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http://www.teijin.co.jp
Printed in Japan using waterless printing. Issued 2012.7
Growth through Constructive
Change Annual Report 2012Year ended March 31, 2012
Annual R
eport 2012
13%
69%
18%
● Aramid fibers ● Carbon fibers and composites
● Pharmaceuticals● Home healthcare
20110.8
Advancedfibers and composites
Healthcare
Stable-profitbusinesses
Fiscal
¥
Net sales
trillion● Polyester fibers● Polycarbonate resin● PET film● PEN film● Trading and retail● IT
*
© 2012 Teijin Limited. All Rights Reserved.
Italicized product names and service names in this report are trademarks or registered trademarks of the
Teijin Group in Japan and/or other countries. Where noted, other italicized product names and service
names used in this report are protected as the trademarks and/or trade names of other companies.
Contents
2 Message from the CEO
3 CHANGE for 2016
8 Business Group Review
8 Advanced Fibers and Composites
Business Group
10 Electronics Materials and Performance
Polymer Products Business Group
12 Healthcare Business Group
14 Trading and Retail Business Group
15 IT Business Group
16 New Business Development Group
17 Research and Development
20 Corporate Governance
23 Corporate Social Responsibility
25 Financial Section
26 Financial Highlights and Consolidated
10-Year Summary
28 Management’s Discussion and Analysis
36 Consolidated Financial Statements
72 Corporate Data * Excluding the impact of the
standardization of accounting
periods.
Cha
Profi le
In fiscal 2011, Teijin announced a new medium- to long-term management vision, CHANGE for 2016. To achieve the targets set forth
in this vision, Teijin is implementing major constructive change. In recent years, the Company classified its core global operations into
eight business areas with an emphasis on high-performance materials and healthcare. Effective from fiscal 2012, Teijin will seek to
provide solutions to customers and markets, further enhancing the quality of life of people everywhere, by concentrating on three
key domains: Green chemistry, healthcare and overlapping domains. At the same time, Teijin will work to ensure both sustainable
growth and profitability, primarily through its promising growth businesses, notably advanced fibers and composites and healthcare.
Growth through Constructive
Disclaimer Regarding Forward-Looking Statements
Any statements in this document, other than those of historical fact, are forward-looking statements about the future performance of Teijin and its Group companies,
which are based on management’s assumptions and beliefs in light of information currently available and involve risks and uncertainties. Actual results may differ
materially from these forecasts. Potential risks and uncertainties include, but are not limited to, domestic and overseas economic conditions, such as consumer
spending and private capital expenditures; currency exchange rate fl uctuations, notably with the Japanese yen, U.S. dollar, Asian currencies, the euro and other
currencies in which Teijin operates its international business; direct and indirect restrictions imposed by other countries; fl uctuations in the market prices of securities
in which Teijin has substantial holdings; and Teijin’s ability to maintain its strength in many product and geographical areas, through such means as new product
introductions, in a market that is highly competitive in terms of both price and technology, pertinent to the industry to which the Company primarily belongs.
10%
20%
25%
50%
Expand promising growth businesses
Provide solutions
20202.0
New businesses
New electronics materials
Advanced medical materials
Advancedfibers and composites
Healthcare
Stable-profitbusinesses
Around fiscal
¥
Net sales
trillion
1Teijin Limited
nge* In our view, a company that has attained “global excellence” is one that is recognized as a key global player in its core businesses, has business
activities worldwide, is evaluated positively by society and is a source of pride for its employees.
Secure profi table sustainable growth by providing customers with the solutions they need
Build value that also benefi ts society and contribute to the advancement of humanity by focusing
on businesses that leverage our cutting-edge technologies
Be recognized as a leading player that has attained global excellence*
Long-term vision:
2 Teijin Limited
In February 2012, we announced CHANGE for 2016, our new
medium- to long-term management vision. Central features of
CHANGE for 2016 include our ongoing long-term vision, which
calls for us to secure profi table sustainable growth, build value that
also benefi ts society and attain global excellence by transforming
our four fundamental portfolios, namely business, geographic,
technology and human resources.
CHANGE for 2016 also sets ambitious targets for consolidated
net sales and operating income for fi scal 2016, of ¥1.3 trillion and
¥100 billion, respectively, and for around fi scal 2020, of ¥2.0 trillion
and ¥200 billion. We are well aware that none of these targets
will be reached by remaining on the same path. To achieve the
targets we have set, it is vital that we change—and change in a
constructive and proactive manner.
In the coming years, we will shift away from our traditional busi-
ness model, which positions us as an upstream manufacturer sup-
plying materials to downstream customers, evolving instead toward
a business model that focuses on providing optimal solutions. In
practical terms, this means that rather than simply providing materi-
als, we will focus on extending solutions that respond effectively
to the needs of customers. Despite boasting superior high-
performance products, our materials businesses have traditionally
lacked suffi cient expertise and experience to provide the solutions
that our customers and end users seek. In the years ahead, rather
than limiting ourselves to developing and selling materials, we will
work to integrate advanced materials and processing technolo-
gies, as well as to promote the development and cultivation of
applications in collaboration with customers. We will also broaden
the scope of our efforts to encompass components and devices
that are further down the supply chain, thereby enabling us to offer
innovative, value-yielding products and services and reinventing
Teijin as an organization that is capable of continuously creating
value for its customers. Further, we will reinforce existing and
acquire new technologies that overlap materials and healthcare,
with the aim of providing unparalleled solutions.
The ability to provide solutions is what distinguishes companies
that are capable of sustainable growth from those that are not.
Guided by CHANGE for 2016, we will apply ourselves with full
determination to ensure Teijin is one of the former.
As always, we are grateful for and encouraged by your ongoing
support.
July 2012
Shigeo Ohyagi
President and CEO
Evolving our business model
From supplying materials to providing solutions
Message from the CEO
3Teijin Limited
Population growth
Falling birth rates and aging of society
Increasing consumption of fossil fuels
Rising CO2 emissionsMacro trends
Market needsGreater energy and resource efficiency
Health and comfort
Key domains
Proprietary technologies to be reinforced
High-performance materials technologies
Environmental technologies, biotechnology
Pharmaceuticals and healthcare technologies
● Polymerization ● Composites ● Forming● Advanced molding, film fabrication, processing● Surface treatment, laminating
● Drug discovery, design and evaluation of medical devices● Medical materials
● Nanoparticle production, nanoscale control● Membrane filtration● Biotechnology
Increased material and spiritual affluence
Safety and security
Clean energy
●New healthcare businesses●Advanced medical materials●Bioplastics
●Pharmaceuticals●Home healthcare
Green chemistry
Overlapping domains Healthcare
●Sustainable transportation● Information and electronics●Safety and protection●Environment and energy
Teijin’s New
Medium- to Long-Term
Management Vision
In addition to outlining basic policies that refl ect our long-term vision, CHANGE for 2016 articulates clear performance targets and growth strategies and sets forth a comprehensive plan of action. Guided by CHANGE for 2016, we will focus on three key domains—green chemistry, healthcare and overlapping domains—identifi ed through an analysis of global macro trends and of our competitive advantages. With the aim of evolving as an organization that creates value for customers through technology-driven innovation, we will press forward with efforts to transform our four fundamental portfolios (business, geographic, technology and human resources), a crucial growth strategy. We will also work to reinforce global cost competitiveness. Through these efforts, we will strive to secure profi table sustainable growth. Performance targets include net sales and operating income of ¥1.3 trillion and ¥100 billion, respectively, in fi scal 2016 and ¥2.0 trillion and ¥200 billion by around fi scal 2020.
Basic Policies
1. Press forward with growth strategies in green chemistry, healthcare and overlapping domains
2. Advance and expand existing businesses by broadening scope and adding depth
3. Bolster R&D aimed at fostering new businesses
4. Enhance implementation of strategies through organizational reforms
5. Promote decisive, ongoing efforts to reform cost structure
Articulating clear performance targets that reflect our long-term vision
Promoting the strategic transformation of our four fundamental portfolios
FY2011* FY2016Around
FY2020
Net sales 791.0 1,300 2,000
Operating income 35.3 100 200
Operating margin (%) 4.5 8 10
Net income 13.8 60 120
Operating income to total assets (ROA) (%) 4.6 8 10
Net income to shareholders’ equity (ROE) (%) 4.8 12 15
Creating value for customers through technology-driven innovation
Refining and strengthening key Teijin Group domains and business fields
Billions of yen
Key Aspects of CHANGE for 2016
Secure profi table sustainable growth
Group PerformanceResults and Targets
* Excluding the impact of the standardization of accounting periods.
CHANGE for 2016
4 Teijin Limited
Provide solutions that respond effectively to the needs of end users
Providing optimal solutions
Solutions platform*
Marketing
● Reinforce responsiveness in diverse markets● Create a specialized team to oversee core projects
Development
● Invest purposefully in R&D personnel● Strengthen downstream technologies● Expand facilities for product evaluation● Capitalize on alliances
Advance efforts to develophigh-performance
materials and product lines
Amass a solid base ofexpertise regarding
finished products
Polyester fibers for industrial applications
Polyester fibers for apparel
IT
Advanced Fibers and Composites
Trading and Retail
Electronics Materials and Performance Polymer Products
Healthcare
New Business Development
Carbon Fibers and Composites
Polyester Fibers
Films
Medical and Pharmaceuticals
Fiber Products Marketing
Plastics
IT
Aramid Fibers
New Business Development
Providing optimal solutions through a practical framework
Realigning and simplifying our business groups to create a solutions-oriented organization
Create a solutions platform
From our traditional business model, which principally emphasizes the supply of upstream materials, we will evolve toward a business model that focuses on providing optimal solutions. As a framework for this metamorphosis, we will create a solutions platform that leverages our technological and sales prowess to provide the solutions our customers seek. Concurrently, we will streamline our organization. In our materials businesses, we will gradu-ally integrate core subsidiaries and functional companies. We will also place all R&D personnel under the direction of the Chief Science and Technology Offi cer to facilitate the concentrated allocation of technological expertise. These constructive changes are designed to reinforce and expand our technological foundation, as well as to rally our sales capabilities.
Provide increasingly competitive solutions
Key Aspect
1
* A framework for strengthening
development and sales capabilities to provide the
solutions our customers seek
5Teijin Limited
Core strategicbusinesses
● Advanced fibers and composites
● New businesses
Prioritize and focusinvestment (including in major M&A activities)
New businessesfor incubation
● Healthcare
Stable-profitbusinesses
● Electronics materials and performance polymer products● IT● Fiber products
Selectively concentrate investment in growth businesses
Businesses targeted for investment Investment stance
Allocation of investment
FY2009–FY2011
13%
25%
30%
35%
18%
20%
20%
2%
10%
20%
25%
New electronicsmaterials
Advanced medical materials
● New electronics materials● Advanced medical materials
FY2011*¥0.8 trillion
FY2016¥1.3 trillion
Around FY2020
¥2.0 trillion
Sales in promising growth businesses
Sales by region
Japan
North Americaand Europe
● Advanced fibers and composites
● Healthcare
Emergingeconomies and Asia
Business categories and investment policies
FY2012–Around FY2020
Synthesis andSynthesis andpolymerization of rawpolymerization of raw
materials
Design andmanufacturingmanufacturingufact
Preliminary processingPreliminary processing
ation,m fabricaSpinnning, film, film fabenttmensuurfacace treatm
Secondary processingSecondary processingndary proce
Finishing
Additional hhigh-value-addedh-value-add
iprocessing
eceMMoolding, devicgngmmmanufacturin
Healthcare technologies
Materials technologies
Drugrydiscover &DR&
Clinicicaldevelopopment onoCCommmercializatio
Research related to the control of chemicals and manufacturing
Foster new technologies that integratematerials and healthcare technologies
Strengthen midstream and downstream technologies
Existing technologies Technologies to be reinforced or acquired
Existing technologies
Technologies to be reinforced or acquired
Fundamental portfoliosTechnology
Business
Geographic
Human resources
Transform our four
fundamental portfolios
Business: Taking into account market potential, competitive advantages and profi tability, we will promote the decisive allocation of management resources to accelerate the expansion of promising growth businesses.Geographic: We will emphasize assertive investment in emerging economies and Asia and by focusing on growth drivers in each region. Technology: Our objectives here will be to reinforce existing and acquire new pro-cessing technologies—thereby boosting our ability to provide solutions further down the supply chain—and to integrate materials and healthcare technologies, furthering the creation of new healthcare businesses, notably advanced medical materials.Human resources: We will focus on securing, fostering and positioning talented individuals irrespective of nationality, ethnicity, age or gender to accelerate the diversity of the Teijin family and facilitate the effective implementation of strategies.
Transforming our business portfolio
Focusing on promising growth businesses
Transforming our geographic portfolio
Focusing on emerging economies and Asia
Transforming our technology portfolio
Focusing on solutions
Implement growth strategies
Key Aspect
2
Reinforcing existing and acquiring new technologies to integrate materials and healthcare technologies
* Excluding the impact of
the standardization of
accounting periods.
6 Teijin Limited
Net Sales Operating Income
● Other
● Healthcare
● High-performance materials
● New electronics materials
0.8
1.3
2.0
FY2011* FY2016 AroundFY2020 FY2011* FY2016
AroundFY2020
● Entry into aramid fibers markets in emerging economies
● LiB separators● Printable electronics
● Thermoplastic CFRP for automotive applications● Increase in new applications for aramid fibers
● Increase in sales of new drugs
● Increase in sales of new drugs● Expansion of home healthcare● New healthcare businesses
● Other
● Elimination and corporate
100
35.3
0
200
20
2
75
30
55
26.4
80
55
(30)
28
(15)
16.6(13.1)
5.4
(¥ trillions) (¥ billions)
Uloric®
Feburic®
Adenuric®
Febuxostat: Aiming for annual sales of at
least ¥100 billion (Distributorships covering
117 countries and territories)
Growth drivers
Growth between now and fi scal 2016 will be driven by the expansion of our lineup of new pharmaceuticals and of advanced fi bers. From fi scal 2016 on, our results will also be powered by thermoplastic composites for automotive applications, new electronics materials and new healthcare businesses, among others. Novel gout and hyperuricemia treatment febuxostat is currently sold in more than 20 markets, including Japan, North America and several European countries. With recognition of the drug’s effi cacy growing, we are continuing to build a global network and have already signed exclusive distributorships for the drug covering 117 countries and territories. We are now preparing for launch in several new markets, including the People’s Republic of China (PRC), Turkey and Mexico, and anticipate annual sales of the drug will eventually peak at over ¥100 billion. Our aramid fi bers business continues to see solid growth. The elimination of bottlenecks is facilitating continuous increases in production capacity. With sales expected to strengthen, particularly for automotive applications, ballistic protection products and fi ber optic cables, we are currently considering expanding our production facilities in emerging economies and Asia.
Global marketing of febuxostat for hyperuricemia and gout
Expanding operating income in the high-performance materials and healthcare businesses through fiscal 2020
Key Aspect
3
* Excluding the impact of the standardization of accounting periods.
■ Countries and territories in blue are where Teijin has
exclusive distribution agreements for febuxostat. As of June 30, 2012
7Teijin Limited
Printable electronics
Advanced fibers and composites Healthcare New businesses Stable-profit businesses
Automobiles
Aircraft
Printable electronics
Displays and touch screens
Materials that enhance safety
Infrastructure-related materials
Green businesses and energy
Pharmaceuticals
Home healthcare
Business areas that fuse key technologies
Sustainable transportation
Safety and protection
Information and electronics
Healthcare
Environment and energy
Advanced medical materials, new healthcare businesses
Rehabilitation devices
Global expansion
New drugs (for atrial fibrillation, others)
Global marketing of drugs in three therapeutic areas: Bone and joint disease; respiratory disease; and cardiovascular and metabolic disease (drug for treating hyperuricemia and gout)
Recycling systems, environment-friendly materials
Innovative LiB separators
Solar cells Next-generation solar cells
Seismic and foundation reinforcement materials
Protective clothing, ballistic protection materials
Web-based businesses
Flexible displays, others
Nanosilicon inks
Structural materials
Glazing materials (windows)
Thermoplastic CFRP
Friction materials, tire reinforcement materials, others
Intelligent IT solutions
Key fields Core business areas 2012 2016 2020
Thermoplastic CFRP LiB separators
Having perfected technologies that reduce the time required for molding thermoplastic carbon fi ber–reinforced plastic (CFRP) to less than one minute, in December 2011 we signed an agreement with General Motors Company of the United States to collaborate in the devel-opment of thermoplastic CFRP for use in mass-produced GM vehicles. We will continue to promote collaboration in this area with automakers in Japan and overseas. In the promising area of lithium-ion battery (LiB) separators, we developed two innovative products that boast dramatically improved heat resistance, which enhances capacity and safety and extends lifespan. We have secured the approval of several leading battery manufacturers and in June 2012 commenced operations at our new LiB separator production joint venture in the Republic of Korea (ROK). Next-generation printable electronics technologies facilitate the production of semiconductors and other electronic circuits by printing electroconductive inks directly onto substrates, signifi cantly streamlining fabrication processes. We are currently promoting development efforts targeting the markets for semiconductors, solar cell materials and thin-fi lm transistors. Another focus is new healthcare businesses—including regenerative medicine and tissue repair—that leverage our materials and healthcare technologies.
Core business areas in five key fields
Focus on fi ve key fi elds
● Attracting considerable attention for
its ability to lower vehicle frame weight
● Teijin technologies reduce
molding time to less than one minute
Coating technologies for both aramid and fl uorine
compound coatings facilitate a signifi cant increase
in LiB capacity, as well as ensure outstanding safety
(prevents batteries from exploding) and a long lifespan.
● Dramatically improves heat resistance and durability
● Facilitates a coating speed fi ve times
faster than that of conventional technologies
Materials manufactured using a groundbreaking
silicon nanoparticle technology.
● Streamlines semiconductor fabrication
processes and signifi cantly reduces
semiconductor fabrication costs
(p e e ts ba
●Dram
● F
8 Teijin Limited
Business Group Review
Q How did the advanced fi bers and composites
businesses perform in fi scal 2011?
A Sales of our principal high-performance fi bers were level in
actual terms with fi scal 2010, while operating income increased.
In aramid fi bers, demand for mainstay Twaron and Technora para-
aramid fi bers was steady for most applications. In carbon fi bers
and composites, demand was favorable for aircraft applications,
although demand for general industrial applications and for use
in sports and leisure equipment softened in the second half. The
polyester fi bers business fi nished in the black, bolstered by the
progress of structural reforms, despite fl agging demand in the
immediate aftermath of the Great East Japan Earthquake and the
suspension of operations at production facilities in Thailand as a
result of severe fl ooding.
Q What do you see as your principal challenges in fi scal
2012 and how will you respond?
A We expect demand for aramid fi bers to continue growing at a
steady pace. In response, we will focus on increasing our produc-
tion capacity by eliminating bottlenecks. At the same time, we will
explore the idea of expanding our production facilities in emerging
economies, particularly in Asia. We will also work to boost sales and
further the development of new high-performance polyethylene, as
well as to cultivate new applications such as aramid tape.
Despite persistently weak demand for general industrial applica-
tions and for use in sports and leisure equipment, we anticipate
overall demand for carbon fi bers and composites will remain solid,
led by products for aircraft-related applications and for use in
compounds. Accordingly, we will step up efforts to encourage the
adoption of our products for use in aircraft. We will also continue
with efforts to bolster sales for use in pressure vessels for natural
gas–related applications, a growing market thanks to the expansion
of shale gas development. On another front, we will press forward
with the commercialization of thermoplastic CFRP, notably for
automotive applications.
In polyester fi bers, we will continue to implement measures
designed to achieve the full restoration of our fl ood-damaged
Advanced Fibers and Composites Business Group
Norio Kamei
General Manager,
Advanced Fibers and Composites
Business Group
Global Market View
Aramid Fibers
Owing to sizeable technological barriers to new market entrants, the global market for para-aramid fi bers is essentially dominated by Teijin and E.I. DuPont de Nemours and Com-pany (DuPont). Global demand, which has risen steadily since bottoming out in late 2010, has recovered to prerecession levels and is expected to rise by between 7% and 9% annually for the foreseeable future. This projection refl ects the increasing need for materials that contribute to greater safety and security, reduce the weight of fi nished products and help lower energy and resource consumption.
Carbon Fibers
The world’s top three manufacturers of carbon fi bers at present—Teijin, Toray Industries, Inc., and Mitsubishi Rayon Co., Ltd.—currently account for more than 50% of global produc-tion capacity. Demand for carbon fi bers has climbed since bottoming out between April and June 2009 and the supply–demand bal-ance has improved, although competition is intensifying for use in sports and leisure equip-ment, which accounts for approximately 30% of all applications for carbon fi bers. Over the long term, we expect global demand for carbon fi bers to expand by more than 15% annually, as tighter environmental regulations and the growing preference for energy-effi cient, ecologically sound options drives interest in carbon fi bers for aircraft, automotive and general industrial applications.
Principal Products
Carbon fibers
Brand name Tenax®
Applications Aircraft (structural and interior components), general
industrial applications (wind turbine blades, pressure
vessels), sporting goods (golf club shafts, fishing rods,
tennis racquets, yacht bodies)
Carbon fiber composite materials
Applications Automobiles (principal parts and components)
Para-aramid fibers
Brand names Twaron®, Technora®
Applications Brake pads, gaskets, rubber reinforcements (hoses, belts),
tires, protective clothing, plastic reinforcements, civil
engineering materials, optical fiber reinforcements
Meta-aramid fibers
Brand name Teijinconex®
Applications Fireproof clothing, heat-resistant filters, rubber reinforcements,
plastic reinforcements
Artificial leather
Brand name Cordley®
Applications Sporting goods (shoes, balls)
Polyester fibers
Brand name Teijin®Tetoron®
Applications Automobile, train and aircraft seats, tire cords, rubber
reinforcements, seat belts, mats, cushions, filters
PEN fibers
Brand name Teonex®
Applications Tire cords, transmission belts, high-pressure hoses, speaker cones
Outlook for Global Market for Para-Aramid Fibers
Thousand tons
(Source: Teijin estimate)
Annual growth 7%–9%
120
60
02006 2010 2020
Outlook for Global Marketfor Carbon Fibers
(Source: Teijin estimate)
Thousand tons
Annual growth 15% +
2003 2010 2020
120
60
0
9Teijin Limited
Thermosetting CFRP molding time: Approximately10 minutes
Thermoplastic CFRP molding time: Less than1minute
Application of heat to mold
Introduction of release agent
Resin impregnation
Resin hardening
Demolding
Press molding Demolding
production facilities in Thailand. We had already resumed produc-
tion on several lines by February. In Japan, we will also capitalize
on demand related to efforts to encourage energy savings and to
post-quake reconstruction initiatives.
Q What are your medium- to long-term strategies?
A With demand for para-aramid fi bers expanding for use in
automotive-related materials, reinforcement materials for fi ber optic
cables and protective clothing, we expect the global market to grow
by between 7% and 9% annually for the foreseeable future. In this
environment, we will strive to reinforce our operating results by
continuing to build on our competitive advantages, which include
our leading global market share and our extensive product portfolio,
which encompasses three principal aramid fi bers products and
high-performance polyethylene products, enabling us to provide
diverse solutions. Our strategic focus will be on promoting the timely
expansion of our production capacity, as well as on reinforcing
our presence in emerging economies and promoting collaboration
with customers with the aim of cultivating new applications.
Competition in the carbon fi bers and composites market is
intensifying, owing to a shift toward in-house production of carbon
fi bers by prepreg manufacturers, the appearance of market entrants
and aggressive diversifi cation by large-tow manufacturers. None-
theless, the global market is expected to rise by more than 15%
annually over the medium to long term, refl ecting expanding demand,
notably for aircraft and general industrial applications. Demand is
also expected to increase for use in automotive-related materials,
owing to the expansion of the market for electric vehicles. Here, we
will continue to capitalize on our principal competitive advantages,
namely, our high global market share, particularly for aircraft appli-
cations, and our innovative mass-production technologies for ther-
moplastic CFRP components. Our basic strategies are to collabo-
rate with customers with the aim of cultivating new markets and
applications and expanding our global operations, as well as to
promote ongoing efforts to develop materials for use in aircraft,
and to work to reduce costs and further enhance quality.
Achieving a tenfold increase in production efficiency
Thermoplastic CFRP
Countries around the world are moving to tighten regulations governing vehicle CO2 emissions and fuel
economy. The European Commission set a CO2 emissions limit of 175 g/km in 2009 and announced plans
for the gradual lowering of limits to 130 g/km in 2012, 95 g/km in 2020 and 70 g/km in 2025. The United
States has announced targets for an improvement in fuel economy of 50% from the 2010 level by 2025. As a
consequence, automakers are rushing to develop commercially viable electric vehicles and other alternatives
to conventional gasoline-powered vehicles that achieve signifi cantly lower emissions and boost fuel economy.
One of the biggest challenges in this effort is to substantially reduce vehicle weight. A vehicle’s frame
accounts for over 30% of its total weight. Using thermoplastic CFRP exclusively for the frame thus facilitates
a sharp reduction in overall vehicle weight, as well as of the powertrain and other components. We recently
completed the development of the world’s fi rst mass-production technologies for thermoplastic CFRP that reduce the time required for mold-
ing to less than one minute, compared with 10 minutes for thermosetting CFRP. Recently, we signed an agreement with General Motors to
cooperate in the development of thermoplastic CFRP for use in mass-produced GM vehicles and will advance the swift commercialization of
thermoplastic CFRP by pursuing initiatives with other automakers. Confi dent in the potential of this business to evolve into a major pillar of our
operations, we are aiming to achieve annual sales in the composites business of between ¥150 billion and ¥200 billion by fi scal 2020.
