Automotive
Automotive

Information &Communications

Electronics

Information &Communications
Automotive

Information &Communications

Electronics

Electric Wire
& Cable, Energy

Indust&Electronics
Automotive

Information &Communications

Electronics

Electric Wire
& Cable, Energy

Electric Wire &Cable, Energy
Automotive

Information &Communications

Annual Report 2011

Electronics

Electric Wire
& Cable, Energy

Year Ended March 31, 2011

Automotive

Information &Communications

Industrial Materials& Others

Industrial Materials &OthersElectronics

Electric Wire
& Cable, Energy

Industrial Materials& Others

The Origin of the Sumitomo Electric GroupThe Spirit Fosteredin Sumitomo’s 400-Year Tradition
After centuries of years,
our high-minded spirit glows ever more brightly.
The Sumitomo Electric Group is committed to maintaining public trust by conducting business activities withintegrity, in accordance with the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles. As
the Company expands its business operation across the world, linking closely with society, it always gives toppriority to the cultivation of high corporate ethics to be a world-class company.
The Sumitomo Spirit grew out of the guiding principles set down by Sumitomo’s founding father Masatomo
Sumitomo in his Monjuin Shiigaki (the Aphorisms of Monjuin), and it has been passed down for over 400 years.
The essence of the spirit was condensed in the Sumitomo Business Principles. In Monjuin Shiigaki, he preached
the importance of doing one’s sincere best in not only business but also every aspect of their life. This is thespirit that we, the members of the entire Sumitomo Electric Group, have inherited and strive to embody.

The Sumitomo Spirit
Business Principles
1: Sumitomo shall achieve prosperity based on solid foundation by placing prime importance on integrity andsound management in the conduct of its business.
2: Sumitomo’s business interest must always be in harmony with public interest; Sumitomo shall adapt to goodtimes and bad times but will not pursue immoral business.
In addition to the Business Principles, the Sumitomo Spirit also includes: Attaching Importance to Technology,
Respect for Human Resources, Long-Range Planning, Mutual Prosperity, Respect for the Public Good.

The Ever-Evolving Principles
The Sumitomo Electric Group makes commitments to all of its
stakeholders.
Based on the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles were established as thefundamental spirits of the Group’s business operation. In the Corporate Principles, we declare our commitment
to the customers, shareholders, society, natural environment and employees. The Principles also emphasize theimportance of compliance and public trust.

Sumitomo Electric Group Corporate Principles (Established in June 1997)
Each company of the Sumitomo Electric Group shall• Offer the very best goods and services to satisfy customer needs.
• Build technical expertise, realize changes and strive for consistent growth.
• Contribute to creating a better society and environment, with a firm awareness of our social responsibility.
• Maintain high corporate ethics and strive to become a company worthy of society’s trust.
• Nurture a lively corporate culture that enables employee self-improvement.

Glorious Excellent Company
The Sumitomo Electric Group is working to develop into a corporate groupwith a solid corporate philosophy and sustainable growth potential, withthe aim of becoming a “Glorious Excellent Company.”
The word “Glorious” represents the philosophical and qualitative goals of the Sumitomo ElectricGroup. The Group has inherited a principle that reflects our corporate ethical values to give top
priority to social trust, that is “placing prime importance on integrity and sound management,”
as well as other traditional principles such as “Attaching Importance to Technology” and “Respectfor Human Resources,” which have a history of more than 400 years. The ideal state achieved inembodying the Sumitomo Spirit, as well as the Sumitomo Electric Group Corporate Principles, whichwere established on the basis of the Spirit, is what we mean by the word “Glorious.”“Excellent” symbolizes what the Sumitomo Electric Group should be in a quantitative sense, whichis to achieve excellent business performance. The Sumitomo Electric Group’s business portfolio
comprises five business segments: Automotive; Information & Communications; Electronics; Electric
Wire & Cable, Energy; and Industrial Materials. Under a strategy advocating establishment of a
global presence, strengthening our leading technology, and pursuing our global top 3 target, wehave established five-year mid-term management plan VISION 2012, which set targets for 2012,
respectively, to realize sustainable expansion of our business fields and increase profitability.

Annual Report 2011

SUMITOMO ELECTRIC

1

Each company of the Sumitomo Electric Group combines its unsurpassed
creativity with knowledge and experience to generate dynamics thatallow the Group to contribute to society.

TM

For the Sumitomo Electric Group, ID stands for Ingenious Dynamics
and at the same time stands for fulfilling and embodying theSumitomo Electric Group identity (ID) and the determination tocontinually contribute to the infrastructure development (ID) of thegreater society.

2

SUMITOMO ELECTRIC

Annual Report 2011

Contents
The Origin of the Sumitomo Electric GroupAt a Glance

4

Financial Highlights

6

Message from the President

8

Special Feature

12

Policies for Fiscal 2012 — Achievement of goals
in the medium-term management plan “VISION 2012”

Corporate Social Responsibility

30

Corporate Governance32

Compliance

34

Business Risk

36

Directors, Corporate Auditors andExecutive Officers

38

Financial Section
Five-Year Financial Data and Indexes

39Management’s Discussion and Analysis

40

Consolidated Balance Sheets

42
44

Research & Development

16

Consolidated Statements of Income

Overseas Trends

18

Consolidated Statements of Changes in Net Assets 45

Review of Operations
Automotive

20

Information & Communications

22

Electronics

24

Electric Wire & Cable, Energy

26

Industrial Materials & Others

28

Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows46

Notes to Consolidated Financial Statements

47

Independent Auditors’ Report

65

Corporate Directory

66

History

68

Company Information

69

Forward-Looking Statements
This presentation contains various forward-looking statements which are based on the current expectations and assumptions of future events.
All figures and statements with respect to the future performance, projections and business plans of Sumitomo Electric and its Group companies
constitute forward-looking statements. Although Sumitomo Electric believes that its expectations and assumptions are reasonable, actual results
and trends of Sumitomo Electric’s performance could differ materially from those expressed or implied by such figures or statements due to risks anduncertainties in the future business circumstances. The factors which may cause such difference include, without limitation:
1. General market and economic conditions in the U.S., Europe, Japan and other Asian countries, especially personal consumption and capital
expenditure.
2. Fluctuations of currency exchange rates, especially between Japanese yen and U.S. dollar, Euro and Asian currencies.
3. Rapid technological development and Sumitomo Electric and its affiliated companies’ ability to cope with it.
4. Changes in various assumptions including financial, managerial and environmental ones.
5. Current and future laws and regulations by foreign countries about trading and other activities.
6. Change in market value of securities that Sumitomo Electric and its affiliated companies own.
Please be advised that there are possibilities actual sales and profits could be different from those described in this material. Sumitomo Electric and its
affiliated companies are not obliged to update and make public any descriptions in forward-looking statements after releasing this material.

Annual Report 2011

SUMITOMO ELECTRIC

3

At a Glance

Sumitomo Electric Industries, Ltd. (TSE: 5802) and its subsidiaries and affiliates globally
undertake product development, manufacturing and marketing as well as service
provision in the five business segments: “Automotive,” “Information & Communications,”“Electronics,” “Electric Wire & Cable, Energy,” and “Industrial Materials & Others.”

Market Environment

Net Sales Breakdown

Automotive

80

47%
Automotive(%)
The U.S.
and Japan both saw new vehicle unit sales
15
rise
64 year-on-year. For a second consecutive year, China(Billions 60of yen) 58(%)
led theworld in new vehicle sales in 2010, against
10
15
80
75
(Billions of yen)(%)
abackgroundof growth in automotive markets in
64
40
35
6.2
6.715
80
58 5.3 75
60
theemerging
economies.
Unit sales in Japan slipped
510
4.2 6420
658
Billionfollowing
the
Great
East
Japan
Earthquake and(Billions 60of yen)(%)
40
35
6.2 0.7
6.715
10
5.3 7580
0Tsunamidisaster and the phasing out of environment05
200720086.2 2009
2010
2011
40
35 4.2 64 6.7
20
6
5.3
58Operating
IncomeOperatingfriendly
Income Ratio
car purchase incentives. In the first half of(Billions 60of yen)
(%)
0.7
5
10
15
80
75
4.2
20
6
02012, supply chains have suffered disruption.
0fiscal
2007
2008
2009
2010
2011
(Billions of yen)

Information &Communications¥960.0

40
60
0
15

0
15
20
5

Electric Wire &Cable, Energy

20Electronics

Electric Wire
& Cable, Energy

Industrial Materials &Others

2007
2008
2009
9.0 17 Income
Operating
1

7.8
0.6

¥178.29.0

1

4Industrial Materials& Others
SUMITOMO ELECTRIC

Annual Report 2011

(%)

13

0.6

3.1
12 & Cable,
Energy
0
0
12
4
2007
2008
2009
2010
20112.9 3
16
1
4(Billions of yen)(%)
Operating
Income 9
Operating Income
13 Ratio
2.4
3.1
12
5
1.7 8
19
20
2
8
1.9
12
2.9 03
0
9
2007
2008
2009
2010
2011
2.4
8
4
16
1
4
Operating Income 1.7 Operating Income Ratio
2
8

Industrial Materials& Others

Despitethe impact of reduced private sector(%)
5
capitalinvestment
in Japan, demand expanded for3
2.9 10
2007
2008
2009
2010
2011
9
equipment
forenvironment-friendly
vehicles and
2.4
84(Billions16
of yen)(%)
Operating
Income 1.7 Operating
IncomeRatio
28
1.9 13 15
0
0
35
12
2007
2008
2010 electronics
2011
products. Demand also grew for power
30 3.1 2009
3
12
2.9
30
Operating Income
Operating Income Ratio
1
4
926
Billion12
generation
and railway infrastructure, overseas
2.4(Billions of yen)
(%)
25
1.7 8
2
8
10.0
1.9
15
8.8
35
0
0
9
2008
2009
2010 notably
2011
in
the
emerging economies.
30
20 200717 (%)(Billions of
30yen)
20
12
0
4

12

19 3.1

1.9 13¥464.91
Operating Income Ratio
12
6.11560
920102011 1217 (%)
3
0.9
Operating
Income Ratio
0.4
6.11569
0
17
2010
2011
12
3
Operating
Income
Ratio
6.1
0.9
6

0.4

(%)

15
9
0
3
17
0.9
2010
2011
12
0.4
Operating
IncomeRatio
6.1 602010
2011
9Operating
Income3
17 Ratio
0.9Market demand for components and processed parts
from vehicle manufacturers remained robust despite
a continuing drop-off in demand from public works
0.4
6.1 6
0
projects
in Japan. There was also growth in demand
2010
2011
Billion Operating
IncomeRatio
3
0.9 for silicon
for solar cells and other new processing
0.4
0products.
2008
2009
2010
2011

¥277.50Electric Wire
Cable, Energy

4

2.9

7.8
7
0.6
13
58
19 3.1
12
0
2007
2008
2009
2010
20112.9 3
5(Billions of yen)(%)
5
Operating Income 9
Operating
IncomeRatio
3.7 54416
2.4Electric
8
19
20
Wire
1 1.7
2.9
2
8
1.9

4
26Operating Income
35
15
25
8.8 3010.0 2
0
30
10
2008
2009
26
20 20070.8(Billions of
25
Operating Income
5yen)
10.0
8.8
15
35
Industrial Materials
20
0
30
2
10 2007
2008
2009
30
& Others
26Operating Income0.8
15(Billions of
5yen)
25
10.0
8.8
35
2
10
0
20
30
0.8
2008
2009
30
5 2007
26Operating Income
15250
10.0 20092
10 20078.8 200820
Operating Income0.8
5
15
0
2008
2009
2
10 2007
Operating Income0.8
5

13%

0
5
2010
2011 12
16
4
3.7
(%)
OperatingRatio
2.9 Income
20
7
8
12
0
2010
2011
5
16
4
7 3.7
Operating Income
Ratio
8

Global mobile phone sales increased 31.8% year-onyear to 1.6 billion units in 2010, of which 19% were
2007
2009
20 9.0 200820
7.8
5Operating Income
smart
10(Billions ofyen)(%) phones. Unit sales of smart phones increased
17
1
2.9
25
20
0.6
5
15
12
72%
year-on-year
to 297 million units, but demand
0
0
5
2007
2009
2010
20113.7 4
20 9.0 2008
Billion1
2.9 Income Ratio
20yen)
16(Billions of(%)
7.8
Operating
IncomeOperatingwasconcentrated
in advanced countries capable of
710
8
17 0.6
50
19
200
2007
2008
2009
2010
2011
15
12
5
providinghigh-speed networks.
Operating Income
Operating Income
Ratio
5
4
3.7
25
10
15
0

(Billions of yen)22%

6.7(%)

100
520104.2 2011(%)
5
Operating Income Ratio
10

(%)

10
200
12

Electronics

35

3.8 17

16

Information &Communications

4.2

Operating Income Ratio

20
3.0 5
0
Materials
420072008 Industrial
2009
2010
2011 12
1.8
3(Billions of yen) 20(%)
Operating
Income & Others
9.0
Operating
1.3 Income Ratio
20
16
25
20
7.8
7 1.4 810
17(Billions of yen)

Automotive

Industrial Materials& Others

3.0 5
0
20
4
2007
2008
2009
2010
2011
3
8 Income 1.8 Operating
20Operating
1.3 Income Ratio
1.4165250
515(Billions of yen)

8%

Electric Wire
& Cable, Energy¥218.2
20

Electric Wire
& Cable, Energy

64

35

6.7
(%)
Operating Income
Ratio
0
10
5
2010
2011 10The global optical device market is growing at aroundadozen percent annually. In optical fiber cable
5
3.0
13
5
10
4
0
0
3
2007
2008
20091.8 2010 products,
20118
overseas markets especially China remain
1.3(Billions of yen)(%)
5
Operating Income
Operating Income
Ratio
1.4
3.8
10
10
15
the driversof strong demand, countering shrinkage
8 3.0 5
0
0
5
13
4
2007
2008
20091.8 20102011
3 the5 Japanese market. Looking ahead, we expect
3.8
1.3in
Operating Income 5
Operating
IncomeRatio(Billions of yen)(%)
Billion
3.0
1.4
5
10
4
10
15
new
demandto emerge in Fiber-to-the-Home (FTTH)
1.8
3
0
0
8
13
2007
2008
2009
20101.3 2011
1.4 5
3.8
(Billions of yen)(%)
Operating
IncomeOperatingapplications.
Income Ratio(Billions of yen)

Electronics

6.2 0.7

5.3

10
15
0
2007
2008
2009
8
13
6
(Billions 20
of yen)Operating Income
3.8
0.7
15

0
25
5
10

Electronics

2007
2008
2009
13
Operating Income 6(Billions of yen)

10%

Information &Communications

Electronics
6.2 0.7(Billions of yen) 58Operating
Income5.3

20
40

Information &Communications

75

2007
Operating Income

Operating Income RatioAt a Glance

In research and development, the Group endeavors to develop original new businesses andproducts. We are also committed to identifying and developing the research themes that will carry
our Group to the next stage. With over 180,000 employees in approximately 30 countries aroundthe world, we will continue to develop as a global company.

Performance

Operating Income and Operating Income Ratio(Billionsofofyen)(Billionsyen)(Billionsofof
yen)(Billionsyen)Automotive
Sales in this segment increased by ¥143.4 billion (17.6%) year-on-year to ¥960.0
billion. In addition to globally expanding automotive demand centered on theemerging economies, demand rose for wiring harnesses used in new types ofvehicle and also increased for high-voltage harnesses for hybrid and electricvehicles (HEVs/EVs) and other environment-conscious products. Operating
income increased by ¥29.6 billion (85.7%) to ¥64.1 billion.
Information & Communications
In this segment, demand for opto-electronic devices has increased against abackground of growing global communication traffic. However, sales fell by¥53.0 billion (19.5%) year-on-year to ¥218.2 billion, due to rapid appreciationof the Japanese yen and intensified international competition, which havesignificantly impacted the operating environment for our optical fiber cableand other businesses. An additional negative factor was the spinning off of theconsolidated subsidiary Commuture Corp. in the second half of the year underreview. Operating income decreased by ¥641 million (17.7%) to ¥3.0 billion.

80
80
8080

(%)
(%)
(%)
15(%)

75
75
7575

15
15
1515

64
64
6464

58
60 58
60
58
6060 58
40
40
4040

10
10
1010

5.3
5.3
5.3
5.3

6.2
6.2
6.2
6.2
66
66
0.7
0.7
0.7
0.7

20
20
2020

35
35
3535

6.7
6.7
6.7
6.7

4.2
4.2
4.2
4.2

00
00
00
0 0 2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
2007
2007 2008
2008 20092009 20102010 2011
2011
OperatingOperating
IncomeRatio
OperatingIncome
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio(Billionsofofyen)(Billionsyen)(Billionsofof
yen)(Billions
yen)

(%)
(%)
(%)
10(%)

15
15
1515
13
13

10
10
1010

13
1313

10
10
1010

3.8
3.8
3.8
3.8

55
55

88
88

55
55

3.0 553.0
3.0
3.0 5 5
44
44
1.8
1.8
33
1.8
33
1.8 1.3
1.3
1.3
1.3 1.4
1.4
1.4
1.4

00
00
00
0 0 2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
2007
2007 2008
2008 20092009 20102010 2011
2011
OperatingOperating
IncomeRatio
OperatingIncome
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio(Billionsofofyen)(Billionsyen)(Billionsofof
yen)(Billionsyen)Electronics
With the recovery of the global electronics market, demand has increased forflat-screen televisions and other digital appliances, for electronic wires usedin mobile phones and for compound semiconductors, as well as for coatingproducts for printers. This drove up sales in this segment by ¥13.2 billion year-onyear (8.0%) to ¥178.2 billion. Operating income increased by ¥1.8 billion (36.2%)
to ¥6.6 billion.
Electric Wire & Cable, Energy
Sales in this segment increased by ¥52.4 billion (12.7%) year-on-year to ¥464.9
billion. This performance was driven by increased demand for magnet wire for
automakers and electronics companies, and charged particle beam-oriented
equipment made by our subsidiary Nissin Electric Co., Ltd. Further impetus camefrom rising copper prices. These positives more than offset a decline in demand forconstruction equipment and power-receiving and transformer equipment, amid an
ongoing slump in private capital investment in Japan. Operating income increased¥5.5 billion (70.1%) to ¥13.4 billion.

(%)
(%)
(%)
20(%)

25
25
2525

20
20
2020
20
20
20
20

15
15
1515

20
20
2020

9.0
9.0
9.0
9.0

10
10
1010

16
16
1616

17
17
1717

55
55

12
12
1212

7.8
7.8
7.8
7.8
11
0.6
0.6 1 177
7 7 888 8
55
55
44
3.7
3.7
3.7
3.74 4
2.9
2.9
2.9
2.9

0.6
00
00
0.6
0 02007
00
2008
2009
2010
2011
2007
2008
2009
2010
2011
2007
2007 2008
2008 20092009 20102010 2011
2011
OperatingOperating
IncomeRatio
OperatingIncome
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio(Billionsofofyen)(Billionsyen)(Billionsofof
yen)(Billions
yen)

16
16
1616
12
12
1212

12
12
1212

88
88

(%)
(%)
(%)
5(%)

19
19
1919

20
20
2020

2.4
2.4
2.4
2.4

55
55

3.1
3.1
3.1
3.1

44
44

13
13
1313
33
2.9
2.9
3
2.9
2.9 3

99
99
88
88
1.7
1.7
1.7
1.9
1.7 1.9
1.9
1.9

22
22
11
11

44
44

00
00
00
0 0 2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
2007
2007 2008
2008 20092009 20102010 2011
2011
OperatingOperating
IncomeRatio
OperatingIncome
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio(Billionsofofyen)(Billionsyen)(Billionsofof
yen)(Billionsyen)

Industrial Materials & Others
Sales in this segment increased by ¥49.3 billion (21.6%) year-on-year to ¥277.5
billion. In addition to rising demand for automotive products, such as cemented
carbide tools, sintered parts and valve springs, on the back of rising global
automobile production, demand also expanded for electronics products, suchas diamond tools made by our subsidiary A.L.M.T. Corp. Operating income
increased by ¥15.9 billion to ¥16.9 billion.

55
55

(%)
(%)
(%)

(%)
35
15
35
15
1515
3535
30
30
30
30
30
30
3030 26
12
26
12
26
1212
26
25
25
2525
10.0
10.0
8.8
8.8
10.0
8.8
10.0
8.8
99
20
20
99
17
2020
17
1717
15
15
6.1
6
6.1
6
1515
6.1
6.16 6
10
22
10
22
1010
33
0.8
0.8
0.9
33
0.8
55
0.8 0.9
0.9
0.9
55
0.4
0.4
0.4
0.4
00
00
00
0 0 2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
2007
2007 2008
2008 20092009 20102010 2011
2011
OperatingOperatingOperatingIncome
IncomeOperatingIncome
IncomeRatio
Ratio
Operating
IncomeOperating
IncomeRatio
Operating
IncomeOperating
IncomeRatio

Annual Report 2011

SUMITOMO ELECTRIC

5

Financial Highlights
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31
Thousands of
U.S. dollars*1

Millions of yen

2011

2010

2009

2008

2007

2011

For the Year:Net sales¥2,033,827 ¥1,836,352 ¥2,121,978 ¥2,540,858 ¥2,384,395$24,459,735

Operating income

103,81051,72823,527

148,996

128,745

1,248,467

Income before income taxes and minority interests

113,781

55,425

41,126

166,612

144,550

1,368,382

Net income

70,61428,70817,23787,80476,029849,236

Capital expenditures

107,620

81,943

143,182

134,421

128,568

1,294,287

Depreciation and amortization

96,760103,848

108,168

106,892

99,802

1,163,680

R&D expenses

79,02672,25972,98872,271

68,373

950,403

1,956,284

1,939,935

1,868,174

2,194,882

2,126,405

23,527,168

341,923

355,586

405,477

415,473456,399

4,112,123

1,092,610

1,064,575

1,014,082

1,128,235

1,052,989

13,140,229

Net cash provided by operating activities

139,298

171,576

168,509

204,612130,997

1,675,260

Net cash used in investing activities(86,551)(72,899)(161,050)(126,414)(131,193)(1,040,902)

Net cash provided by (used in) financing activities(27,845)(67,613)(11,957)(55,946)(16,549)(334,876)

At Year-End:Total assets
Total interest-bearing liabilities
Total net assets*2
Cash Flows:

U.S. dollars*1

Yen

2011

2010

2009

2008

2007

2011

21.78

¥ 112.74¥ 100.22$ 1.07121.32

107.71

95.40

1.071

Per Share Data:
Net income: Basic
Diluted

¥

89.02
89.02

¥

36.19
36.19

¥

Cash dividends

19.00

16.00

18.00

20.00

17.00

0.229

Owner’s equity*3

1,196.46

1,139.84

1,086.79

1,226.56

1,170.54

14.389R&D expenses / net sales (%)

3.9

3.9

3.4

2.8

2.9

Net income / net sales (%)

3.5

1.6

0.8

3.5

3.2

Return on owner’s equity (%)

7.6

3.3

1.9

9.5

8.9

Return on assets (%)*4

7.3

3.6

1.6

9.8

8.8

Current ratio (Times)

1.9

1.7

1.6

1.5

1.6

Owner’s equity ratio (%)

48.5

46.6

46.1

44.1

41.8

Financial Indexes:*1 All dollar figures herein refer to U.S. currency. Yen amounts have been translated, for convenience only, at the rate of ¥83.15 to U.S. $1.00, the approximate exchange rate
prevailing on March 31, 2011.
*2 See page 43.
3* Owner’s equity is sum of total shareholder’s equity and total accumulated other comprehensive income.
*4 ROA = Operating income divided by average capital employed

6

SUMITOMO ELECTRIC

Annual Report 2011

Financial Highlights

Net Sales(Billions of yen)
2,500

Operating Income
2,541(Billions of yen)
150

2,384
2,122

2,000

Net Income(Billions of yen)

149

129

2,034

88

90

76

71

120

1,836

104
60

1,500

90

1,000

60

500

0

30

2007

2008

2009

2010

0

2011

Total Assets and ROA

2,126

(%)
15

2,000

2007

2008

2009

2010

1,940 1,956 12

9.8
9

9.5

100

112.74100.22
89.02

6

36.19

40

3.3
3

200

21.78

20

1.9
0

ROA

2011

60

1.6
0

Total Assets

2010

80

400

3

2009

2009

9

600

3.6

2008

(Yen)
120

1,065 1,093

6

500

2008

Net Income per Share

12

8.9

2007

7.6

7.3
1,000

1,014

1,000

800

8.8

2007

0

2011

(%)
15

1,128

1,053
1,868

17

24

(Billions of yen)
1,200

2,195

29

30

Total Net Assets
and Return on Owner’s Equity(Billions of yen)
2,500

1,500

52

2010

2011

0

0

2007

2008

Total Net Assets

2009

2010

2011

0

2007

2008

2009

2010

2011

Return on Owner’s Equity

Annual Report 2011

SUMITOMO ELECTRIC

7

Message from the President

Thanks to the effects of various measures,
we have overcome the global economiccrisis and gotten back on the growth track.

