Beruflich Dokumente
Kultur Dokumente
K A K U S H I N
P l a n
hs ngt tre f S entum Consolidat i o n o om M and Build i n g
Rebuilding Foundations
Phase 1
Petrochemicals Performance Products Functional Products Health Care Services
Phase 2
20042005
200620
08
T E N
S
3 4 5 7 9 13 15 25 27 29 31 33 35 61 65
Consolidated Financial Highlights Business Highlights To Our Shareholders and Stakeholders KAKUSHIN Plan: Phase 1 KAKUSHIN Plan: Phase 2 Review of Operations Segment Information Topics Battery Materials Business Optoelectronics Business Research & Development Responsible Care/Corporate Social Responsibility Board of Directors, Executive Officers and Corporate Auditors Financial Section Corporate Data Investors Information
Automotive
Daily Necessities
Health Care
2009 onward
Results of operations: Net sales Operating income Income before income taxes Net income Financial position: Total assets Shareholder's equity Per share: Net income Cash dividends
1,970,528 445,977
Yen
2,001,601 397,063
18,416.2 4,168.0
U.S. dollars
25.40 6.00
15.82 4.00
$0.24 0.06
Notes: 1. U.S. dollar amounts are converted, for convenience only, at the rate of 107=US$1. 2. Net income per share is based on the average number of shares outstanding during each period. 3. Cash dividends represent the amount that is approved by the shareholders of the Corporation after the fiscal year.
Net Sales
2001 2002 2003 2004 2005 0 500 1,000 1,500
Operating Income
2001 2002 2003 2004 2005 0 30 60 90
Total Assets
2001 2002
1,500
2,000
2,500
The Petrochemicals Segment achieved substantial growth and contributed to record earnings for the Group Petrochemicals Segment benefited from favorable market conditions, including a tight supply and demand balance and a robust overseas market, driven by strong demand from China. As a result, net sales in the fiscal year under review increased to 933.4 billion while operating income rose to 58.5 billion, more than double the operating income of the previous fiscal year. This performance significantly contributed to the favorable results of the entire Group. The worlds first single-sided, double-layer DVD recording disc developed and launched We began producing and selling innovative DVD discs featuring a double recording layer that provides approximately twice the storage capacity of conventional discs. The production of these single-sided, double-layer DVD discs requires a highly sophisticated technology for applying a dye coating on the first and second layers of the recording layer and inserting a spacer between the layers. The key to our success was the development of azo organic dye by Mitsubishi Kagaku Media Co., Ltd. Production and sales launched for newly developed urea solution to be used in next-generation, extremely low-emission diesel trucks The urea selective catalytic reduction (SCR) system for next-generation diesel trucks is an extremely low-emission technology. It substantially reduces nitrogen oxide emissions (NOx) by injecting urea solution into the engine exhaust pipe and decomposing the NOx contained in the exhaust gas into harmless water and nitrogen. We successfully developed a highdefinition urea solution for urea SCR systems and will promote the production and sales of the product through Nippon Kasei Chemical Co., Ltd., Japans largest producer of highdefinition urea solution. Demand for PTA showed rapid growth in China In response to rapidly growing demand for polyester fiber in China, we developed a plan for manufacturing and selling purified terephthalic acid (PTA) as a material for synthetic fiber in China. Under the plan, Mitsubishi Chemical Corporation formed a joint venture with ITOCHU Corporation and Mitsubishi Corporation and submitted to the Chinese government a detailed feasibility study for a PTA project in the Ningbo Daxie Development Zone. The study was approved in February 2005. The project will improve our competitiveness as one of the worlds largest manufacturers of PTA. Sales of core products such as Radicut and ANPLAG grew The year under review was characterized by adverse market conditions, including a decline in National Health Insurance (NHI) pharmaceutical prices, a reduced number of NHIapplied pharmaceuticals due to integrated medical treatment fees, and reduced income as a result of transferring an OTC drug to another company. We nevertheless recovered the sales of Radicut, an ethical neuroprotective agent, which became the first domestically developed pharmaceutical approved for NHI coverage, and sales of ANPLAG, an anti-platelet agent, also increased. High volume coke shipments continued In the carbon business, the volume of coke shipments remained as high as the previous fiscal year, thanks to robust steel production. The coke supplied by THE KANSAI COKE AND CHEMICALS CO., LTD.s Kakogawa and Sakaide plants ranks as top quality on a global standard.
Following this fiscal years robust performance by all segments, our focus for next fiscal year will be implementing KAKUSHIN Plan: Phase 2 to achieve sustained growth and progress
Managem en t Policies
To achieve customer satisfaction, shareholder satisfaction, and employee satisfaction To rejuvenate conservative corporate culture, making it a more dynamic and entrepreneurial To observe corporate ethics
Customer satisfaction is one of the Mitsubishi Chemical Groups first priorities and applies to all aspects of its business activities. This commitment is reflected in an accelerating shift to a solutions-based approach to business, and in basic policies designed to strengthen the total capabilities of the Group. The Mitsubishi Chemical Group is determined to reform its systems and realize its goals by rejuvenating corporate culture. We are equally determined to ensure that all Group companies comply with all laws and regulations. The Group is also dedicated to timely and reliable disclosure of information.
In the fiscal year ending March 31, 2005, the overall Japanese economy performed favorably, due primarily to strong export growth in the context of a robust global economy, particularly in the United States and China, as well as an increase in capital spending resulting from improved corporate profitability, despite excessive inventories in the IT and digital-related industry. This generally positive environment was also reflected in the performance of the Mitsubishi Chemical Group. Growing demand from China and other Asian markets, as well as strong demand from our customers industries in Japan and aboard provided a strong boost to product sales, particularly in petrochemicals. This fiscal year was the final year for KAKUSHIN Plan: Phase 1 (Phase 1), the initial phase of our management plan, and it was a resounding success. Not only did we meet the Plans goals for improving and enhancing our management infrastructure and achieving its numerical targets, we also strengthened our marketing efforts through expanded sales and development of new markets while recovering product prices. As a result of these efforts, we achieved substantial growth in both net sales and income, with net income surging over and above the previous record we achieved in the previous fiscal year, and operating income reaching 100 billion for the first time. Concretely, net sales for the fiscal year under review increased by 13.7% compared with the previous fiscal year to 2,189.5 billion, while operating income increased by 51.4% to 148.6 billion, due to the favorable market for petrochemical products and the streamlining of overall business operations. Ordinary income increased by 79.2% to 148.1 billion as a result of improvements in the balance of financial income/expenses and equity method income. Consolidated net income for the fiscal year under review rose by 60.3% to 55.4 billion, including the effect of the early adoption of accounting for impairment of fixed assets in the fiscal year under review.
Against this background, we began implementing KAKUSHIN Plan: Phase 2 (Phase 2) in April 2005, following the conclusion of Phase 1. Our overall objective for Phase 2 is to become a corporate group with sustained growth and progress, focusing on three business pillars: petrochemicals, performance and functional products, and health care. Concretely, in petrochemicals, we will actively expand operations in the rapidly growing Asian markets. In performance and functional products, we will accelerate our progress in increasing the ratio of new products and reinvigorate business as a Group. In health care, we will focus on the globalization of our pharmaceutical business and the development of new ventures in response to the rapidly changing medical care environment in Japan. We are committed to raising the profitability of the entire Group through these actions. In addition, Mitsubishi Chemical Corporation and Mitsubishi Pharma Corporation plan to establish a joint holding company in October 2005 in order to facilitate the positioning of Mitsubishi Pharma Corporation as a global pharmaceutical company as soon as possible. We will steadily implement programs to optimize and restructure our business management systems to increase the Groups corporate value. We possess a broad range of technology platforms, spanning petrochemicals, coal chemistry, organic and inorganic chemistry, and life science. Since our establishment, we have constantly created a variety of products and technologies to support everyday life and encourage the development of industries utilizing these assets. This deep reservoir of experience and know-how represents a rich resource for creating solutions that address the multiple business challenges of our customers. We intend to aggressively promote a unique solution business that takes on new challenges and generates greater momentum for the success of our customers, always remaining grateful for the ongoing trust and encouragement of our stakeholders.
Ryuichi Tomizawa President and Chief Executive Officer Mitsubishi Chemical Corporation
K A K USHIN Pla n
P ha se 1
Net sales by business segment (consolidated)
1,000
(Billions of Yen)
933.4
2004 2005
March 2005 marked the completion of Kakushin Plan: Phase 1 (Phase 1), the initial two-year phase of a basic management plan established in November 2002 toward achieving a five-year vision for the Group. We successfully achieved the targets of this first phase, covering April 2003 to March 2005. This report summarizes the objectives of Phase 1 and our efforts that resulted in recordbreaking annual profits.
800
741.4
600
453.1 470.0
400
200
Petrochemicals
Health Care
Performance Products
Functional Products
Services
and for ourselves. This motto expressed our decision to take on the increasingly complex, diverse and multifaceted issues confronting customers as our own challenges. The motto further affirmed the determination of each individual in the Group to achieve growth together by reaching across divisions and business segments to realize the full potential of the entire Group. The main objectives for Phase 1 were to restructure our businesses and reduce interest-bearing debt. To achieve these objectives, we set three numerical targets for fiscal years 2003 and 2004, and we subsequently achieved all of them.
58.6
(Billions of Yen)
2004
50
2005
40
growth through an overall restructuring of the Groups business foundation. Therefore, we created a corporate vision for where the company should be in five years and designed programs to achieve this vision. To ensure effective implementation, we established Phase 1 for fiscal 2003 to 2004 and KAKUSHIN Plan: Phase 2
30
20
10
-10
Petrochemicals
Performance Products
Functional Products
Health Care
Services
Corporate
-20
-12.0 -16.0
(Phase 2) for fiscal 2005 to 2007. The Group also adopted a new motto: Waves of Change! Making Changes Work! With our customers, for our customers . . .
Net sales
148.6 2,189.5
action: concentration, nurturing, strengthening, and restructuring. The purpose of these categories was to establish priorities and focus resources on
150
120 2,000
1,648.0
1,500
1,887.5 1,925.3 1,747.2 1,780.3 98.2 1,669.9 92.0 71.4 66.4 34.8 20.8 3.2 -27.5 -24.1 -45.3 34.5
90
those businesses with the greatest potential for profitability and growth.
1,340.2 30.4
60
55.4
30
The second challenge was to improve our financial structure, that is, to reduce interest-bearing debt to numerical targets
1,000
3.0
500
5.6 -12.0
set out in Phase 1. To that end, we enhanced cash flow management in capital
-30
and financial investment and finance. Research and development is essential for
0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-60
corporate growth. In this context, we identified the third challenge as strengthening research and technology development toward sustainable growth, and we steadily allocated resources to R&D based on a long-term perspective and solid planning. In July 2003, we established Mitsubishi Chemical Group Science and Technology Research Center, Inc. The Center supports us in creating new businesses and strengthening the common technological infrastructure of the Group as well as promoting joint research across the Group. The fourth challenge was minimizing costs. We intended to reduce all costs associated with production, from procurement to manufacturing, logistics, sales and administrative expenses. Our productivity improvement activities consequently focused on cutting costs and realizing highly stable plant operations. As a result, we reduced costs by approximately 40 billion for fiscal years 2003 and 2004. The fifth challenge was integrating Group strengths. The objective in meeting this challenge was to further develop the segment-based management system we introduced in April 2002. The system divides our operations into five segments to expedite decision-making and business execution. We established a means for gathering the expertise and experience of Group companies and each organization related to a specific business to provide customers with the best possible solutions. For example, MCC Group Information Center was set up under this system to handle inquiries and requests from within and outside of the Group.
competitiveness. Performance Products Segment: We identified and focused on the development of three strategically critical fields of business: information and electronics, environment and energy, intermediates and food ingredients. Functional Products Segment: We shifted to high value-added products and businesses in this segment and took advantage of synergies among Group companies to address diversifying market needs. Health Care Segment: We sharpened our competitive advantages in the pharmaceutical business, led by Mitsubishi Pharma Corporation and involving other Group companies, including Mitsubishi Kagaku Institute of Life Sciences and ZOEGENE Corporation. We also enhanced our overall health care ventures, including the diagnostic reagent business of Mitsubishi Kagaku Iatron, Inc. and the clinical testing services of Mitsubishi Kagaku Bio-Clinical Laboratories, Inc. Services Segment: We concentrated on strengthening competitiveness and establishing the independent profitability of each business across a broad range of areas such as engineering, logistics, information systems, chemical analysis and research. Based on our assessment of Phase 1 activities, we determined which programs to continue and identified remaining issues for the implementation of Phase 2, which began April 2005.
