Annual Report 2010
Year Ended March 31, 2010

Profile

Since its founding in 1954, the Nipro Group has enjoyed continuing growththanks to the trust it has achieved worldwide through the manufacture andsale of medical equipment and pharmaceuticals with a high degree of addedvalue.
The key themes that propel our ongoing growth are the dedicated pursuit oftechnology that helps improve the quality of life of patients and the development of original products in line with our corporate philosophy of contributing
to society through technology-oriented business activities.
The Nipro Group is highly valued in Japan and overseas as an artificial kidneyand dialyzer manufacturer, and is now working to be known equally for
manufacturing artificial hearts, lungs, pericardia, skin, and blood. The Nipro
Group is also actively involved in the generic pharmaceutical industry with thepromotion of injection, oral, and percutaneous absorption drugs.
Centering on the two main areas of medical equipment and pharmaceuticals,
the Nipro Group plans to focus on the research of medical equipment andexpand operations as a comprehensive manufacturer. Currently the Nipro
Group runs companies and branches based in about 60 locations throughout
Europe, Asia and the Americas. Looking to the future, we aim to become oneof the premier manufacturers of artificial organs worldwide and the chief
maker of pharmaceuticals in Japan.

Contents

1
2
3
5
9
11
13
17
18
22
23
27
29
31
32
33
34
47
48

ProfileConsolidated Financial Highlights
At a Glance
A Message to Our Shareholders and Investors
Research and Development
Global Activities
Plant and Equipment
Issues Facing the Company
Status of Corporate Governance, etc.
Board of Directors and Auditors
Financial Review
10 Year Summary
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
Corporate Information

1 Nipro Corporation Annual Report 2010

Disclaimer regarding Forward-looking Statements
This report contains forward-looking statements regarding
business indices, strategies and performance representing the
expectations and judgments of the management, based on
information available to the Company and publishable at the time
this report was prepared.
When reading this report, please understand that forward-looking
statements involve potential risks and uncertainties; actual futurebusiness performance and forecasts may therefore differ
materially from those contained in these statements, given thepossible emergence of new factors or changes in economic
circumstances and/or the business environment.

Consolidated Financial Highlights

Nipro Corporation and its consolidated subsidiaries
Year ended March 31, 2010 and 2009

For the year:
Net sales .........................................................................
Operating income ............................................................
Net income ......................................................................
Capital expenditures .......................................................
Depreciation and amortization ........................................
R&D expenses ................................................................
At the year-end:
Total assets .....................................................................
Net assets (1) ..................................................................
Per share data (in yen and U.S. dollars):
Net income
Basic ...........................................................................
Diluted ........................................................................
Cash dividends ...............................................................
Equity ..............................................................................

Millions of Yen

Thousands of
U.S. Dollars

2010

2009

2010

¥ 177,830
18,094
7,253
15,20918,421
4,846¥ 175,945
14,775
4,531
33,142
18,1095,352$ 1,911,328
194,475
77,955
163,467
197,990
52,085¥ 383,397
114,309¥330,641
95,049$ 4,120,776
1,228,601

¥

114.4
114.1
53.0
1,802.3

¥

71.4
—
32.0
1,498.5

$

1.23
1.23
0.57
19.37

Note:
(1) Effective April 1, 2006, the Company adopted a new accounting standard for presentation of net assets in the balance sheet issued by the Accounting Standard
Board of Japan. In the new accounting standard, net assets refer to the sum of total shareholders’ equity, total valuation and translation adjustments and others,
and minority interests. Minority interests, however, have not been included in net assets above to conform to the prior years’ presentation.
The U.S. dollar amounts in this report represent translaitons of Japanese yen, for convenience only, at the rate of ¥93.04=U.S.$1,
the approximate exchange rate on March 31, 2010.

Nipro Corporation Annual Report 2010 2

At a Glance

Medical Equipment
Main Products• Dialysis-related products• Injection and Intravenous-related
products• Infusion, transfusion and diagnosticrelated products• Intervention and anesthesiologyrelated products
Net Sales Ratio

62%

Net Sales
Operating Income¥110,394 million¥18,162 million

Our wide range of products lends support to people all over theworld working in the medical field as well as to those people fighting
an illness or disease.
We have a significant share of the global market for dialysis-related
products. As a global leader in the manufacture of medical equipment, we have also started our full-scale entry into the field of
diabetes-related products.

In the Japanese market, in addition to
our core Dialyzer product we plan toexpand our range and increase ourmarket share of diabetes-related andvascular-related products.
We are taking the initiative todevelop and promote the sale of ecofriendly products, as well as products
to aid in the prevention of medical
accidents and contamination.
For overseas sales, sales of ourcore products like the Dialyzer and our
dialysis machines, as well as diabetesrelated products, have increased
steadily.

We plan to work on increasing
sales and manufacturing in emerging
markets like China and India where
market demand is expected to
expand. On a global scale we plan toaggressively promote our business fordiabetes-related products by building
upon our acquisition of Home
Diagnostics, Inc. as it transitions to its
new name of Nipro Diagnostics, Inc.

Intervention and anesthesiology-related products
Elastomeric disposable infusion pumps

Dialysis-related products
Dialyzer

Dialysis-related products
Dialysis machine

3 Nipro Corporation Annual Report 2010

Pharmaceutical
Main Products• Injectable drugs• Oral drugs• Combination products (Injectable kit
products)• Dialysis-related medical products

Net Sales Ratio

33%

Net Sales
Operating Income¥57,978 million¥4,625 million

Glass & Materials
Main Products

As Japan’s largest contract manufacturer of pharmaceutical products, our products are sold on their distinctive qualities. Furthermore,
our kit-based pharmaceutical products, which combine our knowhow and technical expertise gained from the fields of medical equipment and pharmaceuticals, contribute to increased safety and convenience on the medical front.

As Japanese society continues toage, as a company we have taken on
board the need to promote generic
medical products as well as promoting the sale of our distinctive medicinal remedies.
Sales of liquid-and-powder
double bag kits, pre-mixed bags,
injectable drugs (such as those sold inplastic ampoules, etc,), oral drugs(such as orally disintegrating tabletsand extended-release tablets) anddialysis-related products increased
steadily.
We are carrying out research,development and manufacturing in allpharmaceutical fields. We plan todevelop various contract manufacturing businesses.
We continue to promote researchand development in a variety of fields,
including biosimilars, artificial bloodand drug delivery systems (DDS).

Combination products (Injectable kit products)
Half-type kits

We supply high-performance and high-quality glass products for
medical, chemical and industrial use. Our glass products are heat-,
impact- and chemically-resistant and are manufactured to a highdegree of precision for medical and industrial use.

• Vials and bottles• Thermos bottles• Glass products for lighting purposes

Net Sales Ratio

Net Sales
Operating Income

5%¥8,668 million¥1,925 million

We continue to drive innovation inglass processing technologies, inaddition to working on research anddevelopment. We also promote salesof our thermos bottles, glass products
for lighting purposes and pharmaceuticals (such as ampoules and vials).
We plan to expand sales toforeign pharmaceutical companies aswell as markets overseas. We alsoplan to promote joint businessventures and develop local manufacturing and sales of pharmaceuticalcontainers such as ampoules andglass bottles.

Vials and bottles

Nipro Corporation Annual Report 2010 4

A Message to Our Shareholders and Investors

Both sales and profit increased despite
the continued stagnation of the global economy
Overview of Business Activities and Results during theCurrent Fiscal Year
We were able to achieve increased sales and profit throughthe development of advanced medical equipment and the
expansion of our pharmaceutical business, allied with further
improvements in our production efficiency and the development of our global business.
The future continues to beunclear due to the fallout ofan unprecedented financial
crisis that has rocked theglobal economy, but the Nipro
Group of Companies has
been able to achieve increased sales and profit
thanks to its active worldwide
development and its steadymanagement policies.

During the current fiscal year ended
March 2010, despite the success ofthe stimulus packages implemented
by various countries around the worldthat led to a recovery in someregions, the global economy continued to be in the doldrums due to theeffect of the Dubai debt crisis and thefiscal problems of Greece.
Furthermore, the Japanese economy
was unable to escape from its senseof stagnation and many enterprises
have been compelled to manage
their businesses under what are very
challenging economic conditions.

Under this difficult management
environment, we have been expanding production and sales, concentrating on the field of products where
quantitative expansion is expected,
as well as a thorough drive to reduce
costs, as we strived to secure profits.
Thanks to the success of this approach, consolidated sales for thisterm were ¥177.8 billion (up by 1.1%
on the previous year), operating
income was ¥18.1 billion (up by
22.5% on the previous year) on aconsolidated basis. An increase wasachieved in both sales and profit.

Business Strategy
We are putting all of our efforts into attaining our long-termgoals of ¥500 billion in consolidated sales by fiscal 2020 andgrowing this to ¥1 trillion by fiscal 2030.
As a group of companies we havecome together under a new unified
management vision with a target of¥500 billion in consolidated sales by
fiscal 2020 and growing this to ¥1
trillion by fiscal 2030. Looking
forward, as we look to expand ourcapabilities in terms of manufacturing
and sales as well as making oursystems more efficient, all of our

55 Nipro Corporation Annual Report 2010energies are committed to achieving
these goals.
Firstly, with regard to our medical
equipment business we need to
grow overseas at a more rapid pacethan our current rate of expansion.
We cannot expect the population ofJapan to increase above current
levels and we cannot expect any

Minoru Sanosignificant increase in the number of
medical equipment products supplied by the Nipro Group. The needfor increased competitiveness,delivered through cost reduction bymass production, is enshrined in thebusiness model of the Nipro Group.
Demand overseas is expected to
grow and we are working on promoting sales by aiming to supply medical
products, especially to some of the 4billion people that form what is
known as the BOP*. In the overseas
market, particularly in markets in
newly-emerging nations, sales prices
are low and as such we have to use
a growth strategy based on corresponding production costs or we will
not be able to expand. During thecurrent fiscal year we launchedprojects to construct new plants in
India and China. Our development
going forwards sees us expanding
our production facilities overseas,
hand-in-hand with expanding oursales.
*BOP: Acronym for “Bottom of the Pyramid”. Thisrefers to the global population subsistingon low incomes, currently measured atsome 4 billion people.

Moreover, we expect demand toincrease for our core product, thedialyzer (artificial kidney), all the
products that we manufacture
related to dialysis and also the
products we manufacture related todiabetes. In particular the sensors

President

used by diabetes patients to measure
their blood glucose levels is already ahuge market and we expect that the
rapid surge in growth shown in thismarket in newly emerging nations, inparticular in South-East Asia, willcontinue. We will concentrate ourefforts on achieving our aim of
becoming the market leader in boththe fields of dialysis and diabetes.
With these goals in mind, this fiscal
year saw the acquisition of HDI(Home Diagnostics Inc., based in
Florida, USA; company namechanged to Nipro Diagnostics, Inc.
following the acquisition), a company
that possesses excellent production
technology required to produce

Nipro Corporation Annual Report 2010 6

blood glucose level measuring
instruments for use in the home.
Looking forward, we have great
expectations with regard to thesynergies created by bringing together the outstanding production
technology of Nipro Diagnostics, Inc.
with the global sales network of the
Nipro Group.
With regard to our pharmaceuticalbusiness, by leveraging all of thestrengths of the Nipro Group in termsof research, development andproduction in all fields of pharmaceuticals including capsules, pills,
powder and granules, we havealready risen to the top of the Japanese domestic market for contract
manufacturers of pharmaceuticals.
However, not wishing to rest on ourlaurels, in order to expand going
forward, we are expanding our
production capabilities with regard to
biologicals and anti-cancer drugs.
Furthermore, with regard to genericdrugs, by pouring our efforts into avariety of channels to market, suchas facilities that have introduced the
DPC* system, dispensing pharmacy
groups, etc. we keep our costs low
whilst continuing to increase ournumber of products. Going forward,
we are planning for a system thatallows the Nipro Group to sell its
generic drugs all over the world.
*DPC: Acronym for “Diagnosis Procedure
Combination”, a blanket payment systemfor charges accrued following hospitalization for an acute condition

With regard to our glass and materials business, we are aiming todevelop markets overseas for our
glass items for medical use, such as
ampoules and vials, etc. During thisfiscal year we began joint ventureswith a number of local businesses in

Dividend Policy
Based upon the Nipro Group dividend policy of a 50% payout ratio on aunitary basis, our dividend for the fiscal year was ¥53 per share.
The Nipro Group has adopted aperformance-based set of profitsharing rules (a sliding scale basedon the results of the business) todecide remuneration with regard toshareholders, employees and senior
management. Its basic stancetowards dividends is to aim at a 50%
payout ratio on a unitary basis.

This year, the Nipro Group paid aninterim dividend of ¥23.5 per share.
At the end of the full fiscal year, theyear-end dividend was paid at ¥29.5
per share, giving a total dividend forthe fiscal year of ¥53 per share.
We also plan to pay dividends basedon this dividend policy in the next
fiscal year as well.

Prospects for the Next Fiscal Year
Our plan is to expand our manufacturing capabilities, increase our costcompetitiveness and, by promoting the expansion of our sales and ourbusiness performance, become a company that is able to respond tothe challenges of the global market.
Although the global economy continues to stagnate due to the aftereffects of the financial crisis, perhaps
we can say that we have made it past
the period of greatest peril. The Greek
debt scare was a timely reminder that
we cannot let our guard down, but
we are continuing to make boldinvestments in our facilities as part ofour plans to expand our manufacturing and sales capabilities.
More than 10 years ago we declared
our long-term management targets
for fiscal 2010, which was to develop
our business to the point where sales
would reach ¥200 billion on a consolidated basis. The next fiscal year is
our long-awaited target term.

7 Nipro Corporation Annual Report 2010

countries such as China, etc. and thisis an approach we aim to takemainstream going forward as this issomething we will require to succeedin these regions and become theglobal leader therein.

In terms of sales, operating as we arein a period of intense fluctuations in
the global economy, each of ourbusinesses is working steadily tobear fruit from their labors and as aresult we are planning to attain our
long-term management target withsales predicted to be ¥206 billion (upby 15.8% on the previous year) on aconsolidated basis.
In terms of income, our businesses
have experienced the downside of avery strong yen these past few years
and so we continue to implement
thorough cost-reduction measures.
As a result we project an operating
income of ¥17.2 billion (down by
4.9% on the previous year) on aconsolidated basis.

Towards Becoming a Truly Global Corporation
With an emphasis on CSR, we will vigorously push forward towards ouraim of becoming a truly global business.
The foremost aim of the Nipro Group
is to be a company that takes its
CSR (Corporate Social Responsibility) seriously. Going forward, companies that do not display sensitivity
towards the environment will not betolerated. Furthermore, we believe
we are putting our CSR activities into
practice through the implementationof a BOP approach to our development overseas as well as the systemof our recruitment and employment
at the local level.
Our management principles are tocontribute to society through ourbusiness activities. We are strivingnight and day to achieve our missionof contributing to society as a global
company that responds to global
needs through the mass-productionof reasonably-priced, high quality
products.
We hope that our shareholders andinvestors will look forward to our
future progress and results, and wewould also like to ask you for yourcontinued support.
July 2010

Minoru Sano
President

Nipro Corporation Annual Report 2010 8

Research and Development
Disclaimer regarding Forwardlooking Statements
The Nipro Group promotes
research and development of both
medical equipment and pharmaceutical products.
Our research and development
focuses on cutting-edge technologies
as well as trying to achieve higher
quality and improved functionality with
our existing products.
We expect to commercialize oneof our cutting-edge products, namely
our nerve regeneration-assisting
device, which uses our uniquebioabsorbable materials, developed
in-house.
We have come close to developing a cell-culturing system thanks toour studies of stem cells in umbilical
blood.
In terms of artificial organs, ourrange of implanted ventricular-assist
devices, developed in cooperation
with an American company, arecurrently at the clinical testing stage
here in Japan.
With regard to the development of
new drugs and new formulation
technologies, further to the commercialization of our powdered dialysis
solutions based on a new and highlyeffective granulation technology, weplan be the first company in Japan tocommercialize a double-bag productfor hemodiafiltration substitution fluids
as well as selling various products
such as pre-filled syringes for safetyuse, thereby contributing to theprevention of medical accidents.
In this consolidated accounting
year, the total cost of R&D activity
was 4.8 billion yen (US$ 52.1 million).

1. Medical Equipment
business
The following research and development activities are performed mainly
through the Nipro Group’s own
Research and Development laboratory.
General-Purpose Medical Equipment
The Nipro Group undertakes researchand development in areas related to

9 Nipro Corporation Annual Report 2010

infusions, catheters, fertility treatment, safety-related products andmedical equipment for testing andtreating diabetes.
For infusion-related products,
development focused on infusion
sets, a hood connector system, aneedleless three-way stopcock with achemical resistant connector and, a
new type of precision infusion set.
For catheter-related products, wedeveloped antithrombotic central
venous catheters, catheters for newborn and premature infants, multilumenseldinger catheters as well as
peripheral-vein central-venous
catheters.
Our development of fertility
treatment-related products focusedon cova needles, embryo transfer
catheters, sperm injection catheters
as well as artificial insemination byhusband catheters.
With regard to safety-related
products, our development program
touched on SAFETOUCHTM AVFs,
SAFETOUCHTM PSVs,
SAFETOUCHTM cannulas (clamptype) and SAFETOUCHTM corelessneedles.
With regard to clinical testingproducts, our development program
looked at blood collection tubes andneedles with flash-bag functionality.
For diabetes treatment-related
products, we developed infusion sets
for insulin pumps.
Intervention-Related Medical
Equipment
Our development program resulted in
the introduction of circulatory-organrelated medical equipment used inintervention treatment and diagnosis.
For our cardiovascular catheterrelated products there were developments in new PTCA balloon catheters, blood-clot trapping catheters,
guiding catheters, thrombus vacuum
aspiration catheters and stents.
For our peripheral blood vessel
catheter-related products, development moved forward with regard to
PTA catheters and peripheral stents.

