TOKUYAMA CORPORATION
Annual Report 2016
Year ended March 31, 2016

Contents

Profile2

Consolidated Financial Highlights
Segment Information

5

7

Medium-Term Management Plan

15

Message from the President

17

Research and Development

19

CSR Initiatives

22

Corporate Governance24

Business and Other Risks
Corporate Officers

30

Financial Section

32

28

Independent Auditor’s Report
Business Locations

68

69

Major Subsidiaries and Affiliates

71

Corporate Data and Stock Information

73

CAUTIONARY NOTES:FORWARD-LOOKING STATEMENTS
This annual report contains information about forward-looking statements related to such matters as the Company’s plans, strategies and businessresults. These forward-looking statements represent judgments made by the Company based on information available at the time of preparing thisreport, and are inherently subject to a variety of risks and uncertainties. The Company’s actual activities and business results could differ
significantly from the forward-looking statements due to changes including, but not limited to, those in the economic environment, businessenvironment, demand and exchange rates.

DISCLAIMER
This annual report is supplied to provide information of the Company, and is not intended as a solicitation for investment or other actions. The
Company assumes no responsibility whatever for any losses or deficits resulting from investment decisions based entirely on projections,numerical targets and other information contained in this report.

Tokuyama Corporation Annual Report 2016

1

Profile
Tokuyama Corporation was founded in 1918 to begin production in Japan of soda ash, also known as sodium carbonate,
which was being imported at that time. As a fundamental material for industry, soda ash was indispensable forfacilitating the country's industrial development in the early 20th century.
The company has gone on to produce and supply a wide range of chemical products. Building on this foundation,
Tokuyama is currently expanding its main businesses globally, with a special focus on its information and electronics
business, which markets semiconductor-related products, the life and healthcare business, which includes eyeglass lensmaterials, dental materials and other products, and the environment and energy business, which handles polycrystalline
silicon for solar cells as well as cement, recycling and environment-related businesses.
Tokuyama's 100th anniversary is February 16, 2018. We at the Tokuyama Group are committed to creating new value
centered on the field of chemistry. In creating a constant stream of new value, we will contribute to people’s happinessas well as the growth and development of society.

Company History
1918〜1944 Establishment and specialization in soda production
1918
Nihon Soda Kogyo Co., Ltd. (currently Tokuyama Corporation)
was established to produce soda ash
1938
Commenced cement business
1940
Expansion of inorganic chemicals business

The Factory as it was established

1945〜1960 Further expansion of inorganic chemicals business
1952
Commenced electrolytic chlor-alkali business
1961〜1974 Entry into petrochemicals business
1964
Commenced petrochemicals business
1966
Commenced polyvinyl chloride business
1967
Commenced ion exchange membrane business
1970
Commenced polypropylene business
1975〜1989 Entry into specialty and processing business
1976
Commenced polyolefin film business
1978
Commenced dental materials and equipment business
1981
Commenced building materials business
1982
Commenced life-related business
Commenced fine chemicals business
1983
Commenced IC chemicals business (high-purity chemicals
for electronics manufacturing)
Commenced medical diagnosis systems business
1984
Commenced electronic materials business (polycrystalline silicon)
1985
Commenced aluminum nitride business
Commenced gas sensors business

1960’s Cement kiln (length: 185m)

Tokuyama Factory (Current)

1990〜2004 Strengthening and restructuring of business
1992
Established Sun • Tox Co., Ltd. as a joint venture for manufacture and sale of polyolefin film
1995
Established Shin Dai-ichi Vinyl Corporation as a joint concern for manufacture and sale of polyvinyl chloride
2000
Commenced recycling & environment-related business2005〜 Accelerating overseas business expansion
2005
Established Tokuyama Chemicals (Zhejiang) Co., Ltd. in Zhejiang, China as a manufacturing and sales
company of fumed silica
2009
Established Tokuyama Malaysia Sdn. Bhd. in Malaysia as a manufacturing and sales company ofpolycrystalline silicon
2013
Started operation of Tokuyama Chiyoda Gypsum Co., Ltd as a joint venture for developing a waste
gypsum board recycling business
Established Tokuyama Nouvelle Calédonie S.A., in New Caledonia, as a manufacturing and sales company
of cement

Tokuyama Corporation Annual Report 2016

2

A Value Creation Cycle that Spans Close to a Century
Drawing on its unique technologies in the manufacture and development of inorganic and organic chemicals, Tokuyama
has continued to refine its capabilities as the driving force behind its value creation endeavors for just short of a century.
As a platform for the manufacture and seamless delivery of products that employ these technologies to reduce costs toan unprecedented level, the Company also makes full use of the industry-leading port infrastructure and in-house power
generation facilities owned and operated by Tokuyama Factory. Located in the Shunan Industrial Zone, Tokuyama
Factory works diligently to deepen ties with neighboring companies. In addition to the supply of electric power and raw
materials, Tokuyama Factory actively engages in the collection of waste. As the Group’s main manufacturing facility,
Tokuyama Factory boasts a highly efficient production structure and systems that link several plants and operational
units to ensure the integrated and effective use of raw materials, products, byproducts, and waste.
Taking full advantage of its tangible and intangible asset including unique technologies, competitive manufacturing
facilities as well as human resources and organizations with professional skills and experience, the Tokuyama Group
provides products and services that match the needs of the market. With a proven track record of creating value with ourcustomers for a century, we will continue to fine tune our business model as a core and inherent strength..

Tokuyama Corporation Annual Report 20163

Tokuyama Corporation Annual Report 20164

Consolidated Financial Highlights
Years ended March 31

Tokuyama Corporation and Consolidated Subsidiaries

Millions of yen
2007

2008

2009

2010

2011

Net sales

292,764

307,453

300,999

273,154289,786

Operating income

34,73735,32522,73816,483

20,144

Profit (loss) attributable to owners of parent

18,46018,888(5,597)

7,458

9,765

Basic earnings (loss)

67.24

68.85

(20.42)

23.52

28.06

Cash dividends

6.00

9.00

6.00

6.00

6.00

Net assets

699.69725.37669.80682.03693.18

Total assets

373,745

383,264

403,613452,893474,708

Net assets

197,811206,135

189,757

243,606

247,656

Cash flows from operating activities

34,22547,69842,48029,38037,043

Cash flows from investing activities(22,531)(25,664)(56,506)(36,468)(88,508)

Cash flows from financing activities(13,836)(10,176)

29,24646,99023,994

Cash and cash equivalents at end of the year

29,222

41,05755,36595,945

68,624

Capital expenditures

22,65637,001

52,55026,55735,807

Depreciation and amortization (Note 1)

18,144

21,451

22,986

37,68831,476R&D expenses

10,756

11,161

11,872

11,817

11,469

Shareholders' equity ratio (%)

51.4

51.9

45.5

52.4

50.8

Return on equity (%)

10.0

9.7

(2.9)

3.5

4.1

Number of employees

4,852

5,057

5,295

5,444

5,493

Consolidated subsidiaries

44

47

46

49

50

Per share amounts (in yen)

Note 1: Depreciation and amortization includes amortization of long-term prepaid expenses.

Tokuyama Corporation Annual Report 20165

Thousands of
U.S. dollars

Millions of yen(Note2)

2012

2013

2014

2015

2016

2016

Net sales

282,381258,632

287,330

302,085

307,115

2,717,833

Operating income

13,720

6,772

20,27019,53023,071

204,170

Profit (loss) attributable to owners of parent

9,351(37,916)

10,218(65,349)(100,563)(889,945)

Basic earnings (loss)

26.87(108.98)

29.37(187.85)(289.10)(2.56)Cash dividends

6.00

3.00

6.00

-

-

-

Net assets

716.39625.29660.18467.36147.98

1.31

Total assets

501,181518,251

576,315554,527

401,3423,551,699

Net assets

255,460

223,871

236,453

169,445

60,205

532,792

Cash flows from operating activities

27,06017,071

34,10530,77230,098266,358

Cash flows from investing activities(57,666)(60,673)(64,402)(25,519)

13,400118,585

Cash flows from financing activities

20,791

36,46545,93940,502(37,689)(333,538)

Cash and cash equivalents at end of the year

58,47652,431

69,973

116,122

121,166

1,072,269

Capital expenditures

77,602

97,54961,051

25,345

13,945

123,410Depreciation and amortization (Note 1)

28,492

23,242

16,77018,84520,084

177,738

R&D expenses

11,704

10,076

8,709

10,156

8,522

75,423

Shareholders' equity ratio (%)

49.7

42.0

39.9

29.3

12.8

-

Return on equity (%)

3.8(16.2)

4.6(33.3)(94.0)-

Number of employees

5,506

5,651

5,756

5,852

5,759

-

Consolidated subsidiaries

48

49

53

54

55

-

Per share amounts (in yen, dollars)Note 1: Depreciation and amortization includes amortization of long-term prepaid expenses.
Note 2: U.S. dollar amounts above and elsewhere in this annual report are converted from Japanese yen, for convenience only, at the rate of ¥113=US$1.

Tokuyama Corporation Annual Report 2016

6

Segment Information
CHEMICALS

Tokuyama's Chemicals segment handles basic chemicals used as raw
materials for an array of products that are essential for people's
livelihoods. Among these are soda ash, which Tokuyama has been
producing since its founding in 1918, and caustic soda, a material
which is said to be “essential for the manufacture of products infactories.” These and other chlorine derivatives are used in a very
wide range of applications and are essential for all kinds of industries.
The caustic soda business also plays an additional role in Tokuyama's
earnings platform, as its manufacturing process generates chlorine andhydrogen that are used in processes for producing the Company's
polycrystalline silicon. In addition, Yamaguchi Liquid Hydrogen
Corporation, a joint venture for liquid hydrogen production,commenced operations in 2013. Through these operations, theCompany’s hydrogen is also used for rocket fuel at the Tanegashima
Space Center of Japan Aerospace Exploration Agency (JAXA). In thisway, the segment is contributing to the development of space
exploration.

26.6%

With the goal to continue ensuring that Tokuyama is the preferred choice of customers, the Chemicals segment oversees
three business units and Group companies while working to provide a stable supply of products and services that meetthe expectations and needs of customers in a timely manner.
Business Unit

Major Products

Soda Ash and Calcium Chloride

Soda ash, Calcium chloride, Sodium silicate and Sodium bicarbonate

Chlor-Alkali and Vinyl Chloride

Caustic soda, Vinyl chloride monomer (VCM), Propylene oxide and Methylene chloride

New Organic Chemicals

Isopropyl alcohol (IPA)
Polyvinyl chloride (PVC) [Shin Dai-ichi Vinyl Corp.]

Group Companies
Soda ash and Calcium chloride [Tokuyama & Central Soda Inc.]

Operating Results for the Fiscal Year ended March 31, 2016
Sales of caustic soda were down compared with the previous fiscal year. While domestic sales volumes were steady,this decrease was attributable to weak trends in selling prices.
With regard to vinyl chloride monomer (VCM), profitability improved on the back of a drop in raw material costs dueto the downturn in domestic naphtha prices.
Despite a favorable export environment, sales of polyvinyl chloride (PVC) declined. This was mainly due to a drop insales volumes following the closure of the Chiba factory.

Tokuyama Corporation Annual Report 20167

With regard to soda ash and calcium chloride, sales increased compared with the previous fiscal year. This reflected thestartup of operations by Tokuyama & Central Soda Inc. in October 2014.
As a result of the above, segment net sales decreased 4.5% compared with the previous fiscal year, to ¥87,801 million,
while operating income increased 76.0% to ¥8,900 million. The segment reported higher earnings on lower sales.

Strategies going forward
Tokuyama will contribute to the development of customers’ businesses by delivering high-quality, cost-competitive
basic chemical materials and services that accurately reflect customers’ needs. At the same time, we will help to ensure
the Company’s stable and continuous earnings growth, all through our activities as the core business of the Company.
Guided by this basic policy, we will push forward the following priority measures.
■ Soda Ash and Calcium Chloride BusinessWe will ensure the stable supply while maintaining the quality of products as a single domestic manufacturer.
■ Chlor-Alkali and Vinyl Chloride BusinessWe will strengthen the competitiveness of our in-house power generation and electrolytic chlor-alkali production withthe aim of further reducing the cost of caustic soda and chlorine. At the same time, we will strengthen the profitabilityof the chlorine derivatives business including vinyl chloride, propylene oxide, and chloromethane. Moving forward, we
will double the liquid hydrogen production capacity of Yamaguchi Liquid Hydrogen Corporation. The supply of liquidhydrogen produced by the expanded line is scheduled to start in November 2017.

Tokuyama Corporation Annual Report 20168

SPECIALTY PRODUCTS
The Specialty Products segment offers products for a wide range offields including energy, electronics and the environment. Our
high-purity polycrystalline silicon is used for semiconductors andsolar cells. Tokuyama is one of the leading companies in the world's
polycrystalline silicon market. Fumed silica, which is produced froma by-product of polycrystalline silicon manufacture, is used forsilicone rubber, polishing material for semiconductors manufacturing,copier toner and other applications. Aluminum nitride, which boasts
excellent heat dissipation properties, is used for semiconductor
production equipment and energy-saving applications such as
inverters and LEDs. Our high-purity chemicals for electronics
manufacturing are used chiefly for production of semiconductors and
LCD panels.

26.6%

The Specialty Products segment will continue to build on its
advanced chemical technologies such as high purification, powder
control and others, to create unique products that are useful to society.

Business Unit

Major ProductsElectronic Materials

Polycrystalline silicon

Fumed Silica

Fumed silica

SHAPAL

Aluminum nitride

IC Chemicals

High-purity chemicals for electronics manufacturing

Cleaning System

Methylene chloride for metal cleaning
Polycrystalline silicon [Tokuyama Malaysia Sdn. Bhd.]

Group Companies

Fumed silica [Tokuyama Chemicals (Zhejiang) Co., Ltd.]
Aluminum nitride substrate [Tokuyama-Dowa Power Materials Co., Ltd.]

Operating Results for the Fiscal Year ended March 31, 2016
Sales of semiconductor-grade polycrystalline silicon were essentially unchanged from the previous fiscal year. Thislargely reflected firm overall trends in sales volumes, which offset the slowdown in demand for certain semiconductor
products targeting various fields including smartphones.
Sales of solar-grade polycrystalline silicon increased on the back of higher sales volumes. This was mainly due to thestart of sales and marketing by Tokuyama Malaysia in October 2014. In contrast, profitability deteriorated owing tosuch factors as the marked drop in spot price and sluggish operating rates.
Sales of fumed silica increased compared with the previous fiscal year due to steady sales of such applications as apolishing material for semiconductors manufacturing.
Sales volume of high-purity chemicals for electronic manufacturing were firm thanks largely to semiconductor productapplications. However, sales declined as a result of soft trends in selling prices.
With regard to aluminum nitride, sales increased compared with the previous fiscal year. This was attributable to anincrease in sales volumes of such applications as heat sink materials used for power devices for industrial machineryand LEDs.

Tokuyama Corporation Annual Report 20169

As a result of the above, the segment reported a loss on higher sales. Segment net sales increased 9.8% compared withthe previous fiscal year, to ¥60,902 million. However, this segment incurred an operating loss of ¥1,157 million during
the fiscal year under review.

Strategies going forward

16.3%
Tokuyama will adhere strictly to a policy of QCD (quality, cost, delivery) improvement while continuing to put forward
development product proposals in order to remain the preferred supplier of customers. To achieve this end, we will
undertake the following priority measures.
■ Electronic Materials Business (Polycrystalline Silicon)
With regard to the semiconductor-grade polycrystalline silicon, we will contribute to the development and growth of thesemiconductor industry by accurately grasping the needs of customers with respect to product quality and thenreflecting these requirements in efforts to improve the quality of our own products. Concerning solar-grade
polycrystalline silicon, we will secure stable operations at Tokuyama Malaysia.
■ IC Chemicals BusinessWe will expand sales and improve the quality of products that target the advanced semiconductor field.
■ Fumed Silica BusinessIn addition to upgrading and expanding highly functional products, we will establish optimal production with Tokuyama
Chemicals (Zhejiang) Co., Ltd.
■ Shapal Business (Aluminum Nitride)
We will expand business in the heat sink market targeting the power device and semiconductor equipment fields.

Tokuyama Corporation Annual Report 201610

CEMENT
Tokuyama launched its cement business in 1938 out of a desire toefficiently make use of by-products produced at the Tokuyama
Factory, an environmental approach that was ahead of its time inJapan. The segment produces cement and such related products as
cement-type soil solidifiers at the Nanyo Plant of the Tokuyama
Factory. These products are used for ready-mixed concrete andsecondary concrete items, which in turn are used to help build
infrastructure essential for people's lives, including residences,buildings, structures which support essential utilities, andtransportation facilities such as ports, bridges, and roads.

26.6%

In the cement production process, we accept a large volume of waste
matter, including waste plastic and household garbage incineration
ash from outside the Company as well as inside the Company, andutilize it as raw materials or fuel sources. In this way, the segment is
promoting a recycling approach that is responsive to the needs ofsociety, thereby helping promote a recycling-oriented society that
effectively makes use of resources as much as possible.
Tokuyama Mtech Corporation manufactures and sells various types of building materials products including cementand mortar-type products. Moreover, the Cement segment strives to develop products that can create new businesspossibilities by employing the technologies it has developed in the cement and building material fields. For example,
steps are being taken to roll out Fresco Graph and other cutting-edge techniques that incorporate 3-D modelingtechnologies using Shikkui Lemarge interior design materials and other classic style fresco painting plaster techniques.
Business Unit

Major Products

CementPortland cement, Portland blast furnace slag cement and Cement-type soil solidifier

Recycling and Environment

Recycling of wastes

Group Companies

Ready-mixed concrete [Tokyo Tokuyama Concrete Co., Ltd., etc.]

Operating Results for the Fiscal Year ended March 31, 2016
In the cement business, sales declined compared with the previous fiscal year, as a result of decreased sales volumes.
This decrease reflected sluggish trends in both public and private-sector demand impacted by such factors as thedecrease in public works and delays in construction attributable to unseasonably bad weather in Japan.
In the recycling and environment-related business, the Company accepted a higher volume of waste including
construction waste soil compared with the previous fiscal year. As a result of this, sales increased from the previous
fiscal year.
With regard to consolidated subsidiaries, sales increased compared with the previous fiscal year, because sales volumesof such products as ready mixed concrete for large-scale projects increased in certain areas.
As a result of the above, segment net sales increased 5.2% compared with the previous fiscal year, to ¥85,469 million
and operating income increased 31.1% to ¥5,832 million. The segment reported higher earnings on higher sales.

