W i t h c h e m i s t r y,
we can.

Profile

JSR Corporation, which was Japan Synthetic Rubber Co., Ltd. until 1997 when the company celebrated its
40th anniversary, has a clear policy of achieving an innovation-driven transformation on its own. The aim is
the formulation of a business strategy able to meet projected market trends in the 21st century.
Since its establishment in December 1957, JSR has been expanding its businesses, as a result, JSR has
grown to rank among the leading manufacturers of synthetic rubber, emulsions and plastics. Recently, JSR
has entered the rapidly growing information and electronics industries by applying its polymer technology.
JSR is supplying many types of information electronics materials, a product category where the company
has a high market share. The renewed JSR will continue to take on new challenges to realize its full potential, seeking advanced semiconductor materials, display materials, optical materials, and environment &energy and medical care-related materials that will drive progress in the 21st century.

Contents
1

Management Policies & Corporate Slogan

18

Research and Development, Intellectual Property

2

Consolidated Financial Highlights

21

The JSR Corporate Social Responsibility Report4

At a Glance

22

Corporate Governance and Compliance6

To Our Shareholders

25

Financial Section

10

Special Feature
JSR’s Semiconductor Materials Business48

Independent Auditors’ Report49

Company Network

50

Corporate Data

51

Investor Information

12 Review of Operations / Electronic Materials
12 Fine Chemicals and Other ProductsReview of Operations / Petrochemical Materials
14 Elastomers
16 Emulsions
17 Plastics

Forward-Looking Statements
Statements regarding the company‘s future plans, strategies, projected performance and outlook are based on information available at the time of writing. Readers are cautioned that economic trends in JSR‘s target markets and other risks and factors beyond the company‘s control could cause actual results to differ materially from those projected by the management.

Corporate Philosophy

By offering new materials and through their value,
contribute to the realization of a wealthy human society(people, society, and environment).

Management Policies• Persistently challenge “revolution”, constantly “evolve” globally, and strive to bea technology oriented company.
• Pursue efficient management, transparency, and wholesomeness, and strive to
be a company trusted by stakeholders.
• Practice Responsible Care for the future of the world.

Corporate Slogan

With chemistry, we can.
In commemoration of the 50th anniversary of its foundation, JSR has made its corporate slogan. “With chemistry, we can.” appeals our technological strengths tomake possible by chemistry what appears to be impossible and shows our corporate vision to pursue cutting-edge technologies to create new values, provide
solutions to our customers and society, and keep meeting challenges for the future.
The new corporate slogan shows the scope of our business domains in a clearer
way and supplements our corporate philosophy “Materials Innovation”. Under
the new corporate slogan, we endeavor to enhance our corporate brand.

ANNUAL REPORT 20081

Consolidated Financial Highlights

Fiscal Years ended March 31
FY1999FY2000FY2001Millions of Yen
FY2002
FY2003Results for the year
Net sales

Net Sales(Billions of Yen)

400

¥ 214,849¥ 219,492¥ 231,823¥ 220,058¥ 247,139

Costs and expenses—

212,860

222,400

211,246

226,345

Operating income

7,807

6,632

9,423

8,812

20,794300

Interest and dividend income

—

355

591

411

431

200

Interest expenses—(1,265)

(946)

(757)

(750)

6,960

2,545

9,332

7,915

17,855

Income before income taxes

100and minority interests0

FY’04 FY’05 FY’06 FY’07 FY’08

Net income

4,551

2,243

5,678

4,728

10,991

Capital expenditures

22,90812,317

10,936

13,265

16,048Depreciation

16,665

17,884

17,59916,507

16,489281,874

Year-end financial position
Total assets

269,167

293,477

283,859

270,054(Billions of Yen)(%)

Long-term debt due after one year—

24,76024,222

22,93424,20860

18

Total liabilities

50

15

—

169,186

155,476

135,477

139,68240

12

116,417

121,198

124,684

131,752

139,447

30

9Current ratio (times)

—

1.3

1.4

1.5

1.6

20

6

Return on assets (%)

—

0.8

2.0

1.8

3.9

10

3

Return on equity (%)

0

Equity ratio (%)

Operating Income / Operating Margin

0

FY’04 FY’05 FY’06 FY’07 FY’08

Equity

—

1.9

4.6

3.6

7.9

43.3

41.3

43.9

48.8

49.5

42.46

Operating Income (Left)
Operating Margin (Right)

Per share of common stock (Yen and U.S. Dollars)

Net Income(Billions of Yen)40

Net income

17.52

8.67

22.20

18.48

Cash dividends

6.00

6.00

6.00

6.00

7.00

448.22473.80487.42514.93544.94EquityNote: U.S. dollar amounts are translated from yen, for convenience only, at therate of ¥100.19=$1, the exchange rate prevailing at March 31, 2008.

30

2002–2003

20

HOP

10
0

JSRevolution

The period for establishing a solid
foundation in order to promote structural reform and achieve growth.

FY’04 FY’05 FY’06 FY’07 FY’08

Net Sales: ¥275.1 billion
Operating Income: ¥32.6 billion

JSR CORPORATION

2

FY2004

FY2005

FY2006

FY2007

FY2008

Thousands of
U.S. Dollars
FY2008¥ 275,071¥ 305,368¥ 338,160¥ 365,831¥ 406,968$4,061,958

242,452

260,035

284,803

310,588346,958

3,462,991

32,61945,33353,35755,24360,010598,967

397

519

635

1,030

1,309

13,066

(693)

(475)

(420)

(399)

(256)

(2,553)30,37843,47149,03853,44054,867547,627

19,35327,56430,55533,65536,994369,243

17,15618,13423,36122,09429,076290,209

14,97015,245

16,20618,133

21,180211,395

308,581

325,031

381,097

408,949

416,951

4,161,602

13,92013,857

1,607

2,745

1,525

15,223

146,280

139,249

164,389

168,963

159,288

1,589,862

159,497

182,476

212,751

235,186

252,539

1.6

1.8

1.7

1.8

1.6

6.3

8.7

8.7

8.2

Shareholders’ Equity / ROE

16.1

15.5

15.0

15.2

51.7

56.1

55.8

57.5

60.6

(%)

250

20

200

16

150

12

100

8

50

4

0

0

FY’04 FY’05 FY’06 FY’07 FY’08
Shareholders’ Equity (Left)
ROE (Right)

Total Asset / ROA(Billions of Yen)

2,520,600

14.8

12.9

(Billions of Yen)

(%)

500

15

400

12

300

9

200

6

100

3

0

FY’04 FY’05 FY’06 FY’07 FY’08
Total Assets (Left)
ROA (Right)

75.12

107.54119.63133.10147.26

9.00

14.00

20.00

24.00

32.00

0.32

623.14717.13

836.31

932.47

1,009.27

10.07

1.47
R&D Expenses / Capital Expenditure(Billions of Yen)30

2004–2006

2007–201020

STEP

JSRevolution II

JUMP

JUMP2010

The period for creating operationalfoundations for next-stage growthbusiness and increasing profits forexisting business.

The period for accelerating reform
and innovation to achieve a jump
forward while continuing growth.

Net Sales: ¥365.8 billion
Operating Income: ¥55.2 billion

Net Sales: Over ¥500 billion yen
Operating Margin: 15% or higher

ANNUAL REPORT 2008

10

0

FY’04 FY’05 FY’06 FY’07 FY’08
R&D Expenses

3

Capital Expenditure0At a Glance

Segment

Proportionof SalesFine Chemicals andOther Products
Information electronics materials,
mainly for semiconductors and flat
panel displays, are the largest component of this segment.

Petrochemicals(Billions of Yen)

(Billions of Yen)

(%)

200

50

30

150

40

24

30

18

20

12

50

10

6

0

0

100

44.8%

FY’04 FY’05 FY’06 FY’07 FY’08

0

FY’04 FY’05 FY’06 FY’07 FY’08

Operating Income* (Left)
Operating Margin (Right)* Operating income includes company-wide costs
for fundamental research and development.

Elastomers
The main products in this segment
are synthetic rubber and thermoplastic elastomers (TPE). JSR is one of theworld’s largest manufacturers of synthetic rubber.

Operating Income /Operating Margin

Net Sales

31.7%(Billions of Yen)

(Billions of Yen)

(%)

160

16

12

120

12

9

80

8

6

40

4

3

0

FY’04 FY’05 FY’06 FY’07 FY’08

00

FY’04 FY’05 FY’06 FY’07 FY’08
Operating Income (Left)
Operating Margin (Right)

Emulsions(Billions of Yen)

(Billions of Yen)

(%)

40

3

12

Emulsions are liquids in which synthetic rubber or synthetic resin havebeen dispersed in water, such as
acrylic emulsions and paper coating
latex (PCL).

30

2

8

1

4

20

6.6%

10
0

FY’04 FY’05 FY’06 FY’07 FY’08

00

FY’04 FY’05 FY’06 FY’07 FY’08
Operating Income (Left)
Operating Margin (Right)

Plastics(Billions of Yen)

(Billions of Yen)

(%)

80

5

10

The major product in this segment is
ABS plastics, a material with wellbalanced properties that is used inmany applications worldwide.

60

4

8

3

6

2

4

20

1

2

0

0

40

16.9%

FY’04 FY’05 FY’06 FY’07 FY’08

FY’04 FY’05 FY’06 FY’07 FY’08

0

Operating Income (Left)
Operating Margin (Right)

1st Tier Products
Semiconductor materials

Elastomer
Styrene-butadiene rubber (SBR) and other JSR generalpurpose synthetic rubbers are used in many applications
across industries due to their advanced technology. JSR
products are top class in the Japanese market. The largest
application is automobile tires, and JSR is making a large
contribution to increasing the performance of these products through the development of solution polymerization
SBR for high performance energy efficiency tires.

Tread : SBR , BR
Base tread : BR
Sidewall : BR
Inner liner : IIR
Chafer : BR , SBR

JSR CORPORATION4

JSR is developing materials for semiconductor production based on its many years of polymer chemistry inpetrochemical businesses. JSR is meeting diverse global
needs for high quality products in the trend of miniaturization and high integration in semiconductors. In
particular, JSR photoresists, photo-sensitive resin materials, are recognized as being global top class.

Products

Applications

Semiconductor Materials•Lithography materials (photoresists, multilayer materials and others) •CMP materials(CMP slurries and pads) •Interconnect materials (spin-on low k materials) •Packaging
materials (thick photoresists, photosensitive insulation materials and others)
FPD Materials•LCD materials (alignment films, protective coatings, color pigment dispersed resists,
photosensitive spacer and others) •PDP materials (dielectric layer of dry film, dry film forelectrode formation, and others) •Optical films (ARTON® films)
Optical Materials•Opto-functional materials (anti-reflective coatings, UV curing optical fiber coatings,
heat-resistant transparent resin ARTON®)

Semiconductor Materials•Process materials for semiconductor manufacturing
FPD Materials•Process materials for liquid crystal displays panels•Process materials for plasma display panels
Optical Materials•Anti-reflection for display surface, organic / inorganic hybrid hardcoat, prism lens, adhesive for optical discs, etc. •Optical fiber
coating materials, three-dimensional free form fabrications•Optical lens, retardation films, light guiding plates, etc.

General-Purpose Synthetic Rubbers•Styrene-butadiene rubber (SBR) •Poly-butadiene rubber (BR)Special Purpose Synthetic Rubbers•Acrylonitrile-butadiene rubber (NBR) •Butyl rubber (IIR) •Ethylene-propylene rubber(EPM/EPDM)
Thermoplastic Elastomer (TPE)•Syndiotactic 1,2-Poly-Butadiene “JSR RB®” •Hydrogenated polymer “DYNARON®”•Styrene-butadiene block copolymer “JSR TR” •Styrene-isoprene block copolymer“JSR SIS®”•Automotive tires•Automotive parts, industrial rubber parts., etc.
•Various shoe soles, injection molding items, plastic modifiers•Plastic modifiers•Various shoe soles, injection molding items•Hot melt adhesives, hot melt binders

Emulsion Products•Paper coating latex (PCL) •SB latex •Acrylic emulsion
Performance Chemicals•High-functional dispersant “DYNAFLOW®” •Organic/inorganic hybrid coating material“GLASCA®” •Standard particles •Particles for clinical diagnostic •Research reagents•Carpet backing, various binder•Coating paper for printing purposes•Floor polish, paint, binder, adhesive•Anti-staining coating materials, exterior coating, various functional
coating materials•Acrylonitrile-butadiene styrene (ABS) plastics•Acrylonitrile-ethylene-propylene styrene (AES) plastics•Automotive parts, electrical appliances, office automationequipment, etc.
•Automotive parts, electrical appliances, house-buliding
materials, etc.

Multi-layered LSI

Liquid crystal display (LCD) materials

Interconnect materials•Low-k materials

Retardation films

CMP materials•Slurries•Pads
Lithography materials•Photoresists•Multilayer materials

Anti-reflective
coatings

Photosensitive spacers

Color pigment
dispersed resists

Alignment films

Protective coatings

Transistor

ANNUAL REPORT 2008

5

To Our Shareholders

I hope this will find all of our shareholders well andprosperous.
We marked the 50th anniversary of the founding of our company
on December 10, 2007. I would like to take this opportunity to
express our deep gratitude to our shareholders for their continued support.

1. Operating Environment andReview of Business Results
In the first half of this year the Japanese economy followed apath of recovery, although moderate, on increased capital spending and an improvement in the employment situation, bothbacked by favorable corporate earnings. However, in addition tosoaring prices of raw materials due to sharp rises in crude oil prices,
the rapid appreciation of the yen against the dollar in the second
half of the year proved to be an additional profit-squeezing factor.
Against this background, we have launched “JUMP2010,” thenew mid-term business plan with fiscal 2008 as its initial year,
toward realizing what we have set for ourselves in fiscal 2011,
and focused on responses to the challenges we should address
during the period of the plan.
In the petrochemicals business, we endeavored to raise theprices of our products to maintain profit margins so as to stabilize

YOSHINORI YOSHIDA, Ph.D.
Representative Director and President

earnings amidst continually climbing prices of main raw materials.
In the fine chemicals and other products business, which mainly comprises information electronics materials, we continued tolaunch cutting-edge materials based on our core technologies as
we focused on our growth in the global market to enable further
growth of the business. In addition, we continued to implement
the Cost-Reduction Plan “E-100 Projects” throughout the entire
JSR Group, working to reduce costs at all operational stages.
As a result of the above, net sales for fiscal 2008 increased
11.2% to ¥406.9 billion, operating income was up 8.6% to ¥60.0
billion, current income rose 2.5% to ¥56.0 billion, and current net
income increased 9.9% to ¥36.9 billion, thus enabling us toachieve the initial-year goals under the JUMP2010 mid-term business plan. The Company as a whole was able to make a good start.

JSR CORPORATION

62. Dividends
We view the return of profits to our shareholders as one ofimportant management tasks, along with the enhancement ofcorporate value through the development of new businesses.
We increased the interim dividend by ¥4 per share to ¥16, andbased on the current year’s earning performance, we decided to
pay a year-end dividend of ¥16 per share, also up ¥4. This would
translate into a dividend of ¥32 per share applicable to fiscal
2008, ¥8 higher than the previous fiscal year.

3. Fiscal 2009 Business Strategy( I ) Mid- and Long-Term Corporate Strategy andthe Challenges We Should Address
Under the mid-term business plan “JUMP2010” and guided byour corporate philosophy “Materials Innovation,” with a view to
becoming an advanced chemical company in 2015, we will strive
to make a great leap forward by creating a group of next-stage
growth businesses and expanding existing businesses, with thefocus kept on technologies and human resources, and to realize¥437.0 billion, operating income of ¥61.0 billion, operating profit
margin of 14.0% and ROE of 14.0%. We will push ahead withthe further growth of the fine chemicals and other products business, stable earnings of the petrochemical business and thecost-reduction project.
(II) Strategy by Segment
1. Petrochemicals BusinessOur basic strategy in the petrochemicals business is to maintainand expand earnings through the focus on value-added products, productivity enhancement and cost reductions. In fiscal
2009, the second year of the mid-term plan, we will aim toeliminate the impact of the time lag that emerged in the previous fiscal year between price rises in raw materials and priceraises of our products, envisioning higher profits on increased
net sales, with net sales projected at ¥243.0 billion and operating income at ¥18.0 billion.
Segment-by-segment business strategies for fiscal 2009 are

net sales of over ¥500 billion and an operating income ratio of atleast 15%, as initially planned.
Furthermore, as what we envision for ourselves in 2015, we
will aim to become an advanced chemical company widely recog-

outlined below:(a) Elastomers Segment
We will make proactive efforts to expand sales of value-added
products. For that purpose, specifically, we acquired last year
the right to take delivery of 30,000 tons i.e. 50% of the total

nized as contributing to the creation of a better world by
establishing next-stage growth businesses as our third pillar built
upon the growth of the fine chemicals and other products business and petrochemicals business. In fiscal 2009, the second year

production amount of solution polymerization styrene-butadiene
rubber (S-SBR) for high performance automobile tires fromDow Europe GmbH which will start up a new production line
for value-added products. We will also strive to shorten theof the four-year mid-term plan, we will endeavor to put back on
track businesses that failed to attain goals in the previous fiscal

time lag between price rises in raw materials and price raisesof our products to secure stable earnings.
(b)Emulsions Segment
We will aim to improve earnings through the development andyear, redouble efforts to speed up the start-up of next-stage
growth businesses, and, on the basis of the above, to accelerate
growth in the latter two years of the plan.

increased sales of products in response to the additional installation of new coating equipment in the paper-manufacturing

As business prospects for fiscal 2009, we project net sale of

Fiscal 2008 Business Performance

Fiscal 2009 Business Target

Net sales and operating income were higher than the initial goals
under the JUMP2010 mid-term business plan.

We will redouble efforts to speed up the start-up of next-stage
growth businesses, and accelerate growth in the latter two years ofthe mid-term business plan.