Artificial Organ-Related Medical
Equipment
The Nipro Group continued to focus
on its core products in the field ofartificial kidney-related equipment aswell as engaging in the development
and introduction of products such as
artificial heart-lungs and heart-related
medical equipment used in thetreatment of circulatory and respiratory organs.
With regard to our artificial kidneyrelated products, we worked on thedevelopment of dialysis machines,
dialyzers, blood access products andblood circuits.
With our artificial heart- and lungrelated products, progress was madein developing oxygenators, perfusion
tubing sets, centrifugal blood pumps,
venous reservoirs,
hemoconcentrators, PCPS kits,
percutaneous catheter kits andimplantable ventricular assist devices.
Regenerative Medicine
We are developing regenerative
medicine-related products such as
bag systems for culturing cells, bagsystems for preserving cells as well as
regenerative medicine products that
stimulate and take advantage of theself-healing abilities of tissues andorgans.
Our development program madeprogress in nerve-regeneration tubes,
pericardium regenerative support
membranes, new-type cell culturebags filled with medium islet and cellfreezing containers.
Pharmaceutical Containers
In cooperation with several pharmaceutical companies, our Pharmaceutical Research Center developed
medical equipment as well as kit
containers for equipment and pharmaceuticals. This included doublebag kits for various pharmaceuticals
and pre-filled syringes as well as
exposure prevention device for cancer
drugs.

In Vitro Diagnostics (IVD)
The Nipro Group developed new
IVD’s useful for early diagnosis andmonitoring the effects of treatment,
as well as a POCT system thatleverages medical device technology
when testing for Alzheimer’s disease,diabetic nephropathy, drug-resistanttuberculosis, nutrition assessment
and diabetes mellitus.
The total amount of research anddevelopment costs in this division forthe current fiscal year was ¥1.5 billion(US$15.8 million).

2. Pharmaceutical Business
The following research and development activities were undertaken,
mainly at our Pharmaceutical Research Center.
Development of Generic Drugs
Injectable drugs are a specialty of the
Nipro Group and as such we placed
8 products (using 5 integral elements)on the market as detailed below. We
placed 4 products (using 2 integral
elements) on the market for premixed bag solutions combining drug
and infusion solutions, where theconcentrations of the solutions canbe altered in advance to prevent
medical errors in treatment. As for the
double-bag (liquid-and-powder)
antibiotic drug market, we set 2
products (using 2 integral elements).
In the next term, we plan to set 6
products (using 3 integral elements)on the market including 4 products ofpre-filled blood coagulation inhibitor
syringes which are used during
dialysis.
We also plan to expand our salesof oral drugs. Including the products
listed below, we now sell 15 products(using 9 integral elements), breakdown as follows:
2 easy-to-swallow orally-disintegrating tablet products (using 1
integral element), 1 product of low
dose-requirement drugs needed byelderly with renal deficiencies or drug
metabolism disorders, patients

suffering from functional disorders
and health workers such as pharmacists working at medical facilities.
In the next term, we plan to add
10 products (using 5 integral elements) including low dose-specification drugs (half-dose tablets) as wellas promoting our product range.
With regard to our external
preparation, we launched 2 tapeproducts (using 1 integral element)
for treating inflammations.
Our tape products have highdegree of adhesiveness coupled withlow self-adhesive properties. We
have plans to develop a Trans-dermal
Therapeutic System (TTS) preparation which will deliver a pharmaceutical through the skin to the blood flow
circulating round the entire body.
We combine our formulation
technology with our expertise in
medical containers to facilitate thetimely development of drug products.
Our products meet current medical
needs, such as our high valuedadded drugs like the injectable kit,
our orally-disintegrating tablets andour low dose-requirement drugs.
Application of New Generic Formulation Technologies
We are active in the applied development of new technologies that avoid
the breakup of peptides and proteinsthat often occurs with oral administration as well as researching DDS
technologies using liposomes andnon-oral administration systems.

Blood-related Pharmaceuticals
Preparations
The development of hemoglobinencapsulated artificial oxygen carriers
is an industry-academia cooperative
project promoted by the Ministry of
Health, Labor and Welfare. The
development is proceeding carefully
in order to ensure the safety andeffectiveness. We are also cooperating with a university research organization in the development of artificial
oxygen carriers using synthetic heme
and recombinant human hemoglobins.
Contracted Research and Development
The contracted research and development business has become thecore of contracted manufacturing forpharmaceutical products in thepharmaceutical industry.
Our approach to contracted
development starts at formulationand encompasses the contracted
manufacturing of approved pharmaceutical products. In this fiscal
period, we started contracted
manufacturing trials with two companies and made some progress in ournegotiations with several pharmaceutical companies.
The total amount of research anddevelopment costs in this division forthe current fiscal year was ¥3.4
billion (US$36.3 million).

Nipro Corporation Annual Report 2010 10

Global Activities

Our move towards expanding into emerging economies such as
China and India is shifting into full swing as we look to establish asystem of local manufacturing backed by local sales.

Today, Nipro group owns local companies and branches in about 60 locations throughout Europe, Asia and theAmericas.
We have already gained a leading
share in the global dialyzer (artificial
kidney) market and have an outstanding reputation for high quality products
all over the world.
Though overseas sales accounted
for 33.4% of our consolidated sales in
FY2009 (year ended March 31, 2010),
overseas sales of core products suchas Dialyzers accounted for more thanhalf the sales of our medical equipment
division.
We will work aggressively toincrease overseas sales. In addition, we
will accelerate the expansion of
branches and bases especially inemerging market economies, where we
expect medical needs to expand, as
well as strengthening our sales force
worldwide.

Nipro (Shanghai) Co.,Ltd. Shanghai Plant

11 Nipro Corporation Annual Report 2010

In China, our most notable emerging market, we will establish 10 new
branches for a total of 20 branches andwe will increase the size of our sales
force to 100 people.
Likewise, in India we will double oursales force to 48 people during thisfiscal year.
Other actions will include developing local manufacturing to support local
sales in areas of high demand such as
China and India. This will enable us torestructure our production system andprovide products that meet the needsof each local market. Through thisapproach, we will achieve high quality
output as well as price competitiveness.
Following on from our dialysisrelated products, our diabetes-related
products and artificial lung-related
products will also be launched globally.
In the field of diabetes-related products, with the strategic acquisition ofHome Diagnostics, Inc., (renamed
Nipro Diaginostics, Inc.) we can make afull-scale entry in the blood glucose
meter and ancillaries market.

Our global sales network will start
to sell the blood glucose meter andrelated products worldwide, which arepresently only available in North
America and in some overseas markets.
As for artificial heart-lung products,
we are developing a new artificial heartlung set with performance upgrades ata more competitive cost. This new
artificial heart-lung product will belaunched in 2011 and our intention is
to increase our global market share.

Nipro Medical Corporation Miami Head officeEurope
Asia
America
Sales Ratio by Region (FY2009)

6.1%
Europe 11.6%
Asia

Domestic 66.6%
Total Sales

America 15.7%

177,830

Sales(Millions of yen)

Name

Scope of Business

Name

Scope of Business

Asia

Japan
Nipro Corporation
Nipro Medical Industries Co.,Ltd.
Nipro Pharma Corporation
Nipro Genepha Corporation
Tohoku Nipro Pharmaceutical Corporation
Zensei Pharmaceutical Industries Co.,Ltd.
Nipro Patch Co., Ltd.

Asia
Bangladesh
China

Manufacturing

Nipro Asia Pte. Ltd. Bangladesh Office
Nipro (Shanghai) Co., Ltd.
Nipro Trading (Shanghai) Co., Ltd.
Shanghai Head Office
Beijing Office
Chengdu Office
Guangzhou Office
Shenyang OfficeWuhan Office
Xi'an OfficeHangzhou OfficeNanjing OfficeChongqing Office
Fuzhou Office
Harbin Office
Changsha Office
Zhengzhou OfficeNanning Office
Shanghai Nissho Vacuum Flask Refill Co., Ltd.
India
Nipro Medical (India) Pvt. Ltd.
Chennai Head Office
Kolkata Office
Delhi Office
Nipro Glass India Limited
Nipro India Corporation Pvt. Ltd. Project Office
Philippines
Nipro Hospital Products, Inc.
Saudi Arabia Nipro Asia Pte. Ltd. Saudi Arabia Office
Singapore
Nipro Asia Pte. Ltd. Singapore Head OfficeTaiwanNipro Diagnostics Taiwan, Inc.

------------------------ -Thailand
U.A.E.
VietnamNipro (Thailand) Corporation Limited
Nipro Sales (Thailand) Co., Ltd.
Nipro Middle East Free Zone Establishment
Nipro Sales (Thailand) Co., Ltd. Vietnam OfficeAmerica
Argentina
BrazilCanadaChile
Colombia
Costa Rica
EcuadorEl Salvador
GuatemalaHonduras
MexicoNicaragua
PanamaPeru
Puerto Rico
Uruguay
U.S.A.

Nipro Medical Corporation Argentina Branch
Nipro Medical Ltda.
Nipro Diagnostics Canada, Ltd.
Nipro Medical Corporation Chile Branch
Nipro Medical Corporation Colombia Branch
Nipro Medical Corporation Costa Rica Branch
Nipro Medical Corporation Ecuador Branch
Nipro Medical Corporation El Salvador Branch
Nipro Medical Corporation Guatemala Branch
Nipro Medical Corporation Honduras Branch
Nipro Medica de Mexico S.A.de C.V.
Nipro Medical Corporation Nicaragua Branch
Nipro Medical Panama S.A.
Nipro Medical Corporation Peru Branch
Nipro Medical of Puerto Rico, Inc.
Nipro Medical Corporation Uruguay Branch
Nipro Medical Corporation
Miami Head OfficeMemphis Distribution Center
Nipro Diabetes Systems, Inc.
Nipro Diagnostics, Inc.

EuropeBelgium
Nipro Europe N.V. Belgium Head OfficeFranceNipro France S.A.
Holland
Nipro Europe N.V. Holland Branch
Italy
Nipro Europe N.V. Italy Branch
PolandNipro Europe N.V. Poland Branch
RussiaNipro Europe N.V. Russia Representative Office
Spain
Nipro Europe N.V. Spain Branch
United Kingdom Nipro Diagnostics (UK) Ltd.
Medical Equipment-

Pharmaceutical-

Glass & Materials----------------------

Nipro Corporation Annual Report 2010 12

Plant and Equipment

1 Overview of Capital Investments, etc.
The Group (the Company and its consolidated subsidiaries) focusedon investing in research and development and product areas where
growth can be expected in the future for energy efﬁciency,
rationalization, product quality improvement, and increasing
production capacity.
Capital investment (tangible ﬁxed assets on an acceptance basis;ﬁgures shown do not include consumption tax, etc.) during thisconsolidated ﬁscal year totaled ¥14.3 billion (US$153.2 million).
Capital investment by business is shown below.
The medical equipment business made capital investments toincrease production capacity and for production rationalization at theCompany’s Odate plant and the Thailand plant of Nipro (Thailand)
Corporation Ltd.
The pharmaceutical business made capital investments for freezedried drugs at the Odate plant and infusion solution preparations at
the Ise plant; both plants are owned and run by the Nipro Pharma
Corporation. Furthermore, the Tohoku Nipro Pharmaceutical
Corporation made capital investments related to new contract
manufacturing projects for oral drugs.

The glass & materials business made capital investments for stoppers
and rubber stoppers at the Company’s Otsu plant.
Elimination and corporate capital investments were made primarily
in equipment and devices for research and development at thePharmaceutical Research Center and Research and Development
Laboratory.
The required funds were allocated from owned capital and loans.
There was no material retirement or disposal of plants and equipment.
Millions of yen
Medical equipment ·······················
Pharmaceutical ·····························
Glass & Materials ··························
Other ············································
Elimination/Corporate ···················
Total ·············································

¥

9,144
4,306
244
129
434
14,257¥

Thousands of
U.S. dollars$
98,28046,281
2,623
1,387
4,664
$ 153,235

2 Status of Major Plants and Equipment(1) Nipro Corporation
As of March 31, 2010
Name of Facility(Location)
Odate Plant(Odate, Akita)
Otsu Plant(Otsu, Shiga)
Tokyo Ofﬁce(Bunkyo-ku, Tokyo)

Name of Segment by
Type of AssetBusiness Category
Medical Equipment Medical Equipment
Pharmaceutical
Production Facilities, etc.
Glass & Materials
Glass & Materials
Glass tube Processing
Production Facilities, etc.
Medical Equipment Sales Facilities
Pharmaceutical
Glass & Materials
Medical Equipment Sales Facilities
Pharmaceutical

Domestic Operations
21 Branches and
33 Sales Ofﬁces in Japan
Research and Development Laboratory &Other or Corporate
Pharmaceutical Research Center (Kusatsu, Shiga)
Headquarters
Medical Equipment(Kita-ku, Osaka)
Pharmaceutical
Glass & Materials
Corporate
Leased Assets, Other
Other(Settsu, Osaka, Other)

Name of Facility(Location)
Odate Plant(Odate, Akita)
Otsu Plant(Otsu, Shiga)
Tokyo Ofﬁce(Bunkyo-ku, Tokyo)

13 Nipro Corporation Annual Report 2010

Book Value (Millions of yen)
Machinery and equipment Land(Area m2) Construction in progress¥ 9,670¥961¥ 3,718(198,026)

189

147

272

63

411

Research and development
Plant and Equipment, other
Other Plant and Equipment

Other Plant and Equipment

Name of Segment by
Type of AssetBusiness Category
Medical Equipment Medical Equipment
Pharmaceutical
Production Facilities, etc.
Glass & Materials
Glass & Materials
Glass tube Processing
Production Facilities, etc.
Medical Equipment Sales Facilities
Pharmaceutical
Glass & Materials
Medical Equipment Sales Facilities
Pharmaceutical

Domestic Operations
21 Branches and
33 Sales Ofﬁces in Japan
Research and Development Laboratory &Other or Corporate
Pharmaceutical Research Center (Kusatsu, Shiga)
Headquarters
Medical Equipment(Kita-ku, Osaka)
Pharmaceutical
Glass & Materials
Corporate
Leased Assets, Other
Other(Settsu, Osaka, Other)

Buildings and Structures¥ 7,924

Total¥ 22,273

Number of employees(People)1,124

25(4,604)
1,974
(377)

47

408

35

—

2,309

23

621

357
(2,566)

86

1,475

611

2,092

639

42

3,240

235

370

441

467
(26,544)
1,508(1,891)

—

2,319

188

1,305

2

4,970
(54,065)[21,372] *Note:(1)

—

6,277

—

Book Value (Thousands of U.S. dollars)
Machinery and equipment Land(Area m2) Construction in progress$ 103,934$
10,329$ 39,961(198,026)

Total$ 239,392

Number of employees(People)1,124

Buildings and Structures$ 85,168

2,031

1,580

269
(4,604)
21,217
(377)

505

4,385

35

2,923

677

—

24,817

23

4,417

6,675

3,837
(2,566)924

15,853611

Research and development
Plant and Equipment, other
Other Plant and Equipment

22,485

6,868

452

34,824

235

3,977

4,740

5,019
(26,544)
16,208(1,891)—

24,925

188

Other Plant and Equipment

14,02721—

67,466—53,418(54,065)[21,372] *Note:(1)(2) Domestic subsidiaries
As of March 31, 2010
Company

Name of Facility Name of Segment by(Location)
Business category

Nipro Medical
Industries Co., Ltd.
Nipro Pharma
Corporation

Medical Equipment

Tatebayashi Plant(Tatebayashi, Gunma)
Ise Plant(Matsusaka, Mie)
Odate Plant(Odate, Akita)
Tohoku Nipro
Kagamiishi Plant
Pharmaceutical (Kagamiishi-machi,
Corporation
Iwase-gun, Fukushima)
Zensei Pharmaceutical Kishiwada Plant
Industries Co., Ltd.
(Kishiwada, Osaka)
Nipro Patch Co., Ltd. Kasukabe Plant(Kasukabe, Saitama)
Hanyu Plant(Hanyu, Saitama)Company

PharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalName of Facility Name of Segment by(Location)
Business category

Nipro Medical
Industries Co., Ltd.
Nipro Pharma
Corporation

Tatebayashi Plant(Tatebayashi, Gunma)
Ise Plant(Matsusaka, Mie)
Odate Plant(Odate, Akita)
Tohoku Nipro
Kagamiishi Plant
Pharmaceutical (Kagamiishi-machi,
Corporation
Iwase-gun, Fukushima)
Zensei Pharmaceutical Kishiwada Plant
Industries Co., Ltd. (Kishiwada, Osaka)
Nipro Patch Co., Ltd. Kasukabe Plant(Kasukabe, Saitama)
Hanyu Plant

Medical Equipment
PharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceuticalPharmaceutical(Hanyu, Saitama)

Nipro Medical Industries Co., Ltd. Tatebayashi Plant

Type of Asset
Medical Equipment
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Type of Asset
Medical Equipment
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities
Pharmaceutical
Production Facilities

Book Value (Millions of yen)
Buildings and Machinery andLandConstruction in
Structures
equipment(Area m2)
progress¥ 1,323¥ 1,875¥521¥—(15,462)
6,758
2,139
1,310
638
(92,936)
11,968
6,397
1,247
4,579
(195,468)
6,462
4,082
458
370
(83,841)
1,434

343

1,146

535

¥958

1,061

552
(22,223)
1,008(9,611)455(16,680)

3,719

359

10,845631

24,191

543

11,372

175

—

2,329

210

133

2,822

169

77

2,551

47

Book Value (Thousands of U.S. dollars)
Buildings and Machinery andLandConstruction in
Structures
equipment(Area m2)
progress—$ 14,220$ 20,152$ 5,600$(15,462)
72,63522,99014,0806,858(92,936)
128,632
68,755
13,40349,215(195,468)
69,45343,874
4,923
3,976(83,841)
15,413

3,686

12,317

5,750

10,297

11,403

5,933(22,223)
10,834(9,611)
4,890(16,680)

Total¥

Number of
employees(People)Total

Number of
employees(People)$ 39,972

359

116,563631

260,006543

122,227175—

25,032210

1,430

30,331

169

828

27,41847

Zensei Pharmaceutical Industries Co., Ltd. Kishiwada Plant
Nipro Corporation Annual Report 2010 14

(3) Overseas subsidiaries
As of March 31, 2010
Company
Nipro(Thailand)
Corporation Limited
Nipro (Shanghai)
Co.,Ltd.
Nipro Medical Ltda.

