44
Annual Report 2010 “Tsunagu” Technology Fujikura Ltd. ANNUAL REPORT 2010
Annual Report 2010“Tsunagu” Technology
5-1, Kiba 1-chome, Koto-ku, Tokyo 135-8512, JapanTel: +81-3-5606-1030Fax: +81-3-5606-1502URL: http://www.fujikura.co.jp
Printed in Japan
Fujik
ura
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Company Profile
Contents2 ConsolidatedFinancialHighlights
3 AMessagefromthePresident&CEO
6 FujikuraataGlance
7 BusinessStrategiesbySegment
7 Telecommunications
9 Electronics&Auto
11 MetalCable&Systems
11 RealEstate
13 AttheForefrontofR&D
15 CorporateGovernance
17 Directors,CorporateAuditorsandExecutiveOfficers
18 FinancialSection
19 Management’sDiscussionandAnalysisofFinancialPositionandOperatingResults
20 ConsolidatedBalanceSheets
22 ConsolidatedStatementsofIncome
23 ConsolidatedStatementsofChangesinNetAssets
25 ConsolidatedStatementsofCashFlows
26 NotestotheConsolidatedFinancialStatements
40 ReportofIndependentAuditors
41 GlobalNetwork
42 MainConsolidatedSubsidiaries/InvestorInformation
FujikuraLtd.wasestablishedasanelectricalwiringcompanyin1885,whenfounder
ZenpachiFujikurafiguredouthowtocreatewiresinsulatedbysilkandcottonwindingsfor
useinelectricalgenerators—cutting-edgetechnologyatthetime.Sincethen,theCompany
hasalwaysstayedaheadofthetimeswith“Tsunagu“(connection)technologies,developed
throughthemanufactureofelectricwiresandcableswiththeaimofcontributingtothe
advancementofsociety.Fujikuracontinuestodeliveramyriadofhighlyreliableproducts
inthetelecommunications,electronics,automotiveandenergyfieldsthroughitsnumerous
advancedtechnologies.
In2005,theCompany’s120thanniversary,wedeclaredourintenttostartanewwiththe
beginningofthe“Third60YearsofLeadership.”Westatedourmissiontocontributeto
thecreationofarichersocietyandtocreatevalueforcustomers,throughreformstoour
corporateculturebasedonournewphilosophyof“Mission,Vision,CoreValues”(MVCV).
Now,withitsbasicmanagementpolicyfocusingonprofitability,theFujikuraGroup
isproceedingwithits“Focus&Deep”strategy,reinforcingcraftsmanshipinmonozukuri
(manufacturing),regardingresearchasthesourceofits“metabolism”andensuringthat
everypersonintheFujikuraGroupworksasonetorealizetheGroup’smission—tocreate
customervaluewhilecontributingtosociety.
1
2006 2007 2008 2009 20100
10
20
30
40
50
0
50,000
100,000
150,000
200,000
250,000
300,000
2006 2007 2008 2009 20100
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2006 2007 2008 2009 2010
-20,000
-10,000
0
10,000
20,000
30,000
2006 2007 2008 2009 20100
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2006 2007 2008 2009 20100
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2006 2007 2008 2009 2010
Consolidated Financial HighlightsFujikura Ltd., and its Consolidated Subsidiaries
Millions of yen Thousands ofU.S. dollars
Years ended March 31 2006 2007 2008 2009 2010 2010
For the Year
Net Sales ¥503,090 ¥645,984 ¥659,482 ¥573,658 ¥503,527 $5,411,360
Income from Operations 39,758 34,508 20,376 231 17,934 192,736
Net Income (Loss) 24,990 21,484 4,504 (19,020) 2,567 27,592
Capital Expenditures 24,598 32,412 36,418 31,201 34,598 371,822
R&D Expenditures 12,252 12,291 13,990 14,989 13,491 144,987
At Year-End
Total Assets 465,358 536,766 537,452 481,494 489,749 5,263,299
Total Shareholders’ Equity 217,670 — — — — —
Total Net Assets — 254,638 230,731 189,342 193,386 2,078,308
Number of Employees 33,658 43,874 49,448 46,466 50,639
Yen U.S. dollars
Per Share Data
Net Income (Loss)—Primary ¥66.2 ¥57.3 ¥12.3 ¥(52.7) ¥7.1 $0.077
Net Income—Fully Diluted — — — — — —
Cash Dividends 10.0 10.0 10.0 7.5 5.0 0.054
Notes: 1. All dollar figures herein refer to U.S. currency amounts, which have been translated from yen amounts, for convenience only, at the rate of ¥93.05=US$1.00, the rate of exchange on March 31, 2010.
2. From the year ended March 31, 2007, as a result of reclassification due to the adoption of new accounting standards for presentation of net assets in the balance sheet, minority interests are included in total net assets.
Net Sales
(Millions of yen)
Income from Operations(Millions of yen)
Net Income (Loss) (Millions of yen)
Total Assets
(Millions of yen)
Total Net Assets(Millions of yen)
Shareholders’ Equity to Total Assets(%)
2
A Message from the President & CEO
Despite economic stimuli implemented by various countries,
FY2009 (the year ended March 31, 2010) began with the global
recession showing few promising signs with regard to overall
economic conditions. In the first half of the year, there were
concerns about a double dip in the economy, but evidence of
a rebound in exports due to a recovery in demand in emerging
economies such as China meant that the trend of diminished
consumer spending was coming to an end as a result of the
stimulus packages.
In the latter half of the fiscal year, declining corporate
earnings began to show signs of change driven by increased
exports, but the unemployment rate remains high with no signs
of improvement.
Overall, FY2009 showed some limited improvements, but
difficult conditions have continued and we remain far from a
recovery from the Lehman Shock.
Due to the effects of these economic conditions, the
Group’s management performance in terms of sales fell by
12.2% in FY2009, to ¥503.5 billion.
The decline in sales can be broken down into an effective
decline of approximately ¥31 billion due to the deterioration
of the economic environment; a decline of approximately ¥20
billion due to a fall in the price of copper, which is a material
used in the production of electrical cables; and a decline of
approximately ¥19 billion attributable to the strengthening of
the yen.
Assuming that a recovery in demand cannot be expected
and that sales will decline, we took Companywide measures
to lower manufacturing costs and reduce expenses in order to
secure a profit even under such circumstances. This led to an
increase in productivity and thorough cost reductions, lowering
overall expenses by ¥22 billion compared with the previous
fiscal year. As a result, operating income improved by ¥17.7
billion compared with the previous fiscal year, to ¥17.9 billion.
The loss caused by a fall in copper prices, which was a factor in
reduced profits last fiscal year, reversed significantly this fiscal
year due to more stable market prices and a revision of the
procurement mechanism.
Extraordinary losses amounted to ¥8.5 billion due to the
elimination and consolidation of overseas manufacturing
plants and provisions for the surcharge payment relating to the
Yoichi Nagahama, President & CEOYoichi Nagahama, President & CEO
�
antimonopoly violation. As a result, net income improved by
¥21.5 billion compared with the previous fiscal year, to ¥2.5
billion.
With regard to respective business segments, in
Telecommunications, sales of optical fiber and optical cable
have been solid overall due to demand related to fiber-to-
the-home (FTTH) in Japan and the expansion of the Chinese
market overseas. Connection components, such as optical
connectors used to build communications networks, were
also steady as a result of continued NGN-related demand.
Meanwhile, communications-related work and demand for
optical fusion splicers decreased, resulting in overall sales
in Telecommunications to fall to ¥107.3 billion, down 2.8%
compared with the previous fiscal year.
Stemming from factors such as reduced material costs
achieved through improvements in production technology, and
personnel cuts in North America, operating income increased
by 87.6%, to ¥8.6 billion.
NGN refers to next generation network services enabling
the smoother use of large volumes of data such as video
and voice, through the advancement of existing optical fiber
networks.
In the Electronics & Auto segment, there have been
rapid advances in the functionality of mobile phones as
demonstrated by the appearance of smartphones. Flexible
printed circuits (FPCs), Fujikura’s key product in the field of
electronics, displayed a fast recovery from a bottoming out
during the previous fiscal year, due to the addition of products
with high added value such as double-sided FPCs and multi-
layer FPCs in response to user needs. Meanwhile, demand
remained sluggish for connectors and other products, resulting
in an overall decline in revenue in Electronics.
Turning to profit, operating income rose significantly. This
was a result of the automation of facilities and reductions
in personnel leading to a more streamlined workforce, and
reductions in depreciation due to restrictions on capital
investment.
In the Auto field, the Chinese market performed well,
but there was an overall decline in revenue stemming from a
slowdown in Europe. Profitability improved markedly because
of restructuring and consolidation of European bases in
addition to increased profits in the Chinese market.
In the Electronics & Auto segment, which combines the
electronics business and the automotive electronics business,
sales declined by ¥14.5 billion, to ¥208.4 billion, while
operating income improved from a loss of ¥3.3 billion to a
profit of ¥3.6 billion.
Following on from the previous year, this year was a difficult
one for Metal Cable & Systems. In addition to the ongoing
deterioration of construction investments in Japan, the falling
price of copper, which is a principal raw material used by the
Company, resulted in a significant decrease in revenue in the
field of industrial cables. Sales of overhead power transmission
lines decreased due to a sluggish North American market. With
the acquisition of the optical ground wire (OPGW) business
from Netherlands-based Draka last June, we established a
manufacturing and sales organization for the European and
Middle Eastern markets, where we were previously weak.
Overall sales in this segment decreased by 23.4% compared
with the previous fiscal year, to ¥174.5 billion.
In addition to reducing the expenses incurred, there was a
smaller loss resulting from falling copper prices that had badly
eroded profits in the previous year, resulting in an operating
income of ¥1.6 billion, up from a loss of ¥4.4 billion in the
previous year.
Sharp fluctuations in the price of copper, a core material,
has a major impact on the profitability of this segment. The
relative stability of copper prices this year, along with an
innovation to the mechanism used for procuring copper,
enabled us to minimize such losses.
The Real Estate segment primarily consists of the real estate
rental business conducted through the redevelopment of the
former site of the Company’s Fukagawa Works. Overall sales
in this segment were on par with the previous fiscal year at
¥7.1 billion, while operating income declined by 5.7%, to ¥3.4
billion.
Since work began on the redevelopment of the former
site of Fukagawa Works in 1997, tenants have steadily moved
in, and the construction of two office buildings this March
marked the completion of the Fukagawa Gatharia complex,
boasting a total floor space of 270,000 m2 and a workforce
of approximately 12,000 people. One and a half of the two
tower sections of the office buildings house Nomura Research
�
A Message from the President & CEO
Institute, Ltd., while the West 1 building holds Nikko Cordial
Securities Inc. The West 2 building, completed in March,
houses Resona Holdings, Inc. and Resona Bank, Ltd., while
West 3 building houses the Industrial Property Cooperation
Center, an indication of the socially and economically stable
clients included among our tenants. The commercial space
includes a variety of facilities such as Ito-Yokado and the Lotus
Park restaurant complex. With the completion of Fukagawa
Gatharia, the Real Estate business is expected to provide
stable earnings as a business supporting the foundation of the
Company in the future.
Apart from the four segments above, the Other segment,
including logistics services, posted sales of ¥6 billion and an
operating income of ¥0.6 billion.
FY2010 shows signs of improvement in economic
conditions, and the worst period is thought to be over.
However, it is believed that world demand will continue to be
around 70–80% of pre-Lehman Shock levels, and the business
environment is anticipated to continue to be harsh in the
future.
The Group’s efforts during FY2010 will not simply focus
upon expanding the scale of our business operations, but
instead place emphasis on the return on capital invested.
(1) Based on the key words “Focus & Deep,” we will proceed to
identify underperforming businesses and steadily concentrate
on business opportunities, such as the establishment of
infrastructure in emerging economies that are expected to
flourish.
(2) As part of our efforts to reinforce craftsmanship in
monozukuri (manufacturing), we will reinforce the G-FPS
activities (to improve productivity as a Group) and to develop
the human resources of local subsidiaries.
(3) We will continually create new technologies and new
products and accelerate the “metabolism” of the Company.
Based on these key measures, in the Telecommunications
segment, we will work to secure demand for building
infrastructure in China, which we have positioned as the
largest market expected to show strong demand in the future.
Specifically, we will work to quickly open the manufacturing
site for optical fiber preforms that we established in the city
of Wuhan last year. Until now, the optical fiber business in
China has relied upon the export of optical fiber preforms from
Japan. By replacing these exports with locally manufactured
optical fiber preforms, we will be able to flexibly respond to
local fluctuations in demand.
In the Electronics & Auto segment, we consolidated our
seven subsidiaries in Thailand to establish Fujikura Electronics
(Thailand) Ltd. on April 1. Concentrating the administrative
departments of these companies will make us significantly
more cost competitive. We will also work to improve quality
and productivity by pooling the technological capabilities of
each company. Moreover, by developing human resources and
actively hiring local staff, we aim to establish locally focused
operations and reinforce our craftsmanship in monozukuri
(manufacturing).
In the Metal Cable & Systems segment, we will work to
become more cost competitive in our domestic infrastructure
business by automating manufacturing facilities and
proceeding to reduce personnel. We will also reinforce our
overseas business. Although the Japanese domestic market
has matured with regard to infrastructure, countries such as
Indonesia and Malaysia, where we have a presence, are in
the midst of establishing their infrastructure. Utilizing the
technology and human resources we have developed in Japan
to date, we will establish organizational structure in these
areas to ensure we are able to capitalize on demand in such
emerging markets.
We will proceed with these initiatives in our business
operations, and although emerging markets centered on China
are expected to grow, the immediate business environment is
forecast to remain bleak due to the slow recovery in demand
within Japan. Under our business plan for FY2010, we forecast
net sales of ¥510 billion, operating income of ¥18 billion and
net income of ¥7 billion.
We plan to pay ¥2.5 per share as both an interim dividend
and a year-end dividend for an annual dividend of ¥5.0 per
share.
