Annual Report 1999 - tokuyama.co.jp · Annual Report 1999 35Annual Report 1999 3 ... cathodic electrodeposition Electrodialyzer ... China and the Philippines as strongholds from …

TOKUYAMA CORPORATIONANNUAL REPORT 1999

Printed in Japan

Shibuya Konno Bldg., 3-1, Shibuya 3-chome, Shibuya-ku, Tokyo 150-8383, JapanCorporate Communications DepartmentTEL 03-3499-8023 FAX 03-5469-3374International DepartmentTEL 03-3499-8937 FAX 03-3499-8967URL http://www.tokuyama.co.jp/

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Chemical Business Division

Soda ashSodium silicate culletSodium silicateSodium bicarbonateCalcium chloride (liquid, granular,

flake)Caustic soda (liquid, flake)Liquid chlorineHydrochloric acidSodium hypochloriteMethyl chlorideMethylene chlorideChloroformPropylene oxideEthylene dichlorideIsopropyl alcohol

Moisture absorbent(household-use, industrial-use)

Dew absorbent tapeDew collectorWater purifierNon-fragrant deodorizer

Cement Business Division

Ordinary Portland cementHigh early strength Portland cementBlast furnace slag cementFly ash cementLow heat cementReady-mixed concreteCement type stabilizerChemical groutAntiwashout admixture

Shanon and Building MaterialsDivision

Plastic windowsAdiabatic sliding doorCeiling hatch for insulation and

airtight applicationsPremixed mortar for plasteringCement mortar for self-levelingPremixed mortar for tilesArtesian water treatment formSoundproof wallingMoisture-proof windbreak sheetingArtificial reef

Tokuyama Corporation has always been a pioneer.

Katsujiro Iwai started the company in 1918 because of his firm

belief that Japan should have a domestic soda ash

production capability. Guided by this spirit of innovation,

the company steadily expanded the scope of its operations to

encompass the production of cement, chlor-alkali, plastics and

organic solvents. Tokuyama has also branched out into

sophisticated, high-potential fields such as electronics,

biomedical materials, advanced ceramics and specialty chemicals,

all of which call for the development of business from

a global perspective.

In April 1999, Tokuyama launched a new three-year

management program with the aim of achieving growth in the 21st

century as a company that can make dreams come true through

chemistry. A key focus of the plan is expanding the highly profitable

specialty products sector.

The environment is another focus. Long before environmental

conservation became fashionable, Tokuyama was actively implementing

an environmentally conscious management policy. Today, Tokuyama

continues to take the lead in many areas. Recently, for example,

Tokuyama has been using waste plastic as fuel in cement production.

And the company is also operating a trial plant for the recycling of PVC

using proprietary technology.

In all its endeavors, Tokuyama is intent on making an even bigger

contribution to the well-being of society.

Annual Report 1999 3Annual Report 1999 35

Productsat a Glance

Plastics Business Division

PolypropyleneHighly functional polypropylene

(sliding type)Granular polypropyleneCompound polypropyleneWood flour filled type polypropyleneFlame-retardant polypropyleneHighly functional master batchThermoplastic olefin elastomer

Biaxial-oriented polypropylene filmMicroporous film

Polyvinyl chlorideVinyl chloride monomer

Specialty Chemicals Business Division

Precipitated silicaFinely regulated silicaFumed silicaFused spherical silicaBasic magnesium carbonateCalcium silicate

Photochromic dye materialsScratch-resistant hard coatingWater-repellent coating solution

for plastic lensesChloranilChlorosulfonic acidBenzenesulfonyl chlorideBulk drug substanceThenylchlor

Ion exchange membranesBipolar membranesSeamless tubular membranes for

cathodic electrodepositionElectrodialyzerDiffusion dialyzer

Methylene chloride for electronicsindustry use

Isopropyl alcohol for electronicsindustry use

Sulfuric acid for electronics industryuse

Developer for positype photoresistsIPA vapor drying systemIPA resistivity meter

IPA gas monitorSolvent for metal cleaning (semi-

aqueous)High-purity perfluorinated inert liquidAutomatic chemical supply system

Electronic Materials Business Division

Polycrystalline siliconBoronTrichlorosilaneTetrachlorosilane

High purity aluminum nitride powderTranslucent aluminum nitride

ceramicsMachinable aluminum nitride

ceramics

Gas sensitive semiconductors

Medical Business Division

Composite resinsLight cured dental adhesive and

primerAlginate impression materialsDental stoneDental investmentsGlass ionomer cementDual cured adhesive resin cementDenture relining materialsQuick self curing resinImpression material for fitness test

Materials for reagentReagent for micro-titer testReagent for latex enhanced

immunoturbidimetry assayFully automated electrolyte assay

systemFully automated glucose assay systemBlood coagulation assay systemMultiple chemistry unitReagent for biochemistry assayLaboratory automation systemLaboratory information system

Annual Report 1999 1

Thousands ofMillions of yen U.S. dollars

1999 1998 1999

Net sales ¥177,059 ¥193,630 $1,463,297Operating income 12,963 13,436 107,134Net income 1,213 3,299 10,028Total assets 269,885 272,447 2,230,452

Yen U.S. dollars

Per share:Net income ¥4.76 ¥12.94 $0.039Cash dividends 6.00 7.50 0.050

Note: U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥121=US$1.

Non-ConsolidatedFinancial HighlightsTokuyama CorporationYears ended March 31, 1999 and 1998

CONTENTS

02 >>> To Our Shareholders

04 >>> Review of Operations

08 >>> Responsible Care

09 >>> Research and Development

10 >>> Topics

11 >>> Financial Section

32 >>> Major Subsidiaries and Affiliates

33 >>> Directory

34 >>> Corporate Data/Board of Directors and Responsibilities

35 >>> Products at a Glance


02 Tokuyama Corporation

Kaoru Tsuji, Chairman (right) and

Yuichi Miura, President

Fiscal 1998, the year ended March 31, 1999, posed many

challenges for Tokuyama Corporation. A slowdown in the

world economy and prolonged economic downturn in Ja-

pan characterized the difficulties faced.

As a result, net sales declined by 8.6 percent to

¥177.1 billion (US$1,463 million). Operating income and

net income also fell, down 3.5 percent and 63.2 percent,

respectively, to ¥13.0 billion (US$107 million) and ¥1.2

billion (US$10 million). The sharp drop in net income was

partly attributable to an extraordinary loss of ¥3.9 billion

(US$32 million) related to the liquidation of affiliated companies.

REFLECTING ON THE ACHIEVEMENTS OF “SELF-RENOVATION FOR FURTHER GROWTH”

Fiscal 1998 was the final year of our previous three-year management program called “Self-Renova-

tion for Further Growth,” which started in April 1996. Under that program, we reviewed our business

portfolio with reference to the profitability and efficiency of each business group and focused our ef-

forts on businesses that would lay the foundation for growth in the 21st century. After that review, we

set sales and ordinary profit goals of ¥200 billion and ¥12 billion, respectively. Another goal was to

generate 45 percent of our net sales from specialty products. When setting these targets, we adopted a

conservative approach that took into consideration the unfavorable conditions in the chemical industry

at that time. Unfortunately, the scale of deterioration in our business environment went far beyond our

expectations due to economic crises in Asia as well as domestic financial instability halfway through

the program. Our sales and earnings fell back to fiscal 1995 levels as a result. During the three-year pe-

riod, we raised annual capital expenditures above past levels for three main reasons. First was to ex-

pand new lines of business in specialty chemicals and electronics. Second was to reinforce our

corporate infrastructure, including a self-sufficient power generating capability, as well as our core

businesses such as chlor-alkali. Third was to develop businesses in Singapore, Taiwan, China and the

Philippines as strongholds from a long-term perspective.

To OurShareholders

To Our

Shareholders

NEW THREE-YEAR MANAGEMENT PLAN

With much still to achieve, we set in motion in April a new three-year management program. Called

“Structural Reform for New Growth in the 21st Century,” this program, which places emphasis on con-

solidated results, encompasses all Tokuyama Group companies. The core themes of the new program

are “Reform of Business Structure,” “Improvement of Financial Position” and “Business Process

Reengineering” for further rationalization of operations and the more effective deployment of assets.

GROUP MANAGEMENT AND ENVIRONMENT-FRIENDLY MANAGEMENT

Our new program requires that we optimize the allocation of management resources to and among

business groups for the best business performance. It also requires that we take responsibility for and

consider the environmental impact of our business operations to achieve sustainable growth and es-

tablish ourselves as a valued member of the regional communities in which we operate.

