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Sanwa Holdings CorporationPublic Relations SectionNishi-Shinjuku 2-1-1, Shinjuku-ku,Tokyo 163-0478, JapanTel : +81-3-3346-3331Fax : +81-3-3346-3177http://www.sanwa-hldgs.co.jpE-mail: [email protected]
Printed in Japan
AnnuAl RepoRt 2012
SAnWA HolDInGS CoRpoRAtIon
For the year ended March 31, 2012
Delivering Value and Results
An
nu
Al R
epoRt 2012
SAnW
A Ho
lDIn
GS Co
Rpo
RAtIo
n
2 Our Group
4 Consolidated Financial Highlights
6 To Our Shareholders
9 New Three-Year Plan
13 Business Overview
14 Japan
16 North America
18 Europe
20 Asia
21 CSR Activities
25 Corporate Governance
29 Financial Information
FoRWARD-lookInG StAteMentS:
This annual report includes forward-looking statements pertaining to expectations, plans, strategies, management goals, future performance, expenses, revenues, income and other forecasts formulated on past experiences. Forward-looking statements necessarily entail some degree of uncertainty, and the content conveyed in the results as well as underlying factors identified in the report may differ materially from actual results depending on changes in those factors.
P r o f i l e
C o n t e n t s
The Sanwa Group, headed by Sanwa Holdings Corporation, is a global
corporate group composed of 100 companies, including 81 subsidiaries
and 18 affiliated companies, as of March 31, 2012. The Group has
four major fields of business—commercial building materials, residential
housing materials, maintenance service and home improvement, and
other businesses—and provides a wide range of steel construction
materials for commercial and residential construction, including shutters,
doors and other units.
Under our New Three-year Plan (FY2010–2012), drawn up in April
2010, we aim to establish Sanwa as a “total steel construction material
corporation” and a leading global brand in the field of steel construction
materials. By strengthening market alliances across our four
key markets—Japan, the United States, Europe and Asia—
and venturing into new markets, such as the environmental
field, we intend to capture new market opportunities
for sustained growth.
C o r p o r a t e D a t a
HEAD OFFICE:
ESTABLISHED:
CAPITAL (PAID-IN):
EMPLOYEES:
STOCK LISTINGS:
TRANSFER AGENT:
COMMON STOCK:
Shinjuku Mitsui Building, 52F
Nishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo, 163-0478, Japan
Telephone: +81-3-3346-3019
Facsimile: +81-3-3346-3177
April 10, 1956
¥38,413 million
Consolidated: 8,521
Tokyo Stock Exchange
Mitsubishi UFJ Trust and Banking Corporation
Corporate Agency Department
Higashisuna 7-10-11 Koto-ku,
Tokyo, 137-8081, Japan
Authorized: 550,000,000 shares
Issued: 257,920,497 shares
Number of shareholders: 11,851
1,000
800
600
400
200
0
(Thousands of shares)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
(Yen) (Yen)Nikkei Stock Average
25,000
20,000
15,000
10,000
5,000
0
Apr. ’06 Jan. ’07 Jan. ’08 Jan. ’09 Jan. ’10 Jan. ’12Jan. ’11
Apr. ’06 Jan. ’07 Jan. ’08 Jan. ’09 Jan. ’10 Jan. ’12Jan. ’11
Monthly stock price range
Monthly trading volume
MONTHLY STOCK DATA:
PRINCIPAL SHAREHOLDERS:Percentage of voting rights (%)
Northern Trust Co. (AVFC) Sub Account American Clients 8.62Japan Trustee Services Bank, Ltd. (Trust Account) 6.65The Master Trust Bank of Japan, Ltd. (Trust Account) 5.64Sumitomo Mitsui Banking Corporation 4.70Japan Trustee Services Bank, Ltd. (Trust Account 9) 4.62The Dai-ichi Life Insurance Company, Limited 3.37Nippon Life Insurance Company 3.29Aioi Nissay Dowa Insurance Co., Ltd. 3.21Nisshin Steel Co., Ltd. 2.89Northern Trust Co. AVFC Re U.S. Tax Exempted Pension Funds 2.82
TREND OF STOCK PRICE:High Low
April 1, 2004–March 31, 2005 ¥618 ¥497April 1, 2005–March 31, 2006 ¥813 ¥559April 1, 2006–March 31, 2007 ¥800 ¥582April 1, 2007–March 31, 2008 ¥763 ¥396April 1, 2008–March 31, 2009 ¥462 ¥223April 1, 2009–March 31, 2010 ¥357 ¥218April 1, 2010–March 31, 2011 ¥367 ¥215April 1, 2011–March 31, 2012 ¥333 ¥222
As of March 31, 2012
57
2010
1
1To develop a global strategy for creation of corporate value,
and establish a firm position in the “Movable Building Materials” market in Japan, the U.S., Europe and Asia (China).
2To launch into new markets related to environment, anti-burglary and welfare.
3To establish a management culture directly related to creation of corporate value, execute the PDCA cycle strategically and ensure a healthy and transparent group.
Our Mission
The Sanwa Group is committed to offering products and services that provide safety, security and convenience to
further contribute to the prosperity of society.
Our Values
To deliver products and services to satisfy all customers.
To become a true global player and be highly valued in each market of the world.
To bring together the creativity of each individual in a team environment for the enhancement of corporate value.
G u i d i n g P r i n c i p l e s
Convenience
Safety Security
S A n w A ’ S V i S i o n
2
o u r G r o u p
Established in 1963, Showa Front
was a pioneer in the store façade
business. It has built a reputation
for advanced technology and
an extensive product lineup. It
remains firmly committed to
reliable technology and safety in
façade construction. (A member of
the Sanwa Group since 1984).
With a history dating back almost
100 years, Sanwa Tajima has used
its metal processing expertise
as the basis for a wide-ranging
involvement in the stainless steel
business. It manufactures and
sells metal products, especially
stainless steel products, including
curtain walls and stainless steel
façades. (A member of the Sanwa
Group since 2000)
Founded in 1957, this specialist
partition manufacturer offers an
extensive product range, including
toilet stalls, aluminum partitions
and clean rooms. In October
2011, it became a specialist
manufacturing subsidiary after its
sales organization was transferred
to Sanwa Shutter Corporation.
(A member of the Sanwa Group
since 2003)
Showa Kensan has manufactured
Million-brand automatic doors
since 1967. (A member of the
Sanwa Group since 1995)
This company was established
in 1963 as a specialist supplier
of stainless steel fittings and is
the leading supplier of mailboxes
for apartment complexes. It
designs and sells mailboxes,
bulletin boards and other items.
(A member of the Sanwa Group
since 2005)
Showa Front Co., Ltd. Sanwa Tajima Corporation Venix Co., Ltd. Showa Kensan Tajima Metalwork Co., Ltd.
Sanwa Shutter Corporation has specialized in the production and sales of shutters, doors and other construction materials since the transition to a structure based on a group holding company, Sanwa Holdings Corporation, in October 2007. As the core company in the Sanwa Group, Sanwa Shutter Corporation is working to maximize the potential of its products, enhance its ability to offer solutions, improve customer satisfaction, and enhance synergies with overseas group companies, while also developing global activities and new business areas and adapting to market changes.
Sanwa Shutter Corporation
Japan
Vina-Sanwa
3
Established in 1921 and with the Sanwa Group since 1996, this company pioneered overhead doors and electric operators and remains the leading name in the American overhead door market. It has five divisions: Access Systems Division (Overhead Door, Wayne-Dalton), Genie, Creative Door Services, Horton Automatics and TODCO.
Overhead Door CorporationWayne-DaltonIn December 2009, Overhead Door Corporation acquired the
U.S., Canadian and European door operations of this leading
U.S. door company. It produces and sells Wayne Dalton-brand
garage doors, commercial doors and other products as part of
the Access Systems Division (ASD).
Creative Door ServicesFounded in 1969 and headquartered in Alberta, Canada. It has
built an excellent local reputation through community-based
business activities including supply and installation of residential
and commercial doors and related products, and maintenance
services. (With Sanwa Group since December 2011)
GenieA leader in America since 1923, Genie supplies residential,
commercial and industrial doors, Genie-brand operators and
other products as a division of Overhead Door Corporation.
Horton Automatics Established in 1960, Horton Automatics was the first to
manufacture automatic doors in the United States. It is fully
involved in the design, manufacture and sales of automatic doors
as a division of the Overhead Door Corporation.
TODCOEstablished in 1957, TODCO has become a leading global brand
in the area of overhead doors and truck and trailer shutters. It
manufactures and sells vehicle doors and other products as a
division of the Overhead Door Corporation.
Founded in Germany in 1955, Novoferm is today one of Europe’s leading suppliers of doors, including garage doors and industrial doors, and is active throughout Europe, mainly in Germany, and also in South Korea. (A member of the Sanwa Group since 2003)
Novoferm
Shanghai Baosteel-Sanwa Door Co., Ltd. (China) This company was established in 2006 as a joint venture with
Baosteel Development Co., Ltd., a wholly owned subsidiary
of Baosteel Group Corporation of China. It manufactures and
sells shutters, overhead sliders, high-speed sheet shutters and
steel doors.
Novoferm Shanghai Co., Ltd. (China) Established in 2005 as a subsidiary of Novoferm, a Sanwa
Group company in Europe, Novoferm Shanghai is now a wholly
owned subsidiary of Sanwa Holdings. It manufactures and sells
steel doors.
Sanwa Shutter H.K. Ltd. (Hong Kong)Established in 1986, this company manufactures and sells
shutters, overhead sliders, high-speed sheet shutters and
steel doors.
An-Ho Metal Industrial Co., Ltd. (Taiwan) This company was established in Taipei in 1988. It
manufactures and sells steel doors, shutters, overhead sliders
and high-speed sheet shutters.
Vina-Sanwa Company Liability Ltd. (Vietnam) This company was established in Hanoi in 2008 as a joint
venture with Vinaconex Corporation, a Vietnamese construction
and trading company. It manufactures and sells shutters,
overhead sliders, high-speed sheet shutters and steel doors.
North America
Europe Asia
4
C o n s o l i d a t e d F i n a n c i a l H i g h l i g h t s
Note 1: U.S.doller amounts represent arithmetical translations of the Japanese yen at the approximate exchange rate on March 31, 2012 of ¥82 = US$1. Note 2: Liquidity = Cash and cash equivalents, Short-term investments and Notes and accounts receivables, trade.Note 3: Debt-equity ratio = Interest-bearing debt/Total shareholders’ equity.Note 4: Fiscal years are from April 1 through March 31. Thus, FY2011 refers to the year ended March 31, 2012.
Millions of yenThousands ofU.S. dollars
Fiscal Year FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2011For the Years ended March 31 2008 2009 2010 2011 2012 2012
For the years:
Net sales ¥323,445 ¥272,970 ¥232,029 ¥237,295 ¥248,214 $3,027,000
Cost of sales 242,712 205,426 173,108 179,400 186,684 2,276,634
Gross profit 80,733 67,544 58,921 57,895 61,530 750,366
Selling, general and administrative expenses 64,846 59,474 53,297 53,333 52,675 642,378
Operating income 15,887 8,070 5,624 4,562 8,855 107,988
Income (loss) before income taxes and minority interests
12,959 6,045 (270) (1,000) 6,826 83,244
Income taxes 4,732 3,733 458 1,468 3,529 43,037
Net income (loss) 8,227 2,312 (725) (2,443) 3,297 40,207
Comprehensive income (loss) — — — (7,898) 1,389 16,939
Depreciation and amortization 6,346 8,306 4,824 6,578 5,605 68,354
Capital expenditure 6,857 6,508 3,895 3,495 2,897 35,329
Operating income on sales (%) 4.9 3.0 2.4 1.9 3.6
Net income (loss) before income taxes and minority interests on sales (%)
4.0 2.2 (0.1) (0.4) 2.8
Return on equity (%) 5.5 1.9 — — 3.8
Net income (loss) per share (yen and U.S. dollars) ¥ 33.45 ¥ 9.60 ¥ (3.02) ¥ (10.17) ¥ 13.72 $ 0.17
Dividends per share (yen and U.S. dollars) ¥ 13.00 ¥ 10.00 ¥ 5.00 ¥8.00 ¥ 8.00 $ 0.10
Price-earnings ratio (times) 12.9 28.8 — — 23.5
Return on assets (%) 2.6 0.9 — — 1.5
at the year-end:
Total assets ¥310,957 ¥231,054 ¥246,599 ¥218,933 ¥226,579 $2,763,158
Long-term debt 37,669 38,767 26,763 49,790 48,651 593,305
Total net assets 149,330 95,365 96,110 86,021 85,522 1,042,951
Stock price (yen) 433 276 312 280 323
Aggregate market value 111,680 71,186 80,471 72,217 83,308 1,015,951
Interest-bearing debt 70,775 54,483 74,628 59,892 61,607 751,305
Liquidity (Note 2) 104,283 87,400 92,986 75,668 80,227 978,378
Debt-equity ratio (times) (Note 3) 0.5 0.6 0.8 0.7 0.7
Sanwa Holdings Corporat ion and Subsidiar ies
’11’10’09’08’07FY
323,445
272,970
232,029248,214237,295
’11’10’09’08’07FY
15,887
8,070
5,624
8,855
4,5623.02.4
1.9
3.6
4.9
’11’10’09’08’07FY
3,297
8,227
2,312
-725
-2,443
9.60
-3.02
-10.17
13.72
33.45
’11’10’09’08’07FY
5,453
17,870
19,383
14,312
3,717
1.9
-0.8
-2.7
3.8
5.5
’11’10’09’08’07FY ’11’10’09’08’07FY
8.08.0
5.0
13.0
10.0
5
In addition to the return to a positive net income result, net assets were reduced because of a reduction in foreign currency translation adjustments. As a result, the return on equity was 3.8%.
As initially planned, the final dividend for the current year was set at ¥4.0 per share. Together with the interim dividend of ¥4.0, this brought the total dividend for the year to ¥8.0.
Return on Equity(%)
Dividends Per Share(Yen)
Net Sales(Millions of yen)
Operating Income / Operating Income on Sales(Millions of yen / %)
Net Income / Net Income Per Share(Millions of yen / Yen)
Cash Flows from Operating Activities(Millions of yen)
Post-earthquake reconstruction demand underpinned firm net sales in Japan. The strong yen eroded revenues from group companies in the United States, despite year-on-year growth on a local currency basis. There was substantial growth in the sales of European group companies. These factors were reflected in a 4.6% increase in net sales.
In addition to a healthy increase in net sales, income also benefited from restructuring and cost-cutting initiatives by group companies in Japan and overseas. As a result, operating income was 94.1% higher year on year.
There was a ¥368 million reversal of deferred tax assets due to a change in the tax system. As a result, net income did not reach the forecast level. However, it moved back into positive figures.
Net cash provided by operating activities increased, mainly because the results included net income before income taxes and minority interests.
0
400
600
800
1,000
1,200
1,400
1,600
200
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012Forecast
(Thousand units)
EuropeUSAJapan
6
T o o u r S h a r e h o l d e r s
President CEo & Coo Toshitaka Takayama
Business Environment and Financial Results Initially affected by a temporary recession triggered by the
Great East Japan Earthquake, the Japanese economy
subsequently embarked on gradual recovery in fiscal 2011 (the
year ended March 31, 2012). However, the outlook remained
uncertain because of factors that included the time required to
deal with the after effects of the nuclear plant accident and
implement reconstruction programs in the disaster area, the
persistently high level of the yen and the crude oil price, the
European debt crisis and the floods in Thailand. Overseas,
gradual recovery was seen some areas of the U.S. economy,
such as consumer spending and employment, but the housing
market remained stagnant. While there were signs of
improvement in the economic performance of major European
countries, Europe as a whole continued to be affected by a
recessionary trend because of a rekindling of the Greek crisis
and other problems.
This was the business environment in which the Sanwa Group
started fiscal 2011. Our goal for the year was to shift to a more
proactive strategy, and our first priority was to expand both
domestic and overseas orders. We also restructured our business
to support the expansion of our product range. At the same time,
the entire Sanwa Group focused on restructuring and total cost
“The year ended March 31, 2012 opened with the Japanese economy struggling with the massive impact of the Great East Japan Earthquake. However, the economy recovered steadily thanks to concerted reconstruction efforts by the government, private sector and individual volunteers. The Sanwa Group achieved positive income results through the timely implementation of a range of initiatives designed to drive the recovery of our financial performance and consolidate our foundations for the achievement of the goals set down in the new Three-year Plan.”
reduction (TCR) initiatives. As a result of these efforts, group
companies in Japan increased their revenues and income, and
while the net sales of companies in the United States were lower
because of the high yen, their income was higher, and both
revenues and income increased on a local currency basis. There
were also major increases in revenues and income in Europe.
These factors were reflected in our consolidated financial
results for the year ended March 2012. Consolidated net sales
Building on Our Strengths to Become a Global Category Leader
Business Environment: Housing Starts
Making Our Own Path in the World
7
were 4.6% higher year on year at ¥248,214 million, while
operating income increased by 94.1% over the previous year’s
level to ¥8,855 million. Net income moved back into positive
figures with a result of ¥3,297 million.
Progress under the New Three-year PlanWe attribute this improvement in our financial results to the
timely group-wide implementation of measures based on the
New Three-Year Plan, of which fiscal 2011 was the second
year. Within Japan, we implemented business restructuring
measures, including the integration of partition and automatic
door sales under Sanwa Shutter Corporation. We also took
steps to enhance our integrated strengths as a group. For
example, we began to supply products on an OEM basis to
LIXIL Corporation, a member of the LIXIL Group. Structural
reforms, including an in-depth review of cost structures and the
optimization of management resource allocations, also yielded
significant benefits.
In the United States, Overhead Door Corporation (ODC), a
member of the Sanwa Group, continued to realize synergies
through integration with Wayne-Dalton, which it acquired in
December 2009. This was reflected in improved profitability. In
December 2011, we acquired Creative Door Services Ltd. (CDS),
a major distributor of shutters and doors based in western
Canada, and began to strengthen its door service business.
There was also steady growth in the door operator business of
Genie, a subsidiary of ODC.
Our European group company Novoferm began to reap
benefits from the restructuring of its sales organization in
Germany. In addition to sustained growth in sales, especially in
Germany, there was also an improvement in the profitability of its
door and door frame business. The company also achieved
major cost savings through the diversification of raw material
procurement and other restructuring measures.