Development milestones
March 2011 Perfected technologies for the mass production of thermoplastic CFRP
that reduces molding time to less than one minute
November 2011 Resolved to build a pilot plant at our Matsuyama Plant (Japan)
(Scheduled to begin operating in 2012)
December 2011 Signed an agreement with General Motors to collaborate in the development of thermoplastic
CFRP components for use in mass-produced GM vehicles
April 2012 Established the Teijin Composites Application Center (United States)
Tightening of European CO2 Emissions Regulations
2009
175
2012
130
2020
g/km
95
2025
70
-45%
-60%
Down from the 2009 level
10 Teijin Limited
Q How were results in the electronics materials and
performance polymer products businesses in fi scal
2011?
A Operating income for polycarbonate resin declined sharply,
owing to a harsh operating environment for our customers, princi-
pally manufacturers in the electrical and electronics equipment fi eld,
a result of such factors as slack demand for liquid crystal display
(LCD) televisions, the European fi nancial crisis and the impact of the
Great East Japan Earthquake and the severe fl ooding in Thailand.
Demand for polyethylene terephthalate (PET) fi lm softened from the
third quarter for use in LCD refl ective fi lm and solar cell back sheets.
Q What do you see as your principal challenges in fi scal
2012 and how will you respond?
A In the polycarbonate resin business, operating conditions were
harsh through to the end of 2011, but demand began to improve
in January 2012, particularly in the PRC. Rising prices for key raw
materials and forceful moves by competitors to expand production
capacity are expected to have a continuing negative impact. To bol-
ster operating results, we will accelerate the global expansion of our
compounds business. We will also redouble our efforts to market
high-end and mid-range products to customers in Japan and
around the world.
Yoshio Fukuda
General Manager,
Electronics Materials
and Performance
Polymer Products
Business Group
Electronics Materials and Performance Polymer Products Business Group
Principal Products
Polycarbonate resin
Brand name Panlite®
Applications Electrical and electronics components, audiovisual (AV) and office
automation (OA) equipment, personal computer casings, optical
discs (Blu-ray discs, DVDs and CDs), precision instrument
components, automotive components (headlamps, door handles,
bumpers)
Brand names Panlite® Sheet, ELECLEAR®, PURE-ACE®
Applications Sheet Mobile phone front panels, flat panel LCD TVs (flame-resistant
sheet), automotive instrument panels, dummy cans for vending
machines
Film LCDs for mobile phones, personal digital assistants (PDAs) and
other handheld electronics equipment, touch screens (OA and
FA equipment, handheld video game machines)
PEN resin
Brand name Teonex®
Applications Cosmetics containers, school lunch dishware,
pharmaceuticals containers
PET film
Brand names Teijin®Tetoron®, Mylar®, Melinex®, Teflex®
Applications Industrial applications Film for use in LCD reflective film and in solar cell back sheets,
materials for LCDs and plasma and organic electroluminescent
displays (OELDs), cards (integrated circuit [IC] cards, ID cards,
radio frequency identification [RFID] chips), automotive products
(interior and exterior materials and electronics components)
Packaging materials Laminating film for beverage and food cans, shrink wrap, retort
pouches, environment-friendly plastic trays
PEN film
Brand name Teonex®
Applications Digital videocassettes (DVCs), high-density data backup tapes,
electronics materials, electronic circuit materials, high-performance
materials for automotive applications (seat sensors and hybrid
motor materials)
Processed film
Brand name Purex®
Applications Materials for LCDs, electronics materials, films for semiconductor
materials, medical materials, photocatalysts, moisturizing facial
masks
Brand name CurrentFine®
Applications Flexible panel displays, touch screens, membrane switch materials
ELECLEAR®
11Teijin Limited
Polycarbonate Resin
The world’s top fi ve manufacturers of polycarbonate resin are Bayer AG, Saudi Basic Industries Corporation (SABIC), Teijin, the Mitsubishi Group and Styron LLC. Together these companies account for approximately 80% of global production capacity. Although demand for polycarbonate resin began to pick up after bottoming out in October–December 2011, rising prices for key raw materials and the aggressive expansion of production capacity by competitors continue to have a detrimental effect on the market. However, while global demand shrank in fi scal 2011, in fi scal 2012 renewed demand in the PRC and other emerging economies is expected to drive growth of between 5% and 6%.
PET Film
The global market for PET fi lm rallied after bottoming out early in 2010, returning to the prerecession level in the fi rst half of fi scal 2010. However, in fi scal 2011, demand rose only 3%. Nonetheless, demand for refl ective PET fi lm for use in LCD backlights, a principal application for this product, is expected to rebound, while inventory adjustments by customers are nearing completion. Accordingly, demand is expected to expand by approximately 7% annually for the foreseeable future, led by the high-growth Asian market.
(Source: Teijin estimate)
Million tons
4
3
2
1
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 20102009 2011
(Source: Teijin estimate)
Million tons
2.5
2.0
1.5
1.0
0.5
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 20102009 2011
With inventory adjustments by LCD manufacturers nearing
completion, we expect demand for PET fi lm to begin recovering
in the second half of fi scal 2012. In this market, we will promote
the development of high-performance and low-cost refl ective
fi lm for use in LCD backlights. We will also take decisive steps to
expand sales of products with superior antihydrolitic properties
for use in solar cell back sheets.
Q What are your medium- to long-term strategies?
A We will focus on reinforcing the profi tability and competitive-
ness of both our polycarbonate resin and PET fi lm businesses by
fortifying our ability to provide attractive solutions.
In polycarbonate resin, we will direct our attention to achiev-
ing a dramatic increase in cost effectiveness by, for example,
modifying production methods. We will also step up efforts to
offer high-value-added products, such as specialty polycarbon-
ate copolymers and environment-friendly materials. In com-
pounds, we will foster the use of other types of resins to provide
comprehensive solutions. Our focus in processed products will
be on securing additional technologies and expertise that will
strengthen our offerings across the value chain—particularly from
components and devices through to fi nished products—thereby
enabling us to accelerate the development of thin-fi lm materials
for electronics applications. We will also focus on augmenting
operations in important growth businesses, including glazing
materials.
In PET fi lm, our medium- to long-term priority is to increase our
production capacity and expand sales in promising Asian markets.
Further, we will endeavor to optimize our product mix and work
with customers to build vertically integrated business models. While
refi ning the competitive advantages of our products in terms of
quality, chiefl y our superior insulation properties and excellent
resistance to heat and chemicals, we will press forward with the
development of distinctive new fi lms and processing technologies.
Global Market for Polycarbonate Resin
Global Market for PET Film
Global Market View
12 Teijin Limited
Q How did the pharmaceuticals and home healthcare
businesses perform in fi scal 2011?
A In the pharmaceuticals business, sales continued to expand
favorably for febuxostat, our novel treatment for hyperuricemia and
gout, and Synvisc Dispo, an intra-articular injection-form drug for
treating pain associated with osteoarthritis of the knee. Febuxo-
stat also earned recognition in Japan—where it is marketed as
Feburic—for outstanding effi cacy and for broadening the options
for treating hyperuricemia and gout, receiving the Prize for Science
and Technology (Development Category) for fi scal 2012, part of the
Commendation for Science and Technology, awarded by Japan’s
Ministry of Education, Culture, Sports, Science and Technology,
as well as the Pharmaceutical Society of Japan Award for Drug
Research and Development 2012.
In the home healthcare business, rental volume for mainstay
HOT equipment rose, while rentals of CPAP ventilators also
increased encouragingly. As a consequence, the pharmaceuticals
and home healthcare businesses reported increases in sales and
operating income.
Q What do you see as your principal challenges in fi scal
2012 and how will you respond?
A In pharmaceuticals, we will take decisive steps to bolster sales
of febuxostat, which we see as an important growth driver. With the
April 2012 approval in Japan for long-term prescription of this drug,
we will endeavor to increase domestic sales through the active
expansion of marketing efforts. Overseas, we currently have distri-
bution agreements for this drug covering 117 countries and territo-
ries. In fi scal 2012, we plan to launch in Taiwan, Hong Kong and
Mexico and will move swiftly to secure regulatory approval to mar-
ket the drug elsewhere. In the area of bone and joint disease, we
will focus on expanding sales of Bonalon®* Bag for I.V. Infusion
Pharmaceuticals: Teijin specializes in three key therapeutic areas, namely, bone and joint disease, respiratory disease and cardiovascular and metabolic disease, and in Japan com-mands a leading share of the markets for pharmaceuticals for treating bone and joint disease and respiratory disease. In the area of cardiovascular and metabolic disease, Teijin has posi-tioned febuxostat—a promising new treatment for hyperurice-mia and gout—as a strategic product with global currency and is pushing ahead with efforts to expand marketing world-wide, having secured exclusive distribution agreements for this drug covering 117 countries and territories.Home Healthcare: Teijin was the fi rst company to commer-cialize home oxygen therapy (HOT) services in Japan and maintains its position as the domestic market leader. Teijin is also Japan’s top provider of continuous positive airway pressure (CPAP) services. Overseas, Teijin provides home healthcare services in the United States, Spain and the ROK. Globally, approximately 400,000 individuals use Teijin’s home healthcare services.
Healthcare Business Group
* Bonalon® is the registered trademark of Merck Sharp & Dohme Corp.,
Whitehouse Station, NJ, U.S.A.
Kentaro Arao
General Manager,
Healthcare
Business Group
Principal Products
Bone and joint disease
Pharmaceuticals
Bonalon®* Treatment for osteoporosis
Onealfa® Treatment for osteoporosis
Synvisc Dispo™ Treatment for pain associated with osteoarthritis
of the knee
Home Healthcare
SAFHS® Sonic Accelerated Fracture Healing System
Respiratory disease
Pharmaceuticals
Mucosolvan® Expectorant
Spiropent ® Bronchodilator
Atrovent ® Prophylaxis for bronchial constriction
Rhinocort ® Treatment for allergic rhinitis
Alvesco® Inhaled corticosteroid agent for asthma
Home Healthcare
Hi-Sanso™ series Therapeutic oxygen concentrator
Mildsanso® Therapeutic oxygen concentrator
NIP NASAL® Noninvasive positive pressure ventilator (NPPV) for
sufferers of sleep apnea syndrome (SAS)
SLEEPMATE ® Positive pressure ventilator for sufferers of SAS
AutoSet™ Positive pressure ventilator for sufferers of SAS
GoodKnight ® Positive pressure ventilator for sufferers of SAS
SleepWatcher ® High-performance sleep disorder diagnostic system
Cardiovascular and metabolic disease
Feburic ® Treatment for hyperuricemia and gout
Tricor ® Treatment for hyperlipidemia
Other
Venilon ® Treatment for severe infectious diseases
Laxoberon ® Laxative
Bonalfa ® Treatment for psoriasis
13Teijin Limited
900 µg, which was launched in May 2012. This drug, which is Japan’s
fi rst intravenous drip–form treatment for osteoporosis, administered
once every four weeks, is attracting considerable attention.
In home healthcare, we will work to enhance our lineup of
HOT devices by adding new performance features and developing
smaller, lighter and lower-cost models. We will seek to bolster
rentals of CPAP ventilators by expanding the number of sleep labs
and are proceeding with the development of a monitoring system
that uses mobile phone networks. To reinforce the profi t structure
of our overseas home healthcare business, which encompasses
operations in the United States, Spain and the ROK, we will take
steps to further enhance operating effi ciency. On another front,
we will press ahead with preparations to enter the market for
devices used in stroke rehabilitation.
Q What are your medium- to long-term strategies?
A At present, marketing efforts for febuxostat target the devel-
oped economies, but in the years ahead we will concentrate on the
PRC and other emerging economies. We will also seek to broaden
our portfolio, with a particular emphasis on drugs for treating bone
and joint disease, respiratory disease and cardiovascular and meta-
bolic disease, both through in-house development and licensing in.
We will also employ effective life cycle management.
We will work to ensure sustainable profi tability in our home
healthcare business in Japan by promoting the use of CPAP equip-
ment to treat a wider range of diseases, as well as by introducing
new models, including portable HOT devices. At the same time,
we will accelerate global expansion and further hone operating
effi ciency with a view to increasing the profi tability of our overseas
home healthcare business.
Additionally, we will strive to expand into new healthcare
businesses, including sports medicine and home rehabilitation
for individuals suffering from musculoskeletal disorders, such as
locomotive syndrome.
Jan 2012 (Approved)
Aug 2011 (Filed)
Sept 2011
June 2012 (Approved)
July 2011
R&D PipelineAs of June 30, 2012
Area Code No. Target Disease
Phase of Clinical Trials Approved/New LaunchPhase I Phase II Phase III Filed
Bone and joint
disease
GTH-42V Osteoporosis
ITM-058 Osteoporosis
GTH-42J Osteoporosis
Respiratory disease NA872ET Expectorant
Cardiovascular and
metabolic disease
ITM-077 Type 2 diabetes
ITM-014 Acromegaly
NTC-801 Atrial fi brillation and fl utter
OtherGGS-MPA Microscopic polyangiitis
TV-02H (PRC) Psoriasis vulgaris
Hi-Sanso™ 3S
SLEEPMATE ® S9
WalkAide ® System
14 Teijin Limited
Q How did the trading and retail business do in fi scal 2011?
A In textiles and apparel, active efforts to foster alliances in Japan
and overseas supported brisk sales. In industrial textiles and materials,
we saw an increase in shipments of industrial textiles, owing to a rapid
recovery in sales for automotive-related applications and demand associ-
ated with reconstruction efforts in areas devastated by the Great East
Japan Earthquake.
Q What do you see as your principal challenges in fi scal 2012
and how will you respond?
A Effective from fi scal 2012, the polyester fi bers for apparel component
of the polyester fi bers business has been incorporated into the Trading
and Retail Business Group, a move aimed at strengthening our respon-
siveness to market change. With companies on both the supply and the
demand sides accelerating the shift of their operations outside Japan to
other parts of Asia, we will take steps to reinforce our integrated global
business model, which encompasses everything from the procurement
of materials and sewn items and production, through to sales. We will
also strengthen the production and processing capabilities of our OEM
suppliers in the Association of Southeast Asian Nations (ASEAN) region.
Additionally, we will leverage our R&D bases in the PRC to strengthen
relations with the China Chemical Fibers Association (CCFA) and local
blue-chip companies.
Q What are your medium- to long-term strategies?
A To date, we have sought to build on our technological expertise as
a manufacturer and on our planning prowess to evolve our innovative
business model, bolstering our logistics, credit management and infor-
mation capabilities—thereby enhancing our position as a specialized fi ber
products trading company—and linking these capabilities organically.
These efforts have been guided by with what we call our “3C” approach:
Coordinating our value chain; Compounding materials, technologies and
human resources to cultivate new business opportunities; and, Converting,
that is, maximizing our converter functions to add value. The incorpora-
tion of the apparel component of the polyester fi bers business into our
business group has added polyester fi lament yarn and textile production
technologies, signifi cantly enhancing our integrated supply chain, market
responsiveness and ability to propose comprehensive solutions.
Trading and Retail Business Group
Our newly added polyester fi bers for apparel business encom-passes textile production bases in Japan, the PRC and Thailand, which spe cialize in high-performance, high-quality polyester textiles. Textiles and apparel, which is one component of our original products converting business, centers on a far-reaching global production and sales network that facilitates our involvement in diverse apparel-related businesses, from capabilities in materials development and procurement through dyeing, sewing and other processing stages. In industrial textiles and materials, the second component of our products converting business, we are capitalizing on the broad network and extensive specialized expertise we have cultivated in our polyester fi bers business, and on our superior converting capabilities, to provide a wide range of industrial and consumer-use products, including automotive-related materials and industrial and household items.
Toshihide Fukushima
General Manager,
Trading and Retail
Business Group
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re14 Teijin Limited
15Teijin Limited
Q How did the IT business perform in fi scal 2011?
A We continued to operate in an uncertain environment, owing to efforts
by companies to constrain IT spending, combined with the impact of the
Great East Japan Earthquake. Nonetheless, thanks to growth-oriented
investments and ongoing efforts to secure profi tability and reinforce our
operating structure, we achieved increases in both sales and operating
income.
Q What do you see as your principal challenges in fi scal 2012
and how will you respond?
A Given the increasing prevalence of smartphones, tablet computers and
other sophisticated information terminals, as well as advances in cloud-
based and other services, user requirements are expected to become
increasingly diverse and the scope of application for IT services is set to
expand. Guided by our new medium-term business plan, we will respond
to these and other changes in operating conditions by implementing deci-
sive measures to accelerate growth, particularly in our core businesses,
namely, internet services, healthcare solutions and GRANDIT®, a web-based
enterprise resource planning (ERP) software package.
Q What can you tell us about your medium-term business plan?
A The watchword of the plan is ‘united innovation.’ Our fi rst priority
will be innovation that enables us to respond quickly to changes in the
operating environment, thereby helping us foster a corporate culture that
emphasizes a willingness to take on challenges, alongside the cultivation
of new businesses and services and quick and accurate responses to
market and technological change.
Second, we will target innovation that bolsters the scale and diversi-
fi es the nature of core businesses. This will involve stepping up efforts to
grow our net services and healthcare solutions businesses, augmenting
and adjusting the focus of IT services for corporate customers and driv-
ing overall growth by taking advantage of promising M&A opportunities.
Specifi c measures in the net services business include capitalizing on
the consumer shift to smartphones to expand into global markets and
to modify our business model, as well as to enhance profi tability and
develop a new platform for our social media services. In IT solutions for
the healthcare fi eld, we will intensify efforts to provide solutions for phar-
maceuticals manufacturers and health insurance associations, as well as
launch new services targeted at peripheral markets, including pharmacies
and nursing care service providers. We will also refi ne and refocus our
IT solutions for corporate customers by fortifying global support for
GRANDIT® customers and advancing the development of cloud-based
services for corporate groups.
To facilitate ‘united innovation,’ we will continue to implement mea-
sures that reinforce our operating foundation. Of particular note, we will
modify business processes and boost operations to better refl ect cus-
tomer perspectives and service quality concerns. We will also work to
secure and foster the talented human resources necessary for the further
global expansion of our operations.
IT Business Group
Norihiro Takehara
General Manager,
IT Business Group
Spearheaded by Infocom Corporation, Teijin’s IT business comprises net services for consumers, encompassing internet-, smartphone- and mobile phone–based services, and IT solutions for corporate and public sector customers.
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16 Teijin Limited
separator
TM
New Business Development Group
Kazuo Imose
General Manager,
New Business
Development Group
Q What can you tell us about your efforts to develop new
businesses?
A We are reinforcing R&D with the aim of promptly commercializing
achievements in four key areas, namely, bioplastics, high-performance
electronics materials, water treatment and advanced medical materi-
als. R&D efforts are led by corporate research facilities, notably the
Teijin Technology Innovation Center, the Integrative Technology
Research Institute and the Material Analysis Research Laboratories.
In the area of bioplastics, we are advancing the commercialization
of a number of promising products, including a highly heat-resistant
polylactic acid bioplastic (BIOFRONT), a bio-derived PET product
(ECOCIRLE Plantfi ber) and a bio-derived polycarbonate resin. In the
area of high-performance electronics materials, development efforts
are accentuating innovative thermoresistant LiB separators, which
respond to rising demand for LiBs that deliver greater safety and
capacity, and printable electronics, which signifi cantly streamline fab-
rication processes for semiconductors and other devices. In water
treatment, our goal is to provide comprehensive wastewater treat-
ment solutions. Of particular note, we are promoting the adoption
of the MSABP®* (Multi-Stage Activated Biological Process) system,
which uses the action of microorganisms, thereby making it possible
to effectively treat effl uent with high concentrations of organic sub-
stances. This system has already been selected for use in such
countries as Angola and the PRC. In advanced medical materials,
we are integrating materials technologies with healthcare technolo-
gies to develop materials for tissue repair, drug delivery systems
and medical equipment.
Q What is special about Teijin’s LiB separators and how
are efforts to commercialize progressing?
A LiB separators are widely used, with applications including
electric vehicles, mobile phones and notebook computers, and we
expect demand to continue rising for greater capacity and improved
safety. By using highly heat-resistant coatings, one made with aramid
materials and one with a fl uorine compound coating, we succeeded
in developing two types of LiB separator that achieve signifi cantly
higher capacity, as well as outstanding safety and a long lifespan.
We have secured the approval of several leading battery manufactur-
ers and have recently established a company to manufacture our
LiB separators in the ROK in a joint venture with a local partner.
The New Business Development Group has three basic mis-sions. The fi rst is to leverage Teijin’s incubation capabilities to facilitate the swift creation of new businesses. The second is to conduct investigative research to develop basic technolo-gies that will enable new businesses to germinate. The third is to promote research with a long-term perspective in areas that straddle existing businesses. Guided by these missions, this group focuses on developing advanced technologies and on transforming such technologies into commercially viable businesses with the objective of building a portfolio of promising businesses and ensuring sustainable growth.
* MSABP® is a registered trademark of Aquarius
Technologies Inc. of the United States.
17Teijin Limited
Recognizing technological innovation as vital to ensuring sustain-
able growth, we continue to place a high priority on R&D. Guided
by the Chief Science and Technology Offi cer, appointed as part of
an effort to reinforce our Group R&D organization as we entered fi s-
cal 2012, more than 1,600 researchers at nine major R&D sites in
Japan and seven overseas continue to undertake ambitious R&D
and contribute to the evolution of our unique solutions-oriented
business model.
For strategic purposes, we have grouped highly promising
markets into fi ve key fi elds: Sustainable transportation; information
and electronics; safety and protection; environment and energy;
and healthcare. We have also identifi ed three core technological
areas—high-performance fi bers and composite materials, high-
performance electronics and advanced medical materials—in
which we will concentrate R&D resources with the aim of providing
innovative solutions in these fi elds.
Transforming our Technology Portfolio to Facilitate the
Provision of Optimal Solutions
Restructuring our technology portfolio is crucial to the Teijin Group’s
evolution toward a business model that focuses on providing
solutions. Our materials businesses have achieved a certain degree
of success in meeting the needs of our customers, but that has
meant our business has traditionally emphasized the supply of
upstream materials, limiting our understanding of the needs of end
users. As a result, despite having superior production and proc-
essing technologies, our ability to provide effective solutions and
uncover latent market needs has been restricted. Under CHANGE
for 2016, we will shift our focus to creating a technology portfolio
that ensures a fi rm grasp of end users’ needs and which facilitates
the provision of optimal solutions further down the supply chain.
Research and Development
Transforming our technology portfolio
Rawmaterials
Preliminary processing
Secondaryprocessing
Additional high-value-added
processing
Healthcare technologies
Materialstechnologies
Finished products
Evolving toward a solutions-oriented business model
Development of materials
Components and devices Customers
Identification of needs
Value for customers
Integrated technologies
Solutions
Development ofapplications
18 Teijin Limited
Basic Objectives behind Transforming our Technology
Portfolio
Our fi rst objective in transforming our technology portfolio is to
broaden the scope of and add depth to existing technologies,
enabling us to enhance our technological advantages and expand
existing businesses. Second, we aim to reinforce existing and
acquire new processing technologies. Our purpose here is to
provide solutions further down the supply chain. To this end, we
will promote the design of distinctive components and devices by
championing the assimilation of advanced materials and sophisti-
cated processing technologies, as well as by combining and amal-
gamating various conventional materials developed independently
and with other companies. In addition, we will pursue collaboration
with customers in the development of new products. Third, we will
work to integrate materials and healthcare technologies, furthering
the creation of pioneering healthcare businesses in such areas as
materials for regenerative medicine and tissue repair and basic
materials for drug delivery systems.
Fostering the Next Generation of Teijin Researchers
In addition to seconding individuals to leading research institutions
both in Japan and overseas, we work to foster junior researchers
through such initiatives as the Teijin 21st Century Forum and the
Teijin Technology Advisory Council. Our Teijin Techno College is
staffed by former Teijin employees, retired from management-level
positions, who act as instructors, sharing their expertise, skill and
technological knowledge with current R&D personnel. We are also
fortunate to have Dr. Ei-ichi Negishi, a Nobel Prize in Chemistry
2010 laureate and a former Teijin employee, on staff at present
as a Teijin Group Distinguished Fellow, a capacity that enables
him to extend invaluable guidance to our researchers.
Cultivating New Technologies through Open Innovation
In line with our objective of providing customers with advanced
solutions in a timely manner, we are actively promoting open inno-
vation through partnerships involving industry, government and
academia, both in Japan and overseas. Such efforts are designed
to facilitate open, cooperative R&D that integrates basic research,
incubation and marketing, thereby accelerating the development
process.
