OUR PRODUCTS ARE...
CHEMICALLY INERTINSULATINGCONTENTSSOUND-PROOF

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . 2
Message from the President . . . . . . . . . . . . . . . 3
Review of Operations . . . . . . . . . . . . . . . . . . . . 4
Special Reports
Regional Reports . . . . . . . . . . . . . . . . . . . . 6
Global Reach . . . . . . . . . . . . . . . . . . . . . . 10
New Products . . . . . . . . . . . . . . . . . . . . . . 11
JSP Exhibits at IPF . . . . . . . . . . . . . . . . . . 12

STRONG

WATER-RESISTANT

LIGHT

The ARPRO® Adventure. . . . . . . . . . . . . . 13
Corporate Governance . . . . . . . . . . . . . . . . . . 14
Global Network . . . . . . . . . . . . . . . . . . . . . . . . 15
Financial Section . . . . . . . . . . . . . . . . . . . . . . . 16
Corporate Data/Major Shareholders . . . . . . . . 32

ENERGY-ABSORBINGRECYCLABLE

ANTI-STATIC

Copyright 2012, JSP Corporation.
All rights reserved.
Forward-Looking Statements.
This annual report includes forward-looking
statements related to JSP Corporation plans,
strategies, and business results. These statements
represent judgments of JSP Corporation based on
information available at the time.
As such, these statements are subject to risks
and uncertainties. Please understand that actual
performance may differ from these forward-looking
statements.

W E D E L I V E R I N N O VAT I V E , VA L U E - A D D E D P R O D U C T S T O T H E M A R K E T,
C R E AT I N G G R O W T H A N D N E W O P P O R T U N I T I E S F O R O U R C U S T O M E R S
1

JSP ANNUAL REPORT 2012

Message from the President

JSP CORPORATION
2012 FINANCIAL HIGHLIGHTS
Thousands of
U.S. dollars(Note 1)Millions of yen
2012

2011

2010

2009

2008

2012 (US$)¥93,397¥ 91,971¥ 81,597¥ 96,534¥ 99,407$1,136,364

Operating Income

5,296

7,552

5,685

2,701

5,046

64,437

Ordinary Income

5,536

7,874

5,540

2,778

4,735

67,356

Income before Income Taxes

5,176

7,470

5,096

2,605

4,431

62,986Net Income

3,100

4,881

3,209

1,366

2,589

37,721Years ended March 31
For the Year:Net Sales

At YEAR-END:
Total Assets

89,07289,152

86,19784,316

94,993

1,083,737

Total Net Assets

47,362

46,48145,91242,001

48,057576,258

Capital Stock

10,128

10,128

10,128

10,128

10,113

123,234

Amounts per Share of
Capital Stock:

U.S. dollars(Note 1)

Yen
¥103.98¥161.25¥103.35¥43.74¥ 82.74$1.27

Cash Dividends

30.00

30.00

19.00

14.00

14.00

0.37

Total Net Assets

1,499.89

1,470.44

1,391.92

1,278.38

1,425.83

18.25

Net Income per Share

Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥ 82.19 = 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.

Deepen & Grow
The direction of the global economy remained
uncertain throughout the fiscal year ended March 2012.
The Euro crisis and high crude oil prices, resulting fromthe change situation in the Middle East and Northern
Africa, were the major causes of uncertainty. The
Japanese economy was heavily impacted by electricity
shortages following the natural disaster which also
resulted in the accident at the nuclear power plant. In
addition, the strength of the Yen has been a further
brake on the Japanese economy.
In the face of these challenges, we set about
improving revenues by focusing on value-added
products that utilize our exclusive technologies andthereby expanding globally.
We believe that protecting our irreplaceable global
environment requires us to create a balance
between nature and production activity. We aim
to further reduce our impact on the environment.
As well as benefiting the environment, this should
further validate the continuing public trust we enjoy
and be a long-term competitive advantage.

South America, and Africa to expand our business more
quickly. Our existing global operations will even further
deliver on co-operation and co-ordination as well asbuilding on our technological capabilities in order that
we deliver value to our clients.
We have committed significant attention andresources to creating entirely new business activities.
Some of the projects we have in hand are very
exciting and have the potential to deliver profitableglobal businesses of scale.

Deepen and Grow is the current medium-term(2012 to 2014) management plan for our business.
We aim to deepen and grow through:Net Sales	Ordinary Income(Millions of yen)
100,000

99,407
96,534

93,397
91,971

(Yen)
200

7,874

7,000

81,59780,000(Millions of yen)
8,000

161.25

6,000
5,000

60,000

5,536

5,540

100

103.98103.35
82.74

2,778

3,000

1,000
0

08

09

10

+1.6%
net sales

11

12

0

08

09

10

11

– 29.7%

12

ordinary income

20

Our deepen and grow plans are underpinned by
specific achievement targets. No later than March2014 we target to achieve Sales of ¥110,000 million
and an operating margin of 8.0% . We are confident
that we will continue to work as one global JSP,
developing new ideas to achieve further growth anddelivering value to our clients.

To strengthen our current business, we will selectively
and intelligently reduce costs, drive for increased
penetration and achieve more diversification throughnew applications and indeed new value-added gradesof materials.

43.74

50

2,000

20,000

150

4,735

4,000
40,0001 Strengthening our current business activities
2 Expanding business activities globally
3 Creating entirely new business activities

Net Income per Share

08

09

10

11

– 35.5%

12

net income per share

Our global presence is now firmly established andstrengthened by our recent investments in Brazil. Our
business in China will benefit from a four-base operating
structure (North, East, Southwest and South). We arealso accelerating our reach in the Southeast Asia,

Kozo Tsukamoto
President
3

JSP ANNUAL REPORT 2012

Review of Operations
natural disaster and the accident at the nuclear power
plant, both of which led to serious electric power
shortages. Sales of ARPRO ® /P-BLOCK™ used in
automotive and packaging applications temporarily
decreased, but the demand subsequently recovered
to the same level as the previous fiscal year. Salesof STYRODIA ® decreased as there still has not beena full recovery in demand for fish boxes, which isthe primary application for the product, in the areas
damaged by the natural disaster. The demand for
packaging for home appliances also declined, due
the shift of production outside of Japan as a counterto the strength of the Yen. FOAMCORE™, (a hybrid
molded product used as a ceiling material for
prefabricated bathroom units) and SUPERFOAM™,(used in automotive air conditioning ducts) were
included in the Bead segment from fiscal year 2011.
Sales of FOAMCORE™ increased as a consequenceof tighter thermal insulation standards, while sales ofSUPERFOAM™ were lower because of the decline inautomotive production.

2012 Performance¥93,397million
Net Sales
Up 1.6% from 2011

sheet) were about the same as the previous year.
In home insulation material, sales of MIRAFOAM™
(extruded board made of expanded polystyrene) wereat the same level as the previous year, supported byGovernment subsidies for environmentally friendly
housing and the increased demand for temporary
housing in the disaster area. Sales of MIRAPLANK™
(extruded board made of expanded polyethylene),used as a cushioning material for cargo in trucks
and in returnable containers for transporting home
appliances and automotive parts, decreased due toa general decline in transportation volume.