Tokuyama Corporation Annual Report 201611

Strategies going forward
We will put in place an optimal production, sales, and distribution structure that is capable of addressing changes in thebusiness environment while cultivating and strengthening overseas as well as new businesses. To achieve this end, we
will undertake the following priority measures.
■ Cement BusinessTokuyama will cut back costs by focusing on efforts aimed at reducing the use of coal and increasing the use/intake ofcombustible waste. We will endeavor to secure earnings by expanding exports that maximize the use of the No. 4 kiln.
Energies will also be channeled toward upgrading and expanding the infrastructure maintenance and reinforcementbusiness through Tokuyama Mtech Corporation.
■ Recycling and Environment BusinessWe will promote the use of combustible waste and optimize the fuel plant business. We will also expand the businessfor recycling waste gypsum boards in line with the start of operations at the Kanto Plant of Tokuyama Chiyoda Gypsum
Co., Ltd.

Tokuyama Corporation Annual Report 201612

LIFE & AMENITY
The Life & Amenity Division oversees Group companies that handle
such wide-ranging products as polyolefin films, medical diagnosis
systems, dental materials, gas sensors, ion exchange membranes andplastic window sashes. The Division is also in charge of theTokuyama’s fine chemicals and NF businesses. From April 2013, theAdvanced Components segment was renamed the Life & Amenity
segment.

26.6%

In the fine chemicals business, utilizing our organic synthetic
technology to advantage, we are expanding this business witheyeglass lens materials, active pharmaceutical ingredients for genericpharmaceuticals, and intermediates as our main products. In the NF
business, we manufacture and sell air-permeable films (microporous
films) that repel water but allow air and moisture to penetrate.
Shanghai Tokuyama Plastics Co., Ltd., one of the Group companies
we are responsible for, manufactures and sells air-permeable films
used for disposable diapers, demand for which is climbing rapidly in
China and other emerging countries.
Business Unit

Major Products

Fine Chemicals

Active pharmaceutical ingredients and intermediates, Plastic lens-related materials

NF

Microporous film

Group Companies

Polyolefin film [Sun•Tox Co., Ltd.]
Medical diagnosis systems [A&T Corp.]
Dental materials/equipment [Tokuyama Dental Corp.]
Gas sensors [Figaro Engineering Inc.]
Ion exchange membranes [ASTOM Corp.]
Plastic window sashes [Excel Shanon Corp.]

Operating Results for the Fiscal Year ended March 31, 2016
Sales of active pharmaceutical ingredients were on par with the previous fiscal year. This was in large part due to solid
sales volumes of products used for generic pharmaceuticals.
With regard to plastic lens-related materials, sales volumes of photochromic dye materials for eyeglass lenses increased.
As a result of this, sales increased compared with the previous fiscal year.
With regard to microporous film, sales increased year on year. This was mainly the result of sound sales for use as
sanitary articles including disposable diapers.
With regard to polyolefin film, sales declined compared with the previous fiscal year. Despite firm trends in sales
mainly for application in packaging materials for goods sold at convenience stores, this decrease was the result of weaktrends in selling prices on the back of the decline in domestic naphtha prices.
With regard to dental materials and equipment, sales increased compared with the previous fiscal year, due to thelaunch of new products and increased sales in overseas markets.

Tokuyama Corporation Annual Report 201613

With regard to medical diagnosis systems, sales were up compared with the previous fiscal year. This was due to the
upswing in large-scale orders in Japan for blood testing products.
With regard to gas sensors, sales increased compared with the previous fiscal year. This was attributable to strong
overseas sales volume of such applications as gas alarm devices.
As a result of the above, segment net sales decreased 1.3% compared with the previous fiscal year, to ¥57,677 million,
while operating income increased 27.9% to ¥6,598 million. The segment reported higher earnings on lower sales.

Strategies going forward
Tokuyama is securing a position of advantage
17.7%in markets both in Japan and overseas, pursuing business expansion, andcontributing to the improvement of people’s quality of life by establishing and strengthening its customer-oriented
development, manufacturing, and sales structure. Driven by this policy, we will advance the following priority
measures.
■ Fine Chemicals BusinessWe will expand market share in photochromic dye materials for use in eyeglass lenses and continue to expand sales ofactive pharmaceutical ingredients for generic drugs.
■ NF Business (Microporous Film)
Addressing the rapid increase in use of disposable diapers, a main application for microporous films, in China and other
Asian countries, we will increase earnings at the Group’s manufacturing bases in Shanghai and Tianjin by promoting
ties with disposable diaper manufacturers, who possess factories in China.
■ Polyolefin Film Business (Sun･Tox Co., Ltd.)
Every effort will be made to improve productivity by implementing a scrap and build approach toward manufacturing
facilities.
■ Medical Diagnosis System Business (A&T Corporation)
We will strengthen the OEM business and expand overseas sales channels.
■ Dental Materials/Equipment Business (Tokuyama Dental Corporation)
Steps will be taken to accelerate the pace of overseas business development focusing mainly on aesthetic fillingmaterials (composite resins).

Tokuyama Corporation Annual Report 201614

Medium-Term Management Plan

Lay the Cornerstone of the Group's Revitalization
Tokuyama announced its Medium-Term Management Plan 2017 in July 2015 with the view of rebuilding its financial
platform. In the ensuing period, the Group as a whole worked in unison to rebuild its management structure in a bid tosecure profits. Based on these endeavors, the Company reported an increase in both net sales and operating income infiscal 2015, the fiscal year ended March 31, 2016. Despite achieving a certain level of success, however, Tokuyama wasforced to incur a net loss for the period owing mainly to a substantial impairment loss.
Looking ahead, forecasts for certain existing businesses indicate that the general-purpose product market in Japan willcontract. At the same time, a slowdown in electronic materials business growth is also expected. Under thesecircumstances, and recognizing the need to create the necessary driving force to propel new profit growth, Tokuyama
undertook a fundamental review of its previous Medium-Term Management Plan. Guided by the overarching vision
toward “New Foundation,” the Company put in place a five-year medium-term management plan, commencing fromfiscal 2016, as the “cornerstone of the Group’s revitalization.”

Going forward, Tokuyama is committed to carrying out the following two priority management strategies by fiscal 2025,
the fiscal year ending March 31, 2026.
1. Transition toward a robust business structure that is resilient against changes in the Company’s operating
environment and is capable of sustainable growth
The Tokuyama Group has set the goal of becoming a global leader in advanced materials through unique technologies
across growth businesses including the Specialty Products as well as Life & Amenity segments together with thedevelopment of new products. In such traditional businesses as the Cement and Chemicals segments, the Group will
work to become a leader in Japan through strengthening competitiveness.
2. Transition to a Group-wide low-cost structure by undertaking a comprehensive review of existing work
practices
The Tokuyama Group will reduce costs by adopting a cross-departmental approach that differs from conventional
methods and undertaking strategic capital expenditures as a part of efforts to cut back principal costs including raw
material, fuel, repairs and maintenance, and distribution expenses.
A number of factors led to the Company’s current difficult position. This is largely due to overdependence on Tokuyama
Factory's competitiveness, inward posture spread among employees, corporate governance which was loosening owing
to upswing in the profit of polysilicon business, and lack of management's leadership. Taking these factors into
consideration, Tokuyama is cognizant of the vital need to overcome these issues and to create the necessary driving
force to propel new profit growth. With this in mind, the Company will accordingly work to definitively change its
organizational climate, rebuild its business strategies, strengthen Group management, and improve its financial

Tokuyama Corporation Annual Report 201615

position.

Outline of the plan
1) Positioning of the Plan
The Medium-Term Management Plan has been set up as a milestone toward achieving the Group’s aspirations. Throughimplementing the Plan, the Tokuyama Group will lay the cornerstone for the Group’s revitalization.
2) Term of the Plan
April 1, 2016 to March 31, 2021
3) Priority issues and measures
1. Change the Group’s organizational culture and structure
Steps will be taken to review personnel evaluation systems, actively promote the exchange of human resources between
Group companies, and drastically reform structures and systems through a variety of initiatives including the vigorous
introduction of outside personnel.
2. Rebuild the Group’s business strategies
The Group will strictly adhere to a customer-oriented approach on the conduct of its business activities. At the sametime, the Group will transition to a research and development structure that is in tune with customers’ needs. Throughthese means, energies will be channeled toward cultivating new business domains that employ unique technologies. In
addition, the Group will reinforce management resources including personnel and information through alliance withother companies or utilizing open innovation.
3. Strengthen Group management
Each company of the Tokuyama Group will once again clarify its role and position. Seeking to contribute to the Group’s
growth strategy as well as the reduction of costs, particular emphasis will be placed on further strengthening themanagement of the Group as a whole.
4. Improve the Company’s financial position
Every effort will be made to restore the Company’s shareholders’ equity by steadily building up profits. At the sametime, Tokuyama will issue classified stock (preferred stock) to quickly stabilize the Company’s financial position,
thereby ensuring that the Group is well positioned to flexibly pursue opportunities including M&As that are designed toaccelerate the pace of growth.
4) Targets to be achieved by the final fiscal year of the Medium-Term Management Plan (Fiscal 2020)
Net sales: ¥335.0 billion
Operating income: ¥36.0 billion
ROA: 10%
CCC: 55 days
D/E ratio 1.0[Assumptions]Exchange rate: ¥110/US$
Domestic naphtha price: ¥58,000/kl(Note) ROA: Operating income / Total assets;
Cash Conversion Cycle (CCC): Accounts receivable turnover period + Inventory turnover period – Accounts payable turnover period

Tokuyama Corporation Annual Report 201616

Message from the President

Hiroshi Yokota, President

In fiscal 2015, the fiscal year ended March 31, 2016, Tokuyama incurred an impairment loss of ¥123.8 billion due
mainly to a deterioration in its business environment and the sharp drop in solar-grade polycrystalline silicon market
conditions. Buoyed by robust trends in existing businesses, both net sales and operating income increased comparedwith the previous fiscal year. Despite these favorable results, the Company has decided to forego the payment of a cash
dividend for the fiscal year under review owing to the substantial net loss for the period. I deeply regret these current
circumstances and extend my deepest apologies for the considerable anxiety and inconvenience caused to allshareholders.
Since assuming the position of president in March 2015, I have taken steps to install a new management structure andimplement various reforms in an effort to ensure the Group’s revitalization. Despite the decision to post impairment
losses over the recent past, I have become acutely aware of the Company’s enormous potential through repeateddiscussions with employees and customers. I would like to take this opportunity to provide details of our business andperformance over the past 12 months as well as explain our management policies going forward. As we work towardachieving our established goals, I kindly request the continued support and understanding of all stakeholders.

A Definitive First Step toward Rebuilding Our Financial Platform
In taking over the helm of the Company’s operations, my first priority was to rebuild our financial platform. With themedium-term goal of lowering the Company’s debt-to-equity ratio to below 1.0, I have continued to oversee efforts
aimed at building up business profits mainly through the sale of fixed assets and the reduction of costs. In the fiscal year
under review, operating income climbed ¥3.5 billion compared with the previous fiscal year. This largely reflected theupswing in net sales and improvements in the profitability of petroleum chemicals. Despite an increase in extraordinary
gains of ¥10.9 billion, Tokuyama suffered a substantial downturn in its shareholders’ equity after taking into accountthe impairment loss at Tokuyama Malaysia Sdn. Bhd. and posting a second consecutive fiscal year of net loss.
Recognizing the urgent need to strengthen our financial platform, we decided to issue class shares totaling ¥20.0 billion
by way of a third-party allotment at a Board of Directors’ meeting held in May 2016. This initiative is aimed at quickly
regaining the confidence of stakeholders and restoring our shareholders’ equity in a timely manner. Faced with anumber of options, we took into consideration the impact on existing shareholders when determining how best to
increase capital. An increase in common stock, for example, was deemed inappropriate due to the resulting substantial
dilutive effect. As a result, we decided on the issuance of class shares. At the same time, the Company also recognized
the possibility that it would infringe upon certain loan agreement financial covenants as a result of the impairment loss
incurred in the fiscal year under review. Accordingly, we took steps to obtain the understanding of all major lenders toour efforts to rebuild the Company’s business and financial platform. This understanding was the basis for executing
revised loan agreement and gaining the consent of all financial institutions to continuous transactions going forward.
Despite the deterioration in our financial position, we maintain sufficient cash on hand to fund working capital needs aswell as the repayment of loans outstanding. We strongly believe that our operations remain unaffected and are confident
in our ability to procure funds for the future.

Tokuyama Corporation Annual Report 201617

Seizing the Future amid a Difficult Environment
Tokuyama’s business activities are essentially underpinned by its proprietary technologies, developed over many years,
and the competitive advantage of Tokuyama Factory. With an established management approach that favored the output
of products (product-oriented), we have tended to lose sight of the needs of the market and customers in the recent
past. Prior to my appointment as president, we remained transfixed on a business process that focused on past examples
of success. This in turn contributed to the ongoing development of an insular corporate culture. In carrying out various
tasks, I gradually became aware that this approach was impeding business growth. Despite receiving the opinions andcomments of customers, we failed to take heed of the many important hints being provided. Unable as an organization
to take advantage of these seeds, we squandered several opportunities to generate new profits. In this regard, themembers responsible for the Company’s business and development activities neglected to coordinate directly withcustomers when working through the creating process and endeavoring to resolve issues. A marked and regrettablefeature of this neglect has been our inability to launch any product that has subsequently evolved into a core earnings
pillar over roughly the past two decades.
Reflecting on this culture, subsequent deficiencies within the Company, and the need to enter a new era of renewed
growth, I have made every effort to reform the mindsets of employees over the past 12 months. In order, as a first step,to align the understanding of management with employees at the frontline, I have held a series of in-depth discussions
with the managers of each division. In addition to clarifying the issues that we face, we have put in place detailed plans
and schedules to resolve each and every challenge. Today we are monitoring the progress of these plans and schedules
on a monthly basis. We are also promoting thoroughgoing frontline deliberations in order to restore the Company’s
focus on its customers and place increased importance on adopting an outward-looking approach. This mirrors mystrong belief that each individual must take the initiative rather than rely on the collective strength of the Group. In
order to change the mindsets of employees, top management must set the example. It is my intention therefore toactively spearhead our efforts to take bold action. I am confident this will help to motivate division leaders as well as
division staff.
Engaging in discussions with business divisions has generated various other benefits. Through close-knit dialog, wehave again uncovered unique proprietary technologies that have the potential to address customers’ needs and to help
differentiate our products. In the growth business specialty chemicals field in particular, which targets the ICT and
healthcare sectors, we have identified a number of themes that are consistent not only with the times, but also social
trends. Looking ahead, we will nurture this field as a major pillar of new growth as a part of our business restructuring
endeavors.

The Essence of Our New Medium-Term Management Plan
Tokuyama unveiled its new Medium-Term Management Plan in May 2016. Based on the ideal image of the Company
in the fiscal year ending March 31, 2026, the new Medium-Term Management Plan sets out specific numerical targets
to be achieved by the fiscal year ending March 31, 2021. In addition to detailing certain priority issues that we believe
need to be addressed, we have positioned the Medium-Term Management Plan as a mid-point from which to measure
our progress. At the same time, I strongly believe that the Medium-Term Management Plan will serve as a conduit
through which we will instill in each and every member of the Group as a whole the importance of promoting customer
satisfaction as the source of profit growth. Profits are a barometer for measuring the level of customer satisfaction. Ourability to generate high profits will therefore reflect an awareness among customers of the Company’s added value. In
order to achieve this awareness, it is vital that evolve into an outward-looking company. It is equally important thatvigorously reform our corporate culture while transitioning to an R&D structure that reflects the customer-oriented
nature of our business activities. Ultimately, our goals are to become a global leader in advanced materials throughunique technologies in the Specialty Products, Life & Amenity, and other growth businesses and to become a leader inJapan in each of traditional Cement and Chemicals businesses by strengthening competitiveness in the decade ahead.
As the first year of the new Medium-Term Management Plan, it is vital that top management play a leadership role inchanging the Group’s organizational culture and structure, rebuilding the Group’s business strategies, strengthening
Group management, and improving the Company’s financial position throughout the fiscal year ending March 31, 2017.
At the same time, it is imperative that we take bold steps toward further increasing our operating results and improving
our finances in order to resume the payment of dividends as quickly as possible. As we toward achieving these goals,
we kindly request the continued support and understanding of all stakeholders.

Hiroshi Yokota
President
June 2016

Tokuyama Corporation Annual Report 201618

Research and Development
Research and Development Principles and Policies
With the basic philosophy of contributing to the world by applying chemistry-based technologies, Tokuyama engages in
research and development activities with the aims of (1) promoting research and development with a commitment tobusiness that is based on a customer-focused approach, (2) refining its core technologies and combining them with newtechnologies to develop highly unique, leading-edge technologies, and (3) creating original products by incorporating
market needs in accordance with technical standards.
Societal trends are entering a period of substantial change with the advance of an aging society, focus on theenvironment, and the dramatic growth and penetration of ICT technology. Under these circumstances, expectations
toward the chemical industry and associated technology development continue to mount. As researcher and engineer,
we are being asked to develop products that meet the changing needs of society in a timely manner.
As a manufacturer of chemicals, we continue to draw on our accumulated organic and inorganic synthesis, purification,
crystallization and deposition, powder control, and sintering technologies in an effort to seamlessly integrate newtechnologies and lead the world in the research and development of cutting-edge materials. In addition, we work
diligently expand existing businesses, extend into new business domains, and contribute to the growth and development.
To this end, we pursue research and development that is aligned to the needs of customers and the market as well associal and business trends with a sense of speed while placing the utmost importance on the ideas and efforts ofresearchers.

Research and Development Bases
Tokuyama’s two-pronged R&D structure comprises the Corporate Development Dept. (Tsukuba Research Laboratory)in Tsukuba City, Ibaraki Prefecture, in Eastern Japan, and the Analytical Science Dept. (Tokuyama ResearchLaboratory) in Shunan City, Yamaguchi Prefecture, in Western Japan.

