Annual Report 2015
Year Ended March 31, 2015

Contents

Nipro Corporation
Annual Report 2015

ProfileContents

To Become a Truly Global Comprehensive Medical Care Company

01 Profile

Since its establishment in 1954, Nipro has expanded its business from glass materials to

02 Consolidated Financial
Highlights

medical devices and pharmaceutical products, based on our corporate management

03 A Message to Our
Shareholders and Investors

philosophy and our concept of technological innovation. We provide products and technologies
in a wide range of fields to meet the needs of patients and the medical treatment frontline.

07 Board of Directors andAuditors

The aim of Nipro now is to become a truly global comprehensive medical care company that

08 Review of Operations

lead a healthy life”. Our mission therefore is to strive earnestly to create new value from a

09 Medical-Related Business
11 Pharmaceutical-Related
Business
13 Glass-Related Business

14 Global Activities
15 In Focus
16 Research and Development
19 Status of Corporate
Governance
22 Financial Review
27 Ten-Year Summary
29 Consolidated Balance
Sheets31 Consolidated Statements ofIncomecan fulfill the desire of people of the world, having different cultures, customs and lifestyles, “to“user-focused” unwavering attitude of how to contribute to medical services on a global scale.

Nipro’s Strength—A “Trinity” Business Model
Medical devices, pharmaceuticals and glass products are the three pillars of Nipro’s business.
We shall continue to further develop these business areas in a harmonious manner. Nipro’s
unique strength of technology and know-how about medical devices, pharmaceuticals andglass products is manifested to the maximum extent, for instance, in our combination products
like double bag kit and pre-filled syringe.
Making full use of this strength would ensure safety of patients and labor saving in clinicalpractice. It would also enable speedy response to a wide range of emerging needs felt acrossthe world and to seed ideas.

31 Consolidated Statements ofComprehensive Income

Medical-Related Business

32 Consolidated Statements of
Changes in Net Assets
33 Consolidated Statements ofCash Flows
34 Notes to Consolidated
Financial Statements
49 Report of Independent
Auditors
50 Corporate Information

pages 09-10

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

Pharmaceutical-Related Businesspages 11-12

page 1301

Nipro Corporation
Annual Report 2015

Consolidated Financial Highlights
Nipro Corporation and its Consolidated Subsidiaries Years ended March 31, 2015, 2014, 2013, 2012, and 2011

2014

2015

For the year:
Net sales
Operating income
Net income
Capital expenditures
Depreciation and amortization
R&D expenses

2013

Millions of yen

Thousands of
U.S. dollars

2011

2015

2012

¥

325,084
16,572
12,47047,69827,6688,646¥

300,753
12,2902,861
35,09325,151
7,891¥

241,021
11,371
10,23237,997
21,2106,464¥

212,013
15,825
4,586
39,525
21,581
5,957¥

195,943
17,2252,456
23,323
21,244
4,977$ 2,705,201
137,905
103,770
396,921230,240
71,948¥695,307
178,810¥619,655
135,961¥

579,302
128,763¥499,687
113,951¥476,510
109,038$ 5,786,028
1,487,976

¥

81.0
—
32.5

¥

18.2
16.3
30.5

¥

60.0
54.1
27.5

¥

35.3
31.0
23.5

¥

19.4
17.4
50.0

At the year-end:
Total assets
Net assets
Per share data (in yen and U.S. dollars):
Net income
		Basic
		Diluted
Cash dividends
Equity

988.8

832.1

703.5

Net Sales

Operating Income(Billions of yen)(Billions of yen)

400

20
300.8

300

325.1

11.4

100

5

2012

2013

2014

2015

0

2011

Net Income

Return on Equity(Billions of yen)

(%)

15

2012

10

8.23

2013

12.3

2014

8.9

2015

8.5

12.5
12

0.67
—
0.27

16.6

15

10

2011

17.2

212.0

200

0

839.7

15.8

241.0
195.9

643.9

$

8

10.2

9

6
4.2

6

3

0

4

4.6

2011

2.2

2.9

2.5

2.3

2

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

02
Contents

Nipro Corporation
Annual Report 2015

A Message to Our Shareholders and Investors
Yoshihiko Sano
President & Representative Director

Creating high value-added
products that meet theneeds of the medical
treatment frontline on the
global market

Results for the fiscal year
ended March 31, 2015

In fiscal 2015, ended March 31, 2015, net sales grew 8.1% year on year to ¥325.1 billion andoperating income rose 34.8% to ¥16.6 billion, while net income totaled ¥12.5 billion, an increase of
335.8% from the previous fiscal year.
The Medical-Related business faced a challenging business environment amid a reactionary
decline to special demand prior to the consumption tax hike, in addition to the adverse impact ofrevisions to medical reimbursement fees as well as National Health Insurance (NHI) drug andspecial treatment material prices in April 2014. As a result, shipments of dialysis machines andother products declined. In the field of vascular products, sales increased for the drug-eluting
balloon catheter SEQUENT® PLEASE and related products. Sales volume was steady for the
anticancer agent leuprorelin following updates to our mass production system. On overseas
markets, sales of dialysis products such as dialyzers (artificial kidneys) were firm.
In the Pharmaceutical-Related business, the number of drugs under manufacturing contracts
from drugmakers steadily increased, leading to growth in earnings as capacity utilization improved
at our plants.
In the Glass-Related business, we focused on identifying customer needs and acquiring newcustomers amid globalization, while concentrating on conventional glass containers used in the
medical field. In order to meet needs for more reliable, high-quality injectable formulations, we
focused on the development of high value-added products and put in place systems to facilitate
their development.

03
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Nipro Corporation
Annual Report 2015

A Message to Our Shareholders and Investors

Major initiatives undertaken
in fiscal 2015

In Japan, Nipro increased production capacity at Nipro Pharma Corporation’s Odate plant andconstructed the new Biwako plant, while strengthening the group management structure by turning
into wholly owned subsidiaries Goodman Co., Ltd., which sells vascular products, and Cell Science& Technology Institute, Inc., which undertakes the development and production of safe and highperformance cell culture media for use in the fields of regenerative medicine and cell therapy.
To more rapidly respond to the needs of the medical treatment frontline overseas, Nipro
acquired a company in Europe that sells medical equipment, set up sales offices in Malaysia and
Kenya and expanded its sales network by taking an equity stake in a sales agency in South Korea.
Nipro bolstered its production structure with new plants in India, Indonesia, Bangladesh and Hefei,
China, smoothly ramped up production based on established quality assurance systems, andachieved strong growth in sales in the countries hosting the plants and their neighboring countries.
In October 2014, Nipro opened the Institute for Medical Practice (iMEP), a medical training
facility. At iMEP, the facility is provided for courses on medical technologies to medical professionals
and training sessions on how to use our medical devices. Every month, more than 1,000 people
take advantage of these learning opportunities. Through this facility, we have put in place anenvironment where we can build relationships with medical professionals while they provide us withtechnical advice regarding our products.

Management policies andoutlook for fiscal 2016

Nipro declared certain management policies for fiscal 2016. These policies include strengthening
product competitiveness, enhancing safety measures at the medical treatment frontline,
strengthening profitable structures at overseas plants, and helping to extend life expectancies as acomprehensive medical care company. While each has its own specific measures, the common
underlying theme is to create high value-added products at levels, including safety levels, thatexceed the competition, in order to meet the needs of the medical treatment frontline from users’
viewpoints on the global market.

Net Sales Results and Plan (For the years ended March 31)(Billions of yen)

600
500.0
500
400
300.8
300
195.9

212.0

2011

2012

325.1

241.0

200
100
0

2013

2014

2015

2021

04
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Nipro Corporation
Annual Report 2015

A Message to Our Shareholders and Investors

In the Medical-Related business, Nipro aims to tap into the needs of medical professionals andsell high value-added products that increase the efficiency of administration, are easy to use andimprove safety in the global marketplace. In addition to dialysis products focusing on our mainstay
dialyzers, we are focusing on expanding our lineup of products in the diabetes- and vascularrelated fields, while developing new sales channels. We also plan to expand our overseas sales
network and develop business in the North American and African markets. Nipro has positioned
the field of regenerative medicine as a vital business for realizing growth over the longer term. We
intend to nurture regenerative medicine into a business that drives growth in the future, byleveraging the knowledge, products and technologies related to cell cultivation that we have gained
from our involvement in this field.
In the Pharmaceutical-Related business, as a world-leading pharmaceuticals contract
manufacturing group, Nipro aims to further increase production capacity while adapting its
production and quality assurance systems in the domestic contract manufacturing division so thatthey seamlessly function overseas. Nipro plans to quickly start operations at its new production
bases overseas in order to establish a more stable supply capacity and enhance its costcompetitiveness in the supply of pharmaceuticals.
In the Glass-Related business, Nipro is working to expand its product lineup in line withcustomer needs and improve the competitiveness of its products. We aim to turn a profit as quickly
as possible at our overseas plants by improving efficiency and productivity.
New management philosophy
and the Nipro concept

In May 2015, Nipro formulated a
new management philosophy. The
new philosophy is intended toprovide clarity on the Company’sbusiness field of medical care, andNew Management Philosophy
We believe our current and future responsibility tosociety is to develop innovative, value-added products
and technologies that improve patient outcomes andhealthcare worldwide.

emphasize our global mission ofdeveloping products and technologies that meet both the needs of patients and the medical
treatment frontline, from users’ viewpoints.
Nipro is a company that supplies end products used by hospitals. By fully comprehending theopinions of the medical treatment frontline without being biased by established customs or
knowledge, we aim to create innovative high value-added products for our customers.
Aggressively developing business overseas, Nipro has been putting in place an overseas sales
network in order to expand sales of its competitive lineup of products. Our new management
philosophy will provide impetus to our efforts for creating a structure that generates new value inour products through free thinking, as all of our employees come together as one to thoroughly
understand and meet the needs of our customers, working together across marketing, production
and research divisions.

05
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Nipro Corporation
Annual Report 2015

A Message to Our Shareholders and Investors

To our shareholders

Returning profits to shareholders is one of Nipro’s key business policies. The Company aims for adividend payout ratio of 40% over the medium and long term. For the fiscal year under review,
Nipro paid a dividend of ¥32.50 per share, an increase of ¥2 per share compared with the previous
fiscal year, for a payout ratio of 40.1%. With objectivity a priority for its Board of Directors, Nipro
proposed to increase the number of outside directors by one director, and nominated two female
directors, at its general meeting of shareholders in June 2015.
As a long-term goal, Nipro targets sales of ¥500 billion by the fiscal year ending March 31,
2021, and is working toward this goal by reinforcing the competitiveness of its products as well as
upgrading and expanding its lineup and sales networks. As a goal even farther into the future, Niprotargets sales of ¥1 trillion by the fiscal year ending March 31, 2031, and is marshalling the entire
group with the aim of becoming a global corporation.
To achieve these targets, Nipro will coalesce its technological capabilities for the developmentof advanced products that contribute to extending life expectancies of people around the world byaddressing the treatment, prevention, and examination needs of the medical treatment frontline. In
order to meet the medical needs of all types of people, regardless of their culture, customs,
lifestyles and age, around the world, Nipro aims to become a truly global comprehensive healthcarecompany that never fails to take the viewpoint of customers and patients.
We sincerely appreciate the ceaseless support and encouragement of our shareholders as we
pursue these goals.
July 2015

Yoshihiko Sano
President & Representative Director

06
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Nipro Corporation
Annual Report 2015

Board of Directors and Auditors

Makoto Sato

Kazuo Wakatsuki

Managing Director

Managing Director

Kiyotaka Yoshioka

Toshiaki Masuda

Kyoetsu Kobayashi

Managing Director

Managing Director

Managing Director

Yoshihiko Sano
President &Representative Director

Directors

Standing Statutory Auditor

Akihiko Yamabe

Hiroshi Yoshida

Mitsutaka Ueda

Hiroshi Sudoh

Tsuyoshi Yamazaki

Takeo Kikuchi

Hideo Okamoto

Kenichi Nishida

Masanobu Iwasa

Toyoshi Yoshida

Yozo Sawada

Kouki Hatakeyama

Kazumichi Irie

Kimihito Minoura

Yasushi Ohyama

Masayoshi Hasegawa

Hideto Nakamura

Kenju Fujita

Yasushi Kutsukawa

Takehito Yogo

Masayuki Ito

Yoshiko Tanaka

Itsuo Akasaki(External Director)

Kazuhiko Sano
Akio Shirasu

Takayuki Nomiya

Statutory Auditors

Minako Oomizu(External Director)

07
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Nipro Corporation
Annual Report 2015

Review of Operations

Pharmaceutical-Related
Business

Medical-Related
Business

pages 11-12

pages 9-10

Glass-Related
Business

page 13

08
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Nipro Corporation
Annual Report 2015

Review of Operations

Medical-Related Business

1

2

5

3

Main Products
1 Blood Tubing Set
2 Elisio™ Dialyzer
Elisio™ dialyzer with its polynephron™
membrane is a synthetic dialyzer for
highly convective therapies.
3 NCU-18 Dialysis Machine
NCU-18 is slim and compact in designand has a very unique feature;
automatic priming/reinfusion supports
these processes before and end oftherapy.
4 SafeTouch Tulip™ AVF
SafeTouch Tulip™ AVF features a low
profile design and “tulip-shaped”
needle protector to reduce the risk ofaccidental needlestick injuries.
5 SafeTouch™ CathOur SafeTouch™ Cath has a passive
safety mechanism, which
automatically activates when you
withdraw the needle, reducing the riskof accidental needlestick injuries.
6 SafeTouch™ Safety Winged Needle Set
7 Surefuser™+

4

6

7

In this segment, Nipro engages in the development, manufacture andsale of injection-transfusion, artificial organ, dialysis and diabetic
products on a global basis as well as cell-culture products and genericpharmaceuticals for the domestic market.

(Years ended March 31)

Net Sales

Operating Income

Sales Composition(Billions of yen)(Billions of yen)

(%)

300

30

250
200

221.4

237.8

20

168.2

150

15

100

10

50

5

0

2013

2014

23.8

25

2015

0

20.4

Domestic
39.5

2015

17.3

2013

Overseas
60.5

Dialysis Products 41.4
‌Injection Products 16.6
‌Diabetic Products 13.6
‌Catheter Products 10.5
Transfusion Products 7.2
Others
10.7

2014

2015

Note: ‌Regarding the reclassification of the pharmaceutical product sales unit from PharmaceuticalRelated Business to Medical-Related Business in 2014, the segment information for the period
ended March 31, 2013 under the reclassification is not disclosed in the financial section, but in theabove charts, the figures of 2013 are revised retroactively following the reclassification.

Note: This‌chart does not include the salesof pharmaceutical products, etc. The
total sales amount of this chart is
188.0 billion yen.

09
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Nipro Corporation
Annual Report 2015

Review of Operations

Financial Results for Fiscal 2015
In the year ended March 31, 2015, net sales in the Medical-Related business increased 7.4% year
on year to ¥237.8 billion (US$1,978.7 million). Operating income grew 16.5% to ¥23.8 billion(US$198.2 million).
Filtrap™
Filtrap™ is a self-expandable spiral-shaped
nitinol basket with a filter built on a 0.014”
guidewire for embolic protection during
coronary and peripheral intervention
procedures.

In Japan, sales and profits of vascular products including drug-eluting balloon catheters
increased. Sales of dialysis products such as dialyzers were strong.
Outside Japan, Nipro fortified its sales structure through the acquisition of a sales company in
Switzerland and its subsidiaries in Germany, Turkey and so on, while also entering into a capital
participation agreement with an overseas distribution agent. Turning to production, we took steps
to improve capacity through new overseas plants while boosting production of dialyzers at our India
and Hefei plants. In addition, production of syringes expanded at plants in India and Indonesia. Thisin turn contributed to sales growth.

16.5% growth in operating income

Strategy and Outlook for Fiscal 2016
Brizio™
Brizio™ oxygenator is delivered as a complete
kit with venous reservoir and integrated
cardiotomy filter. The heat exchanger is
pre-connected to the oxygenation chamberand has a synthetic anticoagulation coating.

In fiscal 2016, we will boost our share of the market by expanding our product portfolio andopening up new sales channels in the dialysis market, focusing mainly on dialyzers, as well as the
cardiopulmonary and vascular market. We will also expand sales channels in developing regions
including India and Africa, where we anticipate market growth, and in North America, where wehave established a strategic presence.
In order to boost production, we will increase our manufacturing capacity of dialyzers, bloodtubing, arterial venous fistula (AVF) needles and syringes at new overseas plants such as Nipro
India Corporation Pvt Ltd., PT. Nipro Indonesia JAYA, Nipro JMI Company Ltd. and Nipro Medical(Hefei) Co., Ltd.
In the field of generic drugs, we will continue our business development activities. Leveraging
our track record using Diagnosis Procedure Combination (DPC) hospitals, we will expand sales oforal drugs to dispensing pharmacies. We will also focus on the development and sale of high valueadded products by creating productive synergies with our medical device sales division.