I ask for your continued understanding and support of
Fujikura’s management as we forge ahead.
Yoichi Nagahama, President & CEO
5
Fujikura at a Glance
TelecommunicationsFujikuraboaststheworld’stop-ratedmanufacturingtechnologiesforfiber-to-the-home(FTTH)opticalfibers.Itsstrengthsincludeopticalfiberperipheralapplication technologies,opticalfibercables,opticalconnectorsandconnectioncomponents,opticalfusionsplicersandotherproductsrelatingtotheFTTHnetworks.InestablishingFTTHandnextgenerationnetwork(NGN)servicesinJapanandabroad,wearecombiningouraccumulatedproprietarytechnologieswiththelatesttechnologiestoprovidetotalopticalsolutionsthatsatisfythedemandsofeveryaspectandapplicationofopticalnetworksincludingopticalfibers,opticaldevices,opticalcablesandconnectioncomponentsandconnectivityequipment.
Electronics & AutoAsaGlobalWiringSolutionProvider,Fujikuraisthesourceforone-stopsolutionsrangingfromflexibleprintedcircuits(FPCs)thatenablehigherfunctionalityandminiaturizationindigitalcamerasandmobilephonestoavarietyofotherproducts,includingelectronicwiring,harddiskdrive(HDD)components,membraneswitches,semiconductorpackageproductsandthermalproductssuchasmicroheatpipes,heatsinks,vaporchambersandothermodularproductsaspartsforelectronicdevicessuchasdigitalconsumerappliancesandportabledevices.
Intheautomotiveelectronicsbusiness,theinclusionofamanufacturerofwireharnessesinEuropecompletesaglobalproductionnetworkthathasmanufacturingbasesforproducingautomotivecomponentsincorporatingtotalwiringtechnology,suchasautomotivewireharnesses,ineachofthefourkeymarketingregionsoftheworld.
Metal Cable & SystemsInadditiontosupplyingmetalcablesfortelecommunicationsincludingcoaxialcables,telecommunicationscablesfortelephoneuseandplantinstrumentationcables,Fujikuraprovidesavarietyofotherelectricwireandcables,equipmentandecoproducts,suchasthepowerandcontrolcablesusedinsidebuildingsandfactoriesandindustrialappliancewire,aswellastheelectricwireandcablesusedinelevators,shipping,railtransportationandvariousotherindustrialapplications.
Fujikuraalsoenjoysaglobalreputationfortheperformanceandreliabilityofitsultra-highvoltage(500kV)undergroundandsubmarinetransmissioncables,opticalgroundwire(OPGW)andotherproducts.
Real EstateSince1997,wehavebeenredevelopingthe70,000m2formersiteoftheFujikura
plantinKiba,Koto-ku,Tokyo,intoazonemadeupofofficebuildings,ashoppingmall,acinemacomplex,afitnessclubandrestaurants.ThecompletionoftwoofficebuildingsattheendofMarchmarkedthefinalphaseoftheFukagawaGathariacomplexasplanned.
Net Sales FY2009
21%
Net Sales FY2009
41%
Net Sales FY2009
35%
Net Sales FY2009
1%
6
Business Strategies by Segment
Strengthen overseas business and sales expansion structure in line with the growth of demand for FTTH in China and other Asian countriesIn the Telecommunications segment, we believe demand will remain robust, supported by investment in telecommunications network infrastructure in emerging markets such as China, and investment in FTTH-related markets. However, as we have concerns about the strengthening yen and potentially more intensive competition in pricing, key issues include improved productivity and shifting production overseas to become more cost competitive and resilient to the stronger yen. In addition to the launch of our site for manufacturing optical fiber in China, and the expansion of business in Southeast Asia and the United States, we will also expand and reinforce non-telecommunications businesses. As part of our efforts to expand into non-telecommunications fields and create new technologies and products using optical fiber technology, we will proceed to commercialize fiber lasers.
Telecommunications
Major businessesOptical fiber and optical fiber cables, optical connectors and connection components, optical devices, optical fusion slicers, optical network monitoring systems, optical transmission equipment, optical wiring systems and telecommunications-related installation projects
OpticalFiberArcFusionSplicersFujikura, which holds the world's largest share of the arc fusion splicer market, aims to continue taking further steps to drive forward the evolution of splicers to meet the growing expection of its customers.
NewSingleOpticalFiberCleaverAs optical telecommunications infrastructure expands globally and the demand for FTTH network installations rises, the need for skill-free tools is increasing. This newly developed single optical fiber cleaver exhibits high performance at a low price, and allows for easy maintenance by customers.
Field-InstallableOpticalConnectorsSingle fiber optical connectors that can be installed directly at the cabling site. Suitable for 0.25 or 0.9 mm single fiber, drop or indoor cables, and 2 or 3 mm diameter cords. Both mechanical connection and arc fusion connection models are available.
Market environment Demand for FTTH is increasing worldwide Demand from China, other Asian countries and India continues to grow Domestic ICT strategy has progressed
Our strategies Meet the strong demand in China by establishing an optical fiber preforms manufacturer as soon as possible Consider new overseas manufacturing locations Develop customer-based business by utilizing human resources at the existing overseas manufacturing/sales locations
Focus on becoming the world’s leading cable system provider
North America
(Thousands of subscribers)
2006 2007 2008 2009 2011 2012 20132010
Asia
Europe
Middle East
0
30,000
60,000
90,000
120,000
No.ofSubscribers(ExcludingJapan)
Our Strategies for Overseas FTTH Business
Data: Fujikura
7
Optical cables/fibers
Engineering
(Billions of yen)
52.4
37.1
25.7
115.2
52.3
32.8
25.3
110.4
50.7
34.8
21.7
107.3
48.5
35.7
21.2
105.4
FY2007 FY2008 FY2009 FY2010(Plan)
Optical componentsOptical cables/fibers
Operating income
■ Smooth launch of a joint venture for optical fiber preforms in China
■Establish competitiveness in overseas markets
Optical components
■Develop and expand sales of products responding to the growth of FTTH outside Japan
■Develop and expand sales of optical interconnection products
■Develop and expand non-telecommunications business
■Overseas: Develop new customers and diversify services
■Domestic: Promote local telecommunications projects(FTTH and WiMAX businesses)
Engineering
11.1
4.6 8.6 6.4
Net Sales and Operating Income
Optical Fiber Business in China
Shanghai
Guangzhou
Beijing
■ Fujikura FiberHome Opto-Electronic Material Technology Co., Ltd.(Optical fiber preforms)
Summary of New Company■ Location: Wuhan City, China■ Capital: RMB396 million (¥5.9 billion)■ Sales: ¥2.5 billion (FY2011 plan)■ Expected Date of Manufacturing:
November 2010■ Products: Optical fiber preforms
■ FiberHome Fujikura Optic Technology Co., Ltd.(Optical cables/fibers)
■ Jiangsu Alpha Optical-Electric Technologies Co., Ltd.(Optical fibers)
■ Nanjing Fiberhome Fujikura Optical Communication Ltd.(Optical fibers)
8
Business Strategies by Segment
Raise profitability by strengthening manufacturing capability at overseas business locationsIn the Electronics & Auto segment, we intend to fast-track the operations of Fujikura Electronics (Thailand) Ltd., established on April 1, 2010, through the integration of our seven subsidiaries in Thailand. Focusing on profitability, we will strengthen the Company by reinforcing our craftsmanship in manufacturing, improving quality and improving the efficiency of administrative departments. It is also important to launch new products in a timely manner, and we will improve our technological capabilities and develop new products and technologies that meet the sophisticated demands of our customers.
In automotive electronics, we will begin to reap the benefits of the restructuring implemented in the rebuilding of Fujikura Automotive Europe S.A. (FAE) in Spain. We will also further strengthen our business foundations in China and Southeast Asia through the expansion of production facilities and the improvement of cost competitiveness.
Electronics & Auto
Major businessesFPCs, connectors, automotive wire harnesses, automotive components, sensors, electronic wiring, HDD components, micro heat pipes and heat sinks
AutomotiveWireHarnessesThese are the “nerves and blood vessels of a car”used for supplying power and communicating the necessary signals to every part of the car.
FFConnectorsFF connectors for FPCs feature DDK’s exclusive locking mechanisms with a rotary back lock and a front lock, ensuring a firm connection that remains latched even if the FPCs are pulled apart vertically.
FinePitchFPCsbySemi-AdditiveProcessIn the semi-additive process, electrolytic plating is carried out to form a conductor pattern. The FPCs formed by the semi-additive process have many advantages such as fineness of circuit patterns, small variations in circuit widths, among others.
Integration of Seven Thai Subsidiaries into One Company
Lamphun
AyutthayaPathumthani Prachinburi
Bangkok
LTEC Ltd.
PCTT Ltd.
Fujikura (Thailand) Ltd.
Summary of New Company
■ Name: Fujikura Electronics (Thailand) Ltd.
■ HQ: Navanakorn Industrial Estate, Pathumthani, Thailand
■ Capital: THB5.5 billion (Approx. ¥15 billion)
■ Revenue: THB37 billion (FY2010 Plan) (Approx. ¥100 billion)
■ Employees: Approx. 27,000
■ Representative: T. Nishida
■ Date of Integration: April 1, 2010
■ Seven companies in Thailand were merged on April 1, 2010
■ Revenue is ¥100 billion and employees number approx. 27,000. A shift in focus to acceleratecost competitiveness
■ Fujikura (Thailand) Ltd.■ PCTT Ltd.■ LTEC Ltd.■ Fujikura Engineering (Thailand) Ltd.■ FIMT Ltd.■ Fujikura Shoji (Thailand) Co., Ltd.■ FMOT Ltd.
9
FPCs
■Promote automated facilities/facilities requiring less labor as well as seasonal adjustment
■ Shorten the lead time including designs
Connectors
■ Improve profitability by enhancing cost reduction efforts
■Review the functions of business locations
Auto
■ Strengthen competitiveness by improving productivity at overseas manufacturing locations (China, Vietnam and Morocco)
■MBSW: Expand sales for automobiles, launch new electronics products
■Micro coaxial cable assembly: Expand new applications and customer base
Others
(Billions of yen)
72.0
33.1
94.6
49.9
249.5
67.0
88.2
28.6
39.2
223.0
61.0
89.9
23.1
34.4
208.4
67.0
89.7
30.3
25.7
212.7
FY2007 FY2008 FY2009 FY2010(Plan)
(1.9) (3.3)
3.7
6.3
FPCs AutoConnectors Others
Operating income
Net Sales and Operating Income
Our Strategies for Fujikura Automotive Europe S.A. (FAE)
Continuously press forward with the restructuring and consolidation of bases and the reduction of fixed costs in order to post profit in FY2010
(Millions of euros)
FY2007 FY2008 FY2009 FY2010(Plan)
0
30
60
90
120
150 134116
75
101
NetSales
FujikuraAutomotiveMorocco Moroccoplantbroughtonline
Overview of Tangier Plant
■ Company Name: Fujikura Automotive Morocco S.A.■ Location: Tangier, Kingdom of Morocco ■ Employees: Approx. 700■ Business Objective: Manufacture of automotive wire harnesses■ Establishment: May 2009■ Start of Operation: August 2009
10
Business Strategies by Segment
Reinforce our competitive edge in the extremely challenging market environment by developing high value-added products and production reform activitiesAs the strength of the domestic economy declines, significant growth cannot be expected in the Metal Cable & Systems segment. However, in addition to further improving production efficiency and expanding our overseas business, we will actively work to develop new markets and new products related to areas such as renewable energy and smart grids. Meanwhile, we will also pay careful attention to minimize the detrimental effects of sudden fluctuations in the price of copper, while working to improve profitability. In addition, we are actively developing the much-anticipated superconducting wire materials as a means of realizing a low-carbon society.
Metal Cable & Systems
Major businessesIndustrial cables, metal telecommunications cables, overhead power transmission lines, distribution cables, ultra-high-voltage power cables, magnet wires, bare copper wires, various cable accessories and wiring/cable installation work
CoaxialCableUsingCopper-CladAluminumWireWith the price of copper rapidly increasing, copper-clad aluminum (CCA) wire—lightweight, cost effective, and capable of retaining high conductivity—has become a focus of attention. CCA wire is a composite conductor, in which an aluminum wire is uniformly coated with copper, forming a high-strength metallic bond.
ElevatorCablesElevator cables are mainly used in elevator operation control systems. Fujikura’s flat type PVC elevator cables (FUJIKURA FLAT) are of a thin, flat cross-sectional construction. Unlike round type cables, they can be laid with a relatively small U-shaped suspension radius, and are hence suitable for use in places where space savings are required. They are also capable of providing a large U-shaped bending ratio (bending radius/cable diameter), thus offering excellent bending fatigue life.
600VCVTA 600V power cable. Crosslinked polyethylene is used as the white insulation material, and vinyl is used as the sheath material. These cables are used in a variety of locations including buildings, factories and airports.
Operating income of ¥5.0 billion is expected for FY2011 and thereafter, with the completion of the redevelopment project in the Fukagawa area, including the West 2 and West 3 Buildings
Real Estate
11
(Billions of yen)
279.8
227.8
174.5 175.2
7.3
(4.4)
1.7 1.1
Metal Cable & Systems Operating income
Metal Cable & Systems
■GAINStrengthen environmental and energy businesses:Solar, wind, and atomic power; smart grid
■SAVEProduction renovation activities(Promote development of automated facilities/facilitiesrequiring less labor processes)Inheritance of technologies and skills
■Enhancement of overseas businessExpansion of business location and sales system tomeet infrastructure demands
FY2007 FY2008 FY2009 FY2010(Plan)
Net Sales and Operating Income
West 2 West 3
Gatharia Bio-Garden
Real Estate Development of GathariaCompletionofprincipalbuildings
Ito-Yokado Nov. 2000 Plaza Bldg. Oct. 2002 West 1 Dec. 2002 Tower S Jan. 2003 Tower N Jan. 2007 West 2 Mar. 2010 Resona Bank, Ltd. West 3 Mar. 2010 Industrial Property Cooperation Center
(GathariaBio-Garden:TobecompletedinlateSeptember2010)
(Billions of yen) FY08 FY09 FY10 FY11
CAPEX 8.1 14.7 2.0 —Operating income 3.2 3.4 4.3 5.0No. of office workers (persons) 8,000 8,000 12,000 12,000
12
At the Forefront of R&D
TelecommunicationsFujikura developed technologies and products in
accordance with global trends, including the expansion
of broadband use and the realization of a ubiquitous
society, led by increased use of fiber-to-the-home (FTTH)
and next generation networks (NGN), as well as progress
in information technology (IT) and further developments in
information and communications technology (ICT).
