Environmental Costs For greater efficiency in environmental protection Basic concepts for calculating costs in fiscal 1999 (1) Costs will be determined at the production and R&D bases of TDK and its domestic subsidiaries. (2) Calculations will be made based on Environmental Agency guidelines. (3) The amount of capital investment in plant and equipment shall be the amount paid in fiscal 1999. (4) Depreciation for equipment is not included in cost calculation. The Reason for Ascertaining Environmental Costs TDK is working to determine environmental costs with the objective of gaining an accurate understanding of the expenses necessary for its corporate activities taken in consideration of environmental preservation, so that it can make managerial decisions to promote more effective environmental preservation activities. As one of the means to determine environmental costs, TDK newly created a special accounting code for a part of environmental costs in October 1999. Future developments In the future, TDK will consider the relationship between environmental costs and the reduction in environmental impact as well as profitability and will consider the introduction of an environmental accounting system. Calculating environmental costs (Fiscal 1999 / Unit: ¥ thousand) Parent company Capital investment Category Item Pollution control measures Atmospheric pollution control Foul smell control Water pollution control Total Capital investment 178,132 114,332 63,800 Expenses Total 20,111 74,452 54,341 9,500 57,598 67,098 260 7,801 8,061 121,978 277,222 399,200 92,485 39,697 132,182 3,035 5,618 8,653 1,891 17,087 18,978 35,300 14,541 49,841 29,205 9,308 38,513 0 197 197 0 3,545 3,545 35,857 348,992 384,849 13,668 264,467 278,135 Sub-total 269,470 818,500 1,087,970 191,850 362,016 553,866 Recycling 3,573 117,777 121,350 0 231,643 231,643 468,948 19,276 488,224 3,296 5,421 8,717 Resource-saving 0 4,274 4,274 13,380 10,089 23,469 Warming control 0 0 0 0 0 0 Protection of the ozone layer 0 0 0 18 439 457 20,640 52,717 73,357 1,401 16,125 17,526 9,986 5,949 15,935 5,578 10,352 15,930 503,147 199,993 703,140 23,673 274,069 297,742 245,587 245,587 772,617 1,264,080 2,036,697 Soil pollution control Noise control Vibration control Waste control Environmental measures Domestic subsidiaries Expenses Energy-conservation Greening Others Sub-total Personnel Total Indirect environmental protection costs (Unit: ¥ thousand) Domestic subsidiaries 10,034 16,675 Education and training 5,857 4,284 Waste oil Information and publication 1,816 5,537 Organic solvents ISO certification 159,318 159,318 795,403 1,010,926 Profit from the sales of commercial-value products (Unit: ¥ thousand) Parent company Item 215,523 Item Sludge Parent company Domestic subsidiaries 30,120 3,251 0 0 1,522 937 10,639 3,870 Waste plastic 1,127 14,313 Personnel 230,238 6,638 Scrap metal 14,344 58,518 Total 258,584 37,004 Scrap paper 413 0 3,365 5,856 147 0 Other incidental outlays Class and ceramics Waste acids and alkalis Other Total 52 0 51,090 82,875 Note: Cost reduction effects resulting from recycling of waste are not included. 22