
August 9, 2044
Company name
Toray Chemical Korea Inc.
Position and number
Executives of the
of grantees
Company
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
15
1
5
Type and number of
shares to be issued
upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
Common stock
526,816 shares
18,815 shares
108,160 shares
March 21, 2008
July 22, 2008
March 20, 2009
Holders must be
in continuous
employment from
the grant date to
the vesting date of
March 20, 2011
Holders must be
in continuous
employment from
the grant date to
the vesting date of
July 21, 2011
Holders must be
in continuous
employment from
the grant date to
the vesting date of
March 19, 2012
March 21, 2008-
March 20, 2011
July 22, 2008-
July 21, 2011
March 20, 2009-
March 19, 2012
March 21, 2011-
March 20, 2018
July 22, 2011-
July 21, 2018
March 20, 2012-
March 19, 2019
Toray Industries, Inc.Annual Report 2015 Company name
Toray Chemical Korea Inc.
Position and number
Executives of the
of grantees
Company
No.4 Stock
Option Plan
No.5 Stock
Option Plan
No.6 Stock
Option Plan
2
4
5
Type and number of
shares to be issued
upon exercise
Grant date
Vesting conditions
Vesting period
Exercise period
Common stock
20,000 shares
38,468 shares
41,120 shares
March 19, 2010
March 18, 2011
March 23, 2012
Holders must be
in continuous
employment from
the grant date to
the vesting date of
March 18, 2013
Holders must be
in continuous
employment from
the grant date to
the vesting date of
March 17, 2014
Holders must be
in continuous
employment from
the grant date to
the vesting date of
March 22, 2015
March 19, 2010-
March 18, 2013
March 18, 2011-
March 17, 2014
March 23, 2012-
March 22, 2015
March 19, 2013-
March 18, 2020
March 18, 2014-
March 17, 2021
March 23, 2015-
March 22, 2022
The following table summarizes movements of stock options during the year and price information on stock options as of March
31, 2015. The number of stock options are translated into the number of shares.
(1) Number of stock options
Company name
Toray Industries, Inc.
Stock acquisition rights not yet vested
As of March 31, 2014
Granted
Forfeited
Vested
As of March 31, 2015
Stock acquisition rights already vested
As of March 31, 2014
Vested
Exercised
Forfeited
As of March 31, 2015
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
No.4 Stock
Option Plan
87
—
—
—
—
—
518,000
—
71,000
—
447,000
—
—
—
—
—
737,000
—
110,000
—
627,000
171,000
—
—
171,000
—
412,000
171,000
78,000
—
505,000
—
569,000
—
399,000
170,000
—
399,000
—
—
399,000
Company name
Toray Chemical Korea Inc.
No.1 Stock
Option Plan
No.2 Stock
Option Plan
No.3 Stock
Option Plan
Stock acquisition rights not yet vested
As of December 31, 2013
Granted
Forfeited
Vested
As of December 31, 2014
Stock acquisition rights already vested
As of December 31, 2013
Vested
Exercised
Forfeited
As of December 31, 2014
—
—
—
—
—
202,260
—
65,852
—
136,408
—
—
—
—
—
18,815
—
—
—
18,815
—
—
—
—
—
75,240
—
—
—
75,240
Toray Industries, Inc.Annual Report 2015
Company name
Toray Chemical Korea Inc.
No.4 Stock
Option Plan
No.5 Stock
Option Plan
No.6 Stock
Option Plan
Stock acquisition rights not yet vested
As of December 31, 2013
Granted
Forfeited
Vested
As of December 31, 2014
Stock acquisition rights already vested
As of December 31, 2013
Vested
Exercised
Forfeited
As of December 31, 2014
(2) Price information
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
88
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
—
—
—
—
—
20,000
—
—
—
20,000
No.1 Stock
Option Plan
¥ 1
665
513
No.1 Stock
Option Plan
W 6,030
13,025
5,006
41,120
—
—
—
41,120
—
—
—
—
—
28,468
—
—
28,468
—
—
28,468
—
—
28,468
Yen
Toray Industries, Inc.
No.2 Stock
Option Plan
¥ 1
665
394
Won
Toray Chemical Korea Inc.
No.2 Stock
Option Plan
W 8,480
—
7,067
Won
Company name
Toray Chemical Korea Inc.
