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  • 1. Consolidated Financial Statements Summary (All financial information has been prepared in accordance with accounting principles generally accepted in Japan) November 1, 2011 Company name : TEIJIN LIMITED (Stock code 3401) Contact person : Masahiro Ikeda General Manager of IR Office TEL: +81-(0)3-3506-4395 (Amounts less than one million yen are omitted) 1. Highlight of the Second quarter of FY2011 (April 1, 2011 through September 30, 2011) (1) Consolidated financial results (Percentages are year-on-year changes) % % % % (1.6) 0.7 5.7 (20.4) 11.0 636.8 ― ― cf. Comprehensive income : 9,903million yen (FY2010: 2,225million yen) ※1 E.P.S.: Earnings per share (2) Consolidated financial position cf. Shareholders' equity : 290,074million yen(FY2010: 284,236million yen) 2. Dividends Note: Revision of outlook for dividends in the second quarter: No 3. Forecast for operating results in the year ending March 31, 2012 (Fiscal 2011) (Percentages are year-on-year changes) % % % % 9.1 3.0 (0.7) (4.7) 24.38 Note: Revision of outlook for fiscal 2011 consolidated operating results in the second quarter: Yes Operating income Million yen Million yen - - 2.00 - 3.00 FY2011 Ordinary income Net income Million yen Million yen Net sales 50,000 24,000 Dividends per share 1Q 2Q 3Q 4Q Annual E.P.S. Yen Period Yen 890,000 50,000 Yen FY2010 FY2011 FY2011 (Outlook) - Yen English translation from the original Japanese-language document http://www.teijin.co.jp/english/index.html 21,663 20,492 9,184 11,546 393,567 For the second quarter ended September 30, 2011 For the second quarter ended September 30, 2010 As of Setember 30, 2011 As of March 31, 2011 (For the year ended September 30, 2011) E.P.S.※1 Yen Diluted E.P.S. Yen Million yen For the second quarter ended September 30, 2011 For the second quarter ended September 30, 2010 20,652 784,520 Million yen 761,534 307,698 37.0 9.33 11.74 20,511 Million yen 11.72 Total assets 9.32 399,869 Million yen Net incomeNet sales Operating income Ordinary income Million yenMillion yen Net assets Shareholders' equity ratio 310,347 % 37.3 3.00 6.00 3.00 Yen Yen 5.00
  • 2. Appropriate Use of Forecasts and Other Information and Other Matters All forecasts in this document are based on management’s assumptions in light of information currently available and involve certain risks and uncertainties. Actual results to differ materially from these forecasts. For information on these forecasts, refer to "Qualitative Information on Outlook for Operating Results", beginning on page 6.
  • 3. 1. Qualitative Information and Financial Statements Qualitative Information on Results of Operations Analysis of Consolidated Results of Operations Sales and Income Despite the significant damage to Japan’s economy in the first half of fiscal 2011—the fiscal year ending March 31, 2012—caused by the Great East Japan Earthquake of March 11, 2011, the positive impact of reconstruction efforts was felt from the summer forward. However, the domestic environment continued to reflect a compound crisis that included long-standing economic stagnation and fiscal deterioration, as well as a record-high yen. Global economic conditions remained harsh, owing to a variety of factors, including concern regarding European sovereign risks; sluggish consumer spending in the United States, attributable to lagging employment recovery; and slowing economic growth in the People’s Republic of China (PRC)—until recently the principal driving force behind the global economy—as a consequence of monetary restraint. In this environment, Teijin reported first-half consolidated net sales of ¥393.6 billion, down 1.6% from the first half of fiscal 2010. Operating income edged up 0.7%, to ¥20.7 billion. Ordinary income rose 5.7%, to ¥21.7 billion, while net income fell 20.4%, to ¥9.2 billion. Although the impact of the earthquake, together with stagnating demand for use in liquid crystal display (LCD) televisions, computers and other electronics equipment, pushed down sales and operating income in the Films and Plastics segment, overall net sales and operating income remained essentially level with the fiscal 2010 first half, as a firm sales volume supported increased sales and operating income in a number of segments, including High-Performance Fibers and Polyester Fibers. The increase in ordinary income reflected better results at unconsolidated affiliates accounted for by the equity method. The drop in net income was attributable to a decline in extraordinary income and an increase in income taxes resulting from an adjustment of deferred income taxes. Business Segment Results High-Performance Fibers Sales in the High-Performance Fibers segment amounted to ¥54.4 billion. Operating income was ¥4.2 billion. Aramid Fibers Results were firm and key products remained in full production. The market for Twaron® para-aramid fibers was solid, particularly for use in automotive-related materials, ballistic-protection products and fiber optic cables. Although the Great East Japan Earthquake hindered domestic demand from some quarters for use in composite materials and civil engineering applications, flourishing demand overseas for automotive-related applications continued to support robust overall demand for Technora® para-aramid fibers. While indications of forthcoming production adjustments hampered demand for Teijinconex® meta-aramid fibers in Japan for use in certain types of filters and in Europe for use in industrial materials, demand - 1 -
