AT A GLANCE
2

About
Percentof Total Net Sales

2,271

Employees
worldwide

Total Net Sales

53%

2

ResearchCenters

Average R&D investment
over past three years

Raw materials usedBEAD
FY2011Net Sales¥49,217 million
Operating Income¥4,685 million

CONTENTS
At a Glance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . iMessage from the President .  .  .  .  . 3

Total Net Sales

39%(polystyrene, styrene monomer,
polypropylene, polyethylene.....)EXTRUSION
FY201150
Yearsof technologicalexcellence

Net Sales¥35,429 million
Operating Income¥3,090 million

Review of Operations  .  .  .  .  .  .  .  .  .  . 4President Q&A  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 6Special Reports
The Door of the Future .  .  .  .  .  . 10
Award Winner  .  .  .  .  .  .  .  .  .  .  .  .  . 11
Further Global Expansion  .  .  .  . 12

Total Net Sales

8%
OTHER
FY2011Net Sales¥7,324 million
Operating Loss
¥121 million

Celebrating 50 Years  .  .  .  .  .  .  .  . 14
Board of Directors  .  .  .  .  .  .  .  .  .  .  .  . 16
Governance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 18
Global Network  .  .  .  .  .  .  .  .  .  .  .  .  .  . 19
Financial Section .  .  .  .  .  .  .  .  .  .  .  .  .  . 20

Copyright 2011, JSP Corporation.
All rights reserved.

“I think our strengths are the30%trust and confidence
our customers have in us
together with our focus on
innovation. We’ve created atruly global network

23

millionAutos produced yearlywith JSP components

Sales outsideof Japan

70%

ARPRO®/P-BLOCK™
hold some 70% shareof the global market

Forward-Looking Statements.
This annual report includes forwardlooking statements related to JSP
Corporation plans, strategies, andbusiness results. These statements
represent judgments of JSP Corporation
based on information available at the time.
As such, these statements are subject torisks and uncertainties. Please understandthat actual performance may differ fromthese forward-looking statements.

to serve customers all over
the world.”

JSP ANNUAL REPORT 2011

Highlights

Messagelightergreenerstrongersmarter

lightergreenerstrongersmarter

Millions of yen

2011

2010

2009

2008

2007

2011(US$)¥91,971¥81,597¥96,534¥99,407¥95,505$1,106,092

Operating Income

7,552

5,685

2,701

5,046

4,114

90,829Ordinary Income

7,874

5,540

2,778

4,735

4,119

94,698

Income before Income Taxes andMinority interest

7,470

5,096

2,605

4,431

4,502

89,842Net Income

4,881

3,209

1,366

2,589

2,357

58,708

Total Assets

89,152

86,19784,316

94,993

95,1781,072,183

Total Net Assets

46,48145,91242,001

48,05745,989559,008

Common Stock

10,128

10,128

10,128

10,113

10,076

121,811

Years ended March 31

board for housing constructionand expandable polystyrene beadproducts for the food market.
Our geographical presence has
expanded to provide global sales
coverage including North & SouthAmerica, Europe, the Middle East,
Africa and Asia, including all the
BRIC countries.

Thousands of
U.S. dollars(Note 1)For the Year:Net Sales

At YEAR-END:

U.S. dollars(Note 1)

Yen

Amounts per Share of Common Stock:

Net Income per Share¥161.25¥103.35¥43.74¥82.74¥75.76$1.94

Cash Dividends

30.00

19.00

14.00

14.00

12.00

0.36

Total Net Assets

1,470.44

1,391.92

1,278.38

1,425.83

1,376.68

17.68

leading the way
JSP continues to be
the Technology Leader

Net Income per Share
¥
200

50

2,000

20,000103.35“It is my mission to further
strengthen the company,

43.74

3,000

82.74

100

2,778

4,000
40,000

150

75.76

4,119

5,000

60,000

5,540

7,000
6,000

building on the foundations

1,000
0

07

08

09

10

11

+12.7%
net sales

2

JSP ANNUAL REPORT 2011

0

07

08

09

10

It is my great honor to succeed tothe position of President from Mr.
Inoue, under whose leadership JSP
has successfully expanded overrecent years.

161.25

7,874

91,971

¥
8,000

4,735

80,000Ordinary Income
81,597

96,534¥
100,000

95,505Net Sales

99,407

Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥83.15=U.S.$1.
2. Net income per share is computed based on the weighted average number of shares of common stock outstanding during each year.
3. Beginning FY2011, figures are rounded to the nearest million yen.

11

+42.1%
ordinary income0

put in place by all involved
07

08

09

10

11

+56.0 %

over the last 50 years.”

net income per share
JSP ANNUAL REPORT 2011

January 2012 will mark the 50th
anniversary of JSP. Since startingwith polystyrene paper in 1962,
JSP has been a world leader
in bringing non-cross linked
expanded polyethylene sheets,
expanded polypropylene beads
and other proprietary products
to a global market. Our productline has further extended toincludeextrudedpolystyrene

Our products have brought benefit
and value to many aspects of ourdaily lives. Our constant focus
is on the safety of our products,
reduction of energy consumption
andwastedmaterials,
andoverall continual reduction inenvironmental impact. As weevolve to meet the needs of thetimes, the demand for JSP products
will continue to grow globally.
The past 50 years’ experiencehas demonstrated that we canutilize our technological strengths
and client focus to compete inany market and in any businessenvironment. It is my mission tofurther strengthen the company,
building on the foundations put
in place by all involved over thelast 50 years. I would also like toextend my personal appreciation
to our shareholders, customers
and employees for the kind
support you have given to JSP over
the years.

Kozo Tsukamoto
President

JSP ANNUAL REPORT 20113

review

lightergreenerstrongersmarter

higher revenues& profitsMarket Demand andInnovation Drive Higher
Revenues and Profits
In fiscal 2010 which ended March
31 2011, consolidated net sales were¥91,971 million which represents
a 12.7% increase compared withthe previous fiscal year. Operating
income increased 32.8% year on
year to ¥7,552 million, ordinary
income 42.1% to ¥7,874 million
and net income 52.1% to ¥4,881
million. An extraordinary loss of¥401 million was recorded, as aconsequence of the northeasternJapan earthquake and tsunami.

Extrusion Business
Sales in the Extrusion segment
amounted to ¥35,429 million andoperating income was ¥3,090 million.
Sales of MIRAMAT™, expanded
polyethylene sheet used as anindustrial
packagingmaterial,increased. Demand was strong
primarily for value-added productswith permanent antistatic properties
that are used in returnablecontainers for transporting LCD TV
substrates and other applications.
Sales of STYRENE PAPER™,
expanded polystyrene sheet usedin food packaging, were about thesame as the previous fiscal year.
Demand from major customers
remained firm, but the market
circumstances continued to be
extremely severe in respect of prices.
Sales of MIRABOARD™, expanded

polystyrene
sheet
used
in
advertising displays and folding
boxes, rose compared with thesame period last year along with therecovery of our customers’ earnings.
Sales of MIRAFOAM™, extruded
board made of expanded polystyreneusedashousing
insulationmaterials, surged as a result of theJapanese Government subsidies forenvironmentally friendly housing.
There was also an increase in salesof MIRAPLANK™, extruded board
made of expanded polyethylene
used as cushioning materials forcargo in trucks and in returnablecontainersfortransporting
automotive parts, due to the increaseof transportation volume.

