2-3, Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8370, Japan

Furukawa Co., Ltd.

Growing through Challenge

Annual Report 2009

Fuels and Others

Real Estate

ChemicalsElectronic Materials

UNIC Machinery

Industrial Machinery

MetalsRock Drills(Construction & Mining Machinery)

ANNUAL REPORT 2009
Year ended March 31, 2009
Printed in Japan

Profile
Since its establishment in 1875, Furukawa has emerged from its origins in mine development to build a wide-ranging
business portfolio while constantly addressing the needs of the times. From metals, it has diversified into machinery,electronic materials, chemicals, and various other fields, motivated by the corporate philosophy and technologicaltradition it has embraced throughout its history.
Adhering to its corporate philosophy—Innovation, Creativity, and Harmony—Furukawa is returning to its roots as
a manufacturer by drawing on its technological tradition. Here, our aim is to further improve competitiveness andmaintain growth that will permit the next substantial leap forward.
The Furukawa Company Group consists of five business divisions: Machinery, Metals, Electronic Materials andChemicals, Real Estate, and Fuels and Others. These divisions complement each other and together enable the Groupto demonstrate its powerful strengths.

Fuels and Others

10.3%

Real Estate

1.5%
Electronic Materials
and Chemicals

Industrial
Machinery

7.0%

Machinery

38.7%

Net Sales Composition

ChemicalsElectronic
Materials

UNIC Machinery

MetalsContents

42.5%

Rock Drills(Construction &Mining Machinery)

Consolidated Financial Highlights 1
To Our Stakeholders 2
Overcoming the Turbulence of
the Global Economic Downturn 4
Review of Operations 7
Environmental Protection and Social Contribution Activities 15

Forward-Looking Statements

Corporate Governance 16This annual report contains forward-looking statements that include

Consolidated Six-Year Financial Summary 17plans, strategies, and statements related to the outlook for future

Financial Review 18

results. These forward-looking statements are not historical facts.

Consolidated Financial Statements 22

They are expectations, estimates, forecasts, and projections based on

Report of Independent Auditors 39

information currently available to the Company and are subject toCorporate Data 40

various risks, uncertainties, and assumptions. These changing factors

Corporate History 41

may cause actual results to differ materially from those projected.

Consolidated Financial Highlights
Furukawa Co., Ltd. and consolidated subsidiaries
Years ended March 31, 2009, 2008 and 2007

Thousands of
U.S. dollars
2009

Millions of yen
2009

2008

2007

Percent change
2009/2008

For the year:¥ 161,858

Net sales
Operating income
Income (loss) before income taxes
		 and minority interests
Net income (loss)¥ 213,426¥ 200,749$ 1,651,612

		(24.2)%

		

2,303

		

14,407

		

16,899		

23,500		(84.0)

		(2,618)		

12,484

		

11,127

		(26,715)

		

—

		

(5,917)

		

8,595

		

17,554

		

(60,378)		—

At year-end:
Total assets

		 188,361

		 199,383

		 217,027

		 1,922,051

		

(5.5)

Net assets

		

		

		

		

		

(17.5)

45,74255,431Per share amounts:

52,136

Yen

466,755
U.S. dollars

Net income:
		

Basic

Cash dividends		(14.64)

		

21.26

		

43.42

		

(0.15)

		

—

		

4.00

		

6.00

		

5.00

		

0.04

		

(33.3)

Notes: 1. U.S. dollar amounts are translated from yen for convenience only at the rate of ¥98=US$1.00.
2. From the fiscal year ended March 31, 2007, what was formerly recorded as “shareholders’ equity” is now recorded as “net assets,” in line with revisions to Japanese accounting
standards as detailed in the Accounting Standards Board of Japan’s (ASBJ’s) “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No.5, December 9,2005) and its implementation guidance, ”Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Guidance No.8, December 9, 2005).

Net Assets(Billions of yen)(Billions of yen)

45.7

43.1
2.3

7.4

31.3

12.1

147.2

161.9

181.9

14.4

52.1

16.9

213.4

Operating Income(Billions of yen)
200.7

Net Sales

55.4

Figures for fiscal 2006 represent total shareholders’ equity.

‘05

‘06

‘07

‘08

‘09

‘05

‘06

FURUK AWA

1

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Annual Report 2009

‘05

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‘09

To Our Stakeholders

Business Conditions and Performance
In fiscal 2009, ended March 31, 2009, the Japanese and world economies plunged into recession, sparked by the U.S. subprime loan problem.
Since the autumn of 2008, the financial crisis, with its epicenter in the United States, has spread throughout the world, impacting real economies
and sparking a global contraction in demand and turmoil in the capital markets. In conjunction with these events, corporate activities sharply
declined, leading to suspensions and reductions of production output.
This rapidly changing business environment had a considerable influence on the performance of the Furukawa Company Group.
Consolidated net sales for the year amounted to ¥161,858 million, down 24.2% from the previous fiscal year. The decline stemmed from various
factors. In the Metals Division, for example, plummeting copper prices and the yen’s appreciation caused demand and sales to decrease. In the
Machinery Division, the rock drill and UNIC machinery businesses were significantly impacted by falling worldwide demand, while the electronics
business felt the effects of production declines in the semiconductor device sector.
Operating income fell 84.0%, to ¥2,303 million. In the Metals Division, earnings were affected by deteriorating purchasing conditions andthe yen’s appreciation. In the Machinery Division, the fall in revenue led to a reduction in production, which combined with soaring materials
prices adversely impacted profits. With the exception of the Fuels Division, all segments reported year-on-year earnings declines.
Turning to other income, the Group posted a gain on disposal and sales of property, plant and equipment of ¥1,793 million, and liquidating
distribution from silent partnership of ¥3,962 million. In other expenses, the Group incurred a write-down of investments in securities of ¥7,418
million. Based on the aforementioned, loss before income taxes and minority interests was ¥2,618 million. As a result, the Group posted a net lossof ¥5,917 million.

Decisive Actions
During the year, the Group responded with urgency to sharply falling demand stemming from worldwide
recession. In the rock drill, UNIC machinery, and electronic materials businesses, for example, we adjusted
production to match declining demand and lowered our inventory levels. To this end, we temporarilysuspended operations and reduced the number of production lines at some plants in the first half offiscal 2010, with the aim of optimizing inventories. We also stepped up efforts to reduce cost of sales byreassessing purchasing prices of materials and supplies. With respect to capital expenditures, we drasticallyreduced outlays to the absolute minimum required for equipment renewal. In addition, we made acomprehensive reassessment of expenses, which included reducing executive compensation by up to
20% and middle management salaries by 7.5%. In these ways, the Group united in an effort
to minimize costs.

Medium-Term Management Plan
The Furukawa Company Group’s new Medium-Term Management Plan covers the threeyear period from April 2008 to March 2011. Amid dramatically changing conditions inJapan and overseas, we have positioned the three-year period as a time to secure further
growth ahead of our next leap forward, and we have are restructuring our businesses
accordingly.
Guided by our corporate philosophy—Innovation, Creativity, and Harmony—wewill continue reforming our corporate structure while actively investing in core businesses
and optimizing our personnel and organization to create an efficient management system.
Deploying our creative strengths, we will provide appealing manufactured products andservices in order to earn the trust of customers. Returning to our roots as a manufacturer,
we will pursue full-fledged monozukuri (manufacturing) activities as we strive to develop ahigh-level production, sales, and service structure.

Nobuyoshi Soma
President and Representative Director

FURUK AWA

2

Annual Report 2009

(Billions of yen)250

Net Sales (consolidated)
213.4
200 of yen)(Billions
181.9
250
150
200
100
150

147.2

Business conditions remain extremely challenging, with the export environment

200.7

languishing amid delays in economic recovery in Europe and North America. As

200.7

unpredictable. With the future so difficult to envisage, we will adhere closely to thebasic policies of our Medium-Term Management Plan and work to solidify our internal

181.9
161.9

147.2

50
100
0
50
0

domestic demand is also unstable, the outlook for the industry will continue to be

161.9
213.4

‘05

‘05

‘06

‘06

‘07

‘07

‘08

‘08

‘09

‘09

Machinery
MetalsElectronic Materials
and Chemicals
Real
EstateMachinery
Fuels
Metalsand Others
Electronic Materials
and Chemicals
Real Estate
Fuels and Others

corporate structure. We will place increased emphasis on two core initiatives announced
in the previous fiscal year: strengthening the technical capabilities of the Machinery
Division and promoting development activities aimed at new product commercialization.

Shareholder Return
Furukawa places great importance on improving returns of profits to all shareholders.
Our basic policy is to appropriate profits after comprehensive consideration of various
factors, including retained earnings required to finance capital expenditures and R&D
expenses necessary to bolster earnings, as well as future business development andother factors. In the year under review, the Company paid an interim dividend of ¥2.50

Operating Income (consolidated)share. In fiscal 2010, we do not plan to pay an interim dividend and are yet to decide
14.4
14.4

14
14
16.9
12.1
(Billionsof yen) 12.1
12
12
16
14.4
10
10
14
7.4 12.1
8
7.4
8
12
6
6
10
4
4
7.4
8
2
2
6
0
0
4
-2
-2 ‘05 ‘06 ‘07 ‘08
2 ‘05‘06 ‘07 ‘08

on the year-end dividend.

Outlook
Although the business climate is expected to remain difficult in fiscal 2010, we

2.3
2.3

2.3
‘09
‘09

0
-2

‘05

per share and a year-end dividend of ¥1.50, for total annual dividends of ¥4.00 per

16.9
16.9

(Billions(Billions ofof yen)
yen)
16
16

‘06

‘07

‘08

‘09

Machinery
Machinery
Metals
MetalsElectronic
Electronic Materials
Materials
and Chemicals
Chemicals
andRealMachinery
Real Estate
Estate
Fuels
MetalsFuels andand Others
OthersEliminations
andElectronic
Materials
Eliminations
andCorporate
andChemicals
Corporate
Real Estate
Fuels and Others
Eliminations andCorporate

anticipate an increase in demand going forward. In line with economic stimulus
measures taken by various countries, the Japanese government plans to makesubstantial investments in infrastructure. We also look forward to increased resource
development activities in Southeast Asia and South America, which may help boost
orders for rock drills and related items. Seeking to accurately address demand growthand secure orders, we will drastically reassess our sales expansion strategies for eachregion and product in order to highlight our competitive edge. In addition, we will
improve our earnings structure by further enhancing operating efficiency and rigorously
cutting costs.
Business conditions in the first year of the Medium-Term Management Plan were
extremely difficult. Nevertheless, the Furukawa Company Group will adhere relentlesslyInterest-Bearing Liabilities

to the plan’s basic policies. We are confident that this approach will enable us toovercome the current challenges and set the Group on its next growth trajectory.

(Billions of yen)(Billions of yen)
150
150

We look to the ongoing understanding and support for all stakeholders as we embrace(Billions116.9
of yen)
116.9
150
99.4
100
99.4
92.5
100
89.4
92.5
89.4
77.9
116.9
77.9
99.4

100
50
50

50
0
0

the challenges ahead.
August 2009

92.5

89.4
77.9

‘05
‘05

‘06
‘06

‘07
‘07

‘08
‘08

‘09
‘09

Nobuyoshi Soma
President and Representative Director

Note: Interest-bearing liabilities
0= Long- andshort-term‘05‘06 debt‘07+ Corporate‘08 bonds‘09

FURUK AWA

3

Annual Report 2009

Overcoming the Turbulence of
the Global Economic Downturn
Nobuyoshi Soma, President and Representative Director

1

Q.

“

A

The current economic

What is your view on the current worldwide economic recession?
The current economic crisis enveloping the world is unprecedented in scale, as well as in terms ofrecession is bringing structural

severity. For the Furukawa Company Group, which is a member of the manufacturing sector, thechanges to the world economy.

sudden contraction in markets since the collapse of Lehman Brothers in September 2008 has caused

Rather than viewing this in a

us to struggle. Although I feel that demand bottomed out during the first three months of this year,

negative light, I believe that

we are a long way off a rapid recovery, and it may well take two to three years before we see a full-the current situation presents
excellent business opportunities
for the Furukawa Company
Group.

”

2

Q.

“

A

scale resurgence in demand. The current situation is different from previous cyclical downturns in that
it is bringing structural changes to the global economy. In other words, it appears to be precipitating
huge changes, such as accelerating an energy shift against the backdrop of environmental problems,
as well as the emergence of new economies, such as the BRIC countries. In Japan, we are seeing adecline in population and changes in consumption. These global structural changes are not necessarily
a bad thing for the Group. Rather, by preempting these major changes we can turn them into
excellent business opportunities.

The Furukawa Company Group has encountered hard times on numerous
occasions since it was founded. What can we learn from its history of
more than 130 years?

The attitude and spirit

The current economic recession is just one of many challenges we have experienced throughout ourcultivated by our founder andlong history. There was the difficult period of Japan’s transition to a modern state at the time when

our predecessors in the face of

the Company was established. Then there was the Great Depression, the dismantling of the zaibatsu

difficulties are alive and well in(business conglomerates) following the Second World War, and the two oil shocks. A tenacious spirit

the management philosophy

and strenuous efforts have enabled Furukawa to overcome all of these challenges. Our withdrawal

of today’s Furukawa Company
Group.

”

from a copper refining project in Australia in 2003 is a more recent example of the extraordinary
efforts we have had to make in order to overcome various crises. From 1875, when Ichibei Furukawa
founded the Company, to the present day, our history has been one of survival as we have foundways to address the structural changes to industry that have taken place along the way. The attitude
and spirit cultivated by our founder and predecessors while combating difficult times are embodied
in Furukawa’s management philosophy. By making the most of the unbroken spirit, wisdom, andexperiences passed down through Furukawa’s long history, I believe we can definitely overcome
today’s problems and be reborn as a Group that has adapted successfully to these huge changes.

FURUK AWA

4

Annual Report 2009

3

Q.

“

A

What measures is the Group taking to outride the recession?

I believe that reestablishing

We have focused on lowering inventory volumes to address the sudden decline in demand. This has

the fundamentals of monozukuri

necessitated emergency measures, such as reducing factory utilization rates. We will continue striving(manufacturing) is imperative

to achieve appropriate inventory levels through the first half of the current fiscal year. We have also

for dealing with the structural

taken various measures to cut costs. These include lowering salaries and reviewing the expenses ofchanges that are taking place as

executives and managers, as well as restricting capital investments to the absolute minimum requireda result of the present economic
recession.

”for upgrades. We are also undertaking a fundamental review of sales policies for each product andregion in order to reinforce our sales structure. Of course, these short-term measures are necessary,
but it is more important to look at the Company’s key structures and build the most appropriate
framework for monozukuri (manufacturing) over the long term. The current economic recession has
generated structural changes, and it is vital that we reestablish the fundamentals of monozukuri inorder to address these changes. In May 2008, we launched “Monozukuri Innovation Project, centeringon the Machinery Division. Through these meetings, we are reviewing processes from the groundup, and asking questions such as “What should we be making and how?” and “What constitutes anoptimal production line?” In these ways, we are striving to build systems for the efficient manufactureof products that markets desire. The entire Group is working as one to achieve Group-wide targets ofmaking substantial increases in productivity and reducing production costs. We are also establishing afull-scale structural development system for managing our manufacturing operations. In addition, weare striving to raise productivity by taking maximum advantage of the synergies that can be achieved
among the Group’s companies. This entails reviewing the vertical production system for each productwith the aim of manufacturing and procuring parts and related products within the Group, as well as
making effective use of overseas subsidiaries and affiliates.

4

Q.

“

A

Providing profitability,

How are Furukawa’s three core divisions doing
and what are their strategies?
The Machinery Division makes an important contribution to earnings

stability, and growth potential,

and is a future growth driver. The division goes back a long way,

the Group’s three main

having started in mining operations, and has progressed by adopting

divisions—Machinery, Metals,

a user-focused perspective. It now accounts for a significant shareand Electronic Materials andof the Group’s business owing to its consistent ability to preempt the needs of customers and deliver

Chemicals—play a key role

while complementing eachother’s activities. Our aim is toachieve growth and progressand maintain a balance within
the Furukawa Company Group.

”

innovative products to the market. At this time of weak domestic demand, we look to overseas
markets to represent future growth sources for the division. By creating product strategies and sales
systems for countries that produce resources, such as China and other BRIC and Middle Easterncountries, we expect to generate a steady increase in demand for infrastructure construction andresource development.
As the original business of the Furukawa Company Group, the Metals Division is its linchpin. In
general, the metals business is highly susceptible to changes in metal prices, particularly copper. Since
we focus on refining, however, our business has become stable and comparatively immune to market
trends. A vital task for the division is to secure more stable supplies of cuprous ore and other raw
materials, and we are striving hard to make progress in these areas.
The Electronic Materials and Chemicals Division is slated for huge growth in the future. In ourelectronics business, we focus on developing next-generation compound semiconductor materials

FURUK AWA

5

Annual Report 2009

while exercising our competitive advantage as the world’s top manufacturer of high-purity metallic
arsenic. The division has already provided customers with samples of gallium nitride (GaN) substrates
for use in blue-violet laser diodes (LDs), a key component in the manufacture of next-generation DVD
players, as well as for white light-emitting diodes (LEDs), which have exciting potential for lighting
applications. Our GaN substrates boast unsurpassed quality, and we are gearing up so that we canrespond promptly when the markets for LDs, LEDs, and power devices and other products earmarked
for mass consumption begin to expand.
While complementing each other, these three profitable, stable, and growing divisions play a pivotal
role in the operations of the Furukawa Company Group. Our aim is to achieve growth and progress
while realizing a balance across the entire Group, which also includes the Real Estate Division andthe Fuels and Others Division. At the same time, we will further reinforce the strengths and uniquefeatures of our three core divisions.