  • 4. was firm for key applications, notably protective clothing. As a consequence, all three products remained in full production. In this environment, we continued to push ahead with active efforts to cultivate new applications with the aim of further growing this business. Carbon Fibers and Composites Demand remained brisk for use in aircraft. Demand for Tenax® carbon fibers remained brisk for use in aircraft. Among general industrial applications, demand was solid for use in the wind power and other natural energy industries, as well in civil engineering and infrastructure repair, while demand for use in pressure vessels was hampered by the economic downturn in Europe. In Asia, sales for use in compounds and in sports and leisure equipment were sluggish. In this environment, we continued to restore sales prices, and at the same time cultivated markets in the PRC and other emerging economies. Having started production on our new thermoplastic prepreg facilities in Germany, primarily for use in aircraft, we began sample shipments. Having succeeded in developing mass-production technologies for carbon fiber–reinforced plastic (CFRP) made with thermoplastic resin that reduce the time required for the molding of parts to less than one minute, we actively marketed this new material for a variety of applications, particularly to the automotive industry. In addition to winning the Global Automotive Carbon Composites Technology Innovation Award from world-renowned market research firm Frost & Sullivan for 2011, these technologies were honored with the Overall Innovation Award, as well as winning the Best Product Innovation category, at the 2011 ICIS Innovation Awards, an event run by International Chemical Information Service (ICIS), a leading United Kingdom–based provider of information for the chemicals industry. Polyester Fibers The Polyester Fibers segment, which also includes the polyester raw materials and polymerization businesses, generated sales of ¥53.9 billion and operating income of ¥2.0 billion. Demand rallied, particularly for automotive applications. Demand, particularly for automotive applications—including seat belts, vehicle seats, fabrics for tires and tire cords—flagged in the immediate aftermath of the Great East Japan Earthquake, but began to rise in the summer, shored up by a sharp recovery in automobile production. This contributed to robust sales, as did successful efforts to capitalize on domestic demand associated with official energy saving initiatives and measures to promote cooler business attire, as well as on demand for materials for civil engineering and construction applications related to post-quake reconstruction. The segment’s profit structure continued to improve steadily, thanks in large part to cost reductions achieved by shifting production of filament yarn overseas. In the first half of fiscal 2011, proactive steps taken by subsidiary Teijin Fibers Limited to reduce its impact on the environment were honored with a Good Practice Award in the 13th Green Purchasing Awards, sponsored by Japan’s Green Purchasing Network. In particular, recognition was given to the company’s extensive record of achievement, which includes ECO CIRCLE™, a closed-loop recycling system that has facilitated, among others, partnerships and collaborative product development with companies in other industries. - 2 -
  • 5. Films and Plastics Sales in the Films and Plastics segment totaled ¥93.0 billion. Operating income was ¥5.7 billion. Plastics Demand for polycarbonate resin softened, while prices for raw materials remained high. Demand for mainstay polycarbonate resin for automotive applications and for use in electrical and electronics equipment, which had fallen off in the wake of the earthquake, began to recover in the summer. However, the plastics business as a whole struggled as overall demand deteriorated further, owing to the recessionary shadow cast by the downgrade of the U.S. sovereign credit rating and the European financial crisis, and raw materials prices remained high. Among new products, a series of light-diffusion grade polycarbonate resin products developed for LED lighting applications garnered a significant share of this expanding market, bolstered by the rising preference for products that help reduce energy consumption and increase energy efficiency. In the area of processed polycarbonate resin products, sales of polycarbonate sheet for automotive and entertainment-related applications and of PURE-ACE® polycarbonate retardation film for use in 3D glasses for movie theaters deteriorated, the former due to a drop in orders after the earthquake and the latter to flagging interest in 3D movies and a move toward inventory adjustments. In July, demand for processed polycarbonate sheet products began to revive, particularly for dummy cans for use in vending machines and for automotive instrument