Hisashi Ishikawa
Member of the Board, Managing Executive Officer Supervising - Consolidated Management; Investor Relations; Finance and Accounting
3.5
800 600
2.5
2.2
400 200 0 2002 2003
1.6
2004 2005 Interest-bearing debt 1.5
D/E ratio
80 60
40 20 0
Petrochemicals Segment: We strategically focused resources on internationally competitive products and followed through to restructure and concentrate operations as well as to strengthen our
K A KUSH I N Plan
Ph a s e 2
The Implementation of Strategies to Leap into the Next Level of Growth and Progress
With the completion of Phase 1, the Group launched KAKUSHIN Plan: Phase 2 (Phase 2) in April 2005, encompassing the concluding three-year period from April 2005 through March 2008 of the basic management plan established in November 2002. Encouraged by Phase 1 accomplishments, which were achieved through Group-wide collaboration and effort, we will carry forward this momentum toward sustainable growth. This section summarizes the main points of Phase 2.
Numerical Targets in KAKUSHIN Plan: Phase 2
Operating income: more than 140 billion ROA (income before income taxes): more than 5.5% 1.5 max D/E Ratio:
Exchange rate: $1=105 Naphtha price: 26,000/kl
Emphasizing change, internally and externally, as the key to our strategies for growth
Net sales
2,350 billion
The biggest challenge of Phase 2 is to fully and unreservedly implement strategies for sustainable medium and long-term growth and progress. The key is stimulating change, which we define as increasing corporate value through transformation in our businesses as well as in our individual commitment to success. We will pursue growth by promoting the development of new products and entering new markets and by focusing on the most promising businesses in each of our three core segmentspetrochemicals, performance and functional products, and health care. At the start of Phase 2, we created a new Group vision, Good Chemistry for Tomorrow kagaku shapes the future, comprising four concepts of the Group.
We set numerical targets for Phase 2 to be achieved by the end of fiscal 2007. Moreover, we projected an operating income of approximately 180 billion for fiscal 2010. To achieve these targets, we will focus on growth through reforming our business portfolio, as started in Phase1, and strongly promote strategies that reflect our portfolio priorities. Concretely, we identified five key market domains: automotive; information and electronics; environment and energy; daily necessities; and health care. Within these domains, we designated twelve businesses for concentration and five key challenges. In each domain, we will commercialize new products, develop new production processes, and create new business models. For example, we plan for new products to account for 35% of our functional products. To support these efforts, we will promote substantial R&D and capital investments into designated businesses and challenges. For instance, we will increase capital investments by 20% compared with Phase 1 on a yearly basis. Of course, we will continue to focus on businesses other than those identified in the five key areas, since handling a variety of businesses is a Group strength and reflection of our comprehensive capabilities. For example, we develop businesses which, while not entirely novel, have consistently generated solid profits and led the Groups performance over
by each Group company and developed a Group-wide framework to ensure new synergies are generated as we grow in harmony with society. Phase 2 just started this year. We are confident of achieving our corporate goals in fiscal 2007, the final year of the Plan, and we eagerly look forward to formulating the next corporate vision for fiscal 2010.
Ryuichi Sato
Member of the Board, Managing Executive Officer, General Manager, Carbon Products Division Supervising - Corporate Planning
Concentration
Nurturing
Products to be developed as businesses which are prime candidates for concentration and therefore should be strategically promoted and nurtured.
Foundation Businesses which support concentration and nurture businesses by their supplementary function, profitability, and positioning in product chain, etc. Restructuring Businesses to be reviewed for deconsolidation, downsizing, or withdrawal by seizing opportunities.
Pharmaceuticals
Environmentally sound chemical system Performance polymers, high-performance films, compound materials
Organic synthesis, dye technologies, catalyst technologies, inorganic chemistry, polymerization, molding, high-precision surface processing, functional analysis, nanotechnology, biotechnology, bioinformatics
Technology Platforms
10
KAKUSHIN Pla n
P hase 2
In businesses for nurturing, we will create new profit sources by effectively applying our technological assets to growth markets from a long-term perspective. In businesses for restructuring, we will combine our experience with proven new approaches to actively address current issues.
Performance Products Segment
Basic philosophy
Reform of Business Portfolio Ratio of new products* to all performance and functional products, excluding the carbon business
Currently: 23% Target for fiscal 2007: 35%, or approximately 20% of all products Group-wide
* New products refers to products introduced within the last five years including those developed within the Group, innovative products, or products that were enhanced through improved processes. New product ratio is calculated based on product sales.
We intend to achieve dynamic growth with sustainable profitability by focusing on selected challenges and expediting program implementation. Concretely, our goal is for both return on assets (ROA) and return on invested capital (ROIC) to exceed 10%, with new products accounting for at least 30% of all product sales.
Challenges
At the business segment level, each Group company will work to achieve its mission and strengthen its management and businesses based on a basic philosophy, while encouraging a solid integration of Group strengths.
Petrochemicals Segment
Basic philosophy
We plan to increase profits by developing businesses for concentration at a global level while maintaining and strengthening domestic businesses for concentration based on actively developing technologies and effectively deploying outstanding human resources.
Challenges
1. Establishing a new business development system focused on four new strategic areassolid-state lighting, display materials, battery materials, and nanomaterialsto be managed by the Strategic Business Promotion Office, a new, independently operating entity. 2. Reclassifying businesses under broader categories, including environmentally sound chemical systems, display materials and fine chemicals, to create a business strategy for dynamic growth and progress. 3. Increasing the ratio of new products to ease the transition from declining businesses to growth businesses by boosting ratio of new products from 21% in fiscal 2004 to 33% by fiscal 2007.
Functional Products Segment
Basic philosophy
In businesses for concentration, we will increase revenues through intensive investments in growth markets, developing and deploying human resources on a global level, and continuing technology development. In domestic businesses for concentration, we will strategically invest in the operations of the Mizushima and Kashima Plants in order to establish a solid position as major Petrochemical complexes in the Asian region and ensure a steady supply of raw materials and stable profits.
Our goal is to strengthen our prowess in creating and developing business and continually deliver new value in everevolving markets. We plan to achieve substantial increases in profits and improve both ROA and return on sales (ROS) to approximately 10%.
Challenges
11
integrating the expertise and experience of Group companies to ensure successful product launches. 2. Effectively addressing rising raw material costs and declining product sales prices through differentiation of products and services and drastic cost reductions. 3. Improving the profitability of existing and general-use products by taking advantage of the synergies generated by newly launched products, high performance specialty products, and the combined strengths of Group companies.
contribute to improving the overall performance of Mitsubishi Chemical Corporation and support the business activities of Group companies.
Challenges
1. Supporting the service businesses of each Group company to help them achieve their goals. 2. Promoting collaboration among Group companies engaged in the same or similar businesses.
Mitsubishi Chemical Corporation and Mitsubishi Pharma Corporation plan to jointly establish a holding company on October 3, 2005 to boost corporate growth and transform Mitsubishi Pharma Corporation into a global, research-driven, pharmaceutical company
Mitsubishi Chemical Corporation and Mitsubishi Pharma Corporation plan to jointly establish a holding company, a parent company owning 100% equity of both companies, through a stock-for-stock exchange effective as of October 1, 2005. The reorganization will make both companies fully owned subsidiaries of the holding company. Mitsubishi Chemical Corporation introduced a management system by business segment organized by domain in April 2002. Upon further review of this system, we concluded a pure holding company system would have a greater impact on increasing corporate value and facilitating alliances in each business area. We therefore adopted this decision, recognizing that the new system would have the advantage of completely separating business portfolio management from the operational
Challenges
To adapt to a rapidly evolving health care environment, including changes in public medical insurance programs and the narrowing of covered medical treatments, we will facilitate the coordination of Group-wide sales activities by sharing information across the Group and establishing a system for accurately developing demand in the health care industry. Incorporating emerging needs into our R&D activities will lead to the development of a distinctive health care business that contributes to a more patientoriented health care system.
management of the individual businesses. We are currently implementing KAKUSHIN Plan: Phase 2, in which the early establishment of Mitsubishi Pharma Corporations position as a global researchdriven pharmaceutical company is one of the top priorities. We determined that managing Mitsubishi Pharma Corporation under the holding company system would enable us to apply the full strengths of the Group to support the operations of Mitsubishi Pharma Corporation while more effectively handling business alliances for the company. In addition, this new management system provides other business units of the Group with the same advantage of being able to quickly and flexibly respond to changes in the respective business environment for each business unit. We will gradually implement programs to optimize and restructure the business management systems of all business segments in Mitsubishi Chemical Corporation and other Group companies to increase the Groups corporate value.
Holding Company
Employees: About 60 personnel including those employees on loan
Services Segment
Basic philosophy
We will step up our ability to provide vital business infrastructures for Group service businesses as well as our supplementary support functions for their business operations. We also plan to continue reducing costs for strengthened competitiveness. These efforts will
1. Portfolio management Establishment of Group strategies Financial resource allocation and budgeting Management of Groups top executives Supervision of Groups management execution 2. Function as a listed company Appropriate disclosure of financial results, dividend payments and public and investor relations activities 3. Planning for the health care business
As of October 2005
100% ownership
100% ownership
12
Review of Operations
6.9%
Health Care
12.7%
Total
Functional Products Petrochemicals
2,189.5
Billions of Yen
16.3%
Perfomance Products
42.6%
The Mitsubishi Chemical Group divides its businesses into five segments in order for each segment to efficiently grow within an integrated strategy. The Petrochemicals Segment develops basic chemicals and a large number of secondary and tertiary derivatives while establishing product families. The Performance Products Segment offers a wide range of materials, components, and services focused on information and electronics, the environment and energy, and amenities such as intermediates and food ingredients. The Functional Products Segment provides high performance materials that have excellent properties, including resin films, construction, and civil engineering materials. The Health Care Segment is engaged in health care-related services in such fields as pharmaceuticals, clinical testing, and diagnostics, and also supports new drug discovery. The Services Segment delivers services required by the operations of the Mitsubishi Chemical Group as well as outside companies in such areas as engineering, logistics, information systems, environmental and application analyses, real estate, and office-related support.
21.5% Petrochemicals
(Billions of Yen) 50 60
-8.0 20.6
Net sales in the Petrochemicals Segment increased by 192.0 billion, up 25.9% from the previous fiscal year to 933.4 billion and operating income rose by 38.1 billion, up 186.3% to 58.6 billion. As in the previous fiscal year, annual production of ethylene as a basic material for the Petrochemicals Segment remained at full capacity, 1.33 million tons. Businesses such as basic petrochemicals, industrial chemicals, and raw materials for synthetic fibers performed well against the continued high prices of naphtha, thanks to tight supply and demand and robust overseas markets, particularly China. Polyolefin and polyvinyl chloride demonstrated strong performance due to adjustment in product prices caused by higher raw material prices and the successful implementation of various measures. In the fiscal year under review, we reported a significant gain as an average cost effect due to rapidly increased naphtha prices.
2004 2005
Major Business Purified terephthalic acid, C4 chemicals, polypropylene resins, phenol chain
Net Sales
Operating Income
Performance Products
(Billions of Yen) 30 40
8.2
10
20
Net sales in the Performance Products Segment increased by 16.9 billion, up 3.7% compared to the previous fiscal year to 470.0 billion. Operating income rose by 1.4 billion, up 3.6% to 40.6 billion. Performance polymers and food ingredients continued to show strong results. In the information and electronics product business, despite a decline in sales prices, the overall performance of the optical disc business was generally good due to the launch of new products, such as a singlesided, double-layer DVD+R disc. Organic photo conductor (OPC) drums achieved solid results with increased sales volume offsetting a decline in sales prices. In the carbon business, coke shipments were especially strong, thanks to the high level of steel production. However, the performance of the carbon black business fell short of projections due to the continuing high prices of raw materials. In the fertilizer business, we strove to expand the sales of high value-added products and streamline operations in order to deal with the elevated raw material prices.
Major Business Display materials, optical recording media, printing supplies, API and other intermediates, electronic chemicals, food ingredients, battery materials, carbon materials and products, inorganic materials, performance polymers
13
Net sales in the Functional Products Segment increased by 18.4 billion, up 5.5% compared to the previous fiscal year to 356.6 billion. Operating income rose by 6.0 billion, up 39.2% to 21.5 billion. In polyester films and composite film and sheet products, shipments for semiconductors and LCDs grew considerably while packaging materials performed well in the wake of growing demand from the beverage industry and the strong sales growth of new products. Civil engineering and construction-related products achieved favorable results despite the appreciation of the yen and high raw material prices.
Functional Products
(Billions of Yen) 20 30
11.1 10.8
2003 2004
Major Business Agricultural materials, construction and civil engineering materials, films and sheets, high performance materials
2005
Net sales in the Health Care Segment amounted to 277.8 billion, increased by 0.6 billion, up 0.2% from the previous fiscal year. Operating income declined by 0.5 billion, down 1.8% to 28.7 billion. In the pharmaceutical business, total sales declined under the impact of the April 2004 reduction in NHI pharmaceutical prices and the transfer of the over-the-counter (OTC) drug business, while sales increased for products such as Radicut, an ethical neuroprotective agent, and ANPLAG, an anti-platelet agent. The performance of the clinical diagnosis business was satisfactory, despite the negative effect of national medical service fee system reforms. Sales for the clinical testing business grew, partly in response to major orders of large-scale testing.