Our major group companies in Asia expanded and strength-
ened their marketing infrastructure in their respective countries.
Our group structure spans Japan, North America, Europe
and Asia. We achieved major benefits through group-wide efforts
to generate global synergies from this structure in the areas of
development, production, procurement and marketing.
Initiatives in the Final Year of the New Three-year PlanFiscal 2012 (the year ending March 2013) will be the concluding
year of the Sanwa Group’s long-term plan, 2010 Vision. Within
Japan, we will focus on the restructuring of the Group’s
businesses and the establishment of management infrastructure.
We will also strengthen the shutter and door business through
restructuring and the formation of OEM partnerships. In addition,
we will establish new business models based on the expansion
of our product range, while also working to increase orders and
improve profitability.
Overseas, we will establish the robust management
infrastructure needed for ODC’s future role as the number-one
door company in the United States. We will also strengthen the
door operator business, especially through the development of
new types. Another goal is to expand the scope of our activities
by moving into the service business. Our priorities in Europe are
400,000 35,000
350,000 30,000
300,000 25,000
250,000 20,000
200,000 15,000
150,000 10,000
100,000 5,000
50,000 0
0 -5,000FY2012Forecast
FY2011
NewThree-year Plan
FY2010FY2009FY2008
ThirdThree-year Plan
FY2007FY2006FY2005
SecondThree-year Plan
FY2004
Net Sales Income(Millions of yen) (Millions of yen)
Trend of Consolidated Results
■ Overseas Sales ■ Domestic Sales● Operating Income ● Current Income ● Net Income
8
to realize benefits from the restructuring of Novoferm, to
achieve further improvement in the profitability of the door-
frame segment, to strengthen our financial structure through
business expansion, and to improve productivity and
profitability through business restructuring and other initiatives
in the United Kingdom.
In Asia, we will further strengthen our business infrastructure
through direct investment in ASEAN countries and China.
In April 2012, the Sanwa Group implemented major
organizational changes to create the management structure
needed to drive the timely implementation of these initiatives.
Within Sanwa Holdings, we created the new positions of CEO
and COO to clarify the lines of management responsibility. I
was appointed to both positions. We also split our corporate
organization into management planning and business strategy
units and made other changes to support the proposal of
clearly defined business strategies, support globalization and
business development.
Sanwa Shutter Corporation also implemented organizational
reforms designed to strengthen its corporate functions,
restructure its business segments to support an expanding
product range, and reinforce its procurement systems.
Within Japan, we are already taking steps to strengthen our
marketing organization in the Tohoku region in readiness for the
expansion of post-earthquake reconstruction demand. Overseas,
Novoferm moved in April 2012 to strengthen its business base in
the United Kingdom by establishing a joint venture with a leading
garage door manufacturer and major garage door dealer in that
country. In United States, ODC acquired an automatic door
distributor in May 2012, further strengthening its automatic door
(Billions of yen)
FY 2010 FY 2011 FY 2012
Net sales ¥237.3 ¥248.2 ¥269.0
Operating income 4.6 8.9 13.5
Current income 4.0 8.2 13.2
Net income -2.4 3.3 7.5
Operating Results and Forecast
Net Sales by Geographic Sector
300
-50FY2012Forecast
FY2011FY2010FY2009
(Billions of yen)
50
0
100
150
200
250
servicing business in North America. In Asia, the Chinese steel
door manufacturer Novoferm Shanghai began to expand its
production capacity, which will increase by 30% over the present
level to 4,000 sets per month.
These dynamic initiatives are reflected in our consolidated
financial forecasts for the year ending March 2013. We expect
sales to increase by 8.4% year on year to ¥269,000 million,
operating income by 52.5% to ¥13,500 million, and net income
by 127.5% to ¥7,500 million.
Our forecasts for the coming year are based on exchanges
of ¥80 to the U.S. dollar and ¥105 to the euro.
Shareholder DividendsThe Sanwa Group’s basic dividend policy calls for the
maintenance of a stable dividend payout ratio, and for the
linkage of dividends to financial performance. Our benchmark
dividend payout ratio is 30% of net income.
In accordance with our initial plans, we set the final dividend
for the year ended March 31, 2012 at ¥4.0 per share, bringing
the total dividend for the year to ¥8.0 per share. Based on our
forecasts for the year ending March 2013, we plan to increase
the annual dividend to ¥10.0, consisting of interim and final
payments of ¥5.0 each.
We look forward to the ongoing understanding support of
our shareholders.
Exchange rates FY 2009 FY 2010 FY 2011 FY 2012Forecast
Euro 130.56 115.09 111.42 105.00
U.S. dollar 93.72 87.32 79.63 80.00
■ Sanwa Shutter ■ Other Subsidaries■ ODC (USA) ■ Novoferm (EU) ■ Adjustment
9
Basic Direction
1Structural reform to be able to flexibly cope with any change in business environment,
where to expand group earning base by accomplishing various new business models
2 By utilizing the merit of overseas development, to show global synergy effect
through enhancement of coalitions, where to increase group value
3 To accelerate growing speed by aggressively going into
emerging markets and/or new business fields
4 Enhance corporate social responsibility
(Compliance, Risk management, Environment preservation and Social contribution)
Target Vision
Establish post-shutter business model, to become a total steel construction
material corporation as a globally growing business group.
1. Structural reform of domestic business aiming for establishment of post-shutter
business model
2. Synergy effect of business integration between oDC (USA) and wayne-Dalton
3. introduction of oDC’s new operator
4. Enhance profiitability by structural reform of nF (EU)
5. Expansion of Asian business basis centering on China
6. Enhancement of global synergy and activities to be built into daily operation
7. Expansion of environmental business
8. Enhancement of earning base through M&A
Strategic Subjects of New Three-year Plan
New Three —Year Plan (FY2010---2012) Strategic subjects
Focus on 2012A S c e n a r i o f o r G r o w t h
10
Sales Trend of Main Products in Japan
Sales Trend of Main Products of ODC
● Building & condominium doors ● Heavy-duty shutters● Lightweight shutters ● Maintenance & repair● Storefronts ● Stainless steel products● Partitions ● Window shutters
Total Cost Reduction by Sanwa Shutter
■ Structual reform■ Fixed cost reduction■ TCR
● Automatic doors (R-axis)● Overhead doors (L-axis)● Operator (L-axis)● Truck/trailer doors (R-axis)
P r o g r e s s u n d e r t h e n e w T h r e e - Y e a r P l a n
Recovery of Domestic Business
Restructuring and TCR Initiatives All group companies
in Japan worked to
reduce fixed costs while
also implementing total
cost reduction (TCR)
initiatives targeting
individual processes and
products. Restructuring
measures focused on
a number of areas, including management of staffing levels and
the executive organization. Other changes included a shift to
in-house design operations, a review of production sites and a
reassessment of unprofitable business areas. These measures
resulted in group-wide cost reductions of approximately ¥4,000
million in fiscal 2010 and ¥2,000 million in fiscal 2011. The target
for fiscal 2012, which will be the final year of the plan, is cost
savings of around ¥1,500 million.
Recovery in the Financial Performance of Sanwa Shutter Corporation In fiscal 2010, the financial performance of Sanwa Shutter
Corporation was adversely affected by a one-month business
suspension and a
substantial surcharge
resulting from a violation
of the Antimonopoly
Act. However, the
company’s performance
has since improved
rapidly because
of reconstruction
demand after the Great East Japan Earthquake, the recovery of
construction demand and other factors.
In fiscal 2011, Sanwa Shutter Corporation took steps
to strengthen the overall potential of its corporate group by
expanding its product range and integrating sales divisions for
the partition and automatic door segments. These changes
resulted in substantial improvements in earnings, including a
10.3% year on year increase in net sales and an 89.0% increase
in operating income.
Start of OEM Supply to LIXILSanwa Shutter Corporation has signed an OEM supply
agreement with LIXIL Corporation, a member of the LIXIL
Group. This agreement provides for the supply of some types
of lightweight shutters and doors to LIXIL, starting in March
2012. This arrangement will strengthen both companies’
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0FY2012Forecast
FY2011FY2010FY2009
(Millions of yen)
800
700
600
500
400
300
200
100
80
70
60
50
40
30
20
10
00FY2012Forecast
FY2011FY2010FY2009
(Millions of U.S. dollar) (Millions of U.S. dollar)
4,000
3,000
2,000
1,000
-1,000
0
FY2012Forecast
FY2011FY2010
(Millions of yen)
Manufacturing Line in Ashikaga Factory
An Aluminum Partition Product
11
Share of Residential Operator Market of ODC
Total Cost Reduction by Novoferm
business structures. It will allow LIXIL to reduce its production
costs through outsourcing, while Sanwa Shutter expects to
achieve productivity improvements by increasing the volume
of products sold. The two companies plan to discuss the
progressive expansion of this OEM arrangement to include
other products.
Acceleration of Global Business Activities
Synergies Achieved through Merger of ODC and Wayne-DaltonOur U.S. subsidiary ODC has successfully integrated its
operations with those of Wayne-Dalton, which it acquired
in 2009. Benefits targeted through this process include the
optimization of sales and manufacturing sites, improved
efficiency in purchasing and procurement, and the rationalization
of logistics. These
integration benefits
amounted to
approximately $15
million in fiscal 2010
and around $13 million
in fiscal 2011 and have
already exceeded the
target set down in the
New Three-year Plan, which called for cumulative gains of $20
million during the period covered by the plan.
Expansion of ODC’s Door Service BusinessODC’s long-term strategy calls for the expansion of its
installation and maintenance business. In January 2011, it
expanded into the door service business by acquiring Automatic
Door Enterprises (now Door Services Corporation). In December
2011, ODC acquired Creative Door Services (CDS), a door
service company that has established a strong business base
in western Canada. ODC plans to make CDS the hub for the
continuing expansion of its door service business in the United
States and Canada as part of a business model designed to
create direct links with end users through the integration of
product sales and installation with maintenance services. In
May 2012, ODC acquired the business operations of the U.S.
company Door Control, a supplier of automatic doors with
the aim of strengthening and expanding its automatic door
installation and servicing business.
40
30
20
10
0FY2012Forecast
FY2011FY2010FY2009
(%)
8,000
6,000
4,000
2,000
0FY2012Forecast
FY2011FY2010
(Thousands of euro)
Head Office of Wayne-Dalton
12
Theme (excerpt) FY2010FY2011
FY2012(Forecast)Result The 2Q
Forecast
• Standardize electric components
• Support for ordering intake about Japanese companies’ overseas projects
• Production and sales of group company products in each area
130 270 340 430
• Purchase operators and members made in China
• Group supply chain520 630 530 670
Total 650 900 870 1,100
* Synergy effects are included in Total Cost Reduction of each company
Restructuring and TCR Initiatives by NovofermIn September 2009, Novoferm, a European member of the
Sanwa Group, created a new sales organization by restructuring
its German sales organizations to create Novoferm Vertriebs
GmbH. Novoferm also improved the profitability of its door
frame business. Other initiatives targeted the rationalization
of logistics operations, the reduction of costs in the area of
industrial doors, and the consolidation of door production.
Benefits from these and other measures, including company-
wide TCR initiatives, amounted to €7.38 million in fiscal 2010
and €2.33 million in fiscal 2011.
Building a Stronger Business Structure in Asia The Sanwa Group is preparing for continuing success in the
period after the New Three-year Plan by strengthening and
expanding its business structures in China and other Asian
countries. The net sales of Shanghai Baosteel-Sanwa Door Co.,
Ltd. and Novoferm Shanghai in China, An-Ho Metal Industrial
Co., Ltd. in Taiwan and Vina-Sanwa in Vietnam have risen
steadily, reaching ¥2,300 million in fiscal 2009, ¥2,600 million
in fiscal 2010 and ¥3,000 million in fiscal 2011. The target for
fiscal 2012 is ¥3,600 million. We will continue to strengthen
our business structure in Asia, including the expansion of door
production capacity in China by over 30% in fiscal 2012.
Progress of Global SynergyNet Sales of Major Asian Subsidiaries
4,000
3,000
2,000
1,000
0FY2012Forecast
FY2011FY2010
(Millions of yen)
Global Synergies
Sanwa Group companies in various countries have sought to
maximize synergies through various strategies, including the
common use of parts, the global manufacturing of products,
joint procurement of parts and materials, and the development
of supply chains. Tangible benefits have also been achieved
through the introduction of Sanwa Shutter products into
Europe and the United States and the commencement of local
production in these markets. Benefits also accrued through the
global deployment of the Wayne-Dalton brand, and through
the integration of marketing and development among group
companies in Japan, North America and Europe. In 2012, the
Wayne-Dalton 9600 Series garage doors with urethane filler
panels were redesigned
for the Japanese market
and went on sale in
Japan as the Candy II.
This excellent product
was the result of global
synergies realized
between Japan and the
United States. Candy II
(Millions of yen)
13
Net Sales(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)
(Thousand of U.S. dollars)
(Thousand of U.S. dollars)
(Thousand of U.S. dollars)
(Thousand of U.S. dollars)
Net Sales
Net Sales
Operating Income
Operating Income
Operating Income
■ Segment figures (left scale) ■ Figures of ODC (right scale)
■ Segment figures (left scale) ■ Figures of NF (right scale)
B u s i n e s s o v e r v i e w
A t a G l a n c e
Net sales were 8.9% higher year on year at ¥146,450 million. This reflects reconstruction demand after the Great East Japan Earthquake and a recovery trend in construction demand, which resulted in increased revenues from lightweight and heavy-duty shutters, doors for commercial buildings and condominiums and maintenance services. Earnings benefited not only from revenue growth, but also from ongoing cost-cutting efforts and the expansion of our product range, and segment income increased by 48.6% to ¥6,138 million.
Sales of garage doors, industrial doors and hinged doors remained strong, reflecting a recovery in the housing and construction markets. An increase in sales volumes following the restructuring of the sales organization in Germany also contributed, and net sales increased by 10.5% in local currency terms. In yen terms there was a 6.9% increase to ¥37,794 million. Earnings benefited from revenue growth, the restructuring of the sales organization and cost savings, with the result that segment income was 74.1% higher at ¥1,150 million.
The door businesses generally performed well, especially for commercial facilities, despite stagnation in the housing market. While segment net sales were 4.0% higher in dollar terms, the yen result was 5.2% lower year on year at ¥63,881 million because of the strong yen. Earnings were affected by rising material and transportation costs and other factors, but in-depth cost management helped to lift segment income by 9.9% over the previous year’s result to ¥2,865 million.
Japan
North America
Europe
AsiaIn China, Shanghai Baosteel-Sanwa achieved year on year growth in orders, sales and operating income. Novoferm Shanghai also increased its orders and sales, but income decreased because of cost increases resulting mainly from the expansion of production lines. In Vietnam, Vina-Sanwa’s performance was affected by monetary tightening and other factors, and both orders and sales were only marginally higher year on year. The Taiwanese company An-Ho Metal Industrial was able to increase its orders, but sales stagnated because of slow progress on projects, resulting in part from a tax on condominiums.
25,000
50,000
75,000
0
300,000
600,000
900,000
0FY 20092008 2010 2011 20092008 2010 2011
2,000
1,000
4,000
0
20,000
10,000
3,000 30,000
40,000
0FY
20,000
10,000
30,000
50,000
40,000
0
300,000
200,000
100,000
400,000
500,000
0FY 20092008 2010 2011
800
-400
1,200
0
4,000
-4,000
400
8,000
12,000
0
FY 20092008 2010 2011
20092008
50,000
100,000
150,000
200,000
02010 2011FY
3,000
6,000
9,000
0FY 20092008 2010 2011
14
B u s i n e s s o v e r v i e w
QUICK SAVER S13This is a high-speed sheet shutter used as the entrance of a factory or warehouse, or as a partition in a building. By opening and closing around 10–20 times faster than general steel shutters, the outflow of air from the opening due to temperature differences, wind, etc. is minimized.
Japan
All Sanwa Group companies in Japan worked to expand
orders and product ranges and improve profitability. These
efforts yielded substantial improvements in both revenues
and income, returning our bottom line to the black. We
also made steady progress toward the achievement of our
targets under the 2010 Vision through the reinforcement of
our business base.
Overview of Business Operations and Financial Results for FY2011The Sanwa Group in Japan, which consists of Sanwa Shutter
Corporation and its domestic subsidiaries, supplies construction
materials for commercial buildings and housing and is also
involved in the maintenance and renovation business. In the
shutter category, the Group manufactures and sells custom-made
and standard products, including heavy-duty and lightweight
shutters and window shutters.
In fiscal 2011, which began a year after the Great East
Japan Earthquake, the Japanese economy began to stage a
gradual recovery from the temporary recession that began in the
Many initiatives at all levels resulted in substantial improvements in net sales and operating income.
MAIN PRODuCTS■ BUILDING & CONDOMINIUM DOOrS■ LIGHTWEIGHT SHUTTErS■ HEAVy-DUTy SHUTTErS■ STOrEFrONTS■ STAINLESS STEEL prODUCTS■ pArTITIONS■ WINDOW SHUTTErS■ OTHErS
COFFRET GARDENA greenery planting system for standalone garages is highly compatible with today’s green lifestyle. Building a unit-type planting system into the roof of a stand-alone garage can reduce the rise of interior heat in summer.
ECOLEDAA modern approach to storefront lighting incorporates refreshing LED spot illumination within the storefront window frames for a more attractive facade appearance. Glass panels, such as those fronting stores and other commercial establishments, can be used more effectively as advertising space with the added benefits of the energy-saving LEDs.
FY2011Total
¥146,450 million
immediate aftermath of the earthquake. However, the nuclear
plant accident continued to affect the economy, and progress
toward reconstruction in the areas affected by the earthquake was
also slow. In addition, there was no full-scale recovery in either
employment or capital investment. The Japanese economy also
faced downward external pressures, including an historically high
yen value and the impact of rising crude oil prices. Other negative
factors included the European debt crisis, economic slumps in
other countries and floods in Thailand.
In this environment, the first priority for the Sanwa Group
in Japan was to expand orders. Another was the expansion
of product ranges. We implemented business restructuring,
including the integration of the sales operations of domestic
subsidiaries, to strengthen collaboration among group
companies.