Surdial™-X
Surdial™-X offers the user the flexibility to set
up treatments tailored to the patient’s needs;
its slim and ergonomic design takes up lessspace on the ward or dialysis unit giving more
space to the patient and the operator.

10
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Nipro Corporation
Annual Report 2015

Review of Operations

Pharmaceutical-Related Business

8

9

10

Main Products
8 Orally Administered Drugs
Nipro is one of the largest pharmaceuticalcontract manufacturers in Japan and has
highly value-added formulation
technologies.

In the Pharmaceutical-Related business, we engage in contract manufacturing operations of drugs for oral and external use as well as
injectables. Nipro supplies products to 84 pharmaceutical companies

9 External Preparationsin Japan and is ranked third globally among Contract Manufacturing

Nipro is capable of providing highly valueadded external preparations throughstate-of-the-art formulation technologies.

Organizations (CMOs) in terms of sales.

10 Injectables
Nipro is capable of developing and manufacturing combination products such as
pre-filled syringes, double chamber pre-filled
syringes, powder – liquid doubles bag.

(Years ended March 31)

Net Sales

Operating Income(Billions of yen)(Billions of yen)

75

12
57.4

(Item)
10.6

10

51.5
50

The number of contract
manufacturing products

8.0

46.6

2015

8

Oral drugs
Injectable drugs
External drugs

6
4

25

317
234
76

2.7

2
0

2013

2014

0

2015

2013

2014

2015

Note: ‌Regarding the reclassification of the pharmaceutical product sales unit from PharmaceuticalRelated Business to Medical-Related Business in 2014, the segment information for the period
ended March 31, 2013 under the reclassification is not disclosed in the financial section, but in theabove charts, the figures of 2013 are revised retroactively following the reclassification.

11
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Nipro Corporation
Annual Report 2015

Review of Operations

Financial Results for Fiscal 2015
In the period under review, net sales in the Pharmaceutical-Related business came to ¥57.4
billion (US$477.4 million), up 11.4% year on year. Operating income grew 31.7% to ¥10.6
billion (US$87.8 million).
Nipro Pharma Vietnam Co., Ltd.

Nipro has, in addition to contract manufacturing, strived for broader contractdevelopment services that start from formulation design of drugs for oral and external use to
generic application support and are conducted by the use of its expertise in developing andsupplying vials, syringes, bags and other packaging containers. We are also working toprovide a wide range of lifecycle management support services, aimed at enhancing valueadded features and realizing distinct service differentiation.
In April 2015, the production facility for glass ampoule products at Nipro Pharma
Vietnam Co., Ltd. started operations, following approval for the facility by Vietnam’s Ministryof Health and Japan’s Ministry of Health, Labour and Welfare.

31.7% growth in operating income

Strategy and Outlook for Fiscal 2016
In June 2015, Nipro introduced new generic products to the market: metformin, anantidiabetic agent; clopidogrel, an antiplatelet agent; docetaxel, an anticancer agent; and an
additional dose of meropenem, an antibiotic. Through the launch of new products, we will
strive to increase our market share in the expanding generic drug business.
Nipro Pharma Corporation Ise Plant

Looking at pharmaceutical containers as well as devices related to pharmaceuticalpreparation and administration, we will continue to develop and supply products having safety
and convenience.
In addition to increasing capacity by expanding production lines of glass ampoule
products at the Ise Plant of Nipro Pharma Corporation, another step will also be taken to
expand facilities at Nipro Pharma’s Odate Plant to improve the efficiency of leuprorelin
production. Furthermore, to address an increase in the number of contract projects and items,

Nipro Pharma Corporation Odate Plant

Nipro Patch Co., Ltd. and Zensei Pharmaceutical Industries Co., Ltd. will set up new facilities
for solvent-type tapes in Odate City, Akita Prefecture and solid preparations for oral use in
Izumi City, Osaka, respectively. With an eye to promoting low-cost production, we will expand
ampoule product manufacturing operations in Nipro Pharma Vietnam Co., Ltd.

Zensei PharmaceuticalIndustries Co., Ltd.
New Plant in Izumi City
(Operation April 2016)12
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Nipro Corporation
Annual Report 2015

Review of Operations

Glass-Related Business11

Information About Plants
11 Ampoules
Glass ampoules are the ideal packaging
material for fluid preparations. Ourampoules are tamper-proof, transparent
durable and impermeable to gas andresistant to any interaction between
container and content.
12 Cartridges
Cartridges are used for pen injection
systems, like insulin, dental anesthetics, aswell as other biotech applications.
13 D2F®–Vials
Our D2F® product line includes syringes
and vials pre-packed in a ready-to-fillpackaging. The D2F® products are allsterile and delivered so you can
immediately fill them.

12

13

As an integral part of the Company since its foundation, the GlassRelated business undertakes the manufacture and sale of glass tubes
and containers mainly for pharmaceutical products as well as otherglass products.
(Years ended March 31)

Net Sales

Operating Loss

Sales Composition(Billions of yen)(Billions of yen)

(%)

3

40

30

25.9

27.6

29.8

2

2015

1
20

Domestic
AmericaEuropeIndia
China

0
–1

–1.1

15.4
23.6
43.3
2.7
15.0

10
–2
0

Pre-filled Syringe

2013

2014

–3

2015

–2.2
2013

(Operation April 2015)

2015

Financial Results for Fiscal 2015

Strategy and Outlook for Fiscal 2016

While net sales in this segment increased

In the year ending March 31, 2016, we will8.0% year on year to ¥29.8 billion (US$248.2

reinforce our one-stop solution service of

million), the Company incurred an operating

pharmaceutical packaging materials based

loss of ¥2.9 billion (US$24.0 million).

on production development from a customer

In Japan, the Biwako Plant commenced

Nipro Corporation Biwako Plant

–2.9

2014

perspective. In addition to expanding ourfull-fledged operations and establishedlineup of such products as syringes andproduction and sales structures. Overseas,

cartridges, where profitability is projected,

sales recorded an overall increase while

we will promote sales activities and improve

capital expenditures also increased due tobusiness profits with our high value-added

the additional temporary upgrading andproducts developed through collaboration

repairing of plant furnaces in France and the

between the R&D departments in Japan andU.S.

Europe.

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Nipro Corporation
Annual Report 2015

Global Activities

Marketing
Manufacturing
Manufacturing and Marketing

Net Sales by Region (For the years ended March 31)
0

50

2015

62.7

2014

56.9

2013

Nipro Europe N.V.

150

42.9
40.4

46.3

America

100

Europe

200

37.4

23.4

Asia

Domestic

Nipro India Corporation Pvt. Ltd.

300

350

182.1

28.5

32.4

250

(Billions of yen)

325.1
300.8

174.9
241.0

139.0

Chengdu Pingyuan Nipro
Pharmaceutical Packaging Co., Ltd.

Nipro Medical Corporation

14
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Nipro Corporation
Annual Report 2015

Our Efforts in Regenerative Medicine

In FOCUS

Many companies have been stepping up their efforts in regenerative medicine
using stem cells such as iPS cells. Nipro has positioned regenerative medicine and stem cell treatments as a future pillar of its Medical-Related business, and has been forming partnerships with universities and other research
institutions while investing in future growth by building new plants.
Nipro announced plans to construct a newplant in Tendo City, Yamagata Prefecture(March 2015)

Nipro’s Initiatives in Regenerative Medicine

Establishment of Cell Culture Fluid Plant in Tendo CityP16In April 2014, Nipro entered into an exclusive worldwide
production and sales agreement with Sapporo Medical University
for their research in regenerative medicine for the treatment of
cerebral infarction and spinal cord injuries. Using this regenerative
treatment, several ten milliliters of bone marrow are collectedfrom the patient, and the stem cells are cultivated in vitro up to
approximately 10,000-fold to become new nerves and bloodvessels. These stem cells are then intravenously drip injectedback into the patient, with the expectation that they will help
regenerate damaged nerves and blood vessels. Investigatorinitiated trials have progressed to Phase II clinical trials for spinal
cord injuries and Phase III trials for cerebral infarctions. If efficacy
is confirmed and the treatment is commercially viable, there will
be new hope for patients suffering from severe paralysis due tospinal cord injuries or cerebral infarction. At Nipro, we are jointly
developing the technologies, including devices and equipmentthat will be needed to commercialize and produce thisregenerative treatment. Nipro plans to launch the production ofcell drugs in late 2018. By fully committing to this new field of celldrugs, Nipro aims to make this revolutionary regenerative
medicine a common facet of modern medicine.
Collection ofbone marrowaspirate

Intravenous
infusionFreezing
Quality inspection
Storage

In March 2015, Nipro announced plans to construct a newplant in Tendo City, Yamagata Prefecture for Cell Science &Technology Institute, Inc., a subsidiary that produces cell
culture media. We are designing the new plant so that it will
conform to Good Manufacturing Practices (GMP)* forpharmaceuticals. Plans call for operations to start in
September 2016.
Demand for cell culture media has been increasingalongside the commercialization of regenerative and stem celltherapies. The Nipro group currently produces 90,000 liters ofcell culture media annually at its Odate plant and the main
plant of Cell Science & Technology Institute, Inc. Plans call forthe new plant to produce 200,000-400,000 liters of cell
culture media annually by the fiscal year ending March 2021.
* ‌Good Manufacturing Practice: Standards for pharmaceutical production and quality
management regulated by the Ministry of Health, Labour and Welfare in Japan, theFood and Drug Administration in the U.S., and the European Medicines Agency inEurope.

Isolation of stem
cells from bonemarrow aspirate

Culturing for expansion
Large-scale culture

Cell Culture Media

Preparation ofcell based drug

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Nipro Corporation
Annual Report 2015

Research and Development

Research & Development Laboratory

Pharmaceutical Research Center

The Nipro group is engaged in the research and development of

Cell Drug Division

medical devices and pharmaceuticals, with Nipro Corporation

Nipro has been developing automated cell culture systems forplaying a central role, at the Nipro Life Science Site located incell drugs (regenerative medical products) and iPS/ES cells

Minami Kusatsu, Shiga Prefecture.

through ongoing research projects with industry, academia, andIn the Medical-Related business, we opened the Institute

government in the field of regenerative medicine. In cell drugs,

for Medical Practice (iMEP) as a medical research facility on the

we have entered into a licensing agreement with Sapporo

site on October 8, 2014. We hold training events on the use of

Medical University with the objective of making autologous bone

medical devices, personal training and lectures for medicalmarrow cells into practically applicable pharmaceutical products

professionals to improve their abilities and help solve medical

for use in regenerative treatment of cerebral infarction and spinal

problems. Through these training events and lectures, we

cord injuries. Cooperating with Sapporo Medical University,

receive direct feedback from the medical professionals in

Nipro has been implementing investigator-initiated trials forattendance, and reflect their opinions in the development of new

cerebral infarction and spinal cord injuries. For these patients,

products in R&D and for the improvement of existing products.

the early development of such cell drugs is greatly anticipated,

In the Pharmaceutical-Related business, Nipro develops

as aftereffects like loss of motor function for which no effective

high-quality generic drugs as substitutes for brand-name drugs

therapy is currently available often persist after such ailments.

in various dosage forms and for various diseases, in response to

Nipro has been working jointly with Sapporo Medical University

needs for lower prices and higher quality drugs in healthcare.

on the early commercialization of equipment needed for the

We are also focusing on the development of value-added

practical application of these cell drugs.

products, such as orally-disintegrating tablets that are easier for

Based on evaluations of our automated cell culture systems

patients to ingest and kit formulations that are easy to handle infor iPS/ES cells by several research facilities through the last

medical practice.

fiscal year, we plan to make further improvements in the systemand begin accepting orders for and producing this system for

R&D activities of the different business segments are described

research applications in the upcoming fiscal year.

P15

below.
Medical Devices Division
1. Medical-Related BusinessIn transfusion products, we began to market a multiple manifold

R&D has been undertaken in the following fields, with thefor the indirect administration of drugs along with transfusions as

Research and Development Laboratory playing a pivotal role.

an additional option for our SAFETOUCH® transfusion systems.
Moreover, we began to sell peripherally inserted central
catheters (PICC) with backflow prevention functions and vein

16
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Nipro Corporation
Annual Report 2015

introducer kits in order to rapidly attenuate hyperosmotic

Circulatory and Interventional Products Divisiontransfusions and avoid phlebitis of the vascular wall. In dialysis

Nipro began marketing our PTCA catheter (trade nameproducts, Nipro launched sales of SUREHOLDER™ syringe

CELSUS®), which has the highest guaranteed pressuretransfer holders for transferring specimens taken from blood

resistance (RBP 24 Atm) for such catheters in Japan, and iscircuits via syringes to vacuum blood collection tubes without

used for dilation of calcified lesions and for post-stenting

passing through the needle. In anesthesia products, we added a

dilation. This is a type of PTCA balloon catheter used for balloon

large size to our lineup of Nipro Bite Blocks B-BOC® thatdilation of stenosis in percutaneous coronary intervention (PCI)

prevents inhabitation and damage to endotracheal tubes.

for coronary artery diseases, such as acute myocardial infarction
or coronary artery occlusion.

Diagnosis and Testing Products Division

In addition, we also received approval to market a multi-use

Nipro released Espa™ Li II, an improved, more reliable andhigh-pressure resistance (RBP 20 Atm) PTCA catheter that iseasier-to-use drug for testing the blood concentration of lithium

more compatible with complicated lesions, thanks to improved

carbonate, which is widely used in formulations to treat manic

lesion passage due to a thinner balloon wall than our CELSUS®

depression. Nipro also released the improved Espa™ Zn II, now

catheter. After obtaining approvals in the previous fiscal year,

unaffected by the presence of anticoagulant drugs, as a drug for

Nipro also introduced to market a directional coronary

testing for zinc, which has attracted attention as a marker ofatherectomy (DCA) catheter that ablates and removes

nutritional state and taste disorders. In Thailand, we introduced

atheromas in narrowed or occluded arteries with a small

Genescholar PZA TB as a genetic testing drug that can rapidly

embedded rotary cutter. For percutaneous peripheraland easily detect pyrazinamide-resistant tuberculosis. We planinterventions (PPI) on peripheral blood vessels, we added ato bring this drug to countries other than Thailand. In addition,

longer type to our lineup of E-VAC® thrombus aspiration

Nipro released Quo-Lab, which is able to rapidly and easily test

catheters that makes it easier to approach blood vessels in thea blood drop sample for hemoglobin A1c, a marker for diabetes.

lower limbs. This product aspirates thrombi from thrombotic®

occlusive lesions in peripheral blood vessels that may have
Functional Pharmaceutical Containers Division

dialysis shunts and restores blood flow.
Moreover, we received approval to market FINESTREAM® S,

Nipro began selling SEPAJECT®, a preparation device for blood
products. It simplifies preparation procedures (the maina PTA balloon catheter used for balloon dilation of stenosis inadvantage of preparation devices), prevents accidental needle

peripheral arteries that features better balloon flexibility thansticks, and prevents foreign material and bacterial

current products.

contamination. In addition, the preparation device comes with adefoaming function that works at the push of a button on the

Artificial Organs Division

device after dissolving formulations that easily foam up during

In January, Nipro received pharmaceutical approval for adrug preparation.

biocompatible coating product under the new materials
category for the Japanese market, and is now preparing for its

We also started to sell fixed-quantity collection droppers.
By gripping and removing the cap, the dropper collects a fixedmarket release. The biocompatible coating product is forvolume of sample, making it unnecessary to read graded scales

membrane-type artificial lungs with a venous reservoir, usedor count the number of drops.

during heart surgery. This product includes a high efficiency
artificial lung that removes carbon dioxide from blood andA top cover was added to lock barrel prefilled syringes, suchas for physiological saline and heparin for dialysis. We made it

oxygenates the blood in place of the lungs, and a venous

easier to remove only the top cap after hearing that it was difficult

reservoir with excellent operational performance which allows

to remove. The design makes it more difficult for the top cap

filtration and recovery of lost blood, removal of air bubbles from

opening to come into contact with contaminated areas, by

the blood and maintenance of bodily blood volume. In October,preventing contamination when the removed cap is put back on.

Nipro began marketing a venous reservoir made from the samematerial after obtaining certification, and the response has been

17
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Nipro Corporation
Annual Report 2015

positive. In July, Nipro received approval to produce and sell inalready diluted drug solution is packed, and a liquid-powder

Brazil an ultra-compact membrane-type artificial lung with adual-chamber bag is also under way.

venous reservoir, designed especially for newborn babies, andOral Drugs

the company is now preparing to launch the product.
In the field of hemocatharsis, Nipro aims to spread overseas

We have developed not only conventional tablets, but also

the advantages of powder formulations of dialysis solutions byvalue-added pharmaceutical products that use ingenious drugusing its knowledge accumulated in Japan. We received

formulation technology. We aim for a lineup of tablets imprinted

approval to market a powder formulation of dialysis solutions inwith product names, as we create formulations compatible with

India, and are making preparations to release it in the upcoming

tablet printing in order to enhance their discernibility in medical

fiscal year.

practice.