Net Sales
Operating Income
Operating Margin (%)
ROE (%)

FY2007

FY2008(Plan)

365.8
55.2
15.1
15.0

397.0
56.0
14.1
14.0

(Billions of yen)Compared
FY2008 with theinitial goal

406.9
60.0
14.7
15.2

+10
+4
+0.6
+1.2

(Billions of yen)

Net Sales
Operating Income
Operating Margin (%)
ROE (%)

ANNUAL REPORT 2008

7

FY2008FY2009FY2011
Difference(Plan)(Target)

406.9
60.0
14.7
15.2

437.0
61.0
14.0
14.0

+30
+1
-0.7
-1.2

500
75
15 or
more over
14 ormore overindustry, the main user of our products.
(c ) Plastics Segment

expanding sales of existing materials and actively promoting new materials in such fields as photoresist, multilayer

We will strive to improve earnings by focusing on valueadded and special products and also by pushing ahead withcost reductions in response to the stronger yen-induced
deterioration in export profitability.

materials, chemical mechanical planarization (CMP) materials, and packaging and interconnect materials. We aim to
improve earnings by striving to expand sales by taking
advantage of our strong relationships with global cuttingedge semiconductor manufacturers and our technological

2. Fine Chemicals and Other Products Business
For the fine chemicals and other products business, whichmainly comprises semiconductor materials, flat panel displays

edges and by enhancing cost competitiveness through the
optimization of supply chains.
(b) FPD Materials Segment(FPD) materials and optical materials, our basic strategy is toexpand the business scale by further expanding sales of existing materials and creating new materials in peripheral area,
and to maintain and improve earnings by strongly pushing

In the FPD materials segment, our basic strategy is toexpand sales and maintain earnings by responding to quality enhancement needs for higher resolution and higher
performance, and strengthening our price responsiveness.

ahead with cost reduction on variable and other costs. For fiscal 2009, we expect to continue to post higher sales centering
on semiconductor materials and project net sales of ¥194.0 billion. We project operating income at ¥43.0 billion for theentire fine chemicals and other products business, the same as

Regarding existing materials such as alignment films andcolor pigmented resists, we plan to expand sales of products with technological edge by responding to needs
related to high-definition television sets and new processes.
We will also strive to optimize the global production system

the previous year’s level, as we expect the introduction of cuttingedge research and development equipment and a temporaryrise in depreciation and other fixed costs due to changes in thein Japan, Korea and Taiwan to strengthen cost competitiveness. As for next-generation display materials, we will
redouble efforts to put the development of new materials

tax reform.
(a) Semiconductor Materials Segment
Semiconductor materials are expected to post continued
growth over the long term, and technological needs foron track by making the most of technologies we have andalso by promoting collaboration with leading makers.
(c ) Optical Materials Segment
In fiscal 2009, we will strive to improve earnings for opticalminiaturization and high integration are growing at an everfaster rate. Viewing these market and technological trends
as an opportunity to develop new materials and generate
new businesses, we will strive to expand the business byfiber coating (OFC) materials through redoubled efforts to
reduce costs.
Regarding heat-resistant transparent resin ARTON® on topof retardation film products for high-definition televisionsets, we will add high-performance mobile applications, andother applications that can make use of the resin’s performance advantages as strategic markets.

Research & Development
We will realize the expansion of business operations and an earlystart-up of new businesses by prioritizing the allocation of resources.

R&D and R&D per Sales(Billions of Yen)
25

(%)
10.0

20

8.0

15

6.0

10

4.0

5

2.0

0

0
FY’03

FY’04

FY’05

FY’06

Finechemical and Other Product (Left)
R&D per Sales (Right)

FY’07

FY’08 FY’09 (Plan)Petrochemical (Left)

3. Next-Stage Growth Businesses
Under the current mid-term plan, we will focus on precision
processing, the environment and energy, and medical care as
areas with great growth potential in the 21st century. With thebasic strategy to create new businesses that will develop into
the pillar of growth in the future through the synergy effect ofour competitive materials and processing technologies, we aim
for net sales of at least ¥20.0 billion in fiscal 2011. In the precision processing field, we started a precision processing
research laboratories within the compounds of the Yokkaichi

JSR CORPORATION

8The Cost-Reduction Plan “E-100 Projects”
We achieved cost reductions of ¥7.7 billion in fiscal 2008. We will
work on further cost reductions with concerted efforts.
(Billions of Yen)25

Cost-Reduction

entity that contributes to society. With the phrase of “Materials
Innovation,” our corporate philosophy is to “supply new materials and using the value generated to help create a better world(for people, society and the environment).” In December 2007,

20
15
10
5
0
FY’08
Petrochemical

Finally, we have taken specific actions in the area of CSR(Corporate Social Responsibility), and are making efforts towardrealizing goals under our corporate philosophy and management
policies we have adopted for our aim of becoming a corporate

FY’09 (Target)

FY’11 (Target)on the occasion of marking the 50th anniversary of theCompany’s founding, we adopted a new corporate slogan,“With chemistry, we can.” as a move to strengthen the value of

Finechemical and Other Productour corporate brand. We plan to proactively make use of the slogan in a manner to complement our corporate philosophy,“Materials Innovation,” and all employees of the Company share
this slogan as the guiding principle for their activities.

Plant as a dedicated research laboratory in fiscal 2008. In theenvironment and energy field, we established JM Energy
Corporation. in August 2007 to manufacture and sell lithium
ion capacitors. A mass-production plant is currently under con-

In addition to strengthening JSR Group management systems,
we will fulfill our social responsibilities by conducting Responsible
Care* activities and adhering to the highest standards for corporate ethics. We intend to put forth a collective effort to become

struction in preparation for a full-fledged launch into thelithium ion capacitor business.

the company we are striving to be in 2010.
To our shareholders, we ask for your continued cooperationand support.

4. The Cost-Reduction Plan “E-100 Projects”
June 2008

Under the current mid-term business plan, we are promoting
the Cost-Reduction Plan “E-100 Projects” activity, at all of theGroup companies. We aim at cumulative cost reductions of¥28.0 billion over the four years, covering the entire supply
chain from the procurement of raw materials and production
to distribution of products, by efforts toward productivity
enhancement through process improvements and use of costcompetitive raw materials. We are making steady progress

YOSHINORI YOSHIDA, Ph.D.
Representative Director and President

under the project, achieving cost reductions of about ¥7.7 billion in the first year (fiscal 2008), higher than the initial target.
5. R&D Investment Program
We will invest a cumulative total of over ¥85.0 billion in thefour years from fiscal 2008 to fiscal 2011. We will strive tospeed up the expansion of business operations by prioritizing
the allocation of resources. We are aiming for an early start-up
of next-stage growth business, and as part of efforts toimprove the infrastructure for achieving that goal, we estab-* Responsible care denotes “voluntary management activitiesof business entities that either manufacture or deal in chemical substances under which they make public commitmentsin their management policies to secure the ‘environmentand safety’ and implement necessary measures.”lished a precision processing research facility and a fine processdevelopment office in fiscal 2008.

ANNUAL REPORT 2008

9

Special Feature

A Force behind the Scenes — JSR’s Semiconductor Materials Business1. Introduction: the Semiconductor Materials Market(a) Market Environment and Market Scale
Demand for semiconductors is on the rise for a diversity of applications such as personal computers (PCs), cell phones, flat panel
displays, digital consumer electronics and car electronics as well
as for high-performance applications. The global semiconductor
industry has continued to grow on the back of growth of infor-

Semiconductor Technology Roadmap
Production
start-up2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Generation
Flash hp

65nm

45nm

32nm

22nm

107nm 90nm 76nm 64nm 57nm 51nm 45nm 40nm 36nm 32nm 26nm
KrF
ArF Dry
ArF immersion (deionized water)
Double patteringmation technology and electronics industries and expanding
demand for digital appliances and other electronics products, andthe semiconductor market is said to be set to sustain growththrough 2010. The business environment for photoresists and

ArF immersion (high refractive fluids)
EUV# of metal levels (Logic)
Directric film
k-constantConductor (Memory)
Conductor (Logic)

other semiconductor materials calls for the development of newmaterial technologies as technological requirements for semiconductor design and manufacturing are expected to increase withrising needs for miniaturization and high integration.

10

11

CVD-Low-k
2.9

12

13

Next generation Low-k
2.4

2.1

AluminumCu
Cu

2. JSR’s Semiconductor Materials Business(a) Semiconductor Materials Business and Business Strategy
In the mid-term business plan “JUMP2010” the trend of miniaturization and high integration in semiconductors is viewed as anopportunity to develop new materials and generate new busi-

Circuit Line Width Miniaturization

nesses, and in addition to existing materials such as photoresist,chemical mechanical planarization (CMP) materials and packaging materials, we will proactively pursue the development of newmaterials and new business development. In particular, we willseek to expand market share for lithography materials (ArF photoresists, multilayer materials, top coat materials and othermaterials for immersion lithography) on the strength of differentiating technology and superior quality, and also seek to expand(b) Technology Road Map and Technological Trends
The semiconductor industry has presented the road map of chal-sales to existing users and acquire new users for CMP materials.
In the business development for new materials, we will seek tocreate new business opportunities in response to the growing trendof manufacturing technology toward miniaturization and high integration on the strength of our relationships with customers andlenges to be overcome to attain the future goals of circuit line
width miniaturization. A great variety of semiconductor materials
are being developed in tandem with the road map. This applies

partner companies. In preparation for the 32nm generation from2010 onward, we are researching a variety of shrinkage technologies
in lithography processes, and are also developing next-generation

to the lithography field as well. Mass production of the 45nm
generation started in 2007, with the focus of exposure technology beginning to shift from argon fluoride (ArF) dry exposure to
immersion exposure. The current photoresist market is being led
by ArF photoresist, and customers are striving to respond to mar-

Semiconductor
Market Forecast (by JSR)
CAGR
+6%

ket developments. JSR is carrying out active research anddevelopment in cutting-edge fields, and customers have adopted
our top coats and ArF photoresists for immersion exposure.

JSR CORPORATION

CAGR
+20%
or moreover$260
Billion’06

10

Semiconductor
Materials Sales Target¥49.8
Billion$326
Billion’10 (Forecast)New
Materials¥10 Billion
or more over

FY’07

ExsistingMaterials

FY’11 (Target)Lithography
Materials

CMP Materials

Interconnect
Materials

Packaging Materials

Existing Materials

New manufacturing plant in Yokkaichi(A conceptional image at its completion)g/i-line photoresist
KrF photoresist
ArF photoresist
Top coat materials
for immersion
ArF photoresist
for immersion
Multilayer materials(middle layer / underlayer)
OthersBM slurryCu slurry
CMP pad
OthersSpin-onlow-k materials

Thick film photoresist
photosensitive
insulation film
OthersMain
New
Materials

Lithography material evaluation facility

Materials
for double exposure
High refractive fluids
for immersion
EUV photoresist

New businesses otherthan wafer processes
with the planarization
as the keyword

Next-generation
low-k materials
precusors

SiP-related materials

low-k materials and precursors in interconnect materials. In CMP
materials, in addition to slurries and pads already being marketed,
we plan to develop new business fields other than wafer processes
with “planarization” as the keyword. In packaging technology, we
will develop and market materials in response to the growing trend
toward system in package (SiP). In other areas, we will proactively
develop various materials for CMOS image sensors by making use oftechnical knowledge we have acquired in the fields of semiconductormaterials and liquid crystal displays (LCD) materials.
(b) JSR’s Technological Advantage and Strengthening ofCompetitivenessThe electronic materials, which mainly comprise photoresists and other

Global Operations for Semiconductor Materials
We established strategic relationships with several key customers through global
channels by leveraging our global infrastructure.

Manufacturing Site
(KrF, multilayer, Dev., slurries)• • JSR•

Manufacturing Site
(All Products)

JSR Yokkaichi Plant

semiconductor materials, are the linchpin of the mid-term businessplan “JUMP2010.” We are now implementing our global strategy in
top gear and have successfully built solid relationships with the world’s
top research and development institutions as well as market-leading
enterprises. On the back of these cooperative relationships, we arepushing ahead with the development of cutting-edge technologies
while maintaining technological advantages. In addition, in the
Cost-Reduction Plan “E-100 Projects” underway company-wide,
we are carrying out a thorough review of the entire supply chain
and manufacturing processes to put the efficient system in place.
In order to develop the above-mentioned systems that should leadto earnings growth, we have been aggressively allocating resources
to the information electronic materials sector. In January. 2008, weinstalled cutting-edge evaluation equipment at the Yokkaichi
Research Center to coincide with the full-fledged launch of immersion exposure technology. We have also decided to construct a
manufacturing plant for cutting-edge lithography materials in• JSR Micro Inc.
Manufacturing Site
(KrF, ArF, multilayer)

JSR Taiwan Office

JSR Micro NV

Image sensor-relatedmaterials

response to rising quality requirements associated with miniaturization (completion set for April 2009). We plan to strengthen ourcompetitive advantage by enhancing the supply chain with the addition of a new production line.

JSR Micro Korea• JSR Micro NV

Others

3. Conclusion
JSR’s semiconductor materials business is an important key driver

JSR Micro Inc

to ensure the success of the mid-term business plan “JUMP2010.”
In order to achieve success, we will leverage our technologicaledges as well as the relationships we have developed with customers and ensure sustained growth by aggressively seeking toenter not only existing visible markets but also business fields thatwill emerge over time.
ANNUAL REPORT 200811

Review of Operations / Electronic Materials

Fine Chemicals and Other Products

The Fine Chemicals and Other
Products of JSR mainly consist of
materials for semiconductors, flat
panel displays (FPDs) and opticalmaterials. These business lines
are seeing favorable expansionsof argon fluoride (ArF) photoresists and multilayer materials
used for semiconductors, as well
as alignment films and color pigment- dispersed resists used for
liquid crystal display panels (LCD).

Net Sales and Operating Income(Billions of Yen)

200

50

160

40

120

30

80

20

40

10

0

FY’04 FY’05 FY’06 FY’07 FY’08
Net Sales (Left)
Operating Income (Right)** Operating income includes company-wide costs
for fundamental research and development.

Proportionof Sales44.8%

0

Fiscal 2008 Business Performance:
Semiconductor Materials
In the semiconductor materials segment,
photoresists, the mainstream product,
posted healthy gains reflecting expanded
domestic sales and exports to Asian
countries, due to increased production ofsemiconductor memories. Sales at subsidiaries in Europe and North America
were also higher as demand for semiconductors remained firm in the European
and North American markets. In particular, sales of ArF photoresists andmultilayer materials increased substantially as a result of their expanded
applications in cutting-edge fields as
they progressed in miniaturization. As
for new semiconductor materials, salesof chemical mechanical planarization(CMP) materials remained the samelevel as the previous year, while packaging materials posted healthy gains.
As a result, net sales of semiconductormaterials as a whole increased substantially over the previous year.
JSR has introduced a state-of-the-art
facility to research immersion exposuresat the Yokkaichi Research Center in abid to step up its drives to develop
next-generation technologies for semiconductor production. JSR has, moreover,decided to set up a new production facility for the most advanced lithographymaterials within the Yokkaichi Plant, inorder to respond to quality enhancement
needs following the surging demand andminiaturization. The construction of the
new production facility is targeted for

JSR CORPORATION

12completion in April, 2009. Through these
initiatives, we will seek to further
enhance our competitive edge in thefields of most-advanced materials.
Flat Panel Display Materials
In flat panel display materials, sales ofliquid crystal display (LCD) materials
exceeded the previous year’s levels.
Their shipments, led by exports, recovered around the middle of the year, as
LCD panel inventory adjustments that
had continued until early in the fiscal
year, came to an end and global salesof personal computers and LCD television sets expanded. In terms of
production, our manufacturing site for
LCD materials in Taiwan completed thesecond phase of construction to
expand its product lines and supply
capacities, following the same initiatives
taken by our Korean manufacturingsite. The new Taiwan facilities launchedcommercial production in November,2007. Sales of plasma display panel(PDP) materials decreased sharply
under the strong influences of production adjustments by our major users
both domestically and overseas.
Optical Materials
Sales of optical fiber coating materials, the mainstream product of this
sector, decreased in the wake of low
investment in optical fiber cables inthe domestic market. Sales of materials for anti-reflective coatings andsurface-protective coatings increased

JSR ArF resists and multilayer materials are used in
cutting edge semiconductor production.

as the demand for value-added products recovered reflecting the market’s
shift toward higher definition flatpanel television sets. Sales of ARTON®,a heat-resistant transparent resin,increased significantly as a result ofefforts to increase sales to opticalfilm makers, the primary users of
the product, but still fell short of theinitial target.

Earning:
Profits increased over the previous year
as a result of increased sales of differentiated products and cost-reduction
efforts through the Cost-Reduction
Plan “E-100 Projects”, despite downward pressures on prices stemmingfrom price declines for products of the
major user industries. As a result of theabove, net sales of fine chemicals andother products increased 13.4 % to¥182,176 million and operating income
rose 19.0 % to ¥44,287 million.

Fiscal 2009 Business Strategy:
For the current fiscal year, fine chemicals and other products targets net
sales of ¥194,000 million, seeking tofurther raise profit with a focus on
semiconductor materials. On theother hand, further appreciation of
the yen could affect the sales resultsin our overseas markets. Operating
profit is projected to stay at ¥43,000
million. This figure reflects the introduction of advanced research anddevelopment facilities as investments

and a temporal increase of depreciation expenses etc., due to tax reforms.
Semiconductor Materials
In the semiconductor material markets,sustainable growth is expected in thelong run. We are able to take advantageof the market and technology trends
such as miniaturization and high integration as opportunities to develop newmaterials and create new businesses. In
fiscal 2009, we will seek an expansionof sales, capitalizing on our strong relations with global semiconductor
manufacturers and our technologicaledge. Furthermore, by steadily implementing the Cost-Reduction Plan
“E-100 Projects”, we will strengthen our
cost competitiveness and enhance
our profitability. Moreover, we will prioritize the development of topcoatless
ArF resists to respond to new immersion
processes as well as double patterningmaterials based on the technologies of afurther advanced generation. In addition, with CMP materials, we will seek adevelopment into new fields such as
memory, while striving to also develop
new materials in the fields of packaging
materials and interconnect materials.
FPD Materials
While the LCD panel market expandedboth in terms of sales volume andamount in 2007, its rate of market
growth in sales, is projected to slow
down in 2008. The PDP market, whichshrank in 2007, is also expected to grow

ANNUAL REPORT 200813

JSR LCD materials are used in high definition TVs.

by a very small amount in 2008.
As for FPD materials as a whole, wewill seek to expand sales and maintainprofitability by meeting the trends ofenhanced performance and strengthening our capacity to respond to
pricing movements. Concerning theexisting materials including alignment
films, we will further promote the salesof our technically advantageous products by meeting the technical demandsof high-definition TVs and new processes. Moreover, by optimizing our global
production system based on Japan,
South Korea and Taiwan, we will
strengthen our cost competitiveness. In
addition, we will steadily establish
next-generation display materials
based on our technological assets.
Optical Materials
In optical fiber coating (OFC) materials,
we will seek to boost profits by further
promoting cost-reduction project infiscal 2009.
For ARTON® heat-resistant transparent resin, we will add new strategic
markets: high-performing mobile applications, in which ARTON ® can takeadvantage of its functions, as well asother applications, in addition to retardation film applications. At the sametime, we will seek to improve profitability through thorough reduction ofvariable and fixed costs.

Review of Operations / Petrochemical Materials

Elastomers

Since its foundation, JSR has offereda wide range of elastomer products
for the world market including:
general-purpose synthetic rubber
represented by styrene-butadiene
rubber (SBR) developed for car tires;and special-purpose synthetic rubbers such as acrylonitrile-butadiene
rubber (NBR), butyl rubber (IIR), andethylene-propylene rubber (EPR) .
Also, it offers thermoplastic elastomer materials (TPEs), which haveunique characteristics between rubber and thermoplastic resins.