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
No.4 Stock
Option Plan
W 10,800
—
8,120
No.1 Stock
Option Plan
$ 0.01
5.54
4.28
No.5 Stock
Option Plan
W 11,900
—
9,310
U.S. dollars
No.2 Stock
Option Plan
$ 0.01
5.54
3.28
U.S. dollars
Toray Industries, Inc.
Company name
Toray Chemical Korea Inc.
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
No.1 Stock
Option Plan
$ 5.45
11.78
4.53
No.2 Stock
Option Plan
$ 7.67
—
6.39
No.3 Stock
Option Plan
¥ 1
665
546
No.4 Stock
Option Plan
¥ 1
—
605
No.3 Stock
Option Plan
W 6,900
—
5,597
No.6 Stock
Option Plan
W 9,980
—
5,360
No.4 Stock
Option Plan
$ 0.01
—
5.04
No.3 Stock
Option Plan
$ 0.01
5.54
4.55
No.3 Stock
Option Plan
$ 6.24
—
5.06
Toray Industries, Inc.Annual Report 2015 Company name
Exercise price
Weighted average price at exercise
Fair value per share at the grant date
U.S. dollars
Toray Chemical Korea Inc.
No.4 Stock
Option Plan
$ 9.76
—
7.34
No.5 Stock
Option Plan
$ 10.76
—
8.42
No.6 Stock
Option Plan
$ 9.02
—
4.85
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
Company name
Expected volatility*1
Expected holding period*2
Expected dividend*3
Risk-free rate*4
Toray Industries, Inc.
No.4 Stock Option Plan
32.308%
8 years
¥10 per share ($0.08)
0.361%
*1 The expected volatility is based on actual share prices during 8 years from August 10, 2006 to August 8, 2014.
*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, 2014.
*4 The risk-free interest rate is the yield on Japanese 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.
89
10. INCOME TAXES
The statutory tax rates in Japan used for calculating deferred tax assets and liabilities for the years ended March 31, 2015 and 2014
were 35.6% and 38.0%, respectively.
At March 31, 2015 and 2014, significant components of deferred tax assets and liabilities were as follows:
Deferred tax assets:
Accrued bonuses
Net defined benefit liability
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 subsidiaries and affiliated companies
Unrealized gains on securities
Other
Total deferred tax liabilities
Net deferred tax assets
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 6,091
36,633
36,630
13,107
17,259
36,853
146,573
(41,113)
105,460
5,422
25,402
15,325
35,923
22,761
104,833
627
¥
¥
6,154
35,001
39,172
13,736
23,047
36,559
153,669
(48,394)
105,275
6,653
20,948
11,287
25,706
14,419
79,013
¥ 26,262
$
50,758
305,275
305,250
109,225
143,825
307,108
1,221,442
(342,608)
878,833
45,183
211,683
127,708
299,358
189,675
873,608
5,225
$
Toray Industries, Inc.Annual Report 2015
At March 31, 2015 and 2014, 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
2015
¥ 31,034
13,294
32
43,669
2014
¥ 25,600
21,441
21
20,758
Thousands of
U.S. dollars
2015
$ 258,617
110,783
267
363,908
The reconciliation of the statutory tax rate and the effective income tax rate for the years ended March 31, 2015 and 2014 was as follows:
Statutory tax rate
Increase (decrease) in taxes resulting from:
Permanent differences
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Differences of tax rates for overseas consolidated subsidiaries
Undistributed earnings of subsidiaries and affiliated companies
Change in statutory tax rate
Amortization of goodwill
Other
Effective income tax rate
2015
—%
—
—
—
—
—
—
—
—%
2014
38.0%
(1.3)
(3.0)
(5.8)
3.4
1.6
1.4
(1.4)
32.9%
* Information for the year ended March 31, 2015 was not provided because the difference between the statutory tax rate and the effective income tax rate was
less than 5% of the statutory tax rate.
