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OuR GlObAl QuEsT FOR ExCEllENCE
ANNuAl REPORT 2012For the year ended March 31, 2012
Yokogawa E
lectric Corporation
Annual R
eport 20
12
CONTENTs02 Evolution 2015 Mid-term business Plan
03 Financial Highlights
04 Message from the President and CEO
08 FEATuRE Yokogawa’s Dramatic Advance in the
Growing Natural Gas Market
12 Our businesses at a Glance
14 Research and Development
16 Corporate social Responsibility
17 Corporate Governance
20 Environmental Management
22 Directors, Corporate Auditors, and Officers
24 Consolidated 11-year summary
26 Financial Review
30 Consolidated balance sheet
32 Consolidated statement of Operations
THE YOKOGAWA PHIlOsOPHY
As a company, our goal is to contribute to society through broad-ranging activities in the areas of measurement, control, and information.
Individually, we aim to combine good citizenship with the courage to innovate.
CORPORATE PROFIlEFrom its founding in 1915, Yokogawa Electric Corporation has contributed to society
by supplying industry with cutting-edge products based on its measurement, control,
and information technologies. Always sensitive to changing customer needs,
Yokogawa has continued to transform itself and has become a leading company in
the global industrial automation and control field. While striving to enhance our corpo-
rate value, we remain committed to doing our part as a trustworthy industry partner
to realize a more prosperous society.
1915 1920 1925 1930 1935 1940 1945 1950 1955 1960
Yokogawa Europe b.V.
1915 Tamisuke Yokogawa, Doctor of Architectural Engineering, established an electric meter research institute in shibuya, Tokyo, with Ichiro Yokogawa and shin Aoki
1917 First to produce and sell elec-tric meters in Japan
1920 Incorporated as Yokogawa Electric Works ltd.
1933 started research and man-ufacture of aircraft instru-ments and flow, temperature, and pressure controllers
1948 Made public offering of the Company’s stock
1950 Developed Japan’s first elec-tronic recorder
1955 signed a technical assistance agreement for industrial instru-ments with Foxboro, usA
1957 Established Yokogawa Electric Works, Inc. as North American sales office
1964 Made a full-scale entry into the industrial analyzer market
1966 Developed and started manu-facture and sale of vortex flowmeter
Cautionary Statement regarding Forward-looking Statements Statements made in this annual report regarding Yokogawa’s plans, estimates, strategies, beliefs, and other statements that are not historical facts are forward-looking statements about the future performance of Yokogawa. These statements are based on management’s assumptions and beliefs in the light of currently available information. Yokogawa cautions that a number of important factors, such as general economic conditions and exchange rates, could cause actual results to differ materially from those discussed in the forward-looking statements.
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Yokogawa Electric CorporationYokogawa Corporation of AmericaYokogawa Middle East
B.S.C.(c)
Yokogawa Electric International Pte. Ltd.
Yokogawa Engineering Asia Pte. Ltd.
Yokogawa China Co., Ltd.
Based on the mid-term business plan, Yokogawa will transform itself andexpand the industrial automation andcontrol business to take growth to the next level.
Yokogawa Electric Corporation
Yokogawa’s International Business Headquarters
Regional Support Offices
33 Consolidated Statement of Comprehensive Income
34 Consolidated Statement of Changes in Equity
35 Consolidated Statement of Cash Flows
36 Notes to Consolidated Financial Statements
57 Report of Independent Auditors
58 Subsidiaries and Affiliates
59 Corporate Data/Investor Information
1974 Established Yokogawa Electric Singapore Pte. Ltd. as Singapore plant
Established Yokogawa Electric (Europe) B. V. as European sales office
1975 Released CENTUM, the world’s first distributed process control system
1983 Formed Yokogawa Hokushin Electric Corp. through merger with Hokushin Elec-tric Works, Ltd.
1986 Established Xiyi Yokogawa Co., Ltd. in Xian, China, jointly with Xian Instru-ments Factory
Changed the Company name to Yokogawa Electric Corporation
1988
Entered the high-frequency measuring instrument business
1990 Established Yokogawa Middle East E.C. in Bahrain
1996 Released confocal scan-ner and entered biotech-nology business
2002 Acquired all the shares of Ando Electric Co., Ltd.
2005 Established Yokogawa Electric International Pte. Ltd. in Singapore to oversee global industrial automation business
2008 Entered the drug discovery support market with a new bio test system
2010 Transferred the measuring instruments business to Yokogawa Meters & Instruments Corporation
2011 Announced Evolution 2015 Mid-term Business Plan
01Yokogawa Electric CorporationAnnual Repor t 2012
MID-TERM BUSINESS PLAN
Evolution 2015Taking us to the next growth stage
Business Plan for FY2015
Growth Strategy Centering on Industrial Automation and Control
Strategy by Region
n Resource-rich countries and emerging countries Invest resources in the BRICs, the Middle East, Southeast Asia, and Oceania to win new projects.
n Africa, Central Asia, and Latin America Open new offices/facilities to strengthen sales channels.
n Europe and North America Strengthen relationships with major global companies to efficiently gain market share.
n Japan Provide highly efficient services that add significant value.
Strategy by Product
n Systems For target industries, strengthen the capabilities of our systems and develop digital solutions that make effective use of plant data.
n Sensors Expand and enhance the product lineup by means such as alliances with other companies and M&A.
n Services Provide consulting services that add significant value by improving productivity.
Strategy by Industry
n Business expansion in high-market-share industries Oil refining and petrochemicals
n Expansion in target industries
•Industrieswithsignificantgrowth—oil/gas field development, electric power, and specialty chemicals
• New industries—biomass and geothermal/wind/solar electric power
Sales ¥400 billion
Operating income ¥40 billion
Operating income-to-sales ratio 10 %
EPS ¥100 or more
Equity ratio 50 %
Debt-to-equity ratio (D/E) 40 %Free cash flow 2011-2015 over ¥60 billion
Based on the exchange rates of 1$=80 yen, 1€=110 yen
The market for our industrial automation and control business is expected to grow over the medium to long term, primarily in emerging countries. We will develop and execute strategies by region, industry, and product to capture a larger share of this growing market.
Note: Yokogawa Electric estimates, based on ARC Advisory Group market research data
8.6% (No. 4)
10% or more
No. 12009 2015 Mid- to long-term target
Our Market Share Targets for the Global Control System / Sensor Market (estimated at 3 trillion yen in 2009)
02 Yokogawa Electric CorporationAnnual Repor t 2012
0 08/3
437.4
376.5
316.6 325.6 334.7
09/3 10/3 11/3 12/3
100
200
300
400
500
Net sales
(Billions of yen)
−200 08/3
44.76
–149.26
–57.45
–25.98
23.11
09/3 10/3 11/3 12/3
−100
0
100
Net income (loss) per share
(Yen)
0 0
5 2
10 4
15 6
20 8
25 10
08/3
27.4
4.72.6
11.1
16.6
09/3 10/3 11/3 12/3
30 12
6.3
0.8
3.4
5.0
1.3
� Operating income � Operating income ratio
Operating income/Operating income ratio(Billions of yen) (%)
−60 08/3
11.7
–38.4
–14.8–6.7
6.0
09/3 10/3 11/3 12/3
−40
−20
0
20
Net income (loss)
(Billions of yen)
206.4
0 008/3
243.3
55.6 54.856.0 56.7 59.4
177.3 184.7198.9
09/3 10/3 11/3 12/3
100 20
50 10
200 40
150 30
250 50
300 60
109.7
52.0
35.119.427.1
79.4
36.0
29.1
32.1
29.8
72.9 77.0 87.3
32.0 26.8 26.4
21.0 21.323.0 27.8
36.9 36.1
20.925.226.3
� Asia � Europe � North America� Middle East � Other � Sales ratio outside Japan
Sales outside Japan by geographic area/ Sales ratio outside Japan(Billions of yen) (%)
12/3
Segment sales
Other
6.9%Industrial
Automationand Control
82.8%
Test and Measurement
10.3%
FINANCIAL HIGHLIGHTSYokogawa Electric Corporation and Consolidated Subsidiaries Years Ended March 31, 2010 to 2012
Billions of yenMillions of US dollars
2010/3 2011/3 2012/3 2012/3
For the year:
Net sales ¥316.6 ¥325.6 ¥334.7 $4,072
Industrial Automation and Control Business 257.3 260.7 277.2 3,372
Test and Measurement Business 31.9 37.1 34.6 421
Other Businesses 27.4 27.9 22.9 279
Operating income 2.6 11.1 16.6 202
Operating income ratio (%) 0.8 3.4 5.0 —
Net income (loss) (14.8) (6.7) 6.0 72
At year-end:
Total assets 398.8 361.2 359.5 4,374
Shareholders’ equity 153.4 141.7 145.7 1,773
ROE (Return on equity) (%) (9.2) (4.5) 4.1 —
ROA (Return on assets) (%) (3.7) (1.8) 1.7 —
Shareholders’ equity ratio (%) 38.5 39.2 40.5 —
Yen US dollars
Per share data:
Net income (loss) (57.45) (25.98) 23.11 0.28
Cash dividends 2.00 0.00 5.00 0.06
Shareholders’ equity 595.42 550.19 565.69 6.88
Stock information:
Stock price at the end of the term (yen / US dollars) 814 634 837 10.18
Market capitalization (billions of yen / millions of US dollars) 218.7 170.3 224.8 2,736
Number of issued shares 268,624,510 268,624,510 268,624,510 —
Note: The method for aggregating segment data was changed in fiscal year 2010 (ended March 31, 2011). In the above table, the 2009 figures were recalculated based on the new method.
03Yokogawa Electric CorporationAnnual Repor t 2012
MESSAGE FROM THE PRESIDENT AND CEO
SHUzO KAIHORIPresident and Chief Executive Officer
Upon joining the Company in 1973, Shuzo Kaihori worked in technology, engineering, and services for the industrial automation and control business. He became the President and COO of Yokogawa Corporation of America in 2000, and then served as Vice President and Head of the Industrial Automation Business Headquarters. In June 2006 he became a Director, and the following April was appointed President and COO of Yokogawa Electric Corporation. In April 2008 he became president and CEO.
Not long after this appointment, market conditions declined as the result of the 2008 global financial crisis. Key businesses slowed and losses accumulated. In February 2009, President Kaihori announced a plan to reduce fixed costs and review the Group’s business portfolio. In November 2011, he formulated the Evolution 2015 mid-term business plan with a view to achieving growth centering on the industrial automation and control business.
Seeking to evolve while striving to
enhance corporate value through
attainment of the goals set in the
mid-term business plan
04 Yokogawa Electric CorporationAnnual Repor t 2012
Successful structural reforms led to rising sales and profits in fiscal year 2011While the global economy exhibited modest growth in the first half of the year ended March 31,
2012 (fiscal year 2011), the second half was characterized by increasing uncertainty over the
economic outlook, reflecting the deepening financial instability in Europe, the sluggish recovery
of the U.S. economy, and slowing economic expansion in emerging nations. The Japanese econ-
omy had shown signs of recovery from a slump following the Great East Japan Earthquake, but
failed to gain traction due to factors that included the protracted appreciation of the yen and the
flooding in Thailand.
Against this backdrop, the Yokogawa Group put considerable effort into expanding operations
outside Japan, especially in the industrial automation and control business, where the Company
benefited from increased investment in electric power and energy related projects. Although the
yen’s appreciation affected our results, orders consequently rose 10.0 billion yen year on year
to 344.1 billion yen and net sales rose 9.0 billion yen to 334.7 billion yen. (Excluding the impact
of the yen’s appreciation, orders and net sales would have risen 19.2 billion yen and 17.9 billion
yen, respectively.) Operating income rose 5.5 billion yen year on year to 16.6 billion yen, due to
growth in sales and reduced fixed costs as a result of structural reforms. For the first time in
four years, we recorded net income. The net income figure of 6.0 billion yen represented a 12.7
billion yen improvement over fiscal year 2010, when we booked business structure improvement
expenses and other extraordinary losses in connection with the structural reforms.
The Yokogawa Group positioned fiscal years 2009 and 2010 as a period of structural reform
in preparation for the next growth stage. During that time, the Group implemented an action plan
to reduce costs and review its business portfolio. The outcome of these reforms is readily appar-
ent in the fiscal year 2011 business results.
Structural reforms accomplishedOur structural reforms were vir tually complete by the end of fiscal year 2010, with two tasks
remaining to be resolved in the following fiscal year: deciding how to make the most effective
use of our Sagamihara office and plant—the main facility for the discontinued photonics busi-
ness—and entering into semiconductor tester related alliances.
With respect to the Sagamihara office and plant, we resolved in March 2012 to conclude a
leasing agreement with Opnext Japan, Inc., covering the 20-year period from April 2013 to March
2033. Starting in fiscal year 2013, the Company’s costs associated with the Sagamihara facility
will in principle be offset completely by the leasing fees.
Our Evolution 2015 market share targets for the global control system / sensor market
2009 8.6%
2015 10.0% or more
Mid- to long-term target
Top share of market
Non-Japan: 8%Japan: 2%
Sales growth: Achieve 6% CAGR
The completion of structural reforms in fiscal years 2009 and 2010
led to substantial growth in profits in fiscal year 2011.
05Yokogawa Electric CorporationAnnual Repor t 2012
Expansion in target industries Expansion in
industries where we have expertise
We looked into all manner of measures to support the semiconductor tester business. How-
ever, after considering the prolonged downturn in DRAM prices and the greater-than-expected
slump in LCD-related markets and then discussing the potential of this market and the necessary
capital expenditure, we ultimately decided to exit this business. The memory tester business will
be transferred to DHK Solution Corporation of South Korea by August 2012 and the non-memory
tester business will be discontinued over a one year period commencing from that date. In
stages, the affected employees will be redeployed elsewhere in the Yokogawa Group. From fiscal
year 2013, there will be no risk of the semiconductor tester business recording a loss.
This concludes our decisions on structural reforms. In so doing, we have paved the way for
growth centered on the industrial automation and control business.
The Evolution 2015 mid-term business planIn November 2011, the Yokogawa Group unveiled the Evolution 2015 mid-term business plan for
the years leading up to fiscal year 2015. The plan sets out targets and strategies for this period
and is the first step toward achieving our long-term vision of being the global No. 1 company in
the industrial automation and control business. With the structural reforms now complete, the
Group will use Evolution 2015 as a blueprint for growth centering on the industrial automation
and control business.
Amid steadily rising demand for energy in emerging countries, the industrial automation and
control business is expected to see solid growth in such energy-related markets as electric
power, natural gas, oil, and renewable energy. As a global solutions and service company,
Yokogawa will implement a growth plan for these expanding control markets that centers on the
business of providing customer-focused solutions and is comprised of regional, industry, and
product strategies.
The Group’s regional strategy is to consider opening or expanding sales channels in resource-
rich and emerging countries with high growth potential, especially in Africa, Central Asia, and
Latin America.
In terms of industry strategy, we already have a large share of downstream markets such as oil
refining and petrochemicals, and in these areas aim to strengthen our capacity to provide solu-
tions to major global corporations and to national oil companies in emerging countries. In the
Our Evolution 2015 industry strategy
The decisions to conclude a leasing agreement for the
Sagamihara facility and discontinue the semiconductor tester
business have set the stage for growth centering on the industrial
automation and control business.
NEW MARKETS
HIGH GROWTH MARKETS
HIGH-SHARE MARKETS
RENEWABLE ENERGY
SPECIALTY CHEMICALS
ELECTRIC POWER
PETROCHEMICALS
OIL/GAS FIELD DEVELOPMENT
OIL REFINING
Biomass Geothermal/wind/solar electric power
06 Yokogawa Electric CorporationAnnual Repor t 2012
upstream oil and gas development and production markets, the Group will seek to win projects
based on its strong downstream track record, targeting primarily major oil companies. In electric
power, our plan is to expand business all over the world based on our strong record in Asia and
Oceania, and the expertise and technology that we have amassed along the way. In chemicals,
our aim is to gain market share outside Japan. We will also actively pursue opportunities in the
renewable energy market, especially in biomass, where we already have a strong body of work.
In terms of product strategy, we are broadening our lineup of sensor products. Among our
major product releases in fiscal year 2011 were an optical fiber temperature sensor for use in
oil and natural gas drilling and a differential pressure/pressure transmitter and temperature
transmitter that is compliant with international wireless communication standards. To take a
larger share of the market, we will continue to enhance our lineup of products and make them
more competitive.
In addition to the pursuit of growth strategies, Evolution 2015 calls for business reforms that
include globalization of corporate headquarters functions, changes to the production set-up, and
implementation of a global human resources strategy. The plan also sets out financial strate-
gies. By pursuing the abovementioned growth strategies, implementing business reforms, and
executing the financial strategies, we seek to generate consolidated net sales of 400 billion yen
in fiscal year 2015, along with operating income of 40 billion yen, an operating income-to-sales
ratio of 10%, and EPS of 100 yen or more.
Enhancing corporate valueWith the aim of reciprocating the trust that has been placed in us by our stakeholders, Yokogawa
is dedicated to enhancing its corporate governance and managing its business soundly and prof-
itably. Currently, three of the seven members of the Board of Directors are outside directors,
while three of the five members of the Board of Corporate Auditors are outside corporate audi-
tors. Outside directors and corporate auditors offer advice and suggestions based on their rich
backgrounds and expert judgment. Accordingly, they play an important role in assuring the valid-
ity, objectivity, and transparency of management.
The Company will work tirelessly to strengthen its corporate governance with the aim of man-
aging its business in a trustworthy manner and will endeavor to build a corporate culture that
prioritizes compliance above all else.
Yokogawa is dedicated to enhancing corporate governance and managing its business in a
manner befitting the trust placed in us. We will be doing our utmost to maximize corporate value,
and to this end ask for the continued support and encouragement of investors and stakeholders.
August 2012
SHUzO KAIHORI
President and Chief Executive Officer
Evolution 2015 outlines growth strategies for the industrial automation and
control business; business reforms that include globalization of corporate
headquarters functions, changes to the production set-up, and implementation
of a global human resources strategy; and financial strategies.
07Yokogawa Electric CorporationAnnual Repor t 2012
FEATURE
Yokogawa’s Dramatic Advance in the Growing Natural Gas Market
Driven by economic growth in emerging countries, the
global demand for energy continues to grow. In view of its
high energy efficiency and small environmental footprint,
natural gas is in especially high demand.
Yokogawa supplies a number of products and services
to the natural gas market for use in onshore and offshore
production, liquefaction, transportation, and regasification,
and has a strong record in this field. Our Evolution 2015
mid-term business plan unveiled in November 2011
identifies the natural gas market—in particular upstream
areas such as extraction and primary processing—as a
strategic focus, and we are actively expanding our
business in these areas.
08 Yokogawa Electric CorporationAnnual Repor t 2012
Market trend: Demand for natural gas continues to grow
Global energy demand is still expanding, fueled by eco-
nomic growth in emerging countries. Much attention is
being focused on natural gas as it is more energy efficient
than other fossil fuels like oil and coal, and also burns
cleaner, emitting no sulfurous gas and less carbon dioxide.
The U.S. Energy Information Administration estimates
that global natural gas consumption in 2035 will be 1.52
times as much as in 2008.
With crude oil prices rising, natural gas is a less expen-
sive alternative; as such, the outlook is for demand to con-
tinue growing.
Yokogawa’s position in the natural gas market, and its strategies for gaining market shareLong track record and abundant technical prowess
Spearheaded by control systems, Yokogawa supplies prod-
ucts and services supporting every part of the natural gas
industry, from production to liquefaction, transportation,
and regasification. With its solid and highly credible track
record, Yokogawa has gained recognition as a leading com-
pany in the field.
Needs associated with onshore installations
The typical gas field has a number of wells distributed over
a broad area hundreds of square kilometers in size. The
control system design must be optimized to meet the spe-
cific requirements of the field in terms of area, number of
wells, communications infrastructure, power supply, tem-
perature, and so forth.