Extrusion Business

Bead Businessstrong driven by an increase in automotive builds. In
South America, the current plant has been operating
at full capacity, and further expansion of production
capacity has been in progress to meet the increasing
demand in this region. In Europe, despite the Euro
crisis, strong business performance has beensustained this fiscal year thanks to the increasing
penetration of ARPRO ® /P-BLOCK™ in automotive
applications and the diversification of applications
such as heating, ventilation, air-conditioning andrefrigeration (HVAC-R) and reusable industrial
packaging (dunnage). In Asia, there was growing
demand for automotive applications. Indeed, demand
was so strong in China that we supplemented supply
from our factory in Singapore. Production capacity
in China is being increased and will be on-stream
later in 2012. In Japan, the business environment
remained difficult, primarily due to the effects of theSales in the Bead segment increased 5.3% yearon-year to 52,869 million yen and operating income
fell 29.5% to 3,212 million yen. The major reason of
profit decline in this segment was that the demandfor STYRODIA ® (expandable polystyrene beads) has
been rapidly decreasing in the disaster area.
ARPRO ® /P-BLOCK™ (expanded polypropylene),
manufactured and sold globally, is used in automotive
parts such as bumper cores, interior parts, and seatcores, packaging for consumer electronic equipment,
containers for medical applications and food, andfor materials for construction and civil engineering.
Global sales of ARPRO ® /P-BLOCK™ increased
compared with the previous year. In North America,
demand for ARPRO ® /P-BLOCK™ has continued to be

4

Sales in the Extrusion segment decreased 2.4% yearon-year to 34,585 million yen and operating income
decreased 17.3% to 2,557 million yen. The major
reason of decreasing profit was the delay of selling
price increase for some products in this segment in
the face of surge of raw material price.
MIRAMAT® (expanded polyethylene sheet) and
P-BOARD™ (expanded polypropylene sheet) areused as industrial packaging materials, mainly forthe transport of substrates for LCD TVs and otherdigital home appliances. Sales of these two products
decreased due to the contraction of the production ofhome appliances resulting from the natural disasteras well as reduced demand from export markets
resulting from the strength of the Yen. Sales of
STYRENE PAPER™ (expanded polystyrene sheet
used in food packaging) were sluggish for the same
reasons. In advertising displays and folding boxes,
sales of MIRABOARD™ (expanded polystyrene

Other BusinessOur trading and special fabrication of general
packaging materials businesses had lower sales
because of the natural disaster and the strength of
the Yen serving to inhibit demand.
As a result, sales in this segment declined 6.0% to
5,942 million yen and there was an operating lossof 214 million yen (compared to operating income of
7 million yen a year earlier).

5

JSP ANNUAL REPORT 2012

REGIONAL REPORTS
Shinji Yamada — Asia/China

also planning to cultivate a new market by providing
high value-added products with excellent properties
such as permanent antistatic or static dissipation for
packaging materials for IT related products.

The automotive market in China, the World’s largest,
reached sales of 18.5 million units in 2011. In
addition, further steady growth in the passenger car
sector is expected. This is driven by the expanding
middle-class, particularly in the wealth growth citiesof the inland area.

In the food packaging sector we are working to create
new markets by using innovative materials that arealternatives to solid sheet or high density sheet.

Shinji Yamada — Asia /China

Koichi Teranishi — Asia /Japan

Sachio Suzuki — Asia/Southeast & South Asia and Oceania

Inwon Chang — Asia /Korea

In the Bead business, on top of the existing major
applications for fish and vegetable boxes, STYRODIA ®
has been expanding in application for insulation material
for construction, heat resistant application for boilers
and tanks, and structural parts for air conditioning
equipment. We will further drive for the application
development by introducing our new functional grades
such as ELEMPOR NEO™ (expandable polyethylene
and Polystyrene copolymer bead) and HEATPOR ®
(expandable heat-resistant bead).

We have enhanced our local design and development
resources in order to further promote new automotive
applications, such as ARPRO ® /P-BLOCK™ pedestrian
protection bumper systems and seat cores. This will
provide growth in the period from 2012 to 2014.
The high demand for plant-to-plant transportation
packaging of digital home electronics, especiallysmart phones and tablet PC’s is expected to continue.
We are completing the 2 nd phase capacity extension
at our Dongguan plant, which will be operational fromthe 2 nd half of this year, with capacity of 14,000 t/y.

We do not expect any significant increase of automotive
production in Japan. Nevertheless, we strive to increase
the penetration of ARPRO ® /P-BLOCK™ in automotive
applications.

We expect that demand will grow sufficiently torequire the 3 rd and 4 th manufacturing locations.

Due to the delay of the Japanese Government action
for recovery in the disaster area, strong demand for thenecessary construction and civil engineering materials
will be expected only in 2013. Consequently, demand
will increase for MIRAFOAM™ which has the world
leading level of insulation performance, as well as for
WALLBLOCK™ which is a construction method using our
STYRODIA® that serves to shorten construction time.

Koichi Teranishi — Asia/Japan
Following the natural disaster, the Japanese
economy is now on a gradual recovery trend. The
Japanese domestic market, however, is contracting;as companies accelerate and prioritize investment
outside of Japan. Under these economic circumstances, we will act to reduce costs and concentrateon products with high added value.

Inwon Chang — Asia/Korea
The World economy, which had been recovering fromthe financial crisis, is now exposed to the effects ofthe sovereign debt and currency crisis in Europe.
In addition, the rate of growth in Brazil and China
has slowed. All of these global influences impact
the demand for ARPRO ® /P-BLOCK™. However, thedrivers of the short-term demand issues also present
opportunities. The high performance at reduced

There are two major business segments in Japan,
Extrusion and Bead.
In the Extrusion business, one of our core products,
MIRAMAT ® ACE, used as surface protection material
for glass substrates and panels of LCD TVs, has
now been adopted as a protection material fororganic EL TVs and tablet computer parts. We are6weight provided by ARPRO ® /P-BLOCK™ is a unique
opportunity to expand utilization over the medium-term.

Demand from India is expected to represent asignificant growth opportunity in the near future. We
intend to build an ARPRO ® /P-BLOCK™ factory at
Mahindra World City in Chennai.

The range of applications continues to diversify;
incorporating automotive seat parts, as well as newconcepts in returnable/re-usable packaging for refrigerator and other domestic goods.

Indonesia, with a population of some 240 million
people, is also expected to be an important
automotive market growth opportunity. The capacityof automotive production in Indonesia has been
increasing. It is anticipated to increase from 1 million
passenger cars per year in 2011 to 1.7 million
passenger cars by 2014. Total automotive builds
in Thailand, India and Indonesia are expected toreach 7.5 million cars per year in 2012 and climb to
9.2 million cars per year by 2014.

Despite the uncertain economic environment, we are
optimistic about the future.

Sachio Suzuki — Asia/Southeast & South Asiaand Oceania
Our ARPRO ® /P-BLOCK™ activities cover awide geographic area; South-East & South Asia
to Oceania. The market demand in Thailand, asignificant market, was badly damaged by theflooding in late 2011. However, this has recoveredmuch faster than we expected initially. In addition,other ASEAN demand from Malaysia and thePhilippines has seen continuous modest growth.
These factors resulted in satisfactory returns in 2012.

We are enhancing our technical development support
and commercial services at warp speed, to best
serve the dynamic, growing and ever-changing market
we serve. These efforts underpin the next stages ofour growth strategy.

7

JSP ANNUAL REPORT 2012

REGIONAL REPORTS
Toru Yamaguchi — Asia/Taiwan

insulate our business from sector demand shocks.
Whilst future demand shocks may occur, as a resultof weakening consumer demand for cars due to theimpacts of both the continuing Euro crisis and theausterity measures to deal with problematic Sovereign
debt in many countries in Western Europe, successin application spread (penetration) reduces theimpact. We also look to continued success throughdiversification of application sectors and geography.
ARPRO ® /P-BLOCK™ is increasingly used inheating, ventilation, air-conditioning and refrigeration
applications (HVAC-R) and also continues its strong
presence in reusable industrial packaging (dunnage).
Particular areas of new geographic growth within the
EMEA area are; Russia, the Middle-East and Africa.
We also underpin growth through constant efforts toimprove process and product development.