Health Care
(Billions of Yen) 40 60
24.5 30.5
2003 2004
Major Business Clinical testing, diagnostic reagents and instruments, pharmaceuticals, support for drug discovery
2005
Net sales in the Services Segment, rose by 24.5 billion, up 19.3% to 151.7 billion. Operating income rose by 1.3 billion, up 13.1% to 11.2 billion. The logistics service business operated at a high level as a result of the acquisition of new customers, while we increased the volume of orders in the engineering service business.
Services
(Billions of Yen) 20 30
9.5
10
2003 2004
Major Business Engineering, environment and application analyses, information management, information systems, logistics
2005
14
S e g me nt I nf o r m a t i o n
Petrochemicals Segment
Tokio Niikuni
Managing Executive Officer, Chief Operation Officer, Petrochemicals Segment (Petrochemicals Derivatives Field), General Manager, Petrochemicals R&TD Division
Etsujiro Koge
Managing Executive Officer, Chief Operation Officer, Petrochemicals Segment (Basic Petrochemicals Field), General Manager, Polyolefines Division
The Ethylene Center at the Kashima Plant
15
2005 TOPICS
May 2004
Kashima Plants Olefin Aroma Center expanded facilities in response to the diversification of raw materials
The expansion of these facilities will enable the use of heavy oil such as condensate, light oil and kerosene and thereby reduce our dependence on naphtha in order to strengthen international competitiveness. The upgrade will also broaden the available range of plant operation modes to respond to dynamic demand-and-supply balance of derivatives and emerging market trends. Through these improvements, we will establish a more flexible operating system at the Olefin Aroma Center.
November 2004
Mitsubishi Chemical Corporation agreed to examine a potential business alliance in the Kashima area
The Company agreed to examine a concrete plan and consider opportunities for joint investment for a business alliance centered on an oil refinery and petrochemicals in the Kashima area involving Japan Energy Corporation and Kashima Oil Co., Ltd. The purpose of the plan is to more effectively address trends and growth of market demand as well as environmental concerns.
February 2005
Chinese government approved feasibility study for purified terephthalic acid (PTA) project in Ningbo Daxie Development Zone
Ningbo PTA Investment Co., Ltd., which was established by Mitsubishi Chemical Corporation, ITOCHU Corporation and Mitsubishi Corporation, submitted a detailed feasibility study for a purified terephthalic acid (PTA) project on Ningbo Daxie Development Zone to the Chinese government in collaboration with the Chinese International Trust and Investment Corporation, Beijing, China in March, 2004. The study was approved by the Chinese government. Our goal is to meet the rapidly growing demand for PTA, which is raw material for polyether fibers.
Polypropylene resins Polypropylene (PP) resins exhibit outstanding physical properties, polymer processability and are environmentally safe. Already widely used in such products as food packaging materials and medical containers, their application in structural materials for automotive parts and home electronics is also growing. The market is expected to grow for this environmentfriendly material. Japan Polypropylene Corporation, a leading PP company in Japan, is continuing to develop cuttingedge technologies for high-performance products and to improve the competitiveness of products for general
use. Phenol chain Demand for polycarbonate resins, typically used as engineering plastics, is expected to surge in such areas as IT, automobiles, sports and medical care industries as these resins become vital materials in the daily life of the 21st century. The Mitsubishi Chemical Group operates an integrated product family, ranging from phenol to BPA, alkylphenol and polycarbonate resins. We intend to actively invest in this core business and respond to global demand by taking advantage of our premier manufacturing technology and useroriented development capability.
PET bottles
POINT
Product Family
A prime advantage of the Mitsubishi Chemical Group is comprehensive strength, generated by product families that extend from raw materials to secondary and tertiary derivatives and processed products. Products such as glacial acrylic acid, 1,4-butanediol, oxo products, phenol, acrylamide and purified terephthalic acid (PTA) benefit from our robust systems, encompassing monomers and polymer manufacturing, compounding, and processed resin products, which we continue to diversify and enhance with added functionality at every stage. These highly regarded proprietary manufacturing technologies have received high marks from customers and are being exported to countries around the world.
16
S e g m e n t I n f or m ation
Display materials We offer a wide range of solutions, including materials and components for liquid crystal displays (LCDs) and phosphors for CRT monitors and plasma display panels (PDPs).
Representative products: Color resists, lightemitting diodes (LEDs), and components for mobile phones.
Optical recording media The Mitsubishi Chemical Group has consistently led in developing large capacity, highly reliable products, including the worlds first commercialized 90 mm magneto-optical disc.
Representative products: CD-R/-RW, DVDR/RW, and magneto-optical (MO) discs.
Sugar ester
Nanocarbon products
Hiroshi Harayama
Managing Executive Officer, Chief Operation Officer, Performance Products Segment
Color toner
17
2005 Topics
December 2004
January 2005
December 2004
Mitsubishi Kagaku Media Co., Ltd. and Verbatim Limited developed the worlds first DVD discs based on the DVD9 format for single-sided double-layered DVDs. The discs are compatible with almost all general DVD players. DVD+R was introduced in May 2004 and DVD-R is scheduled to be launched in 2005. Mitsubishi Kagaku Media Co., Ltd. and Verbatim Limited introduced Japans first ultra-density optical (UDO) discs with 30GB capacity.
16x DVD disc for data use, the fastest writing speed currently available (DVD+R released in October 2004, DVD-R in December 2004) The new BIGAZO and Cine-R DVD disc series allow users to freely design and print their own DVD labels (March 2005)
Shinryo Corporation set up a production plant for electrolytes in GEMtek Corporation in Suzhou, Jiangsu Province, China. Mitsubishi Chemical Infonics Pte Ltd expanded its production facility for organic photo conductors in Singapore.
Electronic chemicals
The Group develops high purity chemicals used in semiconductor and LCD production lines. Each product presents the optimal solution for customer needs and processes.
Battery materials
We are the only Japanese manufacturer that develops and produces all key materials for secondary lithium ion batteries, which are in high demand for such products as mobile phones and hybrid vehicles. For customers engaged in developing these products, we offer
Food ingredients
We provide high quality food processing materials, such as sugar esters and polyglyceryl fatty acid esters that reflect the Groups R&D and technical service prowess.
Representative products: Aldehydes used for raw materials in fragrances and pesticide, materials for hair care and cosmetics, materials for polyimides, special epoxy resins, and monomers.
Performance polymers
The Group applies its polymerization, modification and compounding technologies to develop and manufacture polymers for such diverse fields as automobiles, food products, electric machinery and medicine.
Inorganic materials
We supply fertilizers, ammonia derivatives, inorganic acids and a wide array of other inorganic chemicals and industrial gas products.
Representative products: Thermoplastic elastomers, crosslinked polymers, adhesive polymers, and conductive polymers.
18
Se g m e n t In f o r m a t i o n
Katsu Takeuchi
Managing Executive Officer, Chief Operation Officer, Functional Products Segment Supervising - Corporate Marketing Department
Polyester films
ALPOLIC
19
2005 TOPICS
April 2004
MITSUBISHI CHEMICAL MKV COMPANY and MITSUI CHEMICAL PLATECH CO., LTD. jointly established MKV PLATECH CO., LTD.
The new company offers a broad range of products, from agricultural films to other materials, for the agriculture and gardening business, and supports the development of Japanese agriculture and gardening through R&D activities in a wide range of fields.
December 2004
Mitsubishi Chemical Functional Products, Inc. launched Excel EF Joint which enables fusion splice for single cross-linked polyethylene pipes
The company was the first to achieve fusion splicing for single cross-linked polyethylene pipes, a process that had been difficult to apply to hot and cold water feeding pipes for houses. This product is expected to substantially reduce cost while increasing reliability in installing tubes. We expect sales of 1.0 billion yen for fiscal year 2005.
Mitsubishi Plastics, Inc. launched new products for the first time in the industry
In January 2005, the company announced the successful development of HISHIRECYCLE, a three-layer unplasticized polyvinyl chloride joint made of recycled materials and used for sewage pipeline. Marketing of the product was launched in April 2005. Furthermore, in March 2005, the company introduced an ultra-thick unplasticized polyvinyl chloride sheet made by a continuous press process for use in the manufacturing industry. This polyvinyl chloride sheet facilitates the production of larger-sized LCDs and has been eagerly sought by makers of LCD manufacturing equipment. Both products demonstrate the companys sophisticated technologies.
Agricultural materials
MKV PLATECH CO., LTD. provides agricultural-purpose insulation materials in line with diversifying customer needs, including Daiyasutar, a long-life agricultural polyolefin film that uses metallocene plastomer for supple strength. The IFCO Container System of IFCO Japan Inc. links production areas and sales outlets. The system reduces the amount of waste generated and provides safe, efficient transport.
, a carbon fiber supplied by Mitsubishi Chemical Functional Products, Inc., enjoys widespread use in such fields as industrial materials, aerospace and construction. Replark carbon fiber sheets are popular as a principal material for seismic reinforcement and the repair of concrete structures such as bridge piers. MAFTEC alumina fiber is widely used and respected as an autowrap in high temperature environments and helps reduce environmental load. Advanced Plastics Compounds Company manufactures a variety of plastic compounds.
Daiyasutar
Autowraps
Replark
POINT
Solutions
The Functional Products Segment, which handles a variety of processed resin products, carefully listens customers to quickly grasp their needs and social concerns. We fully apply the segments accumulated knowledge in raw materials, polymer processing and composite technology to offer a broad range of products. In response to increasingly complex and sophisticated customer demands, we have worked to provide solutions that cross business segments and concentrate the Groups diverse technologies and expertise. Our goal is to generate new value that significantly contributes to the quality of life.
20
S e g m e n t I n fo rma tio n
As a leading pharmaceutical company in Japan, Mitsubishi Pharma Corporation engages in drug discovery efforts on a global scale to create innovative pharmaceuticals for the cardiovascular system, metabolism, central nervous system, respiratory system and immunology, as well as for combating cancer and hepatic diseases. For example, Radicut, a neuroprotective agent, is a novel free radical scavenger that has demonstrated remarkable clinical efficacy for acute strokes. It has become the first domestically developed drug to be approved by National Health Insurance for base and premium coverage. Mitsubishi Pharma Corporation also collaborates with Mitsubishi Chemical Corporation in research focused on genome-based drug discovery.
Early diagnosis is critical for maintaining and managing health. Mitsubishi Kagaku Iatron, Inc.s primary contributions to health management include a fully automatic latex photometric immunoassay (LPIA) system and the development of radioimmunoassay (RIA) reagents for ultrasensitive testing. The company is also expanding its line of DNA diagnostic products, a field undergoing rapid technological advance.
Kiyoshi Nakayama
Managing Executive Officer, Chief Operation Officer, Health Care Segment
The neuroprotective agent Radicut
21
2005 Topics
Mitsubishi Pharma Corporation
April 2004
March 2005
Mitsubishi Pharma Corporation acquired the remaining shares of the consolidated subsidiary Green Cross Guangzhou Pharmaceutical Co., Ltd., making it a wholly owned subsidiary that manufactures and sells parenterals and also provides academic information on imported pharmaceuticals. The transaction was part of the restructuring of Mitsubishi Pharma Corporations business in Asia, and will better position the company to engage in the rapidly growing prescription pharmaceutical business in China. Mitsubishi Pharma Corporation launched Zione Injection, an internal hemorrhoid sclerotherapy agent for removing internal hemorrhoids. The locally injected product uses aluminum potassium sulfate and tannic acid as active ingredients and was jointly developed by the company and Lequio Pharma Co., Ltd., an Okinawa-based venture.
November 2004
March 2005
ZOEGENE Corporation
ZOEGENE Corporation concluded a joint research agreement with Dainippon Pharmaceutical Co., Ltd. Under the agreement, Dainippon Pharmaceutical Co., Ltd. will conduct research into synthesis and pharmacological evaluation based on compounds designed by ZOEGENE Corporation in order to obtain candidate compounds for its own drug discovery related to diabetes and obesity. The objective is to discover and develop novel treatments with new mechanisms of action for diabetes and obesity.
Clinical testing
Mitsubishi Kagaku Bio-Clinical Laboratories, Inc. provides precise, fast clinical testing services to support an extensive range of medical and health care systems that contribute to the quality of peoples lives. The quality of research has been consistently high. One of the companys laboratories is accredited by the College of American Pathologists (CAP), and another is the only IOC-accredited laboratory for performing doping tests in Japan. Other laboratories, including the food sanitation and hygiene analysis laboratory, have acquired ISO 9001 certification.