In the fiscal year under review, we completed the
development of the much-required cicada-resistant
optical cables and began their mass production. For
FTTH, we developed new C-slot optical cables and low-
cost Magetsuyo™ optical cables, while also conducting
development and mass production of optical cables and
optical connectors aimed at overseas markets, where FTTH
demand is growing. In networking, we also released our
wavelength selective switches (product name: FullFledge),
which are key components in reconfigurable optical add/
drop multiplexing (ROADM) systems for multiplexing optical
signals. We also developed optical interconnections to
respond to the need for high-speed transmission and are
aiming to practically implement these in the future.
FY2009 Activities in Each Business Unit
Fujikura is focusing on R&D activities that integrate optical, electronics and energy fields
TheFujikuraGroupisdevelopingnewproductsandnewtechnologiesinthefollowingbusinesssegments:(1)Telecommunications,(2)Electronics&Auto,and(3)MetalCable&Systems.TheGrouphasthreecorporatelaboratories:theEnvironmentandEnergyLaboratory,theOpticsandElectronicsLaboratory,andtheElectronDeviceLaboratory.Also,theGrouphasfourR&Dcenters,eachalignedwithaparticularbusinessunit:theElectronicsComponentsR&DCenter,theOpticalCableSystemR&DCenter,theOptoelectronicsCircuits&SystemsR&DCenter,andthePower&TelecommunicationCableSystemR&DCenter.
Duringthefiscalyearunderreview,Fujikurabeganworkonanewprojectaimedatthecommercialapplicationoffiberlasersthathasbeenunderdevelopment.InMarch2010,wealsoacquiredOPTOENERGYInc.,whichpossessesthetechnologyofsemiconductorlaserdiodes—keycomponentsoffiberlasers—withtheaimofdevelopinghighoutputfiberlasersinthefuture.Steadyprogresshasalsobeenmadeinthedevelopmentofhigh-temperaturesuperconductingwirematerialsanddye-sensitizedsolarcellsaspartofourenvironment-orienteddevelopment.Inparticular,weplantobegindevelopingandimprovingtheperformanceaswellasincreasingthescaleofhigh-temperaturesuperconductingwirematerialsduringthenextfiscalyear.
Telecommunications
(Billions of yen)
FY2007 FY2008 FY2009 FY2010(Plan)
Electronics & Auto
Metal Cable & SystemsFY2008–FY2010
Cumulative Total ¥43.4 billion
5.3
8.0
0.513.9
5.8
8.1
1.014.9
6.5
7.0
1.615.1
5.5
6.7
1.213.4
Tech
no
log
y D
om
ain
s
Telecom
Electronics&
Auto
● High-power laser diode technologies● Printed electronics technologies● Direct methanol fuel cells● Dye-sensitized solar cells● High-Tc superconductors
● NGN● FTTx● Optical interconnection● Photonics technologies● Medical care applications● Fiber laser technologies
● Precision circuit and multi-layer FPCs or boards● Precision connectors● Digital IT● Membrane switch modules● Thermal technologies● EV automotive harnesses
Area
R&
D
R&D Expenditures
13
FY2009 Activities in Each Business Unit
Electronics & AutoIn this segment, Fujikura is developing flexible printed
circuits (FPCs), membrane products, electronic wires, HDD
carriages and sensor products. We are also developing various
electrical components for the automotive industry, beginning
with wire harnesses. In addition, the development of thermal
products such as heat pipes is also under way.
In the field of digital consumer appliances, the key words
are “high performance,“ “minimize“ and “cost reduction.“
In accordance with these requirements, the Fujikura Group is
developing new FPCs with the technologies of fine pattern,
muti-layering and IC embedded substrates. For products
that use printing technology, we are developing fine pattern
technology by creating new printing methods, while working
on improving the functionality and increasing the added value
of membrane application products, such as sensors and switch
modules, and functional components such as light guide
panels for illumination. We are also developing new products
including thermal products, such as ultra-thin heat pipes with
improved functionality, and automotive electronics products
such as sensors, based on the application of electrostatic
capacitance technology. Other efforts include the practical
application of a direct methanol fuel cell (DMFC).
Metal Cable & SystemsWith regard to the preservation of the global environment,
Fujikura is actively developing metal cable and systems that
lead to a reduction in carbon dioxide emissions, the reduction
of environmental hazardous substances and the effective
use of environment resources. We are developing cable
materials based on an environment-friendly design, cables
and connection materials for power generation systems
that use renewable energy and a material recycling system.
Elsewhere, we are developing coaxial cables for mobile phone
base stations that feature excellent electrical and mechanical
properties along with various smaller, thinner leaky coaxial
cables.
In the fiscal year under review, we continued to develop
environment-friendly cables for wind power generation and
nuclear power generation, in addition to conducting the
development of cables for supporting the infrastructure in
a low-carbon society. The development of a high-frequency
conductor used in copper-clad aluminum (CCA) wire has
also contributed to making cables more lightweight. We also
released the ultra-thin leaky coaxial cable for use in close
proximity wireless communication, such as RFID, aimed at the
ubiquitous era.
Yttrium-based Superconducting Wire MaterialThisisasuperconductorprocessedintowirematerial.Fujikura’syttrium-basedsuperconductingwirematerialismadebyformingnumerousthinceramiclayersonmetaltape.Thetechnologyenablestheproductionofwireswithamaximumcurrentexceeding350Aandawirelengthofmorethan500m.
All Polyimide IVH Colaminated:APICFujikura'sstrengthsasanFPCmanufacturerareintegratedintheultra-thinstructureandinnerviahole(IVH)design,whichconnectscertainfilmsinplaceofconventionalthroughholes.TheAPIChasbeendevelopedforhigh-performancemobileelectronicequipment,suchassmartphones.
External View of Single-Element Emitter ChipOPTOENERGYInc.,oneofFujikura'ssubsidiaries,hasrecentlydevelopedsemiconductorlaserswiththeworld'shighestbrilliance.Usingitsownhigh-powertechnology,OPTOENERGYhasachievedopticaloutputsfromasingle-elementemitterchipof15Wwithawavelengthof915nmandemissionwidthof100μm,and20Wwithawavelengthof880nmandemissionwidthof200μm.
1�
Corporate Governance
Fujikura businesses constantly face intense competition in their
respective fields, and it is vital that the intentions of management
permeate to the farthest reaches of the organization to ensure
that activities are implemented in a consistent and timely manner
throughout the Company. Meetings of the Management Committee
are held weekly to make key decisions within the Company and
the Group, while simultaneously overseeing general operations.
Meetings of the Board of Directors are held almost monthly to
decide upon important matters in accordance with the Regulations
of the Board of Directors, and to supervise the general execution
of operations by Directors. The Executive Committee reports
and exchanges information on the dissemination and state of
implementation of matters decided upon by the Management
Committee.
Fujikura believes that being aware of, incorporating and
managing legal issues and the propriety of operations that span
from executive decision making to everyday activities in the farthest
reaches of the organization is an efficient way of monitoring and
supervising such activities.
Fujikura ensures executive responsibilities are clarified by the
executive officer system, and has adopted the corporate auditor
system to facilitate the monitoring and supervision of management
and its decision-making process. Internal control of daily operations
designed to ensure legal compliance and the propriety of
operational processes is handled by the Audit Division, the relevant
departments at headquarters and administrative organizations
within each business segment. We have established rules for
managing documents and electronic information with regard to
the storage and handling of important management information.
In addition, we review Companywide risks, promote a compliance
system and operate a whistleblowing system with the help of the
Risk Management Committee and the Conduct Code Promotion
Committee.
In accordance with the provisions of Article 427.1 of the
Companies Act, the corporate has concluded contracts with all
outside corporate auditors to limit their liability for damages
pursuant to Article 423.1 of the Companies Act to the Minimum
Liability Amount stipulated in Article 425.1 of the Companies Act,
when they are without knowledge and are not grossly negligent in
performing their duties.
1. Overview of the Corporate Governance System and Reasons for Adopting the System
Board of Auditors (Auditors)
Audit Division
Board of Directors (Directors)
Management Committee
Executive OfficersConduct Code Promotion Committee
Risk Management Committee
Audit
Audit
Audit
SupervisionAppointment/Supervision
AppointmentAppointmentAppointment
Audit
Audit
Cooperation
Cooperation
AuditCompliance
Business Segment/Relevant Departments at Headquarters
Affiliated Companies
Independent Auditors
General Meeting of Shareholders
Ind
epen
den
t Au
dito
rs
Auditors (Board of Auditors)
OrganizationoftheFujikuraCorporateGovernanceSystem
15
The Company has appointed two standing auditors and two
outside corporate auditors to audit the execution of operations by
directors from the perspective of legal compliance and propriety,
by conducting on-site inspections of individual departments and
Group companies, viewing important documents and attending
important meetings. Auditors cooperate by providing reports and
holding discussions at meetings of the Board of Auditors that are
held monthly. Furthermore, Fujikura has adopted a system whereby
standing auditors are able to attend important meetings with regard
to management’s decisions on the execution of business, such as
meetings of the Management Committee, to state their opinions.
We also guarantee auditors’ participation in management, including
but not limited to activities of legal compliance in meetings of the
Board of Directors, etc., and we set regular meetings to exchange
views with operating officers and ensure opportunities are provided
for the auditors to request this information.
The Audit Division, which is a dedicated internal auditing
organization with three dedicated staff, conducted a total of 75
audits of individual divisions (mainly sales divisions) and Group
companies in FY2009.
At the beginning of every year, auditors receive an audit plan from
the independent auditors, and receive reports from the independent
auditors on the results of audits conducted during and at the end of
the period based on the plan. Several times each year, the auditors
and independent auditors meet to discuss and exchange opinions on
the details and system used in financial auditing. Information is also
periodically exchanged with internal audit divisions, and in addition
to internal audit divisions conducting audit operations under the
instruction of auditors when necessary, audit results are periodically
reported to auditors.
Hiroyoshi Ichisawa, an outside corporate auditor, has considerable
knowledge concerning finance and accounting based on many years
of experience in a key position at a major commercial bank.
2. Internal Audits and Supervision of Auditors
Fujikura’s outside officers comprise two outside auditors.
Mr. Hiroyoshi Ichisawa owns 3,000 of the Company’s shares. In
addition to having considerable knowledge concerning finance and
accounting based on many years of experience in a key position
at a major commercial bank, he has abundant knowledge and
insight concerning corporate management, and is deemed to be
able to audit the propriety, etc., of management from an objective
perspective.
Soichiro Sekiuchi, an outside corporate auditor, is a highly
specialized attorney with excellent character and judgment, and
is deemed to have sufficient knowledge concerning corporate
management and the ability to appropriately implement his duties
as auditor due to his involvement in corporate legal affairs for many
years.
The two outside corporate auditors are independent from
and have no special interests in the Company other than those
mentioned above.
As outside corporate auditors, the two audit the execution of
operations by directors from the perspective of legal compliance
and propriety by conducting on-site inspections of individual
departments and Group companies, viewing important documents
and attending important meetings. They also work with standing
auditors by providing reports and holding discussions in meetings
of the Board of Auditors that are held monthly. Materials relating
to meetings of the Board of Directors and the Board of Auditors are
distributed in advance.
The Audit Division, which is a dedicated internal auditing
organization, provides support as appropriate and conveys
information on internal audits to outside corporate auditors as
appropriate.
Fujikura does not currently have outside directors, but it has a
positive stance toward the introduction of outside directors and is
currently engaged in the selection of appropriate personnel.
3. Outside Directors and Outside Corporate Auditors
16
Directors, Corporate Auditors and Executive Officers
Kazuhiko OhashiChairman and Representative Director
As of June 29, 2010
Corporate AuditorsTakaoShiotaToshioOnumaHiroyoshiIchisawa (outside the Company)
SoichiroSekiuchi (outside the Company)
Executive Officers other than Members of the Board
Managing Executive Officers
Yoichi NagahamaPresident & CEO and Representative Director
Takashi NishidaSenior Executive Vice President and Representative Director
Toshio MizushimaSenior Executive Vice President and Member of the Board
Takashi SatoExecutive Vice President and Member of the Board
Takamasa KatoExecutive Vice President and Member of the Board
Masato KoikeSenior Vice President and Member of the Board
Hideo SuzukiSenior Vice President and Member of the Board
Takashi KunimotoSenior Vice President and Member of the Board
Hideo NaruseSenior Vice President and Member of the Board Executive Officers
HideoShiwaSusumuKoyamaYasuoKumakawaToruAizawaAkiraWada
YasuoIchikawaIzumiIshikawaYoshikazuNomuraTodatoshiKuge
NoboruSugiyamaNobumasaMisakiMasatoSugo
ShigeruWatanabeAkioMiyagiToshihideKanai
17
Financial Section
Description of Results
NetsalesdeclinedsignificantlycomparedwithFY2008.Althoughtheyear-on-yeardecreasewas¥70.1billion,iftheeffectsofcopperpricesandforeignexchangearedisregardedthedeclineiscloserto¥31.0billion.
Operatingincomeincreasedby¥17.7billionyearonyearasaresultofmeasurestakentoreduceexpensesincurredfromenvironmentalchanges,amongotherfactors.
Netincomewas¥2.5billionowingtoanextraordinarylossof¥8.3billion.
