yokogawa electric corporation annual report 2012 our ... · middle east, southeast asia, and...

OuR GlObAl QuEsT FOR ExCEllENCE

ANNuAl REPORT 2012For the year ended March 31, 2012

Yokogawa E

lectric Corporation

Annual R

eport 20

12

CONTENTs02 Evolution 2015 Mid-term business Plan

03 Financial Highlights

04 Message from the President and CEO

08 FEATuRE Yokogawa’s Dramatic Advance in the

Growing Natural Gas Market

12 Our businesses at a Glance

14 Research and Development

16 Corporate social Responsibility

17 Corporate Governance

20 Environmental Management

22 Directors, Corporate Auditors, and Officers

24 Consolidated 11-year summary

26 Financial Review

30 Consolidated balance sheet

32 Consolidated statement of Operations

THE YOKOGAWA PHIlOsOPHY

As a company, our goal is to contribute to society through broad-ranging activities in the areas of measurement, control, and information.

Individually, we aim to combine good citizenship with the courage to innovate.

CORPORATE PROFIlEFrom its founding in 1915, Yokogawa Electric Corporation has contributed to society

by supplying industry with cutting-edge products based on its measurement, control,

and information technologies. Always sensitive to changing customer needs,

Yokogawa has continued to transform itself and has become a leading company in

the global industrial automation and control field. While striving to enhance our corpo-

rate value, we remain committed to doing our part as a trustworthy industry partner

to realize a more prosperous society.

1915 1920 1925 1930 1935 1940 1945 1950 1955 1960

Yokogawa Europe b.V.

1915 Tamisuke Yokogawa, Doctor of Architectural Engineering, established an electric meter research institute in shibuya, Tokyo, with Ichiro Yokogawa and shin Aoki

1917 First to produce and sell elec-tric meters in Japan

1920 Incorporated as Yokogawa Electric Works ltd.

1933 started research and man-ufacture of aircraft instru-ments and flow, temperature, and pressure controllers

1948 Made public offering of the Company’s stock

1950 Developed Japan’s first elec-tronic recorder

1955 signed a technical assistance agreement for industrial instru-ments with Foxboro, usA

1957 Established Yokogawa Electric Works, Inc. as North American sales office

1964 Made a full-scale entry into the industrial analyzer market

1966 Developed and started manu-facture and sale of vortex flowmeter

Cautionary Statement regarding Forward-looking Statements Statements made in this annual report regarding Yokogawa’s plans, estimates, strategies, beliefs, and other statements that are not historical facts are forward-looking statements about the future performance of Yokogawa. These statements are based on management’s assumptions and beliefs in the light of currently available information. Yokogawa cautions that a number of important factors, such as general economic conditions and exchange rates, could cause actual results to differ materially from those discussed in the forward-looking statements.

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Yokogawa Electric CorporationYokogawa Corporation of AmericaYokogawa Middle East

B.S.C.(c)

Yokogawa Electric International Pte. Ltd.

Yokogawa Engineering Asia Pte. Ltd.

Yokogawa China Co., Ltd.

Based on the mid-term business plan, Yokogawa will transform itself andexpand the industrial automation andcontrol business to take growth to the next level.

Yokogawa Electric Corporation

Yokogawa’s International Business Headquarters

Regional Support Offices

33 Consolidated Statement of Comprehensive Income

34 Consolidated Statement of Changes in Equity

35 Consolidated Statement of Cash Flows

36 Notes to Consolidated Financial Statements

57 Report of Independent Auditors

58 Subsidiaries and Affiliates

59 Corporate Data/Investor Information

1974 Established Yokogawa Electric Singapore Pte. Ltd. as Singapore plant

Established Yokogawa Electric (Europe) B. V. as European sales office

1975 Released CENTUM, the world’s first distributed process control system

1983 Formed Yokogawa Hokushin Electric Corp. through merger with Hokushin Elec-tric Works, Ltd.

1986 Established Xiyi Yokogawa Co., Ltd. in Xian, China, jointly with Xian Instru-ments Factory

Changed the Company name to Yokogawa Electric Corporation

1988

Entered the high-frequency measuring instrument business

1990 Established Yokogawa Middle East E.C. in Bahrain

1996 Released confocal scan-ner and entered biotech-nology business

2002 Acquired all the shares of Ando Electric Co., Ltd.

2005 Established Yokogawa Electric International Pte. Ltd. in Singapore to oversee global industrial automation business

2008 Entered the drug discovery support market with a new bio test system

2010 Transferred the measuring instruments business to Yokogawa Meters & Instruments Corporation

2011 Announced Evolution 2015 Mid-term Business Plan

01Yokogawa Electric CorporationAnnual Repor t 2012

MID-TERM BUSINESS PLAN

Evolution 2015Taking us to the next growth stage

Business Plan for FY2015

Growth Strategy Centering on Industrial Automation and Control

Strategy by Region

n Resource-rich countries and emerging countries Invest resources in the BRICs, the Middle East, Southeast Asia, and Oceania to win new projects.

n Africa, Central Asia, and Latin America Open new offices/facilities to strengthen sales channels.

n Europe and North America Strengthen relationships with major global companies to efficiently gain market share.

n Japan Provide highly efficient services that add significant value.

Strategy by Product

n Systems For target industries, strengthen the capabilities of our systems and develop digital solutions that make effective use of plant data.

n Sensors Expand and enhance the product lineup by means such as alliances with other companies and M&A.

n Services Provide consulting services that add significant value by improving productivity.

Strategy by Industry

n Business expansion in high-market-share industries Oil refining and petrochemicals

n Expansion in target industries

•Industrieswithsignificantgrowth—oil/gas field development, electric power, and specialty chemicals

• New industries—biomass and geothermal/wind/solar electric power

Sales ¥400 billion

Operating income ¥40 billion

Operating income-to-sales ratio 10 %

EPS ¥100 or more

Equity ratio 50 %

Debt-to-equity ratio (D/E) 40 %Free cash flow 2011-2015 over ¥60 billion

Based on the exchange rates of 1$=80 yen, 1€=110 yen

The market for our industrial automation and control business is expected to grow over the medium to long term, primarily in emerging countries. We will develop and execute strategies by region, industry, and product to capture a larger share of this growing market.

Note: Yokogawa Electric estimates, based on ARC Advisory Group market research data

8.6% (No. 4)

10% or more

No. 12009 2015 Mid- to long-term target

Our Market Share Targets for the Global Control System / Sensor Market (estimated at 3 trillion yen in 2009)

02 Yokogawa Electric CorporationAnnual Repor t 2012

0 08/3

437.4

376.5

316.6 325.6 334.7

09/3 10/3 11/3 12/3

100

200

300

400

500

Net sales

(Billions of yen)

−200 08/3

44.76

–149.26

–57.45

–25.98

23.11

09/3 10/3 11/3 12/3

−100

0

100

Net income (loss) per share

(Yen)

0 0

5 2

10 4

15 6

20 8

25 10

08/3

27.4

4.72.6

11.1

16.6

09/3 10/3 11/3 12/3

30 12

6.3

0.8

3.4

5.0

1.3

� Operating income � Operating income ratio

Operating income/Operating income ratio(Billions of yen) (%)

−60 08/3

11.7

–38.4

–14.8–6.7

6.0

09/3 10/3 11/3 12/3

−40

−20

0

20

Net income (loss)

(Billions of yen)

206.4

0 008/3

243.3

55.6 54.856.0 56.7 59.4

177.3 184.7198.9

09/3 10/3 11/3 12/3

100 20

50 10

200 40

150 30

250 50

300 60

109.7

52.0

35.119.427.1

79.4

36.0

29.1

32.1

29.8

72.9 77.0 87.3

32.0 26.8 26.4

21.0 21.323.0 27.8

36.9 36.1

20.925.226.3

� Asia � Europe � North America� Middle East � Other � Sales ratio outside Japan

Sales outside Japan by geographic area/ Sales ratio outside Japan(Billions of yen) (%)

12/3

Segment sales

Other

6.9%Industrial

Automationand Control

82.8%

Test and Measurement

10.3%

FINANCIAL HIGHLIGHTSYokogawa Electric Corporation and Consolidated Subsidiaries Years Ended March 31, 2010 to 2012

Billions of yenMillions of US dollars

2010/3 2011/3 2012/3 2012/3

For the year:

Net sales ¥316.6 ¥325.6 ¥334.7 $4,072

Industrial Automation and Control Business 257.3 260.7 277.2 3,372

Test and Measurement Business 31.9 37.1 34.6 421

Other Businesses 27.4 27.9 22.9 279

Operating income 2.6 11.1 16.6 202

Operating income ratio (%) 0.8 3.4 5.0 —

Net income (loss) (14.8) (6.7) 6.0 72

At year-end:

Total assets 398.8 361.2 359.5 4,374

Shareholders’ equity 153.4 141.7 145.7 1,773

ROE (Return on equity) (%) (9.2) (4.5) 4.1 —

ROA (Return on assets) (%) (3.7) (1.8) 1.7 —

Shareholders’ equity ratio (%) 38.5 39.2 40.5 —

Yen US dollars

Per share data:

Net income (loss) (57.45) (25.98) 23.11 0.28

Cash dividends 2.00 0.00 5.00 0.06

Shareholders’ equity 595.42 550.19 565.69 6.88

Stock information:

Stock price at the end of the term (yen / US dollars) 814 634 837 10.18

Market capitalization (billions of yen / millions of US dollars) 218.7 170.3 224.8 2,736

Number of issued shares 268,624,510 268,624,510 268,624,510 —

Note: The method for aggregating segment data was changed in fiscal year 2010 (ended March 31, 2011). In the above table, the 2009 figures were recalculated based on the new method.


MESSAGE FROM THE PRESIDENT AND CEO

SHUzO KAIHORIPresident and Chief Executive Officer

Upon joining the Company in 1973, Shuzo Kaihori worked in technology, engineering, and services for the industrial automation and control business. He became the President and COO of Yokogawa Corporation of America in 2000, and then served as Vice President and Head of the Industrial Automation Business Headquarters. In June 2006 he became a Director, and the following April was appointed President and COO of Yokogawa Electric Corporation. In April 2008 he became president and CEO.

Not long after this appointment, market conditions declined as the result of the 2008 global financial crisis. Key businesses slowed and losses accumulated. In February 2009, President Kaihori announced a plan to reduce fixed costs and review the Group’s business portfolio. In November 2011, he formulated the Evolution 2015 mid-term business plan with a view to achieving growth centering on the industrial automation and control business.

Seeking to evolve while striving to

enhance corporate value through

attainment of the goals set in the

mid-term business plan


Successful structural reforms led to rising sales and profits in fiscal year 2011While the global economy exhibited modest growth in the first half of the year ended March 31,

2012 (fiscal year 2011), the second half was characterized by increasing uncertainty over the

economic outlook, reflecting the deepening financial instability in Europe, the sluggish recovery

of the U.S. economy, and slowing economic expansion in emerging nations. The Japanese econ-

omy had shown signs of recovery from a slump following the Great East Japan Earthquake, but

failed to gain traction due to factors that included the protracted appreciation of the yen and the

flooding in Thailand.

Against this backdrop, the Yokogawa Group put considerable effort into expanding operations

outside Japan, especially in the industrial automation and control business, where the Company

benefited from increased investment in electric power and energy related projects. Although the

yen’s appreciation affected our results, orders consequently rose 10.0 billion yen year on year

to 344.1 billion yen and net sales rose 9.0 billion yen to 334.7 billion yen. (Excluding the impact

of the yen’s appreciation, orders and net sales would have risen 19.2 billion yen and 17.9 billion

yen, respectively.) Operating income rose 5.5 billion yen year on year to 16.6 billion yen, due to

growth in sales and reduced fixed costs as a result of structural reforms. For the first time in

four years, we recorded net income. The net income figure of 6.0 billion yen represented a 12.7

billion yen improvement over fiscal year 2010, when we booked business structure improvement

expenses and other extraordinary losses in connection with the structural reforms.

The Yokogawa Group positioned fiscal years 2009 and 2010 as a period of structural reform

in preparation for the next growth stage. During that time, the Group implemented an action plan

to reduce costs and review its business portfolio. The outcome of these reforms is readily appar-

ent in the fiscal year 2011 business results.

Structural reforms accomplishedOur structural reforms were vir tually complete by the end of fiscal year 2010, with two tasks

remaining to be resolved in the following fiscal year: deciding how to make the most effective

use of our Sagamihara office and plant—the main facility for the discontinued photonics busi-

ness—and entering into semiconductor tester related alliances.

With respect to the Sagamihara office and plant, we resolved in March 2012 to conclude a

leasing agreement with Opnext Japan, Inc., covering the 20-year period from April 2013 to March

2033. Starting in fiscal year 2013, the Company’s costs associated with the Sagamihara facility

will in principle be offset completely by the leasing fees.

Our Evolution 2015 market share targets for the global control system / sensor market

2009 8.6%

2015 10.0% or more

Mid- to long-term target

Top share of market

Non-Japan: 8%Japan: 2%

Sales growth: Achieve 6% CAGR

The completion of structural reforms in fiscal years 2009 and 2010

led to substantial growth in profits in fiscal year 2011.


Expansion in target industries Expansion in

industries where we have expertise

We looked into all manner of measures to support the semiconductor tester business. How-

ever, after considering the prolonged downturn in DRAM prices and the greater-than-expected

slump in LCD-related markets and then discussing the potential of this market and the necessary

capital expenditure, we ultimately decided to exit this business. The memory tester business will

be transferred to DHK Solution Corporation of South Korea by August 2012 and the non-memory

tester business will be discontinued over a one year period commencing from that date. In

stages, the affected employees will be redeployed elsewhere in the Yokogawa Group. From fiscal

year 2013, there will be no risk of the semiconductor tester business recording a loss.

This concludes our decisions on structural reforms. In so doing, we have paved the way for

growth centered on the industrial automation and control business.

The Evolution 2015 mid-term business planIn November 2011, the Yokogawa Group unveiled the Evolution 2015 mid-term business plan for

the years leading up to fiscal year 2015. The plan sets out targets and strategies for this period

and is the first step toward achieving our long-term vision of being the global No. 1 company in

the industrial automation and control business. With the structural reforms now complete, the

Group will use Evolution 2015 as a blueprint for growth centering on the industrial automation

and control business.

Amid steadily rising demand for energy in emerging countries, the industrial automation and

control business is expected to see solid growth in such energy-related markets as electric

power, natural gas, oil, and renewable energy. As a global solutions and service company,

Yokogawa will implement a growth plan for these expanding control markets that centers on the

business of providing customer-focused solutions and is comprised of regional, industry, and

product strategies.

The Group’s regional strategy is to consider opening or expanding sales channels in resource-

rich and emerging countries with high growth potential, especially in Africa, Central Asia, and

Latin America.

In terms of industry strategy, we already have a large share of downstream markets such as oil

refining and petrochemicals, and in these areas aim to strengthen our capacity to provide solu-

tions to major global corporations and to national oil companies in emerging countries. In the

Our Evolution 2015 industry strategy

The decisions to conclude a leasing agreement for the

Sagamihara facility and discontinue the semiconductor tester

business have set the stage for growth centering on the industrial

automation and control business.

NEW MARKETS

HIGH GROWTH MARKETS

HIGH-SHARE MARKETS

RENEWABLE ENERGY

SPECIALTY CHEMICALS

ELECTRIC POWER

PETROCHEMICALS

OIL/GAS FIELD DEVELOPMENT

OIL REFINING

Biomass Geothermal/wind/solar electric power


upstream oil and gas development and production markets, the Group will seek to win projects

based on its strong downstream track record, targeting primarily major oil companies. In electric

power, our plan is to expand business all over the world based on our strong record in Asia and

Oceania, and the expertise and technology that we have amassed along the way. In chemicals,

our aim is to gain market share outside Japan. We will also actively pursue opportunities in the

renewable energy market, especially in biomass, where we already have a strong body of work.

In terms of product strategy, we are broadening our lineup of sensor products. Among our

major product releases in fiscal year 2011 were an optical fiber temperature sensor for use in

oil and natural gas drilling and a differential pressure/pressure transmitter and temperature

transmitter that is compliant with international wireless communication standards. To take a

larger share of the market, we will continue to enhance our lineup of products and make them

more competitive.

In addition to the pursuit of growth strategies, Evolution 2015 calls for business reforms that

include globalization of corporate headquarters functions, changes to the production set-up, and

implementation of a global human resources strategy. The plan also sets out financial strate-

gies. By pursuing the abovementioned growth strategies, implementing business reforms, and

executing the financial strategies, we seek to generate consolidated net sales of 400 billion yen

in fiscal year 2015, along with operating income of 40 billion yen, an operating income-to-sales

ratio of 10%, and EPS of 100 yen or more.

Enhancing corporate valueWith the aim of reciprocating the trust that has been placed in us by our stakeholders, Yokogawa

is dedicated to enhancing its corporate governance and managing its business soundly and prof-

itably. Currently, three of the seven members of the Board of Directors are outside directors,

while three of the five members of the Board of Corporate Auditors are outside corporate audi-

tors. Outside directors and corporate auditors offer advice and suggestions based on their rich

backgrounds and expert judgment. Accordingly, they play an important role in assuring the valid-

ity, objectivity, and transparency of management.

The Company will work tirelessly to strengthen its corporate governance with the aim of man-

aging its business in a trustworthy manner and will endeavor to build a corporate culture that

prioritizes compliance above all else.

Yokogawa is dedicated to enhancing corporate governance and managing its business in a

manner befitting the trust placed in us. We will be doing our utmost to maximize corporate value,

and to this end ask for the continued support and encouragement of investors and stakeholders.

August 2012

SHUzO KAIHORI

President and Chief Executive Officer

Evolution 2015 outlines growth strategies for the industrial automation and

control business; business reforms that include globalization of corporate

headquarters functions, changes to the production set-up, and implementation

of a global human resources strategy; and financial strategies.


FEATURE

Yokogawa’s Dramatic Advance in the Growing Natural Gas Market

Driven by economic growth in emerging countries, the

global demand for energy continues to grow. In view of its

high energy efficiency and small environmental footprint,

natural gas is in especially high demand.

Yokogawa supplies a number of products and services

to the natural gas market for use in onshore and offshore

production, liquefaction, transportation, and regasification,

and has a strong record in this field. Our Evolution 2015

mid-term business plan unveiled in November 2011

identifies the natural gas market—in particular upstream

areas such as extraction and primary processing—as a

strategic focus, and we are actively expanding our

business in these areas.


Market trend: Demand for natural gas continues to grow

Global energy demand is still expanding, fueled by eco-

nomic growth in emerging countries. Much attention is

being focused on natural gas as it is more energy efficient

than other fossil fuels like oil and coal, and also burns

cleaner, emitting no sulfurous gas and less carbon dioxide.

The U.S. Energy Information Administration estimates

that global natural gas consumption in 2035 will be 1.52

times as much as in 2008.

With crude oil prices rising, natural gas is a less expen-

sive alternative; as such, the outlook is for demand to con-

tinue growing.

Yokogawa’s position in the natural gas market, and its strategies for gaining market shareLong track record and abundant technical prowess

Spearheaded by control systems, Yokogawa supplies prod-

ucts and services supporting every part of the natural gas

industry, from production to liquefaction, transportation,

and regasification. With its solid and highly credible track

record, Yokogawa has gained recognition as a leading com-

pany in the field.