Furthermore, it is required to reduce overall costs,
increase the gas recovery rate, and improve capacity utiliza-
tion. The overall reduction of costs can be achieved by cut-
ting operating and maintenance costs and better utilizing
resources. The gas recovery rate and capacity utilization
can be improved by preventing accidents and unplanned
shutdowns, optimizing gas collection, and properly main-
taining well facilities.
Strategies for onshore gas installations
For producers looking to reduce overall costs, improve gas
recovery rates, and raise capacity utilization, Yokogawa pro-
vides solutions centering on the STARDOM network-based
control system that permit remote monitoring of distant pro-
duction sites and facilitate effective use of acquired data.
Russia, the U.S., and China are all major gas producers,
and the Yokogawa Group is paying particular attention to
onshore gas development projects in these markets. Some
of the world’s leading energy companies are engaged in gas
Unconventional natural gas resources are driving
change in the natural gas market
Recent years have brought technological advances in the
extraction of unconventional natural gas resources such as
shale gas, coal-bed methane, and tight gas. The U.S.,
Canada, China, and Australia are all actively engaged in
unconventional natural gas development, and by 2009,
unconventional natural gas already accounted for 50% of all
gas production in the U.S.
Unconventional natural gas production is achieving econo-
mies of scale that are driving down natural gas prices. In order
to minimize the amounts that must be invested, gas-producing
countries need to simplify the investment decision-making
process, speed up development, and shorten platform con-
struction lead times. Increasingly, producers are turning to
offshore installations such as floating production, storage and
offloading (FPSO) units, which require little additional con-
struction at sea and can be quickly put into operation.
*Includes the 50 states and the District of Columbia.Notes: Totals may not equal sum of components due to independent rounding.Sources:History: U.S. Energy Information Administration (EIA), International EnergyStatistics database (as of March 2011), website www.eia.gov/iesProjections: EIA, Annual Energy Outlook 2011, DOE/EIA-0383(2011), AEO2011National Energy Modeling System, run REF2011.D020911A,website www.eia.gov/oiaf/aeo/overview.html, and World Energy Projection System Plus (2011)
168.71.52 times
110.7
2008 2015 2020 2025 2030 2035
Area and growth rate
� Brazil 5.1%
� India 4.5%
� China 5.5%
� Africa 3.5%
� Middle East 2.7%
� United States 0.5%*
� Russia 0.1.%
� Other 0.96%
World natural gas consumption by region
(Trillion cubic feet)
0
30
60
90
120
150
180
Central control room of natural gas exploration and production facility
09Yokogawa Electric CorporationAnnual Repor t 2012
production in Russia and China. Yokogawa has prior dealings
with these companies in the field of oil refining, and aims to
leverage those relationships to make inroads into the gas
industry. The U.S. is a particularly promising market, being
home to a huge number of relatively small gas wells. In 2011,
Yokogawa’s U.S. subsidiary released WELL PRODUCER, a
proprietary package that has helped to expand our business
by simplifying the automation and management of natural
gas wellheads.
In 2011, we also rolled out a fiber-optic temperature
sensor that utilizes the optical measurement technologies
that we have acquired over the years in the measurement
field. This sensor was developed specifically for use in natu-
ral gas and oil drilling, and can withstand harsh outdoor envi-
ronments. In 2012 we next launched new field wireless
differential pressure/pressure and temperature transmitters.
These devices can communicate wirelessly with production
control systems, which reduces cabling costs and allows the
installation of equipment in difficult-to-wire locations.
Our goal is to continue adapting to this evolving market
and meet the changing needs of our customers by develop-
ing products for specific applications and continuing to
acquire specialist knowledge.
Needs of parties involved in the LNG market
The growing demand for natural gas and the associated
increase in production have highlighted the need for highly
efficient transport to users in far-flung locales. The lique-
faction of natural gas drastically decreases its volume,
which facilitates the transport of large amounts over great
distances. This is driving up demand for liquefied natural
gas (LNG), and many new LNG projects are planned.
LNG liquefaction and regasification plants both need to
be capable of swiftly and accurately adjusting production to
meet fluctuations in demand.There is a need in the LNG
shipping industry for ways to boost cost competitiveness,
improve voyage efficiency, and minimize carrier downtime.
CASE STUDY 1
NAM’s Groningen gas field in the Netherlands
NAM, or Nederlandse Aardolie Maatschappij B. V., is an oil and natu-ral gas exploration and production company jointly capitalized by Shell and Esso (currently ExxonMobil)
Establishing a large-scale remote control system for the development of Europe’s largest gas fieldWith an ultimately recoverable reserve of some 2,700 billion m3 of natural gas, NAM’s
Groningen field is one of the world’s largest.
Following a rigorous screening process, Yokogawa won the mandate to design, engi-
neer, install, and maintain production control systems, plant information management
systems, and dif ferential pressure / pressure transmitters as this project’s main
instrument vendor. The company was placed in charge of everything from design and
engineering to installation, and currently is providing maintenance services. The
installed systems and products allow a central control room to remotely monitor and
control 29 wellhead clusters with a total of 296 wells in NAM Groningen’s nor th and
south gas fields. Yokogawa’s implementation of this solution was a monumental
under taking that has enabled the unattended operation of these widely dispersed well-
head clusters.
Major systems and products delivered
CENTUM CS 3000 integrated production control system
Exaquantum plant information management system
DPharp EJA differential pressure / pressure transmitter
Upstream
Downstream
Onshore
Gas Production
Oil Production
FPSO Refining
PetrochemicalSubsea
Production Platform
Offshore
Pipeline
Onshore Processing
Overview of oil and gas upstream / downstream
10 Yokogawa Electric CorporationAnnual Repor t 2012
Yokogawa’s strategies for the LNG market
Yokogawa boasts over 30 years in this business, during
which time it has amassed a wealth of experience and
developed sophisticated control technologies. Yokogawa is
the top manufacturer in this field, supplying highly reliable
control solutions spanning the entire range from production
control systems to asset management systems, safety
management systems, and power and pressure manage-
ment systems. The Group has won orders from large proj-
ects in Australia, which is experiencing a boom in natural
gas production. Yokogawa aims to capitalize on its experi-
ence in this field and grow this business.
Liquefaction plant market share:
Distributed control systems (DCS): 25%
Advanced process control (APC) packages: 36%
LNG carriers: 47 vessels with Yokogawa DCS
Regasification plant market: 41 regasification terminals
with Yokogawa DCS
In recent years, FPSOs, floating storage and regasifica-
tion units (FSRU), and floating liquefied natural gas (FLNG)
units have become increasingly feasible and important
solutions for LNG projects, in large part because they can
be swiftly put into operation, thereby keeping initial costs to
a minimum. With a view to meeting the requirements of this
market, Yokogawa’s systems were certified to comply with
the ISO 17894 international standard on the shipboard use
of programmable electronic systems and are thus suitable
for use on vessels such as LNG carriers and floating pro-
duction units. Certification to this standard also provides
objective affirmation that Yokogawa has all the necessary
quality control systems in place, not just in terms of prod-
uct specifications, but also in product development, sales,
engineering, and service.
Yokogawa will continue its efforts to expand its business
in the LNG market by developing dedicated software and
acquiring specialist knowhow.
In conclusion
Yokogawa is accumulating all manner of sophisticated
technologies and knowhow with a view to enhancing the
ability to present solutions to customers. To achieve the
goals set forth in the Evolution 2015 mid-term business
plan, we are seeking to greatly expand the presence of our
industrial automation and control business in the growing
natural gas market.
CASE STUDY 2
South Hook LNG Terminal Company Ltd., Milford Haven, UK
Our position in the global LNG market
South Hook LNG Terminal Company Ltd., the owner and operator of this Terminal, is a joint venture established by Qatar Petroleum International, ExxonMobil, and Total
Contributing to the safe and efficient operation of one of Europe’s largest LNG regasification terminalsThe South Hook LNG Terminal is the UK end of the biggest supply chain ever forged for the
global movement of energy. Capable of meeting around 20% of the United Kingdom’s demand
for natural gas, the Terminal consists of five 155,000 m3 LNG storage tanks, a regasifica-
tion plant, unloading facilities, and a jetty for receiving the world’s largest LNG tankers.
While providing the production control system for this project, Yokogawa was also asked
on the basis of its superior technology and expertise in every stage of the LNG process
to participate in a hazard and operability (HAzOP) study and a safety integrity level (SIL)
study. In addition to installing the production control system, Yokogawa implemented a
safety instrumented system that can safely initiate an emergency shutdown of the Termi-
nal. Yokogawa received kudos from the customer for installing an operator training system
that is fully integrated with the Terminal’s production control system and thus capable of
highly realistic simulations in a virtual environment.
Major systems and products delivered
CENTUM CS 3000 integrated production control system
ProSafe–RS safety instrumented system
Exaquantum plant information management system
OmegaLand dynamic simulation environment
11Yokogawa Electric CorporationAnnual Repor t 2012
Yokogawa is well regarded in the global marketplace as a leading control company and pioneer in the development of distributed control systems for the monitoring and control of processes in a broad range of produc-tion facilities. Based on VigilantPlant, Yokogawa’s vision for realizing the ideal plant, we are developing products and services that enhance pro-ductivity, make maximum use of plant assets, ensure safety, and opti-mize operations over the entire plant lifecycle. These solutions currently play vital supporting roles for our customers in the oil, chemical, natural gas, electric power, iron and steel, paper and pulp, pharmaceutical, food, and other industries.
Yokogawa is also providing solutions based on its measurement and control technologies that make more efficient use of renewable energy and is devising new ways in which next-generation energy sources can be utilized to achieve a sustainable society.
Yokogawa provides reliable measuring instruments for the development and production of electrical, electronic, and automotive equipment, as well as for the environmental measurement and communications market. The Company meets customer needs with a wide-ranging product lineup and an extensive range of calibration and other services.
Yokogawa is also engaged in businesses involving confocal scanners for the real-time observation of life processes at the molecular level and drug discovery support systems for the automatic testing of candidate compounds.
INDUSTRIAL AUTOMATION AND CONTROL BUSINESS
TEST AND MEASUREMENT BUSINESS
OTHER BUSINESSES
OUR BUSINESSES AT A GLANCE
n Production control systemsn Safety instrumented systemsn Production management systemsn Quality management systemsn Asset management systemsn Energy management systemsn Differential pressure /
pressure transmittersn Flowmetersn Analyzersn Recordersn Programmable controllers
n Waveform measuring instruments
n Optical communication measuring instruments
n Signal generatorsn Measuring instruments for
electric power, temperature, and pressure
n High-throughput cytological discovery systems
n Confocal scanner units
n Aviation equipmentn Marine equipmentn Hydrological and
meteorological equipment
MAIN PRODUCTS, SOLUTIONS
SEGMENT PROFILE
CENTUM VPIntegrated ProductionControl System
WT3000Precision Power Analyzer
Flat Panel Displays for Aviation Use
AQ6370COptical Spectrum Analyzer
Gyrocompasses
CellVoyager CV7000High-throughput Cytological Discovery System
CSU-W1Confocal Scanner Unit
Yokogawa is also steadily developing its aircraft instrument and marine navigation system businesses as well as its environmental business. Yokogawa supplies multifunctional flat panel displays (FPDs) for use in a wide range of aircraft, including the latest wide-body airliners from Airbus. Yokogawa also has a full lineup of navigation systems such as gyrocompasses and autopilots for vessels of all kinds, from luxury pas-senger ships to freighters. In addition, the Company supplies hydrologi-cal and meteorological equipment, including rain gauges and hydrostatic level gauges, to mainly the Japan Meteorological Agency and local gov-ernment authorities.
DPharp EJXDifferential Pressure /Pressure Transmitter
GC8000 Process Gas Chromatograph
ProSafe-RS Safety Instrumented System
12 Yokogawa Electric CorporationAnnual Repor t 2012
Overall, the industrial automation and control business remained strong in Japan. Positive factors including demand arising from the reconstruction of the disaster-stricken areas outweighed negative factors such as the continued strength of the yen. Demand for energy and electric power plants in emerg-ing and resource-rich regions and countries such as Southeast Asia, China, Brazil, and Australia remained robust.
Under these circumstances, the Group set about implement-ing the regional, industry, and product growth strategies that had been defined in the Evolution 2015 mid-term business plan. Specifically, the Group worked to expand its business by target-ing mainly oil and natural gas exploration, development, and production in emerging and resource-rich countries, and by focusing on the growing electric power, petrochemical, chemical, and renewable energy markets.
As a result, orders and net sales were up for the industrial automation and control business despite the impact of the strong yen on sales and profits. Operating income was also up mainly due to higher revenues and an improved gross margin resulting from an increase in product volume.
The measuring instrument business saw strong demand for power meters in Japan, driven by a rising need for energy saving solutions. Demand for optical measuring instruments also rose as the result of special measures that were taken in response to the flooding in Thailand. However, the overall business was affected in the second half by weakening demand in China. Both orders and net sales were up for the semiconductor tester business.
The test and measurement business experienced a year-on-year decline in orders and net sales, and this was due mainly to the Group’s withdrawal from the photonics business. At the same time, the segment’s operating loss was down as a result of the implementation of structural reforms that reduced fixed costs and R&D expenditure.
In the other businesses segment, orders declined year on year as no major orders for hydrological and metrological equipment were booked in the year under review.
Net sales fell modestly for the other businesses segment as a whole, despite strong sales of marine engine equipment and navigation systems primarily outside Japan; this can be attrib-uted to adjustments in the delivery schedules for the aviation equipment business.
Operating income declined year on year, as cost reductions were offset mainly by the fall in sales and the yen’s rise.
Note: The method for aggregating segment data was changed in fiscal year 2010 (ended March 31, 2011). In the above graphs, the 2009 figures with an asterisk were recalculated based on the new method.
FISCAL YEAR 2011 BUSINESS REVIEW
0
100
200
300
11/310/3* 12/3
Orders
(Billions of yen)
257.3 268.9288.5
10
20
30
40
11/310/3* 12/3
Orders
(Billions of yen)
31.734.9 34.0
0
0
10
20
30
40
Orders
(Billions of yen)
26.330.3
21.6
11/310/3* 12/3
0
10
20
30
11/310/3* 12/3
Operating income
(Billions of yen)
19.716.5
19.9
–30
–20
–10
10
11/310/3* 12/3
Operating loss
(Billions of yen)
–18.3
–6.4 –3.60
0.5
1.0
1.5
Operating income
(Billions of yen)
1.21.0
0.3
11/310/3* 12/30
0
50
100
150
200
11/310/3 12/3
Non-Japan net sales /Non-Japan net sales ratio(Billions of yen)
156.2 161.2173.7
60.9% 61.8% 62.7%
5
10
15
20
11/310/3 12/3
Non-Japan net sales/Non-Japan net sales ratio(Billions of yen)
15.718.7 19.5
49.8% 50.5% 56.4%
0
2
4
6
Non-Japan net sales /Non-Japan net sales ratio(Billions of yen)
5.44.8
5.7
18.9% 17.3% 24.9%
11/310/3 12/30
0
100
200
300
11/310/3* 12/3
Net sales
(Billions of yen)
257.3 260.7277.2
10
20
30
40
11/310/3* 12/3
Net sales
(Billions of yen)
31.937.1 34.6
0
10
20
30
Net sales
(Billions of yen)27.4 27.9
22.9
11/310/3* 12/30
13Yokogawa Electric CorporationAnnual Repor t 2012
0
25
20
15
10
5
008/3 09/3 10/3 11/3
50.0
40.0
30.0
20.0
10.0
� R&D investment� R&D investment to net sales
12/3
36.2
40.9
37.2
28.827.5
29.2
8.29.3 9.9 9.1 9.0
R&D investment / R&D investment to net sales
(Billions of yen) (%)
Future issues/Business plans
External environment Business
hypotheses/Future perspective
Technology seeds/Technology procurement
Innovation Headquarters
Organization-wideProjects
Long-termmarketing
Marketdevelopment
Innovation Headquar ters functions
RESEARCH AND DEVELOPMENT
Future sense: Yokogawa’s multiple scenarios for the future
Yokogawa seeks not only to perpetuate its business activi-
ties, but to continue being a responsible contributor to soci-
ety long into the future. To this end, the Group continually is
engaged in the planning of multiple sets of future scenarios
so as to make certain that its R&D investments remain rel-
evant and consistently give rise to value.
In 2011, Yokogawa held Global Scenario Workshops (GSW)
in the United Kingdom, India, and the United States. Experts
from various companies, research institutions, and industry
associations as well as journalists and other interested par-
ties gathered to discuss the topic of “Future Sense: Yokoga-
wa’s Multiple Scenarios for the Future.”
Three innovations for a new industrial era
As consumer economies continue to emerge and expand,
people’s lives are increasingly impacted by the scarcity of
resources. Yokogawa’s scenarios point to the possibility that
scarcities of food, energy, and water may come to determine
the course of world events.
Scarcity of food: This is not only about quantity; it can
also involve perceptions on quality as the ranks of consum-
ers who insist on food safety and reliability grow.
Scarcity of energy: Energy demand is likely to continue
rising despite advances in energy conservation technologies.
Scarcity of water: Large quantities of water will be
required to generate energy.
Yokogawa believes that achieving a sustainable society by
2025 is a realistic goal, despite the fact that resources are
limited. However, this belief is premised on three types of
innovation that are associated with a shift in people’s values:
1. Innovation in human behavior
2. Innovation in organizational and social networks
3. Innovation in the individuals (human capital) that make up these networks
Together with its customers, Yokogawa seeks to help bring
about these innovations and provide the services and tech-
nologies needed for a radically industrializing world.
Yokogawa’s initiatives
Access to relevant data and information will be critically
important in enabling the changes in human behavior that
will be necessary to achieve these innovations.
We expect the global business environment to be much
more complex in 2025. With the rising number of corporate
alliances and the increasing integration of activities that
transcend industrial boundaries, it will become harder to
obtain relevant data and information.
Yokogawa’s strength in measurement technology and abil-
ity to build complex systems provide the critical support
needed to achieve the innovations that will bring about a
sustainable society. As needs change, we will continue to
14 Yokogawa Electric CorporationAnnual Repor t 2012
(As of March 31, 2012)
In Japan Outside Japan
RegisteredPatent
Pending Subtotal RegisteredPatent
Pending Subtotal Total
Patent 1,838 1,901 3,739 687 478 1,165 4,904
Design 144 12 156 16 11 27 183
Trademark 545 7 552 495 48 543 1,095
Total 2,527 1,920 4,447 1,198 537 1,735 6,182
Yokogawa’s R&D organization Intellectual proper ty rights owned by the company
Present Future
Innovation HeadquartersBusiness Headquarters
Current operations
Foreseeable future
Possible future(scenarios)
Unknowable future
Product development
Advanceddevelopment Research
develop new measurement standards that will enhance our
strength in this field. Parallel with this effort, we will carry
out R&D in biomeasurement and new energy sources.
Future-oriented R&D
Yokogawa has established an Innovation Headquarters that
has the new function of leading the Group’s future-oriented
R&D initiatives, and also handles the roles of the former
Corporate R&D Headquarters. As a result of this organiza-
tional change, Yokogawa’s business segments have taken
charge of product development and applied research for the
relatively foreseeable future (near term), while the Innovation
Headquarters will be responsible for research with a longer-
term perspective and greater uncertainty that is directed at
generating new business opportunities.
The main functions of the Innovation Headquarters are
value creation, co-creation, and IP acquisition and manage-
ment. Value creation is aimed at staying one step ahead of
shifts in values so as to be able to pioneer the creation of
new markets. Co-creation is about interacting with customers’
research personnel to implement breakthrough investigative
research that will solve problems and develop hypotheses for
generating new markets. IP acquisition and management over-
sees the technological aspects of the Yokogawa Group’s intel-
lectual property strategy. Its primary function is to strategically
obtain and manage key intellectual properties that are vital for
the Yokogawa Group to take the initiative in new markets.
