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T O K U Y A M A C O R P O R AT I O N
Annual Report 2008YEAR ENDED MARCH 31, 2008
Tokuyama traces its roots back to 1918, when it began producing soda ash(sodium carbonate), one of the basic materials used in various industries.
While adding various chemicals to our product lineup, we have grown toincorporate diverse businesses covering a wide range of products includingorganic and inorganic chemicals, plastics, cement/building materials, electronicmaterials, and materials used in the medical field. In this way, Tokuyama hascontinued to serve industry and a variety of markets for 90 years.
Tokuyama aims to be a thoroughly unique company, characterized bytechnology, rather than pursuing scale. At the same time, we strive to become ameaningful presence in society, full of originality, and to generate increasedcorporate value from a medium- to long-term perspective while also practicing astyle of management that is both future-oriented and in harmony with society.
1 C o n s o l i d a t e d F i n a n c i a l H i g h l i g h t s
2 A t a G l a n c e
4 M e s s a g e f r o m t h e P r e s i d e n t
8 F i n a n c i a l R e v i e w
1 6 C o n s o l i d a t e d B a l a n c e S h e e t s
1 8 C o n s o l i d a t e d S t a t e m e n t s o f I n c o m e
1 9 C o n s o l i d a t e d S t a t e m e n t s o f C h a n g e s i n N e t A s s e t s
2 0 C o n s o l i d a t e d S t a t e m e n t s o f C a s h F l o w s
2 1 N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
3 2 I n d e p e n d e n t A u d i t o r s ’ R e p o r t
3 3 D i r e c t o r y
3 4 M a j o r S u b s i d i a r i e s a n d A f f i l i a t e s
3 5 O v e r s e a s
3 5 M a i n P r o d u c t s
3 6 C o r p o r a t e D a t a
3 6 B o a r d o f D i r e c t o r s
CAUTIONARY NOTES: FORWARD-LOOKING STATEMENTSThis annual report contains information about forward-looking statements related to such matters as the Company’s plans, strategies and business results. These
forward-looking statements represent judgments made by the Company based on information available at present and are inherently subject to a variety of risks and
uncertainties. The Company’s actual activities and business results could differ significantly from the forward-looking statements due to changes including, but not limited
to, those in the economic environment, business environment, demand and exchange rates.
Contents
Profile
Tokuyama Corporation
1
Thousands ofMillions of yen Change (%) U.S. dollars
2008 2007 2008/2007 2008
Net sales ¥307,454 ¥292,764 5.0% $3,074,537
Operating income 35,325 34,737 1.7 353,254
Income before income taxes 30,915 29,796 3.8 309,154
Net income 18,889 18,460 2.3 188,889
Per share amounts (in yen, U.S. dollars)
Net income (basic) 68.85 67.24 — 0.689
Net income (diluted) — — — —
Cash dividends 9.00 6.00 — 0.090
Total assets 383,264 373,745 2.5 3,832,642
Net assets 206,135 197,812 4.2 2,061,352
Capital expenditures 37,434 23,058 62.3 374,336
Depreciation 21,380 18,071 18.3 213,796
R&D expenses 11,161 10,757 3.8 111,612
Number of employees 5,057 4,852 — —
Consolidated subsidiaries 47 44 — —
Note: U.S. dollar amounts above and elsewhere in this annual report are converted from Japanese yen, for convenience only, at the
rate of ¥100=US$1.
Consolidated Financial HighlightsTokuyama Corporation and Consolidated Subsidiaries Years ended March 31, 2008 and 2007
Tokuyama Corporation
2
At a Glance
BUSINESS DIVISIONGROUP SEGMENT
Chemicals
(Billions of yen)
Sales
Operating income
Specialty Products
Sales
Operating income
(Billions of yen)
Cement,Building
Materials and Others
Sales
Operating income
(Billions of yen)
Chemicals
Si
Advanced Materials
Cement
2004
4.7
118
30.5
101
3.7
88
2008
2008
2008
2007
8.2
113
25.8
91
4.2
90
2007
2007
7.7
103
16.1
77
3.5
84
2006
2006
2006
8.6
96
9.2
67
3.3
75
2005
2005
2005
5.5
89
6.4
60
4.0
71
2004
2004
Tokuyama Corporation
3
CEMENT
RECYCLING AND ENVIRONMENT
SODA ASH, CALCIUM CHLORIDE
CAUSTIC SODA, PROPYLENE OXIDE
VINYL CHLORIDE MONOMER
ISOPROPYL ALCOHOL (IPA)
MICROPOROUS FILM
ORDINARY PORTLAND CEMENT
OTHER CEMENT
RECYCLING WASTE AND
BY-PRODUCTS
ELECTRONIC MATERIALS
FUMED SILICA
PRECIPITATED SILICA
FUMED SILICA(Tokuyama Chemicals (Zhejiang)
Co., Ltd.)
PRECIPITATED SILICA(Tokuyama Siam Silica Co., Ltd.)
FINE CHEMICALS
SHAPAL
IC CHEMICALS
CLEANING SYSTEM
MEDICAL DIAGNOSIS SYSTEMS(A&T Corp.)
DEVELOPER(Hantok Chemicals Co., Ltd.)
DENTAL MATERIALS(Tokuyama Dental Corp.)
ION-EXCHANGE MEMBRANES(ASTOM Corp.)
POLYCRYSTALLINE SILICON
FUMED SILICA
PRECIPITATED SILICA
(WHITE CARBON)
PHARMACEUTICAL BULKS ANDINTERMEDIATES
OPTICAL LENS MATERIALS
ALUMINUM NITRIDE (SHAPAL®)
HIGH PURITY CHEMICALS FOR ELECTRONICSMANUFACTURING
CLEANING SOLVENTS AND SYSTEM
SODA ASH AND CALCIUM CHLORIDE
CHLOR-ALKALI
VINYL CHLORIDE
NEW ORGANIC CHEMICALS
NF
BUSINESS UNIT MAJOR DIRECT PRODUCTSMAJOR PRODUCTS OF AFFILIATE COMPANIES
POLYVINYL CHLORIDE(Shin Dai-ichi Vinyl Corp.)
POLYPROPYLENE FILM(Sun•Tox Co., Ltd.)
MICROPOROUS FILM(Shanghai Tokuyama Plastics
Co., Ltd.)
CEMENT & READY-MIXED CONCRETE(Tokuyama Tsusho Trading Co., Ltd.)
PLASTIC SASHES(Shanon Co., Ltd.)
OTHERS (Shunan System Sangyo Co., Ltd.)
Tokuyama Corporation
4
Message from the President
SHIGEAKI NAKAHARAPRESIDENT
Tokuyama Corporation
5
Review of the Previous Medium-term Management PlanThe Tokuyama Group is committed to the objectives in its basic management policies, which are: to make the
Group into a business grouping whose members are the enterprises of first choice by their customers, and which
is held in high esteem by all its stakeholders, including its shareholders, customers, employees, and the local
communities through recognizing “corporate social responsibilities” and practicing “management in harmony with
society,” together with achieving sustainable growth in corporate value based on enhancing corporate ethics and
ensuring strict compliance.
Based on these management policies, from April 2005 the Tokuyama Group began its previous three-year
management plan with the goal of enhancing its corporate value over the medium and long term. To do this, we
set numerical targets including net sales of more than ¥260 billion on a consolidated basis, an operating margin
(ratio of operating income to net sales) of higher than 10%, and ROA (ratio of net income to total assets) of higher
than 3.0% for the final fiscal year of the plan.
We endeavored to secure profits through product price revisions and cost reduction in response to continually
rising raw materials and fuel prices from the first fiscal year of the plan. On the other hand, the electronic materials
business saw favorable results, bolstered by robust demand. As a result of those, we succeeded in achieving all
our targets in the previous fiscal year, one year ahead of schedule. In this fiscal 2008 (year ended March 31,
2008), the final fiscal year of the plan, we successfully maintained all the target levels for the second straight year
by generating net sales of ¥307 billion, the operating margin of 11.5%, and ROA of 4.9%.
Our Centennial VisionThe Tokuyama Group celebrated the 90th anniversary of its establishment on February 16, 2008. We have
formulated our Centennial Vision, “a manufacturing company that creates a brighter future through vitality of
human resources and creativity of chemistry in harmony with society” as an ideal image for our centennial
anniversary, a decade from now. Through steadily promoting basic strategies (* See page 6), we will aim to
achieve our numerical targets for our centennial, concretely, net sales of more than ¥500 billion, the operating
margin of higher than 15%, and an overseas sales ratio of higher than 30%.
Outline of a New Three-year Management PlanIn April 2008, we have started a new three-year management plan as the first step based on a management
policy, “Venture spirit & Innovation,” in order to make our centennial vision a reality. Under this new three-year
management plan, we have set targets for the final fiscal year of the plan, fiscal 2011 (the year ending March
2011) of more than ¥370 billion in net sales, the operating margin of higher than 12%, and the overseas sales ratio
of higher than 22%.
Our specific initiatives are as follows.
1. Implementing Growth Strategies
1. Further Selection & Concentration for Attacking
The scope of the Tokuyama Group’s businesses encompasses a wide variety of products ranging from materials
to components in markets that differ from product to product, which can be called a multipolar structure. We
classify these businesses into four categories, namely Growing Materials Business, Growing Components
Business, Foundation Business, and Independent Components Business, from the two viewpoints of
“International competitiveness” and ”Life cycle.” Among these four businesses, we will expand our business
Tokuyama Corporation
6
Net Sales More than ¥500 billion
Operating Margin Higher than 15%
Overseas Sales Ratio Higher than 30%
BASIC STRATEGIES FOR CENTENNIAL VISION
NEW THREE-YEAR MANAGEMENT PLAN
This category contains products used as materials in the globally growing industries. We must pursue scale expansion to win in the international competition. Businesses in this category are characterized as energy-consuming, and a large amount of advance investment is needed. e.g. Polycrystalline silicon, Fumed silica, Aluminum nitride powder, etc.
