Corporate Profile
101 ZEON CORPORATION 2008
Cautionary StatementStatements contained in this annual report with respect to ZEON Corporation's earnings plans, strategies, principles and earnings forecasts that are not historic facts are
forwardlooking statements about the future performance of the Company. They are based on ZEON's expectations, estimates, forecasts and plans that are currently available,
and on management's judgment. These expectations, estimates, forecasts and plans involve various potential risks, uncertainties and assumptions. Possible fluctuations in
these important factors could cause ZEON's actual performance to differ materially from any future results expressed or implied by the forward-looking statements. Therefore,
undue reliance should not be placed on these forward-looking statements. Also, please note that ZEON assumes no responsibility for updating its cautionary statement about
the forward-looking statements with respect to new information, future events or any other developments.
Risks, uncertainties and assumptions that may affect ZEON's actual performance include but are not limited to: commodity prices and currency exchange rates, the global
economic environment in which ZEON operates, the outcome of ongoing and future litigation, and ZEON's continued ability to procure funds and use financial products and
resources.
ZEON Corporation was established in 1950 as a producer of polyvinyl chloride resins. Its corporate philosophy is to
contribute to the preservation of the Earth and the prosperity of the human race. In 1959, ZEON became the first Japanese
company to produce synthetic rubbers, and in 1965 it developed an original process for extracting butadiene, a main raw
material for synthetic rubbers, from C4 fractions (the GPB process). With this technology applied to C5 fractions (the GPI
process), ZEON is now the world's top producer of products using C5 fractions, as well as specialty synthetic rubber
products.
In 2000, ZEON withdrew from polyvinyl chloride operations, the original field of the company. This withdrawal
reflects ZEON's commitment to focusing its resources on new ventures. At present, sales and operating income are steadily
growing in the company's new Specialty Materials Operations, which include specialty chemicals,
information materials, and specialty plastics. Thus, the ZEON Group, which includes 50 subsidiaries and 10
affiliated companies, continues to transform itself.
In 2008, ZEON announced a new medium-term management plan covering the period between 2008 and 2010,
Proud ZEON (IZ)-60, with the aim of making great advances and improving corporate value.
1
2-3
4-7
8-11
12-13
14
15
16-17
18-19
20
21
22
23-40
41
42-43
44
45
TABLE OF CONTENTS
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■ Financial Highlights
■ A Corporate Message to Our Shareholders
■ 3-year Mid-term Management Plan IZ-60
■ Review of Operations
■ Business-related Topics
■ Research and Development
■ Intellectual Property (IP)
■ Environment and Safety
■ Corporate Governance
■ CSR Promotion System
■ Financial Section
■ Five-year Summary
■ Consolidated Financial Statements
■ Report of Independent Auditors
■ International Operations and Overseas Network
■ Corporate History
■ Corporate Data
■ Overview …… 1-3 ■Mid-term Management Plan & Operation & Topics …… 4-13 ■ For The Future …… 14-15
■ CSR …… 16-20 ■ Data & Financial Statements …… 21-41 ■ Overseas & Corporate Data …… 42-45
■Overview
ZEON CORPORATION 2008 1
Net Sales(Millions of yen)
2004 2006 2007 200820050
50,000
100,000
150,000
200,000
250,000
300,000
Net Income(Millions of yen)
2004 2006 2007 200820050
5,000
10,000
150,000
Note: The U.S. dollar amounts above and elsewhere in this annual report are translated from yen, for convenience only, at the rate of ¥100.20=$1.00
(as of March 31, 2008).
Millions of yen (except number of employee) Thousands of U.S. dollars
2004
¥213,297
17,897
4,588
222,254
71,575
-
2,840
2005
¥231,364
19,303
7,773
236,861
76,357
-
2,784
2006
¥263,074
26,835
15,249
272,674
96,528
-
2,893
2007
¥281,613
30,175
17,077
315,448
-
115,180
2,972
2008
¥302,925
25,268
9,092
335,730
-
110,880
3,166
2008
$3,023,204
252,176
90,738
3,350,599
-
1,106,587
Net Sales
Operating Income
Net Income
Total Assets
Shareholder's equity
Net Assets
Number of Employees
Total Assets(Millions of yen)
2004 2006 2007 200820050
100,000
50,000
250,000
300,000
200,000
150,000
350,000
FINANCIAL HIGHLIGHTSZEON Corporation and Consolidated Subsidiaries
For the years ended March 31
2 ZEON CORPORATION 2008
I am very pleased to announce our business results for the fiscal year under review,
ended March 31, 2008. Before reporting on our activities during the year, I would
like to express my deep appreciation for the support and cooperation you have
extended to us. During the fiscal year under review, prices of crude oil soared, while
credit uncertainty triggered by the US subprime loan problem increased and currency
exchange rates fluctuated significantly, particularly at the beginning of 2008. As a
result, by the end of the fiscal year the Japanese economy, which had been gradually
recovering, faltered once again.
In the petrochemical industry, in which we operate, prices of raw materials such as
crude oil and naphtha remained at high levels. Despite a sudden shift in the supply
and demand balance in certain parts of the manufacturing sector, demand remained
firm owing to brisk exports to Asian markets.
In this business environment, the ZEON Group endeavored to reduce costs
thoroughly through ΖΣactivities. At the same time, in elastomer operations, product
prices were revised, profit-oriented sales strategies were pursued, and the specialty
materials sector strove to develop high-value-added products and to expand business
using its original technology.
As a result, net sales for the year under review reached ¥302,925 million, up 7.6%
on the previous year, while operating income fell 16.3%, to ¥25,268 million.
A Corporate Message to Our Shareholders
ZEON CORPORATION 2008 3
Naozumi FurukawaPresident & CEO
■Overview
Ordinary income was ¥20,638 million, down 30.7%, and net income declined to
¥9,092 million, a decrease of 46.8% on the previous year.
Regarding dividends, we declared a year-end dividend of ¥6 per share. On a full-
year basis, dividends came to ¥12 per share, making this the fifth consecutive year
of higher dividends.
In the period ahead, there are fears that the global economy will slow down as a
result of the downturn in the US economy. In addition, corporate earnings are
expected to slow due to the falling US dollar and appreciation of the yen and high
prices for crude oil and other raw materials, and there are concerns that personal
consumption will stagnate in view of uncertain economic prospects. Therefore, the
business environment surrounding ZEON will remain severe.
Under such circumstances, we will strive to make ZEON a highly profitable
company able to withstand change, by improving our ability to create stable and safe
production sites and further increasing our research and development capacities, as
set out in our new 3-year mid-term management plan “IZ-60”
for fiscal 2008 through 2010.
We sincerely request the continued support and
cooperation of our shareholders.
June 2008
Naozumi Furukawa
President & CEO
Elastomer BusinessWith global automobile production at over 70 million units a
year, mainly in Asia, the Elastomer Business is in a strong
position. ZEON intends to develop this business, which has
long been a stable source of revenue, into a growth business by
developing new products that help reduce environmental impact
and conserve energy. One example is the development of new
materials for automobiles in response to environmental
measures, such as 1) new tire materials for higher fuel
efficiency, 2) new biofuel compatible material compliant with
fuel emissions regulations, and 3) the New ZETPOL®
(hydrogenated acrylonitrile-butadiene rubber), a new material
compatible with the high temperatures produced by diesel
engines.
Performance targets for the Elastomer Business are increases in
both sales and profits, with consolidated net sales rising from
¥211,500 million in FY2008 to ¥230,000 million in FY2010
and consolidated operating income rising from ¥16,500
million in FY2008 to ¥20,000 million in FY2010. Although
we cannot be optimistic about the soaring price of naphtha, our
raw material, we intend to achieve our targets by developing
new products.
4 ZEON CORPORATION 2008
3-year Mid-term Management Plan IZ-60
To commemorate our 60th anniversary in 2010 as an innovatively transformed company, our three-year mid-term management plan
that began in FY2008 and will end in FY2010 is called “IZ-60”, short for Innovation ZEON. Based on our vision of the company in
2015, ZEON will focus on corporate social responsibility, strict compliance, and safety first as its management basis up to 2010, and
is striving to maximize its corporate value accordingly.
ZEON operates in two major segments. The first is the Elastomer Business, where we will seek solid growth by focusing on products
that have leading global shares, and the second is the Specialty Materials Business, where we will accelerate value creation by
developing new products. Together, these two areas will drive ZEON's expansion and dramatic progress.
Consolidated performance targets for 2010 under IZ-60 are as follows: net sales of ¥400,000 million, operating income of ¥35,000
million, operating margin of 8.8%, ordinary income of ¥35,000 million, ratio of ordinary income to net sales of 8.8%, and, most
importantly, nearly doubling our ROE from 8.3% in FY2007 to 15.3%.
Emphasis on Corporate Social Responsibility, Strict Compliance, Safety First
Maximize corporate value
Concept of IZ-60
Create valueDevelop eco-friendly
productsCustomer-oriented
Production innovationOperations innovation
Enhance quality
Establish a cultureof reform
and improvement
Establish businessmodel for the processing
business
Specialty Materials BusinessIn the Specialty Materials Business, ZEON intends to make
dramatic progress by continuously spawning lucrative new
businesses. We will develop highly profitable next-generation
businesses in the five target fields of semiconductors,
recording, displays, energy, and telecommunications, to help
create a ubiquitous networked society, by applying our original
innovative technologies, and we will maintain steady growth by
continuously introducing new products.
Regarding LCD materials of the future, the major issues will be
making displays thinner and more energy-efficient. ZEON's
patterned diffusion plates with ultra-thin backlights produce an
even lighting source across the screen. As the types of
televisions become more diverse, it is increasingly difficult to
develop new products that will be used in the strong-selling
products, but we are confident that ZEON is heading in the
right direction. Following a spate of accidents involving lithium
ion batteries, ZEON's water-based binders have been praised by
customers as being extremely safe, and business remains
healthy. If we can halve prices, the number of applications for
the batteries will increase, and so we are actively engaged in
development towards this goal. In the semiconductors materials
segment we are also developing new products in line with our
vision for the future, such as the New ZEORORA® etching gas
for fine processing.
Consolidated performance targets for the segment are to boost
consolidated net sales from ¥61,900 million in FY2008 to
¥100,000 million in FY2010 and to increase consolidated
operating income from ¥2,100 million to ¥13,500 million.
ZEON CORPORATION 2008 5
■Mid-term Management Plan & Operation & Topics
Actual Resultsfor FY2007
IZ-60 Planfor FY2008
IZ-60 Planfor FY2010
Net Sales
Operating Income
Operating Margin
Ordinary Income
Ordinary Income to Net Sales
ROE
¥302,900 million
¥25,300 million
8.3%
¥20,600 million
6.8%
8.3%
¥333,000 million
¥20,000 million
6.0%
¥20,000 million
6.0%
9.0%
¥400,000 million
¥35,000 million
8.8%
¥35,000 million
8.8%
15.3%
Consolidated Performance Targets for IZ-60(assumption of exchange rates:¥100/USD and ¥160/EUR;assumption of naphtha price:¥70,000/kl)
ZEON Directors
Cooperation among Industry, Government andAcademiaThrough cooperation among industry, government and
academia, ZEON has succeeded in increasing the contribution
of new businesses to sales and significantly reducing the time
taken for a new business to become profitable. Close
collaboration among the three players-industry (corporations),
government (public agencies and institutions) and academia
(universities and other educational institutions)-is a technology
management business model for creating highly competitive
products in cutting-edge fields of technology. Such
collaboration has significantly cut the time it takes ZEON to
make new businesses profitable, from an average of almost 12
years to just over 6 years. The duration from commercialization
to profitability is generally just over one year. In the area of
optical films, ZEON achieved a nearly 14-fold increase in sales
just four years after entering the market. This reflects the true
value of industry-government-academia cooperation, and is the
foundation of ZEON's success.
R&D on Next-Generation BusinessesZEON is continually accelerating the pace of development
through: 1) collaboration among industry, government and
academia, 2) careful selection of themes, 3) collaboration with
world-class engineers and recruiting engineers from outside of
the company, and 4) the use of production machinery to create
24-hour systems at new plants when developing materials. In
cutting-edge areas of technology, rapid development is the key
to higher profitability. Currently, ZEON's primary targets are:
1) computers, 2) energy, 3) displays, 4) telecommunications,
and 5) recording. Our IZ-60 mid-term management plan
promotes a wide range of next-generation businesses, including
a high-durability blu-ray pickup lens. In order to achieve
success in IZ-60, ZEON will make further use of industry-
government-academia cooperation to boost the speed of
development.