To accomplish these objectives, we will define the roles and missions assigned to business

groups, establish more practicable systems for human resources development and retool the group in-

formation infrastructure to create an integrated system throughout the group so that group members

can analyze and respond in a timely fashion to social and economic shifts.

PROSPECTS IN THE 21ST CENTURY

In the current fiscal year, Japan’s Gross National Product (GNP) is expected to record its third

consecutive year of negative growth. But the outlook is not all bad. We are beginning to see faint signs

of an economic recovery in Japan and elsewhere in Asia. Given these promising indications, I believe

that if we can successfully implement the principles of our new reform program, we can enter a new

phase of growth for the Tokuyama Group in the 21st century.

The 21st century has been predicted to be an era of chemistry. But this will only be the case if

continued efforts are made to innovate. Information and communications and environmental

technologies are just some of the areas taking on greater importance, as is the development of related

technologies, materials and systems. With this notion in mind, we are reforming our business structure,

placing emphasis on expanding our specialty products business with priority on information, environ-

ments, housing and health care. By refocusing our efforts, we aim to become a highly profitable corpo-

ration with a significant presence in the Asia-Pacific region supported by a network of regional bases.

July 1999

Yuichi MiuraPresident Annual Report 1999 03


CHEMICALS

Results in this sector were affected by the sluggish Japanese economy,

which caused a slowdown in production. Chemicals sales decreased 5.6

percent to ¥57.4 billion (US$474 million), representing 32.4 percent of

total net sales.

In the inorganic chemicals business group, which includes caustic

soda, soda ash and chlorine-derivatives, both sales volumes and prices

dropped slightly, reflecting the weakness in the Japanese economy.

Tokuyama, however, was able to restrict the impact on its results by working

to preserve market share and maintain prices. The organic chemicals

business group was not as resilient. Sharp drops in sales volume and prices

due to sluggish automobile and semiconductors markets, major users of

Review of Operations Review of Operations Review of Operations Review of Operations Review of O

During the year under review, Tokuyama increased capacity at

its electrolytic chlor-alkali plant.

plastics, paints, solvents and cleaning agents, hurt results.

In the previous fiscal year, Tokuyama consummated a

business alliance with Asahi Glass Co., Ltd. to streamline

production and logistics activities for chlor-alkali operations.

As a second step in this improvement process, and in accor-

dance with the new structural reform program, the follow-

ing actions have been taken:

1. On March 31, 1999, wholly owned subsidiary, MTT Ltd.,which produced and sold epichlorohydrin, was liquidated.

2. On April 1, 1999, Sun Arrow Chemical Co., Ltd., a whollyowned subsidiary engaging in production and sales ofvinyl chloride monomer (VCM), was absorbed byTokuyama.

Chemicals Net Sales

(¥ billion)

95 96 97 98 99

51.9 56.4 59.0 60.8 57.4

Chemicals Share of Net Sales

(%)

32.4


CEMENT &

BUILDING MATERIALS

Operations Review of Operations Review of Operations Review of Operations Review of Operations

Tokuyama’s low-viscosity, low-heat cement was used in the

Kurushima Strait Bridge.(Photograph courtesy of the Honshu-Shikoku Bridge Authority)

Sluggish private-sector capital expenditures in industry and for housing

dragged down sales in this sector; net sales dropped 14.0 percent to ¥44.8

billion (US$370 million), accounting for 25.3 percent of total net sales.

The unfavorable economic conditions in Japan caused a significant

gap between supply and demand in the domestic cement market, pressur-

ing sales prices. Similar difficulties were encountered in East Asia due to

the commencement of operations at new cement plants, construction of

which began before the outbreak of economic crises in that region. This

presented a barrier for Japanese cement producers who had traditionally

exported there.In building materials, represented mainly by the heat-

insulation plastic window sashes, sagging private-sector

spending for housing impacted sales.

During the year under review, Tokuyama brought to

market “IBUKI,” a wallboard for use in house interiors.

Made of chemical-free natural materials, IBUKI has won

solid market acceptance. Marketing prior to the launch of

this product that started in October 1998 helped to spur

demand.

Cement & Building Materials Net Sales

(¥ billion)

95 96 97 98 99

59.2 55.6 58.5 52.1 44.8

Cement & Building Materials

Share of Net Sales(%)

25.3


P L A S T I C S

The plastics sector consists of two business lines: polypropylene resin and

plastic film. Plastics sales declined 7.8 percent to ¥29.0 billion (US$240

million), representing 16.4 percent of total net sales.

Dull demand for common grade plastic resins held down both sales

volume and prices in Japan and ASEAN markets alike during the year

under review. In this climate, efforts were made to increase exports to

China, where demand for plastic resins is on the rise.

Biaxially oriented polypropylene (OPP) film

In plastic film, represented by biaxially oriented

polypropylene (OPP) film, sales volume increased thanks to

an aggressive sales campaign in spite of waning plastic

resin demand in line with lower household spending. On

the other hand, sales prices were eroded throughout the

year by fierce marketplace competition.

In October 1998, Tianjin Sunshine Plastics Co., Ltd., a

subsidiary in Tianjin, China, commenced commercial

production of OPP film. China is the world’s largest emerging

market for OPP film and was selected as the site for this

sector’s first overseas production facility for that reason.

Review of Operations Review of Operations Review of Operations Review of Operations Review of O

Plastics Net Sales

(¥ billion)

95 96 97 98 99

23.3 24.9 28.7 31.4 29.0

Plastics Share of Net Sales

(%)

16.4


SPECIALTY PRODUCTS

CLINILAN NT, a new laboratory information system that

facilitates total laboratory management

The specialty products sector reported sales of ¥45.8 billion (US$379

million), down 6.9 percent from the previous fiscal year, and accounted for

25.9 percent of total net sales.

This sector handles a broad range of products from polycrystalline

silicon, aluminum nitride and its sintered plates (SHAPALTM) to dental

materials, medical diagnostic systems and plastic lens materials. All products

have been commercialized in the last 15 years and are based on or origi-

nated from in-house research and development activities.

The decline in sales in the year under review is

mainly attributable to a sluggish market for semiconductor

materials, particularly polycrystalline silicon. Although the

semiconductor materials sector stands on the threshold of a

recovery, more time will be required for customers to

reduce their inventories.

Aluminum nitride and its sintered plate posted strong

sales. Excellent physical properties make this product a

perfect substitute for conventional materials in such fields as

semiconductor manufacturing equipment and fiber-optic

communications.

The medical and health care business suffered the

effects of cutbacks in the national medical insurance system,

which are designed to restore financial stability. However,

sales of laboratory information systems for clinical laborato-

ries were largely the same as a year earlier.

In other businesses, microporous polypropylene sheet

and pharmaceutical and agricultural chemical intermediates

exceeded expectations as a result of an action plan for sales

implemented under the adverse circumstances previously

mentioned.

Operations Review of Operations Review of Operations Review of Operations Review of Operations

Specialty ProductsNet Sales

(¥ billion)

95 96 97 98 99

33.6 34.6 40.2 49.2 45.8

Specialty ProductsShare of Net Sales

(%)

25.9


Environmental Management Promotion Committee Established

Tokuyama places top priority on environmental issues. Reflecting

this, Tokuyama established the Environmental Management

Promotion Committee in April 1998. Positioned directly under the

RC Steering Committee—the company’s highest decision-making

body for Responsible Care activities—the newly formed committee

deals with environmental issues as an integral element of corporate

strategies. Through leadership from top management, this committee

provides resolute solutions to those issues.

Introduction of Global Standards

As borders become less significant in business, the company’s

operations as well as its products will be judged and valued by global standards. Tokuyama believes it

is imperative for the company to meet global standards concerning the environment and product quality.

Investment in Environmental Protection

New global problems such as depletion of the ozone layer and global warming have come under public

scrutiny. Tokuyama has invested in environmental protection for many years. In fiscal 1998, Tokuyama

invested approximately ¥4.4 billion (US$36 million) in sophisticated pollution control facilities, bring-

ing Tokuyama’s aggregate expenditures for environmental facilities from fiscal 1990 to ¥15.1 billion

(US$125 million) as of the end of fiscal 1998.

Acquisition of ISO 14001 Certification for Environmental

Management System

To continually reduce the environmental impact of the company’s

business operations, Tokuyama established an environmental man-

agement system and implemented it at the Tokuyama and Kashima

factories. As a result of the company’s intensive efforts, these factories

obtained ISO 14001 certification in December 1998 and January 1999,

respectively. Tokuyama will continue to review and improve this system.

