Directors and Auditors

Hiroshi Ishihara

Masao Yoshida

Chairman &Chief Executive Officer

President &Chief Operating Officer

Tetsuo Yoshino

Takasuke Kaneko

Sumitaka Fujita

Director

Director

Director

19
ANNUAL REPORT 2008

Atsushi Kitanoya

Kosaku Nakano

Hideo Sakura

Naoomi Tachikawa

Tetsuya Satou

Director
Chief Marketing Officer

Director
Chief Officer, Technology &Production

Director
Chief Financial Officer

Director
Chief Strategy Officer

Director
Chief Social
Responsibility Officer

Statutory Auditors

Hiromasa Ogawa
Takahiko Itou
Yuzuru Fujita (Outside)
Tadashi Kudou (Outside)

Katsuhiko Murota

Masahiro Yanagimoto

Director

Director

Review of Operations

Segment

Net Sales

Telecommunications

Optical Fiber Cable
Business

12.9%
Energy andIndustrial Products

Photonics andNetwork Solutions Business

Energy Business

24.9%
Metals20

Major Businesses

Industrial Products Business

Copper Strips & Pipes Business

ANNUAL REPORT 2008

16.9%
Electronics andAutomotive Systems

Plating BusinessElectrolytic Copper
Foils Business

Automotive Parts Business

21.2%
Light Metals

Electronics Components Business

Magnet Wire BusinessAluminum Rolling Business

20.4%
Services and Others

3.7%

Aluminum Extrusion BusinessAluminum Casting, Forging andOther Processing Businesses

2006
2007
2008
Results Results Results

MIHARU COMMUNICATIONS INC. / Okano Electric Wire
Co., Ltd. / SHODENSHA CO., LTD. / SEIWA GIKEN INC. /T.H. FURUKAWA ELECTRIC CO., LTD. / FURUKAWAINFONET PRODUCTS CO., LTD. / Access Cable Company /FURUKAWA NETWORK SOLUTION CORPORATION /Shianfu Optical Fiber & Cables Co., Ltd. / FURUKAWA
INDUSTRIAL S.A. PRODUTOS ELETRICOS / OpticalCommunication Products, Inc., / OFS Fitel, LLC, others•Bare wires•Aluminum wires•Insulated wires•Power cables•Power transmission cable
accessories and installations•Plastic products such as power
cable conduit material andfoam sheets thermoelectric
products, etc.

Furukawa Elecom Co., Ltd. / FURUKAWA ENGINEERING &CONSTRUCTION INC. / Furukawa Electric Industrial Cable
Co., Ltd. / Asahi Electric Works, Ltd. / INOUE
MANUFACTURING CO.,LTD. / FURUKAWA INDUSTRIAL
PLASTICS CO., LTD. / F-CO CO., LTD. / KYOWA ELECTRIC
WIRE CO., LTD. / THE FOAM KASEI CO., LTD. / SUNSUNNY
INDUSTRY CO., LTD. / Shenyang Furukawa Cable
Company Ltd. / PT TEMBAGA MULIA SEMANAN TBK /Trocellen GmbH, others•Copper pipes•Copper strips•Electrolytic copper foils•Shape memory alloys andother processed copper
products, etc.

FURUKAWA CIRCUIT FOIL CO., LTD. / Furukawa Precision
Engineering Co., LTD. / OKUMURA METALS CO., Ltd. /FURUKAWA TECHNO MATERIAL CO., LTD. / FURUKAWA
PRECISION (THAILAND) CO., LTD. / FURUKAWA METAL(THAILAND) PUBLIC CO., LTD., others

4.9

7.6

6.1

•Battery products•Automotive components
and electrical wires•Magnet wires•Heat sinks•Aluminum blanks for hard
discs
•Electronic component
materials, etc.

The Furukawa Battery Co., Ltd. / Furukawa Automotive
Net
194.9
Sales
Systems Inc. / FCM CO., LTD / Riken Electric Wire Co., Ltd. /SHIKOKU CABLE / FURUKAWA ELECTRIC NORTHAMERICA APD, INC. / FURUKAWA ELECTRIC AUTOPARTS
PHILIPPINES INC. / FURUKAWA AUTOMOTIVE PARTS(VIETNAM) INC. / FE MAGNET WIRE (MALAYSIA) SDN.
Operating
6.0
BHD., others
Income

240.9

268.6

8.7

9.1

•Aluminum sheets•Extruded aluminumproducts•Cast and forged products,
etc.

Furukawa-Sky Aluminum Corp. / Nippon Foil Mfg. Co.,
Ltd. / Nikkei Kakoh Co., LTD. / FURUKAWA COLORALUMINUM CO., LTD. / NIPPON METAL FOIL IND CO., LTD. /HIGASHI NIHON TANZOU Co., Ltd. / Furukawa-Sky Shiga
Corp. / ACE21 Corp. / P.T. Furukawa Indal Aluminum,
others•Real estate, Logistics,
Information and various
other services

FURUKAWA LOGISTICS CORP. / FITEC Corp. / FURUKAWA
LIFE SERVICE Inc. / THE ZAIKOO CO., LTD. / THE
FURUKAWA FINANCE AND BUSINESS SUPPORT CO., LTD./THE YOKOHAMA DRUM CO., LTD. / Furukawa Nikko
Power Generation Inc., others

Net
Sales

143.1

166.2

163.1

Operating
Income

5.4

11.3

11.0

Net
Sales

217.5

294.3

315.0

Operating
Income

6.7

9.2

8.1

Net
Sales

133.4

193.9

213.7
MetalsOperating
Income

246.7

258.6

Operating
Income

12.7

15.0

12.4

Net
Sales

35.6

40.2

45.8

Operating
Income

2.1

1.6

1.5

Light Metals

216.8

Electronics andAutomotive Systems

Net
Sales

Services and Others

Billions of yen

21
ANNUAL REPORT 2008

•Optical fibers and cables•Optical components•Optical fiber cable
accessories and installations•Network equipments, etc.

Energy andIndustrial Products

Major Affiliated Companies

Telecommunications

Major Products

Review of Operations

22
ANNUAL REPORT 2008

U.S. OFS demonstrates solid performance
Telecommunications on the back of growing overseas demandfor optical fiber cables

Results of Operations in Fiscal 2008

consolidated net sales for the segment decreased

In the optical fiber cable business, while growth

1.8% from the previous fiscal year to ¥163.1

slackened in the maturing Japanese market,

billion, due in part to the impact of our sale ofdemand expanded significantly in overseas

Optical Communication Products, Inc. (OCP),

markets, including Europe, the United States andour U.S. optical component manufacturing

newly emerging countries, resulting in a rapid

subsidiary whose performance had flagged as

rise in optical fiber exports. In addition, OFS, oura result of a decline in the price of its products.

consolidated U.S. subsidiary, which returned

Consolidated operating income fell 3.0% fromto profitability for the first time in the previous

the previous fiscal year to ¥11.0 billion as OCP

fiscal year, reported higher sales and profits,

reported an operating loss in the first half of thefirmly establishing its profit structure.

year preceding its sale.