panels. Demand for reverse-dispersion solvent-cast retardation film also picked up, owing to its adoption for use as antireflective film for new mobile phone models and other factors. Looking ahead, we will strive to expand sales of transparent electroconductive film developed for capacitive touch screens and of SCINTIREX™, a new radiation-fluorescent plastic. Films Demand for PET film was firm in Asia, but showed signs of softening in the United States and Europe. We currently have polyester films joint ventures with E.I. du Pont de Nemours and Company (DuPont) of the United States in six countries. In Japan, demand for PET film remained brisk for use as flat panel display (FPD) reflective film and in solar cell back sheets, the principal applications for this product, despite showing signs of softening toward the end of the second quarter. In the wake of the Great East Japan Earthquake, we temporarily suspended production at our Utsunomiya Factory, in Tochigi Prefecture, and our Ibaraki Factory, in Ibaraki Prefecture, which hampered our supply capabilities. However, both facilities have resumed production on all lines, the Ibaraki Factory in late March and the Utsunomiya Factory in mid-June 2011. Despite persistently strong demand in the PRC, a rush by local manufacturers to expand production capacity upset the supply–demand balance, a situation that negatively affected our local joint venture’s sales prices. In the United States, we completed crucial structural reforms at the end of February 2011 with the conclusion of the phased closure of our plant in Florence, South Carolina. However, with demand for use in solar cell back sheets—brisk until fiscal 2010—weak in both the United States and Europe from the second quarter, we were forced to temporarily suspend production of certain product lines to make necessary inventory adjustments. - 3 -
  • 6. Pharmaceuticals and Home Health Care Sales in the Pharmaceuticals and Home Health Care segment amounted to ¥68.0 billion, while operating income was ¥11.9 billion. Pharmaceuticals We began marketing a promising new drug, FEBURIC®, in Japan. In Japan, sales continued to expand favorably for Synvisc Dispo™, an intra-articular injection-form drug for treating pain associated with osteoarthritis of the knee launched in December 2010, and FEBURIC®, a novel treatment for hyperuricemia and gout developed in-house, which was launched in May 2011. We also saw steady sales of osteoporosis treatment Bonalon®.* Overseas, sales of our innovative hyperuricemia treatment were favorable in North America, where it is sold under the name ULORIC®, and in Europe, where it is known as ADENURIC®. In July 2011, we commenced sales of the drug in the Republic of Korea (ROK) under the name FEBURIC®. We also signed exclusive distributorship agreements in April 2011 with licensees Takeda Pharmaceuticals North America, Inc., for marketing in Mexico and the Caribbean, and Algorithm SAL of Lebanon, for marketing in the Middle East and North Africa, and in August 2011 with Astellas Pharma Inc. for marketing in Southeast Asia and India. In R&D, in July 2011 we commenced clinical testing of GGS-MPA (human immunoglobulin preparation Venilon®) for the treatment of microscopic polyangiitis, a new indication. In August and September, we filed for approval to manufacture and market, respectively, GTH-42J, a new oral jelly form of osteoporosis treatment Bonalon®, and ITM-014, a cutting-edge treatment for acromegaly licensed in from Ipsen Pharma SAS of France. Also in September, we commenced phase I clinical trials for NA872ET, a small, sustained-release tablet-form version of expectorant Mucosolvan®. Home Health Care Rental volume remained favorable. In Japan, rental volume for mainstay home oxygen therapy (HOT) equipment remained firm. Rentals of continuous positive airway pressure (CPAP) ventilators, used to treat sleep apnea syndrome, also increased, as we sought to capitalize on new product SLEEPMATE® S9, a silent, easy-to-use positive pressure ventilator launched in April 2011, to strengthen our share of the domestic market. Rentals of other equipment, including noninvasive positive pressure ventilators (the NIP NASAL® series and AutoSet™ CS) and SAFHS® (Sonic Accelerated Fracture Healing System) were healthy. Overseas, we currently provide home health care services in the United States, Spain and the ROK. In all three markets, we took steps to ensure the steady expansion of rental volume and sought to reinforce our earnings base by improving the efficiency of operations. * Bonalon® is the registered trademark of Merck Sharp & Dohme Corp., Whitehouse Station, NJ, U.S.A. - 4 -