Acquisition of ISO 9000 Certification for Quality and Safety

Assurance

Product quality is another focus. Tokuyama’s efforts in this regard have

already resulted in ISO 9000 series certification for cement products,

isopropyl alcohol, high-purity solvents for the electronics industry,

dental materials, aluminum nitride and precipitated silica. Progress is

being made to obtain the same certification for other products, too.

ResponsibleCare

Tokuyama’s new power generation plant atthe Higashi Factory of its main productioncomplex in the city of Tokuyama.

Cumulative Investmentsin Environmental

Facilities(¥ billion)

90 91 92 93 94 95 97 9896

0.91.5

4.14.7

5.3

7.0

8.6

10.7

15.1


In fiscal 1998, Tokuyama concentrated its 400 researchers and annual

budget of ¥7.8 billion (US$64 million) on three main R&D themes: “Cre-

ation of New Products,” “Enhanced Utilization of Existing Technolo-

gies” and “Strengthening Infrastructures to Cope With New-Generation

Technologies.” These R&D activities were consistent with Tokuyama’s

corporate strategy, which targets reinforcement of existing core busi-

nesses as well as expansion of the scale and improved profitability of

new specialty products businesses.

In accordance with the new three-year management program

inaugurated in April 1999, the R&D group is to be reorganized to support

and promote development of new specialty products.

In May 1999, construction of the second research wing at the Tsukuba

Research Laboratory was completed. The new wing accommodates groups

researching advanced, next-generation material assessment technology, a

field that encompasses ultra-micro analysis and structural analysis of electronic

materials and where the level of purity demanded is increasing dramatically.

On the occasion of the completion of the new wing, the company undertook to reform the R&D

organization to ensure optimal allocation of research assignments and management resources between

the Tokuyama Research Laboratory and the Tsukuba Research Laboratory. The ultimate aim: to accelerate

R&D activities with higher productivity and efficiency.

The major R&D activities carried out during the year under review were as follows.

In the electronics-related field, strenuous efforts were made to develop improved production

processes for polycrystalline silicon. The aim was to upgrade the characteristics of encapsulation

compound filler to meet the strict quality demands of the semiconductor industry. With regard to

aluminum nitride, the company placed emphasis on improving physical strength and thermal conductivity

to increase the appeal of this product.

In specialty chemicals, research focused on improving the characteristics and functions of photo-

chromic lens materials with a medium refractive index to meet market requirements. In addition, R&D

carried out here made significant contributions to business in

fields such as medical science, resins, processing and

construction materials.

Research andDevelopment

Inside a Tokuyama laboratory

Construction of the second research wing at theTsukuba Research Laboratory was completed inMay 1999.


Tokuyama Absorbs Sun Arrow Chemical

As previously mentioned on page 4, wholly owned subsidiary Sun

Arrow Chemical was absorbed by Tokuyama on April 1, 1999 with

the aim of further rationalizing vinyl chloride operations.

Formerly, Tokuyama’s polyvinyl chloride (PVC) business was

conducted by three companies: Tokuyama, which produced chlor-

alkali and ethylene dichloride (EDC), Sun Arrow Chemical, which

produced vinyl chloride monomer (VCM) and affiliate Shin Dai-

ichi Vinyl Corporation, which produced PVC. As a result of this

consolidation, Tokuyama has integrated operations from chlor-

alkali to VCM in one organization.

New Soft Relining Material for Dentures

In September 1998, Tokuyama launched a new type of soft relining

material for acrylic dentures. Called “SOFRELINER,” the material

is an improvement on “TOKUYAMA SOFT RELINING,” its

forerunner, which debuted three years ago. “SOFRELINER” achieves

a level of softness close to that of submucosal tissue. Dentists and

patients have been quick to laud the product’s excellent durability

and lasting comfort when chewing. Keying off this success,

Tokuyama has launched “SOFRELINER” in U.S. and European

markets, where the company is hoping for a similar response.

High-Grade Interior Wallboard “IBUKI” on the Market

Tokuyama launched a new interior wallboard under the brand

name of “IBUKI,” which means ‘breath’ in English. This wallboard,

made by plastering mortar on gypsum board, can be installed as is

at home building sites. That means no need for specialist plastering

skills and no need to wait for plaster to dry. As such, it is ideal for

modern construction work. Furthermore, the wallboard is also

distinguished by the nature of the mortar used—the wallboard

absorbs or releases moisture in accordance with the ambient

humidity. What’s more, “IBUKI” is made of 100% natural substances.

This is a desirable quality for homeowners and residents in light

of the assertion that some home building materials are to blame

for the release of hazardous chemical substances.

This vinyl chloride monomer plant has anannual production capacity of 300,000 tons.

Topics

Tokuyama’s new “IBUKI” interior wallboardis a distinctive product that is well suitedfor today’s industrialized homebuildingsystems.

“SOFRELINER,” a new type of soft reliningmaterial for acrylic dentures, achievessoftness close to that of submucosal tissue.


12 >>> Financial Review

14 >>> Non-Consolidated Balance Sheets

16 >>> Non-Consolidated Statements of Income

17 >>> Non-Consolidated Statements of Shareholders’ Equity

18 >>> Non-Consolidated Statements of Cash Flows

19 >>> Notes to Non-Consolidated Financial Statements

25 >>> Report of Independent Certified Public Accountants on the

Non-Consolidated Financial Statements

26 >>> Consolidated Balance Sheets

28 >>> Consolidated Statements of Income and Retained Earnings

29 >>> Notes to Consolidated Financial Statements

30 >>> Report of Independent Certified Public Accountants on the

Consolidated Financial Statements

31 >>> Consolidated Six-Year Summary

FinancialSection


Income Analysis

Net sales in fiscal 1998, the year ended March 31, 1999, decreased 8.6 percent to ¥177,059

million (US$1,463 million) as sales fell in all sectors of the company’s operations due to

protracted weak demand. Cost of sales decreased 9.7 percent. Nevertheless, gross profit

declined 6.2 percent to ¥60,485 million (US$500 million) due to the lower sales. Selling,

general and administrative expenses declined 9.2 percent to ¥47,522 million (US$393 million)

thanks to efforts to streamline logistics and pare costs. However, operating income

decreased 3.5 percent to ¥12,963 million (US$107 million). The ratio of operating income

to net sales was 7.3 percent, compared with 6.9 percent one year earlier. Other expenses

increased over 100 percent from ¥3,707 million in fiscal 1997 to ¥8,306 million (US$69

million) in fiscal 1998 mainly on account of an extraordinary loss of ¥3,868 million (US$32

million) related to the liquidation of affiliated companies. Income before income taxes was

down 52.1 percent to ¥4,657 million (US$38 million) as a result. Income taxes were ¥3,444

million (US$28 million), a year-on-year decrease of 46.4 percent. The result of the foregoing

changes was a 63.2 percent decrease in net income to ¥1,213 million (US$10 million).

Cash Flows

Net cash provided by operating activities decreased 29.8 percent from ¥21,046 million to

¥14,780 million (US$122 million). The main reason was that a decrease in receivables was

outweighed by decreases in payables, income taxes payable and other-net.

Net cash used in investing activities was ¥25,276 million (US$209 million), 28.5 percent

lower than the ¥35,367 million in the previous fiscal year, primarily due to a large decrease

in capital expenditures.

Net cash provided by financing activities decreased 56.3 percent from ¥12,248 million

to ¥5,352 million (US$44 million). This was chiefly the result of a substantial decrease in

proceeds from the issue of bonds.

Net cash provided by operating activities and financing activities was thus less than

net cash used in investing activities. Cash and cash equivalents decreased by ¥5,144 million

to ¥20,537 million (US$170 million) as a result.

FinancialReview


Financial Position

Total assets at March 31, 1999 amounted to ¥269,885 million (US$2,230 million), a 0.9 percent

decrease from a year earlier. Current assets decreased 10.2 percent to ¥104,651 million

(US$865 million) and current liabilities dropped 15.0 percent to ¥75,912 million (US$627

million). The current ratio improved from 1.31 times to 1.38 times. Investments and other

assets decreased 1.6 percent to ¥37,640 million (US$311 million). Net property, plant and

equipment was up 8.4 percent to ¥127,594 million (US$1,054 million). The main reasons

were a continuation of extensions to Tokuyama’s own power plant, expansion of polycrystalline

silicon production and expansion and streamlining of production facilities for chemicals as

well as construction of the second research wing at the Tsukuba Research Laboratory. Total

liabilities at the end of the year were ¥176,720 million (US$1,460 million), a 1.1 percent decline

over the previous fiscal year end. The main reasons for this decline were decreases in trade

accounts payable because of the lower sales and in income taxes payable because of the

decrease in net income. Shareholders’ equity decreased 0.7 percent to ¥93,165 million

(US$770 million) due to cash dividends paid exceeding net income. The equity ratio was

largely unchanged at 34.5 percent, compared with 34.4 percent a year earlier.

