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On the Right Track with Cutting-Edge Chemical and Environmental Technologies
ANNUAL REPORT 2004Y e a r E n d e d M a r c h 3 1 , 2 0 0 4
SEKISUI CHEMICAL CO., LTD.
Corporate Philosophy
Contents
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56
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Statements made in this annual report with respect to Sekisui Chemical's plans, strategiesand future performance that are not historical facts are forward-looking statements, and arebased on management's assumptions and beliefs judged from information currently available.The Company cautions that a number of factors could cause actual results to differ materiallyfrom those discussed in the forward-looking statements.
Creation of social value by responding to stakeholders’ expectations
The Sekisui Chemical Group defines a “good company” as one that has a favorable image and continuing growth. We
intend to maximize business growth and corporate value with customer satisfaction to respond to the expectations of
our shareholders. In addition, through our business, products and contribution to society, we aim to contribute to the
community and the global environment. We actively support the self-actualization of the employees who are the
driving force of our corporate activities.
The Sekisui Chemical Group will pursue a prominent position in the marketplace and high profitability. We will
continue to grow as a “good company,” thereby fulfilling our corporate responsibilities and responding to the expec-
tations of our customers, shareholders, employees, environment, and community.
Financial Highlights
To Our Shareholders and Customers
Special Feature: Progress with Our New Medium-Term Management Vision
Sekisui Chemical Operations at a Glance
Housing Company
Urban Infrastructure & Environmental Products Company
High Performance Plastics Company
Sekisui Chemical’s History of Product and Technology Development
Corporate Governance & Compliance
A Strong Commitment to the Environment and to Society
Board of Directors
Financial Section
Major Domestic Subsidiaries and Affiliates
Corporate Directory
Corporate Data
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
1
Financial Highlights
Financial HighlightsSekisui Chemical Co., Ltd. and Its SubsidiariesYears ended March 31, 2004, 2003, 2002, 2001 and 2000
Operating Income (Loss)
( Billions of Yen )
Net Income (Loss) and Return on Equity (ROE)
( Billions of Yen )
Net Sales
( Billions of Yen )
1,000
800
600
400
200
20022000 2001 2003 2004
0
20022000 2001 2003 2004 20022000 2001 2003 2004
920.0 913.7845.5
799.7 814.9
20
10
-10
-20
-30
-40
-50
-60
0
10.0
5.0
-5.0
-10.0
-15.0
-20.0
-25.0
-30.0
0
25
15
10
20
5
0
-5
6.8
-3.7 -3.1
14.0
23.1
-6.8
-13.8
-17.5
3.4 5.3
-52.1
9.315.0
-27.2
-48.6
Net Income (Loss) (Left)Return on Equity (ROE) (Right)
Operating results (for the year):Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . .Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial position (at year-end):Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Property, plant and equipment, net . . . . . . . . . . . . . . . . .Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . .Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows (for the year):Cash flows from operating activities . . . . . . . . . . . . . . . .Free cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per share amounts:Net income (loss), non-diluted (EPS) . . . . . . . . . . . . . . . .Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratio:Operating income/Net sales (%) . . . . . . . . . . . . . . . . . . .Return on equity (%)*2 . . . . . . . . . . . . . . . . . . . . . . . . . . .Return on total assets (%)*2,3 . . . . . . . . . . . . . . . . . . . . . .Equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Debt/Equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . .Current ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest coverage ratio (Times) . . . . . . . . . . . . . . . . . . . .
20032004
Millions of yen Thousands of U.S. dollars*1
20012002 20042000
¥814,864 23,081 15,019
748,791 239,854 180,217 291,756
57,91341,538
¥ 28.00 7.00
548.16
2.85.3 2.0
39.0 154.0
95.4 8.9
¥799,70914,025
9,298
751,240248,246181,107274,475
47,06722,681
¥ 17.436.00
514.86
1.8 3.4 1.2
36.5 171.3
87.3 4.7
$7,713,593 218,487 142,172
7,088,1392,270,4851,705,9542,761,795
548,211 393,203
$ 0.27 0.07 5.19
¥920,0416,788
(27,183)
887,616287,688173,974383,076
62,871 6,688
¥ (49.25)10.00
694.21
0.7(6.8)(3.0)43.2
130.5104.7
3.5
¥845,497(3,094)
(52,108)
800,272253,454156,277271,287
19,036(16,987)
¥ (96.75)6.00
503.83
(0.4)(17.5)
(6.0)33.9
193.677.3(0.5)
¥913,683(3,701)
(48,634)
928,803285,016207,868323,840
25,691(22,300)
¥ (89.91)10.00
600.88
(0.4)(13.8)
(5.4)34.9
185.488.9(0.6)
Yen U.S. dollars*1
*1: U.S. dollar amounts represent translations of Japanese yen, for the readers’ convenience only, at the rate of ¥105.64=U.S.$1.00, the prevailing exchange rate at March 31, 2004.*2: ROE and ROA are calculated using the simple average of beginning and end of term balance sheet figures.*3: ROA = Net income (loss) / Total assets (Throughout this report, unless otherwise specified, ROA is calculated using income before income taxes as numerator.)
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
2
To O
ur Shareholders and Custom
ers
To Our Shareholders and Customers
Our New Medium-Term Management Vision got off to a good start in fiscal year 2003, achieving
the large profit growth that it targeted. Moreover, our three division companies made steady
progress in developing the businesses and products that will drive our next phase of growth.
new medium-term management vision. A major difference
compared with the previous fiscal year is that, thanks to
progress in fixed cost reduction, the sales growth was
reflected directly in operating income expansion.
Other income (expenses) was a net ¥1.0 billion. Other
expenses included a ¥3.1 billion reorganization costs and a
¥2.3 billion loss on the disposal of fixed assets. As the refor-
mation of our business structure has passed a critical junc-
ture, related expenses were down sharply from ¥7.7 billion
in the previous fiscal year.
As a result of the above, net income was ¥15.0 billion,
up 61.5% from the previous fiscal year.
Looking at fiscal year 2003 results by division company,
Review of fiscal year 2003 (April 1, 2003—March 31, 2004)
In fiscal year 2003, substantial growth was seen worldwide
in such industries as digital consumer electronics and auto-
mobiles, areas in which our products are widely used. In
the Housing area, new housing starts in Japan made a mod-
est recovery, supported by special demand ahead of the
then expected expiration of housing-related tax breaks and
interest rate hikes and by economic recovery.
Amid this environment, in fiscal year 2003, consolidat-
ed net sales grew 1.9% year on year to ¥814.9 billion.
Operating income, moreover, surged 64.6% year on year to
¥23.1 billion, exceeding the ¥20.0 billion target set in our
Naotake Okubo President
3
To O
ur Shareholders and Custom
ersSekisui C
hemical C
o., Ltd. Annual R
eport 2004
net sales in the Housing Company increased ¥11.0 billion
to ¥410.9 billion. This is attributable to growth in orders
for detached houses, which was supported by the strong
reputation of our houses for environmental-friendliness.
Examples include our “zero utility expense” houses and
houses with highly durable tile exterior walls. Growth in
orders for apartments and houses with land also con-
tributed. Operating income more than doubled from ¥5.0
billion in the previous fiscal year to ¥10.3 billion. In addi-
tion to the profit growth in the housing business, the liv-
ing environment business (refurbishing business) where
we made strategic investments in personnel and sales
offices finally turned profitable, contributing to the
increase in operating income.
In the Urban Infrastructure & Environmental Products
(UIEP) Company, net sales were basically flat, increasing
¥2.6 billion year on year to ¥192.3 billion. Despite this,
however, operating income improved from ¥600 million in
the previous fiscal year to ¥3.3 billion, as a result of our
efforts to strengthen the competitiveness of core businesses
such as PVC pipes and to reform business structure, which
included reorganizing and withdrawing from unprofitable
businesses and cutting distribution-related expenses.
In the High Performance Plastics (HPP) Company, net
sales were up ¥9.5 billion year on year to ¥181.8 billion.
This is attributable to growth in exports of IT-related prod-
ucts such as fine particles for LCDs and strength in inter-
layer films for laminated glass for automobiles. Also con-
tributing was the consolidation of two polyolefin foam
companies (China, South Korea) in which we acquired a
controlling interest. Strategic investments, however, limited
growth in operating income to a slight ¥1.9 billion year on
year to ¥12.3 billion. These included investment in the
interlayer film business to expand plant capacity in China
and Netherlands.
Where our businesses are headed under theNew Medium-Term Management Vision
In fiscal year 2003, we developed the new three-year
“GS21-Premium 600” medium-term management vision,
targeting operating income of ¥60.0 billion in fiscal year
2005. Its two key phrases for business growth are “promi-
nence” and “high profitability.”
From fiscal year 1998, we underwent four consecutive
years of losses due to contraction of the housing market
and curbs on public spending. Aiming for a recovery in
cost-competitiveness during that period, we radically
reformed our business structure by withdrawing from
unprofitable businesses, reviewing our production and sales
systems, and reducing personnel.
At the same time, this process of selecting and focusing
gave us an opportunity to reconsider which business con-
cepts would be optimal for leveraging our strengths. As a
result of thorough consideration, we selected the concepts
of “environment” and “cutting-edge chemistry” for our new
medium-term management vision.
We aim to build a “highly profitable” group of busi-
nesses by providing strikingly original products and servic-
es. We will achieve this by developing the cutting-edge
chemistry and environmental technologies that are our
unique strengths to a level of prominence that cannot be
paralleled by competitors.
Our strategy for maximizing the contribution of this
prominence to profit includes “software aspects enhance-
ment” and globalization. “Software aspects enhancement”
refers to the approach of providing comprehensive solu-
tions ranging from design and installation to maintenance
rather than simply selling individual products. The UIEP
Company has, for example, already begun to apply this
approach in the aged pipe restoration business.
4
To O
ur Shareholders and Custom
ersSekisui C
hemical C
o., Ltd. Annual R
eport 2004
In the area of globalization, we are confident that the
prominence of our products assures that they will be well
received around the world. With this credo, the HPP
Company, which handles intermediate materials, is taking
the lead in this area by actively expanding local production,
targeting industries undergoing globalization such as auto-
mobiles and IT-related.
In fiscal years 2002 and 2003, we strengthened our
global development of production and sales bases for inter-
layer film and functional materials (HPP Company) and of
a production and sales base for high-performance pipes and
a production base for EF joints (UIEP Company), particu-
larly in the rapidly growing markets of China.
“Prominence” developing at our three divi-sion companies
Our three division companies are making solid progress in
establishing “prominence.” Our Housing Company, which
has chosen “environment” as a key area for developing
prominence, has earned a strong reputation from customers
for its “zero utility expense” houses, which combine consid-
eration for the environment and reduced life cycle costs, a
concept made possible by our “unit house” technology. The
ratio of orders for houses equipped with photovoltaic gen-
erators to total orders increased from 32% in fiscal year
2002 to 46% in fiscal year 2003. Equipped units accounted
for 6,000 of new houses built in fiscal year 2003 and 3,000
of refurbished houses originally built by us, putting us over-
whelmingly ahead of the competition. We are confident
that Sekisui Chemical’s commitment to the environment is
becoming an established perception in the housing market.
The UIEP Company, which is targeting prominence in
“environmental solutions,” achieved growth in its pipe sys-
tems for detached houses, which offer a total solution for
hot and cold water supply, and draining. It also made its
aged pipe restoration business profitable on a 1.5-fold
increase in sales. Against the background of contraction in
public spending and the housing market, growth based on
the change to solutions-based business model is beginning
to come through.
The HPP Company is focusing on developing promi-
nence in the four key areas of information technology (IT),
automotive parts, medical products, and functional build-
ing materials. Its sales of fine particle products for LCDs
and semiconductors as well as sound control interlayer
film, products that leverage Sekisui Chemical’s unique tech-
nologies, are strong. It is also cultivating new buds of
growth such as retardation film for liquid crystals.
Strengthening the Sekisui Chemical brand—“environmental corporate management” and“CS quality management”
In addition to its objectives of further enhancing the
prominence of our businesses and boosting profit, our new
medium-term management vision calls for further enhanc-
ing the prominence of Sekisui Chemical as a corporate
brand. To achieve this, we aim to make “environmental
corporate management” and “customer satisfaction (CS)
based on absolute confidence in quality” as integral ele-
ments of the foundation of all of our businesses.
Our approach to the environment and CS attaches pri-
mary significance to becoming a manufacturer whose
“products embody the environment and CS.” In fiscal year
2003, we defined our concept of environmental corporate
5
To O
ur Shareholders and Custom
ersSekisui C
hemical C
o., Ltd. Annual R
eport 2004
management as achieving equilibrium between ecological
goals (consideration for and coexistence with the global
environment) and economic goals (maximizing economic
value for customers and ourselves). We aim to move away
from a management style that considers ecological and eco-
nomic goals separately, providing instead products that
combine the consideration for the environment and eco-
nomic efficiency that is so clearly exemplified by our “zero
utility expense” houses.
We are, of course, continuing our environmental pro-
tection activities as well. A major success in fiscal year 2003
was our becoming the first housing company in the indus-
try to achieve zero emission status for a new construction
site. As a result, we received an environmental rating of “A”
from the accounting firm of Deloitte Touche Tohmatsu for
the third consecutive year.
In the area of CS, we have actively conducted customer
surveys and applied feedback from them on business opera-
tion. As a result of such efforts, we have been honored for
our contributions to consumers by the Ministry of Economy,
Trade and Industry. In April 2004, we set up the CS Quality
Management Department to further promote CS based on
customer confidence in quality. The foundation of creating
customer satisfaction lies in the quality of products and
associated services that is based on our tradition of crafts-
manship as a top-notch manufacturer. We will continue to
put into practice the concept that enhancing customer sat-
isfaction is the source of our earnings going forward. We
intend to embody CS in our products by incorporating the
voices of customers at the highest levels of our business.
We are also reforming our management by continuously
improving “product quality, personnel quality, and system
quality.”
In closing
I understand that as shareholders you may have had con-
cerns over our performance trend for these past few years.
Confident that restoring and reinforcing profitability is the
reward that our shareholders deserve, I have worked to rad-
ically reform our business structure and achieve promi-
nence for each of our businesses. These efforts have at last
begun to pay off, albeit incrementally. Based on our busi-
ness performance, we have increased our dividend for fiscal
year 2003 to ¥7 per share, up ¥1 from ¥6 per share in fiscal
year 2002. We hope to return it to the ¥10 per share level
at the earliest possible date.
Having decisively committed to growth in fiscal year
2001, we have been making progress in establishing a new
growth trajectory, as exemplified by our V-shaped recovery
in fiscal year 2002 and strong profit growth in fiscal year
2003. I, as a president, intend to continue to fulfill my role
as a leader so that all of our employees will work every day
toward achieving our vision for fiscal year 2005 and beyond
in order to maintain our growth momentum. We look for-
ward to the continued understanding of you, our share-
holders and customers.
August 2004
Naotake Okubo, President
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
6
Special Feature: Progress with O
ur New
Medium
-Term
Managem
ent Vision
Special Feature: Progress with Our New Medium-Term Management Vision
In fiscal year 2003, Sekisui Chemical developed its new
“GS21-Premium 600” medium-term management
vision. The new plan calls for operating income of ¥60
billion in fiscal year 2005 through our transformation
into a “premium company,” which we define as one that
develops prominent technology and products and is
highly profitable.
Our operating income for fiscal year 2003, the first year of
the new vision, exceeded the ¥20 billion target. Also, our
growth strategy, focused on technologies for the environ-
ment and cutting-edge chemistry, fostered budding busi-
nesses in each of our three division companies.
Overview of GS21-Premium 600, our newmedium-term management vision
Numerical target: Achieve operating income of ¥60 billion infiscal year 2005
Strategies:(1) Reorganize business portfolio by targeting “high prof-
itability.”— Reinforce the profitability of core businesses and
restructure unprofitable businesses.
(2) Achieve prominence in “environmental technology”and chemistry.— Create new businesses by focusing investment on
environment-related fields and cutting-edgechemistry.
(3) Accelerate global development of businesses.— Aggressively develop markets, especially in China
and other parts of Asia.Business Plan (Consolidated)
ROA (%)
Fiscal Year 2003 (Actual) Fiscal Year 2005 (Plan)
HPP*2 OthersUIEP*1Entire Group Housing HPP*2 OthersUIEP*1Entire Group Housing
192.3 (+2.6)
3.3 (+2.6)
1.7 (+1.4)
181.8 (+9.5)
12.3 (+1.9)
6.8 (+0.8)
30.0 (-7.9)
—
814.9 (+15.2)
23.1 (+9.1)
2.8*3 (+1.0)
2.01 (+0.01)
930
60
6.5
8
500
30
6
14
190*4
10
5
7
200
20
10
12
40
0
0
—
410.9 (+11)
10.3 (+5.0)
2.5 (+1.2)
4.3 -0.1 6.2
-2.8 (-0.4)
-9.4 (-3.3)
Net Sales(Billions of Yen)
The figures in the parenthesis show the changes from the previous fiscal year.*1 Urban Infrastructure & Environmental Products Company*2 High Performance Plastics Company*3 ROA = Net income (loss) / Total assets (Unless otherwise specified, ROA is calculated using income before income taxes as numerator.)*4 Already achieved in the first year of the medium-term management vision.
Operating Income(Billions of Yen)
Operating Income/ Net Sales (%)
7
Special Feature: Progress with O
ur New
Medium
-Term
Managem
ent Vision
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Achieving prominence in environment-relatedproducts and chemistry
We aim to boost profits in the Housing Company and theUrban Infrastructure & Environmental Products (UIEP)Company by focusing on environmental technologies anddeveloping the software aspects of businesses including refur-bishing solutions in the Housing Company; design and after-sales installation and maintenance in the UIEP Company. Inthe High Performance Plastics (HPP) Company, we are focus-ing resources on select areas and accelerating global develop-ment. In addition to the recent sales growth, each of our divi-sion companies is developing its business identity, bringing uscloser to achieving medium and long-term results.
Corporate headquarters’ results
Corporate headquarters’ results that support division companystrategies are as follows:
(1) Strengthening the financial position through managementfocused on cash f low in order to maximize shareholder value.
Free cash flow increased from ¥22.7 billion in fiscal year 2002to ¥41.5 billion in fiscal year 2003. This is attributable to a¥57.9 billion increase in funds generated by cash flow fromoperating activities and by reducing non-performing assets.
As a result of prioritizing allocation of this for repayment ofinterest-bearing debt, interest-bearing debt decreased from¥193.8 billion at the end of March 2003 to ¥153.1 billion atthe end of March 2004.
(2) Human resource strategies: Promote creation of corporateculture that encourages employees to proactively set goalsand seek new challenges.
In fiscal year 2003, 70 employees applied for 20 in-house jobtransfers. Also, 101 employees applied for 62 training positions,and 58 employees participated in training courses offered byKeio University’s Business School and other business schools.
(3) Enhancing technological capabilitiesBased on initiatives from corporate headquarters, we promotethe creation of new businesses through the R&D and TechnologyCenter NBO (new business office), which is the “incubation”division.
As a result of enhancing technological capabilities, we aredeveloping new businesses such as fire-resistant products (tapeand sheets) based on “Fiblock,” our thermal expansion fire-resistant material, and LCD cleaning equipment utilizingatmospheric pressure plasma.
Environment+Software Concept
Environment-Friendly Products
Cutting-edge Chemistry+Overseas Expansion
Housing with photovoltaic generator
Units re-using system (URU)
Aged pipe restoration
Using reclaimed materials
etc.
Heat insulation interlayer filmModified silicon(Environment conscious Sealing agents) etc.
Software Concept
Refurbishment proposal
Civil engineering
Piping systems
Cutting-EdgeChemistry Products
Electronic information materials
Medical
Automotive
Functional building materials
Overseas Expansion
Housing Company UIEP Company HPP Company
( Billions of Yen )
Interlayer film,
Polyolefin foam(FY2005 Target: 35% out of total HPP company sales)
High-performance pipes,
Joints (production),
Aged pipe restoration
FY02 FY03 FY05 (Plan)
Sales of Environment-Friendly Products
300
250
0
200
150
100
50
250
150
204
2005 Target: ¥250Bil. (¥100Bil. increase from FY 2002)
Progress Rate against the Plan
54%
8
Sekisui Chemical Operations at a Glance
Sekisui Chem
ical Operations at a G
lanceSekisui C
hemical C
o., Ltd. Annual R
eport 2004
IT-relatedAutomotive materialsMedical productsFunctional materials
Fine particles (LC spacers, gold-plated fine particles for device mounting, conductive fine particles), foams (polyolefin foam), interlayer films, packaging and industrial tapes, films, adhesives, high-functional resin (polyvinyl butyral, PVC resin), blood sampling plastics tube, transdermal drugs, diagnostic drugs
Number of Employees (Consolidated, FY2003 end): 3,903
High Performance Plastics Company
Housing business (newly-built houses and apartments)
Living environment (refurbishing, real estate and others)
Detached houses (steel-framed and wooden-framed unit houses), apartments
Refurbishing, interiors, exteriors, and property
Pipe business (water supply piping, plumbing equipment, construction equipment, sewage pipes, electricity pipes, gas pipes and others)
Building materials and housing equipment
Environmental solution businesses(aged pipe restoration, water supply infrastructure-related and recycle engineered wood)
PVC pipes and joints, polyethylene pipes
Rain gutters, roofing materials and bathroom units
Materials, equipment and installation methods for aged pipe restoration, garbage processing systems, water-purification tanks, and recycle engineered wood
Number of Employees (Consolidated, FY2003 end): 8,949
Number of Employees (Consolidated, FY2003 end): 2,930
Housing Company
Division Company Name Percentage of Sales Generated by Each Company (FY2003)
Main Business / Focused Areas Main Products
Urban Infrastructure & Environmental Products Company
9
Sekisui Chem
ical Operations at a G
lanceSekisui C
hemical C
o., Ltd. Annual R
eport 2004
51 subsidiaries (including 30 overseas subsidiaries) The above includes:. 11 production companies. 20 sales companies. 18 companies dealing with both production and sales
R&D site: Minase Research Laboratories (Osaka)
Micropearl (spacer), Micropearl SOL (gold-plated fine particle)S-LEC® FILM (interlayer film)
Through effective use of our dispersingtechnology, Pigment SDF Interlayer Filmrealizes a heat-shielding function byuniformly dispersing particles of organic pigments on a film.