Aligning management and R&D strategies to acceleratenew product development in five target fields
6 ZEON CORPORATION 2008
3-year Mid-term Management Plan IZ-60
Low birefringencefθ lens for LBP
Blade serversubstrate
TFT protective film
TFT gateinsulation film
Color filter high-heatresistant sheet
Polymerizedtoner
Negative electrodebinder
Sealing compound
LCDresist
Optical filmrolls
PDP heatdissipation
Diffusion plate
Ener
gy
Tele
-C
omm
unic
atio
nsLCD display Electric binder
ZEON CORPORATION 2008 7
■Mid-term Management Plan & Operation & Topics
R&D on Next-Generation BusinessesFive Target Fields
45nm Low-k
Etching gas
Liner film Low-k
32nm Low-k
Low birefringenceLow birefringencefθ lens for LBP lens for LBP
Low birefringencefθ lens for LBP
Brightnessenhancing film
IPS retardationfilm
Capacitor electrode (UPS)
High-speed PKG circuitCOP insulator
EHF high-speedcircuit
RF module
HEV-binder
Antireflectionfilm
TFT protective filmTFT protective filmTFT protective film
Ultra-thindiffusion plate
TFT gateTFT gateinsulation filminsulation film
TFT gateinsulation film
Color filter high-heatColor filter high-heatresistant sheetresistant sheet
Color filter high-heatresistant sheet
High-durability blu-raypickup lens
Low birefringence lensfor mobile phone cameras
Next-generation etching gas
Thin stamper
High-potential positiveelectrode material
COP insulation material(high-speed, multipin)
Built-in antenna
Separator binder
High-rate negativeelectrode material
Positive electrodebinder
Patterned diffusionplate
VA-retardation film
TFT planarizationfilm
Blu-ray lens
DVD stamper
Color toner
PolymerizedPolymerizedtonertoner
Polymerizedtoner
Negative electrodeNegative electrodebinderbinder
Negative electrodebinder
Sealing compoundSealing compoundSealing compound
LCDLCDresistresistLCDresist
Optical filmOptical filmrollsrolls
Optical filmrolls
PDP heatPDP heatdissipationdissipationPDP heat
dissipation
Original(-2004)
PZ-3(2005-2007)
IZ-60(2008-2010)
Diffusion plateDiffusion plateDiffusion plate
Semiconductors
Recording
Display
s
y
Review of Operations
8 ZEON CORPORATION 2008
■ Elastomers
Automobile parts
Consolidated Net Sales (Elastomer Business)Net Sales (Millions of yen)
0
50,000
100,000
150,000
200,000
2008200720060
30,000
60,000
90,000
120,000
150,000
Non-consolidated Net Sales (Elastomer Business)Net Sales (Millions of yen)
200820072006
Business OutlineElastomers are ZEON's flagship business, accounting for over 60% of consolidated sales. The segment comprises three
categories: 1) synthetic rubbers used in automobile tires and conveyor belts, 2) synthetic latices used in tires and adhesives,
and 3) chemical products such as resins and inks. Despite the difficult environment caused by factors such as steep rises in
prices for naphtha, a raw material, the segment is steadily transforming from a stable revenue source to a growth business.
Major Products● Synthetic rubbers for automobile tires and
conveyor belts● Synthetic latices for tires and adhesives● Chemical products such as resins and inks
Elas
tom
ers
■Mid-term Management Plan & Operation & Topics
ZEON CORPORATION 2008 9
Gloves made of NBR latexSynchronous belt using hydrogenated
nitril rubber
Automobile tires using SBR, S-SBR,
BR, and IR
Overview by Business Segment
Elastomer OperationsSynthetic rubberBoth domestic and export sales of synthetic rubber exceeded
the previous year's volume, with demand from its major users,
the automobile and tire industries, remaining high, as in the
previous year. Net sales in the domestic market and exports
were both higher than the previous year, owing to a price
revision corresponding to the continuous hike in material prices
and a shift to a profit-oriented sales strategy. Prices were also
revised at overseas subsidiaries in response to the rising prices
of raw materials. Sales of U.S. subsidiaries in particular grew
steadily as a result of the depreciation of the dollar and
appreciation of the Euro. Profit performance of the U.K.
subsidiary improved significantly as a result of growth due to
introduction of new products and initiatives to stabilize
production processes. As a result, the overall synthetic rubber
figures surpassed the previous year's figures in net sales, but
operating income fell short of the previous year due to inability
to absorb the higher costs incurred by the steeply rising prices
of raw materials.
Synthetic laticesDomestic sales of synthetic latices were lower in volume than
the previous year due to the decreased demand for paper. In
contrast, export sales surpassed the previous year's level in both
volume and net sales with strong demand for gloves and other
materials. As a result, overall net sales of synthetic latices
increased year-on-year. Price revisions to adjust to exchange
rate fluctuations and the soaring raw materials prices, however,
came too late to offset a decline from the previous year in
operating income.
ChemicalsIn chemicals, shipments to existing markets remained firm, but
sales volume decreased slightly compared to the previous year
despite the impact of new markets and development of new
applications. Prices were revised to accommodate sharply rising
prices for raw materials, resulting in a year-on-year increase in
net sales. The Thai subsidiary for petrochemical resins
increased both its net sales and operating income.
Consequently, overall net sales of chemicals were higher than
the previous year, while overall operating income fell.
As a result of these factors, segmental net sales for the year
ended March 31, 2008 were ¥195,711 million (10.1% increase
on the previous year) and operating income was ¥16,570
million (15.1% decrease).
Review of Operations
10 ZEON CORPORATION 2008
■ Specialty Materials
SpecialtyMaterials
Business OutlineSpecialty materials is a high-potential business consisting of three divisions: 1) synthetic aroma chemicals and other chemical
products, 2) information and imaging materials, such as materials for LC panels and semiconductor manufacturing, and
3) specialty plastics for optical lenses. The
research and development framework and
production structures are in place, and going
forward this business will grow to join elastomer
materials in propelling ZEON's business. The
new mid-term management plan “IZ-60” targets
sales of ¥100,000 million in fiscal 2010.
Consolidated Net Sales(Specialty Materials Business)
Net Sales (Millions of yen)
0
10,000
20,000
30,000
40,000
50,000
2006 2007 20080
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Non-consolidated Net Sales(Specialty Materials Business)
Net Sales (Millions of yen)
2006 2007 2008
■Others
Main Products & Applications● Synthetic aroma chemicals and other
chemical products● Information and imaging materials, such
as materials for LC panels and semiconductor manufacturing
● Specialty plastics for optical lenses
Business OutlineIn other business segments, sales of trading operations of subsidiaries grew, while a fall in cost prices in the health materials
segment resulted in increased revenue.
As a result, overall segmental net sales were
¥62,345 million (5.3% increase on the previous
year) and operating income was ¥1,216 million
(39.3% increase).
Consolidated Net Sales(Other Businesses)
Net Sales (Millions of yen)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2006 2007 20080
500
1,000
1,500
2,000
2,500
3,000
3,500
Non-consolidated Net Sales(Other Businesses)
Net Sales (Millions of yen)
2006 2007 2008
Other Segments / Products● Technology licensing● ECombined septic tanks● ERIM blending liquid / RIM molding
products● EMedical equipment
Others
■Mid-term Management Plan & Operation & Topics
ZEON CORPORATION 2008 11
Review of Operations
■Specialty Materials OperationsSpecialty plasticsIn the specialty plastics (cyclo-olefin polymer) business, the
performance of ZEONEX® series plastics for optical lenses and
medical uses continued to perform strongly. Consequently, both
sales volume and net sales outperformed the previous year. In
ZEONOR® materials for LC panels, the sales volume and sales
for optical film and diffuser panels fell year on year due to
changes in the market environment. As a result, overall net
sales and operating income for specialty plastics declined from
the previous year.
Information materialsIn information materials, despite a decline in net sales of resist
and etching gas, net sales of battery materials and toner sales
grew steadily. As a result, overall net sales and operating
income for information materials recorded an increase over the
previous year.
ChemicalsIn chemicals, the sales volume for synthetic aroma chemicals
grew and net sales increased over the previous year. In specialty
chemicals, although the sales volume dipped below the
previous year, sales increased year on year as a result of sales
price revisions. Overall net sales and operating income for
chemicals therefore increased year on year.
As a result, overall segmental net sales were ¥47,153 million
(0.1% decrease on the previous year) and operating income was
¥7,609 million (21.9% decrease).
Printed-circuit boards ZEON Medical Inc. Combined septic tanks
ZEONORFILM®
12 ZEON CORPORATION 2008
contribution to the monodzukuri (manufacturing) culture that
supports Japanese industry.
ZEON embraced the challenge of developing a product that
had long been considered unachievable, succeeded in
developing an innovative production method, and in 2002
released “ZEONORFILM®.” Later, ZEON also succeeded in
developing the world's first wide biaxial stretched optical films,
and released these films under the brand “new ZEONORFILM®”
in 2004. These innovations not only improved the quality of
LCD televisions and reduced manufacturing costs, but also
significantly reduced the environmental impact.
In September 2007, ZEON's wholly owned subsidiary Optes
Co., Ltd. completed construction of the new Himi Plant at the
Toyama Plant. This addition strengthens ZEON's production
structure for responding to the rapidly growing demand for new
ZEONOR FILM® (stretched film) along with the growing size
of LCD TVs. ZEON decided to proceed with the second and
third investment phases to raise production capacity at the Himi
Plant, aiming to start in FY2008. At the existing Takaoka Plant,
capital investment to boost production capacity for optical film
rolls to 40 million m2 and capacity for the new ZEONORFILM®
to 30 million m2 is complete. With the addition of the Himi
Plant, ZEON plans to raise annual production capacity to 75
million m2. Going forward, ZEON will invest capital in stages,
with the aim of increasing the annual production of all types of
optical film for
large-size LCD
televisions to 100
million m2 in the
future.
Himi Plant
ZEON's activities in FY2007
In July 2007, ZEON installed an advanced industrial waste
treatment facility at its Kawasaki Plant. The plant, located in
the Keihin Industrial Complex close to Tokyo, has long been
involved in environmental safety measures to become an earth-
friendly urban plant. While providing the capacity for treating
nearly the same volume of industrial waste as conventional
facilities, the dry distillation type incinerator at the new
industrial waste treatment
facility, by gasifying and
burning waste industrial waste,
can reduce the concentration of
hazardous substances by 90%
and cut gas emission volumes
by 40% overall.
In August 2007, ZEON was awarded the Minister of Economy,
Trade and Industry's Prize in the Products and Technologies
Development Category at the 2nd Monodzukuri Nippon Grand
Award, established as part of the system of commendations
from the Prime Minister. ZEON's award-winning technology
was based on the development of optical films for LCDs
utilizing the sheet extrusion process. It won high acclaim for its
Kawasaki Plant
IEEE CPMT Young Award
Theme 1 Kawasaki Plant
Theme 2 Monodzukuri Nippon Grand Award
Theme 3 Himi Plant
Business-related Topics
ZEON has fully entered
the business of producing
color toner for high-
resolution photocopiers,
which has high growth
potential. Most toners are
produced by the
companies that
manufacture the copy
machines, so ZEON is
one of only a handful of
independent toner
manufacturers. In 2007,
ZEON began production
of its yellow polymerized toner at a pilot plant. In January
2008, ZEON invested approximately ¥3 billion to build a 500-
ton capacity plant at its Tokuyama Plant, and began full
production. With the production of blue and red toner
scheduled to commence in 2009, ZEON will begin construction
of new plants.
In January 2008, ZEON Corporation and its European
subsidiaries, ZEON Europe GmbH and ZEON Chemicals
Europe Ltd., received notification of a decision from the
European Commission regarding an allegation of infringement
of the competition law in the acrylonitrile butadiene rubber
(NBR) market in Europe. Reviewing the decision in light of
various factors, ZEON decided that it would not appeal, as the
company is committed to compliance with laws and regulations
as an important objective underpinning its management. Going
forward, ZEON will endeavor to strengthen its compliance
structures and to prevent such incidents from happening again.
In April 2008, construction of the Integrated Production Center
(IPC) at the Mizushima Plant was completed and the facility
began operations. In order to bolster on-site manufacturing,
ZEON has been introducing Daicel's innovative production
approach at the manufacturing worksite. The IPC serves as an
integrated manufacturing base, through which ZEON will
evolve its personnel and organization as well as production and
information systems, reform its corporate culture, and develop
human resources in a framework of continuous, self-directed
quality improvement at the workplace. Through the IPC, ZEON
hopes to achieve the following: 1) reformed corporate culture,
2) stable and safe production, 3) transformation of skills and
know-how into visible technologies and handing down of
expertise, 4) human resource development, 5) improved
productivity, and 6) reduced manufacturing costs. In order to
integrate the IPC with all our practical manufacturing functions,
the IPC building can withstand earthquakes of magnitude 7 and
above, and features countermeasures against tsunami and
ground liquefaction.
ZEON CORPORATION 2008 13
ZEON CORPORATION 2008 TOPICS
Laser printer using polymerized toner
Integrated Production Center
Theme 4 Color Toner Operations Theme 6 Integrated Production Center
Theme 5 NBR European Commission
Research and Development
14 ZEON CORPORATION 2008
customers on a daily basis, as well as the Incubation Center that
aims to deliver next-generation products quickly and reliably.
There is also a New Business Development Department
dedicated to seeking opportunities for next-generation products.
ZEON is pressing forward with R&D in collaboration with our customersand with external research institutions both in Japan and overseas.
Basic R&D PhilosophyBased on a corporate policy of focusing on technology, ZEON's
R&D philosophy is to contribute to society by creating world-
leading business through the development of unique,
innovative, and earth-friendly technologies in the specific fields
in which ZEON excels.
Special Features of ZEON R&DBased on our Technology Platform (TPF), the foundation of our
exclusive unparalleled technologies, we pursue innovative R&D
activities in order to contribute to 21st century society. A rich
variety of products have been created through our R&D
activities based on ZEON's own Technology Platform.
Research and Development Organization andActivitiesIn order to enable mutual collaboration between laboratories,
ZEON's R&D functions are consolidated at the R&D Center.
The Center contains the various laboratories that respond to
Business Domains for the Future
Technology Platform
Information / Telecommunications Materials Display Materials
Main Business Area
Energy-Related Materials
Bio-Technology
Recombinant DNA TechnologyTechnology Platform
Precision Molding Technology
Film Molding TechnologyUltra-fine Molding Technology
Polymer Technology
Elastomer TechnologyCyclo-olefin Polymer Technology
C5 Chemicals Technology
Organic Synthesis TechnologyMonomer Extraction Technology
Medical EquipmentBioscience
Optical FilmOptical Components
ChemicalsSpecialty ChemicalsRIMInformation Materials
Synthetic RubbersSynthetic LatexSpecialty PlasticsToner
The Center develops the basic technologyto rapidly realize next-generationproducts.