Company
Nipro(Thailand)
Corporation Limited
Nipro (Shanghai)
Co.,Ltd.
Nipro Medical Ltda.

Name of Facility Name of Segment by(Location)
Business category

Type of Asset

Thailand Plant
Medical Equipment Medical Equipment(Ayutaya, Thailand)
Production Facilities
Shanghai Plant
Medical Equipment Medical Equipment(Shanghai, China)
Production Facilities
Brazil Plant
Medical Equipment Medical Equipment(Sorocaba,
Production Facilities
Sao Paolo, Brazil)
Name of Facility Name of Segment by(Location)
Business category

Type of Asset

Thailand Plant
Medical Equipment Medical Equipment(Ayutaya, Thailand)
Production Facilities
Shanghai Plant
Medical Equipment Medical Equipment(Shanghai, China)
Production Facilities
Brazil Plant
Medical Equipment Medical Equipment(Sorocaba,
Production Facilities
Sao Paolo, Brazil)Book Value (Millions of yen)
Buildings and Machinery andLandConstruction
Structures
Equipment(Area m2)
in progress¥ 3,519¥ 9,982¥278
138(159,148)
835
1,982
—
322
<40,681> *Note:(2)
459
1,135
97
8
(73,623)
Book Value (Thousands of U.S. dollars)
Buildings and Machinery andLandConstruction
Structures
Equipment(Area m2)
in progress$ 37,822$ 107,288$
2,988 $ 1,483(159,148)
8,975
21,302—
3,461<40,681> *Note:(2)4,933
12,1991,043
86(73,623)¥ 13,917

Number of
employees(People)
3,381

3,139

740

1,699

364

Total

$ 149,581

Number of
employees(People)
3,381

33,738740

18,261

364

Total

Note:
(1) [21,372] is the area(m2) of major facilities leased to entities other than consolidated subisidiaries.
(2) <40,681> is the area(m2) of facilities leased from entities other than consolidated subsidiaries.
(3) The ﬁgure shown above do not include consumption taxes, etc.
(4) There are no major facilities currently in abeyance.
(5) Number of employees indicates the number of people employed.
(6) In addition to the above, the details of major facilities leased from entities other than consolidated subisidaries are shown below.

1) Nipro Corporation
Name of Facility(Location)
Headquarters(Kita-ku, Osaka)
Domestic Operations
21 Branches and
33 Sales Ofﬁces in Japan
Name of Facility(Location)
Headquarters(Kita-ku, Osaka)
Domestic Operations
21 Branches and
33 Sales Ofﬁces in Japan

Name of Segment by
Business category
Medical Equipment
Pharmaceutical
Glass & Materials
Corporate
Medical Equipment
PharmaceuticalName of Segment by
Business category
Medical Equipment
Pharmaceutical
Glass & Materials
Corporate
Medical Equipment
Pharmaceutical

Type of Facilities
Host computer andPeripheral Equipment, etc.
Company Vehicles, etc.

Type of Facilities
Host computer andPeripheral Equipment, etc.
Company Vehicles, etc.

Major
Lease Period
5 Years

5 Years

Major
Lease Period
5 Years

5 Years

Annual Lease Payments(Millions of yen)
¥
68

216

Lease Contracts Balance(Millions of yen)
¥
103

525

Annual Lease Payments
Lease Contracts Balance(Thousands of U.S. dollars) (Thousands of U.S. dollars)$731$ 1,107

2,322

5,643

2) Subsidiaries
Company
Nipro Pharma
Corporation
Company
Nipro Pharma
Corporation

Name of Facility(Location)
Ise Plant(Matsusaka, Mie)

Name of Segment by
Business category
PharmaceuticalName of Facility(Location)
Ise Plant(Matsusaka, Mie)

Name of Segment by
Business category
Pharmaceutical

15 Nipro Corporation Annual Report 2010

Type of Facilities
Pharmaceutical
Production Facilities
Type of Facilities
Pharmaceutical
Production Facilities

Major
Lease Period
5 Years

Annual Lease Payments Lease Contracts Balance(Millions of yen)
(Millions of yen)
¥
31
¥
68

Major
Lease Period
5 Years

Annual Lease Payments(Thousands of U.S. dollars)$
333

Lease Contracts Balance(Thousands of U.S. dollars)$ 731

3 Plans for New Construction or Disposal of Facilities(1) New Construction of Major Facilities, etc.
The Nipro Corporation leads coordination of plans for new
construction of facilities to avoid duplicate investment across theGroup, since each individual consolidated subsidiary is principally
Company

Location

Nipro Corporation
Odate Plant
Nipro Pharma Corporation
Ise Plant

Odate,
Akita
Matsusaka,
MieCompany

Location

Nipro Corporation
Odate Plant
Nipro Pharma Corporation
Ise Plant

Odate,
Akita
Matsusaka,
Mie

Name of Segment by
Business category

Type of Asset

Medical Equipment Dialyzer
Production Facilities, etc.
Pharmaceutical Infusion solution preparation
Production Facilities, etc.
Name of Segment by
Business category

Type of Asset

Medical Equipment Dialyzer
Production Facilities, etc.
Pharmaceutical Infusion solution preparation
Production Facilities, etc.

responsible for setting their own capital investment plans. Plans for
new construction of major facilities are as shown below.
Planned Amount of Investment
Total AmountPaid-in Amount(Millions of yen) (Millions of yen)
¥ 8,605¥ 1,134
2,309

4

Means ofFund RaisingMonth and Year of Month and Year ofConstruction Start Planned Completion

Loans and
Owned Capital
Loans and
Owned Capital

September 2009

February 2011

March 2010

May 2011

Planned Amount of Investment
Means of
Total AmountPaid-in AmountFund Raising(Thousands of U.S. dollars) (Thousands of U.S. dollars)$ 92,487$ 12,188 Loans andOwned Capital
24,81743 Loans andOwned CapitalMonth and Year of Month and Year ofConstruction Start Planned Completion
September 2009

February 2011

March 2010

May 2011

Note: The ﬁgure shown above do not include consumption taxes, etc.

(2) Disposal of Major Facilities, etc.
There are no plans to dispose of any major facilities.

Nipro Corporation Odate Plant

Nipro Pharma Corporation Ise Plant
Nipro Corporation Annual Report 2010 16

Issues Facing the Company

In the future, the world economy is likely to be pulled continuously byeconomic growth emanating from developing nations. Counter to this,the current unpredictability that stems from credit risk and a fear of
inﬂation means we cannot take such growth for granted.
The Japanese economy faces a continuation of the current severe
circumstances due to bleak forecasts as to its ability to overcome
deﬂation and the appreciation of the yen against the dollar. One also
cannot discount the still-smoldering issue of oil prices.
Under such circumstances, our aim is to expand, continuously
look to improve production efﬁciency and sales as well as aggressively
developing new areas of business, all of which will help us improve
our business performance.
Our Medical Equipment business will try to gain market shareby expanding our range of dialysis-related products, centered on
our main product,the dialyzer, as well as our diabetes-related andvascular-related products.
On the domestic side of our Medical Equipment business, we will
put effort into developing products with minimal adverse impact on theenvironment and medically safety-conscious design (for the preventionof infection). We will also work on developing products friendly tohealthcare professionals, patients as well as the global environment
as we continue to positively reinforce our research and development,
market development and sales programs.
We plan to begin sales of diabetes-related products manufactured
by Home Diagnostics, Inc. (company name changed following
acquisition to Nipro Diagnostics, Inc.), a company acquired during thecurrent ﬁscal year, in overseas markets other than the United States
by utilizing Nipro’s global sales network. We plan to actively promotesales in the diabetes ﬁeld to become a strong presence in this sector.
Meanwhile, we are making efforts to shore up market share in themain dialysis ﬁeld by strengthening our direct selling system in China,
India, the Middle East, Africa and South America where demandis expanding rapidly. Additionally, we plan to expand sales in theEuropean market where we will release a new eco-friendly dialyzer inorder to differentiate to ourselves in this market, as well as launching a
new type of dialysis machine.
We are promoting both sales and manufacturing in each locationon the basis of local production for local consumption, especiallyin developing countries such as India and China where demand is
expected to expand in the future.
Although we expect that the negative impact brought by the highyen will continue, we are endeavoring to increase sales and proﬁt
based on our strong sales operation reinforced by countermeasuresagainst the high yen.
Our Pharmaceutical business plans to enhance our contract
manufacturing business by striving to meet various contract
manufacturing needs, utilizing the Group’s research and development
strengths as well as its production systems across all pharmaceuticalﬁelds.

17 Nipro Corporation Annual Report 2010

In the ﬁeld of generic drugs, we will develop various sales
routes such as dispensing pharmacy groups and DPC hospitals
which implement the Diagnosis Procedure Combination system tokeep medical costs down. Additionally, we plan to cut costs whilst
reinforcing the drug’s response capabilities. Also, we plan to promoteresearch and development in biosimilars, artiﬁcial blood and DDS (DrugDelivery System), with a view to entering and expanding in this sector
overseas. By constructing contract manufacturing facilities for oral
drugs with high biological activity, anticancer drugs and biosimilars, wewill look to meet the high levels of market demand for these products.
In our Glass and Materials business, we continue to drive
innovation in glass processing technologies as well as developing
and expanding our range of pharmaceutical containers and the otherglass products. In addition, we plan to start overseas manufacturing
and sales of pharmaceutical containers such as ampoules and glass
bottles.
We will continue to innovate in the ﬁeld of glass processing
technologies and expand sales to domestic and overseas
pharmaceutical companies. In terms of developing our overseas
markets, we plan to promote joint venture businesses. Looking at
glass products for lighting purposes, we aim to increase proﬁts as weseek a sales outlet for our new overseas market.

Status of Corporate Governance, etc.

1 Status of Corporate Governance(1) System for Corporate Governance(1) System for Corporate Governance and background(3) Status of the Risk Management System
The Company has established risk management regulations and asystem for managing business risk and other individual risks in order torecognize and evaluate in an appropriate and comprehensive manner
risks that could have a material impact on business operations.
In order to effect management across all companies in the Nipro
Group, the Company has established a Management Risk Control
Committee and works continuously to further strengthen the systemfor promoting management of business risk, so as to prevent the risk
and crisis, avoid and prevent the recurrence.
Furthermore, the Company has established a Rewards and Penalty
Committee, chaired by the President, which endeavors to ensure thesoundness of business operations through the appropriate handling of
sanctions.

Meeting of Shareholders
Election

Accounting
Auditor(Auditors)
Board ofAuditors(Directors)
Board ofDirectors

Committees

Decision-making
Accounting
Audit

Operational
Audit

Supervisionof Directors’
executionof duties

President

Directorwithresponsibility
for operation
Division General Manager,
Manager, Assistant Manager, etc.

Management Risk Control Committee(2) Status of Internal Control Systems
The Company’s basic policy for internal control systems, as stipulated
in Article 362, Paragraph 5 of the Companies Act, was approvedat the Board of Directors meeting convened on April 29, 2006, andimplemented from May 1st of the same year.
The Company endeavors to establish business units as thefoundation of its internal control systems for the entire Nipro
Group. The Company’s directors and statutory auditors, as well as
representatives of each of the major companies of the group, holda Group management meeting on a regular monthly basis to reporton the progress of business operations, decide important operating
matters, and deliberate on pending matters.
To build awareness of and compliance with the laws, regulations,and corporate ethics among executives and employees, the Company
implements appropriate training and education programs by archiving
handbooks and manuals of compliance on the corporate portal
site, adopting anonymous whistleblower systems and distributing
information on the intranet.
These internal control systems, which are aimed at the executives
and employees of each company in the Nipro Group, are operated asa consistent management mechanism through mutual cooperation.

Conceptual
Diagramof Corporate GovernanceInternal Control
Systems

Third Party (i.e. lawyer, accountant)

The Nipro Group has established a corporate governance systemwith the Board of Directors and Auditors and Board of Auditors
and accounting auditor, with the annual Shareholder meeting and
the Board of Directors playing a central role in governance. The
Nipro Group has also established internal committees such as aManagement Risk Control Committee and continuously maintains
close coordination with external parties such as the company
attorney, etc., so as to sustain the efﬁciency and appropriateness of
its operations over the Nipro Group as a whole.
The Nipro Group has diversiﬁed its business and establisheda divisional management system from the outset. Based on the
management system of each business unit, mutual collaboration andinternal controls are effectively exerted on the integrated operations of
the Nipro Group.
As described above, with clear responsibilities and a strengthened
management system, the corporate governance system mentioned
above works effectively as a classic and consistent management
system for the Nipro Group.

(4) Overview of the Company’s governance bodies and Internal
Control Systems(2) Status of Internal Auditing and Audits by Statutory
Auditors(1) Internal Auditing
The Company conducts audits of accounting, procedures, and otheroperations based on internal audit protocols through the Auditing
Section, which serves as the internal audit organization for theCompany.
Aside from the two full-time employees in the Auditing Section,
employees are dispatched as necessary from the Head Ofﬁce
Management Division or other divisions to carry out inspections in atimely, smooth and efﬁcient manner.
In regards to implementation of speciﬁc audit operations, theCompany establishes audit policies and audit plans, based on which
audits are conducted as well as endeavoring to ensure smoothaccounting audits and audits by statutory auditors through mutual
collaboration between said statutory auditors and our accounting
auditors.
(2) Audits by Statutory Auditors
For audits by statutory auditors, in accordance with the auditing
policy and the division of labor as agreed upon by the Board ofAuditors, each statutory auditor attends important meetings, including
Board of Directors meetings, and receives reports from Directors
and employees, in addition to inspecting important documents andundertaking other auditing duties. The statutory auditors hold Board
of Auditors Meetings regularly, or as necessary, in order to exchange
views and hold discussions.

Nipro Corporation Annual Report 2010 18

(3) External Directors and External Auditors(4) Remuneration paid to Directors and Auditors(1) External Auditors
At present, two of the three auditors are external auditors, as
stipulated by Article 2, Paragraph 16 of the Companies Act.

(1) The total amount of remuneration, the total amount of remuneration by type and the number of directors and auditors
eligible for remuneration are shown in the table below.

(2) External Directors
The Company does not have an external director.
The 2 external auditors have a profound knowledge of and insights
into business management and they receive reports on the statusof operations of directors and employees, especially on the matterswhich could have a material impact on the group and the statusof performance of the internal audit. Therefore, they are able toindependently and objectively conduct the audit and attend meetingsof the Board of Directors, so that they are sufﬁciently able to performthe function and role expected of external directors.
(3) Personal, capital, transactional or other interests between
the Company and External Auditors.
There are no particular interests and relations between the Company
and the 2 external auditors.
(4) The function and role of the External Auditors in the
Corporate Governance of the Nipro Group.
External auditors are expected to utilize their profound knowledge
from past experience of business management and apply this totheir examination of the management of the Nipro Group from a
broader perspective. With close collaboration with the internal auditor,
employees of the Auditing Section, auditors of subsidiaries andaccounting auditors, they are able to audit from an objective andneutral position so as to ensure the effectiveness of an integral andeffective audit function over the Nipro Group as a whole.
(5) Company’s opinion regarding the status of the election ofExternal Auditors
By coordinating closely with the full-time auditor, employees of the
Auditing Section (and assigned staff from the management section of
the head ofﬁce as needed), the audit function and role as required by
the system of corporate governance is implemented.
In the event that number of auditors falls below the legal minimum,
we have taken the precaution of electing a sub-auditor who meets therequirements to qualify as an external auditor.
When needs arise to improve the audit function in accordance withbusiness developments and future expansion, we intend to review
and enhance the audit system including an increase in the number ofauditors.
(6) Mutual collaboration between External Auditors and theInternal Audit Team, audits by Statutory Auditors and audits by Accounting Auditors and the relationship with ourInternal Control Organization.
External auditors attend important meetings such as the meeting ofBoard of Directors in accordance with the audit policy determined by
the board of auditors. External auditors also obtain reports from thefull-time auditor or directly from directors and employees and can also
inspect materials and documents. They hold periodic or occasional
meetings and discuss and exchange their fair and independent
opinions.
External auditors strive to facilitate the audit service through close
collaboration with employees of the auditing section, the full time
auditor, auditors of subsidiaries and the accounting auditor.