87 subsidiaries (including 1 overseas subsidiary)The above includes:. 9 production companies. 36 sales companies (Sekisui Heim) . 23 companies dealing with refurbishing and others (Sekisui Fami S)
R&D site: Housing Technology Institute (Tsukuba)
Others: . Number of exhibition places (houses): 487 units . 8 Sekisui Heim Workshops, sales offices dealing with refurbishing. 22 “The Season” stores dealing with exteriors and gardening goods
DESIO GT, combination of new type skeleton (building frame) and conventional unit house infill (interiors and equipment)
. Sekisui Heim (steel-framed): PARFAIT/DOMANI/Desio/ Heim BJ/ . Sekisui Two-U (wooden-framed): CENTOWA/ NEW MIOLE/Lucina/ Earthia/Two-U Le (a house with no heating and lighting expenses). Letoit terrace (apartment). Harvestment (group home for the elderly). Crastina. A “recycled house” built through the reuse of unit houses
45 subsidiaries (including 5 overseas subsidiaries)The above includes:. 16 production companies. 14 sales companies. 10 companies dealing with both production and sales
R&D site: Kyoto R&D Laboratory
ESLON pipe series
ESLON rain gutters
SPR Method, ESLON®Omega-Liner Method, SEKISUI®SINKLEAR
ESLON® HI Pipe Gold High performance water pipes with exceedingly superior quality compared to conventional pipes
Subsidiaries, Affiliates, R&D Sites and Others(As of the end of FY2003)
Brand Names
10
Housing C
ompany
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Housing Company
Tomohiko Yasuda Executive Managing Director / President of Housing Company
Company overviewBased on the new medium-term management vision, the
Housing Company’s operating income target is ¥30.0 billion.
Under the previous medium-term management plan, we
achieved an earnings structure suited to a quantitatively shrink-
ing market in its mature phase by sharply cutting fixed costs
and lowering variable costs. We also undertook a thorough dif-
ferentiation of our products using the two concepts of “environ-
mental advantage” and “Life Cycle Cost (LCC)*.” At the same
time, we strengthened our marketing force for growth in orders
received.
*LCC (Life Cycle Cost): By adding maintenance, refurbishing, and scrap-ping expenses to the purchase cost of a house, this concept helps theconsumer evaluate the total cost of a house over its entire life.
LCC= house purchase price + maintenance costs + heating and lightingcosts + dismantling costs.
Results for fiscal year 2003Supported by economic recovery and special demand ahead of
the then expected expiration of the housing-related tax break in
December 2003, Japan’s housing market recovered slightly: new
housing starts rose 2.4% year on year to 1.174 million includ-
ing a 1.4% year on year increase in owner-occupied houses
starts to 371,000.
This contributed to increases in both revenue and profit at
The Housing Company as net sales grew by ¥11.0 billion year
on year to ¥410.9 billion and operating income was up by ¥5.0
billion to ¥10.3 billion.
In the housing business, units sold grew by 270 year on
year to 16,110 (12,270 detached houses, 3,840 apartments),
while sales were ¥338.2 billion (up ¥4.4 billion year on year)
and operating income was ¥9.8 billion (up ¥4.0 billion year on
year). Housing orders grew 7% year on year to ¥394.8 billion.
Sales of our “zero utility expense” houses, which we launched in
January 2003 to take advantage of the market recovery, were
strong. This, coupled with the strengthening of the areas such as
apartments and houses with land, where we did not have a
strong presence before, contributed to the growth in sales
and orders.
Housing Company medium-term managementvision targets and FY2003 results
Overall Housing Company targets and resultsCategory Targets (FY2005) Results (FY2003)Net sales ¥500.0 billion ¥410.9 billionOperating income ¥30.0 billion ¥ 10.3 billion
Strategies by business1) Housing business (newly built houses): Expand orders
received by using our unique environmental technolo-gies as a chemical manufacturer to differentiate ourproducts as well as by enhancing our product lineupand strengthening our solution-providing capabilities.
Targets and resultsCategory Targets (FY2005) Results (FY2003)Detached housing 5% 3.3%shareOperating income ¥25.0 billion ¥9.8 billion
2) Living environment business (refurbishing, real estate,and others): Increase the percentage of refurbishingorders received by us from the 400,000 existing own-ers of Sekisui Heim (housing).
Targets and resultsCategory Targets (FY2005) Results (FY2003)Sales ¥100.0 billion ¥72.7 billionOperating income ¥ 5.0 billion ¥500 million
11
Housing C
ompany
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
The living environment business, which is centered on the
refurbishing business, developed into a profitable business as sales
were ¥72.7 billion (up ¥6.6 billion year on year) and operating
income was ¥500.0 million (up ¥1.0 billion year on year), return-
ing to the black from the ¥500 million loss in fiscal year 2002.
Fiscal year 2004 strategies for achieving the management visionHousing Business
We will continue to focus on expanding market share as new
housing starts are expected to remain on a downward trend over
the medium to long term. To that end, we are engaged in the
following three activities.
1) Product differentiation: Focusing on our “zero utility
expense” houses, we will continue to use the concepts of
“environment” and “LCC” to appeal to customers. We are
also strengthening our product lineup in apartments and
houses with land.
2) Strengthening marketing: Mainly in order to develop our
younger talent, we will increase our marketing force from
2,490 employees at the end of fiscal year 2003 to 3,000 in
fiscal year 2005. We are also actively supporting marketing
with the “ECO Heim Promotion Office,” a special sales force
with engineering knowledge. We are also refocusing on the
apartment market by developing marketing personnel with
qualifications such as financial planning.
3) Evenly spacing orders, production, and construction: One
key to expanding orders is to evenly space them as they tend
to be concentrated at the end of the term. We will educate
our marketing staff to guide customers in this direction. We
also aim to cut costs further by coordinating the spacing
through all divisions from design to production and con-
struction.
Living Environment Business
As of April 1, 2004, we expanded the number of our specialized
refurbishing companies from one each in the Tokyo and Osaka
areas to three in each. In fiscal year 2004, we will increase the
percentage of refurbishing orders from our 400,000 existing
owners of Sekisui Heim by leveraging the improvements we
have made in our marketing system up to now to enhance our
communication with them. We will also focus on promoting
sales of environment-friendly products such as solar generators
and on the brokerage of used housing.
FY03FY02 FY05 (Plan) FY04 (Plan)
Housing Living EnvironmentOf which Refurbishing
Housing Living Environment
Net Sales
( Billions of Yen )
Operating Income
( Billions of Yen )
Number of Houses Sold by the Company vs Housing Starts( Thousand Units ) ( Thousand Units )
25
30
5
10
20
15
35
-5
30.05.0
25.0
10.30.5
9.8
16.01.514.5
5.3
-0.5
5.8
FY01FY99 FY00 FY03
25
15
10
5
20
0
19.8
438
17.5
377
16.1
371366
1,213
1,173
1,174
1,14622.7
1,226
476
750
500
250
1,000
1,250
0
Number of Houses Sold (Left)Housing Starts (Right)Owner-Occupied Houses (Right)
FY02
15.8
600
100
400
300
200
500
0
FY03FY02 FY05 (Plan) FY04 (Plan)
410.972.7
338.2(49.7)
80.0
350.0
(55.0)
399.966.1
333.8(44.2)
500.0
380.0
(90.0)
120.0430.0
0
12
Housing C
ompany
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Topic: Strategy for differentiating the housing businessDifferentiation based on unit construction methodThe houses that we sell are distinguished by our unique unit
construction method. This method is based on the concept that
a house consists of multiple rectangular boxes, or units. Based on
this concept, we build the individual units at our factory, where
we also complete interiors and exteriors, installation work, and
roofing. These finished units are then assembled into the house
on site. As about 80% of the process (versus 20% at other prefab
makers) is done at the factory, our houses have advantages not
only in terms of consistency of quality and construction time,
but also in terms of being friendly to the environment by causing
little construction waste on site. Their insulation exceeds the
next-generation energy conservation standards and their strong
frames are extremely durable. We have consistently demonstrat-
ed the advantages of the unit construction method based on the
two concepts of “environment” and “LCC.” In a Summer 2003
survey of 577 owners of Sekisui Heim houses equipped with
photovoltaic generators, approximately 70% of those in their 30s
or younger listed “good for both utility expenses and the envi-
ronment” as a reason for purchase. This reveals the strength of
concern not only for the environment but also for saving money.
Advantages of the unit construction methodThe unit construction method provides new advantages in terms of
features such as photovoltaic generators and tile exterior walls. Since
it allows tile exterior walls and photovoltaic generators to be installed
at the factory, the unit construction method keeps quality consistent.
Also, its on-site assembly offers price advantages by requiring fewer
steps than that of other companies. In the area of houses equipped
with photovoltaic generators in particular, our annual sales in fiscal
year 2002 totaled 6,079 units, far outpacing the competition.
Boosting appeal with “zero utility expense” conceptIn January 2003, we began marketing under the unified “zero
utility expense” concept the advantages of our unit houses and
environment-friendly products that we had previously promot-
ed individually. Our “zero utility expense” comprises the fol-
lowing four elements.
1) The superior air-tightness and heat insulation of the unit
house’s frame reduce utility expenses for heating and cooling.
2) The photovoltaic generator makes it possible to sell the sur-
plus power generated during the day.
3) The high-efficiency hot water supplier Eco Cute conserves
energy.
4) Being all-electric, the unit house uses economical late-night
electricity.
By making the income from power sold during the day equal to
or greater than the amount spent on power, these features effec-
tively reduce utility expenses to zero.
While the initial investment for all these features adds ¥2.5-¥3.0
million to the cost of the house, we estimate that this can be
recovered over 12-16 years through reduced utility expenses
(cost and time vary depending on type of house).
In April 2003, we began sales of “zero utility expense” houses
that offer these features as standard equipment, launching one prod-
uct line after the other. These include the wood-frame series Two-U
Le, the steel-frame Parfait Zero-Style, Domani Zero-Style series and
special series designed for heavy-snow regions. While other compa-
nies have products equipped with solar generators, we are currently
the only one clearly stating the “zero utility expense” concept. Being
“factory built,” our unit houses live up to the performance that they
demonstrate in simulations. This, in combination with the abun-
dant data we have accumulated from our sales of photovoltaic gener-
ators and similar products, is a powerful marketing tool.
Our “zero utility expense” concept has boosted sales of
environment-friendly products such as photovoltaic generation
systems and all-electric outfitting. Between fiscal years 2002 and
2003, the ratio of houses equipped with photovoltaic generators
to total houses that we sold rose from 32% to 46% and the
same ratio for all-electric houses increased from 65% to 74%.Computer-managed production lines realize efficient production of sophisticated, high quality houses.
13
Housing C
ompany
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
The next differentiation—pursuit of comfortJapan’s housing market can be divided into three post-war
stages. In the first stage (1970-1985), “home ownership” itself
was the goal, while “expansion of floor space” characterized the
second (1986-2000). The housing market was expanding dur-
ing both of these stages. We have now entered a third stage in
which “pursuit of comfort” is the goal.
A key element of “comfort” is a “thermal environment.”
Most housing in Japan continues to have separate air-condition-
ing for each room, so that compared to housing in Europe, where
central air-conditioning is taken for granted, Japan lags in terms
of thermal environment. We have therefore made it our mission
to provide solutions that “pursue comfort, conserve energy, light-
en the environmental load, and save money.” This approach has
the added benefit of differentiating our products. In addition to
our unit construction method, which is our greatest strength, we
possess the integrated strengths of various technologies such as
“construction,” “machinery,” “electricity,” “physics,” “chemistry,”
and “systems.” We will accomplish our new mission by leveraging
this powerful combination of technologies that is unparalleled
at other housing majors and conventional contractors.
Based on these concepts, in April 2004 we launched Parfait AE,
a new type of zero utility expense house. In Japan there is a large
difference between summer and winter temperatures and Parfait
AE expands our zero utility expense specifications with features
that enhance comfort in both of these seasons. These are a “ther-
mal barrier-free system (foundation insulation, floor heating sys-
tem)” and a “passive ventilation heat-blocking system (high heat
dissipation skylight and heat-blocking screen that controls the
amount of sunlight).” To complement this launch, we jointly
developed with Sumitomo Trust and Banking Co., Ltd. a hous-
ing loan for our zero utility expense houses. This loan is designed
so that the larger the power generating capacity of the photo-
voltaic generator, the lower the loan’s interest rate. Going as low
as 2.8%, this compares favorably with long-term fixed-rate bank
loans, further enhancing the economic appeal of our products.
Adding “comfort” to our basic concepts of “environment,”
“LCC,” and “zero utility expense,” we are committed to fully
differentiating our products.
Photovoltaic Generator, All-Electric, Tile Exterior Wall to be increased
( % )
20
40
30
10
60
50
70
80
40
0
48
77
33
24
65
32
29
74
46
35
50
FY01 FY02 FY03 FY04 (Plan)
Solar Generator Tile Exterior WallAll-Electric
Parfait AE
14
Urban Infrastructure & Environmental Products Company
Urban Infrastructure &
Environm
entalProductsCom
panySekisui C
hemical C
o., Ltd. Annual R
eport 2004
Company overviewBased on the medium-term management vision, the Urban
Infrastructure & Environmental Products (UIEP) Company is
reforming its business portfolio and strengthening its competi-
tiveness by reinforcing the profitability of its core businesses and
restructuring unprofitable businesses.
Inspired by the new concept of “becoming the leader in
environmental solutions” as a strategy for growth, we will devel-
op products that take into account the needs of the residential,
urban, and global environments. At the same time, we are shift-
ing from traditional simple sales model to a solutions-oriented
business that systematically incorporates design, installation,
and maintenance. We are also building a new business model
based on global expansion.
Results for fiscal year 2003Despite signs of recovery in housing starts in fiscal year 2003,
public-sector investment continued restrained so that the overall
business environment remained difficult. The UIEP Company
nevertheless achieved net sales of ¥192.3 billion, up ¥2.6 billion
year on year, and operating income of ¥3.3 billion, up ¥2.6 bil-
lion—increases in both revenue and profit in line with our ini-
tial forecast. The growth in operating income is attributable to
the recovery in the PVC pipe business owing to the effects of
the alliance with Mitsubishi Plastics, Inc. Strengthened sales in
the construction materials business, turnaround in unprofitable
businesses, and reduced logistics expenses also contributed. The
growth business of aged pipe restoration also made solid
progress as it became profitable at the operating level.
Toyoo Manabe Executive Managing Director / President of Urban Infrastructure & EnvironmentalProducts Company
250
50
200
150
100
*At the time of introduction of the plan
FY05 (Original Plan)* FY04 (Plan)FY03FY01 FY02
190.00189.7200.0
192.3194.9
0
Net Sales
( Billions of Yen )
UIEP Company medium-term management visiontargets and FY2003 resultsCategory Targets (FY2005) Results (FY2003)Net sales ¥190.0 billion ¥192.3 billionOperating income ¥ 10.0 billion ¥ 3.3 billionROA 7% -0.1%
Medium-term business concept: Becoming theleader in environmental solutions
Major strategies1) Reformation of business portfolio2) Launch of environmental solutions businesses (aged
pipe restoration, water supply infrastructure-related,and recycle-engineered wood (REW))
3) Construction of a new business model inspired by thekeywords “system” and “global”
15
Urban Infrastructure &
Environm
entalProductsCom
panySekisui C
hemical C
o., Ltd. Annual R
eport 2004
Major achievements of fiscal year 2003Progress with the business portfolio
In fiscal year 2002, we embarked upon a thorough restructuring
based on the business portfolio concept. We have categorized
our businesses as “growth/new,” “core,” “stable earnings,” or
“unprofitable” according to the earnings power of each and
have closely examined the independent viability of all of our
businesses, which has included the possibility of withdrawing
from them.
As a result of this portfolio restructuring, by fiscal year
2003 all of our unprofitable business had returned to the black.
Specifically, in addition to withdrawing from waste-related
products (garbage containers and recycle bins), where recovery
was considered difficult, we integrated our FFU (fiber-rein-
forced foamed urethane, used in railway ties, etc.) production
bases from two companies with three plants into one company
with one plant.
In addition, in April 2003 we set up Sekisui Aqua Systems
Co., Ltd. for our water supply infrastructure business by inte-
grating the two subsidiaries and one headquarters division that
had previously run it. As part of our post-reorganization strate-
gy, we aim to contribute to the growth of our “environmental
solutions business” through the systematic integration of design,
installation, and maintenance.
Improvement in the PVC pipe business
PVC pipes, which are one of our core businesses, suffered for
many years from oversupply. The entire industry was in agree-
ment that alliances and rationalization would be indispensable.
Since December 2001, we have been optimizing our production
and distribution systems through an alliance with Mitsubishi
Plastics, Inc. This has enabled us to strengthen cost-competi-
tiveness by eliminating about 30,000 tons of annual production
capacity out of a total of 170,000 tons. With roughly 20% of
the total industry’s production capacity eliminated so far, the
balance of supply and demand is improving.
Meanwhile, PVC manufacturers continue to try to push
through price increases due to high costs for the raw material
naphtha. We came to the conclusion that raising product prices
was essential for achieving a stable supply, and through negotia-
tions with clients, increased prices by 15-20% on PVC pipes
and 10% on joints and other related products effective March
1, 2004.
Growth in the aged pipe restoration business
Our new medium-term management vision positions three
business of “aged pipe restoration,” “water supply infrastruc-
ture-related,” and “recycle-engineered wood (REW)” to be
developed as “environmental solutions businesses” within the
growth/new business category.
In particular, the aged pipe restoration business is on a
growth trajectory, as sales increased 53% year on year to ¥4.6
billion and a profit was achieved at the operation level in fiscal
year 2003. FY05 (Plan) FY04 (Plan)FY03FY01 FY02
Operating Income, ROA
( Billions of Yen )
-10.0-10
-5.0-5
15.015
10.010
5.05
-5.6
-4.1
-0.1
7.0
-3.0 0.6
10.0
3.3
1.7
7.0
0.00
Growth & New
Divisions Change from P.Y.
Core Business
Secured Profitability
Unprofitable
Environ. & Civil Eng.New BusinessWood
Water supply & drainage sys.Building Materials
Plant MaterialsPower & InformationReinforced PipeTouto Sekisui
FFURoofing MaterialsAqua-systemHome-TechnoHome EnergyEarth
Strategic Investment
Total
( Billions of Yen )
Operating Income by Business Portfolio
-1.3
5.3
1.3
0.3
-2.2
3.3
+0.2
+1.5
+0.5
+1.4
-0.8
+2.6
FY 2003
16
Urban Infrastructure &
Environm
entalProductsCom
panySekisui C
hemical C
o., Ltd. Annual R
eport 2004
Thanks to the cost advantages inherent in the aged pipe
restoration business amid the overall curtailment in public-sec-
tor spending, demand is increasing rapidly. The serviceable life
of sewage pipes is estimated at up to 50 years. Of the total
300,000 km of sewage pipes that began being installed after
World War II, more than 6,000 km are currently in need of
repair. As a result, we are experiencing steady growth in installa-
tion orders.
As the situation is similar in New York, London, Paris, and
other major cities around the world, we will expand the business
overseas going forward. We have in fact already received
inquiries from South Korea as well as Los Angeles in the U.S.
and are following up with negotiations.
Fiscal year 2004 strategies for achieving themanagement visionThe UIEP Company’s goal for fiscal year 2004 is to “further
strengthen profitability and take the first steps in a new phase of
growth.” In the case of core businesses and those with stable
earnings, we will continue to strengthen cost-competitiveness
and raise product quality and technical strengths. Our strategies
for growth areas and new businesses will be launching the three
“environmental solutions businesses,” developing new products,
and keeping development inspired by the keywords of “system”
and “global” as we work to achieve our new medium-term man-
agement vision.
Progress with system productsGrowth resulting from “system products” is gradually becoming
apparent. One example is the piping systems for detached hous-
es in our core pipe business. Our piping systems adopt the
header installation method that requires fewer joints and is
extremely reliable in preventing water leakage. In addition to
efficient water supply and drainage, they offer a packaged instal-
lation work that gives them an edge in terms of cost as well.
Although formerly limited to hot and cold water supply sys-
tems, starting from fiscal year 2003 we added water drainage
systems in order to provide comprehensive service. We are cur-
rently the only pipe manufacturer capable of providing compre-
hensive systems for hot and cold water supply and water
drainage, which is a major competitive advantage.
Based on this kind of success, we are promoting “compre-
hensive system” in other fields. In the aged pipe restoration
business, for example, we have already developed a robot-based
pipe inspection method and are building a system that inte-
grates inspection, design and selection of construction method,
installation, and maintenance tailored to clients’ needs.
Global expansionWith regard to the other keyword of “global” we launched two
new businesses in China between fiscal years 2002 and 2003
and they are each developing favorably.
One of these is Sekisui (Qingdao) Plastic Co., Ltd., which
we set up in conjunction with a local business in Qingdao,
Shandong Province, in June 2002. Established in response to
the water supply system needs of China, where infrastructure
is developing rapidly, this company manufactures and sells
pipe products such as ESLON® HI Pipe Gold high-perform-
ance pipes.
The other is Wuxi SSS Diamond Plastics Co., Ltd. (Wuxi,
Jiangsu Province), a production joint venture we set up as part
of our alliance with Mitsubishi Plastics in order to strengthen
our cost-competitiveness in polyethylene EF joints in Japan. In
May 2003, we established annual production capacity of 500
tons and began shipments to Japan in December 2003. We plan
to bring annual production capacity to 1,000 tons by adding
500 tons in the summer of 2004. While all production is cur-
rently shipped to the Japanese market, inquiries from Chinese
companies are on the rise and we will consider the possibility of
The Three Environmental Solutions Businesses
Aged Pipe Restoration Business
Water Supply Infrastructure-
related Business
Recycle-EngineeredWood Buisness
Recycle of waste wood into structural materials
drainage treatment, water-purifier tank, disposer, water pipe installation
17
Urban Infrastructure &
Environm
entalProductsCom
panySekisui C
hemical C
o., Ltd. Annual R
eport 2004
developing this new market going forward.