Corporate Development Dept.
(Tsukuba Research Laboratory)
The Tsukuba Research Laboratory is situatedin the peaceful setting of Tsukuba Science Cityin Ibaraki Prefecture. The lab pursues
leading-edge technologies from a medium- tolong-term perspective, conducting researchand development of analysis techniques as
platform technologies, composite materials
used especially in the field of dentistry, andhigh-value-added products targeting theorganic fine chemicals field.

Tsukuba Research Laboratory

Tokuyama Research Laboratory

Analytical Science Dept. (Tokuyama Research Laboratory)
Located on the grounds of the Tokuyama Factory, the Tokuyama Research Lab serves as the Company’s research anddevelopment facility. Tokuyama Research Lab provides a solid environment for the development units in the Tokuyama
region. It also takes full advantage of its immediate proximity to the Company’s manufacturing operations at the factory
to further enhance the research environment.

R&D Activities in Fiscal 2015
Positioning chemicals as the cornerstone of its efforts to expand business, the Tokuyama Group continues to engage in
research and development in each of the key energy-saving, environment, and health care fields.
In August 2015, Tokuyama undertook a comprehensive review of its Technology Strategy Department, which was
responsible for the Company’s corporate research and development function. Following this review, the existing nine
operating areas that comprised the department were consolidated into three distinct areas and renamed the Research &Development Division. At the same time, Tokuyama took steps to sort the development themes that were in progress,
which were then reassigned together with pertinent staff to business segment and companies. Looking ahead, every
effort will be made to bolster collaboration with each business segment and to push forward research and developmentthat is committed to robust operations in a bid to strengthen business profitability.

Tokuyama Corporation Annual Report 2016

19

The Research & Development Division works closely with the development groups of each segment and engages in thedevelopment of technologies relating to each business department’s peripheral theme. In specific terms, the Research &Development Division conducts basic market surveys and develops technologies for each business department’s
peripheral theme. Each business department is then responsible for bringing final products to market. Currently,
Tokuyama is working to narrow new development themes and is in the process of completing basic evaluations ofpromising opportunities. The Company has continued to pursue the development of neutron-detection scintillators aswell as deep ultraviolet LEDs and is actively seeking the assessment of customers. Work is now underway to accelerate
the pace of commercialization.

Fluoride single crystal for scintillators

Aluminum nitride single-crystal substrates(Deep ultraviolet light emitting diode)In fiscal year ended March 31, 2016, the Tokuyama Group’s R&D spending totaled ¥8,522 million, including ¥2,420
million for basic research expenditures that are not allocable to a specific segment.
Below is a description of R&D projects underway and spending by segment.
Chemicals Segment
R&D is aggressively pursued in this segment to strengthen the competitiveness of existing product lineups and todevelop new applications for these products. Focusing on the development of processes, research into catalysts and thedevelopment of environmentally conscious products and organic / inorganic materials, R&D strengthens ourtechnological prowess and contributes to business. In polyvinyl chloride, we continued to reduce costs, improve
production technologies, and develop various grades and upgrade them to meet the specific requirements of ourcustomers. In crystalline-layered sodium silicate, progress was made on developing applications as a builder forcommercial and industrial detergents and as a material for functional materials.
R&D expenditures totaled ¥553 million in the Chemicals segment.
Specialty Products Segment
In polycrystalline silicon, Tokuyama has carried on the process development to increase the production efficiency ofsilicon at its existing plants in order to reduce costs amid a slump in the polycrystalline silicon market. Regarding silica,
the Company developed new silica in response to customers’ requests. With regard to heat sink materials, efforts
focused on the development of high heat dissipation sheets, aluminum nitride fillers targeting heat-dissipating adhesivematerials, and boron nitride fillers for use as heat sink materials for such devices as power semiconductors and power
LEDs.
R&D expenditures came to ¥1,760 million in the Specialty Products segment.
Cement Segment
Tokuyama has continued to aggressively pursue R&D in the use of various wastes as raw materials and fuels for the
production of cement. On this front, the Company concentrated on the development of technologies for recycling waste
gypsum boards and coal ash. The Tokuyama Group also conducts basic research into cement and concrete. Ongoingstudy is being given to the reduction of cement clinker firing temperatures from an energy conservation and efficiency
perspective. In addition, Tokuyama improved and developed various grades of cement-related products, such as soil
solidifiers, grout materials, and self-leveling materials. Moreover, the Company focused on the development andimprovement of various products for repairing and reinforcing concrete structures, such as cross section repairing
materials.
R&D expenditures were ¥697 million in the Cement segment.

Tokuyama Corporation Annual Report 201620

Life & Amenity Segment
We made progress developing next-generation photochromic materials for eyeglass lenses. We also worked on thedevelopment of manufacturing processes for active pharmaceutical ingredients. In the healthcare and clinical testing
fields, marked progress was made on the integrated development of products including diagnostic reagents andlaboratory information systems, clinical analyzers, and laboratory automation systems. In gas sensors, we advanced thedevelopment of various sensors and applied products in the alarm device and air quality fields. In the dental care field,
continued steps were taken to develop products such as restorative composite resins and orthodontic adhesives. In ion
exchange membranes, progress was made on the development of high-efficiency bipolar membrane electrodialysis
technology, highly functional ion exchange membranes, and other products.
R&D expenditures totaled ¥3,090 million in the Life & Amenity segment.

Tokuyama Corporation Annual Report 201621

CSR Initiatives

Tokuyama works diligently to fulfill its corporate social responsibility (CSR) in an effort to nurture sound relationships
with all stakeholders in accordance with its basic philosophy of CSR-oriented management. Recognizing that the
purpose and purport of the Corporate Governance Code―ensuring sustainable corporate growth while enhancing
corporate value over the medium to long term― is directly linked to the principles of CSR, Tokuyama has positioned
internal control at the heart of its CSR activities and is taking practical steps to adhere to the Corporate GovernanceCode. In this regard, we are placing considerable weight on both risk management and compliance as the key elementsof our internal control endeavors. As a company that manufactures chemicals, we are also aware of the importance that
responsible care plays in advancing CSR. In addition to putting in place a Companywide promotion structure, we areworking to ensure the proper operation and continuous upgrade of our safety, environmental and quality management
systems.
In order to realize sustainable growth as the corporate group of choice for our customers, we have put in place theTokuyama Group Code of Conduct as well as the Tokuyama Group’s Five Conscience Clauses for each and every
executive and employee. In order to ensure that all executives and employees are fully aware of both this Code of
Conduct and Conscience Clauses, posters are displayed at the Group’s business establishments and offices and ahandbook distributed to all staff. Moreover, we have issued the Tokuyama Group Guidelines for Business Activities asa means to clarify the principles for actions taken by members of the Tokuyama Group and to establish parameters for a
relationship with each stakeholder.

Involvement in the Environment
One of our most important corporate social responsibilities is to actively protect the global environment. Tokuyama
practices environmental management with an emphasis on environmental perspectives in all of its business activities.

Tokuyama’s Environmental Performance for Fiscal 2015
Tokuyama strives to obtain accurate data on the input and output of materials and substances in its business activities
and reduce the environmental impact of these activities to meet its environmental targets.
In fiscal 2015, Tokuyama achieved its goals for recycling and zero emissions. Turning to unit energy consumption,
Tokuyama is making steady progress toward meeting its newly established target of a 3% improvement compared withthe level recorded in fiscal 2005 by fiscal 2020.

*Result for Fiscal 2015 (Non-consolidated)

Tokuyama Corporation Annual Report 201622

Involvement in Society
Tokuyama places great importance on communication with its stakeholders as a means of remaining a company neededby communities and society as a whole.

Social Contribution Activities
In an effort to deepen understanding toward the Company’s process safety, disaster prevention, and environmental
protection activities, Tokuyama places the utmost emphasis on promoting communication and dialogue with the local
community. We engage in a wide range of activities in a bid to remain an essential partner to the local community andsociety at large.
Tokuyama Factory Responsible Care Community Dialogue
Since fiscal 2004, Tokuyama Factory has held and conducted an annual responsible care community dialogue. The
purpose of this event is to provide the neighboring residents' association with a deeper understanding of Tokuyama
Factory’s process safety, disaster prevention, and environmental protection activities. In fiscal 2015, the event was held
on September 17, with the dialogue comprising three parts: a presentation meeting; tour of the facility; and a roundtablediscussion to exchange information. Representing the 12th annual community dialogue meeting, 35 members of theresidents' association, eight representatives from Shunan City, and 16 employees from Tokuyama Factory including thegeneral manager took part in discussions on promoting the effective use of hydrogen.

A tour of the hydrogen station during Tokuyama Factory’s
annual responsible care community dialogue initiative

Process Safety, Disaster Prevention and Occupational Health and Safety
Tokuyama believes that safety is an essential part of business activities and that ensuring safety is the first step inachieving coexistence with society. In taking this stance on safety, Tokuyama thoroughly conducts process safety anddisaster prevention activities as well as occupational health and safety efforts. By doing so, the Company endeavors toprevent accidents and disasters while striving to provide a favorable working environment.

For more information on Tokuyama's CSR initiatives, see the Company's CSR Report or the Company's website:
http://www.tokuyama.co.jp/eng/csr/index.html

Tokuyama Corporation Annual Report 201623

Corporate GovernanceTokuyama strongly believes creating and continuously providing new value is made possible through the trust of andcooperation with its stakeholders, which include shareholders, customers, trading partners, employees and local
communities. This in turn enables the Company to grow on a sustainable basis and to increase its corporate value overthe medium to long term. In order to make this a reality, Tokuyama has positioned corporate governance as a key
management priority. Taking into consideration the introduction of the Corporate Governance Code in Japan, theCompany places the utmost emphasis on ensuring the rights and equality of its shareholders while strengthening thesupervisory function and securing the independence of the Board of Directors. At the same time, Tokuyama works
diligently to accelerate decision making and to clarify the business execution responsibilities of its Board of Directors
while ensuring appropriate disclosure and transparency and promoting constructive dialogue with shareholders.

Corporate Governance Structure
Tokuyama is a company with an Audit & Supervisory Board. Working through its Board of Directors, which iscomprised of nine members, four of whom are appointed from outside the Company, Tokuyama is endeavoring toincrease the efficacy of its supervisory and oversight functions with respect to the execution of business. In addition,
Tokuyama maintains an Audit & Supervisory Board that is made up of five members, three of whom are appointed
from outside the Company. Again, every effort is being made to enhance the efficacy of the Company’s audit function
through the Audit & Supervisory Board. In order to ensure transparency and objectivity, Tokuyama has established the
Human Resources Committee. Comprising a majority of external directors, the Human Resources Committee
deliberates on the selection of and remuneration paid to directors. With the aim of separating the supervisory andexecutive functions, Tokuyama adopted an executive officer system in April 2011. Tokuyama is confident that its
current structure and systems ensure that decisions are made in a timely manner. Taking full advantage of thisframework, the Company is maximizing the efficacy of the supervisory and audit functions while enhancing corporate
governance.
Below are main organizations and committees that compose the Company's corporate structure.

Board of Directors and Executive Officer System
In addition to deliberating and making resolutions on important matters relating to the activities of the Company, theBoard of Directors supervises business operations. During fiscal 2015, the Board of Directors met on 19 occasions.
As of June 27, 2016, Tokuyama’s Board of Directors comprised nine members. The Company appointed four external
directors thereby bolstering the supervisory function of the Board of Directors. Meanwhile, the term of office of
directors is set at one year in order to ensure clear accountability as well as the ability to swiftly address changes in theoperating environment.

Tokuyama Corporation Annual Report 201624

Tokuyama adopted an executive officer system in April 2011 with the aim of separating the supervisory and executivefunctions for business operations. As of June 27, 2016, the Company had 14 executive officers.
Based on the rules for approval determined by the Board of Directors, authority is delegated to the business executive
system.

Audit & Supervisory Board
Members of the Audit & Supervisory Board attend meetings of the Board of Directors and various other key meetings
to listen carefully to reports on the status of business execution. Audit & Supervisory Board members also audit theexecution of duties by directors. In fiscal 2015, the Audit & Supervisory Board met on 14 occasions to report on,
discuss and make resolutions on important matters. On and after June 24, 2015, the Company’s Audit & Supervisory
Board consisted of five members, three of whom were appointed from outside the Company.

Human Resources Committee
The Human Resources Committee consists of representative directors and external directors. This committee holds
discussions on such matters as the remuneration for directors and executive officers and the selection of director andexecutive officer candidates before Board of Directors meetings take place.

Executive Committee
Members of the Executive Committee are selected by the representative director and president from among theCompany’s executive officers. The Executive Committee serves as the Company’s decision-making body with respect
to the execution of business operations. In principle, the committee meets two times each month. Based on the approvalrules and regulations determined by the Board of Directors, the Executive Committee deliberates and makes decisions
on strategies and other important matters.

Strategy Committee
Members of the Strategy Committee are selected by the president from among the Company’s executive officers. The
committee meets once a month and serves as an advisory body to the president. In addition to deliberating on the
direction of business execution, the Committee takes steps to confirm the allocation of management resources aimed atevaluating conditions relating to the execution of business with respect to important matters requiring approval whilesetting the direction of policies relating to the execution of business with respect to specific projects.

CSR Promotion Council
Chaired by the president, the CSR Promotion Council is comprised of all executive officers working in Japan. The
Council sets policies on CSR and lays out the goals of our CSR activities, facilitating the execution and attainment of all
such activities and goals. The Council focuses on maintaining appropriate corporate governance and internal control,
which together are the foundations of CSR. It also discusses important matters regarding internal control.

Risk Management and Compliance Committee
Tokuyama’s Risk Management and Compliance Committee, chaired by the director supervising the Corporate Social
Responsibility Division, operates under the CSR Promotion Council. The Committee takes the initiative in promoting
risk management and compliance, which are central to effective internal control.

Helpline Committee
The Helpline Committee is responsible for the administration of Tokuyama’s helpline (whistle-blowing) system, which
has been established for the purpose of enabling the internal reporting of legally questionable actions and behavior byGroup executives and employees.

Departments Responsible for Internal Auditing
Tokuyama has established the Auditing Department and the RC Management Department, which are responsible forinternal auditing. These departments perform internal audits of individual divisions and departments of the Company aswell as of Group companies.

Tokuyama Corporation Annual Report 201625

Policies and Procedures for Appointing Management Executives and Nominating Directorand Auditor Candidates
To enable supervision of appropriate decision making and business execution with regard to the Company’s business
operations that are centered on chemicals, the selection of internal candidates for directorships appoints people who are
well-balanced in terms of their knowledge of each business segment and area as well as the experience they possess. By
adding external directors who possess high-level insight and wide-ranging experience as managers, the Company
ensures the balance and diversity of the Board of Directors as a whole.
When nominating director candidates, discussions are held at a Human Resources Committee meeting in advance of thesubject appearing on the agenda at a Board of Directors’ meeting. Comprising representative directors and external
directors, the Human Resources Committee is the entity that nominates directors, executive officers and others, anddiscusses such matters as remuneration. The Board of Directors makes its decisions in response to the Human
Resources Committee’s report.
In the case of the nomination of auditor candidates, the Board of Directors makes its decisions having received theassent of the Audit & Supervisory Board.

Policies and Procedures for Determining the Company’s Executives Remuneration
The policy relating to the amount of remuneration for the Company’s executives and determining method to calculate
such amounts is based on rules of executive remuneration, which are as follows.
1. The remuneration of directors and Audit & Supervisory Board members shall be within a range of remuneration
obtained by resolution at a Shareholders’ Meeting.
2. Having received the proposals of remuneration from the President in advance, such proposals shall be discussed at a
Human Resources Committee meeting.
3. Individual executive remuneration shall be in accordance with the amounts decided for each executive anddetermined by Board of Directors’ resolution.
4. The specific amounts of remuneration for Audit & Supervisory Board members shall be determined by the
resolution of Audit & Supervisory Board.
In fiscal 2015, a total of ¥138 million, ¥40 million and ¥59 million was paid to ten directors, two corporate auditors(Audit & Supervisory Board members) and six external officers, respectively.
In addition to the aforementioned compensation, an amount of ¥29 million was paid as salaries to four employees, whohold the concurrent position of director.

Anti-takeover Measures
Tokuyama recognizes the need to put in place appropriate countermeasures to protect both the interests of theCompany’s shareholders and the Company’s corporate value from large-scale purchases of its shares (hereinafterreferred to as a “Large-Scale Purchase”) by another party (hereinafter referred to as a “Large-Scale Purchaser”) in cases
where the Large-Scale Purchase is judged to significantly damage the common interests of Tokuyama’s shareholders
and Tokuyama’s corporate value.
Accordingly, the Company established a set of large-scale purchase rules to ensure that these interests and theCompany’s corporate value are preserved. Under these rules, each Large-Scale Purchaser is required to provide anadequate amount of information to Tokuyama’s Board of Directors prior to undertaking a Large-Scale Purchase.
Moreover, an appropriate amount of time must be set aside to allow the Company’s Board of Directors to assess andconsider the terms and conditions of the Large-Scale Purchase and to put forward its opinion as well as alternative
proposals.
In cases where a Large-Scale Purchaser fails to comply with the large-scale purchase rules, or when a Large-Scale
Purchaser complies with the large-scale purchase rules, but is deemed to significantly damage the common interests of
the Company’s shareholders and the Company’s corporate value, Tokuyama may take such measures as the allotment ofshare options without contribution as stipulated under Article 277 and the following provisions of Japan’s Companies
Act, for the purpose of protecting the common interests of Tokuyama’s shareholders and Tokuyama’s corporate value,
and oppose the Large-Scale Purchase.

Tokuyama Corporation Annual Report 201626

Specific details outlined above were collated into the Company’s “Policy regarding Large-scale Purchases of Tokuyama
Corporation's Company Shares (Anti-Takeover Measures).” This policy was approved by the Company’s shareholders
at the 151th Ordinary General Meeting of Shareholders held on June 24, 2015.
Details of the Policy have been posted on the Company’s website:
URL: http://www.tokuyama.co.jp/eng/company/governance/anti_takeover.html

Tokuyama Corporation Annual Report 201627

Business and Other Risks

Set out below are those matters relevant to the Tokuyama Group’s business status and financial conditions that could
potentially have a significant influence on investor decisions. Please note that the matters listed do not cover all risks
relevant to the Tokuyama Group, and it is thought that there are risks other than those matters listed that could
potentially influence investor decisions.
The matters listed are those regarded as relevant as at June 27, 2016.