19 Nipro Corporation Annual Report 2010

Directors
Auditors excluding
external auditors
External auditors

Directors
Auditors excluding
external auditors
External auditors

Millions of yen
Total amount of remuneration by type
Number of
Total amount of
AnnualRetirement eligible directors
remuneration
Bonusand auditors
remuneration
beneﬁts
¥ 346
¥ 110
¥ 204
¥ 32
20
6
2

6
2

—
—

—
—

1
2

Thousands of U.S. dollars
Total amount of remuneration by type
Number of
Total amount ofeligible directors
AnnualRetirement
remuneration
Bonusand auditors
remuneration
beneﬁts$ 3,719$ 1,182$2 ,193
$ 344
20
64
21

64
21

—
—

—
—

1
2

(2) The total amount of remuneration etc. of each director andauditorAs there was no director or auditor whose total consolidated
remuneration exceeded 100 million yen, we are not required todisclose this information.
(3) Basic policy to determine the remuneration of corporateofﬁcers.
• Director’s remuneration
Director’s remuneration is determined by the Board of Birectors or
is based on certain standards decided by the Board of Directors.
Annual remuneration is determined considering the market rate andthe employee’s salary level. Bonuses are calculated by a certain
method based on the sliding scale system in accordance with theresults of the business. Retirement beneﬁts are granted by the
resolution of the Board of Directors, up to a ceiling determined at
the shareholder’s meeting.
• Auditor’s remuneration
The annual remuneration is determined by mutual accord with theauditors.
At present, the total amount of remuneration for directors andauditors is determined by a resolution taken at the shareholders
meeting as follows.
The total amount of remuneration for directors is up to 800
million yen, based on the shareholder’s meeting held on June 25,
2010.
The total amount of remuneration for auditors is up to 300
million yen, based on the shareholder’s meeting held on June 27,2007.

(5) Status of shareholdings(1) Investment in stock for which the purpose of the shareholding is other than pure investment
Number of brands: 33
Total amount on the balance sheet¥47,054 million (US$505.7 million)(2) 10 major stock brands held for purposes other than pureinvestment
Brand

Number ofsharesNippon Electric Glass
17,824,602
Co., Ltd.
Mitsubishi Tanabe
8,030,000
Pharma Corporation
Mitsubishi Chemical
13,260,871
Holdings Corporation
Nichi-Iko Pharmaceutical
1,321,000
Co., Ltd.
Yuki Gosei Kogyo Co., Ltd. 3,685,000

Amount on thebalance sheet(Millions of yen)
23,475

Amount on thebalance sheet(Thousands of U.S. dollars)
252,311

10,600113,929

6,339

68,132

3,470

37,296921

9,899

Resona Holdings, Inc.

375,992

444

4,772

Takeda Pharmaceutical
Company Limited
Zojirushi Corporation

23,62297

1,043

363,000

78

838

138,31568731

500,000

63

677

Mitsubishi UFJ Financial
Group, Inc.
The Fuji Fire and Marine
Insurance Company, Limited

The purpose of shareholding of all brands shown in the above list is tomaintain and raise business relationship.

(9) Matters originally for Resolution of General Shareholders Meetings which are authorized to be resolved by the Board of Directors(i) The Company’s Articles of Association, pursuant to Article 165,
Paragraph 2, of the Companies Act, provide that acquisition ofown shares by Market Transactions, as stipulated in Paragraph 1of the same Article, may be prescribed by a resolution of a Boardof Directors meeting in order to make possible the execution of an
expeditious funding policy.
(ii) The Company’s Articles of Association provide for distribution ofInterim Dividends, as stipulated in Article 454, Paragraph 5, of
the Companies Act, by resolution of the Board of Directors toshareholders, or registered pledgees of shares, who are recorded
in or listed on the ﬁnal Shareholders Register as of September 30thof each year, in order to smoothly implement dividend policies.
(iii) The Company’s Articles of Association provide for exemption of
liability of directors and auditors (including persons who weredirectors or auditors) who have failed in their duties, to the extent
which such exemption may be given pursuant to the law andordinances, by resolution of the Board of Directors, as stipulated in
Article 426, Paragraph 1, of the Companies Act, in order to makepossible the full execution of the roles expected of directors andauditors.

(10) Conditions for Special Resolutions at General Shareholders Meetings
The Company’s Articles of Association provide that special resolutions
at General Shareholders Meetings shall be carried by two-thirds
or more of votes at a General Shareholders Meeting attended byshareholders who are entitled to exercise one-third or more ofshareholder voting rights, as stipulated by Article 309, Paragraph 2, of
the Companies Act, to contribute to the harmonious management ofGeneral Shareholders Meetings.

(3) Investment in stock for pure investment purposes
There were no applicable items.

(6) Status of Accounting Audits
Name of Accounting Auditor
Osaka Audit Corporation
Name of Certiﬁed Public Accountants conducting Audit Operations:
Yoshitsugu Hashimoto, Kouichi Aki, Kazuhiro Bando
Support Staff for Audit Operations:Certiﬁed Public Accountants: 9 people
Assistant Certiﬁed Public Accountant : 1 person
Other staff: 2 people(7) Provisions in the Articles of Association related tothe maximum number of directors
The Company’s Articles of Association stipulate that the number of
directors shall be 40 persons or less.

(8) Conditions for the Election of Directors
The Company’s Articles of Association stipulate that resolutions
pertaining to the election of directors must be carried by a majority of
votes at a General Shareholders Meeting attended by shareholders
entitled to execute one-third or more of shareholder voting rights.
Furthermore, the Articles of Association stipulate that resolutions
pertaining to the election of directors shall not be carried byaccumulative votes.
Nipro Corporation Annual Report 2010 20

2 Details etc. of Auditors Remuneration(1) Remuneration for Certiﬁed Public Accountants, etc.
engaged in Accounting Audit
Millions of Yen
2010
2009
Classiﬁcation Remuneration for
Remuneration
Remuneration for
Remuneration
Audit Certiﬁcation
for Non-Audit
Audit Certiﬁcation
for Non-Audit
Services
Certiﬁcation Services
Services
Certiﬁcation Services
Nipro Corporation ¥
38
—
¥
34
—
Consolidated
14
—
13
—
Total
¥
52
—
¥
47
—
Thousands of U.S. dollars
2010Classiﬁcation Remuneration for
Remuneration
Audit Certiﬁcation
for Non-Audit
Services
Certiﬁcation Services
Nipro Corporation $409—
Consolidated
150
—
Total
$
559
—

(2) Other Important Remuneration
There were no applicable items.

(3) Non-Audit Services Provided by Certiﬁed Public Accountants etc. engaged in Accounting Audit to Reporting Companies
There were no applicable items.

(4) Decision-Making Policy for Audit Remuneration
There were no applicable items, however, remuneration was decidedin consideration of scale, specialty, number of audit days, etc.

3 Dividend Policy
The Company considers providing stockholders with a portion ofcompany proﬁts to be a very important aspect of management
policy. This basic stance is based on the idea that a company is anorganization composed of three parts: stockholders, employees, andmanagement; and that the proﬁts from business operations should beproperly distributed amongst these three components.
As our basic approach, we have been aiming at a 50% payout
ratio on a unitary basis.
The Company’s basic policy is to distribute dividends of retained
earnings twice a year, with an interim dividend and a year-end
dividend. The interim dividend is determined by the board of directors
with the year-end dividend determined at the general meeting ofstockholders.
Our dividends for the present year have been issued at a rate of¥53 per share (comprised of an interim dividend of ¥23.50 and yearend dividend of ¥29.50).
The Company believes that retained earnings are essential for
expanding our business base and for the long-term developmentof our business. The Company will actively invest these funds in themarketing, production, and research and development divisions, inorder to ensure stable earnings and sustainable growth in the future.
Through a decision of the board of directors, the provision of aninterim dividend was made possible in the articles of incorporation and
September 30 of every year was established as the record date.
The dividends of retained earnings with record dates in the current
business year are as described below.
Date of Resolution
November 11,2009
June 25, 2010

Date of Resolution
November 11,2009
June 25, 2010

21 Nipro Corporation Annual Report 2010

Amount of dividends
Millions of yen
¥
1,490
1,871

Dividend per share
Yen
¥
23.50
29.50

Amount of dividends
Thousands of U.S. dollars$
16,015
20,110

Dividend per share
U.S. dollars
$
0.25
0.32

Board of Directors and Auditors

President

Directors

Minoru Sano*

Akihiko Yamabe

Itsuo Akasaki

Accounting division

Glass & material development division

Noriaki Watanabe

Kazuhiko Sano

International division

Research & development laboratory

Kiyotaka Yoshioka

Akio Shirasu

Domestic division

Research & development laboratory

Toshiaki Masuda

Hiroshi Yoshida

Domestic division/Research &development laboratory

Research & development laboratory

Managing Director

Yoshihiko Sano
Domestic division
Managing Director

Makoto Sato
Pharmaceutical business
Managing Director

Kazuo Wakatsuki
International division

Mitsutaka Ueda

Hiroshi Sudo
Research & development laboratory

Domestic division

Tsuyoshi Yamazaki

Takeo Kikuchi
Pharmaceutical Research Center

International division

Yusuke Kofuku

Kenichi Nishida
Pharmaceutical Research Center

International division

Masanobu Iwasa

Toyoshi Yoshida
Regulatory Affairs Division

Glass & material development division

Hideo Okamoto
Glass & material development division

Standing statutory auditor

Takayuki Nomiya
Kyoetsu Kobayashi
Odate plantYozo Sawada

Statutory auditor

Masamichi WadaIntellectual property department
Statutory auditor

Kimihito Minoura

Kiyoshi Kase

Corporate planning & coordination
division

Hideto Nakamura
Human resources/general affairs
division

Yasushi Kutsukawa
Domestic division

Masayuki Ito
Domestic division* Representative Director

Nipro Corporation Annual Report 2010 22

Financial Review

Overview
In the period under review (year ended March 31, 2010), certain
sections of the global economy gradually recovered from the recession
brought about by the global ﬁnancial crisis. This partial recovery
was led by the implementation of stimulus packages in the major
economies coupled with economic growth in developing nations in
Asia.
With regard to the Japanese economy, the business environment
remains severe as the local economy continues to worry about future
uncertainty. There was a pickup in business investments and personal
consumption supported by an expansion in exports to emerging
countries and an increase in business earnings brought about theseexports.
With this economic background, the Nipro Group will continue topromote the development of advanced medical equipment as well as
expanding our pharmaceutical business, increasing our manufacturing
efﬁciency and strengthening our sales force, all with the aim of
improving our business performance.

Consolidated Business Results
Net Sales
In the year ended March 31, 2010, consolidated net sales amounted
to ¥177.8 billion (US$1,911.3 million), an increase of 1.1% comparedwith the previous ﬁscal year.

Net sales by Business Segment
Medical Equipment
Looking at the domestic market, business conditions became
increasingly severe. The health industry as a whole, and medical
institutions in particular, have been urged to improve their business
efﬁciencies as part of medical system reforms aimed at controlling
medical expenses.
Under these circumstances we were able to return consistentsales growth in our product ﬁelds by means of more active sales
promotions and improvements in sales efﬁciency. Sales grew in a
number of ﬁelds, namely injection- and infusion-related (mainly safetyuse and enteral alimentation-related) products; medical-equipmentrelated products (such as dialysis systems); testing-related products(such as blood collection tubes and needles); product devices related
to ventricular assistance as well as products related to artiﬁcial heart
and lungs; vascular-related products (guiding- and blood-clot trapping–catheters).
With regard to our international business, although our sales
revenue decreased due to the appreciation of the yen against the U.S.
dollar and euro, our sales volume showed large increases in our main
products such as dialyzers, dialysis machines, AVF (Arterial venous
ﬁstula needle), injection needles and diabetes-related products.

23 Nipro Corporation Annual Report 2010

As a result, net sales in this sector decreased 2.3% from the previous
period to ¥110.4 billion (US$1,186.5 million).
Pharmaceutical
Our promotion of characteristic drugs and medicines, is part of our
response to policies calling for the dissemination of generic products
due to the advancement of our aging society as well as an increase in
the number of institutions introducing the DPC (Diagnostic Procedure
Combination) system, a comprehensive reimbursement system of
medical costs for in-patients with acute stage conditions.
As a result, we registered steady sales growth in liquid-andpowder double-bag kits, pre-mixed-bag kits, injectable drugs
contained in plastic ampoules, oral drugs (such as orally disintegratingtablets and extended-release tablets) as well as dialysis-related
products (such as kit products of substitution ﬂuid for hemoﬁltrationand hemodiaﬁltration). We also created a framework that enables
us to provide a stable supply of high-quality products as the largest
contract manufacturer of pharmaceutical products in Japan. We
started contract manufacturing steroid injectable drug products andpromoted new business in oral drugs. Building has commenced on a
new plant for infusion solution preparations.
As a result, net sales in this business sector increased 10.0% fromthe previous period to ¥58.0 billion (US$623.2 million).
Glass & Materials
In the ﬁeld of glass for pharmaceutical purposes, the domestic salesof glass ampoules decreased due to changes in container types
coupled with a drop in production demands. The glass tube andbottle business had a relatively good year as a result of successfulpromotions of overseas sales and a smooth transition from automatic
bottles to glass bottles.
In the ﬁeld of other glass & materials products, the export of glass
for thermos bottles, mainly to markets in the Middle East, decreased
due to stagnation in the global economy. The sales of glass for lighting
purposes to automobile-related industries showed a recovery in sales
thanks to production increases in domestic automobiles. However,the sales of products related to LCD backlights decreased due to a
production shift overseas and an unexpected market penetration of
LED products.
As a result, net sales of this business decreased 9.3% from theprevious period to ¥8.7 billion (US$93.2million).
Other
Net sales of our ‘other’ businesses, consisting mainly of sales ofmachines for manufacturing medical equipment and real estate rental
income, increased 13.6% from the previous period to ¥0.8 billion(US$8.5 million).

Cost of sales
The cost of sales increased 1.4% compared with the previous period
to ¥126.1 billion (US$1,355.8 million). The main reason for thisincrease was an increase in sales and production of pharmaceuticalproducts.
The ratio of cost of sales to net sales increased 0.2 percentage
points compared with the previous period to 70.9%, mainly due to anincrease in sales in the pharmaceutical segment which has a relatively
higher cost-of-sales ratio.
As a result, gross proﬁt increased 0.3% compared with theprevious period to ¥51.7 billion (US$555.5 million)

Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased 8.7%
compared with the previous period to ¥33.6 billion (US$361.0million),
mainly as a result of cost-cutting efforts carried out across the Group
as a whole.

Operating Income
As a result of the aforementioned factors, operating income increased
22.5% compared with the previous period to ¥18.1 billion (US$194.5
million). The ratio of operating income to net sales improved 1.8%
percentage points to 10.2%, owing to a decrease in selling, generaland administrative expenses.

Operating Income by business segment
Medical Equipment
The operating income of the Medical Equipment businessincreased 12.1% compared with the previous period to ¥18.2
billion (US195.2million), as a result of cost reduction measures andimprovements in production efﬁciency, especially with regard to the inhouse production of dialyzer units.
Pharmaceutical
The operating income of our Pharmaceutical business increased
13.3% compared with the previous period to ¥4.6 billion (US$49.7
million), resulting from enhanced proﬁtability due mainly to an increasein production of injectable kit products.
Glass & Materials
The operating income of the Glass & Materials business increased
8.6% compared with the previous period to ¥1.9 billion (US$20.7
million), as a result of an increase in sales of glass for pharmaceutical
purposes, which carries a superior proﬁt margin.
Other
The operating income of our ‘other’ businesses amounted to¥0.2 billion (US$1.8 million), mainly from sales of machines for
manufacturing medical equipment.
Elimination/Corporate
Unallocated corporate costs, consisting mainly of R&D-related andheadquarters administration expenses, decreased 6.9% comparedwith the previous period to ¥6.8 billion (US$72.9 million), mainly due toa decrease in R&D-related expenses.

Other income (Expense)
We recorded other expenses of ¥4.2 billion (US$45.4 million)
compared with ¥5.4 billion for the previous period. During the previous
period an exchange loss of ¥3.7 billion was recorded, but for theperiod under review the exchange loss was ¥0.5 billion (US$4.9
million) and afﬁliated company equity losses amounted to ¥1.3 billion(US$14.3 million).

Income before income taxes and minority interests
As a result of the factors outlined above, income before income taxes
and minority interests increased 47.9% compared with the previous
period to ¥13.9 billion (US$ 149.1 million).

