ADK Annual Report 2010
Year ended December 31, 2010

ADK Profile
ASATSU-DK INC., commonly known by its initials ADK,
was founded in March 1956 by Masao Inagaki as a small,
ambitious firm focusing on magazine advertising. ASATSU
INC., as it was known at the time, quickly built up a solidclient base, primarily in the financial sector, giving it a strong
foundation for growth.
As Japan entered the high-growth years of the 1960s,
ASATSU Inc. broadened its creative reach to include planningand production of animation programs for the then still-new
medium of television. In 1987, it was listed on the Second
Section of the Tokyo Stock Exchange (TSE), becoming thefirst advertising agency in Japan to make a public stock
offering. The company listed on the First Section of the TSE
in 1990.
In 1998, it made another major move, signing areciprocal share agreement and strategic alliance with WPP,
the world’s largest marketing organization.* The following
year, the company merged with Dai-Ichi Kikaku Co., Ltd.,
another Top 10 Japanese agency, changed its name to
ASATSU-DK INC. (ADK), and entered a period of renewed
growth. Now it is Japan’s third largest total communications
service agency and 15th largest communications service
group in the world.*
Since its foundation, it has steadily expanded its
operations based on an unwavering commitment to the“Management by All” philosophy. This means every employee
in the ADK Group is expected to embrace a managementlevel perspective and approach client needs proactively.
In recent years, amid dramatic changes in thecommunications environment, the role of advertising
agencies is also changing significantly. ADK’s quest is tobecome a genuine “Future Agency” that is able to respondflexibly to the changing needs of advertisers and contributeto the business performance of its clients.
* Advertising Age, April 2011

s
tent
Con

Business at a Glance2

Message from the Management

4

Topics 1

10

Corporate Social Responsibility

12

Topics 2

14

Corporate Governance and Internal Control

16

Management’s Discussion and Analysis

18

Forward-Looking Statements and Risk Factors

26

Board of Directors and Auditors

30

Financial Section

31

Securities Holdings

64

Investor Information

65

ADK Group Network66

Business at a Glance
Consolidated Five-Year Summary
Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2008

2007

2006

2010

Gross billings¥346,565¥350,211¥399,452¥435,011¥420,059$4,252,853

Gross profit

42,02841,36749,14351,754

48,685515,744

Selling, generaland administrative expenses

42,00642,12345,44444,61942,292515,474
270

Income Statement Data

22

(756)

3,699

7,134

6,392

Income (loss) before income taxes
and minority interests

Operating income (loss)(4,749)

343

3,775

10,122

9,682

Net income (loss)(4,656)

73

2,125

5,350

5,070

EBITDA*

¥

810

¥

187

¥

4,502

¥

8,274

¥

7,590

(58,278)$

9,948*EBITDA = Operating income + Depreciation/Amortization + Amortization of negative goodwill

Balance Sheet Data
Total assets
Total net assets*

Thousands of
U.S. Dollars

Millions of Yen¥ 194,510¥190,024¥191,782¥246,097¥256,754$2,386,919

103,168

107,465

101,617

131,846

141,387

1,266,019

7,467

4,765

2,611

14,354

19,14091,632

Total long-term liabilities* Total net assets consists of Shareholder’s equity, valuation and translation adjustments, and minority interests.

Per Common Share Data (Yen and U.S. Dollars)
Net income (loss) per share (EPS)Dividend per share
Book value per share
No. of common shares outstanding*¥ (110.28)

48.14¥ 116.40¥ 106.62

20

¥

1.73
20

¥

20

42

27

0.25

2,423.06

2,499.05

2,334.48

2,898.49

2,979.79

29.73

42,165,296 42,585,533 43,088,073 45,091,103 47,096,993*Does not include treasury stock. In addition, ADK set up an Employee Stock Ownership Plan (ESOP) trust in fiscal 2010 (see page 46). Shares owned by the ESOP
trust were included in treasury stock at fiscal year-end.

Financial Ratios
AS PERCENT OF GROSS BILLINGS
Gross profit

12.13%

11.81%

12.30%

11.90%

11.59%

SG&A expenses

12.12

12.03

11.38

10.26

10.07

Operating income (loss)(0.01)(0.22)

0.93

1.64

1.52

Income before income taxes
and minority interests(1.37)

0.10

0.94

2.33

2.31

Net income(1.34)

0.02

0.53

1.23

1.21

13.8%

13.1%

57.8

57.8

AS PERCENT OF GROSS PROFIT
Operating income (loss)

0.1%(1.8%)

Staff cost

67.3

67.0

62.4

7.5%

Return on equity

(4.7)

0.1

1.8

3.9

3.7

Return on assets

(2.4)

0.04

1.7

2.8

2.5

Equity ratio*

52.5

56.0

52.4

53.1

54.7

Current ratio

1.52×

1.57×

1.50 ×

1.48 ×1.44 ×* The equity ratio, according to TSE formulas, equals book equity (excluding minority interest) divided by book total assets.
Note: For convenience purposes, U.S. dollar amounts are converted from Japanese yen at the rate of ¥81.49=US$1, the approximate rate of exchange as ofDecember 31, 2010.

2

ADK Annual Report 2010$

(1.35)ADK Group■■Japan■China■• Kyowa Kikaku Ltd.
• ADK International Inc.
• ADK Dialog Inc.
• ADK Arts Inc.
• Boys Inc.
• Digital Advertising Consortium Inc.*
Eiken Co., Ltd.
Nihon Bungeisha Co., Ltd.
Neo Shobo Inc.
• Advertising

■Asia
■

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

• ASATSU-DK SINGAPORE Pte. Ltd.
• ADK Thai Holding Ltd.
• DAI-ICHI KIKAKU (THAILAND) Co., Ltd.
• ASDIK Ltd.
• ASATSU (Thailand) Co., Ltd.
• ASATSU-DK Malaysia Sdn. Bhd.

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

Other business*Affiliates accounted for by equity method• Asatsu Europe Holding BV• Asatsu Europe BV• Asatsu (Deutschland) GmbH

■North America■• ADK America Inc.

Performance of ADK Group Breakdown by Area
Millions of Yen
Year on Year

FY2010
ADK
Japan
Subsidiaries

Gross Billings

Gross Profit

Operating Income

Net Income¥305,759¥ 30,713¥(1,674)¥ (2,112)

—

—

-1.7%
38,141-2.1%

Subsidiaries in Greater China(Shanghai, Hong Kong, Taipei)

13,724

Asia(Thailand, Malaysia)
Europe and North America(Germany, Netherlands, USA)
(Adjustment)
Total

-2.8%
7,339
5.0%

397

(7)

154.5%-96.5%

2,123

540

503

21.5%

157.6%

42.3%

8,896

1,712

439

401

29.2%

37.9%

221.9%

79.6%

3,760

489

52

99

19.0%

34.7%

16.0%

330.1%-13.3%(23,718)

(350)

267

(3,540)¥346,565¥42,028

22¥(4,656)¥

ADK Annual Report 20103

Message from the Management

Rebuilding Profitability
and Enhancing
CompetitivenessIn a challenging environment, the ADK Group madegood progress toward rebuilding profitability andenhancing competitiveness. Despite year-on-year
declines in revenue and earnings, we are well positioned
for sustained growth in the future.

Yoji Shimizu
Representative Director, President & Group CEO

4

ADK Annual Report 2010

Message from the Management

To Our Valued Shareholders

Growth Strategies

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

Since its establishment, the ADK Group has been

performance in fiscal 2010, ended December 31,

working to serve clients by offering innovative and2010.

unique communications solutions.
In fiscal 2010, the Japanese economy continued

Now, we are facing a rapidly changing

recovering, albeit at a modest level. In the latter

communications environment, especially because ofhalf of the period, however, the pace of recovery

the development of the Internet, social media andweakened as the benefits of government stimulus

mobile communications technologies. In this context,

policies faded and exports slowed. Although wethe ADK Group is striving harder than ever to offer

have avoided economic recession for the time being,

optimal communications programs for clients to

we are not yet in a position to predict full-scale

help them maximize ROI on their communications

economic recovery.

budgets. We achieve this through programs thatIn the advertising industry, which accounts for

integrate the various media surrounding consumers.

the majority of the Group’s revenue, there were signs

The global economy is expanding gradually,of recovery in some areas, but conditions remained

driven by steadily developing emerging markets.

challenging in the absence of overall recovery.

However, there are concerns about the JapaneseIn this environment, the Group stood united indomestic economy due to slow exports, whichan effort to improve profitability and control costhave been hit by the yen’s appreciation, as well asof sales more strictly. We also worked to enhance

low employment. Moreover, the Great East Japanbusiness efficiency, including through reductions

Earthquake in March 2011 caused serious damage.

in personnel expenses under our early retirement

Therefore, although total national advertisingprogram. The benefits of such actions were limited,

expenditures may have bottomed, we are still in a

however, as the Group reported disappointing results.

difficult market. Under such circumstances, we will

Gross billings totaled ¥346,565 million, a 1.0% year-

initiate the following strategic actions:on-year decline. Although gross profit increased 1.6%
to ¥42,028 million, we reported limited operating
income of ¥22 million and a net loss of ¥4,656
million.
Nevertheless, in the latter half of the year we
noticed signs of gradual improvement in our results,

Advertising Expendituresin Japan(Trillions of Yen)

8

and the gross margin for the year also improved.

7

These factors show that the path we have followed

6

to date has started to produce results.

5

ADK Consolidated
Gross Billings(Billions of Yen)

500

400

We, the executives and employees of the300

4

ADK Group, are committed to taking full advantage

200

3of these positive signs and firmly stride toward
recovery and further growth.

2
100
1

0

0

’06

’07

’08

’09

’10

’06

’07

’08

’09

’10

Data: Dentsu

ADK Annual Report 20105

1

GlobalIn fiscal 2010, the Group’s subsidiaries in Asia (excluding

In China, ADK already has subsidiaries in such

Greater China) generated gross billings of ¥8,896

important cities as Beijing, Shanghai and Guangzhou. Our

million, which accounted for 2.4% of the Group’s total

subsidiary in Shanghai will operate as a hub company

gross billings (before consolidation adjustment). Grossto supervise and coordinate our other subsidiaries inbillings of subsidiaries in Greater China (including Hong

China. In 2010, ADK participated in the Chinese Private

Kong and Taiwan) accounted for 3.7%. We expect further

Enterprises Joint Pavilion project at Expo 2010 indevelopment in these areas, although revenue from Asia

Shanghai. Taking advantage of this achievement,

in fiscal 2011 may be a little weak compared with that in

we will market not only to Japanese clients but also tofiscal 2010, when we recorded a large increase mainly

local Chinese companies. In addition, we will focus on

due to the solid performance of a newly consolidated

fostering Chinese officers and directors who will becomecompany in Malaysia.

a core competency for the expansion of our business

To better meet the globalization needs ofJapanese clients, the ADK Group has been developing its

in China.
In some areas, ADK also takes advantage of its

international network. More and more Japanese clients

alliance with the WPP Group. For example, in India wesee Asia as a “must-go” market due to limited growthestablished ADK Fortune, a joint venture with JWT inin their own country. Accordingly, they need morefiscal 2009.

efficient communications services in Asia. In fiscal 2010,
ADK established Dai-Ichi Kikaku (Malaysia) Sdn. Bhd., its
second subsidiary in that nation. The Group will enhance
its competitiveness by strategically investing in growing
Asian markets, including Indonesia, Vietnam, Thailand

ADK Group: FY2010 Performance Breakdown by Area

and India. We will also develop human skills through“Planner’s Village,” an education program for advertising

0.9%

planners at our Asia Regional Office in Singapore.

0.1%

3.7%
2.4%

Share
of Total

92.9%
Gross Billings(Millions of Yen)Japan

343,900

Asia (Thailand, Malaysia)

8,896Greater China (China, Hong Kong, Taiwan)

13,724

U.S.A.

3,512

EuropeTotal before consolidation adjustment

6

ADK Annual Report 2010

248
¥370,283

Message from the Management

23

DigitalIntegrated Solutions

Advertisers are keen to employ highly efficient

We in the communications service industry have longcommunications programs that can accelerate theirclassified media by specific delivery vehicle, suchrevenue, and they all know the importance of integrating

as TV, radio, newspaper, magazine and billboards.

digital media with other traditional media. In fiscal

But nowadays these classifications are unsuited to2010, ADK’s gross billings for digital media increased

consumers’ lifestyles. Social media like Facebook and14.9% year on year. However, our performance inJapan’s Mixi have dramatically changed the landscapethis area was not satisfactory in comparison with ourof the communications environment.

major competitors. Dentsu and Hakuhodo, for example,

It is said that we are now in the “Triple Media” orincreased their digital gross billings by 46.2% and 29.7%,“POE Media” era. This idea classifies media environments

respectively. It is vital for us to enhance our digitalby their characteristics, notably paid media, owned

advertising sales force.

media and earned media. Paid media is media in which

With the aim of providing optimal communications

companies can purchase advertising space, namely,

programs that use various communications channels,

traditional mass media. Owned media is that which

including digital media and mass media, ADK reassigned

companies own directly, including proprietary sites and

its Communications Channel Planning Division from thebranded sites. Earned media includes SNSs, Weblogs

Digital Business Group to the Media Content Center.

and Twitter, which evaluate companies and their

We will also pursue greater collaboration with ADK

trustworthiness based on information generated byInteractive Inc., an 80%-owned subsidiary specializing

consumers and other third parties. Consumers gather

in Internet advertising.

and send out information by wisely using these media.

In addition, we established a joint venture, Cross
Ocean Media Inc., together with LAWSON (a convenience

Of course, advertising clients want to wisely use these
media, too.

store chain operator) and NTT DOCOMO (a mobile phone
provider), in March 2010 to develop new and valuable
digital signage as in-store media.

POE Media

Paid MediaMedia in which companies can purchaseadvertising space.
TV, Newspapers, Magazines, etc.

Owned MediaMedia that companies own directly,
including proprietary sites and branded sites.
Web site of XX Company, YY Beer, ZZ Pizza, etc.

Earned MediaMedia that evaluate companies
and their trustworthiness,based on information generated by consumers
and other third parties.
Twitter, Facebook, Weblogs, etc.

ADK Annual Report 20107

4

Content
To address clients’ demands and offer integrated

The content business represents a unique and importantsolutions in the POE Media era, ADK established its

competitive edge for ADK and provides another source

Integrated Solutions Center by amalgamating the formerof revenue to complement its advertising business. In

creative, planning and direct sales business divisions,fiscal 2010, our animation-related business generated

as well as some other functions inside the Company.

gross billings of around ¥6 billion, which accounted for

The Center houses a group of specialists who work toabout 2% of non-consolidated gross billings. Althoughswiftly provide integrated solutions without sectional

not occupying a large share of gross billings, animation

barriers. They are professionals specializing mainly incontent can be a powerful driver to expand ourthe four areas of strategic planning, campaign planning,

advertising business. This can be done, for example,

creative services and production. The Center will focus

by using popular characters for clients’ campaigns.

on three strategically important areas: digital, global
and direct sales business. It will also promote new

ADK has long been involved in producing andcreating TV animation programs. We are one of thebranding methods to enhance clients’ competitivenesslicense holders of such well-known characters as

by analyzing consumers’ latest purchases andDoraemon and Yu-Gi-Oh! . These are popular not only incommunications behavior.

Japan but also all over the world. ADK will foster andrevitalize its long-beloved characters while developing
new content to diversify its portfolio. We will also
further cultivate overseas markets to sell existing andnewly made programs and character goods.

Integrated Solution Center
Strategically Important
Business Areas
Business Specialty

Strategic Planning
DIGITALGLOBAL
Campaign Planning
Production
DIRECTSALES

8ADK Annual Report 2010

Creative Services

Message from the Management

5

6TalentCost Control

The key to the ADK Group’s competitiveness lies in

In fiscal 2010, ADK’s profitability deteriorated amid

its human talent resources. For this reason, we willsevere market conditions in Japan. Enhancing

continue investing in people who can respond to

profitability is our ongoing challenge. On a positive note,changes in the business environment. For example,

our gross margin showed improvement in the second

we are nurturing “Global Account Directors,” personnel

half of the year.

capable of formulating global strategies and serving as

We will step up efforts to reduce the cost oftrusted business partners to help clients develop overallsales through better and more efficient management

overseas markets.

and tougher negotiation. We will also continue to

We are also increasing the number ofCommunications Designers, who are able to plan optimal

meticulously control operating expenses, including
personnel costs.

cross-communications programs in this POE Media era.

It is often said that advertising is a “people

In addition, we are adding Communications Channel

business.” This means that human talent is the mostPlanners who offer and analyze advertising expenditureimportant asset of an advertising company. While

ROI, which more and more clients are demanding.

we recognize the crucial importance of human talent,in fiscal 2010 we implemented an early retirement
program, with the aim of reducing staff costs andrecruiting people suited to the new communications era.
At the same time, we reallocated employees to more
appropriate positions to improve overall organizational
efficiency and proactively utilize our young talent.
Gross Margin
12.6

12.4

12.5%

12.2

12.0

12.0%

11.8

11.8%

11.6

11.7%

11.4

11.2

(%)

2009
1st half

2009
2nd half

2010
1st half

2010
2nd half

In conclusion, we will work as one to achieve business recovery under our “Management by All”
corporate philosophy, which has not changed since our foundation. We look forward to the ongoingsupport and understanding of all shareholders.

March 2011

ADK Annual Report 2010

9

CS
OPI

T

ADK’s Achievements at the
Shanghai Expo
Japan Pavilion and Chinese
Private Enterprises Joint
Pavilion
Expo 2010 was held in

ADK was involved in the projects

Shanghai, China, for six monthsof two pavilions: the Japan Pavilion

from May 1 to October 31, 2010.
With “Better City, Better Life”

and the Chinese Private Enterprises
Joint Pavilion.
At the Japan Pavilion, we

as its theme, 246 participants,

managed the pavilion’s publicity

including 190 countries and 56

activities and events under theinternational organizations,

theme of “Harmony of the Hearts,

took part. The event set two

Harmony of the Skills.”

new visitor records for a world
exposition. At 73,080,000 visits,
it recorded the highest total

The Chinese Private
Enterprises Joint Pavilion wassponsored by 16 private companies.
All of them are well-known private

number of visits, as well as a

Chinese enterprises involved in a

new daily visitor record withdiverse range of business fields,

1,030,000 visits on a single day.

such as real estate, pharmaceuticals,
finance, e-commerce, household
furniture sales, home appliancesales, apparel manufacture andsales, and movies. The theme of thepavilion was “The Infinite Vitality.”
Facing international competition,
ADK tendered successfully forformulating the pavilion’s basic
concept through architecture anddesign, as well as developing,
constructing and operating thepavilion’s exhibits.