Growing Materials Business
This category contains products used as components for growth products in the world markets. We need todifferentiate to win in the international competition. High-functional products created by high development capabilities are needed in this category's businesses.e.g. Fine chemicals, Figaro Engineering, Tokuyama Dental, etc.
Growing Components Business
This category contains products used as basic materials for domestic markets. In these businesses we need to secure stable profits and further reduce costs to compete against imported products. The strength of the Tokuyama Factory is the source of competitive advantages in these businesses.e.g. Cement, Chlor-alkali, Soda, Calcium chloride, etc.
Foundation Business
This category contains products used as components for products in domestic markets. We must pursue continuous growth to meet growth and needs in domestic markets. To win in the competition we need to make operations more efficient, including cooperation with upstream/downstream businesses, as well as differentiation of products.e.g. Sun•Tox, A&T, Shanon, etc.
Independent Components Business
Final Targets under the New Three-Year Management Plan (for Year ending March 2011)
Net Sales
More than ¥370 billion
Overseas Sales Ratio
Higher than 22%
Operating Margin
Higher than 12%
Operating Income before Depreciation/ Person
More than ¥14 million
Basis for the Plan: Exchange rate ¥110/$, Domestic naphtha price ¥66,000/kl
Human Resources-based ManagementPromotion of CSR
CentennialVision
Strengthening ofStrategically Growing
Businesses
Strengthening of International
Competitiveness
Tokuyama Corporation
7
Shigeaki Nakahara
President
June 2008
through aggressively investing our management resources in Growing Materials Business and Growing
Components Business.
2. Creation of New Businesses with Global Competitiveness
In the creation of new businesses, while striving to make it realized that development projects that have already
reached commercial stages at this point will surely contribute to profits, we plan to cultivate new business themes
in the fields of electronic materials and components, as well as energy and environment, through closer
cooperation between our R&D and business planning sections.
3. Strengthening Competitiveness through Productivity Improvement
We aim to improve productivity by restructuring our manufacturing and information infrastructure. As for
manufacturing infrastructure, we will take the initiative in strengthening the Group’s international competitiveness
by building closer cooperation between the Tokuyama Factory, which is defined as the mother factory of
technologies and know-how, and the Kashima Factory, as well as the factories of group companies. At the same
time, for restructuring of information infrastructure, we have already started introducing enterprise resource
planning (ERP) systems. By enhancing the level of our managerial accounting, we will improve productivity in
office work as well as manufacturing departments.
2. Building Systems for Growth Strategies
1. Securing Management Resources and their Optimum Allocation
We will give top priority to human resources among all our management resources in order to achieve long-term
growth, and will realize their optimum allocation on a timely basis. At the same time, we will strive to create a
working environment in which each employee is highly motivated and can display his or her individual capabilities.
2. Globally Competitive HR Development
We will develop globally competitive human resources based on a medium- to long-term HR development
program.
3. Reinforcement of Corporate Governance
We will consider what governance system enables us to make important management decisions quickly in a time
of change.
4. Full Utilization of the Balanced Scorecard
We will enhance our functions for executing strategies through promoting “transparent approaches” in our
measures to achieve our objectives
The Tokuyama Group will steadily implement the above-mentioned medium- and long-term management
strategies and aim to enhance corporate value based on long years of relationships with our customers and our
consistent policy to stick to manufacturing only the best.
In closing, I would like to take this opportunity to ask all stakeholders for their continued support and
cooperation.
Tokuyama Corporation
8
INCOME ANALYSIS
In fiscal 2008 (the year ended March 31, 2008), global economic growth remained steady on the whole,
as the emerging countries including China achieved steady economic growth, although the economy
showed signs of a slowdown due to such factors as growing concern over the financial system
triggered by the subprime loan problem in the second half of 2007 and steep rise in raw materials and
fuel prices. The Japanese economy recorded growth in exports, because the increased exports to the
emerging countries exceeded the decreased amount of exports to the U.S. On the other hand,
domestic demand was sluggish, and what is worse, decreased construction starts caused by the
revised Building Standards Act also had a negative impact on the Japanese economy from summer.
Under such circumstances, The Tokuyama Group further strove to reinforce cost-reduction measures
on a number of fronts while also implementing plans for prioritized investments aimed at realizing a
strategy to enhance corporate value through steady growth. On the sales front, Tokuyama continued to
make every effort to maintain or secure increases in sales prices to bolster profitability and also devoted
considerable resources to acquiring new customers.
Reflecting successful efforts to secure upward price adjustments and other efforts, consolidated net
sales in fiscal 2008 amounted to ¥307,454 million (US$3,075 million), an increase of 5.0% compared
with the previous year.
By business segment, the Chemicals segment sales rose 5.2% year-on-year to ¥118,336 million
(US$1,183 million), sales in the Specialty Products segment rose 11.9% year-on-year to ¥101,291
million (US$1,013 million), and sales recorded by the Cement, Building Materials and Others segment
decreased 2.1% year-on-year to ¥87,826 million (US$878 million).
FINANCIAL SECTION
Financial Review
NET SALES
219238
263
293307
(Billions of yen)
20082007200620052004
OPERATING INCOME
13.2
18.2
24.3
34.7 35.3
(Billions of yen)
20082007200620052004
Tokuyama Corporation
9
Sharp increases in raw materials and fuel prices, higher depreciation and repairing cost, etc.
outweighed the effect of cost-reduction efforts, resulting in a 6.5% year-on-year increase in cost of
sales to ¥209,027 million (US$2,090 million).
Despite our efforts to lower costs, reflecting higher R&D expenses, personnel expenses, distribution
expenses and so on, SG&A expenses amounted to ¥63,102 million (US$631 million), an increase of
2.3% compared with the previous year.
The net aggregate effect of price adjustments and various efforts to lower costs more than offset the
impact of steep increases in raw materials and fuel prices. Operating income increased 1.7% year-on-
year to ¥35,325 million (US$353 million). The operating margin (Ratio of operating income to net sales)
was 11.5%, a decrease of 0.4 percentage points compared with the figure of 11.9% recorded in the
previous year.
In other income and expenses, Tokuyama reported neither impairment loss on fixed assets nor loss
on changes in retirement benefit plans in this fiscal year, both of which had been recorded in the
previous year. Reflecting these and other factors, net other expenses amounted to ¥4,410 million
(US$44 million), a decrease of 10.7% compared with the previous year.
Income before income taxes totaled ¥30,915 million (US$309 million), a gain of ¥1,119 million
compared with the previous year’s figure of ¥29,796 million. Income taxes were ¥11,522 million
(US$115 million) and minority interests totaled ¥504 million (US$5 million). As a result, net income rose
from ¥18,460 million to ¥18,889 million (US$189 million), a gain of ¥429 million compared with the
previous year. The return on sales (ROS) was 6.1%, compared with 6.3% in the previous year. Net
income per share was ¥68.85 (US$0.689), up from ¥67.24 in the previous year. Dividends per share
were increased to ¥9.00 (US$0.090), up ¥3.00 compared with the previous year. Commemorative
NET INCOME
6.0
11.0
14.0
18.5 18.9(Billions of yen)
20082007200620052004
RETURN ON EQUITY
(%)
20082007200620052004
8.58.9
10.09.7
5.1
Tokuyama Corporation
10
dividends per share of ¥3.00 were included to celebrate the 90th anniversary of the Company’s
establishment on February 16, 2008.
Return on equity (ROE) and return on assets (ROA) were 9.7% and 4.9%, respectively, compared with
10.0% and 4.9% in the previous year.
SEGMENT INFORMATION
The Tokuyama Group comprises the parent company Tokuyama Corporation, 48 subsidiaries and 40
affiliated companies. The Group’s operations are divided into the three business segments of
Chemicals, Specialty Products, and Cement, Building Materials and Others. For accounting purposes,
47 of the Company’s major subsidiaries are consolidated, while 13 affiliates are accounted for using the
equity method.
CHEMICALS
The Chemicals segment is composed of the operations of 6 consolidated subsidiaries and 3 equity-
method affiliates.
Segment net sales increased 5.2% year-on-year to ¥118,337 million (US$1,183 million), while
operating income fell 42.4% year-on-year to ¥4,738 million (US$47 million). The segment accounted for
38.5% of total net sales (a rise of 0.1 percentage points compared with the previous year).
Sharp increases in raw materials and fuel prices exerted a substantial impact on overall businesses in
the Chemicals segment. Despite cost reduction and sales price revisions efforts, the performance in this
segment was sluggish.
SALES COMPOSITION
(%)
28.6
38.5
32.9
Chemicals SpecialtyProducts
Cement,Building Materialsand Others
Tokuyama Corporation
11
Shin Dai-ichi Vinyl Corporation stopped special vinyl chloride resins production in its Takaoka factory.
In the film business, Sun•Tox Co., Ltd. registered unfavorable results despite continued efforts to
secure sales price increases and boost efficiency in response to further raw material price hikes.
We withdrew from BOPP films (Biaxial-oriented polypropylene films) business in Tianjin, China, which
had been in a slump.
SPECIALTY PRODUCTS
The Specialty Products segment consists of the operations of 20 consolidated subsidiaries and 5
equity-method affiliates.
Segment net sales increased 11.9% year-on-year to ¥101,291 million (US$1,013 million) and
operating income increased 18.2% year-on-year to ¥30,534 million (US$305 million). The segment
accounted for 32.9% of total net sales (a gain of 2.0 percentage points compared with the previous
year).
In the Si (silicon) business, demand for polycrystalline silicon remained strong for both
semiconductors and solar cells.
In functional powder operations, sales of fumed silica were brisk, especially for polishing of
semiconductor wafers (CMP application). In the second half of this fiscal year, Tokuyama Chemicals
(Zhejiang) Co., Ltd., which is a production base for fumed silica in China, commenced operations.
In the advanced materials business, we saw steadily increasing results for photoresist developer,
high-purity chemicals for use in production of semiconductors and liquid crystal displays, due to
improved production efficiency. In fine chemicals operations, plastic lens-related materials did not grow
Tokuyama Corporation
12
as we had expected, because demand for them entered a phase of adjustment.