Sanwa Shutter Corporation, the core group company,
recorded substantial increases in revenues in all business
segments. There was an 11.4% year on year increase in sales
of lightweight shutters, in part because of post-earthquake
reconstruction and an increase in housing starts. There was
also a 17.2% increase in sales of heavy-duty shutters, mainly
Sales by product in Japan
27%
16%
16%8%
6%
18%
5%
4%
15
Sanwa Shutter Corporation President and CEo Kazuhiko Kinoshita
thanks to a recovery in capital investment. Sales of doors for
commercial buildings and condominiums were 8.2% higher,
reflecting a recovery in the construction of medical facilities and
condominiums. Post-earthquake reconstruction activity also
boosted revenues from maintenance services, which increased by
22.7%. Among Sanwa Group companies in Japan, Showa Front
benefited from a market recovery and saw a substantial increase
in sales. Strong trends in non-housing construction also helped
Okinawa Sanwa Shutter to achieve sales growth.
Segment net sales increased by 8.9% year on year to
¥146,450 million, and segment income by 48.6% to ¥6,138
million. This improvement reflects continuous cost-cutting through
restructuring and TCR activities, as well as the expansion of
product ranges.
Business Environment Trends Economic slowdowns in other countries could create downside
risks for the Japanese economy. However, both capital
investment and new housing starts are expected to remain on
a gradual growth trend, reflecting reconstruction activity after
the Great East Japan Earthquake, as well as the recovery in the
housing market and non-housing construction investment.
The priorities for Sanwa Group companies in Japan in this
environment are business restructuring, the reinforcement of the
business base, the revitalization of the shutter and door business
through restructuring and the establishment of OEM relationships,
and the establishment of new business models through the
expansion of product ranges. Initiatives in these areas will be
paralleled by intensive TCR activities.
Sanwa Shutter Corporation is predicting increased revenues
from lightweight shutters in step with the recovery of housing
construction. Orders for heavy-duty shutters are also on an
upward trend, reflecting a recovery in construction demand.
In addition, we anticipate substantial growth in revenues from
commercial building and condominium doors, especially products
for the condominium market and medical and welfare facilities.
Another area in which growth is predicted is maintenance
services. Although earthquake-related demand has peaked, we
expect that our efforts to encourage business corporations to
carry out inspections will result in increased revenues.
A recovery in investment in industrial facilities is helping
subsidiaries in Japan to achieve sustained revenue growth in such
areas as the store front business, partitions and toilet booths.
In addition to revenue growth, the overall performance
of businesses in Japan is also expected to benefit from cost
reductions, falling prices for materials and other factors. On this
basis, we expect both revenues and income to rise.
Initiatives and Strategies Fiscal 2012 will be the final year of the New Three-year Plan
(FY2010-2012), and our total resources will be focused on the
achievement of our targets under that plan. We will increase our
commitment to structural changes targeted toward the creation
of business models that will reduce the reliance of our domestic
businesses on shutters.
In October 2011, the sales operations of the partition supplier
Venix and the automatic door supplier Showa Kensan were
absorbed by Sanwa Shutter Corporation. This change allowed us
to achieve group-wide optimization by combining the nationwide
sales network, engineering capabilities and brand strength of
Sanwa Shutter Corporation with the specialized expertise of Venix
and Showa Kensan.
In the maintenance business, we have expanded our list of
centrally managed customers by integrating our regional and
corporate sales organizations. Another factor that has contributed
to sales growth is the promotion of package plans that include
inspections, replacement proposals, battery replacement and
simplified inspections.
Since March 2012, Sanwa Shutter Corporation has been
supplying some types of lightweight shutters and doors to LIXIL
under an OEM agreement. We will progressively start supplying
other products on an OEM basis.
Finally, we are developing new products based on emerging
technologies, such as LED signage and shutter gates with built-in
EV charging.
Since its founding more than half-a-
century ago, Sanwa Shutter Corporation
has provided its customers with safety,
security and convenience in the form of
“movable building materials,” such as
shutters and doors. We are continually
working to improve customer satisfaction
through our full-time service systems and
repair and maintenance services. Last
year, we fulfilled our mission by providing
active support, including emergency
repair services, for reconstruction efforts
in areas affected by the Great East Japan
Earthquake. Sanwa Shutter remains firmly
committed to quality in manufacturing and
service. By maximizing synergies among
our group companies, we aim to achieve
our goal of enhancing our products and
services across the entire Sanwa Group.
2009 2010 2011FY
771,
881
802,
889
472,
885
38,8
67
32,3
36
6,83
3
FY 2009 2010 2011
16
Net Sales(Thousand of U.S. dollars)
Operating Income(Thousand of U.S. dollars)
* ODC’s fiscal year is from Jan. 1 to Dec. 31
Performance of Overhead Door Corporation (ODC)
B u s i n e s s o v e r v i e w
North AmericaIn almost all business categories, sales and profit showed constant growth reflect our active approach.
Despite a slump in the housing market, Overhead Door
Corporation (ODC) achieved a substantial increase in
revenues from its automatic door business thanks to
the acquisition of a door service company. Its net sales
increased by 4.0% year on year on a local currency basis to
over $800 million.
Business Overview and Results for FY2011The Texas-based ODC Group is the core of the Sanwa Group’s
business activities in the United States. ODC manufactures
products specified for both commercial and residential use,
including overhead doors for garages and other facilities, as well
as Genie door operators, Horton Automatics automatic doors,
and TODCO truck and trailer doors. ODC has further consolidated
its presence in the North American market by acquiring the
door manufacturer Wayne-Dalton in December 2009, and the
door maintenance service company Creative Door Services in
December 2011.
In the year under review, the U.S. economy benefited from
gradual recoveries in consumer spending and employment,
but the slump in the housing market continued. A decline in the
Sanwa Group’s sales of garage doors as a result of this downturn
was offset by increased sales of commercial doors, resulting in a
marginal rise in revenues from the door business. The acquisition
of Automatic Door Enterprises, Inc. (ADE), now renamed Door
Services Corporation, further enhanced performance, resulting in a
massive 30.6% year on year increase in revenues. Revenues from
the truck and trailer door business were also higher, exceeding
the previous year’s level by 35.3%, thanks to an ongoing recovery
in the transportation sector. The door operator business benefited
from the introduction of new models, and revenues were 3.8%
higher. Segment net sales were 4.0% higher year on year in
local currency terms. However, the rising value of the yen meant
that the yen result was 5.2% lower year on year at ¥63,881
million. Despite negative factors, including increases in the costs
of materials and transportation, segment income increased by
9.9% to ¥2,865 million. Reasons for this growth included higher
MODEL 9600A Wayne-Dalton Model 9600 garage door offers the most options at affordable prices, adding style and curb appeal to any home. They are popular with homeowners for their insulating value, durability, gracious looks and safety design. This model is now exported to the Japanese market with some specification changes under the name Candy II.
WOMEN’S CHOICE AWARDOverhead Door is proud to receive the 2012 Women’s Choice Award for Garage Doors by WomenCertified®. Overhead Door joins an elite group of award recipients recognized as a brand of choice among women. WomenCertified, the voice of the female consumer, honors brands with the Women’s Choice Award seal, which recognizes brands that excel from a woman’s perspective.
GCX (LIGHT DUTy)The next generation of Genie garage door openers offers more power, features and reliability. Genie is expanding its product line of heavy, standard, medium and light-duty models, and these products earn a high reputation in both the industrial and residential segments for their high quality, reliability, and competitive pricing.
17
overhead Door Corporation CEo Dennis Stone
As we emerge from one of the worst
construction markets in more than 50
years, Overhead Door is pleased with
its position. We have maintained our
investments in new products, reduced our
manufacturing costs, and grown both our
sales and profits despite rising pressure on
pricing and service levels.
Today, we are well positioned
strategically and expanding our product
offering, entering new market segments,
and growing our international presence.
These efforts offer Overhead Door
significant sources of future revenue
growth and increased profitability.
Additionally, our substantial resource
and economic commitment to deploying
new systems technology will increase our
organizational effectiveness and ability to
lead the Americas in meeting customer
needs for years to come.
With the support of our parent company,
Sanwa Holdings, we see an attractive and
exciting future for Overhead Door.
revenues resulting from increased sales volumes, as well as
intensive efforts to reduce fixed costs and other cost factors.
Business Environment TrendsWhile a rapid recovery in the U.S. housing market is unlikely, a
gradual recovery is in progress. Consumer spending is expected
to recover, and capital investment trends are also tending to
improve. We therefore expect the overall growth trend to continue.
ODC will continue to work in this environment to build a
business base appropriate for its status as the leading company
in North America. Its priorities are to accelerate the resurgence
of its door operator business, primarily through the development
of new models, and to expand the scope of its activities through
diversification into the service business.
In Fiscal 2012, a gradual recovery in the housing market is
expected to drive revenue growth in the garage door and door
operator segments. We also expect higher revenues from the
commercial door business, reflecting firm capital investment
trends and a recovery in the non-housing construction market.
The recently acquired automatic door service business is also
expected to contribute to revenue growth. In addition, we are
predicting a continuing recovery and substantial revenue growth in
the truck and trailer door segment.
Initiatives and StrategiesProgress on the merger process with Wayne-Dalton has been
excellent, and the cumulative target of $20 million in integration
benefits set out in the New Three-year plan was achieved
ahead of schedule. We are also implementing a plan to optimize
production sites. In fiscal 2011, top priority was given to the
integration of factory systems (ERP) to strengthen production
and administrative capabilities. In fiscal 2012, we will continue
our efforts to optimize production sites and improve procurement
efficiency through integration and restructuring.
In the Genie door operator segment, sales of residential
door operators remained slow in volume terms because of the
slow pace of recovery in the housing market. However, market
penetration by new models sold through dealers, mass-sales
stores and other outlets was encouraging, and our share of the
residential door opener market reached 31% in fiscal 2011. Our
target for fiscal 2012 is to lift this market share to 38% through
aggressive marketing activities, including presentations throughout
the United States, a stand at the IDA Expo, direct marketing via
the Internet, and the Genie “Open Sesame” Video Contest. We
also plan to commence exports of new-model garage doors to
Japan during 2012.
We also achieved an 18.5% year on year increase in sales
of commercial door openers by introducing new models, and
through initiatives to strengthen our marketing activities, including
the expansion of sales channels. In April 2012, we relocated
part of our commercial door opener production operations to
Matamoros, Mexico to reduce production costs.
In automatic door segment, we established a significant
presence in the maintenance and service business by acquiring
an automatic door distributor in the United States in January
2011. This was followed in December 2011 by the acquisition
of Creative Door Services, Ltd. (CDS), which has build a solid
business base in western Canada.
CDS will further strengthen our door service business in
North America as our core company in the U.S. and Canadian
door service market. It will also develop a business model
based on direct interaction with end users by offering integrated
services, from sales and installation through the maintenance
and service. From 2013 to 2015, we will extend the CDS
business model to 20 of the 60 existing ODC sales centers that
have service capabilities. In May 2012, we further expanded
this business by acquiring Door Control Inc., an automatic door
distributor in the United States.
FY
340,
101
307,
351
337,
892
2009 2010 2011 FY
5,30
9
10,7
10
6,09
9
2009 2010 2011
18
In addition to firm trends in the door business, the European
company Novoferm (NF) also benefited from the restructuring
of its sales organization and achieved significant growth in
both revenues and sales. On a local currency basis, its net
sales increased by 10.7% to €340.1 million, while its income
was a 101.7% higher at €10.7 million.
Business Overview and Results for FY2011Based in Germany, NF is Europe’s second-ranked door
manufacturer and the hub of the Sanwa Group’s business
operations in Europe. In addition to Germany, it has manufacturing
sites in France, the Netherlands, Italy, U.K., Poland, Spain and
South Korea. It manufactures and sells doors, door frames, garage
doors and industrial doors, throughout Europe and in South Korea.
Despite recovery trends in the housing market and capital
investment until mid-2011, especially in major European
countries, the European economy continued to stagnate in fiscal
2011 due to the rekindling of the Greek crisis. The European
Sanwa Group company NF responded to this environment and
price hikes for materials such as steels, by closely managing
sales prices and by reducing costs through the procurement of
parts and components from China. It also worked to increase
orders and sales volumes by introducing new products and
reorganizing sales forces in Germany.
These efforts, together with a recovery in the housing
market, sharply boosted revenues in the garage door business
and residential and commercial hinged door business, while
a recovery in the construction market brought a double-digit
increase in revenues from the industrial door business. The
overall result was a significant 10.7% increase in revenues.
These results offset the impact of the high yen, and in yen
terms segment net sales were 6.9% higher at ¥37,794 million.
Segment income increased by 74.1% to ¥1,150 million. This
result reflects the reorganization of the sales forces and cost
reduction measures.
Net Sales(Thousand of Euro)
Operating Income(Thousand of Euro)
* NF’s fiscal year is from Jan. 1 to Dec. 31
Performance of Novoferm (NF)
B u s i n e s s o v e r v i e w
EuropeSales promotion and cost reduction efforts brought a recovery in both of net sales and profit.
NEW U.K. JOINT VENTUREA joint venture between Novoferm and a leading U.K. innovator, Cardale Garage Doors, started operation in April 2012 providing the ideal combination of British bespoke manufacturing and European volume production of all types of garage doors, as well as the highest level of customer service, together with the U.K.’s distribution network by the Garage Door Company.
SALES PROMOTION SERVICESBased on the motto “What we can do for you,” Novoferm has packaged its range of marketing and cooperation services together in a new folder entitled “Novoferm Sales promotion.” The resulting shared marketing and advertising campaigns can generate a higher degree of recognition and leads to increase sales of both the customers and Novoferm.
VANSEAL, A REAL ENERGy SAVERThe Novoferm VanSeal is a unique energy-saving solution for efficient loading and unloading of vans that closes all gaps between vans and warehouses or distribution centers. Tested on 36 different vans, the Novoferm VanSeal combines foam cushions and standard shelter materials. More then 300 units were sold the first year in the Netherlands alone.
19
Business Environment TrendsAlthough export trends for the European economy remain
firm, manufacturers are under pressure to cut production,
while consumer spending is weak because of a worsening
employment situation. The European economy is expected to
remain in recession because of these factors, and also because
of a rekindling of the European debt crisis. This situation is
likely to result in negative trends in both capital investment and
construction investment, and weakness is also predicted for the
housing market.
In this environment, NF will work to build a profitable structure
for its business activities in Germany by reaping the benefits of
restructuring and further improving the profitability of its door and
frame business. It will also focus on the establishment of a solid
business base in Europe through business expansion and the
restructuring of operations in the United Kingdom. In fiscal 2012,
we will need to remain alert to the effects of the debt crisis.
Nevertheless, we aim to increase revenues mainly from the
garage door business, especially in Germany, and from industrial
doors, whose sales were still driven from good order intake
during 2011.
Initiatives and Strategies Trends in the door and door frame business are uncertain,
especially for industrial and commercial sectors because of
the effects of the European debt crisis. We aim to cut costs by
improving productivity at the plants in Italy and Germany, and to
increase revenues from this segment by expanding export sales.
Overall trends in the garage door segment are expected to
remain firm. We aim to expand sales in the United Kingdom, and
to achieve further sales growth by enhancing product portfolio
with the products from Wayne-Dalton, a Sanwa group company
in the U.S.
The outlook for the industrial door is uncertain because of the
effects of the European debt crisis. We will work to expand sales
by enhancing our product line-up, while improving our earning
performance through the reduction of production costs and
improvement to our maintenance and service systems.
In April 2012, we launched a joint venture with Hobbs
Industries, a garage door manufacturing company and owner of
the Cardale brand, and the Garage Door Company, a major British
garage door dealer. Both companies are well positioned to meet
the needs of U.K. customers, thanks to extensive product ranges,
the production capacity to be flexible to various customers needs
with short-time delivery, and nationwide sales and installation
networks. By complementing the activities of NF, which is a leader
in the sectional door category, they will help to accelerate the
expansion of our business activities in the United Kingdom.
We also aim to maximize global synergies within the Sanwa
Group. For example, NF Nederland and NF France have started
to sell carports manufactured by Sanwa Shutter Corporation,
a group company in Japan, and in Germany we enhanced the
garage door portfolio, with products manufactured by the U.S.
company Wayne-Dalton.
The medium-term priority for NF is to improve its overall
earning performance through restructuring and total cost
reduction (TCR) programs. In addition to a project to improve
logistical efficiency, NF has also improved its sales network in
Germany, increased earnings from the door and door frame
business, reduced costs in the industrial door segment, improved
procurement and production efficiency through the NF door
project, and reduced fixed costs through TCR activities. Benefits
from these efforts amounted to €7.8 million in fiscal 2009, €7.38
million in fiscal 2010 and €2.4 million in fiscal 2011.
NF will continue to build a robust business structure while
leveraging global synergies to strengthen its competitiveness. It
will continue to play a pivotal role as key member of the Sanwa
Holdings Group, which spans four key areas: Japan, the United
States, Europe and Asia.
novoferm Group CEo Rainer Schackmann
The ongoing concerns about the future
of the euro zone dominate the economy
in Europe. The austerity programmes of
governments, increasing unemployment
and weakening of the export business are
affecting the construction industry all over
Europe. In this challenging environment,
the Novoferm Group will concentrate
on differentiating itself from competitors
with its products and services. We are
optimising our processes to make it easy
for our customers to do business with us.
We are introducing intelligent solutions like
our I-Vision control system, to offer added
value. Furthermore, we are using the
ongoing harmonization of norms in Europe
to expand our business to new areas.
All these activities will be accompanied
by our total cost reduction program,
TCR. Customer satisfaction and efficient
processes are the basis of our success.
20
B u s i n e s s o v e r v i e w
AsiaStrengthening group synergies across Asia to raise efficiency, sales and profits. NF SHANGHAI
NF Shanghai will expand production capacity for steel doors to 4,000 sets per month, about 1.5 times the present level.
Business Development and Results for FY2011The Sanwa Group is expanding its infrastructure and strengthening
its production and sales assets in Asia, especially China, with the
aim of developing that region into a fourth key market alongside
Japan, the United States and Europe and Asia. In fiscal 2011, the
four main Sanwa Group companies in Asia delivered net sales of
¥3,000 million and an operating loss of ¥200 million.