10

ADK Annual Report 2010

TOPICS 1

ADK’s Achievements at the Shanghai Expo Japan Pavilion and Chinese Private Enterprises Joint Pavilion

The two pavilions were among
the most popular at the Shanghai
Expo, and both received high praisefrom not only the general public but
also members of the Chinese andJapanese governments and Expo
Committee members.
Since overseeing the Japan
Pavilion at Expo 2005 in Aichi,
Japan, we have participated in the
Expo 2008 in Saragossa, Spain.
These experiences, coupled with ourrecent involvement in the Shanghai
Expo, have helped us gradually
gain proficiency in the international
exposition business. Our track record
has also facilitated our involvementin other projects, such as the Japan
Pavilion for Expo 2012 in Yeosu,
South Korea. On top of this, weare convinced that the acclaim we
received for the Chinese Private
Enterprises Joint Pavilion will proveinvaluable in procuring further
work in the Chinese market from

This innovative show, put on jointly by private Chinese enterprises,
was a hot topic at Expo 2010.

private enterprises and governmentorganizations.

Japan Pavilion

Chinese Private Enterprises Joint Pavilion

ADK Annual Report 201011

Corporate Social Responsibility
ADK’s basic policy is to take an active role inCompliancerealizing a sustainable society. Based on thisADK regards compliance as the most fundamental factor

policy, we have pursued a range of corporate

in fulfilling its social responsibility, and compliancesocial responsibility (CSR) activities, with ais now most expected by stakeholders. In 2010, therenewed focus onCompliance Committee successively conducted training
workshops targeting senior management to make them1

Reinforcing our compliance system;

2 Demonstrating our commitment

to environmental protection; and3 Other social contribution activities that

we have pursued over the years.

The task of reinforcing our compliance system
is handled by the Compliance Committee,

aware of their responsibilities for directing their staff tobehave properly under the “ADK Compliance Guidelines,”
which conform to the “ADK Group Code of Conduct” andwere issued in March 2008. Through these workshops,
the Committee also raised awareness of ADK’s in-housereporting system, called the “ADK Group Helpline,” whichis expected to function as a key engine to promotecompliance.

Committee. Our environmental protection andEnvironmental
Protection

other social contribution initiatives are promoted

ADK acquired ISO14001 certificationby the CSR Committee, established in January

in 2008. In 2010, the head office took

a subcommittee of the Risk Management

2008 under the direct control of the president.

the initiative in saving electricity consumption acrossthe company by lowering the air-conditioning and lightlevels throughout the year. As a result, ADK successfully
made a significant cutback in electricity and heating
costs.

Social Contribution
The ADK Group Code of Conduct declares that theADK Group shall strive hard to benefit society in thecommunications domain. To this end, the Group shallprovide ideas and creative services free of charge
where appropriate, working in close cooperation withpublic entities and organizations, nongovernmentalorganizations (NGOs) and nonprofit organizations (NPOs),
and outside entities with specialist expertise. Guided bythis declaration, in 2008 ADK deployed its distinctive
capabilities as an advertising company to promote thefollowing activities.

12

ADK Annual Report 2010

Corporate Social Responsibility

This link is the abundance of the mineral coltan, which is

Pro Bono creative work

Médecins du MondeSupport for Medical Aid for the
Democratic Republic of the Congo

used in mobile phones. According to estimates, as muchas 80% of the world’s coltan reserves can be found in
the Congo.
ADK is providing support on various fronts to
inform the Japanese public of the situation in the Congoand encourage them to make donations. These include

Médecins du Monde (MdM),

planning a campaign that uses mobile phones, as wellor Doctors of the World, is an

as deploying creative content and social networking

international humanitarian

services, to increase media exposure. On the creative

aid organization. With

content side, we devised a newspaper insert with theheadquarters in Paris,

hard-hitting design of a burnt letter with a hole in it.

it is an NGO that sends

By including the QR code for the Congophone Web site

volunteer medical andin the leaflet, we sought to reach as many people ashealthcare professionals topossible to tell them about the situation in the Congo.

provide medical and health

We are also using Twitter and blogs to spread thisservices to vulnerable

information.

1

2 ABC

3 DEF

populations around the

4 GHI

5 JKL

6 MNO

7 PQRS

8 TUV

9 WXYZ

world, irrespective of their

Congo, ADK plans to continue supporting MdM’s future

*

0

#

nationality, ethnicity, beliefs

medical aid activities.

Your cellular phone has animportant link to the Congo.

Motivated by this campaign for medical aid to theor religion.
In June 2010, MdM
Japon launched the“Congophone” Web site toassist MdM’s medical aid

campaign in the Democratic Republic of the Congo.
A long-running conflict and political instability in
the Congo have made access to medical care difficult.
It is said that one in five children die before their fifthbirthday. However, the rest of the world knows little
about the situation in the Congo. In Japan, too, we are
not very familiar with the Congo, even though there is a
close link between our everyday lives and that country.

ADK Annual Report 201013

Toward a New Era after the
March 11 Disaster

CS
OPI

T

—Launch of the“CSR in Emergency” Project

On March 11, 2011, an enormous

place in the social-cultural context

earthquake registering 9.0 on theand the consumption context

Richter scale struck eastern Japan.

that exist between consumer andA huge tsunami triggered by thecompany (product).

earthquake devastated coastal

What shape will this new era

communities over a wide area.

take? How should companies create

As of June 30, there were 15,511

touchpoints between themselvesconfirmed dead and more thanand consumers? A human-centric

7,000 persons still missing.

approach, where marketing balancesThis date marks the beginninga company’s profitability with socialof a huge shift in Japan. Many

responsibility as advocated byadvertisers pulled scheduled

Philip Kotler in his book Marketing

television commercials and

3.0 , might well become increasingly

cancelled campaigns and events.

important.

They also had to make substantial

Officer of ADK’s Integrated

for April onward. But more than

Solution Center, was responsible

anything else, it was thefor launching the project. In his

mind-set or attitude

the resumption of television

on luxuries andcommercials and PR activities

entertainment has

too early. Meanwhile, however,all but disappeared,

questions have begun to surfaceyu

as consumers refrain

surrounding the disappearance

from buying anythingof commercials from televisionkipublic probably did not accept

changed. Spending

N o riN

ADK Annual Report 2010

words, “Just after the disaster, theof consumers thatak

14

Noriyuki Nakai, Operating

revisions to advertising schedules

ai

except items that are

and the successive cancellation

truly necessary. The values andof various events. Instead of

methodologies that existed prior towithdrawing advertising, wouldn’t

the disaster no longer hold sway.

the resumption of normal activities

A dramatic shift has begun to takeby companies in unaffected regions

TOPICS 2Na

okToward a New Era after the March 11 Disaster

i

Sa
to

as soon as possible help revitalize

responsible for thehave enabled it to

the economy, which would

impact they have on

weather various

ultimately benefit the affectedsociety amid growing

crises in the past.

regions? There are many who thinkdemand for social

The Japanese arethis way. Also, there are companies

responsibility thatthat can do something precisely

takes appropriate action

because of what they are. Shouldn’t

and meets the expectations

companies deploy their strengthsof all of their stakeholders. At times

Tohoku region devastated by theto restore Japan’s vitality? This

like this, when such a catastrophe

recent earthquake and tsunami will

would be the best way to help theor serious accident affects a great

definitely recover very quickly.

affected regions. It is also part of amany people, it will be essential for

Advertising agencies like uscompany’s mission. These thoughts

companies to engage in corporate

will also make a contribution tohave been persistently simmering

activities that fulfill their social

company activities by doing ouraway at the back of my mind.”responsibilities as a corporate

utmost when dealing with clients.

citizen.”I also believe that this will help

ADK quickly swung into
action after the disaster. We

According to figures released

known around theworld for their diligenceand perseverance. The

Japan get back on its feet again.”launched the “CSR in Emergency”

by the Cabinet in May 2011, realproject by constructively

GDP in the January–March 2011

reworking earlier projects thatquarter slipped 0.9% year on year,

offered clients proposals for CSR

equivalent to a 3.7% decline on

activities. In a short space of time,an annualized basis. Although thewe gathered media and consumer

economy is expected to recover

1 Develop a corporate response

information, analyzed it andfrom July onward, many private-

strategy package for times ofbegan offering clients appropriate

sector analysts predict that real

emergency (emergency–recovery

advice and proposals concerning

GDP growth in fiscal 2011 will be

period)communication in times ofaround zero (–0.3% to +0.6%).

2 Develop a portal site for

emergency.

The “CSR in Emergency” projectgathering and transmitting in-house

re-creates a new socioculturaland external information

Kenji Morinaga, a SeniorPlanning Director who oversaw

context and consumption context

the gathering and analysis of

between company and consumer

information, came up with exactly

by envisioning a new framework

the same predictions

for a new era. This experimental

impromptu

in

nj

or

Ke

based on aniM

as Noriyuki Nakai,

agaproject will help Japanesecompanies and the nation,and should make a

Outline of Main Project
Activities

3 Collect and analyze past casestudies (response of companies andreactions of society and media)
4 Undertake various kinds ofsurveys (consumer awareness,media opinion, tracking of public
opinion)surveyconsiderable contribution

undertaken

to boosting ADK’s business

5 Develop emergency (emergency–

immediately

performance.

recovery period) projects and ideas

after theNaoki Sato, Director

on communication strategies

disaster. He
says, “From nowof the Communication
Planning Division who heads

on, companies will notclient consultation, says, “Japanpursue profit alone. They will bepossesses underlying strengths that

ADK Annual Report 201015

Corporate Governance and Internal Control

Corporate Governance Policy

With regard to reinforcing the management
supervisory function, because the committee system

ADK believes that the ultimate objective of ahas not been proven superior, ADK will ensure proper

corporation should be to maximize value for its

management supervision via its corporate auditor

shareholders by generating sustained growth. It issystem.

fundamental for corporations to motivate and monitor

At present, we have 13 directors, one of whommanagement teams to work toward this objective, in

has representative status under Japanese law, with 10

order to constantly raise corporate value and ultimately

serving as operating officers (as of March 30, 2011).

enhance competitiveness. Therefore, effective corporate
governance plays an essential role in this context.
Among the various stakeholders, the board of

The Board of Directors meets once a month, inprinciple, and more often as necessary. In fiscal 2010,
the Board met 20 times. On two occasions, the Board

directors of a corporation must try to obtain the best

requested the attendance of accounting auditors tobalance among complex interest relationships. However,receive direct reports of the results of the accounting

because a publicly listed company seeks broad accessaudits.

to capital markets for fund-raising, and because theInternal audits are conducted by the Group Audit

authority of the board of directors is awarded by

Office, which reports directly to the president and had

the shareholders, who ultimately provide the capital,a staff of nine as of March 30, 2011.

shareholder value and shareholders’ rights must be
prioritized.
ADK executes its various corporate governancestrategies based on these ideas.

ADK has four corporate auditors, three of whomare external. One of the three is a lawyer and serves ona part-time basis. The three full-time corporate auditors
attended all 20 meetings of the Board of Directors.
The part-time corporate auditor attended almost allof the meetings. The Board of Corporate Auditors met

Corporate Governance Systemnine times in fiscal 2010, and all four auditors attended
all of the meetings. There are no full-time employees

ADK has adopted the corporate auditor systembecause it is most suitable for two aspects of corporate

ADK uses Yasumori Audit Corporation as its

governance: (1) enhancing management decision-

independent auditor. There is no conflict of interest

making efficiency and (2) reinforcing the management

between ADK and Yasumori or ADK and the executive

supervisory function.

of Yasumori responsible for auditing ADK’s accounts.

With regard to enhancing the efficiency ofWith respect to the business execution andmanagement decision making, we have decided against

management supervisory frameworks, ADK has

the committee system, in which the Board of Directors,

appointed operating officers from among its executive

centered on outside directors, retains certain decision-

directors and employees. Operating officers are charged

making authority. We believe the current corporate

with business execution related to broader decisions

auditor system is more efficient because the Board

made by the Board of Directors.

of Directors, centered on internal directors, shares

The business execution organization is separated

responsibilities of all areas of the Company’s activities

into Centers, Divisions, Departments and Groups, all

and implements speedy and agile decision making onreporting to the president.

the spot, while exchanging significant information.

16

assigned to the corporate auditors.

ADK Annual Report 2010

Corporate Governance and Internal Control

The Management Strategy Committee helps

ensure proper management of personal and otherdecision making by the president, who has the ultimate

business information. Its tasks include the acquisition

authority of day-to-day operations. Consisting ofof the ISO27001 certification. The Business Continuity

operating officers in charge of the Centers, theCommittee sets up various procedures aimed at ensuring

Committee meets almost three times a month (36 times

the continuation of business during times of emergency,

in fiscal 2010) to submit information and exchangesuch as major earthquakes, power stoppages or an

opinions on important matters. Full-time corporate

epidemic of H1N1 (super-flu). The duty of the Process

auditors also attend such meetings to monitor the

Owner Committee is to meet internal control reporting

relevance of items discussed. To ensure common

system requirements under the Financial Instruments

recognition and transparency of important issues

and Exchange Law of Japan.

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

Internal Control
ADK is building a group-wide internal control system,

Risk Management

spearheaded by the Risk Management Committee. One
In May 2006, the Board of Directors passed a resolutionof its subordinate organizations, the Process Ownerconcerning the “Basic Policies for Establishing an

Committee, specializes in setting up an internal control

Internal Control System” and decided to set up areporting system as stipulated under the Financialgroup-wide internal control system headed by theInstruments and Exchange Law of Japan.

Risk Management Committee, which is chaired by the

Note: For more details, please see the English translation of our Corporate
Governance Report, which was filed with the Tokyo Stock Exchange, on our
Web site.
http://www.adk.jp/english/html/ir/governance/index.html

president. The risk management system serves as“Regulations and Systems Relating to Risk Management”
and is consistent with internal control systems as
defined under the New
Corporate Law in Japan.

General Public

Committee heads four

Stakeholders Other Than Shareholders

Expectations

The Risk Management
Corporate Governance

Shareholders

subordinate organizations, eachof which undertakes its own

General Meeting of Shareholders
Elect

Elect

Elect
Board of Directors

specific risk management. They

Board ofCorporate Auditors

are the Compliance Committee,

Corporate
Auditors

the Information Security

Directors

Representative
Directors
Executive Directors

Accounting Auditors

ReportProcess Owner Committee.
The Compliance
Committee is responsible forConsult

Operating Officers

Internal Control

Centers

Management Strategy Committee

illegal acts and for operating

Risk Management Committee

system. The Information
Security Committee handles
operation of the ADK Group’s

Appoint

Audit

creating systems to prevent
ADK’s internal reporting

Supervise & Manage

Elect &
SuperviseCommunicate

Committee, the BusinessContinuity Committee and the

Audit

Information Security Committee
Business Continuity Committee
Compliance Committee
Process Owner Committee

Supervise & Manage

Group Audit
Room
Audit

Divisions/Units
Supervise& Manage
Planning
Management
Rooms

Departments,
Branches &Branch Offices
MonitorAccount Service
Operation Support
Departments

MonitorBusiness Execution Organization

entire information security
management system toCorporate Social Responsibility (CSR)

Corporate Governance, Internal Control and Risk Management Framework

ADK Annual Report 201017

Management’s Discussion and Analysis

Fiscal 2010 Performance Highlights

Consolidated Gross Billings Down 1.0% to ¥346.5 billion
Gross Margin Improved to 12.1%
Gross Profit Up 1.6% to ¥42.0 billion
Operating Income of ¥22.0 million
Net Loss of ¥4.6 billion; Net Loss per Share of ¥110.28

ADK Group Overview

As of the end of 2010, the ADK Group consisted of

All overseas sales of the ADK Group were generated

48 subsidiaries (44 in advertising and four in non-by the advertising business. Together, overseas sales

advertising) and 22 affiliates (21 in advertising and one

represented 6.8% of consolidated gross billings.

in non-advertising). The Group includes 23 consolidated

The number of employees at the end of fiscal 2010

subsidiaries and two equity-method affiliates. (For moretotaled 3,229, down 10 from a year earlier.

details on Group companies, please see page 3.)
Our global reach extends to 21 cities and isreinforced by a close alliance with WPP plc, which leads
the world’s largest communications group.
In fiscal 2010, gross billings in the advertisingbusiness amounted to ¥339,432 million, equivalent
to 97.9% of consolidated total gross billings. Other
businesses generated ¥7,133 million, or 2.1% of grossbillings. The ADK Group’s non-advertising businessconsists of book and magazine publishing and sales.

18

ADK Annual Report 2010

Management’s Discussion and Analysis

Consolidated Performance
Gross Billings

Ltd., earned larger profits, even though ADK disposed

Gross billings totaled ¥346,565 million, a 1.0% year-on-of its investment in Nippon Information Industry Corp.

year decline. This was due to weakness in the domestic(NII) on February 12, 2010.

advertising market, although Asian markets maintainedsolid growth.

The Group incurred a ¥1,022 million loss on salesof securities due to the disposal of NII, the equitymethod book value of which was greater than thesale price. The total loss on valuation of securities

Gross Profit

was ¥2,324 million compared with ¥213 million in

Gross profit increased 1.6% to ¥42,028 million, andfiscal 2009. ADK, the parent company, implemented

the gross margin improved 0.3 percentage point toan early retirement program in fiscal 2010, leading to

12.1%. The consolidated gross margin improved eventhe retirement of 128 employees. Special retirement

though the parent company’s gross margin deteriorated

expenses resulting from the program amounted tobecause of intensifying competition.

¥2,770 million. As a result, the loss before income taxes
and minority interests totaled ¥4,749 million.