In our photonics and network solutions
business, although the price of FTTH-related

Outlook and Measures for Fiscal 2009devices declined in the domestic market

In the optical fiber cable business, we expect

and sales of routers fell, demand for opticalinvestments by optical telecommunications

amplifiers recovered from their temporary slump

carriers to continue expanding beyond fiscal

and sales of CATV-related products were brisk.

2009. To respond to rising global demand,

While sales were generally favorable,

OFS began boosting production of optical fiberOptical Fiber Cables BusinessNet sales (Billions of yen)

Operating income (Billions of yen)

120

8

103.6

106.3

104.5

90

6

60

4

30

2

0

2007

2008

+ OFS sales to European carriers and the generalmarket increased+ Rapid expansion in exports of optical fibers− Slump in domestic demand for optical fiber cables

2009(Plan)

-0.4

5.6

0

5.2 -0.1 5.1

2009(Plan)

2008

2007+ OFS sales to North American carriers and thegeneral market increased+ Strengthening of Chinese subsidiary+ Continued expansion in exports of optical fibers− Continued slump in domestic demand for
optical fiber cables− Temporary decline in undersea cables continues
up to latter half of the year

Photonics and Networks BusinessNet sales (Billions of yen)

Operating income (Billions of yen)

80

+ Increase in domestic sales of CATV-related
products+ Growth in optical amplifier lasers− Decline in domestic prices of FTTH products− Decrease in domestic sales of routers

10.0

62.5

56.8

60

53.0

7.5

5.6
40

5.0

20

2.5

0

0

+0.1 5.7 -0.3

5.4

+ Negative factor resolved by sale of U.S.
subsidiary, OCP+ Continued growth in optical amplifiers lasers− Decrease in domestic sales of CATV-related
products− Continued decline in domestic prices of FTTH
products

23
2008

2009
(Plan)

2007

2008

2009
(Plan)

cables in Russia in October 2007 and plans toconsolidated operating income of ¥10.5 billion

reinforce production bases in Germany starting(¥5.1 billion for optical fiber cables and ¥5.4

the latter half of fiscal 2009 to further build

billion for photonics and network solutions).

capacity.
In the photonics and network solutions
business, full-scale investment in NextGeneration Networks (NGNs) in Japan is
expected to raise demand for componentsof optical devices, and we will respond bybolstering our sales of new products such as
tunable lasers. On the other hand, prices of
FTTH-related products are expected to decline
in Japan; therefore we will seek to secure profit
by aggressively moving into markets such as
Europe, the United States and Asia, where
demand is more vigorous. We also improved
our portfolio by selling OCP, which had been
showing significant losses.
Based on this outlook, in fiscal 2009, we
project consolidated net sales of ¥157.5 billion(¥104.5 billion for optical fiber cables and ¥53.0
billion for photonics and network solutions) and

ColumnFull-Band Tunable Lasers
DWDM (Dense Wavelength Division Multiplex) isa revolutionary technology that enables multiple
transmissions of several optical signals with different
wavelengths through a single optical fiber, thereby
increasing the volume of traffic in optical networks.
Conventional lasers emit single-wavelength opticalsignals, which required installing a laser for eachwavelength used in DWDM. The Furukawa ElectricGroup developed a full-band tunable laser thatcan change wavelengths across all bands throughtemperature control. The technology has made it
possible to build more flexible DWDM networks andis also widely expected to live up to its potential as
an essential device for building NGNs, which havebeen growing in many parts of the world.

ANNUAL REPORT 2008

2007

Review of Operations

Results of Operations in Fiscal 2008

In the industrial products business, while sales

In the energy business, demand for ultra-highof foamed plastic products for construction use

voltage cables continued strong, due to thedecreased in Japan for similar reasons, demandhigh-paced development of infrastructure forfor tapes used to manufacture semiconductors,

electricity transmission in China in responsesuch as DDF (dicing die-bonding film) increased

to vigorous demand for electricity. However,considerably, driving a surge in overall sales.

sales of industrial cables slumped in Japan due

As a result, consolidated net sales increased

to the significant decline in new housing starts

7.1% from the previous fiscal year to ¥315.0

following implementation of the revised Building

billion. Consolidated operating income

Standards Law.

decreased 11.4% to ¥8.1 billion, as demand

Growth in demand for electric cables
in China and tapes for semiconductor
Energy andIndustrial Products fabrication contributed
to greater sales.

24
ANNUAL REPORT 2008

slumped and as we were unable to pass on highproduction and supply. Sales of foamed plastic

raw materials prices to product prices.

products, which experienced a slump in demand

In January 2008 we acquired the electricduring fiscal 2008, are also expected to recover

power component business of FCI Japan K.K.

due to demand from construction and theas part of our drive to reorganize our electric

development of new applications.

power component segment. We expect wide-

Consequently, we are projecting consolidated

ranging synergies from further reinforcing thenet sales of ¥348.5 billion and consolidated

components business, the stronghold of thisoperating income of ¥9.1 billion for fiscal 2009.

segment.

Outlook and Measures for Fiscal 2009

ColumnIn the energy business, we expect demand forEnergy and Industrial Cables:
Ultra-High Voltage Cables

high-voltage cables to continue expanding
in China and other overseas markets. We are
by boosting production capacity for ultra-highvoltage cables at Shenyang Furukawa Cable Co.,
Ltd. in China in May 2008, and by increasing
operations at Suzhou Furukawa Power Optic
Cable Co., Ltd., which manufactures opticalfiber composite overhead ground wires, also in
China. We will accelerate our business in the
global market, including VISCAS Corporation,a joint venture produces and sells high voltage
cables.
In the industrial products business, we expect
demand for tapes used for manufacturing
semiconductors to continue to grow in line withthe spread of digital home appliances. To meetthis demand, we set up a new factory at our
Mie Works to establish a system for increasing

Energy and Industrial Products
Net sales (Billions of yen)

Operating income (Billions of yen)

400

15

+ Favorable performance at Shenyang
Furukawa Cable Co., Ltd.
+ Decrease in domestic sales of copper
cables and industrial cables– Loss due to bare metal prices+
Industrial products Rapid expansion in tapes forsemiconductor fabrication– Decrease in sales of foamed products
Common factors – Surge in crude oil prices– Impact of tax law reforms in fiscal
2008: –¥0.7 billion
Energy

348.5
300

294.3

315.0
10

9.2

-1.0
8.1

200

100

2007

2008

2009
(Plan)

0+ Continued favorable performance at
Shenyang Furukawa Cable Co., Ltd.
+ Improvement in domestic sales ofcopper cables and industrial cables
Industrial products + Steady sales of tapes for semiconductor
fabrication+ Recovery in sales of foamed products
2009(Plan) Common factors – Continued surge in crude oil prices– Impact of tax law reforms in fiscal
2009: –¥0.6 billion
Energy50+1.0 9.1

