ADK Annual Report 2009
Year ended December 31, 2009

ADK Profile
ASATSU-DK INC., commonly known by its initials ADK,
was founded in March 1956 by Masao Inagaki as a small,
ambitious firm focusing on magazine advertising. ASATSU
INC., as it was known at the time, quickly built up a solidclient base, primarily in the financial sector, giving it a strong
foundation for growth.
As Japan entered the high-growth years of the 1960s,
ASATSU INC. broadened its creative reach to include theplanning and production of animation programs for the thenstill-new medium of television. In 1987, it was listed on theSecond Section of the Tokyo Stock Exchange (TSE), becoming
the first advertising agency in Japan to make a public stock
offering. The company listed on the First Section of the TSE
in 1990.
In 1998, it made another major move, signing a reciprocal
share agreement and strategic alliance with WPP, the world’s
largest marketing organization.*
The following year, the company merged with Dai-Ichi
Kikaku Co., Ltd., another Top 10 Japanese agency, changed
its name to ASATSU-DK INC. (ADK), and entered a periodof renewed growth. Now it is Japan’s third largest total
communications service agency and the 12th largest
communications service group in the world.*
Since its foundation, the company has steadily expanded
its operations based on an unwavering commitment to the“Management by All” philosophy. This means every employee
in the ADK Group is expected to embrace a managementlevel perspective and approach client needs proactively.
In recent years, amid dramatic changes in thecommunications environment, the role of advertising
agencies has also changed significantly. ADK’s quest is tobecome a genuine “Future Agency” that is able to respondflexibly to the changing needs of advertisers and contributeto the business performance of its clients.
( * Advertising Age, April, 2010 )Contents

Business at a Glance2

To Our Valued Shareholders

4

Message from Koichiro Naganuma,
Chairman & Group CEO

6

Message from Yoji Shimizu,
New President and COO

12Corporate Social Responsibility

14

Corporate Governance and Internal Control

16

Management’s Discussion and Analysis

22

Forward-Looking Statements and Risk Factors

30

Board of Directors, Auditors
and Operating Officers

34

Financial Section

35

Securities Holdings

66

Investor Information

67

ADK Group Network

68

Business at a Glance
Consolidated Five-Year Summary

Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2007

2006

2005

2009

¥424,705 $3,802,508

Income Statement Data
Gross billings¥350,211¥399,452¥435,011¥420,059

Gross profit

41,36749,14351,754

48,68547,774449,153

Selling, generaland administrative expenses

42,12345,44444,61942,29240,286457,361

Operating income (loss)

(756)

3,699

7,134

6,392

7,488

(8,208)

Income before income taxes
and minority interests

343

3,775

10,122

9,682

11,0283,725

Net income

73

EBITDA*

¥

187

2,125
¥

4,502

5,350
¥

8,274

5,070
¥

7,590

5,946
¥

8,568 $

793
2,031

*EBITDA = Operating income + Depreciation/Amortization

Balance Sheet Data

Thousands of
U.S. Dollars

Millions of Yen

Total assets¥190,024¥191,782¥246,097¥256,754

107,465

101,617

131,846

141,387

135,748

1,166,830

4,765

2,611

14,354

19,14016,79951,737

Total net assets*
Total long-term liabilities¥246,867 $2,063,239*Net assets consists of Shareholder’s equity, valuation and translation adjustments, and minority interests.

Per Common Share Data (Yen and U.S. Dollars)
Net income per share (EPS)*¥

1.73 ¥

48.14 ¥

116.40 ¥106.62 ¥122.11 $

0.02

20

20

42

27

36

0.22

2,499.05

2,334.48

2,898.49

2,979.79

2,809.30

27.13

Dividend per share
Book value per share
No. of common shares issued

45,155,400 45,155,400 45,155,400 51,655,400 51,655,400

No. of common shares outstanding

42,585,533 43,088,073 45,091,103 47,096,993 47,952,849* The number of common shares is calculated excluding treasury stocks.

Financial Ratios
AS PERCENT OF GROSS BILLINGS
Gross profit

11.81%

12.30%

11.90%

11.59%

11.25%

SG&A expenses

12.03

11.38

10.26

10.07

9.49

Operating income(0.22)

0.93

1.64

1.52

1.76

Income before income taxes
and minority interests

0.10

0.94

2.33

2.31

2.60

Net income

0.02

0.53

1.23

1.21

1.40

AS PERCENT OF GROSS PROFIT
Operating income(1.8%)

13.8%

13.1%

15.7%

Staff cost

67.0

62.4

7.5%

57.8

57.8

56.0

Return on equity

0.1

1.8

3.9

3.7

4.6

Return on assets

0.04

1.7

2.8

2.5

3.1

Equity ratio*

56.0

52.4

53.1

54.7

54.6

Current ratio

1.57×

1.50 ×

1.48 ×1.44 ×1.46 ×*Equity ratio, according to TSE formulas, equals book equity (excluding minority interest) divided by book total assets.

Note: For convenience purposes, U.S. dollar amounts are converted from Japanese yen at the rate of ¥92.10=US$1, the approximate rate of exchange as ofDecember 31, 2009.

2

ADK Annual Report 2009

ADK Group■Japan■China• Kyowa Kikaku Ltd.
• ADK International Inc.
• ADK Dialog Inc.
• ADK Arts Inc.
• Boys Inc.
• Digital Advertising Consortium Inc.*
Eiken Co., Ltd.
Nihon Bungeisha Co., Ltd.
Neo Shobo Inc.
Nippon Information Industry Corp.*• Advertising
Other business*Affiliates accounted for by equity method

vs. Consolidated
Consolidated Subsidiaries
Subsidiaries
vs.

lings)
ings)

Taiwan• UNITED-ASATSU INTERNATIONAL Ltd.
• DIK-OCEAN Advertising Co., Ltd.

(Gross Billings)

seas subsidiaries
subsidiaries 21,213
21,213 (6.1%)(6.1%)
seas-20,936-20,936■Europe• Asatsu Europe Holding BV• Asatsu Europe BV• Asatsu (Deutschland) GmbH

■North America

Advertising vs.
vs. Other
Other BusinessBusiness
Advertising(GrossBillings)
Billings)(GrossAdvertisingvs. Other BusinessMillionsof
ofYen
Yen
Millions

Advertising
Advertising

310,970(88.8%)(88.8%)
310,970• ASATSU-DK SINGAPORE Pte. Ltd.
• ADK Thai Holding Ltd.
• DAI-ICHI KIKAKU (THAILAND) Co., Ltd.
• ASDIK Ltd.
• ASATSU (Thailand) Co., Ltd.

• ADK America Inc.

ADK
vs.ofConsolidated
Subsidiaries
Millionsof
Yen
Millions
Yen(Gross Billings)

342,925(97.9%)(97.9%)
342,925

Other BusinessBusiness
Other

estic subsidiaries
subsidiaries 38,963
38,963(11.1%)(11.1%)
estic

ustments)
stments)■Asia• Guangdong Guangxu (ASATSU)
Advertising Co., Ltd.*• ASATSU-DK HONGKONG Ltd.
• DK ADVERTISING (HK) Ltd.
• ASATSU Century (Shanghai)
Advertising Co., Ltd.
• Shanghai Asatsu Advertising Co., Ltd.

7,285 (2.1%)(2.1%)
7,285

TOTAL*TOTAL*¥371,147¥371,147(100%)(100%)TOTAL
TOTAL¥350,211¥350,211(100%)(100%)

Millions of Yen

Millions of Yen■ ADK¥310,970 (83.8%)■ Advertising¥342,926 (97.9%)■ Domestic subsidiaries¥ 38,963 (10.5%)■ Other Business¥■ Overseas subsidiaries¥ 21,213

7,285(2.1%)(5.7%)*Total before consolidation adjustments ¥371,147 (100%)(Adjustments)¥(20,936)

Total¥350,211

Note: Percentage figures indicate share of total gross billings before
consolidation adjustments.

Business at a Glance3

To OurValued Shareholders

It is our pleasure to report on the ADK Group’s

Facing these challenges, the ADK Group sought toperformance in fiscal 2009, ended December 31, 2009.

broaden its service offerings to advertising clientsand boost earnings by adopting stringent cost controls

At the Ordinary General Meeting of Shareholders heldand cutting operational expenses, in an effort toon March 30, 2010, Masao Inagaki was appointed

achieve a recovery in growth and profitability.

Representative Director, Chairman Emeritus; Koichiro

However, the effect of these measures was limited,

Naganuma was appointed Representative Director,

and despite the tireless efforts of all involved, theChairman and Group CEO; and Yoji Shimizu wasGroup failed to meet its performance expectations,

appointed Representative Director, President andposting declines in gross billings and profits compared

COO. All three men assumed their new positions onwith the previous year.

the same day. Under this new arrangement, we arecommitted to advancing the operations of ADK

We expect conditions to remain difficult for someand the ADK Group, and we look forward to yourtime. Nevertheless, under our new management teamongoing support.

and guided by our “Management by All” philosophy,
we will unite in our quest to confront these difficult

Toward the latter half of 2009, the Japanese economy

times and return the Group to a growth trajectory.

showed signs of a moderate recovery. However,personal consumption has weakened, and we feel that

We look forward to your unwavering support anda full-scale recovery will require considerable time. In

understanding as we embrace our future challenges.

the advertising market, which is the core business fieldof the Group, conditions remain severe, with no end insight to declines in corporate advertising expenditures.

4

ADK Annual Report 2009

June 2010

Koichiro Naganuma

Yoji Shimuzu

Representative Director, Chairman & Group CEO

Representative Director, President & COO

Masao Inagaki
Representative Director, Chairman Emeritus

To Our Valued Shareholders

5Message from
Koichiro Naganuma,
Chairman & Group CEO

The ADK Group reported difficult results infiscal 2009 to an extent unseen in recent years.
Moreover, there are concerns that the advertisingmarket will remain depressed for some time.
Taking these factors into account, the Group willplace top priority on achieving a recovery in
profitability while emphasizing financial stability.

Fiscal 2009 : Review and Results
In fiscal 2009, the Japanese economy started out facing

Due to a softening in the media market and intensified

severe conditions in the wake of the global economic

competition in the advertising market, together withcrisis. However, signs of a turnaround began to appear

the fall in gross billings, gross profit declined 18.2%

as companies made good progress in streamlining

to ¥31,603 million, and the gross margin slipped 0.6

their inventories. Growth in China provided an added

percentage point to 10.2%. During the year, the Company

boost. Nevertheless, the economy failed to enter a full-

made large-scale reductions in personnel expenses andscale recovery as employment issues and other serious

otherwise sought to cut costs. Due to a large increase inchallenges remained.

the provision for doubtful accounts and other factors,
however, selling, general and administrative expenses

Confronting a difficult business environment, ADK (thetotaled ¥32,870 million, down 9.1%. Because this decline

parent company), which accounts for the majority offailed to compensate for the decrease in gross profit,

the Group’s consolidated gross billings, strengthened

ADK reported an operating loss of ¥1,267 million

its capabilities to provide 360-degree communications

compared with operating income of ¥2,463 million insolutions for advertisers and pursued proactive sales

fiscal 2008. This represented the first non-consolidated

initiatives. Unable to avoid the impact of a shrinking

annual operating loss since the Company’s public listing

market, however, ADK reported gross billings of ¥310,970

in October 1987. (See the non-consolidated performancemillion, down 13.3% from the previous year.

summary on page 25.)

6

ADK Annual Report 2009

Advertising Expenditures in Japan (Billions of Yen)
’05
’05
’06
’06

Domestic advertising subsidiaries generated overall
increases in gross billings and profits thanks to salesrelated initiatives taken by each company. But, like the

’07
’07
’08
’08
’09
’09
00

parent company, the subsidiaries together reported a

1,000
1,000

2,000
2,000

3,000
3,000

4,000
4,000

5,000
5,000

6,000
6,000

business conditions.
Subsidiaries involved in book publishing and sales
adopted more stringent publication planning criteria

ADK (Parent) Gross Billings (Millions of Yen)
’05
’05
’06
’06
’07
’07

aimed at maintaining profitability. However, gross billings

’08
’08

declines continued due to market shrinkage, and those

’09
’09

subsidiaries, unable to offset fixed costs, reported

8,000
8,000

(Data: Dentsu)

decline in bottom-line income, mainly due to an increased
provision for doubtful accounts necessitated by difficult

7,000
7,000

00

100,000
100,000

200,000
200,000

300,000
300,000

400,000
400,000

operating losses for the year.
Overseas subsidiaries reported an overall decline in grossOn a consolidated basis, the ADK Group posted grossbillings due to the global economic recession and thebillings of ¥350,211 million, down 12.3% from the previous

yen’s appreciation, but posted an increase in bottom-line

year. Gross profit declined 15.8% to ¥41,367 million, andprofits thanks to cost-cutting efforts.

the gross profit ratio was down 0.5 percentage point
to 11.8%. The Group posted an operating loss of ¥756
million compared with operating income of ¥3,699 million

Top priority onachieving a recovery
in profitability
while emphasizing
financial stability

in the previous year. Equity in earnings of affiliatedcompanies totaled ¥126 million, down from ¥648 million
in the previous year. This was due
to lower profits reported by two
equity-method companies in Japan.
Accordingly, other income—net
amounted to ¥1,099 million, and
the Group reported net income of¥73 million, down 96.5% from theprevious fiscal year.

Message from Koichiro Naganuma, Chairman & Group CEO

7

Our Business Strategies

Further promotion of360-degree communications
solutions

Dramatic changes in the business environment are
placing pressure on advertising companies to propose
communications programs that best suit consumers who

ADK views itself as a “Future Agency” capable ofhave developed sophisticated media interaction andaddressing changes in the environment surrounding

purchasing behavior.

the advertising industry and meeting client needs. Ourcommunications strategy is to remain media-neutral andAs a solutions partner, we seek to address the needs

solution-neutral. Rather than adhering to specific mediaof advertisers and provide communications plans thator traditional customs, we utilize all the touchpoints

reach consumers while leaving a strong impressionthat permit communication with consumers and offer

on them. To this end, we contiunously upgrade ourthe most efficient and effective plans to our clients.

360-degree communications programs, especially in

Our fundamental strategy will remain unchanged, evensuch growing business arenas as the digital, in-store

amid changes in the media environment driven by

and direct businesses.

technological progress or in the way that consumers
interact with media.
As you are aware, the proliferation of the Internet
and mobile media has brought about dramatic

Convenience Storeand ongoing changes in consumer lifestyles.
New devices featuring the latest technologies
are constantly appearing on the market.

Transit Ad

In no time at all, consumers incorporate

Billboardsuch devices into their lives as if it were
perfectly natural. These days, they listen
to music downloaded onto tiny terminals,
read novels on LCD screens and enjoy
the excitement of 3-D movies. Scenarios

TheaterSmart Phone

unheard-of just a few years ago are now
regarded as normal. In the future, children
will enjoy 3-D games and programs on thefamily television set and carry tablet-sized
terminals to and from school as a matterof course.

TV
Newspaper

DM
PC

8

ADK Annual Report 2009

In-Store Media

Digital MediaIn the digitalarena, we will work
to strengthen ourto a specific geographical area, time

an alliance with MACS Co., Ltd., aand target in a strongly attention-

Japanese agency that specializes

grabbing manner, not only to store

in in-store merchandising andvisitors but also passersby. It also

sales support. The sales counter isenables two-way communication

the ultimate touchpoint between

by allowing people, for example, toconsumers and products. In the caseuse their mobile phones to obtainof daily goods, it is said that 70%–

product information and coupons.

80% of consumers make purchasing

We believe it is important to invest

decisions while in the store. Thatin such next-generation media, which

is why many manufacturers

has new levels of potential.

concentrate on in-store POP and

Web-related solutions
capabilities, especially by enhancing
the power of ADK Interactive Inc.
We established our specialized
digital agency, ADK Interactive, in
2008, however, in fiscal 2009, wewere unable to expand revenue inthe digital business. I think this was
because of the limited capabilities
and sales force of ADK Interactive
and ADK itself. In 2010, we will
make further investments in thatcompany to reinforce its functions
and capabilities. Meanwhile, searchengines represent an important
aspect of the digital communications
business. To this end, we haveformed an alliance with DA search &link INC. (DASL), a specialist in searchengine marketing.

In September 2009, we formed

promotional activities. Often,
however, they are unable to provide
comprehensive follow-up. In otherwords, they cannot obtain feedbackon actual consumers’ reactions
or verify whether their messages
reach consumers. Therefore, theycannot incorporate such feedback
into their sales strategies. Under theagreement with MACS, we will jointly
provide integrated services ranging
from advertising to distribution,
merchandising and customer
interface.

Direct Business
The directcommunications businessis assuming more andmore importance inthese economically difficult times.
In calendar 2008, the e-commercemarket in Japan was around ¥6
trillion, up 13.9% from the previous
year. Moreover, it is expected tosurpass department store sales
in calendar 2009. Within the

In February 2010, ADK teamed up
with LAWSON (a convenience store
chain operator) and NTT DOCOMO (amobile phone provider) to establish
a new company that will display
advertising content using digital
signage technologies at LAWSON
stores. Digital
signage permits
the transmission of
information tailorede-commerce market, the mobilecommerce segment posted strong
growth, up 18.6% year on year. ADK
has a solid track record and a wealthof know-how amassed throughsupporting mail-order, e-commerce
and telemarketing clients. Deploying
these strengths, we will support
not only nonstore retailing clients
but also those seeking to expand
their sales channels, as well as thoseaiming to upgrade their consumer
relationship management (CRM)
capabilities.

Image of a LAWSON store front

Message from Koichiro Naganuma, Chairman & Group CEO

9

Focus on Overseas Markets
The ADK Group is working to build

Meanwhile, Expo 2010 Shanghai

an overseas network that helps its

China started in May 2010. ADK’sclients advance their international

business participation in the Expo

operations. Even in sluggish

is multifaceted, but its principal

economic conditions, we regard

involvement centers on two areas.

markets in Asia and other emerging

The first is the Japan Pavilion, where

regions as areas with relatively highour responsibilities include pavilion

growth potential. Many Japanese

operation, special events and PR.

advertisers are increasing their

The second is the Chinese Privateemphasis on Asia, especiallyChina and the ASEANEnterprise Pavilion, featuring
exhibits from 16 prominent

Reinforce Domestic Branches
Within Japan, ADK has 12 branch
offices. We will continue to reinforce
the operations of our regionalcountries. Accordingly, we

Chinese private-sector

branches, with a particular focus on

will further strengthen

companies. We hope toOsaka, Nagoya and Fukuoka, which

our activities in these

seize this opportunity to

we regard as major potential growthnations.

attract more local clients.

regions.