(1) Procurement/Market Conditions of Raw Materials and Fuels, etc.
Tokuyama Group procures the raw materials and fuels essential to conduct production operations from various area inthe world. Also, for some of its products, Tokuyama Group uses special raw materials and materials which have alimited number of suppliers. With regard to the procurement of raw materials and fuels, Tokuyama Group engages inlong-term, stable, low-cost procurement by combining, for example, medium- to long-term contracts and purchases on
spot markets. However, in the event that a soaring market or resource nationalism causes the tight supply of raw
materials and fuels or delays in delivery hinders Tokuyama Group’s production operations causing manufacturing costs
to rise drastically, there is the possibility that any such situation greatly affects Tokuyama Group’s business performanceand financial condition.

(2) Electronic Materials Business Market Environment
While the Electronic Materials Business is one of Tokuyama Group’s main businesses, in the event that the economical
trough in the information and electronics industry leads to a deterioration of the earnings from Electronics Materials
Business, there is the possibility that any such situation greatly affects Tokuyama Group’s business performance andfinancial condition.

(3) Environmental Regulations, etc.
Tokuyama Group operates a range of businesses that use natural resources and energy in large quantities. TokuyamaGroup enhances the investment in resource recycling systems and the facility designed to reduce its environmental
impact and accepts waste as an alternative fuel and raw materials. At the same time, Tokuyama Group also works to
reduce its environmental impact by, for example, promoting Zero Emission initiatives and improving its unit energy
consumption. However, in the event that more stringent environment-related regulation is approved or a new social
responsibility for environmental protection becomes required, there is the possibility that any such situation greatly
affects Tokuyama Group’s business performance and financial condition.

(4) Contractual Disputes/Litigation
The Legal & Credit Management Department and the Intellectual Property Department of Tokuyama Groups take leadin day-to-day precaution against patent or contract disputes and litigation. However, in both its domestic and overseas
businesses, there exists the possibility that Tokuyama Group becomes the subject of a legal dispute or litigation. In theevent that a major lawsuit is filed, there is the possibility that such a situation greatly affects Tokuyama Group’sbusiness performance and financial condition.

(5) Effect of Disasters/Accidents
Tokuyama Group performs day-to-day and periodic facility maintenance to minimize the adverse effects from any
disruption to its production operations. Such maintenance, however, is unable to completely prevent or may noteffectively reduce the adverse effects on production facilities from disasters or accidents (including earthquakes andother natural disasters). Also, while Tokuyama Group manufactures products for which alternative production
arrangements could not immediately be made, should events lead to a significant decrease in production volume or, inthe worst case, Tokuyama Group be forced to discontinue production for a protracted period, there is the possibility thatany such situation greatly affects Tokuyama Group’s business performance and financial condition.

Tokuyama Corporation Annual Report 201628

(6) Product Liability
Tokuyama Group makes an honest effort to ensure the proper quality in accordance with product characteristics.
However, in the event that, due to unexpected circumstances, a quality problem leads to a product recall or a productsafety-related product liability (PL) issue arises, there is the possibility that any such situation greatly affects TokuyamaGroup’s business performance and financial condition.

(7) Market Economic Trends/Conditions
The supply of and demand for Tokuyama Group products are subject to the trends of their respective markets, which areprimarily the chemical industries, the construction and construction material industries as well as the information andelectronic industries. The products from Tokuyama Group are sold mainly in Japan, the United States, Asia, and Europe,and the economic conditions in such country could exert a great influence on the sales. Tokuyama Group targets
production improvements and higher quality and also promotes cost reductions however a fall in demand in the market
and industries or an economic slowdown in the sales area may greatly affect Tokuyama Group’s business performanceand financial condition.

(8) Price CompetitivenessIn each of the business that Tokuyama Group conducts, similar products may be available from competitors. TokuyamaGroup supplies products to customers maintaining a competitive advantage in terms of quality and price. However, inthe event that low-cost imported products flood the market or a price war breaks out between rival companies due tounforeseen circumstances, and that the situation continues for a prolonged period of time deteriorating TokuyamaGroup’s profitability, there is the possibility that any such situation greatly affects Tokuyama Group’s businessperformance and financial condition.

(9) Overseas Business Development
The polycrystalline silicon factory that Tokuyama Group built in the Malaysian state of Sarawak is comparatively larger
in scale than Tokuyama Group’s other existing overseas facilities. In the event that the stable operation or sales isdisturbed, unexpected changes are made to the society system, laws and regulations or labor-management problems
arise, there is the possibility that any such situation greatly affects Tokuyama Group’s business performance andfinancial condition.

(10) Financing Arrangements
Tokuyama Group arranges financing through loans or the issuance of unsecured bonds and the cost of financing
arrangements, such as interest rates, could increase due to the changes in market environment. There is thus thepossibility that such a situation greatly affects Tokuyama Group’s business performance and financial condition. Also,in arranging financing through a new loan from a financial institution or the issuance of unsecured bonds, there is no
guarantee that the financing is always available under the same conditions. In the event that Tokuyama Group is unable
to raise funds in a timely manner by means of loans from financial institutions or by issuing unsecured bonds, there is
the possibility that any such situation greatly affects Tokuyama Group’s financing arrangements.

Tokuyama Corporation Annual Report 201629

Corporate Officers(As of June 27, 2016)

Directors(From the left of the back row)

Takeru Ishibashi

Akihiro Hamada

Akio Fujiwara

Toshihide Mizuno

Hiroshi Akao

External Director

Director

External Director

External Director

External Director

Managing Executive
Officer(From the left of the front row)

Takeshi Nakahara

Masao Kusunoki

Hiroshi Yokota

Hideki Adachi

Director

ChairmanPresident

Director

Managing Executive

Representative Director

Representative Director

Managing Executive

Officer

Tokuyama Corporation Annual Report 2016

Officer30

Audit & Supervisory Board
Masaki Akutagawa

Youji Miyamoto

Standing Auditor

Audit & Supervisory Board Member

Ryuji Hori

Shin Kato

Yoshikazu Tsuda

External Auditor

External Auditor

External Auditor

Executive Officers
Chairman and Executive Officer

Masao Kusunoki

President and Executive Officer

Hiroshi Yokota

Managing Executive Officer

Takeshi Nakahara

General Manager of Research & Development Div. andCorporate Development Dept.

Hideki Adachi

General Manager of Tokuyama Factory and
Manufacturing Technology Div.

Akihiro Hamada

General Manager of Financial Div.

Masao Fukuoka

General Manager of General & Personnel Affairs Div.

Toshihiko Annaka

General Manager of Corporate Social Responsibility
Div. and Procurement & Logistics Div.

Executive Officer

Fuminori Sekiguchi

President of Tokuyama Logistics Corporation

Hiroya Yamashita

With responsibility for special missions (R&D)

Ryo Sugiyama

General Manager of Life & Amenity Business Div.

Hiroshi Nomura

General Manager of Specialty Products Business Div.
and President of Tokuyama Malaysia Sdn. Bhd.

Hideo Sugimura

General Manager of Corporate Planning Div.

Kazuo Matsuya

General Manager of Chemicals Business Div. andChemicals Planning Dept.

Sadayuki Kuzuhara

Tokuyama Corporation Annual Report 201631

General Manager of Cement Business Div.

Financial Section

Financial Review

33

Consolidated Balance Sheets

39

Consolidated Statements of Income

41

Consolidated Statements of Comprehensive Income

42

Consolidated Statements of Changes in Net Assets

43

Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Tokuyama Corporation Annual Report 2016

44
45

32

Financial Review

Income Analysis
In the fiscal year ended March 31, 2016 (April 1,2015 to March 31, 2016), signs of a slowdown in the pace of economic
growth in China became increasingly clear. As a result, the prices of resources including crude oil declined substantially.
Due to the decision by the U.S. Federal Reserve Board to raise interest rates for the first time in around nine years, theoutflow of investment funds from emerging and resource-rich countries gathered pace. At the same time, signs of
uncertainty surrounding growth in emerging countries and especially the BRICS nations began to emerge. Taking eachof these factors into consideration, conditions throughout the global economy witnessed significant change during the
fiscal year under review.
Meanwhile, the Japanese economy remained shrouded in uncertainty. Despite expectations of growth on the back oflower crude oil prices and the weaker yen, this uncertainty largely reflected faltering personal consumption, capital
expenditure, and export activity.
Against this backdrop, the Tokuyama Group was able to make some headway toward addressing the priority issues
identified in its Medium-Term Management Plan 2017 announced in July 2015. Under the guidance of a new
management structure, the Group took steps to strengthen business profitability, generate profits at Tokuyama Malaysia,
and rebuild the Company’s financial platform. Despite these endeavors, the net loss for the period increased after
posting an impairment loss of ¥123,875 million in connection with Tokuyama Malaysia Sdn. Bhd., a consolidated
subsidiary.
Consolidated net sales increased 1.7%, or ¥5,029 million compared with the previous fiscal year, to ¥307,115 million(US$2,717million). Despite weaker selling prices of petroleum chemicals on the back of a downturn in domestic
naphtha prices, this was largely attributable to the upswing in sales volumes of soda ash and calcium chloride as well as
solar-grade polycrystalline silicon.
Cost of sales increased 0.8%, or ¥1,720 million compared with the previous fiscal year, to ¥220,638 million (US$1,952
million). Despite a downturn in raw material costs as a result of the drop in domestic naphtha prices, this was due
mainly to the increased sales volume of solar-grade polycrystalline silicon.
SG&A expenses decreased 0.4%, or ¥231 million compared with the previous fiscal year, to ¥63,405 million (US$561
million). Despite the increase in distribution costs associated with the increase in sales volumes of such products as soda
ash and calcium chloride, this decrease primarily reflected our efforts to reduce Companywide expenses.
Operating income increased 18.1%, or ¥3,540 million compared with the previous fiscal year, to ¥23,071 million(US$204 million). Despite the deteriorated profitability of solar-grade polycrystalline silicon at Tokuyama Malaysia
Sdn. Bhd., this was largely attributable to profitability improvement of petroleum chemicals impacted by the drop in
domestic naphtha prices and the weaker yen. The operating margin (the ratio of operating income to net sales) was 7.5%,
an increase of 1.0 percentage points compared with the figure of 6.5% recorded in the previous fiscal year.

Tokuyama Corporation Annual Report 201633

Non-operating income/expenses improved ¥1,264 million compared with the previous fiscal year, due chiefly to achange from foreign exchange losses, recorded in the previous fiscal year, to foreign exchange gains.
As a result, ordinary income increased 37.2%, or ¥4,804 million compared with the previous fiscal year, to ¥17,725
million (US$156 million).
Extraordinary income/losses deteriorated by ¥26,318 million compared with the previous fiscal year. Despite therecording of gains on sales of fixed assets, this was largely attributable to the posting of an impairment loss on thepolycrystalline silicon manufacturing facilities at Tokuyama Malaysia Sdn. Bhd.
As a result of the above, loss before income taxes was ¥86,500 million (US$765 million), which deteriorated by¥21,513 million compared with the previous fiscal year.
After deducting income taxes calculated in an appropriate way, the Company recorded a loss of ¥99,520 million(US$880 million), which deteriorated by ¥34,192 million compared with the previous fiscal year.
Loss attributable to owners of parent was ¥100,563 million (US$889 million), which deteriorated by ¥35,214 million
compared with the previous fiscal year.
Basic earnings per share was loss of ¥289.10 (US$2.558), down from basic earnings per share of loss of ¥187.85 in theprevious fiscal year. Dividends per share were ¥0.00 (US$0.000).
Return on equity (ROE) and return on assets (ROA) were -94.0% and -25.1%, respectively, compared with -33.3% and-11.8% in the previous fiscal year.

Tokuyama Corporation Annual Report 201634

Segment Information
The Tokuyama Group is composed of the parent company, Tokuyama Corporation (“the Company”), 55 subsidiaries
and 30 affiliated companies. The Group’s operations are divided into the four business segments of Chemicals,
Specialty Products, Cement, and Life & Amenity. For accounting purposes, 55 of the Company’s subsidiaries areconsolidated, while 10 affiliates are accounted for using the equity method.
Chemicals
The Chemicals segment includes the operations of the Company and four consolidated subsidiaries.
Sales of caustic soda were down compared with the previous fiscal year. While domestic sales volumes were steady, thisdecrease was attributable to weak trends in selling prices.
With regard to vinyl chloride monomer (VCM), profitability improved on the back of a drop in raw material costs dueto the downturn in domestic naphtha prices.
Despite a favorable export environment, sales of polyvinyl chloride (PVC) declined. This was mainly due to a drop insales volumes following the closure of the Chiba factory.
With regard to soda ash and calcium chloride, sales increased compared with the previous fiscal year. This reflected thestartup of operations by TOKUYAMA & CENTRAL SODA Inc. in October 2014.
As a result of the above, segment net sales decreased 4.5% compared with the previous fiscal year, to ¥87,801 million(US$777 million), while operating income increased 76.0% to ¥8,900 million (US$78 million). The segment reported
higher earnings on lower sales.
Specialty Products
The Specialty Products segment includes the operations of the Company, six consolidated subsidiaries and one
equity-method affiliate.
Sales of semiconductor-grade polycrystalline silicon were essentially unchanged from the previous fiscal year. Thislargely reflected firm overall trends in sales volumes, which offset the slowdown in demand for certain semiconductor
products targeting various fields including smartphones.
Sales of solar-grade polycrystalline silicon increased on the back of higher sales volumes. This was mainly due to thestart of sales and marketing by Tokuyama Malaysia in October 2014. In contrast, profitability deteriorated owing tosuch factors as the marked drop in spot price and sluggish operating rates.
Sales of fumed silica increased compared with the previous fiscal year due to steady sales of such applications as apolishing material for semiconductors.
Sales volume of high-purity chemicals for electronic manufacturing was firm thanks largely to semiconductor productapplications. However, sales declined as a result of soft trends in selling prices.
With regard to aluminum nitride, sales increased compared with the previous fiscal year. This was attributable to anincrease in sales volumes of such applications as heat sink materials used for power devices for industrial machineryand LEDs.
As a result of the above, segment net sales increased 9.8% compared with the previous fiscal year, to ¥60,902 million(US$538 million). However, this segment incurred an operating loss of ¥1,157 million (US$10 million) during the fiscal
year under review. The segment reported a loss on higher sales.

Tokuyama Corporation Annual Report 201635

Cement
The Cement segment comprises the operations of the Company, 17 consolidated subsidiaries and four equity-method
affiliates.
In the cement business, sales declined compared with the previous fiscal year, as a result of decreased sales volumes.
This decrease reflected sluggish trends in both public and private-sector demand impacted by such factors as thedecrease in public works and delays in construction attributable to unseasonably bad weather in Japan.
In the recycling and environment-related business, the Company accepted a higher volume of waste including
construction waste soil compared with the previous fiscal year. As a result of this, sales increased from the previous
fiscal year.
With regard to consolidated subsidiaries, sales increased compared with the previous fiscal year, because sales volumesof such products as ready mixed concrete for large-scale projects increased in certain areas.
As a result of the above, segment net sales increased 5.2% compared with the previous fiscal year, to ¥85,469 million(US$756 million) and operating income increased 31.1% to ¥5,832 million (US$51 million). The segment reported
higher earnings on higher sales.
Life & Amenity
The Life & Amenity segment includes the operations of the Company, 15 consolidated subsidiaries and twoequity-method affiliates.
Sales of active pharmaceutical ingredients were on par with the previous fiscal year. This was in large part due to solid
sales volumes of products used for generic pharmaceuticals.
With regard to plastic lens-related materials, sales volumes of photochromic dye materials for eyeglass lenses increased.
As a result of this, sales increased compared with the previous fiscal year.
With regard to microporous film, sales increased year on year. This was mainly the result of sound sales for use as
sanitary articles including disposable diapers.
With regard to polyolefin film, sales declined compared with the previous fiscal year. Despite firm trends in sales
mainly for application in packaging materials for goods sold at convenience stores, this decrease was the result of weaktrends in selling prices on the back of the decline in domestic naphtha prices.
With regard to dental materials and equipment, sales increased compared with the previous fiscal year, due to increased
sales volumes of new products and products for overseas markets.
With regard to medical diagnosis systems, sales were up compared with the previous fiscal year. This was due to the
upswing in large-scale orders in Japan for blood testing products.
With regard to gas sensors, sales increased compared with the previous fiscal year. This was attributable to strong
overseas sales volume of such applications as gas alarm devices.
As a result of the above, segment net sales decreased 1.3% compared with the previous fiscal year, to ¥57,677 million(US$510 million), while operating income increased 27.9% to ¥6,598 million (US$58 million). The segment reported
higher earnings on lower sales.

Tokuyama Corporation Annual Report 201636

Financial Position and Liquidity
As of March 31, 2016, total assets amounted to ¥401,342 million (US$3,551 million), a decrease of ¥153,185 million
from the figure of ¥554,527 million as of the previous fiscal year-end.
Current assets decreased 0.1% compared with the previous fiscal year-end to ¥243,766 million (US$2,157 million).
This was due primarily to a decrease in inventory. Current liabilities decreased 3.5% to ¥113,200 million (US$1,001
million). This mainly reflected a decrease in current portion of long-term loans payable. As a result, the current ratio
was up to 2.15 times, from 2.08 times as of the previous fiscal year-end.
Property, plant and equipment decreased 52.7% in comparison with the previous fiscal year-end to ¥119,764 million(US$1,059 million). This was largely attributable to a decrease in property, plant and equipment resulting from theposting of a loss on the impairment of polycrystalline silicon manufacturing facilities of Tokuyama Malaysia Sdn. Bhd.
Intangible assets and investments and other assets dropped 33.9% over the previous fiscal year-end to ¥37,811 million(US$334 million). This was primarily due to a decrease in investment securities.
As of March 31, 2016, total liabilities amounted to ¥341,136 million (US$3,018 million), a decrease of 11.4%
compared with the previous fiscal year-end figure of ¥385,082 million. The main contributory factor was a decrease inlong-term loans payable, bonds payable and provision for loss on purchase contract. Interest-bearing debt decreased
13.8% from ¥283,196 million as of the previous fiscal year-end to ¥244,152 million (US$2,160 million).
Non-controlling interests increased 27.1% from ¥6,868 million as of the previous fiscal year-end to ¥8,732 million(US$77 million). Net assets decreased 64.5% compared with the previous fiscal year-end, from ¥169,445 million to¥60,205 million (US$532 million). This was due chiefly to a decrease in retained earnings resulting from the posting of
the impairment loss. The ratio of shareholders’ equity to total assets was 12.8%, down from 29.3% as of the previous
fiscal year-end. The amount of net assets per share was ¥147.98 (US$1.310), down from ¥467.36 as of the previous
fiscal year-end.