From an AR experiment
An example of future-oriented R&D
Industrial ARCyber-perception is an IT systems research field that is
focused on industrial innovations of the future in which
people are the key component. One aspect of this research
is the elimination of human error on the plant floor. An objec-
tive of such research, in which industrial augmented reality
(AR)* is a key technology, is to develop systems that carry
out double checks on human operators. More specifically,
this research is geared toward developing mobile terminals
capable of walking workers of various skill levels through the
task at hand and procedures they are to perform in a timely
manner. Such terminals will also be capable of providing a
worker feedback on whether the tasks were completed prop-
erly, and issue instructions on the recovery procedures
should problems arise. Through such research, Yokogawa
aims to collaborate with customers on developing work envi-
ronments that are both safe and secure.
* Computer technology
that augments the real
world with relevant
information and data
15Yokogawa Electric CorporationAnnual Repor t 2012
CORPORATE SOCIAL RESPONSIBILITY
Basic policy on CSR
The Yokogawa Philosophy is the basic policy for CSR activi-
ties throughout the Group. In addition, in 1994, the Company
established the Standards of Business Conduct for the
Yokogawa Group, and these are the basic guidelines for com-
pliance management.
In 2008, a special CSR promotion department was estab-
lished at our head office to manage the CSR activities of the
entire Group. Around the world, including in a number of
emerging countries and developing nations, Yokogawa Group
companies are pursuing CSR activities in response to the
challenge in each region, and are thereby contributing to the
sustained growth of communities.
Contributing to society through our businessIn accordance with the Yokogawa Philosophy, which states,
“As a company, our goal is to contribute to society through
broad-ranging activities in the areas of measurement, con-
trol, and information,” we are proud to be a company that
contributes to society through our business. We believe that
a company must continue to adapt and grow in response to
changes in society.
We also believe in making use of our measurement, con-
trol, and information technologies to provide products and
solutions that help society address issues by, for example,
protecting the environment and enhancing safety. We supply
energy saving solutions, support the development of alterna-
tive energy, measure and analyze environmental burden, and
support the development of health care and pharmaceutical
solutions.
Corporate responsibilityThe Standards of Business Conduct for the Yokogawa Group
call for the realization of the Yokogawa Philosophy, enhance-
ment of customer satisfaction, observance of laws and regu-
lations, respect for human rights, and maintenance of the
order and safety of communities and society. We have also
outlined our basic stance on environmental conservation
and stakeholder relations.
Yokogawa has joined the Global Compact, a United Nations
initiative based on 10 principles related to human rights,
labor, the environment, and anti-corruption. We are imple-
menting measures based on the ideals and standards of the
Global Compact together with all Group employees and com-
panies connected to us through our supply chain.
We view all Yokogawa employees as valuable assets, and
work proactively to maintain a sound work environment and
provide opportunities for skill development. We also respond
to our customers by putting quality first. Moreover, in accor-
dance with our principle of good citizenship, we interact with
the community, encourage employees to participate in volun-
teer activities, and engage actively in other activities to con-
tribute to society.
Corporate governanceWe are enhancing corporate governance to realize sound and
sustainable growth. By actively encouraging the employment
of outside directors and corporate auditors, we increase the
transparency of our decisions and enhance the functionality
of audits. We are also developing our internal control systems
to ensure the appropriateness and efficiency of business
operations. We seek to be a company that earns the trust of
society with its fair and honest business activities, and are
building a corporate culture that puts compliance first.
Yokogawa receives a high CSR rating from SAM for the second consecutive year
Yokogawa has been selected for inclusion in the Dow
Jones Sustainability Asia Pacific Index (DJSI Asia Pacific
Index), a component of the DJSI* worldwide stock index
for socially responsible investing (SRI). This is the third
time that Yokogawa has been selected for this index, and
the second year in a row. For the DJSI, the business
results of major companies are assessed based on finan-
cial, environmental, and social criteria. For the DJSI Asia
Pacific Index, 600 major companies in the Asia Pacific
region were surveyed, and 156 of these companies,
including 79 from Japan, were selected.
* The DJSI, or the Dow Jones Sustainability Index, is a stock index developed
jointly by Dow Jones and Sustainable Asset Management (SAM), a research
and rating firm based in Switzerland specializing in SRI.
Please refer to Yokogawa Electric Corporation’s CSR website for further information on this topic.
CSR website URLhttp://www.yokogawa.com/csr/
United NationsGlobalCompact
ISO 26000Guidance on socialresponsibility
Business Contributing
to society through business operations
Responsibility to stakeholders
Environmental management, Philanthropy, Customer satisfaction and quality control, Shareholders, Suppliers,
Human rights, Occupational safety and health
Corporate governanceCompliance, Anti-corruption,
Risk management, Information security
CSR activities that contribute to growth
by responding to global concerns
CSR activities that meet the expectations
of stakeholders
CSR activities that form the foundation of
corporate management
•UNGlobalCompactisasetoftenprinciplesthatallYokogawapeopleshouldshareitsvalue.•YokogawarespectstheISO26000guidanceinourdecisionsandactions.
16 Yokogawa Electric CorporationAnnual Repor t 2012
Corporate governance structure
Board of Directors (7 members)
(Including 3 outside directors)
Corporate Functions / BusinessHeadquarters and Group
CompaniesInternal Audit Department
Board of Corporate Auditors (5 members)
(Including 3 outside corporate auditors)
Accounting Auditors
President and CEO
Directors Corporate Auditors
Management Board
CORPORATE GOVERNANCE
Basic policy on corporate governance
The Yokogawa Group recognizes that the basic mission of
corporate management is to secure sound and sustainable
growth, and to earn the trust of its shareholders and other
stakeholders. Accordingly, the Group is implementing mea-
sures to enhance corporate governance in order to achieve a
sound and profitably run organization. The Company employs
a corporate auditor system and has a Board of Directors that
monitors directors in the execution of their duties and a
Board of Corporate Auditors that monitors the Board of Direc-
tors. We are enhancing this system by utilizing independent
outside directors and corporate auditors. Through these sys-
tems, the Company is bolstering the effectiveness of its
corporate governance.
Decision making, business execution, and audits
Speedy decision making and transparency are ensured
through deliberations between directors who are well versed
in the Group’s business and outside directors who maintain
a high degree of independence. Through audits by the corpo-
rate auditors, the legality, efficiency, and rationality of the
directors’ activities and the appropriateness of their deci-
sions are rigorously examined.
Board of DirectorsThe Board of Directors comprises seven directors, three of
whom are independent outside directors, with meetings held
monthly in principle. The Board of Directors makes decisions
for the Group. Accordingly, it develops management policies
and strategies, while monitoring and supervising business
execution. Regulations and systems are in place that ensure
the directors exercise their responsibilities to oversee the
business. The Board of Directors has a maximum of 15 mem-
bers, as outlined in the Company’s Articles of Incorporation.
Also, in order to help ensure that the Company is managed in
such a way that we maintain the trust of our shareholders,
the term of office for directors is set at one year.
Board of Corporate AuditorsThe Board of Corporate Auditors consists of five corporate
auditors, including three outside corporate auditors, with
meetings held monthly in principle. It carries out auditing in
accordance with an annual plan that specifies priority audit
items. Corporate auditors also attend the meetings of the
Board of Directors and the Management Board, and hold
regular meetings with departments that are involved with
internal auditing or business ethics. These meetings focus
on the status of audits, compliance-related education, and
the status of the internal reporting system. In addition, the
Board of Corporate Auditors engages in a regular exchange
of opinions with the president and accounting auditors.
Management BoardTo expedite the decision-making process of the Board of
Directors, decisions regarding business execution are del-
egated to the Management Board. The Management Board is
comprised of the president, officers, subsidiaries’ heads
who report directly to the president, and standing corporate
auditors, and meets monthly in principle. Details on their
decisions are reported to the Board of Directors.
Election / Removal
Audit / Supervision
Instructions / Orders / Supervision
Cooperation / Report
GENERAL SHAREHOLDERS MEETING
17Yokogawa Electric CorporationAnnual Repor t 2012
Accounting auditorsThe Company has concluded an agreement with Deloitte
Touche Tohmatsu LLC, an independent auditing company, for
accounting auditing services pursuant to the Companies Act
and the Financial Instruments and Exchange Act. Remunera-
tion for their services in fiscal year 2011 was as follows:
Payments by the Company: 120 million yen
Total amount paid in cash and other financial asset prof-
its to the accounting auditor by the company and subsid-
iaries: 148 million yen
Compensation to directors and corporate auditorsIn order to improve objectivity and transparency when decid-
ing the allocation of compensation for directors within the
limits resolved and approved at the shareholders meeting,
the Company established a Compensation Committee that is
comprised of four directors, three of whom are outside direc-
tors. The allocation of compensation for directors is decided
through deliberation by the Compensation Committee.
The compensation for directors other than the outside
directors is set at a level that allows for the effective execu-
tion of their main duties, which are comprised of executive
management functions as well as functions involving the
supervision and monitoring of executive officers and other
employees. Furthermore, this level of compensation is linked
to performance. Specifically, the compensation is set at a
level that is market competitive and comprised of a fixed
component and a performance-linked (bonus) component
according to each role.
In consideration of the duties they perform, outside direc-
tors only receive fixed compensation.
Compensation for corporate auditors is decided by mutual
consultation among the corporate auditors and set within the
limits approved at the shareholders meeting. In consideration
of the duties they perform, corporate auditors (including out-
side corporate auditors) only receive fixed compensation.
Total amount of compensation paid to directors and corporate auditors in fiscal year 2011
Total compensation
(Millions of yen)
Compensation breakdown (Millions of yen)
RecipientsFixed
compensationStock
options
Performance-linked
compensationRetirement
benefit
Directors (excluding outside directors)
159 92 — 67 — 8
Outside Directors 32 32 — — — 4
Corporate Auditors (excluding outside corporate auditors)
54 54 — — — 2
Outside Corporate Auditors
32 32 — — — 3
Notes: 1. The above numbers include five directors who retired during fiscal year 2011.
2. The total paid to directors does not include employee salaries for directors
who are concurrently employees.
Major activities of outside directors andoutside corporate auditors in fiscal year 2011Outside Director Yasuro Tanahashi
Present at 14 of the 14 Board of Directors meetings con-
vened in the year. As necessary, provided advice based on
his managerial experience, wide knowledge of Japan’s key
industries, and broad outlook gained from abundant experi-
ence in establishing and developing new businesses.
Outside Director Nobuo Katsumata
Present at 13 of the 14 Board of Directors meetings con-
vened in the year. As necessary, provided advice with high
insight based on his managerial experience mainly at general
trading companies with global operations, and his abundant
experience in corporate restructuring.
Outside Director Mitsudo Urano
Present at 7 of the 10 Board of Directors meetings convened
since his appointment on June 24, 2011. As necessary,
provided advice with high insight based on his managerial
experience primarily in manufacturing and abundant experi-
ence in matters such as management information systems.
Outside Corporate Auditor Shigeru Hikuma
Present at 12 of the 14 Board of Directors meetings and 17
of the 20 Board of Corporate Auditors meetings convened in
the year. As necessary, provided advice with high insight
based on his deep knowledge of corporate finance, discern-
ment, and abundant experience.
*He retired as outside auditor of the Company on June 27, 2012.
Outside Corporate Auditor Teruhiko Ikeda
Present at 12 of the 14 Board of Directors meetings and 18
of the 20 Board of Corporate Auditors meetings convened in
the year. As necessary, provided advice with high insight
based on his abundant managerial experience and wide
range of activities in the business world.
Outside Corporate Auditor Koichi Iki
Present at 14 of the 14 Board of Directors meetings and 19
of the 20 Board of Corporate Auditors meetings convened in
the year. As necessary, provided advice with high insight
based on his abundant managerial experience and deep
knowledge of human resources management.
*He retired as outside auditor of the Company on June 27, 2012.
The Tokyo Stock Exchange requests listed companies to
secure at least one independent officer (an outside director or
outside corporate auditor with no conflicts of interest involving
18 Yokogawa Electric CorporationAnnual Repor t 2012
general shareholders). The Company has three outside direc-
tors and one outside corporate auditor who are registered with
the Tokyo Stock Exchange as independent officers.
Takeover defense measures
The Company believes that it is essential for both a party
attempting a large-scale acquisition and the Board of Direc-
tors to provide the Company’s shareholders with sufficient
information necessary to make an appropriate judgment of
the advantages and disadvantages of the acquisition. In par-
ticular, when a large-scale acquisition is attempted, it is
important to request the party attempting the acquisition to
provide sufficient information necessary for making an appro-
priate decision about its effects on the corporate value and
the common interests of the Company’s shareholders, provide
the Company’s shareholders with information such as the
opinions of the Board of Directors and an analysis of alterna-
tives to the acquisition in order to guide the decision making
of the Company’s shareholders, and prepare for processes
such as negotiations with the party attempting the acquisition.
To fulfill the need for a plan to protect against large-scale
acquisitions that do not comply with these processes, a
resolution entitled “Renewal of Countermeasures to Large-
scale Acquisition of Yokogawa Electric Shares (Takeover
Defense Measures)” was submitted to the 135th Annual
General Meeting of Shareholders on June 24, 2011. The
resolution was approved and is valid for three years.
For further details, please refer to the Company press
release at:
http://www.yokogawa.com/pr/ir/pdf/2011/20110513
TakeoverDefense-en.pdf
Internal control systems
The Yokogawa Group has set forth its basic compliance poli-
cies in the Standards of Business Conduct for the Yokogawa
Group, and directors take the lead in working to see that busi-
ness ethics are upheld and embraced throughout the Group.
In addition, the Yokogawa Group Internal Control Systems,
which are intended in part to ensure the reliability of financial
statements and the propriety of decision making, guarantee
the appropriateness and efficiency of Group operations.
Risk managementThe Yokogawa Group Internal Control Systems were estab-
lished in part to make sure that rules and other risk manage-
ment systems are enforced. As the unit responsible for risk
management, the department responsible for internal audit-
ing identifies and analyzes risks, and recommends
improvements. It also reports important matters to the Board
of Directors and the corporate auditors. Responses to crisis
situations involving facts, incidents, disasters, accidents, and
other events with a potentially material impact on the Group’s
management are set forth in the Group Policy for Crisis Man-
agement. As the head of the Crisis Management Office, the
president controls the communication of information and
issuance of instructions during times of crisis, and works to
ensure safety and minimize economic losses.
The handling and protection of confidential information in
regard to information security is set forth in the Confidential-
ity Code. Each of the Yokogawa Group’s business headquar-
ters, headquarters, and Group companies are responsible
for establishing an organization for promoting information
security of their own and ensuring adherence to the Group’s
policies on information security.
ComplianceA department in charge of business ethics has been estab-
lished within the Company, whose role includes the identifica-
tion and resolution of issues pertaining to the Groupwide
compliance system. Yokogawa strongly promotes compliance
management throughout the Group. The Group aims to be a
healthy and open business entity with both a culture that
encourages and enforces proper ethical conduct and a system
for preventing misconduct and scandals before they occur.
As part of our compliance activities, we have distributed to
each employee a copy of the Standards of Business Conduct
for the Yokogawa Group, which covers the Yokogawa Philoso-
phy and employee code of conduct, and the Yokogawa Group
Compliance Guidelines, which set out how employees should
respond to a variety of issues encountered on the job. A
Compliance Week is also held and training is provided to
enhance employee awareness.
In fiscal year 2012, we set forth Guidelines Prohibiting the
Exchange of Bribes as a supplementary provision to our Group
Compliance Guidelines. These prevention guidelines were
established to comply with laws prohibiting the exchange of
bribes with public officials and private citizens in the countries
where Yokogawa conducts its business. They prohibit bribery
and serve to promote fair and appropriate corporate conduct.
In addition, to rapidly identify and address compliance
issues, we have established compliance hotlines, which we
actively encourage our employees to use. Moreover, each
year we carry out surveys to clarify how employees perceive
compliance issues. We analyze the survey data by workplace
and function, and use the results in connection with formu-
lating compliance measures in the subsequent fiscal year.
19Yokogawa Electric CorporationAnnual Repor t 2012
CO2 emissions reduction results and targets for the Yokogawa Group in Japan
ENVIRONMENTAL MANAGEMENT
Achieving sustainability
Yokogawa places a high priority on protecting the environ-
ment, and we manage our business accordingly. We are
working to reduce the environmental impact of all our oper-
ations, from development to sales, with the goal of achiev-
ing a sustainable society. Using our control, measurement,
and information technologies, we supply environmentally
friendly products and green, energy saving solutions that
help our customers to reduce their environmental footprint.
We also help them make more effective use of renewable
energy sources and are developing new energy-related
solutions.
Promoting environmental management within the Group
Yokogawa has established a Groupwide environmental man-
agement system. And to reduce our environmental impact,
we are striving to utilize energy and resources more effi-
ciently, prevent environmental pollution, reduce waste, and
promote reuse and recycling on every production line and
in all other areas, including development, sales, procure-
ment, and distribution.
The Company has established a Yokogawa Group Green
Implementation Committee and assigned it Groupwide
responsibility for promoting environmental management.
Chaired by the Environmental Officer, the Committee over-
sees the environmental conservation activities of all Group
companies and works to improve the measures that they
undertake to prevent global warming.
Measures to prevent global warmingYokogawa Group companies in Japan are working to reduce
CO2 emissions, with phased targets covering fiscal years
2010–2014, 2015–2019, and 2020.
Measures to reduce CO2 emissions include the use of
green electric power, installation of inverter lighting, and the
use of energy efficient air-conditioning and experimental
equipment. In an effort to reduce their CO2 emissions, our
offices and manufacturing plants in Japan utilize a propri-
etary energy saving support system to visualize energy data.
Reducing industrial waste through the in-house treatment of waste liquids from coating processesYokogawa Manufacturing Corporation’s Ome Factory uses its
own facilities to treat waste liquids generated in the printed
circuit board coating process.
In the process of chemically coating printed circuit boards,
a liquid catalyst is used to ensure that the coating adheres
to the metal. The waste liquid from this process contains
palladium. The company was previously unable to remove
this substance at its own facilities, resulting in the annual
disposal of around 1.6 tons of this industrial waste, which is
subject to special control. To address this problem, in 2011
the company installed special equipment for the removal of
catalyst waste liquid.
Phase 1 Phase 2 Phase 3
Base years2005–2007
Average yearly emissions
20100
10,000
20,000
30,000
40,000
50,000
60,000
2015 2020 (fiscal year)2011 20162012 20172013 20182014 2019
Total yearly emissions from fiscal year 2010 through 2014
7% reductionTotal yearly emissions from fiscal year 2015 through 2019
18% reduction
Total emissions for fiscal year 2020
20% reduction
(tons of CO2)
(231,895 t-CO2)
(263,005 t-CO2)
(45,248 t-CO2)
56,560 t-CO2
48,079 t-CO2
42,044 t-CO2
20 Yokogawa Electric CorporationAnnual Repor t 2012
Water Treatment Plant, City of Oviedo, Florida
Yokogawa’s environmental policy initiatives
Fiscal Year 2011 (main sites)
Targets Results Self evaluation
Recycling based on operations
Reduce CO2 emissions (Group companies in Japan)•ReducetotalCO2 emissions to 52,601 t/year (7%
reduction from benchmark 2005–2007 average)
•Reducedto42,044t/year
Good
Reduce the total amount of generated waste•23%reductionfromfiscalyear2003level(585t/year
reduction)*1
•Reduceto3,368t/year*2
•26%reduction(559t/yearreduction)•Reducedto3,223t/year
Resource saving•Deploygreenproductionlinesandmakeimprovements
to 6 lines*2
•Improvedusageofresourceson6manufacturinglines (Produced less wastewater and reduced power consumption)
Minimization of environmental pollution
•Reducetolueneandxyleneby2,000kg*2
•Promotelead-freesolderingandintroducethiswithallnew products*2
•2,517kgreduction•Introducedwithallnewproducts Good
Creation of environmentally friendly products
•ApplyassessmentstandardsandreduceCO2 emissions for all products under development by more than 25%*1
•All11modelswereinspectedasscheduledandregistered as meeting the assessment standards Good
Provision of environmental solutions
•Givevisitorsapresentationonenergy-savingeffortsatthe Kofu Factory*1
•Increasesalesofenvironmentallyfriendlyproducts*1
•Achieved
•AchievedGood
Main sites: *1 Yokogawa Electric Corporation headquarters & main factory
*2 Yokogawa Manufacturing Corporation
Through an adsorption treatment using a special resin, it
is now possible to flush out the palladium along with other
liquid waste. The company benefits financially as this resin
has a marketable value, and there no longer is the need to
dispose of this specially controlled industrial waste.
deemed to have strong growth potential, and in recent years
has supplied control systems for numerous other projects,
including a large wind-power installation in China and a solar
energy project in Australia. In fiscal year 2011, the Group also
won control and instrumentation orders for geothermal, bio-
mass, waste to energy, and other power projects in Southeast
Asia, Europe, and other regions.