90
The “Act for Partial Amendment of the Income Tax Act, etc.”
and the “Act for Partial Amendment of the Local Tax Act, etc.”
were promulgated on March 31, 2015. As a result, the effective
statutory tax rate used to measure the Company’s deferred tax
assets and liabilities was changed from 35.6% to 33.1% and
32.3% for the temporary differences expected to be realized
or settled in the year beginning April 1, 2015 and for the tem-
porary differences expected to be realized or settled from April
1, 2016, respectively. The effect of the announced reduction
of the effective statutory tax rate was to decrease deferred tax
assets, after offsetting deferred tax liabilities, by ¥206 million
($1,717 thousand) and net deferred losses on hedges by ¥11
million ($92 thousand), and increase deferred income taxes
by ¥3,861 million ($32,175 thousand), net unrealized gains on
securities by ¥3,620 million ($30,167 thousand) and remea-
surements of defined benefit plans by ¥46 million ($383 thou-
sand) as of and for the year ended March 31, 2015.
11. NET ASSETS
The Corporation Law of Japan provides that an amount equal
to 10% of the amount to be disbursed as distributions of cap-
ital surplus (other than the capital reserve) and retained earn-
ings (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 2015 annual stockholders’ meeting, stock-
holders approved the payment of cash dividends of ¥6.00 per
share, aggregating to ¥9,595 million ($79,958 thousand) which
has not been reflected in the accompanying consolidated
financial statements for the year ended March 31, 2015.
Toray Industries, Inc.Annual Report 2015
12. COMMITMENTS AND CONTINGENT LIABILITIES
At March 31, 2015, commitment line of credit to unconsolidated subsidiaries and affiliated companies was as follows:
Total commitment line of credit
Loans receivable outstanding
Balance
Millions of yen
¥ 4,400
2,761
¥ 1,639
Thousands of
U.S. dollars
$ 36,667
23,008
$ 13,658
This commitment does not necessarily imply that the unused amount may be fully utilized.
At March 31, 2015 and 2014, contingent liabilities were as follows:
As guarantors of loans to:
Unconsolidated subsidiaries and affiliated companies
Other
Notes discounted
Export bills discounted
Notes endorsed
Contingent liabilities associated with securitization of receivables
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 4,552
6,346
¥ 10,898
¥ —
1,341
743
¥ 10,032
¥ 3,324
8,052
¥ 11,376
¥ 1,060
627
892
¥ 11,531
$ 37,933
52,883
$ 90,817
$
—
11,175
6,192
$ 83,600
13. LEASES
91
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 ¥133 million
($1,108 thousand) and ¥209 million for the years ended March
31, 2015 and 2014, respectively. Pro forma information relating
to acquisition costs, accumulated depreciation/amortization
and net book value for property held under finance lease trans-
actions which do not transfer ownership of the leased property
to the lessee on an “as if capitalized” basis at March 31, 2015
and 2014 was as follows:
March 31, 2015:
Machinery and equipment
March 31, 2014:
Machinery and equipment
March 31, 2015:
Machinery and equipment
Millions of yen
Accumulated
depreciation/
amortization
Acquisition costs
¥ 101
¥ 101
¥ 89
¥ 89
Net book value
¥ 12
¥ 12
Millions of yen
Accumulated
depreciation/
amortization
Net book value
Acquisition costs
¥ 1,727
¥ 1,727
¥ 1,581
¥ 1,581
¥ 146
¥ 146
Thousands of U.S. dollars
Acquisition costs
$ 842
$ 842
Accumulated
depreciation/
amortization
$ 742
$ 742
Net book value
$ 100
$ 100
Toray Industries, Inc.Annual Report 2015
Future minimum lease payments under finance leases subsequent to March 31, 2015 and 2014 were as follows:
Due within one year
Due after one year
Total
Millions of yen
2015
¥ 10
2
¥ 12
2014
¥ 134
12
¥ 146
Thousands of
U.S. dollars
2015
$ 83
17
$ 100
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, 2015 and 2014 were as follows:
Due within one year
Due after one year
Total
Millions of yen
2015
¥ 411
1,687
¥ 2,098
2014
¥ 420
1,755
¥ 2,175
Thousands of
U.S. dollars
2015
$ 3,425
14,058
$ 17,483
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, 2015 and 2014 were ¥59,504 million ($495,867 thousand) and ¥55,500 million, respectively.
92
15. LOSS ON IMPAIRMENT OF FIXED ASSETS
The Company and its consolidated subsidiaries grouped assets used for business based on the classification under the manage-
ment accounting. For assets to be disposed and idle assets, each asset is considered to constitute a group.