  • 7. Trading and Retail The Trading and Retail segment yielded sales of ¥105.4 billion, while operating income was ¥2.4 billion. Results for textiles and apparel were firm, thanks to increased efficiency in both production and sales, as were results for industrial textiles and materials, owing to an improvement in overall market conditions. Textiles and Apparel Sales of sportswear, everyday apparel and men’s suits rose, reflecting efforts in our mainstay OEM apparel business to bolster our market share, notably by enhancing marketing collaboration with blue-chip customers, and to expand production in the Association of Southeast Asian Nations (ASEAN) region. The operating margin improved, augmented by steps taken to reduce costs through greater production efficiency and the integration of production facilities. Industrial Textiles and Materials Although sales of products for automotive-related applications flagged early in the first half, owing to the Great East Japan Earthquake, demand rallied toward the end of the period. In the area of general-purpose products, market conditions recovered across the board, pushing up sales of mainstay industrial fabrics, nonwoven materials, filters and materials for civil engineering and fisheries-related applications. In film- and resin-related products, film and sheet sales for use in LCDs sagged, while sales of heat-insulating films rose, bolstered by demand related to efforts to reduce energy consumption. Qualitative Information on Financial Position and Cash Flows Analysis of Assets, Liabilities, Net Assets and Cash Flows Assets, Liabilities and Net Assets Total assets as of September 30, 2011, amounted to ¥784.5 billion, an increase of ¥23.0 billion from the end of fiscal 2010. This result was primarily a consequence of higher inventories, attributable to a backlog—caused by regularly scheduled maintenance—and seasonal factors, as well as to contracting demand. Total liabilities, at ¥474.2 billion, were up ¥20.3 billion from the fiscal 2010 year-end. Interest-bearing debt, which includes commercial paper, short-term loans payable and long-term loans payable, rose ¥20.6 billion, to ¥288.0 billion, mainly attributable to the procurement of funds to increase working capital. Total net assets were ¥310.3 billion, an increase of ¥2.6 billion. Shareholders’ equity and total valuation and translation adjustments together represented ¥290.1 billion of the total, up ¥5.8 billion. This increase was due to, among others, quarterly net income of ¥9.2 billion and occurred despite a decrease in the value of investment securities, the result of a sharp decline in share prices, which pushed down the valuation difference on available-for-sale securities. - 5 -
  • 8. Cash Flows As a consequence of operating activities, which provided ¥1.6 billion, plus investing activities, which used ¥18.3 billion, plus financing activities, which provided ¥14.4 billion, cash and cash equivalents as of September 30, 2011, amounted to ¥26.3 billion, down ¥2.1 billion from the end of fiscal 2010. Net cash and cash equivalents provided by operating activities in the first half of fiscal 2011, at ¥1.6 billion, was ¥19.5 billion less than in the first half of fiscal 2010. Factors contributing to this result included income before income taxes of ¥19.7 billion and depreciation and amortization of ¥23.2 billion, which countered the impact of an increase in working capital of ¥32.1 billion and combined interest paid and income taxes paid of ¥5.3 billion. Net cash and cash equivalents used in investing activities amounted to ¥18.3 billion, ¥5.5 billion greater than in the corresponding period of the previous fiscal year. This was attributable primarily to outlays for purchase of property, plant and equipment. Net cash and cash equivalents provided by financing activities amounted to ¥14.4 billion, compared with ¥5.3 billion used in such activities in the fiscal 2010 first half. This result was despite outlays for cash dividends paid and the redemption of debentures, and reflected an increase in short-term bank loans, net. Qualitative Information on Outlook for Operating Results Outlook for Fiscal 2011 Forecast for Operating Results (Billions of yen/%) Net sales Operating income Ordinary income Net income Fisca1 2011 (forecast) ¥890.0 ¥50.0 ¥50.0 ¥24.0 Fiscal 2010 815.7 48.6 50.3 25.2 Change 74.3 1.4 –0.3 –1.2 Percentage change 9.1% 3.0% –0.7% –4.7% With the successful conclusion of key structural reforms, we made a decisive return to profitability at the net income level in fiscal 2010 after two consecutive full-term net losses. Having designated fiscal 2011 as the year for repositioning Teijin on a growth trajectory, our focus for the current period was on further enhancing profitability. However, owing to a global economic slowdown triggered by the European sovereign debt and financial crises, results in several segments—notably Films and Plastics—are expected to continue struggling in the third and fourth quarters. In addition, in October 2011 the severe flooding in Thailand resulted in damage to production facilities belonging to certain local subsidiaries, all of which were forced to suspend operations. For fiscal 2011, we currently forecast consolidated net sales of ¥890.0 billion, operating income of ¥50.0 billion, - 6 -