Bead Business
Sales in the Bead segment
amounted to ¥49,217 million andoperating income was ¥4,685 million.
ARPRO®/P-BLOCK™,
expanded
polypropylene, is used in automotive

Picture at Left. From Left:
Ken Shiosaka
Director
Senior Executive Officer
EPS Division

Bead Business Division
Koichi Teranishi
Director
Executive Vice President
Senior Executive Officer

Extrusion Business Division
Hiroshi Usui
Director
Senior Executive Officer

Bead Business Division
Yasuo Oikawa
Executive Officer and General Manager

Research and Development
General Manager

New Business Development

4

JSP ANNUAL REPORT 2011

parts such as bumper cores, interior
parts, and seat cores. It is also
used in returnable containers fortransporting IT equipment, as acushioning material for consumer
electronics, and as an impact
protection material for artificial
sports ground surfaces. Sales andearnings for this product bothincreased. Compared with theprevious fiscal year when the global
economydownturn
impacted
demand, there was strong demandthroughout Asia, particularly in
China, and a recovery in demandin North America and Europe for
automotive parts.
For
STYRODIA®,
expandable
polystyrene
beads
used
in
packaging containers for fish andvegetables, cushioning materials
for consumer electronics andconstruction and civil-engineering
materials, sales volume was about
the same as the previous fiscal year.

Other Business

CONSOLIDATEDEARNINGSNet Sales¥91,971million+12.7%

Operating Income¥7,552 million+32.8%

Ordinary Income¥7,874 million+42.1%Net Income¥4,881million+52.1%

Sales in this segment amounted to¥7,324 million with an operating lossof ¥121 million.
The sales volume of FOAMCORE™,a ceiling insulation material for
prefabricatedbathroom
units,
increased primarily for generalpurpose versions of this material
because of an improvement of
production process and the demand
recovery. The sales volume ofSUPER FOAM™, a hybrid molded
product with light weight thermaland sound insulation properties
used in automotive air-conditioning
ducts, also increased. However,these sales volumes have not yet
reached break-even point.

JSP ANNUAL REPORT 2011

5

Q&A

lightergreenerstrongersmarter
Kozo Tsukamoto
President
JSP Corporation
After graduating with a Master’s
Degree from the Osaka Prefecture
University Graduate School ofEngineering in 1975, Mr. Kozo
Tsukamoto joined Mitsubishi Gas
Chemical, rising to the positionof Company President, Aromatic
Chemicals.
Having joined the board of
directors of JSP in 2007, Kozo
Tsukamoto three years later
accepted the position of vicepresident. He was elected Presidentof JSP at the annual shareholders’meeting in June 2011.

Maximizing Our Strengths
Question 1.
How do you evaluate
JSP’s performance forthe year ended March
31, 2011?
For the fiscal year ended March
31, 2011, consolidated net sales
were up year on year by 12.7% to¥91,971 million. Operating income
and ordinary income also rose by
32.8% and 42.1% to ¥7,552 millionand ¥7,874 million, respectively.
Consolidated net income was up
52.1%, coming in at ¥4,881 million.
All of these profits were the highest
so far in our history.
Strong demand in asia and therecovery in the automotive industry

6

JSP ANNUAL REPORT 2011

in the US and Europe accelerated
our return to target margin levels. In
Japan, the government’s incentive
programs for cars, home appliancesandhousing
construction
contributed to our business widely.

Question 2.
What is your forecast
for the next fiscal year
ending March of 2012?
The March 11 earthquake andtsunami in Japan will affect global
economic activity going forward
for a certain amount of time andhas left a number of unansweredquestions. No one is certain of thereal recovery, but we can safely
assume things will get better.
At this moment, we forecast thenext fiscal year to deliver slightly
higher revenues, but lower profits,compared with the last fiscal year.
We expect strong growth in China
and that other economies willcompensate for the above negative
impact in Japan. We also forecast
stable demand in America andEurope. We believe our acquisitionin Brazil will contribute to earnings
growth. In addition to demand
growth, the revenue of the next
fiscal year will also slightly increase
as a result of necessary price rises.
In most geographic areas we expect
profit to increase in-line withincreased sales volume. However,in Japan, the profit will decrease
with decreased sale volume since
the disaster negatively affected thedemand.
Given these factors, we forecast
consolidated sales to outperformthe prior year by a slight margin,
with operating income and ordinary
income slightly lower:
Of course, these forecasts are ourbest effort based on the information
we have at this time. So forecasts
may change due to future events or
new information.

Rear seat assembly

PROJECTEDCONSOLIDATEDEARNINGSNet Sales¥93,000million
101%

Kanuma Research Center

Operating Income¥6,300million
83%

Ordinary Income¥6,400million
81%

Net Income¥4,100million
84%

Question 3.
How much have youinvested in R&D overthe last several years?
Will the investment
level change going
forward?
Over the last three years, we haveinvested about 2% of Net Saleson average in R&D. We plan onincreasing this figure somewhat
over the next several years tofocus on enabling a “Zero-Waste”
approach and deliver energy-saving
products and facilities.

JSP ANNUAL REPORT 2011

7

Q&A

lightergreenerstrongersmarter

MAXIMIZING OUR STRENGTHSQuestion 4.
How did the March 11
earthquake andtsunami affect yourbusiness? How long
will it take to recover?
First of all, we need to explain thedamage of production facilities
in Japan. In our Kashima Plant
for
expandable
polystyrene,
subsidence was the main problem
which led to some damage toequipment and pipes. After
remedial work, we were able torestart production on April 27. In
our Kanuma Plants, some facilities
were slightly damaged, but there
was no impact on our operations.
We recorded extraordinary losses
of about ¥401 million, most ofwhich was to repair damage at the
Kashima Plant.
Secondly, some of our Japanesecustomers also sufferred damage

ARPRO®/P-BLOCK™
hold some
70% shareof the global
market.

870%

JSP ANNUAL REPORT 2011

to their facilities and somecustomers stopped or decreased
their production due to parts
supply shortages. Our own supply
system recovered quickly from thedisaster, but we expect it requires
some time before our customers
recover to the pre-disaster levels
though they are moving gradually
towards recovery.

Question 5.
What do you see
as JSP’s strengths?
How do you plan tocapitalize on them?
I think our strengths are the trustand confidence our customers havein us together with our focus on
innovation. We’ve created a truly
global network to serve customers
all over the world. We have wellestablished locations in North

JSP products are used in auto bumper cores, door
panels, seats, air conditioner ducts, and more. Seearpro.com to learn more.

and South America, Europe andthroughout Asia for production andsales of ARPRO®/P-BLOCK™. We
are now well advanced in buiding
strong foundations in the fast
growing BRIC regions.

Question 6.
What do you see as
your weaknesses as
a company? How are
you overcoming them?
The rising cost of crude oil serves
to drive up material, utility andfreight costs. We’re forced to adjust
our price quotes to our customers
even as we’re in the middle ofnegotiations. Once prices have been
settled, we have to bear the costof any price increases during thecontract period, which of course
has a negative effect on our profits.
Some products have a long leadtime before price renegotiations,which again leaves us vulnerable tocost increases.
One way we deal with thisuncertainty is to share information
with our customers so they
understand our position. They
therefore aren’t surprised when
we’re forced to change our prices.
The most important thing tominimize the impact of oil priceincreases is to increase various
value-added products (anti-static
properties,
water-permeability,
sound-insulation, etc.) We arealso developing products andproduction methods with low
energy consumption to cope withincreasing utility prices. Of course,
we are always looking for more
efficiencies in our logistics andoperations.

