NISSHINBO ANNUAL REPORT 2007

2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo 103-8650, Japan
Tel: 03-5695-8833 / Fax: 03-5695-8970
URL: http://www.nisshinbo.co.jp/

Annual Report 2007
(Year ended March 31, 2007)

Year ended March 31, 2007

Reforms for Driving Growth

Printed in Japan

Nisshinbo Industries, Inc. (the “Company”)

CONTENTS

was founded 100 years ago in 1907 as a

Financial Highlights — 1

manufacturer of cotton yarns and threads.

Nisshinbo at a Glance — 2

While playing an important role as part ofInterview with the President — 5

Japan’s basic industry, Nisshinbo has

Three-year Management Plan 2008 — 6

broadened the scope of its business inFocus 1 Role of the New Chemical Division — 8

response to the evolving needs of the times,

Focus 2 Electric Double Layer Capacitor — 9

and has currently built a solid position as a

Focus 3 New Domains within the Textiles Business — 10
Nisshinbo’s Approach to CSR — 13

automobile brake
manufacturer. Nisshinbo is

Nisshinbo’s R&D and New Business Development — 16

preparing for the full-scale

Management Discussion and Analysis — 18

start up of businesses in new

Six-year Summary — 27

growth domains that are aligned with the

Financial Section — 28

emerging needs of contemporary society,

Nisshinbo History — 42

including in environmental andNisshinbo Group — 43

telecommunications fields. Utilizing its

Board of Directors/Corporate Data — 44

overall capabilities and based on the slogan

Organization Chart — 45

“reform and growth,” Nisshinbo is
contributing to society through its businessactivities to raise its corporate value.

In this annual report, statements other than historical facts are forward-looking statements thatreflect our plans and expectations. These forward-looking statements involve risks, uncertainties
and other factors that may cause our actual results and achievements to differ materially from thoseanticipated in these statements.
The paper used for this Annual Report is from Nisshinbo’s VENT NOUVEAU series of fine papers.

Nisshinbo’s Lineage of Products and Technologies

1907~

1930~

1940~

1950~

1960~

1970~

1980~

1990~

2000~
Electric Double Layer
Capacitor
Bipolar platefor fuel cells
Carbons
Carbodilite

Synthetic organic chemistry

Polyurethane foamHigh polymer chemistry
Textile engineering

Synthetic fibers/resins

Spinning engineering

Non-woven fabrics

Weaving/knitting/dyeing/finishing technology

Mechanical engineering

Thermoplastic
polyurethane
elastomer
Spinning
TextilesColor systems
Friction materials
Brake systems

Braking engineering

Electronic engineering

ABS
Machine tools
Label printing/printers

Papermaking

Household papers
Fine papers
Synthetic papers
Surface processing technology

Financial Highlights(Years ended 31st March)

Consolidated:(millions of
US dollars)(millions of yen)

Net Sales
TextilesAutomobile Brakes
PapersChemical ProductsElectronics
Real Estate Leasing
OthersOperating Income
Net Income
Equity

2007

2006

2005

2004

2003

¥

312,825
82,243
61,76429,90835,85076,068
4,788
22,204
11,551
15,107
282,015¥ 278,617
82,87958,13028,61236,00745,858
4,781
22,35010,524
11,183
266,434¥ 243,421
82,16454,30628,58534,19916,843
4,945
22,3799,651
8,199
222,771¥ 226,883
68,40352,07629,01032,09816,176
4,941
24,1798,496
3,919
214,132¥ 231,194
74,03456,35327,02430,77815,936
4,785
22,284
5,989
777
186,028

$

¥

74.19
1,301.14
15.00

¥

¥

¥

¥

$

2007

2,651
697
523
253
304
645
41
188
98
128
2,390

Per Share:(yen)

Net Income
Shareholders’ Equity
Cash Dividends

53.21
1,283.21
10.00

39.03
1,072.54
10.00(US dollars)

17.86
1,030.98
7.00

3.18
860.52
7.00

0.63
11.03
0.13

Key Ratio:
(%)

3.1
5.7

Return on Assets
Return on Equity

2.6
4.6

1.2
2.0

2.2
3.8

0.2
0.4

Note: The United States dollar amounts in this report are given for convenience only and represent translations of Japanese yen at the rate of ¥118=US$1.

Consolidated Net Sales
by Segment

Net Sales Composition by Segment in
Fiscal 2007

(billions of yen)

(%)

350

Net Income

Net Income per Share(billions of yen)

(yen)

20

80

15

60

10

40

5

20

300

Others
7.1

250

200

Real Estate
Leasing
1.5

150Electronics
24.3

Chemical
Products
11.5

100

Textiles26.3

Automobile
Brakes19.7
Papers
9.6

50

0

0

0
’03 ’04 ’05 ’06 ’07
TextilesAutomobile Brakes
PapersChemical Products’03 ’04 ’05 ’06 ’07’03 ’04 ’05 ’06 ’07

Electronics
Real Estate Leasing
OthersNote: Electronics, previously included in the Other Products sector, was treated independently from fiscal 2006 due to the growing importance and potential of the sector. Figures forprevious fiscal years have been adapted to take account of this change.

1

Nisshinbo at a Glance
TEXTILES

Shares of main domestic markets (2006)
Dress shirt cloth• Since Nisshinbo’s founding in 1907, we have continually
been a leader in Japan’s textiles industry with our highquality products and high-level technologies.
• While promoting production in optimal locations, we are
implementing selection and concentration in ourbusinesses, with no business domains off-limits.
Main Products
Dress shirt cloth, denim, uniforms, spandex, non-woven fabrics,
sleepwear
Main Product Fields
Wrinkle-free materials:
Utilizing our technologies for NON CARE 100% cotton, drip-dry(wrinkle-free) shirts as well as our technologies for PURETWIST specialized twisted yarn, we offer a wide range of
wrinkle-free products that range from dress shirts to jackets andpants.
Functional processed materials:
In addition to Nisshinbo’s Nanoscience brand, which features adiversity of functions (softness, water-repellency, anti-staining,
skin care, silver-based anti-bacterial and deodorizing functions
and wrinkle-free functions), we offer a lineup of anti-bacterial,
deodorizing, and anti-soiling materials that utilize photocatalytic

AUTOMOBILE BRAKESMain Products
Friction materials: Disc pads, brake linings, clutch facings
Brake products: Drum brakes for passenger cars and commercial
vehicles, disc brakes for commercial vehicles, ABS products(currently being transferred to Continental Teves Corporation)
Development themes
Development is focused on high coefficient of friction,
noise/vibration characteristics, improved performance of brake

PAPERS• We manufacture various types of paper and paper-related
products. These include such household papers as tissue
paper, toilet paper, and kitchen-use paper towels; finepapers used for high-quality printings and documents;
synthetic papers for use in back-lighting displays printed
advertisements, and labels.
• The basis of our Paper business is to develop and provide
stable supplies of original, high-quality products that areboth environment- and people-friendly.
Main ProductsHousehold papers:
COTTON FEEL (tissue paper and toilet paper)
SHOWER ROLL (toilet paper)
POPLA (toilet paper made from recycled materials)
PEACH (tissue paper, toilet paper, and kitchen paper towels)
2

Uniforms

Approximately 25%
Approximately 30%
Approximately 30%(The above graphs were prepared based on Nisshinbo’s internal data.)
NON CARE

oxidized titanium; materials withtransparency-blocking functions; and materials that promote good
sleep.
GAIACOT:An epoch-making nano-technology material with excellent antibacterial and deodorizing functions. In addition to commencing
sales of masks for medical hygiene fields, we are also developing
applications for industrial and agricultural fields.
Apparel:Shirts (CHOYA CORP., Naigai Shirts Co., Ltd.), denim (Ocean
Link Corporation)
Domestic
Manufacturing plants: 9
Overseas
Manufacturing plants: 5 plants in China, Indonesia, and Brazil
Sales base: 1 in China (Shanghai)

OE market share of friction materials for domestic automakers (2006)
Disc pads• Since entering the business for automobile friction
materials in 1944, Nisshinbo has continually refined its
technologies and achieved growth to become one ofJapan’s premier manufacturers of automobile brakesystems and friction materials.
• In accordance with the main themes of “promoting
globalization” and “developing competitive products,” weadhere to a policy of overall optimization and strive toundertake unified activities in Japan and overseas.

Denim

Brake linings forpassenger cars

Brake linings for commercial
vehiclesApproximately 20%
Approximately 60%
Approximately 35%(The above graphs were prepared based on Nisshinbo’s internal data.)
Brake parts

pad life, “green” products made ofenvironment-friendly materials, and the application of newtechnologies, production methods, and materials to achieve
innovative cost reductions.
Domestic
Manufacturing plants: 2
Test courses: 1
R&D center: 1
Overseas
Manufacturing plants: 5 plants in the United States (2),Thailand (1), South Korea (1), and China (1)Fine papers:
VENT NOUVEAU, ARABEL and MILT GA
high-quality printing paper
Synthetic papers:
Peach Coat (for printing, labels and backlighting displays)
Peach Jet (for ink jet posters and ink jet
printings for back-lighting displays)

Household paper
products

Newly Cultivated Businesses
Nisshinbo entered the market for packaging when Daiwa ShikoCo., Ltd., a packaging processing company, became part of the
Nisshinbo Group. In synthetic papers, we are also working tocreate a new film business using plant-derived resins.
Domestic
Manufacturing plants: 6

CHEMICAL• We are working to cultivate new growth businesses
centered on the three businesses of electric double layer
capacitors, bipolar plates for fuel cells, andCARBODILITE functional chemicals.
• We are accelerating selection and concentration inexisting businesses. While withdrawing from unprofitablebusinesses, we will streamline our operations into heatinsulation materials, elastomers, and carbon products,
and concentrate the allocation of management resourceson these fields.
NEW BUSINESSESElectric Double Layer
Capacitor (N’s CAP)
Features:
These capacitors use
Nisshinbo’s originally developed
ionic liquid and boast theworld’s highest level of power
density. Compared withtraditional batteries, these havesuperior features such as ultra- Electric double layer capacitor (N’s CAP)
quick, highly efficient charging
and discharging capabilities as well as long life. Nisshinbo is
progressing with commercialization with a particular focus on
high-power applications.
Fields of application:
We are currently carrying out development with a view towardvehicle/vehicle-mounted applications. We are steadily building on
our record of supplying these as power sources for transportationequipment.
Market acclaim:
This is the first capacitor to be commercialized for power
applications. We are targeting promising power-assisted
applications.
Collaboration:
We are establishing a support structure comprising Group
companies that includes using the circuit design technologies ofJapan Radio Co., Ltd. and the semiconductor technologies of New
Japan Radio Co., Ltd., which is looking toward future
chipmaking.
Production capacity:
In fall 2007, we will gear up for the operation of mass production
facilities. In the future, we plan to produce 50,000 cells permonth.
Bipolar Plates for Fuel Cells
Features:
Boasting the world’s No. 1
performance capabilities, thesehave such characteristics as“high strength,” “thinness,”“flexibility and outstanding
formability,” “lightness andhigh-corrosion resistance,”
Mold carbon bipolar plate“good conductivity, and “goodhandling properties.”
Market acclaim:
Nisshinbo is earning acclaim as the world’s top manufacturer ofbipolar plates. We have delivered these plates to almost all theworld’s fuel cell manufacturers.

Future potential:
Companies are currently competing to develop automobile- andresidential-use fuel cells.
Automobile use:
We have already responded to automobile specifications.
Demonstration testing of fuel cell vehicles is progressing. A key
to market expansion is progress in establishing a social
infrastructure system that includes hydrogen stations.
Residential use:
Led by the Japanese Government, demonstration testing is taking
place and the introduction of fuel cells is progressing. Full-fledged
expansion is expected from 2009 upon the completion of thisproject.
Functional Chemical Products (CARBODILITE)
We offer CARBODILITE(NISSHINBO’s proprietaryfunctional polymer based on
Carbodiimide) and water
treatment carrier products.
Features & Fields ofapplication:“Improvement agent of the Bioplastic (Polylactic acids)” andCARBODILITE“Crosslinker of water-based
paint / ink / adhesive.” It is used
to give a high function to resin for decreasing burdens on theenvironment.
Market acclaim:
Our product has achieved top acclaim worldwide as a PLA
improvement agent. Also, low toxicity to the human body
gives this product overwhelming superiority.
Growth potential:
There is expected to be a further tightening of regulations,
including regulations on CO2 emissions and VOC release, aimed
at environmental protection. Along with these tighter regulations,the role of CARBODILITE is expected to increase dramatically.
Production capabilities:
At present, a production line with a monthly capacity of 100 tons
is operating at our Tokushima Plant. We are considering
increasing and strengthening production facilities.
EXISTING MAIN BUSINESSES
Rigid-type polyurethane foam:
We are promoting applications as heat insulation materials.
Elastomers:
Our Nisshinbo Mobilon line of products has gained recognition
worldwide. Unlike rubber, this product does not contain sulfur orplasticizers and is therefore unlikely to trigger any allergies.
Nisshinbo Mobilon is a trailblazing elastomer product.
Applications span a wide range from apparel materials toindustrial materials.
Carbon products:
Used mainly in semiconductor production components and otherelectronics sectors. Also used in electrodes for plastic matching
during the semiconductor manufacturing process.
Molded plastic products:
The Nippon Kohbunshi Group offers cross-flow fans for air
conditioners, automobile components, and others.
Domestic
Manufacturing plants: 3
Overseas
Manufacturing plants: 2 plants in Thailand and China

3

Nisshinbo at a Glance

ELECTRONICS• Through consolidated subsidiaries and equity-method
affiliates, we engage in the manufacture and sale ofsemiconductors and electronic devices and are involvedin the information/telecommunications business.
• We are focusing on cultivating new businesses, targetingthe automobile field.
Business Companies:
Consolidated:
Semiconductor-related—New Japan Radio Co., Ltd.
Electronic device-related—Ueda Japan Radio Co., Ltd.
Equity-method affiliates:
Japan Radio Co., Ltd.
Nagano Japan Radio Co., Ltd.

Main Products
Semiconductor devices, microwave
tubes and radar components,
microwave application products,
Wireless communications
equipment, medical-use devices,
measuring devices
Main Product Fields
NJU26040 digital signal processor
Analog semiconductors:
Possesses superiority in analog semiconductor technologies,
beginning with operational amplifiers.
Microelectronics and microwave technologies:
Have applied technologies for information communication andaudio-visual fields by combining information processing
semiconductor technologies and information transmission
microwave technologies.

REAL ESTATE LEASING• Our Real Estate Leasing business involves efficiently
utilizing unused land to contribute to earnings.
• As a large-scale project, a shopping center currently
under construction at the former Tokyo Plant isscheduled to open in November 2007.
Main Projects
We operate an office building in Tokyo (built on the site of ourformer Head Office) and lease out land previously occupied byplants and other facilities for use as shopping centers, residences,and others.

Ario Nishiarai shopping center (scheduled for
opening in November 2007)

OTHERS
Precision Instruments & Machinery
Main products and proprietary technologies
Field

Main product

Proprietary technology

Specialized machinery

Processing machinery for the
automobile, housing, construction
material, business equipment, andaircraft industries• Comprehensive engineering capabilities that can respond tovarious processing methods and types of systems• Electrical equipment design and software design anddevelopment technology capabilities

Environment-related
equipment

Solar photovoltaic module
manufacturing equipment• Laminate technologies and measuring technologies that utilize
our know-how and experience gained from having the No.1
domestic share (more than a 50% share for laminators andmore than a 90% share for simulators ).

General-use machinery

Sheet metal machinery• Response capabilities in building systems using our sales
achievements

Precision processing

Mass-produced components for
ABS and automobiles• Precision-cut components processing, deburring and washingtechnologies and facilities development capabilities

Color Systems
Main product: CCM (computer color matching system)
Priority technology: Color tone know-how and response
capabilities based on internal verifications that reflect ourabundant experience in the response field.

4

Solar Simulator solar battery production
equipment

Hyper CHOSHOKUSENKA X Seriescomputer color matching system

Interview with the President

Takashi Iwashita
President

On February 5, 2007, Nisshinbo Industries, Inc. celebrated the 100th anniversary of its founding. During
the past century, Nisshinbo has continued to steadily carry out its operations thanks to the support ofshareholders, the loyal patronage of customers, the dedicated efforts of employees, including ourpredecessors, the understanding of residents of the local communities near our plants and business offices,and the cooperation of all our stakeholders. I would like to express my deepest gratitude to everyone foryour support. Reaching the 100-year milestone is certainly an achievement representing a long journey interms of a person’s lifetime, but for a company this merely marks a transit point. To drive further growth, acompany must continually retain its youthfulness and be brimming with strength and vigor.
Rather than a time for reflecting on the past, we regard our 100th anniversary as an ideal opportunity
for renewing our commitment to achieving fresh growth. During the same year we celebrate our centennial,
we are preparing to once again set sail on a new course of significant growth and aim to reward
shareholders with the fruits of these efforts. I believe that achieving
growth is the best means of repaying everybody for their loyal
support to the present. This is our firm resolution as we look to
the future.

Reforms for Driving Growth5Interview with the President

Q 1.

Could you briefly explain theinitiatives you implemented
and talk about your consolidated businessresults in fiscal 2007, ended March 31,
2007?
Fiscal 2007 was a year that saw Nisshinbo
make steady strides in solidifying our
foundation for achieving new growth as westart our 101st year of business. To this end,
the Nisshinbo Group ambitiously promoted ahost of initiatives based on “selection andconcentration” and “promotion of amicable
M&As,” which are core management policies ofour “Three-Year Management Plan 2008”
launched in April 2006.
Let me give you a few examples of these
initiatives. In our Textiles business, we ceased
operations at our Toyama Plant and withdrew
from low-profit commodities in the domestic
market, and have now completed therestructuring of our business for spun andwoven products. From fiscal 2008, we intend to
tailor our processing facilities for small-lot,
multi-product production. Additionally, we will
significantly scale-down unprofitable productcategories and businesses and execute sweeping
Three-year Management Plan 2008
Nisshinbo Industries, Inc., has drafted its new
medium-term “Three-year Management Plan
2008” covering the period from April 2006
through the fiscal period ending March 31,
2009. The core management policies are as
follows:
1) Continue to bring to market uniqueproducts with high added value to serve as
the foundation for strong quality
competitiveness.
2) Reduce lead times and thoroughly
emphasize a prompt “customer first”
response.
3) Promote collaboration with othercompanies.
4) Pursue overseas expansion and accelerate
localization of production and marketing.
5) Promote amicable M&As.
6) Reorganize and withdraw from businesses
with no prospects for profitability.
In addition to these policies, Nisshinbo will
implement key measures in order to achieve its
consolidated performance targets for the period
ending March 31, 2009, including net sales of¥360,000 million, operating income of ¥25,000
million and net income of ¥16,000 million.