Telecommunications
FY2008 FY20090
100
200
300
400
500
600
700
Electronics & Auto
Metal Cable & Systems
Real Estate
Other227.8
223.0
110.4
7.26.1
174.5
208.4
107.3
7.15.2
(Billionsofyen)
FY2010 Market Environment
Cannotexpectdomesticdemandtorecover—marketscaleremainsat70–80%ofthepre-recessionlevel.
Intensificationofglobalcompetitionisunavoidableinallbusinesssegments,asmanufacturersfromemergingeconomiescontinuetogrow.
Riskinriseincopperandoilpricesandexchangeratefluctuations.
Businessopportunitiesdoexist—forexample,inthebuildingofinfrastructurethatistakingplaceinChinaandotherdevelopingcountriesinAsia.
Net Sales by Segment
(Billionsofyen)
Operating Income
Cash and cash equivalents at end of year
FY2008FY2007
28.7
+51.5 -40.4
21.1
-0.7
60.2
+43.8
-25.4
-25.3 -0.5
FY2009
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Effects of exchange rate changes on cash and cash equivalents0
20
40
60
80
100
120
53.6
(Billionsofyen)
Shareholder Return Policy
Ensuring stability in the distribution of
dividends Dividend payout
FY2008¥7.5 /share FY2009¥5.0/share
Cash Flow
FY2010 Dividend Payout Plan: ¥5.0/share(1H: ¥2.5, Year-end: ¥2.5)
+22.0
+17.9
FY2008
0.2
+4.7
Decrease inloss on copper
Inventoryrevaluation
Decrease inexpenses incurred
Forex effectsNet change+3.1 -2.3
-9.8
FY2009
+17.7
18
Management’s Discussion and Analysis of Financial Position and Operating Results
1. Analysis of Operating Results for the Fiscal Year Ended March 31, 2010
Consolidated net sales for the year under review stood at ¥503.5
billion, down ¥70.1 billion compared with the previous fiscal year,
due primarily to declines in the Electronics & Auto and Metal
Cable & Systems segments.
Operating income increased ¥17.7 billion, to ¥17.9 billion,
thanks to improved production efficiency and thorough cost
reductions throughout the Company despite a decline in sales.
Ordinary income was ¥16.5 billion and net income was ¥2.5
billion, as the Company’s profits increased despite a decline in
revenue.
2. Significant Factors Affecting Results
With regard to the business environment of the Fujikura Group,
domestic FTTH investment and the Chinese market were robust
in the Telecommunications segment. The Metal Cable & Systems
segment, however, faced difficult business conditions brought
about by a decrease in domestic construction investment in the
field of industrial cables, coupled with plummeting copper prices.
In the Electronics & Auto segment, the Chinese market performed
well, but this was not sufficient enough to compensate for the
slowdown in Europe.
3. Analysis of Capital Resources and Liquidity
Net cash provided by operating activities totaled ¥43.8 billion,
down ¥7.7 billion over the previous fiscal year. This included
pretax income of ¥8.3 billion and depreciation and amortization
of ¥26.3 billion. Net cash used in investing activities, centering on
plant, property and equipment investments, totaled ¥25.4 billion,
down ¥14.9 billion from the previous fiscal year. Net cash used
in financing activities, concentrated on the reduction of interest-
bearing debt, amounted to ¥25.3 billion, up ¥46.4 billion.
As a result, cash and cash equivalents at the end of the term
totaled ¥53.6 billion, a decrease of ¥6.5 billion year on year.
4. Issues Facing Management and Our Future Direction
In the Telecommunications segment, we believe demand will
remain robust, supported by investment in telecommunications
network infrastructure in emerging markets such as China, and
solid investment in FTTH-related markets. However, in light of
concerns over the appreciation of the yen and in anticipation of
more intense price competition, key management issues include
improved productivity, and shifting production overseas to become
more cost competitive and resilient to the appreciation of the yen.
In addition to the launch of our site for manufacturing optical
fiber preforms in China, and the expansion and strengthening
of overseas business in areas such as Southeast Asia and the
United States, we will also expand and reinforce our non-
telecommunications business by strengthening our organization.
In the Electronics & Auto segment, we intend to fast-track
the operations of Fujikura Electronics (Thailand) Ltd., which was
established on April 1 of this year, through the reorganization
and integration of our seven subsidiaries in the Kingdom of
Thailand. Under a policy focused on profitability, we will work to
further strengthen the Company by reinforcing our craftsmanship
in monozukuri (manufacturing), improving quality and further
improving the efficiency of administrative departments. It is also
important to release new products in a timely manner, and we will
focus on improving our technological capabilities and developing
new products and new technologies in order to respond to the
increasingly sophisticated demands of our customers. In the
automotive electronics business, we will begin to reap the benefits
of the restructuring implemented in order to rebuild Spain-based
Fujikura Automotive Europe S.A. (FAE), which has been a key
management challenge for many years. We will also continue
to work to strengthen our business foundations in China and
Southeast Asia through the expansion of production facilities and
the improvement of cost competitiveness.
As the strength of the domestic economy declines, significant
growth cannot be expected in the Metal Cable & Systems segment.
However, in addition to further improving production efficiency
and expanding our overseas business, we will actively work to
develop new markets and new products related to areas such as
renewable energy and smart grids. Meanwhile, we will also pay
careful attention to minimize the detrimental effects of sudden
fluctuations in the price of copper, while working to improve
profitability.
19
Financial Section
Consolidated Balance SheetsFujikura Ltd. and its Consolidated Subsidiaries At March 31, 2009 and 2010
Thousands of Millions of yen U.S. dollars (Note 3)
ASSETS: 2009 2010 2010
Current assets:
Cash and deposits ¥60,870 ¥50,754 $545,445
Notes and accounts receivable, trade 118,387 119,416 1,283,348Inventories (Note12) 43,196 46,987 504,969Deferred income taxes (Note 16) 3,687 4,141 44,505Other current assets 19,426 21,500 231,060Less: Allowance for doubtful accounts (1,406) (1,100) (11,819) Total current assets 244,160 241,698 2,597,508
Investments and advances:
Investment securities (Note 5) 25,699 27,499 295,534Investments in and advances to unconsolidated subsidiaries and affiliates 29,909 31,505 338,577Other investments 1,297 1,230 13,219 Total Investments and advances 56,905 60,234 647,330
Property, plant and equipment: (Notes 6 and 14)
Buildings and structures 151,677 153,568 1,650,384Machinery, equipment and tools 282,213 286,541 3,079,429Lease assets 1,729 1,740 18,694
435,619 441,849 4,748,507Less: Accumulated depreciation (309,798) (327,042) (3,514,689) Impairment charges (8,398) (7,691) (82,656)
117,423 107,116 1,151,162Land 18,974 19,399 208,476Construction-in-progress 11,118 28,347 304,648 Net property, plant and equipment 147,515 154,862 1,664,286
Other assets (Notes 16) 32,914 32,956 354,175 Total assets ¥481,494 ¥489,750 $5,263,299
The accompanying notes to the consolidated financial statements are an integral part of these statements.
20
Thousands of Millions of yen U.S. dollars (Note 3)
LIABILITIES AND NET ASSETS 2009 2010 2010Current liabilities:
Short-term borrowings (Note 6) ¥78,856 ¥49,150 $528,209Current portion of long-term debt (Note 6) 3,717 3,601 38,696
Notes and accounts payable, trade 64,528 74,575 801,456Income taxes payable 1,967 2,263 24,319
Other current liabilities (Note 8 and 16 28,588 43,455 467,007 Total current liabilities 177,656 173,044 1,859,687
Long-term debt (Note 6) 92,876 100,467 1,079,712
Accrued severance indemnities (Note 10) 6,631 6,809 73,176
Other long-term liabilities (Notes 7 and 16) 14,989 16,044 172,416
Contingent liabilities (Note 17)
Net assets:
Shareholders’ equity (Note 20)
Common stock: Authorized : 2009, 2010 - 1,190,000,000 shares Issued and outstanding : 2009 - 360,863,421 shares : 2010 - 360,863,421 shares 53,075 53,075 570,401Capital surplus 54,958 54,958 590,624Retained earnings (Note 19) 84,492 85,254 916,231Treasury stock, at cost 2009 - 254,031 shares and 2010 - 287,702 shares (123) (137) (1,477)
192,402 193,150 2,075,779Valuation and translation adjustments
Unrealized gains on investment securities, net of taxes 623 1,997 21,467Deferred gain (loss) on hedges, net of taxes (234) (7) (76)Foreign currency translation adjustments (12,795) (13,560) (145,740)
(12,406) (11,570) (124,349)
Minority interests 9,346 11,806 126,878 Total net assets 189,342 193,386 2,078,308 Total liabilities and net assets ¥481,494 ¥489,750 $5,263,299
The accompanying notes to the consolidated financial statements are an integral part of these statements.
21
Financial Section
Consolidated Statements of IncomeFujikura Ltd. and its Consolidated Subsidiaries For the Years Ended March 31, 2009 and 2010
Thousands of Millions of yen U.S. dollars (Note 3)
2009 2010 2010Net sales ¥573,658 ¥503,527 $5,411,360Cost of sales (Notes 9, 10 and 12) 497,298 417,831 4,490,391
Gross profit 76,360 85,696 920,969Selling, general and administrative expenses (Notes 9 and 10) 76,129 67,762 728,233 Income from operations 231 17,934 192,736
Other income (expense):
Interest and dividend income 1,931 1,490 16,015Interest expense (3,775) (2,905) (31,221)Equity in earnings of an unconsolidated subsidiary and affiliates 578 1,886 20,267
Provision for surcharge payment(Note 8) - (4,400) (47,286)
Fixed asset maintenance and removal expenses (Note 13) - (1,689) (18,153)Business restructuring charges (Note 11) (1,800) (640) (6,874)Loss on devaluation of investment in affiliates (160) (377) (4,047)Impairment losses (Note 14) (10,242) (312) (3,358)Other, net 3,631 (2,640) (28,379)
(9,837) (9,587) (103,036) Income (loss) before income taxes and minority interests in net loss of consolidated subsidiaries (9,606) 8,347 89,700
Income taxes: (Note 16)
Current 3,971 6,540 70,289
Deferred 6,444 (1,202) (12,928)10,415 5,338 57,361
Minority interests in net loss of consolidated subsidiaries (1,001) 442 4,747
Net income (loss) (¥19,020) ¥2,567 $27,592
U.S. dollars (Note 3)Per share: (Note 20)
Net income (loss) - primary (¥53) ¥7.1 $0.077Net income (loss) - fully diluted - - -Cash dividends 7.5 5.0 0.054
Thousands of Millions of yen U.S. dollars (Note 3)
<Basis for computation of per share data> 2009 2010 2010
Net income (loss) ($19,020) ¥2,567 $27,592
Net income (loss) attributable to common shareholders ($19,020) ¥2,567 $27,592Number of weighted average shares 360,640,758 360,590,310
The accompanying notes to the consolidated financial statements are an integral part of these statements.
22
Consolidated Statements of Changes in Net AssetsFujikura Ltd. and its Consolidated Subsidiaries
Millions of yen Shareholders' equity
TotalNumber of Common Capital Retained Treasury shareholders'
shares issued stock surplus earnings stock equityBalance at March 31, 2008 360,863,421 53,075 54,958 107,039 (96) 214,976Effect of changes in accounting policies - - 88 - 88Net loss - - (19,020) - (19,020)Dividends paid - - (3,608) - (3,608)Purchase of treasury stock - - - (42) (42)Reissuance of treasury stock - - (7) 20 13Effect on treasury stock due to change in investment in affiliates (5) (5)Items other than changes in shareholders' equity - - - - -Balance at March 31, 2009 360,863,421 53,075 54,958 84,492 (123) 192,402Net income - - 2,567 - 2,567Dividends paid - - (1,805) - (1,805)Purchase of treasury stock - - - (16) (16)Reissuance of treasury stock - - (0) 2 2Items other than changes in shareholders' equity - - - - -Balance at March 31, 2010 360,863,421 53,075 54,958 85,254 (137) 193,150
Millions of yen Valuation and translation adjustments
Unrealized Totalgains (loss) Foreign valuation
on investment Deferred gain currency andsecurities, (loss) on translation translation Minority Total net
net of taxes hedges adjustments adjustments interests assetsBalance at March 31, 2008 11,036 471 (6,673) 4,834 10,921 230,731Effect of changes in accounting policies 88Net loss - - - - - (19,020)Dividends paid - - - - - (3,608)Purchase of treasury stock - - - - - (42)Reissuance of treasury stock - - - - - 13Effect on treasury stock due to change in investment in affiliates (5)Items other than changes in shareholders' equity (10,413) (705) (6,122) (17,240) (1,575) (18,815)Balance at March 31, 2009 623 (234) (12,795) (12,406) 9,346 189,342Net income - - - - - 2,567Dividends paid - - - - - (1,805)Purchase of treasury stock - - - - - (16)Reissuance of treasury stock - - - - - 2Items other than changes in shareholders' equity 1,374 227 (765) 836 2,460 3,296Balance at March 31, 2010 1,997 (7) (13,560) (11,570) 11,806 193,386
The accompanying notes to the consolidated financial statements are an integral part of these statements.
23
Financial Section
Thousands of U.S. dollars (Note 3) Shareholders' equity
TotalNumber of Common Capital Retained Treasury shareholders'
shares issued stock surplus earnings stock equityBalance at March 31, 2009 360,863,421 $570,401 $590,624 $908,024 ($1,318) $2,067,731Net income - - 27,592 - 27,592Dividends paid - - (19,382) - (19,382)Purchase of treasury stock - - - (177) (177)Reissuance of treasury stock - - (3) 18 15Items other than changes in shareholders' equity - - - - -Balance at March 31, 2010 360,863,421 $570,401 $590,624 $916,231 ($1,477) $2,075,779
Thousands of U.S. dollars (Note 3) Valuation and translation adjustments
Unrealized Totalgains (loss) Foreign valuation
on investment Deferred gain currency andsecurities, (loss) on translation translation Minority Total net
net of taxes hedges adjustments adjustments interests assetsBalance at March 31, 2009 $6,697 ($2,517) ($137,509) ($133,329) $100,445 $2,034,847Net income - - - - - 27,592Dividends paid - - - - - (19,382)Purchase of treasury stock - - - - - (177)Reissuance of treasury stock - - - - - 15Items other than changes in shareholders' equity 14,770 2,441 (8,231) 8,980 26,433 35,413Balance at March 31, 2010 $21,467 ($76) ($145,740) ($124,349) $126,878 $2,078,308
The accompanying notes to the consolidated financial statements are an integral part of these statements.