In the aged pipe restoration business as well we are in nego-
tiations with local governments in South Korea and the U.S.,
which may develop into global expansion in fiscal year 2004.
Topic: Technological superiority of our aged piperestoration businessAccomplished with no need to dig up old pipes, aged pipe
restoration helps to cut construction time and costs compared
with pipe replacement. In addition, restoration achieves
strength equal to or better than new pipes. While there are cur-
rently more than 10 methods of aged pipe restoration, we use
two methods with outstanding characteristics: the SPR method
for medium to large diameters (800mm-5,000mm) and the
ESLON® Omega-Liner method for small diameters (150mm-
400mm).
With the SPR method a device is placed inside the manhole
and restoration is achieved by spirally winding a PVC profile
inside the existing pipe and injecting grout into the spaces. Able
to handle all pipe shapes including circular, horseshoe, and rec-
tangular, this is the only method among the many in use that
permits implementation without shutting down sewage flow. It
also has superior water sealing properties compared with other
methods, eliminating the need for special measures to deal with
unpleasant odors during installation. The SPR method is over-
whelmingly the method of choice for large pipes with diameters
of 800mm and above.
Using the Omega-Liner method, a PVC pipe with the
property of shape memory and that is folded in the shape of the
Greek letter omega is inserted into the existing pipe from the
manhole and returns to a circular shape when heated with
steam. Compared with other methods, odors and fires are pre-
vented since organic solvents are not required and product qual-
ity is stable since the pipes themselves are manufactured at a fac-
tory. Compared with the analogous EX method, moreover, the
temperature required for completion is low and safe.
Going forward we plan to expand our sales to local govern-
ments based on these strengths. We also plan to achieve greater
automation and speed by developing our technologies.
Boiler unit truck
Omega-Liner Returns to round shape
Steam heat
ESLON® Omega-Liner Method, a method for safely restoring deteriorated small-diameter sewerpipes without digging them up
SPR Method, able to install without stopping the flow of sewage, and adaptable to every surface
18
High Performance Plastics Company
High Perform
ance Plastics Com
panySekisui C
hemical C
o., Ltd. Annual R
eport 2004
Gen Endo Executive Managing Director / President of High Performance Plastics Company
Company overviewThe High Performance Plastics (HPP) Company aims to grow
by leveraging its cutting-edge chemical technologies. To that
end, we have given priority to the four areas of information
technology (IT), medical products, automotive parts, and func-
tional building materials and are focusing resources on them.
Recognizing globalization as a key to growth, we are actively
investing overseas.
Results for fiscal year 2003In fiscal year 2003, net sales were ¥181.8 billion, up ¥9.5 bil-
lion year on year. While commodity items were lackluster,
exports of fine particle products for LCDs, high-functional
resins and other IT-related products expanded and interlayer
films for laminated glass for automobiles were strong. Sales
from the two overseas (China and Korea) companies that we
acquired in the polyolefin foam business also contributed.
HPP Company medium-term management visiontargets and FY2003 resultsCategory Targets (FY2005) Results (FY2003)Net sales ¥200.0 billion ¥181.8 billionOperating income ¥ 20.0 billion ¥ 12.3 billionROA 12% 6.2%
Major strategies 1) Selective expansion of businesses: Focus resources on
four priority areas (IT-related, automotive parts, medicalproducts, and functional building materials) and estab-lish a global leading position in these areas.
2) Accelerate globalization (mainly Asia, especially China).
Operating Income, ROA
( Billions of Yen ) ( % )Operating Income (Left) ROA (Right)
4.0
10.412.3
15.0 10.0
20.0
15.0
5.0
-5.0
0.0
0
25
15
20
10
5
FY05 (Plan)FY03 FY04 (Plan)FY01 FY02
20.0
12.0
7.8
5.16.2
-0.3
250
50
200
150
100
0
16
53
39
172.3
6415
59
39
181.8
70
16
62
40
195.0
5116
54
54
183.5
77
19
60
33
200.0
Group II OtherGroup IGroup IVGroup III
Net Income
( Billions of Yen )
FY05 (Plan)FY03 FY04 (Plan)FY01 FY02
19
High Perform
ance Plastics Com
panySekisui C
hemical C
o., Ltd. Annual R
eport 2004
Operating income was ¥12.3 billion, up by a relatively slight
¥1.9 billion year on year. This is attributable to advance strate-
gic investment in the interlayer film business and active R&D
investment.
Globalization also made steady progress. In fiscal year
2003, overseas sales grew a strong 25% year on year to ¥61.4
billion, so that the ratio of overseas sales to total net sales rose to
34% from 29% of the previous fiscal year.
Fiscal year 2004 strategies for achieving themanagement visionWe are pursuing the following two strategies in order to acceler-
ate growth in fiscal year 2004.
1) Further expansion of globalization
Our new medium-term management vision calls for overseas
sales of ¥70.0 billion and an overseas sales to total net sales ratio
of 35% by fiscal year 2005. As these targets are likely to be
achieved early, we have set the new target of ¥100.0 billion by
fiscal year 2007 and will further accelerate our expansion of
overseas manufacturing and sales bases. We plan to increase our
production bases, including two interlayer film-related plants,
from 13 in fiscal year 2003 to 18 in fiscal year 2005.
2) Focusing of resources on four areas and creation of new
businesses
Placing more emphasis on cutting-edge and growth areas, we
are accelerating product development in the four areas men-
tioned above by actively focusing investment (approx. 80% of
R&D expenses). While sales from these four areas have come to
account for roughly half of the total, we are targeting further
growth.
Selective expansion of businesses based on thebusiness portfolio conceptIn fiscal year 2000, the HPP Company embarked upon a refor-
mation of business structure based on the business portfolio
concept. We divided our 12 business units into four Groups
(I-IV) based on each business’s technical strengths and growth
potential. Using ROA as a benchmark, we are radically restruc-
turing by expanding growth businesses and withdrawing from
or spinning off unprofitable ones. Groups I-IV have the follow-
ing characteristics.
Group I (target ROA 15%): The criteria for Group I are a
combination of market growth potential and technical
strengths. These are businesses that drive the HPP Company’s
Transformation of Business Contents — Entering the leading-edge & growth areas
<Four Main Areas>
Electronics Information Materials (IT300)
Medicals (MD200)
Automotive (AT500)
Functional Bldg. Materials(BD250)
Sales Ratio (Total)
Measures
Development of Liquid Crystal & Mounted Materials; Speed-up of Market Development
Overseas Development & Alliance (Blood related prod.)
Global Expansion of Interlayer film & functional materials ; Industrial adhesive tapes
Enhancement of Environmental functional materials & Reformation materials.
Sales (Billions of yen)
FY 2003 (Actual result)
17.0
12.0
40.0
21.0
49%
FY 2005 (Target)
30.0
20.0
50.0
25.0
62.5%
Expansion of IT Field
Present Main Products Product Groups to be enhanced & expanded Important Business Area
Liquid Crystal Display Materials
Semiconductor-related Materials
Very thin wafer processing materials & Semi-conductors binding materials (Permanent adhesion) Selfa (Very thin material processing tape, Dicing tape) Mount-binding materials (NCF,DAF, Resin core welding ball)
Fine Particle Products(Spacer & Electro Conductive Fine Particles)
Binder for ceramicsSemiconductor processing materials (Temporary adhesion)
Chemical Materials for Liquid crystal TV Electro Conductive Fine Particles (for ACF) Light sensitive resin(UV-sealing material & photo resist) Optical Film (Retardation Film & Brightness improving Film)
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
20
High Perform
ance Plastics Com
pany
earnings, such as LCD spacers, interlayer films, and medical
products. Investment policy in this area is strategic expansion
and we are actively committing resources to alliances and
expanding production. In fiscal year 2003, Group I made solid
progress as a core business with net sales growing 12.2% year on
year to ¥64.0 billion and ROA rising from 20.1% in the previ-
ous fiscal year to 23.8%.
Group II (target ROA 10%): The main products are adhesives,
masking films for sign boards and window displays, and high-
grade decorative sheets for interiors. Sluggish sales due to the
weak economy caused ROA to decline from 6.8% in the previ-
ous year to 5.0% in fiscal year 2003. We expect high market
growth potential in Group II. However, as this group’s techni-
cal strengths are not on a par with the market growth potential,
we are developing technologies in this area. Investment is kept
within the scope allowed by the cash flow this group generates.
Group III (target ROA 10%): The main products are com-
modities such as packaging tape, and functional materials such as
polyolefin foam. Investment is generally kept within the scope
allowed by depreciation. The slump in domestic demand caused
ROA to decline from 7.1% in the previous year to 6.3% in fiscal
year 2003. As Group III is characterized by strong technologies
but limited growth potential in the domestic market, we are bol-
stering overseas expansion. Between fiscal years 2002 and 2003
we actively committed resources to polyolefin foam by investing
in U.K.-based Zotefoams plc and acquiring a controlling interest
in Shanghai Holy Plastics Co., Ltd., China’s largest polyolefin
foam manufacturer, and in Young Bo Chemical Co., Ltd., South
Korea’s largest one. With a total of 11 production bases in Japan,
the U.S., Europe, and Australia and the global market share of
over 40% (our estimate), this business is expanding favorably.
Group IV (target ROA 5%): Lacking in both technological
strength and growth potential, Group IV products include films
and precision industry products for automotive use as well as
nursing products and general merchandise. As a result of
restructuring that included withdrawal from home chemicals
and reorganizing film production bases, all businesses were in
the black in fiscal year 2002. We are currently making a shift to
high value-added products such as high-functional films.
Investment is kept within the scope allowed by after-tax profit
that this group generates.
Topic: Products that drive HPP Company’s earningsInterlayer filmTaking the form of transparent plastic sheets with superior adhesion,
interlayer films are used for enhancing the safety and crime-preven-
tion qualities of laminated glass used in automobiles and other vehi-
cles as well as in construction. Fiscal year 2003 estimates put the
global market at 150,000 tons and our share of it at around 25%.
The ratio of overseas sales to total net sales for this product is 80%
and with production bases in Japan, Mexico, the Netherlands, and
Thailand, we provide service closely tailored to our customers’ needs.
FY05 Target 15%
FY05 Target 5%
FY05 Target 10%
FY05 Target 10%
ROA Breakdown by Group
Group I
Group II
Group III
Group IV
Fine ChemicalChemi. SpecialInd. TapeMedicalInterlayer Film
Sign SystemAdhesive
Packaging TapeFunctional Mat.
Prescision Ind.FilmLife-Tech.
Business Units
HPP Company Total
FY 05(Plan)
FY 03 FY 04 (Plan)
23.8%
5.0%
6.3%
1.7%
6.2%
22.6%
8.2%
7.0%
2.7%
7.8%
25.8%
20.0%
13.1%
6.3%
12.0%
Business Portfolio
Group II(Enhance Competitiveness) (Pursue Expansion)
Group I
(Alliance & Separation)
Group IV(Shifting to Growth Area)
Group III
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
21
High Perform
ance Plastics Com
pany
In October 2003, we set up Sekisui S-LEC (Suzhou) Co., Ltd.
in China, a new company for the manufacture and sale of interlayer
film, and began construction of a production plant scheduled to
come on stream in the fall of 2004 . In China, auto production is
growing rapidly and from 2004 laminated glass with interlayer film
will be required by law on all non-agricultural vehicles, so that we
expect demand to increase rapidly (we estimate to have a 50%
share of the Chinese market).
In November 2003, moreover, we increased our Dutch plant’s
annual production capacity for sound control interlayer film* from
8,000 tons to 17,000 tons. While demand for sound control inter-
layer film is rapidly growing in Europe due to heightened automo-
bile sound control needs, it is also expected to increase in North
America and Asia going forward. All of the demand expected in
these areas will be fulfilled by using this plant’s production capacity.
In order to keep up with this large expected increase in production
of sound control interlayer film, we plan to set up a raw material
resin plant in Europe (targeted to come on stream in 2005) and
establish an integrated system for handling every production
process from raw materials to final product.
*Our sound control interlayer film uses our unique triple layer extrusiontechnology to add sound control to the standard functions of safety andcrime prevention.
Liquid crystal display materialsLiquid crystal (LC) spacers are spherical fine particles that keep
the thickness of the liquid crystal layer uniform by being placed
between the two layers of glass that form the LCD. They are
mainly used in the small and medium-sized liquid crystals for
notebook PCs, monitors, LCD TVs, and mobile phones. In par-
ticular, growth in built-in cameras and multi-function screens in
mobile phones are expected to stimulate demand.
Conductive fine particles are another product for which
demand is currently growing in the LC field. Plated with gold
to make them conduct electricity, conductive fine particles are
increasingly being used in the LC-related and semiconductor
packaging fields. Suitable for use in all LCDs from small to
large scale, demand is growing on the back of the current transi-
tion to larger LCDs.
Semiconductor-related materialsIn the semiconductor material area, we expect growth in
SELFA, a self-removing adhesive tape for wafer processing that
is based on our original technology for high adhesion and easy
removability. SELFA’s special function is that when irradiated
with ultraviolet light the adhesive surface produces gas and the
tape comes off by itself. After using SELFA to affix the semicon-
ductor wafer to the glass substrate in order to perform ultra-fine
(50 microns or less) etching and polishing, the wafer removes
itself automatically. At the 50 micron level, conventional adhe-
sive tapes tended to tear wafer upon removal. By automating
the process, SELFA contributes to boosting productivity of
semiconductor manufactures.
DAF (Die Attach Film)
NCP, NCF(Non-Conductive Paste)(Non-Conductive Film)
Thin Film Processing Tape[Selfa Back Grind][Selfa Dicing]
Plastic cored solder ball [SOL]
Semiconductor-Related Materials
Silicon Chips
Products we handle
Materials for Liquid Crystal Display
Directing Film
Glass Substrate
Retardation Film
Polarization Board
Anisotropic Conductive Film (ACF)
Driver LSI
Conductive Particles (for ACF)
Printed Substrate
Controlling IC
Wave Sheet (High Luminance Film)
Light Guiding Board
Diffusion Board
Color Filter
Spacer
Conductive Particles
UV Sealing Agent
22
Sekisui Chem
ical’s History of Product and T
echnology Developm
entSekisui C
hemical C
o., Ltd. Annual R
eport 2004
Sekisui Chemical’s History of Product and Technology Development
High Performance PlasticsHousing Company
Core Technologies
Urban Infrastructure and Environemntal Products
1940
1950
1968 Starts house development
1970 Completes prototype of Sekisui Heim (steel-framed unit house)1971 Starts production and sales of Sekisui Heim1975 Launches Heim M3
1981 Starts production and sales of Two-U home (wooden-framed)1982 Starts sales of upgraded tile exterior walls
1996 Fully launches Fami S (refurbishing) business1997 Introduces houses equipped with photovoltaic generators
2000 Develops standardized products equipped with tile exterior walls2002 Introduces recycled house through the “unit house reuse system”2003 Launches “zero utility expense” houses
• Environmentally oriented technology • Building structure technology and methods • Production, installation technology • Refurbishing, remodeling technology
1952 Starts production and sales of Eslon PVC pipes1955 Realizes injection molding of PVC pipe joints1956 Develops plastic rain gutters for the first time in Japan
1963 Starts production and sales of Japan's first commercial plastic bathtubs1969 Launches sales of water-purifier tanks
1974 Launches FFU (fiber-reinforced foamed urethane), reinforced plastic composite pipe sales1975 Launches roof tile sales
1981 Launches plastic valve operations1982 Launches PE gas pipe sales1986 Starts restoration business for aged pipes (SPR method)
1990 Starts Sheath-type Header Installation Method sales1996 Starts sales of PE water pipe1998 Launches sales of ESLON HI Pipe Gold high-performance water pipes with distinctive qualities and superior strength
2000 Introduces three-layer foam core PVC pipe using recycled materials2001 Establishes Eslon Omega-Liner Method (for aged pipe restoration)2002 Starts production and sales of high-performance water pipes in China2003 Starts production of polyethylene EF joints in China
1947 Introduces an injection molding machine for the first time in Japan
1950 Commercializes cellophane tape; starts plasticizer production
1960 Starts production of butyral and interlayer film1963 Starts production of craft tape1965 Starts production of “Softlon” (irradiated low density cross-linked foam polyethylene), developed with our unique foam production technology1969 Establishes foam products production and sales company in the U.S.
1971 Establishes interlayer film production and sales company in Mexico1973 Establishes foam product manufacturing company in the Netherlands1975 Establishes foam product manufacturing company in the U.K.1979 Starts project developing medical products
1980 Launches Latex (diagnostic reagent) and Micropearl; establishes fine particle technology and develops business into medical and IT-related fields1986 Starts Sign System development project
1991 Acquires tape manufacturing company in the U.S.1996 Starts production of interlayer film in the Netherlands1998 Starts production of interlayer film in Thailand
2001 Develops Advancell thermal expandable microsphere by upgrading plastic particles2002 Starts production of interlayer film in Thailand; invests in a foam manufacturer in China
• PVC, olefin materials, molding technology • Composite material technology • Piping diagnostics and aged pipe restoration technologies • Recycle and reuse technology for wood and plastics • Water circulation technology
• Funcitionalized surface technology • Precision Synthesis technology • Nanotechnology • Optical reaction technology • Adhesion control technology
1960
1970
1980
1990
2000
Sekisui Chemical Group's growth has been achieved by leveraging differentiated core technologies, products and markets, and by
steadily developing operations in related areas.
23
Corporate G
overnance & C
ompliance
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Corporate governance: basic philosophy andspecific measuresWe have been working on to optimize our management sys-
tem in order to maximize our value as a corporation.
In March 2000, we introduced a division company system and
transferred a large portion of operational authority to the divi-
sion company presidents. In addition to enabling speedy deci-
sion-making in a business environment where speed is of the
essence, this innovation enhances accountability. We have also
transformed headquarters into an organization focused on func-
tions that boost corporate value such as setting overall company
policy and strategies for finance and personnel.
Moreover, we have strengthened our management monitor-
ing system. Our governance system is centered on our auditing
system. Four auditors (including one external auditor) monitor
the board of directors, president, headquarters, and each divi-
sion company. At the same time, the Corporate Audit
Department, which reports directly to the president, internally
monitors headquarters and each division company for legality
and social appropriateness.
We are committed to active and timely disclosure of infor-
mation to achieve management transparency. In addition, we
are promoting disclosure through regular presentations and
meetings for analysts and investors, and for further enhance-
ment, we moved our IR base from Osaka to Tokyo in 2001.
Through our general shareholders’ meeting and customer rela-
tions office, we are also making full use of the opinions of these
stakeholders as a valuable business resource.
Corporate Governance System
Board of CorporateAuditors
Four auditors(including one external auditor)
President
Board of Directors
Assign
Assign
Audit
Audit
Execution of operations
Internal audit
Internal audit
Audit
Audit
Assign and supervise
Shareholders’ meeting
Division companies
Divisions and departments
Decision-making body, 20 directors (in-house only)
Corporate Audit Department
Corporate Governance & Compliance
24
Corporate G
overnance & C
ompliance
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Compliance: basic philosophy and specificmeasuresWe recognize that in addition to its basic sense of observing the
law, compliance requires the ethical conduct expected of corpo-
rate employees as members of society. Emphasizing the impor-
tance of compliance in our business management, our new
medium-term management vision sets as a goal for the Sekisui
Chemical Group our transformation into a company that earns
the broad-based trust of society through the sincere attitudes of
each of our individual employees. With the specific goal of cre-
ating a “self-correcting compliance system,” in April 2003 we
appointed a director responsible for compliance issues and set
up a Compliance Committee chaired by the director. We have
also appointed compliance officers for headquarters and the
division companies as part of our efforts to build a system to
strengthen daily activities under the control of the committee.
In October 2003, we published the Sekisui Chemical Group
“Compliance Manual.” By distributing copies to all our Group
companies and holding employee seminars, we are creating a
compliance-oriented culture. We have also set up a compliance
hotline that allows employees to report potential problems with-
out fear of reprisal.
Compliance seminars
Compliance Management
Spirit of compliance
Establishing compliance system
Sound corporate management
Open and fair corporate cultureEnhancing compliance consciousness
International standards Social responsibility
Laws, regulationsEthics, morals
Good citizenship
Compliance Committee
Compliance network system
25
A Strong Commitment to the Environment and to Society
A Strong C
omm
itment to the E
nvironment and to Society
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Promotion of environmental corporate managementSekisui Chemical positioned the environment as a high-priority areafor management at an early stage. Since then, aiming to become anenvironmentally creative organization that is welcome in each regionand community, we have aggressively pursued activities to protect theenvironment and conserve nature. To strengthen our environmentalactivities, in fiscal year 2003 we adopted the concept of environmentalcorporate management and set up the Environmental ManagementDepartment to promote it. Environmental corporate management isour approach to maintaining environmentally responsible growth as acompany by achieving equilibrium between ecological goals (consider-ation for and coexistence with the global environment) and economicgoals (maximizing economic value for customers and ourselves).
The basic policies of environmental corporate management:1) Create business opportunities by reorganizing existing businesses
and technologies based on the concept of contribution to theenvironment, and by creating next-generation environment-relat-ed businesses by leveraging cutting-edge technologies.
2) Reform our corporate culture by raising the awareness of all Groupemployees and reorganizing the entire Group’s management system.
3) Reduce costs by further strengthening environmental protection andby boosting the efficiency of environment-focused business activities.
4) Enrich social contribution activities such as nature conservationand regional contribution activities.
Our Environmental ReportEach year we publish an Environmental Report on our activities andachievements in this area. These reports are available on our website.(http://www.sekisui.co.jp/general/English/)
Start of the Middle Term Environmental Plan, “STEP-2005”In fiscal year 2003 we started a three-year Middle TermEnvironmental Plan “STEP-2005” introduce specific measures forpromoting environmental corporate management. The table belowshows the plan’s main areas of activity and major achievement infiscal year 2003.
Environmental accountingIn fiscal year 2003, environmental conservation expenditure was¥9.5 billion and the economical effects were ¥8.9 billion. Housesequipped with photovoltaic generation systems saved ¥2.3 billion inelectricity costs.