In fiscal 2009, we set up

In other parts of Asia, as

Osaka is Japan’s second largest

well, we are upgrading ourcity after Tokyo. Unfortunately, it isthat holds considerable potential

personnel and functional capabilities

currently facing greater economic

for Japanese corporations but isin order to attract Japanesedifficulties than Tokyo, but we muststill relatively undeveloped in thecompanies and local corporations

remember that Osaka originally

advertising sense. For Japaneseas clients. We have subsidiaries in

evolved as a commerce-oriented

firms seeking to enter that nation,

Thailand, Hong Kong, Taiwan andtown and remains a vibrant cultural

there are many uncertain elements

Singapore, and from 2010 we will

center. If Osaka and Nagoya, Japan’s

about how to best communicate

newly consolidate ASATSU-DK

third largest city, were combined, thewith Russian consumers. With this in

Malaysia. In the mature markets

result would be a market rivaling an

mind, ADK moved quickly to placeof Europe and North America, weAsia nation in terms of scale. Another

a Japanese representative on thewill effectively utilize the global

city, Fukuoka, in Kyushu, is home toscene and has built a framework

resources of the WPP Group, innumerous prominent corporations

that permits meticulous support

addition to mobilizing our own

despite being geographicallyfor the local activities of Japanese

network. We will also reinforce ourdistant from Tokyo.

companies.

educational program for Global

Although we recognize

Account Directors, who are able tothe importance ofChina is one of the hottest markets

accurately address the global needs

overseas markets,in the world. According to estimatesof advertisers that are advancing

we are careful notfrom Zenith Optimedia, advertising

their business internationally. At

to overlook the

expenditures in China will growpresent, the ADK Group’s overseas

significant potential

12.1% year on year in 2010 comparedbusiness accounts for around only 6%that exists inwith 2.2% growth worldwide. Byof consolidated gross billings, which

Japan.

2011, China is expected to becomemeans we have plenty of room to

the world’s third largest advertising

expand. Our plan is to raise this ratio

market, after the United States andto around 10% over the medium term

Japan. To solidify our presence

as the first step and target further

in that promising market, we are

growth thereafter.

an office in Russia, a market

Osaka

FukuokaTokyo
Head Officefortifying our operational network,
spearheaded by our local subsidiaryin Shanghai.

10

ADK Annual Report 2009

NagoyaAdvertisers’ ultimate requirementfrom ad agencies:

Develop the
Animation Content Business
Animation content is a traditional
strength of the ADK Group and an

Raise accountability
through improved
advertising
investment efficiency

important additional income
source after regularAdvertising is an important element of an advertiser’s

advertising. Nearly 50

investment strategy. Accordingly, advertisers demand

years have passed sinceongoing improvements in efficiency and want verification

ADK started developingof such efficiency from their ad agencies.

animation content.

The ADK Group offers optimal advertising programs andCharacters created

implementation measures that maximize the return on

during that time include

investment in such programs. We also provide clientssuch well-knownwith our ROI Model, which enables them to verify thenames as Doraemon ,effectiveness of their ad investments. Determined

who has been adoredcontinuously in Japan©FUJIKO-PRO, SHOGAKUKAN, TV ASAHI,
SHIN-EI ANIMATION, ASATSU-DK

for more than three
decades. Sometimes these existing
characters can be revitalized byremaking or repositioning them ingames, smart-phone applications
and other forms.
We also have a number of charactersthat are as popular overseas asthey are in Japan. Our plan is toreinvigorate existing popular content
while developing new content todiversify our content portfolio. In
addition to Japan, we will step up

to strengthen our ability to formulate 360-degreecommunications programs and reinforce our effectivenessverification systems, we will continue to incorporate anddevelop the necessary knowledge and technologies, aswell as nurture talented human resources.
Since our establishment, we have embraced a corporate
philosophy of “Management by All.” This means every
employee in the ADK Group is expected to embrace amanagement-level perspective and approach client needs
proactively. Guided by this philosophy, we work as aunited group, adopting measures aimed at ensuring aswift business performance recovery. We look forward
to the ongoing support and understanding of ourshareholders as we pursue our future goals.

development of overseas markets
by enhancing program sales
while developing sales promotion
activities using characters inmarkets where Japanese characters
are enthusiastically supported bychildren.

Message from Koichiro Naganuma, Chairman & Group CEO

11

in magazine advertising and was alate entrant into the TV ad market.
I was placed in a challenging
position. Every day, I fought an

Message from
Yoji Shimizu,
New President
and COO

ongoing battle with our competitors
to get better spots and programs. In
such a position, I was able to polish
my strategic negotiating skills.
In 1985, I moved to the Sales
Division and for the next 25 years
I was involved in the sales field.
During that time, I worked withclients in a variety of sectors, suchas pharmaceuticals, foods, electricalappliances and finance/insurance.
The requirements of my clientswere diverse and differed according

In March 2010,

to industry sector, company size

Yoji Shimizu wasand corporate culture. I listened

appointed president

to my clients and worked hardand chief operating

to understand their needs andofficer of ADK. In

problems, and I was committed tothis new position,

finding the appropriate solutions.
At that time, I always wanted tohe understands that his mostimportant mission is to help ADK

1955. At the time, our company had

do something new, somethingachieve a performance recovery

only 260 employees and annualthat would surprise and impress

and return to a growth trajectory.

billings of ¥7.7 billion. Like thepeople. ADK, or ASATSU in thoseTo this end, he will draw on his

Japanese economy, however, wedays, was filled with a pioneering

track record and experience, andwere enjoying continued strong

spirit. We developed innovative

will embrace the pioneering spirit

growth. In 1970, our gross billings

advertising techniques, such asthat is embodied in ADK’s DNA.

jumped 28% year on year. I wasincorporating reply postcards

initially assigned to the Television &into magazine advertisements

I joined ASATSU INC. in 1970 afterRadio Division. It was a time whenand including household accountgraduating from the Department of

the television market was growing

books in women’s magazines. We

Politics and Economics at Waseda

steadily, with color TV enjoying

also entered the animation content

University. That was the year of thewidespread popularity. However,business. After Japan restoredinternational exposition in Osaka,

ASATSU started out as a specialist

diplomatic relations with China, weand Japan was in the midst of aacted quickly to do business on thehigh-growth period that started in

Chinese mainland. We were Japan’s

1970
OSAKA

12

ADK Annual Report 2009

first advertising company to list its
shares publicly. Indeed, ASATSU has
been responsible for many “firsts”
in the advertising industry, andI believe the pioneering spirit ispart of its DNA.

2005
AICHI

the Japan Pavilion. Althoughcommunication was a one-way

ADK shares the Japan Pavilion

street in the past, we have enteredaccount with other companies,

a new era in which anybody

we have total responsibility forcan become a transmitter of

the Chinese Private Enterprise

information. The communication

Pavilion project, including planning,

possibilities are endless, which

design, construction, exhibition andhas made our business more

operation. This is a truly amazing

interesting than ever before. ThisAt the 2005 World Exposition,feat for a Japanese company

trend will gain further momentum

Aichi, Japan, ADK played a major

to attract the pavilion-related

in the future. Now is the time torole in the design and execution ofbusiness of 16 Chinese exhibitors,

demonstrate ADK’s real pioneering

the Japan Pavilions. For both ADK

including Fosun International Group,

spirit. The economic recession only

and myself, it was an extremely

Alibaba and SUNING. Furthermore,

makes me more determined tochallenging period. Until thatwhen the decision was made thatconvey “amazement” to people andtime, it was thought that only the

we would compete for the account,deliver “joy” to clients, consumers

biggest advertising firm would

we were given only three weeks

and ourselves.

be able to obtain Expo business,to prepare. The concept of ourbut ADK got the account despite

proposal revolves around “cells.” It

being only the third largest firm.

is based on the idea of expressing

As the general director in charge

the “unlimited vitality of Chineseof this account, I approached theprivate enterprises” as “cells” thatchallenge proactively despite thewill keep turning over and nevergreat pressure involved. Afterdisappear. Together with thisthe opening ceremony, a longconcept, which was highly praised,line of people queued in front of

our track record with the Aichi

the Japan Pavilions, and visitors

Expo helped us obtain such a large

cheered loudly at the 360-degree

account. Our success will depend on

images projected in the “Earth

how well we can convey feelings ofRoom” of the pavilion. I felt a deep

amazement in China and deliver joy

sense of joy to be part of thisto clients, visitors and ourselves.

business. We succeeded in earningThis is our new challenge.

the satisfaction of our client andleaving visitors with feelings ofstimulation and amazement. It
gave us a sense of achievement

2010
The Chinese Private Enterprise Pavilion

SHANGHAI

Despite some signs of recovery,
the Japanese advertising

to be involved. This is the mostmarket is expected to continue

thrilling part of the communications

facing difficulties. Under thesebusiness. Moreover, our work on

circumstances, my mission is to

the Expo made us realize the global

bring ADK back onto the roadpotential of this business.

of recovery. This is a daunting
With the advent of the Internet

task. However, we will embrace

By the time this annual reportand mobile media, as well as

the challenge by deploying ADK’sreaches its readers, the 2010social networking services, many

track record and experience while

Expo will be under way inpeople say that business forremaining attuned to the pioneering

Shanghai, China. At this expo,

advertising firms has become

spirit that is inherent in our DNA.

ADK is involved in the Chinese

more difficult. On the contrary, I’m

We look forward to your continued

Private Enterprise Pavilion andquite excited. Whereas advertising

support and understanding.

Message from Yoji Shimizu, New President and COO

13

Corporate Social
Responsibility (CSR)

Environmental Protection
ADK made further progress inpursuing certification under ISO14001,
ADK’s basic policy is to take an active role in realizing
a sustainable society. Based on this policy, we havepursued a range of corporate social responsibility (CSR)
activities, with a renewed focus on
1. Reinforcing our compliance system.
2. Demonstrating our commitment
to environmental protection.
3. Other social contribution activities that
we have pursued over the years.

an international standard forenvironmental management systems,
which was introduced in 2008 to more effectively
address environmental issues. After earning certification
for the efforts of three divisions chosen to start thisproject in the first year, ADK expanded the project tocover other divisions of the head office in the second
year. After a two-year effort, the entire head officesuccessfully obtained the certification at the end of 2009.

The task of reinforcing our compliance system is handled
by the Compliance Committee, a subcommittee of the Risk
Management Committee. Our environmental protection
and other social contribution initiatives are promotedby the CSR Committee, which was establishedin January 2008 under the direct control ofthe president.

Social Contribution
The ADK Group Code of Conduct declares that theADK Group shall strive hard to benefit society
in the communications domain. To this end,
the Group shall provide ideas and creative
services free of charge where appropriate,

Compliance
ADK regards compliance as the most fundamental factor
in fulfilling its social responsibility, and compliance is
now a firm expectation of stakeholders. In 2009, theCompliance Committee conducted training workshops
targeting senior management to make them aware of
their responsibilities for directing their staff to behave
properly under the “ADK Compliance Guidelines,” which
conform to the “ADK Group Code of Conduct” and were
issued in March 2008. Through these workshops, theCommittee also raised awareness of ADK’s in-housereporting system, called “ADK Group Helpline,” whichis expected to function as a key engine to promotecompliance.

14

ADK Annual Report 2009

working in close cooperation with public entities andorganizations, nongovernmental organizations (NGOs)
and nonprofit organizations (NPOs), and outside entities
with specialist expertise. Guided by this declaration,in 2009 ADK deployed its distinctive capabilities as anadvertising company to promote the following activities.

CM Planning Course at
Ritsumeikan University

Pro Bono Creative WorkIn 2008, ADK began offering abeen hosting annual competitions

television commercial (CM) planningto select creative ideas for its publiccourse at Ritsumeikan University

advertising campaigns. Each year,

based on a scholarly exchange

the competition attracts hundreds

agreement. Under the agreement,of ideas from advertising agencies

ADK creative staff members in charge

across the nation. ADK provides

of producing CMs provided lectures

the campaigns with unique creative

make our life comfortable. It does thison the latest creative techniques andworks every year. In 2009, we

through a simple and heartwarming

the current status of the advertising

won the following campaigns:

story about how discarded empty cansbusiness again in September 2009.

1) Campaign to support the Japanand pet bottles, collected by kids playing

The course received favorable

Stroke Association

reviews from the students and2) Campaign to support the 3Rs**

was extensively reported in major

Promotion Group Network

newspapers. ADK will continue thisThe CM for the campaign to support

effort in 2010 and beyond.

the 3Rs Promotion Group Network

The Japan Advertising Council* has

This ad promotes the idea that recycling
will help our dreams come true andin the field, happily dream of being
reborn as parts of the Shinkansen (bullet
train) or the crew uniforms of the train.

conveyed a message that reflects
ADK’s commitment to obtaining
company-wide ISO14001 certification
for its environmental management
systems.

The initial symptoms of a stroke are
difficult to notice. But if you simply
CM planning lecture at Ritsumeikan University

attribute the signs to age or fatigue,
the results could be serious. This ad isbased on the famous line of Hamlet:“To be or not to be? That is thequestion.” The underlying message,“Discarded empty cans whose
dreams have come true.”(The 3Rs Promotion Group Network,
Japan Advertising Council)

however, is, “To live
or not to live? That is
the question.” The adfeatures actor Toru
Emori, famous for hisformer role as Hamlet,
who recovered froma stroke and again
played the role forthis ad.

“To be (a stroke) or not to be (justfatigue)? That is the question.”(Japan Stroke Association, Japan
Advertising Council)*The Japan Advertising Council was established for the purpose of contributing to social welfare through the communicative and persuasive artof advertising. It promotes public advertising campaigns nationwide using ads aimed at encouraging people to act in the public interest.
**“3Rs” means the “reducing, reusing and recycling” of used products.

Corporate Social Responsibility (CSR)

15

Corporate Governanceand Internal Control

Corporate Governance System
ADK has adopted the corporate auditor system because it
is most suitable for two aspects of corporate governance:

Corporate Governance Policy
ADK believes that the ultimate objective of a corporation
should be to maximize value for its shareholders bygenerating sustained growth. It is fundamental for
corporations to motivate and monitor management teams
to work toward this objective, in order to constantly raise
corporate value and ultimately enhance competitiveness.
Therefore, effective corporate governance plays anessential role in this context.
Among the various stakeholders, the Board of
Directors of a corporation must try to obtain the bestbalance among complex interest relationships. However,
because a publicly listed company seeks broad accessto capital markets for fund-raising, and because theauthority of the Board of Directors is awarded by
the shareholders, who ultimately provide the capital,
shareholder value and shareholders’ rights must be
prioritized.
ADK executes its various corporate governancestrategies based on these ideas. We preservegroup-wide corporate governance, while
maintaining close links between ADK andthe other companies of the ADK Group.

1) enhancing management decision-making efficiency and2) reinforcing the management supervisory function.
With regard to enhancing the efficiency ofmanagement decision making, we have decided against
the committee system, in which the Board of Directors,
centered on outside directors, retains certain decisionmaking authority. We believe the current corporate
auditor system is more efficient because the Boardof Directors, centered on internal directors, shares
responsibilities in all areas of the Company’s activities
and implements speedy and agile decision making on thespot, while exchanging significant information.
With regard to reinforcing the management
supervisory function, because the committee system
has not been proven superior, ADK will ensure proper
management supervision via its corporate auditor system.
We have limited the tenure of directors to one year.
This enables us to better clarify the responsibilities of
directors and gives us greater opportunity to gauge thetrust of shareholders. At present, we have 12 directors,
three of whom have representative status underJapanese law, with eight serving as operating officers(as of March 30, 2010).
The Board of Directors meets once a month, inprinciple, and more often as necessary. In fiscal 2009,
the Board met 23 times. On two occasions, the Board
requested the attendance of accounting auditors toreceive direct reports of the results of accounting audits.
Internal audits are conducted by the Group Audit
Office, which reports directly to the president and had astaff of nine as of March 30, 2010.

16

ADK Annual Report 2009

Risk Management
In May 2006, the Board of Directors passed a resolution
concerning the “Basic Policies for Establishing an Internal
Control System,” and decided to set up a group-wide
ADK has four corporate auditors,
three of whom are external. One of
the three is a lawyer and serves ona part-time basis. The three full-time corporate auditors
attended all 23 of the Board of Directors meetings. The
part-time corporate auditor attended almost all suchmeetings. The Board of Corporate Auditors met seventimes in fiscal 2009. There are no full-time employees
assigned to the corporate auditors.
ADK uses Yasumori Audit Corporation as its
independent auditor. There is no conflict of interest
between ADK and Yasumori or ADK and the executive of
Yasumori responsible for auditing ADK’s accounts.
With respect to the business execution andmanagement supervisory frameworks, ADK has appointed
operating officers from among its executive directors andemployees. Operating officers are charged with businessexecution related to broader decisions made by the Boardof Directors.
The business execution organization is separated
into functional groups, divisions, departments and small
groups, all reporting to the president.
The Management Strategy Committee helps decision
making by the president, who has the ultimate authorityof day-to-day operations. Consisting of the operating
officers in charge of Functional Groups, the Committee
meets around three times a month (38 times in fiscal
2009) to submit information and exchange opinions
on important matters. Full-time corporate auditors
also attend such meetings to monitor the relevance of
items discussed. To ensure common recognition andtransparency of important issues among the employees,

internal control system headed by the Risk Management
Committee, which is chaired by the president. The risk
management system provides “Regulations and Systems
Relating to Risk Management” and is consistent withinternal control systems as defined under the New
Corporate Law in Japan.
The Risk Management Committee heads fivesubordinate organizations, each of which undertakes its
own specific risk management. They are the Compliance
Committee, the Personal Information Protection Committee,
the Information Security Committee, the BusinessContinuity Committee and the Process Owner Committee.
The Compliance Committee is responsible for creating
systems to prevent illegal acts and for operating ADK’sinternal reporting system. The job of the Personal
Information Protection Committee is to establish
systems aimed at preventing accidents from happening
when handling the large volumes of personal consumer
information collected in the course of undertaking
marketing and campaign activities. The Information
Security Committee handles the operation of the ADKGroup’s entire information security management system
to ensure the proper management of personal and otherbusiness information. Its tasks include the acquisitionof ISO27001 certification. The Business Continuity
Committee sets up various procedures aimed at ensuring
the continuation of business during times of emergency,such as major earthquakes, power stoppages or an
epidemic of H1N1 (super-flu). The duty of the Process
Owner Committee is to meet internal control reporting
system requirements under the Financial Instruments andExchange Law of Japan.

excerpts of the meeting minutes are posted on the
Company’s intranet.

Internal Control
ADK is building a group-wide internal control system,
spearheaded by the Risk Management Committee. One
of its subordinate organizations, the Process Owner
Committee, specializes in setting up an internal control
reporting system as stipulated under the Financial
Instruments and Exchange Law of Japan.