Tokuyama Corporation Annual Report 201637

Capital Expenditures
Capital expenditures totaled ¥13,945 million (US$123 million), a decrease of 45.0% compared with the previous fiscal
year’s figure of ¥25,345 million.

Cash FlowsNet cash provided by operating activities totaled ¥30,098 million (US$266 million). Principal items included
depreciation expenses of ¥20,084 million (US$177 million) (¥18,845 million in the previous fiscal year).
Net cash provided by investing activities totaled ¥13,400 million (US$118 million). Major contributory factors were
payments for purchases of property, plant and equipment resulting from construction of polycrystalline silicon
manufacturing facilities at Tokuyama Malaysia Sdn. Bhd. of ¥14,334 million (US$126 million) (¥32,470 million in theprevious fiscal year), proceeds from sales of property, plant and equipment of ¥17,841 million (US$157 million) (¥109
million in the previous fiscal year), and proceeds from sales of investment securities of ¥10,932 million (US$96
million) (¥16,746 million in the previous fiscal year).
Net cash used in financing activities came to ¥37,689 million (US$333 million). This was primarily attributable torepayment of long-term loans payable of ¥31,175 million (US$275 million) (¥41,286 million in the previous fiscal year),and redemption of bonds of ¥5,600 million (US$49 million) (no account in the previous fiscal year).
As a result of the above, cash and cash equivalents increased by ¥5,044 million (US$44 million) compared with theprevious fiscal year-end, to ¥121,166 million (US$1,072 million).

Tokuyama Corporation Annual Report 201638

Consolidated Balance Sheets
Tokuyama Corporation and Consolidated Subsidiaries

Years ended March 31, 2016 and 2015
Thousands of U.S.
Millions of yen

dollars (Note 2)
2015

2016

2016

Assets :Current assets :Cash and deposits (Note 5)

121,508

61,364

1,075,296

Notes and accounts receivable - trade (Note 5)

68,56969,371

606,812

Lease receivables and investment assets

6

30

61

Securities (Note 5, Note 15)-

55,053-14,012

15,456124,004

Merchandise and finished goods
Work in process

10,882

11,60696,302

Raw materials and supplies

15,93318,026141,005

Deferred tax assets (Note 6)

4,256

4,772

37,670

Other

8,788

8,396

77,774

Allowance for doubtful accounts
Total current assets

(192)

(103)

(1,699)243,766

243,975

2,157,227

Noncurrent assets :Property, plant and equipment :Buildings and structures (Note 5)

101,982

137,347

902,501

Accumulated depreciation(74,022)(74,090)(655,069)

Buildings and structures, net
Machinery, equipment and vehicles (Note 5)
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land (Note 5)
Lease assets

27,95963,257

247,431461,619546,388

4,085,126(410,707)(401,461)(3,634,576)

50,912

144,927450,550

22,661

23,261

200,543(20,890)(20,974)(184,871)

1,771

2,286

15,672

31,32733,149277,236

2,237

2,135

19,803

Accumulated depreciation(1,041)(936)(9,217)

Lease assets, net

1,196

1,199

10,585Construction in progress

6,597

8,511

58,382

119,764

253,3311,059,859

Goodwill

3,738

5,097

33,080

Lease assets

41

44

368

Other

2,613

4,641

23,132

Total intangible assets

6,393

9,784

56,581

Total property, plant and equipment
Intangible assets

Investments and other assets
Investment securities (Note 4 , Note 5)

15,76531,062

139,517Long-term loans receivable

3,094

3,248

27,383

Deferred tax assets (Note 6)

610

669

5,403

Net defined benefit asset (Note 7)

8,057

8,765

71,300

Other

4,190

4,015

37,083

Allowance for investment loss

(22)

(22)

(194)

Allowance for doubtful accounts

(278)

(303)

(2,464)

Total investments and other assets
Total noncurrent assets
Total assets

See notes to consolidated financial statements

Tokuyama Corporation Annual Report 201639

31,41747,436

278,030

157,575

310,552

1,394,471

401,342554,527

3,551,699

Consolidated Balance Sheets
Tokuyama Corporation and Consolidated Subsidiaries

Years ended March 31, 2016 and 2015
Thousands of U.S.
Millions of yen

dollars (Note 2)
2015

2016

2016

Liabilities :Current liabilities :Notes and accounts payable - trade

35,38840,567313,171

Short-term loans payable (Note 5)

9,382

12,212

83,029

-

3,000

-

Current portion of long-term loans payable (Note 5)

17,03625,110150,762

Current portion of bonds (Note 5)

10,0005,000

88,495

356

340

3,150

11,8881,318

105,209

Commercial papers (Note 5)

Lease obligations (Note 5)
Income taxes payable (Note 6)
Deferred tax liabilities (Note 6)

2

-

26

Provision for bonuses

1,830

1,911

16,194

Provision for repairs

1,480

1,284

13,102

Provision for product warranties

85

132

753

Provision for loss on compensation for damage

-

50

-

2,656

3,183

23,511

Provision for loss on purchase contract
Other

23,09323,186204,368

Total current liabilities

113,200

117,298

1,001,776

Noncurrent liabilities :Bonds payable (Note 5)

34,40045,000304,424

Long-term loans payable (Note 5)

172,877

191,552

1,529,893

Lease obligations (Note 5)

931

981

8,240

Deferred tax liabilities (Note 6)

457

6,409

4,050

Provision for directors' retirement benefits

231

226

2,044

3,691

3,458

32,665

Allowance for loss on compensation for building materials

384

574

3,406

Provision for environmental measures

85

91

752

Provision for loss on purchase contract

2,716

6,250

24,041

Net defined benefit liability (Note 7)

1,354

1,162

11,982

6

5

55

Other

10,79912,071

95,572

Total noncurrent liabilities

227,935

267,783

2,017,130

341,136

385,082

3,018,906

Provision for repairs

Asset retirement obligations

Total liabilities
Contingent liabilities (Note 17)
Net assets :Shareholders' equity (Note 12) :Capital stock
Authorized：

700,000,000

sharesIssued：349,671,876

shares53,45853,458473,088

Capital surplus

57,532

57,670509,137

Retained earnings(61,281)

39,286(542,309)(1,439)(1,434)(12,740)

48,270148,981

427,175

Treasury stock2015 ：

1,805,814

shares2016 ：

1,832,788

sharesTotal shareholders' equity
Accumulated other comprehensive income :(1,020)5,829(9,030)

Deferred gains or losses on hedges

Valuation difference on available-for-sale securities

(526)

330

(4,659)Foreign currency translation adjustment

2,362

4,196

20,910Remeasurements of defined benefit plans

2,386

3,239

21,120Total accumulated other comprehensive income

3,202

13,59628,341

8,732

6,868

77,27560,205

169,445532,792

401,342554,527

3,551,699

Non-controllinginterests

Total net assets
Total liabilities and net assets

See notes to consolidated financial statements

Tokuyama Corporation Annual Report 201640

Consolidated Statements of Income
Tokuyama Corporation and Consolidated Subsidiaries

Years ended March 31, 2016 and 2015
Thousands of U.S.
dollars (Note 2)

Millions of yen
2015

2016

2016

Net sales

307,115

302,085

2,717,833

Cost of sales (Note 10)

220,638

218,917

1,952,552

Gross profit

86,476

83,167765,280

Selling expenses

38,09936,566337,167

General and administrative expenses (Note 10)25,30527,070223,942

63,40563,636561,110

23,071

19,530204,170

Interest income

121

110

1,077

Dividends income

443

629

3,927

Share of profit of entities accounted for using equity method

668

684

5,919

Selling, general and administrative expenses (Note 9) :Total selling, general and administrative expenses
Operating income
Non-operating income :Foreign exchange gains
Other
Total non-operating income

542

-

4,801

1,576

1,465

13,954

3,353

2,889

29,680Non-operating expenses :Interest expenses

4,668

4,756

41,318

Cost of idle operation

1,134

825

10,038

Other

2,896

3,917

25,629

8,699

9,499

76,986

17,725

12,920156,864

14,14473

125,172

-

5

-

6,190

10,442

54,778Gain on sales of shares of subsidiaries and associates

-

20

-

State subsidy

50

24

443

1,092

-

9,669

21,477

10,566

190,063

Total non-operating expenses
Ordinary income
Extraordinary income :Gain on sales of noncurrent assets
Gain on bargain purchase
Gain on sales of investment securities

Other
Total extraordinary income
Extraordinary loss :Loss on sales of noncurrent assets
Impairment loss (Note 11)

130

8

1,154

124,706

76,0101,103,599

Loss on disaster

5

383

50

Loss on reduction of noncurrent assets

108

27

960

Loss on disposal of noncurrent assets

486

420

4,305

Loss on sales of shares of subsidiaries and associates

-

8

-

Provision for loss on purchase contract

-

9,433

-

Loss on purchase contract

-

1,489

-

264

692

2,344

125,70288,473

1,112,415(86,500)(64,986)(765,487)

Other
Total extraordinary losses
Profit(loss) before income taxes
Income taxes (Note 6) :Current

14,408

3,747

127,508

Deferred(1,387)(3,405)(12,280)

13,020341

115,227(99,520)(65,327)(880,714)

Total income taxes
Profit (loss)

1,043

21

9,230

(100,563)(65,349)(889,945)

Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

U.S. dollars（Note 2）
2016

Yen
2015

2016
Per share amounts :Net income (loss)
Cash dividends

See notes to consolidated financial statements

Tokuyama Corporation Annual Report 201641

(289.10)(187.85)(2.558)---

Consolidated Statements of Comprehensive Income
Tokuyama Corporation and Consolidated Subsidiaries

Years ended March 31, 2016 and 2015
Thousands of U.S.
Millions of yen

Profit(loss)

dollars (Note 2)
2015

2016

2016

(99,520)(65,327)(880,714)(6,851)(2,535)(60,628)

(901)

(419)

(7,978)Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment(1,758)

1,299(15,559)

Remeasurements of defined benefit plans, net of tax

(861)

2,257

(7,620)Share of other comprehensive income of entities accounted for using equity

(150)

189

(1,334)(10,522)791(93,122)(110,043)(64,536)(973,836)(110,957)(64,564)(981,923)

913

28

8,086

Total other comprehensive income
Total comprehensive income
Attributable to:
Owners of parent
Non-controling interests

See notes to consolidated financial statements

Tokuyama Corporation Annual Report 201642

Consolidated Statements of Changes in Net Assets
Tokuyama Corporation and Consolidated Subsidiaries

Years ended March 31, 2016 and 2015[2016]
Shareholders' equity

Balance at beginning of year
Changes during the fiscal year
Profit (loss) attributable to owners ofparentCapitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total

53,45857,67039,286(1,434)

148,981(100,563)(100,563)
(6)

1

0

0

(2)

(2)

(118)

(118)

(118)

(19)

(19)

(19)

(1)

Change of scope of consolidation
Capital increase of consolidated
subsidiaries
Purchase of shares of consolidated
subsidiaries
Net changes of items other thanshareholders' equity
Total changes of items during theperiod(2)(137) (100,567)
57,532(61,281)(5) (100,710)(1,439)48,270[2015]
Shareholders' equity

Capitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total

Balance at biginning of year
Cumulative effects of changes in accounting
policies

53,45857,670107,155(1,428)

216,856

Restated balance

53,458(1,842)
57,670Changes during the fiscal year
Cash dividends
Net income (loss)

105,313(1,428)215,013(7)(1,043)(65,349)(7)

Purchase of treasury stock(1)

Disposal of treasury stock
Effect of changes in fiscal year of
consolidated subsidiaries

Balance at end of year

(6,849)(856)(1,833)(852)(10,393)

1,863(6,849)(856)(1,833)(852)(10,393)

1,863 (109,239)(1,020)

(526)

2,362

2,386

3,202

Millions of yen
Accumulated other comprehensive income
Valuation
Remeasurdifference Deferred
Foreign
ements ofongains orcurrency
definedTotal
availablelosses
translation
benefitfor-sale on hedges adjustment
plans
securities
8,369
749
2,710
982
12,8118,732

2(8,529)60,205

Non-contr
Total
oling
net assetsinterests

6,785

236,453

6,785

234,610(1,842)(1,043)(65,349)

Change of scope of consolidation
Net changes of items other thanshareholders' equity
Total changes of items during theperiod169,445(6)

Disposal of treasury stock

53,4586,868(100,563)

Purchase of treasury stock

Balance at end of year

Non-contr
Total
oling
net assetsinterests

(6)

(0)

-

Millions of yen
Accumulated other comprehensive income
Valuation
Remeasurdifference Deferred
Foreign
ements ofongains orcurrency
definedTotal
availablelosses
translation
benefitfor-sale on hedges adjustment
plans
securities
5,829
330
4,196
3,239
13,596(1,842)
8,369

749

2,710

982

12,811(1,043)(65,349)
(7)

0

0

356

356

356

10

10

10
(2,539)

(419)

1,486

2,257

784

82

867

-

-

(66,026)(5)(66,032)(2,539)

(419)

1,486

2,257

784

82

(65,165)

53,45857,67039,286(1,434)

148,981

5,829

330

4,196

3,239

13,596

6,868

169,445[2016]

Thousands of U.S. dollars (Note 2)
Accumulated other comprehensive income
Valuation
Remeasurdifference Deferred
Foreign
ements of
CapitalRetained Treasury
ongains orcurrency
Total
definedTotal
surplusearnings
stock
availablelosses
translation
benefitfor-sale on hedges adjustment
plans
securities
510,355 347,667 (12,693) 1,318,417
51,5872,924
37,13928,667 120,319
Shareholders' equity

Capitalstock

Balance at biginning of year

473,088

Changes during the fiscal year
Profit (loss) attributable to owners ofparent(889,945)

60,7791,499,516(889,945)(889,945)

(60)

(60)

13

3

3

(22)

(22)

(1,044)(1,044)(1,044)

(173)

(173)

Disposal of treasury stock(9)

Change of scope of consolidation
Capital increase of consolidated
subsidiaries
Purchase of shares of consolidated
subsidiaries
Net changes of items other thanshareholders' equity
Total changes of items during theperiod(22)(173)(60,618)-(1,217) (889,977)

473,088509,137 (542,309)(47) (891,241)(12,740)

See notes to consolidated financial statements

Tokuyama Corporation Annual Report 2016

Total
net assets

(60)

(0)

Purchase of treasury stock

Balance at end of year

Non-controling
interests

43

427,175(7,583)(16,229)(7,547)(91,978)

16,495(75,482)(60,618)(7,583)(16,229)(7,547)(9,030)(4,659)20,91021,120(91,978)

16,495(966,724)

28,341

77,275

532,792

Consolidated Statements of Cash Flows
Tokuyama Corporation and Consolidated Subsidiaries

Years ended March 31, 2016 and 2015
Millions of yen
2016
2015

Thousands of U.S.
dollars (Note 2)
2016

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation and amortization
Increase (decrease) in allowance for loss on compensation for building materials
Increase (decrease) in provision for loss on purchase contract
Increase (decrease) in other provision
Increase(decrease) in net defined benefit liability
Increase(decrease) in net defined benefit asset
Interest and dividends income
Foreign exchange losses (gains)
Gain on bargain purchase
Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries and associates
Equity in (earnings) losses of affiliates
Subsidy income
Interest expenses
Loss on reduction of noncurrent assets
Impairment loss
Loss (gain) on disposal of noncurrent assets
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities(86,500)
20,084(189)(4,059)
322
93
(431)
(565)
(176)
(14,013)(6,190)
(668)
(50)
4,668
108
124,706
486
301
4,402
(355)
(4,750)(130)
607
37,701
1,178(4,725)(4,055)30,098(64,986)
18,845
(268)
9,433
450
79
442
(739)
1,070
(5)
(64)
(10,442)
(12)
(684)
(24)
4,756
27
76,010420(2,520)
1,136
681
1,443
808
2,689
38,546
1,189(4,732)(4,232)
30,772(765,487)
177,738(1,675)(35,928)
2,856
829(3,820)(5,004)(1,560)(124,017)(54,778)(5,919)(443)
41,318960
1,103,599
4,305
2,670
38,963(3,146)(42,037)(1,156)
5,375
333,639
10,433(41,821)(35,892)
266,358

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Payments for sales of shares of subsidiaries resulting in change in scope of consolidation
Additional purchase of investments in consolidated subsidiaries
Payments of long-term loans receivableCollection of long-term loans receivable
Proceeds from subsidy income
Payments for transfer of business
Other, net
Net cash provided by (used in) investing activities(84)
34(14,334)
17,841(12)
10,932
(40)
239
50
(37)
(1,187)
13,400(34)
429(32,470)
109(7,967)
16,746
(633)
(23)
(20)
244
2,659
(3,750)(810)(25,519)(743)
300(126,857)
157,888(111)
96,745
(362)
2,123
443
(328)
(10,512)
118,585

Cash flow from financing activities
Increase (decrease) in short-term loans payable
Increase (decrease) in commercial papers
Proceeds of long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Payments from changes in ownership interests in subsidiaries that do not
Cash dividends paid
Cash dividends paid to non-controlling interests
Decrease (increase) in treasury stock
Other, net
Net cash provided by (used in) financing activities(2,648)(3,000)
4,631(31,175)(5,600)
(25)
(1)
(386)
(6)
523
(37,689)(5)(1,000)84,311(41,286)(1,043)
(437)
(75)
40
40,502(23,440)(26,548)
40,982(275,893)(49,557)(224)(15)(3,419)(56)
4,634(333,538)

(792)
5,016
116,12227

392
46,147
69,97310(7,009)44,395
1,027,629
244

121,166(8)
116,122

1,072,269

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation
Increase (decrease) in cash and cash equivalents resulting from change in fiscal period of
consolidated subsidiaries
Cash and cash equivalents at end of period