5

Q.

“

How is the medium-term management plan proceeding?

A

The Furukawa Company GroupThe aim of the medium-term plan, launched in April 2008, is to establish a robust earnings basewill retain the basic policies ofthat is largely impervious to the external environment. We began by designating the three-year“promoting further overseas

period of the plan as a time for building a robust springboard for making a significant leap forward.

development and strengthening

Unfortunately, in fiscal 2009, the first year of the plan, the world was hit by the economic recession,and the outlook for fiscal 2010 is also challenging. Nevertheless, we will adhere to the basic policies

the technical capabilities ofof the plan under theme of “Growing through Challenge.” Those policies are to “promote further

the Machinery Division” and“promoting development activities
targeting the commercializationof new products” in line withoverseas development and strengthen the technical capabilities of the Machinery Division,” aswell as to “promote development activities aimed at new product commercialization.” As for the
performance targets set out under the plan, we are adopting a flexible approach to when and how
we will achieve them while keeping a close watch on the business environment. We believe that

the Medium-Term Management

the plan’s priority theme of “pursuing fully-fledged monozukuri activities and full-scale structural

Plan’s theme of “Growing throughdevelopment” is essential if we are to overcome today’s challenges, and for this reason we will

Challenge.”

expedite its implementation.

6

”

Q.

“

A

Finally, what is your message to shareholders and other stakeholders?

I will strive to lead theFirst of all, I would like to say to our shareholders that, as someone who is charged with managing

Company while accommodating

their valuable resources, I will do everything possible to fulfill my responsibilities. I will strive to ensure

the interests of all stakeholders

stable returns to shareholders and increase those returns in the future. The Furukawa Company

wherever possible so that theyGroup has many shareholders and various other stakeholders. I will continue to lead the Company by

may be proud of their associationaccommodating the interests of all stakeholders wherever possible, so that they may be proud of theirwith the Furukawa Company
Group.

”

affiliation with the Furukawa Company Group.
I look forward to the ongoing understanding and support of shareholders and all otherstakeholders.

FURUK AWA

6

Annual Report 2009

Review of Operations% of Net Sales

Machinery

38.7%

Businesses

Core Business Company

Main Products

Industrial
Machinery

Furukawa Industrial
Machinery Systems Co., Ltd.

Pumps, environmental machinery, stone crushers,
plants, steel structures, castings

Rock Drills (Construction &Mining Machinery)

Furukawa Rock Drill
Co., Ltd.

Rock drills (hydraulic breakers, hydrauliccrawler drills, tunnel drill jumbos, etc.)

UNIC Machinery

Furukawa UNIC
Corporation

UNIC cranes, UNICPAL, UNIC carriers,
mini crawler cranes

Metals42.5%

Electronic Materials
and Chemicals

MetalsFurukawa Metals &Resources Co., Ltd.

Electronic

Furukawa Denshi

Materials

Co., Ltd.

7.0%
Chemicals

Furukawa Chemicals
Co., Ltd.

Copper, gold, silver, sulfuric acid

High-purity metallic arsenic, gallium phosphorous
polycrystals, materials used in X-ray scintillators,
aluminum nitride ceramics, core coil for line filters andlaser-use lenses, optical parts

Cuprous oxide, sulfuric acid, aluminum sulfate,titanium dioxide

Real Estate

1.5%

Real Estate

Fuels and Others
Fuels

Furukawa Co., Ltd.

Furukawa Commerce*Co., Ltd.

Construction/sales, mediation/brokerage,
other related services for office buildings
and apartments

Heavy oil, gasoline, diesel, kerosene,
lubricating oil, LPG, coke

10.3%
OthersFurukawa Co., Ltd.

Transportation service by trucks and domestic
shipping* In July 2008, Furukawa spun off its fuels business to its wholly owned subsidiary, Furukawa Commerce Co., Ltd.

FURUK AWA

7

Annual Report 2009

R E V I E W O F O P E R AT I O N S

MachineryIn fiscal 2009, ended March 31, 2009, the Machinery Division reported sales of ¥62,640 million, a 17.4% decline
compared with the previous year. Operating income fell 74.6%, to ¥1,734 million, and the operating margin slipped 6.2
percentage points, to 2.8%.

Industrial
Machinery

Environment and Performanceto ¥15,837 million, and operating income fell

In the first half of fiscal 2009, we fielded numerous

8.4%, to ¥768 million. As a measure to improveinquiries for pumps, environmental equipment,

business efficiency, we merged two consolidated

and industrial machinery in association with active

subsidiaries—Furukawa Industrial Machinery

capital investments in the steel and nonferrous

Systems Co., Ltd. and Furukawa Otsuka Co., Ltd.—

metal industries. However, the impact of the global

on April 1, 2008.

economic downturn in the second half resulted

Net Sales(Billions of yen)

The industrial machinery segment commenced

Net Salesdue to soaring raw material prices
Costs increased

Net Sales
operations
with the repair of machinery used

16.2

17.3

17.0
14.1

15.8

10

‘05

‘06

‘07

‘08

‘09

Operating Income (Loss)in mines. Since then, the business has supplied

40 sales decreased in the second half ofbackdrop,
37.5

40
numerous
public sector and private sector

33.0
32.8
the year due to declining
private sector demand.

customers backed by Furukawa’s solid reputation
using outstanding technological capabilities. We

and the20overhaul of electrostatic precipitators.

20 an increase in demand for public sector
expect17.4
17.4

We worked hard to stimulate demand for repair

projects accompanying government measures

10 demand for replacements for aging
parts and10
to stimulatedomestic demand amid signs that

products by making on-site inspections for existing

postponements of large-scale projects and0customers.
The Company’s factories sought to0
replacement
demand will be lifted. Furukawa

reduce lead times and costs by reviewing andwill respond by cultivating new markets for its

rebuilding production lines and introducing

recently developed high-performance electrostatic

NC equipment. Despite these efforts, sales ofprecipitators and upgraded pumps, creating

industrial
machineryin fiscal 2009 declined 8.6%,
Operating
Incomedemandfor replacements,and further expanding
Operating
Income(Billionsof yen)demandformaintenance services and parts.

‘05(Billions of yen)

2.0

4.0

0.8

30
for durable
and long-lasting machinery developed

demand for sludge pumps for sewage projects(Billions of yen)

1.0(Billions of yen)and difficulty obtaining some steels. Against this

29.4
28.7
This was30despite firm orders owing to public sector30

0Strengths and Strategies

machinery and many frozen or postponed projects.
(Billions of yen)

40

20

in a decline in inquiries for new and replacement

‘06

‘07

‘08

‘09

20.5

‘05

‘07

21.0

‘08

‘09

4.0

3.7
3.1

0.8

3.0

3.0

2.6

2.6

2.7
2.3

2.2

0.1
0

2.0
(0.1)

-1.0

‘06

20.6

2.0
1.4

1.0

(1.0)

1.0

0.7

0.3
-2.0

0
‘05

‘06

‘07

車両搭載型クレーン（ユニッククレーン）Japanese
Market Share

47%

‘08

‘09

0
‘05

‘06

‘07

‘08

‘09

‘05

‘06

‘07

‘08

‘09

キャリア
（ユニックキャリア）
Our pumps have a proud track record in wastewater
Crushers used in the steel, chemical, andtreatment plants and underground tunnel projects
non-ferrous metal mining industries.
nationwide.
Japanese
Market Share8
FURUK AWA
Annual Report 2009

48%

Electrostatic precipitators used for removing
particulates from gas emissions and dust fromthe environment.

Net Sales

Operating Income

Operating Margin(Billions of yen)(Billions of yen)

(%)

75.8

80

Net70.3
Sales
Net Sales(Billions of yen)67.8

3.5

4

40

20
20
0

’05

17.3
17.0
16.2
17.3 15.8
17.0
16.2
15.8
14.1
14.1 ’09
’06
’07
’08

0

’05

0

‘06
‘06

‘07
‘07

‘08
‘08

Rock Drills(Construction and Mining
Machinery)
Operating Income (Loss)
Operating Income (Loss)(Billions of yen)(Billions of yen)

2.0
2.0

0

0.8
0.8

(Billions of yen)
40

-1.0
-1.0

30

32.8
28.7 -2.0
-2.0

0

’05

‘06
‘06

29.4
‘07
‘07

Japanese‘07‘08
Japanese
MarketShareMarket Share

‘09

4.0

2.0
4.0 andfocused approachthe establishment of a

3.1 in the U.S.
plummeted across the board, sales fell
3.1

world-class sales and service network, Furukawa

market, and sales in3.0
Asia, which
2.6 had been strong

1.0 2.6
2.7
3.0
has acquired a dominant
shareofthe domestic
2.7
2.6

0.8
0.8

3.0

1.4

0
30
0 ‘05
operatingrates
at‘09 businesses. Despite lowering
‘06
‘07
‘08
‘09
‘09
‘05
‘06
‘07
‘08
‘09

4.0

3.0

0.8

manufacturer of hydraulic breakers and hydrauliccrawler drills.

(0.1)

1.0

-1.0
0.7
1.0 market
We believe thefor Furukawa’s
rock
(1.0)
0.7

drills has considerable room for future expansion
0

-2.0
0 of
given the forecasts
for mine‘05strong‘06 demand
‘07
‘08
‘09
‘05

‘05
‘06

‘06
‘07

‘07
‘08

‘08
‘09

20
of the global
economic downturn far
exceeded
17.4
17.4
キャリア
adjustments
madetoproductionlevels.
Asa result,
キャリア（ユニックキャリア）
10
sales（ユニックキャリア）in the rock drill business declined 21.5%,

the construction of infrastructure in emerging

to ¥29,427 million, while operating income

undeveloped European markets, expanding ourplummeted0 93.1%, to ¥255 million.

distributor network in China, and carving out new

Japanese‘05
Japanese
MarketShareMarket Share

‘06

21.0

‘07

‘08

‘09

economies. We will continue
to develop new
車両搭載型クレーン（ユニッククレーン）
markets primarily by building sales networks forJapanesemarkets in Central and SouthAt theMarketAmerica.
Sharesame time, we will undertake 47
a reviewof existing%
油圧ブレーカ油圧ブレーカdistributor networks.

Operating Income
油圧クローラドリル
油圧クローラドリル
Hydrauliccrawler
drills(Billionsof yen)

トンネルドリルジャンボ
Tunnel drill
jumbosHydraulic breakers

Global Market
GlobalShareMarket
Share

30
%
30
%
2.7

JapaneseJapanese
MarketShareMarket Share

30
30%%

2.3

Global Market
GlobalShareMarket
Share

30
30%%

Japanese
Market Share

90%

2.0
1.4

1.0

1.0

0.7

0.3
0

0
‘05

‘06

‘07

‘08

‘09

‘05

‘06

‘07

‘08

‘09

キャリア
（ユニックキャリア）

Japanese
Market Share48%

Used at mines, quarries, civil engineering,and construction sites in Japan and overseas,
Furukawa’s hydraulic crawler drills boasts the
top market share in the world.
FURUK AWA

9

Hydraulic breakers, which are attached tohydraulic shovels, are used for excavating rockand breaking concrete.

Annual Report 2009

0.8

2.3
2.2
2.3leadingrock drill market. Overseas
2.2 too, we are the
0.1
2.0
0
2.0

development in resource-rich countries and for

20.6

‘09

(Billions of yen)(Billions (Billionsof yen) of yen)factories to reduce inventories, the scale and pace

60
%
60
2.2%

2.0

‘09
‘08
‘09

anticipated, demand4.0in the key European 3.7
market3.7

JapaneseJapanese
MarketShare
3.0
Market Share
2.6

90
90%%

‘08
‘07
‘08

development company. Owing to this customer-

4.0Japanese
3.1
Japanese
MarketShareMarket Share

‘07
‘06
‘07

Amid far greater deterioration than originally

48
48%%

3.7

‘06
‘05
‘06

growth based on a user perspective maintained
Operating
IncomeIncome (Loss)
OperatingOperating
Income as a mine
since the foundingof Furukawa

0.3
virtual halt in inquiries from large equipment hire
0.3

‘08
‘08

0
‘05
‘05

The strength of the rock drill business lies in its(Billions of yen)

15.8

10

by the contraction in markets worldwide since the
Operating Income
Operating
Incomecollapse of Lehman
Brothers(Billionsof yen) in September 2008.

1.0

33.0

0

’07

21.0
20.5
20.6
21.0
20.5
20.6
17.4
2.8
17.3
17.0
17.4
16.2
14.1
’08
’09

Strengths and Strategies40
1.0
due to plunging
private-sector
demand and a

(1.0)
37.5
(1.0)

‘05
‘05

0

‘09
‘09

‘08
‘08

’06
10
10

17.4
20
17.4

The rock drill business has been adversely affected(Billions of yen)

Operating Income
トンネルドリルジャンボ
トンネルドリルジャンボ(Billions of yen)

2.6

‘07
‘07

too, sales of breakers and crawler drills declined

47
47%%

3.0

‘06
‘06

2.0

車両搭載型クレーン
車両搭載型クレーン（ユニッククレーン）（ユニッククレーン）

‘06

‘05
‘05

2.0
Netof
Sales
second half
the period.
In the domestic market
1.4

20

‘05

2

’09

’08

in the first half of the year, declined sharply in the

(0.1)
(0.1)

30

Environment and Performance

20.5

10

’07

2.6

0.1
0.1
0

0

6.0
30
30
20
20

’06

‘09
‘09

40

4

4.0

1.0
1.0

Net Sales

5.7

10
10

‘05
‘05

40
40

6

29.4
29.4

20
20

10
10
0

37.5
37.5

1.7

2

20

(Billions of(Billions
yen)(Billions of yen) of yen)

8

33.0
32.8
33.0
32.8

28.7
28.7

30
30

30
30

0

40
40
4.2

Net Sales
9.0
Net
Net Sales
8.7 Sales

6.8(Billions of yen)(Billions of yen)
5.9

6

40
40

10

Net Sales
Net Sales

62.6

62.3 (Billions of yen)

60

8

Used for tunneling through mountains in roadand railway construction projects in Japan,
tunnel drill jumbos dominate the domestic
market.

‘09

R E V I E W O F O P E R AT I O N S

Machinery

Net Sales(Billions of yen)
40

UNIC Machinery

Environment and Performance

Net Sales

Net Sales

Net Sales(Billions of yen)(Billions of yen)(Billions of yen)

40

40

37.5
value-added products to the market, 40together
32.8

37.5

33.0

33.0
with its market-leading product development 32.8
29.4
28.7
28.7
30
30

In the UNIC machinery business, domestic sales
30

declined considerably despite healthy sales 30of thecapabilities, technological strength, andU-can ECO series of low noise, fuel efficient, andinnovativeness. A further advantage is the ability to
20

20

20
20
17.3 17.0
17.0
environmentally friendly truck-mounted
cranes.
A16.2
provideproducts
tailor-made to customers’
needs
17.3
16.2
15.8
15.8
14.1

14.1

major factor in this result was a decrease in truck
10

owing to UNIC’s in-house manufacture of core10

registrations in Japan. In the first half of the year,

10parts. Accordingly, this business has establishedanregistrations fell to 85% of those for the previous

unassailable position in the domestic market, with

10

0 halfcorresponding period, and in ‘05
the second‘06‘07 ‘05‘0800marketof ‘09around 50%
truck-mounted‘09 ‘07shares‘05for ‘06‘07 ‘05‘08 ‘06
‘09
‘06
‘08

declined to 62%. Overseas, efforts to develop

cranes and carriers.

0

Net Sales(Billions of yen)markets in the first half of the year contributed

In fiscal 2010, the operating environment

40

to increased sales in Russia, India, and Saudi

is expected to be extremely challenging based

‘07

‘08

Arabia, although sales dropped
off sharplyin (Loss)theon estimates
10% fallindemand Income
Operating
IncomeOperating
IncomeOperating
Income(Loss) of a further
Operatingof yen)(Billions of yen)(Billions of yen) for trucks. We will continueof yen)second half of the year. In(Billions
response,
we reduced
striving(Billions
to boost

30

20

20.5

20.6

21.0

17.4

17.4

10

0

2.0
inventories by cutting back production,
and worked
2.0

4.0
sales of high-value-added
products, 4.0
including
3.7

hard to lower the break-even point by targeting

environmentally friendly ECO cranes, a new

0.8
efficiencies and reviewing 1.0
material costs. Despite
1.0

0.8
0.8
0.8
3.0 remote crane 3.0
operator-friendly
joystickcontroller,

‘05

‘06

‘07

‘08

‘09

the industry’s first boom crane with seven boom

0 down 17.3% 0from
amounted to ¥17,376 million,

2.0 with capacity
lengths, and UNIC carriers
2.0 for two(0.1)
the previous year. Operating income
fell 69.1%, to(0.1)

1.4
1.4
vehicles. Overseas, meanwhile,
we will continue¥711 million.

-1.0

-2.0
Strengths and Strategies

‘05

-2.0
‘06
‘07

4.0

Truck-mounted cranes
2.6

developing markets for1.0 our operator-friendly
1.0

(1.0)

straight boom cranes. At the same time, we will

‘08
‘05

utilize production subsidiaries
in China and0Thailand
0

‘09
‘06

‘07

‘08

‘09

‘05

‘06

‘07

‘08
‘05

to optimize global production while implementing

0.3
‘09
‘06

‘07

‘08

cost-reduction measures.