Business Overview for FY2011, Future Strategies Our Chinese joint venture, Shanghai Baosteel-Sanwa Door,
manufactures and sells heavy-duty shutters, overhead doors
and other products. Economic conditions in fiscal 2011 were
affected by a moderate slowdown. The company’s priority
in this environment was to capture demand from Japanese-
owned companies with properties in China, and to strengthen
its marketing capabilities by leveraging synergies within the
Sanwa Group. For example, Shanghai Baosteel-Sanwa Door
collaborated with NF Shanghai and supplied products to Sanwa
Shutter (H.K.). As a result of these efforts, orders, net sales
and operating income all surpassed the previous year’s results.
In fiscal 2012 the company aims to expand activities through
increased marketing efforts in coastal and inland cities outside of
the Shanghai and Yangtze Delta areas.
NF Shanghai, which manufactures and sells steel doors in
China, has been a wholly owned subsidiary of Sanwa Holdings
since 2009 and is working with Shanghai Baosteel-Sanwa Door
to capture a share of China’s burgeoning door market. A key
advantage for NF Shanghai in the Chinese market will be its
ability to manufacture its own fireproof doors, having obtained
local certification for its products. In fiscal 2011, construction of
condominiums and houses slowed moderately under the impact
of monetary tightening. Despite this, both orders and sales
exceeded the previous year’s results. In fiscal 2012, the housing
market will remain sluggish, and NF Shanghai will focus on
winning orders for products for hospitals and medical institutions,
an area in which steady demand is anticipated. The company
also aims to expand its sales channels. Production capacity for
steel doors will be increased to 4,000 sets per month, which is
equivalent to about 1.5 times the present level, and the sales
network will be expanded through the accelerated establishment
of sales offices.
Our Vietnamese joint venture Vina-Sanwa, which was
established in 2008, manufactures and sells shutters and doors. In
fiscal 2011, project activity slowed under the impact of monetary
tightening and other factors, creating a challenging environment in
terms of both orders and sales. Vina-Sanwa will work to expand
orders through initiatives to strengthen its business base, including
the improvement of corporate quality through the introduction of
quality management systems, and the reinforcement of its offices
in Hanoi and Ho Chi Minh City.
The Taiwanese company An-Ho Metal Industrial is involved
in the door, shutter and stainless steel businesses. In fiscal
2011, its housing-related sales stagnated under the impact of
a condominium tax and other factors. However, it maintained
strong performance trends, mainly by winning orders for major
projects involving Japanese companies. Orders are expected to
match the fiscal 2011 level in fiscal 2012, but the company aims
to strengthen its profitability by improving productivity and giving
priority to profit margins when accepting orders.
In fiscal 2012, these initiatives are expected to result in net
sales of ¥3,600 million and operating income of ¥160 million for
the four major companies.
2121
Forging strong bonds with society through active CSR is a key management priority for the Sanwa Group. As
we move toward the achievement of the new Three-year Plan, we will contribute to society by enhancing
people’s safety, security and convenience.
The CSR activities the Sanwa Group undertakes for the realization of our CSR vision center on the areas
of compliance, risk management, environmental protection and social contribution.
CSR Vision we will contribute to the prosperity of society and raise our corporate value
by offering products that provide safety, security and convenience.
Priority Themes1
Enhancing reliability through corporate activities based on good faith and transparency A company cannot gain reliability if it does not act in good faith. we will enhance our reputation for reliability with our
shareholders and investors by implementing highly transparent information disclosure and strengthening the functions of
our internal control systems, including risk alleviation initiatives and the improvement of compliance.
2Improving vitalization of employees, suppliers and installation workers
it is people that support our business. The Sanwa Group cannot hope to achieve sustained growth without
encouraging and vitalizing its employees, suppliers and installation workers. we will aim for future growth by
realizing workplaces in which people have more motivation and can express their creativity.
3Enhancing satisfaction for customers and society
Customer satisfaction is always our goal. we believe it is important to tirelessly pursue satisfaction, which includes the safety of
products, and to create products which will be satisfactory to the end users. Environment-friendliness implemented throughout
the product life cycle from development to disposal is another extremely important theme for the Group. we will also aim to
increase the satisfaction of society through business development utilizing the characteristics of the Sanwa Group including
movable building materials, security functions and others, and social contributions utilizing our originality.
• Reinforcement of corporate governance
• Construction of compliance system
• Constrauction of risk management system
• Fulfillment of human resource development programs
• Improvement of working environment
• Improving vitalization of installation workers
• Thorough implementation of quality assurance systems
• Improving social contribution activities
• Improving environmental initiatives
VISIONWe will contribute to the prosperity of society and raise our corporate
value by offering products that provide safety, security and convenience.
Enhancing reliability through corporate activities based on good faith and transparency
improving vitalization of employees, suppliers and
installation workers
Enhancing satisfaction for customers and society
Theme 1 Theme 2 Theme 3
Safety
Convenience
Security
Sanwa Group CSR Logo The CSR logo’s amoeba-like design symbolizes the expansion of CSR initiatives into all facets of our operations. The words “with Smile” express our commitment to a win-win relationship with all stakeholders.
CSRA c t i v i t i e s
22
C S R A c t i v i t i e s
Compliance
The Sanwa Group is determined to meet public expectations
and earn the trust of society. We have established a Compliance
Code of Conduct, and implemented a range of measures
designed to make the concepts contained therein an integral
part of our corporate culture.
The Compliance Code of Conduct defines the specific rules
of behavior to follow when translating the mission, corporate
philosophy and values of the Sanwa Group and the spirit of our
behavior guidelines, into actual conduct.
Employees learn about the Compliance Code of Conduct
through in-house training and other activities. The purpose
of these activities is to ensure legal compliance and to instill
judgment and conduct that comply with public expectations.
The Sanwa Group’s CSR Promotion System
CSR Promotion Organizational System
We also monitor employee awareness of compliance issues
through surveys. The findings are used to identify and remedy
issues through ongoing improvement activities.
The Sanwa Group is committed to improving its process for
prevention and early discovery of improper conduct that violates
the law. To this end, we have introduced a corporate ethics
hotline as part of our objective to promote compliance with laws
and public expectations. The ethics hotline office can receive
reports by phone, fax or through the Internet, and handles
company-internal or external cases.
• The CSR Promotion Council proposes initiatives and development of Group-wide CSR activities.
Chairman: Officer in charge of Corporate Planning Unit
Members: Officers in charge of divisions, general manager of Audit Department and Group Company Presidents and others
• Group companies establish CSR Promotion Committees and CSR Promotion Subcommittees to coordinate CSR activities.
• The CSR Promotion Department serves as the secretariat for the Group CSR Promotion Council and CSR promotion activities in general.
initiative proposal/development
implementation divisions
Group Company Group Company Group Company
CSR Promotion Subcommittee
CSR Promotion Subcommittee
CSR Promotion Subcommittee
CSR Promotion Committee CSR Promotion Committee CSR Promotion Committee
Group CSR Promotion Council
CSR Promotion Department
Sanwa Holdings President
Sanwa Holdings Board of Directors
Secretariat
23
Risk Management
Our risk management systems are designed to detect potential
risks (factors that may adversely affect or hinder business activities)
in advance at all stages of our operations at every Group company
and business unit. We can then implement countermeasures to
prevent these risks from causing actual problems.
We are developing our risk management systems by
applying the PDCA cycle. We work to detect risks promptly
and then analyze and evaluate them to identify which risks are
critical. Next, we devise and implement countermeasures. After
implementation, we evaluate the countermeasures and continue
them when necessary.
Sanwa Group Environmental Policy
Environmental Protection Activities
The Sanwa Group has formulated the Sanwa Group
Environmental Policy and is firmly committed to environmental
preservation activities based on the policy.
We have also designated June 10 as “Sanwa Environment
Day” to raise our employees’ awareness of the need to protect
the environment and to promote environmental protection
activities. On this day, Group company employees participate in
community clean-up campaigns in the areas around our various
business sites, and similar environmental activities. Also, with
the primary aim of reducing CO2 emissions, our manufacturing
units have developed energy conservation measures that cover
proper operation of machinery and equipment as well as thorough
monitoring of energy usage, and our sales units take care to follow
eco-friendly driving practices when using company vehicles.
Basic PhilosophyAs globally integrated manufacturers of building
materials, the Sanwa Group contributes to the
realization of an enriched society capable of sustainable
development through environmentally responsible
business activities and the supply of environment-
friendly products and services.
Basic Policies1. To comply with legal systems and other
requirements related to the environment, and
communicate with society.
2. Appropriately assess impacts on the environment, set
objectives and goals, and continuously work for the
preservation and improvement of the environment.
3. Promote conservation and recycling of natural
resources and energy, and endeavor to prevent
pollution, for example through the reduction of waste.
4. Actively promote the development of environment-
friendly products, and endeavor to improve our
technological level further.
5. Endeavor to raise the awareness of environmental
preservation of all people working for the
Sanwa Group by ensuring they understand this
Environmental Policy and providing them with
information about the environment.
6. Encourage the companies that cooperate with us in
our business activities to undertake environmental
preservation initiatives, and endeavor to support their
efforts to do so.
In order to promote the above policies we will endeavor
to implement, maintain and continuously improve our
environmental management system.
24
C S R A c t i v i t i e s
Social Contribution Activities
Sanwa Group seeks to contribute to society primarily through on
community-based employee participation activities, to fulfill our
roles and responsibilities as a member of the community.
Sanwa Group Social Contribution Club
The Sanwa Group Social Contribution Club was established in
November 2006 as an actual social contribution activity based
on employee initiatives. The Club’s main focus at present is on
donation activities.
Employees contribute as much as they want every month,
in ¥100 units, through deductions from their monthly pay. All
contributions are matched one-to-one by the Company. The
funds collected under this matching gift program are donated to
organizations selected by the club’s management committee.
So far, donations
have been made to
NPOs and other groups
involved in social welfare,
community safety and
local environmental
protection efforts.
Sanwa Group Social Contribution Policy
The Sanwa Group wants to be part of a society in which people can enjoy happy, fulfilling lives. We will help to build such a society through our continuing social contribution activities, and through human resource development initiatives designed to enrich the wider human characteristics of our employees.
1. The Sanwa Group will contribute to society through products and services of the highest quality.
2. As a good corporate citizen, the Sanwa Group will contribute to the development of local communities.
3. The Sanwa Group will provide effective support for social contribution activities involving its employees.
Charging Station for Electric Bicycles
Novoferm Shanghai, by installing a battery charging station at
its site, is helping to encourage the use of electric bicycles for
commuting.
Many Novoferm Shanghai employees already commute
using electric bicycles. This method of commuting offers
numerous benefits, including low energy consumption, zero
emissions and low noise. To encourage the use of electric
bicycles, Novoferm Shanghai has installed a charging station
in its parking lot to allow employees to charge their bicycles
while they are parked. It
also issues notices and
organizes seminars to
inform employees about
the correct handling
of batteries, including
recycling methods.
“Recovery Mailbox” Donated to Post office
Sanwa Tajima Corporation donated a “Recovery Mailbox” to
the Rikuzentakata Branch of Japan Post Service’s Tohoku
subsidiary. Installed in Rikuzentakata City, which suffered
enormous devastation as a result of the Great East Japan
Earthquake, the mailbox expresses the company’s prayers for a
rapid recovery.
The front of the mailbox features a picture of the “Miracle
Pine,” which was the only tree to survive in the Takata
Matsubara area, one of Japan’s best-known places of
scenic beauty. It is also inscribed with Ame ni mo Makezu
(“Not defeated by the rain”), a poem by Kenji Miyazawa.
It is hoped that the image and the words of the poem will
provide encouragement to local
people each time they mail a
letter or postcard, and that the
kind sentiments expressed in
those letters and postcards will
be conveyed to the people who
receive them. The Sanwa Group
hopes that the “Recovery Mailbox”
will help to hearten the people of
the disaster area.Make-A-Wish of Japan accepting donation
Battery Charging Station for electric bicycles
Recovery Mailbox
25
C o r p o r a t e G o v e r n a n c e
Board of Directors(As of June 26, 2012)
Board of Directors, Statutory Auditors and Executive Officers(As of June 26, 2012)
Auditors(As of June 26, 2012)
Representative DirectorPresident CEO&COO
Toshitaka Takayama
Representative DirectorExecutive Vice-PresidentDeputy President
Tamotsu Minamimoto
DirectorSenior Managing Executive OfficerOverseas Business Unit
Wadami Tanimoto
DirectorSenior Managing Executive OfficerCorporate Planning Unit
Yasushi Takayama
DirectorSenior Managing Executive OfficerDomestic Business Unit
Ichiro Ueeda
Toshitaka Takayama
Katsuhiko Tanabe Toshiaki Nakaya Jiro Ichioka Jumpei Morimoto
Ichiro UeedaWadami Tanimoto
Shunsaku HashimotoTamotsu Minamimoto
Yasushi TakayamaMasahiro Fukuda
DirectorSenior Executive OfficerSubleader, Overseas Business UnitAmericas Business
Masahiro Fukuda
Outside Director
Shunsaku Hashimoto
Standing Statutory Auditor
Toshiaki Nakaya
Standing Statutory Auditor
Jiro Ichioka
Statutory Auditor
Katsuhiko Tanabe
Statutory Auditor
Jumpei Morimoto
Senior Executive OfficerSubleader, Overseas Business Unit
Sampei Kametaka
Senior Executive OfficerBusiness Strategy Unit
Mitsunari Murakami
Senior Executive OfficerGeneral Manager, General Affairs Dept.
Tatsuto Satsuka
Executive Officer President, Okinawa Sanwa Shutter Corporation
Mamoru Hikita
Executive OfficerAsia Business
Tsunahiro Watanabe
Executive OfficerPresident, Sanwa Tajima Corporation
Mikio Kurusu
Executive OfficerEurope Business
Takenobu Hoizumi
26
C o r p o r a t e G o v e r n a n c e
Basic Stance on Corporate Governance
Sanwa Holdings Corporation is a global corporation with group
companies in the United States, Europe and Asia including China.
Our basic approach to corporate governance is to continuously
raise our corporate value through fair and equitable business
transactions in a business environment characterized by intense
global competition. To this end, the Sanwa Group seeks to build
a highly transparent system that allows us to effectively achieve
our corporate vision.
In accordance with this approach, we have introduced an
executive officer system to separate the decision-making function
of the Board of Directors from the business execution function of
the executive officers. We undertook this initiative to strengthen
management effectiveness and to give the Board of Directors
oversight of business execution as exercised by the executive
officers. Preceding this, we moved to a holding company structure
in October 2007 with three purposes: 1) to improve group-level
governance, 2) to strengthen the competitiveness of operating
companies and 3) to reinforce group-level strategic functions. We
will continue to work to better fulfill of our corporate governance
obligations by preparing systems that ensure competence in busi-
ness operations.
internal Control System
Pursuant to “System to ensure conformance of execution of du-
ties by directors and employees to laws, ordinances and articles
of incorporation” as provided in Article 362, paragraph 4, item 6
of the Companies Act, the Basic Policy on Internal Control System
was adopted by resolution at a meeting of the Board of Direc-
tors held on May 15, 2006. In accordance with the resolution, the
Company has established and implemented an internal control
system, has established prescribed standards and procedures in
each business operation to ensure that the Company’s internal
organizations are operated soundly, effectively, and efficiently, free
from improprieties, mistakes, and errors, and has implemented
controls based on the standards and procedures.
Risk Management
In accordance with the basic matters pertaining to risk manage-
ment established in the Risk Management Regulations, the Com-
pany identifies, shares, and mitigates risks and strives to minimize
loss in the event an emergency occurs. In addition, the Company
is developing a groupwide risk management system consisting of
Risk Management Guidelines and Crisis Management Guidelines,
which stipulate procedures from reporting when an emergency
occurs to recovery measures.
Corporate Governance Structure
Sanwa Holdings has established a Board of Directors and a
Board of Auditors. The Board of Directors is composed of seven
members, including one outside director, and the Board of Audi-
tors has four corporate auditors, including two outside auditors.
The outside directors and auditors have been designated to play
an independent role.
The Board of Directors Meetings and the Board of Audi-
tors Meetings are normally held once per month. The Board of
Directors makes important management decisions based on
their considered judgment and supervise the execution of the
directors’ responsibilities. To maintain and enhance manage-
ment effectiveness, the Board consists of directors who are
very familiar with Sanwa’s operations and an outside director
with keen insight gained from a wealth of corporate manage-
ment experience.
The Board of Auditors monitors the status of business execu-
tion by the Board of Directors and the executive officers, issue
reports on their findings, and ensure that management actions
are legal and proper. To increase the effectiveness of audits,
they have been granted independence combined with enhanced
responsibilities and authority. In partnership with the Audit Depart-
ment, the corporate auditors ensure that the business is in sound
financial health and pursue compliance with rigor and consistency
across the Sanwa Group.
In fiscal 2011, the Board of Directors met 18 times with a
95.6% attendance rate for directors and corporate auditors,
General Shareholders’ Meeting
Appointment Selection
AppointmentDismissal
AppointmentDismissal
AppointmentDismissalReport
Report
Report Report
Report
Report Report
Report
Report
ReportReport
Report
Report
Report
Audit
Audit Audit
Group Strategy Committee
(Consultation on major items)
Domestic BusinessPDCA Council, etc.
Group CSRPromotion Council
Proposal
Direct
Promotionand Support
Board of Directors
Representative Directors
Executive Officers
Each Division/Group Company
SuperviseMonitor
Monitor
Board of Auditors
Internal Audit
Independent Auditors
AccountingAudit
Audit Department
27
and the Board of Auditors met 10 times with a 97.5% atten-
dance record.
We have also established a Group Strategy Committee as an
advisory body to the Board of Directors. This council conducts
high-level examination and coordination of group management
policies as well as business management plans and budgets,
and formulates medium-to-long term group strategies. They also
deliberate matters pertaining to group-level strategies, offer their
recommendations on these matters, and work with the Board of
Directors to ensure timely and effective business decisions.
Supervision and audits of the detailed status of business ex-
ecution of Japanese group companies is carried out at the PDCA
Council, held quarterly by the directors, executive officers and cor-
porate auditors, and similar organizations. The directors monitor
progress against the management plan and provide guidance on
management issues, while the corporate auditors audit the state
of business execution by the executive officers.