In addition, currently we are increasing the number of house salessubsidiaries to be the subject of environmental accounting. In fiscal year2003, we added 10 new ones (bringing the total to 14).
Efforts by Division CompanyThe table shows the features of businesses and products as well asthe main environmental issues and approaches for each divisioncompany.
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
26
A Strong C
omm
itment to the E
nvironment and to Society
PARFAIT ZERO STYLE isequipped with tile exterior wallsand a photovoltaic generator,which allows customers to holddown heating and lightingexpenses to less than zero. (Housing Company)
CO2 reduction effect of houses( CO2 - Ktons )
Reduction effectCO2 emission from 10 plants
75
50
25
FY02FY00 FY01 FY03
0
42
3021
35 33
61
3343
( Tons )
FY03FY02FY98 FY99 FY01FY00
Pollutant Release and Transfer
800
400
600
200
19 23 2117
151 154 151140
553 527 567 526 10136408 11
83306
0
554
400
723 704 739683
HCFC TolueneOther
Housing Company1) Annual aggregate CO2 reduction effect for Company’s houses
reaches 61,000 tonsAggregate sales of houses equipped with photovoltaic generation sys-tems topped 30,000 units in April 2004, with total generating capac-ity reaching 107MW approx. at the end of fiscal year 2003 (on acontract basis). This, combined with the effects of high heat insula-tion and high efficient water suppliers, resulted in an annual aggre-gate CO2 reduction effect of 61,000 tons for fiscal year 2003.
High Performance Plastics Company1) Supporting our clients’ environmental-friendlinessWe support the environmental friendliness of our clients’ productsby making the products we supply as intermediate materials environ-ment-friendly. This includes products that contribute to the efficientuse of resources and to saving energy as well as measures for dealingwith the polluting aspects of products.
2) Reducing the environmental load from plant productionAmid rising production, we achieved sharp reductions in varioustypes of environmental load. By switching boiler fuels, we reducedCO2 emissions by 12% compared with fiscal year 2000. By convert-ing to on-site RPF (solid fuel), we reduced waste material output perunit by 28% compared with fiscal year 1998. By eliminating solventsfrom Kraft tape manufacturing, we reduced chemical substance emis-sion volume by 45% compared with fiscal year 1998.
2) Zero emissions achieved at all new house construction sitesSince fiscal year 1998, we have been engaged in zero emission activi-ties aimed at recycling all waste materials without exception at everymanufacturing facility. Having achieved zero emissions at all targetedproduction sites in fiscal year 2002, we achieved zero emissions at allnew house construction sites for all 36 house sales subsidiaries andone house sales office in fiscal year 2003. In fiscal year 2004, we ini-tiated zero emission activities for the Fami S division, whose mainbusiness is refurbishing.
Urban Infrastructure & Environmental Products Company1) Urban infrastructure reformation and aged pipe restoration
businessBy restoring aged pipes and avoiding the excavation required by pipelaying, environmental impact, including noise, vibration, odor, traf-fic congestion, and water materials, is kept to a minimum.
2) Housing environment creation businessWe provide technologies and materials for solving housing problemssuch as noise, bumps, energy, and construction waste.
3) Water supply infrastructure-related businessWe provide pipes systems that enable rainwater flow control and effi-cient use of water resources by allowing rainwater storage/permeationand by using moderately soiled water.
4) “For You Plaza” set up at Shiga-Ritto PlantWe set up “For You Plaza” at our Shiga-Ritto Plant. It features theenvironment-friendly products of the Sekisui Chemical Group and isintended as a site for enhancing communication with our customers.
Grout
Grout Injection Nozzle
Interlocking Roller
Profile
Existing Pipe
UV (Ultraviolet) rays
Visible raysGlass
S-lec Solar HeatControl Film
Heat rays New Function
Brightnessregulated by lawJapan/USA: 70%Europe: 75%(automobile windshield)
Normally 99.9%intercepted byinterlayer film
SPR Method for aged piperestoration(UIEP Company)
Heat Insulation InterlayerFilm provides windshieldwith heat shielding func-tion, contributing to sav-ing energy for air condi-tioning(HPP Company)
27
A Strong C
omm
itment to the E
nvironment and to Society
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Social contribution activitiesThe Sekisui Chemical Group positions regional communities andthe global environment as our stakeholders. We have set up anExecutive Committee for Nature Conservation Activities and areactively pursuing nature conservation activities in Japan and overseasin order to contribute to society.
Supporting NGO nature conservation activitiesIn an alliance with the Keidanren Nature Conservation Fund, wesupport the nature conservation activities of environmental NGOs inthe Asia-Pacific region. In fiscal year 2003, we supported the fiveprojects shown below. To enrich this support, we sponsor meetingsfor NGOs to report on their activities. Further, we have one employ-ee act as our representative at the Nippon Keidanren Committee onNature Conservation. In addition to engaging in nature conservationactivities, this employee seeks to gather information and acquireexpertise there.
biotope at Kyushu Sekisui Industry Co., Ltd. that we opened to thepublic in 2001. In addition, at Chubu Sekisui Industry Co., Ltd. weconducted cleanups of the regional coast together with children fromthe local community. The cleanups doubled as bird-watching oppor-tunities.
“Sekisui Chemical’s Program to Support Research forProduct Development Inspired by Nature”In fiscal year 2002, we initiated a program for promoting research toput principles found in nature to practical use in product develop-ment. We seek suggestions for research themes, have these screenedby experts from outside the Company, and subsidize research for oneyear. In fiscal year 2003, we provided funds for 13 research projectsselected from 215 suggestions that were submitted to us. The themesare diverse, ranging from biomimetics to materials chemistry thatmakes practical use of biotechnology and recyclable resources.
Developing nature conservation leaders in SekisuiChemical’s Nature Study CourseIn order to develop leaders for promoting nature conservation activi-ties in our regional offices, we hold our independently developedenvironmental training, the “Sekisui Chemical’s Nature StudyCourse,” on a continual basis. In the two-day program, prospectiveleaders study environmental problems and examples of corporateenvironmental protection activities. They also immerse themselves innature for first-hand experience of the importance of nature conser-vation. More than 370 employees have already participated in thistraining. Since fiscal year 2002, we have held training programs atregional offices in order to increase the number of employees whoparticipate. We are also developing programs in which local childrencan participate.
Nature conservation at each office contributes to localcommunitiesEach of our offices in Japan engages in nature conservation activitiesclosely geared to its local community. These include volunteer activi-ties, nature observation excursions in cooperation with environmen-tal groups, and community clean-up campaigns. Specifically,Tokuyama Sekisui Industry Co., Ltd., one of our Group companies,has maintained a municipality-owned forest (“Forest of Sekisui”) inYamaguchi Prefecture since fiscal year 2000. We also developed a
Ocher Plateau turning to desert
(Photo credit: Green Earth Network)
Nature watching with local children
Sekisui Chemical’s Nature Study Course
Biotope at Kyushu Sekisui Industry
28
Board of Directors
Board of D
irectorsSekisui C
hemical C
o., Ltd. Annual R
eport 2004
President
Naotake Okubo
Executive Managing Directors
Toyoo ManabePresident of Urban Infrastructure & Environmental ProductsCompany
Gen EndoPresident ofHigh Performance Plastics Company
Tomohiko YasudaPresident of Housing Company
Managing Directors
Tetsuji IzuGeneral Manager of Corproate Management StrategyDepartment and General Affairs & Human ResourcesDepartment responsible for overall Sekisui's compliance issues
Yoshiyuki TakitaniGeneral Manager of CS & Quality Management Departmentand Corporate Communication Department responsible foroverall Sekisui's CS issues
Itsurou TogoGeneral Manager of Housing Division Housing Company
Ken YoshidaHead of R&D and Technology Center
Takayoshi MatsunagaResponsible for IT-Related Business Units High Performance Plastics Company
Directors
Akihiko MiyazakiResponsible for West Japan sales area, General Manager ofChu-Shikoku Sales HeadquartersHousing Company
Toshiyasu KobayashiGeneral Manager of Environmental Management Departmentresponsible for overall Sekisui's environmental issues
Naofumi NegishiGeneral Manager of Corporate Finance, Accounting andPlanning Department
Eiji ManshouHead of Wood Project concurrently responsible for HousingMaterials & Equipment, Urban Infrastructure & EnvironmentalProducts Company
Satoshi TairaPresident of Tohoku Sekisui Heim Co., Ltd. Housing Company
Kengo TanakaResponsible for marketing, General Manager of Eastern JapanSales Headquarters High Performance Plastics Company
Yasukazu NishimuraResponsible for Medical & Building-Related Business UnitsHigh Performance Plastics Company
Hiroshi MatsubaraGeneral Manager of Living Environment DivisionHousing Company
Masafumi NishimuraResponsible for East Japan sales area, General Manager ofHokkaido & Tohoku Sales Headquarters, and Tokyo SalesHeadquartersHousing Company
Yuji EnatsuResponsible for Automotive-Related Business Units, GeneralManager of S-Lec Film (Interlayer Film) DivisionHigh Performance Plastics Company
Hideo TagashiraResponsible for Pipe & Related Products, General Manager ofWater Supply & Drainage System DivisionUrban Infrastructure & Environmental Products Company
Full-Time Corporate Auditor
Yoshiharu Takahashi
Corporate Auditors
Katsuya Kittaka
Masashi Takai
Noriaki Kano
Tomohiko YasudaExecutive Managing Director
Naotake OkuboPresident
Toyoo ManabeExecutive Managing Director
Gen EndoExecutive Managing Director
Financial Section
Six-Year Summary
Sekisui Chemical Stock Price and Trading Volume
Review and Analysis of Consolidated Results for Fiscal Year 2003
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
Contents
30
31
32
36
38
39
41
42
55
30
Six-Year Sum
mary
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Results for the year:Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Selling, general and administrative expenses . . . . . . . .Research and development expenditures . . . . . . . . . . .Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .Income (loss) before income taxes and
minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . .Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows (for the year)Cash flows from operating activities . . . . . . . . . . . . . . . .Cash flows from investing activities . . . . . . . . . . . . . . . .Cash flows from financing activities . . . . . . . . . . . . . . . .Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . .Depreciation and amortization . . . . . . . . . . . . . . . . . . . .Free cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year-end financial position:Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .Property, plant and equipment, net . . . . . . . . . . . . . . . .Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . .Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . .
Per share (in yen):Net income (loss), non-diluted (EPS) . . . . . . . . . . . . . . .Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Six-Year SummarySekisui Chemical Co., Ltd. and Its SubsidiariesYears ended March 31
20032004Millions of yen
20012002 19992000
¥814,864579,135212,648
23,70123,081
22,06215,019
57,913(13,115)(40,549)24,17626,62341,538
256,538239,854748,791268,956180,217291,756
¥ 28.00548.16
84.157
¥920,041675,301 237,952
28,773 6,788
(22,449)(27,183)
62,871 (48,987)
(8,133)52,84949,802
6,688
341,267 287,688 887,616 326,013 173,974 383,076
¥ (49.25)694.21
25.1610
¥799,709573,807211,877
23,40414,025
16,6039,298
47,067(21,097)(37,010)25,09928,43322,681
252,179248,246751,240289,001181,107274,475
¥ 17.43514.86
48.676
¥845,497623,474 225,117
22,619 (3,094)
(63,076)(52,108)
19,036 (31,669)
753 40,75744,418
(16,987)
285,381 253,454 800,272 368,967 156,277 271,287
¥ (96.75)503.83(23.46)
6
¥913,683680,700 236,684
24,830 (3,701)
(78,648)(48,634)
25,691 (42,506)23,174 49,64547,377
(22,300)
349,237 285,016 928,803 392,677 207,868 323,840
¥ (89.91)600.88(31.09)
10
¥908,309677,741 234,200
28,581 (3,632)
(5,692)(6,499)
———
51,92852,100
—
333,622 281,174 900,327 317,656 158,208 421,115
¥ (11.78)762.94
—13
31
Six-Year Sum
mary
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Ratios and Other Information:Gross profit/Net sales (%) . . . . . . . . . . . . . . . . . . . . . . .Operating income/Net sales (%) . . . . . . . . . . . . . . . . . .Return on sales (ROS) (%) . . . . . . . . . . . . . . . . . . . . . . .Return on equity (ROE) (%) . . . . . . . . . . . . . . . . . . . . . .Return on total assets (ROA) (%) . . . . . . . . . . . . . . . . . .Total asset turnover (Times) . . . . . . . . . . . . . . . . . . . . .Inventory turnover (Times) . . . . . . . . . . . . . . . . . . . . . .Tangible fixed assets turnover (Times) . . . . . . . . . . . . .Payout ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Current ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest coverage (Times) . . . . . . . . . . . . . . . . . . . . . . .Debt/Equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . .Stock price (¥) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .PER (Times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .PBR (Times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .PCFR (Times) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Number of employees (Non-consolidated) . . . . . . . . . . .Number of shares outstanding (thousands) . . . . . . . . . .
28.2 1.8 1.2 3.4 1.2 1.0
10.14 3.19 34.4 36.5 87.3
4.7 171.3
28016.06
0.54 5.75
2,858539,507
26.60.7
(3.0)(6.8)(3.0)1.0
9.863.32
(26.4)43.2
104.73.5
130.5339
(6.88)0.49
13.484,851
551,967
26.3(0.4)(6.2)
(17.5)(6.0)1.0
9.763.14(6.2)33.977.3(0.5)
193.6372
(3.84)0.74
(15.86)3,299
539,507
25.5(0.4)(5.3)
(13.8)(5.4)1.0
9.943.19
(11.08)34.988.9(0.6)
185.4356
(3.96)0.59
(11.45)3,884
539,507
200120022003
28.9 2.8 1.8 5.3 2.0 1.1
10.383.34 25.0 39.095.4
8.9154.0
71125.39
1.30 8.45
2,553539,507
2004 19992000
25.4(0.4)(0.7)(1.5)(0.7)1.0
9.073.20
(110.4)46.8
105.0(0.5)
113.0843
(71.56)1.10
—5,345
551,967
Sekisui Chemical Stock Price and Trading Volume
Notes: 1. Stock price and market value are closing prices at the end of fiscal years on the Tokyo Stock Exchange.2. ROS, ROE and ROA are calculated using net income (loss) as numerator.3. ROA=Net income/Total assets
Additional information (Sekisui Chemical Co., Ltd.):Price range of common stock (yen)
High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value (Billion ¥) . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 444268
151.1
¥ 880290
187.1
¥ 543300
200.7
¥ 446301
192.1
200220012000
¥ 724268
383.6
1999 20042003
¥ 865459
465.3
32
Review and Analysis of Consolidated Results for Fiscal Year 2003
Review
and Analysis of C
onsolidated Results for Fiscal Y
ear 2003Sekisui C
hemical C
o., Ltd. Annual R
eport 2004
Business Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Analysis of Financial Position and Business Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In fiscal year 2003, ended March 31, 2004, the Japanese economy wascharacterized by a clearer signs of recovery as it posted its second con-secutive year of positive growth in real GDP and by strong results in thedomestic manufacturing industries, particularly automobiles and digitalconsumer electronics. Housing starts grew 2.4% year on year to 1.174million units, supported by the bottoming out of the housing market andby special demand ahead of the then expected expiration of housing-
related tax breaks and interest rate hikes. In contrast, public works con-tinued to decline due to the government’s policy of restraining publicinvestment.
Overseas, the Asian economies were particularly brisk. The expan-sion of internal demand in China, which is preparing for the 2008Olympics in Beijing, is a boon to the economies of neighboring countriesincluding Japan.
I. Analysis of Consolidated Business Results for the Fiscal Year 20031) Net salesNet sales in fiscal year 2003 were ¥814,864 million, up ¥15,155 million(1.9%) year on year. Sales increased at all three division companies.
In the Housing Company, annual orders received increased 7.2%year on year. This is attributable to strength in orders for detached housessupported by the overall bottoming of the detached housing market andby steady sales of “zero utility expense” houses. Also contributing wasgrowth in apartments and houses with land thanks to our reinforcementof marketing. In the living environment business, which is centered onrefurbishing, sales grew 10% year on year. As a result of these factors,net sales increased ¥10,960 million (2.7%) from the previous fiscal yearto ¥410,901 million.
In the Urban Infrastructure & Environmental Products (UIEP) Company,net sales increased ¥2,584 million (1.4%) year on year to ¥192,281 mil-lion. This is attributable to steady expansion of the pipe restoration busi-ness and the piping system and to plant material products such as cleanpipes and valves, which were bolstered by the strong demand for expan-sion of semiconductor and LCD production facilities.
In the High Performance Plastics (HPP) Company, net sales rose¥9,499 million (5.5%) year on year to ¥181,758 million. This is attributa-ble to growth in IT-related products such as fine particles for LCDs andhigh-functional resin, as well as in interlayer films for laminated glass forautomobiles. Sales from two newly consolidated polyolefin foam compa-nies in which we acquired a controlling interest also contributed.
In Other Businesses, net sales fell ¥18,348 million (23.3%) com-pared with the previous fiscal year to ¥60,435 million. This decline result-ed from Sekisui Machinery Co., Ltd., formerly a consolidated subsidiary,being removed from consolidation because we sold a portion of ourshares in it.
2) Operating IncomeOperating income in fiscal year 2003 increased ¥9,056 million (64.6%)year on year to ¥23,081 million. Operating income increased at all threedivision companies.
Breaking operating income down by component, gross profitincreased 4.3% year on year, or ¥9,827 million, to ¥235,729 million. Thiswas a result of the incremental effect of the sales increases in the hous-ing and other businesses and of the improvement in the gross marginfrom 28.2% to 28.9%.
The improvement in the gross margin is attributable to the cumula-tive effects of our efforts to reform our business portfolio by cutting costsand withdrawing from unprofitable businesses. Sales, general and admin-istrative (SG&A) expenses increased slightly to ¥771 million. This resultedfrom higher research and development expenses while we restrainedincreases in other expenses. At the same time, the ratio of SG&A expens-es to net sales improved from 26.5% in the previous fiscal year to 26.1%.* For sales and operating income details by business, please refer to the seg-
ment information on p.51.
Net Sales
( Billions of Yen )
Operating Income (Loss)
( Billions of Yen )
Gross Profit/Net Sales, SG&A/Net Sales
5
1,000
FY00 FY01FY99 FY03FY02
200
800
600
400
10
20
15
25
-10
-5
Gross Profit/Net SalesSG&A/Net Sales
913.7845.5
920.0
814.9
6.8
-3.7 -3.1
14.0
23.1
0
799.7
0
FY00 FY01FY99 FY03FY02 FY01FY99 FY00 FY03
( % )
30.0
27.0
26.0
25.0
28.0
29.0
25.9
25.5
26.6
26.326.1
28.9
26.5
28.2
25.9
26.6
FY02
0.0
33
Review
and Analysis of C
onsolidated Results for Fiscal Y
ear 2003Sekisui C
hemical C
o., Ltd. Annual R
eport 2004
3) Other Income and ExpensesOther Income and Expenses in fiscal year 2003 amounted to a ¥1,018million net expense. In other income, equity in earnings of affiliates (main-ly equity in the earnings of Sekisui House, Ltd.) increased ¥1,908 million.In other expenses, although interest payments decreased ¥573 milliondue mainly to a reduction in interest-bearing debt, the Company recordeda ¥5,428 million net expense, consisting of ¥3,098 million in reorganiza-tion costs and a ¥2,330 million loss on sales or disposal of property, plantand equipment.
4) Net IncomeAs a result of the above, income before income taxes and minority inter-ests increased ¥5,460 million (32.9%) year on year to ¥22,063 million.Deducting income taxes and minority interests, net income increased¥5,721 million (61.5%) to ¥15, 019 million.
II. Financial Position1) Assets, Liabilities, and Shareholders’ EquityAt the end of fiscal year 2003, total assets amounted to ¥748,791 million,down 0.33%, or ¥2,449 million, year on year.
AssetsCurrent assets totaled ¥256,538 million, up ¥4,359 million from the end ofthe previous fiscal year, due mainly to an increase in inventory assets thatlargely resulted from an increase in orders received by the housing business.
Fixed assets totaled ¥492,253 million (consisting of ¥239,854 mil-lion in property, plant and equipment and ¥252,399 million in invest-ments, long-term loans and other assets), down ¥6,808 million from theend of the previous fiscal year, as capital expenditure was kept withindepreciation. The sale and retirement of plant, property, and equipmentalso contributed. Within fixed assets, long-term loans and other assetsedged up a net ¥1,584 million. This is attributable to a ¥7,769 millionincrease, supported by the brisk stock market, in investments in securi-ties consisting of equity in the earnings of unconsolidated subsidiariesand affiliates and unrealized holding gains on marketable securities,despite a ¥5,914 million decrease in deferred income taxes.
LiabilitiesThe Company decreased short-term debt, commercial paper, and long-term debt using cash reserves generated by strong business operations.As a result, interest-bearing debt was ¥153,071 million, down by ¥40,699million from the previous fiscal year-end. On the other hand, trade notesand accounts payable increased ¥4,810 million, reflecting an increase inadvances received due to the strength in housing orders received. As a resultof the above, total liabilities were ¥449,173 million, down ¥20,935 million.
Shareholders’ EquityTotal shareholders’ equity was ¥291,756 million, up ¥17,281 millionfrom the end of the previous fiscal year. This is attributable to a ¥11,620increase in retained earnings resulting from ¥15,019 million in netincome and ¥3,220 million in dividend payments and to a ¥6,395 millionincrease in unrealized gains on securities. As a result, the equity ratiorose to 39.0%, up 2.5 percentage points from 36.5% at the end of previ-ous fiscal year.
2) Cash FlowsAt the end of fiscal year 2003, cash and cash equivalents totaled ¥22,535million, up ¥4,033 million (21.8%) from the end of the previous fiscalyear. The factors behind each type of cash flow in fiscal year 2003 are asfollows.
Cash Flow from Operating ActivitiesNet cash provided by operating activities in fiscal year 2003 was ¥57,913million (inflow), up ¥10,846 million year on year. This is attributable to thelarge increase (32.9%) in income before income taxes and minority inter-ests (¥22,063 million) supported by strong business activities, and to theslightly lower level, compared with the previous fiscal year, of deprecia-tion and amortization (¥26,623 million).