2007

2008

25
ANNUAL REPORT 2008

Surging global demand for energy requires anextremely reliable infrastructure for transmittingenergy over long distances to ensure a stablesupply of electricity. The Furukawa Electric Grouphas been developing high voltage electric cables asa technology for sending more electricity without
loss. We have succeeded in mass producing highly
reliable ultra-high voltage cables by utilizing ourworld-class manufacturing technology and quality
control.
We serve as the backbone for energy networks
in Japan and throughout the world by supplying
cables that contribute not only to a stable electricity
supply but ultimately to resource conservation
through higher transmission efficiency. Particularly
in China, where energy is in great demand, we own
a subsidiary that manufactures ultra-high voltage
cables and related products and have captured the
top share based on reliability.

therefore bolstering our local supply structure

Review of Operations

26
ANNUAL REPORT 2008

Sales of electrolytic copper foils used forlithium ion batteries expanded amid theMetalsspread of digital appliances and heightened
environmental awareness.
Results of Operations in Fiscal 2008

consolidated net sales to ¥213.7 billion in thisIn the wrought copper business, demand forsegment.

copper strips and pipes fell. However, in the

In terms of profit however, while electrolyticelectrolytic copper foil business, we enjoyedcopper foils fared well, in the areas of copper strips

rising sales in specialized foils with high added

and plated products used in digital appliances andvalue, such as double-sided shiny foil used ascopper pipes used in air conditioners, our cost

raw material for lithium ion secondary batteries,

reduction efforts fell short of absorbing the higher

an area in which we boast the top global share.

price of raw materials and fuels caused by surging

In addition to the solid sales of electrolytic

prices of auxiliary materials and fuel. As a result,copper foils, bare copper prices remained high,consolidated operating income fell 20.2% year-

resulting in a 10.3% year-on-year increase inon-year to ¥6.1 billion.

Metals
Net sales (Billions of yen)

Operating income (Billions of yen)

10.0

250

213.7
200

219.5

193.9

7.6

7.5

-1.5

+1.2 7.3
6.1

150+ Continued favorable sales of copper foils+ Price hikes for auxiliary materials, revision ofprocessing charges– Impact of tax law reform in fiscal 2009: –¥1.2 billion

5.0
100
2.5

50
0

+ Favorable sales of copper foils– Deterioration in product mix for copper strips andpipes– Rise in costs for auxiliary materials– Loss due to bare metal prices– Impact of tax law reform in fiscal 2008: –¥0.8 billion

2007

2008

2009
(Plan)

0.0

2007

2008

2009
(Plan)

consolidated operating income of ¥7.3 billion in

We expect demand for electrolytic copper foils

the metals segment.

will continue to rise with the spread of digitalhousehold appliances and have therefore
extended capital investments in subsidiaries inJapan and Taiwan to boost production.
We plan to absorb Furukawa Circuit Foil
Co., Ltd., a 100%-owned subsidiary that
manufactures electrolytic copper foils, in
October 2008. We will set up an electrolytic
copper foil division within Furukawa Electric Co.,
Ltd. subsequent to the merger, and we will seek
to bolster our comprehensive capabilities towardpursuing the business of lithium ion batteries
for automobiles by strengthening the cultivationof human resources as well as research anddevelopment.
We also expect our earnings ratio to advancealong with improvements in the price of auxiliarymaterials and processing costs, which had been
the cause of profit decline.
Based on these factors, we project
consolidated net sales of ¥219.5 billion andColumnElectrolytic Copper Foil for Lithium
Ion Anodes
Lithium ion batteries perform particularly wellamong secondary batteries that can be repeatedly
recharged, and they are widely used as powersources for cellular phones and other devices.
Performance of lithium ion batteries depends
on the quality of electrolytic copper foils used as
anode material. For example, foil flexible enoughto endure repeated expansion and contraction
caused by the discharge and recharge of electricity
will prolong battery life. And superior flatnessof double-sided surfaces contributes to greater
battery capacity. The Furukawa Electric Group has
developed electrolytic copper foils that are superior
in terms of both flexibility and surface flatness byleveraging manufacturing technology cultivatedover thirty years. We command an overwhelming
50% of global market share.

ANNUAL REPORT 2008

Outlook and Measures for Fiscal 200927

Review of Operations

Results of Operations in Fiscal 2008

businesses. And in August 2007, we established a

In the electronic components business, we

production company for wire harnesses in India, aenjoyed solid sales of wire harnesses in response

region of rapid economic growth, in a joint venture

to robust demand from the automotive area. In

with India’s Minda Group.

the electronics business, while sales of magnet
wires remained stagnant, there was strong

Outlook and Measures for Fiscal 2009

demand for aluminum blank materials forIn the electronic components business, thememory discs and heat sinks (heat-dissipationstrong performance of automotive parts such ascomponents for electronic devices) for gamewire harnesses is expected to continue, and wemachines.

plan to begin mass producing harnesses for new

As a result, consolidated net sales for themodels in August 2008. Our Indian subsidiarysegment rose 11.5% year-on-year to ¥268.6

is expected to contribute to build sales once itbillion and consolidated operating income

comes online in September 2008.

increased 4.1% to ¥9.1 billion.

28

In the electronics business, while sales ofWith respect to automotive parts, one of ourheat sinks are expected to decline, sales ofpriority areas, we merged the automotive parts

memory discs are projected to remain steady.

business of Furukawa Electric Co., Ltd. into

We will therefore begin mass producing glass

Furukawa Automotive Systems Inc. in October 2007,

substrates with outstanding shock-absorbing

thereby integrating our parts and wire harness

characteristics, for which demand is rising in

ANNUAL REPORT 2008

Achieving progress in establishinga production and supply
system for the Asian compact
Electronics andAutomotive Systems car market will further boost
electronic components forautomobiles.

the market for mobile products, in addition to

glass substrates with higher quality at lower

our existing aluminum blank materials. While

costs than conventional products.

we were late in entering the market for glass

Based on these factors, we are projecting

substrates, we intend to expand our share based

consolidated net sales of ¥262.5 billion andon a proprietary manufacturing method that

consolidated operating income of ¥8.2 billion in

gives us the advantage of being able to produce

fiscal 2009.

Electronics and Automotive Systems
Net sales (Billions of yen)

Operating income (Billions of yen)

300

12

268.6
250

262.5

240.9

10

8.7
200

8

150

6

100

4

50

2

0

2007

2008

+ Favorable sales of wire harnesses+ Favorable sales of batteries+ Steady sales of memory discs– Decrease in sales of magnet wires– Impact of tax law reform in fiscal 2008: –¥0.6 billion

2009(Plan)

0+0.4 9.1 -0.9
8.2

+ Steady sales of wire harnesses+ Continued steady sales of memory discs– Decrease in sales of heat sinks– Impact of rising yen– Impact of tax law reform in fiscal 2009: –¥0.7 billion

2007

2008

2009
(Plan)

ColumnMetal Core Substrates

ANNUAL REPORT 2008

Making smaller and lighter electronic components
for automobiles requires higher density packaging
than conventional products. Dissipating heatemitted by circuits and components had been amajor obstacle. Metal core substrates developed by
the Furukawa Electric Group allow for one-timeheat discharge by placing a metal core with highheat dissipation properties in the middle layer ofthe substrate to concentrate heat discharged bycomponents and circuit patterns in the metal core.
Through this soaking process, our products are
30% smaller and 40% lighter than conventional
products. From the perspective of the environment,
the automobile industry is faced with the challengeof conserving energy and reducing CO2 emissions,and our technology has gathered significant interest
as a means for producing smaller and lighter circuit
systems.