See notes to consolidated financial statements

Tokuyama Corporation Annual Report 201644

Notes to Consolidated Financial Statements
Tokuyama Corporation and Consolidated Subsidiaries

1. BASIS OF FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared from accounts and records maintained by
Tokuyama Corporation (the “Company”) and its subsidiaries. The Company and its consolidated domestic subsidiaries
have maintained their accounts and records in accordance with the provisions set forth in the Companies Act (the“Act”) and the Financial Instruments and Exchange Act and in conformity with accounting principles and practices
generally accepted in Japan, which are different from the accounting and disclosure requirements of International
Financial Reporting Standards.
The accounts of consolidated overseas subsidiaries are based on their accounting records maintained in conformity withgenerally accepted accounting principles and practices prevailing in the respective countries of domicile.
The consolidated financial statements are not intended to present the consolidated financial position, results ofoperations and cash flows in accordance with accounting principles and practices generally accepted in countries andjurisdictions other than Japan.
2. U.S. DOLLAR AMOUNTSThe U.S. dollar amounts included in the consolidated financial statements and notes represent the arithmetic results oftranslating Japanese yen to U.S. dollars at the rate of ¥113=US$1, the approximate exchange rate on March 31, 2016.
The U.S. dollar amounts are included solely for the convenience of readers outside Japan, and are not intended to imply
that the assets and liabilities that originated in yen have been or could be readily converted, realized, or settled in U.S.
dollars at this or at any other rate.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCONSOLIDATION:
The consolidated financial statements include the accounts of the Company and its 55 significant subsidiaries (54 in2015). Significant intercompany transactions and accounts have been eliminated in consolidation.
A&T Corporation is consolidated on the basis of their original fiscal years ended at December 31. Material differences
in intercompany transactions and accounts arising from the use of the different fiscal year-end are appropriately
adjusted in consolidation.
Investments in 10 affiliates (10 in 2015) are accounted for by the equity method. Investments in unconsolidated
subsidiaries and affiliates not accounted for by the equity method are carried at cost.
The excess of investment cost over equity in net assets acquired is amortized on a straight-line basis over five years.
FOREIGN CURRENCY TRANSACTIONS:
Revenue and expenses items denominated in foreign currencies are translated into Japanese yen at the rates ofrespective transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into yen at
the exchange rate in effect at the balance sheet date and the resulting exchange gains or losses are credited or charged toincome as incurred.
FOREIGN CURRENCY FINANCIAL STATEMENTS (ACCOUNTS OF OVERSEAS SUBSIDIARIES AND
AFFILIATES):
All assets and liabilities are translated into yen at the exchange rate in effect at the balance sheet date except forshareholders’ equity, which is translated at the historical exchange rates. Revenue and expense accounts of theconsolidated overseas subsidiaries are translated at the average rates of exchange prevailing during the year. The
resulting translation adjustments are shown as “Foreign currency translation adjustments” in net assets.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include all highly liquid time deposits with maturities of three months or less, and certificatesof deposit included in securities.

Tokuyama Corporation Annual Report 201645

MARKETABLE AND INVESTMENT SECURITIES:
Securities are classified into four groups: trading securities, held-to-maturity debt securities, securities of subsidiaries
and affiliates, and available-for-sale securities. Trading securities are stated at fair market value, held-to-maturity debt
securities at amortized cost, and securities of subsidiaries and affiliates are stated at cost determined by themoving-average method. Available-for-sale securities with a quoted current price are stated at fair value, and those
without a quoted current price are stated at cost determined by the moving-average method. Net unrealized gains orlosses of available-for-sale securities are stated as “Valuation difference on available-for-sale securities” in net assets
after applying tax effect accounting. The Company and its subsidiaries do not hold trading securities.
INVENTORIES:
Inventories held for sale in the ordinary course of business are stated at cost determined mainly by the moving-averagemethod. The balance sheet value of the inventories is determined by write-down based on their decreased profitability.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. Depreciation is computed mainly by the straight-line method forbuildings, and mainly by the declining-balance method for property, plant and equipment other than buildings at rates
based on the estimated useful lives of assets prescribed by the Corporation Tax Act. The range of estimated useful lives
is principally from 3 to 75 years for buildings and structures, and from 2 to 20 years for machinery, equipment andvehicles.
Significant renewals and betterments are capitalized. Maintenance expenses are charged to income as incurred.
RESEARCH AND DEVELOPMENT EXPENSES:
Research and development expenses are charged to income as incurred.
DERIVATIVES AND HEDGE ACCOUNTING:
All derivative financial instruments, except hedging instruments, are stated at fair value. For the method of hedge
accounting, in general, the deferral hedge accounting is applied. Among hedging instruments, Interest rate swaps that
fulfill the requirement for preferential treatment are subjected to the preferential treatment. The Company uses forward
exchange contracts and interest rate swaps in hedging instruments subject to hedge accounting.
The Company utilizes financial derivative transactions only for the purpose of hedging foreign exchange risk arisingfrom normal operating activities and for managing interest rate risks. The Company does not hold or issue derivatives
for dealing or speculative purposes. All derivative transactions are performed and controlled by the financial section.
Directors in charge approve all derivative transactions entered into.
As the counterparties to these derivative transactions are limited to major financial institutions with high credit
standings, the Company does not anticipate nonperformance by the counterparties to these agreements, and no material
losses are expected.
LEASES:
Leased assets related to finance lease transactions that do not transfer ownership are depreciated by the straight-line
method using the lease term as the useful life and until the residual value becomes zero.
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
The allowance for doubtful accounts of the Company and its consolidated subsidiaries is provided in amounts sufficient
to cover possible losses on collection. In determining the allowance for doubtful accounts for normal receivables,
regard is taken of the historical default rate. With receivables where there is an acknowledged credit risk, allowances for
doubtful accounts are provided for taking account of collectability on a case-by-case basis.
INCOME TAXES:
The tax effects of temporary differences between the carrying amounts of assets and liabilities for tax and financial
reporting is recognized as deferred tax assets (liabilities). The provision for income taxes is computed based on thepretax income included in the consolidated statement of income. The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes.

Tokuyama Corporation Annual Report 2016

46

RETIREMENT BENEFITS:(i) Employees
Recognition of accrued retirement benefits for employees for the fiscal year under review is based on actual valuationof projected benefit obligations and plan assets at the end of the fiscal year.
Prior service costs are charged to income as incurred.
Actuarial differences are amortized by using the straight-line method over a period of time within the average remaining
service period of employees (mainly 16 years), from the subsequent fiscal year when they are incurred.
(ii) Directors and corporate auditors
Certain consolidated subsidiaries record accrued retirement benefits for directors and corporate auditors on the basis of
the amounts required as of the end of the fiscal year under review based on internal rules.
ACCOUNTING FOR CONSUMPTION TAX:
Consumption tax and local consumption tax are accounted for using the tax-excluded method. The consumption tax
amount not subject to tax credit is classified as a period expense.
NET INCOME PER SHARE:
Net income per share is computed by dividing net income available to common stockholders by the weighted average
number of common shares outstanding during each fiscal year. Diluted net income per share is calculated based on theassumption that all diluted convertible bonds were converted at the beginning of the fiscal year. Diluted net income pershare for the fiscal years ended March 31, 2016, 2015 and 2014 was not presented because there was no dilutive effecton any assumed conversion of convertible bonds for the fiscal years ended March 31, 2016, 2015 and 2014.
APPLICATION OF THE ACCOUNTING STANDARD FOR BUSINESS COMBINATIONS AND OTHER
ACCOUNTING STANDARDS:
Effective from the fiscal year under review, Tokuyama has applied the “Accounting Standard for Business
Combinations” (Accounting Standards Board of Japan (ASBJ) Statement No. 21; issues on September 13, 2013), the“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22; issues on September 13, 2013),
and the “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7; issued on September 13, 2013), etc.
In conjunction with the application of these and other standards, the Company made certain changes. In specific terms,
the difference caused by the change in equity of subsidiaries over which the Company continued to maintain control
was recorded as capital surplus. Acquisition costs were recorded as costs in the consolidated fiscal year in which theacquisition costs were incurred. For business combinations conducted on or after the beginning of the fiscal year underreview, Tokuyama has changed the method by which adjusted acquisition costs are allocated by way of provisional
accounting treatment confirmation in the consolidated financial statements of the fiscal year in which businesscombinations were conducted. In addition, the Company has changed the manner in which it records net income as well
as minority interests in income as non-controlling interests. In order to reflect these changes, the consolidated financial
statements of the previous fiscal year have been reclassified.
In connection with the application of the Accounting Standard for Business Combinations and other accounting
standards, Tokuyama has applied its methods prospectively from the beginning of the fiscal year ended March 31, 2016,
based on the transitional period treatments defined in Clause 58-2(4), of the Accounting Standard for Business
Combinations, Clause 44-5(4), of the Accounting Standard for Consolidated Financial Statements, and Clause 57-4 (4),of the Accounting Standard for Business Divestitures.
Accounting for these factors, the effect of these changes on the balance of capital surplus as of the end of the fiscal year
under review as well as operating income, ordinary income, and the loss before income taxes for the fiscal year underreview were immaterial.
In the Company’s consolidated statement of cash flows for the fiscal year ended March 31, 2016, Tokuyama haschanged the definition of cash flows from payments or proceeds from changes in ownership interests in subsidiaries that
do not result in a change in scope of consolidation to cash flows from financing activities.
There are no material changes to the balance of capital surplus as of the beginning of the fiscal year under review in the
consolidated statements of changes in net assets and per share information.

Tokuyama Corporation Annual Report 201647

4. SECURITIESThere are no held-to-maturity debt securities.
Available-for-sale securities at March 31, 2016 were as follows:
Millions of yen
Book value

Acquisition cost

Unrealized gain

Available-for-sale securities:
Equity securities
Total

10,897

9,478(1,418)

10,897

9,478(1,418)

Thousands of U.S. Dollars
Book value

Acquisition cost

Unrealized gain

Available-for-sale securities:
Equity securities
Total

96,43983,883(12,556)

96,43983,883(12,556)

The sales amount of available-for-sale securities for the fiscal year ended March 31, 2016 was as follows:
Millions of yen
Proceeds

Gain on sales

Loss on sales

Available-for-sale securities sold during 2016 :Equity securities

10,915

6,102-

Government and municipal bonds

-

-

-

Corporate bonds

-

-

-

Other

-

-

-

-

-

-

10,915

6,102-

Debt securities

Other
Total

Thousands of U.S. Dollars
Proceeds

Gain on sales

Loss on sales

Available-for-sale securities sold during 2016 :Equity securities

96,59454,003-Government and municipal bonds

-

-

-

Corporate bonds

-

-

-

Other

-

-

-

-

-

-

96,59454,003-

Debt securities

Other
Total

Tokuyama Corporation Annual Report 201648

5. BORROWINGS
Bonds payable at March 31, 2016 and 2015 were as follows:
Thousands of
U.S. Dollars

Millions of yen
2015

2016

2016

0.537% unsecured bonds in yen
due September 9, 2015

-

5,000

-

10,00010,00088,495

10,00010,00088,49515,00015,000132,743

9,400

10,00083,18544,40050,000392,9200.575% unsecured bonds in yen
due September 8, 2016
1.760% unsecured bonds in yen
due March 10, 2020
1.478% unsecured bonds in yen
due September 9, 2020
1.371% unsecured bonds in yen
due September 8, 2021
Total

The aggregate annual maturities at March 31, 2016 are summarized as follows:
Thousands of
U.S. Dollars

Millions of yen
Year ending March 31
2017

10,00088,495

2018

-

-

2019

-

-

2020

10,00088,4952021

15,000132,743

Thereafter

9,400

83,18544,400392,920

Total
Loans payable at March 31, 2016 and 2015 were as follows:

Thousands of
U.S. Dollars

Millions of yen
2015

2016

2016

Short-term loans payable (0.91%)

9,382

12,212

83,029Current portion of long-term loans payable (0.89%)

17,03625,110150,762

356

340

3,150

172,877

191,552

1,529,893

931

981

8,240

-

3,000

-

200,583

233,196

1,775,076

Current portion of lease obligations
Long-term loans payable, due in 2017-2074 (1.71%)
Lease obligations, due in 2017-2021
Commercial papers
Total

Tokuyama Corporation Annual Report 2016

49

The aggregate annual maturities of long-term loans payable at March 31, 2016 are summarized as follows:
Millions of yen

Thousands of
U.S. Dollars

Year ending March 31
201717,036

150,7622018

15,260135,0452019

19,157

169,533

2020

14,733130,3852021

18,318

162,111

Thereafter

105,408

932,818

189,9141,680,656

Total

The aggregate annual maturities of lease obligations at March 31, 2016 are summarized as follows:
Thousands ofMillions of yen
U.S. Dollars
Year ending March 31
2017

356

3,150

2018

309

2,736

2019

282

2,503

2020

208

1,841

2021

89

790

Thereafter

41

368

1,287

11,390Total

Assets pledged as collateral for certain loans and other liabilities at March 31, 2016 and 2015 are summarized asfollows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Pledged Assets
Cash and deposits

662

270

5,864

Notes and accounts receivable - trade

59

80

530

Buildings and structures

2,087

2,225

18,473

Machinery, equipment and vehicles

1,771

2,118

15,673

Land

785

785

6,950

Investment securities

33

3

293

5,399

5,483

47,785Total

Tokuyama Corporation Annual Report 201650

The Company maintained a commitment line of credit with eight banks in order to procure operating capital efficiently.
This line of credit expired in July 2015. Tokuyama did not maintain a commitment line of credit as of March 31, 2016.
The balance of unexecuted loans was as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Lines of credit-

15,000-Credit used

-

-

-

Available credit-

15,000-6. INCOME TAXESThe Company and its domestic consolidated subsidiaries are subject to a number of income taxes that, in the aggregate,
indicate a statutory tax rate in Japan for the respective fiscal years. Overseas subsidiaries are subject to income taxes ofcountries where they are domiciled.
The significant differences between the statutory tax rate and effective tax rate for consolidated financial statement
purposes for the fiscal years ended March 31 were summarized as follows.
2015

2016
Statutory tax rate

This

This

Increase (decrease) in income taxes resulting from：information is

information is

Change in valuation allowance allocated to income tax expenses

omitted, as theomitted, as theInter-company eliminations of allowance for investment loss

company

company

Permanent difference

posted a loss

posted a loss

Equity in earnings of affiliates

before income

before income

Effect of tax credits

taxes during thetaxes during theAmortization of goodwill

period underperiod underInter-company eliminations of provision for loss on business of subsidiaries

review.

review.

and affiliates
Retained earnings of subsidiaries and affiliates
Difference tax rate of recovery special tax
Unrealized intercompany profits
Lower tax rates of overseas consolidated subsidiaries
Inter-company eliminations of allowance for doubtful accounts
Inter-company eliminations of dividends income
Other
Effective income tax rate

Tokuyama Corporation Annual Report 2016

51

Significant components of deferred tax assets and liabilities at March 31, 2016 and 2015 were as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Deferred tax assets：
Property, plant and equipment

4,496

6,109

39,789Deficits

3,272

3,984

28,958Provision for repairs

1,313

1,224

11,621

Accrued business office taxes

899

245

7,962

Provision for bonuses

578

636

5,117

Unrealized holding gains on the other securities

528

(22)

4,676

Other

812

621

7,191

Subtotal

11,90012,800105,317

Less valuation allowance(5,380)(8,309)(47,617)

Total deferred tax assets

6,520

4,490

57,699(1,217)(1,422)(10,777)

Retained earnings of subsidiaries and affiliates

(751)

(839)

(6,646)

Other

(144)

(3,195)(1,278)

Total deferred tax liabilities(2,113)(5,457)(18,702)

Net deferred tax assets/(liabilities)

4,406

(966)

38,996

Deferred tax liabilities：
Appropriations for advanced depreciation

Tokuyama Corporation Annual Report 2016

52

7. RETIREMENT AND SEVERANCE PLAN
The Company and its consolidated domestic subsidiaries have lump-sum severance benefits plans and defined benefit
pension plans as vested benefits system (DB scheme). They also have defined contribution pension plans as DC
scheme.
The Company and its consolidated domestic subsidiaries may pay, under certain circumstances, extra retirement
allowances when their employees leave the Companies.
The Company has a retirement benefit trust.
The reconciliation of beginning and ending balances of benefit obligations for the fiscal year ended March 31, 2016 and2015 was as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016
Balance of defined benefit obligations at beginning of year2016

19,46518,301

172,261

-

1,837

-

Restated balance

19,465

20,139172,261

Service cost

931

960

8,239

Interest cost

153

158

1,355

Occurrence of actuarial loss

(90)

(205)

(798)

(1,702)(1,553)(15,065)

7

(33)

63

18,764

19,465

166,056

Cumulative effects of changes in accounting policies

Payments of retirement benefits
Other
Balance of defined benefit obligations at end of year

The reconciliation of beginning and ending balances of plan assets for the fiscal year ended March 31, 2016 and 2015
was as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016
Balance of plan assets at beginning of year2016

27,07524,992

239,608

602

0

5,330

Occurrence of actuarial loss

(1,322)

2,870(11,701)

Corporation's contributions

625

632

5,539

Payments of retirement benefits(1,514)(1,420)(13,401)

Balance of plan assets at end of year

25,467

27,075

225,374

Expected return on plan assets

Tokuyama Corporation Annual Report 2016

53

The reconciliation of the defined benefit obligations and plan assets to the liabilities and assets on retirement benefits
recognized in the consolidated balance sheet as of March 31, 2016 and 2015 was as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Funded defined benefit obligations

17,524

18,355155,085

Plan assets(25,467)(27,075)(225,374)(7,942)(8,720)(70,289)

Unfunded defined benefit obligations

1,239

1,117

10,971

Net amount shown on balance sheets(6,702)(7,603)(59,318)

Net defined benefit liability

1,354

1,162

11,982

Net defined benefit asset(8,057)(8,765)(71,300)

Net amount shown on balance sheets(6,702)(7,603)(59,318)

Benefit costs and a breakdown of the benefit costs for the fiscal year ended March 31, 2016 and 2015 were as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Service cost

931

960

8,239

Interest cost

153

158

1,355

Expected return on plan assets

602

0

5,330

Recognized actuarial loss

(6)

178

(55)