2�
Consolidated Statements of Cash FlowsFujikura Ltd. and its Consolidated SubsidiariesFor the Years Ended March 31, 2009 and 2010
Thousands of U.S. dollars
Millions of yen (Note 3)2009 2010 2010
Cash flows from operating activities:Income (loss) before income taxes and minority interests in net income(loss) of consolidated subsidiaries ¥(9,606) ¥8,347 $89,700Depreciation and amortization 29,958 26,386 283,566Loss on devaluation of investments in affiliates 160 377 4,048Loss on devaluation of advance to unconsolidated subsidiaries and affiliates 362 3,895Impairment losses 10,242 312 3,358Amortization of goodwill 1,146 343 3,682Increase in reserves and provisions 347 4,350 46,744Interest and dividend income (1,931) (1,490) (16,015)Interest expenses 3,775 2,905 31,221Equity in earnings of affiliates (578) (1,886) (20,267)Gain on sale of investment securities, net (3,202) (11) (123)Loss on devaluation of investment securities, net 995 23 252Loss on disposal of property, plant and equipment 1,563 1,309 14,065Gain on sale of property, plant and equipment, net (161) (20) (219)Changes in assets and liabilities: Notes and accounts receivable, trade 38,551 335 3,601 Inventories 12,918 (3,114) (33,464) Notes and accounts payable, trade (25,474) 9,718 104,443Other, net (2,156) 420 4,510 Sub-total 56,547 48,666 522,997Interest and dividend income received 2,555 2,037 21,892Interest paid (3,736) (2,745) (29,496)Income taxes paid (3,798) (4,090) (43,953) Net cash provided by operating activities 51,568 43,868 471,440Cash flows from investing activities:Payments for purchase of property, plant and equipment and other assets (33,019) (24,645) (264,858)Proceeds from sale of property, plant and equipment and other assets 1,214 1,201 12,908Proceeds from sale of investment securities 7,409 78 840Payments for purchases of investment securities (11,222) (569) (6,111)Payments for loans (3,410) (1,578) (16,957)Proceeds from collection of loan 2,774 2,133 22,928Payments for acquisition of shares of entities newly consolidated (1,648)Payments for purchase of investments in subsidiaries (311)Acquisition, net of cash acquired (1,120) (1,728) (18,571)Payments for advance to unconsolidated subsidiaries and affiliates (768) (8,251)Other, net (1,105) 418 4,473 Net cash used in investing activities (40,438) (25,458) (273,599)Cash flows from financing activities:Net increase (decrease) in short-term borrowings 4,485 (16,669) (179,141)Net increase (decrease in commercial paper 14,000 (14,000) (150,457)Proceeds from increase in long-term debt 20,361 10,000 107,469Repayment of long-term debt (3,742) (2,606) (28,006)Redemption of bonds (10,000)Payment for purchase of treasury stock (42) (16) (177)Cash dividends paid (3,608) (1,805) (19,382)Other, net (350) (215) (2,316) Net cash provided by (used in) financing activities 21,104 (25,311) (272,010)Effects of exchange rate changes on cash and cash equivalents (747) (562) (6,035)Changes in cash and cash equivalents 31,487 (7,463) (80,204)Cash and cash equivalents at beginning of year 28,746 60,233 647,318Increase in cash and cash equivalents due to newly consolidated subsidiaries - 902 9,689Cash and cash equivalents at end of year Note15 ¥60,233 ¥53,672 $576,803
The accompanying notes to the consolidated financial statements are an integral part of these statements.
25
Financial Section
Notes to the Consolidated Financial StatementsFujikura Ltd. and its Consolidated Subsidiaries
For the years ended March 31, 2009 and 2010
1. Basis of Presentation
Accounting principles
The accompanying Consolidated Financial Statements of Fujikura Ltd. (the “Company”) and its consolidated subsidiaries (together, the “Companies”)
are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects, application and
disclosure requirements, from International Financial Reporting Standards, and are prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan.
The Company adopted the “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial
Statements” (Accounting Standard Board of Japan ("ASBJ") PITF No. 18, May 17, 2006) effective for the fiscal year ended March 31, 2009
and made necessary adjustments for the preparation of the Consolidated Financial Statements.
Certain items presented in the consolidated financial statements filed with the Director of the Kanto Local Finance Bureau in Japan
have been reclassified for the convenience of readers outside Japan.
2. Summary of Significant Accounting Policies
(a) Consolidation and investments in affiliates
The consolidated financial statements include the accounts of the Company and all significant subsidiaries (72 subsidiaries at March 31, 2009
and 74 subsidiaries at March 31, 2010). All significant intercompany transactions and accounts and unrealized intercompany profits are
eliminated in consolidation.
The difference between the cost and the underlying net equity of investment in consolidated subsidiaries at the time of acquisition is deferred
and amortized over a five-year. Investments of 50% or less in companies over which the parent company does not have control but has the
ability to exercise significant influence, and investments in unconsolidated subsidiaries are generally accounted for by the equity method
(8 companies at March 31,2009 and 2010). When the accounts of subsidiaries and affiliates are not significant in relation to the Consolidated
Financial Statements, they are carried at cost. The excess of the cost over the underlying net equity of investments in unconsolidated
subsidiaries and affiliates accounted for on an equity basis is deferred and amortized over a five-year period. Consolidated net income
includes the Company’s equity in current earnings of affiliates after elimination of unrealized intercompany profits.
(b) Translation of foreign currency transactions and accounts
Foreign currency transactions are translated using the foreign exchange rates prevailing at the transaction dates. Current receivables
and payables denominated in foreign currencies are translated at the balance sheet date using current exchange rates. All asset and
liability accounts of foreign subsidiaries and affiliates are translated into Japanese Yen at current exchange rates at the respective
balance sheet date and all income and expense accounts of those subsidiaries are translated at the average exchange rate for
the fiscal year then ended.
Foreign currency financial statement translation differences are reported as a separate component of Net Assets in the Consolidated
Balance Sheets.
(c) Consolidated statement of cash flows
For the purpose of reporting cash flows, cash and cash equivalents include all highly liquid investments, with original maturities of
three months or less, that are readily convertible to known amounts of cash and are so near maturity that they present only an
insignificant risk of change in value because of changes in interest rates.
(d) Valuation of securities
Securities held by the Companies have been classified into the following categories depending on the purpose for which they are held:
Held-to-maturity debt securities:
These securities are carried at amortized cost. Any premium or discount arising on acquisition is amortized and recognized as an
adjustment to interest income / expense.
Available-for-sale securities:
These securities are investment securities expected to be held in the long term. Securities for which fair values are readily determinable
are carried at fair value with unrealized gains and losses, net of applicable income taxes being recorded in net assets. Securities for
which fair values are not readily determinable are recorded using the moving average cost.
(e) Allowance for doubtful accounts
An allowance for doubtful accounts is provided for estimated uncollectible accounts at an amount specifically assessed and an amount
computed based on historical loss experience.
(f) Inventories
Inventories, except for copper (raw material), are valued at the lower of cost or market, cost being determined using the weighted average method.
Copper, as a raw material used in production, is valued at the lower of cost or market, cost being determined using the last-in, first-out method.
(g) Property, plant and equipment
Depreciation of property, plant and equipment is generally computed using the declining-balance method, except for buildings acquired on and
after April 1, 1998, which are depreciated using the straight-line method, using an estimate useful lives.
The estimated useful lives are generally as follows:
Buildings: mainly 50 years
Machinery and equipment: mainly 7 years
(h) Research and development costs
Research and development costs are charged to income as incurred.
26
(i) Severance indemnities and pension plans
The severance indemnity plans of the Companies, which cover substantially all employees, provide for benefit payments determined
with reference to the employee’s current basic rate of pay, length of service, position in the respective Company and employment termination
circumstances. The plans also provide for additional benefits upon retirement at retirement age, death or for certain specified reasons.
The Company and certain consolidated subsidiaries have adopted non-contributory funded pension plans to provide the substituted
portion of the benefit payments established under the Companies' regulations for their employees. Under these pension plans, upon termination
of their employment, employees may elect for either a lump-sum payment or annuity payments.
The Company recognized and computed retirement benefits, including pension costs and the related liabilities, using an actuarial
appraisal approach known as the projected unit credit method. Under a defined benefit plan, the net pension cost for a period
includes the i) service costs, ii) interest costs, iii) expected return on plan assets, iv) amortization of unrecognized prior service costs and
v) amortization of unrecognized actuarial differences. Any difference between the net pension cost and the amount actually funded
for the period is reported as accrued severance indemnities or prepaid pension costs in the Consolidated Balance Sheets. In respect of
the policy for the amortization of prior service costs, the Companies amortize these over the period up to estimated remaining service period
of the employees.
Effective for the fiscal year ended March 31, 2010, the Company adopted, “Partial Amendments to Accounting Standard for Retirement Benefits
(Part3)” ASBJ Statement No.19, July 31,2008). As a result, there was no financial impact on "income from operations" or "income before income
taxes and minority interests" in the Consolidated Statements of Income for the fiscal year ended March 31, 2010.
With respect to directors’ and corporate auditors’ resignations, lump-sum severance indemnities are normally paid subject to shareholders’
approval. Severance indemnities for directors and corporate auditors are not covered by the funded pension plan. The balances
of accrued severance indemnities stated in the consolidated balance sheets represent accrued severance indemnities for
employees and the estimated amount of severance indemnities for directors and corporate auditors of its consolidated subsidiaries.
(j) Accounting for long-term construction-type contracts
Until the fiscal year ended March 31,2009, the percentage-of-completion method was applied for significant construction contracts in which
total proceeds are more than ¥1 billion and the construction period is longer than one year. Effective for the fiscal year ended March 31, 2010,
the Companies adopted “Accounting Standard for Construction Contracts” ASBJ Statement No.15, December 27,2007) and "Guidance on
Accounting Standard for Construction Contracts" (ASBJ Guidance No. 18, December 27, 2007). The Companies apply the percentage-of-
completion method for the construction contracts made in the current fiscal year which fulfill the conditions that the outcome of the construction
activity is deemed certain during the course of the activity. Otherwise, the Companies apply the completed-contract method. As a result, there
were no financial impacts on the "Net sales", "income from operations" and "income before income taxes and minority interests" in the
Consolidated Statements of Income for the fiscal year ended March 31, 2010.
(k)Accounting for Lease
Finance leases are depreciated over their respective lease terms with no residual values.
All of the finance leases are accounted for as financing leases in accordance with “Accounting Standard for Lease Transaction”
(ASBJ Statement No.13, March 30, 2007) and “Guidance on Accounting Standard for Lease Transaction” (JICPA Guidance No.16,
March 30, 2007).
(l) Derivative financial instruments
Derivative financial instruments, which include foreign currency forward exchange contracts and interest rate swap agreements are used as
a part of the Companies’ risk management of foreign currency and interest rate exposures underlying the normal course of the Companies'
operations.
Foreign currency exchange forward contracts:
The Companies enter into foreign currency forward exchange contracts to limit exposure to changes in foreign currency exchange rates
on accounts receivable and payable and cash flows generated from anticipated transactions denominated in foreign currencies.
For foreign currency forward exchange contracts, which are designated as hedges, the Company has adopted the accounting method where
by foreign currency denominated assets and liabilities are measured at the contract rate of the respective foreign currency forward exchange
contract. With respect to such contracts for anticipated transactions, the contracts are marked-to-market and the unrealized gains/losses are
deferred to the balance sheet and recorded in the income statement when the exchange gains/losses on the hedged items or transactions are
recognized.
Interest rate swap agreements:
The Companies enter into interest rate swap agreements in order to limit the Companies’ exposure in respect of adverse fluctuations in
interest rates underlying the debt instruments.
The related interest differentials paid or received under the interest rate swap agreements are recognized in interest expense over
the term of the agreements.
(m) Income taxes
Income taxes are computed using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognized
for the expected future tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that the tax benefits will not be realized.
The Company files its return under the consolidated tax filing system.
(n) Appropriations of retained earnings
Appropriations of retained earnings reflected in the accompanying Consolidated Financial Statements are recorded upon approval by
the shareholders.
(o) Net income per share
Net income per share is based upon the weighted average number of shares of common stock outstanding during each period.
Cash dividends per share are computed using dividends declared for the respective periods.
(p) Reclassification
Certain accounts in the Consolidated Financial Statements for the year ended March 31, 2009 have been reclassified to conform to
the 2010 presentation.
27
Financial Section
3. United States Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of exchange on March 31, 2010
(¥93.05=U.S.$1.00), has been used for translation purpose. The inclusion of such amounts is not intended to imply that Japanese Yen
have been or could be readily converted, realized or settled in U.S. dollars at this rate or any other rate.
4.Financial instruments
(a) Information on financial instruments
Policies
The Companies enter into financing arrangements (mainly through bank loans or corporate bonds) based on the planned capital expenditures
of the Metal Cables and the Optical Fiber Cables manufacturing businesses. The Companies invest in highly secured financial assets
using available cash and finance their short-term working capital needs through bank loans. The Companies use derivative transactions within
predetermined transaction volumes to limit the risk of significant fluctuations in foreign currency exchange rates and interest rates. The
Companies do not enter into derivative transactions for speculative purposes.