Each laboratory gains inspiration fornew products through daily contactwith customers and the issues they raise.
Incubation Center
Elastomer / C5 Laboratory
Specialty Materials Laboratory
Precision Molding Laboratory
Biological Laboratory
New Business DevelopmentDepartment
R&D Center
Intellectual Property ( IP) ■ For The Future
ZEON CORPORATION 2008 15
For The Future
IP Strategy and its Promotion SystemZEON Corporation's(ZEON)IP strategy is to ensure the
maintenance andexpansion of its IP rights, and thus to secure a
dominant position as ZEON competes with other companies by
offering products that meet customers' demands.
R&D activities in Japanese industry have changed from a
conventional catch-up approach to a front-runner approach. To
respond to this requirement, ZEON is aware of the importance
of proceeding with efficient R&D activities as parts of an
integrated strategy covering business, R&D and IP. ZEON has
set up an IP Strategy Board which includes top management as
a system for promoting IP activities throughout ZEON. In
addition, patent coordinators have been appointed at the
respective divisions and laboratories. Furthermore, the IP
Department plans and prepares ZEON's IP strategy from the
perspective of the entire company and implements the strategy
in cooperation with the relevant business and R&D segments.
Current Status of IP creation and protectionFor the creation of innovative technologies, ZEON believes that
it is important to foster innovation coupled with IP rights. With
respect to each important development theme, ZEON therefore
will focus activities on the establishment of a patent portfolio in
the early stage of development, and focus ZEON's efforts on
patent filing activities.
Patent applications (in Japan) by ZEON's three business
segments as published in CY2006 totaled 361 : 92 applications
from the elastomer materials business segment; 222 from the
specialty materials business segment; and 47 from the
miscellaneous business segment. As of March, 2007,ZEON
possesses about 640 Japanese patents and some 960 overseas
patents. The number of ZEON's published patent applications
(in Japan) over the last five years is summarized in the table
below:
Furthermore, ZEON is acquiring trademark rights to protect
confidence in ZEON's products. ZEON has established clear
rules for ZEON group companies in and outside Japan to ensure
the unified use of the brand “ZEON”.
For the avoidance of any potential hindrance to ZEON's global
business operations, the brand has been registered as a
trademark in 52 countries and ZEON is striving to protect
ZEON's trademark rights.
Measures against IP-related RisksZEON respects patent rights owned by other companies and, at
the same time, ZEON intends to avoid disputes concerning
patents. To this end, ZEON examines existing patents through
patent databases at every operational stage ranging from R&D
to the marketing of new products. In particular, prior to
introducing a new product on the market, ZEON's staff
members specialized in patent information research conduct
highly-accurate investigations through a plurality of Japanese
and foreign patent information databases to be confident in our
introducing products in the marketplace.
In the light of the recent revision of the provisions concerning
employees' inventions in Article 35 of the Japanese Patent Law,
ZEON reviewed it's internal rules in order to enhance
employees' motivation to create inventions and to avoid
litigation.
Meanwhile, to manage ZEON's technological know-how and
other corporate secrets and to prevent the leakage of
technology, ZEON is reviewing internal rules and striving to
implement the “blackboxing”of technological information to
ensure confidentiality.
Calendar year(CY)
Elastomer materials business segmentSpecialty materials business segment
Miscellaneous business segment
Total
’03
94
183
55
332
’04
95
197
61
353
’05
79
242
62
383
’06
92
222
47
361
’07
53
241
43
337
TOPICS
Acquisition of Patent for Cost-ReductionBusiness MethodsWith the aim of reducing costs, ZEON is deploying ZΣactivities in which employees set themes and manage
progress. The system and program for these activities
have been granted a patent as a business method.
Patents in this field are difficult to acquire, particularly
in the field of chemistry. Our ZΣ activities under the
former PZ-3 medium-term management plan reduced
costs by ¥20.9 billion, and under our current IZ-60
management plan we are anticipating a cost reduction
of ¥20.0 billion.
Responsible Care Action GuidelinesZEON has formulated the seven items of its Responsible Care
Action Guidelines based on the two major principles of
environmental conservation and safety. Environmental
protection is an obligation of a company as a public institution,
and we believe it can be achieved through our unique
technologies and the strong sense of responsibility and efforts
of all employees and officers. Safety is the very foundation of a
business and must be the top priority. One key to safety is the
belief that all accidents can be prevented. By implementing the
“5-S” activities of organization (Seiri), orderliness (Seiton),
standardized cleanup (Seiso), cleanliness (Seiketsu), and
discipline (Shitsuke), and fulfillment of individual
responsibility, we can achieve this goal. The seven guidelines
are: 1) placing top priority on the environment and safety; 2)
collecting and providing the latest information on chemical
products; 3) minimizing discharges of all toxic chemical
substances and waste; 4) promoting activities to conserve
resources and reduce energy consumption; 5) developing new
processes and products with special emphasis on the
environment and safety, and assuring the quality of these
products; 6) ensuring harmonious coexistence with society; and
7) pursuing continuous improvement.
Seven-Article Constitution of the ZEON GroupThe company name ZEON is a combination of the words “geo” meaning Earth and “eon” meaning eternity. As befits this name, we
are committed to contributing to the global environment and human prosperity through the development and application of original,
world-leading technologies. Based on this philosophy of “contributing to eternal Earth and human prosperity,” we have compiled a
seven-article constitution of the ZEON Group, which emphasizes three themes: 1) speed, 2) dialogue, and 3) social contribution.
16 ZEON CORPORATION 2008
Environment and Safety
Constitution of the ZEON Group
ZEON shall respect corporate ethics and serve society.
ZEON shall always emphasize environmental and safety issues.
ZEON shall continuously strive to meet market needs by employing its unique technologies.
ZEON shall provide products and services of excellent quality to assure customer satisfaction.
ZEON, as a vital organization, shall aid each employee in achieving self-fulfillment through his or her work.
Each ZEON employee shall be expected to meet challenges in his or her area of expertise in order to achievecorporate targets and the results shall be shared fairly.
ZEON shall highly regard “speed” in decision-making and response to daily requirements.
Article 1
Article 2
Article 3
Article 4
Article 5
Article 6
Article 7
Contributing to the Environment through OurProductsBased on the Responsible Care Action Guidelines, ZEON is
contributing to the environment through its products. Examples
include ZEORORA®H, which is related to the hot topic of
preventing global warming. This third-generation fluorocarbon
detergent has no harmful impact on the ozone layer. Our
ZEONEX® series cyclo-olefin polymer reduces environmental
risk in medical applications through its low-impurity
characteristics. Synthetic rubber for high fuel-efficiency tires
and ZEOGLOBULE® polymerized toner help to conserve
energy. QUINTAC® thermoplastic elastomer for non-solvent
adhesive tapes and Quintone® C5 petroleum resin for hot-melt
adhesives for road-marking paints contribute to the global
environment by being free of organic solvents.
ZEON CORPORATION 2008 17
■CSR
Contributing to the Environment through Our Products
Binder for BatteriesThermoplastic elastomer for
non-solvent adhesive tape
QUINTAC®
C5 petroleum resinfor road marking
Quintone®
New Zetpol®
Next-generation fluorocarbondetergent
ZEORORA®HEtching gas
ZEORORA® ZFL-58
Cyclo-olefin polymer
ZEONEX®
ZEONOR®
Global WarmingPrevention
Reduction ofEnvironmental
Risks
Reduction ofVoc Emissions
Energy-saving
Ultra-Thin DiffusionPlates for LCDs
Synthetic rubberfor fuel-efficient tires
Polymerized toner
ZEOGLOBULE®
18 ZEON CORPORATION 2008
Corporate Governance
(1) Basic Concepts of Corporate GovernanceZEON aims to continue generating profits and enhancing its
corporate value, while conscientiously attending to the interests
of shareholders and other stakeholders and securing
coordination among them. To this end, ZEON will continue to
build an effective corporate governance system for efficient and
sound corporate management. At the same time, ZEON will
improve its internal control system, in which the roles and
functions of each internal body and organization are clearly
stated. Thus, the Board of Directors can make a quick decision
Corporate Governance and Internal Control System
and instruct the internal organization proper executions for the
operation. The progress and results of these processes will be
monitored and disclosed in a proper manner, thereby increasing
management transparency. In order for these functions to work
effectively, ZEON intends to further improve its corporate
governance system.
(2) Internal organizations and control systemZEON has a corporate auditor system, under which five
statutory auditors, including three outside auditors, have been
appointed.
ZEON's corporate governance and internal control system and
its reporting lines are as follows.• Board of DirectorsThe Board of Directors ensures that operations are executed
conformance with relevant laws and the Company's articles of
association. The board meets on a monthly basis in principle,
with statutory auditors attending. The chairman presides over
the meeting. In addition to responsibilities stipulated by law, the
Board's primary roles are to decide on basic management
principles and strategies and to make important decisions on the
execution of business operations. ZEON currently has no
outside directors.
• Executive BoardThe Executive Board consists of full-time directors with the
title of managing director or above and any person the president
ReportReport(internal)(internal)Report
(internal)
General Meeting of Shareholders
Operating divisions, indirect divisions, laboratories and plants
Subsidiaries and affiliated companies
Execution of Operations and Internal Control System
Board of Directors
President and CEO
Executive Board
PL Council
Environmentaland SafetyProtectionCouncil
PublicRelations
Committee
AntitrustLaw Compliance
Committee
ComplianceCommittee
InternalAudit Dept
Outsidelawyers
Risk ManagementCommittee
Risk ManagementCouncil
Independent Auditors(Board of Corporate Auditors)Statutory Auditors
AuditorSupport Staff
Decision-making and supervisionDecision-making and supervisionassignment Decision-makingassignment Decision-making
and supervisionand supervision(assignment and dismissal)(assignment and dismissal)
Decision-making and supervisionassignment Decision-making
and supervision(assignment and dismissal)
Decision-makingDecision-makingand supervisionand supervision
(assignment and dismissal)(assignment and dismissal)
Decision-makingand supervision
(assignment and dismissal)Operational audit Accounting audit
(Assignment and dismissal)(Assignment and dismissal) (Assignment and dismissal)(Assignment and dismissal)(Assignment and dismissal)
Operationalaudit
(Dismissal)
Cooperation(support)
Cooperation
CooperationCooperationCooperation
ReportReportReport
Internalaudit
Report(outside)
Report(outside)
ReportReport(internal)(internal)Report
(internal)
PL basic policiesPL basic policiesPL basic policies
Managementand monitoring
Managementand monitoring
Managementand monitoring
EnvironmentEnvironmentand safetyand safety
basic policiesbasic policies
Environmentand safety
basic policies
AppropriateAppropriatedisclosuredisclosure
of informationof information
Appropriatedisclosure
of information
Compliance withCompliance withAntitrust LawAntitrust Law
Compliance withAntitrust Law
Export SecurityControl
Commitee
Lawful ExportLawful ExportLawful ExportEnsuring theEnsuring thereliability ofreliability of
financial reportsfinancial reports
Ensuring thereliability of
financial reports
CorporateGovernanceCommitee
Prevention,Prevention,education,education,
training andtraining andmonitoringmonitoring
Prevention,education,
training andmonitoring
(Assignment and dismissal)
Dealing with problemsDealing with problemsand prevention of and prevention of
recurrence Dealing recurrence Dealing with problemswith problems
and of recurrenceand of recurrence
Dealing with problemsand prevention of
recurrence Dealing with problems
and of recurrence
ZEON CORPORATION 2008 19
■CSR
delegates according to the Regulations of the Executive Board.
After having full discussions and hearing opinions from
standing statutory auditors present, the board makes decisions
on important management issues. Of proposals discussed and
resolved at the Executive Board, important matters specified in
the Regulations of the Board of Directors are submitted to the
Board of Directors for deliberations and decisions.
The Executive Board, over which the president presides, meets
twice a month in principle.
• Board of Corporate AuditorsThe Board of Corporate Auditors consists of five statutory
auditors, of which three are outside auditors. The roles of the
board, which meets once every four months in principle, are to
report, discuss and make necessary resolutions for audit-related
important matters. Based on auditing standards determined by
this board, each auditor monitors the execution of duties by
directors through such means as attendance at the Board of
Directors' meetings and holds an internal inquiry into business
operations,including subsidiaries' operations.
• PL CouncilThe PL (Product Liability) Council discusses and determines
basic guidelines and policies with regard to ZEON's product
liability. The council, over which the president presides, meets
twice a year in principle.
• Environmental and Safety Promotion CouncilThis council discusses and determines policies and actions
regarding environment-and safety-related matters. The council,
which the president chairs, meets twice a year in principle.
• Public Relations CommitteeTo ensure timely and appropriate disclosure of information, this
committee discusses and determines corporate information to
be disclosed and its details whenever necessary.
(3) Internal audits, statutoryauditors' audits and accounting auditsAs a company using a corporate auditing system, ZEON has
five statutory auditors, of which three are outside auditors.
Statutory auditors attend the Board of Directors' meetings and
other important internal meetings to provide any advice as
required. In addition, they join in the operational audits carried
out by the Internal Audit Department. In this way, statutory
auditors conduct efficient audits, maintaining close cooperation
with the department responsible for internal audits. If
necessary, statutory auditors request the department responsible
for internal audits or other relevant sections to conduct an
inquiry and submit reports to them.
The Internal Audit Department has been established as the
section responsible for internal audits. The department carries
out internal audits, which are necessary for ensuring appropriate
operations at each division and subsidiary. The department has
three staff members, who are also responsible for supporting
statutory auditors. Statutory auditors and the Internal Audit
Department regularly exchange views with the independent
auditors regarding the results of their accounting audits. If
necessary, they stand by during an accounting audit and discuss
matters with the certified public accountants who conduct the
audit, thereby enhancing mutual cooperation.