In aluminum nitride, although Tokuyama continued to focus on reducing costs and other measures,
results were sluggish. At the end of this fiscal year, the construction of manufacturing facilities of
Tokuyama-Dowa Power Material Co., Ltd., which is a joint venture with Dowa Metaltech Co., Ltd. to
manufacture and sell aluminum nitride substrates, was completed.
A&T Corporation reported solid results, due to cost reduction together with steady sales of laboratory
information systems, etc.
CEMENT, BUILDING MATERIALS AND OTHERS
The Cement, Building Materials and Others segment comprises the operations of 21 consolidated
subsidiaries and 5 equity-method affiliates.
Segment net sales decreased 2.1% year-on-year to ¥87,826 million (US$878 million) and operating
income fell 12.2% year-on-year to ¥3,691 million (US$37 million). The segment accounted for 28.6% of
total net sales (a decline of 2.0 percentage points compared with the previous year).
In cement operations, business conditions remained adverse due to a gradual downward trend of
public works and decreased private-sector demand caused by the delay in building confirmation as well
as harsh cost increases such as sharp price hikes of raw materials and fuel and higher fixed costs.
Tokuyama responded to these conditions by focusing on revising sales prices, lowering costs through
improving production efficiency. As a result of those, the performance of the cement business was
largely level with the previous fiscal year.
As a result of efforts to accept a larger amount of waste used as raw materials, the recycling and
Tokuyama Corporation
13
environment business registered steady results.
In building materials and others operations, the Shanon Group, which is developing plastic window
sash business, registered unfavorable results, because its endeavor to revise product prices and lower
costs did not adequately absorb the steep rise of raw materials prices, and decreased demand caused
by the delay in building confirmation also had a negative impact.
FINANCIAL POSITION AND LIQUIDITY
As of March 31, 2008, total assets amounted to ¥383,264 million (US$3,833 million), an increase of
¥9,519 million from the figure of ¥373,745 million at the previous fiscal year-end.
Current assets increased 6.1% compared with the previous fiscal year-end to ¥164,650 million
(US$1,647 million). This was due primarily to an increase in securities. Current liabilities rose 9.7% to
¥115,068 million (US$1,151 million). This mainly reflected an increase in trade liabilities related to plant
and equipment. As a result, the current ratio was down to 1.43 times, from 1.48 times at the previous
fiscal year-end. Investments and long-term receivables declined 25.2% to ¥51,768 million (US$518
million). This was primarily owing to a drop in the market value of investment securities compared with
the previous fiscal year-end.
Property, plant and equipment totaled ¥164,025 million (US$1,640 million) as of the fiscal year-end.
Partial reconstruction and renovation of our own power generation facilities and an increase in
construction in progress as a result of additional polycrystalline silicon manufacturing facilities, etc.
were offset by a further increase in accumulated depreciation. The net increase compared with the
previous fiscal year-end was 11.9%.
TOTAL ASSETS
309 309
361 374 383
(Billions of yen)
20082007200620052004
Tokuyama Corporation
14
Other assets decreased 0.4% to ¥2,821 million (US$28 million).
As of March 31, 2008, total liabilities amounted to ¥177,129 million (US$1,771 million), an increase of
0.7% compared with the previous fiscal year-end figure of ¥175,933 million. The main contributory
factors were increased trade liabilities related to plant and equipment, etc. Interest-bearing debt
declined 10.7% from ¥72,006 million at the previous fiscal year-end to ¥64,274 million (US$643 million).
Minority interests in consolidated subsidiaries increased 23.1% from ¥5,790 million as of the previous
fiscal year-end to ¥7,125 million (US$71 million). Net assets grew 4.2% compared with the previous
fiscal year-end, from ¥197,812 million to ¥206,135 million (US$2,061 million). This was due chiefly to an
increase in general reserve through appropriations of unappropriated retained earnings. The ratio of
shareholders’ equity to total assets was 51.9%, up from 51.4% at the previous fiscal year-end. Net
assets per share was ¥725.37 (US$7.254), compared with ¥699.69 at the previous fiscal year-end.
CAPITAL EXPENDITURES
Capital expenditures totaled ¥37,434 million (US$374 million), an increase of 62.3% compared with the
previous year’s figure of ¥23,058 million. One of the major items of capital spending was partial
reconstruction and renovation of our own power generation facilities.
CASH FLOWS
Net cash provided by operating activities totaled ¥47,699 million (US$477 million). Principal items
included income before income taxes, which increased from ¥29,796 million to ¥30,915 million (US$309
million). Depreciation totaled ¥21,380 million (US$214 million) from ¥18,071 million in the previous fiscal
127138
184198
206
(Billions of yen)
20082007200620052004
NET ASSETS
Tokuyama Corporation
15
year. The cash inflow due to the decrease in trade receivables totaled ¥3,609 million (US$36 million)
compared with the cash outflow of ¥8,149 million in the previous year. Income taxes paid were ¥12,651
million (US$127 million) from ¥11,172 million in the previous year.
Net cash used in investing activities totaled ¥25,664 million (US$257 million). A major contributory
factor was the cash outflow due to payments for purchases of property, plant and equipment, from
¥21,042 million in the previous year to ¥27,593 million (US$276 million).
Net cash used in financing activities equaled ¥10,176 million (US$102 million). This was primarily
attributed to repayments of debt of ¥4,627 million (US$46 million) from ¥6,960 million in the previous
year and redemption of bonds of ¥5,000 million (US$50 million) from ¥4,800 million in the previous year.
As a result of the above, cash and cash equivalents increased by ¥11,835 million (US$118 million)
compared with the previous fiscal year-end, to ¥41,057 million (US$411 million).
Tokuyama Corporation
16
Consolidated Balance SheetsTokuyama Corporation and Consolidated Subsidiaries Years ended March 31, 2008 and 2007
Thousands ofMillions of yen U.S. dollars (Note 2)
ASSETS 2 0 0 8 2 0 0 7 2 0 0 8
Current assets:
Cash in hand and deposits at bank ¥ 28,657 ¥ 29,222 $ 286,573
Time deposits 528 689 5,282
Short-term investments 679 1,995 6,790
Marketable securities (Note 5, Note 19) 12,400 1 124,001
Receivables:
Trade notes and accounts 81,751 85,688 817,512
Others 3,795 2,645 37,952
Less allowance for doubtful accounts (475) (560) (4,755)
85,071 87,773 850,709
Inventories (Note 6) 32,515 29,415 325,153
Deferred tax assets (Note 8) 3,482 4,508 34,825
Other current assets 1,318 1,538 13,163
Total current assets 164,650 155,141 1,646,496
Investments and long-term receivables:
Investment securities (Note 5) 32,487 47,445 324,875
Investments in unconsolidated subsidiaries and affiliates 6,913 11,078 69,125
Long-term receivables 4,631 4,612 46,309
Others 8,013 6,305 80,127
Less allowance for doubtful accounts (276) (192) (2,759)
51,768 69,248 517,677
Property, plant and equipment (Note 7):
Land 32,208 31,075 322,078
Buildings and structures 95,825 93,755 958,246
Machinery and equipment 419,276 401,423 4,192,759
Construction in progress 19,214 9,342 192,141
566,523 535,595 5,665,224
Less accumulated depreciation (402,498) (389,071) (4,024,976)
164,025 146,524 1,640,248
Other assets:
Intangible assets 1,770 1,724 17,716
Deferred tax assets (Note 8) 1,047 1,108 10,466
Excess of investment cost over equity in net assets acquired 4 — 39
2,821 2,832 28,221
Total assets ¥383,264 ¥373,745 $3,832,642
See notes to consolidated financial statements
Tokuyama Corporation
17
Thousands ofMillions of yen U.S. dollars (Note 2)
LIABILITIES AND NET ASSETS 2 0 0 8 2 0 0 7 2 0 0 8
Current liabilities:
Short-term bank loans (Note 7) ¥ 8,565 ¥ 9,899 $ 85,655
Current portion of long-term debt (Note 7) 18,638 13,966 186,378
Notes and accounts payable:
Trade notes and accounts 43,064 44,311 430,644
Others 24,800 12,193 248,000
67,864 56,504 678,644
Accrued income taxes (Note 8) 2,963 7,436 29,635
Accrued expenses 9,266 8,501 92,664
Guarantee deposits received from dealers 5,183 4,985 51,832
Other current liabilities 2,589 3,606 25,871
Total current liabilities 115,068 104,897 1,150,679
Long-term liabilities:
Long-term debt, less current portion (Note 7) 37,071 48,140 370,711
Accrued retirement and severance benefits (Note 9) 1,387 9,599 13,867
Deferred tax liabilities (Note 8) 7,200 11,846 72,003
Other long-term liabilities 16,403 1,451 164,030
Total long-term liabilities 62,061 71,036 620,611
Contingent liabilities (Note 17)
Shareholders’ equity (Note 4, Note 14):
Common stock, ¥50 par value:
Authorized: 700,000,000 shares
Issued: 275,671,876 shares 29,976 29,976 299,758
Additional paid-in capital 34,195 34,193 341,955
Retained earnings 125,667 108,628 1,256,665
Less treasury stock, at cost (1,176) (1,011) (11,761)
Total shareholders’ equity 188,662 171,786 1,886,617
Valuation, translation adjustments and others (Note 4):
Unrealized holding gains on available-for-sale securities 10,193 20,366 101,933
Foreign currency translation adjustments 155 (130) 1,552
Total valuation, translation adjustments and others 10,348 20,236 103,485
Minority interests in consolidated subsidiaries (Note 4): 7,125 5,790 71,250
Total net assets 206,135 197,812 2,061,352
Total liabilities and net assets ¥383,264 ¥373,745 $3,832,642
See notes to consolidated financial statements
Tokuyama Corporation