Patent Applications in Fiscal 2011 (Japan)
Years ended/ending March 31
Patent Applications Related to Key Technological Themes (Japan)
High-Performance Fibers 137
Polyester Fibers 56
Films and Plastics 173
Pharmaceuticals and Home Health Care
23
New Business Development and others
83
Total 472
Intellectual Property
The principal responsibility of the Teijin Intellectual Property Center is to enhance the value of our intellectual property, a task that focuses on expanding our pat-ent portfolio and extending patent terms. To this end, we have identifi ed promising growth businesses and key fi elds and are actively fostering inventions and new technologies, products and processes; applying for patents; securing intellectual property rights; and analyzing competi-tors’ patent information in core techno-logical areas. To enhance the effectiveness of intellectual property management, we are selective in seeking patent protection, main-taining a high percentage of applications for achievements related to signifi cant Groupwide technological themes. The Teijin Intellectual Property Center also works with manage-ment to address challenges pertaining to intellectual property and forges intellectual property strategies in close alliance with man-agement strategies. Of particular note, the center assesses the rel-ative merits of our intellectual property portfolio as it pertains to our signifi cant technological themes and takes steps to strengthen the portfolio as necessary to facilitate the formulation of business and technological strategies. With the further globalization of our oper-ations that will result from the restructuring of our geographic port-folio, the center is developing a new mechanism that will expand the scope of our intellectual property management capabilities beyond patents and trademarks to encompass the protection of knowledge and trade secrets.
Hideko Mihara
President,
Teijin Intellectual
Property Center
29%17%
37%
5%
New Business Development and othersrs
Pharmaceuticalsand HomeHealth Care
Films and Plastics
rformanceHigh-PerfrfFibers
12%PolyesterFibers
250
500
750
1,000
Number of applications
0
15
30
45
60
Key technological themes as a percentage of total applications
OthersKey technological themes
02007 2008 2009 20122010 2011
%
19Teijin Limited
2012 2016 2020
Materials for regenerative medicineand tissue repair
Basic materials for drug delivery systems
Materials for medical equipment
Sports medicine / locomotive syndrome
Clinical development
Products and systems
Marketing
Osteoarthritis treatment systems
Second-generation osteoarthritis treatment systems Pain relief equipment
Mechanical stresstreatment systems
Equipment for building muscular strength Active Aging Center
Materials for tissue repair (adhesive barrier materials)
Drugs for cellular therapy (treatments for stroke)
Materials for tissue repair (bone support materials)
Materials for tissue repair (complex sheets)
Percutaneous administration devices (for vaccinations)
Percutaneous administration devices (polymerized pharmaceuticals)
Injectable gels (polymerized pharmaceuticals)
Nanofiber materials (polymerized pharmaceuticals)
Materials for medical equipment (pump oxygenators)
Materials for medical equipment (vascular substitutes)
Development pipeline for new healthcare businesses
Guided by our CHANGE for 2016 medium- to long-term vision, which
designates promising businesses that straddle our existing green
chemistry and healthcare domains as “overlapping domains,” we
are working to cultivate exciting new healthcare businesses.
We have long conducted R&D aimed at integrating materials
technologies in our portfolio that respond to demand in the medical
fi eld—including technologies used in the development of bioabsorb-
able polymers and other new materials, as well as nanomaterials
processing and microforming technologies—with key Teijin health-
care technologies for cellular engineering, protein engineering, drug
formulation and medical equipment design. Looking ahead, we will
further efforts to reinforce existing and develop new technologies
that integrate materials and healthcare technologies.
New healthcare businesses we are targeting include radical
tissue repair treatment, which involves materials for regenerative
medicine and tissue repair; drug delivery systems, which combine
medical materials and pharmaceuticals; and healthcare for seniors,
which brings together materials for medical equipment, sports med-
icine and techniques for treating musculoskeletal disorders, such
as locomotive syndrome. Materials for regenerative medicine and
tissue repair currently under development include drugs for cellular
therapy, which are used in stroke therapy, adhesive barrier materi-
als and bone support materials. In the area of basic materials for
drug delivery systems, our efforts encompass the clinical develop-
ment of percutaneous administration devices and the development
of injectable gels and nanofi ber materials. In materials for medical
equipment, we are developing pump oxygenators and vascular
substitutes, among others, with the aim of achieving commercial-
ization by 2020. In sports medicine and techniques for treating
musculoskeletal disorders, we are stepping up efforts to develop
osteoarthritis treatment systems, as well as equipment used in
electrical muscle stimulation and pain relief treatment.
Materialstechnologies
Healthcaretechnologies
Nanomaterials processingMicroforming● Microstructured materials
New materials technologies● Bioabsorbable polymers● Biocompatible polymers
Cellular engineering
Protein engineering
Pharmaceuticals manufacturing
Medical equipment design● Device design● Performance analysis
Materials for regenerative medicine and tissue repairDrugs for cellular therapy, hemostaticmaterials, adhesive barrier materials,bone support materials
Basic materials for drug delivery systemsMicroneedle devices, injectable gels,nanofiber materials
Materials for medical equipmentPump oxygenators, vascular substitutes,artificial joints
Sports medicineEquipment used in the treatment ofosteoarthritis and locomotive syndrome
Philosophy behind efforts to foster technologies that integrate materials and healthcare technologies
Promoting R&D in Overlapping Domains
20 Teijin Limited
We believe effective corporate governance is essential if a company is to steadily increase its returns to shareholders on their investments over the medium to long term, as well as to fulfi ll its responsibilities to its various stakeholders. To these ends, we have implemented pioneering reforms aimed at enhancing transparency, ensuring fairness and objectivity and accelerating decision making. These include establishing an Advisory Board, reducing the number of directors on Teijin’s Board of Directors, introducing a corporate offi cer system and adopting a compensation system for directors that is linked to our business performance.
Board of Directors and Corporate Offi cers
To expedite decision making and clarify responsibility for frontline
management, we have set the number of directors on Teijin’s Board
of Directors at a maximum of 10. We have also introduced a corpo-
rate offi cer system and have delegated considerable authority and
responsibility to those offi cers. To ensure the appropriate separation
of responsibility for frontline management and monitoring/supervising,
the Board of Directors is directly responsible to the chairman, who
does not participate in internal, operations-level decision making.
Four of the directors on the Board are independent and
appointed from outside the Company. Responsibility for supervising
the internal directors is vested with these independent outside direc-
tors, who also draw on the exceptional insight they bring to the
position to advise on management-related issues, thereby helping
to increase the transparency and accountability of the Board.
Corporate Governance Milestones
1993 Establishes corporate philosophy, Standards of Conduct and
Corporate Code of Conduct
1998 Establishes Corporate Ethics Committee and formulates
Corporate Standards of Conduct
1999 Installs Advisory Board and introduces corporate offi cer system
2003 Adopts holding company system and issues Teijin Group
Corporate Governance Guide
2007 Updates Teijin Group Corporate Governance Guide
2009 Updates Teijin Group Corporate Governance Guide
2012 Increases the number of independent outside directors to four
Teijin’s Disclosure Policies
1. In disclosing information, Teijin’s basic policy is to disclose the same
content both in and outside Japan simultaneously.
2. In addition to disclosing legally stipulated fi nancial information,
Teijin proactively discloses corporate information from the perspective
of good CSR.
3. Teijin’s general meetings of shareholders are open meetings,
wherein communicating with shareholders is our fi rst priority.
Audit System and Board of Auditors
Teijin’s Board of Auditors comprises fi ve members, three of whom
are independent outside corporate auditors, thereby ensuring trans-
parency and the effective monitoring and auditing of all aspects of
management, including Total Risk Management (TRM). To further
enhance the effi cacy of monitoring and auditing, full-time corporate
auditors not only attend meetings of the CEO Corporate Strategic
Committee and the Management Committee, but also coordinate
meetings of the Group Board of Auditors and may, in addition,
serve concurrently as outside corporate auditors for core Group
companies.
Advisory Board
The Advisory Board is a consultative body that is tasked with advis-
ing on all aspects of management and evaluating the performance
of top executives. The Board, which has two ordinary meetings
each year, comprises six or seven leading experts from outside
the Company—of whom four are Japanese and two or three
non-Japanese—as well as Teijin’s chairman and its president, who
also serves as CEO. The Advisory Board additionally functions as a
nomination and remuneration committee and is charged with delib-
erating the replacement of the CEO and putting forward succes-
sors, proposing candidates for chairman, reviewing systems and
standards governing remuneration for directors and evaluating the
performance of the CEO and representative directors. Compensa-
tion for directors is based on consolidated ROA, calculated using
Corporate Governance
Teijin’s Three-Pronged Approach to Management
Businessstrategies
Corporategovernance CSR
Board of Directors Board of Auditors Advisory Board
Total number of individuals 10 5 8
Number of independent
outside individuals 4 3 6
Percentage of independent
outside individuals 40% 60% 75%
Note: Teijin has formulated its own requirements concerning the independence
of outside directors and corporate auditors that are comparable with those
mandated by U.S. stock exchanges.
Percentage of Independent Outside Members on Teijin’s BoardsAs of July 2012
21Teijin Limited
New Business
Development Group
IT
Trading and Retail
Healthcare
Electronics Materials and
Performance Polymer Products
Advanced Fibers and
Composites
Six
Business
Groups
Majority of members are external
Corporate Governance System
Holding Company System
Ten members(of whom four are external)
Five members(of whom three are external)
Advisory Board
Shareholders’Meeting
Board of Directors
Board of Auditors
CEOTRM Committee
Nomination and Remuneration
Group Board of Auditors
Management CommitteeHeads of Business Groups
and Chief Officers
CEO Corporate
Strategic CommitteeChief Officers
One focus of the management
reforms we initiated in 1999 was the
creation of a fi rst-class corporate
governance system, a move
designed to bring Teijin in line with
other top global players. Our Advisory Board performed a key role
in this effort. In addition to leading experts from Japan, the Advisory
Board’s original members included John A. Krol, former chairman
of global chemicals giant DuPont, and Sir Ronald Hampel, previ-
ously chairman of ICI and of the Hampel Committee, which estab-
lished certain key principles of corporate governance in the United
Kingdom. Both these gentlemen took a very active role in Advisory
Board discussions. Subsequent Advisory Board members have
also made valuable contributions that have consistently enhanced
both our corporate governance system and our corporate value.
Toru NagashimaChairman of Teijin
John W. HimesFormer Senior Vice-President
of DuPont
Lord Leon BrittanVice-Chairman of UBS
Investment Bank
Hajime SawabeExecutive Advisor,
TDK Corporation
operating income; consolidated ROE; and consolidated operating
income—specifi cally, on an examination of whether those targets
have been met and/or improvements seen—as well as on a
qualitative assessment of each individual director’s execution of
his or her duties.
Compliance and Total Risk Management
We operate on the principal that effective corporate governance
depends on strict compliance and comprehensive risk manage-
ment. Individuals employed by the Teijin Group are required not
only to comply with relevant laws and regulations, but also to act
Yutaka IimuraSpecial Envoy of the Government
of Japan (Middle East, Europe)
Nobuo SekiCorporate Advisor,
Chiyoda Corporation
Kenichiro SenohPresident and Chairperson, The
Industry-Academia Collaboration
Initiative Nonprofi t Organization
Shigeo OhyagiPresident and CEO of Teijin
The Teijin Group’s Corporate Governance SystemAs of July 2012
Advisory Board MembersAs of July 2012
with good faith as a businessperson and a member of society in
accordance with ethical and social norms. In line with this convic-
tion, we formulated the Corporate Code of Conduct and the Corpo-
rate Standards of Conduct, which set forth consistent guidelines
for the entire Teijin Group, and work diligently to reinforce aware-
ness of compliance issues among management and employees.
As a countermeasure to the risks and uncertainties we face
as a corporate entity, we established our TRM Committee,
which answers directly to the Board of Directors and which is
charged with the comprehensive management of strategic and
operational risk.
22 Teijin Limited
Management Team
Board of Directors, Corporate Auditors, Advisory Board, Chief Offi cers and Business Group General ManagersAs of July 2012
Board of Directors
Chairman of the Board
Toru Nagashima
President and CEO,
Representative Director
of the Board
Shigeo Ohyagi
Executive Vice-President,
Representative Director
of the Board
Norio Kamei
Senior Executive Officer,
Representative Director
of the Board
Osamu Nishikawa
Senior Executive Officer,
Member of the Board
Takashi Takahashi
Executive Officer,
Member of the Board
Yoshio Fukuda
Independent Outside Director
Hajime Sawabe
Independent Outside Director
Yutaka Iimura
Independent Outside Director
Kenichiro Senoh
Independent Outside Director
Nobuo Seki
Corporate Auditors Full-Time Atsuo Amano
Full-Time Toshiaki Yatabe
Independent Outside Toshiharu Moriya
Independent Outside Noriko Hayashi
Independent Outside Nobuo Tanaka
Advisory Board Toru Nagashima (Chairman)
John W. Himes
Lord Leon Brittan
Hajime Sawabe
Yutaka Iimura
Nobuo Seki
Kenichiro Senoh
Shigeo Ohyagi
Business Group
General Managers
Advanced Fibers and Composites Norio Kamei
Electronics Materials and
Performance Polymer Products Yoshio Fukuda
Healthcare Kentaro Arao
Trading and Retail Toshihide Fukushima
IT Norihiro Takehara
New Business Development Group Kazuo Imose
Chief Offi cers Corporate Strategy Offi cer Kazuhiro Yamamoto
Chief Science and Technology Offi cer Takashi Takahashi
Chief Marketing Offi cer Jun Suzuki
Chief Social Responsibility Offi cer Osamu Nishikawa
Chief Financial Offi cer Yoshihisa Sonobe
Chief Human Resources Offi cer Yasumichi Takesue
Chief Engineering Offi cer Yo Goto
General Manager—Raw Materials,
Polymers & Procurement DivisionYasuhiro Hayakawa
23Teijin Limited
Selective CSR
Advanced CSR
Philanthropic activities
Personnel and occupational issues,
Purchasing and procurement
Basic CSR Compliance, Risk management, ESH, Disaster mitigation,
Product liability issues and quality assurance
Chief Social Responsibility Officer
Group CSR Committee
ESH Office
Risk Management Office
CSR Planning Office
Group Compliance and Risk Management Subcommittee
Group ESH Subcommittee
Group Product Liability and Quality Assurance Subcommittee
Group Secure Export Control Conference
Group Environmental Management Promotion Subcommittee
Group CSR Promotion Subcommittee
CSR Management
The Evolution of Teijin’s CSR Program
The basic goals underlying our approach to CSR are articulated
by the phrases, “Quality of Life,” “In Harmony with Society,” and
“Empowering our People,” which comprise the Teijin Group corpo-
rate philosophy, set forth in 1993. To achieve the goals entailed in
this philosophy, we have formulated a basic policy for CSR and
continue to implement systematic, well-planned initiatives. In April
2005, we inaugurated the role of Chief Social Responsibility Offi cer
and created an internal organization to coordinate all aspects of our
CSR program, including corporate ethics; compliance; risk man-
agement; environment, safety and health (ESH); and efforts to con-
tribute to society. We have also developed specifi c policies, targets
and strategies and continue to promote a wide range of related
activities. Fiscal 2011 was our fi rst year as a member of the United
Nations Global Compact. By joining this program, we have commit-
ted ourselves to abiding by a set of universally accepted principles
related to human rights, labor practices, environmental concerns
and the prevention of corruption.
Advancing CSR Management
We have categorized our various CSR initiatives as addressing
“basic,” “advanced” or “selective” issues. This categorization has
enabled us to clarify the focus of and appropriate course of action
for these initiatives, set medium-term goals and enhance the
effectiveness of our activities.
To date, our CSR management system has centered on the
CSR Planning Offi ce and the ESH Offi ce. Acknowledging the
increasingly important role of risk manage-
ment, effective from fi scal 2012 we have also
established the Risk Management Offi ce.
Environmental Preservation
Teijin’s Sustainable Environment
Declaration
Having long recognized environmental issues
as a crucial management responsibility, in
1992 we formulated the Teijin Group Global
Environmental Charter. Today, we remain
committed to protecting the environment
through ambitious measures. In July 2007, we
published our Sustainable Environment Decla-
ration, which outlines three principal elements:
Environmental preservation, environmental
design and environmental business. In line with
these elements, we continue to implement a
variety of progressive initiatives. In fi scal 2012,
we established the Group Environmental Man-
agement Promotion Subcommittee as the
sixth prong of our Group CSR Committee,
Corporate Social Responsibility
SOCIALLY RESPONSIBLE INVESTMENT
As of July 2012, the Teijin Group is included in the Dow Jones Sustainability Indexes (criteria for inclusion:
economic, environmental and social performance); the FTSE4Good Index Series, which measures the performance of companies that meet globally recognized CSR standards
(criteria for inclusion: efforts to ensure environmental sustainability, development of positive relationships with
stakeholders and support for universal human rights); and the Ethibel Investment Register (criteria for inclusion: ethical economic policy, environmental policy, internal
social policy and external social policy).
Teijin’s CSR Framework
Teijin’s CSR Management System
24 Teijin Limited
50
100
150
200
0 2003 2004 2005 2015 20172012
23%
20%
160
120
7964
45
20
20%
50%
20%
45%57%
30% 35%
1% %7Number of female employees in management positions as a percentage of the total (Based on data for the 12 main domestic Teijin Group companies)
Number of individuals Years ended / ending March 31
Japan
North Americaand Europe
Emergingeconomies and Asia
FY2011 FY2016Around
FY2020
We are committed to creating a working environment that supports personal growth and skill enhancement and which encourages employees to achieve their full potential. In our new medium- to long-term management vision, CHANGE for 2016, we have identifi ed the transformation of our human resources portfolio as a crucial component of our strategy for reinforcing our management founda-tion and achieving growth. Accordingly, we are stepping up efforts to promote diversity in hiring and in maximizing capabilities, enhance early-career efforts to cultivate human resources and ensure effective global placement, all with the aim of fostering a global and highly diverse labor force. To promote diversity in hiring, we are recruiting on a worldwide basis, having set up recruiting offi ces in four locations, namely, Japan, the United States, Europe and Asia. We are also increasing the number of female candidates hired (30% or more of new grad-uates recruited in Japan) and expediting the promotion of female employees to managerial positions. To enhance early-career efforts to cultivate human resources, we are taking swift steps to identify and foster individuals with the potential to become tomorrow’s global frontline leaders, as well as expanding overseas training opportunities and assignments for junior employees and developing and implementing common global systems for job grading and performance evaluation. To ensure effective global placement, we are developing and implementing a global human resources database and promoting cross-border assignments.
Accelerating the promotion of female employees to managerial positions
Human Resources
1
2
3
4
Million tons Years ended March 31
0 1991 2006 2007 2008 2010 20112009
Overseas
Japan
2012
making it possible for us to ensure environmental strategies are
consistent with the Group’s strategies for growth.
CO2 Emissions from Teijin Manufacturing Operations Worldwide
Item Scope Minimum Target
CO2 emissions Japan 20% reduction from the fi scal 1990 level
Chemical substance emissions
Global 80% reduction from the fi scal 1998 level
Disposal of unusable industrial waste
Global 85% reduction from the fi scal 1998 level
Social Responsibility
Creating Bonds of Trust
Individual Teijin Group sites and companies take the initiative in
implementing corporate citizenship initiatives in their own communi-
ties. These efforts are complemented by a Groupwide social contri-
bution program, which was formulated and launched in fi scal 2006.
This program places particular emphasis on three areas—the envi-
ronment, international exchange and social education—and encom-
passes an employee volunteer scheme that includes days off for
volunteer activities and extended leave designed to enable employ-
ees to become, for example, registered bone marrow donors and
volunteer fi refi ghters. In fi scal 2011, we introduced the Volunteer
Support Program, which is intended to assist employees’ efforts
to contribute to society and encourage employee participation in
volunteer activities. Expenses for volunteer activities are covered
in part by donations from concerned employees and directors.
In the wake of the Great East Japan Earthquake, which struck
on March 11, 2011, we donated more than ¥500 million worth
of funds and relief supplies. In January 2012, we joined the
Kesennuma Kizuna (“strong bond”) Project, an initiative led by the
National Institute of Advanced Industrial Science and Technology’s
Smart Life Care Consortium that seeks to provide ongoing support
for efforts by inhabitants of Kesennuma, Miyagi Prefecture, to
restore self-reliance. In our capacity as a participant in this project,
we have supplied a variety of items, including wastewater treatment
systems for use at temporary emergency housing and curtains
made with heat-retentive polyester fi bers manufactured by Teijin
Fibers Limited. Looking ahead, we will continue working to provide
meaningful assistance to the communities affected by the disaster.
Shifting the composition of our human resources portfolio
Principal Environmental Targets of the Teijin Group for 2020
25Teijin Limited 25Teijin Limited
Financial Section
Financial Highlights and
Consolidated 10-Year Summary 26
Management’s Discussion and Analysis 28
Summary 28
Results of Operations 29
Business Segment Results 30
Financial Position 33
Outlook for Fiscal 2012 34
Risk Factors 35
Consolidated Financial Statements 36
Consolidated Balance Sheets 36
Consolidated Statements of Income 38
Consolidated Statements of Comprehensive Income 39
Consolidated Statements of Changes in Net Assets 40
Consolidated Statements of Cash Flows 42
Notes to Consolidated Financial Statements 43
Independent Auditors’ Report 71
26 Teijin Limited
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
815.7854.4
48.6
34.0
890.4 874.6908.4
938.1
1,009.61,036.6
943.4
765.8
13.418.0
75.1
65.2
76.8
38.7
51.9
35.3
4.0%4.4%
5.7%
8.2%
7.4%
6.3%
1.9%1.8%
6.0%
4.0%
0
200
400
600
800
1,000
1,200
0
20
40
60
80
100
120
0
2
4
6
8
10
12
Billions of yen
Net SalesYears ended March 31
Billions of yen %Operating Income
Operating Margin
Notes:
1. The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥82.19 to U.S.$1.00, the prevailing exchange rate at March 31, 2012.
2. Throughout this annual report, return on equity (ROE) is calculated as net income divided by average shareholders’ equity, and return on assets (ROA) is calculated as oper-
ating income divided by average total assets. Shareholders’ equity = Total net assets at year-end – Subscription rights to shares at year-end – Minority interests at year-end.
3. The debt-to-equity ratio is calculated as interest-bearing debt at year-end divided by shareholders’ equity at year-end.
Financial Highlights and Consolidated 10-Year Summary
Years ended/as of March 31 2003 2004 2005 2006
Operating Results Net sales ¥ 890,434 ¥874,569 ¥908,389 ¥938,082
Operating income 35,298 38,745 51,865 76,757
Net income (loss) (20,977) 8,455 9,159 24,853
Financial Position Total assets ¥1,036,518 ¥914,502 ¥852,029 ¥943,991
Interest-bearing debt 443,564 356,658 277,032 298,298
Shareholders’ equity 278,527 293,898 290,586 338,609
Cash Flows Cash fl ows from operating activities ¥ 58,316 ¥ 44,973 ¥ 73,313 ¥ 75,491
Cash fl ows from investing activities (65,919) (16,715) 12,708 (74,062)
Free cash fl ow (7,603) 28,258 86,021 1,429
Cash fl ows from fi nancing activities 10,842 (32,325) (79,643) 1,511
Per Share Data Net income (loss) ¥ (22.7) ¥ 9.0 ¥ 9.7 ¥0 26.6
Shareholders’ equity 300.3 316.8 313.3 364.8
Cash dividends 6.5 6.5 6.5 7.5
Other Data Capital expenditure ¥ 70,184 ¥ 52,996 ¥ 54,135 ¥ 66,777
Depreciation and amortization 53,028 52,794 52,287 50,389
R&D expenses 29,880 32,830 30,024 31,196
Number of employees 23,265 20,551 18,960 18,819
27Teijin Limited
12.6
(43.0)
3.3%
(35.7)-12.3%
25.2
-12.4%
9.1%
12.0
4.2%
325.2361.3 320.3
267.4
1.6%
6.1%
1.18 times
0.94 times
1,016.0
874.2
823.1
761.5
261.0
4.5%
0.89 times
762.1
0.83 times
1.18 times
6.5%
1.9%
0
200
400
600
800
1,000
1,200
0
2
4
6
8
10
12
0
0.5
1.0
1.5
2.0
2.5
3.0
-45
-30
-15
0
15
30
45
-15
-10
-5
0
5
10
15
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
Years ended March 31 As of March 31
Billions of yenNet Income (Loss)
%ROE
TimesBillions of yen %
Total Assets Interest-Bearing DebtROADebt-to-Equity
Ratio
Millions of yen Percentage change Thousands of U.S. dollars
2007 2008 2009 2010 2011 2012 2012/2011 2012
¥1,009,586 ¥1,036,624 ¥943,410 ¥765,840 ¥815,656 ¥854,371 +4.7% $ 10,395,072
75,061 65,162 17,966 13,436 48,560 34,044 -29.9% 414,211
34,125 12,613 (42,963) (35,684) 25,182 11,979 -52.4% 145,748
¥ 999,917 ¥1,015,991 ¥874,157 ¥823,071 ¥761,535 ¥762,118 +0.1% $ 9,272,637
295,480 325,245 361,342 320,285 267,400 261,034 -2.4% 3,175,983
366,753 391,010 305,577 271,306 284,236 292,030 +2.7% 3,553,121
¥ 96,456 ¥ 53,740 ¥ 40,392 ¥ 80,433 ¥ 77,132 ¥ 53,669 $ 652,987
(87,065) (79,218) (116,304) (33,437) (27,745) (35,165) (427,850)
9,391 (25,478) (75,912) 46,996 49,387 18,504 225,137
(19,074) 16,080 79,178 (42,949) (42,063) (14,123) (171,834)
Yen U.S. dollars
¥ 36.8 ¥ 13.2 ¥ (43.7) ¥ (36.3) ¥ 25.6 ¥ 12.2 $ 0.15
395.2 397.3 310.5 276.2 288.8 296.7 3.61
10.0 8.0 5.0 2.0 5.0 6.0 0.07
Millions of yen Thousands of U.S. dollars
¥ 75,698 ¥ 84,641 ¥ 75,806 ¥ 36,314 ¥ 29,249 ¥ 32,294 $ 392,919
54,009 62,668 67,364 61,879 56,410 52,304 636,379
35,097 36,282 37,630 33,356 31,483 31,845 387,455
19,053 19,125 19,453 18,778 17,542 16,819
* Excluding the impact of the standardization of accounting periods.