The prospects for the Taiwan economy are inevitably
influenced by the world economic situation. However, it
is expected that the production and sales of flat-panel
TVs in Taiwan will show steady growth, due to thedemand in China. In addition, the ever increasing
demand for smart-phones and tablet PC’s also present
opportunities for us. ARPRO ® /P-BLOCK™ delivers
excellent quality, is available to short lead times andprovides clients with class leading value.
We are planning for investment in increased production
capacity to meet the forecast demand growth.

Paul Compton —EMEA (Europe, Middle-East & Africa)

The growth opportunities are exciting and are fuelledby the rigor of our penetration and diversification
efforts. Even if the near-term economic situation is
not encouraging, this approach can, at least, in part
insulate our business. The medium-term view remains
very encouraging and a growth trend is anticipated.

Our strong business performance reflects the strong
value proposition of ARPRO ® /P-BLOCK™ andresults in our leading market position. The growth in
ARPRO ® /P-BLOCK™ sales serves to demonstrate
the benefit of a large loyal client base and also how
a strong value offering attracts significant new clientsand end-users. The continuing high cost and volatilityof propylene, driven both by the cost of crude oiland specific demand dynamics, does however makeholding price levels difficult.

Rich. C. Alloway — North America
For North America, the period from 2012 through2014 is expected to be one of significant growthand opportunity. Our core automotive business willcontinue to flourish. Automotive builds are scheduled
to extend their rebound from a low of 9,000,000 units
in 2009 to 14,500,000 units in 2012 and eventually up
to the 16,000,000 unit mark by 2014. In addition to
the increase in vehicle builds, we forecast continued
penetration for ARPRO ® /P-BLOCK™ into the automotive
market via new applications, most notably seat cores.

The continuing value offered by ARPRO ® /P-BLOCK™
is underpinned by; our focus on speed of delivery, aculture of client service, a focus on constant innovation
and relentless attention to and improvement in allelements of quality and consistency.
Whilst the economic outlook is uncertain, ourbusiness model is strong and the financial position
is robust. The strategy of driving and capturing
growth through innovation has worked well and willcontinue. This is targeted to achieve double-digit
growth over the coming years. Our efforts have
and will continue to fuel growth through increased
penetration and diversification. The increasing
penetration of ARPRO ® /P-BLOCK™ in automotive
applications has and is designed to continue toGrowth is also projected in our other markets. Plank
sales, which have been averaging 10% annual
increases, should accelerate as a result of new capacityand product offerings. Our underlayment businesswill increase significantly as the field market reboundswith the economy and our landscaping product line
is introduced on a national basis. We also anticipate

8Toru Yamaguchi — Asia /Taiwan

Paul Compton — EMEA (Europe, Middle-East & Africa)

Rich. C. Alloway — North America

Raul Sanchez — South America

Argentina and Brazil.

growth in our new product lines with recent investmentin the integxion™ high performance sheet foam businessand in a molding plant for returnable packaging. We
have the capacity and flexibility to pursue numerous newmarkets and applications.

The automotive sector in Brazil is expected tocontinue to grow. The Brazilian economy is now the
5 th largest in the World and the Brazilian automotive
industry will soon be 4 th in the world, surpassing
Germany and smaller only than China, the US, andJapan. Automotive builds are expected to surpass the
4 million/year mark in 2013/14 and continue with over
5% growth beyond that.

This growth will be challenging. We have asubstantial capital plan in place to ensure that wemeet these demands in a safe, environmentally
responsible and profitable manner. As always, we will
undergo this challenge with an unrelenting focus on
customer satisfaction.

In addition to the core automotive growth, we arepromoting other automotive applications such asseat and trunk components. We are also actively
working to diversify into other markets such as themattress and packaging industries. Other business
opportunities and indeed business areas areconstantly under evaluation. The management of theexciting organic growth and new areas of opportunity
demand significant resource; thus our focus during
the period from 2012 to 2014 will be to manage
growth efficiently and effectively, plant the seed todiversify our book of business and consolidate ourpresence in the region.

Raul Sanchez — South America
The period of 2012 through 2014 for SouthAmerica is expected to be one of consolidation andcontinued growth. In 2012 we are starting up our“SAP” (Santo Antonio de Posse) Plant. The new
ARPRO ® /P-BLOCK™ capacity comes on-stream in
the summer of 2012; with additional molding capacity
coming in the second half of the year. Our Campinas
Plant is completely full so the new capacity from
SAP is awaited with eagerness by the markets in

9

JSP ANNUAL REPORT 2012

Global Reach

New ProductS

New molding facility in Michigan, US.

Plant expansion in Dongguan Plant

New production site in Brazil

We now have operations in all of the major global markets and are adding to our production
capacity to meet growing demand. We have continuously improved our production and sales
structure and capability to meet the wide range of needs of global markets.
BrazilIn February 2011, we made a strategic acquisitionin Brazil. We are now running close to capacity
and are in the final stages of construction of a newfactory outside Sao Paulo that will start productionin July 2012. This will triple our production capacity
in the country. We expect the Brazilian economy willgrow rapidly with the benefit from the soccer World
Cup and 2016 Olympic Games. At present, Brazil
produces 3.5 million automobiles annually, with that
number expected to reach 5 million soon.

the country’s incredible economic growth. We completed
the construction work in July 2012. In addition to ourcurrent Wuxi and Dongguan plants, we are planning togain ground in the North and Southwest parts of China
to establish a four-base operating structure.

North America
In August 2011, we purchased an ARPRO ® /P-BLOCK™
molding plant located west of Detroit, Michigan. Thisfacility positions us to respond to the increasing auto
production. The need for energy-saving, safe vehicles
have led to continuously increasing demand for
ARPRO ® /P-BLOCK™ which is light-weight and hasenergy management properties. We now have six strategically positioned production plants in North America,
with all locations running at high operating rate. Thereremains scope for further significant growth.

India
We have established a presence in India and expect
to build a manufacturing plant in the near future.

China
In China, we are adding production capacity at our
Dongguan plant to meet the growing demand sparked by

10

Barrier Tank

P-SHINE™ SD

New Fuel Tank

Charge-Free, Protects Products from
Static Electricity“ Bar r ier Tank ” (trademar k in progress) utilizes
M X Nylon resin layer s impregnated with high densit y polyethylene ( HDPE) to of fer bar r ier
c apabilities that restr ic t gasoline per meation.

Sales have commenced of our newly developed
P-SHINE™ SD, a non-cross linked high-density
polypropylene foam sheet for molding, featuring
static dissipative properties making it ideal for use
in shipping trays used in the transport of electronic
components and equipment.

The product was a co-development utilizing JSP’s
blow-moulding technology and MX Nylon from
Mitsubishi Gas Chemical. The Barrier Tank is targeted
at engines of 1.0 to 1.5 litre capacity, and represents
exceptionally high value for the price.

New technology has made it possible to incorporatecharge-free properties into this product, allowing it toprotect packaged items from static electricity buildup.
This new product overcomes a long-time weakness inother anti-static products, namely that they allow theadditives to transfer to the packaged product during
shipping. P-SHINE™ SD delivers high-value to clients.

The Barrier utilizes existing high-density polyethylenetank blow molding investments and offers advantages
versus tanks produced by fluorine coating or
multilayer blow molding. Additionally process waste iseasily recycled.

JSP first created a series of permanent anti-staticcushioning and packaging materials for commercial
applications in 2001. In recent years we have extended
the range of permanent anti-static products we offer.

Already adopted by Suzuki for use in outboard
motors, Barrier Tank has global market potential
and is particularly suited to the demands of theNorth American market, where regulations on fuelpermeation are already in effect.

The introduction of P-SHINE™ SD sheets to the market
represents an evolution in the JSP lineup of permanentanti-static products. This new non-charge technology
not only protects products from static electricity,
but also reduces the risk of dielectric breakdown inelectronics components due to electrostatic discharge
by maintaining the optimum surface resistance of the
sheet. The new technology also reduces the risk of theadditives being transferred to the packaged product.