To develop a consistent set of CSR activities across the
Sanwa Group, the Group CSR Promotion Council, run by the
CSR Promotion Department, meets four times a year. The council
deliberates CSR policies of the entire Group, matters related to
the quality assurance system and other CSR issues. Sanwa is
actively working to fulfill its corporate social responsibilities, and to
this end has established CSR Promotion Committee that plan and
promote CSR activities together with individual work sites.
To establish and maintain a corporate governance system
that earns the trust of society through its financial health, corpo-
rate auditors travel directly to subsidiaries and affiliates to study
their situation or issue requested reports. Furthermore, Sanwa’s
independent auditors, Kyoritsu Audit Corporation, conducts finan-
cial audits of Sanwa Holding’s major consolidated subsidiaries.
It is the view of Sanwa Holdings that the structure outlined
above constitutes a governance system that ensures the compe-
tence of the Group’s business operations and fulfills its corporate
governance obligations.
Sanwa Group Corporate Governance System
28
C o r p o r a t e G o v e r n a n c e
Countermeasures against Large-scale Acquisitions of the Company’s Stock (Anti-takeover Measures)
Countermeasures against large-scale acquisitions of the Com-
pany’s stock (anti-takeover measures) were renewed at the
regular general meeting of shareholders on June 24, 2008, with
a stipulation that the measures would expire at the conclusion of
the regular general meeting of shareholders in June 2011. (The
renewed anti-takeover measures will be referred to below as “the
Current Plan.”)
Prior to the expiration of the Current Plan, the Board of
Directors resolved at a meeting held on May 18, 2011, to renew
the current plan with amendments as required. (The amended
anti-takeover measures will be referred to below as “the Plan.”). A
resolution approving the plan was passed at the regular general
meeting of shareholders on June 24, 2011.
Purpose and Content of the Plan
The purpose of the plan is manifold: (1) to prevent a party from
gaining control over decisions concerning the Company’s finances
or business activities through large-scale acquisitions of the Com-
pany’s stock certificates, etc., where this would not contribute to
corporate value or the common interests of shareholders, (2) to
deter large-scale acquisitions that would be harmful to corporate
value or the common interests of shareholders, (3) to provide the
information and time needed for the directors of the Company to
provide shareholders with alternative proposals when large-scale
acquisitions are about to be implemented, (4) to decide whether
or not such large-scale acquisitions should be allowed and (5) to
negotiate on behalf of shareholders.
The Plan stipulates the procedures required to achieve the
aforementioned purposes, such as demands for information,
in the event that a party (hereinafter referred to as “the bidder,
etc.”) seeks to acquire 20% or more of the Company’s stock
certificates. The bidder, etc., must supply the required informa-
tion to the Company. The information will then be submitted to
an independent committee, which will consist of the Company’s
outside directors and others and will operate independently of the
Company’s management, together with the opinions of the Board
of Directors and the grounds for those opinions, and alterna-
tive proposals (if any). The independent committee will examine
the nature of the offer put forward by the bidder, etc., and the
method used, as well as any alternative proposals submitted by
the Company’s Board of Directors. It will also gather, compare
and examine information about the business plans of the bidder,
etc., and the Board of Directors and consult and negotiate with
the bidder, etc.
If the independent committee determines that the criteria
stipulated in the Plan have been met, such as when the bid-
der, etc., has failed to comply with the procedures set down in
the Plan, or when there is a risk that bidder, etc., would clearly
harm the Company’s corporate value or the common interests of
shareholders through the bid, etc., and if the independent com-
mittee judges that it would be appropriate to implement a gratis
allocation of stock options, the independent committee will advise
the Board of Directors to implement a gratis issue of stock op-
tions subject to the condition that the options cannot be exercised
by the bidder, etc., and that the options will be acquired from
parties other than the bidder, etc., in exchange for shares in the
Company. The Company’s Board of Directors will comply with the
recommendations of the independent committee to the greatest
possible extent and will pass a resolution concerning whether or
not options should be allocated. In addition, the Board of Direc-
tors will, under the circumstances stipulated in the Plan, convene
a general meeting of shareholders to ascertain the wishes of all
shareholders concerning the implementation of a gratis allocation
of stock options.
This plan will remain in force until the conclusion of the regular
general meeting of shareholders for the year ending March 2014.
However, the Plan will be terminated before the expiration date if
(1) the authority delegated to the Board of Directors concerning
the implementation of a gratis allocation of stock options under
the Plan is withdrawn at a general meeting of the Company’s
shareholders, or (2) if the Board of Directors passes a resolution to
terminate the Plan.
Financial Information
30
Consolidated Balance Sheets
32
Consolidated Statements of Operations
32
Consolidated Statements of Comprehensive Income
33
Consolidated Statements of Changes in Net Assets
34
Consolidated Statements of Cash Flows
35
Notes to the Consolidated Financial Statements
52
Independent Auditors’ Report
C o n t e n t s
2929
Millions of yenThousands of
U.S. dollars (Note 1)
2012 2011 2012
ASSETS
Current assets:
Cash and cash equivalents (Note 10) ¥ 16,825 ¥ 20,306 $ 205,183
Short-term investments (Notes 3, 10) 1,824 2,434 22,244
Notes and accounts receivable, trade (Note 10) 61,578 52,928 750,951
Allowance for doubtful accounts (1,222) (1,118) (14,902)
Inventories (Note 4) 36,590 33,237 446,220
Deferred income taxes (Note 14) 3,287 3,187 40,085
Other current assets 4,080 3,777 49,756
Total current assets 122,962 114,751 1,499,537
Property, plant and equipment:
Land 22,292 22,448 271,854
Buildings and structures 41,512 42,821 506,244
Machinery and equipment 53,763 54,512 655,646
Construction in progress 990 728 12,073
118,557 120,509 1,445,817
Less accumulated depreciation (69,013) (68,448) (841,622)
Total property, plant and equipment 49,544 52,061 604,195
Intangible assets:
Goodwill 3,225 48 39,329
Other intangible assets (Note 5) 12,774 14,354 155,780
Total intangible assets 15,999 14,402 195,109
Investments and other assets:
Investments in non-consolidated subsidiaries and affiliates (Notes 3, 10) 7,268 6,792 88,634
Investments in securities (Notes 3, 10) 19,915 18,045 242,866
Deferred income taxes (Note 14) 6,757 8,101 82,402
Allowance for doubtful accounts (492) (499) (6,000)
Other assets 4,626 5,280 56,415
Total investments and other assets 38,074 37,719 464,317
Total assets ¥226,579 ¥218,933 $2,763,158
C o n s o l i d a t e d B a l a n c e S h e e t s
Sanwa Holdings Corporat ion and Subsidiar iesAs of March 31, 2012 and 2011
The accompanying notes are an integral part of these statements.
30
Millions of yenThousands of
U.S. dollars (Note 1)
2012 2011 2012
LIABILITIES AND NET ASSETS
Current liabilities:
Short-term debt (Notes 6, 10) ¥ 12,956 ¥ 10,102 $ 158,000
Notes and accounts payable, trade (Note 10) 38,334 33,187 467,488
Accrued income taxes 2,064 1,991 25,171
Accrued expenses 12,479 11,424 152,183
Deferred income taxes (Note 14) 110 69 1,341
Other current liabilities 11,231 10,107 136,963
Total current liabilities 77,174 66,880 941,146
Long-term liabilities:
Long-term debt (Notes 6, 10) 48,651 49,790 593,305
Retirement and severance benefits (Note 7) 8,780 8,673 107,073
Deferred income taxes (Note 14) 3,277 2,883 39,963
Other long-term liabilities 3,175 4,686 38,720
Total long-term liabilities 63,883 66,032 779,061
Total liabilities 141,057 132,912 1,720,207
Contingent liabilities (Note 8)
NET ASSETS
Shareholders’ equity (Note 12)
Common stock:
Authorized—550,000,000 shares in 2012 and 2011
Issued—257,920,497 shares in 2012 and 2011 38,413 38,413 468,451
Additional paid-in capital 39,902 39,902 486,610
Retained earnings 25,999 24,625 317,061
Treasury stock, at cost (17,618,606 shares in 2012 and 17,613,204 shares in 2011) (9,694) (9,693) (118,219)
Total shareholders’ equity 94,620 93,247 1,153,903
Accumulated other comprehensive income
Net unrealized holding losses on securities (3,315) (3,334) (40,427)
Deferred gains on hedges — 107 —
Foreign currency translation adjustments (5,909) (4,089) (72,061)
Total accumulated other comprehensive income (9,224) (7,316) (112,488)
Stock acquisition rights 126 90 1,536
Total net assets 85,522 86,021 1,042,951
Total liabilities and net assets ¥226,579 ¥218,933 $2,763,158
31
Millions of yenThousands of
U.S. dollars (Note 1)
2012 2011 2012Net sales ¥248,214 ¥237,295 $3,027,000
Cost of sales (Note 13) 186,684 179,400 2,276,634 Gross profit 61,530 57,895 750,366
Selling, general and administrative expenses (Note 12) 52,675 53,333 642,378 Operating income 8,855 4,562 107,988
Other income (expenses):Interest and dividend income 600 594 7,317 Interest expenses (1,029) (1,289) (12,549)Equity in earnings of non-consolidated subsidiaries and affiliates (269) (66) (3,280)Other, net (Note 15) (1,331) (4,801) (16,232)
(2,029) (5,562) (24,744)Net income (loss) before income taxes and minority interests 6,826 (1,000) 83,244
Income taxes (Note 14):Current 2,258 2,512 27,537 Deferred 1,271 (1,044) 15,500
3,529 1,468 43,037 Income (loss) before minority interests 3,297 (2,468) 40,207Minority interests in losses of consolidated subsidiaries — (25) —Net income (loss) ¥ 3,297 ¥ (2,443) $ 40,207
Yen U.S. dollars (Note 1)
2012 2011 2012Per share:
Net income (loss) —Basic ¥13.72 ¥(10.17) $0.167 —Diluted — — —Cash dividends 8.00 8.00 0.098
The accompanying notes are an integral part of these statements.
The accompanying notes are an integral part of these statements.
Millions of yenThousands of
U.S. dollars (Note 1)
2012 2011 2012Income (loss) before minority interests ¥ 3,297 ¥(2,468) $ 40,207 Other comprehensive income (loss) (Note 16)
Net unrealized holding gains (losses) on securities 18 (552) 220 Deferred gains (losses) on hedges (107) 107 (1,305)Foreign currency translation adjustments (1,824) (4,884) (22,244)Share of other comprehensive income (loss) of non-consolidated subsidiaries
and affiliates accounted for using the equity method 5 (101) 61
Total other comprehensive income (loss) (1,908) (5,430) (23,268)Comprehensive income (loss) ¥ 1,389 ¥(7,898) $ 16,939
Comprehensive income (loss) attributable to:Owners of the parent ¥ 1,389 ¥(7,875) $ 16,939 Minority interests — (23) —
C o n s o l i d a t e d S t a t e m e n t s o f O p e r a t i o n s
Sanwa Holdings Corporat ion and Subsidiar iesFor the years ended March 31, 2012 and 2011
C o n s o l i d a t e d S t a t e m e n t s o f C o m p r e h e n s i v e I n c o m e
Sanwa Holdings Corporat ion and Subsidiar iesFor the years ended March 31, 2012 and 2011
32
Millions of yen
Common stock
Additional paid-in capital
Retained earnings
Treasury stock
Net unrealized holding gains
(losses) on securities
Deferred gains
(losses) on hedges
Foreign currency
translation adjustments
Stock acquisition
rights
Minority interests
Total net assets
Balance at March 31, 2010 ¥38,413 ¥39,902 ¥29,283 ¥(9,690) ¥(2,782) ¥ — ¥ 899 ¥ 56 ¥ 29 ¥96,110
Net changes during the year
Cash dividends (2,163) (2,163)
Net income (loss) for the year (2,443) (2,443)
Change of scope of equity method
(50) (50)
Purchases of treasury stock (6) (6)
Disposal of treasury stock (2) 3 1
Net changes during the year other than shareholders’ equity
(552) 107 (4,988) 34 (29) (5,428)
Total net changes during the year — — (4,658) (3) (552) 107 (4,988) 34 (29) (10,089)
Balance at March 31, 2011 ¥38,413 ¥39,902 ¥24,625 ¥(9,693) ¥(3,334) ¥ 107 ¥(4,089) ¥ 90 ¥ — ¥86,021
Net changes during the year
Cash dividends (1,922) (1,922)
Net income (loss) for the year 3,297 3,297
Purchases of treasury stock (2) (2)
Disposal of treasury stock (1) 1 0
Net changes during the year other than shareholders’ equity
19 (107) (1,820) 36 — (1,872)
Total net changes during the year — — 1,374 (1) 19 (107) (1,820) 36 — (499)
Balance at March 31, 2012 ¥38,413 ¥39,902 ¥25,999 ¥(9,694) ¥(3,315) ¥ — ¥(5,909) ¥126 ¥ — ¥85,522
Thousands of U.S. dollars (Note 1)
Common stock
Additional paid-in capital
Retained earnings
Treasury stock
Net unrealized holding gains
(losses) on securities
Deferred gains
(losses) on hedges
Foreign currency
translation adjustments
Stock acquisition
rights
Minority interests
Total net assets
Balance at March 31, 2011 $468,451 $486,610 $300,305 $(118,207) $(40,659) $ 1,305 $(49,866) $1,098 $ — $1,049,037
Net changes during the year
Cash dividends (23,439) (23,439)
Net income (loss) for the year 40,207 40,207
Purchases of treasury stock (24) (24)
Disposal of treasury stock (12) 12 0
Net changes during the year other than shareholders’ equity
232 (1,305) (22,195) 438 — (22,830)
Total net changes during the year — — 16,756 (12) 232 (1,305) (22,195) 438 — (6,086)
Balance at March 31, 2012 $468,451 $486,610 $317,061 $(118,219) $(40,427) $ — $(72,061) $1,536 $ — $1,042,951
The accompanying notes are an integral part of these statements.
C o n s o l i d a t e d S t a t e m e n t s o f C h a n g e s i n N e t A s s e t s
Sanwa Holdings Corporat ion and Subsidiar iesFor the years ended March 31, 2012 and 2011
33
Millions of yenThousands of
U.S. dollars (Note 1)
2012 2011 2012Cash flows from operating activities:
Net income (loss) before income taxes and minority interests ¥ 6,826 ¥ (1,000) $ 83,244 Adjustments for:
Depreciation and amortization 5,605 6,578 68,354 Equity in earnings of non-consolidated subsidiaries and affiliates 269 66 3,280 Interest and dividend income (600) (594) (7,317)Interest expenses 1,029 1,289 12,549 Penalties of alleged violations of the Law — 2,815 —
Increase in allowance for doubtful accounts 132 87 1,610 Increase (decrease) in allowance for bonuses (29) 219 (354)Increase (decrease) in retirement and severance benefits 212 (1,447) 2,585 Increase (decrease) in provision for loss on disaster (260) 260 (3,171)Decrease (increase) in notes and accounts receivable (8,011) 1,906 (97,695)Increase in inventories (3,536) (1,501) (43,122)Increase (decrease) in notes and accounts payable 4,714 (937) 57,488 Other, net 1,668 670 20,342
Subtotal 8,019 8,411 97,793 Interest and dividend income received 636 565 7,756 Interest expenses paid (1,045) (1,313) (12,744)Payment for penalties of alleged violations of the Law — (2,815) —Income taxes paid (2,157) (1,131) (26,305)
Net cash provided by operating activities 5,453 3,717 66,500
Cash flows from investing activities:Payments for purchase of investments in securities (2,103) (3,128) (25,646)Proceeds from sales of investments in securities 846 2,615 10,317 Payments for purchase of tangible and intangible assets (2,897) (3,495) (35,329)Payments for advances (1,206) (882) (14,707)Proceeds from collections of advances 1,153 1,166 14,061 Acquisition for business (1,383) — (16,866)
Acquisition of investments in subsidiaries resulting in change in scope of consolidation (3,621) — (44,159)
Other, net (42) (67) (512)Net cash used in investing activities (9,253) (3,791) (112,841)
Cash flows from financing activities:Increase (decrease) in short-term bank loans, net (1,855) (9,917) (22,622)Proceeds from long-term bank loans 3,567 10,200 43,500 Repayments of long-term bank loans (1,296) (16,780) (15,805)Proceeds from issuance of bonds 2,000 14,400 24,390 Repayments of bonds — (10,000) —Purchase and disposal of treasury stock, net (1) (5) (12)Cash dividends paid (1,922) (2,163) (23,439)Other, net (180) 13 (2,195)
Net cash provided by (used in) financing activities 313 (14,252) 3,817
Effect of exchange rate changes on cash and cash equivalents 6 (351) 73 Net increase (decrease) in cash and cash equivalents (3,481) (14,677) (42,451)Cash and cash equivalents at beginning of year 20,306 34,912 247,634 Increase in cash and cash equivalents from newly consolidated subsidiary — 71 —Cash and cash equivalents at the end of year ¥16,825 ¥ 20,306 $ 205,183
The accompanying notes are an integral part of these statements.
C o n s o l i d a t e d S t a t e m e n t s o f C a s h F l o w s
Sanwa Holdings Corporat ion and Subsidiar iesFor the years ended March 31, 2012 and 2011
34
1. Basis of Presenting Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Sanwa Holdings Corporation (the “Company”) and its domestic subsidiaries maintain their accounts and
records in accordance with the provisions set forth in the Japanese Corporate Law and the Financial
Instruments and Exchange Law and in conformity with accounting principles and practices generally
accepted in Japan, which are different from the accounting and disclosure requirements of International
Accounting Standards.
The Company’s overseas subsidiaries have been prepared in conformity with International Financial
Reporting Standards or US GAAP for the Company’s consolidation process, except for certain items
which are required to be adjusted in the consolidation process.
The accompanying consolidated financial statements are prepared based on the consolidated
financial statements of the Company and its subsidiaries (the “Group”), which were filed with the Director
of Kanto Local Finance Bureau as required by the Financial Instruments and Exchange Law.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience
of the reader, using the approximate exchange rate at March 31, 2012, which was ¥82 to US$1.00.