28 Teijin Limited
Management’s Discussion and Analysis
Operating Environment
Global economic conditions were generally soft in fiscal 2011,
ended March 31, 2012. With the world still reeling from the destruc-
tion wrought by the Great East Japan Earthquake of March 11,
2011, only seven months later, in October 2011, Thailand was hit
by massive floods that resulted in global supply chain disruptions.
The impact of the European sovereign debt crisis began to spill
over into the real economy, slowing growth in Europe as well as
overseas. In Japan, economic conditions were also impeded by
such factors as electric power shortages and the unprecedented
strength of the yen and remained harsh throughout the period.
Strategies in Action
Having designated fiscal 2011 as the year in which we would repo-
sition Teijin on a growth trajectory, we focused on manifesting the
positive results of structural reforms, as well as on strengthening
our sales capabilities and R&D platform. We also continued to place
a high priority on securing and enhancing financial soundness and
at the same actively fostered businesses expected to support future
growth, as well as promising projects.
Operating Results
With the aim of guaranteeing timely disclosure and the efficiency of
business performance management, effective from fiscal 2011, all
consolidated subsidiaries of Teijin now close their books on March
31. As a consequence, for this fiscal year only, certain consolidated
subsidiaries and equity method affiliates reported operating results
for a 15-month period (January 1, 2011–March 31, 2012). Results
excluding the impact of this change are provided, where relevant,
for convenience only.
Billions of yen
Years ended March 31 2011 2012 Change
Net Sales ¥815.7 ¥854.4 4.7%¥791.0* –3.0%
Net sales totaled ¥854.4 billion, up 4.7% from fiscal 2010. This
increase was attributable to the positive impact of the standardiza-
tion of accounting periods for all consolidated subsidiaries of Teijin.
However, if this factor is discounted, net sales declined, owing
primarily to a slump in sales in the Films and Plastics segment.
Billions of yen
Years ended March 31 2011 2012 Change
Operating Income ¥48.6 ¥34.0 –29.9%
¥35.3* –27.3%
Operating income declined considerably, mainly attributable to sup-
ply chain disruptions caused by the natural disasters in Japan and
Thailand, as well as to lackluster conditions in electronics markets
Summary worldwide, which caused a deterioration of results in the Films and
Plastics segment.
Billions of yen
Years ended March 31 2011 2012 Change
Net Income ¥25.2 ¥12.0 –52.4%
¥13.8* –45.2%
Declines in operating income and equity in earnings of affiliates,
as well as an extraordinary loss resulting from amendments to the
employee retirement benefit plans of certain European subsidiaries,
combined to cause a substantial drop in net income.
Billions of yen
As of March 31 2011 2012 Change
Total Assets ¥761.5 ¥762.1 0.1%
Total assets were essentially level, despite constraints on major capi-
tal investment and the progress of depreciation and amortization,
owing to increases in trade notes and accounts receivable and other
components of working capital.
Billions of yen
Years ended March 31 2011 2012
Free Cash Flow ¥49.4 ¥18.5Free cash flow fell steeply as the sizeable decline in net income
drove down net cash and cash equivalents provided by operating
activities, while outlays for capital investment pushed up net cash
and cash equivalents used in investing activities.
Key Indicators
Years ended March 31 2011 2012
ROA 6.1 % 4.5 %
ROE 9.1 % 4.2 %
Debt-to-equity ratio 0.94 times 0.89 times
Owing to the marked declines in operating income and net income,
return on assets (ROA)—calculated using operating income—and
return on equity (ROE) retreated sharply. The debt-to-equity ratio
improved slightly, reflecting the reduction of interest-bearing debt.
Tasks Ahead
Fiscal 2012 is the first year of our new medium- to long-term
management vision, CHANGE for 2016. Guided by this, we will
implement basic strategies for transforming our four fundamental
portfolios—strategies that reflect effective risk management—and
will promote initiatives aimed at strengthening our sales and devel-
opment capabilities. In all these efforts, we will move swiftly and
with purpose, mindful of our commitment to securing profitable
sustainable growth, a key element of our long-term vision.
29Teijin Limited
of net sales, up 0.3 percentage point. R&D expenses rose 1.1%,
or ¥362 million, to ¥31.8 billion, reflecting ongoing forward-looking
investments in corporate research in key technological areas and
in the cultivation of new businesses.Net Sales
In the period under review, we reported consolidated net sales
of ¥854.4 billion, an increase of 4.7%, or ¥38.7 billion, from fiscal
2010. Sales in our materials businesses accounted for 52% of net
sales, the same as in fiscal 2010, while sales in overseas markets
represented 39% of the total, up 2.0 percentage points.
Discounting the impact of the standardization of accounting
periods for all consolidated subsidiaries of Teijin, consolidated net
sales amounted to ¥791.0 billion, down 3.0%, or ¥24.6 billion, as
the natural disasters disrupted the supply chain and results in the
Films and Plastics segment worsened, a trend precipitated by list-
less global electronics markets. Nonetheless, all other segments
reported moderate sales increases.
Costs and Expenses
Cost of sales rose 7.3%, or ¥42.9 billion, to ¥629.2 billion, a
consequence of costs incurred by subsidiaries that changed their
accounting period and of rising prices for fuel and raw materials. As
a percentage of net sales, cost of sales edged up 1.8 percentage
points, to 73.6%, reflecting the rising raw materials prices and
fuel costs and reduced operating rates in response to production
adjustments in the second half of the period. Selling, general and
administrative (SG&A) expenses rose 6.7%, or ¥10.0 billion, also
reflecting the standardization of accounting periods, as well as an
increase in labor costs. SG&A expenses were equivalent to 18.6%
Results of Operations
Operating Income
Despite favorable growth in operating income in the High-
Performance Fibers, the Pharmaceuticals and Home Health Care
and the Trading and Retail segments, operating income declined
29.9%, or ¥14.5 billion, to ¥34.0 billion, mainly attributable to sup-
ply chain disruptions caused by the natural disasters in Japan and
Thailand, as well as to lackluster conditions in electronics markets
worldwide, which caused a deterioration of results in the Films and
Plastics segment. As a consequence, the operating margin dipped
2.0 percentage points, to 4.0%. Discounting the impact of the stan-
dardization of accounting periods, operating income fell 27.3%, or
¥13.3 billion, to ¥35.3 billion.
Increases in sales volume in the High-Performance Fibers and
the Pharmaceuticals and Home Health Care segments and higher
sales prices had a positive impact of ¥32.0 billion on operating
income, while rising prices for fuel and raw materials, along with
a decline in sales volume in the Films and Plastics segment and
other factors, had a counteracting negative impact of ¥46.5 billion,
resulting in the net decline of ¥14.5 billion.
Effective from fiscal 2011, the Company and its domestic
consolidated subsidiaries adopted a new method of depreciation,
switching from the declining balance method to the straight-line
750
800
850
900
0 2011 2012
¥815.7Net sales
¥ 854.4
Net sales
Pharmaceuticals and Home Health Care
+6.6
Others
+2.4
High-Performance Fibers
+17.4
Polyester Fibers
+6.4
Films and Plastics
-1.7
Trading and Retail
+7.7
Billions of yenAnalysis of Net Sales
Years ended March 31
750
800
850
900
0 2011 2012
¥815.7Net sales
¥ 791.0
Net sales
Pharmaceuticals and Home Health Care
+3.1
Trading and Retail
+2.0
Others
+2.4
High-Performance Fibers
+0.9
Polyester Fibers
+3.4
Films and Plastics
-36.5
Billions of yen
Analysis of Net SalesExcluding the impact of the standardization of accounting periods
Years ended March 31
25
50
75
100 40
30
20
10
%%
0 02008 2009 2010 20122011
75.3% 76.8% 74.9% 71.9%
15.0%17.3%
18.9% 18.3%
73.6%
18.6%
Years ended March 31
Cost of Sales as a Percentage of Net Sales
SG&A Expenses as aPercentage of Net Sales
25
50
75
100
0 2011 2012
¥48.6 Operatingincome
¥ 34.0
Sales prices up +¥23.0Raw materials prices and fuel costs up
-¥27.0
Sales volume up(High-Performance Fibers, Pharmaceuticals and Home Health Care)+¥9.0
Sales volume down (Films and Plastics)-¥13.0
Other
-¥6.5
Billions of yenAnalysis of Operating Income
Years ended March 31
Operatingincome
30 Teijin Limited
High-Performance FibersSales in the High-Performance Fibers segment amounted to ¥120.7 billion. Operating income was ¥6.3 billion.
Aramid Fibers
Results were firm in most product categories.
The market for Twaron para-aramid fibers was solid, particularly
for use in automotive-related materials, ballistic-protection products
and fiber optic cables. Although the Great East Japan Earthquake
hindered domestic demand for Technora para-aramid fibers from
some quarters for use in composite materials and civil engineering
applications, overall demand remained steady, supported by over-
seas demand for automotive-related applications. Despite firm
domestic demand for use in protective clothing, Teijinconex meta-
aramid fibers entered an adjustment phase as demand slowed in
Japan for use in filters, a consequence of the strong yen, and in
Europe for use in industrial materials, reflecting the economic slow-
down. In this environment, we continued to push ahead with active
efforts to enhance profitability by reducing costs and cultivating
new applications for all products.
Carbon Fibers and Composites We proceeded with assertive efforts to promote the use of thermoplastic CFRP.
Demand for Tenax carbon fibers was favorable for use in aircraft
and comparatively firm for use in compounds, particularly in Japan.
Despite increasing in the first half, demand for general industrial
applications and for use in sports and leisure equipment softened
overall, owing to such factors as production adjustments by cus-
tomers in Asia. We responded by working actively to cultivate new
markets and customers worldwide, including in emerging econo-
mies. To capitalize on new growth opportunities, we will promote
the development of technologies designed to improve productivity
and product quality, as well as the development of advanced
prepreg for aircraft applications and high-performance carbon
fibers for use in pressure vessels.
We also persevered with preparations for the commercialization
of revolutionary technologies that reduce the time required for
molding thermoplastic CFRP (CFRP made with thermoplastic resin)
components to less than one minute. In December 2011, we
signed an agreement with General Motors Company of the United
States to collaborate in the development of thermoplastic CFRP
components for use in mass-produced GM vehicles, a move that
bodes well for the expanded use of such components. We are also
currently building a pilot plant for the fully integrated production
of thermoplastic CFRP components at our factory in Matsuyama,
Ehime Prefecture, which is slated to begin operations by the middle
of fiscal 2012. In March 2012 we announced the establishment of
the Teijin Composites Application Center in the northeastern United
States, which will focus on cultivating new applications and markets
with the aim of accelerating the development of commercially viable
thermoplastic CRFP components. To facilitate the broad adoption
of CFRP in vehicles, we will continue to collaborate with automak-
ers in Japan and overseas in the development of lighter vehicle
bodies and components, thereby contributing to the reduction
of CO2 emissions and the improvement of fuel efficiency.
These technologies received the Global Automotive Carbon
Composites Technology Innovation Award from world-renowned
market research firm Frost & Sullivan for 2011. In addition, the tech-
nologies were honored with the Overall Innovation Award, as well
as winning the Best Product Innovation category, at the 2011
ICIS Innovation Awards, an event run by International Chemical
method, used by its overseas consolidated subsidiaries. This
change added ¥6.3 billion more to operating income than would
have been the case under the previous method.
Other Income (Expenses)
Other expenses, a net figure, amounted to ¥6.2 billion, up from
¥4.1 billion in fiscal 2010. This increase occurred despite the
absence of business structure improvement expenses and a
significant decline in earthquake-related loss and was attributable
to a ¥3.3 billion actuarial loss resulting from amendments to the
employee retirement benefit plans of certain European subsidiaries.
Other factors included a decline in equity in earnings of affiliates,
as well as a decrease in both gain on sales of investment securities
and gain on sales of property, plant and equipment, plus an
increase in impairment loss.
Net Income
Net income, affected by the declines in operating income and equity
in earnings of affiliates, fell 52.4%, or ¥13.2 billion, to ¥12.0 billion. As
a consequence, ROE retreated sharply to 4.2%, from 9.1% in fiscal
2010. Discounting the impact of the standardization of accounting
periods, net income dropped 45.2%, or ¥11.4 billion, to ¥13.8 billion.
Business Segment Results
50
100
150 30
20
10
-10
0 0
20122011 2012*2010
30
20
10
-10
0
%
103.4120.7
104.3
89.9
(7.7)
4.4 6.3 5.4
-8.6%
4.3% 5.2% 5.2%
* Excluding the impact of the standardization of accounting periods.
Billions of yenBillions of yen
Years ended March 31
Sales Operating Income (Loss)Operating Margin
104.3
3 5.4
.2%5.
31Teijin Limited
Information Service (ICIS), a leading United Kingdom–based
provider of information for the chemicals industry.
Polyester FibersThe Polyester Fibers segment, which also includes the polyester raw materials and polymerization businesses, generated sales of ¥109.9 billion and operating income of ¥1.9 billion. Efforts to resume operations at three flood-damaged production facilities in Thailand proceeded apace.
Despite flagging demand in the immediate aftermath of the Great
East Japan Earthquake, as well as damage from the severe flood-
ing to production facilities belonging to three Thai subsidiaries—all
of which were forced to suspend operations—the Polyester Fibers
segment remained profitable, bolstered by the positive impact of
structural reforms and a sharp recovery in automobile production
that began in the summer of 2011, as well as by demand associ-
ated with post-quake reconstruction efforts and measures to
promote energy savings. The bulk of production from the flood-
damaged facilities in Thailand was temporarily transferred to
domestic subsidiary Teijin Fibers Limited, among others, to fulfill
our responsibilities as a supplier. Efforts to repair the facilities
proceeded apace and in February 2012 production resumed on
several lines, with the first shipments since the floods going out
before the close of the fiscal year.
In the area of product development, ultrafine polyester
nanofiber Nanofront, which delivers superb slip resistance and
fit, was adopted for use in a line of golf gloves designed for profes-
sional golfers. On another front, to strengthen our presence in
the PRC, which boasts a rapidly expanding consumer market, in
January 2012 we launched that country’s first closed-loop system
for recycling polyester uniforms. In March we signed an agreement
with the China Chemical Fibers Association (CCFA) to establish a
comprehensive alliance that will enhance growth opportunities for
both parties through close collaboration and participation in joint
development projects. Additionally, in April 2012 we announced
plans for the August establishment of Teijin Product Development
China Co., Ltd., a fiber and textile product R&D base, a move
aimed at helping foster the local chemical fibers industry.
Films and PlasticsSales in the Films and Plastics segment totaled ¥215.4 billion. Operating income was ¥3.7 billion.
Plastics The plastics business struggled, owing to sluggish market conditions.
Our mainstay polycarbonate resin business was hampered by
a harsh operating environment for electrical and electronics
equipment manufacturers, its principal customers, stemming from
factors such as slack demand for LCD televisions, the European
financial crisis, the impact of the Great East Japan Earthquake and
the severe flooding in Thailand. October 2011 saw the beginning
of a market slump that drew comparisons with conditions in the
wake of the Lehman Brothers collapse, although demand in
certain sectors began to pick up in early 2012, particularly in the
PRC. Prices for key raw materials continued to climb as ongoing
geopolitical tensions drove up crude oil prices. Accordingly,
despite unclear market prospects for end products, we pressed
ahead with efforts to revise sales prices, as well as to lower costs
and trim inventories.
In the area of processed polycarbonate resin products, operat-
ing conditions waned, reflecting stagnant demand for PURE-ACE
polycarbonate retardation film, used primarily in 3D glasses for
movie theaters, and a sharp decline in sales of transparent electro-
conductive film for resistive touch screens. One bright spot was
the adoption of a newly developed transparent electroconductive
film for capacitive touch screens for use in smartphones and
tablet computers, which bodes well for the future of this product.
Films
Demand for PET film in Asia recovered. In Europe and the United States, structural reforms neared completion.
We have a number of polyester films joint ventures with E.I. du Pont
de Nemours and Company (DuPont) of the United States around the
world. Demand for PET film, robust in fiscal 2010, remained firm in
the first half of fiscal 2011, notably for use as LCD reflective film—one
2010 2011 2012 2012*
(5.4)
122.1
3.0
103.5
1.9
109.9
2.3
106.9
-4.4%
2.9%1.7% 2.1%50
100
150 30
20
10
-10
0 0
15
10
5
-5
0
* Excluding the impact of the standardization of accounting periods.
%Billions of yenBillions of yen
Years ended March 31
Sales Operating Income (Loss)Operating Margin
2.3
106.9
%2.1
2010 2011 2012 2012*
8.9
177.8
23.4
217.1
3.7
215.4
4.9
180.6
5.0%
10.8%
1.7%2.7%
60
120
180
240 40
30
20
10
0 0
20
15
10
5
0
* Excluding the impact of the standardization of accounting periods.
Billions of yenBillions of yen
Years ended March 31
Sales Operating IncomeOperating Margin
%
4.9
180.6
2..7%
32 Teijin Limited
of the principal applications for this product—and in solar cell back
sheets. However, in the third quarter demand declined worldwide,
owing primarily to deteriorating conditions in electronics markets.
In Japan, we were forced to temporarily suspend production
at our Utsunomiya Factory, in Tochigi Prefecture, and our Ibaraki
Factory, in Ibaraki Prefecture, in the wake of the Great East Japan
Earthquake, which hampered our supply capabilities from April until
late June 2011, by which time both facilities had resumed produc-
tion on all lines. Sales of PET film for use as LCD reflective film
began to soften toward the end of the second quarter and remained
sluggish in the third quarter, owing to production cuts by LCD
manufacturers. Demand for use in solar cell back sheets dropped
sharply, primarily as a result of worsening fiscal problems across
Europe, which prompted the reduction of subsidies to solar cell
manufacturers.
Demand in Indonesia remained comparatively solid. In the PRC,
demand flourished, but a rush by local manufacturers to expand
production capacity upset the supply–demand balance, a situation
that negatively affected our local joint venture’s sales prices. In
the United States and Europe, demand for use in solar cell back
sheets, brisk in fiscal 2010, weakened in the second quarter,
forcing us to take steps—including temporarily suspending
production of certain product lines to make necessary inventory
adjustments—that hindered profitability.
Pharmaceuticals and Home Health CareSales in the Pharmaceuticals and Home Health Care segment amounted to ¥143.0 billion, while operating income was ¥25.9 billion.
Pharmaceuticals Sales of our novel treatment for hyperuricemia and gout expanded.
In the domestic market, sales continued to expand favorably for
Synvisc Dispo, an intra-articular injection-form drug for treating pain
associated with osteoarthritis of the knee launched in December
2010, and Feburic, a novel treatment for hyperuricemia and gout
launched in May 2011. In January 2012, in the domestic market,
we obtained approval to manufacture and sell Bonalon®* Bag for
I.V. Infusion 900 µg, Japan’s first intravenous drip–form treatment
for osteoporosis, which is administered once every four weeks.
The drug was launched in May 2012.
Overseas, in July 2011 we commenced sales of our innovative
hyperuricemia treatment, already sold in North America and Europe,
in the ROK under the name Feburic. This drug is now sold in over
20 countries and territories, including Japan. We also secured
regulatory approval to market the drug in Taiwan and Hong Kong.
Additionally, we signed exclusive distributorship agreements
with Takeda Pharmaceuticals North America, Inc., for marketing
in Mexico and the Caribbean; Algorithm SAL, for marketing in the
Middle East and North Africa; Astellas Pharma Inc., for marketing
in Southeast Asia and India; and the Menarini Group for marketing
in Central and South America, the Commonwealth of Independent
States (CIS) and Oceania. Thanks to these agreements, our
distributorships currently cover 117 countries and territories.
On another note, our novel treatment for hyperuricemia and
gout was recognized with the Prize for Science and Technology
(Development Category) for fiscal 2012, part of the Commendation
for Science and Technology by Japan’s Ministry of Education,
Culture, Sports, Science and Technology. The drug also received
the Pharmaceutical Society of Japan Award for Drug Research
and Development 2012.
In R&D, we commenced clinical testing of GGS-MPA (human
immunoglobulin preparation Venilon) for the treatment of micro-
scopic polyangiitis, a new indication, and NA872ET, a small
sustained-release tablet-form version of expectorant Mucosolvan.
We also filed for approval to manufacture and market GTH-42J,
a new oral jelly form of osteoporosis treatment Bonalon®, and
ITM-014, a cutting-edge treatment for acromegaly.
* Bonalon® is the registered trademark of Merck Sharp & Dohme Corp., Whitehouse Station,
NJ, U.S.A.
Home Health Care Rental volume for HOT equipment and CPAP ventilators remained favorable.
In Japan, rental volume for mainstay HOT equipment rose.
Rentals of CPAP ventilators, used to treat sleep apnea syndrome,
also increased favorably, bolstered by SLEEPMATE S9, a high-
performance positive pressure ventilator launched in April 2011
that is both small and light, which has emerged as a major pillar
of our home healthcare business. The markets for other offerings,
including noninvasive positive pressure ventilators (the NIP NASAL
series and AutoSet CS) and SAFHS (Sonic Accelerated Fracture
Healing System), expanded encouragingly.
Overseas, we currently provide home healthcare services in the
United States, Spain and the ROK, bringing the total number of
patients using these services worldwide to approximately 400,000.
40
80
120
160 40
30
20
10
0 02010 2011 2012 2012*
24.3
131.7
22.9
136.4
25.9
143.0
26.4
139.5
18.5%
16.8%18.1%
18.9% 20
15
10
5
0
* Excluding the impact of the standardization of accounting periods.
Billions of yenBillions of yen
Years ended March 31
Sales Operating IncomeOperating Margin
%
26.4
139.5139.5
18.9%
33Teijin Limited
Analysis of Assets, Liabilities, Net Assets and Cash Flows
Interest-bearing debt decreased ¥6.4 billion, to ¥261.0 billion. As a
consequence, the debt-to-equity ratio edged up 0.05 point, to 0.89
times. The equity ratio was 38.3%, up 1.0 percentage point.
Our long-term debt ratings remained unchanged from fiscal
2010. Despite only a slight increase in interest expenses paid and
a decline in interest-bearing debt, our interest coverage ratio fell to
10.9 times, from 17.2 times in the previous period, owing to a sub-
stantial decline in cash and cash equivalents provided by operating
activities. The debt payback period rose to 4.9 years, from 3.5
years in the previous period.
As of March 31, 2012
Moody’s Rating and Investment Information, Inc.
Rating A3 AOutlook Stable Stable
Assets, Liabilities and Net Assets
Total assets as of March 31, 2012, amounted to ¥762.1 billion, an
increase of ¥583 million from the end of fiscal 2010. This increase
occurred despite constraints on major capital investment and the
progress of depreciation and amortization and was primarily a con-
sequence of increases in notes and account receivable—trade
and other components of working capital.
Total liabilities, at ¥449.9 billion, were down ¥3.9 billion from
the fiscal 2010 year-end. Interest-bearing debt, which includes
commercial paper, short-term loans payable and long-term loans
payable, declined ¥6.4 billion, to ¥261.0 billion, thanks to the use
of cash generated as a result of operating activities and as a result
of constraints on major capital investment to pay down such debt.
In all three overseas markets, we took steps to ensure the expan-
sion of rental volume and sought to reinforce our earnings base
by improving the efficiency of operations.
Trading and RetailThe Trading and Retail segment yielded sales of ¥224.6 billion, while operating income was ¥6.0 billion. During the period, we continued to actively promote alliances both in Japan and overseas.
Financial Position
Textiles and ApparelActive efforts to foster both production and sales alliances in Japan
and overseas, including capital investment in production bases in the
ASEAN region and equity participation in a leading Japanese apparel
manufacturer, supported brisk sales, particularly of sportswear,
everyday apparel and apparel targeted specifically at the Tokyo
metropolitan area market.
Industrial Textiles and MaterialsShipments of industrial textiles for automotive-related applications
recovered rapidly. Sales of general-purpose products were brisk,
owing to demand associated with post-quake reconstruction
efforts, while sales of tents, REFTEL heat reflecting and insulating
film and other products rose on the strength of demand related
to domestic measures to promote energy savings.
OthersThis segment, which does not qualify as a reportable operating segment, generated sales of ¥40.8 billion and operating income of ¥3.3 billion. Sales in the IT business were hampered by restraints on corporate IT spending, while sales in the e-commerce site management and healthcare solutions businesses were firm.
60
120
180
240 10.0
7.5
5.0
2.5
0 02010 2011 2012 2012*
3.4
205.3
4.7
216.9
6.0
224.6
5.9
218.9
1.7%
2.2%
2.7% 2.7%
4
3
2
1
0
* Excluding the impact of the standardization of accounting periods.