Moreover, with the objective of developing new surgeryrelated products centered on orthopedic surgery and abdominal

External Use Products

surgery, Nipro is leveraging its processing technologies forThis year, we began selling creams, lotions and sprays withdegradable and absorbent materials in the development of

heparinoid (brand-name: Hirudoid®, Maruho). In addition, we

medical devices that can be embedded in the human body,confirmed that an Abbreviated New Drug Application (ANDA)

such as for regenerative medicine including nerve regeneration-seeking approval to market hydrogel patches of lidocaine

inducing tubes and pericardium reproduction assistancehydrochloride, which is our first generic drug out-licensed

materials.

overseas, has been accepted for filing by the U.S. Food andDrug Administration (FDA).
We have continued to work on the development of tapes

The basic concept of our R&D is to develop and provide highvalue-added products by approaching medical needs andand hydrogel patches that are hypoallergenic, thin andproblems from unique viewpoints. Our primary aim is to carrylightweight, and have good tackiness and stretchability, whileout exhaustive research on medical devices, and to act as a

keeping in mind overseas markets as well.

driving force to produce high-quality Nipro products.
Generic Anti-Cancer Drugs and Biosimilars

The total research and development costs of this businessIn the rapidly expanding market for anti-cancer drugs andsegment in the fiscal year were ¥5.1 billion (US$42.4 million).

biological drugs, drug prices are generally quite high. As a result,
2. Pharmaceutical-Related Businessthe need for low-priced and reliable generic drugs and biosimilars

The following research and development activities are carried

is increasing. In the fiscal year under review, we began marketing aout, with the Pharmaceutical Research Center playing a pivotal

total of two generics, one injectable and one oral anti-cancer drug.

role.

In the next fiscal year, we plan to start selling a value-added
injectable generic drug developed for the purpose of easing the

Injectable Drugs

burden on patients, in addition to an oral generic drug formulation.
In biosimilars, Nipro aims to rapidly create products throughWe have been actively pursuing the development of formulations
for injection kits that have excellent usability in medical practice.

tie-ups with firms that manufacture bulk pharmaceuticals at

In the previous fiscal year, we began marketing a prefilled dual-

favorable prices and excellent quality.

chamber syringe (1-month depot dosage form) of leuprorelin
acetate (brand-name: LEUPLIN®, Takeda Pharmaceutical) used

In the future, we intend to actively pursue development work to

in hormone therapy for prostate cancer and endometritis. We

provide high-quality, low-cost safe generics to help reduce thehave continued to develop products focused on a 3-monthspiraling cost of healthcare.

depot dosage form of leuprorelin acetate and highly difficult-to-

The research and development costs of this businessdevelop extended-release injectables. Development of kit

segment in the fiscal year were ¥3.6 billion (US$29.5 million).

formulations such as premixed preparations, in which the18
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Nipro Corporation
Annual Report 2015

Status of Corporate Governanceoverall. Nipro Corporation’s directors and auditors, as well as
representatives of each of the major companies of the group,
hold a group management meeting on a monthly basis. Thesemeetings are used to report on the progress of businessactivities, decide key operating matters, and deliberate on
pending matters. To build awareness of compliance with laws,
regulations and corporate ethics among executives andemployees, Nipro Corporation establishes, and promotes
awareness toward, the “Nipro Code of Practice,” while preparing
legal compliance manuals and making them available on thecorporate portal site, implementing an internal reporting system
to collect and respond to risk data, and distributing appropriate
information via net bulletin boards and the intranet. These
internal control systems are targeted at the executives andemployees of each company in the Nipro group, and areoperated under an integrated management mechanism whichseeks to ensure close mutual collaboration.

1. System for Corporate Governance(1) System‌
for Corporate Governance and Reasons for
Adoption
Nipro Corporation has an established corporate governancesystem including organizations for the Meeting of Shareholders
and directors as required under the Companies Act, in addition
to a Board of Directors, auditors, Board of Auditors and an
Accounting Auditor. Nipro Corporation has also establishedinternal committees such as the Operational Risk Management
Committee. This committee continuously maintains close
coordination with external parties such as the company attorney,
to enable effective monitoring and supervision of the efficiency
and propriety of operations across the company as a whole.
Since its establishment, Nipro Corporation has diversified
its business and has established an independent management
system for each division. Nipro group operations are integrated
through mutual collaboration and companywide governance by
Nipro Corporation. The foundations for this system are themanagement systems of each business unit. Our corporate
governance system functions effectively as a traditional andcoordinated management system for the Nipro group, by
clarifying responsibilities and enhancing management systems.

(3) Risk Management System
Nipro Corporation has established risk management regulations
and a system for managing business and other specific risks. Its
purpose is to recognize and capture risks that could have amaterial impact on business operations, in an appropriate andcomprehensive manner. Nipro Corporation has also established
an Operational Risk Management Committee to ensure crosssectional management across all group companies. The
committee endeavors to further strengthen risk management
systems to prevent, avoid and learn from risks and crises. Nipro
Corporation has also established a Sanction Committee, chairedby the President, which endeavors to ensure sound business(2) Internal Control Systems
Nipro Corporation resolved to partially change its basic policy forinternal control systems, as stipulated in Article 362, Paragraph 5of the Companies Act, at the Board of Directors meeting convened
on April 28, 2015 and implemented it from May 1, 2015.
Nipro Corporation strives to make business units thefoundations of its internal control system for the Nipro group

Basic Structure of Corporate Governance and Risk Management
Meeting of Shareholders
Election

Accounting
Auditor(Auditors)
Board ofAuditors

President(Directors)
Board ofDirectors

Committees

Third Party(i.e., lawyer,
accountant)[Decision-making]Accounting
Audit

Operational
Audit

Supervision of
Directors’
executionof duties

Director withresponsibility for
operation

Operational
Risk
Management
Committee

Division General Manager,
Manager, Assistant Manager

Conceptual Diagram of Corporate Governance19
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Nipro Corporation
Annual Report 2015(3) ‌Function and Role of Outside Directors and Outside
Auditors in the Corporate Governance of Nipro
Corporation
The outside directors have excellent insight and wide-ranging
experiences developed through their current and former
positions and serve a management function by providing theappropriate advice and guidance in order to reinforce
supervision.
The outside auditors are expected to apply their profoundknowledge from past experiences of business management to
the examination of the management of Nipro Corporation from a
broad perspective. They work in close collaboration with theinternal auditors, employees of the Audit Office, auditors andaccounting auditors of subsidiaries. Their role is to effectively
demonstrate an objective auditing function, and to effectively
ensure integrated and effective audit activities across the Niprogroup as a whole.

management through the appropriate handling of sanctions.
Nipro Corporation produced the Disaster Prevention and Crisis
Management handbook and distributed it to each employee
within the Nipro group. Nipro Corporation tries hard to keep
employees fully informed about taking calm and appropriate
action when faced with disasters and about reassessing andrenewing business continuity plans as appropriate.
2. Internal and Statutory Auditing
Internal Auditing
Nipro Corporation has established an Internal Audit Division,consisting of an Audit Office and an Overseas Audit Office, andconducts audits of accounting and other operations based oninternal audit protocols. In addition to the two full-time
employees in the Internal Audit Division, employees aredispatched as necessary from the Head Office Management
Division or other divisions. Auditors carry out inspections andensure smooth and efficient performance. Audits are carried out
efficiently in accordance with audit policies and schedules as
determined each fiscal year. Nipro Corporation endeavors toensure smooth accounting and statutory audits through mutual
collaboration between our auditors and accounting auditors.

(4) ‌Policy and Criteria for Independence from the Filing
Company in the Election of Outside Directors andOutside Auditors
Nipro Corporation has no criteria or policy in place regarding
independence from the filing company with respect to theelection of outside directors and outside auditors. However, theevaluation criteria used for the independence of stock
exchanges are referenced in such elections.

(2) Statutory Auditing
For each statutory audit, auditors attend key meetings such as
those of the Board of Directors, in accordance with the auditing
policy and roles determined by the Board of Auditors. Auditors
receive performance reports from directors and employees, and areable to request further explanation when necessary, and inspect
key documents. Auditors also undertake other auditing duties suchas investigating the state of operations and assets in key places ofbusiness. Board of Auditors Meetings are held regularly, or asnecessary, in order to exchange views and hold discussions.

(5) ‌Approach to the Election of Outside Directors andOutside Auditors
Close coordination with the outside directors and the full-time
auditors, employees of the Audit Office and assigned staff fromthe management section of the head office (as needed) ensuressufficient cover to implement the supervision and the audit
function and role as required by the current corporate
governance system.
In the event that the number of auditors falls below the legal
minimum, a pre-nominated standing auditor who meets therequirements to qualify as an outside auditor would be called
upon.
Should the need arise to improve the audit function inaccordance with business developments and future expansion,a review of the audit system would be considered, including an
increase in the number of auditors.

3. Outside Directors and Outside Auditors(1) Outside Directors and Outside Auditors
Two of the directors are outside directors and two of the threeauditors are outside auditors. One of the outside directors and oneof the outside auditors are designated as independent directors.
(2) Personal,‌Capital, Business or Other Interests between
Nipro Corporation, Outside Directors and Outside
Auditors
There are no particular interests or relations between Nipro
Corporation, the two outside directors and the two outside
auditors.

20
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Nipro Corporation
Annual Report 2015

fixed method based on a sliding scale system in accordancewith the performance of the business. Retirement benefits are
granted by a resolution of the Board of Directors, up to a ceiling
approved by the Meeting of Shareholders.

(6) Mutual‌Collaboration between Outside Audits andInternal, Statutory and Accounting Audits, and theRelationship between Internal Control Divisions
The outside directors attend meetings of the Board of Directors
and supervise our management based on their extensive
knowledge and management experiences from an independent
standpoint. The outside auditors carry out auditing activities
including attending key meetings such as meetings of the Boardof Directors in accordance with the audit policy and roles
determined by the Board of Auditors. They are able to access
reports via the full-time auditors or directly from directors andemployees, and inspect key documents. The outside auditors
also attend periodic or occasional meetings of the Board ofAuditors to contribute to discussion and exchange opinionsfrom an objective and independent viewpoint. The outside
auditors strive to facilitate a smooth audit service through close
collaboration with employees of the Audit Office, the full-time
auditors, auditors of subsidiaries and the accounting auditor.

Auditor Remuneration, etc.
The annual remuneration is determined by mutual accord withthe auditors.
Ceilings on the amounts of remuneration for directors andauditors are determined by a resolution taken at the Meeting of
Shareholders. Annual directors’ remuneration may be up to 800
million yen, based on a resolution of the 57th Meeting of
Shareholders held on June 25, 2010.
Annual auditors’ remuneration may be up to 30 million yen,based on a resolution of the 54th Meeting of Shareholders heldon June 27, 2007.
5. Accounting Audits
Name of Accounting Auditor: Hibiki Audit Corporation
Names of Certified Public Accountants conducting the Audit:
Kouichi Aki,
Takashi Kinoshita,
Miho Ishihara

4. Remuneration of Directors and Auditors(1) Total‌Amount of Remuneration etc., for Each Filing
Company Officer
As there was no director or auditor whose total consolidated
remuneration exceeded 100 million yen, this information is notdisclosed.

Support Staff for Audits:
Certified Public Accountants: 10 people
Other staff:
4 people
Effective July 1, 2014, Osaka Audit Corporation, which Nipro
Corporation has previously obtained audit certification from,merged with Shinbashi Audit Corporation, Pegasasu Audit
Corporation and became Hibiki Audit Corporation.

(2) Policy for the Determination of Officer Remuneration
Director’s Remuneration, etc.
Director’s remuneration is determined by the Board of Directors
or based on fixed standards set out by the Board of Directors.
Annual remuneration is determined considering the market rate
and the salary level of employees. Bonuses are calculated by a

Total Amount of Remuneration for Each Class of Filing Company Officer,
Total Amount of Remuneration by Type, and Number of Directors and Auditors Eligible for Remuneration
Millions of yen
Total amount of
remuneration

Directors
Auditors excluding external auditors
External auditors

¥610
7
6

Total amount of remuneration by type
Annual remuneration

¥128
7
6

Bonus

Retirement benefits

Number of eligible
corporate officers

¥45
—
—

27
1
3

Retirement benefits

Number of eligible
corporate officers

$374
—
—

27
1
3

¥437
—
—
Thousands of U.S. dollars

Total amount of
remuneration

Directors
Auditors excluding external auditors
External auditors$5,07658
50

Total amount of remuneration by type
Annual remuneration$1,065
58
50

Bonus

$3,637——21
Contents

Nipro Corporation
Annual Report 2015

Financial Review
Overview

As a result, gross profit increased by 13.7% compared withDuring the period under review, the global economy generally

the previous fiscal year to ¥99.6 billion (US$828.5 million).

remained on a gradual recovery trend due to a stable recovery in
the United States led by an improvement in personal

Selling, General and Administrative Expenses

consumption, and also continued economic recovery in Europe.

Selling, general and administrative expenses increased by

Despite the fallback after the last-minute surge in demand

10.3% compared with the previous fiscal year to ¥83.0 billion

before the consumption tax rate hike, the Japanese economy(US$690.6 million), mainly due to an increase in labor costs andshowed continued improvement on the back of the yen’s

depreciation expenses.

depreciation and the increase in stock prices caused by the
economic policies implemented by the Japanese government

Operating Income

and the Bank of Japan.

As a result of the aforementioned factors, operating income

Under such circumstances, the Nipro group has worked toincreased by 34.8% compared with the previous fiscal year to

improve operating results through continued efforts to expand¥16.6 billion (US$137.9 million). The ratio of operating income tosales and reduce costs.

net sales increased by 1.0 percentage points to 5.1%, mainly
due to the fluctuation of exchange rates.

Consolidated Business Results
Net Sales

Other Income (Expenses)

In the year ended March 31, 2015, consolidated sales increased

We recorded other income of ¥3.3 billion (US$27.8 million)

by 8.1% compared with the previous fiscal year to ¥325.1 billion

compared with other income of ¥0.6 billion in the previous fiscal(US$2,705.2 million).

year. In the period under review, we recorded ¥4.9 billion(US$41.0 million) in foreign exchange gains, an increase of

Cost of Sales

266.0% compared with the previous fiscal year, and gain on sale

The cost of sales increased 5.8% compared with the previousof investment securities of ¥3.4 billion (US$28.3 million).

fiscal year to ¥225.5 billion (US$1,876.7 million). This increase
corresponded to the increase in net sales, however, the ratio of

Income before Income Taxes and Minority Interests

cost of sales to net sales decreased by 1.5 percentage points

As a result of the factors outlined above, income before income

compared with the previous fiscal year to 69.4%, mainly

taxes and minority interests increased by 54.4% compared withbecause the increase in sales of dialyzers, which offer high profit

the previous fiscal year to ¥19.9 billion (US$165.7 million).

margins, improved productivity, which contributed to a decreasein manufacturing costs.

(Years ended March 31)

Net Sales

Operating Income

Income Before Income Taxes
and Minority Interests(Billions of yen)(Billions of yen)(Billions of yen)

400

20
325.1

17.2

300.8
300
195.9

11.4

212.0

15

12.3

10

10

100

5

5

2011

2012

2013

2014

2015

0

2011

2012

2013

2014

12.9
11.0

200

0

18.1

16.6

15.8

15

241.0

19.9

20

2015

0

7.4

2011

2012

2013

2014

2015

22
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Nipro Corporation
Annual Report 2015

Income Taxes

America

Income taxes, including deferred taxes, decreased by 27.5%

In America, net sales increased by 10.1% compared with thecompared with the previous fiscal year to ¥7.1 billion (US$59.0

previous fiscal year to ¥62.7 billion (US$521.4 million) due to themillion) thanks to the loss carried forward by Tohoku Nipro

stable expansion of sales especially in dialyzer and disposal

Pharmaceutical Corporation, which was absorbed into

products supported by strong sales channels.

Nipro Pharma Corporation during the period. The effective tax
rate was 35.4%, lower than the rate of 75.9% for the previous

Europefiscal year, due to the above-mentioned reason and the fact that

In Europe, net sales increased by 6.0% compared with thelosses at overseas subsidiaries shrunk from the previous fiscal

previous fiscal year to ¥42.9 billion (US$356.8 million) due to theyear.

sound sales of dialysis products.

Minority Interests in Income from Consolidated

Asia

Subsidiaries

In Asia, net sales increased by 30.9% compared with the

Minority interests in income from consolidated subsidiaries

previous fiscal year to ¥37.4 billion (US$311.2 million) mainly

amounted to ¥0.3 billion (US$2.8 million).

because of the sales increase at new plants.

Net Income

Financial Position

Net income increased by 335.9% compared with the previous

Total assets as of March 31, 2015 stood at ¥695.3 billion

fiscal year to ¥12.5 billion (US$103.8 million). Net income per(US$5,786.0 million), an increase of 12.2% from the end of theshare increased to ¥81.0 (US$0.67) from ¥18.2 for the previous

previous fiscal year.
Current assets increased by 18.3% from the end of the

fiscal year. Return on equity increased 6.2 percentage points to
8.5% from 2.3% for the previous fiscal year because of theprevious fiscal year to ¥350.3 billion (US$2,915.4 million), due

higher net income.

mainly to an increase in cash and cash equivalents and tradenotes and accounts receivable.
Property, plant and equipment, net of accumulated

Net Sales by Geographic Segment
Japandepreciation, stood at ¥220.2 billion (US$1,832.4 million), an

In Japan, net sales increased by 4.2% compared with theincrease of 14.9% compared with the previous fiscal year.

previous fiscal year to ¥182.1 billion (US$1,515.8 million) mainly
due to firm sales of pharmaceutical products.