車両搭載型クレーンキャリア
車両搭載型クレーン
キャリア（ユニッククレーン）（ユニッククレーン）（ユニックキャリア）
Vehicle （ユニックキャリア）
carriers(UNIC cranes)

2.7

3.1
2.6

0.1

-1.0

UNIC’s ability to always be the first to introduce(Billions of yen)

3.0

(1.0)

The strengths of the UNIC machinery business are

Operating Income

2.6

these efforts, sales in the UNIC machinery business
0.1

3.7

3.1

(UNIC carriers)

2.3

2.2
2.0

1.0

Japanese
Market ShareJapanese
Market ShareJapanese
Market ShareJapanese
Market Share

47%

47%

48%

48%

油圧ブレーカ油

0.7

トンネルドリルジャンボ
油圧クローラドリル
トンネルドリルジャンボ
油圧クローラドリル

0
‘05

‘06

‘07

‘08

‘09

Japanese
Market Share

90%

Japanese
Market Share90%

The U-can ECO series of low-noise, fuel-efficient truck-mounted
cranes is slowly penetrating the market.

FURUK AWA10

Annual Report 2009

Japanese
Market Share60%

Global Market
Share

Global Market
Share

30

30%

Japanese%
Market Share

60%

Glob
S

Japanese
Market ShareThe UNIC carriers lineup of high-value-added products includes truckmounted cranes that can operate on a platform with a zero-degree
angle and two-vehicle carriers.

30%

3Metals
Net Sales

Operating Income

Operating Margin(Billions of yen)(Billions of yen)

(%)

97.5

100

12

10
8

80

40

35.9

4
2

’05

6.4
6

20
0

6.2

5.8

6

52.7

10.4

9

68.8
60

11.0

8.8

84.8

’06

’07

’08

’09

In fiscal 2009, sales in the

0

3
1.0
0.02
’05

’06

’07

’08

’09

0

2.9
0.0
’05

’06

’07

’08

’09

Environment and PerformanceStrengths and Strategies

In July 2008, the price of electrolytic copper

The Metals Division operates two refineries

reached a record-high US$8,985/ton on the backin Japan: the Onahama Refinery in Okayama

of supply interruption fears stemming from strikes

Prefecture in western Japan, and the Hibi Kyodo

at mines. From August 2008, however, concerns

Refinery in Fukushima Prefecture in eastern

about weakening demand in the face of financial

Japan. The two refineries form a complementary

uncertainties and an increase in LME inventories

production structure that enables the efficient

prompted a downturn in prices. By December 24,

delivery of products to customers throughout thethe price had dropped to US$2,770/ton, breaking

country. The Division has long-term contracts with

99.6%, to ¥23 million, and the

below the US$3,000 mark for the first time sinceleading domestic customers. This minimal reliance

December 2004. In January and February 2009,

on exports and spot sales largely protects theoperating margin dropped 6.4

prices seesawed between US$3,100 and US$3,500

metals business from vicissitudes in the market.

while the industry kept a close watch on economic

We will continue to focus on maintaining andstimulation measures, economic indicators, andexpanding sales channels for domestic customers

demand in China. Copper prices eventually started

in line with our policy emphasizing domestic sales.

climbing in March 2009 amid expectations of

We will step up initiatives aimed at reducing costs

higher demand in China, and ended the fiscal

while developing new sources of ore procurement.

Metals Division amounted
to ¥68,786 million, down
29.5% from the previous year.
Operating income declined

percentage points, to 0.0%.

year at US$4,035. In Japan too, copper prices
fell after reaching ¥1.0 million/ton in July, and at
fiscal year-end stood at ¥430,000. The average
price for the year was ¥660,000, down ¥260,000
from the previous year. Weak domestic demand
led to a drop in total sales volume of 6,818 tons,
to 88,989 tons. A rise in raw material costs due
to increasing treatment and refining charges (TC/RCs) also adversely affected the profitability of theMetals Division. In response to such uncertainties

Hibi Kyodo Smelting
Co., Ltd.

surrounding future demand, the Division has cut
back production since January 2009 by reducing
refinery operating rates. Nonetheless, both revenue
and earnings for the Metals Division declined
Onahama Smelting and Refining Co., Ltd.

considerably in fiscal 2009.

Copper cathodes

Copper prices and foreign exchange rates
LME Copper price (average; U.S. dollars/ton)
JPY rate per U.S. dollar (average for fiscal year)

2005
3,000
¥108.552006
4,096¥114.322007
6,970¥118.032008
7,584¥114.282009
5,864¥100.54

Copper production and sales volume*
Copper production volume (tons)
Copper sales volume (tons)

2005
83,33583,883

2006
84,49884,464

2007
88,68688,521

2008
95,35595,808

2009
90,02388,989* Furukawa Metals & Resources Co., Ltd.

FURUK AWA

11

Annual Report 2009

R E V I E W O F O P E R AT I O N SElectronic Materials and Chemicals

電子 電子

化成品化成品Sales in the Electronic Materials and Chemicals Division declined 25.5% year-on-year, to ¥11,389 million.
Net Sales
Net Sales
Net Sales
Net Sales
Operating income fell 85.8%, to ¥206 million,
while
the operating margin slipped 7.7
percentage
points, to 1.8%.
(Billions(Billions(Billions ofyen) of yen)(Billions ofyen) of yen)
20

20

15

15

Electronic Materials

12.5

Environment and Performance

9.4
9.4
10
8.8
Demand for10gallium
arsenate semiconductors,
the8.8

main application for high-purity metallic5.6arsenic,
5.6(Billions of yen)

15.9
15
12.5
9.4

5.6
5

‘05

‘06

‘07

‘08

‘09

Operating Income(Billions of yen)

5.0

5.3
5.0

5.3

0
0
under development
includegallium
nitride
(GaN)
‘05
‘06
‘07
‘08
‘09

from the sharp decline in sales of such items as

substrates, high-performance lutetium aluminum

mobile phones and LED lamps. Furukawa’s market

garnet (LuAG) scintillator crystals, and thermal

share also dropped due to the yen’s appreciationenergy conversion elements. One area of particular

Net OperatingSales
and changes
in thepurchasing
policies of major
Operating
IncomeIncomefocus isOperating
the commercializationof GaN substrates
Operating
IncomeIncomeyen) of yen)customers. (Billions
Otherof(Billions
crystalproducts were adversely(Billions(Billionsofyen) of yen)and GaN
epi-wafer
substrates. To this end, in

affected20by2.0the downturnin the semiconductor
2.0

March 2.0
2009 2.0
we completed construction of aindustry. To address the slump in sales throughout

new mass-production and product development

1.4
1.4
15 we adjusted
the year,production to reduce
1.5
1.5
1.4
1.4

facility at
1.5 Built with the aim of speeding
1.5 Oyama.

1.1

‘05

‘06

‘07

‘08

‘09

up the development and mass production of

1.0
10 and thus improve productivity.
1.0
expenses
Despite
1.0
1.0

GaN substrates,
1.0 the new facility brings together
1.0

6.5 electronic
6.5
such efforts, sales in thematerials
5.8

equipment and personnel 0.7
that had
0.7 previously been

5.3
5.0
business 5declined
36.4% year-on-year, to ¥5,568
0.5
0.5

0
¥4 million.

0.0

0
0‘05
‘05‘07 ‘07‘06‘08 ‘08‘07‘09 ‘09‘08‘05‘06 ‘06

0.5 Tsukuba,
0.4 in 0.5
spread 0.5
among0.5our 0.4
factories
Oyama,and Osaka.

0.0
‘09

0.3

0.3

0.2

0.2

We anticipate
0 that inventory adjustments in the
0
‘05

‘05
‘06

‘06
‘07

‘07
‘08

‘08
‘09

‘09

semiconductor industry will see a gradual recovery

Strengths and Strategies

in demand for electronic materials starting inFurukawa enjoys dominant market shares in
高純度金属ヒ素
高純度金属ヒ素Japan Operating
and overseas
for high-purity metallic
Incomeyen)arsenic(Billions
and ofgallium
phosphorus polycrystals.

the current fiscal year. We will maximize efforts
ガリウムリン多結晶
ガリウムリン多結晶
to regain our market shares while adopting
competitive pricing strategies.

2.0

2.0

1.5

6.5 launch
6.5 of new
6.5
entails pursuing the early6.5market
5.8
5.8

and the Materials Research Laboratory. Products

million, while operating income plunged 99.6%, to0

10
10 developing
lineup by
new materials. This strategy

00 markets.
and overseas
This‘06stemmed
mainly
‘05
‘07
‘08
‘09
‘05
‘06
‘07
‘08
‘09

1.1

8.8

We plan to complement our existing productand optical devices destined for both the domestic

inventories and implemented measures to lower

10

15

5
products 5developedby the Nitride Business Office(Billions of yen)20

15

declined due 5to an overall drop in electronic devices

5

Net Sales

20

15.9

15.9
12.5

20

JapaneseJapanese Global Global
Market Market
Market Share
Market Share
Share Share

High-purity metallic

1.4

1.5

1.4
1.1

arsenic
1.0

1.0

75% 75% 60% 60%

1.0

Gallium phosphorus
polycrystals

Global Global
Market Market
JapaneseJapanese Share Share
Market Share
Market Share

40% 40% 40%

40%

0.7
0.5

0.5

0.5

0.4
0.3

0

0.0
‘05

‘06

‘07

‘08

‘09

0.2

亜酸化銅
亜酸化銅
‘05

‘06

‘07

‘08

‘09

JapaneseJapanese(Production)(Production)
Market Share
Market Share

高純度金属ヒ素Japanese
Market Share0

ガリウムリン多結晶
45% 45%GlobalMarketShare

Gallium arsenate semiconductor materials used in cellular
phones and other electronic devices, red laser diodes, and
LEDs.
GlobalMarket12 AnnualF U R U K AJapaneseWA
Share Report 2009Market Share

Semiconductor materials used in LED applications for displays
and cellular phones.

al
et
e

電子

Net Sales(Billions of yen)

Net Sales

Operating Income

Operating Margin(Billions of yen)(Billions of yen)

(%)

25

2.5

15

21.2
20

2.0
15.9

15

15.3

12

1.7
1.5

9.5

1.0

9.4

10

9

11.4
10

12.5

9.9
1.5

1.5

15.9

13.1
15

2.1

17.5

20

8.8

7.1

6

5.6
5

5

0.5

3
0.2

0

’05

’06

’07

’09

’08

0

’05

’06

’07

’08

’09

0

0
’05

’06

’07

‘05
’08

1.8
‘06
’09

‘07

‘08

‘09

Operating Income

Chemicals

Net Sales(Billions of yen)
20

15

10
6.5
5

5.0

6.5

5.3

5.8

Environment and Performance(Billions of yen)
Strengths and Strategies

In the year under review, the volume of work in

At present, Furukawa produces
45% of cuprous
2.0

progress in the shipbuilding industry contributedoxide made in Japan. Although orders for new

to strong demand for cuprous oxide, which is

1.4demand from theships are expected to decline,
1.5

used as an antifouling agent in paints applied to

shipbuilding sector is forecast to remain firm owing

1.4

1.1

the bottom of ships. However, sales declined on

1.0
to the promising outlook
1.0 for cuprous oxide forthe back of falling production volumes caused

maintenance-related repainting in the coming fiscal

by problems with the supply of raw materials. In

year and beyond. We will
0.5 target optimal profits

response, we took measures to shore up production

and sales volumes by attracting new customers andvolume, such as raising the ratio of copper scrap.

sharing information with 0affiliates. With respect to
‘05

‘06

‘05

‘06

‘07

‘08

‘08

We also reduced costs and pursued efficiencies byproduction, we will constantly review production,

reassessing manufacturing processes and methods.

explore optimal methods of procurement, andSales of sulfuric acid were adversely affected bya slump in demand due to the scaling down ofreduce costs while securing supplies of raw
高純度金属ヒ素
materials. Furukawa’s strategy for the market

operations by titanium oxide manufacturers, ourlaunch of new products is to swiftly address

main customers, as well as soaring raw material

market demands for higher quality, and to time theprices. As a result, sales in the chemicals businessintroduction of new products so that market prices

decreased 10.8%, to ¥5,821 million, and operating

at least cover costs.

Japanese
Market Shareincome fell 57.1%, to ¥202 million.
0

‘07

75%

‘09

亜酸化銅

Operating Income(Billions of yen)

Cuprous oxide

2.0Japanese(Production)
Market Share

45%

1.5

1.0
0.7
0.5
0.3
0

‘05

Sulfuric acid—an indispensable raw material used in thechemical, electronic materials, steel, and food processing
industries—is manufactured at the Osaka Plant.

0.5

0.4

0.2
‘06

‘07

‘08

‘09

ガリウムリン多結晶
Furukawa holds the largest market share in Japan for
cuprous oxide, which is used as an antifouling agent inpaints applied to the bottoms of ships.
Japanese
Market Share

GlobalMarketShare

FURUK AWA

13

Annual Report 2009

0.0
‘09

Glo
Mar
Sha

60

R E V I E W O F O P E R AT I O N S

Real Estate
Net Sales

Operating Income

Operating Margin(Billions of yen)
3.8
4.0

(Billions of yen)

(%)

2.0

40

3.1
3.0

2.9

2.8

1.5

35.9
1.4

35

2.4
0.9

1.0

2.0

1.0

0.5

0

0

0.8

0.7

0.7

30

28.6

29.6

29.1
27.2

’05

’06

’07

’08

’09

’05

’06

’07

’08

In fiscal 2009, sales in the Real
Estate Division amounted to¥2,386 million, down 13.5%
from the previous year.
Operating income dipped
5.7%, to ¥706 million, while
the operating margin increased
2.4 percentage points, to29.6%.

’09

25

’05

’06

’07

’08

’09

Overview
Revenue in this business declined due to the sale of the
Dojima Grand Building in Kita-ku, Osaka. The Furukawa
Osaka Building, one of the Division’s core buildings,
generated positive figures owing to acquisition of new
tenants, which reduced the vacancy rate, as well as
efforts to reduce expenses.
Furukawa Osaka Building

Fuels and Others
Net Sales

Operating Income (Loss)

Operating Margin(Billions of yen)(Billions of yen)

(%)

40

1.0

0

(0.2)

34.6
30

(0.6)

29.4

27.7

0.5
-1

22.0
20

16.7

（0.1）

10

-0.5

0

-1.0

(1.4)

(1.2)

0
（0.3）

(0.1)

-2

（0.4）
（0.7）

’05

’06

’07

’08

ʼ09

’05

’06

’07

Sales in the Fuels and Others
Division decreased 24.4%, to¥16,657 million. The Division
reported an operating lossof ¥102 million, down from a¥660 million operating loss inthe previous fiscal year.

’08

ʼ09

-3

(3.0)
’05

’06

’07

’08

’09

Overview
Seeking to enhance business efficiency, on July 1,
2008, Furukawa’s fuels business was split off fromthe Company and integrated into the operations of
Furukawa Commerce Co., Ltd., a consolidated subsidiary.
Stringent credit management and rigorous efforts tobolster earnings resulted in sales of ¥15,452 million, a
25.5% year-on-year decline, and operating income of¥203 million. The latter result compares favorably withthe operating loss of ¥431 million recorded in fiscal 2008
due to an increase in allowance for doubtful accounts.
In the Others category, consisting primarily of thetransport business and new businesses, we reported salesof ¥1,205 million and an operating loss of ¥305 million.

FURUK AWA

14

Annual Report 2009

Environmental Protection and Social Contribution Activities
The protection of the environment is one of the most important management issues at the Furukawa Company Group. Our fundamental
policy is that each employee should strive in all corporate activities to perform in harmony with the environment, consider the improvementof the environment, and contribute to the development of a sustainable society. We are aware of the important role we play in giving backto the community as a good corporate citizen and strive to contribute in every way we can through the involvement of every Furukawa
employee.

Environmental Management

Environmentally Friendly Products

Environmental management system

The Furukawa Company Group engages in the active development ofenvironmentally friendly products as part of its contribution to the creation of asustainable society.

The senior decision-making body for environmental protection activities is theCentral Committee for Environmental Management, in which the senior managing
directors and managing directors participate. The Environmental Management
Subcommittee studies, proposes, directs, and monitors environmental protection
activities.
The companies of the Furukawa Company Group have each established their own
Environmental Management Committee, chaired by their own top management,
to formulate environmental protection plans and direct environmental protection
programs.
Furthermore, the Committee of Environmental Protection Supervisors meets every
year, bringing together the people who directly guide and manage environmental
and safety initiatives in each Group company. At these meetings, the committee
aims to fulfill three basic purposes: (1) convey and ensure the enforcement ofdecisions made by the Environmental Management Committees; (2) help improvethe competency of environmental protection supervisors at each Group company; (3)prevent accidents and disasters through concerted efforts to share information andreflect it in its daily business management; and (4) verify revisions to environmentrelated regulations.

Environment and safety audits

New highly efficient electrostatic precipitator
An electrostatic precipitator is a pollution prevention device that removes particles
from exhaust gas. Furukawa has developed a new model that is smaller than earlier
models, thus saving both resource consumption and space. Electricity consumption
has also been reduced by fitting a proprietary electrode, also developed by
Furukawa. Furthermore, we have constructed a revolutionary mechanism based on
the principle of a bag filter.