Operating Income/Loss
Operating income in fiscal 2010 totaled ¥22 million

Net Income(compared with a ¥756 million operating loss in fiscal

The ADK Group de-recognized ¥1,559 million in2009). Staff costs to gross profits were 67.3%.

deferred tax assets in accordance with the guidelinesof the “Auditing Treatment concerning Determinationof Recoverability of Deferred Tax Assets,” or Audit

Other Income and Expenses

Committee Report No. 66, issued by the Japanese

The ADK Group incurred equity in earnings of affiliates—

Institute of Certified Public Accountants. As a result, thenet of ¥213 million compared with ¥126 million in

net loss was ¥4,656 million compared with net income

fiscal 2009. This was because both Digital Advertisingof ¥73 million in fiscal 2009. The net loss per share was

Consortium Inc., a publicly traded Internet media buying¥110.28.

rep, and Guangdong Guangxu (Asatsu) Advertising Co.,

Balance Sheets and Cash Flow
Assets and Liabilities
At the fiscal year-end, the balance of total assets

but retained earnings decreased ¥5,447 million tostood at ¥194,510 million, up ¥4,485 million from a¥45,907 million, due to the ¥4,656 million net loss.

year earlier. This was due to an increase in notes andAs a result, total net assets decreased ¥4,296 million

accounts receivables—trade near the end of the year,to ¥103,168 million, and the equity ratio* declined 3.5

reflecting an increase in gross billings toward year-end.

percentage points to 52.5%.

Likewise, total liabilities increased ¥8,782 million to*According to the TSE formulas, the equity ratio equals book equity,
excluding minority interest, divided by book total assets.

¥91,341 million. The unrealized gain on available-for-salesecurities increased ¥2,817 million to ¥7,727 million,

ADK Annual Report 201019

Cash FlowsAt the end of fiscal 2010, cash and cash equivalents

respectively, because of larger gross billings toward theamounted to ¥19,127 million, an increase of ¥283 million

end of the year.

from the previous fiscal year-end. This was because

Net cash provided by investing activities

cash inflows from investing activities surpassed cash

totaled ¥2,298 million, up from ¥1,570 million in fiscal

outflows from operating and financing activities by

2009. There was a ¥318 million net increase in time

¥810 million. The Group also recognized a ¥745 million

deposits, resulting from transfers to and reversals of

foreign currency translation negative adjustment to thetime deposits of ¥5,049 million and ¥5,367 million,

balance and a ¥217 million increase due to the addition

respectively. Proceeds from sales of marketableof a consolidated subsidiary.

securities totaled ¥1,139 million. Proceeds from sales

Net cash used in operating activities amountedof securities and purchases of securities were ¥4,065

to ¥221 million compared with ¥6,404 million in cash

million and ¥1,521 million, respectively.

provided by such activities in fiscal 2009. Among

Net cash used in financing activities was ¥1,266

operating activities were a loss before income taxes andmillion compared with ¥2,141 million in fiscal 2009. The

minority interests of ¥4,749 million and depreciation

main factors included dividends paid of ¥851 million,

and amortization of ¥818 million, whereas increases inpurchases of treasury stocks—net of ¥747 million bynotes and accounts receivable and notes and accounts

the Employees Stock Ownership Plan (ESOP) and net

payable were ¥5,562 million and ¥5,068 million,

purchases of odd-lot shares.

Capital Expenditures(Millions of Yen)

2010
Capital expenditures
Buildings¥

Depreciation

Capital expenditures

Depreciation

49

¥125

¥ 29

Building improvements

—

1

—

2

Vehicles

27

28

10

24

Furniture, fixtures and equipment

107

148

61

172

—

—

—

—

Land
Licenses

¥129

—

—

—

—

Computer software

501

459

467

580

Lease assets

460

41

136

12

Others
Total

Free Cash Flow

Net cash provided byoperating activities

—

12

—

21

¥1,146

¥818

¥705

¥943

(Millions of Yen)

2010

2009

¥(221)¥6,404

Business reinvestment*

(642)

(556)

Free cash flow

(864)

5,848

*Business reinvestment = Purchase of property and equipment +Purchase of intangible assets – Sales of property and equipment

20

2009

ADK Annual Report 2010

Corporate Management’s
Governance andInternal
Discussion
andControl
Analysis

Segment Information
Non-Consolidated Performance by Discipline

Advertising Business
Creative and Others

The Group’s advertising business generated gross

Magazinebillings of ¥339,432 million, down 1.0% year on year,

Newspaper

whereas segment operating income amounted to ¥49
million compared with a ¥618 million operating loss infiscal 2009.

MarketingandPromotion

TOTAL¥305,759
million(100%)

1

Non-Consolidated Performance
InformationTV

OOH Media
Digital Media

Because all of ADK’s non-consolidated gross billings andRadioincome are generated from the advertising business,(Millions of Yen)

and those non-consolidated gross billings of ¥305,759
Grossbillings

million (a 1.7% year-on-year decline) represent 90.1%
of gross billings generated by the advertising businesssegment, the non-consolidated performance forinvestor information purposes is reviewed as follows.
Media
Non-Consolidated Performance Summary(Millions of Yen)

2010

2009

¥305,759¥310,970-1.7%

Gross profit

30,71331,603-2.8%

Operating income(1,674)(1,267)—

Net income(2,112)(498)—

Gross billings

ChangeMagazine¥ 15,576

5.1%

-7.6%

Newspaper

21,201

6.9%

-2.0%

TV

144,882

47.4%

-3.3%

Radio

2,866

0.9%

-3.4%

Digital Media

8,913

2.9%

14.9%

OOH Media

8,712

2.9%

5.8%

202,152

66.1%

-2.5%

58,715

19.2%

-4.1%

44,892

14.7%

5.7%

103,607

33.9%

-0.1%

¥305,759

100.0%-1.7%

SubtotalMarketingandNon-Media Promotion
Creative andOthersSubtotal
Total

Share of Y-o-Y
totalchangeNotes:
1. Because ADK offers cross-media communications programs, theabove figures may not strictly represent gross billings by medium.
2. ADK has changed the classification of gross billings by discipline asfollows:
The new “Marketing and Promotion” discipline covers theformer “Sales Promotion,” as well as Marketing, Digital Solutions,
Digital Creative, Exposition Events, Public Relations and Consulting.
Digital Solutions, previously recognized as “Digital Media,” is now
separated from “Digital Media” and has been added to “Marketing
and Promotion.” Digital Creative, previously recognized as “Creative
and Others,” is now separated from it and added to “Marketing andPromotion.”
Year-on-year change ratios are based on previous-year figuresthat have been restated to reflect the new classification.
3. Figures for gross billings by discipline are rounded down. Therefore,
their sums do not equal the total or the subtotals.

ADK Annual Report 201021

Magazine

Television

Gross billings from magazine advertising decreased 7.6%

Gross billings from television advertising decreased

year on year to ¥15,576 million, due to tighter budgets

3.3% to ¥144,882 million. Program TV advertising sales

at many clients, especially those in the Apparel/Jewelry

declined due to a fall in business with clients in theand Cosmetics/Toiletry Goods sectors. This was despite

Finance/Insurance and Information/Communications

growth in gross billings from clients in the Hobbies/

sectors, which contrasted with higher gross billings

Sporting Goods and Information/Communications

to clients in some other sectors, such as Beverages/

sectors.

Tobacco Products, Foods and Automobiles/Auto-Related
Products. Spot TV advertising sales decreased also due

Magazine
Millions of Yen

Share of
Gross Billings(Non-consolidated)

5.1%

10

to lower business with clients in the Beverages/Tobacco
Products and Transportation/Leisure sectors, despite
growth in business with clients in the Government/
Organization, Apparel/Jewelry and Education/
Healthcare Services/Religion sectors. The Company

09

continued striving to promote sales from its content
0

5,000

10,00015,00020,00025,000business by developing digital animation distribution
on PCs and mobile devices, making investments in new
programs and promoting events. However, the overall

Newspaper

growth in the content business was sluggish.

Gross billings from newspaper advertising declined 2.0%
to ¥21,201 million. This was due to lower gross billings

Television
Millions of Yen

to clients in the Transportation/Leisure and Finance/
Insurance sectors, which contrasted with larger grossShare of
Gross Billings(Non-consolidated)

47.4%

10

billings to clients in the Foods and Automobiles/AutoRelated Products sectors.

09
0

Newspaper
Millions of Yen

100,000

150,000

200,000(Non-consolidated)

6.9%
10

50,000Share of
Gross Billings
Gross Billings from Television Ads (Breakdown by Category)(Millions of Yen)

2010

09

0

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

-5.0%

Total

ADK Annual Report 2010

ChangeSpotContent-related sales

22

2009

Time (program-sponsored ad) ¥ 53,590 ¥ 56,398
80,10482,081-2.4%

11,186

11,297-1.0%¥144,882 ¥149,776-3.3%

Management’s Discussion and Analysis

Radio
Gross billings from advertising on radio decreased 3.4%

Out-of-Home Mediato ¥2,866 million. This was due to a decline in businesswith clients in the Transportation/Leisure, Distribution/

Share of
Gross Billings
Millions of Yen(Non-consolidated)

2.9%
10

Retail and Information/Communications sectors, which
contrasted with increases in business with clients in the09

Automobiles/Auto-Related Products sector.
0Radio
Millions of Yen

2,000

6,000

10,00014,000Share of
Gross Billings(Non-consolidated)

0.9%

10

Marketing and Promotion
Gross billings from marketing and promotion declined
4.1% to ¥58,715 million, due to decreased business

09

with clients in the Information/Communications and
0

1,000

2,000

3,000

Real Estate/Housing sectors. By contrast, we reported

4,000increased business with clients in such sectors as
Government/Organization and Finance/Insurance. Thiswas because we offered integrated communications

Digital Media
Gross billings from advertising on digital media

services, taking advantage of onsite merchandising and(excluding digital solutions) grew 14.9% year on year todigital solutions to better respond to clients’ demands.

¥8,913 million, thanks to tighter collaboration with 80%
subsidiary ADK Interactive Inc., which is engaged in theMarketing and Promotion

planning and buying of digital media advertising andcross-media solutions. There were increases in grossbillings to clients in the Information/Communications,
Hobbies/Sporting Goods and Automobiles/Auto-Related

Share of
Gross Billings

Millions of Yen(Non-consolidated)

19.2%

10

09

Products sectors.
0

Digital MediaMillions of Yen

20,00040,00060,00080,000Share of
Gross Billings(Non-consolidated)

2.9%
10

Creative and Others
Sales of creative and others increased 5.7% to ¥44,892
million, thanks to increased business with clients in

09

such sectors as Automobiles/Auto-Related Products and
0

3,000

6,000

9,000

12,00015,000Information/Communications.
Creative and Others

Out-of-Home Media
Gross billings from advertising on out-of-homemedia increased 5.8% to ¥8,712 million, thanks to ourcross-media approach and development of in-store

Share of
Gross Billings
Millions of Yen(Non-consolidated)

14.7%
10

09

media. During the year, we focused on promoting
transportation and billboard advertising and posted

0

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

higher billings to clients in such sectors as Beverages/
Tobacco Products and Government/Organization.

ADK Annual Report 201023

Non-Consolidated Gross Billings and Market Share (2001–2010)(Millions of Yen)Year

Gross billings

ChangeMarket share*

2001¥358,830

5.3%

2002

334,915

-6.7%

5.87%

2003

357,597

6.8%

6.29%
6.38%

5.92%

2004

373,897

4.6%

2005

384,849

2.9%

5.64%

2006

378,804

-1.6%

5.46%

2007

387,860

2.4%

5.53%

2008

358,595

-7.5%

5.36%

2009

310,970-13.3%

5.25%

2010

305,759

-1.7%

5.23%

*Market share: According to Advertising Expenditures in Japan reported by
Dentsu Inc. The scope of the report was expanded from 2006 to reflect theeffect of the rapid expansion of the Internet and promotional advertising.

Non-Consolidated Gross Billings Breakdown by Client Industry(Millions of Yen)

2010
Energy/Raw Materials/Machinery

4,976

1.6%

Food

33,602

Beverages/Tobacco Products

17,653

Pharmaceuticals/Medical Supplies
Cosmetics/Toiletry Goods

2009¥

Share oftotal

Change
¥

555

Y-o-Y

4,420

1.4%

11.0%

32,649

10.5%

952

2.9%

5.8%

21,9587.1%(4,305)-19.6%

12,728

4.2%

13,575

4.4%

(846)

-6.2%

34,746

11.4%

36,494

11.7%(1,747)-4.8%

Apparel/Jewelry

8,670

2.8%

8,211

2.6%

458

5.6%

Precision Instruments/Office Equipment

2,265

0.7%

2,529

0.8%

(264)

-10.5%

Electric Machines/AV Equipment

3,270

1.1%

3,590

1.2%

(320)

-8.9%

Automobiles/Auto-Related Products

15,857

5.2%

13,207

4.2%

2,650

20.1%

Household Products

3,464

1.1%

3,034

1.0%

429

14.2%

Hobbies/Sporting Goods

12.6%

19,9696.5%

19,228

6.2%

741

3.9%

Real Estate/Housing

7,772

2.5%

9,071

2.9%

(1,298)-14.3%

Publications

3,563

1.2%

3,254

1.0%

309

9.5%

Information/Communications

38,557

12.6%

38,492

12.4%

65

0.2%

Distribution/Retail24,846

8.1%

25,094

8.1%

(248)

-1.0%

Finance/Insurance

24,3938.0%

24,957

8.0%

(563)

-2.3%

Transportation/Leisure11,957

3.9%

14,961

4.8%(3,004)-20.1%

Restaurants/Other Services

6,464

2.1%

5,647

1.8%

817

14.5%

Government/Organization

12,120

4.0%

9,587

3.1%

2,533

26.4%

Education/Healthcare Services/Religion

4,931

1.6%

4,555

1.5%

375

8.2%

Classified Ads/Other
Total

24

¥

Share oftotal

ADK Annual Report 2010

13,946

4.6%

16,446

5.3%(2,499)-15.2%¥305,759

100.0%¥310,970

100.0%¥(5,210)-1.7%

Management’s Discussion and Analysis

2Group Companies
in the Advertising Business

Other Business Segment

The ADK Group’s domestic advertising companies

Subsidiaries in the publishing business segment

overall generated slightly larger gross billings thanreported a 2.1% year-on-year decline in sales to ¥7,133

during the previous year. Also, they reported an overall

million. They also posted an operating loss of ¥24

increase in gross profit that was larger than the increase

million compared with a ¥135 million operating loss inin operating expenses. Accordingly, those subsidiaries

fiscal 2009. Despite generating larger gross profit andas a whole returned to operating profitability. All

an improved gross margin thanks to more meticulous

consolidated subsidiaries operating in the Greater

selection of new titles, those subsidiaries failed toChina region (mainland China, Taiwan and Hong Kong)

adequately absorb fixed costs.

reported positive operating income. In other overseas
markets, newly consolidated subsidiary ASATSU-DK(Malaysia) Sdn. Bhd. made a remarkable contribution toOverseas Sales

existing subsidiaries in that nation and reported larger

The ADK Group obtained 6.8% of its gross billings

gross billings and operating income as a whole.

from overseas compared with 5.4% in fiscal 2009. Alloverseas sales are in the advertising business.

Outlook for Fiscal 2011

Under an environment of slow growth, ADK has set the

For fiscal 2011, we plan to pay a ¥10.00 interim

following consolidated forecasts for the two-quarter

dividend and a ¥12.00 year-end dividend, for total

period ending June 30, 2011: gross billings of ¥171.0

annual dividends of ¥22.00 per share and a payout

billion, operating income of ¥0.75 billion and net income

ratio of 35.7%.

of ¥1.1 billion. For the entire year ending December
31, 2011, we forecast gross billings of ¥356.0 billion,
operating income of ¥2.9 billion and net income ofNote: The aforementioned forecasts were formulated before theGreat East Japan Earthquake on March 11, 2011. Accordingly, theimpact of the disaster has not been factored into the forecasts.

¥2.6 billion. Our EPS forecast for the year is ¥61.66.

ADK Annual Report 201025

Forward-Looking Statements
and Risk Factors
This report may contain forward-looking statements

Risks Arising from Trading Customs

based on ADK management’s view and assumptions ofRelationship with Advertisers

future developments as of the date of such statements.

1

The foregoing statements herein are inherently subject

In Japan, traditionally advertisers do not strictly require

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

an exclusive relationship with their agencies, which may(under Tokyo Stock Exchange guidance), and uncertainties

have business with competitors. However, there is nothat could lead to material differences between suchassurance that this practice will continue in the future.

statements and actual outcomes. Therefore, ADK does

In the event that ADK fails to adapt to such changes in

not warrant any certainty and accuracy thereto. ADK also

the advertising market, its performance and financial

expressly disclaims any obligation to update or revise its

condition could be adversely affected.

forward-looking statements.

Advertising companies in Japan do not always
have documented contracts with media and clients so as

Domestic Economy

to maximize their flexibility to adapt to sudden changes.

In fiscal 2010, the Group generated 93.2% of its gross

However, ADK works to ensure that it has written

billings from the Japanese domestic market. Japanesecontracts with more media and more clients. When thisnational advertising spending is directly influenced byis the rule, not the exception, the Company believes

corporate advertisers’ budgets and, therefore, is closely

accountability by both parties will minimize disputes. Until

correlated with nominal consumer spending and GDP.

that time, however, there remains the possibility

In the event that the domestic economy deteriorates

of disputes with the media and clients.
An advertising agency buys media time or spaceseriously, the ADK Group’s performance and financial
condition could be negatively affected.

and materials on behalf of its clients on its own account.
Sometimes a purchase is made through another agency.

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

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

Media and advertising markets are rapidly and significant-a subcontracting production company.

ly changing. We do not see traditional and new
media cannibalizing each other. Rather, they could enhancedefaults, the advertising company is still liable for the
media and or materials toward a media owner and or

2Media Inventories

each other. The ADK Group continues to focus on both

Normally, ADK purchases media inventories, particularly

traditional and new and digital media through its cross-animation programs, at fixed prices based on orders

communications approach.

from client advertisers. Occasionally, ADK speculates on

In addition, the Group has been accelerating efforts

inventories for strategic reasons. We strive to improveto enhance its functionalities to lead the digital advertis-

the quality of content and increase the demand foring market, including the Internet. However, if ADK fails tosuch programs by maintaining close relationships withadapt to changes in the advertising media, its performancethe media. However, weak sales could lead to excess

and financial condition could be adversely affected.

inventories, which could have an adverse effect on
our performance and financial condition.

26

ADK Annual Report 2010

Forward-Looking Statements and Risk Factors

a similar sector concentration risk as its competitors.