Net Sales and Operating Income(Billions of Yen)

160

16

120

12

80

8

40

4

0

FY’04 FY’05 FY’06 FY’07 FY’08
Net Sales (Left)
Operating Income (Right)

Proportionof Sales31.7%

0

Fiscal 2008 Business Performance:
Synthetic Rubber
In the domestic synthetic rubber business, automobile tire production was
robust for general-purpose synthetic
rubbers such as styrene-butadiene rubber (SBR) and polybutadiene rubber(BR). But sales volume was lower
because of limited availability of raw
materials due to an accidental fire at oneof the facilities of Mitsubishi Chemical
Corporation. Net sales were nevertheless higher, due to efforts to raise theprices of our products in response tohigher raw materials prices. Sales ofhigh-performance special-purpose rubber was the same level as the previous
year as increased sales of acrylonitrilebutadiene rubber (NBR) and butyl
rubber (IIR) buoyed by higher automobile production was offset by decreased
sales of ethylene-propylene rubber(EPR) due to the downsizing of ourresin modifying business; neverthelesssales were higher than in the previous
year as a result of price revision efforts.
As for the exports of general-purpose
synthetic rubber, sales increased substantially from the previous year, as demand
expanded rapidly for solution polymerization styrene-butadiene rubber (S-SBR)
for fuel-efficient and high-performance
automobile tires, while demand for othergeneral-purpose synthetic rubber also
increased. Sales of high- performance
special-purpose rubber increased, with
NBR and IIR posting healthy gains
reflecting higher demand in Southeast

JSR CORPORATION

14

Asia and China.
Thermoplastic Elastomer (TPE)
Domestic sales of thermoplastic elastomers (TPEs), such as butadiene andstyrene-butadiene thermoplastic elastomers, increased due to the efforts to
expand sales in addition to the recovering demand and raised prices. Exports
also rose as demand for butadiene
thermoplastic elastomers (RB) recovered in Europe and Latin America.

Production:
JSR has entered into a capacity rights
agreement with Dow Europe GmbH
to receive 30,000 tons a year of S-SBR,
equivalent to 50% of the capacity of
Dow’s planned new production line.
This agreement is aimed at responding
to the expanding demand of S-SBR for
fuel-efficient and high-performancetires. Dow’s new production line is due
to be completed in the second half offiscal 2009. This is one example of ourinitiatives to strengthen the supply system of high-quality products, further
developing our global drives based inJapan and Europe. Concerning EPR, weconcentrated our domestic production
by increasing the output capacity of
the Kashima Plant to 36,000 tons ayear. We also expanded the output
capacity of Kumho Polychem Co., Ltd.
(KPC), a Korean joint venture, to78,000 tons a year in August, 2007.

JSR’s products support to improve the performanceof tires.

Earning:
Profits dropped mainly because of
sharp rises in raw materials prices,
despite efforts to expand sales ofvalue-added products and stepped-up
cost reductions through the promotionof the Cost-Reduction Plan “E-100
Projects” as well as efforts to raise theprices of our products in response tohigher raw materials prices.
Net sales in the elastomers segment
grew 10.9% over the previous year to¥128,952 million and operating income
decreased 9.7% to ¥11,168 million.

Fiscal 2009 Business Strategy:
In the business environment, we expect
tight supply-demand conditions for our
main synthetic rubber business, due tothe steady production of automobiles
and tires. On the other hand, further
hikes of material prices and volatile foreign exchange rates could worsen our
profitability, suggesting a severe business environment ahead. Amidst thesecircumstances, we will aggressively
expand the production of value-added
products, such as S-SBR for fuel effi-

JSR TPE products are used in the soles of shoes.

cient and high performance tires, inour bid to increase our production
capacity by efficient investments in
response to a surge of synthetic rubber
demand. Specifically, we will have Dow
Europe, with which we entered into anagreement the previous year to receive
30,000 tons a year of S-SBR start up a
new product line and expand sales ofvalue-added products aggressively. We
will also step up the price-revising cycle
to reflect more swiftly rises in raw
material prices.

Production Profile
Products
Styrene-butadiene rubber (SBR)
Acrylonitrile-butadiene rubber (NBR)

typical general–purpose synthetic rubber; for tires, conveyor belts, hoses, footwear

Application / Features

Production Capacity of Plant

High styrene rubber (HSR)a high degree of hardness with low specific gravity; for hardboard, tiles,
ebonite, footwear

Polybutadiene rubber (BR)general-purpose synthetic rubber; low in heat buildup, high in resilience;for tires and golf balls

highly oil–resistant; for industrial rubber parts

Yokkaichi—255,000 tons/year

Chiba—72,000 tons/year

Solution polymerization styrenebutadiene rubber (S-SBR)
Hydrogenated polymer (DYNARON®)
and others

specialty SBR for fuel-efficient and high-performance tires

Polyisoprene rubber (IR)physical properties duplicate those of natural rubber; for tires, belts, footwear

Kashima—41,000 tons/year(Manufactured by KRATON JSR
Elastomers K.K.)

Ethylene-propylene rubber (EPR)

specialty synthetic rubber; excellent weatherability and heat resistance;
for automotive parts, window frames, electrical cables, industrial goods

Kashima—36,000 tons/year

Butadiene resin (JSR RB®)a plastic with rubberlike properties for shoe soles, plastic modifiers, etc.

Chiba—24,000 tons/year

Styrenic thermoplastic elastomer(SBS, JSR SIS®)

used as adhesives, plastics modifiers, footwear

Kashima—45,000 tons/year(Manufactured by KRATON JSR
Elastomers K.K.)

Butadiene

material for petrochemical products

Yokkaichi—148,000 tons/year
Chiba—130,000 tons/year(Manufactured by Kashima-Tobu
Butadiene Co., Ltd.)
Kashima—120,000 tons/year

Isoprenematerial for petrochemical products

Kashima—36,000 tons/year

used as a compatible blending agents, resin modifier, adhesives, etc.

ANNUAL REPORT 200815

Yokkaichi—45,000 tons/year

Review of Operations / Petrochemical Materials

Emulsions
JSR’s PCL (paper coating latex) is widely used tobeautify papers more.

A material with special functions
based on the technology of theemulsion polymerization developed through the process ofmanufacturing synthetic rubber. A
core product of emulsion is paper
coating latex (PCL) that has the top
share in the domestic market. Withpowerful adhesiveness and excellent suitability for printing, PCL isused for a wide range of coatedpaper products. Styrene-butadiene
latex is also developed as various
types of adhesive, such as the carpet backings.

Fiscal 2008 Business Performance:

Earning:

In the case of paper coating latex

Profits dropped due, for the most part,(PCL), although production amount of

to sharp rises in raw material prices,

coated paper exceeded that of the pre-despite efforts to reduce costs throughvious year, owing to reduction in thethe promotion of the Cost-Reduction

amount of latex used by the users with

Plan “E-100 Projects” as well as efforts

the purpose of reducing the cost, theto raise the sales prices in response tosales volume remained unchanged. Net

higher raw materials prices.

sales were nevertheless higher, reflect-

In the emulsion segment, net sales

ing our efforts to raise the sales prices inincreased 10.8% to ¥26,993 million

response to higher raw materials prices.

and operating income fell 13.2% toOn the other hand, sales of acrylic emul-¥1,542 million.

sion were lower due to decreased sales
in the adhesive materials division that is

Fiscal 2009 Business Strategy:

mainly for use in building materials.

While the coated paper segment is
expected to fare well, we will increase
profits through the development andsales expansion of differentiation products in respond to the newly added
coating equipment in the paper manu-

Net Sales and Operating Income

facturing industry.

(Billions of Yen)

40

4

30

3

20

2

10

1

0

FY’04 FY’05 FY’06 FY’07 FY’08
Net Sales (Left)
Operating Income (Right)

0

Production Profile
Products

Application / Features

Production Capacity of Plant

Latex

for paper coating, carpet backing,tire cord dipping, adhesive agents,
ABS plastics

Yokkaichi—120,000 tons/year

Proportionof Sales

6.6%

JSR CORPORATION

16

Review of Operations / Petrochemical Materials

Plastics
ABS plastic products are being used for automotive parts.

JSR is operating its plastics businessunder Techno Polymer Co., Ltd., ajoint venture with Mitsubishi
Chemical Corporation. Techno
Polymer offers various kinds of
ABS plastic products that customers seek. The company’s ABS
products are noted for uniqueness, based on the combined
characteristics of various kinds ofpolymers. The company presents
ABS products, which are consistent in quality, backed by its
worldwide bases of sales, andtechnical services.

Net Sales and Operating Income

Fiscal 2008 Business Performance:

Earning:

In the domestic market, sales volume

Profits nonetheless dropped, mainly

declined due to sluggish demand for

because of the deterioration in export

plastics used in building materials as aprofitability due to the yen’s sharp appre-

result of the fall in new housing starts

ciation since the beginning of 2008,

coupled with our withdrawals fromdespite stepped-up efforts to reduce

unprofitable product lines, even thoughcosts through the promotion of the Cost-

heat-resistant ABS plastics and weath-

Reduction Plan “E-100 Projects” as well

erproof AES plastics posted healthy

as efforts to raise prices of our products ingains. However, net sales were higher

response to higher raw materials prices.

as a result of increased sales in the spe-

As a result of the above, net sales ofcial and value-added fields as well as

plastics increased 6.5 % to ¥68,844

efforts to raise prices of our products inmillion and operating income decreased

response to higher raw materials prices.

22.1 % to ¥3,012 million.

Exports increased in terms of sales,
as a result of increased sales in the spe-

Fiscal 2009 Business Strategy:

cial and value-added fields and higher

While seeking to focus on production

demand from the entertainment sec-of unique and added-value products,

tor, on top of efforts to raise prices of

we will strive to increase earnings

our products.

through cost-reduction measures tocope with worsened export profitability(Billions of Yen)

80

8

60

6

40

4

20

2

0

FY’04 FY’05 FY’06 FY’07 FY’08
Net Sales (Left)
Operating Income (Right)

Proportionof Sales16.9%

0caused by a stronger yen.

Production Profile
Products
Acrylonitrilebutadienestyrene plastics(TECHNO ABS®)
Acrylonitrileethylenepropylene
styrene plastics(AES)
Acrylonitrile
styrene plastics(AS)

ANNUAL REPORT 2008

Application / Features

Production Capacity of Plant

excellent impact resistance; for automotive parts, electrical appliances,office automation equipment, miscellaneous goods
same mechanical properties as ABS
plastics; superior weatherability;
for automotive partstransparent plastics; applications
similar to those of ABS plastics

17

Yokkaichi—280,000 tons/year(Manufactured by Techno Polymer
Co., Ltd.)

Research and Development, Intellectual Property
1. Core Technologies and the JSR Business Model
Expertise in polymerization gained from the manufacture of synthetic rubber and other petrochemical products represents the coretechnology of JSR. Leveraging this know-how, JSR has grown by
responding quickly and accurately to the technological demandsof customers concerning information electronics materials. Nextgeneration businesses as well will be rooted in the even more
effective use of this core technology. Through this process,
JSR is dedicated to developing new materials along with new
business domains.
Growth at JSR is driven by the following three business models:(1) Global Leadership
Information electronics materials products pose unique challenges. Most become outdated rather quickly and no single
product makes a significant contribution to sales. For this reason, it is imperative to secure powerful market positions
worldwide. This strength provides quick access to information
on next-generation technological breakthroughs that can beused for new research projects. With this in mind, JSR early on(2) De Facto Standards
By transforming diverse user needs into products suitable for many
applications, JSR strives to create products that become the de facto
standard in their respective categories. Success in the informationelectronics materials business requires this de facto standard
approach. Building ties rooted in trust with the most advanced users
in a targeted category is the most effective means of establishing a defacto standard. JSR and these partners can then jointly develop innovative products and quickly bring them to the market.
(3) Clusters
Cluster refers to a business made up of many niche markets, eachwith annual sales of a few billion yen. JSR gathers a number of interrelated products to create a single business unit. The image is similar
to how many grapes combine to make one bunch. Taking thisapproach raises the efficiency of research, manufacturing and sales.
To generate more benefits, JSR is moving quickly to build more clusters.
JSR is confident that adherence to these three business models will givethe company a solid base for growth for many years to come.

began establishing a global presence, supplying products toprominent companies in many countries.

2. R&D and Intellectual Property Organization and R&D Alliances(1) R&D and Intellectual Property Organization
Yokkaichi
ResearchCenterPolymer ResearchLaboratories
Performance Materials
Research Laboratories
Semiconductor Materials
Research Laboratories

Fine Electronic Materials
Research Laboratories

As of June 13, 2008

Performance chemicals Lab.

Rubber for tires, specialty rubber, functional elastomer, thermoplastic elastomer, etc.
Latex for paper coating, functional emulsions, etc.
ARTON®, optical materials for films, etc.
Functional particles, water soluble polymer, etc.

Semiconductor materials Lab.

Photoresist for semiconductors, etc.

Microfabrication processmaterials Lab.

CMP materials (slurries, pads), etc.

Packaging and assemblymaterials Lab.

Thick photoresists, photo sensitive insulation materials for LSI, etc.

Hidaka Lab.
Display materials Lab.

Pressure conductive rubber, circuit testing fixture for PCB and IC, etc.
Dry films for PDP dielectric layer and PDP electrode, etc.

Elastomer Lab.
Emulsion Lab.
Performance polymers Lab.

Display Materials Research
LCD materials 1st Lab.
Laboratories
LCD materials 2nd Lab.

Protective coatings, and color pigment dispersed resists for LCDs, etc.
Alignment films for LCD, etc.

Fine Process Development
Department

Review possibilities to industrialize new raw materials and productsin the fine material/product area.

Material Characterization & Analysis Lab.

Physical properties, analysis, characterization, CAC, etc.
Research on fine converting technology, etc.
Converting products on optical films, ARTON® films, etc.
Manufacturing technology and manufacture of film.
Optical fiber coating, radiation curing materials, particles for diagnosis, etc.
Fuel battery,etc.
R&D strategic initiatives and administration.

Precision Process
Precision Process
Technology Center Research Laboratories

Process Technology Lab.
Process materials Lab.
Precision Process High Performance Film Department
Tsukuba Research Laboratories
Research Fellow Lab. (Tsukuba)
Research and Development Dept.
Intellectual Property Dept.

Business related to intellectual property rights.

JSR CORPORATION

18

(2) R&D Alliances
JSR establishes R&D alliances as required to achieve strategic
objectives. Most alliances are with customers conducting busi-of R&D programs. JSR also assesses and manages potential risks
in its intellectual property portfolio.

nesses that use leading-edge technologies.

d. A global perspective
JSR will secure a competitive edge in its businesses by devising a
global intellectual property strategy that covers not only patents,

3. Summary of R&D Segments and Intellectual Property
JSR aims to build and enhance intellectual property (IP) networks
in all its R&D segments by creating IP, such as patents, knowhow,
designs, and trademarks, as well as by acquiring and utilizing IP on
a global scale. By strategically utilizing these networks, JSR aims toattain a predominant position over competitors in its businesses.
One priority is information electronics materials and other businesses outside the petrochemicals field. The goal is to acquire IP
that can support global expansion. In this regard, JSR is focusing
not only on Europe and North America, but also on Asia, chiefly
South Korea, Taiwan and China, as a source of IP to build andbut also trademarks and brands. In addition, JSR is upgrading theskills of its Intellectual Property Department and strengthening
ties with patent offices in other countries. This will allow JSR toacquire and utilize intellectual property rights according to thecircumstances of each country and region.
(2) Framework for Using Intellectual Property
JSR’s framework for using intellectual property is distinguished byexpand its IP network.
Another theme is creating IP in fields where JSR aims to create
new businesses that use sophisticated technologies.

two elements: a system closely linked to R&D laboratories, which
identifies ideas that should be patented, and a centralized management system for intellectual property.
JSR’s Intellectual Property Department assigns staff members towork at the Yokkaichi Area and Tsukuba Area. By maintaining

4. Policy for Acquisition andManagement of Intellectual Property

close ties with R&D activities, this approach allows the department to help create intellectual property and quickly submit
well-prepared patent applications.

(1) Strategy for Intellectual Property
JSR uses intellectual policy based on an intellectual property strategy that is made up of the following four components.

In addition, JSR and its group companies use an organizedapproach to effectively use their intellectual property and obtainworldwide patents. All matters concerning intellectual property
are managed by the JSR head office to keep this information con-a. Participation in the creation of intellectual property
JSR takes part in 3C analysis of intellectual property and technological information beginning at the stage of searching for R&D
themes. The results of this analysis are incorporated in R&D activi-

fidential and prevent leaks of technological information.

ties. Furthermore, by being selective in its intellectual property
rights applications, JSR will enhance consistency between its
technological development and patent application strategies.

R&D Organization
Yokkaichi Area
Precision
Process
Technolgy
Centerb. Acquisition of intellectual property
JSR always seeks to secure the broadest possible rights to its R&D
achievements. The aim is to acquire “usable rights” that can contribute to industry-wide progress and be licensed to othercompanies. Portfolio management of intellectual property is con-

R&D
Dept.

Yokkaichi
ResearchCenterAssigned to
Yokkaichi Area

ducted in accordance with potential earnings and the degree ofinnovation. Clearances are received for the use of patents in JSR
products and JSR acquires strategic patents that have the potential of becoming more valuable in the future.

Tsukuba Area
Tsukuba
Research
Laboratories

Intellectual
Property Dept.
centralized
management()

Research
FellowLab.
(Tsukuba)

Assigned to
Tsukuba Areac. Use of intellectual property rights
JSR makes effective use of its own patent rights and utilizes theintellectual property of other companies by entering into individ-

JSR has an intellectual property award and bonus system toincrease motivation to come up with new ideas and follow
through with inventions. The system distributes payments in linewith JSR’s workplace invention system when patent applications

ual licensing and cross-licensing agreements. The goal ispreserving the continuity of business activities and the freedom

are submitted, when a patent is registered and when a patent
generates earnings.

ANNUAL REPORT 2008

19

The following graph shows the number of patents acquiredby JSR. It shows that applications are being made andpatents acquired along with the globalization of JSR business. It also shows that total patents acquired globally andtotal overseas applications are increasing in total.
Patents

intellectual property, including patents held by other companies.
To ensure the sustainability of its operations and the freedom of
R&D programs, JSR gains access to the technologies it requires byentering into licensing and cross-licensing agreements.
(1) Fee Income From Intellectual Property

300

1,000

¥100 million (cumulative)

’08.3

250

800

200
600
’08.3

150
400
100
200

0

50
0
’02

’03

’04

Total patents acquired globally*1

’05

’06

’07

’60.3

’65.3

’70.3

’75.3

Cumulative fee income

Applications in Japan

’80.3

’85.3

’90.3

’95.3

’00.3

’05.3

Cumulative net fee expenses

Total overseas applications*2*1: Total patents acquired globally = patents acquired both in Japan and overseas*2: Total overseas applications = applications made in countries overseas, which
can include multiple patents filed based on a single Japanese application.

5. Contribution of Licensing Activities
As one means of raising earnings by supplying more distinctive
and competitive products, JSR is making effective use of its
patents. In the field of information electronics materials, where
technologies are becoming increasingly sophisticated and complex, success requires the use of a large volume of industrial(2) Time Series Analysis of Expenses for Acquisition and
Preservation of Intellectual Property
Expenses for the acquisition and preservation of intellectual
property have been increasing steadily. One reason is the risingnumber of patent applications involving optical and electronics
materials. Also responsible for this growth are foreign patentapplications associated with the increasingly global nature of
JSR’s operations. JSR expects these expenses to continue toclimb as R&D activities are expanded in line with the ongoing
mid-term business plan.