(Years ended March 31)

Net Income

Capital Expenditures(Billions of yen)(Billions of yen)

Total Assets(Billions of yen)
47.7

50

15
12.5
12

39.5
40

10.2

38.0

800

695.3
579.3

35.1

600
476.5

30

9

6

3

0

400

2.9

2.5

200

10

2012

499.7

20

4.6

2011

23.3

619.7

2013

2014

2015

0

2011

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

23
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Nipro Corporation
Annual Report 2015

Capital expenditures totaled ¥47.7 billion (US$396.9

Net cash used in investing activities amounted to ¥29.7

million). By business segment, capital expenditures amounted tobillion (US$247.3 million), mainly due to the purchase of¥14.5 billion (US$120.5 million) in the Medical-Related business,

property, plant and equipment.

¥17.9 billion (US$148.6 million) in the Pharmaceutical-Related

Net cash provided by financing activities amounted tobusiness and ¥8.4 billion (US$70.1 million) in the Glass-Related¥26.6 billion (US$221.3 million) as a result of proceeds frombusiness.

long-term loans.

Intangible assets increased by 5.1% to ¥44.4 billion

As a result, net cash and cash equivalents increased by(US$369.2 million) due to an increase in the other accounting¥27.3 billion compared with the end of the previous fiscal year toline item.

¥98.2 billion (US$817.2 million).

Investments and other assets decreased by 10.4% to¥80.4 billion (US$669.0 million), due mainly to the decrease in

Staff

investment in unconsolidated subsidiaries and an affiliate

The total number of employees at the end of the period underaccounted for by the equity method.

review increased by 1,327 compared with the end of theCurrent liabilities increased 11.0% from the end of theprevious fiscal year to 23,153. Employees in Japan increased byprevious fiscal year to ¥278.4 billion (US$2,316.7 million), mainly

190 to 6,398, and the overseas employees increased by 1,137

due to an increase in the current portion of long-term debt.

to 16,755.

Long-term liabilities increased by 2.2% from the end of theprevious fiscal year to ¥238.1 billion (US$1,981.3 million), mainly

Basic Policy on Distribution of Profit

owing to an increase in long-term debt.

At Nipro, we have been paying dividends to shareholders by

Total net assets increased by 31.5% from the end of thepositioning the return of profits as an important management

previous fiscal year to ¥178.8 billion (US$1,488.0 million).

policy. Retained earnings will be actively invested in the research

Shareholders’ equity increased by ¥22.6 billion and accumulated

and development division, in addition to the sales division andother comprehensive income increased by ¥19.7 billion from theproduction division, as a part of efforts to expand the businessend of the previous fiscal year.

base and promote long-term business development in order toensure stable profits and achieve continued growth.

Cash Flow
Net cash provided by operating activities amounted to ¥28.0

Risk Factors

billion (US$232.9 million), mainly because of net income as well

The following are risks that may have an effect on the Niproas depreciation and amortization.

group’s operational results and/or financial condition. The items
concerned were determined as of March 31, 2015.

(Years ended March 31)

Net Assets

Basic Earnings per Share

Number of Employees(Billions of yen)

(yen)(Thousand)

200

178.8

100

25

21.8

81.0
150

128.8
109.0

80

136.0

14.6

60

15

100

35.3

40

18.2

20

2011

2012

2013

2014

2015

0

12.0

10

19.4

50

0

19.3
20

60.0

114.0

23.2

5

2011

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

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Nipro Corporation
Annual Report 2015

(1) Risks Related to Product Safety

brought about by unforeseeable wholesale changes in

The Nipro group brings all of its capabilities to bear in ensuring

government healthcare policies, there could be a material

product safety in the design, development and manufacturing ofadverse effect on our operational results and/or financial

medical devices and pharmaceutical products. There are still thecondition.

risks, however, that accidental defects or adverse effects could
result in damages to a third party and our being sued for liability.

(4) Risks Related to Changes in Sale Prices

To cover these risks, we therefore maintain general liability and

The products sold by the Nipro group include some that are

product liability insurance. In the unlikely event of a successful

affected on an irregular two-year basis by price reductions underclaim in excess of the insurance coverage, however, there could

the Japanese payment system for medical care, drug prices andbe a material adverse effect on our operational results and/or

reimbursement prices for medical materials and supplies.

financial condition.

Moreover, should measures to hold down medical costs also
become pervasive worldwide, resulting in intensified competition(2) Risks Related to Supplier Concentration

between corporations and leading to prices falling to a greater

The Nipro group procures materials and parts for its operations

degree than anticipated, there could be a material adverse effectfrom a large number of suppliers. Some key materials or partson our operational results and/or financial condition.

may be obtained only from a single supplier or a limited group of
suppliers. If circumstances at any of these suppliers make it(5) Risks Related to Changes in Prices of Raw Materials

impossible for us to acquire a sufficient quantity of materials or

The products manufactured by the Nipro group include someparts to meet our production needs in a timely and cost-effectivethat are made from petrochemical products such as plastics.

manner, there could be a material adverse effect on our

Should the cost of raw materials such as petrochemicals rise,

operational results and/or financial condition.

there could be a material adverse effect on our operational
results and/or financial condition.

(3) Risks‌
Related to Changes in Government Healthcare
Policies(6) Risks Related to Overseas Expansion

The business sector to which the Nipro group belongs is

The Nipro group maintains manufacturing bases and sales

intimately connected with the healthcare system and is subject

offices around the world for the production and supply of its

to the regulations laid out by government organizations,products. Should there be unexpected revisions to legal

including the National Health Insurance System and theregulations or political or economic changes in these countries

Pharmaceutical Affairs Law. Should circumstances arise in which

or regions, there could be a material adverse effect on ourwe were unable to respond to changes in the environment

operational results and/or financial condition.

(Years ended March 31)

Equity Ratio

Return on Assets

Return on Equity

(%)

(%)

(%)

50

5

10

8.9

8.5

4.0
40

30

4

22.4

22.0

24.1
20.7

3

2.1

20.2

20

2.5

3.2

8

6

2.1

4.2

2

4
2.2

10

0

1

2011

2012

2013

2014

2015

0

2.3

2

2011

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

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Nipro Corporation
Annual Report 2015

(7) Risks Related to Intellectual Property(11) Risks Related to Controls on Personal Information

The Nipro group owns numerous patents and trademarks, and

The Nipro group has established strict precautions to protect

maintains various proprietary rights for the products it

the confidentiality of personal information in our possession.

manufactures. Additionally, we take all possible measures to

However, if due to unforeseen events or an accident thisavoid infringing the patents and proprietary rights of any third

personal information is leaked outside the group, causing a loss

party, and to avoid breaching any license agreements we haveof trust or customers, there could be a material adverse effectconcluded concerning technologies. Nevertheless, if an

on our operational results and/or financial condition.

unanticipated claim for damages were to be made by a third
party and the defense of the Nipro group were to be rejected,(12) Risks Related to Fund Raising

there could be a material adverse effect on its operational results

The Nipro group relies on debt finance in the form of loans from

and/or financial condition.

financial institutions or issuance of corporate bonds andcommercial paper, etc., to raise business and investment funds.

(8) Risks Related to Environmental Regulations

If due to turmoil in financial markets, there is a reduction in

The Nipro group believes it has taken adequate precautions tolending from financial institutions or a significant downgrade ofcomply with applicable regulations in the course of its businessour credit rating by credit rating agencies, we may not be able toactivities. Should our activities cause an unforeseen

raise the necessary funds when we need them on acceptableenvironmental problem, however, with a claim for damages

terms. At the same time, we may incur restrictions on our fundmade against us, there could be a material adverse effect on our

raising capabilities or see an increase in the cost of fund raising.

operational results and/or financial condition.

Any of these occurrences could have a material adverse effecton our operational results and/or financial condition.

(9) Risks Related to Exchange Rate Fluctuations
The Nipro group, including its overseas subsidiaries, carries out(13) Risks Related to M&A and Business Alliances

its foreign currency transactions primarily in US Dollars and

The Nipro group conducts M&A activities and enters into

Euros, but calculates financial statements for its overseas

business alliances to reinforce its business base. Prior to

subsidiaries using Japanese Yen for the purpose of producing

concluding these deals, we carry out a thorough investigation of

consolidated financial statements. Fluctuations in exchange

the target company. However, should any problems arise suchrates may therefore have a material adverse effect on ouras the discovery of unrecognized liabilities or should theoperational results and/or financial condition.

development of the acquired business not proceed as planned,
there could be a material adverse effect on our operational(10) Risks Related to Investment Value

results and/or financial condition.

The Nipro group’s assets include investments in stocks andother securities. These investments have been made for(14) Other Risks

purposes such as building good business relationships with theFires, earthquakes, acts of terrorism, wars, epidemics, or otherissuers of such securities, or for gathering useful information for

unforeseen man-made or natural disasters affecting areas or

the development of new products or new businessfacilities where the Nipro group conducts its business activities

opportunities. Should the value of these investments decline

may cause a delay or interruption in production, sales,significantly owing to fluctuations in the stock market,

distribution, or provision of services. Should such a delay or

circumstances at an issuer, or a change in the accounting

interruption be extended, there could be a material adverse

methods used to deal with these investments, there could be aaffect on our operational results and/or financial condition.

material adverse effect on our operational results and/or financial
condition.

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Nipro Corporation
Annual Report 2015

Ten-Year Summary

Nipro Corporation and its Consolidated Subsidiaries
Years ended March 31

Millions of yen

Income Statement Data:
Net sales
Medical-Related (*1)
Pharmaceutical-Related (*1)
Glass-Related (*1)
Other (*1)
Store (*1)
Cost of sales
Selling, general and administrative expenses
Operating income
Medical-Related (*2)
Pharmaceutical-Related (*2)
Glass-Related (*2)
Other (*2)
Store (*2)
Income before income taxes and minority interests
Net income
Capital expenditures
Depreciation and amortization
R&D expenses

2015

2014

2013

2012

¥    325,084
237,777
57,372
29,830105—
225,525
82,987
16,572
23,813
10,553(2,889)131—
19,90812,47047,69827,6688,646¥    300,753
221,363
51,50827,611
271—
213,22175,242
12,29020,436
8,013(2,183)
216—
12,891
2,861
35,09325,1517,891¥    241,021
169,971
66,212
4,603
235—
175,31454,336
11,371
14,287
3,988
601
222
—
18,060
10,23237,997
21,2106,464¥    212,013
145,082
59,715
6,954
262—
149,253
46,935
15,825
17,078
4,940
454
230
—
11,022
4,586
39,525
21,581
5,957

Balance Sheet Data:
Total assets
Property, plant and equipment—net
Working capital
Current liabilities
Long-term liabilities
Common stock
Capital surplus
Net assets¥    695,307
220,195
71,945
278,402
238,095
84,398635
178,810¥    619,655
191,594
45,405
250,715232,979
84,398689
135,961¥    579,302
174,70374,216
213,758
236,781
84,398
636
128,763¥    499,687
145,679
61,346
189,090
196,646
84,398636
113,951
Yen

Per Share Data:
Basic earnings (*3)
Diluted earnings (*3)
Cash dividends
Equity (*3)¥       81.0
—
32.5
988.8

¥       18.2
16.3
30.5
832.1

¥       60.0
54.1
27.5
703.5

¥       35.3
31.0
23.5
643.9

Number of common shares issued
Number of employees

171,459,479
23,153

171,459,479
21,826

171,459,479
19,327

171,459,479
14,566

24.1
2.5
8.5
14.1

20.2
2.1
2.3
51.0

20.7
2.1
8.9
14.0

22.0
3.2
4.2
17.5

Selected Data and Ratios:
Equity ratio (*4) (%)
Return on assets (*4) (%)
Return on equity (*4) (%)
Price earnings ratio (*4) (times)(*1) Effective the fiscal year ended March 31, 2011, the Company has adopted ASBJ Statement No. 17 “Accounting Standard for Disclosures about Segment of an Enterprise andRelated Information” (March 27, 2009) and ASBJ Guidance No. 20 “Guidance on Accounting Standard for Disclosures about Segment of an Enterprise and Related Information”(March 21, 2008). Net sales and operating income for the period for the fiscal year ended March 31, 2010 have been restated to show what the Group’s result would have been if
the new accounting standards had been applied in that year. Before the fiscal year ended March 31, 2009, net sales and operating income have been stated in compliance withprevious accounting rules. In addition, the corporate reorganization was conducted effective on October 1, 2012 in order to enforce Pharmaceutical-Related business and build astrong cooperative relationship among Medical-Related, Pharmaceutical-Related and Glass-Related businesses. As a result of this reorganization, some business divisions included
in Glass-Related business were changed to Pharmaceutical-Related business. The segment information is presented as if the aforementioned reorganization had been conductedat the beginning of the financial year 2012, and the presentation for the prior financial years are not restated.
(*2) Operating income at the operating segment level is not adjusted for intra-segment transactions. See Note 16. “Segment Reporting” to the consolidated financial statements.

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Nipro Corporation
Annual Report 2015

Millions of yen

Thousands of
U.S. dollars(Note 1)

2011

2010

2009

2008

2007

2006

2015

¥   195,943
132,817
38,00524,704417—
137,768
40,95017,225
18,437
1,658
2,701
88
—
7,432
2,456
23,323
21,244
4,977¥   177,830
118,517
34,52824,338447—
126,145
33,591
18,09419,923
2,102
3,103
64
—
13,872
7,253
15,20918,421
4,846¥   175,945
112,970
52,726
9,554
695—
124,396
36,774
14,775
16,209
4,082
1,772
4
—
9,379
4,531
33,142
18,1095,352¥   172,113
111,084
48,754
11,437838—
123,108
35,32813,677
15,830
3,271
1,890
13
—
8,260
4,454
25,90015,054
6,194¥   184,363
97,30042,152
12,9191,019
30,973
132,142
39,16813,053
14,334
3,298
1,865
151
270
16,776
8,555
23,093
12,4704,461¥   206,801
90,86835,22011,934
1,518
67,261
149,971
44,49812,332
13,430
2,111
1,836
529
578
9,061
4,513
20,874
12,3153,760$2,705,201
1,978,672
477,424
248,232873—
1,876,716
690,580
137,905
198,161
87,817(24,041)
1,091—
165,665
103,770
396,921230,240
71,948¥   476,510
128,506
40,621
176,401
191,071
28,66329,973109,038¥   383,397
124,20941,725
138,204
129,122
28,66329,973116,071¥   330,641
126,739
46,070114,796
119,285
28,66329,97396,560¥   349,302
118,81253,911
108,835
120,923
28,66329,975
119,544¥   336,660
104,882
43,128104,105
105,535
28,66329,973127,020¥   338,741
106,195
34,579111,285
113,453
28,66329,972
114,003$5,786,028
1,832,363
598,694
2,316,734
1,981,318
702,3225,284
1,487,976
U.S. dollars(Note 1)¥      19.4
17.4
50.0
839.7

¥     114.4
114.1
53.0
1,802.3¥      71.4—
32.0
1,498.5¥      70.2—
37.5
1,861.8¥     134.7—
80.0
1,979.2¥      69.6—
37.5
1,767.7

63,878,505
12,017

63,878,505
9,939

63,878,505
9,354

63,878,505
9,020

63,878,505
8,807

63,878,505
9,048

22.4
4.0
2.2
42.5

29.8
5.1
6.9
15.8

28.7
4.3
4.2
21.5

33.8
4.0
3.7
24.8

37.3
3.9
7.2
17.1

33.2
3.9
4.3
26.0

$     0.67
—
0.27
8.23

(*3) Effective the fiscal year ended March 31, 2012, the Company has adopted ASBJ Statement No. 2 “Accounting Standard for Earnings per Share” (June 30, 2010), ASBJ Guidance
No. 4 “Guidance on Accounting Standard for Earnings per Share” (June 30, 2010) and ASBJ PITF No. 9 “Practical Solution on Accounting for Earnings per Share” (June 30, 2010).
In addition, the Company split one share of common stock into two shares on October 1, 2011 based on a resolution at the board of directors’ meeting held on August 27, 2011.
In accordance with this adoption, equity per share, basic earnings per share and diluted earnings per share are calculated on the assumption that the two-for-one stock split ofcommon stock was conducted at the beginning of the fiscal year ended March 31, 2011. Before the fiscal year ended March 31, 2010, each amount has been stated incompliance with previous accounting rules.
(*4) Equity ratio is the ratio of the sum of total shareholders’ equity and accumulated other comprehensive income to total assets at the period end. Return on assets is the ratio of
operating income for the period to the average of total assets during the period. Return on equity is the ratio of net income for the period to average of the sum of total
shareholders’ equity and accumulated other comprehensive income during the period. The price earnings ratio is the ratio of the closing price of the Company’s shares listed on theFirst Section of the Tokyo Stock Exchange on the last trading day in March of each year to the basic earnings per share.