Mitsubishi Chemical Safety Institute Ltd. is Japans largest contract research organization for non-clinical studies. Its portfolio of contract work with pharmaceutical companies is rapidly growing on the strength of the companys accumulated technology and experience in the safety testing of industrial chemicals, agrochemicals and other chemical products. ZOEGENE Corporation promotes its licensing business and the development of resources for drug discovery drawing upon the Groups intellectual property, technologies, and research foundations related to biotechnology. The companys testing capabilities encompass protein synthesis from cDNA and the functional analysis of proteins. It also licenses patented techniques to pharmaceutical companies and other organizations. Contracting ventures focus on the structural and functional analyses of proteins.
POINT
Global Network
ICH guidelines are being applied to clinical trials worldwide to accelerate and improve the efficiency of pharmaceutical development, and Mitsubishi Pharma Corporation is applying these guidelines to expedite the development of novel pharmaceuticals. Specific efforts include setting up local firms in the United Kingdom, the United States and Germany, in an aggressive effort to establish alliances with U.S. and European pharmaceutical manufacturers and research institutes and to cultivate joint R&D projects.
22
S e gme n t I nformation
Services Segment
Information systems
Ryoka Systems Inc. This companys array of solutions through the Mitsubishi Chemical Group includes highly advanced system integration services and the development of unique packaged software.
Logistics
Mitsubishi Chemical Logistics Corporation Logistic services are provided beyond the chemical industries to a wider range of industries by applying the high quality services and proven capabilities in providing safe, economic solutions that we have gained through our extensive experience in all logistics operations related to chemical products, including land and marine transportation.
Atsushi Baba
Managing Executive Officer, Chief Operation Officer, Services Segment Supervising - Public Relations; Administration; Human Resources; Purchasing and Logistics; Information Systems
23
Corporate Topics
April 2004
June 2004
January 2005
Released joint research report by a comprehensive and integrative industryacademia alliance, including Mitsubishi Chemical Corporation, Kyoto University, Pioneer Corporation and Rohm Co., Ltd.
Organic light-emitting transistor: Multi-function device which incorporates EL light-emitting function in an organic transistor. Using this transistor reduces the number of parts compared with existing organic EL displays. Low thermal-expansion transparent substrate: Flexible transparent substrate which applies for the first time the innovative concept of reinforcing transparent polymer with transparent nanofibers of biological origin. The use of a biological source enables biosynthesis, so that this substrate substantially reduces the environmental load associated with its production and disposal.
24
TOPICS 1
Li-ion batteries: opening the way for the automobiles of the next decade
The 1997 Kyoto Global Warming Conference challenged automakers to develop environmentally sound automobiles. The hybrid electric vehicle (HEV), which uses both electric power and gasoline, represents a very promising approach, although it requires high-performance electricity storage devices with superior efficiency and safety. Consequently, attention has focused on Li-ion batteries that generate 3.6V, nearly three times the rating of the currently popular nickel-metal-hydride (NiMH) batteries, and demonstrate greater power density in output of electric current per unit volume.
Meeting the challenge of increasing the number of Li-ion battery-equipped HEVs by 2008
To date, mobile phones, notebook computers and digital cameras have been the primary devices that take advantage of the compact size of high-voltage Li-ion batteries. HEVs, however, are an ideal application. Only 80 Li-ion batteries could deliver the 288V specification of an HEV that would otherwise require 240 NiMH batteries. This advantage makes possible smaller, lighter batteries with more responsive driving performance and a roomier interior, with greater freedom in vehicle design. Today, although HEVs account for 200,000 to 300,000 of the approximately 60 million automobiles produced annually across the world, the number of HEVs is expected to surge over the next ten years to occupy a significant proportion of cars coming off the assembly line. And major overseas automakers are expected to join the Japanese makers who are currently turning out these vehicles. The challenges are daunting. Materials determine battery characteristics and performance, which, in turn, significantly influence the development of onboard software that controls the batteries. Moreover, automobile batteries are expected to operate for ten to fifteen years while maintaining consistent durability and safety. Consequently, a genuine Li-ion batteryequipped HEV is only possible through the creative chemistry of an expert automaker and a comprehensive chemical enterprise. Mitsubishi Chemical Corporation, which made an enormous contribution to commercialize automobile batteries in 2003, is a prime candidate for meeting these challenges and seizing this opportunity. The potential of Li-ion battery-equipped HEVs can already be seen in vehicles which use Li-ion batteries to eliminate idling. Mitsubishi Chemical Corporation has been concentrating its resources on Li-ion battery materials for HEVs that are expected to move into full-scale production around 2008. We are well-equipped to satisfy the sophisticated needs of customers with extensive experience and wealth of expertise in Li-ion batteries that support a comprehensive system encompassing R&D, manufacturing and sales.
Cell voltage Operating temperature Energy density by weight Energy density by volume Power density
25
The only comprehensive chemical manufacturer in the world that handles key battery materials
Since first entering the battery materials business in the 1970s with high-purity solvents for Lithium primary batteries, Mitsubishi Chemical Corporation has steadily advanced. An initiative sponsored by the Company president in 1998 led to the establishment of todays Battery Materials Department. Our research and development is based on recognizing that a battery is essentially a small chemical factory that produces a stable supply of electricity through controlled chemical reactions. As a result, we possess an overwhelming competitive advantage in evaluation and analysis technologies related to batteries, and are widely recognized as the number one enterprise in the field. In 2004, we received the Battery Technology Award from the Electrochemical Society in the United States. Mitsubishi Chemical Corporation is the only comprehensive chemicals maker in the world that handles key battery materials, including cathodes, anodes and electrolytes. This allows us to uniquely offer the optimum combination of these components for the specific requirements of our customers. Dramatic growth in this market is virtually assured. The current annual production of Li-ion batteries for consumer products is estimated at 1.3 billion to 1.4 billion cells for the entire industry, and is expected to double over the next seven to eight years. Beyond consumer products, the greatest growth in demand is expected to come from HEVs, industrial robots and hybrid-type train carriages, adding up to an immense potential market for Li-ion batteries. Mitsubishi Chemical Corporation is well-positioned to lead the way into the coming era of high-performance storage devices.
Junji Eguchi
Associate Director, General Manager, Battery Materials Department
Growth Stage 302Q3 Full-scale LIB shift in GSM terminals Expanding Chinese demand for battery packs 01Q3 Rise of Asian manufacturers Oversupply Stage 3
Oversupply Stage 1 97Q1 Tube cells Growth Stage 196Q2 Shift to Pentium in notebook computers
26
TOPI C S 2
Optoelectronics Business
Evolving from accessory usage into a major, energy conserving lighting source high-intensity white LEDs are poised to light up the settings of everyday life
The most promising and realistic option for conserving energy is reducing the energy required for lighting, which accounts for 20% of all private-sector energy consumption. In addition, fluorescent lights contain mercury, a hazardous waste substance. Innovation in lighting technology, therefore, is vital for protecting the environment. One of the more revolutionary technologies is high-intensity white light emitting diodes (LEDs). First invented in the 1960s, LEDs have come into wide use, benefiting from the invention of blue LEDs and the subsequent availability of LEDs in the three primary colors of light: red, green and blue. Blue LEDs were recently brought to public attention in a high-profile, intellectual property lawsuit in Japan.
White-color light
LED chips
Emitting layer
Energy Efficiency
LEDs Fluorescent lamps Incandescent lamps
Crystal substrate
MCC, MCRC
40% 1 30,000-60,000
5% x8 1,000
27
Yasuji Kobashi
General Manager, Optoelectronics Department
Colors Created Using Green and Red Phosphors with a Blue LED
Lighting colors inside the triangle (shown to the left) can be created by mixing appropriate quantities of phosphors. White color (high color rendering property) Pastel color
GaAs ingot
Several hundreds lm
Lighting
Green Yellow
Tens of lm
LCD backlighting
Red
Number lm
Display
Indicator, LED, display, Traffic signal
Blue
Around 1993 End of 1999 Around 2000 2002 2003 Around 2005 Around 2015
28
R&D
The Mitsubishi Chemical Group recognizes R&D as a principal driver of sustainable growth. Its mission is to deliver complete customer satisfaction and value through competitive science and technology. We produce a broad range of products, from petrochemical and biomedical products to digital home electronics. To support such diversity, our R&D efforts also vary in period and scope, encompassing both short-term and long-term efforts as well as basic research on specific themes and interdisciplinary research.
Display
To become the worlds No.1 player in materials for devices with organic coating.
Renewable Resources
To become a leader in developing an environmentally sound product business by utilizing technologies such as biosynthesis, catalysis and synthesis/processing of polymers which use plant resources.
The Mitsubishi Chemical Group boasts the world's premier products, materials and expertise across a broad range of areas, such as phenol-chain, purified terephthalic acid, polycarbonates, C4 chemicals, OPC, lithium-ion secondary battery materials, compound semiconductors, optical recording media and drugs for improving brain functions. We will ensure our continued leadership in these areas and further advance our technologies and know-how to the highest level by fostering an intellectual environment conducive to obtaining our objectives. With the completion of KAKUSHIN Plan: Phase 1 last year, we reformed our corporate organizational structure toward improving our business infrastructure. Through these reforms, we are steadily evolving from a material supplier into a product innovator and customer solution partner that effectively responds to the latest market requirements. In the concentration and nurturing of businesses promoted in KAKUSHIN Plan: Phase 2, we will clearly define the mission for research and continue to encourage the adoption of a product and customer-oriented approach, by establishing a review committee and a project team system. Each project team is led by a business strategy leader and a technology strategy leader, and projects are reviewed and implemented in relationship to their commercial and technological potential. Researchers must also be actively engaged as entrepreneurs in the entire R&D process. It is believed this change in the awareness of researchers will help to reinforce existing businesses, develop technology platforms and create new businesses.
29
implement specific patent strategies. We incorporate our patents into our business strategy based on reviews and decision on the creation of property rights related to specific patents, as well as how they would be effectively used by the divisions concerned.
30
RC/ C S R
Responsible Care Activities: Ensuring safety and environment protection in all corporate activities
Responsible Care (RC) is a voluntary program implemented by chemical companies to ensure safety and environmental protection throughout all processes related to the handling of chemical substances and products, from research and development, manufacturing, and distribution, to consumption and disposal. Mitsubishi Chemical Corporation began its RC activities in 1995 and established a Group RC policy in 2003 to actively promote environmental management across the Group.
Osamu Fujishima
Managing Executive Officer General Manager, Technology and Production Center Supervising - Production; Process Safety Technology; Environment and Health Safety; Quality Assurance; Utility
Action
Group-wide efforts to achieve targets.
Check
Plan
Review of RC activities and program progress by audit teams.
In the area of preventing disasters and ensuring occupational safety, our goal is zero accidents and disasters in every plant and research center. As part of these efforts, we Annual development of RC policy and program conduct safety assessments when building or upgrading plants as well as safety reviews of activities. existing processes. We also work to establish manufacturing processes with unparalleled RC improvement in operational safety, utilizing our wealth of accumulated production Excerpt from a document produced by Environment, Safety and technologies. Quality Department of Technology and Manufacturing Center. To ensure chemical safety, we promote the total management of chemical substances, and we RC Organizational Structure of the Mitsubishi Chemical Group participate in establishing international guidelines and conducting green procurement. RC Promotion Committee of the Mitsubishi Chemical Group Chairman: President of Mitsubishi Chemical Corporation We are also actively involved in the prevention of global warming, the reduction and recycling RC Follow-up Committee of industrial wastes and the Pollutant Release and Transfer Register (PRTR). The Mitsubishi Chemical Group is deeply committed to ensuring safety and environmental Group Company RC Promotion Meeting Segment Segment (Department) RC Committee protection as a chemical manufacturer and a responsible corporate citizen.
RC Policy
Do
Plant RC Committee
31
Compliance with laws and regulations is a fundamental requirement for corporate activities. The Mitsubishi Chemical Group launched its Compliance Program in October 2004 and continually strives to raise the awareness of compliance with laws, regulations and corporate ethics across the entire Group.
Yosuke Yamada
Representative Director, Member of the Board, Senior Managing Executive Officer, Chief Compliance Officer
32
Kanji Shono
Hiroshi Harayama
Osamu Fujishima
Ryuichi Sato
Atsushi Baba Kiyoshi Nakayama Ryuichi Tomizawa Etsujiro Koge Masaoki Funada Yosuke Yamada Yoshimitsu Kobayashi Tokio Niikuni
Katsu Takeuchi
Hisashi Ishikawa
Yoshiyuki Maekawa
George Stephanopoulos
Shinichiro Handa
33
Kanji Shono
Representative Director, Member of the Board, President and Chief Executive Officer
Executive Officers
Tomihisa Ikeura
General Manager, Yokkaichi Plant, Technology and Production Center
Nobukazu Imamura
(Petrochemicals Segment)
Ryuichi Tomizawa
Representative Director, Member of the Board, Deputy Chief Executive Officer
Kenichi Uno
(Corporate Planning Department)
Shigenori Otsuka
President, Mitsubishi Kagaku Media Co., Ltd.