(a) Scope of Consolidation At March 31, 2012, the Company had 81 subsidiaries and 18 affiliates.
The consolidation for the year ended March 31, 2012 (FY2011) includes Sanwa Holdings
Corporation and its 38 consolidated subsidiaries. In FY2011, 3 companies are included in the scope of
consolidation because they were newly established in the current fiscal year. In addition, 2 companies
are excluded from the scope of consolidation in the current fiscal year because the Group sold their
shares. Equity method accounting is applied to investments in 10 non-consolidated subsidiaries and 1
affiliate at March 31, 2012.
(b) Foreign Currency TranslationAll asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at
the exchange rates prevailing at the year-end and revenues and expenses accounts are translated into
Japanese yen at average exchange rates during the year.
Shareholders’ equity accounts of foreign subsidiaries and affiliates are translated at historical rates.
The resulting translation differences are debited or credited to the foreign currency translation
adjustment account in shareholders’ equity or to the minority interests in consolidated subsidiaries in the
consolidated balance sheets.
(c) Cash EquivalentsAll highly liquid investments with original maturities of three months or less are considered to be
cash equivalents.
(d) Short-term Investments and Investments in SecuritiesThe Group adopted the Accounting Standards for Financial Instruments which was issued by the
Business Accounting Deliberation Council. In accordance with these standards, securities are classified
into four categories: trading securities, held-to-maturity debt securities, equity investments in associates,
and other securities. Based on this classification, securities with a maturity of less than one year are
included in “Short-term investments” as current assets.
Securities held by the Group are all classified as other securities. Marketable securities classified as
other securities are carried at fair value with the unrealized gain and loss, net of applicable tax, reported
in a separate component of shareholders’ equity. Non-marketable securities classified as other
securities are carried at cost determined by the moving average method. Realized gain and loss and
declines in value judged to be other than temporary on other securities are charged to income.
(e) InventoriesInventories of the domestic consolidated companies are valued at cost, determined by the gross
average method (Carrying amount in the balance sheet is calculated with consideration of write-downs
due to decreased profitability). The costs of inventories held by foreign consolidated subsidiaries are
N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
Sanwa Holdings Corporat ion and Subsidiar ies
35
stated at the lower of cost or market value method by the first-in, first-out method or the moving
average method.
(f) Property, Plant and Equipment (Excluding Lease Assets)Property, plant and equipment are stated at cost. Depreciation is computed by the declining-balance
method over the estimated useful lives of assets, except that the straight-line method is applied to
buildings (other than structures attached to the buildings) acquired subsequent to April 1, 1998. The
foreign consolidated subsidiaries adopt the straight-line method for depreciation.
Costs of maintenance, repairs and minor renewals are charged to income in the year incurred,
although major renewals and improvements are capitalized.
(g) Amortization of GoodwillAmortization of goodwill is determined on a case basis and is generally amortized over a period not
exceeding 20 years.
(h) Leased AssetsLeased assets related to finance lease transactions that do not transfer ownership rights are amortized
under the straight-line method based on the lease term as the useful life and residual value of zero.
However, the Group continues to apply the method for ordinary operating lease transactions to finance
lease transactions contracted before March 31, 2008.
(i) Retirement and Severance BenefitsThe Company and its domestic subsidiaries in Japan have severance indemnity plans, defined
contribution pension plans and defined benefit pension plans. Under these plans, employees who
terminate their service with the Company and its domestic subsidiaries are, under most circumstances,
entitled to lump-sum severance indemnities and pension payments, determined by reference to current
basic rates of pay, length of service and conditions under which the terminations occur.
The Company and its domestic subsidiaries in Japan also have contributory pension benefit plans
covering substantially all of their employees, including the governmental welfare pension benefit plan
which would otherwise be provided by the Japanese government. The contributions to the contributory
and the non-contributory pension plans are placed into trusted pension funds.
The foreign consolidated subsidiaries have defined benefit pension plans or contributory pension
plans, which substantially cover all of their employees, under which the cost of benefits is currently
funded or accrued.
(j) Revenue RecognitionThe Group recognizes revenue at the time products are shipped, which is when title and risk of loss
pass to the customer. The Group recognizes revenue related to installation of products at the time
installation is complete.
However, revenues and costs of construction contracts, of which the percentage of completion can
be reliably estimated, are recognized by the percentage-of-completion method. To estimate the
progress of such construction projects, the Group measures the percentage of completion by
comparing costs incurred to date with the most recent estimate of total costs required to complete the
project (cost to cost basis). If a reliable estimate cannot be made, revenues and costs of construction
contract are recognized by the completed-contract method.
(k) Research and Development Expense and SoftwareResearch and development expenditure is charged to income when incurred.
Expenditure relating to software developed for internal use is charged to income when incurred, except
if it contributes to the generation of income or to the future cost savings. Such expenditures capitalized as
assets are amortized using the straight-line method over their estimated useful lives of five years.
36
(l) Income TaxesThe provision for income taxes is computed based on the pretax income included in the consolidated
statements of operations. Deferred income taxes are recorded to reflect the expected future tax
consequence of temporary differences between the carrying amounts and the tax bases of assets
and liabilities.
(m) Net Income Per ShareThe computation of basic net income (loss) per share is based on the weighted-average number of
shares of common stock outstanding. The average number of shares used in the computation was
240,305 thousand and 240,320 thousand for the years ended March 31, 2012 and 2011, respectively.
Cash dividends per share shown in the consolidated statements of operations are the amounts
applicable to the respective years.
(n) Derivative and Hedging ActivitiesThe Group utilizes derivative transactions related to foreign currency exchange rates and interest rates
in order to reduce their risk exposure arising from fluctuations in these rates and prices, to reduce the
cost of the funds financed and to improve their return on invested funds.
Derivative transactions currently utilized by the Group include interest rate swap contracts and
currency swap contracts.
Net asset or liability arising from derivative transactions is measured at fair value, with unrealized gain
or loss included in earnings. Hedging transactions, which meet the criteria of hedge accounting are
accounted for using deferral hedge accounting, which requires the unrealized gain or loss to be deferred
as a liability or asset until gain or loss relating to the hedge object is recognized.
In addition, certain forward exchange contracts and certain interest rate swap transactions are
accounted for using the allocation method and the special method, respectively, which are regulated in
the standard. The allocation method required recognized foreign currency receivables or payables
covered by forward exchange contracts to be translated at such contract rates. Under the special
method, interest rate swap transactions are accounted for as if the interest rates under those
transactions were originally applied to underlying borrowing.
The Group has established a control environment, which includes policies and procedures for risk
assessment and for the approval, reporting and monitoring of derivative transactions. The Group does
not do derivative transactions for trading purposes. The Group is exposed to certain market risks
arising from derivative transactions. The Group is also exposed to the risk of credit loss in the event of
non-performance by the counterparties to those transactions. However, the Group does not
anticipate non-performance by any of these counterparties, all of whom are financial institutions with
high credit ratings.
The Group evaluates hedge effectiveness by comparing the cumulative changes in cash flows or
the changes in fair value of the hedged items with the corresponding changes in the hedging
derivative instruments.
The assessment of hedging effectiveness regarding interest rate swaps which are accounted for
under the above special accounting method is omitted.
(o) ReclassificationsCertain reclassifications of the financial statements for the year ended March 31, 2011 have been made
to conform to the presentation for the year ended March 31, 2012.
(p) Additional Information(Adoption of Accounting Standard for Accounting Changes and Error Corrections)
For accounting changes and corrections of prior period errors made on or after the beginning of the
current fiscal year, the Company adopted the “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24, issued on December 4, 2009) and the “Implementation Guidance
on Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24,
issued on December 4, 2009).
37
3. Short-term Investments, Investments in Securities and Investments in Non-consolidated Subsidiaries and Affiliates
At March 31, 2012 and 2011, other securities, which were included in short-term investments and
investment in securities, were as follows:
Millions of yen
2012Other securities
CostGross
unrealized gainsGross
unrealized lossesBook value
(Estimated fair value)
Market value available
Equity securities ¥17,887 ¥142 ¥(5,155) ¥12,874
Bonds and debentures 1,105 4 — 1,109
Other 4,400 44 (114) 4,330
¥23,392 ¥190 ¥(5,269) ¥18,313
Market value not available 3,426 — — 3,426
Total ¥26,818 ¥190 ¥(5,269) ¥21,739
Millions of yen
2011
Other securities
CostGross
unrealized gainsGross
unrealized lossesBook value
(Estimated fair value)
Market value available
Equity securities ¥16,658 ¥ 91 ¥(5,563) ¥11,186
Bonds and debentures 1,538 5 (4) 1,539
Other 3,762 50 (123) 3,689
¥21,958 ¥146 ¥(5,690) ¥16,414
Market value not available 4,065 — — 4,065
Total ¥26,023 ¥146 ¥(5,690) ¥20,479
Thousands of U.S. dollars
2012Other securities
CostGross
unrealized gainsGross
unrealized lossesBook value
(Estimated fair value)
Market value available
Equity securities $218,134 $1,732 $(62,866) $157,000
Bonds and debentures 13,476 49 — 13,525
Other 53,659 536 (1,390) 52,805
$285,269 $2,317 $(64,256) $223,330
Market value not available 41,780 — — 41,780
Total $327,049 $2,317 $(64,256) $265,110
At March 31, 2012 and 2011, investments in non-consolidated subsidiaries and affiliates were as follows:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Equity securities ¥5,422 ¥5,101 $66,122
Advances 1,846 1,691 22,512
¥7,268 ¥6,792 $88,634
38
4. Inventories
5. Other Intangible Assets
6. Short-term Debt and Long-term Debt
Inventories at March 31, 2012 and 2011 comprised the following:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Finished goods ¥ 7,242 ¥ 8,399 $ 88,318
Work in process 18,271 14,975 222,817
Raw materials and supplies 11,077 9,863 135,085
¥36,590 ¥33,237 $446,220
Other intangible assets at March 31, 2012 and 2011 comprised the following:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Trademarks ¥ 3,060 ¥ 3,155 $ 37,316
Software 6,339 1,962 77,305
Other 3,375 9,237 41,159
¥12,774 ¥14,354 $155,780
Short-term debt and long-term debt at March 31, 2012 and 2011 consisted of the following:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Short-term loans (unsecured) ¥ 7,138 ¥ 9,261 $ 87,049
Current portion of long-term debt 818 841 9,975
1.32% unsecured bonds, due 2013 5,000 — 60,976
Short-term debt ¥12,956 ¥10,102 $158,000
1.32% unsecured bonds, due 2013 — 5,000 —
1.03% unsecured bonds, due 2014 15,000 15,000 182,927
1.04% unsecured bonds, due 2015 2,000 2,000 24,390
1.16% unsecured bonds, due 2016 2,400 2,400 29,268
0.89% unsecured bonds, due 2016 10,000 10,000 121,951
1.00% unsecured bonds, due 2017 2,000 — 24,390
Loans from banks and other financial institutions unsecured maturing 2012–2015 with interest average rate from 1.64% to 3.14%
18,069 16,231 220,355
Long-term debt ¥49,469 ¥50,631 $603,281
Less, current portion (818) (841) (9,976)
Long-term debt ¥48,651 ¥49,790 $593,305
Aggregate annual maturities of long-term loans at March 31, 2012 were as follows:
Years ending March 31 Millions of yenThousands of U.S. dollars
2014 ¥ 3,318 $ 40,463
2015 3,733 45,524
2016 10,200 124,392
¥17,251 $210,379
39
7. Retirement and Severance Benefits
8. Contingent Liabilities
The following tables set forth the changes in benefit obligation, fair value of plan assets and funded
status of the Group at March 31, 2012 and 2011.
Millions of yenThousands of U.S. dollars
2012 2011 2012
Benefit obligation at the end of year ¥(36,330) ¥(36,292) $(443,049)
Fair value of plan assets at the end of year 24,596 25,095 299,951
Funded status (11,734) (11,197) (143,098)
Unrecognized prior service cost — 7 —
Unrecognized actuarial loss 4,489 4,121 54,744
Accrued pension liability recognized in the consolidated balance sheets ¥ (7,245) ¥ (7,069) $ (88,354)
Prepayment pension cost 1,535 1,604 18,719
Retirement and severance benefits (8,780) (8,673) (107,073)
Some domestic subsidiaries have adopted alternative treatment of the accounting standards for
retirement benefit for small business entities.
Severance and pension cost of the Group included the following components for the years ended
March 31, 2012 and 2011.
Millions of yenThousands of U.S. dollars
2012 2011 2012
Service cost ¥ 1,142 ¥ 1,265 $ 13,927 Interest cost 984 1,065 12,000 Expected return on plan assets (1,069) (1,032) (13,037)Amortization:
Prior service cost 2 2 24 Actuarial loss 747 1,098 9,110
¥ 1,806 ¥ 2,398 $ 22,024 Loss on transfer of defined benefit pension plan to
defined contribution pension plan — 650 —
Other 215 166 2,622 Net periodic benefit cost ¥ 2,021 ¥ 3,214 $ 24,646
Assumption used in the accounting for the defined benefit plans for the years ended March 31, 2012
and 2011 were as follows:
2012 2011
Method of attributing benefits to periods of service Straight-line basis Straight-line basisDiscount rate Mainly 2.0% Mainly 2.0%Long-term rate of return on fund assets Mainly 3.5% Mainly 3.5%Amortization period for prior service cost:
The Company and its domestic subsidiaries Mainly 1 year Mainly 1 yearThe foreign consolidated subsidiaries Mainly 10 years Mainly 10 years
Amortization period for actuarial loss Mainly 10 years Mainly 10 years
Contingent liabilities at March 31, 2012 and 2011 were as follows:
Millions of yenThousands of U.S. dollars
2012 2011 2012
As a guarantor of indebtedness of:
Affiliates ¥842 ¥724 $10,268
40
9. Leases
10. Financial Instruments
The following pro forma amounts represent the acquisition costs, accumulated depreciation and net
book value of the leased assets under finance lease contracts, commencing on or before March 31,
2008 that do not transfer ownership to the lessee at March 31, 2012 and 2011, which would have been
reflected in the accompanying consolidated balance sheets if finance lease accounting had been
applied to the finance leases currently accounted for as operating leases:
Machinery and equipment
Millions of yenThousands of U.S. dollars
2012 2011 2012
Acquisition costs ¥861 ¥913 $10,500 Accumulated depreciation 778 713 9,488 Net book value ¥ 83 ¥200 $ 1,012
The Group leases certain machinery and equipment. Total lease payments under these leases were ¥116
million ($1,415 thousand) and ¥160 million for the years ended March 31, 2012 and 2011, respectively.
Obligations under non-cancelable operating leases as of March 31, 2012 and 2011 were as follows:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Due within one year ¥1,308 ¥1,194 $15,951 Due after one year 2,533 2,109 30,890
¥3,841 ¥3,303 $46,841
1. Status of financial instruments(1) Policy for financial instruments
In light of plans for financing, the Group raises the funds it requires through bank loans and
bond issuance.
The Group manages temporary fund surpluses through financial assets that have high levels
of safety.
The Group reduces the customer credit risk by having the internal policies for managing credit risk.
Long-term debt and bonds are taken out principally for the purpose of capital expenditure
and acquisitions.
The Group undertakes interest rate swap transactions as a hedging instrument for certain
long-term debt to reduce such risk and fix interest expense for debt bearing interest at variable rates.
The Group limit the use of derivatives to the volume of long-term debt and bonds and actual
requirements based on the established internal control rules, and do not engage in speculative
transactions.
(2) Types of financial instruments and related risk
Trade receivables—notes receivables and accounts receivables—are exposed to credit risk in
relation to customers.
The Group holds securities and investments in securities, which are mainly issued by companies
who have business relationships with the Group, and these securities are exposed to the risk of
fluctuation in market prices.
Trade payables—notes payable and accounts payable—mostly have payment due dates within
one year.
Bank loans and bonds are taken out principally for the purpose of working capital, capital
expenditure and acquisitions, which are exposed to the liquidity risk and the interest-rate risk.
The forward exchange contract and the interest swap transaction are almost used for the hedge
as a type of derivative transactions.
41
(3) Risk management for financial instruments
(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies for managing credit risk of the Group, the Group monitors
credit worthiness of their main customers periodically, and monitors due dates and outstanding
balances by customer.
To minimize the credit risk when entering into derivative transactions, counterparties are
limited to financial institutions with high ratings.
(b) Monitoring of market risks
Derivatives mainly include forward foreign currency contracts and interest rate swaps, which are
used to manage exposure to market risks from charges in foreign currency exchange rates of
receivables and payables, and from changes in interest rates of bank loans.
Investments in securities, primarily the equity securities of corporations with which the Group
does business, are exposed to the risk of fluctuations in market price.
The Group manages this risk by periodically examining market prices and the financial
condition of the issuing entities.
The Group executes and manages derivative transactions within the limits of established
internal rules and regulations, and reduces credit risk by limiting counterparties to highly
creditworthy financial institutions.
(c) Monitoring of liquidity risk for financing (the risk that the Companies may not be able to meet its
obligations on the scheduled due dates)
The Group manages the liquidity risk mainly through the cash-flow plans, which are prepared
by financial department.
In order to achieve more efficient and flexible financing, the Group contracts line-of-credit
agreements with certain financial institutions.
(4) Supplementary explanation of items relating to the market value of financial instruments
The Group calculates the fair value of financial instruments based on market prices, or by using
reasonable estimates when market prices are not available. These estimates include variable factors,
and are subject to fluctuation due to change in the underlying assumptions. The contract amounts of
derivatives are not an indicator of the market risk associated with derivative transactions.
2. Market value of financial instrumentsAmounts recognized in the consolidated balance sheets, market values and the differences between
them on March 31, 2012 and 2011 are as shown below.
Moreover, items for which it is extremely difficult to determine market values are not included in the
following table (see (note 2)).