Barrier Tank is also ideal for chain saws, power
generators, lawn mowers, golf cars, tractors, anddune buggies.
The annual global demand for this type of solution isestimated at four to five million units.

11

JSP ANNUAL REPORT 2012

JSP Exhibits at
the International Plastic Fair

The ARPRO® Adventure

The ARPRO ® Awards
Tom Peters Company
Paul Compton – the future
our employees have relationships. Some tremendous
individuals have spoken, including: President Martti
Ahtisaari (former President of Finland and Nobel
Peace Prize Winner), Sir Nick Scheele (former
President of FORD), Tim Harford (Editor of the
Financial Times) and Professor Jok Madut Jok (whoamong many other achievements started and fundeda school in war stricken South Sudan).

JSP exhibited at the 2011 International Plastic Fair, held in October at the
Makuhari Messe in Chiba, Japan
Held once every three years, this event covers
technology and services related to all aspects ofplastic and rubber, including; raw materials, equipment,
products, recycling equipment, and fabricating.

We also featured MIRAFOAM™, an extruded foamed
board made of polystyrene used as an insulationmaterial in home building. The high insulation efficiencyof MIRAFOAM™ makes it ideal for thermal insulation ofouter walls. Thereby making homes and building moreenergy efficient. The MIRAFOAM™ display featured
a house, complete with walls, ceiling, and floors tohighlight the use of our insulation materials.

The JSP display was designed to allow visitors to see
the different ways in which our products are found inour daily lives.

Visitors could also learn more about other of our
products and how they are in fact already part of ourdaily lives. Exhibits included; MIRAMAT® a cushioning
material for cargo transport, STYRODIA ® used in fishboxes and fruit boxes, and STYRENE PAPER™ usedin food trays and instant ramen (noodle) cups. Other
displays featured; permanent anti-static technologies
and simultaneous blow molding and bead forming in asingle mold.

To demonstrate the range of automotive applications
for ARPRO ® /P-BLOCK™, we displayed a real scale
car replica. ARPRO ® /P-BLOCK™ is used in anever-widening range of automotive applications as
it provides shock absorption/energy management
properties and is light-weight. ARPRO ® /P-BLOCK™
is used in all types of passenger vehicles, including
hybrids and electric vehicles. The pursuit by theautomotive industry of improvements to fuel efficiency
are answered by the high property yet light-weightnature of ARPRO ® /P-BLOCK™.

The event was a great success and has resulted in ahigh level of interest and many enquiries.

12

The ARPRO ® Adventure is our EMEA annual client
event that aims to stimulate and inform. The ARPRO ®
Adventure allows us to share our enthusiasm andhow we are continuously developing and investing in
ARPRO ® with our valued client base, in an engaging
and interactive manner.

Companies and organisations who have spoken at
the ARPRO ® Adventure include: BMW, Dimplex,
ECOmove, Environmental Resource Management,
FIA, J D Power, PSA Peugeot Citroen, Skoda, Tom
Peters Company, WWF and Williams Formula 1.

The event has been held in a different location each
October since 2008. Locations so far have been;
Weggis/Luzern, Frankfurt, Prague and Geneva.
The 2012 event is to be held in Barcelona at CampNou, the home of the incomparably successful andcurrent World Club Champions F C Barcelona. Each
ARPRO ® Adventure is unique and is built around atime pertinent business theme. The theme for 2012,
given the location, is teamwork, strategy and efficientand effective execution.

A small taste of the ARPRO ® Adventure can be seen at:
arpro.com /adventure2011
A further feature of the event are the prestigious
ARPRO ® Awards. The highly respected and valued
ARPRO ® Awards recognise; technical achievement,
excellence, environmental performance and careerachievement. Past winners include: BMW, Dimplex,
ECOmove and Rowenta.

The majority of speakers are drawn from JSP, but
we also have highly relevant and thought provoking
external speakers, with whom we as a business or

13

JSP ANNUAL REPORT 2012

Corporate Governance1

Basic Stance3

We recognize that our basic mission as management
is to increase shareholder value in a sustainable
manner. Further, we understand the need to meet our
responsibilities to all of our stakeholders, including
employees, customers, consumers, the local citizens,and the communities which we serve.

Internal Controls, Risk Management

We have taken measures to institute appropriate
systems and structures for internal controls and risk
management. We have policies in compliance withlegal statutes, continually reviewing these systems
and revising as necessary.
We have established the risk management andcompliance committee chaired by the representative
director. This committee has responsibility for crossorganizational monitoring and audit, taking the lead in
exercising risk and compliance management for JSP.

In light of this stance, we believe that proper
corporate governance represents an indispensable
part of our business. It is important for us as acompany to be consistent in our pursuit of efficiency,transparency, and soundness in management, fromthe election of corporate directors through the establishment of corporate compliance mechanisms.

KOREA

JAPAN

CHINA (WUXI)

42

GLOBAL NETWORKOur external and internal auditors assess legal
compliance and the validity of company operations
and assets. External and internal auditors havedynamic exchange and coordination.

G ove r n a n c e O r g a n i z a t i o n s

The board of directors deliberate and decide
important company business matters. The board andthe audit committee ensure business is performed in
an appropriate manner.
We also hold management meetings made up of
regular members who discuss important business.
We have adopted a system of executive officers toensure the efficient execution of our business. In thisway, we have established a system to assign both
authority over the execution of our business andresponsibility.

GERMANYCZECH REPUBLICFRANCE

External Audits

CHINA (KUNSHAN)
CHINA (DONGGUAN)

TAIWAN

INDIA

USA(DETROIT)USA(JACKSON) USA (BUTLER)USA(TULLAHOMA)

SINGAPORE

MEXICOBRAZIL

14

TOKYO HEAD OFFICEHOKKAIDO
KANUMAKASHIMAYOKKAICHIKANSAIKYUSHU15

JSP ANNUAL REPORT 2012Results of Operations

Financial Position

For the fiscal year ended March 31, 2012 (FY2011),
JSP Corporation and its consolidated subsidiaries(“the Company”) recorded net sales of ¥93,397 million,
representing a 1.6% year-on-year increase. Consolidated
operating income amounted to ¥5,296 million, a 29.9%
year-on-year decrease, while ordinary income fell 29.7%
year-on-year, amounting to ¥5,536 million. Consolidated
net income amounted to ¥3,100 million, representing a
36.5% decrease compared to the prior fiscal year.

2011, demand and production has reduced in industrial
sector. The strong valuation of the yen against other world
currencies led to lower exports and inevitable downward
economic pressure.

These results reflected both the economic situation in
Japan and for the world at large. While the economies in
Asia and other emerging markets experienced continued
growth, financial issues continued to disrupt the markets
in Europe, and instability in the Middle East and Northern
Africa resulted in soaring oil prices. In Japan, due to theaftereffects of the Great East Japan Earthquake in March

On a consolidated basis, the Company recorded extraordinary income of ¥323 million, including ¥221 million related
to negative goodwill. Extraordinary losses amounted
to ¥682 million, which included ¥223 million in losses
attributable to the aftereffects of the Great East Japan
Earthquake in March 2011.

In the face of these challenges, JSP worked as a group
to improve our profit structure, building up our production systems and focusing on selling high-value-added
products based on our proprietary technologies.

As a result, consolidated net assets amounted to a totalof ¥47,362 million as of the end of the consolidated fiscal
year, representing a 50.2% shareholders’ equity ratio, up
1.0% from the end of the prior consolidated fiscal year.