Question 7.
Of the countries JSP
has gone into over thelast few years, which
do you see as having
the most potential toimpact your businessin the coming two or
three years?
We started the operation of
ARPRO®/P-BLOCK™ in China in
2003. Most recently, we opened asales office in Moscow, Russia andare to build a factory in Chennai,
India in the near future. In addition,
we had the acquisition in Brazil toserve the market in South America.
These countries represent growing
economies with large populations,andthus
terrificbusiness
opportunities.

“We deliver value through;quality, Service andinnovation.”

If I had to say, I think China offers
the most promising opportunities
in the short term. We are going to
expand the production capacityof the Dongguan Plant to keep up
with the increasing demand forautomotive parts and packaging
materials in southern China tocome up to a 14,000 tonne annual
production capacity in China. Our
next target is to build a new plantin northern China such as Tianjin
and Dalian where demand is also
increasing.
South America has also promising
opportunities for automotive partsand other industries. We expect
to grow the automotive market
in Brazil which is predicted to be
the world’s third-largest market
in the near future. We have been
producing automotive parts at highoperation rates and need to expand
production capacilty in the very
near future.

JSP ANNUAL REPORT 20119

special reportlightergreenerstrongersmarter

Winner of Kinoshita Award
Antistatic Features
further Enhance
JSP’s Market-Leading
ARPRO®/P-BLOCK™
ARPRO®/P-BLOCK™
isan
industry leading product used in;automotive parts such as energyabsorbing bumper cores, seat coreand other interior parts, bicycle
helmets,
furniture,
packagingmaterials. As a matter of fact, JSP
components are used in more thanhalf of all cars annually producedin the world.

the Door of the Future
Expanded Biomass
Materials showpromise for lighter,greener and smarter
solutions.

PLA (polylactic acid) foam wasselected as the core material
for the new door. JSP has
trademarked its PLA foamcomposition under the name
LACTIF®.

10

JSP ANNUAL REPORT 2011

An innovative door panel withup to 80% biomass content
was unveiled in 2010 at EVEX(Electric Vehicle Development
Technology
Exhibition)inYokohama, Japan. The car door
panel is produced using expanded
biomass materials encased in
FRP (fiber-reinforced plastic) andgenerated a great deal of interest.
PLA, (polylactic acid) foam, arenewablematerial
derivedfrom certain plants, was selected
as the core material. The door
panel solution brings 25% weight
reduction (as much as 30kg/car)and through weight reduction
cuts fuel consumption.

The core material, PLA, hasadhesion properties and is notdissolved when in contact with the
FRP. Conventional materials were
not functional when combinedwith FRP. In addition, the PLA
foam provides superior heat
resistance; a vital attribute during
the car painting process.

We earned the Kinoshita Award
as superior packaging technology
in 2010. This product is a special
grade which reduces dust and dirt
attracted by static electricity on
packaging materials, whilst offeringsuperior shock absorption and heatinsulation property. The durabilityof antistatic property allows reuse, helping customers make theirown contribution to environmental
impact reduction.

Noteworthy features are:
• The antistatic performance isretained
in
low
humid
environment.
• It is retained even after washing.
• Antistatic agents do not transfer
to customers’ products during
tranportation.
The most popular application isfor reusable shipping containers
for LCD TV screens and car
navigation equipment. We expect
this product to be used for manyother precision applications in thenear future.

Strict EU and US regulations
require car makers to be fuelefficient and minimize emissions.
This possible solution can bring:lowinvestment,
rapid
tool
production, cost efficient parts,
as well as contributing reduced
weight and enhanced insulation.

About the Kinoshita
Award

While this application is still inthe development phase, the door
panel made of PLA foam and FRP
has benefited from widespread
media coverage and generated
significant OEM interest.

Award with long history more

Established as a way torecognize notable advancementsin the packaging industry,
the well-respected Kinoshita
than 30 years is given yearly
for the best contributions
to industry.

JSP ANNUAL REPORT 201111

special reportlightergreenerstrongersmarter

considerable capabilities of thecompany’s global network oftechnical centers more accessible
to customers in Russia andthe CIS.

INDIA/New
manufacturing site
Production of ARPRO®/P-BLOCK™
will commence at Chennai, India
in the near future. In recent
years, many major automotive
manufacturers and parts makers
moved into the Indian market
and it is expected the demand forautomotive-related products willcontinue to increase in the area.

BRAZIL/Major force inSouth America
As a result of a recent acquisition,
we are now a major force in SouthAmerica. From its new base in
Sao Paulo, we are manufacturing
ARPRO®/P-BLOCK™ to supply
the expanding automotive industry
and other sectors across SouthAmerica. Further investment incapacity has been determinedahead of increased automotive
demand. Brazil alone produces
over 3 million vehicles per
year and the global automotive
industry has been present forover 50 years. Starting in 1950s
with Toyota and Volkswagen andfollowed by Chevrolet, Ford,
Mercedes and Fiat in the 60s, theremaining global brands entered
Brazil in the mid-90s. The global
automotive industry is underincreasing pressure to produce
cars with reduced CO2 emissions.
Utilizing
ARPRO®/P-BLOCK™
inautomotive
components,
particularly in bumpers, seatbacks, and seat cores reduce a
car’s weight in a cost effective andenvironmentally friendly way.

Dongguan, China

Further Global Expansion
In the last financial year, JSP expanded its
ARPRO®/P-BLOCK™ business globally including
in: Brazil, Russia, India, and China (BRIC).
ARPRO®/P-BLOCK™ is used in energy absorbing
automotive parts; including; bumper cores, interior
components, and seat cores as well as packaging
materials for IT products and electrical appliances.
Our aim is to leverage our global operations to driveand capture demand growth in all regions.
CHINA/Increase inproduction capacity

Campinas, Brazil

12

JSP ANNUAL REPORT 2011

In China, we currently have two
production sites manufacturing
ARPRO®/P-BLOCK™ for automotive
and packaging applications. In
order to meet increasing demand insouthern China, we have increased
capacity to 14 kt/a at our Dongguan

Plant in Guangdong, China. The
increased capacity will be on-line by
March 2012.

RUSSIA/New customer
support office
A
new
ARPRO®/P-BLOCK™
customer support office wasestablished in Moscow, Russia
in April 2010, which made the

JSP ANNUAL REPORT 201113

special reportlightergreenerstrongersmarter

CELEBRATING
50 YEARSOF INNOVATION

Making greater contributions to society as a worldwide supplier
JSP moves forward, in step with the world
The JSP 50th anniversary logo represents a half-century of gratitude and looking forward
to the next generation. It communicates our mission to contribute to society throughcreative action based on our foundation of unique foaming technologies as a worldwide
supplier. It tells all that we will continue to move forward, in step with the world.
The elements forming our commemorative logo are the earth and the hexagon, bringing
JSP foaming technologies to mind. The colors represent the JSP corporate colors, aswell as blue and green earth tones. Explained in terms of deeper meanings, the colors
represent harmony, creation, freedom, metamorphosis, integrity, charity, and so forth.

January 2012 will mark the 50th anniversaryof JSP. Through its half-century in business,
JSP has established a position as a global leader
in foamed plastics.