6. Contribution of Patents
The following table summarizes patents held by JSR:
Petrochemicals

As ofPatents (Japan)
Patents (Overseas)

07.3.31500
516

08.3.31428
493

Fine Chemicals andOther Products

07.3.31894
1,415

08.3.31
1,103
1,721

Others07.3.3173
30

08.3.31
67
36

Total

07.3.31
1,467
1,961

08.3.31
1,598
2,250

7. Policy regarding Intellectual Property Portfolio

8. Information Regarding Risk

JSR follows a policy of retaining rights to intellectual property thatcan be used to give its products a competitive edge. Other intellectual property having potential applications is retained or, if
necessary, provided to other companies through licensing agree-

There are no risks involving JSR’s patents or licensing agreementsthat could have a material impact on cash flows. Furthermore, in
its business operations, JSR exercises care regarding the patents
and rights of other companies, quickly conducting investigations

ments. JSR does not keep rights to intellectual property that has
no potential applications.

where necessary and strictly complying with all laws.

JSR CORPORATION

20The JSR Corporate Social Responsibility Report
Fiscal 2008 Accomplishments Concerning Key
Themes and Goals
JSR has established seven key themes based on the fundamental policiesof the Japan Chemical Industry Association concerning the environmentand safety. These key themes have been used to formulate specificaction plans designed to conduct a Responsible Care program.
Fiscal 2008 major accomplishments are listed below.

1. Consider Safety and the Environment
When Developing Products
Established JM Energy Corporation, which is working on the development, production and sales of lithium ion capacitors, which areelectricity storage devices that hold strong promise as an economicaland ecological solution for effectively using large bursts of energy thatconventional storage batteries cannot use.

2. Provide Safety and Environmental Information
Related to Products
JSR operates a Material Safety Data Sheets (MSDS) electronic data
management system to ensure that customers are provided withaccurate MSDS information for their prototypes and products.

3. Ensure the Safety of the Public andProtect the Environment

4. Reduce the Environmental Impact
Starting from April 2008, JSR launched a campaign to encourage
household energy conservation by employees at their home, aspart of measures to address global warming.
For all years from fiscal 2004 through fiscal 2008, JSR achieved
its zero waste goals for industrial waste through the implementation of comprehensive initiatives at all JSR plants. These initiatives
included reduction of waste generation, stringent separation ofmaterials, and identification of sources to accept and recycle
waste materials. As a result of these initiatives, the amount of
final landfill waste was reduced to 19 tons per year.

5. Ensure Safety and Protect the Environmental
in International Operations
As part of the company’s voluntary initiatives to train human personnel
that can work as a professional in the global society, JSR arranged forstudents of the Trier University of Applied Sciences in Germany to visit
the Yokkaichi Plant in January 2008, in order to tour the facility andlearn about environmental and safety initiatives at the chemical plant.
JSR provided energy conservation technology as well when JSR
exported technology to be used by a manufacturing facility for
1,3-butadiene in the Czech Republic.

6. Ensure Employee Health and Safety

The company conducted an audit of voluntary measurements andreporting of waste gas data for the Yokkaichi Plant, in which it
was found that nitrogen oxide (NOx) emissions were higher thanpermissible under the Air Pollution Control Law, and that erroneous information had been reported to government authorities.
In response to the exceeding of permissible emission levels, JSR
implemented measures to further strengthen its framework for
operational management at the Yokkaichi Plant. JSR will makeevery effort to prevent similar incidents from occurring again andachieve strict regulatory compliance at the Yokkaichi Plant.
The Yokkaichi Plant is involved in various initiatives such as hosting
field trips by junior high school students as part of their social studies,and conducting special science classes at junior high schools in
Yokkaichi City at the request of the Yokkaichi Board of Education.
The Yokkaichi Plant also contributes staff to act as instructors for theKids ISO 14001 environmental education program, which engages in
activities under Mie Prefecture’s basic policies on environmental
activities and environmental education. In addition, the Chiba Plant
conducted a special lecture on industrial engineering for students of
the College of Industrial Technology Nihon University, as part of an
initiative organized by the Ichihara City municipality to promote collaboration between industry and academia.

The company adopted a Mental Toughness Orientation Program(MTOP) in order to provide employees with tools to periodicallyassess and help manage the state of their own mental health.
In order to further assist employees in balancing their work and personal lives, JSR adopted new rules that enable employees to return to
the workplace if they leave the company for reasons such as marriage,
pregnancy, parenting, work transfer by a spouse, or in order to care forrelatives or family. The new rules were introduced on April 1, 2008.
Acquired “Kurumin” certification in August 2007 from the
Ministry of Health, Labour and Welfare, which is given to enterprisesthat meet certain Ministry criteria for supporting young parents.

7. Make All Employees Aware of their Responsibilities
Implemented corporate ethics training for all JSR Group managers,
and conducted a survey concerning JSR Group corporate ethics.
The survey, which was conducted among JSR Group companies inJapan, is designed to measure employees’ understanding of the
JSR Group Principles of Corporate Ethics as well as the corporate
philosophy and management policies. The survey is also designed
to gauge employee attitudes on corporate ethics and examine thecorporate culture of the JSR Group.
In the current fiscal year, JSR established training centers in
Kashima and Chiba in addition to its existing training center in
Yokkaichi, in order to provide a better framework to support continuing education for employees.

ANNUAL REPORT 200821

Corporate Governance and ComplianceFundamental Position Regarding
Corporate Governance

1. Board of Directors

JSR is dedicated to translating into actions its corporate philosophy:
Materials Innovation – Supplying new materials and using the value
generated to help create a better world (for people, society and theassociated with the execution of business operations. As a rule, thedirectors hold monthly meetings that are chaired by JSR’s president. In addition, the five corporate auditors, including threeexternal auditors, attend meetings of the Board of Directors andstate opinions as required.

As of June 13, 2008, there were nine directors. They are charged
with studying and reaching decisions concerning important items

environment). JSR’s goal is to constantly generate corporate value
by sustaining the efficiency, transparency and soundness of its
operations, while functioning as an exciting company that earns
the trust of and satisfies all stakeholders.
JSR has adopted the corporate auditor system. There are five corporate auditors, including three from outside the JSR Group. By fully
utilizing the functions of this system, JSR intends to conduct business operations in a manner that is fair, transparent and speedy.
Since fiscal 2006, JSR has also used the executive officer system
to separate the management decision-making and supervisionfunction and business execution function. This makes it possible toreach management and business execution decisions faster as wellas to speed up business operations. Another purpose of this separation is to reinforce supervisory functions. Authority andresponsibility are clearly established concerning the directors’ roleof dealing with company-wide management issues and the executive officers’ role of executing business operations.
JSR has established a Corporate Social Responsibility (CSR)
Committee in response to the high priority that society now places on
the effectiveness of corporate governance. This committee clearly
defines the company’s stance regarding compliance activities, ensuresstrict legal compliance and preserves a sound relationship with society.
In addition, in accordance with the Corporation Law of Japan,
JSR’s Board of Directors decided in May 2006 on a basic policy toestablish a sound internal control system and the company is working to strengthen and improve internal controls. In order to ensure
the effectiveness of internal controls, the Internal Audit Department
will carry out systematic audits of the execution of operations andcompliance in each department of the company and in companies
throughout the Group. Based on the results of these audits, JSR isrefining the framework for confirming legal compliance across thecompany and making further improvements.
The internal control system is also designed to ensure the fairness of financial reports. Project teams are formed to conduct
activities in this regard throughout JSR. The framework of the system has been completed and the actual activities along with thesystem started in April 2008 to establish the complete system.

Management Organization for Management
Decision-Making, Business Execution and Supervision and Other Corporate Governance Systems

2. Executive Committee
This committee studies items concerning management plans aswell as important items concerning the execution of business activities. As required, certain items submitted to this committee arepassed on to the Board of Directors for further study. The Executive
Committee is made up of the president, executive vice president,
executive managing directors, managing directors, and directors,
senior executive officers and executive officers named by the president. By handling important matters concerning the execution ofbusiness activities, the committee contributes to speedy decisionmaking and operating efficiency. As a rule, this committee meets
every Monday and is chaired by the president.

3. Strategic Issues Committee
This committee performs functions that are supplementary to thoseof the Board of Directors and Executive Committee. One role is to
examine items concerning fundamental management initiatives andmanagement policies. This committee also holds extensive debatesand discussions concerning fundamental policies associated withspecific projects and changes in business strategies. The committee’s activities are then incorporated in the deliberations conductedby the Board of Directors and Executive Committee.
The Strategic Issues Committee is made up of the president,
executive vice president, executive managing directors, managing
directors and other directors. As a rule, this committee meets every
Tuesday and is chaired by the president.

4. Board of Auditors
With five members, including three external auditors, this board
meets every month as stipulated in the regulations governing thisbody. The corporate auditors receive reports on important matters,
hold discussions and reach decisions. In accordance with standards
for audits by corporate auditors, the auditors attend meetings ofthe Board of Directors, Executive Committee and other important
committees to monitor how important decisions are reached andbusiness activities are executed. The auditors also receive reports
from the independent financial accountants, directors and others.
Through these activities, the Board of Auditors holds discussions inorder to form auditing opinions.

JSR uses the following management systems to conduct operations
in a fair and transparent manner.

JSR CORPORATION

22

5. CSR Committee

and transparency of data. Through these activities, the committee is

The CSR Committee was established to ensure that JSR fulfills its
responsibilities to society and complies with laws and regulations.

dedicated to earning greater trust from customers and preventing
any concerns among residents in the neighborhoods of JSR facilities.
Since fiscal 2007, JSR has elevated the position of its CSR reportby revamping it to include more information on CSR activities,
based on JSR’s fundamental stance regarding the three core ele-

To further strengthen the company’s CSR efforts, in June 2008 JSR
established the Risk Management Committee to further bolster thecompany’s risk management framework, and the Social
Contribution Committee to promote activities that contribute tosociety. These two committees, along with the Corporate Ethics
Committee and Responsible Care Committee, were placed under
the CSR Committee.
The CSR Committee integrates and guides the activities of theabove four committees and meets four times each year along withspecial meetings as necessary. The Committee is chaired by the
executive managing director responsible for CSR, with other members being an executive vice president, an executive managing
director, and two managing directors. Bureaus of the four committees listed above also attend meetings of the CSR Committee. The
Committee clarifies the company’s stance toward CSR and works
to strengthen CSR efforts at JSR.

ments of CSR: the economy, the environment and the community.
To make the information widely available, these reports are postedon the JSR website (http://www.jsr.co.jp/jsr_e/index.shtml).

8. Risk Management Committee
In the event of a large crisis, JSR considers actions to limit the
impact on operations to be a critical management task. In thislight the company established the Risk Management Committee
in June 2008, under the CSR Committee with the executive managing director responsible for CSR as committee chair. The
Committee decides policies and plans in response to crises, bothpresent and potential, and promotes crisis management trainingthat simulates the occurrence of large disasters.

6. Corporate Ethics Committee

9. Social Contribution Committee

The Corporate Ethics Committee chaired by managing director for
general affairs was established to implement corporate ethics standards and prevent improper actions throughout the JSR Group.
The JSR Group Principles of Corporate Ethics has been prepared to

JSR is involved in many activities that contribute to society, centered on activities at the local level. To further bolster thecompany’s activities in these areas, JSR established the Social
Contribution Committee in June 2008, under the CSR

provide a code of conduct for executives and employees. The committee oversees corporate ethics throughout the Group as well as
provides guidance regarding specific items.
Along with the existing system for submitting reports to thisCommittee with the executive managing director responsible
for CSR as committee chair. The Committee examines andimplements new programs by addressing how JSR should contribute to solve society’s issues in the good use of thecommittee, JSR has added a new external reporting channel thatuses an attorney who provides advice from an objective stance.
This provides a means for individuals to receive advice and takeactions at an early stage of a potential ethics problem.

company’s unique characteristics.

10. Status of Internal Audits, Audits by Corporate
Auditors and Financial Audits
JSR has adopted the corporate auditor system. There are currently
five corporate auditors, including three from outside the JSR Group.

7. Responsible Care Committee
JSR conducts a Responsible Care program to fulfill its obligations toachieve sustainable development. The Responsible Care
Committee was established to ensure that Responsible Care activities are conducted effectively across the entire company. The
committee is chaired by the executive managing director for safety
environmental affairs, demonstrating Responsible Care’s position
as a core component of JSR’s management.
This committee approves Responsible Care plans, evaluates andverifies results of activities, and helps maintain and upgrade JSR’s
programs to eliminate accidents, reduce environmental impact andhandle chemicals responsibly. Details and results of Responsible
Care activities are disclosed through Responsible Care reports pre-These auditors have a staff of one individual. Audits are performed
as described in item 4 concerning the Board of Auditors.
The corporate auditors work closely with the independent financial accountant. The corporate auditors receive reports on thefinancial accountant’s audit plan and audit results. Furthermore,
the corporate auditors and financial accountants exchange information and opinions as necessary in the course of each fiscal year.
JSR has established the Internal Audit Department as a specialized internal auditing unit in order to reinforce all auditing
functions associated with ensuring that internal controls are functioning in accordance with applicable laws and regulations.

pared by individual plants as well as for the company as a whole.
These reports are audited by third parties to improve the reliability

ANNUAL REPORT 200823

11. Names and Affiliations of Accountants at Independent
Financial Accounting Firm Assigned to Audit JSR
The certified public accountants assigned by the independent
financial accounting firm to audit JSR are Teruo Iida, Shinnosuke
Yamada and Masayuki Kawanishi. All three individuals are
employed by KPMG AZSA & Co. These individuals are assisted bythree certified public accountants among others.

12. Consulting Attorneys
To receive consultations from attorneys, JSR uses the services of theTokyo Aoyama Aoki Koma Law Office, Shinpo Law Office andattorney Kiyotaka Ishikawa. JSR asks for advice from these offices
and person as required.

Also, to get a firm grasp of the status of corporate ethics
throughout the entire JSR group, the company held a corporate
ethics awareness survey for all employees (August-September2007). This survey followed on from surveys held in fiscal 2005
and 2006. Survey results were fed back to all members of theGroup and are useful in corporate ethics initiatives at each Group
company. Through the survey results together with Group-wide
education and dissemination efforts JSR is working to raise corporate ethics levels throughout the Group.

3. A risk management drill was conducted by the JSR head officeand plants to strengthen the risk management framework. Thisdrill confirmed that JSR can respond properly to an accident, fireor damage from a natural disaster at a plant. Drills cover the head
office Disaster Response Headquarters, the disaster response
departments at plants, corporate communications units andActions during Past Fiscal Year to
Improve Corporate Governance
1. JSR revamped its Sustainability Report, which is centered on thecompany’s stance regarding the three core elements of CSR—
economy, environment and community—by enhancing information
on CSR activities and renaming it the JSR CSR Report (June 2006).
The report data undergoes third-party checks to heighten transparency and reliability (June 2007).

2. To further strengthen efforts in corporate ethics, in April 2005 thecompany enacted the JSR Group Corporate Ethics Platform as a set ofbasic rules for JSR and Group companies. JSR is working to disseminate
and enforce these basic philosophies.
In fiscal 2008 JSR worked to increase corporate ethics awarenessamong all employees. The company held ethics training for executives
conducted by outside experts (August 2007) and such training fordomestic managers of JSR and group companies (18 seminars,
November-December 2007).

other components of the JSR organization (November 2007).
JSR is working to further implement accident and disaster prevention measures and further strengthen its disaster responsemanagement framework.

4. JSR conducts environmental and safety audits at all of its plants,
research facilities and manufacturing subsidiaries in Japan. In fiscal
2006, these audits were extended to include JSR Group companies
outside Japan. In fiscal 2008, audits were conducted at 13 domestic group companies and three overseas group companies.

5. To reinforce compliance measures, JSR specified laws that apply
uniformly for JSR and Group companies and put in place a framework
to assess and improve the levels of compliance. Periodic compliancechecks began in fiscal 2008. Going forward JSR will conduct thesechecks on a yearly basis and make improvements as needed. Throughthese efforts the company will strengthen its compliance framework.
As of June 13, 2008

Shareholders’ Meeting
Selection/
Dismissal

Reports

Board of Auditors

Supervision/
Reports

5 Corporate Auditors(including 3 external auditors)
Information

Selection/
Dismissal

Reports

Board of Directors
9 Directors

Reports
Executive
Committee

Selection/
Dismissal

Independent Financial
Accountants
Corporate Ethics
Committee

Representative
Directors

Responsible Care
Committee
CSR Committee

Executive Officers
13 Officers
Internal
auditsSelection/
Dismissal

Reports

Strategic Issues
Committee

Internal Audit
Department

FinancialauditsBusiness Operations

JSR CORPORATION

24

Risk Management
Committee
Social Contribution
Committee

Financial Section

26

Management’s Discussion and Analysis

30

Consolidated Balance Sheets

32

Consolidated Statements of Income

33

Consolidated Statements of Changes of Net Assets

34

Consolidated Statements of Cash Flows35

Notes to Consolidated Financial Statements

48

Independent Auditors’ ReportManagement’s Discussion and Analysis
Business Results for fiscal 2008
The Japanese economy in fiscal 2008 (April 1, 2007 to March 31,2008) remained on a path of moderate recovery, supported byincreased capital spending backed by expanding exports and steadycorporate earnings and improvements in the employment environment, despite setbacks in the first half of the year such as sharp rises
in crude oil prices and decreased housing investment. However,Japan’s economic prospects grew increasingly uncertain as crude oil
prices continued to rise further after the summer, followed by turmoil in the financial markets triggered by the US subprime loan
crisis, a slowdown in the US economy and the Japanese yen’s
advances against the US dollar in the latter half of the year.
In the major industries that use our products, production of
automobiles, tires and paper was higher than in the previous year.
Production of semiconductors also exceeded the previous year’slevel, thanks to increased demand from personal computer, cell
phone and digital home electronics manufacturers, despite pricedecreases experienced by memory products. Flat display panel(FDP) performed steadily, as liquid crystal display (LCD) panels, forwhich inventory adjustment that continued until early in fiscal
2008 came to an end, saw a recovery in production from the middle of the year and also because global demand for flat panel
television sets increased.
As for raw materials, increased global demand for crude oil coupled with an inflow of speculative funds in the oil market sent prices
of crude oil and naphtha soaring, and the prices of raw materials for
the Group’s petrochemicals business rose across the board tosqueeze profitability.
Under these circumstances, in the petrochemicals business weendeavored to raise the prices of our products to maintain profit
margins so as to stabilize earnings amidst continually climbing prices
of main raw materials. In the fine chemicals and other products
business, which mainly comprises information electronics materials,
we continued to deliver cutting-edge materials based on our coretechnologies as we focused on our growth in the global market toenable further growth of the business.
In addition, we continued to implement the Cost-Reduction Plan

“E-100 Projects” throughout the entire JSR Group, working to
reduce costs at all operational stages from raw materials to distribution to improve earnings.
As a result of the above, net sales increased 11.2% to ¥406,967
million, operating income was up 8.6% to ¥60,010 million, ordinary
income rose 2.5% to ¥56,063 million, and net income for the current fiscal year increased 9.9% to ¥36,994 million.