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Consolidated Statements of IncomeTokuyama Corporation and Consolidated Subsidiaries Years ended March 31, 2008, 2007 and 2006
Thousands ofMillions of yen U.S. dollars (Note 2)
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Net sales ¥307,454 ¥292,764 ¥263,374 $3,074,537
Cost of sales (Note 4) 209,027 196,334 179,961 2,090,258
Gross profit 98,427 96,430 83,413 984,279
Selling, general and administrative expenses (Note 4, Note 11) 63,102 61,693 59,101 631,025
Operating income 35,325 34,737 24,312 353,254
Other income (expenses):
Interest and dividend income 951 585 477 9,512
Interest expenses (1,446) (1,534) (1,638) (14,455)
Loss from disposal of property, plant and equipment (358) (211) (461) (3,582)
Impairment loss on fixed assets (3) (1,903) — (35)
Gain on sale of marketable and investment securities 1,494 1,049 830 14,942
Loss on write-down of marketable and investment securities (661) (3) (6) (6,607)
Foreign exchange gain (loss) (1,271) — 380 (12,714)
Seconded employee labor cost (1,912) (1,940) (1,883) (19,120)
Gain (loss) on changes in retirement benefit plans (Note 9) 39 (1,004) — 393
Costs of idle operations (494) (372) (580) (4,939)
Equity in earnings of unconsolidated subsidiaries and affiliates 715 972 484 7,154
Other-net (1,464) (580) (3) (14,649)
(4,410) (4,941) (2,400) (44,100)
Income before income taxes 30,915 29,796 21,912 309,154
Income taxes (Note 8)
Current 8,163 11,060 8,748 81,632
Deferred 3,359 (314) (1,662) 33,589
11,522 10,746 7,086 115,221
Minority interests (504) (590) (862) (5,044)
Net income ¥ 18,889 ¥ 18,460 ¥ 13,964 $ 188,889
Yen U.S. dollars (Note 2)
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Per share amounts:
Net income (basic) ¥ 68.85 ¥ 67.24 ¥ 52.61 $ 0.689
Net income (diluted) — — — —
Cash dividends 9.00 6.00 6.00 0.090
See notes to consolidated financial statements
Tokuyama Corporation
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Consolidated Statements of Changes in Net AssetsTokuyama Corporation and Consolidated Subsidiaries Years ended March 31, 2008, 2007 and 2006
Thousands ofMillions of yen U.S. dollars (Note 2)
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Common stock
Balance at beginning of year ¥ 29,976 ¥ 29,976 ¥ 19,274 $ 299,758
Issuance of common stock — — 10,702 —
Balance at end of year ¥ 29,976 ¥ 29,976 ¥ 29,976 $ 299,758
Additional paid-in capital
Balance at beginning of year ¥ 34,193 ¥ 34,192 ¥ 23,497 $ 341,929
Issuance of common stock — — 10,692 —
Gain on disposal of treasury stock 2 1 3 26
Balance at end of year ¥ 34,195 ¥ 34,193 ¥ 34,192 $ 341,955
Retained earnings
Balance at beginning of year ¥108,628 ¥ 91,889 ¥ 79,522 $1,086,277
Net income 18,889 18,460 13,964 188,889
Cash dividends paid (1,646) (1,648) (1,525) (16,464)
Bonuses to directors and statutory auditors — (66) (72) —
Adjustment for changes in consolidated subsidiaries and
affiliates accounted for by the equity method (204) (7) — (2,037)
Balance at end of year ¥125,667 ¥108,628 ¥ 91,889 $1,256,665
Less treasury stock, at cost
Balance at beginning of year ¥ (1,011) ¥ (676) ¥ (306) $ (10,114)
Net change (165) (335) (370) (1,647)
Balance at end of year ¥ (1,176) ¥ (1,011) ¥ (676) $ (11,761)
Unrealized holding gains on available-for-sale securities
Balance at beginning of year ¥ 20,366 ¥ 24,250 ¥ 13,652 $ 203,660
Net change (10,173) (3,884) 10,598 (101,727)
Balance at end of year ¥ 10,193 ¥ 20,366 ¥ 24,250 $ 101,933
Foreign currency translation adjustments
Balance at beginning of year ¥ (130) ¥ (606) ¥ (1,243) $ (1,301)
Net change 285 476 637 2,853
Balance at end of year ¥ 155 ¥ (130) ¥ (606) 1,552
Minority interests in consolidated subsidiaries
Balance at beginning of year ¥ 5,790 ¥ 4,500 ¥ 3,845 $ 57,908
Net change 1,334 1,290 655 13,342
Balance at end of year ¥ 7,125 ¥ 5,790 ¥ 4,500 $ 71,250
See notes to consolidated financial statements
Tokuyama Corporation
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Consolidated Statements of Cash FlowsTokuyama Corporation and Consolidated Subsidiaries Years ended March 31, 2008, 2007 and 2006
Thousands ofMillions of yen U.S. dollars (Note 2)
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Cash flows from operating activities:Income before income taxes ¥ 30,915 ¥ 29,796 ¥ 21,912 $ 309,154Adjustments to reconcile net cash provided by operating activities:
Depreciation 21,380 18,071 18,087 213,796Increase (decrease) in provision (4,327) 443 1,124 (43,272)Interest and dividend income (951) (585) (477) (9,512)Gain on sale of marketable and investment securities (1,558) (1,039) (826) (15,582)Foreign exchange gain 559 (283) (88) 5,590Loss on sale and disposal of property, plant and equipment 399 211 461 3,988Impairment loss on fixed assets 3 1,903 — 35Equity in earnings of affiliates (715) (972) (484) (7,154)Interest expenses 1,446 1,534 1,638 14,455Loss on write-down of marketable and investment securities — 3 6 —(Increase) decrease in trade receivables 3,609 (8,149) (11,496) 36,088Increase in inventories (3,042) (3,071) (3,166) (30,422)Increase (decrease) in trade payable (867) 6,222 2,497 (8,672)Increase in other long-term liabilities 11,785 — — 117,849Payment for bonuses to directors and statutory auditors — (66) (79) —Other 1,533 1,642 1,147 15,344
Sub total 60,169 45,660 30,256 601,685Interest and dividend received 1,666 1,280 767 16,663Interest paid (1,485) (1,542) (1,627) (14,851)Income taxes paid (12,651) (11,172) (3,648) (126,511)
Net cash provided by operating activities 47,699 34,226 25,748 476,986Cash flows from investing activities:
Increase in time deposits (135) (83) (399) (1,353)Decrease in time deposits 296 57 149 2,958Payments for purchases of marketable securities — — (50) —Proceeds from sales of marketable securities — 50 57 —Payments for purchases of property, plant and equipment (27,593) (21,042) (22,933) (275,934)Proceeds from sales of property, plant and equipment 573 681 771 5,729Payments for purchases of investment securities (3,012) (2,045) (626) (30,117)Proceeds from sales of investment securities 2,428 1,607 1,345 24,281Increase in loans receivable (309) (41) (93) (3,094)Decrease in loans receivable 351 544 572 3,509Other 1,737 (2,259) (1,551) 17,379
Net cash used in investing activities (25,664) (22,531) (22,758) (256,642)Cash flows from financing activities:
Decrease in short-term loans (212) (1,145) (1,193) (2,124)Increase (decrease) in commercial papers — — (3,000) —Proceeds from long-term debt 4,966 3,613 1,326 49,664Repayments of long-term debt (9,381) (9,428) (3,388) (93,812)Redemption of bonds (5,000) (4,800) — (50,000)Issuance of common stock — — 21,394 —Cash dividends paid (1,646) (1,648) (1,525) (16,464)Cash dividends paid to minority interest (79) (91) (92) (788)Increase in treasury stock (163) (338) (367) (1,633)Other 1,339 — — 13,395
Net cash used in (provided by) financing activities (10,176) (13,837) 13,155 (101,762)Effect of exchange rate changes on cash and cash equivalents (612) 200 53 (6,120)Net increase (decrease) in cash and cash equivalents 11,246 (1,942) 16,198 112,462Cash and cash equivalents at beginning of the year 29,222 30,999 14,801 292,224Increase in cash and cash equivalents due to changes of
scope of consolidation 589 165 — 5,887Cash and cash equivalents at end of year ¥ 41,057 ¥ 29,222 ¥ 30,999 $ 410,573
See notes to consolidated financial statements
Tokuyama Corporation
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Notes to Consolidated Financial StatementsTokuyama Corporation and Consolidated Subsidiaries
1. BASIS OF FINANCIAL STATEMENTSThe accompanying consolidated financial statements have been prepared from accounts and records maintained by TokuyamaCorporation (the “Company”) and its subsidiaries. The Company and its consolidated domestic subsidiaries have maintained theiraccounts and records in accordance with the provisions set forth in the Company Law (the “Law”) and the Financial Instruments andExchange Law and in conformity with accounting principles and practices generally accepted in Japan, which are different from theaccounting and disclosure requirements of International Accounting Standards.
The accounts of consolidated overseas subsidiaries are based on their accounting records maintained in conformity with generallyaccepted accounting principles and practices prevailing in the respective countries of domicile.
Certain items presented in the consolidated financial statements filed with the appropriate Local Finance Bureau of the Ministry ofFinance (“MOF”) in Japan have been reclassified for the convenience of readers outside Japan. Such reclassifications have no effecton net income or retained earnings.
The consolidated financial statements are not intended to present the consolidated financial position, results of operations and cashflows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.
2. U.S. DOLLAR AMOUNTSThe U.S. dollar amounts included in the consolidated financial statements and notes represent the arithmetic results of translatingJapanese yen to U.S. dollars at the rate of ¥100=US$1, the approximate exchange rate on March 31, 2008. The U.S. dollar amountsare included solely for the convenience of readers outside Japan, and are not intended to imply that the assets and liabilities thatoriginated in yen have been or could be readily converted, realized, or settled in U.S. dollars at this or at any other rate.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and its 47 significant subsidiaries (44 in 2007 and 43 in2006). Significant intercompany transactions and accounts have been eliminated in consolidation.
In total, 16 subsidiaries are consolidated on the basis of their original fiscal years ended at December 31. Material differences inintercompany transactions and accounts arising from the use of the different fiscal year-end are appropriately adjusted inconsolidation.