Net Income (Loss), ROE
( Billions of Yen )
Shareholders’ Equity, Equity Ratio
( Billions of Yen )
Interest-Bearing Debt, Debt/Equity Ratio( Billions of Yen )
226.1
252.2
226.1
300
200
50
150 150
100
300
250 250
200
50
100
FY00 FY01FY99 FY03FY02
129.7
185.4 193.6 171.3
154.0
193.8
153.1
0 0
20
10
FY00 FY01FY99 FY03FY02
( % ) ( % ) ( % )
-50
0 0.0
-10
-20
-30
-40
-6.8
-13.8
-17.5
3.4
5.3
ROE (right)
-48.6-52.1
-27.2
15.0
Net Income (Loss) (left)
9.3
-60
10.0
5.0
-25.0
-5.0
-10.0
-15.0
-20.0
-30.0
500
400
FY00 FY01FY99 FY03FY02
100
300 30.0
200
43.2
34.933.9
36.539.0
Equity Ratio (right)
383.1
323.8271.3 274.5
291.8
Shareholders’ Equity (left)
0
50.0
40.0
10.0
20.0
0.0
Debt/Equity Ratio (right)Interest-Bearing Debt (left)
34
Review
and Analysis of C
onsolidated Results for Fiscal Y
ear 2003Sekisui C
hemical C
o., Ltd. Annual R
eport 2004
Cash Flow from Investing ActivitiesNet cash used in investing activities in fiscal year 2003 was ¥13,115 mil-lion (outflow), a ¥7,982 million decrease in payments compared with theprevious fiscal year. The main factors behind this were a ¥21,007 millionused for purchases of plant, property and equipment such as productionfacilities in growth areas, a ¥5,521 million used for acquisition of a sub-sidiary to be included in consolidation, and ¥11,035 in proceeds fromsales of investments in securities.
Cash Flow from Financing ActivitiesNet cash used in financing activities was ¥40,549 million (outflow), a¥3,539 million increase in payments compared with the previous fiscalyear. The main factors behind this were a ¥20,000 million decrease incommercial paper and a ¥18,696 reduction in short-term debt in order tostrengthen the financial position with the free cash flow generated.
Interest Coverage Ratio
( Times )
Free Cash Flows
( Billions of Yen )
10
8
FY00 FY01FY99 FY03FY02
6
4
2
3.5
-0.6 -0.5
4.7
8.9
-2
0
50
FY00 FY01FY99 FY03FY02
10
0
-10
-20
20
30
40
6.7
-22.3-17.0
22.7
41.5
-30
Business Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The following factors related to our businesses and accounting prac-tices may materially impact investment decisions. The Company isendeavoring to establish a system that predicts potential risks for theGroup, prevents their occurrence, and promptly and appropriately dealswith them when they do occur.
1) Foreign Exchange Rate VolatilityChanges in foreign exchange rates may affect the yen value of theGroup’s foreign business assets that are denominated in local curren-cies. While the Group hedges against currency volatility as required,sustained yen strength that exceeds assumptions may impact theGroup’s business performance and financial position.
2) Raw Material Price VolatilityThe prices of raw materials such as PVC, olefin, and iron are significantfor the Group’s business, particularly for the Urban Infrastructure &Environmental Products business. Any inability to pass volatility in theseprices on to product prices and secure an ample spread may impact theGroup’s business performance and financial position.
3) Overseas Business ActivitiesThe Group’s overseas business activities are subject to risks such asunanticipated changes in laws and regulations, weakness of the indus-trial infrastructure, and social or political disorder due to terrorism, war,and other factors. Any of these factors has the potential to disrupt theGroup’s overseas business activities, impacting its business perform-ance and financial position.
4) Housing Taxation and Interest Rate TrendsThe Group’s housing-related businesses are affected by tax system,consumption tax, and interest rate trends in Japan as they relate to thepurchasing of houses. Any impact of these trends on its housing-relatedbusinesses may impact the Group’s business performance and financialposition.
5) IT Market TrendsThe IT-related markets targeted by the Group’s High PerformancePlastics business are characterized by highly volatile demand. A suddenreduction in such demand may impact the Group’s business perform-ance and financial position.
35
Review
and Analysis of C
onsolidated Results for Fiscal Y
ear 2003Sekisui C
hemical C
o., Ltd. Annual R
eport 2004
required by an industrial accident or disaster, including loss of andcompensation for social trust; opportunity losses due to suspension ofproduction; and compensation paid to customers may impact theGroup’s business performance and financial position.
8) Intellectual Property and Product LiabilityThe Group is subject to the risk of an unfavorable ruling in an intellectu-al property dispute or a product defect resulting in a large-scale productrecall or damage payment that cannot be covered by insurance. Risksof this nature have the potential of impacting the Group’s business per-formance and financial position.
6) Public Spending TrendsThe Group’s Urban Infrastructure & Environmental Products businessincludes that for the public sector, and therefore is affected by trendsin public investment. As public investment is determined by govern-ment policy at the national and local levels, any reduction in publicinvestment may impact the Group’s business performance and finan-cial position.
7) Industrial Accidents and DisastersThe occurrence at any of the Group’s production sites of an industrialaccident or disaster such as a fire or explosion could have an enormousimpact on the local society and the Group’s business. Any expenses
36
Consolidated B
alance SheetsSekisui C
hemical C
o., Ltd. Annual R
eport 2004
Consolidated Balance SheetsSekisui Chemical Co., Ltd. and Consolidated Subsidiaries
March 31, 2004 and 2003
AssetsCurrent assets:
Cash and time deposits (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Short-term investments (Note 4): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade notes and accounts receivable:
Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Deferred income taxes (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment (Note 5):Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tools, furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments, long-term loans and other:Investments in securities (Note 4):
Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Deferred income taxes (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Less allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments, long-term loans and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 221,44110,100
76,5521,018,213
765,96099,527
252,773(16,149)
2,428,417
693,8851,690,4962,638,934
635,848100,549
5,759,712(3,489,227)2,270,485
1,648,116201,250
35,119302,385217,493(15,126)
2,389,237
$ 7,088,139
Thousands of U.S. dollars(Note 1)Millions of yen
¥ 23,3931,067
8,087107,564
80,91610,51426,703(1,706)
256,538
73,302178,584278,777
67,17110,622
608,456(368,602)239,854
174,10721,260
3,71031,94422,976(1,598)
252,399
¥ 748,791
¥ 19,3111,600
10,709107,729
76,10710,87527,880(2,032)
252,179
74,112180,996267,607
70,76412,372
605,851(357,605)248,246
168,85018,748
4,12937,85823,344(2,114)
250,815
¥ 751,240
20032004 20032004
$ 182,80015,146
101,3721,019,775
720,437102,944263,915(19,235)
2,387,154
701,5521,713,3282,533,198
669,860117,115
5,735,053(3,385,129)2,349,924
1,598,353177,471
39,085358,368220,977(20,011)
2,374,243
$ 7,111,321
See notes to consolidated financial statements.
Liabilities and shareholders’ equityCurrent liabilities:
Short-term debt (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Commercial paper (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds due within one year (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Current portion of long-term debt (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade notes and accounts payable:
Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Deferred income taxes (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities:Bonds less current maturities (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Long-term debt less current portion (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Deferred income taxes (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Accrued retirement benefits (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent liabilities (Note 10)
Shareholders’ equity (Note 8):Common stock:
Authorized —1,187,540,000 shares;Issued —539,507,285 shares at March 31, 2004 and 2003 . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrealized gain on land revaluation (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrealized holding gain (loss) on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Less treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
Consolidated B
alance SheetsSekisui C
hemical C
o., Ltd. Annual R
eport 2004
$ 286,65347,330
90993,270
33,8321,151,089
238,7734,061
24,195665,855
2,545,967
237,666783,178
31,380615,638
38,0921,705,954
74,423
946,6301,034,116
3,275764,796
55,718(16,765)(25,975)
2,761,795$7,088,139
¥ 30,2825,000
969,853
3,574121,601
25,224429
2,55670,341
268,956
25,10782,735
3,31565,036
4,024180,217
7,862
100,002109,244
34680,793
5,886(1,771)(2,744)
291,756¥748,791
Thousands of U.S. dollars(Note 1)Millions of yen
¥ 50,52225,000
1086,551
4,847117,141
34,909116
1,71148,096
289,001
25,33686,257
3,10561,580
4,829181,107
6,657
100,002109,235
34369,172
(510)(1,479)(2,288)
274,475¥751,240
20032004 20032004
$ 478,247236,653
1,02262,012
45,8821,108,870
330,4521,098
16,197455,282
2,735,715
239,834816,518
29,392582,923
45,7121,714,379
63,016
946,6301,034,030
3,247654,790
(4,828)(14,000)(21,658)
2,598,211$7,111,321
See notes to consolidated financial statements.
38
Consolidated Statem
ents of Income
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Net sales (Notes 12 and 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cost of sales (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . .Operating income (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expenses):Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Reorganization costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gain on sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gain on return of substitutional portion of employees’ Welfare
Pension Fund Plans (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Loss on sales or disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . .Loss on devaluation of investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes (Note 7):Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of IncomeSekisui Chemical Co., Ltd. and Consolidated SubsidiariesYears ended March 31, 2004 and 2003
$7,713,5935,482,1562,231,437
2,012,950218,487
(29,146)13,08280,367
(29,326)—
—(22,056)
—(22,557)208,851
32,64828,588
5,443$ 142,172
Thousands of U.S. dollars(Note 1)Millions of yen
$7,570,1345,431,7212,138,413
2,005,651132,762
(34,210)14,74862,306
(72,416)15,543
117,228(29,922)(26,079)(22,794)157,166
21,74447,160
246$ 88,016
¥814,864579,135235,729
212,64823,081
(3,079)1,3828,490
(3,098)—
—(2,330)
—(2,383)22,063
3,4493,020
575¥ 15,019
¥799,709573,807225,902
211,87714,025
(3,614)1,5586,582
(7,650)1,642
12,384(3,161)(2,755)(2,408)16,603
2,2974,982
26¥ 9,298
20032004 20032004
See notes to consolidated financial statements.
39
Consolidated Statem
ents of Shareholders’ Equity
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Common stockNumber of sharesof common stock
Retainedearnings
Consolidated Statements of Shareholders’ EquitySekisui Chemical Co., Ltd. and Consolidated SubsidiariesYears ended March 31, 2004 and 2003
Millions of yen
Unrealized holdinggain (loss) on
securities
Unrealized gain on landrevaluation
Capital surplus
Thousands
Treasury stock,at cost
Translationadjustments
Balance at March 31, 2002 . . . . . . . . .Net income for the year . . . . . . . . . . . . .Cash dividends . . . . . . . . . . . . . . . . . . . .Bonuses to directors
and corporate auditors . . . . . . . . . . . .Decrease in retained earnings
resulting from addition of consolidated subsidiaries . . . . . . . . . .
Unrealized gain on land revaluation . . . . .Unrealized holding loss on securities . . .Translation adjustments . . . . . . . . . . . . .Increase in treasury stock . . . . . . . . . . . .Balance at March 31, 2003 . . . . . . . . .Net income for the year . . . . . . . . . . . . .Cash dividends . . . . . . . . . . . . . . . . . . . .Bonuses to directors
and corporate auditors . . . . . . . . . . . .Decrease in retained earnings
resulting from exclusion of consolidated subsidiaries . . . . . . . . . .
Unrealized gain on land revaluation . . . . .Unrealized holding gain on securities . . .Translation adjustments . . . . . . . . . . . . .Gain on sales of treasury stock . . . . . . . .Increase in treasury stock . . . . . . . . . . . .Balance at March 31, 2004 . . . . . . . . .
539,507——
—
—————
539,507——
—
——————
539,507
¥100,002——
—
—————
¥100,002——
—
——————
¥100,002
¥109,235——
—
—————
¥109,235——
—
————
9—
¥109,244
¥335——
—
—8
———
¥343——
—
—3
————
¥346
¥63,2109,298
(3,228)
(21)
(87)————
¥69,17215,019(3,220)
(41)
(137)—————
¥80,793
¥ 379——
—
——
(889)——
¥ (510)——
—
——
6,396———
¥5,886
¥(1,386)——
—
——
(93)—
¥(1,479)——
—
———
(292)——
¥(1,771)
¥ (488)——
—
————
(1,800)¥(2,288)
——
—
—————
(456)¥(2,744)
40
Consolidated Statem
ents of Shareholders’ Equity (continued)
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Consolidated Statements of Shareholders’ Equity (continued)Sekisui Chemical Co., Ltd. and Consolidated SubsidiariesYears ended March 31, 2004 and 2003
Thousands of U.S. dollars (Note 1)
Balance at March 31, 2002 . . . . . . . . . . . . . . . . . . . .Net income for the year . . . . . . . . . . . . . . . . . . . . . . . .Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonuses to directors and
corporate auditors . . . . . . . . . . . . . . . . . . . . . . . . . .Decrease in retained earnings
resulting from addition of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . .
Unrealized gain on land revaluation . . . . . . . . . . . . . . .Unrealized holding loss on securities . . . . . . . . . . . . . .Translation adjustments . . . . . . . . . . . . . . . . . . . . . . .Increase in treasury stock . . . . . . . . . . . . . . . . . . . . . .Balance at March 31, 2003 . . . . . . . . . . . . . . . . . . . .Net income for the year . . . . . . . . . . . . . . . . . . . . . . . .Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonuses to directors
and corporate auditors . . . . . . . . . . . . . . . . . . . . . .Decrease in retained earnings
resulting from exclusion of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . .
Unrealized gain on land revaluation . . . . . . . . . . . . . . .Unrealized holding gain on securities . . . . . . . . . . . . .Translation adjustments . . . . . . . . . . . . . . . . . . . . . . .Gain on sales of treasury stock . . . . . . . . . . . . . . . . . .Increase in treasury stock . . . . . . . . . . . . . . . . . . . . . .Balance at March 31, 2004 . . . . . . . . . . . . . . . . . . . .
See notes to consolidated financial statements.
Common stock Retainedearnings
Unrealized holdinggain (loss) on
securities
Unrealized gain on landrevaluation
Capital surplus Treasury stock,at cost
Translationadjustments
$946,630——
—
—————
$946,630——
—
——————
$946,630
$1,034,030——
—
—————
$1,034,030——
—
————86—
$1,034,116
$3,171——
—
—76———
$3,247——
—
—28————
$3,275
$598,35388,016
(30,557)
(199)
(823)————
$654,790142,172(30,481)
(388)
(1,297)—————
$764,796
$ 3,587——
—
——
(8,415)——
$ (4,828)——
—
——
60,546———
$55,718
$(13,120)——
—
———
(880)—
$(14,000)——
—
———
(2,765)——
$(16,765)
$ (4,619)——
—
————
(17,039)$(21,658)
——
—
—————
(4,317)$(25,975)
41
Consolidated Statem
ents of Cash Flow
sSekisui C
hemical C
o., Ltd. Annual R
eport 2004
Operating activities:Income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .Adjustments for:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gain on sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Loss on sales or disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . .Loss on devaluation of investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .Increase (decrease) in accrued retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in notes and accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Increase (decrease) in notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .Increase in advances received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest and dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investing activities:Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Proceeds from sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .Increase in investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Proceeds from sales of investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Acquisition of investment in a subsidiary resulting
in inclusion in consolidation (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Proceeds from sale of investment in a subsidiary resulting
in exclusion from consolidation (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Purchases of intangible assets and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities:Decrease in short-term debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Decrease in commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Repayment of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash dividends paid to minority shareholders of consolidated subsidiaries . . . . . . . . . . .Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . .Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Increase in cash and cash equivalents resulting
from initial consolidation of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Decrease in cash and cash equivalents resulting
from exclusion of subsidiaries from consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash FlowsSekisui Chemical Co., Ltd. and Consolidated SubsidiariesYears ended March 31, 2004 and 2003
$ 208,851
252,016—
22,056—
36,085(80,367)29,146
(13,082)20,835
(47,160)26,58134,44772,131
561,53941,121
(29,837)(24,612)
$ 548,211
$(198,855)34,258
(36,293)104,459
(52,262)
5,348(21,365)40,562
(124,148)
(176,979)(189,322)
94,661(72,955)
(909)(30,528)
(331)—
(7,478)(383,841)
(1,893)38,329
175,142
123
(275)$ 213,319
Thousands of U.S. dollars(Note 1)Millions of yen
¥ 22,063
26,623—
2,330—
3,812(8,490)3,079
(1,382)2,201
(4,982)2,8083,6397,620
59,3214,344
(3,152)(2,600)
¥ 57,913
¥(21,007)3,619
(3,834)11,035
(5,521)
565(2,257)4,285
(13,115)
(18,696)(20,000)10,000(7,707)
(96)(3,225)
(35)—
(790)(40,549)
(200)4,049
18,502
13
(29)¥ 22,535
¥ 16,603
28,248(1,642)3,1612,755
(8,883)(6,582)3,614
(1,558)13,900
7,538(10,090)
454385
47,9034,624
(3,491)(1,969)
¥ 47,067
¥(21,231)2,767
(8,661)5,851
—
—(2,838)3,015
(21,097)
(22,051)(15,000)39,787
(14,133)(21,899)
(3,240)(49)
(407)(18)
(37,010)(195)
(11,235)28,911
870
(44)¥ 18,502
20032004 20032004
$ 157,166
267,399(15,543)29,92226,079
(84,087)(62,306)34,210
(14,748)131,579
71,355(95,513)
4,2983,644
453,45543,771
(33,046)(18,639)
$ 445,541
$(200,975)26,193
(81,986)55,386
—
—(26,865)28,540
(199,707)
(208,737)(141,992)376,628
(133,785)(207,298)
(30,670)(464)
(3,853)(170)
(350,341)(1,845)
(106,352)273,675
8,236
(417)$ 175,142
See notes to consolidated financial statements.
42
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
(1) Principles of ConsolidationAt March 31, 2004, the Company had 202 subsidiaries as opposed to 210in 2003. The consolidated financial statements for the years endedMarch 31, 2004 and 2003 include the accounts of the Company and its134 and 142 significant subsidiaries (the “Companies”), respectively.
The accounts of the remaining 68 subsidiaries have not been consoli-dated with those of the Company at March 31, 2004 and 2003 becausetheir combined assets, retained earnings, net sales and net income (loss)in the aggregate are not material to the consolidated financial statements.
Foreign consolidated subsidiaries have a December 31 year end whichdiffer from that of the Company. As a result, adjustments have beenmade for any significant intercompany transactions which took place dur-ing the period between the year ends of these foreign subsidiaries and theyear end of the Company.
Unrealized intercompany profit and loss among the Companies havebeen entirely eliminated and the portion attributable to minority interestshas been charged to minority interests.
Any difference between the cost of an investment in a subsidiary andthe amount of the underlying equity in the net assets of the subsidiary istreated as an asset or a liability as the case may be, and is amortized overa period of 5 years by a straight-line basis or the estimated economiclives, if available, except that immaterial amounts are charged to income.
Although the Company had 68 unconsolidated subsidiaries and 16 affil-iates at March 31, 2004 and 2003, the Company has applied the equitymethod to investments in 9 major affiliates, including Sekisui House, Ltd.,Sekisui Plastics Co., Ltd., and Sekisui Jushi Corp., for the purpose of theconsolidated financial statements for the years ended March 31 2004 and2003, since investments in the remaining unconsolidated subsidiariesand affiliates were not material. Sekisui House, Ltd.’s year end is January31.
The difference between the cost of an investment in an affiliate and theamount of the Company’s underlying equity in the net assets of the affili-ate is amortized over a period of 10 years on a straight-line basis.
Notes to Consolidated Financial StatementsSekisui Chemical Co., Ltd. and Consolidated SubsidiariesMarch 31, 2004
(2) Translation of Foreign Currency TransactionsRevenue and expense items arising from transactions denominated in for-eign currencies are generally translated into yen at the rates in effect atthe respective transaction dates. Gain or loss on foreign exchange iscredited or charged to income in the period in which the gain or loss isrecognized for financial reporting purposes.
All monetary assets and liabilities denominated in foreign currenciesare translated into yen at the rates of exchange in effect at the balancesheet date and gain or loss on each translation is credited or charged toincome.
The financial statements of the foreign consolidated subsidiaries aretranslated into yen at the rates of exchange in effect at the balance sheetdate except that the components of shareholders’ equity are translated attheir historical exchange rates. Adjustments resulting from translatingforeign currency financial statements are not included in the determina-tion of net income and are reported as translation adjustments in a sepa-rate component of shareholders’ equity.
(3) Cash and Cash EquivalentsFor the purposes of the consolidated statements of cash flows, cash andcash equivalents include cash on hand and in banks and other highly liq-uid investments with maturities of three months or less when purchased.
(4) InventoriesInventories are stated at cost which is determined primarily by the aver-age method.
(5) SecuritiesSecurities other than those of unconsolidated subsidiaries and affiliatesare classified into three categories: trading securities, held-to-maturitydebt securities or other securities. Trading securities are carried at fairvalue. Gain or loss, both realized and unrealized, is credited or charged toincome. Held-to-maturity debt securities are carried at amortized cost.Marketable securities classified as other securities are carried at fairvalue with any changes in unrealized holding gain or loss, net of theapplicable income taxes, included directly in shareholders’ equity. Non-marketable securities classified as other securities are carried at cost.Cost of securities sold is determined by the moving average method.
In preparing the accompanying consolidated financial statements,certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to pres-ent them in a form which is more familiar to readers outside Japan.
The accompanying U.S. dollar financial statements have been trans-lated from yen solely for convenience and, as a matter of arithmeticcomputation only, at the rate of ¥105.64 = U.S.$1.00, the rate ofexchange prevailing on March 31, 2004. This translation should not beconstrued as a representation that the yen amounts have been, couldhave been, or could in the future be, converted into U.S. dollars at theabove or any other rate.
Sekisui Chemical Co., Ltd. (the “Company”) and its domestic consoli-dated subsidiaries maintain their books of account and records inaccordance with accounting principles generally accepted in Japan, andits foreign consolidated subsidiaries maintain their books in conformitywith those of their countries of domicile.