3

Credit Risks of Subcontractors

Although we strive to maintain and develop good

In Japanese advertising markets, an advertising agency

relationships with our clients, there is no assurance thatis usually required to absorb the credit and functionality

we will be able to continue to do so.

risks of many small and specialty subcontractors without
shifting them to the advertisers. Moreover, sometimes

2

Relationship with the Mediaan agency needs to help finance such subcontractors

The ADK Group buys and resells various media including

through advance payments. In an international business,mass media and rapidly growing digital media. In fiscal

a partial advance payment is commonly required. When

2010, the parent company ADK generated 66.1% of its

a subcontractor cannot fulfill an order from an advertiser

gross billings by handling the four major mass media, asor maintain its business as a going concern, the agency iswell as the Internet and digital advertising and OOH media.

likely to suffer a loss.

Gross billings from television represented 47.4% of ADK’s
non-consolidated gross billings. ADK strives to secure

Competitive Risk

advertising time and/or space in these media. However,

The Top 5 advertising agencies in Japan share roughly

in the event of a decrease in advertising volume and/or

40% of the domestic advertising market. The ADK Group,changes in business terms and conditions and advertisingwith its share of 5%–6% and ranking third, competes

methods, and/or the emergence of new advertisingagainst them and other companies. Advertising clients

formats, and the ADK Group does not respond to thesetend to select a preferred agency to enjoy economies ofchanges appropriately, there is a significant possibility

scale to minimize procurement costs. Consolidation amongthat its performance and financial condition could beclients would accelerate this trend. In addition, the entry

adversely affected.

of foreign mega–agency groups into the Japanese market
and many new and rapidly growing entrants in the Internet

3

Relationship with Subcontractors

and other nontraditional mass media advertising market

Although ADK carries out planning for advertising andaccelerates competition. In the event that ADK is unable tosales promotion campaigns, the execution of these

respond appropriately to client needs and changes in theactivities is mostly outsourced to qualified subcontractors.

advertising industry, and loses its competitiveness as a

In the case of a change in trading relationships withresult, there is significant risk that its market share could

these subcontracted companies and in the event thatdecline and profitability could deteriorate. This would

ADK is unable to respond appropriately, this could have

have a serious impact on its performance and financial

a negative impact on its performance and financial

condition.

condition.

Risks Arising from Operations

4

1

Client Portfolio

Staff

Advertising is a people business and human talents are
critical assets in the advertising industry. In the event

The amount of advertising spending by clients’ industry

that ADK is unable to secure and train its talented staff

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

adequately, there could be a negative impact on its

according to a 2009 report by Dentsu Inc., companies

performance and financial condition.

in the sectors of Restaurants/Other Services, Apparel/

In addition, most of the staff cost is a fixed cost andJewelry and Government/Organizations boosted spending,the largest portion of selling, general and administrative

whereas those in the sectors of Automotive/Automotive–

expenses. On a consolidated basis, staff expenses

Related Products and Publications decreased spending.

represented as much as 67.3% of SG&A expenses in fiscal

The ADK Group has a diversified portfolio of first-tier2010. It is not easy to reduce staff costs even when grossclients. The parent company’s largest 10 and 20 clients

profit decreases. Thus, staff costs significantly influence

accounted for around 20% and 30%, respectively, of total

the Group’s profitability.

non-consolidated gross billings in fiscal 2010 and had

ADK Annual Report 201027

5Overseas Operations

8

Management of Group Companies

ADK has been striving to develop overseas revenues. In

The ADK Group consists of the parent company, 52

fiscal 2010, the ADK Group generated 6.8% of its grosssubsidiaries, 22 affiliates and one related company, andbillings from overseas sources. In overseas markets,

operates in the advertising and publications businesses.

because of differences in culture, society, law andAlthough the ADK Group strives hard to realize synergies

commercial customs, a variety of problems may arise. In

among these companies, in the event that it is unable toaddition, both country risk and currency risk are inherent

do so as planned, its performance and financial conditionin conducting international business. In the event that the

could be significantly affected.

ADK Group is unable to expand its overseas operations asplanned, its performance and financial condition could besignificantly affected.

6

Content Business

9

Relationship with WPP plc

ADK has maintained strategic operating and equity ties
with WPP plc of the Republic of Ireland since August 1998,
holding a 2.47% equity stake in WPP (as of December 31,

ADK has been successful in the animation content

2010). WPP is the largest shareowner of ADK, holding

business, as well as in sports and cultural event marketing,24.32% of the voting rights. At the same time, bothwhich enables ADK to differentiate itself from competitors.

companies have non-executive directors on each other’s

ADK continues to develop new content under existing andboards. By way of operating alliances with WPP Groupnew business models. However, the demography of Japan

operating companies, including JWT, ADK made a number

is aging and people’s preferences and media consumptionof creative and promotional tie-ups and will continue toare changing. Accordingly, the content business is getting

develop operations worldwide.

more complicated, and competition is becoming tougher.

Because ADK does not own a majority of WPP’s

The typical amount of content development investment isvoting rights, and its influence on WPP Group operations

increasing, volatility is growing and the time to recoup isis limited, in the event that the ADK Group is unable

increasing. In sum, the content business is getting riskier

to realize the benefits from this relationship or if the

but less profitable. There is no guarantee of the continued

relationship should negatively change in any way, there

success of this content or of its derivatives. Continued

could be an impact on the ADK Group’s performance andresale income from existing content is not guaranteedfinancial condition in the future.

either. Accordingly, in the case that the ADK Group is not

Although the yen-translated market value of theable to generate income as it expects, it could experience

equity stake in WPP was ¥31,250 million (at a stock pricea significant impact on its performance and financialof £7.895 per share) as of the end of December 2010

conditions.

compared with a book value of ¥22,262 million (at a7

Investment in Competitivenessstock price of £3.6517 per share under the lower-of-costor-market method), in the event of a major deterioration

To enhance its competitiveness in the changing advertisingin the Group’s Sterling-based stock price, there is amarket, ADK occasionally invests in new businesses, suchpossibility that ADK would have to account for valuation

as the Internet and OOH media. Moreover, ADK invests

losses on this holding.

in data collection and R&D, which would be critical inoffering cross-communications program ideas, and invests
in IT for more efficient operations. However, in the event

10 Marketable Securities

and Investment Securities

that the ADK Group is unable to realize benefits from the

The ADK Group’s holdings of marketable and investment

investments as planned, its performance and financial

securities (including the aforementioned stake in WPP

condition could be significantly affected.

plc and the equity method value of Digital Advertising
Consortium Inc., or “DAC”) totaled ¥52,790 million,
representing 27.1% of its ¥194,510 million in total assets
as of December 31, 2010. Of this amount, ¥44,030 million

28

ADK Annual Report 2010

Forward-Looking Statements and Risk Factors

consisted of publicly traded equity securities, mostly the

March 2010 were 10.61% and 6.14%, respectively, making

equity alliance with WPP plc and cross-shareholdings in

the total 16.75%. Applying simply the shares to theadvertising clients and other trading partners (excluding

aforementioned total fund assets, the Group’s prorated

our investment in DAC, the non-consolidated results

shares of assets as of March 31, 2010, were ¥11,532 millionof which are accounted for by the equity method). The

in total. Out of this amount, the employers’ portion andbalance of unrealized gains on available-for-sale securities

the employees’ portion were ¥7,304 million and ¥4,228

was ¥7,727 million after deducting deferred tax liabilities

million, respectively. Likewise, the Group’s prorated

on such gains (compared with ¥4,940 million as ofshares of pension liabilities were ¥14,511 million in total.

December 2009). However, in the event of a major decline

Within this amount, the employers’ portion and thein the market prices of these holdings, we would be forced

employees’ portion were ¥9,191 million and ¥5,320 million,

to account for valuation losses.

respectively.

11 Retirement Benefits and Pension Plans

12 Contingent Litigation Risks

ADK and some of its Group companies adopt combinations

As of the date of the financial statements, the ADK Groupof defined contribution and defined benefits pension

had not been involved in or exposed to a lawsuit orplans. At the end of 2004, ADK (parent company)

dispute that could place a significantly negative influence

reformed its employee retirement benefits and pension

on its performance and financial condition. However, thereplans and adopted a defined contribution pension plan

is no guarantee that the Group will never be involved in or

and a cash balance plan to reduce the volatility of net

exposed to such a lawsuit or dispute in the future.

periodic benefit costs, an element of the staff costs,
through a smaller Projected Benefit Obligation and lessrisky pension asset investment strategies.
In the event of deterioration in pension asset

13 Legal Risks
The ADK Group’s advertising clients are affected bya number of mandatory and voluntary regulations,management performance, and a significant change

depending on the type or types of businesses in whichin actuarial assumptions, the ADK Group could face

they are engaged. If these laws and regulations area negative impact on its performance and financial

tightened or new ones are enacted, our clients’ advertisingcondition.

activities could shrink or become curtailed. Such changes

ADK and some of its domestic subsidiaries are
members of the Japan Advertising Industry Welfare
Pension Fund. Because the ADK Group cannot technicallyand reasonably define how much pension assets andcould have a negative impact on our performance andfinancial condition.

14 Regulatory Changes

liabilities it is accountable for, the Group recognizes its

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

annual cash contribution to the fund as its periodic benefit

companies, including ADK. These include laws to prevent

costs applicable for the fund. In the case that the funddelays in payment to subcontractors and protect personalrequires the Group to make a larger contribution due toinformation, as well as regulations applicable to advertisingchanges in the discount rate, pension asset performance,companies. As a publicly listed company, moreover,number of member companies and beneficiaries, and so

ADK should be in compliance with internal control

on, the Group may need to recognize larger net periodic

reporting systems. If there is a tightening of existing

benefit costs.

laws or regulations affecting the advertising activities of

The fund’s total pension assets and liabilities as ofadvertisers or the format or content of advertisements,

March 31, 2010, were ¥68,862 million (a ¥11,862 million

and if the ADK Group needs to enhance its complianceyear-on-year increase) and ¥86,650 million, respectively,

environment, the financial results of the ADK Group andand therefore the difference was negative ¥17,788 million.

other advertising companies could be adversely affected.

The discount rate for the liabilities was mainly 5.5%.

In the case of the introduction of new laws or regulations,

The ADK Group’s cash contribution share by both
employers and employees made during the year throughor the reinterpretation of existing laws or regulations, theresult could affect the ADK Group’s performance.

ADK Annual Report 201029

Board of Directors and Auditors

as of March 30, 2011

Board of Directors and Auditors
Yoji Shimizu

Hiroshi Nomiyama

Representative Director,
President & Group CEO

Executive Director, Operating Officer
Integrated Account Service Management

Takeo Hishiyama

Hiroaki Onohara

Executive Director, Senior Operating Officer
Group Business Management

Executive Director, Operating Officer
Media & Content Center

Jiro Kitamura
Executive Director, Senior Operating Officer
Integrated Account Service Management

Koichiro Naganuma
Director, Chairman of the Board

Kazuhiko Narimatsu

Stuart Neish

Executive Director, Senior Operating Officer
Integrated Account Service Management

Non-Executive Director
Regional Director, WPP Asia PacificOsamu Okayasu

Yoshiro Sakai

Executive Director, Operating Officer
Integrated Account Service Management

Auditor (Full-time)

Makoto Ichikawa
Shinichi Ueno

Auditor (Full-time)

Executive Director, Operating Officer
Integrated Solution Center

Hiroshi Ota
Yoshiki Uemura

Auditor (Full-time)

Executive Director, Operating Officer
Integrated Solution Center

Masayuki Yoshinari
AuditorHiroshi Nakazato
Executive Director, Operating Officer
Corporate Business Development

Takeshi Kato
Executive Director, Operating Officer
Corporate Management Center30

ADK Annual Report 2010

Financial
SectionConsolidated Balance Sheets

32

Consolidated Statements of Income

34

Consolidated Statements of Changes in Net Assets

35

Consolidated Statements of Cash Flows38

Notes to Consolidated Financial Statements

39

Independent Auditors' Report63Consolidated Balance Sheets
ASATSU-DK INC. and Consolidated Subsidiaries
At December 31, 2010 and 2009

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

ASSETS

2010

2009

2010

CURRENT ASSETS:
Cash and time deposits¥ 21,520¥ 21,605$ 264,081

Marketable securities (Note 3)

1,436

2,145

17,622

Notes and accounts receivable—trade

92,774

87,957

1,138,471

(286)

(677)

(3,510)Inventories

8,274

8,824

101,534

Deferred tax assets (Note 7)

1,501

641

18,419Allowance for doubtful receivables

Other current assets

2,344

1,760

28,765

127,563

122,255

1,565,382

Land

1,263

1,276

15,499Buildings and leasehold improvements

3,920

4,048

48,104

Other

2,929

2,664

35,943

8,112

7,988

99,546(4,019)(4,049)(49,319)

4,093

3,939

50,22747,37245,550581,323

5,743

8,047

70,475

645

806

7,915

Total current assets
PROPERTY AND EQUIPMENT:

Total
Accumulated depreciation
Net property and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Note 3)
Investments in unconsolidated
subsidiaries and affiliated companies
Deferred tax assets (Note 7)
Other assets
Total investments and other assets
TOTAL

See notes to consolidated financial statements.

32

ADK Annual Report 2010

9,094

9,427

111,597

62,854

63,830771,310¥194,510¥190,024$2,386,919

Financial Section

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

LIABILITIES AND NET ASSETS

2009

2010

CURRENT LIABILITIES:
Short-term debt (Note 4)
Current portion of long-term debt (Note 4)
Notes and accounts payable—trade
Income taxes payable (Note 7)
Accrued bonuses to employees
Allowance for sales returns
Deferred tax liabilities (Note 7)
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:Long-term debt (Note 4)
Accrued retirement benefits (Note 5)
Allowance for retirement benefits to directors
and corporate auditors*
Provision for loss on guarantees
Deferred tax liabilities (Note 7)
Other long-term liabilities
Total long-term liabilities

¥

84
278
74,358
358
384
508
—
7,905
83,875¥346
92
69,237
227
163
545
—
7,184
77,794

$

1,031
3,411
912,480
4,393
4,712
6,234
—
97,007
1,029,268

765
1,347

1,001

9,388
16,530

1,203
—
3,527
625
7,467

1,208
45
1,904
354
4,765

14,763—43,281
7,670
91,63237,581
20,02445,907(7,718)95,79437,581
20,02451,354(6,970)101,989

461,173245,723
563,345(94,711)
1,175,530

7,727
(94)
(1,258)6,375
999
103,168

4,910
16
(492)
4,434
1,042
107,465

94,822(1,154)(15,437)
78,231
12,2581,266,019¥194,510¥190,024$2,386,919

253

CONTINGENT LIABILITIES (Note 11)
NET ASSETS (Note 6):
Shareholders’ equity
Common stock
Authorized: 206,000,000 shares in 2010 and 2009;
Issued: 45,155,400 shares in 2010 and 2009,
respectively
Capital surplus
Retained earnings
Treasury stock—at cost
Total shareholders’ equity—net
Valuation and translation adjustments
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interests
Total net assets
TOTAL*No allowance for retirement benefits to corporate auditors was standing as of December 31, 2010, due to the abolition of the retirement
bonus system to them.
See notes to consolidated financial statements.

ADK Annual Report 201033

Consolidated Statements of Income
ASATSU-DK INC. and Consolidated Subsidiaries
Years Ended December 31, 2010 and 2009

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

2010

2009

2010

GROSS BILLINGS (Note 13)¥346,565¥350,211$4,252,853

COST OF SALES (Note 13)

304,537

308,8443,737,109

42,02841,367515,744

42,00642,123

515,474

22

(756)

270

Gross profit
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES (Notes 8 and 13)
Operating income (loss)
OTHER INCOME (EXPENSES):Interest and dividend income—net

1,421

1,337

17,438Gain on sales of securities

14

143

172

Loss on sales of securities(1,022)(61)(12,541)

Loss on valuation of securities(2,324)(213)(28,519)

Loss on disposal of fixed assets

(59)

(319)

(724)

Equity in earnings (losses) of affiliated companies—net

213

126

2,614

(2,770)(43)(33,992)(304)

0(3,731)

45

(8)

552

(236)

—

(2,896)

Additional retirement benefits paid to employees
Provision for bad debts
Provision for loss on guarantees—net
Exchange loss
Other—net

251

137

3,079

(4,771)

1,099(58,548)(4,749)343(58,278)

Current

524

797

6,430

Deferred

(640)

(560)

(7,854)

23

33

282

Other income—net
INCOME (LOSS) BEFORE INCOME TAXESAND MINORITY INTERESTSINCOME TAXES (Note 7):

MINORITY INTERESTS IN NET INCOME
NET INCOME (LOSS)

See notes to consolidated financial statements.

34

ADK Annual Report 2010

¥ (4,656)

¥

73

$

(57,136)

Financial Section

Consolidated Statements of Changes in Net Assets (1)ASATSU-DK INC. and Consolidated Subsidiaries
Year Ended December 31, 2010
Millions of Yen

Year Ended December 31, 2010

Balance as of December 31, 2009

Shareholders’ equity
Total
Treasuryshareholders’
stock—at costequityCommonstock

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

Effect of changes in accounting policies—

applied to foreign subsidiaries—

Change during the consolidated fiscal year

(851)

(851)

(4,656)(4,656)

81

81

Dividend payments
Net income
Increase due to newly consolidated
subsidiaries(825)

Acquisitions of treasury stock77

Disposals and cancellation of treasury stock(21)

Other decrease of retained earnings*

(825)
77
(21)

Net change of items other thanshareholders’ equity——(5,447)(748)(6,195)¥37,581¥20,024¥45,907¥(7,718)¥ 95,794

Total change during the consolidated fiscal year
Balance as of December 31, 2010

Valuation and translation adjustments
Unrealized
gain onavailablefor-salesecurities

Balance as of December 31, 2009

¥4,910

DeferredForeign
Total valuation
gain oncurrency
andderivatives
translation
under hedge translationaccounting adjustments adjustments¥ 16¥ (492)¥4,434

Minority
interests

Total net
assets¥1,042¥107,465

Effect of changes in accounting policies—

applied to foreign subsidiaries

Change during the consolidated fiscal year
(851)

Dividend payments(4,656)

Net income
Increase due to newly consolidated

81

subsidiaries(825)

Acquisitions of treasury stock
Disposals and cancellation of treasury stock77

Other decrease of retained earnings*(21)

Net change of items other thanshareholders’ equity
Total change during the consolidated fiscal year
Balance as of December 31, 2010

2,817

(110)

(766)

1,941

(43)

1,898

2,817

(110)

(766)

1,941

(43)

(4,297)¥7,727¥ (94)¥(1,258)¥6,375¥ 999¥103,168* Other decrease of retained earnings is the appropriation of retained earnings at a Chinese subsidiary to provide reserves for employees’
incentive and welfare funds under a Chinese accounting standard.