Results by Business Segment
Petrochemicals
Net sales in the elastomers segment grew 10.9% over the previous year to ¥128,952 million and operating income increased
9.7% to ¥11,168 million.
In the domestic synthetic rubber business, automobile tire production was robust for general-purpose synthetic rubbers such as
styrene-butadiene rubber (SBR) and polybutadiene rubber (BR).
But sales volume was lower because of limited availability of raw
materials due to an accidental fire at one of the facilities ofMitsubishi Chemical Corporation. Sales were higher, however, asa result of efforts to raise prices of our products in accordancewith an increase in raw materials prices. Sales volume of highperformance special-purpose rubber was the same level as theprevious year as increased sales of acrylonitrile-butadiene rubber(NBR) and butyl rubber (IIR) buoyed by higher automobile production was offset by decreased sales of ethylene-propylene rubber(EPR) due to the downsizing of our resin modifying business; nevertheless net sales were higher than in the previous year as aresult of price revision efforts.
As for exports of general-purpose synthetic rubber, sales
increased substantially from the previous year, as demand
expanded rapidly for solution polymerization styrene-butadiene
rubber (S-SBR) for fuel-efficient, high-performance automobile
tires and demand for other general-purpose synthetic rubber also
increased. Sales of high-performance special-purpose rubberincreased, with NBR and IIR posting healthy gains thanks to higher demand in Southeast Asia and China. Domestic sales ofthermoplastic elastomers (TPEs), such as butadiene and styrene-

Net Sales & Net Income

Operating Income & Operating Margin(Billions of Yen)

(Billions of Yen)

400
338.1

300
275.0

305.3

200

365.8

40

406.9
33.6

20

19.3

FY’04
Net Sales (Left)

14.8

30

60

11.9

15.8

15.1
55.2

53.3

14.7
60.0

45.3

40

12
8

32.6

100
0

16

36.9

30.5

27.5

(%)

80

FY’05

FY’06

FY’07

FY’08

10

20

0

0

Net Income (Right)

4

FY’04

FY’05

Operating Income (Left)

JSR CORPORATION

26

FY’06

FY’07

FY’08

Operating Margin (Right)

0butadiene thermoplastic elastomers, increased thanks to efforts
to expand sales in addition to the recovering demand and raised
prices. Exports also rose as demand for butadiene thermoplastic
elastomers (RB) recovered in Europe and Latin America.
Profits dropped mainly because of sharp rises in raw materials
prices, despite efforts to expand sales of value-added products andstepped-up cost reductions through the promotion of the CostReduction Plan “E-100 Projects” as well as efforts to raise theprices of our products in response to higher raw materials prices.
In the emulsion segment, net sales rose 10.8% to ¥26,993 million but operating income fell 13.2% to ¥1,542 million.
As for paper coating latex (PCL) which is the mainstream product in the emulsion segment, although the production amountof coated paper exceeded that of the previous year, owing to
reduction in the amount of latex used by the users with the purpose of reducing the cost, the sales volume remained
unchanged. Sales were higher, however, thanks to efforts toraise the prices of our products in response to higher raw materials prices. Sales of acrylic emulsion were lower due to decreased
sales in the adhesive and impregnated materials division mainly
for use in building materials. Profits dropped mainly because of
sharp rises in raw materials prices, despite efforts to expand
sales of value-added products and stepped-up cost reductions
through the promotion of the Cost-Reduction Plan “E-100
Projects” as well as efforts to raise the prices of our products in
response to higher raw materials prices.
In the plastics segment, net sales increased 6.5% to ¥68,844
million but operating income decreased 22.1% to ¥3,012 million.
In the domestic market, sales declined due to sluggish demandfor plastics used in building materials as a result of the fall in new
housing starts coupled with our withdrawals from unprofitableproduct lines, even though heat-resistant ABS plastics and weatherproof AES plastics posted healthy gains. However, sales werehigher as a result of increased sales in the special and valueadded fields as well as efforts to raise prices of our products in
response to higher raw materials prices.
Exports increased in terms of sales, as a result of increased

Total Asset & ROA

sales in the special and value-added fields and higher demand
from the entertainment sector, on top of efforts to raise pricesof our products.
Profits nonetheless dropped, mainly because of the deterioration in export profitability due to the yen’s sharp appreciation
since the beginning of 2008, despite stepped-up efforts to
reduce costs through the promotion of the Cost-Reduction Plan
“E-100 Projects” as well as efforts to raise prices of our products
in response to higher raw materials prices.
Fine Chemicals and Other Products
In the semiconductor materials segment, domestic sales andexports to Asia of photoresists, the mainstream product, posted
healthy gains thanks to increased production of semiconductor
memories. In particular, sales of argon fluoride (ArF) photoresists
increased substantially as a result of expanded applications in cutting-edge fields with further progress in miniaturization. Moreover,lithography-related sales rose sharply, thanks to increased demand
for multi-layer materials necessary for miniaturization and ArF
immersion lithography as well as higher sales resulting fromstepped-up sales and marketing. Sales at subsidiaries in Europe andNorth America were also higher as demand for semiconductors
remained firm in the European and North American markets. As for
new semiconductor materials, sales of chemical mechanical planarization (CMP) materials remained the same level as in theprevious year, while packaging materials posted healthy gains. As aresult of the above, sales of semiconductor materials as a wholeincreased substantially over the previous year.
In flat panel display (FPD) materials, both sales volume and sales
amount of liquid crystal display (LCD) materials exceeded the previous year’s levels. Shipments, led by exports, recovered around the
middle of the year, as LCD panel inventory adjustments, that had
continued until early in the fiscal year, ran their course and global
sales of personal computers and LCD television sets expanded.
Sales of plasma display panel (PDP) materials decreased sharply
under the strong influences of production adjustments by majorusers both domestically and overseas.

Shareholders‘ Equity & ROE(Billions of Yen)(%)

(Billions of Yen)

500

15

300

400
300

11.2

14.5

15.3
381.0

308.5

14.2
408.9

14.8
416.9

12
9

325.0

6

100
0

FY’04

FY’05

Total Asset (Left)

250

FY’06

FY’07

FY’08

18
15.5

12.9

15.0
239.9

200
150

200

(%)

16.1

182.4

15.2
257.6

15
12

212.7

9

159.4

100

6

3

50

3

0

0

FY’04

ROA (Right)

FY’05

Shareholders‘ (Left)

ANNUAL REPORT 2008

27

FY’06
ROE (Right)

FY’07

FY’08

0

In optical functional materials, sales of optical fiber coating materials, the mainstream product of this sector, decreased in the wake of
low investment in optical fiber cables in the domestic market.
Sales of materials for anti-reflective coatings and surface-protective
coatings increased as demand for value-added products recovered
as a result of the market shift toward higher definition flat panel
television sets. Sales of ARTON®, a heat-resistant transparent resin,increased significantly as a result of efforts to increase sales to optical film makers, the primary users of the product, but still fell shortof the initial target.
Profits in this segment increased over the previous year as aresult of increased sales of differentiated products and cost-reduction efforts through the Cost-Reduction Plan “E-100 Projects”,
despite downward pressures on prices stemming from pricedeclines for products of the major user industries.
As a result of the above, net sales of fine chemicals and otherproducts increased 13.4% to ¥182,176 million and operating
income rose 19.0% to ¥44,287 million.

Outlook
The Japanese economy is likely to remain challenging in fiscal 2009amid concerns over a global economic slowdown in the wake of a
possible US recession, sluggish corporate earnings due to the yen’s
further rise against the US dollar, and soaring prices of crude oil andother raw materials as well as concerns over restrained personal
consumption due to economic uncertainties.
In fiscal 2008, the JSR Group launched “JUMP2010,” the new midterm business plan for a period of four years beginning in fiscal 2008.
Recognizing the importance of fiscal 2009 as the year concluding thefirst two years of the business plan, we will strengthen efforts to tackle the challenges ahead in order to ensure the achievement of thegoals under the business plan and carry the results of the first halfover to the later half beginning in fiscal 2010.
While we expect the difficult situation to continue in the petrochemicals segment where upward pressures on raw materials prices
persist due to higher crude oil prices, we will double our efforts togenerate earnings by increasing total sales as well as by raising theshare of sales from value-added products. In the fine chemicals andother products segment, we expect even more intense competition.
Nevertheless we plan to generate earnings in this segment by continuing to allocate resources into growth areas and mount proactive
efforts to expand sales both in the domestic and overseas markets,
while maintaining cost-reduction efforts.
Consequently, for fiscal 2009, we project net sales of ¥437.0 billion (up 7.4% over the previous year), operating income of ¥61.0
billion (up 1.6%), ordinary income of ¥62.0 billion (up 10.6%) andnet income of ¥37.5 billion (up 1.4%).
The above projections assume a yen exchange rate of 100 to thedollar and a naphtha price of ¥68,000 per kiloliter.

R&D Expenditures
R&D expenditures in fiscal 2008 amounted to ¥19,612 million as we
proactively made substantial investments in the fine chemicals andother products segment and in next-stage growth businesses. In thefield of precision processing, one of next-generation businesses, weestablished a new precision processing research facility. We plan tocontinue proactive R&D investments for the product development in
cutting-edge areas of information electronics materials and thedevelopment of new products in next-stage growth businesses.

Capital Expenditures
Capital expenditures amounted to ¥29,076 million in fiscal 2008.In
the fine chemicals and other products segment, we plan to enhance
R&D facilities and production capacity in response to cutting-edge
technologies in semiconductor materials and next-stage businesses.
We will continue to proactively direct resources into the fine chemicals and other products business. In the petrochemicals segment,
we will also proactively invest in the enhancement of production
capacity for value-added products and in environmental and safetymeasures. In fiscal 2009 in particular, a new production line isscheduled to be completed for S-SBR, of which we acquired 50%
delivery rights from Dow Europe GmbH.

R&D Expenses & Capital Expenditures

Shareholder Return & Payout Ratio(Billions of Yen)

(Billions of yen)

30

150

29.0

(%)

25

120
23.3

20
15.0

17.1

18.1

16.5

16.4

22.0

13.0

60

10

27.0

30

FY’04
R&D Expenses

FY’05

FY’06

FY’07

FY’08

Dividend(Yen/Share)

Capital Expenditures

28

20
15

81.0

81.0

10

61.0

51.0

5

FY’04

FY’05

FY’06

FY’07

FY’08 (Plan)

14

20

24

32

32

Dividend (Left)

JSR CORPORATION

16.7

20.5

36.0

0
0

20.5

18.0

90

19.6

17.7

60.0

54.0

Shareholder Return (Left)

Payout Ratio (Right)

0

RISKSThe JSR Group is exposed to the following risks that may impact
its operating results, financial position, cash flows and otheraspects of performance. Forward-looking statements in this discussion are based on JSR's judgment as of March 31, 2008.
Risks at JSR include, but are not limited to, the following items:(1) Changes in demand due to economic trends
In the major industries where the JSR Group's products are sold,automobiles and electronics, demand is influenced by the economic climate in a country or region. An economic slowdown
could reduce demand in an industry and adversely affect the JSRGroup's operating results.
(2) Higher prices for crude oil, naphtha andother major raw materials
Higher prices for crude oil and naphtha, or changes in the markets
for JSR's major raw materials, could raise prices of raw materials
and adversely affect the JSR Group's operating results, especially inthe petrochemicals segments of elastomers, emulsions and plastics.
(3) Procurement of raw materials
The JSR Group works on ensuring a stable supply of raw materials by procuring materials from a number of sources. However, aninterruption to the supply of raw materials due to an accident,
bankruptcy or quality problem at a supplier could adversely affectproduction activities and the JSR Group's operating results.
(4) Development of new products
Rapid technological progress is constantly taking place in theelectronics industry, which is the primary source of demand forsemiconductor manufacturing materials, FPD materials and optical materials, the major products of the JSR Group's finechemicals and other products business. JSR is constantly working
on developing state-of-the-art materials in line with this progress.
However, unforeseen changes in the industry or market could
prevent the timely development of new products and adversely
affect the JSR Group's operating results.
(5) R&D involving next-stage growth businesses
The JSR Group makes substantial investments in R&D to createnext-stage growth businesses. However, there is no guaranteethat these R&D activities will always yield worthwhile results.
Depending on R&D results, there could be an adverse effect on
the JSR Group's operating results.
(6) Protection of intellectual property
Protection of intellectual property is extremely important for the JSRGroup's business activities. JSR has established a system for protecting its intellectual property and takes various actions as required.
However, a dispute about intellectual property with another company or an infringement on JSR's intellectual property by anothercompany could adversely affect the JSR Group's operating results.
(7) Product quality assurance and product liability
The JSR Group has a product quality assurance system and product liability insurance. However, damage or injury caused by a
product manufactured by the JSR Group could adversely affect
the JSR Group's operating results.

(8) Natural disasters and accidents
To minimize the negative effect on its business activities of any
disruption of manufacturing activities, all JSR Group manufacturing facilities have established countermeasures based on theidentification of all potential sources of a crisis and conduct periodic inspections of facilities. The group also works constantly on
safety measures with regard to earthquakes and other natural
disasters. However, a major natural disaster or accident that damages a production facility or disrupts manufacturing could
adversely affect the JSR Group's operating results.
(9) Environmental issues
Positioning environmental protection as an important element of
its operations, the JSR Group complies with all laws and regulations concerning the environment. The group also takes actions
aimed at reducing its environmental impact, lowering and eliminating waste materials, and cutting energy and resource
consumption. The group has taken many actions to prevent theexternal release of chemicals of all types.
However, in the event that a spill occurs or that environmental
regulations become more strict, the group's business activities
could be restricted, the group may have to pay compensationand other expenses, or the group may have to make substantial
capital expenditures. Any of these events could adversely affect
the JSR Group's operating results.
(10) Overseas operations
The JSR Group is aggressively expanding operations on a global
scale, conducting manufacturing, sales and other activities in countries and regions of the United States, Europe, Asia and other partsof the world. Overseas operations are exposed to a number of risks
that include, but are not limited to, an unfavorable political environment or economic trends; labor disputes and other problems due todifferences in labor laws and other working conditions; difficulty inrecruiting and retaining employees; an adverse impact on businessactivities due to an inadequate social infrastructure; and the impact
of wars, terrorism and other social instability. Any of these events
could adversely affect the JSR Group's operating results.
(11) Laws and regulations
In the countries where it operates, the JSR Group is subject to various
laws and regulations involving business and investment permits,
export and import activities, trade, labor relations, intellectual property, taxes, foreign exchange and other items. The group has
established a clear compliance policy in order to ensure strict observance of laws and regulations as well as ethical standards. In the eventthat a law or regulation is violated, or a law or regulation becomes
more strict or is significantly altered, there could be limitations on thegroup's business activities or additional compliance costs. Any ofthese events could adversely affect the JSR Group's operating results.
(12) Litigation
In conjunction with its business activities in Japan and overseas,
the JSR Group may be sued or be involved in other litigation concerning a dispute with a supplier, customer or other external
party. The outcome of significant litigation could adversely affect
the JSR Group's operating results.

ANNUAL REPORT 200829

Consolidated Balance Sheets
JSR Corporation
March 31, 2007 and 2008
Thousands of
U.S. dollars(Note 1)Millions of yen

ASSETS

2007

2008

2008

Current assets:
Cash (Note 4)¥

14,586¥

16,537$

165,060

Notes and accounts receivable — trade (Note 3)

93,34187,069869,036

Marketable securities (Notes 4 and 5)

39,41846,836

467,470

Inventories

67,221

72,317

721,801

Accounts receivable — other

24,691

25,062

250,143

Deferred tax assets (Note 8)

5,074

4,973

49,639Other current assets (Note 12)

5,005

5,970

59,585

(97)

(114)

(1,139)249,239

258,650

2,581,595

Buildings and structures

85,80389,884

897,129

Machinery, equipment and vehicles

217,105

218,436

2,180,221

Tools, furniture and fixtures

38,74542,013419,334

Land

16,957

16,778167,464

Construction in progress

7,580

8,142

81,265366,190375,253

3,745,413(268,008)(269,721)(2,692,095)

98,182

105,532

1,053,318

5,713

6,466

64,542

Investment securities (Note 5)

34,594

26,619265,688

Investments in unconsolidated subsidiaries and affiliated companies

9,713

9,037

90,196

Other assets (Note 8 and 12)

11,694

10,888

108,672

(186)

(241)

(2,409)55,81546,303462,147

416,951$ 4,161,602

Allowance for doubtful accounts
Total current assets

Property, plant and equipment (Notes 6 and 9):

Accumulated depreciation
Net property, plant and equipment

Intangible assets

Investments and other non-current assets:

Allowance for doubtful accounts¥
See accompanying notes.

JSR CORPORATION

30

408,949¥

Thousands of
U.S. dollars(Note 1)Millions of yen

LIABILITIES AND NET ASSETS

2007

2008

2008

Current liabilities:
Notes and accounts payable — trade¥87,952¥

83,445$

832,868

Short-term loans payable and current portion of long-term debt (Note 6)

15,524

16,808167,764

Income taxes payable (Note 8)

10,7958,366

83,506

Other current liabilities (Note 8 and 12)

27,82929,097

290,413

Total current liabilities

142,100

137,716

1,374,551

Long-term debt (Note 6)

2,745

1,525

15,223

Employees’ retirement benefits (Note 7)

14,782

14,679146,513

Allowance for environmental expenses

3,294

3,294

32,880

Other long-term liabilities (Note 8 and 12)

6,042

2,074

20,695

Total long-term liabilities

26,863

21,572

215,31123,32023,320232,759

Capital surplus

25,17925,179251,317

Retained earnings

183,374

212,503

2,121,003(8,300)(13,623)(135,973)

Unrealized gains on securities, net of taxes

10,087

4,807

47,976

Foreign currency translation adjustments

1,526

353

3,518

Subscription rights to shares (Note 11)

70

194

1,936

4,730

4,930

49,204Long-term liabilities:

Contingent liabilities (Note 14)
Net assets (Note 10)
Shareholders’ equity
Common stock:
Authorized — 696,061,000 shares
Issued— 255,885,166 shares in 2007 and 2008

Less treasury stock, at cost
— 3,664,774 shares in 2007 and 5,666,693 shares in 2008
Valuation and translation adjustments

Minority interests
Total net assets

239,986¥

ANNUAL REPORT 2008

31

408,949¥

257,663

2,571,740

416,951$ 4,161,602

Consolidated Statements of Income
JSR Corporation
Years ended March 31, 2006, 2007 and 2008
Thousands of
U.S. dollars(Note 1)Millions of yen

2006

Net sales (Note 16)

¥

2007

¥

338,160

2008

365,831¥2008

406,968$ 4,061,958

Costs and expenses (Notes 15 and 16):
Cost of sales

230,012

252,752

284,4312,838,913

Selling, general and administrative expenses

54,791

57,83662,527624,078

284,803

310,588346,958

3,462,991

53,35755,24360,010598,967Interest and dividend income

635

1,030

1,309

13,066

Interest expenses

(420)

(399)

(256)

(2,553)Operating income (Note 16)
Other income (expenses):

Loss on disposal of inventories(3,350)(2,791)(1,799)(17,956)

Gain (loss) on sale and disposal of property, plant and equipment

(269)

(617)

(1,574)(15,708)

Foreign exchange gains (losses)

1,179

352

(2,036)(20,323)

Equity in earnings of affiliated companies

1,719

1,439

1,249

12,466

—

(461)

—

—

(580)

—

—

—

(3,094)

(201)

—

—

Loss on disposal of asbestos
Impairment loss of fixed assets (Note 9)
Loss on allowance for environmental expenses
Gain on sales of investment securities
Other — net

21

282

377

3,767

(160)

(437)

(2,413)(24,099)(4,319)(1,803)(5,143)(51,340)

49,03853,44054,867547,627

Current

19,222

20,127

18,112

180,777

Deferred(1,487)(1,136)(776)(7,746)

17,73518,991

17,336173,031

31,30334,44937,531

374,596

(748)

(794)

(537)

(5,353)

Income before income taxes and minority interests
Income taxes (Note 8):

Minority interests in net income of consolidated subsidiaries
Net income¥¥

30,55533,655¥36,994$

U.S. dollars(Note 1)

Yen

2006

369,243

2007

2008

2008

Amounts per share of common stock:
Net income (Note 18)
Cash dividends applicable to the year¥¥

119.63

24.00

20.00

See accompanying notes.