The accompanying consolidated financial statements of the Companyand consolidated subsidiaries are prepared on the basis of accountingprinciples generally accepted in Japan, which are different in certainrespects as to the application and disclosure requirements ofInternational Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as requiredby the Securities and Exchange Law of Japan.
1. Basis of Preparation of Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Land for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
(6) Property, Plant and Equipment and DepreciationDepreciation of buildings (except for structures attached to the buildings)is computed principally by the straight-line method based on the estimat-ed useful lives of the respective assets.
Depreciation of other property, plant and equipment is computed prin-cipally by the declining-balance method based on the estimated usefullives of the respective assets.
(7) Accrued Retirement BenefitsThe Company and the domestic consolidated subsidiaries have non-con-tributory defined benefit pension plans and retirement benefit plans.Certain foreign consolidated subsidiaries have defined contribution retire-ment plans.
Accrued retirement benefits have been provided based on the amountof the projected benefit obligation reduced by the pension plan assets atfair value at the end of the year.
Prior service cost is amortized by the straight-line method over 5 years,which is within the estimated average remaining years of service of theemployees participating in the plans.
Actuarial gain and loss are amortized in the year following the year inwhich the gain or loss is recognized, principally by the straight-linemethod over 5 years, which is within the estimated average remainingyears of service of the eligible employees.
In addition, the Company and certain of its consolidated subsidiarieshave retirement benefit plans for payments to directors and corporateauditors (“officers”), which are stated at 100 percent of the estimatedamount calculated in accordance with each company’s internal rules.
See Note 6 for the method of accounting for the exemption from thesubstitutional portion of the national Welfare Pension Fund Plans (the“WPFP”).
(8) Research and Development Costs and Computer SoftwareResearch and development costs are charged to income when incurred.Expenditures relating to computer software developed for internal use arecharged to income when incurred, unless these contribute to the genera-tion of future income or cost savings. Such expenditures are capitalizedas assets and amortized by the straight-line method over their usefullives, which is generally 5 years.
(9) LeasesNoncancelable leases are accounted for as operating leases whethersuch leases are classified as operating or finance leases, except thatleases which stipulate the transfer of ownership of the leased property tothe lessee are accounted for as finance leases.
(10) Income TaxesIncome taxes are calculated based on taxable income and charged toincome on an accrual basis. Certain temporary differences exist betweentaxable income and income reported for financial statement purposeswhich enter into the determination of taxable income in a different period.
The Company has recognized the tax effect of such temporary differ-ences in the accompanying consolidated financial statements.
(11) Derivatives and Hedging ActivitiesThe Company and certain consolidated subsidiaries have entered intoderivatives transactions in order to manage the risk arising from adversefluctuation in foreign currency exchange rates and interest rates.Derivatives are carried at fair value with any changes in unrealized gain orloss charged or credited to operations, except for those which meet thecriteria for deferral hedge accounting under which unrealized gain or lossis deferred as an asset or a liability.
(12) New Accounting PronouncementA new Japanese accounting standard called “Impairment of Fixed Assets”was issued in August 2002 which will go into effect for fiscal years begin-ning on or after April 1, 2005. Early adoption is allowed from fiscal yearsbeginning on or after April 1, 2004 and application from fiscal years end-ing from March 31, 2004 through March 30, 2005 is also permitted. Thenew standard requires that tangible and intangible fixed assets be carriedat cost less depreciation, and be reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount ofan asset may not be recoverable. A company will be required to recog-nize an impairment loss in its statement of income if certain indicators ofasset impairment exist and the book value of an asset exceeds the undis-counted sum of the future cash flows of the asset. The Company is cur-rently assessing the impact of this new accounting standard on its finan-cial position and results of operations.
Inventories at March 31, 2004 and 2003 were as follows:
$306,617277,461
99,02582,857
$765,960
Thousands of U.S. dollarsMillions of yen
¥32,39129,31110,461
8,753¥80,916
¥30,96324,69410,464
9,986¥76,107
20032004 20032004
$293,099233,756
99,05394,529
$720,437
3. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Market value determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value not determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Other securities
Gross unrealized gainCost Book value
(estimated fair value)Gross
unrealized loss
¥(287)—
¥(287)
¥ 7,60295
¥ 7,697
7,9541,067
¥16,718
¥7,3343
¥7,337
¥14,64998
¥14,747
(1) Other securities at March 31, 2004 and 2003 and held-to-maturity debt securities at March 31, 2003 were as follows:
2004
4. Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value not determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Other securities
Gross unrealized gainCost Book value
(estimated fair value)Gross
unrealized loss
¥(1,467)—(21)
¥(1,488)
¥10,171103315
¥10,589
7,8681,191
¥19,648
¥7452
—¥747
¥9,449105294
¥9,848
2003
Market value determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value not determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollars
Other securities
Gross unrealized gainCost Book value
(estimated fair value)Gross
unrealized loss
$(2,717)—
$(2,717)
$ 71,961899
$ 72,860
75,29410,100
$158,254
$69,42528
$69,453
$138,669927
$139,596
2004
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gross realized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Gross realized loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
(2) The proceeds from sales of, and gross realized gain and loss on, other securities for the years ended March 31, 2004 and 2003 are summarizedas follows:
$35,8396,418
331
Thousands of U.S. dollarsMillions of yen
¥3,786678
35
¥3559210
20032004 20032004
$3,360871
95
Market value determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value not determinable:Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bonds and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollars
Other securities
Gross unrealized gainCost Book value
(estimated fair value)Gross
unrealized loss
$(13,887)—
(199)$(14,086)
$ 96,280975
2,982$100,237
74,47911,274
$185,990
$7,05219—
$7,071
$89,445994
2,783$93,222
2003
Market value determinable:Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Held-to-maturity debt securities
Gross unrealized gainBook value Estimated fair valueGross
unrealized loss
¥(8)¥1,600 ¥ — ¥1,592
2003
Market value determinable:Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollars
Held-to-maturity debt securities
Gross unrealized gainBook value Estimated fair valueGross
unrealized loss
$(76)$15,146 $ — $15,070
2003
(3) The redemption schedule for securities with maturity dates classified as other securities at March 31, 2004 is summarized as follows:
2004Millions of yen Thousands of U.S. dollars
Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due inone year or less
Due after oneyear through
five years
Due inone year or less
Due after oneyear through
five years
¥ 5—
1,067¥1,072
¥8013—
¥93
$ 47—
10,100$10,147
$757123—
$880
46
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
(4) At March 31, 2004, the following assets were pledged as collateral for long-term and short-term debt and trade notes and accounts payable:
As is customary in Japan, substantially all loans (including short-termloans) from banks are made under general agreements which providethat, at the request of the respective banks, the Company or the rele-vant consolidated subsidiary be required to provide collateral or guaran-tors (or additional collateral or guarantors, as appropriate) with respectto such loans, and that all assets pledged as collateral under such
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2010 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
¥ 9,94924,59013,92340,942
5,94222,445
¥117,791
$ 94,179232,771131,797387,561
56,248212,467
$1,115,023
Year ending March 31,
Buildings and structures, at book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
¥1,1992,289
¥3,488
$11,35021,668
$33,018
(3) Long-term debt at March 31, 2004 and 2003 was as follows:
Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
$ 9,466866,982876,448(93,270)
$783,178
¥ 1,00091,58892,588(9,853)
¥82,735
20032004 2004
¥ 2,00790,80192,808(6,551)
¥86,257
$ 18,998859,532878,530(62,012)
$816,518
The annual maturities of bonds and long-term debt subsequent to March 31, 2004 are summarized below:
agreements be applicable to all present and future indebtedness to thebanks concerned. The general agreements further provide that thebanks have the right, as the indebtedness matures or becomes due pre-maturely by reason of default, to offset deposits at such banks againstany indebtedness due to the banks.
2003
Bank loans were due within one year at average interest rates of approximately 0.72% and 0.62% at March 31, 2004 and 2003, respectively. Theaverage interest rates of commercial paper at March 31, 2004 and 2003 were 0.01% and 0.02%, respectively.
(1) Short-term debt and commercial paper5. Short-Term Debt, Bonds and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Bonds outstanding at March 31, 2004 and 2003 were as follows:
Thousands of U.S. dollarsMillions of yen
2003 2004 2003
2.22% bonds due December 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.67% bonds due May 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.04% bonds due May 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Variable interest rate bonds due November 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 47,33194,66194,661
1,922238,575
(909)$237,666
¥ 5,00010,00010,000
20325,203
(96)¥25,107
2004
¥ 5,00010,00010,000
44425,444
(108)¥25,336
$ 47,33194,66194,661
4,203240,856
(1,022)$239,834
47
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated balance sheets at March31, 2004 and 2003 for the Companies’ defined benefit plans:
Retirement benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unfunded retirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrecognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrecognized past service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net retirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Accrued retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
$(1,181,920)381,380
(800,540)260,479(25,625)
(565,686)151
$ (565,837)
¥(124,858)40,289
(84,569)27,517(2,707)
(59,759)16
¥ (59,775)
Accrued retirement benefits of ¥65,036 million ($615,638 thousand)and ¥61,580 million ($582,923 thousand) in the consolidated balancesheets at March 31, 2004 and 2003 included accrued retirement bene-fits for officers of ¥1,823 million ($17,257 thousand) and ¥1,805 million($17,086 thousand), respectively.
On February 17, 2003, the Company received approval from the Ministerof Health, Labor and Welfare with respect to its application for an exemptionfrom the obligation for benefits related to employees’ future services underthe substitutional portion of the WPFP. In accordance with the transitionalprovision stipulated in “Practical Guidelines for Accounting for RetirementBenefits,” the Company accounted for the separation of the substitutional
$(1,053,692)457,876
(595,816)117,370
(119,661)(598,107)
274$ (598,381)
¥(111,312)48,370
(62,942)12,399
(12,641)(63,184)
29¥ (63,213)
20032004 20032004
portion of the benefit obligation from the corporate portion of the benefitobligation under its WPFP as of the date of approval of its exemptionassuming that the transfer to the Japanese government of the substitutionalportion of the benefit obligation and related pension plan assets had beencompleted as of that date. As a result, the Company recognized a gainof ¥12,384 million ($117,228 thousand) for the year ended March 31, 2003.
Effective April 1, 2003, the Company and consolidated domestic sub-sidiaries plan to adopt a new type of defined benefit pension plan known as a“cash balance plan,” which allows pension benefits to fluctuate in accordancewith market interest rates. In connection with this adoption, prior service cost(a reduction of the liability) was incurred for the year ended March 31, 2004.
6. Accrued Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The components of retirement benefit expenses for the years ended March 31, 2004 and 2003 are outlined as follows:
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Amortization:
Unrecognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Past service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
¥ 9,6934,788
(3,722)
3,777(2,062)
¥12,474
$ 91,75545,324
(35,233)
35,753(19,519)
$118,080
$ 66,11125,085
(11,567)
49,811(8,908)
$120,532
¥ 6,9842,650
(1,222)
5,262(941)
¥12,733
20032004 20032004
Discount rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Expected rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.5%1.0% to 3.5%
The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2004 and 2003 were as follows:
2.5%1.3% to 4.2%
20032004
Income taxes applicable to the Company consist of corporation, inhabi-tants’ and enterprise taxes, which, in the aggregate, resulted in a statu-tory tax rate of approximately 41.8% for the years ended March 31,2004 and 2003, respectively.
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Temporary differences arising from consolidation without tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2004
41.8%(13.3)
0.829.3%
The effective tax rate reflected in the consolidated statements ofincome for the year ended March 31, 2004 differs from the above statu-tory tax rate for the following reasons:
7. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Deferred tax assets:Tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrealized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Accrued bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Loss on devaluation of investments in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:Revaluation of investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Deferred capital gains on property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Adjustment for allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrealized holding gain on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
$ 279,345237,107
27,09236,68122,29347,889
(128,360)522,047
61,70027,452
1,55327,11137,760
155,576$ 366,471
¥ 29,51025,048
2,8623,8752,3555,059
(13,560)55,149
6,5182,900
1642,8643,989
16,435¥ 38,714
20032004 20032004
¥ 34,16623,274
2,9813,254
–10,455
(15,182)58,948
6,6673,006
214–
3,54913,436
¥ 45,512
$ 323,419220,314
28,21830,803
–98,968
(143,714)558,008
63,11028,455
2,026–
33,595127,186
$ 430,822
the shareholders held on June 27, 2002. Under the terms of this plan,925,000 shares of common stock were granted at an exercise price of¥450 ($4.26) per share, subject to adjustment for certain events includ-ing stock splits. The options become exercisable on July 1, 2004 andare scheduled to expire on June 30, 2007.
In accordance with the Code, a stock option plan for directors andcertain employees of the Company and for directors of certain sub-sidiaries and affiliates was approved at the annual general meeting ofthe shareholders held on June 27, 2003. Under the terms of this plan,1,020,000 shares of common stock were granted at an exercise priceof ¥453 ($4.29) per share, subject to adjustment for certain eventsincluding stock splits. The options become exercisable on July 1, 2005and are scheduled to expire on June 30, 2008.
In accordance with the Code, an stock option plan for directors andcertain employees and for directors of certain subsidiaries and affiliatesof the Company was approved at the annual general meeting of theshareholders held on June 29, 2004. Under the terms of this plan, anew issuance of up to 1,100,000 shares of common stock has beenauthorized. The eligible participants may purchase these stock optionsat an exercise price calculated as the average of the closing marketprices of the Company’s shares on the Tokyo Stock Exchange for alltrading for the month immediately preceding the month of the date ofthe grant; however, if the exercise price referred to above is less thanthe closing market price of the Company’s shares on the Tokyo StockExchange on the day on which the rights are granted, the closing mar-ket price is to be the exercise price. The exercise price is subject toadjustment for certain events including stock splits. The optionsbecome exercisable on July 1, 2006 and are scheduled to expire onJune 30, 2009.
The Commercial Code of Japan (the “Code”) provides that an amountequal to at least 10% of the amounts to be disbursed as distributions ofearnings be appropriated to the legal reserve until the sum of the legalreserve and additional paid-in capital equals 25% of the common stockaccount. The Code also stipulates that, to the extent that the sum of theadditional paid-in capital account and the legal reserve exceeds 25% ofthe common stock account, the amount of any such excess is availablefor appropriation by resolution of the shareholders.
Retained earnings include the legal reserve provided in accordancewith the provisions of the Code. The legal reserve of the Companyincluded in retained earnings amounted to ¥10,363 million ($98,097thousand) at March 31, 2004 and 2003.
In accordance with the Code, a stock option plan for directors andcertain employees of the Company was approved at the annual generalmeeting of the shareholders held on June 29, 2000. Under the terms ofthis plan, 565,000 shares of common stock were granted at an exerciseprice of ¥480 ($4.54) per share, subject to adjustment for certain eventsincluding stock splits. The options become exercisable on July 1, 2002and are scheduled to expire on June 30, 2005.
In accordance with the Code, a stock option plan for directors andcertain employees of the Company was approved at the annual generalmeeting of the shareholders held on June 28, 2001. Under the terms ofthis plan, 460,000 shares of common stock were granted at an exerciseprice of ¥484 ($4.58) per share, subject to adjustment for certain eventsincluding stock splits. The options become exercisable on July 1, 2003and are scheduled to expire on June 30, 2006.
In accordance with the Code, a stock option plan for directors andcertain employees of the Company and for directors of certain sub-sidiaries and affiliates was approved at the annual general meeting of
8. Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A reconciliation of the statutory tax rate to the Company’s effectivetax rate for the year ended March 31, 2003 has been omitted asthe effective tax rate in the accompanying consolidated statementof income for the year ended March 31, 2003 differs from thestatutory tax rate by less than 5%.
Deferred income taxes reflect the net tax effect of the temporary differ-ences between the carrying amounts of the assets and liabilities for finan-cial reporting purposes and the corresponding amounts for income tax pur-poses. The significant components of the Companies’ deferred tax assetsand liabilities at March 31, 2004 and 2003 are summarized as follows:
49
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
unrealized gain on land revaluation and this has been accounted forunder shareholders’ equity as unrealized gain on land revaluation of¥346 million ($3,275 thousand) and ¥343 million ($3,247 thousand)in the consolidated balance sheets at March 31, 2004 and 2003,respectively.
Sekisui Plastics Co., Ltd., which has been accounted for by the equitymethod, revalued its land held for business use in accordance with the“Land Revaluation Law” and the “Amended Land Revaluation Law.” Asa result of this revaluation by Sekisui Plastics Co., Ltd., the Companyrecognized the portion attributable to the Company’s interest in the
9. Land Revaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
unconsolidated subsidiary in the amount of ¥50 million ($473 thousand).In addition, at March 31, 2004, the Companies had contingent liabili-ties arising from notes endorsed in the total amount of ¥103 million($975 thousand).
At March 31, 2004, the Companies were contingently liable as guarantorsfor housing loans of customers in the aggregate amount of ¥22,202 mil-lion ($210,167 thousand), for housing loans of employees in the aggre-gate amount of ¥3,734 million ($35,346 thousand), and for loans of an
10. Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development costs included in selling, general and administrative expenses for the years ended March 31, 2004 and 2003 amountedto ¥23,701 million ($224,356 thousand) and ¥23,404 million ($221,545 thousand), respectively.
11. Research and Development Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Company’s sales to and purchases from its unconsolidated subsidiaries and affiliates for the years ended March 31, 2004 and 2003 are summa-rized as follows:
$319,992172,283
Thousands of U.S. dollarsMillions of yen
¥33,80418,200
¥32,42715,771
20032004 20032004
$306,958149,290
12. Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leased property:Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . .Machinery and vehicles . . . . . . . . . . . . . . . . . . . . . . . .Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 85,2059,551
37,5715,121
$137,448
$54,63810,52629,970
4,686$99,820
$139,84320,07767,541
9,807$237,268
Thousands of U.S. dollars
Acquisition costsNet book valueAccumulateddepreciationAcquisition costs Net book value
2004 2003Accumulateddepreciation
$ 78,69210,50734,788
6,200$130,187
$152,78318,91373,50412,136
$257,336
$ 74,0918,406
38,7165,936
$127,149
Leased property:Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . .Machinery and vehicles . . . . . . . . . . . . . . . . . . . . . . . .Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
¥14,7732,1217,1351,036
¥25,065
¥ 9,0011,0093,969
541¥14,520
¥ 5,7721,1123,166
495¥10,545
Acquisition costsNet book valueAccumulateddepreciationAcquisition costs Net book value
2004 2003Accumulateddepreciation
¥ 8,3131,1103,675
655¥13,753
¥16,1401,9987,7651,282
¥27,185
¥ 7,827888
4,090627
¥13,432
ance sheets if finance lease accounting had been applied to thefinance leases (under which the Companies are lessees) currentlyaccounted for as operating leases:
The following pro forma amounts represent the acquisition costs, accu-mulated depreciation and net book value of the leased property as ofMarch 31, 2004 and 2003, which would have been reflected in the bal-
13. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Forward foreign exchange contracts:Sell:
US$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Future minimum lease payments (including the interest portion thereon) subsequent to March 31, 2004 for finance leases accounted for as operatingleases are summarized as follows:
Summarized below are the notional amounts and the estimated fair value of the derivatives positions outstanding at March 31, 2004 and 2003:
(1)Currency-related transactions
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2006 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
¥ 5,2195,326
¥10,545
$49,40450,416
$99,820
Year ending March 31,
Millions of yen
¥1,2641,559
¥2,823
Unrealized gain Fair value
¥1,3001,638
¥2,938
Notional amount Unrealized gain(loss)
2004 2003
Fair value
¥1,4382,345
¥3,783
Notional amount
¥1,4702,251
¥3,721
¥ 3679
¥115
¥ 32(94)
¥(62)
The Company and its consolidated subsidiaries are exposed to marketrisk arising from forward foreign exchange contracts and interest-rateswaps. The Company and its consolidated subsidiaries are alsoexposed to the risk of credit loss in the event of nonperformance by the
Interest-rate swaps:Receive/fixed and pay/floating . . . . . . . . . . . . . . . . . . .Receive/floating and pay/fixed . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)Interest-related transactions
¥ 1,510(1,529)
¥ (19)
Unrealized gain(loss)Fair value
¥25,00025,000
¥50,000
Notional amount Unrealized gain(loss)
2004 2003
Fair value
¥ 2,384(2,388)
¥ (4)
Notional amount
¥25,00025,000
¥50,000
¥ 1,510(1,529)
¥ (19)
¥ 2,384(2,388)
¥ (4)
14. Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
respectively. These amounts were equal to the depreciation expense ofthe leased assets computed by the straight-line method over therespective lease terms.
Lease payments relating to finance leases accounted for as operatingleases for the years ended March 31, 2004 and 2003 were ¥6,836 mil-lion ($64,710 thousand) and ¥7,825 million ($74,072 thousand),
Forward foreign exchange contracts:Sell:
US$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollars
$11,96514,758
$26,723
Unrealized gain Fair value
$12,30615,505
$27,811
Notional amount Unrealized gain(loss)
2004 2003
Fair value
$13,61222,198
$35,810
Notional amount
$13,91521,308
$35,223
$ 341747
$1,088
$ 303(890)
$(587)
Millions of yen
counterparties to these forward foreign exchange contracts and inter-est-rate swap contracts; however, they do not anticipate nonperfor-mance by any of the counterparties, all of whom are financial institu-tions with high credit ratings.
51
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Interest-rate swaps:Receive/fixed and pay/floating . . . . . . . . . . . . . . . . . . .Receive/floating and pay/fixed . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollars
$ 14,294(14,474)
$ ( 180)
Unrealized gain(loss)Fair value
$236,653236,653
$473,306
Notional amount Unrealized gain(loss)
2004 2003
Fair value
$ 22,567(22,605)
$ (38)
Notional amount
$236,653236,653
$473,306
$ 14,294(14,474)
$ (180)
$ 22,567(22,605)
$ (38)
Net income:Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. dollarsyen
$0.16—
0.064.87
¥ 17.43—
6.00514.86
Basic net income per share has been computed based on the net incomeattributable to shareholders of common stock and the weighted-averagenumber of shares of common stock outstanding during the year. Dilutednet income per share has been computed based on the amount of netincome attributable to the shareholders of common stock and the weight-ed-average number of shares of common stock outstanding during eachyear after giving effect to the dilutive potential of the shares of common
$0.270.260.075.19
¥ 28.0027.89
7.00548.16
20032004 20032004
stock to be issued upon the exercise of warrants issued by the Company.The amount per share of net assets has been computed based on the netassets available for distribution to shareholders of common stock andthe number of shares of common stock outstanding at the year end.