Yokogawa’s control technologies are garnering attention
worldwide for their contribution to the stable supply of non-
fossil fuel energy sources.
Yokogawa’s water business: support for a key lifelineIn emerging countries, water shortages are a major problem.
In such countries, it is particularly important to prevent water
losses resulting from equipment malfunctions and breakages
in the water supply system, while with sewage facilities the
challenge is for the development of infrastructure to keep
pace with rapid urbanization. It is here that Yokogawa’s mea-
surement and control technologies come into play. Our water-
related technologies and expertise are employed worldwide in
monitoring systems and water-flow control systems. Yokogawa
is also a member of the Global Water Recycling and Reuse
System Association, Japan, a group comprising 50 Japanese
companies involved in the water business. As a major player
in Japan’s water industry, the Group is actively collaborating
with government and
academia to promote
the international use
of water recycling
systems developed
in Japan.
Targets and results in FY2011
Environmentally friendly business activities
Yokogawa leverages its control, measurement, and informa-
tion technologies to help people make more efficient use of
renewable energy and to devise new ways of utilizing next-
generation energy sources. To achieve a sustainable society,
we are also active in various water-related businesses that
are securing the provision of this essential resource.
Yokogawa control technologies contribute to efficient use of renewable energyYokogawa is also working to expand its presence in the renew-
able energy field. The Group already has an extensive track
record in biomass and waste materials, a market segment
* Palladium: A rare metal that is used as a metal catalyst. It can be recovered from
waste liquid and recycled.
Catalyst waste liquid treatment process
Catalyst waste liquid
Adsorption column
Adsorption column
First towerSecond tower
Adsorbed palladium* removed as a
marketable substance
Waste liquid rendered harmless through in-house treatment
21Yokogawa Electric CorporationAnnual Repor t 2012
Corporate auditors
DIRECTORS, CORPORATE AUDITORS, AND OFFICERSAs of June 27, 2012
SHUzO KAIHORIRepresentative Director President and Chief Executive Officer
1973 Joined the Company
2005 Vice President, Head of Industrial Automation Business Headquarters
2006 Senior Vice President, Head of Industrial Automation Business Headquarters
2006 Director and Senior Vice President, Head of Industrial Automation Business Headquarters
2007 President and Chief Operating Officer
2008 President and Chief Executive Officer
TAKAFUMI KOYANAGICorporate Auditor
1971 Joined the Company
2003 Vice President, Head of Business and Sales Planning, Industrial Solutions Business Headquarters
2005 Senior Vice President, Head of Solution Sales No. 2/Industrial Solutions Business Headquarters, in charge of China business
Deputy President of Yokogawa Electric International Pte. Ltd.
2007 Senior Vice President, Head of Audit & Compliance Headquarters
2008 Corporate Auditor
HITOSHI NARADirector Senior Vice President
1985 Joined the Company
2001 Deputy Managing Director, Yokogawa Engineering Asia Pte. Ltd.
2003 Managing Director, Yokogawa (Thailand) Ltd.
2007 Head of Sales Div. I, Industrial Solutions Business Headquarters
2010 Senior Vice President, Head of Industrial Solutions Business Headquarters
2011 Director and Senior Vice President, Head of Industrial Solutions Business Headquarters
2012 Director and Senior Vice President, Head of Industrial Solutions Service Business Headquarters
KIYOSHI MAKINOCorporate Auditor
1971 Joined the Company
1999 Vice President, Head of Components Business Division
2001 Director of Ando Electric Co., Ltd.
2003 President and CEO of Ando Electric Co., Ltd.
2005 Chairman of Yokogawa Corporation of America
2006 Vice President of ATE Business Headquarters (in charge of sales operations)
2009 Corporate Auditor
SATORU KUROSUDirector Senior Vice President
1983 Joined the Company
2006 Vice President, Head of Marketing Center, Industrial Automation Business Headquarters
2007 Senior Vice President, Head of Industrial Automation Business Headquarters
2009 Senior Vice President, Head of Global Business Headquarters
2010 President, Yokogawa Engineering Asia Pte. Ltd.
2011 Director and Senior Vice President, Head of IA Marketing Headquarters
TAKASHI NISHIJIMADirector Senior Vice President
1981 Joined the Company
2001 Head of Development and Engineering Dept. 2, Field Instruments Business Division
2005 Head of Field Instruments Product Marketing Dept., Industrial Automation Business Headquarters
2008 Head of Control Products Business Center, Industrial Automation Business Headquarters
2010 President of Yokogawa Meters & Instruments Corporation
2011 Director, President of Yokogawa Meters & Instruments Corporation
2012 Director and Senior Vice President, Head of IA Platform Business Headquarters
TERUHIKO IKEDAOutside Corporate Auditor
1969 Joined The Fuji Bank, Limited
2002 Deputy President of Mizuho Corporate Bank, Ltd.
2004 President and CEO of Mizuho Trust & Banking Co., Ltd.
2008 Chairman of Mizuho Trust & Banking Co., Ltd.
Outside Corporate Auditor of Yokogawa Electric Corporation
2010 Advisor of Mizuho Trust & Banking Co., Ltd. (present)
Directors
22 Yokogawa Electric CorporationAnnual Repor t 2012
NOBUO KATSUMATAOutside Director
1966 Joined Marubeni-Iida Co., Ltd. (present Marubeni Corporation)
1996 Director of Marubeni Corporation
1999 Corporate Vice President of Marubeni Corporation
2001 Senior Vice President of Marubeni Corporation
2003 President and CEO of Marubeni Corporation
2008 Chairman of Marubeni Corporation (present)
2009 Outside Director of Yokogawa Electric Corporation
MITSUDO URANOOutside Director
1971 Joined Nippon Reizo Co. Ltd. (present Nichirei Corporation)
1999 Director of Nichirei Corporation
2001 Representative Director and President of Nichirei Corporation
2007 Representative Director and Chairman of Nichirei Corporation (present)
2011 Outside Director of Yokogawa Electric Corporation
YASURO TANAHASHIOutside Director
1963 Joined Fuji Iron & Steel Co., Ltd. (present Nippon Steel Corporation)
1995 Director and General Manager of Electronics and Information Systems Division of Nippon Steel Corporation
1997 Managing Director of Nippon Steel Corporation (in charge of new businesses overall)
2000 Representative Director and President of Nippon Steel Information and Communication Systems Inc. (present NS Solutions Corporation)
2003 Representative Director and Chairman of NS Solutions Corporation
2007 Senior Advisor of NS Solutions Corporation (present)
Outside Director of Yokogawa Electric Corporation
zENICHI SHISHIDOOutside Corporate Auditor
1980 Research Fellow of Faculty of Law, Tokyo University
1985 Associate Professor of Faculty of Law, Seikei University
1994 Professor of Faculty of Law, Seikei University
2001 Registered as lawyer (Member of Dai-ichi Tokyo Bar Association)
2004 Professor of School of Law, Seikei University
2009 Professor of Graduate School of International Corporate Strategy, Hitotsubashi University (present)
2012 Outside Corporate Auditor of Yokogawa Electric Corporation
Officers
Senior vice president
JUNJI YAMAMOTO
TAKASHI FUJII
TOSHIAKI SHIRAI
SHUHEI SAKUNO
HIROSHI SUzUKI
Vice president
MASAHARU YAMAzAKI
KOICHI CHUJO
TONY LEE
MAKOTO OTAKE
NOBUAKI KONISHI
JUN-ICHI ANABUKI
Note: Outside Directors Yasuro Tanahashi, Nobuo
Katsumata, and Mitsudo Urano as well as
Outside Corporate Auditor Zenichi Shishido
are independent officers as defined by the
regulations of the Tokyo Stock Exchange.
HIDETO MASAKIOutside Corporate Auditor
1973 Joined The Dai-ichi Mutual Life Insurance Company (present The Dai-ichi Life Insurance Company, Limited)
1999 Managing Executive Officer of Dai-ichi Life Asset Management Co., Ltd. (present DIAM Co., Ltd.)
2001 Director, Chief General Manager of Securities Investment of The Dai-ichi Mutual Life Insurance Company
2006 Director, Managing Executive Officer of The Dai-ichi Mutual Life Insurance Company
2007 Director, Senior Managing Executive Officer of The Dai-ichi Mutual Life Insurance Company
2008 Representative Director, Senior Managing Executive Officer of The Dai-ichi Mutual Life Insurance Company
2010 Representative Director, Deputy President of The Dai-ichi Life Insurance Company, Limited (present)
2012 Outside Corporate Auditor of Yokogawa Electric Corporation 23Yokogawa Electric Corporation
Annual Repor t 2012
Consolidated 11-year summaryyokogawa electric Corporation and Consolidated subsidiaries years ended march 31, 2002 to 2012
Billions of yenmillions of us dollars
2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2012/3
For the year:
net sales ¥310.8 ¥328.8 ¥371.9 ¥387.1 ¥388.9 ¥433.4 ¥437.4 ¥376.5 ¥316.6 ¥325.6 ¥334.7 $4,072
Cost of sales 209.8 219.0 241.4 250.0 245.9 275.9 277.4 253.0 214.5 215.1 195.4 2,378
selling, general and administrative expenses 99.3 108.2 112.3 112.3 117.6 128.2 132.6 118.8 99.5 99.4 122.6 1,492
operating income 1.7 1.6 18.3 24.8 25.3 29.3 27.4 4.7 2.6 11.1 16.6 202
net income (loss) (23.1) (26.2) 24.3 9.4 21.6 12.6 11.7 (38.4) (14.8) (6.7) 6.0 72
Capital expenditures 13.3 15.3 21.4 18.7 29.5 40.3 38.0 26.8 11.1 11.3 11.1 136
depreciation and amortization 14.0 14.3 13.5 14.3 15.1 16.5 23.1 21.6 16.0 13.8 12.8 155
research and development costs 19.2 25.2 27.0 29.0 30.9 36.2 40.9 37.2 28.8 29.2 27.5 334
Cash flow from operating activities 20.5 1.8 8.3 18.3 25.6 40.5 20.8 24.5 21.4 16.2 12.9 157
Cash flow from investing activities (4.4) (3.1) (10.2) (11.2) (11.7) (39.0) (51.0) (24.1) (13.2) (8.0) (7.8) (95)
Cash flow from financing activities (22.9) 3.6 (11.4) (1.3) (14.1) (6.1) 23.9 28.4 11.1 (25.7) (8.0) (97)
at year-end:
total assets 353.9 364.7 397.4 400.3 417.8 438.7 444.6 401.0 398.8 361.2 359.5 4,374
interest-bearing debt 65.5 108.7 99.6 100.3 61.3 59.6 93.0 124.3 137.1 111.0 103.3 1,256
shareholders’ equity 169.1 131.8 160.3 168.8 224.6 234.3 220.7 167.2 153.4 141.7 145.7 1,773
%
Financial indicators:
operating income ratio 0.6 0.5 4.9 6.4 6.5 6.8 6.3 1.3 0.8 3.4 5.0
debt equity ratio (times) 0.39 0.82 0.62 0.59 0.27 0.25 0.42 0.74 0.89 0.78 0.71
roe (return on equity) (12.5) (17.4) 16.6 5.7 11.0 5.5 5.1 (19.8) (9.2) (4.5) 4.1
roa (return on assets) (6.0) (7.3) 6.4 2.3 5.3 2.9 2.6 (9.1) (3.7) (1.8) 1.7
shareholders’ equity ratio 47.8 36.1 40.3 42.2 53.7 53.4 49.6 41.7 38.5 39.2 40.5
yen us dollars
Per share data:
net income (loss) (94.57) (108.39) 99.84 38.43 87.45 47.79 44.76 (149.26) (57.45) (25.98) 23.11 0.28
Cash dividends 7.50 7.50 7.50 7.50 15.00 15.00 16.00 16.00 2.00 0.00 5.00 0.06
shareholders’ equity 697.10 542.20 658.97 693.75 854.24 891.08 856.72 649.20 595.42 550.19 565.69 6.88
stock information:
stock price at the end of the term (yen / us dollars) 1,059 788 1,544 1,452 2,095 1,806 998 394 814 634 837 10.18
market capitalization (billions of yen / millions of us dollars) 257.4 200.1 392.1 368.8 562.8 485.1 268.1 105.8 218.7 170.3 224.8 2,736
number of issued shares 243,041,012 253,967,991 253,967,991 253,967,991 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 —
other information:
number of employees 17,224 18,675 18,364 18,972 17,858 19,286 20,266 20,247 19,574 19,334 19,437
average exchange rate during the periodyen
2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3
us dollar ¥133.25 ¥122.29 ¥113.97 ¥107.46 ¥113.09 ¥117.00 ¥113.80 ¥100.66 ¥ 92.61 ¥ 85.13 ¥ 78.82euro 116.14 120.36 132.73 134.90 137.81 150.33 162.26 143.28 130.68 112.45 109.34
unification of the accounting periods of non-Japan consolidated subsidiariesBeginning with the fiscal year ended march 31, 2007, financial statements based on the provisional settlement of accounts implemented as of the consolidated closing date are being used for yokogawa electric China Co., ltd. and 10 other non-Japan subsidiaries, and the closing date for yokogawa usa, inc., and 47 other non-Japan subsidiaries has been changed to the consolidated closing date. through these changes, 13 consoli-dated subsidiaries had a 15-month accounting period, and 46 consolidated subsidiaries had a 13-month accounting period. due to these changes to the accounting period, compared to the usual standard, the consolidated statement of income showed a 22.1 billion yen increase in net sales, a 1.4 billion yen increase in operating income, and a 985 million yen increase in net income.
24 Yokogawa Electric CorporationAnnual Repor t 2012
Billions of yenmillions of us dollars
2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2012/3
For the year:
net sales ¥310.8 ¥328.8 ¥371.9 ¥387.1 ¥388.9 ¥433.4 ¥437.4 ¥376.5 ¥316.6 ¥325.6 ¥334.7 $4,072
Cost of sales 209.8 219.0 241.4 250.0 245.9 275.9 277.4 253.0 214.5 215.1 195.4 2,378
selling, general and administrative expenses 99.3 108.2 112.3 112.3 117.6 128.2 132.6 118.8 99.5 99.4 122.6 1,492
operating income 1.7 1.6 18.3 24.8 25.3 29.3 27.4 4.7 2.6 11.1 16.6 202
net income (loss) (23.1) (26.2) 24.3 9.4 21.6 12.6 11.7 (38.4) (14.8) (6.7) 6.0 72
Capital expenditures 13.3 15.3 21.4 18.7 29.5 40.3 38.0 26.8 11.1 11.3 11.1 136
depreciation and amortization 14.0 14.3 13.5 14.3 15.1 16.5 23.1 21.6 16.0 13.8 12.8 155
research and development costs 19.2 25.2 27.0 29.0 30.9 36.2 40.9 37.2 28.8 29.2 27.5 334
Cash flow from operating activities 20.5 1.8 8.3 18.3 25.6 40.5 20.8 24.5 21.4 16.2 12.9 157
Cash flow from investing activities (4.4) (3.1) (10.2) (11.2) (11.7) (39.0) (51.0) (24.1) (13.2) (8.0) (7.8) (95)
Cash flow from financing activities (22.9) 3.6 (11.4) (1.3) (14.1) (6.1) 23.9 28.4 11.1 (25.7) (8.0) (97)
at year-end:
total assets 353.9 364.7 397.4 400.3 417.8 438.7 444.6 401.0 398.8 361.2 359.5 4,374
interest-bearing debt 65.5 108.7 99.6 100.3 61.3 59.6 93.0 124.3 137.1 111.0 103.3 1,256
shareholders’ equity 169.1 131.8 160.3 168.8 224.6 234.3 220.7 167.2 153.4 141.7 145.7 1,773
%
Financial indicators:
operating income ratio 0.6 0.5 4.9 6.4 6.5 6.8 6.3 1.3 0.8 3.4 5.0
debt equity ratio (times) 0.39 0.82 0.62 0.59 0.27 0.25 0.42 0.74 0.89 0.78 0.71
roe (return on equity) (12.5) (17.4) 16.6 5.7 11.0 5.5 5.1 (19.8) (9.2) (4.5) 4.1
roa (return on assets) (6.0) (7.3) 6.4 2.3 5.3 2.9 2.6 (9.1) (3.7) (1.8) 1.7
shareholders’ equity ratio 47.8 36.1 40.3 42.2 53.7 53.4 49.6 41.7 38.5 39.2 40.5
yen us dollars
Per share data:
net income (loss) (94.57) (108.39) 99.84 38.43 87.45 47.79 44.76 (149.26) (57.45) (25.98) 23.11 0.28
Cash dividends 7.50 7.50 7.50 7.50 15.00 15.00 16.00 16.00 2.00 0.00 5.00 0.06
shareholders’ equity 697.10 542.20 658.97 693.75 854.24 891.08 856.72 649.20 595.42 550.19 565.69 6.88
stock information:
stock price at the end of the term (yen / us dollars) 1,059 788 1,544 1,452 2,095 1,806 998 394 814 634 837 10.18
market capitalization (billions of yen / millions of us dollars) 257.4 200.1 392.1 368.8 562.8 485.1 268.1 105.8 218.7 170.3 224.8 2,736
number of issued shares 243,041,012 253,967,991 253,967,991 253,967,991 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 —
other information:
number of employees 17,224 18,675 18,364 18,972 17,858 19,286 20,266 20,247 19,574 19,334 19,437
0
100
200
300
400
500
02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3
310.8 328.8371.9 387.1 388.9
433.4 437.4
376.5
316.6 325.6 334.7
net sales
(Billions of yen)
25Yokogawa Electric CorporationAnnual Repor t 2012
0
500
400
300
200
100
08/3 09/3 10/3 11/3 12/3
� Industrial Automation and Control Business� Test and Measurement Business� Other Businesses
437.4
376.5
316.6 325.6 334.7
Net sales
(Billions of yen) (%)
08/3 09/3 10/3 11/3 12/3
� Asia � Europe � North America� Middle East � Other� Sales ratio outside JapanNote: �Prior to fiscal year 2007, the Middle East was
included in Others.