As of March 31, 2012, total consolidated assets amounted
to ¥89,072 million, a ¥79 million decrease compared tothe end of the prior consolidated fiscal year. This decrease
was primarily due to a decrease of ¥1,018 million in current
assets, offset somewhat by a ¥938 million increase innoncurrent assets.
Total consolidated liabilities amounted to ¥41,709 million,
which was a ¥960 million decrease compared to theend of the prior consolidated fiscal year. The bulk of thisdecrease was due to a ¥1,840 million decrease in current
liabilities partially offset by a ¥879 million in increased
noncurrent liabilities.

Sales Breakdown by
Business Segment

Operating Income

Net Income

Total Assets/
Total Net Assets

Shareholder’sEquity Ratio

Return on Equity(Millions of yen)

(Millions of yen)

(Millions of yen)

(Millions of yen)

(%)

(%)

8,000

8,000

10,000

60

12

2012

7,552

7,000

94,99384,316 86,197

7,000

89,152 89,072
50

8,000

6,000

5,000

Total Sales¥ 93,397

6,000

5,685
5,046

5,000

4,000

million

4,881

4,000

2,701

3,000

3,000

2,000

3,100

4,000

42,00145,912 46,481 47,362

2,589
2,000

2,000

1,366
Extrusion Business

37.0%

Bead Business

56.6%

Other Business

6.4%

1,000

8

30

6

20

4

10

2

7.7
5.9

7.0

3.2

1,000
0

0

40
6,000

48,057

3,209

10

49.2

47.1

5,296

50.2

50.1

47.0

11.2

08

09

10

16

11

12

0

08

09

10

11

12

08

09

10

11

12

0

08

09

10

11

12

0

08

09

10

11

12

Total Assets
Total Net Assets

17

JSP ANNUAL REPORT 2012

Cash Flows

INDEPENDENT AUDITOR’S REPORT

Consolidated cash and cash equivalents as of March
31, 2012 amounted to ¥5,976 million. This represented
a ¥4,511 million decrease in total cash and cash equivalents compared to the end of the prior consolidated
fiscal year.

Net cash used in investing activities amounted to¥6,138 million, representing a year-on-year increase of¥941 million. These funds were used primarily to acquire
noncurrent assets (¥6,006 million) and a net outlay ofcash for time deposits (¥614 million).

Net cash from operating activities amounted to¥5,532 million, a ¥2,308 million year-on-year decrease.
This decrease was primarily due to ¥5,176 million in
net income before taxes and adjustments, depreciation
and amortization in the amount of ¥4,607 million, andan increase in accounts payable-trade of ¥1,837 million.
These increases were offset by an increase of ¥2,739
million in accounts receivable-trade, and income tax
payments of ¥1,936 million.

Net cash used in financing activities amounted to¥3,602 million, an increase of ¥3,126 million comparedto the prior fiscal year. These funds were primarily used
to repay long-term loans (¥5,243 million) and short-termloans (¥2,991 million), and to pay dividends (¥894 million).
These outlays were offset by cash inflows of ¥5,728 million
in new long-term loans.

Free Cash FlowsNet Income/Depreciation and Amortization/
Operating Cash Flows

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

(Millions of yen)

(%)

8,000

12,0007,167

11,28315

10,000

8,000

5,000

13.8

12

7,840

7,512

9
4,000

2,643

3,000

6,000

6,129
4,950 5,069

4,000

2,000

1,148

1,000
0
-1,000

08

09

10

11

12

0

6

6.3

5.9

3,100
3

1,366

-606

-365

4,607
4,688 4,881
4,582
3,209

2,589
2,000

5,532

8.5

7.6

08

09

10

11

12

Net Income
Depreciation and Amortization
Operating Cash Flows

18

0

08

09

10

11

the auditor’s judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether
due to fraud or error. In making those risk
assessments, the auditor considers internal
control relevant to the entity’s preparation andfair presentation of the consolidated financial
statements in order to design audit proceduresthat are appropriate in the circumstances, but
not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal
control. An audit also includes evaluating
the appropriateness of accounting policies
used and the reasonableness of accounting
estimates made by management, as well
as evaluating the overall presentation of theconsolidated financial statements.

We have audited the accompanying consolidated financial statements of JSP Corporationand its subsidiaries, which comprise theconsolidated balance sheets as at March
31, 2012, and the consolidated statements
of income, changes in net assets and cash
flows for the year then ended, and a summaryof significant accounting policies and otherexplanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparationand fair presentation of these consolidated
financial statements in accordance withaccounting principles generally accepted inJapan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

We believe that the audit evidence we haveobtained is sufficient and appropriate toprovide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of JSP Corporation andits subsidiaries as at March 31, 2012, and theirfinancial performance and cash flows for theyear then ended in accordance with accounting principles generally accepted in Japan.

Auditor’s Responsibility
Our responsibility is to express an opinion
on these consolidated financial statements
based on our audit. We conducted our audit inaccordance with auditing standards generally
accepted in Japan. Those standards requirethat we plan and perform the audit to obtainreasonable assurance about whether the
consolidated financial statements are free frommaterial misstatement.

7,000
6,000

To the Board of Directors of JSP Corporation

12

An audit involves performing procedures toobtain audit evidence about the amounts anddisclosures in the consolidated financial statements. The procedures selected depend on

Toho Audit Corporation
June 22, 2012
Tokyo, JapanAs the above is an English translation from the original auditor’s report (Yukashoken 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 omitted.

19

JSP ANNUAL REPORT 2012

CONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED BALANCE SHEETSJSP Corporation and Consolidated Subsidiaries

JSP Corporation and Consolidated Subsidiaries

Years Ended March 31

As of March 31

Thousands of
U.S. Dollars

Millions of yen

2012¥ 93,397
67,51625,8812011¥ 91,971
64,32027,6512012$ 1,136,364
821,465
314,899

6,735
13,84920,585
5,296

6,498
13,60020,098
7,552

81,954
168,506
250,461
64,437

245
20
53
28
120
15
249
733

166
85
61
—
120
—
327
762

2,991
244
647
351
1,467
186
3,040
8,929

240
—
—
253
494
5,536

236
95
11
97
440
7,874

2,921
—
—
3,090
6,011
67,356

Gain on sales of noncurrent assets
Gain on sales of investment securities
Reversal of allowance for doubtful accounts
Gain on negative goodwill
Reversal of provision for loss on disaster
Other
Total extraordinary income

17
0
—
221
84
—
323

6
257
30
—
—
74
369

211
6
—
2,693
1,027
—
3,938

Loss on retirement of noncurrent assets
Loss on sales of noncurrent assets
Loss on sales of investment securities
Loss on valuation of investment securities
Impairment loss
Loss on valuation of inventories
Provision for loss on business liquidation
Loss on disaster
Loss on support to subsidiaries and affiliates
Other
Total extraordinary losses

54
39
—
20
169
9
166
223
—
—
682
5,176
1,470
—
287
1,758
3,418
318
¥ 3,100

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

660
485
—
243
2,058
120
2,020
2,719
—
—
8,308
62,986
17,896—
3,497
21,394
41,5923,870
37,721

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
Foreign exchange gains
Amortization of negative goodwill
Equity in earnings of affiliates
Other
Total non-operating income

Non- operating expenses
Interest expenses
Foreign exchange losses
Equity in losses of affiliates
Other
Total non-operating expenses

Ordinar y income
Extraordinar y income

Extraordinar y loss

Income before income taxes
Income taxes-current
Refund of income taxes for prior periods
Income taxes- deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income
20$

Thousands of
U.S. Dollars

Millions of yen

AssetsCurrent assets

2012

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

¥

2011

2012

9,362
29,055
0
5,416
680
3,398
572
858
1,011
(282)
50,073¥ 13,474
26,709
0
4,862
598
2,868
710
1,056
1,025
(214)
51,091$

113,907353,5161
65,8998,282
41,3436,960
10,45012,308(3,432)609,237

28,065(16,837)(69)
11,15853,926(45,049)(24)
8,852
13,054
120
(75)
45
1,477
8,198
(7,634)(2)
560
35,150967

27,650(16,161)—
11,48953,608(44,343)—
9,265
11,995
93
(54)
38
771
8,000
(7,368)—632
34,194986

341,472(204,856)(848)
135,767
656,124(548,111)(303)
107,708
158,836
1,472
(915)
557
17,97899,747(92,890)(32)
6,824
427,672
11,771

1,873
27
221
778
(19)
2,881
38,999¥ 89,072

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

22,789
334
2,692
9,471
(231)
35,056474,500$ 1,083,737

Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Accumulated impairment loss
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Accumulated impairment loss
Machinery, equipment and vehicles, net
Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Other
Accumulated depreciation
Accumulated impairment loss
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
The accompanying notes are an integral part of these statements.