Investments in 13 unconsolidated subsidiaries and affiliates (15 in 2007 and 16 in 2006) are accounted for by the equity method.Investments in unconsolidated subsidiaries and affiliates not accounted for by the equity method are carried at cost.
The excess of investment cost over equity in net assets acquired is amortized on a straight-line basis over five years.
FOREIGN CURRENCY TRANSACTIONS:
Revenue and expenses items denominated in foreign currencies are translated into Japanese yen at the rates of respective transactiondates. Monetary assets and liabilities denominated in foreign currencies are translated into yen at the exchange rate in effect at thebalance sheet date and the resulting exchange gains or losses are credited or charged to income as incurred.
FOREIGN CURRENCY FINANCIAL STATEMENTS (ACCOUNTS OF OVERSEAS SUBSIDIARIES AND AFFILIATES):
All assets and liabilities are translated into yen at the exchange rate in effect at the balance sheet date except for shareholders’ equity,which is translated at the historical exchange rates. Revenue and expense accounts of the consolidated overseas subsidiaries aretranslated at the average rates of exchange prevailing during the year. The resulting translation adjustments are shown as “Foreigncurrency translation adjustments” in net assets.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include all highly liquid time deposits with maturities of three months or less, and short-term investmentsand marketable securities which are readily convertible into cash and have no significant risk of change in value.
MARKETABLE AND INVESTMENT SECURITIES:
Securities are classified into four groups: trading securities, held-to-maturity debt securities, securities of subsidiaries and affiliates,and other securities. Trading securities are stated at fair market value, held-to-maturity debt securities at amortized cost, and securitiesof subsidiaries and affiliates are stated at cost. Other securities with a quoted current price are stated at fair value, and those without aquoted current price are stated at cost, cost being determined by the moving-average method. Net unrealized gains or losses of othersecurities are stated as “Unrealized holding gains on available-for-sale securities” in shareholders’ equity after applying tax effectaccounting. The Company and subsidiaries do not hold trading securities.
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INVENTORIES:
Inventories are mainly stated at the lower of cost or market value, cost being determined by the moving-average method.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Depreciation is mainly computed by the declining-balance method for structures,machinery and equipment, and by the straight-line method for buildings at rates based on the estimated useful lives of assetsprescribed by the Japanese Income Tax Law. The range of estimated useful lives is principally from 3 to 50 years for buildings andstructures, and from 2 to 17 years for machinery and equipment.
Significant renewals and betterments are capitalized. Maintenance expenses are charged to income as incurred.
RESEARCH AND DEVELOPMENT EXPENSES:
Research and development expenses are charged to income as incurred.
DERIVATIVES AND HEDGE ACCOUNTING:
All derivative financial instruments, except hedging instruments, are stated at fair value. The Company includes interest rate swaps inhedging instruments subject to hedge accounting.
The Company utilizes financial derivative transactions only for the purpose of hedging foreign exchange risk arising from normaloperating activities and for managing interest rate risks. The Company does not hold or issue derivatives for dealing or speculativepurposes. All derivative transactions are performed and controlled by the financial section. Directors in charge approve all derivativetransactions entered into.
As the counterparties to these derivative transactions are limited to major financial institutions with high credit standings, theCompany does not anticipate nonperformance by the counterparties to these agreements, and no material losses are expected.
LEASES:
Finance leases, other than those which are deemed to transfer ownership, are accounted for in the same manner as operating leases inaccordance with generally accepted accounting principles in Japan.
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
The allowance for doubtful accounts of the Company and its consolidated subsidiaries is provided in amounts sufficient to coverpossible losses on collection. In determining the allowance for doubtful accounts for normal receivables, regard is taken of thehistorical default rate. With receivables where there is an acknowledged credit risk, allowances for doubtful accounts are provided fortaking account of collectability on a case-by-case basis.
INCOME TAXES:
The tax effects of temporary differences between the carrying amounts of assets and liabilities for tax and financial reporting isrecognized as deferred income taxes. The provision for income taxes is computed based on the pretax income included in theconsolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for theexpected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financialreporting purposes and the amounts used for income tax purposes.
ACCRUED RETIREMENT BENEFITS:
(i) EmployeesRecognition of accrued retirement benefits for employees for this fiscal year is based on actual valuation of projected benefitobligations and plan assets at the end of the fiscal year.
Prior service costs are charged to income as incurred.Actuarial differences are amortized by using the straight-line method over a period of time within the average remaining service
period of employees (16 years), from the subsequent fiscal year when they are incurred(ii) Directors and corporate auditorsCertain consolidated subsidiaries record accrued retirement benefits for directors and corporate auditors on the basis of the amountsrequired as of the end of this fiscal year based on internal rules.
Previously, the amounts required for retirement benefits for directors and corporate auditors at the balance sheet date were fullyaccrued by the Company based on internal rules.
At the Company’s 143rd general meeting of shareholders on June 26, 2007, a resolution was passed to abolish the retirementbenefits plan for directors and corporate auditors. On the same date, the Board of Directors of the Company resolved to make lump-sum payments of their retirement benefits for duties performed up to the date of abolition of the retirement plan at the time of theirretirement. As a result of that, the Company’s obligation for retirement benefits of ¥332 million payable for their duties performed up to
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5. MARKET VALUE INFORMATIONThe market values and net unrealized gains of quoted securities at March 31, 2008 were as follows:
Millions of yen
Carrying amount Market value Difference
Held-to-maturity debt securities:
Government securities and municipal bonds — — —
Bonds and others — — —
Total — — —
the date of abolition of the retirement plan is presented in “Other long-term liabilities.”Retirement benefits for directors and corporate auditors of ¥25 million for the period from the previous fiscal year-end to the date of
abolition of the retirement plan were recorded as expense for accrued directors’ and corporate auditors’ retirement benefits.
NET INCOME PER SHARE:
Net income per share is computed by dividing net income available to common stockholders by the weighted average number ofcommon shares outstanding during each year. Diluted net income per share is calculated based on the assumption that all dilutedconvertible bonds were converted at the beginning of the year. Diluted net income per share for the Years ended March 31, 2008, 2007and 2006 was not presented because there was no dilutive effect on any assumed conversion of convertible bonds for the year endedMarch 31, 2008, 2007 and 2006.
4. CHANGE IN ACCOUNTING POLICIES(1) ADOPTION OF AN ACCOUNTING STANDARD FOR DIRECTORS’ BONUS
Effective April 1, 2006, the Company and its consolidated subsidiaries have adopted an “Accounting Standard - ASBJ Statement No. 4Accounting Standard for Directors’ Bonus” (issued on Nov. 29, 2005). Compared with the previous accounting standard, the effect ofthis change was to decrease operating income and income before income taxes by ¥65 million (US$646 thousand) respectively in thefiscal year ended March 31, 2007.
(2) ADOPTION OF AN ACCOUNTING STANDARD FOR PRESENTATION OF NET ASSETS IN THE BALANCE SHEET
Effective April 1, 2006, the Company and its consolidated subsidiaries have adopted an ”Accounting Standard - ASBJ Statement No. 5Accounting Standard for Presentation of Net Assets in the Balance Sheet” (issued on Dec. 9, 2005) and its “Implementation Guidance -ASBJ Guidance No. 8 Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (issued on Dec. 9,2005). The corresponding figure to that of Total shareholders’ equity previously used was ¥192,022 million (US$1,920 million).
(3) CHANGE IN AN ACCOUNTING POLICY FOR DEPRECIATING IMPORTANT DEPRECIABLE ASSETS
In conformance with changes to the Corporate Income Tax Law, the method of depreciating tangible fixed assets (property, plant andequipment) for the Company and its domestic consolidated subsidiaries has been revised to confirm with the revised CorporateIncome Tax Law from the fiscal year under review for tangible fixed assets acquired on or after April 1, 2007.
Compared with the previous method, the effect of this change was to increase depreciation by ¥539 million (US$5,395 thousand),and decrease operating income and income before income taxes by ¥502 million (US$5,021 thousand) respectively during the fiscalyear under review.
Tangible fixed assets (property, plant and equipment) acquired by the Company and its domestic consolidated subsidiaries on orbefore March 31, 2007 are depreciated by the method applicable before the law’s revision. When the residual value of the assetsreaches 5% of the acquisition value, the remaining 5% is depreciated to a memorandum value over five years beginning in thesubsequent fiscal year by using the straight-line method, and is recorded as depreciation.
Compared with the previous method, the effect of this change was to increase depreciation by ¥1,880 million (US$18,799 thousand),and decrease operating income, ordinary income and income before income taxes by ¥1,765 million (US$17,651 thousand)respectively during the fiscal year under review.
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Thousands of U.S. dollars
Carrying amount Market value Difference
Held-to-maturity debt securities:
Government securities and municipal bonds — — —
Bonds and others — — —
Total — — —
Thousands of U.S. dollars
Carrying amount Market value Difference
Other securities:
Listed corporate shares $124,223 $294,984 $170,760
Bonds and others — — —
Total $124,223 $294,984 $170,760
Thousands of U.S. dollars
Carrying amount
Non-quoted main securities:
Held-to-maturity debt securities $ —
Certificates of deposit 124,000
Other securities 27,309
Total $151,309
6. INVENTORIESInventories at March 31, 2008 and 2007 were as follows:
Thousands ofMillions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Finished products and merchandise ¥17,282 ¥15,449 $172,819
Work in progress 5,208 4,802 52,082
Raw materials and supplies 10,025 9,164 100,252
Total ¥32,515 ¥29,415 $325,153
Millions of yen
Acquisition cost Carrying amount Unrealized gain
Other securities:
Listed corporate shares ¥12,422 ¥29,498 ¥17,076
Bonds and others — — —
Total ¥12,422 ¥29,498 ¥17,076
Millions of yen
Carrying amount
Non-quoted main securities:
Held-to-maturity debt securities ¥ —
Certificates of deposit 12,400
Other securities 2,731
Total ¥15,131
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7. SHORT-TERM BANK LOANS AND LONG-TERM DEBTShort-term bank loans at March 31, 2008 represent loans, which principally bear interest at rates ranging from 0.94% to 6.72% perannum.