Masayoshi Matsumoto
President and CEO

8

SUMITOMO ELECTRIC

Annual Report 2011

Message from the President

Business Conditions and Results in Fiscal 2011
and the impact of the earthquake, the Group’s automotive

Business Conditions in Fiscal 2011

and industrial materials businesses achieved an increase in

Although global demand continued to recover and expand insales by tapping rising global demand on the back of growthfiscal 2011 centered on automotive-related sectors, businessin emerging economies. As a result, in fiscal 2011, theconditions for the Sumitomo Electric Group deteriorated

Group reported growth in net sales of 10.8% year on year

further owing to weakness in domestic demand and export-

to ¥2,033.8 billion. Although we faced falling product prices

related sectors due to yen appreciation from mid-2010. The

due to intensifying competition overseas and the impact ofGreat East Japan Earthquake that occurred on March 11, 2011

yen appreciation, we achieved cost savings of ¥49.9 billion

also had a serious social and economic impact. Some of the

by cutting direct costs and increasing efficiency in indirect

Group’s manufacturing facilities were partially damaged by theand fixed cost areas. As a result, operating income improved

earthquake and we also incurred indirect losses from a slump

sharply to ¥103.8 billion, double the level in the previous

in orders and production due to suspended operations at

fiscal year. We posted disaster-related losses of ¥8.8 billion

customers and suppliers.

and impairment losses of ¥11.3 billion, but the Group still

After the earthquake, many of our business partners

reported a strong increase in net income to ¥70.6 billion, orbased overseas sent us condolences and warm words of

2.5 times the level in fiscal 2010, owing to the improvement

encouragement. I would like to take this opportunity to thankin operating income and an increase in equity in net income ofthem again for their kind words. The Group moved rapidly toaffiliates. All these figures exceeded our start-of-year forecasts.

restart production lines at sites affected by the disaster andthey are now back on track.

In new technology and product development, weannounced a number of successes, including the adoption ofa low-voltage automotive wiring harnesses using aluminum

Strategy and Results in Fiscal 2011

wires and the world’s first molten salt electrolyte battery. We

Against this backdrop, the Group worked to expand its

will continue to push ahead with R&D activities that flexibly

overseas operating bases further in order to capture growing

meet the demands of our customers and society, and rapidly

global demand, and focused on rigorous cost reduction,translate these R&D successes into new businesses.

new technology and product development, and sales

As part of our response to the Great East Japan

expansion through initiatives such as strengthening SEQCDD

Earthquake, we plan to reinforce our supply chain by procuring(Safety, Environment, Quality, Cost, Delivery, and Research &materials from more diverse sources and rebuild production

Development).

lines so that we can continue operating reliably even if power

Despite declining demand due to the yen’s appreciation

supplies are restricted.

Net Sales and Operating Income by Segment
Automotive
Information & Communications

Net Sales(Billions of yen)

2,500
2,000
1,500
1,000
500
0
-500
Operating
Income Ratio

Electronics
Electric Wire & Cable, Energy

Industrial Materials, etc.
Eliminations

3,000.0
Net Sales

2,000.0

1,836.4

915.0

816.6 Operating
Income

271.2
165.1
412.5
228.2
(57.2)

51.7

34.5

FY2010 Results
2.8%

3.6
4.9
7.9
0.9

220.0
200.0
455.0
280.0
(70.0)

210.0

2,033.8
100.0
60.0
2.0
12.0
11.0
15.0

FY2011 Forecast
5.0%

Operating Income(Billions of yen)

103.8
960.0
218.2
178.2
464.9
277.5

90
64.1

60

3.0
13.4 6.6
16.9(65.0)FY2011 Results
5.1%

30
0
FY2013 Targets(VISION 2012)
7.0%

Annual Report 2011

SUMITOMO ELECTRIC

9

Message from the President

Strategy and Outlook for Business Conditions and Performance in Fiscal 2012billion and ¥80 billion, respectively, assuming that production

Outlook for Business Conditions in Fiscal 2012

impaired by the disaster will be restored to near normal levels.

In fiscal 2012, we see a number of concerns that could weighAt this point, we have not factored in an increase in demandon the global economy, such as surging resource prices,to recover lost production due to the earthquake.

inflation in emerging economies and other areas, geopolitical

Changes in these assumptions could lead to upward or

instability in the Middle East and Africa, sovereign risk in

downward revisions to our forecasts, so we intend to review

Europe, and slow progress toward genuine economic recovery

our full-year figures in either the first or second quarter andin the U.S. There are also concerns for the Japanese economy,

respond flexibly to changes in the environment. In addition,owing to considerable uncertainty about power supplies andwe will work to reinforce our supply chain and production

trends in corporate production activity, which could lead tolines so that we can fully respond to the needs of customers

further hollowing out of the domestic manufacturing sector

that aim to make up lost production due to the earthquake.

and weak consumer spending.

Strategy and Concrete Initiatives for Fiscal 2012

Outlook for Performance in Fiscal 2012

Fiscal 2012 is the second-to-last year of VISION 2012, our five-

Because of this uncertain outlook, formulating businessyear medium-term management plan. Given current exchange

forecasts is more problematic than normal. For fiscal 2012,rates and economic conditions, the plan’s targets of ¥3,000

we have disclosed forecasts for net sales of ¥2,000 billion,

billion in net sales, ¥210 billion in operating income, andoperating income of ¥100 billion, ordinary income of ¥115

ROA* of 10% are challenging. However, we will leverage thebillion, and net income of ¥65 billion.

combined strengths of the Sumitomo Electric Group to attain

Forecasting when production and other conditions will

our operating income target in the second half of fiscal 2012,

normalize after the earthquake is difficult, but we assume (asproviding a foothold to reach the plan’s final-year objectives.

of May 13, 2011) that production and demand will probablySpecifically, we aim to refocus our efforts on the Group’s

remain weak through to the second quarter of fiscal 2012.

existing objective of building a strong corporate constitution

Based on this outlook, we project sales and operating income

flexibly responsive to the changing times and reinforce internal

will decline year on year in the first half to ¥900 billion

activities such as safety and environmental measures, qualityand ¥20 billion, respectively. For the second half, however,improvement, and cost reduction. In addition, we intend to

we forecast sales and operating income will rise to ¥1,100

strengthen our monozukuri (manufacturing) capabilities —Sumitomo Electric Group’s Net Sales and Operating Income
Net Sales(Billions of yen)

Operating Income(Billions of yen)

4,000

400
2011 The Great East
Japan Earthquake

3,500
3,000

2008 Lehman
Brothers’ Collapse

2001 Burst of IT Bubble

2,500

300
VISION
2012

2,000

150

1,000

100

Operating Income

500

10

SUMITOMO ELECTRIC

250
200

Net Sales

1,500

0

350

50
FY00

FY01

Annual Report 2011

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12
FY13
Forecast Target

0Message from the President

the lifeblood of our Company — including human resource

Regulations and are now taking other steps such as building

development. We will also work to actively cut costs toa framework to implement these regulations based onlower the break-even point, thereby boosting the Group’s

cooperation between a dedicated unit in the Corporate Staff

competitive edge.

Group and organizations in each business unit. Going forward,

A great deal of uncertainty exists in the productdemand environment, including supply chain problems in theautomotive sector after the earthquake and a range of risks in

we will remain fully committed to ensuring our businessactivities are fair and honest.
By firmly maintaining the Sumitomo Spirit, with its 400-

countries and regions worldwide. However, in contrast to theyear history and tradition, and vigorously pursuing businessfinancial crisis triggered by the collapse of Lehman Brothers,with sincerity and fairness, Sumitomo Electric Group’s

there has been no worldwide supply-side damage, and we

employees will all work as one to achieve our corporate ideal:

expect our global market to continue expanding for the time

to become a Glorious Excellent Company.

being. In order to tap this growth in global demand, we plan
to continue expanding our overseas operating bases in theWe therefore request the continued understanding andsupport of our shareholders and investors.

medium term, as well as steadily boost the efficiency of ourdomestic sites to enhance our international competitiveness.

*ROA: Operating income divided by average capital employed during the fiscal year

In this way, we will reinforce the business base in each of ourbusiness segments as we work to attain the goals of VISION2012.
In R&D, our objective under VISION 2012 is to boost
the ratio of total sales generated by new products to 30%
by fiscal 2013. In order to achieve this goal, we plan toaccelerate research programs in the plan during fiscal 2012,
which is effectively the last year for these programs to achieve
their targets. Also, we plan to strengthen the Group’s baseto support growth beyond VISION 2012. Specifically, we areaiming to expand our business into the promising field ofsmart grids, by combining our core material and information& communications technologies and promoting Group-wide
R&D programs.
Guided by these strategies, we are budgeting a total of¥130 billion for capital investment in fiscal 2012 (comparedwith actual spending of ¥98.4 billion in fiscal 2011), mainly to
be spent on boosting production capacity in growth markets.
We also plan to spend a total of ¥85 billion on R&D (comparedwith ¥79 billion in fiscal 2011). Please refer to the Review ofOperations, starting from page 20, for more details on specificinitiatives in each business segment.
Over the past two years, a number of the Group’sbusiness deals have been subject to investigations by anticompetition authorities, resulting in cease and desist orders
and fines in some cases. We take these administrative
actions very seriously and have positioned compliance withcompetition law as one of our top priorities. We have alreadyestablished regulations for Competition Law Compliance

Annual Report 2011

SUMITOMO ELECTRIC

11

Special Feature

Policies for Fiscal 2012
— Achievement of goals in the medium-term
management plan “VISION 2012”
Targets in the planfor fiscal 2013(consolidated basis)Sales¥3 trillion

Operating Income¥210 billion

ROA

10 %

Demand Environment
As things stand, we expect demand to grow globally.
Despite uncertainties such as supply chain disruption
in the automotive sector due to the earthquake
disaster in Japan in the first half, there has been no
impact on the demand side — unlike the aftermath ofthe collapse of Lehman Brothers.

Forecasts for Fiscal 2012
We published our forecasts on May 13, 2011, on
the assumption that (1) disaster-related production
stoppages will trail off by the end of the second
quarter, and (2) a rebound in demand to make good
lost production following the earthquake are notfactored in. However, we cannot rule out downward
or upward revisions. For this reason, we will continue
to closely monitor the market, and take a flexible
approach toward full-year targets, with possible
adjustments in the first and second quarters.
In addition, we plan to strengthen supply chains andproduction lines so as to better support customers
trying to make good lost production due to thedisaster.

Market Conditions and Sales Forecast
FY2011
Billions of yen

12

1H Result

FY2012

2H Result

Demand Environment (Prior conditions)
World Automobile Output Forecast before the Great
East Japan Earthquake:5% increase over the previous
yearJapan , Asia , North America , Europe(1H/2H)

Automotive

468.9

491.1

Information &Communications

119.4

98.8

Electronics

86.0

92.2

Electric Wire &Cable, Energy

214.6

250.3

Industrial
Materials & Others

133.1

144.4

Eliminations(31.4)

Total

990.6

SUMITOMO ELECTRIC

Annual Report 2011

1H Forecast 2H Forecast

430.0

530.0

75.0

95.0

85.0

100.0

225.0

270.0

135.0

155.0

(33.6)(50.0)(50.0)

1,043.2

900.0

1,100.0

Despite concerned factors, such as stagnation ofJapanese market, inflation or economic overheatingin emerging countries, global market will continue
growing.
While Japanese market slowed down temporarily due
to the earthquake, global market of basic industrial
materials, such as magnet wires, hard metal tools, arestable. Domestic demand for construction materials are
increasing.

Special Feature

Measures for Fiscal 2012
With regard to plans for expansion of overseas bases
and streamlining of production in Japan in the medium
term (plans for the previous year are detailed on pages
14 and 15), we are steadily working through our listof tasks in each business segment for the current fiscal
year, and strengthening our business fundamentals toposition us to meet the targets in “VISION 2012” foreach segment. As a platform for achievement of thegoals, we have set an operating income target of ¥80
billion for the second half of fiscal 2012.

Priority areas for our research and development
laboratories are as follows.
1. We are stepping up efforts to complete research
programs under the themes of the medium-term
management plan, with fiscal 2012 as the effective
final year.
2. By expanding and blending R&D domains, we arelaying the groundwork for growth after VISION 2012.
Based on this policy, R&D projects for fiscal 2012 are asshown in Table 2 below.

Based on this policy, capital investment plans for fiscal
2012 are as shown in Table 1.

Plans of Investment into Fixed Assets and R&D
Table 1

Table 2Main target

Billions of yen

Main target

Billions of yen

Automotive
140

130.0
120

• Increasing production capacity ofharnesses to meet changes indemands• shifting production base to low
cost countries• Increasing capacity for new orders(Tokai Rubber)
Information & Communications

100

98.4

63.0

80

Electronics

45.7

60

• Increasing production of- electronic devices for LTE basestation- optical devices for WDM laser• Streamlining

14.0• Increasing production of- FPCs for mobile phones- flat cables in China• Integrated production of FPCs in
China

Automotive
90

85.0
80

79.0

Information & Communications
70

48.0

60

45.1
50

40

18.7

10.1
20

12.0

9.8
27.0
14.1

0

FY2011FY2012• Increasing capacity for new orders(Nissin Electric)• Streamlining
Industrial Materials• Increasing capacity of- steel tire cords in Thailand- diamond tools• Making smooth start with newbase for mass production in China.
(Hard metal)• Streamlining• High speed opticaltransceivers/devices• Power devices for mobile phonebase stations• High performance optical fibers• Optical/Wireless access equipment• ICT application systems
Electronics• High performance FPCs
• High density mounted materials• GaN epitaxial/devices• Magnesium alloys

40

Electric Wire & Cable, Energy

14.0• Aluminum harnesses• HEVs/EVs harnesses• Reactors• Switch/Information control
equipment

30

17.5
17.1
20

5.4
10

0

7.2

5.5
9.0

4.2

5.0

FY2011FY2012

Electric Wire & Cable, Energy• High-temperature superconducting
wires/cables/coils• Molten salt electrolyte battery
Industrial Materials• High performance cemented
carbide tool materials• High performance soft magnetic
powder• Binder polycrystalline diamonds

Annual Report 2011

SUMITOMO ELECTRIC

13

Special Feature

Expanding Operationsin Global Markets
The Sumitomo Electric Group is carrying out the following measures in each of its
businesses, to meet the goals of “VISION 2012” and lay the groundwork for longerterm growth. In this feature, we would like to say a few words about our most recent
initiatives in new (global) markets.

Strategies for Achieving VISION 2012

Deepen internal solidification• Step up our SEQCDD (Safety, Environment, Quality, Cost, Delivery, Research & Development)
program, including personnel training, and our monozukuri (manufacturing) capability
enhancement on a global basis

Enter new business areas• Fuse and leverage core technologies (IT and materials) for expansion of business domains• R&D for future growth after “VISION 2012”

Expand into global markets
Expansion into Global Markets
The newly emerging economies are increasing theirshare of the global economy. For us, the implications
are as follows. Vehicle production volumes are unlikely
to show much further growth in the developed world
due to market maturity, but the emerging economies
led by China, now the world’s largest automotive
market, continue to expand. Likewise, demand forelectric power and telecommunications infrastructureis growing against a background of economic
development in the emerging and resource-richcountries.

14

SUMITOMO ELECTRIC

Annual Report 2011

However, in Japan, birth rates are falling and theaged population is increasing, markets are no longer
growing strongly, and the yen seems likely to remainhigh into the future. In light of these tendencies, theGroup is expanding its overseas production bases
to broaden sales networks and optimize production
through localization, so as to capture global demand,
particularly in the growing emerging economies. At
the same time, the Group is streamlining operations inJapan through integration of bases so as to strengthen
its international competitiveness.

Special Feature

Enhanced Overseas Bases andStreamlined Domestic Bases in Fiscal 2011
Streamline and Enhance Operations in Japan
Integrate four wiring harnesses manufacturers to createa “mother” factory. Aim to strengthen production
technology development.
Integrate two manufacturers of optical communications
products, and relaunch them as SEI Optifrontier Co., Ltd.
Aim to develop overseas markets.
Develop and expand marketing of new products suchas Tab-Leads for lithium-ion batteries, microfiltration
membrane modules for water treatment, green laser
GaN substrates and magnesium alloys.
Increase supply capability for high-temperature
superconducting wires.
Speed up development of superconducting equipment
and devices such as superconducting cables.
Strengthen supply capability for core materials such as
sintered diamonds and sintered cBN products.
Tianjin

Expansion of Overseas Bases (East Asia)

Nanjing

JVs with Major Business Partners

Changzhou
Wuix
Hangzhou

Optical fiber cables: Futong Group, China
FTTx optical wiring components: SEI-Nanjing Putian
Optical Network, China

TaoyuanSteel cords: Hyosung, South Korea

Shenzhen

New Bases
Hung Yen

Wiring harnesses connectors (Changshu, China/Vietnam)
Wiring harnesses (Philippines, Cambodia)

HermosaCompound semiconductor materials (Changzhou, China)
Flexible printed circuits, flexible flat cables, wiring
harnesses for electronics (Shenzhen, China)

RayongPhnom Penh

Cutting tools (Changzhou, China)
Saw wires (Jiangusu, China/Taiwan)
Upgrade Existing Facilities
Nissin Electric: World’s highest voltage transformers forgas insulation measuring instruments(Build new facilities at established plants in China)
Sintered components (invest in higher production ofvariable valve timing devices, etc., in Wuxi, China)
Cutting tools (expand marketing networks in China)

Annual Report 2011

SUMITOMO ELECTRIC

15

Research & Development
79

(%)
4.0

3.9

3.9
72

70

72

(Billions of yen)
80

73

R&D Expenses
and as a Percentage of Net Sales

68

With a goal of ensuring that 30% of sales come from new product launches by fiscal
2013, we are stepping up efforts to commercialize the fruits of our research anddevelopment programs. At the same time, we are accelerating strategic initiatives,
including new business development and cross-organizational promotion of R&D within
the Group, by harnessing our core industrial materials and information technologies that
we have built up over the years.
Earmarked for early commercialization are the following original products of ourresearch labs: An advanced molten salt electrolyte battery, combining high energy
density, compactness and light weight; a smart grid system and power devices, for which
considerable market growth is foreseen in years ahead; a composition imaging systemusing near-infrared light, which is expected to find applications in the food safety andmedical fields; and ultra high-speed optical transmission technologies for higher data
communication volumes.

60

3.4

50

3.5

40
30

2.9

20

3.0

2.8

10
0

2007 2008
R&D Expenses

2.52009 2010 2011
R&D Expenses / Net Sales

Molten Salt Electrolyte Battery
Being nonvolatile and nonflammable, and featuringhigh ion concentrations, molten salt makes an
excellent battery electrolyte. In a joint project with
Kyoto University, we have developed a molten saltwith a melting point as low as 57°C. On this basis, wehave successfully developed a new type of secondary
battery, a molten salt electrolyte battery, using only
molten salt as its electrolyte. This achievement reflects
our long years of experience in secondary battery
systems and related technologies.
Possible areas of commercialization are electric
power storage (medium-sized power grids andhousehold use) and on-vehicle applications (trucks
and buses). We will continue the evaluation andimprovement, of the battery to find molten salt thatbe used at still lower temperatures.

(1) High energy density
The new battery achieves an energy-density as high as
290 Wh/L.

(2) N onflammability and miniaturization
facilitate battery pack formation
Since it comprises only nonflammable materials, the newbattery will not ignite on contact with air from outside.
Likewise, there is no thermal runaway from overcharging or
temperature rises in the battery.
For this reason, there is no need for waste-heat storage
or fire- and explosion-proof equipment, so batteries can bepacked close together. In our trial calculations, assuming
equal capacity, the new battery had half the volume oflithium-ion batteries and one quarter that of sodium-sulfur
batteries, enabling miniaturization.

16

SUMITOMO ELECTRIC

Annual Report 2011

Battery packs undergoingtrialing
Construction of the molten salt electrolyte
battery
Separator impregnatedwith molten salt
Power source/load

Negative electrodecurrent collector
Negative electrodeactive material

Positive electrodecurrent collector
Positive electrodeactive material

Micro Smart-Grid
Demonstration System
We have developed a micro smart-grid demonstration
system combining renewable energy (solar and windderived) generating equipment with storage batteries
using direct current. In-house trials were launched at
our Osaka Works in June 2011.

(1) Configuration of the system[1] In this system, three types of photovoltaic, a small wind
power generator and a small redox flow battery areinterconnected by DC power cables 1 km in total length.
Generated electric power is used by some lighting
fixtures, home appliances and a charging station for a
superconductor electric vehicle in Osaka Works.
[2] DC electric power generated by each generator(maximum total generating capacity: about 10 kW) is
increased to a higher voltage by a DC-DC converter,transmitted via DC power cables, and either stored in theredox flow battery, or fully inverted to AC and supplied
to the above-mentioned loads (equipment) via a smart
distributor and intelligent taps.

2011.07

Research & Development(2) Features of the system[1] The demonstration system is not connected to any
commercial power network; its power sources comprise
only photovoltaic and wind power generators. An
energy management system monitors and controls
fluctuations in renewable generation and electric
power consumption. The storage battery balances thefluctuations. Consequently, the overall system achieves
the most efficient and stable use of power.
[2] The DC interconnection of the demonstration system
involves fewer DC-AC inversions than conventional ACinterconnection. Since DC-AC inversion is subject toenergy loss caused by inverter power consumption andby inversion itself, reduction in inversions means more
efficient use of renewable energy. Furthermore, in DC
power transmission, power loss via cables is lower thanin AC power transmission.
[3] The demonstration system accommodates flexible
connections of various renewable generators and storage
batteries, and is usable in a variety of power systems ofvarious sizes according to each specific requirement.
We will test the demonstration system for about one
year to assess its effectiveness in energy-saving performanceand other features, and then use it to promote thedevelopment of smart grid products.

DC power

Photovoltaic
DC/DC
converter

AC power

Small wind-power
generator

Information

DC/DC
converter

Redox flow battery.
Bidirectional
converter

InverterSmart distributor

DC/DCconverter

Operation terminal

Concentrating
photovoltaic

Electrical charge
connector
Central control server(EMS server)Intelligent
tap

Electric vehicle
charging station

CompovisionTM Near-Infrared
Composition Imaging System
As more and more emphasis is placed on safety
and quality control in the pharmaceutical and foodindustries, demand has grown for systems that canmeasure real-time differences in substance compositionand concentration distribution in a nondestructive andnoninvasive way.
Our a composite image-capturing and -processing
system CompovisionTM is an inspection system thatmeets all of these needs by leveraging the advanced
optical technologies developed by us over the years inour optical communications business. The product has
been commercially launched on the market.

(1) Enabling nondestructive, noninvasive
measurement
Near-infrared bandwidths include the absorption spectraof organic substances such as water, lipids and proteins.
Accordingly, near-infrared light can be used to analyze thecomposition of living organisms and food. Furthermore,

as near-infrared light is easily transmitted through living
or organic matter, nondestructive and noninvasive
measurement is possible, without inspection pre-processing.

(2) Real-time imaging
All image data collected by near-infrared camera is subjected
to high-speed spectral analysis using proprietary technology
to analyze composition. In this way, real-time imaging of
SEI WORLD 2011.07 3
differences in composition and concentration distribution isenabled.

(3) Broadband wavelength measurement
The development of new sensor materials for near-infrared
cameras enables high-sensitivity, detailed inspectionsof differences among
substances that previously
could not be distinguished.

Microscope-type CompovisionTM

Annual Report 2011

SUMITOMO ELECTRIC

17

Overseas Trends
Expansion of Overseas Sales Ratio
To position the Group to monetize demand growth inoverseas markets, we are aggressively stepping up marketing
initiatives and production capacity.