21

JSP ANNUAL REPORT 2012

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSJSP Corporation and Consolidated Subsidiaries
Years Ended March 31

Thousands of
U.S. Dollars

Millions of yen

Liabilities
Current liabilities

Thousands of
U.S. Dollars

Millions of yen

2012

2011

2012

¥ 11,868¥ 10,210

Short-term loans payable

6,122

9,200

74,493

Balance, Beginning of Period

Current portion of long-term loans payable

4,582

4,533

55,749Changes of items during the period

2012

2011

2012

¥ 10,128¥ 10,128$ 123,234

Shareholders' equity

Notes and accounts payable-trade

Lease obligations$

144,402

36

34

445

Accounts payable-other

3,086

2,541

37,548

Income taxes payable

307

967

3,739

Accrued consumption taxes

111

306

1,355

Deferred tax liabilities

10

6

123

Provision for bonuses

1,168

1,326

14,211

Provision for loss on business liquidation

166

—

2,020

Provision for loss on disaster

32

340

399

Capital stock

Total changes of items during the period
Balance, End of Period
Balance, Beginning of Period
Total changes of items during the period
Balance, End of Period

87

59

1,065

637

10,389Balance, Beginning of Period
Changes of items during the period

1,634

1,743

19,891

31,908365,836

9,753

9,307

118,674

Noncurrent liabilities
Long-term loans payable

13,405

13,405

163,103———

13,405

13,405

163,10328,47524,413

346,460

(894)

(819)

(10,883)

Retained earnings

853
30,068—123,234

Changes of items during the period

Accounts payable-facilities
Total current liabilities—
10,128

Capital surplus

Notes payable-facilities
Other—
10,128Dividends from surplus
Net income

3,100

4,881

37,721

Total changes of items during the period

2,205

4,061

26,83830,681

28,475373,299(1,371)(211)(16,688)

Lease obligations

49

41

597

Deferred tax liabilities

469

355

5,717

Provision for retirement benefits

714

508

8,691

Balance, Beginning of Period

Provision for directors' retirement benefits

152

130

1,857

Changes of items during the period
Purchase of treasury stock(0)(1,159)(3)

Total changes of items during the period(0)(1,159)(3)(1,371)(1,371)(16,692)

50,63847,736616,110

Provision for corporate officers retirement benefits

27

12

328

Negative goodwill

120

241

1,467

Other

354

164

4,307

11,641

10,761

141,642

41,70942,670507,479

Total noncurrent liabilities
Total liabilities

Net assets

Balance, End of Period
Treasury stock

Balance, End of Period
Total shareholders' equity
Balance, Beginning of Period
Changes of items during the period

Shareholders' equity

Dividends from surplus

(894)

(819)

(10,883)

Net income

3,100

4,881

37,721

Capital stock

10,128

10,128123,234

Capital surplus

13,405

13,405

163,103

Retained earnings

30,681

28,475373,299

Purchase of treasury stock
Total changes of items during the period

Treasury stock(1,371)(1,371)(16,692)

Total shareholders’ equity

52,84350,638642,945

Balance, End of Period(0)(1,159)

(3)

2,205

2,901

26,835¥ 52,843¥ 50,638$ 642,945

The accompanying notes are an integral part of these statements.

Valuation and translation adjustments
148

11

1,803

Foreign currency translation adjustment

Valuation difference on available-for-sale securities(8,270)(6,805)(100,630)

Total valuation and translation adjustments(8,122)(6,794)(98,827)

Minority interests

2,641

2,638

32,139Total net assets

47,362

46,481

576,258¥ 89,072¥ 89,152$ 1,083,737

Total liabilities and net assets

22

23

JSP ANNUAL REPORT 2012

CONSOLIDATED STATEMENTS OF CASH FLOWSJSP Corporation and Consolidated Subsidiaries
Years Ended March 31

Thousands of
U.S. Dollars

Millions of yen

2012

2011

2012

2012

2011

2012

Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of negative goodwill
Gain on 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¥ 5,176
4,607
169
(120)
(221)
54
(150)
208
36
76
(0)
20
(265)
240
19
(15)
(2,739)1,837(1,325)
(240)
6
7,373
323
(228)
(1,936)
5,532¥ 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$ 62,986
56,0572,058(1,467)(2,693)664(1,835)
2,539
441
933
(6)
243
(3,236)
2,921
235
(186)
(33,327)
22,356(16,129)(2,925)83
89,715
3,932(2,778)(23,556)
67,312

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(6,006)
385
(23)
(8)
4
(614)
—
—
124
(6,138)(3,368)
47
(19)
(9)
395
(409)
(300)
(1,681)148(5,197)(73,082)
4,686
(289)
(100)
55
(7,477)——
1,519(74,687)(2,991)
5,728(5,243)
—
(0)
(894)
(160)
(40)
(3,602)(303)(4,511)
10,487¥ 5,976

2,713
3,800
(4,689)(162)(1,159)
(819)
(122)
(35)
(475)
(748)
1,418
9,069
¥10,487(36,391)
69,695(63,802)—(3)(10,883)(1,958)(487)(43,830)(3,686)(54,892)
127,603$ 72,710

Net cash provided by (used in) operating activities

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Balance, Beginning of Period

¥

11

¥

167

$

137

Changes of items during the period
Net changes of items other than shareholders' equity

136

(155)

1,665

Total changes of items during the period

136

(155)

1,665

148

11

1,803

(6,805)(4,682)(82,807)

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(1,464)(2,123)(17,822)

Total changes of items during the period(1,464)(2,123)(17,822)(8,270)(6,805)(100,630)(6,794)(4,515)(82,670)

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(1,327)(2,279)(16,156)

Total changes of items during the period(1,327)(2,279)(16,156)(8,122)(6,794)(98,827)

2,638

2,691

32,097

3

(52)

42

Balance, End of Period

Minority interests
Balance, Beginning of Period

Net cash provided by (used in) investing activities

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

3

(52)

42

2,641

2,638

32,13946,48145,912565,537

Net assets
Balance, Beginning of Period
Changes of items during the period
Dividends from surplus

(894)

(819)

(10,883)

Net income

3,100

4,881

37,721(0)(1,159)(3)(1,324)(2,332)(16,114)Purchase of treasury stock
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance, End of Period

881

569

10,720¥ 47,362¥ 46,481$ 576,258

Thousands of
U.S. Dollars

Millions of yen

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
The accompanying notes are an integral part of these statements.

24

25

JSP ANNUAL REPORT 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
in affiliates more than 15% owned are accounted for underthe equity method of accounting.
In addition, the accompanying notes include certain
information which is not required under generally accepted
accounting principles and practices in Japan, but ispresented herein as additional information. The accompanying consolidated financial statements have also beenpresented in U.S. dollars by translating all yen amounts forthe year ended March 31, 2012 using an exchange rate of¥82.19 to U.S. $ 1.