Details of financial instruments and related risks
Trade notes and accounts receivable are exposed to customer credit risk. Also, trade receivables denominated in foreign currencies, which
are derived from the global business expansion, are exposed to fluctuation in foreign currency exchange rates, however, the exposure is
mitigated by entering into foreign forward exchange contracts.
Investment securities consist mainly of equity securities, which are exposed to market price fluctuation risks.
Trade notes and accounts payable have payment terms within one year. Also, within these accounts there are foreign currency
denominated balances derived from the import of raw materials and therefore the balances are exposed to fluctuations in foreign currency
exchange rates. However, such balances are constantly offset by the accounts receivable balances denominated in the same currencies.
Borrowings and Corporate Bonds are used primarily for capital expenditures and have maturity dates within five years subsequent to the
balance sheet date. Certain borrowing contracts are based on variable, or floating, interest rates, which are exposed to fluctuation risk and
are hedged via interest rate swap agreements.
Derivative transactions are comprised primarily of foreign forward exchange contracts aiming to hedge foreign currency exchange rate
fluctuation risk in trade receivables/payables denominated in foreign currencies and of interest rate swap agreements aiming to hedge
interest rate fluctuation risk in bank loans.
Risk management over financial instruments
Credit risk management (risk of customers' default risk, etc.)
The Company periodically monitors major customers' financial conditions and performs customer specific aging analyses. In addition,
the Company monitors doubtful accounts due to the current economic difficulities in accordance with the "credit management policy".
The consolidated subsidiaries and affiliates are also required to conform with the "credit management policy" of the Company.
In order to mitigate credit risks to the greatest extent possible when dealing with derivative transactions, the Companies trade with
financial institutes that maintain high credit ratings.
The financial assets being exposed to credit risks recorded in the Consolidated Balance Sheets represent amounts of maximum
exposures to credit risk as of March 31, 2010.
Market risk management (risk of fluctuations in foreign currency rates, interest rates, etc.)
The Company and certain consolidated subsidiaries generally use foreign forward exchange contracts to limit foreign currency exchange
rate fluctuation risk in trade receivables/payables denominated in foreign currencies. Depending on the foreign currency market condition,
the Companies use forward exchange contracts for trade receivables denominated in foreign currencies generated from highly probable
forecast export transactions. Also, the Company and certain consolidated subsidiaries use interest rate swap agreements to limit interest
rate fluctuation risk associated with bank loans.
In relation to investment securities, the Companies continuously monitors the related market values and financial condition of the
issuers while also taking into consideration their business relationships with the issuers.
In executing and managing the daily operations of derivative transactions, the Companies and certain consolidated subsidiaries regularly
monitor transaction balances/volumes and profit/loss status. Such information is periodically reported to the responsible management team
and is audited by certain administration divisions. Also, prior approvals by an Executive Officer of the Company are generally required to
enter into significant transactions, transaction modifications or applications for the use of new financial instruments.
Liquidity risk management for financing activities (risk of inability to repay on due date)
The Company manages liquidity risk by preparing/updating cash flow forecasts (led by the finance division) based on relevant information
reported from the individual divisions and by entering into commitment line agreements.
Supplementary information on the fair value of financial instruments
The fair value of financial instruments is based on market values as well as reasonably determined values in situations where the market fair
value is unavailable. The determination of such values is based on certain assumptions, which may result in different outcomes if other
assumptions are applied. Also, the following information (b) Fair values of Financial Instruments does not include market risk of derivative
transactions.
28
(b) Fair values of Financial Instruments
The fair value of financial instruments at March 31, 2010, their associated book value as recorded in the Consolidated Financial Statements and
the net differences are as follow:
Millions of yen Thousands of U.S. dollars
Consolidated Fair Difference Consolidated Fair Difference
2010 amount value amount value
Cash and deposits 50,753 50,753 - 545,445 545,445 -
Notes and accounts receivable, trade 119,415 1,283,348
Less: Allowance for doubtful accounts (1,072) (11,524)
Total 118,343 118,343 - 1,271,824 1,271,824 -
Securities and investment securities 35,013 33,795 (1,218) 376,291 363,193 (13,098)
Notes and accounts payable, trade 74,575 74,575 - 801,456 801,456 -
Short-term borrowings 49,150 49,150 - 528,209 528,209 -
Income taxes payable 2,263 2,263 - 24,319 24,319 -
Bond 30,000 30,417 417 322,407 326,889 4,482
Long-term debt 73,053 73,803 750 785,099 793,154 8,055
Derivative Instruments
Non-hedge derivative instruments 109 109 - 1,171 1,171 -
Designated hedge instruments (211) (211) - (2,268) (2,268) -
(*1)¥3,223 million (US$34,644 thousand) of the long-term debt which matures within 1 year and are recorded in "current portion of long-term debts"
in the consolidated balance sheets are included in "long-term debt" above.
(*2)Net receivables and liabilities related to the derivative transactions are presented net and items with a net liability position are presented in ( ).
Note 1: Method used to determine fair value of financial instruments, securities and derivative transactions:
(1)Cash and deposits
The fair values of these items approximate cost due to their short term maturities.
(2)Notes and accounts receivable, trade
The fair values of these items approximate cost because of their short term maturities. For certain accounts receivables, the Companies enter into
foreign exchange forward contracts for which a simplified method of determinig fair value is applied and allowable under JGAAP. The fair values
of such receivables are determined on a aggregate basis with the related foreign exchange forward contract.
(3)Securities and investment securities
The fair value of equity securities are determined using quoted market prices for those securities. The fair value of debt securities are determined
using quoted market prices or the prices provided by the financial institutions with which the related transactions are entered.
(4)Notes and accounts payable, trade, (5) Short-term borrowings and (6) Income taxes payable
The fair values of these items approximate cost due to their short term maturities.
(7) Bond
The fair value of bonds issued by the Company is determined using quoted market prices.
(8) Long-term debts
The fair value of these items are determined based on the present value of the principal and interest discounted at the interest rate to be charged
for a newly entered into similar borrowing. For certain long-term debt with a floating interest rate, the Companies enter into interest swaps for
which a simplified method is applied and allowable under JGAAP. Such long-term debt is combined with the related interest swaps and their fair
values are determined based on the present value of the principal and interest after the swap is discounted at the interest rate to be charged for
a similar new entered into borrowing.
(9) Derivative instruments
The Companies use a forward exchange rate for foreign exchange forward contracts. Foreign exchange forward contracts are combined with
the accounts receivable designated as hedged items and are treated as one unit. Their fair values are included in related accounts receivable.
Also, interest swaps for which a simplified method allowed under JGAAP is applied are combined with the long-term debts designated as
hedged item and are treated as one unit. Their fair values are included in long-term debt.
Note 2 : Financial instruments for which estimation of the fair value is extremely difficult
Millions of yen Thousands of U.S. dollars
Description Amount recorded in consolidated Amount recorded in consolidated
balance sheets balance sheets
Non-public companies ¥23,604 $253,669
These items are not included in "(3) Security and Investment securities" because it is extremely difficult to determine their fair value as
there is no quoted market price for these companies available and there is an inability to estimate the future cash flows of these companies.
29
Financial Section
Note 3 : Receivable and held-to-maturity investment securities at March 31, 2010 is recorded in balance sheet securities of which the aggregate annual maturities are as follows:
Year ended March 31, 2010
1year Due after 1 yearthrough5 years
Due after 5years through
10 years
Due after 10years
Cash and deposits 50,753 - - -Notes and accounts receivable, trade 119,415 - - -Securities and investment securities Held-to-maturity investment securities 4,039 - 66 59Total ¥174,207 ¥66 ¥59
Year ended March 31, 2010
1year Due after 1 yearthrough5 years
Due after 5years through
10 years
Due after 10years
Cash and deposits 545,445 - - -Notes and accounts receivable, trade 1,283,348 - - -Securities and investment securities Held-to-maturity investment securities 43,413 - 709 638
Total $1,872,206 $709 $638
5. Investment SecuritiesHeld-to-maturity investment securities at March 31, 2010 whose aggregate cost, gross unrealized gains, gross unrealized losses and fair values are as follows:
Thousands of Millions of yen U.S. dollars
2010 2010Cost ¥4,164 $44,760Gross unrealized gains - -Gross unrealized losses - -Fair value ¥4,164 $44,760
Available-for-sale investment securities at March 31, 2009 and 2010 consist primarily of equity securities whose aggregate cost, gross unrealized gains, gross unrealized losses and fair values are as follows:
Thousands of Millions of yen U.S. dollars
2009 2010 2010Cost ¥21,656 ¥21,686 $233,062Gross unrealized gains 855 3,660 39,334Gross unrealized losses (43) (1,067) (11,470)Fair value ¥22,468 ¥24,279 $260,926
Available-for-sale investment securities sold during the year ended March 31, 2009 are as follows:
Millions of yen2009
Sales amount ¥7,228Total gains 3,198Total losses (0)
Available-for-sale investment securities sold during the year ended March 31, 2010 were immaterial.
6. Short-term Borrowings, Long-term DebtShort-term borrowings at March 31, 2009 and 2010 comprised the following:
Thousands of Millions of yen U.S. dollars
2009 2010 2010Loans, principally from banks, with weighted-average interest rates of
2.2% and 1.8% per annum at March 31, 2009 and 2010, respectively ¥64,856 ¥49,150 $528,209
Commercial paper, with a weighted-average interest rate of 0.8% per annum at March 31, 2009. ¥14,000 - -
¥78,856 ¥49,150 $528,209
Thousands of U.S. dollars
Millions of yen
30
Long-term debt at March 31, 2009 and 2010 is comprised of the following:Thousands of
Millions of yen U.S. dollars2009 2010 2010
Loans from banks and other financial institutions with mortgage, or
other collateral and/or guarantees by other banks, due from 2010 to 2028
with weighted-average interest rates of 1.6% and 1.6 % at March 31, 2009 and 2010, respectively ¥65,573 ¥73,054 $785,099
Lease obligation 1,020 1,014 10,902
Unsecured straight bonds issued from March 19, 2007 to January 31, 2008 with interest rates ranging from 1.2% to 1.8% due from March 19, 2012 to January 31, 2018 30,000 30,000 322,407
96,593 104,068 1,118,408
Less: portion due within one year (3,717) (3,601) (38,696)¥92,876 ¥100,467 $1,079,712
The Companies’ assets pledged as collateral for short-term borrowings, long-term debt and other interest-bearing debts at March 31,
2009 and 2010 are as follows:
Thousands of
Millions of yen U.S. dollars2009 2010 2010
Carrying values of property, plant and equipment:Buildings and structures ¥807 ¥916 $9,847Machinery, equipment and tools 388 304 3,272Land 1,059 1,178 12,670Investment securities 128 65 709
The annual maturities of long-term debts during the five years ending March 31, 2015 are as follows:
Thousands of Millions of yen U.S. dollars
Year ending March 31,
2011 ¥3,601 $38,696
2012 6,796 73,034
2013 16,237 174,503
2014 23,001 247,187
2015 5,686 61,111
7. Other Long-term LiabilitiesOther than the loans and debts included in footnote 6 above, interest-bearing debts, which consisted of guarantee money received amounting to ¥5,685 million (US$61,098 thousand), were recorded as a part of other long-term liabilities in the Consolidated Balance Sheets as of March 31, 2010.
8.Provision for Surcharge PaymentProvision for surcharge payment included in other current liabilities, is recorded for expected loss resulting from the payment of thesurcharge due to the receipt of a (tentative) surcharge payment order based on the Antimonopoly Act.
9. Research and Development Costs
Research and development costs included in Selling, general and administrative expenses and Cost of sales, in aggregate, for the years endedMarch 31, 2009 and 2010, amounted to ¥14,989million and ¥13,491 million (US$144,992 thousand), respectively.
31
Financial Section
10. Severance indemnities and Pension Plans
Thousands of
Millions of yen U.S. dollars
Accrued severance indemnities for employees: 2009 2010 2010
Benefit obligations ¥(68,040) ¥(67,129) $(721,429)
Fair value of plan assets 41,390 44,618 479,513
Funded status (26,650) (22,511) (241,916)
Unrecognized actuarial loss, net 31,177 24,271 260,839
Unrecognized prior service costs, net (2,824) (2,852) (30,657)
Trust funds for severance plans 16,324 18,430 198,075
Net amount recognized 18,027 17,338 186,341
Accrued severance indemnities for directors and corporate auditors (62) (76) (822)
Prepaid pension costs included in the consolidated balance sheet (24,658) (24,148) (259,518)
Accrued severance indemnity reported
in the consolidated balance sheet ¥(24,720) ¥(24,224) $(260,340)
The components of net period pension costs for employees for the years ended March 31, 2009 and 2010 are as follows:
Thousands of
Millions of yen U.S. dollars
2009 2010 2010
Service costs ¥2,419 ¥2,155 $23,165
Interest costs 1,261 1,248 13,422
Expected return on plan assets (1,111) (604) (6,494)
Amortization of unrecognized prior service costs (233) (232) (2,497)
Amortization of unrecognized actuarial losses 2,324 2,767 29,743
Total 4,660 5,334 57,339
Gain on revision of retirement benefit plan - (42) (457)
Net periodic pension costs ¥4,660 ¥5,292 $56,882
Assumptions used in the calculation of the above net periodic pension costs as of March 31, 2009 and 2010 are as follows:
2009 2010
Method of attributing the projected benefits Term straight-line Term straight-line
to periods of service basis basis
Discount rates Mainly 1.9% Mainly 1.9%
Rates of expected return on plan assets Mainly 2.5% Mainly 1.6%
Amortization period for unrecognized prior service costs Mainly 15 years Mainly 15 years
Amortization period for unrecognized actuarial differences Mainly 15 years Mainly 15 years
11. Business Restructuring Charges
Business restructuring charges recorded as a component of other income (expense) are comprised of expenses resulting from the introduction
of an early retirement program primarily in the Electronics & Auto segment for the year ended March 31, 2009 and 2010.
12.Inventories
Inventories are valued at the lower of cost or market and the associated losses on inventory devaluation have been included
in "Cost of sales" for the years ended March 31 2009 and 2010 in the amounts of ¥1,762 million and ¥404 million(US$4,343 thousand),
respectively.