Overseas

Domestic

As a result, sales of the Company and its consolidated
subsidiaries in markets other than Japan increased ¥185.0

Ratio of overseas
sales to consolidated
net sales FY2011

43.8%

billion year-on-year in fiscal 2011 ended March 31, 2011,
Ratio of overseas
sales to consolidated
net sales FY2006

to ¥890.4 billion. Overseas sales now account for 43.8% ofconsolidated sales, a year-on-year increase of 5.4 percentage

33.6%

points.
Furthermore, in fiscal 2011, the sales of consolidated
subsidiaries in markets other than Japan accounted for
40.8% of total sales, an increase of 5.6 percentage points,
and overseas operations of consolidated subsidiaries

Overseas Sales¥674.0 Billion

Overseas Sales¥890.4 Billion
Consolidated Net Sales¥2,033.8 Billion

Consolidated Net Sales¥2,007.1 Billion

accounted for 51.7% of operating income, an increase of
10.2 percentage points.

North America

37

The Americas
Sales volumes for passenger cars are rebounding rapidly in the U.S., with forecasts of year-on-yearincreases of 50% from 2009 and 30% in 2010. This has driven up demand for automotive products
such as wiring harnesses and anti-vibration rubbers, so that sales for the Americas in fiscal 2011
increased ¥44.2 billion year-on-year to ¥239.9 billion.
Meanwhile, sales of consolidated subsidiaries in the Americas in fiscal 2011 (to externalcustomers) increased ¥46.9 billion year-on-year to ¥235.2 billion. Operating income likewise rose

Africa6¥8.4 billion to ¥9.6 billion.
Consolidated subsidiaries’ operating income from the Americas accounted for 9.1% of total
consolidated operating income.

South America

2
Total of consolidated subsidiaries and equity-method
affiliates, as of March 31 2011: 325

18

SUMITOMO ELECTRIC

Annual Report 2011

Overseas Trends

Overseas Sales

Geographical Segment Sales(Billions of yen)
1,200(Billions of yen)
1,200

1,000

1,000

283
800

199
195

600

800

474

Americas

332
248

0

2007

2008

2009

200

Americas

322

341

253

240

196

0

2011

2010

441

400

348

596

496

451
364

314

567

600

348
400

Asia
(Except Japan)

153

417

200

194
187

Asia

161

Europe and Others

226

Europe and Others

238

266

2007

2008

2009

194

240
2011

2010

Japan

Europe36
Europe and Others

Asia

117

124
China and Other Asian Countries
Sales in China, where economic growth remains above 9.5%, increased
to ¥45.0 billion from the previous fiscal year to ¥237.9 billion in
fiscal 2011, buoyed chiefly by strong demand in the automotive andAs in other advanced countries, the automotive market inelectronics sectors. Fiscal 2011 sales also increased, by ¥57.8 billion toEurope is mature. Automotive manufacturers in Europe are¥213.2 billion, in other Asian markets such as Thailand, Indonesia andstrengthening their business operations in the newly emerging

Taiwan, on increased demand from automakers.

markets such as China, India and Brazil, which are growing

At the same time, consolidated subsidiaries’ total sales in Asia,

rapidly. Sales in fiscal 2011 in these regions increased ¥37.9

including China (to external customers), increased ¥112.6 billion year-

billion year-on-year to ¥119.3 billion on more widespread use

on-year in fiscal 2011 to ¥401.6 billion. Consolidated operating incomeof wiring harnesses for new kinds of automobile.

likewise grew ¥12.7 billion to ¥36.3 billion. Consolidated subsidiaries’

Meanwhile, sales of consolidated subsidiaries in theEurope and other regions in fiscal 2011 (to external customers)

operating income from the Asian region accounted for 34.6% of total
consolidated operating income.

increased ¥40.9 billion to ¥191.7 billion. Consolidated
subsidiaries’ operating income also improved significantly,
to ¥8.5 billion, following an operating loss of ¥3.3 billion in
the previous fiscal year. Consolidated subsidiaries’ operating
income from the Europe and other regions accounted for 8%of total consolidated operating income.

3 Oceania
Annual Report 2011

SUMITOMO ELECTRIC

19

Review of Operations

Automotive
Automotive

Anti-Vibration Rubber Products

Wiring Harnesses
Wiring harnesses are a system that conveys power
and information. Their constituent electronic
components are required to be smaller, lighter andmore reliable.

Anti-vibration rubbers are the important functional
components that absorb and control the vibrationsof car bodies and engines.

Hoses

High-Voltage Wiring Harnesses
for HEVs

We offer a wide rage of hoses suitable for thesystems in cars like the fuel system and oil system.

High-voltage harnesses are used in hybrid electricalvehicles (HEVs) that have both an electric motor andan internal combustion engine. In these harnesses,
which connect a high-voltage battery with aninverter and an inverter with a motor, shield wires
are used so that noise from an inverter or otherequipment can be suppressed.

Connectors
Our compact and high reliability connectors operate
under harsh conditions such as extreme heat, coldand vibration, and satisfy the diverse needs of ourcustomers.

(Billions of yen)
1,200(Billions of yen)
80

69

70

960

45

1,000

917
800

4.2

817

39

4.7

38

4.6

41

41

(%)
5.0

60

Others
50

46

30

70

(Billions of yen)
50

73

Capital Expenditure
1,199

Net Sales

1,096

R&D Expenses
and as a Percentage of Net Sales

40

Info
Comm

4.0

40

600

3.7

30
400

3.5

30

20

Wiring Harnesses
20

10

200
10

0

2007

2008

R&D Expenses

20

SUMITOMO ELECTRIC

2009

2010

2011

3.0

R&D Expenses / Net Sales

Annual Report 2011

0

2007

2008

2009

2010

2011

0

2007

2008

2009

2010

2011

Review of Operations
Automotive
Automotive

Segment Overview

With the aim of realizing an automotive society
characterized by safety, comfort and environmentfriendliness, we are supplying worldwide a broad
range of wiring harnesses and other products for invehicle communication and energy applications.

Key Challenges and Responses in Fiscal 2011

The main issues needing to be addressed in this segment
were the following:
1) With the aim of achieving a 25% share of the global
wiring harnesses market. We need to maintain asteady order flow from Japanese automakers fortheir major car lines and global strategic models. At
the same time, to meet the needs of non-Japanese
automakers, we need to strengthen our development
and sales structure, build up a firm position in the
newly emerging markets, and win automotive orders
now going to rival companies;2) Optimizing global production and introducing greater
efficiency into our production activities; and
3) Developing new products and technologies forwiring harnesses and optical harnesses for hybrid andelectric vehicles (HEVs/EVs) as well as for low-priced
vehiclesIn fiscal 2011, while making our production plants
in Japan more efficient, we expanded our plants in
China and Southeast Asia for the Japanese and North
American markets and in Africa for the European
market, in order to reduce costs and cope with thestrong yen. We also focused on marketing of promising
new environmental products such as high-voltage
wiring harnesses for HEVs and low-voltage aluminum
harnesses.
Apart from these measures, due particularly to theglobal increase in demand for automobiles especiallyin the newly developing countries, we succeeded inincreasing both revenue and profit over the previous
year. The operating income ratio rose to our best everlevel of 6.7%. We also achieved a 25% share (according
to our own estimate) of the global market for wiring
harnesses.

Issues Being Tackled in Fiscal 2012

We will be responding flexibly to production taking
account of prospects for demand in the aftermath of
the Great East Japan Earthquake and Tsunami and,in response to medium-term demand, we intend
to expand our global production structure. Morespecifically, we will be strengthening our production
capacity at our Mexican plant to better serve the North
American automobile market. In response to demand
from European customers, we intend to transfer someproduction to North Africa and to strengthen our sales
and technology bases in Europe so as to consolidate our
localized design capacity. In Asia, we will be reinforcing
our production capacity for harnesses in China, Vietnam,
Cambodia and the Philippines. Meanwhile in Japan,
we will invest in the development of new technologies
and products as well as investing in the development ofpioneering harness components and other new products
for the global market and tackling the development of
production technology to enhance investment efficiency.

Strategic Topics

Adoption of aluminum wiring
harnesses
Apart from safety and comfort, automobiles are
increasingly being required to show consideration for
the environment. Improved fuel efficiency is essential,
and it is becoming more and more important to reduce
the weight of wiring harnesses, which may be as heavy
as 20kg in total. In addition to producing slendererwires and smaller connectors, we have developed lowvoltage wiring harnesses for use in automobiles that uses
aluminum wires, with a relative density lower than thatof copper wires. This particular harnesses were employedin mass-produced vehicles released in 2010. We willfurther develop this technology with the aim of increasing
the number of models in which this aluminum wiring
harnesses are used.

Annual Report 2011

SUMITOMO ELECTRIC

21

InformComm

Review of Operations

Information & Communications
Automotive

Information &Communications

Electronics

40 GbE CFP Transceiver for 40 km Transmission
With the rapid growth of video distribution and other Internet services, there has been
increasing demand for large volume data transmission capability. To meet this demand,
we have successfully developed the world’s first 40 GbE CFP transceiver capable of 40
km transmission.

Multicore Optical Fiber Cables
Our multicore optical fiber cables, in which fiber ribbons are housed in the groove of theslot, offer high fiber density and small cable diameter.

Field Assembly Optical Connectors
The field assembly optical connectors are optical connectors that can be assembled withgeneral fusion splicers. We have developed these connectors as an effective solution for
construction of FTTH and other optical communication networks. These connectors canbe fusion-assembled without using special-purpose bond or tool, and offer low-loss, lowreflection, high-reliability optical interconnections.

R&D Expenses
and as a Percentage of Net Sales

Net Sales

Capital Expenditure(Billions of yen)
20

(Billions of yen)
350

(Billions of yen)
25

333

19

271
218

250

275

20
7.5

Others

200

150

4.4
3.7

Access Network
Equipment
Opto-Electronic
Devices

100
2.5

5

10

9

4.9

13

Commuture

5.0

10

15

8

6.5

10

12

12

13

7.8

276

15

300

17

18

(%)
10.0

5
50

0

2007

2008

R&D Expenses

22

SUMITOMO ELECTRIC

2009

2010

2011

R&D Expenses / Net Sales

Annual Report 2011

0

0

Fiber-Cable/Accessories

2007

2008

2009

2010

2011

0

2007

2008

2009

2010

2011

Review of Operations
Information & Communications
Automotive

Segment Overview

As well as providing optical fiber cables essential in
optical communications networks along with opticalconnectors, optical fiber fusion splicers, opticalcommunication devices, GE-PON (Gigabit Ethernet*
Passive Optical Network) devices and other accessnetwork equipment, we provide various products
for supporting telecommunications infrastructuresuch as traffic control systems and other Intelligent
Transportation System (ITS) devices.
* Ethernet is a trademark of Xerox Corporation.

Key Challenges and Responses in Fiscal 2011

The main issues needing to be addressed by thissegment were the following:
1) Capturing the rising demand for communications
infrastructure in the newly emerging countries;2) Rebuilding a system of development and production
geared to the Japanese market environment;3) Optimizing global production to cope with theappreciation of the yen;4) Developing and increasing sales of faster datatransmission devices to respond to future increases incommunications traffic; and
5) Development of new products such as GaN electronic
devices and wireless products
In fiscal 2011, as well as thoroughly reducing costsin each operational sector, we worked on rebuilding our
production structures both inside and outside Japan. In
optical fiber cables, we created an integrated production
system in China extending from optical fiber preforms
to cables, with the aim of capturing local demand in the
rapidly expanding Chinese market. In the field of opticalcommunications devices and products, we set up a
joint venture with a Chinese company. We also merged
two of our Japanese affiliates under the name of SEI
Optifrontier Co., Ltd. As our core company involved in
the design and production of optical communications
devices and products, this new company will be
providing high-quality, attractive products and services
for the “fiber-to-the-home” (FTTH) market, which is set
to grow globally.
Despite our best efforts along these lines, bothrevenue and profit fell in comparison with the previous
year. Although there was increased demand for optical

Information &Communications

Electronics

and electronic devices, the business environment for
optical fiber cables grew more difficult than ever due tothe sudden appreciation of the yen and the increasing
severity of international competition. This situation was
further exacerbated because Commuture Corp. ceased
to be a consolidated subsidiary in the second half of thereporting year.
Issues Being Tackled in Fiscal 2012

In optical fiber cables, we aim to increase our market
share in China and other newly emerging countries
and to make further reductions in costs, by leveraging
integrated production that got under way in China in
2010.
As to optical communications devices and products,
we intend to capture the increasing demand for FTTH
products and data centers in China and other overseas
markets.
In network devices, we will be developing new
products such as 10GE-PON, while expanding global
their sales.
In connection with optical and electronic devices,
we will be concentrating on developing and increasing
sales of new products including devices for LTE (LongTerm Evolution; next-generation mobile communication
services) and 40G and 100G devices for long-distancetransmission.
Strategic Topics

The first Japanese company toembark on mass production of
optical fiber preforms in China
In October 2008 we concluded a joint ventureagreement with the Futong Group, one of China’s largest
manufacturers of optical fiber and cables, resulting in theestablishment of four optical fiber-related joint venture
manufacturing companies. One of these, Hangzhou SEIFutong Optical Fiber Co., Ltd., began mass production of
optical fiber preforms in September 2010. Combining ouradvanced technical capabilities in areas such as preform
production with the strong sales potential of the Futong
Group will help us to realize our goals of achieving the
top share of theChinese market andbecoming the leader
in the optical fiberand cable industry.

Annual Report 2011

SUMITOMO ELECTRIC

23

Ele
& Ca

Review of Operations

Electronics
Automotive

Information &Communications

Flexible Printed Circuits (FPCs)
FPCs consist of a copper circuitry overlaid on an ultra-thin insulation film. They greatly
contribute to the downsizing, weight saving, and cost reduction of electronic devices, and areused in computer hard disc drives, camera-integrated video recorders, mobile phones, etc.

Tab-Leads
Tab-Leads are used to draw electricity from lithium-ion batteries or electric double layer
capacitors covered with aluminum laminated film. This wire is remarkably resistant tobattery electrolyte. Also, its insulating layer prevents heat deformation. These characteristics
provide excellent sealing reliability.

SUMI-CARDTM
SUMI-CARDTM is a flat cable which enables easy jointing to connectors. Using the flat squareconductor, this flat cable reduces its thickness and allows multi-wiring assembly. We have various
types of SUMI-CARDTM, such as whisker-free, halogen free and terminal-processed types.

Capital Expenditure(Billions of yen)
8

(%)
5.0

(Billions of yen)
250

(Billions of yen)

4.0

200

3.0

150

2.0

100

3.0

14

12
11

178

10

10

165

5

3.4

183

6

3.6

220

7
3.9
6 3.5

15

223

8

Net Sales

8

R&D Expenses
and as a Percentage of Net Sales

Others7

4Electronic Wires
5
Semiconductors

2
1.0

50
FPCs

0

2007

2008

R&D Expenses

24

SUMITOMO ELECTRIC

2009

2010

2011

0

R&D Expenses / Net Sales

Annual Report 2011

0

2007

2008

2009

2010

2011

0

2007

2008

2009

2010

2011

Review of Operations
Electronics
Automotive

Segment Overview

Our Group’s products are being used in many state-ofthe-art electronic devices such as smart phones, flatscreen TVs, and home video game consoles. We supply
raw materials, wiring materials and components that
underpin the small size, light weight, advanced functions
and high performance of devices and equipment informs such as flexible printed circuits, ultra-thin coaxial
cable, flexible flat cable, heat-shrinkable tubing, coatedproducts, and compound semiconductors.
Key Challenges and Responses in Fiscal 2011

The main issues needing to be addressed by thissegment were the following:1) Increasing sales in growth areas such as mobile
phones and liquid crystal panels (or displays);
2) Strengthening our global sales and production
systems centering on the newly emerging markets;
3) Increasing sales of high-value-added products andlowering the sales costs of mainline products; and
4) Launching new products and developing newtechnology
Our activities in fiscal 2011 included the launch
in September 2010 of Sumitomo Electric Interconnect
Products (Shenzhen), Ltd. to serve as a joint base ofoperations for business in China in the three areas offlexible print circuits, flexible flat cables and electronic
wiring harnesses. This move has enabled us to capture
demand for smart phones, tablet computers and flatscreen TVs, a market undergoing global expansion
especially in China and Southeast Asia. At the sametime, it will help us to strengthen our competitivenessthrough the mutually supportive effect achievablethrough the integrated management of these threeareas of business.
We have also taken the lead over other companies
in developing and increasing sales of various new andunique products such as Tab-Leads for lithium ion
batteries used in electric vehicles and 6-inch gallium
nitride (GaN) substrates for white light-emitting diodes(LEDs). In addition to these efforts, the recovery in
the global electronics market was another factor thatenabled us to achieve increased revenue and profit inInformation &Communications

Issues Being Tackled in Fiscal 2012

In the electronic wire business, we will work on
increasing sales of automotive wires in Europe andNorth America and also promote sales of harnesses for
medical purposes and Tab-Leads.
In FPCs, we aim to increase sales of products foruse in tablet computers, demand for which is expanding
globally, as well as for hard-disk drives and liquid crystal
panels applications. We will also ensure that production
occurs at the most appropriate locations and lower costs
through the integrated production of FPCs at our plantin China and transfer of production of electronic wires.
Turning to compound semiconductors, in February
2011 we established a new manufacturing and sales
base for gallium arsenide substrates in China in an
attempt to capture demand in the rapidly growing
Chinese domestic market. We will also work toward
increasing sales of GaN substrates for use in white LEDs,
which constitute another rapidly expanding market.

Strategic Topics

World’s first 6-inch GaN substrates
for white LED applications
We led the world with the mass production of 2-inchdiameter GaN substrates for blue-violet lasers inside Bluray DVD players.
The white LED market has been growing rapidly
using 2- to 4-inch diameter sapphire substrates. As analternative to sapphire, we began large-scale productionof 2-inch diameter GaN substrates designed for use
in white LEDs. We have also been developing largerdiameter GaN substrates. These materials allow for
better thermal dispersion and other superior properties
which will enable LED manufacturers to reduce chipsizes and increase output power. We also believe GaN
substrates will be used for power devices because of theexcellent thermal conductivity, electric responsiveness andbreakdown voltage of devices made using these materials.

comparison with the previous year.

Annual Report 2011

SUMITOMO ELECTRIC

25

Electronics

Review of Operations

Electric Wire & Cable, Energy
Automotive

Information &Communications

Electronics

Electric Wire
& Cable, Energy

Air Cushion for Railroad Vehicles
Our air cushions are used by many railroad companies in Japan andabroad for their railroads, including Shinkansen super-express lines,
fulfilling the needs for higher railroad speeds and improved riding
comfort.

Cross-Linked Polyethylene (XLPE) Insulated Cables
Our high-voltage electric wires and cables, which stably supply
large-capacity electric power, serve as the main arteries of energy
transmission by power companies in Japan and abroad.

Scratch-Resistant Magnet Wires
Magnet wires are widely used in automotive electric components.
Our magnet wires can withstand harsh conditions during coilwinding and are used in high-efficiency motors and coils.

Trolley wires
Railroad trolley wires are installed in the bottom of an overhead
feeder system, so that it contacts the pantograph of each railcar
to feed power to the car. The trolley wire is made of hard-drawn
copper or copper alloy, to meet the requirements for low electric
resistance and high mechanical strength.

Net Sales(Billions of yen)
10

(Billions of yen)
700

(Billions of yen)
20

18

1.8

413

1.0

Nissin Electric

8

Sumitomo Densetsu

200

Magnet Wires

0.5

10

10
300

4

4

Others

400

0.8

15

10

7
7

6

16

1.5

502

8

1.5
500

1.2

595

600
8

465

1.8

(%)
2.0

Capital Expenditure

536

10

R&D Expenses
and as a Percentage of Net Sales

5

2
Electric Power Cables

100

Copper Wire Rods
0

2007

2008

R&D Expenses

26

SUMITOMO ELECTRIC

2009

2010

2011

0

R&D Expenses / Net Sales

Annual Report 2011

0

2007

2008

2009

2010

2011

0

2007

2008

2009

2010

2011

Review of Operations
Electric Wire & Cable, Energy
Automotive

Segment Overview

The segment provides electric wires and cables productsthat underpin stable energy supply. They include
copper wires rod from which various types of electric
wires and cables are made, high-voltage power cables
indispensable for the supply of electric power in large
quantities, and trolley wires for railways. The segment
also supplies magnet wires used in household electronic
products, automotive electric components, and industrial
motors, as well as coating materials for electric wires,
along with hybrid products that have emerged throughthe development of technology involving materials
such as rubber, plastic and ceramics, to many different
branches of industry.
Key Challenges and Responses in Fiscal 2011

The main issues needing to be addressed in this segment
were the following:1) Deepening structural reform in mature business areas
and rigorous cost-cutting;2) Expanding sales in overseas markets, especially China,
India and the Middle East;
3) Developing more products in the automotive andelectronics fields; and
4) Exploring new markets in the fields of energy,
resources and the environment.
The slump in capital investment in the private sector
in Japan continued through fiscal 2011. Despite thefall in demand for construction equipment and powerreceiving and transformer equipment, sales of magnet
wires for the automotive and electronics fields increased.
There was increased demand for charged particle
beam-oriented equipment made by our subsidiary
Nissin Electric Co., Ltd. These factors, together withthe rise in copper prices, enabled us to increase ourincome in comparison with the previous fiscal year.
On the earnings front, in addition to these factors,
our thorough attempts to cut costs on a global level
meant that we managed to achieve a 70% increase inoperating income over the previous year.

Information &Communications

Electronics

Electric Wire
& Cable, Energy

Issues Being Tackled in Fiscal 2012

As to electric wires and cables, we will respond to
demand arising in the aftermath of the earthquake
disaster for the rehabilitation and recovery of the social
infrastructure. In the field of high-voltage power cables,
we will capture growing demand for electric power
infrastructure in Asia and the Middle East.
In the case of magnet wires, we will continue towork toward reducing total costs, while expanding
sales of scratch-resistant magnet wires for use in hybrid
vehicles.
In response to demand related to renewableenergy, we are planning to develop and increase salesof products such as low-loss transmission lines andsuperconducting cables, and power conditioners forsolar generation. To meet increased demand for railway
infrastructure in China and other countries, we are also
stepping up sales of trolley wires and air cushions forrailcar.
Strategic Topics

Start of trial mass production of hightemperature superconducting wire witha critical current value of 200A
We have been working on raising critical current values
ever since achieving success with the industrial productionof bismuth-based high-temperature superconducting(HTS) wire in 2004. We have recently made a start withthe trial mass production of HTS wire with a critical valueof 200A.
We developed and began supplying HTS high fieldmagnet system cooled by cryocooler in 2010. In addition,
we are now supplying DI-BSCCOTM bismuth-based HTS
wire for induction heater and HTS DC power cableprojects. The use of HTS wires is thus on the increase invarious industries. Raising critical current values makes
it possible to decrease the size of units and devices. We
intend to move forward with mass production and raising
the performance of HTS wires with sights set on the fullscale practical introduction of HTS devices in the future.

Annual Report 2011

SUMITOMO ELECTRIC

27

Review of Operations

Industrial Materials & Others
Information &Communications

Electronics

Electric Wire
& Cable, Energy

Industrial Materials& Others

Cutting tools, SUMIBORON™ and SUMIDIA™
These cutting tools are tipped with cubic crystal boron
nitride (CBN) or a sintered body of diamond. Suitable forhigh-efficiency, high-accuracy cutting operations for highhardened steel and aluminum alloy, these cutting tools
improve productivity and lower cutting costs.

Sintered Parts
Powder metallurgical parts are made mainly of iron powderusing a powder metallurgical technique. They are widely usedas the structural parts for automobiles, office instruments andhome electric appliances.

Saw WiresSaw wires are brass coated high tensile high carbon steel
wires, used by wire saw machines in the cutting process,essential for the cutting of solar cells and for silicon ingot
slicing to obtain semiconductor wafers.

Cemented Carbide Tool “Multi-DrillTM”
In the field of metal parts machining, demand has been
growing for drills that are highly efficient and offer long service
life. To respond to these needs, we have employed its innovative
tool design and coating film to develop novel products thatcan contribute to high-efficient, high-precision machining andproduction cost saving.