29

Review of Operations

30
ANNUAL REPORT 2008

Expanding sales centered on strategic productsLight Metals that demonstrate a competitive edgein functionality and quality.
Results of Operations in Fiscal 2008

¥258.6 billion. Consolidated operating income

In the light metals segment, exports grewfell 17.5% to ¥12.4 billion, as our cost reduction

for our mainstay aluminum plate metals

efforts, including integrated production amongused in beverage cans, while products with amanufacturing plants, fell short of absorbing

competitive edge in their respective markets,the effects of surging prices of fuel and auxiliarysuch as tank materials for LNG (liquefied natural

materials.

gas) tankers, materials for printing equipment
and radiators for automobiles, continued to fare

Outlook and Measures for Fiscal 2009

well. However, due to the slump in construction-

While we expect demand for IT-related materials

related demand caused by the revised Building

and general-purpose materials to recover inStandards Law and the delayed recovery of IT-

fiscal 2009, high prices of fuel and auxiliary

related demand, sales declined for general-materials will likely apply continued pressure on

purpose materials and thick plates used in

profits.

semiconductor and LCD fabrication equipment.

In response, we will seek to strategicallyThanks in part to the rise in the selling prices

boost exports of materials for cans and printingof products that accompanied the rise in bareequipment and automobile-related materials

aluminum prices, consolidated net sales forprimarily targeting the overseas manufacturing

the segment increased 4.8% year-on-year toplants of Japanese customers. We will also strive

Column
Compressor Wheels

to raise profits by reinforcing our production

clean diesel vehicles.

system to expand the number of units produced

Based on these factors, we projectfor strategic products, including large substrates

consolidated net sales of ¥268.5 billion andfor solar panel fabrication equipment andconsolidated operating income of ¥9.2 billion.

compressor wheels for turbo chargers used inLight Metals (Furukawa-Sky Aluminum Corporation)
Net sales (Billions of yen)

Operating income (Billions of yen)

+ Progress in cost reductions– Decrease in volume of thick plates and foil stock– Surge in prices of crude oil and auxiliary materials– Impact of tax law reform in fiscal 2008: –¥1.6 billion

20

300

246.7

258.6

268.5
15

15.0

200

-2.6
12.4

-3.2
9.2

10
100
5

0

2007

2008

2009
(Plan)

0

2007

2008

2009
(Plan)+ Recovery in sales volumes for thick plates and foil
stock
+ Effects of productivity enhancements– Surge in prices of crude oil and auxiliary materials– Impact of tax law reform in fiscal 2009: –¥3.6 billion

31
ANNUAL REPORT 2008

Demand for clean diesel vehicles is rising, primarilyin Europe, from the standpoint of preventing global
warming. Compressor wheels are the key parts ofdiesel turbo engines with superior gas mileage andrequire durability and high dimensional accuracy.
Furukawa-Sky has succeeded in mass producing
aluminum compressor wheels that are highly
accurate and ultra-light by leveraging its proprietaryaluminum precision casting technology. Its products
are highly regarded for their superior quality andhave captured approximately 25% of the global
market. Furukawa-Sky intends to further increase
its share in response to growing global demand by
reinforcing the production facilities at its production
base in Vietnam, which came online in 2007.

Review of Operations

Results of Operations in Fiscal 2008a broad range of needs, from building networks

Net sales for the Services and Others segment inthat incorporate the strongest security measures

fiscal 2008 increased 13.9% from the previous

and mission-critical systems, to developing andyear to ¥45.8 billion. Operating income declined

operating various operational application systems

5.6% to ¥1.5 billion.

including sales support systems, CAD/CAE, andothers. The core responsibility lies with Furukawa

The Logistics BusinessInformation Technology Corporation, which quickly

There is a high demand for expertise in logistics

achieved CMM Level-3 in Japan and is highly

solutions throughout industry as a means ofregarded for the quality of its work.

efficiently focusing corporate resources on core
carrying out its mission to provide logistics

The Environmental and Recycling
Business

support for Group companies, has accumulated

The Furukawa Electric Group utilizes its

know-how and expertise that ensure thenationwide network to collect out-of-service

provision of optimal logistics solutions to suit thepower lines and cables and recycle themchallenges and needs of corporations.

through its dismantling system and at our plastic

business. Furukawa Logistics Corporation,

recycling plant, which are among Japan’s largest.

The Information Systems
Development BusinessAs a result, nearly 100% of conductor materials,

We develop and operate a variety of network

as we expand our use of insulation materials

systems, not limited to the Furukawa Electric Group,

such as recycled plastic and fuel.

such as copper and aluminum are recycled, evenbut also serving other companies. We respond to

32
ANNUAL REPORT 2008

Adding greater value to products
Services and from the perspectives of
Otherslogistics, information systems
and the environmentFIVE-YEAR SUMMARY
THE FURUKAWA ELECTRIC CO., LTD. AND ITS CONSOLIDATED SUBSIDIARIESFor the years ended March 31

Thousands of
U.S. dollars

Millions of yen

2008

Net sales
Cost of sales
Selling, general and administrative expenses
Operating income (loss)
Income (loss) before income taxes and minority interests
Net income (loss)
Cash dividends per common share (yen and U.S. dollars)
Research and development costs
Capital expenditure and cash flow
Total current assets
Property, plant and equipment,net of accumulated depreciation
Total assets
Total current liabilities
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities2007¥ 1,174,247 ¥ 1,104,709
930,399
1,002,410
120,677
123,390
53,63348,44757,98631,03429,765
15,291
6.50
7.00
19,976
19,78941,83345,264
531,584
501,436
337,679
338,227
1,096,709
1,014,778
454,690
419,175
50,72490,760−29,612−52,113−20,694−41,581

2006

2005

2004

2008

¥ 872,536
722,576
112,530
37,43044,54225,5083.00
18,01730,886483,171
325,325
1,052,256
430,206
22,719
11,133−46,782¥ 775,894
640,901
111,257
23,73633,06015,805—
17,19327,294442,937
335,687
991,358
392,90932,60040,360−84,578¥ 739,867
624,061
118,967−3,161−145,142−140,128—
19,06629,422
422,358
368,848
1,110,666
493,100
11,679−6,674−17,141$11,742,470
10,024,100
1,233,900
484,470
310,340
152,9100.070
197,890452,640
5,014,360
3,382,270
10,147,780
4,191,750
907,600−521,130−415,810

Note: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥100 to US$1.