13.Fixed asset maintenance and removal expenses
Based on changes in the use of fixed assets in the Fukagawa area, the company has incurred maintenance and removal costs.
32
14. Impairment of Fixed AssetsLosses on impaired assets during the fiscal year ended March 31, 2009 consist primarily of the following:
(1) Location: Sakura plant (Sakura City, Chiba Prefecture)Use: Wafer Level Package manufacturing equipmentType: Machinery, others
Asset-impairment losses: Machinery and others ¥915 million US$9,314 thousand
Background leading to the recognition of asset-impairment losses: Idleness, and market value had fallen substantially below book value.Recoverable amount: Utility valueCalculation method for recoverable amount: Discounted Future Cash Flow (Discount rate : 6.18%)
(2) Location: N/AUse: N/AType: Goodwill
Asset-impairment losses: Goodwill ¥6,667 million US$67,871 thousand
Background leading to the recognition of asset-impairment losses : Idleness, and market value had fallen substantially below book value.Recoverable amount: Utility valueCalculation method for recoverable amount: Discounted Future Cash Flow (Discount rate : 7.33%)
(3) Location: Fujikura Automotive Europe S.A. (Zaragoza, Spain)Use: Wire Harness manufacturing equipmentType: Machinery, others
Asset-impairment losses: Machinery and others ¥1,951 million US$19,859 thousand
Background leading to the recognition of asset-impairment losses : Idleness, and market value had fallen substantially below book value.Recoverable amount: Utility valueCalculation method for recoverable amount: Discounted Future Cash Flow (Discount rate : 7.33%)
Losses on impaired assets during the fiscal year ended March 31, 2010 consisted principally of the following:
(1) Location: Fujikura Electronics Wuxi Ltd. (Jiangsu, China)
Use: HDD manufacturing equipmentType: Machinery, others
Asset-impairment losses: Machinery and Others 110 million US$1,184 thousand
Background leading to the recognition of asset-impairment losses : Certain equipment had become idle due to the realignment of the production base among the group entities.Recoverable amount: Net salable valueCalculation method for recoverable amount: Stated at net salable value or nil due to difficulty of conversion or sale.
(2) Location: Yonezawa Electric Wire(Guangzhou) Co.,Ltd.(Guangdong, China)Use: Electric wire manufacturing equipment
Type: Machinery, others
Asset-impairment losses: Machinery and Others 181 million US$1,949 thousand
Background leading to the recognition of asset-impairment losses: Expected future cash flow had fallen substantially below book values.Recoverable amount: Utility valueCalculation method for recoverable amount: Stated at utility value or nil.
Grouping method:The Companies grouped long-lived assets into asset groups by merchandise category.
15. Supplementary Cash Flow Information A reconciliation of cash and cash equivalents in the Consolidated Statement of Cash Flows and account balances in the Consolidated Balance Sheets at March 31, 2009 and 2010 are as follows:
Thousands of Millions of yen U.S. dollars
2009 2010 2010Cash and deposits 60,870 50,754 545,445
Negotiable certificates of deposits reported in securities - 4,000 42,988
Deposits with maturity of over three months (637) (1,082) (11,630)
Cash and cash equivalents ¥60,233 ¥53,672 $576,803
33
Financial Section
16. Income Taxes
The Company and its domestic subsidiaries are subject to a number of different income taxes which, in aggregate, indicate a nominal
statutory tax rate in Japan of approximately 40% for the years ended March 31, 2009 and 2010.
A reconciliation between the nominal statutory income tax rate and the effective income tax rate in the accompanying consolidated
statements of income for the years ended March 31, 2009 and 2010 is as follows:
2009 2010
Nominal statutory tax rate - % 40.0 %
Increase in taxes resulting from permanent differences - 8.9
Provision for surcharge payment - 20.8
Foreign tax credit and payment - 8.2
Intercompany elimination of dividends - 6.8
Equity earnings - (9.1)
Tax exemption in foreign tax jurisdiction - (10.5)
Valuation allowance - 13.7
Effect of lower tax rates at overseas subsidiaries - (12.0)
Tax credit - (1.4)
Other - (1.6)
Effective income tax rate - 63.8
As the companies recorded net loss, such reconciliation for the year ended 31, 2009 is not disclosed.
The significant components of deferred tax assets and liabilities at March 31, 2009 and 2010 are as follows:
Thousands of
Millions of yen U.S. dollars
2009 2010 2010
Deferred tax assets:
Inventory revaluation ¥693 ¥656 $7,047
Bonus accrual 1,925 2,088 22,445
Elimination of intercompany profits on inventories 218 209 2,244
Enterprise taxes 101 202 2,177
Net operating losses carried forward 7,287 7,485 80,437
Loss on devaluation of investment securities 3,986 3,824 41,094
Depreciation 1,505 1,562 16,783
Allowance for doubtful accounts 475 358 3,854
Impairment losses 1,768 2,303 24,755
Elimination of intercompany profits on fixed assets 946 630 6,769
Loss on disposal of fixed assets 1,619 1,288 13,840
Foreign tax credit carried forward 2,386 4,264 45,826
Other 3,722 5,448 58,552
Gross deferred tax assets 26,631 30,317 325,823
Less: valuation allowance (18,924) (22,012) (236,561)
Total deferred tax assets 7,707 8,305 89,262
Deferred tax liabilities:
Special tax-purpose reserve for deferred gain on sale of property 1,285 1,168 12,551
Unrealized gains on investment securities 135 631 6,785
Prepaid pension costs 1,611 1,039 11,169
Other 587 493 5,299
Total deferred tax liabilities 3,618 3,331 35,804
Net deferred tax assets ¥4,089 ¥4,974 $53,458
Net deferred tax assets (liabilities) included in the consolidated balance sheets are as follows:
Thousands of
Millions of yen U.S. dollars
2009 2010 2010
Current assets—deferred income taxes ¥3,687 ¥4,141 $44,505
Other assets 2,543 3,088 33,187
Current liabilities—other current liabilities (41) (58) (616)
Long-term liabilities—other long-term liabilities (2,100) (2,197) (23,618)
Net deferred tax assets ¥4,089 ¥4,974 $53,458
17. Contingent Liabilities
Thousands of
U.S. dollars
Guarantees for loans borrowed / notes issued by: 2009 2010 2010
Employees ¥873 ¥759 $8,161
Viscas corporation, affiliated company 12,041 7,178 77,152
Other unconsolidated subsidiaries and affiliates 3,555 3,056 32,830
¥16,469 ¥10,993 $118,143
Millions of
yen
3�
18. Derivative InstrumentsThe Companies use derivative financial instruments, comprised mainly of foreign forward exchange contracts to reduce their exposure tomarket risk from fluctuations in foreign currency exchange rates and interest rates.The Companies do not anticipate incurring significant losses from the derivative arrangements due to the event of nonperformance by
counterparties.Foreign forward exchange contracts entered into by the Companies at March 31, 2009 and 2010,for which hedge accounting has not been applied, are as follows:
Millions of yenNotional Fair Gain
2009 amount value (loss)Foreign forward exchange contractsSell USD 1,905 1,906 (1) JPY 633 627 6 EUR 457 464 (7)
216 219 (3) Total ¥3,211 ¥3,216 (¥5)
Buy USD 2,137 2,147 10
291 284 (7) Total ¥2,428 ¥2,431 ¥3
Currency swaps Pay Foreign/ Rec. Euro USD 607 551 56 Total ¥607 ¥551 ¥56
Interest Rate SwapsSell Pay Fixed interest / Rec. Floating interest 868 (38) (38) Total ¥868 (¥38) (¥38)
Millions of yen Thousands of U.S. dollarsNotional Fair Gain Notional Fair Gain
2010 amount value (loss) amount value (loss)Foreign forward exchange contractsSell USD 2,389 15 15 25,675 157 157 JPY 678 23 23 7,288 250 250 EUR 247 2 2 2,657 27 27
Others 220 (3) (3) 2,362 (42) (42) Total ¥3,534 ¥37 ¥37 $37,982 $392 $392
Buy USD 5,615 149 149 60,349 1,603 1,603 MXN 864 (28) (28) 9,289 (300) (300)
Others 788 (16) (16) 8,459 (172) (172) Total ¥7,267 ¥105 ¥105 $78,097 $1,131 $1,131
Interest Rate SwapsSell Pay Fixed interest / Rec. Floating interest 781 (33) (33) 8,389 (352) (352) Total ¥781 (¥33) (¥33) $8,389 ($352) ($352)
Gains and losses on these derivative instruments are included in "Other, net" in the Consolidated Statements of Income.Foreign forward exchange contracts entered into by the Companies as at March 31, 2010,for which hedge accounting has been applied, are as follows:
Millions of yen Thousands of U.S. dollars
2010
Special treatment of interest rate swaps
Interest Rate Swaps
Long-term debt
Sell
Pay Fixed interest / Rec. Floating interest 46,000 45,000 - 494,358 483,611 -
Transfer process of foreign forward exchange contracts
Foreign forward exchange contracts
Accounts receivable, trade
Sell
USD 15,761 - - 169,381 - -
EUR 512 - - 5,499 - -
Processing method in principle
Foreign forward exchange contracts
Accounts receivable, trade
Sell
USD 7,493 262 (210) 80,522 2,814 (2,262)
EUR 243 - (1) 2,612 - (6)T ¥70,009 ¥45,262 (¥211) $752,372 $486,425 ($2,268)
Fairvalue
More than oneyear of Notional
amount
More than oneyear of Notional
amount
Notionalamount
Fairvalue
Notionalamount
35
Financial Section
19. Appropriation of retained earnings
Appropriations of retained earnings are recorded in the accounts only after shareholders’ approval has been obtained. The following
appropriations of retained earnings of the Company for the year ended March 31, 2010 were approved at the Ordinary General Meeting
of Shareholders held on June 29, 2010:
Millions of Thousands of
yen U.S. dollars
Cash dividends ¥901 $9,691
20. Supplementary Information for the Consolidated Statements of Net Assets
(a) Type and number of outstanding shares
Year ended March 31, 2010
Type of shares
Issued stock:
Common stock
Total
Treasury stock:
Common stock (* 1,2)
Total
(*1) Treasury stock increased due to the repurchase of 37,000 shares.
(*2) Treasury stock decreased due to the sale of shares of 3,000 shares.
(b) Dividends
(1) Dividends paid to shareholders:
Type of Amount Amount Amount Amount Shareholders' Effective
Date of approval shares(Millions of
Yen)
(Thousands of
U.S. dollars)
per share
(Yen)
per share
(U.S.dollars)cut-off date date
June 26, 2009 Common 901 $9,691 2.5 $0.03
stock
November 2, 2009 Common 901 $9,691 2.5 $0.03
stock
(2) Dividends with a shareholders' cut-off date during the current fiscal year but an effective date subsequent to the current fiscal year:
Type of Amount Amount Paid from Amount Amount Shareholders'
Date of approval shares(Millions of
Yen)
(Thousands of
U.S. dollars)per share (Yen)
per share
(U.S.dollars)cut-off date
June 29, 2010 Common 901 $9,691 Retained 2.5 $0.03
stock earnings
21. Investment and Rental Property
Effective for the fiscal year ended March 31,2010, the Companeis adopted the"Accounting Standard for Disclosures about Fair Value"(ASBJ Statement No.20,
November 28,2008) and "Guidance on Accounting Standard for Disclosures about Fair Value of Investment and Rental Property"(ASBJ Guidance
No.23,November 28, 2008)
The Companies own office building (including land) for rent in Tokyo and other districts. Gains and lossed generated from these investments
and rental properties were ¥3,445 million ($37,024 thousand) for the fiscal year ended March 31, 2010. Majority of rental revenues were recorded
in Net Sales and majority of rental costs were recorded in Cost of sales in the Consolidated Statements of Income.
The investment and rental property at March 31,2010, including in the Consolidated Balance Sheets and respective increases and decreases fair value
are as follows;
Year ended March 31, 2010
Millions of yen
Amounts in the consolidated balance sheet(*1)
Balance at Increase and decrease in Balance at end Fair value at end
beginning of year property during the year(*2) of year of year(*3)
¥32,721 ¥13,552 ¥46,273 ¥110,474
Year ended March 31, 2010
Thousands of U.S. dollars
Amounts in the consolidated balance sheet(*1)
Balance at Increase and decrease in Balance at end Fair value at end
beginning of year property during the year(*2) of year of year(*3)
$351,652 $145,641 $497,293 $1,187,261
(*1) Amounts in the consolidated balance sheet were computed based on acquisition costs after deducting accumulated depreciation and
impairment charges.
(*2) The increase in property during the year includes the purchase of office building for rent (¥14,184 million(US$152,434 thousand)).
(*3) Fair value at end of year was primarily based on "Real Estate Appraisal Standards".
Thousands of shares
Balance at
beginning of year
Increase in shares
during the year
Decrease in shares
during the year
Balance at end
of year
360,863
360,863
254
254
37
37
3
3
360,863
360,863
288
288
Resolution
approved by
Annual general meeting
of shareholders
March 31,
2009 June 29, 2009
Board of directors September 30,
2009
December
2,2009
of shareholders
Resolution
approved by
Annual general meeting March 31,
2010
36
22. Segment Information(a) Business segmentsAs of March 31, 2010, the Real Estate business previously included in “Other” was reported as a separate business segment, which reflects increasing significance of the business.Segment information for the year ended March 31, 2009 has been restated to conform to the current presentation.Definitions of the five segments for the years ended March 31, 2009 and 2010 are as follows:The Telecommunications segment deals with optical fiber cables, splicers, etc.The Electronics & Auto segment deals with FPCs, electric wire, automobile parts, etc.The Metal Cable & Systems segment deals with telecommunication cables, power cables, control/instrumentation cables, magnetic wire, construction, etc.The Real estate segment deals with real estate, rentals of commercial properties, etc.The Other segment deals with new products, etc.The segment information of the Companies for the years ended March 31, 2009 and 2010 is presented below.