Net Sales(Billions of yen)
4

(Billions of yen)(Billions of yen)

250

20

228

3

Others

200
1.5

15

1.5
1.4

1.4

14

1.8

2

21

23

282

278

250

19

2.0

300

Capital Expenditure
302

(%)
2.5

295

4

4

4

4

4

R&D Expenses
and as a Percentage of Net Sales

A.L.M.T.

150

1.3
1.0

10
Hard Metal

7

100
1
0.5

5
50
Special Steel Wires

0

2007

2008

R&D Expenses

28

SUMITOMO ELECTRIC

2009

2010

2011

0

R&D Expenses / Net Sales

Annual Report 2011

0

2006

2007

2008

2009

2010

0

2007

2008

2009

2010

2011

Review of Operations
Industrial Materials & Others
Automotive

Segment Overview

Hard metal products, such as cutting tools, are needed
to satisfy the demand for high speed, high performanceand high precision in mechanical processing. The
segment manufactures products used in many industries,
including prestressing concrete steel wires used in civilengineering and building construction projects, aswell as special steel wires such as the tire-reinforcing
material steel cord used in the automobile industry andoil-tempered wires for valve springs. We also makesintered parts that are used as structural components in
automobiles and home electric appliances, etc.
Key Challenges and Responses in Fiscal 2011

The main issues needing to be addressed in this segment
were the following:1) Accelerating global business operations;2) Developing materials and products, and further
strengthening and differentiating our processing andother core technologies;3) Developing products for fields outside the automobile
industry such as aviation and energy; and
4) Stable procurement of raw material resources such as
tungsten.
Turning first to our hardmetal business in fiscal 2011,
we set up a new company in China, where demandfor cutting tools is growing sharply due to the rapid
expansion of the automobile industry. Named Sumitomo
Electric Hardmetal Manufacturing (Changzhou) Co.,
Ltd., the company will serve as a global base for themass production of cemented carbide drills and sintereddiamond chips. In our special steel wire business, wereached agreement with the South Korean company
Hyosung Corporation over the establishment of a joint
venture for steel cord in Thailand and China, in response
to growing demand from the emerging countries. We also
invested in areas of growth, for example by setting up
new production bases for saw wire in China and Taiwan,
which is used in the processing of silicon for solar cells.
This segment saw a global increase in automobile
production and consequent growth in demand forautomotive products such as cemented carbide tools,
sintered parts and valve springs. As a result, sales increased
from the previous fiscal year, and operating income wasup 17.9 times over the previous year.

Information &Communications

Electronics

Electric Wire
& Cable, Energy

Industrial Materials& Others

Issues Being Tackled in Fiscal 2012

In this field, we will improve production efficiency inJapan, while at the same time, continuing to expand ourmain manufacturing bases in Asia.
As regards the hard metal business, we areplanning to make a smooth start with the new bases
for mass production in China, and to supply products
not only within China but on a global basis to include
Europe and other Asian countries.
From the standpoint of acquiring a stable supply of
raw materials and making effective use of rare resources,
we began operation of a new tungsten recycling plantin April this year.
In the area of special steel wires, we intend toembark on the previously mentioned joint venture forsteel cords at the earliest opportunity.
As regards sintered parts, as well as enhancing
the capacity of our production bases in China andelsewhere, we intend to strengthen developmentof environmentally-friendly sintered items such as
variable valve timing (VVT) and continuously variabletransmission (CVT) devices.
Our subsidiary A.L.M.T. Corp. is expediting thedevelopment and sale of new products including
precision wire saws for processing sapphire for LEDs
and silicon for solar cells, telecommunications, and heatsinks for regulating electric power.
Strategic Topics

Establishment of a joint venture for the
manufacture and sale of steel cords
Together with Hyosung Corporation, South Korea’s
leading manufacturer of tire reinforcing materials, we aresetting up a joint venture in Thailand for steel cords, thematerial used to strengthen automobile tires. We haveacquired a 30% holding in Hyosung’s Chinese subsidiaryand have embarked on joint venture operations. Hyosung
holds the top share of the market for textile cords.
We hope to capture growing demand in Thailand andChina by tapping into Hyosung’s strong sales capacity inthis area, by consolidating supply chains for steel cords
operations, and by further
strengthening our costcompetitiveness.

Annual Report 2011

SUMITOMO ELECTRIC

29

Corporate Social Responsibility

We have set targets in five priority
areas in the field of CSR.
Sumitomo Electric Group CSR Basic Policy

We have specified five priority categories on which

The Sumitomo Spirit, which gives top priority to social

we focus our CSR efforts: environmental preservation;

credibility and corporate ethics, is deeply instilled into

procurement and logistics; safety and quality; employees

the Sumitomo Electric Group. The Sumitomo Spirit, asand human rights; and social contribution. Based onwell as the Sumitomo Electric Group Corporate Principles,

this approach, we will establish good relationships with

serves as the basic value standards that guide us. We feelstakeholders and continue sustained growth with the aimthat the Sumitomo Electric Group’s CSR basic policy is toof becoming a Glorious Excellent Company, i.e., realizing

contribute to society through business operations in line

the ideal state of the Sumitomo Electric Group, so as towith compliance regulations.

fulfill our corporate social responsibility.

The global
environment

Our customers

Quality

Environmental
preservation
ComplianceBusiness
partners

Procurement
andlogistics

The Sumitomo Spirit

The local
community,
NGOs/NPOs
Socialcontribution

Sumitomo ElectricGroup Corporate
Principles

Compliance

Shareholders
and investors

Employees/human rights,
safetyEmployees

Administrative
bodies,economicorganizations

Sumitomo Electric Group CSR Report 2010
For more information on the Group’s CSR initiatives, please see our website

http://global-sei.com/csr/download.html
The CSR report for 2011 will be published at the end of October, 2011.

30

SUMITOMO ELECTRIC

Annual Report 2011

Corporate Social Responsibility

Highlights of Fiscal 2011

Stakeholder Dialogue
The Company organized Stakeholder Dialogue, a meeting

environmental management at the Sumitomo Electric Group.

aimed at enabling our stakeholders from various fields to

We believe that the valuable opinions expressed during theexchange views with the Sumitomo Electric Group.

Stakeholder Dialogue events can help to further improve our

The first session was held in July 2010 at the Yokohama

environmental management.

Works. With the participation of locally based stakeholders, a
lively exchange of opinion developed on the role of companies
in environmental protection initiatives, and their relationships
with local communities. The second session, held in March2011 at the Tokyo Head Office of the Company, featured
three experts in corporate environmental management, who
facilitated exchanges in opinions on effective and sustainable

SEI Group CSR Foundation FundWe established the SEI Group CSR Foundation Fund (a public

and overseas; (5) support for research and academic studies;interest incorporated foundation) in April 2009, with the aim

and (6) support for sports, culture and the arts.

of supporting human resource development, academic studies

Monetary contributions for six university courses totaled

and research activities inside and outside Japan. In February¥84 million in fiscal 2011. After screening 60 applications for

24, 2010, it was certified as a public interest incorporated

academic research subsidies, we selected 16 for ¥20 million inassociation.

grants. Scholarships totaling ¥10.28 million were granted to

The Fund is aggressively committed to supporting

students from Japan and overseas.

youth training through channels such as: (1) monetary

Through these activities, we believe the Fund is making

contributions to university courses; (2) scholarships for local

a contribution, no matter how small, to broadening our stock

students studying at foreign universities; (3) scholarshipsof knowledge, thereby advancing the prosperity of mankind

enabling overseas students to study in Japan; (4) support forand the security of society.

elementary, junior high and high school education in Japan“Eco Mind” products and Eco-Products
When significant changes are made in the design of existingproducts or new products are established, to ensure they can

EcotubeTM

be used in full confidence, we carry out product assessments

Sumitomo Electric Fine Polymer, lnc.
Restriction of use of hazardous chemical substances

and, based on the results, incorporate feedback intodevelopment and design.
We identify and internally register products thathave undergone this process of assessment as being “EcoMind” products — part of our commitment to creating
environment-friendly products. Among these “Eco Mind”
products, particularly environment-friendly items are

High-performance & Lightweight FUSE BOX
Sumitomo Wiring Systems, Ltd.
Reduction of use of resources, etc.

PureFlexTM slim cable
Optical Fiber and Cable Division
Reduction of use of resources, etc.

designated as Eco-Products, after review and assessment byour own standards based on ISO14021. We aim to increase

SEC-Sumi-Power MillTM PWS typethe proportion of both Eco-Products and “Eco Mind”

Sumitomo Electric Hardmetal Corp.
Products with longer service life, etc.

products in our overall sales.

Annual Report 2011

SUMITOMO ELECTRIC

31

Corporate Governance
Basic Policy for Corporate GovernanceThe consistent basic policy of the Sumitomo Electric Group is to make a positive contribution tosociety through the pursuit of fair business activities, in line with the Sumitomo Spirit and theSumitomo Electric Group Corporate Principles. To develop our business and enhance our corporate
value while adhering to this basic policy, we are committed to improving overall management
efficiency and speed, and to ensuring the legality and appropriateness of our business decisions andactivities. We are also strengthening related supervisory and remedial systems.
In June 2003, Sumitomo Electric adopted the Executive Officer and Business Unit systems,with the aim of creating a flexible system of business execution by accelerating the Board’s
decision-making, improving its supervisory functions, and clarifying the scope of its authority andresponsibility.
In June 2008, outside corporate auditors were appointed with the aim of further strengthening
the supervisory functions of the Board of Directors.
To ensure soundness of management, we have strengthened auditing functions and ensured
that independent Outside Corporate Auditors comprise over half of the Corporate Auditor team.
The Outside Corporate Auditors have a high degree of specialist knowledge and multi-faceted
expertise. Outside Corporate Auditors, the full-time Corporate Auditors and their support staffs
work with the Internal Auditing Department and the Accounting Auditors to ensure that business isconducted in a legal and appropriate way.
At meetings of the Board of Directors, the independent Outside Executive Officers offer theiropinions on matters such as improving management efficiency. Looking ahead, we plan to further
improve our internal governance systems.

Sumitomo Electric Group’s Corporate Governance Structure
General Meeting of Shareholders
Appointments / Dismissals

Board of Directors
Management Conference

Audit

Board of Corporate Auditors

President

Cooperate

Corporate Auditors

Accounting Auditors

Accounting Audit

Co

op

Sales Units

Affiliates in Japan and Overseas

R&D Unit

Affiliates in Japan and Overseas

Production Units

Affiliates in Japan and Overseas

era

te

Audit

Internal Auditing Department

Corporate Staff Group
Cross-Sectional Risk Management Activity etc.

Risk Management
Committee

32

SUMITOMO ELECTRIC

Annual Report 2011

Compliance Committee

Corporate Environment
Committee

Information Management
Committee

CSR CommitteeCorporate Governance

Board of Directors
The Board of Directors meet regularly once a month and from time to time when deemed necessary
to discuss and approve important business matters such as investment and business restructuring,with the President as a chairman because the position of the chairman of the Board of Director
is vacant. Before submitting agendas to the Board, the Management Conference comprising thePresident and Executive Directors discuss and improve the agenda in advance.
Conduct of operations based on the decisions of the Board of Directors and other committees
is entrusted to Business Unit General Managers, Sales Unit General Managers, R&D Unit General
Managers and Directors and Executive Officers heading Corporate Staff Groups. At the same time,to establish a functioning system of internal checks, clear organizational authority and responsibilities
have been laid down in the in-house regulations, along with appropriate operational procedures.
In addition to receiving monthly reports on sales and earnings as well as financial position andother matters from the director in charge of accounting, the Board of Directors receives reports
about orders (received) and sales at each Business Unit headed by a director, and oversees progress
towards achievement of management targets and conduct of operations.

Internal Audits and Audits by Corporate Auditors
The Company receives three types of audits, namely corporate auditor audits, internal audits andaccounting audits, to ensure the legality and appropriateness of its business management. In thecorporate auditor audits, five corporate auditors, three of whom are Outside Corporate Auditors,
inspect the performance of Board members in business execution, backed by the Corporate Auditor
support staff (Office of Corporate Auditors).
Corporate Auditors all attend important meetings of the Board of Directors, based on thebrief they were assigned — audit planning, policy-making and task allocation — by the Board of
Corporate Auditors. They question the Board of Directors, Internal Auditing Department and otheroffices on their performance of duties, and read through important documents for approval. They
also carry out regular visiting audits at major business premises. At the same time, they receive audit
reports from other Corporate Auditors and exchange needed information with the Accounting
Auditors.
The Company has established the Internal Auditing Department as an auditing unit forinternal audits. This Department carries out audits at Sumitomo Electric‘s premises including Group
companies and suggests improvements in problem areas to ensure appropriate and efficient conductof operations. In addition, the Corporate Auditors and Accounting Auditors collaborate if needed intheir audits.
Our Accounting Auditors are KPMG AZSA LLC.

Outside Director and Outside Corporate Auditors
Sumitomo Electric has one Outside Director and three Outside Corporate Auditors. The Company
has appointed the Outside Director to provide an external perspective and step up supervision
at Board of Directors’ meetings and to increase the transparency and objectivity of corporate
management. Moreover, to strengthen the supervisory system to better ensure legal and appropriate
management, we have appointed Outside Corporate Auditors as over half of our Corporate
Auditors, ensuring a wider range of expertise and perspectives. To date, outside Executive Officers
have provided useful opinions from an independent position to the Board of Directors and otherexecutive meetings.

Annual Report 2011

SUMITOMO ELECTRIC

33

Compliance

Compliance Committee
Sumitomo Electric has established the Compliance Committee, chaired by the President, as anorganization that promotes measures necessary to develop and further strengthen the compliancesystem.
The Committee engages in various activities, including preparing and distributing theSumitomo Electric Employee Compliance Manual, and organizing compliance training programs.
In addition, the Committee identifies and analyzes Group-wide compliance risks and monitors thecompliance activities implemented by each department and division.
Sumitomo Electric also provides support to Group companies in Japan and overseas inestablishing their own compliance systems, based on the Company’s own compliance initiatives.

Compliance Manual
The Manual explains specific and useful instructions so that employees can act in a sociallyacceptable way from legal and ethical perspectives. In March 2009, we reviewed the Compliance
Manual, reflecting recent law amendments, enforcement of regulations, and changes in the social
conditions. We distributed the revised version to employees in Sumitomo Electric and the Group
companies.

Compliance Education
To check compliance risks, ensure implementation of preventive measures and enhance awarenessof compliance, the Compliance Committee organizes regular training seminars for all officers
and administrative members every year. New employees and newly promoted personnel are also
provided with training seminars.
The Sumitomo Spirit, which forms the basis of the Sumitomo Electric Group’s compliancesystem, as well as our philosophies and codes of conduct mentioned in the Sumitomo ElectricGroup Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior,
are also disseminated by, for example, holding a variety of training programs and through top
management’s actions and statements.

Speak-Up System
We have established the Speak-Up System, which enables employees to directly report andconsult on potential compliance-related issues, so as to identify and resolve such issues internallyat an early stage and enable the Compliance Committee to swiftly mount an investigation basedon information it has received and take the necessary measures.
In addition to overseeing the setting up of an in-house offices for Group companies inJapan, we have set up an external offices (law offices) under the Speak-Up System for all Group
companies to use. We are working to disseminate the Speak-Up System to employees throughmonthly in-house magazines.

34

SUMITOMO ELECTRIC

Annual Report 2011

Compliance

Strengthened Competition Law Compliance System
1. Intensively conduct special training programs
Instead of regular compliance training seminars for administrative members conducted every
spring, special training programs on compliance with competition laws were conducted intensively
from February through May 2010 for all members of Sumitomo Electric and its subsidiaries inJapan excluding employees working at manufacturing sites (81 sessions were held in 40 locations
nationwide for 5,000 participants in total). The Company continues to provide competition law
compliance training on a regular basis.

2. Develop Competition Law compliance rules
In June 2010, Sumitomo Electric established its Competition Law Compliance Regulations, whichcontain provisions restricting contact with competitors.
To increase the effectiveness of these regulations, each department and division will develop
its own rules and frameworks for these regulations in consideration of the activities of thedepartment or division. By doing so, the Company intends to create an environment free fromviolation and even from suspicion of violation.

3. Establish action guidelines for competition law compliance
The Company already has the Sumitomo Electric Employee Compliance Manual and various
procedures in place. To more clearly specify prohibited conduct and matters to be observed,
Competition Law Action Guidelines will be established. These guidelines will also cover foreigncompetition laws. We will spare no effort to ensure that these guidelines are fully understood
through training, particularly among members of Sales Groups.

4. Form dedicated organizations and establish an auditing system(1) Sumitomo Electric has established the Competition Law Compliance Office in its Corporate
Staff Group, and appointed Competition Law Compliance Manager for each business unit. Asa unit of the head office, the Competition Law Compliance Office is exclusively responsible forpromoting compliance with competition laws.
It will engage in the enforcement of the Competition Law Compliance Regulations,monitoring and auditing of the status of compliance with competition laws, the Regulations
and rules for administering these regulations at each department and division, and theplanning and organization of training and other programs.
(2) As of June 2010, Sumitomo Electric had also established the Sales Compliance Office in
the Sales Group. In cooperation with the Competition Law Compliance Office, the Sales
Compliance Office engages in the development and enforcement of manuals and rules
regarding electric wire-related sales and marketing activities; evaluation of the status ofcompliance with competition laws using check sheets that all employees are required tosubmit on a regular basis and through interactive communication; monitoring of the status ofparticipation in competitive bids; and auditing of the status of compliance with the Regulations
and the rules for administering those regulations.

Annual Report 2011

SUMITOMO ELECTRIC

35

Business Risk
The following major categories of risk could affect the business performance and financial position of theSumitomo Electric Group. Forward-looking statements in this section represent judgments made by the Group’s
management as of the end of the fiscal year on a consolidated basis ended March 2011.

Political and economic situations, demand fluctuation

In January 2009, the Sumitomo Electric Group was subjected
to an on-site investigation by the Japan Fair Trade Commission (JFTC)The Group’s businesses span the “Automotive,” “Information &with regard to collusion and cartel allegations in the submarine

Communications,” “Electronics,” “Electric Wire & Cable, Energy”

and underground power cables businesses. Sumitomo Electric hadand “Industrial Materials & Others” sectors. In addition to Japan,transferred its development, manufacturing and export businesses in

the Group has business operations in the Americas, the rest of Asia,

this field to J-Power Systems Corporation, our 50-50 joint venture with

Europe and North Africa. For this reason, its business performance,

Hitachi Cable, Ltd., in October 2001, with sales operations targeting

financial position and cash flows do not depend excessively on specificdomestic power companies transferred in October 2004. Regulatory

trading partners, products or technologies, but are affected by sector-

authorities in the EU, U.S. and later Australia also started investigations

and locality-specific changes in demand, the shortening of productinto these allegations. In January 2010, the JFTC issued a cease andlife cycles due to technological innovation, and political change in thedesist order and an order for payment of an administrative surcharge

countries in which the Group operates. Most of the Group’s products

totaling ¥228 million against J-Power Systems Corporation.

are components for end-user goods, and materials and systems used

The Company was investigated by the JFTC in February 2010

in public facilities and infrastructure. Hence, the Group is exposed

about its trade in automotive wiring harnesses-related products, and is

to fluctuations in the business cycle as well as changes in customers’

under investigation by EU, U.S. and other overseas antitrust regulators.

procurement policies and decisions on capital expenditures.

Natural disasters
Changes in laws and regulations

Having sustained significant damage mainly at its Itami Works in the

In addition to its Japanese facilities, the Group has manufacturing

Great Hanshin-Awaji Earthquake of 1995, the Group has earthquake

and marketing subsidiaries and affiliates in countries around theand other disaster measures in place. However, the Group could sufferworld. Operations in each of these markets entail the following risk

significant earthquake damage as some of its manufacturing facilities

factors, which are impossible to fully avoid, and which could affect theare located in the areas most likely to be affected if earthquakes

business performance and financial position of the Group.

were to hit the Tokai, Tonankai and Nankai regions. The Great East

— Falling sales or a deterioration in the cost-to-sales ratio due toJapan Earthquake caused damage at some of our facilities, which

import restrictions and increases in customs duties.
—Increased tax cost due to changes in taxation systems for domestic
or cross-border transactions.

we are now repairing. There is also a possibility of disruption to our
production plans due to power shortages and procurement problems
in the Tohoku or Kanto area.

—Inability to recover investment due to foreign currency restrictions,
hyperinflation, acts of terrorism, the outbreak of infectious diseases
including new influenza, or other factors.

Interest-rate changes
In its fund-raising activities, the Group takes care of funding

Risks relating to lawsuits, regulations and other legal
measures by regulatory authorities

requirements, the financial market environment and the balance ofIn the course of its ordinary business operations, the Sumitomo Electric

ensure a stable, long-term supply of funding for capital investment.

Group is exposed to risks related to lawsuits, administrative orders

For this reason, the Group has relatively little exposure to short-termand other legal measures carried out by regulatory authorities, which

fluctuations in interest rates, but medium- to long-term rises in interest

could result in compensation claims for damages, official pecuniary

rates can push up the costs of funding via corporate bonds and otherpenalties, or imposition of constraints that could obstruct the Group’s

funding sources, which could in turn adversely affect the businessordinary business operations. Any such lawsuit, administrative order

performance and financial position of the Group.

or legal measure taken by regulatory authorities could have negative
impact on the Group’s business operations, earnings performance andfinancial condition.

36

SUMITOMO ELECTRIC

Annual Report 2011

funding sources. The Group raises funds mainly through the issuanceof long-term, fixed-rate corporate bonds and long-term loans, toBusiness Risk

Exchange-rate fluctuations
Individual financial statements of overseas subsidiaries and equity

Valuation losses on securities held for businesspurposesmethod affiliates of the Group are prepared using local currencies,

The Group holds shares in its trading partners with the purpose

which are then translated into Japanese yen when the consolidatedof ensuring steady supplies of raw materials and stable businessfinancial statements are compiled. Therefore, even when there is no

relations with customers. Because the Group does not hold securities

major variation in business results on local currency basis, the Groupfor the purpose of investment, it is exposed to a relatively low levelcan suffer adverse effects on its business performance and financialof risk from share-price fluctuation, but a rapid fall in the stock

position at the time of translation into yen as a result of changes

market could erode the Group’s equity ratio.

in the exchange rate against the U.S. dollar, the euro and othercurrencies. The Group carries out its manufacturing and marketing
activities in countries all over the world (overseas sales accountedIntellectual property

for 43.8% of total sales for the fiscal year, consolidated basis). The

In addition to protecting its own technologies through theGroup minimizes risk from short-term exchange-rate fluctuationsacquisition of patents, design rights and other intellectual property

by using forward exchange contracts and similar instruments, but

protection, the Group is scrupulous in its observance of othersubstantial exchange-rate fluctuations over the medium-to-long termcompanies’ intellectual property rights. However, circumstances may

could adversely affect the business performance and the financial

arise in which it unwittingly violates the intellectual property rights ofposition of the Group.

another company due to diversification of product configuration or
manufacturing technology, expansion of overseas business activities,

Raw materials procurement

and increased complexity of retail channels. This could result in the

The Group produces a large number of items that use copper aschanges. Further, because the necessary protection cannot always

main component, including electrical cables. In setting the sales

be assured in cases where other companies violate the Group’s

prices of major products containing copper, risk of market priceintellectual property rights, due to differences in legal systems andfluctuation is avoided through the widespread industry practice

enforcement practices from one country to another, the Group isof using the prevailing copper price quoted on the London Metal

unable to guarantee that its products will win a significant share in

Exchange. However, this method is not used for setting the prices

overseas markets.

Group being forced to suspend marketing activities or make designof certain Group products containing copper, which means that any
rapid rise in cooper market prices could adversely affect the Group’sbusiness performance and financial position.