6

reforms to raise profitability, as part ofstructural reforms that will allow us to
specialize in high value-added products. In
Automobile Brakes, we finally attained
profitability at U.S. subsidiaries that had
continually posted losses since theirestablishment, thereby creating a solid structure
capable of generating steady earnings in North
America in the future. Regarding the Chemicalbusiness, we withdrew from such unprofitablebusinesses as soft-type polyurethane foam,
Airlight FRU (glass fiber-reinforced urethane),and “N’s VIP” (vacuum insulation panels). At
the same time, we re-directed the allocation ofmanagement resources toward three new pillarsof business with high growth potential: electric
double layer capacitors, bipolar plates for fuelcells, and CARBODILITE, Nisshinbo’s
proprietary functional polymer based on
Carbodiimide. We also integrated our Business
Development Division with the Chemical
Products Division to form the new Chemical
Division as part of important organizational
reforms to overhaul our structure for effectively
cultivating new businesses. In the Electronics
business, Japan Radio Co., Ltd. and Nagano
Japan Radio Co., Ltd. became part of the
Nisshinbo Group as equity-method affiliates.
With the addition of these two companies, wehave built a support structure for business forelectric double layer capacitors in preparation
for the start-up of mass production in fall 2007.
At the same time, we have formed a framework
within the Group for doing business in suchgrowth domains as information and wirelesscommunications.
I feel that the series of measures we have
implemented is already having a positive
impact. However, rather than yielding
immediate benefits, it could take several years
or in some cases even longer for our reforms totruly bear fruit. I have always consideredreforms as the only real means of achieving
growth and will thus continue to vigorously
promote reforms in the future. Thanks to thesereforms, as well as the favorable turnaround in
the business environment, as underscored byan overall rebound in the Japanese economy,
Nisshinbo achieved steady growth inconsolidated business results in fiscal 2007.
Consolidated net sales increased 12.3% fromthe previous year to ¥312,825 million(US$2,651 million). Operating income rose
9.8% to ¥11,551 million (US$98 million),underpinned by improved earnings of a U.S.
subsidiary in the Automobile Brakes business.
Net income soared 35.1% to ¥15,107 million(US$128 million).

Q 2.

Could you bring us up to dateon the progress of Nisshinbo’s
new three-year management plan and yourpriority tasks in fiscal 2008, ending March
31, 2008?
We are transitioning from stock-typemanagement, which emphasizes utilizing assets
to achieve growth, to flow-type management,
which stresses profits in each fiscal year.
Through our three-year management plan, weare making our utmost efforts to further
advance our reforms and undertake activities
that spur further growth.
Although our actual business results might
give the impression that progress in attaining
the numerical targets of the three-year plan isslightly lagging, I foresee these reforms picking
up speed during the second year as we work toattain our targets. As a crucial core policy inpromoting our business, we will resolutely
execute “selection and concentration,” andstrive to raise ROE.
Let me now describe some of the specificmeasures we will take in each business. In the
Textiles business, we will reevaluate thecontents of our business, introduce cutting-edge
processing facilities, and strengthen ourdevelopment structure. In our Automobile
Brakes business, we will proceed with the
preparation of plans for advancing into India, amarket with the potential to serve as a newpillar of growth. Looking at our Chemicalbusiness, in November 2007 we will start
operating a new plant for mass production ofelectric double layer capacitors. At the sametime, we have created a conceptual frameworkfor supporting investments in facilities in the
run-up to mass production of bipolar plates forfuel cells. We will also strive to achieve
profitability for CARBODILITE products by
expanding sales in this business.
One factor hindering the progress of ourthree-year plan has been slumping the inabilityof New Japan Radio Co., Ltd. to reach its
targets in the Electronics business. We
recognize this situation mirrors inadequacies indeveloping products matched to market needs.
However, I am pleased to report that the
product development situation has recently

brightened, and that in fiscal 2007 New Japan
Radio attained certification for ISO/TS16949,
an international quality assurance standard forthe automobile industry. New Japan Radio has
now firmly put into place a structure forsupplying products to the automobile industry,
Japan’s largest industry. Thanks to its
involvement in automobile brakes and ABS, theNisshinbo Group is well positioned with a solid
customer base of automakers and components
manufacturers. In the future, we expect toexpand business by guiding New Japan Radio’s
business toward these customers, which is an
excellent example of how we are utilizing
Group synergies.

Reforms for Driving Growth7Interview with the President

Q 3.

How would you assess growthpotential for your three new
Chemical businesses?
Given that actual markets for these threebusinesses—electric double layer capacitors,
bipolar plates for fuel cells, andCARBODILITE—are still in embryonic stages,
it is difficult to make any categorical forecasts.
We anticipate that the automobile industry willbe the main target market for these threebusinesses. As you are well aware, theautomobile sector is enormous. With this inmind, even based on our most-conservative
estimates, the full-scale use of these products
would likely have the impact of doubling

FOCUS 1
Role of the New Chemical Division
A division for cultivating growth businesses that utilize
proprietary technologies
As a growth measure embodying “selection and concentration,” weintegrated the Business Development Division and the Chemical Products
Division to form the new Chemical Division. The establishment of thisdivision has two broad aims.
1) Establish a structure for new businesses that have entered the fullfledged business development stage.
In each of our new growth businesses of electric double layer capacitors,
bipolar plates for fuel cells, and CARBODILITE functional chemicals, we aim
to establish structures that integrate sales, development, and manufacturing
as well as to raise business development speed and efficiency. Moreover, we
will concentrate the allocation of human, financial, and other management
resources toward these fields while also realizing quick decision-making
capabilities.
2) Reevaluate existing businesses
We have been striving to reevaluate and carry out selection andconcentration in our existing businesses from the perspectives of profitability
and future potential. To this end, we withdrew from such sectors as Airlight
FRU (fiber-glass reinforced urethane), in which Nisshinbo’s competitivenesswas weak, and streamlined our business into the three fields of heatinsulation materials, elastomers, and carbon.
By taking these steps, we have dismantled divisional barriers andconsolidated our isocyanate (a main raw material of urethane) and carbon
technologies, which functioned as core technologies cultivated over many
years in our chemical
products business.
These measures will also
allow us to concentrate
the reallocation of assets
toward growth businessfields.
Mold carbon bipolar plate

8

CARBODILITE

Nisshinbo’s current non-consolidated sales.
Numerically speaking, the value of sales could
thus conceivably rise from around ¥137,000
million to nearly ¥300,000 million.
Also, because these three businesses areclosely aligned with the value of “global
environment protection,” for which there areextensive needs in contemporary society, we
envision particularly rich future potential forthese businesses. Each of these three products
is particularly well matched to the wide-ranging
environmental protection needs of humansociety. Specifically, our electric double layer
capacitors have applications in energy
conservation, while bipolar plates have uses inclean energy and residential-use fuel cells and
CARBODILITE can be used as an additive forplant-derived plastic components.
My own pet theory is that businesses infields closely attuned to the essential needs ofhumans and their aspirations will definitely
achieve growth, even if there are twists andturns along the way. As we remain vigilant of
the needs of human society, when deciding
whether to fully launch a business, aparamount consideration must be whether wepossess proprietary and unique technologies
that cannot be emulated by competitors. If a
misjudgment is made, then a business will end
up being an empty dream with no viability andwill be easily overtaken by competitors.
Fortunately, our three new business pillars
are founded on Nisshinbo’s highly originaltechnologies, making it difficult for any
competitor to catch up to Nisshinbo. Our
technologies are clearly in the vanguard of thetimes and have the potential to become the defacto standard globally.

Q 4.

Could you describe how you
are proceeding with M&As,
which represent one effective growthstrategy?
An inherent feature of M&As is the purchaseof both business domains and time. For
Nisshinbo, M&As are not a means of achieving
the end result of temporarily increasing sales
and earnings. Similarly, Nisshinbo believes
M&As offer no value unless this course ofaction brings sustainable growth. Additionally,
Nisshinbo believes that M&As must be
amicable. However, the most crucial aspect of
M&As is not whether target companies canactually be purchased, but whether thesecompanies can be skillfully managed and bring
benefits to the Nisshinbo Group after
acquisition. Hostile takeovers inevitably lead tounequal superior-subordinate relationships andgenerate no positive benefits. With this inmind, Nisshinbo’s policy is to pursue only
amicable M&As and avoid hostile acquisitions.
A main challenge in pursuing M&As is thedifficulty in finding a suitable target company.
In our own M&A activities, Nisshinbo was able
to smoothly incorporate Japan Radio, New
Japan Radio, and Nagano Japan Radio into the
Nisshinbo Group, mainly because Nisshinbo
and these companies shared the common trait
of being manufacturers and because we hadforged relationships of trust through long yearsof business transactions, which formed a solidbase for undertaking these M&As.
Our M&As have yielded a host of benefits.
In our electric double layer capacitors business,under the direction of Nisshinbo, we havecreated a technology support structure and built
a foundation for generating synergies while
also securing a solid position in a new growthdomain. We now stand at the threshold of theso-called ubiquitous society, an advanced
information-intensive society. The national
government is thus devoting great efforts tonurturing information-based and ubiquitousrelated businesses. Making the Japan RadioGroup a member of the Nisshinbo Group wasparticularly significant because this provides
the Nisshinbo Group with access to theunlimited growth potential of the informationand telecommunications fields.
M&As have also played a key role in the
Textiles business as well. Determined to securea new pillar of growth, we carried out M&As asa springboard for launching a full-scale foray
into downstream businesses, where Nisshinbo
previously had virtually no presence. One suchcompany acquired was CHOYA CORP., ashirtmaker. During fiscal 2007, CHOYA posted
a sizeable loss amid sluggish business results.
Nonetheless, we have identified the problems
underlying this poor performance and haveintroduced a new management team capable ofsolving these issues. Conversely, this sluggish
performance has provided valuable experiencethat we will utilize to achieve growth in the
future. Having entered downstream sectors
with a sufficient awareness of the inherent
risks, I am confident we can utilize the lessons
learned to develop capabilities for achieving

FOCUS 2
Electric Double Layer Capacitor
Realizing Group synergies to unlock new potentials
Among our three new business pillars, our electric double layer capacitors
business is making particularly noteworthy progress in its commercialization
schedule, and demonstrates strong promise for rapid growth.
Electric double layer capacitors are electric power storage devices capable ofstoring direct currents and do not utilize a chemical reaction such as withbatteries. Because of their small electric power storage capacities, up until
now limited applications of these devices have included circuits. However,advances in technologies have enabled large storage capacities, opening thedoor to new applications such as motors and other high-power applications.
The main characteristics of electric double layer capacitors are thatcompared with batteries, these capacitors can be charged and discharged in
extremely short times and they have long life that can be aptly described assemi-permanent. Moreover, these capacitors are environment-friendly
products because they contain no heavy metals and help reduce wastematerial because of their long life. The market for electric double layer
capacitors is expected to experience large growth as the use of environmentfriendly energy gains momentum. There are also high hopes that electric
double layer capacitors will find important applications in hybrid and othervehicles. On the other hand, there are still several remaining challenges tomarket growth, which include increasing the volume of electricity once it has
been stored and further lowering costs.
Offered under the N’s CAP brand name, our electric double layer capacitors
were developed utilizing Nisshinbo’s originally developed ionic liquid while
amalgamating Japan
Radio’s unique equalizing
circuit design
technologies. Our electric
double layer capacitors
boast the world’s highestlevel capacity, with highoutput charge anddischarge capabilities.
Electric double layer capacitor
Electric double layer capacitor(N’s CAP)
We are alreadyachieving growth in business for electric double layer capacitors used as
power sources for transportation equipment, and from the beginning of theyear we have experienced a surge in new inquiries for applications in
automobiles. In view of these factors, we will start the operation of massproduction facilities in November 2007.
Our electric double layer capacitors business symbolizes the Nisshinbo
Group’s synergies. Specifically, Nisshinbo handles manufacturing of capacitor
cells, which function as the backbone, while Japan Radio handles uniqueequalizing circuit design technologies. Meanwhile, New Japan Radio
undertakes chip making, while Nagano Japan Radio is responsible formodularization. In 2005 New Japan Radio became a Nisshinbo subsidiary,
followed by Japan Radio and Nagano Japan Radio becoming equity-method
affiliates in 2006. As a result, we have now established a foundation for ourcollaborative structure. By actively promoting personnel interchanges as wellas accelerating decision-making, we aim to speed up commercialization andbelieve that we will further raise our competitiveness by bolstering
confidentiality.

Reforms for Driving Growth9Interview with the President

true growth in downstream sectors, as we
remain undaunted in meeting the challenges ofthese businesses.

Q 5.

What is the central focus ofyour growth strategy?

Although I have repeated this frequently, I
cannot overstate the importance of “selection
and concentration.” This is one of our main
approaches to cultivating new businesses, but
as I explained earlier, it is not our only
approach. Many of our existing businesses canbe characterized as mature businesses.
Nonetheless, within these businesses, I believe
there is definitely room for growth in domains
closely related to the needs of human society.
From this perspective, the implementation of“selection and concentration” is indispensable.

FOCUS 3
New Domains within the Textiles Business
Generating growth in mature businesses
Undoubtedly, there are growth domains even within the mature textiles
industry. To firmly seize such growth opportunities, Nisshinbo continuously
implements its policy of “selection and concentration.”
The current textiles market is characterized by the two major trends ofpolarization between lower-priced products and distinctive high value-added
products and rising environmental consciousness. Regarding market
polarization, we believe there are areas for growth in the domains of healthand comfort. A crucial key to capturing markets is to develop high valueadded products and technologies that match consumer needs. Accordingly,
we have developed an abundance of proprietary technologies that utilize
nanotechnologies. These include AG Fresh with anti-bacterial anddeodorizing functions, and Dual Clean, possessing water-absorbing and antisoiling functions. We are also focusing on downstream strategies for a wideranging application of technologies, including technology tie-ups with othercompanies. Prime examples of collaboration include NON CARE wrinkle-free
shirts that utilize anti-puckering technologies of Taltech Limited, as well as
jeans that apply the resin processing technologies of the Chemical Division.
Regarding rising environmental consciousness, we are developing andexpanding sales of natural fiber textiles such as bamboo fibers and banana
fibers as well as developing “Cool Biz” and “Warm Biz” products.
At the production level as well, we have transferred domestic production ofgeneral-use products to overseas locations and have now completed thistransfer with the closingof the Fuji Plant in fiscal
2007. By taking suchinitiatives, Nisshinbo hascompletely ceased
production ofcommodities in Japan andis now concentrating onhigh value-added
processed products.
Nanoscience series

10

Ecosys 28ºC shirts keep wearers
cool in summer

As specific examples, in our Textiles
business we have developed the highly
functional composite material, GAIACOT,
which has anti-bacterial and deodorizing
functions, as well as appealing new functions
such as the ability to effectively inactivate theavian influenza virus under certain conditions.
In precision equipment, we lead the Japanesemarket in providing manufacturing and testing
facilities for solar energy devices and modules,
which have attracted widespread attention as apromising source of clean energy. The three new
businesses that I have discussed are all well
suited to address society’s most-pressing needs,
such as global environmental protection, as wellas people’s desire for long and healthy lives.
Next I would like to talk about the meaningof “grow our businesses,” which basicallyentails orienting our business domains to theneeds of human society. I believe this is truly
the high road to growth. Such efforts to “growour businesses” must also be based on “pursuitof CSR” in addition to “selection andconcentration.” We must also focus on ensuringharmony with all stakeholders. If we extend
these efforts to encompass shareholders,customers, employees, residents of local
communities and, by extension, people
throughout Japan and the world, thenultimately we will earn acclaim fromhumankind.
In starting a new stage of growth as we
begin our 101st year of operation, we mustreevaluate our founding corporate moral
principle of “companies are public organs” andour corporate creed of “consistent integrity.”
Although Nisshinbo exists as a privatecompany that pursues profits, our corporate
moral principle of “companies are publicorgans” also implies that Nisshinbo has an
essential role in contributing to human society
through activities that transcend the attainmentof profits. Our corporate creed of “consistentintegrity” emphasizes honest and humble
conduct in undertaking our business activities,
always keeping in mind corporate and human
ethics. In this context, our corporate moral
principle and corporate creed represent thestarting point of CSR. Taking the high road to
growth thus closely overlaps with ourmanagement principle of “contributing tosociety through corporate activities.”
The corporate principle and corporate creed
we have resolutely adhered to for the past 100

years will remain unchanged. Losing sight ofthese and turning our attention only to the
pursuit of short-term profits would likely
prevent Nisshinbo from realizing sustainablegrowth and prosperity.

Q 6.

Could you describe some of thespecific measures you are
implementing in “pursuing CSR”?
During the past 100 years, we have continually
carried out our operations without becoming
involved in any type of scandalous conduct,
which I attribute to our corporate principle andcorporate creed having deeply permeated theentire Nisshinbo Group as Nisshinbo’s
corporate culture. As we begin our 101st year ofoperation, it will be extremely crucial to once
again demonstrate our firm stance in promoting
the corporate principle and corporate creed.
As one concrete measure, in fiscal 2007 welaunched the CSR Management Center as anorganization under the direct control of the
President. Although specific details are
explained in Nisshinbo’s Approach to CSR(pages 13-15), the following are the principal
functions handled by the CSR Management
Center.
• Arranges regulations prescribing ourcorporate governance and continuallychecks to ensure these regulations areobeyed.
• Strengthens auditing to guarantee thefairness and accuracy of financial
documents.
• Contributes to global environmental
protection through business activities andfocuses on occupational safety in creating
workplaces where employees can workwith peace of mind.
• Promotes two-way communication withstakeholders.
Nisshinbo operates the CSR Management
Center as a core organization within our CSR
framework.
Further bolstering our CSR efforts, we also
set up a system that allows persons inside oroutside the Nisshinbo Group to report any
activities they believe do not conform to our
CSR stance. Under this system, the privacy of
the reporting party is completely protected andthe Corporate Ethics Committee, which isunder the direct authority of the President,
investigates reports, considers countermeasures,and promptly corrects any deficiencies.

We also regard management-related reforms
as a crucial element of CSR. As examples of such
reforms, we have introduced outside directors on
our Board of Directors and shortened the termsof office of directors to one year.
Looking ahead, if we can continuallyrefocus on our origins, namely contributing tohumankind, then I am confident we can avoid
any type of ethical impropriety. As we are in anage where priority is placed on earning profits,

taking every opportunity to ensure a thoroughawareness of our origins becomes even more
important.

Q 7.