Needs associated with onshore installations

The typical gas field has a number of wells distributed over

a broad area hundreds of square kilometers in size. The

control system design must be optimized to meet the spe-

cific requirements of the field in terms of area, number of

wells, communications infrastructure, power supply, tem-

perature, and so forth.

Furthermore, it is required to reduce overall costs,

increase the gas recovery rate, and improve capacity utiliza-

tion. The overall reduction of costs can be achieved by cut-

ting operating and maintenance costs and better utilizing

resources. The gas recovery rate and capacity utilization

can be improved by preventing accidents and unplanned

shutdowns, optimizing gas collection, and properly main-

taining well facilities.

Strategies for onshore gas installations

For producers looking to reduce overall costs, improve gas

recovery rates, and raise capacity utilization, Yokogawa pro-

vides solutions centering on the STARDOM network-based

control system that permit remote monitoring of distant pro-

duction sites and facilitate effective use of acquired data.

Russia, the U.S., and China are all major gas producers,

and the Yokogawa Group is paying particular attention to

onshore gas development projects in these markets. Some

of the world’s leading energy companies are engaged in gas

Unconventional natural gas resources are driving

change in the natural gas market

Recent years have brought technological advances in the

extraction of unconventional natural gas resources such as

shale gas, coal-bed methane, and tight gas. The U.S.,

Canada, China, and Australia are all actively engaged in

unconventional natural gas development, and by 2009,

unconventional natural gas already accounted for 50% of all

gas production in the U.S.

Unconventional natural gas production is achieving econo-

mies of scale that are driving down natural gas prices. In order

to minimize the amounts that must be invested, gas-producing

countries need to simplify the investment decision-making

process, speed up development, and shorten platform con-

struction lead times. Increasingly, producers are turning to

offshore installations such as floating production, storage and

offloading (FPSO) units, which require little additional con-

struction at sea and can be quickly put into operation.

*Includes the 50 states and the District of Columbia.Notes: Totals may not equal sum of components due to independent rounding.Sources:History: U.S. Energy Information Administration (EIA), International EnergyStatistics database (as of March 2011), website www.eia.gov/iesProjections: EIA, Annual Energy Outlook 2011, DOE/EIA-0383(2011), AEO2011National Energy Modeling System, run REF2011.D020911A,website www.eia.gov/oiaf/aeo/overview.html, and World Energy Projection System Plus (2011)

168.71.52 times

110.7

2008 2015 2020 2025 2030 2035

Area and growth rate

� Brazil 5.1%

� India 4.5%

� China 5.5%

� Africa 3.5%

� Middle East 2.7%

� United States 0.5%*

� Russia 0.1.%

� Other 0.96%

World natural gas consumption by region

(Trillion cubic feet)

0

30

60

90

120

150

180

Central control room of natural gas exploration and production facility


production in Russia and China. Yokogawa has prior dealings

with these companies in the field of oil refining, and aims to

leverage those relationships to make inroads into the gas

industry. The U.S. is a particularly promising market, being

home to a huge number of relatively small gas wells. In 2011,

Yokogawa’s U.S. subsidiary released WELL PRODUCER, a

proprietary package that has helped to expand our business

by simplifying the automation and management of natural

gas wellheads.

In 2011, we also rolled out a fiber-optic temperature

sensor that utilizes the optical measurement technologies

that we have acquired over the years in the measurement

field. This sensor was developed specifically for use in natu-

ral gas and oil drilling, and can withstand harsh outdoor envi-

ronments. In 2012 we next launched new field wireless

differential pressure/pressure and temperature transmitters.

These devices can communicate wirelessly with production

control systems, which reduces cabling costs and allows the

installation of equipment in difficult-to-wire locations.

Our goal is to continue adapting to this evolving market

and meet the changing needs of our customers by develop-

ing products for specific applications and continuing to

acquire specialist knowledge.

Needs of parties involved in the LNG market

The growing demand for natural gas and the associated

increase in production have highlighted the need for highly

efficient transport to users in far-flung locales. The lique-

faction of natural gas drastically decreases its volume,

which facilitates the transport of large amounts over great

distances. This is driving up demand for liquefied natural

gas (LNG), and many new LNG projects are planned.

LNG liquefaction and regasification plants both need to

be capable of swiftly and accurately adjusting production to

meet fluctuations in demand.There is a need in the LNG

shipping industry for ways to boost cost competitiveness,

improve voyage efficiency, and minimize carrier downtime.

CASE STUDY 1

NAM’s Groningen gas field in the Netherlands

NAM, or Nederlandse Aardolie Maatschappij B. V., is an oil and natu-ral gas exploration and production company jointly capitalized by Shell and Esso (currently ExxonMobil)

Establishing a large-scale remote control system for the development of Europe’s largest gas fieldWith an ultimately recoverable reserve of some 2,700 billion m3 of natural gas, NAM’s

Groningen field is one of the world’s largest.

Following a rigorous screening process, Yokogawa won the mandate to design, engi-

neer, install, and maintain production control systems, plant information management

systems, and dif ferential pressure / pressure transmitters as this project’s main

instrument vendor. The company was placed in charge of everything from design and

engineering to installation, and currently is providing maintenance services. The

installed systems and products allow a central control room to remotely monitor and

control 29 wellhead clusters with a total of 296 wells in NAM Groningen’s nor th and

south gas fields. Yokogawa’s implementation of this solution was a monumental

under taking that has enabled the unattended operation of these widely dispersed well-

head clusters.

Major systems and products delivered

CENTUM CS 3000 integrated production control system

Exaquantum plant information management system

DPharp EJA differential pressure / pressure transmitter

Upstream

Downstream

Onshore

Gas Production

Oil Production

FPSO Refining

PetrochemicalSubsea

Production Platform

Offshore

Pipeline

Onshore Processing

Overview of oil and gas upstream / downstream


Yokogawa’s strategies for the LNG market

Yokogawa boasts over 30 years in this business, during

which time it has amassed a wealth of experience and

developed sophisticated control technologies. Yokogawa is

the top manufacturer in this field, supplying highly reliable

control solutions spanning the entire range from production

control systems to asset management systems, safety

management systems, and power and pressure manage-

ment systems. The Group has won orders from large proj-

ects in Australia, which is experiencing a boom in natural

gas production. Yokogawa aims to capitalize on its experi-

ence in this field and grow this business.

Liquefaction plant market share:

Distributed control systems (DCS): 25%

Advanced process control (APC) packages: 36%

LNG carriers: 47 vessels with Yokogawa DCS

Regasification plant market: 41 regasification terminals

with Yokogawa DCS

In recent years, FPSOs, floating storage and regasifica-

tion units (FSRU), and floating liquefied natural gas (FLNG)

units have become increasingly feasible and important

solutions for LNG projects, in large part because they can

be swiftly put into operation, thereby keeping initial costs to

a minimum. With a view to meeting the requirements of this

market, Yokogawa’s systems were certified to comply with

the ISO 17894 international standard on the shipboard use

of programmable electronic systems and are thus suitable

for use on vessels such as LNG carriers and floating pro-

duction units. Certification to this standard also provides

objective affirmation that Yokogawa has all the necessary

quality control systems in place, not just in terms of prod-

uct specifications, but also in product development, sales,

engineering, and service.

Yokogawa will continue its efforts to expand its business

in the LNG market by developing dedicated software and

acquiring specialist knowhow.

In conclusion

Yokogawa is accumulating all manner of sophisticated

technologies and knowhow with a view to enhancing the

ability to present solutions to customers. To achieve the

goals set forth in the Evolution 2015 mid-term business

plan, we are seeking to greatly expand the presence of our

industrial automation and control business in the growing

natural gas market.

CASE STUDY 2

South Hook LNG Terminal Company Ltd., Milford Haven, UK

Our position in the global LNG market

South Hook LNG Terminal Company Ltd., the owner and operator of this Terminal, is a joint venture established by Qatar Petroleum International, ExxonMobil, and Total

Contributing to the safe and efficient operation of one of Europe’s largest LNG regasification terminalsThe South Hook LNG Terminal is the UK end of the biggest supply chain ever forged for the

global movement of energy. Capable of meeting around 20% of the United Kingdom’s demand

for natural gas, the Terminal consists of five 155,000 m3 LNG storage tanks, a regasifica-

tion plant, unloading facilities, and a jetty for receiving the world’s largest LNG tankers.

While providing the production control system for this project, Yokogawa was also asked

on the basis of its superior technology and expertise in every stage of the LNG process

to participate in a hazard and operability (HAzOP) study and a safety integrity level (SIL)

study. In addition to installing the production control system, Yokogawa implemented a

safety instrumented system that can safely initiate an emergency shutdown of the Termi-

nal. Yokogawa received kudos from the customer for installing an operator training system

that is fully integrated with the Terminal’s production control system and thus capable of

highly realistic simulations in a virtual environment.

Major systems and products delivered

CENTUM CS 3000 integrated production control system

ProSafe–RS safety instrumented system

Exaquantum plant information management system

OmegaLand dynamic simulation environment


Yokogawa is well regarded in the global marketplace as a leading control company and pioneer in the development of distributed control systems for the monitoring and control of processes in a broad range of produc-tion facilities. Based on VigilantPlant, Yokogawa’s vision for realizing the ideal plant, we are developing products and services that enhance pro-ductivity, make maximum use of plant assets, ensure safety, and opti-mize operations over the entire plant lifecycle. These solutions currently play vital supporting roles for our customers in the oil, chemical, natural gas, electric power, iron and steel, paper and pulp, pharmaceutical, food, and other industries.

Yokogawa is also providing solutions based on its measurement and control technologies that make more efficient use of renewable energy and is devising new ways in which next-generation energy sources can be utilized to achieve a sustainable society.

Yokogawa provides reliable measuring instruments for the development and production of electrical, electronic, and automotive equipment, as well as for the environmental measurement and communications market. The Company meets customer needs with a wide-ranging product lineup and an extensive range of calibration and other services.

Yokogawa is also engaged in businesses involving confocal scanners for the real-time observation of life processes at the molecular level and drug discovery support systems for the automatic testing of candidate compounds.

INDUSTRIAL AUTOMATION AND CONTROL BUSINESS

TEST AND MEASUREMENT BUSINESS

OTHER BUSINESSES

OUR BUSINESSES AT A GLANCE

n Production control systemsn Safety instrumented systemsn Production management systemsn Quality management systemsn Asset management systemsn Energy management systemsn Differential pressure /

pressure transmittersn Flowmetersn Analyzersn Recordersn Programmable controllers

n Waveform measuring instruments

n Optical communication measuring instruments

n Signal generatorsn Measuring instruments for

electric power, temperature, and pressure

n High-throughput cytological discovery systems

n Confocal scanner units

n Aviation equipmentn Marine equipmentn Hydrological and

meteorological equipment

MAIN PRODUCTS, SOLUTIONS

SEGMENT PROFILE

CENTUM VPIntegrated ProductionControl System

WT3000Precision Power Analyzer

Flat Panel Displays for Aviation Use

AQ6370COptical Spectrum Analyzer

Gyrocompasses

CellVoyager CV7000High-throughput Cytological Discovery System

CSU-W1Confocal Scanner Unit

Yokogawa is also steadily developing its aircraft instrument and marine navigation system businesses as well as its environmental business. Yokogawa supplies multifunctional flat panel displays (FPDs) for use in a wide range of aircraft, including the latest wide-body airliners from Airbus. Yokogawa also has a full lineup of navigation systems such as gyrocompasses and autopilots for vessels of all kinds, from luxury pas-senger ships to freighters. In addition, the Company supplies hydrologi-cal and meteorological equipment, including rain gauges and hydrostatic level gauges, to mainly the Japan Meteorological Agency and local gov-ernment authorities.

DPharp EJXDifferential Pressure /Pressure Transmitter

GC8000 Process Gas Chromatograph

ProSafe-RS Safety Instrumented System


Overall, the industrial automation and control business remained strong in Japan. Positive factors including demand arising from the reconstruction of the disaster-stricken areas outweighed negative factors such as the continued strength of the yen. Demand for energy and electric power plants in emerg-ing and resource-rich regions and countries such as Southeast Asia, China, Brazil, and Australia remained robust.

Under these circumstances, the Group set about implement-ing the regional, industry, and product growth strategies that had been defined in the Evolution 2015 mid-term business plan. Specifically, the Group worked to expand its business by target-ing mainly oil and natural gas exploration, development, and production in emerging and resource-rich countries, and by focusing on the growing electric power, petrochemical, chemical, and renewable energy markets.

As a result, orders and net sales were up for the industrial automation and control business despite the impact of the strong yen on sales and profits. Operating income was also up mainly due to higher revenues and an improved gross margin resulting from an increase in product volume.

The measuring instrument business saw strong demand for power meters in Japan, driven by a rising need for energy saving solutions. Demand for optical measuring instruments also rose as the result of special measures that were taken in response to the flooding in Thailand. However, the overall business was affected in the second half by weakening demand in China. Both orders and net sales were up for the semiconductor tester business.

The test and measurement business experienced a year-on-year decline in orders and net sales, and this was due mainly to the Group’s withdrawal from the photonics business. At the same time, the segment’s operating loss was down as a result of the implementation of structural reforms that reduced fixed costs and R&D expenditure.

In the other businesses segment, orders declined year on year as no major orders for hydrological and metrological equipment were booked in the year under review.

Net sales fell modestly for the other businesses segment as a whole, despite strong sales of marine engine equipment and navigation systems primarily outside Japan; this can be attrib-uted to adjustments in the delivery schedules for the aviation equipment business.

Operating income declined year on year, as cost reductions were offset mainly by the fall in sales and the yen’s rise.

Note: The method for aggregating segment data was changed in fiscal year 2010 (ended March 31, 2011). In the above graphs, the 2009 figures with an asterisk were recalculated based on the new method.

FISCAL YEAR 2011 BUSINESS REVIEW

0

100

200

300

11/310/3* 12/3

Orders

(Billions of yen)

257.3 268.9288.5

10

20

30

40

11/310/3* 12/3

Orders

(Billions of yen)

31.734.9 34.0

0

0

10

20

30

40

Orders

(Billions of yen)

26.330.3

21.6

11/310/3* 12/3

0

10

20

30

11/310/3* 12/3

Operating income

(Billions of yen)

19.716.5

19.9

–30

–20

–10

10

11/310/3* 12/3

Operating loss

(Billions of yen)

–18.3

–6.4 –3.60

0.5

1.0

1.5

Operating income

(Billions of yen)

1.21.0

0.3

11/310/3* 12/30

0

50

100

150

200

11/310/3 12/3

Non-Japan net sales /Non-Japan net sales ratio(Billions of yen)

156.2 161.2173.7

60.9% 61.8% 62.7%

5

10

15

20

11/310/3 12/3

Non-Japan net sales/Non-Japan net sales ratio(Billions of yen)

15.718.7 19.5

49.8% 50.5% 56.4%

0

2

4

6

Non-Japan net sales /Non-Japan net sales ratio(Billions of yen)

5.44.8

5.7

18.9% 17.3% 24.9%

11/310/3 12/30

0

100

200

300

11/310/3* 12/3

Net sales

(Billions of yen)

257.3 260.7277.2

10

20

30

40

11/310/3* 12/3

Net sales

(Billions of yen)

31.937.1 34.6

0

10

20

30

Net sales

(Billions of yen)27.4 27.9

22.9

11/310/3* 12/30


0

25

20

15

10

5

008/3 09/3 10/3 11/3

50.0

40.0

30.0

20.0

10.0

� R&D investment� R&D investment to net sales

12/3

36.2

40.9

37.2

28.827.5

29.2

8.29.3 9.9 9.1 9.0

R&D investment / R&D investment to net sales

(Billions of yen) (%)

Future issues/Business plans

External environment Business

hypotheses/Future perspective

Technology seeds/Technology procurement

Innovation Headquarters

Organization-wideProjects

Long-termmarketing

Marketdevelopment

Innovation Headquar ters functions

RESEARCH AND DEVELOPMENT

Future sense: Yokogawa’s multiple scenarios for the future

Yokogawa seeks not only to perpetuate its business activi-

ties, but to continue being a responsible contributor to soci-

ety long into the future. To this end, the Group continually is

engaged in the planning of multiple sets of future scenarios

so as to make certain that its R&D investments remain rel-

evant and consistently give rise to value.

In 2011, Yokogawa held Global Scenario Workshops (GSW)

in the United Kingdom, India, and the United States. Experts

from various companies, research institutions, and industry

associations as well as journalists and other interested par-

ties gathered to discuss the topic of “Future Sense: Yokoga-

wa’s Multiple Scenarios for the Future.”

Three innovations for a new industrial era

As consumer economies continue to emerge and expand,

people’s lives are increasingly impacted by the scarcity of

resources. Yokogawa’s scenarios point to the possibility that

scarcities of food, energy, and water may come to determine

the course of world events.

Scarcity of food: This is not only about quantity; it can

also involve perceptions on quality as the ranks of consum-

ers who insist on food safety and reliability grow.

Scarcity of energy: Energy demand is likely to continue

rising despite advances in energy conservation technologies.

Scarcity of water: Large quantities of water will be

required to generate energy.

Yokogawa believes that achieving a sustainable society by

2025 is a realistic goal, despite the fact that resources are

limited. However, this belief is premised on three types of

innovation that are associated with a shift in people’s values:

1. Innovation in human behavior

2. Innovation in organizational and social networks

3. Innovation in the individuals (human capital) that make up these networks

Together with its customers, Yokogawa seeks to help bring

about these innovations and provide the services and tech-

nologies needed for a radically industrializing world.

Yokogawa’s initiatives

Access to relevant data and information will be critically

important in enabling the changes in human behavior that

will be necessary to achieve these innovations.

We expect the global business environment to be much

more complex in 2025. With the rising number of corporate

alliances and the increasing integration of activities that

transcend industrial boundaries, it will become harder to

obtain relevant data and information.

Yokogawa’s strength in measurement technology and abil-

ity to build complex systems provide the critical support

needed to achieve the innovations that will bring about a

sustainable society. As needs change, we will continue to


(As of March 31, 2012)

In Japan Outside Japan

RegisteredPatent

Pending Subtotal RegisteredPatent

Pending Subtotal Total

Patent 1,838 1,901 3,739 687 478 1,165 4,904

Design 144 12 156 16 11 27 183

Trademark 545 7 552 495 48 543 1,095

Total 2,527 1,920 4,447 1,198 537 1,735 6,182

Yokogawa’s R&D organization Intellectual proper ty rights owned by the company

Present Future

Innovation HeadquartersBusiness Headquarters

Current operations

Foreseeable future

Possible future(scenarios)

Unknowable future

Product development

Advanceddevelopment Research

develop new measurement standards that will enhance our

strength in this field. Parallel with this effort, we will carry

out R&D in biomeasurement and new energy sources.

Future-oriented R&D

Yokogawa has established an Innovation Headquarters that

has the new function of leading the Group’s future-oriented

R&D initiatives, and also handles the roles of the former

Corporate R&D Headquarters. As a result of this organiza-

tional change, Yokogawa’s business segments have taken

charge of product development and applied research for the

relatively foreseeable future (near term), while the Innovation

Headquarters will be responsible for research with a longer-

term perspective and greater uncertainty that is directed at

generating new business opportunities.