Net sales and operating income by geographic segment
Japan
In Japan, net sales increased 3.8% compared with the previous
period to ¥139.4 billion (US$1,498.1 million) due to an increase in
the sales of injection- and infusion-related products in our Medical
Equipment business as well as sales increases of oral drugs in our
Pharmaceutical business. Operating income also increased 12.3%
compared with the previous period to ¥23.0 billion (US$ 247.5 million)
due to a reduction in manufacturing costs, sales and administrative
expenses.
America
In America, net sales decreased 16.3% compared with the previous
period to ¥17.8 billion (US$191.7 million) due to the loss of a tenderfor dialysis-related products. This segment recorded an operating lossof ¥0.1 billion (US$0.9 million) which was an improvement comparedwith an operating loss of ¥0.5 billion for the previous period. This
improvement was a result of a favorable exchange rate between the
US dollar and the local currencies of Latin American nations coupledwith a decrease in the deﬁcit of the US subsidiary selling diabetesrelated products.
EuropeIn Europe, net sales increased 3.8% compared with the previous
period to ¥12.9 billion (US$138.7 million) due to the steady sales
performance of dialysis-related products. This segment recorded
operating income of ¥0.05 billion (US$0.5 million) compared with anoperating loss of ¥0.03 billion for the previous period. This turnaround
was a result of our efforts in cost reduction.
Asia
In Asia, net sales decreased 2.0% compared with the previous period
to ¥7.7 billion (US$82.9million). The decrease was caused by credit
instability in Asian ﬁnancial markets, while sales of dialysis-related
products increased in China. Operating income increased 55.3% to¥2.2 billion (US$23.5 million) due to an increase in production as wellas improvements in manufacturing proﬁtability.

Nipro Corporation Annual Report 2010 24

Financial Position

Basic Policy on Distribution of Proﬁts

Total assets as of March 31, 2010 stood at ¥383.4 billion (US$4,120.8
million), an increase of 16.0% from the end of the previous period.
Current assets increased 11.9% from the end of the previous period
to ¥179.9 billion (US$1,933.9 million), due mainly to increases incash and cash equivalents, trade notes, accounts receivable andinventories.
Property, plant and equipment, net of accumulated depreciation,
stood at ¥124.2 billion (US$1,335.0 million), a slight decrease of 2.0%
compared with the previous period.
Capital investments in property, plants and equipment totaled ¥14.3
billion (US$153.2 million). By business segment, capital investments
amounted to ¥9.1 billion (US$98.3 million) in our Medical Equipmentand ¥4.3 billion (US$ 46.3 million) in our Pharmaceutical businesses.
Investment and other assets increased 84.2% to ¥79.3 billion(US$851.9 million), due mainly to an increase in investments inunconsolidated subsidiaries and an afﬁliate accounted by equity
method as well as our investment securities.
Current liabilities increased 20.4% from the end of the previous
period to ¥138.2 billion (US$1,485.4 million), mainly due to an increasein short-term bank loans and commercial paper.
Long-term liabilities increased 8.2% from the end of the previous
period to ¥129.1 billion (US$1,387.8 million), owing to an increase indeferred income taxes.
Total net assets increased 20.2% from the end of the previous
ﬁscal year to ¥116.1 billion (US$1,247.5 million), due to an increase inretained earnings and unrealized gain on available-for-sale securities.

Our policy is that 50% of non-consolidated net income is to be
distributed to shareholders. Employees’ bonuses are determinedaccording to the business performance of the division to which theemployees belong. Bonuses for directors and statutory auditors are
determined on the basis of corporate business performance.
Retained earnings are invested in sales and production facilities aswell as in R&D, with a view to establishing a ﬁrm management basis
and long-term business development, which in turn should ensurestable proﬁts in the future.

Cash Flow
Net cash provided by operating activities increased 39.2% comparedwith the previous period to ¥26.2 billion (US$282.0 million), mainly
because of a increase in net income coupled with a decrease inworking capital as a result of improved efﬁciency in operations.
Net cash used in investing activities amounted to ¥45.0 billion(US$483.6 million), mainly for purchases of property, plants andequipment and investments in unconsolidated subsidiaries.
Net cash provided by ﬁnancing activities amounted to ¥30.1 billion(US$323.9 million) as a result of increases in short- and long-termloans as well as commercial paper.
As a result, net cash and cash equivalents increased¥10.8 billion (US$116.5 million) compared with the end of previous
period to ¥56.2 billion (US$603.9 million).

Staff
Total number of employees at the end of the period under review
increased 585 compared with the end of the previous period to 9,939.
People employed in Japan increased 239 to 4,894, and overseas
employees increased 346 to 5,045.

25 Nipro Corporation Annual Report 2010

Risk Factors
The following are risks that may have an effect on the Nipro Group’s
results of operations and/or its ﬁnancial condition.
The items concerned were determined as at March 31, 2010.

(1) Risks Related to Product Safety
The Nipro Group brings all of its capabilities to bear in securing
product safety in the design, development and manufacturing of
medical equipment and pharmaceutical products. There are still therisks, however, that accidental defects or side-effects could result indamages to a third party and our being sued for liability.
To cover these risks, we therefore maintain general liability andproduct liability insurance. In the unlikely event of a successful claim inexcess of the insurance coverage, however, there could be a material
adverse effect on our results of operations and ﬁnancial condition.

(2) Risks Related to Supplier Concentration
The Nipro Group procures materials and parts for its operations froma large number of suppliers. Some key materials or parts may beobtained only from a single supplier or a limited group of suppliers.
If circumstances at any of these suppliers make it impossible for
us to acquire a sufﬁcient quantity of materials or parts to meet our
production needs in a timely and cost-effective manner, there could
be a material adverse effect on our results of operations and ﬁnancial
condition.

(3) Risks Related to Changes in Government Healthcare
Policies
The business sector to which the Nipro Group belongs is intimately
connected with the healthcare system and is subject to theregulations laid out by the government organizations, including the
National Health Insurance System and the Pharmaceutical Affairs
Law. Should circumstances arise in which we were unable to respondto changes in the environment brought about by unforeseeable
wholesale changes in the government healthcare policies, there could
be a material adverse effect on our results of operations and ﬁnancial
condition.

(4) Risks Related to Changes in Sale Prices
The products sold by the Nipro Group include some that are, in
general, subject every two years to the effect of price reductions in thesystem of payment for medical care, drug prices and reimbursement
prices for medical materials and supplies.
Should measures to hold down medical costs also become
pervasive worldwide, resulting in intensiﬁed competition between
corporations and leading to prices falling to a greater degree than
anticipated, there could be a material adverse effect on our results ofoperations and ﬁnancial condition.

(5) Risks Related to Changes in Prices of Raw Materials
The products manufactured by the Nipro Group include some that are
made from petrochemical products such as plastics.
Should the cost of such raw materials rise, there could be a material
adverse effect on our results of operations and ﬁnancial condition.

(6) Risks Related to Overseas Expansion
The Nipro Group maintains manufacturing bases and sales ofﬁces
around the world for the production and supply of its products.
Should there be unexpected revisions to legal regulations or politicalor economic changes in these countries or regions, there could bea material adverse effect on our results of operations and ﬁnancial
condition.

(7) Risks Related to Intellectual Property
The Nipro Group owns numerous patents and trademarks, andmaintains various proprietary rights for the products it manufactures.
Additionally, we take all possible measures to avoid infringing on
the patents and proprietary rights of any third party, and to avoid
breaching any license agreements we have concluded concerningtechnologies. Nevertheless, if an unanticipated claim for damages
were to be made by a third party and the defense of the Nipro Group
were to be rejected, there could be a material adverse effect on its
results of operations and ﬁnancial condition.

(8) Risks Related to Environmental Regulations
The Nipro Group believes it has taken adequate precautions tocomply with applicable regulations in the course of its businessactivities. Should our activities cause an unforeseen environmental
problem, however, with a claim for damages made against us, there
could be a material adverse effect on our results of operations andﬁnancial condition.

(9) Risks Related to Exchange Rate Fluctuations

Japanese yen for the purpose of producing consolidated ﬁnancial
statements. Fluctuations in exchange rates may therefore have amaterial adverse effect on our results of operations and ﬁnancial
condition.

(10) Risks Related to Investment Value
The Nipro Group’s assets include investments in stocks and othersecurities. These investments have been made for purposes suchas building good business relationships with the issuers of suchsecurities, or for gathering useful information for the development of
new products or for new business opportunities. Should the valueof these investments decline signiﬁcantly owing to ﬂuctuations inthe stock market, circumstances at an issuer, or a change in theaccounting methods used to deal with these investments, there could
be a material adverse effect on our results of operations and ﬁnancial
condition.

(11) Risks Related to Controls on Personal Information
The Nipro Group set the strict precautions to protect the conﬁdential
personal information that the Group possesses.
In the unforeseen events or accidents that the personal information isleaked outside the Group, causing loss of trust or customers, there
could be a material adverse effect on its results of operations andﬁnancial condition.

(12) Risks Related to Litigation
On December 7, 2007, a damage suit was ﬁled at the Tokyo Higher
Court by Naigai Co., Ltd. and Naigai Glass Kogyo Co., Ltd. against
the Company, based on the 25th article of the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair Trade. The claimed
amount was ¥2,032 million (US$21,840 thousand). The Company
is arguing, among others, the occurrence of the damage and thecorrelation between the act and the damage. Should the defense of
the Company be unsuccessful and a judgment to order the paymentof compensation be given to the Company, there could be a material
adverse effect on our results of operations and ﬁnancial condition.

(13) Other Risks
Fire, earthquake, terrorist act, war, epidemic, or other unforeseen
man-made or natural disasters affecting areas or facilities where the
Nipro Group conducts its business activities may possibly cause adelay or interruption in production, sales, distribution, or provision ofservices. Should such a delay or interruption become extended, there
could be a material adverse affect on our results of operations andﬁnancial condition.

The Nipro Group, including its overseas subsidiaries, carries out its
foreign currency transactions primarily in US dollars and euro, but
calculates ﬁnancial statements for its overseas subsidiaries using

Nipro Corporation Annual Report 2010 26

10 Year Summary

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31

Millions of yen
2010

2009

2008

2007

Income Statement Data:
Net sales ·····················································································¥

177,830¥

175,945¥

172,113¥

184,363

Medical Equipment·······························································

110,394

112,970

111,084

97,300

Pharmaceutical ····································································

57,97852,72648,75442,152

Glass and Materials ······························································

8,668

9,554

11,437

12,919Other ····················································································

790

695

838

1,019

Store ···················································································

—

—

—

30,973

Cost of sales ··············································································

126,145

124,396

123,108

132,142

Selling, general and administrative expenses ······························

33,591

36,77435,32839,168Operating income ·······································································

18,094

14,775

13,677

13,053

Medical Equipment (1) ·························································

18,162

16,20915,83014,334

Pharmaceutical (1) ·······························································

4,625

4,082

3,271

3,298

Glass and Materials (1) ·························································

1,925

Other (1) ···············································································

169

1,772
4

1,890
13

1,865
151

Store (1) ···············································································

—

—

—

270

Income before income taxes and minority interests ·····················

13,872

9,379

8,260

16,776

Net income ·················································································

7,253

4,531

4,454

8,555

Capital expenditures ··································································

15,20933,14225,90023,093

Depreciation and amortization ····················································

18,421

18,10915,054

12,470R&D expenses ············································································

4,846

5,352

6,194

4,461

Balance Sheet Data:
Total assets ·················································································¥

383,397¥

124,209

Property, plant and equipment-net···············································

330,641¥

126,739

349,302¥

118,812336,660
104,882

Working capital ············································································

41,72546,07053,911

43,128Current liabilities ·········································································

138,204

114,796

108,835

104,105

Long-term liabilities ······································································

129,122

119,285

120,923

105,535

Common stock············································································

28,663

28,663

28,663

28,663

Capital surplus·············································································

29,97329,97329,97529,973

Net Assets (2) ··············································································

114,309

95,049118,156

125,651Yen
Per share data:
Basic earnings (3) ·······································································

¥

114.4

¥

71.4

¥

70.2

¥

134.7

Diluted earnings (3) ·····································································

114.1

—

—

—

Cash dividends ············································································

53.0

32.0

37.5

80.0

Equity ··························································································

1,802.3

1,498.5

1,861.8

1,979.2

Number of common shares issued ··················································

63,878,505

63,878,505

63,878,505

63,878,505

Number of employees ·····································································

9,939

9,354

9,020

8,807

Equity ratio (4) (%)········································································

29.8

28.7

33.8

37.3

Return on assets (4) (%)·······························································

5.1

4.3

4.0

3.9

Return on equity (4) (%) ·······························································

6.9

4.2

3.7

7.2

Price earnings ratio (4) (times) ······················································

15.8

21.5

24.8

17.1

Selected Data and Ratios:

Note:(1) Operating income at the operating segment level is not adjusted for intra-segment transactions. See note 14 to the consolidated ﬁnancial statements.
(2) Effective April 1, 2006, the Company adopted a new accounting standard for presentation of net assets in the balance sheet issued by the Accounting Standard
Board of Japan. In the new accounting standard, net assets refer to the sum of total shareholders’ equity, total valuation and translation adjustments and others,
and minority interests. Minority interests, however, have not been included in net assets above to conform to the prior years’ presentation.
(3) Effective April 1, 2002, the Company adopted a new accounting standard for earnings per share of common stock issued by the Accounting Standards Board of Japan.
Basic earnings and diluted earnings per share for the year ended March 31, 2003 and thereafter are computed in accordance with the new standard. Basic earnings
27 Nipro Corporation Annual Report 2010

Thousands of
U.S. dollars(Note1)Millions of yen
2006
¥

¥

2005

2004

2003

2002

2010

2001

90,86882,50478,72776,00977,572

66,413

1,911,328
1,186,522

35,22026,20725,33921,97915,946

14,120623,151

11,934

11,667

11,891

11,064

11,234

11,784

93,164

1,518

1,101

1,386

1,758

1,701

2,933

8,491

67,261

70,841

71,35769,56064,76456,822—

149,971

140,072

137,153

128,776

122,092

110,608

1,355,815

44,49841,84438,99036,69534,69031,735361,038

12,332

10,404

12,557

14,89914,435

9,729

194,475

13,43011,03912,117

14,17515,016

11,913

195,206

2,111

2,261

2,471

1,981

1,104

844

49,709

1,836
529

1,889
288

1,819
404

1,777
148

1,806
115

1,773
69

20,690

578

115

420

1,109

1,037

20

—

9,061

8,660

8,044

8,781

11,617

6,641

149,097

4,513

4,519

4,216

5,078

5,842

3,401

77,95520,874

16,312

14,50020,775

17,166

14,295

163,467

12,315

10,266

9,819

8,767

7,215

6,898

197,990

3,760

3,422

3,074

2,328

2,553

3,048

52,085

206,801

338,741¥¥

192,320

293,749¥¥

188,700

279,701¥¥

180,370

252,848

106,195

98,78894,005

91,147¥¥

171,217

245,403¥¥

152,072

228,918

81,02972,061

$

1,817

$

34,57939,12328,57027,542

9,792

35,770448,464

111,285

96,24296,36488,889105,764

74,995

1,485,425

113,453

99,19886,93278,657

61,952

83,2601,387,812

28,663

28,663

28,663

28,663

23,11322,563308,072

29,972

29,972

29,972

29,972

24,43523,886322,152

112,391

96,70094,711

83,53376,09969,196

1,228,601
U.S. dollars(Note1)

Yen¥

4,120,776
1,335,006

69.6
—

¥

69.4
—

¥

64.9
—

¥

84.3
78.5

¥

104.4
92.4

¥

60.8
54.3

$

1.23
1.23

37.5

38.5

30.5

32.0

47.0

31.0

0.57

1,767.7

1,519.6

1,487.5

1,310.7

1,343.7

1,236.6

19.37

63,878,505

63,878,505

63,878,505

63,878,505

56,670,149

55,956,987

9,048

8,617

8,132

8,029

7,835

6,818

33.2

32.9

33.9

33.0

31.0

30.2

3.9

3.6

4.7

6.0

6.1

4.4

4.3

4.7

4.7

6.4

8.0

5.1

26.0

25.6

24.1

21.5

17.4

16.5

and diluted per share for the prior years are not translated to reﬂect the new standard’s provision, based on the weighted average number of outstanding shares for theperiod.
(4) Equity ratio is the ratio of the sum of total shareholders’ equity and total valuation and translation adjustments and others to total assets at the period end. Returnon assets is the ratio of operating income for the period to average of total assets during the period. Return on equity is the ratio of net income for the period toaverage of the sum of total shareholders’ equity and total valuation and translation adjustments and others during the period. Price earnings ratio is the ratio of theclosing price of the Company’s shares listed on the First Section of the Tokyo Stock Exchange on the last trading day in March of each year to basic earnings per
share.
Nipro Corporation Annual Report 2010 28

Consolidated Balance Sheets

Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2010 and 2009

Millions of yen
2010

2009

Thousands of U.S. dollars(Note 1)
2010

AssetsCurrent assets:
Cash and cash equivalents ······························································¥

56,188¥45,352$603,912

Time deposits (over three months) ····················································

3,079

3,848

33,094

Trade notes and accounts receivable (Note 5) ·································

56,30450,947605,159

Allowance for doubtful receivables ···················································

(433)

(410)

(4,654)Inventories (Note 3) ··········································································

54,704

51,114

587,962

Deferred income taxes (Note 4) ·······················································

3,149

2,847

33,846

Other current assets ·······································································

6,938

7,168

74,570Total current assets ··································································

179,929

160,866

1,933,889

Property, plant and equipment (Notes 5 and 6):
Land ·······························································································

19,766

19,459212,446

Buildings and structures ···································································

107,011

101,361

1,150,161

Machinery and equipment ······························································

143,960

131,332

1,547,291

Construction in progress ·································································

11,993

16,848

128,902282,730

269,000

3,038,800

Accumulated depreciation ······························································(158,521)(142,261)(1,703,794)

Property, plant and equipment-net ···········································

124,209126,739

1,335,006

and an afﬁliate accounted for by equity method·························

22,787

3,667

244,916

Investment securities (Note 7) ···························································

50,08833,203538,349

Lease deposits ················································································

1,871

2,030

20,110

Deferred income taxes (Note 4) ······················································

335

141

3,601

Other ······························································································

4,178

3,995

44,905Investments and other assets:
Investment in unconsolidated subsidiaries

79,259Total investments and other assets ············································
Total ······································································································
The accompanying notes are an integral part of these statements.