Corporate Governance and Internal Control

17

Basic Philosophy and Status of the
Implementation of Internal Control
as of March 31, 2010

Specific Rules
1. System to ensure directors and employees perform theirduties in accordance with laws, regulations, ordinances and

The following is an English translation of a section of the
Corporate Governance Report for informational purposes
only. This section is about the basic philosophy and thestatus of implementation of internal control. The original
Corporate Governance Report was written in Japaneseand filed with the Tokyo Stock Exchange. In the event thatany discrepancy exists between the translation and theJapanese original, the latter shall prevail.

the Articles of Incorporation
The Board of Directors formulated the “ADK Group’s Codeof Conduct” to clarify the ethics and values to be sharedby all directors and employees. The directors themselves
observe this code, and the chairman and the president
continuously reiterate its spirit to employees.
The Risk Management Committee appoints theCompliance Committee as a subordinate organization
chaired by the director in charge of compliance, and its
members includes external attorneys. The Compliance
Committee implements policies to raise compliance

General Rules
Based on the “Management by All” principle that has
guided ADK since its establishment, we have developed aninternal control system with the following aims:
1) Raise operational effectiveness and efficiency;
2) Maintain the reliability of financial reporting;3) Ensure compliance with laws and regulations relating
to business activities; and
4) Safeguard assets.
Development of the internal control system is overseenby the Risk Management Committee, which is chaired by
the president. The Risk Management Committee regularly
investigates if the system effectively functions, using aprocess management method based on the PDCA (Plan, Do,
Check, Act) cycle, and reports its results to the Board of
Directors.
The elements of resolution stipulated in the Company
Law and the enforcement regulations of the Company Law
are described in the following rules.

awareness among directors and employees, investigatesmajor violations of laws and regulations or suspicion ofviolations, and instructs the responsible departments totake corrective actions. To help guarantee compliancewith business execution regulations and the Articles
of Incorporation, the perspective of rejecting ties with
antisocial influences is incorporated in the ADK Group Codeof Conduct. The Compliance Committee will spearhead
efforts to ensure effective rejection of such antisocial
influences.
The Compliance Committee also operates the “Group
Helpline System,” which involves external law offices andguarantees anonymity to encourage employees to reportviolations of laws and regulations in order to prevent andcorrect such violations.
The Risk Management Committee also appoints theProcess Owner Committee as a subordinate organization
chaired by the director in charge of maintenance andcontrol of the system for ensuring the reliability of financial
reporting. To ensure that business execution complies
with various regulations, especially pertaining to financial
reporting, the Process Owner Committee identifies risks
related to the reliability of financial reporting and issues
instructions accordingly. Based on such instructions, theCommittee ensures that suitable responses are implemented
to address risks identified in each major department andthat the risk management system is properly operated andmaintained.

18

ADK Annual Report 2009

2. System regarding the retention and management of

4. System to ensure the effective execution of

information related to the execution of duties of directors

directors’ duties

The following policies have been put in place under the

The Company maintains an appropriate number ofsupervision of the director in charge of the information

directors in order to ensure the flexible holding of andmanagement system with regard to the retention andactive discussions at the Board of Directors meetings. The

management of information related to the execution ofCompany also limits the tenure of each director to one year

duties of directors.

in order to frequently check the qualifications of directors.
The Company has adopted an operating officer system

1) The minutes of the Board of Directors meetings and thematerials distributed to directors for the deliberation of

to operate the Board of Directors in careful consideration

resolutions shall be retained for a minimum of 10 years inof the authority of the Board of Directors, centering on

the division in charge of the secretariat.

the decision and supervision of the execution of duties as2) The minutes of regular meetings that directors muststipulated in the Company Law.

attend, as well as other business documents approved by

The Board of Directors sets companywide goals for

directors or in which their opinions are written, shall bedirectors and employees to share and establishes medium-

managed in compliance with the “Document Management

term and annual business plans to achieve these goals.

Regulations” and the “Information Security Policy.”

Progress is reported on a quarterly basis to the Board of
Directors. In case there are factors that hinder progress

3. Regulations and systems relating to risk management

toward these goals, the executive director in charge of the

The Risk Management Committee defines the “Riskrelevant department takes responsibility for formulating

Management Policy” and implements comprehensive

solutions, and the president carries them out by giving

risk management for the entire ADK Group, consisting

directions to the relevant departments.

of ADK and its subsidiaries. The Risk Management
Committee implements risk management by using aprocess management method and instructs responsible
departments to take necessary measures.
Under the control of the
Risk Management Committee, in
addition to the aforementioned
Compliance Committee andGeneral Public

Stakeholders Other Than Shareholders

Expectations

Corporate Governance

Shareholders

Process Owner Committee, thePersonal Information Protection
Committee, the Information
Security Committee and theBusiness Continuity Committee

General Meeting of Shareholders
Elect

Elect

Audit

Corporate
Auditors

have been established as
specialist committees toElect
Board of Directors

Board ofCorporate Auditors

Representative
Directors
Executive Directors

Communicate

Accounting Auditors

Reportimplement risk management inConsult

their respective fields. Other
specialist committees shall beestablished as needed. The Risk
Management Committee directly
implements risk managementin the fields not covered by the
specialist committees.
The Group Audit Officemonitors the effectiveness ofSupervise & Manage

Elect &
Supervise
Directors

Appoint

Audit

Operating Officers

Internal Control

Functional Groups

Management Strategy Committee

Supervise & Manage

Risk Management Committee
Information Security Committee
Personal Information Protection Committee
Business Continuity Committee
Compliance Committee
Process Owner Committee

Group Audit
Room

Divisions/Units

Audit

Supervise& Manage
Planning
Management
Rooms

Departments,
Branches &Branch Offices
MonitorAccount Service
Operation Support
Departments

MonitorBusiness Execution Organization

the risk management system andreports to the Risk Management
Committee.

Corporate Social Responsibility (CSR)

Corporate Governance, Internal Control and Risk Management Framework

Corporate Governance and Internal Control

19

5. System to maintain appropriate business practices

the execution of duties by directors; material facts thatthroughout the ADK Groupbreach laws, regulations and the Articles of Incorporation;

Under the supervision of the Risk Management

reports received through the Helpline System; or results ofCommittee, the division in charge of management ofinspection by the regulator or external audit. At least twice

subsidiaries directs each subsidiary to maintain its own

a year, the president holds a meeting to exchange opinionsinternal control system and establishes a group-widewith the corporate auditors. The Audit Reports of theinternal control system by requesting that subsidiaries

Group Audit Office are submitted to the corporate auditors,

comply with the “ADK Group’s Code of Conduct” andand members of the Group Audit Office attend meetings

implement specific measures, such as the adoption ofof the Board of Corporate Auditors to cooperate with thethe “Group Helpline System.”corporate auditors.

The division in charge of the managementof subsidiaries makes arrangements with major
subsidiaries about approval and reporting, makes it
mandatory to gain approval from or report to ADK
before making decisions regarding certain matters,
and manages them while respecting each subsidiary’s

Basic Concept and System to
Exclude Antisocial Groups

independence.
6. System for employees when requested tosupport the Board of Corporate Auditors and their
independence from directors
In the event that the corporate auditors request theassistance of employees, the Company assigns theappropriate persons as assistants to corporate auditors
as soon as possible. To reinforce independence fromdirectors, the employees to assist the corporate
auditors shall not be assigned to interlocking duties
in the organization under the authority of directors.
Performance reviews, personnel transfers, anddecisions on reward and punishment shall be approved

Basic concept, code of conduct andimprovement of internal rules

Because a corporation has a large economic scalecompared with individuals, there may be a significant
adverse impact if it is exploited by antisocial groups. Thus,
it is an obligation of the corporation not to engage in any
action that could be beneficial to antisocial groups. The“ADK Group’s Code of Conduct,” stipulated by the Board of
Directors, clearly documents the concept and declares that
“The ADK Group shall maintain no contact with antisocialgroups, and will staunchly decline any requests fromthem.” This provision is contained in the article entitled “Toin advance by the Board of Corporate Auditors.

adopt to social norms and ensure social justice.”

7. Reporting to the Board of Corporate Auditors andCompliance Guidelines” to specifically express the spirit

system to ensure the efficient execution of audits
The Company has a policy to maintain four or more
corporate auditors in total, three or more outside
corporate auditors and three or more full-time
corporate auditors­­—exceeding the legal requirement.
In addition to the Board of Directors meetings, theattendance of corporate auditors is requested at theManagement Strategy Committee, Performance Report
Meetings and other important regular meetings, andthe minutes of those meetings must be presented to
all corporate auditors. If corporate auditors request
attendance at any other meetings, directors andemployees shall not refuse the request. Directors andemployees shall report immediately to the Board of
Corporate Auditors on cases that may cause serious
damage to the Company; inappropriate actions in

20

1

ADK Annual Report 2009

Our Compliance Committee has formulated the “ADKof the “ADK Group’s Code of Conduct.” In the guidelines,
there is a description explaining the necessity of “Excluding
relationships with antisocial groups” and how to do it. The“ADK Compliance Guidelines” is distributed as a handbook
to all employees.
Furthermore, ADK created its “Manual for Handling
Unfair Requests from Antisocial Groups,” which describes
concrete procedures, steps, and internal and external
collaboration in case the Company is approached byantisocial groups. To ensure thorough dissemination of thisinformation among employees, the manual is uploaded
onto the Company’s intranet, allowing all employees toaccess and read it at any time.

2

Improvement of internal system

Takeover Defense

1) Section in charge of supervising and assigning manager
in charge of preventing unfair requests

ADK believes that persons who control the Company’s

ADK has assigned its Corporate Governance Office, andecisions on financial matters and business policies should

administrative office for the Compliance Committee,

be ultimately judged by the shareholders.

as the supervisory section to handle issues related to

In addition to improving capital efficiency andantisocial forces. The Office actively participates in training

implementing various measures to return profits tosessions held by the National Center for the Elimination

shareholders, ADK has made company-wide efforts toof Boryokudan (crime syndicate). These sessions are for

maximize corporate value and the common interests

managers in charge of preventing unfair requests.

of the shareholders based on its “Management by All”
principle. The Company believes that management with

2) Collection and management of information onsuch a company-wide sense of unity and sense of common

antisocial forces

destiny among directors and employees in the advertising

ADK files information obtained from various violationindustry (which is called a “people business”) is the best

prevention conferences to which it belongs and distributes

defense against an inadequate takeover. The Company hassuch information to the relevant sections. If there is

not implemented any specific takeover defense measures

suspicion that certain individuals or groups, with which aat present.

Company section communicates in the course of regular

On the other hand, in the event of a large-scalebusiness, may have an antisocial nature, ADK will makepurchase of the Company’s shares or a takeover proposal,

inquiries through its supervisory section to the appropriate

the Board of Directors, which assumes management

police office, the Office of Specific Violation Prevention

responsibility for the shareholders, shall assess the impact

Association under the Metropolitan Police or an inquiryof such purchase on the corporate value and the common

agency.

interests of the shareholders, while respecting the opinionsof outside specialists. In addition to expressing its views,

3) Collaboration with external professional organizations

the Board of Directors shall negotiate with such purchaser

In case ADK comes in contact with individuals or groups

and do its best to provide necessary information andthat may belong to antisocial forces, it takes a firm stanceensure sufficient time for shareholders to properly judge

against them, following instructions from the competent

whether to accept such a purchase.

police office and its legal adviser.

Moreover, in the event that such purchaser does notprovide necessary information, or it is deemed that such4) Implementation of training sessions

a proposal may damage corporate value and the common

The “ADK Group’s Code of Conduct,” the “ADK Complianceinterests of shareholders, the Board of Directors shall

Guidelines” and the “Manual for Handling Unfair Requests

take reasonable countermeasures deemed to be mostfrom Antisocial Groups” are uploaded on to the intranet,

effective at that time and in a manner that is acceptable toallowing access by all employees at any time. ADK also

shareholders.

holds special face-to-face sessions during the training of

The Company shall carefully discuss whether to

new employees and new managers. At these sessions, theimplement specific takeover defense measures in advance,

administrative officer of the Compliance Committee servesin consideration of future economic environments, capital

as a lecturer, and the “ADK Compliance Guidelines” is usedmarkets and trends in laws and regulations.

as a textbook.

Corporate Governance and Internal Control

21

Management’s
Discussion and Analysis

Fiscal 2009 Performance Highlights

Consolidated gross billings down 12.3% to ¥350.2 billion
Gross margin down to 11.8%
Gross profit down 15.8% to ¥41.3 billion
Operating loss of ¥0.7 billion
Net income down 96.5% to ¥73 million
0.5 million shares bought back for ¥0.8 billion
EPS down to ¥1.73

ADK Group Overview
As of the end of 2009, the ADK Group consisted of

to 97.9% of consolidated total billings. Other businesses

53 subsidiaries (48 in advertising and five in non-generated ¥7,285 million, or 2.1% of total billings. The

advertising), 22 affiliates (21 in advertising and one in

ADK Group’s non-advertising business consists of booknon-advertising) and one related company. The Groupand magazine publishing and sales, as well as information

includes 23 consolidated subsidiaries and three equity-

processing services.

method affiliates. For more details on Group companies,
please see pages 3 and 68.
Our global reach extends to 22 cities and is reinforced
by a close alliance with WPP plc, which leads the world’s
largest communications group.
In fiscal 2009, the Group’s advertising businessgenerated gross billings of ¥342,926 million, equivalent

22

ADK Annual Report 2009

All overseas sales of the ADK Group were generated
by the advertising business. Together, overseas sales
represented 5.4% of consolidated gross billings.
The number of employees at the end of fiscal 2009
totaled 3,239, down 25 from a year earlier.

Consolidated Performance
Gross Billings

Other Income and Expenses

Gross billings for the year totaled ¥350,211 million,

The ADK Group reported equity in earnings of affiliates—

down 12.3% from the previous year amid the continuing

net of ¥126 million. This was due to lower earnings

significant recession both in Japan and overseas. For moregenerated by Digital Advertising Consortium Inc., adetails, please refer to the Segment Information section.

publicly traded Internet media buying rep, and Nippon
Information Industry Corp., an information processing

Gross Profit

service company.* Dividend income decreased because

The gross margin deteriorated because of more intenseof the yen’s appreciation and the sale of securities.

competition and the writing off of older-than-two-year

Accordingly, other income—net, including loss on disposal

investments in animation content. As a result, gross profit

of fixed assets and loss on valuation of investment

totaled ¥41,367 million, down 15.8% year on year. The

securities, amounted to ¥1,099 million.

gross margin edged down 0.5 percentage point to 11.8%.

*ADK sold its stake in Nippon Information Industry Corp. for ¥2.5
billion on February 12, 2010, and that company is no longer an affiliateof the ADK Group.

Operating Income/Loss
The ADK Group reported an operating loss of ¥756
million, due to the lower gross profit and the ¥786 million

Net Income

provision of allowance for doubtful accounts. This was

Income before income taxes and minority interests

despite the Group’s strong efforts to compensate fortotaled ¥343 million. After deducting ¥237 million inmarket shrinkage by controlling operating expenses.

income taxes and ¥33 million in minority interest, net

The ratio of staff costs to gross profit was 67.0%.

income was ¥73 million, a 96.5% decrease. Net income
per share was ¥1.73.

Balance Sheets and Cash Flow
Assets and Liabilities

Cash Flow

At fiscal year-end, total assets amounted to ¥190,024

At the fiscal year-end, cash and cash equivalents

million, down ¥1,758 million from a year earlier. This wasamounted to ¥18,844 million, up ¥6,037 million from adue to a decrease in notes and accounts receivable—

year earlier. This was because cash inflows from operating

trade, reflecting the decline in gross billings. Amongand investing activities surpassed cash outflows fromcurrent assets, marketable securities also decreased.

financing activities.

Current liabilities and long-term liabilities were ¥77,794

Net cash provided by operating activities amounted tomillion and ¥4,765 million, respectively. After the¥6,404 million compared with ¥3,181 million in net cash

payment of dividends totaling ¥856 million and theused in operating activities in the previous fiscal year.

acquisition of treasury stocks at ¥882 million—reflecting

Among operating activities, income before income taxes

recognition of an unrealized gain on available-for-saleand minority interests was ¥343 million and depreciation

securities of ¥7,303 million—total net assets increasedwas ¥943 million. Notes and accounts receivable andto ¥107,465 million. The equity ratio* was 56.0%, up 3.6

notes and accounts payable decreased ¥14,028 million

percentage points.

and ¥8,471 million, respectively, due to the decline in*According to TSE formulas, equity ratio equals book equity, excluding
minority interest, divided by book total assets.

gross billings. Income taxes paid during the period was¥108 million.

Management’s Discussion and Analysis

23

Net cash provided by investing activities totaled

Despite posting a disappointing net income figure,¥1,570 million, down from ¥7,085 million in the previous

under its shareholders distribution policy ADK declaredyear. Proceeds from sales of securities were ¥7,930

a ¥10.00 year-end dividend, bringing the total annual

million, and purchases of securities were ¥6,641 million.

dividend to ¥20.00 per share.

Net cash used in financing activities was ¥2,141

In addition to paying cash dividends, ADK has been

million, down from ¥7,853 million in the previous

buying back stock since 2001. Our plan here is improveyear. This was mainly due to a decrease in the return

EPS by reducing the number of shares outstanding andto shareholders, dividends of ¥856 million and thecurtailing the growth of equity. During fiscal 2009, ADK’s

acquisition of treasury stock of ¥882 million.

Board of Directors acquired 0.5 million shares, amounting
to ¥877 million. Together with the acquisition of odd-

Dividend Distribution and Share Buyback

lot share parcels, the total acquisition of treasury stock

ADK’s dividend distribution policy, set in February 2007,

amounted to ¥882 million for the year.

is that 35% of consolidated net income is to be distributed
through common dividends, with a minimum annual
dividend of ¥20.00 per share. ADK pays dividends semiannually instead of quarterly in order to save operationalcosts.

Capital Expenditures(Millions of Yen)

2009
Capital expenditures
Buildings

29

Building improvements

2008
Depreciation

Capital expenditures

129

88

Depreciation
148

–

2

–

3

Vehicles

10

24

23

32

Furniture, fixtures & equipment

61

172

633

189

Land

–

–

–

–

Licenses

–

–

31

6

Computer software

467

580

1,287

414

Lease assets

136

12

–

–

Others
Total

Free Cash Flow

–

21

–

8

705

943

2,065

803

(Millions of Yen)

2009

2008

Net cash provided byoperating activities

6,404(3,181)Business reinvestment*(556)(2,031)

Free cash flow

5,848

(5,212)*Business reinvestment = purchase of property and equipment +purchase of intangible assets – sales of property and equipment

24

ADK Annual Report 2009

Segment Information

Non-Consolidated Performance by Discipline (Millions of Yen)

Advertising Business

Creative and others

In fiscal 2009, the Japanese advertising market shrankMagazine
Newspaperfor the second consecutive year amid the recession in
the domestic economy. According to figures producedby Dentsu, total advertising expenditures amounted
Sales
promotionto ¥5,922.2 billion, down 11.5% from the previous year.
According to Japan’s Ministry of Economy, Trade and

TOTAL¥310,970

Industry, total advertising expenditures declined 5.9%

(100%)

in 2008 and 15.5% in 2009.

TV

OOH media

Against this background, the ADK Group’s advertisingbusiness generated gross billings of ¥342,925 million,

Digital mediaRadiodown 12.3% from the previous year, and posted an
operating loss of ¥618 million.

(Millions of Yen)

1

Gross
billings

ADK’s Non-Consolidated Performance
Information

Because all of ADK’s non-consolidated gross billings andMedia

income are generated from the advertising business, andthose non-consolidated gross billings of ¥310,970 million
represent 90.7% of the gross billings generated by theadvertising business segment, for investors’ information,

Non-Media
Non-Consolidated Performance Summary(Millions of Yen)

2009

2008

ChangeGross billings

310,970

358,595-13.3%

Gross profit

31,60338,640-18.2%

Operating income(1,267)

2,463

–

(498)

1,721

–

Net income

Magazine

16,8655.4%-29.0%

Newspaper

21,6367.0%-28.8%

TV

149,776

48.2%

-7.8%

Radio

2,967

1.0%

-20.0%

Digital Media

13,115

4.2%

-2.6%

OOH Media

8,236

2.6%

-31.9%

Subtotal

the non-consolidated performance is reviewed below.