For the year ended March 31, 2015, the carrying value of certain business-use assets for which profitability declined were writ-
ten down to the recoverable amount. As a result, its consolidated subsidiaries recognized loss on impairment of fixed assets in the
amount of ¥7,915 million ($65,958 thousand).
The major assets for which a loss on impairment was recognized were as follows:
Millions of yen
Thousands of
U.S. dollars
Location
Use
Classification
Loss on impairment
Kaohsiung City, Taiwan
Films production facilities
Machinery and equipment
Gumi-si, Gyeongsangbuk-do,
Korea
Aramid fiber production
facilities
Machinery and equipment
Other
¥ 3,359
¥ 1,808
26
$ 27,992
$ 15,067
217
The recoverable amount of the above assets was measured at their value in use. The value in use was calculated by discounting
future cash flows at discount rates of 6% - 8%.
For the year ended March 31, 2014, the carrying value of certain business-use assets for which profitability declined and assets to
be disposed were written down to the recoverable amount. As a result, the Company and its consolidated subsidiaries recognized
a loss on impairment of fixed assets in the amount of ¥14,390 million.
The major assets for which a loss on impairment was recognized were as follows:
Location
Use
Classification
Urayasu, Chiba, Japan
Second Head Office Bldg.
St-Maurice de Beynost, France Films production facilities
Buildings
Land
Other
Machinery and equipment
Other
Millions of yen
Loss on
impairment
¥ 1,131
7,060
3
¥ 3,385
506
The recoverable amount of the above assets was measured at their value in use or the net selling value. The value in use was cal-
culated by discounting future cash flows at a discount rate of 8%, and the net selling value was calculated based on the real estate
appraisal value.
Toray Industries, Inc.Annual Report 2015
16. 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, 2015 and 2014.
Net unrealized gains 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 on securities
Net deferred gains 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 gains on hedges
Foreign currency translation adjustments:
Amount arising during the year
Millions of yen
Thousands of
U.S. dollars
2015
2014
2015
¥ 41,773
¥ 21,039
$ 348,108
(50)
41,723
(10,415)
31,308
(110)
225
42
157
(60)
97
(8)
21,031
(7,080)
13,951
(432)
72
896
536
(204)
332
(417)
347,692
(86,792)
260,900
(917)
1,875
350
1,308
(500)
808
64,219
94,366
535,158
Reclassification adjustments for gains and losses included in net income
(2)
(12)
(17)
93
Before tax effect
Tax effect
Foreign currency translation adjustments
Remeasurements of defined benefit plans:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Before tax effect
Tax effect
Remeasurements of defined benefit plans
64,217
94,354
535,142
(32)
—
(267)
64,185
94,354
534,875
18,443
5,668
24,111
(8,492)
15,619
(199)
94
(105)
23
(82)
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
5,315
(129)
5,225
(13)
5,186
5,212
153,692
47,233
200,925
(70,767)
130,158
44,292
(1,075)
43,217
Total other comprehensive income
¥ 116,395
¥ 113,767
$ 969,958
Toray Industries, Inc.Annual Report 2015
17. BUSINESS COMBINATIONS
Significant adjustments to initial allocation of acquisition costs
With respect to the acquisition of Zoltek Companies, Inc., the allocation of acquisition costs was not completed in the year ended
March 31, 2014.
It was completed in the year ended March 31, 2015 and the resulting goodwill revision was as follows:
Revised accounts
Goodwill (before revision)
Intangible assets
Deferred tax assets
Current liabilities
Deferred tax liabilities
Other
Total revision
Goodwill (after revision)
Amount of goodwill revision
Millions of yen
Thousands of
U.S. dollars
¥ 28,973
$ 241,442
(7,156)
(2,898)
1,415
2,898
21
¥ (5,720)
¥ 23,253
(59,633)
(24,150)
11,792
24,150
175
$ (47,667)
$ 193,775
18. SEGMENT INFORMATION
94
(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, ultra-microfiber non-woven fabric with suede texture and
apparel products
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 agrochem-
icals; veterinary medicine (excludes film and resin covered in IT-related Products segment)
Films and plastic products for information and telecommunications related products; mate-
rials for electronic circuits and semiconductors; color filters for LCDs and related materi-
als and equipment; 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 devices
Toray Industries, Inc.Annual Report 2015
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.