The main functions of the Innovation Headquarters are

value creation, co-creation, and IP acquisition and manage-

ment. Value creation is aimed at staying one step ahead of

shifts in values so as to be able to pioneer the creation of

new markets. Co-creation is about interacting with customers’

research personnel to implement breakthrough investigative

research that will solve problems and develop hypotheses for

generating new markets. IP acquisition and management over-

sees the technological aspects of the Yokogawa Group’s intel-

lectual property strategy. Its primary function is to strategically

obtain and manage key intellectual properties that are vital for

the Yokogawa Group to take the initiative in new markets.

From an AR experiment

An example of future-oriented R&D

Industrial ARCyber-perception is an IT systems research field that is

focused on industrial innovations of the future in which

people are the key component. One aspect of this research

is the elimination of human error on the plant floor. An objec-

tive of such research, in which industrial augmented reality

(AR)* is a key technology, is to develop systems that carry

out double checks on human operators. More specifically,

this research is geared toward developing mobile terminals

capable of walking workers of various skill levels through the

task at hand and procedures they are to perform in a timely

manner. Such terminals will also be capable of providing a

worker feedback on whether the tasks were completed prop-

erly, and issue instructions on the recovery procedures

should problems arise. Through such research, Yokogawa

aims to collaborate with customers on developing work envi-

ronments that are both safe and secure.

* Computer technology

that augments the real

world with relevant

information and data


CORPORATE SOCIAL RESPONSIBILITY

Basic policy on CSR

The Yokogawa Philosophy is the basic policy for CSR activi-

ties throughout the Group. In addition, in 1994, the Company

established the Standards of Business Conduct for the

Yokogawa Group, and these are the basic guidelines for com-

pliance management.

In 2008, a special CSR promotion department was estab-

lished at our head office to manage the CSR activities of the

entire Group. Around the world, including in a number of

emerging countries and developing nations, Yokogawa Group

companies are pursuing CSR activities in response to the

challenge in each region, and are thereby contributing to the

sustained growth of communities.

Contributing to society through our businessIn accordance with the Yokogawa Philosophy, which states,

“As a company, our goal is to contribute to society through

broad-ranging activities in the areas of measurement, con-

trol, and information,” we are proud to be a company that

contributes to society through our business. We believe that

a company must continue to adapt and grow in response to

changes in society.

We also believe in making use of our measurement, con-

trol, and information technologies to provide products and

solutions that help society address issues by, for example,

protecting the environment and enhancing safety. We supply

energy saving solutions, support the development of alterna-

tive energy, measure and analyze environmental burden, and

support the development of health care and pharmaceutical

solutions.

Corporate responsibilityThe Standards of Business Conduct for the Yokogawa Group

call for the realization of the Yokogawa Philosophy, enhance-

ment of customer satisfaction, observance of laws and regu-

lations, respect for human rights, and maintenance of the

order and safety of communities and society. We have also

outlined our basic stance on environmental conservation

and stakeholder relations.

Yokogawa has joined the Global Compact, a United Nations

initiative based on 10 principles related to human rights,

labor, the environment, and anti-corruption. We are imple-

menting measures based on the ideals and standards of the

Global Compact together with all Group employees and com-

panies connected to us through our supply chain.

We view all Yokogawa employees as valuable assets, and

work proactively to maintain a sound work environment and

provide opportunities for skill development. We also respond

to our customers by putting quality first. Moreover, in accor-

dance with our principle of good citizenship, we interact with

the community, encourage employees to participate in volun-

teer activities, and engage actively in other activities to con-

tribute to society.

Corporate governanceWe are enhancing corporate governance to realize sound and

sustainable growth. By actively encouraging the employment

of outside directors and corporate auditors, we increase the

transparency of our decisions and enhance the functionality

of audits. We are also developing our internal control systems

to ensure the appropriateness and efficiency of business

operations. We seek to be a company that earns the trust of

society with its fair and honest business activities, and are

building a corporate culture that puts compliance first.

Yokogawa receives a high CSR rating from SAM for the second consecutive year

Yokogawa has been selected for inclusion in the Dow

Jones Sustainability Asia Pacific Index (DJSI Asia Pacific

Index), a component of the DJSI* worldwide stock index

for socially responsible investing (SRI). This is the third

time that Yokogawa has been selected for this index, and

the second year in a row. For the DJSI, the business

results of major companies are assessed based on finan-

cial, environmental, and social criteria. For the DJSI Asia

Pacific Index, 600 major companies in the Asia Pacific

region were surveyed, and 156 of these companies,

including 79 from Japan, were selected.

* The DJSI, or the Dow Jones Sustainability Index, is a stock index developed

jointly by Dow Jones and Sustainable Asset Management (SAM), a research

and rating firm based in Switzerland specializing in SRI.

Please refer to Yokogawa Electric Corporation’s CSR website for further information on this topic.

CSR website URLhttp://www.yokogawa.com/csr/

United NationsGlobalCompact

ISO 26000Guidance on socialresponsibility

Business Contributing

to society through business operations

Responsibility to stakeholders

Environmental management, Philanthropy, Customer satisfaction and quality control, Shareholders, Suppliers,

Human rights, Occupational safety and health

Corporate governanceCompliance, Anti-corruption,

Risk management, Information security

CSR activities that contribute to growth

by responding to global concerns

CSR activities that meet the expectations

of stakeholders

CSR activities that form the foundation of

corporate management

•UNGlobalCompactisasetoftenprinciplesthatallYokogawapeopleshouldshareitsvalue.•YokogawarespectstheISO26000guidanceinourdecisionsandactions.


Corporate governance structure

Board of Directors (7 members)

(Including 3 outside directors)

Corporate Functions / BusinessHeadquarters and Group

CompaniesInternal Audit Department

Board of Corporate Auditors (5 members)

(Including 3 outside corporate auditors)

Accounting Auditors

President and CEO

Directors Corporate Auditors

Management Board

CORPORATE GOVERNANCE

Basic policy on corporate governance

The Yokogawa Group recognizes that the basic mission of

corporate management is to secure sound and sustainable

growth, and to earn the trust of its shareholders and other

stakeholders. Accordingly, the Group is implementing mea-

sures to enhance corporate governance in order to achieve a

sound and profitably run organization. The Company employs

a corporate auditor system and has a Board of Directors that

monitors directors in the execution of their duties and a

Board of Corporate Auditors that monitors the Board of Direc-

tors. We are enhancing this system by utilizing independent

outside directors and corporate auditors. Through these sys-

tems, the Company is bolstering the effectiveness of its

corporate governance.

Decision making, business execution, and audits

Speedy decision making and transparency are ensured

through deliberations between directors who are well versed

in the Group’s business and outside directors who maintain

a high degree of independence. Through audits by the corpo-

rate auditors, the legality, efficiency, and rationality of the

directors’ activities and the appropriateness of their deci-

sions are rigorously examined.

Board of DirectorsThe Board of Directors comprises seven directors, three of

whom are independent outside directors, with meetings held

monthly in principle. The Board of Directors makes decisions

for the Group. Accordingly, it develops management policies

and strategies, while monitoring and supervising business

execution. Regulations and systems are in place that ensure

the directors exercise their responsibilities to oversee the

business. The Board of Directors has a maximum of 15 mem-

bers, as outlined in the Company’s Articles of Incorporation.

Also, in order to help ensure that the Company is managed in

such a way that we maintain the trust of our shareholders,

the term of office for directors is set at one year.

Board of Corporate AuditorsThe Board of Corporate Auditors consists of five corporate

auditors, including three outside corporate auditors, with

meetings held monthly in principle. It carries out auditing in

accordance with an annual plan that specifies priority audit

items. Corporate auditors also attend the meetings of the

Board of Directors and the Management Board, and hold

regular meetings with departments that are involved with

internal auditing or business ethics. These meetings focus

on the status of audits, compliance-related education, and

the status of the internal reporting system. In addition, the

Board of Corporate Auditors engages in a regular exchange

of opinions with the president and accounting auditors.

Management BoardTo expedite the decision-making process of the Board of

Directors, decisions regarding business execution are del-

egated to the Management Board. The Management Board is

comprised of the president, officers, subsidiaries’ heads

who report directly to the president, and standing corporate

auditors, and meets monthly in principle. Details on their

decisions are reported to the Board of Directors.

Election / Removal

Audit / Supervision

Instructions / Orders / Supervision

Cooperation / Report

GENERAL SHAREHOLDERS MEETING


Accounting auditorsThe Company has concluded an agreement with Deloitte

Touche Tohmatsu LLC, an independent auditing company, for

accounting auditing services pursuant to the Companies Act

and the Financial Instruments and Exchange Act. Remunera-

tion for their services in fiscal year 2011 was as follows:

Payments by the Company: 120 million yen

Total amount paid in cash and other financial asset prof-

its to the accounting auditor by the company and subsid-

iaries: 148 million yen

Compensation to directors and corporate auditorsIn order to improve objectivity and transparency when decid-

ing the allocation of compensation for directors within the

limits resolved and approved at the shareholders meeting,

the Company established a Compensation Committee that is

comprised of four directors, three of whom are outside direc-

tors. The allocation of compensation for directors is decided

through deliberation by the Compensation Committee.

The compensation for directors other than the outside

directors is set at a level that allows for the effective execu-

tion of their main duties, which are comprised of executive

management functions as well as functions involving the

supervision and monitoring of executive officers and other

employees. Furthermore, this level of compensation is linked

to performance. Specifically, the compensation is set at a

level that is market competitive and comprised of a fixed

component and a performance-linked (bonus) component

according to each role.

In consideration of the duties they perform, outside direc-

tors only receive fixed compensation.

Compensation for corporate auditors is decided by mutual

consultation among the corporate auditors and set within the

limits approved at the shareholders meeting. In consideration

of the duties they perform, corporate auditors (including out-

side corporate auditors) only receive fixed compensation.

Total amount of compensation paid to directors and corporate auditors in fiscal year 2011

Total compensation

(Millions of yen)

Compensation breakdown (Millions of yen)

RecipientsFixed

compensationStock

options

Performance-linked

compensationRetirement

benefit

Directors (excluding outside directors)

159 92 — 67 — 8

Outside Directors 32 32 — — — 4

Corporate Auditors (excluding outside corporate auditors)

54 54 — — — 2

Outside Corporate Auditors

32 32 — — — 3

Notes: 1. The above numbers include five directors who retired during fiscal year 2011.

2. The total paid to directors does not include employee salaries for directors

who are concurrently employees.

Major activities of outside directors andoutside corporate auditors in fiscal year 2011Outside Director Yasuro Tanahashi

Present at 14 of the 14 Board of Directors meetings con-

vened in the year. As necessary, provided advice based on

his managerial experience, wide knowledge of Japan’s key

industries, and broad outlook gained from abundant experi-

ence in establishing and developing new businesses.

Outside Director Nobuo Katsumata

Present at 13 of the 14 Board of Directors meetings con-

vened in the year. As necessary, provided advice with high

insight based on his managerial experience mainly at general

trading companies with global operations, and his abundant

experience in corporate restructuring.

Outside Director Mitsudo Urano

Present at 7 of the 10 Board of Directors meetings convened

since his appointment on June 24, 2011. As necessary,

provided advice with high insight based on his managerial

experience primarily in manufacturing and abundant experi-

ence in matters such as management information systems.

Outside Corporate Auditor Shigeru Hikuma

Present at 12 of the 14 Board of Directors meetings and 17

of the 20 Board of Corporate Auditors meetings convened in

the year. As necessary, provided advice with high insight

based on his deep knowledge of corporate finance, discern-

ment, and abundant experience.

*He retired as outside auditor of the Company on June 27, 2012.

Outside Corporate Auditor Teruhiko Ikeda




based on his abundant managerial experience and wide

range of activities in the business world.

Outside Corporate Auditor Koichi Iki




based on his abundant managerial experience and deep

knowledge of human resources management.

*He retired as outside auditor of the Company on June 27, 2012.

The Tokyo Stock Exchange requests listed companies to

secure at least one independent officer (an outside director or

outside corporate auditor with no conflicts of interest involving


general shareholders). The Company has three outside direc-

tors and one outside corporate auditor who are registered with

the Tokyo Stock Exchange as independent officers.

Takeover defense measures

The Company believes that it is essential for both a party

attempting a large-scale acquisition and the Board of Direc-

tors to provide the Company’s shareholders with sufficient

information necessary to make an appropriate judgment of

the advantages and disadvantages of the acquisition. In par-

ticular, when a large-scale acquisition is attempted, it is

important to request the party attempting the acquisition to

provide sufficient information necessary for making an appro-

priate decision about its effects on the corporate value and

the common interests of the Company’s shareholders, provide

the Company’s shareholders with information such as the

opinions of the Board of Directors and an analysis of alterna-

tives to the acquisition in order to guide the decision making

of the Company’s shareholders, and prepare for processes

such as negotiations with the party attempting the acquisition.

To fulfill the need for a plan to protect against large-scale

acquisitions that do not comply with these processes, a

resolution entitled “Renewal of Countermeasures to Large-

scale Acquisition of Yokogawa Electric Shares (Takeover

Defense Measures)” was submitted to the 135th Annual

General Meeting of Shareholders on June 24, 2011. The

resolution was approved and is valid for three years.

For further details, please refer to the Company press

release at:

http://www.yokogawa.com/pr/ir/pdf/2011/20110513

TakeoverDefense-en.pdf

Internal control systems

The Yokogawa Group has set forth its basic compliance poli-

cies in the Standards of Business Conduct for the Yokogawa

Group, and directors take the lead in working to see that busi-

ness ethics are upheld and embraced throughout the Group.

In addition, the Yokogawa Group Internal Control Systems,

which are intended in part to ensure the reliability of financial

statements and the propriety of decision making, guarantee

the appropriateness and efficiency of Group operations.

Risk managementThe Yokogawa Group Internal Control Systems were estab-

lished in part to make sure that rules and other risk manage-

ment systems are enforced. As the unit responsible for risk

management, the department responsible for internal audit-

ing identifies and analyzes risks, and recommends

improvements. It also reports important matters to the Board

of Directors and the corporate auditors. Responses to crisis

situations involving facts, incidents, disasters, accidents, and

other events with a potentially material impact on the Group’s

management are set forth in the Group Policy for Crisis Man-

agement. As the head of the Crisis Management Office, the

president controls the communication of information and

issuance of instructions during times of crisis, and works to

ensure safety and minimize economic losses.

The handling and protection of confidential information in

regard to information security is set forth in the Confidential-

ity Code. Each of the Yokogawa Group’s business headquar-

ters, headquarters, and Group companies are responsible

for establishing an organization for promoting information

security of their own and ensuring adherence to the Group’s

policies on information security.

ComplianceA department in charge of business ethics has been estab-

lished within the Company, whose role includes the identifica-

tion and resolution of issues pertaining to the Groupwide

compliance system. Yokogawa strongly promotes compliance

management throughout the Group. The Group aims to be a

healthy and open business entity with both a culture that

encourages and enforces proper ethical conduct and a system

for preventing misconduct and scandals before they occur.

As part of our compliance activities, we have distributed to

each employee a copy of the Standards of Business Conduct

for the Yokogawa Group, which covers the Yokogawa Philoso-

phy and employee code of conduct, and the Yokogawa Group

Compliance Guidelines, which set out how employees should

respond to a variety of issues encountered on the job. A

Compliance Week is also held and training is provided to

enhance employee awareness.

In fiscal year 2012, we set forth Guidelines Prohibiting the

Exchange of Bribes as a supplementary provision to our Group

Compliance Guidelines. These prevention guidelines were

established to comply with laws prohibiting the exchange of

bribes with public officials and private citizens in the countries

where Yokogawa conducts its business. They prohibit bribery

and serve to promote fair and appropriate corporate conduct.

In addition, to rapidly identify and address compliance

issues, we have established compliance hotlines, which we

actively encourage our employees to use. Moreover, each

year we carry out surveys to clarify how employees perceive

compliance issues. We analyze the survey data by workplace

and function, and use the results in connection with formu-

lating compliance measures in the subsequent fiscal year.


CO2 emissions reduction results and targets for the Yokogawa Group in Japan

ENVIRONMENTAL MANAGEMENT

Achieving sustainability

Yokogawa places a high priority on protecting the environ-

ment, and we manage our business accordingly. We are

working to reduce the environmental impact of all our oper-

ations, from development to sales, with the goal of achiev-

ing a sustainable society. Using our control, measurement,

and information technologies, we supply environmentally

friendly products and green, energy saving solutions that

help our customers to reduce their environmental footprint.

We also help them make more effective use of renewable

energy sources and are developing new energy-related

solutions.

Promoting environmental management within the Group

Yokogawa has established a Groupwide environmental man-

agement system. And to reduce our environmental impact,

we are striving to utilize energy and resources more effi-

ciently, prevent environmental pollution, reduce waste, and

promote reuse and recycling on every production line and

in all other areas, including development, sales, procure-

ment, and distribution.

The Company has established a Yokogawa Group Green

Implementation Committee and assigned it Groupwide

responsibility for promoting environmental management.

Chaired by the Environmental Officer, the Committee over-

sees the environmental conservation activities of all Group

companies and works to improve the measures that they

undertake to prevent global warming.

Measures to prevent global warmingYokogawa Group companies in Japan are working to reduce

CO2 emissions, with phased targets covering fiscal years

2010–2014, 2015–2019, and 2020.

Measures to reduce CO2 emissions include the use of

green electric power, installation of inverter lighting, and the

use of energy efficient air-conditioning and experimental

equipment. In an effort to reduce their CO2 emissions, our

offices and manufacturing plants in Japan utilize a propri-

etary energy saving support system to visualize energy data.

Reducing industrial waste through the in-house treatment of waste liquids from coating processesYokogawa Manufacturing Corporation’s Ome Factory uses its

own facilities to treat waste liquids generated in the printed

circuit board coating process.

In the process of chemically coating printed circuit boards,

a liquid catalyst is used to ensure that the coating adheres

to the metal. The waste liquid from this process contains

palladium. The company was previously unable to remove

this substance at its own facilities, resulting in the annual

disposal of around 1.6 tons of this industrial waste, which is

subject to special control. To address this problem, in 2011

the company installed special equipment for the removal of

catalyst waste liquid.