  • 9. ordinary income of ¥50.0 billion and net income of ¥24.0 billion, all of which are down from our previous forecasts, published August 1, 2011. These forecasts take into account an estimate of the impact of flooding in Thailand on our business, based on information currently available to us. However, because it is difficult at this time to calculate losses resulting from damage to production facilities and inventory, these forecasts do not reflect the impact of those factors. Once the full extent of damage and the resulting disruption to our supply chain has become clearer, should it seem likely results will diverge from these figures, we will promptly release revised forecasts. With the aim of guaranteeing timely disclosure and the efficiency of business performance management, effective from fiscal 2011 all consolidated subsidiaries will close their books on March 31. As a consequence, for this fiscal year only, certain consolidated subsidiaries will report operating results for a 15-month period (January 1, 2011–March 31, 2012). Our current consolidated results forecasts assume exchange rates of ¥79 to US$1.00 and ¥111 to €1.00 and a Dubai crude oil price of US$109 per barrel. Outlook for Segment Results (Billions of yen) Net sales Operating income First half Full term (Forecast) First half Full term (Forecast) High-Performance Fibers ¥ 54.4 ¥130.0 ¥ 4.2 ¥11.5 Polyester Fibers 53.9 120.0 2.0 3.5 Films and Plastics 93.0 225.0 5.7 12.5 Pharmaceuticals and Home Health Care 68.0 150.0 11.9 28.0 Trading and Retail 105.4 225.0 2.4 5.0 Total 374.7 850.0 26.2 60.5 Others 18.9 40.0 1.1 3.0 Elimination and corporate — — (6.7) (13.5) Consolidated total ¥393.6 ¥890.0 ¥20.7 ¥50.0 - 7 -
  • 10. 2. Other Information Changes in significant subsidiaries during the period under review: None Adoption of special quarterly accounting methods: Calculation of tax expense Certain of the Company’s consolidated subsidiaries have adopted a method for estimating in practical terms the effective tax rate for the fiscal year, including for the first and second quarters, following the application of tax effect accounting to income before income taxes, and multiplying this by quarterly income before income taxes to estimate quarterly tax expense. Changes in accounting principles, procedures and presentation methods: Change in the method for determining depreciation of tangible fixed assets To date, the Company and its domestic consolidated subsidiaries have determined depreciation of tangible fixed assets principally using the declining-balance method, while overseas consolidated subsidiaries have used the straight-line method. However, effective from the first quarter of fiscal 2011, the Company and all its consolidated subsidiaries adopted the straight-line method. Since fiscal 2009, the Company has been implementing structural reforms aimed at, among others, establishing optimal global production configurations. These efforts have enabled the Company to achieve stable operating rates for its various production facilities. Having designated fiscal 2011 as the year for repositioning the Teijin Group on a growth trajectory, the Company has lifted the moratorium it has placed on major capital investment to promote promising new businesses. The Company recognizes the essential completion of structural reforms and its new policy regarding capital investment as an important opportunity. The decision to adopt the straight-line method for the Company and all its consolidated subsidiaries, in Japan and overseas, came as a result of this recognition, as well the outcome of an examination of the need to employ a method that both facilitates a fair and impartial assessment of Group companies’ operating results and appropriately reflects Group facilities’ potential for stable operation at present and in the future. The impact of this change on consolidated results for the first two quarters has increased consolidated operating income by ¥2,559 million, ordinary income by ¥2,622 million and income before income taxes by ¥2,675 million. The impact of this change on segment results is outlined in the section titled “Segment Information, etc.” Additional Information: Application of Accounting Standard for Accounting Changes and Error Corrections Effective from the first quarter of fiscal 2011, the Company applied the Accounting Standard for Accounting Changes and Error Corrections (Accounting Standards Board of Japan (ASBJ) Statement No. 24, issued on December 4, 2009) and the Guidance on Accounting Standard for Accounting Changes and Error Corrections (ASBJ Guidance No. 24, issued on December 4, 2009) to accounting changes implemented and corrections to past errors made from the beginning of the first quarter onward. - 8 -
  • 11. Change in provision of retirement benefits for directors and corporate auditors At the ordinary general meeting of shareholders held on June 22, 2011, shareholders approved a proposal to abolish the retirement benefits payment system for retiring directors and corporate auditors and to pay accrued retirement benefits associated with the abolishment of the system, with the timing of payment to be upon retirement. As a consequence, an amount equivalent to accrued retirement benefits due to directors and corporate auditors up to the close of the aforementioned ordinary general meeting of shareholders (¥1,102 million) is included in other noncurrent liabilities. Italicized product names and service names in this report denoted with ™ or ® are trademarks or registered trademarks of the Teijin Group in Japan and/or other countries. Other product names and service names used in this document may be protected as the trademarks and/or trade names of other companies. - 9 -