29 Nipro Corporation Annual Report 2010¥

383,397¥

43,036

851,881

330,641$ 4,120,776

Thousands of U.S. dollars(Note 1)
2010

Millions of yen
2010

2009

Liabilities and net assets
Current liabilities:
Short-term bank loans (Notes 5 and 10) ··········································¥

44,201¥

30,488$475,075

Current portion of long-term debt (Notes 5 and 10) ························

30,402

23,832

326,763

Trade notes and accounts payable ·················································

29,20428,323313,886

Accrued income taxes ····································································

4,933

2,281

53,020Accrued expenses ··········································································

9,921

8,288

106,632

Allowance for loss on clearance of business ····································

1,955

1,955

21,012

Commercial papers ··········································································

10,000—107,481

Notes and accounts payable for plant and equipment ····················

5,803

18,17262,371Other current liabilities ····································································

1,785

1,457

19,185

Total current liabilities ··································································

138,204

114,796

1,485,425

Long-term liabilities:··················································

115,840

114,172

1,245,056

Accrued pension and severance liabilities (Note 11) ························

1,973

1,889

21,206

Deferred income taxes (Note 4) ······················································

7,771

913

83,523Long-term debt (Notes 5 and 10)

Other long-term liabilities ································································

3,538

2,311

38,027

Total long-term liabilities ······························································

129,122

119,285

1,387,812

28,663

28,663308,072

Capital surplus ················································································

29,97329,973322,152

Retained earnings ···········································································

47,22041,458507,524

Less cost of common shares of treasury stock ·······························

(862)

(850)

(9,265)
1,128,483

Commitments and contingent liabilities (Note 12)
Net Assets (Note 13):
Common stock ················································································
Authorized: 200,000,000 shares
Issued :63,878,505 shares(455,328 shares in 2010 and 447,874 shares in 2009)
Total shareholders' equity ·······················································

104,994

99,244

Unrealized gain on available-for-sale securities ·································

15,024

4,998

161,479

Foreign currency translation adjustments ········································(5,709)(9,193)(61,361)
100,118

Total valuation and translation adjustments and others ............

9,315(4,195)

Minority interests ·············································································

1,762

1,511

18,938

Total net assets ··········································································

116,071

96,5601,247,539

Total ·····································································································¥

383,397¥

330,641$

4,120,776

The accompanying notes are an integral part of these statements.

Nipro Corporation Annual Report 2010 30

Consolidated Statements of Income

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009

Thousands of U.S. dollars(Note 1)
2010

Millions of yen
2010
Net sales ······························································································

¥

2009

177,830¥

175,945$

1,911,328

Cost of sales ························································································

126,145

124,396

1,355,815

Gross proﬁt·······················································································

51,68551,549555,51333,591

36,774

361,038

18,094

14,775

194,475

Interest and dividend income ···························································

857

1,178

9,211

Interest expense ···············································································(2,251)(2,376)(24,194)

Selling, general and administrative expenses (Notes 15 and 16)
Operating income ·············································································
Other income (expenses):

Loss on sale and disposal of property,
plant and equipment - net ······················································

(316)

(14)

(3,396)

Exchange gain(loss) ··········································································(456)(3,746)(4,901)Equity in proﬁt(loss) of an afﬁliated company ·····································(1,329)88(14,284)

Loss on impairment of ﬁxed assets(Note 6)·······································

(23)

(163)

(247)

Abnormal manufacturing cost ···························································

(541)

(538)

(5,815)

Loss on disposal of inventories ·························································

(185)

(269)

(1,988)Loss on devaluation of inventories ····················································

—

(253)

—

Other income(loss)-net ·····································································

22

697

236

13,872

9,379

149,097

Current ·····························································································

6,843

4,037

73,549Deferred ···························································································

(475)

629

(5,105)

251

182

2,698

Income before income taxes and minority interests
Income taxes (Note 4):

Minority interests in income (loss) of consolidated
subsidiaries
Net income ·······················································································

¥

7,253

¥

4,531

$

77,955

U.S. dollars(Note 1)

Yen
Amounts per common share :Basic earnings ··················································································

114.4

71.4

1.23

Diluted earnings················································································

114.1

—

1.23

Cash dividends ·················································································

53.0

32.0

0.57

The accompanying notes are an integral part of these statements.

31 Nipro Corporation Annual Report 2010

Consolidated Statements of Changes in Net Assets

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009

Millions of yen

Thousands

Balance at March 31, 2008 ···Outstanding
number ofshares ofcommonstock

Commonstock

CapitalsurplusRetainedearnings

63,463¥28,663¥29,975¥39,477

Net income ·····················
Increase (decrease) in
retained earnings due
to inclusion of new
subsidiaries in
consolidation ················Cash dividends ················

Treasurystock¥(795)

4,531

Purchase of treasury stock ··(42)

Disposal of treasury stock ··Other net change
during the year ··············

10

Balance at March 31, 2009 ···63,431

29,973

Unrealized
gain onavailable-for-salesecurities¥97,320¥18,948

Total valuation
Foreignandcurrencytranslationtranslation adjustments
adjustments and others¥1,888¥20,836

Minority
interests

Total
net assets¥1,388 ¥119,544

4,531

4,531

84

84

84

(2,634)(2,634)(2,634)

(73)

(73)

(73)

18

16

(2)

28,663

Total
shareholders’equity41,458

(850)

16

—

(13,950)(11,081)(25,031)123(24,908)

99,244

4,998(9,193)(4,195)

1,511

96,560Net income ·····················

7,253

7,253

7,253

Cash dividends ···············(1,491)(1,491)(1,491)

(13)

(13)

Purchase of treasury stock ··(8)

Disposal of treasury stock ··Other net change
during the year ··············
Balance at March 31, 2010 ···063,423(13)(0)¥28,663¥29,9731¥47,2201
10,0263,484

13,510¥(862) ¥104,994¥15,024¥(5,709)¥9,315251

13,761¥1,762 ¥116,071

Thousands of U.S. dollars (Note 1)

Thousands

Balance at March 31, 2009 ···1—

Outstanding
number ofshares ofcommonstock

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityUnrealized
gain onavailable-for-salesecurities

63,431$308,072$322,152$445,593$(9,136) $1,066,681$53,719

Total valuation
Foreignandcurrencytranslationtranslation adjustments
adjustments and others

Minority
interests$(98,807)$16,240 $1,037,833$(45,088)

Total
net assets

Net income ·····················

77,955

77,955

77,955

Cash dividends ···············(16,024)(16,024)(16,024)

(140)

(140)

(140)

11

11

11

Purchase of treasury stock ··(8)

Disposal of treasury stock ··Other net change
during the year ·············

0

Balance at March 31, 2010 ···63,423(0)—$308,072$322,152$507,524

107,760

37,446145,206$(9,265) $1,128,483 $161,479$(61,361)$100,118

2,698

147,904$18,938 $1,247,539

The accompanying notes are an integral part of these statements.

Nipro Corporation Annual Report 2010 32

Consolidated Statements of Cash Flows

Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2010 and 2009

Millions of yen
2010
Operating activities:
Net income ·······················································································
Adjustments to reconcile net income to net cash provided operating activities:
Depreciation and amortization ······················································
Loss on impairment of ﬁxed assets ···············································
Equity in loss (proﬁt) of an afﬁliated company ································
Allowance for doubtful receivables ················································
Provision for deferred taxes ··························································
Exchange loss (gain) ·····································································
Loss on devaluation of marketable securities ································
Loss on sale and disposal of property, plant and equipment-net ·············
Other, net ·····················································································

¥

7,253

2009
¥

4,531

Thousands of U.S. dollars(Note 1)
2010$

77,955

18,421
23
1,329
(25)
(475)
39
—
316
1,046

18,109
163
(88)
351
629
2,037
75
14
27

197,990247
14,284(269)(5,105)419—
3,396
11,242

Changes in operating assets and liabilities:
Trade receivables ··········································································
Inventories ····················································································
Other current assets ·····································································
Lease deposits ·············································································
Trade payables ·············································································
Accrued income taxes ··································································
Other, net ·····················································································
Total adjustments ······································································Net cash provided by operating activities ··································(7,035)(2,856)
(676)
(159)
4,987
2,651
1,402
18,98826,241(2,527)(6,539)
(529)
(236)
1,557
55
1,222
14,32018,851(75,612)(30,696)(7,265)(1,709)53,601
28,49315,069204,085
282,040Investing activities:
Purchase of property, plant and equipment·······································
Proceeds from sale of property, plant and equipment ·······················
Purchase of available-for-sale securities ············································
Purchase of investments in unconsolidated subsidiaries ···················Net decrease (increase) in short-term loans to afﬁliates ····················
Deposits (Over three months) ···························································
Other, net ·························································································Net cash used in investing activities ··········································(25,596)59(29)(20,618)
196
800
193
(44,995)(20,534)
390
(375)
—
(49)
(2,184)
1,566(21,186)(275,107)
634(311)(221,604)
2,107
8,599
2,073
(483,609)

Financing activities:
Net increase (decrease) in short-term loans ······································
Proceeds from long-term loans·························································
Repayment of long-term loans ··························································
Proceeds from issuance of bonds ····················································
Repayment of bonds ········································································Net increase (decrease) in commercial paper ····································Cash dividends paid ·········································································
Other, net ·························································································Net cash provided by (used in) ﬁnancing activities ·····················

13,712
29,111(18,757)
17,971(20,140)
10,000(1,491)(271)
30,1352,267
27,300(15,881)
4,979(15,150)—(2,631)(97)
787

147,377
312,887(201,601)
193,153(216,466)
107,481(16,025)(2,913)323,893(545)
10,83645,352(1,566)(3,114)47,657(5,858)116,466
487,446

Effect of exchange rate changes on cash and cash equivalents ·············Net increase (decrease) in cash and cash equivalents····················Cash and cash equivalents, beginning of period ·····························Cash and cash equivalents of newly
consolidated subsidiary, beginning of period ·····························Cash and cash equivalents, end of period ·······································
The accompanying notes are an integral part of these statements.

33 Nipro Corporation Annual Report 2010¥—
56,188¥809
45,352$—603,912

Notes to Consolidated Financial Statements

1. Basis of Presenting Consolidated Financial Statements
The ﬁnancial statements of Nipro Corporation (“the Company”)
and its consolidated domestic subsidiaries have been prepared inaccordance with the provisions set forth in the Financial Instruments
and Exchange law of Japan and its related accounting regulations,and in conformity with accounting principles generally accepted inJapan, which are different in certain respects as to application anddisclosure requirements of International Financial Reporting Standards.
Effective from the year ended March 31, 2009, the Company adopted
the “Practical Solution on Uniﬁcation of Accounting Policies Applied
to Foreign Subsidiaries for Consolidated Financial Statements” (PITF
No. 18) and as a result, the accounts of consolidated overseas
subsidiaries are prepared in accordance with either International
Financial Reporting Standards or generally accepted accounting
principles in the United States, with adjustments for the speciﬁed six
items as applicable.

In preparing the accompanying consolidated ﬁnancial statements,
certain reclassiﬁcations have been made to the consolidated
ﬁnancial statements issued domestically, in order to present themin a form which is more familiar to readers outside Japan. However,no adjustment has been made which would change the ﬁnancial
position or the results of operations presented in the original
ﬁnancial statements. In addition, the notes to consolidated ﬁnancial
statements include additional information which is not required undergenerally accepted accounting principles and practices in Japan.
The ﬁnancial statements presented herein are expressed inJapanese yen and, solely for the convenience of the reader, have beentranslated into United States dollars at the rate of ¥93.04=US$1, theapproximate exchange rate on March 31, 2010. These translations
should not be construed as representations that the Japanese yenamounts actually are, have been or could be converted into U.S.
dollar amounts.

2. Summary of Signiﬁcant Accounting Policies(a) Basis of Consolidation(c) Cash and Cash Equivalents

The consolidated ﬁnancial statements include the accounts of theCompany and the signiﬁcant subsidiaries and afﬁliated company
accounted for by the equity method.
Investments in unconsolidated subsidiaries are stated at cost andthe equity method is not applied for the valuation of such investments
since they are considered immaterial in the aggregate.
All signiﬁcant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized proﬁt included
in assets resulting from transactions within the Company and its
consolidated subsidiaries is eliminated. The difference between thecost of investments in subsidiaries and afﬁliates and the equity in their
net assets at dates of acquisition is being amortized over ﬁve years.
All accounts herein have been presented on the basis of the twelve
months ended March 31, 2010 for the Company and for consolidated
domestic subsidiaries, and December 31, 2009 for all consolidated
overseas subsidiaries.
Adjustments have been made for any signiﬁcant intercompany
transactions which took place during the period between the end of
accounting period of the consolidated overseas subsidiaries and thatof the Company.

Cash and cash equivalents include all highly liquid investments,
generally with original maturities of three months or less, that arereadily convertible to cash.

(b) Translation of Foreign Currencies(d) Inventories
Inventories are stated principally at cost, carrying amount in thebalance sheet is calculated with consideration of written downs dueto the decreased proﬁtability. Cost is determined principally by theaverage method, except for certain inventories determined by the ﬁrstin, ﬁrst-out method.

(e) Depreciation
Depreciation of property, plant and equipment of the Company andits consolidated domestic subsidiaries is computed principally by
the declining-balance method. The straight-line method is applied tobuildings acquired by the domestic companies after April 1, 1998,
and is principally applied to the property, plant and equipment ofconsolidated overseas subsidiaries.
The range of useful lives is principally from 31 to 50 years forbuildings and from 7 to 8 years for machinery and equipment.

Balance sheets of consolidated overseas subsidiaries are translated
into Japanese yen at the current exchange rate as of the balance
sheet date except for shareholders' equity, which is translated at
the historical rate. Income statements of consolidated overseas
subsidiaries are translated into Japanese yen at the average exchange
rate for the period. Resulting translation adjustments are shown as"Foreign currency translation adjustments" in the "Valuation andtranslation adjustments and others" section of net assets.

Nipro Corporation Annual Report 2010 34

(f) Investment Securities(h) Income Taxes

Investment securities are classiﬁed and accounted for, depending on
management's intent, as follows:i) held-to-maturity debt securities, which are expected to be held tomaturity with the positive intent and ability to hold to maturity arereported at amortized cost; andii) available-for-sale securities, which are not classiﬁed as theaforementioned securities, are reported at fair value. Unrealized
gain and loss, net of applicable tax, reported in the "Valuation andtranslation adjustments and others" section of net assets.
For year ended March 31, 2010, there was no held-to-maturity
debt securities held by the Company and its consolidated subsidiaries.
Non-marketable available-for-sale securities are stated at cost
determined by the average method.
For other than temporary declines in fair value, investment
securities are reduced to net realizable value by a charge to income.

The provision for income taxes is computed based on income forﬁnancial statement purpose. 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 of assets and liabilities for ﬁnancial reporting purposes andthe amounts used for income tax purposes.

(g) Leases
Finance leases, except for certain immaterial leases, are capitalized in
the balance sheet. Amortization of ﬁnance lease assets is calculated
by straight-line method over the lease period assuming no residual
value.
The Company and its consolidated domestic subsidiaries accountfor the ﬁnance leases for which ownership is not transferring to thelessee and commenced prior to April 1, 2008 as operating leases.
The pro-forma information of such leases on a “as if capitalized” asoperating leases basis is presented in Note 8. “Leases”.

35 Nipro Corporation Annual Report 2010(i) Amounts per Common Share
Basic earnings per share is computed by dividing net income
available to common shareholders by the weighted-average numberof common shares outstanding for the period. Diluted earnings per
share reﬂect the potential dilution that could occur if securities were
exercised or converted into common stock. Diluted earnings per
share of common stock assumes full conversion of the outstanding
convertible notes and bonds at the beginning of the year (or at thetime of issuance) with an applicable adjustment for related interest
expense, net of tax, and full exercise of outstanding warrants.