Masaoki Funada
Supervising - Special Mission, Internal Audit Representative Director, Member of the Board, Senior Managing Executive Officer
Toshihiko Okada
General Manager, Mizushima Plant, Technology and Production Center
Hiromi Ogawa
General Manager, Internal Audit Department
Yosuke Yamada
Chief Compliance Officer Members of the Board, Managing Executive Officers
Yasuhiro Kajiwara
General Manager, Technology Coordination Department, Technology and Production Center; General Manager, Planning and Coordination Department, Technology and Production Center
Ryuichi Sato
General Manager, Carbon Products Division Supervising - Corporate Planning
Kazuo Kikuchi
(Performance Products Segment)
Eiji Tanaka
General Manager, MCC-Group Science & Technology Office
Hisashi Ishikawa
Supervising - Consolidated Management; Investor Relations; Finance and Accounting Members of the Board
Shigeo Tanaka
General Manager, Kurosaki Plant, Technology and Production Center
Noboru Tsuda
General Manager, Corporate Planning Department
Akira Naito
General Manager, Performance Products Planning and Coordination Division
Takashi Furusawa
General Manager, Corporate Marketing Department
Shigeyoshi Murase
General Manager, Finance and Accounting Department
Toshikazu Yamabe
General Manager, Terephthalic Acid Division; General Manager, Petrochemicals Planning and Coordination Division
Shinichiro Handa
Senior Corporate Adviser, Mitsubishi Pharma Corporation
Hiroshi Yoshida
General Manager, Kashima Plant, Technology and Production Center
Shotaro Yoshimura
General Manager, Consolidated Management Department
Etsujiro Koge
Chief Operation Officer, Petrochemicals Segment (Basic Petrochemicals Field) General Manager, Polyolefines Division
Corporate Auditors
Yoshimitsu Kobayashi
Chief Technology Officer Supervising - MCC-Group Corporate Science & Technology Strategy; MCC- Group Corporate Science & Technology Research; Intellectual Property
Katsu Takeuchi
Chief Operation Officer, Functional Products Segment Supervising - Corporate Marketing Department
Kiyoshi Nakayama
Chief Operation Officer, Health Care Segment
Tokio Niikuni
Chief Operation Officer, Petrochemicals Segment (Petrochemicals Derivatives Field) General Manager, Petrochemicals R&TD Division
Atsushi Baba
Chief Operation Officer, Services Segment Supervising - Public Relations; Administration; Human Resources; Purchasing and Logistics; Information Systems
Hiroshi Harayama
Chief Operation Officer, Performance Products Segment
Osamu Fujishima
General Manager, Technology and Production Center Supervising - Production; Process Safety Technology;
34
2005
Financial Section
Consolidated Five Year Summary Segment Information Managements Discussion and Analysis Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Shareholders Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors 45 47 48 49 50 59 36 37 39
60 65
35
2005 Results of operations: Net sales Operating income Income (loss) before income taxes Net income (loss) Financial position: Total assets Inventories Property, plant and equipment Short-term and long-term debt Shareholders equity Ratio of shareholders equity to total assets (%) General: Capital expenditures Depreciation and amortization R&D expenditures Shareholders of record (number) Employees (number) 1,970,528 277,721 674,953 704,077 445,977 22.6 2,189,462 148,624 106,604 55,372
U.S. Dollars
(20.78) 157.86
Notes: 1. U.S. dollar amounts are converted, for convenience only, at the rate of 107=US$1. 2. Net income per share is based on the average number of shares outstanding during each period. 3. Cash dividends represent the amount that is approved by the shareholders of the Corporation after the fiscal year.
36
Segment Information
Mitsubishi Chemical Corporation and its consolidated subsidiaries Years ended March 31, 2005 and 2004
Net Sales
Millions of Yen Millions of U.S. Dollars
INDUSTRY SEGMENT Petrochemicals Perfomance Products Functional Products Health Care Services Subtotal Corporate Costs Total
2004 741,443 453,118 338,144 277,217 115,409 1,925,331 1,925,331 Total Assets
Depreciation
Millions of U.S. Dollars Millions of Yen Millions of U.S. Dollars
Millions of Yen
INDUSTRY SEGMENT Petrochemicals Perfomance Products Functional Products Health Care Services Subtotal Corporate Assets and Eliminations Total
2004 30,348 22,059 16,718 14,743 7,721 91,589 3,970 95,559 R&D Expenditures
Capital Expenditures
Millions of Yen Millions of U.S. Dollars
Millions of Yen
INDUSTRY SEGMENT Petrochemicals Perfomance Products Functional Products Health Care Services Subtotal Corporate R&D and Other Total
Employees (Number) INDUSTRY SEGMENT Petrochemicals Perfomance Products Functional Products Health Care Services Subtotal Corporate R&D and Other Total 2005 4,530 6,622 7,053 8,608 5,648 32,461 800 33,261 2004 4,611 6,919 7,027 8,669 5,451 32,677 819 33,496
Note: For the fiscal year ended March 31, 2005, one consolidated subsidiary was reclassified from the Performance Products Segment to the Services Segment to reflect its performance in the more appropriate segment. This change increased sales by 13,833 million yen and total assets by 9,365 million yen in the Services Segment and decreased sales by 13,833 million yen and total assets by 9,365 million yen in the Performance Products Segment compared to the results that would have been achieved under the previous segmentation. The impact on the operating income, depreciation, capital expenditures, and R&D expenditures in both segments is immaterial.
37
As noted in Significant Accounting Policies, the Corporation changed the foreign currency translation policy for the income and costs of overseas subsidiaries and affiliates from the fiscal year ended March 31, 2005. This change in the accounting policy had the following effect on sales compared to the previous method: for the Petrochemical Segment, an increase of 5,633 million yen; for the Performance Products Segment, a decrease of 926 million yen; for the Functional Products Segment, an increase of 66 million yen; for the Health Care Segment, an increase of 20 million yen. Operating income for the fiscal year ended March 31, 2005 was affected as follows: for the Petrochemical Segment, an increase of 131 million yen; for the Performance Products Segment, a decrease of 48 million yen; for the Functional Products Segment, an increase of 65 million yen; for the Health Care Segment, an increase of 18 million yen; for the Services Segment, a decrease of 1 million yen. As noted in Significant Accounting Policies, the Corporation has adopted the accounting policy for impairment loss on fixed assets from the fiscal year ended March 31, 2005. This change in the accounting policy had the following effect on operating income compared to the previous method: for the Petrochemical Segment, a decrease of 666 million yen; for the Performance Products Segment, a decrease of 2,451 million yen; for the Functional Products Segment, a decrease of 767 million yen; for the Health Care Segment, a decrease of 4,070 million yen; for the Service Segment, 7,100 million yen; for the Corporate and Eliminations, a decrease of 2,248 million yen.
Net Sales
Millions of Yen Millions of U.S. Dollars
Millions of Yen
GEOGRAPHIC DISTRIBUTION Japan Asia Other Subtotal Corporate Assets and Eliminations Total
Note: As noted in Significant Accounting Policies, the Corporation changed the foreign currency translation policy for the income and costs of overseas subsidiaries and affiliates from the fiscal year ended March 31, 2005. This change in the accounting policy affected sales by geographic area compared to the previous method as follows: for Asia, an increase of 5,332 million yen; for other areas, a decrease of 539 million yen. Operating income for the fiscal year ended March 31, 2005 was affected as follows: for Asia, an increase of 164 million yen; for other areas, an increase of 1 million yen.
Millions of Yen
OVERSEAS SALES Asia Other Total Overseas Sales Consolidated Sales Percentage of Overseas Sales to Consolidated Sales
Note: Major countries or areas in the categories Asia and Other are as follows: Asia : China, Taiwan, Korea, Indonesia, Thailand, India Other: North America, Europe
38
In the consolidated accounting period ended March 31, 2005, the Japanese economy generally fared well, benefiting from robust exports due to a strong global economy, particularly in the United States and China, and the growth of capital spending caused by improved corporate profitability, despite excessive inventories in the IT and digital industries. The business environment surrounding the Mitsubishi Chemical Group was favorable due to the solid performance of our customers industries in Japan and abroad, despite a sharp rise in the prices of crude oil and naphtha, which continued at higher-than-expected levels. Under these circumstances, all the Group companies continued to strongly pursue marketing activities to increase sales and develop new demand as well as to recover product prices and achieve the targets of the KAKUSHIN Plan: Phase 1 Rebuilding Foundations. As a result of these efforts, net sales for the fiscal year ended March 31, 2005 reached 2,189.4 billion, up 13.7% year-on-year due to the continued strong performance of petrochemical products and robust demand from the steel industry, despite the adverse affect of reduced National Health Insurance (NHI) pharmaceutical prices on the pharmaceutical business. Operating income rose by 51.4% to 148.6 billion due to the favorable market for petrochemical products and the streamlining of overall business operations. Ordinary income increased by 79.2% to 148.0 billion due to improvements in the balance of interest income and expenses and equity method income. Income before income taxes rose by 60.2% to 55.3 billion.
Results of Operations
Net Sales The business environment for the Mitsubishi Chemical Group fared well due to the favorable performance of our customers industries in Japan and abroad, despite a sharp rise in the prices of crude oil and naphtha, which subsequently remained at high levels. Consequently, net sales for the fiscal year under review increased by 264.1 billion or 13.7% compared to the previous fiscal year, to 2,189.4 billion, due to the recovery of product prices resulting from continued high crude oil prices, strong performance of petrochemical products in the Petrochemicals Segment, strong demand from the steel industry in the Performance Products Segment, and in spite of the adverse impact of a decline in NHI pharmaceutical prices on businesses in the Heath Care Segment. Operating Income Operating income for the fiscal year under review increased by 50.4 billion or 51.4% compared to the previous fiscal year, to 148.6 billion. The positive factors affecting operating income included a favorable balance of supply and demand in basic petrochemical products, industrial chemicals and raw materials for synthetic fibers in the Petrochemicals Segment; strong performance in the overseas market due to strong demand from China, large gains on the price difference in inventories as a result of sharply rising naphtha prices; an increase in sales volume attributable to the launch of new products, despite the negative effect of declining selling prices of information and electronics products, including optical discs in the Performance Products Segment; streamlining benefits and reducing fixed costs, mainly in the Petrochemical, Functional Products and Health Care Segments. The ratio of operating income to net sales for the fiscal year under review improved from 5.0% in the previous fiscal year to 6.7%. Other Income and Expenses Interest received declined by 0.1 billion from the previous fiscal year to 1.1 billion and dividends received increased by 1.0 billion to 3.5 billion. Interest payments declined by 2.2 billion to 10.8 billion. Consequently, net financial expenses amounted to 6.1 billion, a year-on-year reduction of 3.0 billion.
39
Equity method investment income amounted to 8.9 billion, up 4.3 billion compared to the previous fiscal year. This was due primarily to the fact that a majority of the affiliates to which the equity method was applied, including Sam Nam Petrochemical Co., Ltd., Korea, reported increased net income. An exchange gain of 4.0 billion was reported for the fiscal year under review as nonoperating income, compared to an exchange loss of 3.4 billion reported as non-operating losses in the previous fiscal year. This was due mainly to the fact that the Corporation and its consolidated subsidiaries in Japan reported exchange gains from the appreciation of the dollar against the yen. Personnel expenses for employees temporarily assigned to other companies amounted to 4.5 billion, a reduction of 5.1 billion compared to the previous fiscal year. This was attributable to the reduced amortization of actuarial differences as a reduced liability relating to pension fund investment, and lowered post-employment benefit obligations associated with the Corporations amendment of its retirement benefits and pension fund program. The main other income items were a 3.1 billion gain on the sales of property, plant and equipment, a 2.4 billion from a decrease of post-employment profit obligations resulting from the transition of the pension system, and a 2.0 billion gain on sales of investment securities. The major items recorded as other expenses were a 17.3 billion for impairment loss on fixed assets; 8.0 billion for the amortization of differences due to a change in the retirement benefit accounting standard; a 7.3 billion loss on disposal of property, plant and equipment; a 3.4 billion loss for allowance for disposal of property, plant and equipment; a 3.4 billion revaluation loss in investment securities; and 3.3 billion in additional benefits for employees early retirement. Net Income Income taxes paid in the fiscal year under review totaled 35.7 billion. Net income tax amounted to 5.1 billion. Taxation expenses came to 40.8 billion. The income tax burden after applying tax effect accounting was 38.2%. Minority interests for the fiscal year under review were 10.4 billion, up 1.6 billion from the previous fiscal year. This increase was primarily the result of a substantial year-on-year improvement in the net income of V-Tech Corporation. As a result, net income rose by 20.8 billion or 60.2% from the previous fiscal year to 55.3 billion.