Net Sales(¥ million)

95 96 97 98 99

168,093

171,696

186,334

193,630

177,059

Operating Income(¥ million)

95 96 97 98 99

8,974

11,135

13,323

13,436

12,963

Operating Income Ratio(%)

95 96 97 98 99

5.3

6.57.1 6.9

7.3

Current Ratio(times)

95 96 97 98 99

1.2 1.3 1.4 1.3 1.4


Thousands ofMillions of yen U.S. dollars (Note 2)

ASSETS 1999 1998 1999

Current assets:Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 20,537 ¥ 25,681 $ 169,725Marketable securities (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . 3,058 2,854 25,273Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,838 8,721 64,778Notes and accounts receivable:

Subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,383 12,684 102,343Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,752 47,388 353,321Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . (3,976) (2,461) (32,859)

51,159 57,611 422,805Inventories (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,601 17,781 137,196Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,458 3,874 45,108

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,651 116,522 864,885

Investments and other assets:Investments in securities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . 14,895 14,941 123,098Investments in and advances to subsidiaries and affiliates . . . 15,690 18,449 129,665

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,055 4,849 58,310

37,640 38,239 311,073

Property, plant and equipment (Note 7):Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,288 17,903 159,402Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,199 59,840 514,041Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,813 282,934 2,428,207Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,145 20,561 240,867

404,445 381,238 3,342,517Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (276,851) (263,552) (2,288,023)

127,594 117,686 1,054,494

¥ 269,885 ¥ 272,447 $ 2,230,452

See notes to non-consolidated financial statements.

Non-ConsolidatedBalance Sheets

Tokuyama CorporationMarch 31, 1999 and 1998



LIABILITIES AND SHAREHOLDERS’ EQUITY 1999 1998 1999

Current liabilities:Short-term bank loans (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 22,435 ¥ 23,035 $ 185,413Current portion of long-term debt (Note 7) . . . . . . . . . . . . . . . . 4,621 7,852 38,187Accounts payable:

Subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,868 6,018 48,494Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,572 32,481 219,600Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,566 2,690 21,207

35,006 41,189 289,301Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,843 7,978 64,820Income taxes payable (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . 114 3,099 945Other current liabilities (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . 5,893 6,133 48,707

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,912 89,286 627,373

Long-term liabilities:Long-term debt, less current portion (Note 7) . . . . . . . . . . . . . . 90,882 79,915 751,094Accrued retirement and severance benefits (Note 10) . . . . . . . 9,842 9,354 81,339Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 96 690

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,808 89,365 833,123

Contingent liabilities (Note 15)Shareholders’ equity (Note 11):

Common stock, ¥50 par value:Authorized — 700,000,000 shares;Issued and outstanding —254,971,876 shares at March 31, 1999 and 1998 . . . . . . . . . 19,274 19,274 159,288

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,895 22,895 189,215Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,722 3,538 30,762Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,274 48,089 390,691

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . 93,165 93,796 769,956

¥269,885 ¥272,447 $2,230,452



1999 1998 1999

Net sales (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥177,059 ¥193,630 $1,463,297Cost of sales (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,574 129,139 963,423

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,485 64,491 499,874

Selling, general and administrative expenses (Note 13) . . . . . . 47,522 51,055 392,740

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,963 13,436 107,134

Other income (expenses)Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,124 1,128 9,290Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,161) (2,841) (26,124)Other–net (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,269) (1,994) (51,809)

(8,306) (3,707) (68,643)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,657 9,729 38,491Income taxes (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,444 6,430 28,463

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,213 ¥ 3,299 $ 10,028

U.S. dollarsYen (Note 2)

Net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 4.76 ¥ 12.94 $ 0.039Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00 7.50 0.050


Non-ConsolidatedStatements of Income

Tokuyama CorporationYears ended March 31, 1999 and 1998


Millions of yenShares of

common stock Common Additional Legal Retained(thousands) stock paid-in capital reserve earnings

Balance at March 31, 1997 . . . . . . . . . . . . . . . . . . 254,972 ¥19,274 ¥22,895 ¥3,366 ¥46,682Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – 3,299Cash dividends paid (¥7.50 per share) . . . . . . . – – – – (1,658)Bonuses to directors and statutory auditors . . . – – – – (62)Transfer to legal reserve . . . . . . . . . . . . . . . . . . – – – 172 (172)

Balance at March 31, 1998 . . . . . . . . . . . . . . . . . . 254,972 ¥19,274 ¥22,895 ¥3,538 ¥48,089Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – – 1,213Cash dividends paid (¥6.00 per share) . . . . . . . – – – – (1,784)Bonuses to directors and statutory auditors . . . – – – – (60)Transfer to legal reserve . . . . . . . . . . . . . . . . . . – – – 184 (184)

Balance at March 31, 1999 . . . . . . . . . . . . . . . . . . 254,972 ¥19,274 ¥22,895 ¥3,722 ¥47,274

Thousands of U.S. dollars (Note 2)

Common Additional Legal Retainedstock paid-in capital reserve earnings

Balance at March 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . $159,288 $189,215 $29,237 $397,434Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – 10,028Cash dividends paid (¥6.00 per share) . . . . . . . . . . . . . . . – – – (14,750)Bonuses to directors and statutory auditors . . . . . . . . . . . – – – (496)Transfer to legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . – – 1,525 (1,525)

Balance at March 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . $159,288 $189,215 $30,762 $390,691


Non-ConsolidatedStatements of Shareholders’ Equity




1999 1998 1999

Cash flows from operating activities:Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,213 ¥ 3,299 $ 10,028Adjustments to reconcile net income to cash providedby operating activities:Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . 17,347 19,655 143,363Provision for retirement andseverance benefits, less payments . . . . . . . . . . . . . . . . . . 488 241 4,036

Loss on sales and disposal ofproperty, plant and equipment . . . . . . . . . . . . . . . . . . . . . 31 31 256

Write-down of investment securities . . . . . . . . . . . . . . . . . 1,112 684 9,193Payment of directors’ bonuses . . . . . . . . . . . . . . . . . . . . . . (60) (62) (494)Decrease in receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,451 1,572 53,314Decrease (increase) in inventories . . . . . . . . . . . . . . . . . . . 1,181 (2,738) 9,758Decrease (increase) in other current assets . . . . . . . . . . . . (1,584) 1,595 (13,093)Decrease in payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,184) (3,507) (51,105)Increase (decrease) in accrued expenses . . . . . . . . . . . . . . (135) 464 (1,114)Decrease in income taxes payable . . . . . . . . . . . . . . . . . . . (2,985) (626) (24,668)Decrease in other current liabilities . . . . . . . . . . . . . . . . . . (240) (65) (1,982)Other–net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,855) 503 (15,341)

Net cash provided by operating activities . . . . . . . . . . . 14,780 21,046 122,151

Cash flows from investing activities:Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,213) (37,264) (224,899)Proceeds from sales of property, plant and equipment . . . . 131 448 1,082Payment for purchase of investment securities . . . . . . . . . . . (1,632) (1,918) (13,487)Decrease in investments in and advances tosubsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,759 3,438 22,806

Decrease (increase) in marketable securities . . . . . . . . . . . . (204) 673 (1,687)(Increase) decrease in short-term investments . . . . . . . . . . . 883 (744) 7,293

Net cash used in investing activities . . . . . . . . . . . . . . . . (25,276) (35,367) (208,892)

Cash flows from financing activities:Proceeds from issue of bonds . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 15,000 41,322Increase in short-term bank loans . . . . . . . . . . . . . . . . . . . . . (600) – (4,959)Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 10,617 1,036 87,749Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . (7,881) (2,130) (65,135)Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,784) (1,658) (14,750)

Net cash provided by financing activities . . . . . . . . . . . 5,352 12,248 44,227

Net decrease in cash and cash equivalents . . . . . . . . . . . . . . (5,144) (2,073) (42,514)Cash and cash equivalents at beginning of year . . . . . . . . . 25,681 27,754 212,239

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . ¥ 20,537 ¥ 25,681 $ 169,725Additional cash flow information:

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 3,086 ¥ 2,725 $ 25,501Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,197 6,877 51,211


Non-ConsolidatedStatements of Cash Flows



1. Basis of presenting the financial statementsThe accompanying non-consolidated financial statements include only the accounts of Tokuyama

Corporation (the “Company”) and are prepared on the basis of accounting principles and practices generallyaccepted in Japan and from the financial statements filed with the Minister of Finance as required by theSecurities and Exchange Law of Japan.