Billions of yenBillions of yen
Years ended March 31
Sales Operating IncomeOperating Margin
%
5.9
218.9
7%7%2.7
20
40
60
80 12
9
6
3
0 02010 2011 2012 2012*
2.6
39.0
3.1
38.3
3.3
40.8
3.5
40.7
6.7%
8.1% 8.2%8.6%
12
9
6
3
0
* Excluding the impact of the standardization of accounting periods.
Billions of yenBillions of yen
Years ended March 31
Sales Operating IncomeOperating Margin
%
3.5
40.7
8.6%
34 Teijin Limited
Total net assets were ¥312.2 billion, an increase of ¥4.5 billion.
Shareholders’ equity and total valuation and translation adjustments
together represented ¥292.0 billion of the total, up ¥7.8 billion. This
result was attributable to net income of ¥12.0 billion for the period
under review and a decrease in the deduction for foreign currency
translation adjustments, among others.
Cash Flows
Net cash and cash equivalents provided by operating activities in
fiscal 2011 amounted to ¥53.7 billion. Contributing factors included
net income, which offset increases in receivables and inventories
and income taxes paid, as well as an increase in payables,
depreciation and amortization and the amortization of goodwill.
Net cash and cash equivalents used in investing activities
amounted to ¥35.2 billion. This result was primarily a consequence
of outlays for the purchase of property, plant and equipment.
Operating and investing activities in fiscal 2011 thus provided
a net total of ¥18.5 billion.
Net cash and cash equivalents used in financing activities
amounted to ¥14.1 billion. This reflected the issue and redemption
of bonds and commercial paper, the net result of proceeds from
short- and long-term loans payable and the repayment thereof and
the payment of dividends, among others.
After factoring in the impact of exchange rate fluctuations,
operating, investing and financing activities in the period under
review resulted in a net increase in cash and cash equivalents of
¥4.8 billion as of March 31, 2012.
Outlook for Operating Results
Owing to a variety of factors, including pessimism about European
debt resolution and further increases in crude oil prices stemming
from geopolitical risk, prospects for Teijin’s operating environment
remain uncertain. However, economic conditions worldwide are
expected to pick up toward the end of the first half of fiscal 2012,
bolstered by steady growth in emerging economies, a result
of increased consumer spending and the easing of monetary
restrictions, and the emergence of additional demand related
to post-quake reconstruction in Japan.
Fiscal 2012 is the first year of our new medium- to long-term
management vision, CHANGE for 2016. Guided by this, we will
implement basic strategies for transforming our four fundamental
portfolios—strategies that reflect effective risk management—and
will promote initiatives aimed at strengthening our sales and devel-
opment capabilities. In all these efforts, we will move swiftly and
with purpose, mindful of our commitment to securing profitable
sustainable growth, a key element of our long-term vision.
In the current period, efforts in our materials businesses will
focus on responding to a recovery in demand from the automotive
and electronics industries by restoring production and sales to
appropriate levels. We will also endeavor to capitalize on demand
in Japan associated with post-quake reconstruction efforts and
measures to promote energy savings. In our healthcare business,
we will work to boost sales of new drugs and rentals of home
healthcare equipment both in Japan and overseas. In new busi-
nesses, we recently established companies in the ROK to support
the commercialization of two innovative separators for LiBs, the
market for which is expanding rapidly. Production and sales of
the separators, marketed under the LIELSORT brand name, com-
menced in June 2012. Additionally, we will accelerate the expan-
sion of our water treatment business in overseas markets, focusing
on our innovative wastewater treatment system, which has been
adopted for use in a number of countries, including the PRC and
Angola. Another priority will be to step up R&D aimed at facilitating
the early commercialization of nanoparticle silicon ink–based print-
able electronics, which substantially shorten the time required for
the fabrication of semiconductors and thin-film transistors, and of
new healthcare businesses, including materials for regenerative
medicine and tissue repair, which overlap our existing materials
and healthcare business domains.
With operations at the nuclear power plants in Japan now
essentially suspended, projections are for a shortage of electric
power this summer. To minimize the potential impact of this situa-
tion on the operations of the Teijin Group, we will strive to make full
use of in-house generators, as well as to maximize energy savings.
As a consequence of these and other factors, we currently fore-
cast consolidated net sales of ¥840.0 billion, operating income of
¥43.0 billion and net income of ¥22.0 billion for fiscal 2012, repre-
senting increases of 6.2%, 21.8% and 59.5%, respectively, from
fiscal 2011 adjusted results. Our fiscal 2012 forecasts assume
exchange rates of ¥80 to US$1.00 and ¥110 to €1.00 and a
Dubai crude oil price of US$110 per barrel.
Forecast for Financial Position
In fiscal 2012, we will press forward with efforts to first maintain,
and then enhance, financial soundness. At the same time, we
will actively promote promising investments and projects with
the potential to contribute to future growth, in line with our new
medium- to long-term management vision. Our forecasts for fiscal
2012 are for an ROA of 5.5%, ROE of 7.4% and a debt-to-equity
ratio of 0.8 times.
Outlook for Fiscal 2012
5
10
15
20 40
30
20
10
%
0 02008 2009 2010 20122011
3.54.0
8.9
6.1
37.3%
4.9
38.3%
33.0%35.0%
38.5%
Years
Years ended March 31
Debt Payback Period Equity Ratio
35Teijin Limited
Risk Factors
The Teijin Group recognizes certain risks as having the potential to
affect its operating results and/or financial position. As of the date
of this document, these risks included, but were not limited to,
the risks listed below.
Market-Related Risk
The Teijin Group manufactures and sells products, the sales of
which may be affected by market conditions and competition with
other companies, as well as by market price fluctuations arising
thereof. Businesses involving commoditized materials—notably
polyester fibers, polyester films and polycarbonate resin—are
particularly vulnerable to fluctuations in shipments, sales prices and
procurement costs for raw materials and fuel related to market con-
ditions and competition with other companies. Because the cost of
raw materials and fuel accounts for a major portion of production
costs in these businesses, fluctuations in the price of crude oil may
have a significant impact on the Group’s income performance.
The majority of products in the Teijin Group’s materials busi-
nesses are intermediates. Owing to inventory adjustments at each
stage of production and sales, the rate of expansion or contraction
of end-user demand for such products may exceed that of the real
economy.
The Teijin Group’s Healthcare segment is vulnerable to
changes in drug reimbursement prices under Japan’s National
Health Insurance (NHI) scheme, as well as to increasingly intense
competition, both of which may have a negative impact on sales
prices.
Fluctuations in foreign exchange and interest rates also have
the potential to affect the Teijin Group’s operating results and/or
financial position.
Product Quality Risk
Teijin Pharma Limited, the principal subsidiary in the Teijin Group’s
Healthcare segment, has established its own product reliability
assurance function in the form of a compliance division. This
division, which functions independently of other Group businesses,
is charged with quality assurance in all aspects of our healthcare
businesses. The Group maintains insurance coverage against
product liability.
Nonetheless, as the pharmaceuticals business involves prod-
ucts that may affect the lives of users, quality issues have the
potential to negatively affect, among others, the Group’s operating
results, financial position and public reputation.
R&D-Related Risk in the Pharmaceuticals Business
R&D in the pharmaceuticals business is characterized by significant
investments of funds and time. Pharmaceuticals discovery research
has a high incidence of failure. In the initial stages, there is a high
risk that researchers will fail to discover a promising drug. Even if a
promising drug is discovered, clinical trials may prove it not to be as
effective as anticipated, or to have unexpected adverse side effects,
thereby forcing the abandonment of plans to apply for approval.
There is also a risk that a new drug candidate may not receive reg-
ulatory approval as a result of the examination process that follows
application, or that approval may be rescinded based on the
outcome of research conducted subsequent to launch.
Risks Related to Overseas Operations
The Teijin Group has operations in the PRC, Southeast Asia
(including Thailand and Singapore), Europe (including Germany
and the Netherlands) and the United States. These operations are
vulnerable to the impact of fluctuations in foreign exchange and
interest rates. Our operations in the PRC and Southeast Asia, in
particular, may also be affected by such factors as the enforcement
of new—or unexpected changes to existing—laws, regulations or
tax systems that exert an adverse impact on the Group; economic
fluctuations; and social unrest triggered by, among others, changes
of government or acts of terror or war. The manifestation of such
risks has the potential to adversely affect the Group’s operating
results and/or financial position.
Risks Related to Accidents and Disasters
The Teijin Group has prepared common disaster prevention
guidelines for use by all Group companies and is an active propo-
nent of efforts to prevent and/or alleviate the impact of disasters
through disaster prevention diagnostics, earthquake response
measures, fire prevention and other advance prevention strategies,
disaster prevention education and training and post-disaster
impact mitigation measures.
Nonetheless, in the event of a major natural disaster or unfore-
seen accident that results in damage to the Group’s production
facilities or significantly impedes the Group’s supply chain, such
developments may have a negative impact on the Group’s
operating results and/or financial position.
36 Teijin Limited
Consolidated Balance Sheets
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
ASSETS
Current assets:
Cash and time deposits (Notes 4 and 5) ¥ 28,612 ¥ 33,441 $ 406,874
Receivables:
Notes and accounts receivable—trade (Notes 3 and 5):
Unconsolidated subsidiaries and affiliates 3,439 3,324 40,443
Other 152,693 168,763 2,053,328
Short-term loans receivable (Note 5):
Unconsolidated subsidiaries and affiliates 8,368 10,945 133,167
Other 594 994 12,094
Other 16,360 20,222 246,040
Inventories (Note 8) 105,507 108,997 1,326,159
Deferred tax assets (Note 16) 13,230 12,215 148,619
Other current assets 10,206 5,829 70,922
Allowance for doubtful accounts (2,114) (2,940) (35,771)
Total current assets 336,895 361,790 4,401,875
Investments and other assets:
Investment securities (Notes 5 and 6):
Unconsolidated subsidiaries and affiliates 22,184 24,404 296,922
Other 39,932 37,596 457,428
Long-term loans receivable (Note 5):
Unconsolidated subsidiaries and affiliates 2,533 2,648 32,218
Other 1,368 788 9,588
Prepaid pension cost (Note 10) 15,994 15,599 189,792
Other 13,109 13,225 160,906
Allowance for doubtful accounts (1,970) (2,321) (28,239)
93,150 91,939 1,118,615
Property, plant and equipment (Note 12):
Land 44,532 43,630 530,843
Buildings and structures 176,560 178,980 2,177,637
Machinery, equipment and vehicles 512,070 517,928 6,301,594
Tools 72,108 71,978 875,751
Construction in progress 6,629 7,370 89,670
Other 2,261 2,460 29,931
814,160 822,346 10,005,426
Accumulated depreciation (554,501) (578,045) (7,033,033)
259,659 244,301 2,972,393
Intangible assets 15,843 16,371 199,185
Deferred tax assets (Note 16) 4,215 1,397 16,997
Goodwill 51,773 46,320 563,572
71,831 64,088 779,754
¥761,535 ¥ 762,118 $ 9,272,637
See accompanying Notes to Consolidated Financial Statements.
TEIJIN LIMITED
As of March 31, 2011 and 2012
37Teijin Limited
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
LIABILITIES AND NET ASSETS
Current liabilities:
Short-term loans payable (Notes 5 and 9) ¥ 44,568 ¥ 61,555 $ 748,935
Current portion of long-term loans payable (Notes 5 and 9) 18,942 47,359 576,214
Commercial paper (Note 5) 33,000 18,000 219,005
Payables:
Notes and accounts payable—trade (Note 3):
Unconsolidated subsidiaries and affiliates 1,192 961 11,692
Other 86,092 89,265 1,086,081
Other 22,911 25,780 313,663
Income taxes payable 7,459 5,604 68,183
Accrued expenses 19,264 19,017 231,379
Deferred tax liabilities (Note 16) 162 11 134
Other current liabilities 11,181 10,400 126,537
Total current liabilities 244,771 277,952 3,381,823
Long-term loans payable (Notes 5 and 9) 168,871 132,192 1,608,371
Provision for retirement benefits (Note 10) 18,153 18,783 228,531
Deferred tax liabilities (Note 16) 9,285 8,837 107,519
Other non-current liabilities 12,757 12,137 147,671
Contingent liabilities (Note 20)
Net assets (Note 11)
Shareholders’ equity:
Capital stock
Authorized—3,000,000,000 shares in 2011 and 2012
Issued— 984,758,665 shares in 2011
984,758,665 shares in 2012 70,817 70,817 861,626
Capital surplus 101,373 101,390 1,233,605
Retained earnings 135,385 141,441 1,720,903
Treasury stock, at cost: 561,229 shares in 2011
483,968 shares in 2012 (152) (128) (1,558)
Total shareholders’ equity 307,423 313,520 3,814,576
Valuation and translation adjustments:
Valuation difference on available-for-sale securities 10,824 9,913 120,611
Deferred gains (losses) on hedges (199) 306 3,723
Foreign currency translation adjustments (33,812) (31,708) (385,789)
Total valuation and translation adjustments (23,187) (21,489) (261,455)
Subscription rights to shares 439 567 6,899
Minority interests 23,023 19,619 238,702
Total net assets 307,698 312,217 3,798,722
¥761,535 ¥762,118 $9,272,637
38 Teijin Limited
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
Net sales ¥815,656 ¥854,371 $10,395,072
Costs and expenses:
Cost of sales 586,262 629,152 7,654,849
Selling, general and administrative expenses 149,351 159,330 1,938,557
Research and development expenses 31,483 31,845 387,455
Operating income 48,560 34,044 414,211
Other income (expenses):
Interest and dividend income 1,382 1,325 16,121
Interest expenses (4,416) (4,885) (59,435)
Gain on sales of investment securities 2,220 1,234 15,014
Gain on sales of property, plant and equipment 1,354 282 3,431
Gain on sales of stocks of subsidiaries and affiliates — 713 8,675
Loss on disposal of property, plant and equipment (585) (953) (11,595)
Loss on valuation of investment securities (117) (192) (2,336)
Impairment loss (Note 12) (1,792) (2,614) (31,804)
Provision for allowance for doubtful accounts (883) (791) (9,624)
Business structure improvement expenses (1,050) — —
Equity in earnings of affiliates 6,300 5,299 64,473
Net gain related to flooding (Note 14) — 347 4,222
Loss on revision of retirement benefit plans (Note 10) — (3,300) (40,151)
Earthquake-related loss (Note 13) (2,861) (327) (3,979)
Other, net (3,618) (2,349) (28,581)
(4,066) (6,211) (75,569)
Income before income taxes 44,494 27,833 338,642
Income taxes (Note 16):
Income taxes—current 11,976 9,943 120,976
Income taxes—deferred 4,196 4,780 58,158
16,172 14,723 179,134
Minority interests in net income (3,140) (1,131) (13,760)
Net income ¥ 25,182 ¥ 11,979 $ 145,748
Yen
U.S. dollars
(Note 1)
Net income per share (Note 2) ¥25.59 ¥12.17 $0.15
Net income per share—diluted 25.56 12.15 0.15
Cash dividends applicable to the year 5.00 6.00 0.07
Consolidated Statements of IncomeTEIJIN LIMITED
Years ended March 31, 2011 and 2012
See accompanying Notes to Consolidated Financial Statements.
39Teijin Limited
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
Income before minority interests ¥ 28,323 ¥13,110 $159,508
Other comprehensive income (Note 15):
Valuation difference on available-for-sale securities (2,209) (901) (10,962)
Deferred gains (losses) on hedges (487) 504 6,132
Foreign currency translation adjustments (8,294) 2,099 25,538
Share of other comprehensive income of associates accounted for
using the equity method 770 (21) (255)
Total (10,220) 1,681 20,453
Comprehensive income ¥ 18,103 ¥14,791 $179,961
Breakdown of comprehensive income:
Comprehensive income attributable to shareholders of the parent ¥ 15,045 ¥13,677 $166,407
Comprehensive income attributable to minority interests ¥ 3,058 ¥ 1,114 $ 13,554
Consolidated Statements of Comprehensive IncomeTEIJIN LIMITED
Years ended March 31, 2011 and 2012
See accompanying Notes to Consolidated Financial Statements.
40 Teijin Limited
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
Shareholders’ equity Capital stock Balance at beginning of current fiscal year ¥ 70,817 ¥ 70,817 $ 861,626
Changes in items during the period:
Issuance of new shares — — —
Total — — —
Balance at end of current fiscal year 70,817 70,817 861,626
Capital surplus Balance at beginning of current fiscal year 101,328 101,373 1,233,398
Changes in items during the period:
Issuance of new shares — — —
Disposal of treasury stock 45 17 207
Transfer of loss on disposal of treasury stock — — —
Total 45 17 207
Balance at end of current fiscal year 101,373 101,390 1,233,605
Retained earnings Balance at beginning of current fiscal year 112,983 135,385 1,647,220
Change owing to application of accounting policies for overseas equity method affiliates 1,154 — —
Changes in items during the period:
Dividends from surplus—other capital surplus (3,933) (5,906) (71,858)
Net income 25,182 11,979 145,748
Others* (1) (17) (207)
Transfer of loss on disposal of treasury stock — — —
Total 21,248 6,056 73,683
Balance at end of current fiscal year 135,385 141,441 1,720,903
Treasury stock at cost Balance at beginning of current fiscal year (773) (152) (1,849)
Changes in items during the period:
Purchase of treasury stock (41) (15) (183)
Disposal of treasury stock 662 39 474
Total 621 24 291
Balance at end of current fiscal year (152) (128) (1,558)
Shareholders’ equity, total Balance at beginning of current fiscal year 284,355 307,423 3,740,395
Change owing to application of accounting policies for overseas equity method affiliates 1,154 — —
Changes in items during the period:
Issuance of new shares — — —
Dividends from surplus—other capital surplus (3,933) (5,906) (71,858)
Net income 25,182 11,979 145,748
Others* (1) (17) (207)
Purchase of treasury stock (41) (15) (183)
Disposal of treasury stock 707 56 681
Total 21,914 6,097 74,181
Balance at end of current fiscal year ¥307,423 ¥313,520 $3,814,576
Consolidated Statements of Changes in Net AssetsTEIJIN LIMITED
Years ended March 31, 2011 and 2012
* In 2011 and 2012, changes in surpluses owing to change in scope of consolidation.
See accompanying Notes to Consolidated Financial Statements.
41Teijin Limited
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
Valuation and translation adjustments Valuation difference on available-for-sale securities Balance at beginning of current fiscal year ¥ 13,025 ¥ 10,824 $ 131,695
Changes in items during the period:
Net changes in items other than shareholders’ equity (2,201) (911) (11,084)
Total (2,201) (911) (11,084)
Balance at end of current fiscal year 10,824 9,913 120,611
Deferred gains (losses) on hedges Balance at beginning of current fiscal year 299 (199) (2,421)
Changes in items during the period:
Net changes in items other than shareholders’ equity (498) 505 6,144
Total (498) 505 6,144
Balance at end of current fiscal year (199) 306 3,723
Foreign currency translation adjustments Balance at beginning of current fiscal year (26,373) (33,812) (411,388)
Changes in items during the period:
Net changes in items other than shareholders’ equity (7,439) 2,104 25,599
Total (7,439) 2,104 25,599
Balance at end of current fiscal year (33,812) (31,708) (385,789)
Valuation and translation adjustments, total Balance at beginning of current fiscal year (13,049) (23,187) (282,114)
Changes in items during the period:
Net changes in items other than shareholders’ equity (10,138) 1,698 20,659
Total (10,138) 1,698 20,659
Balance at end of current fiscal year (23,187) (21,489) (261,455)
Subscription rights to shares Balance at beginning of current fiscal year 401 439 5,341
Changes in items during the period:
Net changes in items other than shareholders’ equity 38 128 1,558
Total 38 128 1,558
Balance at end of current fiscal year 439 567 6,899
Minority interests Balance at beginning of current fiscal year 23,575 23,023 280,119
Changes in items during the period:
Net changes in items other than shareholders’ equity (552) (3,404) (41,417)
Total (552) (3,404) (41,417)
Balance at end of current fiscal year 23,023 19,619 238,702
Net assets, total Balance at beginning of current fiscal year 295,282 307,698 3,743,741
Change owing to application of accounting policies for overseas equity method affiliates 1,154 — —
Changes in items during the period:
Issuance of new shares — — —
Dividends from surplus—other capital surplus (3,933) (5,906) (71,858)
Net income 25,182 11,979 145,748
Others* (1) (17) (207)
Purchase of treasury stock (41) (15) (183)
Disposal of treasury stock 707 56 681
Net changes in items other than shareholders’ equity (10,652) (1,578) (19,200)
Total 11,262 4,519 54,981
Balance at end of current fiscal year ¥307,698 ¥312,217 $3,798,722
42 Teijin Limited
Consolidated Statements of Cash Flows
Millions of yen
Thousands of
U.S. dollars
(Note 1)
2011 2012 2012
Cash flows from operating activities:Income before income taxes ¥ 44,494 ¥ 27,833 $ 338,642
Depreciation and amortization 56,410 52,304 636,379
Impairment loss 1,792 2,614 31,804
Increase in provision for retirement benefits 630 679 8,261
Increase in allowance for doubtful accounts 1,082 1,157 14,077
Interest and dividend income (1,382) (1,325) (16,121)
Interest expenses 4,416 4,885 59,435
Equity in earnings of affiliates (6,300) (5,299) (64,473)
Loss (gain) on sales or disposal of property, plant and equipment (770) 671 8,164
Gain on sales of investment securities (2,220) (1,947) (23,689)
Loss on valuation of investment securities 117 192 2,336
Increase in notes and accounts receivable—trade (10,937) (14,410) (175,325)
Increase in inventories (6,283) (3,358) (40,857)
Increase in notes and accounts payable—trade 8,477 1,279 15,562
Other, net (260) (915) (11,131)
Subtotal 89,266 64,360 783,064
Interest and dividend income received 4,053 3,672 44,677
Interest expenses paid (4,481) (4,903) (59,654)
Income taxes paid (11,706) (9,460) (115,100)
Net cash and cash equivalents provided by operating activities 77,132 53,669 652,987
Cash flows from investing activities:Purchase of property, plant and equipment (25,456) (27,641) (336,306)
Proceeds from sales of property, plant and equipment 1,125 487 5,925
Purchase of investment securities (4,439) (1,601) (19,479)
Proceeds from sales of investment securities 3,719 2,355 28,653
Purchase of investments in subsidiaries — (4,950) (60,226)
Increase in short-term loans receivable (810) (687) (8,359)
Increase in long-term loans receivable (662) (57) (694)
Decrease in long-term loans receivable 933 136 1,655
Other, net (2,155) (3,207) (39,019)
Net cash and cash equivalents used in investing activities (27,745) (35,165) (427,850)
Cash flows from financing activities:Net increase (decrease) in short-term loans payable (3,648) 16,781 204,173
Net decrease in commercial paper (18,000) (15,000) (182,504)
Proceeds from issuance of bonds 13,022 6,106 74,291
Redemption of bonds (22,584) (10,957) (133,313)
Proceeds from long-term loans payable 6,788 22,159 269,607
Repayment of long-term loans payable (10,517) (25,287) (307,665)
Cash dividends paid (3,933) (5,906) (71,858)
Cash dividends paid to minority shareholders (2,996) (1,676) (20,392)
Other, net (195) (343) (4,173)
Net cash and cash equivalents used in financing activities (42,063) (14,123) (171,834)
Effect of exchange rate changes on cash and cash equivalents (1,946) 447 5,439
Net increase in cash and cash equivalents 5,378 4,828 58,742
Cash and cash equivalents at beginning of year 22,964 28,455 346,210
Increase in cash and cash equivalents resulting from change in scope of consolidation 113 — —
Cash and cash equivalents at end of year (Note 4) ¥ 28,455 ¥ 33,283 $ 404,952
See accompanying Notes to Consolidated Financial Statements.
TEIJIN LIMITED
Years ended March 31, 2011 and 2012
43Teijin Limited
Notes to Consolidated Financial StatementsTEIJIN LIMITED
Note 1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Teijin
Limited (the “Company”) have been prepared in accordance with
the provisions set forth in the Financial Instruments and Exchange
Law (the “Law”) and the related accounting regulations, and in
conformity with accounting principles generally accepted in Japan
(“Japanese GAAP”), which are different in certain respects as to
application and disclosure requirements of International Financial
Reporting Standards.
Prior to the year ended March 31, 2009, the accounts of
overseas subsidiaries were based on their accounting records
maintained in conformity with generally accepted accounting princi-
ples prevailing in the respective countries of domicile. From the
fiscal year ended March 31, 2009, the Company adopted “Practical
Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statement” (Practical
Issues Task Force (“PITF”) No. 18, issued by the Accounting
Standards Board of Japan (“ASBJ”) on May 17, 2006). In principle,
the Company unified accounting standards for foreign subsidiaries
and makes necessary adjustments upon consolidation. There
were no material effects as a result of the adoption of PITF No. 18
on the consolidated financial statements for the years ended March
31, 2011 and 2012.
The accompanying consolidated financial statements have
been reformatted and translated into English with some expanded
descriptions from the consolidated financial statements of the
Company prepared in accordance with Japanese GAAP and
filed with the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Law. Certain supplementary information
included in the statutory Japanese-language consolidated financial
statements, but not required for fair presentation, is not presented
in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2012, which
was ¥82.19 to U.S.$1.00. The convenience translations should not
be construed as representations that the Japanese yen amounts
have been, could have been, or could in the future be, converted
into U.S. dollars at this or any other rate of exchange.