(Changes in Accounting Policy Resulting from Revisions to Accounting Standards)
As described in Note 1. SIGNIFICANT ACCOUNTING POLICIES of the Notes to Consolidated Financial Statements, the Company
and its domestic consolidated subsidiaries have revised the calculation method for retirement benefit obligations and service costs.
Accordingly, the Company and its domestic consolidated subsidiaries have also revised the calculation method for retirement ben-
efit obligations and service costs in each reportable segment.
As a result, segment income increased by ¥505 million ($4,208 thousand) in the Fibers & Textiles segment, ¥405 million ($3,375
thousand) in the Plastics & Chemicals segment, ¥374 million ($3,117 thousand) in the IT-related Products segment, ¥241 mil-
lion ($2,008 thousand) in the Carbon Fiber Composite Materials segment, ¥307 million ($2,558 thousand) in the Environment &
Engineering segment and ¥191 million ($1,592 thousand) in the Life Sciences segment.
(Changes in Accounting Policy Difficult to Distinguish from Changes in Accounting Estimate)
As described in Note 1. SIGNIFICANT ACCOUNTING POLICIES of the Notes to Consolidated Financial Statements, the primary
depreciation method of property, plant and equipment (except lease assets), which was previously the declining-balance method
for the Company and its domestic consolidated subsidiaries, has been changed to the straight-line method from the year ended
March 31, 2015.
As a result, segment income increased by ¥1,193 million ($9,942 thousand) in the Fibers & Textiles segment, ¥2,140 mil-
lion ($17,833 thousand) in the Plastics & Chemicals segment, ¥1,685 million ($14,042 thousand) in the IT-related Products seg-
ment, ¥1,611 million ($13,425 thousand) in the Carbon Fiber Composite Materials segment, ¥191 million ($1,592 thousand) in the
Environment & Engineering segment, ¥495 million ($4,125 thousand) in the Life Science segment and ¥14 million ($117 thousand)
in Others, and corporate expenses included in Adjustments decreased by ¥489 million ($4,075 thousand).
(Changes in Accounting Estimate)
As described in Note 1. SIGNIFICANT ACCOUNTING POLICIES of the Notes to Consolidated Financial Statements, when account-
ing for retirement benefits, actuarial gains and losses and past service costs were previously amortized primarily over 15 years but
are now amortized primarily over 14 years, effective from the year ended March 31, 2015, due to a decrease in the employees’ aver-
age remaining years of service.
As a result, segment income decreased by ¥531 million ($4,425 thousand) in the Fibers & Textiles segment, ¥391 million ($3,258
thousand) in the Plastics & Chemicals segment, ¥351 million ($2,925 thousand) in the IT-related Products segment, ¥237 mil-
lion ($1,975 thousand) in the Carbon Fiber Composite Materials segment, ¥239 million ($1,992 thousand) in the Environment &
Engineering segment and ¥197 million ($1,642 thousand) in the Life Sciences segment.