Could you give us yourthoughts regarding measures
for returning profits to shareholders?
Finally, do you have any message forshareholders and investors?
I believe it is essential to achieve growth toraise corporate value, earn high acclaim frominvestors and the market, and ultimately
increase our share price. This is the essence ofreturning profits to shareholders.
In fiscal 2007, we paid annual cash
dividends per share of ¥15.00 (US$0.13), an
increase of ¥5.00 from the previous year. This
¥5.00 increase was paid in the form of a special
dividend to commemorate our centennial.
From fiscal 2008, but will strive to further
return profits to shareholders, which includes
raising dividends, depending on improvements
in profits.
As another means of returning profits toshareholders, we also buy back our own sharesas needed. In fiscal 2007, we paid annual
Reforms for Driving Growth11Interview with the President

Yearly Changes in Annual Dividends and Shares Retired(thousandsof shares)¥15

50,00045,000¥10

40,000
¥7

¥7

¥7

¥7

34,745¥730,000(As of the endof May 2007)
37,745¥10

Dividends
35,000¥15(including commemorative dividend)

dividends totaling approximately ¥3,000
million, repurchased our own shares forapproximately ¥7,200 million (5,850 thousand
shares, or 2.8% of outstanding shares issued)
based on a resolution by the Board of Directors,
and retired 6,500 thousand shares. The total
redistribution ratio (total payout ratio), whichis the total amount of dividends and own shares
repurchased as a proportion of consolidated net
income, thus amounted to 67.5%. Consideringthat the average corresponding payout ratio forlisted Japanese companies during the same
period was 55.0%, we take pride in ourconsiderable redistribution to shareholders.
We aim to distribute around the sameamount to shareholders in the fiscal year
ending March 31, 2008. Regarding sharebuybacks, any time Nisshinbo’s further growthdemands stepped-up investments, we willconsider the benefits and drawbacks of sharebuybacks upon considering whether corporate
value can best be raised by investments or by
dividend payments.
I believe that an important mission has been
entrusted to me as president of Nisshinbo. I
recognize that my duty is to once again place areinvigorated Nisshinbo on a new growth track.
The only means of realizing this growth is toearnestly undertake reforms. There is no
denying that reforms also bring pain, and there
is no assurance such reforms will even bear
fruit during my tenure as president. Reforms
are never easy. However, I hope to reward
shareholders by forging a path that will allow
Nisshinbo to become a corporate Group thatattains growth over the long term.
I ask for your understanding of theapproach we are taking as well as for yourcontinued support over the medium andlong terms.

28,245 28,245

25,00019,863 19,863 19,863

20,00014,70015,00010,0009,000

Cumulative total of shares retired

5,000
0

2000

’01

’02

’03

’04

’05

’06

(Fiscal years ended 31st March)

12

’07

’08

Takashi Iwashita
PresidentNisshinbo’s Approach to CSR

CORPORATE PHILOSOPHY OF THE NISSHINBO
GROUP• We shall contribute broadly toward enhancing the comfortable
lifestyles and cultures of people around the world.
• We aim to achieve harmony with society and the global
environment and conduct business activities with honesty
and integrity based on the belief that companies are
public organs.
• We aim to raise corporate value and become a corporategroup with a strong presence in the 21st century.
STRUCTURE FOR PROMOTING CSR ACTIVITIESThe Nisshinbo Group’s basic policy is to promote CSR activities
on a comprehensive basis throughout the entire Group. In June
2006, Nisshinbo established the CSR Management Center withthe aim of strengthening internal control and CSR activities forthe entire Nisshinbo Group. Consisting of five departments, the
CSR Promotion Center consolidates functions that werepreviously dispersed among numerous divisions. The respective
areas overseen by each department of the CSR Management
Center have been designated as follows.
• Corporate Governance Planning Office: Responsible forchecking and evaluating corporate governance for the entire
Nisshinbo Group.
• Internal Audit Office: Performs audits of the head office,branches, plants, and Group companies.
• Environment and Safety Office: Maintains and monitors
environmental management systems as well as carries out
Groupwide safety management and environment and safety
education.
• Investor Relations and Public Relations Office: Responsiblefor investor relations and external public affairs.
• Business Planning Office: Prepares medium- and long-term
management plans and searches for new business.

CORPORATE GOVERNANCE
Nisshinbo’s corporate governance focuses on raising profits forshareholders, and the Company works to ensure managementtransparency, strengthen its responsibilities for providing
explanations, thoroughly adhere to corporate ethics, and makespeedy and accurate management decisions.
Nisshinbo is strengthening its corporate governance underthe management structure described below. With a Board of
Directors consisting of 12 members (including three outside
directors), we are ensuring quick decision-making for
management strategies and policies, while also strengthening
functions for surveillance of the execution of business. Also,
the term of office for directors is now just one year, whichallows us to better clarify the management responsibilities of
directors in each fiscal year. As part of efforts to further raisemanagement transparency, we adopted an outside director
system that includes three outside directors. Additionally, we
introduced a managing officer system aimed at vitalizing theBoard of Directors by separating management decision-making
and business execution functions.
Although it has a simple framework, our surveillancestructure, which is centered on the Board of Directors,
functions effectively, as it permits mutual deliberations
on a variety of issues and allows for fast and accurate
decision-making.
The Board of Directors convenes monthly and monitors theexecution of business matters by directors based on resolutions
concerning the establishment, amendment, and abolishment ofimportant regulations as well as medium- and long-term
management plans, fiscal year plans and Companywide
divisional management plans and revisions to these plans.
Extraordinary meetings of the Board of Directors are also
convened when necessary. Three outside directors attend themeeting of the Board of Directors for the entire duration of themeeting and monitor management activities. Four auditors

Nisshinbo’s Corporate Governance Structure
General Meeting of Stockholders
Election/Dismissal

Election/Dismissal

Election/Dismissal
ReportBoard of Directors
12 directors(includes three outside directors)

Board of Statutory Auditors
Four statutory auditors(includes two outside auditors)
Cooperation

Representative Directors

ReportAccounting Auditors

Election/Reappointment consent/Dismissals
Decision on suitability of accounting audit

Internal Audit Office, CSR
Management Center

Board of Management
Deliberation and decisions on
business execution matters

Audit

Audit

Managing Officers, Business Divisions & Departments and Group Companies

13

Nisshinbo’s Approach to CSR(including two outside auditors) also attend the meeting of theBoard of Directors for the entire duration of the meeting andfreely offer their suggestions and ascertain and monitor the
execution of management duties in a timely manner. At thesame time, the auditors perform regular auditing of the Company
and its subsidiaries, thereby further improving our auditing.
As another important facet of its corporate governance,
Nisshinbo also receives management advice from legal counsel,
has concluded auditing agreements with several certified public
accounting offices and thoroughly implements strict and fairaccounting audits.
The Internal Audit Office, an internal auditingorganization, supports auditors in line with efforts to enhancethe effectiveness of operational and accounting audits.

INVESTOR RELATIONS
Maintaining close affiliations with the General Affairs Divisionand the Accounting and Finance Division, the Investor
Relations and Public Relations Office makes utmost efforts todisclose IR and other information and publishes such materials
as notifications of resolutions and the convening of theOrdinary Meeting of Shareholders, financial results, securities
reports, annual reports and press releases. This information is
also available on the Company’s home page. At analysts’
meetings as well, Nisshinbo’s president makes self-initiatedefforts to explain the Company’s results and policies to convey
information in a smooth manner.
RISK MANAGEMENTCOMPLIANCE
Companies are also members of society and thus have an
obligation to strictly adhere to the laws and ordinances ofsociety. The business and economic activities of companies
must also be carried out in accordance with the rules andcommon practices of society. All Nisshinbo employees must
maintain a strong awareness of the need for adhering to thelaws, ordinances, and common practices of society. It is alsoessential that Nisshinbo’s officers and managers take the selfinitiative in strictly obeying laws while providing guidance andoversight for regular employees in this area.
Determined to promote thoroughgoing compliance, we haveclarified our compliance policies in our Corporate Code of
Conduct and are striving to ensure that corporate ethics
permeate and become firmly rooted across the Company andstrictly prescribe the roles of top management. In addition, ourCompliance Action Guidelines express specific mattersrequiring stringent compliance and that are essential in therespective roles and work responsibilities of all members ofmanagement and general employees. We also set up the
Corporate Ethics Committee to oversee the establishment ofsystems and various regulations for compliance and educational
activities.
Nisshinbo has also established the Corporate Ethics
Reporting System, a hotline for the prevention of violations oflaws and internal regulations, as well as for the early detection,correction, and prevention of any behavior that could
conceivably be a violation. Available for use by anyone, not only
Company employees, this system allows violations to bereported to external lawyers in addition to the internal
Corporate Ethics Committee. Moreover, we are also working topreserve human rights and ensure thorough legal compliance
via training that utilizes our easy-to-understand Compliance
Action Guidelines.
We are acutely aware of the important social responsibilities
of companies involved in the handling of personal information,and have thus formulated and put into practice the Privacy
Policy. Concurrently, we have established the positions of
information systems managers in each department
headquarters and office as part of a structure for monitoringand surveillance of information assets.
14

Response to Risk in Business Activities
Nisshinbo has prescribed its Emergency Situation Response
Manual and Crisis Management Policies as its policies forresponding to the occurrence of any emergency (earthquakes,
fires, etc.) and is establishing a framework for responding
quickly to such emergencies.
Nisshinbo also undertakes activities to prevent occupational
accidents. These include carrying out safety and hygiene
activities at each business site and implementing safety andhygiene surveys at all business sites.
Regarding information systems, Nisshinbo is working tobuild a structure for computer systems that can be restored
quickly after disasters and that can operate around the clock
year round. These efforts include storing our mail servers andgroupware servers in safe and secure locations.
Nisshinbo also adopts a sincere and thorough approach to
managing and responding to other risks in accordance with its
Corporate Code of Conduct.
Response to Risk in Carrying Out Group Operations
Nisshinbo operates a Risk Management System that allows forthe use of rational and optimal risk management methods fromthe perspective of the whole Nisshinbo Group, thereby enabling
Nisshinbo to raise corporate value. The president of Nisshinbo(parent company) is the person in charge of the Risk
Management System and appoints Nisshinbo directors tooversee risk management for the entire Group as well as
persons responsible for risk management in each division.
Nisshinbo has designated each individual risk management
category—including risks related to the protection of personal
information, monitoring confidential management information,and ensuring environmental protection and quality in accordancewith ISO—as subsystems of its Risk Management System.
Additionally, Nisshinbo has designated various committees,
including the Corporate Ethics, Human Rights, Environmental
Affairs, Product Safety, Intellectual Property, and Safety andHygiene committees, as sub units of its Risk Management System.
In fiscal 2007, Nisshinbo also positioned Legal Risk
countermeasures as a priority risk management category. In
doing so, Nisshinbo has identified 11 laws and ordinances(including related laws and ordinances) with a significant

impact on management or the operation of businesses.
Nisshinbo is implementing inspections using check sheets at its
headquarters and business offices to ensure adherence to theselaws and ordinances. In fiscal 2008 as well, we will continue tofocus on Legal Risk countermeasures as a priority risk
management category and will expand our inspections to theentire Nisshinbo Group.

are also placing high importance on “providing the world withproducts that contribute to environmental preservation.”
We provide information on the details of these products andrelated activities on our home page.
In autumn 2008, we plan to issue an Environmental Reportas part of our commitment to providing information to
stakeholders.

Anti-takeover Measures
At the General Meeting of Shareholders held in June 2006, a
resolution was approved for a policy to respond to any purchaseof Nisshinbo stock for the purpose of giving a specificshareholder more than a 20% proportion of voting rights or toany purchase of Nisshinbo stock ultimately resulting in a
specific shareholder holding more than a 20% proportion of
voting rights. It was resolved that this anti-takeover measure be
adopted at the first Board of Directors Meeting convened after
the conclusion of the General Meeting of Shareholders. Please
visit our home page at http://www.nisshinbo.co.jp/english/ forspecific details on the anti-takeover plan.

SOCIAL CONTRIBUTION ACTIVITIESENVIRONMENTAL MANAGEMENT
As a manufacturer, Nisshinbo recognizes that environmental
management is an extremely vital management issue. Adheringto the Environment Charter, our core policies are to continually
implement environmental protection initiatives, effectively
utilize resources, reduce the environmental load of ouroperations, develop environmentally conscious products, andraise environmental protection awareness, with these efforts
centered on the Environment and Safety Office. Moreover, we

Environment-friendly Products and Technologies
Chemical
Products

Electric double layer capacitors (N’s CAP):
These capacitors offer energy-saving
performance.
Bipolar plates for fuel cells: These have clean
energy-related applications.
CARBODILITE: These products haveapplications as an improvement agent of the
Bio-plastic (Polylactic acids).

Mechatronics Solar Photovoltaic Manufacturing Equipment:
We provide manufacturing equipments thatmakes up solar photovoltaic modules.
TextilesBanana fibers: Fiber materials from discarded
banana stalks.
Promoting “green” friction materials: We
Automobile
developed and supply environment-friendly
Brakesfriction materials that reduce the use of
substances that are harsh on the environment.
Lead-free electrodeposition coating: We havecompleted the switchover to lead-free coating.
Papers
COTTON FEEL: This tissue combines wood
pulp with non-wood pulp made from natural
cotton fibers.
Kenaf 100GA: This is a 100% wood-free finepaper made from kenaf.
POPLA: Toilet paper made from recycledmaterials.

Adhering to the belief that companies are public organs,
Nisshinbo undertakes a variety of social contribution activities,
including initiatives for contributing to local communities, inareas close to where it operates.
Examples of social contribution activities:
Cooperation in environmental
education (Fuji Plant):
Nisshinbo introduces elementary
school children to paper recycling
methods and extols the importanceof recycling.
Promoting clean-up activities within
local communities:
The Miai and Fujieda plants
participated in riverbed clean-up
activities, the Toyota Plant wasinvolved in the “Industrial Region
Clean Walk,” and the Osaka Branch
participated in “Clean Osaka.”
Dispatching of personnel touniversities:
In response to requests, Nisshinbo dispatches engineers withspecialized knowledge as adjunct professors to universities.
HUMAN RESOURCES/EDUCATION
Nisshinbo provides mandatory education and training for all
employees covering the areas of risk, personal information
protection, monitoring of confidential management information(response to the Unfair Competition Prevention Law), andvarious management systems for environmental protection.
Nisshinbo has set up the Human Rights Team, andimplements human rights enlightenment training every year for
all employees. Additionally, we have established consultation
counters at every business site for dealing with all types ofharassment, as we actively implement measures for responding
to and preventing various problems.
Nisshinbo is undertaking a host of activities in fulfilling its
social responsibilities as a company. These include responding
to amendments to the Law for the Stabilization of Employmentof the Aged, instituting its Next Generation Cultivation Plan,
undertaking mental health initiatives, and responding to the
new legislation to support victims of asbestos-related diseases.
15

NISSHINBO’S R&D AND NEW BUSINESS DEVELOPMENT

Nisshinbo’s R&D has progressed from the basic research phase and has now entered the stage ofcommercialization. In other words, we have moved beyond the period for planting the seeds for
future business to a period in which we will harvest these businesses. In looking back at thetransition of our R&D organization, the changes undergone by this organization have particularly
accelerated since 2000.

History of Nisshinbo’s R&D Structure
1988

2002

2006

Business Chemical Products Division

2007
Chemical Division

Established

Integrated
Business Development
Division
Established

Integrated

Basic
Research and Development Divisionresearch
EstablishedR&D POLICIES• Progress with R&D, mainly in growth fields that consider the needs ofhuman society.
• Raise the level of our core technologies.
• Launch unique products that cannot be duplicated by competitors.
• Refine our original technologies and strive to secure No.1 positions thatcannot be matched by competitors while working toward continualtechnological improvements.
Research and Development Center

Number of patents at the end of fiscal 2007
(non-consolidated basis)

R&D Expenditure(billions of yen)

15

Domestic 202(632 patent applications currently
submitted)

Overseas 472(406 patent applications currently
submitted)

129As licensee:• Taltech Limited of the British Virgin Islands for Pucker Free
Seam Technology• Meritor Heavy Vehicle Braking Systems (UK) Limited of the
U.K. for disc brake and drum brake technologies• Spire Corporation of the U.S., in solar photovoltaic module
manufacturing equipment
As licensor:• Rane Brake Linings Ltd. of India for friction materials
technology• Heng Tong Auto Parts Inc. of Taiwan for friction materials
and passenger car disc brake technologies

6

3

0
’03

16

International Technical Agreements

’04

’05

’06

’07

As cross-licensing partners:• TMD Friction Beteiligungs GmbH & Co KG of Germany for
friction materials technology• TRW Inc. of the U.K. for drum brake technology(Negotiations in progress regarding change in line with
expiration of contract)Each of our next-generation growth products—electric double layer capacitors,
CARBODILITE functional chemicals, and bipolar plates for fuel cells—was developed inaccordance with the above R&D policies. In addition, we are striving to find applications forthese products in the creation of various products for protecting the environment, which is
an issue shared by all humankind. Our new growth products are expected to find uses in awide range of domains that include power assists for hybrid cars, reformers for realizing
high performance in Bio-plastic (Polylactic acids), and residential-use fuel cells(cogeneration systems), as well as for installation in fuel cell vehicles of the future. From a
global perspective as well, these products represent truly unique technologies.
The Research and Development Center serves as a company-wide incubator for
new businesses while also handling development functions for the chemicals
business. Additionally, our other business divisions each possess their own
respective R&D organizations.

AUTOMOBILE BRAKES BUSINESS• Brake Research & Development Center (Tatebayashi Plant, Gunma Prefecture)
This center focuses on satisfying customer performance requirements and developing socalled green materials that contain no harmful substances as a response to protecting the
Earth’s environment.

TEXTILE BUSINESS• Textile Research and Development Center (Miai Plant, Aichi Prefecture)
This center strives to further raise our highly advanced textile processing technologies. Our
highly functional material, GAIACOT, which has outstanding anti-bacterial anddeodorizing functions, has been recognized for its effectiveness in deactivating the avian
influenza virus under certain conditions. We are progressing with R&D focused not only on
applications for GAIACOT in apparel but also in medical, industrial, and agricultural fields.

PAPER PRODUCTS BUSINESS• Product Development Center (Fuji Plant, Shizuoka Prefecture)
This center undertakes original research based on the theme of creating people- andenvironment-friendly products. The center aims to create a film business using plantderived resin basic materials that utilize coating technologies.