For the year ended March 31, 2009
Millions of yenElimination of inter-segment
Telecommuni- Electronics Metal Cable sales/profit or ConsolidatedBusiness segments cations & auto & Systems Real estate Other Total common assets total
Sales to outside customers ¥110,390 ¥223,040 ¥227,839 ¥7,147 ¥5,242 ¥573,658 ¥573,658Inter-segment sales 185 255 2,507 - 12,488 15,435 (15,435) -Total sales ¥110,575 ¥223,295 ¥230,346 ¥7,147 ¥17,730 ¥589,093 (¥15,435) ¥573,658
Operating expenses ¥105,973 ¥226,646 ¥234,767 ¥3,913 ¥17,391 ¥588,690 (¥15,263) ¥573,427
Operating profit loss 4,602 (3,351) (4,421) 3,234 339 403 (172) 231Total assets 73,949 124,399 109,862 30,902 8,291 347,403 134,091 481,494Depreciation and amortization 6,005 16,710 3,009 1,131 315 27,170 2,788 29,958Impairment loss 0 10,240 2 - - 10,242 - 10,242Capital expenditures 4,781 13,039 3,296 8,117 206 29,439 1,762 31,201
For the year ended March 31, 2010
Millions of yenElimination of inter-segment
Telecommuni- Electronics Metal Cable sales/profit or ConsolidatedBusiness segments cations & auto & Systems Real estate Other Total common assets totalSales to outside customers ¥107,320 ¥208,447 ¥174,508 ¥7,172 ¥6,080 ¥503,527 ¥503,527Inter-segment sales 113 73 3,146 7 5,218 8,557 (8,557) -Total sales ¥107,433 ¥208,520 ¥177,654 ¥7,179 ¥11,298 ¥512,084 (¥8,557) ¥503,527
Operating expenses ¥98,799 ¥204,827 ¥175,976 ¥3,762 ¥10,654 ¥494,018 (¥8,425) ¥485,593
Operating profit loss 8,634 3,693 1,678 3,417 644 18,066 (132) 17,934Total assets 80,258 133,583 110,994 45,943 9,939 380,717 109,033 489,750Depreciation and amortization 5,035 14,356 3,229 1,060 443 24,123 2,262 26,385Impairment loss - 312 - - - 312 - 312Capital expenditures 7,391 8,565 2,519 14,741 233 33,449 1,149 34,598
Thousands of U.S. dollarsElimination of inter-segment
Telecommuni- Electronics Metal Cable sales/profit or ConsolidatedBusiness segments cations & auto & Systems Real estate Other Total common assets totalSales to outside customers $1,153,355 $2,240,161 $1,875,427 $77,079 $65,338 $5,411,360 $5,411,360Inter-segment sales 1,213 795 33,807 74 56,075 91,964 (91,964) -Total sales $1,154,568 $2,240,956 $1,909,234 $77,153 $121,413 $5,503,324 ($91,964) $5,411,360
Operating expenses $1,061,784 $2,201,267 $1,891,199 $40,427 $114,493 $5,309,170 ($90,546) $5,218,624
Operating profit loss 92,784 39,689 18,035 36,726 6,920 194,154 (1,418) 192,736Total assets 862,524 1,435,608 1,192,839 493,741 106,824 4,091,536 1,171,763 5,263,299Depreciation and amortization 54,108 154,286 34,699 11,389 4,765 259,247 24,319 283,566
Impairment loss - 3,358 - - - 3,358 - 3,358Capital expenditures 79,429 92,051 27,073 158,423 2,499 359,475 12,348 371,823
Notes:Common assets included in "Elimination of inter-segment sales/profit or common assets" for the years ended March 31, 2009 and 2010amounted to ¥171,106 million and ¥142,552 million (US$1,532,000 thousand), respectively.Common assets mainly consisted of investment securities and assets related to the research and development and administrative divisionsof the Company.
37
Financial Section
(b) Geographical segmentsThe operations of the Companies are classified into geographical areas as follows:Japan, Asia (Thailand, Singapore, Malaysia, China and other ) and Other (U.S.A., U.K, Spain.).
For the year ended March 31, 2009
Millions of yenElimination of inter-segmentsales/profit or Consolidated
Geographic segments Japan Asia Other Total common assets totalSales to external customers ¥351,964 ¥136,606 ¥85,088 ¥573,658 ¥573,658Inter-segment sales 93,886 84,450 1,039 179,375 (179,375) -Total sales ¥445,850 ¥221,056 ¥86,127 ¥753,033 (¥179,375) ¥573,658
Operating expenses ¥452,788 ¥213,308 ¥86,834 ¥752,930 (¥179,503) ¥573,427
Operating profit loss (6,938) 7,748 (707) 103 128 231Total assets 289,584 94,292 36,391 420,267 61,227 481,494
For the year ended March 31, 2010
Millions of yenElimination of inter-segment
sales/profit or ConsolidatedGeographic segments Japan Asia Other Total common assets total
Sales to external customers ¥295,618 ¥136,526 ¥71,384 ¥503,527 ¥503,527
Inter-segment sales 102,316 89,432 1,353 193,102 (193,102) -Total sales ¥397,934 ¥225,958 ¥72,737 ¥696,629 (¥193,102) ¥503,527
Operating expenses ¥389,921 ¥218,662 ¥69,995 ¥678,578 (¥192,985) ¥485,593
Operating profit loss 8,013 7,296 2,742 18,051 (117) 17,934
Total assets 324,216 114,183 40,804 479,203 10,547 489,750
Thousands of U.S. dollarsElimination of
inter-segmentsales/profit or Consolidated
Geographic segments Japan Asia Other Total common assets totalSales to external
customers $3,176,980 $1,467,227 $767,153 $5,411,360 $5,411,360Inter-segment sales 1,099,583 961,121 14,543 2,075,247 (2,075,247) -
Total sales $4,276,563 $2,428,348 $781,696 $7,486,607 ($2,075,247) $5,411,360
Operating expenses $4,190,446 $2,349,939 $752,233 $7,292,618 ($2,073,994) $5,218,624
Operating profit loss 86,117 78,409 29,463 193,989 (1,253) 192,736Total assets 3,484,323 1,227,110 438,518 5,149,951 113,348 5,263,299
Notes:Common assets included in "Elimination of inter-segment sales/profit or common assets" for the years ended March 31, 2009 and 2010amounted to ¥171,106 million and ¥142,552 million (US$1,532,000 thousand), respectively.Common assets mainly consisted of investment securities and assets related to the research and development and administrative divisionsof the Company.
(c) Overseas salesExport sales by the Companies and sales by overseas subsidiaries (after elimination of inter-company sales) for the years ended March 31,2009 and 2010 are summarized as follows:
Millions of yen2009 Asia Others TotalOverseas sales ¥154,831 ¥100,101 ¥254,932Consolidated net sales - - 573,658Percentage of overseas sales to consolidated net sales 27.0% 17.4% 44.4%
Millions of yen Thousands of U.S. dollars2010 Asia Others Total Asia Others TotalOverseas sales ¥156,501 ¥82,051 ¥238,552 $1,681,910 $881,796 $2,563,706Consolidated net sales - - 503,527 - - 5,411,360Percentage of overseas sales to consolidated net sales 31.1% 16.3% 47.4% 31.1% 16.3% 47.4%
38
23. Related Party TransactionsThe principal transactions between the Company and affiliates accounted for by the equity methodfor the year ended March 31, 2009 and 2010 are summarized as follows:
2009Millions of
VISCAS Corporation yenSupply of raw materials ¥12,814Purchases of raw materials 14,765Guarantee for loans 12,040
Other current assets 5,257Account payables 4,532
2010Millions of Thousands of
VISCAS Corporation yen U.S. dollarsSupply of raw materials ¥8,386 $90,124Purchases of raw materials 8,989 96,604Guarantee for loans 7,178 77,152
Other current assets 4,796 51,543Account payables 3,708 39,855
Millions of Thousands ofUnimac Ltd. yen U.S. dollarsSupply of raw materials ¥5,696 $61,224
Account receivables 3,619 38,901
24. Subsequent EventsThere are no subsequent events.
39
Financial Section
�0
12
3
10
45
6
7
1312
14
11
98
18
15
17
16
Global Network
Share of Sales by Geographic Area
OTHERS
Region Company Name
U.S.A. 1 Fujikura America Inc.2 America Fujikura Ltd.
AFL Telecommunications LLC.3 Fujikura Automotive America LLC.
China 4 Fujikura (Shanghai) Trading Co., Ltd.
Fujikura Electronics Shanghai Ltd.
DDK (Shanghai) Co., Ltd.5 Fujikura Electronics Wuxi Ltd.
Fujikura Hengtong Aerial Cable System Ltd.6 Fujikura Changchun Ltd.
7 Fujikura Zhuhai Co., Ltd.
8 Yonezawa Electric Wire (Guangzhou) Co., Ltd.
9 Fujikura Hong Kong Ltd.
Region Company Name
Korea 10 Fujikura Korea Automotive Ltd.
Thailand 11 Fujikura Electronics (Thailand) Ltd.
DDK (Thailand) Ltd.
Fujikura SHS Ltd.
Yoneden (Thailand) Ltd.
SoutheastAsia
12 Fujikura Federal Cables Sdn. Bhd.
Fujikura Malaysia Sdn. Bhd.
13 Fujikura Asia Ltd.
14 Fujikura Fiber Optics Vietnam Ltd.
Europe 15 Fujikura Europe Ltd.
16 Fujikura Automotive Europe GmbH
17 Fujikura Automotive Europe S.A.
18 Joint Stock Company Moskabel-Fujikura
Net Sales (Consolidated)
(Millionsofyen)
Operating Income (Consolidated)
(Millionsofyen)
Assets (Consolidated)
(Millionsofyen)
Japan 295,618
Asia 136,525
Others 71,383
503,527
17,934
489,749
Japan 8,013
Asia 7,295
Adjustment (116)
Others 2,741
Japan 324,216
Asia 114,182
Adjustment 10,546Others 40,804
*Please refer to the following for information about Fujikura's Global Network:http://www.fujikura.co.jp/eng/corporate/network-o1.html
ASIA 27%14%U.S.A. EUROPE
�1
Investor Information As of March 31, 2010
Company Name
Percentage of Equity Ownership including Indirect Ownership
Paid-in Capital(Millions) Major Lines of Business
Nishi Nippon Electric Wire & Cable Co., Ltd.
60.7% ¥960Optical fiber cables, optical fiber cables with connectors, electric wires and cables
Yonezawa Electric Wire Co., Ltd. 92.8% ¥1,022Optical fiber cables and optical connection parts, automotive wire harnesses, electric wires and cables, and power distribution equipment
Dai-ichi Denshi Kogyo Co., Ltd. 86.6% ¥1,075 Connectors
America Fujikura Ltd. 100.0% US$102
Optical fiber cables, optical fusion splicers, optical measuring instruments, optical fibers and cables with connectors and optical parts, automobile wire harnesses, OPGW and engineering
Fujikura Electronics Shanghai Ltd. 100.0% US$12 Assembling of FPCs, metal domes
Fujikura Zhuhai Co., Ltd. 96.5% US$8� Automotive wire harnesses and components
Fujikura (Thailand) Ltd. 100.0% THB1,100Various electronic wire, tape wire, metal domes, heat sinks and micro heat pipes
LTEC Ltd. 100.0% THB1,000Optical fiber cables with connectors, optical couplers, HDD components, membrane switches and coil assemblies
PCTT Ltd. 100.0% THB3,200 FPCs
DDK (Thailand) Ltd. 86.7% THB730 Connectors
Note: Of the companies listed above, seven electronics subsidiaries in Thailand, including Fujikura (Thailand) Ltd., LTEC Ltd. and PCTT Ltd., were consolidated with the establishment of Fujikura Electronics (Thailand) Ltd. (capital: THB5.5 billion), a wholly owned subsidiary of Fujikura, on April 1, 2010.
Number of Shares Held (Thousands)
Ratio of Shareholding
(%)
JapanTrusteeServiceBankLtd.(TrustAccount) 31,173 8.6�
TheMasterTrustBankofJapan,Ltd.(TrustAccount) 20,396 5.65
MitsuiLifeInsuranceCo.,Ltd. 10,192 2.82
JapanTrusteeServicesBankLtd.(AccountofRetirementBenefitTrustforTheChuoMitsuiTrustandBankingCompany,Limited)
9,777 2.71
JapanTrusteeServiceBankLtd.(TrustAccount9) 8,952 2.�8
SumitomoMitsuiBankingCorporation 8,�56 2.3�
TheShizuokaBank,Ltd. 7,713 2.1�
MitsuiSumitomoInsuranceCompany,Limited 6,891 1.91
BBHBostonCustodianforVanguardInternationalValueFund
6,673 1.85
DowaMetals&MiningCo.,Ltd. 6,563 1.82
Head Office5-1, Kiba 1-chome, Koto-ku, Tokyo 135-8512, JapanURL: www.fujikura.co.jp/eng/
Year of Foundation1885
Date of IncorporationMarch 18, 1910
Common StockAuthorized: 1,190,000,000 sharesIssued: 360,863,421 sharesCapital: ¥53,075,807,507
Number of Shareholders33,859
Independent AuditorsPricewaterhouseCoopers Aarata
Further InformationFor further information on this annual report, please contact the Investor Relations Group at the Head Office.
ContactInvestor Relations GroupTel: +81-03-5606-1112Fax: +81-03-5606-1539E-mail: [email protected]
Major Shareholders
Main Consolidated Subsidiaries As of March 31, 2010
�2
Annual Report 2010“Tsunagu” Technology
5-1, Kiba 1-chome, Koto-ku, Tokyo 135-8512, JapanTel: +81-3-5606-1030Fax: +81-3-5606-1502URL: http://www.fujikura.co.jp
Printed in Japan
Fujik
ura
Ltd. A
NN
UA
L RE
PO
RT
20
10