Bee hives, snow crystals, graphite, chemical compounds, the planet Saturn, thefullerene, turtle shells...there is a near infinite number of instances of hexagonal shapes
occurring in nature, and the honeycomb structure of connected hexagons is said torepresent the universal ultimate in terms of bond and stability.

1962

1967

1978

1980

JSP was initially established to
produce and sell synthetic paper
which was expected to replace
conventional paper produced fromwood pulp. The main application,
however, became food trays; thanks
to the waterproof and cushioning
properties of the product.

In 1967 JSP entered a new stageof growth by developing andintroducing
MIRAMAT®. This
innovative
andcost-effective
product has been widely accepted
as an industrial packaging material.
With the growing demand of homeelectronic appliances, the salesof MIRAMAT® as a cushioning
material for transportation ofelectronic
appliances
rapidly
increased.
Thus,
MIRAMAT®
became our second leading product.

In
1978
MIRAFOAM™
wasdeveloped, based on the extruded
technology of synthetic paper.
This product is used as insulationmaterial for the constructionindustry. This product has grown tobecome one of our core products.

JSP entered the next step of growthin the 1980s and early 1990s.

Foundation

Product development

Third business field

Rapid Growth

In 1982 ARPRO®/P-BLOCK™ was
successfully brought to market, andhas made a massive contribution to
the profitability and globalization of
JSP.

1990

2011

JSP was listed on the Tokyo Stock
Exchange in 1990.

JSP
continues
toinnovateanddevelopboth
through
improvements to existing products
and technologies as well as throughactive R&D in pursuit of entirely
new products.

Stock Exchange
Listing

Accelerating Global
Expansion

JSP now serves global markets
and has a presence in the mainindustrial centers of the World.

2003

Mergerand Acquisition
In 2003 JSP merged with Mitsubishi
Chemical Foam Plastic which
was the leading manufacturer of
expandable polystyrene in Japan.
Furthermore, JSP acquired the
expandable polystyrene businessfrom Hitachi Chemical in 2008.

14

JSP ANNUAL REPORT 2011

JSP ANNUAL REPORT 201115

governancelightergreenerstrongersmarter

Hitoshi Yamamoto

Hiroshi Usui

Ken Shiosaka

Rokuro Inoue

Director

Representative Director

Executive Officer
General Manager ofFinance & Accounting Division

Senior Executive Officer
Bead Business Division

Senior Executive Officer
EPS Division
Bead Business Division

Chairman

Katsuhiro Matsumoto

Yukio Sakai

Director

Director

Kozo Tsukamoto

Representative Director
President

Koichi Teranishi
Director

Executive Vice President
Senior Executive Officer
Extrusion Business Division

Hideo Ono

Yoshinari Saito

Executive Officer
Construction and Civil
Engineering Materials Division
Extrusion Business Division

Executive Officer
General Manager
General & Personnel Affairs Division

Director

Director[Not Pictured]

Ken Toyoguchi
Corporate Auditor

16

Masashi Hashimoto

Corporate Auditor (external)

JSP ANNUAL REPORT 2011

Corporate Auditor

Corporate Auditor (external)

JSP ANNUAL REPORT 201117

governance

Global Network

lightergreenerstrongersmarter

Rokuro Inoue
Representative Director
Chairman

JSP is committed to protect
the rights and interests ofshareholders

andshareholders

be

that

all

treatedequally. In addition, we arefocusedonrespecting

therights and interests of allconcerned parties and building
relationships

thatenhance

corporate value. Compliancewith all applicable laws is
the minimum condition for
JSP; we aspire to do more.

EuropeFranceGermany
Czech Republic

It is our aim that we exhibittransparency throughout ourAsia

activities, not least through

China (Wuxi)
China (Kunshan)
China (Dongguan)
Korea
TaiwanSingaporetimely and accurate disclosureof information. Our board of
directors, auditors, and indeed
all employees are passionate
about upholding our aims andNorth America

meeting all responsibilities.

USA (Detroit)
USA (Butler)
USA (Tullahoma)
Mexico (Toluca)

Japan
Tokyo Head Office
Hokkaido
KanumaKashima
Yokkaichi
KansaiKyushuSouth America
Brazil18

JSP ANNUAL REPORT 2011

JSP ANNUAL REPORT 2011

19

FINANCIALS
Results of Operations

Financial Position

For the fiscal year ended March 31, 2011

increase. Meanwhile, ordinary income rose

As of March 31, 2011, total assets amounted¥3,413 million in current liabilities, offset by(FY2010), JSP Corporation and its consolidated

42.1% year-on-year, reaching ¥7,874 million.

to ¥89,152 million, a ¥2,954 million increasea decrease of ¥1,028 million in noncurrent

subsidiaries (“the Company”) recorded

These gains reflected the Company's efforts

compared to the end of the prior consolidated

liabilities.

net sales of ¥91,971 million, representing

at cost-cutting, as well as the aforementioned

fiscal year. This increase was primarily due

As a result, total net assets at the end of thea 12.7% year-on-year increase. This increase in

re o r g a n i z a t i o n , w h i c h c re a t e d g re a t e r

to an increase in current assets of ¥4,103

fiscal year amounted to ¥46,481 million, with

net sales is primarily due to increased exports

operating efficiencies.

million, offset by a ¥1,149 million decrease ina shareholders’ equity ratio of 49.2%.

to emerging economic regions, government

Despite ¥401 million in extraordinary losses

fixed assets.

economic incentives, and a reorganization

recorded due to the March 11 earthquake andTotal liabilities amounted to ¥42,670 million,

along business lines that helped the Company

tsunami in northeastern Japan, JSP Corporation

which was a ¥2,384 million increase compareddevelop, manufacture and sell higher-value

was able to record consolidated net income ofto the end of the prior consolidated fiscal year.

foamed plastics products to its customers.

¥4,881 million, representing a 52.1% gain

Most of this increase was due to increases ofConsolidated operating income amounted

compared to the prior fiscal year.

to ¥7,552 million, a 32.8% year-on-year

Sales Breakdown by Business
Segment

Operating Income

Net Income(Millions of yen)

(Millions of yen)

Total Assets/Total Net Assets

Shareholder’s Equity Ratio

Return on Equity(Millions of yen)

(%)

(%)

10,00060

12Bead Business

53.5%

Other Business

8.0%

2,000

2,000

1,000

1,000

20

JSP ANNUAL REPORT 2011

07

08

09

10

11

0

07

08

09

2,000

10

11

11.2

49.2

50.1

8

30

6

20

4

10

2

7.7

47.1

47.0

45.2

86,197

89,152

07

08

09

10

11

0

07

08

09

10

11

0

07

08

3.2

46,481

48,05745,989

4,881
3,209

4,000

0

0

40

5.9

38.5%

10

5.7

Extrusion Business

3,000

1,366

2,701

3,000

50

6,000

45,912

5,685

4,000

4,000

2,589

million

5,000

2,357

5,000

6,000

4,114

91,971

5,046

6,000

Total Sales

8,000

84.3167,000

42,001

7,000

94,993

7,552

2011

95,178(Millions of yen)

09

10

11

Total Assets
Total Net Assets

JSP ANNUAL REPORT 2011

21

FINANCIALSJSP Corporation and Consolidated Subsidiaries

Cash FlowsREPORT OF INDEPENDENT ACCOUNTANTS
Consolidated cash and cash equivalents as ofof ¥1,081 million compared to the prior fiscal