In preparing the non-consolidated financial statements for purposes of inclusion in these financialstatements, certain items presented in the original financial statements have been reclassified andsummarised for readers outside Japan. In addition, the accompanying footnotes include information which isnot required under accounting principles and practices generally accepted in Japan, but is presented asadditional information in this document.

2. U.S. dollar amountsThe United States dollar amounts included in the accompanying non-consolidated financial statements and

related notes represent the arithmetic results of translating Japanese yen into U.S. dollars at the rate of¥121=US$1, the approximate exchange rate on March 31, 1999. The U.S. dollar amounts are included solely forthe convenience of the reader, and it should not be construed that the assets and liabilities, expressed in U.S.dollar equivalents, can actually be realised in or be extinguished by U.S. dollars at the exchange rate used inthe accompanying translation.

3. Summary of significant accounting policiesForeign Currencies:

Current monetary assets and liabilities in foreign currencies have been translated into Japanese yen at theapplicable current rates. Long-term monetary assets and liabilities denominated in foreign currencies,except for those hedged by forward exchange contracts, have been translated at the historical rates. Theexchange differences arising from such forward exchange contracts are deferred and amortized over theremaining life of those contracts.

Cash Equivalents:The Company considers all highly liquid time deposits with a maturity of three months or less to be

cash equivalents.

Marketable Securities and Investments in Securities:Securities which are listed on stock exchanges except for investment in subsidiaries are valued at the

lower of cost or market, cost being determined by the moving average method. Securities which are notlisted on stock exchanges are valued at cost, cost being determined by the moving average method.

Inventories:Inventories are 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 at the rates based on the estimated useful lives of assets which are prescribed by Japanese incometax law. The range of the estimated useful lives is principally from 3 to 50 years for buildings and structuresand from 2 to 20 years for machinery and equipment.

Provision for additional depreciation is made to reflect the use of machinery and equipment in excess ofthe normal production schedule, which computation is adopted in accordance with Japanese tax regulations.Significant renewals and betterments are capitalised at cost. Maintenance expenses are charged to incomeas incurred. Repair expenses are charged to income.

Research and Development Expenses:Research and development expenses are charged to income as incurred.

Notes to Non-ConsolidatedFinancial Statements

Tokuyama Corporation


Income Taxes:Income taxes are calculated on taxable income and charged to income on an accrual basis. Deferred

income taxes arising from timing differences between financial and tax reporting are not recognised.

Retirement and Severance Benefits:Employees who terminate employment are entitled, under most circumstances, to lump-sum payments

determined by current basic rate of pay, length of service, position in the Company, and conditions underwhich the termination occurs. The minimum payment is an amount based on voluntary retirement.

The Company’s reserve for retirement allowance is equal to 40 percent of the amount which would berequired if all employees voluntarily retired on the balance sheet date.

In addition, the Company has a non-contributory pension plan which will generally provide for a quarterlyallowance payable subsequent to retirement. The plan is to be funded to the extent of 55 percent by thistrusted pension plan to cover employees who terminated employment with over twenty years of service.

Net Income per Share:The computation of net income per share is based on the weighted average number of shares outstanding

during each period.

4. Changes in accounting policiesIn the year ended March 31, 1999, the Company changed from the declining-balance method to the

straight-line method for calculating depreciation on buildings. This change was made to provide a moreaccurate allocation of the cost of buildings. If the former method had been used as in the previous fiscal year,depreciation would have been ¥548 million (US$4,531 thousand) lower and income before income taxes¥548 million (US$4,531 thousand) higher.

5. Marketable securitiesMarketable securities at March 31, 1999 and 1998 were as follows:


1999 1998 1999

Listed common stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 835 ¥ 690 $ 6,902Bonds and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,223 2,164 18,371

¥3,058 ¥2,854 $25,273

6. InventoriesInventories at March 31, 1999 and 1998 were as follows:


1999 1998 1999

Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥10,878 ¥11,071 $ 89,903Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,468 3,118 20,393Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,946 2,286 16,083Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,309 1,306 10,817

¥16,601 ¥17,781 $137,196


7. Short-term bank loans and long-term debtShort-term bank loans at March 31, 1999 are bank loans which are due principally in 365 days and bear

interest at rates ranging from 0.8 percent to 1.119 percent per annum.A summary of long-term debt at March 31, 1999 and 1998 is as follows:


1999 1998 1999

Loans principally from banks and insurance companies, duethrough 2007 with interest ranging from 1.4 percent to 5.6 percent . . . ¥25,603 ¥22,867 $211,595

2.2 percent convertible bonds in yendue September 30, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,900 9,900 81,818

4.25 percent unsecured bonds in yen due August 9, 2001 . . . . . . . . 5,000 5,000 41,3222.75 percent unsecured bonds in yen due June 14, 2002 . . . . . . . . . 10,000 10,000 82,6452.9 percent unsecured bonds in yen due February 15, 2003 . . . . . . . 10,000 10,000 82,6452.75 percent unsecured bonds in yen due July 10, 2001 . . . . . . . . . . 10,000 10,000 82,6452.45 percent unsecured bonds in yen due March 26, 2004 . . . . . . . . 5,000 5,000 41,3222.575 percent unsecured bonds in yen due August 19, 2004 . . . . . . 10,000 10,000 82,6452.90 percent unsecured bonds in yen due January 9, 2008 . . . . . . . . 5,000 5,000 41,3222.6 percent unsecured bonds in yen due April 28, 2005 . . . . . . . . . . 5,000 – 41,322

95,503 87,767 789,281Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,621) (7,852) (38,187)

¥90,882 ¥79,915 $751,094

The aggregate annual maturities of long-term debt at March 31, 1999 are summarised as follows:


Year ending March 312000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 4,621 $ 38,1872001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,952 24,3982002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,671 146,0412003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,746 179,7182004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,652 137,622Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,861 263,315

¥95,503 $789,281

Assets of the Company pledged as collateral for certain loans and other liabilities at March 31, 1999 and1998, are summarised as follows:


1999 1998 1999

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥22,052 ¥24,276 $182,246Investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 18 138

¥22,068 ¥24,294 $182,384

Loans, principally from banks and insurance companies, aggregating ¥6,783 million ($56,058 thousand) atMarch 31, 1999, are secured by an enterprise mortgage amounting to ¥22,052 million ($182,246 thousand).


Additional information with respect to the company’s convertible bonds outstanding at March 31, 1999 isas follows:

Convertible price Convertible at any timeper share up to and including

2.2 percent convertible bonds in yen due September 30, 2003 . . . . . . . . . . . ¥827.80 September 29, 2003

Under the provisions of the issues, the conversion price is subject to adjustment in certain cases, whichinclude the payment of stock dividends and the free distribution of shares. If all the outstanding convertiblebonds had been converted at March 31, 1999, approximately 11,959 thousand additional shares of commonstock would have been issued.

8. Income taxesThe Company is subject to several taxes based on income which, in the aggregate, resulted in a normal

tax rate of approximately 47.35 and 51 percent for 1999 and 1998, respectively.The effective tax rates reflected in the statements of income differ from the normal tax rates primarily

because of the effect of timing differences in the recognition of certain income and expenses for tax andfinancial reporting purposes, the effect of permanent non-deductible expenses, tax exemptions for dividendincome received from Japanese companies and tax credit for certain qualified expenditures.

9. Other current liabilitiesAt March 31, 1999 and 1998 other current liabilities consisted of the following:


1999 1998 1999

Guarantee deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥5,006 ¥5,242 $41,367Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 888 891 7,340

¥5,894 ¥6,133 $48,707

10. Retirement and severance planRetirement and severance plan expenses charged to operations for the years ended March 31, 1999 and

1998, were as follows:


1999 1998 1999

Funded pension plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 965 ¥ 615 $ 7,973Accrued retirement and severance benefits . . . . . . . . . . . . . . . . . . . . . 1,299 1,529 10,741

¥2,264 ¥2,144 $18,714


11. Shareholders’ equityThe Commercial Code of Japan provides that an amount equivalent to at least 10 percent of cash payment

shall be appropriated as a legal reserve until such reserve equals 25 percent of stated capital. The Code alsoprovides that neither additional paid-in capital nor legal reserve is available for dividends, but both may beused to reduce a deficit by resolution of the shareholders or may be capitalised in the form of freedistributions of shares by resolution of the Board of Directors.

The Commercial Code of Japan provides that the entire amount of paid-in capital on new share issues,including shares issued upon conversion of bonds and exercise of warrants, shall generally be included inthe common stock account. However, an amount equal to or less than 50 percent of the issue price of sharesmay be transferred to the additional paid-in capital account on the condition that at least the par value pershare is included in the common stock account.