Phase 1 Phase 2 Phase 3

Base years2005–2007

Average yearly emissions

20100

10,000

20,000

30,000

40,000

50,000

60,000

2015 2020 (fiscal year)2011 20162012 20172013 20182014 2019

Total yearly emissions from fiscal year 2010 through 2014

7% reductionTotal yearly emissions from fiscal year 2015 through 2019

18% reduction

Total emissions for fiscal year 2020

20% reduction

(tons of CO2)

(231,895 t-CO2)

(263,005 t-CO2)

(45,248 t-CO2)

56,560 t-CO2

48,079 t-CO2

42,044 t-CO2


Water Treatment Plant, City of Oviedo, Florida

Yokogawa’s environmental policy initiatives

Fiscal Year 2011 (main sites)

Targets Results Self evaluation

Recycling based on operations

Reduce CO2 emissions (Group companies in Japan)•ReducetotalCO2 emissions to 52,601 t/year (7%

reduction from benchmark 2005–2007 average)

•Reducedto42,044t/year

Good

Reduce the total amount of generated waste•23%reductionfromfiscalyear2003level(585t/year

reduction)*1

•Reduceto3,368t/year*2

•26%reduction(559t/yearreduction)•Reducedto3,223t/year

Resource saving•Deploygreenproductionlinesandmakeimprovements

to 6 lines*2

•Improvedusageofresourceson6manufacturinglines (Produced less wastewater and reduced power consumption)

Minimization of environmental pollution

•Reducetolueneandxyleneby2,000kg*2

•Promotelead-freesolderingandintroducethiswithallnew products*2

•2,517kgreduction•Introducedwithallnewproducts Good

Creation of environmentally friendly products

•ApplyassessmentstandardsandreduceCO2 emissions for all products under development by more than 25%*1

•All11modelswereinspectedasscheduledandregistered as meeting the assessment standards Good

Provision of environmental solutions

•Givevisitorsapresentationonenergy-savingeffortsatthe Kofu Factory*1

•Increasesalesofenvironmentallyfriendlyproducts*1

•Achieved

•AchievedGood

Main sites: *1 Yokogawa Electric Corporation headquarters & main factory

*2 Yokogawa Manufacturing Corporation

Through an adsorption treatment using a special resin, it

is now possible to flush out the palladium along with other

liquid waste. The company benefits financially as this resin

has a marketable value, and there no longer is the need to

dispose of this specially controlled industrial waste.

deemed to have strong growth potential, and in recent years

has supplied control systems for numerous other projects,

including a large wind-power installation in China and a solar

energy project in Australia. In fiscal year 2011, the Group also

won control and instrumentation orders for geothermal, bio-

mass, waste to energy, and other power projects in Southeast

Asia, Europe, and other regions.

Yokogawa’s control technologies are garnering attention

worldwide for their contribution to the stable supply of non-

fossil fuel energy sources.

Yokogawa’s water business: support for a key lifelineIn emerging countries, water shortages are a major problem.

In such countries, it is particularly important to prevent water

losses resulting from equipment malfunctions and breakages

in the water supply system, while with sewage facilities the

challenge is for the development of infrastructure to keep

pace with rapid urbanization. It is here that Yokogawa’s mea-

surement and control technologies come into play. Our water-

related technologies and expertise are employed worldwide in

monitoring systems and water-flow control systems. Yokogawa

is also a member of the Global Water Recycling and Reuse

System Association, Japan, a group comprising 50 Japanese

companies involved in the water business. As a major player

in Japan’s water industry, the Group is actively collaborating

with government and

academia to promote

the international use

of water recycling

systems developed

in Japan.

Targets and results in FY2011

Environmentally friendly business activities

Yokogawa leverages its control, measurement, and informa-

tion technologies to help people make more efficient use of

renewable energy and to devise new ways of utilizing next-

generation energy sources. To achieve a sustainable society,

we are also active in various water-related businesses that

are securing the provision of this essential resource.

Yokogawa control technologies contribute to efficient use of renewable energyYokogawa is also working to expand its presence in the renew-

able energy field. The Group already has an extensive track

record in biomass and waste materials, a market segment

* Palladium: A rare metal that is used as a metal catalyst. It can be recovered from

waste liquid and recycled.

Catalyst waste liquid treatment process

Catalyst waste liquid

Adsorption column

Adsorption column

First towerSecond tower

Adsorbed palladium* removed as a

marketable substance

Waste liquid rendered harmless through in-house treatment


Corporate auditors

DIRECTORS, CORPORATE AUDITORS, AND OFFICERSAs of June 27, 2012

SHUzO KAIHORIRepresentative Director President and Chief Executive Officer

1973 Joined the Company

2005 Vice President, Head of Industrial Automation Business Headquarters

2006 Senior Vice President, Head of Industrial Automation Business Headquarters

2006 Director and Senior Vice President, Head of Industrial Automation Business Headquarters

2007 President and Chief Operating Officer

2008 President and Chief Executive Officer

TAKAFUMI KOYANAGICorporate Auditor


2003 Vice President, Head of Business and Sales Planning, Industrial Solutions Business Headquarters

2005 Senior Vice President, Head of Solution Sales No. 2/Industrial Solutions Business Headquarters, in charge of China business

Deputy President of Yokogawa Electric International Pte. Ltd.

2007 Senior Vice President, Head of Audit & Compliance Headquarters

2008 Corporate Auditor

HITOSHI NARADirector Senior Vice President


2001 Deputy Managing Director, Yokogawa Engineering Asia Pte. Ltd.

2003 Managing Director, Yokogawa (Thailand) Ltd.

2007 Head of Sales Div. I, Industrial Solutions Business Headquarters

2010 Senior Vice President, Head of Industrial Solutions Business Headquarters

2011 Director and Senior Vice President, Head of Industrial Solutions Business Headquarters

2012 Director and Senior Vice President, Head of Industrial Solutions Service Business Headquarters

KIYOSHI MAKINOCorporate Auditor


1999 Vice President, Head of Components Business Division

2001 Director of Ando Electric Co., Ltd.

2003 President and CEO of Ando Electric Co., Ltd.

2005 Chairman of Yokogawa Corporation of America

2006 Vice President of ATE Business Headquarters (in charge of sales operations)

2009 Corporate Auditor

SATORU KUROSUDirector Senior Vice President


2006 Vice President, Head of Marketing Center, Industrial Automation Business Headquarters

2007 Senior Vice President, Head of Industrial Automation Business Headquarters

2009 Senior Vice President, Head of Global Business Headquarters

2010 President, Yokogawa Engineering Asia Pte. Ltd.

2011 Director and Senior Vice President, Head of IA Marketing Headquarters

TAKASHI NISHIJIMADirector Senior Vice President


2001 Head of Development and Engineering Dept. 2, Field Instruments Business Division

2005 Head of Field Instruments Product Marketing Dept., Industrial Automation Business Headquarters

2008 Head of Control Products Business Center, Industrial Automation Business Headquarters

2010 President of Yokogawa Meters & Instruments Corporation

2011 Director, President of Yokogawa Meters & Instruments Corporation

2012 Director and Senior Vice President, Head of IA Platform Business Headquarters

TERUHIKO IKEDAOutside Corporate Auditor

1969 Joined The Fuji Bank, Limited

2002 Deputy President of Mizuho Corporate Bank, Ltd.

2004 President and CEO of Mizuho Trust & Banking Co., Ltd.

2008 Chairman of Mizuho Trust & Banking Co., Ltd.

Outside Corporate Auditor of Yokogawa Electric Corporation

2010 Advisor of Mizuho Trust & Banking Co., Ltd. (present)

Directors


NOBUO KATSUMATAOutside Director

1966 Joined Marubeni-Iida Co., Ltd. (present Marubeni Corporation)

1996 Director of Marubeni Corporation

1999 Corporate Vice President of Marubeni Corporation

2001 Senior Vice President of Marubeni Corporation

2003 President and CEO of Marubeni Corporation

2008 Chairman of Marubeni Corporation (present)

2009 Outside Director of Yokogawa Electric Corporation

MITSUDO URANOOutside Director

1971 Joined Nippon Reizo Co. Ltd. (present Nichirei Corporation)

1999 Director of Nichirei Corporation

2001 Representative Director and President of Nichirei Corporation

2007 Representative Director and Chairman of Nichirei Corporation (present)

2011 Outside Director of Yokogawa Electric Corporation

YASURO TANAHASHIOutside Director

1963 Joined Fuji Iron & Steel Co., Ltd. (present Nippon Steel Corporation)

1995 Director and General Manager of Electronics and Information Systems Division of Nippon Steel Corporation

1997 Managing Director of Nippon Steel Corporation (in charge of new businesses overall)

2000 Representative Director and President of Nippon Steel Information and Communication Systems Inc. (present NS Solutions Corporation)

2003 Representative Director and Chairman of NS Solutions Corporation

2007 Senior Advisor of NS Solutions Corporation (present)

Outside Director of Yokogawa Electric Corporation

zENICHI SHISHIDOOutside Corporate Auditor

1980 Research Fellow of Faculty of Law, Tokyo University

1985 Associate Professor of Faculty of Law, Seikei University

1994 Professor of Faculty of Law, Seikei University

2001 Registered as lawyer (Member of Dai-ichi Tokyo Bar Association)

2004 Professor of School of Law, Seikei University

2009 Professor of Graduate School of International Corporate Strategy, Hitotsubashi University (present)

2012 Outside Corporate Auditor of Yokogawa Electric Corporation

Officers

Senior vice president

JUNJI YAMAMOTO

TAKASHI FUJII

TOSHIAKI SHIRAI

SHUHEI SAKUNO

HIROSHI SUzUKI

Vice president

MASAHARU YAMAzAKI

KOICHI CHUJO

TONY LEE

MAKOTO OTAKE

NOBUAKI KONISHI

JUN-ICHI ANABUKI

Note: Outside Directors Yasuro Tanahashi, Nobuo

Katsumata, and Mitsudo Urano as well as

Outside Corporate Auditor Zenichi Shishido

are independent officers as defined by the

regulations of the Tokyo Stock Exchange.

HIDETO MASAKIOutside Corporate Auditor

1973 Joined The Dai-ichi Mutual Life Insurance Company (present The Dai-ichi Life Insurance Company, Limited)

1999 Managing Executive Officer of Dai-ichi Life Asset Management Co., Ltd. (present DIAM Co., Ltd.)

2001 Director, Chief General Manager of Securities Investment of The Dai-ichi Mutual Life Insurance Company

2006 Director, Managing Executive Officer of The Dai-ichi Mutual Life Insurance Company

2007 Director, Senior Managing Executive Officer of The Dai-ichi Mutual Life Insurance Company

2008 Representative Director, Senior Managing Executive Officer of The Dai-ichi Mutual Life Insurance Company

2010 Representative Director, Deputy President of The Dai-ichi Life Insurance Company, Limited (present)

2012 Outside Corporate Auditor of Yokogawa Electric Corporation 23Yokogawa Electric Corporation

Annual Repor t 2012

Consolidated 11-year summaryyokogawa electric Corporation and Consolidated subsidiaries years ended march 31, 2002 to 2012

Billions of yenmillions of us dollars

2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2012/3

For the year:

net sales ¥310.8 ¥328.8 ¥371.9 ¥387.1 ¥388.9 ¥433.4 ¥437.4 ¥376.5 ¥316.6 ¥325.6 ¥334.7 $4,072

Cost of sales 209.8 219.0 241.4 250.0 245.9 275.9 277.4 253.0 214.5 215.1 195.4 2,378

selling, general and administrative expenses 99.3 108.2 112.3 112.3 117.6 128.2 132.6 118.8 99.5 99.4 122.6 1,492

operating income 1.7 1.6 18.3 24.8 25.3 29.3 27.4 4.7 2.6 11.1 16.6 202

net income (loss) (23.1) (26.2) 24.3 9.4 21.6 12.6 11.7 (38.4) (14.8) (6.7) 6.0 72

Capital expenditures 13.3 15.3 21.4 18.7 29.5 40.3 38.0 26.8 11.1 11.3 11.1 136

depreciation and amortization 14.0 14.3 13.5 14.3 15.1 16.5 23.1 21.6 16.0 13.8 12.8 155

research and development costs 19.2 25.2 27.0 29.0 30.9 36.2 40.9 37.2 28.8 29.2 27.5 334

Cash flow from operating activities 20.5 1.8 8.3 18.3 25.6 40.5 20.8 24.5 21.4 16.2 12.9 157

Cash flow from investing activities (4.4) (3.1) (10.2) (11.2) (11.7) (39.0) (51.0) (24.1) (13.2) (8.0) (7.8) (95)

Cash flow from financing activities (22.9) 3.6 (11.4) (1.3) (14.1) (6.1) 23.9 28.4 11.1 (25.7) (8.0) (97)

at year-end:

total assets 353.9 364.7 397.4 400.3 417.8 438.7 444.6 401.0 398.8 361.2 359.5 4,374

interest-bearing debt 65.5 108.7 99.6 100.3 61.3 59.6 93.0 124.3 137.1 111.0 103.3 1,256

shareholders’ equity 169.1 131.8 160.3 168.8 224.6 234.3 220.7 167.2 153.4 141.7 145.7 1,773

%

Financial indicators:

operating income ratio 0.6 0.5 4.9 6.4 6.5 6.8 6.3 1.3 0.8 3.4 5.0

debt equity ratio (times) 0.39 0.82 0.62 0.59 0.27 0.25 0.42 0.74 0.89 0.78 0.71

roe (return on equity) (12.5) (17.4) 16.6 5.7 11.0 5.5 5.1 (19.8) (9.2) (4.5) 4.1

roa (return on assets) (6.0) (7.3) 6.4 2.3 5.3 2.9 2.6 (9.1) (3.7) (1.8) 1.7

shareholders’ equity ratio 47.8 36.1 40.3 42.2 53.7 53.4 49.6 41.7 38.5 39.2 40.5

yen us dollars

Per share data:

net income (loss) (94.57) (108.39) 99.84 38.43 87.45 47.79 44.76 (149.26) (57.45) (25.98) 23.11 0.28

Cash dividends 7.50 7.50 7.50 7.50 15.00 15.00 16.00 16.00 2.00 0.00 5.00 0.06

shareholders’ equity 697.10 542.20 658.97 693.75 854.24 891.08 856.72 649.20 595.42 550.19 565.69 6.88

stock information:

stock price at the end of the term (yen / us dollars) 1,059 788 1,544 1,452 2,095 1,806 998 394 814 634 837 10.18

market capitalization (billions of yen / millions of us dollars) 257.4 200.1 392.1 368.8 562.8 485.1 268.1 105.8 218.7 170.3 224.8 2,736

number of issued shares 243,041,012 253,967,991 253,967,991 253,967,991 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 —

other information:

number of employees 17,224 18,675 18,364 18,972 17,858 19,286 20,266 20,247 19,574 19,334 19,437

average exchange rate during the periodyen

2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3

us dollar ¥133.25 ¥122.29 ¥113.97 ¥107.46 ¥113.09 ¥117.00 ¥113.80 ¥100.66 ¥ 92.61 ¥ 85.13 ¥ 78.82euro 116.14 120.36 132.73 134.90 137.81 150.33 162.26 143.28 130.68 112.45 109.34

unification of the accounting periods of non-Japan consolidated subsidiariesBeginning with the fiscal year ended march 31, 2007, financial statements based on the provisional settlement of accounts implemented as of the consolidated closing date are being used for yokogawa electric China Co., ltd. and 10 other non-Japan subsidiaries, and the closing date for yokogawa usa, inc., and 47 other non-Japan subsidiaries has been changed to the consolidated closing date. through these changes, 13 consoli-dated subsidiaries had a 15-month accounting period, and 46 consolidated subsidiaries had a 13-month accounting period. due to these changes to the accounting period, compared to the usual standard, the consolidated statement of income showed a 22.1 billion yen increase in net sales, a 1.4 billion yen increase in operating income, and a 985 million yen increase in net income.


Billions of yenmillions of us dollars

2002/3 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2012/3

For the year:

net sales ¥310.8 ¥328.8 ¥371.9 ¥387.1 ¥388.9 ¥433.4 ¥437.4 ¥376.5 ¥316.6 ¥325.6 ¥334.7 $4,072

Cost of sales 209.8 219.0 241.4 250.0 245.9 275.9 277.4 253.0 214.5 215.1 195.4 2,378

selling, general and administrative expenses 99.3 108.2 112.3 112.3 117.6 128.2 132.6 118.8 99.5 99.4 122.6 1,492

operating income 1.7 1.6 18.3 24.8 25.3 29.3 27.4 4.7 2.6 11.1 16.6 202

net income (loss) (23.1) (26.2) 24.3 9.4 21.6 12.6 11.7 (38.4) (14.8) (6.7) 6.0 72

Capital expenditures 13.3 15.3 21.4 18.7 29.5 40.3 38.0 26.8 11.1 11.3 11.1 136

depreciation and amortization 14.0 14.3 13.5 14.3 15.1 16.5 23.1 21.6 16.0 13.8 12.8 155

research and development costs 19.2 25.2 27.0 29.0 30.9 36.2 40.9 37.2 28.8 29.2 27.5 334

Cash flow from operating activities 20.5 1.8 8.3 18.3 25.6 40.5 20.8 24.5 21.4 16.2 12.9 157

Cash flow from investing activities (4.4) (3.1) (10.2) (11.2) (11.7) (39.0) (51.0) (24.1) (13.2) (8.0) (7.8) (95)

Cash flow from financing activities (22.9) 3.6 (11.4) (1.3) (14.1) (6.1) 23.9 28.4 11.1 (25.7) (8.0) (97)

at year-end:

total assets 353.9 364.7 397.4 400.3 417.8 438.7 444.6 401.0 398.8 361.2 359.5 4,374

interest-bearing debt 65.5 108.7 99.6 100.3 61.3 59.6 93.0 124.3 137.1 111.0 103.3 1,256

shareholders’ equity 169.1 131.8 160.3 168.8 224.6 234.3 220.7 167.2 153.4 141.7 145.7 1,773

%

Financial indicators:

operating income ratio 0.6 0.5 4.9 6.4 6.5 6.8 6.3 1.3 0.8 3.4 5.0

debt equity ratio (times) 0.39 0.82 0.62 0.59 0.27 0.25 0.42 0.74 0.89 0.78 0.71

roe (return on equity) (12.5) (17.4) 16.6 5.7 11.0 5.5 5.1 (19.8) (9.2) (4.5) 4.1

roa (return on assets) (6.0) (7.3) 6.4 2.3 5.3 2.9 2.6 (9.1) (3.7) (1.8) 1.7

shareholders’ equity ratio 47.8 36.1 40.3 42.2 53.7 53.4 49.6 41.7 38.5 39.2 40.5

yen us dollars

Per share data:

net income (loss) (94.57) (108.39) 99.84 38.43 87.45 47.79 44.76 (149.26) (57.45) (25.98) 23.11 0.28

Cash dividends 7.50 7.50 7.50 7.50 15.00 15.00 16.00 16.00 2.00 0.00 5.00 0.06

shareholders’ equity 697.10 542.20 658.97 693.75 854.24 891.08 856.72 649.20 595.42 550.19 565.69 6.88

stock information:

stock price at the end of the term (yen / us dollars) 1,059 788 1,544 1,452 2,095 1,806 998 394 814 634 837 10.18

market capitalization (billions of yen / millions of us dollars) 257.4 200.1 392.1 368.8 562.8 485.1 268.1 105.8 218.7 170.3 224.8 2,736

number of issued shares 243,041,012 253,967,991 253,967,991 253,967,991 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 268,624,510 —

other information:

number of employees 17,224 18,675 18,364 18,972 17,858 19,286 20,266 20,247 19,574 19,334 19,437

0

100

200

300

400

500

02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3

310.8 328.8371.9 387.1 388.9

433.4 437.4

376.5

316.6 325.6 334.7

net sales

(Billions of yen)


0

500

400

300

200

100

08/3 09/3 10/3 11/3 12/3

� Industrial Automation and Control Business� Test and Measurement Business� Other Businesses

437.4

376.5

316.6 325.6 334.7

Net sales


08/3 09/3 10/3 11/3 12/3

� Asia � Europe � North America� Middle East � Other� Sales ratio outside JapanNote: �Prior to fiscal year 2007, the Middle East was

included in Others.