ADK Annual Report 201035

Consolidated Statements of Changes in Net Assets (2)ASATSU-DK INC. and Consolidated Subsidiaries
Year Ended December 31, 2009
Millions of Yen

Year Ended December 31, 2009

Balance as of December 31, 2008

Shareholders’ equity
Commonstock

CapitalsurplusRetainedearnings¥37,581¥20,024¥52,158

Total
Treasuryshareholders’
stock—at costequity¥(6,088)¥103,675

Effect of changes in accounting policies
applied to foreign subsidiaries

0

0

(856)
73

(856)
73

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

subsidiaries
Acquisitions of treasury stock(0)

Disposals and cancellation of treasury stock

(882)
0

—
(882)
0
(21)

(882)
¥(6,970)(1,686)¥101,989(21)

Other decrease of retained earnings*
Net change of items other thanshareholders’ equity
Total change during the consolidated fiscal year
Balance as of December 31, 2009—
¥37,581(0)¥20,024(804)¥51,354

Valuation and translation adjustments
Unrealized
gain onavailablefor-salesecurities

Balance as of December 31, 2008¥(2,394)

DeferredForeign
Total valuation
gain oncurrency
andderivatives
translation
under hedge translationaccounting adjustments adjustments¥(22)¥(671)¥(3,087)

Minority
interests

Total net
assets¥1,029 ¥101,617

Effect of changes in accounting policies

0applied to foreign subsidiaries
Change during the consolidated fiscal year

(856)
73

Dividend payments
Net income
Increase due to newly consolidated

—
(882)
0
(21)

subsidiaries
Acquisitions of treasury stock
Disposals and cancellation of treasury stock
Other decrease of retained earnings*
Net change of items other thanshareholders’ equity
Total change during the consolidated fiscal year
Balance as of December 31, 2009

7,304
7,304
¥ 4,910

38
38
¥ 16

179
179
¥(492)

7,521
7,521¥ 4,434

13
7,534
13
5,848
¥1,042 ¥107,465* Other decrease of retained earnings is the appropriation of retained earnings at a Chinese subsidiary to provide reserves for employees’
incentive and welfare funds under a Chinese accounting standard.

36

ADK Annual Report 2010

Financial Section

Consolidated Statements of Changes in Net Assets (3)ASATSU-DK INC. and Consolidated Subsidiaries
Year Ended December 31, 2010
Thousands of U.S. Dollars (Note 1)

Year Ended December 31, 2010

Balance as of December 31, 2009
Effect of changes in accounting policies
applied to foreign subsidiaries
Change during the consolidated fiscal year
Dividend payments
Net income
Increase due to newly consolidated
subsidiaries
Acquisitions of treasury stock
Disposals and cancellation of treasury stock
Other decrease of retained earnings*
Net change of items other thanshareholders’ equity
Total change during the consolidated fiscal year
Balance as of December 31, 2010

Shareholders’ equity
Total
Treasuryshareholders’
stock—at costequityCommonstock

CapitalsurplusRetainedearnings$461,173$245,723$630,188$(85,532)

00(10,443)(57,136)(10,443)(57,136)994(10,124)945

994(10,124)945(258)(9,179)$(94,711)(76,022)$1,175,530

(258)

—
$461,173—$245,723$1,251,552(66,843)$563,345

Valuation and translation adjustments
Unrealized
gain onavailablefor-salesecurities
Balance as of December 31, 2009
Effect of changes in accounting policies
applied to foreign subsidiaries
Change during the consolidated fiscal year
Dividend payments
Net income
Increase due to newly consolidated
subsidiaries
Acquisitions of treasury stock
Disposals and cancellation of treasury stock
Other decrease of retained earnings*
Net change of items other thanshareholders’ equity
Total change during the consolidated fiscal year
Balance as of December 31, 2010

$60,253

DeferredForeign
Total valuation Minority
gain oncurrency
andinterests
derivatives
translation
under hedge translationaccounting adjustments adjustments$196$ (6,037)$54,412

Total net
assets$12,787 $1,318,751—(10,443)(57,136)994(10,124)945(258)

34,56934,569$94,822(1,350)(1,350)$(1,154)(9,400)(9,400)$(15,437)

23,81923,819$78,231(529)
23,290(529)(52,732)$12,258 $1,266,019* Other decrease of retained earnings is the appropriation of retained earnings at a Chinese subsidiary to provide reserves for employees’
incentive and welfare funds under a Chinese accounting standard.

Yen

U.S. Dollars (Note 1)

2010

2009

2010

PER SHARE OF COMMON STOCK:Net income
Basic¥ (110.28)

¥

1.73

$ (1.35)

Diluted

—

1.72

—

Net assets

2,423.06

2,499.05

29.73

20.00

20.00

0.25

Cash dividend applicable to the year

ADK Annual Report 201037

Consolidated Statements of Cash FlowsASATSU-DK INC. and Consolidated Subsidiaries
Years Ended December 31, 2010 and 2009
Thousands of
U.S. Dollars (Note 1)

Millions of Yen

OPERATING ACTIVITIES:
Income (loss) before income taxes and minority interests

2010

2009

2010

¥ (4,749)¥$(58,278)

Adjustments for:
Income taxes—paid

343

(803)

(108)

(9,854)

Depreciation and amortization
Equity in earnings of affiliated companies
Gain on sales of securities

818
(213)
1,007

943
(126)
(82)

10,038(2,614)
12,357

Loss on valuation of securities
Changes in assets and liabilities:

2,324

213

28,519(Increase) Decrease in notes and accounts receivable
Increase (Decrease) in inventories
Increase (Decrease) in notes and accounts payable
Increase in provision for bad debts
Increase in accrued retired benefits(5,562)
293
5,068
258
346

14,028(269)(8,471)790
150(68,254)
3,596
62,192
3,166
4,246

Increase (Decrease) in payables
Others—net
Total adjustments
Net cash provided by (used for) operating activities

692
300
4,528
(221)

(748)
(259)
6,061
6,404

8,492
3,681
55,565(2,713)318
4,065(1,521)
44
(184)
(501)
77
2,298

974
7,930
(6,641)
11
(100)
(467)
(137)
1,570

3,902
49,883(18,665)540(2,258)(6,147)945
28,200FINANCING ACTIVITIES:
Decrease in short-term debt—net

(251)

(209)

(3,080)

Increase of long-term debt
Repayment of long-term debt
Purchases of treasury stock—net
Dividends paid

925
(187)
(747)
(851)

—
(154)
(882)
(856)

11,351(2,295)(9,167)(10,443)(155)(1,266)(40)(2,141)(1,902)(15,536)

(745)

204

(9,142)INVESTING ACTIVITIES:
Increase in time deposits—net
Proceeds from sales of securities
Purchases of securities
Proceeds from sales of property and equipment
Purchases of property and equipment
Purchases of intangible assets
Other investing activities
Net cash provided by investing activities

Other financing activities
Net cash used for financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS¥

66¥ 6,037$809

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR

18,844

12,807231,243

217

—

2,663

¥19,127¥18,844$234,715

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATEDSUBSIDIARIES, BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS, END OF THE YEAR
See notes to consolidated financial statements.

38

ADK Annual Report 2010

Financial Section

Notes to Consolidated Financial Statements
ASATSU-DK INC. and Consolidated Subsidiaries
Years ended December 31, 2010 and 2009

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

issued domestically in order to present them in a form
that is more familiar to readers outside Japan.
The consolidated financial statements are statedin Japanese yen, the currency of the country in which
the Company is incorporated and mainly operates. The
translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience ofreaders outside Japan and has been made at the rateof ¥81.49 to US$1.00, the approximate rate of exchange
on December 31, 2010. Such translation should not be
construed as a representation that the Japanese yenamounts could be converted into U.S. dollars at that or
any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements
include the accounts of the Company and its significant
twenty-four (24) (twenty-three (23) in 2009) majorityowned subsidiaries (together, the “Group”).
Under the control or influence concept, thosecompanies in which the Company, directly or indirectly,
is able to exercise control over operations are fully
consolidated, and those companies over which theGroup has the ability to exercise significant influence
are accounted for by the equity method.
Twenty-three (23) subsidiaries use a fiscal year
ended at December 31, as does the Company. One
subsidiary uses a fiscal year ended at September 30.
The consolidated financial statements include thefinancial statements of this subsidiary for its respective
fiscal years after making appropriate adjustments for
significant transactions during the periods from its
respective year-end dates to the date of the consolidated
financial statements.
Investments in two (2) affiliated companies, inwhich the Company owns interests of 20% to 50%, areaccounted for by the equity method. (Investments inthree (3) affiliated companies were accounted for by theequity method in 2009.) Investments in the remaining
twenty-eight (28) (thirty (30) in 2009) unconsolidated
subsidiaries and twenty (20) (nineteen (19) in 2009)
affiliated companies are stated at cost. If thesecompanies are fully consolidated, or the equity methodof accounting had been applied to the investmentsin these companies, the effect on the accompanying
consolidated financial statements would not be material.
ASATSU-DK (Malaysia) Sdn. Bhd., which was an
unconsolidated subsidiary for fiscal 2009, has become
a consolidated subsidiary from fiscal 2010 due to its
increasing materiality.
Nippon Information Industry Corp. (“NII”), which
was an equity-method affiliate for fiscal 2009, has been
excluded from the scope of the equity method for fiscal
2010 because the Company sold off its share in NII
during the fiscal year. The amount of loss on sales ofthe securities was ¥978 million ($12,001 thousand).
Goodwill is charged or credited to income in theyear incurred.
All significant inter-company balances andtransactions have been eliminated in consolidation. All
material unrealized profits included in assets resulting
from intra-group transactions are eliminated.
Effective from the financial statement for
fiscal 2009, the financial statements of the overseas
consolidated subsidiaries are made in accordance withASBJ Practical Solution No. 18 (issued on May 17, 2006),
where certain corrections are made upon consolidation.
The effect of this Practical Solution on the operating loss
and income before income taxes and minority interests
is not material.
b. Cash and Cash Equivalents—Cash and cash equivalents
consist of cash, demand deposits with banks and those

ADK Annual Report 201039

deposits that are short-term investments, which arereadily convertible into cash and are not exposed tosignificant risk of changes in value.

Cash equivalents include time deposits, certificatesof deposit and money management funds invested inbonds for the short term, all of which mature or becomedue within three months of the date of acquisition.

The balances of cash and cash equivalents as of December 31, 2010 and 2009, are reconciled to the balance
sheets as follows:
Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2010
$264,081

Balance sheet:¥21,520¥21,605

Securities

Cash and time deposits

1,436

2,145

17,622

Total

22,95623,750281,703

3,544

3,732

43,490

285

1,174

3,498

¥19,127¥18,844$234,715

Less:
Time deposits more than three months
Securities not applicable to cash equivalents(e.g., Securities other than money management funds)
Cash and cash equivalents
c. Inventories—Inventories consist principally of billable
production orders in process, which are stated at cost
determined by the specific identification method. Billable
production orders in process are primarily costs incurredon behalf of clients when providing advertising services
such as marketing and branding consultation, designingand producing sales promotion programs, and event
marketing to clients. Inventories also include publication
merchandise.
Effective from the financial statements for fiscal
2009, inventories are assessed in accordance withASBJ Statement No. 9 (issued on July 5, 2006), where
inventories with low expected profitability are written
down when such judgment is made. As a result, for theyear ended December 31, 2009, the operating loss was
negatively affected by ¥69 million and income before
income taxes and minority interests was lower by¥208 million.
d. Marketable and Investment Securities—All applicablesecurities are classified and accounted for, depending on
management’s intent, as follows:i) trading securities, which are held for the purposeof earning capital gains in the near term, are reported
at the fair value, and the related unrealized gains andlosses are reflected to earnings of the period of such gainor loss; ii) held-to-maturity debt securities, which are
expected to be held to maturity with the positive intent

40

ADK Annual Report 2010

and ability to hold to maturity, are reported at cost after
amortization or accumulation of any difference between
cost and face value; and iii) available-for-sale securities
that are not classified as either of the aforementioned
securities are reported at the fair value, and any resulting
unrealized gains and losses, net of applicable taxes, arereported as an unrealized gain (loss) on available-for-salesecurities, which is a component of net assets. As of theend of 2009 and 2010, the Company and its consolidated
subsidiaries had no balance of held-to-maturity debt
securities.
If the market values of held-to-maturity debt
securities, equity securities issued by unconsolidated
subsidiaries and affiliated companies, and availablefor-sale securities decline significantly, such securities
are stated at the fair market value, and the difference
between the fair market value and the carrying amountis recognized as a loss in the period of the decline. If
the fair market value of equity securities issued byunconsolidated subsidiaries and affiliated companies thathave not been accounted for by the equity method is notreadily available, such securities should be written down
to the net asset value with a corresponding charge inthe statement of income in the event the net asset value
declines significantly. In these cases, such fair market
value or net asset value will be the carrying amountof the securities at the beginning of the next year.

Financial Section

e. Property and Equipment—Property and equipment are
carried at cost. Depreciation for property and equipment
other than buildings acquired after April 1, 1998, iscomputed mainly by the declining-balance method at
rates based on the estimated useful lives of the assets.
Depreciation of buildings acquired after April 1, 1998,
is computed by the straight-line method over theirestimated useful lives. The estimated useful lives ofmajor assets are as follows:
Buildings and leasehold improvements: 3–65 years
Under an amendment of Japanese Corporation Tax Law,effective April 2007, the Company and its domestic
subsidiaries are allowed to depreciate the entire cost of
their property, plant and equipment leaving no salvage
value. The property, plant and equipment acquired byMarch 31, 2007, are and will be depreciated to the value
allowed to depreciate as originally scheduled before theamendment of the law, and the remaining amount (i.e., thebalance not yet depreciated) is and will be depreciatedto zero value from the following year in five years. The
effects of the changes and application of the amended
tax law are immaterial.
f. Provision for Loss on Guarantees—The Group sets aside
a reserve of losses on guarantees for liabilities owed
by non-consolidated subsidiaries, affiliated companies
or business associates. The amount of such provisionreflects estimated potential losses based on such factors
as the financial condition of parties whose liabilities areguaranteed.
g. Retirement Benefits and Pension Plans—The Groupaccounted for the liability for retirement benefits basedon the projected benefit obligations and plan assets atthe balance sheet date, except for the liability in regard
to the Japan Advertising Industry Pension Fund, as noted
later.
The Company’s directors are entitled, in mostcircumstances, to lump-sum severance payments basedon current rates of pay, length of service and otherfactors. The Company accrues 100% of the obligations
based on its rule required under the assumption that all
directors retired at the balance sheet date.
The Company and some of its domestic subsidiaries
are members of the Japan Advertising Industry Pension
Fund. Because the Group cannot technically or reasonably
define how much pension assets and liabilities the Groupis accountable for, the Group recognizes its annual cash
contribution to the fund as its periodic benefit costs
applicable for the fund but not as pension assets andliabilities.
h. Sales Recognition—Income derived from media
advertising is recognized upon publication or
broadcasting. Product sales are recognized when
the products are received by clients. One domestic
consolidated subsidiary provides allowances, basedon the Japanese tax code, for returned publication
merchandise and losses derived from unsold publication
merchandise.
i. Leases—In March 2007, the ASBJ issued ASBJ Statement
No. 13, “Accounting Standard for Lease Transactions,”
which revised the previous accounting standard for leasetransactions issued in June 1993. The revised accounting
standard is required to be adopted for a fiscal year
starting on or after April 2009.
ASBJ Statement No. 13 requires that all financelease transactions should be capitalized to recognize
lease assets and lease obligations on the balance
sheet. However, the standard allows some leases to beaccounted for as operating lease transactions, if thetransactions were contracted on or before the end of
the year before the fiscal year of adoption, if the leased
property is not deemed to be transferred to the lessee
and if certain “as-if-capitalized” information is disclosed
in the notes to the lessee’s consolidated financial
statements.
The Group applied ASBJ Statement No. 13 effectivefrom fiscal 2009 but keeps reporting certain applicable
lease transactions as operating leases. For informationon those operating leases, please refer to Note 9. Leases.
In major overseas consolidated subsidiaries, leases areaccounted for as finance leases and leased propertiesare capitalized.
As a result, lease assets of ¥113 million were
capitalized as tangible fixed assets and ¥6 million as
intangible fixed assets as of December 31, 2009. The
effects of this change in accounting standard on theoperating loss and income before income taxes andminority interests are not material. Lease assets are
depreciated by the straight-line method over the termsof the respective leases with no salvage value.
j. Software and R&D Costs—Research-and-development
costs are charged to income when incurred. Capitalized

ADK Annual Report 201041

software for internal use amounting to ¥1,464 million($17,965 thousand) in 2010 and ¥1,424 million in 2009,
included in “Other assets” of investments and otherassets, was amortized by the straight-line method basedover the estimated useful lives (five years).
k. Income Taxes—The provision for income taxes iscomputed based on the pretax income or loss reported in
the consolidated statements of income. Deferred income
taxes are recorded based on the asset-and-liability
method to reflect the impact of temporary differences
between assets and liabilities recognized for financial
reporting purposes and such amounts recognized fortax purposes by applying the statutory tax rate to thetemporary differences. With respect to the deferred
tax assets, the companies believe it is more likely than
not that such tax benefits will be realized through the
reduction of future taxable income.
l. Appropriations of Retained Earnings—The appropriationof retained earnings at each year-end is reflected in the
consolidated financial statements for the following year.
m. Foreign Currency Transactions—Short-term and longterm monetary receivables and payables denominatedin foreign currencies are translated into Japanese yenat the exchange rates at the balance sheet dates. The
foreign exchange gains and losses from translation arerecognized in the consolidated statements of income inthe cases where they are not hedged by foreign exchange
derivatives or a hedging transaction does not qualify forspecific hedge accounting.
n. Foreign Currency Financial Statements—Both balance
sheet accounts of the consolidated overseas subsidiaries
and affiliated companies are translated into Japanese
yen at the current exchange rates as of the balance sheet
dates except for shareholders’ equity, which is translated
at historical exchange rates.
Differences arising from such translation ofshareholders’ equity are shown as “Foreign currencytranslation adjustments” in a separate component ofshareholders’ equity.
Revenue and expense items of the consolidated
overseas subsidiaries and affiliated companies for theyears ended December 31, 2010, and the year ended
December 31, 2009, are translated into Japanese yenat the average exchange rate for each year.