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Nipro Corporation
Annual Report 2015

Consolidated Balance Sheets
Nipro Corporation and its Consolidated Subsidiaries
As of March 31, 2015 and 2014

Millions of yen

Thousands of
U.S. dollars(Note 1)

2015

2014

2015

AssetsCurrent assets:¥ 98,199¥ 70,892$  817,167

Time deposits (over three months)

14,672

14,065122,094

Trade notes and accounts receivable (Note 5)

114,477

103,179

952,625(2,783)(2,011)(23,159)

102,476

90,486

852,759

Cash and cash equivalents

Allowance for doubtful receivables
Inventories (Note 3)
Deferred income taxes (Note 4)

6,964

7,354

57,951Other current assets

16,342

12,155

135,991

Total current assets

350,347

296,120

2,915,428

Property, plant and equipment (Note 5):Land22,02723,368183,299

Buildings and structures

174,138

158,1091,449,097

Machinery and equipment

258,590

232,371

2,151,868

Construction in progress

31,243

20,534259,990

Accumulated depreciation(265,803)(242,788)(2,211,891)

220,195

191,594

1,832,363

26,36428,494

219,389

485,998
Property, plant and equipment—net

434,382

4,044,254

Intangible assets (Note 5):
Goodwill

18,005

13,722

149,82944,36942,216369,218

Investment in unconsolidated subsidiaries
and an affiliate accounted for by the equity method

5,764

11,13947,965Investment securities (Note 6)

58,313

60,953

485,254

Lease deposits

1,356

1,213

11,284

Other
Total intangible assets

Investments and other assets:

Deferred income taxes (Note 4)

7,900

8,454

65,740

Other

7,063

7,966

58,776

Total investments and other assets
Total

80,39689,725669,019¥695,307¥619,655$5,786,028

The accompanying notes are an integral part of these statements.

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Nipro Corporation
Annual Report 2015

Millions of yen

Thousands of
U.S. dollars(Note 1)

2015

2014

2015

Liabilities and net assets
Current liabilities:¥ 82,248¥ 77,630$  684,430

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

81,952

68,965681,967

Trade notes and accounts payable

51,75145,661

430,648

Accrued income taxes

3,508

10,25329,192

Accrued expenses

22,50818,453

187,302

Short-term bank loans (Notes 5 and 10)

—

2,439

—

Commercial paper (Note 10)10,00010,00083,215

Notes and accounts payable for plant and equipment

11,7608,936

97,861Other current liabilities

14,675

8,378

122,119

Total current liabilities

278,402250,715

2,316,734

Long-term debt (Notes 5 and 10)

226,214

222,837

1,882,450

Net defined benefit liability (Note 11)

3,841

4,043

31,963

Deferred income taxes (Note 4)

2,162

1,977

17,991

Allowance for loss on clearance of businessLong-term liabilities:

Other long-term liabilities

5,878

4,122

48,914

Total long-term liabilities

238,095

232,979

1,981,318

84,39884,398702,322

635

689

5,284

Commitments and contingent liabilities (Note 12)
Net Assets (Notes 15):
Common stock
Authorized: 400,000,000 shares
Issued: 171,459,479 shares
Capital surplus
Retained earnings

58,88652,568490,022

Less cost of common shares of treasury stock(1,687)(18,000)(14,038)

142,232

119,655

1,183,590(2,311)(7,444)(19,231)(1,899,861 shares in 2015 and 20,730,973 shares in 2014)
Total shareholders’ equity
Unrealized gain (loss) on available-for-sale securities

39

38

325

Foreign currency translation adjustments

27,87013,535

231,921

Remeasurements of defined benefit plans

(171)

(357)

(1,423)25,427

5,772

211,592

11,151

10,534

92,794

Deferred gains or losses on hedges

Accumulated other comprehensive income
Minority interests
Total net assets
Total

178,810

135,961

1,487,976¥695,307¥619,655$5,786,028

The accompanying notes are an integral part of these statements.

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Nipro Corporation
Annual Report 2015

Consolidated Statements of Income
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2015 and 2014

Millions of yen
2015

2014

Thousands of
U.S. dollars(Note 1)
2015

¥325,084
225,525
99,559¥300,753
213,22187,532$2,705,201
1,876,716
828,485

Selling, general and administrative expenses (Notes 17 and 18)
Operating income

82,987
16,57275,242
12,290690,580
137,905

Other income (expenses):
Interest and dividend income
Interest expense
Loss on sale and disposal of property, plant and equipment—net
Exchange gain
Equity in loss of an affiliated company
Gain on sale of investment securities (Note 6)
Loss on impairment of fixed assets
Other loss—net
Income before income taxes and minority interests

2,679(4,067)
857
4,923
(168)
3,403
(66)
(4,225)
19,9082,617(3,857)
(348)
1,345
—
1,322
(2)
(476)
12,891

22,293(33,844)
7,132
40,967(1,398)28,318(549)(35,159)
165,665

Income taxes (Note 4):
Current
Deferred

8,349(1,253)

13,740(3,951)

69,476(10,427)

Net income before minority interests

12,812

3,102

106,616342¥ 12,470241¥  2,861

2,846$  103,770

Yen

U.S. dollars(Note 1)¥   18.2
16.3
30.5$     0.67—
0.27

Millions of yen

Thousands of
U.S. dollars(Note 1)

Net sales
Cost of sales
Gross profit

Minority interests in income (loss) of consolidated subsidiaries
Net income
Amounts per common share:
Basic earnings
Diluted earnings
Cash dividends¥   81.0—
32.5

The accompanying notes are an integral part of these statements.

Consolidated Statements of Comprehensive Income
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2015 and 20142015

Net income before minority interests
Other comprehensive income:Unrealized gain on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted
for using equity method
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Minority interests

2014

2015

¥12,812¥ 3,102$106,616

5,134
1
14,656
187

5,104
38
21,259—42,7238
121,9611,556

1¥32,791—¥29,5038$272,872

32,126665

27,975
1,528

267,338
5,534

The accompanying notes are an integral part of these statements.

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Nipro Corporation
Annual Report 2015

Consolidated Statements of Changes in Net Assets
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2015 and 2014

Balance at March 31, 2013
Net income
Increase (decrease) in retained
earnings due to inclusion of new
subsidiaries in consolidation
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Decrease of retained earnings(Other)Other net change during
the year
Balance at March 31, 2014
Cumulative effects of changes inaccount policies
Balance at March 31, 2014
Net income
Increase (decrease) in retained
earnings due to inclusion of new
subsidiaries in consolidation
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Decrease of retained earnings(Other)Other net change during
the year
Balance at March 31, 2015

Balance at March 31, 2014
Cumulative effects of changes inaccount policies
Balance at March 31, 2014
Net income
Increase (decrease) in retained
earnings due to inclusion of new
subsidiaries in consolidation
Cash dividends
Purchase of treasury stock
Disposal of treasury stock
Decrease of retained earnings(Other)Other net change during
the year
Balance at March 31, 2015

Thousands
Outstanding
number ofshares ofcommonstock

171,459Retainedearnings

Commonstock

Capitalsurplus¥84,398¥636 ¥54,788 ¥   (865) ¥138,957 ¥(12,547)
2,861
2,861
—
(5,055)
53

Treasury
Total sharestock holders’ equity(18,179)
1,044

(26)
171,459

84,398689

52,568(18,000)

171,459

84,398689

98
52,666
12,470(18,000)(325)(4,992)
(54)

(932)

(1)
16,314(1)
171,459
Thousands
Outstanding
number ofshares ofcommonstock

Unrealized Deferred
RemeasureForeign
Accumulated
gain on gains or
ments
currency
other comavailablelosses
of definedtranslationprehensive
for-saleonbenefitadjustments
incomesecurities hedges
plans¥84,398

Commonstock

Retainedearnings

Minority
interests

Total
net assets¥ — ¥(18,984) ¥ 8,790 ¥128,763
2,861—(5,055)(18,179)
1,097—(5,055)(18,179)
1,097

(26)

(26)

—
119,655

5,103(7,444)38
38

19,972
13,535

(357)
(357)

24,756 1,744
5,772 10,534

26,500135,96198
119,753
12,470(7,444)38

13,535(357)

5,772 10,534

98
136,059
12,470(325)(4,992)(1)
15,328(325)(4,992)(1)
15,328

(1)

(1)

—
5,133
¥635 ¥58,886 ¥ (1,687) ¥142,232 ¥ (2,311)

Capitalsurplus¥ — ¥ (6,437)

Millions of yen

Treasury
Total sharestock holders’ equity

1 14,335¥39 ¥27,870

186
19,655617
20,272¥(171) ¥ 25,427 ¥11,151 ¥178,810

Thousands of U.S. dollars (Note 1)
Unrealized Deferred
RemeasureForeign
Accumulated
gain on gains or
ments
currency
other comMinority
Total
availablelosses
of definedtranslationprehensive interests
net assets
for-saleonbenefitadjustments
incomesecurities hedges
plans

171,459$702,322 $5,734 $437,447 $(149,788) $  995,715 $(61,946) $316 $112,632$(2,971) $ 48,031 $87,659 $1,131,405

171,459$    816$      816
$702,322 $5,734 $438,263 $(149,788) $  996,531 $(61,946) $316 $112,632
103,770
103,770$      816
$(2,971) $ 48,031 $87,659 $1,132,221
103,770(2,705)(41,541)(450)(7,756)(8)
135,758(9)
171,459(2,705)(41,541)(8)
127,552(2,705)(41,541)(8)
127,552(9)(9)— 42,715
9 119,289$702,322 $5,284 $490,022 $ (14,038) $1,183,590 $(19,231) $325 $231,921

The accompanying notes are an integral part of these statements.

1,548 163,561 5,135
168,696$(1,423) $211,592 $92,794 $1,487,976

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Nipro Corporation
Annual Report 2015

Consolidated Statements of Cash Flows
Nipro Corporation and its Consolidated Subsidiaries
For the years ended March 31, 2015 and 2014

Millions of yen

Thousands of
U.S. dollars(Note 1)

2015

2014

2015

¥ 12,470¥ 2,861$ 103,770

27,668
5,837
66
169
1,292
(426)
(1,254)(2,801)
1
(857)
252

25,151
4,827
2
—
1,072
(1,161)(3,951)(2,998)10342
739

230,240
48,573549
1,406
10,751(3,545)(10,435)(23,309)8(7,132)
2,097(6,766)(8,120)
5,502
(79)
1,147
(6,800)681
15,512
27,982(10,730)(2,441)
2,061(212)(2,468)6,468
1,980
18,691
21,552(56,303)(67,571)
45,785(657)
9,545(56,586)
5,667
129,083
232,853

Investing activities:
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of available-for-sale securities
Purchase of investments in unconsolidated subsidiaries
Proceeds from sales of available-for-sale securities
Purchases of investments in consolidated subsidiaries affecting scope of consolidation
Payments for transfer of business
Deposits (Over three months)
Other, net
Net cash used in investing activities(38,772)3,749(2,048)(1,225)
11,520(754)(1,400)898(1,682)(29,714)(27,921)379(627)(6,780)
9,059(6,959)
—
1,125
(214)
(31,938)(322,643)
31,197(17,043)(10,194)
95,864(6,274)(11,650)
7,473(13,996)(247,266)

Financing activities:
Net increase (decrease) in short-term loans
Proceeds from long-term loans
Repayment of long-term loans
Proceeds from issuance of bonds
Repayment of bonds
Proceeds from issuance of common stock
Proceeds from sales of treasury shares
Purchase of treasury shares
Cash dividends paid
Other, net
Net cash used in financing activities

3,210
83,331(52,384)
2,983(4,715)—213(2)(5,008)(1,030)(26,598)(9,340)63,280(49,029)
2,980(1,282)
151
1,196(18,278)(5,057)(967)(16,346)

26,712
693,443(435,916)
24,823(39,236)
—
1,772
(17)
(41,674)(8,571)(221,336)

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents of newly consolidated subsidiary, beginning of period
Cash and cash equivalents, end of period

1,785
26,65170,892656¥ 98,199

4,982(21,750)
92,62319¥ 70,892

14,854
221,777
589,9315,459$ 817,167

Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of goodwill
Loss on impairment of fixed assets
Equity in loss of an affiliated company
Allowance for doubtful receivables
Gain on sales of available for sales securities
Provision for deferred taxes
Exchange loss
Loss on devaluation of marketable securities
Loss (gain) on sale and disposal of property, plant and equipment—net
Other, net
Changes in operating assets and liabilities:
Trade receivables
Inventories
Other current assets
Lease deposits
Trade payables
Accrued income taxes
Other, net
Total adjustments
Net cash provided by operating activities

The accompanying notes are an integral part of these statements.

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Nipro Corporation
Annual Report 2015

Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements
The financial statements of Nipro Corporation (“the Company”) and its
consolidated domestic subsidiaries have been prepared in accordancewith the provisions set forth in the Financial Instruments and Exchange
Law of Japan and its related accounting regulations, and in conformity
with accounting principles generally accepted in Japan, which are
different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. Effective from theyear ended March 31, 2009, the Company has adopted the “Practical
Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18) and as aresult, the accounts of consolidated overseas subsidiaries are preparedin accordance with either International Financial Reporting Standards orgenerally accepted accounting principles in the United States, withadjustments for the specified five items as applicable.
In preparing the accompanying consolidated financial statements,

certain reclassifications have been made to the consolidated financial
statements issued domestically, in order to present them in a form
which is more familiar to readers outside Japan. However, no adjustment has been made which would change the financial position or the
results of operations presented in the original financial statements. In
addition, the notes to consolidated financial statements include additional information which is not required under generally accepted accounting principles and practices in Japan.
The financial statements presented herein are expressed inJapanese yen and, solely for the convenience of the reader, have beentranslated into United States dollars at the rate of ¥120.17=US$1, theapproximate exchange rate on March 31, 2015. These translations
should not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be, converted into U.S. dollar amounts at that or any other rate.

2. Summary of Significant Accounting Policies(a) Basis of Consolidation
The consolidated financial statements include the accounts of theCompany and the significant subsidiaries and affiliated company accounted for by the equity method.
Investments in unconsolidated subsidiaries are stated at cost andthe equity method is not applied for the valuation of such investments
since they are considered immaterial in the aggregate.
All significant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profits included in
assets resulting from transactions within the Company and its consolidated subsidiaries have been eliminated. The difference between thecost of investments in subsidiaries and affiliates and the equity in their
net assets at the dates of acquisition is amortized on a straight-line
basis over five to twenty years.
All accounts herein have been presented on the basis of the 12months ended March 31, 2015 for the Company and for consolidated
domestic subsidiaries, and December 31, 2014 for all consolidated
overseas subsidiaries.
Adjustments have been made for any significant intercompany transactions which took place during the period between the end of theaccounting period of the consolidated overseas subsidiaries and that of
the Company.

(d) Allowance for Doubtful Receivables
An allowance for possible losses from trade notes and accounts receivable, loans and other receivables is provided based on the actual rateof past bad debts and the uncollectible amounts of certain individual
receivables.
(e) Inventories
Inventories are stated principally at the lower of average cost or net
realizable value.
(f) Property, Plant and Equipment
Depreciation of property, plant and equipment of the Company and its
consolidated domestic subsidiaries is computed principally by the
declining-balance method. The straight-line method is applied to buildings acquired by the domestic companies after April 1, 1998, and isprincipally applied to the property, plant and equipment of consolidated
overseas subsidiaries.
(g) Intangible Assets
Amortization of intangible assets, including software for the Company’s
own use, is computed by the straight-line method over the estimateduseful life of the asset.
Goodwill is amortized on a straight-line basis over the period theCompany benefits from its use. If the amount is not significant, it isexpensed when incurred.

(b) Translation of Foreign Currencies
Balance sheets of consolidated overseas subsidiaries are translated
into Japanese yen at the current exchange rates as of the balance
sheet date except for shareholders’ equity, which is translated at thehistorical rates. Income statements of consolidated overseas subsidiaries are translated into Japanese yen at the average exchange rates forthe period. Resulting translation adjustments are shown as “Foreign
currency translation adjustments” in the “Accumulated other comprehensive income” section of net assets.

(h) Investment Securities
Investment securities are classified and accounted for, depending on
management’s intent, as follows:i)	held-to-maturity debt securities, which are expected to be held tomaturity with the positive intent and ability to hold to maturity arestated at amortized cost.
ii)	available-for-sale securities, which are not classified as the aforementioned securities, are stated at fair value. Unrealized gains andlosses, net of applicable taxes, are reported as “Accumulated
other comprehensive income” of net assets.
Non-marketable available-for-sale securities are stated at cost determined by the average method.
For other-than-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.

(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, readily available
deposits and short-term highly liquid investments with original maturities of three months or less.

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Nipro Corporation
Annual Report 2015(i) Allowance for Loss on Clearance of Business
The Company has withdrawn from retail business and a provision for
anticipated losses of sales of related fixed assets is provided.