27.1 29.8 26.3 36.919.4

32.1 25.2 23.035.1

29.120.9 21.0

52.0 36.032.0 26.8

109.779.4

72.9 77.0

36.1

27.8

21.326.4

87.3

243.3

206.4

177.3 184.7198.9

55.6 54.8

56.0 56.759.4300

250

200

150

100

50

0

60

50

40

30

20

10

0

Sales outside Japan bygeographic area / Sales ratiooutside Japan(Billions of yen) (%)

08/3 09/3 10/3 11/3 12/3

� Operating income� Operating income ratio

0

5

10

15

20

25

30

0

2

4

6

8

10

1227.4

11.1

16.6

2.64.7

6.3

1.3

3.4

5.0

0.8

Operating income / Operating income ratio


FinanCial reVieW

analysis of results in fiscal year 2011in the fiscal year ended march 31, 2012 (fiscal year

2011), consolidated net sales amounted to 334.7

billion yen, up 9.0 billion yen year on year. this was

mainly due to an increase of 16.5 billion yen in sales

in the industrial automation and control business

thanks to expansion of the Group’s business in emerg-

ing and resource-rich countries, which more than made

up for a decrease of 7.5 billion yen in the test and

measurement business and the other businesses seg-

ment. operating income increased 5.5 billion yen to

16.6 billion yen and can be attributed to the increase

in sales and the continued implementation of initia-

tives to strengthen the Group’s corporate structure.

the Group recorded a net income for the first time in

four years; this amounted to 6.0 billion yen and was a

result of the increase in operating income and a

decline in extraordinary losses.

sales in markets other than Japan rose year on year

due to a strong performance in emerging markets and

resource-rich countries by the industrial automation

and control business. sales grew strongest in China,

the middle east, australia, and southeast asia.

analysis of capital and assets1. Fund raising and liquidity management

the Group raises funds—both short-term and long-term

loans—based on the principles of security, ensuring

the efficiency of fund usage, and limiting fund raising.

it also ensures the security of its finances and the

efficiency of its fund raising through a 40 billion yen

commitment line of credit. as of the end of fiscal year

2011, the balance of the commitment line stood at 0.9

billion yen.

in fiscal year 2011, the Group took funds that had

been raised through loans as well as cash flow from

operating activities and allocated them to working capi-

tal and capital expenditure. maturing long-term loans

totaling 48.1 billion yen were repaid using cash equiva-

lents on hand and the drawdown of new long-term loans.

2. Condition of assets, liabilities, and net assets

total assets at the end of fiscal year 2011 were 359.5

billion yen, down 1.7 billion yen from the end of the

previous fiscal year. While there was a 7.0 billion yen

increase in trade notes and accounts receivables, the

decline in total assets can be attributed mainly to a

4.0 billion yen decrease in cash and cash equivalents,

a 2.9 billion yen decrease in property, plant and equip-

ment, and a 1.8 billion yen decrease in intangible assets.

total liabilities were 209.9 billion yen, down 6.1

billion yen from the end of the previous fiscal year.

total liabilities declined mainly because of a 7.7 billion

yen decrease in short-term and long-term borrowings.

total equity was 149.6 billion yen, up 4.3 billion yen

from the end of the previous fiscal year. this was mainly

due to an increase of 6.0 billion yen in retained earn-

ings. as a result, the shareholders’ equity ratio rose 1.3

percentage points from the previous year, to 40.5%.


08/3 09/3 10/3 11/3 12/3

� Net income (loss)� Net income (loss) ratio

20

0

–20

–40

–60

20

0

–20

–40

–60

11.7

–38.4

–14.8

–6.7

6.0

Net income (loss) / Net income (loss) ratio


2.7 –10.2–4.7 –2.1

1.8

08/3 09/3 10/3 11/3 12/3

� Earnings per share� Price earnings ratio

100

50

0

–50

–100

–150

–200

50

25

0

–25

–50

–75

–100

44.76

36.2

–149.26

–57.45

–25.98

Earnings per share / Price earnings ratio

(Yen) (%)

22.3

23.1

0

250

200

150

100

50

08/3 09/3 10/3 11/3 12/3

� Shareholders’ equity� Shareholders’ equity ratio

0

20

40

60

80

100220.7

167.2153.4

141.7 145.7

Shareholders’ equity / Shareholders’ equity ratio


49.641.7 38.5 39.2 40.5

3. Cash flows

net cash provided by operating activities in fiscal year

2011 totaled 12.9 billion yen, mainly reflecting inflows

of 11.7 billion yen from income before income taxes

and minority interests, and adjustments for deprecia-

tion and amortization. net cash used in investing activ-

ities was 7.8 billion yen, a year-on-year decrease of

151 million yen. this reflects a substantial streamlin-

ing of Group investments, and is the consequence of

proceeds primarily from the sale of property, plant and

equipment that offset r&d investments the Group

made in growth fields. as a result, net free cash flow

provided 5.1 billion yen, down 3.1 billion yen from the

previous fiscal year. moreover, net cash used in financ-

ing activities totaled 8.0 billion yen due primarily to the

repayment of long-term borrowings.

risks relating to the Company’s businessas described in the Company’s statutory annual finan-

cial report filed as stipulated by the Financial instru-

ments and exchange act, the following risks may

impact its business and accounting conditions, and

therefore could have a significant effect on investor

decision making.

these risks include forward-looking statements that

are based on judgments made by the Group at the end

of fiscal year 2011. Further, the risks include items

that will not necessarily affect investment decisions.

However, based on an awareness of these risks, the

Company maintains the necessary risk management

structure and works to avoid risk occurrence as well as

to minimize the impact of a risk should it occur.

1. risks relating to the business environment

a. economic conditions

the Group’s main markets where it conducts its busi-

ness activities are countries and regions including

Japan, asia, europe, north america, and the middle

east. Political situations and economic trends in these

markets could adversely affect the Group’s business

results and financial condition.

b. international factors

the Group’s sales and production operations are truly

international in scope, as is indicated by the fact that

sales generated in all markets other than Japan cur-

rently account for approximately 60% of consolidated

sales. therefore, factors in these markets such as

economic trends; exchange rate fluctuations; changes

to laws and regulations relating to investment, trade,

competition, taxation, or foreign exchange; differences

in commercial practices or labor standards that may

have cultural or religious origins; terrorist attacks,

wars, natural disasters, or other unanticipated inci-

dents; or political, social, or other elements could

adversely affect the Group’s business results and

financial condition.


0

150

120

90

60

30

08/3 09/3 10/3 11/3 12/3

� Interest-bearing debt� Debt equity ratio

1.5

1.2

0.9

0.6

0.3

0

103.393.0

124.3137.1

111.0

0.42

0.74

0.890.78

0.71

Interest-bearing debt /Debt equity ratio

(Billions of yen) (Times)

0

500

400

300

200

100

08/3 09/3 10/3 11/3 12/3

� Total assets� Total assets turnover

1.5

1.2

0.9

0.6

0.3

0

359.5

444.6401.0 398.8

361.2

0.930.99

0.890.79

0.86

Total assets / Total assets turnover

(Billions of yen) (Times)

08/3 09/3 10/3 11/3 12/3

� ROE� ROA

10

0

–10

–20

–30

ROE / ROA

(%)

–9.1–3.7

–1.82.6 1.7

–19.8

–9.2

–4.5

5.1 4.1

c. laws and regulations

the Group observes the laws and regulations of each

country in which it operates. Changes in laws and regu-

lations or the enactment of new laws that cannot be

anticipated could adversely affect the Group’s busi-

ness results and financial condition. in addition, any

increase in costs required to achieve compliance with

environmental protection-related legislation could


financial condition. moreover, such legislation could

impact the Group’s overall business activities, includ-

ing its r&d and production activities.

d. Fluctuations in currency exchange rates and

interest rates

the Company carries out measures for ameliorating

the risk of exchange rate fluctuations. However, due to

their impact on the prices and costs of products and

services with transactions denominated in foreign cur-

rencies, fluctuations in currency exchange rates may


financial condition. the Group also carries out mea-

sures for ameliorating the risk of interest rate fluctua-

tions. However, fluctuations in interest rates could still



e. Changes in the value of assets owned

Changes in the value of shares, etc., owned by the

Group could adversely affect the Group’s business

results and financial condition. in addition, regarding

the fixed assets owned by the Group, a decrease in

asset value accompanying a decline in their market

value or a fall in profitability could adversely affect the

Group’s business results and financial condition.

2. risks relating to business activities

a. industrial automation and control business

the industrial automation and control business is

mainly expected to grow outside Japan in the medium

to long term due to increased demand for energy and

raw materials, particularly in newly industrialized

nations. to increase its share of the global market and

bolster sales and income, the Company has focused

its resources on this business and strengthened sys-

tems related to r&d, production, sales, engineering,

and service. as a result, the percentage of net sales

on a consolidated basis accounted for by the industrial

automation and control business has grown in recent

years. Consequently, trends related to the demand for

plant construction and upgrades, which affect orders

and sales in this business, could adversely affect the


b. test and measurement business

the Company has focused its resources on strengthen-

ing its sales network outside Japan and planning and

development of new products for emerging countries to

develop the electric energy market in connection with

environmental solutions and the optical telecommunica-

tion market. this may have an impact on the Group’s

business results and financial condition if the implemen-


tation does not proceed as planned due to the deterio-

ration of economic and market trends.

c. securing and training human resources

the Group’s growth is supported by its talented and

capable human resources. in particular, the techni-

cians who support its leading-edge technology in the

fields of measurement, control, and information, as

well as the technicians who support its high levels of

product quality, are extremely important to the Group.

Further, in the industrial automation and control busi-

ness, the need to secure and train human resources

with the project management and engineering capabili-

ties required to work in the international market is an

ongoing issue. if the Group is unable to address this

issue satisfactorily, this could adversely affect the


d. Product quality

the Group provides its customers with highly reliable

products and services through the technologies and

expertise that it has accumulated over many years as

well as through its rigorous quality control system. if by

any chance a defect should occur in a Group product or

service, and if this defect causes any damage, then

this could adversely affect the Group’s business

results and financial condition, and could also impact

the Group’s overall business activities.

e. r&d activities

the Group has positioned the development of new tech-

nologies as one of its most important management

issues, and is continuously carrying out r&d in its core

technology areas of measurement, control, and informa-

tion. However, if r&d investments do not match planned

future market needs, this could adversely affect the


3. other risks

a. intellectual property

in order to maintain its competitive advantages, the

Group accumulates differentiated technologies and

expertise relating to the products and services that it

develops, and strives to protect these intellectual

property assets. However, if the intellectual property

is infringed upon by a third party and therefore the

Group is unable to make an expected profit, it could



moreover, the Group has established systems and

conducts training to ensure that it does not infringe

upon the intellectual property rights of other compa-

nies. However, if due to a difference in viewpoint or

some other reason the Group infringes on the intellec-

tual property rights of another company, there is a risk

that it will be subsequently disadvantaged by its inabil-

ity to use important technology and/or may be held

liable for compensation, which could adversely affect

the Group’s business results and financial condition.

b. information security

through its business activities, the Group acquires

personal or otherwise confidential information on its

customers and trading partners. the Group therefore

establishes systems to manage this information and

provides employees training on information security.

However, in the event that information is leaked or

abused due to some unforeseen circumstance, there is

a risk the Group will be held liable for compensation or

the corporate image will be drastically tarnished, which

could adversely affect the Group’s business results

and financial condition.

c. natural disasters, etc.

a natural disaster such as an earthquake, fire, or

flood; the outbreak of war; a terrorist attack; an attack

via a computer virus; or a disruption in the supply

chain caused by any of the aforementioned factors that

makes it difficult to procure electronic parts or other

materials could impact the Company’s overall business

activities, including the Group’s production activities. in

addition, while the Group has appropriate measures in

place for responding to the outbreak of diseases such

as new influenza strains, these diseases could have an

impact on the Group’s overall business results and



Consolidated BalanCe sheetYokogawa electric Corporation and Consolidated subsidiaries March 31, 2012

Millions of yen

thousands of Us dollars

(note 1)

2012 2011 2012

assets

Current assets:

Cash and cash equivalents (note 13) ¥ 53,430 ¥ 57,335 $ 650,079

Receivables (notes 4 and 13)

trade notes and accounts 110,541 103,492 1,344,941

other 4,734 3,815 57,600

less: allowance for doubtful accounts (3,247) (3,175) (39,507)

net receivables 112,028 104,132 1,363,034

inventories (note 5) 35,359 35,474 430,210

deferred tax assets (note 10) 3,087 2,829 37,560

other 7,398 7,367 90,017

total current assets 211,302 207,137 2,570,900

Property, Plant and equipment (note 6):

land 16,682 17,244 202,969

Buildings and structures—net 46,167 48,927 561,714

Machinery, equipment and vehicles—net 6,644 7,220 80,832

tools, furniture and fixtures—net 7,001 4,570 85,183

Construction in progress 1,175 2,653 14,292

lease assets—net (note 12) 492 488 5,984

total property, plant and equipment 78,161 81,102 950,974

investments and other assets:

investment securities (notes 3, 7 and 13) 26,355 26,171 320,659

investments in and advances to unconsolidated subsidiaries and affiliated companies 5,495 5,560 66,852

Goodwill 1,695 1,823 20,622

software 23,349 8,126 284,088

other intangible assets 3,214 20,145 39,111

deferred tax assets (note 10) 1,960 2,077 23,844

other 8,534 9,460 103,831

less: allowance for doubtful accounts (564) (368) (6,860)

total investments and other assets 70,038 72,994 852,147

total assets ¥359,501 ¥361,233 $4,374,021

see notes to consolidated financial statements.


Millions of yen


(note 1)2012 2011 2012

liaBilities and eQUitY

Current liabilities:

short-term loans payable (notes 7, 13 and 15) ¥ 10,688 ¥ 6,072 $ 130,034

Current portion of long-term debt (notes 7 and 13) 4,050 48,300 49,281

Payables (notes 7 and 13)

trade notes and accounts 30,659 28,807 373,020

other 8,070 12,828 98,192

income taxes payable (notes 10 and 13) 3,308 3,270 40,244

accrued expenses 29,748 23,953 361,946

other (note 10) 28,094 28,863 341,812

total current liabilities 114,617 152,093 1,394,529

long-term liabilities:

long-term debt (notes 7, 13 and 15) 88,883 56,921 1,081,435

liability for retirement benefits (note 8) 2,441 2,067 29,700

other (note 10) 3,986 4,919 48,497

total long-term liabilities 95,310 63,907 1,159,632

Commitments and Contingent liabilities (note 17)

equity (notes 9 and 19):

Common stock, authorized, 600,000,000 shares; issued, 268,624,510 shares in 2012 and 2011 43,401 43,401 528,058

Capital surplus 50,345 50,345 612,536

Retained earnings 79,002 73,011 961,216

treasury stock, 11,078,187 shares in 2012 and 11,071,323 shares in 2011 (11,006) (11,001) (133,906)

accumulated other comprehensive income

net unrealized gain on available-for-sale securities 2,483 2,146 30,215

deferred gain (loss) on derivatives under hedge accounting 9 (137) 110

adjustment relating to pension liability (678) (375) (8,247)

Foreign currency translation adjustments (17,865) (15,687) (217,364)

total (16,051) (14,053) (195,286)

Minority interests 3,883 3,530 47,242

total equity 149,574 145,233 1,819,860

total liabilities and equity ¥359,501 ¥361,233 $4,374,021


Consolidated stateMent oF oPeRationsYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012

Millions of yen


(note 1)

2012 2011 2012

net sales ¥334,669 ¥325,621 $4,071,893

Cost of sales (note 11) 195,431 215,131 2,377,790

Gross profit 139,238 110,490 1,694,103

selling, General and administrative expenses (note 11) 122,636 99,411 1,492,109

operating income 16,602 11,079 201,994

other income (expenses):

interest and dividend income 1,954 1,860 23,773

interest expense (2,653) (2,815) (32,276)

loss on valuation of investment securities (note 3) (2,251)

net gain on sale of investment securities and investment in affiliated companies (note 3) 754 502 9,170

Foreign exchange loss—net (413) (1,752) (5,027)

net gain (loss) on disposal of property, plant and equipment 226 (178) 2,755

loss on impairment of long-lived assets (note 6) (465) (708) (5,663)

equity in earnings of affiliates 179 593 2,175

state subsidy 334 334 4,058

Restructuring costs (note 16) (3,212) (6,824) (39,086)

other (1,633) (865) (19,853)

other income (expenses)—net (4,929) (12,104) (59,974)

income (loss) before income taxes and Minority interests 11,673 (1,025) 142,020

income taxes (note 10):

Current 5,218 4,491 63,481

deferred (81) 631 (984)

total income taxes 5,137 5,122 62,497

net income (loss) before Minority interests 6,536 (6,147) 79,523

Minority interests in net income 584 546 7,105

net income (loss) ¥ 5,952 ¥ (6,693) $ 72,418

YenUs dollars

(note 1)

Per share of Common stock (note 19):

Basic net income (loss) ¥ 23.11 ¥ (25.98) $ 0.28

Cash dividends applicable to the year ¥5 nil $ 0.06



Consolidated stateMent oF CoMPRehensive inCoMeYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012

Millions of yen


(note 1)

2012 2011 2012

net income (loss) before Minority interests ¥ 6,536 ¥ (6,147) $ 79,523

other Comprehensive income (note 18) :

net unrealized gain (loss) on available-for-sale securities 341 (317) 4,144

deferred gain (loss) on derivatives under hedge accounting 146 (220) 1,780

adjustment relating to pension liability (303) (5) (3,684)

Foreign currency translation adjustments (2,120) (3,970) (25,793)

share of other comprehensive income in affiliates (4) (5) (45)

total other comprehensive income (1,940) (4,517) (23,598)

Comprehensive income ¥ 4,596 ¥(10,664) $ 55,925

total Comprehensive income attributable to (note 18) :

owners of the parent ¥ 3,954 ¥(11,049) $ 48,115

Minority interests 642 385 7,810



Millions of yenaccumulated other comprehensive income

outstanding number of shares of common

stockCommon

stockCapital surplus

Retained earnings

treasury stock

net unrealized

gain on available-

for-sale securities

deferred gain (loss)

on derivatives

under hedge

accounting

adjustment relating to

pension liability

Foreign currency

translation adjustments total

Minority interests

total equity

Balance, april 1, 2010 257,569,105 ¥43,401 ¥50,345 ¥80,304 ¥(10,991) ¥2,450 ¥ 83 ¥(370) ¥(11,860) ¥ (9,697) ¥3,998 ¥157,360

net loss (6,693) (6,693)

Cash dividends, ¥2.0 per share (note 19) (515) (515)

Purchase of treasury stock (17,585) (11) (11)

disposal of treasury stock 1,667 (0) 1 1

other (85) (85)

net change in the year (304) (220) (5) (3,827) (4,356) (468) (4,824)