3. Inventories
Inventories consisted of the following:

Millions of yen
2010
Finished goods and merchandises ·······················································¥

Thousands of U.S. dollars (Note 1)
2010

2009

38,503¥$35,759413,833

Raw materials ························································································

7,547

6,853

81,115Work in process ····················································································

6,192

6,410

66,552

Packing and other ················································································

2,462

2,092

Total ····························································································¥

54,704¥

26,462$

51,114

587,962

4. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local taxes based on income which, in aggregate,
resulted in a normal statutory tax rate of approximately 40.5% for the years ended March 31, 2010 and 2009.
The signiﬁcant components of deferred tax assets and liabilities were as follows:
Millions of yen
2010

Thousands of U.S. dollars (Note 1)
2010

2009

Deferred tax assets
Operating loss carryforwards for tax purposes ···························

¥

4,330

¥

$

3,475

46,539Intercompany proﬁts ··································································

821

690

8,824

Allowance for bonuses to employees ·········································

706

654

7,588

Allowance for loss on clearance of business ·······························

792

792

8,513

Accounts receivable ···································································

190

188

2,042

Loss on impairment of ﬁxed assets ············································

808

883

8,685

Excess of allowance for doubtful accounts over tax allowable amounts ·······

1,159

1,171

12,457

Accrued pension and severance liabilities ···································

782

743

8,405

Accrued enterprise taxes····························································

378

203

4,063

Other ·························································································

1,070

1,071

11,500Gross deferred tax assets ·································································¥¥(4,941)

Less: Valuation allowance ·································································
Total deferred tax assets ···································································

11,036$

9,870

118,616(53,106)(4,272)

¥

6,095

¥

5,598

$

65,510¥10,267

¥

3,423

$

110,350

Total deferred tax liabilities ··························································¥

10,382

¥

3,523

$

111,586

Net deferred tax assets (liabilities) ··························································¥(4,287)

¥

2,075

$

(46,076)

Deferred tax liabilities
Unrealized gain on available-for-sale securities ··························

115

Other ·························································································

1,236

100

Reconciliation of the differences between the statutory tax rates and the effective income tax rates was as follows:
2010

2009

Statutory tax rate ·····························································································································

40.5%

40.5%

Expenses not deductible for tax purposes ·················································································

2.5

1.8

Non-taxable dividend income ·····································································································

(1.3)

(1.4)

Loss in subsidiaries ···················································································································

7.4

13.9

Tax credits primarily for research and development costs ···························································

(2.4)

(5.0)

Other ··········································································································································

(0.8)

0.0

Effective income tax rate ·················································································································

45.9

49.8

Nipro Corporation Annual Report 2010 36

5. Pledged Assets
The following assets were pledged as collateral:
Millions of yen
2010
Land ································································································¥

Thousands of U.S. dollars (Note 1)
2010

2009

1,523

¥

2,448

Buildings and structures ···································································

7,672

9,437

Notes receivable ··············································································

—

3,432

Total ······················································································

¥

9,195

¥

15,317$

16,36982,459—$98,828The above assets were pledged against the following liabilities:
Millions of yen
2010
Short term bank loans ·····································································¥

Thousands of U.S. dollars (Note 1)
2010

2009

910

¥

3,925

Current portion of long-term debt ····················································

1,137

681

Long-term debt ··············································································

5,666

5,863

Total ······················································································

¥

7,713

¥

10,469$

9,781
12,22160,898$82,900

6. Loss on Impairment of Fixed Assets
The Company and its consolidated subsidiaries reviewed their ﬁxed assets for impairment as of March 31, 2010 and 2009, as a result, recognizedimpairment loss of ¥23 million (US$ 241 thousand) and ¥163 million, respectively. In the year ended March 31, 2010, impairment loss wasrecognized on the long-lived assets of the oversea subsidiaries, due to the idleness or decreased recoverability.
In the year ended March 31, 2009, impairment loss was recognized on the domestic ﬁxed assets as follows.
2009
Use

Type of asset

Location

Millions of yen

Idle asset

Buildings and Machinery etc.

3 sites in Gunma Pref. etc.

Assets for common use

Buildings and Land

1 site in Akita Pref.

¥

150

¥

163

13

Total ·························································································································

7. Investment securities
Investment securities as of March 31, 2010 and 2009 consisted of the followings:
Millions of yen
2010

Thousands of U.S. dollars (Note 1)
2010

2009

Non-current:
Marketable:
Marketable equity securities ······················································¥

48,713¥42

Investment trust funds and other ··············································

31,770$523,571451

39

Sub total····················································································¥

48,755¥31,809$Non-marketable securities ··························································

¥

1,333

¥

1,394

$

14,327

Total ························································································¥

50,088¥33,203$538,349

37 Nipro Corporation Annual Report 2010

524,022

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31, 2010 and 2009 were as follows:
Millions of yen
2010
Cost

Unrealized gain

Unrealized loss¥

24,290¥25,195¥772¥

24,337¥25,195¥777

Fair Value

Available-for-sale securities
Equity securities ····································································

47

Debt securities and other ······················································
Total ·················································································—¥

48,713¥48,755

5

42

Thousands of U.S. dollars(Note 1)
2010
Cost

Unrealized gain

Unrealized loss

Fair Value$ 261,071$ 270,798

$

8,298
54

451

$

8,352

$ 524,022

Available-for-sale securities
Equity securities ···································································
Debt securities and other ······················································

505—

Total ·················································································$ 261,576$ 270,798$ 523,571

Millions of yen
2009
Cost

Unrealized gain

Unrealized loss¥

24,200¥11,279

¥

3,709

¥

24,261¥

11,279¥3,731

Fair Value

Available-for-sale securities
Equity securities ···································································
Debt securities and other ·····················································
Total ·················································································

61

—

¥

31,770¥31,8092239

8. Leases
Finance leases entered into prior to April 1, 2008 that do not transfer ownership of leased property to the lessee are accounted for as if they wereoperating leases. The details of such ﬁnance leases accounted for as operating leases at March 31, 2010 and 2009 were as follows:
Millions of yen
2010
Acquisition cost ·····················································································¥Net leased property ···············································································

1,431

¥

1,098

Accumulated depreciation ·····································································¥

Thousands of U.S. dollars (Note 1)

333

1,659

¥

546

Millions of yen¥

Total ·······························································································

258

¥

¥

495

$

3,579

Thousands of U.S. dollars (Note 1)
2010

290

$

2,773

$

5,320

2,547

440
¥

15,38011,801

2009

237

Payments due after one year ··································································

$

1,113

2010
Payments due within one year ································································

2010

2009

730

Lease payments under such leases for the years ended March 31, 2010 and 2009 were ¥307 million(US$3,300 thousand) and ¥535million,
respectively.

Nipro Corporation Annual Report 2010 38

9. Financial instruments(1) Circumstances on ﬁnancial instruments(a) Policy for ﬁnancial instruments
The Company manages the temporary surplus funds by deposit with banks that have a high level of safety.
The Company raises funds for business operation with mainly bank loans and bonds considering their business investment and cash planning.
(b) Details and risk of ﬁnancial instruments and its risk management
Receivable such as trade notes and accounts receivable are exposed to customer’s credit risk. Receivables denominated in foreign currencies are
exposed to the market risk of ﬂuctuation in foreign currency exchange rates.
In order to reduce the customer’s risk, the company monitors the dues and balances by customer in accordance with the company’s regulationsof credit administration.
Investments securities are exposed to the market ﬂuctuation risk, but mainly consist of equity of the companies which conduct business with thecompany. The company periodically reviews the market price of such securities.
Payables such as trade notes, accounts payable and accounts payable other are due within 1 year. Payables denominated in foreign currency are
exposed to the risk of ﬂuctuation in foreign currency exchange rates.
Short-terms loans payable are mainly borrowed to raise operating capital and long-terms loans payable are mainly borrowed to make capital
expenditures. Bonds and commercial papers are mainly issued to raise the funds for bonds retirement.
Lease obligations are mainly for the capital expenditures, free from interest-rate risk because the interest rate is ﬁxed.
Payables, loans and bonds are exposed to the liquidity risk, but the Company and its subsidiaries manage the risk by establishing cash planning.
(c) Supplemental information on market values of ﬁnancial instruments
Market values of ﬁnancial instruments include values based on market price and reasonably estimated values when market price is not available.
Because a change factor is counted in the estimation, the estimated price may be changed by adopting different assumptions.

(2) Fair values of ﬁnancial instruments
The book values, fair values and the differences between them as of March 31, 2010 are as follows (Financial instruments for which the fair value
is extremely difﬁcult to determine are not included as described in Remark 2.):Thousands of U.S.
dollars (Note 1)
Difference

Millions of yen

Cash on hand and in banks ················································

Book value

Fair value

Difference

¥

¥

¥

59,26759,267—$—

Trade notes and accounts receivable, net allowance for
doubtful receivables ····························································

55,87155,871——

Investments securities ·······················································

48,75548,755——

Assets total ·······································································¥

163,893¥

163,893

¥

—

$

—

Trade notes and accounts payable ····································¥

29,204¥29,204¥—$—

Short-term bank loans, current portion of long-term debt,
84,603and commercial paper ······················································

84,603——

Other notes and account payable (1) ·································

9,662

9,662

—

—

Long-term debt ··································································

115,840

115,216

624

6,707

1,416

Lease obligations (2) ···························································
Liabilities total ·····································································¥

240,7251,343¥

240,028

Note:(1) This is included in accrued expenses and notes and accounts payable for plant and equipment on the balance sheet.
(2) This is included in other current liabilities and other long-term liabilities on the balance sheet.

39 Nipro Corporation Annual Report 2010

73
¥

697

784
$

7,491

Remark 1 Methods used to calculate fair values of ﬁnancial instruments and the details of securities<Assets>• Cash on hand and in banks and trade notes and accounts receivable
Cash on hand and in banks and trade notes and accounts receivable are stated at the relevant book value because the settlement periods areshort and the fair values are almost the same as the book value.
• Investments securities
Equity securities are stated at market value. See Note 7. “Investment securities” for the detailed information by classiﬁcation.
<Liabilities>• Trade notes and accounts payable and short-term bank loans and current portion of long-term debt
Because the settlement periods of the above items are short and their fair values are almost the same as their book values, the relevant bookvalues are used.
• Long-term debt
The fair value of long-term debt is calculated by applying a discount rate to the total of principal and interest. The discount rate is based on theassumed interest rate if a similar new loan was entered into.
• Lease obligation
The fair value of lease obligations is calculated by applying a discount rate to the total of principal and interest. The discount rate is based on theassumed interest rate if a current lease transaction was renewed.
Remark 2 Financial instruments for which the fair value is extremely difﬁcult to determine
Millions of yen¥

Unlisted equity securities ··································································

Thousands of U.S. dollars (Note 1)

24,120$259,243

Because these items have no market value and are difﬁcult to estimate the future cash ﬂow and it is extremely difﬁcult to determine their fairvalues, they are not included in investment securities and investment in unconsolidated subsidiaries and an afﬁliate accounted for by the equity
method above.
Remark 3 Planned redemption amounts after the balance sheet date for monetary receivables with maturity dates are as follows:
Millions of yen

Thousands of U.S. dollars (Note 1)

Within 1 year¥

Cash and cash equivalents ·······························································

Within 1 year

59,267$

637,006

55,871

Trade notes and accounts receivable ················································

600,505

Remark 4 Planned repayment amounts after the balance sheet date for monetary payables with maturity dates are as follows:

Within 1 year
Trades and accounts payable ························
Short-term bank loans, current portion of¥

29,204

Millions of yen
Over 1 year but Over 2 years but Over 3 years but Over 4 years but
within 2 years
within 3 years
within 4 years
within 5 years
¥
—
¥
—
¥
—
¥
—

Over 5 years¥—

84,603
9,662

—
—

—
—

—
—

—
—

—
—

Long term debt ··············································—

23,63631,30512,00130,59718,301

Lease obligations ···········································

318

293

270

252

283

long-term debt, and commercial paper ····
Other notes and account payable ···················

Total ·······························································¥

123,787

Within 1 year
Trades and accounts payables ·······················$

313,886¥

23,929¥31,575¥

12,253¥30,880Thousands of U.S. dollars (Note 1)
Over 1 year but Over 2 years but Over 3 years but Over 4 years but
within 2 years
within 3 years
within 4 years
within 5 years
$
—
$
—
$
—
$
—

—
¥

18,301

Over 5 years$—

Short-term bank loans, current portion of
long-term debt, and commercial paper ·····

909,319

Other notes and account payable ···················

103,848

—

—

—

—

—

Long term debt ··············································—

254,042

336,468

128,987

328,858

196,700

Lease obligations ···········································

3,418

Total ······························································$ 1,330,471

—

—

3,149
$

257,191

—

2,902
$

339,370

—

2,709
$

131,696

—

3,042
$

331,900—$

196,700

Nipro Corporation Annual Report 2010 40

10. Short-Term Loans and Long-Term Debt
Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rate of short-term bank loans for the years ended March 31, 2010 and 2009 was 0.846% and 1.207%,
respectively.
The weighted-average interest rate of commercial paper for the year ended March 31, 2010 was 0.107%.
Long-term debt comprised the following:Thousands of U.S. dollars(Note 1)
2010

Millions of yen
2010
1.07% unsecured bonds due 2010 ························································

¥

2009
—

¥

3,000

$

—

1.18% unsecured bonds due 2009 ························································

—

3,000

—

1.51% unsecured bonds due 2012 ························································

5,000

5,000

53,7401.37% unsecured bonds due 2014 ·························································

3,000

—

32,244

1.42% unsecured bonds due 2011 ·······················································

10,00010,000107,481

1.37% unsecured bonds due 2013 ························································

10,00010,000107,481

2.04% unsecured bonds due 2018 ·······················································

10,00010,000107,481

Zero coupon convertible bonds due 2023 ··············································—

14,000—

Zero coupon convertible bonds due 2015 ·············································

15,000—161,221

1.28% unsecured bonds due 2009 ·························································

—

100

—

0.7% unsecured bonds due 2010 ··························································

—

20

—

0.95% unsecured bonds due 2010 ·······················································

100

100

1,075

0.79% unsecured bonds due 2010 ·······················································

10

30

107

1.55% unsecured bonds due 2011 ························································
Long-term bank loans due through 2020, with weighted-averageinterest rate of 1.434% for the year ended March 31, 2010, and of
1.506% for the year ended March 31, 2009. ···········································
Less current portion of long-term debt ····················································

50

50

538

93,082(30,402)82,704(23,832)

1,000,451(326,763)

Total ·································································································In March 2003, the Company issued ¥3,000 million (US$32,244
thousand) of 1.07% privately-placed bonds due 2010.
In July 2004, the Company issued ¥3,000 million (US$32,244
thousand) of 1.18% privately-placed bonds due 2009.
In February 2009, the Company issued ¥ 5,000 mllion (US$53,740
thousand) of 1.51% privately-placed bonds due 2012.
In September 2009, the Company issued ¥ 3,000 mllion(US$32,244 thousand) of 1.37% privately-placed bonds due 2014.
In March 2006, the Company issued ¥10,000 million (US$107,481
thousand) of 1.42% unsecured bonds due 2011.
In March 2008, the Company issued ¥10,000 million (US$107,481
thousand) of 1.37% unsecured bonds due 2013.
In March 2008, the Company issued ¥10,000 million (US$107,481
thousand) of 2.04% unsecured bonds due 2018.
In July 2003, the Company issued ¥14,000 million (US$150,473
thousand) of zero coupon convertible bonds due 2023.
In March 2010, the Company issued ¥14,000 million (US$150,473
thousand) of zero coupon convertible bonds due 2015.

41 Nipro Corporation Annual Report 2010¥

115,840¥

114,172$

1,245,056

In July 2004, Zensei Pharmaceutical Industries Co., Ltd. issued¥100 million (US$1,075 thousand) of 1.28% privately-placed bondsdue 2009.
In January 2005, Zensei Pharmaceutical Industries Co., Ltd. issued¥100 million (US$1,075 thousand) of 0.7% privately-placed bonds tobe serially redeemed by 2010.
In August 2005, Zensei Pharmaceutical Industries Co., Ltd. issued¥100 million (US$1,075 thousand) of 0.95% privately-placed bondsdue 2010.
In August 2005, Zensei Pharmaceutical Industries Co., Ltd. issued¥100 million (US$1,018 thousand) of 0.79% privately-placed bonds tobe serially redeemed by 2010.
In March 2006, Zensei Pharmaceutical Industries Co., Ltd. issued¥50 million (US$537 thousand) of 1.55% privately-placed bonds due
2011.

The aggregate annual maturities of long-term debt outstanding at March 31, 2010 are as follows:
Millions of yen

Thousands of U.S. dollars (Note 1)

2010

2010

¥

2010········································································································

30,402$

326,7632011········································································································

23,636254,0412012········································································································

31,305

336,468

60,8992013 and thereafter ·················································································¥

Total ·································································································
As is customary in Japan, long-term and short-term bank loans
are made under general agreements which provide that additional
securities and guarantees for present and future indebtedness will begiven under certain circumstances at the request of the bank.

654,547

146,242$

1,571,819

In addition, the agreements provide that the bank has the right tooffset cash deposits against any long-term and short-term bank loanthat becomes due, and in case of default and certain other speciﬁed
events, against all other loans payable to the bank.