(4) Risk Management SystemZEON has the following three committees associated with risk
management under the Risk Management Council, over which
the president presides.
• Risk Management CommitteeThis committee is responsible for dealing with crises that have
occurred and preventing similar incidents from occurring in the
future.
Using ZEON's internal network, the committee quickly gathers
risk-related information. In addition, the Compliance Hotline, a
reporting system in which outside lawyers participate, has been
established.
• Compliance CommitteeThis committee's roles are to provide training and education
and to carry out inspections with the aim of preventing any
crisis from occurring. The committee draws up and implements
preventive measures regarding violations of laws and
regulations, and compliance-related training and education
programs and inspection plans.
• Antitrust Law Compliance Committee This committee was established to prevent any director or
employee from violating the Antitrust Law.
• Export Security Control CommiteeThe Security and Export Control Committee is an organization
that observes and appropriately implements export regulations.
During fiscal 2007 the committee responded to the partial
amendment of the Export Trade Control Order and revised the
company regulations.
• Corporate Governance CommiteeThe Internal Controls Committee promotes the creation and
evaluation of internal control systems governing financial
reports, and administers the internal control reporting system
based on the Financial Instruments and Exchange Law.
20 ZEON CORPORATION 2008
CSR Promotion System
President
Meetings
EnvironmentImprovement Projects
Audits
CSR
Risk Management Committee
Compliance Committee
Antitrust Law Regulatory Committee
CSR team
Internal Auditing
Corporate Communication & Public Affairs
Environmental & Safety Affairs
Quality Assurance
Legal Affairs
Export Security Control Committee
Corporate Governance Committee
Risk Management Committee (twice yearly)Discussions and decisions concerning progress reports from the three committees
(Risk Management, Compliance, and Anti-Monopoly) Chairman: President
PL Countermeasure Meeting (twice yearly)
Internal Plant Audits(1) Diagnosis by the plant manager(2) Environment ISO internal audit(3) Quality ISO internal audit
Environment and Safety Promotion Meeting (twice yearly)Discussions and decisions concerning company-wide polices for the
environment and safety and items for implementation Chairman: President
PL Meeting (twice yearly)Discussions and decisions concerning fundamental, company-wide
items related to chemical safety and product liability Chairman: PresidentPlanning, discussions and reports for specific policies
and countermeasures related to chemical safety and product liability
Company-wide Audits(1) Diagnosis by top management (yearly) Chairman: President(2) Responsible Care audit (yearly) Auditor: Employee in charge of environment and safety(3) Operation Department PL audit (yearly) Auditor: Head of the Quality Assurance Department(4) Voluntary Safety audit(5) Special audit by the head of the Safety Environmental Affairs Department(6) Plant technology audit
(1) Reducing the discharge of toxic chemicals (2) Reducing waste and reusing materials (3) Conserving resources and energy
Environment and Safety Meeting (four times yearly)Assessments of issues, planning, reports
and proposals related to the environment and safety
Plant Safety and Environment Meeting (monthly)Discussions and decisions for items related
to plant environment and safety
Risk Management Council
ZEON Corporation conducted a reorganization effective June 28, 2007, to more clearly define CSR, which is responsible for fulfilling
the social obligations of the company. CSR at ZEON comprises four departments: 1) the CSR Department, 2) the Audit Section,
3) the Safety Environmental Affairs Department, and 4) the Quality Assurance Department. A number of meetings chaired by the
president have been set up based on these organizations. These meetings implement the policies specified in Environment
Improvement Projects, and audit the entire Company, including plants. Through persistent Plan Do Check activities, these
organizations work to improve CSR.
TOPICS
ZEON wins City of Kawasaki Urban Planning Design AwardIn May 2006, ZEON completed a new laboratory building
with financial assistance from Kanagawa Prefecture to house
research for creating new, next-generation businesses. In
November 2006 the facility received the City of Kawasaki
Urban Planning Design Award in recognition of its success in
taking into account the environment, safety, and the city
landscape.
Hosting of Yamaguchi Higashi Regional DialogueIn September 2006, ZEON hosted the 5th Yamaguchi Higashi
Regional Dialogue on Responsible Care. The regional
dialogue is managed and run every two years by companies in
the Shunan industrial complex area. This year, ZEON's
Tokuyama Plant organized the event, which featured a
vigorous exchange of opinions with local autonomous bodies
and educational institutions.
ZEON CORPORATION 2008 21
Financial Section
FINANCIAL SECTION OF CONTENTS
22
23
25
26
27
28
41
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■ Five-year Summary
■ Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes In Net Assets
Consolidated Statements of Cash Flows
Note to Consolidated Financial Statements
■ Report of Independent Auditors
■Data & Financial Statements
22 ZEON CORPORATION 2008
Five-year Summary
22
Note: The U.S. dollar amounts above and elsewhere in this annual report are translated from yen, for convenience only, at the rate of¥100.20=$1.00 (As of March 31, 2008)
Millions of yen (except per share amounts and number of employees)
Thousands of U.S. dollars(except per share amounts)
2004
¥213,297
17,897
6,165
4,588
18.74
-
222,254
71,575
-
32.2
295.47
6.7
2,840
2005
¥231,364
19,303
13,524
7,773
32.01
-
236,861
76,357
-
32.3
317.86
10.5
2,784
2006
¥263,074
26,835
24,101
15,249
63.23
-
272,674
96,528
-
35.4
405.10
17.6
2,893
2007
¥281,613
30,175
28,126
17,077
71.74
71.72
315,448
-
115,180
35.4
469.17
16.4
2,972
2008
¥302,925
25,268
18,173
9,092
38.24
38.22
335,730
-
110,880
31.9
453.54
8.3
3,166
2008
$3,023,204
252,176
181,367
90,738
0.38
0.38
3,350,599
-
1,106,587
4.53
Net Sales
Operating Income
Income before income taxes
Net Income
Net Income per share
Primary
Fully diluted
Total assets
Shareholder's equity
Net Assets
Equity ratio (%)
Shareholder's equity per share
ROE (%)
Number of employees
ZEON Corporation and Consolidated Subsidiaries For the years ended March 31
ZEON CORPORATION 2008 2323
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets
Consolidated Balance Sheets
Millions of yen Thousands of U.S.dollars (Note 3)
¥6,126
383
72,115
4,701
56,021
3,101
30,815
(88)
173,174
13,970
59,498
215,639
15,557
304,664
(188,401)
116,263
5,898
34,576
2,227
469
3,583
(462)
40,393
2
¥335,730
2008
¥6,483
355
54,691
6,535
52,021
3,311
32,206
(113)
155,489
13,915
53,498
199,205
10,667
277,285
(175,637)
101,648
5,782
45,768
2,446
384
4,401
(473)
52,526
3
¥315,448
2007 2008
$64,701
3,543
545,818
65,220
519,172
33,044
321,416
(1,128)
1,551,786
138,872
533,912
1,988,074
106,457
2,767,315
(1,752,864)
1,014,451
57,705
456,766
24,411
3,832
43,924
(4,721)
524,212
30
$3,148,184
$61,138
3,822
719,711
46,916
559,092
30,948
307,534
(878)
1,728,283
139,421
593,792
2,152,086
155,260
3,040,559
(1,880,250)
1,160,309
58,863
345,070
22,226
4,681
35,758
(4,611)
403,124
20
$3,350,599
2007
Assets
Current assets:
Cash and cash equivalents
Short-term investments (Note 8)
Receivables, trade:
Notes and accounts
Unconsolidated subsidiaries and affiliates
Inventories (Note 5)
Deferred tax assets (Note 13)
Other current assets (Note 9)
Allowance for doubtful accounts
Total current assets
Property, plant and equipment, at cost(Notes 8 and 10):
Land
Buildings and structures
Machinery and equipment
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net
Intangible assets
Investments and other assets (Note 6):
Investment securities (Notes 8 and 16)
Unconsolidated subsidiaries and affiliates
Deferred tax assets (Note 13)
Other investments
Allowance for doubtful accounts
Total investments and other assets
Deferred charges
Total assets
■Data & Financial StatementsAs of March 31, 2008 and 2007
24 ZEON CORPORATION 2008 24
Consolidated Balance SheetsAs of March 31, 2008 and 2007
Consolidated Balance Sheets
Millions of yen Thousands of U.S.dollars (Note 3)
¥20,155
5,196
19,984
72,252
7,459
12,588
3,021
2,936
12,950
156,541
52,177
11,675
1,383
3,074
68,309
24,211
18,378
67,000
(5,433)-
104,156
5,056
2
(556)-
(1,595)2,907
151
3,666
110,880
¥335,730
2008
¥21,953
1,278
4,998
74,319
7,640
11,851
4,754
3,491
7,722
138,006
40,348
10,243
7,007
4,664
62,262
24,211
18,372
60,542
-
(4,444)98,681
13,872
12
(100)(789)
-
12,995
101
3,403
115,180
¥315,448
2007 2008
$219,092
12,754
49,880
741,707
76,248
118,273
47,445
34,840
77,067
1,377,306
402,675
102,226
69,930
46,546
621,377
241,627
183,353
604,212
-
(44,352)984,840
138,443
120
(998)(7,874)
-
129,691
1,008
33,962
1,149,501
$3,148,184
$201,148
51,856
199,441
721,078
74,441
125,629
30,150
29,301
129,241
1,562,285
520,729
116,517
13,802
30,679
681,727
241,627
183,413
668,663
(54,222)-
1,039,481
50,459
20
(5,549)-
(15,918)29,012
1,507
36,587
1,106,587$3,350,599
2007
Liabilities and shareholders' equity
Current liabilities:
Short-term loans payable (Note 7)Current portion of long-term debt (Note 7)Commercial paper
Payables, trade:
Notes and accounts
Unconsolidated subsidiaries and affiliates
Payables, other (Note 9)Accrued income taxes
Accrued expenses (Note 9)Other current liabilities (Notes 9 and 13)
Total current liabilities
Long-term liabilities:
Long-term debt (Note 7)Allowance for employees' retirement benefits (Note 12)Deferred tax liabilities (Note 13)Other long-term liabilities
Total long-term liabilities
Contingent liabilities(Note 14)
Net assets:
Shareholders' equity
Common stock
Authorized - 800,000,000 shares
Issued - 242,075,556 shares
Capital surplus
Retained earnings (Note 4)Treasury stock, at cost
2008 - 6,014,022 shares
2007 - 4,048,429 shares
Total shareholders' equity
Valuation and translation adjustments
Net unrealized holding gain on available-for -sale securities
Deferred gain(losses) on hedges
Foreign currency translation adjustments
Minimum pension liabilities
Pension liabilities adjustments
Total valuation and translation adjustments
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets
Consolidated Statements of Income
ZEON CORPORATION 2008 2525
See accompanying notes to consolidated financial statements.
Millions of yen Thousands of U.S. dollars (Note 3)
¥302,925
228,830
74,095
48,827
25,268
1,403
(1,468)
32
(7,062)
(7,095)
18,173
8,022
602
9,549
(457)
¥9,092
¥38.24
38.22
12.00
453.54
2008
¥281,613
203,164
78,449
48,274
30,175
1,187
(1,083)
27
(2,180)
(2,049)
28,126
9,723
780
17,623
(546)
¥17,077
¥71.74
71.72
10.00
469.17
2007 2008
$2,810,509
2,027,585
782,924
481,776
301,148
11,846
(10,808)
269
(21,756)
(20,449)
280,699
97,037
7,784
175,878
(5,449)
$170,429
$0.72
0.72
0.10
4.68
$3,023,204
2,283,733
739,471
487,295
252,176
14,002
(14,651)
319
(70,479)
(70,809)
181,367
80,060
6,008
95,299
(4,561)
$90,738
$0.38
0.38
0.12
4.53
2007
Net sales
Cost of sales(Notes 10 and 12)
Gross profit
Selling, general and administrative expenses
(Notes 10, 11 and 12)
Operating income
Other income(expenses):
Interest and dividend income
Interest expenses
Equity in earnings of unconsolidated
subsidiaries and affiliates, net
Other, net(Notes 16 and 18)
Income before income taxes and minority interests
Income taxes:
Current
Deferred
Income before minority interests
Minority interests
Net income
Amounts per share:
Net income
Fully diluted net income
Cash dividends
Net Assets
Consolidated Statements of IncomeYears ended March 31 ■Data & Financial Statements
Consolidated Statements of Changes in Net Assets
26 ZEON CORPORATION 2008
Consolidated Statements of Changes in Net Assets
26
See accompanying notes to consolidated financial statements.
For the years ended March 31, 2008 and 2007
Millions of yenThousands
¥242,076
-
-
-
-
-
-
-
242,076
-
-
-
-
-
-
-
242,076
Number of shares of common
stock
¥24,211
-
-
-
-
-
-
-
24,211
-
-
-
-
-
-
-
¥24,211
common stock
¥18,372
-
0
-
-
-
-
-
18,372
-
-
-
6
-
-
-
¥18,378
Capitalsurplus
¥44,963
17,077
-
(2,380)
(101)
983
-
-
60,542
9,092
238
(15)
-
(2,857)
-
-
¥67,000
Retainedearnings
(¥4,435)
-
0
-
-
-
(9)
-
(4,444)
-
-
-
42
-
(1,031)
-
(¥5,433)
Treasurystock
¥14,497
-
-
-
-
-
-
(625)
13,872
-
-
-
-
-
-
(8,816)
¥5,056
Net unrealizedholding gain on
available-for-salesecurities
¥-
-
-
-
-
-
-
12
12
-
-
-
-
-
-
(10)
¥2
Deferredgain(losses)on hedges
(¥1,080)
-
-
-
-
-
-
980
(100)
-
-
-
-
-
-
(456)
(¥556)
Foreigncurrency
translationadjustments
¥-
-
-
-
-
-
-
(789)
(789)
-
-
-
-
-
-
789
¥-
Minimumpensionliabilities
¥-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,595)
(¥1,595)
Pensionliabilities
adjustments
¥-
-
-
-
-
-
-
101
101
-
-
-
-
-
-
50
¥151
Stockacquisition
rights
¥3,162
-
-
-
-
-
-
241
3,403
-
-
-
-
-
-
263
¥3,666
Minorityinterests
Balance at March 31, 2006
Net income for the year
Disposition of treasury stock
Cash dividends paid
Bonuses to directors and statutory auditors
Adjustment in minimum pension liability of
consolidated subsidiaries in U.S.A.