Development of thermoelectric conversion materials
Furukawa has succeeded in developing highperformance thermoelectric conversion
materials that convert heat energy to electricity.
Experiments conducted using a prototype heat
conversion unit achieved a heat conversion
efficiency of 7% and a high output of 33
watts. In recognition of this achievement, theGroup received a 2008 Japan Mining Industry
Association Award.

The Furukawa Company Group conducts annual “environment and safety audits,”
the purpose of which is to “establish a safe and comfortable work environment andraise the level of related qualifications and competencies.” In fiscal 2009, efforts
taken to enhance environmental management included extending the scope of theaudits at additional sites. The year under review marked the second time that theGroup conducted “cross-audits,” in which each plant is audited by the environment
protection supervisor from another plant. The supervisors bring back the knowledge
and experience acquired from performing cross-audits to their own plants, andthe new perspectives gained in the process help with the implementation of
improvements. In fiscal 2009, the success of this system was apparent in thedecrease in the number of items requiring improvement or correction comparedwith the previous year.

*1 Scintillator: A material that emits light when exposed to y-rays, x-rays, or ultraviolet rays.
*2 PET: Positron emission tomography

Environmental Protection Activities

Social Contribution Activities

The Furukawa Company Group’s energy-saving activities center on achieving
medium-term targets for energy and resource consumption set every five years.
The results for the first set of targets (covering fiscal 2005–2009) and the targets
for the next five years (fiscal 2010–fiscal 2014) are shown below.

The Furukawa Company Group seeks to maintain good relationships and livein harmony with local communities through stewardship and maintenance offorests owned by Furukawa, afforestation programs, beach cleanup operations,preservation of the “Nikko-Suginamiki” (Avenue of Cedars in Nikko), acceptinginternships, hosting factory visits, conducting fund-raising events, arranging blooddonor drives, proposing original environment activities, and loaning our land for free
to local environmental associations.

First Medium-Term Reduction Targets
Base year: Fiscal 2004
Category
Electricity
Heavy oil
Natural gas
Water
Waste discharge

Total scope: 10 sites

Fiscal 2009 (target)
40% reduction of fiscal 2004 consumption
25% reduction of fiscal 2004 consumption
10% reduction of fiscal 2004 consumption
25% reduction of fiscal 2004 consumption
35% reduction of fiscal 2004 consumption

ResultAchieved
Achieved
Not achieved *1
Achieved
Achieved

Development of Pr:LuAG scintillator
high-resolution PET device

Tohoku University and Furukawa’s Materials Research Laboratory have jointly
developed a Pr:LuAG scintillator*1 high-resolution next-generation cancer-screening
PET*2 device. The development was the recipient of the Minister of Economy Tradeand Industry Prize in the enterprise-academia division of the 22nd Leadership in
Cutting-Edge Technology Grand Prize sponsored by FujiSankei Business Eye.
A PET device is a powerful tool for not only cancer screening, but also in making
diagnoses of intractable diseases, such as Alzheimer’s and dementia.

*1: Switched from heavy oil to natural gas, which produces fewer CO2 emissions

Second Medium-Term Reduction Targets
Base year: Fiscal 2006
Category
CO2 emissions *2
Water
Waste discharge

Total scope: 15 sites
Fiscal 2014 (target)
5% reduction of fiscal 2006 consumption
5% reduction of fiscal 2006 consumption
10% reduction of fiscal 2006 consumption*2: Figures for forms of energy (gasoline, kerosene, diesel oil, heavy oil, LPG, natural gas,and electricity) are calculated separately.

FURUK AWA

15

Thermoelectric module

Annual Report 2009

Corporate GovernanceThe basic policy of the Furukawa Company Group is to contribute to society, our shareholders, and other stakeholders by building anefficient management structure that will yield stable profits and increased corporate value through greater management transparency
and continuous innovation in our corporate structure. This policy binds the Group’s businesses together to ensure Group integrity, while
enabling them to manage their individual operations under a flexible management structure with a clear focus on asset management andaccountability for gain and loss. At the same time, Group businesses leverage collective strengths to maximize corporate value by providing
products and services that achieve customer satisfaction.

System of Corporate GovernanceFurukawa maintains a Board of Directors comprising seven members, one ofwhom is appointed from outside the Group. The Board of Directors oversees
the execution of the Furukawa Company Group’s operations and in principle
meets once every month, with additional meetings held as required.
To clearly separate management oversight functions from executivefunctions, accelerate decision-making, and clarify responsibilities, Furukawa
has adopted an executive officer system. Furukawa’s executive officers havebecome representative directors at seven core companies in the interest of
promoting an agile management structure. As of June 26, 2009, the systemcomprised 16 executive officers, five of whom concurrently hold positions as
directors.
The Management Council sets the Furukawa Company Group’s
fundamental management policies and strategies and makes decisions onimportant matters. There is also a Management Committee, which meets
monthly to discuss the operations of Furukawa and its core companies, andprovides direction. Decisions made by the Management Council that involve
the allocation of funds or other important management issues must be
discussed and approved by a resolution of the Board of Directors. Furthermore,
important matters that have been determined by individual Group companies
are discussed and reviewed by the Board of Directors and other relevantbodies.
Furukawa uses an auditor system, with a Board of Auditors composed oftwo statutory auditors and three outside auditors. Pursuant to an audit policy
formulated by the Board of Auditors, auditors attend meetings of the Boardof Directors, the Management Council, the Management Committee, andother important management meetings. In addition, they receive business
reports from directors, audit business sites and subsidiaries, and monitor the
performance of duties carried out by directors. The audit function is further
reinforced by the Audit Office, an organization in charge of internal auditing.
The Audit Office is composed of six members who engage in auditing Groupwide operations management and the execution of business operations.
In order to ensure the efficiency and effectiveness of the audit function,
Furukawa continuously works to reinforce cooperation between the Audit
Office, auditors, and independent auditors, who together devise audit plans,review audit results, and share other audit-related information.

Compliance and System of Risk Management
The Furukawa Company Group has formulated a Corporate Conduct Charterand an Employees’ Code of Behavior. Every effort is made to ensure that all
members of the Group are fully aware of and practice the principles containedin each.
Furukawa also recognizes effective risk management as an important aspectof its business activities. In addition to identifying and assessing potential
risk and formulating preventive and response measures as well as remedial
initiatives, the Group has established the Risk Management & Compliance
Committee for the purpose of formulating the Group’s basic policies towardrisk management and compliance. Through these means, Furukawa iscommitted to developing a comprehensive structure capable of addressing all
relevant issues.

Shareholders’ Meeting
Appoints / recalls

Appoints / recalls

Appoints / recalls

Appoints / recalls
Reports

Independent
Auditors

Board of Directors
7 members(6 internal, 1 external)

AuditsAuditsBoard of Auditors
5 members(2 statutory, 3 external)

Reports
Reports

Risk Management& Compliance
Committee

Appoints / recalls / oversees

Representative Director

Reports

Directs

Reports
Appoints / recalls

Reports

Directs /oversees

Directs /oversees

Reports

Reports

Management
CouncilManagement
Committee

Audit Office
AuditsExecutive Officers(16 members)

AuditsAuditsAll Divisions and Group Companies

FURUK AWA

16

Annual Report 2009

AuditsConsolidated Six-Year Financial Summary
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31
Millions of yen

2008

2009
For the year:
Net sales ............................................................... ¥ 161,858
Cost of sales.......................................................... 		 143,651
Gross profit ........................................................... 		 18,207
Selling, general and administrative expenses ................ 		 15,904
Operating income .................................................. 		
2,303
Income (loss) before income taxes andminority interests................................................ 		
(2,618)Net income (loss) ................................................... 		
(5,917)
Cash flows from operating activities ......................... 		
5,112
Cash flows from investing activities .......................... 		 (11,539)
Cash flows from financing activities ......................... 		 12,116
Capital expenditures............................................... 		 16,507
Depreciation and amortization ................................ 		
3,145
At year-end:
Total assets............................................................ ¥ 188,361
Current assets ....................................................... 		 77,509
Current liabilities .................................................... 		 64,276
Net assets (Note 1) ................................................. 		 45,742
Interest-bearing liabilities ........................................ 		 92,475
Per share amounts:
Net income (loss):
Basic ................................................................. ¥Diluted .............................................................. 		
Cash dividends ...................................................... 		
Net assets ............................................................. 		

2007

2006

2005

2004

¥ 213,426
		 181,522
		 31,904
		 17,497
		 14,407¥ 200,749
		 167,507
		 33,242
		 16,343
		 16,899¥ 181,938
		 153,281
		 28,657
		 16,527
		 12,130¥ 147,237
		 124,586
		 22,651
		 15,268
		
7,383¥ 153,513
		 135,872
		 17,641
		 15,617
		
2,024

		
		
		
		
		
		
		

		
		
		
		
		
		
		

		
		
		
		
		
		
		

		
		
		
		
		
		
		

		
		
		
		
		
		
		

12,484
8,595
12,823(855)(13,835)
4,374
2,993

¥ 199,383
		 88,888
		 80,487
		 55,431
		 77,907

11,127
17,554
12,648(4,367)(8,910)
3,905
2,626

¥ 217,027
		 94,865
		 89,293
		 52,136
		 89,389

9,810
5,309
8,254
(336)
(18,086)
1,777
2,595

¥ 213,046
		 89,055
		 88,220
		 43,072
		 99,418

4,199
2,257
7,698
7,620
(8,227)
2,994
3,026

(35,238)(27,634)(3,083)25,602(14,962)
2,995
6,533

¥ 204,651
		 92,197
		 104,439
		 31,335
		 116,851¥ 206,250
		 83,777
		 81,213
		 28,660
		 123,995

Yen(14.64)—4.00
110.31

¥
		
		
		

21.26
—
6.00
134.33

¥
		
		
		

43.42
—
5.00
139.13

¥
		
		
		

13.12
12.37
3.00
106.52

¥
		
		
		

5.57
5.03
—
77.49

¥
		
		
		

(84.61)
—
—
70.86

88.8
11.2
9.8
1.4
(3.7)

		
		
		
		
		

85.1
14.9
8.2
6.8
4.0

		
		
		
		
		

83.4
16.6
8.1
8.4
8.7

		
		
		
		
		

84.2
15.8
9.1
6.7
2.9

		
		
		
		
		

84.6
15.4
10.4
5.0
1.5

		
		
		
		
		

88.5
11.5
10.2
1.3
(18.0)

Return on equity (%) (Note 2) ................................. 		
Return on assets (%) (Note 3) .................................. 		
Debt-to-equity ratio (times) (Note 4) ......................... 		

(12.0)
(3.1)
2.1

		
		
		

15.5
4.1
1.4

		
		
		

35.3
8.2
1.6

		
		
		

14.3
2.5
2.3

		
		
		

7.5
1.1
3.7

		
		
		

(88.7)(12.0)
4.3

Equity ratio (%) (Note 5) ......................................... 		

23.7

		

27.2

		

25.9

		

20.2

		

15.3

		

13.9

Dividend payout ratio (%) (Note 6) .......................... 		
Dividend on equity ratio (%) (Note7) ........................ 		

—
3.2

		
		

28.2
4.5

		
		

11.5
4.3

		
		

22.9
3.3

		
		

—
—

		
		

—
—

Price book value ratio (times) (Note 8) ...................... 		

0.7

		

1.4

		

2.1

		

2.9

		

1.8

		

2.0

Stock price at fiscal year-end ................................... 		

82

		

183

		

293

		

306

		

143

		

142

Profitability:
Cost of sales margin (%)......................................... 		
Gross margin (%)................................................... 		
SG&A expense margin (%)...................................... 		
Operating margin (%) ............................................ 		
Return on sales (%) ................................................ 		
Efficiency and soundness:

Investment Indicators:

Notes: 1. Figures for fiscal 2004 to fiscal 2006 represent total shareholders’ equity.
2. Return on equity = Net income / Average total equity × 100
3. Return on assets = Net income / Average total assets × 100
4. Debt-to-equity ratio = Interest-bearing liabilities (fiscal year-end) / Total equity [Shareholders’ equity] (fiscal year-end)
5. Equity ratio = Total equity [Shareholders’ equity] (fiscal year-end) / Total assets (fiscal year-end) × 100
6. Dividend payout ratio = Total cash dividends / Consolidated net income × 100
7. Dividends on equity (DOE) = Total cash dividends / Average net assets × 100
8. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share
9. Total equity = Net assets - Minority interests (as of March 31, 2009: ¥44,585 million; as of March 31, 2008: ¥54,301 million; as of March 31, 2007: ¥56,246 million)

FURUK AWA

17

Annual Report 2009

Financial Review

Revenue and Expenses

of property, plant and equipment, a ¥3,962 million liquidating

In the fiscal year ended March 31, 2009, consolidated net sales

distribution from silent partnership, and a ¥7,418 million loss

totaled ¥161,858 million, a decline of 24.2% compared with theon write-down of investments in securities. Based on theprevious fiscal year.

aforementioned, loss before income taxes and minority interests was¥2,618 million. After accounting for current and deferred income

Within this amount, sales of the Metals Division fell 29.5% year-

taxes totaling ¥3,224 million, net loss amounted to ¥5,917 million.

on-year, due mainly to declining copper prices and decreasing sales
prices in the wake of the yen’s appreciation, as well as a drop in sales

Return on equity dropped sharply, to minus 12.0%. The net

volume caused by languishing domestic demand for copper. Sales ofloss per share was ¥14.64, compared with net income per share of

the Machinery Division were down 17.4% amid retreating worldwide¥21.26 in the previous year.

demand for rock drill products. In the Fuels Division, sales declined

Financial Position

25.5% as the Company implemented stringent credit controls.
Cost of sales decreased 20.9% to ¥143,651 million, with the cost

At March 31, 2009, total assets stood at ¥188,361 million, downof sales margin rising 3.7 percentage points, to 88.8%. The increase

5.5% from a year earlier. Within this amount, current assets declinedin the cost of sales margin was mainly due to weakened purchasing

12.8%, to ¥77,509 million, due mainly to a decrease in notes andconditions in the Metals Division.

accounts receivable.

Selling, general and administrative expenses were down 9.1%, to

Property, plant and equipment, net rose 13.3%, to ¥84,083¥15,904 million, owing mainly to declines in salaries and allowances

million, due mainly to the purchase of the Furukawa Building (Chuo-

as well as shipping charges.

ku, Tokyo). By contrast, investments fell 26.3%, to ¥26,769 million,

As a result, operating income dropped 84.0% from the previous

stemming mainly from decline in investments in securities caused byfiscal year, to ¥2,303 million. This was primarily due to a ¥6,183

the plummeting prices of listed shares.

million year-on-year operating income decline in the Metals Division

Total liabilities edged down 0.9%, to ¥142,619 million. This wasand a ¥5,103 million decrease in the Machinery Division. Accordingly,

mainly due to a 51.1% fall in notes and accounts payable in thethe operating margin fell 5.4 percentage points, to 1.4%.

current liabilities section. As a result, the fiscal year-end balance ofUnder other income (expenses), there was a ¥1,728 million

interest-bearing liabilities (corporate bonds and debt) rose 18.7%, tointerest expense, a ¥1,793 million gain on disposal and sales

14.4

‘07

‘08

(Yen)

2

Net Income (Loss) per Share

‘09

‘05

‘06

Total Assets
Return on Assets

FURUK AWA(Billions of yen)

‘07

‘08

18

8.7

17.6

8.6
4.0

5.3
‘09

0

0

-5

-2.5

0

Annual Report 2009
(%)

-10

‘05

‘06

‘07

‘08

(3.7)

(5.9)

3

2.3

0

5.0
2.5

‘09

-5.0

Net Assets
Return on Equity(Billions of yen)

(%)

4

‘06

5

2.9

6.8

6

1

‘05

7.5

15

1.4
0

10.0

10

5

50

20

5.0

7.4

10
100

（%）

(Billions of yen)

9

8.4

15
12.1

161.9

16.9

12

6.7

150

147.2

200

（%）

2.3

20

Net Income (Loss)
Return on Sales

1.5(Billions of yen)

213.4

(Billions of yen)

250
200.7

Operating Income
Operating Margin

181.9

Net Sales¥92,475 million.

Net assets at the fiscal year-end stood at ¥45,742 million, down

for use in the transportation business. Depreciation and amortization

17.5% from a year earlier. This was mainly due to a decline in totalrose 5.0%, to ¥3,145 million.

valuation, translation adjustments and others. Consequently, theIn the year ending March 2010, the Group plans to invest a total

equity ratio slipped 3.5 percentage points, to 23.7%, and the debt-of ¥2.3 billion, mainly for the purchase of new facilities and repair of

to-equity ratio edged up 0.7 point, to 2.1 times.

existing ones. We expect to procure these funds via borrowings and/or internal funds.

R&D and Capital Expenditures
The Furukawa Company Group is actively engaged in R&D on new

Cash Flows

materials and high-value-added products that meet diversified

In the year under review, net cash provided by operating activities

market needs and address dramatic changes in the socioeconomic

amounted to ¥5,112 million, down ¥7,711 million from the previous

environment. In the year under review, research and development

year. Main factors included a decline in trade payables.

expenses were ¥1,752 million, equivalent to 1.1% of consolidated

Net cash used in investing activities totaled ¥11,539 million,

net sales. Of this total, ¥938 million was allocated to the Machineryup ¥10,684 million from the previous year. The primary reason was

Division and ¥813 million to the Electronic Materials and Chemicals

purchases of property, plant and equipment.

Division.