95
Toray Industries, Inc.Annual Report 2015
3. Information on sales, income, assets and other material items of reportable segments
Millions of yen
Year ended
March 31, 2015:
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Total
Adjustments
Consolidated
Total
Sales to outside customers ¥ 856,676 ¥ 496,370 ¥ 247,975 ¥ 158,365 ¥ 179,988 ¥ 57,039 ¥ 14,321 ¥ 2,010,734 ¥
— ¥ 2,010,734
Intersegment sales
1,070
30,390
7,020
348
62,867
1
16,060
117,756
(117,756)
—
Total sales
¥ 857,746 ¥ 526,760 ¥ 254,995 ¥ 158,713 ¥ 242,855 ¥ 57,040 ¥ 30,381 ¥ 2,128,490 ¥ (117,756) ¥ 2,010,734
Segment income
¥ 55,600 ¥ 23,875 ¥ 24,494 ¥ 26,228 ¥ 8,020 ¥ 4,072 ¥ 1,901 ¥ 144,190 ¥
(20,709) ¥ 123,481
Segment assets
¥ 705,465 ¥ 562,144 ¥ 360,401 ¥ 436,761 ¥ 204,166 ¥ 82,933 ¥ 57,236 ¥ 2,409,106 ¥
(51,181) ¥ 2,357,925
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
23,234
18,957
15,702
15,913
4,089
2,287
1,152
81,334
146
81,480
34,197
45,962
1,978
7,822
11,082
3,361
6,015
110,417
(693)
109,724
Capital expenditures
36,987
21,458
16,324
45,495
3,252
2,462
1,208
127,186
(2,257)
124,929
Year ended
March 31, 2014:
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Total
Adjustments
Consolidated
Total
Sales to outside customers ¥ 755,474 ¥ 470,542 ¥ 245,741 ¥ 113,342 ¥ 180,197 ¥ 58,205 ¥ 14,277 ¥1,837,778 ¥
— ¥ 1,837,778
96
Intersegment sales
1,213
32,751
7,139
308
60,907
1
16,199
118,518
(118,518)
—
Millions of yen
Total sales
¥ 756,687 ¥ 503,293 ¥ 252,880 ¥ 113,650 ¥ 241,104 ¥ 58,206 ¥ 30,476 ¥ 1,956,296 ¥ (118,518) ¥ 1,837,778
Segment income
¥ 52,919 ¥ 18,010 ¥ 24,586 ¥ 16,927 ¥
6,397 ¥ 5,605 ¥ 1,987 ¥ 126,431 ¥
(21,178) ¥ 105,253
Segment assets
¥ 618,469 ¥ 507,133 ¥ 361,102 ¥ 341,762 ¥ 202,146 ¥ 76,440 ¥ 57,717 ¥ 2,164,769 ¥
(45,086) ¥ 2,119,683
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
19,368
19,688
18,331
14,339
2,843
2,134
1,235
77,938
805
78,743
24,148
41,252
4,006
3,432
9,996
2,853
5,422
91,109
(587)
90,522
Capital expenditures
26,842
19,386
20,059
40,290
3,333
8,632
1,069
119,611
(1,404)
118,207
Toray Industries, Inc.Annual Report 2015
Thousands of U.S. dollars
Year ended
March 31, 2015:
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering
Life Science
Others
Total
Adjustments
Consolidated
Total
Sales to outside customers $ 7,138,967 $ 4,136,417 $ 2,066,458 $ 1,319,708 $ 1,499,900 $ 475,325 $ 119,342 $ 16,756,117 $
— $ 16,756,117
Intersegment sales
8,917
253,250
58,500
2,900
523,892
8 133,833
981,300
(981,300)
—
Total sales
$ 7,147,883 $ 4,389,667 $ 2,124,958 $ 1,322,608 $ 2,023,792 $ 475,333 $ 253,175 $ 17,737,417 $
(981,300) $ 16,756,117
Segment income
$ 463,333 $ 198,958 $ 204,117 $ 218,567 $
66,833 $ 33,933 $ 15,842 $ 1,201,583 $
(172,575) $ 1,029,008
Segment assets
$ 5,878,875 $ 4,684,533 $ 3,003,342 $ 3,639,675 $ 1,701,383 $ 691,108 $ 476,967 $ 20,075,883 $
(426,508) $ 19,649,375
Depreciation and
amortization
Investment in unconsolidated
subsidiaries and affiliated
companies accounted for
by the equity method
193,617
157,975
130,850
132,608
34,075
19,058
9,600
677,783
1,217
679,000
284,975
383,017
16,483
65,183
92,350
28,008
50,125
920,142
(5,775)
914,367
Capital expenditures
308,225
178,817
136,033
379,125
27,100
20,517
10,067
1,059,883
(18,808)
1,041,075
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, 2015 of ¥(20,709) million ($(172,575) thousand) includes
intersegment eliminations of ¥(1,303) million ($(10,858) thousand) and corporate expenses of ¥(19,406) million ($(161,717)
thousand). “Adjustments” of segment income for the year ended March 31, 2014 of ¥(21,178) million includes intersegment
eliminations of ¥(934) million and corporate expenses of ¥(20,244) million. The corporate expenses consist of the headquar-
ters’ research expenses, etc. that are not allocated to each reportable segment.
b) “Adjustments” of segment assets for the year ended March 31, 2015 of ¥(51,181) million ($(426,508) thousand) includes inter-
segment eliminations of ¥(69,543) million ($(579,525) thousand) and corporate assets of ¥18,362 million ($153,017 thousand).