27.1 29.8 26.3 36.919.4
32.1 25.2 23.035.1
29.120.9 21.0
52.0 36.032.0 26.8
109.779.4
72.9 77.0
36.1
27.8
21.326.4
87.3
243.3
206.4
177.3 184.7198.9
55.6 54.8
56.0 56.759.4300
250
200
150
100
50
0
60
50
40
30
20
10
0
Sales outside Japan bygeographic area / Sales ratiooutside Japan(Billions of yen) (%)
08/3 09/3 10/3 11/3 12/3
� Operating income� Operating income ratio
0
5
10
15
20
25
30
0
2
4
6
8
10
1227.4
11.1
16.6
2.64.7
6.3
1.3
3.4
5.0
0.8
Operating income / Operating income ratio
(Billions of yen) (%)
FinanCial reVieW
analysis of results in fiscal year 2011in the fiscal year ended march 31, 2012 (fiscal year
2011), consolidated net sales amounted to 334.7
billion yen, up 9.0 billion yen year on year. this was
mainly due to an increase of 16.5 billion yen in sales
in the industrial automation and control business
thanks to expansion of the Group’s business in emerg-
ing and resource-rich countries, which more than made
up for a decrease of 7.5 billion yen in the test and
measurement business and the other businesses seg-
ment. operating income increased 5.5 billion yen to
16.6 billion yen and can be attributed to the increase
in sales and the continued implementation of initia-
tives to strengthen the Group’s corporate structure.
the Group recorded a net income for the first time in
four years; this amounted to 6.0 billion yen and was a
result of the increase in operating income and a
decline in extraordinary losses.
sales in markets other than Japan rose year on year
due to a strong performance in emerging markets and
resource-rich countries by the industrial automation
and control business. sales grew strongest in China,
the middle east, australia, and southeast asia.
analysis of capital and assets1. Fund raising and liquidity management
the Group raises funds—both short-term and long-term
loans—based on the principles of security, ensuring
the efficiency of fund usage, and limiting fund raising.
it also ensures the security of its finances and the
efficiency of its fund raising through a 40 billion yen
commitment line of credit. as of the end of fiscal year
2011, the balance of the commitment line stood at 0.9
billion yen.
in fiscal year 2011, the Group took funds that had
been raised through loans as well as cash flow from
operating activities and allocated them to working capi-
tal and capital expenditure. maturing long-term loans
totaling 48.1 billion yen were repaid using cash equiva-
lents on hand and the drawdown of new long-term loans.
2. Condition of assets, liabilities, and net assets
total assets at the end of fiscal year 2011 were 359.5
billion yen, down 1.7 billion yen from the end of the
previous fiscal year. While there was a 7.0 billion yen
increase in trade notes and accounts receivables, the
decline in total assets can be attributed mainly to a
4.0 billion yen decrease in cash and cash equivalents,
a 2.9 billion yen decrease in property, plant and equip-
ment, and a 1.8 billion yen decrease in intangible assets.
total liabilities were 209.9 billion yen, down 6.1
billion yen from the end of the previous fiscal year.
total liabilities declined mainly because of a 7.7 billion
yen decrease in short-term and long-term borrowings.
total equity was 149.6 billion yen, up 4.3 billion yen
from the end of the previous fiscal year. this was mainly
due to an increase of 6.0 billion yen in retained earn-
ings. as a result, the shareholders’ equity ratio rose 1.3
percentage points from the previous year, to 40.5%.
26 Yokogawa Electric CorporationAnnual Repor t 2012
08/3 09/3 10/3 11/3 12/3
� Net income (loss)� Net income (loss) ratio
20
0
–20
–40
–60
20
0
–20
–40
–60
11.7
–38.4
–14.8
–6.7
6.0
Net income (loss) / Net income (loss) ratio
(Billions of yen) (%)
2.7 –10.2–4.7 –2.1
1.8
08/3 09/3 10/3 11/3 12/3
� Earnings per share� Price earnings ratio
100
50
0
–50
–100
–150
–200
50
25
0
–25
–50
–75
–100
44.76
36.2
–149.26
–57.45
–25.98
Earnings per share / Price earnings ratio
(Yen) (%)
22.3
23.1
0
250
200
150
100
50
08/3 09/3 10/3 11/3 12/3
� Shareholders’ equity� Shareholders’ equity ratio
0
20
40
60
80
100220.7
167.2153.4
141.7 145.7
Shareholders’ equity / Shareholders’ equity ratio
(Billions of yen) (%)
49.641.7 38.5 39.2 40.5
3. Cash flows
net cash provided by operating activities in fiscal year
2011 totaled 12.9 billion yen, mainly reflecting inflows
of 11.7 billion yen from income before income taxes
and minority interests, and adjustments for deprecia-
tion and amortization. net cash used in investing activ-
ities was 7.8 billion yen, a year-on-year decrease of
151 million yen. this reflects a substantial streamlin-
ing of Group investments, and is the consequence of
proceeds primarily from the sale of property, plant and
equipment that offset r&d investments the Group
made in growth fields. as a result, net free cash flow
provided 5.1 billion yen, down 3.1 billion yen from the
previous fiscal year. moreover, net cash used in financ-
ing activities totaled 8.0 billion yen due primarily to the
repayment of long-term borrowings.
risks relating to the Company’s businessas described in the Company’s statutory annual finan-
cial report filed as stipulated by the Financial instru-
ments and exchange act, the following risks may
impact its business and accounting conditions, and
therefore could have a significant effect on investor
decision making.
these risks include forward-looking statements that
are based on judgments made by the Group at the end
of fiscal year 2011. Further, the risks include items
that will not necessarily affect investment decisions.
However, based on an awareness of these risks, the
Company maintains the necessary risk management
structure and works to avoid risk occurrence as well as
to minimize the impact of a risk should it occur.
1. risks relating to the business environment
a. economic conditions
the Group’s main markets where it conducts its busi-
ness activities are countries and regions including
Japan, asia, europe, north america, and the middle
east. Political situations and economic trends in these
markets could adversely affect the Group’s business
results and financial condition.
b. international factors
the Group’s sales and production operations are truly
international in scope, as is indicated by the fact that
sales generated in all markets other than Japan cur-
rently account for approximately 60% of consolidated
sales. therefore, factors in these markets such as
economic trends; exchange rate fluctuations; changes
to laws and regulations relating to investment, trade,
competition, taxation, or foreign exchange; differences
in commercial practices or labor standards that may
have cultural or religious origins; terrorist attacks,
wars, natural disasters, or other unanticipated inci-
dents; or political, social, or other elements could
adversely affect the Group’s business results and
financial condition.
27Yokogawa Electric CorporationAnnual Repor t 2012
0
150
120
90
60
30
08/3 09/3 10/3 11/3 12/3
� Interest-bearing debt� Debt equity ratio
1.5
1.2
0.9
0.6
0.3
0
103.393.0
124.3137.1
111.0
0.42
0.74
0.890.78
0.71
Interest-bearing debt /Debt equity ratio
(Billions of yen) (Times)
0
500
400
300
200
100
08/3 09/3 10/3 11/3 12/3
� Total assets� Total assets turnover
1.5
1.2
0.9
0.6
0.3
0
359.5
444.6401.0 398.8
361.2
0.930.99
0.890.79
0.86
Total assets / Total assets turnover
(Billions of yen) (Times)
08/3 09/3 10/3 11/3 12/3
� ROE� ROA
10
0
–10
–20
–30
ROE / ROA
(%)
–9.1–3.7
–1.82.6 1.7
–19.8
–9.2
–4.5
5.1 4.1
c. laws and regulations
the Group observes the laws and regulations of each
country in which it operates. Changes in laws and regu-
lations or the enactment of new laws that cannot be
anticipated could adversely affect the Group’s busi-
ness results and financial condition. in addition, any
increase in costs required to achieve compliance with
environmental protection-related legislation could
adversely affect the Group’s business results and
financial condition. moreover, such legislation could
impact the Group’s overall business activities, includ-
ing its r&d and production activities.
d. Fluctuations in currency exchange rates and
interest rates
the Company carries out measures for ameliorating
the risk of exchange rate fluctuations. However, due to
their impact on the prices and costs of products and
services with transactions denominated in foreign cur-
rencies, fluctuations in currency exchange rates may
adversely affect the Group’s business results and
financial condition. the Group also carries out mea-
sures for ameliorating the risk of interest rate fluctua-
tions. However, fluctuations in interest rates could still
adversely affect the Group’s business results and
financial condition.
e. Changes in the value of assets owned
Changes in the value of shares, etc., owned by the
Group could adversely affect the Group’s business
results and financial condition. in addition, regarding
the fixed assets owned by the Group, a decrease in
asset value accompanying a decline in their market
value or a fall in profitability could adversely affect the
Group’s business results and financial condition.
2. risks relating to business activities
a. industrial automation and control business
the industrial automation and control business is
mainly expected to grow outside Japan in the medium
to long term due to increased demand for energy and
raw materials, particularly in newly industrialized
nations. to increase its share of the global market and
bolster sales and income, the Company has focused
its resources on this business and strengthened sys-
tems related to r&d, production, sales, engineering,
and service. as a result, the percentage of net sales
on a consolidated basis accounted for by the industrial
automation and control business has grown in recent
years. Consequently, trends related to the demand for
plant construction and upgrades, which affect orders
and sales in this business, could adversely affect the
Group’s business results and financial condition.
b. test and measurement business
the Company has focused its resources on strengthen-
ing its sales network outside Japan and planning and
development of new products for emerging countries to
develop the electric energy market in connection with
environmental solutions and the optical telecommunica-
tion market. this may have an impact on the Group’s
business results and financial condition if the implemen-
28 Yokogawa Electric CorporationAnnual Repor t 2012
tation does not proceed as planned due to the deterio-
ration of economic and market trends.
c. securing and training human resources
the Group’s growth is supported by its talented and
capable human resources. in particular, the techni-
cians who support its leading-edge technology in the
fields of measurement, control, and information, as
well as the technicians who support its high levels of
product quality, are extremely important to the Group.
Further, in the industrial automation and control busi-
ness, the need to secure and train human resources
with the project management and engineering capabili-
ties required to work in the international market is an
ongoing issue. if the Group is unable to address this
issue satisfactorily, this could adversely affect the
Group’s business results and financial condition.
d. Product quality
the Group provides its customers with highly reliable
products and services through the technologies and
expertise that it has accumulated over many years as
well as through its rigorous quality control system. if by
any chance a defect should occur in a Group product or
service, and if this defect causes any damage, then
this could adversely affect the Group’s business
results and financial condition, and could also impact
the Group’s overall business activities.
e. r&d activities
the Group has positioned the development of new tech-
nologies as one of its most important management
issues, and is continuously carrying out r&d in its core
technology areas of measurement, control, and informa-
tion. However, if r&d investments do not match planned
future market needs, this could adversely affect the
Group’s business results and financial condition.
3. other risks
a. intellectual property
in order to maintain its competitive advantages, the
Group accumulates differentiated technologies and
expertise relating to the products and services that it
develops, and strives to protect these intellectual
property assets. However, if the intellectual property
is infringed upon by a third party and therefore the
Group is unable to make an expected profit, it could
adversely affect the Group’s business results and
financial condition.
moreover, the Group has established systems and
conducts training to ensure that it does not infringe
upon the intellectual property rights of other compa-
nies. However, if due to a difference in viewpoint or
some other reason the Group infringes on the intellec-
tual property rights of another company, there is a risk
that it will be subsequently disadvantaged by its inabil-
ity to use important technology and/or may be held
liable for compensation, which could adversely affect
the Group’s business results and financial condition.
b. information security
through its business activities, the Group acquires
personal or otherwise confidential information on its
customers and trading partners. the Group therefore
establishes systems to manage this information and
provides employees training on information security.
However, in the event that information is leaked or
abused due to some unforeseen circumstance, there is
a risk the Group will be held liable for compensation or
the corporate image will be drastically tarnished, which
could adversely affect the Group’s business results
and financial condition.
c. natural disasters, etc.
a natural disaster such as an earthquake, fire, or
flood; the outbreak of war; a terrorist attack; an attack
via a computer virus; or a disruption in the supply
chain caused by any of the aforementioned factors that
makes it difficult to procure electronic parts or other
materials could impact the Company’s overall business
activities, including the Group’s production activities. in
addition, while the Group has appropriate measures in
place for responding to the outbreak of diseases such
as new influenza strains, these diseases could have an
impact on the Group’s overall business results and
financial condition.
29Yokogawa Electric CorporationAnnual Repor t 2012
Consolidated BalanCe sheetYokogawa electric Corporation and Consolidated subsidiaries March 31, 2012
Millions of yen
thousands of Us dollars
(note 1)
2012 2011 2012
assets
Current assets:
Cash and cash equivalents (note 13) ¥ 53,430 ¥ 57,335 $ 650,079
Receivables (notes 4 and 13)
trade notes and accounts 110,541 103,492 1,344,941
other 4,734 3,815 57,600
less: allowance for doubtful accounts (3,247) (3,175) (39,507)
net receivables 112,028 104,132 1,363,034
inventories (note 5) 35,359 35,474 430,210
deferred tax assets (note 10) 3,087 2,829 37,560
other 7,398 7,367 90,017
total current assets 211,302 207,137 2,570,900
Property, Plant and equipment (note 6):
land 16,682 17,244 202,969
Buildings and structures—net 46,167 48,927 561,714
Machinery, equipment and vehicles—net 6,644 7,220 80,832
tools, furniture and fixtures—net 7,001 4,570 85,183
Construction in progress 1,175 2,653 14,292
lease assets—net (note 12) 492 488 5,984
total property, plant and equipment 78,161 81,102 950,974
investments and other assets:
investment securities (notes 3, 7 and 13) 26,355 26,171 320,659
investments in and advances to unconsolidated subsidiaries and affiliated companies 5,495 5,560 66,852
Goodwill 1,695 1,823 20,622
software 23,349 8,126 284,088
other intangible assets 3,214 20,145 39,111
deferred tax assets (note 10) 1,960 2,077 23,844
other 8,534 9,460 103,831
less: allowance for doubtful accounts (564) (368) (6,860)
total investments and other assets 70,038 72,994 852,147
total assets ¥359,501 ¥361,233 $4,374,021
see notes to consolidated financial statements.
30 Yokogawa Electric CorporationAnnual Repor t 2012
Millions of yen
thousands of Us dollars
(note 1)2012 2011 2012
liaBilities and eQUitY
Current liabilities:
short-term loans payable (notes 7, 13 and 15) ¥ 10,688 ¥ 6,072 $ 130,034
Current portion of long-term debt (notes 7 and 13) 4,050 48,300 49,281
Payables (notes 7 and 13)
trade notes and accounts 30,659 28,807 373,020
other 8,070 12,828 98,192
income taxes payable (notes 10 and 13) 3,308 3,270 40,244
accrued expenses 29,748 23,953 361,946
other (note 10) 28,094 28,863 341,812
total current liabilities 114,617 152,093 1,394,529
long-term liabilities:
long-term debt (notes 7, 13 and 15) 88,883 56,921 1,081,435
liability for retirement benefits (note 8) 2,441 2,067 29,700
other (note 10) 3,986 4,919 48,497
total long-term liabilities 95,310 63,907 1,159,632
Commitments and Contingent liabilities (note 17)
equity (notes 9 and 19):
Common stock, authorized, 600,000,000 shares; issued, 268,624,510 shares in 2012 and 2011 43,401 43,401 528,058
Capital surplus 50,345 50,345 612,536
Retained earnings 79,002 73,011 961,216
treasury stock, 11,078,187 shares in 2012 and 11,071,323 shares in 2011 (11,006) (11,001) (133,906)
accumulated other comprehensive income
net unrealized gain on available-for-sale securities 2,483 2,146 30,215
deferred gain (loss) on derivatives under hedge accounting 9 (137) 110
adjustment relating to pension liability (678) (375) (8,247)
Foreign currency translation adjustments (17,865) (15,687) (217,364)
total (16,051) (14,053) (195,286)
Minority interests 3,883 3,530 47,242
total equity 149,574 145,233 1,819,860
total liabilities and equity ¥359,501 ¥361,233 $4,374,021
31Yokogawa Electric CorporationAnnual Repor t 2012
Consolidated stateMent oF oPeRationsYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012
Millions of yen
thousands of Us dollars
(note 1)
2012 2011 2012
net sales ¥334,669 ¥325,621 $4,071,893
Cost of sales (note 11) 195,431 215,131 2,377,790
Gross profit 139,238 110,490 1,694,103
selling, General and administrative expenses (note 11) 122,636 99,411 1,492,109
operating income 16,602 11,079 201,994
other income (expenses):
interest and dividend income 1,954 1,860 23,773
interest expense (2,653) (2,815) (32,276)
loss on valuation of investment securities (note 3) (2,251)
net gain on sale of investment securities and investment in affiliated companies (note 3) 754 502 9,170
Foreign exchange loss—net (413) (1,752) (5,027)
net gain (loss) on disposal of property, plant and equipment 226 (178) 2,755
loss on impairment of long-lived assets (note 6) (465) (708) (5,663)
equity in earnings of affiliates 179 593 2,175
state subsidy 334 334 4,058
Restructuring costs (note 16) (3,212) (6,824) (39,086)
other (1,633) (865) (19,853)
other income (expenses)—net (4,929) (12,104) (59,974)
income (loss) before income taxes and Minority interests 11,673 (1,025) 142,020
income taxes (note 10):
Current 5,218 4,491 63,481
deferred (81) 631 (984)
total income taxes 5,137 5,122 62,497
net income (loss) before Minority interests 6,536 (6,147) 79,523
Minority interests in net income 584 546 7,105
net income (loss) ¥ 5,952 ¥ (6,693) $ 72,418
YenUs dollars
(note 1)
Per share of Common stock (note 19):
Basic net income (loss) ¥ 23.11 ¥ (25.98) $ 0.28
Cash dividends applicable to the year ¥5 nil $ 0.06
see notes to consolidated financial statements.
32 Yokogawa Electric CorporationAnnual Repor t 2012
Consolidated stateMent oF CoMPRehensive inCoMeYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012
Millions of yen
thousands of Us dollars
(note 1)
2012 2011 2012
net income (loss) before Minority interests ¥ 6,536 ¥ (6,147) $ 79,523
other Comprehensive income (note 18) :
net unrealized gain (loss) on available-for-sale securities 341 (317) 4,144
deferred gain (loss) on derivatives under hedge accounting 146 (220) 1,780
adjustment relating to pension liability (303) (5) (3,684)
Foreign currency translation adjustments (2,120) (3,970) (25,793)
share of other comprehensive income in affiliates (4) (5) (45)
total other comprehensive income (1,940) (4,517) (23,598)
Comprehensive income ¥ 4,596 ¥(10,664) $ 55,925
total Comprehensive income attributable to (note 18) :
owners of the parent ¥ 3,954 ¥(11,049) $ 48,115
Minority interests 642 385 7,810
see notes to consolidated financial statements.
33Yokogawa Electric CorporationAnnual Repor t 2012
Millions of yenaccumulated other comprehensive income
outstanding number of shares of common
stockCommon
stockCapital surplus
Retained earnings
treasury stock
net unrealized
gain on available-
for-sale securities
deferred gain (loss)
on derivatives
under hedge
accounting
adjustment relating to
pension liability
Foreign currency
translation adjustments total
Minority interests
total equity
Balance, april 1, 2010 257,569,105 ¥43,401 ¥50,345 ¥80,304 ¥(10,991) ¥2,450 ¥ 83 ¥(370) ¥(11,860) ¥ (9,697) ¥3,998 ¥157,360
net loss (6,693) (6,693)
Cash dividends, ¥2.0 per share (note 19) (515) (515)
Purchase of treasury stock (17,585) (11) (11)
disposal of treasury stock 1,667 (0) 1 1
other (85) (85)
net change in the year (304) (220) (5) (3,827) (4,356) (468) (4,824)
Balance, March 31, 2011 257,553,187 43,401 50,345 73,011 (11,001) 2,146 (137) (375) (15,687) (14,053) 3,530 145,233
net income 5,952 5,952
Purchase of treasury stock (7,508) (5) (5)
disposal of treasury stock 644 (0) 0 0
other 39 39
net change in the year 337 146 (303) (2,178) (1,998) 353 (1,645)
Balance, March 31, 2012 257,546,323 ¥43,401 ¥50,345 ¥79,002 ¥(11,006) ¥2,483 ¥ 9 ¥(678) ¥(17,865) ¥(16,051) ¥3,883 ¥149,574
thousands of Us dollars (note 1)accumulated other comprehensive income
Common stock
Capital surplus
Retained earnings
treasury stock
net unrealized
gain on available-
for-sale securities
deferred gain (loss)
on derivatives
under hedge
accounting
adjustment relating to
pension liability
Foreign currency
translation adjustments total
Minority interests
total equity
Balance, april 1, 2011 $528,058 $612,538 $888,324 $(133,849) $26,109 $(1,670) $(4,562) $(190,859) $(170,982) $42,946 $1,767,035
net income 72,418 72,418
Purchase of treasury stock (65) (65)
disposal of treasury stock (2) 8 6
other 474 474
net change in the year 4,106 1,780 (3,684) (26,505) (24,304) 4,296 (20,008)
Balance, March 31, 2012 $528,058 $612,536 $961,216 $(133,906) $30,215 $ 110 $(8,247) $(217,364) $(195,286) $47,242 $1,819,860
see notes to consolidated financial statements.