Note 2. Summary of significant accounting policies
Consolidation
The consolidated financial statements include the accounts of the
Company and 76 significant subsidiaries for the years ended March
31, 2011 and 2012. Investments in 68 (69 in 2011) unconsolidated
subsidiaries and affiliates are, with minor exceptions, stated at
cost, adjusted for equity in undistributed earnings and losses
since acquisition.
Companies which are 40% or more owned and substantially
controlled by the Company are considered subsidiaries for inclusion
in the consolidation. Equity method accounting is applied to uncon-
solidated subsidiaries and affiliates which are substantially con-
trolled or of which operating and financial policies are significantly
influenced by the Company.
In the elimination of investments in subsidiaries, the assets and
liabilities of the subsidiaries, including the portion attributable to
minority shareholders, are evaluated using the fair value at the time
the Company acquired control of the respective subsidiaries.
Goodwill is usually amortized using the straight-line method
over the estimated useful life from five to 20 years.
Prior to the year ended March 31, 2012, the accounts of 38
consolidated subsidiaries were included on the basis of their fiscal
years ending December 31 (plus January 31 for one and February
28 for two other subsidiaries). These subsidiaries did not prepare,
for consolidation purposes, statements for the period that corre-
sponds to the fiscal year of the Company. For these 41 consolidated
subsidiaries, when there were significant transactions that occurred
between their respective fiscal year ends and the Company’s year
end, necessary adjustments were made to reflect the transactions
in the accompanying consolidated financial statements.
Effective from the year ended March 31, 2012, 25 consolidated
subsidiaries changed their fiscal year end from December 31 (plus
one from January 31 and two from the last day of February) to
March 31. As a result, the consolidated financial statements for the
year ended March 31, 2012, include the results for a 15-month
period (January 1, 2011, to March 31, 2012) for 25 subsidiaries, a
14-month period (February 1, 2011, to March 31, 2012) for one
subsidiary and a 13-month period (March 1, 2011, to March 31,
2012) for two subsidiaries. However, 13 consolidated subsidiaries
did not change their fiscal year end from December 31. These 13
subsidiaries prepared, for consolidation purposes, statements for
the period that corresponds to the fiscal year of the Company.
As a result, the consolidated financial statements for the year ended
March 31, 2012, also include the results for a 15-month period for
these 13 subsidiaries, from January 1, 2011, to March 31, 2012.
Statements of cash flows
In preparing the consolidated statements of cash flows, cash on
hand, readily available deposits and short-term highly liquid invest-
ments with maturities not exceeding three months at the time of
purchase are considered to be cash and cash equivalents.
44 Teijin Limited
Allowance for doubtful accounts
The allowance for doubtful accounts is provided in amounts
sufficient to cover possible losses on collection. It is determined
by adding the individually estimated uncollectible amounts of
certain accounts to an amount calculated using the provision
rate based on past experience.
Securities
Under the Japanese accounting standard for financial instruments,
all companies are required to classify securities as (a) securities
held for trading purposes (“trading securities”), (b) debt securities
intended to be held to maturity (“held-to-maturity debt securities”),
(c) equity securities issued by subsidiaries and affiliated companies,
and (d) all other securities that are not classified in any of the above
categories (“available-for-sale securities”).
The Company and its consolidated subsidiaries (the “Companies”)
do not hold trading securities. Held-to-maturity debt securities are
stated at amortized cost.
Equity securities issued by subsidiaries and affiliated compa-
nies, which are not consolidated or accounted for using the equity
method, are stated at moving-average cost. Available-for-sale
securities with available fair market values are stated at fair market
value. Unrealized gains and losses on these securities are reported,
net of applicable income taxes, as a separate component of net
assets. Realized gains and losses on sales of such securities are
computed using moving-average cost.
Debt securities with no available fair market value are stated
at amortized cost, net of the amount considered not collectible.
Other securities with no available fair market value are stated at
moving-average cost.
If the market value of held-to-maturity debt securities, equity
securities issued by unconsolidated subsidiaries and affiliated com-
panies and available-for-sale securities decline significantly, such
securities are stated at fair market value and the difference between
fair market value and the carrying amount is recognized as a loss in
the period of the decline. If the fair market value of equity securities
issued by unconsolidated subsidiaries and affiliated companies not
accounted for using the equity method is not readily available, the
securities will be written down to net asset value with a correspond-
ing charge in the consolidated statements of income in the event
net asset value declines significantly. In these cases, the fair market
value or the net asset value will be the carrying amount of the
securities at the beginning of the following year.
Inventories
Inventories are stated at the lower of average cost or net realizable
value.
Property, plant and equipment
Effective from the year ended March 31, 2012, the Company and
its domestic consolidated subsidiaries (the “domestic companies”)
changed their method of depreciation from the declining balance
method to the straight-line method to depreciate tangible fixed
assets. Previously, the Company and its domestic companies
mainly used the declining balance method and generally used
the straight line method for overseas consolidated subsidiaries.
The Company’s facilities have been operating in a stable man-
ner since the year ended March 31, 2010, owing to the implemen-
tation of structural reforms undertaken to optimize the Company’s
global production system. Having largely completed these struc-
tural reforms, and with the aim of repositioning itself on a growth
trajectory, effective from the year ended March 31, 2012, the
Company lifted a moratorium on major capital investment, thus
enabling the domestic companies to make promising new
investments.
It was as a consequence of this change in the capital invest-
ment situation that management reviewed its method of deprecia-
tion. As a result of this review, after investigating which approach
would best demonstrate the feasibility of stable operating condi-
tions at facilities now and in the future, and allow for the appropri-
ate periodic allocation of costs, management resolved to switch
to the straight-line method of depreciation for the domestic
companies.
As a result of this change, operating income and income
before income taxes increased by ¥6,320 million ($76,895 thou-
sand) and ¥6,483 million ($78,878 thousand), respectively, com-
pared to what would have been recorded under the previous
method.
Intangible assets
Goodwill, patents, trademarks and other intangible assets are
amortized using the straight-line method over the estimated useful
life of the asset.
Software for internal use is amortized using the straight-line
method over the estimated useful life, i.e. five to 10 years.
Research and development expenses
The Company charges research and development expenses to
income as incurred.
Retirement benefits
(1) EmployeesThe Company has an unfunded lump-sum benefit plan and a
funded contributory pension plan, generally covering all employees.
Certain consolidated subsidiaries have unfunded lump-sum
benefit plans and non-contributory pension plans. Most foreign
subsidiaries do not have pension plans.
Under the terms of the lump-sum benefit plans, eligible
employees are entitled under most circumstances, upon manda-
tory retirement at age 60 or earlier voluntary termination, to a
lump-sum payment based on their compensation at the time
of severance and years of service.
The liabilities and expenses for severance and retirement
benefits are determined based on the amounts actuarially calcu-
45Teijin Limited
lated using certain assumptions. The Companies provided for
employees’ severance and retirement benefits at March 31, 2011
and 2012, based on the estimated amounts of projected benefit
obligation and the fair value of the pension assets at those dates.
Prior service costs and actuarial gains and losses are recog-
nized in expenses using the straight-line method over mainly 12
years, which is within the average of the estimated remaining ser-
vice years of the employees, commencing with the current and
the following period, respectively.
Effective from the year ended March 31, 2012, certain consol-
idated subsidiaries transferred a portion of their defined benefit
plan to a defined contribution pension plan or multiemployer
contributory funded pension plan.
(2) Directors and statutory auditorsPrior to the year ended March 31, 2012, the Company and its
domestic companies provided for lump-sum retirement payments
for directors and statutory auditors in amounts that would be
required if they retired at the balance sheet dates.
At the general shareholders’ meeting held on June 22, 2011,
the Company resolved to abolish the lump-sum retirement pay-
ments for directors and auditors of the Company and instead to
make a lump-sum payment to each eligible director and auditor
for duties performed up to the date of abolition, upon retirement.
As a result, the remaining amount reserved for retirement allow-
ance for directors and auditors, ¥1,102 million ($13,408 thou-
sand), is included in other non-current liabilities at March 31,
2012.
Liabilities arising from the application of the equity
method
Liabilities arising from the application of the equity method have
been provided with respect to losses that may arise from the
Company’s portion of the capital deficits of unconsolidated sub-
sidiaries and affiliates that are accounted for by the equity method,
after giving consideration to the Company’s investments in, and
guarantees for, such companies.
Derivatives and hedge accounting
The Companies state derivative financial instruments at fair value
and recognize changes in the fair value as gain or loss unless the
derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and
meet certain hedging criteria, the Company and its domestic
companies defer recognition of the gain or loss resulting from a
change in fair value of the derivative financial instrument until the
related gain or loss on the hedged item is recognized.
Also, if interest rate swap contracts are used as hedges
and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or
deducted from the interest on the assets or liabilities for which the
swap contract was executed.
(Change in accounting procedures)
Prior to the year ended March 31, 2010, the domestic companies
applied a method of accounting for foreign currency forward contract
transactions entered into to hedge transactions denominated in foreign
currencies over the term of the contract based on a predetermined
rate.
With the implementation of a new backbone system, effective
from the year ended March 31, 2011, the domestic companies
changed their method of accounting for such foreign currency for-
ward contract transactions and began applying a principle-based
method, in line with the accounting standard for financial instruments.
The aim of this change was to achieve a more accurate presentation
of foreign currency assets, liabilities and derivatives positions. This
change had no material impact on the consolidated financial
statements for the year ended March 31, 2011.
Income taxes
The provision for income taxes is based on income for financial state-
ment purposes. Income taxes comprise corporation tax, enterprise tax,
and prefectural and municipal inhabitants taxes. The assets and liabili-
ties approach is used to recognize deferred tax assets and liabilities
for the expected future tax consequences of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
The Company and its wholly owned domestic consolidated
subsidiaries have adopted the consolidated tax return filing under
Japanese tax regulations for the year ended March 31, 2006 and
thereafter.
Translation of foreign currency
Cash, receivables and payables denominated in foreign currencies
are translated into Japanese yen at year-end exchange rates. All
revenues and expenses in foreign currencies are translated at the
exchange rates prevailing when such transactions are made. The
resulting exchange loss or gain is charged or credited to income.
The balance sheet accounts of the foreign consolidated subsidiar-
ies and foreign investments accounted for by the equity method are
translated at the rates of exchange in effect at the balance sheet date,
except for capital accounts and assets and liabilities due to/from the
Company, which are translated at historical rates. Accounts in the
consolidated statements of income are translated at the average
rates of exchange for the year. Differences arising from translations
are presented as “Foreign currency translation adjustments” in the
accompanying consolidated financial statements. The Companies
report foreign currency translation adjustments in net assets.
Net income per share
Computations of net income per share of common stock are based
on the weighted-average number of shares outstanding during each
period. Diluted net income per share is calculated based on the
assumption that all dilutive convertible debentures and stock
46 Teijin Limited
warrants were converted or exercised at the beginning of the year
or at the time of issue.
Net income per share for the years ended March 31, 2011 and
2012, is calculated based on the following factors:
Year ended March 31, 2011
( a ) Net income: ¥25,182 million
(b ) Amount not attributable to
common shareholders: ¥ — million
( c ) Bonuses to directors and
statutory auditors included in (b): ¥ — million
(d ) Net income allocated to common stock: ¥25,182 million
( e ) Average number of shares
outstanding during the period: 984,033 thousand shares
( f ) Increase in number of shares: 1,269 thousand shares
(g ) Increase in number of subscription
rights to shares included in (f): 1,269 thousand shares
( h ) Summary of outstanding potential shares
excluded from the computation of diluted
EPS, if calculated for the period, since such
potential stocks do not have a dilutive effect:
—
Year ended March 31, 2012
( a ) Net income: ¥11,979 million ($145,748 thousand)
(b ) Amount not attributable to
common shareholders: ¥ — million ($ — thousand)
( c ) Bonuses to directors and
statutory auditors included in (b): ¥ — million ($ — thousand)
(d ) Net income allocated to
common stock: ¥11,979 million ($145,748 thousand)
( e ) Average number of shares
outstanding during the period: 984,230 thousand shares
( f ) Increase in number of shares: 1,310 thousand shares
(g ) Increase in number of subscription
rights to shares included in (f): 1,310 thousand shares
( h ) Summary of outstanding potential
shares excluded from the
computation of diluted EPS, if
calculated for the period, since
such potential stocks do not have
a dilutive effect:
—
(Change in accounting procedures)
Accounting standards for investments applied to equity
method affiliates
Effective from the year ended March 31, 2011, the Company
applied “Accounting Standard for Equity Method of Accounting for
Investments” (ASBJ Statement No. 16, issued on March 10, 2008)
and “Practical Solution on Unification of Accounting Policies Applied
to Associates Accounted for Using the Equity Method” (ASBJ PITF
Statement No. 24, issued on March 10, 2008). In principle, the
Companies make adjustments as necessary for their consolidated
financial statements. As a result, operating income and income
before income taxes each decreased by ¥420 million, compared to
what would have been recorded under the previous method.
Accounting standards for asset retirement obligations
Effective from the year ended March 31, 2011, the domestic compa-
nies applied “Accounting Standard for Asset Retirement Obligations”
(ASBJ Statement No. 18, issued on March 31, 2008) and “Guidance
on Accounting Standard for Asset Retirement Obligations” (ASBJ
Guidance No. 21, issued on March 31, 2008). As a result, operating
income decreased by ¥34 million, and income before income taxes
decreased by ¥563 million, compared to what would have been
recorded under the previous method.
Accounting standards for business combinations
Effective from the year ended March 31, 2011, the domestic compa-
nies applied “Accounting Standard for Business Combinations”
(ASBJ Statement No. 21, issued December 26, 2008), “Accounting
Standard for Consolidated Financial Statements” (ASBJ Statement
No. 22, issued on December 26, 2008), “Partial Amendments to
Accounting Standard for Research and Development Costs” (ASBJ
Statement No. 23, issued on December 26, 2008), “Revised
Accounting Standard for Business Divestitures” (ASBJ Statement
No. 7, issued on December 26, 2008), “Revised Accounting
Standard for Equity Method of Accounting for Investments” (ASBJ
Statement No. 16, issued on December 26, 2008), and “Revised
Guidance on Accounting Standard for Business Combinations and
Accounting Standard for Business Divestitures” (ASBJ Guidance
No. 10, issued on December 26, 2008).
Reclassifications and restatement
Certain prior year amounts have been reclassified and restated to
conform with the current year presentation. These reclassifications
and restatements have no impact on previously reported results of
operations or retained earnings.
(Additional information)
Accounting standards for presentation of comprehensive
income
Effective from the year ended March 31, 2011, the Company applied
“Accounting Standard for Presentation of Comprehensive Income”
(ASBJ Statement No. 25, issued on June 30, 2010).
Accounting standards for accounting changes and error
correction
Effective from the year ended March 31, 2012, the Company and its
domestic companies adopted “Accounting Standard for Accounting
Changes and Error Corrections” (ASBJ Statement No. 24, issued on
December 4, 2009) and the “Guidance on Accounting Standard for
Accounting Changes and Error Corrections” (ASBJ Guidance No.
24, issued on December 4, 2009). This Standard and its accompa-
nying Guidance are applied to accounting changes and corrections
of prior period errors made on or after April 1, 2011.
47Teijin Limited
Note 3. Effect of the March 31, 2012, bank holiday
Although financial institutions in Japan were closed on March 31, 2012, and notes maturing on March 31, 2012, were settled on the following
business day, April 2, 2012, notes receivable of ¥2,760 million ($33,581 thousand) and notes payable of ¥2,343 million ($28,507 thousand)
were accounted for as if settled on March 31, 2012.
Note 4. Statements of cash flows
The reconciliation of cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the consolidated statements
of cash flows, as of March 31, 2011 and 2012, is as follows:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Cash and time deposits in the consolidated balance sheets ¥28,612 ¥ 33,441 $ 406,874
Time deposits with maturities exceeding 3 months (157) (158) (1,922)
Cash and cash equivalents in the consolidated statements of cash flows ¥28,455 ¥ 33,283 $ 404,952
The assets and liabilities of two subsidiaries, P.T. Teijin Indonesia Fiber Tbk. and Teijin Monofilament Germany GmbH, which are
excluded from the consolidation following the sale of their share of common stock during the year ended March 31, 2011, were as follows:
Millions of yen
Current assets ¥ 8,965
Fixed assets 12,654
Assets, total ¥ 21,619
Current liabilities ¥(22,983)
Long-term liabilities (1,765)
Liabilities, total ¥(24,748)
Note 5. Fair value of financial instruments
(1) Qualitative information on financial instruments
(a) Policies for using financial instruments The Companies’ fund management policy is to put money
into short-term deposit only and to raise money through
loans payable, commercial paper and corporate bonds.
The Companies principally enter into derivatives transac-
tions in connection with managing their market risk and not
for speculation or trading purposes.
(b) Details of financial instruments used and the exposure to risk and how it arises
Notes and accounts receivable—trade are exposed to
customers’ credit risk. To manage that risk, the Companies
check the balance of the accounts and confirm the collec-
tion of money at the due date. The Companies also review
the credit risk of their main customers every six months
in accordance with the Company’s credit management
regulations.
Securities are exposed to market price fluctuation risk;
however, the Companies only hold shares in firms with
which they have business relations and these are not
for speculation.
The due dates of notes and accounts payable—trade
are mainly within one year.
Commercial paper and short-term loans receivable are
used mainly for operating purposes, and funding through
corporate bonds and long-term loans payable is mainly for
capital investment. Debts with a floating rate are exposed to
interest rate fluctuation risk, but interest on some long-term
loans payable is converted to a fixed rate through interest
rate swap transactions.
The Companies use derivative transactions of, for example,
forward currency exchange and currency swaps that are
used to hedge the risk of fluctuation in foreign currency
exchange rates with respect to monetary receivables and
48 Teijin Limited
payables denominated in foreign currencies resulting from
import and export transactions. With respect to other
derivative transactions, interest rate swap transactions are
used to hedge the risk of fluctuation in interest rates and
commodity swap transactions are used to hedge the risk of
fluctuation in the commodity price of fuel. The Companies
evaluate hedge effectiveness by comparing the cumulative
changes in cash flows from, or the changes in fair value
of, hedged items with the corresponding changes in the
hedging derivative instruments.
The Companies report periodically to the Chief Financial
Officer and the Accounting and Treasury Office on the actual
results of derivative transactions. The actual results of deriv-
ative transactions for which hedge accounting cannot be
applied are reported to the Board of Directors after the
end of each year. Furthermore, the Companies enter into
contracts with highly rated international institutions as
counterparts to these transactions to minimize credit risk
exposure.
(c) Supplementary information on fair values The fair value of financial instruments is calculated based on
quoted market price or, in cases where there is no market
price, by making a reasonable estimation. Because the
preconditions applied include a floating element, estimations
of fair value may vary. The contracted amounts, as pre-
sented in Note 7, “Derivative transactions,” do not reflect
market risk.
(2) Fair values of financial instruments
The following tables summarize fair value and book value of the financial instruments, and the difference between them, as of March 31,
2011 and 2012. Items for which fair value is difficult to estimate are not included in the following tables.
Millions of yen
2011
Book value Fair value Difference
(1) Cash and time deposits ¥ 28,612 ¥ 28,612 ¥ —
(2) Receivables 156,132 156,132 —
(3) Short-term loans receivable 8,872 8,872 —
(4) Investment securities 36,620 36,620 —
(5) Long-term loans receivable 3,992 — —
Allowance for doubtful accounts* (555) — —
3,437 3,437 —
Total ¥233,673 ¥233,673 ¥ —
(1) Payables ¥ 87,284 ¥ 87,284 ¥ —
(2) Short-term loans payable 44,568 44,568 —
(3) Commercial paper 33,000 33,000 —
(4) Bonds 35,959 37,024 1,065
(5) Long-term loans payable 151,855 152,991 1,136
Total ¥352,666 ¥354,867 ¥2,201
Derivative transactions†
(1) For which hedge accounting is not applied ¥ 1,593 ¥ 1,593 ¥ —
(2) For which hedge accounting is applied (242) (242) —
Total ¥ 1,351 ¥ 1,351 ¥ —
49Teijin Limited
Millions of yenThousands of U.S. dollars
2012 2012
Book value Fair value Difference Difference
(1) Cash and time deposits ¥ 33,441 ¥ 33,441 ¥ — $ —
(2) Receivables 172,087 172,087 — —
(3) Short-term loans receivable 11,838 11,838 — —
(4) Investment securities 33,090 33,090 — —
(5) Long-term loans receivable 3,537 — — —
Allowance for doubtful accounts* (550) — — —
2,987 2,987 — —
Total ¥253,443 ¥253,443 ¥ — $ —
(1) Payables ¥ 90,226 ¥ 90,226 ¥ — $ —
(2) Short-term loans payable 61,555 61,555 — —
(3) Commercial paper 18,000 18,000 — —
(4) Bonds 30,501 31,409 908 11,048
(5) Long-term loans payable 149,050 149,908 858 10,439
Total ¥349,332 ¥351,098 ¥1,766 $21,487
Derivative transactions†
(1) For which hedge accounting is not applied ¥ 341 ¥ 341 ¥ — $ —
(2) For which hedge accounting is applied 475 475 — —
Total ¥ 816 ¥ 816 ¥ — $ —
* Allowance for doubtful accounts is estimated for each category and is deducted from long-term loans receivable.
† Derivative transactions are presented net of receivables and liabilities, and figures within parenthesis indicate net liabilities.
(Note 1) The method of estimating the fair value for securities and derivative transactions is as follows:
Assets(1) Cash and time deposits, (2) Receivables, (3) Short-term loans receivable
These terms are all short-term, and the fair value is nearly equal to book value, so the book value is used as fair value.
(4) Investment securities
The fair value of shares is the market price. See Note 6, “Investment securities” for information on investment securities
categorized by holding purpose.
(5) Long-term loans receivable
The fair value of long-term loans receivable, distinguished by the term, is discounted by the interest rate that is based on that
of government bonds, to which a spread that reflects credit risk has been added.
Moreover, the fair value of long-term loans receivable that are doubtful is estimated in the same way or is provided in an
amount sufficient to cover possible losses on collection.
Liabilities(1) Payables, (2) Short-term loans payable, (3) Commercial paper
These terms are all short-term and the fair value is nearly equal to book value, so the book value is used as fair value.
(4) Bonds
The fair value of corporate bonds is calculated based on market price. In cases where there is no market price, fair value is
calculated by using the discounted cash flow based on the sum of the principal and total interest of the remaining period and
credit risk.
(5) Long-term loans payable
The fair value of long-term loans payable is the sum of the principal and total interest discounted by the rate that is applied
if a new loan is made. Certain long-term loans payable with floating rates are tied to interest rate swap transactions and
subject to special treatment.
Derivative transactions See Note 7, “Derivative transactions.”
50 Teijin Limited
(Note 2) Financial instruments for which fair value is difficult to estimate:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Unlisted shares ¥ 3,142 ¥ 4,362 $ 53,072
Shares in affiliated companies 17,258 18,169 221,061
Total ¥20,400 ¥22,531 $274,133
Market prices of the above shares are not available and the future cash flow cannot be estimated. Therefore, fair value is difficult
to estimate. Hence these are not included in Note 6, “Investment securities,” below.
(Note 3) Expected repayment of monetary assets and securities with maturity after the date of the accounting period is as follows:
Millions of yen
2011
Within one yearOne year to five years
Over five years
Cash and time deposits ¥ 28,612 ¥ — ¥—
Receivables 156,132 — —
Short-term loans receivable 8,872 — —
Long-term loans receivable 90 3,902 —
Millions of yen
2012
Within one yearOne year to five years
Over five years
Cash and time deposits ¥ 33,441 ¥ — ¥ —
Receivables 172,087 — —
Short-term loans receivable 11,838 — —
Long-term loans receivable 101 3,424 12
Thousands of U.S. dollars
2012
Within one yearOne year to five years
Over five years
Cash and time deposits $ 406,874 $ — $ —
Receivables 2,093,771 — —
Short-term loans receivable 144,032 — —
Long-term loans receivable 1,229 41,660 146
(Note 4) Expected repayment of bonds and long-term loans payable:
See Note 9, “Loans payable.”
51Teijin Limited
Note 6. Investment securities
(1) Information on securities held by the Companies at March 31, 2011, is as follows:
a) There were no held-to-maturity debt securities with fair values at March 31, 2011.
b) The following table summarizes acquisition costs and book values (fair values) of available-for-sale securities with fair values as of
March 31, 2011.
Millions of yen
2011
Acquisition cost Book value Difference
Securities with book values exceeding acquisition costs:
Corporate shares ¥12,621 ¥31,717 ¥19,096
Securities with book values not exceeding acquisition costs:
Corporate shares 7,207 4,903 (2,304)
Total ¥19,828 ¥36,620 ¥16,792
c) Total sales of available-for-sale securities in the year ended March 31, 2011, and the related gains and losses amounted to ¥3,715
million, ¥2,231 million and ¥8 million, respectively.
d) Available-for-sale securities with no fair values as of March 31, 2011, consisted mostly of non-listed equity securities, bonds and
others amounting to ¥2,847 million, ¥1 million and ¥294 million, respectively.