  • 12. 3. Financial Statements (1) Consolidated Balance Sheets (Million yen) As of March 31, 2011 As of September 30, 2011 < Assets > Current assets Cash and time deposits 28,612 26,502 Trade notes and accounts receivable 156,132 160,394 Finished goods 71,448 97,681 Work in process 9,163 11,351 Raw materials and supplies 24,895 31,538 Other current assets 48,756 44,225 Allowance for doubtful receivables (2,113) (2,268) Total 336,894 369,424 Noncurrent assets Property, plant and equipment Buildings and structures, net 72,046 71,347 Machinery and equipment, net 121,340 114,343 Other, net 66,272 70,849 Total 259,659 256,540 Intangible assets Goodwill 51,773 50,678 Other 15,842 15,840 Total 67,615 66,519 Investments and other assets Investment securities 57,020 53,176 Other 42,314 41,137 Allowance for doubtful receivables (1,969) (2,277) Total 97,365 92,036 Total noncurrent assets 424,640 415,096 761,534 784,520Total assets - 10 -
  • 13. (Million yen) As of March 31, 2011 As of September 30, 2011 < Liabilities > Current liabilities Trade notes and accounts payable 87,283 93,500 Short-term loans payable 44,568 60,661 Current portion of long-term loans payable 12,983 56,208 Commercial paper 33,000 27,000 Current portion of bonds 5,958 2,010 Income taxes payable 7,459 3,679 Other current liabilities 53,516 50,517 Total 244,770 293,578 Noncurrent liabilities Bonds payable 30,000 30,000 Long-term loans payable 138,870 110,042 Provision for retirement benefits 18,153 18,375 Other 22,041 22,177 Total 209,065 180,595 453,836 474,173 <Net assets> Shareholders' equity Capital stock 70,816 70,816 Capital surplus 101,373 101,378 Retained earnings 135,385 141,617 Treasury stock (151) (140) Total 307,423 313,672 Valuation and translation adjustments Valuation difference on available-for-sale securities 10,823 7,929 Deferred gains (losses) on hedges (198) 662 Foreign currency translation adjustment (33,812) (32,189) Total (23,186) (23,597) Subscription rights to shares 439 414 Minority interests 23,023 19,858 Total net assets 307,698 310,347 Total liabilities and net assets 761,534 784,520 Total liabilities - 11 -
  • 14. (2) Consolidated Statements of Income (Million yen) For the second quarter ended September 30, 2010 For the second quarter ended September 30, 2011 Net sales 399,869 393,567 Cost of sales 290,025 281,743 Gross profit 109,844 111,823 Selling, general and administrative expenses 89,332 91,170 Operating income 20,511 20,652 Non-operating income Interest income 242 274 Dividend income 516 450 Equity in earnings of affiliates 2,597 3,871 Other income 358 499 3,715 5,096 Non-operating expenses Interest expenses 2,279 2,093 Foreign exchange losses 275 759 Other expenses 1,178 1,232 3,734 4,086 Ordinary income 20,492 21,663 Extraordinary income Gain on sales of investment securities 1,184 ― Gain on sales of subsidiaries and affiliates' stocks ― 705 Other 322 249 1,506 954 Extraordinary loss Loss on sales and retirement of non-current assets 194 191 Write-down of investment securities 189 653 Loss on impairment 84 980 Restructuring costs 954 ― Provision for allowance for doubtful accounts ― 392 Earthquake-related expenses ― 426 Loss on adjustment for changes of accounting standard for asset retirement obligations 529 ― Other 860 260 2,812 2,904 Income before income taxes 19,186 19,712 Income taxes 6,881 9,356 Income before minority interests 12,305 10,356 Minority interests in income 758 1,171 Net income 11,546 9,184 Total Total Total Total - 12 -
  • 15. (Consolidated Statements of Comprehensive Income) (Million yen) Income before minority interests 12,305 10,356 Other comprehensive income Valuation difference on available-for-sale securities (3,887) (2,881) Deferred gains (losses) on hedges (3,069) 862 Foreign currency translation adjustment (3,937) 1,970 814 (404) (10,079) (452) Comprehensive income 2,225 9,903 Breakdown of comprehensive income: Comprehensive income attributable to owners of the parent 1,507 8,774 Comprehensive income attributable to minority interests 718 1,129 Total Share of other omprehensive income of associates accounted for using the equity method For the second quarter ended September 30, 2010 For the second quarter ended September 30, 2011 - 13 -
  • 16. (3) Consolidated Statements of Cash Flows (Million yen) Cash flows from operating activities Income before income taxes 19,186 19,712 Depreciation and amortization of others 28,009 23,195 Interest and dividend income (759) (725) Interest expense 2,279 2,093 Equity in losses (earnings) of affiliates (2,597) (3,871) Decrease (increase) in receivables (5,736) (3,651) Decrease (increase) in inventories (10,620) (34,413) Increase (decrease) in payables 4,872 6,002 Other, net (11,333) (2,373) Subtotal 23,300 5,968 Interest and dividends received 1,205 1,000 Interest paid (2,350) (2,222) Income taxes paid (1,018) (3,099) Net cash and cash equivalents provided by operating activities 21,136 1,647 Cash flows from investing activities Purchase of property, plant and equipment (11,590) (13,122) Purchase of investment securities (3,631) (36) Purchase of investments in subsidiaries ― (4,950) Other, net 2,396 (174) Net