Consolidated stateMent oF ChanGes in eQUitYYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012
34 Yokogawa Electric CorporationAnnual Repor t 2012
Millions of yen
thousands of Us dollars
(note 1)2012 2011 2012
operating activities:
income (loss) before income taxes and minority interests ¥ 11,673 ¥ (1,025) $ 142,020
adjustments for:
income taxes paid (3,946) (3,452) (48,014)
depreciation and amortization 12,756 13,836 155,207
equity in earnings of affiliates (179) (593) (2,175)
loss on impairment of long-lived assets 465 708 5,663
net (loss) gain on disposal of property, plant and equipment (226) 178 (2,755)
loss on valuation of investment securities 2,251
net gain on sale of investment securities (754) (502) (9,170)
Restructuring costs 3,212 6,824 39,086
Payment for special retirement benefit (3,370) (4,021) (41,004)
Changes in assets and liabilities:
decrease (increase) in trade notes and accounts receivable (7,641) 2,294 (92,965)
decrease (increase) in inventories (211) (1,670) (2,573)
increase (decrease) in trade notes and accounts payable 2,750 2,290 33,455
increase (decrease) in allowance for doubtful accounts 341 (240) 4,152
other assets and liabilities 474 (2,984) 5,768
other—net (2,447) 2,274 (29,777)
total adjustments 1,224 17,193 14,898
net cash provided by operating activities 12,897 16,168 156,918
investing activities:
Purchase of property, plant and equipment (6,799) (4,719) (82,717)
Proceeds from sale of property, plant and equipment 1,232 515 14,991
acquisition of intangible assets (4,655) (5,335) (56,642)
Cash received in conjunction with sale of consolidated subsidiaries 818
Proceeds from sale of investment securities 1,031 652 12,546
other—net 1,349 76 16,415
net cash used in investing activities (7,842) (7,993) (95,407)
Financing activities:
net increase (decrease) in short-term loans payable 4,529 (670) 55,106
Proceeds from long-term debt 35,920 437,036
Repayments of long-term debt (48,119) (24,236) (585,466)
Purchase of treasury stock (5) (11) (65)
Cash dividends paid to minority shareholders (276) (251) (3,350)
Cash dividends paid (4) (521) (53)
other—net 0 1 6
net cash used in financing activities (7,955) (25,688) (96,786)
effect of exchange Rate Changes on Cash and Cash equivalents (1,005) (1,784) (12,233)
net decrease in Cash and Cash equivalents (3,905) (19,297) (47,508)
increase (decrease) in Cash and Cash equivalents Resulting
from Change of scope of Consolidation (0) 76 (0)
Cash and Cash equivalents, Beginning of Year 57,335 76,556 697,587
Cash and Cash equivalents, end of Year ¥ 53,430 ¥ 57,335 $ 650,079
see notes to consolidated financial statements.
Consolidated stateMent oF Cash FlowsYokogawa electric Corporation and Consolidated subsidiaries Years ended March 31, 2012
35Yokogawa Electric CorporationAnnual Repor t 2012
1. Basis of Presentation of the Consolidated Financial statements
2. summary of significant accounting Policies
the accompanying consolidated financial statements have
been prepared in accordance with the provisions set forth in
the Japanese Financial instruments and exchange act and its
related accounting regulations and in conformity with account-
ing principles generally accepted in Japan (“Japanese GaaP”),
which are different in certain respects as to application and
disclosure requirements of the international Financial Report-
ing standards.
in preparing these consolidated financial statements, cer-
tain reclassifications and rearrangements have been made to
the consolidated financial statements issued in Japan in
order to present them in a form which is more familiar to
readers outside Japan. Certain comparative figures of the
a. Consolidation—the consolidated financial statements as
of March 31, 2012 include the accounts of the Company
and its 85 significant (85 in 2011) subsidiaries (together,
the “Group”).
Under the control and influence concept, those companies
in which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated, and those
companies over which the Group has the ability to exercise
significant influence are accounted for by the equity method.
investments in 1 (1 in 2011) unconsolidated subsidiary
and 2 (3 in 2011) affiliated companies are accounted for by
the equity method. investment in the remaining affiliated
company is stated at cost. if the equity method of accounting
had been applied to the investments in these companies, the
effect on the accompanying consolidated financial state-
ments would not be material.
the excess of the cost of an acquisition over the fair value
of the net assets of the acquired subsidiary at the date of
acquisition is being amortized over a period of 20 years.
all significant intercompany balances and transactions have
been eliminated on consolidation. all material unrealized
profit included in assets resulting from transactions within
the Group is eliminated.
b. Unification of accounting Policies applied to Foreign sub-
sidiaries for the Consolidated Financial statements—in May
2006, the accounting standards Board of Japan (the “asBJ”)
issued asBJ Practical issues task Force (PitF) no. 18 “Practi-
cal solution on Unification of accounting Policies applied to
Foreign subsidiaries for the Consolidated Financial state-
ments.” PitF no. 18 prescribes: (1) the accounting policies
and procedures applied to a parent company and its subsid-
iaries for similar transactions and events under similar cir-
cumstances should in principle be unified for the preparation
of the consolidated financial statements, (2) financial state-
ments prepared by foreign subsidiaries in accordance with
either international Financial Reporting standards or the
generally accepted accounting principles in the United states
previous year have been reclassified to conform with the
classification used in 2012.
the consolidated financial statements are stated in
Japanese yen, the currency of the country in which Yokogawa
electric Corporation (the “Company”) is incorporated and
operates. the translations of Japanese yen amounts into Us
dollar amounts are included solely for the convenience of
readers outside Japan and have been made at the rate of
¥82.19 to $1, the approximate rate of exchange at March
31, 2012. such translations should not be construed as
representations that the Japanese yen amounts could be
converted into Us dollars at that or any other rate.
of america tentatively may be used for the consolidation
process, (3) however, the following items, should be adjusted
in the consolidation process so that net income is accounted
for in accordance with Japanese GaaP unless they are not
material: a) amortization of goodwill; b) scheduled amortiza-
tion of actuarial gain or loss of pensions that has been
directly recorded in the equity; c) expensing capitalized devel-
opment costs of R&d; d) cancellation of the fair value model
accounting for property, plant and equipment and investment
properties and incorporation of cost model accounting; and e)
exclusion of any minority interests from net income.
c. Cash equivalents—Cash equivalents are short-term invest-
ments that are readily convertible into cash and are exposed
to insignificant risk of changes in value. specifically, cash
equivalents represent time deposits which mature within
three months of the date of placement.
d. inventories—inventories are stated at the lower of cost,
mainly determined by the specific identification method for
finished goods and work in process, and by the average
method for merchandise, raw materials and supplies, or the
net selling value.
e. investment securities—investment securities are classi-
fied and accounted for, depending on management’s intent,
as follows:
i) held-to-maturity debt securities, which are expected to be
held to maturity with the positive intent and ability to hold to
maturity, are reported at amortized cost and
ii) available-for-sale securities, which are not classified as the
aforementioned securities, are reported at fair value, with
unrealized gains and losses, net of applicable taxes, reported
under accumulated other comprehensive income in a sepa-
rate component of equity.
non-marketable available-for-sale securities are stated at
cost determined by the moving-average method. For other
than temporary declines in fair value, investment securities
notes to Consolidated FinanCial stateMentsYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012
36 Yokogawa Electric CorporationAnnual Repor t 2012
are reduced to net realizable value by a charge to income.
f. Property, Plant and equipment—Property, plant and equip-
ment are stated at cost less accumulated depreciation and
any impairment in value. depreciation of property, plant and
equipment is mainly calculated by the straight-line method
over their estimated useful lives.the estimated useful lives
range principally from 3 to 50 years for buildings, and from 4
to 10 years for machinery and equipment. the estimated
useful lives for leased assets are the terms of the respec-
tive leases.
effective april 1, 2011, the Company and its consolidated
subsidiaries in Japan adopted the straight-line method of
depreciation for their assets which, previously, had been
depreciated by the declining-balance method. this change
was made to provide a more accurate allocation of the cost of
the assets, after the restructuring of the business portfolio in
recent years.
the effects of this change were to increase gross profit
by ¥1,787 million (Us$21,738 thousand) and to increase
income before taxes and minority interests by ¥1,816 mil-
lion (Us$22,094 thousand).
accumulated depreciation deducted from the cost of prop-
erty, plant and equipment in the accompanying consolidated
balance sheet amounted to ¥145,204 million (Us$1,766,688
thousand) and ¥145,857 million at March 31, 2012 and
2011, respectively.
g. long-lived assets—the Group reviews its long-lived assets
for impairment whenever events or changes in circumstance
indicate the carrying amount of an asset or asset group may
not be recoverable. an impairment loss would be recognized
if the carrying amount of an asset or asset group exceeds the
sum of the undiscounted future cash flows expected to result
from the continued use and eventual disposition of the asset
or asset group. the impairment loss would be measured as
the amount by which the carrying amount of the asset
exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
h. Retirement and Pension Plans—the Company and most of
its consolidated subsidiaries have defined contribution plans,
and some other consolidated subsidiaries have defined ben-
efit plans for employees. Under a defined benefit plan, liability
for retirement benefits represents the estimated present
value of projected benefit obligations in excess of the fair
value of plan assets less unrecognized actuarial gain (loss)
and unrecognized prior service costs. Unrecognized actuarial
gain (loss) is amortized on a straight-line basis over the
expected average remaining years of service from the follow-
ing year in which they arise. Unrecognized prior service costs
are charged to expense on a straight-line basis over the aver-
age remaining years of service of the employees.
i. Research and development Costs—Research and develop-
ment costs are charged to income as incurred.
Prior to april 1, 2011, the Company and its certain consoli-
dated subsidiaries in Japan recorded R&d costs for basic
research in general and administrative expenses, while prod-
uct development costs were included in manufacturing costs,
based on the fact that product development costs were
incurred during the process of designing and producing of
hardware. effective april 1, 2011, the Company and its cer-
tain consolidated subsidiaries in Japan changed to record
some product development costs in general and administra-
tive expenses, which were previously recorded in manufactur-
ing costs, due to the fact that R&d activities are more
focused on software than hardware and R&d costs are
incurred separately from the production process after the
change of the business portfolio in recent years.
the effect of this change is to increase gross profit by
¥21,194 million (Us$257,868 thousand) and to decrease
operating income and net income before income taxes and
minority interests by ¥470 million (Us$5,719 thousand).
j. leases—in March 2007, the asBJ issued asBJ statement
no. 13 “accounting standard for lease transactions” which
revised the previous accounting standard for lease transac-
tions issued in June 1993. the revised accounting standard
for lease transactions is effective for fiscal years beginning
on or after april 1, 2008.
Under the previous accounting standard, finance leases
that were deemed to transfer ownership of the leased assets
to the lessee were to be capitalized. however, other finance
leases were permitted to be accounted for as operating lease
transactions if certain “as if capitalized” information was
disclosed in the note to the lessee’s financial statements.
the revised accounting standard requires that all finance
lease transactions should be capitalized to recognize lease
assets and lease obligations in the balance sheet. in addi-
tion, the accounting standard permits leases which existed at
the transition date and do not transfer ownership of the
leased assets to the lessee to be accounted for as operating
lease transactions.
the Company and its subsidiaries in Japan applied the
revised accounting standard effective april 1, 2008. in addi-
tion, the Company accounted for leases which existed at the
transition date and do not transfer ownership of the leased
assets to the lessee as operating lease transactions.
all other leases are accounted for as operating leases.
k. Bonuses to directors and Corporate auditors—Bonuses to
directors and corporate auditors are accrued at the end of the
year to which such bonuses are attributable.
l. Construction Contracts—Construction revenue and con-
struction costs are recognized based on the percentage-of-
completion method if the outcome of the construction
contract can be estimated reliably.
37Yokogawa Electric CorporationAnnual Repor t 2012
when total contract revenue, total contract costs and
costs incurred at the balance sheet date can be reliably
measured, the outcome of a construction contract can be
estimated reliably.
if the outcome of a project cannot be reliably estimated,
the completed-contract method shall be applied.
when it is probable that the total construction costs will
exceed total construction revenue, an estimated loss on the
contract should be immediately recognized by providing for a
loss on construction contracts.
m. income taxes—the provision for income taxes is computed
based on the pretax income included in the consolidated
statement of operations. the asset and liability approach is
used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets
and liabilities. deferred taxes are measured by applying cur-
rently enacted tax laws to the temporary differences.
the Group files its tax return under the consolidated corpo-
rate tax system, which allows companies to base tax pay-
ments on the combined profits or losses of the parent
company and its wholly owned subsidiaries in Japan.
n. Foreign Currency transactions—Monetary assets and
liabilities denominated in foreign currencies at the balance
sheet date are translated into Japanese yen at the exchange
rate as of that date. the foreign exchange gains and losses
from translation are recognized in the consolidated statement
of operations.
o. Foreign Currency Financial statements—the balance sheet
accounts of the consolidated subsidiaries outside Japan are
translated into Japanese yen at the prevailing exchange rate
as of the balance sheet date except for equity, which is trans-
lated at the historical rate. differences arising from such
translation are shown as “Foreign currency translation adjust-
ments” under accumulated other comprehensive income in a
separate component of equity. Revenue and expense
accounts of consolidated subsidiaries outside Japan are
translated into yen at the average exchange rate.
p. derivatives and hedging activities—the Company and
certain consolidated subsidiaries use a variety of derivative
financial instruments, including foreign currency forward con-
tracts, currency options, and interest rate swaps, as a means
of hedging foreign currency and interest rate risks. they do
not enter into derivatives for trading or speculative purposes.
derivative financial instruments and foreign currency trans-
actions are classified and accounted for as follows: (1) all
derivatives other than those which qualify for hedge account-
ing: these are measured at fair value, and gains or losses are
recognized in the statement of operations. (2) derivatives
used for hedging purposes, if the derivatives qualify for hedge
accounting because of a high correlation between the hedging
instruments and the hedged items, gains or losses are
deferred until maturity of the hedged transactions. these
amounts are shown as “deferred gain (loss) on derivative
under hedge accounting” under accumulated other compre-
hensive income in a separate component of equity.
Foreign currency forward contracts are utilized to hedge the
foreign currency risk of trade receivables denominated in
foreign currencies. if the forward contracts qualify for hedge
accounting, these trade receivables are translated at the
contracted rates. interest rate swaps are utilized to hedge the
interest rate risk of long-term debt. those interest rate swaps
which qualify for hedge accounting and meet specific match-
ing criteria are not remeasured at market value, but the dif-
ferential paid or received under the swap agreements is
recognized and included in interest expense or income.
q. Per share information—Basic net income (loss) per share
is computed by dividing net income (loss) available to
common shareholders by the weighted-average number of
common shares outstanding for the period.
Cash dividends per share presented in the accompanying
consolidated statement of operations are dividends appli-
cable to the respective years including dividends to be paid
after the end of the year.
r. accounting Changes and error Corrections—in december
2009, the asBJ issued asBJ statement no. 24, “accounting
standard for accounting Changes and error Corrections” and
asBJ Guidance no. 24, “Guidance on accounting standard for
accounting Changes and error Corrections.” accounting treat-
ments under this standard and guidance are as follows: (1)
Changes in accounting Policies-when a new accounting policy
is applied with revision of accounting standards, the new
policy is applied retrospectively unless the revised accounting
standards include specific transitional provisions. when the
revised accounting standards include specific transitional
provisions, an entity shall comply with the specific transitional
provisions. (2) Changes in Presentations-when the presenta-
tion of financial statements is changed, prior-period financial
statements are reclassified in accordance with the new pre-
sentation. (3) Changes in accounting estimates-a change in
an accounting estimate is accounted for in the period of the
change if the change affects that period only, and is
accounted for prospectively if the change affects both the
period of the change and future periods. (4) Corrections of
Prior-Period errors-when an error in prior-period financial
statements is discovered, those statements are restated.
this accounting standard and the guidance are applicable to
accounting changes and corrections of prior-period errors
which are made in the fiscal year beginning on or after april
1, 2011.
38 Yokogawa Electric CorporationAnnual Repor t 2012
3. investment securitiesinvestment securities as of March 31, 2012 and 2011 consisted of the following:
Millions of yenthousands of
Us dollars
2012 2011 2012
Current:
Government and municipal bonds ¥ 0 $ 0
non-current:
Government and municipal bonds ¥ 0
equity securities and other 26,355 26,171 320,659
total ¥26,355 ¥26,171 $320,659
the cost and aggregate fair values of investment securities at March 31, 2012 and 2011 were as follows:
Millions of yen
March 31, 2012 CostUnrealized
gainUnrealized
lossFair
value
securities classified as:
available-for-sale:
equity securities ¥11,391 ¥3,532 ¥455 ¥14,468
other 9 2 7
held-to-maturity 0 0
March 31, 2011
securities classified as:
available-for-sale:
equity securities ¥11,566 ¥2,960 ¥244 ¥14,282
other 12 3 9
held-to-maturity 0 0
thousands of Us dollars
March 31, 2012 CostUnrealized
gainUnrealized
lossFair
value
securities classified as:
available-for-sale:
equity securities $138,593 $42,975 $5,541 $176,027
other 109 22 87
held-to-maturity 0 0
39Yokogawa Electric CorporationAnnual Repor t 2012
the information for available-for-sale securities sold during the years ended March 31, 2012 and 2011 was as follows:
Millions of yen
2012 Proceeds Realized gain Realized loss
available-for-sale:
equity securities ¥37 ¥1 ¥156
Millions of yen
2011 Proceeds Realized gain Realized loss
available-for-sale:
equity securities ¥652 ¥214 ¥0
thousands of Us dollars
2012 Proceeds Realized gain Realized loss
available-for-sale:
equity securities $448 $10 $1,894
4. transfer of Receivablesthe Company and certain consolidated subsidiaries transferred their trade notes and accounts receivable-trade before maturity
based on an asset transfer agreement. the balance of those receivables that were outstanding whose settlement date had not
been reached as of March 31, 2012 and 2011 was as follows:
Millions of yenthousands of
Us dollars
2012 2011 2012
notes and accounts receivable—trade ¥14,849 ¥11,290 $180,672
(with recourse, included in above) (1,536) (972) (18,688)
5. inventoriesinventories at March 31, 2012 and 2011 consisted of the following:
Millions of yenthousands of
Us dollars
2012 2011 2012
Merchandise and finished goods ¥14,699 ¥16,478 $178,846
work in process 7,994 8,745 97,260
Raw materials and supplies 12,666 10,251 154,104
total ¥35,359 ¥35,474 $430,210
40 Yokogawa Electric CorporationAnnual Repor t 2012
6. long-lived assetsthe Group reviewed its long-lived assets for impairment as of the years ended March 31, 2012 and 2011. as a result, impairment
loss of ¥1,416 million (Us$17,234 thousand) and ¥708 million, were recognized for 2012 and 2011, respectively. the main com-
ponents of the impairment loss on long-lived assets for the years ended March 31, 2012 and 2011 were as follows:
Millions of yenthousands of
Us dollars
2012 2011 2012
land ¥ 42 ¥122 $ 509
Buildings and structures 671 367 8,163
Machinery, equipment and vehicles 394 46 4,794
tools, furniture and fixtures 28 162 337
other 281 11 3,431
total ¥1,416 ¥708 $17,234
the recoverable amount of assets was measured principally at their net selling price determined by quotations from third parties.
of the ¥1,416 million (Us$17,234 thousand) impairment loss, ¥951 million (Us$11,571 thousand) which is associated with
the impairment loss of the discontinued operation of the test and measurement business is included in restructuring costs in the
consolidated statement of operations.