March 31, 2011 amounted to ¥10,487 million.

year. These funds were used primarily toThis represented a ¥1,418 million increase inacquire fixed assets (¥3,368 million), purchasetotal cash and cash equivalents compared tosubsidiary company shares in connection withthe end of the prior consolidated fiscal year.

a change in the scope of consolidation (¥1,681

Net cash from operating activities amounted tomillion), and a net outlay of cash for time

We have audited the accompanying

significant estimates made by management,¥7,840 million, a ¥3,443 million year-on-year

deposits (¥409 million).

consolidated balance sheets of JSP Corporation

as well as evaluating the overall consolidated

decrease. This decrease was primarily due to

Net cash used in financing activities amounted

and its subsidiaries as of March 31, 2011financial statement presentation. We believe¥7,470 million in net income before taxes andto ¥475 million, a decrease of ¥4,222 million

and 2010, and the related consolidated

that our audits provide a reasonable basis foradjustments and a ¥1,157 million increase

compared to the prior fiscal year. These funds

statements of income, shareholders’ equity,

our opinion.

in accounts payable, trade. These increases

were used primarily to repay long-term loans

and cash flows for the years then ended. These

were offset by income tax payments of ¥3,097(¥4,689 million) and to acquire shares of treasury

consolidated financial statements are themillion and an increase of ¥2,186 million instock (¥1,159 million). These outlays were offset

responsibility of the Company’s management.

accounts receivable, trade.

by cash inflow of ¥3,800 million in new long-

Our responsibility is to express an opinion on

Net cash used in investing activities amounted

term loans.

these consolidated financial statements based

to ¥5,197 million, representing an increase

8,000

Net Income/Depreciation and Amortization/
Operating Cash Flows

Operating Cash Flows to Net
Sales Ratio(Millions of yen)(%)

12,00015

10,000-2,000

07

08

09

10

11

0

7,840

07

08

of their operations and their cash flows forauditing standards generally accepted inaccounting principles generally acceptedJapan. Those standards require that we planin Japan.

and perform the audit to obtain reasonable

Tokyo, Japan
June 22, 2011

7.6

assessing the accounting principles used andToho Audit Corporation

5.7

6

financial statements. An audit also includes

6.3

4,881
4,582

4,688

5,069

09

March 31, 2011 and 2010, and the results

amounts and disclosures in the consolidated
8.5

6,129

7,512

3,209

2,000

2,357

-1,000-1,546

0

-365

1,000

4,000

of JSP Corporation and its subsidiaries as ofon a test basis, evidence supporting the

9

As the above is an English translation from the original auditor’s report (Yukashoken
3

Hokokusho) filed with the Financial Services Agency for public disclosure pursuant to the
Financial Instruments and Exchange Law, the Toho Audit Corporation’s signature has been

1,366

2,000

6,000

2,589

1,148

3,000

4,566

2,643

4,000

5,442

8,000

in all material respects, the financial position

misstatement. An audit includes examining,

12

4,950

5,000

statements referred to above present fairly,

the years then ended in conformity withfinancial statements are free of material

7,000
6,000

In our opinion, the consolidated financial

We conducted our audits in accordance withassurance about whether the consolidated
13.8

7,167

(Millions of yen)on our audits.

11,283

Free Cash Flows

To the Board of Directors of JSP Corporation

10

11

0

07

08

09

10

11

omitted.

Net Income
Depreciation and Amortization
Operating Cash Flows22

JSP ANNUAL REPORT 2011

JSP ANNUAL REPORT 2011

23

FINANCIALSJSP Corporation and Consolidated Subsidiaries
Years Ended March 31

JSP Corporation and Consolidated Subsidiaries
As of March 31

CONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED BALANCE SHEETS
Thousands of
U.S. Dollars

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Rent income
Amortization of negative goodwill
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Equity in losses of affiliates
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Reversal of allowance for doubtful accounts
Other
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on sales of noncurrent assets
Loss on valuation of investment securities
Loss on sales of investment securities
Loss on liquidation of subsidiaries and affiliates
Impairment loss
Loss on valuation of inventories
Loss on disaster
Loss on support to subsidiaries and affiliates
Other
Total extraordinary loss
Income before income taxes
Income taxes-current
Income taxes for prior periods
Refund of income taxes for prior periods
Income taxes-deferred
Total income taxes
Income before minority interest
Minority interests in income
Net income
24

JSP ANNUAL REPORT 2011

2011

2010

2011

¥ 91,971
64,32027,651¥ 81,597
56,87524,721$ 1,106,092
773,547
332,545

6,498
13,60020,098
7,552

6,030
13,00519,036
5,685

78,155
163,561
241,716
90,829

166
85
61
120
327
762

173
30
60
120
308
694

2,007
1,023
743
1,450
3,941
9,166

236
95
11
97
440
7,874

308
72
289
168
839
5,540

2,846
1,143
138
1,169
5,297
94,698

6
257
30
74
369

2
0
16
13
32

73
3,095
372
900
4,442

104
118
7
401
100
41
773
7,470
2,296
(21)
(63)
2,211
5,258
376
¥ 4,881

147
2
2
6
171
92
53
476
5,096
1,835
6
(271)
1,571
316
¥ 3,209

1,257
1,428
85
4,829
1,202
494
9,297
89,842
27,619(259)(757)
26,601
63,241
4,532
58,708$

Thousands of
U.S. Dollars

Millions of yen

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

2011

2010

2011

¥ 13,474
26,709
0
4,862
598
2,868
710
1,056
1,025
(214)
51,091¥ 11,882
24,930
39
4,633
532
2,671
480
1,093
972
(250)
46,98727,650(16,161)
11,48953,608(44,343)
9,265
11,995
93
(54)
38
771
8,000
(7,368)632
34,194986

27,636(15,720)
11,91553,983(43,904)
10,07911,613
104
(38)
65
654
8,205
(7,539)666
34,995936

332,540(194,359)
138,181644,725(533,291)
111,434
144,261
1,123
(655)
468
9,281
96,217(88,612)
7,605
411,233
11,862

1,673
27
253
965
(40)
2,880
38,060¥ 89,152

1,906
28
195
1,190
(44)
3,277
39,210¥ 86,197

20,130336
3,052
11,606(488)
34,637457,732$ 1,072,183$

162,050
321,222
1
58,481
7,199
34,5008,543
12,701
12,334(2,585)
614,450

The accompanying notes are an integral part of these statements.