Net cash provided by financing activities was ¥12,116 million,

Capital expenditures (including investments in intangible fixedcompared with ¥13,835 million net cash used in such activities in theassets) amounted to ¥16.507 million. Of this total, ¥2,131 million
Net Sales
Operating Income
was allocated to the Machinery Division, ¥314 Operating
million to the
MetalsMarginprevious year. This was due mainly to repayment of long-term loans
Net Income (Loss)payable.
Return on Sales
As a result,cash
equivalents at the end of the fiscal（%） cash and(Billionsof yen)（%）

Division,and ¥305 million to the Electronic Materials(Billions of yen)(Billions ofandyen) Chemicals

14.4

‘09

8.6

(3.7)

2.3

(Billions of yen)

60

7.5

50

5.0

40

2.5

30

0

20

0

-2.5

10

-10

-5.0

0

(%)

‘05

45.7

43.1

30

10

‘06

‘07

‘08

Equity Ratio

Debt-to-Equity (D/E) Ratio(%)(%) F U R U K A W A

19(12.0)

7.5

14.3

31.3

188.4

199.4

40

20

4.1

50
0

‘08

-5.0

‘09

‘08

Net Assets
Return on Equity(3.1)(14.64)

-20

4.0

5.3

2.9
‘07

8.2
21.26

13.12

-10

‘07

‘06

(%)

100

‘06

‘05

10.0

150

0

‘05

-10

(Billions of yen)

200

5.57

10

-2.5

300
250

20

0

‘09

‘08

217.0

40
30

‘07

213.0

50

‘06

Total Assets
Return on Assets

43.42

(Yen)

‘05

-5

55.4

Net Income (Loss) per Share

0

0

15.5

‘09

0

52.1
35.3

‘08

2.5

‘07

1.1

‘06

204.7

‘05

2.5

3
1.4

0

5.0

(5.9)

7.4
5

50

5

2.3

6.7

6

5.0

10
100

10
6.8

went to the Fuels and Others Division for the purchase of vehicles
150

7.5

15

9

8.4

12.1

147.2

161.9

primarily for the purchase of the Furukawa Building,
15 and ¥118 million

from a year earlier.

17.6

16.9

213.4

200.7

181.9

addition, ¥13,468 million was allocated to the Real Estate Division,
200

8.7

20
10.0
year totaled 12¥19,343 million,a ¥4,796 million, or 33.0%, increase

20
Division, primarily for improvements in manufacturing
efficiency. In

1.5

250

‘09

Annual Report 2009

‘05

‘06

‘07

‘08

Dividends on Equity (DOE)
(%)

‘09

-20

Capital Strategies

Business Risks

Net Sales
Operating Income
Furukawa places great importance in improving returns of profits
Operating Margin
to all shareholders. Our basic policy is to appropriate profits after

Net Income (Loss)(1) Fluctuations in the Foreign Exchange and Nonferrous Metals
Return on Sales
Markets

250
20 including retained
comprehensive consideration of various factors,

20 Group is at risk of foreign exchange
10.0
12 Company
The Furukawa

（%）

17.6

9

In addition, the Furukawa Company Group’s stock of nonferrous
8.6

12.1

7.5

15

materials, primarily copper ore, and smelting and processing income.

8.4

161.9

147.2

and other factors. In principle, we appropriate retained earnings tofluctuations in connection with its export business, the import of raw
14.4

earnings required to finance capital expenditures and R&D expenses
200
necessary to bolster earnings, as well as future business development
15（%）(Billions of yen)

8.7

16.9

213.4

200.7

(Billions of yen)

181.9

(Billions of yen)

10

5.0

10
dividends. The decision-making body for the year-end
dividend is the

6
2.5
5 the Furukawa Company Group utilizes
market movements.
While

2.9

5.3

2.3

1.5

6.7

5.0

7.4

4.0

metal inventories, an internationally traded commodity, is subject to
6.8

150
shareholders twice a year in the form of interim and year-end cash

100
Annual General Meeting of Shareholders, while that for the interim

foreign exchange contracts and forward delivery transactions as

dividend is the Board of Directors. In the year under review, thea hedge against the aforementioned risks, its operating results

50Company
paid an interim dividend of ¥2.50 per share and a year-

and financial position may be adversely affected by movements inend dividend of ¥1.50, for total annual dividends of ¥4.00 per share,exchange rates and nonferrous metal markets

‘06

‘07

‘08

‘09

‘05

‘06

2.3

3

‘07

-10

‘05

‘06

‘07

(2) Investments in Securities and Land

therefore, declined 33.4% year-on-year, to ¥1,616 million. The

(5.9)

0

‘09

‘08

(3.7)

-5

1.4

0
down
¥2.00 from the previous fiscal year. Total0dividend payments,
‘05

0

0

5

-5.0

‘09

‘08

-2.5

50
earnings
to further enhance operating efficiency300
and comprehensively

60 at ¥56,160 million. Accordingly, the10.040
million, whileland stoodcut
40 costs, in order to improve our earnings structure and reinforce

Furukawa Company Group’s operating results and financial position

our financial position. We will also make prudent and effective

are at risk of impairment losses, losses from devaluation and losses on

-20

188.4

‘06

‘07

‘08

‘09

‘05

55.4

15.5

14.3

31.3

0
‘05

45.7

199.4

50

(3.1)

(14.64)

-10

2.5

30

0

20

0

-2.5

10

-10

-5.0

0

‘06

‘07

‘09

‘08

‘05

‘06

‘07

‘09

‘08

(%)

(%)

30

4

5
4.3

23.7

1.6

2
1.4

10
1

1

0
‘05

‘06

‘07

‘08

‘09

Capital Expenditures
Depreciation and Amortization(Billions of yen)

3.2

3.3
2.1

2.3

15.3

2

3

0
‘05

‘06

‘07

‘08

‘09

Cash Flows
Cash Flows from Operating Activities
20from Annual
F U R U K ACashW A Flows2009
InvestingReport
Activities(Billions of yen)
Cash Flows from Financing Activities

‘05

‘06

‘07

‘08

Cash Dividends per Share
(Yen)

6.00

20.2

4

3

0

4.5

(%)

3.7

Dividends on Equity (DOE)

27.2

Debt-to-Equity (D/E) Ratio

25.9

Equity Ratio

20

10(12.0)

100

0

4.1

1.1

5.57

10

20

7.5

150

and enter various markets.

30

sales due to movementsin
40stock and land prices.
5.0

2.5

business,develop next-generation semiconductor device materials,
20

50

43.1

8.2

13.12

investments to promote overseas advancement
200of our machinery

7.5

217.0

213.0

21.26

204.7

250

30

52.1
35.3

Historically, the Furukawa Company Group has maintained relatively
Net Assets
high balances of marketable securities and land. As of March 31,
Return on Equity
2009, the carrying
value
of investments
in securities was ¥12,943(Billionsof yen)
(%)
(%)

43.42

dividends-on-equity (DOE) ratio was down 1.3 percentage points, to
Net Income (Loss) per ShareTotal Assets
3.2%.
Return on Assets
will deploy(Yen) Facing difficult business conditions, we (Billionsof yen) retained

‘09

-20

0
‘07

(3) Accrued Employees’ Retirement Benefits
Net(Loss)
TotalareAssetsThe Income
employeesof perthe Share
Furukawa Company Group
covered by
Return on Assets
unfunded employee retirement benefit plans and non-contributory

(%)

8.2

employees’ retirement benefits, the Furukawa Company Group
13.12

2.3

4.0

(3.7)

-5.0

‘09

‘08

(Billions of yen)

(%)

199.4

50
7.5
30
Furthermore, inJapan theGroup is vigilant in preventing waterrun-off from idle mines from contaminating water supplies and in
5.0

40

20

preventing the buildup of slag or slurry. The Furukawa Company
Group also maintains
tight
30 security at metals deposition sites.
2.5
10

10
expected
rate of return on plan assets, as well as other assumptions.

However, in the event of new legislation or similar directives, there

1.1

7.5

adopts assumptions in connection with the150
discount rate and
5.57

2.5

217.0

213.0

204.7

21.26

30
pensionplan assets at the balance sheet date. In calculating accrued
20‘07

sites, both in Japan and overseas, respecting all laws and regulations.

250
based on the retirement benefit obligation andthe fair value of
200

‘06

pollution, and10.0
it has implemented
stringent measures at all business
60
40

4.1

40

‘05

52.1
35.3

fundedemployee pension plans as defined-benefit
50
300 plans. Accrued
employees’ retirement benefits are provided at an amount calculated-10(5) Environmental Protection
AssetsThe Furukawa CompanyNet
Groupplaces the highest importance on
Return on Equity
environmental protection, environmental safety, and prevention of(Billions of yen)

43.42

(Yen)

0

‘09

‘08

45.7

‘06

55.4

‘05

15.5

‘09

-2.5

14.3

‘08

-5

43.1

‘07

0

31.3

‘06

0

(5.9)

2.3
1.4

‘05

2.5

3

188.4

0

5.0

1.5

7.4
5

50

5

2.9

5.3

6.8

6

5.0

10
100

8.6

8.

12.1

10

6.7

16

147.

150

20
0
0
is a possibility that
the Group’s
performance results and its financial

financial position are at risk in the event the actual discount rate andstanding could be influenced.

50

(3.1)

expected rate of return on plan assets differs materially from theassumptions,as well as in the event of a change in-20
0 the assumptions
‘06

‘07

‘08

‘09

‘05

‘06

on which accrued employees’ retirement benefits are made.
Equity Ratio(4) Earthquakes and Natural Disasters

‘07

10

-5.0

0

‘09

‘08

‘05

Debt-to-Equity (D/E) Ratio

4

5
4.3

3.7

27.2

23.7

delays in shipments due to damage to manufacturing bases and
4

3

2.1
1.6

2

2
1.4

10
1

1

0

‘08

‘09

‘08

6

‘06

FURUK AWA

3

(8.9)

(4.4)

(0.9)

(0.3)

-20
‘05

‘09

2

(13.8)‘07-15(18.1)

3.1

‘06

(Yen)

5

(8.2)

3.0

4.4

2.6

3.9
1.8
2.6

3.0
3.0

-5

‘05

‘07

4

0

-10

‘06

5.1

7.7
7.6

16.5

10
5

0

‘05

Cash Dividends per Share

10

5

‘09

Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities

15

15

‘08

Cash Flows(Billions of yen)

20

‘07

4.00

(Billions of yen)

‘06

6.00

Capital Expenditures
Depreciation and Amortization

0
‘05

5.00

‘09

12.1

‘08

(11.5)

‘07

12.8

‘06

12.6

‘05

8.3

0

3.00

15.3

2.3

3.3

20.2

facilities from earthquakes and other natural disasters. 3
20

‘09

‘08

(%)

position are at risk in the event of a suspension in operations and
25.9

‘07

Dividends on Equity (DOE)(%) Furukawa Company Group’s operating results(%)and financial
The

30

‘06

3.2

‘05

-2.5

4.5

-10

(12.0)

Accordingly,
the Furukawa Company Group’s operating results and0(14.64)

100

1
0

‘07

21

‘08

‘09

Annual Report 2009

‘05

‘06

‘07

‘08

‘09

-10
-20

Consolidated Balance Sheets
Furukawa Co., Ltd. and consolidated subsidiaries
March 31, 2009 and 2008
Thousands of
U.S. dollars (Note 4)

Millions of yen

ASSETS
Current Assets:
Cash and cash equivalents . .........................................................................................
Receivables, trade:		 Notes and accounts .................................................................................................
		 Affiliates ..................................................................................................................
Finished products ........................................................................................................
Work in process ...........................................................................................................
Raw materials and supplies ..........................................................................................
Deferred income taxes (Note 12) .................................................................................
Other current assets ....................................................................................................
Allowance for doubtful accounts .................................................................................
			 Total current assets ..............................................................................................

¥

19,343¥

14,547$

197,378

		
		
		
		
		
		
		
		
		

18,942
601
13,034
6,370
9,671
772
9,201
(425)
77,509

		
		
		
		
		
		
		
		
		

31,301914
13,207
5,983
16,114
2,001
5,505
(684)
88,888

		
		
		
		
		
		
		
		
		

193,286
6,133
133,000
65,00098,684
7,878
93,886(4,337)790,908

Investments:
Investments in securities (Notes 5 and 6) .....................................................................
Investments in affiliates ...............................................................................................
Loans receivable ..........................................................................................................
Deferred income taxes (Note 12) .................................................................................
Other investments (Note 7) .........................................................................................
Allowance for doubtful accounts .................................................................................

		
		
		
		
		
		

15,931
3,310
1,396
14
7,771
(1,653)

		
		
		
		
		
		

24,752
3,217
906
91
8,681
(1,332)

		
		
		
		
		
		

162,561
33,776
14,245
143
79,295(16,867)

			 Total investments ................................................................................................. 		

26,769		

36,315

		

273,153

		
		
		
		
		
		

58,02040,93144,607536
309
144,403

		
		
		
		
		
		

47,83541,375
48,212—
1,348
138,770		
592,041		
417,663		
455,174
		
5,469
		
3,153
		 1,473,500

Accumulated depreciation ........................................................................................... 		
			 Property, plant and equipment, net ..................................................................... 		

(60,320)
84,083

				

(64,590)
74,180				

¥

188,361¥

199,383

Property, Plant and Equipment—at Cost (Notes 6 and 7):
Land and timberlands ..................................................................................................
Buildings and structures . .............................................................................................
Machinery and equipment . .........................................................................................
Lease assets (Note 9) ...................................................................................................
Construction in progress .............................................................................................

			 Total assets ..........................................................................................................

FURUK AWA

22

2009

Annual Report 2009

2009

2008

(615,500)
857,980$ 1,922,051

Thousands of
U.S. dollars (Note 4)

Millions of yen

LIABILITIES AND NET ASSETS
Current Liabilities:
Short-term loans (Note 6) ............................................................................................ ¥Current portion of long-term debt (Note 6) ................................................................. 		
Lease obligations (Note 6) ........................................................................................... 		

2009

2009

2008

13,172
18,141
101

¥
		
		

15,31818,270—$				

134,408
185,1121,031

		 Notes and accounts (Note 6) ................................................................................... 		

16,342

		

33,399

		

166,755

		 Affiliates .................................................................................................................. 		

219

		

18

		

2,235

Accrued expenses ........................................................................................................ 		
Accrued income taxes (Note 12) .................................................................................. 		

11,462
827

		
		

9,402
618

		
		

116,959
8,439

Payables, trade:

Deferred income taxes (Note 12) ................................................................................. 		

30

		

32

		

306

Other current liabilities ................................................................................................ 		

3,982

		

3,430

		

40,633

		 Total current liabilities............................................................................................... 		

64,276

		

80,487

		

655,878

Long-term debt (Note 6) ............................................................................................. 		

61,162

		

44,320		

624,102

Lease obligations (Note 6) ........................................................................................... 		

418

		

—

		

4,265

Accrued employees’ retirement benefits (Note 11) ...................................................... 		

1,381

		

1,136

		

14,092Long-term Liabilities:

Deferred income taxes (Note 12) ................................................................................. 		

7,098

		

6,824

		

72,429Deferred income taxes on surplus on the revaluation of land (Note 12) ....................... 		

3,030

		

3,113

		

30,918Other long-term liabilities ............................................................................................ 		

5,254

		

8,072

		

53,612

		 Total long-term liabilities . ........................................................................................ 		

78,343

		

63,465

		

799,418

			 Issued—404,455,680 shares ............................................................................... 		

28,208

		

28,208		

287,837

		 Retained earnings .................................................................................................... 		

16,386

		24,629		

167,204

			 2009—283,139 shares . ....................................................................................... 		

(43)

		

—

		

(439)

			 2008—225,261 shares ........................................................................................ 		

—

		

(35)

		

—

				Total shareholders’ equity ................................................................................... 		

44,551

		

52,802

		454,602

		 Net unrealized holding loss on securities, net of income taxes ................................. 		

(2,076)

		(1,200)		

(21,184)

		 Deferred (losses) gains on hedges . .......................................................................... 		

(138)

		

146

		

(1,408)

		 Surplus on the revaluation of land, net of income taxes ........................................... 		

3,674

		

3,775

		

37,490		 Translation adjustments ........................................................................................... 		

(1,426)

		

(1,222)

		

(14,551)

				Total valuation, translation adjustments and others ............................................ 		

34

		

1,499

		

347

Net Assets:
Shareholders’ Equity:
		 Common stock without par value:
			 Authorized—800,000,000 shares .......................................................................

		 Treasury stock, at cost:

Valuation, Translation Adjustments and Others:

Minority Interests in Consolidated Subsidiaries ............................................................ 		

1,157

		

1,130

		

11,806

				Total net assets ................................................................................................... 		

45,742

		

55,431

		

466,755¥

188,361¥

199,383

				Total liabilities and net assets ..............................................................................
The accompanying notes are an integral part of these statements.