Balance, March 31, 2011 257,553,187 43,401 50,345 73,011 (11,001) 2,146 (137) (375) (15,687) (14,053) 3,530 145,233

net income 5,952 5,952

Purchase of treasury stock (7,508) (5) (5)

disposal of treasury stock 644 (0) 0 0

other 39 39

net change in the year 337 146 (303) (2,178) (1,998) 353 (1,645)

Balance, March 31, 2012 257,546,323 ¥43,401 ¥50,345 ¥79,002 ¥(11,006) ¥2,483 ¥ 9 ¥(678) ¥(17,865) ¥(16,051) ¥3,883 ¥149,574

thousands of Us dollars (note 1)accumulated other comprehensive income

Common stock

Capital surplus

Retained earnings

treasury stock

net unrealized

gain on available-

for-sale securities

deferred gain (loss)

on derivatives

under hedge

accounting

adjustment relating to

pension liability

Foreign currency

translation adjustments total

Minority interests

total equity

Balance, april 1, 2011 $528,058 $612,538 $888,324 $(133,849) $26,109 $(1,670) $(4,562) $(190,859) $(170,982) $42,946 $1,767,035

net income 72,418 72,418

Purchase of treasury stock (65) (65)

disposal of treasury stock (2) 8 6

other 474 474

net change in the year 4,106 1,780 (3,684) (26,505) (24,304) 4,296 (20,008)

Balance, March 31, 2012 $528,058 $612,536 $961,216 $(133,906) $30,215 $ 110 $(8,247) $(217,364) $(195,286) $47,242 $1,819,860


Consolidated stateMent oF ChanGes in eQUitYYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012


Millions of yen


(note 1)2012 2011 2012

operating activities:

income (loss) before income taxes and minority interests ¥ 11,673 ¥ (1,025) $ 142,020

adjustments for:

income taxes paid (3,946) (3,452) (48,014)

depreciation and amortization 12,756 13,836 155,207

equity in earnings of affiliates (179) (593) (2,175)

loss on impairment of long-lived assets 465 708 5,663

net (loss) gain on disposal of property, plant and equipment (226) 178 (2,755)

loss on valuation of investment securities 2,251

net gain on sale of investment securities (754) (502) (9,170)

Restructuring costs 3,212 6,824 39,086

Payment for special retirement benefit (3,370) (4,021) (41,004)

Changes in assets and liabilities:

decrease (increase) in trade notes and accounts receivable (7,641) 2,294 (92,965)

decrease (increase) in inventories (211) (1,670) (2,573)

increase (decrease) in trade notes and accounts payable 2,750 2,290 33,455

increase (decrease) in allowance for doubtful accounts 341 (240) 4,152

other assets and liabilities 474 (2,984) 5,768

other—net (2,447) 2,274 (29,777)

total adjustments 1,224 17,193 14,898

net cash provided by operating activities 12,897 16,168 156,918

investing activities:

Purchase of property, plant and equipment (6,799) (4,719) (82,717)

Proceeds from sale of property, plant and equipment 1,232 515 14,991

acquisition of intangible assets (4,655) (5,335) (56,642)

Cash received in conjunction with sale of consolidated subsidiaries 818

Proceeds from sale of investment securities 1,031 652 12,546

other—net 1,349 76 16,415

net cash used in investing activities (7,842) (7,993) (95,407)

Financing activities:

net increase (decrease) in short-term loans payable 4,529 (670) 55,106

Proceeds from long-term debt 35,920 437,036

Repayments of long-term debt (48,119) (24,236) (585,466)

Purchase of treasury stock (5) (11) (65)

Cash dividends paid to minority shareholders (276) (251) (3,350)

Cash dividends paid (4) (521) (53)

other—net 0 1 6

net cash used in financing activities (7,955) (25,688) (96,786)

effect of exchange Rate Changes on Cash and Cash equivalents (1,005) (1,784) (12,233)

net decrease in Cash and Cash equivalents (3,905) (19,297) (47,508)

increase (decrease) in Cash and Cash equivalents Resulting

from Change of scope of Consolidation (0) 76 (0)

Cash and Cash equivalents, Beginning of Year 57,335 76,556 697,587

Cash and Cash equivalents, end of Year ¥ 53,430 ¥ 57,335 $ 650,079


Consolidated stateMent oF Cash FlowsYokogawa electric Corporation and Consolidated subsidiaries Years ended March 31, 2012


1. Basis of Presentation of the Consolidated Financial statements

2. summary of significant accounting Policies

the accompanying consolidated financial statements have

been prepared in accordance with the provisions set forth in

the Japanese Financial instruments and exchange act and its

related accounting regulations and in conformity with account-

ing principles generally accepted in Japan (“Japanese GaaP”),

which are different in certain respects as to application and

disclosure requirements of the international Financial Report-

ing standards.

in preparing these consolidated financial statements, cer-

tain reclassifications and rearrangements have been made to

the consolidated financial statements issued in Japan in

order to present them in a form which is more familiar to

readers outside Japan. Certain comparative figures of the

a. Consolidation—the consolidated financial statements as

of March 31, 2012 include the accounts of the Company

and its 85 significant (85 in 2011) subsidiaries (together,

the “Group”).

Under the control and influence concept, those companies

in which the Company, directly or indirectly, is able to exercise

control over operations are fully consolidated, and those

companies over which the Group has the ability to exercise

significant influence are accounted for by the equity method.

investments in 1 (1 in 2011) unconsolidated subsidiary

and 2 (3 in 2011) affiliated companies are accounted for by

the equity method. investment in the remaining affiliated

company is stated at cost. if the equity method of accounting

had been applied to the investments in these companies, the

effect on the accompanying consolidated financial state-

ments would not be material.

the excess of the cost of an acquisition over the fair value

of the net assets of the acquired subsidiary at the date of

acquisition is being amortized over a period of 20 years.

all significant intercompany balances and transactions have

been eliminated on consolidation. all material unrealized

profit included in assets resulting from transactions within

the Group is eliminated.

b. Unification of accounting Policies applied to Foreign sub-

sidiaries for the Consolidated Financial statements—in May

2006, the accounting standards Board of Japan (the “asBJ”)

issued asBJ Practical issues task Force (PitF) no. 18 “Practi-

cal solution on Unification of accounting Policies applied to

Foreign subsidiaries for the Consolidated Financial state-

ments.” PitF no. 18 prescribes: (1) the accounting policies

and procedures applied to a parent company and its subsid-

iaries for similar transactions and events under similar cir-

cumstances should in principle be unified for the preparation

of the consolidated financial statements, (2) financial state-

ments prepared by foreign subsidiaries in accordance with

either international Financial Reporting standards or the

generally accepted accounting principles in the United states

previous year have been reclassified to conform with the

classification used in 2012.

the consolidated financial statements are stated in

Japanese yen, the currency of the country in which Yokogawa

electric Corporation (the “Company”) is incorporated and

operates. the translations of Japanese yen amounts into Us

dollar amounts are included solely for the convenience of

readers outside Japan and have been made at the rate of

¥82.19 to $1, the approximate rate of exchange at March

31, 2012. such translations should not be construed as

representations that the Japanese yen amounts could be

converted into Us dollars at that or any other rate.

of america tentatively may be used for the consolidation

process, (3) however, the following items, should be adjusted

in the consolidation process so that net income is accounted

for in accordance with Japanese GaaP unless they are not

material: a) amortization of goodwill; b) scheduled amortiza-

tion of actuarial gain or loss of pensions that has been

directly recorded in the equity; c) expensing capitalized devel-

opment costs of R&d; d) cancellation of the fair value model

accounting for property, plant and equipment and investment

properties and incorporation of cost model accounting; and e)

exclusion of any minority interests from net income.

c. Cash equivalents—Cash equivalents are short-term invest-

ments that are readily convertible into cash and are exposed

to insignificant risk of changes in value. specifically, cash

equivalents represent time deposits which mature within

three months of the date of placement.

d. inventories—inventories are stated at the lower of cost,

mainly determined by the specific identification method for

finished goods and work in process, and by the average

method for merchandise, raw materials and supplies, or the

net selling value.

e. investment securities—investment securities are classi-

fied and accounted for, depending on management’s intent,

as follows:

i) held-to-maturity debt securities, which are expected to be

held to maturity with the positive intent and ability to hold to

maturity, are reported at amortized cost and

ii) available-for-sale securities, which are not classified as the

aforementioned securities, are reported at fair value, with

unrealized gains and losses, net of applicable taxes, reported

under accumulated other comprehensive income in a sepa-

rate component of equity.

non-marketable available-for-sale securities are stated at

cost determined by the moving-average method. For other

than temporary declines in fair value, investment securities

notes to Consolidated FinanCial stateMentsYokogawa electric Corporation and Consolidated subsidiaries Year ended March 31, 2012


are reduced to net realizable value by a charge to income.

f. Property, Plant and equipment—Property, plant and equip-

ment are stated at cost less accumulated depreciation and

any impairment in value. depreciation of property, plant and

equipment is mainly calculated by the straight-line method

over their estimated useful lives.the estimated useful lives

range principally from 3 to 50 years for buildings, and from 4

to 10 years for machinery and equipment. the estimated

useful lives for leased assets are the terms of the respec-

tive leases.

effective april 1, 2011, the Company and its consolidated

subsidiaries in Japan adopted the straight-line method of

depreciation for their assets which, previously, had been

depreciated by the declining-balance method. this change

was made to provide a more accurate allocation of the cost of

the assets, after the restructuring of the business portfolio in

recent years.

the effects of this change were to increase gross profit

by ¥1,787 million (Us$21,738 thousand) and to increase

income before taxes and minority interests by ¥1,816 mil-

lion (Us$22,094 thousand).

accumulated depreciation deducted from the cost of prop-

erty, plant and equipment in the accompanying consolidated

balance sheet amounted to ¥145,204 million (Us$1,766,688

thousand) and ¥145,857 million at March 31, 2012 and

2011, respectively.

g. long-lived assets—the Group reviews its long-lived assets

for impairment whenever events or changes in circumstance

indicate the carrying amount of an asset or asset group may

not be recoverable. an impairment loss would be recognized

if the carrying amount of an asset or asset group exceeds the

sum of the undiscounted future cash flows expected to result

from the continued use and eventual disposition of the asset

or asset group. the impairment loss would be measured as

the amount by which the carrying amount of the asset

exceeds its recoverable amount, which is the higher of the

discounted cash flows from the continued use and eventual

disposition of the asset or the net selling price at disposition.

h. Retirement and Pension Plans—the Company and most of

its consolidated subsidiaries have defined contribution plans,

and some other consolidated subsidiaries have defined ben-

efit plans for employees. Under a defined benefit plan, liability

for retirement benefits represents the estimated present

value of projected benefit obligations in excess of the fair

value of plan assets less unrecognized actuarial gain (loss)

and unrecognized prior service costs. Unrecognized actuarial

gain (loss) is amortized on a straight-line basis over the

expected average remaining years of service from the follow-

ing year in which they arise. Unrecognized prior service costs

are charged to expense on a straight-line basis over the aver-

age remaining years of service of the employees.

i. Research and development Costs—Research and develop-

ment costs are charged to income as incurred.

Prior to april 1, 2011, the Company and its certain consoli-

dated subsidiaries in Japan recorded R&d costs for basic

research in general and administrative expenses, while prod-

uct development costs were included in manufacturing costs,

based on the fact that product development costs were

incurred during the process of designing and producing of

hardware. effective april 1, 2011, the Company and its cer-

tain consolidated subsidiaries in Japan changed to record

some product development costs in general and administra-

tive expenses, which were previously recorded in manufactur-

ing costs, due to the fact that R&d activities are more

focused on software than hardware and R&d costs are

incurred separately from the production process after the

change of the business portfolio in recent years.

the effect of this change is to increase gross profit by

¥21,194 million (Us$257,868 thousand) and to decrease

operating income and net income before income taxes and

minority interests by ¥470 million (Us$5,719 thousand).

j. leases—in March 2007, the asBJ issued asBJ statement

no. 13 “accounting standard for lease transactions” which

revised the previous accounting standard for lease transac-

tions issued in June 1993. the revised accounting standard

for lease transactions is effective for fiscal years beginning

on or after april 1, 2008.

Under the previous accounting standard, finance leases

that were deemed to transfer ownership of the leased assets

to the lessee were to be capitalized. however, other finance

leases were permitted to be accounted for as operating lease

transactions if certain “as if capitalized” information was

disclosed in the note to the lessee’s financial statements.

the revised accounting standard requires that all finance

lease transactions should be capitalized to recognize lease

assets and lease obligations in the balance sheet. in addi-

tion, the accounting standard permits leases which existed at

the transition date and do not transfer ownership of the

leased assets to the lessee to be accounted for as operating

lease transactions.

the Company and its subsidiaries in Japan applied the

revised accounting standard effective april 1, 2008. in addi-

tion, the Company accounted for leases which existed at the

transition date and do not transfer ownership of the leased

assets to the lessee as operating lease transactions.

all other leases are accounted for as operating leases.

k. Bonuses to directors and Corporate auditors—Bonuses to

directors and corporate auditors are accrued at the end of the

year to which such bonuses are attributable.

l. Construction Contracts—Construction revenue and con-

struction costs are recognized based on the percentage-of-

completion method if the outcome of the construction

contract can be estimated reliably.


when total contract revenue, total contract costs and

costs incurred at the balance sheet date can be reliably

measured, the outcome of a construction contract can be

estimated reliably.

if the outcome of a project cannot be reliably estimated,

the completed-contract method shall be applied.

when it is probable that the total construction costs will

exceed total construction revenue, an estimated loss on the

contract should be immediately recognized by providing for a

loss on construction contracts.

m. income taxes—the provision for income taxes is computed

based on the pretax income included in the consolidated

statement of operations. the asset and liability approach is

used to recognize deferred tax assets and liabilities for the

expected future tax consequences of temporary differences

between the carrying amounts and the tax bases of assets

and liabilities. deferred taxes are measured by applying cur-

rently enacted tax laws to the temporary differences.

the Group files its tax return under the consolidated corpo-

rate tax system, which allows companies to base tax pay-

ments on the combined profits or losses of the parent

company and its wholly owned subsidiaries in Japan.

n. Foreign Currency transactions—Monetary assets and

liabilities denominated in foreign currencies at the balance

sheet date are translated into Japanese yen at the exchange

rate as of that date. the foreign exchange gains and losses

from translation are recognized in the consolidated statement

of operations.

o. Foreign Currency Financial statements—the balance sheet

accounts of the consolidated subsidiaries outside Japan are

translated into Japanese yen at the prevailing exchange rate

as of the balance sheet date except for equity, which is trans-

lated at the historical rate. differences arising from such

translation are shown as “Foreign currency translation adjust-

ments” under accumulated other comprehensive income in a

separate component of equity. Revenue and expense

accounts of consolidated subsidiaries outside Japan are

translated into yen at the average exchange rate.

p. derivatives and hedging activities—the Company and

certain consolidated subsidiaries use a variety of derivative

financial instruments, including foreign currency forward con-

tracts, currency options, and interest rate swaps, as a means

of hedging foreign currency and interest rate risks. they do

not enter into derivatives for trading or speculative purposes.

derivative financial instruments and foreign currency trans-

actions are classified and accounted for as follows: (1) all

derivatives other than those which qualify for hedge account-

ing: these are measured at fair value, and gains or losses are

recognized in the statement of operations. (2) derivatives

used for hedging purposes, if the derivatives qualify for hedge

accounting because of a high correlation between the hedging

instruments and the hedged items, gains or losses are

deferred until maturity of the hedged transactions. these

amounts are shown as “deferred gain (loss) on derivative

under hedge accounting” under accumulated other compre-

hensive income in a separate component of equity.

Foreign currency forward contracts are utilized to hedge the

foreign currency risk of trade receivables denominated in

foreign currencies. if the forward contracts qualify for hedge

accounting, these trade receivables are translated at the

contracted rates. interest rate swaps are utilized to hedge the

interest rate risk of long-term debt. those interest rate swaps

which qualify for hedge accounting and meet specific match-

ing criteria are not remeasured at market value, but the dif-

ferential paid or received under the swap agreements is

recognized and included in interest expense or income.

q. Per share information—Basic net income (loss) per share

is computed by dividing net income (loss) available to

common shareholders by the weighted-average number of

common shares outstanding for the period.

Cash dividends per share presented in the accompanying

consolidated statement of operations are dividends appli-

cable to the respective years including dividends to be paid

after the end of the year.

r. accounting Changes and error Corrections—in december

2009, the asBJ issued asBJ statement no. 24, “accounting

standard for accounting Changes and error Corrections” and

asBJ Guidance no. 24, “Guidance on accounting standard for

accounting Changes and error Corrections.” accounting treat-

ments under this standard and guidance are as follows: (1)

Changes in accounting Policies-when a new accounting policy

is applied with revision of accounting standards, the new

policy is applied retrospectively unless the revised accounting

standards include specific transitional provisions. when the

revised accounting standards include specific transitional

provisions, an entity shall comply with the specific transitional

provisions. (2) Changes in Presentations-when the presenta-

tion of financial statements is changed, prior-period financial

statements are reclassified in accordance with the new pre-

sentation. (3) Changes in accounting estimates-a change in

an accounting estimate is accounted for in the period of the

change if the change affects that period only, and is

accounted for prospectively if the change affects both the

period of the change and future periods. (4) Corrections of

Prior-Period errors-when an error in prior-period financial

statements is discovered, those statements are restated.

this accounting standard and the guidance are applicable to

accounting changes and corrections of prior-period errors

which are made in the fiscal year beginning on or after april

1, 2011.


3. investment securitiesinvestment securities as of March 31, 2012 and 2011 consisted of the following:

Millions of yenthousands of

Us dollars

2012 2011 2012

Current:

Government and municipal bonds ¥ 0 $ 0

non-current:

Government and municipal bonds ¥ 0

equity securities and other 26,355 26,171 320,659

total ¥26,355 ¥26,171 $320,659

the cost and aggregate fair values of investment securities at March 31, 2012 and 2011 were as follows:

Millions of yen

March 31, 2012 CostUnrealized

gainUnrealized

lossFair

value

securities classified as:

available-for-sale:

equity securities ¥11,391 ¥3,532 ¥455 ¥14,468

other 9 2 7

held-to-maturity 0 0

March 31, 2011


available-for-sale:

equity securities ¥11,566 ¥2,960 ¥244 ¥14,282

other 12 3 9



March 31, 2012 CostUnrealized

gainUnrealized

lossFair

value


available-for-sale:

equity securities $138,593 $42,975 $5,541 $176,027

other 109 22 87



the information for available-for-sale securities sold during the years ended March 31, 2012 and 2011 was as follows:

Millions of yen

2012 Proceeds Realized gain Realized loss

available-for-sale:

equity securities ¥37 ¥1 ¥156

Millions of yen


available-for-sale:

equity securities ¥652 ¥214 ¥0



available-for-sale:

equity securities $448 $10 $1,894

4. transfer of Receivablesthe Company and certain consolidated subsidiaries transferred their trade notes and accounts receivable-trade before maturity

based on an asset transfer agreement. the balance of those receivables that were outstanding whose settlement date had not

been reached as of March 31, 2012 and 2011 was as follows:


Us dollars

2012 2011 2012

notes and accounts receivable—trade ¥14,849 ¥11,290 $180,672

(with recourse, included in above) (1,536) (972) (18,688)

5. inventoriesinventories at March 31, 2012 and 2011 consisted of the following:


Us dollars

2012 2011 2012

Merchandise and finished goods ¥14,699 ¥16,478 $178,846

work in process 7,994 8,745 97,260

Raw materials and supplies 12,666 10,251 154,104

total ¥35,359 ¥35,474 $430,210


6. long-lived assetsthe Group reviewed its long-lived assets for impairment as of the years ended March 31, 2012 and 2011. as a result, impairment

loss of ¥1,416 million (Us$17,234 thousand) and ¥708 million, were recognized for 2012 and 2011, respectively. the main com-

ponents of the impairment loss on long-lived assets for the years ended March 31, 2012 and 2011 were as follows:


Us dollars

2012 2011 2012

land ¥ 42 ¥122 $ 509

Buildings and structures 671 367 8,163

Machinery, equipment and vehicles 394 46 4,794

tools, furniture and fixtures 28 162 337

other 281 11 3,431

total ¥1,416 ¥708 $17,234

the recoverable amount of assets was measured principally at their net selling price determined by quotations from third parties.

of the ¥1,416 million (Us$17,234 thousand) impairment loss, ¥951 million (Us$11,571 thousand) which is associated with

the impairment loss of the discontinued operation of the test and measurement business is included in restructuring costs in the

consolidated statement of operations.