Net Sales
Billions of Yen 2,400 Overseas Sales Ratio % 30
2,189.5
Operating Income
Billions of Yen 150 Operating Income Ratio %
148.6
10
60 40 20 0
2,000
1,747.1 1,780.3
25
25.9%
120
8 10
98.1 3.1
1,600
21.6% 19.7%
22.4%
20 90 15
66.4 91.9
6
6.79%
0
1.45 9.75
1,200
-10 60
5.09% 4.87% 3.80% 34.8
-20
(20.78)
-20 -30
800
10 30
1.95%
400
2 -40 0 2001 2002 2003 2004 2005 -50 2001 (45.2) 2002 2003 2004 2005
-100
40
41
R&D Expenditures
Billions of Yen 100
91.0 84.5 88.5 89.2
80
68.0
60
40
20
42
Financial Position
Assets Total assets of the Mitsubishi Chemical Group at the end of the year under review were 1,970.5 billion, down 31.0 billion compared to the end of the previous fiscal year. This result was due mainly to a reduction of 48.3 billion in property, plant and equipment, which resulted from constrained capital expenditures under depreciation and impairment loss on fixed assets. This led to a reduction of 11.7 billion in deferred tax assets, despite a 25.9 billion increase in the value of inventories due to higher raw material prices. Liabilities Liabilities declined by 83.5 billion to 1,385.1 billion at the end of the fiscal year under review. Positive factors, including a reduction of 157.4 billion in interest-bearing debt, particularly loans and commercial paper, more than compensated for such negative factors as the increase of 57.7 billion in trade payables (accounts and bills payable) due mainly to higher raw material prices. Minority Interests Minority interests at the end of the fiscal year under review rose by 3.6 billion from the end of the previous fiscal year, to 139.4 billion. Equity Equity at the end of the fiscal year under review increased by 48.9 billion from the previous fiscal year to 445.9 billion. The primary reason was an increase of 35.2 billion in retained earnings resulting from a net income of 55.3 billion, an increase of 12.8 billion in valuation gain on investment securities. As a result, the shareholders equity ratio at the end of the fiscal year under review was 22.6%, up from 19.8% at the end of the previous fiscal year.
Cash Flows
Free cash flows, which consist of cash flows provided by operating activities and investment activities, amounted to 165.1 billion, up 95.8 billion from the previous fiscal year. The factors behind the increase were income before income taxes of 106.6 billion, a reduction in working capital by improving payment terms of trade receivables, and no substantial funding needs comparable to the previous fiscal years acquisition of Mitsubishi Pharma Corporation shares through a takeover bid. Cash and cash equivalents provided by these cash flows were used to repay interest-bearing debt and to pay dividends to shareholders of the Corporation and its consolidated subsidiaries. The balance of cash and cash equivalents at the end of the fiscal year under review was 52.5 billion, down 4.9 billion from the previous fiscal year. Net Cash Provided by Operating Activities Net cash provided by operating activities at the end of the fiscal year under review amounted to 222.8 billion, up 77.8 billion from the end of the previous fiscal year. The increase resulted mainly from a 35.8 billion rise in income before income taxes, reduced working capital, achieved through offsetting increased accounts receivables associated with higher raw material prices by improving payment terms, and an increase in trade payables resulting from higher raw material prices. Net Cash used in Investing Activities Net cash used in investing activities declined by 18.0 billion to 57.6 billion at the end of the fiscal year under review. This was primarily the result of requiring no substantial funding such as the previous fiscal years payments of 53.5 billion for the acquisition of Mitsubishi Pharma Corporation shares by a takeover bid, even as revenue declined due to reduced revenue from the transfer of goodwill and a reduction in investment assets due to sales of investment securities.
43
Net Cash used in Financing Activities Net cash used in financing activities in the fiscal year under review amounted to 171.3 billion, up 101.0 billion from the previous fiscal year. The main financing activities included the redemption of corporate bonds of 44.4 billion, the repayment of 87.5 billion in long-term debt, revenue from the issuance of 43.1 billion in new corporate bonds, revenue from new long-term debt of 26.5 billion; repayment of 26.0 billion in short-term debt; a reduction in the balance of commercial paper of 70.0 billion, and 12.2 billion in payments of cash dividends to the shareholders of the Corporation and its consolidated subsidiaries. Capital Expenditures Capital expenditures were 67.1 billion, down 2.2 billion from the previous fiscal year. The main factor behind this decrease was the fact that capital expenditures were kept within the amount of depreciation. This figure breaks down into 21.6 billion for new facilities or facility expansion, 17.3 billion for streamlining, 10.2 billion for research and development, and 18.0 billion for other purposes. The main projects requiring investment in new or expanded facilities were the transfer of operations of the Yodogawa Plant of Benesis in the Health Care Segment and the expansion of the OPC production facilities of Mitsubishi Chemical Infonics Pte Ltd. in the Performance Products Segment.
Total Assets
Billions of Yen 2500
2,246.1 2,117.0
Shareholders' Equity
Billions of Yen 500 Equity Ratio % 25
2,000 2,016.5
2,001.6 1,970.5
400
19.0% 19.8% 16.5% 15.3%
22.6% 20
1,500
300
15
446.0 397.0
1,000
200
383.8 343.7 350.3
10
500
100
Capital Expenditures
Billions of Yen 100 99.7
86.2
85.3
200
80
69.3 67.1
150
132.4 113.7
144.9
60
100
92.2
40
50
20
44
Millions of Yen
ASSETS Current assets: Cash and cash equivalents Short-term investments Securities (Note 6) Trade receivables (Notes 7, 9) Inventories (Note 7): Finished goods Work in process Raw materials and supplies Land held for sale Deferred income taxes-current (Note 12) Prepaid expenses and other current assets Allowance for doubtful accounts Total current assets Property, plant and equipment (Note 7): Land Buildings Machinery and equipment Construction in progress Accumulated depreciation Net property, plant and equipment Investments and other assets: Investment securities (Note 6) Long-term loans Deferred income taxes-non-current (Note 12) Other (Note 7) Allowance for doubtful accounts Total investments and other assets Total assets
See Notes to Consolidated Financial Statements.
2005 52,575 2,648 13 515,274 126,682 63,922 82,177 4,940 32,806 36,169 (2,327) 914,879
2004 57,538 116 2,763 511,039 119,227 59,333 69,012 4,190 38,165 34,779 (3,036) 893,126 $
2005 491,355 24,748 121 4,815,645 1,183,944 597,402 768,009 46,168 306,598 338,028 (21,748) 8,550,271
45
March 31
Thousands of U.S. Dollars (Note 3)
Millions of Yen
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt (Note 7) Current portion of long-term debt (Note 7) Trade payables Accrued expenses Accrued income taxes Other current liabilities Total current liabilities Long-term liabilities: Long-term debt (Note 7) Accrued retirement benefits (Note 8) Other non-current liabilities Total long-term liabilities Minority interests Shareholders' equity: Common stock: Authorized-5,900,000 thousand shares; Issued-2,177,675 thousand shares at March 31, 2005 and 2,177,675 thousand shares at March 31, 2004 Additional paid-in capital Retained earnings (Note 16) Revaluation surplus Valuation gain on investment securities after tax effect Foreign currency translation adjustments Treasury stock at cost3,880 thousand shares at March 31, 2005 and 3,911 thousand shares at March 31, 2004 Total shareholders' equity Total liabilities and shareholders' equity
See Notes to Consolidated Financial Statements.
46
Millions of Yen
2005 Net sales Cost of sales (Notes 13, 14) Gross profit Selling, general and administrative expenses (Notes 13, 14) Operating income Other income (expenses): Interest expenses Interest income Dividend income Equity in earnings of non-consolidated subsidiaries and affiliates Exchange gain (loss) Impairment loss on fixed assets Gain (Loss) on sale and disposal of property, plant and equipment, net Amortization of transition amount under post-employment benefits accounting (Note 8) Personnel expenses of employees on secondment charged by affiliated and unaffiliated companies Write-down of securities and investment securities Provision for prospective loss on removal of fixed assets Additional benefits for employees' early retirement (Note 8) Write-down of property, plant and equipment Provision for loss on the disposal of businesses in the affiliated companies Gain on sale of securities and investment securities Immediate recognition of reduction in prior service cost (Note 8) Gain on sale of business Other, net Income before income taxes Income taxes (Note 12): Current Deferred Minority interests in consolidated subsidiaries Net income
See Notes to Consolidated Financial Statements. Yen
2004 1,925,331 1,455,267 470,064 371,901 98,163 (13,060) 1,360 2,572 4,699 (3,492) 811 (8,341) (9,670) (656) (3,063) (3,190) (4,948) 4,359 4,887 2,545 (2,172) 70,804 23,982 3,500 27,482 (8,775) 34,547
2005 $20,462,262 15,596,430 4,865,832 3,476,822 1,389,009 (101,458) 11,009 33,393 84,103 38,140 (161,701) (80,738) (75,336) (42,439) (33,654) (32,645) (30,841) (13,664) (8,570) 23,355 22,682 5,000 (29,346) 996,299 333,701 47,860 381,561 (97,243) $ 517,495
2,189,462 1,668,818 520,644 372,020 148,624 (10,856) 1,178 3,573 8,999 4,081 (17,302) (8,639) (8,061) (4,541) (3,601) (3,493) (3,300) (1,462) (917) 2,499 2,427 535 (3,140) 106,604 35,706 5,121 40,827 (10,405) 55,372
U.S. Dollars
25.40 6.00
15.82 4.00
$ 0.237 0.056
47
Number of outstanding shares of common stock (thousands) Balance at March 31, 2003 Net income Cash dividends Bonuses to directors Increase from retirement or resale of treasury stock Revaluation of land by an affliate, after tax effect Valuation gain on investment securities, after tax effect Foreign currency translation adjustments Decrease resulting from exclusion of an affiliate from the scope of application of the consolidated subsidiaries Decrease resulting from exclusion of subsidiaries and affiliates from the scope of application of the equity method Increase resulting from exclusion of subsidiaries and affiliates from the scope of application of the equity method Increase resulting from exclusion of an affiliate from the scope of application of the consolidated subsidiaries Increase resulting from the merger of subsidiaries accounted for by the equity method with nonconsolidated subsidiaries Minimum pension liability adjustment Decrease resulting from reorganization of subsidiaries and affiliates Net increase in treasury stock Balance at March 31, 2004 Net income Cash dividends Bonuses to directors Increase from retirement or resale of treasury stock Valuation gain on investment securities, after tax effect Foreign currency translation adjustments Decrease resulting from exclusion of an affiliate from the scope of application of the equity method Increase resulting from exclusion of subsidiaries and affiliates from the scope of application of the equity method Decrease resulting from the merger of a consolidated subsidiary with a non-consolidated subsidiary Decrease resulting from the merger of a subsidiary accounted for by the equity method with a nonconsolidated subsidiary Decrease resulting from inclusion of a subsidiary in the scope of application of the consolidated subsidiaries Decrease resulting from inclusion of an affiliate in the scope of application of the equity method Minimum pension liability adjustment Net increase in treasury stock Balance at March 31, 2005 2,177,675 2,177,675 2,177,675
Retained earnings 100,611 34,547 (6,527) (81) (547) (471) 455 377 39 (352) (307) 127,744 55,372 (8,701) (102) (11,501) 343 31 (18) (13) (13) (176) 162,966
Valuation gain on investment securities after Revaluation tax effect surplus 1,894 7 1,901 1,901 (2,629) 27,526 24,897 12,897 37,794
Balance at March 31, 2004 Net income Cash dividends Bonuses to directors Increase from retirement or resale of treasury stock Valuation gain on investment securities, after tax effect Foreign currency translation adjustments Decrease resulting from exclusion of an affiliate from the scope of application of the equity method Increase resulting from exclusion of subsidiaries and affiliates from the scope of application of the equity method Decrease resulting from the merger of a consolidated subsidiary with a non-consolidated subsidiary Decrease resulting from the merger of a subsidiary accounted for by the equity method with a nonconsolidated subsidiary Decrease resulting from inclusion of a subsidiary in the scope of application of the consolidated subsidiaries Decrease resulting from inclusion of an affiliate in the scope of application of the equity method Minimum pension liability adjustment Net increase in treasury stock Balance at March 31, 2005 See Notes to Consolidated Financial Statements.
2,177,675 2,177,675
$1,355,944 $1,355,944
$1,093,271 $1,193,869 1,196 $1,094,467 (121) (1,645) $1,523,047 517,495 (81,318) (953) (107,486) 3,206 290 (168) (121)
$17,766 $17,766
48
Millions of Yen
2005 Cash flows from operating activities: Income before income taxes Adjustments for: Depreciation and amortization Write-down of property, plant and equipment Interest expenses Interest and dividend income Equity in earnings of the non-consolidated subsidiaries and affiliates Exchange loss (gain) Impairment loss on fixed assets Gain (loss) on sale and disposal of property, plant and equipment, net Amortization of transition amount under post-employment benefits accounting Write-down of securities and investment securities Provision for prospective loss on removal of fixed assets Gain on sale of securities and investment securities Increase in trade receivables Increase in inventories Increase in trade payables Other, net Interest and dividends received Interest paid Income taxes paid Net cash provided by operating activities Cash flows from investing activities: Payments for purchases of securities Proceeds from repayments of securities Payments for purchases of property, plant and equipment Proceeds from sales of property, plant and equipment Payments for purchases of investment securities Proceeds from sales of investment securities Proceeds form sales of business Decrease in loans receivable, net Other, net Net cash used in investing activities Cash flows from financing activities: Decrease in short-term debt, net Proceeds from issuance of long-term debt Repayments of long-term debt Cash dividends paid Other, net Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of adjustment of scope of consolidation on cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year
See Notes to Consolidated Financial Statements.