17

Management Discussion and Analysis

Operating Results
Overview
During the fiscal year under review, the recovery of theJapanese economy continued, fueled by private-sector demand,
as improvements in employment and income amid favorable
corporate earnings spread to the household sector.
Amid this environment, Nisshinbo implemented a host ameasures based on “selection and concentration” and“promotion of amicable M&As,” which are the coremanagement policies of the Three-Year Management Plan 2008,
our new medium-term management plan. In line with thesepolicies, we withdrew from unprofitable chemicals products
businesses while working to cultivate our three new businesses,
namely electrical double-layer capacitors, bipolar plates for fuelcells, and CARBODILITE.
In December 2006, we added Japan Radio Co., Ltd. andNagano Japan Radio Co., Ltd. to the Nisshinbo Group as equitymethod affiliates, thereby further progressing with an
expansion of our business domains in such high-growthpotential businesses as the information/
telecommunications and electronics businesses.
Results of Operations for Fiscal 2007
Compared with Fiscal 2006
During fiscal 2007, we recorded an increase in sales, due
mainly to the full-year contribution of business results fromNew Japan Radio Co., Ltd., which became a consolidated
subsidiary in the second half of fiscal 2006, and increasedorders in Automobile Brakes, which reflected robust automobile
production from Japanese and Korean automakers. Accordingly,
we posted a 12.3% rise in consolidated net sales to ¥312,825
million (US$2,651 million), thus breaking our previous all-timehigh for net sales recorded in fiscal 2006.
Cost of sales rose 12.0% from the previous fiscal year to¥257,665 million (US$2,184 million), but cost of sales to net
sales declined 0.2 percentage point to 82.4%. Selling, generaland administrative expenses rose 14.8% to ¥43,609 million(US$370 million) and costs and expenses increased 12.4% to¥301,274 million (US$2,553 million). As a result, operating
income amounted to ¥11,551 million (US$98 million), an
increase of 9.8%.
Interest and dividend income rose ¥500 million to ¥2,745
million (US$23 million), reflecting improved corporate earnings
along with the continued recovery in the Japanese economy. On
the other hand, interest expenses increased ¥96 million to¥1,229 million (US$10 million). Equity in earnings of affiliates

18rose ¥2,161 million to ¥4,178 million (US$35 million), owing tosuch factors as contributions made by the addition of Japan
Radio Co., Ltd. and Nagano Japan Radio Co., Ltd. to the
Nisshinbo Group as equity-method affiliates.
We recorded a gain of ¥831 million (US$7 million) on thesale of property, plant and equipment, a ¥908 million differencecompared with a loss recorded in the previous fiscal year. Gainon sale of securities declined ¥3,064 million to ¥10,668 million(US$90 million). On the other hand, impairment of long livedassets declined ¥4,087 million to ¥1,328 million (US$11
million). The recording of impairment of assets reflected therespective write-downs of assets to recoverable amounts, due toa decision to scrap and dispose of a portion of assets along witha rebuilding of domestic production facilities in the Textiles
business and a restructuring of the Chemical Products business,and because of the unlikelihood of utilizing idle assets of theformer Nagoya Plant in the immediate future. The amount ofthese impairments was also less than recorded in the previous
fiscal year at which time a portion of assets in the Textiles andABS businesses and at a U.S.-based Automobile Brake businesssubsidiary were written down.
Loss on plant closures increased ¥2,162 million to ¥2,649
million (US$22 million) accompanying the closure of the
Toyama Plant and the transfer of facilities from the Nagoya
Plant. Also, retirement benefits paid due to restructuring ofbusiness operations increased ¥1,888 million to ¥1,969 million(US$17 million).
As a result, other income increased ¥2,238 million to¥11,534 million (US$98 million), leading to an increase of¥3,265 million in income before income taxes and minority
interests to ¥23,085 million (US$196 million). After deducting
income taxes of ¥6,289 million (US$53 million) and minority
interests in net income of ¥1,689 million (US$14 million), net
income jumped 35.1% to ¥15,107 million (US$128 million).
Net income per share was ¥74.19 (US$0.63), a rise of ¥20.98
from the previous year, and ROE was 5.7%, up 1.1 percentage
points from the previous fiscal year.
Dividends
Cash dividends per share for the year amounted to ¥15.00(US$0.13), and included a special ¥5.00 commemorative
dividend marking the Company’s 100th anniversary. Total
dividends paid for the fiscal year amounted to ¥3,033 million(US$26 million). Taking a long-term perspective, Nisshinbo
will follow a basic policy of maintaining stable dividends, while
implementing diverse measures to redistribute profits toshareholders.

Segment Information
On April 1, 2007, we integrated the Business Development
Division and the Chemical Products Division to newly form the
Chemical Division. Along with this reorganization, thebusiness scope of the Chemical Products and the Others
segments have changed significantly in the fiscal year ending
March 31, 2008. In this annual report, we have compiled
forecasts taking these changes into consideration.

TextilesFiscal 2007 Results• Despite such positive factors as favorable sales of jeans
and uniforms and expanded exports of fabrics to theMiddle East, overall net sales and operating income inthis segment declined owing to the reorganization of ourSpandex business as well as sluggish results by CHOYA
CORP., a subsidiary engaged in shirt sales.
We closed our Toyama Plant, reorganized our domestic
spinning and weaving facilities, and promoted production
in optimal locations.
2007

Net sales

Operating income

0.8%

60.0%

billions of yen

billions of yen

100

2.5

80

2.0

60

1.5

40

1.0

20

0.5

0

’04

’05
Net sales

’06

’07

’08

0

Figures for fiscal
years 2004-2007 are
actual amounts andfigures for fiscal 2008
are estimates.

Operating income

Fiscal 2007 Results
Japan’s textile market was plagued by difficult conditions
throughout the year that included an unavoidable rise inproduction costs resulting from high prices for raw cotton andenergy.
In Japan, we recorded robust sales of uniforms and denim
and posted increased exports of fabrics for use in ethnic apparelin the Middle East. Nonetheless, domestic net sales andoperating income declined due to our withdrawal from the
Mobilon dry spandex business in addition to a loss by CHOYA
CORP. that reflected sluggish sales of “Cool Biz”-related
products.
Regarding overseas subsidiaries, NISSHINBO(SHANGHAI) CO., LTD., a sales company in China, achieved
sharp rises in sales and operating income on the back offavorable sales of raw yarn to Japan and yarn-dyed shirts to theUnited Kingdom. Additionally, Indonesia-based P.T. Nikawa
Textile Industry, which possesses a stable customer base, also
posted increases in sales and operating income, mirroring theeffects of increased and strengthened production capabilities
and the implementation of energy-reduction measures.
Conversely, P.T. Gistex Nisshinbo Indonesia reported sluggish

results due to soaring energy
and other costs while Nisshinbo
Do Brasil Industria Textil
LTDA. unavoidably suffereddeclines in sales and operating
income owing to falling productprices. As a result, overseas
sales rose but operating income
declined.
Due to the aforementioned
NON CARE
factors, the Textiles segment
posted declines in total sales and operating profit in fiscal 2007.
Business Performance and Initiatives
In general-use products, we ceased all domestic production
while actively expanding this business overseas, including inIndonesia and China. On the other hand, in Japan we focusedon raising our development capabilities and production
technologies for creating high value-added products as we strive
to respond to a polarization in consumer markets between lowpriced items and distinctive high value-added products. We also
strengthened our core businesses of shirts, denim, and uniforms
while progressing with selection and concentration, with nobusiness domains off-limits.
Business Development for Principal Products and Future
IssuesIn shirt fabrics, in addition to our technologies in NON CARE
100% cotton wrinkle-free wash-and-wear shirts, we will also
raise our technologies in special twisted yarns, as we strive todevelop our business for advanced wrinkle-free materials. In
the future as well, we will progress with the development ofproprietary materials that enhance ease-of-fit and comfort
functions.
In denim, we will develop such functional products as
stretch denim as well as materials that incorporate a sense of
fashion. We will also progress with our own novel technology
applications that include “non-fade jeans” that utilize chemical
processing technologies. To further strengthen development
capabilities and competitiveness, we plan to close our Harisaki
Plant and consolidate all denim yarn production facilities into
our Fujieda Plant.
In uniforms, we are developing and expanding sales ofClean Tecta highly advanced anti-soiling materials that utilize
photocatalytic oxidized titanium. In the future, we will focus ondeveloping and expanding sales of such new materials ascomposite materials and environment-related materials.
Additionally, we are actively responding to new sales channels
in such fields as medical and service fields.
One of our new fields is GAIACOT, an epoch-making nanotechnology material with excellent
anti-bacterial and deodorizing
functions that include effectiveness indeactivating the avian influenza virus
under certain conditions. We are
currently developing applications for
medical, industrial, and agricultural
fields. We recently developed masks forHighly functional masks utilizing
medical hygiene fields and sales of
GAIACOT

19

Management Discussion and Analysis

these masks were commenced in February 2007 by ALOKA
CO., LTD, a Nisshinbo Group company that manufactures andsells medical devices.

Automobile Brakes
Fiscal 2007 Results• Net sales and operating income rose on the back offavorable business performance supported by a rise in
the volume of domestic and overseas automobile
production.
Our two U.S.-based consolidated subsidiaries (Nisshinbo
Automotive Corporation (NAC) and Nisshinbo
Automotive Manufacturing Inc. (NAMI)) achieved
profitability for the first time.
We completed the shifting of Automobile Brake
operations from our Nagoya Plant to the Toyota Plant. We
are currently progressing with initiatives for realizing
efficient operation and raising efficiency.
2007

Net sales

Operating income

6.3%

28.3%

billions of yen

billions of yen

80

8.0

60

6.0

40

4.0

20

2.0

0

’04

’05
Net sales

’06

’07

’08

0

Operating income

Fiscal 2007 Results
Although the volume of domestic sales of automobiles declined
from the previous fiscal year, the volume of domestic
automobile production rose 5.6% to 11.50 million units amid
favorable exports, enabling Japan to become the world’s top
vehicle manufacturer for the first time in 13 years. Overseas,
Japanese and Korean automakers recorded robust local
production. Under these circumstances, our core themes inAutomobile Brakes in fiscal 2007 were “promoting
globalization” “developing competitive products,” “completingthe project for transferring production to the Toyota Plant,”and “securing staff competent in their field.”
Nisshinbo Industries, the parent company, recorded anincrease in sales due to new orders for friction materials in
addition to an increase in domestic automobile production.
However, operating income declined due to higher expenses formoving to the Toyota Plant as well as the effects of price hikes
for steel, non-ferrous metals, and other raw materials.
In 2006, production and sales of automobiles in North
America, excluding trucks, dipped 2.6% from the previous year
to 16.56 million. Amid this environment, despite sluggish
orders from the U.S. Big Three and European automakers,

20

Brake parts

Toyota Plant

attributable to soaring crude oil prices, Nisshinbo Automotive
Corporation (NAC) and Nisshinbo Automotive Manufacturing
Inc. (NAMI) posted increases in sales due to growth in orders
from locally based Japanese automakers, which posted
favorable results. NAC and NAMI also recorded their first
operating profits due to an increase in net sales and the passing
on of rising prices for steel and other raw material prices to
product prices.
In Thailand, domestic sales of automobiles and exports wereboth favorable, and automobile production in 2006 rose
approximately 6.3% from the previous fiscal year to 1.19
million units. Against this background, Nisshinbo Somboon
Automotive Co., Ltd. posted an increase in net sales owing to arise in orders in addition to orders for new products. On theother hand, operating income declined due to a steep rise in
raw materials expenses.
In Korea, despite the effects of the appreciation of the
Korean won, automobile production increased 3.9% to 3.84
million units from the previous year, underpinned by robust
exports to North America and Europe. Saeron Automotive
Corporation (SAC), a Korean-based subsidiary, achieved
increases in net sales and operating income due to an increasein new orders for friction materials.
Saeron Automotive Beijing Corporation (SABC), a
subsidiary of SAC in China, manufactures sintered products
and friction materials for Chinese subsidiaries of Korean
automakers. Amid an approximately 26.8% year-on-year leapin automobile production in China to 7.23 million, production
and sales at SABC got firmly on track and net sales andoperating income rose sharply.
Net sales and operating income of ABS fell sharply owing tothe ongoing transfer of this business to equity-method affiliate
Continental Teves Corporation (CTC).
Due to the previous activities, overall sales and operating
income in the Automobile Brakes segment increased.
Business Performance and Initiatives
With friction materials as a core business, we will progress withthe development of products that ensure a high level ofcustomer satisfaction while proceeding with various global
responses. Specifically, the Automobile Brakes segment isstrengthening its product development capabilities, global
response capabilities, and competitiveness of domestic bases,
which will lead to an expansion in sales. In addition, we arebolstering our framework for responding quickly to shifts indemand and will push ahead with our cost-reduction activities.
Looking at global markets, automobile production in China
and India is expected to grow in the future. In the Chinese
market, SABC is responding to this trend and steadily
increasing its business. In India as well, Rane Brake Linings

Ltd., in which Nisshinbo holds a 10% equity share, is steadilybuilding on its achievements, which include the securing of a
50% share for friction materials for compact vehicles in themarket for locally assembled new vehicles. In the future, whilelooking at trends among our automaker customers, we will
focus on flexible responses, including collaboration with othercompanies and establishing local subsidiaries, as we efficiently
expand and upgrade our global supply structure.

PapersFiscal 2007 Results•Although net sales rose amid robust sales of household
papers, fine papers, and developed synthetic papers, thesevere impact of sharply rising raw material and fuelprices dragged down operating income.
2007

Net sales

Operating income

4.5%

15.2%

billions of yen

billions of yen

50

2.5

40

2.0

30

1.5

20

1.0

10

0.5

0

’04

’05
Net sales

’06

’07

’08

0

Operating income

Fiscal 2007 Results
In household papers, we recorded increases in sales volume andnet sales due to expanded sales of distinctive products as well as
to last-minute demand following price hike announcements bymajor paper manufacturers. However, operating income forhousehold papers declined owing to rising costs triggered bysoaring raw material and energy expenses, in addition to theslow permeation of product price increases.
In the speciality paper field, sales of such high-quality
printing papers as VENT NOUVEAU and ARABEL remained
firm, while sales of plastic card products, such synthetic papers
as back-lighting displays, and telegraph-related papers allrecorded steady sales increases. Additionally, consolidated
subsidiary Nisshinbo Postal Chemical Co., Ltd. recorded robust
sales of software and thermal ribbon, among others. Thesefavorable results compensated for the effects of rising raw
material and energy expenses and supported increases in net
sales and operating income in the speciality paper field.
As a result of the previous factors, total net sales in the
Papers segment rose, but operating income declined.

previous products, and by offering
SHOWER ROLL toilet paper in agreater variety in terms of the numberof rolls.
At the production level, we arebolstering facilities at our Shimada
Plant and at Tokai Seishi Co., Ltd. On
the other hand, we expect raw
High-quality VENT NOUVEAU
material and fuel costs to rise sharply
printing paper series
in the short term, and we will thus
work to improve profitability by making price revisions thatreflect these higher costs.
In the speciality paper field, we will secure a solid earnings
base by expanding sales and developing new products in highquality printing papers and achieve further growth in suchfields of strength as plastic card products and back-lighting
displays while also expanding our business domains throughcooperation with other companies. As part of these efforts, inJune 2007 we carried out an amicable M&A with packaging
processing company Daiwa Shiko Co., Ltd., and made thiscompany a consolidated subsidiary. This acquisition was aimed
at attaining synergies and further developing our operations in
the packaging market. In synthetic papers, we are creating new
film businesses that utilize plant-derived resins as basic
materials.

Chemical
Fiscal 2007 Results• Although net sales declined because of our emphasis on“selection and concentration” in the polyurethane foambusiness, operating income rose because of the effects ofbusiness streamlining and favorable results inelastomers and carbon products.
During the year, we announced the integration of theBusiness Development Division and Chemical Products
Division to newly form the Chemical Division.
2007

Net sales

Operating income

0.4%

8.6%

billions of yen

billions of yen

1.5

40

1.2

30

0.9
20
0.6
10
0

0.3
’04

’05
Net sales

Business Performance and Initiatives
In household papers, we are undertaking initiatives forstrengthening our business for such distinctive products as our
COTTON FEEL and SHOWER ROLL brands. We are also
strengthening our brand capabilities by launching COTTONFEEL FINE, a higher-grade product category compared with

’06

’07

’08

0

Forecasts for 2008
are values for theChemical Division.
(Expenses for fullscalecommercialization in
new business fields
are incorporated.)

Operating income

Fiscal 2007 Results
In the polyurethane foam business, we improved our profit
structure by consolidating production into the Chiba Plant andstreamlining our business for foam basic liquid and rigid-type
polyurethane foam.

21

Management Discussion and Analysis

In elastomers, we achieved increased net sales and operating
income by expanding sales of MOBILON TAPE.
In carbon products, where we are promoting a shift tonewly developed products with such applications as
semiconductor washing and medical usage, we recorded
increased sales and operating income owing to growth in salesof developed products amid a buoyant semiconductor market.
We recorded growth in sales of molded plastic products—abusiness carried out through domestic subsidiary NIPPONKOHBUNSHI CO., LTD. and overseas subsidiaries Kohbunshi(Thailand) Ltd. and Pudong Kohbunshi (Shanghai) Co., Ltd.—owing to an increase in air conditioner-related orders by ouroverseas subsidiaries. However, operating income declined
because of the effects of price competition and steep increases
in raw material prices.
Due to the preceding developments, while we posted adecrease in overall sales of the Chemical segment, operating
income rose.