7. shor t-term loans and long-term debtshort-term bank loans at March 31, 2012 and 2011 consisted of bank overdrafts. the annual average interest rates on the short-
term bank loans were 1.963% and 2.287% for the years ended March 31, 2012 and 2011, respectively.
long-term debt as of March 31, 2012 and 2011 consisted of the following:
Millions of yenthousands of
Us dollars
2012 2011 2012
loans from banks and other financial institutions ¥92,573 ¥104,926 $1,126,329
obligations under finance leases 360 295 4,387
92,933 105,221 1,130,716
less: Current portion 4,050 48,300 49,281
¥88,883 ¥ 56,921 $1,081,435
annual maturities of long-term loans from banks and other financial institutions, excluding finance leases at March 31, 2012
were as follows:
Year ending March 31 Millions of yenthousands of
Us dollars
2013 ¥ 3,918 $ 47,665
2014 26,313 320,152
2015 12,222 148,707
2016 20,222 246,042
2017 3,722 45,286
2018 and thereafter 26,176 318,477
total ¥92,573 $1,126,329
the annual average interest rate on long-term loans (excluding current portion) from banks was 2.109% for the year ended March
31, 2012.
41Yokogawa Electric CorporationAnnual Repor t 2012
Collateral and secured debt at March 31, 2012 and 2011 were as follows:
Millions of yenthousands of
Us dollars
2012 2011 2012
Collateral:
deposits ¥ 13 ¥ 13 $ 152
investment securities 4 3 50
assets in consolidated subsidiaries outside Japan* 4,890 5,132 59,502
total ¥4,907 ¥5,148 $59,704
* “assets in consolidated subsidiaries outside Japan” represent the aggregate amount of accounts receivable and other assets of such subsidiaries.
Millions of yenthousands of
Us dollars
2012 2011 2012
secured debt:
trade notes and accounts payable ¥10 ¥14 $124
total ¥10 ¥14 $124
the Group’s interest-bearing debt includes financial covenants which require the Company to maintain certain levels of equity
and operating income on a consolidated basis.
8. Retirement and Pension Plansthe Company and most of its consolidated subsidiaries have defined contribution plans, while some other subsidiaries have
defined benefit plans. in certain circumstances, additional payments are made upon the retirement of employees.
the (liability) asset for employees’ retirement benefits at March 31, 2012 and 2011 consisted of the following:
Millions of yenthousands of
Us dollars
2012 2011 2012
Projected benefit obligation ¥(6,285) ¥(5,618) $(76,472)
Fair value of plan assets 3,624 3,436 44,096
Unfunded projected benefit (2,661) (2,182) (32,376)
Unrecognized actuarial gain 198 90 2,411
Unrecognized prior service cost 22 25 265
net liability ¥(2,441) ¥(2,067) $(29,700)
the components of net periodic benefit costs for the years ended March 31, 2012 and 2011 were as follows:
Millions of yenthousands of
Us dollars
2012 2011 2012
service cost ¥ 637 ¥ 626 $ 7,754
interest cost 186 215 2,265
expected return on plan assets (166) (167) (2,021)
amortization of actuarial gain 29 38 355
amortization of prior service cost 1 (5) 15
additional retirement benefit and other 970 6,146 11,798
Contribution to defined contribution plan 5,652 6,017 68,768
net periodic benefit costs ¥7,309 ¥12,870 $88,934
42 Yokogawa Electric CorporationAnnual Repor t 2012
9. equityJapanese companies are subject to the Companies act of
Japan (the “Companies act”). the significant provisions in the
Companies act that affect financial and accounting matters
are summarized below:
1. dividends
Under the Companies act, companies can pay dividends at
any time during the fiscal year in addition to the year-end
dividend upon resolution at the shareholders meeting. For
companies that meet certain criteria such as: (1) having
the Board of directors, (2) having independent auditors,
(3) having the Board of Corporate auditors, and (4) the
term of service of the directors is prescribed as one year
rather than two years of normal term by its articles of
incorporation, the Board of directors may declare divi-
dends (except for dividends in kind) at any time during the
fiscal year if the company has prescribed so in its articles
of incorporation.
semiannual interim dividends may also be paid once a
year upon resolution by the Board of directors if the arti-
cles of incorporation of the company so stipulate. the
Companies act provides certain limitations on the
amounts available for dividends or the purchase of trea-
sury stock. the limitation is defined as the amount avail-
able for distribution to the shareholders, but the amount of
net assets after dividends must be maintained at no less
than ¥3 million.
2. increases / decreases and transfer of common stock,
reserve and surplus
the Companies act requires that an amount equal to 10%
of dividends must be appropriated as a legal reserve (a
component of retained earnings) or as additional paid-in
capital (a component of capital surplus) depending on the
equity account charged upon the payment of such divi-
dends until the total of aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common
stock. Under the Companies act, the total amount of addi-
tional paid-in capital and legal reserve may be reversed
without limitation. the Companies act also provides that
common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be trans-
ferred among the accounts under certain conditions upon
resolution of the shareholders.
3. treasury stock and treasury stock acquisition rights
the Companies act also provides for companies to pur-
chase treasury stock and dispose of such treasury stock
by resolution of the Board of directors. the amount of
treasury stock purchased cannot exceed the amount avail-
able for distribution to the shareholders which is deter-
mined by specific formula. Under the Companies act,
stock acquisition rights are presented as a separate com-
ponent of equity. the Companies act also provides that
companies can purchase both treasury stock acquisition
rights and treasury stock. such treasury stock acquisition
rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.
assumptions used for the years ended March 31, 2012 and 2011 were as follows:
2012 2011
discount rate 2.0–5.0% 2.8–5.5%
expected rate of return on plan assets 0.0–7.0% 0.0–7.0%
amortization of prior service cost Mainly 10 years Mainly 10 years
amortization of actuarial gain Mainly 10 years Mainly 10 years
43Yokogawa Electric CorporationAnnual Repor t 2012
10. income taxesthe tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabili-
ties at March 31, 2012 and 2011 were as follows:
Millions of yenthousands of
Us dollars
2012 2011 2012
deferred tax assets:
Provision for retirement benefits ¥ 335 ¥ 316 $ 4,080
tax loss carryforwards 38,984 39,825 474,314
impairment loss on investment securities 2,565 3,241 31,203
Provision for bonuses 4,063 3,322 49,432
write-down of inventories 3,814 3,525 46,408
accrued expenses resulting from transfer of pension plan 421 1,650 5,119
impairment loss on investments in consolidated subsidiaries 1,737 7,021 21,130
other 8,288 9,429 100,855
less: valuation allowance (54,964) (63,084) (668,745)
total ¥ 5,243 ¥ 5,245 $ 63,796
deferred tax liabilities:
Property, plant and equipment ¥ (833) ¥ (979) $ (10,135)
Undistributed earnings of consolidated subsidiaries outside Japan (193) (150) (2,349)
net realized gain on available-for-sale securities (563) (542) (6,852)
other (172) (469) (2,093)
total ¥ (1,761) ¥ (2,140) $ (21,429)
net deferred tax assets ¥ 3,482 ¥ 3,105 $ 42,367
net deferred tax assets are included in the following accounts in the accompanying consolidated balance sheet:
Millions of yenthousands of
Us dollars
2012 2011 2012
Current assets—deferred tax assets ¥ 3,087 ¥ 2,829 $ 37,560
investments and other assets—deferred tax assets 1,960 2,077 23,844
Current liabilities—other (59) (128) (716)
long-term liabilities—other (1,506) (1,673) (18,321)
net deferred tax assets ¥ 3,482 ¥ 3,105 $ 42,367
a reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statement of operations for the years ended March 31, 2012 and 2011 was as follows:
2012 2011
normal effective statutory tax rate 40.7% 40.7 %
Permanent differences
expenses not deductible for income tax purposes 7.0 (66.4)
dividend income and other non-taxable income (1.7) 9.0
equity in earnings of affiliates (0.6) 24.0
Changes in valuation allowance 39.4 (812.8)
lower income tax rates applicable to certain consolidated subsidiaries outside Japan (30.5) 318.1
effect of consolidated tax return in Japan (12.1)
other—net 1.8 (12.2)
actual effective tax rate 44.0% (499.6)%
on december 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective tax rate from approxi-
mately 41% to 38% effective for the fiscal years beginning on or after april 1, 2012 through March 31, 2015, and to 35% there-
after. the effect of this change on the consolidated financial statements was not material.
44 Yokogawa Electric CorporationAnnual Repor t 2012
12. leasesthe Group leases certain machinery, equipment and vehicles,
tools, furniture and fixtures and other assets.
the Group accounts for leases which existed at the transi-
tion date on april 1, 2008 and do not transfer ownership of
the leased property to the lessee as operating lease transac-
tions. Pro forma information of such leases existing at the
transition date on an “as if capitalized” basis for the years
ended March 31, 2012 and 2011 was as follows:
Finance lease assets
Millions of yenthousands of
Us dollars
2012 2012
acquisition cost
accumulated depreciation
accumulated impairment loss
Balance as of March 31, 2012
Balance as of March 31, 2012
tools, furniture and fixtures ¥282 ¥191 ¥6 ¥85 $1,036
Millions of yen
2011
acquisition cost
accumulated depreciation
accumulated impairment loss
Balance as of March 31, 2011
Buildings and structures ¥ 9 ¥ 8 ¥ 1
Machinery, equipment and vehicles 69 52 ¥11 6
tools, furniture and fixtures 571 407 164
intangible assets 52 45 7
total ¥701 ¥512 ¥11 ¥178
the acquisition cost includes the imputed interest expense portion.
obligations under finance leases
Millions of yenthousands of
Us dollars
March 31 March 31
2012 2011 2012
due within one year ¥36 ¥ 93 $ 444
due after one year 49 85 592
¥85 ¥178 $1,036
the allowance for impairment loss on leased property of ¥2 million (Us$19 thousand) and ¥6 million as of March 31, 2012 and
2011, respectively, was not included in the obligations under finance leases.
depreciation expense, interest expense, and other information under finance leases:
Millions of yenthousands of
Us dollars
March 31 March 31
2012 2011 2012
lease payment for the year ¥102 ¥155 $1,237
Reversal of allowance for impairment loss on leased property 2 3 20
depreciation expense 100 152 1,217
depreciation expense, which is not reflected in the accompanying consolidated statement of operations, is computed using the
straight-line method over the lease terms assuming no residual value.
11. Research and development CostsResearch and development costs charged to income were ¥27,472 million (Us$334,252 thousand) and ¥29,180 million for the
years ended March 31, 2012 and 2011, respectively.
45Yokogawa Electric CorporationAnnual Repor t 2012
the minimum rental commitments under non-cancelable operating leases at March 31, 2012 were as follows:
Millions of yenthousands of
Us dollars
due within one year ¥1,469 $17,873
due after one year 3,293 40,067
¥4,762 $57,940
13. Financial instruments and Related disclosures1. information regarding financial instruments
a. Group policy on financial instruments
Based on the Group’s capital expenditure program for the
industrial automation and control business and the test and
measurement business, the Group uses financial instruments
such as bank loans to get necessary funding. Cash surpluses
are invested in low risk financial assets. short-term bank
loans are used to fund ongoing operations. derivatives are
used to manage exposure to financial risks as described in
note 14 and are not used for speculative purposes.
b. nature of the financial instruments and risk management
Receivables such as trade notes and trade accounts are
exposed to customer credit risk. those securities are mainly
issued by the Group’s customers and suppliers, and are
managed by monitoring market value and financial position of
issuers on a regular basis.
investment securities are exposed to the risk of market
price fluctuations. the Group reviews its holdings of these
securities, whose issuers are mainly its customers and sup-
pliers, by regularly checking their market value and the finan-
cial position of the issuers.
Payment terms of payables such as trade notes and trade
accounts are less than one year.
long-term debts are used for capital expenditures and
investments. in order to manage exposure to market risks
from fluctuations in interest rates, the Group principally uses
fixed rate contracts; otherwise, interest swap contracts are
used for variable rate loans.
Foreign currency trade receivables and payables are
exposed to market risk resulting from fluctuations in foreign
currency exchange rates. such foreign exchange risk is
hedged principally by foreign currency forward contracts and
range forward options.
Basic policies on derivative transactions are set out in the
Group’s internal guidelines. the guidelines prescribe a control
policy, designate authorized departments, specify the pur-
pose of the transactions, define the basis for selecting finan-
cial institutions, and specify the reporting route.
the fair value of financial instruments is based on the
quoted price in an active market. if the quoted price is not
available, other valid valuation techniques are used.
46 Yokogawa Electric CorporationAnnual Repor t 2012
2. Fair value of financial instruments
the carrying amounts in the consolidated balance sheet, fair value, and unrealized gain (loss) as of March 31, 2012 and 2011
were as follows.
in addition, financial instruments, of which it is extremely difficult to measure the fair value, are not included. Please see note
2 hereinafter.
Millions of yen
2012
Carrying amount Fair value
Unrealized gain (loss)
(1) Cash and cash equivalents ¥ 53,430 ¥ 53,430
(2) Receivables—trade notes and trade accounts 110,541
less: allowance for doubtful accounts (3,247)
107,294 107,294
(3) investment securities 14,475 14,475
total ¥175,199 ¥175,199
(1) short-term loans payable ¥ 10,688 ¥ 10,688
(2) Payables—trade notes and trade accounts 30,659 30,659
(3) Payables—other 8,070 8,070
(4) income taxes payable 3,308 3,308
(5) long-term loans payable 92,933 93,389 ¥456
total ¥145,658 ¥146,114 ¥456
derivatives ¥ (213) ¥ (213)
Millions of yen
2011
Carrying amount Fair value
Unrealized gain (loss)
(1) Cash and cash equivalents ¥ 57,335 ¥ 57,335
(2) Receivables—trade notes and trade accounts 103,492
less: allowance for doubtful accounts (3,175)
100,317 100,317
(3) investment securities 14,291 14,291
total ¥171,943 ¥171,943
(1) short-term loans payable ¥ 6,072 ¥ 6,072
(2) Payables—trade notes and trade accounts 28,807 28,807
(3) Payables—other 12,828 12,828
(4) income taxes payable 3,270 3,270
(5) long-term loans payable 105,221 106,135 ¥914
total ¥156,198 ¥157,112 ¥914
derivatives ¥ (146) ¥ (146)
47Yokogawa Electric CorporationAnnual Repor t 2012
thousands of Us dollars
2012
Carrying amount Fair value
Unrealized gain (loss)
(1) Cash and cash equivalents $ 650,079 $ 650,079
(2) Receivables—trade notes and trade accounts 1,344,941
less: allowance for doubtful accounts (39,507)
1,305,434 1,305,434
(3) investment securities 176,114 176,114
total $2,131,627 $2,131,627
(1) short-term loans payable $ 130,034 $ 130,034
(2) Payables—trade notes and trade accounts 373,020 373,020
(3) Payables—other 98,192 98,192
(4) income taxes payable 40,244 40,244
(5) long-term loans payable 1,130,716 1,136,259 $5,543
total $1,772,206 $1,777,749 $5,543
derivatives $ (2,593) $ (2,593)
notes:1. Fair value measurement of financial instruments
Cash and cash equivalents, trade notes and accounts receivable:
the carrying values of cash and cash equivalents, trade notes and accounts receivable less an allowance for doubtful accounts, approximate fair value
because of their short maturities.
investment securities:
the fair value of equity instruments is measured at the quoted equity market price, and the fair value of debt instruments is measured at the quoted price
obtained from the respective financial institution. information on the fair value of each class of investment securities is included in note 3.
short-term loans payable, trade notes and accounts payable, other payable and income taxes payable:
the carrying values of short-term loans payable, trade notes and accounts payable, other payable and income taxes payable approximate fair value because of
their short maturities.
long-term loans payable:
the fair value of long-term loans payable is determined by discounting cash flows related to the debt at the Group’s assumed corporate borrowing rate. long-
term loans payable are included in the following accounts in the accompanying consolidated balance sheet: current portion of long-term debt and long-term debt.
long-term other payables:
the fair value of long-term other payables is determined by discounting cash flows divided by certain time intervals at the appropriate rates. long-term other
payables are included in the following account in the accompanying consolidated balance sheet: long-term liabilities—other.
derivatives
information on the fair value of derivatives is included in note 14.
2. Financial instruments whose fair value cannot be reliably determined
Carrying amount
Millions of yen Millions of yenthousands of Us
dollars
March 31, 2012 March 31, 2011 March 31, 2012
Unlisted equity securities ¥17,375 ¥17,440 $211,397
Maturity analysis for financial assets and securities with contractual maturities
Millions of yen thousands of Us dollars
March 31, 2012 March 31, 2012
due in one year or less
due after one year through
five yearsdue in
one year or less
due after one year through
five years
Cash and cash equivalents ¥ 53,430 $ 650,079
Receivables—trade notes and accounts 110,391 ¥150 1,343,120 $1,821
investment securities
held-to-maturity securities 0 0
total ¥163,821 ¥150 $1,993,199 $1,821
48 Yokogawa Electric CorporationAnnual Repor t 2012
14. derivativesderivative transactions are used to manage foreign exchange risk and the risk of market rate fluctuations that occur in the
normal course of business. the Group does not use derivatives for speculative purposes or for highly leveraged transactions.
1. derivative transactions to which hedge accounting was not applied at March 31, 2012 and 2011
Millions of yen
2012
Contract amount
totaldue over one year Fair value
Unrealized gain (loss)
Forward exchange contracts
selling contracts
Us dollar ¥ 5,258 ¥(110) ¥(110)
other 212 (5) (5)
Buying contracts
Us dollar 856 (50) (49)
other 1,616 2 1
Currency options
selling contracts
Call
Us dollar 3,288
(option premium) (—)
Buying contracts
PUt
Us dollar 2,038 (63) (63)
(option premium) (—)
Currency swaps 1,467 ¥775 25 25
total ¥14,735 ¥775 ¥(201) ¥(201)
49Yokogawa Electric CorporationAnnual Repor t 2012
Millions of yen
2011
Contract amount
totaldue over one year Fair value
Unrealized gain (loss)
Forward exchange contracts
selling contracts
Us dollar ¥ 5,546 ¥ 61 ¥ 61
other 382 ¥74 (3) (3)
Buying contracts
Us dollar 2,049 (93) (93)
other 50 (1) (1)
Currency options
selling contracts
Call
Us dollar 6,352
(option premium) (—)
Buying contracts
PUt
Us dollar 3,126 93 93
(option premium) (—)
Currency swaps 2,888 (20) (20)
total ¥20,393 ¥74 ¥ 37 ¥ 37
thousands of Us dollars
2012
Contract amount
totaldue over one year Fair value
Unrealized gain (loss)
Forward exchange contracts
selling contracts
Us dollar $ 63,968 $(1,339) $(1,339)
other 2,580 (66) (66)
Buying contracts
Us dollar 10,416 (600) (600)
other 19,666 22 22
Currency options
selling contracts
Call
Us dollar 40,000
(option premium) (—)
Buying contracts
PUt
Us dollar 24,800 (761) (761)
(option premium) (—)
Currency swaps 17,854 $9,434 298 298
total $179,284 $9,434 $(2,446) $(2,446)
50 Yokogawa Electric CorporationAnnual Repor t 2012
2. derivative transactions to which hedge accounting was applied at March 31, 2012 and 2011
Millions of yen
2012
Contract amount
hedged item totaldue over one year Fair value
Forward exchange contracts
Buying contracts
Us dollar Payables ¥ 1,843 ¥(12)
interest rate swaps
Pay fixed/Receive floating long-term debt ¥54,000 ¥54,000 note 2
Millions of yen
2011
Contract amount
hedged item totaldue over one year Fair value
Forward exchange contracts
Buying contracts
Us dollar Payables ¥ 4,262 ¥(183)
interest rate swaps
Pay fixed/Receive floating long-term debt ¥66,000 ¥26,000 note 2
thousands of Us dollars
2012
Contract amount
hedged item totaldue over one year Fair value
Forward exchange contracts
Buying contracts
Us dollar Payables $ 22,421 $(147)
interest rate swaps
Pay fixed/Receive floating long-term debt $657,014 $657,014 note 2
notes: 1. the above interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential
paid or received under the swap agreements is recognized and included in interest expense or income.