Purchases of treasury stock
Net change during the year
Balance at March 31, 2007
Net income for the year
Increase due to change in number of
consolidated subsidiaries
Decrease due to change in number of
consolidated subsidiaries
Disposition of treasury stock
Cash dividends paid
Purchases of treasury stock
Net change during the year
Balance at March 31, 2008
Thousands of U.S.dollars (Note3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$241,627
-
-
-
-
-
-
-
241,627
-
-
-
-
-
-
-
$241,627
$183,353
-
0
-
-
-
-
-
183,353
-
-
-
60
-
-
-
$183,413
$448,733
170,429
-
(23,752)
(1,008)
9,810
-
-
604,212
90,738
2,376
(150)
-
(28,513)
-
-
$668,663
($44,261)
-
0
-
-
-
(91)
-
(44,352)
-
-
-
419
-
(10,289)
-
($54,222)
$144,681
-
-
-
-
-
-
(6,238)
138,443
-
-
-
-
-
-
(87,984)
$50,459
$-
-
-
-
-
-
-
120
120
-
-
-
-
-
-
(100)
$20
($10,778)
-
-
-
-
-
-
9,780
(998)
-
-
-
-
-
-
(4,551)
($5,549)
$-
-
-
-
-
-
-
(7,874)
(7,874)
-
-
-
-
-
-
7,874
$-
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(15,918)
($15,918)
$-
-
-
-
-
-
-
1,008
1,008
-
-
-
-
-
-
499
$1,507
$31,557
-
-
-
-
-
-
2,405
33,962
-
-
-
-
-
-
2,625
$36,587
Balance at March 31, 2006
Net income for the year
Disposition of treasury stock
Cash dividends paid
Bonuses to directors and statutory auditors
Adjustment in minimum pension liability of
consolidated subsidiaries in U.S.A.
Purchases of treasury stock
Net change during the year
Balance at March 31, 2007
Net income for the year
Increase due to change in number of
consolidated subsidiaries
Decrease due to change in number of
consolidated subsidiaries
Disposition of treasury stock
Cash dividends paid
Purchases of treasury stock
Net change during the year
Balance at March 31, 2008
ZEON CORPORATION 2008 2727
Consolidated Statements Cash Flows
See accompanying notes to consolidated financial statements.
Millions of yen Thousands of U.S. dollars (Note 3)
¥18,173
19,497
(1,403)
1,468
(15,573)
(4,091)
(2,541)
2,361
17,891
1,607
(1,481)
(72)
(9,748)
8,197
(30,194)
(1,377)
(3,603)
707
452
(34,015)
(1,696)
14,987
17,178
(1,269)
(2,951)
(1,032)
3
25,220
(107)
(705)
6,483
348
¥6,126
2008
¥28,126
16,245
(1,187)
1,083
(12,103)
(6,861)
17,483
(8,116)
34,670
1,286
(916)
(490)
(10,917)
23,633
(26,394)
(1,054)
(3,082)
-
(1,155)
(31,685)
(1,376)
998
15,031
(5,166)
(2,449)
-
(10)
7,028
187
(837)
7,320
-
¥6,483
2007 2008
$280,699
162,126
(11,846)
10,808
(120,788)
(68,473)
174,481
(80,999)
346,008
12,834
(9,142)
(4,890)
(108,952)
235,858
(263,413)
(10,519)
(30,758)
-
(11,528)
(316,218)
(13,733)
9,960
150,010
(51,557)
(24,441)
-
(99)
70,140
1,867
(8,353)
73,054
-
$64,701
$181,367
194,581
(14,002)
14,651
(155,419)
(40,828)
(25,359)
23,562
178,553
16,038
(14,780)
(719)
(97,286)
81,806
(301,337)
(13,743)
(35,958)
7,056
4,511
(339,471)
(16,926)
149,571
171,437
(12,665)
(29,451)
(10,299)
30
251,697
(1,068)
(7,036)
64,701
3,473
$61,138
2007
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority
interests to net cash provided by operating activities:
Depreciation and amortization
Interest and dividend income
Interest expenses
(Increase)decrease in receivables, trade
(Increase)decrease in inventories
Increase(decrease)in payables, trade
Other, net
Cash generated from operations
Interest and dividends received
Interest paid
Payment of litigation costs
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of subsidiary stocks
associated with change in the scope of consolidation
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase(decrease)in short-term borrowings
Increase(decrease)in commercial paper
Proceeds from long-term debt
Repayment of long-term debt
Dividends paid
Repurchase of treasury stock
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase(decrease)in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash due to increase in number of consolidated subsidiaries
Cash and cash equivalents at end of year
Consolidated Statements of Cash Flows
■Data & Financial StatementsYears ended March 31
28 ZEON CORPORATION 2008
Notes to Consolidated Financial Statements
28
ZEON Corporation and Consolidated Subsidiaries
1. Basis of PresentationZEON CORPORATION(the "Company")and its domesticconsolidated subsidiaries maintain their accounting records andprepare their financial statements in accordance withaccounting principles generally accepted in Japan, and itsoverseas consolidated subsidiaries maintain their books ofaccount in conformity with those of their countries of domicile. The accompanying consolidated financial statements have beencompiled from the accounts prepared by the Company inaccordance with the provisions set forth in the FinancialInstruments and Exchange Law of Japan and in conformity withaccounting principles generally accepted in Japan, which aredifferent in certain respects as to the application and disclosurerequirements of International Financial Reporting Standards.
In addition, the notes to the consolidated financial statementsinclude information that is not required under accountingprinciples generally accepted in Japan but is presented herein asadditional information.
Certain amounts in the prior year's financial statements havebeen reclassified to conform to the current year's presentation.
2. Summary of Significant Accounting Policies(1)Principles of Consolidation
The accompanying consolidated financial statementsinclude the accounts of the Company and its significantsubsidiaries(23 subsidiaries as of March 31, 2008 and 21subsidiaries as of March 31, 2007). All significantintercompany accounts and transactions have beeneliminated in consolidation. Investments in certainunconsolidated subsidiaries and significant affiliates areaccounted for by the equity method. All significantunrealized intercompany items have been eliminated inconsolidation.
Investments in other affiliates and unconsolidatedsubsidiaries, not significant in amounts, are carried at cost.
(2)Cash and Cash EquivalentsCash and cash equivalents include all highly liquid debtinstruments with a maturity of three months or less whenpurchased.
(3)SecuritiesSecurities other than investments in affiliates have beenclassified as "held-to-maturity securities" and "available-for-sale securities." Available-for-sale securities aresecurities other than trading securities and held-to-maturitysecurities. Held-to-maturity securities are carried at
amortized cost or accumulated cost calculated by thestraight-line method.Available-for-sale securities whose fair value is readilydeterminable are carried at fair value with thecorresponding unrealized gain/loss recorded directly as aseparate component of net assets, and those whose fairvalue is not readily determinable are carried at movingaverage cost.
(4)Allowance for Doubtful AccountsThe allowance for doubtful accounts is provided at anamount considered sufficient to cover estimated futurelosses.
(5)InventoriesInventories, in general, are stated at cost determinedprincipally by the average method.
(6)DepreciationDepreciation of property, plant and equipment is computedprimarily by the declining-balance method based on theestimated useful lives of the respective assets determinedaccording to their type of construction and use.Maintenance and repairs, including minor renewals andimprovements, are charged to income as incurred.
<Changes in accounting policy>Effective from the fiscal year ended March 31, 2008,pursuant to an amendment to the Corporate Tax Law, theCompany and its domestic consolidated subsidiaries havedepreciated Property, plant and equipment acquired on andafter April 1, 2007 in accordance with the methodstipulated in the amended Corporation Tax Low. As aresult of this change, compared with the previousaccounting method, operating income decreased by ¥795million($7,934 thousand), and ordinary income andincome before income taxes and minority interestsdecreased by ¥798 million($7,964 thousand).Effective from the fiscal year ended March 31, 2008, theproperty, plant and equipment acquired before April 1,2007 for which the allowable limit on the depreciableamount has been reached are to be depreciated evenly overfive years from the following fiscal year. As a result of thischange, compared with the previous accounting method,operating income decreased by ¥830 million($8,283thousand), and ordinary income and income before incometaxes and minority interests decreased by ¥856 million($8,543 thousand).
The effects of this change on the segment information areseparately stated in Note 19.
ZEON CORPORATION 2008 29
■Data & Financial Statements
29
(7)LeasesFinance leases that are not deemed to transfer ownership ofleased property to lessee are accounted for in the samemanner as operating leases for the Company and domesticconsolidated subsidiaries, and principally as finance leasesfor foreign consolidated subsidiaries.
(8)Employees' Retirement BenefitsThe allowance for employees' retirement benefits isprovided at the amount incurred during the fiscal yearbased on the present value of the projected benefitobligation less the fair value of pension plan assets at theend of the fiscal year. The retirement benefit obligation for certain domesticconsolidated subsidiaries corresponds to the amount thatwould be required to be paid for retirement benefits if alleligible employees voluntarily quit their companies as ofthe balance-sheet dates or the amount of liability reserve inpension financing.Prior service cost for the Company and certain foreignconsolidated subsidiaries is amortized as incurred on astraight-line basis over a certain period(9-13 years).Actuarial gain or loss is amortized by the straight-linemethod over a certain period(9-13 years mainly), whichis not over than the average remaining service years foremployees when incurred, from the following fiscal year ofthe accrual.
(9)Income TaxesDeferred income taxes reflect the net tax effect of thetemporary differences between the carrying amounts of theassets and liabilities for financial reporting purposes andthe amounts reported for income tax purposes.
(10)Foreign Currency TranslationnBoth current and noncurrent receivables and payablesdenominated in foreign currencies have been translatedinto yen at the exchange rates in effect at the respectivebalance sheet dates.
The Company translates the asset and liability accounts,except for shareholders' equity, of its foreign consolidatedsubsidiaries at the exchange rates in effect at the respectivebalance sheet dates. The components of shareholders'equity are translated at their historical exchange rates.Revenue and expense accounts are translated at the averageexchange rate in effect during the year. The resultingtranslation differences have been recorded as "Foreigncurrency translation adjustments" except for thosecorresponding to minority interests.
(11)Net Income per ShareThe computation of basic net income per share is based onthe weighted average number of shares outstanding duringthe respective years. The computation of fully diluted netincome per share reflects the potential dilution that couldoccur if the stock acquisition rights were excercised.
3. U.S. Dollar AmountsThe Company maintains its accounting records in yen. TheU.S. dollar amounts included in the accompanying consolidatedfinancial statements and the notes thereto represent thearithmetic results of translating yen into U.S. dollars at¥100.20= US$1.00, the rate of exchange prevailing on March31, 2008. The inclusion of such U.S. dollar amounts is solelyfor the convenience of the reader and is not intended to implythat assets and liabilities which originated in yen have been orcould readily be converted, realized or settled in U.S. dollars atthe above or any other rate.
4. Shareholders' EquityThe Company Law in Japan(the "Law")provides that anamount equal to at least 10% of the amounts to be disbursed asdistributions of earnings be appropriated to the legal reserveuntil the sum of the legal reserve and additional paid-in capital,which is included in Capital surplus, equals 25% of thecommon stock account. The Law provides that neitheradditional paid-in capital nor the legal reserve in available fordividends, but both may be used to reduce or eliminate a deficitby resolution of the shareholders or may be transferred tocommon stock upon approval by the Board of Directors.Accordingly, the Law provides that if the total amount ofadditional paid-in capital and the legal reserve exceeds 25% ofthe amount of common stock, the excess may be distributed tothe shareholders either as a return of capital or as dividendssubject to the approval of the shareholders. The Company'sshares of common stock had no par value in accordance withthe Law.
The retained earnings account in the accompanyingconsolidated financial statements at March 31, 2008 and 2007included the legal reserve of ¥3,359million($33,519thousand )and ¥3,287million($32,802 thousand).