(n) Income Taxes
The provision for income taxes is computed based on income for financial statement purposes. The asset and liability approach is used torecognize deferred tax assets and liabilities for the future tax consequences of temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and the amounts
used for income tax purposes.

(j) Employees’ Retirement and Severance Benefits
Method of Attributing Expected Benefit to Periods
In calculating retirement benefit obligation, the estimated amount of
retirement benefit is attributed to the periods on the benefit formulabasis.

(o) Amounts per Common Share
Basic earnings per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period. Diluted earnings per share reflect thepotential dilution that could occur if securities were exercised or converted into common stock. Diluted earnings per share of common
stock assume full conversion of the outstanding convertible notes andbonds at the beginning of the year (or at the time of issuance) with anapplicable adjustment for related interest expense, net of tax, and full
exercise of outstanding warrants.

Accounting Method of Actuarial Gains and Losses and Prior
Service Costs
Prior service costs are amortized on a straight-line basis over a certain
period (mainly 5 years), which is within the average of the estimatedremaining service years of the employees when such costs occur.
Actuarial gains and losses are amortized on a straight-line basis overa certain period (mainly 5 years), which is within the average of theestimated remaining service years of the employees commencing fromthe following year in which they arise.

(p) Changes in Accounting Policy
Application of Accounting Standard for Retirement Benefits and its
Guidance
Effective beginning the fiscal year ended March 31, 2015, the Company
applied Article 35 of the “Accounting Standard for Retirement Benefits”(ASBJ Statement No. 26, May 17, 2012) and Article 67 of the “Guidance on the Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015) and changed the calculation methods for
retirement benefit obligations and service costs. The method of attributing estimated retirement benefits to periods was changed from thestraight-line basis to the benefit formula basis, and the method of determining the discount rate was revised from a method based on an­approximation of the employees’ average remaining service period to amethod of using a single weighted average discount rate reflecting theestimated payment period and the amount for each estimated payment
period of the retirement benefit. In applying the Accounting Standard for
Retirement Benefits and its Guidance, the Company follows the transitional treatment set out in Section 37 of Accounting Standard for Retirement Benefit. Consequently, the effects of the changes in calculation
methods for retirement benefit obligations and service costs were recognized in retained earnings at the beginning of the fiscal year ended
March 31, 2015.
As a result, net defined benefit liability decreased ¥150 million(US$1,248 thousand) and retained earnings increased ¥98 million(US$816 thousand) at the beginning of the current period under review.
This change has minimal impact on operating income, ordinary income
and income before income taxes and minority interests in the current
period under review.

(k) Derivatives
Derivatives are stated at fair value, with changes in fair value included in
net income or loss for the period in which they arise, unless derivatives
are used for hedging purposes. Please see (m) Hedge Accounting
below.
(l) Leases
Finance leases, except for certain immaterial leases, are capitalized in
the balance sheet. Amortization of finance lease assets is calculated bystraight-line method over the lease period assuming no residual value.
The Company and its consolidated domestic subsidiaries accountfor certain finance leases as operating leases, which do not transfer
ownership to the lessee and existed prior to April 1, 2008. The information of such leases on an “as if capitalized” basis is presented in Note 7.
“Leases”.
(m) Hedge Accounting<Method of hedge accounting>
The deferral hedge accounting method is applied in principle. The
allocation method is applied to currency swaps and the exceptional
accounting method is applied to interest rate swaps when certain
hedging criteria are met.
<Hedge instrument and hedge items>(Hedging instruments) (Hedged items)
Currency swap
Short-term and long-term debt
denominated in foreign currency
Interest rate swap
Interest on short-term and long-term debt
<Hedge policy>
The Company uses currency swaps and interest rate swaps toreduce currency exposure and interest volatility risk.
<Method for assessing hedge effectiveness>
Hedge effectiveness is not assessed for currency swaps which meetcertain criteria of the allocation method and interest rate swaps
which meet certain criteria of the exceptional accounting method.

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Nipro Corporation
Annual Report 2015

3. Inventories
Inventories consisted of the following:2015¥ 67,413
18,90812,150
4,005¥102,476

Finished goods and merchandise
Raw materials
Work in process
Packing and other
Total

Millions of yen
2014¥59,517
16,387
10,968
3,614¥90,486

Thousands of
U.S. dollars (Note 1)
2015$560,980
157,344
101,107
33,328$852,759

4. Income Taxes
The Company and its domestic subsidiaries are subject to several taxes based on income which, in aggregate, resulted in a normal statutory tax rateof approximately 35.4% and 37.8% for the years ended March 31, 2015 and 2014, respectively.
The significant components of deferred tax assets and liabilities were as follows:

Deferred tax assets
Tax loss carryforwards
Intercompany profits
Valuation loss on inventories
Allowance for bonuses to employees
Allowance for loss on clearance of business
Sales allowance
Loss on impairment of fixed assets
Excess of allowance for doubtful accounts over tax allowable amounts
Net defined benefit liability
Accrued enterprise taxes
Unrealized loss on available-for-sale securities
Goodwill
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Unrealized gain on available-for-sale securities
Revaluation reserve for land
Revaluation reserve for intangible assets
Revaluation reserve for fixed assets—other
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities) (*1)

2015Millions of yen
2014

Thousands of
U.S. dollars (Note 1)2015¥ 9,429
2,409
953
873
—
242
93
1,528
1,144
237
1,797
1,671
3,919
¥24,295(6,121)¥18,174¥ 9,061
1,535
1,031
1,013
863
246
119
1,012
1,313
747
4,831
2,045
4,170
¥ 27,986(10,604)¥ 17,382$ 78,464
20,047
7,930
7,265
—
2,013
774
12,715
9,520
1,972
14,954
13,90532,613$202,172(50,936)$151,236

452
676
1,222
1,717
1,782
¥ 5,849¥12,325

443
676
1,194
682
590
¥ 3,584¥ 13,798

3,761
5,625
10,16914,288
14,830$ 48,673$102,563(*1) The current portion of Deferred Tax Liabilities for the year ended March 31, 2015 is ¥376 million (US$3,129 thousand) and is accounted for as “Others” of Current Liabilities.

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

2015

—
—
—
—
—
—
—
—
—
—

Statutory tax rate
Expenses not deductible for tax purposes
Non-taxable dividend income
Loss in subsidiaries
Amortization of goodwill
Tax credits primarily for research and development costs
Tax loss carryforwards
Valuation allowance
Other
Effective income tax rate

2014

37.8%
4.9
(3.3)
—
13.7
(5.3)
—
17.2
10.9
75.9

* The note is omitted because the difference between the statutory tax rate and effective tax rate after adoption of tax-effect accounting is less than 5% of the statutory tax rate for the
fiscal year ended March 31, 2015.
* Adjustment of deferred tax assets and liabilities following the change in the statutory tax rates“Act on Partial Revision of the Income Tax Act” (Law No. 9, 2015) and “Revision of the Local Tax Law” (Law No. 2, 2015) were promulgated on March 31, 2015.
Accordingly, the statutory tax rate for calculating deferred tax assets and liabilities for this fiscal year under review (limited to those to be eliminated on and after April 1, 2015) has beenchanged from 35.4% of the previous fiscal year to 33.0% for those which are expected to be recovered or paid from April 1, 2015 to March 31, 2016 and to 32.2% for those which are
expected to be recovered or paid on and after April 1, 2016.
As a result, net deferred tax assets decreased ¥698 million (US$5,808 thousand), while income taxes deferred increased ¥519 million (US$4,319 thousand) and the valuationdifference on available-for-sale securities increased ¥151 million (US$1,257 thousand).

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Nipro Corporation
Annual Report 2015

5. Pledged Assets
The following assets were pledged as collateral:
2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015¥56,623—¥56,623¥ 1,690¥58,313¥59,4730¥59,473¥ 1,480¥60,953$471,191—$471,191$ 14,063$485,254¥14,503
3,684
4,227
6,699
19,325¥48,438

Buildings and structures
Machinery and equipment
Land
Trade notes receivable
Other
Total

¥12,703
2,701
2,606
7,158
13,037¥38,205

The above assets were pledged against the following liabilities:¥ 3,007
1,289
5,730¥10,026

Short-term bank loans
Current portion of long-term debt
Long-term debt
Total

¥ 2,029
1,508
6,748¥10,285$120,687
30,65735,17555,746
160,814$403,079$25,023
10,726
47,682$83,431

6. Investment Securities
Investment securities as of March 31, 2015 and 2014 consisted of the following:

Non-current:
Marketable:
Marketable equity securities
Investment trust funds and otherSub total
Non-marketable securities
Total

The carrying amounts and aggregate fair values of marketable securities for investments as of March 31, 2015 and 2014 were as follows:

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

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

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

Cost

Unrealized gain

Unrealized loss

Millions of yen
2015
Fair Value¥60,771—¥60,771¥8,208—¥8,208¥12,356—¥12,356¥56,623—¥56,623

Cost

Unrealized gain

$505,709—$505,709$68,303—$68,303

Thousands of U.S. dollars (Note 1)
2015
Unrealized loss
Fair Value$102,821—$102,821$471,191—$471,191

Cost

Unrealized gain

Unrealized loss

Millions of yen
2014
Fair Value¥72,000—¥72,000¥7,185—¥7,185¥19,712—¥19,712¥59,473—¥59,473

Proceeds from sales of securities and gross realized gains or losses on those sales for the years ended March 31, 2015 and 2014 were as follows:2015¥11,520
3,403
2,977

Proceeds
Gains on sales
Losses on sales

Millions of yen
2014¥9,0591,322
161

Thousands of
U.S. dollars (Note 1)
2015$95,864
28,31824,77337
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Nipro Corporation
Annual Report 2015

7. Leases
Finance leases entered into prior to April 1, 2008 that do not transfer ownership of leased property to the lessee are accounted for as if they wereoperating leases. The details of such finance leases accounted for as operating leases at March 31, 2015 and 2014 were as follows:
2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

¥6
6
¥0

Acquisition cost
Accumulated depreciation
Net leased property

¥0
—
¥0

Payments due within one year
Payments due after one year
Total

¥123
121
¥  2

¥3
0
¥3

$50
50
$ 0

$0
—
$0

Lease payments under such leases for the years ended March 31, 2015 and 2014 were ¥4 million (US$33 thousand) and ¥13 million, respectively.

8. Financial Instruments(1) Circumstances on financial instruments

currency are exposed to the risk of fluctuation in foreign currency exchange rates.
Short-term loans payable are mainly borrowed to raise operating
capital and long-terms loans payable are mainly borrowed to makecapital expenditures. A part of long-term loans with the floating interest
rate has the risk of interest rate fluctuation, but the Company and its
consolidated subsidiaries use interest rate swaps to solidify the interest
rate. For some of the loans denominated in foreign currency, the Company and its consolidated subsidiaries use currency swap to hedge thecurrency fluctuation risk.
Bonds and commercial paper are mainly issued to raise the funds
for the retirement of bonds.
Lease obligations are mainly for capital expenditures, free frominterest-rate risk because the interest rate is fixed.
Payables, loans and bonds are exposed to liquidity risk, but theCompany and its consolidated subsidiaries manage the risk by establishing cash planning.

(a) Policy for financial instruments
The Company and its consolidated subsidiaries manage the temporary
surplus funds by deposits with banks that have a high level of safety.
The Company and its consolidated subsidiaries raise funds forbusiness operation with mainly bank loans and bonds considering theirbusiness investment and cash planning.
(b) D etails and risk of financial instruments and its risk
management
Receivables such as trade notes and accounts receivable are exposed
to customer’s credit risk. Receivables denominated in foreign currencies
are exposed to the market risk of fluctuation in foreign currency exchange rates.
In order to reduce the customer’s risk, the Company monitors thedues and balances by customer in accordance with the Company’s
credit administration regulations.
Investment securities are exposed to market fluctuation risk, butmainly consist of equity of the companies which conduct business with
the Company. The Company periodically reviews the market price ofsuch securities.
Payables such as trade notes, accounts payable and accounts
payable other are due within 1 year. Payables denominated in foreign(c) Supplemental information on fair values of financial instruments
Fair values of financial instruments include values based on market
price and reasonably estimated values when market price is not available. Because variable factors are counted in the estimation, the estimated values may vary by adopting different assumptions.

(2) Fair values of financial instruments
The book values, fair values and the differences between them as of March 31, 2014 and 2015 are as follows (Financial instruments for which themarket value is extremely difficult to determine are not included as described in remark 2.):

Cash and cash equivalents, time deposits
Trade notes and accounts receivable,
net of allowance for doubtful receivables
Investment securities
Assets total
Trade notes and accounts payable
Short-term bank loans, current portion of
long-term debt, and commercial paper
Other notes and account payable (*1)
Long-term debt
Lease obligations (*2)
Liabilities total¥112,871¥112,871

Fair value

Millions of yen
2015
Difference¥—¥ 84,957¥ 84,957

Fair value

Millions of yen
2014
Difference

111,693
56,623¥281,187¥ 51,751

111,693
56,623¥281,187¥ 51,751

¥
¥

—
—
—
—

101,168
66,058¥252,183¥ 45,661

101,168
66,058¥252,183¥ 45,661

—
—
¥ —
¥ —

174,200
23,440226,2143,956¥479,561

174,200
23,440224,599
3,768¥477,758

—
—
1,615
188
¥1,803

156,595
17,500222,8372,460¥445,053

156,595
17,500221,9412,369¥444,066

—
—
896
91
¥987

Book value

Book value¥ —38
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Nipro Corporation
Annual Report 2015

Cash and cash equivalents, time deposits
Trade notes and accounts receivable,
net of allowance for doubtful receivables
Investment securities
Assets total
Trade notes and accounts payable
Short-term bank loans, current portion of
long-term debt, and commercial paper
Other notes and account payable (*1)
Long-term debt
Lease obligations (*2)
Liabilities total

Book value$  939,261

Thousands of U.S. dollars (Note 1)
2015
Fair value
Difference$  939,261

$

—

—
—
—
—

929,458
471,192$2,339,911$  430,648

929,458
471,192$2,339,911$  430,648$$

1,449,612
195,057
1,882,450
32,920$3,990,687

1,449,612
195,057
1,869,011
31,356$3,975,684——
13,4391,564$15,003(*1) This is included in accrued expenses and notes andaccounts payable for plant and equipment on thebalance sheet.
(*2) This is included in other current liabilities and otherlong-term liabilities on the balance sheet.

Remark 1 Methods used to calculate fair values of financial instruments and the details of securities<Assets>• Other notes and account payable• Cash and cash equivalents, time deposits and trade notes and acBecause the settlement periods of the above items are short and theircounts receivablefair values are almost the same as their book values, the relevant book
Cash and cash equivalents and trade notes and accounts receivablevalues are used.
are stated at the relevant book value because the settlement periods• Long-term debt
are short and the fair values are almost the same as the book value.
The fair value of long-term debt is calculated by applying a discount• Investments securities
rate to the total of principal and interest. The discount rate is based
Equity securities are stated at market value. See Note 6. “Investment
on the assumed interest rate if a similar new loan was entered into.
securities” for the detailed information by classification.
• Lease obligation<Liabilities>
The fair value of lease obligations is calculated by applying a discount• Trade notes and accounts payable and short-term bank loans andrate to the total of principal and interest. The discount rate is based
current portion of long-term debt and commercial paperon the assumed interest rate if a current lease transaction was
Because the settlement periods of the above items are short and theirrenewed.
fair values are almost the same as their book values, the relevant bookvalues are used.
Remark 2

Financial instruments for which the fair value is extremely difficult to determine
2015¥6,034¥7,454

Unlisted equity securities

Thousands of
U.S. dollars (Note 1)
2015

Millions of yen
2014$62,029

Because these items have no market value and are difficult to estimate the future cash flow and it is extremely difficult to determine their fair values, they are not included in investment
securities above.

Remark 3

Planned redemption amounts after the balance sheet date for monetary receivables with maturity dates are as follows:
2015
Within 1 year

¥ 84,957
101,169¥112,871
111,693

Cash and cash equivalents, time deposits
Trade notes and accounts receivableThousands of
U.S. dollars (Note 1)
2015
Within 1 year

Millions of yen
2014
Within 1 year

$939,261
929,458

Remark 4 Planned repayment amounts after the balance sheet date for monetary payables with maturity dates
Planned repayment amounts after the balance sheet date for monetary payables with maturity dates at March 31, 2015 are as follows:

Trade notes and accounts payable
Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Lease obligations
Total

Millions of yen
2015

Within 1 year

Over 1 year but Over 2 years but Over 3 years but Over 4 years but
within 2 years
within 3 years
within 4 years
within 5 years

Within 1 year

Thousands of U.S. dollars (Note 1)
2015
Over 1 year but Over 2 years but Over 3 years but Over 4 years but
within 2 years
within 3 years
within 4 years
within 5 years
Over 5 years¥ 51,751
174,200
23,440—828¥250,219$  430,648
Trade notes and accounts payable
Short-term bank loans, current portion of long-term debt, and commercial paper 1,449,612
195,057
Other notes and account payable—
Long-term debt
6,890
Lease obligations$2,082,207
Total

¥

—
—
—
72,307931¥73,238$———
601,706
7,747$609,453¥———
63,797564¥64,361$———
530,890
4,693$535,583¥———
22,784463¥23,247$———
189,598
3,853$193,451¥———
34,035768¥34,803$———283,224
6,391$289,615

Over 5 years

¥

—
—
—
33,291
402¥33,693$———
277,032
3,346$280,378

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Nipro Corporation
Annual Report 2015

Within 1 year

¥ 45,661
156,595
17,500—949¥220,705

Trade notes and accounts payable
Short-term bank loans, current portion of long-term debt, and commercial paper
Other notes and account payable
Long-term debt
Lease obligations
Total

Over 1 year but Over 2 years but Over 3 years but Over 4 years but
within 2 years
within 3 years
within 4 years
within 5 years

¥

—
—
—
72,138574¥72,712¥———62,349301¥62,650¥———
53,456
139¥53,595

Millions of yen
2014
Over 5 years

¥

—
—
—
15,07765¥15,142¥———
19,817432¥20,249

9. Derivatives
The Company and its consolidated subsidiaries had the following derivatives contracts outstanding at March 31, 2015 and 2014.