A summary of long-term debt at March 31, 2008 and 2007 was as follows:
Thousands ofMillions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Loans principally from banks and insurance companies, due through 2022
with interest rates ranging from 1.00 percent to 7.05percent ¥ 30,709 ¥ 32,106 $ 307,089
2.9 percent unsecured bonds in yen due January 9, 2008 — 5,000 —
2.65 percent unsecured bonds in yen due September 2, 2009 5,000 5,000 50,000
2.35 percent unsecured bonds in yen due March 29, 2010 10,000 10,000 100,000
0.47 percent unsecured bonds in yen due June 19, 2008 5,000 5,000 50,000
1.36 percent unsecured bonds in yen due May 11, 2011 5,000 5,000 50,000
55,709 62,106 557,089
Less current portion (18,638) (13,966) (186,378)
¥ 37,071 ¥ 48,140 $ 370,711
The aggregate annual maturities of long-term debt at March 31, 2008 are summarized as follows:
Thousands ofMillions of yen U.S. dollars
Years ending March 31
2008 ¥18,638 $186,378
2009 17,816 178,159
2010 2,344 23,443
2011 9,777 97,765
2012 5,153 51,528
Thereafter 1,981 19,816
¥55,709 $557,089
Assets pledged as collateral for certain loans and other liabilities at March 31, 2008 and 2007 are summarized as follows:
Thousands ofMillions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Pledged Assets
Property, plant and equipment ¥28,983 ¥32,908 $289,825
Other 444 508 4,442
¥29,427 ¥33,416 $294,267
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8. INCOME TAXESThe Company and its domestic consolidated subsidiaries are subject to a number of income taxes that, in the aggregate, indicate astatutory tax rate in Japan of approximately 40.4% for the year ended March 31, 2008. Overseas subsidiaries are subject to incometaxes of countries where they are domiciled.
The significant differences between the statutory tax rate and effective income tax rate for consolidated financial statementpurposes for the years ended March 31, 2008 and 2007 were summarized as follows:
2 0 0 8 2 0 0 7
Statutory tax rate 40.4% 40.4%
Increase (decrease) in income taxes resulting from:
Effect of tax credits (4.0) (3.1)
Change in valuation allowance allocated to income tax expenses — —
Permanent differences — —
Equity in earnings of unconsolidated subsidiaries and affiliates — (1.3)
Utilization of loss carryforward — —
Loss on write-down of investments — —
Loss carried forward without deferred tax assets — —
Other 0.9 0.1
Effective income tax rate 37.3% 36.1%
Significant components of deferred tax assets and liabilities at March 31, 2008 and 2007 were as follows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Deferred tax assets:
Allowance for repairs ¥ 1,763 ¥ 1,602 $ 17,628
Fixed assets 1,027 900 10,274
Accrued retirement and severance benefits 1,043 2,718 10,432
Investment securities 1,062 1,040 10,619
Deficits 950 — 9,504
Others 2,631 4,337 26,309
Subtotal 8,476 10,597 84,766
Less valuation allowance (1,104) (346) (11,042)
Total deferred tax assets 7,372 10,251 73,724
Deferred tax liabilities:
Unrealized holding gains on available-for-sale securities (6,899) (13,802) (68,994)
Special depreciation reserve (1,230) (714) (12,304)
Appropriations for advanced depreciation (1,851) (1,884) (18,507)
Others (63) (84) (631)
Total deferred tax liabilities (10,043) (16,484) (100,436)
Net deferred tax liabilities ¥ (2,671) ¥ (6,233) $ (26,712)
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9. RETIREMENT AND SEVERANCE PLANThe Company and consolidated domestic subsidiaries have lump-sum severance benefits plans and tax-qualified pensionplans as vested benefits system. Benefits under these plans are based on the current rate of pay, length of service andconditions under which terminations occur. The Company set up an employee retirement benefit trust, contributed certainmarketable securities to the trust.
The Company transferred to defined contribution pension plans in lump-sum severance benefits plans as of April 1, 2007.
A consolidated domestic subsidiary withdrew from the-same-industry-based Employees’ Pension Fund plans on the samedate, and transferred from qualified retirement pension plans to defined contribution pension plans in October 2007.
The Company and its consolidated subsidiaries adopted “Implementation Guidance of an Accounting Standard - ASBJGuidance No. 1 Guidance on Accounting Treatment for Transfer between Retirement Benefit Plans” in the accountingtreatments stated above.
Benefit obligations for the year ended March 31, 2008 were as follows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 8
Project benefit obligation ¥(23,641) $ (236,405)
Fair value of plan assets 22,951 229,515
Funded status (690) (6,890)
Unrecognized actuarial loss 4,238 42,372
Net amount shown on balance sheet 3,548 35,482
Prepaid pension expense 4,935 49,349
Accrued retirement and severance benefits ¥ (1,387) $ (13,867)
Benefit costs for the year ended March 31, 2008 were as follows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 8
Service cost ¥1,090 $10,898
Interest cost 584 5,844
Expected return on plan assets (541) (5,405)
Recognized actuarial loss 89 883
Benefit cost 1,222 12,220
Gain on transfer to defined contribution pension plans (39) (393)
Other 481 4,812
Total ¥1,664 $16,639
Assumptions used in the actuarial calculation were as follows:
Discount rate 2.5%
Expected rate of return on plan assets 2.5%
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10. LEASESLease payments on finance lease contracts that do not transfer ownership for the year ended March 31, 2008 amounted to¥538 million (US$5,385 thousand). Lease payments corresponding to depreciation expenses for the year ended March 31,2008, which were computed by the straight-line method over a period up to the maturity of the relevant lease contracts with noresidual value, amounted to ¥538 million (US$5,385 thousand).
If the leases were capitalized, the cost of assets and accumulated depreciation at March 31, 2008 and 2007 would be asfollows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Machinery, equipment and vehicles ¥ 780 ¥ 625 $ 7,805
Other 2,004 1,804 20,045
Less accumulated depreciation (1,378) (1,286) (13,790)
Total ¥ 1,406 ¥ 1,143 $ 14,060
The future lease payments on finance leases at March 31, 2008 and 2007 were as follows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Due within one year ¥ 523 ¥ 455 $ 5,234
Due beyond one year 883 688 8,826
Total ¥1,406 ¥1,143 $14,060
11. SELLING, GENERAL AND ADMINISTRATIVE EXPENSESSelling, general and administrative expenses for the Years ended March 31, 2008, 2007 and 2006 were as follows:
Thousands ofMillions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Carriage and shipping ¥27,814 ¥27,543 ¥27,022 $278,141
Salaries and bonuses 8,956 8,382 7,916 89,562
Research and development expenses 9,804 9,305 7,960 98,037
Rent 1,689 1,655 1,563 16,886
Traveling expenses and postage 1,922 1,841 1,837 19,216
Welfare expense 1,603 1,481 1,443 16,027
Other 11,314 11,486 11,360 113,156
Total ¥63,102 ¥61,693 ¥59,101 $631,025
12. DEPRECIATIONDepreciation for the Years ended March 31, 2008, 2007 and 2006 were as follows:
Thousands ofMillions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Depreciation ¥21,380 ¥18,071 ¥18,087 $213,796
Tokuyama Corporation
29
13. RESEARCH AND DEVELOPMENT EXPENSESResearch and development expenses for the Years ended March 31, 2008, 2007 and 2006 were as follows:
Thousands ofMillions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 8
Research and development expenses ¥11,161 ¥10,757 ¥9,397 $111,612
14. SHAREHOLDERS’ EQUITYThe “Law” provides that an amount equal to at least 10% of cash dividends and other cash appropriations shall beappropriated and set aside as a legal reserve until the total amount of legal reserve and additional paid-in capital equals 25% ofstated capital.
The legal reserve was not available for dividends but might be used to reduce a deficit with shareholder approval orcapitalized by resolution of the Board of Directors. On condition that the total amount of legal reserve and capital reserveremains being equal to or exceeding 25% of common stock, they are available for distributions and certain other purposes bythe resolution of shareholders’ meeting.
The legal reserve is included in the retained earnings and is not allowed to show separately in the accompanyingconsolidated financial statements.
15. SEGMENT INFORMATIONBUSINESS SEGMENT INFORMATION
The Company and its consolidated subsidiaries operate primarily in the following three business segments: “Chemicals”,“Specialty Products” and “Cement, Building Materials and Others”Chemicals: caustic soda, soda ash, vinyl chloride monomer, polyvinyl chloride, microporous film and others Specialty Products: Polycrystalline silicon, aluminum nitride, amorphous precipitated silica, solvent for semiconductor basematerials, medical diagnosis systems, dental materials, ion-exchange membranes and others Cement, Building Materials and Others: cement, ready-mixed concrete, plastic window sashes and others.