Information leakage

For the procurement of other raw and secondary materials

In the pursuit of its business activities, the Group holds a great deal

such as non-ferrous metals, steel and petrochemicals, the Groupof personal and confidential information. The Group has taken every

is strengthening measures to purchase at more advantageous

possible measure to uphold confidentiality of such information,

terms, for example through joint purchasing. However, a rapid rise

but can offer no definitive guarantee that leakage will not occur inin market prices or a sharp drop in the inventory prices of suchthe case of unforeseen circumstances. If such circumstances arise,

raw and secondary materials could adversely affect the financial

the Group’s business performance and financial position could be

performance and business standing of the Group. Difficulty may also

adversely affected by harm done to its reputation and damage

be experienced in procuring needed volumes of rare metals, because

claims.

rare metal deposits and suppliers are limited. Supplies of such raw
materials and secondary materials may also be difficult to obtain in
the needed volumes, for reasons such as bankruptcy of the supplier,

Defective products and inferior services

natural disaster, war, terrorism, strike, and transportation system

Based on predetermined product quality standards, the Groupfailure.

makes every effort to ensure the quality of its products and services.
However, in certain unforeseen circumstances, it cannot rule out
the possibility of the occurrence of product quality problems leading
to large-scale recalls and product-liability compensation payments.
If such circumstances arise, the Group’s business performance andfinancial position could be adversely affected.

Annual Report 2011

SUMITOMO ELECTRIC

37

Directors, Corporate Auditors and Executive Officers

Hiroyuki Takenaka

Katsuhide Kurasaka

Mitsuo Nishida

Shigeru Tanaka

Executive Vice President

Senior Managing Director

Senior Managing Director

Senior Managing Director

Akira Nishimura

Atsushi Yano

Shigeru Noda

Hideaki Inayama

Managing Director

Managing Director

Managing Director

Managing Director

Makoto Nakajima

Akito Kubo

Osamu Inoue

Kazuo HiramatsuManaging Director

Managing Director

Director

Director (Outside Director)

Masayoshi Matsumoto
President and CEO

President and CEO

Managing Directors

Corporate Auditors

Managing Executive Officers

Executive Officers

Masayoshi Matsumoto

Akira Nishimura

Shintaro Mitake

Shosuke Hongo

Hisashi Takada

Atsushi Yano

Kazuyoshi Hasegawa

Seizo Takamuku

Yoshihiro Minato

Executive Vice President

Shigeru Noda

Takashi Kakimi

Masanori Yoshikai

Makoto Tani

Hiroyuki Takenaka

Hideaki Inayama

Ichiro Kobayashi

Fumiyoshi Kawai

Satoru Ogura

Makoto Nakajima

Kan Hayashi

Naoyuki Yamabayashi

Shigeo Saito

Masamichi Yokogawa

Yasushi Kida

Hiroyasu Torii

Takashi Yoshioka

Senior Managing Directors

Akito Kubo

Katsuhide Kurasaka
Mitsuo Nishida

Directors

Kenji Miyazaki

Shigeru Tanaka

Osamu Inoue

Nozomi Ushijima

Kazuo Hiramatsu

Takahiro Nakano(Outside Director)

Junji Ito
Toshiaki Kakii
Jun ItoKenichi Urushibata(As of June 2011)38

SUMITOMO ELECTRIC

Annual Report 2011

Financial Section 2011
Five-Year Financial Data and Indexes
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFor the five years in the period ended March 31, 2011
Thousands of
U.S. dollars

Millions of yen
2011

2010

2009

2008

2007

For the Year:Net sales .......................................................... ¥2,033,827 ¥1,836,352 ¥2,121,978 ¥2,540,858 ¥2,384,395
Cost of sales .................................................... 1,656,750 1,516,688 1,814,447 2,102,375 1,979,737
Selling, general and administrative expenses ....
273,267
267,936
284,004
289,487
275,913
Operating income .............................................
103,81051,72823,527
148,996
128,745
Income before income taxes
and minority interests......................................
113,781
55,425
41,126
166,612
144,550
Net income .......................................................
70,61428,70817,23787,80476,029
Capital expenditures .........................................
Depreciation and amortization ..........................
R&D expenses ..................................................

2011$24,459,735
19,924,834
3,286,434
1,248,467
1,368,382
849,236

107,620
96,76079,026

81,943103,848
72,259143,182
108,168
72,988134,421106,892
72,271

128,568
99,802
68,373

1,294,287
1,163,680
950,403

At Year-End:Total assets ...................................................... 1,956,284
Working capital .................................................
457,833
Total interest-bearing liabilities...........................
341,923
Total net assets*1 .............................................. 1,092,610

1,939,935
402,081355,586
1,064,575

1,868,174
313,591
405,477
1,014,082

2,194,882
387,088415,473
1,128,235

2,126,405
386,791
456,399
1,052,989

23,527,168
5,506,109
4,112,123
13,140,229

Yen

Per Share Data:
Net income:Basic............................................................. ¥ 89.02
Diluted ..........................................................
89.02
Cash dividends .................................................
19.00
Owner’s equity*2 ............................................... 1,196.46

¥

36.19
36.19
16.00
1,139.84¥

U.S. dollars

21.78
21.32
18.00
1,086.79¥ 112.74
107.7120.00
1,226.56¥ 100.22
95.40
17.00
1,170.54

Weighted average number of shares
outstanding (in thousands) ..............................
Number of employees (at year-end) ..................

793,225
182,773793,241
157,203

791,414
152,547

778,785
153,725758,606
133,853

Financial Indexes:
R&D expenses / net sales (%) ...........................
Net income / net sales (%) ................................
Return on owner’s equity (%) ............................
Current ratio (Times) .........................................
Owner’s equity ratio (%) ....................................
Total assets turnover (Times) ............................
Inventory turnover (Times) ................................

3.9
3.5
7.6
1.9
48.5
1.0
7.6

3.9
1.6
3.3
1.7
46.6
1.0
7.1

3.4
0.8
1.9
1.6
46.1
1.0
7.3

2.8
3.5
9.5
1.5
44.1
1.2
8.7

2.9
3.2
8.9
1.6
41.8
1.2
9.5

$ 1.071
1.071
0.229
14.389Note: All dollar figures herein refer to U.S. currency. Yen amounts have been translated, for convenience only, at the rate of ¥83.15 to U.S.$1.00,
the approximate exchange rate prevailing on March 31, 2011.
*1 See Note 9.
*2 Owner’s equity is sum of total shareholders’ equity and total accumulated other comprehensive income.
Annual Report 2011

SUMITOMO ELECTRIC

39

Management’s Discussion and Analysis
Results of Operations
In fiscal 2011, ended March 31, 2011, the Japanese economy started out with moderate growth marked by increase inexports and capital spending. While, by the latter half of theyear, low consumer spending and high yen slowed down therecovery and moreover the earthquake left a huge scar.
The world economy is moderately recovering. However,potential risks such as escalating raw material price, inflationin the developing countries, regional conflicts and EU sovereign risk remain.
As for the business environment of SEI group, demands ofautomotive products recovered and increased globally, yet
the slowdown in domestic demand and high yen has dragged
down domestic sales and exports. In addition, the earthquake
has caused damages to manufacturing equipment and supply chain, and the limitation in electricity usage may draw out
the situation.
Under this circumstance, SEI group has continued
reinforcement in sales, cost reduction and developing newtechnologies and products. The Group has expeditiously
recovered the locations damaged of the earthquake. In addition, SEI group will reinforce the supply chain by multi source
procurement prepare and rebuild the manufacturing flow to
prepare for electricity usage limitation.
As a result, in the reporting period (the fiscal year ended
March 2011) net sales increased 10.8% year-on-year, to¥2,033.8 billion; operating income increased 100.7%, to¥103.8 billion; and net income was up by 146.0%, at¥70.6 billion.

Segment Information
In the Automotive segment, sales for the reporting period
increased 17.6% year-on-year, to ¥960.0 billion reflecting the
global recovering in demand for automotives mainly amongdeveloping countries, the increasing order receipt of wiring
harnesses for new car models, and the sales expansion of
new products relating to the environment such as high-voltage
wiring harnesses for HEV and EV. The operating income
increased by ¥29.6 billion to ¥64.1 billion. The operating
income margin increased 2.5 of a percentage point, to 6.7%.
In the Information & Communications segment, sales
decreased 19.5% to ¥218.2 billion, because the businessenvironment for optical fiber businesses got worse due to therapidly appreciated yen and intensifying foreign competition,
and Commuture Corp. has been changed from being a
consolidated subsidiary to the status of an equity-method
affiliate in the second half of fiscal 2011, despite the increasing demand for opto-electronic devices, under the influenceof the global expansion of data communication traffic. The
operating income fell 17.7% to ¥3.0 billion in the reporting
period. The operating income margin was up by 0.1 of apercentage point to 1.4%.
In the Electronics segment, sales increased 8.0% to ¥178.2
billion due to an increase in demand for electronic wires andcompound semiconductors for mobile phones and digitalappliances like flat-screen TVs, and demand for coatedproducts for printers. The operating income increased by¥1.8 billion to ¥6.6 billion. The operating income margin was
up by 0.8 percentage points, to 3.7%.

Net Sales

Operating Income
and Operating Income Margin(Billions of yen)
3,000(Billions of yen)

5.9

6.0

(Billions of yen)

(%)

9.5

100

10.0

8.9
7.6

80

8.0

1,500

71

104

100

4.0
60

75

2.8

3.0

52

1,836

2,000

2,034

76

5.0

88

5.1
129

125

2,122

2,384

2,500

2,541

5.4

(%)

149

150

Net Income
and Return on Owner’s Equity

2.0

6.0

40
50

500

25

4.0

3.3
29

1,000

0

2007

2008

2009

2010

2011

0

24
2007

2008

Operating Income

40

SUMITOMO ELECTRIC

Annual Report 2011

1.0

2009

2010

2011

0

Operating Income Margin

1.9

20

0

2007

Net Income

2008

2.0

17

1.1

2009

2010

2011

0

Return on Owner’s Equity

Management’s Discussion and Analysis

402

458

80

600

1.6

200

10.0

100

1.9

1.7

1.6

1.5

107

100

82

300

20.0

3.0

314

705

387

890
807

30.0

120

97

400

140

104 108

40.0

387

1,032

38.4

38.0

(Billions of yen)

108

4.0

143

(Times)500

134(Billions of yen)

43.8

901

900

(%)
50.0

100

(Billions of yen)
1,200

40.6

Capital Expenditures
and Depreciation and Amortization

Working Capitaland Current Ratio

Overseas Sales
and Overseas Sales Ratio

37.8

Cash FlowsThe term-end balance of cash and cash equivalents
increased by ¥16.5 billion, or 9.4%, compared with the previous term-end, to stand at ¥192.1 billion.
Net cash provided by operating activities decreased by¥32.3 billion to ¥139.3 billion. This is primarily attributable to¥113.8 billion in income before income taxes and minority
interests and ¥97.0 billion in depreciation and amortization.
Net cash used in investing activities increased by ¥13.7
billion to ¥86.6 billion. Expenditures for purchase of property,
plant and equipment increased to ¥91.2 billion.
Free cash flow, cash flows provided from operating activities and investing activities (combined), posted a positive
figure in the amount of ¥52.7 billion, compared with ¥98.7
billion (positive) in the previous year.
Net cash used in financing activities came to ¥27.8 billion,
compared with ¥67.6 billion used in the previous year. Thisis primarily attributable to the decrease of net decrease in
short-term debt.

129

In the Electric Wire & Cable, Energy segment, sales
increased by 12.7% to ¥464.9 billion due to an increase indemand for both magnet wires for automotives & electronics,
and the charged particle beam-oriented equipment producedby Nissin Electric Co., Ltd., in addition to the rising prices ofcopper, despite a decrease in demand for constructions andelectric substation equipment, resulted from a continuous
decrease in domestic business equipment investments. The
operating income increased by ¥5.5 billion to ¥13.4 billion.
The operating income margin increased 1.0 of a percentage
point to 2.9%.
In the Industrial Materials & Others segment, sales
increased 21.6% at ¥277.5 billion due to an increase indemand for electronics-related products like diamond tools
produced by A.L.M.T. Corp., and demand for automotiverelated products such as carbide tools, sintered parts andvalve springs, in accordance with the recovering of global
automotive market. The operating income increased by ¥15.9
billion to ¥16.9 billion. The operating income margin increased
5.7 percentage points to 6.1%.

2.0
60

300

1.0

40

20

0

2007

2008

Overseas Sales

2009

2010

2011

Overseas Sales Ratio

0

0

2007

2008

Working Capital

2009

2010

Current Ratio

2011

0

0

2007

2008

Capital Expenditures

2009

2010

2011

Depreciation and Amortization

Annual Report 2011

SUMITOMO ELECTRIC

41

Consolidated Balance Sheets
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESAs of March 31, 2011 and 2010

Millions of yen

ASSETS
Current Assets:
Cash and time deposits (Notes 3 and 4).................................................
Securities (Notes 4 and 5) ......................................................................
Receivables (Notes 4 and 11):
Trade notes and accounts ..................................................................
Other ..................................................................................................
Allowance for doubtful receivables ......................................................
Inventories (Note 7) ................................................................................
Deferred income taxes (Note 12) ............................................................
Other current assets...............................................................................
Total current assets .........................................................................

Property, Plant and Equipment (Note 8):
Land ......................................................................................................
Buildings and structures .........................................................................
Machinery, equipment and others...........................................................
Construction in progress ........................................................................
Accumulated depreciation ......................................................................
Net property, plant and equipment ..................................................

Thousands of
U.S. dollars (Note 1)

2011

2010

2011

¥ 142,287
53,993¥ 143,851
32,000$ 1,711,209
649,345425,187
29,920(2,195)452,912286,519
32,97920,093
988,783

441,892
41,312(2,902)
480,302
251,727
31,755
20,315959,950

5,113,494
359,831(26,398)
5,446,927
3,445,809
396,621
241,647
11,891,558

75,528459,461
1,079,955
16,4201,631,364(1,149,589)
481,775

82,619480,389
1,097,870
15,868
1,676,746(1,152,089)
524,657

908,334
5,525,689
12,988,034
197,474
19,619,531(13,825,484)
5,794,047

187,256
175,793
17,745
104,932
485,726¥1,956,284

156,254
161,681
23,133
114,260
455,328¥1,939,935

2,252,026
2,114,167
213,410
1,261,960
5,841,563$23,527,168

Investments and Other Assets:
Investments in and loans to unconsolidated subsidiaries
and affiliates (Note 4) ............................................................................
Investment securities (Notes 4, 5 and 8) .................................................
Deferred income taxes (Note 12) ............................................................
Other .....................................................................................................
Total investments and other assets ..................................................
Total assets .....................................................................................

The accompanying notes to consolidated financial statements are an integral part of these statements.

42

SUMITOMO ELECTRIC

Annual Report 2011

Consolidated Balance Sheets

Thousands of
U.S. dollars (Note 1)

Millions of yen
2011

LIABILITIESCurrent Liabilities:
Short-term debt (Notes 4 and 8).............................................................
Current portion of long-term debt (Notes 4 and 8) ..................................
Notes and accounts payable (Notes 4 and 11):
Trade ..................................................................................................
Construction .......................................................................................
Accrued expenses .................................................................................
Accrued income taxes............................................................................
Provision for loss on disaster (Note 17) ...................................................
Provision for surcharge (Note 19) ...........................................................
Other current liabilities (Note 12) .............................................................
Total current liabilities .......................................................................
Long-Term Liabilities:
Long-term debt (Notes 4 and 8) .............................................................
Accrued pension and severance costs (Note 13) ....................................
Deferred income taxes (Note 12) ............................................................
Other long-term liabilities ........................................................................
Total long-term liabilities...................................................................
Total liabilities...................................................................................

¥

74,01943,364

2010¥

93,93850,695

2011$

890,186
521,515

250,820
22,98869,673
18,272
4,114—
47,700530,950

255,574
21,431
72,03916,886—
6,763
40,543557,869

3,016,476
276,464
837,920
219,747
49,477—
573,663
6,385,448

224,540
30,38164,36913,434
332,724
863,674

210,953
32,716
61,176
12,646
317,491
875,360

2,700,421
365,376
774,131
161,5634,001,491
10,386,939

99,737
171,020
696,776

99,737
171,020
637,478

1,199,483
2,056,765
8,379,747(640)
966,893(619)
907,616(7,697)
11,628,298

61,184(35)—(78,996)(17,847)
17
143,547
1,092,610¥1,956,284

50,08733(1,188)(52,387)(3,455)22
160,392
1,064,575¥1,939,935

735,827(421)—(950,042)(214,636)
205
1,726,362
13,140,229$23,527,168

Contingent Liabilities (Note 14)
NET ASSETS (Note 9)
Shareholders’ Equity:
Common stock;
Authorized—3,000,000 thousand shares in 2011 and 2010
Issued—793,941 thousand shares in 2011 and 2010 .........................
Capital surplus .......................................................................................
Retained earnings ..................................................................................
Treasury stock, at cost; 728 thousand shares in 2011 and702 thousand shares in 2010 ...............................................................
Total shareholders’ equity ................................................................
Accumulated Other Comprehensive Income:Net unrealized holding gains on available-for-sale securities ...................
Deferred gains and losses on hedges .....................................................
Land revaluation .....................................................................................
Foreign currency translation adjustments ...............................................
Total accumulated other comprehensive income .............................
Share Warrants .......................................................................................
Minority Interests....................................................................................
Total net assets ...............................................................................
Total liabilities and net assets ...........................................................

Annual Report 2011

SUMITOMO ELECTRIC

43

Consolidated Statements of Income
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010
Thousands of
U.S. dollars (Note 1)

Millions of yen
2011

2010

2011

¥2,033,827
1,656,750
377,077
273,267
103,810¥1,836,352
1,516,688
319,664
267,936
51,728$24,459,735
19,924,834
4,534,901
3,286,434
1,248,467

4,355(5,189)23,861368
7,970(2,188)(1,287)(11,336)(8,845)
—
—
2,262
9,971
113,781

5,323(6,186)
12,1591,825
7,140(4,371)(1,240)(3,595)—(5,777)(6,763)5,182
3,697
55,42552,375(62,405)
286,963
4,426
95,851(26,314)(15,478)(136,332)(106,374)——
27,203
119,915
1,368,382

30,993165
31,15824,971(8,050)16,921

372,736
1,984
374,720

Income before Minority Interests ..........................................................

82,62338,504

993,662

Minority Interests....................................................................................

(12,009)(9,796)(144,426)

Net Sales (Note 11) ..................................................................................
Cost of Sales (Note 11)............................................................................
Gross profit ............................................................................................
Selling, General and Administrative Expenses ....................................
Operating income...................................................................................
Other Income (Expenses):
Interest and dividend income..................................................................
Interest expense .....................................................................................
Equity in net income ...............................................................................
Gain on sales of property, plant and equipment ......................................
Gain on sales of investment securities ....................................................
Loss on disposal of property, plant and equipment.................................
Loss on valuation of investment securities ..............................................
Impairment losses of fixed assets (Note 16) ............................................
Loss on disaster (Note 17) .....................................................................
Restructuring expenses (Note 18) ..........................................................
Provision for surcharge (Note 19) ...........................................................
Other, net ...............................................................................................
Income before Income Taxes and Minority Interests ..........................
Income Taxes (Note 12):Current...................................................................................................
Deferred .................................................................................................

Net Income ..............................................................................................

¥

70,614¥28,708Yen

Per Share of Common Stock (Note 10):Net income (basic) .................................................................................
Net income (diluted) ...............................................................................
Cash dividends ......................................................................................

¥89.02
89.02
19.00

$

849,236

U.S. dollars (Note 1)¥36.1936.19
16.00$1.071
1.071
0.229

The accompanying notes to consolidated financial statements are an integral part of these statements.

Consolidated Statements of Comprehensive Income
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010
Millions of yen

Income before Minority Interests ..........................................................
Other Comprehensive Income
Net unrealized holding gains on available-for-sale securities ...................
Deferred gains and losses on hedges .....................................................
Foreign currency translation adjustments................................................
Share of other comprehensive income of affiliates in equity method .......
Total other comprehensive income ......................................................
Comprehensive Income .........................................................................
Comprehensive income attribute to:
Owners of the Company ........................................................................
Minority interests ....................................................................................

2011

2010

2011

¥82,623¥38,504$993,662

11,022(44)(26,368)(7,791)(23,181)
59,442

19,384
(385)
7,910
1,958
28,867
67,371

132,556(529)(317,114)(93,698)(278,785)
714,877

52,956
6,486

53,83813,533636,873
78,004

The accompanying notes to consolidated financial statements are an integral part of these statements.

44

SUMITOMO ELECTRIC

Annual Report 2011

Thousands of
U.S. dollars (Note 1)

Consolidated Statements of Changes in Net Assets
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010
Millions of yen
Shareholders’ Equity

Balance at March 31, 2009...........

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥99,737¥171,020¥622,186¥(612)

Accumulated Other Comprehensive Income
Foreign
DeferredNet unrealized
currency
holding gains on gains andtranslation
lossesLand
available-for-saleadjustmentson hedges
revaluation
securities¥31,514¥377¥(1,422)¥(60,713)

Share
warrants

Minority
interests

Total
net assets(Note 9)¥37

¥151,958¥1,014,082

Cash dividends ..........................

(11,107)(11,107)

Net income for the year ..............
Effect arising from net increasein number of subsidiaries andaffiliates for consolidation .......

28,70828,708(593)

Purchases of treasury stock .......
Other .........................................
Balance at March 31, 2010...........
Effect arising from change inclosing period of consolidated
subsidiaries (Note 2 a) ..............

(593)
(7)

99,737(7)

0(1,716)

0

18,573

(344)

234

8,326

(15)

8,434

33,492

171,020

637,478(619)

50,08733(1,188)(52,387)22

160,392

1,064,575

4,605

4,605

Cash dividends ..........................

(14,280)(14,280)

Net income for the year ..............
Effect arising from net decreasein number of subsidiaries andaffiliates for consolidation .......

70,61470,614(1,607)Purchases of treasury stock .......
Disposal of treasury stock ..........

0

Other .........................................
Balance at March 31, 2011...........

(1,607)(22)(34)¥99,737¥171,020(22)

1¥696,776¥(640)

1
11,097(68)¥61,184¥ (35)¥

1,188(26,609)(5)(16,845)(31,276)—¥(78,996)¥17¥143,547¥1,092,610

Sharewarrants

Minority
interests

Total
net assets(Note 9)$265

$1,928,948$12,803,069

Thousands of U.S. dollars (Note 1)
Shareholders’ Equity

Commonstock
Balance at March 31, 2010........... $1,199,483
Effect arising from change inclosing period of consolidated
subsidiaries (Note 2 a) ..............

CapitalsurplusRetainedearnings

Treasurystock

Accumulated Other Comprehensive Income
Foreign
DeferredNet unrealized
currency
holding gains on gains andtranslation
lossesLand
available-for-saleadjustmentson hedges
revaluation
securities$2,056,765$7,666,603$(7,444)$602,369$ 397$(14,287)$(630,030)

55,382

55,382

Cash dividends ..........................

(171,738)(171,738)

Net income for the year ..............
Effect arising from net decreasein number of subsidiaries andaffiliates for consolidation .......

849,236

849,236(19,327)

Purchases of treasury stock .......
Disposal of treasury stock ..........

0

Other .........................................
Balance at March 31, 2011........... $1,199,483(19,327)
(265)

(409)
$2,056,765

(265)

12
$8,379,747$(7,697)12
133,458(818)$735,827$(421)$

14,287(320,012)(60)(202,586)(376,140)—$(950,042)$205$1,726,362$13,140,229

The accompanying notes to consolidated financial statements are an integral part of these statements.