(1) Derivatives for which hedge accounting has not been applied.
(a) Currency related
N/A in 2015 and 2014(b) Interest related
Type of Derivative

Transaction other thanmarket transaction

Contract amountOver 1 year out of contract amountMillions of yen
2015
Fair Value

¥40

¥20

¥2

¥73

Interest rate option
Interest rate swap
To receive variable/To pay fixed¥—¥0

Thousands of U.S. dollars (Note 1)
Type of Derivative

Transaction other thanmarket transaction

Contract amountOver 1 year out of contract amount2015
Fair Value

$333

$166

$17

$607

Interest rate option
Interest rate swap
To receive variable/To pay fixed

$ —

$ 0

Millions of yen
Type of Derivative

Transaction other thanmarket transaction

Contract amountOver 1 year out of contract amount2014
Fair Value

¥60

¥40

¥(5)

¥73

Interest rate option
Interest rate swap
To receive variable/To pay fixed¥—¥0

Fair value is based on information provided by a financial institution at the end of the fiscal year.

(2) Derivatives for which hedge accounting has been applied.
(a) Interest related
Method of hedge accounting

Principle method
Exceptional accounting method for interest rate swap

Type of Derivative

Interest rate swap
Interest rate swap

Principal Hedge Item

Long-term loans
Long-term loans

Contract amount¥  212¥2,719Millions of yen
2015
Over 1 year out-of-contract amount
Fair Value¥  140¥2,222¥ 7(*1)

Thousands of U.S. dollars (Note 1)
Method of hedge accounting

Principle method
Exceptional accounting method for interest rate swap

Type of Derivative

Interest rate swap
Interest rate swap

Principal Hedge Item

Long-term loans
Long-term loans

Contract amount$ 1,764$22,626

Over 1 year out-of-contract amount$ 1,165$18,4902015
Fair Value

$58
(*1)

Millions of yen
Method of hedge accounting

Principle method
Exceptional accounting method for interest rate swap

Type of Derivative

Interest rate swap
Interest rate swap

Principal Hedge Item

Long-term loans
Long-term loans

Over 1 year out-of-contract amountContract amountMillions of yen
2015
Over 1 year out-of-contract amount
Fair Value¥  258¥3,216(b) Currency related
Method of hedge accounting

Principle method
Allocation method of forward foreign exchange contract, etc.

Type of Derivative

Currency swap
Currency swap

Principal Hedge Item

Account receivables
Long-term loans

2014
Fair ValueContract amount¥  337¥1,196¥  194¥2,719¥—¥1,125

¥ 3
(*1)

¥36
(*1)

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Nipro Corporation
Annual Report 2015

Thousands of U.S. dollars (Note 1)
Method of hedge accounting

Principle method
Allocation method of forward foreign exchange contract, etc.

Type of Derivative

Currency swap
Currency swap

Principal Hedge Item

Account receivables
Long-term loans

Contract amountOver 1 year out-of-contract amount$2,804$9,953$—$9,362

2015
Fair Value

$300
(*1)

Millions of yen
Method of hedge accounting

Principle method
Allocation method of forward foreign exchange contract, etc.

Type of Derivative

Currency swap
Currency swap

Principal Hedge Item

Account receivables
Long-term loans

Contract amountOver 1 year out-of-contract amount¥  526¥1,268¥ —¥1,1962014
Fair Value

¥42
(*1)

(*1) The fair value of interest rate swap to which the exceptional accounting method is applied and the fair value of forward foreign exchange contract, etc., to which the allocation
method is applied are included in the fair value of long-term loans in Note 8. “Financial Instruments” because such interest rate swap and forward foreign exchange contract, etc.,
are accounted for as a single item with the corresponding long-term loans.

10. Short-Term Loans and Long-Term Debt
Short-term loans comprised overdrafts and promissory notes.
The weighted-average interest rates of short-term bank loans for the years ended March 31, 2015 and 2014 were 0.8568% and 1.005%,
respectively.
The weighted-average interest rate of commercial paper for the years ended March 31, 2015 and 2014 was 0.1112% and 0.104%, respectively.
Long-term debt comprised the following:2015

2.04% unsecured bonds due 20180.877% unsecured bonds due 2016 (*1)
0.83% unsecured bonds due 2016 (*1)
1.09% unsecured bonds due 2018
0.61% unsecured bonds due 2019 (*1)
0.57% unsecured bonds due 2020
0.64% unsecured bonds due 2016
0.30%~0.86% unsecured bonds due 2019 (*1) (*2)
Long-term bank loans due through 2074, with weighted-average interest rate of 1.1039%
for the year ended March 31, 2015, and of 1.230% for the year ended March 31, 2014
Less current portion of long-term debt
Total

¥ 10,000
20,000[20,000]
6,000[6,000]
4,000
1,600
[400]
3,000
1,000
2,832
[1,440]Millions of yen
2014

259,734(81,952)¥226,214[27,840]¥ 10,000
20,000
6,000
4,000
2,000
—
1,000
4,147
226,760(68,965)¥222,837[19,210]

Thousands of
U.S. dollars (Note 1)
2015$   83,215
166,431[166,431]
49,929[49,929]
33,286
13,314[3,329]24,965
8,322
23,567[11,983]
2,161,388(681,967)$1,882,450[231,672](*1) [] is the amount of the current portion of bonds.
(*2) This is the total amount of the bonds Goodman Co., Ltd. issued.
In March 2008, the Company issued ¥10,000 million (US$83,215 thousand) of 2.04% unsecured bonds due 2018.
In March 2011, the Company issued ¥20,000 million (US$166,431 thousand) of 0.877% unsecured bonds due 2016.
In March 2013, the Company issued ¥6,000 million (US$49,929 thousand) of 0.83% unsecured bonds due 2016.
In March 2013, the Company issued ¥4,000 million (US$33,286 thousand) of 1.09% unsecured bonds due 2018.
In March 2014, the Company issued ¥2,000 million (US$16,643 thousand) of 0.61% unsecured bonds due 2019.
In March 2015, the Company issued ¥3,000 million (US$24,965 thousand) of 0.57% unsecured bonds due 2020.
In April 2011, Nipro Pharma Corporation issued ¥1,000 million (US$8,322 thousand) of 0.64% privately placed bonds due 2016.
From November 2010 to February 2014, Goodman Co., Ltd. issued ¥4,424 million (US$36,815 thousand) of 0.30% and 0.86% unsecured bonds due from 2015 to 2019.

The aggregate annual maturities of long-term debt outstanding at March 31, 2015 are as follows:
Millions of yen
2015¥ 81,952
72,307
63,797
90,110¥308,166

2015
2016
2017
2018 and thereafter
Total

Thousands of
U.S. dollars (Note 1)2015$  681,967
601,706
530,890749,854$2,564,417

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional securities and guarantees for present and futureindebtedness will be given under certain circumstances at the request of the bank.
In addition, the agreements provide that the bank has the right to offset cash deposits against any long-term and short-term bank loan that becomes due, and in case of default andcertain other specified events, against all other loans payable to the bank.

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Annual Report 2015

11. Accrued Pension and Severance Liabilities
The Company and certain consolidated subsidiaries have defined benefit pension plans and unfunded retirement benefit plans, and defined contribution pension plan for employees.
Certain consolidated subsidiaries have recorded liabilities for retirement benefit and assets for a retirement benefit based on the simplified method.

(1) Defined Benefit Plans(a) T he reconciliation of beginning and ending balances of the benefit obligation (excluding the defined benefit plans applied based on thesimplified method) are as follows:2015¥11,003(150)
10,853
664
151
199
—
(374)
(26)
¥11,467

Obligation at April 1
Cumulative effects of changes in accounting policies
Restated balance
Service cost
Interest cost
Actuarial loss
Prior service cost
Benefit payments
Other (foreign currency translation adjustments, etc.)
Obligation at March 31

Millions of yen
2014¥ 9,870
—
—
676
152
381
381
(662)
205
¥11,003

Thousands of
U.S. dollars (Note 1)
2015$91,562(1,248)90,314
5,526
1,256
1,655
—
(3,112)(216)$95,423(b) T he reconciliation of beginning and ending balances of the fair value of the plan assets (excluding the defined benefit plans applied
based on the simplified method) is as follows:
2015¥7,577
131
305
508
(206)
24
¥8,339Fair value of plan assets at April 1
Expected return on plan assets
Actuarial loss
Company contribution
Benefit payments
Other (foreign currency translation adjustments, etc.)
Fair value of plan assets at March 31

Millions of yen
2014¥6,923
122
389
506
(432)
69
¥7,577

Thousands of
U.S. dollars (Note 1)
2015$63,052
1,090
2,538
4,227
(1,714)200$69,393(c) The reconciliation of beginning and ending balances of liabilities for retirement benefit applied based on the simplified method is as follows:
2015

¥519
10
183
(20)
(83)
(36)
¥573

Liabilities for retirement benefit at April 1
Beginning balance of newly consolidated subsidiary
Retirement benefit cost
Retirement payments
Contribution for the plan
Other (foreign currency translation adjustments, etc.)
Liabilities for retirement benefit at March 31

Millions of yen
2014

¥417
62
165
(43)
(71)
(11)
¥519

Thousands of
U.S. dollars (Note 1)
2015$4,319
83
1,523
(166)
(691)
(300)
$4,768(d) The reconciliation of ending balance of the benefit obligation and the fair value of the plan assets, and liabilities and assets for
retirement benefit are as follows:

Benefit obligation on funded scheme
Plan assets¥11,748(8,999)¥ 2,749

2015

Millions of yen
2014

Benefit obligations on non-funded scheme
Net assets (liabilities) on the consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net assets (liabilities) on the consolidated balance sheet¥   952
3,701
3,841
(140)
¥ 3,701¥   857
3,945
4,043
(98)
¥ 3,945¥11,223(8,135)¥ 3,088

Thousands of
U.S. dollars (Note 1)2015$ 7,92230,79831,963(1,165)$ 30,798$ 97,762(74,886)$ 22,876(*) Including the defined benefit plans applied based on the simplified method

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Nipro Corporation
Annual Report 2015(e) T he breakdown of net pension and severance costs is as follows:
2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)
2015

¥ 664
151
(131)
34
53
183
5
¥ 959

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial
Amortization of past service obligation
Retirement benefit cost based on the simplified method
Other
Total

¥  676
152
(122)
259
91
165
98
¥1,319(f) R emeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans are as follows:

¥

—
(306)
¥(306)

Past service obligation
Actuarial loss
Total

¥—
—
¥—

(g) Remeasurements of defined benefit plans (Accumulated Other Comprehensive Income)The breakdown of the items recorded in adjustments to defined benefit plans are as follows:

¥221
18
¥239

Unrecognized prior service cost
Unrecognized actuarial loss
Total(h) Items concerning the pension assets
1. The breakdown of the pension assets
The ratio of the plan assets are as follows:

¥274
271
¥545

2015

38%
25%
31%
6%
100%

Bonds
Equities
General account
OthersTotal$ 5,526
1,257(1,090)
283
441
1,522
41
$ 7,980$     —
(2,546)$(2,546)$1,839150$1,989

2014

35%
27%
34%
4%
100%

(*) Including the defined benefit plans applied based on the simplified method

2. Setting of the long-term expected rate of return
The long-term expected rate of return is to be determined considering the current and future allocation of plan assets, and the current and expectedlong-term rate of return from the diverse assets composing the plan assets.
(i) Calculation basis of actuarial methods
The main calculation basis of actuarial methods at the end of the period is as follows:

2015

Primarily 0.8%
Primarily 1.5%
Primarily 6.6%

Discount rate
Expected long-term rate of return
Assumed wage increase rate

2014

Primarily 1.2%
Primarily 1.5%—

(1) Defined Contribution Retirement Plans
The amounts of necessary contributions to defined contribution retirement plans within the Company and consolidated subsidiaries were ¥433
­millions (US$3,603 thousand).

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Annual Report 2015

12. Commitments and Contingent Liabilities
The Company and its consolidated subsidiaries had the following commitments and contingent liabilities:
2015

¥ 13
169
¥182

Export drafts discounted
Trade notes receivable discounted
Total

Millions of yen
2014

¥—
36
¥36

Thousands of
U.S. dollars (Note 1)2015$  1081,406$1,514

13. Stock Options
The stock options outstanding as of March 31, 2015 and 2014 were as follows:
Consolidated subsidiary (Goodman Co., Ltd.)

Persons granted
Class andnumber of shares
Grant date
Exercise period
Terms for vestingSpecified term ofyears before vesting

Persons granted
Class andnumber of shares
Grant date
Exercise period
Terms for vestingSpecified term ofyears before vesting

November 25, 2005
at board of directors’ meeting

2015
April 27, 2006
at board of directors’ meeting

Directors of Goodman Co., Ltd: 4
Employees of Goodman Co., Ltd: 348
Others: 4
878,500 shares of common stockof Goodman
December 5, 2005
From December 6, 2005 toAugust 31, 2015
None

Employees of Goodman Co., Ltd: 6

None

None
November 25, 2005
at board of directors’ meeting

7,000 shares of common stockof Goodman
April 28, 2006
From April 28, 2006 to
August 31, 2015
None

January 6, 2006
at board of directors’ meeting

April 14, 2006
at board of directors’ meeting

2014
April 27, 2006
at board of directors’ meeting

Directors of Goodman Co., Ltd: 4
Employees of Goodman Co., Ltd: 348
Others: 4
878,500 shares of common stockof Goodman
December 5, 2005
From December 6, 2005 toAugust 31, 2015
None

Employees of Goodman Co., Ltd: 2

Employees of Goodman Co., Ltd: 16

Employees of Goodman Co., Ltd: 66,500 shares of common stockof Goodman
January 6, 2006
From September 23, 2007 to
August 31, 2015
None

31,000 shares of common stockof Goodman
April 14, 2006
From September 23, 2007 to
August 31, 2015
None

7,000 shares of common stockof Goodman
April 28, 2006
From April 28, 2006 to
August 31, 2015
None

None

None

None

None

In addition to the aforementioned information of the stock options outstanding, the stock option activity is as follows:
Consolidated subsidiary (Goodman Co., Ltd.)

Non-vested shares
At the beginning of the year
Granted during the year
Forfeited and expired during the year
Vested during the year
At the end of the year
Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited and expired during the year
Unexercised at the end of the year

November 25, 2005
at board of directors’ meeting

2015
April 27, 2006
at board of directors’ meeting

—
—
—
—
—

—
—
—
—
—

253,000———
253,000

2,000
—
—
—
2,000

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Annual Report 2015

Non-vested shares
At the beginning of the year
Granted during the year
Forfeited and expired during the year
Vested during the year
At the end of the year
Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited and expired during the year
Unexercised at the end of the year

November 25, 2005
at board of directors’ meeting

January 6, 2006
at board of directors’ meeting

April 14, 2006
at board of directors’ meeting

2014
April 27, 2006
at board of directors’ meeting

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

709,000——
456,000
253,000

6,500
—
—
6,500
—

28,500——28,500
—

2,500
—
—
500
2,000

November 25, 2005
at board of directors’ meeting

Yen
2015
April 27, 2006
at board of directors’ meeting

November 25, 2005
at board of directors’ meeting

U.S. dollars (Note 1)
2015
April 27, 2006
at board of directors’ meeting

April 14, 2006
at board of directors’ meeting

Yen
2014
April 27, 2006
at board of directors’ meeting

The number of stock options were converted into that of common stocks.

Exercise price
Average stock price at exercise
Fair value price at the grant date

Exercise price
Average stock price at exercise
Fair value price at the grant date

¥2,169——November 25, 2005
at board of directors’ meeting¥2,169——¥2,415——January 6, 2006
at board of directors’ meeting¥2,410
—
—

$18
—
—

¥2,490
—
—

$20
—
—

¥2,415——

14. Business Combination
1. Outline of the transaction under common control(5) Outline and purpose of the transaction
1 Purpose of merger
The purpose of this merger is to increase the efficiency of procurement and allocation of management resources and strengthen thesystem of quality assurance under the group strategy of businessintegration for Pharmaceutical-Related Business.
2 Merger ratio and delivered money due to merger
As Nipro Pharma Corporation owns all shares of Tohoku Nipro­Pharmaceutical Corporation, there is no arrangement for the merger
ratio.
Also, there was no issuance of new shares or increase in capitaland payment of delivered money due to the merger.