33

Contents
FIVE-YEAR SUMMARY

33

CONSOLIDATED FINANCIAL REVIEW34

CONSOLIDATED BALANCE SHEETS

40

CONSOLIDATED STATEMENTS OF INCOME

42

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

43

CONSOLIDATED STATEMENTS OF CASH FLOWS45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

47

REPORT OF INDEPENDENT AUDITORS74

ANNUAL REPORT 2008

Financial Section

FINANCIAL REVIEW
Scope of Consolidation
The consolidated financial statements for the fiscal year
ended March 31, 2008 (fiscal 2008) include the businessresults of 110 subsidiaries and 16 affiliates accounted forusing the equity method. In the fiscal year under review,
five subsidiaries were added to consolidation while two
subsidiaries were dissolved due to mergers and one
subsidiary was removed due to divestiture. With respect
to consolidated equity-method affiliates, two were added.

Overview of Business Performance
Net sales

34
ANNUAL REPORT 2008

In fiscal 2008, signs of a slowdown became more apparent
in the global economy under the influence of surging
prices for crude oil and other materials and uncertainty infinancial markets caused by the subprime loan issue. The
economic outlook in Japan was also clouded by the rapid
strengthening of the yen and a stagnant stock market.
In this context, the actions of the Furukawa ElectricGroup were guided by Innovations 09, its mediumterm management plan, now in its second year. We
aggressively invested in priority areas with future growthpotential, such as automotive and electronic components,
achieved progress in restructuring our business and Group
companies, and sought to raise efficiency and strengthen
corporate governance. In the face of persistently highprices for raw materials such as copper, aluminum andpetrochemical products and fuel, we endeavored to raise
the prices of our products to secure profit and cut costs
by improving production yields and productivity. We alsosought to reduce inventory and sales receivables, restrain
increases in costs caused by high raw materials prices andreduce interest-bearing debt.
As a result, consolidated net sales rose 6.3% fromthe previous fiscal year to ¥1,174.2 billion (US$11.7
billion), as telecommunications-related demand
recovered, mainly in overseas markets, and sales ofelectronic components and automotive products fared
favorably. These factors were further bolstered by surging
prices in bare metals such as copper and aluminum.

Results by Business Segment
Telecommunications
Consolidated net sales decreased 1.8% from theprevious fiscal year to ¥163.1 billion (US$1.6 billion). The
FTTH-related markets expanded, demand for optical fiber
cables increased primarily in European and U.S. markets,and sales of CATV-related products were strong due
to recovery in demand for optical amplifiers. Net sales,
however, declined due to factors including the sale ofstock in Optical Communication Products, Inc., our U.S.
optical products manufacturing subsidiary, whose net
sales are no longer reflected on our balance sheet.
Energy and Industrial Products
Consolidated net sales increased 7.1% from the previous
fiscal year to ¥315.0 billion (US$3.2 billion). Sales of foam
sheets and industrial cables for construction slumped due
to a significant decline in new housing starts following
implementation of the revised Building Standard Law.
Demand for electric cables in China, however, remainedrobust and sales of tapes used for semiconductor
fabrication, such as DDF (dicing die bonding film), werealso strong.
MetalsConsolidated net sales rose 10.3% from the previous
fiscal year to ¥213.7 billion (US$2.1 billion). Sales ofelectrolytic copper foils remained favorable, sales of highvalue-added specialized foils increased considerably andsales of general-purpose foils also expanded. In addition,
bare copper prices remained high, further boosting results.
Light Metals
Consolidated net sales increased 4.8% to ¥258.6 billion(US$2.6 billion). Stagnant construction-related demandcaused by the revised Building Standard Law and delayed
recovery in IT-related demand resulted in a decline insales of general-purpose materials and thick plates used
for liquid crystal fabrication equipment. The selling priceof our products, however, rose along with surging barealuminum prices. The export of materials for beveragecans and materials for printing equipment, our mainstay
products, also increased.
Electronics and Automotive Systems
Consolidated net sales rose 11.5% from the previous
fiscal year to ¥268.6 billion (US$2.7 billion). While salesof magnet wires slumped, sales of automotive parts,
such as wire harnesses, grew due to favorable sales

Net sales (Billions of yen)
5.6

–13.1

Services

27.6
11.9
Light Metals

19.9
Metals–3.0
Telecommuications

1,104.7

2007

20.8

Electronics
andAutomotive
Products

Eliminationor
corporate
Up ¥69.5 billion
year-on-year

1,174.2

Energy andIndustrial
Products

2008Services and others
Consolidated net sales for this segment rose 13.9% fromthe previous fiscal year to ¥45.8 billion (US$0.5 billion).

in the black in terms of non-consolidated operating
income and maintain its recovery in profitability, given
the need for further strengthening our financial condition,
the company decided to pay a dividend of ¥7.0 per share.
Looking ahead, we intend to uphold our policy ofstable dividend payments from a long-term perspective
on income trends, while paying due consideration to
future business development.

Cost of sales/Selling, general andadministrative expenses

Cash Flowsof automobile models that incorporate our products.
We also enjoyed strong demand for aluminum blankmaterials for memory disks and heatsinks (heat radiating
components for electronic devices) for game machines.

Cost of sales increased by ¥72.0 billion from the previous
fiscal year to ¥1.0024 trillion (US$10.0 billion), and thecost of sales ratio increased by 1.2 percentage points
to 85.4%. However, excluding the effects of surging
bare copper and aluminum prices that comprised theincremental rise from the previous fiscal year, the actual
cost of sales ratio showed some improvement. Selling,
general and administrative expenses rose ¥2.7 billion
from the previous year to ¥123.4 billion (US$1.2 billion).

Net income

Liquidity

Dividends
Furukawa Electric intends to pay dividends toshareholders, upholding its basic policy of paying solid
dividends, while maintaining a long-term outlook on
future income trends and business development.
For fiscal 2008, while the company was able to remain

Since launching the Furukawa Survival Plan in 2004, a
three-year medium term management plan, we haveendeavored to sell investment securities and real estateholdings and reduce interest-bearing debt to bolster our
financial condition.