11. Accrued Pension and Severance Liabilities
The Company and certain consolidated subsidiaries have deﬁned beneﬁt pension plans and unfunded retirement beneﬁt plans for employees.
The following table sets forth the changes in projected beneﬁt obligation, plan assets and funded status of the Company and its consolidated
subsidiaries at March 31, 2010 and 2009.
Millions of yen
20101) Projected beneﬁt obligation······························································¥

Thousands of U.S. dollars (Note 1)
2010

2009

(10,084)¥$(9,194)(108,383)

2) Fair value of plan assets···································································

7,122

6,337

76,5473) Projected beneﬁt obligation in excess of plan assets 1)+2) ···············(2,962)(2,857)(31,836)4) Unrecognized actuarial (gain) loss ····················································

1,039

1,030

11,1675) Unrecognized past service obligation ···············································

(15)

(18)

(161)

6) Total 3)+4)+5) ·················································································(1,938)(1,845)(20,830)357) Prepaid pension cost ······································································
8) Accrued pension and severance liabilities 6)-7) ································¥(1,973)

376

44
¥

$

(1,889)(21,206)

The breakdown of net pension and severance costs for the years ended March 31, 2010 and 2009 were as follows:
Millions of yen
2010
Service cost ·······················································································¥

Thousands of U.S. dollars (Note 1)
2010

2009

640

¥

679

$

6,879

Interest cost ························································································

223

220

2,397

Expected return on plan assets ····························································

(103)

(116)

(1,107)

Amortization of actuarial gain ·······························································

83

(230)

892

Amortization of past service obligation ··················································

(3)

(3)

(32)

Other ····································································································

30

85

Net pension and severance costs ·························································

¥

870

¥

635

322
$

9,351

The assumptions used in the accounting for the above beneﬁt plans were as follows:
2010

2009

Discount rate ························································································

Primarily 1.8%

Primarily 2.5%

Expected rate of return on plan assets ·················································

Primarily 1.5%

Primarily 1.5%

Amortization period of past service obligation ·······································

Primarily 5 years

Primarily 5 years

Amortization period of actuarial differences ···········································

Primarily 5 years

Primarily 5 years

Nipro Corporation Annual Report 2010 42

12. Commitments and Contingent Liabilities
The Company and Consolidated Subsidiaries had the following commitments and contingent liabilities:
Millions of yen
2010
Liabilities for guarantees ·······································································¥

Thousands of U.S. dollars (Note 1)
2010

2009
—

¥

54

$

—

Export drafts discounted ······································································

3

18

32

Trade notes receivable discounted ························································

32

14

343

Total ·······························································································

¥

35

¥

86

$

375

13. Net Assets
The signiﬁcant provisions in the Corporate Law of Japan (the“Corporate Law”) that inﬂuence ﬁnancial and accounting matters are
summarized below:(a) Dividends
Under the Corporate Law, 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 meetcertain criteria such as (1) having the board of directors, (2) having
independent auditors, (3) having the board of corporate auditors, and(4) the service period of the directors is prescribed as one year rather
than the normal term of two years by its articles of incorporation, theboard of directors may declare dividends (except for dividends in kind)
if the company has prescribed so in its articles of incorporation. The
Company’s present system meets the ﬁrst three criteria but the twoyear service period of the directors does not meet the fourth criterion.
Interim dividends may also be paid once a year by the resolutionof the board of directors if the articles of incorporation of the company
stipulate so. The Company’s articles of incorporation contain such a
stipulation, and it pays interim dividend semi-annually by the resolutionof the Board of Directors.
The Corporate Law provides certain limitations on the amounts
available for dividends or the purchase of treasury stock.

(b) Increases / decreases and transfer of common
stock, reserve and surplus
The Corporate Law 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 capitalsurplus) depending on the equity account charged upon the paymentof such dividends until the total of aggregate amount of legal reserve
and additional paid-in capital equals 25% of the common stock.
Under the Corporate Law, the total amount of additional paid-in
capital and legal reserve may be reversed without limitation.
The Corporate Law also provides that common stock, legal
reserve, additional paid-in capital, other capital surplus and retained
earnings can be transferred among the accounts under certain
conditions by the resolution of the shareholders.
The Company’s legal reserve, which is included in retained
earnings, amounted to ¥1,196 million (US$12,855 thousand) as ofMarch 31, 2010, and its additional paid-in capital, which is included incapital surplus, amounted to ¥29,972 million (US$ 322,141 thousand)as of March 31, 2010.

14. Segment Reporting
The Company and its consolidated subsidiaries are primarily
engaged in the business consisting of three major segments: Medical
Equipment, Pharmaceutical and Glass and Materials. The Company
is organized into operating segments based on the market nature of
products.
The Medical Equipment segment manufactures and sells
disposable medical equipment. The medical equipment sold includes
dialyzers, dialysis-related devices, and injection-related products.
The Pharmaceutical segment manufactures and sells a range ofpharmaceutical products and devices, such as prescribed specialized

43 Nipro Corporation Annual Report 2010

and diagnostic products for hospital use, and medical equipment
incorporating solutions and drugs, such as pre-ﬁlled syringes andinjectable kit product.
The Glass and Materials segment sells internal glass sections for
vacuum ﬂasks, glass tubes for ampoule and vial production, vials andother glass products.
The sales of "Other" include the sales of machinery for manufactureof medical equipment and real estate rental income.

Business segment information for the years ended March 31, 2010 and 2009 was as follows:
Millions of yen
2010
MedicalEquipment

Pharmaceutical¥¥

Glass &
Materials

Other

Total

Eliminations/
Corporate

Consolidated

177,830¥¥

Net sales:
Outside······································

110,394

57,978

¥

8,668

¥

790

¥

—

177,830

Intersegment ·····························

—

0

4,144

109

4,253

(4,253)—

Total ·········································

110,394

57,97812,812899

182,083(4,253)

177,830

Operating expenses ·······················

92,23253,353

10,887730

157,202

2,534

159,736

Operating income ···························¥

18,162

¥

4,625

¥

1,925

¥

169

¥

24,881¥(6,787)¥18,094

Identiﬁable assets ···························¥

152,734¥

107,875¥

11,044

¥

5,767

¥

277,420¥

105,977¥

383,397

Depreciation and amortization ········

9,050

8,132

371

84

17,637784

Loss on impairment of ﬁxed assets

23

—

—

—

23

—

18,421
23

Capital expenditures ·······················

9,438

4,674

244

130

14,486723

15,209Eliminations/
Corporate

Consolidated$$ 1,911,328

Thousands of U.S. dollars (Note 1)
2010
MedicalEquipment

Glass &
Materials

Pharmaceutical

Outside······································$ 1,186,522

$

8,491

$ 1,911,328

Intersegment ·····························—

044,5401,172

45,712(45,712)—

Total ·········································

1,186,522

623,151

137,704

9,663

1,957,040(45,712)1,911,328

Operating expenses ·······················

991,316

573,442

117,014

7,846

1,689,618

27,235

1,716,853

Other

Total

Net sales:

195,206$

623,151$

93,164$

267,422$—

Operating income ···························$

49,709$20,690

$

1,817

$

(72,947)$194,475

Identiﬁable assets ···························$ 1,641,594$ 1,159,448$

118,702$

61,984$ 2,981,728$ 1,139,048$ 4,120,776

Depreciation and amortization ········

97,27087,403

3,988

903

189,564

8,426

197,990

Loss on impairment of ﬁxed assets

247

—

—

—

247

—

247

Capital expenditures ·······················

101,440

50,236

2,623

1,397

155,696

7,771

163,467

Total

Eliminations/
Corporate

Consolidated

175,945¥¥

Millions of yen
2009
MedicalEquipment

Pharmaceutical¥¥

Glass &
Materials

Other

Net sales:
Outside······································

112,970

52,726

¥

9,554

¥

695

¥

—

175,945

Intersegment ·····························

—

0

3,389

90

3,479

(3,479)—Total ·········································

112,970

52,726

12,943785

179,424(3,479)

175,945

Operating expenses ·······················

96,761

48,644

11,171

781

157,357

3,813

161,170

Operating income ···························¥

16,209

¥

4,082

¥

1,772

¥

4

¥

22,067¥(7,292)¥

14,775

Identiﬁable assets ···························¥

120,447¥

111,203¥

10,800

¥

6,106

¥

248,556¥

82,085¥

330,641

Depreciation and amortization ········

9,720

6,963

445

89

17,217892

Loss on impairment of ﬁxed assets

13

19

131

—

163

—

18,109163

Capital expenditures ·······················

11,516

20,633134

68

32,351791

33,142Note:(1) Operating expenses of “Eliminations/Corporate” for the years ended March 31, 2010 and 2009 included unallocated corporate costs of ¥6,787 million (US$72,947
thousand) and ¥7,292 million, respectively. The unallocated corporate costs consisted primarily of research and development costs and headquarters
administration costs.
(2) Assets of “Eliminations/Corporate” at March 31, 2010 and 2009 included ¥106,079 million (US$ 1,140,144 thousand) and ¥82,341 million of corporate assets,
respectively, consisting primarily of cash and cash equivalents, investments securities, research and development-related equipment and headquarters
administration-related assets.

Nipro Corporation Annual Report 2010 44

The information by geographic area for the years ended March 31, 2010 and 2009 was as follows:
Millions of yen
2010
Japan

America

Europe

Asia

Total

Eliminations/
Corporate

Consolidated

177,830¥¥

Net sales:
Outside·····································¥

139,379¥

17,833¥

12,901

¥

7,717

¥

—

177,830

Intersegment ····························

29,444592

415,32845,368(45,368)—

Total ·········································

168,823

18,425

12,90523,045

223,198(45,368)

177,830

145,800

Operating expenses ·······················

18,50912,857

20,856

198,022(38,286)

159,736

Operating income (loss) ··················¥

23,023

¥

(84)

¥

48

¥

2,189

¥

25,176¥(7,082)¥

18,094

Identiﬁable assets ···························¥

276,570

¥

6,268

¥

7,249

¥

10,880¥300,967¥

82,430¥383,397

Thousands of U.S. dollars (Note 1)
2010
Japan

America

Europe

Asia

Total

Eliminations/
Corporate

Consolidated$

Net sales:
Outside·····································$ 1,498,054

82,943$ 1,911,328—$ 1,911,328

Intersegment ····························

316,466$

191,670
6,363$

138,661
43$

164,746487,618(487,618)—

Total ·········································

1,814,520

198,033

138,704

247,689

2,398,946(487,618)

1,911,328

Operating expenses ·······················

1,567,067

198,936

138,188

224,162

2,128,353(411,500)

1,716,853

Operating income (loss) ··················$

247,453

$

(903)

$

516

$

23,527$

270,593$(76,118)$

194,475

Identiﬁable assets ···························$ 2,972,592$

67,369$77,913$116,939$ 3,234,813$

885,962$ 4,120,775

Total

Eliminations/
Corporate

Consolidated

175,945¥¥

Millions of yen
2009
Japan

America

EuropeAsia

Net sales:
Outside·····································¥

134,330¥

21,307¥

12,432

¥

7,876

¥

—

175,945

Intersegment ····························

30,207823

414,38245,416(45,416)—

Total ·········································

164,537

22,13012,43622,258221,361(45,416)

175,945

Operating expenses ·······················

144,027

22,721

12,46820,848200,064(38,894)

161,170

Operating income (loss) ··················¥

20,510

¥

(591)

¥

(32)

¥

1,410

¥

21,297¥(6,522)¥

14,775

Identiﬁable assets ···························¥

256,812

¥

3,025

¥

5,082

¥

6,085

¥

271,004¥

59,637¥

330,641Note:(1) Operating expenses of “Eliminations/Corporate” for the years ended March 31, 2010 and 2009 included unallocated corporate costs of ¥6,787 million (US$72,947
thousand) and ¥7,292 million, respectively. The unallocated corporate costs consisted primarily of research and development costs and headquarters
administration costs.
(2) Assets of “Eliminations/Corporate” at March 31, 2010 and 2009 included ¥106,079 million (US$ 1,140,144 thousand) and ¥82,341 million of corporate assets,
respectively, consisting primarily of cash and cash equivalents, investments securities, research and development-related equipment and headquarters administrationrelated assets.
(3) The main countries of each geographic area are:America : The United States of America and Brazil
Europe : Belgium
Asia: China, Thailand and Singapore

45 Nipro Corporation Annual Report 2010

Sales to foreign customers were as follows:
Millions of yen
2010

2009

America

Europe

Asia

Total

America

Europe

Asia

Total

overseas subsidiaries·················· ¥ 27,865¥ 20,662¥ 10,836¥ 59,363¥ 33,291¥ 19,991¥ 10,666¥ 63,948

11.6%

6.1%

33.4%

18.9%

11.4%

6.1%

36.4%

Export sales and sales by
Percentage of such sales against
consolidated net sales ················

15.7%

Thousands of U.S. dollars (Note 1)
2010
America

Europe

Asia

Total

overseas subsidiaries·················· $ 299,495$ 222,077$ 116,466$ 638,038

11.6%

6.1%

33.4%

Export sales and sales by
Percentage of such sales against
consolidated net sales ················

15.7%

15. Selling, General and Administrative Expenses
Signiﬁcant components of selling, general and administrative expenses for the years ended March 31, 2010 and 2009 are as follows:
Millions of yen
2010
Salaries ···································································································

¥

8,852

¥

3,776

Freight charges························································································

Thousands of U.S. dollars (Note 1)
2010

2009
9,610

$

95,14240,5854,320

16. Reseach and Development Expenses
Research and development expenses for the years ended March 31, 2010 and 2009 were ¥4,846 million (US$52,085 thousand) and ¥5,352
million, respectively.

17. Supplemental Disclosures of Cash Flow Information
Supplemental information related to the Consolidated Statements of Cash Flows was as follows:
Millions of yen
2010

Thousands of U.S. dollars (Note 1)
2010

2009

Cash paid during the year for:
Interest ·····························································································
Income tax ························································································

¥

2,304
4,236

¥

2,784
3,522

$

24,76445,529

Nipro Corporation Annual Report 2010 46

Report of Independent Auditors

INDEPENDENT AUDITORS’ REPORT

47 Nipro Corporation Annual Report 2010

Corporate Information (As of March 31, 2010)

Date of Establishment

Common Stock

July 8, 1954

Authorized
IssuedOutstanding
Number of Shareholders

Head Ofﬁce
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone : +81-6-6372-2331
Facsimile : +81-6-6375-0669
URL: http://www.nipro.co.jp/en

200,000,000 shares
63,878,505 shares
63,423,177 shares
15,398Stock Listings
Tokyo Stock Exchange, Osaka Securities Exchange
Ticker Code: 8086

Tokyo Ofﬁce
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone : +81-3-5684-5611
Facsimile : +81-3-5684-5610

Transfer Agent
Mizuho Trust & Banking Co., Ltd., Osaka Branch,
Stock Transfer Agency Dpt.
2-11-16 Sonezaki, Kita-ku, Osaka 530-0057, Japan

Number of Employees
Nipro Corporation ·································································
Consolidated subsidiaries ·····················································

2,216
7,723

Total .....................................................................................

9,939

Principal Shareholders

Stock Price Range(Tokyo Stock Exchange)
Number of Shares Held(in thousands)

Percentage of Total
Shares in Issue (%)

(Yen)

3,000
2,800

Sanri Kosan Co., Ltd. ····················

12,92020.23

Japan Trustee Services Bank, Ltd. ···

7,740

12.12

The Master Trust Bank of Japan, Ltd. ···

4,548

7.12

Trust & Custody Services Bank, Ltd. ····

2,436

3.81

2,000

Minoru Sano ··································

1,993

3.12

1,800

Resona Bank Limited ····················

1,380

2.16

1,600

Mizuho Corporate Bank, Ltd. ·········

782

1.23

1,400

The Dai-ichi Life Insurance Company, Limited

614

0.96

1,200

Mitsubishi Tanabe Pharma Corporation ·······

583

0.91

Nipro’s employee shareholding plan···

531

0.83

2,600
2,400
2,200

1,000

12

3

6

2008

9

12

3
2009

6

9

12

3
2010

Major Subsidiaries and Afﬁliates (As of June 30, 2010 )Area
Domestic

Country
Japan

Name

Manufacturing

Nipro Pharma Corporation

Pharmaceutical

Manufacturing and Marketing

Nipro Genepha Corporation

Pharmaceutical

Manufacturing and Marketing

Tohoku Nipro Pharmaceutical Corporation

Pharmaceutical

Manufacturing

Zensei Pharmaceutical Industries Co.,Ltd.

Pharmaceutical

Manufacturing and Marketing

Nipro Patch Co., Ltd.

Pharmaceutical

Manufacturing and R&D*

Pharmaceutical

R&D, Manufacturing and Marketing

Nipro (Thailand) Corporation Limited

Medical Equipment

Manufacturing

Nipro Sales (Thailand) Co.,Ltd.

Medical Equipment

MarketingNipro (Shanghai) Co.,Ltd.

Medical Equipment

Manufacturing and Marketing

Nipro Trading (Shanghai) Co., Ltd.

Medical Equipment

Marketing

Shanghai Nissho Vacuum Flask Reﬁll Co.,Ltd.

Glass & Materials

MarketingSingapore

Nipro Asia Pte. Ltd.

Medical Equipment

MarketingBrazilNipro Medical Ltda.

Medical Equipment

Manufacturing and Marketing

U.S.A.

Nipro Medical Corporation

Medical Equipment

MarketingNipro Diabetes Systems, Inc.

Medical Equipment

R&D and Marketing

Nipro Diagnostics, Inc.

Medical Equipment

Manufacturing and Marketing

Nipro Europe N.V.

Medical Equipment

MarketingThailand
China

Belguim*Principal business

Medical Equipment

Bipha Corporation
Overseas

Segment

Nipro Medical Industries Co.,Ltd.

: Afﬁliate accounted for by the equity method

Nipro Corporation Annual Report 2010 48

NIPRO CORPORATION
3-9-3 Honjo-nishi, Kita-ku, Osaka 531-8510, Japan
Telephone : +81-6-6372-2331
Facsimile : +81-6-6375-0669
URL: http://www.nipro.co.jp/en