Polyurethane elastomer Nisshinbo Mobilon

Cross-flow fans for air conditioners,
automobile components, and others

Initiatives in Fiscal 2007
Nisshinbo integrated its Business Development Division andChemical Products Division, and in April 2007 the newly
merged entity initiated operations as the Chemical Division.
Through this reorganization, Nisshinbo has consolidated its
isocyanate and carbon-related chemicals businesses, technology
domains that spanned both former divisions and in which we
possess independently cultivated technological superiority. The
new Chemical Division will serve as a strategic division for
cultivating new businesses. Within the Chemical Division, we
have added three businesses that we are striving to position as
new pillars of growth, namely electric double layer capacitors,
bipolar plates for fuel cells, and CARBODILITE. (Please refer
to Focus 1 on page 8)
Business Development for Principal Products and Future
OutlookIn electric double layer capacitors, we have continued tocompile a solid record of deliveries to manufacturers oftransportation equipment. We are steadily expanding ourcustomer base thanks to demand for sample shipments forapplications in construction machinery and automobiles. We
plan to begin operating mass-production facilities at the Chiba
Plant in November 2007, as we gear up for full-fledged
production. In the future the new production facilities will give
us a fivefold increase in production to 50,000 cells per month.
With the support of Group companies Japan Radio, New Japan
Radio, and Nagano Japan Radio, we will strive to securetechnologies for electric double layer capacitors while
promoting the development of products that bring synergies.
Nisshinbo is the world’s leading manufacturer of bipolar
plates for fuel cells, a core component of fuel cells, both in22

terms of quality and volume. Compared with products ofcompetitors, Nisshinbo’s bipolar plates for fuel cells offer
superior strength and flexibility. We are currently working tocreate technologies and maintain our share to establish an
overwhelmingly dominant position in the domestic market for
bipolar plates for residential fuel cells, which are rapidly
approaching a period of full-scale diffusion. Although sometime will be needed before the widespread use of fuel-cellvehicles, we are working to develop bipolar plates withapplications in automobiles, a market that is expected to growsharply once demand gets on track.
CARBODILITE is Nisshinbo’s proprietary functional
polymer. Thanks to its characteristic of being the only lowtoxicity additive for realizing high performance in plastics,
CARBODILITE is well positioned to address the trend toward aworldwide tightening of regulations for various chemical
substances. We are promoting applications in product fields
where there is a need for reducing the environmental load,
including as an additive indispensable for commercializing
plant-derived resins as well as cross-linking agents of waterbased paints.
We will also accelerate “selection and concentration” in our
existing businesses. In heat-insulation products, we offer alineup of high value-added products and technologies, including
non-fluorocarbon technologies, as well as polyurethane foam
basic liquid, for which demand is expected to expand. In
elastomers, we are working to expand sales through thedevelopment of new technologies, for example, tapes usable fornon-sewing garments, and super soft elastomer tapes. In carbon
products, we will continue to develop semiconductor-related
products while realizing high performance for our coating
technologies, which have earned widespread acclaim.
In molded plastic products, the air conditioner industry is a
primary market for our products. Nonetheless, we are also
making efforts to expand sales of molded plastic products forautomobiles and general applications by utilizing our solid
rotation production technologies as well as our molding
technologies in engineering plastics.
Additionally, we will build various types of collaborative
relationships both internally and externally and uncover theseeds of new business through such collaboration.

Electronics
Fiscal 2007 Results•Net sales and operating income
rose thanks to the whole-year
contribution to consolidated
results made by New Japan
Radio.
•Japan Radio and Nagano Japan
Radio also became part of the
Nisshinbo Group as equitymethod affiliates.
Main office of New Japan Radio, Tokyo

2007

Net sales

Operating income

65.9%

28.8%

billions of yen

billions of yen

1.5

80

1.0

60

0.5
40
0
20
0

Real Estate Leasing
Fiscal 2007 Results• Despite factors in increasing sales and income such as
the addition of leased real estate, we recorded costs
associated with the redevelopment of our former Tokyo
Plant as well as a rise repair expenses. As a result, net
sales rose slightly but operating income declined.

-0.5
’04

’05
Net sales

’06

’07

’08

-1.0

We started construction on a large-scale shopping centerat the site of our former Tokyo Plant.

Operating income

Fiscal 2007 Results
During the fiscal year, New Japan Radio recorded brisk sales of
microwave application products, including satellite
communications components. In semiconductor devices, which
account for over 80% of its sales, New Japan Radio posted firmsales in microwave & optoelectronic devices, while sales ofbipolar ICs remained on par with those of the previous year. On
the other hand, sales of metal oxide semiconductor (MOS) ICs
fell. Thus, net sales and operating income in semiconductors
were down slightly from the previous year. Consequently,
business results by New Japan Radio were virtually the same asin the previous year.
This full-year contribution of New Japan Radio, whichbecame a consolidated subsidiary in the second half of theprevious fiscal year, was yet another factor supporting
performance in the Electronics segment.
Despite firm sales of wireless devices for use in civilian
aircraft, net sales and operating income of Ueda Japan Radio
Co., Ltd., a subsidiary that engages in the electronic device
business, declined owing to decreased sales in fields for mobile
communications terminals.
As a result of the previous, the Electronics segment recorded
overall increases in net sales and operating income.
Business Development for Principal Products and Future
Outlook
Regarding semiconductor products, in bipolar IC fields New
Japan Radio will focus on power-supply ICs for digital cameras
and other products. In MOS ICs, New Japan Radio will develop
new digital signal processors for audio equipment and flatscreen TVs.
In microwave & optoelectronic devices, efforts to promoteselection and concentration and enhance earnings power will
include focusing on GaAsICs for mobile phone one-segment TV
broadcasts and game devices.
In March 2007, New Japan Radio received certification for
ISO/TS16949, a quality management system for the automobile
industry. New Japan Radio is working to expand business forvarious types of vehicle-mounted products, including car
navigation systems, car audio systems, control equipment, andsafety devices.
The Nisshinbo Group is pursuing an array of synergies.
These include utilizing the advanced circuit design technologies
of New Japan Radio and Japan Radio in our capacitor businessas well as in the development and manufacturing of carmounted devices by affiliate CTC.

2007

Net sales

Operating income

0.1%

1.8%

billions of yen

billions of yen

8.0

4.0

6.0

3.0

4.0

2.0

2.0

1.0

0

’04

’05
Net sales

’06

’07

’08

0

Operating income

Fiscal 2007 Results
During the year, we achieved a slight increase in net sales byleasing a portion of a building at our Toyota Plant while
increasing the area of leased idle land at our Fujieada and Miai
plants and at our former Notogawa Plant. On the other hand,operating income declined slightly due to the start ofconstruction on a large-scale shopping center scheduled to open
in November 2007 at our former Tokyo Plant in addition toincurring an increase in repair expenses on existing leaseproperties.
Nisshinbo Urban Development Co., Ltd., a subsidiary,
recorded a rise in net sales owing to the large effects of themerging of operations with Kansai Nisshinbo Urban
Development Co., Ltd. in 2005 and the establishment of an
Osaka branch in addition to generally favorable results in its realestate and indoor tennis businesses. On the other hand, itsfranchise business posted sluggish results and several outlets
Current plans for utilizing idle land at plants
Hamamatsu Plant: Schedule determined for construction ofcommercial facilities; preparations underway forstart of construction in autumn 2007; infrastructure
being established in the surrounding area in
preparation for the opening of stores in autumn
2008.
Toyama Plant:

Decision made to sell all land, with handoverscheduled for winter 2007.

Nagoya Plant:

Considering direction of redevelopment.

Harisaki Plant:

Redevelopment plan to be formulated during
current fiscal year.

23Management Discussion and Analysis

photovoltaic module production equipment due to a shortage ofsilicon.

Ario Nishiarai shopping center(scheduled for opening inNovember 2007)

were inevitably closed, which led to a decline in operating
income.
As a result of the aforementioned factors, total sales in theReal Estate Leasing rose slightly but operating income declined.
Future Business Development and Initiatives
As a large-scale project, we plan to open the Ario Nishiarai
shopping center, currently under construction at the site of theformer Tokyo Plant. We expect a slight decline in operating
income because of a temporary rise in initial-period expenses.

OthersFiscal 2007 Results• Despite an expansion in the new businesses of electric
double layer capacitors, bipolar plates for fuel cells, andfunctional chemicals, the operating loss widened due toinvestments for business commercialization and a
decline in sales in the Precision Instruments &Machinery business.
Along with the start of the Chemical Division in April
2007, we decided to transfer the above-mentioned three
new businesses to the new Chemical Division.
2007

Net sales

Operating loss

0.7%

¥ 0.48 billion

billions of yen

billions of yen

25
-0.5
20
15

-1.0

10
-1.5
5
’04

’05
Net sales

’06

’07

’08

Production Value
Production in each business segment during fiscal 2007 was asfollows.
AmountBusiness segment(millions of yen)

TextilesAutomobile Brakes
PapersChemical ProductsElectronics
OthersTotal

67,22154,08923,002
23,81473,6228,870
250,618

AmountChange from the(millions of US dollars) previous year (%)

570
458
195
202
624
75
2,124

- 4.8
+4.9
+8.6
- 2.3
+68.1
+7.1
+14.0

-2.0

Operating income

Fiscal 2007 Results
Precision Instruments & Machinery BusinessDespite steady growth in OEM business such as precisioncomponents for automobiles, net sales and operating income
declined owing to sluggish orders for facilities due to atemporary lull in capital investments in the automobile
industry as well as to a delay in investments for solar

24

Business Development for Principal Products and Future
Outlook
The Precision Instruments & Machinery business will continue
to carry out business for aircraft assembly and manufacturing
equipment. In the domestic market for solar photovoltaic
module manufacturing equipment, we hold a more than 50%
share for laminators and over 90% share for simulators. We areaccelerating our business in Asia, mainly for our solar
photovoltaic module manufacturing equipment. In OEM
business, we will strive to expand orders for such products asprecision components for automobiles and develop
manufacturing
equipment for use inleading-edge domains. We
are undertaking various
initiatives to establish ourrecently initiatedSolar module laminator for solar battery production
Chemical Division as aequipment
future earnings pillar.

0

30

0

New Business (electric double layer capacitors, bipolar
plates for fuel cells, functional chemicals)
We commenced supplies of electric double layer capacitors tomakers of large-scale transportation equipment, which led to anincrease in inquiries for other applications. We are supplying
bipolar plates for fuel cells, mainly bipolar plates for residentialuse fuel cells, to major manufacturers of fuel cells, as we
steadily expand the scale of this business. Sales of functional
chemical products are continuing to expand thanks to their
excellent safety and environmental properties. Each of thesethree businesses is registering steady growth. However, upfront
expenses in gearing up for full-scale commercialization
constricted profitability in fiscal 2007.

Amounts are computed based on manufacturing costs.
The Real Estate Leasing business does not engage in manufacturing, and therefore, the abovetable contains no figures for this segment.
The above figures do not include consumption taxes.

Segment Information by Geographic Region
Sales in Japan rose 11.1% to ¥259,752 million (US$2,201
million) mainly because of the full-year contribution made by
New Japan Radio to Nisshinbo’s consolidated accounts.
Operating income in Japan decreased 7.3% to ¥6,690 million(US$57 million) due to the effects of price increases for raw

Net Sales by Geographicalmaterials and sluggish results by
Segment
consolidated subsidiaries in theOverseas 17.0%
Textiles business.
Other
Sales in Asia advanced 21.0% to
5.3%
Asia
11.7%
¥36,616 million (US$310 million) due
to the addition of New Japan Radio to
Nisshinbo’s consolidated accounts.
Domestic 83.0%
Operating income in Asia rose 7.3%
to ¥3,326 million (US$28 million)
along with favorable results ofoverseas subsidiaries in the Automobile Brakes business.
Similarly, net sales in other regions rose 13.4% to ¥16,457
million (US$139 million) due to the addition of New Japan
Radio to Nisshinbo’s consolidated accounts, while operating
income was up 87.9% to ¥1,702 million (US$14 million) due tothe recording of profits by a U.S. subsidiary in the Automobile
Brakes business.
Overseas Network

Saeron Automotive Corporation
Nisshinbo
Automotive Corporation

Nisshinbo Europe B.V.
Nisshinbo Automotive
Manufacturing Inc.
Rane Brake Linings Ltd.
Kohbunshi (Thailand) Ltd.
Nisshinbo Somboon
Automotive Co., Ltd.
THAI NJR CO., LTD.
NJR (SINGAPORE) PTE. LTD.
P.T. Nikawa Textile Industry
P.T. Gistex Nisshinbo Indonesia
P.T. Naigai Shirts Indonesia

Nisshinbo Do Brasil
Industria Textil LTDA.
Mingly Textile (Changzhou) Limited
Hangzhou Yimian Ltd.
Shanghai Choya Fashion Co., Ltd.
Shanghai Kaikai Non-Ironing Garment Co., Ltd.
Ningbo Youngor Sunrise Textile Dyeing and Finishing Co., Ltd.
Ningbo Veken Textile Co., Ltd.
Pudong Kohbunshi (Shanghai) Co., Ltd.
Shanghai Sun-Rich Arts & Craft Co., Ltd.
NISSHINBO (SHANGHAI) CO., LTD.
Continental Teves Corporation(Lian Yun Gang) Co., Ltd.
Saeron Automotive Beijing Corporation

Financial Position
Total assets at the end of fiscal 2007 amounted to ¥472,670
million (US$4,006 million), down ¥18,560 million from theprevious fiscal year-end. Current assets declined ¥3,187 million
to ¥168,884 million (US$1,431 million). Although buildings
and structures, and machinery, equipment and tools declined,
property, plant and equipment increased ¥756 million to¥121,905 million (US$1,033 million) due to increases in landand construction in progress. Despite a rise in investments inand advances to unconsolidated subsidiaries and affiliates
resulting from investments in Japan Radio and Nagano Japan
Radio, investments and other assets fell ¥16,129 million to¥181,881 million (US$1,541 million) due to the significant
effects of a decline in valuation of investment securities owing
to a fall in market prices.
On the liabilities side, despite a rise in payables, current
liabilities declined ¥4,173 million to ¥105,129 million (US$891
million) owing to decreases in short-term bank loans andaccrued income taxes. Long-term liabilities declined ¥8,824
million to ¥85,526 million (US$725 million), owing todecreases in long-term debt, deferred tax liabilities, and accrued
severance benefits. Total liabilities thus declined ¥12,997
million to ¥190,655 million (US$1,616 million).
For the fiscal year under review, minority interests inconsolidated subsidiaries is reported as a separated componentof equity due to a change in accounting method* along with theintroduction of the new Corporate Law. The item previously
recorded as shareholders’ equity is now expressed as equity.
Equity rose ¥15,581 million to ¥282,015 million (US$2,390
million) and includes the addition of minority interest of¥20,780 million (US$176 million), deferred gain on derivatives
under hedge accounting of ¥68 million (US$1 million), andstock acquisition rights of ¥16 million (US$0 million) toprevious shareholders’ equity. The shareholders’ equity ratiorose 1.1 percentage points to 55.3%, and shareholders’ equity
per share increased ¥17.93 to ¥1,301.14 (US$11.03).
* For a detailed explanation, please refer to note “10. EQUITY” in the Notes to theConsolidated Financial Statements.

Cash Flows
Cash flows from operating activities
In cash flows from operating activities, Nisshinbo recorded
such inflows as ¥23,085 million (US$196 million) in income
before income taxes and minority interests, ¥14,984 million(US$127 million) in depreciation and amortization, ¥2,649
million (US$22 million) in loss on plant closure, and ¥3,334
million (US$28 million) in increase in payables.
On the other hand, outflows included ¥10,668 million(US$90 million) in gain on sale of investment securities andinvestments in and advances to unconsolidated subsidiaries andaffiliates, ¥7,841 million (US$66 million) in income taxes-paid,¥4,178 million (US$35 million) in equity in earnings ofaffiliates, and ¥3,631 million (US$31 million) in payment of
accrued pension and severance benefits. As a result of theprevious factors, net cash provided by operating activities
amounted to ¥19,352 million (US$164 million).
Cash flows from investing activities
In net cash flows from investing activities, outflows included¥18,629 million (US$158 million) in payment for purchase ofproperty, plant and equipment and ¥9,497 million (US$80
million) in payment for purchase of investment securities andinvestments in and advances to unconsolidated subsidiaries andaffiliates. On the other hand, inflows included ¥14,364 million(US$122 million) in proceeds from sale of investment securities
and investments in and advances to unconsolidated subsidiaries
and affiliates, ¥2,918 million (US$25 million) in proceeds fromsale of property, plant and equipment, and ¥1,642 million(US$14 million) in decrease in time deposits. As a result of
these activities, net cash used in investing activities amounted
to ¥10,109 million (US$86 million).
Cash flows from financing activities
In cash flows from financing activities, inflows included ¥3,476
million (US$29 million) arising from an increase in other longterm liabilities and ¥1,072 million (US$9 million ) in proceedsfrom issuance of long-term debt, while outflows included¥7,302 million (US$62 million) in payment for purchase oftreasury stock, ¥4,369 million (US$37 million) in repayment oflong-term debt, and ¥3,658 million (US$31 million) in decreasein short-term bank loans. As a result, net cash used in financing
activities amounted to ¥13,231 million (US$112 million).

25

Management Discussion and Analysis

Due to the previous activities, cash and cash equivalents at endof year declined ¥2,939 million to ¥25,764 million (US$218
million).

liability insurance. However, the incurrence of a large
indemnity amount could have an adverse impact on the
Company’s business results.

Risk Information

Risk from Market Shifts Related to Product Sales Prices
and Raw Materials Procurement
The Nisshinbo Group’s products are significantly affected byfluctuations in market prices accompanying competition withother companies and trends in market conditions. The
Company operates under a structure whereby sales prices for
textiles and paper products are easily affected by these factors
while in procurement these factors have an impact on the
procurement of raw cotton, pulp, and steel materials. Raw
cotton and pulp are imported raw materials and thus the effects
of exchange rate fluctuations are unavoidable.

New Business Risk
New businesses have numerous uncertainties, and factors suchas lack of progress in developing attractive products or increating new markets in accordance with expectations could
result in a delay in or an inability to recover investments.
Risk of Fluctuations in the Value of Investment Securities
Marketable securities held by the Company are marked tomarket in accordance with accounting standards for financial
products and Nisshinbo implements impairment accounting
based on even more stringent internal standards for a portion
its securities. Under current legal provisions, the Company’s
overall securities acquisition costs are low, and thus there islittle probability of an impairment having an impact on the
Company’s Statements of Income. However, a future change inaccounting standards requiring the effects of such a change tobe reflected in the Statements of Income could cause asignificant increase or decrease in profits for the fiscal year.
The Company implements a policy of selling marketablesecurities to cover investments for M&A, investments foroverseas business development, and capital investment, thereby
curtailing the incurrence of interest-bearing debt. However,there could be unforeseen scenarios resulting from amisalignment in timing between selling and investments.
The Company made a trust contribution amounting ¥14.7
billion in response to a loss resulting from a change inaccounting standards for employee retirement benefits in 2000.
In fiscal 2007, the Company realized a valuation gain of ¥4.6
billion on the contributed portion. Although the Company
amortizes retirement benefits evenly over an average of 15
years of employee service, retirement benefit expenses affectedby fluctuations in stock prices could have an impact on profits
for the fiscal year. The effects of current valuations of stocks intrust are reflected in the Statements of Income. Nonetheless,because profit and loss for each fiscal year is averaged over a
period of 15 years, the impact on profits for a fiscal year is notbelieved to be significant.
Utilization of Idle Land Risk
As part of its utilization of idle land assets, the Company also
focuses on selling a portion of this land. However, falling land
prices could result in a decline in profit on the sale of this land.
In carrying out the redevelopment of this land, there is apossibility that the Company will incur expenses for the
purification of the land or that revisions to laws could impede
redevelopment.
Product Quality Risk
Most of the Nisshinbo Group’s products are manufactured inaccordance with international quality management standards.
However, there is no assurance that a quality-related problem
will not arise in the future. The Company is covered by product

26

Electronics Products Business Risk
Consolidated subsidiary New Japan Radio’s core business isanalog semiconductors, a stable business. However, there is apossibility of fluctuations in earnings due to demands for pricedecreases and changes in semiconductor market conditions.
New Japan Radio generates approximately 50% of its
consolidated sales overseas and thus exchange rate fluctuations
could have an impact on its business results.
Also, the burden of investments for future earnings
opportunities, mainly for strengthening the advance into car
electronics fields, could be a factor in a temporary constrictionof profits.
Overseas Business Development Risk
The Nisshinbo Group’s overseas production bases are exposedto the inherent risk of unforeseen changes in laws andregulations, disadvantageous political and economic factors, or
social unrest.
Risk of Fluctuation in the Business Results of Customers
The Automobile Brake business’ customers are auto
manufacturers who carry out their operations globally.
However, factors that are beyond control of the Nisshinbo
Group, such as unforeseen contract dissolutions and requests
for large price reductions resulting from fluctuations in thebusiness results of these corporate customers, could have an
adverse impact on business results.
Capital Expenditures
During the fiscal year, capital expenditures amounted to¥18,306 million (US$155 million). Capital expenditures in the
Automobile Brakes business totaled ¥4,568 million (US$39
million) and were primarily for investment at the Toyota Plant,a new production base, and for production facilities for friction
materials at the existing Tatebayashi Plant. Capital
expenditures in the Real Estate Leasing business amounted to¥3,492 million (US$30 million) mainly for investment for
construction of a shopping center at the site of our former
Tokyo Plant. In our Electronics Business, we invested ¥3,762
million (US$32 million) primarily for investments forsemiconductor manufacturing facilities by consolidated
subsidiary New Japan Radio.