Millions of yen
2012Book value Market value Difference
(1) Cash and deposits ¥ 16,921 ¥ 16,921 ¥ —
(2) Notes and accounts receivables, trade 61,578 61,578 —
(3) Securities and investments in securities 18,313 18,313 —
Total assets ¥ 96,812 ¥ 96,812 ¥ —
(1) Notes and accounts payables, trade (38,334) (38,334) —
(2) Short-term debt (12,956) (12,956) —
(3) Long-term debt (48,651) (49,257) (606)
Total liabilities ¥(99,941) ¥(100,547) ¥(606)
42
Millions of yen
2011
Book value Market value Difference
(1) Cash and deposits ¥ 20,993 ¥ 20,993 ¥ —
(2) Notes and accounts receivables, trade 52,928 52,928 —
(3) Securities and investments in securities 16,414 16,414 —
Total assets ¥ 90,335 ¥ 90,335 ¥ —
(1) Notes and accounts payables, trade (33,187) (33,187) —
(2) Short-term debt (10,102) (10,102) —
(3) Long-term debt (49,790) (50,163) (373)
Total liabilities ¥(93,079) ¥(93,452) ¥(373)
Derivative transactions ¥ 57 ¥ 57 ¥ —
Thousands of U.S. dollars
2012Book value Market value Difference
(1) Cash and deposits $ 206,354 $ 206,354 $ —
(2) Notes and accounts receivables, trade 750,951 750,951 —
(3) Securities and investments in securities 223,329 223,329 —
Total assets $ 1,180,634 $ 1,180,634 $ —
(1) Notes and accounts payables, trade (467,488) (467,488) —
(2) Short-term debt (158,000) (158,000) —
(3) Long-term debt (593,305) (600,695) (7,390)
Total liabilities $(1,218,793) $(1,226,183) $(7,390)
Note 1: Methods to determine the estimated fair value of financial instruments and other matters related
to securities and derivative transactions
Assets
(1) Cash and deposits and (2) Notes and accounts receivables, trade
Since these items are settled in a short period, their carrying value approximates fair value.
(3) Securities and investments in securities
The fair value of equity securities is based on quoted market prices. The fair value of debt securities
is based on either quoted market prices or prices provided by the financial institutions making
markets in these securities.
For information on securities classified by holding purpose, please refer to Note 3. of the notes to
the consolidated financial statements.
Liabilities
(1) Notes and accounts payables, trade and (2) Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Long-term debt
(Long-term loans)
The market value of long-term loans payable is calculated by applying a discount rate to the total of
principal and interest. That discount rate is based on the assumed interest rate if a similar new loans
was entered into.
Because long-term loans payable with variable interest rates are based on the condition that
interest rates are revised periodically, their market values are almost the same as their book values,
the relevant book values are used.
A specially treated interest rate swap is accounted for as an integral part of long-term loans
payable, or the subject of hedging, so that the fair value of the swap is stated by being included in
the fair value of long-term loans payable.
43
11. Derivative Transactions
Derivative transactions to which hedge accounting is not applied at March 31, 2012 and 2011.
Millions of yen
2012 2011
Contract amounts
Market value
Unrealized gain (loss)
Contract amounts
Market value
Unrealized gain (loss)
Currency and interest rate swap contracts: Receive in Japanese yen, pay in euro — — — ¥2,481 ¥(119) ¥(119)
Note: The market value is provided by financial institutions with which we made the contracts.
(Bonds)
The quotation of the company bond that the Company issues calculates the one based on the
market price, and the one without the market price is calculated by the present value that discounts
the principal and interest money total at the interest rate in which it tempers with the remaining
period and the credit risk of the company bond.
Derivative transactions
For information on derivative transactions, please refer to Note 11. “Derivative transactions” of the notes
to the consolidated financial statements.
Note 2: Financial instruments for which it is extremely difficult to determine the fair value were as follows:
Millions of yenThousands of U.S. dollars
2012 2011 2012Book value Book value
Investments in non-consolidated— subsidiaries and affiliates ¥5,422 ¥5,100 $66,122
Other securities
Unlisted equity securities 3,260 3,309 39,756
Others 70 70 854
Because it is recognized that these do not have market values and that the market values are extremely
difficult to determine, they are not included in the chart above.
Note 3: Planned redemption amounts after the balance sheet date for monetary assets and investment
securities with monetary assets and maturity dates.
Millions of yen
2012 2011
Within 1 year Over 1 year Within 1 year Over 1 year
Cash and deposits ¥16,922 ¥ — ¥20,993 ¥ —
Notes and accounts receivables, trade 61,578 — 52,928 —
Securities and investments in securities
Other securities (Bonds) 70 1,108 100 1,509
Other securities (Others) 658 2,672 1,648 1,108
Total ¥79,228 ¥3,780 ¥75,669 ¥2,617
Thousands of U.S. dollars
2012Within 1 year Over 1 year
Cash and deposits $206,366 $ —
Notes and accounts receivables, trade 750,951 —
Securities and investments in securities
Other securities (Bonds) 854 13,513
Other securities (Others) 8,024 32,585
Total $966,195 $46,098
44
12. Stock Options 1. The amount of expense appropriation and the accounting name during the year ended March 31, 2012.
Equity deal expense (Included in “Selling, general and administratve expenses”) ¥35 million (US$427 thousand)
2. The contents, scale and change situation of stock options(1) The contents of stock options
June 2008 stock option
Company Sanwa Holdings Corporation
Resolution date June 26, 2008
A grant person’s classification and the number 5 directors
Type and number of shares Common stock of the Company: 110,000 shares
Date of grant July 15, 2008
Exercise period of rights For 30 years from grant date (from July 16, 2008 to July 15, 2038)
June 2009 stock option
Company Sanwa Holdings Corporation
Resolution date June 30, 2009
A grant person’s classification and the number 5 directors
Type and number of shares Common stock of the Company: 118,000 shares
Date of grant July 15, 2009
Exercise period of rights For 30 years from grant date (from July 16, 2009 to July 15, 2039)
June 2010 stock option
Company Sanwa Holdings Corporation
Resolution date June 30, 2010
A grant person’s classification and the number 5 directors
Type and number of shares Common stock of the Company: 141,000 shares
Date of grant July 15, 2010
Exercise period of rights For 30 years from grant date (from July 16, 2010 to July 15, 2040)
Derivative transactions to which hedge accounting is applied at March 31, 2012 and 2011.
Millions of yen
2012 2011
Contract amounts
Over 1 year
Market value
Contract amounts
Over 1 year
Market value
Interest swap contracts: Objected by long-term loans receive floating, pay fixed
¥9,200 ¥8,700 ¥(96) ¥9,700 ¥9,200 ¥ (62)
Foreign currency forward contracts: Objected by stock on subsidiaries denominated in euro
— — — ¥2,171 — ¥177
Thousands of U.S. dollars
2012
Contract amounts
Over 1 year
Market value
Interest swap contracts: Objected by long-term loans receive floating, pay fixed
$112,195 $106,098 $(1,171)
Foreign currency forward contracts: Objected by stock on subsidiaries denominated in euro
— — —
Note: The market value is provided by financial institutions with which we made the contracts.
45
June 2011 stock option
Company Sanwa Holdings Corporation
Resolution date June 29, 2011
A grant person’s classification and the number 5 directors
Type and number of shares Common stock of the Company: 146,000 shares
Date of grant July 14, 2011
Exercise period of rights For 30 years from grant date (from July 15, 2011 to July 14, 2041)
(2) Scale, and change situation of stock options
(2)-1 Number of stock options
Shares
June 2008 stock option
June 2009 stock option
June 2010 stock option
June 2011 stock option
Before vested
Beginning of period — — 141,000 —
Granted — — — 146,000
Forfeited — — — —
Vested — — 141,000 —
Unvested — — — 146,000
After vested
Beginning of period 110,000 118,000 — —
Vested — — 141,000 —
Exercised — — — —
Expired — — — —
Exercisable 110,000 118,000 141,000 —
(2)-2 Unit value and exercise period for stock option rights
Yen
June 2008 stock option
June 2009 stock option
June 2010 stock option
June 2011 stock option
Exercise price 1 1 1 1
Average share price at exercise — — — —
Fair value unit price (Date of grant) 301 263 250 243
U.S. dollars
June 2008 stock option
June 2009 stock option
June 2010 stock option
June 2011 stock option
Exercise price 0.012 0.012 0.012 0.012
Average share price at exercise — — — —
Fair value unit price (Date of grant) 3.671 3.207 3.049 2.963
3. Assumptions used in estimation of the fair value of stock options above were as follows:
June 2008 stock option
June 2009 stock option
June 2010 stock option
June 2011 stock option
Method of estimation Black-Scholes model
Black-Scholes model
Black-Scholes model
Black-Scholes model
Volatility 26.6% 30.7% 31.4% 33.5%
Expected remaining period 8 years 7 years 6 years 5 years
Expected dividend ¥13 per share ¥10 per share ¥5 per share ¥8 per share
Risk-free interest rate 1.33% 0.94% 0.46% 0.41%
46
13. Research and Development Expenses
14. Income Taxes
Research and development expenses included in selling, general and administrative expenses were
¥2,073 million (US$25,280 thousand) and ¥2,078 million for the years ended March 31, 2012 and 2011,
respectively.
And so on, research and development expenses included in cost of sales were ¥383 million
(US$4,671 thousand) and ¥357 million for the years ended March 31, 2012 and 2011, respectively.
The Company and its domestic subsidiaries are subject to several taxes based on income, which in the
aggregate resulted in statutory tax rate of approximately 39.8% for the years ended March 31, 2012
and 2011. Foreign subsidiaries are subject to income taxes of the countries in which they operate.
The effective rates for the years ended March 31, 2012 and 2011 differ from the Company’s
statutory tax rates for the following reasons:
2012 2011
Statutory tax rate 39.8% —
Expenses not deductible for income tax purposes 1.0 —
Current operating losses of subsidiaries 0.6 —
Depreciation of goodwill 1.2 —
Effect of changes in corporate tax rates 5.4 —
Other 3.7 —
Effective tax rate 51.7 —
The reconsideration for FY2011 is omitted because income before income taxes is negative.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
and liabilities at March 31, 2012 and 2011 were as follows:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Deferred tax assets:
Allowance for bonuses ¥ 725 ¥ 669 $ 8,841
Retirement and severance benefits 3,984 3,750 48,585
Contribution benefit pension plan 663 1,012 8,085
Tax loss carryforwards 814 417 9,927
Securities 485 572 5,915
Investment in affiliates’ securities 554 618 6,756
Net unrealized holding losses on securities 1,810 2,208 22,073
Other 2,496 3,365 30,439
11,531 12,611 140,621
Less valuation allowance (411) (300) (5,011)
Total ¥11,120 ¥12,311 $135,610
Deferred tax liabilities:
Depreciation (3,883) (3,332) (47,354)
Prepayment pension cost (266) (401) (3,244)
Other (314) (242) (3,829)
Total ¥ (4,463) ¥ (3,975) $ (54,427)
Net deferred tax assets ¥ 6,657 ¥ 8,336 $ 81,183
47
15. Other Income (Expenses)
Net deferred tax assets at March 31, 2012 and 2011 were included in the consolidated balance sheets
as follows:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Current assets ¥ 3,287 ¥ 3,187 $ 40,085
Investments and other assets 6,757 8,101 82,402
Current liabilities (110) (69) (1,341)
Long-term liabilities (3,277) (2,883) (39,963)
Net deferred tax assets ¥ 6,657 ¥ 8,336 $ 81,183
(Revisions to Amounts of Deferred Tax Assets and Deferred Tax Liabilities Due to Change in Rate of
Income Taxes)
The Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating Taxation System
Responding to Changes in Economic and Social Structures and the Act on Special Measures for
Securing Financial Resources Necessary to Implement Measures for Reconstruction from the Great
East Japan Earthquake were promulgated on December 2, 2011. In accordance with this, the effective
statutory tax rate used to calculate deferred tax assets and deferred tax liabilities in the current fiscal
year (limited to items eliminated on or after April 1, 2012) has been changed from the previous fiscal
year’s rate for items expected to be collected or paid in the period from April 1, 2012.
As a result, the amount of deferred tax assets (after deduction of deferred tax liabilities) decrease by
¥579 million (US$7,061 thousand), while the amounts of income taxes-deferred recorded in the current
fiscal year increased by ¥368 million (US$4,488 thousand).
Other, net, for the years ended March 31, 2012 and 2011 consisted of the following:
Millions of yenThousands of U.S. dollars
2012 2011 2012
Gain (loss) on sales and disposal of fixed assets ¥ 7 ¥ (18) $ 85 Gain (loss) on sales of investments in securities (28) 75 (341)Loss on revaluation of derivatives (77) (119) (939)Write-down of investments in securities (329) (269) (4,012)Loss from restructuring cost of subsidiary (851) (827) (10,378)Acquisition cost — — —Penalties of alleged of violations of the Law — (2,815) —Retirement benefit expenses — (650) — Disaster loss (31) (304) (378)Other, net (22) 126 (269)
¥(1,331) ¥(4,801) $(16,232)
48
16. Other Comprehensive Income (Loss)
17. Segment Information
The reclassification adjustments and tax effects for components of other comprehensive income (loss)
for the year ended March 31, 2012 are as follows:
Millions of yenThousands of U.S. dollars
2012 2012
Unrealized holding gains on securities:Amount arising during the year ¥ 82 $ 1,000 Reclassification adjustments for losses realized in net income 310 3,780 Before tax effect 392 4,780 Tax effect (374) (4,560)
Total unrealized holding gains on securities 18 220 Deferred losses on hedges:
Amount arising during the year 87 1,061 Reclassification adjustments for losses realized in net income (264) (3,220)Before tax effect (177) (2,159)Tax effect 70 854
Total deferred losses on hedges (107) (1,305)Foreign currency translation adjustments:
Amount arising during the year (1,828) (22,293)Reclassification adjustments for losses realized in net income 4 49
Total foreign currency translation adjustments (1,824) (22,244)Share of other comprehensive income of non-consolidated
subsidiaries and affiliates accounted for using the equity methodAmount arising during the year 5 61
Total other comprehensive income (loss) ¥(1,908) $ (23,268)
The above information for the year ended March 31, 2011 is not required to be presented under the
accounting standard for presentation of comprehensive income as an exemption for the first year of
adopting the standard.
Information about operations in report segments of the Group for the years ended March 31, 2012 and
2011 was as follows:
(1) Report segments
Millions of yen
2012
Japan North America Europe Total Adjustment cost
Consolidated Financial
Statement
Sales to customers ¥146,450 ¥63,881 ¥37,794 ¥248,125 ¥ 89 ¥248,214 Inter-segment 19 53 99 171 (171) —Total sales 146,469 63,934 37,893 248,296 (82) 248,214 Segment income (loss) ¥ 6,138 ¥ 2,865 ¥ 1,150 ¥ 10,153 ¥ (1,298) ¥ 8,855 Segment assets ¥110,831 ¥39,456 ¥21,954 ¥172,241 ¥54,338 ¥226,579 Investment in equity
method companies — 258 644 902 2,072 2,974
Depreciation 2,626 1,548 1,116 5,290 58 5,348 Capital expenditures 773 1,154 933 2,860 37 2,897
49
Millions of yen
2011
Japan North America Europe Total Adjustment cost
Consolidated Financial
Statement
Sales to customers ¥134,491 ¥67,370 ¥35,346 ¥237,207 ¥ 88 ¥237,295 Inter-segment 25 31 27 83 (83) —Total sales 134,516 67,401 35,373 237,290 5 237,295 Segment income (loss) ¥ 4,130 ¥ 2,607 ¥ 661 ¥ 7,398 ¥ (2,836) ¥ 4,562 Segment assets ¥102,393 ¥39,026 ¥22,909 ¥164,328 ¥54,605 ¥218,933 Investment in equity
method companies — — 686 686 1,913 2,599
Depreciation 1,964 1,816 1,224 5,004 59 5,063 Capital expenditures 1,997 719 778 3,494 1 3,495
Thousands of U.S. dollars
2012
Japan North America Europe Total Adjustment cost
Consolidated Financial
Statement
Sales to customers $1,785,976 $779,037 $460,902 $3,025,915 $ 1,085 $3,027,000 Inter-segment 232 646 1,207 2,085 (2,085) —Total sales 1,786,208 779,683 462,109 3,028,000 (1,000) 3,027,000 Segment income (loss) $ 74,854 $ 34,939 $ 14,024 $ 123,817 $ (15,829) $ 107,988 Segment assets $1,351,597 $481,171 $267,732 $2,100,500 $662,658 $2,763,158 Investment in equity
method companies — 3,146 7,854 11,000 25,268 36,268
Depreciation 32,024 18,878 13,610 64,512 707 65,219 Capital expenditures 9,427 14,073 11,378 34,878 451 35,329
(2) Related informationa) Information on product and each service
Millions of yen
2012
Commercial ResidentialMaintenance/
Home improve-ment
Other Consolidated
Sales to customers ¥159,871 ¥62,800 ¥22,791 ¥2,752 ¥248,214
Millions of yen
2011
Commercial ResidentialMaintenance/
Home improve-ment
Other Consolidated
Sales to customers ¥144,322 ¥73,361 ¥17,322 ¥2,290 ¥237,295
Thousands of U.S. dollars
2012
Commercial ResidentialMaintenance/
Home improvement
Other Consolidated
Sales to customers $1,949,646 $765,854 $277,939 $33,561 $3,027,000
50
18. Business Combination
19. Subsequent Events
On December 1, 2011, Overhead Door Corporation, a wholly owned of the Company, completed the
purchase of 100% of the shares of Creative Door Services, Ltd., a distributor and installer of residential
and commercial garage doors based in Western Canada.
(1) Name and main business of acquired company; reason, date and legal method used for acquisition;
1. Name and main business of acquired company
Name of acquired company: Creative Door Services, Ltd.
Main business of acquired company: Sales and construction of door and other products
2. Reason for business combination
Strengthen the business foundation in North America
3. Date of combination
Purchase with cash: December 1, 2011
4. Legal method used for combination
Legal method used for combination: purchase of shares with cash
(2) Purchase price and details
The purchase price for the acquired shares was approximately $45 million comprising all cash paid.
(3) Goodwill incurred, assets acquired and liabilities assumed on the date of business combination
As Overhead Door Corporation was the acquiring company, goodwill of $33 million arising from
the acquisition is being amortized over the estimated useful period.