42

ADK Annual Report 2010

o. Derivatives and Hedging Activities—The Group uses
derivative financial instruments to manage its exposure
to fluctuations in foreign exchange. Foreign exchange
forward contracts are utilized by the Group to reduce
foreign currency exchange risks. The Group also has
investments in debt securities with derivatives that aredesigned to enhance returns. Some of those investments
have terms and conditions that could lead to a situation
where the original face value of such security is notredeemed even if there is no credit event. However,
because such loss would be limited to the face value
at maximum, the influence of such risk is limited.
Derivatives are recognized as either assets or
liabilities at fair value and gains or losses on derivativetransactions are recognized in the consolidated
statements of income, unless such derivatives qualify
for specific hedge accounting.
Short-term receivables and payables denominatedin foreign currencies for which foreign exchange forward
contracts are used to hedge the foreign currency
fluctuations are translated at the contracted rate if theforward contracts qualify for specific hedge accounting.
p. Per Share Information—The computation of basic net
income per share is based on net income attributable toshareholders of common stock and the weighted average
number of shares outstanding during each year, anddiluted net income per share is computed based on net
income attributable to shareholders of common stock
after giving effect to the net income of an affiliatedcompany that has the dilutive potential of shares and aweighted average number of shares outstanding during
each year. The average number of common shares used in
the computation was 42,221,554 shares for the fiscal year
ended December 31, 2010, and 42,709,412 shares for the
fiscal year ended December 31, 2009.
The cash dividend per common share presented
in the accompanying consolidated statements of income
is dividends applicable to net income of the respective
years including dividends paid after the end of the year.
q. ESOP Trust—The Company is committed to reinforcing
measures to ensure the welfare of its employees, who
represent the driving force behind the Group’s growth.
In addition, the Company seeks to increase employees’
awareness about our performance and stock price andthus boost medium- and long-term corporate value. To
achieve these aims, the Company has introduced an ESOP
trust as an incentive plan.

Financial Section

An ESOP trust is a trust-type employee incentive
plan that uses ADK’s employee shareholder group
framework. Specifically, the Company will establish
a trust, the beneficiaries of which will be employee
members of the ADK Employee Shareholding Association(the “Association”) who satisfy certain requirements.
The trust will purchase a certain number of ADK shares,
determined according to the Association’s planned
share purchases during the period from April 2010 toMarch 2015. Such shares will be acquired over a certain
purchase period, also to be determined. Subsequently,
the trust will sell shares to the Association at the market
price each month on a set date.

The Company guarantees the losses in the trust
account (the “Trust Account”) resulting from the purchaseand sale of the ADK shares and accounts for thetransactions involving the trust as its own. Accordingly,
shares of the Company held by the trust and the assets,
liabilities, expenses and income of the trust wererecorded in the accompanying consolidated financial
statements.
For the purpose of calculating basic net income (loss)
and net assets per common stock, the common stock heldby the ESOP trust is considered as the treasury shares.
As of March 31, 2010, the number of shares of theCompany held by the ESOP trust was 417,400.

3. MARKETABLE AND INVESTMENT SECURITIESMillions of Yen

2010

Cost

Unrealized gains

Unrealized losses

Fair value

Equity securities¥31,004¥13,621¥595¥44,030

Debt securities

1,650

—

56

1,594

Other

355

17

11

361

Total

¥33,009¥13,638¥662¥45,985

Cost

Unrealized gains

Equity securities¥33,099¥10,650¥2,148¥41,601

Debt securities

3,091

3

149

2,945

Other

338

7

6

339

Total

¥36,528¥10,660¥2,303¥44,885

Cost

Unrealized gains

Equity securities$380,464$167,149$7,302$540,311

Debt securities

20,248—687

19,561

Other

4,356

209

135

4,430

Total

$405,068$167,358$8,124$564,302

Available-for-sale:

Millions of Yen

2009

Unrealized losses

Fair value

Available-for-sale:

Thousands of U.S. Dollars

2010

Unrealized losses

Fair value

Available-for-sale:

ADK Annual Report 2010

43

The carrying amount of the securities classified as available-for-sale securities for which the fair values were not readily
determinable as of December 31, 2009, was as follows. Similar information for 2010 is disclosed in Note 10.

Millions of Yen

2009

Carrying amount

Available-for-sale:Non-listed equity securities
Investment trust
Other
Total

¥1,944739
126¥2,809Total sales of available-for-sale securities sold in the year ended December 31, 2009, amounted to ¥7,930 million ($97,312
thousand), the related gains amounted to ¥144 million ($1,767 thousand) and the related losses amounted to ¥66 million($809 thousand).
The information on available-for-sales securities that were sold during the year ended December 31, 2010, was asfollows:
Millions of Yen

2010

Proceeds

Realized gains

Realized losses

Available-for-sale:
Equity securities

¥

78

¥15

¥11

Debt securities

1,399

3

32

Other

30

—

—

Total

¥1,508¥18¥43

Thousands of U.S. Dollars

2010

Proceeds

Realized gains

Realized losses

Available-for-sale:
Equity securities

$

957

$184

$135

Debt securities

17,168

37

393

Other

380

—

—

Total

$18,505

$221

$528

The impairment losses on available-for-sale equity securities for the years ended December 31, 2010 and 2009, were¥2,156 million ($26,457 thousand) and ¥67 million, respectively.

44

ADK Annual Report 2010

Financial Section

4. SHORT-TERM AND LONG-TERM DEBT
The weighted average annual interest rates applicable to the short-term debt were 1.94% and 1.42% at December 31,
2010 and 2009, respectively.
Long-term debt as of December 31, 2010 and 2009, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2010

¥1,043¥345$12,799

(278)

(92)

(3,411)

Total

¥ 765

¥253

$ 9,388

Obligations under capital leases*

¥ 459

¥122

$ 5,632

(101)

(27)

(1,239)

¥ 358

¥ 95

$ 4,393

Loans due through 2015*
Amount due within one year

Amount due within one year
Total

*The weighted average interest rates or the averages of interest rates applicable to loans outstanding at the end of each fiscal year
weighted by then amounts of loans, for the loans due beyond one year were 1.63% p.a. in 2010 and 4.75% p.a. in 2009. The weighted
average interest rates of the loans due within one year were 2.12% p.a. in 2010 and 4.07% p.a. in 2009. The weighted average interest
rates of obligations under finance leases due beyond and within one year were 2.11% and 2.37%, respectively, in 2010.

The repayment schedule of long-term debt as of December 31, 2010, was as follows:

Millions of Yen

Thousands of
U.S. Dollars

2011

¥ 278

$ 3,411

2012

278

3,411

2013

241

2,957

2014

164

2,013

Later years

82

1,007

¥1,043$12,799

Year Ending December 31

Total

The repayment schedule of obligations under capital leases as of December 31, 2010, was as follows:Year Ending December 31

Millions of Yen

Thousands of
U.S. Dollars

2011

¥101

$1,239

2012

98

1,203

2013

98

1,203

2014

86

1,055

Later years
Total

76

932

¥459

$5,632

The amounts of long-term debt used for the ESOP trust at December 31, 2010, were as follows:
Current portion of long-term debt: ¥164 million ($2,012 thousand)Long-term debt: ¥574 million ($7,043 thousand)

ADK Annual Report 201045

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

The liabilities for employees’ retirement benefits and pension plans as of December 31, 2010 and 2009, comprised thefollowing:*
Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2010

¥10,545¥11,367$129,402

Fair value of plan assets(7,301)(8,227)(89,594)

Unrecognized actuarial differences(1,897)(2,139)(23,278)¥ 1,347¥ 1,001$ 16,530

Projected benefit obligation

Accrued retirement benefits

The components of net periodic benefit costs for the years ended December 31, 2010 and 2009, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost

2010

2009

2010

¥ 819

¥ 802

$10,050

Interest cost

209

204

2,565

Expected return on plan assets

(123)

(118)

(1,509)Amortization of actuarial differences

256

255

3,141

Contributions paid during the period, etc.*

978

970

12,001¥2,139¥2,113$26,248

Net periodic benefits costs

The discount rate used by the Group was 2.0% as of theyears ended December 31, 2010 and 2009. The rate of
expected return on plan assets used by the Group was
1.5% for the years ended December 31, 2010 and 2009.
The estimated amount of retirement benefits to be paid
at the future retirement date is allocated equally to eachservice year over the estimated number of total service
years. Unrecognized actuarial differences are amortizedover 13 years on a straight-line basis commencing fromthe succeeding period. Prior service costs are charged toincome when incurred.

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

46

ADK Annual Report 2010

Financial Section

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

Millions of Yen

March 31,2010

March 31,2009

March 31,201 0¥(86,650)¥(90,518)$(1,063,321)

68,86257,000845,037¥(17,788)¥(33,518)$ (218,284)

April 1, 2009–
March 31, 2010

April 1, 2008–
March 31, 2009

Share of the Group as employers

10.61%

10.30%

Share of employees

6.14%

6.22%

Total

16.75%

16.52%

Pension liabilities*
Pension assets
Net assets (deficits)*The discounted rate for the liabilities used by the fund was mainly 5.5%.

b. The Group’s share of the contribution to the fundc. Prorated share of pension assets or liabilities as measured by the Group’s share of the contribution to the fundMillions of Yen

March 31, 2010

Share of the Groupas employer

Share ofemployees

Pension liabilities¥(9,191)¥(5,320)

7,305

4,228

¥(1,886)¥(1,092)

Pension assets
Net deficits

Millions of Yen

March 31, 2009

Share of the Groupas employer

Share ofemployees

Pension liabilities¥(9,320)¥(5,634)

5,869

3,548

¥(3,451)¥(2,086)

Pension assets
Net deficits

Thousands of U.S. Dollars

March 31, 2010

Share of the Groupas employer

Share ofemployees

Pension liabilities$(112,787)$(65,284)

Pension assets
Net deficits

89,64351,884$ (23,144)$(13,400)

ADK Annual Report 201047

d. Supplemental information
The Japan Advertising Industry Pension Fund’s total net pension deficit amount of ¥17,788 million ($218,284
thousand) and ¥33,518 million on March 31, 2010, and March 31, 2009, stated in the item “a” above equals to the sumof prior service liabilities of ¥7,823 million ($96,000 thousand) and ¥7,083 million and net accumulated deficit carryforward of ¥9,964 million ($122,273 thousand) and ¥26,435 million, respectively.
Prior service liabilities are amortized over 20 years by the straight-line method at the fund accounting, and theGroup expensed an additional contribution of ¥117 million ($1,436 thousand) and ¥117 million during the periods from
April 1, 2009, to March 31, 2010, and from April 1, 2008, to March 31, 2009, respectively, for this amortization.

6. CHANGE IN NET ASSETS
The type and number of shares issued and treasury stock as of December 31, 2010 and 2009, were as follows:

2010

Shares issued

Treasury stock

Type of shares

Common stock

Common stock

Number of shares as of December 31, 2009

45,155,400

2,569,867—

464,237

Increase in the number of shares during the accounting
period ended December 31, 2010
Decrease in the number of shares during the accounting
period ended December 31, 2010
Number of shares as of December 31, 2010
Notes:—(44,000)

45,155,400

2,990,104

1. Increases in the number of treasury stock were due to the purchase of 461,400 shares by the ESOP trust and the purchaseof 2,837 shares of less-than-one-unit shares.
2. Decreases in the number of treasury stock were due to sales of 44,000 shares by the ESOP trust.

2009

Shares issued

Treasury stock

Type of shares

Common stock

Common stock

Number of shares as of December 31, 2008

45,155,400

2,067,327—

502,804

Increase in the number of shares during the accounting
period ended December 31, 2009
Decrease in the number of shares during the accounting
period ended December 31, 2009
Number of shares as of December 31, 2009
Notes:

48

—

(264)

45,155,400

2,569,867

1. Increases in the number of treasury stock were due to the purchase of 500,000 shares with the approval at a Board of
Directors meeting and the purchase of 2,804 shares of less-than-one-unit shares.
2. Decreases in the number of treasury stocks were due to sales of 264 shares of less-than-one-unit shares.

ADK Annual Report 2010

Financial Section

Information related to dividends for the accounting periods ended December 31, 2010 and 2009, was as follows:
2010
Dividends paid during the accounting period ended December 31, 2010

Resolution by:

Board of Directors
February 12, 2010

Board of Directors
August 11, 2010

Total amount of dividends¥425 million¥421 million

Dividend per share

¥10

¥10

Record date

December 31, 2009

June 30, 2010

Payable date

March 12, 2010

September 13, 2010

Dividends paid to the ESOP trust in the amount of ¥4 million ($49 thousand) have been excluded from the total
amount of dividends as stated under “Board of Directors August 11, 2010.”
Dividends attributable to the performance of the accounting period ended December 31, 2010, but paid after said
accounting period
Board of Directors
February 10, 2011

Resolution by:
Total amount of dividends¥421 million

Fund for dividends

Retained earnings

Dividend per share¥10

Record date

December 31, 2010

Payable date

March 14, 2011

Dividends paid to the ESOP trust in the amount of ¥4 million ($49 thousand) have been excluded from the total
amount of dividends as stated above.
2009
Dividends paid during the accounting period ended December 31, 2009

Resolution by:

Board of Directors
February 13, 2009

Board of Directors
August 12, 2009

Total amount of dividends¥430 million¥425 million

Dividend per share

¥10

¥10

Record date

December 31, 2008

June 30, 2009

Payable date

March 12, 2009

September 14, 2009

Dividends attributable to the performance of the accounting period ended December 31, 2009, but paid after said
accounting period

Resolution by:

Board of Directors
February 12, 2010

Total amount of dividends¥425 million

Fund for dividends

Retained earnings

Dividend per share¥10

Record date

December 31, 2009

Payable date

March 12, 2010

ADK Annual Report 201049

7. INCOME TAXESThe Company and its domestic consolidated subsidiaries
are subject to corporate, inhabitant and enterprise taxes
based on income. The normal effective statutory tax rate
for these taxes in the aggregate was 40.69% for 2010 and2009, respectively, after reflection of the enterprise tax, ina way that such tax should be deductible for tax purposes
only when paid. Overseas subsidiaries are subject toincome taxes of the countries in which they operate.

The deferred tax assets and liabilities as a result of the tax effects of signifi cant temporary differences as of December
31, 2010 and 2009, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2010

¥

$ 8,332

Deferred tax assets:
679

¥ 712

Accrued bonuses

Allowance for doubtful receivables

81

22

994

Accrued retirement benefits

441

326

5,412

Inventory

122

104

1,497

Investment securities

1,300

407

15,953Tax loss carry-forwards

1,776

327

21,794

Unrealized loss on marketable securities

146

46

1,792

Deferred tax assets in overseas consolidated subsidiaries*

32

40

393

1,286

1,152

15,780

5,863

3,136

71,947

Valuation allowance**(2,152)(135)(26,408)

Total deferred tax assets

3,711

3,001

45,539Other

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

—

21

—

5,047

3,376

61,934

44

59

540

0

—

0

5,091

3,456

62,474¥(1,380)¥ (455)$(16,935)*The deferred tax assets and liabilities in overseas consolidated subsidiaries as a result of the tax effects of signifi canttemporary differences and losses carried forward as of the end of fiscal 2010 and 2009 were as follows:50

ADK Annual Report 2010

Financial Section

Thousands of
U.S. Dollars

Millions of Yen

2010

2009

2010
$ 503

Deferred tax assets:
Tax loss carry-forwards

¥ 41

¥ 71

Other

22

27

270

Less valuation allowance**

(31)

(58)

(380)

Deferred tax assets
Deferred tax liabilities

32

40

393

—Depreciation

43

59

528

—Other

—

—

—

43

59

528

¥(11)

¥(19)

$(135)

Deferred tax liabilities
Net deferred tax assets (liabilities)** The valuation allowances shown above are provided for tax loss carry-forwards of certain subsidiaries under theGroup’s tax planning. The Company increased the valuation allowance for deferred tax assets by ¥1,559 million ($19,131
thousand).
Reconciliation between the normal effective statutory tax rate for the year ended December 31, 2009, and the actual
effective tax rates reflected in the accompanying consolidated statements of income were as follows:

Normal effective statutory tax rate

2010*

2009

—

40.69%

—

92.99

—

(18.26)

Certain expenses, including, but not limited to,entertainment expenses, permanently not deductible
for tax purposes
Certain income, including, but not limited to, dividend income,permanently not taxable for tax purposes
Per capita levy

—

8.53

Corporate income tax for the past year

—

29.15

Amendment of effective tax rate for the past year—

(48.33)

Tax rate difference applicable to overseas subsidiaries—(35.38)Other—net—(0.44)

Actual effective tax rate—

68.95%*The effective tax rate for the year ended December 31, 2010, cannot be shown due to the financial position resulting ina loss before income taxes and minority interests.

8. RESEARCH-AND-DEVELOPMENT COSTS
Research-and-development costs charged to income for the years ended December 31, 2010 and 2009, were ¥1,035
million ($12,700 thousand) and ¥949 million, respectively.