7. shor t-term loans and long-term debtshort-term bank loans at March 31, 2012 and 2011 consisted of bank overdrafts. the annual average interest rates on the short-

term bank loans were 1.963% and 2.287% for the years ended March 31, 2012 and 2011, respectively.

long-term debt as of March 31, 2012 and 2011 consisted of the following:


Us dollars

2012 2011 2012

loans from banks and other financial institutions ¥92,573 ¥104,926 $1,126,329

obligations under finance leases 360 295 4,387

92,933 105,221 1,130,716

less: Current portion 4,050 48,300 49,281

¥88,883 ¥ 56,921 $1,081,435

annual maturities of long-term loans from banks and other financial institutions, excluding finance leases at March 31, 2012

were as follows:

Year ending March 31 Millions of yenthousands of

Us dollars

2013 ¥ 3,918 $ 47,665

2014 26,313 320,152

2015 12,222 148,707

2016 20,222 246,042

2017 3,722 45,286

2018 and thereafter 26,176 318,477

total ¥92,573 $1,126,329

the annual average interest rate on long-term loans (excluding current portion) from banks was 2.109% for the year ended March

31, 2012.


Collateral and secured debt at March 31, 2012 and 2011 were as follows:


Us dollars

2012 2011 2012

Collateral:

deposits ¥ 13 ¥ 13 $ 152

investment securities 4 3 50

assets in consolidated subsidiaries outside Japan* 4,890 5,132 59,502

total ¥4,907 ¥5,148 $59,704

* “assets in consolidated subsidiaries outside Japan” represent the aggregate amount of accounts receivable and other assets of such subsidiaries.


Us dollars

2012 2011 2012

secured debt:

trade notes and accounts payable ¥10 ¥14 $124

total ¥10 ¥14 $124

the Group’s interest-bearing debt includes financial covenants which require the Company to maintain certain levels of equity

and operating income on a consolidated basis.

8. Retirement and Pension Plansthe Company and most of its consolidated subsidiaries have defined contribution plans, while some other subsidiaries have

defined benefit plans. in certain circumstances, additional payments are made upon the retirement of employees.

the (liability) asset for employees’ retirement benefits at March 31, 2012 and 2011 consisted of the following:


Us dollars

2012 2011 2012

Projected benefit obligation ¥(6,285) ¥(5,618) $(76,472)

Fair value of plan assets 3,624 3,436 44,096

Unfunded projected benefit (2,661) (2,182) (32,376)

Unrecognized actuarial gain 198 90 2,411

Unrecognized prior service cost 22 25 265

net liability ¥(2,441) ¥(2,067) $(29,700)

the components of net periodic benefit costs for the years ended March 31, 2012 and 2011 were as follows:


Us dollars

2012 2011 2012

service cost ¥ 637 ¥ 626 $ 7,754

interest cost 186 215 2,265

expected return on plan assets (166) (167) (2,021)

amortization of actuarial gain 29 38 355

amortization of prior service cost 1 (5) 15

additional retirement benefit and other 970 6,146 11,798

Contribution to defined contribution plan 5,652 6,017 68,768

net periodic benefit costs ¥7,309 ¥12,870 $88,934


9. equityJapanese companies are subject to the Companies act of

Japan (the “Companies act”). the significant provisions in the

Companies act that affect financial and accounting matters

are summarized below:

1. dividends

Under the Companies act, companies can pay dividends at

any time during the fiscal year in addition to the year-end

dividend upon resolution at the shareholders meeting. For

companies that meet certain criteria such as: (1) having

the Board of directors, (2) having independent auditors,

(3) having the Board of Corporate auditors, and (4) the

term of service of the directors is prescribed as one year

rather than two years of normal term by its articles of

incorporation, the Board of directors may declare divi-

dends (except for dividends in kind) at any time during the

fiscal year if the company has prescribed so in its articles

of incorporation.

semiannual interim dividends may also be paid once a

year upon resolution by the Board of directors if the arti-

cles of incorporation of the company so stipulate. the

Companies act provides certain limitations on the

amounts available for dividends or the purchase of trea-

sury stock. the limitation is defined as the amount avail-

able for distribution to the shareholders, but the amount of

net assets after dividends must be maintained at no less

than ¥3 million.

2. increases / decreases and transfer of common stock,

reserve and surplus

the Companies act requires that an amount equal to 10%

of dividends must be appropriated as a legal reserve (a

component of retained earnings) or as additional paid-in

capital (a component of capital surplus) depending on the

equity account charged upon the payment of such divi-

dends until the total of aggregate amount of legal reserve

and additional paid-in capital equals 25% of the common

stock. Under the Companies act, the total amount of addi-

tional paid-in capital and legal reserve may be reversed

without limitation. the Companies act also provides that

common stock, legal reserve, additional paid-in capital,

other capital surplus and retained earnings can be trans-

ferred among the accounts under certain conditions upon

resolution of the shareholders.

3. treasury stock and treasury stock acquisition rights

the Companies act also provides for companies to pur-

chase treasury stock and dispose of such treasury stock

by resolution of the Board of directors. the amount of

treasury stock purchased cannot exceed the amount avail-

able for distribution to the shareholders which is deter-

mined by specific formula. Under the Companies act,

stock acquisition rights are presented as a separate com-

ponent of equity. the Companies act also provides that

companies can purchase both treasury stock acquisition

rights and treasury stock. such treasury stock acquisition

rights are presented as a separate component of equity or

deducted directly from stock acquisition rights.

assumptions used for the years ended March 31, 2012 and 2011 were as follows:

2012 2011

discount rate 2.0–5.0% 2.8–5.5%

expected rate of return on plan assets 0.0–7.0% 0.0–7.0%

amortization of prior service cost Mainly 10 years Mainly 10 years

amortization of actuarial gain Mainly 10 years Mainly 10 years


10. income taxesthe tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabili-

ties at March 31, 2012 and 2011 were as follows:


Us dollars

2012 2011 2012

deferred tax assets:

Provision for retirement benefits ¥ 335 ¥ 316 $ 4,080

tax loss carryforwards 38,984 39,825 474,314

impairment loss on investment securities 2,565 3,241 31,203

Provision for bonuses 4,063 3,322 49,432

write-down of inventories 3,814 3,525 46,408

accrued expenses resulting from transfer of pension plan 421 1,650 5,119

impairment loss on investments in consolidated subsidiaries 1,737 7,021 21,130

other 8,288 9,429 100,855

less: valuation allowance (54,964) (63,084) (668,745)

total ¥ 5,243 ¥ 5,245 $ 63,796

deferred tax liabilities:

Property, plant and equipment ¥ (833) ¥ (979) $ (10,135)

Undistributed earnings of consolidated subsidiaries outside Japan (193) (150) (2,349)

net realized gain on available-for-sale securities (563) (542) (6,852)

other (172) (469) (2,093)

total ¥ (1,761) ¥ (2,140) $ (21,429)

net deferred tax assets ¥ 3,482 ¥ 3,105 $ 42,367

net deferred tax assets are included in the following accounts in the accompanying consolidated balance sheet:


Us dollars

2012 2011 2012

Current assets—deferred tax assets ¥ 3,087 ¥ 2,829 $ 37,560

investments and other assets—deferred tax assets 1,960 2,077 23,844

Current liabilities—other (59) (128) (716)

long-term liabilities—other (1,506) (1,673) (18,321)

net deferred tax assets ¥ 3,482 ¥ 3,105 $ 42,367

a reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying

consolidated statement of operations for the years ended March 31, 2012 and 2011 was as follows:

2012 2011

normal effective statutory tax rate 40.7% 40.7 %

Permanent differences

expenses not deductible for income tax purposes 7.0 (66.4)

dividend income and other non-taxable income (1.7) 9.0

equity in earnings of affiliates (0.6) 24.0

Changes in valuation allowance 39.4 (812.8)

lower income tax rates applicable to certain consolidated subsidiaries outside Japan (30.5) 318.1

effect of consolidated tax return in Japan (12.1)

other—net 1.8 (12.2)

actual effective tax rate 44.0% (499.6)%

on december 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective tax rate from approxi-

mately 41% to 38% effective for the fiscal years beginning on or after april 1, 2012 through March 31, 2015, and to 35% there-

after. the effect of this change on the consolidated financial statements was not material.


12. leasesthe Group leases certain machinery, equipment and vehicles,

tools, furniture and fixtures and other assets.

the Group accounts for leases which existed at the transi-

tion date on april 1, 2008 and do not transfer ownership of

the leased property to the lessee as operating lease transac-

tions. Pro forma information of such leases existing at the

transition date on an “as if capitalized” basis for the years

ended March 31, 2012 and 2011 was as follows:

Finance lease assets


Us dollars

2012 2012

acquisition cost

accumulated depreciation

accumulated impairment loss

Balance as of March 31, 2012


tools, furniture and fixtures ¥282 ¥191 ¥6 ¥85 $1,036

Millions of yen

2011

acquisition cost

accumulated depreciation

accumulated impairment loss


Buildings and structures ¥ 9 ¥ 8 ¥ 1

Machinery, equipment and vehicles 69 52 ¥11 6

tools, furniture and fixtures 571 407 164

intangible assets 52 45 7

total ¥701 ¥512 ¥11 ¥178

the acquisition cost includes the imputed interest expense portion.

obligations under finance leases


Us dollars

March 31 March 31

2012 2011 2012

due within one year ¥36 ¥ 93 $ 444

due after one year 49 85 592

¥85 ¥178 $1,036

the allowance for impairment loss on leased property of ¥2 million (Us$19 thousand) and ¥6 million as of March 31, 2012 and

2011, respectively, was not included in the obligations under finance leases.

depreciation expense, interest expense, and other information under finance leases:


Us dollars

March 31 March 31

2012 2011 2012

lease payment for the year ¥102 ¥155 $1,237

Reversal of allowance for impairment loss on leased property 2 3 20

depreciation expense 100 152 1,217

depreciation expense, which is not reflected in the accompanying consolidated statement of operations, is computed using the

straight-line method over the lease terms assuming no residual value.

11. Research and development CostsResearch and development costs charged to income were ¥27,472 million (Us$334,252 thousand) and ¥29,180 million for the

years ended March 31, 2012 and 2011, respectively.


the minimum rental commitments under non-cancelable operating leases at March 31, 2012 were as follows:


Us dollars

due within one year ¥1,469 $17,873

due after one year 3,293 40,067

¥4,762 $57,940

13. Financial instruments and Related disclosures1. information regarding financial instruments

a. Group policy on financial instruments

Based on the Group’s capital expenditure program for the

industrial automation and control business and the test and

measurement business, the Group uses financial instruments

such as bank loans to get necessary funding. Cash surpluses

are invested in low risk financial assets. short-term bank

loans are used to fund ongoing operations. derivatives are

used to manage exposure to financial risks as described in

note 14 and are not used for speculative purposes.

b. nature of the financial instruments and risk management

Receivables such as trade notes and trade accounts are

exposed to customer credit risk. those securities are mainly

issued by the Group’s customers and suppliers, and are

managed by monitoring market value and financial position of

issuers on a regular basis.

investment securities are exposed to the risk of market

price fluctuations. the Group reviews its holdings of these

securities, whose issuers are mainly its customers and sup-

pliers, by regularly checking their market value and the finan-

cial position of the issuers.

Payment terms of payables such as trade notes and trade

accounts are less than one year.

long-term debts are used for capital expenditures and

investments. in order to manage exposure to market risks

from fluctuations in interest rates, the Group principally uses

fixed rate contracts; otherwise, interest swap contracts are

used for variable rate loans.

Foreign currency trade receivables and payables are

exposed to market risk resulting from fluctuations in foreign

currency exchange rates. such foreign exchange risk is

hedged principally by foreign currency forward contracts and

range forward options.

Basic policies on derivative transactions are set out in the

Group’s internal guidelines. the guidelines prescribe a control

policy, designate authorized departments, specify the pur-

pose of the transactions, define the basis for selecting finan-

cial institutions, and specify the reporting route.

the fair value of financial instruments is based on the

quoted price in an active market. if the quoted price is not

available, other valid valuation techniques are used.


2. Fair value of financial instruments

the carrying amounts in the consolidated balance sheet, fair value, and unrealized gain (loss) as of March 31, 2012 and 2011

were as follows.

in addition, financial instruments, of which it is extremely difficult to measure the fair value, are not included. Please see note

2 hereinafter.

Millions of yen

2012

Carrying amount Fair value

Unrealized gain (loss)

(1) Cash and cash equivalents ¥ 53,430 ¥ 53,430

(2) Receivables—trade notes and trade accounts 110,541

less: allowance for doubtful accounts (3,247)

107,294 107,294

(3) investment securities 14,475 14,475

total ¥175,199 ¥175,199

(1) short-term loans payable ¥ 10,688 ¥ 10,688

(2) Payables—trade notes and trade accounts 30,659 30,659

(3) Payables—other 8,070 8,070

(4) income taxes payable 3,308 3,308

(5) long-term loans payable 92,933 93,389 ¥456

total ¥145,658 ¥146,114 ¥456

derivatives ¥ (213) ¥ (213)

Millions of yen

2011



(1) Cash and cash equivalents ¥ 57,335 ¥ 57,335

(2) Receivables—trade notes and trade accounts 103,492


100,317 100,317


total ¥171,943 ¥171,943

(1) short-term loans payable ¥ 6,072 ¥ 6,072




(5) long-term loans payable 105,221 106,135 ¥914

total ¥156,198 ¥157,112 ¥914

derivatives ¥ (146) ¥ (146)



2012



(1) Cash and cash equivalents $ 650,079 $ 650,079

(2) Receivables—trade notes and trade accounts 1,344,941


1,305,434 1,305,434


total $2,131,627 $2,131,627

(1) short-term loans payable $ 130,034 $ 130,034




(5) long-term loans payable 1,130,716 1,136,259 $5,543

total $1,772,206 $1,777,749 $5,543

derivatives $ (2,593) $ (2,593)

notes:1. Fair value measurement of financial instruments

Cash and cash equivalents, trade notes and accounts receivable:

the carrying values of cash and cash equivalents, trade notes and accounts receivable less an allowance for doubtful accounts, approximate fair value

because of their short maturities.

investment securities:

the fair value of equity instruments is measured at the quoted equity market price, and the fair value of debt instruments is measured at the quoted price

obtained from the respective financial institution. information on the fair value of each class of investment securities is included in note 3.

short-term loans payable, trade notes and accounts payable, other payable and income taxes payable:

the carrying values of short-term loans payable, trade notes and accounts payable, other payable and income taxes payable approximate fair value because of

their short maturities.

long-term loans payable:

the fair value of long-term loans payable is determined by discounting cash flows related to the debt at the Group’s assumed corporate borrowing rate. long-

term loans payable are included in the following accounts in the accompanying consolidated balance sheet: current portion of long-term debt and long-term debt.

long-term other payables:

the fair value of long-term other payables is determined by discounting cash flows divided by certain time intervals at the appropriate rates. long-term other

payables are included in the following account in the accompanying consolidated balance sheet: long-term liabilities—other.

derivatives

information on the fair value of derivatives is included in note 14.

2. Financial instruments whose fair value cannot be reliably determined

Carrying amount

Millions of yen Millions of yenthousands of Us

dollars

March 31, 2012 March 31, 2011 March 31, 2012

Unlisted equity securities ¥17,375 ¥17,440 $211,397

Maturity analysis for financial assets and securities with contractual maturities

Millions of yen thousands of Us dollars

March 31, 2012 March 31, 2012

due in one year or less

due after one year through

five yearsdue in

one year or less

due after one year through

five years

Cash and cash equivalents ¥ 53,430 $ 650,079

Receivables—trade notes and accounts 110,391 ¥150 1,343,120 $1,821

investment securities

held-to-maturity securities 0 0

total ¥163,821 ¥150 $1,993,199 $1,821


14. derivativesderivative transactions are used to manage foreign exchange risk and the risk of market rate fluctuations that occur in the

normal course of business. the Group does not use derivatives for speculative purposes or for highly leveraged transactions.

1. derivative transactions to which hedge accounting was not applied at March 31, 2012 and 2011

Millions of yen

2012

Contract amount

totaldue over one year Fair value


Forward exchange contracts

selling contracts

Us dollar ¥ 5,258 ¥(110) ¥(110)

other 212 (5) (5)

Buying contracts

Us dollar 856 (50) (49)

other 1,616 2 1

Currency options

selling contracts

Call

Us dollar 3,288

(option premium) (—)

Buying contracts

PUt

Us dollar 2,038 (63) (63)


Currency swaps 1,467 ¥775 25 25

total ¥14,735 ¥775 ¥(201) ¥(201)


Millions of yen

2011

Contract amount




selling contracts

Us dollar ¥ 5,546 ¥ 61 ¥ 61

other 382 ¥74 (3) (3)

Buying contracts

Us dollar 2,049 (93) (93)

other 50 (1) (1)

Currency options

selling contracts

Call

Us dollar 6,352


Buying contracts

PUt

Us dollar 3,126 93 93


Currency swaps 2,888 (20) (20)

total ¥20,393 ¥74 ¥ 37 ¥ 37


2012

Contract amount




selling contracts

Us dollar $ 63,968 $(1,339) $(1,339)

other 2,580 (66) (66)

Buying contracts

Us dollar 10,416 (600) (600)

other 19,666 22 22

Currency options

selling contracts

Call

Us dollar 40,000


Buying contracts

PUt

Us dollar 24,800 (761) (761)


Currency swaps 17,854 $9,434 298 298

total $179,284 $9,434 $(2,446) $(2,446)


2. derivative transactions to which hedge accounting was applied at March 31, 2012 and 2011

Millions of yen

2012

Contract amount

hedged item totaldue over one year Fair value


Buying contracts

Us dollar Payables ¥ 1,843 ¥(12)

interest rate swaps

Pay fixed/Receive floating long-term debt ¥54,000 ¥54,000 note 2

Millions of yen

2011

Contract amount



Buying contracts

Us dollar Payables ¥ 4,262 ¥(183)

interest rate swaps

Pay fixed/Receive floating long-term debt ¥66,000 ¥26,000 note 2


2012

Contract amount



Buying contracts

Us dollar Payables $ 22,421 $(147)

interest rate swaps

Pay fixed/Receive floating long-term debt $657,014 $657,014 note 2

notes: 1. the above interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential

paid or received under the swap agreements is recognized and included in interest expense or income.