Under the Commercial Code of Japan, the amount available for dividends is based upon retained earningsas recorded by the Company. At March 31, 1999, the amount available for dividends, subject to the legalreserve requirements, was ¥46,177 million (US$381,630 thousand).

The following appropriations of retained earnings, which have not been reflected in the financial statementsas at March 31, 1999, were proposed on May 20, 1999 by the Board of Directors and were approved at theannual shareholders’ meeting on June 29, 1999:


Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥765 $6,321Transfer to legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 678Bonuses to directors and statutory auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 446

¥901 $7,445

12. Sales to and purchases from subsidiaries and affiliatesSales to and purchases from subsidiaries and affiliates for the years ended March 31, 1999 and 1998, were

as follows:


1999 1998 1999

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥33,124 ¥34,785 $273,753Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,556 28,730 227,733

13. Research and development expensesResearch and development expenses presented in general and administrative expenses for the years

ended March 31, 1999 and 1998, were as follows:


1999 1998 1999

Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . ¥6,262 ¥6,295 $51,749


14. Other income (expenses)“Other–net” in “Other income (expenses)” for the years ended March 31, 1999 and 1998 is as follows:


1999 1998 1999

Loss on disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . ¥ (49) ¥ (31) $ (409)Gain on sales of property and equipment . . . . . . . . . . . . . . . . . . . . . . . 18 – 152Write-down of investments in securities, subsidiaries and affiliates . . . (1,112) (1,889) (9,193)Losses on the liquidation of affiliated companies . . . . . . . . . . . . . . . . . (3,868) – (31,964)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,258) (74) (10,395)

¥(6,269) ¥(1,994) $ 51,809

15. Contingent liabilitiesAt March 31, 1999 and 1998, the Company was contingently liable as follows:


1999 1998 1999

As guarantor of indebtedness of subsidiaries, affiliates and others . . . ¥ 4,394 ¥8,944 $ 36,314Obligations equivalent to the guarantee of indebtedness . . . . . . . . . . . 12,644 – 104,498

16. Subsequent EventsOn April 1, 1999, the Company absorbed the operations of wholly owned subsidiary Sun Arrow Chemical

Co., Ltd. As a result, the Company’s assets and liabilities increased by ¥10,805 million (US$89,294 thousand)and ¥9,205 million (US$76,071 thousand), respectively, and the Company assumed all rights and obligations.


The Board of DirectorsTokuyama Corporation

We have audited the non-consolidated balance sheets of Tokuyama Corporation as of March 31, 1999 and1998, and the related non-consolidated statements of income, shareholders’ equity and cash flows for the yearsthen ended, all expressed in Japanese yen. Our examinations were made in accordance with auditing standardsgenerally accepted in Japan and, accordingly, included such tests of the accounting records and such otherauditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying non-consolidated financial statements, expressed in Japanese yen,present fairly the non-consolidated financial position of Tokuyama Corporation as of March 31, 1999 and1998, and non-consolidated results of its operations and its cash flows for the years then ended, in conformitywith accounting principles generally accepted in Japan applied on a consistent basis, except for the changewith which we concur, in the method of depreciation, made in the year ended March 31, 1999, as describedin Note 4 of the notes to the financial statements.

The U.S. dollar amounts in the accompanying non-consolidated financial statements with respect to theyear ended March 31, 1999 are presented solely for convenience. Our examination also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has beenmade on the basis described in Note 2 to the non-consolidated financial statements.

YAMAGUCHI Audit CorporationTokuyama, JapanJune 30, 1999

Report of Independent Certified Public Accountants on theNon-Consolidated Financial Statements



ASSETS 1999 1998 1999

Current assets:Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 23,746 ¥ 27,619 $ 196,248Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 60 612Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,612 3,543 29,851Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,835 5,662 39,957Notes and accounts receivable:

Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . 4,172 10,272 34,484Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,183 57,835 472,585Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . (2,944) (2,045) (24,334)

58,411 66,062 482,735Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,084 22,134 182,515Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,552 3,162 45,885

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,314 128,242 977,803

Investments and other assets:Investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,271 15,811 184,058Investments in and advances to unconsolidated subsidiariesand affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 12,028 2,057Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,343 7,616 85,478

32,863 35,455 271,593

Property, plant and equipment:Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,095 21,103 190,871Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,385 71,447 639,545Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320,110 301,749 2,645,537Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,244 20,775 241,687

449,834 415,074 3,717,640Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (295,819) (278,529) (2,444,787)

154,015 136,545 1,272,853

¥ 305,192 ¥ 300,242 $ 2,522,249

See notes to consolidated financial statements.

ConsolidatedBalance Sheets

Tokuyama Corporation and Consolidated SubsidiariesMarch 31, 1999 and 1998



LIABILITIES AND SHAREHOLDERS’ EQUITY 1999 1998 1999

Current liabilities:Short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 33,425 ¥ 27,479 $ 276,237Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . 7,360 12,457 60,830Accounts payable:

Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . 9,326 2,662 77,077Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,128 40,051 215,934Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,560 4,147 29,423

39,014 46,860 322,434Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,021 8,969 74,549Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 3,446 2,903Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,190 6,343 51,158

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,361 105,554 788,111

Long-term liabilities:Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . 103,304 88,696 853,754Accrued retirement and severance benefits . . . . . . . . . . . . . . 10,267 9,778 84,849Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 602 4,132

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 114,071 99,076 942,735

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,378 535 11,387

Contingent liabilities (Note 3)Shareholders’ equity:

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,274 19,274 159,288Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,895 22,895 189,215Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,217 52,910 431,543

94,386 95,079 780,046Less treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) (2) (30)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . 94,382 95,077 780,016

¥305,192 ¥300,242 $2,522,249



1999 1998 1999

Statement of income:Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥207,391 ¥227,440 $1,713,976Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,583 156,129 1,153,575

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,808 71,311 560,401

Selling, general and administrative expenses . . . . . . . . . . . . 53,831 56,786 444,883

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,977 14,525 115,518

Other income (expenses)Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . 995 1,032 8,226Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,926) (3,369) (32,446)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,013) (2,611) (41,431)Equity in earnings ofunconsolidated subsidiaries and affiliates . . . . . . . . . . . . . (919) 120 (7,599)

(8,863) (4,828) (73,250)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 5,114 9,697 42,268Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,669) (6,878) (30,324)Minority interests in earnings of consolidated subsidiaries . . . 63 (23) 519

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,508 2,796 12,463

Retained earnings:Balance at beginning of the year . . . . . . . . . . . . . . . . . . . . . 52,910 51,561 437,273Adjustment due to increase of consolidated subsidiary . . . (353) (90) (2,920)Adjustment due to increase of affiliates accounted for

by the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 369 –Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,785) (1,657) (14,750)Directors’ and statutory auditors’ bonuses . . . . . . . . . . . . . . (63) (69) (524)Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,508 2,796 12,463

Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 52,217 ¥ 52,910 $ 431,542

U.S. dollarsYen (Note 2)

Net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 5.91 ¥ 10.97 $ 0.049Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00 7.50 0.050

See notes to consolidated financial statements.

Consolidated Statements ofIncome and Retained Earnings

Tokuyama Corporation and Consolidated SubsidiariesYears ended March 31, 1999 and 1998


1. Summary of significant accounting policiesBasis of presenting the financial statements:

The accompanying consolidated financial statements have been prepared on the basis of accountingprinciples and practices generally accepted in Japan and from the financial statements filed with theMinister of Finance as required by the Securities and Exchange Law of Japan with reclassification ofcertain items.

Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates:The consolidated financial statements include the accounts of the Company and its significant

subsidiaries. Significant intercompany balances, transactions and unrealised profits have been eliminatedin consolidation.

Investments in significant affiliates (20 percent to 50 percent owned) are accounted for by the equity method.Consolidated net income includes the Company’s equity in the current net income of such companies afterelimination of unrealised intercompany profits.

Investments in unconsolidated subsidiaries and affiliates not accounted for on an equity method arecarried at cost.

Other accounting principles and practices employed by the Company and its subsidiaries:Significant accounting principles and practices employed by the Company and its subsidiaries are

explained in Note 3 of the notes to non-consolidated financial statements. Therefore, the accompanyingconsolidated financial statements should be read in conjunction with such notes.