Share of Y-o-Y
totalchange212,598

68.4%-13.5%

Sales
Promotion

49,50015.9%-13.8%Creative andOthers48,871

15.7%-11.7%

Subtotal

98,371

31.6%-12.8%

Total

310,970

100.0%-13.3%

Notes:
1. TV includes Time (program-sponsored ad), Spot and Content-related
sales.
2. Gross billings by discipline are rounded down. Therefore, their sums
may not equal the total or subtotals.

Management’s Discussion and Analysis

25

Magazine

Television

According to the Preliminary Report on the Current

For the entire domestic market, sales of television ads

Survey of Selected Service Industries, released by the

declined 11.8% year on year. ADK’s gross billings from

Ministry of Economy, Trade and Industry, total sales

television ads decreased relatively modestly, down 7.8%of magazine ads by Japanese advertising companies

year on year to ¥149,776 million. Television program

declined 29.5% from the previous year. ADK’s grosssales decreased due to a decline in business with clientsbillings from magazine ads decreased 29.0% year on year

in the Finance/Insurance and Distribution/Retail sectors,

to ¥16,865 million, mainly due to tighter budgets

although business with clients in the Foods and Beverages

by international brand manufacturers in the Apparel/

and Tobacco Products sectors performed relatively well.

Jewelry sector.

Spot TV sales decreased due to a decline in businesswith clients in the Finance/Insurance and Hobbies/

Billings of Magazine Division
Millions of Yen

Share of
Gross Billings(Non-consolidated)

5.4%

09

Sporting Goods sectors, even though business withclients in the Cosmetics/Toiletry, Foods and Information/
Communications sectors performed relatively well. We
endeavored to promote sales from our content businessthrough the development of digital animation distribution

08
0

5,000

10,00020,00015,000sites on PCs and mobiles, investments in new characters
25,000and the promotion of events. However, overseas sales
from existing content declined. As a whole, total billings
from the content business reported a small decline.

Newspaper
According to the aforementioned report, total sales ofBillings of Television Division
Millions of Yen

newspaper ads in Japan declined 21.0%, whereas ADK’sgross billings from newspaper ads were down 28.8%.
This was due to lower gross billings to clients in the
Finance/Insurance and Automobiles/Automobile-Related

Share of
Gross Billings(Non-consolidated)

48.2%

09
08

Products sectors, although we acquired new clients in0

the Pharmaceuticals/Medical Supplies sector. As a result,

50,000100,000

150,000

200,000

gross billings from newspaper ads totaled ¥21,636 million.
Billings of Newspaper Division
Millions of Yen

Share of
Gross Billings

08
0

26

5,000 10,000 15,000 20,000 25,000 30,000 35,000

ADK Annual Report 2009

(Millions of Yen)

2009

(Non-consolidated)

7.0%
09

Gross Billings from Television Ads (Breakdown by Category)
2008

ChangeTime (program-sponsored ad)

56,39862,401

-9.6%

Spot

82,081

88,552-7.3%

Content-related sales

11,297

11,499

-1.8%

Total

149,776

162,453-7.8%

RadioOut-of-Home Media

Total sales of radio ads in Japan declined 14.1%. ADK’s

Total sales of OOH media in Japan, including billboards

gross billings from radio ads fell 20.0% to ¥2,967

and transit ads, declined 17.2%. ADK’s gross billings frommillion, due to a decline in business with clients in the

OOH ads fell 31.9% to ¥8,236 million, mainly due to a

Automobiles/Automobile-Related Products sector.

decline in business with clients in the Restaurants/Other
Services and Information/Communications sectors.

Billings of Radio Division
Millions of Yen

Share of
Gross Billings(Non-consolidated)

1.0%

09

Billings of Out-of-Home MediaDivision

Millions of Yen

Share of
Gross Billings(Non-consolidated)

2.6%
09

08
0

1,000

2,000

3,000

08

4,000

0

Digital MediaSales of digital media or Internet ads in Japan declined
2.1% in 2009, despite posting rapid growth through 2008.
ADK’s gross billings from digital media advertising also
did not grow. This was despite efforts to take advantage
of our capital and strategic alliances with DA search andlink INC. (aimed at boosting our competitiveness in searchengine marketing of Internet advertising) and Glam Media
Inc.’s Japanese subsidiary (to promote marketing targeting
women). For the year, we generated gross billings of¥13,115 million from this media, down 2.6% year on year.

2,000

6,000

10,00014,000

Sales Promotion
Total sales from sales promotion in Japan declined around
11%. ADK’s gross billings from this business decreased
13.8% to ¥49,500 million, due to a decline in business withclients in the Automobiles/Automobile-Related Products,
Information/Communications and Finance/Insurance
sectors. By contrast, we reported higher gross billings toclients in the Distribution/Retail sector.
Billings of Sales Promotion Division
Millions of Yen

Digital Media Division
Millions of Yen

Share of
Gross Billings

Share of
Gross Billings(Non-consolidated)

15.9%

09

(Non-consolidated)

4.2%

08

09
0

10,000 20,000 30,000 40,000 50,000 60,000

08
0

3,000

6,000

9,000

12,00015,000Creative and Others
ADK’s sales of creative and others decreased 11.7% to¥48,871 million, mainly due to tighter budget controls by
our advertising clients. This was despite our efforts toaddress clients’ needs through faster intra-communication
and a focus on digital creative.
Billings of Creative and Others
Divisions

Millions of Yen

Share of
Gross Billings(Non-consolidated)

15.7%
09
08
0

10,000 20,000 30,000 40,000 50,000 60,000

Management’s Discussion and Analysis

27

Non-Consolidated Gross Billings,
Market Share and Industry Ranking (2000–2009)(Millions of Yen)

Year

Gross
billings

ChangeMarketshare*

2000

340,888

6.5%

5.57%

Industry
rank
3

2001

358,830

5.3%

5.92%

3

2002

334,915

-6.7%

5.87%

3

2003

357,597

6.8%

6.29%

3

2004

373,897

4.6%

6.38%

3

2005

384,849

2.9%

5.64%

3

2006

378,804

-1.6%

5.46%

3

2007

387,860

2.4%

5.53%

3

2008

358,595

-7.5%

5.36%

3

2009

310,970-13.3%

5.25%

3*Market share: According to “Advertising Expenditures in Japan ”
reported by Dentsu Inc. The scope of the report was expanded from2006 to reflect the effect of the rapid expansion of the Internet andpromotional advertising.

Non-Consolidated Gross Billings Breakdown by Client Industry
2009
Energy / Raw materials / Machinery(Millions of Yen)

Share of
total

4,421

1.4%

Food

32,650Beverages / Tobacco products

21,904

Pharmaceuticals / Medical supplies

2008

Share oftotal

Change

3,901

1.1%

485

12.3%

10.5%

29,5757.0%

22,804

8.2%

3,065

10.4%

6.4%

(1,031)

13,575

4.4%

12,800

-4.5%

3.6%

775

6.1%

Cosmetics / Toiletry goods

36,494

11.7%

34,652

9.7%

1,842

5.3%

Apparel / Jewelry

8,212

2.6%

12,6193.5%(4,407)-34.9%

Precision instruments / Office equipment

2,530

0.8%

4,493

1.3%

(1,963)-43.7%

Electric machines / AV equipment

3,591

1.2%

5,923

1.7%

(2,332)-39.4%

Automobiles / Auto-related products

13,212

4.2%

22,6986.3%(9,485)-41.8%

Household products

3,133

1.0%

3,494

1.0%

(361)

-10.3%

Hobbies / Sporting goods

19,228

6.2%

22,466

6.3%(3,571)-15.7%

Real estate / Housing

8,954

2.9%

12,837

3.6%(3,888)-30.3%

Publications

3,250

1.0%

3,929

1.1%

(679)

-17.3%

Information / Communications

38,493

12.4%

44,031

12.3%(6,432)-14.3%

Distribution / Retail25,052

8.1%

25,847

7.2%(6,175)-19.8%

Finance / Insurance

24,9578.0%

34,371

9.6%(9,414)-27.4%

Transportation / Leisure

14,962

4.8%

15,573

4.3%

(615)

-3.9%

Restaurants / Other services

5,642

1.8%

9,028

2.5%

(3,631)-39.2%

Government / Organization

9,587

3.1%

9,662

2.7%

(73)

-0.8%

Education / Health care services/Religion

4,556

1.5%

5,065

1.4%

(510)

-10.1%Classified ads / Other

16,567

5.3%

22,828

6.4%

775

4.9%

Total

310,970

100.0%

358,595

100.0%(47,625)-13.3%28

ADK Annual Report 2009

2

Group Companies in theAdvertising Business

Other Business Segment

The ADK Group’s advertising agency companies had

ADK has two consolidated subsidiaries in the publications

mixed results. Domestic subsidiaries as a whole increased

industry. Among the two, the smaller subsidiary,

their gross billings, but after large provisions of doubtful

specializing in the publication of periodicals to select clubaccounts, the overall result was an operating loss.

members, obtained new contracts and became profitable.

Overseas subsidiaries reported lower gross billings due toAs the publications market has been experiencing

the yen’s appreciation and the global recession. However,a significant decline under the influence of growing

gross billings at Chinese subsidiaries grew and operating

consumer preference for Internet/mobile media, theexpenses were relatively flexibly controlled. In total,

general publication subsidiary was unable to generate

therefore, overseas subsidiaries reported slightly higher

sufficient sales to absorb its fixed costs. As a result, theoperating income.

Group’s other business generated gross billings of ¥7,285
million, down 11.4% year on year, and posted an operating
loss of ¥135 million, compared with an operating loss of¥44 million in fiscal 2008.

Overseas Sales
For the year, the ADK Group obtained 5.4% of its grossbillings from overseas sources. All overseas sales were in
the advertising business.

Outlook for Fiscal 2010
As stated earlier, ADK is concerned that the resumption

year, our forecasts are gross billings of ¥356.0 billion,of growth in the Japanese advertising market will take

operating income of ¥1.3 billion and net income of ¥0.1

more time.

billion. Our forecast for EPS is ¥2.35.

Under this slow-growth environment, ADK’s
consolidated forecasts for the first two quarters of 2010
are gross billings of ¥170.0 billion, operating income of¥0.0 billion and a net loss of ¥0.8 billion.* For the entire*Please be advised that ADK recognized a ¥978 million loss on thesale of its equity in Nippon Information Industry Corp., an equitymethod affiliate, in February 2010.

Management’s Discussion and Analysis

29

Forward-Looking
Statements andRisk Factors

This report may contain forward-looking statements

In addition, the Group has been acceleratingbased on ADK management’s view and assumptions ofefforts to enhance its functionalities to lead the digital

future developments as of the date of such statements.

advertising market, including the Internet. However, if

The foregoing statements herein are inherently subject

ADK fails to adapt to changes in the advertising media, its

to risks, including, but not limited to, those shown below

performance and financial condition could be adversely(under Tokyo Stock Exchange guidance), and uncertainties

affected.

that could lead to material differences between suchstatements and actual outcomes. Therefore, ADK does

Relationships with Advertisers

not warrant any certainty and accuracy thereto. ADK also

In Japan, traditionally advertisers do not strictly require

expressly disclaims any obligation to update or revise its

an exclusive relationship with their agencies, which may

forward-looking statements.

have business with competitors. However, there is no

Domestic Economy

assurance that this practice will continue in the future.
In the event that ADK fails to adapt to such changes in

In fiscal 2009, 97.9% of ADK Group billings were

the advertising market, its performance and financial

generated from the advertising market. The Groupcondition could be adversely affected.

generates 94.6% of its gross billings from the JapaneseAdvertising companies in Japan do not always havedomestic market. Japanese national advertising spending

documented contracts with media and clients so as tois directly influenced by corporate advertisers’ budgets

maximize their flexibility to adapt to sudden changes.

and, therefore, is closely correlated with nominal

However, ADK works to ensure it has written contracts

consumer spending and GDP. In the event that thewith more media and more clients. When this is the rule,

domestic economy deteriorates seriously, the ADK

not the exception, the Company believes accountabilityGroup’s performance and financial condition could beby both parties will minimize disputes. Until that time,negatively affected.

however, there remains the possibility of disputes with

Response to the Development of New andDigital Media and Changing Consumers’Media Consumption

media and clients.
An advertising agency buys media time or spaceand materials on behalf of its clients on its own account.
Sometimes a purchase is made through another agency.

Media and advertising markets are rapidly and

Therefore, even if a client and/or such another agency

significantly changing. We do not see traditional anddefault, the advertising company is still liable for the

new media cannibalizing each other. Rather, they could

media and or materials toward a media owner and/or aenhance each other. The ADK Group continues to focus on

subcontracting production company.

both traditional and new media through its 360-degreecommunications approach.

30

ADK Annual Report 2009

Client Portfolio

Media Inventories

The sizes of advertising spending by clients’ industry

Occasionally, ADK purchases media inventories,

sector may vary and change. In the last 10 years,

particularly animation programs, at fixed prices based

according to Dentsu, the Information/Communications,on orders from client advertisers, and sometimes

Finance/Insurance and Restaurants/Other services sectors

ADK speculates on inventories. We strive to improve

boosted spending, whereas the Automotive/Automotive-

the quality of content and increase the demand for

Related Products, the Foods and Beverages/Tobaccosuch programs by maintaining close relationships with

Products and Publications sectors decreased their

the media. However, weak sales could lead to excess

spending. The ADK Group has a diversified portfolio of

inventories, which could have an adverse effect on our

first-tier clients. The parent company’s 10 and 20 largest

performance and financial condition.

clients accounted for around 20% and 30%, respectively,of total non-consolidated gross billings in fiscal 2009,

Relationships with Subcontractors

which was a similar sector concentration risk as its

Although ADK carries out planning for advertisingcompetitors. Although we strive to maintain and develop

and sales promotion campaigns, the execution ofgood relationships with our clients, there is no assurance

these activities is mostly outsourced to qualified

that we will be able to continue to do so.

subcontractors. In the case of a change in trading

Competitive Risk

relationships with these subcontracted companies and in
the event that ADK is unable to respond appropriately,Competition among Japan’s major advertising companies

this could have a negative impact on its performance andis intensifying. This trend is accelerated by the entry offinancial condition.

foreign mega-agency groups into the Japanese market,
and that of many new and rapidly growing firms in theCredit Risks of Subcontractors

Internet advertising market. Moreover, advertising clients

In Japanese advertising markets, an advertising agency

tend to select their preferred agency to enjoy economies

is usually required to absorb the credit and functionalityof scale and minimize procurement costs. Consolidation

risks of many small and specialty subcontractors withoutamong clients could accelerate this trend. In the event

shifting them to the advertisers. Moreover, sometimes

that ADK is unable to respond appropriately to clientan agency needs to help finance such subcontractors

needs and changes in the advertising industry, and loses

through advance payments. In an international business,

its competitiveness as a result, there is significant riska partial advance payment is commonly required. Whenthat its market share could decline and profitability could

a subcontractor cannot fulfill an order from an advertiser

deteriorate. This would have a serious impact on its

or maintain its business as a going concern, the agency is

performance and financial condition.

likely to suffer a loss.

Relationships with the Media

Staff

In fiscal 2009, the parent company generated 68.4% of its

Advertising is a people business, and human talent isgross billings by handling the four major mass media, asa critical asset in the advertising industry. In the event

well as the rapidly growing Internet and digital advertisingthat ADK is unable to secure and train its talented staff

sectors and OOH media. Gross billings from televisionadequately, there could be a negative impact on its

represented 48.2% of ADK’s non-consolidated gross billings.

performance and financial condition.

ADK strives to secure advertising time and/or space inthese traditional and new media. However, in the event of adecrease in advertising volume and/or changes in businessterms and conditions and advertising methods, and/or the
emergence of new advertising formats, and the ADK Group
does not respond to these changes appropriately, there isa significant possibility that its performance and financial
condition could be adversely affected.

Forward-Looking Statements and Risk Factors

31Overseas Operations

Relationship with WPP plc

ADK has been striving to develop overseas revenues. In

ADK has maintained strategic operating and equity

fiscal 2009, the ADK Group generated 5.4% of its grossties with WPP plc, of the Republic of Ireland, sincebillings from overseas sources. In overseas markets,

August 1998, holding a 2.49% equity stake in WPP (asbecause of the differences in culture, society, law andof December 31, 2009). WPP holds 24.32% of the voting

commercial customs, a variety of problems may arise. In

rights in ADK. At the same time, both companies haveaddition, both country risk and currency risk are inherent

non-executive directors on each other’s boards. By

in conducting international business. In the event that theway of operating alliances with WPP Group operating

ADK Group is unable to expand its overseas operations ascompanies, including JWT, ADK has made a number ofplanned, its performance and financial condition could becreative and promotional tie-ups and will continue tosignificantly affected.

develop operations worldwide.

Content Businessvoting rights, and its influence on WPP Group operations

ADK has been successful in the animation content

is limited, in the event that the ADK Group is unablebusiness and in sports and cultural event marketing,to realize the benefits from this relationship or if thewhich enables ADK to differentiate itself from

relationship should negatively change in any way, there

competitors. ADK continues to develop new content

could be an impact on the ADK Group’s performance andunder existing and new business models. However, there

financial condition in the future.

Because ADK does not own a majority of WPP’s

is no guarantee of the continued success of this content

Although the yen-translated market value of theor of derivative and/or resale income from it. Accordingly,

equity stake in WPP was ¥27,950 million (at a stock pricein the case that the Group is not able to generate incomeof £6.095 per share) as of the end of December 2009

as expected, the Group could experience a significant

compared with the book value of ¥22,262 million (at a

impact on its performance and financial condition.

stock price of £3.6517 per share under the lower-of-cost-

Investment in Competitivenessor-market method), in the event of a major deteriorationin the Group’s Sterling-based stock price, there is a

To enhance its competitiveness in the changing

possibility that ADK would have to account for valuation

advertising market, ADK occasionally invests in new

losses on this holding.

businesses, such as the Internet and OOH media.
which would be critical in offering 360-degree solution

Marketable Securities andInvestment Securities

ideas, and invests in IT for more efficient operations.

The ADK Group’s holdings of marketable and investment

However, in the event that the ADK Group is unable tosecurities (including the aforementioned stake in WPP

realize benefits from the investments as planned, its

plc and the equity method value of Digital Advertising

performance and financial condition could be significantly

Consortium Inc., or “DAC”) totaled ¥53,280 million,

affected.

representing 28.0% of its ¥190,024 million in total assets

Moreover, ADK invests in data collection and R&D,

Management of Group Companies

as of December 31, 2009. Of this amount, ¥41,602 million
consists of publicly traded equity securities, mostly

The ADK Group consists of the parent company, 53

cross-shareholdings in advertising clients and othersubsidiaries, 22 affiliates and one related company

trading partners (excluding our investment in DAC, non-and operates advertising and publications businesses.

consolidated results of which are accounted for by the

Although we strive hard to realize synergies among theseequity method). The balance of unrealized gains oncompanies, in the event that the ADK Group is unable toavailable-for-sale securities was ¥4,909 million after

do so as planned, its performance and financial condition

deducting deferred tax liabilities on such gains. However,

could be significantly affected.

in the event of a major decline in the market pricesof these holdings, we would be forced to account forvaluation losses.