FURUK AWA

23

Annual Report 2009

$ 1,922,051

Consolidated Statements of Operations
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2009 and 2008
Thousands of
U.S. dollars (Note 4)

Millions of yen

Net Sales ....................................................................................................................... ¥Cost of Sales (Note 8 and 14) ........................................................................................ 		
		 Gross profit . ............................................................................................................ 		
Selling, General and Administrative Expenses (Note 8) ........................................... 		
		 Operating income .................................................................................................... 		
Other Income (Expenses):
Interest and dividend income . ..................................................................................... 		
Equity in earnings of affiliates ...................................................................................... 		
Interest expense .......................................................................................................... 		
Other, net (Note 14 and 15) . ....................................................................................... 		
		 (Loss) income before income taxes and minority interests . ...................................... 		
Income Taxes (Note 12):Current ........................................................................................................................ 		
Deferred ...................................................................................................................... 		
		 Total ........................................................................................................................ 		
Minority Interests ........................................................................................................ 		
		 Net (loss) income ..................................................................................................... ¥2009
161,858(143,651)
18,207(15,904)
2,303

¥
		
		
		
		

2008
213,426(181,522)
31,904(17,497)
14,407623
107(1,728)(3,923)(2,618)

		
		
		
		
		

951
114
(2,381)(607)
12,484

		
		
		
		
		

6,357
1,092
(17,633)(40,031)(26,715)(1,047)(2,177)(3,224)(75)(5,917)

		
		
		
		
¥

(1,082)(2,866)(3,948)
59
8,595

		
		
		
		
$

(10,684)(22,214)(32,898)(765)(60,378)yen

Net (loss) Income per Share:
Basic 		 ......................................................................................................................... ¥Cash Dividends per Share :		
Net Assets per Share:		The accompanying notes are an integral part of these statements.

FURUK AWA24

Annual Report 2009(14.64)4.00
110.31

¥
		
		

2009
$ 1,651,612
		 (1,465,826)
		
185,786		 (162,286)
		
23,500U.S. dollars (Note 4)

21.26
6.00
134.33$				

(0.15)
0.04
1.13

Consolidated Statements of Changes in Net Assets
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2009 and 2008
Millions of yen
Shareholders' equity
Number ofshares ofcommon stock(thousands)

Balance as of March 31, 2008 . .................................................................... 		404,456
Cash dividends paid . ................................................................................... 		
—Net loss for the year .................................................................................... 		
—Acquisition of the treasury stock . ................................................................ 		
—Reversal of surplus on the revaluation of land . ............................................ 		
—Net change during the year ......................................................................... 		
—Balance as of March 31, 2009 ...................................................................... 		404,456

Treasury stock,at costTotal
shareholders'equity

¥
		
		
		
		
		
¥

(35)
—
—
(8)
—
—
(43)

¥ 52,802		 (2,427)
		 (5,917)
		
(8)
		
101
		
—
¥ 44,551

Translation
adjustments

Total valuation,translation
adjustments
and others

Minority
interests inconsolidated
subsidiaries

Total net assets¥ (1,222)
		
—
		
—
		
—
		
—
		
(204)
¥ (1,426)¥ 1,499
		
—
		
—
		
—
		
(101)
		 (1,364)¥
34¥ 1,130
		
—
		
—
		
—
		
—
		
27
¥ 1,157¥ 55,431
		 (2,427)
		 (5,917)
		
(8)
		
—
		 (1,337)¥ 45,742

Common stock

Retainedearnings¥ 28,208
		
—
		
—
		
—
		
—
		
—
¥ 28,208¥ 24,629
		 (2,427)
		 (5,917)
		
—
		
101
		
—
¥ 16,386

Millions of yen
Valuation, translation adjustments and others
Surplus on the
Net unrealized
revaluation ofDeferredholding loss onland, net of
securities, net (losses)gains on
income taxes
hedgesof income taxes

Balance as of March 31, 2008 . ........................... ¥ (1,200)
Cash dividends paid . .......................................... 		
—Net loss for the year ........................................... 		
—Acquisition of the treasury stock . ....................... 		
—Reversal of surplus on the revaluation of land . ... 		
—Net change during the year ................................ 		
(876)
Balance as of March 31, 2009 ............................. ¥ (2,076)

¥
		
		
		
		
		
¥

146
—
—
—
—
(284)
(138)

¥ 3,775
		
—
		
—
		
—
		
(101)
		
—
¥ 3,674

Millions of yen
Shareholders' equity
Number ofshares ofcommon stock(thousands)

Balance as of March 31, 2007 ...................................................................... 		404,456
Cash dividends paid . ................................................................................... 		
—Net loss for the year .................................................................................... 		
—Acquisition of the treasury stock . ................................................................ 		
—Reversal of surplus on the revaluation of land . ............................................ 		
—Net change during the year ......................................................................... 		
—Balance as of March 31, 2008 . .................................................................... 		404,456

Common stock

Retainedearnings¥ 28,208
		
—
		
—
		
—
		
—
		
—
¥ 28,208¥ 18,194		 (2,223)
		 8,595
		
—
		
63
		
—
¥ 24,629

Treasury stock,at costTotal
shareholders'equity

¥
		
		
		
		
		
¥

(24)
—
—
(11)
—
—
(35)

¥ 46,378
		 (2,223)
		 8,595
		
(11)
		
63
		
—
¥ 52,802

Minority
interests inconsolidated
subsidiaries

Total net assets¥ (4,110)
		
—
		
—
		
—
		
—
		 5,240¥ 1,130¥ 52,136		 (2,223)
		 8,595
		
(11)
		
—
		 (3,066)¥ 55,431

Millions of yen
Valuation, translation adjustments and others
Net unrealized
holding gain
(loss) on
securities, net Deferred gains
of income taxes
on hedges

Balance as of March 31, 2007 ............................. ¥ 6,270
Cash dividends paid . .......................................... 		
—Net loss for the year ........................................... 		
—Acquisition of the treasury stock . ....................... 		
—Reversal of surplus on the revaluation of land . ... 		
—Net change during the year ................................ 		 (7,470)
Balance as of March 31, 2008 . ........................... ¥ (1,200)

¥
		
		
		
		
		
¥

FURUK AWA

371
—
—
—
—
(225)
146

25

Surplus on therevaluation ofland, net ofincome taxes

Translation
adjustments

Total valuation,translation
adjustments
and others¥ 3,838
		
—
		
—
		
—
		
(63)
		
—
¥ 3,775¥ (611)
		
—
		
—
		
—
		
—
		
(611)
¥ (1,222)¥ 9,868
		
—
		
—
		
—
		
(63)
		 (8,306)¥ 1,499

Annual Report 2009

Thousands of U.S. dollars (Note 4)
Shareholders' equity

Common stock

Balance as of March 31, 2008 . ........................................................................................ $		287,837
Cash dividends paid . ....................................................................................................... 		
—Net loss for the year ........................................................................................................ 		
—Acquisition of the treasury stock . .................................................................................... 		
—Reversal of surplus on the revaluation of land . ................................................................ 		
—Net change during the year ............................................................................................. 		
—Balance as of March 31, 2009 .......................................................................................... $		287,837

Retainedearnings$		251,316
		 (24,764)
		 (60,378)
		—		 1,030
		—$		167,204

Treasury stock,at costTotal
shareholders'equity

$
		
		
		
		
		
$

$		538,796
		 (24,764)
		 (60,378)
		
(82)
		 1,030
		—$		454,602

(357)
—
—
(82)
—
—
(439)

Thousands of U.S. dollars (Note 4)
Valuation, translation adjustments and others

Translation
adjustments

Total valuation,translation
adjustments
and others

Minority
interests inconsolidated
subsidiaries

Total net assets$		 (12,469)
		
—
		
—
		
—
		
—
		 (2,082)$		 (14,551)$		 15,296
		
—
		
—
		
—
		 (1,030)
		 (13,919)$		347$ 11,531
		
—
		
—
		
—
		
—
		
275
$ 11,806$		565,623
		 (24,764)
		 (60,378)
		
(82)
		
—
		 (13,644)$		466,755

Surplus on the
Net unrealized
revaluation ofDeferredholding loss onland, net of
securities, net (losses)gains on
income taxes
hedgesof income taxes

Balance as of March 31, 2008 . ........................... $		 (12,245)
Cash dividends paid . .......................................... 		
—Net loss for the year ........................................... 		
—Acquisition of the treasury stock . ....................... 		
—Reversal of surplus on the revaluation of land . ... 		
—Net change during the year ................................ 		 (8,939)
Balance as of March 31, 2009 ............................. $		 (21,184)$ 1,490
		
—
		
—
		
—
		
—
		 (2,898)$ (1,408)$ 38,520
		
—
		
—
		
—
		 (1,030)
		—$ 37,490

The accompanying notes are an integral part of these statements.

FURUK AWA

26

Annual Report 2009

Consolidated Statements of Cash Flows
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2009 and 2008
Thousands of
U.S. dollars (Note 4)

Millions of yen

2009
Cash Flows from Operating Activities:(Loss) income before income taxes and minority interests ...........................................
Adjustments to reconcile (loss) income before income taxes and minority interests
to net cash provided by operating activities:
Depreciation and amortization ....................................................................................
Increase in allowance for doubtful accounts, net .........................................................
Increase in accrued employees’ retirement benefits .....................................................
Loss on disposal and sales of property, plant and equipment ......................................
Write-down of investments in securities ......................................................................
Expenses on removal of office tenants . .......................................................................
Gain on sales of property, plant and equipment ..........................................................
Interest and dividend income . .....................................................................................
Interest expense ..........................................................................................................
Changes in operating assets and liabilities:
		 Receivables, trade ....................................................................................................
		 Inventories ...............................................................................................................
		 Payables, trade ........................................................................................................
Other .........................................................................................................................
		 Subtotal ...................................................................................................................
Interest and dividends received . ..................................................................................
Interest paid ................................................................................................................
Payments for removal of office tenants . ......................................................................
Income taxes paid . ......................................................................................................
Income taxes refunded ................................................................................................

2009

2008

¥

(2,618)¥12,484$(26,715)

		
		
		
		
		
		
		
		
		

3,145
80
565
806
7,418
1,305
(2,599)
(623)
1,728

		
		
		
		
		
		
		
		
		

2,993
357
327
746
637
–
(286)
(951)
2,381

		
		
		
		
		
		
		
		
		

32,092
816
5,765
8,224
75,694
13,316(26,520)(6,357)
17,633

		
		
		
		
		
		
		
		
		
		

12,064
5,355(16,194)(2,211)8,221
630(1,709)(1,023)(1,859)
985

		
		
		
		
		
		
		
		
		
		

62
(2,986)(6)(2,401)
13,357966(2,383)–(2,218)
3,100

		
		
		
		
		
		
		
		
		
		

123,10254,643(165,245)(22,560)
83,888
6,429(17,439)(10,439)(18,969)
10,051Other ......................................................................................................................... 		
		 Net cash provided by operating activities ................................................................. 		

(133)
5,112

		
		

–
12,823				

(1,358)52,163

		
		
		
		
		
		
		

(16,437)
5,517
–
(6)
–
–
(613)

		
		
		
		
		
		
		

(4,281)
449
4,425(3,476)3,000(1,000)
28

		
		
		
		
		
		
		

(167,724)
56,296–(61)––(6,256)

		 Net cash used in investing activities ......................................................................... 		

(11,539)

		

(855)

		

(117,745)

Cash Flows from Financing Activities:
Proceeds from long-term loans payable .......................................................................
Repayment of long-term loans payable .......................................................................
Proceeds from short-term loans ...................................................................................
Repayment of short-term loans ...................................................................................
Repayment of notes ....................................................................................................
Repayment of finance lease obligations .......................................................................
Cash dividends ............................................................................................................
Other .........................................................................................................................

		
		
		
		
		
		
		
		

35,000(18,286)
4,615(6,827)–(76)(2,427)
117

		
		
		
		
		
		
		
		

17,250(18,473)
6,304(7,645)(4,600)(4,425)(2,223)
(23)

		
		
		
		
		
		
		
		

357,143(186,592)
47,092(69,663)–(776)(24,764)
1,193

		 Net cash provided by (used in) financing activities ................................................... 		

12,116

		(13,835)

		

123,633

Effect of Exchange Rate Changes on Cash and Cash Equivalents .......................... 		

(893)

		

82

		

(9,112)Net Increase (Decrease) in Cash and Cash Equivalents ............................................ 		

4,796

		

(1,786)

		

48,939Cash and Cash Equivalents at Beginning of Year ..................................................... 		
Cash and Cash Equivalents at End of Year ................................................................ ¥14,547
19,343

		
¥16,333
14,547

		
$148,439
197,378

Cash Flows from Investing Activities:
Purchases of property, plant and equipment ...............................................................
Proceeds from sales of property, plant and equipment ................................................
Decrease in restricted deposits ....................................................................................
Purchases of investments in securities . ........................................................................
Proceeds from redemption of investments . .................................................................
Acquisition of an affiliate accounted for by the equity method ....................................
Other .........................................................................................................................

The accompanying notes are an integral part of these statements.

FURUK AWA27

Annual Report 2009

Notes to Consolidated Financial Statements
Furukawa Co., Ltd. and consolidated subsidiaries
March 31, 2009

1. Basis of Presentation
The accompanying consolidated financial statements of Furukawa

generally accepted in Japan but is presented herein as additional

Co., Ltd. (the “Company”) and consolidated subsidiaries (together

information.

the “Furukawa Group”) have been prepared in accordance with

In preparing these statements, the Company has made certain

accounting principles generally accepted in Japan, which are different

reclassifications and rearrangements to the consolidated financial

in certain respects as to the application and disclosure requirements ofstatements prepared in Japan in order to present these statements inInternational Financial Reporting Standards, and have been compiled

a form which is more familiar to readers outside Japan.

from those prepared by the Company as required under the Financial

In addition, certain amounts in the prior year’s financial

Instruments and Exchange Law of Japan.

statements have been reclassified to conform to the current year’s

In addition, the notes to the consolidated financial statements

presentation.

include information which is not required under accounting principles

2. Summary of Significant Accounting Policies(1) Principles of Consolidation

value with changes in unrealized holding gain or loss, net of the

The Company had 34 subsidiaries as of March 31, 2009 (34 as ofapplicable income taxes, included directly in net assets. Fair value isMarch 31, 2008). The consolidated financial statements included thedetermined based on the average of the market value during the lastaccounts of the Company and 34 subsidiaries as of March 31, 2009

month of the fiscal year. Non-marketable securities classified as other(34 as of March 31, 2008).

securities are carried at cost. Cost of securities sold is determined byCompared with the previous year, the number of subsidiaries

the moving average method.

increased by 1 due to establishment and decreased by 1 due to(4) Inventories

amalgamation.
For the purpose of preparing the consolidated financial

Finished copper products and work in process relating to copper

statements, all significant inter-company transactions, accountproducts are stated at cost determined by the moving averagebalances and unrealized profits among the Furukawa Group havemethod (the balance sheets amounts of the inventories are stated atbeen eliminated.

the lowered book values reflecting potential decline in profitability).

Certain foreign subsidiaries have a December 31 year-end.

Other inventories are mainly stated at cost determined by the average

Relevant adjustments have been made for significant transactions

method (the balance sheets amounts of the inventories are stated atwith such subsidiaries during the period from January 1 to March 31.

the lowered book values reflecting potential decline in profitability).

Although the Company had 12 affiliates as of March 31, 2009 (12affiliates as of March 31, 2008), the equity method was applied to 6(5) Allowance for Doubtful Accounts

affiliates as of March 31, 2009 (6 as of March 31, 2008) in preparing

In order to cover probable losses on collection, the allowance forthe consolidated financial statements, and investments in the rest of

doubtful accounts is calculated based on the historical default

those affiliates are carried at cost or less.

rates for normal receivables plus estimate of uncollectible amounts
determined by reference to specific doubtful receivables from

(2) Cash and Cash Equivalents

customers who are experiencing financial difficulties.

Cash and cash equivalents include all highly liquid investments with a(6) Property, Plant and Equipment, and Depreciation

maturity of three months or less when purchased.

Property, plant and equipment is stated at cost. Depreciation is mainly(3) Marketable Securities and Investments in Securities

calculated by the straight-line method based on the estimated useful

Securities other than equity securities issued by subsidiaries andlives of the assets. The range of useful lives of property, plant andaffiliates are classified into three categories: trading, held-to-maturity

equipment are summarized as follows:or other securities. The Furukawa Group does not hold any trading

Buildings and structures 5 to 60 years

or held-to-maturity securities as of March 31, 2009 and 2008.

Machinery and equipment 2 to 22 years

Marketable securities classified as other securities are carried at fair

(Additional information)

FURUK AWA28

Annual Report 2009

In accordance with the revision made to the Corporate Tax Law

31, 2002. The income tax effect of the difference between theof Japan (the “Tax Law”) in 2008, the Company and domestic

book value and the revalued amount has been presented underconsolidated subsidiaries reviewed the useful lives of depreciableliabilities as “Deferred income taxes on surplus on the revaluation

assets and have changed the applicable useful lives of machinery andof land” and the remaining balance has been presented under net

equipment. The impact on income of this change was immaterial.

assets as “Surplus on the revaluation of land” in the accompanying

Amortization is calculated by the straight-line method forconsolidated balance sheets. Revaluation of land was determinedintangible assets.

based on the official notice prices published by the Commissioner ofDepreciation of lease assets arising from finance lease transactions

the National Tax Authorities in accordance with Paragraph 4, Article 2that do not involve transfer of ownership is calculated byof the “Enforcement Ordinance Concerning Land Revaluation,” withthe straight-line method over the lease term with no residual

relevant adjustments. The carrying value of the land after revaluation

value. Finance lease transactions that do not involve transfer ofexceeded its fair value by ¥1,609 million ($16,418 thousand) andownership, entered into on and before March 31, 2008, by the¥1,658 million as of March 31, 2009 and 2008, respectively.

Company and domestic consolidated subsidiaries are accounted(9) Income Taxes

for as operating leases.