Cash dividends per share represent the cash dividends proposed bythe Board of Directors as applicable to the respective years togetherwith the interim cash dividends paid.
15. Amounts Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The business segment information of the Companies for the years ended March 31, 2004 and 2003 is summarized as follows:
Business segments
Housing Other
Millions of yen
2004
TotalHigh
performanceplastics
Urban infrastruc-ture and environ-mental products
ConsolidatedEliminations or
unallocableaccounts
Sales:Sales to third parties . . . . . . . . . . . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Depreciation and amortization . . . . . . . . . . . . . . . . . . .Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
Sales:Sales to third parties . . . . . . . . . . . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Depreciation and amortization . . . . . . . . . . . . . . . . . . .Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . .
¥399,784157
399,941394,621
¥ 5,320¥178,179
7,7724,686
¥174,45215,245
189,697189,069
¥ 628¥149,761
7,2775,508
¥166,6155,644
172,259161,829
¥ 10,430¥148,819
9,82810,566
¥58,85819,92578,78381,994
¥ (3,211)¥72,494
2,9011,558
¥799,70940,971
840,680827,513
¥ 13,167¥549,253
27,77822,318
¥ —(40,971)(40,971)(41,829)
¥ 858¥201,987
6552,781
¥799,709—
799,709785,684
¥ 14,025¥751,240
28,43325,099
¥410,723178
410,901400,626
¥ 10,275¥176,520
6,6553,431
¥175,58516,696
192,281189,006
¥ 3,275¥145,133
6,0644,701
¥176,1565,602
181,758169,448
¥ 12,310¥166,765
10,72312,548
¥52,4008,035
60,43563,236
¥ (2,801)¥54,521
2,1731,236
¥814,86430,511
845,375822,316
¥ 23,059¥542,939
25,61521,916
¥ —(30,511)(30,511)(30,533)
¥ 22¥205,852
1,0082,260
¥814,864—
814,864791,783
¥ 23,081¥748,791
26,62324,176
16. Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Housing Other
Thousands of U.S. dollars
2004
TotalHigh
performanceplastics
Urban infrastruc-ture and environ-mental products
ConsolidatedEliminations or
unallocableaccounts
Sales:Sales to third parties . . . . . . . . . . . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Depreciation and amortization . . . . . . . . . . . . . . . . . . .Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
Sales:Sales to third parties . . . . . . . . . . . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Depreciation and amortization . . . . . . . . . . . . . . . . . . .Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,784,4001,486
3,785,8863,735,526
$ 50,360$1,686,662
73,57144,358
$1,651,382144,311
1,795,6931,789,748
$ 5,945$1,417,655
68,88552,140
$1,577,19653,427
1,630,6231,531,891
$ 98,732$1,408,737
93,033100,019
$557,156188,612745,768776,164
$ (30,396)$686,236
27,46114,748
$7,570,134387,836
7,957,9707,833,329
$ 124,641$5,199,290
262,950211,265
$ —(387,836)(387,836)(395,957)
$ 8,121$1,912,031
6,20026,325
$7,570,134—
7,570,1347,437,372
$ 132,762$7,111,321
269,150237,590
$3,887,9501,685
3,889,6353,792,370
$ 97,265$1,670,958
62,99732,478
$1,662,107158,046
1,820,1531,789,152
$ 31,001$1,373,845
57,40344,500
$1,667,51253,029
1,720,5411,604,013
$ 116,528$1,578,616
101,505118,781
$496,02476,060
572,084598,599
$ (26,515)$516,102
20,57011,700
$7,713,593288,820
8,002,4137,784,134
$ 218,279$5,139,521
242,475207,459
$ —(288,820)(288,820)(289,028)
$ 208$1,948,618
9,54221,394
$7,713,593—
7,713,5937,495,106
$ 218,487$7,088,139
252,017228,853
Change in Presentation of Business SegmentsThrough March 31, 2003, the financial and investment businesses were
included in the “other” segment. Effective April 1, 2003, these financial
and investment business have been included in “eliminations or unallo-
cable accounts.” As a financing and holding subsidiary was newly
established for the year ended March 31, 2004, the Company consid-
ered its business strategy with respect to the financing and investment
businesses. As a result, the Company has no plan to conduct financing
and investing business outside the Group as the Company’s main busi-
ness. Based on this new segmentation, the Company has restated its
previously reported business segment information for the year ended
March 31, 2003 to conform to the 2004 presentation. As a result of this
change, intersegment sales, operating expenses and assets included in
the other segment decreased by ¥1,055 million ($9,987 thousand),
¥1,237 million ($11,710 thousand) and ¥50,783 million ($480,718
thousand), respectively, from the amounts which would have been
recorded under the method applied in the previous year. Similarly, inter-
segment sales, operating expenses and assets included in eliminations
or unallocable accounts increased by ¥1,055 million ($9,987 thousand),
¥1,237 million ($11,710 thousand) and ¥50,783 million ($480,718
thousand), respectively, over the corresponding amounts which would
have been recorded if the method applied in the previous year had been
followed.
The geographical segment information of the Companies for the years ended March 31, 2004 and 2003 is summarized as follows:
Geographical SegmentsMillions of yen
2004
Sales:Sales to third parties . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . .Operating income . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥17,7361,174
18,91017,731
¥ 1,179¥13,209
¥752,92120,084
773,005754,145
¥ 18,860¥466,746
¥24,624503
25,12723,094
¥ 2,033¥26,858
¥17,5011,146
18,64717,787
¥ 860¥15,099
¥2,08279
2,1611,948
¥ 213¥2,759
¥814,86422,986
837,850814,705
¥ 23,145¥524,671
¥ —(22,986)(22,986)(22,922)
¥ (64)¥224,120
¥814,864—
814,864791,783
¥ 23,081¥748,791
United States ofAmericaJapan Europe Asia Others Total
Eliminationsor unallocable
accounts
Consoli-dated
53
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
Thousands of U.S. dollars
2004
Sales:Sales to third parties . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . .Operating income . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
$167,89111,114
179,005167,844
$ 11,161$125,038
$7,127,234190,117
7,317,3517,138,820
$ 178,531$4,418,269
$233,0944,761
237,855218,610
$ 19,245$254,241
$165,66610,848
176,514168,374
$ 8,140$142,929
$19,708748
20,45618,440
$ 2,016$26,117
$7,713,593217,588
7,931,1817,712,088
$ 219,093$4,966,594
$ —(217,588)(217,588)(216,982)
$ (606)$2,121,545
$7,713,593—
7,713,5937,495,106
$ 218,487$7,088,139
United States ofAmericaJapan Europe Asia Others Total
Eliminationsor unallocable
accounts
Consoli-dated
2003
Sales:Sales to third parties . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . .Operating income . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥18,0041,363
19,36718,998
¥ 369¥15,827
¥746,49917,502
764,001753,392
¥ 10,609¥443,293
¥22,744669
23,41321,290
¥ 2,123¥32,651
¥10,346604
10,95010,730
¥ 220¥ 7,035
¥2,11617
2,1331,929
¥ 204¥2,833
¥799,70920,155
819,864806,339
¥ 13,525¥501,639
¥ —(20,155)(20,155)(20,655)
¥ 500¥249,601
¥799,709—
799,709785,684
¥ 14,025¥751,240
United States ofAmericaJapan Europe Asia Others Total
Eliminationsor unallocable
accounts
Consoli-dated
Millions of yen
2003
Sales:Sales to third parties . . . . . . . . . . . . . . . .Intersegment sales . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . .Operating expenses . . . . . . . . . . . . . . . . .Operating income . . . . . . . . . . . . . . . . . . .Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
$170,42812,902
183,330179,837
$ 3,493$149,820
$7,066,443165,676
7,232,1197,131,693
$ 100,426$4,196,261
$215,2986,333
221,631201,534
$ 20,097$309,078
$ 97,9355,718
103,653101,571
$ 2,082$ 66,594
$20,030161
20,19118,260
$ 1,931$26,817
$7,570,134190,790
7,760,9247,632,895
$ 128,029$4,748,570
$ —(190,790)(190,790)(195,523)
$ 4,733$2,362,751
$7,570,134—
7,570,1347,437,372
$ 132,762$7,111,321
United States ofAmericaJapan Europe Asia Others Total
Eliminationsor unallocable
accounts
Consoli-dated
Thousands of U.S. dollars
54
Notes to C
onsolidated Financial Statements
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
A reconciliation between cash and cash equivalents in the consolidated statements of cash flows and cash and time deposits in the consolidated bal-ance sheets at March 31, 2004 and 2003 is presented as follows:
Cash and time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Time deposits with a maturity in excess of three months . . . . . . . . . . . . . . . . . . . . . . . .Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
¥19,311(809)
¥18,502
$182,800(7,658)
$175,142
$221,441(8,122)
$213,319
¥23,393(858)
¥22,535
20032004 20032004
Cash dividends (¥4.00 = $0.04 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
¥2,145 $20,305
The following appropriations of retained earnings of the Company, which have not been reflected in the accompanying consolidated financial state-ments for the year ended March 31, 2004, were approved at a shareholders’ meeting held on June 29, 2004:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Excess of investment cost over underlying net assets of a consolidated subsidiary . . . .Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cash and cash equivalents of Youngbo Chemical Co., Ltd. . . . . . . . . . . . . . . . . . . . . . .Cash disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
$ 32,71534,01229,231
(14,549)(6,854)
(22,179)(57)
52,319(57)
$ 52,262
¥ 3,4563,5933,088
(1,537)(724)
(2,343)(6)
5,527(6)
¥ 5,521
2004 2004
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of U.S. dollarsMillions of yen
$45,35241,500
$86,852
$43,72415,629
$59,353
¥4,7914,384
¥9,175
¥4,6191,651
¥6,270
2004 2004
18. Subsequent Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Supplemental Information on Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In April 2003, the Company purchased shares of Youngbo ChemicalCo., Ltd. and initially consolidated the accounts of Youngbo ChemicalCo., Ltd. for the year ended March 31, 2004. The following summa-
rizes the assets and liabilities included in consolidation and presentsinformation on acquisition costs and cash disbursements:
In April 2003, the assets and liabilities of Sekisui Machinery Co.,Ltd. were excluded from consolidation due to the sale of the sharesof Sekisui Machinery Co., Ltd.. The following summarizes the
assets and liabilities excluded from consolidation for the year endedMarch 31, 2004:
55
Report of Independent A
uditorsSekisui C
hemical C
o., Ltd. Annual R
eport 2004
Report of Independent Auditors
Report of Independent Auditors
The Board of Directors
Sekisui Chemical Co., Ltd.
We have audited the accompanying consolidated balance sheets of Sekisui Chemical Co., Ltd. and
consolidated subsidiaries as of March 31, 2004 and 2003, and the related consolidated statements
of income, shareholders’ equity, and cash flows for the years then ended, all expressed in yen.
These financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Sekisui Chemical Co., Ltd. and consolidated subsidiaries at March
31, 2004 and 2003, and the consolidated results of their operations and their cash flows for the
years then ended in conformity with accounting principles generally accepted in Japan.
Supplemental Information
As described in Note 16, effective April 1, 2003, the Company has changed its method of presenta-
tion of business segments.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the
years ended March 31, 2004 and 2003 are presented solely for convenience. Our audits also
included translations of yen amounts into U.S. dollar amounts and, in our opinion, such translations
have been made on the basis described in Note 1.
June 29, 2004
56
Major D
omestic Subsidiaries and A
ffiliatesSekisui C
hemical C
o., Ltd. Annual R
eport 2004
Major Domestic Subsidiaries and Affiliates
Nagoya Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . .
Gifu Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . . . . .
Mie Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . . . . .
Hokuriku Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . .
Osaka Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . . .
Wakayama Sekisui Fami S Co.,Ltd. . . . . . . . . . . .
Kitakinki Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . .
Sekisui Fami S Chugoku Co.,Ltd. . . . . . . . . . . . . .
Shikoku Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . .
Oita Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . . . . .
Nagasaki Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . .
Kyuseki Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . .
Kumamoto Sekisui Fami S Co.,Ltd. . . . . . . . . . . . .
Fukuoka Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . .
Kagoshima Sekisui Fami S Co.,Ltd. . . . . . . . . . . .
Sekisui Interior Co.,Ltd. . . . . . . . . . . . . . . . . . . . .
Sekisui Exterior Co.,Ltd. . . . . . . . . . . . . . . . . . . . .
Sekisui Heim Real Estate Co.,Ltd. . . . . . . . . . . . . .
Gunma Sekisui Heim Real Estate Co.,Ltd. . . . . . . .
Nagoya Sekisui Heim Real Estate Co.,Ltd. . . . . . . .
Osaka Sekisui Heim Real Estate Co.,Ltd. . . . . . . . .
Kitanihon Sekisui Industry Co.,Ltd. . . . . . . . . . . . .
Higashinihon Sekisui Industry Co.,Ltd. . . . . . . . . .
Kanto Sekisui Industry Co.,Ltd. . . . . . . . . . . . . . . .
Tokyo Sekisui Industry Co.,Ltd. . . . . . . . . . . . . . . .
Chubu Sekisui Industry Co.,Ltd. . . . . . . . . . . . . . .
Kansai Sekisui Industry Co.,Ltd. . . . . . . . . . . . . . .
Chugoku Sekisui Industry Co.,Ltd. . . . . . . . . . . . .
Nishinihon Sekisui Industry Co.,Ltd. . . . . . . . . . . .
Sekisui Board Co.,Ltd. . . . . . . . . . . . . . . . . . . . . .
Sekisui Global Trading Co.,Ltd. . . . . . . . . . . . . . . .
Sekisui Heim Supply Center Co.,Ltd. . . . . . . . . . . .
Urban Infrastructure & Environmental Products
Sekisui Aqua Systems Co.,Ltd. . . . . . . . . . . . . . . .
Vantec Co.,Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . .
Sekisui Home Techno Co.,Ltd. . . . . . . . . . . . . . . .
Tohoku Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . . . .
Tokyo Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . . . . .
Chubu Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . . . .
Kinki Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . . . . . .
Housing
Hokkaido Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . .
Tohoku Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . .
Fukushima Sekisui Heim Co.,Ltd. . . . . . . . . . . . . .
Kitanihon Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . .
Sekisui Heim Nishitohoku Co.,Ltd. . . . . . . . . . . . .
Sekisui Heim Tokyo Co.,Ltd. . . . . . . . . . . . . . . . . .
Sekisui Heim Kanagawa Co.,Ltd. . . . . . . . . . . . . .
Sekisui Heim Chiba Co.,Ltd. . . . . . . . . . . . . . . . . .
Sekisui Heim Saitama Co.,Ltd. . . . . . . . . . . . . . . .
Sekisui Heim Yamanashi Co.,Ltd. . . . . . . . . . . . .
Gunma Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . .
Sekisui Heim Shinetsu Co.,Ltd. . . . . . . . . . . . . . . .
Nagoya Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . .
Gifu Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . . . .
Mie Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . . . .
Hokuriku Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . .
Sekisui Heim Keiji Co.,Ltd. . . . . . . . . . . . . . . . . . .
Sekisui Heim Osaka Co.,Ltd. . . . . . . . . . . . . . . . .
Sekisui Heim Hanna Co.,Ltd. . . . . . . . . . . . . . . . .
Wakayama Sekisui Heim Co.,Ltd. . . . . . . . . . . . . .
Kitakinki Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . .
Sekisui Heim Chugoku Co.,Ltd. . . . . . . . . . . . . . .
Shikoku Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . .
Oita Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . . . .
Nagasaki Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . .
Kyuseki Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . .
Kumamoto Sekisui Heim Co.,Ltd. . . . . . . . . . . . . .
Fukuoka Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . .
Kagoshima Sekisui Heim Co.,Ltd. . . . . . . . . . . . . .
Hokkaido Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . .
Tohoku Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . .
Fukushima Sekisui Fami S Co.,Ltd. . . . . . . . . . . . .
Kitanihon Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . .
Sekisui Fami S Nishitohoku Co.,Ltd. . . . . . . . . . . .
Tokyo Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . . .
Gunma Sekisui Fami S Co.,Ltd. . . . . . . . . . . . . . .
Sekisui Fami S Shinetsu Co.,Ltd. . . . . . . . . . . . . .
The Company'sEquity Ownership
(%)
Paid-in Capital(Millions of yen)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
55.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
55.0
200
200
100
200
200
200
200
200
200
100
200
300
300
200
200
100
200
200
200
100
100
300
100
100
100
200
200
200
100
20
20
10
10
10
50
10
20
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
78.3
100.0
100.0
100.0
100.0
100.0
100.0
50
10
10
10
50
10
10
30
10
10
10
10
10
10
10
50
50
200
10
20
100
100
100
100
300
100
300
100
100
100
100
50
200
600
360
30
150
30
70
SUBSIDIARIES
57
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ffiliatesSekisui C
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Listed Company
Sekisui House,Ltd. . . . . . . . . . . . . . . . . . . . . . . . .
Sekisui Plastics Co.,Ltd. . . . . . . . . . . . . . . . . . . . .
Sekisui Jushi Corp. . . . . . . . . . . . . . . . . . . . . . . .
Sales of Housing
Sekisui Heim Tokai Co.,Ltd. . . . . . . . . . . . . . . . . .
Ibaragi Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . .
Sekisui Heim Sanyo Co.,Ltd. . . . . . . . . . . . . . . . .
Kagawa Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . .
Kochi Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . . .
Tochigi Sekisui Heim Co.,Ltd. . . . . . . . . . . . . . . . .
As of March 31, 2004
Chu-Shikoku Sekisui Shoji Co.,Ltd. . . . . . . . . . . . .
Kyusyu Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . . . .
Kyusyu Sekisui Kenzai Co.,Ltd. . . . . . . . . . . . . . . .
Sekisui Chemical Hokkaido Co.,Ltd. . . . . . . . . . . .
Hokkaido Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . .
Shikoku Sekisui Industry Co.,Ltd. . . . . . . . . . . . . .
Okayama Sekisui Industry Co.,Ltd. . . . . . . . . . . . .
Kyusyu Sekisui Industry Co.,Ltd. . . . . . . . . . . . . . .
Ryuseki Jubi Co.,Ltd. . . . . . . . . . . . . . . . . . . . . . .
Sekisui Roof Tech Co.,Ltd. . . . . . . . . . . . . . . . . . .
High Performance Plastics
Sekisui Techno-seikei Higashinihon Co.,Ltd. . . . . .
Sekisui Film Co.,Ltd. . . . . . . . . . . . . . . . . . . . . . .
Senseki Kako Co.,Ltd. . . . . . . . . . . . . . . . . . . . . .
Hiroseki Kako Co.,Ltd. . . . . . . . . . . . . . . . . . . . . .
Sekisui Film Kyushu Co.,Ltd. . . . . . . . . . . . . . . . .
Kaseki Kako Co.,Ltd. . . . . . . . . . . . . . . . . . . . . . .
Sekisui Esudain Co.,Ltd. . . . . . . . . . . . . . . . . . . .
Sekisui Polymatech Co.,Ltd. . . . . . . . . . . . . . . . . .
Sekisui Life Tech Co.,Ltd. . . . . . . . . . . . . . . . . . .
Sekisui Medical Denshi Co.,Ltd. . . . . . . . . . . . . . .
Sekisui Signsystem Co.,Ltd. . . . . . . . . . . . . . . . . .
Sekisui Techno Shoji Higashi Nihon Co.,Ltd. . . . . .
Sekisui Techno Shoji Chubu Co.,Ltd. . . . . . . . . . .
Sekisui Techno Shoji Nishi Nihon Co.,Ltd. . . . . . . .
Sekisui Hosou Kiki Co.,Ltd. . . . . . . . . . . . . . . . . .
Naseki Seimitsukako Co.,Ltd. . . . . . . . . . . . . . . . .
Sekisui Amagasaki Kako Co.,Ltd. . . . . . . . . . . . .
Sekisui Musashi Kako Co.,Ltd. . . . . . . . . . . . . . .
Sekisui Minakuchi Kako Co.,Ltd. . . . . . . . . . . . . . .
Others
Sekisui Seikei Industry Co.,Ltd. . . . . . . . . . . . . . .
Sanin Sekisui Shoji Co.,Ltd. . . . . . . . . . . . . . . . . .
Toto Sekisui Co.,Ltd. . . . . . . . . . . . . . . . . . . . . . .
Sekisui Engineering Co.,Ltd. . . . . . . . . . . . . . . . . .
Hinomaru Co.,Ltd. . . . . . . . . . . . . . . . . . . . . . . . .
Tokuyama Sekisui Industry Co.,Ltd. . . . . . . . . . . .
Sekisui Kosan Co.,Ltd. . . . . . . . . . . . . . . . . . . . . .
Sekisui Accounting Center Co.,Ltd. . . . . . . . . . . . .