ADK Annual Report 201051

9. LEASESThe Group leases certain computer equipment, officespace, vehicles, software and other assets.
As discussed in Note 2.i. Leases, the Group accounts
for certain leases as operating lease transactions, if
the transactions were contracted on or before the endof 2009, if the leased property is not deemed to betransferred to the lessee and if certain “as-if-capitalized”

information is disclosed in the notes to the lessee’s
consolidated financial statements. Pro forma informationof those leased properties such as acquisition cost,
accumulated depreciation, obligations under financeleases, depreciation expense and interest expense offinance leases on an “as-if-capitalized” basis for the years
ended December 31, 2010 and 2009, were as follows:

Millions of Yen

Year Ended December 31, 2010
Acquisition cost
Accumulated depreciation
Net leased property

Furniture andequipment

Machinery andvehiclesSoftware

Total

¥915

¥—

¥167

¥1,082

726

—

147

873

¥189

¥—

¥ 20

¥ 209

Obligations under finance leases:
Millions of Yen

Due within one year¥155

Due after one year

74

Total

¥229

Millions of Yen

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

Furniture andequipment

Machinery andvehiclesSoftwareTotal¥1,364¥—¥337¥1,701

901

—

263

1,164

¥ 463

¥—

¥ 74

¥ 537

Obligations under finance leases:
Millions of Yen

Due within one year

¥ 327

Due after one year

243

Total

¥ 570

Thousands of U.S. Dollars

Year Ended December 31, 2010
Acquisition cost
Accumulated depreciation
Net leased property

52

ADK Annual Report 2010

Furniture andequipment$11,228
8,909$ 2,319

Machinery andvehicles$——$—SoftwareTotal$2,0491,804$ 245$13,277
10,713$ 2,564

Financial Section

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

Due within one year

$1,902

Due after one year

908

Total

$2,810

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

Millions of Yen

2010

2009

2010

Total lease payments

¥334

¥436

$4,099Depreciation expense

293

412

3,596

9

17

110

Interest expense

Depreciation expense and interest expense, which are not reflected in the accompanying consolidated statements ofincome and retained earnings, are computed by the straight-line method and the interest method, respectively.
Obligations under operating leases:
Millions of Yen

Due within one year
Due after one year
Total

Thousands of
U.S. Dollars

2010

2009

2010

¥ 605
2,904
¥3,509¥ 576
3,700¥4,276$ 7,424
35,636$43,060

10. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURESOn March 10, 2008, the ASBJ revised ASBJ Statement No.
10, “Accounting Standard for Financial Instruments,” andissued ASBJ Guidance No. 19, “Guidance on AccountingStandard for Financial Instruments and Related
Disclosures.” This accounting standard and the guidance
are applicable to financial instruments and the related
disclosures at the end of the fiscal years ending on orafter March 31, 2010, with early adoption permitted fromthe beginning of the fiscal years ending before March
31, 2010. The ADK Group applied the revised accounting
standard and the new guidance for the fiscal year ending
December 31, 2010.
(1) Group Policy for Financial Instruments
The ADK Group invests its cash surplus in low risk
and liquid marketable financial asset classes. Such
cash surpluses are generated from the Group’s own

operations and bank loans. Derivatives are used, not for
speculative purposes, but to manage financial exposure
to the volatility of exchange rates by way of exchange
reservation. In addition, the Group purchases bonds
with embedded derivatives for the purpose of asset
management.
(2) Nature and Extent of Risks Arising from Financial
Instruments, and Risk Management Method
Receivables such as trade notes and accounts are
exposed to customer credit risk.
Investment securities, mainly equity instrumentsof customers for the purpose of building strong business
relationships other than equity instruments of businessalliances, are exposed to the risk of market pricefluctuations.

ADK Annual Report 2010

53

The payment terms of payables, such as trade notes
and trade accounts, are only short term.
Bank loans are aimed at (mainly short-term) cash
operation and the purchase of treasury stock under the
ESOP trust system as the employees’ benefit plan. Bankloans, most of which are contracted with a floating rate,are exposed to the risk of rate fluctuations.
Derivatives mainly include forward foreign currency
contracts, which are used to manage exposure to market
risks from changes in the foreign exchange rates ofreceivables and payables. Some domestic subsidiaries
have purchased bonds with embedded derivatives thatare exposed to the risk of a loss of principal.
Regarding Hedge Accounting, please see Note 2.ofor more detailed information.
(3) Risk Management for Financial Instruments
Credit Risk Management
The Company manages its credit risk from receivableson the basis of internal accounting rules, which include
screening customers, setting credit limits for eachcustomer, designating due date controls for each
receivable and monitoring the financial status of major
customers through the cooperation of the accounting
department and each front office to prevent the default
risk of customers.
Consolidated subsidiaries of the Company manage
their credit risks and control their receivables, and are
required to report certain substantial events to theCompany when they happen.
Market Risk Management (Foreign exchange risk andinterest-rate risk)
To hedge the foreign currency exchange risk associatedwith foreign currency trade receivables and payables,
foreign currency forward contracts are implemented forthe purpose of hedging risks generated in the ordinary
course of business.

54

ADK Annual Report 2010

Loan payables are exposed to market risks fromchanges in interest rates, however, these market risks are
considered limited as the balance of loans payable is sosmall.
The market values of marketable and investment
securities are managed by monitoring market prices andthe financial position of the issuers on a regular basis,considering the relationships with the issuers.
Derivative transactions are determined in
specified types and volume based on the Company’s
internal guidelines to be approved by the authorized
person. After the approval, derivative transactions are
implemented and managed by the accounting department.
In addition, the accounting department is required toreport the financial position and the results of derivativetransactions to the management of the Company on aregular basis.
Liquidity Risk Management
The Company manages its liquidity risk by the corporate
treasury department preparing and updating thefund management plan based on reports from eachdepartment, and manages liquidity by holding adequate
volumes of liquid assets.
(4) Supplementary Explanation on the Estimated Fair
Value
The fair values of financial instruments are based on
the quoted price in active markets. If the quoted priceis not available, other rational valuation techniques areused instead. Because various assumptions and factors
are reflected in computing the fair value, different
assumptions and factors could result in different fairvalues. The amounts of derivative contracts that are
noted in Note 12 do not indicate market risks.
(a) Fair Value of Financial Instruments
As of December 31, 2010, the book value, the fair value
and the difference between the two are as follows.

Financial Section

Financial instruments for which the quoted value cannot be reliably determined are not included in the following.
Thousands of U.S. Dollars

Millions of Yen

Carrying
amount1

2010
Cash and time deposits

Fair value1

Difference

Carrying
amount1

Fair value1¥—$ 264,081$ 264,081

Difference¥ 21,520¥ 21,520$—

92,774

92,760(14)

1,138,470

1,138,299(171)

Notes and accounts
receivable
Securities and investment
securities2
Notes and accounts
payableShort-term debt

49,301

52,034

2,733

604,994

638,532

33,538(74,358)(84)(74,358)(84)——(912,480)(1,030)(912,480)(1,030)——Long-term debt

(1,043)(1,050)(7)(12,799)(12,885)

(86)

106

106

—

1,300

1,300

—

Derivative transaction3
Notes:
1. Liabilities are shown in parentheses.

2. The embedded derivatives, to the extent that they cannot be separated
from the financial host contract, are considered with these as tradingtransactions for measurement purposes and are shown in “Investment
securities.”
3. Net receivables (payables) derived from derivative transactions are
displayed in the table above. Total net payables are shown in parentheses.
• Cash, cash equivalents and time deposits, and notes and accounts
receivable
The carrying values of cash, cash equivalents and time deposits, and notes
and accounts receivable due in one year or less approximate the fairvalue because of short maturities. The fair values of notes and accounts
receivable due after one year are calculated based on future cash flow
discounted at an appropriate rate with credit spreads, for those groupedby a certain period of time and credit rating.

whereas the fair values of bonds are measured at the quoted priceobtained from a financial institution, and the fair values of mutual funds
are measured at the constant values available.
• Notes and accounts payable, short-term debt
The carrying values of notes and accounts payable and short-term debt
approximate the fair value because of their short-term maturities.
• Long-term debt
The carrying values of long-term debt with a floating rate approximate
the fair value because the floating rate reflects the market rate on aregular basis and the credit spread of the Company remains almost thesame. The fair values of long-term debt with a fixed rate are measured at
the present value of the principal with interest added (including long-term
debt due in one year or less), discounted at an expected rate applied for
new borrowings with the same terms.
• Derivatives
Information on the fair value for derivatives is included in Note 12.

• Securities and investment securities
These mainly consist of stocks, bonds and mutual funds. The fair valuesof stocks are measured at the quoted market price on the stock exchange,(b) Financial Instruments for Which the Fair Value Cannot Be Reliably Determined
Carrying amountMillions of Yen

Thousands of
U.S. Dollars¥1,823$22,371

2,964

36,372

Investment in equity instruments that do not have aquoted market price in an active market
Investment in affiliates
Other
Total

139

1,705

¥4,926$60,448

ADK Annual Report 201055

(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

Due in one year
or lessCash, cash equivalents and time deposits
Notes and accounts receivable
Securities and investment securities
Held-to-maturity securities
Other
Total

Due after one
year throughfive years

Due after five
years through10 years¥ 21,520
92,185

¥ —
589

¥

337
¥114,042

52
¥641

1,060
¥1,060Due after 10
years

—
—

¥

—
—

145
¥145

Thousands of U.S. Dollars

Cash, cash equivalents and time deposits
Notes and accounts receivable
Securities and investment securities
Held-to-maturity securities
Other
Total

Due in one year
or less

Due after one
year throughfive years$ 264,081
1,131,243

$
—
7,227

Due after five
years through10 years$——

Due after 10
years

$

—
—

4,136

638

13,007

1,779$1,399,460$7,865$13,007$1,779Millions of Yen

Thousands of
U.S. Dollars

11. CONTINGENT LIABILITIESAs of December 31, 2010, the Group had the following contingent liabilities:
Guarantee Obligations:Aggregated amount of guarantees for debts owed by subsidiaries
and affiliates and payables by a client, GroupM Japan

Other contingent liability:
On January 8, 2010, the Company filed a lawsuit
against Art Corporation seeking payments of unpaid
considerations for services already provided and advancemoney in the total amount of ¥379 million ($4,650
thousand) together with late charges. On April 22, 2010,
Art Corporation filed a countersuit against the Company
seeking demands in the amount of ¥311 million ($3,816
thousand) together with late charges, however, both cases
are still pending in the courts.
The Company, considering the fact that Art
Corporation has filed a countersuit against it, has
examined carefully and sufficiently the content of the56

ADK Annual Report 2010

¥342

$4,197counterclaim to obtain the presumption that the claimof the Company seeking payments of consideration forservices provided and advance money is justifiable,
whereas the counterclaim by Art Corporation isunjustified. The Company will handle its claim and thecounterclaim appropriately consulting with the corporate
lawyers of the Company, who have agreed with thepresumption as stated above.
On July 30, 2010, the Company faced a lawsuit by
Tokyu Agency Inc. claiming payment of consideration
for advertisement in the amount of ¥142 million ($1,742
thousand) together with late charges and the case isstill pending in court. The Company has examined theFinancial Section

presumption as stated above. The Company will handle
the lawsuit appropriately consulting with the corporate
lawyers.

content of the claim to obtain the presumption that it isunjustified. The Company has given a defense claiming
dismissal with prejudice on the merit after consultation
with the corporate lawyers, who have agreed with the

12. DERIVATIVESThe Group enters into foreign exchange forward contracts
to hedge the foreign exchange risk associated with certain
assets and liabilities denominated in foreign currencies.
The Group also has investments in debt securities with
derivatives that are designed to enhance returns. Some ofthose investments have terms and conditions that could
lead to a situation where the original face value of suchsecurity is not redeemed even if there is no credit event.
However, because such loss would be limited to the facevalue at maximum, the influence of such risk is limited.
Because the counterparties to these derivatives arelimited to major sound financial institutions, the Group
does not anticipate any losses arising from credit risk.

Derivative transactions entered into by the Group
have been made in accordance with the internal rules andpolicies that regulate the authorization and exposure limit
amount.
As noted in Note 10, the Company applied ASBJ
Statement No. 10, “Accounting Standard for Financial
Instruments,” and ASBJ Guidance No. 19, “Guidance on
the Accounting Standard for Financial Instruments andRelated Disclosures.” The accounting standard and theguidance are applicable to financial instruments andrelated disclosures at the end of the fiscal year ended
December 31, 2010, therefore the required information
is disclosed only for 2010.

Derivative transactions to which hedge accounting was not applied at December 31, 2010
Millions of Yen

Year Ended December 31, 2010

Notional
amounts

Due after
one year

Fair value

¥141

¥70

¥106

Unrealized gain
(loss)

Currency:
OTC market
Foreign exchange forward contracts— buying (US$)
Total

¥(35)
¥(35)

Thousands of U.S. Dollars

Year Ended December 31, 2010

Notional
amounts

Due after
one year

Fair value$1,730$859$1,301

Unrealized gain
(loss)

Currency:
OTC market
Foreign exchange forward contracts— buying (US$)
Total$(430)$(430)ADK Annual Report 201057

Derivative transactions to which hedge accounting was applied at December 31, 2010
Millions of Yen

Hedged item

Notional
amounts

Due after one
year

Fair value—buying (US$)

Payables¥1,986¥1,042¥1,818—buying (HKD)

Payables

30

—

28

¥2,016¥1,042¥1,84628—*

Year Ended December 31, 2010
Currency:
OTC market
Non-designated as a hedging derivative
Foreign exchange forward contracts

Subtotal
Designated as a hedging derivative
Foreign exchange forward contracts—buying (US$)

Payables¥—buying (EURO)

Payables5—*—buying (STG)

Payables20—*—buying (HKD)

Payables73—*

Subtotal

¥ 126

—

—

Total

¥2,142¥1,042—Thousands of U.S. Dollars

Hedged item

Notional
amounts

Due after one
year

Fair value—buying (US$)

Payables$24,371$12,787$22,309—buying (HKD)

PayablesYear Ended December 31, 2010
Currency:
OTC market
Non-designated as a hedging derivative
Foreign exchange forward contracts

Subtotal

368

—

344

$24,739$12,787$22,653

Designated as a hedging derivative
Foreign exchange forward contracts—buying (US$)

Payables

344

—

*

—buying (EURO)

Payables

$

61

—

*

—buying (STG)

Payables

245

—

*

—buying (HKD)

Payables

896

—

*

Subtotal$ 1,546

—

—

Total

$26,285$12,787—* The estimated fair value of forward foreign exchange contracts is included in the estimated fair value of accounts payable because amounts in suchderivative contracts designated as hedging derivatives are handled together with the payables denominated in foreign currencies that are subject to hedge
accounting.

58

ADK Annual Report 2010

Financial Section

The following is the fair value information for foreign currency forward contracts to which hedge accounting was notapplied at December 31, 2009.
Derivative transactions that qualify for hedge accounting are excluded from the information below.
Millions of Yen

Year Ended December 31, 2009
Currency:
OTC market
Foreign exchange forward contracts— buying (US$)
Total

Notional
amounts

Due after
one year

Fair value

¥212

¥141

¥177

Unrealized gain
(loss)

¥(33)
¥(33)

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.

13. SEGMENT INFORMATION
Information about business segments, geographic segments and billings to foreign customers of the Group for the years
ended December 31, 2010 and 2009, was as follows:(1) Business Segment Information
Business segment information for the years ended December 31, 2010 and 2009, was as follows:a. Billings and Operating Income
Millions of Yen

Advertising

Nonadvertising

Total

Billings to customers¥339,432¥7,133¥346,565—Inter-segment billings

15

279

294

¥(294)—

339,447

7,412

346,859(294)

346,5652010

Total billings

Eliminations
or Corporate

Consolidated¥346,565

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

339,398
¥

49

7,436
¥

(24)

346,834(292)

346,542

¥

¥

¥

25

(2)

23

Millions of Yen

Advertising

Nonadvertising

Total

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

Inter-segment billings

24

350

374

¥(374)—

342,950

7,635

350,585(374)

350,2112009

Total billings

Eliminations
or Corporate

Consolidated

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

343,568

7,770

(618)

¥ (135)351,338
¥

(753)

(371)
¥

(3)

350,967¥(756)

ADK Annual Report 201059

b. Assets, Depreciation and Capital Expenditures
Millions of Yen

2010
AssetsAdvertising

Nonadvertising¥185,666
781
1,103

Depreciation
Capital expenditures

Total

Eliminations
or Corporate

Consolidated¥8,972¥194,638¥(128)¥194,510

37

818

—

818

43

1,146

—

1,146
Millions of Yen

2009
AssetsAdvertising

Nonadvertising

Total

Eliminations
or Corporate

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

Depreciation

909

34

943

—

943

Capital expenditures

561

7

568

—

568

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

Advertising

Nonadvertising

Total

Billings to customers$4,165,321$87,532

Inter-segment billings

184

3,424

4,165,505

2010

Total billings

Eliminations
or Corporate

Consolidated$4,252,853—$4,252,853

3,608$(3,608)—

90,956

4,256,461(3,608)4,252,853

4,164,904

91,2504,256,154$$

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

601(294) $

307

(3,583)

4,252,571

$

$

(25)

282

b. Assets, Depreciation and Capital Expenditures
Thousands of U.S. Dollars

2010
AssetsAdvertising

Nonadvertising

Total

Eliminations
or Corporate

Consolidated$2,278,390$110,099$2,388,489$(1,570)$2,386,919

Depreciation

9,584

454

10,038—10,038

Capital expenditures

13,535528

14,063—14,063

Notes: 1. The Group is engaged primarily in the advertising industry. The two business segments, namely, advertising services and nonadvertising, consist primarily of the following services
Advertising services: Planning, creating, producing and placing advertising in various media such as television, radio,
newspapers, magazines, public transportation, billboards and digital media. Additional services such as marketing andbranding consultation, design and production of sales promotion programs, and event marketing.
Non-advertising: Publishing and selling of magazines and books and information processing services.
2. As discussed in Note 2.c. Inventories, effective from the financial statements for fiscal 2009, inventories are assessed inaccordance with ASBJ Statement No. 9 (issued on July 5, 2006), where inventories with low expected profitability are written
down when such judgment is made. As a result, the operating loss of the advertising business segment for fiscal 2009 was
negatively affected by ¥69 million.

60

ADK Annual Report 2010

Financial Section(2) Geographic Segment Information
Because the billings and total assets of the overseas
operations of the Group for the years ended December
31, 2010 and 2009, were less than 10% of those of thetotal consolidated operation, such segment information
is not presented.

(3) Billings to Foreign Customers
Because the billings to foreign customers of the Groupfor the years ended December 31, 2010 and 2009,were 6.8% and 5.4%, respectively, or less than 10% of
the total consolidated billings in the two periods, suchinformation is not presented.

14. RELATED PARTY TRANSACTIONSTransactions with a Principal Shareholder
The Company and WPP plc mutually own shares in the other, and WPP plc owns indirectly 22.87% of the Company’scommon stock. An outline of the transactions of the Company with the principal shareholder for the years ended
December 31, 2010 and 2009, is as follows.