2004 70,804 92,369 3,190 13,060 (3,932) (4,699) (158) (811) 8,341 656 (4,359) (22,455) (8,552) 23,596 (7,324) 159,726 6,629 (13,252) (8,111) 144,992
2005 $ 996,299 806,037 13,664 101,458 (44,402) (84,103) 1,327 161,701 80,738 75,336 33,654 32,645 (23,355) (12,261) (234,486) 591,963 (109,794) 2,386,421 69,196 (101,327) (271,851) 2,082,439
106,604 86,246 1,462 10,856 (4,751) (8,999) 142 17,302 8,639 8,061 3,601 3,493 (2,499) (1,312) (25,090) 63,340 (11,748) 255,347 7,404 (10,842) (29,088) 222,821
(2,731) 7,721 (64,689) 9,609 (79,068) 16,613 28,961 4,147 3,730 (75,707)
(96,006) 69,733 (132,027) (8,701) (4,305) (171,306) 414 (5,713) 57,538 750 52,575
(22,207) 107,368 (144,664) (6,527) (4,222) (70,252) (305) (1,272) 59,317 (507) 57,538
(897,252) 651,710 (1,233,897) (81,318) (40,234) (1,600,991) 3,869 (53,393) 537,738 7,009 $ 491,355
49
(c) Securities
Debt securities that are intended to be held to maturity ("held- to-maturity debt securities") are measured at amortized cost in the balance sheet. Securities other than held-to-maturity debt securities and equity investments in subsidiaries and affiliates ("other securities") are measured at fair value. The difference between the fair value and the historical cost is recorded as a separate component of shareholders' equity. The historical cost is determined by the moving average cost. Securities that have no market price, if not impaired, are stated at their historical cost. Debt securities due within one year are presented as "current" in the consolidated balance sheets. All the other securities are presented as "noncurrent" in the consolidated balance sheets.
(e) Inventories
Finished goods are stated principally at the lower of cost or market, using the average cost method. Other inventories are stated principally at average cost.
(g) Leases
Finance leases other than those that are deemed to transfer the ownership of the leased assets to the lessees are principally accounted for by the method that is applicable to ordinary operating leases.
50
2. Accounting Change
(a) Foreign Currency Financial Statements
The exchange rates at which the revenue and expense accounts of foreign subsidiaries and affiliates are translated from local currencies to Japanese yen, have been changed from the exchange rates as of the balance sheet date to the average exchange rates during the fiscal year from the fiscal year ended March 31, 2005. This change has increased sales by 4,793 million yen, operating income by 165 million yen, and net income by 160 million yen, compared to the results that would have been obtained using the previous method.
(b) Adoption of Accounting Standard for Impairment of Fixed Assets The Corporation and its consolidated subsidiaries in Japan have chosen the early adoption of the new accounting standard for impairment loss on fixed assets, which had the effect of decreasing income before income taxes by 15,554 million yen for the fiscal year ended March 31, 2005. Accumulated impairment losses on fixed assets are included in "accumulated depreciation" on the consolidated balance sheets. (c) Provision for Prospective Loss on Removal of Fixed Assets The Corporation and its consolidated subsidiaries in Japan have added a new provision for prospective loss on removal of fixed assets from the fiscal year ended March 31, 2005, because they have changed the timing of recording loss incurred through the removal of fixed assets from the year when removal is completed with the actual amount of loss to the year when the removal is decided with the amount of estimated loss. This change has decreased net income by 3,493 million yen, with 3,493 million yen recorded on the provision account.
51
information, are planned for the 16-month period from December 2004 to March 2006. Following negotiations aimed at the sale of the site after completion of the clean-up operations, a sales agreement was reached in February 2005. According to current estimates, when the cost of disposing of the site (book value plus cost of clean-up operations) is taken into account together with attendant costs, a profit is expected to be realized on the sale.
6. Securities
Held-to-maturity debt securities are measured at amortized cost in the balance sheet. However, some held-to-maturity debt securities have fair value, The carrying amount, gross unrealized gains, gross unrealized losses and estimated fair value of held-to-maturity debt securities at March 31, 2005 and 2004, are summarized as follows:
Millions of Yen
2005 March 31 Held-to-maturity debt securities: Government bonds Corporate bonds Other debt securities
Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
20 20
0 0
Millions of Yen
0 0
20 20
2004 March 31 Held-to-maturity debt securities: Government bonds Corporate bonds Other debt securities
Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
20 318 338
0 2 2
0 0
20 320 340
2005 March 31 Held-to-maturity debt securities: Government bonds Corporate bonds Other debt securities
Carrying Amount Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
$186 $186
$0 $0
$0 $0
$186 $186
Other securities are measured at fair value. The difference between the fair value and the historical cost is recorded in the category of shareholders' equity. The differences at March 31, 2005 and 2004, are summarized as follows.
Millions of Yen
2005 March 31 Other securities: Equity securities Government bonds Corporate bonds Other debt securities
Historical Costs Fair Value Net Differences (Breakdown) Gross Gains Gross Losses
59,795 30 3 59,828
124,862 30 3 124,895
65,067 0 0 65,067
65,558 0 65,558
(491) 0 0 (491)
52
Millions of Yen
2004 March 31 Other securities: Equity securities Government bonds Corporate bonds Other debt securities
Historical Costs Fair Value Net Differences (Breakdown) Gross Gains Gross Losses
55,595 30 20 3 55,648
97,590 30 20 3 97,643
41,995 0 0 0 41,995
Thousands of U.S. Dollars
43,175 0 43,175
(1,180) 0 0 (1,180)
2005 March 31 Other securities: Equity securities Government bonds Corporate bonds Other debt securities
Historical Costs Fair Value Net Differences (Breakdown) Gross Gains Gross Losses
$608,103 0 0 $608,103
$612,692 0 $612,692
($4,589) 0 0 ($4,589)
The carrying amount of held-to-maturity debt securities and other securities which have maturities at March 31, 2005 and 2004, by contractual maturity, are shown below.
Millions of Yen
2005
Held-to-Maturity Debt Securities Government Securities Corporate Securities Other Debt Securities Other Securities Total
Maturity: Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years
10 40
2,000
3 2 1
Millions of Yen
13 40 2,002 1
2004
Held-to-Maturity Debt Securities Government Securities Corporate Securities Other Debt Securities Other Securities Total
Maturity: Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years
10 40
340 2,000
3 2 1
353 40 2,002 1
2005
Held-to-Maturity Debt Securities Government Securities Corporate Securities Other Debt Securities Other Securities Total
Maturity: Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years
$ 93 374
18,692
$28 19 9
53
March 31 Short-term loans, principally from banks and other financial institutions, interest ranging from 0.06% to 6.20% at March 31, 2005, and from 0.06% to 13.00% at March 31, 2004 Commercial paper
2005
2004
2005
At March 31, 2005 and 2004, the long-term debt of the Corporation and its consolidated subsidiaries consisted of the following:
Millions of Yen Thousands of U.S. Dollars
March 31 1.6% convertible bonds due 2006, currently convertible at 502.9 4.2% notes due 2004 2.425% notes due 2004 2.325% notes due 2004 3.0% notes due 2005 3.1% notes due 2005 4.2% notes due 2006 3.4% notes due 2006 2.85% notes due 2007 3.05% notes due 2007 2.775% notes due 2007 2.675% notes due 2007 3.25% notes due 2007 Floating rate notes due 2007 2.75% notes due 2008 0.55% notes due 2008 1.08% notes due 2008 3.0% notes due 2009 1.43% notes due 2009 1.27% notes due 2009 2.65% notes due 2010 1.15% notes due 2010 1.46% notes due 2011 1.8% notes due 2013 1.16% notes due 2013 1.90% notes due 2014 2.02% notes due 2014 Debt issued by consolidated subsidiaries, due 20042009, interest 0.58%1.621% ranging from 0.58% to 1.621% at March 31, 2005 and from 0.58% to 2.6% at March 31, 2004 Loans, principally from banks and insurance companies due 2004 to 2027, interest ranging from 0.0% to 13.407% at March 31, 2005, and from 0.0% to 13.407% at March 31, 2004: Collateralized Non-collateralized Less, current portion
2005 8,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 5,000 10,000 10,000 15,000 10,000 15,000 20,000 5,000 10,000 10,000 15,000 10,000 10,000 10,000
2004 8,000 10,000 20,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 5,000 10,000 10,000 15,000 10,000 15,000 20,000 5,000 15,000 10,000 $
2005 74,766 93,458 93,458 93,458 93,458 93,458 93,458 93,458 93,458 93,458 46,729 93,458 93,458 140,187 93,458 140,187 186,916 46,729 93,458 93,458 140,187 93,458 93,458 93,458
14,151
15,269
132,252
54
At March 31, 2005, the following assets were pledged as collateral for short-term debt and long-term debt:
March 31 Current assets Property, plant and equipment
Millions of Yen Thousands of U.S. Dollars
9,455 93,505
102,960
The aggregate annual maturities of the non-current portion of long-term debt are as follows:
Years ending March 31 2007 2008 2009 2010 and thereafter
Millions of Yen
At March 31, 2005, the number of shares of common stock necessary for conversion of all outstanding convertible bonds was approximately 16 million shares.
March 31 Projected benefit obligation at end of year Fair value of plan assets at end of year Funded status Unrecognized transition amount under post-employment benefits accounting Unrecognized actuarial loss Unrecognized prior service cost Net amount recognized Prepaid pension expense Accrued retirement benefits
2005 (375,334) 263,967 (111,367) 8,503 39,350 (35,395) (98,909) 3,691 (102,600)
2004 (380,495) 249,138 (131,357) 16,747 52,533 (44,289) (106,366) 2,020 (108,386)
2005 $(3,507,794) 2,466,981 (1,040,813) 79,467 367,757 (330,794) (924,383) 34,496 (958,879)
The components of net pension and severance costs for the year ended March 31, 2005 and 2004, were as follows:
Millions of Yen Thousands of U.S. Dollars
Years ended March 31 Service cost Interest cost Expected return on plan assets Amortization of transition amount under post-employment benefits accounting Recognized actuarial loss Amortization of prior service cost Decrease of post-employment benefits obligation Net periodic benefit cost
Notes: 1. Actuarial loss is recognized using the straight-line method over a period of mainly five years from the fiscal year following the year in which the loss arises. 2. Prior service cost is amortized using the straight-line method over a period of mainly five years from the relevant fiscal year. 3. Transition amount under post-employment benefits accounting is amortized using the straight-line method over a period of mainly five years from the fiscal year ended March 31,2001. 4. On March 1, 2003, the consolidated subsidiary Mitsubishi Pharma Corporation received approval from the Minister of Health, Labor and Welfare with respect to its application for an exemption from the benefit obligation related to future employees services under the substitutional portion of the Welfare Pension Fund Plans (WPFP). Regarding the restitution of the past portions, approval was received from the Minister of Labor, Health and Welfare on July 1, 2004, and the return of the assets was completed on March 29, 2005. Effective from July 1, 2004, the future payment of an extra portion, corresponding to the added substitutional portion, of the basic pension was terminated, and a sum corresponding to the past portion was transferred to a cash-balance pension system. The large decrease in the retirement benefit obligation resulting from the transition to this system was accounted for by applying Clause 32 of Practical Guidelines for Accounting for Transition between Retirement Benefit Systems (Financial Accounting Standards Implementation Guideline No.1) whereby all prior service cost was amortized concurrently with the corresponding unrecognized actuarial loss and net unrecognized retirement benefit obligation at transition. 5. Additional benefits for employees' early retirement amounting to 3,300 million and 3,063 million were recorded in addition to the amount of net periodic benefit cost for the year ended March 31, 2005 and 2004, respectively.
55
9. Contingent Liabilities
At March 31, 2005, the Corporation and its consolidated subsidiaries were contingently liable for trade notes discounted for 7,385 million ($69,018 thousand). They were also construed as guarantors for the borrowing below, principally incurred by non-consolidated subsidiaries, affiliates, and others.
Gross including Third Parties' Liabilities Net Corporation and Its Consolidated Subsidiaries' Own Liabilities Millions of Yen Thousands of U.S. Dollars
Millions of Yen
March 31 Machinery and equipment: Equivalent purchase amount Equivalent accumulated depreciation amount Equivalent accumulated impairment amount Equivalent balance at year-end
Notes: 1. Equivalent purchase amount includes interest. 2. Equivalent purchase amount excludes subleased assets.