32

ADK Annual Report 2009

Retirement Benefits and Pension Plans

Contingent Litigation Risks

ADK and some of its Group companies have adopted

As of the date of the financial statements, the ADK Group

combinations of defined contribution and defined

had not been involved in or exposed to a lawsuit orbenefits pension plans. At the end of 2004, ADK (parent

dispute that could place a significantly negative influencecompany) reformed its employee retirement benefits andon its performance and financial condition. However,pension plans and adopted a defined contribution pension

there is no guarantee that the Group will never beplan and a cash balance plan to reduce the volatility of

involved in or exposed to such a lawsuit or dispute in

net periodic benefit costs, an element of the staff costs,

the future.

through a smaller Projected Benefit Obligation and lessrisky pension asset investment strategies.

Legal Risks

In the event of deterioration in pension asset

The ADK Group’s advertising clients are affected bymanagement performance, and a significant change

a number of mandatory and voluntary regulations,in actuarial assumptions, the ADK Group could facedepending on the type or types of businesses ina negative impact on its performance and financial

which they are engaged. If these laws and regulations

condition.

are tightened or new ones are enacted, our clients’

ADK and some of its domestic subsidiaries areadvertising activities could shrink or become curtailed.

members of the Japan Advertising Industry Welfare

Such changes could have a negative impact on ourPension Fund. Because the ADK Group cannot technically

performance and financial condition.

and reasonably define how much pension assets andliabilities it is accountable for, the Group recognizes its

Regulatory Changes

annual cash contribution to the fund as its periodical

In Japan, there are a number of laws that bind advertising

benefit costs applicable for the fund. In the case that thecompanies, including ADK. These include laws to prevent

fund requires the Group to make a larger contribution

delays in payment to subcontractors and protect

due to changes in the discount rate, pension asset

personal information, as well as regulations applicable

performance, number of member companies andto advertising companies. As a publicly listed company,

beneficiaries, and so on, the Group may need to recognize

moreover, ADK should be in compliance with internallarger net periodic benefit costs.

control reporting systems (under the so-called J-SOXThe fund’s total pension assets and liabilities as oflaw). If there is a tightening of existing laws or regulations

March 31, 2009, were ¥57,000 million and ¥90,519 million,

affecting the advertising activities of advertisers or therespectively, and therefore the difference was negative

format or content of advertisements, and if the ADK¥33,518 million. The discount rate for the liabilities wasGroup needs to enhance its compliance environment, themainly 5.5%.

financial results of the ADK Group and other advertising

The ADK Group’s cash contribution share by bothcompanies could be adversely affected. In the case

employers and employees made during the year throughof the introduction of new laws or regulations, or the

March 2009 were 10.30% and 6.22%, respectively,

reinterpretation of existing laws or regulations, the result

making the total 16.52%. Applying simply the shares

could also affect the ADK Group’s performance.

to the aforementioned total fund assets, the Group’s
prorated shares of assets as of March 31, 2009, were
¥9,417 million in total. Out of that amount, the employers’
portion and employees’ portion were ¥5,869 millionand ¥3,548 million, respectively. Likewise, the Group’s
prorated shares of pension liabilities were ¥14,954 million
in total. Within this amount, the employers’ portion andemployees’ portion were ¥9,320 million and ¥5,634
million, respectively.

Forward-Looking Statements and Risk Factors

33

as of March 30, 2010

Board of Directors and Auditors

Masao Inagaki

Kazuhiko Narimatsu

Hiroshi Nakazato

Representative Director
Chairman Emeritus

Executive Director
Senior Operating Officer
Account Services

Executive Director
Operating Officer
Corporate Business Development

Osamu Okayasu

Sir Martin Sorrell

Executive Director
Operating Officer
Account Services

Non-Executive Director
Group Chief Excecutive

Toshiyuki Inoue

Yuzo Shikata

Executive Director
Operating Officer
Media & Content BusinessCorporate Auditor

Koichiro Naganuma
Representative Director
Chairman & Group CEO

Yoji Shimizu
Representative Director
President & COO

Takeo Hishiyama
Executive Director
Senior Operating Officer
Group Business Management

Jiro Kitamura
Executive Director
Senior Operating Officer
Account Services

WPP plc

Yoshiro Sakai
Shinichi Ueno
Executive Director
Operating Officer
Corporate Management

Yoshiki Uemura
Executive Director
Operating Officer
Planning Management
Creative Management

Corporate Auditor

Makoto Ichikawa
Corporate Auditor

Hideshige Haruki
Corporate Auditor

Operating Officers

Katsuhiro Ikuma

Chikara Yoshioka

Toshiyuki Kurayoshi

Hidekatsu Ikedo

Makoto Nakamura

Ritsuo Fukazawa

Osamu Ishikawa

Takeshi Kato

Ryuichi Chibu

Hiroaki Onohara

Akio Yoshi

Michinori Yamada

Hiroshi Nomiyama

Takashi Fukuzaki

Satoru Taniguchi

Huang Hui34

ADK Annual Report 2009

Financial Section

Consolidated Balance Sheets

36

Consolidated Statements of Income

38

Consolidated Statements of Changes in Net Assets

39

Consolidated Statements of Cash Flows

42

Notes to Consolidated Financial Statements

43

Independent Auditors' Report65Consolidated Balance Sheets
ASATSU-DK INC. and Consolidated Subsidiaries
Years Ended December 31, 2009 and 2008
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS

2009

2008

2009

¥ 21,605¥ 14,881$ 234,582

2,145

3,419

23,29087,957

101,823

955,016

CURRENT ASSETS:
Cash and time deposits
Marketable securities (Note 3)
Notes and accounts receivable:		—trade		

Allowance for doubtful receivables

Inventories
Deferred tax assets (Note 7)
Other current assets
			

Total current assets

(677)

(723)

(7,351)

8,824

8,624

95,809

641

477

6,960

1,760

2,971

19,110122,255

131,472

1,327,416

					
PROPERTY AND EQUIPMENT:Land		

1,276

1,284

13,855

Buildings and leasehold improvements

4,048

4,028

43,952

Other

2,664

2,540

28,925

			

Total

Accumulated depreciation			Net property and equipment

7,988

7,852

86,732(4,049)(3,775)(43,963)

3,939

4,077

42,76945,55034,926494,571

8,047

7,314

87,372INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 3)
Investments in unconsolidated		

subsidiaries and affiliated companies

Deferred tax assets (Note 7)
Other assets
			

Total investments and other assets

806

3,574

8,751

9,427

10,419102,357

63,83056,233

693,051						TOTAL		

See notes to consolidated financial statements.

36

ADK Annual Report 2009

¥190,024¥191,782$2,063,236

Millions of Yen

LIABILITIES AND NET ASSETS

2009

Thousands of
U.S. Dollars (Note 1)

2008

2009

CURRENT LIABILITIES:
Short-term debt (Note 4)
¥
346
¥
551
92
151
Current portion of long-term debt (Note 4)
Notes and accounts payable—trade69,237
78,241
227
52
Income taxes payable (Note 7)
Accrued bonuses to employees
163
291
Allowance for sales returns
545
599
—
6
Deferred tax liabilities (Note 7)
Other current liabilities
7,184
7,663
			 Total current liabilities
77,79487,554						
LONG-TERM LIABILITIES:
341
253
Long-term debt (Note 4)
1,001
850
Accrued retirement benefits (Note 5)
Allowance for retirement benefits to directors
		 and corporate auditors*
1,208
1,145
Provision for loss on guarantees
45
37
1,904
13
Deferred tax liabilities (Note 7)
Other long-term liabilities
354
225
			 Total long-term liabilities
4,765
2,611
						CONTINGENT LIABILITIES (Note 11)			
						NET ASSETS (Note 6):			
Shareholders’ equity
		 Common stock			 Authorized: 206,000,000 shares in 2009 and 2008;
			 Issued: 45,155,400 shares in 2009 and 2008,
			 respectively
37,581
37,581		 Capital surplus
20,02420,024
		 Retained earnings
51,35452,158
		 Treasury stock—at cost
(6,970)(6,088)
			 Total shareholders’ equity—net
101,989
103,675
Valuation and translation adjustments		
		 Unrealized gain (loss) on available-for-sale securities
4,910(2,394)16(22)
		 Deferred gain (loss) on derivatives under hedge accounting
		 Foreign currency translation adjustments
(492)
(671)
			 Total valuation and translation adjustments
4,434(3,087)
Minority interests
1,042
1,029
			 Total net assets
107,465
101,617			 		$TOTAL		

$2,063,236¥190,024¥191,782

3,757
999
751,759
2,465
1,770
5,917
—
78,002
844,669

2,747
10,86913,116489
20,673
3,843
51,737

408,046
217,416
557,590(75,679)
1,107,373
53,312
174(5,342)
48,144
11,313
1,166,830*No allowance for retirement benefits to corporate auditors was outstanding as of Dec. 31, 2008,
due to the abolition of the retirement bonus system for them.
See notes to consolidated financial statements.

Financial Section

37

Consolidated Statements of Income
ASATSU-DK INC. and Consolidated Subsidiaries
Years Ended December 31, 2009 and 2008
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

GROSS BILLINGS (Note 13)

2009

2008

2009

¥350,211¥399,452$3,802,508						COST OF SALES (Note 13)

308,844

350,3093,353,355

			

41,36749,143449,153

Gross profit						SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 8, 9 and 13)
			Operating income (loss)

42,12345,444457,361

(756)

3,699

(8,208)						OTHER INCOME (EXPENSES):Interest and dividend income—net
Gain on sales of securities

1,337

1,732

14,517

143

1,427

1,553

Loss on sales of securities

(61)

(27)

(662)

Loss on valuation of securities(213)(1,965)(2,313)

Loss on disposal of fixed assets

(319)

—

(3,464)Equity in earnings (losses) of affiliated companies—net

126

648

1,368

Additional retirement benefits paid to employees

(43)

(321)

(467)

Provision for retirement benefits paid to directors
		and corporate auditors

Provision for loss on guarantees
Exchange loss
Other—net
			Other income—net

—

(459)

—

(8)

(37)

(87)

—

(1,111)

—

137

189

1,488

1,099

76

11,933						
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS

343

3,775

3,725

						
INCOME TAXES (Note 7):
Current

797

1,488

8,654

Deferred

(560)

154

(6,080)						MINORITY INTERESTS IN NET INCOME

33

8

358

						NET INCOME

See notes to consolidated financial statements.

38

ADK Annual Report 2009

¥

73

¥

2,125

$

793

Consolidated Statements of Changes in Net Assets (1)ASATSU-DK INC. and Consolidated Subsidiaries
Year Ended December 31, 2009
Millions of Yen

Year Ended December 31, 2009

Shareholders’ equity
Total
Treasuryshareholders’
stock—at costequityCommonstock

CapitalsurplusRetainedearnings¥37,581¥20,024¥52,158¥(6,088)¥103,675

0		

0

		

(856)		

(856)

Net income			

73		

73

—		

—

Balance as of December 31, 2008
Effect of changes in accounting policies

applied to foreign subsidiaries			Change during the consolidated fiscal year 		
Dividend payments
Increase due to newly consolidated		

subsidiaries			Acquisitions of treasury stock				

(882)

(882)

0

0

standards of foreign subsidiaries			—		—

Other decrease of retained earnings*			(21)		

(21)

Disposals and cancellation of treasury stock		(0)		

Increase due to change in accounting(Net) changes of items other than		shareholders’ equity

—

(0)

(804)

(882)

(1,686)¥37,581¥20,024¥51,354¥(6,970)¥101,989

Total change during the consolidated fiscal year
Balance as of December 31, 2009

Valuation and translation adjustments
Unrealized
gain onavailablefor-salesecurities

DeferredForeign
Total valuation
gain oncurrency
andderivatives
translation
under hedge translationaccounting adjustments adjustments

Minority
interests

Total net
assets¥1,029¥101,617

applied to foreign subsidiaries						

0Balance as of December 31, 2008¥(2,394)¥(22)¥(671)¥(3,087)

Effect of changes in accounting policies

Change during the consolidated fiscal year 				Dividend payments						(856)Net income						

73Increase due to newly consolidated
subsidiaries						

—Acquisitions of treasury stock						(882)Disposals and cancellation of treasury stock						

0

		Increase due to change in accounting
standards of foreign subsidiaries						

—Other decrease of retained earnings*						

(21)

		

(Net) changes of items other than		shareholders’ equity

Total change during the consolidated fiscal year
Balance as of December 31, 2009

7,304

38

179

7,521

13

7,534

7,304

38

179

7,521

13

5,848

¥ 4,910¥16¥(492)¥ 4,434¥1,042¥107,465*Other decrease of retained earnings is appropriation of retained earnings at a Chinese subsidiary to provide reserves for employees’
incentive and welfare funds under a Chinese accounting standard.
Financial Section

39

Consolidated Statements of Changes in Net Assets (2)ASATSU-DK INC. and Consolidated Subsidiaries
Year Ended December 31, 2008
Millions of Yen

Year Ended December 31, 2008

Shareholders’ equity
Commonstock

CapitalsurplusRetainedearnings¥37,581¥20,024¥51,901

Total
Treasuryshareholders’
stock—at costequity¥ (203)¥109,303

		

(1,883)		

(1,883)

Net income			

2,125		

2,125

Balance as of December 31, 2007

Change during the consolidated fiscal year 				Dividend payments
Increase due to newly consolidated		

subsidiaries			19		

Acquisitions of treasury stock				Disposals and cancellation of treasury stock		

(0)		

19

(5,888)(5,888)3

3

Increase due to change in accounting
standards of foreign subsidiaries			

1		1

Other decrease of retained earnings*			

(5)		

(5)

(Net) changes of items other than		shareholders’ equity

—

(0)

257

(5,885)(5,628)¥37,581¥20,024¥52,158¥(6,088)¥103,675

Minority
interests

Total net
assetsTotal change during the consolidated fiscal year
Balance as of December 31, 2008

Valuation and translation adjustments
Unrealized
gain onavailablefor-salesecurities

Balance as of December 31, 2007

¥20,304

DeferredForeign
Total valuation
gain oncurrency
andderivatives
translation
under hedge translationaccounting adjustments adjustments¥ 1¥ 1,087¥ 21,392¥1,151 ¥131,846

Change during the consolidated fiscal year 				Dividend payments						(1,883)

Net income						2,125Increase due to newly consolidated
subsidiaries						

19Acquisitions of treasury stock						(5,888)

Disposals and cancellation of treasury stock						3

		Increase due to change in accounting
standards of foreign subsidiaries						

1Other decrease of retained earnings*						

(5)

		

(Net) changes of items other than		shareholders’ equity

Total change during the consolidated fiscal year
Balance as of December 31, 2008

(22,698)(23)(1,758)(24,479)(122)(24,601)(22,698)(23)(1,758)(24,479)(122)(30,229)¥ (2,394)¥(22)¥ (671)¥ (3,087)¥1,029 ¥101,617*Other decrease of retained earnings is appropriation of retained earnings at a Chinese subsidiary to provide reserves for employees’
incentive and welfare funds under a Chinese accounting standard.

40

ADK Annual Report 2009

Consolidated Statements of Changes in Net Assets (3)ASATSU-DK INC. and Consolidated Subsidiaries
Year Ended December 31, 2009
Thousands of U.S. Dollars (Note 1)

Year Ended December 31, 2009

Shareholders’ equity
Commonstock

Capitalsurplus

Total
Treasuryshareholders’
stock—at costequityRetainedearnings

Balance as of December 31, 2008
$408,046$217,416$566,319$ (66,102)
Effect of changes in accounting policies
applied to foreign subsidiaries		0		
Change during the consolidated fiscal year 				Dividend payments		(9,294)		
Net income		
793		
Increase due to newly consolidated
		 subsidiaries			—		Acquisitions of treasury stock			
(9,577)
Disposals and cancellation of treasury stock		(0)		
0
Increase due to change in accounting
		 standards of foreign subsidiaries			—		
Other decrease of retained earnings*			(228)		(Net) changes of items other than		 shareholders’ equity 		Total change during the consolidated fiscal year—
(0)(8,729)(9,577)
Balance as of December 31, 2009
$408,046$217,416$557,590$ (75,679)$1,125,679
0(9,294)793—(9,577)0—(228)(18,306)$1,107,373

Valuation and translation adjustments
Unrealized
gain onavailablefor-salesecurities

DeferredForeign
Total valuation Minority
gain oncurrency
andinterests
derivatives
translation
under hedge translationaccounting adjustments adjustments

Total net
assetsBalance as of December 31, 2008$(25,993)$(239)$(7,286) $(33,518) $11,173 $1,103,334
Effect of changes in accounting policies
applied to foreign subsidiaries						
0Change during the consolidated fiscal year
Dividend payments						(9,294)
Net income						
793Increase due to newly consolidated—
		 subsidiaries						Acquisitions of treasury stock						(9,577)
Disposals and cancellation of treasury stock						0Increase due to change in accounting
		 standards of foreign subsidiaries						—Other decrease of retained earnings*						(228)(Net) changes of items other than		 shareholders’ equity
79,305413
1,944
81,662
140
81,802
Total change during the consolidated fiscal year
79,305413
1,944
81,662
140
63,496
Balance as of December 31, 2009
$ 53,312$ 174$(5,342) $ 48,144 $11,313 $1,166,830*Other decrease of retained earnings is appropriation of retained earnings at a Chinese subsidiary to provide reserves for employees’
incentive and welfare funds under a Chinese accounting standard.
Yen

U.S. Dollars (Note 1)

2009

2008

2009

PER SHARE OF COMMON STOCK:			
Net income
		

Basic

		

Diluted

1.72

48.12

0.02

Net assets

2,499.05

2,334.48

27.13

20.00

20.00

0.22

Cash dividend applicable to the year

¥

1.73

¥

48.14

$ 0.02Financial Section

41

Consolidated Statements of Cash FlowsASATSU-DK INC. and Consolidated Subsidiaries
Years Ended December 31, 2009 and 2008
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2009

2008

2009

343

¥ 3,774$

OPERATING ACTIVITIES:		
Income before income taxes and minority interests

¥

3,725

Adjustments for:		

Income taxes—paid(108)(4,065)(1,173)		

Depreciation and amortization

943

803

10,238		Equity in losses (earnings) of affiliated companies

(126)

(648)

(1,368)		Gain on sales of securities(82)(1,427)(890)

		Loss on valuation of securities

213

1,965

2,313

		

Changes in assets and liabilities:
14,0285,421

152,313

(269)

(6)

(2,921)(8,471)(8,385)(91,976)

			(Increase) Decrease in notes and accounts receivable			

Increase in inventories

			

Increase (Decrease) in notes and accounts payable

		

(67)

(640)

(728)

			

Others—net
Total adjustments

6,061(6,955)65,809			Net cash provided by (used for) operating activities

6,404(3,181)

69,533

10,575INVESTING ACTIVITIES:
974

1,415

Proceeds from sales of securities

Increase in time deposits—net

7,930

13,344

86,102

Purchases of securities(6,641)(5,561)(72,106)

Proceeds from sales of property and equipment

11

33

119

(100)

(745)

(1,086)

Purchases of intangible assets(467)(1,319)(5,070)

Other investing activities

(137)

(82)

(1,487)

1,570

7,085

17,047

(209)

(444)

(2,269)

—

455

—

(154)

(70)

(1,672)

Purchases of property and equipment

			Net cash provided by investing activities

					
FINANCING ACTIVITIES:
Increase (Decrease) in short-term debt—net
Increase of long-term debt
Repayment of long-term debt
Purchases of treasury stock—net(882)(5,885)(9,577)

Dividends paid

(856)

(1,883)(9,294)

Other financing activities			

Net cash used for financing activities

(40)

(26)

(434)

(2,141)(7,853)(23,246)204(1,289)2,215

			
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS

						NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

6,037(5,238)65,549						
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR

12,807

17,994139,055—

51—¥18,844¥12,807$204,604

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATEDSUBSIDIARIES, BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS, END OF THE YEAR

See notes to consolidated financial statements.