(2) Information on securities held by the Companies at March 31, 2012 is as follows:
a) There were no held-to-maturity debt securities with fair values at March 31, 2012.
b) The following table summarizes acquisition costs and book values (fair values) of available-for-sale securities with fair values as of
March 31, 2012.
Millions of yenThousands of U.S. dollars
2012 2012
Acquisition cost Book value Difference Difference
Securities with book values exceeding acquisition costs:
Corporate shares ¥12,432 ¥29,311 ¥16,879 $205,366
Securities with book values not exceeding acquisition costs:
Corporate shares 5,926 3,779 (2,147) (26,123)
Total ¥18,358 ¥33,090 ¥14,732 $179,243
c) Total sales of available-for-sale securities in the year ended March 31, 2012, and the related gains and losses amounted to ¥1,890
million ($22,995 thousand), ¥1,268 million ($15,428 thousand) and ¥15 million ($183 thousand), respectively.
d) Available-for-sale securities with no fair values as of March 31, 2012, consisted mostly of non-listed equity securities, bonds and
others amounting to ¥4,093 million ($49,799 thousand), ¥1 million ($12 thousand) and ¥268 million ($3,261 thousand), respectively.
52 Teijin Limited
Note 7. Derivative transactions
(1) The following tables summarize market value information of outstanding derivative transactions as of March 31, 2011, for which hedge
accounting is not applied.
Outstanding positions, for which gains and losses were recognized in the consolidated financial statements as of March 31, 2011,
were as follows:
Currency-related derivativesMillions of yen
2011
Contract amountAmount of principal due over one year Fair value Recognized gain (loss)
Foreign currency swap transactions:
Japanese yen received for Euro ¥19,481 ¥7,566 ¥1,656 ¥1,656
Foreign currency forward contract transactions:
Sell: U.S. dollars ¥ 1,912 ¥ — ¥ (26) ¥ (26)
Sell: Japanese yen ¥ 679 ¥ — ¥ (36) ¥ (36)
Buy: U.S. dollars ¥ 195 ¥ — ¥ 0 ¥ 0
(2) The following tables summarize market value information of outstanding derivative transactions as of March 31, 2011, for which hedge
accounting is applied.
Currency-related derivatives: Principle-based methodMillions of yen
2011
Contract amountAmount of principal due over one year Fair value
Foreign currency forward contract transactions:
Sell: U.S. dollars ¥24,962 ¥ 8,273 ¥ 941
Sell: Euro ¥ 2,988 ¥ — ¥(113)
Sell: Japanese yen ¥ 6,956 ¥ 3,531 ¥(260)
Buy: U.S. dollars ¥17,896 ¥ — ¥ 181
Buy: Euro ¥ 125 ¥ — ¥ 2
Buy: British pounds ¥ 0 ¥ — ¥ 0
Buy: Thai baht ¥ 0 ¥ — ¥ 0
Buy: Hong Kong dollars ¥ 0 ¥ — ¥ 0
Interest-rate-related derivatives: Principle-based methodMillions of yen
2011
Contract amountAmount of principal due over one year Fair value
Interest rate swap transactions:
Receive variable rate in Euro, pay fixed rate in Euro ¥21,041 ¥21,041 ¥(542)
Receive variable rate in Euro, pay variable rate in Euro ¥ 745 ¥ 745 ¥ (5)
Receive variable rate in Japanese yen, pay fixed rate in Euro ¥14,217 ¥ 7,566 ¥(446)
Receive fixed rate in Japanese yen, pay variable rate in Euro ¥ 2,502 ¥ — ¥ (2)
Receive fixed rate in Japanese yen, pay fixed rate in Euro ¥ 2,762 ¥ — ¥ 2
53Teijin Limited
Interest-rate-related derivatives: Conventional methodMillions of yen
2011
Contract amountAmount of principal due over one year Fair value
Interest rate swap transactions:
Receive variable rate in Japanese yen, pay fixed rate in Japanese yen ¥22,400 ¥20,000 ¥—
Receive variable rate in U.S. dollars, pay fixed rate in U.S. dollars ¥ 246 ¥ 246 ¥—
(3) The fair value of foreign currency forward contract transactions is based on the year-end forward rate. The fair value of foreign currency
swap transactions and interest rate swap transactions is based on the prices presented by the counterpart financial institutions.
(4) The recognized gain or loss is estimated by the counterpart financial institutions.
(5) The following tables summarize market value information of outstanding derivative transactions as of March 31, 2012, for which hedge
accounting is not applied.
Outstanding positions, for which gains and losses were recognized in the consolidated financial statements as of March 31, 2012,
were as follows:
Currency-related derivativesMillions of yen
Thousands of U.S. dollars
2012 2012
Contract amountAmount of principal due over one year Fair value Recognized gain (loss) Recognized gain (loss)
Foreign currency swap transactions:
Japanese yen received for Euro ¥8,201 ¥— ¥ 452 ¥ 452 $5,499
Foreign currency forward contract transactions:
Sell: U.S. dollars ¥7,756 ¥— ¥ (70) ¥ (70) $ (852)
Sell: Euro ¥1,615 ¥— ¥ (72) ¥ (72) $ (876)
Sell: Japanese yen ¥ 897 ¥— ¥ (6) ¥ (6) $ (73)
Buy: U.S. dollars ¥ 15 ¥— ¥ 0 ¥ 0 $ 0
Buy: Euro ¥ 122 ¥— ¥ 1 ¥ 1 $ 12
Buy: Japanese yen ¥ 13 ¥— ¥ 0 ¥ 0 $ 0
Buy: Renminbi ¥1,061 ¥— ¥ 36 ¥ 36 $ 438
54 Teijin Limited
(6) The following tables summarize market value information of outstanding derivative transactions as of March 31, 2012, for which hedge
accounting is applied.
Currency-related derivatives: Principle-based methodMillions of yen
Thousands of U.S. dollars
2012 2012
Contract amountAmount of principal due over one year Fair value Fair value
Foreign currency forward contract transactions:
Sell: U.S. dollars ¥20,535 ¥9,631 ¥569 $6,923
Sell: Euro ¥ 611 ¥ — ¥ (9) $ (110)
Sell: Japanese yen ¥ 7,043 ¥4,522 ¥ 412 $5,013
Buy: U.S. dollars ¥ 9,339 ¥ — ¥333 $4,052
Buy: Euro ¥ 94 ¥ — ¥ 3 $ 37
Buy: Swiss francs ¥ 12 ¥ — ¥ 1 $ 12
Interest-rate-related derivatives: Principle-based methodMillions of yen
Thousands of U.S. dollars
2012 2012
Contract amountAmount of principal due over one year Fair value Fair value
Interest rate swap transactions:
Receive variable rate in Euro, pay fixed rate in Euro ¥22,509 ¥22,509 ¥(544) $(6,619)
Receive variable rate in Euro, pay variable rate in Euro ¥ 758 ¥ 758 ¥ (6) $ (73)
Receive variable rate in Japanese yen, pay fixed rate in Euro ¥ 7,699 ¥ — ¥(284) $ (3,455)
Receive fixed rate in Japanese yen, pay fixed rate in Euro ¥ 502 ¥ — ¥ 0 $ 0
Interest-rate-related derivatives: Conventional methodMillions of yen
Thousands of U.S. dollars
2012 2012
Contract amountAmount of principal due over one year Fair value Fair value
Interest rate swap transactions:
Receive variable rate in Japanese yen, pay fixed rate in Japanese yen ¥40,000 ¥40,000 ¥— $—
(7) The fair value of foreign currency forward contract transactions is based on the year-end forward rate. The fair value of foreign currency
swap transactions and interest rate swap transactions is based on the prices presented by the counterpart financial institutions.
(8) The recognized gain or loss is estimated by the counterpart financial institutions.
55Teijin Limited
Note 8. Inventories
Inventories at March 31, 2011 and 2012, consisted of the following:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Finished goods ¥ 71,448 ¥ 69,315 $ 843,351
Work in progress 9,163 10,142 123,397
Raw materials 19,559 24,168 294,050
Supplies 5,337 5,372 65,361
Total ¥105,507 ¥108,997 $1,326,159
Note 9. Loans payable
Short-term loans payable were represented by bank overdrafts and short-term notes with average annual interest rates of approximately
1.2% and 1.3% in 2011 and 2012, respectively.
Long-term loans payable at March 31, 2011 and 2012, consisted of the following:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Unsecured:
Banks and insurance companies at 0.2–1.7%, maturing serially through 2017 ¥ 99,110 ¥107,282 $1,305,293
1.6% bonds, due 2013 15,000 15,000 182,504
1.8% bonds, due 2015 15,000 15,000 182,504
1.0% medium-term notes, due 2011 993 — —
0.3–1.3% medium-term notes, due 2010–2011 1,986 — —
0.4% medium-term notes, due 2011 993 — —
0.5% medium-term notes, due 2011 1,986 — —
0.2% medium-term notes, due 2012 — 501 6,096
Loans denominated in foreign currencies (principally U.S. dollars),
0.7–4.3% maturing serially through 2015 52,745 41,768 508,188
Lease obligations, 8.0% maturing serially through 2024 2,019 1,928 23,458
189,832 181,479 2,208,043
Less amounts due within one year 19,179 47,711 580,496
Total ¥170,653 ¥133,768 $1,627,547
The aggregate annual maturities of long-term loans payable at March 31, 2012, were as follows:
Year ending March 31 Millions of yenThousands of U.S. dollars
2013 ¥47,711 $580,496
2014 64,269 781,956
2015 19,440 236,525
2016 28,247 343,679
2017 and thereafter 21,812 265,387
56 Teijin Limited
Note 10. Employees’ retirement benefits
(1) The liabilities for severance and retirement benefits included in the liability section of the consolidated balance sheets as of March 31,
2011 and 2012, consisted of the following:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Projected benefit obligation ¥ 131,743 ¥104,285 $ 1,268,828
Unrecognized prior service costs 3,349 2,633 32,036
Less unrecognized actuarial differences (25,247) (15,999) (194,659)
Less fair value of pension assets (110,522) (87,735) (1,067,466)
Prepaid pension cost 18,830 15,599 189,792
Liability for severance and retirement benefits ¥ 18,153 ¥ 18,783 $ 228,531
As described in Note 2, certain consolidated subsidiaries
transferred a portion of their defined retirement benefit plan to a
defined contribution pension plan or multiemployer contributory
funded pension plan. The effect of this change was to decrease
projected benefit obligation by ¥26,003 million ($316,377 thou-
sand), fair value of pension assets by ¥23,957 million ($291,483
thousand), unrecognized actuarial differences by ¥4,724 million
($57,477 thousand), prepaid pension cost by ¥2,870 million
($34,920 thousand), and liability for severance and retirement
benefits by ¥191 million ($2,324 thousand), in the consolidated
balance sheets as of March 31, 2012.
(2) The expenses for severance and retirement benefits included in the consolidated statements of income for the years ended March 31,
2011 and 2012, comprised the following:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Service costs—benefits earned during the year ¥ 4,846 ¥ 5,154 $ 62,708
Interest cost on projected benefit obligation 3,144 3,218 39,153
Expected return on pension assets (3,586) (3,406) (41,441)
Amortization of actuarial differences 3,038 3,633 44,202
Amortization of prior service costs (669) (708) (8,614)
Severance and retirement benefit expenses* ¥ 6,773 ¥ 7,891 $ 96,009
* In addition to the aforementioned service costs, the Company recorded ¥3,300 million ($40,151 thousand) in contributions to a defined contribution pension plan.
(3) The discount rate and the rate of expected return on pension assets used by the Companies were mainly 2.0% and 3.6%, respectively,
for the years ended March 31, 2011 and 2012.
(4) The estimated amount of all retirement benefits to be paid at
future retirement dates is allocated equally to each service year
using the estimated number of total service years. Prior service
costs and actuarial gains and losses are recognized in
expenses using the straight-line method over mainly 12 years,
which is within the average of the estimated remaining service
years of the employees, commencing with the current and the
following period, respectively.
57Teijin Limited
(5) The funded status of the multiemployer contributory funded pension plans at December 31, 2011 (based on information available as of
March 31, 2012), to which contributions are recorded as net periodic retirement benefit costs by the Companies, is as follows:
Millions of yenThousands of U.S.
dollars
2011 2012 2012
Fair value of plan assets ¥— ¥ 1,255,124 $ 15,271,006
Benefit obligation in the calculation of pension financing — (1,262,700) (15,363,183)
Difference ¥— ¥ (7,576) $ (92,177)
Companies’ contribution percentage for multiemployer contributory funded pension plans* — 5.7%
* This percentage shows the Companies’ portion of the total estimated annual contribution to the plans, which is not necessarily equal to the actual percentage of the
Companies’ portion against the funded status in the above table.
Note 11. Net assets
Under Japanese laws and regulations, the entire amount of the
issue price of shares is required to be accounted for as capital
stock, although a company may, by resolution of its Board of
Directors, account for an amount not exceeding one-half of the
issue price of the new shares as capital surplus.
Under the Japanese Corporate Law, in cases where dividend
distribution of surplus is made, the smaller of an amount equal to
10% of the dividend and excess, if any, of 25% of capital stock
over the total of additional paid-in capital and legal earnings reserve
must be set aside as additional paid-in capital or legal earnings
reserve. Additional paid-in capital is included in capital surplus and
legal earnings reserve is included in retained earnings in the
accompanying consolidated balance sheets.
Legal earnings reserve and additional paid-in capital may be
used to eliminate or reduce a deficit or may be capitalized by a res-
olution of the shareholders’ meeting. All additional paid-in capital
and all legal earnings reserve may be transferred to other capital
surplus and retained earnings, respectively, which are potentially
available for dividends. The maximum amount that the Company
can distribute as dividends is calculated based on the unconsoli-
dated financial statements of the Company in accordance with
Japanese laws and regulations.
At the Board of Directors’ meeting held on May 9, 2012, appropriations of retained earnings for year-end dividends applicable to the
year ended March 31, 2012, were duly approved as follows:
Millions of yenThousands of U.S. dollars
Cash dividends:¥3.00 ($0.04) per share ¥2,953 $35,929
Note 12. Impairment loss
Certain consolidated subsidiaries accounted for impairment losses for the year ended March 31, 2012, as follows:
Impairment lossLocation Usage purpose Type of assets Millions of yen
Thousands of U.S. dollars
Emmen, Netherlands High-performance fibers production facilities Machinery, etc. ¥ 829 $10,086
Nordrhein-Westfalen, Germany High-performance fibers production facilities Machinery, etc. 823 10,013
Tennessee, U.S.A. High-performance fibers production facilities Machinery, etc. 444 5,402
Shunan City in Yamaguchi Prefecture Polyester fibers production facilities Machinery, etc. 145 1,764
Utsunomiya City in Tochigi Prefecture Idle assets Machinery 139 1,691
California, U.S.A. Pharmaceuticals and home healthcare business Intangible assets 96 1,168
Kentucky, U.S.A. High-performance fibers business Goodwill 59 718
Matsuyama City in Ehime Prefecture Polyester fibers production facilities Machinery 46 560
Others — — 33 402
Total ¥2,614 $31,804
58 Teijin Limited
The Companies set asset groups by the business unit on which
the profit or loss is continually controlled. Idle assets, which are not
being used for business, are separately treated.
Among the assets used for business purposes, certain produc-
tion facilities were devalued to the recoverable values by ¥2,475
million ($30,113 thousand) as “Impairment loss.” Recoverable
value was measured by the usage value, which was calculated
by discounting future cash flows with discount rates of 10%–20%.
The book values of idle assets with no utilization plan were
written down to recoverable values by ¥139 million ($1,691 thou-
sand). Recoverable value was measured by the net salvage value,
based on real-estate appraisals or similar methods. If it is deter-
mined that an idle asset cannot be sold or diverted to another use,
the asset is valued at zero.
Note 13. Earthquake-related loss
Earthquake-related loss represents costs related to the Great East Japan Earthquake in March 2011 and consisted of the following:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Restoration expense ¥1,442 ¥ — $ —
Loss on valuation of inventories 816 — —
Others 603 327 3,979
Total ¥2,861 ¥327 $3,979
Note 14. Net gain related to flooding
Net gain related to flooding, which represents the net result of losses related to the flooding in Thailand in October 2011 and insurance
received in compensation, consisted of the following:
Millions of yenThousands of U.S. dollars
Insurance compensation ¥ 5,939 $ 72,259
Facility reconstruction expenses (2,239) (27,242)
Loss on valuation of inventories (1,832) (22,290)
Fixed costs during downtime (1,244) (15,136)
Others (277) (3,369)
Total ¥ 347 $ 4,222
59Teijin Limited
Note 15. Consolidated statements of comprehensive income
Components of other comprehensive income for the year ended March 31, 2012, consisted of the following:
Millions of yenThousands of U.S. dollars
Valuation difference on available-for-sale securities:
Increase (decrease) during the year ¥ (3,253) $(39,579)
Reclassification adjustments 789 9,600
Subtotal, before tax ¥ (2,464) $(29,979)
Tax (expense) or benefit 1,563 19,017
Subtotal, net of tax ¥ (901) $(10,962)
Deferred gains (losses) on hedges:
Increase (decrease) during the year ¥ 515 $ 6,266
Reclassification adjustments 79 961
Subtotal, before tax ¥ 594 $ 7,227
Tax (expense) or benefit (90) (1,095)
Subtotal, net of tax ¥ 504 $ 6,132
Foreign currency translation adjustments
Subtotal, net of tax ¥ 2,099 $ 25,538
Share of other comprehensive income of associates accounted for using the equity method:
Increase (decrease) during the year ¥ (25) $ (304)
Reclassification adjustments 4 49
Subtotal ¥ (21) $ (255)
Total other comprehensive income ¥ 1,681 $ 20,453
Note 16. Income taxes
The Company is subject to a number of taxes based on income, which, in the aggregate, indicate a statutory rate in Japan of approximately
40.4% for the years ended March 31, 2011 and 2012. The following table summarizes the significant differences between the Company’s
effective tax rate and the actual income tax rate for financial statement purposes for the years ended March 31, 2011 and 2012.
2011 2012
Effective tax rate 40.4% 40.4%
Non-deductible expenses 2.1 3.9
Difference in statutory tax rate between Japan and other countries (7.6) (2.5)
Equity in earnings of affiliates (5.7) (7.8)
Amortization of goodwill 5.9 11.4
Changes in valuation allowance 3.2 9.5
Decrease in statutory tax rate — 0.5
Other (2.0) (2.5)
Actual income tax rate 36.3% 52.9%
The “Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating a Taxation System that Responds to Changes in
Economic and Social Structures” (2011, Act No. 114) and the “Act on Special Measures for Securing the Financial Resources Necessary to
60 Teijin Limited
Implement Measures for Reconstruction Following the Great East
Japan Earthquake” (2011, Act No. 117), promulgated in Japan on
December 2, 2011, resulted in a reduction in the corporate tax rate
and the imposition of a special reconstruction corporate tax for the
fiscal years beginning in the period from April 1, 2012, to March 31,
2015. This changed the effective statutory tax rate from 40.4% to
37.8% for those temporary differences expected to be eliminated
in the fiscal years beginning on or after April 1, 2012, and to 35.4%
for those temporary differences expected to be eliminated in the
years beginning on or after April 1, 2015. As a result of this change,
deferred tax assets, income taxes—deferred, net unrealized gains
on securities and deferred gains (losses) on hedges increased by
¥496 million ($6,035 thousand), ¥146 million ($1,776 thousand),
¥538 million ($6,546 thousand) and ¥104 million ($1,265 thousand),
respectively, in the consolidated financial statements for the year
ended March 31, 2012.
Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2011 and 2012, are as follows:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Deferred tax assets:
Excess bonuses accrued ¥ 4,060 ¥ 3,406 $ 41,441
Provision for loss on guarantees 2,529 2,264 27,546
Write-down of investment securities 2,965 2,639 32,109
Retirement benefits 4,507 4,192 51,004
Accumulated impairment loss 3,631 3,856 46,916
Net operating losses 68,022 53,776 654,289
Capital losses 1,778 — —
Other 11,952 13,547 164,824
Total 99,444 83,680 1,018,129
Valuation allowance (62,157) (54,485) (662,916)
Total deferred tax assets 37,287 29,195 355,213
Offset with deferred tax liabilities (19,842) (15,583) (189,597)
Net deferred tax assets ¥ 17,445 ¥ 13,612 $ 165,616
Deferred tax liabilities:
Adjustments to fixed assets based on Corporate Tax Law ¥ (7,108) ¥ (6,326) $ (76,968)
Accelerated depreciation of foreign subsidiaries’ fixed assets (3,677) (2,459) (29,918)
Tax effect of foreign subsidiaries’ undistributed earnings (3,849) (2,250) (27,376)
Valuation difference of newly acquired subsidiaries (5,750) (5,111) (62,185)
Valuation difference on available-for-sale securities (6,062) (4,504) (54,800)
Other (2,843) (3,781) (46,003)
Total deferred tax liabilities (29,289) (24,431) (297,250)
Offset with deferred tax assets 19,842 15,583 189,597
Net deferred tax liabilities ¥ (9,447) ¥ (8,848) $ (107,653)
61Teijin Limited
Note 17. Leases
(1) Finance leases as lessee
Finance lease transactions that commenced on and before March 31, 2008, and which did not transfer ownership are accounted for in
the same manner as operating leases.
The original lease obligations, payments to date and payments remaining for assets leased from other parties under non-capitalized
finance leases as of March 31, 2011 and 2012, are as follows:
Millions of yen
Year ended March 31, 2011 Original lease obligation Payments to date Payments remaining
Machinery, equipment and vehicles ¥2,058 ¥1,787 ¥271
Other fixed assets 878 693 185
Intangible assets 48 36 12
Total ¥2,984 ¥2,516 ¥468
Millions of yen
Year ended March 31, 2012 Original lease obligation Payments to date Payments remaining
Machinery, equipment and vehicles ¥1,846 ¥1,705 ¥141
Other fixed assets 610 529 81
Intangible assets 48 44 4
Total ¥2,504 ¥2,278 ¥226
Thousands of U.S. dollars
Year ended March 31, 2012 Original lease obligation Payments to date Payments remaining
Machinery, equipment and vehicles $22,460 $20,745 $1,715
Other fixed assets 7,422 6,437 985
Intangible assets 584 534 50
Total $30,466 $27,716 $2,750
Future minimum lease payments for the remaining lease periods as of March 31, 2011 and 2012, including interest, are as follows:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Due within one year ¥236 ¥150 $1,825
Due over one year 234 81 986
Total ¥470 ¥231 $2,811
Lease payments for finance leases that do not transfer ownership were ¥451 million and ¥198 million ($2,409 thousand) for the
years ended March 31, 2011 and 2012, respectively.
(2) Operating leases as lessee
Future minimum lease payments for the remaining lease periods, as of March 31, 2011 and 2012, are as follows:
Millions of yenThousands of U.S. dollars
2011 2012 2012
Due within one year ¥ 257 ¥ 303 $ 3,687
Due over one year 1,491 2,003 24,370
Total ¥1,748 ¥2,306 $28,057
62 Teijin Limited
Note 18. Stock option plans
Information on stock option plans at March 31, 2012, is shown below.
The account title and the amount related to stock options in the years ended March 31, 2011 and 2012, are as follows:
Millions of yenThousands of U.S. dollars
Account title 2011 2012 2012
Selling, general and administrative expenses ¥91 ¥181 $2,202
The following tables summarize the contents of stock options as of March 31, 2012.
Company name Teijin Limited
Position and number of grantee Directors and Corporate Officers: 54
Class and number of stock Common Stock 146,000
Date of issue July 10, 2006
Condition of settlement of rights No provisions
Period grantees provide service in return for stock options No provisions
Period subscription rights are to be exercised From July 10, 2006 to July 9, 2026
Company name Teijin Limited
Position and number of grantee Directors and Corporate Officers: 55
Class and number of stock Common Stock 207,000
Date of issue July 5, 2007
Condition of settlement of rights No provisions
Period grantees provide service in return for stock options No provisions
Period subscription rights are to be exercised From July 5, 2007 to July 4, 2027
Company name Teijin Limited
Position and number of grantee Directors and Corporate Officers: 57
Class and number of stock Common Stock 328,000
Date of issue July 7, 2008
Condition of settlement of rights No provisions
Period grantees provide service in return for stock options No provisions
Period subscription rights are to be exercised From July 7, 2008 to July 6, 2028
Company name Teijin Limited
Position and number of grantee Directors and Corporate Officers: 57
Class and number of stock Common Stock 420,000
Date of issue July 9, 2009
Condition of settlement of rights No provisions
Period grantees provide service in return for stock options No provisions
Period subscription rights are to be exercised From July 9, 2009 to July 8, 2029
Company name Teijin Limited
Position and number of grantee Directors and Corporate Officers: 55
Class and number of stock Common Stock 349,000
Date of issue July 9, 2010
Condition of settlement of rights No provisions
Period grantees provide service in return for stock options No provisions
Period subscription rights are to be exercised From July 9, 2010 to July 8, 2030
Company name Teijin Limited
Position and number of grantee Directors and Corporate Officers: 47
Class and number of stock Common Stock 737,000
Date of issue March 12, 2012
Condition of settlement of rights No provisions
Period grantees provide service in return for stock options No provisions
Period subscription rights are to be exercised From March 12, 2012 to March 11, 2032
63Teijin Limited
The following tables summarize the scale and movement of stock options as of March 31, 2012.