(1) Company name and business line at the time of the businesscombination
1 Combining company
Name of the company: Nipro Pharma Corporation
Business line:
Manufacturing and Marketing of		pharmaceuticals
2 Combined company
Name of the company: Tohoku Nipro Pharmaceutical Corporation
Business line:
Manufacturing of pharmaceuticals(2) Date of the business combination
October 1, 2014

2. Implemented accounting treatment
This merger was processed as a transaction under common control,
based on the “Accounting Standard for Business Combinations”(ASBJ Statement No. 21, December 26, 2008) and the “Guidance on­Accounting Standard for Business Combinations and Accounting­Standard for Business Divestitures” (ASBJ Guidance No. 10, December
26, 2008).

(3) Legal form of the business combination
Absorption-type merger between entities under common control, in
which Nipro Pharma Corporation was the surviving entity and­Tohoku Nipro Pharmaceutical Corporation was the dissolved entity.
(4) Name of the company after business combination
Nipro Pharma Corporation

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Nipro Corporation
Annual Report 201515. Net Assets
The significant provisions in the Corporate Law of Japan (the “Corporate Law”) that influence financial and accounting matters are summarized below:(b) Increases/Decreases and Transfer of Common Stock, Reserveand Surplus
The Corporate Law requires that an amount equal to 10% of dividends
must be appropriated as legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such
dividends until the total of the aggregate amount of legal reserve andadditional paid-in capital equals 25% of the common stock.
Under the Corporate Law, the total amount of additional paid-in
capital and legal reserve may be reversed without limitation.
The Corporate Law also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings
can be transferred among the accounts under certain conditions by the
resolution of the shareholders’ meeting.
The Company’s legal reserve, which is included in retained earnings,
amounted to ¥2,678 million (US$22,285 thousand) as of March 31,
2015, and its additional paid-in capital, which is included in capitalsurplus, amounted to ¥635 million (US$5,284 thousand) as of March
31, 2015.

(a) Dividends
Under the Corporate Law, companies can pay dividends at any time
during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain
criteria such as (1) having the board of directors, (2) having independent
auditors, (3) having the board of corporate auditors, and (4) the service
period of the directors is prescribed as one year rather than the normal
term of two years by its articles of incorporation, the board of directors
may declare dividends (except for dividends in kind) if the company hasprescribed so in its articles of incorporation. The Company’s present
system meets the first three criteria but the two-year service period of
the directors does not meet the fourth criterion.
Interim dividends may also be paid once a year by the resolution of
the board of directors if the articles of incorporation of the company
stipulate so. The Company’s articles of incorporation contain such a
stipulation, and it pays interim dividend semi-annually by the resolutionof the Board of Directors.
The Corporate Law provides certain limitations on the amounts
available for dividends or the purchase of treasury stock.

16. Segment Reporting
Outline of Reportable Operating Segments
Applied ASBJ Statement No. 17 “The Revised Accounting Standard forDisclosures of Segments of an Enterprise and Related Information”, thereportable operating segments are components of an entity for which
separate financial information is available and such information is evaluated regularly by the board of directors in deciding how to allocate
management resources and in assessing performance.
The Company currently operates its business on a stand-alone basiswith the divisional organization and evaluates the performance of sales
and manufacture of each division regardless of their products. Accordingly, the Company has three reportable operating business segments
according to the divisions (Medical-Related business, PharmaceuticalRelated business and Grass-Related business), which are divided
mainly by their products.

Glass-Related
The MP Glass division sells glass for vials and ampoules for medicaluse, glass for thermos bottles and glass for lighting. Overseas subsidiaries manufacture and sell tube glass and glass for vials and ampoules
for medical use.
Change in Reportable Segment(1) Effective from the second quarter ended September 30, 2014, Nipro
Glass India PVT. LTD., Nipro Tube Glass PVT. LTD., Nipro Glass­Americas Corporation, Nipro Glass France S.A.S., Nipro Glass Belgium
N.V., Nipro Pharma Glass AG, Nipro Glass Germany AG, Nipro Sterile
Glass Germany AG, Chengdu Pingyuan Nipro Pharmaceutical­Packaging Co., Ltd., Jilin Nipro Jiaheng Pharmaceutical Packaging Co.,
Ltd., Anyang Nipro Changda Pharmaceutical Packaging Co., Ltd., OOO
Ural Glass Plant and Puyang City Changda Glass Co., Ltd. are reclassified from Medical-Related business to Glass-Related business due to arevision of the organization system in the Nipro group.
Segment information for the previous period is based on thisreclassification.
(2) Effective from the current period, the calculation method of retirement benefit obligations and service costs in business segments waschanged following the changes in accounting policy for retirement
benefits.
This change has a minimal impact on segment profit or loss for the
fiscal year ended March 31, 2015.

Medical-Related
The domestic division sells injection and infusion products, artificialorgan products, highly functional products, dialysis products, diabetic
products and pharmaceuticals such as generic and kit products. In the
global business division, the head office plays the center role, places
overseas sales and manufacturing bases for medical equipment andsales injection and infusion products, artificial organ products anddiabetic products.
Pharmaceutical-Related
The pharmaceutical division sells containers for combination products(injectable kit products) and pharmaceutical products consigned byother pharmaceutical companies. Domestic subsidiaries sell and manufacture injectable drugs, oral drugs and combination products.

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Nipro Corporation
Annual Report 2015

Business segment information for the years ended March 31, 2015 and 2014 was as follows:

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Capital expenditures

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Capital expenditures

Net sales:
OutsideIntersegment
Total
Operating income (loss)
Identifiable assets
Other items
Depreciation and amortization
Amortization of goodwill
Capital expenditures

Reportable Segment
GlassTotal
RelatedMedicalRelated

PharmaceuticalRelated¥237,777
1,535
239,31223,813¥350,870¥ 57,372
8,401
65,773
10,553¥137,570¥29,830775
30,605(2,889)¥70,176¥ 13,357
3,912
14,486¥  9,569
4
17,854¥ 3,023
1,921
8,429

Other
(*1)

Total

¥324,979
10,711
335,690
31,477¥558,616

¥105
34
139
131
¥ 55

¥325,084
10,745335,829
31,608¥558,671¥—(10,745)(10,745)(15,036)¥136,636¥325,084—
325,084
16,572¥695,307¥ 25,949
5,837
40,769———¥ 25,949
5,837
40,769¥  1,719—
6,929¥ 27,668
5,837
47,698

Reportable Segment
GlassTotal
Related

Other
(*1)

Adjustment(*2)

Millions of yen
2015
Consolidated
financialstatements

Thousands of U.S. dollars (Note 1)
2015
Consolidated
Adjustment
Total
financial(*2)
statements

MedicalRelated

PharmaceuticalRelated$1,978,672
12,774
1,991,446
198,161$2,919,780$  477,424
69,909547,333
87,817$1,144,795$248,232
6,449
254,681(24,041)$583,973$2,704,328
89,132
2,793,460
261,937$4,648,548$  873
283
1,156
1,091
$  457$2,705,201
89,4152,794,616
263,028$4,649,005$—(89,415)(89,415)(125,123)$1,137,023$2,705,201—
2,705,201
137,905$5,786,028$  111,151
32,554
120,546$   79,629
33
148,573$ 25,156
15,98670,142$ 215,936
48,573
339,261———$  215,936
48,573
339,261$   14,304—
57,660$  230,240
48,573396,921

Reportable Segment
GlassTotal
RelatedMedicalRelated

PharmaceuticalRelated¥221,363
1,587
222,950
20,436¥348,332¥ 51,508
7,511
59,0198,013¥137,193¥27,611627
28,238(2,183)¥28,531¥ 12,896
3,473
14,241¥  8,7773
10,647¥ 2,395
1,351
5,465

Adjustment(*2)

Millions of yen
2014
Consolidated
financialstatements

Other
(*1)

Total

¥300,482
9,725
310,20726,266¥514,056¥  271—271
216¥4,496¥300,753
9,725
310,478
26,482¥518,552¥—(9,725)(9,725)(14,192)¥101,103¥300,753—
300,753
12,290¥619,655¥ 24,068
4,827
30,353¥   46——¥ 24,114
4,827
30,353¥  1,037—
4,740¥ 25,151
4,827
35,093(*1) “Other” is the business segment which is not included in the reportable segment and consists of real estate income and sales by headquarters.
(*2) Adjustment is as follows:• Adjustments for operating income ended March 31, 2015 and 2014 include ¥(2,971) million (US$(24,723) thousand) and ¥(2,483) million of elimination of inter-segment transactionand ¥(12,065) million (US$(100,399) thousand) and ¥(11,709) million of corporate cost, respectively. Corporate cost consists primarily of sales, general and administrative expenses
and research and development costs which do not belong to the reportable segment.
• Adjustments for Identifiable assets ended March 31, 2015 and 2014 include ¥(10,933) million (US$(90,979) thousand) and ¥(66,172) million of elimination of inter-segment transaction and ¥147,569 million (US$1,228,002 thousand) and ¥167,276 million of corporate assets, respectively. Corporate assets consisted primarily of cash and deposits, investment
securities, assets for development and assets for management division of head office which do not belong to the reportable segment.
• Adjustments for depreciation and amortization ended March 31, 2015 and 2014 are for corporate assets. Depreciation and amortization and Capital expenditures include long-term
prepaid expenses.
• Adjustment for capital expenditures is increase in corporate assets.

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Nipro Corporation
Annual Report 2015

Loss on impairment of fixed assets and Unamortized balance of goodwill by business segments were as follows:

MedicalRelated

Loss on impairment of
fixed assets
Unamortized balance of
goodwill

Loss on impairment of
fixed assets
Unamortized balance of
goodwill

PharmaceuticalRelated

Millions of yen
2015

Reportable Segment
GlassTotal
Related

Other

Total

MedicalRelated

PharmaceuticalRelated0¥—¥   66¥    66¥—¥    66¥     2¥—

19,83713

6,514

26,364—26,364

20,71817¥

Reportable Segment
GlassTotal
Related

Other

Total

¥

—

¥     2¥—¥     2

7,759

28,494—28,494

Thousands of U.S. dollars (Note 1)
2015
Reportable Segment
Other
Total
GlassTotal
RelatedMedicalRelated

PharmaceuticalRelated0$ —$   549$    549$—$    549

165,074108

54,207219,389—

219,389$

Millions of yen
2014

Net sales and Property, plant and equipment for each area were as follows:

Net sales
Property, plant andequipment

Net sales
Property, plant andequipment¥182,149¥62,662¥42,874¥37,399

Asia

Millions of yen
2015
Total

¥325,084¥174,862¥56,887¥40,434¥28,570

Asia

Millions of yen
2014
Total

108,211

19,664

12,96579,355

220,195

103,368

16,306

11,10460,816

191,594

AmericaThousands of U.S. dollars (Note 1)
2015
Europe
Asia
Total

Japan

Japan

America

Europe$1,515,761$521,445$356,778$311,217$2,705,201

900,483

163,635

107,889

660,356

1,832,363

Japan

America

Europe¥300,753

17. Selling, General and Administrative Expenses
Significant components of selling, general and administrative expenses for the years ended March 31, 2015 and 2014 were as follows:
2015¥19,397
7,358

Salaries
Freight charges

Millions of yen
2014¥17,795
6,527

Thousands of
U.S. dollars (Note 1)
2015$161,413
61,23018. Research and Development Expenses
Research and development expenses for the years ended March 31, 2015 and 2014 were ¥8,646 million (US$71,948 thousand) and ¥7,891 million,
respectively.

19. Supplemental Disclosures of Cash Flow Information
Supplemental information related to the Consolidated Statements of Cash Flows was as follows:

Cash paid during the year for:
Interest
Income tax

2015

Millions of yen
2014

Thousands of
U.S. dollars (Note 1)2015¥ 3,989
16,979¥3,9087,501$ 33,195
141,292

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Nipro Corporation
Annual Report 2015

Report of Independent Auditors

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Nipro Corporation
Annual Report 2015

Corporate Information(As of March 31, 2015)

Date of Establishment
July 8, 1954

Principal Shareholders
Number of
Shares Held(in thousands)

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

Nippon Electric Glass Co., Ltd. ����������������������������������������������������������� 25,718
Resona Bank Limited �������������������������������������������������������������������������������
5,360Japan Trustee Services Bank, Ltd. ���������������������������������������������������
3,554
The Master Trust Bank of Japan, Ltd �����������������������������������������������
3,448
Chase Manhattan Bank GTS. Clients Account Escrow ���������
3,422
Kazumi Sano �������������������������������������������������������������������������������������������������
1,910
Mizuho Bank, Ltd. �������������������������������������������������������������������������������������
1,565
Trust & Custody Services Bank, Ltd. as trustee for Mizuho Bank, Ltd.
Retirement Benefit Trust Account re-entrusted   by Mizuho Trust and Banking Co., Ltd. ���������������������������������������������������
1,564
Nipro employees’ stock ownership associations �����������������������
1,412
Japan Trustee Services Bank, Ltd �����������������������������������������������������
1,332
Total ������������������������������������������������������������������������������������������������������������������� 49,289

Tokyo Office
4-3-4 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Telephone: +81-3-5684-5611
Facsimile: +81-3-5684-5610
Number of Employees
Parent Company ����������������������������������������������������������������������������������������������������������������
Consolidated subsidiaries ��������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������������������
Common Stock
Authorized
IssuedOutstanding
Number of Shareholders

Percentage ofTotal Sharesin Issue (%)

2,922
20,231
23,153

15.00
3.13
2.07
2.01
1.41
1.11
0.91
0.91
0.82
0.77
28.16

Stock Price Range (Tokyo Stock Exchange)

400,000,000 shares
171,459,479 shares
170,512,718 shares
63,295

(Yen)
1,600
1,400
1,200

Stock Listings
Tokyo Stock Exchange,
Ticker Code: 8086

1,000
800

Transfer Agent
Mizuho Trust & Banking Co., Ltd., Head Office
Stock Transfer Agency Dept.
1-2-1, Yaesu, Chuo-ku, Tokyo, 103-8670, Japan

600
400

Major Subsidiaries (As of June 30, 2015)
Area
Country
Domestic Japan

Name
Nipro Medical Industries Co., Ltd.
Goodman Co., Ltd.
Nipro Pharma Corporation
Zensei Pharmaceutical Industries Co.,Ltd.
Nichihos Co., Ltd.
Cell Science & Technology Institute, Inc.
Overseas Thailand
Nipro (Thailand) Corporation Limited
Nipro Sales (Thailand) Co., Ltd.
China
Nipro (Shanghai) Co., Ltd.
Nipro Trading (Shanghai) Co., Ltd.
Chengdu Pingyuan Nipro Pharmaceutical Packaging Co., Ltd.
Jilin Nipro Jiaheng Pharmaceutical Packaging Co., Ltd.
Anyang Nipro Changda Pharmaceutical Packaging Co., Ltd.
Nipro Medical (Hefei) Co., Ltd.
Shanghai Nissho Vacuum Flask Refill Co., Ltd.
Singapore Nipro Asia Pte Ltd.
India
Nipro India Corporation Private Limited
Nipro Glass India Private Limited
Nipro Tube Glass Limited
Nipro Medical (India) Pvt. Ltd.
Bangladesh Nipro JMI Co., Ltd.
Nipro JMI Pharma Ltd.
Indonesia
PT. Nipro Indonesia JAYA
UAE
Nipro Middle East FZE
BrazilNipro Medical Ltda.
U.S.A.
Nipro Medical Corporation
Nipro Diagnostics, Inc.
Nipro Glass Americas Corporation
Belguim
Nipro Europe N.V.
Nipro Glass Belgium N.V.
FranceNipro Glass France S.A.S.
Germany
Nipro Glass Germany AG
Nipro Sterile Glass Germany AG
Switzerland Nipro Pharma Glass AG

12

2013

3

6

9

12

2014

3

6

9

12

2015

3

Principal business
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of pharmaceuticals
Management of dispensing pharmacies and marketing of pharmaceutical products
Development and manufacture of cell culture media
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of glass products
Manufacturing and marketing of glass products
Manufacturing and marketing of glass products
Manufacturing and marketing of medical devices
Marketing of glass products
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of medical glass products
Manufacturing and marketing of medical glass products
Marketing of medical devices
Manufacturing and marketing of medical devices
Manufacturing and marketing of pharmaceuticals
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of medical devices
Marketing of medical devices
Manufacturing and marketing of diabetes products
Manufacturing and marketing of medical glass products
Marketing of medical devices
Manufacturing and marketing of medical glass products
Manufacturing and marketing of medical glass products
Manufacturing and marketing of medical glass products
Manufacturing and marketing of medical glass products
Business management

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