100.0
100.0
100.0
100.0
100.0
100.0
100.0
91.5
100.0
100.0
100.0
100.0
100.0
69.7
78.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
86.7
70.0
100.0
100.0
30
30
40
200
32
100
150
130
40
10
200
365
20
33
50
10
30
50
400
30
40
50
50
50
30
10
20
25
10
450
30
50
80
673
1,000
400
20
21.9
23.6
24.3
36.4
40
43.3
37.5
25
40
186,554
16,534
12,335
198
105
100
100
100
80
The Company'sEquity Ownership
(%)
Paid-in Capital(Millions of yen)
AFFILIATES
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Corporate Directory
Head Office:
4-4, Nishitenma 2-chome, Kita-ku, Osaka 530-8565Tel: (06) 6365-4122 Fax: (06) 6365-4370
Tokyo Head Office:
3-17, Toranomon 2-chome, Minato-ku, Tokyo 105-8450Tel: (03) 5521-0521 Fax: (03) 5521-0519
R&D and Technology Center New Business Office Development Center:32, Wadai, Tsukuba, Ibaraki 300-4292Tel: (029) 864-4111 Fax: (029) 864-4111
Housing Company
Hokkaido & Tohoku Sales Headquarters:Sumitomo Seimei Sendai Chuo Building,6-1, Chuo 4-chome, Aoba-ku, Sendai 980-6060Tel: (022) 267-8801 Fax: (022) 267-8806
Tokyo Sales Headquarters:3-17, Toranomon 2-chome, Minato-ku, Tokyo 105-8450Tel: (03) 5521-0711 Fax: (03) 5521-0717
Kanto Sales Headquarters:3-17, Toranomon 2-chome, Minato-ku, Tokyo 105-8450Tel: (03) 5521-0722 Fax: (03) 5521-0725
Chubu Sales Headquarters:NHK Nagoya Broadcasting Center Bldg,13-3, Higashi Sakura 1-chome,Higashi-ku, Nagoya 461-0005Tel: (052) 952-9750 Fax: (052) 952-9751
Kinki Sales Headquarters:Hanshin Shinmei Building, 11-22, Nishitenma 4-chome, Kita-ku, Osaka 530-0047Tel: (06) 6366-0021 Fax: (06) 6366-1051
Chu-Shikoku Sales Headquarters:189, Kozushuku, Okayama 703-8510Tel: (086) 208-3212 Fax: (086) 208-3213
Kyusyu Sales Headquarters:Fukuoka Asahi Kaikan Building, 8-41, Tenjin 2-chome, Chuo-ku, Fukuoka 810-0001Tel: (092) 725-9301 Fax: (092) 725-9305
Housing Technology Institute:32, Wadai, Tsukuba, Ibaraki 300-4292Tel: (029) 864-7251 Fax: (029) 864-7286
Urban Infrastructure & Environmental Products Company
Tohoku Sales Headquarters:Sumitomo Seimei Sendai Chuo Building,6-1, Chuo 4-chome, Aoba-ku, Sendai 980-6060Tel: (022) 222-4111 Fax: (022) 223-6502
Tokyo Sales Headquarters:3-17, Toranomon 2-chome, Minato-ku, Tokyo 105-8450Tel: (03) 5521-0622 Fax: (03) 5521-0627
Chubu Sales Headquarters:NHK Nagoya Broadcasting Center Bldg,13-3, Higashi Sakura 1-chome,Higashi-ku, Nagoya 461-0005Tel: (052) 952-9730 Fax: (052) 952-9731
Kinki Sales Headquarters:4-4, Nishitenma 2-chome, Kita-ku, Osaka 530-8565Tel: (06) 6365-4500 Fax: (06) 6365-4387
Chu-Shikoku Sales Headquarters:Toshiba Fukoku Seimei Building, 7-18, Teppo-cho, Naka-ku, Hiroshima 730-0017Tel: (082) 224-6211 Fax: (082) 224-5291
Kyusyu Sales Headquarters:Hakata Mitsui No.2 Building, 35, Tenyamachi 1-chome, Hakata-ku,Fukuoka 812-0025Tel: (092) 271-1306 Fax: (092) 271-1309
Shiga-Ritto Plant:75, Nojiri, Ritto, Shiga 520-3081Tel: (077) 553-0771 Fax: (077) 552-3304
Gunma Plant:54, Shimofuchina, Sakaimachi, Sawa-gun, Gunma 370-0103Tel: (0270) 76-3355 Fax: (0270) 76-3462
Tokyo Plant:15-1, Negishidai 3-chome, Asaka, Saitama 351-8511Tel: (048) 463-5111 Fax: (048) 463-7232
Kyoto R&D Laboratory:2-2, Kamitoba Kamichoshi-cho, Minami-ku, Kyoto 601-8105Tel: (075) 662-8541 Fax: (075) 662-8581
High Performance Plastics Company
Eastern Japan Sales Headquarters:3-17, Toranomon 2-chome, Minato-ku, Tokyo 105-8450Tel: (03) 5521-0623 Fax: (03) 5521-0695
Central Japan Sales Headquarters:NHK Nagoya Broadcasting Center Bldg,13-3, Higashi Sakura 1-chome,Higashi-ku, Nagoya 461-0005Tel: (052) 952-9725 Fax: (052) 952-9726
Western Japan Sales Headquarters:4-4, Nishitenma 2-chome, Kita-ku, Osaka 530-8565Tel: (06) 6365-4500 Fax: (06) 6365-4387
Amagasaki Plant:8-6, Shioe 5-chome, Amagasaki, Hyogo 661-8564Tel: (06) 6429-4301 Fax: (06) 6427-0744
Musashi Plant:3535, Oaza Kurohama, Hasuda, Saitama 349-0198Tel: (048) 768-1131 Fax: (048) 768-3069
Shiga-Minakuchi Plant:1259, Oaza Izumi, Minakuchi-cho Kohga-gun, Shiga 528-8585Tel: (0748) 62-3381 Fax: (0748) 62-8159
Minase Research Laboratories:2-1, Hyakuyama, Shimamoto-cho, Mishima-gun, Osaka 618-8589Tel: (075) 962-8811 Fax: (075) 962-7584
DOMESTIC
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North America
Sekisui America Corporation (Head Office)*12th Floor, 666 Fifth Avenue, New York, NY 10103, U.S.A.Tel: 212-489-3500Fax: 212-489-5100Main Activities: Holding CompanyPaid-in Capital: US $19,390,000Equity Ownership: 100.0%
Voltek, LLC. (Head Office and Lawrence Plant)*100 Shepard Street, Lawrence, MA 01843, U.S.A.Tel: 978-685-2557 Fax: 978-685-9861Main Activities: Sales, marketing, and manufacture of polyolefin foam productsPaid-in Capital: US $48,533,613Equity Ownership: 100.0%
Voltek, LLC. (Coldwater Plant)*17 Allen Avenue, Coldwater, Ml 49036, U.S.A.Tel: 517-279-7587Fax: 517-279-8562Main Activities: Manufacture of polyolefin foam products
Sekisui Products, LLC.*550 Stephenson Highway, Suite 301, Troy, Michigan 48083, U.S.A.Tel: 248-307-0000Fax: 248-307-1680Main Activities: Import and export of plastic productsPaid-in Capital: US $2,036,956Equity Ownership: 100.0%
Sekisui S-Lec America, LLC.*1786 Dividend Drive, Columbus, OH 43228, U.S.A.Tel: 614-527-5250Fax: 614-527-5257Main Activities: Sales and marketing of polyvinyl butyral interlayerPaid-in Capital: US $1,765,411Equity Ownership: 100.0%
Kleerdex Company, LLC.*100 Gaither Drive, Suite B, Mount Laurel, NJ 08054, U.S.A.Tel: 856-866-1700Fax: 856-866-9728Main Activities: Corporate administration, sales, and marketing of acrylic PVC alloy sheetPaid-in Capital: US $3,471,996Equity Ownership: 100.0%
Bloomsburg Plant6685 Low Street, Bloomsburg,PA 17815, U.S.A.Tel: 570-387-6997Fax: 570-387-8722Main Activities: Manufacture of acrylic PVC alloy sheet
Sekisui TA Industries, LLC. (Head Office)*100 S, Puente Street, Brea, CA 92821, U.S.A.Tel: 714-255-7888Fax: 714-990-0440Main Activities: Corporate administration, sales, marketing,and manufacture of adhesive tapePaid-in Capital: US $6,000,000Equity Ownership: 100.0%
Sekisui Ta Industries, LLC. (Tennessee Plant)*75 Industrial Park Drive, Rogersville, TN 37857, U.S.A.Tel: 423-272-5898Fax: 423-272-6155Main Activities: Manufacture of adhesive tape
Central and South America
Sekisui S-Lec Mexico S.A. de C.V.*Calle 21E, No.524 Civac, Cuernavaca, Morelos, MexicoTel: 777-319-04-55Fax: 777-319-06-75Main Activities: Sales, marketing, and manufacture of polyvinyl butyral interlayerPaid-in Capital: MXN32,836,144 Equity Ownership: 70.92%
Alveo-Voltek Ltda.Rua Bento Goncalves 1731, Sala 172, 93410- 003 Novo Hamburgo RS, BrazilTel: 51-587-7155Fax: 51-594-2314Main Activities: Sales of polyolefin foam productsPaid-in Capital: R $387,200Equity Ownership: 100.0%
Europe
Alveo AG*Bahnhofstr.7, CH-6002 Luzern, SwitzerlandTel: 41-228-92-92Fax: 41-228-92-00Main Activities: Sales and marketing of polyolefin foam productsPaid-in Capital: SFr21,000,000Equity Ownership: 100.0%
Sekisui (U.K.) Ltd.*Unit 19, Merthyr Tydfil Industrial Park, Cardiff Road, Troedyrhim, Merthyr Tydfil,South Wales CF48 4DR, United KingdomTel: 1443-690-940Fax: 1443-690-738Main Activities: Manufacture of polyolefin foam productsPaid-in Capital: Stg.£7,100,000Equity Ownership: 100.0%
Sekisui-Alveo B.V.*Montageweg 6, 6045 JA, Roermond, the NetherlandsTel: 475-354-354Fax: 475-328-056Main Activities: Manufacture of polyolefin foam productsPaid-in Capital: EURO 1,361,341Equity Ownership: 100.0%
Eslon B.V.*Metaalweg 7, 6045 JB, Roermond, the NetherlandsTel: 475-322-851Fax: 475-328-248Main Activities: Sales, marketing, and manufacture of PVC rain guttersPaid-in Capital: EURO 363,024Equity Ownership: 100.0%
*Consolidated subsidiary
OVERSEAS SUBSIDIARIES
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Sekisui S-Lec B.V.*Metaalweg 5, 6045 JB, Roermond, the NetherlandsTel: 475-349900Fax: 475-349999Main Activities: Manufacture of polyvinyl butyral interlayer filmPaid-in Capital: EURO 11,344,506Equity Ownership: 100.0%
German Representative OfficeHafenstr. 72, 41460 Neuss GermanyTel: 2131-36926-0Fax: 2131-36926-30Main Activities: Sales and marketing of polyvinyl butyral interlayer
German Representative Office U.K. DivisionFirst Point, Buckingham Gate, Gatwick, West Sussex RH6 0NT, United KingdomTel: 1293-897-217Fax: 1293-897-300Main Activities: Sales and marketing of polyvinyl butyral interlayer
Sekisui EUROPE B.V.*c/o Metaalweg 5, 6045JB, Roermond, the NetherlandsTel: 06-6365-4113 Fax: 06-6365-4367(Sekisui Chemical Corporate Finance, Accounting and Planning Dept.)Main Activities: Financing, Holding CompanyPaid-in Capital: EURO 136,134Equity Ownership: 100.0%
Sekisui Chemical G.m.b.H.*Vehrham Center, Cantadorstr, 3 40211 Düsseldorf, GermanyTel: 211-36977-0Fax: 211-36977-31Main Activities: Export and import of plastic productsPaid-in Capital: EURO 664,679Equity Ownership: 100.0%
U.K. DivisionCP House, 97-107 2nd Floor, Uxbridge Road, Ealing, London W5 5TL, United KingdomTel: 0208-566-1132Fax: 0208-566-0701/0702
Alveo G.m.b.H.Daimlerstrasse 1/H, D- 63303 Dreieich, GermanyTel: 6103-94830Fax: 6103-948374Main Activities: Marketing of polyolefin foam productsPaid-in Capital: DM50,000Equity Ownership: 100.0%
Alveo S.p.A.Viale Italia 5/A, 20020 Lainate, ItalyTel: 2-935-70283Fax: 2-935-70343Main Activities: Marketing of polyolefin foam productsPaid-in Capital: Llt200,000,000Equity Ownership: 100.0%
Alveo S.a.r.L.Le Valvert 46 bis, Chemin du Vieux Moulin 69160 Tassin la Demi Lune, FranceTel: 04-78-33-97-97Fax: 04-78-33-97-98Main Activities: Marketing of polyolefin foam productsPaid-in Capital: FFr50,000Equity Ownership: 100.0%
Sekisui-Alveo S.A.C/Industria s/n (esquina C/de l'Horta), Poligono Industrial El Pl'a 08750-Molinsde Rei (Barcelona), SpainTel: 3-680-28-42Fax: 3-680-28-69Main Activities: Marketing of polyolefin foam productsPaid-in Capital: Ptas.10,000,000Equity Ownership: 100.0%
Asia and Other Regions
Thai Sekisui Foam Co.,Ltd.*Amata Nakorn Industrial Estate, 700/329 Moo6, (Bangana-Trad Rd., Km.57),Tumbol Don Hua-loh, Amphur Muang, Chonburi20000, Thailand.Tel: (66-)38-213-219~26Fax: (66-)38-213-281Main Activities: Sales and marketing of polyvinyl butyral interlayerPaid-in Capital: B450,000,000Equity Ownership: 91.11%
SekisuiS-Lec Thailand Co.,Ltd.*64/31, Moo 4 Eastern Seaboard Industrial Estate, T. Pluakdaeng, A. Pluakdaeng Rayong Code. 21140, ThailandTel: 38-955-430-6Fax: 38-955-427-8Main Activities: Sales, marketing, and manufacture of polyvinyl butyral interlayer filmPaid-in Capital: B430,000,000Equity Ownership: 100.0%
Sekisui Chemical Singapore (Pte.) Ltd.*2 Jurong East Street Road 21, #05-17, IMM Building, Singapore 609601Tel: 562-5081Fax: 562-5021Main Activities: Export and import of plastic productsPaid-in Capital: S $70,000Equity Ownership: 100.0%
Malaysia OfficeLot 16, 1st Floor, Kompleks Antarabangsa, Jalan Sultan, 50250 Kuala Lumpur MalaysiaTel: 03-214-55333Fax: 03-214-22533
Thailand Office75/46 15th Floor, Richmond Building, Sukhumvit Soi 26, Sukhumvit Road, Klongton,Klongtoey, Bangkok 10110, ThailandTel: (66)2-2617745~49Fax: (66)2-2617750
Sekisui (Hong Kong) Ltd.*8th Floor, 111 Leighton Road, Causeway Bay, Hong KongTel: 2890-9161Fax: 2577-1908Main Activities: Export and import of plastic productsPaid-in Capital: HK $300,000Equity Ownership: 100.0%
Taiwan OfficeRoom A, 10F, No.2, Sec.2, Nanjing E. Rd., Taipei, Taiwan, R.O.C.Tel: 02-2523-5335Fax: 02-2523-5336
Shenzhen OfficeRoom 2703, 27/F, Shenzhen Kerry Centre, No.2008 Ren Min South Road, 518001, ChinaTel: 0755-82219393Fax: 0755-82219395
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Sekisui (Shanghai) International Trading Co., Ltd.*Room 702-705, Metro Tower, No.30, Tianyaoqiao Road, Shanghai 200030, ChinaTel: 021-64820638Fax: 021-64820639Main Activities: Export and import of plastics priductsPaid-in Capital: US $200,000Equity Ownership: 100%
Sekisui Korea Co., Ltd.*402F, Youngbo Bldg, 168-1 Samsung-Dong, Gangnam-Gu, Seoul, Korea, 135-090Tel: 02-319-9471Fax: 02-319-9475Main Activities: Sales of plastic products, Technical servicePaid-in Capital: W250,000,000Equity Ownership: 100%
Young Bo Chemical Co.,Ltd. (Head Office) 542-1, Panje-Ri, Wongok-Myon, Ansung-Si, Kyonggi-Do,465-810, KoreaTel: 31-659-8800Fax: 31-659-8877Main Activities: Manufacture of Polyolefin foamPaid-in Capital: W10,000,000Equity Ownership: 51%
Taejeon Plant236 Pokyong-Dong, Yoosug-Gu, Taejeon 305-305, KoreaTel: 42-822-0603Fax: 42-822-0606
Sekisui Polytie Co.,Ltd.6F,824-19 Dongkyung Bldg., Yeoksam-Dong, Kangnam-Ku, Seoul, KoreaTel: 02-561-0654Fax: 02-561-9873Main Activities: Research and preparation for production and commercializationof synthetic wood tiePaid-in Capital: W30,000,000Equity Ownership: 60%
Pilon Plastics Pty.Ltd.*1-5 Parraweena Road, Taren Point N.S.W 2229, AustraliaTel: 2-9525-9880Fax: 2-9525-8004Main Activities: Sales, marketing, and manufacture of polyolefin foam productsPaid-in Capital: A$3,000,000Equity Ownership: 100.0%
Sekisui Dalian Housing Technology Co., Ltd.Ping’an Building 1405, No. 24 Renmin Road,Zhongshan DistrictTel: 86-411-82539771Fax: 86-411-82539773Main Activities: Development of construction-related data for use in JapanPaid-in Capital: US $250,000Equity Ownership: 100.0%
Wuxi SSS-Diamond Plastics Co., Ltd.Block 82-A, Wuxi National High & New Technology Industrial Development Zone, Wuxi, Jiangsu, 214028 ChinaTel: 86-510-520-4282Fax: 86-510-520-4618Main Activities: Sales and manufacture of Polyethylene EF jointsPaid-in Capital: US $4,000,000Equity Ownership: 51%
Sekisui (Qingdao) Plastic Co., Ltd.Construction Group Industry Park, Huanghe West Road, Qingdao Economic &Technology Development Zone, 266500 ChinaTel: 86-532-870-2915Fax: 86-532-870-1755Main Activities: Sales and manufacture of high-performance water pipesPaid-in Capital: US $6,050,000Equity Ownership: 25%
Shanghai Sekisui-Holy Plastics Co.,Ltd.No.951.Liou-Shan Rd Nan-Shan Industrial Park Jiading Village Shanghai ChinaTel: 021-69178519Fax: 021-69177219Main Activities: Manufacture of Polyolefin foamPaid-in Capital: US $5,000,000Equity Ownership: 51%
Sekisui High Performance Packaging (Langfang) Co.,Ltd.No.12 HuiYuan Road Langfang E&T Development Zone Hebei Province,P.R.China P.C.: 065001Tel: 0316-6089731Fax: 0316-6089731Main Activities: Manufacture of adhesive tapePaid-in Capital: US $1,900,000Equity Ownership: 100%
Sekisui S-Lec (Suzhou) Co.,Ltd.No.25 Taishan Rd., Suzhou New District, Suzhou, The People’s Republic of China 215219Tel: (86)512-6661-8181Fax: (86)512-6661-8383Paid-in Capital: US $12,500,000Equity Ownership: 100%
Beijing Sekisui Trank Medical Technology Co.,Ltd.8F Pana Tower, No. 128 Zhichun Road, Haidian District, Beijing, The People’sRepublic of China 10086Tel: (86)10-62632947Fax: (86)10-62636647Main Activities: Manufacture, sales and marketing of medical equipmentPaid-in Capital: US $6,100,000Equity Ownership: 55%
Sekisui Nanya (Hong Kong) Ltd.7/F, Citicorp Center, 18 Whitfield Road, Causeway Bay, Hong KongTel: 2887-5030Fax: 2887-5030
*Consolidated subsidiary
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Corporate Data
Sekisui Chemical Co., Ltd.
Head Office: 4-4, Nishitenma 2-chome, Kita-ku, Osaka 530-8565Tel: (06) 6365-4122 Fax: (06) 6365-4370
Tokyo Head Office: 3-17, Toranomon 2-chome, Minato-ku, Tokyo 105-8450Tel: (03) 5521-0521 Fax: (03) 5521-0519
Founded: March 3, 1947
Paid-in Capital: ¥100.002375657 billion
Major Shareholders: Name of shareholder State of investments The Company’s investments in these companies
Number of Shares Held Percentage of Number of Shares Held Percentage of (Thousands) Ownership Voting (%) (Thousands) Ownership Voting (%)
Japan Trustee Services Bank, Ltd. (Trust Account) 51,675 9.68 — —The Master Trust Bank of Japan, Ltd. (Trust Account) 46,041 8.63 — —Asahi Kasei Corporation 31,039 5.82 3,846 0.28The Dai-ichi Mutual Life Insurance Company 26,181 4.91 — —Sekisui House, Ltd. 17,592 3.30 152,018 22.00The Tokio Marine and Fire Insurance Co., Ltd. 9,160 1.72 — —Resona Bank, Ltd. 13,828 2.59 — —State Street Bank and Trust Company 9,127 1.71 — —Employees Stock Ownership Plan 8,683 1.63 — —Morgan Grenfell and Co., Ltd. 600 8,080 1.51 — —
Notes: 1. The shares held by Japan Trustee Services Bank, Ltd. (Trust Account) and The Master Trust Bank of Japan, Ltd. (Trust Account) are held
on trust for investors, including shares in securities investment trusts.2. The Company owns 2.685 million common stock shares (ownership voting of 0.01%) in Resona Holdings Inc., a holding company of
Resona Bank, Ltd.3. On April 1, 2004, the Company sold a portion of its Asahi Kasei Corporation shares and, as a result, its remaining shareholding totaled
1.846 million (ownership voting of 0.13%).
Breakdown of Shareholders:
(As of March 31, 2004)
Authorized: 1,187,540,000 shares
Issued: 539,507,285 shares
Listings: Common stock is listed on the Tokyo stockexchange and Osaka securities exchange.
Number of Shareholders: 34,166
Transfer Agent: UFJ Trust Bank Limited Osaka Branch Corporate Agency Department 6-3, Fushimi-cho 3-chome, Chuo-ku, Osaka 541-8502
Treasury Stock3,260,106 shares (0.61%)
Securities Companies3,148,204 shares (0.58%)
Financial Institutions249,203,924 shares (46.19%)
Foreign Investors113,014,322 shares (20.95%)
Other Corporations79,967,210 shares (14.82%)
Individuals and Other90,913,519 shares (16.85%)
Total539,507,285 shares
Sekisui Chem
ical Co., Ltd. A
nnual Report 2004
For further information, –– please contact: Sekisui Chemical Co., Ltd. Investor relations, Corporate Communication Department 3-17, Toranomon, 2-chome, Minato-ku, Tokyo 105-8450, Japan http://www.sekisui.co.jp Tel: 03(5521)0524 Fax: 03(5521)0511
This annual report was printed with vegetable oil-based soy ink on recycled paper, and using a waterless printing method.