Operating income (Billions of yen)
–2.5
Decrease ingross margin

53.6

–0.8

Down ¥5.2 billion
year-on-year

0.1

–0.4

0.5

–2.4
Increase in Decrease in
Decrease in–0.1
0.3
Increase inshipping and
sales
R&D
transportation commission salaries and Increase in Decrease in expenses Decrease inbenefits
retirement depreciation
costs
other selling,
benefits
andgeneral andamortization
administrative
expenses
48.4

2007

2008

35
ANNUAL REPORT 2008

Affected by higher cost of sales, operating income
declined ¥5.2 billion from the previous fiscal year to¥48.4 billion (US$0.5 billion). Other expenses (net) cameto ¥17.4 billion (US$0.2 billion), compared with otherincome (net) of ¥4.4 billion in the previous fiscal year. The
two primary reasons for this net change of ¥21.8 billion
were a net foreign exchange loss of ¥3.1 billion (US$0.03
billion), compared with a gain in this category in theprevious year, as well as the posting of impairment lossesof ¥3.5 billion (US$0.03 billion), mainly for manufacturing
equipment which were absent in the preceding term.
Higher environmental costs and an increase in otherexpenses were also factors.
As a result, income before income taxes and minority
interests amounted to ¥31.0 billion (US$0.3 billion), andnet income was down ¥14.5 billion compared with thepreceding term to ¥15.3 billion (US$0.2 billion).

In fiscal 2008, income before income taxes and minority
interests decreased by ¥27.0 billion from the previous
fiscal year to ¥31.0 billion (US$0.3 billion). Cash and cash
equivalents decreased by ¥2.0 billion compared with theend of the previous fiscal year to ¥43.8 billion (US$0.4
billion) in the wake of a decrease in proceeds from thesale of non-current assets, an increase in payments forthe acquisition of property, plant and equipment andreductions in interest-bearing debt.
Net cash provided by operating activities was ¥90.8
billion (US$0.9 billion). While income before income
taxes remained below levels of the previous fiscal year,
depreciation expenses increased due to the effects of therevised tax law. Increase in trade receivables and increase
in inventories decreased significantly, and decreases inrefundable income taxes increased.
Net cash used in investing activities was ¥52.1 billion(US$0.5 billion). This was primarily due to proceeds fromsales of non-current assets remaining below levels of theprevious fiscal year and increased payment for purchaseof property, plant and equipment.
Net cash used in financing activities was ¥41.6 billion(US$0.4 billion). Apart from an increase in payment for
the repurchase of treasury stock, interest-bearing debt
decreased by ¥29.1 billion as we used our favorable cash
flow from operating activities to repay long- and shortterm debt.

FINANCIAL REVIEWAs a result, interest-bearing debt decreased by ¥29.1
billion from the previous fiscal year to ¥399.1 billion(US$0.3 billion), falling below the ¥400.0 billion mark forthe first time in seven years since fiscal 2002.
Looking ahead, we will seek to further reduce
interest-bearing debt through a renewed effort toraise asset efficiency by reducing inventory and tradereceivables. In terms of numerical targets, we intend tolower inventory turnover period to no more than 1.0
months, total asset turnover to 1.1 and debt-to-equity
ratio to 1.3 by March 31, 2010.

R&D Activities
Furukawa Electric Group maintains a solid R&D structurethat enables it to create and develop new businesses
through innovative products and technologies and toaggressively pursue R&D activities. Furukawa Electric Co.,
Ltd. operates five research laboratories in Japan, including
Yokohama R&D Laboratories, the Metal ResearchCenter, the Ecology and Energy Laboratory, the FITEL
Photonics Laboratory, and the Automotive Technology
Center, which are further complemented by the researchlaboratories of other Group companies. We also operate
two overseas laboratories, OFS Laboratories in the UnitedStates and FETI in Hungary. Total R&D expenditures infiscal 2008 were ¥19.8 billion. The major results of our
R&D activities segment were as follows:

36
ANNUAL REPORT 2008

Telecommunications(1) We developed products such as optical amplifiers andtemperature-insensitive AWG for next-generation
networking (NGN), and began shipping to several
customers. NGN has entered a stage of full-scaleconstruction, leading to brisk orders.
(2) We completed development of full-band tunable
lasers that have moved into the mainstream with
DWDM mesh network systems. We began delivery
to several customers and are working to expand
production capacity.
(3) We developed and began selling a high-sensitivity
optical fiber identifier that does not require parts
replacement for single-fiber and up to 12 fibers,featuring excellent workability that is ideal for FTTH.
R&D expenditures for the segment totaled ¥7.4 billion.

Energy and Industrial Products(1) We developed thin-walled materials for Eco-Ace
Plus, a flame retardant grade eco-electric wire forelectronic devices. We plan to conduct PR activities
targeting electric equipment makers and so on.
(2) We continue to develop highly functional materials
for semiconductor tapes, and sales of DDF (dicing die
bonding film) have shown consistent growth.
(3) We are participating in a national project fordeveloping Yttrium-based, high-temperature
superconducting power cables. We achieved
transmission loss of 0.1 W/m and less in productionmodel cables.
R&D expenditures for the segment totaled ¥1.1 billion.
Metals(1) We submitted mass production samples of highperformance connector material to customers forevaluation.
(2) We submitted engineering samples of shield casematerials for developing aluminum plastic composite
products to several press makers for evaluation.
(3) We further enhanced the functionality of our new
internally grooved tubes and are expanding bothsales and market share. We also succeeded in thecommercial introduction of internally grooved tubes
for CO2 coolants. In addition, we are expanding
sales of Thermo-In BIRUMEITO Tube®, an outdoortype sheathed copper for refrigerants used as air
conditioner piping in buildings developed through theindustry’s first foam resin integral molding technology.
R&D expenditures for the segment totaled ¥1.4 billion.
Light Metals(1) Beyond enjoying top market share in Japan forautomobile heat exchangers, such as radiators,
condensers, evaporators and intercoolers, we
also provide a global supply through alliances andtechnical cooperation with overseas aluminummakers. In fiscal 2008 our overseas business was
acclaimed by users for the level of technical support
and joint development capabilities. We are pushing
forward with the development of materials for nextgeneration heat exchangers to serve both domestic
and overseas markets.

Research and development costs (Billions of yen)
0.7

–1.1
0.2
Telecommunications

20.0

2007

–0.1

0.3

Energy andIndustrial
Products

MetalsLight Metals

Electronics
andAutomotive
Products–0.2

Down ¥0.2 billion
year-on-year

Services

19.8

2008

R&D expenditures for the segment totaled ¥2.5 billion.
Electronics and Automotive Systems(1) We are expanding markets for high-performanceheatsinks and flat heat pipes that are essential forthe characteristic features of highly functional home
information appliances.
(2) As part of the TEX (triple-insulated wires) series,
we followed up on the TEX-BS (B-type) with heat
resistance of 130˚c by completing development of the
TEX-FS (F-type), and we began undertaking full-scale
shipping. We plan to expand applications for the
B-type as AC adaptors for personal computers andthe F-type as power units for medical equipment, flatpanel TVs and video cameras.
(3) We plan to develop a highly pressure-resistant, lowelectricity-consuming device for application in GaN(gallium nitride) power units.
R&D expenditures for the segment totaled ¥4.3 billion.