Annual Report 2011

SUMITOMO ELECTRIC

45

Consolidated Statements of Cash Flows
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESFor the years ended March 31, 2011 and 2010
Thousands of
U.S. dollars (Note 1)

Millions of yen

Cash Flows from Operating Activities:
Income before income taxes and minority interests ................................
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization.............................................................
Impairment losses of fixed assets .......................................................
Interest and dividend income ..............................................................
Interest expense .................................................................................
Equity in net income ...........................................................................
Increase (decrease) in accrued pension and severance costs .............
Loss on disposal of property, plant and equipment .............................
Gain on sales of investment securities.................................................
Loss on valuation of investment securities...........................................
Increase (decrease) in provision for loss on disaster ...........................
Provision for surcharge .......................................................................
(Increase) decrease in trade notes and accounts receivable ................
(Increase) decrease in inventories ........................................................
Increase (decrease) in trade notes and accounts payable ...................
Other, net............................................................................................
Subtotal ..........................................................................................
Interest and dividend received.............................................................
Interest paid ........................................................................................
Payments for surcharge .....................................................................
Income taxes paid ..............................................................................
Income tax refunds .............................................................................
Net cash provided by operating activities.........................................
Cash Flows from Investing Activities:
Expenditures for purchase of property, plant and equipment ..................
Proceeds from sales of property, plant and equipment ...........................
Expenditures for purchase of securities ..................................................
Proceeds from sales and redemption of securities ..................................
Expenditures for purchase of investments in subsidiaries .......................
Special dividend distribution received from an affiliate .............................
Expenditures for acquisition of sharesof newly consolidated subsidiaries........................................................
Other, net ...............................................................................................
Net cash used in investing activities .................................................
Cash Flows from Financing Activities:
Net increase (decrease) in short-term debt .............................................
Net increase (decrease) in commercial paper .........................................
Proceeds from long-term debt ...............................................................
Repayment of long-term debt ................................................................
Proceeds from issuance of stock to minority shareholders .....................
Sale of treasury stock .............................................................................
Purchase of treasury stock .....................................................................
Cash dividends paid ...............................................................................
Cash dividends paid to minority shareholders .........................................
Other, net ...............................................................................................
Net cash used in financing activities ................................................
Effect of Exchange Rate Changes on Cash and Cash Equivalents ...
Net Increase (Decrease) in Cash and Cash Equivalents.....................
Cash and Cash Equivalents at Beginning of Year ...............................
Increase (Decrease) in Cash and Cash Equivalents from Change in
Closing Period of Consolidated Subsidiaries ....................................
Cash and Cash Equivalents of Newly Consolidated Subsidiaries .....
Cash and Cash Equivalents of Deconsolidated Subsidiaries ............
Increase in Cash and Cash Equivalents Resulting from
Merger with Unconsolidated Subsidiaries .........................................
Cash and Cash Equivalents at End of Year (Note 3).............................

2011

2010

2011

¥113,781¥ 55,425$1,368,382

96,96911,336(4,355)
5,189(23,861)
(868)
2,296
(7,826)
1,287
4,114
—
(16,232)(52,521)
21,65812,281
163,248
10,411(5,204)(6,763)(29,998)
7,604
139,298

103,712
4,948(5,323)
6,186(12,159)
2,089
4,891
(7,140)
1,418
—
6,763
(58,559)
28,30737,275
8,982
176,815
8,309(6,042)—(19,732)
12,226
171,576

1,166,193
136,332(52,375)
62,405(286,963)(10,439)
27,613(94,119)
15,47849,477—(195,213)(631,642)
260,469
147,697
1,963,295
125,207(62,586)(81,335)(360,770)
91,4491,675,260(91,163)3,518(7,413)
10,766(1,551)
9,446(84,565)6,669(10,103)
27,296(2,473)
4,723(1,096,368)
42,309(89,152)
129,477(18,653)
113,602—(10,154)(86,551)(7,037)(7,409)(72,899)—(122,117)(1,040,902)(13,768)—
55,793(51,184)135
0(5)(14,280)(3,489)(1,047)(27,845)(2,720)22,182
175,617(62,946)(14,997)
68,203(43,372)—0(4)(11,107)(2,738)(652)(67,613)(264)
30,800143,946(165,580)—
670,992(615,562)
1,624
0
(60)
(171,738)(41,960)(12,592)(334,876)(32,712)
266,770
2,112,051

(689)
1,037
(6,322)

—
1,146
(472)

(8,286)
12,471(76,031)267¥192,092

197¥175,617

3,211$2,310,186

The accompanying notes to consolidated financial statements are an integral part of these statements.

46

SUMITOMO ELECTRIC

Annual Report 2011

Notes to Consolidated Financial Statements
SUMITOMO ELECTRIC INDUSTRIES, LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2011 and 2010

1. BASIS OF PRESENTING CONSOLIDATEDFINANCIAL STATEMENTS
Sumitomo Electric Industries, Ltd. (the “Company”) and its
consolidated domestic subsidiaries maintain their accounts
and records in Japanese yen, and in accordance with theprovisions set forth in the Japanese Corporate Law (the“Law”), the Japanese Financial Instruments and Exchange Act
and its related accounting regulations and in conformity withaccounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial
Reporting Standards.
The accounts of overseas consolidated subsidiaries areprepared in accordance with either International Financial
Reporting Standards or U.S. generally accepted accounting
principles, with adjustments for the specified six items asapplicable.
The accompanying consolidated financial statements havebeen restructured and translated into English, with some
expanded descriptions, from the consolidated financial
statements of the Company prepared in accordance withJapanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance in Japan as required by
the Japanese Financial Instruments and Exchange Act.
Some supplementary information included in the statutory
consolidated financial statements prepared in Japanese,but not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S.
dollars are included solely for the convenience of readers
outside Japan, using the prevailing exchange rate at March
31, 2011, which was ¥83.15 to U.S.$1.00. These translations should not be construed as representations that theJapanese yen amounts have been, could have been, or couldin the future be, converted into U.S. dollars at this or any
other rate of exchange.

2. SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIESa) Consolidation
The consolidated financial statements include the accountsof the Company and all of its significant subsidiaries. All significant intercompany transactions and balances have been
eliminated. The difference between the cost of investments
in consolidated subsidiaries and the underlying equity atdates of acquisition is amortized over periods within 20 years;
however, most are in five years.
Investments in significant affiliates and unconsolidated
subsidiaries are accounted for by the equity method.

Investments in unconsolidated subsidiaries and affiliates,
not accounted for by the equity method, are stated at cost.
110 overseas consolidated subsidiaries report on a calendar year for consolidation purpose in fiscal 2011. Necessary
adjustments, such as significant transactions that occurred
during January 1 to March 31, 2011, are included. All but
110 of the overseas consolidated subsidiaries that have thefiscal year ending December 31 processed additional financial
closings at March-end for consolidation purposes, aiming at amore appropriate disclosure.
44 overseas consolidated subsidiaries have changed thefiscal year-end from December 31 to March 31 starting from
April 1, 2010. 21 overseas consolidated subsidiaries that havethe fiscal year ending December 31 have changed to process
additional financial closings at March-end for consolidation
purposes, aiming at a more appropriate disclosure. As aresult of these changes, the Company consolidated the 12months’ result from April 1, 2010 to March 31, 2011. As
for those 65 (44 plus 21) companies, 3 months gains andlosses from January 1, 2010 to March 31, 2010, are includedin the retained earnings on the Balance Sheet. Additionally,
3 months cash flows during the period are included in an
adjustment item of cash and cash equivalents at the beginning of year on the Statements of Cash Flows.
All but five of the overseas consolidated subsidiaries have
December 31 balance sheet date in fiscal 2010. Any significant differences in intercompany accounts and transactions
during the period from January 1 through March 31 havebeen adjusted, if necessary.
b) Translation of Foreign Currencies
All assets and liabilities of overseas subsidiaries and affiliates
are translated into Japanese yen at the current exchange rateof the respective fiscal year end, and shareholders’ equity is
at historical rates. The resulting foreign currency translation
adjustments are shown as a separate component of net
assets, net of minority interests. In fiscal 2011, the Company
has changed the exchange rate for revenue and expense ofoverseas subsidiaries and affiliates from the current exchange
rate to the average exchange rate to calculate more properly
figures on consolidated financial statements.
The effect of this change was to increase net sales by¥41,851 million (US$503,319 thousand), operating incomeby ¥1,946 million (US$23,403 thousand) and income before
income taxes and minority interests by ¥2,469 million(US$29,693 thousand).
c) Cash and Time Deposits
Cash and time deposits include cash on hand, readily available deposits and deposits with a maturity of one year or less.
Annual Report 2011

SUMITOMO ELECTRIC

47

Notes to Consolidated Financial Statementsd) Securities
The Company and its domestic consolidated subsidiaries
classify and account for securities as follows:
Held-to-maturity debt securities are stated at amortizedcost. Investments in unconsolidated subsidiaries and affiliates,
excluding those accounted for by the equity method, arestated at cost.
Debt and equity securities, not classified as above, areclassified as available-for-sale securities. Available-for-salesecurities which have fair values are stated at the fair value
at the fiscal year end, and unrealized gains and losses,
net of related taxes and minority interests, are reported
as a separate component of net assets. Available-for-salesecurities which do not have fair values are stated at averagecost. Realized gains or losses on sales of such securities arecomputed using average cost.
Held-to-maturity debt securities and available-for-salesecurities maturing within one year from the fiscal year end,and highly liquid investment funds are included in securities
in current assets. Other securities are included in investments
in and loans to unconsolidated subsidiaries and affiliates andinvestment securities.
Effective from the fiscal year ended March 31, 2010,
the Company adopted the revised Accounting Standard,“Accounting Standard for Financial Instruments” (AccountingStandards Board of Japan (“ASBJ”) Statement No. 10 revisedon March 10, 2008) and the “Guidance on Disclosures about
Fair Value of Financial Instruments” (ASBJ Guidance No. 19
revised on March 10, 2008). The effect of this change was
immaterial to the consolidated financial statements.
e) Derivatives and Hedging Transactions
The Company and its consolidated subsidiaries utilize hedge
accounting for foreign currency forward exchange contracts
and currency options hedging foreign currency monetary
assets and liabilities, foreign currency swap contracts
hedging foreign currency debt, interest rate swap contracts
hedging interest on debt and bonds, and commodity forward
contracts, etc., hedging raw materials.
Derivative financial instruments are stated at fair value. If
derivative financial instruments meet certain hedging criteria,
the Company and its consolidated subsidiaries defer therecognition of gains or losses until the hedged transactions
occur. Certain foreign currency exchange contracts, currency
options and foreign currency swap contracts, meeting certain
conditions, are accounted for as a part of translating foreign
currency monetary assets and liabilities in the consolidatedbalance sheets. In case where an interest rate swap contract
is used as a hedge and meets certain hedging criteria, the net
amount to be paid or received under the interest rate swap

48

SUMITOMO ELECTRIC

Annual Report 2011

contract is added to or deducted from the interest on theassets or liabilities for which the swap contract is executed.
The Company and its consolidated subsidiaries utilize
hedging instruments to hedge risks of future changes inforeign exchange rates and interest rates in accordance withrespective internal policies and procedures on risk control.
The Company and its consolidated subsidiaries assess theeffectiveness of each hedge contract by comparing the total
cash flow fluctuation of hedging instruments and hedged
items, except in case where interest rate swap contract isused as hedges and meet certain hedging criteria.
f) Allowance for Doubtful Receivables
The allowance for doubtful receivables is provided based
upon estimated uncollectible amounts for individually identified doubtful receivables and historical loss experience forother receivables.
g) Inventories
Inventories are mainly stated at the lower of average cost or
net realizable value.
h) Property, Plant and Equipment (excluding Leases)
The Company and its domestic consolidated subsidiaries
principally use the straight-line method for depreciationof buildings and the declining-balance method for otherdepreciable assets, and overseas subsidiaries principally use
the straight-line method, based on the estimated useful livesof the respective assets.
i) Land Revaluation
Pursuant to the “Law Concerning Land Revaluation,” adomestic consolidated subsidiary revaluated land used inbusiness activities on March 31, 2002. The net unrealized
losses in value of the subsidiary’s land, net of related income
taxes and minority interests, are recorded as “Land revaluation” in net assets based upon a real estate tax value.
j) Revenue Recognition
Sales are generally recorded at the time of shipment of
products.
Prior to the year ended March 31, 2010, for significant
long-term and large-scale construction contracts, revenue
was recognized using the percentage-of-completion method.
The completed-contract method was used for all othercontracts. In applying the completed-contract method, during
the construction period, accumulated costs of the contracts
were included in inventories and advances from customers
received on the related contracts were included in other current
liabilities.

Notes to Consolidated Financial Statements

Effective from the year ended March 31, 2010, the Company
and its consolidated domestic subsidiaries have adopted the“Accounting Standard for Construction Contracts” (ASBJ
Statement No. 15, issued on December 27, 2007) andthe “Guidance on Accounting Standard for Construction
Contracts” (ASBJ Guidance No. 18, issued on December 27,2007).
Accordingly, when the outcome of individual contracts
can be estimated reliably, the domestic companies apply thepercentage-of-completion method to work commencing in theyear ended March 31, 2010, otherwise the completed-contract
method is applied. The percentage of completion at the end of
the reporting period is measured by the proportion of the cost
incurred to the estimated total cost.
The effect of this change was immaterial to net sales, operating income, income before income taxes and minority interests,
and segment information.
k) Research and Development
Expenses related to research and development activities arecharged to income as incurred and totaled ¥79,026 million(US$950,403 thousand) and ¥72,259 million for the years
ended March 31, 2011 and 2010, respectively.
l) Pension and Severance Costs
The Company and most of its domestic consolidated
subsidiaries have contributory and noncontributory defined
benefit plans and lump-sum retirement benefit plans, while
the Company and some of its subsidiaries have defined
contribution plans and prepaid retirement allowance plans.
Some overseas subsidiaries have defined benefit plans.
Effective from the fiscal year ended March 31, 2010,
the Company and its consolidated domestic subsidiaries
adopted the “Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3)” (ASBJ Statement No. 19 issued
on July 31, 2008).
This change had no material impact on the consolidated
financial statements for the year ended March 31, 2010.
m) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are determinedbased on the financial statements carrying amounts and tax
bases of assets and liabilities, using the effective tax rates
in effect for the year in which the temporary differences are
expected to be recovered or settled. Deferred tax assets arealso recognized for the estimated future tax effects attributable to operating loss carryforwards. Valuation allowances areprovided to reduce deferred tax assets if it is more likely than
not that some portion or all of the deferred tax assets will not

be realized.
n) Leases
Finance leases which do not transfer ownership areaccounted for as purchase and sale transactions and are
depreciated by straight-line method over their lease terms,
while some of such leases are accounted for in the samemanner as operating leases if they commenced prior to April
1, 2008.
o) Consolidated Statements of Cash Flows
In preparing the consolidated statements of cash flows, cashon hand, readily available deposits and short-term highly
liquid investments with maturities not exceeding three months
at the time of purchase are considered to be cash and cash
equivalents.
p) Appropriation of Retained Earnings
The Company and its domestic consolidated subsidiaries
record, as a charge directly to retained earnings, cash
dividends in the financial year in which the appropriation ofretained earnings is approved at the shareholders’ meeting.
q) Use of Estimates
The management of the Company has made a number of
estimates and assumptions that affect the reported amountsof assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in preparing thesefinancial statements in conformity with generally accepted
accounting principles. Actual results could differ from thoseestimates.
r) Reclassifications and Restatement
Certain prior year amounts have been reclassified to conformto the current year presentation. These reclassifications andrestatement had no effect on previously reported results ofoperations or retained earnings.
s) New Accounting Standards
Effective from the year ended March 31, 2011, the following
new standards have been adopted.
(1) Equity Method of Accounting for Investments• The “Accounting Standard for Equity Method of Accounting
for Investments” (ASBJ Statement No. 16, issued on March
10, 2008)• The “Practical Solution on Unification of Accounting Policies
Applied to Associates Accounted for Using the Equity
Method” (ASBJ PITF No. 24, issued on March 10, 2008)
The effect of this change was immaterial to the consolidated
financial statements for the year ended March 31, 2011.
Annual Report 2011

SUMITOMO ELECTRIC

49

Notes to Consolidated Financial Statements(2) Asset Retirement Obligations• The “Accounting Standard for Asset Retirement Obligations”(ASBJ Statement No. 18, issued on March 31, 2008)• The “Guidance on Accounting Standard for Asset
Retirement Obligations” (ASBJ Guidance No. 21, issued on
March 31, 2008)
The effect of this change was immaterial to the consolidated
financial statements for the year ended March 31, 2011.
(3) Business Combinations• The “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, issued on December 26, 2008)• The “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, issued on December
26, 2008)• The “Partial Amendments to Accounting Standard for
Research and Development Costs” (ASBJ Statement No.
23, issued on December 26, 2008)• The “Revised Accounting Standard for Business

Divestitures” (ASBJ Statement No. 7 (Revised 2008), issued
on December 26, 2008)• The “Revised Accounting Standard for Equity Method of
Accounting for Investments” (ASBJ Statement No. 16(Revised 2008), issued on December 26, 2008)• The “Revised Guidance on Accounting Standard forBusiness Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10 (Revised2008), issued on December 26, 2008)(4) Presentation of Comprehensive Income• The “Accounting Standard for Presentation ofComprehensive Income” (ASBJ Statement No. 25, issued
on June 30, 2010)
As the result of the adoption of this standard, the Company
has presented the consolidated statements of comprehensive
income in the consolidated financial statements.

3. CASH AND CASH EQUIVALENTS
The reconciliations between cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the
consolidated statements of cash flows as of March 31, 2011 and 2010 are as follows:
Millions of yen

Cash and time deposits .............................................................................
Securities (excluding held-to-maturity debt securities) ................................
Deposits placed with banks with a maturity of over three months ..............
Cash and cash equivalents ........................................................................

In fiscal 2011, Commuture Corp., together with Daimei
Telecom Engineering Corp. and Todentsu Corp. transferred
its share and established Mirait Holdings Corp. As a result
Commuture Corp. and its two subsidiaries have been
excluded from the consolidated subsidiaries. Details of
decrease in assets and liabilities are provided below as aresult of this transaction.

2011

Current assets ...........................
Long-term assets ......................
Total assets ...............................
Current liabilities ........................
Long-term liabilities ....................
Total liabilities .............................

Millions of yen

Thousands of
U.S. dollars¥30,014
21,145
51,15910,022
2,071
12,093$360,962
254,299615,261
120,529
24,907
145,436

In fiscal 2010, the Company and its consolidated subsidiaries did not have any significant non-cash transactions.

50

SUMITOMO ELECTRIC

Annual Report 2011

Thousands of
U.S. dollars

2011

2010

2011

¥142,287
51,000(1,195)¥192,092¥143,851
32,000(234)¥175,617$1,711,209
613,349(14,372)$2,310,186

4. FINANCIAL INSTRUMENTSa) Qualitative Information on Financial Instruments(1) Policies for using financial instruments
The Company and its consolidated subsidiaries financeinvestment in equipment and operating capital for business,
mainly using borrowings from banks and the issuance ofbonds based on their cash flow planning. Temporary excess
cash is managed with low risk financial assets. The Company
and its consolidated subsidiaries utilize derivative transactions
only to hedge risks of future changes in cash flows and fairvalues not for trading purpose.
(2) Details of financial instruments used and the exposures torisk and how they arise
Trade notes and accounts receivable are exposed to the credit
risks of customers, but the Company and its consolidated
subsidiaries try to reduce the risk according to rules for credit
control. Operating receivables denominated in foreign currency
are exposed to foreign exchange risks, but the Company andNotes to Consolidated Financial Statements

its consolidated subsidiaries hedge the risks using forward
exchange contracts, etc. for the net position of foreign
currency operating receivables and payables. Securities aremainly held to build and maintain good customer relationships.
The Company and its consolidated subsidiaries review thecircumstances periodically and evaluate the fair value of the
securities or the financial condition of the issuer, which are
generally business counterparties.
The main purpose of holding debt and issuing bonds is

to secure financing for equipment and operating capital.
The derivative transactions entered into comprise forward
exchange contracts to hedge exchange risks of foreign
currency debts and credits, interest swap contracts to hedge
fluctuation risks of interest rates and fair value for debt andbonds, and commodity forward transactions to hedge therisk of price fluctuation for materials. The Company and its
consolidated subsidiaries manage and control these risks
according to management’s rules for derivative transactions.

b) Fair Value of Financial Instruments
The carrying amounts and fair values of the financial instruments on the consolidated balance sheet at March 31, 2011 and2010 are as follows. Financial instruments whose fair value is hard to determine are not included in the table.
Millions of yen
Carrying
amountFair value Difference

Thousands of U.S. dollars
2011
Carrying
amountFair value
Difference—¥143,851¥143,851$ 1,711,209 $ 1,711,209—

441,892

441,892—

5,113,494

5,113,494—

27,67827,678250,592
836,335

274,442860,185

23,85023,8503,724,485
10,549,188

4,057,354
10,882,057

332,869
332,869—

255,574

255,574—

3,016,476

3,016,476

—

—
—
1,921
2,114
4,035
—

21,431
101,170
138,000
115,337
631,51260

21,431
101,170
140,566
115,439
634,180
60

—
—
2,566
102
2,668
—

276,464
984,450
1,142,514
1,967,408
7,387,312(361)

276,464
984,450
1,165,616
1,992,833
7,435,839
(361)

—
—
23,102
25,42548,527—2011
Carrying
amount2010

Fair value Difference

Cash and time deposits ........ ¥142,287 ¥142,287Trade notes andaccounts receivable ............. 425,187
425,187
Securities andinvestment securities........... 309,691
337,369
Total assets .......................... 877,165
904,843
Trade notes andaccounts payable ............... 250,820
250,820
Construction notes andaccounts payable ...............
22,98822,988Loans in current liabilities ......
81,857
81,857
Bonds ..................................
95,00096,921Long-term loans ................... 163,590
165,704
Total liabilities ........................ 614,255
618,290
Derivative transactions ..........
(30)
(30)

¥

1. Valuation approach for the fair value of financial instruments
Cash and time deposits, trade notes and accounts
receivable:
The carrying amount approximates fair value because of theshort maturity.
Securities and investment securities:
Securities in current assets are stated at the carrying amountwhich approximates fair value because they consist ofnegotiable certificates of deposit settled in the short term.
Investment securities, including investment in affiliates, whichhave a quoted market value are stated at the fair market
value. The fair value of investment securities which do nothave a quoted market value is estimated based on thepresent value of future cash flows using appropriate current
discount rates.

¥

—

$

—

Trade notes and accounts payable, construction notes
and accounts payable:
The carrying amount approximates fair value because of theshort maturity.
Loans in current liabilities:
The carrying amount approximates fair value because of theshort maturity.
Bonds:
The fair value of bonds is stated at the fair market value.
Long-term loans:
The fair value of long-term loans is estimated based on thepresent value of future cash flows using appropriate current
discount rates.

Annual Report 2011

SUMITOMO ELECTRIC

51

Notes to Consolidated Financial Statements

Derivative transactions:
See Note 6.
2. Financial instruments whose fair value is hard to determine
Millions of yen
2011

2010

Unlisted securities(available-for-salesecurities) ....................... ¥ 9,228 ¥ 7,297
Unlisted investments inaffiliates .......................... 97,547 91,845

These financial instruments do not have quoted market value
and their future cash flows can not be estimated. Because
the fair value is hard to determine, these instruments are notincluded in “Securities and investment securities.”

Thousands of
U.S. dollars
2011$ 110,980
1,173,145

5. SECURITIESThe carrying amounts of securities in current assets and investment securities at March 31, 2011 and 2010 consist of thefollowing:
Millions of yen

Securities in current assets:
Available-for-sale securities ....................................................................
Held-to-maturity debt securities .............................................................
Investment securities:
Available-for-sale securities ....................................................................
Held-to-maturity debt securities .............................................................

Thousands of
U.S. dollars

2011

2010

2011

¥ 51,100
2,893¥ 53,993¥ 32,000—¥ 32,000$ 614,552
34,793$ 649,345¥175,783
10¥175,793¥161,672
9¥161,681$2,114,047
120$2,114,167

Available-for-sale securities with fair value or quoted market values included in investment securities, at March 31, 2011 and 2010
are as follows:

2011

Acquisition cost

Equity securities ...........................................................
Other ............................................................................

2010

Acquisition cost

Equity securities ...........................................................
Other ............................................................................

2011

SUMITOMO ELECTRIC¥36,721
10,000¥46,721

Acquisition cost

Equity securities ...........................................................
Other ............................................................................

52¥33,643
10,000¥43,643

Annual Report 2011

$404,606
120,265$524,871

Millions of yen
Gross unrealized
Gross unrealized
gains
losses¥125,670
244¥125,914¥(3,002)—¥(3,002)

Millions of yen
Gross unrealized
Gross unrealized
gains
losses¥110,142155¥110,297¥(2,643)—¥(2,643)

Thousands of U.S. dollars
Gross unrealized
Gross unrealized
gains
losses$1,511,365
2,934$1,514,299$(36,103)—$(36,103)

Book value(Fair value)¥156,311
10,244¥166,555

Book value(Fair value)¥144,22010,155¥154,375

Book value(Fair value)$1,879,868
123,199$2,003,067

Notes to Consolidated Financial Statements

Proceeds from sales of available-for-sale securities were
¥10,730 million (US$129,044 thousand) and ¥8,127 million
for the years ended March 31, 2011 and 2010, respectively.
The net realized gains on those sales were ¥7,970 million(US$95,851 thousand) and ¥5,484 million for the years
ended March 31, 2011 and 2010, respectively. Impairment
losses of securities during fiscal 2011 amounted to ¥1,287
million (US$15,478 thousand), which consist of ¥1,226 million(US$14,744 thousand) for the available-for-sale securitiesand ¥61 million (US$734 thousand) for the securities of the
non-consolidated subsidiaries. Impairment losses of securities
during fiscal 2010 amounted to ¥1,418 million, which consistof ¥1,240 million for the available-for-sale securities and ¥178
million for the securities of the non-consolidated subsidiaries,
which is included in “Restructuring expenses.”