Current income taxes comprising corporation tax, enterprise tax(7) Retirement Benefit Plans

and inhabitants’ taxes are provided for based on amounts currently

The employees of the Company and most of its domestic consolidated

payable for each year. Deferred income taxes arising from temporary

subsidiaries are covered by unfunded employee retirement benefit

differences between financial reporting and tax bases of the assets

plans and non-contributory funded employee pension plans as

and liabilities, which were measured using the enacted tax rates

defined benefit plans. The employee retirement benefit plans provide

and laws which will be in effect when the temporary differences

for lump-sum payments. The employee pension plans, which areare expected to reverse, are reflected in the consolidated financial

funded, were instituted to replace a certain portion of the benefits

statements.

under the retirement benefit plans with respect to employees

The Company and its domestic wholly-owned subsidiaries file a

who retire at the mandatory retirement age. Certain consolidated

consolidated corporation tax return.

subsidiaries (both domestic and foreign) have defined contribution(10) Amounts per Shareplans.
Accrued employees’ retirement benefits have been provided at

Basic net income per share is computed based on the net income

an amount calculated based on the retirement benefit obligation andavailable for distribution to shareholders of common stock and thethe fair value of the pension plan assets at the balance sheet dates,

weighted-average number of shares of common stock outstanding

as adjusted for unrecognized actuarial gain or loss and unrecognized

during the year. Diluted net income per share is not presented for theprior service cost. The retirement benefit obligation has beenyears ended March 31, 2009 and 2008 since no dilutive instruments

attributed to each period by the straight-line method over the years

were issued and outstanding during those years.

of service of the eligible employees.

Cash dividends per share represent the cash dividends declared

Prior service cost is being amortized as incurred by the straight-

as applicable to the respective years together with the interim cash

line method over a period of principally 15 years, which is shorter

dividends paid.

than the average remaining years of service of the employees.

Net assets per share are computed based on the net assets

Actuarial gain and loss is amortized in the year following the year

excluding minority interests and the number of common stockin which the gain or loss is recognized by the straight-line method

outstanding at the year end.

over the period of mainly 15 years, which is shorter than the average(11) Foreign Currency Translation

remaining years of service of the employees.

Foreign currency denominated monetary assets and liabilities are(8) Surplus on the Revaluation of Landtranslated into Japanese yen using the rates of exchange in effectPursuant to the “Law Concerning the Revaluation of Land,” landat the balance sheet date. Resulting gains or losses are credited orused for the Company’s business operations was revalued on Marchcharged to income as incurred.

FURUK AWA

29

Annual Report 2009

The balance sheet accounts of the foreign consolidated

denominated in foreign currencies are translated at the contracted

subsidiaries are translated into yen at the rates of exchange in effectrates if the relating forward contracts qualify for hedge accounting.

at the balance sheet date, except for the components of net assets

The interest rate swaps which qualify for hedge accounting andexcluding minority interests, which are translated at their historicalmeet specific matching criteria are not carried at fair value, but any

exchange rates. Revenue and expense accounts are translated at thedifferences paid or received on the interest rate swaps are recognized

average rate of exchange in effect during the year. Differences arising

as adjustments to interest expense or income over the life of eachfrom the translation are presented as translation adjustments andswap, thereby adjusting the effective interest rate on the hedged

minority interests in consolidated financial statements.

items.

(12) Hedging Activities(13) Shareholders’ Equity

The Furukawa Group uses derivative financial instruments for the

The Company Law of Japan (the “Law”) provides that an amountpurpose of hedging the risks of adverse fluctuations in foreign

equal to 10% of the amount to be distributed as distributions of

exchange rates, commodity prices and interest rates on thecapital surplus (other than the capital reserve) and retained earnings

receivables, payables and forecast transactions denominated in(other than the legal reserve) be transferred to the capital reserve

foreign currencies. All derivative financial instruments except below

and the legal reserve respectively, until the sum of the capital reserve

are stated at fair value and related gain or loss on the changes inand the legal reserve equals 25% of the common stock account.

the fair values of derivative financial instruments is deferred as a

Such distributions can be made at any time by resolution of thecomponent of net assets in the balance sheet until the recognition

shareholders, or by the Board of Directors if certain conditions areof gain or loss on hedged items when those derivative financial

met, but neither the capital reserve nor the legal reserve is available

instruments qualify for hedge accounting.

for distributions.

Trade receivables, trade payables and forecast transactions

3. Accounting Changes(1) Practical Solution on Unification of Accounting Policies(3) Accounting Standard for Lease Transactions

Applied to Foreign Subsidiaries for Consolidated Financial

Previously, finance lease transactions that do not involve transfer ofStatements

ownership were accounted for as operating leases. However, starting

From the fiscal year ended March 31, 2009, the Company adopted

from the fiscal year ended March 31, 2009, the Company and its“Practical Solution on Unification of Accounting Policies Applied todomestic consolidated subsidiaries adopted “Accounting Standard for

Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ

Lease Transactions” (ASBJ Statement No. 13, June 17, 1993, Revised

Practical Issues Task Force No. 18, May 17, 2006). The Company

March 30, 2007) and “Guidance on Accounting Standard for Lease

unified accounting standards for the consolidated overseas

Transactions” (ASBJ Guidance No.16, January 18, 1994, Revised

subsidiaries and makes necessary adjustments upon consolidation.

March 30, 2007).

This change had no impact on income.

Under the new accounting standard, finance lease transactions
that do not involve transfer of ownership were capitalized. Finance(2) Accounting Standard for Measurement of Inventories

lease transactions that do not involve transfer of ownership, entered

From the fiscal year ended March 31, 2009, the Company andinto on and before March 31, 2008, are accounted for as operating

the consolidated subsidiaries adopted “Accounting Standard forleases.

Measurement of Inventories” (ASBJ Statement No. 9, July 5, 2006).

The adoption of the new standard had immaterial impact on total

As a result, operating income decreased by ¥579 million ($5,908

assets and no impact on income.

thousand) and loss before income taxes increased by ¥611 million($6,235 thousand) compared with the corresponding amounts which
would have been reported under the previous method.

FURUK AWA30

Annual Report 2009

4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is included

translation should not be construed as a representation that yen havesolely for convenience, as a matter of arithmetic computation only, atbeen, could have been, or could in the future be, converted into U.S.

¥98=US$1.00, the exchange rate prevailing on March 31, 2009. Thisdollars at the above or any other rate.

5. Investments in Securities
The aggregate acquisition cost, carrying value and unrealized gain or loss pertaining to the marketable other securities as of March 31, 2009 and2008 were as follows:
Millions of yen

Thousands of U.S. dollars

2009

Acquisition cost Carrying value

Unrealized gain
(loss)¥ 2,603		–		 2,603

¥
		
		

762
–
762

$ 18,786		–		 18,786$ 26,561
		–		 26,561$ 7,776		–
		 7,776

		 10,325		
15
		 10,340¥ 12,943

		 (2,816)		
(1)
		 (2,817)¥ (2,055)

		134,092
		163
		134,255$		153,041

		105,357
		
153
		105,510$		132,071

		 (28,735)		(10)
		 (28,745)$		 (20,969)

Acquisition cost Carrying value

Securities whose carrying value exceeds their acquisition cost:
Listed corporate shares .......................................................... ¥ 1,841
Government bonds . .............................................................. 		
–		 1,841
Securities whose acquisition cost exceeds their carrying value:
Listed corporate shares .......................................................... 		 13,141
Government bonds . .............................................................. 		
16
		 13,157
Total .......................................................................................... ¥ 14,998

2009
Unrealized gain
(loss)

Millions of yen

2008
Acquisition cost Carrying value

Securities whose carrying value exceeds their acquisition cost:
Listed corporate shares .......................................................... ¥ 7,643
Government bonds . .............................................................. 		
–		 7,643
Securities whose acquisition cost exceeds their carrying value:
Listed corporate shares .......................................................... 		 14,750
Government bonds . .............................................................. 		
16
		 14,766
Total .......................................................................................... ¥ 22,409

Unrealized gain
(loss)¥ 10,793
		–		 10,793¥ 3,150		–		 3,150

		 10,943
		15
		 10,958¥ 21,751

		 (3,807)		
(1)
		 (3,808)¥ (658)Proceeds from sales of securities classified as other securities with aggregate gain and loss for the years ended March 31, 2009 and 2008 aresummarized as follows:
Thousands of
U.S. dollars

Millions of yen

2009
Sales proceeds . ...................................................................................................................................... ¥Aggregate gain ...................................................................................................................................... 		
Aggregate loss ....................................................................................................................................... 		

FURUK AWA31

Annual Report 2009

2008
3
3
0

¥
		
		

0
–
–

$
		
		

2009
31
31
0

6. Short-Term Loans, Long-Term Debt and Lease Obligations
Short-term loans, most of which are unsecured, represented notes payable to banks, with the average interest rates of 1.3% and 2.0% as ofMarch 31, 2009 and 2008, respectively.
Long-term debt as of March 31, 2009 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2008¥ 62,590

2009$		809,214

		 79,303 		 62,590
Current portion of long-term debt ......................................................................................................... 		 (18,141) 		 (18,270)¥ 61,162¥ 44,320

		809,214
		(185,112)$		624,102

Loans, principally from banks, insurance companies and government agencies,
most of which are secured, due 2009 to 2024 .......................................................................................

2009¥ 79,303

The average interest rate applicable to the above loans amounting to ¥79,303 million ($809,214 thousand) was 1.8% and 2.0% as of March 31,
2009 and 2008, respectively.
The aggregate annual maturities of long-term debt subsequent to March 31, 2009 were as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2010 . .........................................................................................................................................................................
2011 ...........................................................................................................................................................................
2012 . .........................................................................................................................................................................
2013 . .........................................................................................................................................................................
2014 and thereafter ...................................................................................................................................................

¥ 18,141
		 17,346
		 11,486
		 8,987
		 23,343
		¥79,303$185,112
		177,000
		117,204
		 91,704
		238,194$809,214

Lease obligations as of March 31, 2009 and 2008 consisted of the following:¥		Current portion of lease obligations ...................................................................................................... 		
¥Lease obligations due 2009 to 2016 ......................................................................................................

Millions of yen

Thousands of
U.S. dollars

2009
2008
519
¥
–
519 		–
(101) 		
–
418
¥
–

2009
$ 5,296		 5,296		 (1,031)$ 4,265

The aggregate annual maturities of lease obligations subsequent to March 31, 2009 were as follows:Year ending March 31,

Millions of yen

Thousands of
U.S. dollars

2010 . .........................................................................................................................................................................
2011 ...........................................................................................................................................................................
2012 . .........................................................................................................................................................................
2013 . .........................................................................................................................................................................
2014 and thereafter ...................................................................................................................................................

¥
		
		
		
		
¥

$
		
		
		
		
$

FURUK AWA32

Annual Report 2009

101
100
100
88
130
519

1,031
1,020
1,020
898
1,327
5,296

The Company and certain consolidated subsidiaries have enteredcredit facilities amounted to ¥25,356 million ($258,735 thousand)into overdraft and loan commitment agreements amounting toand ¥19,433 million ($198,296 thousand), respectively, as of March¥44,789 million ($457,031 thousand) with 27 banks and ¥30,702

31, 2009 and amounted to ¥12,693 million and ¥18,009 million,

million with 25 banks as of March 31, 2009 and 2008, respectively.

respectively, as of March 31, 2008.

The borrowings outstanding and the unused balances under these

Assets pledged as collateral and liabilities with collateral pledged as of March 31, 2009 and 2008 were as follows:(a) Assets pledged as collateralMillions of yen

2009
¥
645
		 19,587
Property, plant and equipment, net .......................................................................................................
¥ 20,232

Investments in securities ........................................................................................................................

2008
¥
950
		 19,798¥ 20,748

Thousands of
U.S. dollars

2009$		 6,582
		199,867$		206,449(b) Liabilities with collateral pledged
Millions of yen

2009
Notes and accounts payable-trade . .......................................................................................................
¥–
Short-term debt .................................................................................................................................... 		
30
Long-term debt (including current portion) ........................................................................................... 		 2,177¥ 2,207

2008
¥
338
		
–
		 3,630¥ 3,968

Thousands of
U.S. dollars

2009
$
–
		
306
		 22,214$ 22,520

7. Depreciation and Amortization
Depreciation and amortization for the years ended March 31, 2009 and 2008 consisted of the following:

Millions of yen

2009
Property, plant and equipment ..............................................................................................................
¥ 3,095
Other investments ................................................................................................................................. 		
50¥ 3,1452008¥ 2,964		29¥ 2,993

Thousands of
U.S. dollars

2009$ 31,582
		
510$ 32,092

8. Research and Development Expenses
Research and development expenses, included in selling, general and administrative expenses and cost of sales for the years ended March 31,
2009 and 2008 amounted to ¥1,752 million ($17,878 thousand) and ¥1,941 million, respectively.

9. Leases
Finance leases (lessee)(1) Finance lease transactions that do not involve transfer of ownership
1. Leased asset quality
		(a) Tangible fixed assets

			

Mainly production installations in the machinery segment (Machinery and equipment) and distribution vehicles in the others segment

			(Machinery and equipment)		(b) Intangible assets

			

Mainly software

FURUK AWA33

Annual Report 2009

2. Depreciation method of leased assets
		R e f e r t o “ ( 6 ) P ro p e r t y, P l a n t a n d E q u i p m e n t , a n dtransfer of ownership, entered into on and before March

Depreciation” in “2. Summary of Significant Accounting

31, 2008, by the Company and domestic consolidated

Policies.” Finance lease transactions that do not involve

subsidiaries are accounted for as operating leases.

The pro forma amounts representing acquisition costs, accumulated depreciation and net carrying value for the machinery and equipment andothers held under the finance leases currently accounted for as operating leases as of March 31, 2009 and 2008 were as follows:

Millions of yen

2009
Acquisition costs ...................................................................................................................................
¥ 3,593
Less accumulated depreciation .............................................................................................................. 		 1,522
Net carrying value .................................................................................................................................
¥ 2,071
Lease payments relating to finance leases accounted for as operating2008¥ 3,477		 1,182¥ 2,295

Thousands of
U.S. dollars

2009$ 36,663
		 15,530$ 21,133the straight-line method over the lease terms.

leases amounted to ¥599 million ($6,112 thousand) and ¥472 million

Future minimum lease payments including an interest element

for the years ended March 31, 2009 and 2008, respectively, which

under the finance leases outstanding as of March 31, 2009 and 2008

were equal to the depreciation expense of leased assets computed by

are summarized as follows:

Millions of yen

2009
Within one year . ...................................................................................................................................
¥
535
Over one year ........................................................................................................................................ 		 1,536¥ 2,0712008¥
561
		 1,734¥ 2,295

Thousands of
U.S. dollars

2009$ 5,459
		 15,674$ 21,133(2) Operating leases
The future minimum lease payments under lease agreements other than finance leases as of March 31, 2009 and 2008 are summarized asfollows:

Millions of yen

Within one year . ...................................................................................................................................
¥
Over one year ........................................................................................................................................ 		
¥

2009
19
22
41

¥
		
¥

2008
805
50
855

Thousands of
U.S. dollars

$
		
$

2009
194
224
418

10. Derivative Financial Instruments
The Furukawa Group entered into swap agreements to manage

to the derivative transactions are major financial institutions andinterest rate risks. Interest rate swaps convert the floating rate of

trading companies, the Furukawa Group believes that their derivative

long-term debt to a fixed basis. The Furukawa Group also enteredfinancial instruments entail minimal credit risks. Furthermore, theinto forward foreign exchange contracts to hedge against transactions

Furukawa Group does not use derivative financial instruments thatin foreign currencies. For copper products, the Furukawa Group also

would increase market risks.

entered into futures contracts to reduce the risks of fluctuations of

As of March 31, 2009 and 2008, there is no derivative transactioncommodity price.

for which hedge accounting is not applied.

There are market risks in these derivatives. As the counterpartiesFURUK AWA34

Annual Report 2009

11. Retirement Benefits
The balances of the retirement benefit obligation and plan assets, funded status and the amounts recognized in the consolidated balance sheets
as of March 31, 2009 and 2008 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation ................................................................................................................
Plan assets at fair value . ........................................................................................................................
Unfunded status . ..................................................................................................................................
Unrecognized actuarial loss ...................................................................................................................
Unrecognized prior service cost .............................................................................................................
Prepaid pension expenses . ....................................................................................................................
Accrued employees’ retirement benefits . ..............................................................................................

2009¥		 (13,743)
		 7,936
		 (5,807)
		 10,526		248
		 (6,348)¥		 (1,381)

2009$		(140,235)
		 80,980
		 (59,225)
		107,408
		 2,531
		 (64,776)$		 (14,092)2008¥		 (14,142)
		 10,584
		 (3,558)
		 9,064
		97
		 (6,739)¥		 (1,136)

The components of retirement benefit expenses for the years ended March 31, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Service cost ...........................................................................................................................................
Interest cost . .........................................................................................................................................
Expected return on plan assets . ............................................................................................................
Amortization of prior service cost . ........................................................................................................
Amortization of actuarial loss ................................................................................................................
Retirement benefit expenses .................................................................................................................
Employees’ contributions to the defined benefit pension plans .............................................................
Total ......................................................................................................................................................

2009
¥
686
		
349
		
(149)
		
22
		
855
		 1,763
		
12¥ 1,7752009$ 7,000
		 3,561
		 (1,520)
		
224
		 8,725
		 17,990
		122$ 18,112

2008
¥
664
		
367
		
(198)
		
11
		
511
		 1,355
		14¥ 1,369

The assumptions used in accounting for the above plans are as follows:

Discount rates ...................................................................................................................................................
Expected return on plan assets . ........................................................................................................................