JSP ANNUAL REPORT 2011

25

FINANCIALSJSP Corporation and Consolidated Subsidiaries
Years Ended March 31

CONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
Thousands of
U.S. Dollars

Millions of yen

Liabilities

Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Accounts payable-other
Income taxes payable
Accrued consumption taxes
Deferred tax liabilities
Provision for bonuses
Provision for loss on disaster
Notes payable-facilities
Accounts payable-facilities
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for retirement benefits
Provision for directors' retirement benefits
Provision for corporate officers retirement benefits
Negative goodwill
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets

26

JSP ANNUAL REPORT 2011

2011

2010

¥ 10,210
9,200
4,533
34
2,541
967
306
6
1,326
340
59
637
1,743
31,908¥ 9,278
6,386
4,569
162
37
2,324
1,660
381
4
1,109
154
388
2,037
28,495

2011

9,307
41
355
508
130
12
241
164
10,761
42,670

10,113
79
505
409
126
33
361
159
11,78940,285111,938
495
4,275
6,113
1,571
152
2,901
1,976
129,425
513,175

10,12813,40528,475(1,371)
50,638

10,12813,40524,413(211)
47,736

121,811161,220
342,460(16,495)
608,996

11(6,805)(6,794)
2,638
46,481¥ 89,152

167(4,682)(4,515)
2,691
45,912¥ 86,197

136(81,851)(81,715)
31,727559,008$ 1,072,183$

122,796
110,649
54,523416
30,569
11,6303,689
84
15,954
4,090
709
7,668
20,967383,750

Thousands of
U.S. Dollars

Millions of yen

Shareholders' equity
Capital stock
Balance, Beginning of Period
Changes of items during the period
Total changes of items during the period
Balance, End of Period
Capital surplus
Balance, Beginning of Period
Changes of items during the period
Total changes of items during the period
Balance, End of Period
Retained earnings
Balance, Beginning of Period
Changes of items during the period
Dividends from surplus
Net income
Change of scope of consolidation
Total changes of items during the period
Balance, End of Period
Treasury stock
Balance, Beginning of Period
Changes of items during the period
Purchase of treasury stock
Total changes of items during the period
Balance, End of Period
Total shareholders' equity
Balance, Beginning of Period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Change of scope of consolidation
Total changes of items during the period
Balance, End of Period

2011

2010

2011

¥ 10,128¥ 10,128$ 121,811

10,128

10,128

121,811

13,405

13,405

161,220

13,405

13,405

161,220

24,413

21,548

293,612

(819)
4,881
4,061
28,475

(434)
3,209
91
2,865
24,413(9,860)58,70848,848342,460

(211)

(210)

(2,548)(1,159)(1,159)(1,371)

(1)
(1)
(211)

(13,947)(13,947)(16,495)

47,73644,871

574,096

(819)
4,881
(1,159)2,901¥ 50,638

(434)
3,209
(1)
91
2,864
¥ 47,736(9,860)58,708(13,947)
34,900$ 608,996

The accompanying notes are an integral part of these statements.

JSP ANNUAL REPORT 201127

FINANCIALSJSP Corporation and Consolidated Subsidiaries
Years Ended March 31

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSCONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands of
U.S. Dollars

Millions of yen

2011

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance, Beginning of Period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance, End of Period
Foreign currency translation adjustment
Balance, Beginning of Period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance, End of Period
Total valuation and translation adjustments
Balance, Beginning of Period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance, End of Period
Minority interests
Balance, Beginning of Period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance, End of Period
Net assets
Balance, Beginning of Period
Changes of items during the period
Dividends from surplus
Net income
Purchase of treasury stock
Change of scope of consolidation
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance, End of Period

¥

167

2011

2010

¥

131

$

2,010

(155)
(155)
11

36
36
167

(1,874)(1,874)136(4,682)(5,305)(56,310)(2,123)(2,123)(6,805)623
623(4,682)(25,541)(25,541)(81,851)(4,515)(5,174)(54,299)(2,279)(2,279)(6,794)659
659(4,515)(27,416)(27,416)(81,715)

2,691

2,304

32,364

(52)
(52)
2,638

386
386
2,691

(637)
(637)
31,72745,91242,001

552,160

(819)
4,881
(1,159)(2,332)569¥ 46,481

(434)
3,209
(1)
91
1,046
3,910
¥ 45,912(9,860)58,708(13,947)(28,053)6,847$ 559,008

Thousands of
U.S. Dollars

Millions of yen

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of negative goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Increase (decrease) in provision for directors' retirement benefits
Loss (gain) on sales and retirement of noncurrent assets
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Interest and dividends income
Interest expenses
Foreign exchange losses (gains)
Equity in (earnings) losses of affiliates
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in inventories
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of noncurrent assets
Proceeds from sales of noncurrent assets
Payments for retirement of noncurrent assets
Purchase of investment securities
Proceeds from sales of investment securities
Net decrease (increase) in time deposits
Purchase of stocks of subsidiaries and affiliates
Purchase of investments in subsidiaries resulting in change in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

2011

2010

2011

¥ 7,470
4,582
(120)
(22)
217
103
(16)
217
(250)
(252)
236
(70)
11
(2,186)
1,157
(659)
(140)
697
10,976202(241)(3,097)7,840¥ 5,096
4,688
171
(120)
87
367
2
(21)
146
(0)
2
(204)
308
(37)
289
(1,402)
197
1,280
284
786
11,926
214
(310)
(546)
11,283$ 89,842
55,113(1,450)
(265)
2,618
1,249
(196)
2,612
(3,010)(3,030)
2,846
(852)
138
(26,292)
13,922(7,931)(1,693)8,388
132,007
2,439(2,906)(37,248)
94,292(3,368)
47
(19)
(9)
395
(409)
(300)
(1,681)148(5,197)(3,203)
12
(25)
(240)
0
(256)
(403)
(4,115)(40,509)
571
(236)
(114)
4,751
(4,928)(3,607)(20,222)
1,790(62,507)

2,713
3,800
(4,689)(162)(1,159)
(819)
(122)
(35)
(475)
(748)
1,418
9,069
¥ 10,487(2,810)3,700(4,860)
(222)
(1)
(434)
(30)
(39)
(4,698)
44
2,514
6,555
9,069

32,62945,700(56,398)(1,948)(13,947)(9,860)(1,470)(426)(5,721)(9,004)
17,059109,070$ 126,130

The accompanying notes are an integral part of these statements.

28

JSP ANNUAL REPORT 2011

JSP ANNUAL REPORT 2011

29

FINANCIALSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Leased Assets

straight-line method based on a certain number of years

Assets subject to financing lease transactions entered into by(generally 14 years) representing the average remaining years ofdomestic consolidated companies in which asset ownership is

employment.

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

not transferred to the lessee are depreciated according to theForeign consolidated companies record reserves for employee

straight-line method. The lease term is considered to be theretirement benefits according to International Financial

The accompanying consolidated financial statements have been

consolidation. Investments in affiliates more than 15% owned

useful life of the asset; residual value is assumed to be zero.

Reporting Standards or U.S. GAAP.

prepared from the financial statements filed with the Ministry of

are accounted for under the equity method of accounting.

Domestic consolidated companies will continue to account for

Provision for Directors' Retirement Benefits

Finance as required by the Securities and Exchange Law of

In addition, the accompanying notes include certain

financing lease transactions in which the asset ownership does

The Company and certain of its domestic consolidated

Japan, in accordance with accounting principles and practices

information which is not required under generally accepted

not transfer to the lessee entered into prior to March 31, 2008 in

subsidiaries reserve an amount for director retirement benefits

generally accepted in Japan. The accompanying consolidated

accounting principles and practices in Japan, but is presented

conformity with methods related to normal lease transactions.

based on corporate bylaws. The amount reserved is equivalentfinancial statements include the accounts of JSP Corporationh e re i n a s a d d i t i o n a l i n f o r m a t i o n . T h e a c c o m p a n y i n g

Assets subject to financing lease transactions entered into by

to the amount payable as of the end of the current consolidated(the “Company”), and its domestic and foreign subsidiaries

consolidated financial statements have also been presented inforeign consolidated companies are depreciated according tofiscal year.

which are more than 50% owned. Significant intercompany

U.S. dollars by translating all yen amounts for the year ended

International Financial Reporting Standards or U.S. GAAP.