Six-year Summary(millions of yen)

Net Sales
Operating Income
Net Income
EquityTotal Assets
Shareholders’ Equity Ratio (%)
Return on Assets (%)
Return on Equity (%)
Payout Ratio (%)*
Capital Expenditures
Depreciation and Amortization
Common Shares Issued

2002

2003

2004

2005

2006

2007

225,836
3,968-2,649213,665
364,161
58.7
-0.8
-1.3
53.1
13,243
13,422

231,194
5,989
777
186,028
312,909
59.5
0.2
0.4
64.3
9,057
12,758226,883
8,496
3,919
214,132
368,444
58.1
1.2
2.0
51.9
8,989
11,776

243,4219,651
8,199
222,771
370,168
60.2
2.2
3.8
28.1
12,504
11,046278,617
10,524
11,183
266,434
491,230
54.2
2.6
4.6
32.2
16,548
13,835

312,825
11,551
15,107
282,015472,670
55.3
3.1
5.7
35.6
18,306
14,984

216,580,939 216,580,939 216,580,939 208,198,939 208,198,939 201,698,939

Per Share (in yen):
Net Income
Shareholders’ Equity
Cash Dividends-12.03988.027.00

3.18
860.52
7.00

17.86
1,030.98
7.00

39.03
1,072.54
10.00

53.21
1,283.21
10.00

74.19
1,301.14
15.00

Number of Employees

8,456

8,627

9,875

9,505

12,602

12,744*Payout Ratio is on a non-consolidated basis.

Operating Income

Total Assets(billions of yen)(billions of yen)

Shareholders’ Equity
Ratio

Return on Equity
(%)

(%)

12

500

10

80

6.0

60

4.0

40

2.0

20

0.0

400

8
300
6
200
4
100

2
0

0

Capital Expenditures-2.0

0’02 ’03 ’04 ’05 ’06 ’07’02 ’03 ’04 ’05 ’06 ’07’02 ’03 ’04 ’05 ’06 ’07(billions of yen)

Depreciation andAmortization

20

15(billions of yen)

Shareholders’ Equity per
Share
(yen)

’02 ’03 ’04 ’05 ’06 ’07

Cash Dividends per
Share
(yen)

15

1,400
1,200

15

1,000
10

10
800
10
600

5

5
400

5

200
0

0
’02 ’03 ’04 ’05 ’06 ’07

0

0’02 ’03 ’04 ’05 ’06 ’07’02 ’03 ’04 ’05 ’06 ’07’02 ’03 ’04 ’05 ’06 ’07
27

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Balance Sheets
31st March, 2007 and 2006ASSETS(millions of yen)
2007

2006

(thousands of
US dollars)(Note 1)
2007

Current assets:
Cash and cash equivalents ........................................................................
Time deposits (Note 5) .............................................................................
Marketable securities (Note 4) .................................................................
Receivables
Notes receivable, trade .........................................................................
Accounts receivable, trade ...................................................................
Unconsolidated subsidiaries and affiliates ..........................................
Other......................................................................................................
Less allowance for doubtful accounts..................................................
Inventories (Note 3)..................................................................................
Deferred tax assets (Note 7) .....................................................................
Other current assets ..................................................................................
Total current assets..........................................................................

Property, plant and equipment (Note 5):
Land ...........................................................................................................
Buildings and structures ...........................................................................
Machinery, equipment and tools..............................................................
Construction in progress...........................................................................
Less accumulated depreciation .................................................................

Investments and other assets:
Investment securities (Notes 4 and 5) .....................................................
Investments in and advances to unconsolidated
subsidiaries and affiliates .....................................................................
Deferred tax assets (Note 7) .....................................................................
Goodwill.....................................................................................................
Other ..........................................................................................................

See Notes to Consolidated Financial Statements.

28¥

25,764
1,916
1,727

¥

28,7033,215
1,485$ 218,339
16,237
14,636

13,241
59,6388,497
492
81,868(1,497)80,371
53,7792,790
2,537
168,884

14,35660,2455,085
807
80,493(932)
79,56153,6883,122
2,297
172,071

112,212505,407
72,008
4,169
693,796(12,686)
681,110455,754
23,64421,5001,431,220

26,950123,062
250,767
4,952
405,731(283,826)
121,905

25,541
125,870
260,508
3,970
415,889(294,740)
121,149

228,390
1,042,898
2,125,144
41,9663,438,398(2,405,305)
1,033,093

144,534

173,802

1,224,865

25,104
1,701
3,236
7,306
181,881¥ 472,670

12,747
1,597
3,302
6,562
198,010¥ 491,230

212,746
14,41527,424
61,915
1,541,365$4,005,678

LIABILITIES AND EQUITY(millions of yen)
2007

Current liabilities:
Short-term bank loans (Note 5) ...............................................................
Current portion of long-term debt (Note 5) ............................................
PayablesNotes and accounts payable, trade (Note 5) .......................................
Unconsolidated subsidiaries and affiliates ..........................................
Other......................................................................................................
Employees’ savings deposits .....................................................................
Accrued expenses ......................................................................................
Accrued income taxes ...............................................................................
Deferred tax liabilities (Note 7) ...............................................................
Other current liabilities (Note 5) .............................................................
Total current liabilities ....................................................................
Long-term liabilities:
Long-term debt (Note 5) ...........................................................................
Accrued severance benefits (Note 6) .......................................................
Deferred tax liabilities (Note 7) ...............................................................
Other long-term liabilities (Note 5)..........................................................

Minority interests in consolidated subsidiaries .............................................................

2006

2007

46,5344,132$ 365,881
33,67835,8061,029
6,615
43,450
255
8,106
3,545
34
2,591
105,129

32,501575
8,034
41,110
261
7,991
6,344
29
2,901
109,302

303,441
8,720
56,059368,220
2,161
68,69530,042
288
21,958890,923

5,918
27,791
39,772
12,04585,526

8,933
29,011
48,151
8,255
94,35050,153
235,517
337,051
102,076
724,797—

21,144—

27,58820,401
16
149,50761,22568
2,989

27,58820,449—144,086
74,994—(229)

233,797
172,890136
1,267,008
518,856576
25,330(559)
261,235
20,780282,015¥ 472,670(454)
266,434—
266,434¥ 491,230(4,737)2,213,856
176,1022,389,958$4,005,678¥ 43,174
3,974¥(thousands of
US dollars)(Note 1)

Commitments and contingencies (Note 12)
Equity (Notes 10 and 13):
Common stock:
Authorized —371,755,000 shares
Issued2007 —— 201,698,939 shares2006 —— 208,198,939 shares .......................................................
Capital surplus...........................................................................................
Stock acquisition rights.............................................................................
Retained earnings......................................................................................
Net unrealized gain on available-for-sale securities ................................
Deferred gain on derivatives under hedge accounting............................
Foreign currency translation adjustments...............................................
Less shares in treasury
2007 ——— 120,524 shares2006 ——— 675,130 shares.........................................................
Minority interests......................................................................................

29

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Statements of Income
Years ended 31st March, 2007 and 2006

(millions of yen)

Net sales ..................................................................................................................................

2007

2006

2007

¥ 312,825¥ 278,617$2,651,059

257,665
43,609301,274

230,120
37,973
268,093

2,183,601
369,568
2,553,169

11,551

10,524

97,8902,745(1,229)4,178
5,840
11,534

2,245(1,133)
2,017
6,167
9,296

23,263(10,415)
35,40649,492
97,74623,08519,820195,636

5,022
1,267
6,289

9,244
(1,805)
7,439

42,56010,73753,297

16,796(1,689)¥ 15,107

12,381(1,198)
11,183

142,339(14,314)$ 128,025

Costs and expenses:
Cost of sales ...............................................................................................
Selling , general and administrative expenses..........................................

Operating income .................................................................................................................
Other income (expenses):
Interest and dividend income ...................................................................
Interest expenses .......................................................................................
Equity in earnings of affiliates .................................................................
Other, net (Note 11) .................................................................................

Income before income taxes and minority interests......................................................
Income taxes (Note 7)
Current.......................................................................................................
Deferred .....................................................................................................

Income before minority interests ......................................................................................
Minority interests in net income .......................................................................................
Net income ..............................................................................................................................

(thousands of
US dollars)(Note 1)¥(yen)

(US dollars)

Per share:
Net income.................................................................................................
Cash dividends...........................................................................................

See Notes to Consolidated Financial Statements.

30

¥

74.19
15.00

¥

53.21
10.00

$

0.63
0.13

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Statements of Changes in Equity
Years ended 31st March, 2007 and 2006

(thousands of
US dollars)(Note 1)(millions of yen)
2007

2006

2007

Common stock:
Balance at beginning of year
(2007 and 2006 — 208,198,939 shares) ............................................. ¥ 27,588
Balance at end of year
(2007 — 201,698,939 shares; 2006 — 208,198,939 shares).............. ¥ 27,588¥

27,588$

233,797¥

27,588$

233,797¥

20,4472
20,449$173,297(407)
172,890———$

Capital surplus:
Balance at beginning of year..................................................................... ¥ 20,449
Gain (loss) on sale of treasury stock ........................................................
(48)
Balance at end of year ............................................................................... ¥ 20,401
Stock acquisition rights:
Balance at beginning of year..................................................................... ¥Net changes................................................................................................
Balance at end of year ............................................................................... ¥

—
16
16

Retained earnings:
Balance at beginning of year..................................................................... ¥ 144,086
Adjustments due to increase in a consolidated subsidiary ....................
—Net income.................................................................................................
15,107
Cash dividends...........................................................................................
(2,055)
Directors’ and statutory auditors’ bonuses..............................................
(120)
Retirement of treasury stock ....................................................................
(7,520)
Other ..........................................................................................................
9
Balance at end of year ............................................................................... ¥ 149,507
Net unrealized gain on available-for-sale securities:
Balance at beginning of year..................................................................... ¥ 74,994
Net changes................................................................................................
(13,769)
Balance at end of year ............................................................................... ¥ 61,225

¥

¥
¥

¥
¥

—
68
68

¥

Foreign currency translation adjustments:
Balance at beginning of year..................................................................... ¥Net changes................................................................................................
Balance at end of year ............................................................................... ¥

(229)
3,218
2,989

¥

Minority interests:
Balance at beginning of year..................................................................... ¥—Reclassified balance as of March 31, 2006 (Note 2. (k))........................
21,144
Net changes................................................................................................
(364)
Balance at end of year ............................................................................... ¥ 20,780

$

—
136
136

¥ 135,447 $ 1,221,068(42)—
11,183
128,025(2,387)(17,415)(104)(1,017)—(63,729)(11)76¥ 144,086 $ 1,267,008

Deferred gain on derivatives under hedge accounting:
Balance at beginning of year..................................................................... ¥Net changes................................................................................................
Balance at end of year ............................................................................... ¥Treasury stock at cost:
Balance at beginning of year..................................................................... ¥(454)
Add: acquired ............................................................................................
(7,302)
Add: increase in an affiliate accounted for by the equity method..........
(411)
Deduct: sold and retirement .....................................................................
7,608
Balance at end of year ............................................................................... ¥
(559)

$

¥

¥

¥

¥

¥
¥

42,69132,30374,994$

635,542(116,686)$ 518,856

—
—
—

$
$

—
576
576

(3,040) $2,811(229) $

(1,941)
27,271
25,330(362) $
(99)—7(454) $

(3,848)(61,881)(3,483)64,475(4,737)—————179,186(3,084)
176,102$$

See Notes to Consolidated Financial Statements.
31

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
Years ended 31st March, 2007 and 2006

(millions of yen)
2007

Cash flows from operating activities:
Income before income taxes and minority interests..........................................
Adjustments to reconcile net income to net cash provided
by operating activities:
Income taxes-paid.......................................................................................
Depreciation and amortization..................................................................
Impairment of long lived-assets .................................................................
Amortization of goodwill ...........................................................................
Equity in earnings of affiliates...................................................................
Provision for (reversal of) doubtful receivables .......................................
Provision for accrued pension and severance benefits ............................
Payment of accrued pension and severance benefits ...............................
Directors’ and statutory auditors’ bonuses paid.......................................
(Gain) loss on sale of property, plant and equipment..............................
Gain on sale of investment securities and investments inand advances to unconsolidated subsidiaries and affiliates ................
Loss on plant closures ................................................................................
Other ...........................................................................................................
Changes in operating assets and liabilities:
Receivables..................................................................................................
Inventories ..................................................................................................
Payables.......................................................................................................
Other ...........................................................................................................
Net cash provided by operating activities ...................................

$ 195,636(7,841)
14,984
1,328
686(4,178)589
2,415(3,631)
(136)
(831)

(6,830)13,835
5,415
951(2,017)(159)
3,727(2,103)(107)
77(66,449)
126,983
11,254
5,814(35,407)
4,992
20,466(30,771)(1,153)(7,042)(10,668)
2,649
(302)

(13,732)487
520(90,407)22,449(2,559)

(773)
343
3,334
(1,701)
19,352

(637)
4,200
(682)
(290)
22,475(6,551)
2,906
28,254(14,415)
164,000

2,918

1,088

24,72914,364(18,629)

20,646(14,921)

121,729(157,873)(9,497)
1,642(11,417)
114(80,483)
13,915—(907)(10,109)(13,907)(449)(18,846)—(7,686)(85,669)

Cash flows from financing activities:
Proceeds from issuance of long-term debt..........................................................
Repayment of long-term debt..............................................................................
Proceed from issuance of new stock...................................................................
Decrease in short-term bank loans .....................................................................
Cash dividends paid.............................................................................................
Payment for purchase of treasury stock.............................................................
Increase in other long-term liabilities.................................................................
Other.....................................................................................................................
Net cash used in financing activities ...........................................

1,072(4,369)—(3,658)(2,055)(7,302)
3,476(395)(13,231)

1,352(3,031)
1,271(4,162)(2,387)
(99)
—
(415)
(7,471)

9,085(37,026)—(31,000)(17,415)(61,881)
29,458(3,348)(112,127)

Effect of exchange rate changes on cash ..........................................................................
Net decrease in cash and cash equivalents ......................................................................
Cash and cash equivalents of newly consolidated subsidiaries at beginning of year ...

1,049(2,939)—656(3,186)
209

8,889(24,907)—

Cash and cash equivalents at beginning of year.............................................................
Cash and cash equivalents at end of year ........................................................................

28,703¥ 25,764

31,68028,703

243,246$ 218,339

See Notes to Consolidated Financial Statements.

32

¥

2007

19,820Cash flows from investing activities:
Proceeds from sale of property, plant and equipment.......................................
Proceeds from sale of investment securities and investments
in and advances to unconsolidated subsidiaries and affiliates .....................
Payment for purchase of property, plant and equipment .................................
Payment for purchase of investment securities andinvestments in and advances to unconsolidated subsidiaries and affiliates
Decrease in time deposits....................................................................................
Cash acquired from newly consolidated subsidiaries,
net of payment for purchase of companies....................................................
Other, net .............................................................................................................
Net cash used in investing activities ...........................................

¥ 23,085

2006(thousands of
US dollars)(Note 1)¥

Nisshinbo Industries, Inc. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS:
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Securities
and Exchange Law and its related accounting regulations, and in conformity with accounting principles and practices generally accepted in Japan,
which are different in certain respects as to application and disclosure requirements of International Accounting Standards.
In addition, the accompanying footnotes include information which is not required under generally accepted accounting principles andpractices in Japan but is presented herein as additional information.
The United States dollar ($) amounts included herein are given solely for convenience and are stated, as a matter of arithmetical computation
only, at the rate of ¥118 = $1, the approximate exchange rate at 31st March, 2007. The translations should not be construed as representations
that the Japanese yen amounts have been, could have been, or could in the future be, converted into United States dollars.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:(a) Consolidation
The consolidated financial statements include the accounts of Nisshinbo Industries, Inc. (the “Company”) and its significant subsidiaries(together, the “Group”).
Under the control or influence concept, those companies in which the Parent, directly or indirectly, is able to exercise control over
operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted forby the equity method.
Investments in unconsolidated subsidiaries and associated companies are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries and associated companies are stated at cost. If the equity method of accounting had
been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in
assets resulting from transactions within the Group is eliminated.
(b) Foreign currency transactions
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at theexchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the income statement to theextent that they are not hedged by forward exchange contracts.
Investments in and advances to unconsolidated subsidiaries and affiliates in foreign currencies are translated at the historical rates effectiveat the dates of transaction from which such accounts were originated.
(c) Foreign currency financial statements
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate. Revenue
and expense accounts of consolidated foreign subsidiaries are translated into yen at the average exchange rate.
(d) Cash equivalents
Cash equivalents include time deposits which mature or become due within six months of the date of acquisition.
(e) Marketable and investment securities
Marketable and investment securities classified as available-for-sale securities are reported at fair value, with unrealized gain and losses, netof applicable taxes, reported in a separate component of equity.
(f) Inventories
Inventories are stated principally at the lower of cost or market, cost being substantially determined by the average cost method.
(g) Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is computed principally on the declining balance method over their estimateduseful lives. Contributions in aid of purchases of property, plant and equipment from national and local governments are deducted from theacquisition costs of related assets in accordance with tax regulations.
(h) Goodwill
Goodwill is carried at cost less accumulated amortization, which is calculated by the straight-line method principally over 5 years.