5. InventoriesInventories at March 31, 2008 and 2007 consisted of the following:
6. Investments and Other AssetsInvestments in and long-term loans to unconsolidated subsidiaries and affiliates at March 31,2008 and 2007consisted of the following:
Other investments at March 31, 2008 and 2007 consisted of the following:
7. Short-Term Loans Payable and Long-Term DebtShort-term loans payable at March 31, 2008 and 2007 were unsecured.Long-term debt at March 31, 2008 and 2007 consisted of the following:
30 ZEON CORPORATION 2008 30
Millions of yen Thousands of U.S. dollars
¥42,711
4,558
8,752
¥56,021
2008
¥40,063
4,360
7,598
¥52,021
2007 2008
$399,830
43,513
75,829
$519,172
$426,257
45,489
87,346
$559,092
2007
Finished products
Work in process
Raw materials and supplies
Millions of yen Thousands of U.S. dollars
¥1,530
697
¥2,227
2008
¥1,756
690
¥2,446
2007 2008
$17,525
6,886
$24,411
$15,269
6,957
$22,226
2007
Capital investments
Long-term loans
Millions of yen Thousands of U.S. dollars
¥1,313
2,270
¥3,583
2008
¥1,972
2,429
¥4,401
2007 2008
$19,681
24,243
$43,924
$13,104
22,654
$35,758
2007
Long-term prepayments
Other
Millions of yen Thousands of U.S. dollars
¥10,000
10,000
37,373
57,373
(5,196)
¥52,177
2008
¥10,000
10,000
21,626
41,626
(1,278)
¥40,348
2007 2008
$99,800
99,800
215,829
415,429
(12,754)
$402,675
$99,800
99,800
372,985
572,585
(51,856)
$520,729
2007
1.02% Japanese yen unsecured bonds due 2010
2.02% Japanese yen unsecured bonds due 2013
Loans(principally from banks and insurance companies)
Less current portion
ZEON CORPORATION 2008 3131
The aggregate annual maturities of long-term debt subsequent to March 31,2008 are summarized as follows:
8. Assets pledged as collateralAssets pledged as collateral at March 31,2008 and 2007 consisted of the following:
9. Supplementary Information to the Consolidated Balance SheetsBalances with unconsolidated subsidiaries and affiliates at March 31,2008 and 2007 were principally as follows:
10. Depreciation and AmortizationDepreciation and amortization charges for the years ended March 31,2008 and 2007 were ¥19,497million ($194,581thousand) and ¥16,245million ($162,126thousand), respectively.
11. Research and Development ExpensesResearch and development expenses included in selling, general and administrative expenses for the years ended March 31,2008 and 2007 were ¥12,276million ($122,515thousand) and ¥11,745million ($117,216thousand), respectively.
■Data & Financial Statements
Millions of yenYear ending March 31, Thousands of U.S. dollars
¥9,336
10,000
700
10,142
21,999
¥52,177
$93,174
99,800
6,986
101,218
219,551
$520,729
2010
2011
2012
2013
2014 and thereafter
Millions of yen Thousands of U.S. dollars
¥-
25
3,632
2008
¥26
25
5,075
2007 2008
$259
250
50,649
$-
250
36,248
2007
Time deposits
Land
Investment securities
Millions of yen Thousands of U.S. dollars
¥7,222
26
680
101
2008
¥7,295
13
1,112
126
2007 2008
$72,804
130
11,098
1,257
$72,076
259
6,786
1,008
2007
Other current assets
Payables, other
Accrued expenses
Other current liabilities
32 ZEON CORPORATION 2008 32
12. Retirement BenefitsThe Company and certain domestic consolidated subsidiaries have defined contribution pension plans, advanced retirement allowanceplans and lump-sum severance indemnity plans.Certain foreign consolidated subsidiaries have defined benefit pension plans covering substantially all their employees.
The table below sets forth funded status of the plans and the amounts recognized in the balance sheets at March 31,2008 and 2007 :
Retirement benefit expenses related to the plans, including amortization of the unfunded projected benefit obligation for the years ended March 31, 2008 and 2007 are summarized as follows:
The assumptions at March 31,2008 and 2007, which were used in determining retirement benefit expenses and the allowance foremployees' retirement benefits shown above were as follows:
Millions of yen Thousands of U.S. dollars
(¥24,281)
10,621
(13,660)
¥-
2,774
(405)
(384)
(¥11,675)
2008
(¥24,758)
10,254
(14,504)
¥-
5,209
(317)
(631)
(¥10,243)
2007 2008
($247,086)
102,335
(144,751)
$-
51,986
(3,164)
(6,297)
($102,226)
($242,325)
105,997
(136,328)
$-
27,685
(4,042)
(3,832)
($116,517)
2007
Projected benefit obligation
Plan assets at fair value
Projected benefit obligation in excess of plan assets
Unrecognized net retirement benefit obligation at transition
Unrecognized net actuarial loss
Unrecognized prior service cost
Prepaid pension cost
Allowance for employees' retirement benefits
Millions of yen Thousands of U.S. dollars
¥845
926
(728)
364
(23)
1,384
433
¥1,817
2008
¥766
892
(601)
177
(24)
1,210
432
¥1,642
2007 2008
$7,645
8,902
(5,998)
1,766
(240)
12,075
4,312
$16,387
$8,433
9,242
(7,265)
3,633
(230)
13,813
4,321
$18,134
2007
(a) Service cost
(b) Interest cost
(c) Expected return on plan assets
(d) Allocation of actuarial loss
(e) Amortization of prior service cost
(f) Net retirement benefit expenses [(a)+(b)+(c)+(d)+(e)]
(g) Employer match contribution
to defined contribution pension plans
(h) Total [(f)+(g)]
2008
Flat allocation
2.5%~6.0%
5.0%~8.3%
9~13 years
9~13 years mainly
2007
Flat allocation
2.5%~5.8%
4.7%~8.0%
9~13 years
9~13 years mainly
Allocation of retirement benefit expenses
Discount rates
Expected rates of return on plan assets
Period of amortization of past service cost
Period of allocation of actuarial loss
ZEON CORPORATION 2008 3333
■Data & Financial Statements
13. Income TaxesThe significant components of deferred tax assets and liabilities are summarized as follows:
A reconciliation of the differences between the statutory tax rate and the effective tax rates for the years ended March 31, 2008 and 2007 is as follows:
2008
40.0%
11.4
(5.8)
1.9
47.5
2007
40.0%
-
(4.4)
1.7
37.3
Statutory tax rate
Increase(reduction)in taxes resulting from:
Unrecognized tax effect of deficit subsidiaries
Tax credit
Other
Effective tax rates
Millions of yen Thousands of U.S. dollars
¥1,342
539
1,121
-
-
365
686
4,830
-
617
2,050
-
-
1,618
13,168
(3,660)
9,508
(1,087)
(311)
(411)
(723)
(936)
-
(3,477)
(379)
(7,324)
¥2,184
2008
¥747
551
1,110
142
440
656
730
4,597
56
-
1,000
12
207
759
11,007
(1,480)
9,527
(1,258)
(311)
(411)
(798)
(612)
(36)
(9,069)
(347)
(12,842)
(¥3,315)
2007 2008
$7,455
5,499
11,078
1,417
4,391
6,547
7,285
45,878
559
-
9,980
120
2,066
7,575
109,850
(14,770)
95,080
(12,555)
(3,104)
(4,102)
(7,964)
(6,108)
(359)
(90,509)
(3,463)
(128,164)
($33,084)
$13,393
5,379
11,187
-
-
3,643
6,846
48,204
-
6,158
20,459
-
-
16,148
131,417
(36,527)
94,890
(10,848)
(3,104)
(4,102)
(7,216)
(9,342)
-
(34,701)
(3,781)
(73,094)
$21,796
2007
Deferred tax assets:
Inventories
Investment securities
Net unrealized gain
Allowance for doubtful accounts
Accrued enterprise tax
Payables, other
Accrued expenses
Allowance for employees' retirement benefits
Retirement allowances for directors and statutory auditors
Allowance for repairs
Operating losses carried forward
Foreign exchange loss
Allowance for environmental remediation
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Land
Investment securities
Reserve for deferred gain on fixed assets for tax purposes
Retained earnings
Foreign exchange gain
Net unrealized holding gain on available-for -sale securities
Other
Total deferred tax liabilities
Net deferred tax assets
34 ZEON CORPORATION 2008 34
14. Contingent LiabilitiesContingent liabilities at March 31, 2008 and 2007 were as follows:
15. LeasesLease payments relating to finance lease transactions accounted for as operating leases amounted to ¥267million($2,665thousand) and ¥564million ($5,629thousand) for the years ended March 31, 2008 and 2007, respectively. Future minimum lease payments (including the interest portion thereon) subsequent to March 31,2008 and 2007 for finance leasesaccounted for as operating leases are summarized as follows:
Future minimum lease payments (including the interest portion thereon) subsequent to March 31, 2008 and 2007 for operating leasesare summarized as follows:
Millions of yen Thousands of U.S. dollars
¥-
3,117
2008
¥5
4,377
2007 2008
$50
43,683
$-
31,108
2007
Notes discounted and endorsed
Guarantees
Millions of yen Thousands of U.S. dollars
¥264
409
¥673
2008
¥400
588
¥988
2007 2008
$3,992
5,868
$9,860
$2,635
4,082
$6,717
2007
Due within one year
Due after one year
Total
Millions of yen Thousands of U.S. dollars
¥165
524
¥689
2008
¥172
123
¥295
2007 2008
$1,717
1,228
$2,945
$1,647
5,230
$6,877
2007
Due within one year
Due after one year
Total
In May 2007, ZEON Corporation and its European subsidiaries,ZEON Europe GmbH and ZEON Chemicals Europe Ltd.(collectively "ZEON") received a Statement of Objections fromthe European Commission with respect to an investigation intothe NBR (acrylonitrile butadiene rubber) market in Europe.ZEON carefully reviewed the Statement of Objections and inJune 2007 filed its reply with the European Commission. InJanuary 2008, the European Commission rendered a decision to
impose a fine of 5.36 million Euro (approximately 840 millionYen) on ZEON for a certain period between 2000 and 2002. InMarch 2008, ZEON decided not to appeal to the court againstthe decision, taking into consideration all factors including thecost of long and burdensome litigation. The fine was paid inApril 2008 and reflected in the consolidated financialstatements for the fiscal year ended March 31, 2008.
16. SecuritiesThe fair value at March 31, 2008 and 2007 of available-for-sale securities is summarized as follows:
Total sales of available-for-sale securities and the related net realized gain for the years ended March 31, 2008 and 2007 were as follows:
Securities whose fair value was not known as of March 31, 2008 and 2007 principally consisted of the following:
ZEON CORPORATION 2008 35
■Data & Financial Statements
35
Millions of yen Thousands of U.S. dollars
¥100
4
2008
¥12
1
2007 2008
$120
10
$998
40
2007
Total sales
Net realized gain
Millions of yen Thousands of U.S. dollars
¥-
-
3,397
-
-
2008
¥4
-
3,464
-
-
2007 2008
$40
-
34,571
-
-
$-
-
33,902
-
-
2007
Held-to-maturity securities:
Corporate bonds
Municipal bonds
Available-for-sale securities:
Unlisted equity securities
Unlisted foreign bond
Money management fund
Millions of yenCurrent fiscal year (As of March 31, 2008)
Thousands of U.S. dollars
¥19,360
-
¥19,360
¥3,140
-
¥3,140
¥22,500
Acquisition cost
¥28,731
-
¥28,731
¥2,448
-
¥2,448
¥31,179
Fair value
¥9,371
-
¥9,371
(¥692)
-
(¥692)
¥8,679
Unrealized gain (loss)
$193,214
-
$193,214
$31,337
-
$31,337
$224,551
Acquisition cost
$286,737
-
$286,737
$24,431
-
$24,431
$311,168
Fair value
$93,523
-
$93,523
($6,906)
-
($6,906)
$86,617
Unrealized gain (loss)
Securities whose fair value exceeds their acquisition cost:
Equity securities
Bonds and debentures
Subtotal
Securities whose acquisition cost exceeds their fair value:
Equity securities
Bonds and debentures
Subtotal
Total
Millions of yenPrevious fiscal year (As of March 31, 2007)
Thousands of U.S. dollars
¥18,916
-
¥18,916
¥106
2
¥108
¥19,024
Acquisition cost
¥42,198
-
¥42,198
¥100
2
¥102
¥42,300
Fair value
¥23,282
-
¥23,282
(¥6)
-
(¥6)
¥23,276
Unrealized gain (loss)
$188,782
-
$188,782
$1,057
20
$1,077
$189,859
Acquisition cost
$421,138
-
$421,138
$997
20
$1,017
$422,155
Fair value
$232,356
-
$232,356
($60)
-
($60)
$232,296
Unrealized gain (loss)
Securities whose fair value exceeds their acquisition cost:
Equity securities
Bonds and debentures
Subtotal
Securities whose acquisition cost exceeds their fair value:
Equity securities
Bonds and debentures
Subtotal
Total
36 ZEON CORPORATION 2008 36
The carrying amounts of held-to-maturity securities and available-for-sale securities which had maturities as of March 31, 2008 and 2007 were as follows:
17. Fair value of derivatives positionsThe fair value of derivatives positions at March 31, 2008 and 2007 is summarized as follows:
Current fiscal year (As of March 31, 2008)Millions of yen Thousands of U.S.dollars
¥-
¥-
5 to 10years
¥-
¥-
Over10years
$-
$-
Within1year
$-
$-
1 to 5years
$-
$-
5 to 10years
$-
$-
Over10years
¥-
¥-
1 to 5years
¥-
¥-
Within1year
Bonds
Total
Previous fiscal year (As of March 31, 2007)Millions of yen Thousands of U.S.dollars
¥-
¥-
5 to 10years
¥-
¥-
Over10years
$40
$40
Within1year
$20
$20
1 to 5years
$-
$-
5 to 10years
$-
$-
Over10years
¥2
¥2
1 to 5years
¥4
¥4
Within1year
Bonds
Total
Millions of yenCurrent fiscal year (As of March 31, 2008)
Thousands of U.S. dollars
¥1,680
829
476
¥2,985
Contractamount
¥1,699
825
(24)
¥2,500
Fair value
(¥19)
(4)
(24)
(¥47)
Unrealizedgain(loss)
$16,766
8,273
4,750
$29,789
Contractamount
$16,956
8,234
(240)
$24,950
Fair value
($190)