cash and cash equivalents used in investing activities (12,824) (18,283) Cash flows from financing activities Increase (decrease) in short-term bank loans, net (3,528) 16,950 Increase (decrease) in commercial paper 14,000 (6,000) Proceeds from long-term debt 3,626 20,000 Repayment of long-term debt (9,751) (8,128) Issue of debentures 13,572 2,013 Redemption of debentures (18,697) (5,610) Cash dividends paid (1,964) (2,952) Cash dividends paid to minority shareholders (2,472) (1,676) Other, net (46) (146) Net cash and cash equivalents provided by financing activities (5,261) 14,449 Effect of exchange rate changes on cash and cash equivalents (480) 76 Net increase in cash and cash equivalents 2,569 (2,109) Cash and cash equivalents at beginning of period 22,964 28,454 112 ― Cash and cash equivalents at end of period 25,646 26,344 Increase of cash and cash equivalents due to change in scope of consolidation For the second quarter ended September 30, 2010 For the second quarter ended September 30, 2011 - 14 -
  • 17. (4) Notes Pertaining to Going Concern Assumption No (5) Segment Information, etc. I. Outline of segments The Company's reportable operating segments are components of an entity for which separate financial information is available and evaluated regularly by the chief decision-making authority in determining the allocation of management resources and in assessing performance. The Company currently divides its operations into business groups, based on type of product/nature of business/services provided. The business groups formulate product and service strategies in a comprehensive manner in Japan and overseas. Accordingly, the Company divides its operations into five reportable operating segments on the same basis as it uses internally: High-Performance Fibers (Aramid Fibers and Carbon Fibers and Composites); Polyester Fibers; Films and Plastics (Plastics and Films); Pharmaceuticals and Home Health Care; and Trading and Retail. Within the High-Performance Fibers segment, Aramid Fibers encompasses production and sale of thread, staple fibers and textiles, and of synthetic leather, while Carbon Fibers and Composites encompasses the production and sale of carbon fibers products. Polyester Fibers includes the production and sale of filament yarn, staple fibers, spun yarn, processed fibers, nonwoven fabrics and textiles, as well as of polyester raw materials. Within the Films and Plastics segment, Plastics involves the production and sale of polycarbonate resin, other resins and resin products, while Films includes the production and sales of polyester films. Pharmaceuticals and Home Health Care encompasses the production and sales of pharmaceuticals, the production and rental of home health care equipment and the provision of home health care services. Trading & Retail focuses on the planning and sales of textile products. II. FY10 2Q results (Apr. 2010 - Sep. 2010) Notes: 1. Corporate expenses are expenses that cannot be allocated to individual reportable operating segments and are primarily related to basic research and head office administration. (Million yen) High- Performance Fibers Polyester Fibers Films & Plastics Pharma. & H. H. Care Trading & Retail Total 1) External customers 52,113 50,864 110,815 66,480 102,193 382,468 17,400 399,869 2) Intersegment transactions or transfers 5,344 20,240 3,850 0 2,301 31,736 15,003 46,739 Net sales 57,458 71,105 114,666 66,480 104,494 414,204 32,404 446,608 Segment income (loss) 1,158 (10) 10,937 11,809 1,919 25,813 897 26,711 Note: "Others," which includes the Company's IT business, does not qualify as a reportable operating segment. 2. Difference between operating income and sum of operating income (loss) in reportable operating segments (Adjustment) (Million yen) Total reportable operating segments Others segment Elimination of intersegment transactions Corporate expenses* Operating income Note: Corporate expenses are expenses that cannot be allocated to individual reportable operating segments and are primarily related to basic research and head office administration. 3. Loss on impairment and goodwill by reportable segments No 20,511 140 (6,340) 25,813 897 Operating income Sales Grand total Reportable operating segments Others* Amount - 15 -
  • 18. III. FY11 2Q results (Apr. 2011 - Sep. 2011) 1. Segment sales and operating income (loss) (Million yen) High- Performance Fibers Polyester Fibers Films & Plastics Pharma. & H. H. Care Trading & Retail Total 1) External customers 54,381 53,923 92,951 68,043 105,364 374,665 18,901 393,567 2) Intersegment net sales or transfer 5,177 17,155 3,081 0 2,039 27,453 16,933 44,386 Net sales 59,559 71,079 96,033 68,043 107,404 402,119 35,834 437,954 Segment income 4,230 1,994 5,724 11,914 2,358 26,223 1,086 27,310 Note: "Others," which includes the Company's IT business, does not qualify as a reportable operating segment. 2. Difference between operating income and sum of operating income (loss) in reportable operating segments (Adjustment) (Million yen) Total reportable operating segments Others segment Elimination of intersegment transactions Corporate expenses* Operating income Notes: 1. Corporate expenses are expenses that cannot be allocated to individual reportable operating segments and are primarily related to basic research and head office administration. 