2. the fair value of such interest rate swaps is included in that of hedged items disclosed in note 13.

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

contract or notional amounts of the derivatives shown in the above table do not represent the amounts exchanged by the parties

and are not a measure of the Group’s exposure to credit or market risk.

Currency options are zero cost options.


15. Commitment line agreementsthe Company has commitment line agreements with financial institutions in order to obtain funds for stable and efficient operation.

the commitment line of credit as of March 31, 2012 and 2011 was as follows:


Us dollars

2012 2011 2012

total commitment line of credit ¥40,000 ¥30,000 $486,677

outstanding borrowings (904) — (11,000)

Unused credit line ¥39,096 ¥30,000 $475,677

16. Restructuring Related expensesRestructuring costs for the year ended March 31, 2012 con-

sisted mainly of the cost relating to discontinued operations

of ¥1,506 million (Us$18,329 thousand), impairment loss for

the fixed assets of ¥951 million (Us$11,571 thousand) and

reorganization cost of ¥755 million (Us$9,186 thousand).

Restructuring costs for the year ended March 31, 2011

consisted mainly of special retirement benefit expenses and

retirement related costs of ¥6,732 million and the Compa-

ny’s reorganization costs of ¥67 million.

17. Contingent liabilitiesat March 31, 2012, the Group had the following contingent liabilities:


Us dollars

2012 2012

Guarantees and similar items of bank loans ¥94 $1,138


18. Comprehensive incomethe components of other comprehensive income for the year ended March 31, 2012 were as follows:


Us dollars

2012 2012

net unrealized gain on available-for-sale securities:

Gains arising during the year ¥ 206 $ 2,511

Reclassification adjustments to profit or loss 156 1,893

amount before income tax effect 362 4,404

income tax effect (21) (260)

total ¥ 341 $ 4,144

deferred gain (loss) on derivatives under hedge accounting:

Gains arising during the year ¥ 66 $ 806

Reclassification adjustments to profit or loss 130 1,582

amount before income tax effect 196 2,388

income tax effect ( 50) ( 608)

total ¥ 146 $ 1,780

adjustment relating to pension liability:

adjustments arising during the year ¥ (498) $ (6,053)

Reclassification adjustments to profit or loss 25 296

amount before income tax effect (473) (5,757)

income tax effect 170 2,073

total ¥ (303) $ (3,684)

Foreign currency translation adjustments:

adjustments arising during the year ¥(2,189) $(26,637)

Reclassification adjustments to profit or loss

amount before income tax effect (2,189) (26,637)

income tax effect 69 844

total ¥(2,120) $(25,793)

share of other comprehensive income in affiliates-

Gains arising during the year ¥ (4) $ (45)

total ¥ (4) $ (45)

total other comprehensive income ¥(1,940) $(23,598)

the corresponding information for the year ended March 31, 2011 is not required under the accounting standard for presentation of

comprehensive income, and is not disclosed herein as disclosure is exempted for the first year in which the standard was adopted.

19. Per share informationBasic net income per share (ePs) for the years ended March 31, 2012 and 2011 was as follows:

Millions of yenthousands

of shares Yen dollars

net income (loss)

weighted average shares ePs

2012

Basic ePs

net income attributable to common shareholders ¥ 5,952 257,550 ¥ 23.11 $ 0.28

2011

Basic ePs

net loss attributable to common shareholders ¥(6,693) 257,563 ¥(25.98) $(0.31)

diluted net income per share is not disclosed because there were no dilutive securities in the years ended March 31, 2012 and 2011.


20. subsequent events1. the Company concluded a contract to sell to Mitsubishi

Jisho Residence Co., ltd. 5,268.80 m2 of land located at

2-2977-22 nakacho, Musashino-shi, tokyo. the rights to the

property were transferred on april 27, 2012.

the Company and Mitsubishi Jisho Residence Co., ltd. are

unrelated parties.

the Company is expected to record ¥3,734 million

(Us$45,434 thousand) in income for the year ending March

31, 2013.

2. appropriations of Retained earnings

the Board of directors proposed the following appropriations

of retained earnings, at March 31, 2012, which is subject to

approval at a general meeting of the shareholders of the

Company to be held on June 27, 2012:


Us dollars

Year-end cash dividends, ¥5 (Us$0.06) per share ¥1,288 $15,668

Under asBJ statement no. 17, “accounting standard for

segment information disclosures” and asBJ Guidance no.

20, “Guidance on accounting standard for segment informa-

tion,” an entity is required to report financial and descriptive

information about its reportable segments. Reportable seg-

ments are operating segments or aggregations of operating

segments that meet specified criteria. operating segments

are components of an entity about which separate financial

information is available and such information is evaluated

regularly by the chief operating decision maker in deciding

how to allocate resources and in assessing performance.

Generally, segment information is required to be reported on

the same basis as is used internally for evaluating operating

segment performance and deciding how to allocate resources

to operating segments.

1. description of reportable segments

the Group’s reportable segments are those for which sepa-

rate financial information is available and regular evaluation

by the Company’s management is being performed in order

to decide how resources are allocated among the Group. the

Group operates in three business segments: industrial auto-

mation and control, test and measurement, and other

businesses.

the industrial automation and control business offers

comprehensive solutions including field instruments such as

flowmeters, differential pressure/pressure transmitters, and

process analyzers; control systems and programmable con-

trollers; various types of software that enhance productivity;

and services that minimize plant lifecycle costs.

the test and measurement business offers waveform mea-

suring instruments, optical communications measuring instru-

ments, signal generators, and electric voltage, current, and

power measuring instruments; semiconductor testers for

memory and lCd drivers; and confocal scanners for observa-

tion of live cells.

the other businesses segment mainly offers cockpit flat-

panel displays, engine meters, and other instruments for

aviation use; marine navigation equipment such as gyrocom-

passes and autopilot systems; and meteorological/hydrologi-

cal monitoring system equipment.

2. accounting methods for each reportable segment’s sales,

income (loss), assets, and other items

the accounting policies for each reportable segment are

consistent with those disclosed in note 2, “summary of

significant accounting Policies.”

the income or loss for each reportable segment corre-

sponds to the operating income or loss in the consolidated

statement of operations.

the assets of a reportable segment consist of “Receiv-

ables—trade notes and trade accounts, inventory, property,

plant and equipment, and intangible assets.”

21. segment information


3. information about sales and operating income (loss), assets and other items

Millions of yen

2012

Reportable segment

industrial automation and

controltest and

measurement othereliminations/

Corporate Consolidated

sales to customers ¥277,185 ¥34,580 ¥22,904 ¥334,669

intersegment sales 1,949 6,377 485 ¥(8,811)

total sales 279,134 40,957 23,389 (8,811) 334,669

segment income (loss) 19,896 (3,572) 278 16,602

segment assets 195,762 32,825 23,611 121 252,319

depreciation and amortization 10,535 1,417 804 12,756

impairment loss 261 1,047 108 1,416

increase in property, plant and equipment and intangible assets 8,814 1,034 1,295 11,143

amortization of goodwill 123 123

Goodwill 1,695 1,695

Millions of yen

2011

Reportable segment


controltest and



sales to customers ¥260,665 ¥37,076 ¥27,880 ¥325,621

intersegment sales 1,587 6,011 509 ¥(8,107)

total sales 262,252 43,087 28,389 (8,107) 325,621

segment income (loss) 16,464 (6,391) 1,006 11,079

segment assets 192,762 34,274 22,958 169 250,163

depreciation and amortization 10,639 2,172 1,025 13,836

impairment loss 306 378 24 708

increase in property, plant and equipment and intangible assets 8,929 884 1,524 11,337

amortization of goodwill 126 126

Goodwill 1,823 1,823


2012

Reportable segment


controltest and



sales to customers $3,372,491 $420,732 $278,670 $4,071,893

intersegment sales 23,713 77,589 5,901 $(107,203)

total sales 3,396,204 498,321 284,571 (107,203) 4,071,893

segment income (loss) 242,073 (43,460) 3,381 201,994

segment assets 2,381,821 399,375 287,278 1,472 3,069,946

depreciation and amortization 128,182 17,244 9,781 155,207

impairment loss 3,182 12,735 1,317 17,234

increase in property, plant and equipment and intangible assets 107,234 12,581 15,768 135,583

amortization of goodwill 1,491 1,491

Goodwill 20,622 20,622


notes: 1. as discussed in note 2f, effective april 1, 2011, the Company and its consolidated subsidiaries in Japan changed the depreciation method from the declining-

balance method to the straight-line method. the effects of this change were to increase the segment income of industrial automation and control business by

¥1,167 million (Us$14,202 thousand), to decrease the segment loss of test and measurement business by ¥465 million (Us$5,652 thousand) and to

increase the segment income of other businesses by ¥155 million (Us$1,884 thousand).

2. as discussed in note 2i, effective april 1, 2011, the Company changed to record some product development costs in general and administrative expenses,

which were previously recorded in manufacturing costs. the effects of this change were to decrease industrial automation and control business segment

income by ¥455 million (Us$5,534 thousand), to increase test and measurement business segment operating loss by ¥14 million (Us$176 thousand) and to

decrease other businesses’ operating income by ¥1 million (Us$9 thousand).

3. an impairment loss of ¥951 million (Us$11,571 thousand) on the assets of test and measurement business segment is included as a restructuring cost in

the consolidated statement of operations. Please see note 16 for the details.

4. information about geographical areas

a. sales

Millions of yen

2012

Japan asia europe north america Middle east other total

sales ¥135,786 ¥87,288 ¥26,366 ¥21,276 ¥27,815 ¥36,138 ¥334,669

Millions of yen

2011


sales ¥140,920 ¥77,038 ¥26,844 ¥20,997 ¥22,953 ¥36,869 ¥325,621


2012


sales $1,652,098 $1,062,022 $320,798 $258,864 $338,425 $439,686 $4,071,893

note: sales are categorized in each country or area based on the location of customers.

b. Property, Plant and equipment

Millions of yen

2012


¥58,097 ¥10,687 ¥5,866 ¥2,002 ¥1,070 ¥439 ¥78,161

Millions of yen

2011


¥60,826 ¥10,344 ¥6,510 ¥2,176 ¥786 ¥460 ¥81,102


2012


$706,860 $130,028 $71,375 $24,363 $13,014 $5,334 $950,974

5. information about major customers

no customer accounts for 10% or more of total sales of the Group.


RePoRt oF indePendent aUditoRs


sUBsidiaRies and aFFiliatesas of March 31, 2012

area/Company name

investment Ratio: ( ) indicates second-tier subsidiary

Business segment

subsidiary/affiliate

north americaUnited States

Yokogawa Usa, inc. 100 H NYokogawa Corporation of america (100) n/s NYokogawa nuclear solutions, llC (100) n/s NCanada

Yokogawa Canada, inc. (100) n NMexico

Yokogawa de Mexico, s.a. de C.v. (100) n NYokogawa engineering services de Mexico, s.a. de C.v. (100) n N

south americaBrazil

Yokogawa america do sul ltda. 100 n/s NYokogawa service ltda. (100) n N

europeNetherlands

Yokogawa europe B.v. 100 n/s NYokogawa europe solutions B.v. (100) n NYokogawa europe Branches B.v. (100) H NAustria

Yokogawa Gesmbh, Central east europe (100) n NBelgium

Yokogawa Belgium n.v./s.a. (100) n NFrance

Yokogawa France s.a.s. (100) n NGermany

Yokogawa deutschland Gmbh (100) n NRota Yokogawa Gmbh & Co. KG (100) n NHungary

Yokogawa hungaria Kft. (100) n NItaly

Yokogawa italia s.r.l. (100) n/s NSpain

Yokogawa iberia s.a. (100) n/s NSweden

Yokogawa Measurement technologies aB (100) s NUnited Kingdom

Yokogawa United Kingdom limited (100) n NYokogawa Measurement technologies ltd. (100) s NYokogawa Marex limited 100 n NRussia

Yokogawa electric Cis ltd. 100 n/s NYokogawa electric sakhalin ltd. (95) n NKazakhstan

Yokogawa electric Kazakhstan ltd. (99) n NUkraine

Yokogawa electric Ukraine ltd. (99) n N

africaSouth Africa

Yokogawa south africa (Pty) ltd. (100) n/s NNigeria

Yokogawa services solutions nigeria ltd. (49) H NYokogawa nigeria ltd. (100) n N

Middle eastBahrain

Yokogawa Middle east B.s.C.(c) 100 n/s NYokogawa engineering Bahrain sPC (100) n NSaudi Arabia

Yokogawa saudi arabia ltd. 100 n NYokogawa services saudi arabia ltd. 67 n NUnited Arab Emirates

Yokogawa engineering Middle east FZe (100) n N

area/Company name

investment Ratio: ( ) indicates second-tier subsidiary

Business segment

subsidiary/affiliate

oceaniaAustralia

Yokogawa australia Pty. ltd. 100 n/s NNew Zealand

Yokogawa new Zealand ltd. (100) n/s N

asiaSingapore

Yokogawa electric international Pte. ltd. 100 n NYokogawa engineering asia Pte. ltd. (100) n/s NYokogawa electric asia Pte. ltd. 100 n/c NPlant electrical instrumentation Pte. ltd. (51) n NIndonesia

P.t. Yokogawa indonesia (100) n/s NP.t. Yokogawa Manufacturing Batam (100) n NMalaysia

Yokogawa electric (Malaysia) sdn. Bhd. (100) n/s NYokogawa Kontrol (Malaysia) sdn. Bhd. (30) n/s CYokogawa industrial safety systems sdn. Bhd. (100) n NPhilippines

Yokogawa Philippines inc. (100) n/s NThailand

Yokogawa (thailand) ltd. (91) n/s NVietnam

Yokogawa vietnam Company ltd. (100) n NIndia

Yokogawa india ltd. 97.08 n/s NYokogawa ia technologies india Private limited (100) n NChina

Yokogawa China Co., ltd. 100 n/s NYokogawa electric China Co., ltd. 100 n NYokogawa sichuan instrument Co., ltd. 60 n Nsuzhou Yokogawa Meter Company 59.28 s NYokogawa shanghai instrumentation Co., ltd. 60 n NYokogawa shanghai trading Co., ltd. 100 s NYokogawa Process Control (shanghai) Co., ltd. 100 n NYokogawa information systems (dalian) Corporation (100) n N

Yokoshin software engineering (wUXi) Co., ltd. (100) n NKorea

Yokogawa electric Korea Co., ltd. 100 n NYokogawa electronics Manufacturing Korea Co., ltd. 100 n/s N

Taiwan

Yokogawa taiwan Corporation 100 n N

subsidiaries and affiliates in Japanomega simulation Co., ltd. 85.10 n NYdC Corporation 91.00 n NYokogawa & Co., ltd. 50.00 n/s NYokogawa denshikiki Co., ltd. 78.67 c NYokogawa digital Computer Corporation 100 s NYokogawa Field engineering service Corporation 100 n/s N

Yokogawa Foundry Corporation 100 c NYokogawa Manufacturing Corporation 100 n/s NYokogawa Medical solutions Corporation 100 n NYokogawa Meters & instruments Corporation 100 s NYokogawa Pionics Co., ltd. 100 c NYokogawa solutions Corporation 100 n NYokogawa test solutions Corporation 100 s NQ&a Corporation 23.97 c CYokogawa Rental & lease Corporation 47.35 c C

n industrial automation and Control Businesss test and Measurement Businessc other Businesses

Hholding companyN subsidiaryC affiliate


INVEsTOR INFORMATIONAs of March 31, 2012

Number of shares Authorized 600,000,000

Number of shares of Common stock Issued 268,624,510

Number of shareholders 29,405

stock Exchange listing Tokyo stock Exchange

Administrator of the Register of shareholders Mizuho Trust & banking Co., ltd.

1-2-1 Yaesu, Chuo-ku, Tokyo 103-8670, Japan

Annual shareholders Meeting The annual general meeting of shareholders of the Company is held in June.

Accounting Auditors Deloitte Touche Tohmatsu llC

Major shareholders (Top 10)

shareholdersNumber of shares held

(shares)shareholding ratio

(%)

The Master Trust bank of Japan, ltd. (trust account) 22,056,400 8.21

The Dai-Ichi life Insurance Company, limited 15,697,000 5.84

Japan Trustee services bank, ltd. (trust account) 14,693,300 5.46

Nippon life Insurance Company 14,284,615 5.31

Yokogawa Electric Employee shareholding Program 9,168,597 3.41

Retirement benefit Trust in Mizuho Trust & banking Co., ltd.

(Mizuho Corporate bank, ltd. account);

Trust & Custody services bank, ltd. as a Trustee of Retrust

6,643,990 2.47

Tokio Marine & Nichido Fire Insurance Co., ltd. 4,694,936 1.74

Morgan stanley Private bank, National Association Pb Client Custody 4,664,400 1.73

Retirement benefit Trust in Mizuho Trust & banking Co., ltd.

(Mizuho bank, ltd. account);

Trust & Custody services bank, ltd. as a Trustee of Retrust

4,617,010 1.71

ssbT OD 05 Omnibus Account-Treaty Clients 3,710,500 1.38

Note: In addition to the above, the Company holds 11,078,187 shares of treasury stock.

CORPORATE DATAAs of March 31, 2012

Corporate Name Yokogawa Electric Corporation

Headquarters 2-9-32 Nakacho, Musashino-shi, Tokyo 180-8750, Japan

Founded september 1, 1915

Incorporated December 1, 1920

Paid-in Capital 43,401,056,425 yen

Number of Employees 19,437 (consolidated)

4,211 (non-consolidated)

subsidiaries and Affiliates 16 subsidiaries and 2 affiliates in Japan

70 subsidiaries and 1 affiliate outside Japan

shareholders

by Category

shareholding

by Category

shareholders by Category Number of shareholders: 29,405

Individual Investors 28,615 (97.31%) Foreign Investors 345 (1.17%) Others 343 (1.16%) Financial Institutions 60 (0.20%) securities Companies 41 (0.13%) Treasury stock 1 (0.00%)

shareholding by Category Number of shares held: 268,624 (thousand)

Financial Institutions 115,496 (42.99%) Foreign Investors 68,801 (25.61%) Individual Investors 46,811 (17.42%) Others 14,678 (5.46%) securities Companies 11,758 (4.37%) Treasury stock 11,078 (4.12%)


Printed in Japan

Corporate Communication

2-9-32 Nakacho, Musashino-shi, Tokyo 180-8750, Japan

Phone: +81-422-52-5530 Facsimile: +81-422-55-6492

http://www.yokogawa.com/

Published in August 2012

Yokogawa E

lectric Corporation

Annual R

eport 20

12

yokogawa electric corporation annual report 2012 our ... · middle east, southeast asia, and...

Documents