Provision for Corporate Officers Retirement Benefitsbalances and transactions have been eliminated in

March 31, 2011 using an exchange rate of ¥83.15 to U.S. $ 1.

(d) Significant Allowances and Provisions

The Company reserves an amount for executive officer

Allowance for Doubtful Accounts

retirement benefits based on corporate bylaws. The amount

Domestic consolidated companies reserve against losses due

reserved is equivalent to the amount payable as of the end of

to uncollectible debt using actual loan loss ratios for general

the current consolidated fiscal year.

receivables. For loans questionable as to collectability and under(e) Foreign Currency Translation

claim of bankruptcy, domestic consolidated companies reserve

Domestic consolidated companies translate rights andagainst uncollectible amounts according to the likelihood of

obligations denominated in foreign currency into Japanese yencollectability in each case.

according to the spot rate as of the last day of the consolidated

Foreign consolidated companies reserve against losses due tofiscal period. Translation differences are recorded as income or

uncollectible debt according to management’s consideration of

expense. Assets and liabilities of foreign consolidated companies

individual accounts.

are translated into Japanese yen according to the spot rate as

Provision for Bonusesof the last day of the fiscal period of the subsidiary in question.

The Company and its domestic consolidated companies reserve

Income and expense accounts are translated into Japanese yen

an estimated amount of future payments for employee bonuses

according to average rate during the period, and translation

based on a calculation of the exact amount to be payable for thedifferences are included in the foreign currency translation

current consolidated fiscal year.

adjustment and minority interests of the net assets section ofProvision for Loss on Disasterthe consolidated balance sheet.

The Company and certain of its domestic consolidated companies(f) Major Hedge Accounts

has recorded an estimated amount of expected costs likely

Hedge Accounting

to be incurred during the next fiscal year in removing and/or

Accounting for hedges using the deferred treatment. However,restoration expenses for assets damaged in the northeasternspecial treatment is applied for interest rate swaps meeting

Japan Earthquake of March 11, 2011.

certain special conditions.

Provision for Employees‘ Retirement Benefits

Hedge Methods and Transactions

Domestic consolidated companies reserve an estimated amount

Hedge Method: Interest rate swap transaction

for employee retirement benefits based on the projected

Hedge Transactions: Interest rates on borrowings

retirement benefit obligation and related pension assets for the

Hedge Policy

current consolidated fiscal year.

Company policy is not to enter into speculative transactions.

Prior service cost is charged to expense as it occurs according to

Derivatives are used to reduce the risk of interest rate

the straight-line method based on a certain number of years

fluctuations on debt, according to Company management rules.

(generally 14 years) representing the average remaining years of

Evaluation of Hedge Effectivenessemployment.

Effectiveness is assessed by confirming whether there is a highAny actuarial differences are charged to the expense accounts

correlation among the rate fluctuation of the hedgedof the following consolidated fiscal year according to thetransaction, cash flows, and the hedge method in question.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES30(a) Investment Securities

according to the former declining balance method under theForeign Consolidated Companies

Corporation Tax Law of Japan. Buildings acquired between April

Marketable securities owned by foreign consolidated companies

1, 1998 and March 31, 2007 are depreciated according to theare accounted for under International Financial Reporting

former straight-line method under the Corporation Tax Law ofStandards or U.S. GAAP.

Japan. Buildings acquired after April 1, 2007 are depreciatedDomestic Consolidated Companies

according to the straight-line method under the Corporation Tax

Other Investment Securities

Law of Japan.

Securities for which market prices are available are stated at fairTangible noncurrent assets (other than buildings) acquired bymarket value of the quoted market price as of the last day ofdomestic consolidated companies prior to March 31, 2007 are

the fiscal year. Valuation differences are directly charged or

depreciated mainly according to the former declining balance

credited to shareholders’ equity; the cost of securities ismethod under the Corporation Tax Law of Japan. Assets acquired

calculated according to the moving average method.

after April 1, 2007 are depreciated mainly according to the

Securities for which market prices are not readily available are

declining balance method.

stated at cost, as determined by the moving average method.

Useful lives and residual values are determined according to(b) Inventories

standards prescribed by the Corporation Tax Law of Japan.

Domestic Consolidated Companies

Tangible noncurrent assets acquired by foreign consolidated

Inventories owned by domestic consolidated companies arecompanies are depreciated according to the straight-line

stated mainly at cost according to the moving average method

method.

(book value written down for inventories with impaired

Intangible Noncurrent Assets (excluding leased assets)

profitability).

Intangible noncurrent assets acquired by domestic consolidated

Foreign Consolidated Companies

companies are amortized according to the straight-line method.

Inventories owned by foreign consolidated companies are statedUseful lives and residual values are determined according to

mainly under first-in first-out accounting based on thestandards prescribed by the Corporation Tax Law of Japan.

lower-of-cost-or-market method.

Software used for internal purposes is amortized according to(c) Depreciation and Amortization

the straight-line method over the useful life for Company

Property, Plant, and Equipment (excluding leased assets)

purposes (five years).

Buildings (excluding attached structures) acquired by domestic

Foreign consolidated companies amortize intangible noncurrent

consolidated companies prior to March 31, 1998 are depreciatedassets according to the straight-line method.

JSP ANNUAL REPORT 2011

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31

FINANCIALS
5. TAX-EFFECT ACCOUNTING(g) Amortization of Goodwill and Negative Goodwill

investments that are highly liquid, easily convertible to cash, areGoodwill is amortized over five years under the straight-line

redeemable within three months of acquisition, and are notmethod during the period in which said goodwill is considered tosubject to material risk of fluctuation in value.

provide benefits. Negative goodwill occurring prior to March 31,(i) Accounting for Consumption Taxes

2011

2010 is amortized over five years under the straight-line method.

Accounting for consumption taxes using the tax-exclusion(h) Scope of Cash included in the Consolidated Statement ofmethod.

Deferred Tax Assets
Provision for Bonuses
Allowance for Doubtful Accounts
Depreciation
Accrued Enterprise Taxes and Accrued Business Office Taxes
Retirement Benefits, etc.
Provision for Directors‘ Retirement Benefits
Provision for Corporate Officers Retirement Benefits
Loss on Valuation of Equity in Affiliates
Loss on Valuation of Investment Securities
Loss on Valuation of Golf Club Memberships
Loss Carryforward
Valuation Differences on Assets Received in Merger
Other
Sub-total
Less: Valuation Allowances
Total Deferred Tax Assets

527
13
42
86
217
50
5
5
49
22
90
7
455
1,574
(95)
1,479

Deferred Tax Liabilities
PPE, Insufficient Accelerated Depreciation
Provision for Tax-Basis Adjustments of Noncurrent Assets
Unrealized Gains (Losses) on Marketable Securities, Net
Valuation Differences on Assets Received in Merger
Other
Total Deferred Tax Liabilities

255
24
29
108
114
532

Cash Flows“Cash” stated in the consolidated cash statement of cash flows
includes cash on hand, demand deposits, and other short-term

3. SECURITIESSecurities as of March 31, 2011
Millions of Yen
Classification

Cost

Book Value

ChangeStocks with Value on Consolidated Balance
Sheet Greater than Acquisition Cost
Stock

224

307

83

Sub-total

224

307

83

Stocks with Value on Consolidated Balance
Sheet Not Exceeding Acquisition Cost
Stock

512

452

(59)

Sub-total

512

452

(59)

Total

737

760

23

(Notes)The market value for unlisted stocks (¥913 million on consolidated balance sheet) is extremely difficult to discern. Accordingly, such is
not included in the table above.