Non-exercisable stock optionsStocks
Company name Teijin Limited
2006 2007 2008 2009 2010 2012
Stock options outstanding at April 1, 2011 — — — — — —
Stock options granted — — — — — 737,000
Forfeitures — — — — — —
Conversion to exercisable stock options — — — — — 737,000
Stock options outstanding at March 31, 2012 — — — — — —
Exercisable stock options Stocks
Company name Teijin Limited
2006 2007 2008 2009 2010 2012
Stock options outstanding at April 1, 2011 103,000 150,000 275,000 410,000 349,000 —
Conversion from non-exercisable stock options — — — — — 737,000
Stock options exercised 29,000 28,000 24,000 32,000 5,000 —
Forfeitures — — — — — —
Stock options outstanding at March 31, 2012 74,000 122,000 251,000 378,000 344,000 737,000
The following table summarizes price information of stock options as of March 31, 2012.
Yen
Company name Teijin Limited
2006 2007 2008 2009 2010 2012
Paid-in value ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥ 1
Average market price of the stock at the time of exercise ¥319 ¥319 ¥334 ¥334 ¥337 ¥ —
Fair value at the date of grant ¥663 ¥610 ¥307 ¥253 ¥261 ¥245
The method of estimation for the fair value of stock options granted in the year ended March 31, 2012, is as follows:
Method of valuation Black-Scholes Model
Volatility 36%
Expected remaining period 4.5 years
Expected dividend ¥6.0 per share
Interest rate without any risks 0.26%
64 Teijin Limited
Note 19. Segment information
(1) Reportable segment information
The Company’s reportable operating segments are compo-
nents of an entity for which separate financial information is
available and evaluated regularly by its chief decision-making
authority in determining the allocation of management
resources and in assessing performance. Up to and including
the fiscal year ended March 31, 2012, the Company divided
its operations into business groups based on type of product,
nature of business and services provided. The business groups
formulate product and service strategies in a comprehensive
manner in Japan and overseas. Accordingly, the Company
divided its operations into five reportable operating segments
on the same basis as it uses internally: High-Performance
Fibers; Polyester Fibers; Films and Plastics; Pharmaceuticals
and Home Health Care; and Trading and Retail.
Each segment is as follows:
High-Performance Fibers: — Production and sales of aramid fibers and carbon fibers and
composites for industrial applications, and artificial leather
Polyester Fibers: — Production and sales of polyester fibers and raw material for
apparel and industrial applications
Films and Plastics: — Production and sales of films and resins for various industrial
applications
Pharmaceuticals and Home Health Care: — Production and sales of prescription and non-prescription drugs
and production, sales and rental of home healthcare devices
Trading and Retail: — Trading and retail of polyester filaments and other fibers
(2) Accounting methods used to calculate segment sales, segment income, segment assets and other items for reportable segments
Accounts for reportable segments are for the most part calculated in line with generally accepted standards for the preparation of
consolidated financial statements. Segment income for reportable segments is based on operating income. Amounts for intersegment
transactions or transfers are calculated based on market prices or on prices determined using the cost-plus method.
(3) Segment sales, segment income, segment assets and other items for reportable segments
Segment information for the years ended March 31, 2011 and 2012, is shown below.
Millions of yen
2011
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail Total OthersConsolidated
total
Sales:
1) External customers ¥103,354 ¥103,502 ¥217,109 ¥136,446 ¥216,922 ¥777,333 ¥ 38,323 ¥815,656
2) Intersegment net sales
and transfer 10,651 40,776 7,951 1 4,813 64,192 30,312 94,504
Net sales 114,005 144,278 225,060 136,447 221,735 841,525 68,635 910,160
Segment income 4,423 3,017 23,447 22,910 4,744 58,541 3,105 61,646
Segment assets 215,824 101,534 185,208 93,420 76,472 672,458 50,407 722,865
Other items:
Depreciation 16,781 5,624 11,492 9,486 201 43,584 2,052 45,636
Amortization of goodwill 5,531 — (40) 1,817 16 7,324 (73) 7,251
Investments in associates
accounted for using the
equity method 3,816 3,409 9,314 772 367 17,678 4,506 22,184
Increase in tangible and
intangible fixed assets 5,077 4,204 4,277 12,441 273 26,272 1,242 27,514
65Teijin Limited
Millions of yen
2012
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail Total OthersConsolidated
total
Sales:
1) External customers ¥120,724 ¥109,944 ¥215,376 ¥143,000 ¥224,574 ¥813,618 ¥ 40,753 ¥854,371
2) Intersegment net sales
and transfer 9,966 33,246 6,464 0 3,938 53,614 34,338 87,952
Net sales 130,690 143,190 221,840 143,000 228,512 867,232 75,091 942,323
Segment income 6,309 1,895 3,733 25,913 6,013 43,863 3,325 47,188
Segment assets 195,934 107,966 169,701 97,909 85,457 656,967 55,614 712,581
Other items:
Depreciation 16,985 4,448 10,946 7,921 430 40,730 1,588 42,318
Amortization of goodwill 5,884 — 132 1,970 16 8,002 (68) 7,934
Investments in associates
accounted for using the
equity method 5,486 3,397 10,619 569 731 20,802 3,602 24,404
Increase in tangible and
intangible fixed assets 7,982 4,032 4,427 11,332 1,009 28,782 1,985 30,767
Thousands of U.S. dollars
2012
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail Total OthersConsolidated
total
Sales:
1) External customers $1,468,840 $1,337,681 $2,620,465 $1,739,871 $2,732,376 $9,899,233 $495,839 $10,395,072
2) Intersegment net sales
and transfer 121,256 404,502 78,647 0 47,913 652,318 417,788 1,070,106
Net sales 1,590,096 1,742,183 2,699,112 1,739,871 2,780,289 10,551,551 913,627 11,465,178
Segment income 76,761 23,056 45,419 315,282 73,160 533,678 40,455 574,133
Segment assets 2,383,915 1,313,615 2,064,740 1,191,252 1,039,749 7,993,271 676,652 8,669,923
Other items:
Depreciation 206,655 54,119 133,179 96,374 5,232 495,559 19,321 514,880
Amortization of goodwill 71,590 — 1,606 23,969 195 97,360 (828) 96,532
Investments in associates
accounted for using the
equity method 66,747 41,331 129,201 6,923 8,894 253,096 43,826 296,922
Increase in tangible and
intangible fixed assets 97,117 49,057 53,863 137,876 12,276 350,189 24,151 374,340
(Notes)
1. “Others” includes the Company’s IT business and does not qualify as a reportable operating segment.
2. Depreciation and Increase in tangible and intangible fixed assets include long-term prepaid expenses and their amortization.
3. As described in Note 2, Teijin and its domestic consolidated subsidiaries changed their method of depreciating fixed assets acquired on or after April 1, 2011. As a result of
this change, segment income was ¥777 million ($9,454 thousand) higher in High-Performance Fibers, ¥606 million ($7,373 thousand) higher in Polyester Fibers, ¥1,228 mil-
lion ($14,941 thousand) higher in Films and Plastics, ¥2,632 million ($32,023 thousand) higher in Pharmaceuticals and Home Health Care, ¥364 million ($4,429 thousand)
higher in Trading and Retail and Others, combined, and ¥713 million ($8,675 thousand) lower in Elimination and corporate, compared to what would have been recorded
under the previous method.
66 Teijin Limited
Reconciliation of published figures and aggregates of reportable operating segments for the years ended March 31, 2011 and 2012,
is shown below:
Millions of yenThousands of U.S. dollars
Adjustment for net sales 2011 2012 2012
Reportable operating segments ¥841,525 ¥867,232 $10,551,551
Others segment 68,635 75,091 913,627
Elimination of intersegment transactions (94,504) (87,952) (1,070,106)
Net sales ¥815,656 ¥854,371 $10,395,072
Millions of yenThousands of U.S. dollars
Adjustment for operating income 2011 2012 2012
Reportable operating segments ¥58,541 ¥ 43,863 $ 533,678
Others segment 3,105 3,325 40,455
Elimination of intersegment transactions 584 250 3,042
Corporate expenses * (13,670) (13,394) (162,964)
Operating income ¥48,560 ¥ 34,044 $ 414,211
* Corporate expenses are expenses that cannot be allocated to individual reportable operating segments and are primarily related to basic research and head office
administration.
Reconciliation of published figures and aggregates of reportable operating segments as of March 31, 2011 and 2012, is shown below:
Millions of yenThousands of U.S.
dollars
Adjustment for assets 2011 2012 2012
Reportable operating segments ¥672,458 ¥656,967 $7,993,271
Others segment 50,407 55,614 676,652
Elimination of intersegment transactions 94,852 91,088 1,108,261
Corporate assets † (56,182) (41,551) (505,547)
Total assets ¥761,535 ¥762,118 $9,272,637
† Corporate assets are assets that cannot be allocated to individual reportable operating segments and are primarily related to investments of the parent company in “Cash and
time deposits” and “Investment securities,” etc.
Millions of yen
2011
Other items Reportable operating segments Others Adjustment Total
Depreciation ¥43,584 ¥2,052 ¥3,523 ¥49,159
Amortization of goodwill 7,324 (73) — 7,251
Investments in associates accounted for using the equity method 17,678 4,506 — 22,184
Increase in tangible and intangible fixed assets 26,272 1,242 1,735 29,249
Millions of yen
2012
Other items Reportable operating segments Others Adjustment Total
Depreciation ¥40,730 ¥1,588 ¥2,052 ¥44,370
Amortization of goodwill 8,002 (68) — 7,934
Investments in associates accounted for using the equity method 20,802 3,602 — 24,404
Increase in tangible and intangible fixed assets 28,782 1,985 1,527 32,294
67Teijin Limited
Thousands of U.S. dollars
2012
Other items Reportable operating segments Others Adjustment Total
Depreciation $495,559 $19,321 $24,967 $539,847
Amortization of goodwill 97,360 (828) — 96,532
Investments in associates accounted for using the equity method 253,096 43,826 — 296,922
Increase in tangible and intangible fixed assets 350,189 24,151 18,579 392,919
(4) Information by geographical segment
1. Net sales by region for the years ended March 31, 2011 and 2012, is shown below: Millions of yen
2011
Japan China Asia Americas Europe and others Consolidated total
¥512,152 ¥111,494 ¥68,752 ¥64,129 ¥59,129 ¥815,656
Millions of yen
2012
Japan China Asia Americas Europe and others Consolidated total
¥518,973 ¥121,886 ¥72,166 ¥71,004 ¥70,342 ¥854,371
Thousands of U.S. dollars
2012
Japan China Asia Americas Europe and others Consolidated total
$6,314,308 $1,482,978 $878,039 $863,901 $855,846 $10,395,072
2. Tangible fixed assets by region as of March 31, 2011 and 2012, is shown below:
Millions of yen
2011
Japan Netherlands Asia Americas Europe Consolidated total
¥142,582 ¥55,194 ¥44,297 ¥6,984 ¥10,602 ¥259,659
Millions of yen
2012
Japan Netherlands Asia Americas Europe Consolidated total
¥141,755 ¥47,907 ¥39,418 ¥6,037 ¥9,184 ¥244,301
Thousands of U.S. dollars
2012
Japan Netherlands Asia Americas Europe Consolidated total
$1,724,723 $582,881 $479,596 $73,452 $111,741 $2,972,393
(5) Information by major customer
Information for the year ended March 31, 2012, is omitted as no single customer accounts for more than 10% of consolidated net sales
as reported in the consolidated statements of income.
(6) Loss on impairment and goodwill by reportable segment
Loss on impairment by reportable segment for the years ended March 31, 2011 and 2012, is shown below:
Millions of yen
2011
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail OthersElimination and
corporateConsolidated
total
Loss on impairment * ¥549 ¥537 ¥148 ¥— ¥— ¥558 ¥— ¥1,792
* The figure for “Others” is losses on impairment of power supply equipment and/or facilities.
68 Teijin Limited
Millions of yen
2012
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail OthersElimination and
corporateConsolidated
total
Loss on impairment ¥2,167 ¥212 ¥139 ¥96 ¥— ¥— ¥— ¥2,614
Thousands of U.S. dollars
2012
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail OthersElimination and
corporateConsolidated
total
Loss on impairment $26,366 $2,579 $1,691 $1,168 $— $— $— $31,804
Goodwill by reportable segment as of March 31, 2011 and 2012, is shown below:
Millions of yen
2011
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail OthersElimination and
corporateConsolidated
total
Amortization of goodwill ¥ 5,531 ¥— ¥ (40) ¥ 1,817 ¥16 ¥ (73) ¥— ¥ 7,251
Balance as of March 31, 2011 ¥39,869 ¥— ¥(135) ¥12,251 ¥62 ¥(274) ¥— ¥51,773
Millions of yen
2012
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail OthersElimination and
corporateConsolidated
total
Amortization of goodwill ¥ 5,884 ¥— ¥ 132 ¥ 1,970 ¥16 ¥ (68) ¥— ¥ 7,934
Balance as of March 31, 2012 ¥33,926 ¥— ¥2,020 ¥10,502 ¥47 ¥(175) ¥— ¥46,320
Thousands of U.S. dollars
2012
High-Performance
Fibers Polyester FibersFilms and Plastics
Pharmaceuticals and Home
Health CareTrading and
Retail OthersElimination and
corporateConsolidated
total
Amortization of goodwill $ 71,590 $— $ 1,606 $ 23,969 $195 $ (828) $— $ 96,532
Balance as of March 31, 2012 $412,775 $— $24,577 $127,777 $572 $(2,129) $— $563,572
Note 20. Contingent liabilities
At March 31, 2011 and 2012, the Companies were contingently liable as follows:
Millions of yenThousands of U.S. dollars
2011 2012 2012
(a) As endorser of notes discounted or endorsed ¥ 52 ¥ 63 $ 767
(b) As guarantors of indebtedness of:
Unconsolidated subsidiaries and affiliates ¥2,429 ¥1,386 $16,863
Others 2,744 2,765 33,642
¥5,173 ¥4,151 $50,505
(c) As guarantor of accounts receivable negotiated to third parties ¥3,086 ¥2,268 $27,595
69Teijin Limited
Note 21. Subsequent events
(1) At the Board of Directors’ meeting held on May 9, 2012, appropriations of retained earnings for year-end dividends applicable to the
year ended March 31, 2012, were duly approved as follows:
Millions of yenThousands of U.S. dollars
Cash dividends: ¥3.00 ($0.04) per share ¥2,953 $35,929
(2) With the aim of enhancing market responsiveness and integrating fundamental technologies, on October 1, 2012, a company split
will be implemented between the Company and core subsidiary Teijin Fibers Limited, in a bid to advance the creation of value for cus-
tomers, a key objective of the Company’s new medium-term management vision. On the same date, four mergers will be implemented
(plus one merger on April 1, 2013), involving the Company and five consolidated subsidiaries of the Company. The details are as follows:
a) Company splita. Agenda
Approval of the Board of Directors May 9, 2012
Date of contract May 25, 2012
Approval granted at the general shareholders’ meeting June 22, 2012
Effective date of the company split October 1, 2012 (scheduled)
b. Names and major businesses of the parties
Name Major business
Split company Teijin Fibers Limited Manufacturing and sales of polyester fibers
Successor company Teijin Limited Holding company
c. Legal form of the split
A simple absorption-type split with the Company as the successor company.
d. Split business
All businesses of Teijin Fibers Limited, except for its apparel business.
e. Stock acquisition rights and convertible bonds
There are no stock acquisition rights or convertible bonds issued by the Company.
f. Outline of accounting treatment
The transaction is implemented as a business combination under common control.
b) Mergera. Agenda
Approval of the Board of Directors May 9, 2012
Date of contract May 25, 2012
Approval granted at the general shareholders’ meeting June 22, 2012
Effective date of merger October 1, 2012 (scheduled, except Teijin Chemicals Limited)
Effective date of merger (Teijin Chemicals Limited) April 1, 2013 (scheduled)
b. Names and major businesses of the parties
Name Major business
Surviving company Teijin Limited Holding company
Absorbed companies Teijin Techno Products Limited Manufacture and sales of high-performance fibers
Teijin Films Limited Coordination of joint venture films business
Teijin Intellectual Property Center Limited Intellectual property–related services for the Teijin Group
Teijin Creative Staff Co., Ltd. Contracting out of support service personnel for the Teijin Group
Teijin Chemicals Limited Manufacture and sales of films and plastics
70 Teijin Limited
c. Legal form of the merger
A simple absorption-type merger with the Company as the surviving company.
d. Outline of accounting treatment
These transactions are implemented as a business combination under common control. In addition, there is no plan to issue or
allocate new shares, and no plan to increase capital as a result of the merger.
(3) To maximize the Teijin Group’s comprehensive capabilities and
expedite the implementation of growth strategies, the Company
has formulated essential organizational reforms under its hold-
ing company system. Up to and including the year ended
March 31, 2012, the Company had divided its operations into
five reportable operating segments: High-Performance Fibers;
Polyester Fibers; Films and Plastics; Pharmaceuticals and
Home Health Care; and Trading and Retail. Effective from April
1, 2012, these segments were reorganized into four reportable
operating segments. The new segment names are as follows:
Advanced Fibers and Composites; Electronics Materials and
Performance Polymer Products; Healthcare; and Trading
and Retail.
The High-Performance Fibers segment has been renamed
the Advanced Fibers and Composites segment, and now also
includes polyester fibers for industrial applications, which was
previously accounted for in the Polyester Fibers segment. The
Films and Plastics segment has been renamed Electronics
Materials and Performance Polymer Products, while the
Pharmaceuticals and Home Health Care segment is now
Healthcare. The apparel component of the Polyester Fibers
segment has been incorporated into the Trading and Retail
segment. Others (other businesses) retained the same
name, but now also includes the polyester raw materials
and polymerization businesses, previously part of the
Polyester Fibers segment.
Each segment is now as follows:
Advanced Fibers and Composites: — Production and sales of aramid fibers, carbon
fibers, polyester fibers and composites for industrial
applications
Electronics Materials and Performance Polymer Products:
— Production and sales of films and resins for various
industrial applications
Healthcare: — Production and sales of prescription and non-
prescription drugs and production, sales and rental
of home healthcare devices
Trading and Retail: — Trading and retail of polyester filaments, other fibers
and polymer products
Segment information for the year ended March 31, 2012, restated to conform with the new segmentation, is as follows:
Millions of yen
2012
Advanced Fibers and Composites
Electronics Materials and Performance
Polymer Products Healthcare
Trading and Retail
Total for reportable segments Others Total
Elimination and corporate
Consolidated total
Sales to external
customers ¥153,218 ¥215,376 ¥143,000 ¥262,710 ¥774,304 ¥80,067 ¥854,371 ¥ — ¥854,371
Segment income 7,182 3,733 25,913 6,621 43,449 3,739 47,188 (13,144) 34,044
Thousands of U.S. dollars
2012
Advanced Fibers and Composites
Electronics Materials and Performance
Polymer Products Healthcare
Trading and Retail
Total for reportable segments Others Total
Elimination and corporate
Consolidated total
Sales to external
customers $1,864,193 $2,620,465 $1,739,871 $3,196,374 $9,420,903 $974,169 $10,395,072 $ — $10,395,072
Segment income 87,383 45,419 315,282 80,557 528,641 45,492 574,133 (159,922) 414,211
71Teijin Limited
To the Shareholders and the Board of Directors of Teijin Limited:
We have audited the accompanying consolidated financial statements of Teijin Limited and its consolidated subsidiaries, which comprise
the consolidated balance sheets at March 31, 2011 and 2012, and the consolidated statements of income, statements of comprehensive
income, statements of changes in net assets and statements of cash flows for the years then ended, and a summary of significant
accounting polices and other explanatory information.
Management’s Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in
accordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant
to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Teijin Limited and
its consolidated subsidiaries at March 31, 2011 and 2012, and their financial performance and cash flows for the years then ended in
accordance with accounting principles generally accepted in Japan.
Emphasis of MatterWithout qualifying our opinion, we draw attention to Note 2 to the consolidated financial statements. From the year ended March 31, 2012,
the Company and its domestic consolidated subsidiaries changed their method of depreciation from the declining balance method to the
straight-line method to depreciate tangible fixed assets. Previously, the Company and its domestic consolidated subsidiaries mainly used
the declining balance method.
Convenience TranslationThe U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2012, are
presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,
such translation has been made on the basis described in Note 1 to the consolidated financial statements.
Tokyo, Japan
June 22, 2012
Independent Auditors’ Report
72 Teijin Limited
Established June 17, 1918
Head Offices Osaka Head Office6-7, Minami Hommachi 1-chome, Chuo-ku, Osaka 541-8587, Japan
Tel: +81-6-6268-2132
Tokyo Head OfficeKasumigaseki Common Gate West Tower,
2-1, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo 100-8585, Japan
Tel: +81-3-3506-4529
Fiscal Year-End March 31
Common Stock Authorized 3,000,000,000 shares
Issued 984,758,665 shares
Paid-in capital ¥70,817 million
Shareholders 123,487
Number of Teijin Group Companies Japan 68
Overseas 81
Total 149
Number of Teijin Group Employees
(Consolidated)
Japan 9,708
Overseas 7,111
Total 16,819
Stock Exchange Listings Tokyo, Osaka
Stock Code 3401
Stock Transfer Agent Mitsubishi UFJ Trust and Banking Corporation
Dividends Dividends are usually declared in May and November.
Dividends are usually paid in or about May and November.
Reports Available to Shareholders and Investors Corporate Brochure
Annual Report
Fact Book
Kessan Tanshin (Japanese summary financial report)
The Teijin Group CSR Report
Annual Meeting of Shareholders The annual meeting of shareholders is held before the end of June.
Independent Public Accountants KPMG AZSA LLC
Teijin on the Internet http://www.teijin.co.jp
Teijin’s web site offers a wealth of corporate and product information, including the latest annual report,
financial results and corporate news.
Investor Relations If you have any questions or would like copies of any of our reports, please contact:
Masahiro Ikeda,
General Manager,
Investor Relations Office,
Kasumigaseki Common Gate West Tower,
2-1, Kasumigaseki 3-chome,
Chiyoda-ku, Tokyo 100-8585, Japan
Tel: +81-3-3506-4407 Fax: +81-3-3506-4150
E-mail: [email protected]
Corporate DataAs of March 31, 2012
13%
69%
18%
● Aramid fibers ● Carbon fibers and composites
● Pharmaceuticals● Home healthcare
20110.8
Advancedfibers and composites
Healthcare
Stable-profitbusinesses
Fiscal
¥
Net sales
trillion● Polyester fibers● Polycarbonate resin● PET film● PEN film● Trading and retail● IT
*
© 2012 Teijin Limited. All Rights Reserved.
Italicized product names and service names in this report are trademarks or registered trademarks of the
Teijin Group in Japan and/or other countries. Where noted, other italicized product names and service
names used in this report are protected as the trademarks and/or trade names of other companies.
Contents
2 Message from the CEO
3 CHANGE for 2016
8 Business Group Review
8 Advanced Fibers and Composites
Business Group
10 Electronics Materials and Performance
Polymer Products Business Group
12 Healthcare Business Group
14 Trading and Retail Business Group
15 IT Business Group
16 New Business Development Group
17 Research and Development
20 Corporate Governance
23 Corporate Social Responsibility
25 Financial Section
26 Financial Highlights and Consolidated
10-Year Summary
28 Management’s Discussion and Analysis
36 Consolidated Financial Statements
72 Corporate Data * Excluding the impact of the
standardization of accounting
periods.
Cha
Profi le
In fiscal 2011, Teijin announced a new medium- to long-term management vision, CHANGE for 2016. To achieve the targets set forth
in this vision, Teijin is implementing major constructive change. In recent years, the Company classified its core global operations into
eight business areas with an emphasis on high-performance materials and healthcare. Effective from fiscal 2012, Teijin will seek to
provide solutions to customers and markets, further enhancing the quality of life of people everywhere, by concentrating on three
key domains: Green chemistry, healthcare and overlapping domains. At the same time, Teijin will work to ensure both sustainable
growth and profitability, primarily through its promising growth businesses, notably advanced fibers and composites and healthcare.
Growth through Constructive
Disclaimer Regarding Forward-Looking Statements
Any statements in this document, other than those of historical fact, are forward-looking statements about the future performance of Teijin and its Group companies,
which are based on management’s assumptions and beliefs in light of information currently available and involve risks and uncertainties. Actual results may differ
materially from these forecasts. Potential risks and uncertainties include, but are not limited to, domestic and overseas economic conditions, such as consumer
spending and private capital expenditures; currency exchange rate fl uctuations, notably with the Japanese yen, U.S. dollar, Asian currencies, the euro and other
currencies in which Teijin operates its international business; direct and indirect restrictions imposed by other countries; fl uctuations in the market prices of securities
in which Teijin has substantial holdings; and Teijin’s ability to maintain its strength in many product and geographical areas, through such means as new product
introductions, in a market that is highly competitive in terms of both price and technology, pertinent to the industry to which the Company primarily belongs.
http://www.teijin.co.jp
Printed in Japan using waterless printing. Issued 2012.7
Growth through Constructive
Change Annual Report 2012Year ended March 31, 2012
Annual R
eport 2012