2. Change in accounting policySee Note 4 to the non-consolidated financial statements.

3. U.S. dollar amountsSee Note 2 to the non-consolidated financial statements.

4. Contingent liabilitiesThe Company and its consolidated subsidiaries had the following contingent liabilities at March 31, 1999

and 1998:


1999 1998 1999

As endorser of trade notes discounted or endorsed . . . . . . . . . . . . . . . ¥ 524 ¥ 377 $ 4,328As guarantor of indebtedness of unconsolidated subsidiaries,affiliates and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,998 8,775 24,780

Obligations equivalent to the guarantee of indebtedness . . . . . . . . . . 5,205 – 43,016

Notes to ConsolidatedFinancial Statements

Tokuyama Corporation and Consolidated Subsidiaries


The Board of DirectorsTokuyama Corporation

We have audited the consolidated balance sheets of Tokuyama Corporation and consolidated subsidiaries asof March 31, 1999 and 1998, and the related consolidated statements of income and retained earnings for theyears then ended, all expressed in Japanese yen. Our examinations were made in accordance with auditingstandards generally accepted in Japan and, accordingly, included such tests of the accounting records andsuch other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying consolidated financial statements, expressed in Japanese yen, presentfairly the consolidated financial position of Tokuyama Corporation and consolidated subsidiaries as of March31, 1999 and 1998, and consolidated results of their operations for the years then ended, in conformity withaccounting principles generally accepted in Japan applied on a consistent basis, except for the change withwhich we concur, in the method of depreciation, made in the year ended March 31, 1999, as described inNote 2 of the notes to the financial statements.

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the yearended March 31, 1999 are presented solely for convenience. Our examination also included the translationof Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made onthe basis described in Note 3 to the consolidated financial statements.

YAMAGUCHI Audit CorporationTokuyama, JapanJune 30, 1999

Report of Independent Certified Public Accountants on theConsolidated Financial Statements



1999 1998 1997 1996 1995 1994 1999

Results of operations:Net sales . . . . . . . . . . . . . . . . . . . ¥207,391 ¥227,440 ¥216,664 ¥197,241 ¥191,070 ¥179,180 $1,713,976Cost of sales . . . . . . . . . . . . . . . . 139,583 156,129 144,748 127,215 124,080 117,719 1,153,575Operating income . . . . . . . . . . . 13,977 14,525 14,358 13,219 10,153 5,447 115,518Net income . . . . . . . . . . . . . . . . . 1,508 2,796 2,077 3,638 3,899 1,038 12,463Net income per share . . . . . . . . 5.91 10.97 8.15 14.27 15.29 4.07 0.049Cash dividends per share . . . . . 6.00 7.50 6.00 6.00 6.00 6.00 0.050

Financial position:Property, plant andequipment . . . . . . . . . . . . . . . . 154,015 136,545 122,163 108,409 104,770 97,301 1,272,853

Total assets . . . . . . . . . . . . . . . . . 305,192 300,242 289,342 269,908 241,222 219,639 2,522,249Long-term debt,less current portion . . . . . . . . . 103,304 88,696 80,796 65,612 48,239 41,653 853,754

Total liabilities . . . . . . . . . . . . . . 209,432 205,165 195,615 176,691 150,058 130,374 1,730,846Shareholders’ equity . . . . . . . . . 94,382 95,077 93,727 93,217 91,164 89,265 780,016

Note: U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥121=US$1.

ConsolidatedSix-Year Summary

Tokuyama Corporation and Consolidated SubsidiariesYears ended March 31


Major Subsidiariesand Affiliates

Capital(¥ millions) Ownership

Company (in thousands local currencies) (%) Scope

•Chemicals•MTT Ltd. ¥ 600 100 Production of epichlorohydrin•Sun Arrow Chemical Co., Ltd. 1,000 100 Production and sale of vinyl chloride monomer•Shunan Polymer Co., Ltd. 5 100 Production and sale of plastics•Sun•Tox Co., Ltd. 100 70 Sale of plastic films•Tokuyama Film Co., Ltd. 400 100 Production of plastic films•Tianjin Sunshine Plastics Co., Ltd. RMB132,885 53.75 Production and sale of plastic film

**3 other companies*Nishinihon Resicoat Co., Ltd. 50 50 Manufacture of metal parts and anti-rust surface

coating material*Nanbu Plastics Co., Ltd. 1,800 29.40 Production of resins for industrial use*Shin Dai-ichi Vinyl Corporation 7,000 30 Production and sale of polyvinyl chloride

∆14 other companies

•Cement & Building Materials•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•Kyushu Tokuyama Ready Mixed Concrete Co., Ltd. 50 100 Production and sale of ready-mixed concrete•Sanyo Tokuyama Ready Mixed Concrete Co., Ltd. 50 85 Production and sale of ready-mixed concrete•Taki Ready Mixed Concrete Co., Ltd. 20 60 Production and sale of ready-mixed concrete•Tokusho Co., Ltd. 10 100 Sales of concrete and steel frame materials•Tokuso Trading Co., Ltd. 50 100 Sale of construction materials•Shanon Co., Ltd. 30 100 Production of plastic windows•Tohoku Shannon Co., Ltd. 300 70 Production of plastic windows•Hokkaido Shannon Co., Ltd. 30 100 Sale of plastic windows•Shannon Tohoku Trading Co., Ltd. 30 100 Sale of plastic windows•Shannon Sales East Japan Co., Ltd. 30 100 Sale of plastic windows•Shannon Kasei Corporation 100 80 Production and sale of materials for plastic windows•Hachimaru Sangyo Corporation 10 100 Production of plastic sashes•Sun Clean Kogyo Corporation 10 100 Production of plastic sashes

∆30 other companies•Others

•Figaro Engineering Inc. 48 100 Production and sale of sensor devices•Figaro USA, Inc. US$200 60 Sale of sensor devices•A&T Corporation 378 67.5 Production and sale of diagnostic reagents and

analyzers•Pornpat Chemicals Co., Ltd. Baht 150,000 99 Production and sale of precipitated silica•Eurodia Industrie S.A. Fr 4,000 85 Sale of ion exchange membranes and

electrodialyzers•Tokuyama Electronic Chemicals Pte. Ltd. S$2,000 100 Production of solvent for semiconductor base

materials•Taiwan Tokuyama Corp. NT$205,000 100 Production and sale of solvent for semiconductor

base materials•Unirex Co., Ltd. 12 100 Design and sale of printed circuit boards•Tokuyama Asia Pacific Pte. Ltd. S$800 100 Sale of Tokuyama Group products•Tokuyama Europe GmbH DM 500 100 Sale of Tokuyama Group products•Tokuyama America Inc. US$300 100 Sale of Tokuyama Group products•Shunan System Sangyo Co., Ltd. 50 100 Real estate, civil engineering, construction•Shunan Koki Corporation 35 100 Design and production of machines and plants•Kiyo Kaiun Co., Ltd. 50 98 Transportation and warehousing•Nishinihon Kaihatsu Corporation 10 98 Transportation•Shunan Swimming Club Co., Ltd. 50 100 Swimming school and athletic club•Tokuyama Esuteto Co., Ltd. 100 100 Real estate

**1 other company*Tokuyama Toshiba Ceramics Co., Ltd. 1,600 30 Production and sale of quartz glass

∆10 other companies

• Consolidated subsidiary* Subsidiary accounted for by equity method** Subsidiary∆ Affiliate Notes: (April 1, 1999 to June 30, 1999)

1. Sun Arrow Chemical Co., Ltd. was merged with Tokuyama on April 1, 1999.2. MTT Ltd. was dissolved on March 31, 1999.3. Tokuyama’s equity interest in Shin Dai-ichi Vinyl Corporation was changed to 42% on June 24, 1999.

(As of March 31, 1999)


Directory

Head OfficeShibuya Konno Bldg.3-1, Shibuya 3-chomeShibuya-ku, Tokyo 150-8383Tel: (03) 3499-8937Fax: (03) 3499-8967

Domestic Offices:Sapporo, Sendai, Nagoya, Osaka,Hiroshima, Takamatsu, Fukuoka

Research Laboratories:Tsukuba, Fujisawa, Tokuyama

Factories:Tokuyama Factory1-1, Mikage-cho, TokuyamaYamaguchi 745-8648Tel: (0834) 21-4326

Kashima Factory26 Sunayama, Hasaki-machiKashima, Ibaraki 314-0255Tel: (0479) 46-4700

Overseas

Tokuyama America Inc.1875 South Grant Street, Suite 570San Mateo, CA 94402-2669, U.S.A.Tel: 1-650-571-8872Fax: 1-650-571-8037

Figaro USA, Inc.3703 West Lake Avenue, Suite 203Glenview, IL 60025-1266, U.S.A.Tel: 1-847-832-1701Fax: 1-847-832-1705

Eurodia Industrie S.A.14/16 Voie de Montavas91320, Wissous, FranceTel: 33-1-60110694Fax: 33-1-69308595

Tokuyama Europe GmbHOststrasse 10, 40211 DüsseldorfGermanyTel: 49-211-161893Fax: 49-211-357379