2009
mainly 2.4%
mainly 2.0%

2008
mainly 2.4%
mainly 2.0%

12. Income Taxes
The reconciliation between the statutory tax rate and the effective tax rate of the Furukawa Group for 2009 has not been presented because the
Furukawa Group recorded a loss before income taxes and minority interests.
The above information for the year ended March 31, 2008 was summarized as follows:
Statutory tax rate .............................................................................................................................................................................
Non-deductible expenses for tax purposes .......................................................................................................................................
Non-taxable dividends and other income .........................................................................................................................................
Inhabitants per capita tax .................................................................................................................................................................
Equity in earnings of affiliates . .........................................................................................................................................................
Gain from forgiveness of debt by minority shareholders ...................................................................................................................
Changes in valuation allowance .......................................................................................................................................................
Other ...............................................................................................................................................................................................
Effective tax rate ..............................................................................................................................................................................

FURUK AWA35

Annual Report 200940.7 %
0.8
(0.5)
0.6
(0.4)
13.2
(19.7)(3.1)
31.6 %

Deferred tax assets and liabilities as of March 31, 2009 and 2008 consisted of the following:

Millions of yen

Deferred tax assets:
Allowance for doubtful accounts .......................................................................................................
Accrued employees’ retirement benefits ............................................................................................
Loss on impairment of fixed assets ....................................................................................................
Investments in securities ....................................................................................................................
Accrued expenses ..............................................................................................................................
Net unrealized holding loss on securities ...........................................................................................
Unrealized gains on sales of property, plant and equipment eliminated in consolidation ...................
Net operating loss carryforwards . .....................................................................................................
Land ..................................................................................................................................................
Other . ...............................................................................................................................................
Total gross deferred tax assets ...........................................................................................................
Valuation allowance ..........................................................................................................................
Total deferred tax assets ....................................................................................................................
Deferred tax liabilities:
Net unrealized holding gain on securities ..........................................................................................
Statutory reserves provided for tax purposes .....................................................................................
Gain from establishment of trust for retirement benefit plans ...........................................................
Land ..................................................................................................................................................
Capitalized interest of a foreign subsidiary . .......................................................................................
Other . ...............................................................................................................................................
Total deferred tax liabilities ................................................................................................................
Net deferred tax liabilities ..................................................................................................................
Deferred income taxes on surplus on the revaluation of land . ...........................................................

Thousands of
U.S. dollars

2009

2008

2009

¥
322
		 5,257
		 2,791
		 3,820
		
351
		
998
		
–
		 14,227
		 2,627
		
875
		 31,268
		 (21,693)
		 9,575¥
445
		 4,895
		 5,089
		
369
		
318
		
815
		
465
		 26,288
		 1,779		
675
		 41,138
		 (27,425)
		 13,713$		 3,286
		 53,643
		 28,480
		 38,980
		 3,582
		 10,184
		–		145,173
		 26,806
		 8,927
		319,061
		(221,357)
		 97,704		(20)
		 (1,478)
		 (4,327)
		 (9,225)
		
(738)
		
(129)
		 (15,917)
		 (6,342)¥ (3,030)

		
(532)
		
(348)
		 (4,327)
		 (9,225)
		 (3,777)		
(268)
		 (18,477)
		 (4,764)¥ (3,113)		
(204)		 (15,082)
		 (44,153)
		 (94,133)
		 (7,530)
		 (1,316)
		(162,418)
		 (64,714)$		 (30,918)

13. Contingent Liabilities
Contingent liabilities as of March 31, 2009 and 2008 consisted of the following:

Millions of yen

2009
Notes receivable discounted and endorsed . ..........................................................................................
¥
444
Loans guaranteed . ................................................................................................................................ 		 3,725

2008¥ 2,631		 1,241

Thousands of
U.S. dollars

2009$ 4,531
		 38,010

14. Write-Down of Inventories
The amounts of write-down of inventories, included in cost of sales and other income (expenses) for the year ended March 31, 2009 amounted to¥579 million ($ 5,908 thousand) and ¥32 million ($327 thousand), respectively.

FURUK AWA36

Annual Report 2009

15. Other Income (Expenses)—Other, Net
Other income (expenses)—other, net for the years ended March 31, 2009 and 2008 consisted of the following:

Millions of yen

Gain or loss on disposal and sales of property, plant and equipment . ...................................................
Gain on sales of disused articles ............................................................................................................
Gains related to copper smelting business in Australia . .........................................................................
Liquidating distribution from silent partnership .....................................................................................
Payments for idle mines . .......................................................................................................................
Loss on disposal and devaluation of inventories . ...................................................................................
Write-down of investments in securities ................................................................................................
Expenses on removal of office tenants ..................................................................................................
Other, net . ............................................................................................................................................

2009¥ 1,793		
131		–
		 3,962
		
(532)
		
–
		 (7,418)
		 (1,305)		
(554)¥ (3,923)

2008¥ (460)		203		 1,475
		
–
		
(402)
		
(656)
		
(637)
		
–
		
(130)
¥ (607)

Thousands of
U.S. dollars

2009$		 18,296
		 1,337
		–		 40,429
		 (5,429)		–		 (75,694)
		 (13,316)
		 (5,654)$		 (40,031)

16. Segment Information
The business of the Furukawa Group is divided into the following six categories: machinery, metals, electronic materials and chemicals, real estate,
fuels and others.
The business segment information of the Furukawa Group for the years ended March 31, 2009 and 2008 was as follows:Year ended March 31, 2009

Millions of yen

Machinery

Electronic
Materials andChemicals

MetalsReal Estate

Fuels

OthersEliminations
andCorporate

Consolidated

I. Sales and operating income (loss)
Outside customers . ........................................ ¥		62,640 ¥		68,786 ¥		11,389 ¥		 2,386 ¥		15,452 ¥		 1,205 		– ¥		 161,858Intersegment .................................................. 		 372 		 526 		 204 		 159 		 329 		 1,400 ¥		 (2,990) 		
–Total ............................................................... 		63,012 		69,312 		11,593 		 2,545 		15,781 		 2,605 		 (2,990) 		 161,858
Costs and expenses ............................................ 		(61,278) 		(69,289) 		(11,387) 		 (1,839) 		(15,578) 		 (2,910) 		 2,726 		 (159,555)
Operating income (loss) . .................................... ¥		 1,734 ¥		
23 ¥		 206 ¥		 706 ¥		 203 ¥		 (305) ¥		 (264) ¥		
2,303
II. Assets, depreciation and capital expenditures
Total assets ..................................................... ¥		65,405 ¥		20,748 ¥		24,179 ¥		28,534 ¥		 2,638 ¥		 4,823 ¥		42,034 ¥		 188,361
Depreciation ................................................... 		 1,488 		 273 		 780 		 291 		
14 		
98 		 201 		
3,145
Capital expenditures . ..................................... 		 2,131 		 314 		 305 		13,468 		
10 		 108 		 171 		 16,507
Year ended March 31, 2009

Thousands of U.S. dollars

Machinery

MetalsElectronic
Materials andChemicals

Real Estate

Fuels

OthersEliminations
andCorporate

Consolidated

I. Sales and operating income (loss)
Outside customers . ........................................ $ 639,184 $ 701,898 $ 116,214 $ 24,347 $ 157,673 $ 12,296– $ 1,651,612
Intersegment ..................................................
3,796
5,367
2,082
1,622
3,357
14,286 $ (30,510)–
Total ............................................................... 642,980 707,265 118,296
25,969 161,030
26,582(30,510) 1,651,612
Costs and expenses ............................................ (625,286) (707,030) (116,194) (18,765) 158,959(29,694)
27,816 (1,628,112)
Operating income (loss) . .................................... $ 17,694 $235 $ 2,102 $ 7,204 $ 2,071 $ (3,112) $ (2,694) $23,500
II. Assets, depreciation and capital expenditures
Total assets ..................................................... $ 667,398 $ 211,714 $ 246,725 $ 291,163 $ 26,919 $ 49,214 $ 428,918 $ 1,922,051
Depreciation ...................................................
15,184
2,786
7,959
2,969
143
1,000
2,051
32,092
Capital expenditures . .....................................
21,7453,204
3,112 137,429
102
1,102
1,745
168,439FURUK AWA37

Annual Report 2009

Year ended March 31, 2008

Millions of yen

Machinery

MetalsElectronic
Materials andChemicals

Real Estate

Fuels

Eliminations
andCorporate

OthersConsolidated

I. Sales and operating income (loss)
Outside customers . ........................................ ¥ 75,841 ¥ 97,520 ¥ 15,277 ¥ 2,758 ¥ 20,735 ¥ 1,295– ¥ 213,426Intersegment ..................................................
470
544
202
158
401
1,643 ¥ (3,418)–
Total ...............................................................
76,311
98,064
15,4792,916
21,136
2,938(3,418)
213,426
Costs and expenses ............................................ (69,473) (91,857) (14,024)(2,167) (21,567)(3,168)3,237(199,019)
Operating income (loss) . .................................... ¥ 6,838 ¥ 6,207 ¥ 1,455 ¥749 ¥(431) ¥
(230) ¥
(181) ¥ 14,407
II. Assets, depreciation and capital expenditures
Total assets ..................................................... ¥ 70,415 ¥ 32,975 ¥ 26,657 ¥ 14,582 ¥ 5,221 ¥ 3,155 ¥ 46,378 ¥ 199,383
Depreciation ...................................................
1,364
222
860
334
26
57
130
2,993
Capital expenditures . .....................................
3,017
120
484
338
3
46
366
4,374

The geographic segment information for the years ended March 31,

to Japan) of the foreign consolidated subsidiaries, totaled ¥31,913

2009 and 2008 has not been presented, because the revenues andmillion ($325,643 thousand) and ¥39,783 million or 19.7% andtotal assets in Japan exceed 90% of consolidated totals.

18.6% of the consolidated net sales for the years ended March 31,

Overseas sales, which include exports of the Company and its

2009 and 2008, respectively.

domestic consolidated subsidiaries and sales (other than exports

17. Subsequent Event
The following appropriations of retained earnings of the Company, which have not been reflected in the accompanying consolidated financial
statements, were approved at a shareholders’ meeting held on June 26, 2009:

Millions of yen

Year-end cash dividends (¥1.50 = $0.015 per share) . .............................................................................. ¥Transfer to legal reserve . .........................................................................................................................
¥FURUK AWA38

Annual Report 2009

2009
606
61
667

2008
1,415
141
¥
1,556
¥

Thousands of
U.S. dollars

2009
6,184
622
$
6,806
$

FURUK AWA

39

Annual Report 2009

Corporate Data（(As of March 31, 2009)

Directors and Auditors

Company Name: Furukawa Co., Ltd.

(As of June 26, 2009)

Head Office: 2-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo

President and Representative Director Nobuyoshi Soma

100-8370, Japan

Senior Managing Director

Hiroyuki Shiaku

TEL: +81-3-3212-6570 FAX: +81-3-3212-6578

Managing Director

Manabu Zama

Date of Foundation: August 1875

Director

Junnosuke Furukawa

Director

Yoshihito Emoto

Director

Susumu Nakamura

Stock Exchange Listing: Tokyo, Osaka

Director

Toshio Matsumoto

Securities Code Number: 5715

Statutory Auditor

Ryoji Ohnuma

Employees: Consolidated 2,290; Non-consolidated 196

Statutory Auditor

Masafumi Miyata

AuditorTamiki Ishihara

AuditorNobuyuki Tomotsune

AuditorYoshiki Sato

Date of Establishment: April 1918
Number of Shares Authorized: 800,000,000 shares
Number of Shares Outstanding: 404,455,680 shares

Stock Transfer Agent: The Chuo Mitsui Trust and Banking
Company, Limited
33-1, Shiba 3-chome, Minato-ku,
Tokyo 105-8574, Japan
Principal Shareholders
Number of Percentage ofTotal Shares
Shares(%)(Thousands)

Asahi Mutual Life Insurance Co.

27,923

6.90

Executive Officers

Japan Trustee Services Bank, Ltd. (trust account 4G)

15,305

3.78(As of June 26, 2009)

Seiwa Sogo Tatemono Co., Ltd.

15,034

3.71

Senior Managing Executive Officer

Hiroyuki Shiaku

Japan Trustee Services Bank, Ltd. (trust account)

14,549

3.59

Managing Executive Officer

Manabu Zama

Sompo Japan Insurance Inc.

13,8103.41

Senior Executive Officer

Yoshihito Emoto

The Master Trust Bank of Japan, Ltd. (trust account)

12,500

3.09

Senior Executive Officer

Susumu Nakamura

Chuo Real Estate Co., Ltd.

11.827

2.92

Senior Executive Officer

Toshio Matsumoto

Fujitsu Limited

9,617

2.37

Senior Executive Officer

Toshikazu Nakagawa

The Furukawa Electric Co., Ltd.

8,777

2.17

Senior Executive Officer

Yasuji Tomiyama

Fuji Electric Holdings Co., Ltd.

8,620

2.13

Senior Executive Officer

Akira Usui

Executive Officer

Naohisa Miyakawa

Executive Officer

Masaya Kouzaki

Executive Officer

Osamu Watanabe

Executive Officer

Saburou Saruhashi

Executive Officer

Kouichiro Umezaki

Executive Officer

Toshiyuki Kobashi

Executive Officer

Masaji Kobayashi

Executive Officer

Norihiro Yanagisawa

Composition of Shareholders:
Financial Instruments Firms(Security Companies)
5.09%

Foreign Institutions
2.49%

Other JapaneseCompanies
23.56%

Individuals
and Others
40.48%

URL: http://www.furukawakk.co.jp/e_index.htm

FURUK AWA

Financial
Institutions
28.38%

40

Annual Report 2009

Corporate History

1875 Began the operation of the Kusakura
Copper Mine in Niigata (Company
foundation).

1987 Bought UNIC Corporation (manufacturer of truck-mounted cranes).

1877 Began the operation of the Ashio
Copper Mine in Tochigi.

1900 Set up a machinery works at the
Ashio Copper Mine and entered into
the machinery business.

1989 The Japanese name changed from
Furukawa Kogyo Kabushiki Kaisha
to Furukawa Kikai Kinzoku Kabushiki
Kaisha.

The Ashio Copper Mine is where the
Furukawa Company Group began.

1990 Bought an America breaker manufacturer.

1914 Manufactured the first rock drill inJapan.
1918 Spun off mining business from Furukawa General Partnership and established Furukawa Mining Co., Ltd.

1997 Established a manufacturer of UNIC
products/components, Furukawa
UNIC (Thailand) Co.,Ltd. in Thailand.

The first domestic rock drill was developedat Ashio.

1944 Bought Osaka Smelter of Toa Chemical Smelting Co., Ltd. and established it as Osaka Cementation and
Refining. Entered into the chemicalbusiness.
Built the Oyama Works of the Machinery Division of the Ashio Copper
Mine in Tochigi.

1962 Completed the Furukawa/Outokumpu flash smelting plant at Ashio
Smelting and Refining.

This is an affiliate company for the UNIC
business established in Rayong, Thailand,
which manufactures truck-mounted cranes
and other products.

1998 Established a sales company of rock
drill products, Furukawa Rock Drill
Europe B.V., in Holland.

1999 Moved the Materials Research Laboratory to Tsukuba City in Ibaraki.

At the Oyama Works, pumps and mining
machinery for copper mines were
manufactured, not only for internal use
but also to sell externally.

This is an affiliate company for theconstruction and mining machinery
business established in Utrecht, Holland,
which distributes rock drills and otherproducts.

2003 Established Thian Furukawa Machinery Co., Ltd.- a joint company forthe manufacturing and distributionof UNIC cranes in China.

1950 Built the Takasaki Works of the Rock
Drill Division in Gunma.

1951 Began manufacturing of titanium dioxide and cuprous oxide at Osaka
Cementation and Refining.

“UNIC” has become a synonym for truckmounted cranes in Japan.

2005 Spun off the Machinery business,
Metals business and Electronic Materials and Chemicals business andshifted to a group management
structure as the Furukawa Company
Group to enhance management.

At the Takasaki Works, rock drills were
mass-produced and we establishedthe position of a leading rock drill
manufacturer.

This is an affiliate company for the UNIC
business established in Taian, Shandong,
China, which manufactures and distributes
truck-mounted cranes and other products.

2006 Established a rock drills sales company, Furukawa Rock Drill (Shanghai)Co., Ltd. in China.
2007 Formed a capital and business alliance for the GaN semiconductor
epi-wafer business with POWDEC
K.K.

The Furukawa/Outokumpu flash smelting
plantThis is an affiliate company which
deals with the construction and mining
machinery business established in
Shanghai, China and distributes rock drills
and other products.

2008 Newly setup the Nitride Semiconductors Department as a gallium
nitride and related nitride semiconductor-related research organization.

Completed research and development of high-purity (99.999%) metallic arsenic and commenced withthe sale of it.

2009 Built the new laboratory of the Nitride Business Office in Oyama.
Arsenic is one of th e b y - p r o d u c t s
generated during the smelting stage ofcopper concentrates.

FURUK AWAIn 2009, the new laboratory of the Nitride
Business Office was built in Oyama.

41

Annual Report 2009

2-3, Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8370, Japan

Furukawa Co., Ltd.

Growing through Challenge

Annual Report 2009

Fuels and Others

Real Estate

ChemicalsElectronic Materials

UNIC Machinery

Industrial Machinery

MetalsRock Drills(Construction & Mining Machinery)

ANNUAL REPORT 2009
Year ended March 31, 2009
Printed in Japan