6. DERIVATIVE TRANSACTIONSThe Company and its consolidated subsidiaries have enteredinto foreign currency forward exchange contracts, currency
options and foreign currency swap contracts to hedge risksof exchange rate fluctuations of foreign currency monetary
assets and liabilities, interest rate swap contracts to hedge
risks of interest rate fluctuations, and commodity forward
contracts, etc., for copper and aluminum to hedge risks ofprice fluctuations. The Company and its consolidated subsidiaries use derivative transactions for managing market risk
related to recorded assets and liabilities as well as for futurecommitments, and not for speculation or dealing purposes.
The Company and its consolidated subsidiaries deal withhighly rated international financial institutions and trading
concerns as counterparties to these transactions to minimize
credit risk exposure. Derivative transactions are entered intoby each operational division, and the processing of the transactions is controlled and reviewed by administrative divisions,in accordance with established policies that restrict dealing inderivatives, including limits on authorities and amounts.

Additional information for derivative transactions as of and for the years ended March 31, 2011 and 2010 is as follows:
Millions of yen
2011
Contracts for which hedge
accounting is not adopted
Contracted
Fair
Recognizedamountvalue
gain (loss)
Interest rate swap
contracts ......................

¥

—

¥ —

¥—

Contracts for which hedge
accounting is adopted*
Contracted
Fair
amount
value
¥

—

2010
Contracts for which hedge
accounting is not adopted
Contracted
Fair
Recognizedamountvalue
gain (loss)¥ —¥ 5,000

¥(88)

¥(88)

Contracts for which hedge
accounting is adopted*
Contracted
Fair
amountvalue¥ 8,000¥127

Foreign currency forward
exchange contracts:
Buy .............................

4,728

5

5

14,044

145

3,830

2

2

4,291

108

Sell .............................

9,274

(61)

(61)

7,525

(148)

6,594

38

38

10,962(180)

Commodity forward
contracts for copper:
Buy .............................

1,914

0

0

—

—

1,267

0

0

—

—

Sell .............................

1,926

(1)

(1)

569

1

1,191

(13)

(13)

—

—

Copper swap contracts ...

—

—

—

626

29

—

—

—

516

66

¥17,842

¥(57)

¥(57)

¥22,764¥ 27¥17,882

¥(61)

¥(61)

¥23,769¥121

Annual Report 2011

SUMITOMO ELECTRIC

53

Notes to Consolidated Financial Statements

Thousands of U.S. dollars
2011
Contracts for which hedge
Contracts for which hedge
accounting is not adopted
accounting is adopted*
Contracted
Fair
RecognizedContracted
Fair
amountvalue
gain (loss)
amountvalue
Interest rate swap
contracts ...................... $

—

$ —

$ —

$

—

$

—

Buy .............................

56,86160

60

168,899

1,744

Sell .............................

111,533

(734)

(734)

90,499(1,780)Foreign currency forward
exchange contracts:

Commodity forward
contracts for copper:
Buy .............................

23,01900——Sell .............................

23,163

(12)

(12)

6,843

12

Copper swap contracts ...

—

—

—

7,529

349

$214,576$(686)$(686)$273,770$ 325* Certain interest rate swap contracts (contracted amount ¥64,129 million (US$771,245 thousand) and ¥63,381 million for the years ended
March 31, 2011 and 2010) meeting certain hedging criteria are excluded from the table above. Certain foreign currency forward exchange contracts (contracted amount “Buy” ¥9,632 million (US$115,839 thousand) and ¥10,134 million, “Sell” ¥98,077 million (US$1,179,519 thousand)and ¥77,248 million for the years ended March 31, 2011 and 2010, respectively) meeting certain hedging criteria are excluded from the table
above. See Note 4.

7. INVENTORIESInventories at March 31, 2011 and 2010 consist of the following:
Millions of yen

Merchandise and finished goods ...............................................................
Work in process ........................................................................................
Raw materials and supplies .......................................................................

Thousands of
U.S. dollars

2011

2010

2011

¥ 81,830
118,148
86,541¥286,519¥ 73,192
101,80376,732¥251,727$ 984,125
1,420,902
1,040,782$3,445,809

8. SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt at March 31, 2011 and 2010 consist of the following:
Millions of yen

Unsecured .................................................................................................
Secured.....................................................................................................

Thousands of
U.S. dollars

2011

2010

2011

¥70,675
3,344¥74,019¥86,763
7,175¥93,938$849,970
40,216$890,186

Weighted average year end interest rates were approximately 1.8% and 1.5% in 2011 and 2010, respectively. The Company
and its consolidated subsidiaries have had no difficulty in renewing such notes upon maturity.

54

SUMITOMO ELECTRIC

Annual Report 2011

Notes to Consolidated Financial Statements

Long-term debt at March 31, 2011 and 2010 consists of the following:Thousands of
U.S. dollars

Millions of yen

Unsecured bonds, payable in yen,due 2010 to 2016, interest 0.62%–1.97% ...............................................
Secured loans from banks, insurance companies and otherfinancial institutions, due 2011–2015, interest 1.0%–1.8%.......................
Unsecured loans from banks, insurance companies andother financial institutions, due 2011–2021, interest 0.2%–8.8%..............
Finance lease obligations, due 2011–2017 ................................................
Current portion of long-term debt and finance lease obligations.................

Substantially all of the loans from banks are made underbasic agreements, customary in Japan, which provide that,with respect to all present or future liabilities to the banks,
the Company and its consolidated subsidiaries shall provide
collateral or a third-party guarantee at the request of any
such banks, that any collateral provided under any agreement
will be applicable to all indebtedness to the banks and thatlending banks have the right to offset deposits with themagainst any debt or obligation that becomes due and, in caseof default or certain other specified events, against all debts
payable to the banks.
The aggregate annual maturities of long-term debt
outstanding at March 31, 2011 are as follows:
March 31

Millions of yen

Thousands of
U.S. dollars¥ 43,364
47,56338,03876,241
10,381
52,317¥267,904$ 521,515
572,015
457,462
916,909124,847
629,188$3,221,936

2012..........................................
2013..........................................
2014..........................................
2015..........................................
2016..........................................
2017 and thereafter ...................

The following assets were pledged as collateral for shortterm debt and long-term debt, including current portion, at
March 31, 2011 and 2010.
Millions of yen
2011

Investment securities ........
Property, plant andequipment, net ofaccumulated
depreciation....................

2010

Thousands of
U.S. dollars
2011¥6,845 ¥11,426$ 82,321

2,200
2,241
¥9,045 ¥13,667

26,458$108,779

2011

2010

2011

¥ 95,000¥138,000$1,142,514

1,248

1,617

15,009170,180
1,476
267,904(43,364)¥224,540

120,952
1,079
261,648(50,695)¥210,953

2,046,662
17,7513,221,936(521,515)$2,700,421

9. NET ASSETS
Under the Law, the entire amount of the issue price of sharesis required to be accounted for as common stock. However
a company may, by a resolution of the Board of Directors,
account for an amount not exceeding 50% of the issue price ofthe new shares as additional paid-in capital, which is included
in capital surplus. However, an increase resulting from shareexchange can be included in capital surplus up to a full amount.
The Law provides that the smaller of an amount equal to
10% of the dividend or the excess, if any, of 25% of common
stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in
capital or legal earnings reserve, in cases where a dividend
distribution of surplus is made.
Under the Law, additional paid-in capital may be used
to eliminate or reduce a deficit, or may be capitalized by aresolution of the shareholders’ meeting, and legal earnings
reserve may be used to eliminate or reduce a deficit by aresolution of the shareholders’ meeting. Legal earnings
reserve is included in retained earnings in the accompanying
financial statements.
Additional paid-in capital and legal earnings reserve
may not be distributed as dividends. Under the Law, alladditional paid-in capital and all legal earnings reserve may
be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that a company can distributeas dividends is calculated based on its non-consolidated
financial statements in accordance with the Law.
Conversions of convertible bonds into common stock
are accounted for in accordance with the provisions of the
Law by crediting approximately one-half of the conversion
proceeds to the common stock account and the remainder tothe capital surplus account.

Annual Report 2011

SUMITOMO ELECTRIC

55

Notes to Consolidated Financial Statementsa) Stock Information
Changes in number of shares issued and outstanding during
the years ended March 31, 2011 and 2010 are as follows:
Common stock outstanding
Thousands of shares

Balance at beginning ..............
Balance at end.........................

2011

2010

793,941
793,941

793,941
793,941

Treasury stock outstandingb) Dividend Information
Dividends paid in fiscal 2011

Resolution

Recorddate

Effectivedate

The shareholders’meeting on
March 31, 2010 June 28, 2010
June 25, 2010
The board of
directors on
October 29,
2010

September 30,
2010

December 1,
2010

Total amountMillions of Thousands ofyen
U.S. dollars¥7,140$85,869¥7,140$85,869

Thousands of shares

Balance at beginning ..............
Increase due to purchaseof odd-lot stocks ..................
Other, net ...............................
Balance at end.........................

2011

2010

Dividend paid after March 31, 2011 with record date in fiscal 2011

702

696

5
21
728

4
2
702

Total amountMillions of Thousands ofyen
U.S. dollars

Resolution

Record date

Effective date

The shareholders’meeting on
March 31, 2011 June 27, 2011
June 24, 2011

¥7,933$95,406

10. EARNINGS PER SHARE
Basic net income per share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted net income per share is computed based on the weighted average number of shares of common stock
outstanding increased by the number of shares which would have been outstanding assuming the conversion of dilutive bondsand exercise of dilutive share warrants at the beginning of the period. The related interest expense, net of income taxes, hasbeen eliminated for the purpose of this calculation.

11. TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES AND AFFILIATES
Sales to and purchases from unconsolidated subsidiaries and affiliates, related year end trade notes and accounts receivableand payable, and other receivables in current assets from those companies are as follows:
Millions of yen

For the years ended March 31:
Sales ......................................................................................................
Purchases ..............................................................................................
As of March 31:
Trade notes and accounts receivable .....................................................
Trade notes and accounts payable .........................................................
Other receivables in current assets .........................................................

56

SUMITOMO ELECTRIC

Annual Report 2011

Thousands of
U.S. dollars

2011

2010

2011

¥99,71061,656¥90,809
63,025$1,199,158
741,503

30,107
13,440660

25,92914,105
1,191

362,081
161,6367,937

Notes to Consolidated Financial Statements

12. INCOME TAXESThe Company and its domestic consolidated subsidiaries are subject to several taxes based on income which, in the aggregate,
result in statutory tax rates of approximately 40.6% for the years ended March 31, 2011 and 2010.
The following table summarizes the significant differences between the statutory tax rate and the effective tax rate for financial
statement purposes for the years ended March 31, 2011 and 2010:
Statutory tax rate .............................................................................................................................
Equity in net income ........................................................................................................................
Expenses not deductible for tax purposes .......................................................................................
Dividend income from overseas consolidated subsidiaries ...............................................................
Tax credits .......................................................................................................................................
Effect of lower tax rates for overseas consolidated subsidiaries .......................................................
Valuation allowance .........................................................................................................................
Intercompany profits ........................................................................................................................
Undistributed earnings of consolidated subsidiaries and affiliates .....................................................
Amortization of goodwill...................................................................................................................
Provision for surcharge ....................................................................................................................
Other ...............................................................................................................................................
Effective tax rate...........................................................................................................................

2011

2010

40.6%
(8.5)
0.3
1.4
(2.4)
(10.2)
3.0
0.4
0.2
0.4
—
2.2
27.4%

40.6%
(8.9)
0.6
6.7
(5.2)
(11.6)
(1.3)
(0.6)
0.9
1.4
5.0
2.9
30.5%

Deferred tax assets and liabilities included in the consolidated balance sheets at March 31, 2011 and 2010 are as follows:
Millions of yen

Deferred income taxes (current assets) ......................................................
Deferred income taxes (investments and other assets)...............................
Other current liabilities ...............................................................................
Deferred income taxes (long-term liabilities) ...............................................

Thousands of
U.S. dollars

2011

2010

2011

¥ 32,979
17,745(653)(64,369)¥(14,298)¥31,755
23,133(405)(61,176)¥ (6,693)$ 396,621
213,410(7,854)(774,131)$(171,954)

Annual Report 2011

SUMITOMO ELECTRIC

57

Notes to Consolidated Financial Statements

Significant components of the deferred tax assets and liabilities at March 31, 2011 and 2010 are as follows:
Millions of yen

Deferred tax assets:
Net operating loss carryforwards ............................................................
Fixed assets ...........................................................................................
Accrued pension and severance costs ...................................................
Accrued expenses .................................................................................
Inventories .............................................................................................
Intercompany profits ..............................................................................
Investment securities ..............................................................................
Accrued contributions of transfer to defined contribution plans ..............
Allowance for doubtful receivables .........................................................
Other .....................................................................................................
Less—Valuation allowance..................................................................
Total deferred tax assets .....................................................................
Deferred tax liabilities:
Net unrealized holding gains on investment securities ............................
Prepaid pension cost .............................................................................
Undistributed earnings of consolidated subsidiaries and affiliates ...........
Reserve for deferred gains on sales of fixed assets.................................
Excess of fair value over the book value of assets andliabilities of consolidated subsidiaries at the acquisition dates ...............
Accelerated depreciation of overseas consolidated subsidiaries .............
Land revaluation .....................................................................................
Other .....................................................................................................
Total deferred tax liabilities ..................................................................
Net deferred tax liabilities ....................................................................

Thousands of
U.S. dollars

2011

2010

2011

¥ 31,238
21,131
11,353
13,993
6,978
6,272
5,217
1,269
1,017
22,562
121,030(41,143)
79,887¥ 34,207
19,272
12,238
13,165
7,344
6,136
6,278
1,855
1,399
19,696
121,590(38,506)
83,084$ 375,683
254,131
136,536
168,286
83,92175,43062,742
15,262
12,231
271,340
1,455,562(494,804)
960,758(50,248)(14,886)(13,187)(6,095)(44,279)(16,302)(12,972)(6,540)(604,305)(179,026)(158,593)(73,301)(4,936)(2,095)—(2,738)(94,185)¥ (14,298)(4,906)(2,593)(652)(1,533)(89,777)¥ (6,693)(59,363)(25,195)—(32,929)(1,132,712)$ (171,954)

13. PENSION AND SEVERANCE COSTS
The following table sets forth the employee benefit obligations, plan assets and funded status of the Company and its consolidated subsidiaries at March 31, 2011 and 2010.
Millions of yen

Benefit obligation at end of year.................................................................
Fair value of plan assets at end of year ......................................................
Funded status:
Plan assets in excess of (less than) benefit obligation .............................
Unrecognized actuarial differences .........................................................
Unrecognized prior service cost .............................................................
Subtotal.....................................................................................................
Advances to funded pension plans ............................................................
Accrued pension and severance costs for employees
in the consolidated balance sheets ..........................................................

Thousands of
U.S. dollars

2011

2010

2011

¥(250,795)
218,486¥(261,250)
234,496$(3,016,176)
2,627,613(32,309)69,170(1,716)35,14564,029(26,754)
61,649(1,858)33,037
64,105(388,563)
831,870(20,637)
422,670770,042¥ (28,884)¥ (31,068)$ (347,372)

In addition, retirement benefits for directors and corporate auditors of certain subsidiaries of ¥1,497 million (US$18,004 thousand) and ¥1,648 million are included in accrued pension and severance costs as of March 31, 2011 and 2010, respectively.

58

SUMITOMO ELECTRIC

Annual Report 2011

Notes to Consolidated Financial Statements

Pension and severance costs of the Company and its consolidated subsidiaries consist of the following components for theyears ended March 31, 2011 and 2010:
Thousands of
U.S. dollars

Millions of yen

Service cost...............................................................................................
Interest cost ..............................................................................................
Expected return on plan assets .................................................................
Amortization:
Actuarial differences ...............................................................................
Prior service cost ...................................................................................
Net periodic pension and severance costs.................................................

2011

2010

2011

¥ 9,8026,152(2,806)¥ 9,971
6,286(2,699)$117,883
73,987(33,746)

7,582
(147)
¥20,583

9,640
(192)
¥23,006

91,185(1,768)$247,541

Assumptions used in the accounting for the defined benefit plans for the years ended March 31, 2011 and 2010 are as
follows:
2011

2010

Method of attributing benefits to periods of service ........................................ Straight-line basis(Some subsidiaries
adopt point basis.)
Discount rates ............................................................................................... Mainly 2.5%
Long-term rates of expected return on plan assets ........................................ 0.0%–6.8%
Amortization period for prior service cost ....................................................... Mainly 15 years
Amortization period for actuarial differences ................................................... Average remaining
service period or less(mainly 15 years)

Straight-line basis

Mainly 2.5%
0.0%–7.0%
Mainly 15 years
Average remaining
service period or less(mainly 15 years)

14. CONTINGENT LIABILITIESContingent liabilities at March 31, 2011, are as follows:

Notes receivable discounted .................................................................................................
Notes receivable endorsed ...................................................................................................
Guarantees:
Guarantees for debt of employees, unconsolidated subsidiaries and affiliates....................
Contingent guarantees for debt of unconsolidated subsidiaries and affiliates .....................
Keepwell agreements and letters of awareness for debt
of unconsolidated subsidiaries and affiliates ....................................................................

Millions of yen

Thousands of
U.S. dollars

¥ 187
543

$ 2,249
6,530

4,899
430

58,918
5,171

1,350

16,236

Millions of yen

Thousands of
U.S. dollars

15. LEASES
Information related to non-capitalized finance leases commenced prior to April 1, 2008, except for which the ownership of the leased assets is considered to be transferred to
the lessee, and operating leases is as follows:a) Finance Leases as Lessor
Finance leases as lessor, at March 31, 2011 and 2010 are as
follows:
Millions of yen

Acquisition cost ................
Accumulated depreciation...
Net book value .................

Thousands of
U.S. dollars

2011

2010

2011

¥404
384
¥ 20

¥404
316
¥ 88

$4,8594,618$ 241

Payments due
within one year ...............
Payments due
after one year .................

2011

2010

2011

¥59

¥ 66

$710

—
¥59

59
¥125

—
$710

Lease payments received under such leases for the years
ended March 31, 2011 and 2010 were ¥66 million (US$794
thousand) and ¥72 million, respectively.

Annual Report 2011

SUMITOMO ELECTRIC

59

Notes to Consolidated Financial Statementsb) Finance Leases as Lessee
Information on lease obligations for non-capitalized financeleases accounted for as operating leases at March 31, 2011
and 2010 is as follows:
Millions of yen

Thousands of
U.S. dollars

2011

2010

2011

Original lease obligation* ... ¥3,994
Payments made to date ... 2,637
Payments remaining* ........ ¥1,357¥6,851
4,475¥2,376$48,034
31,714$16,320* Including assumed future interest

Millions of yen
2011

Payments due
within one year ............... ¥ 383
Payments due
after one year .................
974¥1,357

Thousands of
U.S. dollars

2010

2011

¥ 784

$ 4,606

1,592¥2,376

11,714$16,320

Lease payments under such leases for the years ended
March 31, 2011 and 2010 were ¥761 million (US$9,152
thousand) and ¥986 million, respectively.
c) Operating Leases as Lessee
Lease obligations under non-cancellable operating leases at
March 31, 2011 and 2010 are as follows:
Millions of yen
2011

Payments due
within one year ...............
Payments due
after one year .................

2010

Thousands of
U.S. dollars
2011¥3,477 ¥ 3,347$ 41,816

5,456
7,196
¥8,933 ¥10,543

65,616$107,432

16. IMPAIRMENT LOSSES OF FIXED ASSETS
Details of impairment losses of fixed assets for the years
ended March 31, 2011 and 2010 are as follows:
Millions of yen
2011

Machinery, equipment
and others ...................... ¥ 4,316
Buildings and structures ... 6,395
Construction in progress...
223
Intangible assets ...............
381
Other ................................
21¥11,3362010¥1,876
1,682
61
487
842
¥4,948*

Thousands of
U.S. dollars

SUMITOMO ELECTRIC

Annual Report 2011

17. LOSS ON DISASTER
Details of loss on disaster which has been accounted forcaused by the Great East Japan Earthquake for the year
ended March 31, 2011 are as follows:
2011

Loss on disposal of inventories ..
Loss on disposal of property,
plant and equipment................
Restoration expense andothers*.....................................

Millions of yen

Thousands of
U.S. dollars¥ 926$ 11,136

108

1,299

7,811
¥8,84593,939$106,374* Including the amount of provision for loss on disaster, ¥4,114 million(US$49,477 thousand)

18. RESTRUCTURING EXPENSES
In fiscal 2010, restructuring expenses were mainly related
to the restructuring of manufacturing locations in overseas
automotive business for the purpose of business structure
improvement.
Details of the expenses are as follows:2010

Impairment losses of fixed
assets (Note 16) .......................................
Loss on disposal of property,
plant and equipment.................................
Extra payment of retirement
benefit and others.....................................

2011$ 51,906
76,909
2,682
4,582
253
$136,332* The amount of ¥3,595 million is shown as “Impairment losses
of fixed assets” and the amount of ¥1,353 million is included in“Restructuring expenses” (Note 18) in the consolidated statements
of income for fiscal 2010.

60

The Company and its consolidated subsidiaries grouped
long-lived assets into asset groups by business segment,
and conducted impairment tests with the conclusion thatthe carrying amounts should be reduced by ¥11,336 million(US$136,332 thousand) and ¥4,948 million to the recoverable
amounts in fiscal 2011 and 2010, respectively.
The recoverable amount is the net selling price or the value
in use, which is equal to net future cash flow discounted at
8.3%.
Figures of impairment losses of fixed assets for each reportable segment are disclosed in Note 20 b), for the year ended
March 31, 2011.

Millions of yen¥1,353520
3,904¥5,777

19. PROVISION FOR SURCHARGE
In fiscal 2010, the Company recognized a provision forsurcharge as a result of a prior notice of draft of surcharge
payment orders from the Japan Fair Trade Commission withrespect to the sale of optical fiber cables for telecommunications carriers and related products.

Notes to Consolidated Financial Statements

20. SEGMENT INFORMATIONa) Reportable Segments
The reportable segment of the Company is regular consideration, whose divided financial information is available for
the President, the supreme decision-making body, to makedecisions regarding management resources allocation andevaluate each business result.
The Company has adopted a business unit system based
upon the similarity in product’s category, method for manufacturing and sales markets, etc., and devises comprehensive
strategies of the Company and its affiliates by dividing
businesses such as product development, manufacturing,sales and supplementary services into the following five classifications: “Automotive,” “Information & Communications,”“Electronics,” “Electric Wire & Cable, Energy” and “Industrial
Materials & Others.” Therefore, the Company considers theabove five classifications as reportable segments.
The method of calculation of sales, profit or loss, assets
and other items by reportable segment is pursuant to theaccounting policies stated in Note 2. Intersegment sales arestated at current market value.

Automotive:
Wiring harnesses, anti-vibration rubber products and otherautomotive parts
Information & Communications:
Optical fiber cables, optical fiber fusion splicers, optical data
links and other optical components, access network systemproducts such as GE-PON, CDN-related product and traffic
control systems
Electronics:
Electronic wires, compound semiconductors, materials forelectronic components, irradiated products and flexible
printed circuits (FPCs)
Electric Wire & Cable, Energy:
Copper wire rods, electric power cables, magnet wires,
power system equipment such as substation equipment,
supervisory telecontrol equipment and power cable construction works
Industrial Materials & Others:
Special steel wires, hard materials and sintered parts

Reportable segment information for the years ended March 31, 2011 and 2010 is as follows:
Millions of yen
Industrial
Materials &Others2011

Automotive

Information &Communications

Electronics

Electric Wire &Cable, Energy

Sales to customers .................
Intersegment sales .................
Net sales .............................
Segment profit or loss ............
Segment assets......................
Depreciation and amortization ...
Amortization of goodwill..........
Investments in equity method
affiliates ................................
Amount of increase in tangible
and intangible fixed assets ....