Net Deferred Tax Assets

4. LONG-TERM LOANS PAYABLE
Amounts payable for fiscal years ending March 31.
Millions of Yen

Long-term loans payable

32

JSP ANNUAL REPORT 2011

2011

2012

2013

2014

2015

After
2015

4,533

3,410

3,207

1,477

704

506

Reconciliation of Differences between Statutory Tax Rate andEffective Income Tax Rate
Normal Effective Statutory Tax Rate
(Adjustments)
Entertainment and Other Non-Deductible Expenses
Dividend and Other Non-Taxable Income
Per-Capita Taxation
Deduction for Foreign Taxes
Special Deduction for R&D
Loss in Equity in Affiliates
Difference in Tax Rate on Income of Consolidated Subsidiaries
Less: Valuation Allowances
Other
Actual Effective Tax Rate

Millions of Yen

947

40.7%
1.5%
(0.5%)
0.4%(0.7%)(1.3%)
0.1%(9.1%)(0.4%)(1.1%)
29.6%

JSP ANNUAL REPORT 2011

33

FINANCIALS
6. EMPLOYEE RETIREMENT BENEFITS

7. SEGMENT INFORMATION

Current Consolidated Fiscal Year

1. Overview of Retirement Plan

Domestic consolidated companies have adopted a defined

Certain foreign consolidated companies have adopted abenefit plan for employees. At the time of retirement, employees

defined contribution plan for employee retirement benefits.

may be given severance pay in some circumstances.

1. Reporting Segments

2. Calculation of Net Sales, Profit or Loss, Assets and Other

Reporting segments are those segments comprising the Company

Items for Reporting Segments

group for which separate financial information can be obtained.

JSP follows the provisions of “Summary of Significant Accounting

The Company board of directors periodically reviews these

Policies” in accounting for reporting business segments.

segments to determine the allocation of Company resources andInter-segment sales are based on transaction prices with third

to assess performance.

parties.

The Company has adopted a business division structure. Each
2. Defined Benefit Plan (as of March 31, 2011)

business division is responsible for comprehensive strategy
Millions of Yen

a. Projected Benefit Obligationb. Plan Assets
c. Sub-total (a + b)
d. Unrecognized Actuarial Differencese. Unrecognized Past Service Obligation
f. Net Accrued Retirement Benefits Recognized in Consolidated Balance Sheets (c+d+e)g. Prepaid Pension Costh. Provision for Retirement Benefits (f – g)

(7,086)
4,518(2,567)
1,927
136
(503)
5
(508)

(Note) Certain consolidated subsidiaries utilize the simplified method to calculate the projected benefit obligation.

related to domestic and international products handled therein,
as well as for their business activities. Accordingly, the businessdivisions are comprised of the basic products making up thatsegment, and have been classified into the Extrusion Businessand Bead Business reporting segments.
Extrusion foaming technology is the core of the Extrusion
Business, which manufactures and sells polystyrene, polyethylene,
and polypropylene sheets and boards. Bead foaming technology
is the basis of the Bead Business, which manufactures andsells foamed polypropylene, foamed polyethylene, and foamed
polystyrene products, etc.

3. Retirement Benefit Expenses (as of March 31, 2011)
Millions of Yen

a. Service Cost
b. Interest Cost
c. Expected Return on Pension Assets
d. Recognized Actuarial Differencese. Amortization of Prior Service Cost
f. Net Retirement Benefit Cost (a+b+c+d+e)

400
107
(73)
149
24
608

(Note) The net retirement benefit cost for consolidated subsidiaries adopting the simplified method is recorded as “a. Service Cost.”
4. Basis of Projected Benefit Obligation Calculation

a. Period Allocation Method for Projected Benefits
Period Straight-Line Basisb. Discount Rate
Primarily 1.7%
c. Expected Return on Pension Assets
Primarily 1.7%
d. Years over which Past Service Cost is AmortizedPrimarily 14 years(Charged to expense using the straight-line method over the average remaining years of employee service.)e. Years over which Actuarial Differences are AmortizedPrimarily 14 years(Charged to expense in the following consolidated fiscal year using the straight-line method over the average remaining years of employee service.)

34

JSP ANNUAL REPORT 2011

JSP ANNUAL REPORT 2011

35

FINANCIALS
3. Sales and Income (Loss) by Reporting Segment
Consolidated Fiscal Year (April 1, 2009 to March 31, 2010)

2010

Millions of Yen
Reporting Segments

Net Sales
External Customers
Intersegment Sales/Transfers
Total Net Sales
Segment Profit (Loss)

Extrusion

Bead

Sub Total

Other(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)31,999862
32,861
2,534

43,002367
43,3693,405

75,002
1,229
76,231
5,939

6,595
59
6,654
(183)

81,597
1,289
82,886
5,756(1,289)(1,289)(70)

81,597
81,5975,685

JSP joins Japanand the rest of the world in offering
condolences to all who were
so deeply affected by the March 11
earthquake and tsunami
in northeastern Japan.

(Notes)1: “Other” represents a classification for a business segment not included in reporting segments. This segment includes the
manufacture and sale of FOAMCORE™, SUPER FOAM™, and general packaging products.
2: The ¥70 million of Adjustment under Segment Loss consists of ¥90 million in companywide expenses not allocated to eachreporting segment and ¥19 million in intersegment eliminations. The majority of these expenses are costs for research anddevelopment not attributable to either reporting segment.
3: Segment Profit (Loss) is adjusted with Operating Income on the Consolidated Statements of Income.

We are pleased to know thatJapan has so many friendsaround the world.

Consolidated Fiscal Year (April 1, 2010 to March 31, 2011)

2011

Millions of Yen
Reporting Segments

Net Sales
External Customers
Intersegment Sales/Transfers
Total Net Sales
Segment Profit (Loss)

It was heart warming to see how many
companies, organizations,and individuals came together
to offer relief.

Extrusion

Bead

Sub Total

Other(Note 1)35,429882
36,311
3,090

49,217495
49,713
4,685

84,646
1,378
86,025
7,776

7,324
33
7,358
(121)

Total

Adjustment(Note 2)

Consolidated(Note 3)

91,971
1,412
93,384
7,654(1,412)(1,412)(102)

91,971
91,971
7,552(Notes)1: “Other” represents a classification for a business segment not included in reporting segments. This segment includes the
manufacture and sale of FOAMCORE™, SUPER FOAM™, and general packaging products.

We are reminded of how much
we are blessed as a nation
and a people.
As the months pass by, we ask thatyou continue to keep the victims ofthis terrible tragedy, as well as the victims
other disasters, in your thoughts
and prayers as they strive to rebuild
their lives.

2: The ¥102 million of Adjustment under Segment Loss consists of ¥103 million in companywide expenses not allocated to eachreporting segment and ¥0 million in intersegment eliminations. The majority of these expenses are costs for research and development
not attributable to either reporting segment.
3: Segment Profit (Loss) is adjusted with Operating Income on the Consolidated Statements of Income.

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36

JSP ANNUAL REPORT 2011

In so many ways, and in so many places,
JSP protects the things andthe people that are
most important
to you.

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