Business segment information for the Years ended March 31, 2008, 2007 and 2006 was summarized as follows:
Millions of yen
CementSpecialty building Corporate or
2 0 0 8 Chemicals products materials and other Total elimination Consolidated
1. Sales
Sales to customers ¥118,337 ¥101,291 ¥ 87,826 ¥307,454 ¥ — ¥307,454
Inter-segment sales/transfer 1,714 52 12,877 14,643 (14,643) —
Total sales ¥120,051 ¥101,343 ¥100,703 ¥322,097 ¥(14,643) ¥307,454
Operating expenses 115,313 70,809 97,012 283,134 (11,005) 272,129
Operating income 4,738 30,534 3,691 38,963 (3,638) 35,325
2. Assets
Assets ¥103,064 ¥111,066 ¥ 85,488 ¥299,618 ¥ 83,646 ¥383,264
Depreciation 7,553 8,030 4,698 20,281 1,099 21,380
Impairment loss on fixed assets — — 3 3 — 3
Capital expenditures 7,987 18,343 5,443 31,773 5,661 37,434
Tokuyama Corporation
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Millions of yen
CementSpecialty building Corporate or
2 0 0 7 Chemicals products materials and other Total elimination Consolidated
1. Sales
Sales to customers ¥112,537 ¥90,525 ¥ 89,702 ¥ 292,764 ¥ — ¥292,764
Inter-segment sales/transfer 1,855 62 11,430 13,347 (13,347) —
Total sales ¥114,392 ¥90,587 ¥101,132 ¥ 306,111 ¥ (13,347) ¥292,764
Operating expenses 106,173 64,758 96,929 267,860 (9,833) 258,027
Operating income 8,219 25,829 4,203 38,251 (3,514) 34,737
2. Assets
Assets ¥101,949 ¥96,935 ¥ 88,881 ¥ 287,765 ¥ 85,980 ¥373,745
Depreciation 6,004 6,879 4,224 17,107 964 18,071
Impairment loss on fixed assets 1,787 — — 1,787 116 1,903
Capital expenditures 10,355 7,207 4,644 22,206 852 23,058
Millions of yen
CementSpecialty building Corporate or
2 0 0 6 Chemicals products materials and other Total elimination Consolidated
1. Sales
Sales to customers ¥102,647 ¥76,716 ¥84,011 ¥263,374 ¥ — ¥263,374
Inter—segment sales/transfer 1,681 56 8,958 10,695 (10,695) —
Total sales ¥104,328 ¥76,772 ¥92,969 ¥274,069 ¥ (10,695) ¥263,374
Operating expenses 96,635 60,667 89,473 246,775 (7,713) 239,062
Operating income 7,693 16,105 3,496 27,294 (2,982) 24,312
2. Assets
Assets ¥ 94,470 ¥88,078 ¥83,645 ¥266,193 ¥ 94,910 ¥361,103
Depreciation 6,191 6,867 4,283 17,341 746 18,087
Capital expenditures 6,432 7,199 5,237 18,868 2,784 21,652
Thousands of U.S. dollars
CementSpecialty building Corporate or
2 0 0 8 Chemicals products materials and other Total elimination Consolidated
1. Sales
Sales to customers $1,183,362 $1,012,915 $ 878,260 $3,074,537 $ — $3,074,537
Inter—segment sales/transfer 17,143 515 128,769 146,427 (146,427) —
Total sales $1,200,505 $1,013,430 $1,007,029 $3,220,964 $ (146,427) $3,074,537
Operating expenses 1,153,128 708,090 970,121 2,831,339 (110,056) 2,721,283
Operating income 47,377 305,340 36,908 389,625 (36,371) 353,254
2. Assets
Assets $1,030,637 $1,110,663 $ 854,882 $2,996,182 $ 836,460 $3,832,642
Depreciation 75,534 80,294 46,980 202,808 10,988 213,796
Impairment loss on fixed assets — — 35 35 — 35
Capital expenditures 79,867 183,431 54,428 317,726 56,610 374,336
Tokuyama Corporation
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OVERSEAS SALES INFORMATION
Overseas sales of the Company and its consolidated subsidiaries for the Years ended March 31, 2008 and 2007 weresummarized as follows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Asia ¥42,247 ¥38,163 $422,473
Others 17,099 13,755 170,989
Total ¥59,346 ¥51,918 $593,462
16. DERIVATIVE FINANCIAL INSTRUMENTSThe Company enters into foreign exchange forward contracts for certain foreign currency-denominated assets and liabilities to hedgeagainst future foreign currency fluctuations. The Company also enters into interest rate swap contracts to hedge against fluctuations ininterest rates on bonds and to reduce financing costs on debt instruments.
Information on the derivative financial instrument contracts utilized by the Company outstanding as of March 31, 2008 and 2007 isnot disclosed, as such contracts are accounted for as hedging instruments.
17. CONTINGENT LIABILITIESAt March 31, 2008 and 2007, the Company and its consolidated subsidiaries were contingently liable as follows:
Thousands of Millions of yen U.S. dollars
2 0 0 8 2 0 0 7 2 0 0 8
Notes discounted or endorsed ¥ 497 ¥ 644 $ 4,971
Loans guaranteed 2,232 3,513 22,324
Commitments to guarantee 843 1,014 8,433
18. SUBSEQUENT EVENTSAt the annual shareholders’ meeting of the Company held on June 25, 2008, the appropriation of retained earnings for the yearended March 31, 2008, was approved as follows:
Thousands of Millions of yen U.S. dollars
Cash dividends (¥6.00 per share) ¥1,646 $16,461
19. CHANGE IN THE METHOD OF PRESENTATIONEffective in the current fiscal year ended March 31, 2008, in accordance with the “Practice Guidelines on Accounting forFinancial Instruments” (JICPA Accounting Committee Report No. 14, revised on July 4, 2007) and “Questions and Answers onAccounting for Financial Instruments” (JICPA Accounting Committee, revised on November 6, 2007) in which certificates ofdeposit are defined to be treated as securities, certificates of deposit were categorized as “Marketable securities,” through theyhad been included in “Cash in hand and deposits at bank” for the previous fiscal year.
The amount of the certificates of deposit as of March 31, 2007 was ¥11,000 million ($110 million) and that as of March 31,2008 was ¥12,400 million ($124 million).
Tokuyama Corporation
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TO THE BOARD OF DIRECTORS OF TOKUYAMA CORPORATION
We have audited the accompanying consolidated balance sheets of Tokuyama Corporationand consolidated subsidiaries as of March 31, 2008, and 2007, and the related consolidatedstatements of income, changes in net assets and cash flows for each of the three years in theperiod ended March 31, 2008, all expressed in Japanese yen. These financial statements arethe responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of Tokuyama Corporation andconsolidated subsidiaries as of March 31, 2008, and 2007, and the consolidated results of theiroperations and their cash flows for each of the three years in the period ended March 31, 2008,in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respectto the year ended March 31, 2008, are presented solely for conveniences. Our audit alsoincluded the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion,such translation has been made on the basis described in Note 2 to the consolidated financialstatements.
YAMAGUCHI Audit Corporation
Shunan, JapanJune 10, 2008
Independent Auditors’ Report
Tokuyama Corporation
33
Directory
Head OfficeShibuya Konno Bldg.3-1, Shibuya 3-chomeShibuya-ku, Tokyo 150-8383, JapanTel: +81-3-3499-8030Fax: +81-3-3499-8958URL: http://www.tokuyama.co.jp/
Domestic Offices:Sendai, Nagoya, OsakaHiroshima, Takamatsu, Fukuoka
Research Laboratories:Tsukuba, Tokuyama
Factories:
Tokuyama Factory1-1, Mikage-cho, Shunan-shiYamaguchi 745-8648, JapanTel: +81-834-34-2000Fax: +81-834-33-3790
Kashima Factory26 Sunayama, Kamisu-shi, Ibaraki 314-0255, JapanTel: +81-479-46-4700Fax: +81-479-46-1933
Overseas:
Hantok Chemicals Co., Ltd.23rd Fl., Samsung Life Bldg.,150, 2-Ga, Taepyung-Ro, Jung-GuSeoul 100-716, Korea Tel: +82-2-755-3952Fax: +82-2-755-3955
Tianjin Figaro Electronic Co., Ltd.Weishan Road, No. 19,Tianjin Economic-TechnologicalDevelopment AreaTianjin China 300457Tel: +86-22-2532-5831Fax: +86-22-2532-5908
Shanghai Tokuyama Plastics Co., Ltd.138 Xintao Road, Qingpu Industrial Zone, Shanghai China 201707Tel: +86-21-5970-5669Fax: +86-21-5970-3756
Tokuyama Chemicals (Zhejiang) Co., Ltd.No.555, Yashan West Road, Zhapu, Development ZoneJiaxing, Zhejiang China 314201Tel: +86-573-8552-7887Fax: +86-573-8552-3355Email: [email protected]
Taiwan Tokuyama CorporationNo. 21, Shin Chen RoadHu Kou CountryHsin Chu Industrial ParkHsin Chu CountyTaiwan, R.O.C.Tel: +886-3-597-9108Fax: +886-3-597-9208
Tokuyama Siam Silica Co., Ltd.38th Floor, Ocean Tower II Bldg., 75/106,Sukhumvit 19, Klongtoey Nua, Wattana,Bangkok 10110, ThailandTel: +66-2-665-2903Fax: +66-2-665-2912
Tokuyama Electronic Chemicals Pte. Ltd.21 Gul Road, Singapore 629355Tel: +65-6862-1081Fax: +65-6862-1267
Tokuyama Electronic Materials (Suzhou) Co., Ltd.86 Yinsheng Road, Shengpu TownSuzhou Industrial Park, China 215126Tel: +86-512-6281-1790Fax: +86-512-6281-1791
Figaro USA, Inc.121 South Wilke Road, Suite 300Arlington heights, IL 60005, U.S.A. Tel: +1-847-832-1701Fax: +1-847-832-1705Email: [email protected] URL: http://www.figarosensor.com/
Eurodia Industrie S.A.Batiment Tokyo, Parc deffairesSilic, 7 Rue du Jura, BP 30527Wissous, 94633 Rungis Cedex, FranceTel: +33-1-5630-1640Fax: +33-1-4675-3762URL: http://www.eurodia.com/
Tokuyama America Inc.121 South Wilke Road, Suite 300Arlington Heights, IL 60005, U.S.A. Tel: +1-847-385-2195 Fax: +1-847-832-1705
Tokuyama Europe GmbHOststrasse 10, 40211 DusseldorfGermanyTel: +49-211-1754480Fax: +49-211-357379