¥959,341
661¥960,002¥ 64,118¥735,249¥ 45,044
168¥216,752
1,413¥218,165¥ 2,983¥198,573¥ 12,264304¥169,546
8,663¥178,209¥ 6,603¥145,036¥ 9,45863¥449,771
15,112¥464,883¥ 13,428¥404,779¥ 13,173
719¥238,417
39,116¥277,533¥ 16,884¥424,499¥ 16,821
127

67,912

32,164381

39,573

47,91020,423

10,816

10,701

Adjustments

Consolidated¥—(64,965)¥(64,965)¥ (206)¥ 48,148¥——¥2,033,827—¥2,033,827¥ 103,810¥1,956,284¥ 96,760
1,381

30,995—

171,025

15,289—105,139

Annual Report 2011

SUMITOMO ELECTRIC

61

Notes to Consolidated Financial Statements

Millions of yen
Industrial
Materials &Others2010

Automotive

Information &Communications

Electronics

Electric Wire &Cable, Energy

Sales to customers .................
Intersegment sales .................
Net sales .............................
Segment profit or loss ............
Segment assets......................
Depreciation and amortization ...
Amortization of goodwill..........
Investments in equity method
affiliates ................................
Amount of increase in tangible
and intangible fixed assets ....

¥814,821
1,802¥816,623¥ 34,526¥705,376¥ 50,586
403¥269,952
1,225¥271,177¥ 3,624¥237,635¥ 12,200
288¥156,950
8,100¥165,050¥ 4,849¥136,578¥ 10,29063¥401,712
10,799¥412,511¥ 7,893¥390,313¥ 13,347
1,083¥192,917
35,308¥228,225¥
944¥427,849¥ 17,425
118

67,232

9,497

388

33,15332,31015,0497,227

16,6802011

Automotive

Information &Communications

Sales to customers ................. $11,537,474 $2,606,759
Intersegment sales .................
7,949
16,993
Net sales ............................. $11,545,423 $2,623,752
Segment profit or loss ............ $ 771,112 $ 35,875
Segment assets...................... $ 8,842,441 $2,388,130
Depreciation and amortization ... $ 541,720 $ 147,492
Amortization of goodwill..........
2,020
3,656
Investments in equity method
affiliates ................................
816,741
386,819
Amount of increase in tangible
and intangible fixed assets ....
576,188245,616

Adjustments

Consolidated¥—(57,234)¥(57,234)¥ (108)¥ 42,184¥——¥1,836,352—¥1,836,352¥ 51,728¥1,939,935¥ 103,848
1,955

29,862—

140,132

9,663—

80,929Thousands of U.S. dollars
Industrial
Electric Wire & Materials &Electronics Cable, Energy
OthersAdjustments

Consolidated$2,039,038
104,185$2,143,223$ 79,411$1,744,269$ 113,746
758$5,409,152
181,744$5,590,896$ 161,491$4,868,058$ 158,425
8,647$2,867,312
470,427$3,337,739$ 203,055$5,105,220$ 202,297
1,527

$
—
(781,298)$(781,298)$ (2,477)$ 579,050$——$24,459,735—$24,459,735$ 1,248,467$23,527,168$ 1,163,680
16,6084,582

475,923

372,760—

2,056,825

130,078

128,695

183,873—

1,264,450

1. Segment profit or loss included in Adjustments of ¥206 million (US$2,477 thousand) and ¥108 million at March 31, 2011 and2010, respectively, consist mainly of unrealized profits caused by intersegment transactions.
2. Segment assets included in Adjustments of ¥48,148 million (US$579,050 thousand) and ¥42,184 million at March 31, 2011
and 2010, respectively, consist mainly of cash and time deposits and investment securities owned by the Company.
3. Segment profit or loss corresponds to operating income.

b) Related Information
Information about products and services
Millions of yen
Wiringharnesses

2011

Sales to customers ......

¥714,182

OthersTotal¥1,319,645¥2,033,827

Thousands of U.S. dollars
Wiringharnesses
OthersTotal

2011

Sales to customers ...... $8,589,080 $15,870,655 $24,459,735

62

SUMITOMO ELECTRIC

Annual Report 2011

Notes to Consolidated Financial Statements

Information about geographical areas
Millions of yen
Asia
2011

Sales to customers .........................
Net property, plant and equipment...

Japan

China

OthersAmericas

Europe andOthersConsolidated¥1,143,457¥ 324,289¥237,941¥ 54,810¥213,155¥ 41,348¥239,947¥ 32,973¥199,327¥ 28,355¥2,033,827¥ 481,775

Thousands of U.S. dollars
Asia
2011

Japan

Sales to customers ......................... $13,751,738
Net property, plant and equipment... $ 3,900,048

China

OthersAmericas

Europe andOthersConsolidated$2,861,587$ 659,170$2,563,500$ 497,270$2,885,712$ 396,549$2,397,198$ 341,010$24,459,735$ 5,794,047

Information about impairment losses of fixed assets by reportable segment
Millions of yen

2011

Impairment losses of fixed assets .................

Automotive

Information &Communications¥1,124¥9,133

Electronics

Electric Wire &Cable, Energy

¥245

¥48

Industrial
Materials &Others

¥786

Total

¥11,336

Thousands of U.S. dollars

2011

Impairment losses of fixed assets .................

Automotive

Information &Communications$13,518$109,838

Electronics

Electric Wire &Cable, Energy

Industrial
Materials &Others$2,946$577$9,453

Electric Wire &Cable, Energy

Industrial
Materials &OthersTotal$136,332

Information about goodwill by reportable segment
Millions of yen

2011

Amortization .................................................
Balance at end .............................................

Automotive

¥168
¥650

Information &Communications

¥304
¥678

Electronics

¥63
¥95

¥ 719
¥1,732

¥127
¥262

Total

¥1,381¥3,417

Thousands of U.S. dollars

2011

Amortization .................................................
Balance at end .............................................

Automotive

Information &Communications$2,020$7,817$3,656$8,154

Electronics

Electric Wire &Cable, Energy

Industrial
Materials &Others$ 758$1,142$ 8,647$20,830$1,527$3,151

Total$16,608$41,094

Effective April 1, 2010, the “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information”(ASBJ Statement No. 17, issued on March 27, 2009) and the “Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, issued on March 21, 2008) were adopted.

Annual Report 2011

SUMITOMO ELECTRIC

63

Notes to Consolidated Financial Statements

21. RELATED PARTY TRANSACTIONSCondensed financial information of a significant affiliate,
Sumitomo 3M Ltd., as of fiscal 2011 is as follows:
2011

Millions of yen

Thousands of
U.S. dollars

Total current assets ...................
Total long-term assets ...............
Total current liabilities .................
Total long-term liabilities .............
Total net assets .........................
Sales .........................................
Income before income taxes ......
Net Income................................

¥124,494
23,00840,255
2,397
104,850
212,954
48,542
36,236$1,497,221
276,705
484,125
28,8271,260,974
2,561,082
583,788435,791

The Company entered into the following transaction with arelated party in fiscal 2010:
Party type:
Affiliate
Party name:
Sumitomo 3M Ltd.
Address:
Setagaya-ku, Tokyo, Japan
Capital:¥18,929 million
Business:
Industrial, electrical, electric, powerand communications, automotive,
construction, sign and display,lifestyle, health care products% of voting stock held: Direct 25.0
Business relationship: Sending a board member to
Sumitomo 3M
Details of transaction: * Application for offer of share buyback
for the purpose of own shareretirement
Transaction amount: ¥23,221 million
Account title andbalance at year end: Other current assets (¥9,446 million)
and other assets (¥4,723 million)* The Company determined sales price based on the appraised valueby an expert outside company.

22. OTHER
The Company was investigated by the Japan Fair Trade
Commission in February 2010 about its trade in automotive
wiring harnesses-related products, and is under investigation
by EU, U.S. and other overseas antitrust regulators.

64

SUMITOMO ELECTRIC

Annual Report 2011

Independent Auditors’ Report
To the Board of Directors of Sumitomo Electric Industries, Ltd.:We have audited the accompanying consolidated balance sheets of Sumitomo Electric Industries, Ltd. and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of income, comprehensive income, changes in
net assets and cash flows for the years then ended expressed in Japanese yen. These consolidated financial statements are theresponsibility of the Company’s management. Our responsibility is to independently express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positionof Sumitomo Electric Industries, Ltd. and subsidiaries as of March 31, 2011 and 2010, and the results of their operations andtheir cash flows for the years then ended, in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2011are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.

Osaka, Japan
June 24, 2011

Annual Report 2011

SUMITOMO ELECTRIC

65

Corporate Directory
Head Office (Osaka)
5-33, Kitahama 4-chome, Chuo-ku, Osaka
541-0041, Japan
Tel.: 81 (6) 6220-4141
Fax: 81 (6) 6222-3380
Head Office (Tokyo)
Shibaura Renasite Tower 3-9-1 Shibaura,
Minato-ku, Tokyo 108-8539, Japan
Tel.: 81 (3) 6722-3100
Fax: 81 (3) 6722-3109
DOMESTIC WORKS
Osaka Works
Main Products: Electric conductors, electric
power cables, power line constructionand engineering, optical fiber cables,
telecommunication cables, opticaltransmission components, information
systems, control systems, high frequency
products, hybrid products
Itami Works
Main Products: Special steel wires,
powdered alloys, sintered powder metal
products, diamond products, compounds
semiconductors
Yokohama Works
Main Products: Optical fiber cables,
telecommunication cables, opticalconnectors, optical fiber fusion splicers,
optical amplifiers, optical transmission
components• SEWS-CABIND S.p.A.
Collegno, Italy
Main Products: Automotive wiring harnesses• Sumidenso Vietnam Co., Ltd.
Hai Duong, Vietnam
Main Products: Automotive wiring harnesses• Huizhou Zhurun Wiring Systems Co., Ltd.
Guangdong, China
Main Products: Automotive wiring harnesses• Sumidenso Mediatech Suzhou Co., Ltd.
Jiangsu, China
Main Products: Automotive wiring harnesses• Sumitomo do Brasil Industrias Eletricas Ltd.
Sao Paulo, Brazil
Main Products: Automotive wiring harnesses
113 other companies

INFORMATION & COMMUNICATIONSOVERSEAS CONSOLIDATED SUBSIDIARIES• Sumitomo Electric Lightwave Corp.
North Carolina, U.S.A.
Main Products: Optical fiber fusion splicers
and optical fiber cables• Sumitomo Electric Device Innovation (U.S.A.),
Inc.
North Carolina, U.S.A.
Main Products: Optical transmission
components• Hangzhou SEI-Futong Optical Fiber Co.,Ltd.
Zhejiang, China
Main Products: Optical fibers and preforms• Sumitomo Electric Optical Components(Wuxi) Co., Ltd.
Jiangsu, China
Main Products: Optical couplers and opticalconnectors and jumper units• Sumitomo Electric Photo-Electronics
Components (Suzhou), Ltd.
Jiangsu, China
Main Products: Optical devices and opticaltransceivers
8 other companies

DOMESTIC CONSOLIDATED SUBSIDIARIES• Kiyohara Sumiden, Ltd.
Main Products: Optical fibers

ELECTRONICS

AUTOMOTIVE• SEI Optifrontier Co., Ltd.
Main Products: Optical network devices andcomponents, optical fiber
cables, machinery and appliances for communication

DOMESTIC CONSOLIDATED SUBSIDIARIES★ Sumiden Tomita Shoji Co., Ltd.
Main Products: Electronic components,
wires and systems

DOMESTIC CONSOLIDATED SUBSIDIARIES• Tokai Rubber Industries, Ltd.
Main Products: Rubber products• Sumitomo Electric Device Innovations, Inc.
Main Products: Optical and electronic
devices• Sumitomo (SEI) Electronic Wire, Inc.
Main Products: Electric wires and electric
wire products• Sumitomo Wiring Systems, Ltd.
Main Products: Automotive wiring harnesses• Sumitomo Electric Networks, Inc.
Main Products: Information andcommunications equipment• Sumitomo Electric Flat Components, Inc.
Main Products: Flat cables• Sumiden Electronics, Ltd.
Main Products: Electronic components anddevices for automobiles★ AutoNetworks Technologies, Ltd.
Main Service: Automotive wiring harnesses
R&D
OVERSEAS CONSOLIDATED SUBSIDIARIES• Sumitomo Electric Wiring Systems, Inc.
Kentucky, U.S.A.
Main Products: Automotive wiring harnesses• Sumitomo Electric Wiring Systems(Europe) Ltd.
Staffordshire, U.K.
Main Products: Automotive wiring harnesses

66• Sumitomo Electric Bordnetze GmbH
Wolfsburg, Germany
Main Products: Automotive wiring harnesses

SUMITOMO ELECTRIC

Annual Report 2011

• Sumitomo Electric Printed Circuits, Inc.
Main Products: Flexible printed circuits• Sumitomo Electric Fine Polymer, Inc.
Main Products: Fine polymer products

OVERSEAS CONSOLIDATED SUBSIDIARIES• Judd Wire, Inc.
Massachusetts, U.S.A.
Main Products: Electronic wires• Sumitomo Electric Semiconductor
Materials, Inc.
Oregon, U.S.A.
Main Products: Compound semiconductormaterials

Corporate Directory• Sumitomo Electric Interconnect Products(Suzhou), Ltd.
Jiangsu, China
Main Products: Electronic wires, FPCs
• Suzhou Sumiden Electronic Materials Co.,Ltd.
Jiangsu, China
Main Products: Electronic parts• Sumitomo Electric Interconnect Products(Hong Kong), Ltd.
Hong Kong, China
Main Products: Electronic wires, FPCs andirradiated products
16 other companies

INDUSTRIAL MATERIALS & OTHERSDOMESTIC CONSOLIDATED SUBSIDIARIES• Sumitomo Electric Hardmetal Corp.
Main Products: Cemented carbide andsintered diamond cutting
tools• Sumitomo Electric Sintered Alloy, Ltd.
Main Products: Sintered parts• A.L.M.T. Corp.
Main Products: Tungsten and molybdenum
products• Sumitomo (SEI) Steel Wire Corp.
Main Products: Special steel wires

ELECTRIC WIRE & CABLE, ENERGY• Sumitomo Electric Tochigi Co., Ltd.
Main Products: Steel cords

DOMESTIC CONSOLIDATED SUBSIDIARIES• Sumitomo Densetsu Co., Ltd.
Main Service: Electric transmission lines
installation

OVERSEAS CONSOLIDATED SUBSIDIARIES★ Sumitomo Electric U.S.A., Inc.
California, U.S.A.
Regional headquarter• Nissin Electric Co., Ltd.
Main Products: Electric-power control
systems★ Sumitomo Electric Finance U.S.A., Inc.
New York, U.S.A.
Finance company• Daikoku Electric Wire Co., Ltd.
Main Products: Electric wires and coils★ Sumitomo Electric Carbide, Inc.
Illinois, U.S.A.
Main Products: Cemented carbide tools• Sumitomo Electric Toyama Co., Ltd.
Main Products: Electric wires and cables andmetal materials• Sumitomo Electric Industrial Wire & Cable, Inc.
Main Products: Electric wires and cables• Sumitomo Electric Wintec, Inc.
Main Products: Magnet wires and related
products
OVERSEAS CONSOLIDATED SUBSIDIARIES• P.T. Karya Sumiden Indonesia
Tangerang, Indonesia
Main Products: Copper wire rods
• P.T. Sumi Indo Kabel Tbk
Tangerang, Indonesia
Main Products: Power cables• Sumitomo Electric Wintec (Wuxi) Co., Ltd.
Jiangsu, China
Main Products: Magnet wires and DG coils
47 other companies★ Sumitomo Electric Europe Ltd.
Hertfordshire, U.K.
Regional Headquarter★ Sumitomo Electric Finance U.K. Ltd.
Hertfordshire, U.K.
Finance company★ Sumitomo Electric Hartmetall GmbH
Willich, Germany
Main Products: Cemented carbide alloys

SUBSIDIARIES AND AFFILIATESACCOUNTED FOR BY THE EQUITYMETHODDOMESTIC• Kitanihon Electric Cable Co., Ltd.
Main Products: Electric wires and cables★ TECHNO ASSOCIE Co., Ltd.
Main Products: Threads and non-ferrous
metal products• Sumitomo 3M, Ltd.
Main Products: Abrasives and industrial
tapes• Sumitomo Rubber Industries, Ltd.
Main Products: Automotive tires and sportinggoods• Dyden Co., Ltd.
Main Products: Electric wires and cables• J-Power Systems Corporation
Main Products: Power transmission cables
and cable accessories★ MIRAIT Holdings Corporation
Main Service: Telecommunications engineering work, electrical work,
civil engineering work andconstruction work
OVERSEAS• Kyungshin Corporation
Incheon, South Korea
Main Products: Automotive wiring harnesses• Chengdu SEI-Futong Optical Fiber Co.,Ltd.
Sichuan, China
Main Products: Optical fiber cables
32 other companies• Sumitomo Electric Hardmetal
Manufacturing (Thailand), Ltd.
Chachoengsao, Thailand
Main Products: Cemented carbide tools• P.T. Sumiden Serasi Wire Products
Jakarta, Indonesia
Main Products: Special steel wires★ Sumitomo Electric Asia, Ltd.
Hong Kong, China
Regional Headquarter

Notes 1. Publicly listed companies areindicated in bold print.
2. The number of the companies is asof March 31, 2011.
• Manufacturing / Construction company★ Sales company / Others

46 other companies

Annual Report 2011

SUMITOMO ELECTRIC

67

History
1897

Sumitomo Copper Rolling Works was founded

1971

Opened the Kanto Works

1900

Started production of coated wires

1974

Started production of optical fiber cables

1908

Started production of power cables

1975

Contracted to construct a power transmission line in
Iran

1909

Started trial production of telecommunication cables
1976

1911

Established Sumitomo Electric Wire & Cable Works

Received an order for a large telecommunications
network construction project in Nigeria

1978

Delivered and put into operation the world’s firstbidirectional fiber optics CATV system called “Hi-OVIS”

1981

Delivered and installed fiber optic LAN systems for the
first time in its history

Laid first Japan-made high-voltage underground cables
1916

Opened a new factory (now the Osaka Works)
Started production of enamel wires

1920

Sumitomo Electric Wire & Cable Works incorporated asa limited company

1982

Succeeded in producing the world’s-largest-class (1.2
carats) synthetic diamonds

1931

Started production of cemented carbide tools

1996

Developed a technology for producing long-length oxidehigh voltage superconducting wires

1932

Started production of special steel wires
1998

1939

Company name changed to the current name,
Sumitomo Electric Industries, Ltd.

Developed and started marketing ecology wires andcables

1999
1941

Opened the Itami Works

Sumitomo Electric Fine Polymer, Inc. (fine polymer
products) started operation

1943

Started production of vibration-proof rubber products
and fuel tanks

2001

J-Power Systems Corporation (high-voltage power
cables) started operation

1946

Opened a branch office in Tokyo (now the Tokyo Head
Office)

2002

1948

Started marketing sintered powder metal products

Sumitomo Electric Networks, Inc. (network equipment),
Sumitomo (SEI) Steel Wire Corp. (special steel wires) and
Sumitomo Electric Wintec, Inc. (magnet wires) started
operation

1949

Entered into the construction business of overheadtransmission lines

2003

1957

Delivered the first Japan-made television broadcasting
antennas to NHK

Sumiden Hitachi Cable Ltd. (wires and cables forbuildings and industrial equipment) and Sumitomo
Electric Hardmetal Corp. (powder metal and diamondproducts) started operation

1961

Opened the Yokohama Works

2004

A.L.M.T. Corp. was made a wholly-owned subsidiary

2006

The HTS cable used in a power transmission grid in the
U.S. started supplying electricity

2007

Sumitomo Wiring Systems, Ltd. was made awholly-owned subsidiary

Delivered the wiring harnesses for four-wheel vehicles
for the first time in its history
1962

Started production of the “IrraxTM Tube” electron beamirradiation tubes

Nissin Electric Co., Ltd. was made a consolidated
subsidiary

The head office was moved from Osaka’s Konohana
Ward to its present location in Chuo Ward
1963

Started production of disc brakes

1964

Started production of electron beam irradiation wires

1968

Entered into the traffic control systems business

1969

Established the first overseas production subsidiary
Started production of flexible printed circuits (FPCs)

1970

68

Started production of compound semiconductors

SUMITOMO ELECTRIC

Annual Report 20112008

Opened Technical Training Center

2009

Eudyna Devices Inc. was made a wholly-owned subsidary
and changed its trade name to Sumitomo Electric Device
Innovations, Inc.

2010

Opened new R&D center “WinD Lab”
SEI Optifrontier Co., Ltd. was made a wholly-owned
subsidiaryCompany Information
Sumitomo Electric Industries, Ltd. (As of March 31, 2011)
HEAD OFFICE (OSAKA)SHARE PRICE RANGE

5-33, Kitahama 4-chome, Chuo-ku, Osaka 541-0041, JapanHEAD OFFICE (TOKYO)
Shibaura Renasite Tower 3-9-1 Shibaura, Minato-ku,
Tokyo 108-8539, Japan

Yen
Year

Month

High

Low

2010

Apr.
May
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.

1,230
1,165
1,154
1,073
1,038
1,036
1,099
1,143
1,163
1,244
1,272
1,285

1,140
1,031
1,030
991
879
900
978
1,000
1,097
1,137
1,160
904

INCORPORATED
December 1920
NUMBER OF EMPLOYEES
182,773
COMMON STOCK

2011

Authorized: 3,000,000,000 shares
Issued:793,940,571 shares
NUMBER OF SHAREHOLDERSSHARE PRICE

78,526

(Yen)

1,500

STOCK EXCHANGE LISTINGS
Four domestic stock and securities exchanges: Tokyo, Osaka,
Nagoya, and Fukuoka
Ticker Code: 5802

1,300

1,100

SHAREHOLDER REGISTER MANAGER
The Sumitomo Trust & Banking Co., Ltd.
5-33, Kitahama 4-chome, Chuo-ku, Osaka 541-0041, Japan

900

700

SUMITOMO ELECTRIC VIA THE INTERNET
Sumitomo Electric Group’s web site provides a wide range ofcorporate information, including the latest annual report, news
releases, and financial results.
http://global-sei.com/

500
Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

2010

Mar.

2011

PRINCIPAL SHAREHOLDERS
Outstanding
Shareholdings
voting share(Thousands)(%)
Japan Trustee Services Bank, Ltd.
(Trust Account)

61,985

7.81

The Master Trust Bank of Japan, Ltd.
(Trust Account)

51,833

6.53

Nippon Life Insurance Company

28,903

3.64

Japan Trustee Services Bank, Ltd.
(Trust Account 9)

16,217

2.04

Sumitomo Life Insurance Company

15,556

1.96

SSBT OD05 OMNIBUS ACCOUNT— TREATY CLIENTS

15,3201.93

Sumitomo Mitsui Banking Corporation

12,551

1.58

THE CHASE MANHATTAN BANK, N. A. LONDONSECS LENDING OMNIBUS ACCOUNT

10,950

1.38

Japan Trustee Services Bank, Ltd.
(Trust Account 4)

10,090

1.27

MELLON BANK, N.A. AS AGENT FOR ITS CLIENTMELLON OMNIBUS US PENSION

10,072

1.27

BREAKDOWN OF SHAREHOLDERS
Financial Institutions
325,759 thousand shares
41.03% (Shareholders: 175)
Foreign Investors
291,699 thousand shares
36.74% (Shareholders: 601)
Individuals and Others
116,945 thousand shares
14.73% (Shareholders: 76,780)
Other Corporations
46,187 thousand shares
5.82% (Shareholders: 884)
Financial Instruments Firm
12,759 thousand shares
1.61% (Shareholders: 85)
Treasury Stock
592 thousand shares
0.07%

Annual Report 2011

SUMITOMO ELECTRIC

69

5-33, Kitahama 4-chome, Chuo-ku, Osaka 541-0041, Japan
Tel: +81 (6) 6220-4141
Fax: +81 (6) 6222-3380

http://global-sei.com/