42

ADK Annual Report 2009

Notes to Consolidated Financial Statements
ASATSU-DK INC. and Consolidated Subsidiaries
Years Ended December 31, 2009 and 2008

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements
have been prepared from the accounts maintained by
ASATSU-DK INC. (the "Company") and its consolidated
subsidiaries in accordance with the provisions set forthin the Financial Instrument and Exchange Law and its
related accounting regulations, and in conformity withaccounting principles and practices generally acceptedin Japan, which are different in certain respects as
to application and disclosure requirements fromInternational Financial Reporting Standards.
In preparing these consolidated financial
statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements

issued domestically in order to present them in a form
which is more familiar to readers outside Japan.
The consolidated financial statements are statedin Japanese yen, the currency of the country in which
the Company is incorporated and mainly operates. The
translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience ofreaders outside Japan and has been made at the rate of¥92.10 to U.S.$1.00, the approximate rate of exchange
on December 31, 2009. Such translation should not be
construed as a representation that the Japanese yenamounts could be converted into U.S. dollars at that or
any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements
include the accounts of the Company and its significant
twenty-three (23) (twenty-three (23) in 2008) majorityowned subsidiaries (together, the "Group").
Under the control or influence concept, thosecompanies in which the Company, directly or indirectly,
is able to exercise control over operations are fully
consolidated, and those companies over which theGroup has the ability to exercise significant influence areaccounted for by the equity method.
Twenty-two (22) subsidiaries use a fiscal year
ended at December 31, so does the Company. One
subsidiary uses a fiscal year ended at September 30.
The consolidated financial statements include thefinancial statements of this subsidiary for its respective
fiscal years after making appropriate adjustments for
significant transactions during the periods from its
respective year-end dates to the date of the consolidated
financial statements.
Investments in three (3) affiliated companies, 20%
to 50% of which interests are owned by the Company, areaccounted for by the equity method. (Investments in thethree (3) affiliated companies were accounted for by theequity method in 2008.) Investments in the remaining
thirty (30) (twenty-five (25) in 2008) unconsolidated
subsidiaries and nineteen (19) (eighteen (18) in 2008)
affiliated companies are stated at cost. If thesecompanies are fully consolidated, or the equity methodof accounting had been applied to the investmentsin these companies, the effect on the accompanying
consolidated financial statements would not be material.
For the number of the equity method affiliates please
see Note 16. SUBSEQUENT EVENT.
Goodwill is charged or credited to income, in theyear incurred.
All significant inter-company balances andtransactions have been eliminated in consolidation. All
material unrealized profits included in assets resulting
from intra-group transactions are eliminated.
Effective from the financial statement for
FY2009, financial statements of the overseas
consolidated subsidiaries are made in accordance withASBJ Practical Solution No. 18 (issued on May 17, 2006),
where certain corrections are made upon consolidation.
The effect of this Practical Solution on Operating loss
and Income before income taxes and minority interests
is not material.
b. Cash and Cash Equivalents—Cash and cash equivalents
consist of cash, demand deposits with banks and thosewhich are short-term investments that are readily
convertible into cash and that are not exposed tosignificant risk of changes in value.
Cash equivalents include time deposits, certificatesof deposit and money management funds investing inbonds for the short term, all of which mature or becomedue within three months of the date of acquisition.

Financial Section

43

The balances of cash and cash equivalents as of December 31, 2009 and 2008 are reconciled to the balance sheets
as follows:
Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

¥14,881$234,582

Balance sheet:		Cash and time deposits¥21,605

Securities

2,145

3,419

23,290		

23,75018,300257,872

3,732

3,960

40,521

Total

Less:
Time deposits over three months
Securities not applicable to cash equivalents(Securities other than Money Management Funds, etc.)
Cash and cash equivalents

c. Inventories—Inventories consist principally of billable
production orders in process, which are stated at cost
determined by the specific identification method. Billable
production orders in process are primarily costs incurredon behalf of clients when providing advertising services
such as marketing and branding consultation, designingand producing of sales promotion programs, and event
marketing to clients. Inventories also include publication
merchandise.
Effective from the financial statements for
FY2009, inventories are assessed in accordance withASBJ Statement No. 9 (issued on July 5, 2006), where
inventories with low expected profitability are written
down when such judgment is made. As a result, forthe year ended December 31, 2009, Operating loss isnegatively impacted by ¥69 million ($749 thousand) andIncome before income taxes and minority interests islower by ¥208 million ($2,258 thousand).
d. Marketable and Investment Securities—All applicablesecurities are classified and accounted for, depending on
management’s intent, as follows:i) trading securities, which are held for the purpose of
earning capital gains in the near term, are reported atfair value, and the related unrealized gains and losses arereflected to earnings of the period of such gain or loss,ii) held-to-maturity debt securities, which are expected tobe held to maturity with the positive intent and ability tohold to maturity are reported at cost after amortizationor accumulation of any difference between cost and facevalue and iii) available-for-sale securities, which are notclassified as either of the aforementioned securities, arereported at fair value, and which unrealized gains and44

ADK Annual Report 2009

1,174

1,533

12,747¥18,844¥12,807$204,604

losses, net of applicable taxes, are reported to unrealized
gain (loss) on available-for-sale securities, a component of
net assets. As of the end of 2008 and 2009, the Company
and its consolidated subsidiaries had no balance of heldto-maturity debt securities.
If the market values of held-to-maturity debt
securities, equity securities issued by unconsolidated
subsidiaries and affiliated companies, and availablefor-sale securities decline significantly, such securities
are stated at fair market value, and the difference
between the fair market value and the carrying amountis recognized as a loss in the period of the decline. If
the fair market value of equity securities issued byunconsolidated subsidiaries and affiliated companies
which have not been accounted for by the equity method
is not readily available, such securities should be written
down to net asset value with a corresponding charge
in the statement of income in the event net asset value
declines significantly. In these cases, such fair market
value or the net asset value will be the carrying amountof the securities at the beginning of the next year.
e. Property and Equipment—Property and equipment
are carried at cost. Depreciation for the property andequipment other than the buildings acquired after
April 1, 1998, is computed mainly by the declining balancemethod at rates based on the estimated useful lives of
the assets. Depreciation of buildings acquired after April 1,
1998 is computed by the straight line method over theirestimated useful lives. The estimated useful lives of major
assets are as follows:
Buildings and leasehold improvements 10–50 years

Under the amendment of the Japanese Corporation
Tax Law, effective April 2007, the Company and its
domestic subsidiaries are allowed to depreciate theentire cost of their property, plant and equipment leaving
no salvage value. The property, plant and equipment
acquired by March 31, 2007 are and will be depreciatedto the value allowed to depreciate as originally scheduled
before the amendment of the law, and then the remaining
amount (i.e., the balance not yet depreciated) is and will
be depreciated to zero value from the following year infive years. The effects of the changes and application of
the amended tax law are immaterial.
f. Provision for Loss on Guarantees—The Group sets aside
a reserve of losses on guarantees for liabilities owed
by non-consolidated subsidiaries, affiliated companies
or business associates. The amount of such provisionreflects estimated potential losses based on such factors
as the financial condition of parties whose liabilities areguaranteed.
g. Retirement Benefits and Pension Plans—The Groupaccounted for the liability for retirement benefits basedon the projected benefit obligations and plan assets atthe balance sheet date, except for the liability in regard
with Japan Advertising Industry Pension Fund, as noted
later.
The Company’s directors are entitled, in mostcircumstances, to lump-sum severance payments basedon current rates of pay, length of services and othercertain factors. The Company accrues 100% of obligations
based on its rule required under the assumption that all
directors retired at the balance sheet date.
During fiscal 2008, some of the domestic
consolidated subsidiaries stipulated their internal rules
for retirement benefits to their board members andcorporate auditors. Accordingly, these subsidiaries andthe Group recognized allowance for retirement benefits
to directors and corporate auditors incurred by the endof 2008.
The Company and some of its domestic subsidiaries
are members of the Japan Advertising Industry Pension
Fund. Because the Group cannot technically or reasonably
define how much pension assets and liabilities the Groupis accountable for, the Group recognizes its annual cash
contribution to the fund as its periodical benefit costs
applicable for the fund but not as pension assets andliabilities.

h. Sales Recognition—Income derived from media
advertising is recognized upon publication or
broadcasting. Product sales are recognized when
the products are received by clients. One domestic
consolidated subsidiary provides allowances, based
upon the Japanese tax code, for returned publication
merchandise and losses derived from unsold publication
merchandise.
i. Leases—In March 2007, ASBJ issued ASBJ Statement
No. 13, “Accounting Standard for Lease Transactions,”
which revised the previous accounting standard for leasetransactions issued in June 1993. The revised accounting
standard is required to be adopted for a fiscal year
starting on or after April 2008.
ASBJ Statement No. 13 requires that all financelease transactions should be capitalized to recognize
lease assets and lease obligations on the balance sheet.
However, the standard permits that some leases could
be accounted for as operating lease transactions, if thetransactions were contracted on or before the end of
the year before the fiscal year of adoption, if the leased
property is not deemed to be transferred to the lessee,
and if certain "as-if-capitalized" information is disclosed
in the notes to the lessee's consolidated financial
statements.
The Group applied ASBJ Statement No. 13 effective
FY2009, but keeps accounting for certain applicable leasetransactions as the operating lease. For the information of
those operating leases, please refer to Note 10. LEASES.
In major overseas consolidated subsidiaries, leases areaccounted for as finance leases and leased properties arecapitalized.
As a result, lease assets of ¥113 million ($1,226
thousand) are capitalized as tangible fixed assets and¥6 million ($65 thousand) as intangible fixed assets asof December 31, 2009. The effects of this change inaccounting standard on Operating loss and Income before
income taxes and minority interests are not material.
Lease assets are depreciated by the straight line method
over the terms of respective leases with no salvage
values.
j. Software and R&D Costs—Research and development
costs are charged to income when incurred. Capitalized
software for internal use amounting to ¥1,424 million($15,461 thousand) in 2009 and ¥1,848 million in 2008,
respectively, included in "Other assets" of investments

Financial Section

45

and other assets, was amortized by the straight line
method based on the estimated useful lives (five years).
k. Income Taxes—The provision for income taxes iscomputed based on the pretax income or loss reported in
the consolidated statements of income. Deferred income
taxes are recorded based on the asset and liability
method to reflect the impact of temporary differences
between assets and liabilities recognized for financial
reporting purposes and such amounts recognized fortax purposes by applying the statutory tax rate to thetemporary differences. With respect to the deferred
tax assets, the companies believe it is more likely than
not that such tax benefits will be realized through the
reduction of future taxable income.
l. Appropriations of Retained Earnings—Appropriationsof retained earnings at each year end are reflected in the
consolidated financial statements for the following year.
m. Foreign Currency Transactions—Short-term and longterm monetary receivables and payables denominatedin foreign currencies are translated into Japanese yenat the exchange rates at the balance sheet dates. The
foreign exchange gains and losses from translation arerecognized in the consolidated statements of income inthe cases where they are not hedged by foreign exchange
derivatives or a hedging transaction does not qualify forspecific hedge accounting.
n. Foreign Currency Financial Statements—Both balance
sheet accounts of the consolidated overseas subsidiaries
and affiliated companies are translated into Japanese
yen at the current exchange rates as of the balance sheet
dates except for shareholders' equity, which is translated
at historical exchange rates.
Differences arising from such translation ofshareholders’ equity are shown as “Foreign currencytranslation adjustments” in a separate component ofshareholders’ equity.
Revenue and expense items of the consolidated
overseas subsidiaries and affiliated companies for theyear ended on December 31, 2009 are translated into
Japanese yen at the average exchange rate for the year,
while those for the year ended on December 31, 200846

ADK Annual Report 2009were translated into Japanese yen at the exchange rate
as of the balance sheet date. The effect of this change is
not material.
o. Derivatives and Hedging Activities—The Group uses
derivative financial instruments to manage its exposures
to fluctuations in foreign exchange. Foreign exchange
forward contracts are utilized by the Group to reduce
foreign currency exchange risks. The Group also has
investments in debt securities with derivatives which aredesigned to enhance returns. Some of those investments
have terms and conditions that could lead to a situation
where an original face value of such security is notredeemed even if there is no credit event. However,
because such loss would be limited to the face value atmaximum, an influence of such risk is limited.
Derivatives are recognized as either assets or
liabilities at fair value and gains or losses on derivativetransactions are recognized in the consolidated
statements of income, unless such derivatives qualify forspecific hedge accounting.
Short-term receivables and payables denominatedin foreign currencies for which foreign exchange forward
contracts are used to hedge the foreign currency
fluctuations are translated at the contracted rate if theforward contracts qualify for specific hedge accounting.
p. Per Share Information—The computation of basic net
income per share is based on net income attributable toshareholders of common stock and the weighted average
number of shares outstanding during each year, anddiluted net income per share is computed based on net
income attributable to shareholders of common stock
after giving the effect to the net income of an affiliatedcompany which has the dilutive potential of shares andthe weighted average number of shares outstanding
during each year. The average number of common sharesused in the computation was 42,709,412 shares for the
fiscal year ended December 31, 2009 and 44,145,863
shares for the fiscal year ended December 31, 2008,
respectively.
Cash dividends per common share presented in
the accompanying consolidated statements of income
are dividends applicable to net income of the respective
years including dividends paid after the end of the year.

3. MARKETABLE AND INVESTMENT SECURITIESThe carrying amount and aggregate fair value of the securities classified as available-for-sale as of December 31, 2009
and 2008 were as follows:
Millions of Yen

2009

Cost

Unrealized gains

Unrealized losses

Fair value

Available-for-sale:				
Equity securities¥33,099¥10,650¥2,148¥41,601

Debt securities

3,091

3

149

2,945

Other

338

7

6

339

Total

¥36,528¥10,660¥2,303¥44,885
Millions of Yen

2008

Cost

Unrealized gains

Unrealized losses

Fair value

Available-for-sale:				
Equity securities¥33,231¥4,358¥7,756¥29,833

Debt securities

5,363

4

499

4,868

Other

924

1

13

912

Total

¥39,518¥4,363¥8,268¥35,613

Thousands of U.S. Dollars

2009

Cost

Unrealized gains

Unrealized losses

Fair value

Available-for-sale:				
Equity securities$359,381$115,635$23,322$451,694

Debt securities

33,56133

1,618

31,976

Other

3,670

76

65

3,681

Total

$396,612$115,744$25,005$487,351

The carrying amount of the securities classified as available-for-sale securities whose fair values are not readily
determinable as of December 31, 2009 and 2008 were as follows:

Millions of Yen

Carrying amount2009

Thousands of
U.S. Dollars

2008

2009

¥1,451
1,126
—
—
—
155
¥2,732$21,107
8,024
—
—
—
1,368
$30,499

Available-for-sale:			Non-listed equity securities
Investment trust
Money management funds
Free financial funds
Medium-term government bond funds
Other
Total

¥1,944
739
—
­—
—
126
¥2,809Financial Section47

Total sales of available-for-sale securities sold in the year
ended December 31, 2009 and 2008 amounted to ¥7,930
million ($86,102 thousand) and ¥11,393 million and therelated gains amounted to ¥144 million ($1,563 thousand)and ¥1,464 million, and the related losses amounted to¥66 million ($716 thousand) and ¥79 million, respectively.

The redemption schedule for available-for-sale securities
with maturities as of December 31, 2009 and 2008 is asfollows (Note: If a security with a derivative instrument
is to be redeemed earlier than the contracted maximum
maturity date under certain conditions, regardless of suchconditions, the maximum maturity date is reflected in theschedule.):Millions of Yen

2009
Debt securities
Other
Total

Due within one year

1 to 5 years

5 to 10 years¥1,112¥482¥278

Over 10 years¥1,071————¥1,112¥482¥278¥1,071

1 to 5 years

5 to 10 years¥1,132¥491

Millions of Yen

2008
Debt securities
Other
Total

Due within one year

¥1,568Over 10 years¥1,674————¥1,568¥1,132¥491¥1,674

Thousands of U.S. Dollars

2009
Debt securities
Other
Total

48

ADK Annual Report 2009

Due within one year

1 to 5 years

5 to 10 years$12,074$5,233$3,018Over 10 years$11,629

—

—

—

—

$12,074$5,233$3,018$11,629

4. SHORT-TERM AND LONG-TERM DEBT
The weighted average annual interest rates applicable to the short-term debt were 1.42% and 2.07% at December 31,
2009 and 2008, respectively.
Long-term debt as of December 31, 2009 and 2008 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Loans due through 2013 (See note below.)
Amount due within one year
Total					

2009

2008

2009

¥345

¥ 492

$3,746

(92)

(151)

(999)

¥253

¥ 341

$2,747
Thousands of
U.S. Dollars

Millions of Yen

Obligations under capital leases (See note below.)
Amount due within one year
Total					

2009

2008

2009

¥122

¥—

$1,324

(27)

—

(293)

¥ 95

¥—

$1,031

Note: Weighted average interest rates or averages of interest rates applicable to loans outstanding at the end of each fiscal year weighted
by then amounts of loans, for the loans due beyond one year are 4.75% p.a. in 2009 and 4.53% p.a. in 2008. Weighted average interest
rates of the loans due within one year are 4.07% p.a. in 2009 and 2.97% p.a. in 2008. Weighted average interest rates of obligations underfinance leases due beyond and within one year are 2.55% and 2.82%, respectively, in 2009.

Repayment schedule of long-term debt as of December 31, 2009, was as follows:Year Ending December 31

Millions of Yen

Thousands of
U.S. Dollars

2010					

¥ 92

$ 999

2011					

929992012					

929992013					

69749Total					¥345$3,746

Repayment schedule of obligations under capital leases as of December 31, 2009, was as follows:Year Ending December 31

Millions of Yen

Thousands of
U.S. Dollars

2010					

¥ 27

$ 293

2011					

293142012					

252712013					

24261Later years				

17

185

Total					¥122$1,324

Financial Section

49

5. RETIREMENT BENEFITS AND PENSION PLANS
The Company and certain of its consolidated subsidiaries
provide two types of post-employment benefit plans,
namely defined contribution pension plans and defined
benefit pension plans. The latter consists of cash balanceplans, funded non-contributory pension plans and plansprovided by the Japan Advertising Industry Pension
Fund, as well as unfunded lump-sum payment plans underwhich all eligible employees are entitled to benefits basedon the level of salary, length of services and certain otherfactors.