The accompanying consolidated financial statements havebeen prepared from the financial statements filed with
the Ministry of Finance as required by the Securities andExchange Law of Japan, in accordance with accounting
principles and practices generally accepted in Japan. The
accompanying consolidated financial statements include
the accounts of JSP Corporation (the “Company”), andits domestic and foreign subsidiaries which are more than
50% owned. Significant intercompany balances and transactions have been eliminated in consolidation. Investments

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(c) Depreciation and Amortization
Property, Plant, and Equipment (excluding leased assets)
Buildings (excluding attached structures) acquired bydomestic consolidated companies prior to March 31,
1998 are depreciated according to the former decliningbalance method under the Corporation Tax Law of Japan.
Buildings acquired between April 1, 1998 and March 31,
2007 are depreciated according to the former straightline method under the Corporation Tax Law of Japan.
Buildings acquired after April 1, 2007 are depreciatedaccording to the straight-line method under the Corporation Tax Law of Japan.
Tangible noncurrent assets (other than buildings) acquiredby domestic consolidated companies prior to March 31,
2007 are depreciated mainly according to the former
declining balance method under the Corporation Tax Law ofJapan. Assets acquired after April 1, 2007 are depreciatedmainly according to the declining balance method.
Useful lives and residual values are determinedaccording to standards prescribed by the Corporation
Tax Law of Japan.
Tangible noncurrent assets acquired by foreign consolidated companies are depreciated according to thestraight-line method.
Intangible Noncurrent Assets (excluding leased assets)
Intangible noncurrent assets acquired by domestic
consolidated companies are amortized according to thestraight-line method.

(a) Investment Securities
Domestic Consolidated Companies
Other Investment Securities
Securities for which market prices are available are stated
at fair market value of the quoted market price as of thelast day of the fiscal year. Valuation differences are directly
charged or credited to shareholders’ equity; the cost of
securities is calculated according to the moving averagemethod.
Securities for which market prices are not readily available
are stated at cost, as determined by the moving averagemethod.
Foreign Consolidated Companies
Marketable securities owned by foreign consolidated
companies are accounted for under International Financial
Reporting Standards or U.S. GAAP.
(b) Inventories
Domestic Consolidated Companies
Inventories owned by domestic consolidated companies
are stated mainly at cost according to the moving averagemethod (book value written down for inventories with
impaired profitability).
Foreign Consolidated Companies
Inventories owned by foreign consolidated companies arestated mainly under first-in first-out accounting based on
the lower-of-cost-or-market method.

26

Provision for Loss on Disaster
The Company and certain of its domestic consolidated
companies has recorded an estimated amount of expected
costs likely to be incurred during the next fiscal year inremoving and/or restoration expenses for assets damaged
in the northeastern Japan Earthquake of March 11, 2011.
Provision for Employees’ Retirement Benefits
Domestic consolidated companies reserve an estimatedamount for employee retirement benefits based on the
projected retirement benefit obligation and related pension
assets for the current consolidated fiscal year.
Prior service cost is charged to expense as it occurs
according to the straight-line method based on a certain
number of years (generally 14 years) representing the
average remaining years of employment.
Any actuarial differences are charged to the expense
accounts of the following consolidated fiscal year
according to the straight-line method based on a certain
number of years (generally 14 years) representing the
average remaining years of employment.
Foreign consolidated companies record reserves for
employee retirement benefits according to International
Financial Reporting Standards or U.S. GAAP.
Provision for Directors’ Retirement Benefits
The Company and certain of its domestic consolidated
subsidiaries reserve an amount for director retirement
benefits based on corporate bylaws. The amount reserved
is equivalent to the amount payable as of the end of thecurrent consolidated fiscal year.
Provision for Corporate Officers Retirement Benefits
The Company reserves an amount for executive officer
retirement benefits based on corporate bylaws. The
amount reserved is equivalent to the amount payable as ofthe end of the current consolidated fiscal year.

Useful lives and residual values are determined according tostandards prescribed by the Corporation Tax Law of Japan.
Software used for internal purposes is amortized according
to the straight-line method over the useful life for Company
purposes (five years).
Foreign consolidated companies amortize intangible noncurrent assets according to the straight-line method.
Leased Assets
Assets subject to financing lease transactions enteredinto by domestic consolidated companies in which asset
ownership is not transferred to the lessee are depreciatedaccording to the straight-line method. The lease term isconsidered to be the useful life of the asset; residual value
is assumed to be zero.
Domestic consolidated companies will continue to accountfor financing lease transactions in which the asset
ownership does not transfer to the lessee entered into
prior to March 31, 2008 in conformity with methods related
to normal lease transactions.
Assets subject to financing lease transactions enteredinto by foreign consolidated companies are depreciatedaccording to International Financial Reporting Standards or
U.S. GAAP.
(d) Significant Allowances and Provisions
Allowance for Doubtful Accounts
Domestic consolidated companies reserve against losses
due to uncollectible debt using actual loan loss ratios forgeneral receivables. For loans questionable as to collectability and under claim of bankruptcy, domestic consolidated companies reserve against uncollectible amounts
according to the likelihood of collectability in each case.
Foreign consolidated companies reserve against losses
due to uncollectible debt according to management’s
consideration of individual accounts.
Provision for Bonuses
The Company and its consolidated companies reserve an
estimated amount of future payments for employee bonuses
based on a calculation of the exact amount to be payablefor the current consolidated fiscal year.
Provision for Loss on Business Liquidation
Certain of the domestic consolidated companies hasrecorded a provision for estimated losses in connection withthe liquidation of a Company business.

(e) Foreign Currency Translation
Domestic consolidated companies translate rights andobligations denominated in foreign currency into Japanese
yen according to the spot rate as of the last day of theconsolidated fiscal period. Translation differences arerecorded as income or expense. Assets and liabilities
of foreign consolidated companies are translated into
Japanese yen according to the spot rate as of the last dayof the fiscal period of the subsidiary in question. Income
and expense accounts are translated into Japanese yen

27

JSP ANNUAL REPORT 2012transaction, cash flows, and the hedge method in question.

according to average rate during the period, and translationdifferences are included in the foreign currency translation
adjustment and minority interests of the net assets sectionof the consolidated balance sheet.

(g) Amortization of Goodwill and Negative Goodwill
Goodwill is amortized over five years under the straightline method during the period in which said goodwill is
considered to provide benefits. Negative goodwill occurring
prior to March 31, 2010 is amortized over five years under
the straight-line method.

(f) Major Hedge Accounts
Hedge Accounting
Accounting for hedges using the deferred treatment.
However, special treatment is applied for interest rate
swaps meeting certain special conditions.
Hedge Methods and Transactions
Hedge Method: Interest rate swap transaction
Hedge Transactions: Interest rates on borrowings
Hedge Policy
Company policy is not to enter into speculative transactions. Derivatives are used to reduce the risk of interest
rate fluctuations on debt, according to Company management rules.
Evaluation of Hedge Effectiveness
Effectiveness is assessed by confirming whether there is ahigh correlation among the rate fluctuation of the hedged(h) Scope of Cash included in the Consolidated
Statement of Cash Flows“Cash” stated in the consolidated cash statement of cash
flows includes cash on hand, demand deposits, andother short-term investments that are highly liquid, easily
convertible to cash, are redeemable within three months ofacquisition, and are not subject to material risk of fluctuation in value.
(i) Accounting for Consumption Taxes
Accounting for consumption taxes using the tax-exclusion
method.

3. SECURITIESSecurities as of March 31, 2012

Millions of Yen
Classification
Cost
Securities with Value on Consolidated Balance
Sheet Greater than Acquisition Cost
Stock
478
Sub-total
478
Securities with Value on Consolidated Balance
Sheet Not Exceeding Acquisition Cost
Stock
245
Sub-total
245
Total
724

Book Value

Change

734
734

255
255

220
220
954

(25)
(25)
230

(Notes)1: The market value for unlisted stocks (¥ 918 million on consolidated balance sheets) is extremely difficult todiscern. Accordingly, such is not included in the table above.
2: “Cost” in the table above reflects book value after recording impairment loss. The Company recognizedimpairment losses for certain securities and recorded ¥ 20 million in loss on valuation of investment securities during the consolidated fiscal year.