33

(i) Retirement and pension plans
Under the employees’ retirement plans for the Company and certain consolidated subsidiaries, the annual provision for retirement benefits
is calculated to state the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date.
Retirement benefits to directors and corporate auditors are provided at the amount which would be required if all directors and corporate
auditors retired at the balance sheet date.
(j) Stock options
On 27th December, 2005, the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Statement No.8, “Accounting Standard for
Stock Options” and related guidance. The new standard and guidance are applicable to stock options newly granted on and after 1st May, 2006.
This standard requires companies to recognize compensation expense for employee stock options based on the fair value at the date of grantand over the vesting period as consideration for receiving goods or services. The standard also requires companies to account for stock options
granted to non-employees based on the fair value of either the stock option or the goods or services received. In the balance sheet, the stock
option is presented as a stock acquisition right as a separate component of equity until exercised. The standard covers equity-settled, sharebased payment transactions, but does not cover cash-settled, share-based payment transactions. In addition, the standard allows unlistedcompanies to measure options at their intrinsic value if they cannot reliably estimate fair value.
The Company applied the new accounting standard for stock options to those granted on and after 1st May, 2006. The effect of adoption ofthis accounting standard for the year ended 31st March, 2007 was to decrease income before income taxes and minority interests by ¥15
million ($127 thousand).
(k) Presentation of equity
On 9th December, 2005, the ASBJ published a new accounting standard for presentation of equity. Under this accounting standard, certain
items which were previously presented as liabilities are now presented as components of equity. Such items include stock acquisition rights, minority interests, and any deferred gain or loss on derivatives accounted for under hedge accounting. This standard is effective for fiscal years ending
on or after 1st May, 2006. The consolidated balance sheet as of 31st March, 2007 is presented in line with this new accounting standard.
(l) Research and development costs
Research and development costs are changed to income as incurred.
(m) Bonuses to directors and corporate auditors
Prior to the fiscal year ended 31st March, 2005, bonuses to directors and corporate auditors were accounted for as a reduction of retained
earnings in the fiscal year following approval at the general shareholders meeting. The ASBJ issued ASBJ Practical Issues Task Force (PITF)
No.13, “Accounting treatment for bonuses to directors and corporate auditors”, which encouraged companies to record bonuses to directors
and corporate auditors on the accrual basis with a related charge to income, but still permitted the direct reduction of such bonuses from retained
earnings after approval of the appropriation of retained earnings.
The ASBJ replaced the above accounting pronouncement by issuing a new accounting standard for bonuses to directors and corporate auditors on 29th November, 2005. Under the new accounting standard, bonuses to directors and corporate auditors must be expensed and are nolonger allowed to be directly changed to retained earnings. This accounting standard is effective for fiscal years ending on or after 1st May,
2006. The companies must accrue bonuses to directors and corporate auditors at the year end to which such bonuses are attributable.
The Company adopted the new accounting standard for bonuses to directors and corporate auditors in the year ended 31st March, 2007.
The effect of adoption of this accounting standard was to decrease income before income taxes and minority interests for the year ended 31st
March, 2007 by ¥104 million ($881 thousand).
(n) Income taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset andliability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.
(o) Derivative financial instruments
The Group uses a variety of derivative financial instruments, including foreign currency forward contracts and interest rate swaps as a meansof hedging exposure to foreign currency and interest rate risks. The Group does not enter into derivatives for trading or speculative purposes.
The foreign currency forward contracts are utilized to hedge foreign currency exposures in procurement of raw materials from overseas
suppliers. Trade payables denominated in foreign currencies are translated at the contracted rates if the forward contracts qualify for hedge
accounting.
Interest rate swaps are utilized to hedge interest rate exposures of long-term debt. These swaps which qualify for hedge accounting and meet
specific matching criteria are not remeasured at market value but the differential paid or received under the swap agreements are recognized andincluded in interest expense or income.

34

3. INVENTORIES:
Inventories at 31st March, 2007 and 2006 were as follows:(thousands of
US dollars)(millions of yen)
2007

Finished products .....................................................................................................................
Work in process........................................................................................................................
Materials and supplies..............................................................................................................

2007

2006

¥ 26,450
15,274
12,055¥ 53,779¥¥

26,715
14,907
12,066
53,688$ 224,153
129,440
102,161$ 455,754

4. MARKETABLE AND INVESTMENT SECURITIES:The carrying amounts and aggregate fair values of securities available-for-sale included in marketable and investment securities
at 31st March, 2007 and 2006 were as follows:(thousands of
US dollars)(millions of yen)
2007

Cost............................................................................................................................................
Unrealized gains .......................................................................................................................
Unrealized losses ......................................................................................................................
Fair value ..................................................................................................................................

¥ 32,313
104,460(420)¥ 136,353

2006

2007

37,239127,331(54)¥ 164,516$ 273,839
885,254(3,559)$1,155,534¥

5. SHORT-TERM BANK LOANS AND LONG-TERM DEBT:
The annual interest rates applicable to the short-term bank loans at 31st March, 2007 and 2006 were 0.6% to 8.8%.
Long-term debt at 31st March, 2007 and 2006 consisted of the following:(thousands of
US dollars)(millions of yen)
2007

Long-term debt with collateral:
Loans from banks maturing serially to 2011, ranging from 1.1% to 2.3% .....................

¥

Long-term debt without collateral:
Loans from banks maturing serially to 2010, ranging from 0.8% to 5.4% .....................
Capital lease obligations, due through 2010.......................................................................
Less current portion .................................................................................................................
¥

2007

2006

934

¥

1,285

$

7,915

2,656

4,122

22,5096,302
9,892(3,974)
5,918

7,658
13,065(4,132)
8,933

53,407
83,831(33,678)$ 50,153¥

Annual maturities of long-term debt were as follows:Year ending 31st March,
2008..................................................................................................................................
2009..................................................................................................................................
2010.................................................................................................................................................
2011.................................................................................................................................................
2012 and thereafter .........................................................................................................

(millions of yen)

¥

¥

3,974
2,741
2,504
628
45
9,892

(thousands of US dollars)$$

33,67823,22921,221
5,322
381
83,83135

At 31st March, 2007 and 2006, net book value of assets pledged as collateral for short-term bank loans and long-term debt were as follows:(thousands of
US dollars)(millions of yen)
2007

Property, plant and equipment ........................................................................................................

¥

9,688

2007

2006

¥

10,595$ 82,102

In addition, pledged assets as collateral for liabilities other than the above were as follows:
Assets pledged:(thousands of
US dollars)(millions of yen)
2007

Property, plant and equipment ........................................................................................................
Investment securities........................................................................................................................
Time deposits ....................................................................................................................................

¥

¥

315
410
209
934

2007

2006

¥

—
354
209
563

¥

$

$

2,669
3,475
1,771
7,915

Liabilities with collateral:(thousands of
US dollars)(millions of yen)
2007

Other long-term liabilities ...............................................................................................................
Notes and accounts payable, trade ..................................................................................................
Other current liabilities ...................................................................................................................

¥

¥

3,959
184
183
4,326

2007

2006

¥

—
184
180
364

¥

$

$

33,5511,559
1,551
36,661

6. RETIREMENT AND PENSION PLANS:
Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of
pay at termination, years of service and certain other factors.
The Company and certain domestic subsidiaries have two types of pension plans for employees: a non-contributory and a contributory
funded defined benefit pension plan. The contributory funded defined benefit pension plan, which is established under the Japanese Welfare
Pension Insurance Law, covers a substitutional portion of the governmental pension program managed by the Company on behalf of thegovernment and a corporate portion established at the discretion of the Company.
The liability for retirement benefits for directors and corporate auditors at 31st March, 2007 and 2006 were ¥433 million ($3,669 thousand) and ¥388 million. The retirement benefits for directors and corporate auditors are paid subject to the approval of the shareholders.
The liability for employees’ retirement benefits at 31st March, 2007 and 2006 consisted of the following:(millions of yen)
2006

2007

52,401(29,707)
22,694
2,977
104
(238)
25,537
3,086¥ 28,623$ 431,906(248,220)
183,686
23,170492(1,619)205,729
26,119$ 231,848

2007

Projected benefit obligation....................................................................................................
Fair value of plan assets......................................................................................................................
Unrecognized prior service cost.............................................................................................
Unrecognized actuarial loss....................................................................................................
Unrecognized transitional obligation ....................................................................................
Prepaid pension cost ...............................................................................................................
Net liability.........................................................................................................................

36¥ 50,965(29,290)
21,675
2,734
58
(191)
24,276
3,082¥ 27,358(thousands of
US dollars)¥

The components of net periodic retirement benefit costs for the years ended 31st March, 2007 and 2006 were as follows:(thousands of
US dollars)(millions of yen)
2007

Service cost..............................................................................................................................
Interest cost .............................................................................................................................
Expected return on plan assets ..............................................................................................
Amortization of prior service cost .........................................................................................
Recognized actuarial loss........................................................................................................
Amortization of transitional obligation.................................................................................
Net periodic benefit costs ..................................................................................................
Defined contribution pension cost ........................................................................................
Retirement benefits paid due to restructuring of business operations................................
Total....................................................................................................................................

¥

¥

2007

2006

2,516
1,097
(332)
(1,236)
215
48
2,308
94
1,969
4,371

¥

¥

2,338 $ 21,322
9,297
1,162
(2,814)(319)(10,475)
(234)
1,822
634
407
48
19,5593,629
797
93
16,68681
3,803 $ 37,042

Assumptions used for the years ended 31st March, 2007 and 2006 were set forth as follows:
Discount rate ..................................................................................................................................
Expected rate of return on plan assets..........................................................................................
Amortization period of prior service cost.....................................................................................
Recognition period of actuarial gain / loss ...................................................................................
Amortization period of transitional obligation ............................................................................

2007

2006

2.0%~2.5%
1.0%~2.0%
10~15 years
10~15 years
10 years

2.0%~2.5%
0.5%~4.0%
10~15 years
10~15 years
10 years

7. INCOME TAXES:
The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities at 31st
March, 2007 and 2006 were as follows:(millions of yen)
2007

Deferred tax assets:
Inventories ..............................................................................................................................
Tax loss carryforwards ...........................................................................................................
Allowance for doubtful accounts ...........................................................................................
Accrued employees’ bonuses..................................................................................................
Accrued severance benefits ....................................................................................................
Impairment of long lived-assets .............................................................................................
Other........................................................................................................................................
Less valuation allowance........................................................................................................

Deferred tax liabilities:
Unrealized gain on available-for-sale securities ....................................................................
Deferred gains on sale of property.........................................................................................
Other........................................................................................................................................

Net deferred tax ................................................................................................................................

¥(thousands of
US dollars)

2006

461
4,757
443
1,790
11,206
1,075
1,795(6,763)¥ 14,764¥¥ (42,359)(4,163)(3,557)¥ (50,079)¥ (51,768)(4,253)(3,500)¥ (59,521)$(358,974)(35,280)(30,144)$(424,398)¥ (35,315)¥ (43,461)$(299,280)

¥

435
4,641
111
1,735
11,733
1,455
2,143(6,193)
16,060

2007

$

3,907
40,314
3,754
15,16994,966
9,110
15,212(57,314)$ 125,118

A reconciliation between the normal effective statutory tax rate for the years ended 31st March, 2007 and 2006 and the actual effective
tax rates reflected in the accompanying consolidated statement of income was as follows:
Normal effective statutory tax rate ..........................................................................................................................
Dividend income not taxable..........................................................................................................................
Expenses not deductible for income tax purposes ........................................................................................
Equity in earnings of affiliates .......................................................................................................................
Lower income tax rates applicable to income in certain foreign countries .................................................
Valuation allowance........................................................................................................................................
Tax credit for research and development costs and other............................................................................
Other ................................................................................................................................................................
Actual effective tax rate............................................................................................................................................

2007

2006

40.7%
(0.5)
0.6
(7.4)
(2.3)
1.5
(3.7)
(1.7)
27.2%

40.7%
(1.7)
0.5
(4.1)
(3.1)
4.1
(2.7)
3.8
37.5%

37

8. LEASES:
The Group leases certain machinery, computer equipment and other assets.
Total rental expenses for the years ended 31st March, 2007 and 2006 were ¥491 million ($4,161 thousand) and ¥559 million, respectively,
including ¥491 million ($4,161 thousand) and ¥559 million of lease payments under finance leases.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligation under finance lease, depreciation
expense of finance leases that do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended
31st March, 2007 and 2006 was as follows:(thousands of
US dollars)(millions of yen)2007

Acquisition cost ......................................................................................................................
Accumulated depreciation......................................................................................................
Net leased property.................................................................................................................

¥
¥

2,240
(1,129)
1,111

2007

2006

¥
¥

2,604
(1,416)
1,188$ 18,983(9,568)$ 9,415

Obligations under finance leases:(thousands of
US dollars)(millions of yen)
2007

Due within one year ...............................................................................................................
Due after one year ..................................................................................................................
Total.........................................................................................................................................

¥
¥

408
703
1,111

2007

2006

¥
¥

455
733
1,188

$
$

3,458
5,957
9,415

Depreciation expense under finance leases:(thousands of
US dollars)(millions of yen)
2007

Depreciation expense .............................................................................................................

¥

491

2007

2006

¥

559

$

4,161

Depreciation expense, which is not reflected in the accompanying statements of income, is computed by the straight-line method.

9. DERIVATIVES:The Group enters into foreign currency forward contracts to hedge exchange risk associated with certain assets and liabilities denominatedin foreign currencies. Foreign currency forward contracts which qualify for hedge accounting for the years ended 31st March, 2007 and 2006
and such amounts which are assigned to the associated assets and liabilities and are recorded on the balance sheets at 31st March, 2007 and 2006,
are excluded from disclosure of market value information.
The Group also enters into interest rate swap contracts to manage its interest rate exposures on certain liabilities. Such contracts outstandingat 31st March, 2007 and 2006 were as follows:(millions of yen)
2007

Contract
amountInterest rate swaps:
Fixed rate payments, floating rate receipt....
Foreign currency forward contracts....................

Fair
value

(thousands of US dollars)
2007

2006

Unrealized Contractgain(loss) amount

Fair
value

Unrealized Contract
gain (loss) amount

Fair
value

Unrealizedgain(loss)¥6,007 ¥ 342 ¥ 342 ¥ 4,989 ¥ (243) ¥ (243) $50,907 $2,898 $2,898(9)¥ 457 ¥ 456 ¥(1) ¥ 159 ¥ 164 ¥5 $3,873 $ 3,864 $10. EQUITY:
On and after 1st May, 2006, Japanese companies are subject to a new corporate law of Japan (the “Corporate Law”), which reformed andreplaced the Commercial Code of Japan (the “Code”) with various revisions that are, for the most part, applicable to events or transactions
which occur on or after 1st May, 2006 and for the fiscal years ending on or after 1st May, 2006. The significant changes in the Corporate Law
that affect financial and accounting matters are summarized below:(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, the Board of Directors may declare dividends (expect for dividends in kind) at any
time during the fiscal year if the company has prescribed so in its articles of incorporation.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the shareholders.

38(b) Increases/decreases and transfer of common stock, reserve and surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained
earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment ofsuch dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under
the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law
also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferredamong the accounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Boardof Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which isdetermined by specific formula.
Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of equity.
The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury
stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.
The computation of net income per share is based on the weighted average number of shares of common stock outstanding during eachfiscal year.

11. OTHER INCOME (EXPENSES) — OTHER, NET:
Other income (expenses) — Other, net consisted of the following:(millions of yen)
2007

Gain (loss) on sale of property, plant and equipment ....................................................................
Gain on sale of securities .................................................................................................................
Loss on inventory disposal...............................................................................................................
Impairment of long lived-assets .......................................................................................................
Loss on plant closures ......................................................................................................................
Provision for loss from guarantee of indebtedness of affiliated.....................................................
Retirement benefits paid due to restructuring of business operations..........................................
Amortization of goodwill .................................................................................................................
Other, net ..........................................................................................................................................

¥

831
10,668(401)(1,328)(2,649)(92)(1,969)—780¥ 5,840(thousands of
US dollars)

2006

¥

¥

(77)
13,732(678)(5,415)
(487)
(132)
(81)
(575)
(120)
6,167

2007

$

7,042
90,407(3,398)(11,254)(22,449)(780)(16,686)—
6,610$ 49,492

12. COMMITMENTS AND CONTINGENCIES:
Contingent liabilities at 31st March, 2007 and 2006 for loans guaranteed amounted to ¥1,999 million ($16,941 thousand) and ¥1,998
million, respectively.
Commitments for capital expenditures outstanding at 31st March, 2007 and 2006 were in the approximate amounts of ¥13,169 million($111,602 thousand) and ¥12,881 million, respectively.

13. SUBSEQUENT EVENT:
Year-end cash dividends
On 30th May, 2007, Nisshinbo’s Board of Directors declared year-end cash dividends (¥10 per share) in the amounts of ¥2,015 million($17,076 thousand).