Capital Expenditures
The Furukawa Electric Group conducted investments
exceeding levels of the previous fiscal year in our Energy
and Industrial Products, Electronics and Automotive
Products and Metals segments, and total Group capital
expenditures, at ¥45.3 billion, were also higher than theprevious fiscal year.
The primary goals for capital expenditures bysegment were as follows:

Metals• Expand production capacity of copper alloys andstrips, plated strips and copper foil products for the
automotive, IT and electronics markets
Light Metals• Construct a new melting and casting facility forrationalizing slab manufacturing by increasing capacity• Concentrate product mix to bolster competence inquality and cost
Electronics and Automotive Products• Expand production capacity of enameled wires forelectronic components• Mass produce and expand production capacity ofelectronic components for automobiles• Mass produce substrates for hard discs
As common measures across the entire Group, weundertook capital expenditures primarily to modify
systems related to personnel and general affairs,
sales and accounting, following the establishment ofconsolidated subsidiary Furukawa Automotive Systems
Inc., and to maintain and upgrade old buildings andancillary facilities.
Major facilities completed within the fiscal year
under review included: facilities for manufacturing
semiconductor fabrication tapes and for manufacturing
enameled wires used in electronic components at the
Mie Works of Furukawa Electric Co., Ltd.; facilities for
manufacturing copper foil products at Furukawa Circuit
Foil Taiwan Corporation and Furukawa Circuit Foil Co.,
Ltd.; a melting and casting facility at the Fukui Works anda board-cutting facility at the Fukaya Works of FurukawaSky Aluminum Corporation.

Capital expenditure (Billions of yen)

–3.5
3.9
0.9

–0.4
Services

Light Metals
MetalsElectronics
andAutomotive
Products–0.1
Eliminationor
corporate

Up ¥3.4 billion
year-on-year

3.0
–0.4

41.8

2007

Telecommunications

45.3
Energy andIndustrial
Products

2008

37
ANNUAL REPORT 2008

Services and Others
This area is primarily related to our new business fields.
(1) We achieved 200w output in our development of CW
fiber lasers through joint research with the OFS Labs.
(2) We developed a femtosecond laser (fiber laser thatemits ultra short pulses).
(3) We developed and began selling the world’s smallest
class single-frequency, polarization maintaining fiber
laser with output power of 1,064 nm. Intended for
applications requiring the generation of 532 nm
green colors, the laser is excellently designed in termsof its extremely stable frequency.
R&D expenditures for the segment totaled ¥3.0 billion.

Telecommunications• Expand production capacity of optical fiber cables• Mass produce and expand production capacity of
optical components, such as semiconductor lasers
Energy and Industrial Products• Expand production capacity of semiconductor
fabrication tapes, a high-growth product• Expand production capacity of ultra-high voltage power
cablesFINANCIAL REVIEWa decrease of ¥22.4 billion in unrealized gains on othermarketable securities. Consequently, total shareholders’equity ratio rose 0.4 percentage point from the end of
the previous fiscal year to 22.9%.

No significant facilities were disposed of or soldduring the fiscal year under review.

Financial position

38
ANNUAL REPORT 2008

Total assets decreased by ¥81.9 billion from the previous
fiscal year to ¥1.0148 trillion (US$10.1 billion). Current
assets decreased by ¥30.1 billion to ¥501.4 billion (US$5.0
billion) and non-current assets decreased ¥51.7 billion
to ¥513.3 billion (US$5.1 billion). The major reasons forthe decline included sales of a consolidated subsidiary,
the receipt of refundable income taxes from overseas
subsidiaries that in turn were used to fund repayment ofinterest-bearing debt, and declines in the market value ofinvestment securities.
The net increase in operating capital, excluding theeffects of changes in the scope of consolidation, was¥18.8 billion. While notes and trade receivables rose by¥1.2 billion (US$0.01 billion) and inventory by ¥4.1 billion(US$0.04 billion) compared with the previous fiscal year,
notes and trade payables decreased by ¥13.4 billion.
Major factors behind changes in non-current assets
included a decrease of ¥42.1 billion in depreciation, an
increase of ¥45.2 billion in capital expenditures, offsetting
increases and decreases due to changes in the scope of
consolidation and decreases due to disposal of assets.
With respect to current liabilities, interest-bearing
debt, which is the sum of long- and short-term debt,
commercial paper and corporate bonds, decreased by¥29.1 billion from the end of the previous fiscal year to¥399.1 billion.
With respect to net assets, retained earnings
increased by ¥11.0 billion, while there was a increase of¥5.0 billion due to the repurchase of treasury stock andBusiness-Related Risks
The Furukawa Electric Group’s management
performance is affected by the economic conditions of
the various markets in which we sell our products andprovide services.
The Furukawa Electric Group’s management
performance, stock price and financial condition may beaffected by the following risks, assessed by the Group asof June 26, 2008, the date on which we submitted ourfinancial report.
1) Infringement of third-party intellectual
property rights and other rights
The Furukawa Electric Group takes appropriate measures
to prevent the infringement of intellectual property
and other rights owned by third parties in connection
with business activities, including the development,
manufacture, use and sales of products and software.
These measures include prior research of such rights
and the arrangement of licensing as required. However,
we may become engaged in a dispute with a third party
who sues the Group for alleged infringement ofintellectual property or other rights owned by the third
party.
Suspension of the manufacture or sale of Group
products or a major claim for damages or settlement
benefits as a result of alleged infringement of third party
rights may adversely affect the results of operations andfinancial position of the Group.

Assets (Billions of yen)
0.7

–0.1

Cash and Trade notes
anddeposits
accounts
receivable

Current assets:
Down¥30.1 billion
year-on-year

3.5

–8.1
1.1
Securities Inventory

Deferredtax assets

–27.5
0.5
0.3

Other
current
assets

1,096.7–6.5

Tangible
Allowance fixed assets Intangibleforfixed assets
doubtfulaccounts

Fixed assets:
Down¥51.8 billion
year-on-year–45.8

Investments 1,014.8
and otherassets2007

2008

Liabilities and net assets (Billions of yen)
–28.7

1,096.7

2007

Current–6.8
portion of
–0.5
Other
corporatecurrent Corporate
bonds
liabilities bonds

Liabilities: Down
¥60.6 billion
year-on-year

–11.0

1.7

–15.4

Long-term Allowance for0.2
borrowings environmental Other fixed Capital,
measures liabilities
capitalsurplus

11.0
Earnedsurplus–5.1
Treasury
stock

–21.2

Net assets: Down
¥21.3 billion
year-on-year

Valuation–6.2
andMinoritytranslation shareholding 1,014.8
adjustments
2008including markets in the U.S., Europe and Asia, as wellas emerging markets. We face various potential risks inthese overseas markets, such as unexpected changes inlaws and regulations, labor disputes caused by changes
in the economic environment or sudden outbreaks of
epidemics. Such risks may adversely affect the result of
our operations.
Particularly in China, where the annual GDP growthrate has remained at 10% over the past several years,
we have established and operate a number of businesssites, namely in Shanghai, Beijing and Tianjin. Unexpected
events in China, such as changes in laws, rules andregulations associated with investment, foreign currency,
finance and trade; suspension of power supply; or theoutbreak of epidemics, may adversely affect our operations.
Concretely, should the Chinese GDP growth rate sharply
decline due to the adoption of a governmental policy
to curb excessively rapid economic growth, or should
the exchange rate of the yuan be adjusted, the resultsof our operations in China may significantly differ fromour business plan forecast. In such cases, the cash flows
of our subsidiaries in China may be adversely affected
because the collection period for sales receivables from
Chinese customers is relatively long.