The liabilities for employees’ retirement benefits and pension plans as of December 31, 2009 and 2008 are comprised of
the following. (See the *Remarks below.):
Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

¥11,367¥11,048$123,420

Fair value of plan assets(8,227)(7,897)(89,327)

Unrecognized actuarial differences(2,139)(2,371)(23,225)780$ 10,868

Projected benefit obligation

Accrued retirement benefits¥ 1,001¥

The components of net periodic benefit costs for the years ended December 31, 2009 and 2008 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost			

2009

2008

2009

¥ 802

¥ 762

$ 8,708

Interest cost			

204

201

2,215

Expected return on plan assets

(118)

(132)

(1,281)

Amortization of actuarial differences

255

131

2,769

Contributions paid during the period, etc.
(See the *Remarks below.)
Net periodic benefits costs
The discount rate used by the Group was 2.0% as of theyears ended December 31, 2009 and 2008. The rate of
expected return on plan assets used by the Group was
1.5% for the years ended December 31, 2009 and 2008.
The estimated amount of retirement benefits to be paid
at the future retirement date is allocated equally to each*Remarks:

970

978

10,531¥2,113¥1,940$22,942

service year over the estimated number of total service
years. Unrecognized actuarial differences are amortizedover 13 years on a straight-line basis commencing fromthe succeeding period. Prior service costs are charged toincome when incurred.

For plans provided by the Japan Advertising Industry Pension Fund, the Group cannot technically or reasonably allocate
pension assets and liabilities to the Group’s account. Therefore, the Group recognizes its annual cash contribution to thisfund as its periodical benefit costs, but does not recognize pension assets and liabilities as stated above.
Contributions paid during the period, etc., stated in the table shown above include the Group’s cash contribution for theperiod to the Japan Advertising Industry Pension Fund.
The information of total pension assets and liabilities of the Japan Advertising Industry Pension Fund, the Group’s share of
the contribution to the fund, and the pro-rated share of pension assets or liabilities for the Group as measured by the shareof the contribution to the fund are as follows (Note: As stated above, the Group cannot technically or reasonably allocate
pension assets and liabilities to the Group’s account. The pro-rating calculation is simply for information purposes only.) :50

ADK Annual Report 2009

a. Total pension assets and liabilities of the fundThousands of
U.S. Dollars

Millions of Yen

March 31,2009

March 31,2008

March 31,2009¥(90,518)¥(86,836)$(982,823)

57,00070,570618,892¥(33,518)¥(16,266)$(363,931)

Pension liabilities		
Pension assets (See Remark below.)
Net assets (deficits)		

The rate of expected return on plan assets used by the fund was roughly 5.5%.
Remark: The Japan Advertising Industry Pension Fund’s total pension asset as of March 31, 2010 was ¥69,325 million ($752,714
thousand). The pension liabilities amount is now being calculated.

b. The Group’s share of the contribution to the fund

Share of the Group as employers		

April 1, 2008–
March 31, 2009

April 1, 2007–
March 31, 2008

10.30%

9.01%

Share of employees			

6.22%

5.54%

Total						16.52%

14.55%

c. Pro-rated share of pension assets or liabilities as measured by the Group’s share of the contribution to the fundMillions of Yen

March 31, 2009
Pension liabilities			

Share of the Groupas employer

Share ofemployees¥(9,320)¥(5,634)

Pension assets				

5,869

3,548

Net deficits				¥(3,451)¥(2,086)

Millions of Yen

March 31, 2008
Pension liabilities			

Share of the Groupas employer

Share ofemployees¥(7,824)¥(4,807)

Pension assets				

6,358

3,907

Net deficits				¥(1,466)¥ (900)Thousands of U.S. Dollars

March 31, 2009

Share of the Groupas employer

Share ofemployees$(61,173)

Pension liabilities			$(101,194)

Pension assets				

63,72438,524

Net deficits				$ (37,470)$(22,649)

Financial Section

51

d. Supplemental information
The Japan Advertising Industry Pension Fund’s total
net pension deficit amount of ¥33,518 million ($363,931
thousand) and ¥16,266 million on March 31, 2009
and March 31, 2008 stated in the item “a” above
equals to the sum of prior service liabilities of ¥7,083
million ($76,906 thousand) and ¥7,533 million and net
accumulated deficit carry-forward of ¥26,435 million($287,025 thousand) and ¥8,712 million, respectively.

Prior service liabilities are amortized over 20 years by
the straight line method at the fund accounting, and
the Group expensed an additional contribution of ¥117
million ($1,270 thousand) and ¥111 million during theperiods from April 1, 2008 to March 31, 2009 and from
April 1, 2007 to March 31, 2008, respectively, for thisamortization.

6. CHANGE IN NET ASSETS
The type and number of shares issued and treasury stock as of December 31, 2009 and 2008 were as follows:
Type of sharesissuedType of treasury
stock

2009

Common stock

Common stock

Number of shares as of December 31, 2008

45,155,400

2,067,327—

502,804

Number of shares increased during the accounting
period ended December 31, 2009
Number of shares decreased during the accounting
period ended December 31, 2009
Number of shares as of December 31, 2009
Notes:—(264)

45,155,400

2,569,867

1. Increase in the number of treasury stock was due to the purchase of 500,000 shares with an approval of board of directors
meeting and purchase of 2,804 shares of less-than-one-unit shares.
2. Decreases in the number of treasury stocks were due to sales of 264 shares of less-than-one-unit shares.

Type of sharesissuedType of treasury
stock

2008

Common stock

Common stock

Number of shares as of December 31, 2007

45,155,400

64,297—2,004,159

Number of shares increased during the accounting
period ended December 31, 2008
Number of shares decreased during the accounting
period ended December 31, 2008
Number of shares as of December 31, 2008
Notes:

52—(1,129)45,155,400

2,067,327

1. Increase in the number of treasury stock was due to the purchase of 2,000,000 shares with an approval of board of
directors meeting and purchase of 4,159 shares of less-than-one-unit shares.
2. Decreases in the number of treasury stocks were due to sales of 1,129 shares of less-than-one-unit shares.

ADK Annual Report 2009

Information related to dividends for the accounting periods ended December 31, 2009 and 2008 was as follows:2009
Dividend paid during the accounting period ended December 31, 2009

Resolution

Board of Directors
February 13, 2009

Board of Directors
August 12, 2009

Total amount of dividends¥430 million¥425 million

Dividend per share

¥10

¥10

Record date

December 31, 2008

June 30, 2009

Payable date

March 12, 2009

September 14, 2009

Dividend attributable to the performance of the accounting period ended December 31, 2009 but paid after thesaid accounting period
Board of Directors
February 12, 2010

Resolution
Total amount of dividends		

¥425 million

Fund of dividend		

Retained earnings

Dividend per share		¥10

Record date		

December 31, 2009

Payable date		

March 12, 2010

2008
Dividend paid during the accounting period ended December 31, 2008

Resolution

Board of Directors
February 14, 2008

Board of Directors
August 14, 2008

Total amount of dividends¥1,442 million¥440 million

Dividend per share

¥32

¥10

Record date

December 31, 2007

June 30, 2008

Payable date

March 12, 2008

September 16, 2008

Dividend attributable to the performance of the accounting period ended December 31, 2008 but paid after thesaid accounting period

Resolution

Board of Directors
February 13, 2009

Total amount of dividends		

¥430 million

Fund of dividend		

Retained earnings

Dividend per share		¥10

Record date		

December 31, 2008

Payable date		

March 12, 2009

Financial Section

53

7. INCOME TAXESThe Company and its domestic consolidated subsidiaries
are subject to corporate, inhabitant and enterprise taxes
based on income. Normal effective statutory tax rates
for these taxes in the aggregate result in approximately
40.69% for 2009 and 2008, respectively, after reflectionof the enterprise tax, in the way that such tax should be
deductible for tax purposes only when paid. Overseas
subsidiaries are subject to income taxes of the countries
in which they operate.

The deferred tax assets and liabilities as a result of the tax effects of significant temporary differences as of December
31, 2009 and 2008 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009
$ 7,731

Deferred tax assets:
Allowance for doubtful receivables

¥ 712

¥ 505

Accrued bonuses

22

36

239

Accrued retirement benefits

326

300

3,540

Inventory			

104

—

1,129

Investment securities

407

392

4,419

Tax loss carry-forwards

327

424

3,550

Unrealized loss on marketable securities

46

1,921

499

Deferred tax assets in overseas consolidated subsidiaries*

40

78

434

Other				

1,152

929

12,509						

3,136

4,585

34,050

Valuation allowance**		

(135)

(170)

(1,466)

Total deferred tax assets

3,001

4,415

32,584

Deferred tax liabilities:			
Accrued retirement benefits
Unrealized gain on marketable securities
Deferred tax liabilities in overseas consolidated subsidiaries*
Other				Total deferred tax liabilities
Total net deferred tax assets (liabilities)*Remarks:

94

228

204

36,656

59

70

640

—

15

—

3,456

383

37,524¥ (455)¥4,032$ (4,940)

The deferred tax assets and liabilities in overseas consolidated subsidiaries as results of the tax effectsof significant temporary differences and losses carry-forward as of the end of fiscal year 2009 and 2008
were as follows:

:

54

21
3,376

ADK Annual Report 2009

Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009
$ 771

Deferred tax assets:		
Tax loss carry-forwards

¥ 71

¥119

Other 				

27

31

293

Less valuation allowance**

(58)

(72)

(630)

Deferred tax assets		

40

78

434

Deferred tax liabilities —Depreciation

59

68

641

						 —Other

—

2

—

Deferred tax liabilities

59

71

641

Net deferred tax assets

¥(19)

¥ 7

$ (207)**Remarks: Valuation allowances shown above are provided for tax loss carry-forwards of certain subsidiaries under
the Group’s tax planning.
Reconciliation between the normal effective statutory tax rate for the years ended December 31, 2009 and 2008 andthe actual effective tax rates reflected in the accompanying consolidated statements of income were as follows:

Normal effective statutory tax rate

2009

2008

40.69%

40.69%

92.99

10.23

(18.26)(2.20)

8.53

0.78

29.15

—

Certain expenses, including, but not limited to,entertainment expenses, permanently not deductible
for tax purposes 		Certain incomes, including, but not limited to, dividend income,permanently not taxable for tax purposes
Per capita levy			
Corporate income tax for the past year
Amendment of effective tax rate for the past year

(48.33)—

Tax rate difference applicable to overseas subsidiaries(35.38)(3.03)

Other—net				(0.44)(2.98)

Actual effective tax rate

68.95%

43.49%

Financial Section

55

8. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Breakdown of Selling, general and administrative expenses for the years ended December 31, 2009 and 2008 are as
follows:
Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

¥22,114¥24,785$240,109

Selling, general and administrative expenses:
Salaries				
Provision for bonus expenses

126

302

1,368

Provision for pension benefits

2,082

1,917

22,606

Provision for retirement benefits to directors

84

87

912

Welfare expenses		

2,845

3,102

30,890Rent expenses		

4,146

4,024

45,016

Provision for doubtful accounts

786

223

8,534

Depreciation expenses

290

332

3,149

9,650

10,672

104,777¥42,123¥45,444$457,361

Other

		

Total

			

9. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income for the years ended December 31, 2009 and 2008 were ¥949
million ($10,304 thousand) and ¥1,084 million, respectively.

56

ADK Annual Report 2009

10. LEASESThe Group leases certain computer equipment, officespace, vehicles, software and other assets.
As discussed in Note 2.i. Leases, the Group accounts
for certain leases as operating lease transactions,satisfying certain conditions that the transactions were
contracted on or before the end of 2008, that theleased property is not deemed to be transferred to thelessee, and that certain "as-if-capitalized" information

is disclosed in the notes to the lessee's consolidated
financial statements. Pro forma information of thoseleased properties such as acquisition cost, accumulated
depreciation, obligations under finance leases,
depreciation expense and interest expense of financeleases on an "as-if-capitalized" basis for the years ended
December 31, 2009 and 2008, were as follows:

Millions of Yen

Year Ended December 31, 2009
Acquisition cost
Accumulated depreciation
Net leased property

Furniture andequipment

Machinery andvehiclesSoftwareTotal¥1,701¥1,364

¥—

¥337

901

—

263

1,164

¥ 463

¥—

¥ 74

¥ 537

Obligations under finance leases:
Millions of Yen

Due within one year			Due after one year			

¥327
243

Total						¥570Millions of Yen

Year Ended December 31, 2008
Acquisition cost
Accumulated depreciation
Net leased property

Furniture andequipment

Machinery andvehiclesSoftwareTotal¥2,229¥1,801

¥33

¥395

982

29

245

1,256

¥ 819

¥ 4

¥150

¥ 973

Obligations under finance leases:
Millions of Yen

Due within one year			¥ 436

Due after one year				574

Total						¥1,010Financial Section57Thousands of U.S. Dollars

Year Ended December 31, 2009
Acquisition cost
Accumulated depreciation
Net leased property

Furniture andequipment$14,810
9,783$ 5,027

Machinery andvehicles$——$—SoftwareTotal$3,6592,856$ 803$18,469
12,639$ 5,830

Obligations under finance leases:
Thousands of U.S. Dollars

Due within one year			$3,550Due after one year				

2,639

Total						$6,189

Breakdown of lease payments, or depreciation expense and interest expense under finance leases:
Thousands of
U.S. Dollars

Millions of Yen

2009

2008

2009

Total lease payments

¥436

¥490

$4,734

Depreciation expense

412

474

4,473

Interest expense

17

23

185

Depreciation expense and interest expense, which are not reflected in the accompanying consolidated statements ofincome and retained earnings, are computed by the straight-line method and the interest method, respectively.

Obligations under operating leases:
Millions of Yen

Due within one year
Due after one year		Total				

58ADK Annual Report 2009

Thousands of
U.S. Dollars

2009

2008

2009

¥ 576
3,700
¥4,276¥ 566
4,019¥4,585$ 6,254
40,174$46,428

11. CONTINGENT LIABILITIESAs of December 31, 2009, the Group had the following contingent liabilities:
Guarantee Obligations:
Millions of Yen

Aggregated amount of guarantees for debts owed by subsidiaries
		 and affiliates and payables by a client, GroupM Japan		¥372

Thousands of
U.S. Dollars$4,039Other contingent liability:
In September 2005, a former client filed a lawsuit against one of the Company’s consolidated subsidiaries and four othercompanies and five individuals seeking demands in excess of U.S. $12.5 million in connection with the subsidiary’s andthe other defendants’ advertising business. The subsidiary and its legal counsel filed a motion to dismiss the complaint inNovember 2005. The court heard oral arguments on the motion in January 2006 and has not yet issued a ruling.

Financial Section

5912. DERIVATIVESThe Group enters into foreign exchange forward contracts
to hedge foreign exchange risk associated with certain
assets and liabilities denominated in foreign currencies.
The Group also has investments in debt securities with
derivatives which are designed to enhance returns. Someof those investments have terms and conditions that
could lead to a situation where an original face value ofsuch security is not redeemed even if there is no credit
event. However, because such loss would be limited to

the face value at maximum, the influence of such risk islimited.
Because the counterparties to these derivatives arelimited to major sound financial institutions, the Group
does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group
have been made in accordance with internal rules andpolicies which regulate the authorization and exposure
limit amount.

The notional amounts, fair values and unrealized gain and loss on derivatives as of December 31, 2009 and 2008 weresummarized as follows:
Millions of Yen

Year Ended December 31, 2009

Notional
amounts

Due after
one year

Fair value

Currency:				
OTC market 				Foreign exchange forward contracts 				— Buying (US$)
¥212
¥141
¥177
Total						Unrealized gain
(loss)

¥(33)
¥(33)

Millions of Yen

Year Ended December 31, 2008

Notional
amounts

Due after
one year

Fair value

Currency:				
OTC market 				Foreign exchange forward contracts 				— Buying (US$)
¥283
¥212
¥230
Total						Unrealized gain
(loss)

¥(48)
¥(48)

Thousands of U.S. Dollars

Year Ended December 31, 2009

Notional
amounts

Due after
one year

Fair value

Unrealized gain
(loss)

Currency:
OTC market
Foreign exchange forward contracts 						— Buying (US$)$1,922$(358)

Total						$2,302$1,581$(358)

Derivative transactions which were accounted for by hedge accounting were excluded.
60

ADK Annual Report 2009

13. SEGMENT INFORMATION
Information about business segments, geographic segments and billings to foreign customers of the Group for the years
ended December 31, 2009 and 2008, was as follows:(1) Business Segment Information
Business segment information for the years ended December 31, 2009 and 2008 was as follows:a. Billings and Operating Income
Millions of Yen

Advertising

Nonadvertising

Total

Billings to customers¥342,926¥7,285¥350,211—

Inter-segment billings

24

350

374

¥(374)—

342,950

7,635

350,585(374)

350,2112009

Total billings

Eliminations
or corporate

Consolidated¥350,211

The total of cost of sales and selling,
general and administrative expenses
Operating income (loss)

343,568
¥

(618)

7,770
¥ (135)351,338(371)

350,967

¥

¥

¥

(753)

(3)

(756)

Millions of Yen

Advertising

Nonadvertising

Total

Billings to customers¥391,229¥8,223¥399,452—¥399,452

Inter-segment billings

29

170

199

¥(199)—

391,258

8,393

399,651(199)

399,452

2008

Total billings

Eliminations
or corporate

Consolidated

The total of cost of sales and selling,
general and administrative expenses
Operating income (loss)

387,510
¥

3,748

8,438
¥

(45)

395,948(195)

395,753

¥

¥

¥

3,703

(4)

3,699

b. Assets, Depreciation and Capital Expenditures
Millions of Yen

2009
AssetsAdvertising

Nonadvertising

Total

Eliminations
or corporate

Consolidated¥190,024¥181,193¥9,096¥190,289¥(265)

Depreciation

909

34

943

—

943

Capital expenditures

561

7

568

—

568
Millions of Yen

2008
AssetsDepreciation
Capital expenditures

Advertising

Nonadvertising

Total

Eliminations
or corporate

Consolidated¥182,633
764¥9,536¥192,169¥(387)¥191,782

39

803

—

2,060

803

5

2,065

—

2,065

Financial Section

61

a. Billings and Operating Income
Thousands of U.S. Dollars

Advertising

Nonadvertising

Total

Billings to customers$3,723,409$79,099

Inter-segment billings

261

3,800

3,723,670

2009

Total billings

Eliminations
or corporate

Consolidated$3,802,508—$3,802,508

4,061$(4,061)—

82,8993,806,569(4,061)3,802,508

3,730,380

84,365

3,814,745$$ (1,466) $The total of cost of sales and selling,
general and administrative expenses
Operating income (loss)(6,710)(8,176)(4,028)3,810,717

$

$

(33)

(8,209)b. Assets, Depreciation and Capital Expenditures
Thousands of U.S. Dollars

2009
AssetsAdvertising

Nonadvertising

Total

Eliminations
or corporate

Consolidated$1,967,351$98,762$2,066,113$(2,877)$2,063,236

Depreciation

9,870

369

10,239—10,239

Capital expenditures

6,091

76

6,167

—

6,167

Notes: 1. The Group is engaged primarily in the advertising industry. The two business segments, namely, advertising services and nonadvertising, consist primarily of the following services
Advertising services: Planning, creating, producing and placing advertising in various media such as television, radio,
newspapers, magazines, public transportation, billboards, and digital media. Additional services such as marketing andbranding consultation, design and production of sales promotion programs, and event marketing.
Non-advertising: Publishing and selling of magazines and books and information processing services. (Please refer to 16.
SUBSEQUENT EVENT for more information.)
2. As discussed in Notes 2.c. Inventories, effective from the financial statements for FY2009, inventories are assessed in accordancewith ASBJ Statement No. 9 (issued on July 5, 2006), where inventories with low expected profitability are written down whensuch judgment is made. As a result, operating loss of the advertising business segment for FY2009 is negatively impacted by¥69 million ($749 thousand).