39

14. SEGMENT INFORMATION:(1) Industry Segments
Information about industry segments of the Company and its consolidated subsidiaries for the years ended 31st March, 2007 and 2006 wereas follows:(millions of yen)
2007
TextilesAutomobile
BrakesPapersChemical
Products

Electronics

Real Estate
Leasing

I. Sales and Operating Income
Sales to customers ............................. ¥ 82,243 ¥ 61,764 ¥ 29,908 ¥ 35,850 ¥ 76,068 ¥Intersegment sales .............................
5
—
16
759
0
Total sales....................................... 82,248
61,76429,92436,60976,068Operating expenses ...........................
81,80954,75528,67435,76175,027
Operating income (loss).................... ¥439 ¥ 7,009 ¥ 1,250 ¥848 ¥ 1,041 ¥OthersEliminations/
Corporate

4,788 ¥ 22,204 ¥353
532
22,557
5,320
24,0292,709
2,611 ¥ (1,472) ¥II. Total Assets, Depreciation and Amortization, Impairment of Long lived-assets and Capital Expenditures
Total assets......................................... ¥ 77,712 ¥ 66,323 ¥ 20,205 ¥ 23,248 ¥ 89,097 ¥ 21,347 ¥ 19,752
Depreciation and amortization ........ ¥ 2,682 ¥ 4,139 ¥ 1,302 ¥928 ¥ 4,044 ¥773 ¥ 1,116
Impairment of long lived-assets ....... ¥
—
292 ¥
— ¥
— ¥
49 ¥
— ¥
— ¥
Capital expenditures ......................... ¥ 1,841 ¥ 4,568 ¥ 1,275 ¥898 ¥ 3,762 ¥ 3,492 ¥ 2,470

Consolidated— ¥ 312,825(1,665)—(1,665)
312,825(1,490)301,274(175) ¥ 11,551¥ 154,986
¥
—
¥
987
¥
—

¥ 472,670¥ 14,984¥
1,328¥ 18,306

Eliminations/
Corporate

Consolidated(millions of yen)
2006
TextilesI. Sales and Operating Income
Sales to customers ............................. ¥Intersegment sales .............................
Total sales.......................................
Operating expenses ...........................
Operating income (loss).................... ¥Automobile
Brakes82,879 ¥1
82,88081,783
1,097 ¥

58,130 ¥—58,13052,667
5,463 ¥

Papers28,612 ¥14
28,62627,152
1,474 ¥

Chemical
Products

Electronics

36,007 ¥711
36,71835,938780 ¥Real Estate
Leasing

45,858 ¥145,85945,051808 ¥

4,781 ¥
464
5,245
2,588
2,657 ¥

II. Total Assets, Depreciation and Amortization, Impairment of Long lived-assets and Capital Expenditures
Total assets......................................... ¥ 80,724 ¥ 65,093 ¥ 19,732 ¥ 22,933 ¥ 78,137 ¥ 19,017 ¥981 ¥2,465 ¥
751 ¥Depreciation and amortization ........ ¥ 3,040 ¥ 4,205 ¥ 1,365 ¥
— ¥
— ¥
— ¥
— ¥
Impairment of long lived-assets ....... ¥ 2,025 ¥ 3,390 ¥
810 ¥
739 ¥
1,317 ¥
2,925 ¥
Capital expenditures ......................... ¥ 2,381 ¥ 5,177 ¥Others

22,350 ¥
1,188
23,53824,534(996) ¥

— ¥(2,379)(2,379)(1,620)(759) ¥

278,617—
278,617
268,093
10,52418,090
1,028
—
3,199

¥
¥
¥
¥

187,504———

491,230
13,835
5,415
16,548OthersEliminations/
Corporate¥¥¥¥(thousands of US dollars)
2007
TextilesAutomobile
BrakesPapersChemical
Products

Electronics

Real Estate
Leasing

Consolidated

I. Sales and Operating Income— $2,651,059
Sales to customers ............................. $ 696,974 $ 523,424 $ 253,458 $ 303,814 $ 644,644 $ 40,576 $ 188,169 $
42
—
135
6,432
0
4,509
2,992
(14,110)—
Intersegment sales .............................
45,085 191,161(14,110) 2,651,059
Total sales....................................... 697,016 523,424 253,593 310,246 644,644
22,958 203,635(12,627) 2,553,169
Operating expenses ........................... 693,296 464,026 243,000 303,059 635,822
Operating income (loss).................... $ 3,720 $ 59,398 $ 10,593 $ 7,187 $ 8,822 $ 22,127 $ (12,474) $ (1,483) $ 97,890
II. Total Assets, Depreciation and Amortization, Impairment of Long lived-assets and Capital Expenditures
Total assets......................................... $ 658,576 $ 562,059 $ 171,229 $ 197,017 $ 755,059 $ 180,907 $ 167,390
Depreciation and amortization ........ $ 22,729 $ 35,076 $ 11,034 $ 7,864 $ 34,271 $ 6,551 $ 9,458
— $
— $
415 $
— $
— $
—
Impairment of long lived-assets ....... $ 2,475 $Capital expenditures ......................... $ 15,602 $ 38,712 $ 10,805 $ 7,610 $ 31,882 $ 29,593 $ 20,932

40$1,313,441
$
—
$
8,364
$
—

$4,005,678$ 126,983$ 11,254$ 155,136

(2) Geographical Segments
The geographical segments of the Company and its consolidated subsidiaries for the years ended 31st March, 2007 and 2006 were as follows:(millions of yen)(millions of yen)

2007

2006
Eliminations/
Corporate Consolidated

Eliminations/
Corporate Consolidated

Others¥ 16,457 ¥— ¥312,825
96(23,475)—
16,553(23,475) 312,825
14,851(23,308) 301,274¥ 1,702 ¥(167) ¥ 11,551¥233,837 ¥ 30,269 ¥ 14,511 ¥— ¥278,617
8,907
7,255
266 (16,428)—
39,176
241,092
14,777 (16,428) 278,617
36,076
233,876
13,871 (15,730) 268,093¥ 7,216 ¥ 3,100 ¥906 ¥ (698) ¥ 10,524

Total assets .................................... ¥272,732 ¥ 32,406 ¥ 17,151 ¥150,381 ¥472,670¥ 261,539 ¥ 27,031 ¥ 18,606 ¥184,054 ¥491,230

Japan

Asia

Sales to customers ......................... ¥ 259,752 ¥ 36,616
Interarea transfer ..........................
10,081
13,298
Total sales................................... 269,833
49,914
Operating expenses ....................... 263,143
46,588Operating income (loss) ................ ¥ 6,690 ¥ 3,326

Japan

Asia

Others(thousands of US dollars)
2007
Japan

Asia

OthersEliminations/
Corporate Consolidated

Sales to customers ......................... $2,201,288 $ 310,305 $139,466 $— $2,651,059
Interarea transfer ..........................
85,432
112,695
814(198,941)—
Total sales................................... 2,286,720 423,000 140,280 (198,941) 2,651,059
Operating expenses ....................... 2,230,025 394,814 125,856 (197,526) 2,553,169
Operating income (loss) ................ $ 56,695 $ 28,186 $ 14,424 $ (1,415) $ 97,890
Total assets .................................... $2,311,288 $274,627 $145,348 $1,274,415 $4,005,678(3) Sales to Foreign Customers
Sales to foreign customers for the years ended 31st March, 2007 and 2006 amounted to ¥84,898 million ($719,475 thousand) and ¥55,087
million, respectively.

Independent Auditors’ Report
To the Board of Directors of
Nisshinbo Industries, Inc.
We have audited the consolidated balance sheets of Nisshinbo Industries, Inc. and consolidated subsidiaries as of 31st March, 2007
and 2006, and the related consolidated statements of income, changes in equity, and cash flows for the years then ended, all expressedin Japanese yen. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted and applied in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positionof Nisshinbo Industries, Inc. and consolidated subsidiaries as of 31st March, 2007 and 2006, and the results of their operations andtheir cash flows for the years then ended, in conformity with accounting principles and practices generally accepted in Japan.
The United States dollar amounts shown in the consolidated financial statements have been translated solely for convenience. We
have reviewed this translation and, in our opinion, the consolidated financial statements expressed in Japanese yen have beentranslated into US dollars on the basis described in Note 1.

Etsuko Nagashima
Certified Public Accountant

Takeshi Takubo
Certified Public Accountant

28th June, 2007
Tokyo, Japan

41

Nisshinbo History

1907 Nisshin Cotton Spinning Co., Ltd.
established.
1920 Office opened in Nihonbashi, andthereafter became the head office ofNisshin Cotton Spinning.
Nisshin Cotton Spinning merged with
Okazaki Boseki Co., Ltd.
(the present Harisaki Plant).
1924 Nisshin Cotton Spinning merged with Tokyo BosekiCo., Ltd.
1925 Branch office opened in Nagoya (the present Nagoya
Branch).
Branch office opened in Osaka (the present Osaka Branch).
1937 Nisshin Cotton Spinning acquired Kawagoe Boseki Co., Ltd.
(the present Kawagoe Plant).
1938 Nisshin Cotton Spinning merged with Nisshin Rayon Co.,
Ltd. (the present Miai Plant).
1940 Toa Jitsugyo Co., Ltd. established (the company namechanged to Nissin Toa Inc. in 1990).
1945 Nisshin Cotton Spinning acquired the Meiji Plant ofNanshin Seiki Co., Ltd. (the present Fuji Plant).
1947 Non-textiles Division set up and thereafter expanded
operations to include automobile brakes, chemical products,
papers and machine tools.
1949 Nihon Postal Franker Co., Ltd. established (the company
name changed to Nisshinbo Postal Chemical Co., Ltd. in2006).
Nisshin Cotton Spinning listed on the Tokyo Stock
Exchange.
Nitto Asbestos Co., Ltd. established (the company namechanged to Nisshinbo Brake Sales Co., Ltd. in 1987).
1950 Ueda Japan Radio Co., Ltd. established.
1952 Shimada Plant began operations.
1958 Tokushima Plant began operations.
Nippon Kohbunshikan Co., Ltd. established (the company
name changed to Nippon Kohbunshi Co., Ltd. in 1986).
1961 Nisshin Cotton Spinning listed on the first section of theTokyo Stock Exchange.
1962 Nisshin Cotton Spinning’s English company name changed
to Nisshin Spinning Co., Ltd.
1966 Fujieda Plant began operations.
1972 Nisshinbo Do Brasil Industria Textil LTDA. (Brazil)
established.
1978 Nisshin Spinning acquired Tokai Seishi Kougyou
Co., Ltd.
1981 Tatebayashi Chemical Plant (the present Tatebayashi Plant)began operations.
1984 Nisshin Spinning’s English company name changed to
Nisshinbo Industries, Inc.
1985 Nisshinbo Industries acquired Nisshin Denim Inc.
1986 The Machine Tools Department of the Miai Plant spun off
to create the Miai Machinery Plant.
Anti-skid Brake System (now ABS) Division set up.
1987 Hamakita Plant began operations.
1989 Kohbunshi (Thailand) Ltd. established.

42

1992 Chiba Plant began operations.
1993 The head office relocated to its present
location in Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo.
Pudong Kohbunshi (Shanghai) Co., Ltd.
(China) established.
1995 Nisshinbo Automotive Corporation(U.S.A.) established.
Nisshinbo Urban Development Co., Ltd.
established.
1996 Nisshinbo Somboon Automotive Co., Ltd. (Thailand)established.
1997 Nisshinbo Automotive Manufacturing Inc. (U.S.A.)
established through complete financing from the subsidiary
Nisshinbo Automotive Corporation.
1998 P.T. Gistex Nisshinbo Indonesia established as a joint
venture.
1999 Saeron Automotive Corporation(South Korea) established.
Research & Development Centerestablished.
2000 P.T. Nikawa Textile Industry(Indonesia) established as a
subsidiary through the additional
acquisition of shares.
Continental Teves Corporation established as a joint venture.
2001 Ningbo Youngor Sunrise Textile
Dyeing and Finishing Co., Ltd.
(China) established as a joint
venture.
2002 Ningbo Veken Textile Co., Ltd.
(China) established as a joint
venture.
Nisshinbo Industries acquired all shares of Iwao & Co., Ltd.
NISSHINBO (SHANGHAI) CO., LTD. (China) began
operations.
2003 Saeron Automotive Beijing Corporation (China) establishedthrough complete financing from the subsidiary Saeron
Automotive Corporation.
2004 Continental Teves Corporation (Lian Yun Gang)
Co., Ltd. (China) established.
Nisshinbo Industries acquired additional stock in Naigai
Shirts Co., Ltd. and CHOYA CORP.
2005 Toyota Plant established.
Nisshinbo Urban Development Co., Ltd. absorbs Kansai
Nisshinbo Urban Development Co., Ltd. by merger.
Saeron Automotive Corporation listed on the Korea Stock
Exchange.
Nisshinbo Industries acquired additional stock in
New Japan Radio Co., Ltd. and ALOKA CO., LTD.
2006 Nisshinbo Postal Chemical Co., Ltd. (currently consolidated
subsidiary) merged with Nisshinbo Engineering Co., Ltd.
Acquisition of additional shares of Japan Radio Co., Ltd. andNagano Japan Radio Co., Ltd.

Nisshinbo GroupThe Nisshinbo Group consists of Nisshinbo Industries, Inc., its 59 subsidiaries, and 40 affiliates.

Main Group Companies (As of March 31, 2007)
Consolidated Subsidiaries
Company
Nisshin Toa Inc.
Nisshinbo Yarn Dyed Co., Ltd.
Nisshin Denim Inc.
Nisshin Tex Co., Ltd.
Naigai Shirts Co., Ltd.
Nisshinbo Mobix Co., Ltd.
CHOYA CORP.
NISSHINBO (SHANGHAI) CO., LTD.
Nisshinbo Do Brasil Industria Textil LTDA.
P.T. Naigai Shirts Indonesia
Shanghai Choya Fashion Co., Ltd.
P.T. Nikawa Textile Industry
P.T. Gistex Nisshinbo Indonesia
Nisshinbo Brake Sales Co., Ltd.
Nisshinbo Automotive Corporation
Nisshinbo Automotive Manufacturing Inc.
Nisshinbo Somboon Automotive Co., Ltd.
Saeron Automotive Corporation
Tokai Seishi Co., Ltd.
Nisshinbo Postal Chemical Co., Ltd.
NIPPON KOHBUNSHI CO., LTD.
Kohbunshi (Thailand) Ltd.
Pudong Kohbunshi (Shanghai) Co., Ltd.
Iwao & Co., Ltd.

Location
Tokyo, Japan
Aichi, Japan
Tokushima, Japan
Osaka, Japan
Osaka, Japan
Wakayama, JapanTokyo, Japan
China
BrazilIndonesia
China
Indonesia
Indonesia
Tokyo, Japan
U.S.A.
U.S.A.
ThailandSouth Korea
Shizuoka, JapanTokyo, Japan
Aichi, Japan
ThailandChina
Osaka, Japan

Capital¥450 million¥80 millon¥200 million¥10 million¥300 million¥80 millon¥4,594 million
RMB9 million
R$20.075 million
US$0.85 million
RMB34 million
US$75 million
US$10 million¥346 million
US$88 million
US$15.44 million
THB732.6 million
KRW9,600 million¥300 million¥310 million¥310 million
THB100 million
US$7 million¥250 million

Nisshinbo Urban Development Co., Ltd.
Nisshinbo Europe B.V.
Nisshinbo Kikai Hanbai Co., Ltd.
New Japan Radio Co., Ltd.
Ueda Japan Radio Co., Ltd.

Tokyo, JapanThe Netherlands
Tokyo, JapanTokyo, Japan
Nagano, Japan¥480 million€2.165 million¥30 million¥5,220 million¥700 million

Business
Textiles, Papers, Food Ingredients
TextilesTextilesTextilesTextilesTextilesTextilesTextilesTextilesTextilesTextilesTextilesTextilesAutomobile Brakes
Automobile Brakes
Automobile Brakes
Automobile Brakes
Automobile Brakes
PapersPapers, Chemical Products
Plastic Molded Products
Plastic Molded Products
Plastic Molded Products
Textiles, Chemical Products,
Real Estate Leasing
Real Estate Leasing
Real Estate Leasing
Machine Tools
Electronics
Electronics

Location
Kanagawa, Japan
China

Capital¥5,000 million
US$3.68 million

Business
Automobile Brakes
Automobile Brakes

Tokyo, JapanTokyo, Japan
Nagano, Japan

¥6,465 million¥14,704 million¥3,649 million

Medical Equipment
Electronics
Electronics

Subsidiary and Affiliates Accounted for by the Equity Method
Company
Continental Teves Corporation
Continental Teves Corporation(Lian Yun Gang) Co., Ltd.
ALOKA CO., LTD.
Japan Radio Co., Ltd.
Nagano Japan Radio Co., Ltd.

43

Board of Directors and Statutory Auditors
Director, Senior Executive
Managing Officer

Director, Chairman

Yoshikazu Sashida

Yasuo Takeuchi

Director* 1, President

Director, Managing Officer

Standing Statutory Auditor

Masaya Kawata

Masashi Shinagawa
Standing Statutory Auditor

Director, Senior Executive
Managing Officer

Director*2

Shoichi Hayashi

Shizuka Uzawa

Tomofumi Akiyama

Statutory Auditor* 3

Director* 2

Yoshikuni Utsunomiya

Director, Executive Managing Officer

Toshiya Hanawa

Statutory Auditor* 3

Toshihiko Tomita

Takashi Iwashita
Yoshihito Onda

Director*

Director* 1, Vice President

Director, Executive Managing Officer

Koji Kato

Kunihiro Toda

Yoshihiro Sakaki
Director, Executive Managing Officer*1 Representative director

2*3 Outside auditor* Outside director
2

Masaaki IsobeManaging Officers
President

Executive Managing Officers

Senior Managing Officers

Managing Officers

Takashi Iwashita*

Yoshihito Onda*
Yoshihiro Sakaki*
Masaaki Isobe*

Takeo Shimura
Yoshio Ide
Kazuo Manaka

Masaya Kawata*
Akihiko Ishikawa
Hitoshi Ito
Michihiro Ohga
Shigenori Mori
Toshihiro Kijima
Koji Nishihara
Syuichi Fukuda

Vice President

Kunihiro Toda*
Senior Executive Managing Officers

Yasuo Takeuchi*
Shizuka Uzawa** Board member as well

Corporate Data
(As of March 31, 2007)

Common Stock:

Founded:February 5, 1907

Head Office:2-31-11, Ningyo-cho, Nihonbashi,
Chuo-ku, Tokyo 103-8650, Japan
Tel: 03-5695-8833 Fax: 03-5695-8970
URL: http://www.nisshinbo.co.jp/

Authorized:

371,755,000 shares

Issued:201,698,939 shares¥27,588 million — US$234 million

2-4-2, Kitakyuhoji-machi, Chuo-ku,
Osaka 541-0057, Japan
Tel: 06-6267-5501 Fax: 06-6267-5679

Shareholders:

12,113

Listings:

Tokyo, Osaka, Nagoya, Fukuoka andSapporoTransfer Agent:

Mitsubishi UFJ Trust and Banking
Corporation
4-5, Marunouchi, 1-chome, Chiyoda-ku,
Tokyo 100-8212, Japan

Osaka Branch:

Nagoya Branch:

Employees:

44

5-2-38, Sakae, Naka-ku, Nagoya
460-0008, Japan
Tel: 052-261-6151 Fax: 052-263-9480
Parent Company
Subsidiaries
Total

2,797
9,947
12,744

Organization Chart (As of June 1, 2007)

45

NISSHINBO ANNUAL REPORT 2007

2-31-11, Ningyo-cho, Nihonbashi, Chuo-ku, Tokyo 103-8650, Japan
Tel: 03-5695-8833 / Fax: 03-5695-8970
URL: http://www.nisshinbo.co.jp/

Annual Report 2007
(Year ended March 31, 2007)

Year ended March 31, 2007

Reforms for Driving Growth

Printed in Japan