“Adjustments” of segment assets for the year ended March 31, 2014 of ¥(45,086) million includes intersegment elimina-
tions of ¥(63,419) million and corporate assets of ¥18,333 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.
(Related information)
Geographic information
Sales to outside customers
Millions of yen
Asia
Year ended March 31, 2015:
Japan
China
Others
North America,
Europe
and other areas
Total
Sales to outside customers
¥ 929,797
¥ 344,545
¥ 387,962
¥ 348,430
¥ 2,010,734
Year ended March 31, 2014:
Japan
China
Others
Millions of yen
Asia
North America,
Europe
and other areas
Total
Sales to outside customers
¥ 925,867
¥ 305,742
¥ 323,151
¥ 283,018
¥ 1,837,778
Year ended March 31, 2015:
Japan
China
Others
Asia
North America,
Europe
and other areas
Total
Sales to outside customers
$ 7,748,308
$ 2,871,208
$ 3,233,017
$ 2,903,583
$ 16,756,117
Thousands of U.S. dollars
Sales amounts are allocated to countries or regions according to the customers’ location.
97
Toray Industries, Inc.Annual Report 2015
Property, plant and equipment, net
Millions of yen
Asia
March 31, 2015:
Japan
Republic of Korea
Others
North America,
Europe
and other areas
Total
Property, plant and equipment, net
¥ 321,535
¥ 164,467
¥ 173,970
¥ 195,621
¥ 855,593
March 31, 2014:
Japan
Republic of Korea
Others
Millions of yen
Asia
North America,
Europe
and other areas
Total
Property, plant and equipment, net
¥305,161
¥152,570
¥154,781
¥168,723
¥781,235
March 31, 2015:
Japan
Republic of Korea
Others
Asia
North America,
Europe
and other areas
Total
Property, plant and equipment, net
$ 2,679,458
$ 1,370,558
$ 1,449,750
$ 1,630,175
$ 7,129,942
Thousands of U.S. dollars
(Information about loss on impairment of fixed assets by reportable segments)
Year ended
March 31, 2015:
Loss on impairment
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering Life Science
Others
Elimination
& Corporate
Total
¥ 1,925
¥ 1,545
¥ 3,612
¥ —
¥ 833
¥ —
¥ —
¥ —
¥ 7,915
Millions of yen
98
Year ended
March 31, 2014:
Loss on impairment
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering Life Science
Others
Elimination
& Corporate
Total
¥ 1,687
¥ 6,826
¥ 2,425
¥ 2,512
¥ 259
¥ 681
¥ —
¥ —
¥ 14,390
Millions of yen
Year ended
March 31, 2015:
Loss on impairment
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering Life Science
Others
Elimination
& Corporate
Total
$ 16,042
$ 12,875
$ 30,100
$ —
$ 6,942
$ —
$ —
$ —
$ 65,958
Thousands of U.S. dollars
(Information about amortization and balance of goodwill by reportable segments)
Year ended
March 31, 2015:
Amortization of goodwill
Balance of goodwill
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering Life Science
Others
Elimination
& Corporate
Total
¥ 1,239 ¥ 234
1,180
12,624
¥ 3,109 ¥ 2,659 ¥ 344
3,374
21,692 24,499
¥ —
—
¥ 1
—
¥ — ¥ 7,586
— 63,369
Millions of yen
Year ended
March 31, 2014:
Amortization of goodwill
Balance of goodwill
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering Life Science
Others
Elimination
& Corporate
Total
Millions of yen
(25)
¥
12,724
¥ 191
1,384
¥ 3,070 ¥
24,801 29,976
300 ¥ —
3,414
¥ —
—
¥ —
1
¥ — ¥ 3,536
— 72,300
Thousands of U.S. dollars
Year ended
March 31, 2015:
Amortization of goodwill
Balance of goodwill
Fibers
&
Textiles
Plastics
&
Chemicals
IT-
related
Products
Carbon Fiber
Composite
Materials
Environment
&
Engineering Life Science
Others
Elimination
& Corporate
Total
$ 10,325 $ 1,950
105,200 9,833
$ 25,908 $ 22,158 $ 2,867
180,767 204,158 28,117
$ —
—
$ 8
—
$ — $ 63,217
— 528,075
“Others” represents service-related businesses such as analysis, survey and research.