(39)
(240)
($469)
Unrealizedgain(loss)
Forward foreign exchange contracts:
To sell foreign currencies
To buy foreign currencies
Coupon swaps
Millions of yenPrevious fiscal year (As of March 31, 2007)
Thousands of U.S. dollars
¥5,349
678
456
¥6,483
Contractamount
¥5,284
665
(17)
¥5,932
Fair value
¥65
(13)
(17)
¥35
Unrealizedgain(loss)
$53,383
6,766
4,551
$64,700
Contractamount
$52,735
6,637
(170)
$59,202
Fair value
$648
(129)
(170)
$349
Unrealizedgain(loss)
Forward foreign exchange contracts:
To sell foreign currencies
To buy foreign currencies
Coupon swaps
ZEON CORPORATION 2008 37
■Data & Financial Statements
37
18. Other Income (Expenses) - Other, NetOther income (expenses) - other, net for the years ended March 31, 2008 and 2007 consisted of the following:
19. Segment InformationThe business and geographical segments of the Company and its consolidated subsidiaries for the years ended March 31,2008 and 2007 are outlined as follows:
Business Segments Current fiscal year (From April 1, 2007, to March 31, 2008)
Millions of yen
¥194,066
1,646
195,712
179,141
¥16,571
¥169,909
8,535
10,556
Elastomer
¥47,153
-
47,153
39,544
¥7,609
¥82,873
8,937
22,395
Specialtymaterials
¥61,706
639
62,345
61,129
¥1,216
¥36,103
718
590
Others
¥302,925
2,285
305,210
279,814
¥25,396
¥288,885
18,190
33,541
Total
¥-
(2,285)
(2,285)
(2,157)
(¥128)
¥46,845
1,307
1,959
Eliminations/Corporate
¥302,925
-
302,925
277,657
¥25,268
¥335,730
19,497
35,500
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets, depreciation and capital expenditures:
Total assets
Depreciation
Capital expenditures
Millions of yen Thousands of U.S. dollars
¥72
184
(1,849)
(3,797)
(1,160)
(1,123)
611
(¥7,062)
2008
¥102
1
125
(1,488)
(811)
(489)
380
(¥2,180)
2007 2008
$1,018
10
1,248
(14,850)
(8,094)
(4,880)
3,792
($21,756)
$719
1,836
(18,453)
(37,894)
(11,577)
(11,208)
6,098
($70,479)
2007
Rental income
Gain on sales of property, plant and equipment
Foreign exchange gain (loss), net
Loss on disposal of inventories
Loss on disposal of property, plant and equipment
Litigation costs
Other, net
38 ZEON CORPORATION 2008 38
Previous fiscal year (From April 1, 2006, to March 31, 2007)
Current fiscal year (From April 1, 2007, to March 31, 2008)
Previous fiscal year (From April 1, 2006, to March 31, 2007)
Millions of yen
¥176,222
1,481
177,703
158,176
¥19,527
¥156,601
6,829
9,284
Elastomer
¥47,197
-
47,197
37,451
¥9,746
¥68,209
7,377
16,307
Specialtymaterials
¥58,194
1,030
59,224
58,352
¥872
¥29,910
730
1,305
Others
¥281,613
2,511
284,124
253,979
¥30,145
¥254,720
14,936
26,896
Total
¥-
(2,511)
(2,511)
(2,541)
¥30
¥60,728
1,309
1,984
Eliminations/Corporate
¥281,613
-
281,613
251,438
¥30,175
¥315,448
16,245
28,880
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets, depreciation and capital expenditures:
Total assets
Depreciation
Capital expenditures
Thousands of U.S.dollars
$1,936,786
16,427
1,953,213
1,787,834
$165,379
$1,695,699
85,180
105,349
Elastomer
$470,589
-
470,589
394,651
$75,938
$827,076
89,192
223,503
Specialtymaterials
$615,829
6,377
622,206
610,070
$12,136
$360,309
7,165
5,888
Others
$3,023,204
22,804
3,046,008
2,792,555
$253,453
$2,883,084
181,537
334,740
Total
$-
(22,804)
(22,804)
(21,527)
($1,277)
$467,515
13,044
19,551
Eliminations/Corporate
$3,023,204
-
3,023,204
2,771,028
$252,176
$3,350,599
194,581
354,291
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets, depreciation and capital expenditures:
Total assets
Depreciation
Capital expenditures
Thousands of U.S.dollars
$1,758,703
14,780
1,773,483
1,578,603
$194,880
$1,562,884
68,154
92,655
Elastomer
$471,028
-
471,028
373,762
$97,266
$680,729
73,623
162,745
Specialtymaterials
$580,778
10,279
591,057
582,355
$8,702
$298,503
7,285
13,024
Others
$2,810,509
25,059
2,835,568
2,534,720
$300,848
-
$2,542,116
149,062
268,424
Total
$-
(25,059)
(25,059)
(25,359)
$300
$606,068
13,064
19,800
Eliminations/Corporate
$2,810,509
-
2,810,509
2,509,361
$301,148
$3,148,184
162,126
288,224
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets, depreciation and capital expenditures:
Total assets
Depreciation
Capital expenditures
Notes: 1. According to the ZEON Group's segmentation categories for business management purposes2. Major products by business segment are as follows:
3. Change in the depreciation method of property, plant and equipment
Geographical Segments Current fiscal year (From April 1, 2007, to March 31, 2008)
Previous fiscal year (From April 1, 2006, to March 31, 2007)
ZEON CORPORATION 2008 39
■Data & Financial Statements
As described in the "2. Summary of Significant AccountingPolicies", effective from the fiscal year ended March 31,2008, pursuant to an amendment to the Corporate Tax Law,the Company and its domestic consolidated subsidiaries havedepreciated Property, plant and equipment acquired on andafter April 1, 2007 in accordance with the method stipulatedin the amended Corporation Tax Low.As a result of this change, compared with the previousaccounting method, operating expenses for the yearincreased ¥288 million ($2,874 thousand) for "Elastomer,"¥366 million ($3,653 thousand) for "Specialty materials" and¥141 million ($1,407 thousand) for "Others," whereasoperating income decreased by the same amount for the
respective segments.Also, effective from the fiscal year ended March 31, 2008,the property, plant and equipment acquired before April 1,2007 for which the allowable limit on the depreciableamount has been reached are to be depreciated evenly overfive years from the following fiscal year.As a result of this change, compared with the previousaccounting method, operating expenses for the yearincreased ¥647 million ($6,457 thousand) for "Elastomer,"¥126 million ($1,257 thousand) for "Specialty materials" and¥57 million ($569 thousand) for "Others," whereas operatingincome decreased by the same amount for the respectivesegments.
39
Millions of yen
¥24,675
8,763
33,438
29,958
¥3,480
¥27,712
NorthAmerica
¥239,372
29,585
268,957
248,173
¥20,784
¥262,278
Japan
¥20,854
662
21,516
20,958
¥558
¥10,623
Europe
¥18,024
1,832
19,856
19,240
¥616
¥8,925
Asia
¥302,925
40,842
343,767
318,329
¥25,438
¥309,538
Total
¥-
(40,842)(40,842)(40,672)(¥170)
¥26,192
Eliminations/Corporate
¥302,925
-
302,925
277,657
¥25,268
¥335,730
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets at end of year:
Total assets
Millions of yen
¥23,284
8,212
31,496
28,233
¥3,263
¥30,079
NorthAmerica
¥226,514
24,423
250,937
224,971
¥25,966
¥231,297
Japan
¥18,080
462
18,542
18,023
¥519
¥10,388
Europe
¥13,735
1,526
15,261
14,863
¥398
¥5,813
Asia
¥281,613
34,623
316,236
286,090
¥30,146
¥277,577
Total
¥-
(34,623)(34,623)(34,652)
¥29
¥37,871
Eliminations/Corporate
¥281,613
-
281,613
251,438
¥30,175
¥315,448
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets at end of year:
Total assets
Synthetic rubbers, Synthetic latices, Chemicals (e.g., C5 Petroleum resins, Thermoplastic elastomers)
Specialty Chemicals (e.g., Synthetic aroma, Synthetic organic pharmaceuticals), Information materials(e.g., Electronic materials, Polymerized toners), Specialty plastics (Cyclo-olefin polymer and fineprocessed products with Cyclo-olefin polymer)RIM blending liquid, RIM molding products, Medical equipment, Butadiene extraction technology,Outsourced production of vinyl chloride resins, Vinyl chloride compounds, Packaging and distributionmaterials, Housing materials, etc.
Elastomer
Major business line and productsBusiness segment
Specialty materials
Others
40 ZEON CORPORATION 2008 40
Current fiscal year (From April 1, 2007, to March 31, 2008)
Previous fiscal year (From April 1, 2006, to March 31, 2007)
Overseas Sales Sales are analyzed geographically as follows:
20. Subsequent EventsAppropriations of retained earnings The following appropriations of retained earnings of the Company were approved at a shareholders' meeting held on June 27, 2008:
Thousands of U.S.dollars
$246,257
87,455
333,712
298,982
$34,730
$276,567
NorthAmerica
$2,388,943
295,259
2,684,202
2,476,776
$207,426
$2,617,545
Japan
$208,124
6,607
214,731
209,162
$5,569
$106,018
Europe
$179,880
18,283
198,163
192,016
$6,147
$89,072
Asia
$3,023,204
407,604
3,430,808
3,176,936
$253,872
$3,089,202
Total
$-
(407,604)(407,604)(405,908)($1,696)
$261,397
Eliminations/Corporate
$3,023,204
-
3,023,204
2,771,028
$252,176
$3,350,599
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets at end of year:
Total assets
Thousands of U.S.dollars
$232,375
81,956
314,331
281,766
$32,565
$300,190
NorthAmerica
$2,260,619
243,743
2,504,362
2,245,220
$259,142
$2,308,353
Japan
$180,439
4,611
185,050
179,870
$5,180
$103,673
Europe
$137,076
15,230
152,306
148,333
$3,973
$58,014
Asia
$2,810,509
345,540
3,156,049
2,855,189
$300,860
$2,770,230
Total
$-
(345,540)(345,540)(345,828)
$288
$377,954
Eliminations/Corporate
$2,810,509
-
2,810,509
2,509,361
$301,148
$3,148,184
Consolidated
Ⅰ. Sales and operating income:
Sales to third parties
Inter-group sales and transfers
Total
Operating expenses
Operating income
Ⅱ. Assets at end of year:
Total assets
Millions of yen Thousands of U.S. dollars
¥170,104
30,757
31,161
67,758
3,145
¥302,925
2008
¥157,267
29,647
29,285
62,064
3,350
¥281,613
2007 2008
$1,569,532
295,878
292,265
619,401
33,433
$2,810,509
$1,697,645
306,956
310,988
676,228
31,387
$3,023,204
2007
Sales designated for:
Japan
North America
Europe
Asia
Other
Total
¥1,416 $14,132Cash dividends (¥6.00 = $0.06 per share)
Millions of yen Thousands of U.S. dollars
ZEON CORPORATION 2008 4141
42 ZEON CORPORATION 2008
ZEON Chemicals Europe Ltd.Sully,Vale of Glamorgan, CF64 5YU, United KingdomTEL: +44-1446-725400 FAX: +44-1446-747988Business: Manufacture and sale of synthetic rubbers.Founded: February 6, 1989Capital: STG£28,300,000Percentage owned: ZEON Corporation 100%
ZEON Europe SpanishRepresentative OfficeC/Muntaner, 479-483 6
。6a, 08021 Barcelona, Spain
TEL: +34-93-417-6900 FAX: +34-93-254-0248Founded: December 11, 1996
ZEON Europe GmbHNiederkasseler Lohweg 177,40547 Dusseldorf, GermanyTEL: +49-211-52670 FAX: +49-211-5267160Business: Sale, export, and import of synthetic rubbersand resins.Founded: December 7, 1989Capital: EUR 2,659,000Percentage owned: ZEON Corporation 100%
ZEON France S.A.22, rue Guynemer 78600 MAISONS LAFFITTE,FranceTEL: +33-1-39-12-75-20 FAX: +33-1-39-12-75-26Business: Sale of synthetic rubbers and resins in France.Founded: February 15,1990Capital: EUR 480,000Percentage owned: ZEON Europe GmbH 100%
ZEON Italia S.r.l.Via G.B. Pirelli, 11, 20124 Milano, ItalyTEL: +39-2-671-417-03 FAX: +39-2-671-417-20Business: Sale of synthetic rubbers and resins in Italy.Founded: June 29, 1990Capital: EUR 26,000Percentage owned: ZEON Europe GmbH 100%
ZEON Asia Pte Ltd.331 North Bridge Road,#20-01/02,Odeon Towers,Singapore 188720TEL: +65-6332-2338 FAX: +65-6332-2339Business: Sale, export, and import of syntheticrubbers,synthetic latex and hydrocarbon resins.Founded: December 4, 1997 Capital: S$ 500,000Percentage owned: ZEON Corporation 100%
Malaysia BranchUnit 208, Block B, Phileo Damansara 2, No15,Jalan16/11, Off Jalan Damansara, 46350 PetalingJaya Selangor MalaysiaTEL: +603-7955-2032 FAX: +603-7955-2032
Shanghai ZEON Co., Ltd.No.380, Shennan Road, Zinzhuang IndustryDistrict,Minhang, Shanghai, 201108, ChinaTEL: +86-21-6489-6160 FAX: +86-21-6442-0569(Push "0" after announcements)Business: Manufacture and sale of rubber compounds.Founded: January 27, 2002 Capital: US$ 400,000Percentage owned: ZEON Corporation 100%
ZEON Trading (Shanghai) Co., Ltd.Room.319, No.500, Bingke Road, Wai Gao Qiao FreeTrade Zone, Shanghai, 200131, ChinaTEL: +86-21-6489-3343 FAX: +86-21-6442-0569(Push "0" after announcements)Business: Sale export and import of synthetic rubbersand chemicals and related products.Founded: March 19, 2002 Capital: US$ 200,000Percentage owned: ZEON Corporation 100%
ZEON Chemicals (Thailand) Co., Ltd.3 Soi G-14, Pakorn-Songkhrorad Road, TambolHuaypong, Amphur Muangrayong, Rayong 21150,ThailandTEL: +66-3-868-5973~5 FAX: +66-3-868-5972Business: Manufacture and sale of hydrocarbon resins.Founded: May 9, 1996 Capital: BHT 350,000,000Percentage owned: ZEON Corporation 73.9%
ZEON Advanced Polymix Co.,Ltd.591 UBCII BLDG, Office No.2206, 22thFL, Sukhumvit33rd,Klongton Nua, Wattana, Bangkok 10110 ThailandTEL: +66-2-261-0175 FAX: +66-2-261-0172Business: Manufacture and sale of rubber compounds.Founded: April 26, 1995 Capital: BHT 100,000,000Percentage owned: ZEON Corporation 40%
PlantInternational Polymer Park, No.112/2 Mu2 SoiNikom 13, Tmbol Makham Ging,Amphur Nikompattana,Rayong Province 21180, ThailandTEL: +66-38-893-565 FAX: +66-38-893-569
ZEON Shinhwa Inc.