1,680

1,298

14,869Periodic benefit costs of retirement benefit plan

The remeasurements of defined benefit plans for the fiscal year ended March 31, 2016 and 2015 were as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Actuarial loss

1,238

(3,248)

10,959

Total

1,238

(3,248)

10,959The remeasurements of defined benefit plans for the fiscal year ended March 31, 2016 and 2015 were as follows:
Thousands ofMillions of yen
U.S. Dollars
2016
Unrecognized actuarial loss
Total

Tokuyama Corporation Annual Report 2016

54

2015

2016

(3,529)(4,768)(31,235)(3,529)(4,768)(31,235)

Principal items of plan assets for the fiscal year ended March 31, 2016 and 2015 were as follows:
%
2015

2016
Domestic stocks

15

19

Foreign stocks

7

10

Domestic bonds

27

42

Foreign bonds

3

4

Insurance product (General account)

27

16

Other

21

9

100

100

Total

(Note) The total of pension assets as of March 31, 2015 and March 31, 2016 included a retirement benefit trust,established for the Company’s pension plans that represented 10% and 8% of the total of pension assets, respectively.
Method for setting the expected long-term rate of return
The expected long-term rate of return on plan assets has been set based on the allocation of the plan assets as well as thecurrent and expected rate of return from each category of the plan assets.
Items regarding the basis for calculation used in the actuarial calculation for the fiscal year ended March 31, 2016 and2015 were as follows:
2016

2015

Discount rate

Mainly 0.8%

Mainly 0.8%

Expected long-term return on plan assets

Mainly 2.5%

Mainly 0.0%

Defined contribution scheme
The amount which the Company and its consolidated subsidiaries were required to contribute to the defined
contribution scheme was ¥538million (US$4 million).
8. LEASES(1)Lessee(i) Operating lease
The future lease payments on noncancellable operating lease transactions at March 31, 2016 and 2015 were as follows.
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Due within one year

143

503

1,271

Due beyond one year

56

200

502

200

703

1,773

Total

(2) Lessor(i) Operating lease
The future lease payments on noncancellable operating lease transactions at March 31, 2016 and 2015 were as follows.
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

Due within one year

9

9

85

Due beyond one year

121

131

1,075

131

140

1,161

Total

Tokuyama Corporation Annual Report 201655

9. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling expenses for the fiscal years ended March 31, 2016 and 2015 were as follows:
Thousands of
U.S. Dollars

Millions of yen
2015

2016

2016

Selling expenses :Freight-out expenses

21,32820,330188,746

Shipping charges

5,489

4,618

48,577

Salaries and bonuses

5,079

5,260

44,955

Provision for bonuses

246

261

2,182

Retirement benefit expenses

60

137

533

Provision of allowance for doubtful accounts

(1)

122

(9)

General and administrative expenses for the fiscal years ended March 31, 2016 and 2015 were as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016

2016

General and administrative expenses :Technical research expenses

7,506

9,235

66,430

Salaries and bonuses

4,573

4,950

40,470

Provision for bonuses

256

220

2,268

Provision for directors' retirement benefits

61

59

539

Retirement benefit expenses

57

178

510

10. RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the fiscal years ended March 31, 2016 and 2015 were as follows:
Thousands ofMillions of yen
U.S. Dollars
2015

2016
Research and development expenses

Tokuyama Corporation Annual Report 2016

8,522

56

10,156

2016
75,423

11. IMPAIRMENT LOSSThe Company’s Group groups its assets mainly according to the smallest units independently generating cash flows
based on business categories. During the fiscal year ended March 31, 2016, the Group recorded impairment losses forthe following asset groups.
Details of the Company’s impairment loss have been omitted due to the low level of importance except for those items,
which are presented briefly as follows.

Use

Location
Sagamihara-shi,
Kanagawa
Yokohama-shi,
Kanagawa
Koshigaya-shi,
SaitamaCompany
housesSaitama-shi,
Saitama
Tsukuba-shi,
IbarakiKamisu-shi,
IbarakiAsset category

Millions of yen

Thousands of
U.S. Dollars

2016

2016

Buildings and structures

12

103

Land

94

834

Buildings and structures

68

605

Buildings and structures

25

219

Buildings and structures

77

679

Land

189

1,668

Buildings and structures

80

712

Land

66

585

Buildings and structures

124

1,096

0

0

735

6,506

Tools, furniture and fixtures
Total

In light of the execution of sales contracts and the decision to dispose of certain assets, Tokuyama recognized a notabledifference between the recoverable amounts and book values of the housing facilities described above owned by theCompany and Shunan Sangyo Co., Ltd. As a result, Tokuyama decided to write down the book values of these assets totheir recoverable amounts and to post the amount of write-down as an impairment loss in extraordinary losses.
Recoverable amounts represent estimates of net realizable values based on sales contract and other factors.

Use

Location

Idle fixed

Ishikari-shi,

assetsHokkaidou

Asset category

Millions of yen

Thousands of
U.S. Dollars

2016

2016

Land

73

646

Total

73

646

Tokuyama recognized a notable difference between the book and market value of the idle land described above ownedby the Company owing to the drop in land prices. As a result, Tokuyama decided to write down the book value of idle
land to its recoverable amounts and to post the amount of write-down as an impairment loss in extraordinary losses. The
recoverable amount represents an estimate of net realizable value based on the real estate appraisal value.

Tokuyama Corporation Annual Report 2016

57

Use
Manufacturing
facilities forpolyolefin film

Location
Shunan-shi,
Yamaguchi

Asset category

Millions of yen

Thousands of
U.S. Dollars

2016

2016

Buildings and structures

15

133

Machinery, equipment and vehicles

1

8

Tools, furniture and fixtures

0

0

Total

16

143

Sun･Tox Co., Ltd. determined that there was little or no prospect of a recovery following the decision to discontinue
operations at certain manufacturing facilities. As a result, the company wrote down the book values of the relevant
assets and to post the amount of write-down as an impairment loss in extraordinary losses. The recoverable amounts ofassets groups represent estimates of net realizable values. The assets described above have been written down to theirmemorandum values.

Use

Location

Manufacturing
facilities forpolycrystalline

Sarawak, Malaysia

siliconAsset category

Millions of yen

Thousands of
U.S. Dollars

2016

2016

Buildings and structures

31,866

282,004

Machinery, equipment and vehicles

90,143

797,727

Tools, furniture and fixtures

625

5,531

Intangible assets-other

172

1,522

Construction in progress

1,069

9,456

123,875

1,096,242

Total

Engaged in the manufacture of solar-grade polycrystalline silicon, the PS-2 Plant operated by Tokuyama Malaysia Sdn.
Bhd. came online in October 2014. Due to the global glut in supply and the prolonged substantial drop in sales prices,
however, the decision was made to write down the book value of the plant to its recoverable value and to post theamount of write-down as an impairment loss in extraordinary losses. The decision to undertake this write-down reflects
the forecast continued decline in selling prices to a level that is significantly below the Company’s business plans. The
recoverable amount has been determined using the utility value of assets and a discount rate of 6.2% for calculating theutility value based on future cash flows. Meanwhile, an impairment loss of ¥389 million (US$3 million) applicable tomanufacturing facilities at the PS-1 polycrystalline silicon Plant is included in construction in progress totaling ¥1,069
million (US$9 million).

Tokuyama Corporation Annual Report 2016

58

12. SHAREHOLDERS’ EQUITYThe “Act” provides that an amount equal to 10% of dividends from surplus shall be appropriated and set aside as a legal
reserve until the total amount of legal reserve and additional paid-in capital equals 25% of capital stock.
On condition that the total amount of legal reserve and additional paid-in capital remains being equal to or exceeding
25% of capital stock, they are available for distributions and certain other purposes by the resolution of the shareholders’meeting.
The legal reserve is included in the retained earnings and is not allowed to show separately in the accompanying
consolidated financial statements.
13. ASSET RETIREMENT OBLIGATIONS
Since the amount of asset retirement obligations at the fiscal year-end under review was immaterial, the preparation ofan asset retirement obligations schedule was omitted.
14. SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION(1) Summary of reportable segments
The reportable segments in the Company Group are defined as individual units, where separate financial information isavailable and which are subject to regular review to evaluate their results and decide the allocation of management
resources by the board of directors of the Company.
The Company has business divisions by product group, and the Company Group conducts business operations througheach business division devising its comprehensive product strategy for domestic and overseas markets.
The Company Group is, therefore, composed of segments by product group based on business divisions, and has four
reportable segments, “Chemicals,” “Specialty Products,” “Cement,” and “Life & Amenity.”
Main products and services of each reportable segment are as follows:
Chemicals: Caustic soda, soda ash, calcium chloride, sodium silicate, vinyl chloride monomer, polyvinyl chloride resin,
propylene oxide, isopropyl alcohol and chlorinated solvents
Specialty Products: Polycrystalline silicon, fumed silica, tetrachlorosilane, aluminum nitride, high-purity chemicals forelectronics manufacturing, and photoresist developer
Cement: Cement, ready-mixed concrete, cement-type stabilizer, and resourece recycling businessLife & Amenity: Polyolefin film, plastic window sashes, medical diagnosis systems, dental materials and equipment, gassensors, ion exchange membranes, pharmaceutical ingredients and intermediates, plastic lens-related materials forglasses, and microporous film
(2) Calculation of sales, income (loss), assets and other financial items by reportable segment
The accounting treatment methods applied to reportable segments are identical to those stated in “3. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES.”
Inter-segment sales or transfer are based on market prices.
Reportable segment’s income (loss) is based on operating income.

Tokuyama Corporation Annual Report 201659

[2016]

Millions of yen
Life &
Others*1
Amenity

Chemicals

Specialty
Products

CementSales to customers
Inter-segment
sales/transfer

87,042

47,66485,32055,67931,408307,115-

307,115759

13,237148

1,998

22,27538,420(38,420)-

Total sales

87,80160,902

85,46957,67753,684

345,535(38,420)

307,115

Segment income

8,900(1,157)

5,832

6,598

5,668

25,842(2,771)

23,071

Segment assets

46,381

66,28755,952

56,64943,825

269,097

132,244401,342

2,517

5,956

3,211

2,132

3,565

17,3842,700

20,084

2,000

4,588

2,437

3,111

1,595

13,733585

14,319Total

Adjustment*2

Consolidated*3

Sales

Other items
Depreciation andamortization
Increase in tangible
and intangible fixed
assets(Note 1) The “Others” segment comprises businesses other than those of the reportable segments. Concretely, thesegment includes overseas sales companies, a distribution company, a real estate business, etc.
(Note 2) The segment income (loss) adjustment amount consists mainly of basic R&D expenses that are not allocable toa specific reportable segment. Included in the segment assets adjustment amount are corporate assets that are notallocated to a specific reportable segment (¥174,924million).
(Note 3) With regard to segment income (loss), operating income in the consolidated financial statements has been
calculated by making an adjustment to the sum total of the reportable segments’ income and the “Others” segment’s
income.
(Note 4) Included in depreciation expenses is the long-term prepaid expense depreciation amount.
(Note 5) Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.
[2015]

Millions of yen
Life &
Others*1
Amenity

Chemicals

Specialty
Products

Cement91,122

43,787

81,10056,68329,391

302,085-

302,085805

11,663

118

1,774

22,07636,438(36,438)-

91,92755,45081,21958,45751,468338,523(36,438)

302,085

Segment income

5,056

4,122

4,446

5,159

6,023

24,808(5,278)19,530

Segment assets

55,785

194,868

60,77051,352

28,260391,037

163,490554,527

2,706

4,314

2,841

2,341

1,447

13,6505,194

18,8452,054

17,456

3,734

1,693

1,085

26,023239

26,262

Total

Adjustment*2

Consolidated*3

Sales
Sales to customers
Inter-segment
sales/transfer
Total sales

Other items
Depreciation andamortization
Increase in tangible
and intangible fixed
assets(Note 1) The “Others” segment comprises businesses other than those of the reportable segments. Concretely, thesegment includes overseas sales companies, a distribution company, a real estate business, etc.
(Note 2) The segment income adjustment amount consists mainly of basic R&D expenses that are not allocable to a
specific reportable segment. Included in the segment assets adjustment amount are corporate assets that are notallocated to a specific reportable segment (¥190,190 million).
(Note 3) With regard to segment income, operating income in the consolidated financial statements has been calculated
by making an adjustment to the sum total of the reportable segments’ income and the “Others” segment’s income.
(Note 4) Included in depreciation expenses is the long-term prepaid expense depreciation amount.
(Note 5) Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.

Tokuyama Corporation Annual Report 201660

Thousands of U.S. Dollars[2016]
Chemicals

Specialty
Products

770,283

421,810

CementLife &
Amenity

Others*1

Total

755,050

492,736

277,952

2,717,833

Adjustment*2

Consolidated*3

Sales
Sales to customers
Inter-segment
sales/transfer-

2,717,833

6,721

117,148

1,318

17,682

197,132

340,003(340,003)-

777,004

538,959

756,368

510,419

475,084

3,057,837(340,003)

2,717,833

Segment income

78,767(10,242)

51,61058,39550,165

228,696(24,526)

204,170

Segment assets

410,459

586,611495,157

501,326

387,837

2,381,393

1,170,306

3,551,699

22,27752,71528,424

18,87531,551

153,844

23,893

177,738

17,70240,607

21,572

27,536

14,115

121,535

5,185

126,720

Total sales

Other items
Depreciation andamortization
Increase in tangible
and intangible fixed
assets(Note 1) The “Others” segment comprises businesses other than those of the reportable segments. Concretely, thesegment includes overseas sales companies, a distribution company, a real estate business, etc.
(Note 2) The segment income (loss) adjustment amount consists mainly of basic R&D expenses that are not allocable toa specific reportable segment. Included in the segment assets adjustment amount are corporate assets that are notallocated to a specific reportable segment (US$1,548 million).
(Note 3) With regard to segment income (loss), operating income in the consolidated financial statements has been
calculated by making an adjustment to the sum total of the reportable segments’ income and the “Others” segment’s
income.
(Note 4) Included in depreciation expenses is the long-term prepaid expense depreciation amount.
(Note 5) Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.
RELATED INFORMATION
Information by Region(1) Sales
Thousands of
U.S. Dollars

Millions of yen
2015

2016

2016

Japan

239,143

240,932

2,116,313

Asia

54,71447,099484,200

Others13,257

14,052

117,319

307,115

302,085

2,717,833

Total(2) Property, plant and equipment

Thousands of
U.S. Dollars

Millions of yen
2015

2016

2016

Japan

98,199104,791

869,021

Asia

20,415

147,331

180,670

Others

1,149

1,208

10,168

119,764

253,3311,059,859

Total

Tokuyama Corporation Annual Report 2016

61

INFORMATION ON IMPAIRMENT LOSS OF NON-CURRENT ASSETS BY REPORTABLE SEGMENT
Millions of yen[2016]
Specialty
Products

Chemicals
Impairment loss-

Life &
Amenity

Cement123,882-[2015]

Others16

Adjustment

276

531

OthersAdjustment

Total
124,706

Millions of yen
Chemicals

Specialty
Products

1,101

74,870

Impairment loss

Life &
Amenity

Cement
5

-

-

32

Total
76,010Thousands of U.S. Dollars[2016]
Specialty
Products

Chemicals
Impairment loss-

Life &
Amenity

Cement

1,096,304-

Others143

Adjustment

2,450

4,702

Total
1,103,599

INFORMATION ON AMORTIZATION OF GOODWILL AND UNAMORTIZED BALANCE BYREPORTABLE SEGMENT
Millions of yen[2016]
Chemicals

Specialty
Products

CementLife &
Amenity

OthersAdjustment

Total

Amortization of goodwill

-

3

1,369

-

-

-

1,373

Unamortized balance

-

31

3,706

-

-

-

3,738

[2015]

Millions of yen
Chemicals

Specialty
Products

CementLife &
Amenity

OthersAdjustment

Total

Amortization of goodwill

-

-

1,212

-

-

-

1,212

Unamortized balance

-

-

5,097

-

-

-

5,097

Thousands of U.S. Dollars[2016]
Chemicals

Specialty
Products

CementLife &
Amenity

OthersAdjustment

Total

Amortization of goodwill-

30

12,121---

12,152

Unamortized balance-

278

32,802---

33,080Tokuyama Corporation Annual Report 201662

[2015]

Millions of yen
Life &
Amenity

Specialty
Products

Cement

-

-

14

-

-

-

14

-

-

-

-

-

-

-

Chemicals

OthersAdjustment

Total

Amortization of negative
goodwill
Unamortized balance

15. FINANCIAL INSTRUMENTS(1) Management policy on financial instruments
The Tokuyama Group raises funds as required (mainly through bank loans and the issuance of corporate bonds) in linewith its business investment program aimed at implementing a customer-oriented approach toward strengthening the
profitability of its businesses.”
The Group invests occasional spare cash in financial assets with high safety, and raises short-term operating capital withbank loans and CP (commercial paper). We use derivatives only to hedge against risks, and have a management policyof not implementing derivative transactions for speculative purposes.
(2)Fair value of financial instruments
As at March 31, 2016, the book value of financial instruments, their fair value, and the differences between the twowere as follows. The financial instruments whose fair value is extremely difficult to estimate are not given in the tablebelow.
Millions of yen
Book value

Fair value

Difference

Cash and deposits

121,508

121,508-

Notes and accounts receivable - trade

68,56968,569-The other securities

9,478

9,478

-

Long-term loans receivable

3,094

3,094

-

Total assets

202,651

202,651-

Notes and accounts payable - trade

35,38835,388-

Short-term loans payable

9,382

9,382

-

-

-

-

Bonds payable

44,40040,676(3,723)Long-term loans payable

189,914

191,032

1,118

Total liabilities

279,084

276,480(2,604)

-

-

-

(834)

(2,333)(1,499)(834)(2,333)(1,499)Securities and Investment securities

Commercial papers

Derivative financial instruments
In which hedge accounting is not applied
In which hedge accounting is applied
Total derivative financial instruments

Tokuyama Corporation Annual Report 2016

63

Thousands of U.S. Dollars
Book value
Cash and deposits

Fair value

Difference

1,075,296

1,075,296-

606,812606,812-The other securities

83,88383,883-Long-term loans receivable

27,38327,383-

Total assets

1,793,376

1,793,376-

Notes and accounts payable - trade313,171

313,171-

Short-term loans payable

83,02983,029----392,920359,971(32,948)