(4) The amount of assets acquired and liabilities assumed of the business of Creative Door Services, Ltd
at the date of acquisition were as follows:
Thousands of U.S. dollars
Current assets $20,125 Fixed assets 1,387 Current liabilities (8,903)Long-term liabilities (282)Goodwill 33,146
(Year-end cash dividends)
The following distribution of retained earnings of the Company, which has not been reflected in the
accompanying consolidated financial statements for the year ended March 31, 2012, was approved at
the general shareholders’ meeting held on June 26, 2012:
Millions of yen Thousands of U.S. dollars
Year-end cash dividends (¥4.0 per share) ¥961 $11,720
b) Information on each region
Millions of yen
2012Japan North America Europe Total
Property, plant and equipment ¥30,664 ¥11,171 ¥7,709 ¥49,544
Millions of yen
2011
Japan North America Europe Total
Property, plant and equipment ¥31,540 ¥11,988 ¥8,533 ¥52,061
Thousands of U.S. dollars
2012Japan North America Europe Total
Property, plant and equipment $373,951 $136,232 $94,012 $604,195
51
I n d e p e n d e n t A u d i t o r s ’ R e p o r t
52
C o n s o l i d a t e d S u b s i d i a r i e s a n d A f f i l i a t e d C o m p a n i e s
As of October 1, 2012
Domestic
Overseas
SANWA SHUTTER CORPORATIONThe core company of the Sanwa Group.No.1 supplier of rolling steel shutters, overhead doors, steel hinge doors and maintenance and repair services in Japan.• Address: Shingashi 2-3-5, Itabashi-ku, Tokyo, 175-0081, Japan• TEL: +81-3-5998-9111
SHOWA FRONT CO., LTD.A leading manufacturer of facades for stores and other building materials.• Address: Uchikanda 1-13-7, Chiyoda-ku, Tokyo, 101-0047, Japan • TEL: +81-3-3293-6737
OKINAWA SANWA SHUTTER CORPORATIONManufactures and sells steel building materials such as shutters and doors, and store building materials.• Address: Taira 84-1, Tomigusukushi, Okinawa, 901-0212, Japan• TEL: +81-98-840-5538
SANWA TAJIMA CORPORATIONManufactures and sells various kinds of stainless steel building products.• Address: Ikebukuro 2-77-5, Toshima-ku, Tokyo, 171-0014, Japan • TEL: +81-3-5954-5880
SANWA EXTERIOR NIIGATA PLANT CO., LTD.Manufactures various exterior products.• Address: Oigashima 1397-1, Tsubameshi, Niigata,
959-0113, Japan• TEL: +81-256-98-5551
VENIX CO., LTD.Manufactures various partitions.• Address: Kamagata 3128, Ranzan-machi, Hiki-gun, Saitama,
355-0225, Japan• TEL: +81-493-62-6671
SHOWA KENSAN CO., LTD.Manufactures automatic doors for store fronts.• Address: Nakano 1453, Oura-machi, Oura-gun, Gunma,
370-0603, Japan • TEL: +81-276-88-2121
TAJIMA METALWORK CO., LTD.Top brand designing and marketing company of post boxes.• Address: Higashi-Ikebukuro 4-41-24, Toshima-ku, Tokyo,
170-0013, Japan• TEL: +81-3-5396-7611
OVERHEAD DOOR CORPORATIONA leading U.S. manufacturer of garage doors and shutters. • Address: 2501 South State Highway 121, Suite 200 Lewisville,
TX 75067, U.S.A.• TEL: +1-469-549-7110
NOVOFERM GROUP (Novoferm GmbH)One of the leading manufacturers of shutters and doors in Europe.• Address: Isselburger Strasse 31 46459 Rees, Germany• TEL: +49-2850-910-624
SHANGHAI BAOSTEEL-SANWA DOOR CO., LTD.Manufactures and sells shutters and overhead doors.• Address: 988 Yueluo Road, Baoshan, Shanghai, China• TEL: +86-21-5692-5550
NOVOFERM (SHANGHAI) CO., LTD.Manufactures and sells doors.• Address: No.118 Mingye Road, Shenshan Industrial Area,
Songjiang, Shanghai, China• TEL: +86-21-5779-3335
SANWA HOLDINGS CORPORATION SHANGHAI REPRESENTATIVE OFFICE• Address: Room 1405, Chunshenjiang Building,
400 Zhejiang Road (MID), Shanghai, China• TEL: +86-21-3318-0127
SANWA SHUTTER DESIGN (SHANGHAI) CORPORATION• Address: Room 7AF, Xinda Building,
1399 Beijing West Road, Shanghai, China• TEL: +86-21-3360-6778
SANWA SHUTTER (H.K.) LTD.Manufactures and sells shutters and doors. • Address: Room 1901, 19/F Emperor Group Centre, No. 288
Hennessy Road, Wanchai, Hong Kong, China• TEL: +852-2833-6619
AN-HO METAL INDUSTRIAL CO., LTD.Manufactures and sells shutters and doors. • Address: 7Fl, No. 27, Section 1, Chungshan North Road,
Taipei, Taiwan• TEL: +886-2-2521-0013
VINA-SANWA COMPANY LIABILITY LTD.Manufactures and sells shutters and doors. • Address: High-Tech Industrial Zone, Hoa Lac High-Tech Park,
Thach That, Hanoi, Vietnam• TEL: +84-4-6281-1388
SUN METAL CO., LTD.Manufactures and sells shutters and doors.• Address: 180-184 METRO Building 4F, Rajawongse Road,
Bangkok 10100, Thailand• TEL: +66-2-222-5190
PT. SANWAMAS METAL INDUSTRYManufactures and sells shutters.• Address: Jl. Let. Jend. S. Parman kav. 32-34,
Jakarta 11480, Indonesia• TEL: +62-21-548-2308
53
G l o b a l N e t w o r k
57
1
11
46
8
7
5 10
14
1516
23
912
13
1722
21
23
19
20
24 18
JAPAN ASIA
272625
32
33
34
3738
41
3130
29
28
40
36
3942
48
55
56
50
49
54
4535
5344
4351
5246
NORTH AMERICA EUROPE
54
Group Plant Locations
Company Plant Name Country Products
SANWA SHUTTER, JAPANESE SUBSIDIARIES & AFFILIATESSanwa Shutter Corporation 1 Sapporo
Japan
Rolling Shutters, Overhead Sectional Doors, Doors & Door Frames2 Ashikaga Rolling Shutters, Overhead Sectional Doors3 Ota Doors & Door Frames4 Shizuoka Window Shutters, Doors & Door Frames5 Gifu Rolling Shutters, Overhead Sectional Doors6 Hiroshima Rolling Shutters, Doors & Door Frames7 Kyushu Rolling Shutters
Okinawa Sanwa Shutter Corporation 8 Okinawa Rolling Shutters, Doors & Door FramesSanwa Tajima Corporation 9 Saitama Stainless Steel Fittings, Automatic Revolving Doors
10 Nagoya Stainless Steel FittingsSanwa Exterior Niigata Plant Co., Ltd. 11 Niigata Exterior ItemsVenix Co., Ltd. 12 Ranzan Aluminum PartitionsShowa Kensan Co., Ltd. 13 Gunma Automatic DoorsYoshida Seisakusyo Co., Ltd. 14 Saku Stainless Steel FittingsSuzuka Engineering Co., Ltd. 15 Yokkaichi Rubber Mixing PlantsMetalwork Kansai Co., Ltd. 16 Sannan Stainless Steel FittingsHayashi Industries Co., Ltd. 17 Niigata Doors & Door Frames
AFFILIATED COMPANIES (ASIA)
Shanghai BaoSteel-Sanwa Door Co., Ltd. 18 ShanghaiChina
Overhead Sectional Doors, Rolling Shutters, Sheet ShuttersSanwa Shutter (H.K.) Ltd. 19 Hong Kong Rolling Shutters, Doors & Door FramesAn-Ho Metal Industrial Co., Ltd. 20 Hsinchu Taiwan Doors & Door FramesVina-Sanwa Company Liability Ltd. 21 Hanoi Vietnam Doors & Door Frames, Rolling Shutters, Sheet ShuttersSun Metal Co., Ltd. 22 Korat Thailand Rolling Shutters, Doors & Door FramesPt. Sanwamas Metal Industry 23 Bekasi Indonesia Rolling ShuttersNovoferm (Shanghai) Co., Ltd. 24 Shanghai China Hinge Doors
ODC (U.S.A.)
Access Systems Division 25 Lewistown
U.S.A.
Rolling Doors26 Williamsport Residential Garage Doors, Sectional Steel Doors27 Grand Island Residential Garage Doors, Sectional Steel Doors28 Mt. Hope Residential Garage Doors, Sectional Steel Doors, Hardware Parts29 Dalton Rolling Doors30 Trail Sheet Doors31 Conneaut Window Frames, Premium Doors32 Pensacola Residential Garage Doors, Sectional Steel Doors, Hardware Parts33 Centralia Residential Wood Doors34 Portland Residential Garage Doors, Sectional Steel Doors35 Reims France Residential Garage Door Assembly
Genie 36 Baltic U.S.A. Garage Door OpenersHorton 37 Corpus Christi Automatic Entrance Systems
38 Matamoros Mexico Automatic Entrance Systems39 Telford U.K. Automatic Entrance Systems
TODCO 40 Marion U.S.A. Truck & Trailer Doors41 Tecate Mexico Truck & Trailer Doors
NOVOFERM (EUROPE)
Novoferm (NF) GmbH 42 Haldern
Germany
Doors & Door Frames43 Werth Residential Garage Doors, Door Frames44 Dortmund Residential Garage Doors, Sectional Door Panels
NF Riexinger Tüenwerke GmbH 45 Brackenheim Fireproof Doors & Door Frames, Industrial DoorsNF Siebau GmbH 46 Buschhütten Other DoorsNF Tormatic GmbH 47 Dortmund Garage Door OperatorsNF France S.A.S. 48 Machecoul
FranceResidential Garage Doors
49 Bavilliers Residential Garage Doors50 Melun Fireproof Doors & Door Frames
NF Nederland B.V. 51 WaardenburgNetherlands
Industrial Doors52 Roermond Industrial Doors
Novoferm UK Limited 53 Luton U.K. Residential Garage DoorsNF Schievano s.r.l. 54 Padova Italy Doors & Door FramesNF Alsal S.A. 55 Cantabria Spain Doors & Door Frames, Residential Garage Doors, Industrial DoorsNovoferm Door Sp. zo.o 56 Wykroty Poland Tubular Frame DoorsDong Bang Novoferm Inc. 57 Seoul South Korea Doors & Door Frames
55
H i s t o r y o f S a n w a H o l d i n g s
1956 Apr. Established Sanwa Shutter Manufacturing Co., Ltd. (President: Manji Takayama), a predecessor of this company, in Amagasaki, Hyogo Prefecture.
1963 Apr. Merged three Group companies and established Sanwa Shutter Corporation. Relocated headquarters to Tokyo.
1970 Jul. Listed on the First Section of the Tokyo Stock Exchange.
1974 Aug. Entered into technical tie-up with Overhead Door Corp. (U.S.A.).
Oct. Relocated the headquarters to Shinjuku, Tokyo.
1981 May Toshitaka Takayama becomes President and Manji Takayama Corporate Advisor.
1983 Mar. Deployed nationwide 24-hour service.
1986 Oct. Established Sanwa Shutter (HK) Ltd. in Hong Kong.
1988 Sep. Established An-Ho Metal Industrial Co., Ltd. in Taiwan.
1992 Oct. Established Sun Metal Co., Ltd. in Thailand.
1996 Jun. Established Sanwa USA Inc. and acquired Overhead Door Corp. Secured the lion’s share of the U.S. garage door and shutter mar-kets.
Nov. Established PT. Sanwamas Metal Industry in Indonesia.
2003 Oct. Acquired Novoferm, Europe’s second-largest manufacturer of doors and shutters. With this acquisition, Sanwa Shutter established a presence in Europe, as well as Japan and the United States.
2004 Jan. Established Sanwa Shutter Design (Shanghai) Corporation in Shanghai.
Apr. Established an internal office on corporate social responsibilities to oversee risk management, legal compliance and environment-friendly policies.
2005 Sep. Entered into comprehensive business alliance with Hochiki, a leading fire detection and disaster-prevention equipment company in Japan.
2006 Apr. Sanwa Shutter celebrated its 50th anniversary.
Established Shanghai BaoSteel-Sanwa Door Co., Ltd., a joint venture with BaoSteel Development Co., Ltd., a subsidiary of BaoSteel, in Shanghai to manufacture and sell overhead doors, rolling shutters and sheet shutters. Completion of quadruple core structure: Japan, U.S.A., Europe and Asia (China).
2007 Oct. The Sanwa Group adopts holding company system.
Sanwa Shutter Corporation changed its trade name to “Sanwa Holdings Corporation,” and the operating company succeeded the trade name “Sanwa Shutter Corporation.”
2008 Jan. Sanwa Holdings agreed to establish a joint-venture company, Vina-Sanwa Company Liability Ltd., with the Vietnamese construction and trading company Vinaconex Corporation.
2009 Dec. Overhead Door Corporation, our consolidated subsidiary, acquired the door businesses of Wayne Dalton Corporation.
2010 Feb. Sanwa Shutter Corporation concluded a direct sales agreement for the Japanese market with EFAFLEX Tor-und Sicherheitssysteme GmbH & Co. KG of Germany.
2011 Jan. Overhead Door Corporation acquired an automatic door sales, installation, and maintenance business from Automatic Door Enterprises, Inc., an automatic door distributor in the U.S.
Oct. The partition sales business of subsidiary Venix Co., Ltd. and the automatic door sales business of subsidiary Showa Kensan Co., Ltd. were integrated into Sanwa Shutter Corporation, and the two subsidiaries become specialized manufacturing operations.
Dec. Overhead Door Corporation acquired Creative Door Services Ltd., a leader in the door business in Western Canada, and which became a new Canadian subsidiary of ODC.
2012 Jan. Sanwa Shutter Corporation announced that it concluded an OEM contract with LIXIL Corporation to supply some types of lightweight shutters and lightweight doors from March 2012.
56
2 Our Group
4 Consolidated Financial Highlights
6 To Our Shareholders
9 New Three-Year Plan
13 Business Overview
14 Japan
16 North America
18 Europe
20 Asia
21 CSR Activities
25 Corporate Governance
29 Financial Information
FoRWARD-lookInG StAteMentS:
This annual report includes forward-looking statements pertaining to expectations, plans, strategies, management goals, future performance, expenses, revenues, income and other forecasts formulated on past experiences. Forward-looking statements necessarily entail some degree of uncertainty, and the content conveyed in the results as well as underlying factors identified in the report may differ materially from actual results depending on changes in those factors.
P r o f i l e
C o n t e n t s
The Sanwa Group, headed by Sanwa Holdings Corporation, is a global
corporate group composed of 100 companies, including 81 subsidiaries
and 18 affiliated companies, as of March 31, 2012. The Group has
four major fields of business—commercial building materials, residential
housing materials, maintenance service and home improvement, and
other businesses—and provides a wide range of steel construction
materials for commercial and residential construction, including shutters,
doors and other units.
Under our New Three-year Plan (FY2010–2012), drawn up in April
2010, we aim to establish Sanwa as a “total steel construction material
corporation” and a leading global brand in the field of steel construction
materials. By strengthening market alliances across our four
key markets—Japan, the United States, Europe and Asia—
and venturing into new markets, such as the environmental
field, we intend to capture new market opportunities
for sustained growth.
C o r p o r a t e D a t a
HEAD OFFICE:
ESTABLISHED:
CAPITAL (PAID-IN):
EMPLOYEES:
STOCK LISTINGS:
TRANSFER AGENT:
COMMON STOCK:
Shinjuku Mitsui Building, 52F
Nishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo, 163-0478, Japan
Telephone: +81-3-3346-3019
Facsimile: +81-3-3346-3177
April 10, 1956
¥38,413 million
Consolidated: 8,521
Tokyo Stock Exchange
Mitsubishi UFJ Trust and Banking Corporation
Corporate Agency Department
Higashisuna 7-10-11 Koto-ku,
Tokyo, 137-8081, Japan
Authorized: 550,000,000 shares
Issued: 257,920,497 shares
Number of shareholders: 11,851
1,000
800
600
400
200
0
(Thousands of shares)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
(Yen) (Yen)Nikkei Stock Average
25,000
20,000
15,000
10,000
5,000
0
Apr. ’06 Jan. ’07 Jan. ’08 Jan. ’09 Jan. ’10 Jan. ’12Jan. ’11
Apr. ’06 Jan. ’07 Jan. ’08 Jan. ’09 Jan. ’10 Jan. ’12Jan. ’11
Monthly stock price range
Monthly trading volume
MONTHLY STOCK DATA:
PRINCIPAL SHAREHOLDERS:Percentage of voting rights (%)
Northern Trust Co. (AVFC) Sub Account American Clients 8.62Japan Trustee Services Bank, Ltd. (Trust Account) 6.65The Master Trust Bank of Japan, Ltd. (Trust Account) 5.64Sumitomo Mitsui Banking Corporation 4.70Japan Trustee Services Bank, Ltd. (Trust Account 9) 4.62The Dai-ichi Life Insurance Company, Limited 3.37Nippon Life Insurance Company 3.29Aioi Nissay Dowa Insurance Co., Ltd. 3.21Nisshin Steel Co., Ltd. 2.89Northern Trust Co. AVFC Re U.S. Tax Exempted Pension Funds 2.82
TREND OF STOCK PRICE:High Low
April 1, 2004–March 31, 2005 ¥618 ¥497April 1, 2005–March 31, 2006 ¥813 ¥559April 1, 2006–March 31, 2007 ¥800 ¥582April 1, 2007–March 31, 2008 ¥763 ¥396April 1, 2008–March 31, 2009 ¥462 ¥223April 1, 2009–March 31, 2010 ¥357 ¥218April 1, 2010–March 31, 2011 ¥367 ¥215April 1, 2011–March 31, 2012 ¥333 ¥222
As of March 31, 2012
57
Sanwa Holdings CorporationPublic Relations SectionNishi-Shinjuku 2-1-1, Shinjuku-ku,Tokyo 163-0478, JapanTel : +81-3-3346-3331Fax : +81-3-3346-3177http://www.sanwa-hldgs.co.jpE-mail: [email protected]
Printed in Japan
AnnuAl RepoRt 2012
SAnWA HolDInGS CoRpoRAtIon
For the year ended March 31, 2012
Delivering Value and Results
An
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Al R
epoRt 2012
SAnW
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GS Co
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