2005 Due within one year Due after one year Impairment of lease assets amount on the balance sheet
Notes: 1. Lease Payments include interest. 2. Lease Payments include sublease payments.
Paid Lease Fees, Equivalent Depreciation Expense Amount, Amortization Expense Amount, and Impairment Loss
Millions of Yen
Years ended March 31 Paid lease fees Equivalent depreciation expense amount Amortization expense amount Impairment loss on lease assets
Note: Equivalent depreciation expense amount is calculated using the straight-line method,with the lease period as the useful life and zero (0) as the residual value.
56
2005 Due within one year Due after one year 172 662 834
At March 31, 2005 and 2004, noncancellable operating lease obligations were accounted for as follows: Future Minimum Lease Payments for the Remaining Lease Periods
Millions of Yen
2005 Due within one year Due after one year 1,078 3,502 4,580
March 31 Deferred tax assets: Tax loss carryforwards Employees' retirement benefits Write-down of investment securities Bonus payment reserve for employees Impairemnt of fixed assets Depreciation Unrealized earnings Other Deferred tax assets Valuation allowance Total deferred tax assets Deferred tax liabilities: Valuation gain of investment securities Valuation of assets Accelerated tax depreciation Tax deductible reserve Other Total deferred tax liabilities Net deferred tax assets
2005 42,366 41,295 10,467 9,893 7,292 6,757 6,242 36,723 161,035 (45,022) 116,013 (22,509) (10,263) (8,377) (1,401) (1,254) (43,804) 72,209
2004 59,025 42,493 9,437 9,239 5,879 6,800 29,904 162,777 (40,868) 121,909 (12,704) (9,418) (9,168) (1,630) (1,740) (34,660) 87,249
2005 $ 395,944 385,935 97,822 92,458 68,150 63,150 58,336 343,206 $1,505,000 (420,766) $1,084,234 (210,364) (95,916) (78,290) (13,093) (11,720) (409,383) $ 674,850
57
At March 31, 2005 and 2004 the net deferred tax assets are included in the consolidated balance sheets as follows:
Millions of Yen Thousands of U.S. Dollars
March 31 Deferred income taxes-current Deferred income taxes-non-current Other current liabilities Other non-current liabilities
Reconciliations of the statutory tax rate and the effective income tax rate for the years ended March 31, 2005 and 2004 are not disclosed because the differences are immaterial.
2005 89,215
2004 88,513
2005 $833,785
2005 87,708
2004 95,559
2005 $819,701
Millions of Yen
13,047
$121,935
Pursuant to the Japanese Commercial Code, the maximum amount available for cash dividends is determined based upon the Corporations non-consolidated financial position.
58
59
Corporate Data
Major Affiliates
Japan Name Petrochemicals Segment Chuo Rika Kogyo Corporation Dia Chemical Co., Ltd. Dia-Nitrix Co., Ltd. Dia Terephthalic Acid Corporation Echizen Polymer Co., Ltd. Japan Ethanol Company Limited Japan Polychem Corporation Japan Polyethylene Corporation Japan Polypropylene Corporation Japan Unipet Co., Ltd. J-PLUS Co., Ltd. KAWASAKI KASEI CHEMICALS LTD. Mitsubishi Engineering-Plastics Corporation Nihon Isobutylene Company Limited Nippon Ester Co., Ltd. PS Japan Corporation San-Dia Polymers, Ltd. Techno Polymer Co., Ltd. The Nippon Synthetic Chemical Industry Co., Ltd. V-Tech Corporation Yokkaichi Chemical Co., Ltd. Yuka Schenectady Co., Ltd. Emulsions Industrial chemicals, Specialty chemicals Acrylnitrile, Acrylamide, Polyacrylamide, N-vinylformamide and its polymers Purified terephthalic acid PET resins, A-PET sheet Synthetic alcohol for industrial use Holding company of Japan Polyethylene Corp. and Japan Polypropylene Corp. Polyethylene resins Polypropylene resins Polyethylene terephthalate resins for bottles Plasticizers Organic acid and its derivatives, Quinone-related products Engineering plastics Isobutylene Polyester fibers, PET resins Polystyrene resins Super-absorbent polymers ABS resins PVOH, EVOH, PVOH films, Specialty polymers, Industrial and fine chemicals Electrolytes products, Vinyl chloride monomer, Polyvinyl chloride resins Nonionic surfactants, Glycol ethers, Fine chemicals Alkylphenol products (PTBP, PTOP, PDDP) 45.8 100.0 50.0 65.0 80.0 100.0 100.0 50.0 65.0 44.9 50.0 38.4 50.0 50.0 40.0 27.5 40.0 40.0 35.5 85.1 55.0 50.0 Major Products or Lines of Business Equity Participation (%)
60
Corporate Data
Major Affiliates
Japan Name Performance Products Segment API Corporation Calgon Mitsubishi Chemical Corporation Dia Chemco Company Limited Dia Fine Co., Ltd. Dia Instruments Co., Ltd. Frontier Carbon Corporation Japan Epoxy Resins Co., Ltd. Kasei Optonix, Ltd. Mitsubishi Chemical Agri, Inc. Mitsubishi-Kagaku Foods Corporation Mitsubishi Kagaku Media Co., Ltd. Nippon Kasei Chemical Company Limited Shinryo Corporation Yuka Denshi Company Limited Active pharmaceutical ingredients, Fine chemicals Activated carbon Substrate for cosmetics Dye stuff and chemicals for paper industry Analytical Instruments Nanocarbon products Epoxy resins Phosphors, Intensifying screen for radiography Fertilizers, Green and gardening materials Food ingredients, Sugar ester, Erythritol FD, MO, CD-R/-RW, DVD R/ RW 100.0 51.0 100.0 50.0 100.0 50.0 90.0 97.4 100.0 100.0 100.0 52.8 100.0 100.0 Major Products or Lines of Business Equity Participation (%)
Industrial chemicals, Specialty chemicals, Inorganic chemicals Ecological recycling, Semiconductors, Fine chemicals Materials for electronics devices
Functional Products Segment Alpolic Co. ASTRO CORPORATION Kodama Chemical Industry Co., Ltd. Mitsubishi Chemical Functional Products, Inc. MITSUBISHI CHEMICAL MKV COMPANY Mitsubishi Plastics, Inc. Mitsubishi Polyester Film Corporation NITTO KAKO CO., LTD. Ryoka MACS Corporation YUPO CORPORATION Aluminum-plastic composite panels Artificial turf Plastic molding products Products for construction, civil engineering, and other industries Plastic films for agricultural use, Plastic films and sheets for general use Plastic pipes, Plates, Films, Containers, and Tanks Polyester films Rubbers for industrial use Aluminum mold and casting Synthetic paper 100.0 95.0 20.7 100.0 100.0 52.7 100.0 40.0 100.0 50.0
61
Name Health Care Segment Mitsubishi Chemical Safety Institute Ltd. Mitsubishi Kagaku Bio-Clinical Laboratories, Inc. Mitsubishi Kagaku Iatron, Inc. Mitsubishi Pharma Corporation ZOEGENE Corporation
Safety testing and research for chemicals Clinical testing Clinical diagnostics, Medical analytical instruments, Research reagents Pharmaceuticals Drug candidate compounds, Protein engineering
Services Segment Dia Analysis Service Inc. DIA RESEARCH MARTECH INC. DIA RIX CORPORATION Kitakyushu Prince Hotel Inc. Misuzu Erie Co., Ltd. Mitsubishi Chemical Engineering Corporation Mitsubishi Chemical Logistics Corporation Nippon Rensui Co. RHOMBIC CORPORATION Ryoka Systems Inc. Environmental analysis, Investigation and assessment Investigation, Consulting, Publication, Informational services, Agency services Real estate, Insurance agency, Office services Hotel business Construction and maintenance of electrical measuring instruments Engineering, Plant construction Logistics services Plant engineering for water treatment, Ion exchange resins Resin compounds Computer systems, Software development 100.0 93.2 100.0 80.0 92.0 100.0 100.0 100.0 100.0 84.0
Others Arpa Staff Inc. MCFA Inc. Mitsubishi Chemical Group Science and Technology Research Center, Inc. Mitsubishi Kagaku Institute of Life Sciences MNET Corporation Osaka Kasei Co., Ltd. THE KANSAI COKE AND CHEMICALS CO., LTD. Research institute of life sciences Education, Training Chemicals Coke, Tar derivatives 100.0 100.0 100.0 51.0 Recruiting, Job placement, Temporary personnel services, Job consulting Financing and accounting for the Mitsubishi Chemical Group Research and technology development, Analysis services 100.0 100.0 100.0
62
Corporate Data
America Name MC Research & Innovation Center, Inc. Mitsubishi Chemical America, Inc. Mitsubishi Polyester Film, LLC Mytex Polymer General Partnership USR Optonix Inc. Verbatim Corporation Major Products or Lines of Business Research and technology development Holding company of American subsidiaries Polyester films Polypropylene compounds for automobile industry Intensifying screen for radiography CD-R/-RW, DVD R/ RW, MO Equity Participation (%) 100.0 100.0 100.0 50.0 100.0 100.0
Europe Name Mitsubishi Chemical Europe GmbH Mitsubishi Polyester Film GmbH RESINDION S.R.L. Verbatim Limited Major Products or Lines of Business Liaison activities, Export, Import Polyester films Ion exchange resins CD-R/-RW, DVD R/ RW, MO Equity Participation (%) 100.0 100.0 100.0 100.0
63
Directory DOMESTIC
Mitsubishi Chemical Corporation (Head Office) 33-8, Shiba 5-chome, Minato-ku, Tokyo 108-0014, Japan Phone: [+81] (0)3-6414-3730 Fax: [+81] (0)3-6414-3745
OVERSEAS
Mitsubishi Chemical America, Inc. (Head Office) One North Lexington Avenue, White Plains, NY 10601, USA Phone: [+1] 914-286-3600 Fax: [+1] 914-681-0760
Mitsubishi Chemical America, Inc. (Virginia Office) 401 Volvo Parkway, Chesapeake, VA 23320, USA Phone: [+1] 757-382-5750 Fax: [+1] 757-547-0119
Mitsubishi Chemical Europe GmbH Prinzenallee 13, Duesseldorf 40549, Germany Phone: [+49] (0)211-523920 Fax: [+49] (0)211-591272
Mitsubishi Chemical Hong Kong Ltd. Room 1303, 13th Floor, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong Phone: [+852] 2522-7031 Fax: [+852] 2868-1470
Mitsubishi Chemical Singapore Pte Ltd 79 Anson Road, #12-01, Singapore 079906 Phone: [+65] 6226-3707 Fax: [+65] 6226-1676
Mitsubishi Chemical (Thailand) Co., Ltd. 18th Floor, Regent House Building, 183 Rajdamri Road, Bangkok 10330, Thailand Phone: [+66] (0)-2255-2821 Fax: [+66] (0)-2255-2824
Mitsubishi Chemical Corporation (Beijing Office) No.5, Dong San Huan Bei Lu, Chao Yang District, Beijing 100004, PRC Phone: [+86] (0)10-6590-8621 Fax: [+86] (0)10-6590-8623
Mitsubishi Chemical Corporation (Shanghai Office) No.4209, The Center, 989 Chang Le Road, Shanghai 200031, PRC Phone: [+86] (0)21-5407-6000 Fax: [+86] (0)21-5407-6111
64
Investors' Information
Percentage of Total
Individuals and others Foreign corporations and other foreign investors Other corporations
Outstanding Shares 2,177,675,032 Major Shareholders Number of Shareholders 166,217 Japan Trustee Services Bank, Ltd. (Trust account) General Meeting The General Meeting of Shareholders was held on June 28, 2005 The Master Trust Bank of Japan Ltd. (Trust account) Meiji Yasuda Life Insurance Co. Nippon Life Insurance Co. Stock Listings Tokyo, Osaka Stock Exchanges The Bank of Tokyo-Mitsubishi, Ltd. The Tokio Marine & Nichido Fire Insurance Co., Ltd. The Taiyo Life Insurance Co. Transfer Agent The Mitsubishi Trust & Banking Corp. 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212 The Mizuho Corporate Bank, Ltd. The Mitsubishi Trust and Banking Corp. (Trust account) The Norinchukin Bank 26,994 1.2 114,116 88,500 73,680 66,488 47,095 36,826 33,950 5.2 4.0 3.3 3.0 2.1 1.6 1.5 142,489 6.5
Number of Shares Held (Thousands) Percentage of Total
149,151
6.8%
Common Stock Price Range (left scale) and Nikkei Stock Average
() 400 () 20,000
300
15,000
200
10,000
100
5,000
65
http://www.m-kagaku.co.jp
2005.09.3K