Long-term loans payable

1,680,656

1,690,555

9,898

Total liabilities

2,469,777

2,446,727(23,050)---(7,381)(20,652)(13,270)(7,381)(20,652)(13,270)

Notes and accounts receivable - trade
Securities and Investment securities

Commercial papers
Bonds payable

Derivative financial instruments
In which hedge accounting is not applied
In which hedge accounting is applied
Total derivative financial instruments

Tokuyama Corporation Annual Report 201664

16. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative transactions to which hedge accounting is not applied
There are no derivative transactions to which hedge accounting is not applied.
Derivative transactions to which hedge accounting is applied(1) Currency-related derivatives
Millions of yen

Main hedging targets

Notional
value

Maturing
after
one year

Fair value

Hedge accounting method
Principle-based accounting
Forward exchange
agreements
Call
U.S. dollars
Euros

Forecast transaction in foreign
currencies
Forecast transaction in foreign
currencies

Subtotal

29

-

(0)

1,445

90

(59)

1,474

90

(59)

1,051

-

-

Allocation method
Forward exchange
agreements
Put
U.S. dollars

Forecast transaction in foreign
currencies

Subtotal

1,051

-

-

Total

2,525

90

(59)

Thousands of U.S. Dollars

Main hedging targets

Notional
value

Maturing
after
one year

Fair value

Hedge accounting method
Principle-based accounting
Forward exchange
agreements
Call
U.S. dollars

Forecast transaction in foreign
currencies
Forecast transaction in foreign
currencies

257

-

(2)

12,790799(528)

13,047

799

(530)

9,302

-

-

Subtotal

9,302

-

-

Total

22,349

799

(530)

Euros
Subtotal
Allocation method
Forward exchange
agreements
Put
U.S. dollars

Tokuyama Corporation Annual Report 2016

Forecast transaction in foreign
currencies

65

(2) Interest-related derivatives
Millions of yen

Main hedging targets
Hedge accounting method
Principle-based accounting
Interest rate swaps
Pay fixed rate, receive
floating rateLong-term loans payable

60,30060,300(774)

60,300(774)

45,15939,183(1,499)45,15939,183(1,499)105,459

99,483(2,273)Long-term loans payable

Subtotal
Total

Fair value

60,300SubtotalSpecial accounting proceduresfor interest rate swaps
Interest rate swaps
Pay fixed rate, receive
floating rate

Maturing
after
one year

Notional
value

Thousands of U.S. Dollars
Notional
value

Maturing
after
one year

Fair value

533,628

533,628(6,850)533,628

533,628(6,850)399,642

346,757(13,270)

399,642

346,757(13,270)

933,270

880,386(20,121)

Hedge accounting method
Principle-based accounting
Interest rate swaps
Pay fixed rate, receive
floating rateLong-term loans payable

SubtotalSpecial accounting proceduresfor interest rate swaps
Interest rate swaps
Pay fixed rate, receive
floating rateLong-term loans payable

Subtotal
Total
17. CONTINGENT LIABILITIESAs at March 31, 2016 and 2015, the Company and its consolidated subsidiaries were contingently liable as follows:
Thousands of
U.S. Dollars

Millions of yen
2015

2016

2016

Notes discounted or endorsed

417

331

3,696

Loans guaranteed

157

165

1,397

-

32

-

Commitments to guarantee

Tokuyama Corporation Annual Report 201666

18. FINANCIAL COVENANTS
The Company has a syndicated loan agreement (issue date: December 22, 2011) with seven lenders with theDevelopment Bank of Japan Inc. as the lead manager. This agreement has the following financial covenants related to
the Company’s consolidated financial statements.
(1) The amount of total net assets on the borrower’s consolidated balance sheet at the end of each fiscal year, less any
amounts of subscription rights to shares, non-controlling interests, deferred gains or losses on hedges, foreign currencytranslation adjustment, or valuation difference on available-for-sale securities, must not fall below 75% of the larger of
either (i) the identically calculated amount as of the end of the preceding fiscal year or (ii) the identically calculated
amount as of March 31, 2016.
(2) There must not be two consecutive fiscal years of ordinary losses.
(3) The borrower must maintain a credit rating of at least BB+ from Rating and Investment Information, Inc.
The Company has a syndicated loan agreement (issue date: July 24, 2012) with six lenders with The Bank ofTokyo-Mitsubishi UFJ, Ltd. as the lead manager. This agreement has the following financial covenants.
(1) The borrower promises to not let the amount of total net assets on its consolidated balance sheet at the end of eachfiscal year, less any amounts of subscription rights to shares, non-controlling interests, deferred gains or losses onhedges, foreign currency translation adjustment, or valuation difference on available-for-sale securities, fall below 75%of the larger of either the identically calculated amount as of the end of the preceding fiscal year or the identicallycalculated amount as of March 31, 2016.
(2) The borrower firmly promises to not record two consecutive fiscal years of ordinary losses on its consolidated
statements of income.
The Company has an agreement (issue date: September 30, 2011) for a term-out medium-term commitment line withThe Bank of Tokyo-Mitsubishi UFJ, Ltd. This agreement has the following financial covenant.
The borrower must not let the amount of total net assets on its consolidated balance sheet at the end of the first half andsecond half of each fiscal year, less any amounts of subscription rights to shares, minority interests, deferred gains orlosses on hedges, foreign currency translation adjustment, or valuation difference on available-for-sale securities, fall
below 75% of identically calculated amounts at the end of the first half and second half of the preceding fiscal year.
19. SUBSEQUENT EVENTS
The decision not to pay a period-end cash dividend for the fiscal year ended March 31, 2016 was approved at theCompany’s Ordinary General Meeting of Shareholders held on June 24, 2016.

Tokuyama Corporation Annual Report 201667

Independent Auditor’s Report
TO THE BOARD OF DIRECTORS OF TOKUYAMA CORPORATION
We have audited the accompanying consolidated balance sheet of Tokuyama Corporation and consolidated subsidiaries
as of March 31, 2016, and the related consolidated statements of income, comprehensive income, changes in net assets,
and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information, all expressed in Japanese yen.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inconformity with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in conformity with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Tokuyama Corporation and consolidated subsidiaries as of March 31, 2016, and theconsolidated results of their operations and their cash flows for the year then ended in conformity with accounting
principles generally accepted in Japan.
Convenience Translation
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 2. Such U.S. dollar amounts are presented
solely for the convenience of readers outside Japan.

YAMAGUCHI Audit Corporation
Shunan, Japan
June 15, 2016

Tokuyama Corporation Annual Report 2016

68

Business Locations
JAPANTokyo Head Office
FRONT PLACE AKIHABARA, 7-5, Sotokanda 1-chome, Chiyoda-ku, Tokyo 101-8618, Japan
TEL: +81-3-5207-2500
FAX: +81-3-5207-2580
Domestic Offices:
Osaka, Hiroshima, Takamatsu, Fukuoka, Sendai, Nagoya
Tokuyama Factory [Registered Address]
1-1, Mikage-cho, Shunan, Yamaguchi 745-8648, Japan
TEL: +81-834-34-2000
FAX: +81-834-33-3790
Kashima Factory
26 Sunayama, Kamisu, Ibaraki 314-0255, Japan
TEL: +81-479-46-4700
FAX: +81-479-46-1933
Tsukuba Research Lab
40 Wadai, Tsukuba, Ibaraki 300-4247, Japan
TEL: +81-29-864-6000
FAX: +81-29-864-6050

Asia/Oceania
Tokuyama (Shanghai) Co., Ltd.
1003, Shanghai International Group, Mansion, 511 WeiHai Road, Shanghai China 200041
TEL: +86-21-6218-1177
FAX: +86-21-5382-2894
Tokuyama Trading (Shanghai) Co., Ltd.
1003, Shanghai International Group, Mansion, 511 WeiHai Road, Shanghai China 200041
TEL: +86-21-6218-1177
FAX: +86-21-5382-2894
Tokuyama Chemicals (Zhejiang) Co., Ltd.
No.555 Yashan West Road, Economic Development Zone, Zhapu Port, Jiaxing, Zhejiang China 314201
TEL: +86-573-8552-7887
FAX: +86-573-8552-3355
http://www.tokuyama.net.cn/
Shanghai Tokuyama Plastics Co., Ltd.
138 Xintao Road, Qingpu Industrial Zone, Shanghai China 201707
TEL: +86-21-5970-5669
FAX: +86-21-5970-3756
http://www.tokuyama.com.cn/
Tianjin Tokuyama Plastics Co., Ltd.
Building 2, No.1, XEDA North 3rd Road, Xiqing Economic Development Area, Tianjin China 300385
TEL: +86-22-8720-2155
FAX: +86-22-8720-2156
Tokuyama Korea Co., Ltd.
#415 Korea Air City Terminal Bldg., 22, Teheran-ro 87-gil, Gangnam-gu, Seoul 06164, Korea
TEL: +82-2-517-3851
FAX: +82-2-517-3856
Hantok Chemicals Co., Ltd.
26th Fl., Glass Tower Bldg., 534, Teheran-ro, Gangnam-gu, Seoul 06181, Korea
TEL: +82-2-6974-4895
FAX: +82-2-6974-4899

Tokuyama Corporation Annual Report 2016

69

Taiwan Tokuyama Corporation(Head Office, Factory)
21 Shi Jian Road, Hsin Chu Industrial Park, Hu Kou, Hsin Chu 303, Taiwan, R.O.C.
TEL: +886-3-597-9108
FAX: +886-3-597-9208(Taipei Branch)
70-3F-1 Min Chuan West Road, Taipei 104, Taiwan, R.O.C.
TEL: +886-2-2563-2340
FAX: +886-2-2522-2042
salesttc@tokuyama.com.tw
Tokuyama Asia Pacific Pte. Ltd.
61 Robinson Road, #14-02 Robinson Centre Singapore 068893
TEL: +65-6533-5258
FAX: +65-6533-5256
http://www.tokuyama-asia.com/
Tokuyama Electronic Chemicals Pte. Ltd.
21 Gul Road, Singapore 629355
TEL: +65-6862-1081
FAX: +65-6862-1267
Tokuyama Malaysia Sdn. Bhd.
Lot 600, 6th Floor Wisma, Bukit Mata Kuching, Jalan Tunku Abdul Rahman 93100 Kuching, Sarawak, Malaysia
TEL: +60-82-422-705
FAX: +60-82-427-708
http://www.tokuyama.com.my/
Tokuyama Nouvelle Calédonie S.A.
Pointe Kuari, Baie de Numbo - BP 310 98845 NOUMÉA, Nouvelle Calédonie
TEL: +687-24-32-95
FAX: +687-28-18-12
http://www.tokuyama.nc/

AmericaTokuyama America Inc.
121 South Wilke Road, Suite 300, Arlington Heights, IL 60005, U.S.A.
TEL: +1-847-385-2195
FAX: +1-847-832-1705
http://www.tokuyama-a.com/

EuropeTokuyama Europe GmbH
Berliner Allee 38, 40212 Düsseldorf, Germany
TEL: +49-211-1754480
FAX: +49-211-357379
http://www.tokuyama-europe.com/

Tokuyama Corporation Annual Report 2016

70

Major Subsidiaries and Affiliates(As of March 31, 2016）

Company

Capital(millions ofyen)

Ownership
Scope

(%)

Chemicals
Shin Dai-ichi Vinyl Corporation

2,000

71.0

Production and sale of polyvinyl chloride

Tokuyama & Central Soda Inc.

10

65.0

Sale of soda ash and calcium chloride

Sun Arrow Kasei Co., Ltd.

98

100

Production and sale of polyvinyl chloride compounds

Tokuyama Siltech Co., Ltd.

200

100

Production and sale of layered sodium silicate

Tokuyama Chemicals (Zhejiang) Co., Ltd.

CNY
377 million

100

Production and sale of fumed silica

Tokuyama-Dowa Power Materials Co., Ltd.

250

65.0

Production and sale of aluminum nitride

100

Production and sale of high purity chemicals forelectronics manufacturing

100

Production and sale of high purity chemicals forelectronics manufacturing

Category also includes another 4 affiliates
Specialty Products

Taiwan Tokuyama Corporation

SGD
11,000thousandTWD
200 million

Tokuyama Malaysia Sdn. Bhd.

131,344100

Production and sale of polycrystalline silicon*Hantok Chemicals Co., Ltd.

KRW
4,500 million

50.0

Production and sale of photoresist developer

Tokyo Tokuyama Concrete Co., Ltd.

80

99.9

Production and sale of ready-mixed concrete andconcrete products

Hiroshima Ready Mixed Concrete Co., Ltd

100

67.2

Production and sale of ready-mixed concrete

Seibu Tokuyama Ready Mixed Concrete Co., Ltd.

100

100

Production and sale of ready-mixed concrete

40

100

Production and sale of ready-mixed concrete

Kyushu Tokuyama Ready Mixed Concrete Co., Ltd.

50

100

Production and sale of ready-mixed concrete

Chugoku Ready Mixed Concrete Co., Ltd.

80

52.3

Production and sale of ready-mixed concrete

Notsuharu Co., Ltd

3

100

Production and sale of ready-mixed concrete

Tokuyama Tsusho Trading Co., Ltd.

95

100

Sale of cement and ready-mixed concrete

Kansai Tokuyama Trading Co., Ltd.

80

100

Sale of cement and ready-mixed concrete

Tokusho Co., Ltd.

40

100

Sale of cement and ready-mixed concrete

Tokushin Co., Ltd.

40

100

Sale of cement and ready-mixed concrete

Tokuyama Electronic Chemicals Pte. Ltd.

Category also includes another 1 consolidated subsidiary
CementKawasaki Tokuyama Ready Mixed Concrete Co.,Ltd.

Tokuyama Mtech Corporation

50

100

Processing and sale of building materials

Tokuyama Nouvelle Calédonie S.A.

XPF
210 million

75.3

Production and sale of cement*Yamaguchi Eco-tech Corporation

90

50.0

Recycling business of incinerated ash of wastes

Category also includes another 4 consolidated subsidiaries, 3 equity method affiliates and 13 affiliates
Life & Amenity
Shanghai Tokuyama Plastics Co., Ltd.
Tianjin Tokuyama Plastics Co., Ltd.
Sun•Tox Co., Ltd.

Tokuyama Corporation Annual Report 2016

CNY
85 million
CNY
129 million
300

71

100

Production and sale of microporous film

100

Production and sale of microporous film

80.0

Production and sale of polyolefin films

Company

Capital(millions ofyen)

Ownership
Scope

(%)

A&T Corporation

577

40.2

Production and sale of diagnostic reagents, analyzers
and systems

Figaro Engineering Inc.

99

100

Production and sale of sensor devices

55.7

Production and sale of sensor devices

100

Production and sale of sensor devices

Tianjin Figaro Electronic Co., Ltd.
Figaro USA, Inc.

CNY
23 million
USD
200
thousandTokuyama Dental Corporation

100

100

Production and sale of dental and medical materials

ASTOM Corporation

450

55.0

Production, sale and maintenance of ion-exchange
membranes and related equipment

Excel Shanon Corporation

495

100

Production and sale of plastic window sashes

Tohoku Shanon Co., Ltd.

300

72.0

Production of plastic window sashes

CNY
60 million

49.0

Production and sale of diagnostic reagents, analyzers
and systems*Neusoft A&T Diagnostics Co., Ltd.

Category also includes another 4 consolidated subsidiaries, 1 equity method affiliate and 1 affiliate
Other
Tokuyama Asia Pacific Pte. Ltd.
Tokuyama Europe GmbH
Tokuyama Trading (Shanghai) Co., Ltd.
Tokuyama (Shanghai) Co., Ltd.

SGD
800
thousandEUR
255
thousandCNY
5 million
CNY
12 million

100

Sale of Tokuyama’s products

100

Sale of Tokuyama’s products

100

Sale of Tokuyama’s products

100Management company to provide services for othergroup companies in China

Tomitec Co., Ltd.

100

60.0

Production and sale of plastic molded products

Shunan System Sangyo Co., Ltd.

151

100

Real estate, civil engineering, construction

Shunan Swimming Club Corporation

50

100

Swimming and othermaintenance / promotion

Tokuyama Logistics Corporation

100

100

Transportation and warehousing

Tokuyama Information Service Corporation

20

100

Information processing services

Shunan Bulk Terminal Co., Ltd.

150

72.2

Warehouse operations for bulk cargoes of coal etc.

* CoorsTek Tokuyama Corporation

100

30.0

Production and sale of ceramics and electrochemical
products* Tokuyama Polypropylene Co., Ltd.

500

50.0

Production and sale of polypropylene

50.0

Production of metal parts and anti-rust surface coating
materials* Nishinihon Resicoat Co., Ltd.

50

Category also includes another 3 consolidated subsidiaries and 2 affiliates*Equity method affiliates

Tokuyama Corporation Annual Report 201672

sportstraining,

healthCorporate Data and Stock Information(As of March 31, 2016)

Composition of Shareholders
Company Name:

Tokuyama Corporation

Established:

February 16, 1918

Capital:¥53,458 million

Employees:

5,759 (Consolidated)

Fiscal Year:

From April 1 to March 31

General Meeting of
Shareholders:

June

Stock Listing:Tokyo

Minimum Number of
Shares per Trade:

1,000 shares

Stock:

4043

Major Shareholders
Number of Shares Held(Thousands)

Percentage ofTotal Shares

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

19,916

5.70

Japan Trustee Services Bank, Ltd. (trust account)

12,804

3.66

Nippon Life Insurance Company

10,874

3.11

The Yamaguchi Bank, Ltd.

8,246

2.36

Meiji Yasuda Life Insurance Company

7,442

2.13

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

7,095

2.03

Sojitsu Corporation

6,484

1.85

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

6,068

1.74

Sumitomo Metal Mining Co., Ltd.

5,904

1.69

Mitsubishi UFJ Trust and Banking Corporation

5,852

1.67

Name

Stock Chart

Tokuyama Corporation Annual Report 201673

Tokuyama Corporation Annual Report 2016

74

FRONT PLACE AKIHABARA,
7-5, Sotokanda 1-chome, Chiyoda-ku, Tokyo 101-8618, Japan
Corporate Communications & Investor Relations Department
TEL: +81-3-5207-2552 FAX: +81-3-5207-2578
URL: http://www.tokuyama.co.jp/eng/