2. the fair value of such interest rate swaps is included in that of hedged items disclosed in note 13.
the fair value of derivative transactions is measured at the quoted price obtained from the respective financial institution. the
contract or notional amounts of the derivatives shown in the above table do not represent the amounts exchanged by the parties
and are not a measure of the Group’s exposure to credit or market risk.
Currency options are zero cost options.
51Yokogawa Electric CorporationAnnual Repor t 2012
15. Commitment line agreementsthe Company has commitment line agreements with financial institutions in order to obtain funds for stable and efficient operation.
the commitment line of credit as of March 31, 2012 and 2011 was as follows:
Millions of yenthousands of
Us dollars
2012 2011 2012
total commitment line of credit ¥40,000 ¥30,000 $486,677
outstanding borrowings (904) — (11,000)
Unused credit line ¥39,096 ¥30,000 $475,677
16. Restructuring Related expensesRestructuring costs for the year ended March 31, 2012 con-
sisted mainly of the cost relating to discontinued operations
of ¥1,506 million (Us$18,329 thousand), impairment loss for
the fixed assets of ¥951 million (Us$11,571 thousand) and
reorganization cost of ¥755 million (Us$9,186 thousand).
Restructuring costs for the year ended March 31, 2011
consisted mainly of special retirement benefit expenses and
retirement related costs of ¥6,732 million and the Compa-
ny’s reorganization costs of ¥67 million.
17. Contingent liabilitiesat March 31, 2012, the Group had the following contingent liabilities:
Millions of yenthousands of
Us dollars
2012 2012
Guarantees and similar items of bank loans ¥94 $1,138
52 Yokogawa Electric CorporationAnnual Repor t 2012
18. Comprehensive incomethe components of other comprehensive income for the year ended March 31, 2012 were as follows:
Millions of yenthousands of
Us dollars
2012 2012
net unrealized gain on available-for-sale securities:
Gains arising during the year ¥ 206 $ 2,511
Reclassification adjustments to profit or loss 156 1,893
amount before income tax effect 362 4,404
income tax effect (21) (260)
total ¥ 341 $ 4,144
deferred gain (loss) on derivatives under hedge accounting:
Gains arising during the year ¥ 66 $ 806
Reclassification adjustments to profit or loss 130 1,582
amount before income tax effect 196 2,388
income tax effect ( 50) ( 608)
total ¥ 146 $ 1,780
adjustment relating to pension liability:
adjustments arising during the year ¥ (498) $ (6,053)
Reclassification adjustments to profit or loss 25 296
amount before income tax effect (473) (5,757)
income tax effect 170 2,073
total ¥ (303) $ (3,684)
Foreign currency translation adjustments:
adjustments arising during the year ¥(2,189) $(26,637)
Reclassification adjustments to profit or loss
amount before income tax effect (2,189) (26,637)
income tax effect 69 844
total ¥(2,120) $(25,793)
share of other comprehensive income in affiliates-
Gains arising during the year ¥ (4) $ (45)
total ¥ (4) $ (45)
total other comprehensive income ¥(1,940) $(23,598)
the corresponding information for the year ended March 31, 2011 is not required under the accounting standard for presentation of
comprehensive income, and is not disclosed herein as disclosure is exempted for the first year in which the standard was adopted.
19. Per share informationBasic net income per share (ePs) for the years ended March 31, 2012 and 2011 was as follows:
Millions of yenthousands
of shares Yen dollars
net income (loss)
weighted average shares ePs
2012
Basic ePs
net income attributable to common shareholders ¥ 5,952 257,550 ¥ 23.11 $ 0.28
2011
Basic ePs
net loss attributable to common shareholders ¥(6,693) 257,563 ¥(25.98) $(0.31)
diluted net income per share is not disclosed because there were no dilutive securities in the years ended March 31, 2012 and 2011.
53Yokogawa Electric CorporationAnnual Repor t 2012
20. subsequent events1. the Company concluded a contract to sell to Mitsubishi
Jisho Residence Co., ltd. 5,268.80 m2 of land located at
2-2977-22 nakacho, Musashino-shi, tokyo. the rights to the
property were transferred on april 27, 2012.
the Company and Mitsubishi Jisho Residence Co., ltd. are
unrelated parties.
the Company is expected to record ¥3,734 million
(Us$45,434 thousand) in income for the year ending March
31, 2013.
2. appropriations of Retained earnings
the Board of directors proposed the following appropriations
of retained earnings, at March 31, 2012, which is subject to
approval at a general meeting of the shareholders of the
Company to be held on June 27, 2012:
Millions of yenthousands of
Us dollars
Year-end cash dividends, ¥5 (Us$0.06) per share ¥1,288 $15,668
Under asBJ statement no. 17, “accounting standard for
segment information disclosures” and asBJ Guidance no.
20, “Guidance on accounting standard for segment informa-
tion,” an entity is required to report financial and descriptive
information about its reportable segments. Reportable seg-
ments are operating segments or aggregations of operating
segments that meet specified criteria. operating segments
are components of an entity about which separate financial
information is available and such information is evaluated
regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.
Generally, segment information is required to be reported on
the same basis as is used internally for evaluating operating
segment performance and deciding how to allocate resources
to operating segments.
1. description of reportable segments
the Group’s reportable segments are those for which sepa-
rate financial information is available and regular evaluation
by the Company’s management is being performed in order
to decide how resources are allocated among the Group. the
Group operates in three business segments: industrial auto-
mation and control, test and measurement, and other
businesses.
the industrial automation and control business offers
comprehensive solutions including field instruments such as
flowmeters, differential pressure/pressure transmitters, and
process analyzers; control systems and programmable con-
trollers; various types of software that enhance productivity;
and services that minimize plant lifecycle costs.
the test and measurement business offers waveform mea-
suring instruments, optical communications measuring instru-
ments, signal generators, and electric voltage, current, and
power measuring instruments; semiconductor testers for
memory and lCd drivers; and confocal scanners for observa-
tion of live cells.
the other businesses segment mainly offers cockpit flat-
panel displays, engine meters, and other instruments for
aviation use; marine navigation equipment such as gyrocom-
passes and autopilot systems; and meteorological/hydrologi-
cal monitoring system equipment.
2. accounting methods for each reportable segment’s sales,
income (loss), assets, and other items
the accounting policies for each reportable segment are
consistent with those disclosed in note 2, “summary of
significant accounting Policies.”
the income or loss for each reportable segment corre-
sponds to the operating income or loss in the consolidated
statement of operations.
the assets of a reportable segment consist of “Receiv-
ables—trade notes and trade accounts, inventory, property,
plant and equipment, and intangible assets.”
21. segment information
54 Yokogawa Electric CorporationAnnual Repor t 2012
3. information about sales and operating income (loss), assets and other items
Millions of yen
2012
Reportable segment
industrial automation and
controltest and
measurement othereliminations/
Corporate Consolidated
sales to customers ¥277,185 ¥34,580 ¥22,904 ¥334,669
intersegment sales 1,949 6,377 485 ¥(8,811)
total sales 279,134 40,957 23,389 (8,811) 334,669
segment income (loss) 19,896 (3,572) 278 16,602
segment assets 195,762 32,825 23,611 121 252,319
depreciation and amortization 10,535 1,417 804 12,756
impairment loss 261 1,047 108 1,416
increase in property, plant and equipment and intangible assets 8,814 1,034 1,295 11,143
amortization of goodwill 123 123
Goodwill 1,695 1,695
Millions of yen
2011
Reportable segment
industrial automation and
controltest and
measurement othereliminations/
Corporate Consolidated
sales to customers ¥260,665 ¥37,076 ¥27,880 ¥325,621
intersegment sales 1,587 6,011 509 ¥(8,107)
total sales 262,252 43,087 28,389 (8,107) 325,621
segment income (loss) 16,464 (6,391) 1,006 11,079
segment assets 192,762 34,274 22,958 169 250,163
depreciation and amortization 10,639 2,172 1,025 13,836
impairment loss 306 378 24 708
increase in property, plant and equipment and intangible assets 8,929 884 1,524 11,337
amortization of goodwill 126 126
Goodwill 1,823 1,823
thousands of Us dollars
2012
Reportable segment
industrial automation and
controltest and
measurement othereliminations/
Corporate Consolidated
sales to customers $3,372,491 $420,732 $278,670 $4,071,893
intersegment sales 23,713 77,589 5,901 $(107,203)
total sales 3,396,204 498,321 284,571 (107,203) 4,071,893
segment income (loss) 242,073 (43,460) 3,381 201,994
segment assets 2,381,821 399,375 287,278 1,472 3,069,946
depreciation and amortization 128,182 17,244 9,781 155,207
impairment loss 3,182 12,735 1,317 17,234
increase in property, plant and equipment and intangible assets 107,234 12,581 15,768 135,583
amortization of goodwill 1,491 1,491
Goodwill 20,622 20,622
55Yokogawa Electric CorporationAnnual Repor t 2012
notes: 1. as discussed in note 2f, effective april 1, 2011, the Company and its consolidated subsidiaries in Japan changed the depreciation method from the declining-
balance method to the straight-line method. the effects of this change were to increase the segment income of industrial automation and control business by
¥1,167 million (Us$14,202 thousand), to decrease the segment loss of test and measurement business by ¥465 million (Us$5,652 thousand) and to
increase the segment income of other businesses by ¥155 million (Us$1,884 thousand).
2. as discussed in note 2i, effective april 1, 2011, the Company changed to record some product development costs in general and administrative expenses,
which were previously recorded in manufacturing costs. the effects of this change were to decrease industrial automation and control business segment
income by ¥455 million (Us$5,534 thousand), to increase test and measurement business segment operating loss by ¥14 million (Us$176 thousand) and to
decrease other businesses’ operating income by ¥1 million (Us$9 thousand).
3. an impairment loss of ¥951 million (Us$11,571 thousand) on the assets of test and measurement business segment is included as a restructuring cost in
the consolidated statement of operations. Please see note 16 for the details.
4. information about geographical areas
a. sales
Millions of yen
2012
Japan asia europe north america Middle east other total
sales ¥135,786 ¥87,288 ¥26,366 ¥21,276 ¥27,815 ¥36,138 ¥334,669
Millions of yen
2011
Japan asia europe north america Middle east other total
sales ¥140,920 ¥77,038 ¥26,844 ¥20,997 ¥22,953 ¥36,869 ¥325,621
thousands of Us dollars
2012
Japan asia europe north america Middle east other total
sales $1,652,098 $1,062,022 $320,798 $258,864 $338,425 $439,686 $4,071,893
note: sales are categorized in each country or area based on the location of customers.
b. Property, Plant and equipment
Millions of yen
2012
Japan asia europe north america Middle east other total
¥58,097 ¥10,687 ¥5,866 ¥2,002 ¥1,070 ¥439 ¥78,161
Millions of yen
2011
Japan asia europe north america Middle east other total
¥60,826 ¥10,344 ¥6,510 ¥2,176 ¥786 ¥460 ¥81,102
thousands of Us dollars
2012
Japan asia europe north america Middle east other total
$706,860 $130,028 $71,375 $24,363 $13,014 $5,334 $950,974
5. information about major customers
no customer accounts for 10% or more of total sales of the Group.
56 Yokogawa Electric CorporationAnnual Repor t 2012
sUBsidiaRies and aFFiliatesas of March 31, 2012
area/Company name
investment Ratio: ( ) indicates second-tier subsidiary
Business segment
subsidiary/affiliate
north americaUnited States
Yokogawa Usa, inc. 100 H NYokogawa Corporation of america (100) n/s NYokogawa nuclear solutions, llC (100) n/s NCanada
Yokogawa Canada, inc. (100) n NMexico
Yokogawa de Mexico, s.a. de C.v. (100) n NYokogawa engineering services de Mexico, s.a. de C.v. (100) n N
south americaBrazil
Yokogawa america do sul ltda. 100 n/s NYokogawa service ltda. (100) n N
europeNetherlands
Yokogawa europe B.v. 100 n/s NYokogawa europe solutions B.v. (100) n NYokogawa europe Branches B.v. (100) H NAustria
Yokogawa Gesmbh, Central east europe (100) n NBelgium
Yokogawa Belgium n.v./s.a. (100) n NFrance
Yokogawa France s.a.s. (100) n NGermany
Yokogawa deutschland Gmbh (100) n NRota Yokogawa Gmbh & Co. KG (100) n NHungary
Yokogawa hungaria Kft. (100) n NItaly
Yokogawa italia s.r.l. (100) n/s NSpain
Yokogawa iberia s.a. (100) n/s NSweden
Yokogawa Measurement technologies aB (100) s NUnited Kingdom
Yokogawa United Kingdom limited (100) n NYokogawa Measurement technologies ltd. (100) s NYokogawa Marex limited 100 n NRussia
Yokogawa electric Cis ltd. 100 n/s NYokogawa electric sakhalin ltd. (95) n NKazakhstan
Yokogawa electric Kazakhstan ltd. (99) n NUkraine
Yokogawa electric Ukraine ltd. (99) n N
africaSouth Africa
Yokogawa south africa (Pty) ltd. (100) n/s NNigeria
Yokogawa services solutions nigeria ltd. (49) H NYokogawa nigeria ltd. (100) n N
Middle eastBahrain
Yokogawa Middle east B.s.C.(c) 100 n/s NYokogawa engineering Bahrain sPC (100) n NSaudi Arabia
Yokogawa saudi arabia ltd. 100 n NYokogawa services saudi arabia ltd. 67 n NUnited Arab Emirates
Yokogawa engineering Middle east FZe (100) n N
area/Company name
investment Ratio: ( ) indicates second-tier subsidiary
Business segment
subsidiary/affiliate
oceaniaAustralia
Yokogawa australia Pty. ltd. 100 n/s NNew Zealand
Yokogawa new Zealand ltd. (100) n/s N
asiaSingapore
Yokogawa electric international Pte. ltd. 100 n NYokogawa engineering asia Pte. ltd. (100) n/s NYokogawa electric asia Pte. ltd. 100 n/c NPlant electrical instrumentation Pte. ltd. (51) n NIndonesia
P.t. Yokogawa indonesia (100) n/s NP.t. Yokogawa Manufacturing Batam (100) n NMalaysia
Yokogawa electric (Malaysia) sdn. Bhd. (100) n/s NYokogawa Kontrol (Malaysia) sdn. Bhd. (30) n/s CYokogawa industrial safety systems sdn. Bhd. (100) n NPhilippines
Yokogawa Philippines inc. (100) n/s NThailand
Yokogawa (thailand) ltd. (91) n/s NVietnam
Yokogawa vietnam Company ltd. (100) n NIndia
Yokogawa india ltd. 97.08 n/s NYokogawa ia technologies india Private limited (100) n NChina
Yokogawa China Co., ltd. 100 n/s NYokogawa electric China Co., ltd. 100 n NYokogawa sichuan instrument Co., ltd. 60 n Nsuzhou Yokogawa Meter Company 59.28 s NYokogawa shanghai instrumentation Co., ltd. 60 n NYokogawa shanghai trading Co., ltd. 100 s NYokogawa Process Control (shanghai) Co., ltd. 100 n NYokogawa information systems (dalian) Corporation (100) n N
Yokoshin software engineering (wUXi) Co., ltd. (100) n NKorea
Yokogawa electric Korea Co., ltd. 100 n NYokogawa electronics Manufacturing Korea Co., ltd. 100 n/s N
Taiwan
Yokogawa taiwan Corporation 100 n N
subsidiaries and affiliates in Japanomega simulation Co., ltd. 85.10 n NYdC Corporation 91.00 n NYokogawa & Co., ltd. 50.00 n/s NYokogawa denshikiki Co., ltd. 78.67 c NYokogawa digital Computer Corporation 100 s NYokogawa Field engineering service Corporation 100 n/s N
Yokogawa Foundry Corporation 100 c NYokogawa Manufacturing Corporation 100 n/s NYokogawa Medical solutions Corporation 100 n NYokogawa Meters & instruments Corporation 100 s NYokogawa Pionics Co., ltd. 100 c NYokogawa solutions Corporation 100 n NYokogawa test solutions Corporation 100 s NQ&a Corporation 23.97 c CYokogawa Rental & lease Corporation 47.35 c C
n industrial automation and Control Businesss test and Measurement Businessc other Businesses
Hholding companyN subsidiaryC affiliate
58 Yokogawa Electric CorporationAnnual Repor t 2012
INVEsTOR INFORMATIONAs of March 31, 2012
Number of shares Authorized 600,000,000
Number of shares of Common stock Issued 268,624,510
Number of shareholders 29,405
stock Exchange listing Tokyo stock Exchange
Administrator of the Register of shareholders Mizuho Trust & banking Co., ltd.
1-2-1 Yaesu, Chuo-ku, Tokyo 103-8670, Japan
Annual shareholders Meeting The annual general meeting of shareholders of the Company is held in June.
Accounting Auditors Deloitte Touche Tohmatsu llC
Major shareholders (Top 10)
shareholdersNumber of shares held
(shares)shareholding ratio
(%)
The Master Trust bank of Japan, ltd. (trust account) 22,056,400 8.21
The Dai-Ichi life Insurance Company, limited 15,697,000 5.84
Japan Trustee services bank, ltd. (trust account) 14,693,300 5.46
Nippon life Insurance Company 14,284,615 5.31
Yokogawa Electric Employee shareholding Program 9,168,597 3.41
Retirement benefit Trust in Mizuho Trust & banking Co., ltd.
(Mizuho Corporate bank, ltd. account);
Trust & Custody services bank, ltd. as a Trustee of Retrust
6,643,990 2.47
Tokio Marine & Nichido Fire Insurance Co., ltd. 4,694,936 1.74
Morgan stanley Private bank, National Association Pb Client Custody 4,664,400 1.73
Retirement benefit Trust in Mizuho Trust & banking Co., ltd.
(Mizuho bank, ltd. account);
Trust & Custody services bank, ltd. as a Trustee of Retrust
4,617,010 1.71
ssbT OD 05 Omnibus Account-Treaty Clients 3,710,500 1.38
Note: In addition to the above, the Company holds 11,078,187 shares of treasury stock.
CORPORATE DATAAs of March 31, 2012
Corporate Name Yokogawa Electric Corporation
Headquarters 2-9-32 Nakacho, Musashino-shi, Tokyo 180-8750, Japan
Founded september 1, 1915
Incorporated December 1, 1920
Paid-in Capital 43,401,056,425 yen
Number of Employees 19,437 (consolidated)
4,211 (non-consolidated)
subsidiaries and Affiliates 16 subsidiaries and 2 affiliates in Japan
70 subsidiaries and 1 affiliate outside Japan
shareholders
by Category
shareholding
by Category
shareholders by Category Number of shareholders: 29,405
Individual Investors 28,615 (97.31%) Foreign Investors 345 (1.17%) Others 343 (1.16%) Financial Institutions 60 (0.20%) securities Companies 41 (0.13%) Treasury stock 1 (0.00%)
shareholding by Category Number of shares held: 268,624 (thousand)
Financial Institutions 115,496 (42.99%) Foreign Investors 68,801 (25.61%) Individual Investors 46,811 (17.42%) Others 14,678 (5.46%) securities Companies 11,758 (4.37%) Treasury stock 11,078 (4.12%)
59Yokogawa Electric CorporationAnnual Repor t 2012