JSR CORPORATION

133.1032¥

147.26
32.00

$

1.47
0.32

Consolidated Statements of Changes of Net Assets
JSR Corporation
Years ended March 31, 2006, 2007 and 2008
Millions of yen
Number ofshares ofcommon stock(thousands)

Balance at March 31, 2005
Decrease resulting from increase inconsolidated subsidiaries
Decrease resulting from decrease inconsolidated subsidiaries
Net income
Increase of treasury stock
Cash dividends paid
Bonuses to directors
Net changes other thanshareholders’ equity
Balance at March 31, 2006
Net income
Increase of treasury stock
Disposal of treasury stock
Cash dividends paid
Bonuses to directors
Net changes other thanshareholders’ equity
Balance at March 31, 2007
Net income
Increase of treasury stock
Disposal of treasury stock
Cash dividends paid
Decrease resulting from increasein consolidated subsidiaries
Increase resulting from increase inaffiliated companies byequity method
Net changes other thanshareholders’ equity
Balance at March 31, 2008

255,885

commonstock¥

23,320 ¥CapitalsurplusRetainedearnings

Unrealized
gains onTreasury stock securities,
net of taxes
at cost25,179 ¥ 130,772 ¥Foreigncurrencytranslation
adjustments

Subscription
rightsto shares

Minority
interests(2,885) ¥6,591 ¥

(501) ¥

— ¥

3,306

—

—

—

(1,404)

—

—

—

—

—

—

—

—

(8)

—

—

—

—

—

—

—

—

30,555

—

—

—

—

—

—

—

—

—

(13)

—

—

—

—

—

—

—

(4,322)

—

—

—

—

—

—

—

—

(159)

—

—

—

—

—

—

—

—

—

—

4,560

1,066

—

651

255,885

23,32025,179155,434(2,898)

11,151

565

—

3,957

—

—

—

33,655

—

—

—

—

—

—

—

—

—

(5,412)

—

—

—

—

—

—

—

(10)

10

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(5,569)

—

—

—

—

(136)

—

—

—

—

—

—

(1,064)

961

70

773

255,885

23,32025,179183,374(8,300)10,087

1,526

70

4,730

—

—

—

36,994

—

—

—

—

—

—

—

—

—

(5,328)

—

—

—

—

—

—

—

(5)

5

—

—

—

—

—

—

—

(7,044)

—

—

—

—

—

—

—

—

(1,048)

—

—

—

—

—

—

—

—

232

—

—

—

—

—

—

—

—

—

—

(5,280)(1,173)

124

200

353 ¥

194 ¥

4,930

15,227 $701 $47,206————

255,885¥

23,320 ¥25,179 ¥ 212,503 ¥ (13,623) ¥4,807 ¥

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2007
Net income
Increase of treasury stock
Disposal of treasury stock
Cash dividends paid
Decrease resulting from increasein consolidated subsidiaries
Increase resulting from increase inaffiliated companies by equity method
Net changes other thanshareholders’ equity
Balance at March 31, 2008

$ 232,759 $ 251,317 $1,830,263 $ (82,841) $ 100,682 $——

369,243

—

—

—

—

(53,186)

—

—

—

—

—

(54)

54

—

—

—

—

—

—

(70,306)

—

—

—

—

—

—

—

(10,463)

—

—

—

—

—

—

—

2,320

—

—

—

—

—

—

—

—

—

(52,706)(11,709)$ 232,759 $ 251,317 $2,121,003 $ (135,973) $See accompanying notes.

ANNUAL REPORT 2008

33—

47,976 $3,518 $

1,235

1,998

1,936 $

49,204

Consolidated Statements of Cash FlowsJSR Corporation
Years ended March 31, 2006, 2007 and 2008
Thousands of
U.S. dollars(Note 1)Millions of yen

2006

Cash flows from operating activities:
Income before income taxes and minority interests¥ 49,038
Adjustments to reconcile income before income taxes andminority interests to cash provided by operating activities:
Depreciation and amortization
16,206
Interest and dividend income(635)
Interest expenses
420
Equity in earnings of affiliated companies(1,719)Loss (gain) on sales and disposal of property, plant and equipment
269
Impairment loss of fixed assets
580
Loss (gain) on sales of investment securities(21)
Changes in operating assets and liabilities — net:
Increase (decrease) in allowance for environmental expenses
3,094
Decrease (increase) in notes and accounts receivable — trade(7,516)
Decrease (increase) in inventories(7,330)
Increase (decrease) in notes and accounts payable — trade
15,042
Other(5,017)
Total
62,411
Interest and dividends received
1,261Interest expenses paid
(420)
Income taxes paid
(18,371)
Net cash provided by operating activities
44,881
Cash flows from investing activities:
Purchase of property, plant and equipment and intangible assets(24,845)
Payments for investments in capital of unconsolidated subsidiaries andaffiliated companies(1,145)
Proceeds from sales of property, plant and equipment and intangible assets
442
Purchase of investment securities(65)
Proceeds from sales of investment securities
410
Proceeds from redemption of investment securities—
Decrease (increase) in loans receivable(1,702)Other — net
889
Net cash used in investing activities(26,016)
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable(47)
Repayment of long-term debt
(553)
Proceeds from long-term debt—
Redemption of bonds—
Cash dividends paid
(4,320)Cash dividends paid to minority shareholders(227)
Purchase of treasury stock(13)
Other — net—
Net cash used in financing activities(5,160)Effect of exchange rate changes on cash and cash equivalents
390
Net increase (decrease) in cash and cash equivalents
14,095
Cash and cash equivalents at beginning of year
46,474
Increase (decrease) in cash and cash equivalents resulting
from change of scope of consolidation
277
Cash and cash equivalents at end of year (Note 4)¥ 60,846
See accompanying notes.

JSR CORPORATION

34

2007

2008

2008

¥ 53,440¥ 54,867$ 547,627

18,133(1,030)399(1,439)
617
—
(282)

21,180(1,309)256(1,249)
1,574
—
(377)

211,395(13,066)
2,553(12,466)
15,708—(3,767)200(14,548)(6,685)8,814
6,820
64,4392,907(411)(20,463)
46,472—
5,379(5,693)(2,352)(79)
72,1972,530(254)(20,583)
53,890—53,690(56,817)(23,478)(775)
720,604
25,254(2,538)(205,439)
537,881(26,218)(27,122)(270,708)—
347(1,767)563—(2,194)(1,094)(30,363)(491)—(1,653)601
500(1,107)(2,968)(32,240)(4,899)—(16,496)
5,997
4,991
(11,053)(29,618)(321,786)(1,945)(2,306)
1,558(10,000)(5,566)(106)(5,412)
0(23,777)478(7,190)60,846

(222)
(476)
—
—
(7,033)(341)(5,329)0(13,401)
(819)
7,430
53,656(2,214)(4,748)——(70,199)(3,407)(53,186)0(133,754)(8,187)
74,154
535,541—¥ 53,656

639¥ 61,725

6,382$ 616,077

Notes to Consolidated Financial Statements
JSR Corporation
Years ended March 31, 2006, 2007 and 2008

1. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements of JSR
Corporation (“the Company”) and its consolidated subsidiaries
have been prepared in accordance with the provisions set forth in
the Japanese Securities and Exchange Law and its related
accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries and affiliates are based on their accounting records maintained inconformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying
consolidated financial statements have been restructured andtranslated into English (with some expanded descriptions and theinclusion of consolidated statement of changes in net assets for2006) from the consolidated financial statements of theCompany prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Japanese Securities and Exchange Law.
Some supplementary information included in the statutory
Japanese language consolidated financial statements, but notrequired for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2008, which was¥100.19 to U.S. $1.00. The convenience translations should not
be construed as representations that the Japanese yen amounts
have been, could have been, or could in the future be, converted
into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies(a) Consolidation — The accompanying consolidated financial
statements include the accounts of the Company and its 28 significant subsidiaries in 2008 (26 significant subsidiaries in 2006
and 2007).
All significant intercompany accounts and transactions havebeen eliminated in consolidation.
JSR Micro Taiwan Co., Ltd. and Elastomix (Foshan) Co., Ltd. havebeen consolidated since 2008 due to the principle of materiality.
JSR Micro Korea Co., Ltd. has been consolidated since 2006
due to the principle of materiality and Techno Polymer Singapore
Pte Ltd., which had been liquidated, were excluded from thescope of consolidation in 2006.
(b) Equity method — Investments in affiliated companies (all of
those 20% to 50% owned and certain others 15% to 20%
owned) were accounted for by the equity method.
Unconsolidated subsidiaries and the other affiliated companies
are stated at cost since their net income and retained earnings in
the aggregate are not material compared to consolidated net
income and retained earnings, respectively.
(c) Cash and cash equivalents — In preparing the consolidated
statements of cash flows, cash on hand, readily available deposits
and short-term highly liquid investments with maturities notexceeding three months at the time of purchase are considered
to be cash and cash equivalents.

(d) Marketable securities and investment securities — The
Company and its consolidated subsidiaries (the “Companies”)
had no trading securities or held-to-maturity debt securities.
Equity securities issued by subsidiaries and affiliated companies,
which are not consolidated or accounted for using the equity
method, are stated at moving-average cost. Available-for-salesecurities with available fair market values are stated at fair market value and unrealized gains and losses on these securities arereported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of suchsecurities are computed using moving-average cost. Available-forsale securities with no available fair market values are stated atmoving-average cost or amortized cost.
(e) Inventories — Inventories are stated at cost, which is determined by the average method.
(f) Property, plant and equipment, and depreciation —Property, plant and equipment are stated at cost. Depreciation iscomputed using the declining-balance method at rates based on
their estimated useful lives except for buildings acquired after March
31, 1998, which are depreciated based on the straight-line method.
(i) The accounting change
Effective April 1, 2007, the Company and domestic consolidated subsidiaries changed the depreciation method forproperty, plant and equipment acquired on or after April 1,
2007 in accordance with the revised Corporation Tax Law ofJapan. As a result of this change, income before income
taxes and minority interests decreased by ¥851 million($8,492 thousand) for the year ended March 31,2008 fromthe corresponding amounts which would have been recorded under the previous method.
Effective from the year ended March 31, 2008, theproperty, plant and equipment acquired before April 1, 2007
for which the allowable limit on the depreciable amount has
been reached are to be depreciated evenly over five years
from the following fiscal year. As a result of this change,
income before income taxes and minority interests decreasedby ¥1,429 million ($14,262 thousand) for the year ended
March 31, 2008.
(g) Intangible assets — Goodwill is amortized over five years
using the straight-line method.
Software for its own use is amortized over the estimated usefullife (five years) using the straight-line method.
(h) Impairment of fixed assets — Effective April 1, 2005, theCompanies adopted newly “Accounting Standard for Impairmentof Fixed Assets” (Opinion Concerning Establishment of
Accounting Standard for Impairment of Fixed Assets issued by theBusiness Accounting Deliberation Council on August 9, 2002)
and “Implementation Guidance for Accounting Standards for
Impairment of Fixed Assets” (the Financial Accounting Standard
Implementation Guidance No.6 issued by the AccountingStandards Board of Japan (the “ASBJ”) on October 31, 2003).
As result of adopting these accounting standards, income
before income taxes and minority interests for the year ended
March 31, 2006, decreased ¥580 million compared with what
would have been reported under the previous accounting policy.
Accumulated impairment losses are deducted directly from therelated fixed assets.

ANNUAL REPORT 200835

(i) Allowance for doubtful accounts — Allowance for doubtful
accounts is provided in amounts sufficient to cover possible losses
on collection. Allowance for doubtful accounts consists of theestimated uncollectible amount with respect to specific items,
and the amount calculated using the actual percentage of collection losses in the past with respect to other items.
(j) Severance and retirement benefits — Employees of theCompanies are entitled, under most circumstances, to lump-sum
severance payments or pension payments upon reaching the
mandatory retirement age, or earlier in the case of voluntary or
involuntary termination, based on the compensation at the timeof severance and years of service.
The Companies provided allowances and expenses for employees‘ severance and retirement benefits at year-end based on theestimated amounts of projected benefits obligation and the fairvalue of the pension assets.
The prior service costs are recognized as expenses using thestraight-line method over three years, which falls within the estimated average remaining service lives, commencing with thefollowing period. Actuarial differences of the Company are recognized as expenses at once in the following period, and some of
consolidated subsidiaries use the straight-line method over 10
years within the estimated average remaining service lives, commencing with the following period.
(i) The accounting change — Effective April 1, 2005, theCompanies adopted “Amendment of Accounting Standard
for Retirement Benefits” (the Financial Accounting Standard
No.3 issued by the ASBJ on March 16, 2005) and“Implementation Guidance of Amendment of AccountingStandard for Retirement Benefits” (the Financial AccountingStandard Implementation Guidance No. 7 issued by the ASBJ
on March 16, 2005).
As a result of adopting these accounting standards,
income before income taxes and minority interests for theyear ended March 31, 2006 increased ¥1,348 million compared with what would have been reported under theprevious accounting policy.
(K) Allowance for environmental expenses — An allowancefor expenses is provided bases on estimated costs for the disposalof Polychlorinated biphenyl (PCB) as mandated by the Law
Concerning Special Measures Against PCB Waste.
(l) Income taxes — The Companies provide for income taxes
applicable to all items included in the consolidated statements ofincome regardless of when such taxes are payable. Income taxes
based on temporary differences between tax and financial reporting
purposes are reflected as deferred income taxes in the consolidated
financial statements using the asset and liability method.
(m) Derivative and hedging activities — The Companies use
derivative financial instruments to manage their exposures to fluctuations in foreign exchange and interest rates. Foreign exchange
forward contracts, foreign currency swaps and interest rate swaps
are utilized by the Companies to reduce foreign currency
exchange and interest rate risks. The Companies do not enter into
derivatives for trading purposes or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows:(a) All derivatives are recognized as either assets or liabilities

and measured at fair value, and gains or losses on thesederivative transactions are recognized in the consolidated
statements of income.
(b) For derivatives used for hedging purposes, if derivatives
qualify for hedge accounting because of high correlationand effectiveness between the hedging instruments and thehedged items, gains or losses on these derivatives aredeferred until maturity of the hedged transactions.
The interest rate swaps that qualify for hedge accounting andmeet specific matching criteria are not remeasured at market value,
but the differential paid or received under the swap agreements is
recognized and included in interest expense or income as incurred.
(n) Certain lease transactions — Finance lease transactions,which do not transfer ownership of the leased assets to lessees,
are accounted for in the same manner as operating leases underaccounting principles generally accepted in Japan.
(o) Foreign currency transactions — The Companies translate
assets and liabilities denominated in foreign currencies into
Japanese yen at exchange rates prevailing at the balance sheet
dates. Resulting exchange gains or losses are credited or charged
to income as incurred.
(p) Translation of foreign currency financial statements —Financial statements of overseas subsidiaries are translated into
Japanese yen using the respective year-end rate for assets and liabilities, the average rate for revenues and expenses, and thehistorical rates for shareholders’ equity accounts. Foreign currency translation adjustments are contained in valuation andtranslation adjustments and minority interests.
(q) Amounts per share of common stock — The computationof net income per share of common stock is based on the average number of shares outstanding during each fiscal year.
Treasury stock has been excluded in the calculation of amounts
per share of common stock. Diluted net income per share is notdisclosed because the effects of the Company’s stock option
plans are immaterial (Note 11).
Cash dividends per share represent actual amounts applicableto the respective years.
(r) Accounting Standard for Presentation of Net Assets in
the Balance Sheet — Effective for the year ended March 31,
2007, the Companies adopted newly “Accounting Standard for
Presentation of Net Assets in the Balance Sheet” (Statement No.5
issued by the ASBJ on December 9, 2005) and “Guidance on
Accounting Standard for Presentation of Net Assets in the
Balance Sheet” (Guidance No.8 issued by the ASBJ on December
9, 2005) .
Under these accounting standards, the balance sheet comprises three sections, which are the assets, liabilities and net assets
sections. Previously, the balance sheet comprised the assets, liabilities, minority interests, as applicable, and the shareholders’equity sections.
Due to the adoption of the accounting standards, the following
items are presented differently compared to the previous presentation rules. Subscription right to shares and minority interests areincluded in net assets under the accounting standards. Under theprevious presentation rules, subscription right to shares were included in current liabilities, and minority interests were presented
between non-current liabilities and the shareholders’ equity section.

JSR CORPORATION

36

(t) Stock options — Effective from the year ended March 31,
2007, the Company adopted newly “Accounting Standard for
Share-based Compensation” (Statement No.8 issued by the ASBJ
on December 27, 2005) and “Guidance on Accounting Standard
for Share-based Compensation” (Guidance No.11 issued by the
ASBJ on May 31, 2006).
The adoption of these accounting standards did not have amaterial effect on net income.
(u) Reclassifications — Certain prior years amounts have been
reclassified and restated to conform to the current year presentation.
Also, as described in Note 2 (s), in lieu of the consolidated
statement of shareholders’ equity for the year ended March 31,
2006, which was prepared on a voluntary basis for inclusion in
the 2006 consolidated financial statements, the Company prepared the consolidated statements of changes in the net assets
for the year ended March 31, 2006.
These reclassifications and restatements had no effect on previously reported results of operations or retained earnings.

If the accounting standards had not been adopted and the previous presentation method for shareholders’equity had been
applied, the shareholders’equity at March 31, 2007, which comprised common stock, capital surplus, retained earnings,
unrealized gain on securities net of taxes, foreign currency translation adjustments and treasury stock, would have been
¥235,186 million.
The adoption of the accounting standards had no effect on the
consolidated statements of income for the years ended March
31, 2007 and 2006.
(s) Accounting Standard for Statement of Changes in Net
Assets — Effective for the year ended March 31, 2007, theCompanies adopted newly “Accounting Standard for Statementof Changes in Net Assets” (Statement No.6 issued by the ASBJ on
December 27, 2005), and “Implementation Guidance for the
Accounting Standard for Statement of Changes in Net Assets”(Financial Accounting Standard Implementation Guidance No.9
issued by the ASBJ on December 27, 2005).
Accordingly, the Company prepared the statement of changes
in net assets for the year ended March 31, 2007. In addition, theCompany voluntarily prepared the consolidated statement ofchanges in net assets for 2006 in accordance with these accounting standards. Previously, the consolidated statements ofshareholders’ equity were prepared for the purpose of inclusionin the consolidated financial statements although such statements were not required under Japanese GAAP.