2. As explained in Changes in accounting principles, procedures and presentation methods, in the section titled 2. Other Information, the Company and its domestic consolidated subsidiaries, which have to date determined depreciation —principally of equipment— using the declining balance method, have, effective from the first quarter of FY11, adopted the straight-line method. The impact of this change in the first quarter of FY11 was to increase operating income by 120 million in the High-Performance Fibers segment, 113million in the Polyester Fibers segment, 230 million in the Films and Plastics segment, 497 million in the Pharmaceuticals and Home Health Caresegment and 55 million in the Others segment, and to reduce corporate expenses by 169 million, compared to what would have been the case had the former method had been used. 3. Loss on impairment and goodwill by reportable segments No (6) Notes on Significant Changes in Shareholders' Equity No (7) Subsequent Event Flooding in Thailand Owing to the severe flooding in Thailand this year, in October 2011 production facilities belonging to certain Teijin Group subsidiaries in the country have been inundated or otherwise damaged. As entry into these facilities is not currently possible, we are unable at this time to accurately calculate the financial impact of this event, net of the amount of insurance settlements, nor to estimate when these facilities will be able to resume normal operations. 57 (6,715) 20,652 Grand total 26,223 1,086 Sales Reportable operating segments Others* Operating income Amount - 16 -
  • 19. 1. Movement of consolidated results (1) Movement of results (Billion yen) FY2010 1Q FY2010 2Q FY2010 3Q FY2010 4Q FY2011 1Q FY2011 2Q Net sales 192.6 207.3 206.3 209.5 189.6 204.0 Operating income 8.1 12.4 15.9 12.2 11.0 9.6 Ordinary income 7.8 12.7 16.9 12.9 12.8 8.9 Net income 4.0 7.5 8.5 5.2 6.3 2.9 (2) Movement of industrial segment information (Billion yen) FY2010 1Q FY2010 2Q FY2010 3Q FY2010 4Q FY2011 1Q FY2011 2Q Net sales High-Performance Fibers 25.6 26.5 24.7 26.6 26.9 27.5 Polyester Fibers 24.7 26.2 24.9 27.7 23.8 30.2 Films & Plastics 51.8 59.1 54.8 51.5 46.9 46.1 Pharma. & H. H. Care 33.7 32.8 35.7 34.2 34.9 33.1 Trading & Retail 48.7 53.5 58.1 56.7 48.2 57.2 Total 184.5 198.0 198.2 196.6 180.6 194.1 Others 8.1 9.3 8.0 12.9 9.0 9.9 Consolidated total 192.6 207.3 206.3 209.5 189.6 204.0 Operating income High-Performance Fibers 0.0 1.1 1.2 2.1 2.0 2.2 Polyester Fibers 0.0 (0.0) 1.4 1.6 0.5 1.5 Films & Plastics 3.6 7.3 8.1 4.4 3.2 2.6 Pharma. & H. H. Care 6.9 4.9 6.8 4.3 7.2 4.7 Trading & Retail 0.7 1.2 1.6 1.2 1.0 1.3 Total 11.3 14.6 19.2 13.6 13.9 12.3 Others (0.1) 1.0 0.2 2.0 0.3 0.8 Elimination & corporate (3.1) (3.1) (3.5) (3.4) (3.2) (3.5) Consolidated total 8.1 12.4 15.9 12.2 11.0 9.6 2. Capital expenditure, depreciation & amortization expenses and research & development expenses (consolidated) (Billion yen) FY2008 FY2009 FY2010 FY2011 2Q FY2011 (Actual) (Actual) (Actual) (Actual) (Outlook) 69.6 30.8 25.3 11.4 40.0 75.8 36.3 29.2 12.9 45.0 67.4 61.9 56.4 23.2 55.0 37.6 33.4 31.5 15.2 33.0 *Depreciation and amortization includes amortization of goodwill. 3. Number of employees (Consolidated) End of FY08 End of FY09 End of FY10 End of FY11 2Q 19,453 18,778 17,542 17,680 Research & development Supplementary Information Depreciation & amortization* Consolidated Capital expenditure: CAPEX for tangible assets Total - 17 -
  • 20. 4. Foreign Exchange Rate (1) BS exchange rate for overseas subsidiaries (End of fiscal year) 92 81 81 77 1.43 1.32 1.45 1.41 (2) PL exchange rate for overseas subsidiaries (Average of fiscal year) 94 88 82 79 1.39 1.33 1.40 1.41 5. Sales of principal pharmaceuticals (Billion yen) Bonalon® Osteoporosis Onealfa® Osteoporosis Mucosolvan® Expectorant Venilon® Severe infectious diseases Laxoberon® Laxative Tricor® Hyperlipidemia Bonalfa® Psoriasis Alvesco® Asthma Spiropent® Bronchodilator Synvisc Dispo™ Feburic® Hyperuricemia and gout 6. Development status of new pharmaceuticals (As of September 30, 2011) Products TMX-67 BTR-15K TV-02H GTH-42V Filed in Japan in February 2011 GTH-42J Filed in Japan in August 2011 ITM-014 Filed in Japan in September 2011 GGS(Venilon® ) ITM-077 NTC-801 GGS(Venilon® ) ITM-058 NA872ET FY2009 FY2010 FY2011 2Q FY2011 (Actual) FY2009 FY2010 FY2011 2Q (Actual) JPY/US$ US$/EURO (Actual) (Actual) Ph Ⅰ Commenced sales in Japan in May, 2011 Stage (Actual) (Outlook) FY2011 (Actual) (Outlook) Ph Ⅲ Commenced sales in Japan in April, 2011 21.0 10.3 11.9 11.4 5.4 21.3 10.3 10.0 4.5 8.0 9.1 4.5 4.7 4.4 2.1 1.6 1.8 0.7 1.6 0.7 1.1 1.2 0.6 1.0 0.5 ― 0.7 0.9 Ph ⅡTypeII Diabetes Ph Ⅰ Ph ⅡAtrial fibrillation and flutter Osteoporosis Microscopic PolyAngitis (MPA) Ph Ⅱ Expectorant ― 0.5 Additional filing for low-concentration preparation in September 2010(PRC) ― Asthma in children Gout and hyperuricemia FY2010 FY2011 2Q (Actual) (Actual) (Actual) Multiple Sclerosis (MS) Acromegaly Target disease Osteoporosis Osteoarthritis pain in the knee Osteoporosis Psoriasis JPY/US$ US$/EURO Products Indication FY2009 1.1 1.7 - 18 -