ZEON Europe GmbH
Suzuhou Rui HongElectronic Chemicals Co., Ltd.
Shanghai ZEON Co.,Ltd.
ZEON Trading(Shanghai) Co.,Ltd.
International Operations andOverseas Network
ZEON Chemicals (Thailand) Co., Ltd.
ZEON Advanced Polymix Co., Ltd.
ZEON Chemicals Europe Ltd.
ZEON Italia S.r.l.
ZEON France S.A.
ZEON Europe GmbHSpain Office
ZEON Asia Pte LTD.
ZEON CORPORATION 2008 43
■Overseas & Corporate Data
ZEON Polymix (Guangzhou) Co., Ltd.Jing Quan 1st Road, Yong He Economic Zone,Guangzhou, 511356, ChinaTEL: +86-20-3222-1171 FAX: +86-20-3222-1820Business: Manufacture and sale of rubber compounds.Founded: July 16, 2003 Capital: US$ 3,000,000Percentage owned: ZEON Corporation 70%
Suzhou Rui Hong ElectronicChemicals Co., Ltd.81, Su Li Road, Wuzhong, Suzuhou, ChinaTEL: +86-512-5284759 FAX: +86-512-5279926Business: Manufacture and sale of photo resist.Founded: September 24, 1993Capital: RMB 15,340,000Percentage owned: ZEON Corporation 25.6%
ZEON Shinhwa Inc.16F Star Tower, 737, Yeoksam-Dong, Kangnam-Gu,Seoul,135-984, KoreaTEL: +82-2-761-7030 FAX: +82-2-786-7221Business: Sale of electronic materials.Founded: June 17, 1997 Capital: WON 100,000,000Percentage owned: ZEON Corporation 51%
ZEON CSC CORPORATION3rd Fl.266,Sec1,Wen Hwa 2 Road ,Linkou Hsiang,Taipei Hsien, Taiwan,R.O.CTEL: +886-2-2609-2156 FAX: +886-2-2600-6413Business:Sale of optical materials.Founded: March 26, 2001 Capital: NTD 20,000,000Percentage owned: ZEON Corporation 51%
R&D Center4111 Bells Lane, Louisville, Kentucky 40211, U.S.A.TEL: +1-502-775-7765 FAX: +1-502-775-7783
Kentucky Plant4100 Bells Lane, Louisville, Kentucky 40211, U.S.A.TEL: +1-502-775-7600 FAX: +1-502-775-7614
Mississippi Plant1301 West Seventh Street, Hattiesburg, Mississippi39401, U.S.A.TEL: +1-601-583-6020 FAX: +1-601-583-6032
Texas Plant11235 Choate Road, Pasadena, Texas 77507, U.S.A.TEL: +1-281-474-9693 FAX: +1-281-474-0966
ZEON Chemicals L.P.4100 Bells Lane, Louisville, Kentucky 40211, U.S.A.TEL: +1-502-775-7700 FAX: +1-502-775-7714Business: Manufacture and sale of synthetic rubbers.Founded: September 12, 1989Capital: US$ 36,000,000Percentage owned: ZEON Corporation 100%
Sales & Marketing Office4111 Bells Lane, Louisville, Kentucky 40211, U.S.A.TEL: +1-800-735-3388 FAX: +1-502-775-2055TEL: +1-502-775-2000
ZEON do Brasil LtdaRua Arandu, 1544, Sao Paulo SP, BrazilTEL:+55-11-5501-2120 FAX:+55-11-5501-2122Business: Sale of synthetic rubbers and resinsin South America.Founded: April 1, 2005Capital: R$ 1,000Percentage owned: ZEON Chemicals L.P. 99%
ZEON do Brasil Ltda
ZEON Chemicals L.P.Texas Plant
ZEON Chemicals L.P.Mississippi Plant
ZEON Chemicals L.P.
ZEON Chemicals L.P.Kentucky Plant
ZEON Chemicals L.P.R&D Center
ZEON CSC CORPORATION
ZEON CORPORATION
ZEON Polymix (Guangzhou) Co., Ltd.
Head Office
44 ZEON CORPORATION 2008
Corporate History
Apr. 1950 Nippon ZEON Co., Ltd. founded to manufacture and sellsynthetic resins with starting capital of 5 million yen.Head Office set up within Nippon Light Metal Co., Ltd.(7-3 Ginza Nishi, Chuo-ku, Tokyo).
Apr. 1952 Polyvinyl chloride resin (PVC) production begins atKanbara Plant (Shizuoka Prefecture).
Nov. 1956 PVC production begins at Takaoka Plant (ToyamaPrefecture).
Jul. 1959 Production of Japan’s first synthetic rubbers begins atKawasaki Plant (Kanagawa Prefecture).Central Research Laboratory opens.
Sep. 1961 Listed on the Tokyo Stock Exchange. Listed on the Osakaand Nagoya Stock Exchanges in October.
Jun. 1965 Head Office moves to Marunouchi, Chiyoda-ku, Tokyo.
Aug. 1965 Butadiene and SBR production using the GPB Process(Nippon ZEON's proprietary technology for extractingbutadiene) begins at Tokuyama Plant (YamaguchiPrefecture).
Mar. 1967 Kanbara Plant closed for rationalization.
Sep. 1969 PVC production begins at Mizushima Plant (OkayamaPrefecture).
Nov. 1971 GPI (ZEON’s proprietary technology for extractingisoprene) facility completed in Mizushima Plant andproduction of IR at the plant.
Oct. 1981 Spins off the Processed Products Division to establishZEON Kasei Co., Ltd. (now a consolidated subsidiary).
Jul. 1988 Establishes ZEON Chemicals, Inc. in the U.S. The company,now a consolidated subsidiary, is engaged in localproduction of hydrogenated acrylonitril butadiene rubber.
Mar. 1989 Establishes ZEON Chemicals Europe Limited in the U.K.The company, now a consolidated subsidiary, acquires thenitrile rubber division of BP Chemicals Ltd. and startsoperations on April 1.
Sep. 1989 Establishes ZEON Chemicals USA, Inc. in the U.S. Thefollowing month the company acquires the specialtyrubber division of BF Goodrich Chemical Co. of the U.S.
Oct. 1993 Moves into the electronic materials business in China andestablishes Suzuhou Rui Hong Electronic Chemicals Co.,Ltd., a joint venture with Suzuhou Electronic MaterialsCo., Ltd. and Marubeni Corporation.
Jul. 1995 Spins off vinyl chloride business, transferring it to ShinDai-Ichi Vinyl Corporation.
May. 1996 Establishes ZEON Chemicals (Thailand) Co., Ltd. toproduce C5 hydrocarbon resins. The company, now aconsolidated subsidiary, starts production in April 1998.
Apr. 1997 Completes Yonezawa Plant (Yamagata Prefecture), nowZEON Chemicals Yonezawa Co., Ltd., to manufacturefine chemicals.
Sep. 1997 ZEON Chemicals USA, Inc. (now a consolidatedsubsidiary) acquires the goodwill of acrylic rubberbusiness from EniChem Elastomerie,Inc. of Italy.
Mar. 1999 U.S.-based ZEON Chemicals L.P. (now a consolidatedsubsidiary) acquires DSM Copolymer's NBR business inNorth America.
Sep. 1999 ZEON Chemicals L.P. (now a consolidated subsidiary)
acquires a specialty rubber operation from Goodyear Tire& Rubber, of the U.S.
Mar. 2000 Discontinues production of PVC at Mizushima Plant andwithdraws from the PVC business.
Jun. 2000 Changes the English company name to ZEON Corporation.
Jul. 2000 Tokyo Zairyo Co., Ltd. (now a consolidated subsidiary)
and ZEON Trading Co., Ltd. merge.
Jun. 2001 ZEON Kasei Co., Ltd. (now a consolidated subsidiary) andAsahi Chemical Co., Ltd. merge.
Dec. 2001 Completes a factory for processing light-guide plates forhighly functional (thermoplastic transparent) resin COPliquid crystal displays, along with an optical film technicalcenter in Takaoka .
Mar. 2003 Applies for delisting of stock on the Nagoya StockExchange. (Delisted in April 2003.)
Aug. 2003 Transfers DCPD-RIM operations to RIMTEC Corporationby means of a company breakup.
Mar. 2005 Head office moves to present location.
May. 2006 Completes Next-Generation R&D Building No. 10.
Sep. 2007 Optes Co.,Ltd.(now a consolidated subsidiary) completesthe Himi Plant at the Toyama Plant.
Apr. 2008 Completes the Integrated Production Center (IPC) at theMizushima Plant.
1998Year Award issuing organization Award name and technology
Environmental Protection Agency (U.S.A) Stratospheric Ozone Protection Award (October 27)
Environment Technology Award“Development and manufacturing of environmentally friendlyfluorinated materials.” (May 25)
The 8th Award “Development and evaluation of cyclic fluorinatedcompounds as environmentally safe materials.” (May 29)
The Green Sustainable Chemistry (GSC),Minister of theEnvironmenta Award
Japan Chemical Industry Association
Tsukuba Foundation for Chemical andBio-Technology
The Green Sustainable ChemistryNetwork (GSCN)
2000
2000
2003
ZEORORA®-H received the Green & Sustainable Chemistry, Minister of the Environment AwardUnique fluorine cleaning solvent “ZEORORA®-H”, having no harmful effects on the ozone layer and less impact on global warming. We werehonored to receive the Green and Sustainable Chemistry (GSC), Minister of the Environment Award. In addition, ZEORORA®-H has receivedmany other commendations,including the U.S. Environmental Protection Agency's Stratospheric Ozone Protection Award, recognizing itsoutstanding features as an environment-friendlycleaning agent. It is widely used in products such as electronics components as a degreasingcleaner in place of CFC or chlorine solvents, and it is being extensively applied to many fields.
ZEON CORPORATION 2008 45
■Overseas & Corporate DataCorporate Data
ZEON Corporation
Shin Marunouchi Center Building, 1-6-2 Marunouchi,
Chiyoda-ku, Tokyo, 100-8246, Japan
Established April 12,1950
Capital ¥24,211 million
Number of Employees 3,166
(Consolidated: March 31, 2008)
Directors and Auditors (as of June 27,2008)
President & CEO Naozumi Furukawa
Representative Tadao Natsuume
Executive Managing
Director
Managing Director Masafumi Miyamoto
Seiichi Okada
Tadayuki Minami
Kohei Arakawa
Yoshimasa Fushimi
Director Minero Iwata
Hiroshi Takegami
Kimiaki Tanaka
Shuichi Kakinuma
Standing Auditors Teruaki Hiramatsu
Shuichi Mitsubori
Auditors Yasuo Tominaga
Yuzuru Fujita
Tamiki Ishihara
Public Relations Dept. Tel : +81-3-3216-2747
Fax: +81-3-3216-0501
Export Sales Tel : +81-3-3216-1807
Fax: +81-3-3216-0503
Home Page http://www.zeon.co.jp/index_e.html
Principal Domestic Subsidiaries and Affiliates
Consolidated or Accounted for by the Equity
Consolidation Percentage Owned
Optes Inc. 100.0
ZEON Kasei Co., Ltd. 100.0
ZEON Polymix Inc. 100.0
ZEON Medical Inc. 100.0
ZEON Yamaguchi Co., Ltd. 100.0
ZEON North Co., Ltd. 100.0
ZEON Environmental Material Co., Ltd. 100.0
Tokyo Zairyo Co., Ltd. 58.4
ZEON F&B Co., Ltd. 100.0
RIMTEC Corporation 60.0
ZEON Logistical Materials Co., Ltd. 100.0
Equity methodPercentage Owned
ZEON Analysis Center Co., Ltd 100.0
Number of Stocks Issued 242,075,556
Number of Shareholders 14,092 (as of March 31, 2008)
Major Shareholders Yokohama Rubber Co., Ltd.Japan Trustee Services Bank, Ltd.The Master Trust Bank of Japan, Ltd.Asahi Mutual Life Insurance CompanyMizuho Corporate Bank, Ltd.Furukawa Electric Co., Ltd. CompanyAsahi Kasei Chemicals Corp.Japan Trustee Services Bank, Ltd.Mizuho Bank, Ltd.Sompo Japan Insurance Inc.
Distribution of Stock Ownership
Closing Date March 31st of each year
Stock Exchange Tokyo (First Section) Osaka (First Section)
Transfer Agent The Chuo Mitsui Trust and BankingCompany, Limited
Other corporate bodies 21.8%Financial Institutions 43.4%
Securities Companies 1.2%Foreign corporate bodies 16.1%
Individuals & Others 17.5%