3. Effect of Bank Holiday on March 31, 2007
As financial institutions in Japan were closed on March 31, 2007,¥871 million of notes receivable maturing on March 31, 2007
were settled on the following business day, April 2, 2007 andaccounted for accordingly.

4. Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2006, 2007 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of Yen

CashMarketable securities
Time deposits over three months
Cash and cash equivalents

2006

2007

2008

2008

¥ 13,021
47,855(30)¥ 60,846¥ 14,586
39,418(348)¥ 53,656¥ 16,537
46,484(1,296)¥ 61,725$ 165,060
463,962(12,945)$ 616,077

5. Marketable Securities and Investment Securities(1) The following tables summarize the acquisition cost, book value and fair value of available-for-sale securities with available fair value asof March 31, 2007 and 2008:(a) Securities with book value exceeding acquisition cost
Millions of Yen

Acquisition cost

Equity securities¥

11,0702007
Book value

Difference¥¥

28,177

17,107

Millions of Yen

Acquisition cost

Equity securities

¥

9,904

2008
Book value

Difference¥ 19,272¥

9,368

Thousands of U.S. dollars

Acquisition cost2008
Book value

Difference$ 98,849$ 192,358$ 93,509

Equity securities

ANNUAL REPORT 200837

(b) Securities with book value not exceeding acquisition cost
Millions of Yen

Acquisition cost

Equity securities

¥

718

2007
Book value

Difference

¥

¥

695

(23)

Millions of Yen

Acquisition cost

Equity securities

¥

3,428

2008
Book value

Difference¥¥ (1,189)

2,239

Thousands of U.S. dollars

Equity securities

Acquisition cost2008
Book value

Difference$ 34,214$ 22,348$ (11,866)(2) The following tables summarize the book value of available-for-sale securities with no available fair value as of March 31, 2007 and2008:
Thousands of
U.S. dollars

Millions of Yen

2007

Non-listed equity securities
Commercial paper
Preferred subscription certificate
Certificate of deposit
Other
Total

¥

3,222
38,418
2,500
1,000
—
¥ 45,140

2008

2008

3,108
33,984
2,000
9,500
3,352
¥ 51,944$ 31,020
339,200
19,962
94,82033,450$ 518,452

Over ten
years

Total

¥

(3) Redemption schedule of available-for-sale securities with fixed maturities are as follows:

Withinone yearMarch 31, 2007:
March 31, 2008:¥ 39,418¥ 46,484¥¥——
Over oneyears
withinfive years

Withinone yearMarch 31, 2008:

Millions of Yen
Over fiveyears
withinten years

Over oneyears
withinfive years$463,963

$

¥
¥

—
—

¥
¥

Thousands of U.S. dollars
Over fiveyears
withinten years

—

$

—

—
—

Over ten
years

$

—

¥ 39,418¥ 46,484

Total$463,963(4) Total sales of available-for-sale securities sold and the related gains and losses for the years ended March 31, 2006, 2007 and 2008 are
as follows:
Thousands of
U.S. dollars

Millions of Yen

2006

Total sales
Gain
Loss

¥

2007

410
21
—

¥

563
282
—

2008

¥

493
377
—

2008

$ 4,918
3,767—

6. Short-Term Loans Payable and Long-Term Debt
Short-term loans payable represent primarily overdrafts from banks bearing interest at 1.2% and 1.4% per annum (weighted averageinterest rate) at March 31, 2007 and 2008, respectively.

JSR CORPORATION

38

Long-term debt at March 31, 2007 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of Yen

Loans principally from banks and insurance companies due through2013 with interest rates ranging from 0.8% to 6.8% in 2007 and 2008:
SecuredUnsecuredLess amount due within one year

2007

2008

2008

1
3,199
3,200
(455)
¥ 2,745

1
2,739
2,740
(1,215)¥ 1,525

10
27,34327,353(12,130)$ 15,223

At March 31, 2008, property, plant and equipment, at book value of ¥12,202 million ($121,788thousand) were pledged as collateralfor secured loans.
The annual maturities of long-term debt at March 31, 2008 were as follows:Year ending March 31,

2009
2010
2011
2012
2013
2014 and thereafter

Millions of Yen

Thousands of
U.S. dollars¥ 1,215
25
—
500
1,000
—
¥ 2,740$12,130
252
—
4,990
9,981
—
$27,353

7. Employees’ Severance and Retirement Benefits
Employees‘ retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2007 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of Yen

Projected benefit obligation
Less fair value of pension assets
Unfunded retirement benefit liabilities
Unrecognized prior service costs
Unrecognized actuarial differences
Net retirement benefit liabilities
Prepaid pension costs
Employees’ retirement benefits

2007

2008

2008

¥ 49,230(35,724)
13,506123(14)
13,615(1,167)¥ 14,782¥ 49,067(35,038)
14,02961(536)
13,554(1,125)¥ 14,679$ 489,743(349,715)
140,028612(5,357)135,283(11,230)$ 146,513

Included in the consolidated statements of income for the years ended March 31, 2006, 2007 and 2008 were severance and retirement benefit expenses consisting of the following:Thousands of
U.S. dollars

Millions of Yen

Service costs — benefits earned during the year
Interest cost on projected benefits obligation
Expected return on plan assets
Amortization of prior service costs
Amortization of actuarial differences
Severance and retirement benefit expenses

2006

2007

2008

2008

¥ 1,741902(243)—(1,517)¥ 883¥ 1,729
878
(341)
(61)
(525)
¥ 1,680¥ 1,789
896
(445)
(61)
(51)
¥ 2,128$17,856
8,943(4,443)(611)(508)$21,237

ANNUAL REPORT 2008

39

The discount rates used by the Companies for the years ended
March 31, 2007 and 2008 are mainly 1.9% and 2.0%, respectively. The rates of expected return on plan assets used by theCompanies for the years ended March 31, 2007 and 2008 aremainly 1.0% and 1.3%, respectively. The estimated amount of all
retirement benefits to be paid at the future retirement date isallocated equally to each service year using the estimated numberof total service years.
Changes of the Company‘s accounting policy of severance andretirement benefits were outlined in Note 2 (j).

8. Income Taxes
Income taxes in the accompanying consolidated statements ofincome comprise corporation, enterprise and inhabitants‘ taxes.
The aggregated normal effective tax rate was approximately 40.7%.
The following table summarizes the significant differences
between the statutory tax rate and the Companies‘ effective tax
rates for financial statement purposes for the years ended March
31, 2006, 2007 and 2008:

Statutory tax rate
Dividend income from foreign consolidated subsidiaries and foreign affiliated companies
Non-deductible entertainment expenses
Lower tax rates for foreign consolidated subsidiaries
Tax credit on research and development costs
Equity in earnings of affiliated companies
Foreign tax credits
Non-taxable dividend income
Other
Effective tax rate

2006

2007

2008

40.7%
0.4
0.3
(0.5)
(3.2)
(1.4)
(0.4)
(0.1)
0.4
36.2%

40.7%
0.6
0.2
(1.9)
(2.3)
(1.1)
(0.6)
(0.1)
0.0
35.5%

40.7%
0.4
0.2
(5.0)
(3.2)
(0.9)
(0.5)
(0.2)
0.1
31.6%

Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2007 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of Yen

2007

Deferred tax assets:
Excess retirement benefits
Excess bonuses accrued
Provision for environmental expenses
Unrealized gain on sale of inventories
Unrealized gain on sale of property, plant and equipment
Enterprise taxes payable
Loss on write down of finished products
Loss on devaluation of investment securities
Other
Sub-total
Valuation allowance
Total deferred tax assets¥

Deferred tax liabilities:
Net unrealized holding gains on securities
Deferred gain on sale of fixed assets
Special depreciation reserve
Other
Total deferred tax liabilities
Net deferred tax assets

5,468
1,646
1,337
939
959
905
991
294
2,306
14,845(298)
14,547

6,956
2,607
576
793
10,932¥ 3,615

JSR CORPORATION

40

2008

¥

¥

2008

5,436
1,711
1,337
1,135
1,130
799
708
258
2,751
15,265(92)
15,173$ 54,254
17,076
13,34911,324
11,282
7,976
7,068
2,575
27,458152,362(925)
151,437

3,315
2,656
323
876
7,170
8,003

33,09026,505
3,223
8,741
71,559$ 79,878

9. Impairment of Fixed Assets
The loss on impairment of fixed assets for the year ended
March 31, 2006 consisted of the following.
Location
Major use

: Yokkaichi City, Mie Prefecture: Some sections of production facilities
for ABS resin
Asset category : Machinery and equipment, structures
Amount: ¥580 million
Remarks: Not for business activities

The companies have grouped their fixed assets into business
units. Fixed assets that are idle or not being used for businessactivities are assessed individually.

10. Net Assets
As described in Note 2 (r), net assets comprises four subsections,which are the shareholders‘ equity, valuation and translation
adjustments, subscription rights to shares and minority interests.
Japanese Corporate Law (“the Law”) became effective on May
1, 2006, replacing the Japanese Commercial Code (“the Code”).
Under the Japanese laws and regulations, the entire amount
paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of
Directors, designate an amount not exceeding one-half of theprice of the new shares as additional paid-in capital, which isincluded in capital surplus.
Under the Law, in the case where a dividend distribution of
surplus is made, the smaller of an amount equal to 10% of thedividends or the excess, if any, of 25% of common stock over the
total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve.
Legal earnings reserve is included in retained earnings in theaccompanying consolidated balance sheets.

Under the Code, companies were required to set aside anamount equal to at least 10% of the aggregate amount of cash
dividends and other cash appropriations as legal earnings reserve
until the total of legal earnings reserve and additional paid-in
capital equaled 25% of common stock.
Under the Code, legal earnings reserve and additional paid-in
capital could be used to eliminate or reduce a deficit by a resolution of the shareholders’ meeting or could be capitalized by aresolution of the Board of Directors. Under the Law, both ofthese appropriations generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not
be distributed as dividends. Under the Code, however, on condition that the total amount of legal earnings reserve andadditional paid-in capital remained equal to or exceeded 25% ofcommon stock, they were available for distribution by the resolution of the shareholders’ meeting. Under the Law, all additional
paid-in capital and all legal earnings reserve may be transferred toother capital surplus and retained earnings, respectively, which
are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the Japaneselaws and regulations.
At the annual shareholders’ meeting held on June 13, 2008,
the shareholders resolved cash dividends amounting to ¥4,003
million ($39,959 thousand). Such appropriations have not been
accrued in the consolidated financial statements as of March 31,
2008. Such appropriations are recognized in the period in which
they are resolved.

11. Stock Option Plans
The shareholders of the Company approved the issuance of stock
options to the directors and the executive officers of theCompany as follows:

Date of resolution of the general shareholders’ meeting

June 17, 2005

June 16, 2006

June 15, 2007

The maximum number of shares to be issued
Exercisable period of the stock options

62,500 shares
From June 18, 2005
to June 17, 2025

39,100 shares
From August 2, 2006
to June 16, 2026

48,500 shares
From July 11, 2007
to July 10, 2027

55,300 shares
1$0.01

39,100 shares
1$0.01

48,500 shares
1$0.01

Stock subscription rights which have been vested
Outstanding as of March 31, 2008
Exercise price per share

12. Derivative Transactions(1)Qualitative disclosure about derivatives
The Companies enter into foreign exchange forward contracts, foreign currency swap contracts and interest rate swap
contracts as derivative financial instruments. The Companies
deal with foreign exchange forward transactions to hedge
exchange rate risks of trade receivables and payables denominated in foreign currency. Foreign currency swap transactions
are made in order to mitigate foreign exchange risks on loans
receivable denominated in foreign currencies. Interest rate

swap transactions are made in order to reduce interest raterisks on loans payable.
The Companies do not enter into derivatives for speculativetransaction purposes. Hedge accounting is used for interest
rate swaps in the case where there is a high degree of correlation between the hedge instruments and the hedge items.
Significant conditions surrounding hedging instruments are
the same as those for the items hedged, the risks of which will
likely continue to be hedged through hedge transactions.
Foreign exchange forward contracts and foreign currency

ANNUAL REPORT 200841

swaps that the Companies entered have risks due to fluctuations in foreign exchange rates. Interest rate swap contracts
that the Companies entered have risks due to fluctuations ininterest rates. Due to the fact that counterparties to theCompanies represent major financial institutions that havehigh creditworthiness, the Companies believe that the overall
credit risk related to its financial instruments is insignificant.
Derivative transactions are executed and controlled basedon the Companies’ internal rules and are approved by the
responsible officials. The balances of such transactions withcounterparties are periodically confirmed.
(2) Quantitative disclosure about derivatives
The following contract amounts are only nominal or notionalamounts of derivatives, and do not necessarily indicate the magnitude of market risk associated with the derivative transactions.
Contract amounts, market values and recognized gains orlosses on the derivative transactions, except those accounted
for using hedge accounting, at March 31, 2007 and 2008 wereas follows:(a) Related to currencies
Millions of Yen
Contract amount

Recognized
gains or losses

Over one year

Market value¥ 2,713174
31
1¥ 2,919

¥

—
—
—
—
—

¥ 2,700175
31
1¥ 2,907¥¥ 3,504
104
310
165
71

¥

—
—
—
—
—

¥ 3,332
106
293
165
73

¥

4,315
5,739
¥
—

3,065
5,739
¥
—

(311)
137
—

March 31, 2007:
Items not traded on exchanges
Foreign exchange forward contracts
Selling: U.S. Dollars
Buying: U.S. Dollars
Euro
Swiss Franc
Total
March 31, 2008:
Items not traded on exchanges
Foreign exchange forward contracts
Selling: U.S. Dollars
Euro
Buying: U.S. Dollars
Euro
Swiss Franc
Foreign currency swaps
Receiving Japanese Yen paying, Korean Won
Receiving Japanese Yen paying, Taiwan Dollar
Total

¥

¥

¥

¥

13
1
(0)
(0)
14

172
(2)
(17)
(0)
2
(311)
137
(19)

Thousands of U.S. dollars

March 31, 2008:
Items not traded on exchanges
Foreign exchange forward contracts
Selling: U.S. Dollars
Euro
Buying: U.S. Dollars
Euro
Swiss Franc
Foreign currency swaps
Receiving Japanese Yen paying, Korean Won
Receiving Japanese Yen paying, Taiwan Dollar
Total$34,969
1,042
3,097
1,647
709

$

—
—
—
—
—

$33,261
1,057
2,930
1,645
724

$ 1,708
(15)
(167)
(2)
15

43,06957,277$—30,59357,277$—(3,100)1,371$—(3,100)1,371$ (190)JSR CORPORATION

42

italized and are accounted for in the same manner as operating leases with appropriate footnote disclosures. As if capitalized information
for significant leased assets under the finance lease contracts of theCompany and its domestic consolidated subsidiaries as of and for theyears ended March 31, 2007 and 2008 were as follows:(1)Equivalent amounts of purchase price, accumulated depreciation and book value of leased properties were as follows(including the interest portion thereon):Market values are calculated using foreign exchange forward rates.
(b)Related to interests
Interest rate swap contracts, for which hedge accounting is
adopted, are excluded from being an object of disclosure.

13. Information for Certain Lease Payments
The Company and its domestic consolidated subsidiaries’ financelease contracts that do not transfer ownership to lessees are not cap-

Thousands of
U.S. dollars

Millions of Yen

2007

2008

2008

¥

¥

42
17
25

$ 420
169
$ 251

¥ 614
370
¥ 244

¥ 660
506
¥ 154

$ 6,589
5,053$ 1,536

¥ 656
382
¥ 274

¥ 702
523
¥ 179

$ 7,0105,223$ 1,787

Machinery, equipment and vehicles:
Purchase price equivalent
Accumulated depreciation equivalentBook value equivalent
Tools, furniture and fixtures:
Purchase price equivalent
Accumulated depreciation equivalentBook value equivalent
Total:
Purchase price equivalent
Accumulated depreciation equivalentBook value equivalent

¥

42
12
30

¥

(2) Lease commitments (including the interest portion thereon):Thousands of
U.S. dollars

Millions of Yen

Due within one year
Due over one year

2007

2008

2008

¥ 140
134
¥ 274

¥ 120
59
¥ 179

$ 1,195592$ 1,787(3) Lease expenses and depreciation equivalent:Thousands of
U.S. dollars

Millions of Yen

Lease expenses
Depreciation equivalent

2006

2007

2008

2008

¥ 129
129

¥ 145
145

¥ 147
147

$ 1,465
1,465

Depreciation equivalent is computed using the straight-line
method over the term of each lease with no residual value.
There is no impairment loss on finance leases.

lion, ¥17,390 million and ¥19,118 million ($190,814 thousand),
respectively, which are included in selling, general and administrative expenses or manufacturing costs.

14. Contingent Liabilities

16. Segment Information

At March 31, 2008, the Company and certain consolidated subsidiaries were contingently liable as guarantors for loans of
employees and others in the amount of ¥163 million ($1,623
thousand) and discounted bills of export exchange at March 31,
2008 were ¥274 million ($2,733 thousand).