(2) Geographic Segment Information
Because the billings and total assets of the overseas
operations of the Group for the years ended December
31, 2009 and 2008 were less than 10% of those of thetotal consolidated operation, such segment information
is not presented.

62

ADK Annual Report 2009(3) Billings to Foreign Customers
Because the billings to foreign customers of the Groupfor the years ended December 31, 2009 and 2008
were 5.4% and 6.2%, respectively, or less than 10% of
the total consolidated billings in the two periods, suchinformation is not presented.

14. RELATED PARTY TRANSACTIONSThe Company and WPP plc (“WPP”), a strategic partner of
the Company, mutually own shares in the other, and WPP
plc owns indirectly 24.32% of the Company’s common
stocks as of December 31, 2009. The outlines of therelationship and transactions of the Company with theprincipal shareholder for the years ended December 31,
2009 and 2008 were as follows.

Outline of the Transactions

2009
Name of the related party

WPP plc

Type of the relationshipA principal shareholder owning more than 20% of				the voting rights in the Company

Location

Dublin, Ireland

Called-up share capital£125.6 million

Type of businessCommunications services

WPP’s share of voting rights in the Company

24.32% (Indirectly owned)

The Company’s share of ownership in WPP

2.49%

Type of the transaction to be reported

The Company received dividends from WPP.

Amount of the dividends the Company received¥719 million ($7,806 thousand)

Outline of the Transactions

2008
Name of the related party

WPP plc

Type of the relationshipA principal shareholder owning more than 20% of				the voting rights in the Company

Location

Dublin, Ireland

Called-up share capital£125.5 million

Type of businessCommunications services

WPP’s share of voting rights in the Company

24.04% (Indirectly owned)

The Company’s share of ownership in WPP

2.49%

Type of the transaction to be reported

The Company received dividends from WPP.

Amount of the dividends the Company received¥851 million

Notes: 1. The direct shareholder in the Company is WPP International Holding BV.
2. Since January 2004, the Group’s Chairman and Group Chief Executive, Koichiro Naganuma, has been a nonexecutive director of the board of WPP plc. In return, Sir Martin Sorrell, Director and Chief Executive of WPPplc, has had a seat as a non-executive director of the board of the Company.

Financial Section

6315. QUARTERLY FINANCIAL HIGHLIGHTS
Quarterly financial highlights in 2009 were as follows.
Quarterly financial highlights in 2008 were not disclosed, because they were not required under the Japanese
accounting standard in 2008.

Millions of Yen (except per common stock data)

2009
Gross billings

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

January 1, 2009March 31, 2009

April 1, 2009June 30, 2009

July 1, 2009September 30,
2009

October 1, 2009December 31,
2009¥91,267¥86,213¥83,221¥89,508

130

783

(488)

(82)

Income (loss) before taxes andminority interests
Net income (loss)
Net income (loss) per common stock (yen)

99

290

(126)

(189)

¥2.31

¥6.81

¥(2.98)¥(4.44)

Thousands of U.S. Dollars (except per common stock data)

2009
Gross billings
Income (loss) before taxes andminority interests
Net income (loss)

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

January 1, 2009March 31, 2009

April 1, 2009June 30, 2009

July 1, 2009September 30,
2009

October 1, 2009December 31,
2009$990,955$936,080$903,594$971,857

1,412

8,502

(5,299)

(890)

1,075

3,149

(1,368)(2,052)

$0.03

$0.07

$(0.03)$(0.05)

Net income (loss) per common stock(U.S. dollars)

16. SUBSEQUENT EVENTThe Company sold all of its shares in Nippon Information
Industry Corp. (“NII”), an equity-method affiliatedcompany and the only group company engaged in
information processing services, to NII itself as of64

ADK Annual Report 2009

February 8, 2010 for ¥2,558 million ($27,774 thousand).
The amount of loss on sales of the securities is around¥1,073 million ($11,650 thousand).

INDEPENDENT AUDITORS’ REPORTThe Board of Directors
ASATSU-DK INC.:
We have audited the accompanying consolidated balance sheets of ASATSU‑DK INC. and consolidated
subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income,changes in net assets and cash flows for the years then ended, all expressed in Japanese yen.
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to independently express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of ASATSU‑DK INC. and consolidated subsidiaries as ofDecember 31, 2009 and 2008, and the consolidated results of their operations and cash flows for theyears then ended, in conformity with accounting principles generally accepted in Japan.
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and,in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

Yasumori Audit Corporation
Certified Public Accountants
March 26, 2010

Financial Section

65Securities Holdings
ASATSU-DK INC. Consolidated Investments as of December 31, 2009
Millions of Yen

2009
¥

739

Current

Bond investment trust/Money market fund

			

Bonds

			

Mutual funds in equities and bonds and others

			

Total

¥ 2,145

Non-Current

WPP plc.

¥27,950

2.49% or 31,295,646 stocks			

Digital Advertising Consortium, Inc.

2,238

Equity method			

Other publicly traded equities

13,652137 issues

			Publicly traded equities total

43,841

1,112

5 funds

294

10 funds						

Non-publicly traded equities in affiliated companies

4,614

15 issues			Non-publicly traded equities in subsidiary companies

877

21 issues

			Other non-publicly traded equities

1,944

71 issues			Non-publicly traded equities total

7,435

			

Bonds

1,833

14 issues			

Mutual funds in equities and bonds and others

170

7 issues			Total non-current investments in securities

			

Investments in affiliated companies (Non-securities)

317

8 funds			

Investments in funds (Non-securities)

96

7 funds

			Total non-current investments

			

2,003

¥53,694

Millions of Yen

Top Five Equities by Balance		
2009¥27,950

31,295,646 shares

ASAHI BREWERIES, Ltd.

1,712

1,000,000 shares

Tokyo Broadcasting System, Incorporated

1,277

982,900 shares

Shochiku Co., Ltd.

911

1,100,000 shares

Shiseido Co.,Ltd.

751

421,718 shares

WPP plc.		

66

ADK Annual Report 2009

Investor Information(As of December 2009)

Parent company nameASATSU-DK INC.

EstablishedMarch 19, 1956

Head office13-1, Tsukiji 1-chome, Chuo-ku, Tokyo 104-8172, Japan

Number of employees

3,239 (consolidated basis)2,060 (non-consolidated basis)

Common stock

Authorized: 206,000,000 shares
Issued: 45,155,400 shares

Number of shareholders 9,426

Percentage of Total Shares Issued

Treasury stock

5.69%

Individual and others

19.08%

Financial institutions

13.75%

Securities companies

0.14%

Other domestic corporations

5.60%

Distribution
byowners		
Major shareholders

Foreigners

55.74%

Percentage of Ownership Voting*

WPP International Holding B.V.

24.26%

Northern Trust Company (AVFC) Sub Account American Client

6.14%

Northern Trust Company AVFC Re U.S. Tax-Exempted Pension Funds

4.40%

The Silchester International Investors International Value Equity Trust

3.93%

Masao Inagaki

3.85%

JP Morgan Chase Bank, 380055

3.37%State Street Bank and Trust Company 505225

2.05%

Japan Trustee Service Bank, Ltd. (trust a/c)

1.99%

The Master Trust Bank of Japan, Ltd., Retirement Benefit Trust Account(Mitsubishi Corporation Account)

1.80%

State Street Bank and Trust Company 505223

1.74%*Percentage of Ownership Voting figures are based on 42,585,533 shares (45,155,400 shares issued andoutstanding, minus 2,569,867 shares of treasury stock).

Stock listing

Tokyo Stock Exchange, First Section

Securities code

9747

Transfer agent

Tokyo Securities Transfer Agent Co., Ltd.
6-2, Otemachi 2-chome, Chiyoda-ku,
Tokyo 100-0004, Japan

Annual meeting

The annual meeting of shareholders is normallyheld in March in Tokyo, Japan.

For further information

ASATSU-DK INC. Office of Corporate Communications
Tel.: +81-3-3547-2003
URL: http://www.adk.jp/english/index.html

Financial Section

67

ADK Group Network

DOMESTICANIMATION CONTENT GROUPAGENCY GROUP

Nihon Ad Systems Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2183
Fax: +81-3-3547-2098

ADK International Inc. … ■1-1, Tsukiji 4-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3546-9100
Fax: +81-3-3546-9208
ADK Dialog Inc. … ■1-1, Tsukiji 4-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-5163
Fax: +81-3-3547-5152
ADK Interactive Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2780
Fax: +81-3-3547-2087
Digital Advertising Consortium Inc. … ❑20-3, Ebisu 4-chome,
Shibuya-ku, Tokyo 150-6033
Tel.: +81-3-5449-6200
Fax: +81-3-5449-6201

Super Vision, Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2156
Fax: +81-3-3547-2098
Right Song Music Publishing Co., Ltd.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2184
Fax: +81-3-3547-2098
Eiken Co., Ltd. … ■56-7, Minamisenjyu 6-chome,
Arakawa-ku, Tokyo 116-0003
Tel.: +81-3-3802-3011
Fax: +81-3-3807-6205
PUBLISHING GROUP

Kyowa Kikaku Ltd. … ■20-15, Shimbashi 2-chome,
Minato-ku, Tokyo 105-0004
Tel.: +81-3-3571-3111
Fax: +81-3-3571-3314

Nihonbungeisha Co., Ltd. … ■1-7, Kanda-Jimbo-cho,
Chiyoda-ku, Tokyo 101-8407
Tel.: +81-3-3294-7771
Fax: +81-3-3294-7780

ASP Co., Ltd.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2100
Fax: +81-3-3547-2937

Neo Shobo Inc. … ■6-7, Shimbashi 1-chome,
Minato-ku, Tokyo 105-0004
Tel.: +81-3-3573-1277
Fax: +81-3-3574-8165

AD&M Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3524-5056
Fax: +81-3-3524-5058

CREATIVE GROUPADK Arts Inc. … ■1-1, Tsukiji 4-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3545-5016
Fax: +81-3-3545-5075
Boys Inc. … ■13-13, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3545-1071
Fax: +81-3-3545-1305
Drill Inc.
19-5, Udagawa-cho,Shibuya-ku, Tokyo 150-0042
Tel.: +81-3-5428-8771
Fax: +81-3-5428-8772

68

ADK Annual Report 2009

OVERSEASNORTH AMERICANew York
ADK America Inc. N.Y. … ■6F, 515 W. 20th St.,New York, NY 10011, U.S.A.
Tel.: +1-646-284-9800
Fax: +1-646-284-9825
Los Angeles
ADK America Inc. L.A.
970 W. 190th St. #710,
Torrance, CA 90502, U.S.A.
Tel.: +1-310-630-3600
Fax: +1-310-630-3620

EUROPE
Frankfurt
Asatsu (Deutschland) GmbH … ■Waldschmidtstrasse 19
60316 Frankfurt,Frankfurt am Main Germany
Tel.: +49-6997-120-832
Fax: +49-6997-120-821

Amsterdam
ADK Europe B.V. … ■Neptunusstraat 31,
2132 JA Hoofddorp, The Netherlands
Tel.: +31-23-554-3530
Fax: +31-23-554-3553
Knots Europe B.V.
Neptunusstraat 31,
2132 JA Hoofddorp, The Netherlands
Tel.: +31-23-554-3554
Fax: +31-23-554-3553
Paris
ADK France S.A.S.
352 Rue Saint-Honore,
75001 Paris, France
Tel.: +33-1-5345-3450
Fax: +33-1-5345-3455
Moscow
ASATSU-DK INC.
Moscow Representative Office
12 Krasnopresnenskaya nab., No. 1603,
Mezhdunarodnaya-2,
Moscow 123610, Russia
Tel.: +7-495-258-1591

ASIA
Beijing
Beijing Huawen-Asatsu International
Advertising Co., Ltd.
Room 1216, Spaces International Center,
No. 8 Dongdaqiao Road,
Chaoyang District,
Beijing 100020, P.R.C.
Tel.: +86-10-5870-3636
Fax: +86-10-5870-3628
Tiexu Advertising Co., Ltd.
18F, Golden Land Bldg.,
No. 32 Liangmaqiao Road,
Chaoyang District,
Beijing 100016, P.R.C.
Tel.: +86-10-6464-2122
Fax: +86-10-8448-3324
Beijing Asatsu Advertising Co., Ltd.
C-3, Huitong Office Park,
No. 71 Jianguo Road,
Chaoyang District,
Beijing 100025, P.R.C.
Tel.: +86-10-8599-7788
Fax: +86-10-8599-7579
Beijing DongFang SanMeng Public Relations
Consulting Co., Ltd.
Room 828, Beijing Capital Times Square,No. 88 Xichang’an Ave., Xicheng District,
Beijing 100031, P.R.C.
Tel.: +86-10-8391-3389
Fax: +86-10-8391-3399

(As of April 2010)
Shanghai
Shanghai Asatsu Advertising Co., Ltd. … ■10F, Yongxing Mansion
No. 887 Huaihai Zhong Lu,
Shanghai 200020, P.R.C.
Tel.: +86-21-6467-4118
Fax: +86-21-6474-7803
Asatsu (Shanghai) Exposition &Advertising Co., Ltd.
23F, Jiushifuxing Mansion,
No. 918 Huaihai Road (M),Shanghai 200020, P.R.C.
Tel.: +86-21-6415-5881
Fax: +86-21-6271-3651
Asatsu Century (Shanghai)
Advertising Co., Ltd. … ■9F, Yongxing Mansion,
No. 887 Huaihai Road (M),Shanghai 200020, P.R.C.
Tel.: +86-21-6474-8908
Fax: +86-21-6474-8909
Beijing DongFang SanMeng Public Relations
Consulting Co., Ltd. Shanghai Branch
Room 1205, Yongxing Mansion,
No. 887 Huaihai Road (M),Shanghai 200020, P.R.C.
Tel.: +86-21-6433-9623
Fax: +86-21-6443-9705
Guangzhou
Guangdong Guangxu (Asatsu)
Advertising Co., Ltd. … ❑26F, Telecom Plaza,No. 18 Zhong Shan Er Road,
Guangzhou 510081, P.R.C.
Tel.: +86-20-8888-9818
Fax: +86-20-8888-9815
Shanghai Asatsu Advertising Co., Ltd.
Guangzhou Branch
Room 2604, 26F, Telecom Plaza,No. 18 Zhong Shan Er Road,
Guangzhou 510081, P.R.C.
Tel.: +86-20-8888-8650
Fax: +86-20-8888-8461
ChengduShanghai Asatsu Advertising Co., Ltd.
Chengdu Branch
Room 1502, No. 16 Hongxing Road,
Sec. 3, Chengdu 610016, P.R.C.
Tel.: +86-28-8666-5471
Fax: +86-28-8672-5017
FuzhouShanghai Asatsu Advertising Co., Ltd.
Fuzhou Branch
15F, JianYin Bldg., 68 JingDa Road,
GuLou District, Fuzhou 350001, P.R.C.
Tel.: +86-591-8801-2100
Fax: +86-591-8801-2108

Hong KongASATSU-DK HONG KONG LTD. … ■25F, Leighton Centre, 77 Leighton Road,
Causeway Bay, Hong Kong
Tel.: +852-2895-8111
Fax: +852-2576-3322
DK ADVERTISING (HK) LTD. … ■25F, Leighton Centre, 77 Leighton Road,
Causeway Bay, Hong Kong
Tel.: +852-2811-9999
Fax: +852-2811-9699
Taipei
United-Asatsu International Ltd. … ■13F, No. 287 Nanking E. Road,
Sec. 3, Taipei 105, Taiwan, R.O.C.
Tel.: +886-2-8712-8555
Fax: +886-2-8712-9555
DIK-OCEAN Advertising Co., Ltd. … ■13F, No. 287 Nanking E. Road,
Sec. 3, Taipei 105, Taiwan, R.O.C.
Tel.: +886-2-8712-8555
Fax: +886-2-8712-9555
Singapore
ASATSU-DK SINGAPORE PTE. LTD. … ■1 Liang Seah Street, #02-05,
Singapore 189022
Tel.: +65-6333-5115
Fax: +65-6333-5225
Scoop AD WORLD Pte Ltd
1 Liang Seah Street, #02-05,
Singapore 189022
Tel.: +65-6333-5115
Fax: +65-6333-5225
IMMG Pte Ltd
213 Henderson Industrial Road, #01-09,
Henderson Industrial Park,
Singapore 1595535
Tel.: +65-6376-5088
Fax: +65-6375-2029
Jakarta
PT. Asta Atria Surya
Wisma Slipi, Lantai 11 Jl. Let.
Jend. S. Parman Kav. 12,
Jakarta 11480, Indonesia
Tel.: +62-21-530-7155
Fax: +62-21-530-7156
PT. Perdana IMMG Indonesia
Jl. Kemang No. 5,
Jakarta Selatan 12730, Indonesia
Tel.: +62-21-718-3311
Fax: +62-21-718-3322
Kuala Lumpur
ASATSU-DK Malaysia Sdn. Bhd.
Level 18, Menara Merais, No. 1,
Jalan 19/3, 46300 Petaling Jaya,
Selangor, Malaysia
Tel.: +603-7954-0388
Fax: +603-7954-0266

Bangkok
ASATSU (THAILAND) CO., LTD. … ■24F, Sirinrat Bldg.,
3388/86 Rama 4 Road, Klongton,
Klongtoey, Bangkok 10110, Thailand
Tel.: +66-2-367-5951
Fax: +66-2-367-5946
DAI-ICHI KIKAKU (THAILAND) CO., LTD. … ■23F, Shinawatra Tower III, 1010 Vibhavadi
Rangsit Road, Ladyao, Chatuchak, Bangkok
10900, Thailand
Tel.: +66-2-949-2700
Fax: +66-2-949-2777
ASDIK Ltd. … ■6F, Shinawatra Tower III, 1010 Vibhavadi
Rangsit Road, Ladyao, Chatuchak, Bangkok
10900, Thailand
Tel.: +66-2-949-2800
Fax: +66-2-949-2805
Ho Chi Minh CityASATSU-DK VIETNAM INC.
28 Nguyen Van Thu St.,
District 1, Ho Chi Minh City, Vietnam
Tel.: +84-8-3910-5550
Fax: +84-8-3910-5551
SOL Advertising Company
28 Nguyen Van Thu St.,
District 1, Ho Chi Minh City, Vietnam
Tel.: +84-8-3910-5550
Fax: +84-8-3910-5551
ManilaASATSU-DK INC.
Philippine Representative Officec/o Catalytx Advertising,
25F, Raffles Corporate Center,
F. Ortigas, Jr. Road (formerly Emerald Ave.),
Ortigas Center, Pasig City 1605, Philippines
Tel.: +63-2-914-4297
Fax: +63-2-914-9001
Seoul
Asatsu-DK Korea Co., Ltd.
5F, Yujin Building, 518-8 Dogok-Dong
Kangnam-Ku, Seoul 135-854, South Korea
Tel.: +82-2-511-5934
Fax: +82-2-511-5935
New Delhi
ADK-FORTUNE PVT. LTD.
B1/B2 Enkay Centre, Udyog Vihar Phase-V,
Gurgaon 122016, India
Tel.: +91-124-453-9723
Fax: +91-124-453-9752
Dubai
AGA ADK advertising & marketing
7F, Al Sufouh Tower,
Office No. 701, Dubai Media City,
Dubai United Arab Emirates
Tel.: +971-4-4278-722
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