Future Outlook
The future economic outlook is riddled with concerns,
including instability in global financial markets caused
by protraction of the subprime loan problem, fears of aslowdown in the U.S. economy and growing inflationarypressures caused by continuously high prices for crude oiland primary products. Consequently, business conditions
are expected to become even harsher.
Under these circumstances, the Furukawa ElectricGroup will continue to pursue its 2006–2009 mediumterm management plan Innovations 09, formulated in
March 2006 and partially revised in May 2007, toward
our goal of transforming the company into a truly
creative corporation with a global presence. While
staying attuned to the changing market, we will continue
to invest in research and development and extend
capital investments centered on our four priority areas ofautomobiles, electronics, photonics and networks andecology (eco), while at the same time seeking to develop
new overseas markets.
On the other hand, since reducing interest-bearing
debt is still a key management concern, and we also
want to minimize the impact of surging bare metal
prices, we will strive to further improve asset efficiency
by reducing inventory and trade receivables. In addition,from the perspective of driving growth, we will promote
restructuring, eliminating and integrating businesses
and affiliate companies while focusing resources oncultivating human resources that are capable of precisely
managing the deployment of our global business.
With respect to consolidated performance for fiscal
2009, we expect ¥1.2100 trillion in net sales, ¥46.0 billion
in operating income, ¥34.5 billion in ordinary income and¥24.1 billion in net income. Income and expenses includes
the incremental rise of depreciation expense due to therevised tax system, which will have a negative impact of¥6.5 billion on consolidated operating income.

39
ANNUAL REPORT 2008

2) Defective products
The Furukawa Electric Group manufactures products
and services in accordance with prevailing domestic andinternational standards and specifications as well as its
own quality control standards developed over the courseof its extensive business experience. However, we cannot
warrantee that all our products and services are free fromdefects or that we will not be liable for any future losses
or damages. Any defects in products such as power
cables, communication cables and automotive parts may
incur significant additional costs.
While our product liability insurance policy covers
risks associated with our products, it may not cover all thedamages we might be required to pay. Product defects
causing significant damage or product liability may incur
major costs and tarnish the Group’s reputation, adversely
affecting the results of the Group’s operations andfinancial position.
3) Fluctuations in raw material and fuel prices
Prices for our main raw materials, including non-ferrous
metals such as copper and aluminum, and polyethylene,
along with fuels such as heavy oil and LNG, may fluctuate
beyond expectations due to changes in international
politics and market trends. We may not be able tosufficiently reflect such substantial price fluctuations onto
our sales prices, or we may unable to do so in a timely
manner. This may adversely affect the results of ouroperations or financial position.
4) Fluctuations in exchange rates
The Furukawa Electric Group owns foreign currencydenominated credit and obligations. Therefore,
fluctuations in the foreign currency environment may
result in exchange gains or losses.
5) Higher interest rates
If interest rates rise, our interest expenses will increase,which may adversely affect the results of operations.
6) Lowering of credit ratings
Should our performance stagnate, we may incur the riskof credit rating agencies downgrading our long-termbonds and commercial paper.
7) Impairment of assets
In the event of unfavorable conditions in the market or
business environment, the market value of our assets
may substantially decline, or the profit generated by ourassets may decrease, leading us to incur impairment
losses on such assets.
8) Soil pollution on land held for business purposes
The Furukawa Electric Group discovered contaminatedsoil on part of land owned by the Group in the Nikko
area. We are implementing the necessary soil remediation
actions. Remediation work is also underway in part ofland owned in the Yokohama area intended for leasing.
We will also begin remediation work at the former site of
the Neyagawa Plant owned by subsidiary Kyowa Electric
Wire Co., Ltd. towards the lifting of the contaminatedarea designation.
When we sell our land or change how it is usedin other areas, we may incur costs associated with soil
pollution in the event a soil survey demonstrates the landis contaminated.
9) Overseas activities
The Furukawa Electric Group manufactures and sells
products not only in Japan but also in overseas markets,

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Corporate Data
Head Office

Manufacturing Facilities

2-3, Marunouchi 2-chome, Chiyoda-ku,Tokyo 100-8322, Japan

Chiba

PHONE: 81-3-3286-3001

Nikko

URL: http://www.furukawa.co.jp/english/

Hiratsuka
MiePaid-in Capital

Yokohama¥69,373 million (As of March 31, 2008)

Osaka

Branches

Research Laboratories

Osaka

Yokohama R&D Laboratories

NagoyaMetal Research Center

Fukuoka

Ecology & Energy Laboratory
FITEL Photonics Laboratory
Automotive Technology Center

Stock Information
Stock Information

March 31, 2008

2,596,000,000

Common shares

2,500,000,000

Preferred shares

50,000,000

Subordinated shares

46,000,000

Total number of shares issued and outstanding

706,539,179(Common shares)

Treasury stock
1.31%
9,226,349 shares
Domestic corporations,others
7.36%
52,011,692 shares
Individuals and others
28.70%
202,843,928 shares

March 31, 2008

Financial institutions
38.04%
268,724,234 shares

75

Securities companies
1.95%
13,806,230 shares

ANNUAL REPORT 2008

Number of shares authorizedDistribution of Stock Ownership(Common shares)

Foreign corporations
22.64%
159,926,746 shares

Total number of shares issued and outstanding: 706,539,179

Major Stockholders
Name

March 31, 2008
Number of shares held

Shareholding ratio

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

35,663,000

5.05％Japan Trustee Services Bank, Ltd. (trust account)

31,213,000

4.42％Japan Trustee Services Bank, Ltd. (trust account 4)

23,961,000

3.39％

Trust & Custody Services Bank, Ltd.
(Mizuho Corporate Bank, Ltd. Retirement Benefit Trust Account re-entrusted by Mizuho Bank, Ltd.)22,928,250

3.25％

Asahi Mutual Life Insurance Company

16,050,000

2.27％

Furukawa Co., Ltd.

13,290,455

1.88％

Mitsui Asset Trust and Banking Co., Ltd. (specified trust account)

12,544,000

1.78％

Nippon Life Insurance Company

11,895,000

1.68％

Fuji Electric Holdings Co., Ltd.

11,000,000

1.56％

Trust & Custody Services Bank, Ltd.
(Mizuho Corporate Bank, Ltd. Retirement Benefit Trust Account re-entrusted by Furukawa Co., Ltd.)

10,919,000

1.55％

2-3, Marunouchi, 2-chome, Chiyoda-ku, Tokyo 100-8322, Japanwww.furukawa.co.jp/english/

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IE-110 2J8 BC 25