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

Millions of Yen

Long-term loans payable

28

2012

2013

2014

2015

2016

After
2016

4,582

4,393

2,594

1,758

822

185

5. TAX-EFFECT ACCOUNTING
2012

Millions of Yen

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 Stocks of 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

381
44
29
34
235
53
9
4
42
19
62
6
430
1,353
(77)
1,276

Deferred Tax Liabilities
PPE, Insufficient Accelerated Depreciation
Unrealized Gains (Losses) on Marketable Securities, Net
Valuation Differences on Assets Received in Merger
Other
Total Deferred Tax Liabilities

318
91
94
171
676

Net Deferred Tax Assets

600

Reconciliation of Differences between Statutor y Tax Rate andEffective Income Tax Rate
Normal Effective Statutory Tax Rate
(Adjustments)
Entertainment and Other Non-Deductible Expenses
Dividends and Other Non-Taxable Income
Per-Capita Taxation
Deduction for Foreign Taxes
Special Deduction for R&D
Gain in Equity in Affiliates
Difference in Tax Rate on Income of Consolidated Subsidiaries
Income Taxes for Prior Periods
Reversal of Deferred Tax Assets due to Amendments of the Corporate Tax Act
Valuation Allowances
Other
Actual Effective Tax Rate

29

40.7%
2.5%
(0.6%)
0.7%(0.4%)(2.2%)(0.1%)(13.2%)
0.9%
1.3%
2.9%
1.5%
34.0%

JSP ANNUAL REPORT 2012

6. EMPLOYEE RETIREMENT BENEFITS
Current Consolidated Fiscal Year
1. Overview of Retirement Plan
Domestic consolidated companies have adopted adefined benefit plan for employees. At the time of retirement, employees may be given severance pay in somecircumstances.

Certain foreign consolidated companies have adopted
a defined contribution plan for employee retirement
benefits.

manufactures and sells foamed polypropylene, foamed
polyethylene, and foamed polystyrene products, etc.

handled therein, as well as for their business activities.
Accordingly, the business divisions are comprised of thebasic products making up that segment, and have beenclassified into the Extrusion Business and 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. Beadfoaming technology is the basis of the Bead Business, which

2. Calculation of Net Sales, Profit or Loss, Assets andOther Items for Reporting Segments
The Company follows the provisions of “Summary of
Significant Accounting Policies” in accounting for reporting
business segments.
Inter-segment sales are based on transaction prices withthird parties.

2. Defined Benefit Plan (as of March 31, 2012)

Millions of Yen
a. Projected Benefit Obligation(7,227)b. Plan Assets
4,742
c. Sub-total (a + b)
(2,484)d. Unrecognized Actuarial Differences
1,658
e. Unrecognized Past Service Obligation
112
f. Net Accrued Retirement Benefits Recognized in Consolidated Balance(714)
Sheets (c+d+e)g. Prepaid Pension Cost—h. Provision for Retirement Benefits (f – g)(714)

3. Net Sales and Income (Loss) by Reporting Segment
Consolidated Fiscal Year (April 1, 2010 to March 31, 2011)2011(Note) Certain consolidated subsidiaries utilize the simplified method to calculate the projected benefit obligation.

3. Retirement Benefit Expenses (as of March 31, 2012)

4. Basis of Projected Benefit Obligation Calculation
a. Period Allocation Method for Projected Benefits
b. Discount Ratec. Expected Return on Pension Assets
d. Years over which Past Service Cost is Amortized

Period Straight-Line BasisPrimarily 1.7%
Primarily 1.7%
Primarily 14 years

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.)

7. SEGMENT INFORMATION
1. Reporting Segments
Reporting segments are those segments comprising theCompany group for which separate financial information
can be obtained. The Company board of directors periodically reviews these segments to determine the allocationof Company resources and to assess performance.
The Company has adopted a business division structure.
Each business division is responsible for comprehensive
strategy related to domestic and international products

30

50,219495
50,715
4,556

85,6481,378
87,027
7,647

Total

6,322
33
6,356
7

91,971
1,412
93,384
7,654

Adjustment Consolidated(Note 2)
(Note 3)—
(1,412)(1,412)(102)

91,971—
91,971
7,552

Consolidated Fiscal Year (April 1, 2011 to March 31, 2012)(Note) The net retirement benefit cost for consolidated subsidiaries adopting the simplified method is recorded as “a. Service Cost.”(Charged to expense using the straight-line method over the average remaining years of employee service.)

35,429882
36,3113,090

Other(Note 1)

(Notes)1: “Other” represents a classification for a business segment not included in reporting segments. This segment includes the manufacture and saleof general packaging products.
2: The ¥102 million of Adjustment under Segment Loss consists of ¥103 million in companywide expenses not allocated to each reporting 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 Income (Loss) is adjusted with Operating Income on the Consolidated Statements of Income.

Millions of Yen
447
112
(74)
165
24
674

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)

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

Millions of Yen
Reporting Segments
Extrusion
Bead
Sub Total

2012

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

Millions of Yen
Reporting Segments
Extrusion
Bead
Sub Total
34,585829
35,4152,557

52,869447
53,316
3,212

87,454
1,276
88,731
5,769

Other(Note 1)
5,942
56
5,999
(214)

Total
93,397
1,333
94,7305,555

Adjustment Consolidated(Note 2)
(Note 3)—
(1,333)(1,333)(259)

93,397—
93,397
5,296(Notes)1: “Other” represents a classification for a business segment not included in reporting segments. This segment includes the manufacture and saleof general packaging products.
2: The ¥259 million of Adjustment under Segment Loss consists of ¥260 million in companywide expenses not allocated to each reporting segment and¥1 million in intersegment eliminations. The majority of these expenses are costs for research and development not attributable to either reporting segment.
3: Segment Income (Loss) is adjusted with Operating Income on the Consolidated Statements of Income.

4. Matters related to Changes in Reportable Segments
Beginning with the current consolidated fiscal year, theCompany has moved some products under the “Other”
segment to the “Bead” segment due to changes to theCompany’s organization.

Net sales and income (loss) by reporting segments
for the prior consolidated fiscal year (April 1, 2010 toMarch 31, 2011) is based on new segment categorization.

31

JSP ANNUAL REPORT 2012

CORPORATE DATA (As of March 31, 2012)

WORKING TOGETHER FOR A PROMISING FUTURE

JSP Corporation
Head Office: Shin nisseki Bld., 4-2, 3-chome Marunouchi, Chiyoda-ku, Tokyo, 100-0005, Japan
President, Representative Director: Kozo Tsukamoto
Founded: January 1962
Paid-in Capital: 10,128.610 Million Yen
Number of Shareholders: 16,826
Stock Exchange Listing: Tokyo (First Section: 7942)
Fiscal Year-End: March 31
Investor Relations Contact: Investors Relations Department, Tel: +81-3-6212-6302
URL: jsp.com

Major Shareholders (As of March 31, 2012)
Shares held
(thousands)

Voting rightratio (%)

Mitsubishi Gas Chemical Company, Inc.

13,212

42.06

Japan Trustee Services Bank, Ltd.

2,190

6.97

The Master Trust Bank of Japan, Ltd.

1,565

4.98

JSP Client Stock Ownership Plan

1,081

3.44

JPMorgan Chase Bank, N.A.

575

1.83

JSP Employee Stock Ownership Plan

485

1.54

BBH LUX Fidelity Funds Japan Advantage

424

1.35

Trust & Custody Services Bank, Ltd.

311

0.99

Nippon Life Insurance Company

301

0.95

Shareholders

32

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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