Outline of the Transaction

2010
Shareholder name

WPP plc

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

Location

Dublin, Ireland

Type of businessCommunications services

Shareholding ratio

22.87% (Indirectly owned)

The Company’s share of ownership in WPP

2.49%

Type of the transaction

Dividends received

Amount of the transaction¥681 million ($8,356 thousand)

Outline of the Transaction

2009
Shareholder name

WPP plc

Type of the relationshipA principal shareholder owning more than 20% of

Location

Dublin, Ireland

Type of businessCommunications services

Shareholding ratio

24.32% (Indirectly owned)

The Company’s share of ownership in WPP

2.49%

Type of the transaction

Dividends received

Amount of the transaction¥719 million

the voting rights in the Company

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

ADK Annual Report 201061

Outline of the Transaction

2010
Company name

Nippon Information Industry Corp. (NII)

Type of the relationshipAn affiliated company

Location

Shibuya-ku, Tokyo, Japan

Type of businessInformation handling services

Shareholding ratio—

Type of the transaction

Sale of its shares in NII

Amount of the transaction¥2,558 million ($27,708 thousand)

The Company, which had directly owned 33.7% of theshares of NII, sold all of its shares of NII to NII itself
during the fiscal year ended December 31, 2010. The
sale price of the NII shares was reasonably determined

between the two parties, and the consideration was paidin a lump sum based on the terms of the contract. The
amount of loss on sales of the securities was ¥978 million($12,001 thousand).

15. QUARTERLY FINANCIAL HIGHLIGHTS
The quarterly financial highlights in 2010 were as follows:

Millions of Yen (except per common stock data)

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

January 1, 2010–
March 31, 2010

April 1, 2010–
June 30, 2010

July 1, 2010–
September 30,
2010

October 1, 2010–
December 31,
2010¥82,758¥85,738¥80,589¥97,478

1,043(3,686)(321)(1,783)243(2,112)(151)(2,636)5.75¥ (50.13)¥ (3.60)¥ (62.54)

2010
Gross billings
Income (loss) before taxes andminority interests
Net income (loss)¥

Net income (loss) per common stock (yen)Thousands of U.S. Dollars (except per common stock data)

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

January 1, 2010–
March 31, 2010

April 1, 2010–
June 30, 2010

July 1, 2010–
September 30,
2010

October 1, 2010–
December 31,
2010

2010
Gross billings
Income (loss) before taxes and$1,015,560$1,052,129$988,943$1,196,196

12,799(45,233)(3,939)(21,880)

2,982(25,917)(1,853)(32,348)(0.615)$ (0.044)

minority interests
Net income (loss)
Net income (loss) per common stock(U.S. Dollars)

62

ADK Annual Report 2010

$

0.071

$

$

(0.767)

Financial Section

INDEPENDENT AUDITORS’ REPORTThe Board of Directors
ASATSU-DK INC.:
We have audited the accompanying consolidated balance sheets of ASATSU-DK INC. and consolidated
subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income,changes in net assets and cash flows for the years then ended, all expressed in Japanese yen.
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to independently express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of ASATSU-DK INC. and consolidated subsidiaries as ofDecember 31, 2010 and 2009, and the consolidated results of their operations and cash flows for theyears then ended, in conformity with accounting principles generally accepted in Japan.
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and,in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such
U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

Yasumori Audit Corporation
Certified Public Accountants
March 25, 2011

ADK Annual Report 201063

Securities Holdings

ASATSU-DK INC. Consolidated Investments as of December 31, 2010
Millions of Yen

2010
Current

Bond investment trust/Money market fund
Bonds
Mutual funds in equities and bonds and others

Non-Current

¥

861
234

1 funds339

9 funds

Total¥ 1,436

WPP plc.

¥31,250

2.49% or 31,295,646 stocks

Digital Advertising Consortium, Inc.

2,454

Equity method

Other publicly traded equities

12,780132 issues

Publicly traded equities total

46,485

Non-publicly traded equities in affiliated companies

1,260

17 issues

Non-publicly traded equities in subsidiary companies

1,703

20 issues

Other non-publicly traded equities

1,823

70 issues

Non-publicly traded equities total

4,787

Bonds

1,358

10 issues

158

6 issues

Mutual funds in equities and bonds and others

Total non-current investments in securities

Investments in affiliated companies (Non-securities)

Total

52,790325

7 funds¥53,115

Millions of Yen

Top Five Equitiy Investments by Balance¥31,250

31,295,646 shares

ASAHI BREWERIES, Ltd.

1,573

1,000,000 shares

Tokyo Broadcasting System, Incorporated

WPP plc.

64

2010

1,133

982,900 shares

Shiseido Co., Ltd.

754

425,265 shares

Mitsubishi Corporation

681

310,000 shares

ADK Annual Report 2010

Financial Section

Investor Information(As of December 2010)

Parent company nameASATSU-DK INC.

EstablishedMarch 19, 1956

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

Number of employees

3,229 (consolidated basis)
1,936 (non-consolidated basis)

Common stock

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

Number of shareholders 9,003

Percentage of Total Shares Issued

Treasury stock

5.70%

Individual and others

18.30%

Financial institutions

12.68%

Securities companies

0.19%

Other domestic corporations

4.88%

Distribution
byownersForeigners

58.25%

Percentage of Ownership Voting*Major shareholders

WPP International Holding B.V.

24.26%

Northern Trust Company (AVFC) Sub Account American Client

6.62%

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

3,95%

The Silchester International Investors International Value Equity Trust

3.93%

Masao Inagaki

3.85%

State Street Bank and Trust Company

3.58%

JP Morgan Chase Bank, 380055

3.38%

State Street Bank and Trust Company 505223

3.04%

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

1.80%

State Street Bank and Trust Company 505225

1.76%*Percentage of Ownership Voting figures are based on 42,582,696 shares (45,155,400 shares issued andoutstanding, minus 2,572,704 shares of treasury stock).

Stock listing

Tokyo Stock Exchange, First Section

Securities code

9747

Transfer agent

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

Annual meeting

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

For further information

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

ADK Annual Report 201065

ADK Group Network

DOMESTIC
AGENCY GROUPADK International Inc. … ■1-1, Tsukiji 4-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3546-9100
Fax: +81-3-3546-9208
ADK Dialog Inc. … ■1-1, Tsukiji 4-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-5163
Fax: +81-3-3547-5152
ADK Interactive Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2780
Fax: +81-3-3547-2087
Digital Advertising Consortium Inc. … ❑20-3, Ebisu 4-chome,
Shibuya-ku, Tokyo 150-6033
Tel.: +81-3-5449-6200
Fax: +81-3-5449-6201
Kyowa Kikaku Ltd. … ■20-15, Shimbashi 2-chome,
Minato-ku, Tokyo 105-0004
Tel.: +81-3-3571-3111
Fax: +81-3-3571-3314
ASP Co., Ltd.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2100
Fax: +81-3-3547-2937
AD&M Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3524-5056
Fax: +81-3-3524-5058
DA search & link Inc.
5-11, Nishi-Shimbashi 1-chome,
Minato-ku, Tokyo 105-0003
Tel.: +81-3-5157-3951
Fax: +81-3-5157-3976
Cross Ocean Media, Inc.
4-5, Ebisunishi 2-chome,
Shibuya-ku, Tokyo 150-0021
Tel.: +81-3-6416-3194
Fax: +81-3-6416-3196
Cosmo Communications Inc.
24-15, Minami-Aoyama 2-chome,
Minato-ku, Tokyo 107-0062
Tel.: +81-3-3405-8111
Fax: +81-3-3405-8215

CREATIVE GROUPADK Arts Inc. … ■1-1, Tsukiji 4-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3545-5016
Fax: +81-3-3545-5075

66

ADK Annual Report 2010

Boys Inc. … ■13-13, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3545-1071
Fax: +81-3-3545-1305
Drill Inc.
19-5, Udagawa-cho,Shibuya-ku, Tokyo 150-0042
Tel.: +81-3-5428-8771
Fax: +81-3-5428-8772
TOPS INC.
46-3, Minami-Otsuka 3-chome,
Toshima-ku, Tokyo 170-0005
Tel.: +81-3-5955-7961
Fax: +81-3-5955-7950

ANIMATION CONTENT GROUP
Nihon Ad Systems Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2183
Fax: +81-3-3547-2098
Super Vision, Inc.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2156
Fax: +81-3-3547-2098
Right Song Music Publishing Co., Ltd.
13-1, Tsukiji 1-chome,
Chuo-ku, Tokyo 104-0045
Tel.: +81-3-3547-2184
Fax: +81-3-3547-2098
Eiken Co., Ltd. … ■56-7, Minamisenjyu 6-chome,
Arakawa-ku, Tokyo 116-0003
Tel.: +81-3-3802-3011
Fax: +81-3-3807-6205
PUBLISHING GROUP
Nihonbungeisha Co., Ltd. … ■1-7, Kanda-Jimbo-cho,
Chiyoda-ku, Tokyo 101-8407
Tel.: +81-3-3294-7771
Fax: +81-3-3294-7780
Neo Shobo Inc. … ■6-7, Shimbashi 1-chome,
Minato-ku, Tokyo 105-0004
Tel.: +81-3-3573-1277
Fax: +81-3-3574-8165

OVERSEASNORTH AMERICANew York
ADK America Inc. N.Y. … ■6F, 515 W. 20th Street,
New York, NY 10011, U.S.A.
Tel.: +1-646-284-9800
Fax: +1-646-284-9825

Los Angeles
ADK America Inc. L.A.
970 W. 190th Street, Suite 710,
Torrance, CA 90502, U.S.A.
Tel.: +1-310-630-3600
Fax: +1-310-630-3620

EUROPE
Frankfurt
Asatsu (Deutschland) GmbH … ■Waldschmidtstrasse 19,60316 Frankfurt,Frankfurt am Main, Germany
Tel.: +49-6997-120-832
Fax: +49-6997-120-821
Amsterdam
ADK Europe B.V. … ■Neptunusstraat 31,
2132 JA Hoofddorp, The Netherlands
Tel.: +31-23-554-3530
Fax: +31-23-554-3553
Knots Europe B.V.
Neptunusstraat 31,
2132 JA Hoofddorp, The Netherlands
Tel.: +31-23-554-3554
Fax: +31-23-554-3553
Paris
ADK France S.A.S.
352 Rue Saint-Honore,
75001 Paris, France
Tel.: +33-1-5345-3450
Fax: +33-1-5345-3455
Moscow
ASATSU-DK INC.
Moscow Representative Office
12 Krasnopresnenskaya nab., No. 1603,
Mezhdunarodnaya-2,
Moscow 123610, Russia
Tel.: +7-495-258-1591

ASIA
Beijing
Beijing Huawen-Asatsu International
Advertising Co., Ltd.
Room 1216, Spaces International Center,
No. 8 Dongdaqiao Road,
Chaoyang District,
Beijing 100020, P.R.C.
Tel.: +86-10-5870-3636
Fax: +86-10-5870-3628
Tiexu Advertising Co., Ltd.
18F, Golden Land Bldg.,
No. 32 Liangmaqiao Road,
Chaoyang District,
Beijing 100016, P.R.C.
Tel.: +86-10-6464-2122
Fax: +86-10-8448-3324
Beijing Asatsu Advertising Co., Ltd.
C-3, Huitong Office Park,
No. 71 Jianguo Road,
Chaoyang District,
Beijing 100025, P.R.C.
Tel.: +86-10-8599-7788
Fax: +86-10-8599-7579

ADK Group Network(As of April 2011)
Beijing DongFang SanMeng Public Relations
Consulting Co., Ltd.
Room 828, Beijing Capital Times Square,No. 88 Xichang’an Ave., Xicheng District,
Beijing 100031, P.R.C.
Tel.: +86-10-8391-3389
Fax: +86-10-8391-3399
Shanghai
Shanghai Asatsu Advertising Co., Ltd. … ■10F, Yongxing Mansion,
No. 887 Huaihai Zhong Lu,
Shanghai 200020, P.R.C.
Tel.: +86-21-6467-4118
Fax: +86-21-6474-7803
Asatsu (Shanghai) Exposition & AdvertisingCo., Ltd.
23F, Jiushifuxing Mansion,
No. 918 Huaihai Road (M),Shanghai 200020, P.R.C.
Tel.: +86-21-6415-5881
Fax: +86-21-6271-3651
Asatsu Century (Shanghai)
Advertising Co., Ltd. … ■9F, Yongxing Mansion,
No. 887 Huaihai Road (M),Shanghai 200020, P.R.C.
Tel.: +86-21-6474-8908
Fax: +86-21-6474-8909
Beijing DongFang SanMeng Public Relations
Consulting Co., Ltd. Shanghai Branch
Room 1201, Yongxing Mansion,
No. 887 Huaihai Road (M),Shanghai 200020, P.R.C.
Tel.: +86-21-6433-9875
Fax: +86-21-6443-9705
Guangzhou
Guangdong Guangxu (ASATSU)
Advertising Co., Ltd. … ❑26F, Telecom Plaza,No. 18 Zhongshan Er Road,
Guangzhou 510081, P.R.C.
Tel.: +86-20-8888-9818
Fax: +86-20-8888-9815
Shanghai Asatsu Advertising Co., Ltd.
Guangzhou Branch
Room 2604, 26F, Telecom Plaza,No. 18 Zhongshan Er Road,
Guangzhou 510081, P.R.C.
Tel.: +86-20-8888-8650
Fax: +86-20-8888-8461
ChengduShanghai Asatsu Advertising Co., Ltd.
Chengdu Branch
Room 1502, No. 16 in 3rd Section of
Hongxing Road,
Chengdu 610016, P.R.C.
Tel.: +86-28-8666-5471
Fax: +86-28-8672-5017
FuzhouShanghai Asatsu Advertising Co., Ltd.
Fuzhou Branch
15F, JianYin Bldg., 68 JingDa Road,
GuLou District, Fuzhou 350001, P.R.C.
Tel.: +86-591-8801-2100
Fax: +86-591-8801-2108

Hong KongASATSU-DK HONG KONG LTD. … ■25F, Leighton Centre, 77 Leighton Road,
Causeway Bay, Hong Kong
Tel.: +852-2895-8111
Fax: +852-2576-3322
DK ADVERTISING (HK) LTD. … ■25F, Leighton Centre, 77 Leighton Road,
Causeway Bay, Hong Kong
Tel.: +852-2811-9999
Fax: +852-2811-9699
Taipei
United-Asatsu International Ltd. … ■13F, No. 287 Nanking E. Road,
Sec. 3, Taipei 105, Taiwan, R.O.C.
Tel.: +886-2-8712-8555
Fax: +886-2-8712-9555
DIK-OCEAN Advertising Co., Ltd. … ■13F, No. 287 Nanking E. Road,
Sec. 3, Taipei 105, Taiwan, R.O.C.
Tel.: +886-2-8712-8555
Fax: +886-2-8712-9555
Singapore
ASATSU-DK SINGAPORE PTE. LTD. … ■1 Liang Seah Street, #02-05,
Singapore 189022
Tel.: +65-6333-5115
Fax: +65-6333-5225
Scoop AD WORLD Pte Ltd.
1 Liang Seah Street, #02-05,
Singapore 189022
Tel.: +65-6333-5115
Fax: +65-6333-5225
IMMG Pte Ltd.
213 Henderson Industrial Road, #01-09,
Henderson Industrial Park,
Singapore 159553
Tel.: +65-6376-5088
Fax: +65-6375-2029
Jakarta
PT. Asta Atria Surya
Wisma Slipi, Lantai 11 Jl. Let.
Jend. S. Parman Kav. 12,
Jakarta 11480, Indonesia
Tel.: +62-21-530-7155
Fax: +62-21-530-7156
PT. Perdana IMMG Indonesia
Jl. Kemang I No. 5,
Jakarta Selatan 12730, Indonesia
Tel.: +62-21-718-3311
Fax: +62-21-718-3322
Kuala Lumpur
ASATSU-DK Malaysia Sdn. Bhd.… ■Level 18, Menara Merais, No. 1,
Jalan 19/3, 46300 Petaling Jaya,
Selangor, Malaysia
Tel.: +603-7954-0388
Fax: +603-7954-0266
Dai-Ichi Kikaku (Malaysia) Sdn. Bhd.
C-13A-3A, Dataran 3 Two, No. 2,
Jalan 19/1, 46300 Petaling Jaya,
Selangor, Malaysia
Tel.: +603-7960-8106
Fax: +603-7960-8103

Bangkok
ASATSU (THAILAND) CO., LTD. … ■24F, Sirinrat Bldg.,
3388/86 Rama 4 Road, Klongton,
Klongtoey, Bangkok 10110, Thailand
Tel.: +66-2-367-5951
Fax: +66-2-367-5946
DAI-ICHI KIKAKU (THAILAND) CO., LTD. … ■23F, Shinawatra Tower III,
1010 Vibhavadi Rangsit Road,
Ladyao, Chatuchak,Bangkok 10900, Thailand
Tel.: +66-2-949-2700
Fax: +66-2-949-2777
ASDIK Ltd. … ■6F, Shinawatra Tower III,
1010 Vibhavadi, Rangsit Road,
Ladyao, Chatuchak,Bangkok 10900, Thailand
Tel.: +66-2-949-2800
Fax: +66-2-949-2805
Ho Chi Minh CityASATSU-DK VIETNAM INC.
28 Nguyen Van Thu Street,
District 1, Ho Chi Minh City, Vietnam
Tel.: +84-8-3910-5550
Fax: +84-8-3910-5551
SOL Advertising Company
28 Nguyen Van Thu Street,
District 1, Ho Chi Minh City, Vietnam
Tel.: +84-8-3910-5550
Fax: +84-8-3910-5551
ManilaADK INTEGRA INC.
25F, Raffles Corporate Center,
F. Ortigas, Jr. Road (formerly Emerald Ave.),
Ortigas Center, Pasig City 1605, Philippines
Tel.: +63-2-914-4297
Fax: +63-2-914-9001
Seoul
Asatsu-DK Korea Co.,Ltd.
7F, DaeHeung Bldg., 4-3, Yangjae-dong,Seocho-gu, Seoul, Korea
Tel.: +82-2-511-5934
Fax: +82-2-511-5935
New Delhi
ADK-FORTUNE PVT. LTD.
B1/B2, Enkay Centre, Udyog Vihar Phase-V,
Gurgaon 122016, India
Tel.: +91-124-453-9723
Fax: +91-124-453-9752
Dubai
AGA ADK advertising & marketing
3F, Fortune Executive Tower,
Jumeirah Lake Towers,
Dubai, United Arab Emirates
Tel.: +971-4-4458-383
Fax: +971-4-4503-948… ■ Consolidated subsidiaries… ❑ Affiliates accounted for by the equity
methodADK Annual Report 201067

ASATSU-DK INC.
http://www.adk.jp/english/index.html

Printed in Japan