The Companies’ business segments are classified into the following four business segments ranked in order of importance: (1)elastomers business (2) emulsions business, (3) plastics business,and (4) fine chemicals and other products business.
A summary of net sales, costs and expenses, operating income,identifiable assets, depreciation, and capital expenditures by segment of business activities for the years ended March 31, 2006,
2007 and 2008 was as follows:

15. Research and Development Expenses
Research and development expenses of the Companies for theyears ended March 31, 2006, 2007 and 2008 were ¥15,829 mil-

ANNUAL REPORT 200843

Elastomers

For 2006:
Sales to outside customers
Costs and expenses
Operating income
Identifiable assets
Depreciation
Capital expenditures
For 2007:Sales to outside customers
Inter-segment sales/transfers
Costs and expenses
Operating income
Identifiable assets
Depreciation
Capital expenditures
For 2008:
Sales to outside customers
Inter-segment sales/transfers
Costs and expenses
Operating income
Identifiable assets
Depreciation
Capital expenditures

¥
¥
¥

¥

¥
¥

¥

¥
¥

Emulsions

Millions of Yen
Finechemicals
and otherproducts

Plastics

Total

Elimination
and/orcorporate

Consolidated

104,021 ¥92,277
11,744 ¥110,449 ¥
4,060
3,982

24,944 ¥22,3892,555 ¥
22,324 ¥
1,246
1,430

66,451 ¥62,2494,202 ¥
32,717 ¥
1,391
1,374

142,744 ¥
104,519
38,225 ¥
135,820 ¥
8,935
15,434

338,160 ¥
281,434
56,726 ¥301,310 ¥15,632
22,220— ¥3,369(3,369) ¥79,787 ¥574
1,141

338,160
284,80353,357
381,097
16,20623,361

116,250 ¥536
104,417
12,369 ¥
129,896 ¥
4,357
5,916

24,362 ¥3,576
26,161
1,777 ¥
25,031 ¥
1,381
1,625

64,614 ¥—60,7493,865 ¥
35,200 ¥
1,523
1,257

160,605 ¥12,966
132,839
40,732 ¥147,999 ¥10,042
12,382365,831 ¥17,078324,166
58,743 ¥338,126 ¥
17,303
21,180— ¥(17,078)(13,578)(3,500) ¥70,823 ¥830
914

365,831—
310,588
55,243408,949
18,13322,094

128,953 ¥537
118,322
11,168 ¥
130,586 ¥
5,075
7,185

26,994 ¥
4,300
29,752
1,542 ¥
24,861 ¥
1,501
1,226

68,845 ¥—
65,832
3,013 ¥
34,375 ¥
1,546
1,835

182,176 ¥
15,358153,247
44,287 ¥160,524 ¥
13,05818,831

406,968 ¥20,195367,153
60,010 ¥350,346 ¥21,18029,077— ¥(20,195)(20,195)— ¥66,605 ¥——406,968—
346,958
60,010416,951
21,18029,077

Thousands of U.S. dollars

For 2008:
Sales to outside customers
Inter-segment sales/transfers
Costs and expenses
Operating income
Identifiable assets
Depreciation
Capital expenditures$ 1,287,081 $
5,359
1,180,968$ 111,472 $$ 1,303,387 $
50,65171,717

269,428 $
42,919296,955
15,392 $248,142 $
14,987
12,240— $ 4,061,958
687,142 $ 1,818,307 $ 4,061,958 $—(201,567)
201,567
153,289—(201,567) 3,462,991
657,073 1,529,562 3,664,558— $ 598,967
30,069 $ 442,034 $ 598,967 $
343,095 $ 1,602,193 $ 3,496,817 $ 664,785 $ 4,161,602
211,395—
211,395
130,328
15,429290,215—290,215
187,949
18,309Costs and expenses in elimination and/or corporate that cannot be allocated to business segments are related mainly to fundamental
research and development. Assets in elimination and/or corporate are related mainly to Cash, Marketable Securities and Investment Securitiesof the Company. Capital expenditures are recognized on an accrual basis.
Effective from the year ended March 31, 2008, fundamental research and development costs previously reflected as Costs and expenses inelimination and/or corporate have been involved in Costs and expenses in Fine chemicals and other products, as a result of research and development activities. Those of the Companies for the years ended March 31, 2006 and 2007 were ¥3,369 million and ¥3,500 million , respectively.
As noted in Note 2. (f) (i), effective April 1,2007, the Company and its domestic consolidated subsidiaries changed depreciation
method. As a result of this change, depreciation expenses increased ¥178 million ($1,781 thousand) in Elastomers segment, ¥41 million($404 thousand) in Emulsions segment, ¥51 million ($506 thousand) in Plastics segment and ¥581 million ($5,801 thousand) in Fine
chemicals and other products segment.

JSR CORPORATION

44

Also, effective from the year ended March 31, 2008, the property, plant and equipment acquired before April 1, 2007 for which theallowable limit on the depreciable amount has been reached are to be depreciated evenly over five years from the following fiscal year. As
a result of this change, depreciation expenses increased ¥889 million ($8,875 thousand) in Elastomers segment, ¥252 million ($2,520
thousand) in Emulsions segment, ¥60 million ($599 thousand) in Plastics segment and ¥180 million ($1,800 thousand) in Fine chemicals
and other products segment.
Geographic segment information with respect to net sales, costs and expenses, operating income, and identifiable assets for the years
ended March 31, 2006, 2007 and 2008 was as follows:
Millions of Yen

Japan

For 2006:
Sales to outside customers

Asia¥ 292,964
238,984¥
53,980¥ 269,304¥

Costs and expenses
Operating income
Identifiable assets
For 2007:Sales to outside customers
Inter-segment sales/transfers
Costs and expenses
Operating income
Identifiable assets¥ 308,459
31,583287,357¥
52,685¥ 299,981¥

For 2008:
Sales to outside customers
Inter-segment sales/transfers
Costs and expenses
Operating income
Identifiable assets¥ 308,758
64,878319,680¥
53,956¥ 296,347

¥

¥
¥

¥
¥

¥
¥

Others27,80627,524282
16,051¥36,4471,181
35,366
2,262
18,425¥74,552
67
70,236
4,383
34,874

¥

¥
¥

¥
¥

¥
¥

Elimination
and/orCorporate

Total

17,39014,9262,464
15,955¥ 338,160
281,434¥
56,726¥ 301,310¥

20,925788
17,917
3,796
19,721¥ 365,831
33,552
340,640¥
58,743¥ 338,127¥

23,6584,423
26,4101,671
19,125¥ 406,968
69,368416,326¥
60,010¥ 350,346

¥

¥
¥

¥
¥

¥
¥

Consolidated— ¥ 338,160
284,803
3,369
53,357(3,369) ¥79,787 ¥ 381,097— ¥ 365,831—(33,552)
310,588(30,052)
55,243(3,500) ¥70,822 ¥ 408,949— ¥ 406,968—(69,368)
346,958(69,368)
60,010— ¥66,605 ¥ 416,951

Thousands of U.S. dollars

For 2008:
Sales to outside customers
Inter-segment sales/transfers
Costs and expenses
Operating income
Identifiable assets$ 3,081,722
647,555
3,190,736$ 538,541$ 2,957,852$ 744,109
668
701,030$
43,747$ 348,076$ 236,127
44,145263,593$
16,679$ 190,889$ 4,061,958
692,368
4,155,359$ 598,967$ 3,496,817— $ 4,061,958—(692,368)
3,462,991(692,368)$— $ 598,967$ 664,785 $ 4,161,602$

The geographical segments consist of Japan, Asia and Others. Effective from the year ended March 31, 2008, the region previously
reflected as Others has been divided into Asia and Others, considering the materiality of the sales of Asia. Main countries and regions
included in each geographical segment were as follows;
Asia : China, Korea, Taiwan, Thailand
Others : United States, Belgium

ANNUAL REPORT 200845

Overseas sales for the years ended March 31, 2006, 2007 and 2008 were as follows:
Millions of Yen
North America
Others

Asia

Total

For 2006:
Overseas sales
Consolidated net sales
Percentage of overseas sales to consolidated sales
For 2007:
Overseas sales
Consolidated net sales
Percentage of overseas sales to consolidated sales
For 2008:
Overseas sales
Consolidated net sales
Percentage of overseas sales to consolidated sales¥ 107,687

¥

31.9%

12,955¥

10,901

3.8%¥ 111,431

¥

30.5%

14,0893.2%¥

15,152

3.9%¥ 133,837

¥

32.9%

15,864

4.1%¥

16,6893.9%

4.1%¥ 131,543
338,160
38.9%¥ 140,672
365,83138.5%¥ 166,390
406,968
40.9%

Thousands of U.S. dollars

For 2008:
Overseas sales
Consolidated net sales$ 1,335,836$ 158,337$ 166,574$ 1,660,747
4,061,958

Overseas sales are segmented into Asia, North America and Others. Main countries and regions included in each segment were as follows;
Asia : China, Korea, Taiwan, Thailand, Singapore
North America : United States
Others : Europe

17. Related Parties
Significant transactions and balances with related parties as of and for the years ended March 31, 2006, 2007 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of Yen

2006

2007

2008

2008

¥ 31,951
11,010¥ 36,542
16,180¥ 38,878
12,855$ 388,046
128,305————

10,650
5,613
5,604
3,273

12,117
5,435——

120,939
54,243
—
—

9,624
4,455
7,433
3,772

12,419
5,953
10,196
5,077

13,632
6,507
11,642
5,327

136,058
64,942
116,195
53,172

BRIDGESTONE Corporation (a major shareholder):Sales
Notes and accounts receivable
KRATON JSR Elastomers K.K. (an affiliated company):
Purchases
Notes and accounts payable
Provision of materials for processing
Accounts receivable — otherTobu Butadiene Co., Ltd. (an affiliated company):
Purchases
Notes and accounts payable
Provision of materials for processing
Accounts receivable — other

JSR CORPORATION

46

18. Net Income per Share
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2006, 2007 and2008 were as follows:
EPS
Net income
Millions of yen

Weightedaverage shares
Thousands of shares

Yen¥ 30,412

254,224¥ 119.63

U.S. dollars

For the year ended March 31, 2006:
Basic EPS
Net income available to common shareholders
Effect of dilutive securities
Stock options
Diluted EPS
Net income for computation
For the year ended March 31, 2007:
Basic EPS
Net income available to common shareholders
Effect of dilutive securities
Stock options
Diluted EPS
Net income for computation
For the year ended March 31, 2008:
Basic EPS
Net income available to common shareholders
Effect of dilutive securities
Stock options
Diluted EPS
Net income for computation48¥ 30,412

254,272¥ 119.61¥ 33,655

252,850¥ 133.10

83¥ 33,655

252,933¥ 133.06¥ 36,994

251,217¥ 147.26$

1.47¥ 147.19

$

1.47

129
251,346¥ 36,994

19. Subsequent Events
At the June 13, 2008 annual meeting, the Company’s shareholders approved the following appropriations of retained earnings: Paymentof a year-end cash dividend of ¥16.00 per share aggregating ¥4,003 million ($39,959 thousand)

ANNUAL REPORT 200847

Independent Auditors’ Report

JSR CORPORATION

48

Company Network
HEAD OFFICEJSR Corporation : 6-10, Tsukiji 5-chome, Chuo-ku, Tokyo 104-8410, Japan

BRANCH OFFICES
Nagoya Branch, Wallisellen Branch, Shanghai Office, Taiwan Office

PLANTS
Yokkaichi Plant : 100 Kawajiri-cho Yokkaichi, Mie 510-8552, Japan
Chiba Plant :5, Chigusakaigan, Ichihara, Chiba 229-0108, Japan
Kashima Plant : 34-1, Tohwada, Kamisu, Ibaraki 314-0102 Japan

Business Segment / Company Name / Purpose of Enterprise*Equity method affiliate

Fine Chemicals Business

Elastomers Business

JSR MICROTECH INC.
Production and sales of printed circuit boards and IC testing fixtures.

Kyushu Gomu Kako Co., Ltd.
Compounding of crude rubber and sales of compounded products.

D-MEC LTD.
Commissioned generation of 3D models, sales of solid modeling systems
and optically-hardened resins, and commissioned analysis by CAE.

ELASTOMIX CO., LTD.
Compounding of crude rubber and sales of compounded products.

JSR Micro Kyushu Co., Ltd.
Production of photoresists for semiconductors and materials for flat
panel displays.
JSR Optech Tsukuba Co., Ltd.
Production of UV curing type optical fiber coating materials.
JAPAN FINE COATINGS Co., Ltd.*Sales of coating materials for fiber-optic cables reinforced by ultraviolet
or electron radiation and for other apparatus.

Japan Butyl Co., Ltd.*
Production and sales of butyl rubber.
KRATON JSR ELASTOMERS K.K.*
Production, purchase, and sales of thermoplastic rubber.
JSR AMERICA, INC.
Sales of synthetic rubber.
Kumho Polychem Co., Ltd.*
Production and sales of EPR.
ELASTOMIX (THAILAND) CO., LTD.
Compounding of crude rubber and sales of compounded products.

JSR Micro N.V.
Production and sales of semiconductor materials.

ELASTOMIX (FOSHAN) CO., LTD.
Compounding of crude rubber and sales of compounded products.

JSR Micro, Inc.
Production and sales of semiconductor materials.
JSR Micro Korea Co., Ltd.
Design, development, production and sales of materials for flat panel
displays and others.
JSR Micro Taiwan Co., Ltd.
Design, development, production and sales of materials for flat panel displays.

Tianjin Kuo Cheng Rubber Industry Co., Ltd.*
Compounding of crude rubber and sales of compounded products.

Emulsions Business
Emulsion Technology Co., Ltd.
Compounding and sales of crude latex.

Business in Other Fields
JSR Trading CO., LTD.
Exports and Imports, purchase and Sales of the following: Various chemicals,
machinery, equipment, physical distribution materials, living necessaries,
foodstuffs, beverages, real estate.
JSR LOGISTICS CO., LTD.
Freight forwarding, warehousing, delivery management.
JSR ENGINEERING CO., LTD.
Engineering and consultation for chemical engineering equipment.
JSR Service Co., Ltd.
Nonlife insurance agency, purchase, sales and leasing of real estate,undertaking of financing, payroll accounting calculation.
JNT SYSTEM Co., Ltd.
Development and sales of computer software and sales of hardware.
Nichigo Kogyo Co., Ltd.
Product packaging, undertaking of civil engineering & general construction.

Plastics Business
EXCEL TOKAI CO., LTD.
Production and sales of extruded synthetic resin products.
JAPAN COLORING CO., LTD.
Coloring of synthetic resin and sales of colored products.
Techno Polymer Co., Ltd.
Production, sales and R&D of ABS resin.
TECHNO POLYMER HONG KONG CO., LTD.
Sales and technical services of synthetic resin in Hong Kongand neighboring regions.
Techno Polymer (Thailand) Co., Ltd.
Sales and technical services of synthetic resin in ASEAN region.
Techno Polymer (Shanghai) Co., Ltd.
Sales and technical services of synthetic resin in China.
TECHNO POLYMER AMERICA, INC.
Sales of plastics, technical services related to plastics in North America.
Shanghai Rainbow Color Plastics Co., Ltd.
Coloring of synthetic resin and sales of colored products.

ANNUAL REPORT 200849

Corporate Data
(As of June 13, 2008)

Directors and Corporate Auditors

Company NameJSR Corporation

Yoshinori Yoshida
Representative Director and President

Tadahiko Ito

Established

Representative Director and Executive Vice President, Petrochemicals Sector

December 10, 1957

Tsugio Haruki
Executive Managing Director, Accounting & Finance,
Corporate Communications, CSR, Logistics

Capital¥23,320,165,484

Mitsunobu Koshiba

Executive Managing Director, Fine Chemicals Sector, Safety Environmental Affairs

Employees

Seiichi Hasegawa
Managing Director, Strategic Planning, Group Companies Coordination,
Information Technology, Purchasing

Masaki Hirose
Managing Director, Human Resources, Legal and General Affairs

Hozumi SatoManaging Director, Research & Development, Business Development,
Precision Process Technology

Yasuki Sajima
Director, Senior Officer, General Manager,
Electronic Materials Div.

5,122

Main Products (Businesses)<Petrochemicals>
Elastomers :General-purpose synthetic rubber, special-purpose synthetic
rubber, thermoplastic elastomers, and others
Emulsions:
Paper coating latex, general-purpose latex

Koichi Kawasaki
Director, Senior Officer, Manufacturing & Technology,
Product Safety & Quality Assurance, General Manager, Elastomer Div.

Fumio Ozaki

Plastics:
ABS, AES, AS, ASA plastics

Corporate Auditor (Full-time)<Fine Chemicals and Other Products>

Nobuo Bessho

Semiconductor Materials:
Photoresists, CMP materials, packaging and assemblymaterials, antireflective coating materials

Corporate Auditor (Full-time)

Kunihiro Fukasawa
Corporate Auditor (Full-time)

Akira Nozawa
Corporate Auditor

Display Materials:
Color LCD materials, PDP materials

Kenji Ito
Corporate Auditor

Optical Materials:
Optical fiber coating materials, functional coating materials,
antireflection treatment, heat-resistant transparent resinand film

Officers
Tomokazu Ito
Senior Officer, President, Techno Polymer Co., Ltd.

Akira Tsuji
Senior Officer, Vice President, Emulsion Technology Co., Ltd.

Performance Chemicals:
Functional materials, industrial particles, particles forapplication in clinical diagnosis

Goro Miyabe
Senior Officer, President, JM Energy Corporation

Eitaro Nakamura
Senior Officer, President, ELASTOMIX CO., LTD.

Closing Date

Hisao Hasegawa
Senior Officer, Yokkaichi Plant Manager, Health Insurance Union Chair

Toshiyuki Fujimoto

JSR’s books are closed on March 31 each year.

Regular General Meeting

Senior Officer, General Manager, Purchasing Dept.

The regular general meeting of shareholders is held in June eachyear. The 2008 regular general meeting was held on June 13.

Atsushi Kumano
Senior Officer, General Manager, Yokkaichi Research Center

Shinichiro Iwanaga

Transfer Agent and Register

Officer, General Manager, Tsukuba Research Lab.

Yoshiyuki Ohashi

The Chuo Mitsui Trust and Banking Co., Ltd.

Officer, President, JSR Micro Taiwan Co LTD.

Takashi Wakabayashi

Auditors

Officer, General Manager, Accounting & Finance Dept.

KPMG AZSA & Co.

Tatsushi Kawai
Officer, General Manager, Emulsion Div.

Home Page

Takashi Ukachi
Officer, General Manager, Optical Materials Div, President, D-MEC LTD.

URL http://www.jsr.co.jp/jsr_e/index.html

Nobuo Kawahashi
Officer, General Manager, Display Materials Div, New FPD Materials Dept.

JSR CORPORATION

50

Investor Information(As of March 31, 2008)

Number of Shares Issued

Common Stock Price Range

255,885,166 shares(Tokyo Stock Exchange)

Number of Shareholders

FY2001

20,292
FY2002Major Shareholders
Percentage Number ofof shares shares held
held (%) (thousands)

Name

Bridgestone Corporation
The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Mizuho Corporate Bank, Ltd.
The Master Trust Bank of Japan, Ltd.
(Number of Retirement Allowance Trust Sharesof Mitsubishi Chemical Corporation)
JP Morgan Chase Bank 380055
Nippon Life Insurance Company
State Street Bank and Trust Company 505103
The Chase Manhattan Bank 385036
State Street Bank and Trust Company

5.53
4.00

40,866
16,188
14,162
10,249

3.86

9,888

3.04
2.34
2.23
1.83

7,794
5,998

15.97
6.32

FY2003
FY2004
FY2005
FY2006
FY2007
FY2008

1.66

5,716
4,690
4,256

High
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Low

1st quarter2nd quarter3rd quarter

4th quarter

1,021
716
1,005
685
1,135
856
1,477
1,141
2,520
1,892
2,395
2,000
3,710
2,535
2,985
2,540

945
650
945
599
1,033
780
2,080
1,429
2,180
1,655
2,635
2,175
2,930
2,280
3,120
2,445

805
665
910
650
1,238
900
2,540
1,795
2,265
1,790
3,150
2,370
3,170
2,505
3,020
2,465

772
600
963
815
1,282
1,109
2,435
2,055
2,255
2,040
3,810
3,040
2,935
2,530
2,845
1,886

’07/10’08/5

Securities Traded Common Stock
Tokyo Stock Exchange
Osaka Securities ExchangeMonthly Stock Price
Composition of Shareholders
Shareholders by category

NumberShares held
(thousands)

Individuals and Others
Foreign Corporation and Individuals
Other Corporations
Financial Institutions
Securities Companies
Total

19,422404

102,941
70,006295
133
38
20,29260,717
21,551
668
255,885

(Yen)
4,000

3,500

3,000

2,500
Financial institutions& securities companies

Foreign investors

27.36%

Individuals/others

40.49%
By type ofshareholders

8.42%

2,000

1,500
’06/4
Domestic
corporations

23.73%
1 tangen or more

Less than 1 tangen

3.92%

0.02%

50 tangen or more

4.12%

500 tangen or more

1.89%

By number ofshares held
1,000 tangen or more

90.05%

ANNUAL REPORT 200851

’06/10’07/4This annual report was printed with vegetable-based ink on FSC-certified paper

Printed in Japan 08-07IM