Tokuyama Asia Pacific Pte. Ltd.61 Robinson Road#14-02 Robinson CentreSingapore 068893Tel: +65-6533-5258Fax: +65-6533-5256URL: http://www.tokuyama-asia.com/
Tokuyama Trading (Shanghai) Co., Ltd.2106, Shui On Plaza,333 Huai Hai Zhong Road,Shanghai, China 200021Tel: +86-21-5306-4804Fax: +86-21-5382-2894
Tokuyama Korea Co., Ltd.#415 Korea Air City Terminal Bldg.159-6, Samseong-DongGangnam-Gu, Seoul, KoreaTel: +82-2-517-3851Fax: +82-2-517-3856
Tokuyama Corporation
34
Major Subsidiaries and AffiliatesAs of March 31, 2008
Capital OwnershipCompany (millions of yen, local currency in thousands) (%) Scope
Chemicals• Shin Dai-ichi Vinyl Corporation 2,000 71 Production and sale of polyvinyl chloride• Sun Arrow Chemical Co., Ltd. 98 100 Production and sale of polyvinyl chloride compounds• Sun•Tox Co., Ltd. 1,600 100 Production and sale of plastic films• Tomitec Co., Ltd. 100 60 Production of plastic molding and moisture absorbing
agents, as well as components for gas sensors andoffice equipment
• Tokuyama Siltech Co., Ltd. 200 100 Production and sale of layered silicate• Shanghai Tokuyama Plastics Co., Ltd. RMB51,555 100 Production and sale of microporous film* Nishinihon Resicoat Co., Ltd. 50 50 Manufacture of metal parts and anti-rust surface coating
materials* Tokuyama Polypropylene Co., Ltd. 500 50 Production and sale of polypropylene(Category also 1 equity method affiliate and 4 affiliates)
Specialty Products• Tokuyama Dental Corporation 100 100 Production and sale of dental and medical materials• A&T Corporation 577.6 40.21 Production and sale of diagnostic reagents, analyzers
and systems• Figaro Engineering Inc. 99 100 Production and sale of sensor devices• Tokuyama Siam Silica Co., Ltd. Baht389,268 52 Production and sale of precipitated silica• Taiwan Tokuyama Corporation NT$200,000 100 Production and sale of solvent for semiconductor base
materials• Tokuyama Electronic Chemicals Co., Ltd. S$11,000 100 Production of solvent for semiconductor base materials• ASTOM Corporation 450 55 Production and sale of ion-exchange membranes• Eurodia Industrie S.A. EUR650 99.99 Sale of ion-exchange membranes and maintenance and
leasing of related equipment• Tokuyama Asia Pacific Pte.Ltd. S$800 100 Sale of Tokuyama’s products• Figaro USA, Inc. US$200 100 Sale of sensor devices• Tianjin Figaro Electronic Co., Ltd. RMB23,671 55.7 Production and sale of sensor devices**Tokuyama Korea Co., Ltd. Won500,000 100 Sale of Tokuyama’s products* Hantok Chemicals Co., Ltd. Won4,500,000 50 Production of developers for photolithography(Category also includes another 9 consolidated subsidiaries, 4 equity method affiliates and 3 affiliates)
Cement, Building Materials and Others• Tokuyama Ready Mixed Concrete Co., Ltd. 100 100 Production and sale of ready-mixed concrete• Seibu Tokuyama Ready Mixed Concrete Co., Ltd. 100 100 Production and sale of ready-mixed concrete• Kawasaki Tokuyama Ready Mixed Concrete Co., Ltd. 40 100 Production and sale of ready-mixed concrete• Tokuyama Tsusho Trading Co., Ltd. 95 100 Sale of cement and building materials• Tokusho Co., Ltd. 40 100 Sale of cement and steel frame materials• Shanon Co., Ltd. 495 100 Production, processing and sale of building materials,
including plastic window sashes and doors • Tohoku Shanon Co., Ltd. 300 72 Production of plastic window sashes• Hachimaru Sangyo Corporation 10 100 Production of plastic window sashes• Tokuyama Mtech Corporation 50 100 Processing and sale of building materials• Tokuyama Logistics Corporation 100 100 Transportation and warehousing• Shunan System Sangyo Co., Ltd. 151 100 Real estate, civil engineering, construction• Chugoku Ready Mixed Concrete Co., Ltd. 80 52.36 Production and sale of ready-mixed concrete* Sanyo Tokuyama Ready Mixed Concrete Co., Ltd. 50 50 Production and sale of ready-mixed concrete(Category also includes another 9 consolidated subsidiaries, 4 equity method affiliates and 20 affiliates)
• Consolidated subsidiary * Affiliate accounted for by the equity method ** Unconsolidated subsidiary
Tokuyama Corporation
35
Overseas
Main Products
Chemicals
Caustic soda
Soda ash
Calcium chloride
Sodium silicate
Vinyl chloride monomer
Polyvinyl chloride
Propylene oxide
Isopropyl alcohol
Methylene chloride
Biaxial-oriented polypropylene film
Multilayer co-extrusion films
Cast polypropylene films
Microporous film
Specialty Products
Polycrystalline silicon
Amorphous precipitated silica
Fumed silica
Aluminum nitride
Dental materials
Pharmaceutical bulks and intermediates
Plastic lens materials
Ion-exchange membranes
Methylene chloride for washing metal
Solvent for semiconductor base materials
Medical diagnosis systems
Gas sensitive semiconductor
Cement, Building Materials and Others
Ordinary Portland cement
High early strength Portland cement
Blast furnace slag cement
Ready-mixed concrete
Plastic window sashes
Cement type stabilizer
Capital OwnershipCompany (thousands) (%) Scope
Tokuyama America Inc. US$300 100 Sale of Tokuyama’s products
Tokuyama Europe GmbH EUR255 100 Sale of Tokuyama’s products
Tokuyama Asia Pacific Pte. Ltd. S$800 100 Sale of Tokuyama’s products
Taiwan Tokuyama Corporation NT$200,000 100 Production and sale of solvent for semiconductor base
materials
Tokuyama Electronic Chemicals Pte. Ltd. S$11,000 100 Production of solvent for semiconductor base materials
Tokuyama Siam Silica Co., Ltd. Baht389,268 52 Production and sale of precipitated silica
Eurodia Industrie S.A. EUR650 99.99 Sale of ion-exchange membranes and maintenance
and leasing of related equipment
Figaro USA, Inc. US$200 100 Sale of sensor devices
Tokuyama Dental Italy S.r.l. EUR99 51 Production and sale of dental and medical materials
Hantok Chemicals Co., Ltd. Won4,500,000 50 Production of developers for photolithography
Southern Cross Cement Corporation PP342,000 50 Sale of cement
Tianjin Figaro Electronic Co., Ltd. RMB23,671 55.7 Production and sale of sensor devices
Shanghai Tokuyama Plastics Co., Ltd. RMB51,555 100 Production and sale of microporous film
Tokuyama Chemicals (Zhejiang) Co., Ltd. RMB177,500 100 Production and sale of fumed silica
Tokuyama Korea Co., Ltd. Won500,000 100 Sale of Tokuyama’s products
Tokuyama Corporation
36
Corporate DataAs of March 31, 2008
Established:February 16, 1918
Capital:¥29,976 million
Employees (consolidated):5,057
Shares Authorized:700,000,000
Shares Issued:275,671,876
Shareholders:26,194
Board of DirectorsAs of June 26, 2008
President
Shigeaki Nakahara
Executive Managing Director
Yoshikazu MizunoAssistant to the President
Supervision of the Corporate Administration Div.
The Auditing Dept., the Secretarial Dept., all branches
and all subsidiaries and affiliates
Managing Directors
Masao KusunokiGeneral Manager of the Cement Business Div.
Etsuro MatsuiGeneral Manager of the Corporate Social Responsibility
Div., the ERP Promotion Div. and the Planning Dept.,
Corporate Social Responsibility Div.
Shouji IidaGeneral Manager of the General & Personnel Affairs Div.
Nobuyuki KuramotoGeneral Manager of the Research & Development Div.
Seiichi ShiragaGeneral Manager of Tokuyama Factory
Supervision of the Manufacturing Technology Div.
Hiroo MomoseGeneral Manager of the Si Business Div. and the GSE
Project Dept.
Directors
Tatsuo SegawaGeneral Manager of the Corporate Administration Div.
and the Management Support Center
Koji YasumotoGeneral Manager of the Personnel Dept.
Kazuhisa KogoGeneral Manager of the Advanced Materials Business
Div., Supervision of Kashima Factory
Yukio MuranagaDeputy General Manager of the Si Business Div.
General Manager of the Polysilicon Sales Dept.
and the SPS project Dept., the Si Business Div.
Shigeki YuasaGeneral Manager of the Corporate Planning Div.
and the Strategic Planning Dept.
Toshiaki TsuchiyaGeneral Manager of the Chemicals Business Div.
Standing Auditor
Kiyoshi Saigou
Auditor
Isao Aso
External Auditors
Ryuji HoriAkio Fujiwara
Major Shareholders:Number of Shares Percentage of Held (Thousands) Total Shares
State Street Trust and Banking Co., Ltd. 19,259 6.99
Nippon Life Insurance Company 17,518 6.35
The Master Trust Bank of Japan, Ltd. 13,409 4.86
The Chase Manhattan Bank 13,057 4.74
The Tokio Marine & Nichido Fire Insurance Co., Ltd. 9,202 3.34
The Yamaguchi Bank, Ltd. 8,246 2.99
Meiji Yasuda Life Insurance Company 8,082 2.93
The Bank of Tokyo-Mitsubishi UFJ, Ltd. 7,884 2.86
Mistubishi UFJ Trust and Banking Corporation 7,748 2.81
The Northern Trust Company AVFC 7,265 2.64
Composition of Shareholders:Number of Shares Percentage of Held (Thousands) Total Shares
Financial Institutions 104,122 37.8
Non-Japanese Corporations/Foreign Residents 80,058 29.0
Individuals/Other 51,176 18.5
Other Domestic Corporations 35,183 12.8
Securities Companies 5,132 1.9
Shibuya Konno Bldg.
3-1, Shibuya 3-chome, Shibuya-ku, Tokyo 150-8383, Japan
Corporate Communications & Investor Relations DepartmentTEL: +81-3-3499-8023 FAX: +81-3-5469-3374
URL: http://www.tokuyama.co.jp
Tokuyama Corp.
DJ08070700Printed in Japan