Toray Industries, Inc.Annual Report 2015
19. 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 out-
standing 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 pro-
posed by the Board of Directors applicable to the respective
years together with any interim cash dividends paid.
Yen
2015
2014
U.S. dollars
2015
¥ 44.33
44.28
11.00
616.70
¥ 36.59
35.70
10.00
527.32
$ 0.37
0.37
0.09
5.14
Net income:
Basic
Diluted
Cash dividends applicable to the year
Net assets
20. SUBSEQUENT EVENTS
Year ended March 31, 2015
Toray Advanced Materials Korea Inc., a consolidated subsidiary of the Company, made a tender offer for the shares in Toray Chemical
Korea Inc., another consolidated subsidiary of the Company. The outline and result of the tender offer are as follows:
99
1. Outline of the tender offer
(1) Name of the target company:
(2) Type of stock certificates to be acquired: Common stock
(3) Tender offer period:
Toray Chemical Korea Inc.
From March 31, 2015 to April 20, 2015 (21 days)
2. Result of the tender offer
(1) Number of shares acquired:
(2) Ownership percentage after the tender offer: 86.85% (calculated after excluding treasury stock)
(3) Tender offer price:
20,000 won per share of common stock
14,160,640 shares
In addition, Toray Advanced Materials Korea Inc. has decided to acquire the remaining shares in Toray Chemical Korea Inc. through
a second round of the tender offer.
1. Outline of the tender offer
(1) Name of the target company:
(2) Type of stock certificates to be acquired:
(3) Tender offer period:
(4) Expected number of shares to be acquired:
(5) Expected ownership percentage after the tender offer:
(6) Tender offer price:
Toray Chemical Korea Inc.
Common stock
From May 22, 2015 to July 20, 2015 (60 days)
6,091,047 shares
100.00%
20,000 won per share of common stock
Toray Industries, Inc.Annual Report 2015
100
Toray Industries, Inc.Annual Report 2015 Investor Information
(As of March 31, 2015)
Common Stock:
Issued:
1,599,106,347 shares
(excluding treasury stock)
Number of Stockholders: 162,527
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.
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
2015
2014
¥11.00
¥10.00
5.00
5.00
Thousands of
shares
Percentage of
shares held
The Master Trust Bank of Japan, Ltd. (Trust Account)
114,625
Japan Trustee Services Bank, Ltd. (Trust Account)
Nippon Life Insurance Co.
Mitsui Life Insurance Co., Ltd.
Sumitomo Mitsui Banking Corporation
Japan Trustee Services Bank, Ltd. (Trust 4 Account)
State Street Bank West Client – Treaty 505234
The Bank of New York Mellon SA/NV 10
Mitsui Fudosan Co., Ltd.
Mitsui Sumitomo Insurance Co., Ltd.
84,800
71,212
35,961
30,022
22,340
20,375
20,241
19,460
17,638
7.17
5.30
4.45
2.25
1.88
1.40
1.27
1.27
1.22
1.10
* Percentage of shares held is calculated excluding 32,375,056 shares of treasury stock.
Stock Price Range
Composition of Stockholders (Thousands of shares)
(Yen)
1,200
1,000
800
600
400
200
0
2010
April
2011
April
2012
April
2013
April
2014
April
2015
April
Treasury Stock
32,375
1.98%
Individuals and
Others
402,772
24.69%
Companies and
Individuals in
Foreign Countries
407,130
24.95%
Financial
Institutions
621,260
38.08%
Securities
Companies
24,807
1.52%
Other
Japanese
Companies
143,138
8.77%
.
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Corporate Data
(As of March 31, 2015)
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:
45,789
Parent company:
7,232
Japanese subsidiaries: 10,299
Overseas subsidiaries: 28,258
Toray Industries, Inc.
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
For questions about this report:
Contact IR Dept.
Telephone: 81(3)3245-5113
Facsimile: 81(3)3245-5459
e-mail:
ir@nts.toray.co.jp
Printed in Japan
Issued: September 2015