Pornpat Chemicals Co., Ltd.787 Sukhumvit Road (SOI 43)Bangkok Bank Branch Bldg., 4th Fl.Bangkok 10110, ThailandTel: 66-2-260-2606Fax: 66-2-260-9001

Tianjin Sunshine Plastics Co., Ltd.No. 9, Xinghua RoadTianjin Xiqing EconomicDevelopment Area,Tianjin, 300381 ChinaTel: 86-22-23971442Fax: 86-22-23973464

Taiwan Tokuyama Corporation8F-3, No. 139, Sung Chiang RoadTaipei, Taiwan, Republic of ChinaTel: 886-2-2516-4511Fax: 886-2-2517-7735

Tokuyama Asia Pacific Pte. Ltd.20 Cecil Street, #20-04/05The ExchangeSingapore 049705Tel: 65-533-5258Fax: 65-533-5256

Tokuyama Electronic Chemicals Pte. Ltd.21 Gul Road, Singapore 629355Tel: 65-862-1081Fax: 65-862-1267


CorporateData (As of March 31, 1999)

Major Shareholders:

Number of Shares Percentage ofHeld (Thousand) Total Shares

Nippon Life Insurance Company . . . . . . . . . . . . . . 15,985 6.27The Sumitomo Trust & Banking Co., Ltd. . . . . . . . 15,703 6.16The Sanwa Bank, Ltd. . . . . . . . . . . . . . . . . . . . . . . . 12,737 5.00The Toyo Trust & Banking Co., Ltd. . . . . . . . . . . . 11,171 4.38The Meiji Mutual Life Insurance Company . . . . . 8,666 3.40J.P. Morgan Trust Bank Ltd. . . . . . . . . . . . . . . . . . . 7,317 2.87The Tokio Marine &Fire Insurance Company, Limited . . . . . . . . . . . . 6,904 2.71

Industrial Bank of Japan . . . . . . . . . . . . . . . . . . . . . 5,781 2.27The Mitsubishi Trust & Banking Corporation . . . . 5,708 2.24Nissho Iwai Corporation . . . . . . . . . . . . . . . . . . . . . 5,566 2.18

Board of Directorsand Responsibilities (As of June 29, 1999)

Hisami Tanimoto:Personnel Affairs Div.

Go Yanagida:Corporate Planning Div.

Yoshikazu Mizuno:Plastics Business Div.

Masato Todo:Tokuyama Factory/TokuyamaFactory Cement ManufacturingDept.

Standing Auditor:Shigeyoshi Inoue

Auditor:Okitsugu Itokawa

External Auditors:Yoshio TaniguchiAkira Nishio

Chairman:Kaoru Tsuji

President:Yuichi Miura

Executive Managing Director:Yoshihiko Nishino: All MarketingAffairs/Branches

Senior Managing Director:

Kazuo Shikata: All TechnicalAffairs/Research & DevelopmentDiv./RC Administration

Managing Directors:

Kazuhiko Nishimura:Corporate Administration Div./Affiliates/Auditing Dept./Secretarial Dept.

Kenichiro Ueyama:Electronic Materials Business Div.

Teruyoshi Fukuda:Cement Business Div.

Koshi Kusumoto:Silica & Derivatives Business Div./Specialty Chemicals Business Div.

Tsugimori Kitade:Plastic Films Div.

Kizo Nagasako:Tokuyama Factory

Directors:

Hiroaki Masaki:General Affairs Div.

Shigeaki Nakahara:Chemical Business Div.

Kazuo Ikeda: ManufacturingTechnology Div./TokuyamaFactory Plant Maintenance Dept.

Koichi Doi:Research & Development Div./Tokuyama Research Laboratory

Established:February 16, 1918

Capital:¥19,274 million

Employees:2,475

Shares authorized:700,000,000

Shares issued:254,971,876

Shareholders:31,996

Chemical Business Division

Soda ashSodium silicate culletSodium silicateSodium bicarbonateCalcium chloride (liquid, granular,

flake)Caustic soda (liquid, flake)Liquid chlorineHydrochloric acidSodium hypochloriteMethyl chlorideMethylene chlorideChloroformPropylene oxideEthylene dichlorideIsopropyl alcohol

Moisture absorbent(household-use, industrial-use)

Dew absorbent tapeDew collectorWater purifierNon-fragrant deodorizer

Cement Business Division

Ordinary Portland cementHigh early strength Portland cementBlast furnace slag cementFly ash cementLow heat cementReady-mixed concreteCement type stabilizerChemical groutAntiwashout admixture

Shanon and Building MaterialsDivision

Plastic windowsAdiabatic sliding doorCeiling hatch for insulation and

airtight applicationsPremixed mortar for plasteringCement mortar for self-levelingPremixed mortar for tilesArtesian water treatment formSoundproof wallingMoisture-proof windbreak sheetingArtificial reef

Tokuyama Corporation has always been a pioneer.

Katsujiro Iwai started the company in 1918 because of his firm

belief that Japan should have a domestic soda ash

production capability. Guided by this spirit of innovation,

the company steadily expanded the scope of its operations to

encompass the production of cement, chlor-alkali, plastics and

organic solvents. Tokuyama has also branched out into

sophisticated, high-potential fields such as electronics,

biomedical materials, advanced ceramics and specialty chemicals,

all of which call for the development of business from

a global perspective.

In April 1999, Tokuyama launched a new three-year

management program with the aim of achieving growth in the 21st

century as a company that can make dreams come true through

chemistry. A key focus of the plan is expanding the highly profitable

specialty products sector.

The environment is another focus. Long before environmental

conservation became fashionable, Tokuyama was actively implementing

an environmentally conscious management policy. Today, Tokuyama

continues to take the lead in many areas. Recently, for example,

Tokuyama has been using waste plastic as fuel in cement production.

And the company is also operating a trial plant for the recycling of PVC

using proprietary technology.

In all its endeavors, Tokuyama is intent on making an even bigger

contribution to the well-being of society.

Annual Report 1999 3Annual Report 1999 35

Productsat a Glance

Plastics Business Division

PolypropyleneHighly functional polypropylene

(sliding type)Granular polypropyleneCompound polypropyleneWood flour filled type polypropyleneFlame-retardant polypropyleneHighly functional master batchThermoplastic olefin elastomer

Biaxial-oriented polypropylene filmMicroporous film

Polyvinyl chlorideVinyl chloride monomer

Specialty Chemicals Business Division

Precipitated silicaFinely regulated silicaFumed silicaFused spherical silicaBasic magnesium carbonateCalcium silicate

Photochromic dye materialsScratch-resistant hard coatingWater-repellent coating solution

for plastic lensesChloranilChlorosulfonic acidBenzenesulfonyl chlorideBulk drug substanceThenylchlor

Ion exchange membranesBipolar membranesSeamless tubular membranes for

cathodic electrodepositionElectrodialyzerDiffusion dialyzer

Methylene chloride for electronicsindustry use

Isopropyl alcohol for electronicsindustry use

Sulfuric acid for electronics industryuse

Developer for positype photoresistsIPA vapor drying systemIPA resistivity meter

IPA gas monitorSolvent for metal cleaning (semi-

aqueous)High-purity perfluorinated inert liquidAutomatic chemical supply system

Electronic Materials Business Division

Polycrystalline siliconBoronTrichlorosilaneTetrachlorosilane

High purity aluminum nitride powderTranslucent aluminum nitride

ceramicsMachinable aluminum nitride

ceramics

Gas sensitive semiconductors

Medical Business Division

Composite resinsLight cured dental adhesive and

primerAlginate impression materialsDental stoneDental investmentsGlass ionomer cementDual cured adhesive resin cementDenture relining materialsQuick self curing resinImpression material for fitness test

Materials for reagentReagent for micro-titer testReagent for latex enhanced

immunoturbidimetry assayFully automated electrolyte assay

systemFully automated glucose assay systemBlood coagulation assay systemMultiple chemistry unitReagent for biochemistry assayLaboratory automation systemLaboratory information system

TOKUYAMA CORPORATIONANNUAL REPORT 1999

Printed in Japan

Shibuya Konno Bldg., 3-1, Shibuya 3-chome, Shibuya-ku, Tokyo 150-8383, JapanCorporate Communications DepartmentTEL 03-3499-8023 FAX 03-5469-3374International DepartmentTEL 03-3499-8937 FAX 03-3499-8967URL http://www.tokuyama.co.jp/

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Annual Report 1999 - tokuyama.co.jp · Annual Report 1999 35Annual Report 1999 3 ... cathodic electrodeposition Electrodialyzer ... China and the Philippines as strongholds from …